STOCK PURCHASE AGREEMENT
This Agreement is made as of January 25, 1999 ("Agreement") by and
between each of the shareholders whose signatures appear on the signature pages
attached hereto (each a "Shareholder" and collectively, the "Shareholders") and
Xxxxxxx Raystay Holdings, Inc. ("Buyer").
BACKGROUND OF AGREEMENT
WHEREAS, Raystay Co. (the "Company"), which operates multiple cable
television systems ("Systems"), is authorized to issue ten thousand (10,000)
shares of Class A Common Stock, par value $2.50 per share (the "Class A Common
Stock"), and thirty-five thousand (35,000) shares of Class B Common Stock, par
value $2.50 per share (the "Class B Common Stock"); and
WHEREAS, each respective Shareholder desires to sell and deliver to
Buyer, and Buyer desires to purchase and receive from each respective
Shareholder, upon the terms and conditions herein set forth, the shares of the
Class A Common Stock and/or Class B Common Stock of the Company set forth
opposite their respective names on Exhibit A hereto (collectively, the "Stock").
The parties hereto are entering into this Agreement to set forth their entire
understanding with respect to such sales and purchases.
NOW, THEREFORE, the parties hereto in consideration of the mutual
covenants herein contained and intending to be legally bound hereby, agree as
follows:
1. Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, and in reliance upon the representations and
warranties herein made by each of the parties to the other, at the
Closing (as hereinafter defined) each Shareholder will sell, assign,
transfer, convey and deliver to Buyer, and Buyer will purchase, accept
and acquire from each Shareholder, all of the right, title and interest
of such Shareholder in and to the shares of Stock owned by such
Shareholder set forth opposite his, her or its name on Exhibit A.
2. Purchase Price.
a. Purchase Price. Subject to the terms and conditions of this
Agreement, at the Closing, Buyer shall deliver to each
Shareholder by wire transfer of immediately available funds an
amount (in the aggregate, the "Purchase Price") equal to the
product of (i) One Hundred Thirty-Nine Million, Two Hundred
Thousand Dollars ($139,200,000) (the "Enterprise Value"), less
the Escrow Amount described in Section 2(b), less the
adjustments provided for in Section 3 hereof, and less the
amount of the BIPC (as defined below) fees and disbursements
provided for in Section 16(g) hereof, multiplied by (ii) the
percentage amount set forth opposite such Shareholder's name
on Exhibit A.
b. Escrow. At the Closing, Buyer shall deposit with the escrow
agent, which shall be Xxxxxxxx Ingersoll, Professional
Corporation ("BIPC"), the sum of Two Million Dollars
($2,000,000) (the "Escrow Amount"). The Escrow Amount shall be
held in escrow, in an interest bearing account. The Escrow
Amount shall be divided into two portions. One portion (the
"Closing Adjustment Escrow Amount") shall consist of Five
Hundred Thousand Dollars ($500,000), which amount shall be
paid on the day the parties have agreed upon the Final
Statement in the following amounts and order of priority:
First, to Buyer in an amount equal to the amount of the net
adjustment set forth in the Final Statement to be made in
favor of Buyer, if any, which amount shall not exceed the
Closing Adjustment Escrow Amount, and Second, if any amount
remains, to the Shareholders, in the same proportion as the
Purchase Price paid to such Shareholder bears to the aggregate
Purchase Price paid to all Shareholders. The second portion
(the "Indemnity Reserve Escrow Amount") shall consist of One
Million Five Hundred Thousand Dollars ($1,500,000), which
amount shall be paid in the following amounts and order of
priority: First, to Buyer, from time to time in accordance
with and subject to the provisions concerning the obligations
of the Shareholders to indemnify Buyer contained in Section 12
hereof; Second, to the Shareholders, in the same proportion as
the Purchase Price paid to such Shareholder bears to the
aggregate Purchase Price paid to all Shareholders. on the day
which is fifteen (15) months following the Closing Date, in an
amount equal to the net amount of the remaining Indemnity
Reserve Escrow Amount, if any, less the amount as to which
there is pending a good faith claim by Buyer for indemnity
pursuant to Section 12 hereof; and Third, to Buyer or
Shareholders in accordance with the resolution of pending
claims for indemnity following the day which is fifteen (15)
months following the Closing Date. Disbursements of the Escrow
Amount shall be made in accordance with the terms of the
Escrow Agreement among the parties in the form attached hereto
as Exhibit 2(b). All interest and earnings on the Escrow
Amount shall be for the account of the Shareholders.
3. Purchase Price Adjustments.
a. Adjustment. The aggregate Purchase Price shall be increased or
decreased by the net amount of the adjustments set forth on
Schedule 3 hereto. The adjustments provided for hereinbelow
shall be made as of the close of business (5:00 p.m., local
time) on the day prior to the Closing Date (the "Adjustment
Time").
b. Estimated Statement. Not less than ten (10) days prior to the
Adjustment Time, Xxxxxxx, acting as the designated
representative of the Shareholders, shall deliver to Buyer an
estimate of the adjustments to be made at Closing pursuant to
Section 3(a) ("Estimated Statement"), which shall be prepared
in accordance with GAAP, with such additional adjustments as
the parties have previously agreed, consistently applied with
the manner in which the line items being adjusted were
determined by the Company for purposes of its Financial
Statements (as defined below) as of and for the year ended
October 31, 1998, as previously delivered to Buyer and
acknowledged by the parties ("Adjusted GAAP"). Not less than
three (3) days prior to the Adjustment Time, Buyer shall
provide Xxxxxxx with any written objections to the Estimated
Statement. After considering such objections, Buyer and
Xxxxxxx shall make such revisions to the Estimated Statement
as are mutually acceptable not less than one (1) day prior to
the Adjustment Time. Such revised Estimated Statement shall be
used for purposes of Closing irrespective of any disagreements
that may exist with respect thereto, and that any such
disagreements, if any, shall be resolved in connection with
the preparation of the Final Statements.
