EXHIBIT 10.8
8/29/96
ASSET PURCHASE AGREEMENT
dated as of August 29, 1996
between
MEDIACOM LLC
and
SAGUARO CABLE TV INVESTORS, L.P.
Table of Contents
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Page
ARTICLE I CERTAIN DEFINITIONS 1
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ARTICLE II PURCHASE AND SALE 7
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Section 2.1 Covenant of Purchase and Sale; Assets 7
Section 2.2 Excluded Assets 9
Section 2.3 Assumed and Retained Obligations
and Liabilities 10
Section 2.4 Purchase Price 11
Section 2.5 Escrow Amount 12
Section 2.6 Current Items Amount 12
Section 2.7 Purchase Price and Closing Adjustments 13
ARTICLE III RELATED MATTERS 15
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Section 3.1 HSR Act Compliance 15
Section 3.2 Noncompetition Agreement 15
Section 3.3 Bulk Sales 15
Section 3.4 Use of Name and Logos 15
Section 3.5 Transfer Taxes 15
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES 16
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Section 4.1 Organization of Buyer 16
Section 4.2 Authority 16
Section 4.3 No Conflict; Required Consents 16
Section 4.4 Litigation 17
Section 4.5 Finders and Brokers 17
Section 4.6 Full Access 17
Section 4.7 Taxpayer Identification Number 17
ARTICLE V SELLER'S REPRESENTATIONS AND WARRANTIES 17
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Section 5.1 Organization and Qualification of Seller 17
Section 5.2 Authority 18
Section 5.3 No Conflict; Required Consents 18
Section 5.4 Title to Assets; Sufficiency 19
Section 5.5 Franchises, Licenses, and Contracts 20
Section 5.6 Employee Benefits 20
Section 5.7 Employees 21
Section 5.8 Litigation 22
Section 5.9 Tax Returns; Other Reports 22
Section 5.10 System Compliance 23
Section 5.11 Systems Information 25
Section 5.12 Environmental 26
Section 5.13 Financial and Operational Information 27
Section 5.14 No Adverse Change; Operations of
the Business 28
Section 5.15 Taxpayer Identification Number 28
Section 5.16 Intangibles 28
Section 5.17 Accounts Receivable 29
Section 5.18 Bonds 29
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Section 5.19 Exclusivity 29
Section 5.20 Rights to Assets 29
Section 5.21 Transactions with Affiliates and Employees 30
Section 5.22 Disclaimer of Warranty 30
Section 5.23 Real Property 30
Section 5.24 Equipment 31
Section 5.25 No Other Consents 31
Section 5.26 No Undisclosed Liabilities 32
Section 5.27 Liabilities to Subscribers 32
Section 5.28 Restoration 32
Section 5.29 Certain Programming Arrangements
and Relationships 32
Section 5.30 Finders; Brokers and Advisors 33
Section 5.31 Disclosure 33
ARTICLE VI COVENANTS 33
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Section 6.1 Certain Affirmative Covenants of Seller
Regarding the Systems 33
Section 6.2 Certain Negative Covenants of Seller 35
Section 6.3 FCC Approval; Forms 394 37
Section 6.4 Release of Certain Liens, Litigation
and Other Obligations 37
Section 6.5 Certain Other Covenants of Seller 37
Section 6.6 Employee Matters 38
Section 6.7 WARN Act 40
Section 6.8 Exclusivity 40
Section 6.9 Title Insurance 40
Section 6.10 Confidentiality 41
Section 6.11 Supplements to Schedules 42
Section 6.12 Notification of Certain Matters 42
Section 6.13 Commercially Reasonable Best Efforts 42
Section 6.14 Closing Date Financial Statements 43
Section 6.15 Customer Notification 43
Section 6.16 Consents 43
Section 6.17 Risk of Loss; Condemnation 43
Section 6.18 Phase I Study 44
Section 6.19 UCC Searches 45
ARTICLE VII CONDITIONS PRECEDENT 45
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Section 7.1 Conditions to Buyer's Obligations 45
Section 7.2 Conditions to Seller's Obligations 47
ARTICLE VII CLOSING 48
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Section 8.1 Closing; Time and Place 48
Section 8.2 Seller's Obligations 49
Section 8.3 Buyer's Obligations 50
ARTICLE IX TERMINATION 51
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Section 9.1 Termination Events 51
Section 9.2 Effects of Termination 51
Section 9.3 Financing Contingency 52
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ARTICLE X REMEDIES 52
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Section 10.1 Default by Buyer 52
Section 10.2 Default by Seller 52
ARTICLE XI INDEMNIFICATIONS 53
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Section 11.1 Indemnification by Seller 53
Section 11.2 Indemnification by Buyer 54
Section 11.3 Indemnified Third Party Claims 54
Section 11.4 Determination of Indemnification Amounts
and Related Matters 55
Section 11.5 Time and Manner of Certain Claims 56
ARTICLE XII MISCELLANEOUS 56
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Section 12.1 Expenses 56
Section 12.2 Waivers 56
Section 12.3 Notices 56
Section 12.4 Entire Agreement; Amendments 57
Section 12.5 Binding Effect; Benefits 58
Section 12.6 Headings, Schedules, and Exhibits 58
Section 12.7 Counterparts 58
Section 12.8 Publicity 58
Section 12.9 Governing Law 58
Section 12.10 Third Parties; Joint Ventures 59
Section 12.11 Construction 59
Section 12.12 Arbitration 59
Section 12.13 Further Acts 60
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Schedules
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Schedule 2.1(a) Tangible Personal Property
Schedule 2.1(b) (I) Owned Real Property
Schedule 2.1(b) (II) Leased Real Property
Schedule 2.1(c) Franchises
Schedule 2.1(d) Licenses
Schedule 2.1(e) Contracts
Schedule 2.2 Other Excluded Assets
Schedule 2.4(d) Allocation
Schedule 4.3 No Conflict; Required Consents (Buyer)
Schedule 5.3 No Conflict; Required Consents (Seller)
Schedule 5.4 Additional Permitted Liens
Schedule 5.5 Franchises, Licenses and Contracts
Schedule 5.7 Employees
Schedule 5.8 Litigation
Schedule 5.9 Taxes
Schedule 5.10 Exceptions to System Compliance Warranties
Schedule 5.11 System Information
Schedule 5.12 Environmental
Schedule 5.16 Intangibles
Schedule 5.18 Bonds
Schedule 5.19 Exceptions to Exclusive Operations
Schedule 5.20 Third Party Rights in Assets
Schedule 5.21 Transactions with Affiliates and Employees
Schedule 5.24 Exceptions to Equipment
Schedule 5.25 Consents
Schedule 5.26 Undisclosed Liabilities
Schedule 5.29 Certain Programming Arrangements and Relationship
Schedule 6.9 Title Commitments
Exhibits
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Exhibit 2.5 Escrow Agreement
Exhibit 3.2 Noncompetition Agreement
Exhibit 7.1(e) Opinion of Seller's Counsel
Exhibit 7.1(f) Opinion of Seller's FCC Counsel
Exhibit 7.2(e) Opinion of Buyer's Counsel
Exhibit 8.2(a) Xxxx of Sale
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8/29/96
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August __, 1996, between Mediacom LLC, a New York limited liability
company whose Taxpayer Identification Number is 00-0000000 ("Buyer"), and
Saguaro Cable TV Investors, L.P., a Colorado limited partnership whose U.S.
Taxpayer Identification Number is 00-0000000 ("Seller").
RECITALS
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A. Seller owns and operates cable television Systems (as hereinafter
defined) franchised or holding other operating authority to serve areas in and
around the communities of Nogales, Rio Xxxx, Xxxxx and Ajo, Arizona, and located
in the Counties of Pima and Santa Xxxx, Arizona.
B. Seller is willing to convey to Buyer, and Buyer is willing to Purchase
from Seller, substantially all of the assets comprising the Systems and the
Business (as hereinafter defined), other than the Excluded Assets (as
hereinafter defined), upon the terms and conditions set forth in this Agreement.
AGREEMENTS
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In consideration of the mutual covenants and promises set forth herein,
Buyer and Seller agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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As used in this Agreement, the following terms, whether in singular or
plural forms, shall have the following meanings:
"Accounts Receivable" shall mean, as of the Closing Date, all subscriber,
paging, trade or other accounts receivable of Seller, determined in accordance
with GAAP, representing amounts owed to Seller in connection with its operation
of the Business in the ordinary course of business.
"Affiliate" shall mean, with respect to any Person, 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
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xxxxxxxxx of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
"Agreement" means this Asset Purchase Agreement including all schedules and
exhibits attached hereto, as may be amended from time to time.
"Allocation" has the meaning given in Section 2.4(d).
"Assets" has the meaning given in Section 2.1.
"Assumed Obligations and Liabilities" has the meaning given in Section
2.3(a).
"Basic Cable" means the cable television services described as Basic on
Schedule 5.11.
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"Xxxx of Sale" has the meaning given in Section 8.2(a).
"Business" shall mean the paging business and cable television business
conducted by Seller through the Systems.
"Business Day" shall mean 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.
"Business's Financial Statements" has the meaning given in Section 5.13(a).
"Cable Act" means Title VI of the Communications Act of 1934, as amended,
47 U.S.C. (S)(S) 151 et. seq., and all provisions of the Cable Communications
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Policy Act of 1984, Pub. L. No. 98-549, and the Cable Television Consumer
Protection and Competition Act of 1992, Pub. L. No. 102-385, as such statutes
may be amended from time to time, and the rules and regulations promulgated
thereunder.
"CATV" means Community Antenna Television.
"Closing" has the meaning given in Section 8.1.
"Closing Date" has the meaning given in Section 8.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"Commercially Reasonable Best Efforts" shall mean such best efforts as do
not require the party to (i) undertake extraordinary or unreasonable measures,
including, without limitation, the initiation or prosecution of legal
proceedings or the payment of fees in excess of normal and usual filing and
processing fees or
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(ii) assume any additional liability or make any additional commitment.
"Communications Act" means the Communications Act of 1934, as amended.
"Contracts" has the meaning given in Section 2.1(e).
"Copyright Act" means the Copyright Act of 1976, as amended.
"Current Items Amount" has the meaning given in Section 2.6.
"Xxxxxxx Money Payment" has the meaning given in Section 2.4(b).
"EBU's" shall mean (i) the number of residential households that subscribe
to Basic Cable (exclusive of secondary outlets and courtesy accounts) which pay
the standard rate for Basic Cable in each System without discount, each of which
has paid in full without discount at least one monthly xxxx generated in the
ordinary course of business, none of which is pending disconnection for any
reason, none of which is, as of the Closing Date, delinquent in payment for
services for more than sixty days, and none of which has been obtained as a
subscriber within the twelve month period preceding the Closing Date by offers
made, promotions conducted and discounts given outside the ordinary course of
business, plus (ii) the number of equivalent bulk subscribers (determined by
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dividing the aggregate dollar monthly amount collected from bulk/commercial
accounts for Basic Cable by the monthly rates for Basic Cable in each System),
each of which has paid in full without discount at least one monthly xxxx
generated in the ordinary course of business, none of which is pending
disconnection for any reason, none of which is, as of the Closing Date,
delinquent in payment for services for more than sixty days none of which is, as
of the Closing Date, delinquent in payment for services for more than sixty
days, and none of which has been obtained as a subscriber within the twelve
month period preceding the Closing Date by offers made, promotions conducted and
discounts given outside the ordinary course of business, provided, there shall
be excluded from the definition of EBU any subscriber or equivalent bulk
subscriber who comes within the definition of "EBU's" because its account has
been compromised or written off within the twelve month period preceding the
Closing Date, other than in the ordinary course of business consistent with past
practices for reasons such as service interrupted or waiver of late charges but
not for the purpose of making it qualify as an EBU.
"Eligible Accounts Receivable" has the meaning given in Section 2.6(a).
"Employee Benefit Plan" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus,
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incentive, medical, vision, dental, disability, life insurance or any other
employee benefit plan as defined in Section 3(3) of ERISA to which Seller
contributes or which Seller sponsors or maintains, or by which Seller is
otherwise bound.
"Equipment" has the meaning given in Section 2.1(a).
"ERISA" has the meaning given in Section 5.6.
"Escrow Agent" shall be Bankers Trust, N.A., or such other party as Buyer
and Seller shall agree.
"Escrow Agreement" shall mean the Escrow Agreement among Buyer, Seller and
Escrow Agent, substantially in the form annexed hereto as Exhibit 2.5.
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"Escrow Amount" has the meaning given in Section 2.5.
"Excluded Assets" has the meaning given in Section 2.2.
"Expenses" has the meaning given in Section 2.6(c).
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Final Adjustment Certificate" has the meaning given in Section 2.7(c).
"Franchises" has the meaning given in Section 2.1(c).
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States of America.
"Governmental Authority" means the United States of America, any state,
commonwealth, territory, or possession thereof, and any political subdivision or
quasi-governmental authority of any of the same, including any court, tribunal,
department, bureau, commission or board.
"Hazardous Substances" has the meaning given in
Section 5.12(d).
"Indemnitee" has the meaning given in Section 11.3(a).
"Indemnitor" has the meaning given in Section 11.3 (a).
"Initial Adjustment Certificate" has the meaning given in Section 2.7(a).
"Intangibles" has the meaning given in Section 5.16.
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"Judgment" means any judgment, writ, order, injunction, award, or decree of
any court, judge, justice, magistrate, Governmental Authority or arbitrators.
"Leased Real Property" has the meaning given in Section 2.1(b).
"Legal Requirements" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, or order enacted, adopted or
promulgated by any Governmental Authority, including, without limitation,
Judgments and the Franchises.
"Licenses" has the meaning given in Section 2.1(d).
"Lien" means any security agreement, financing statement filed with any
Governmental Authority, conditional sale or other title retention agreement, any
lease, consignment or bailment given for purposes of security, any lien,
mortgage, indenture, pledge, caption, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, but not limited to, reservations,
rights of entry, possibilities of reverter, encroachments, easement, rights-
of-way, rights of first refusal, restrictive covenants, leases, and licenses) of
any kind that otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Legal Requirement, under any Contract or
otherwise.
"Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing, or other similar activity or procedure that could result
in a Judgment.
"Losses" means any claims, losses, liabilities, damages, penalties, costs,
and expenses, including, without limitation, reasonable counsel fees and costs
and expenses incurred in the investigation, defense or settlement of any claims
covered by the indemnification provided for in Article 11 hereof, but shall in
no event include incidental or consequential damages.
"Noncompetition Agreement" has the meaning given in Section 3.2.
"Owned Real Property" has the meaning given in Section 2.1(b).
"Partner" means the general partner or any limited partner of Seller, and
"Partners" means the general partner and the limited partners of Seller,
collectively.
"Pay TV" means premium programming services selected by and sold to
subscribers on a per-channel or per-program basis.
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"Permitted Lien" means (i) Liens for Taxes that are not yet due and payable
or that are being contested in good faith by appropriate proceedings and for
which adequate reserves has been established by Seller, (ii) rights reserved to
any Governmental Authority to regulate the affected property, (iii) as to leased
Assets, interests of the lessors thereof and Liens affecting the interests of
the lessors thereof, (iv) inchoate materialmen's, mechanics', workmen's,
repairmen's or other like Liens arising in the ordinary course of business, (v)
as to any parcel of Owned Real Property or Leased Real Property, Liens that do
not in any material respect, individually or in the aggregate, affect or impair
the value or use thereof as it is currently being used by Seller in the ordinary
course of the business or render title thereto unmerchantable or uninsurable,
and (vi) the Liens described on Schedule 5.4.
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"Person" means any natural person, Governmental Authority, corporation,
general or limited partnership, joint venture, trust, association, limited
liability company, or unincorporated entity of any kind.
"Pole Attachment Agreements" means pole attachment authorizations and
agreements held by Seller that relate to a System and were granted by a public
utility or other Person providing utility services, municipality or other
Governmental Authority.
"Purchase Price" has the meaning given in Section 2.4(a).
