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EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this AGREEMENT") is made and entered
into this 30th day of January, 1996, by and between DBS HOLDINGS, L.P., a
Delaware limited partnership ("BUYER") and Xxxxxx XXXXXXXX and Xxxxx Xxxxxxxx
Xxxxxxxx ("SELLER").
RECITALS
A. Seller owns all of the issued and outstanding shares (the "SHARES")
of Spacenet, Inc., a New Mexico corporation (the "COMPANY").
B. The Company operates an exclusive distributorship of the National
Rural Telecommunications Cooperative's DBS Services and of Xxxxxx Communications
Galaxy, Inc.'s DirecTv service in Los Alamos and Colfax Counties, New Mexico
(the "BUSINESS").
C. Seller desires to sell, and Buyer desires to purchase for the price
and on the terms hereinafter set forth, the Shares.
AGREEMENTS
NOW, THEREFORE, in order to implement said sale and purchase, and in
consideration of the mutual agreements set forth herein, the parties agree as
follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
Accounts Receivable shall have the meaning set forth in Section 3.7(e)
of this Agreement.
Acquisition Documents shall mean this Agreement, the Pledge Agreement,
the Security Agreement and any and all other agreements, documents, certificates
or instruments executed pursuant to or in connection with this Agreement or the
transactions contemplated hereby.
Affiliate, when used with reference to a specified Person, shall mean
any Person that is a spouse, parent, grandparent, lineal descendant, sibling or
other relative of such Person or any Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the specified Person.
Business shall have the meaning ascribed to it in Recital B.
Business Day shall mean any day except a Saturday, Sunday or other day
on which commercial banks are required or authorized to close in New York.
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Cable Programming shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
Closing and Closing Date shall have the meanings set forth in Section
2.5 of this Agreement.
Commercial Establishment shall have the meaning ascribed to such term
in the NRTC/Member Agreement.
Committed Member Residence shall have the meaning ascribed to such term
in the NRTC/Member Agreement.
Current Assets shall mean the current assets of the Company, as shown
on the Closing Date Balance Sheet.
Current Liabilities shall mean the current liabilities of the Company,
as shown on the Closing Date Balance Sheet.
Customer shall mean any user of the DBS Services or other services
distributed by Seller (including a Subscriber).
DBS Services shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
DirecTv means DirecTv, Inc., a California corporation.
DirecTv Agreement shall mean any and all agreements between Seller and
DirecTv relating to Seller's application or authorization to act as a dealer of
DirecTv programming packages, together with any amendments thereto.
Escrow Agent shall mean the escrow agent pursuant to the Escrow
Agreement.
Escrow Agreement shall mean an escrow agreement substantially in the
form of Exhibit A.
HGC DirecTv shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
Xxxxxx shall mean Xxxxxx Communications Galaxy, Inc.
Indebtedness shall mean any indebtedness of the Company, as shown on
the Closing Date Balance Sheet.
Independent Accountant shall mean a "Big 6 " Accounting Firm (or other
firm mutually acceptable to Buyer and Seller) which accounting firm shall not
have provided any services to
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Buyer, Seller or any of their Affiliates for the prior five (5) years.
Licenses shall mean all governmental or private licenses, permits,'
authorizations and rights, including the NRTC/Member Agreement and the DirecTv
Agreement, all rights in pending applications, and all additions thereto,
including renewals and modifications and applications therefor, with respect to
the Business, all of which Licenses are described in Schedule 3.10 of this
Agreement.
Lien shall mean with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim or
restriction of any kind in respect of such property or asset. For purposes of
this Agreement, any restriction or limitation with respect to a security or
other ownership interest (including any restriction on the right to vote, sell
or otherwise dispose of such security or ownership interest) shall constitute a
"Lien" thereon. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any property or asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
relating to such property or asset.
Non-Select Services shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
NRTC shall mean the National Rural Telecommunications Cooperative, a
District of Columbia corporation.
NRTC/Member Agreement shall mean the NRTC/Member Agreement for
Marketing and Distribution of DBS Services by and between the Company and NRTC,
together with all amendments and exhibits thereto and any and another agreements
by and between the Company and NRTC.
Other Contracts shall mean all equient leases, real estate leases and
other contracts and agreements described in Schedule 3.19 to this Agreement
other than the NRTC/Member Agreement and the DirecTv Agreement, together with
any additional contracts entered into by the Company between the date hereof and
the Closing Date in accordance with this Agreement.
Person shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or agency or instrumentality thereof.
Pledge Agreement shall mean that certain Stock Pledge Agreement
substantially in the form attached hereto as Exhibit B, the execution and
delivery of which is a condition to Closing.
Programming shall mean Cable Programming and HCG DirecTv.
Security Agreement means that certain Security Agreement substantially
in the form
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attached hereto as Exhibit C, the execution and delivery of which is a condition
to Closing.
Subscriber as of any date shall mean a Customer who, at a minimum, is
subscribing to a package of basic services and: (1) on the last date of the
calendar month prior to such date, whose account is not more than sixty (60)
days past due from the date payment is due; (2) who is not an employee or agent
of the service provider or charged a fee that is nominal (e.g., demonstration
unit) or substantially below the service provider's published rates; and (3) who
has not given notice of intent to discontinue service.
1.2 Other & Definitional Provisions. For purposes of this Agreement and
the other Acquisition Documents, the following additional rules of construction
shall apply:
(a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter;
(b) the term "including" shall not be limiting or exclusive, unless
specifically indicated to the contrary; and
(c) all references to "sections" or "subsections" in an Acquisition
Document shall be to sections or subsections of such Acquisition Document,
unless otherwise specifically provided.
SECTION 2. PURCHASE AND SALE OF SHARES.
2.1 Sale Of Shares.
Subject to the provisions of this Agreement, Seller agrees to sell, and
Buyer agrees to purchase, at Closing, the Shares.
2.2 Purchase Price.
The purchase price for the Shares (the "PURCHASE PRICE") shall be
$100,000 (the "CLOSING PAYMENT"), payable at Closing, plus certain additional
payments of interest and principal (the "Note Payments") to made in accordance
with the terms of a secured promissory note of the Company in the principal
amount of $412,000 substantially in the form attached hereto as Exhibit D (the
46 Note"), payable as follows:
(i) the Closing Payment will be paid by Buyer to Seller at
Closing by wire transfer of immediately available funds to an account
designated in writing by Seller at least three Business Days prior to
the Closing Date; and
(ii) the Note Payments will be evidenced by, and paid to
Seller in accordance with the terms of the Note, which shall be issued
by the Company to
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Seller at Closing.
2.3 Consideration Adjustments. (a) The Closing Payment shall be reduced
by the parties' good faith estimate of the amount by which Current Liabilities
exceed Current Assets, or increased by the amount that Accounts Receivable
exceed Current Liabilities, and reduced by the parties' good faith estimate of
amount of any Indebtedness (excluding Indebtedness of the Company to Columbia
Capital Corporation in the principal amount of $7,500) (the "Closing
Adjustment"). Buyer shall cause the Indebtedness of the Company to Los Alamos
National Bank to be paid in full at Closing.