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c. Final Statement. Not later than ninety (90) days after the
Closing Date, Buyer shall deliver to Xxxxxxx, in his capacity
as the designated representative of the Shareholders, a final
statement of all adjustments to be made pursuant to Section
3(a) ("Final Statement"), which shall be prepared in
accordance with Adjusted GAAP. If Xxxxxxx disagrees with the
amounts set forth in the Final Statement, Xxxxxxx shall so
notify Buyer within thirty (30) days after the date upon which
Xxxxxxx shall have received the Final Statement, specifying in
detail the points of disagreement. Buyer and Xxxxxxx shall
negotiate in good faith to resolve any such points of
disagreement. If any such points of disagreement cannot be
resolved within thirty (30) days, Buyer and Xxxxxxx shall
jointly refer the points of disagreement to
PricewaterhouseCoopers to act as an independent arbitrator to
resolve all points of disagreement with respect to the
disputed Final Statement. All determinations made by the
arbitrator shall be final, conclusive and binding on the
parties. The fees and expenses of the arbitrator (if any)
incurred in connection with such final determination shall be
shared equally by Buyer and the Shareholders.
d. Payment. If the adjustments set forth on the Final Statement
result in a net balance due to the Shareholders, Buyer shall
pay such balance to the Shareholders in the manner provided in
Section 2(a) within two (2) business days from the date of
final agreement on the Final Statement; and if the adjustments
set forth in the Final Statement result in a net balance due
Buyer, Buyer shall be reimbursed from the Closing Adjustment
Escrow Amount. Any amount due to Buyer in excess of such
Closing Adjustment Escrow Amount shall be paid by the
Shareholders, first from the Indemnity Reserve Escrow Amount
and then, individually, in the same proportion as each
received his, her or its portion of the Purchase Price, within
two (2) business days from the date of final agreement on the
Final Statement.
e. Buyer's Due Diligence Investigation. Buyer will undertake an
on-site due diligence investigation of the books, records and
properties of the Company promptly following the date of this
Agreement and will complete such due diligence investigation
not later than fourteen (14) days following the date of this
Agreement. At the conclusion of such fourteen (14) day period,
Buyer may terminate this Agreement without any liability to
the Shareholders (and Shareholders shall have no liability to
Buyer) if and only if as a result of such due diligence
investigation and review Buyer learns of information which
materially and adversely deviates from the representations and
warranties of Xxxxxxx contained in Section 5 of this
Agreement.
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4. Closing. The closing on the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Saul, Ewing, Xxxxxx
& Xxxx, LLP, Penn National Insurance Tower, 0 Xxxxx Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, at 10 a.m. on a business day not
later than fifteen (15) days following the satisfaction of all
conditions precedent specified herein to the consummation of the
transactions contemplated by this Agreement (the "Closing Date").
5. Representations and Warranties of Xxxxxx X. Xxxxxxx. Xxxxxx X. Xxxxxxx
("Xxxxxxx"), President of the Company, represents and warrants to Buyer
as follows:
a. Organization. The Company is a corporation duly and validly
organized, existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Company is duly qualified to
do business in and is in good standing under the laws of each
other jurisdiction where the nature of its business or the
ownership of its assets requires it to be so qualified except
where the failure to be so qualified would not have a material
adverse effect on the business, financial condition or results
of operations of the Company ("Material Adverse Effect"). The
Company has full corporate power and authority to own or hold
under lease its assets and operate its business at the places
where such assets are presently located and at the places and
in the manner in which such business is presently conducted.
b. Corporate Records. The copies of the Articles of Incorporation
and By-Laws of the Company attached hereto as Exhibit 5(b)(i)
and Exhibit 5(b)(ii) are true and complete copies of such
instruments and include all amendments, and modifications
through the date hereof. The minute book of the Company, as
previously made available to the Buyer and its
representatives, contains accurate records of all meetings of
and corporate actions or written consents by the respective
shareholders and Board of Directors of the Company.
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c. Capitalization. The total authorized capital stock of the
Company consists of ten thousand (10,000) shares of Class A
Common Stock and thirty-five thousand (35,000) shares of Class
B Common Stock. The rights and privileges enjoyed by the
holders of Class A Common Stock and Class B Common Stock are
identical in every respect, except that the holders of Class A
Common Stock are entitled to the voting power of the Company.
The total issued and outstanding Common Stock of the Company
consists of two thousand nine hundred sixty-four (2,964)
shares of Class A Common Stock and thirty-two thousand four
hundred forty (32,440) shares of Class B Common Stock, and
there are no treasury shares of any security. Except as set
forth on Schedule 5(c), all of the issued and outstanding
Stock (i) is duly and validly issued, fully-paid and
non-assessable and (ii) is free and clear of all liens,
claims, pledges, encumbrances and restrictions of any kind,
nature and description. There are no outstanding
subscriptions, script, warrants, commitments, conversion
rights, calls, options or agreements to issue or sell
additional securities of the Company, and no obligations
whatsoever requiring, or which might require, the Company to
issue any securities, except that Class A Common Stock is
convertible into Class B Common Stock in certain events. There
are no agreements, commitments, or understandings with respect
to the internal management, control or affairs of the Company
other than as set forth in its Articles of Incorporation and
By-Laws and except for the Shareholders Agreement dated as of
July 29, 1994 among the Company, Buyer and the Shareholders
(the "Shareholders' Agreement"). Other than as described on
Schedule 5(c) hereof, there exist no rights or interests
relating to the ownership or distribution of the equity of the
Company other than the issued and outstanding Class A Common
Stock and Class B Common Stock.
d. Financial Condition. The audited financial statements of the
Company for the year ended October 31, 1998, and the notes and
any schedules to any such financial statements (collectively,
the "Financial Statements"), all as previously delivered to
Buyer, have been prepared in accordance with generally
accepted accounting principles ("GAAP"), consistently applied,
and fairly present the financial position, results of
operations, assets and liabilities of the Company as of the
dates, and for the fiscal periods covered thereby. The
Financial Statements are true, accurate and complete in all
material respects, do not contain any untrue statement of a
material fact or omit to state a material fact required by
GAAP to be stated therein and fairly present the financial
condition and the results of operations and cash flows of the
Company as of the dates and for the periods covered thereby.