"Required Consents" shall mean any registration or filing with, consent or
approval of, notice to, or action by any Person or Governmental Authority
required to permit the transfer of the Assets to Buyer or to permit Seller to
perform any of its other obligations under this Agreement, as set forth in
Schedule 5.3.
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"Rate Regulation Rules" shall mean the FCC rules currently in effect
implementing the cable television rate regulations provisions of the Cable Act.
"Required EBU's" shall mean (i) 8,000 EBU's if the Closing Date is on or
prior to September 30, 1996 and (ii) 8,100 EBU's if the Closing Date is on or
after October 1, 1996.
"Study" shall mean a Phase I environmental study of all Leased Real
Property and Owned Real Property which shall be transferred to Buyer pursuant to
this Agreement.
"Subscriber Adjustment" has the meaning given in Section 2.7(b).
"Systems" shall mean the cable television reception and distribution
systems consisting of one or more headends, subscriber
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drops and associated electronic and other equipment which are, or are capable of
being, operated as an independent system without interconnection with other
systems, and which provide cable television service pursuant to the respective
Franchises.
"Taxes" shall mean all levies and assessments imposed by any Governmental
Authority, including but not limited to income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes, and interest, penalties and other
government charges with respect thereto.
"Taxing Authority" shall mean any federal, state, local or foreign
governmental body or political subdivision with the power to impose Taxes.
"Tax Returns" shall mean any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any Taxing Authority in connection with the determination,
assessment, collection, administration or reposition of any Taxes.
"Transaction Documents" shall mean this Agreement, the Escrow Agreement,
the Noncompetition Agreement and each other instrument, document, certificate
and agreement required or contemplated to be executed and delivered hereunder
and thereunder.
"To Seller's knowledge" or the equivalent means to the actual knowledge,
after due inquiry, of the general manager of any System or any officer or
director of Seller's general partner.
ARTICLE II
PURCHASE AND SALE
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Section 2.1 Covenant of Purchase and Sale; Assets. Subject to the terms and
conditions set forth in this Agreement, at Closing Seller shall sell, convey,
assign, and transfer to Buyer, and Buyer shall acquire from Seller in
consideration for the Purchase Price, free and clear of all Liens (except for
Permitted Liens, other than those Permitted Liens identified on Schedule 5.4 as
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Liens to be terminated, released, removed or satisfied as of the Closing Date) ,
all right, title and interest of Seller or any Affiliate of Seller in all of the
assets and properties, real and personal, tangible and intangible, used or held
for use by Seller in its operation of the Business (the "Assets"), including,
without limitation, the following:
(a) Equipment. All tangible personal property, including, without
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limitation, towers, tower equipment, antennae, aboveground and underground
cable, distribution systems, headend and line amplifiers, feeder line
cable,
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distribution plant, programming signal decoders for each satellite service which
scrambles its signal, housedrops, including disconnected housedrops,
subscribers' devices (including converters, encoders, transformers behind
television sets and fittings), utility poles (if owned by Seller), local
origination equipment, vehicles and trailers, microwave equipment, testing
equipment, electronic devices, trunk and distribution coaxial and optical fiber
cable, power supplies, conduit, vaults and pedestals, grounding and pole
hardware, headend hardware (including origination, earth stations, transmission
and distribution systems), test equipment, power supplies, pagers and paging
units, office and billing computers and other equipment, furniture, fixtures,
supplies, inventory, and other physical assets owned, used or held for use by
Seller in connection with the Business, including but not limited to the items
described on Schedule 2.1 (a) (collectively, the "Equipment").
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(b) Real Property. All interests in real property used by Seller in
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connection with the operation of the Business, including all improvements,
fixtures and appurtenances thereon, owned by Seller, described on Schedule
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2.1(b) (I), ("Owned Real Property"), or leased by Seller, described on Schedule
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2.1(b) (II) ("Leased Real Property"; and together with the Owned Real Property,
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the "Real Property").
(c) Franchises. All of the existing governmental authorizations for
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construction, maintenance and operation of the Business (individually, a
"Franchise" and collectively, the "Franchises") presently held by Seller as
listed on Schedule 2.1(c).
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(d) Licenses. The intangible CATV channel distribution rights, cable
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television relay service (CARS), business radio and other licenses,
authorizations, or permits issued by the FCC or any other Governmental Authority
(excluding those listed on Schedule 2.1(c)) used in the operations of the
Business that are in effect as of the date hereof or entered or obtained in the
ordinary course of business between the date hereof and the Closing Date (the
"Licenses"), including, without limitation, the Licenses described on Schedule
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2.1(d).
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(e) Contracts. The leases, private easements or rights of access,
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contractual rights to easements, Pole Attachment Agreements or joint line
agreements, underground conduit agreements, crossing agreements, bulk and
commercial service agreements, retransmission consent agreements and must-carry
requests, agreements for paging services and other contracts, leases, agreements
or understandings relating to the Business in effect as of the date hereof or
entered or obtained in the ordinary course of business between the date hereof
and the Closing Date as permitted by this Agreement (other than
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Excluded Assets) (the "Contracts"), as described on Schedule 2.1(e).
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(f) Accounts Receivable. All Accounts Receivable.
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(g) Goodwill. The goodwill associated with the Business.
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(h) Intangibles. The Intangibles, if any, associated with the Business.
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(i) Books and Records. All engineering records, files, data, drawings,
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blueprints, schematics, reports, lists, plans and processes, maps of the
Systems, billing manuals and other data owned by the Seller relating to the
billing practices and procedures of the Business, and all files of
correspondence, lists, records, and reports concerning customers and
subscribers and prospective customers and subscribers of the Systems and the
Business, personnel records relating to employees of the Business who are to
be hired by Buyer, signal and program carriage, and dealings with
Governmental Authorities, including, but not limited to, all reports filed by
or on behalf of Seller with the FCC with respect to the Systems and
statements of account filed by or on behalf of Seller with the U.S. Copyright
Office with respect to the Business.
Section 2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1,
the Assets shall not include the following, which shall be retained by Seller
(the "Excluded Assets"):
(a) programming and agreements other than those listed on Schedule
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2.1(e) (which are to be assigned);
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(b) insurance policies and rights and claims thereunder;
(c) bonds, letters of credit, surety instruments, and other similar
items;
(d) cash and cash equivalents;
(e) equipment owned by customers of the Business, such as converters
purchased by customers, pagers and house wiring;
(f) any agreement, right, asset or property owned or leased by Seller
that is not used or held for use in connection with its operation of the
Systems;
(g) all claims, rights, and interest in and to refunds of Taxes or fees
of any nature, or other claims against third parties, relating to the
operation of the Systems prior to the Closing Date;
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(h) the account books of original entry, general ledgers and financial
records used in connection with the Systems, provided, however, that Seller
shall (i) from time to time upon reasonable notice from Buyer, provide to Buyer
access to any of such books and records as then may be in Seller's possession,
(ii) retain possession of such books and records for a reasonable period, not to
exceed three (3) years from the Closing Date (except for Tax-related books and
records which shall be retained by Seller for at least seven (7) years from the
Closing Date), and (iii) notify Buyer in writing at least thirty (30) days
prior to disposing of or destroying any of such books and records and permit
Buyer to arrange, at Buyer's cost, for the delivery to Buyer of the books and
records proposed to be disposed or destroyed;
(i) subject to the provisions of Section 3.4, Seller's trademarks, trade
names, service marks, service names, logos, and similar proprietary rights; and
(j) any other items described on Schedule 2.2.
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Section 2.3 Assumed and Retained Obligations and Liabilities.
(a) Assumed Obligations and Liabilities. Subject to the terms and
-----------------------------------
conditions of this Agreement, from and after the Closing Date, Buyer shall
assume, pay, discharge, and perform the following (the "Assumed Obligations and
Liabilities"):
(i) those obligations and liabilities attributable to periods after
the Closing Date under or with respect to any of the Franchises, Licenses or
Contracts assumed by Buyer;
(ii) other obligations and liabilities of Seller (including those
comprising the Current Liabilities Amount) to the extent that there shall be a
reduction in the Purchase Price with respect thereto pursuant to Section 2.6;
and
(iii) all obligations and liabilities arising out of Buyer's ownership
of the Assets or operation of the Systems and the Business after the Closing
Date (including without limitation all obligations and liabilities for
adjustments of revenues from the Business and for any rate refunds, rollback,
credit, penalty and/or interest payment required by the FCC or local franchising
authority relating to the rates charged to customers of the Systems and the
Business during any period after the Closing Date for which Buyer received
subscriber payments).
(b) Retained Obligations and Liabilities. All obligations and liabilities
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arising out of or relating to the Assets, the Systems or the Business and all
other liabilities and obligations of Seller and each Partner, other than the
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Assumed Obligations and Liabilities, shall remain and be the obligations and
liabilities solely of Seller or the appropriate Partner (collectively, the
"Retained Obligations and Liabilities"). Without limiting the generality of the
foregoing, Retained Obligations and Liabilities shall include the following:
(i) all obligations and liabilities arising out of or relating to
the Litigation and Judgments relating to periods prior to the Closing Date,
including as disclosed on Schedule 5.8;
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(ii) unless specifically assumed by Buyer, all obligations and
liabilities arising before the Closing Date with respect to the Franchises,
Contracts, Owned Real Property and Leased Real Property;
(iii) all obligations and liabilities for adjustment of revenues from
the Business and for any rate refunds, rollback, credit, penalty and/or interest
payment required by the FCC or local franchising authority relating to the rates
charged to customers of the Systems and the Business during any period prior to
the Closing Date;
(iv) any liability under any claim relating to the period ending as
of the Closing Date that is or, but for the consummation of the transactions
contemplated hereby, would have been covered under any insurance policy of
Seller, and all liability associated with workmen's compensation claims that
relate to the period prior to the Closing Date, whether or not reported or due
or payable as of the Closing Date; and
(v) all obligations and liabilities with respect to the Excluded
Assets.
Section 2.4 Purchase Price.
(a) Calculation of Purchase Price. As consideration for its purchase of
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the Assets, Buyer shall pay to Seller a total price of $11,535,000, which amount
shall be subject to adjustment under certain circumstances as set forth herein
(the "Purchase Price").
(b) Xxxxxxx Money Payment. Upon execution of this Agreement, Buyer shall
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pay to Seller the sum of $50,000 ("Xxxxxxx Money Payment") which shall under no
circumstances be refundable to Buyer and shall unconditionally become the
property of Seller, but shall nonetheless be credited against the amount of the
Purchase Price due from Buyer at Closing.
(c) Payment of Purchase Price. At Closing, Buyer shall pay to Seller the
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balance of the Purchase Price plus or minus
11
the Current Items Amount (as appropriate) as calculated and estimated in
the Initial Adjustment Certificate, less any Subscriber Adjustment in
accordance with the provisions of Section 2.7(b) and less the Escrow Amount
that shall have been deposited by Buyer into the escrow account established
pursuant to Section 2.5 below.
(d) Purchase Price Allocation. Attached hereto as Schedule 2.4(d) is
------------------------- ---------------
the allocation (the "Allocation") of the Purchase Price and the Assumed
Obligations and Liabilities to the individual assets or classes of asset
(within the meaning of Section 1060 of the Code). Buyer, Seller, each
Partner, and their respective affiliates, shall file all Tax returns and
schedules thereto (including, without limitation, those returns and forms
required by Section 1060 of the Code) consistent with the Allocation unless
otherwise required by the applicable Legal Requirements.
Section 2.5 Escrow Amount. On the later of 45 Business Days from the date
hereof and September 15, 1996 (unless this Agreement is terminated prior to such
date pursuant to Section 9.3), $550,000 of the Purchase Price ("Escrow Amount")
shall be deposited by Buyer into an interest bearing escrow account set up and
maintained by the Escrow Agent pursuant to the Escrow Agreement. All fees, costs
and expenses of the Escrow Agent to be paid pursuant to the Escrow Agreement
shall be payable one-half by Buyer and one-half by Seller.
Section 2.6 Current Items Amount. In addition to the payment by Buyer of
the Purchase Price, Buyer or Seller, as appropriate, shall pay to the other the
net amount of the adjustments and prorations effected pursuant to Sections
2.6(a), (b), and (c) (collectively, the "Current Items Amount").
(a) Eligible Accounts Receivable. Seller shall be entitled to a credit
----------------------------
in an amount equal to (i) ninety percent (90%) of the face amount of all
Eligible Accounts Receivable that are thirty (30) or fewer days past due as
of the Closing Date, (ii) sixty percent (60%) of the face amount of all
Eligible Accounts Receivable that are more than thirty (30) but fewer than
sixty (60) days past due as of the Closing Date, and (iii) zero percent
(0%) of the full amount of Eligible Accounts Receivable that are sixty (60)
or more days past due as of the Closing Date, it being understood and
agreed that all amounts owed by customers shall be discounted by the
percentage discount applicable to the most aged Eligible Account Receivable
attributable to such customer. "Eligible Accounts Receivable" shall mean
accounts receivable resulting from Seller's provision of cable television
service prior to the Closing Date to the Systems' subscribers. For purposes
of making "past due" calculations under this paragraph, the monthly billing
statements of Seller shall be
12
deemed to be due and payable on the first day of the period during which
the service for which such billing statements relate is provided.
(b) Advance Payments and Deposits. Buyer shall be entitled to a
-----------------------------
credit in an amount equal to the aggregate of (i) all deposits of
customers and subscribers of the Systems and the Business, and all
interest, if any, required to be paid thereon as of the Closing Date, for
converters, decoders, and similar items, and (ii) the appropriate portion
of all payments received by Seller for services to be rendered by Buyer
including services to subscribers of the Systems, after the Closing Date,
or for other services to be rendered by Buyer to other third parties after
the Closing Date for cable television commercials, channel leasing, or
other services or rentals, or paging, to the extent the obligations of
Seller relating thereto are assumed by Buyer at Closing.
(c) Expenses. As of the Closing Date, expenses of a recurring nature
--------
that are incurred to benefit the Business and are incurred in the ordinary
course of business (the "Expenses"), including those set forth below, shall
be prorated, in accordance with GAAP, so that all such Expenses for periods
prior to the Closing Date shall be for the account of Seller, and all such
expenses for periods after the Closing Date shall be for the account of
Buyer:
(i) all Expenses under any of the Franchises, the Licenses, or
the Contracts;
(ii) Taxes levied or assessed against any of the Assets or
payable with respect to cable television service and related sales to the
Systems subscribers or otherwise in connection with the Business;
(iii) Expenses for utilities, municipal assessments, rents and
service charges, and other goods or services furnished to the Business; and
(iv) copyright fees based on signal carriage by the Systems.
Provided, however, that Seller and Buyer shall not prorate any Expense payable
under or with respect to any Excluded Asset, or any expense for capital
expenditures actually incurred or contracted for prior to the Closing Date, all
of which shall remain and be solely for the account of Seller.
SECTION 2.7 PURCHASE PRICE AND CLOSING ADJUSTMENTS.
(a) The Initial Adjustment Certificate. No later than fifteen (15)
----------------------------------
Business Days prior to the Closing Date, Seller
13
shall deliver to Buyer Seller's certificate estimated as of the Closing Date
("Initial Adjustment Certificate") setting forth the number and calculation of
EBU's and all adjustments including the Current Items Amount and Subscriber
Adjustments, if any, proposed to be made at the Closing as of the Closing Date.
Prior to Closing, Seller shall provide Buyer or Buyer's representative with
copies of all books and records as Buyer may reasonably request for purposes of
verifying the Initial Adjustment Certificate and shall meet with Buyer's
accountants and other representatives, but without limiting Seller's obligations
hereunder to certify the Initial Adjustment Certificate.