(b) Promptly after the Closing, Seller shall prepare a balance sheet of
the Company as of the Closing Date, which balance sheet will be prepared on a
basis consistent with the Latest Balance Sheet and will present fairly the
financial position of Seller as of the Closing Date. Such balance sheet is
hereinafter called the "Closing Date Balance Sheet." No later than 30 days after
the Closing, Seller shall deliver to Buyer a copy of the Closing Date Balance
Sheet together with its determination of the Closing Adjustment pursuant to the
Closing Date Balance Sheet. The Closing Date Balance Sheet and the determination
of the Closing Adjustment shall be subject to review by Buyer and its auditors
on behalf of Buyer at Buyer's expense. Such review by Buyer shall be completed
within fifteen (15) business days after delivery of the Closing Date Balance
Sheet to Buyer. In the event of any disagreement between Seller and Buyer
regarding the amount of the Closing Adjustment which has not been resolved
within sixty (60) days after the Closing Date, unless said date shall have been
extended by mutual agreement of the parties, the dispute shall be referred to an
Independent Accountant, whose determination shall be made within thirty (30)
days of such referral, and shall be final and binding upon the parties. The fees
and expenses of said Independent Accountant shall be borne by Seller and the
Buyer equally. The determination of the Closing Adjustment pursuant to this
Section 2.3(b) shall be referred to as the "Final Closing Adjustment".
(c) If the Final Closing Adjustment is greater than the Closing
Adjustment agreed to pursuant to Section 2.3(a), then the Seller shall pay the
difference to Buyer in cash, within thirty (30) days after delivery to it of the
Closing Date Balance Sheet. If the Final Closing Adjustment is less than the
Closing Adjustment agreed to pursuant to Section 2.3(a), then Buyer shall pay
the difference to Seller within thirty (30) days after the delivery of the
Closing Date Balance Sheet; provided, however, in either case that if the Buyer
shall disagree with the Closing Date Balance Sheet, the payment shall be made
within thirty (30) days of the final determination of such disagreement.
(d) If, following any final payment of a consideration adjustment
pursuant to this Section 2.3, an error (in billing or reporting by NRTC or
otherwise) is thereafter discovered which would have affected such final
payment, the parties shall agree in good faith on the amount of such adjustment,
and the next payment made pursuant to the Note shall be increased or decreased
accordingly.
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2.4 Time and Place of Closing; Termination of Agreement. The closing of
the purchase and sale provided for in this Agreement (herein called the
"Closing") shall be held at the office of the Buyer at 10:00 A.M. (the "CLOSING
DATE") (i) on the last calendar day of the month in which all of the conditions
precedent set forth in Section 7 hereof shall have been satisfied or waived,
(ii) at Buyer's election with at least five (5) days prior written notice to
Seller, on the calendar day of such month on which the NRTC's mid-month
statements are created, or (iii) such other place, time or date as the parties
may agree upon in writing. Either party may terminate this Agreement by written
notice to the other party if the Closing has not occurred by April 30, 1996.
2.5 The Closing. At the Closing:
(a) Seller shall deliver to Buyer certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock powers), for
transfer to Buyer;
(b) Seller shall deliver to Buyer all originals or copies, as
provided herein, of Seller's files and records which are relevant to the
Company, such relevance to be determined in Buyer's reasonable discretion, and
Seller shall put Buyer in actual possession of the Company; and
(c) Seller and Buyer shall execute and deliver, each to the other,
the documents required to be executed and delivered by such parties pursuant to
Sections 7.2 and 7.3, respectively.
2.6 Further Assurances. From and after Closing, Buyer and Seller shall
do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
and delivered, all such further acts, deeds, assignments, documents,
instruments, transfers, conveyances, discharges, releases, assurances and
consents as Buyer or Seller may, from time to time, reasonably request to
confirm, perfect and evidence the transfers and transactions contemplated by
this Agreement.
2.7 Escrow. Contemporaneously with the execution of this Agreement,
Buyer has delivered to the Escrow Agent a deposit in the amount of $50,000, to
be held by the Escrow Agent in accordance with the Escrow Agreement. At Closing,
the Escrow Agent shall release all escrowed funds to Seller, and Buyer shall
receive a credit to the Closing Payment in the amount of any sum so released.
Upon the termination of this Agreement (except for any termination by Seller
resulting from a default hereunder by Buyer), all escrowed funds shall be
released to Buyer. Buyer and Seller shall execute and deliver to the Escrow
Agent any and all instructions required to cause the release of escrowed funds
in accordance with this Section 2.7.
2.8 Cablenet Sales Agreement. At Closing, Buyer and Seller shall cause
that certain promissory note issued to the Company pursuant to the Cablenet
Sales Agreement to be assigned to Seller.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
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In order to induce Buyer to enter into this Agreement, Seller hereby
represents and warrants to Buyer that the following statements are true, correct
and complete. The representations and warranties of Seller set forth in this
Agreement and in any other Acquisition Document are continuing in nature and
Seller shall promptly inform Buyer of any matter which would cause any such
representations or warranties to be untrue, incorrect or incomplete.
3.1 Incorporation; Authorized Shares (a) The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of New Mexico. The Company has full corporate power and authority to
carry on its business and operations as presently conducted and as planned to be
conducted and is duly qualified to do business in each jurisdiction in which it
is either doing business or in which the failure to qualify would have an
adverse effect on the Company. The Company does not directly or indirectly own
or otherwise control any capital stock of, or have any ownership interest in,
any corporation, partnership or other entity. The current ownership structure
has been approved by all necessary governmental agencies. Attached hereto as
Schedule 3.1(a) is a complete and correct copy of the Articles of Incorporation
and Bylaws (together with all amendments thereto and restatements thereof) of
the Company.
(b) The authorized equity securities of the Company consist of 10,000
shares of common stock, no par value, of which 9,500 shares are issued and
outstanding and constitute the Shares. Seller is the record and beneficial owner
and holder of the Shares, free and clear of all Liens. All of the Shares have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no agreements relating to the issuance, sale, or transfer of any
equity securities or other securities of the Company. The Company does not own
or have any agreement to acquire any equity securities or other securities of
any Person or any direct or indirect ownership interest in any other business.
3.2 Governmental Authorizations.
No consent or authorization of, or filing with, any governmental
authority is required on the part of the Seller or the Company in connection
with the Seller's execution, delivery or performance of this Agreement and the
other Acquisition Documents to which it is a party.
3.3 Binding Effect. This Agreement has been duly and validly executed
and delivered by Seller. This Agreement constitutes, and, on the Closing Date,
the other Acquisition Documents executed and delivered by the Seller will
constitute the legal, valid and binding obligation of Seller enforceable against
Seller in accordance with their respective terms, subject to bankruptcy,
insolvency and similar laws of general application affecting creditors' rights
and remedies.