There are no material liabilities or material obligations of
any nature, whether accrued or not accrued, absolute,
contingent or otherwise, which are not disclosed as such on
the Financial Statements, or in the notes thereto. Since
October 31, 1998, the Company has not incurred any liabilities
or obligations, accrued, absolute, contingent or otherwise,
except in the normal course of the Company's business, or
which in the aggregate results in a material increase in the
liabilities or obligations of the Company. Since October 31,
1998, there has been no material adverse change in the assets
or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations of the Company,
whether as a result of any legislative or regulatory change,
revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God, or other public force
or otherwise, except in the ordinary course of business; and
to the best knowledge, information and belief of Xxxxxxx,
after due inquiry, no fact or condition exists or is
contemplated or threatened which might cause such a change in
the future, other than any change arising out of matters
affecting the economy as a whole or matters (including,
without limitation, competition caused by or arising from
multichannel multipoint distribution services and/or direct
broadcast satellite and legislation, rulemaking or regulation)
affecting the cable television industry (national or regional)
generally.
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e. Title to and Usability of Assets. Schedule 5(e) contains a
copy of the fixed asset schedule of the Company as of October
31, 1998, which was used in the preparation of the Financial
Statements as of and for the year then ended, and the property
reflected thereon constitutes the personal property of the
Company ("Personal Property"). The Personal Property
constitutes all substantially all of the personal property
necessary to conduct lawfully and properly the business or
operations of the Systems as now conducted. Except as set
forth on said Schedule, the Company has good and marketable
title to such assets, subject to no mortgage, pledge, lien,
security interest, right of possession in favor of any third
party, claim or other encumbrance or restriction ("Lien"),
except for those that are not material in character or amount
and do not materially impair the use of any asset that is
material to the operation or financial condition of the
Company's business as it is now and has been operated. All
Personal Property is being accepted in "as is, where is"
condition and all such assets so reflected or existing are
used or held in compliance with all applicable laws, rules and
regulations. Since October 31, 1998 and other than as
previously disclosed in writing to Buyer, the Company has not
disposed of or acquired any assets or properties otherwise
than in the ordinary course of its business and for individual
amounts not in excess of $25,000.
f. Taxes. The Company has filed or caused to be filed, within the
times and within the manner prescribed by law, all federal,
state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to, the Company. Such
returns and reports reflect accurately all liability for taxes
of the Company for periods covered thereby. All federal,
state, local and foreign income, profits, franchise, sales,
use, occupancy, excise and other taxes and assessments
(including interest and penalties) ("Taxes") payable by, or
due from, the Company have been fully paid or adequately
disclosed and fully provided for in the books and financial
statements of the Company. No examination of any tax return of
the Company is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of
limitation applicable to any tax return of the Company. True,
accurate and complete copies of all federal income tax returns
for the Company for its fiscal years ended October 31, 1995,
1996 and 1997 have been delivered to Buyer.
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g. Litigation. Except as set forth on Schedule 5(g) hereto, there
is no action, suit, claim, complaint, notice of violation,
proceeding at law or in equity, arbitration, administrative or
other proceeding or investigation ("Legal Proceeding") by or
before any Governmental Authority, or, to Xxxxxxx'x best
knowledge, after due inquiry, threatened, against the Company
or any of its properties or rights in either case, which,
would reasonably be expected to have a Material Adverse
Effect. The Company is not subject to any judgment, order or
decree entered in any lawsuit or proceeding ("Judgment") which
affects (i) the Company or any part of the business,
properties or assets of the Company or (ii) any part of the
transaction contemplated hereby, or which seeks to impose
conditions upon the degree of Buyer's control over, or the
manner in which Buyer shall be permitted to manage its
investment in the Company subsequent to the consummation of
the transaction contemplated hereby.
h. Licenses. Schedule 5(h) hereto lists each FCC License (as
defined below) and receive only earth station authorization
required to permit the operation of the Systems in the manner
in which it is currently conducted, indicating in each case
the expiration date thereof. An "FCC License" is defined as an
authorization, or renewal thereof, issued by the FCC pursuant
to Parts, 78, 90, or 101 of its rules, authorizing the
operation of a facility in the Cable Television Relay Service,
Business Radio Service, or Fixed Microwave Service. Except as
set forth in Schedule 5(h), said FCC Licenses (i) are valid,
and in full force and effect and constitute all of the
Licenses, permits and authorizations required by the FCC for
the operation of the Systems as now operated, and (ii)
constitute all the material Systems licenses and
authorizations issued by the FCC to the Company for or in
connection with the operation of the Systems. Xxxxxxx, after
due inquiry, has no knowledge of any condition imposed by the
FCC as part of any FCC License that is material to the
operation of the Systems which is neither set forth on the
face thereof as issued by the FCC nor contained in the rules
and regulations of the FCC applicable generally to stations of
the type, nature, class or location of the Systems. No
proceedings are pending or, to Xxxxxxx'x best knowledge, after
due inquiry, are threatened which may result in the
revocation, modification, non-renewal or suspension of any of
the FCC Licenses, the issuance of any cease and desist order
or the imposition of any administrative actions by the FCC
with respect to the Systems or its operation. To the best
knowledge of Xxxxxxx, after due inquiry, there are no matters
which could reasonably be expected to result in the suspension
or revocation of the FCC Licenses. There are not any
unsatisfied or otherwise outstanding citations issued by the
FCC with respect to the Systems or its operation. The actions
by the FCC in issuing the current licenses of the Systems are
final actions of the FCC.