At the Closing, all adjustments will be made on the basis of the Initial
Adjustment Certificate, provided Buyer has not given notice to Seller that, in
Buyer's opinion, the proposed adjustments are materially incorrect. If Buyer
gives notice that in its opinion, the proposed adjustments are materially
incorrect, and if the parties have not been able to resolve the matter prior to
the Closing Date, any disputed amounts shall be paid by the party to be charged
with a disputed adjustment, into escrow, and shall be held by the Escrow Agent
in accordance with the Escrow Agreement until the Closing Adjustments are
finally determined pursuant to Section 2.7(c), at which xxxx Xxxxxx and Buyer
shall deliver a joint written notice to the Escrow Agent setting forth
appropriate instructions as to the disposition from escrow of such disputed
amounts deposited thereunder, in accordance with the Escrow Agreement.
(b) Subscriber Adjustment. The Purchase Price shall be reduced by an
---------------------
amount equal to $1,424 times the difference between the number of Required EBU's
and the number of EBU's actually delivered on the Closing Date (the "Subscriber
Adjustment").
(c) Trueup of Current Items Amount. As soon as practicable after the
------------------------------
Closing Date, and in any event within one hundred twenty (120) days after the
Closing Date, Buyer shall deliver to Seller a final calculation calculated as of
the Closing Date, of the Current Items Amount, the Subscriber Adjustment, if
any, and the number of EBU's, together with such supporting documentation as
Seller may reasonably request, in a certificate (the "Final Adjustment
Certificate"), which shall evidence in reasonable detail the nature and extent
of each calculation. The Final Adjustment Certificate shall be final and
conclusive unless objected to by Seller in writing within thirty (30) days after
delivery. Seller and Buyer shall attempt jointly to reach agreement as to the
amount of the Current Items Amount and Subscriber Adjustment within forty-five
(45) days after receipt by Buyer
14
of such written objection by Seller, which agreement, if achieved, shall be
binding upon both parties to this Agreement and not subject to dispute or
review. If Seller and Buyer cannot reach agreement as to the amount of the
closing adjustments within such forty-five (45) day period, Seller and
Buyer agree to submit promptly any disputed adjustment to arbitration in
accordance with Section 12.12 hereof. Any amounts due Buyer or Seller for
closing adjustments shall be paid by the party owing such amount (or, to
the extent disputed amounts are held by the Escrow Agent, shall be paid by
the Escrow Agent pursuant to joint written instructions of Buyer and Seller
in accordance with such final resolution) not later than five (5) Business
Days after such amounts shall have become final and conclusive.
ARTICLE III
RELATED MATTERS
---------------
SECTION 3.1 HSR ACT COMPLIANCE. Buyer and Seller each agrees that the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, does not require
either party to make any filings or take any other action thereunder in
connection with the transactions contemplated hereby insofar as the aggregate
consideration payable hereunder by Buyer to Seller shall in no event equal or
exceed $15,000,000.
SECTION 3.2 NONCOMPETITION AGREEMENT. Seller and R. Xxxxxxx Xxxxxx each
agrees to execute and deliver to Buyer at Closing a five-year noncompetition and
confidentiality agreement in the form of Exhibit 3.2 (the "Noncompetition
-----------
Agreement"). A portion of the Purchase Price, not to exceed $350,000, shall be
allocated as compensation for the Noncompetition Agreement.
SECTION 3.3 BULK SALES. Buyer and Seller each waives compliance by the
other with all bulk sales Legal Requirements applicable to the transactions
contemplated hereby.
SECTION 3.4 USE OF NAMES AND LOGOS. For a period of one-hundred twenty
(120) days after Closing, Buyer shall be entitled to use the trademarks, trade
names, service marks, service names, logos, and similar proprietary rights of
Seller to the extent incorporated in or on the Assets.
SECTION 3.5 TRANSFER TAXES. Seller and Buyer each shall be liable for one-
half of all sales, use, transfer, and similar Taxes (other than income taxes)
arising from or payable by reason of the transactions contemplated by this
Agreement, and each party shall indemnify and hold the other party harmless from
and against all Losses arising from Taxes for which it is liable hereunder.
15
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------
Buyer represents and warrants to Seller, as of the date of this Agreement
and as of Closing; as follows:
SECTION 4.1. ORGANIZATION OF BUYER. Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of New York, and has all requisite power and authority to own and lease
the properties and assets it currently owns and leases and to conduct its
activities as such activities are currently conducted. On or prior to Closing,
Buyer (or its assignee which shall assume the obligations of Buyer under this
Agreement) shall be qualified to do business and will be in good standing in
Arizona and will be qualified to do business and will be in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary.
SECTION 4.2 AUTHORITY. Buyer has all requisite limited liability company
power and authority to execute, deliver, and perform this Agreement and the
other Transaction Documents to which it is a party and consummate the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party. The execution, delivery, and performance of this
Agreement and each other Transaction Documents to which it is a party and the
consummation of the transactions contemplated by this Agreement and each
transaction Documents to which Buyer is a party have been duly and validly
authorized by all necessary limited liability company action on the part of
Buyer. This Agreement has been, and the other Transaction Documents to which
Buyer is a party will be on or prior to the Closing, duly and validly executed
and delivered by Buyer, and this Agreement and each of the other Transaction
Documents to which Buyer is a party constitutes and will constitute on or prior
to Closing the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
SECTION 4.3 NO CONFLICT; REQUIRED CONSENTS. Except as set forth in Schedule
--------
4.3 or except as will not have a material adverse effect on the ability of Buyer
---
to perform its obligations hereunder, the execution, delivery, and performance
by Buyer of this Agreement and the other Transaction Documents to which it is a
party do not and will not (a) conflict with or violate any provision of the
articles of organization or operating agreement of Buyer, (b) violate any
provision of any Legal Requirement, (c) conflict with, violate, result in a
breach of, or constitute a default under any agreement to which Buyer is a party
or by which Buyer or the assets or properties owned or leased by it are bound or
affected, or (d) require any consent, approval, or authorization
16
of, or filing of any certificate, notice, application, report, other document
with, any Governmental Authority or other Person.
SECTION 4.4 LITIGATION. Except for any Litigation as may affect the cable
television industry (national or regional) generally, there is no Litigation
pending or, to Buyer's knowledge, threatened by, against, affecting, or relating
to Buyer or any of its Affiliates in any court or before any Governmental
Authority or any arbitrator that, if adversely determined, would restrain or
materially hinder or delay the consummation of the transactions contemplated by
this Agreement or cause any of such transactions to be rescinded.
SECTION 4.5 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, for which Seller
will in any way have any liability in connection with the transactions
contemplated by this Agreement.
SECTION 4.6 FULL ACCESS. Buyer's representatives have received access to
Seller's books and records and to the facilities and the Assets of the Systems
to the extent requested by Buyer, and Seller has cooperated with Buyer to the
end that Buyer has been able to conduct its own inspection and investigation of
the Systems and the Assets to Buyer's satisfaction and has independently
investigated, analyzed and appraised the condition, value, prospects and
profitability thereof and performed such other presigning due diligence in
connection with the transactions contemplated by this Agreement in accordance
with the normal practice of Buyer. Notwithstanding the foregoing, Buyer's
investigation shall not limit or effect any of the representations or warranties
of the Seller contained in this Agreement.
SECTION 4.7 TAXPAYER IDENTIFICATION NUMBER. Buyer's U.S. Taxpayer
Identification Number is as set forth in the introductory paragraph of this
Agreement.
ARTICLE V
SELLER'S REPRESENTATIONS AND WARRANTIES
---------------------------------------
Seller represents and warrants to Buyer, as of the date of this Agreement
and as of Closing, as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION OF SELLER. Seller is a limited
partnership duly organized and validly existing under the laws of the State of
Colorado, and has all requisite partnership power and authority to own, lease
and use the properties and assets it currently owns, leases and uses and to
conduct its activities as such activities are currently conducted. Seller is
duly qualified to do business as a foreign limited partnership in Arizona and is
not required to be qualified or
17
licensed in any other jurisdiction. Seller's general partner is Arizona and
Southwest Cable, Inc., which is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arizona, and which has all
requisite corporate power and authority to own all its assets and to carry on
its business as now conducted. Seller has delivered to Buyer a true and complete
copy of the limited partnership agreement of Seller together with all amendments
and modifications thereto. Other than the management of the Business by Western
Cablesystems, Inc., an Affiliate of Seller, Seller has not conducted the
Business through, and none of the Assets are held or owned by, any subsidiary,
Affiliate or other entities.
SECTION 5.2 AUTHORITY. Seller has all requisite partnership power and
authority to execute, deliver, and perform this Agreement and each other
Transaction Document to which it is a party and consummate the transactions
contemplated hereby and thereby. The execution, delivery, and performance of
this Agreement and each other Transaction Document to which it is a party and
the consummation of the transactions contemplated by this Agreement and each
other Transaction Document to which Seller is a party have been duly and validly
authorized by all necessary partnership action on the part of Seller. This
Agreement and each other Transaction Document to which it is a party has been or
will be on or prior to the Closing, duly and validly executed and delivered by
Seller, and this Agreement and each other Transaction Document to which it is
the party constitute and will constitute on or prior to the Closing, the legal,
valid, and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
SECTION 5.3 NO CONFLICT; REQUIRED CONSENTS.
(a) Except for (i) the Required Consents and (ii) filings, waivers,
approvals, actions, authorization, qualifications and consents which, if
not made or obtained, would not, individually or in the aggregate, have a
material adverse effect on the Assets, the Systems, the Business, Seller's
ability to perform its obligations under this Agreement or the other
Transaction Documents to which it to a party or, to the best of Seller's
knowledge, Buyer's ability to conduct the Business after the Closing in
substantially the same manner in which it is currently conducted by Seller,
no consent, waiver, approval, action or authorization of, or filing,
registration or qualification with, any Governmental Authority is required
to be made or obtained by Seller in connection with the execution, delivery
and performance of this Agreement or the other Transaction Documents to
which it is a party.
18
(b) Except as described on Schedule 5.3, the execution, delivery, and
------------
performance by Seller of this Agreement and each other Transaction Document
to which it is a party do not and will not (a) conflict with or violate any
provision of the limited partnership agreement of Seller; (b) violate any
provision of any Legal Requirement; (c) (i) conflict with, violate, result
in a breach of, or constitute a default under (without regard to
requirements of notice, passage of time or elections of any Persons), (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, any Contract, agreement, or understanding
to which Seller is a party or by which Seller or any of the Assets is bound
or affected or (d) result in the creation or imposition of any Lien or
other encumbrance of any nature whatsoever against or upon any of the
Assets; provided that, with respect to (c) and (d) of this Section 5.3,
such prohibition shall not apply to a conflict, violation, breach, default,
consent or filing that would not impair the ability of Seller to perform
hereunder or that would not have an adverse effect on any of the Assets or
the financial condition or business of any of the Systems or the Business.
Except as described on Schedule 5.3, no approval, application, filing,
------------
registration, contract or other action of any Person is required to enable
Seller to take advantage of the rights and privileges intended to be
conferred by any License or Franchise.
SECTION 5.4 TITLE TO ASSETS; SUFFICIENCY. Except for Permitted Liens,
Seller has good and marketable title to (or, in the case of Assets that are
leased, valid leasehold interests in) and possession of all of the Assets, free
and clear of all Liens. Upon Closing, Buyer will have good and marketable title
to and possession of the Assets, free and clear of all Liens (except for
Permitted Liens other than those designated Permitted Liens described on
Schedule 5.4, which will be terminated, released, removed or satisfied by the
------------
Closing Date). Except for the Excluded Assets and except for the absence of
various easements, apartment access agreements and/or commercial service
agreements permitting Seller to locate cable on real property owned by third
parties which individually or in the aggregate does not and will not have a
material adverse effect on any of the Assets, the operation of any System or the
financial condition or business of any System, the Assets constitute all
property and rights, real and personal, tangible and intangible, necessary or
required to operate the Business as currently operated and conducted and to
prepare and render complete and accurate invoices to the subscribers of the
Systems and customers of the Business as currently prepared and rendered;
provided, however, that support for the billing system currently used by the
--------- -------
Business may not be available after December 31, 1996. Except as set forth on
Schedule 5.4, Seller has not signed any Uniform Commercial Code financing
------------
statement or any
19
security agreement or mortgage or similar agreement authorizing any Person to
file any financing statement or claim any security interest or lien with respect
to any of the Assets. Seller has no properties or assets used or held for use in
the Business that are not included in the Assets, other than the Excluded
Assets; and except for the Excluded Assets, the Assets to be transferred to
Buyer at the Closing include all Equipment, Contracts, Franchises, Licenses and
other property and assets necessary for the conduct of the Business in the
ordinary course of business in substantially the same manner as conducted prior
to the Closing Date.
SECTION 5.5 FRANCHISES, LICENSES AND CONTRACTS. Seller has delivered to
Buyer true and complete copies of each of the Franchises, Licenses, and
Contracts (including without limitation all Contracts with bulk or commercial
service accounts of any System) and all amendments, assignments and consents
thereto. Except for the Contracts that are Excluded Assets, Seller is not bound
or affected by any other material contract, agreement or understanding that
relates to the Business. Except as described on Schedule 5.5, other than the
------------
Franchises and the Licenses, Seller requires no franchise, license or permit
from any Governmental Authority to enable it to operate the Business as
currently operated. To Seller's knowledge, except as described in Schedule 5 5
------------
each of the Franchises, Licenses, and Contracts is in full force and effect, is
valid, binding and enforceable in accordance with its terms and is valid under
and complies in all respects within all applicable Legal Requirements. Except as
described on Schedule 5.5, there has not occurred any default by Seller nor, to
------------
Seller's knowledge, by any other Person under any of the Franchises, Licenses,
or Contracts. Seller has not received from any Governmental Authority a notice
of default under any Franchise or License that would require it (in order to
preserve its right to assert that a Governmental Authority has waived a default)
to provide written notice to a Governmental Authority of its failure or
inability to cure a default under such Franchise or License.
SECTION 5.6 EMPLOYEE BENEFITS. Neither Seller nor any Employee Benefit Plan
(as defined in the Employer Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by Seller or by its general partner is in violation of the
provisions of ERISA; no reportable event, within the meaning of Sections 4043
(c) (1), (2), (3), (5), (6), (7), (10) or (13) of ERISA has occurred and is
continuing with respect to any such Employee Benefit Plan; and no prohibited
transaction within the meaning of Title I of ERISA has occurred with respect to
any such Employee Benefit Plan. Buyer is not required under ERISA, the Code or
any collective bargaining agreement to establish, maintain or continue any
Employee Benefit Plan maintained by Seller or any of Seller's Affiliates or
Partners.
20
SECTION 5.7 EMPLOYEES.
(a) Except as set forth in Schedule 5.7, there are no collective bargaining
------------
agreements applicable to any Person employed by Seller that renders services in
connection with the Systems or the Business, and Seller has no duty to bargain
with any labor organization with respect to any such Person. There are not
pending any unfair labor practice charges against Seller, nor is there any
demand for recognition or any other request or demand from a labor organization
for representative status with respect to any Person employed by Seller that
renders services in connection with the Systems or the Business.
(b) Seller is in substantial compliance with all applicable Legal
Requirements respecting employment conditions and practices, has withheld and
paid all amounts required by any applicable Legal Requirements or Contracts to
be withheld from the wages or salaries of its employees, and is not liable for
any arrears of wages or any Taxes (other than wages and Taxes that have not
become due or payable) or penalties for failure to comply with any of the
foregoing.
(c) Seller has not engaged in any unfair labor practice within the meaning
of the National Labor Relations Act and has not violated any Legal Requirement
prohibiting discrimination on the basis of race, color, national origin, sex,
religion, age, marital status, or handicap in its employment conditions or
practices. There are no pending or, to Seller's knowledge, threatened unfair
labor practice charges or discrimination complaints relating to race, color,
national origin, sex, religion, age, marital status, or handicap against Seller
before any Governmental Authority.
(d) There are no existing or, to Seller's knowledge, threatened labor
strikes, disputes, grievances, or other labor controversies affecting the
Business. There are no pending or, to Seller's knowledge, threatened
representation questions respecting Seller's employees. There are no pending or,
to Seller's knowledge, threatened arbitration proceedings under any Contracts.