3.4 No Conflict. Neither the execution and delivery by Seller of this
Agreement or the other Acquisition Documents nor the consummation of the
transactions contemplated by this
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Agreement and the other Acquisition Documents (i) violate any applicable law,
regulation, order, judgment, injunction, decree, rule or ruling of any
governmental authority, (ii) violate any provision of the articles of
incorporation or bylaws of the Company, (iii) result in any breach of, or
constitute (with due notice or lapse of time or both) a default under any
agreement, instrument, license or permit to which the Company or Seller is a
party or by which or to which the Company, Seller or any of its or his assets
are subject or bound, (iv) result in the creation or imposition of any lien,
charge or encumbrance on any of the assets of the Company, or (v) require the
consent of any third party, except for consents required pursuant to agreements
set forth on Schedule 3.19, all of which shall have been obtained by Seller or
Buyer prior to Closing.
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3.5 Title to Properties; Liens: Condition of Properties.
(a) SCHEDULE 3.5(a) lists all tangible assets of the Company which
consist of all tangible assets used or otherwise necessary to conduct the
Business. The Company has good and valid title to the tangible assets free and
clear of any Lien. All tangible assets material to the operation of the Business
are in good working order and repair and comply in all material respects with
applicable rules, regulations and standards regarding their intended use.
Without limiting the generality of the foregoing, except as indicated in
SCHEDULE 3.5(a), the Company uses no furniture, fixtures or equient which it
does not own. All items of such furniture, fixtures and equient are in good
operating condition, ordinary wear and tear excepted (where appropriate) and
adequate for the present use thereof.
(b) All leases of personal property to which the Company is a
party are valid, binding and enforceable in accordance with their terms, and
neither the Company nor, to Seller's knowledge, any other party thereto is in
default thereunder. The Company is the sole and exclusive owner of all right,
title and interest in and to all assets. Except for the Lien in favor Los
Alamos National Bank, which shall be released at Closing upon payment in full
by Buyer of the Indebtedness of the Company to Los Alamos National Bank, all of
the assets of the Company are free and clear of all security interests,
pledges, liens, conditional sales agreements and encumbrances.
(c) SCHEDULE 3.5(c) contains a description of all of the Company's
interests, including leasehold interests and easements, and rights in and
agreements with respect to real property used or intended for use in connection
with the operations of the Business (the "REAL PROPERTY"). All of the Real
Property is in good condition and repair consistent with its current use and
available for immediate use in connection with the Business. All of the Real
Property owned by the Company and the use thereof complies with all applicable
laws, statutes, ordinances, rules and regulations of federal, state and local
governmental and quasi-governmental authorities, including, without limitation,
those relating to zoning.
(d) The Company has not received any notice of any appropriation,
condemnation or like proceeding, or of any violation of any applicable zoning
law, regulation or other law, order, regulation or requirement relating to or
affecting such Real Property or improvements thereon, or of the need for any
material repair, remedy, construction, alteration or installation with respect
to such Real Property or improvements thereon, or any change in the means or
methods of conducting operations thereon.
(e) The Company has good title to the non-fee estates identified on
SCHEDULE 3.5(c), if any. The contracts with respect to Real Property listed on
SCHEDULE 3.5(c) constitute valid and binding obligations of the Company and of
all other parties thereto, and are in full force and effect as of the date
hereof. The Company is not in default under any of the contracts with respect to
Real Property and, to the best of Seller's knowledge, the other parties to such
contracts are not in default thereunder. The Company has not received or given
written
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notice of any default thereunder from or to any of the other parties thereto.
SCHEDULE 3.5(c) lists all third party consents necessary to assign such
contracts.
3.6 [INTENTIONALLY OMITTED.]
3.7 Financial Condition of Seller.
(a) Prior to the execution of this Agreement or prior to Closing,
as specified below, copies of the following financial statements (together with
any financial statements delivered pursuant to Section 5.3(l), the "FINANCIAL
STATEMENTS") have been or shall be delivered to the Buyer:
(i) the balance sheets of the Company as of December 31, 1993,
1994 and 1995, and statements of operations and retained earnings and
cash flows for the fiscal years then ended shall be delivered to Buyer
within fifteen (15) days after the date of this Agreement; and
(ii) the unaudited trial balance sheet of the Company as of
January 23, 1996 has been delivered prior to the execution of this
Agreement and, within fifteen (15) days after the execution of this
Agreement, will be revised to conform to the accounting
representations, warranties and covenants set forth herein (the "Latest
Balance Sheet").
The Financial Statements, together with the notes thereto, (i) are in accordance
with the books and records of the Company, (ii) present fairly and accurately
the financial condition of the Company as of the dates of the balance sheets,
(iii) present fairly and accurately in all material respects the results of
operations of the Company for the periods covered by such statements, and (iv)
have been prepared in accordance with the applicable rules and regulations of
the NRTC and sound accounting principles except as noted therein, and in the
case of the Latest Balance Sheet, subject to normal year-end adjustments. As of
the Closing, the Company shall have no debts, liabilities or obligations of any
nature (whether absolute, accrued or contingent and whether due or to become
due) that are not reflected on the Latest Balance Sheet or that are not
otherwise disclosed on schedules delivered pursuant to this Agreement. The
Financial Statements include appropriate reserves for all taxes and other
liabilities accrued as of the date of such statements but not yet payable.
(b) Except to the extent provided in the Latest Balance Sheet,
there are no material liabilities or obligations of the Company or otherwise
relating to the Business. Since the date of the Latest Balance Sheet, there has
been no material adverse change in the financial condition of the Company or
results of operations of the Business, or either of them, nor has any other
event or condition occurred which may have or has had a material adverse effect
on the Company or the Business.
(c) All federal, state, county and local tax returns, reports and
declarations of
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estimated tax or estimated tax deposit forms required to be filed by the Company
have been duly and timely filed. The Company has timely paid all taxes which
have become due pursuant to such returns or pursuant to any assessment received
by it, and has paid in full all installments of estimated taxes due. All taxes,
levies and other assessments which the Company is required by law to withhold or
to collect have been duly withheld and collected, and have been paid over to the
proper governmental authorities or are held by the Company for such payment.
(d) The Company's books and records are complete and accurately and
fairly reflect the transactions and dispositions of the Company's assets.
(e) Within fifteen (15) days after the execution of this Agreement,
Seller shall deliver to Buyer a schedule of the accounts receivable of the
Company relating to the Business (collectively, the "Accounts Receivable").
(f) (1) The accounting data in the Financial Statements has been
derived from NRTC Central Billing System Reports, including but not limited to:
Report 18A (Subscriber Accounts Receivable), Report 19A (Accounts Receivable
Summary), Report 17 (Unearned Revenue Report), and the NRTC Wholesale Invoice.
Any deviation in the Financial Statements in any month from the amounts stated
on these reports will be reconciled and adjusted to the satisfaction of Buyer.
(2) The Financial Statements have been prepared in compliance
with NRTC recommendations as stated in the following documents: NRTC DBS Member
Audit Guide, DBS Participant Accounting Handbook, NRTC DBS Member Standard
Journal Entry Reference Manual. Any deviation in the Financial Statements in
any month from the procedures described in these manuals will be reconciled and
adjusted to the satisfaction of the Buyer.
