ASSET PURCHASE AGREEMENT
BY AND BETWEEN
EAGLE WEST COMMUNICATIONS, INC.
AND
CORRIDOR COMMUNICATIONS CORP.
DATED AS OF
August 16, 2004
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of August 1016,
2004 (the "Effective Date"), by and between Eagle West Communications, Inc., a
Nevada corporation ("Seller") and Corridor Communications Corp., a Delaware
corporation ("Buyer") with Eagle West, LLC, a Kansas limited liability company
("Operator").
RECITALS
A. Operator owns and operates certain cable television systems serving
communities in Arizona, Nevada and New Mexico. Seller has entered into an asset
purchase agreement to buy said assets from Operator. Pursuant to this Agreement,
Seller will offer those assets to the Buyer.
B. On February 18, 2003, Operator filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. xx.xx. 101 et
seq. ("Bankruptcy Code") in the United States Bankruptcy Court for the District
of Arizona ("Bankruptcy Court") commencing Case No. 0302530RJH ("Bankruptcy
Case").
C. On March 5, 2003, the Bankruptcy Court entered its order appointing and
designating Xxxxxx X. Xxxxx ("Xxxxx") as representative of the
debtorinpossession with respect to the Operator and the Operator's Chapter 11
bankruptcy estate.
D. Operator has agreed to sell certain assets to Seller used primarily in
connection with the operation of its cable television systems located in
Arizona, Nevada and New Mexico as more particularly described herein, and Buyer
desires to purchase such assets from Seller as set forth herein.
E. The parties acknowledge on May 12, 2004 in the United States Bankruptcy
Court in an Expedited hearing the court granted the Operator the authority to
proceed with the sale of the assets to the Seller, which submitted the highest
bid ("Approval Order"). With this Order the Bankruptcy Court has approved this
sale in this Bankruptcy Case.
AGREEMENTS
In consideration of the above recitals and the mutual agreements stated in
this Agreement, the parties agree as follows:
1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set forth
below:
1.1 Adjustment Time. Means 11:59 p.m., Arizona time, on the last day of
the month immediately prior to the Closing Date.
1.2 Affiliate. With respect to any Person, means any other Person
controlling, controlled by or under common control with such 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.
1.3 Assets. As more specifically set forth in the Schedules to this
Agreement, all properties, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description used or held
for use in connection with the Business, now in existence or hereafter acquired
before the Closing Date, including rights under Governmental Permits (to the
extent assignable), Intangibles, rights under Contracts (to the extent
assignable), insurance policies (subject to the provisions of Sections 1.17(d)
and 2.4, Equipment, Leased Property, Included Vehicles, customer and subscriber
lists, engineering records, maps, databases, files and records, prepaid expenses
relating solely to the Business that are held by third parties for security for
Seller's performance of its obligations, but excluding any Excluded Assets and
any assets disposed of prior to the Closing Date in the ordinary course of
business and not in violation of this Agreement.
1.4 Bankruptcy Case. The Bankruptcy Case as identified in the Recitals.
1.5 Bankruptcy Code or Code. The Bankruptcy Code as identified in the
Recitals.
1.6 Bankruptcy Court or Court. The Bankruptcy Court as identified in the
Recitals.
1.7 Business. The cable television business conducted by Seller on the
Effective Date through and with respect to the Systems.
1.8 Business Day. Any day other than Saturday, Sunday or a day on which
banking institutions in New York, New York are required or authorized to be
closed.
1.9 Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the FCC rules and regulations promulgated thereunder, all as in effect from
time to time.
1.10 Closing. The consummation of the transactions contemplated by this
Agreement, as described in Section 9, the date of which is referred to as the
"Closing Date."
1.11 Contracts. All agreements (including any amendments or modifications
thereto) relating to: the Franchises, all multiple dwelling unit agreements,
pole attachment and conduit agreements, software license agreements, subscriber
agreements and other agreements, written or oral (including any amendments and
other modifications thereto), except Governmental Permits, which affect the
Assets, the Business or the operation of the Systems, and (a) which are in
effect on the Effective Date or (b) which are entered into by Seller in the
ordinary course of business and as permitted by this Agreement between the
Effective Date and the Closing Date and which by their terms are to be in effect
as of the Closing Date.
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1.12 Xxxxx. Xxxxxx X. Xxxxx, the courtappointed debtorinpossession in the
Bankruptcy Case.
1.13 Encumbrance. Any security interest, interest retained by a transferor
under a conditional sale or other title retention agreement, mortgage, lien,
pledge, option, encumbrance, adverse interest, exception to or defect in title
or other ownership interest (including reservations, rights of entry,
possibilities of reverter, encroachments, easements, rightsofway, restrictive
covenants, leases and licenses) of any kind, which constitutes an interest in or
claim against property, whether arising pursuant to any Legal Requirement,
Governmental Permit, Contract or otherwise.
1.14 Environmental Law. Shall include the following: (a) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 et
seq. ("CERCLA"); (b) the Solid Waste Disposal Act, also known as the Resource
Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901 et seq. ("RCRA"); (c) the
Emergency Planning and Community RighttoKnow Act, 42 U.S.C. ss. 11001, et seq.;
(d) the Hazardous Materials Transportation Act, 49 U.S.C. xx.xx. 1801 et seq.;
(e) the Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq. ("CAA"); (f) the Clean
Water Act, 33 U.S.C. xx.xx. 1251 et seq.; (g) the Occupational Safety and Health
Act, 29 U.S.C. xx.xx. 651 et seq.; (h) the Toxic Substances Control Act, 15
U.S.C. xx.xx. 2601 et seq.; (i) the Rivers and Harbors Act of 1899, 33 U.S.C.
ss. 401, et seq.; (j) the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701, et
seq.; each as amended; (k) any state or local law similar to the foregoing; (l)
all regulations issued pursuant to the foregoing; and (m) any law or regulation
relating to the use, generation, transport, treatment, storage, disposal,
removal or recovery of Hazardous Substances.
1.15 Equipment. All electronic devices, trunk and distribution coaxial and
optical fiber cable, amplifiers, drops, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, subscriber devices (including
converters, encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
Systems), test equipment, Included Vehicles, inventory (except the inventory
used and operated with respect to the Reserve Business), and other tangible
personal property used or held for use primarily in connection with the
Business. Schedule 1.15 lists all material items of Equipment, including headend
equipment.
1.16 [Intentionally left blank].
1.17 Excluded Assets. Any of the following, which will not be included in
the Assets:
(a) Any and all properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description used or held for use in connection with the Seller's cable
television business and operations located in and around Reserve, New
Mexico, the tangible assets of which are set forth in Schedule 1.17(a)
(the "Reserve Business"), now in existence or hereafter acquired by the
Operator, including, with respect to the Reserve Business, the following:
rights under Governmental Permits (to the extent assignable), Intangibles,
rights under Contracts (to the extent assignable), Equipment, Real
Property, customer and subscriber lists, engineering records, maps,
databases, files and records, and deposits relating solely to the Reserve
Business that are held by third parties for security for Operator's
performance of its obligations.
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(b) Any and all properties subject to pole access lease agreements
for areas that are not actively operating the Systems that are the subject
of this Agreement.
(c) Programming Contracts and cable guide Contracts, except those
listed on Schedule 5.5;
(d) Any and all rights and claims under any insurance policies which
exist as of the Closing Date;
(e) Bonds, letters of credit, surety instruments, and other similar
items;
(f) Cash, cash equivalents and shortterm investments;
(g) All claims, rights and interests in and to any refunds for Taxes
or fees, including franchising and copyright fees, for periods prior to
the Adjustment Time;
(h) Rights under any Contract for subscriber billing services and
any subscriber billing equipment (leased or owned) relating to the Reserve
Business;
(i) Except as otherwise provided in Section 7.10, retransmission
consent agreements;
(j) Operator's corporate minute books and stock records;
(k) Any employee benefit plans covering employees of Operator;
(l) Any and all credit facilities and loan agreements to which
Operator is a party;
(m) Any Contract required to be described on Schedule 5.5 but not
described thereon as of the Effective Date, and any Contract entered into
by Operator after the Effective Date unless, in either case, Buyer elects
in writing to include such Contract in the Assets;
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(n) The account books of original entry, general ledgers, financial
records and personnel files and records used in connection with the
operation of the Systems, provided that Operator will provide copies of,
or information contained in such books, ledgers, records and files (other
than information pertaining to programming agreements, except programming
agreements specific to the Systems), to the extent reasonably requested by
Buyer before or after the Closing Date and in Operator's possession.