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i. Franchises and Contracts. Schedule 5(i) contains a description
of all of the franchises ("Franchises") and contracts
("Contracts") to which the Company is a party or by which it
or its assets are bound or affected, except for: (i)
subscription agreements with individual residential
subscribers for the cable services provided by the Systems in
the ordinary course of business which may be canceled by the
Company without penalty on not more than 30 days notice; (ii)
miscellaneous service contracts terminable at will without
penalty; (iii) other Contracts not involving aggregate
liabilities when viewed on an annual basis under all such
Contracts exceeding $25,000; and (iv) other Contracts not
involving any material nonmonetary obligation. The Company has
delivered to Buyer true and complete copies of each of the
Franchises and written Contracts, including any amendments
thereto, other than Contracts described in clauses (i), (ii),
(iii) and (iv) above and motor vehicle leases. Except as
described on Schedule 5(i): (A) each of the Franchises and
Contracts is a valid obligation of the Company, in full force
and effect, and enforceable in accordance with its terms
against the parties thereto other than the Company, and the
Company has fulfilled when due, or has taken all action
necessary to enable it in all material respects to fulfill
when due, all of its obligations thereunder; (B) there has not
occurred any default (without regard to lapse of time, the
giving of notice, the election of any Person other than the
Company, or any combination thereof) by the Company nor, to
the best knowledge of Xxxxxxx, after due inquiry, has there
occurred any default (without regard to lapse of time, the
giving of notice, the election of the Company, or any
combination thereof) by any Person other than the Company
under any of the Franchises or Contracts; and (C) neither the
Company nor, to the best knowledge of Xxxxxxx, after due
inquiry, any other Person is in arrears in the performance or
satisfaction of its obligations under any of the Franchises or
Contracts, and no waiver or indulgence has been granted by any
of the parties thereto. Except as described on Schedule 5(i),
the Franchises and Contracts are sufficient to permit the
Company to operate the Company lawfully in the manner in which
it is currently operated. Except as set forth on Schedule 5(i)
attached hereto, the Company does not have (i) any agreements
or binding arrangements of any kind with any person
controlling, controlled by or under common control with the
Company ("Affiliate") or (ii) any management or consulting
agreement of any kind with any third party (including, without
limitation, Affiliates).
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j. FCC Matters.
i. The Company's Systems serve the communities listed on
Schedule 5(j)(i). Each of these communities has been
registered with the FCC and their respective
community unit identifiers are listed on said
schedule. All required notifications have been
submitted to the FCC with respect to the Systems'
utilization of frequencies in the 108-137 MHZ and
225-400 MHZ bands. Other than requests for network
nonduplication and syndex protection and as described
on Schedule 5(j)(i), no written requests have been
received by the Company during the three years
preceding the date of this Agreement from the FCC,
the United States Copyright Office or any other
Person challenging or questioning either the right of
the Company's operation of the Systems or the right
of Xxxxxxx'x operation of the Company and of any
FCC-licenses or registered facility used in
conjunction with either the Company's operation of
the Systems or Xxxxxxx'x operation of the Company.
Except as provided in Schedule 5(j)(i), the Company's
operation of the Systems, and of any FCC-licenses or
registered facility used in conjunction with the
operation of the Company, is in compliance in all
material respects with the FCC's rules and
regulations and the provisions of the Communications
Act of 1934, as amended. The Company has not violated
any laws or any duty or obligation with regard to
protecting the privacy rights of any past or present
subscribers of the Company.
ii. The Company has conducted all system and microwave
performance tests and all Cumulative Leakage Index
("CLI") related tests applicable to the Company. The
Company has (i) maintained appropriate log books and
other record keeping which accurately and completely
reflect in all material respects all results required
to be shown thereon; (ii) to the extent required by
the rules and regulations of the FCC, corrected any
radiation leakage of the Systems required to be
corrected in connection with the Company's monitoring
obligations under the rules and regulations of the
FCC; and (iii) otherwise complied in all material
respects with all applicable CLI rules and
regulations in connection with the operation of the
Company.
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iii. All of the broadcast television signals carried by
the Systems, other than a "superstation" as that term
is defined in Section 119 of the Copyright Act, are
carried either pursuant to the must-carry
requirements or pursuant to executed retransmission
consent agreements.
iv. All reports, applications and other documents
required to be filed by the Company with the FCC with
respect to the Systems have been filed with the FCC,
and all such reports, applications and documents are
true and correct in all material respects. The
Company has delivered or will deliver promptly after
the date hereof to Buyer complete and correct copies
of all reports and filings for the past three years
made or filed pursuant to the Communications Act or
FCC rules or regulations with respect to the Company.
The Company has delivered to Buyer complete and
correct copies of all FCC 393 Forms and FCC 1200
Series Forms provided to local franchising
authorities or the FCC with respect to the Systems
and copies of all material correspondence with any
Governmental Authority relating to rate regulation
generally or specific rates charged to customers with
respect to the Systems, including, without
limitation, copies of any complaints and responses
filed with the FCC with respect to any rates charged
to customers of the Systems. A request for renewal
has been timely filed under Section 626(a) of the
Communications Act with the proper Governmental
Authority with respect to each franchise of the
Company expiring within 36 months of the date of this
Agreement. Except as described on Schedule 5(j)(iv),
the Company has received no notice that any
complaints about the Company have been filed with the
FCC or any other Governmental Authority which exerts
jurisdiction over the Company. Attached to Schedule
5(j)(iv) are true, correct and complete copies of all
Forms 395-A as filed with the FCC and resulting
compliance certificates.
v. The Systems are being operated in compliance with the
Rules and Regulations of the Federal Aviation
Administration ("FAA") and the FCC. Schedule 5(j)(v),
lists all of the existing towers of the Systems.
Without limiting the generality of the foregoing, the
existing towers of the Systems are obstruction marked
and lighted in accordance with the Rules and
Regulations of the FAA and FCC or are exempt from
such requirements. All required authorizations,
including but not limited to, Hazard to Air
Navigation determinations, for such towers have been
issued by and pursuant to the Rules and Regulations
of the FAA and all registrations required by the FCC
have been made. Except as set forth on Schedule
5(j)(v), the Company does not lease space on such
towers to any third party.