(3) For the months following the last statement provided,
there have been no material changes in revenues or expenses, except those
normally associated with the addition of new Customer accounts, there have been
no purchases or other additions of new Customer accounts, and there have been
no purchases or other additions to fixed assets by the Company. Listings of
fixed assets, accounts payable, accounts receivable, and inventory provided by
the Seller are true and correct as of the date they were provided to Buyer. Any
material changes in the updated financial statements will be reconciled and
adjusted to the satisfaction of the Buyer.
3.8 Absence of Certain Changes. Since June 30, 1995, or as otherwise
provided, except as expressly disclosed in this Agreement or the -Schedules
thereto, there has not been (a) any pending or threatened union organizational
activity, labor dispute or grievance, strike or work stoppage affecting the
Business; (b) any physical damage,.destruction or loss affecting the Business
where the affected assets have not been restored, repaired or replaced with
assets of similar quality, value and utility; (c) any material contract,
commitment or transaction entered into or consummated respecting the Business;
(d) any sale, assignment, lease or other transfer or disposition of any of the
Company's properties or assets except in the normal course of
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business; (e) any increase in compensation payable or to become payable to, or
any bonus paid or agreed to be paid to, any employee or agent of the Business;
or (f) any change in the service area of the Business or any electronic
interference with the Business.
3.9 Compliance with Laws and Other Instruments. The Company is not in
violation or breach of, or in default under, (a) any provision of its or other
organizational documents, (b) any provision of any law or regulation applicable
to it or to which any of its assets are subject, or any other state, federal, or
municipal administrative agency, which violation or breach would have a material
adverse effect on the Seller or the Business (and no notice has been received of
any violation or breach of law or regulation whatsoever), except as may be
listed in the Schedules to this Agreement, (c) any order, judgment or award of
any court, tribunal or state, federal, or municipal administrative or regulatory
authority applicable to it or to which any of its assets are subject, or (d) any
material agreement or instrument to which it is a party or to which any of its
assets is bound, including, without limitation, the NRTC/Member Agreement and
the DirecTv Agreement.
3.10 Intellectual Property. Schedule 3.10 lists all material
copyrights, trademarks, tradenames, service marks, Licenses, patents, permits,
jingles, privileges and other similar intangible property rights and interests
(exclusive of those required to be listed in other Schedules) applied for,
issued to or owned by the Company, or under which the Company is licensed or
franchised, and used or useful in the conduct of the businesses and operations
of the Business, all of which rights and interests are issued to or owned by the
Company, or if licensed or franchised to the Company, are valid and uncontested.
Seller has delivered to Buyer copies of all material documents, if any,
establishing such rights, Licenses or other authority. To Seller's knowledge,
there is no pending or threatened proceeding or litigation affecting or with
respect to the intellectual property. The Company has received no notice and the
Seller has no knowledge of any infringement or unlawful use of such property.
The intellectual property listed in SCHEDULE 3.10 includes all such property
necessary to conduct the Business as now conducted.
3.11 Litigation.
(a) Except as set forth in SCHEDULE 3.11(a) (or as otherwise disclosed
to Buyer), there are no actions, suits, proceedings or investigations (whether
or not purportedly on behalf of Seller) pending or threatened against or
affecting Seller, the Company or the Business at law or IN equity or admiralty,
or before or by any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or foreign which could
have a material adverse effect on the Company or the Business, nor has any such
action, suit, proceeding or investigation been pending during the 12-month
period preceding the date of this Agreement.
(b) Except as listed in SCHEDULE 3.11(b), the Company is not operating
under or subject to, or in default with respect to, any order, writ, injunction
or decree of any court or federal, state, municipal or other governmental
department, commission, board, agency or
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instrumentality, domestic or foreign.
3.12 Employee Information.
(a) SCHEDULE 3.12(a) contains a true and complete list of all Persons
employed in connection with the Business. Except as set forth on SCHEDULE
3.12(a), there are no employment contracts or other compensation arrangements
respecting any employees of the Company.
(b) The Company is not a party to any collective bargaining agreement
or other contract or commitment to or with any labor union or other employee
representative or group of employees, and no labor organization or any
representative thereof has made any attempt to organize or represent such
employees. There are no unfair labor practice charges, pending grievance
proceedings or adverse decisions of a Trial Examiner of the National Labor
Relations Board against the Company or any agent, representative or employee of
the Company. The Company is not in arrears in the payment or deposit of any
wages or wagerelated governmental taxes or charges. The Company has complied
with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
(ERISA), and those laws relating to safety, health, wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
(c) Except as set forth in SCHEDULE 3.12(c), the Company is not a party
to or bound by any employee benefit plan within the meaning of Section 3(3) of
the Employment Retirement Income Security Act of 1974, as amended (ERISA),
whether or not such plan is otherwise exempt from the provisions of ERISA, and
no employee or spouse of an employee is entitled to any benefits that would be
payable pursuant to any such plan. Except pursuant to a plan or agreement listed
on SCHEDULE 3.12(c), the Company has no fixed or contingent liability or
obligation to any person now or formerly employed at the Business, including,
without limitation, pension or thrift plans, individual or supplemental pension
or accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements and
vacation, sick leave, disability and termination arrangements or policies,
including workers' compensation policies. The Company has administered any plan
on SCHEDULE 3.12(c) in accordance with the provisions of ERISA.
3.13 Finder's Fee. No agent, broker or finder has acted for Seller in
connection with this Agreement, and the transactions contemplated hereby, and
Seller hereby agrees to indemnify and save Buyer harmless from any claims of
Persons claiming by or through Seller for commissions or fees by reason of this
Agreement or the transactions contemplated by this Agreement.
3.14 Safety and Environmental Representation. The Company is in
compliance with all applicable laws and regulations related to the environment,
health and safety, all required governmental permits have been obtained and are
in effect, and no on-site storage, treatment or
14
disposal of hazardous waste or material has been made (except in compliance with
applicable laws and regulations). There are no pending actions, proceedings, or
notices of potential action against the Company or with respect to the Business,
and Seller has no knowledge of any facts that may lead to actions, proceedings,
or notices of potential action from any governmental agency regarding the
condition of the properties owned or leased by the Company under environmental,
health or safety laws, which would have a material adverse effect on the Company
or the Business. The Company has lawfully disposed of its waste and no pending
or threatened proceedings exist concerning waste disposal by the Company. There
are no underground storage tanks, PCBs, asbestos, radon gas, harmful nuclear
radiation, or hazardous wastes present on the properties leased by or real or
personal property owned by the Company.
3.15 Non-Foreign Status. Seller is not a "non-resident alien", "foreign
corporation", "foreign partnership", "foreign trust" or "foreign estate" within
the meaning of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder and Seller agrees, at the Closing, to deliver to Buyer
any affidavit or certificate required pursuant to the Internal Revenue Code or
any regulations thereunder specifically relating to the matters represented in
this Section.