Seller understands that Buyer will need sufficient accounting information
and access in order to complete an audit of the Business for the years
ending 2002 and 2003. Seller agrees to give Buyer access to the records
needed for the audit;
(o) Seller's rights under this Agreement and the Transaction
Documents;
(p) The personal property and/or Intangible assets specifically
listed and set forth on Schedule 1.17(p);
(q) The real property assets specifically listed and set forth on
Schedule 1.30;
(r) Any assets not specifically used in connection with and/or
related to the operations of the Business; and
(s) Any and all Vehicles used and operated with respect to the
Reserve Business, as specifically identified in Schedule 1.17(s).
1.18 Franchises. All cable television franchises and similar rights
obtained with respect to the Business from any Governmental Authority, including
those set forth on Schedule 5.4.
1.19 GAAP. Generally accepted accounting principles as in effect from time
to time in the United States of America.
1.20 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasigovernmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.21 Governmental Permits. All FCC licenses and all other material
approvals, authorizations, permits, licenses, registrations, qualifications,
leases, variances and similar rights obtained with respect to the Business or
Assets from any Governmental Authority, other than the Franchises, including
those set forth on Schedule 5.4.
1.22 Hazardous Substances. The following: (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.
ss.ss.6901 et seq.); (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) (42 U.S.C. ss.ss.9601 et seq.); (c) any substance regulated by the
Toxic Substances Control Act (TSCA) (15 U.S.C. ss.ss.2601 et seq.), or the
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA)(7 U.S.C. ss.ss.136 et
seq.); (d) friable asbestos or asbestoscontaining material of any kind or
character; (e) polychlorinated biphenyls; (f) any substances regulated under the
provisions of Subtitle I of RCRA relating to underground storage tanks; and (g)
any other substance which by any Environmental Law requires special handling,
reporting or notification of any Governmental Authority in its collection,
storage, use, treatment or disposal.
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1.23 Included Vehicles. The vehicles listed on Schedule 1.23.
1.24 Intangibles. All intangible assets, including subscriber lists,
accounts receivable, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held by Seller
primarily for use in the Business.
1.25 Legal Requirements. Applicable common law and any statute, ordinance,
code, or other law, rule, regulation, order, technical or other written standard
or procedure enacted, adopted or applied by any Governmental Authority.
1.26 Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and settlement costs, exclusive of consequential damages.
1.27 Material Adverse Effect. A material adverse effect on the operation
of the Systems or the financial condition of the Business, taken as a whole, but
without taking into account any effect resulting from any regulatory or other
change affecting the United States cable industry as a whole, including changes
in FCC regulations.
1.28 Permitted Encumbrances. The following Encumbrances: (a) those
Encumbrances set forth on Schedule 1.28, (b) liens securing Taxes, assessments
and governmental charges in an aggregate amount greater than $1,000.00, (c) any
zoning law or ordinance or any similar Legal Requirement, (d) any right reserved
to any Governmental Authority to regulate the affected property, and (e) in the
case of leased property, whether real or personal, the rights, titles and
interests of the lessor thereof, and all Encumbrances on such rights, titles and
interests.
1.29 Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.30 Real Property. Except for the Excluded Assets (which Excluded Assets
include any and all real property specifically identified and listed in Schedule
1.30), all of Seller's interests in leased real property, including leasehold
interests and easements, wire crossing permits and rights of entry (except
agreements related to multiple dwelling units).
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1.31 Required Consents. All authorizations, approvals and consents
required under Governmental Permits, Contracts, Lease Property or otherwise for
(a) Seller to transfer the Assets and the Business to Buyer, and (b) Buyer to
own or lease the Assets and to operate the Business in the manner in which the
Business is conducted as of the Closing Date.
1.32 Systems. Each of the cable television Systems providing cable
television services to the communities in Arizona and Nevada listed on Schedule
1.32.
1.33 System Employees. All personnel who primarily render services in
connection with the Systems.
1.34 Taxes. All levies and assessments of any kind or nature imposed by
any Governmental Authority with respect to the Assets, including all income,
sales, use, ad valorem, value added, franchise, severance, net or gross
proceeds, withholding, payroll, employment, excise or property taxes and levies,
together with any interest thereon and any penalties, additions to tax or
additional amounts applicable thereto.
1.35 Tax Return. Any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.36 Other Definitions. The following terms are defined in the Sections
indicated:
Term Section
---- -------
Action 11.4
Agreement Preamble
Approval Order 7.13
Assumed Obligations and Liabilities 2.2
Bankruptcy Case Recitals
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Billing Transition Services 7.7
Buyer Preamble
Closing Date 9.1
Closing Date Payment 3.1.2
Xxxxxxx Money Deposit 3.1.1
Escrow Agent 3.1.1
Effective Date Preamble
Eligible Accounts Receivable 3.2
ERISA 5.14.1
FINOVA 2.4
Indemnified Party 11.4
Indemnifying Party 11.4
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Term Section
---- -------
IRC 3.3
Outside Closing Date 9.1
Reserve Business 1.17(a)
Prime Rate 12.11
Purchase Price 3.1
Seller Preamble
Transaction Documents 5.2
1.37 Rules of Construction. Unless otherwise expressly provided in this
Agreement, (a) accounting terms used in this Agreement will have the meaning
ascribed to them under GAAP; (b) words used in this Agreement, regardless of the
gender used, will be deemed and construed to include any other gender,
masculine, feminine, or neuter, as the context requires; (c) the word
"including" is not limiting; (d) the capitalized term "Section" refers to
sections of this Agreement; (e) references to a particular Section include all
subsections thereof, (f) references to a particular statute or regulation
include all amendments thereto, rules and regulations thereunder and any
successor statute, rule or regulation, or published clarifications or
interpretations with respect thereto, in each case as from time to time in
effect; (g) references to a Person include such Person's successors and assigns
to the extent not prohibited by this Agreement; and (h) references to a "day" or
number of "days" (without the explicit qualification "Business") will be
interpreted as a reference to a calendar day or number of calendar days.
2. PURCHASE AND SALE OF ASSETS; ASSUMED OBLIGATIONS AND LIABILITIES
2.1 Purchase and Sale of Assets. Subject to the terms and conditions set
forth in this Agreement, at the Closing, Seller will convey, transfer and assign
to Buyer, and Buyer will purchase from Seller, free and clear of all
Encumbrances (except Permitted Encumbrances), the Assets, effective as of 12:01
a.m., eastern time, on the Closing Date.
2.2 Assumed Obligations and Liabilities. At the Closing, Buyer will
assume, from the date of closing ongoing, and pay, discharge, and perform the
following (the "Assumed Obligations and Liabilities"): (a) any outstanding and
ongoing obligations and liabilities under the Governmental Permits and Contracts
assigned and transferred to Buyer at Closing; (b) general property Taxes, sales
and use Taxes, special assessments, and ad valorem Taxes levied or assessed
against any of the Assets, including those that constitute Permitted Liens; (c)
charges for utilities and other goods or services furnished to the Systems; (d)
copyright expenses; (d) those obligations and liabilities of Seller that Buyer
elects to assume at Closing; and (e) all other obligations and liabilities
arising out of Buyer's ownership of the Assets or operation of the Systems on
and after the Closing Date. The Assumed Obligations and Liabilities shall
include any of the foregoing obligations or liabilities that have accrued prior
to the Closing but are not due and payable until after the Closing.
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All obligations and liabilities arising out of or relating to the
Business, the Assets or the Systems other than the Assumed Obligations and
Liabilities will remain and be the obligations and liabilities solely of Seller.