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k. Copyright Matters.
i. The Company has deposited with the United States
Copyright Office all statements of account and other
documents and instruments, and paid all royalties,
supplemental royalties, fees and other sums to the
United States Copyright Office required under the
Copyright Act with respect to the business and
operations of the Company as are required to obtain,
hold and maintain the compulsory copyright license
for cable television systems prescribed in Section
111 of the Copyright Act. The Company is in
compliance in all material respects with the
Copyright Act and the rules and regulations of the
Copyright Office with respect to the operation of the
Company. The Company is entitled to hold and does
hold the compulsory copyright license described in
Section 111 of the Copyright Act, which compulsory
copyright license is in full force and effect and has
not been revoked, canceled, encumbered or adversely
affected in any manner. The Company has provided
Buyer with true and complete copies of its Copyright
filings for 1995, 1996, 1997 and the first period of
1998.
ii. Set forth on Schedule 5(k)(ii) is a list of all
program services carried by the Systems, with a
breakdown as to channel line-up, marketing tier, mode
of reception (i.e., satellite, microwave, or off-air
reception) and transmission frequencies utilized. The
carriage of the broadcast signals carried by the
Systems in each community in which such signals are
so carried has been duly registered with the FCC and
the United States Copyright Office, and the Company
has full legal right and authority, and all necessary
authorizations and documentation from the FCC and the
United States Copyright Office, to carry all program
services (including broadcast signals) now being
carried on the Systems and which are listed on
Schedule 5(k)(ii). No notices or demands have been
made to the Company challenging its right to carry
any program services listed on Schedule 5(k)(ii) or
demanding the Company to carry any program service
not so listed. The Company's business is being
conducted in accordance with the requirements and
provisions of all communications, copyright, and
other similarly applicable laws, rules, and
regulations relative to the Systems or the Company's
operation thereof. Schedule 5(k)(ii) sets forth the
channel capacities of each System.
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l. No Conflicts; Consents. Except as described on Schedule 5(l),
the execution, delivery, and performance by the Shareholders
of this Agreement does not and will not conflict with,
violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or
elections of other Persons, or any combination thereof),
accelerate, or permit the acceleration of the performance
required by (a "Violation"), any Contract or result in the
creation or imposition of any Lien against or upon any of the
assets of the Company except for Violations which individually
and in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
m. Real Property. Schedule 5(m) contains descriptions of all the
owned and leased real property (the "Real Property"), which
comprises all real property interests necessary to conduct the
business or operations of the Company as now conducted. The
Company has delivered to Buyer true and complete copies of all
deeds, leases, easements, rights-of-way or other instruments
pertaining to the Real Property (including any and all
amendments and other modifications of such instruments). The
Company has good and marketable fee simple title to all of the
fee estates (including the improvements thereon), listed in
Schedule 5(m), free and clear of all Liens, except for (i)
Liens for Taxes not yet due and payable; (ii) easements,
rights-of-way and restrictions of record, none of which
materially affects the use of value of such property and all
of which are described in Schedule 5(m); and (iii) any other
claims or encumbrances which are described in Schedule 5(m)
and annotated to indicate that such claims or encumbrances
will be removed prior to or at Closing. All Real Property
(including the improvements thereon) (A) is being accepted by
Buyer in "as is, where is" condition, (B) is available to the
Company for immediate use in the conduct of the business or
operations of the Company, and (C) complies in all material
respects with all applicable building or zoning codes and the
regulations of any Governmental Authority having jurisdiction;
provided, however, that notwithstanding the foregoing, nothing
contained in this Section 5(m) shall in any way limit or
otherwise diminish any other representation, warranty or
covenant contained in this Agreement, each of which is being
made without reference to or reliance upon the acceptance by
Buyer of the Real Property in "as is, where is" condition.
x. Xxxxx. Schedule 5(n) contains an accurate and complete list of
all bonds (franchise, construction, fidelity, or performance)
of the Company which relate in any way to the ownership or use
of the Assets or the operation of the Company.
o. Non-Infringement. The operation of the Company's business as
currently conducted does not infringe upon, or otherwise
violate, the rights of any person or entity in any copyright,
trade name, trademark right, service xxxx, service name,
patent, patent right, license or trade secret, and there is
not pending or, to the best knowledge of Xxxxxxx, after due
inquiry, threatened any action with respect to any such
infringement or breach.
-12-
p. Books and Records. All of the books, records, and accounts of
the Company are in all material respects true and complete,
are maintained in accordance with good business practice and
all applicable laws, rules, regulations and other legal
requirements, and accurately present and reflect in all
material respects all of the transactions therein described.
q. Accounts Receivable. Except as described in Schedule 5(q), the
Company is the true and lawful owner of the accounts
receivable and has good and clear title to each account, free
and clear of all Liens, with the absolute right to transfer
any interest therein. Each such account is (i) a valid
obligation of the account debtor enforceable in accordance
with its terms, except insofar as enforcement may be affected
by bankruptcy, reorganization or similar laws relating to
creditors, rights in general, and general principles of
equity, and (ii) in all material respects, a true and correct
statement of the account for merchandise actually sold and
delivered to, or for actual services performed for and
accepted by, such account debtor.
r. Compliance with Laws. Except as set forth on Schedule 5(r),
the Company is in compliance with all federal, state and local
laws, ordinances, regulations and orders applicable to it and
its business. The Company has all required federal, state and
local governmental licenses and permits necessary in the
conduct of its business, such licenses and permits are in full
force and effect, the Company has not violated any thereof and
no proceeding is pending or, to Xxxxxxx'x knowledge,
threatened to revoke or limit any thereof.
s. Disclosure of Information. No representation, warranty or
covenant concerning the Company made to Buyer in this
Agreement, any schedule or exhibit to this Agreement contains,
or at Closing will contain, any untrue statement of a material
fact or omits, or at Closing will omit, to state a material
fact necessary to make the statements set forth in this
Agreement or the matters disclosed in such exhibit, document,
schedule or certificate, in light of the circumstances under
which such statements or disclosures were made, not
misleading. There is no fact known to Xxxxxxx which may
materially and adversely affect the business, prospects or
financial condition of the Company or its properties or
assets, which has not been set forth in the Agreement or in
the exhibits, certificates, schedules or statements in writing
furnished in connection with the transactions contemplated by
this Agreement except for the possible impact of pending or
future laws or regulations affecting the cable television
industry generally.