3.16 Insurance. The assets and employees of the Business are insured
against loss, damage or injury in amounts customary in the industry. SCHEDULE
3.16 lists all insurance policies held by the Company relating to such business,
properties and employees, together with the policy limit, the type of coverage,
the location of the property covered, annual premium, premium payment dates and
expiration date of each of the policies. All such insurance policies are in full
force and effect.
3.17 Insolvency. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Company or any of the assets of the Company, are pending or threatened, and
neither Seller nor the Company has made any assignment for the benefit of
creditors or taken any action in contemplation of or which would constitute the
basis for the institution of such insolvency proceedings.
3.18 Securities Law. The Company is not now and has never been subject
to the reporting requirements of the Securities and Exchange Commission
("SECII).
3.19 Contracts. Except for the contracts, plans, agreements, and leases
listed in SCHEDULE 3.19, true and complete copies of which have been furnished
to Buyer as of the date hereof, Seller is not a party to any (i) contracts for
the future purchase of materials, supplies, equient or services; (ii)
contracts not made in the ordinary and usual course of business; (W) employment
or consulting contracts; (iv) contracts with any labor union or other labor
organization; (v) guarantees or accommodations; (A) leases of personal or real
property; (vii) contracts or agreements with affiliates or shareholders of the
Company, or (viii) contracts continuing for a period of more than six (6) months
from their respective dates. The Company has performed all obligations required
to be performed by it to date (including having paid any
15
amounts required to have been paid to date under any agreements including, but
not limited to, Programming agreements, all franchise fees, and all payments to
NRTC, Xxxxxx, or DirecTv and has not breached and is not in default under any
agreement listed in SCHEDULE 3.19 or to which it is a party or by which it is
bound, and all of the same are enforceable in accordance with their terms. All
such agreements are in full force and effect and there does not exist any
default or event or condition which, after notice or lapse of time or both,
would constitute a default thereunder by the Company or to the knowledge of
Seller, by any other party thereto.
3.20 NRTC Membership; DBS Distribution Rights.
(a) Attached hereto as SCHEDULE 3.20(a), is a true and complete copy of
the NRTC/Member Agreement together with all exhibits thereto.
(b) Attached hereto as SCHEDULE 3.20(b) is a true and complete copy of
the DirecTv Agreement, with all exhibits thereto.
(c) Pursuant to the NRTC/Member Agreement, the Company has the
exclusive right to market, sell and retain revenue from Programming (except
Non-Select Services) transmitted over the NRTC/Member Agreement directly to
Committed Member Residences in Los Alamos and Colfax Counties under the terms
and conditions set forth in the NRTC/Member Agreement. The Company also has the
right to market, sell and, retain revenue from the distribution of Programming
(except Non-Select Services) directly to Commercial Establishments in Los Alamos
and Colfax Counties under the terms and conditions set forth in the NRTC/Member
Agreement.
(d) Pursuant to the NRTC/Member Agreement, the Company. has (i) the
right to establish the terms and conditions upon which it will market and sell
Programming (except Non-Select Services) to Committed Member Residences or
Commercial Establishments, or both, in Los Alamos and Colfax Counties and is
entitled to all revenues from such marketing and sales to such Committed Member
Residences or Commercial Establishments, or both, in Los Alamos and Colfax
Counties, subject only to those Programming agreements set forth on SCHEDULE
3.20(d) ("MARKETING REVENUES"), and (ii) the Company has paid all sums to NRTC
or Xxxxxx, as appropriate, required under the NRTC/Member Agreement such that
the Company is entitled to the Marketing Revenues. The Company has the right to
receive from NRTC, on a pro rata basis, all other net revenues received by NRTC
from Xxxxxx in connection with the Programming which are directly attributable
to the Committed Member Residences or the Commercial Establishments in Los
Alamos and Colfax Counties.
(e) The Company is in full compliance in all material respects with any
and all membership, affiliation, licensing or other requirements or arrangements
as may have been established by NRTC, Xxxxxx or DirecTv, if any, pursuant to the
NRTC/Member Agreement, the DirecTv Agreement, or otherwise.
(f) The Company is not in breach of the NRTC/Member or the DirecTv
Agreement,
16
nor has the Company failed to perform any material obligation under the
NRTC/Member Agreement or the DirecTv Agreement. The Company has not received
notice of any such breach or non-performance at any time.
(g) Except as disclosed on SCHEDULE 3.20(g), none of the DBS Services
distributed by the Company has been suspended at any time since inception.
(h) SCHEDULE 3.20(h) (as supplemented by applicable NRTC reports) sets
forth all Customers, identified as Committed Member Residence and Commercial
Establishment, including the number of months such Customer has been a Customer,
whether such Customer's account is past due, and the number of monthly payments
per Customer which have been 30, 60 and 90 days past due. The Company has
maintained full and complete information regarding the location of each
Customer's descrambler.
3.21 True at Closing. The representations, warranties, covenants and
agreements of the Seller set forth in this Section 3, are and will be true both
on the date of this Agreement and on and as of the Closing, except for
representations, warranties, covenants and agreements made as of a specific
date, which will be true as of such specific date. All of the representations
and warranties by Seller shall survive the Closing for a period of eighteen (18)
months, with the exception of the tax representations and warranties, which will
survive for the respective tax statute of limitation periods.
3.22 Disclosure Seller. No representation or warranty made by Seller in
this Agreement and no statement made in any certificate to be delivered at the
Closing, Exhibit or Schedule furnished or to be furnished in connection with the
transactions herein contemplated contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary to
make such representation or warranty or any such statement not misleading to a
prospective purchaser of assets of Seller who is seeking full information with
respect to Seller, the Company and the Business.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
In order to induce Seller to enter into this Agreement, Buyer represents
and warrants to Seller that the following statements are true, correct and
complete. The representations and warranties of Seller set forth in this
Agreement and in any other Acquisition Document are continuing in nature and
Seller shall promptly inform Buyer of any matter which would cause any such
representations or warranties to be untrue, incorrect or incomplete.
4.1 Organization, Ownership, etc. of Buyer. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware with full power and authority to carry on its business
and operations as presently conducted and is duly qualified to do business in
each jurisdiction in which it is doing business.
17
4.2 Authority of Buyer. Buyer has the power to execute, deliver, and
perform this Agreement and the other Acquisition Documents to which it is a
party. Buyer has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and the other Acquisition Documents to which
it is a party, and has full partnership power to perform its obligations
hereunder and thereunder and to consummate the transactions(s) contemplated by
this Agreement.
4.3 Binding Effect. This Agreement constitutes, and the other
Acquisition Documents to which it is a party, on the Closing Date, will
constitute, the legal, valid, and binding obligations of Buyer enforceable
against it in accordance with the respective terms hereof and thereof, subject
to bankruptcy, insolvency, and similar laws of general application affecting
creditors' rights and remedies.