2.3 Buyer's Duty to Pay Cure Costs for Assumed Contracts. Notwithstanding
anything to the contrary herein, at Closing and in addition to the Purchase
Price, Buyer will pay any and all amounts necessary to cure any defaults (if
any) under any assumed Contracts, except the following: (i) franchise fees, (ii)
pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes
relating to Seller's personalty, and (vi) real property taxes relating to any
Real Property under lease to be transferred to Buyer up to a maximum aggregate
amount of $1,000.00.
2.4 Insurance Policies. Notwithstanding the transfer of the Operator's
insurance policies to the Buyer, the Seller, Operator and FINOVA Capital
Corporation ("FINOVA") shall remain as additional insureds under such policies,
at no cost to them, until the expiration of any such policies, and the Seller,
Operator (and/or FINOVA as the loss payee on any insurance policies) shall be
entitled to recover any insurance proceeds relating to any insured claims or
losses arising prior to the Closing Date.
3. CONSIDERATION
3.1 Purchase Price. The consideration for the Assets will be total cash
consideration of $1,700,000 (the "Purchase Price"). The Purchase Price will be
paid as follows:
3.1.1. Xxxxxxx Money Deposit. Within one (1) calendar day after the
Buyer's execution of this Agreement, Buyer shall deposit with Seller's
attorney for deposit into Seller's attorney's Trust Account ("Escrow
Agent"), to be held and disbursed by Escrow Agent in accordance with the
terms and provisions of this Agreement the cash amount of TWO HUNDRED &
FIFTY THOUSAND DOLLARS ($250,000.00) as an xxxxxxx money deposit ("Xxxxxxx
Money Deposit", which shall also include all interest earned thereon, if
any). The Xxxxxxx Money Deposit shall be held and disbursed in accordance
with the terms of this Agreement. At the Closing of the purchase and sale
of the Assets in accordance with the terms of this Agreement, the full
amount of the Xxxxxxx Money Deposit shall be paid to Seller and applied
toward the Purchase Price.
3.1.2. Closing Date Payment. Buyer will pay the sum of $1,450,000
(the "Closing Date Payment"), to Seller on the Closing Date by wire
transfer of immediately available funds to the account designated by
Seller in writing at least three Business Days prior to the Closing Date.
Notwithstanding the foregoing, no monies (neither the Xxxxxxx Money
Deposit nor the Closing Date Payment) shall be paid to Seller before the
Bankruptcy Court has entered the Formal Approval Order in a form
authorizing the sale of the assets.
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If the Buyer is unable to complete 3.1.2, at the Seller's
option this agreement may be voided with the Buyer forfeiting any cash
payment. Buyer further grants to Seller, to secure payment and performance
of the obligations of Seller under this Agreement, a security interest in
the contract, equipment, lease of real property and inventory listed in
SCHEDULES 1.15, 1.30, 5.4, 1.23, 1.32, 5.6, 5.7, 5.13, 5.15 (see
attachments A & B)
3.2 Buyer's Assistance in Collecting Seller's Accounts Receivable. Buyer
will use its best efforts to collect all of Seller's accounts receivable, and
Buyer will remit to Seller an amount equal to such collections less the Buyer's
percentage for the costs of collection, and will settle the accounts on a
monthly basis, until satisfied or until 120 days from the date of Closing. The
"Buyer's percentage for the costs of collection" shall be an amount equal to the
sum of (a) 25% of the face amount of all Eligible Accounts Receivable that are
current or 30 days or less past due as of the Adjustment Time and (b) 25% of the
face amount of all Eligible Accounts Receivable that are over 31 days past due
as of the Adjustment Time. "Eligible Accounts Receivable" will mean accounts
receivable resulting from the provision of cable television and internet
services by the Systems to active subscribers as of the Adjustment Time that
relate to periods of time prior to the Adjustment Time.
3.3 Allocation of Purchase Price. For tax purposes, the purchase price
shall be allocated among the Assets in accordance with the principles of Section
1060 of the Internal Revenue Code of 1986 (the "IRC") and applicable Treasury
Regulations thereunder. For purposes of this paragraph and Section 1060 of the
IRC, the fair market values of the Assets shall be determined by Buyer within
ten (10) business days of the date hereof. Such determination shall be subject
to approval by the Seller, Operator and FINOVA. Buyer, Seller and Operator will
file all necessary and appropriate Tax returns, forms and schedules thereto
consistent with any such allocations, unless otherwise required by applicable
Legal Requirements.
4. EMPLOYEE MATTERS
4.1 At the Closing, Buyer may, but will have no obligation to, make offers
of employment, commencing effective as of the Closing Date, to any System
Employees who otherwise meet Buyer's criteria for employment. To the extent
permissible by applicable Legal Requirements, Seller and Operator agrees to
cooperate in all reasonable respects with Buyer to allow Buyer to evaluate and
interview System Employees in order to make employment decisions, including
providing reasonable access to Seller and Operator's files with respect to the
System Employees, if requested by Buyer. Buyer will, at its cost, be permitted
to conduct preemployment physical examinations (including drugscreening tests)
and other appropriate prehire investigations of System Employees, and Buyer may
make any offer of employment to any such System Employee conditional upon its
receipt, review and approval of the results of such prehire examinations and
investigations.
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4.2 At the Closing, Seller and Operator will terminate the employment of
all System Employees to whom Buyer has made an offer of employment.
4.3 Subject to the requirements of the Bankruptcy Code and any confirmed
plan of reorganization in the Bankruptcy Case, all claims and obligations under,
pursuant to or in connection with any welfare, medical, insurance, disability or
other employee benefit plans covering any System Employee or arising under any
Legal Requirement affecting System Employees of Seller and Operator incurred
through and including the Closing Date will remain the responsibility of Seller
and Operator or its Affiliates. For purposes of this Section, a claim or
obligation will be deemed to have been incurred on the date of the occurrence of
(a) death or dismemberment in the case of claims under life insurance and
accidental death and dismemberment policies, (b) the date of the initial
disability in the case of claims under disabilities policies or (c) the date on
which the charge or expense giving rise to such claim is incurred in the case of
all other claims. Buyer will not have or assume any obligation or liability
under or in connection with any such plan maintained with respect to any System
Employee.
4.4 Except as expressly provided in this Section 4 and subject to the
requirements of the Bankruptcy Code and any confirmed plan of reorganization in
the Bankruptcy Case, Operator will remain solely responsible for, and will
indemnify Buyer and hold Buyer harmless from and against all Losses arising from
or with respect to, all salaries and all severance, vacation, medical, sick,
holiday, continuation coverage and other compensation or benefits to which
System Employees may be entitled (including "sticking" or "staying" bonuses),
whether or not such System Employees may be hired by Buyer, as a result of their
employment by Operator, the termination of their employment, the consummation of
the transactions contemplated hereby or pursuant to any applicable Legal
Requirement.
4.5 Subject to the requirements of the Bankruptcy Code and any confirmed
plan of reorganization in the Bankruptcy Case, Operator will retain full
responsibility and liability for offering and providing "continuation coverage"
to any "qualified beneficiary" who is covered by a "group health plan" sponsored
or contributed to by Operator and who has experienced a "qualifying event" or is
receiving "continuation coverage" through and including the Closing Date. As
used in this Section 4.5, "continuation coverage," "qualified beneficiary,"
"group health plan," and "qualifying event" all will have the meanings given
such terms under Internal Revenue Code Section 4980B.
4.6 Nothing in this Section 4 or elsewhere in this Agreement will be
deemed to make any employee of the parties a third party beneficiary of this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF SELLER AND OPERATOR
To the best of its knowledge, Seller and Operator (but specifically not
Xxxxx) represents and warrants to Buyer, as of the Effective Date and as of the
Closing, as follows:
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5.1 Authority and Validity.
5.1.1 Subject only to the requirements and restrictions of the
Bankruptcy Code and subject to the Bankruptcy Court's Order, Operator has full
power and authority to possess the Assets and to carry on the operation of the
Systems pursuant to the Approval Order.
5.1.2 Subject to the Bankruptcy Court's Order and any conditions
that the Court has imposed, this Agreement will constitute a valid and binding
agreement of Seller, enforceable in accordance with its terms.