-13-
t. Employees; Compensation; Unions.
i. Except as set forth on Schedule 5(t)(i), each
employee of the Company is an "at-will" employee of
the Company who may be terminated without cause at
any time without the incurrence of any liability.
Except as set forth on Schedule 5(t)(i), the Company
is not a party to any collective bargaining
agreements. Except as set forth on Schedule 5(t)(i),
the Company is not a party to any pending or
threatened labor disputes and no trade union, council
of trade unions, employee bargaining agent or
affiliated bargaining agent for any of the employees
(A) holds bargaining rights with respect to any of
the employees by way of certification, interim
certification, voluntary recognition, designation or
successor rights; or (B) has applied or indicated an
intention to apply to be certified as the bargaining
agent of any of the employees.
ii. Except as set forth in Schedule 5(t)(ii), the Company
and its Affiliates have no pension plans, profit
sharing plans, supplemental income plans, deferred
compensation plans, stock option or stock bonus plans
or the like or similar employee or executive benefit
plans, or any contracts under any thereof
(collectively, the "Plans"). Except as set forth in
Schedule 5(t)(ii), the Company and its Affiliates do
not maintain, sponsor or contribute to any "employee
benefit plan" within the meaning of ERISA, or other
plan, program, practice, agreement or arrangement,
whether written or oral, of employee compensation,
deferred compensation, severance pay, retiree benefit
or fringe benefit covering current or former
employees of the Company or their respective
dependents or survivors. The Company is and has been
in compliance with all material provisions, including
all reporting and disclosure requirements of ERISA
and of the Internal Revenue Code, as amended
("Code"), relating to the Plans, and has administered
each Plan heretofore maintained or sponsored in
accordance with its terms, and, to the extent
applicable, with ERISA and the Code. Attached hereto
on Schedule 5(t)(ii) is a summary of each Plan.
iii. Except as set forth on Schedule 5(t)(iii), neither
the Company nor any trade or business, whether or not
incorporated, which together with the Company would
be treated as a single employer under ERISA (i) has
incurred, or taken or failed to take any action which
could result in the incurrence of (A) "withdrawal
liability" under ERISA or (B) termination liability
to the Pension Benefit Guaranty Corporation under
ERISA, (ii) has contributed to any "multiemployer
plan", within the meaning of ERISA which (A) has
"unfunded vested benefits" allocable to any of them
under ERISA or (B) which is in "reorganization"
within the meaning of ERISA, (iii) has failed to make
all contributions required to date under any
collective bargaining agreement to any benefit plan
or program, or (iv) has maintained or sponsored at
any time prior to the date hereof any "employee
pension benefit plan" within the meaning of ERISA,
which is subject to Title IV or ERISA or Section 302
of ERISA. Having made due inquiry, Xxxxxxx knows of
no circumstances relating to an employee plan
intended to qualify under section 401(a) of the Code
that would likely result in the denial or revocation
of tax qualification. No other material liabilities
not mentioned in Section 5(t)(i), other than for
payment of benefits in the ordinary course, have been
incurred nor do any facts exist which are reasonably
likely to result in any material liability (whether
or not asserted as of the date hereof) of the Company
or its Affiliates arising by virtue of any event, act
or omission occurring prior to the Closing Date with
respect to any Plan. To Xxxxxxx'x knowledge, after
due inquiry, no liens under Code Section 412(h) of
ERISA Section 6069(a), nor liabilities under ERISA
section 4069(a) or 4201(a), exist with respect to any
employee plan or any employee benefit plan (within
the meaning of section 3(3) of ERISA) of the Company
or any of the Company's Affiliates that is aggregated
with the Company under section 414(b), 414(c) or
414(m) of the Code that would have a material adverse
effect on the assets or the business of the Company,
nor do any facts which are reasonably likely to
result in the assertion of any such liens or
liabilities.
-14-
iv. Attached hereto as Schedule 5(t)(iv) is a list of the
names of all employees of the Company as of January
1, 1999, the position and duties performed by each,
the total compensation payable to each, schedule of
hours worked (if part time), and accrued sick,
personal vacation days and hire date for each, and
the list sets forth the Company's policies as to
payment of salaries and commissions, vacation time,
vacation pay, sick pay, disability or severance pay,
or other benefits and similar items. The Company has
in all material respects properly verified the
identity and authorization to work in the United
States and has completed and retained INS forms I-9
for all employees who are employed by the Company,
whether or not actively at work, where required by
the Immigration Reform and Control Act of 1986 and
related statutes. Within the two week period
following the execution of this Agreement the Company
will make available to Buyer true and complete copies
of such forms.
v. Except as set forth on Schedule 5(t)(v), no employee
has received an increase in his regular rate of
compensation or any bonus or other compensation or
benefit within the six (6) month period immediately
prior to the date hereof. No employee has been or
will be offered an increase in compensation or any
bonus or benefits, including, without limitation any
severance pay or benefit, prior to the Closing
without the prior written consent of Buyer.