4.4 No Violation. Neither the execution and delivery by Buyer of this
Agreement or any other Acquisition Document nor the consummation of the
transactions contemplated hereby or thereby violate or will violate any
provision of law applicable to, or any provision of the certificate of limited
partnership or agreement of limited partnership of the Buyer or conflict with or
result in any breach of any term, condition or provision of, or constitute (with
due notice or lapse of time or both) a default under, or, except as contemplated
by the Security Agreement, result in the creation or imposition of any lien,
charge or encumbrance upon any of the properties or assets of Buyer pursuant to
the terms of, any mortgage, deed of trust or other agreement or instrument to
which Buyer is a party or by which or to which Buyer or any of its assets are
subject or bound.
4.5 Finder's Fee. No agent, broker or finder has acted for Buyer in
connection with this Agreement, and the transactions contemplated hereby, and
Buyer hereby agrees to indemnify and save Seller harmless from any claims of
Persons claiming by or through Buyer for commissions or fees by reason of this
Agreement or the transactions contemplated by this Agreement.
4.6 Consents.
Except as contemplated in Section 7.1 of this Agreement, no consent or
approval by, or filing with, any governmental authority is required in
connection with the execution or delivery of this Agreement by Buyer or the
performance of its obligations hereunder.
SECTION 5. COVENANTS OF SELLER.
Seller agrees that from the date hereof through and until the Closing
Date (or as otherwise provided in Section 5.5):
5.1 Approvals. It shall diligently prosecute any required applications
to NRTC,
18
Xxxxxx and DirecTv for all consents, authorizations and approvals necessary for
the sale of the Shares to Buyer, (including, without limitation, attendance by
representatives of Seller at meetings with NRTC, Xxxxxx or DirecTv) and use its
best efforts to obtain such consents and approvals as promptly and expeditiously
as possible.
5.2 Access. Buyer shall have the right, itself or through its
representatives, subject to the conditions and limitations set forth in this
Agreement, to inspect the properties of Seller and to inspect and make abstracts
and reproductions of all books and records of Seller including, without
limitation, applications and reports to and correspondence with NRTC, Xxxxxx and
DirecTv, and Seller shall furnish Buyer with such information respecting the
Assets and the Business as Buyer may, from time to time, reasonably request.
Buyer and Seller agree to use such reasonable discretion so as to preserve the
confidentiality of the transaction.
5.3 Conduct of Business. Unless performance of the following
obligations is waived by Buyer (made in its sole discretion) in advance and in
writing, Seller shall cause the Company to:
(a) not sell or dispose of any of the assets of the Company,
other than in the ordinary course of business, in which case such assets
disposed of shall be replaced by assets of like kind, quality and utility;
(b) not modify, amend, alter or terminate the NRTC/Member.
Agreement, the DirecTv Agreement or any of the Other Contracts, or waive any
default or breach thereunder;
(c) comply in all material respects with the NRTC/Member
Agreement, the DirecTv Agreement and all Other Contracts, use its best efforts
to cure any material default or breach thereunder, and promptly notify Buyer
upon receipt of notice of any default or breach thereunder;
(d) maintain the insurance set forth in Schedule 3.16;
(e) maintain its books and records in accordance with prior
practice, maintain all of its property and assets in their present condition,
ordinary wear and tear excepted, maintain supplies of technical materials,
supplies, inventory and spare parts consistent with past practice, and
otherwise use its best efforts to operate the Business in the ordinary course
in accordance with practices during the twelve (12) months preceding the date
of this Agreement;
(f) not increase the compensation payable or to become payable to,
and not pay or agree to pay any bonus to, any employee or agent of the Company.
19
(g) not enter into any contract or renewal of any existing
contract for the employment of any employee of the Company;
(h) not, without the prior written consent of Buyer, enter into any
other contract or commitment affecting the Business;
(i) use its best efforts to keep its business organization intact,
make available the services of key employees, and maintain good relationships
with its employees, suppliers, advertisers and other having business relations
with it;
(j) use its best efforts to obtain prior to the Closing Date
consents from all third parties under the Other Contracts listed on SCHEDULE
3.19 hereto;
(k) operate the Business in all material respects in accordance
with the Licenses, comply in all material respects with all laws, rules and
regulations applicable to it, including the regulations and policies of NRTC,
Xxxxxx and DirecTv, and use its best efforts to cure any material violations of
the Licenses;
(l) within ten (10) days after the end of each month (commencing
with the month in which this Agreement is executed) prior to the Closing Date,
furnish to Buyer or unaudited balance sheet and a statements of operations in
respect of the Business for the elapsed portion of the then current fiscal year
of the Company, which financial statements shall be prepared in accordance with
the rules and regulations of the NRTC and sound accounting principles, and
shall fairly present the results of such operations of the Company as of the
dates and for the periods covered thereby (subject to normal year-end
adjustments);
(m) provide to Buyer, concurrently with filing thereof, copies of
all reports to and other filings and correspondence with the NRTC, Xxxxxx and
DirecTv;
(n) not surrender or voluntarily modify any of the Licenses, or,
without the prior agreement of Buyer, take any action which would cause the
institution of proceedings for the suspension, revocation or limitation of
rights under any of the Licenses;
(o) provide to Buyer, promptly upon receipt thereof by the
Company, a copy of (i) any notice of the revocation, suspension, or limitation
of the rights under, or of any proceeding for the revocation, suspension, or
limitation of the rights under any License, and (ii) copies of all protests,
complaints, challenges or other documents submitted to or filed with the NRTC,
Xxxxxx or DirecTv by third parties concerning the Business and, promptly upon
the filing or making thereof, copies of the Company's responses thereto; and
(p) notify Buyer in writing immediately upon learning of the
institution or threat of any action against Seller or the Company in any court,
or any action against Seller or the Company before any governmental agency, and
notify Buyer in writing promptly upon receipt of any administrative or court
order relating to the Business.
20
5.4 Lien Searches. As soon as practicable after the date hereof and in
any event not later than ten days prior to the Closing, the Seller shall obtain
and deliver to the Buyer at the Seller's expense Uniform Commercial Code, tax
lien, bankruptcy and judgment lien Searches for the Company. Such searches shall
be conducted under the present name of the Seller and such other names as it has
used during the past five years. All such names are listed in Schedule 5.4
attached hereto.
5.5 Coordination. Prior to Closing, Seller will use its best efforts to
coordinate with Buyer the transfer of systems and management at Closing. Seller
shall be available on a reasonable basis for a period of two (2) weeks after
Closing to facilitate the transition.
SECTION 6. COVENANTS OF BUYER.
Buyer agrees that from the date hereof through and until the Closing
Date:
6.1 Approvals. It shall diligently prosecute any required applications
to NRTC, Xxxxxx and DirecTv for all consents, authorizations and approvals
necessary for the sale of the Shares to Buyer (including, without limitation,
attendance by representatives of Buyer at NRTC, Xxxxxx and DirecTv meetings) and
use its best efforts to obtain such consents and approvals as promptly and
expeditiously as possible.
6.2 Controls of Business. Subject to the provisions of Section 5.3,
Buyer shall not exercise any control over or supervise, directly or indirectly,
the operations or policies of the Business, all of which shall be Seller's sole
right and responsibility.