5.2 No Conflict; Required Consents. Except for the approval of the Court
and obtaining the Required Consents (if necessary and/or if not otherwise
authorized by the Approval Order), the execution and delivery by Seller of, the
performance of Seller under, and the consummation by Seller of the transactions
contemplated by, this Agreement and any other agreements or documents
contemplated by this Agreement (the "Transaction Documents") to which Seller is
a party do not and will not: (a) violate any Legal Requirement; (b) require any
consent, approval or authorization of, or filing of any certificate, notice,
application, report or other document with any Governmental Authority or other
Person; or (c) (i) violate or result in a breach of or constitute a default
under (without regard to requirements of notice, lapse of time, or elections of
any Person, or any combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of Seller under, or
(iv) result in the creation or imposition of any Encumbrance under any Contract
or any other instrument evidencing any of the Assets or by which Seller or any
of its assets is bound or affected.
5.3 Assets. Subject to the Bankruptcy Court's Order, Seller, on the
Closing Date, will have the authority to transfer, and will transfer, good and
marketable title to (or, in the case of Assets that are leased, valid leasehold
interests in) the Assets. Pursuant to the Approval Order and ss. 363 of the
Bankruptcy Code, the sale of the Assets shall be free and clear of all
Encumbrances, except (a) Permitted Encumbrances and (b) Encumbrances described
on Schedule 5.3. Otherwise, pursuant to ss. 363 of the Bankruptcy Code, Seller
is transferring the Assets "as is, where is" to Buyer.
5.4 Franchises and Governmental Permits. All Franchises and Governmental
Permits are listed on Schedule 5.4. Seller has provided to Buyer complete and
correct copies of all Franchises and Governmental Permits. Except as set forth
on Schedule 5.4, each Franchise and Governmental Permit is in full force and
effect and Seller is not, and the other party thereto is not, in breach or
default of any material terms or conditions thereunder. Except as set forth on
Schedule 5.4, there is no legal action, governmental proceeding or investigation
pending or threatened to terminate, suspend or modify any Franchise or
Governmental Permit.
5.5 Contracts. All Contracts are described on Schedule 5.5, except for:
(a) subscription agreements with individual residential subscribers for the
cable services provided by the Systems in the ordinary course of business which
may be canceled by the Systems without penalty on not more than 30 days' notice;
(b) miscellaneous service Contracts terminableatwill without penalty; (c)
Contracts involving any immaterial monetary or nonmonetary obligation of Seller,
(d) bank financing documents; and (e) Contracts constituting Excluded Assets.
Seller has provided to Buyer true and complete copies of each of the written
Contracts, including any amendments thereto, other than Contracts described in
clauses (a) through (e) above. Each Contract is unmodified and is in full force
and effect and constitutes the valid, legal, binding and enforceable obligation,
and neither Seller nor any other party thereto, is in breach or default of any
material terms or conditions thereunder. If requested in writing by Buyer,
Seller shall, at Buyer's expense, produce copies of any contracts relating to
the Business not described on Schedule 5.5.
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5.6 Real Property. All Assets consisting of leased Real Property interests
are described on Schedule 5.6. Seller has valid and enforceable leasehold
interests in Real Property shown as being leased by Seller on Schedule 5.6 and,
with respect to other Real Property not owned or leased by Seller, Seller has
the valid and enforceable right to use all such other Real Property pursuant to
easements, licenses, rightsofway or other rights, including those easements,
licenses, rightsofway or other rights described on Schedule 5.6, subject only to
Permitted Encumbrances. There is no easement or other real property interest,
other than the Real Property, that is required, or that has been asserted by a
Governmental Authority or other Person to be required, to conduct the Business
or operate the Systems. All leased Real Property (including the improvements
thereon) (a) is in good condition and repair (ordinary wear and tear excepted)
consistent with its present use, (b) will be available to Buyer for immediate
use in the conduct of the Business or operation of the Systems in accordance
herewith, (c) has access to and over public streets or private easements for
which Seller has a valid right of ingress and egress, and (d) conforms in its
use to all material restrictive covenants, if any, or other material
Encumbrances affecting all or part of such parcel.
5.7 Environmental Matters.
5.7.1 Except as disclosed in Schedule 5.7, the leased Real Property
has not been used in connection with the operation of the Systems for the
generation, storage, discharge or disposal of any Hazardous Substances except as
permitted under applicable Environmental Laws. Except as set forth in Schedule
5.7, the Seller has not received any written notice from any Governmental
Authority alleging that the owned or leased Real Property is in violation of any
Environmental Law, and no claim based on any applicable Environmental Law has
been asserted in writing in the past or is currently pending or threatened with
respect to any owned or leased Real Property.
5.7.2 Seller has provided to Buyer complete and correct copies of
(a) all studies, reports, surveys or other materials in Seller's possession
relating to the presence or alleged presence of Hazardous Substances at, on or
affecting the owned or leased Real Property, (b) all notices or other materials
in Seller's possession that were received from any Governmental Authority
administering or enforcing any Environmental Laws relating to current or past
ownership, use or operation of the owned or leased Real Property or activities
at such Real Property, and (c) all materials in Seller's possession relating to
any litigation or allegation by any Person under or concerning any Environmental
Law as it relates to the leased Real Property.
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5.8 Compliance with Legal Requirements.
5.8.1 Except as set forth on Schedule 5.8, the operation of the
Business is in compliance with all applicable Legal Requirements, including the
Cable Act, except to the extent that the failure to so comply with any of the
foregoing would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. Seller has provided to Buyer true and complete
copies of all FCC rate forms that have been prepared with respect to the Systems
and copies of all correspondence with any Governmental Authority relating to
rate regulation generally or specific rates charged to subscribers of the
Systems. Schedule 5.8 sets forth a list of (a) all pending complaints with
respect to any rates which have been filed with the FCC for the Systems and (b)
those franchising authorities that have filed FCC Form 328 for certification to
regulate any of the rates of the Systems.
5.8.2 To the extent necessary and appropriate, Seller has made the
required filings with respect to the Business under Section 111 of the Copyright
Act for the past three reporting periods, if requested in writing by Buyer,
Seller shall, at Buyer's expense, produce copies of any such filings.
5.9 Patents, Trademarks and Copyrights. Except for Excluded Assets and
except as described in Schedule 5.9, Seller does not possess any patent, patent
right, trademark or copyright material to the operation of the Business, and
Seller is not a party to any license or royalty agreement with respect to any
such patent, trademark or copyright except for licenses respecting program
material and obligations under the Copyright Act of 1976 applicable to cable
television systems generally and commercially available software. The Business
and the Systems have been operated in such a manner so as not to violate or
infringe upon the rights of, or give rise to any rightful claim of any Person
for copyright, trademark, service xxxx, patent, license, trade secret
infringement or the like.
5.10 Legal Proceedings. Except for the Bankruptcy Case pending before the
Bankruptcy Court and as set forth in Schedule 5.10: (a) with respect to the
Systems, there is no claim, investigation or litigation pending or threatened,
by or before any Governmental Authority or private arbitration tribunal by or
against Seller or the Assets, which, if adversely determined, could have a
Material Adverse Effect or could materially and adversely affect the ability of
Seller to perform its obligations under this Agreement.
5.11 Tax Matters. Except as set forth on Schedule 5.11, there are no
unresolved claims concerning any Tax liability relating to the Assets or the
Systems. Seller has not received any notice of deficiency or assessment or of a
proposed deficiency or assessment from any taxing Governmental Authority
pertaining to the Assets or the Systems.
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5.12 Employment Matters.
5.12.1 Seller has separately provided to Buyer on a confidential
basis a list of names and positions of all System Employees as of the date set
forth in such list, along with other pertinent employment information. Except as
set forth on Schedule 5.12, no System Employee is party to any employment
agreement, either written or oral, the Business has complied with applicable
Legal Requirements relating to the employment of labor, including the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), continuation
coverage requirements with respect to group health plans, and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
5.12.2 System Employees are not a party to any collective bargaining
agreements. There are not pending any unfair labor practice charges relating to
System Employees, any demand for recognition or any other request or demand from
a labor organization for representative status with respect to any System
Employee.