(e) Except as set forth on Schedule 5.7, Seller is not a party to any
------------
employment agreement, commitment, arrangement or understating, written or oral,
relating to employees or consultants of the Business.
(f) Schedule 5.7 sets forth a true and complete list of the names, social
------------
security numbers, titles, job descriptions, and rates of compensation of all of
the employees of the Business, including the length of time such employee has
been employed with the Seller, whether such employee is full time
21
or part time, and any bonus or other direct or indirect compensation and
employee benefits.
SECTION 5.8 LITIGATION. Except as set forth on Schedule 5.8 and any
------------
Litigation or Judgment affecting the cable television industry generally, there
is no Litigation or Judgment outstanding or pending or to Seller's knowledge,
threatened, involving or affecting the Systems, the Assets or the Business. To
Seller's knowledge, no facts or circumstances exist that could reasonably be
expected to give rise to any such Litigation or Judgment that will have a
material adverse effect on the financial condition or operation of any of the
Systems, the Assets, the Business or the ability of Seller to perform its
obligations under this Agreement or the other Transaction Documents to which it
is a party, or that seeks or could result in the modification, revocation,
termination, suspension, or other limitation of any of the Franchises, Licenses
or Contracts.
SECTION 5.9 TAX RETURNS; OTHER REPORTS. Seller has as of the date hereof,
and will have as of the Closing Date, timely filed in proper form all Tax
Returns and all other reports that reasonably may affect Buyer's rights to and
ownership of the Assets, the Systems or the Business that are required to be
filed as of the date hereof, or which are required to be filed on or before the
Closing Date, as the case may be, and all such Tax Returns were prepared in good
faith and are accurate and complete in all material respects, and, to the best
of Seller's knowledge, there is no basis for assessment of any addition to any
Taxes shown thereon. Except as set forth on Schedule 5.9, all Taxes due or
------------
payable by Seller and the Partners on or before the date hereof or the Closing
Date, as the case may be, the non-payment of which could result in a lien upon
the Assets, any of the Systems or the Business (including any Taxes, liabilities
or amounts owing resulting from liability of Seller as the transferee of the
assets of, or successor to, any other corporation or entity or resulting by
reason of Seller having been a member of any group of corporations filing a
consolidated, combined or unitary Tax Return) have been or will be timely paid,
except to the extent any such Taxes (as set forth as of the date hereof on
Schedule 5.9) are being contested in good faith by appropriate proceedings by
------------
Seller and for which adequate reserves for any disputed amounts shall have been
established in accordance with GAAP. Except as set forth on Schedule 5.9, as of
------------
the date hereof, there has been no Tax examination, audit, proceeding or
investigation of Seller, or with respect to the Assets, the System or the
Business, by any relevant Taxing Authority, and Seller does not have any
outstanding Tax deficiency or assessment. Except as set forth on Schedule 5.9,
------------
there are no pending or, to the best of Seller's knowledge, threatened actions,
audits, examination, proceedings or investigations, by any relevant Taxing
Authority with respect to Seller, the Assets, the Systems, or the Business.
There is no outstanding request for an extension of time within which to pay
22
any Taxes with respect to Seller, the Assets, the Systems or the Business.
Seller has withheld and paid in a timely manner to all relevant Taxing
Authorities all payments for withholding Taxes, unemployment insurance and other
amounts required to be withheld and paid. All Taxes of or with respect to
Seller, the Assets, the Systems and the Business relating to the period prior to
the Closing shall be the responsibility of Seller.
SECTION 5.10 SYSTEM COMPLIANCE.
(a) Except as otherwise expressly provided herein and in the
Schedules hereto, Seller's operation of each of the Systems and the
Business is in material compliance with all applicable Legal Requirements,
including without limitation, the Communications Act, the Copyright Act,
the Cable Act, the Occupational Safety and Health Act, and the rules and
regulations of the FCC, the United States Copyright Office, and the Equal
Employment Opportunity Commission including, without limitation, rules and
laws governing system registration, use of aeronautical frequencies and
signal carriage, equal employment opportunity, cumulative leakage index
testing and reporting, signal leakage, and subscriber privacy, except to
the extent that the failure to so comply with any of the foregoing could
not (either individually or in the aggregate) reasonably be expected to
have a material adverse effect on the Assets, the Systems or the Business.
Without limiting the generality of the foregoing except to the extent that
the failure to comply with any of the following could not (either
individually or in the aggregate) reasonably be expected to have a material
adverse effect on the Assets, the Systems or the Business and except as set
forth in Schedule 5.10 hereto:
-------------
(i) the Franchises have been registered with the FCC;
(ii) all of the annual performance tests on each of the Systems
required under the rules and regulations of the FCC have been performed to
330 MHZ, except the Ajo System which have been performed to 300 MHZ, and
the results of such tests demonstrate satisfactory compliance with the
applicable requirements being tested in all material respects;
(iii) each of the Systems concurrently meet or exceed the
technical standards set forth in the rules and regulations of the FCC,
including, without limitation, the leakage limits contained in 47 C.F.R.
Section 76.605(a) (11);
(iv) each of the Systems is being operated in compliance with
the provisions of 47 C.F.R. Sections 76.610 through 76.619 (mid-band and
super-band signal carriage),
23
including 47 C.F.R. Section 76.611 (compliance with the cumulative signal
leakage index) to the extent applicable;
(v) each of the Systems is presently being operated in compliance
with such authorizations and all required certificates, permits and clearances
from governmental agencies, including the FAA, with respect to all towers, CARS
station licenses, business radios and frequencies utilized and carried by the
Systems have been obtained; and
(vi) all notices to subscribers of the Systems required by the rules
and regulations of the FCC have been provided.
(b) All notices, statements of account, supplements and other documents
required under Section 111 of the Copyright Act and under the rules of the
Copyright Office with respect to the carriage of off-air signals by the Systems
have been duly filed, and the proper amount of copyright fees have been paid on
a timely basis (except as to potential copyright liability arising from the
performance, exhibition or carriage of any music on the Systems which applies to
or affects the cable television industry generally), and the Systems qualify for
the compulsory license under Section 111 of the Copyright Act, except to the
extent that the failure to so file or pay could not (either individually or in
the aggregate) reasonably be expected to have an adverse effect on the Assets,
the Systems or the Business.
(c) The carriage of all television station signals (other than satellite
super stations) by the Systems is permitted by valid transmission consent
agreements or by must-carry elections by broadcasters.
(d) Seller is in compliance with its obligations with regard to protecting
the privacy rights of any past or present customers of the Systems except to the
extent that failure to so comply could not (either individually or in the
aggregate) reasonably be expected to have an adverse effect on the Assets, the
Business or the Systems.
(e) To the best of Seller's knowledge, the Assets are adequate and
sufficient for all of the current operations of the Systems except as set forth
in this Agreement and as described in the Schedules attached hereto.
(f) To Seller's knowledge, the Systems are not subject to effective
competition (as defined in the Cable Act and any FCC Legal Requirements) as of
the date hereof.
24
(g) No Governmental Authority has notified Seller of its application to be
certified to regulate rates with respect to any of the Systems as provided in 47
C.F.R. Section 76.910.
(h) No Governmental Authority has notified Seller that it has been
certified to regulate basic service rates and has adopted regulations required
to commence such regulation with respect to any of the Systems as provided in 47
C.F.R. Section 76.910 (e) (2).
(i) Except to the extent that a Governmental Authority regulates rates
pursuant to the Rate Regulation Rules, Seller is not aware of any reason that
the Seller cannot continue to charge its current programming rates in connection
with the Seller's operation of the Systems in compliance with the Cable Act and
the Rate Regulation Rules.
(j) To Seller's knowledge, no reduction of rates or refunds to subscribers
is required as of the date hereof.
(k) Seller is in compliance with its obligations under 47 C.F.R. Part 17
concerning the construction, marking and lighting of antenna structures used by
Seller in connection with the operation of each of the Systems.
SECTION 5.11 SYSTEMS INFORMATION.
(a) As of June 1, 1996, the Systems include not less than 10,800 homes
passed by energized cable (i.e., homes (including apartments and commercial
----
units) for which cable service may be provided solely by the installation of a
drop line without addition of trunk or feeder cable), and not more than 200
miles of energized cable plant, of which not more than 70 miles are of
underground construction. There are no pending rate complaints (as defined
pursuant to FCC Legal Requirements) filed by subscribers or other users of the
Systems with any Governmental Authority.
(b) Schedule 5.11 sets forth with reasonable accuracy and completeness the
-------------
following information as of June 30, 1996 with respect to each of the Systems
and the Business:
(i) a description of the Systems' physical plant and bandwith
capacity;
(ii) coordinates of locations, and System central point coordinates
and radius for FCC purposes;
(iii) inventory of plant materials;
(iv) a summary of services, the number of subscribers to each, and the
rate charged currently and for
25
the prior three (3) years, a summary of bulk subscribers and revenues, and a
calculation, without duplication, of EBU's, including, without limitation, the
number of residential and bulk subscribers in each System and revenue thereof in
each System;
(v) a listing of communities served, for FCC purposes, by the
Systems;
(vi) for each headend, a list of video channels and frequencies used,
content, and source
(vii) installation charges;
(viii) a description of Seller's past and current marketing programs
and practices, including those which are expected to be continued or implemented
prior to the Closing Date;
(ix) Seller's 1994 annual statement of Customer Policies and Required
Notices, and Notice of Protection of Subscriber Privacy;
(x) a description of Seller's repair, manufacturing and equipment
enhancement activities;
(xi) a list of free and courtesy connections; and
(xii) a description of the paging business, including services offered,
marketing practices, rates charged, inventory and the customer agreement.
SECTION 5.12 ENVIRONMENTAL.
(a) To Seller's knowledge, none of the Real Property is listed on the
National Priorities Lists or the Comprehensive Environmental Response,
Compensation, Liability Information System ("CERCLIS"), or is the subject of any
"Superfund" evaluation or investigation, or any other investigation or
proceeding of any Governmental Authority evaluating whether any remedial action
is necessary to respond to any release of Hazardous Substances on or in
connection with the Real Property.
(b) To Seller's knowledge, except as described on Schedule 5.12, no
-------------
surface impoundments or underground storage tanks are located in or on the Real
Property. Any such tanks have been duly registered with all appropriate
Governmental Authorities in accordance with all applicable Legal Requirements.
26
(c) To the knowledge of Seller, Seller is in compliance in all
material respects with, and holds all permits, licenses and authorizations
required under, all Legal Requirements with respect to pollution or
protection of the environment, including Legal Requirements relating to
actual or threatened emissions, discharges, or releases of Hazardous
Substances into the ambient air, surface water, ground water, land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Substances. Seller has received no notice of, and currently Seller does not
have knowledge of any past or present condition, circumstance, activity,
practice or incident (including without limitation, the presence, use,
generation, manufacture, disposal, release or threatened release of any
Hazardous Substances from or on the Real Property) that could reasonably be
expected to interfere materially with, prevent continued substantial
compliance with, or result in any Losses pursuant to any Legal Requirement
with respect to pollution or protection of the environment or that is
reasonably likely to give rise to any material liability, based upon or
related to the processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the environment of any Hazardous Substance on, from or
attributable to the Real Property.
(d) For these purposes, the term "Hazardous Substances" includes any
substance heretofore or hereafter designated as "hazardous" or "toxic,"
including, without limitation, petroleum and petroleum related substances,
or having characteristics identified as "hazardous" or "toxic" under any
Legal Requirement including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
-- ---
Section 6901, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
-- ---
Section 1247, et seq., the Clean Air Act, 42 U.S.C. Section 2001, et seq.,
-- --- -- ---
and the Community Right to Know Act, 42 U.S.C. Section 11001, et seq., all
-- ---
as amended.
SECTION 5.13 FINANCIAL AND OPERATIONAL INFORMATION. Seller has delivered to
Buyer correct and complete copies of the Business's audited balance sheet and
related statements of operations, income, changes in financial position and
statements of income and cash flows for the years ended December 31, 1993, 1994
and 1995, and an unaudited balance sheet and statements of profit and loss and
cash flow of the Business for the six months ending June 30, 1996 (the
"Business's Financial Statements"). The Business's Financial Statements have
been prepared in the ordinary course of business, are based on the books and
records of the Seller, were prepared in accordance with GAAP consistently
applied and present fairly the financial condition and results of
27
operations of the Business as of the dates and for the periods indicated, with
no material differences between such financial statements and the financial
records maintained by Seller. Upon the reasonable request of Buyer setting forth
a description of the items requested, Seller will make available to Buyer,
correct and complete copies of all filings made to Governmental Authorities with
respect to the Business.
SECTION 5.14 NO ADVERSE CHANGE; OPERATIONS OF THE BUSINESS. Except for
conditions affecting the cable television industry as a whole, (i) there has
been no material adverse change in, and no event has occurred which, so far as
reasonably can be foreseen, is likely, individually or in the aggregate to
result in any material adverse change in the Assets, the Business, liabilities,
financial condition, operations, earnings or business prospects of the Business;
(ii) the Assets or the operations of the Business have not been materially and
adversely affected as a result of any fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise or any theft, damage, removal of property, destruction or other
casualty loss; (iii) Seller has not made any sale, assignment, lease or other
transfer of any of the properties relating to the Business other than in the
normal and ordinary course of business; (iv) Seller has continued the pricing
policies and has conducted the promotional, advertising and other business and
operational activities with respect to the Business (including, without
limitation, billing, collection, subscriber relations, and construction and
joint trenching activities) substantially and materially in the normal and
ordinary course of business consistent with past practices and cable television
industry practices; (v) there has been no amendment or termination of any
License, Franchise or any Contract; (vi) there has been no waiver or release of
any material right or claim against any third party relating to the Business;
(vi) there has been no material labor dispute or union activity with respect to
or by Seller's employees which affects the operation of the Business; and (vii)
there has been no agreement by Seller to take any of the actions described in
the preceding clauses (i) through (vi), except as contemplated by this
Agreement.
SECTION 5.15 TAXPAYER IDENTIFICATION NUMBER. Seller's U.S. Taxpayer
Identification Number is as set forth in the introductory paragraph of this
Agreement.
SECTION 5.16 INTANGIBLES. Seller neither uses nor holds any copyrights,
trademarks, trade names, service marks, service names, logos, licenses, permits
or other similar intangible property rights and interests ("Intangibles") in the
operations of the Business that does not incorporate the name "Saguaro,"
or variations thereof. In the operation of the Business, Seller is not aware
that it is infringing upon or otherwise acting adversely to the intangible
property rights and interests owned by any other
28
Persons, and there is no claim or action pending or, to Seller's knowledge,
threatened with respect thereto. Schedule 5.16 contains a true, correct and
-------------
complete list of all Intangibles which are material to the operation of the
Business.
SECTION 5.17 ACCOUNTS RECEIVABLE. The Accounts Receivable have not been
assigned to or for the benefit of any Person and are actual and bona fide
receivables representing obligations for the total dollar amount thereof shown
on the books of Seller, resulting from the ordinary course of Seller's business.
The Accounts Receivable are fully collectible in accordance with their terms,
subject to no offset or reduction of any nature except for a reserve for
uncollectible accounts consistent with the reserve established by Seller in its
most recent balance sheet delivered to Buyer in accordance with Section 5.13 and
statutory rights of offset which may be asserted against amounts held as
deposits.
SECTION 5.18 BONDS. Except as set forth on Schedule 5.18, there are no
-------------
franchise, construction, fidelity, performance, or other bonds posted by Seller
in connection with the Business.
SECTION 5.19 EXCLUSIVITY. Except for nationally distributed satellite
services and as set forth on Schedule 5.19, (i) Seller is currently the only
-------------
Person providing wireline or wireless cable television services or similar video
programming or related services within all or part of the geographic areas
served by the Systems; (ii) no Person other than Seller has been granted a
presently valid franchise or has a pending application for a franchise in the
communities or unincorporated areas presently served by the Systems; (iii)
Seller has no knowledge of any Person currently intending to apply for such a
franchise; (iv) no construction programs have been undertaken, or to Seller's
knowledge, are proposed or threatened to be undertaken, by any municipality or
other cable television, multichannel multipoint distribution systems or
multipoint distribution system provider or operator in any area served by the
Systems. Seller is not, nor is an Affiliate of Seller, a party to any agreement
restricting the ability of a third party to operate cable television systems in
the areas of the Systems.