6.3 Coordination of Consents. Buyer agrees to make reasonable efforts
to respond to reasonable and customary inquiries relating to Buyer made by a
party (other than Seller) from whom, pursuant to Section 7.2(c) hereof, a
consent to the assignment of such Other Contract is a condition precedent to
Buyer's obligation to consummate the transaction contemplated hereby.
SECTION 7. CONDITIONS TO CLOSING.
7.1 Mutual Conditions. The obligations of Buyer and Seller to
consummate the transactions contemplated hereby are subject to satisfaction at
the time of the Closing of, in addition to all other conditions set forth
herein, the condition precedent that NRTC, Xxxxxx and DirecTv shall have issued
all necessary authorizations, consents and approvals in connection with the
transactions contemplated by this Agreement, without conditions which are
materially adverse to Buyer or Seller or which in any material way diminish the
operating rights with respect to the Company or the Business.
7.2 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
(1) receipt by Buyer of the Schedules required to be provided by Seller
hereunder in such form and substance as shall be
21
satisfactory to Buyer (2) the satisfactory completion, in Buyer's sole
discretion, of Buyer's due. diligence investigation of the Company, and (3) the
fulfillment (or waiver by Buyer), on or prior to the Closing Date, of each of
the following conditions:
(a) The representations and warranties of Seller contained herein
shall have been true and correct when made and shall be repeated and be true
and correct as of the Closing Date;
(b) Seller shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement and the other Acquisition
Documents required to be performed or complied with by it prior to or at the
Closing Date;
(c) All authorizations and approvals of or consents of, or filings
with, any governmental authority or other Person required to be obtained or made
by Seller or the Company in connection with the Closing shall have been obtained
or made and shall be in full force and effect;
(d) Each of the Acquisition Documents to which Seller is a party
shall have been duly executed and delivered by Seller and complete and correct
copies thereof shall have been delivered to Buyer.
(e) At Closing, the Company shall have not less than 350
Subscribers;
(f) Seller shall have executed and delivered to Buyer a
certificate, dated the Closing Date, to the effect that the conditions set
forth in paragraphs (a) through (e) of this Section 7.2 have been fulfilled;
(g) All corporate and other proceedings of the Company in
connection with the transactions contemplated by this Agreement and the other
Acquisition Documents, and all documents and instruments incident to such
corporate proceedings, shall be satisfactory in substance and form to Buyer and
its counsel, and Buyer and its counsel shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be
reasonably requested;
(h) No action or proceeding shall have been instituted or
threatened against Seller or the Company which could have a material adverse
effect on the Seller, the Company or the Business; no action or proceeding
shall have been instituted or threatened against, the Company or any of the
parties to this Agreement or their directors or officers, before any court or
governmental department, agency or commission. to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the consummation of
the transactions contemplated hereby; and neither Seller, the Company nor Buyer
shall have received written notice from any court or governmental department,
agency or commission of its intention to institute any action or proceeding to
restrain or enjoin or continence any investigation (other than a routine letter
of inquiry) into the consummation of this Agreement and the transactions
22
contemplated hereby or to nullify or render ineffective this Agreement or such
transactions if consummated, which in the opinion of Buyer would make it
inadvisable to consummate such transactions;
(i) Prior to the Closing, there shall not have occurred any
material adverse change in the financial condition, operations, business or
prospects of the Company, including, but not limited to, becoming subject to
any state or federal regulatory proceedings which could culminate in an order
or other action which could cause such a material adverse change;
(j) Prior to the Closing, there shall not have occurred any damage,
destruction or loss to tangible assets of the Company exceeding $1,000 or other
loss that has a material adverse effect on the products, properties, business
operations or prospects of the Company;
(k) Seller shall have obtained and delivered to Buyer consents
from all third parties under the Other Contracts, where such consents are
required in order to transfer and assign such Other Contracts, and neither
Seller nor, to Seller's knowledge, any third party shall be in material breach
or default under the NRTC/Member Agreement, the DirecTv Agreement or any Other
Contract;
(l) None of the Licenses shall have been revoked or suspended, or
modified in any manner which could have a material adverse effect on the
Company, the Business or its operation and no proceeding for such revocation,
suspension, or modification shall be in effect; and
(m) Seller shall have executed and delivered the Security
Agreement and the Pledge Agreement.
7.3 Conditions to Obligations of Seller. Seller's obligation to
consummate the transactions contemplated by this Agreement is subject to
satisfaction at the time of Closing of each of the following conditions
precedent, any of which may be waived by Seller:
(a) Each of the representations and warranties of Buyer contained
in this Agreement shall be true and correct in all material respects on the
Closing Date as though made on and as of the Closing Date; and Buyer shall, on
or before the Closing Date, have performed in all material respects all of its
covenants and obligations hereunder which by the terms hereof are to be
performed on or before the Closing Date;
(b) No action or proceeding shall have been instituted or
threatened against Buyer, the Company or Seller before any court or
governmental agency or commission seeking to restrain or prohibit this
Agreement or consummation of the transactions contemplated hereby;
(c) Buyer shall have delivered to Seller the certificate of Buyer,
dated as of
23
the Closing Date, certifying as to the matters set forth in the foregoing
clauses (a) and (b) (except that, with regard to clause (b), such certificate
shall not certify as to matters relating to Seller);
(d) All partnership and other proceedings of Buyer in connection
with the transactions contemplated by this Agreement and the other Acquisition
Documents, and all documents and instruments incident to such partnership
proceedings, shall be satisfactory in substance and form to Seller and its
counsel, and Seller and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested;
(e) Buyer shall have executed and delivered the Pledge Agreement;
(f) The Company shall have executed and delivered the Security
Agreement, and the Company and the Buyer shall have executed and delivered the
Note;
(g) Seller shall have received confirmation that the Company has
been capitalized by Buyer with at least an additional $100,000 for working
capital and capital expenditures; and
(h) Seller shall have received confirmation in the form of a
balance sheet that Buyer has been capitalized with at least an additional
$100,000 for working capital and capital expenditures.
24
SECTION 8. INDEMNIFICATION.
8.1 Right to Indemnification.
(a) Seller shall indemnify, reimburse, and hold harmless Buyer from and
against all claims, losses, damages, costs (including, without limitation, court
costs and attorneys' fees), expenses and liabilities suffered, incurred, or
sustained by Buyer on account of (i) any misrepresentation, breach of warranty,
or nonfulfillment of any agreement on the part of Seller under this Agreement or
under any Acquisition Document, (ii) the failure of the Company (prior to
Closing) to pay and perform promptly when due all of its obligations,
liabilities and debts, (iii) the operation of the Business prior to Closing,
(iv) any breach by the Company of the NRTC/Member Agreement, the DirecTv
Agreement or any of the Other contracts prior to Closing, or (v) any other
matter or event respecting the Company and which occurs with respect to the
period prior to the Closing, subject, however, to any contrary agreement by the
parties concerning costs and expenses of litigation arising from or relating to
the parties' efforts to seek approval of the transactions contemplated by this
Agreement.