5.13 System Information. Schedule 5.13 sets forth the approximate number
of plant miles (aerial and underground) for the Systems, the stations and
signals carried by the Systems and the channel position of each such signal and
station, and the counties, cities and towns served by the Systems. Schedule 5.13
also sets forth the approximate number of homes passed by the Systems, the
channel lineup of the Systems, and the monthly rates charged for each class of
service for the Systems.
5.14 Finders and Brokers. Except for Xxxxxx Capital Corporation , the fees
of which will be the sole responsibility of Seller, Seller has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Buyer (directly or
indirectly) could be liable.
5.15 Bonds. Except as set forth on Schedule 5.15, there are no franchise,
construction, fidelity, performance or other bonds, or letters of credit, posted
or required to be posted in connection with the Systems or the Assets.
5.16 Accounts Receivable. The accounts receivable relating to the Systems
are actual and bona fide receivables representing obligations for the total
dollar amount thereof shown on the books of the Business, and are subject to no
offset or reduction of any nature.
6. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller, as of the Effective Date and as
of the Closing, as follows:
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6.1 Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and use the assets
owned, leased or used by it and to conduct its business as it is currently
conducted.
6.2 Authority and Validity. Buyer has all requisite power and authority to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which Buyer is a party. The execution and delivery by Buyer of, the performance
by Buyer of its obligations under, and the consummation by Buyer of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Buyer is a party have been duly and validly authorized by all necessary
action by or on behalf of Buyer. This Agreement has been, and when executed and
delivered by Buyer the Transaction Documents will be, duly and validly executed
and delivered by Buyer and the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
6.3 No Conflicts; Required Consents. The execution and delivery by Buyer,
the performance of Buyer under, and the consummation by Buyer of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Buyer is a party do not and will not (a) violate any provision of the
articles of incorporation or bylaws of Buyer, (b) violate any Legal Requirement,
(c) require any consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with any Governmental
Authority or other Person, or (d) (i) violate or result in a breach of or
constitute a default under (without regard to requirements of notice, lapse of
time or elections of any Person or any combination thereof), (ii) permit or
result in the termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the performance of
Buyer under, or (iv) result in the creation or imposition of any Encumbrance
under any instrument or other agreement to which Buyer is a party or by which
Buyer or any of its assets is bound or affected, except for purposes of this
clause (d) such violations, conflicts, breaches, defaults, terminations,
suspensions, modifications and accelerations as would not, individually or in
the aggregate, have a material adverse effect on the validity, binding effect or
enforceability of this Agreement or on the ability of Buyer to perform its
obligations under this Agreement or the Transaction Documents to which it is a
party.
6.4 Finders and Brokers. Buyer has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Seller (directly or
indirectly) could be liable.
6.5 Legal Proceedings. There are no claims, actions, suits, proceedings,
investigations or litigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal, by or against or
affecting or relating to Buyer and, no facts or circumstances exist which could
reasonably be expected to give rise to any such claim, investigation or
litigation, which, if adversely determined, would restrain or enjoin the
consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
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7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the Effective Date and the
Closing Date, Seller will give Buyer and its counsel, accountants and other
representatives full access during normal business hours upon reasonable notice
to all the premises and books and records of the Business and to all the Assets
and to the Systems' general manager and will furnish to Buyer and such
representatives all such documents, financial information, and other information
regarding the Business and the Assets as Buyer from time to time reasonably may
request; provided that no such investigation will affect or limit the scope of
any of Seller's representations, warranties, covenants and indemnities in this
Agreement or any Transaction Document or limit liability for any breach of any
of the foregoing.
7.2 Continuity and Maintenance of Operations. Except as Buyer may
otherwise consent in writing (which consent will not be withheld unreasonably),
between the Effective Date and the Closing, Seller will comply with the
following:
7.2.1 Seller will conduct the Business and operate the Systems only
in the usual, regular and ordinary course consistent with its past practices,
and will use commercially reasonable efforts to (a) preserve the Business
intact, including preserving existing relationships with franchising
authorities, suppliers, customers and others having business dealings with
Seller relating to the Business, (b) keep available the services of its
employees and agents providing services in connection with the Business, and (c)
continue making marketing, advertising and promotional expenditures with respect
to the Business consistent with past practices.
7.2.2 Seller will perform regular maintenance on the Assets to
maintain the Assets in good repair, order and condition (ordinary wear and tear
excepted), will maintain equipment and inventory at historical levels consistent
with past practices, will maintain in full force and effect, policies of
insurance with respect to the Business in amounts consistent with good industry
practice, and will maintain its books, records and accounts in the usual,
regular and ordinary manner on a basis consistent with past practices.
7.2.3 Seller will not (a) change the rates charged for any
programming services provided by the Systems or add, delete, retier or repackage
any such programming services except to the extent required under any Legal
Requirement, (b) sell, transfer or assign any portion of the Assets other than
sales in the ordinary course of business, or permit the creation of any
Encumbrance on any Asset other than a Permitted Encumbrance or any Encumbrance
which will be released at or prior to the Closing, (c) modify in any material
respect, terminate, suspend or abrogate any Governmental Permits, material
Contracts or any other material agreement (other than those constituting
Excluded Assets), or (d) enter into any Contract or commitment relating to the
Systems involving an expenditure in excess of $5,000, other than as required by
the Franchises or as contemplated by this Agreement, other than contracts or
commitments which are cancelable on 60 days' notice or less without penalty.
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7.2.4 Seller will promptly notify Buyer of any fact, circumstance,
event or action by it or otherwise (a) which, if known at the Effective Date,
would have been required to be disclosed in or pursuant to this Agreement or (b)
the existence, occurrence or taking of which would result in any of Seller's
representations and warranties in this Agreement or any Transaction Document not
being true, complete and correct, if not already qualified by materiality, in
all material respects, and if qualified by materiality, in all respects, in each
case when made or at the Closing.
7.3 Required Consents.
7.3.1 Prior to the Closing, Seller will use commercially reasonable
efforts to either (a) obtain an order (which may be within the Approval Order)
from the Bankruptcy Court in the Bankruptcy Case authorizing the Seller to
assume and assign to Buyer, pursuant to ss. 365 of the Bankruptcy Code, any and
all Contracts, and/or Government Permits, without regard to and/or
notwithstanding the failure or refusal of any third party to any such Contracts
or Government Permits to consent to such assignment; or (b) obtain in writing,
as promptly as possible and at its expense, all the Required Consents, and any
other consent, authorization or approval required to be obtained by Seller in
order to transfer the Assets to Buyer in connection with the transactions
contemplated by this Agreement, each in form and substance reasonably
satisfactory to Buyer (which, in the case of Contracts, may include estoppel
language with respect to the status of the Contract), and deliver to Buyer
copies of such Required Consents and such other consents, authorizations or
approvals promptly after they are obtained by Seller. To the extent required
under 11 U.S.C. ss. 365, Seller shall cure any defaults relating to the payment
of (i) franchise fees, (ii) pole attachment fees, (iii) FCC fees, (iv) copyright
fees, (v) property taxes relating to Seller's personalty, and/or (vi) real
property taxes relating to any Real Property under lease to be transferred to
Buyer, up to a maximum aggregate amount of $1,000.00, which cures are or may be
necessary to permit the assumption and assignment to Buyer of any Contracts to
be assumed by Buyer and that are in default due to the Seller's failure to pay
any such (i) franchise fees, (ii) pole attachment fees, (iii) FCC fees, (iv)
copyright fees, (v) property taxes relating to Seller's personalty, and/or (vi)
real property taxes relating to any Real Property under lease to be transferred
to Buyer. Other than the cost to cure such defaults, commercially reasonable
efforts do not require that Seller (a) pay any amounts in excess of reasonable
processing or application fees or (b) institute, threaten or settle any
litigation. Buyer will cooperate with Seller to obtain all Required Consents,
but Buyer will not be required to accept or agree or accede to any modifications
or amendments to, or changes in, or the imposition of any condition to the
transfer to Buyer of any Contract or Governmental Permit that are not reasonably
acceptable to Buyer.