-15-
vi. Except as set forth on Schedule 5(t)(vi), there is no
complaint or litigation pending or threatened before
any Governmental Authority or any court with respect
to any strike or unresolved labor dispute, the
outcome of which would adversely affect the operation
of the Company or the Systems.
u. Environmental Matters.
i. None of the properties of the Company contains,
including, without limitation, in, on or under the
soil and groundwater thereunder, any Hazardous
Materials (as defined below) in violation of
Environmental Laws (as defined below) or in amounts
that could give rise to liability under Environmental
Laws.
ii. The Company is in compliance with all Environmental
Laws, and, to the best of the Xxxxxxx'x knowledge,
after due inquiry, there is no contamination of any
of such properties which could interfere with the
continued operation of any of such properties or
impair the financial condition of the Company.
iii. The Company has not received from any Governmental
Authority any complaint, notice of violation, alleged
violation, investigation or advisory action or notice
of potential liability regarding matters of
environmental protection or permit compliance under
applicable Environmental Laws with regard to any such
properties that have not been resolved to the
satisfaction of the issuing government authority, nor
is Xxxxxxx aware that any Governmental Authority is
contemplating delivering any such notice to the
Company.
iv. There has been no pending or threatened complaint,
notice of violation, alleged violation, investigation
or notice of potential liability under Environmental
Laws with regard to any of such properties and to
Xxxxxxx'x best knowledge, after due inquiry, there is
no basis for any person asserting the same against
the Company.
v. Hazardous Materials have not been generated, treated
stored, disposed of, at, on or under any of such
property in violation of any Environmental Laws, nor
have any Hazardous Materials been transported or
disposed of from any of such properties to any other
location in violation of any Environmental Laws or in
a manner that could give rise to liability under
Environmental Laws.
-16-
vi. The Company is not a party to any governmental
administrative actions or judicial proceedings
pending under any Environmental Law with respect to
any of such properties nor are there any consent
decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding
under any Environmental Law with respect to any of
such properties.
vii. Except as set forth on Schedule 5(u)(vii) hereof,
there are currently or previously no above ground or
below ground tanks on any of the Real Property. The
Company has provided Buyer with complete and correct
copies of all studies, reports, surveys and other
materials relating to the presence or alleged
presence of any Hazardous Materials at, on or
affecting the Real Property.
As used herein, "Environmental Laws" means any and
all applicable federal, state, local or municipal laws, rules,
orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct
concerning environmental protection matters, including,
without limitation, Hazardous Materials, as now or may at any
time heretofore or hereafter be in effect.
As used herein, "Hazardous Materials" means any
hazardous materials, hazardous wastes, hazardous constituents,
hazardous or toxic substances, petroleum products (including
crude oil or any fraction thereof) or friable asbestos
containing materials defined or regulated as such in or under
any Environmental Law.
v. Year 2000 Compliance. The Company has (i) initiated a
review and assessment of all areas within its
businesses and operations (including those affected
by suppliers and vendors that would reasonably be
expected to be adversely affected by the "Year 2000
Problem" (that is, the risk that computer
applications used by the Company (or suppliers or
vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain
dates prior to and any date after December 31,
1999)), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis,
and (iii) to date, implemented that plan in
accordance with that timetable. Based on the
foregoing, Xxxxxxx reasonably believes that all
computer applications (including those of its
suppliers and vendors) that are material to the
Company's business and operations are reasonably
expected by September 30, 1999 to be able to perform
properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year
2000 Compliant"), except to the extent that a failure
to do so would not reasonably be expected to have a
Materially Adverse Effect. Exhibit 5(v) sets forth
the Company's plan and timetable for addressing the
Year 2000 Problem and the specific actions taken to
date.
-17-
w. Customers. At the Closing, the number of Customers (as defined
below) shall be at least 60,500, or 60,000 Customers if the
Closing occurs after April 30, 1999. As used herein, the term
"Customer" shall have the meaning ascribed to the term
"Subscriber" for the purposes of the line captioned "Total
Combined Subs" of the Company's Monthly Subscriber Reports
that the Company has delivered to Buyer for at least the last
two years. Notwithstanding the foregoing, the term "Customer"
shall not include any commercial, residential or other
subscriber who (i) has not paid for at least one (1) month's
service or (ii) is more than sixty (60) days delinquent from
the date of billing on any amount due to the Company in excess
of $10.00.
x. Equity Sharing Agreements. Except for the Shareholders
Agreement, the Company is not a party to any agreement or
arrangement relating to profit sharing or the creation of
beneficial interests in the equity of the Company,
y. Insurance. The Company is insured in scope and amounts
customary and reasonable for the CATV business. With respect
to the Systems and Real Property, the Company has not been
refused insurance or has its coverage been limited by an
insurance carrier to which it has applied for insurance during
the last three years, and, to Xxxxxxx'x best knowledge, after
due inquiry, no facts exist which would reasonably cause the
Company to believe that its premiums on any insurance policy
will be extraordinarily increased or the renewal of any such
insurance policy denied. All of such policies are in full
force and effect and the Company is not in default of any
provision thereof. Schedule 5(y) hereto sets forth a complete
list of all of the Company's insurance policies, with policy
numbers, coverages and limits. The Company shall maintain all
of the insurance policies described on Schedule 5(y) in full
force and effect in the amounts specified through the Closing
Date.
6. Representations and Warranties of the Shareholders. Each Shareholder,
severally and not jointly, represents and warrants to Buyer as follows:
a. Authority. Shareholder has all requisite power and authority
to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated in
this Agreement. The execution, delivery and performance by
Shareholder of this Agreement and the consummation of this
transactions contemplated by this Agreement on the part of
Shareholder have been or prior to the Closing will be duly and
validly authorized and approved by all necessary action on the
part of Shareholder, and except as set forth in Schedule 6(a),
(i) does not require the consent, waiver, approval, permit,
license, authorization of, or any declaration or filing with,
any person, court or public authority; (ii) does not violate,
with or without the giving of notice or the passage of time,
any provision of law applicable to Shareholder; and (iii) does
not conflict with or result in the breach or termination of,
or constitute a default under, or result in the creation of
any lien, charge or encumbrance upon any of the Stock pursuant
to any by-law, mortgage, deed of trust, indenture or other
agreement of any kind or instrument or any order, judgment or
decree to which Shareholder is a party or by which any of
Shareholder's assets or properties are bound or affected.