SECTION 5.20 RIGHTS IN ASSETS. Except as set forth in Schedule 5.20, no
-------------
Person (including any Governmental Authority) has any right to acquire an
interest in any of the Systems or any of the Assets or the Business (including
any right of first refusal or similar right), other than rights of condemnation
or eminent domain afforded by law (none of which has been exercised and no
proceedings therefor have been commenced). Each Person that has such a right of
first refusal or similar right arising as a result of the proposed sale of the
Business as contemplated hereby has expressly declined to exercise such right
and has no further legal or contractual ability to hinder or prevent Seller's
performance in accordance with the terms of this Agreement.
29
SECTION 5.21 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in Schedule 5.21, there is no lease, sublease, indebtedness, contract,
-------------
agreement, understanding, or other arrangement of any kind entered into by
Seller with respect to the Business with any employee, Affiliate or Partner of
the Seller which will be an Assumed Obligation and Liability.
SECTION 5.22 DISCLAIMER OF WARRANTY. Seller shall not be liable for or
bound in any manner by, and Buyer has not relied upon, any express or implied,
oral or written information, warranty, guaranty, promise, statement, inducement
or representation pertaining to the Business (including projections as to income
from and expense of any System, or the uses which can be made of, or the value,
prospects or profitability of such System), except as is expressly set forth in
this Agreement, in the Schedules attached to this Agreement or in the Business's
Financial Statements.
SECTION 5.23 REAL PROPERTY. Schedule 2.1(b) sets forth a list and
---------------
description of all Owned Real Property and Leased Real Property, and is true,
complete and accurate in all respects. Seller is holding, or shall hold at
Closing, title in fee simple to the Owned Real Property, and the leasehold
interests to all Leased Real Property, including Real Property hereafter
acquired, in each case free and clear of any Liens, except for Permitted Liens.
At the Closing, Seller shall have and shall transfer to Buyer (i) good and
marketable fee simple title to all its Owned Real Property and (ii) its
leasehold interests in and to all Leased Real Property, free and clear of any
and all Liens (except for Permitted Liens). There are not pending or, to the
best of Seller's knowledge, threatened, any condemnation actions or special
assessments or any pending proceedings for changes in the zoning with respect to
such Real Property or any part thereof and Seller has not received any notice of
the desire of any public authority or other entity to take or use any Real
Property or any part thereof. To Seller's knowledge, there is no material defect
in any of the structures on the Real Property which would interfere with the
current use of such structures or Buyer's ability to utilize such structures in
substantially the same manner in which they are currently used by Seller. Each
parcel of Real Property has access to all public roads, utilities, and other
services necessary for the operation of the relevant System with respect to such
parcel and except for the absence of various easements, apartment access
agreements and/or commercial service agreements permitting Seller to locate
cable on real property owned by third parties which individually or in the
aggregate does not and will not have a material adverse effect on any of the
Assets, the operation of any System or the financial condition or business of
any System, Seller has complied with or otherwise resolved to the satisfaction
of the relevant Government Authority, all notices or orders to correct
violations of Legal Requirements issued by any Governmental Authority having
jurisdiction against or affecting any of the Real Property. All
30
leases and subleases pursuant to which any of the Real Property is occupied or
used are set forth on Schedule 2.1(b) and such leases and subleases are valid,
---------------
subsisting, binding and enforceable in accordance with their respective terms
and there are no existing defaults thereunder or events that with notice or
lapse of time or both would constitute defaults thereunder. Seller has not nor,
to the best of Seller's knowledge, has any other party to any contract, lease or
sublease relating to any Leased Real Property given or received notice of
termination, and, to the best of Seller's knowledge, subject to the receipt of
any Required Consents, the consummation of the transactions contemplated by this
Agreement will not result in any such termination. Subject to the receipt of
Required Consents, Seller is not nor will it be, as a result of the transactions
contemplated by this Agreement, with the giving of notice or the passage of time
or both, in breach of any provision of any contract, lease or sublease relating
to any Real Property. All easements, rights-of-way and other rights which are
necessary for Seller's current use of any Real Property are valid and in full
force and effect, and Seller has not received any notice with respect to the
termination or breach of any of such easements, rights-of-way or other similar
rights.
SECTION 5.24 EQUIPMENT. Schedule 2.1(a) contains a list of all Equipment
---------------
used or held for use by Seller in the operation of the Business. To the best of
Seller's knowledge, except as set forth on Schedule 5.24, all of the tools, test
-------------
equipment, office equipment and office furniture listed on Schedule 2.1(a) are
---------------
and will be at Closing in good operating condition and repair (reasonable wear
and tear excepted) and fit for the purpose they are being used.
SECTION 5.25 NO OTHER CONSENTS. Seller has obtained and is in material
compliance with all consents, approvals, authorizations, waivers, orders,
licenses, certificates, permits and franchises from, and has made all filings
with, any Governmental Authority and other Persons required for the operation of
the Systems and the Business as presently operated, all of which are in full
force and effect and enforceable in accordance with their respective terms and
comply with all applicable Legal Requirements, except for such failures which do
not or could not, individually or in the aggregate, be expected to have a
material adverse effect on the Systems or the Business. Except as set forth on
Schedule 5.25, no consent, authorization, approval, waiver, order, license,
-------------
certificate or permit of or from or declaration or filing with any Governmental
Authority or other Person is necessary to preclude any cancellation, suspension,
termination or reformation of any Contract, other than such consents,
authorizations, approvals, waivers, orders, licenses, certificates or permits
which do not or could not, individually or in the aggregate, have a material
adverse effect on the Systems or the Business.
31
SECTION 5.26 NO UNDISCLOSED LIABILITIES. Except as and to the extent set
forth on Schedule 5.26, Seller does not have any liability or obligation (direct
-------------
or indirect, absolute, fixed, contingent or otherwise) arising out of the Assets
or conduct of the Business which was not reflected or reserved on the Business'
Financial Statements, and Seller has not incurred any such liability or
obligation since the last day of the last Business' Financial Statement, other
than in the ordinary course of business.
SECTION 5.27 LIABILITIES TO SUBSCRIBERS. There are no obligations or
liabilities to subscribers of the Systems or other customers of the Business
except with respect to (i) prepayments or deposits made by such subscribers or
customers in the ordinary course of business consistent with past practices as
set forth in the Business's Financial Statements or, since the last day of the
monthly financial statements of the Business delivered to Buyer and (ii) the
obligation to supply services to subscribers and customers in the ordinary
course of business in accordance with and pursuant to the terms of the Licenses,
Franchises and Contracts.
SECTION 5.28 RESTORATION. No property of any Person has been damaged,
destroyed, disturbed or removed in the process of construction or maintenance of
the Business, which has not been, or will not be, prior to the Closing,
repaired, restored or replaced, or as to which an adequate reserve has not been
established by Seller.
SECTION 5.29 CERTAIN PROGRAMMING ARRANGEMENTS AND RELATIONSHIPS. Except as
set forth on Schedule 5.29, Seller is not a party to any programming contract
-------------
with any Person providing for any exclusive arrangement with respect to the
provision of programming to Seller or the Systems. Except as set forth on
Schedule 5.29, neither Seller nor any of its Affiliates has any affiliation with
-------------
(other than on a third party basis), equity interest in, profit participation
in, contractual right to acquire any such interest or participation, or any
other relationship with any Person that provides programming to the Systems.
Seller has not entered into any arrangement with any community groups or similar
third parties restricting or limiting the types of programming which may be
shown on the Systems.
SECTION 5.30 FINDERS; BROKERS AND ADVISORS. Except for the engagement of
Xxxxxx Capital Corporation, with respect to which Seller shall have sole
responsibility for the payment of all amounts owed, Seller has not employed any
financial advisory, 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 its Agreement and Seller is not aware of any
claim or basis for any claim for payment of, or any unpaid liability to any
Person for any fees or commissions or like payments with respect to the
negotiations
32
leading to this Agreement or the consummation of any of the transactions
contemplated by this Agreement.
SECTION 5.31 DISCLOSURE. No representation or warranty by Seller contained
in this Agreement (including the exhibits and schedules hereto), and no
statement contained in any document, certificate or other instrument furnished
to Buyer by or on behalf of Seller (excluding drafts of any thereof) pursuant
hereto contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading. Except for matters affecting the
cable television industry generally, there is no fact known to Seller which
could reasonably be expected to materially adversely affect the Business, any of
the Systems or the Assets which has not been set forth in this Agreement.
ARTICLE VI
COVENANTS
---------
SECTION 6.1 CERTAIN AFFIRMATIVE COVENANTS OF SELLER REGARDING THE SYSTEMS.
Except as Buyer may otherwise consent in writing, between the date of this
Agreement and Closing, Seller shall:
(a) (i) operate the Business in the ordinary course of business
consistent with Seller's past practices; (ii) perform all of its
obligations under all of the Franchises, Licenses, and Contracts without
breach or default; (iii) operate the Business in substantial compliance
with all applicable Legal Requirements; (iv) continue the pricing,
marketing, advertising, promotion and other activities with respect to the
Business and each System (including without limitation billing, collection,
subscriber, and construction and joint trenching matters) substantially and
materially in the normal and ordinary course of business consistent with
Seller's past practices; and (v) use its Commercially Reasonable Best
Efforts to (A) preserve the current business organization of the Business
intact, including preserving existing relationships with Persons having
business with the Business, (B) keep available the services of its
employees providing services in connection with the Business, and (C)
maintain inventories of equipment and supplies at historic levels and
consistent with good industry practices;
(b) provide Buyer and its counsel, lenders, accountants, and other
representatives access to the Business, the employees of the Business, the
Owned real property and Leased Real Property, the other Assets and Seller's
books and records relating to the Business during normal business hours,
provided that such access shall not unreasonably disrupt the normal
business operations of the Business, and provided
33
further, that no investigation by Buyer shall affect or limit the scope of
any representations and warranties of Seller herein or otherwise limit
liability for any breach of such representations and warranties of Seller;
(c) as soon as practicable after the date of this Agreement, and at
its expense, make all filings, and exercise Commercially Reasonable Best
Efforts to obtain in writing as promptly as practicable all approvals,
authorizations and consents described on Schedule 5.3 and deliver to Buyer
------------
copies thereof promptly upon receiving them;
(d) promptly deliver to Buyer copies of any monthly and quarterly
financial statements for the Business and other reports with respect to the
operation of the Business regularly prepared by Seller at any time from the
date hereof until Closing;
(e) promptly inform Buyer in writing of any material adverse change in
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Business or the Assets, including, without
limitation, (a) any damage, destruction, loss (whether or not covered by
insurance) or other event materially affecting any of the Assets, the
Systems or the Business, (b) any notice of violation, forfeiture or
complaint under any Licenses or Franchises, or (c) anything which, if not
corrected prior to the Closing Date, will prevent Seller from fulfilling
any condition to Closing described herein;
(f) continue to carry and maintain in full force and effect its
existing bonds and casualty and liability insurance with respect to the
Business through and including the Closing Date;
(g) maintain its books, records and accounts with respect to the
Assets and the operation of the Business in the usual, regular and ordinary
manner on a basis consistent with past practices and pay, consistent with
past practices, all accounts payable and other debts, liabilities and
obligations relating to the Business;
(h) maintain the Assets, including the plant and Equipment related
thereto, in accordance with past practices and in compliance with the terms
of this Agreement, fulfill installation requests in the normal course of
business, and make routine capital expenditures in accordance with past
practices and good industry practice which are necessary to maintain the
normal operations of the Systems and the Business, including, but not
limited to, completing ongoing line extensions, placing conduit or cable in
new developments,
34
fulfilling installation requests, and continuing work on existing
construction projects;
(i) continue to implement its procedures for disconnection and
discontinuance of service to System subscribers whose accounts are
delinquent in accordance with those in effect on the date of this
Agreement;
(j) report and write off Accounts Receivable in accordance with past
practices;
(k) withhold and pay when due all Taxes relating to employees of the
Business, the Assets, and/or the System;
(l) maintain service quality of the Systems at a level at least
consistent with past practices;
(m) file with the FCC all reports required to be filed under
applicable FCC rules and regulations, and otherwise comply with all Legal
Requirements with respect to the Business; and
(n) effect and facilitate the transition of the operation of the
Systems from Seller to Buyer as contemplated by this Agreement.
SECTION 6.2 CERTAIN NEGATIVE COVENANTS OF SELLER. Except as Buyer may
otherwise consent in writing, which consent may be withheld at Buyer's sole
discretion, or as otherwise contemplated by this Agreement, between the date
hereof and Closing, Seller shall not do or cause to be done any of the
following:
(a) enter into, modify, terminate, renew, suspend, or abrogate any
Franchise, License or material Contract other than in the ordinary course
of business, provided that for purposes of this clause (a) a material
Contract shall mean a Contract pursuant to which Seller would incur either
monetary liabilities which, after the Closing Date, would exceed $10,000
individually or liabilities in the aggregate in excess of $30,000 or a
material non-monetary obligation;
(b) enter into, modify, or renew any retransmission consent agreement
other than an agreement which contains materially the same terms as such
retransmission consent agreement which is indicated on Schedule 2.1(e)
--------------
contains, provided that if Buyer does not participate in the negotiations
of any new, modified or renewed retransmission agreement or if Buyer does
not approve the terms of any such agreement, Buyer has the right to
terminate this Agreement by written notice to the Seller. Seller shall not
be entitled to recover any damages from the Buyer in connection with a
termination pursuant to this Section 6.2(b);
35
(c) sell, assign, lease or otherwise dispose of any of the Assets,
unless such Assets are consumed or disposed of in the ordinary course of
business or in conjunction with the acquisition of replacement property of
equivalent kind and value, or are no longer used or useful in the business
or operation of the Systems;
(d) create, assume, or permit to exist any Lien upon any Asset other
than Permitted Liens;
(e) except as provided elsewhere herein (i) change customer rates for
Basic Service or charges for remotes or installations, (ii) implement any
tiering, re-tiering or repackaging of cable television programming offered
by such System or make any other change in the programming services or
channel positions (including the addition or deletion of any channels) of
such System, or (iii) take any other action that would subject the rates
for any tier of service to regulation;
(f) seek amendments or modifications to existing Licenses, Franchises,
or Contracts or accept or agree to accede to any modification or amendment
to, or any condition to the transfer of, any of the Licenses, Franchises,
Contracts or Real Property that may adversely affect Buyer;
(g) enter into any transaction or permit the taking of any action or
omit taking any action that would result in any of Seller's representations
and warranties contained in this Agreement not being true and correct when
made or at Closing;
(h) increase the number of employees in the Business, increase the
compensation or change any benefits available to employees of Seller who
work in the Business except as required pursuant to the existing written
agreements indicated on Schedule 5.7 or as otherwise expressly described on
------------
Schedule 5.7; and
------------
(i) except as set forth in Section 6.5(b), not implement any new
marketing program, policy or practice, or implement any rate change,
retiering or repackaging.
SECTION 6.3 FCC APPROVAL; FORMS 394.
(a) Promptly after the execution of this Agreement, but no later than
the twentieth (20th) Business Day after the date hereof, Seller shall, at
its sole expense, make application to the FCC for the consent and approval
of the FCC to the transfer of the ownership and operation of all FCC
Licenses of the Systems from Seller to Buyer.
(b) If not previously submitted, on or prior to the expiration of the
fifteenth (15th) Business Day after the date
36
of this Agreement, Seller and Buyer shall, each at its own expense, prepare
and file properly prepared Applications for Franchise Authority consent to
Assignment or Transfer of Control of Cable Television Franchise FCC 394
("Forms 394") with the local Governmental Authorities that have issued
franchises to Seller, and shall file all additional information required by
such franchises or applicable local Legal Requirements or that the
Governmental Authorities deem necessary or appropriate in connection with
their consideration of the request of Seller or Buyer that such authority
approve of the transfer of the Franchises to Buyer.