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7.4 Transfer Taxes. Any state or local sales, use, transfer, or
documentary transfer Taxes or fees or any other charge (including filing fees)
imposed by any Governmental Authority arising from or payable by reason of the
transfer of the Assets as contemplated by this Agreement will be paid by Seller,
subject to any Bankruptcy Code requirements or restrictions and subject to the
terms of a confirmed plan of reorganization in the Bankruptcy Case.
7.5 Use of Names and Logos. After the Closing, Buyer will remove or delete
the name "Eagle West, LLC" from the Business and Assets as soon as reasonably
practicable but in any event by the 120th day following the Closing.
Notwithstanding the foregoing, nothing in this Section 7.5 will require Buyer to
remove or discontinue using any such name or xxxx that is affixed to converters
or other items in or to be used in consumer homes or properties, or as are used
in a similar fashion making such removal or discontinuation impracticable.
Seller and Operator agrees that Seller's name, Eagle West Communications, Inc.,
is acceptable to be utilized in all future business operations.
7.6 Satisfaction of Conditions. Each party will use commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 8.
7.7 Transition Services. Seller will provide assistance to Buyer with
respect to the operation of the billing systems, software and related fixed
assets used by Seller in connection with the Systems (the "Billing Transition
Services") for a period of up to 120 days following the Closing to allow for
transition of such services to Buyer and the conversion of existing billing
arrangements. Buyer will reimburse Seller, on a monthly basis, for all direct
expenses, including personnel expenses, incurred by Seller in providing the
Billing Transition Services or other transition services.
7.8 Leased Equipment and Other Capital Leases. Seller will assign to Buyer
any capital leases for Equipment that Buyer agrees to assume, and Buyer will
assume all of Seller's rights, responsibilities and liabilities under any such
capital leases. Further, to the extent that any lessors under such capital
leases require any form of "adequate assurance of future performance" under ss.
365 of the Bankruptcy Code, Buyer will exercise its best efforts to provide such
assurances.
7.9 PostClosing Access to Personnel Records. Except as otherwise
prohibited by applicable Legal Requirements, for a period ending on the first
anniversary of the Closing Date, Seller will, at no cost to Buyer, provide Buyer
from time to time, during normal business hours and upon reasonable notice from
Buyer, with access to, and the right to make copies or extracts of, pertinent
information from the personnel files and records of Seller and Operator relating
to System Employees who are hired by Buyer in connection with any claim,
investigation or litigation, payment of Taxes or any other valid business
reason.
7.10 Retransmission Consent Agreements. On or prior to the date which is
20 days prior to the Closing Date, Seller will provide to Buyer a list (and
provide copies, to the extent not previously provided) of all local
retransmission consent agreements then in effect with respect to the Systems. By
written notice delivered to Seller at least 10 days prior to the Closing Date,
Buyer may, in its sole discretion, elect to assume one or more of Seller's
retransmission consent agreements. Any such retransmission consent agreements
that Buyer elects to assume pursuant to this Section 7.10 will be deemed to be
included in the Assets for all purposes under this Agreement.
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7.11 Court Approval. Upon execution of this Agreement, Seller has
exercised its diligent, good faith efforts and has obtained entry of an order of
the Bankruptcy Court authorizing Seller's execution, delivery and performance of
this Agreement, authorizing the sale of the Assets to Buyer in accordance with
the terms of this Agreement and in such form and content as Buyer may reasonably
request (the "Approval Order"). The parties acknowledge that the Court has
signed an Approval Order subject to (i) the opportunity of interested parties to
object to the conduct of a hearing thereon, and/or (ii) higher and better bids
from third party purchasers. The Court did conduct a hearing and found one such
objection and no competing bids before signing the Approval Order. Objection was
resolved with this order.
8. CONDITIONS PRECEDENT
8.1 Conditions to the Obligations of Buyer and Seller. The obligation of
each party to consummate the transactions contemplated by this Agreement is
subject to the satisfaction, at or before the Closing, of the following
conditions, which may be waived by the parties to the extent permitted by
applicable Legal Requirements:
8.1.1 Absence of Legal Proceedings. Other than the Bankruptcy Case,
no action, suit, investigation or proceeding is pending before, or threatened
by, any Governmental Authority, no judgment will have been entered and not
vacated by any Governmental Authority and no Legal Requirement will have been
enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
could reasonably be expected to prevent or make illegal the purchase and sale of
the Assets contemplated by this Agreement.
8.1.2 Consents.
8.1.2.a. Seller and Buyer will have received either:
(a) an approval order from the Bankruptcy Court in the
Bankruptcy Case authorizing the transfer of the Assets free
and clear all claims, liens and encumbrances, and authorizing
the assignment of all assigned Contracts and Government
Permits relating to the Mesa, Arizona System; or
(b) evidence, in form and substance satisfactory to
Buyer, that all of the Required Consents with respect to the
assigned Contracts and Government Permits relating to the
Mesa, Arizona System have been obtained or given and are in
full force and effect.
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8.1.2.b. With respect to all cable television systems owned
and operated by Seller other than the Mesa, Arizona system, Seller
will use its best efforts to obtain either:
(a) an approval order from the Bankruptcy Court in the
Bankruptcy Case authorizing the assignment of all assigned
Contracts and Government Permits relating to such systems; or
(b) evidence, in form and substance satisfactory to
Buyer, that all of the Required Consents with respect to the
assigned Contracts and Government Permits relating to such
systems have been obtained or given and are in full force and
effect.
8.1.3 Court Approval. An Approval Order will have become
effective as provided in Section 7.11 and be final
and nonappealable.
8.2 Conditions to the Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Buyer to the extent permitted by applicable Legal Requirements:
8.2.1 Representations and Warranties. The representations and
warranties of Seller in this Agreement, if qualified by a reference to
materiality, are true, complete and correct and, if not so qualified, are true,
complete and correct in all material respects, at and as of the Closing with the
same effect as if made at and as of the Closing, except for changes, if any,
permitted or contemplated by this Agreement and except to the extent a different
date is specified therein, in which case such representation and warranty will
be true and correct as of such date.
8.2.2 Performance of Agreements. Seller will have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and any Transaction Document to be
performed or complied with by Seller at or before the Closing.
8.2.3 No Material Adverse Effect. Since the Effective Date, no event
will have occurred which has had, or could reasonably be expected to result in,
a Material Adverse Effect.
8.2.4 Retransmission Consent Agreements. Buyer will have entered
into, or received a valid assignment of, a retransmission consent agreement with
respect to each local broadcast signal carried by the Systems other than
pursuant to a valid must carry election under the Cable Act.
8.2.5 Programming Deletion. Upon written notice from Buyer to Seller
given at least 30 days prior to Closing, or given 30 days prior to the date
designated by Buyer for deletion, if earlier than Closing, Seller will have
deleted from the Systems any programming services that (i) Buyer does not have
the right to carry on the Systems after Closing or (ii) Buyer determines, in its
reasonable judgment, could potentially result in liability on the part of Buyer
for copyright payments after Closing in excess of those payments made by Seller
with respect to carriage of such signals prior to Closing. If Buyer designates
any programming services for deletion prior to Closing, Buyer and Seller will
use commercially reasonable efforts to agree upon substitute programming to be
added to the Systems to replace such deleted programming.
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8.2.6 Subscriber List. Seller will have delivered to Buyer, at least
10 days prior to the Closing, a current list of subscribes of the Systems,
including billing address and related account information.
8.2.7 Seller's Cure. Seller will have cured, or made arrangements
for the prompt cure of, any defaults relating to the payment of (i) franchise
fees, (ii) pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v)
property taxes relating to Seller's personalty, and/or (vi) real property taxes
relating to any leased Real Property to be assumed by the Buyer, up to a maximum
aggregate amount of $1,000.00, which cures are or may be necessary to permit the
assumption and assignment to Buyer of any Contracts to be assumed by Buyer and
that are in default due to the Seller's failure to pay any such (i) franchise
fees, (ii) pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v)
property taxes relating to Seller's personalty, and/or (vi) real property taxes
relating to any Real Property to be sold to Buyer.