(b) Buyer shall indemnify, reimburse, and hold harmless Seller from and
against all claims, losses, damages, costs (including, without limitation, court
costs and attorneys' fees), expenses and liabilities suffered, incurred, or
sustained by Seller on account of (i) any misrepresentation, breach of warranty,
or nonfulfillment of any agreement on the part of Buyer under this Agreement or
under any Acquisition Document, or (ii) the failure of Buyer to pay and perform
promptly when due all of its obligations, liabilities, and debts as provided
under this Agreement or any Acquisition Document, subject, however, to any
contrary agreement by the parties concerning costs and expenses of litigation
arising from or relating to the parties' efforts to seek approval of the
transactions contemplated by this Agreement.
8.2 Right to Contest. Before being required to make any payment
pursuant to Section 8.1 hereof, Seller or Buyer, whichever is the indemnifying
party (the "INDEMNIFYING PARTY"), may, at its expense, elect to undertake and
control the defense of, and take all necessary steps properly to contest any,
claim, liability or action in respect thereof involving third parties or to
prosecute such contest or action to conclusion or settlement satisfactory to the
party to be indemnified (the "INDEMNIFIED PARTY"). The Indemnified Party shall
notify the Indemnifying Party of any claims to indemnification involving third
parties it may wish to assert pursuant to Section 8.1 hereof as soon as
reasonably practicable; thereafter, the Indemnified Party shall, at the expense
of the Indemnifying Party, cooperate FULLY with the Indemnifying Party in the
conduct of any such contest or action. If the Indemnifying Party makes the
foregoing election, then the Indemnified Party shall have the right to
participate, at its own expense, in all proceedings. If the Indemnifying Party
does not make such election, it shall be bound by whatever result is obtained by
the Indemnified Party respecting such third party matter.
8.3 Limitation of Claims. Any claim by a party hereunder arising from a
claimed breach by the other party of any representation, warranty or covenant
hereunder (other than tax claims in respect of which there shall be no
limitation period) shall be made in writing and
25
delivered to such other party no later than eighteen (18) months after the
Closing Date.
SECTION 9. ACCESS.
9.1 Access. Buyer and Seller each acknowledges that, to the best of its
knowledge, it has been afforded such opportunity to obtain information, inspect
and examine the other party, the Company and the Business as it deems necessary
to enter into this Agreement; however, the foregoing acknowledgment of present
belief shall not be deemed to relieve either party under, or impair or otherwise
affect, any representation, warranty or covenant (including Buyer's right to
conduct additional due diligence and to receive completed Schedules to this
Agreement) contained in this Agreement or any of the other Acquisition Documents
or the rights and obligations of either party in respect of a breach thereof.
9.2 Notice of Breach. Buyer and Seller each agrees to give to the other
prompt notice of a breach by such other party of any of its representations,
warranties and covenants of which Buyer or Seller, as the case may be, obtains
actual knowledge prior to the Closing Date. The term "actual knowledge" shall be
deemed to include information which is actually known and in good faith
recognized to be such a breach, it being the intention hereby that a party be
afforded as much opportunity as reasonably possible to cure prior to Closing
breaches which hereafter are found to exist.
SECTION 10. MISCELLANEOUS.
10.1 Fees and Expenses.
Each of the parties shall bear its own expenses in connection with the
negotiation and the consummation of the transactions contemplated by this
Agreement.
10.2 Law Governing. This Agreement and the other Acquisition Documents
shall be construed under and governed by the laws of the state of New Mexico.
10.3 Notice. Any notice or communication given pursuant to this
Agreement by any party to any other party shall be in writing and shall be
sufficiently given if personally delivered, delivered by commercial courier
service (which obtains receipt on delivery) or sent by registered or certified
mail, return receipt requested, postage prepaid to the parties at the following
addresses or to such other address as either party may hereafter designate to
the other by like notice:
If to Buyer:
DBS Holdings, L.P.
000 X. Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, HI
26
With a copy to:
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
If to Seller:
Xxxxxx and Xxxxx Xxxxxxxx Xxxxxxxx
0000 Xxxxx Xxxx
Xxxxx Xx, XX 00000
With a copy to:
Xxxxxx & Xxxx, P.A.
000 Xxxxx xx Xxxxxxx Xxxxx 000
Xxxxx Xx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Notices shall be deemed given when personally delivered, confirmation
of delivery is received by the sender, or on the date on which notice is
otherwise received. The foregoing provisions shall not, however, prohibit the
giving of actual written notice in any other manner.
10.4 Construction.
(a) The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
(b) Words such as "herein" and "hereof" shall be deemed to refer to
this Agreement as a whole and not to any particular provision of this Agreement.
10.5 Assignment; Binding Effect. This Agreement may not be assigned by
Buyer or Seller prior to the Closing without the prior written consent of the
other party, which shall not be unreasonably withheld. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
successors and permitted assigns.
10.6 Amendment; Waiver. This Agreement may be amended only by a written
instrument signed by Buyer and Seller. No provisions of this Agreement may be
waived except by an instrument in writing signed by the party sought to be
bound. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, and a waiver of a particular right
or remedy on one occasion shall not be deemed a waiver of any other right or
remedy or a waiver on any subsequent occasion.
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10.7 Entire Agreement. Except as provided in Section 10.9 hereof, this
Agreement and the Acquisition Documents set forth the entire understanding
between the parties relating to the subject matter hereof, any and all prior
correspondence, conversations and memoranda or other writings being merged
herein and replaced. No promises, covenants or representations of any character
or nature other than those expressly stated herein have been made to induce
either party to enter into this Agreement and the Acquisition Documents.
10.8 Initial Notice to Public. Seller and Buyer shall mutually agree in
advance on the manner in which the public is first informed of the execution of
this Agreement.
10.9 Termination of Term Sheet. All provisions of that certain
Acquisition Term Sheet dated November 28, 1995 between Seller and Columbia
Capital Corporation ("COLUMBIA"), an affiliate of Buyer, as amended by that
certain letter dated December 15, 1995, are hereby terminated, other than the
confidentiality and the exclusivity provisions set forth therein. Buyer hereby
assumes and agrees to be bound by the obligations imposed upon Columbia pursuant
to such confidentiality provision.
10.10 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, all of which together shall constitute one and the same
Agreement.
10.11 Facsimile Signatures. Facsimile signatures shall be considered
original signatures for the purpose of execution and enforcement of the rights
delineated in this Agreement.
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their respective duly authorized general partners as of the date
first above written.
ATTEST/WITNESS: SELLER:
XXXXXX XXXXXXXX
XXXXX XXXXXXXX XXXXXXXX
BUYER:
DBS HOLDINGS, L.P.
Columbia DBS, Inc.
General Partner
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their respective duly authorized general partners as of the date
first above written.
ATTEST/WITNESS: SELLER:
XXXXXX XXXXXXXX
------------------------ ----------------------------
XXXXX XXXXXXXX XXXXXXXX
------------------------ ----------------------------
BUYER:
DBS HOLDINGS, L.P.
By:Columbia DBS, Inc.
Its:General Partner
By: /s/
----------------------- ---------------------
Name:
---------------------
Title:
---------------------