SECTION 6.4 RELEASE OF CERTAIN LIENS, LITIGATION AND OTHER OBLIGATIONS.
Seller shall take all necessary actions, including without limitation the
discharging or other satisfaction of related claims and obligations, to cause
the termination, release, removal or satisfaction on or prior to the Closing
Date, of (i) all designated Permitted Liens listed on Schedule 5.4, and (ii)
------------
all other outstanding liabilities and obligations relating to the Business other
than subscriber and customer deposits and prepaid subscriber and customer fees,
in each case without incurring any obligations on the part of Buyer or otherwise
adversely affecting Buyer.
SECTION 6.5 CERTAIN OTHER COVENANTS OF SELLER. Not later than August 30,
1996, Seller shall have caused the monthly cable television rates that are
charged by Seller for individual basic service to be changed as set forth below:
System: Current rate: Changed Rate:
------ ------------ ------------
Nogales $20.75 $22.00
Rio Rico $20.75 $22.00
Xxxxx (no change) $20.75 $20.75
Ajo $24.00 $24.50
In addition, a new franchise fee line item equal to 3% of items
subject to franchise fees, shall be added to the monthly billing statement
for subscribers of the Ajo System only, and a franchise fee line item shall
continue to be added for all other Systems when applicable.
In connection with the foregoing rate increases, Seller may add
KQBN-TV Channel 14 (from Tucson) and the Cartoon Channel to the channel
line-ups shown in Schedule 5.11 for Nogales and Rio Rico, and may modify
other services if necessary to obtain channel position.
37
SECTION 6.6 EMPLOYEE MATTERS.
(a) Seller shall terminate all of its employees who primarily perform
services with respect to the operations of the Systems immediately prior to
Closing. Seller shall be responsible for and shall cause to be discharged
and satisfied in full all amounts owed to any employee of Seller through
the Closing Date, including wages, salaries, accrued vacation, any
employment, incentive, compensation or bonus agreements, or other benefits
or payments on account of termination, and shall indemnify and hold Buyer
harmless from any Losses thereunder. Seller shall retain liability for all
workers' compensation claims made by employees of the Business and the
Systems filed on or before the Closing Date. Seller shall also retain
liability for all workers' compensation claims filed by such employees
after the Closing Date to the extent that such claims relate to any
compensable injuries incurred prior to the Closing Date.
(b) Buyer shall not assume or have any liability under any agreement
with any individual related to such individual's employment in the Business
at or prior to the Closing Date or bonus, incentive or other employee
benefit plans maintained by Seller, including, without limitation, phantom
stock plans, stock incentive plans, opportunity pay plans, long term cash
and incentive compensation plans, covering persons employed by or who at
any time prior to the Closing Date were employed in the Business. Seller
shall take such actions as are necessary to ensure the preservation and
delivery of all benefits accrued through the Closing Date, whether payable
presently or at some future date, to employees of the Business in respect
of any such bonus or incentive plans. Seller shall be responsible for and
shall pay all amounts payable to all of its employees in connection with
the termination of employment of any such employee on or before the Closing
Date in connection with the transactions contemplated hereby, or otherwise,
and also shall be responsible for all health insurance, vacation pay and
other benefits payable to such employees for all periods prior to and
including the Closing Date.
(c) Seller shall be responsible for compliance with the notice and
continuation coverage requirements of Section 4980B of the Code that arise
with respect to the former employees of Seller and the Affected Employees
(as defined in ERISA), on account of the transactions contemplated by this
Agreement, if any.
(d) Seller's long term disability plan shall be responsible for
payment of any and all covered benefits, payable with respect to employment
on or before the Closing Date and for thirty days thereafter, regardless of
whether
38
payment is required to be made after the Closing Date, for: (i) any
individual who is currently receiving such benefits as of the Closing Date,
(ii) any individual who becomes disabled prior to the Closing Date and who
remains disabled for the length of any qualifying disability period, and
(iii) any individual described in (i) and (ii) above whose disability
ceases after the Closing Date and who subsequently becomes disabled prior
to the expiration of ninety (90) days of active employment with Buyer,
where such subsequent disability is a continuation of such prior disability
for which benefits were due under Seller's or the System's welfare plan.
(e) Except as otherwise provided in this Agreement, Seller shall
retain, and Buyer shall not assume, any liabilities or obligations of
Seller or any of its Affiliates to employees with respect to claims
incurred and employment prior to the Closing Date.
(f) Prior to or as of the Closing Date, Seller shall have made
arrangements reasonably satisfactory to Buyer for termination of all
deferred compensation, pension, 401 (k), or other similar employee
benefits plans, which arrangements shall not create any liability or
obligation for Buyer after Closing.
(g) Buyer may offer (but is not obligated to offer) employment to any
or all of the employees of Seller who primarily perform services with
respect to the operations of the Systems as of the Closing Date. Buyer
shall recognize the term of service with Seller of any employee of Seller
hired by Buyer in determining such employee's vacation benefits under
Buyer's vacation plan. Buyer also shall permit any former employee of
Seller hired by Buyer to participate in Buyer's group health plan without
imposing any waiting periods so long as such employee was covered by
Seller's health plan immediately prior to the Closing. To the extent that
accrued vacation time is included in the Current Items Amount, Buyer either
shall permit any former employee of Seller who is hired by Buyer to take
any such accrued vacation at whatever times the employee would have been
entitled to take such vacation had the employee not left the employ of
Seller, or shall pay such employee for any such accrued vacation time that
such employee is not able to take under Buyer's vacation plan. Nothing in
this statement of intent shall be construed to create any third party
beneficiary rights in favor of any person not a party to this Agreement or
to constitute an offer of employment, employment agreement or condition of
employment for any of the employees of the Business.
SECTION 6.7 WARN ACT. Seller shall give all notices required to be given
under the Federal Workers Adjustment and Retraining Notification Act ("WARN
Act") by any party related to or as a
39
result of the transactions contemplated by this Agreement, and shall indemnify
and hold Buyer harmless for any liability resulting from the failure of Seller
and the Systems to do so. On the Closing Date, Seller shall deliver to Buyer a
written description of any "employment loss," as defined in the WARN Act, which
occurs at any time within the ninety (90) days prior to the Closing Date. For
purposes of the WARN Act and this Section 6.7, "Closing Date" shall mean the
"effective date" of the transactions contemplated by this Agreement, as defined
in the WARN Act.
SECTION 6.8 EXCLUSIVITY. Between the date of this Agreement and the earlier
of the termination of this Agreement in accordance with its terms and the
Closing Date, Seller shall not, and shall cause its Partners, officers,
directors, employees, agents and representatives (including, without limitation,
Xxxxxx Capital Corporation, any investment banker, attorney or accountant
retained by Seller) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal with respect to the
Business, engage in any negotiations concerning, or provide to any other Person
any information or data relating to the Business, any of the Systems, the
Assets, or Seller for the purposes of, or have any discussions with any Person
relating to, or otherwise cooperate in any way with or assist or participate in,
facilitate or encourage, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any effort or attempt by
any other Person to seek or effect a sale of all or substantially all of the
Assets, the Systems or the Business.
SECTION 6.9 TITLE INSURANCE. Attached hereto as Schedule 6.9 are the title
------------
commitments to the Owned Real Property which have been obtained by Seller.
Seller represents, warrants and covenants that (a) title to the Owned Real
Property is and on the Closing Date shall be insurable on substantially the same
terms as set forth on the attached title commitments, and (b) a current survey
of the Owned Real Property by a registered professional surveyor would not show
any matter or thing that (i) violates any representation or warranty contained
herein or (ii) does or could materially affect the Business. Seller will
reasonably cooperate with Buyer if Buyer elects to obtain title insurance
policies and boundary surveys indicating for each surveyed parcel (i) access
from public rights of way, (ii) all improvements and (iii) encroachments across
the parcel's boundary lines by such improvements or improvements by owners of
adjacent parcels, for parcels of Owned Real Property or Leased Real Property, it
being understood that Buyer shall have the sole responsibility for obtaining and
paying for such policies and boundary surveys. The obtaining of title insurance
and/or surveys shall not be a condition to the obligations of Buyer to
consummate the transactions contemplated hereunder.
40
SECTION 6.10 CONFIDENTIALITY. Any non-public information that either party
("Recipient Party") may obtain from the other ("Disclosing Party") in connection
with this Agreement with respect to the Disclosing Party or the Systems shall be
confidential and, unless and until Closing shall occur, Recipient Party shall
not disclose any such information to any third party (other than its directors,
officers, Partners and employees, and representatives of its advisers and
lenders whose knowledge thereof is necessary in order to facilitate the
consummation of the transactions contemplated hereby) or use such information to
the detriment of Disclosing Party; provided that (a) Recipient may use and
disclose any such information once it has been publicly disclosed (other than by
Recipient Party in breach of its obligations under this Section) or that
rightfully has come into the possession of Recipient Party (other than from
Disclosing Party), and (b) to the extent that Recipient Party may become
compelled by Legal Requirements to disclose any of such information, Recipient
Party may disclose such information if it shall have made all reasonable
efforts, and shall have afforded Disclosing Party the opportunity, to obtain an
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information compelled to be disclosed. If this Agreement is
terminated, Recipient Party shall use all reasonable efforts to cause to be
delivered to Disclosing Party, and retain no copies of, any documents, work
papers and other materials obtained by or on the behalf of Recipient Party from
Disclosing Party, whether so obtained before or after the execution hereof. The
rights and obligations of Buyer and Seller under this Section shall survive
Closing or the termination of this Agreement. Notwithstanding the foregoing, the
following will not constitute a part of the information for the purposes of this
Section:
(i) information that a party can show was known by the Recipient
Party prior to the disclosure thereof by the Disclosing Party;
(ii) information that is or becomes generally available to the public
other than as a result of a disclosure directly or indirectly by the
Recipient Party in breach of this Section 6.10;
(iii) information that is independently developed by the Recipient
Party; or
(iv) information that is or becomes available to the Recipient Party
on a non-confidential basis from a source other than the Disclosing Party,
provided that such source is not known by the Recipient Party to be bound
by any obligation or confidentiality in relation thereto.
SECTION 6.11 SUPPLEMENTS TO SCHEDULES. Each of Seller and Buyer shall, from
time to time prior to Closing, supplement the
41
Schedules to this Agreement with additional information that, if existing or
known to it on the date of this Agreement, would have been required to be
included in such Schedules. For purposes of determining the satisfaction of any
of the conditions to the obligations of Buyer and Seller in Sections 7.1 and 7.2
and the liability of Seller or of Buyer following Closing for breaches of its
representations and warranties under this Agreement, the Schedules to this
Agreement shall be deemed to include only (a) the information contained therein
on the date of this Agreement and (b) information added to the Schedules by
written supplements to such Schedules delivered prior to Closing by the party
making such amendment that (i) are accepted in writing by the other party or
(ii) reflect actions expressly permitted by this Agreement to be taken prior to
Closing. Notwithstanding any information contained in the Schedules, all
liabilities and obligations arising out of or relating to the operation of the
Systems prior to the Closing Date shall be the responsibility of the Seller.
SECTION 6.12 NOTIFICATION OF CERTAIN MATTERS. Each party will promptly
notify the other party in writing of any fact, event, circumstance, action or
omission (i) that, if known at the date of this Agreement, would have been
required to be disclosed in or pursuant to this Agreement, or (ii) the existence
or occurrence of which would cause any of such party's representations or
warranties under this Agreement not to be true in any material respect, and with
respect to clause (ii) the party responsible thereof or pursuant to this
Agreement shall use commercially reasonable best efforts to remedy the same.
SECTION 6.13 COMMERCIALLY REASONABLE BEST EFFORTS. Each party shall use
Commercially Reasonable Best Efforts to take all steps within its power, and
will cooperate with the other party, to cause to be fulfilled those of the
conditions to the other party's obligations to consummate the transactions
contemplated by this Agreement that are dependent upon its actions, and to
execute and deliver such instruments and take such other commercially reasonable
best actions as may be necessary to carry out the intent of this Agreement and
consummate the transactions contemplated hereby.
SECTION 6.14 CLOSING DATE FINANCIAL STATEMENTS. Seller shall promptly
deliver to Buyer after Closing a true and complete copy of the unaudited balance
sheet for the Business as of the Closing Date and the unaudited statements of
profit and loss and cash flow of the Business for the period then ended, in each
case the report format shall be that in which the Business's Financial
Statements are presented. Not later than ninety (90) days after December 31,
1996, Seller shall deliver to Buyer an audited balance sheet and statements of
income and cash flow of the Business for the period commencing January 1, 1996
and ending on the Closing Date.
42
SECTION 6.15 CUSTOMER NOTIFICATION. As soon as reasonably practicable after
execution of this Agreement and in accordance with Section 12.9, the parties
shall jointly announce to the general public the transactions contemplated
hereby. All reasonable additional costs and expenses actually incurred and
related to mail notification of subscribers shall be borne and paid by Seller.
Other means of notifying subscribers may be employed by either party, at the
expense of the initiating party, but in no event shall any notification be
initiated without the prior consent of the other party (which consent shall not
be unreasonably withheld).
SECTION 6.16 CONSENTS.
(a) Seller will use Commercially Reasonable Best Efforts to obtain, at
its own cost and expense as soon as practicable, the Required Consents, in
form and substance reasonably satisfactory to Buyer. Seller and Buyer will
use Commercially Reasonable Best Efforts to obtain, as soon as practicable,
the Consents of Governmental Authorities; provided, that Commercially
Reasonable Best Efforts for this purpose shall not require Buyer to agree
to any change in any Contract or as a condition to obtaining any Consent,
the effect of which is to make such Contract more burdensome to Buyer.
(b) Following the Closing, Buyer will deliver promptly to the
Governmental Authorities for those Governmental Permits transferred at
Closing all bonds, letters of credit, indemnity agreements, or certificates
of deposit required by such Governmental Authorities and will use its
Commercially Reasonable Best Efforts to cooperate with Seller to obtain a
release by such Governmental Authorities of Seller's bonds, letters of
credit, indemnity agreements, and certificates of deposit.
SECTION 6.17 RISK OF LOSS; CONDEMNATION.
(a) Seller will bear the risk of any loss or damage to the Assets
resulting from fire, theft or other casualty at all times prior to the
Closing. If any such loss or damage is so substantial as to prevent normal
operation of any portion of the Systems within five days after the
occurrence of the event resulting in such loss or damage, Seller shall
immediately notify Buyer of that fact and Buyer, at any time within ten
days after receipt of such notice, may elect by written notice to Seller
either (i) to waive such defect and proceed toward consummation of the
acquisition of the Assets in accordance with this Agreement or (ii) to
terminate this Agreement. If Buyer elects to consummate the acquisition of
the Assets notwithstanding such loss or damage and does so, at Buyer's
election (i) there will be an adjustment in the aggregate
43
consideration to be paid for the Assets under Article II on account of such
loss or damage and Seller shall be entitled to all insurance proceeds paid
as a result of such loss or damage or (ii) all insurance proceeds paid or
payable as a result of the occurrence of the event causing such loss or
damage will be delivered by Seller to Buyer at the Closing or the rights to
such proceeds will be assigned by Seller to Buyer at the Closing if not yet
paid over to Seller.
(b) If, prior to Closing, any portion of any System is taken or
condemned as a result of the exercise of the power of eminent domain, or if
a Governmental Authority having such power informs Seller or Buyer that it
intends to condemn any portion of any System (such event being referred to
herein, in either case, as a "Taking"), then Buyer may terminate this
Agreement. If Buyer does not so elect to terminate this Agreement then (i)
if the Closing occurs, Buyer shall have the sole right, in the name of
Seller, if Buyer so elects, to negotiate for, claim, contest and (if the
Closing occurs) receive all damages with respect to the Taking, (ii) Seller
shall be relieved of its obligation to convey to Buyer the Asset or
interests that are the subject of the Taking and (iii) at the Closing
Seller shall assign to Buyer all of Seller's rights (including the right to
receive payment of damages) with respect to such Taking and shall pay to
Buyer all damages previously paid to Seller with respect to the Taking.