8.3 Conditions to Obligations of Seller. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Seller to the extent permitted by applicable Legal Requirements:
8.3.1 Representations and Warranties. The representations and
warranties of Buyer in this Agreement, if qualified by a reference to
materiality, are true, complete and correct and, if not so qualified, are true,
complete and correct in all material respects, at and as of the Closing with the
same effect as if made at and as of the Closing, except for changes, if any,
permitted or contemplated by this Agreement and except to the extent a different
date is specified therein, in which case such representation and warranty will
be true and correct as of such date.
8.3.2 Performance of Agreements. Buyer will have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions in this Agreement and any Transaction
Document to be performed or complied with by Buyer at or before the Closing.
9. THE CLOSING
9.1 The Closing; Time and Place. The Closing will be held on a date
mutually agreed upon by the parties after all conditions to the Closing
contained in this Agreement (other than those based on acts to be performed at
the Closing) have been satisfied or waived (the "Closing Date"). In no event
will the Closing occur after August 19, 2004 (the "Outside Closing Date"),
unless the parties otherwise agree. The Closing will be held via facsimile and
overnight courier, or at such place and at such time as Buyer and Seller may
agree. If the Closing Date is not a Business Day, then Buyer will pay the
Purchase Price on the immediately following Business Day.
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9.2 Seller's Delivery Obligations. At the Closing, Seller will deliver (or
cause to be delivered) to Buyer the following:
9.2.1 an executed Xxxx of Sale and Assignment and Assumption in the
form of Exhibit A to this Agreement;
9.2.2 possession of the Assets;
9.2.3 to the extent not previously provided or included in the
Excluded Assets, copies of all Contracts, customer and subscriber lists,
engineering records, maps, databases, files, records, codes, combinations,
passwords, keys and other entry and identification information to permit
operation of the Assets and used by Seller in connection with the operation of
the Systems (provision of the foregoing will be deemed made to the extent such
records are then located at any offices included in the leased Real Property);
and
9.2.4 such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.3 Seller Cooperation; Covenant Not to Compete; and Termination of Rights
at Closing:
9.3.1 Seller shall cooperate with Buyer to achieve a smooth
transition of utility and other similar services furnished to the Systems.
9.3.2 For a period of one (1) year after the Closing, Operator shall
not, either directly or indirectly, solicit business from any customer of the
Business, and shall not directly or indirectly own, manage, operate, control or
participate in the ownership, management, operation or control, or be connected
in any manner, either as owner, proprietor, partner, stockholder, director,
officer, employee, agent or otherwise, of any business that competes with the
Business anywhere that the Business transacts business as of the day before the
Closing Date. Other than the "Reserve Business" in New Mexico. In the event of a
breach of this covenant, Buyer shall be entitled to injunctive relief in
addition to all remedies provided by law.
9.3.3 Operator shall have no right, title or interest of any kind in
the Assets, and shall not transfer, assign or convey or purport to transfer,
assign or convey any of the Assets or any interest therein, including, without
limitation, any of the Intangibles, to any person other than the Buyer.
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9.4 Buyer's Delivery Obligations. At the Closing, Buyer will deliver (or
cause to be delivered) to Seller the following:
9.4.1 the Closing Date Payment;
9.4.2 an executed Xxxx of Sale and Assignment and Assumption in the
form of Exhibit A to this Agreement; and
9.4.3 such other documents as Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
10. TERMINATION
10.1 Termination Events. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned:
10.1.1 At any time by the mutual written agreement of Buyer and
Seller;
10.1.2 By either party at any time upon 30 days prior written notice
to the other, if the other is in material breach or default of any of its
covenants, agreements or other obligations in this Agreement and fails to cure
such breach or default within the 10day period following such written notice or,
if such breach or default is incapable of being cured within such 10day period
and the defaulting party promptly initiates and diligently pursues such cure to
completion upon receipt of such notice, within a reasonable period of time;
10.1.3 By either party upon written notice to the other, if the
Closing has not occurred by the Outside Closing Date, for any reason other than
a breach or default by such party of its respective covenants, agreements or
other obligations under this Agreement; or
10.1.4 As otherwise provided herein.
10.2 Effect of Termination; Limitation of Liability. If this Agreement is
terminated pursuant to Section 10.1, all obligations of the parties under this
Agreement will terminate, except (a) as set forth in Section 10.3, (b) that each
party will pay the costs and expenses incurred by it in connection with this
Agreement, and neither party will be liable to the other for any costs, expenses
or damages except as expressly provided herein; (c) that each party will
redeliver all documents, work papers and other material of the other party
relating to the transactions contemplated hereby, whether so obtained before or
after execution hereof, to the party furnishing the same; and (d) as provided in
Sections 12.4 and 12.16. Notwithstanding a party's right to pursue remedies for
breach of contract upon termination of this Agreement in accordance with Section
10.1, no remedies for breaches of representations and warranties will be
available if this Agreement is so terminated pursuant to Sections 10.1.1 or
10.1.3. Furthermore, except as provided in Section 10.3, in the event the
Closing does not occur, no party to this Agreement will be liable for any
incidental, consequential, exemplary, special or punitive damages in connection
with any claim for breach of this Agreement. In the event of a breach by Seller,
any and all of Buyer's claims under this Section 10.2 and under Section 12.4
shall be deemed administrative expenses under 11 U.S.C. ss. 503, entitled to
priority under 11 U.S.C. ss. 507(a).
24
10.3 Xxxxxxx Money Deposit. If Buyer fails to purchase the assets in
accordance with the terms of this Agreement, or if Buyer breaches its
obligations under this Agreement, and fails to cure any such failure or
breach(es) within five (5) days of receiving written notice thereof, and the
transaction contemplated in this Agreement fails to close by reason of such
failures and/or breach(es), then Escrow Agent shall deliver the Xxxxxxx Money
Deposit to Seller and Seller's sole remedy for such failures and breach(es)
shall be to recover the Xxxxxxx Money Deposit as liquidated damages. If this
Agreement is terminated or the transaction contemplated herein fails to close
for any other reason, the Xxxxxxx Money Deposit shall be returned to Buyer, and
subject to the limitations set forth elsewhere in this Agreement, Buyer shall
have all rights and remedies available to it for Seller's breach hereof. With
the Court having entered the Approval Order, if one or more of the Required
Consents are not obtained, due to the Buyer's (or any of its principals',
affiliates' or employees') actions, inactions or status, then the failure to
satisfy the requirement of the Approval Order and/or the Required Consent shall
be deemed to be a breach by Buyer and the Xxxxxxx Money Deposit shall be
delivered to Seller.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 Survival of Representations and Warranties. Except for the
representations and warranties of Seller set forth in Sections 5.1, 5.2, 5.3,
5.7, 5.8 and 5.9 of this Agreement, the respective representations and
warranties of Buyer and Seller in this Agreement shall not survive the Closing,
and no claim for breach thereof may be made pursuant to this Section 11.
11.2 Indemnification by Seller. Following the Closing, Seller will
indemnify and hold harmless, to the extent of available bankruptcy estate
assets, Buyer and its owners, directors, officers, employees, agents, successors
and assigns and any Person claiming by or through any of them, as the case may
be, from and against all Losses resulting from or arising out of any breach of
any surviving representation or warranty made by Seller in this Agreement.
11.3 Indemnification by Buyer. Following the Closing, Buyer will indemnify
and hold harmless Seller and its shareholders, owners, directors, officers,
employees, agents, successors and assigns, and any Person claiming by or through
any of them, as the case may be, from and against all Losses resulting from or
arising out of:
11.3.1 any breach of any covenant, agreement or obligation of Buyer
contained in this Agreement or in the Transaction Documents delivered by Buyer;
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11.3.2 the Assumed Obligations and Liabilities; and
11.3.3 the ownership of the Assets or operation of the Systems and
the Business on and after the Closing Date.
11.4 Third Party Claims. Promptly after the receipt by any party of notice
of any claim, action, suit or proceeding by any Person who is not a party to
this Agreement (collectively, an "Action"), which Action is subject to
indemnification under this Agreement, such party (the "Indemnified Party") will
give reasonable written notice to the party from whom indemnification is claimed
(the "Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) notifies the Indemnified Party in writing of the
Indemnifying Party's intention to assume such defense, (b) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (c) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action, it being
understood that counsel to each of Buyer and Seller named in this Agreement will
be deemed reasonable. The other party will cooperate with the party assuming the
defense, compromise or settlement of any such Action in accordance with this
Agreement in any manner that such party reasonably may request. If the
Indemnifying Party so assumes the defense of any such Action, the Indemnified
Party will have the right to employ separate counsel and to participate in (but
not control) the defense, compromise or settlement of the Action, but the fees
and expenses of such counsel will be at the expense of the Indemnified Party
unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii)
any relief other than the payment of money damages is sought against the
Indemnified Party, or (iii) the Indemnified Party will have been advised by its
counsel that there may be one or more defenses available to it which are
different from or additional to those available to the Indemnifying Party, and
in any such case that portion of the fees and expenses of such separate counsel
that are reasonably related to matters covered by the indemnity provided in this
Section 11 will be paid by the Indemnifying Party, provided that the
Indemnifying Party will have no obligation to pay the reasonable fees and
expenses of more than one law firm (in addition to the Indemnifying Party's law
firm). The Indemnified Party will not settle or compromise any such Action for
which it is entitled to indemnification under this Agreement without the prior
written consent of the Indemnifying Party, unless the Indemnifying Party has
failed, after reasonable notice, to undertake control of such Action in the
manner provided in this Section 11.4. The Indemnifying Party will not settle or
compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period, unless the Indemnified Party
consents in writing to such compromise or settlement. Any and all of Buyer's
claims under this Section 11.4 shall be deemed to be administrative expenses
under 11 U.S.C. ss. 503, entitled to priority under 11 U.S.C. ss. 507(a).
26
11.5 Sole Remedy. Each party acknowledges and agrees that, should the
Closing occur, its sole and exclusive remedy against the other with respect to
any breach of representation, warranty, covenant, agreement or obligation, this
Agreement or the transactions contemplated by this Agreement, will be pursuant
to the indemnification provisions set forth in this Section 11.
12. MISCELLANEOUS
12.1 Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the other party, neither party may assign
any of its rights under this Agreement or delegate any of its duties under this
Agreement, provided that Buyer may assign its rights and obligations under this
Agreement to any Affiliate or in connection with any transaction that includes
the sale or transfer of all or substantially all of its cable Systems assets
located in the State of Arizona or Nevada.
12.2 Notices. All notices and communications hereunder will be in writing
and will be deemed to have been duly given to a party when delivered in person,
sent by facsimile transmission (with confirmation of receipt), delivered by
first class, postage prepaid, registered or certified mail, or sent by a
nationally recognized overnight courier service, and addressed as follows:
Seller:
Eagle West Communications, Inc.
0000 X. Xxxx Xxxxx
Xxxx, XX 00000
with copy to:
Johnson, Rasmussen, Xxxxxxxx & Xxxxx,
P.L.C.
00 X. Xxxxxxxxx
Xxxx, XX 00000
Attention: Xxx Xxxxx
Buyer:
Corridor Communications
Corp.
000 Xxxxxxx Xx., Xxxxx 000
Xxxxx, Xxxxxx 00000
Attn: J. Xxxxxxx Xxxx, C.E.O.
Telephone: (000) 0000000
Facsimile: (000) 0000000
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Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 12.2. Any
notice of a change of address will be effective only upon actual receipt.
12.3 Right to Specific Performance. Each party acknowledges that the
unique nature of the transactions contemplated by this Agreement and the
circumstances under which this Agreement has been entered into renders money
damages for a breach of the parties' respective obligations to consummate the
transactions contemplated by this Agreement an inadequate remedy, and the
parties agree that either party will be entitled to pursue specific performance
as a remedy for such breach without the requirement of posting a bond or other
security therefor.
12.4 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any alleged breach by any party of any representation, warranty,
covenant or agreement contained in this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees and other costs of such action or
suit from the other party.
12.5 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.6 Captions. The captions of this Agreement are for convenience only and
do not constitute a part of this Agreement.
12.7 Governing Law. This Agreement shall be construed in accordance with,
and governed by the laws of the
State of Arizona
12.8 Rights Cumulative. Except as expressly provided in this Agreement,
all rights and remedies of each of the parties under this Agreement will be
cumulative, and the exercise of one or more rights or remedies will not preclude
the exercise of any other right or remedy available under this Agreement or
applicable law.
12.9 Further Actions. Seller and Buyer will execute and deliver to the
other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents, assurances
or things as may be reasonably necessary to give full effect to this Agreement
and to allow each party fully to enjoy and exercise the rights accorded and
acquired by it under this Agreement.
12.10 Time. If the last day permitted for the giving of any notice or the
performance of any act required or permitted under this Agreement falls on a day
which is not a Business Day, the time for the giving of such notice or the
performance of such act will be extended to the next succeeding Business Day.
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12.11 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by Bank of New York as its "reference rate" (the "Prime Rate") plus two
percentage points per annum, adjusted as and when changes in the Prime Rate are
made.
12.12 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original. This Agreement may be executed by facsimile
signature(s), which will be deemed an original.
12.13 Entire Agreement; Amendments. This Agreement (including the Exhibits
and Schedules referred to in this Agreement, which are incorporated in and
constitute a part of this Agreement) and the Transaction Documents contain the
entire agreement of the parties and supersede all prior oral or written
agreements and understandings with respect to the subject matter hereof and
thereof. There are no representations, warranties, covenants or agreements made
by either party except as expressly stated herein and in the Schedules and
Transaction Documents. This Agreement may not be amended or modified except in
writing and signed by the parties.
12.14 Severability. Any term or provision of this Agreement, which is
invalid or unenforceable, will be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
rights of the Person intended to be benefited by such provision or any other
provisions of this Agreement.
12.15 Construction. Buyer and Seller and their respective legal counsel
have negotiated this Agreement, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.16 Expenses. Except as otherwise expressly provided in this Agreement,
each party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
[SIGNATURE PAGE FOLLOWS]
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12.17 Risk of Loss. In the event of any loss or damage to the Assets
resulting from fire, theft, tornado, flood, lightening or any other similar
casualty (excluding reasonable wear and tear) prior to the Closing Date, which
loss or damage is sufficiently substantial so as to preclude and prevent
resumption of normal operations of any material portion of the Systems or the
replacement or restoration of the lost or damaged property within 45 days from
the occurrence of the event resulting in such loss or damage, Seller will
immediately notify Buyer in writing of its inability to resume normal operations
or to replace or restore the lost or damaged Assets, as well as the likely
amount of any insurance coverage for such loss or damage. Buyer, at any time
within 30 days after receipt of such notice, may elect by written notice to
Seller to either (a) waive such loss or damage and proceed toward consummation
of the transaction in accordance with terms of this Agreement (including all
other conditions to Buyer's obligations set forth in Sections 8.1 and 8.2), or
(b) terminate this Agreement. If Buyer elects to so terminate this Agreement,
Buyer and Seller will stand fully released and discharged of any and all
obligations hereunder (except for obligations intended to survive hereunder),
and Buyer's deposit shall be refunded. If Buyer elects to consummate the
transactions contemplated by this Agreement notwithstanding such loss or damage
and does so, all insurance proceeds paid or payable as a result of the
occurrence of the event resulting in such loss or damage will be delivered by
Seller to Buyer, or the rights thereto will be assigned by Seller to Buyer if
not yet paid over to Seller, and Buyer will have no further recourse against
Seller with respect to such loss or damage arising out of or in connection with
any representation or warranty of Seller hereunder.
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The parties have executed this Agreement as of the day and year first
above written.
SELLER:
EAGLE WEST COMMUNICATIONS, INC.
By /s/Xxxx X. X. XxXxxxx
---------------------
Xxxx X. X. XxXxxxx
Chief Executive Officer and
President, Eagle West
Communications, Inc.
BUYER:
CORRIDOR COMMUNICATIONS CORP.
By /s/J. Xxxxxxx Xxxx
J. Xxxxxxx Xxxx
Chief Executive Officer
Corridor Communications Corp.
31