SECTION 6.18 PHASE I STUDY. Within twenty (20) days after the execution of
this Agreement, Seller shall, at its sole expense, commission a qualified
engineering firm to conduct the Study in accordance with ASTM Standard 1527-94.
Within three (3) business days of receipt of the completed Study, Seller shall
promptly deliver the Study to Buyer. If Buyer notifies Seller in writing within
thirty (30) Business Days from the date Buyer receives the report of the Study
that the Study discloses the existence of any breach, or any facts which could
be expected to result in a breach, of the representations of Seller contained in
Section 5.12, Seller shall promptly commence further investigation and/or
remedial action to cure the condition at its expense prior to the Closing;
provided that Seller shall not be obligated to spend more than $50,000 in the
aggregate in its attempt to cure all such conditions. Seller shall notify Buyer
within seven (7) days after its receipt of such written notice from Buyer if
Seller determines that it is or will be unable to cure such conditions for
$50,000 or less. If Seller exercises the right not to cure such conditions
because the aggregate cost would exceed $50,000, Buyer may elect (i) to
terminate this Agreement without waiver of any remedies available to Buyer
hereunder or (ii) to waive such obligations, in which event Buyer shall receive
a credit at the Closing in the amount, if any, by which $50,000 exceeds the
aggregate amount paid by Seller to third parties in connection with curing such
44
conditions and assume all liabilities and obligations in connection with such
conditions and hold harmless and indemnify Seller from same in accordance with
this Agreement, notwithstanding any provisions, including any representations
and warranties of Seller, of this Agreement to the contrary and Seller shall
have no liability under this Agreement or otherwise to Buyer related to or
arising from such conditions.
SECTION 6.19 UCC SEARCHES. Seller shall reimburse Buyer, no later than ten
(10) Business Days following receipt of the invoice therefor from Buyer, for the
actual costs (other than attorney review in connection therewith) incurred by
Buyer in obtaining Uniform Commercial Code lien, judgment and tax searches on
the Assets, the Seller and the general partner of Seller prior to Closing and a
bringdown certificate with respect thereto as of the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
SECTION 7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the following conditions, any one or more of which may be waived by Buyer, in
its sole discretion.
(a) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Seller in this Agreement shall be true and accurate in
all material respects at and as of Closing with the same effect as if made
at and as of Closing, except for changes contemplated under this Agreement
and except for representations and warranties made only at and as of a
certain date.
(b) Performance of Agreements. Seller shall have performed all
-------------------------
obligations and agreements and complied with all covenants in this
Agreement to be performed and complied with by it at or before Closing, and
no event which would constitute a breach of the terms of this Agreement on
the part of Seller shall have occurred or be continuing. Notwithstanding
the generality of the preceding sentence, Seller shall have strictly
performed its obligations and agreements and strictly complied with its
covenants set forth in Section 6.5.
(c) Officer's Certificate. Buyer shall have received a certificate
---------------------
executed by an executive officer of the general partner of Seller, dated as
of Closing, reasonably satisfactory in form and substance to Buyer,
certifying that the conditions specified in Sections 7.1(a) and (b) have
been satisfied.
45
(d) Legal Proceedings. There shall be no Legal Requirement, and no
-----------------
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation relating to any Legal Requirement,
that enjoins, restrains, makes illegal, or prohibits consummation of the
transactions contemplated by this Agreement, and there shall be no Litigation
pending or threatened that seeks or that, if successful, would have the effect
of any of the foregoing.
(e) Opinion of Seller's Counsel. Buyer shall have received an opinion
---------------------------
of Xxxx Xxxxx Xxxx Xxxxxxxx & Xxxxx, P.C., counsel to Seller, dated as of
Closing, substantially in the form of Exhibit 7.1(e).
--------------
(f) Opinion of Seller's FCC Counsel. Buyer shall have received an
-------------------------------
opinion of Xxxx, Raywid & Xxxxxxxxx, special communications counsel to Seller,
dated as of Closing, substantially in the form of Exhibit 7.1(f).
-------------
(g) Consents. Buyer shall have received evidence, in form and
--------
substance reasonably satisfactory to it, that all consents, approvals and
authorizations identified on Schedule 5.3 as Required Consents have been
------------
obtained and remain in full force and effect; provided, however, that to the
extent such Required Consents relate to consents by the FCC to assignments of
Licenses, this condition shall be deemed met if such consents to assignment have
been requested prior to Closing and Buyer is entitled to operate the Systems
under such Licenses pursuant to conditional use authorizations from the FCC
until the FCC's consent is received.
(h) Noncompetition Agreement. Seller and R. Xxxxxxx Xxxxxx shall each
------------------------
have delivered to Buyer the Noncompetition Agreement duly executed by
Seller and R. Xxxxxxx Xxxxxx, respectively.
(i) Liens, Litigation and Other Obligations. Seller shall have
---------------------------------------
delivered evidence satisfactory to Buyer that all Liens, Litigation and other
obligations or liabilities of the Systems that are to be terminated, released,
removed, satisfied or waived prior to or as of the Closing Date under Section
6.4 have been so terminated, released, removed, satisfied or waived, or will be
terminated, released, removed, satisfied or waived simultaneously with the
Closing.
(j) No Material Adverse Change. There shall not have been any material
--------------------------
adverse change in the Assets, liabilities, financial condition, earnings or
business prospects of the Systems or the Business, other than any change due to
an event (other than an event described in the following proviso) that affects
the cable television industry in general; provided,
46
however, that for purposes of this Agreement, the actual regulation by any
Governmental Authority of rates, charges or fees charged to the subscribers
of any System shall be deemed to be a material adverse change in the
financial condition and business prospects of such System.
(k) Systems. The Systems shall include not less than 10,800 homes
-------
passed by energized cable (i.e., homes (including apartments and commercial
----
units) for which cable service may be provided solely by the installation
of a drop line without addition of trunk or feeder cable or electronic
components) and not more than 200 miles of energized cable plant, of which
not more than 70 miles are of underground construction.
(1) Transfer Documents. Seller shall have delivered to Buyer
------------------
customary bills of sale, general warranty deeds, assignments and other
instruments of transfer sufficient to convey good and marketable title to
the Assets in accordance with the terms of this Agreement and otherwise in
form and substance reasonably satisfactory to Buyer and its counsel.
(m) Other Documents. All other documents and certificates and other
---------------
items required to be delivered under this Agreement by Seller to Buyer at
or prior to Closing shall have been delivered or shall be tendered at the
Closing.
(n) Material Adverse Change. The financial institutions providing
-----------------------
financing to Buyer to consummate the transactions contemplated by this
Agreement shall not have exercised the Material Adverse Change clause under
the financing commitment letters provided to Buyer.
SECTION 7.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller
to consummate the transactions contemplated by this Agreement shall be subject
to the following conditions, any one or more of which may be waived by Seller,
in its sole discretion:
(a) Accuracy of Representations. The representations and warranties of
---------------------------
Buyer in this Agreement shall be true and accurate in all material respects
at and as of Closing with the same effect as if made at and as of Closing
except for changes contemplated under this Agreement and except for
representations and warranties made only at and as of a certain date.
(b) Performance of Agreements. Buyer shall have performed in all
-------------------------
material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement to be performed and
complied with by it at or before Closing, and no event that would
constitute
47
a material breach of the terms of this Agreement on the part of Buyer shall
have occurred or be continuing.
(c) Officer's Certificate. Seller shall have received a certificate
---------------------
executed by an executive officer of Buyer, dated as of Closing, reasonably
satisfactory in form and substance to Seller, certifying that the
conditions specified in Sections 7.2(a) and (b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no
-----------------
Judgment shall have been entered and not vacated by any Governmental
Authority of competent jurisdiction in any Litigation relating to any Legal
Requirement, that enjoins, restrains, makes illegal, or prohibits
consummation of the transactions contemplated hereby, and there shall be no
Litigation pending or threatened that seeks or that, if successful, would
have the effect of any of the foregoing.
(e) Opinion of Buyer's Counsel. Seller shall have received an
--------------------------
opinion of Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C., general counsel
to Buyer, dated as of Closing, substantially in the form of Exhibit 7.2(e).
--------------
(f) Other Documents. All other documents certificates, and other items
---------------
required to be delivered under this Agreement by Buyer to Seller at or
prior to Closing shall have been delivered or shall be tendered at the
Closing.
ARTICLE VIII
CLOSING
-------
SECTION 8.1 CLOSING; TIME AND PLACE.
(a) Subject to the terms and conditions of this Agreement, the closing
of the transactions contemplated by this Agreement ("xxx Xxxxxxx") shall be
held at the offices of Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C., 000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local
time, on November 30, 1996, or at such earlier or later date as may be
agreed upon by Seller and Buyer (the "Closing Date"). Seller and Buyer
shall, without modifying or expanding their obligations hereunder, exercise
their diligent, good faith efforts to cause the Closing to occur as quickly
as reasonably possible.
(b) If at any time prior to the scheduled Closing Date, all of the
conditions contained in Article VII have been met or waived, Buyer may give
notice to Seller of the Closing. Such notice shall state a date and time,
not less than ten
48
Business Days from the date of such notice, for Closing to occur.
(c) If on November 30, 1996, all of the conditions contained in
Article VII have not been met or waived, then the Closing shall be deferred
until all such conditions have been met or waived but not to a date later
that December 31, 1996. Upon the last of the conditions being so met or
waived, Seller or Buyer may give notice to the other of the Closing, which
notice shall state a date and time, not less than ten Business Days from
the date of such notice, for the Closing to occur.
SECTION 8.2 SELLER'S OBLIGATIONS. At Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
(a) Xxxx of Sale. Executed counterparts of a Xxxx of Sale and
------------
Assignment and Assumption Agreement relating to the Assets in the form of
Exhibit 8.2(a) (the "Xxxx of Sale");
-------------
(b) Deeds. General warranty deeds in form and substance reasonably
-----
satisfactory to buyer conveying to Buyer the Owned Real Property;
(c) Officer's Certificate. The certificate described in Section
---------------------
7.1(c);
(d) Evidence of Authorizing Actions. Evidence reasonably satisfactory
-------------------------------
to Buyer that Seller has taken all action necessary to authorize the
execution of this Agreement and the consummation of the transactions
contemplated hereby;
(e) Opinion of Seller's Counsel. The opinion described in Section
---------------------------
7.1(e);
(f) Opinion of Seller's FCC Counsel. The opinion described in Section
-------------------------------
7.1(f);
(g) Vehicle Titles. Title certificates to all vehicles that constitute
--------------
Assets, endorsed for transfer of title to Buyer, and any separate bills of
sale and other vehicle title transfer documentation required by the laws of
the State of Arizona or such county or other state in which such vehicles
are titled;
(h) Documents and Records. All (i) existing blueprints, schematics,
---------------------
working drawings, plans, specifications, projections, statistics,
engineering records, original plant records, construction, and as-built
maps relating to the Systems, (ii) customer lists, files and records used
by the Seller in connection with the operation of the Systems, including
lists of all pending subscriber hook-ups, disconnects and all repair
orders, supply orders and any other
49
records pertinent to the operation of the Systems, and (iii) personnel
files and records relating to the employees of the Systems who have
accepted Buyer's offer of employment after the Closing Date. Delivery of
the foregoing shall be deemed made to the extent such lists, files, and
records are located as of the Closing Date at any of the offices included
in the Owned Real Property or the Leased Real Property;
(i) Noncompetition Agreements . The Noncompetition Agreements, duly
-------------------------
executed by each of Seller and R. Xxxxxxx Xxxxxx;
(j) Incumbency. An incumbency certificate of Seller and the general
----------
partner of Seller evidencing the authority of the entitles and individuals
who are signatories to this Agreement and each other Transaction Documents
to which Seller it is a party; and
(k) Other. Such other documents and instruments, including, but not
-----
limited to, such documents or instruments evidencing the satisfaction of
the conditions set forth in Section 7.1(i) hereof, as shall be necessary to
effect the intent of this Agreement and consummate the transactions
contemplated hereby.
SECTION 8.3 BUYER'S OBLIGATIONS. At Closing, Buyer shall deliver or cause
to be delivered to Seller the following:
(a) Purchase Price and Current Items Amount. The Purchase Price plus
---------------------------------------
or minus the Current Items Amount, the Subscriber Adjustment and Escrow, as
determined in accordance with the provisions of Section 2.7(a);
(b) Xxxx of Sale. Executed counterparts of the Xxxx of Sale in the
------------
form of Exhibit 8.2(a);
(c) Officer's Certificate. The certificate described in Section
---------------------
7.2(c);
(d) Evidence of Authorizations. Evidence reasonably satisfactory to
--------------------------
Seller that Buyer has taken all action necessary to authorize the execution
of this Agreement and the consummation of the transactions contemplated
hereby;
(e) Incumbency. An incumbency certificate of Buyer evidencing the
----------
authority of the entities and individuals who are signatories to this
Agreement and each other Transaction Documents to which Buyer is a party;
(f) Opinion of Buyer's Counsel. The opinion described in Section
--------------------------
7.2(e); and
50
(g) Other. Such other documents and instruments as shall be necessary
-----
to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
ARTICLE IX
TERMINATION
-----------
SECTION 9.1 TERMINATION EVENTS. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned as follows:
(a) At any time, by the mutual agreement of Buyer and Seller;
(b) By either Buyer or Seller upon written notice to the other, if the
other is in material breach or default of its respective covenants,
agreements, or other obligations herein, or if any of its representations
herein are not true and accurate in all material respects when made or when
otherwise required by this Agreement to be true and accurate, and such
breach, default or failure is not cured by the earlier of (i) thirty (30)
days of receipt of notice that such breach, default or failure exists or
has occurred, or (ii) December 31, 1996;
(c) By either Buyer or Seller upon written notice to the other, if any
conditions to its obligations set forth in Sections 7.1 and 7.2,
respectively, shall not have been satisfied on or before the Closing Date
for any reason other than a breach or default by such party of its
respective covenants, agreements, or other obligations hereunder, or any of
its representations herein not being true and accurate when made or when
otherwise required by this Agreement to be true and accurate; or
(d) As otherwise provided herein.
SECTION 9.2 EFFECT OF TERMINATION. If this Agreement shall be terminated
pursuant to Section 9.1, all obligations of the parties hereunder shall
terminate, except for the obligations set forth in Sections 6.10, 10.1, 10.2,
12.1, and 12.8. Termination of this Agreement pursuant to Section 9.1(b) shall
not limit or impair any remedies that Buyer or Seller may have with respect to a
breach or default by the other of its covenants, agreements or obligations
hereunder.
SECTION 9.3 FINANCING CONTINGENCY. Buyer shall have the right to terminate
this Agreement without any monetary penalty to Buyer (other than the forfeiture
by Buyer of the Xxxxxxx Money Payment paid to Seller pursuant to Section 2.4(b)
hereof) upon the occurrence of either of the following events: (a) Buyer shall
51
provide written notice to Seller on or before the later of forty-five (45)
Business Days from the date hereof or September 15, 1996 that Buyer is not able
to obtain sufficient financing to consummate the purchase and sale contemplated
by this Agreement, or (b) Buyer shall provide written notice to Seller at any
time before the Closing Date that Buyer has received written notification from
its senior lender for this transaction that there has been a material adverse
change in either the Systems or the cable television business generally that is
sufficient to cause such lender to refuse to finance Buyer's purchase of the
Systems from Seller (in which event a copy of such written notification from
Buyer's lender shall accompany Buyer's written notification to Seller).
ARTICLE X
REMEDIES
--------
SECTION 10.1 DEFAULT BY BUYER. If Buyer shall default in the performance of
its obligations under this Agreement in any material respect or if, as a result
of Buyer's breach of its obligations pursuant to this Agreement, the conditions
precedent to Seller's obligation to close specified in Section 7.2 are not
satisfied, and Seller shall not then be in default in the performance of its
obligations hereunder in any material respect, Seller shall be entitled, as its
sole remedy, to terminate this Agreement by written notice to Buyer and to
recover its actual out-of-pocket costs and expenses (including reasonable
attorneys and other professional fees) incurred in connection with the execution
of this Agreement and the satisfaction of its obligations hereunder, but not
including consequential, punitive or exemplary damages, or any other damages.
Seller agrees that such damages shall not exceed the amount of the Escrow
Amount.
SECTION 10.2 DEFAULT BY SELLER. If Seller shall default in the performance
of its obligations under this Agreement in any material respect or if, as a
result of Seller's breach of its obligations pursuant to this Agreement, the
conditions precedent to Buyer's obligation to close specified in Section 7.1 are
not satisfied, and Buyer shall not then be in default in the performance of its
obligations hereunder in any material respect, Buyer shall be entitled, at
Buyer's sole option, either:
(a) to require Seller to consummate and specifically perform the sale
in accordance with the terms of this Agreement, if necessary through
injunction or other court order or process, and to recover any damages,
costs and expenses incurred by Buyer in connection therewith; or
(b) to terminate this Agreement by written notice to Seller, and to
recover its out-of-pocket costs and expenses (including reasonable
attorneys and other professional fees) in connection with the execution of
this Agreement and the
52
satisfaction of its obligations hereunder, but not including consequential,
punitive or exemplary damages, or any other damages.
ARTICLE XI
INDEMNIFICATION
---------------
SECTION 11.1 INDEMNIFICATION BY SELLER. From and after Closing, Seller
shall indemnity and hold harmless Buyer from and against any and all Losses
arising out of or resulting from the following:
(a) Any representations and warranties made by Seller in this
Agreement not being true and accurate when made or when required by this
Agreement to be true and accurate, except for Losses that relate to any
circumstance, act or omission constituting a breach of any representation
or warranty by Seller or failure by Seller to comply with any of its
covenants, agreements or obligations hereunder of which Buyer has received
notice and which Buyer has waived in writing;
(b) Any breach or default by Seller in the performance of its
covenants, agreements, or obligations under this Agreement;
(c) Any liabilities relating to employees of Seller or any Partner
working for the Systems asserted under any Legal Requirement or otherwise
pertaining to any labor or employment matter arising out of conditions
existing or actions or events occurring prior to the Closing Date;
(d) Any liabilities and obligations arising out of or relating to the
operation of the Systems prior to the Closing Date, including, without
limitation, the Retained Liabilities and Obligations;
(e) Any claims made by creditors with respect to noncompliance with
any bulk sales law relating to this Agreement and the transactions
contemplated hereby; and
(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempt to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
SECTION 11.2 INDEMNIFICATION BY BUYER. From and after Closing, Buyer shall
indemnify and hold harmless Seller and each Partner from and against any and all
Losses arising out of or resulting from the following:
53
(a) Any representations and warranties made by Buyer in this Agreement
not being true and accurate when made or when required by this Agreement to
be true and accurate, except for Losses that relate to any circumstance,
act or omission constituting a breach of any representation or warranty by
Buyer or failure by Buyer to comply with any of its covenants, agreements
or obligations hereunder of which Seller has received notice and which
Seller has waived in writing;
(b) Any breach or default by Buyer in the performance of its
covenants, agreements, or obligations under this Agreement;
(c) Any of the Assumed Obligations and Liabilities;
(d) Any liabilities relating to employees of Seller hired by Buyer
pursuant to Section 6.6 arising after the Closing Date asserted under any
federal, state or local law or regulation or otherwise pertaining to any
labor or employment matter arising out of conditions existing or actions or
events occurring subsequent to the Closing Date;
(e) Any liabilities and obligations arising out of or relating to the
operation of the Systems subsequent to the Closing Date; and
(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempt to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
SECTION 11.3 INDEMNIFIED THIRD PARTY CLAIM.
(a) If any Person not a party to this Agreement shall make any demand
or claim or file or threaten to file or continue any Litigation with respect
to which Buyer or Seller is entitled to indemnification pursuant to Sections
11.1 or 11.2, respectively, then within ten (10) days after notice (the
"Notice") by the party entitled to such indemnification (the "Indemnitee")
to the other (the "Indemnitor") of such demand, claim or Litigation, the
Indemnitor shall have the option, at its sole cost and expense, to retain
counsel for the Indemnitee (which counsel shall be reasonably satisfactory
to the Indemnitee), to defend any such Litigation. Thereafter, the
Indemnitee shall be permitted to participate in such defense at its own
expense, provided that, if the named parties to any such Litigation
(including any impleaded parties) include both the Indemnitor and the
Indemnitee or, if the Indemnitor proposes that the same counsel represent
both the Indemnitee and the Indemnitor and representation of both
54
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, then the Indemnitee shall have
the right to retain its own counsel at the cost and expense of the
Indemnitor, unless the Indemnitor shall acknowledge in writing its
indemnity obligation, in which event the retention by Indemnitee of its own
counsel shall be at its cost and expense. If the Indemnitor shall fail to
respond within ten (10) days after receipt of the Notice, the Indemnitee
may retain counsel and conduct the defense of such Litigation as it may in
its sole discretion deem proper, at the sole cost and expense of the
Indemnitor.
(b) The Indemnitee shall provide reasonable assistance to the
Indemnitor and provide access to its books, records and personnel as the
Indemnitor reasonably requests in connection will the investigation or
defense of the indemnified Losses. The Indemnitor shall promptly upon
receipt of reasonable supporting documentation reimburse the Indemnitee for
out-of-pocket costs and expenses incurred by the latter in providing the
requested assistance.
(c) In the event that Indemnitor desires to compromise or settle any
such claim, Indemnitee shall have the right to consent to such settlement
or compromise; provided, however, that if such compromise or settlement is
for money damages only and will include a full release and discharge of
Indemnitee, and Indemnitee withholds its consent to such compromise or
settlement, Indemnitor and Indemnitee agree that (1) Indemnitor's liability
shall be limited to the amount of the proposed settlement and Indemnitor
shall thereupon be relieved of any further liability with respect to such
claim, and (2) from and after such date, Indemnitee will undertake all
legal costs and expenses in connection with such claim and shall indemnify
Indemnitor from any further liability or obligation to such third party in
connection with such claim in excess of the amount of the proposed
settlement. If Indemnitor fails to defend any claim within a reasonable
time, Indemnitee shall be entitled to assume the defense thereof, and
Indemnitor shall be liable to Indemnitee for its expenses reasonably
incurred, including attorney's fees and payment of any settlement amount or
judgment.
SECTION 11.4 DETERMINATION OF INDEMNIFICATION AMOUNTS AND RELATED MATTERS.
(a) In calculating amounts payable to an Indemnitee hereunder, the
amount of the indemnified losses shall be reduced by the amount of any
insurance proceeds paid to the Indemnitee for such Losses.
(b) Subject to the provisions of Section 11.3, all amounts payable by
the Indemnitor to the Indemnitee in respect
55
of any Losses under Sections 11.1 or 11.2 shall be payable by the
Indemnitor as incurred by the Indemnitee.
(c) The provisions of Sections 11.3 and 11.4 shall be applicable to
any claim for indemnification made under any other provision of this
Agreement and all references in Sections 11.3 and 11.4 to Sections 11.1 and
11.2 shall be deemed to be references to such other provisions of this
Agreement.
SECTION 11.5 TIME AND MANNER OF CERTAIN CLAIMS. Except as otherwise
provided herein, the representations, warranties and covenants of Buyer and
Seller in this Agreement shall survive Closing for a period of twelve (12)
months except for representations, warranties and covenants (i) relating to
title, ownership, employee benefit matters, Copyright Act matters and Taxes,
which shall survive until the expiration of the applicable statute of
limitations and (ii) relating to environmental matters, which shall survive
until the third anniversary of the Closing Date, and Buyer's and Seller's rights
to make claims dated thereafter shall likewise expire and be extinguished on
such dates. Neither Seller nor Buyer shall have any liability under Sections
11.1(a) or 11.2(a), respectively, unless a claim for Losses for which
indemnification is sought thereunder is asserted by the party seeking
indemnification by written notice to the party from whom indemnification is
sought within the applicable survival period.
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each of the parties shall pay its own expenses and the fees and
expenses of its counsel, accountants, and other experts in connection with this
Agreement.
SECTION 12.2 WAIVERS. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party hereto, shall be deemed to
constitute a waiver by the party taking the action of compliance with any
representation, warranty, covenant or agreement contained herein or in any
document delivered pursuant hereto. The waiver by any party hereto of any
condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party of any of the conditions precedent to its obligations
under this Agreement shall not preclude it from seeking redress for breach of
this Agreement other than with respect to the condition so waived.
SECTION 12.3 NOTICES. All notices, requests, demands, applications,
services of process, and other communications which are required to be or may be
given under this Agreement shall be in
56
writing and shall be deemed to have been duly given if sent by facsimile
transmission, delivered by overnight or other courier service, or mailed,
certified first class mail, postage prepaid, return receipt requested, to the
parties hereto at the following addresses:
To Seller: Saguaro Cable TV Investors, L.P.
c/o Arizona And Southwest Cable, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: R. Xxxxxxx Xxxxxx, President
Telecopy: (000) 000-0000
Copies (which shall not constitute notice) to:
Xxxx Xxxxx Xxxx Xxxxxxxx
& Xxxxx, P.C.
Dominion Plaza, Suite 2700 South
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
To Buyer: Mediacom LLC
00 Xxxxxxx Xxx Xxxx, Xxxxx 000-X
Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Manager
Telecopy: (000) 000-0000
Copies (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxx Xxxxxxxx
Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq,
Telecopy: (000) 000-0000
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered by courier service or by facsimile transmission, upon actual
receipt by the intended recipient, or (ii) if mailed, upon the earlier of five
(5) days after deposit with the U. S. Postal Service or the date of delivery as
shown on the return receipt therefor.
SECTION 12.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement embodies the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect thereto. This Agreement may not be modified orally, but only by an
57
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification, or discharge may be sought to be enforced.
SECTION 12.5 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and will be binding upon the parties hereto and their respective
heirs, legal representatives, successors, and permitted assigns. Neither Buyer
nor Seller shall assign this Agreement or delegate any of its duties hereunder
to any other Person without the prior written consent of the other, provided,
that Buyer may assign this Agreement to any Affiliate of Buyer without the prior
written consent of Seller. Nothing in this Agreement, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies or obligations
under or by reason of this Agreement.
SECTION 12.6 HEADINGS, SCHEDULES, AND EXHIBITS. The section and other
headings contained in this Agreement are for reference purposes only and will
not affect the meaning or interpretation of this Agreement. Reference to
schedules and exhibits shall, unless otherwise indicated, refer to the schedules
or exhibits attached to this Agreement, which shall be incorporated in and
constitute a part of this Agreement by such reference.
SECTION 12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together will be deemed to be one and the same instrument.
SECTION 12.8 PUBLICITY. Seller and Buyer shall consult with and cooperate
with the other with respect to the content and timing of all press releases and
other public announcements, and any oral or written statements to Seller's
employees concerning this Agreement and the transactions contemplated hereby.
Neither Seller nor Buyer shall make any such release, announcement, or
statements without the prior written consent of the other, which shall not be
unreasonably withheld or delayed; provided, however, that Seller or Buyer may at
any time make any announcement required by Legal Requirements so long as such
party, promptly upon learning of such requirement, notifies the other of such
requirement and consults with the other in good faith with respect to the
wording of such announcement.
SECTION 12.9 GOVERNING LAW. The validity, performance, and enforcement of
this Agreement and all transaction documents, unless expressly provided to the
contrary, shall be governed by the laws of the State of Arizona without
giving effect to the principles of conflicts of law of such state. Each party
hereby submits to the jurisdiction of the appropriate courts of the State of
Arizona and agrees to be served with legal process from any of such courts.
Each party hereby irrevocably waives, to the fullest extent
58
permitted by law, any objection that it may have, whether now or in the future,
to the laying of venue in, or to the jurisdiction of, any and each of such
courts for the purpose of any such suit, action, proceeding or judgment and
further waives any claim that any such suit, action, proceeding or judgment has
been brought in an inconvenient forum.
SECTION 12.10 THIRD PARTIES; JOINT VENTURES. This Agreement constitutes an
agreement solely among the parties hereto, and, except as otherwise provided
herein, is not intended to and will not confer any right, remedies, obligations,
or liabilities, legal or equitable, including any right of employment on any
Person (including but not limited to any employee or former employee of Seller)
other than the parties hereto and their respective successors or assigns, or
otherwise constitute any Person a third party beneficiary under or by reason of
this Agreement. Nothing in this Agreement, expressed or implied, is intended to
or shall constitute the parties hereto partners or participants in a joint
venture.
SECTION 12.11 CONSTRUCTION. This Agreement has been negotiated by Buyer and
Seller and their respective legal counsel, 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 shall not apply in any
construction or interpretation of this Agreement.
SECTION 12.12 ARBITRATION. Except for claims for injunctive relief under
Section 6.10, claims for damages or specific performance pursuant to Section
10.1 or 10.2 and third-party claims by one party against the other in any action
or proceeding commenced by unaffiliated persons or firms, all claims, disputes
and differences hereunder shall be determined by arbitration under the rules
then obtaining of the American Arbitration Association in Arizona. If $50,000 or
more is at issue, the matter shall be heard by a panel of three arbitrators. In
such case, Seller and Buyer shall each designate one disinterested arbitrator,
and the two arbitrators so designated shall select the third arbitrator. Buyer
and Seller agree that in any dispute submitted for arbitration in connection
herewith, the "non-prevailing" party shall pay all fees and expenses of the
arbitration proceedings incurred by the "prevailing" party if the amount of
award granted to the "prevailing" party is in excess of the award, if any,
granted to the "non-prevailing" party; otherwise each party shall pay its own
fees and expenses and one-half of the arbitration fees and expenses.
SECTION 12.13 FURTHER ACTS. Buyer and Seller shall, without further
consideration, execute and deliver such further instruments and documents and do
such other acts and things as the other may reasonably request in order to
confirm the transactions contemplated by this Agreement. Without limiting the
foregoing,
59
Seller shall deliver to Buyer any and all checks, drafts or other forms of
payment received in respect of any of the Accounts Receivable acquired by Buyer
pursuant to the terms of this Agreement and any of the Accounts Receivable
subsequent to the Closing Date derived from the operations of the Business.
[Remainder of this page intentionally left blank;
Signatures to follow]
60
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first written above.
BUYER:
MEDIACOM LLC
BY: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Manager
SELLER:
SAGUARO CABLE TV INVESTORS, L.P.
BY: Arizona and Southwest Cable, Inc.,
its General Partner
BY: _______________________________
Name: R. Xxxxxxx Xxxxxx
Title: President
SOLELY FOR PURPOSES
OF SECTION 3.2:
________________________________
R. XXXXXXX XXXXXX
61
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first written above.
BUYER:
MEDIACOM LLC
By: ______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Manager
SELLER:
SAGUARO CABLE TV INVESTORS, L.P.
By: Arizona and Southwest Cable, Inc.
its General Partner
By: /s/ R. Xxxxxxx Xxxxxx
-------------------------------
Name: R. Xxxxxxx Xxxxxx
Title: President
SOLELY FOR PURPOSES
OF SECTION 3.2:
/s/ R. Xxxxxxx Xxxxxx
--------------------------------
R. Xxxxxxx Xxxxxx
61
SCHEDULES TO
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 29 1996
BETWEEN
MEDIACOM LLC
AND
SAGUARO CABLE TV INVESTORS, L.P.
Notwithstanding anything contained in these Schedules, all liabilities
relating to the operation of the Business prior to Closing shall be the sole
responsibility of Seller.