-18-
b. Valid Obligation. This Agreement has been duly and validly
executed and delivered by Shareholder and constitutes a legal
and valid obligation of Shareholder enforceable in accordance
with its terms, except insofar as enforcement may be affected
by bankruptcy, reorganization or similar laws relating to
creditors' rights in general, and general principles of
equity.
c. Title. Except as set forth on Schedule 6(c), Shareholder owns
the shares of Stock set forth opposite his, her or its name on
Exhibit A free clear of all liens, claims, pledges,
encumbrances and restrictions of any kind, nature and
description, and Shareholder has good, valid, marketable and
indefeasible title to such Stock. Except as set forth on
Schedule 6(c) hereof, when purchased by Buyer from Shareholder
in accordance with the terms and conditions hereof, such
Shareholder's Stock (i) will be duly and validly issued, will
be fully-paid and non-assessable and (ii) will be free and
clear of all liens, claims, pledges, encumbrances and
restrictions of any kind, nature and description, and Buyer
will have good, valid, marketable and indefeasible title to
such Shareholder's Stock. There are no outstanding
subscriptions, script, warrants, commitments, conversion
rights, calls, options or agreements relating to such
Shareholder's Stock, and no obligations whatsoever requiring,
or which might require, the Company to issue any securities,
and no agreements, commitments, or understandings with respect
to the internal management, control or affairs of the Company
other than as set forth in its Articles of Incorporation and
By-Laws and except for the Shareholder Agreement.
d. Litigation. Shareholder is not subject to any Judgment entered
in any Legal Proceeding, and there is no Legal Proceeding by
or before any Governmental Authority, or, to Shareholder's
knowledge, threatened, against Shareholder, or any of
Shareholder's properties or rights, which affects (i) the
Shareholder's Stock, (ii) the Company or any part of the
business, properties or assets of the Company or (iii) any
part of the transaction contemplated hereby, or which seeks to
impose conditions upon the degree of Buyer's control over, or
the manner in which Buyer shall be permitted to manage its
investment in the Company subsequent to the consummation of
the transaction contemplated hereby.
-19-
e. Disclosure of Information. No representation, warranty or
covenant made by Shareholder to Buyer in this Agreement, any
schedule or exhibit to this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements set forth in this Agreement
or the matters disclosed in such exhibit, document, schedule
or certificate, in light of the circumstances under which such
statements or disclosures were made, not misleading.
f. Broker's Fees. Shareholders have not employed any broker in
connection with the transaction contemplated by this
Agreement. Xxxxxx Capital Corporation was retained by the
Company in connection with the transaction contemplated by
this Agreement.
7. Representations and Warranties of Buyer. Buyer represents and warrants
to the Company and to each Shareholder as follows:
a. Organization. Buyer is a corporation duly and validly
organized, existing and in good standing under the laws of the
State of Delaware.
b. Authority. The execution and carrying out of this Agreement
and the compliance with the provisions hereof by Buyer have
been duly and validly authorized by all necessary corporate
action of Buyer, and this Agreement is the valid and binding
agreement of Buyer, enforceable in accordance with its terms,
except insofar as enforcement may be affected by bankruptcy,
reorganization or similar laws relating to creditors, rights
in general, and general principles of equity. Buyer has all
requisite power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the
transactions contemplated in this Agreement. The execution,
delivery and performance by Buyer of this Agreement and the
consummation of this transactions contemplated by this
Agreement on the part of Buyer have been or prior to the
Closing will be duly and validly authorized and approved by
all necessary action on the part of Buyer, and except as set
forth in Schedule 7(b), (i) does not require the consent,
waiver, approval, permit, license, authorization of, or any
declaration or filing with, any person, court or public
authority; (ii) does not violate, with or without the giving
of notice or the passage of time, any provision of law
applicable to Buyer; and (iii) does not conflict with or
result in the breach or termination of, or constitute a
default under, or result in the creation of any lien, charge
or encumbrance upon any of the Stock pursuant to any by-law,
mortgage, deed of trust, indenture or other agreement of any
kind or instrument or any order, judgment or decree to which
Buyer is a party or by which any of Buyer's assets or
properties are bound or affected.
-20-
c. Litigation. There are no Legal Proceeding by or before any
Governmental Authority or, to the knowledge of Buyer,
threatened against Buyer which would give any third party the
right to enjoin or rescind the transactions contemplated by
this Agreement or otherwise prevent Buyer from complying with
the terms and provisions of this Agreement.
d. Broker's Fees. Buyer has not employed any broker in connection
with the transaction described herein.
e. Financing. Buyer has adequate funds available to consummate
the transactions contemplated by this Agreement, to refinance
the existing indebtedness of the Company and to satisfy the
reasonably anticipated working capital requirements of the
Company after the Closing.
8. Actions Prior to the Closing Date.
a. Access. Each Shareholder shall cause the Company to afford the
officers, employees, attorneys, agents, engineers, accountants
and other representatives of Buyer free and full access,
during normal business hours, to the properties and assets of
the Company. Each Shareholder shall and shall cause the
Company to cooperate with Buyer in obtaining any consents of
third parties that may be required with respect to the
consummation of the transactions contemplated hereby.
b. Conduct of the Business Prior to the Closing Date. Except as
contemplated in connection with this Agreement, until the
Closing Date, each Shareholder shall cause the Company to: (i)
operate only in the usual, regular and ordinary manner and, to
the extent consistent with such operation, use reasonable
efforts to (A) preserve its present business operations,
organization and goodwill intact, (B) preserve its present
relationships with persons having business dealings with the
Company and (C) maintain all of the assets and properties of
the Company in their current condition, normal wear and tear
excepted; and (ii) not sell or agree to sell any material
assets of the Company to any corporation or other entity.
c. Cooperation. The parties shall cooperate fully in obtaining
all approvals necessary to effectuate and consummate the
transactions contemplated hereby.
d. HSR Notification. Shareholders and Buyer shall each make an
appropriate filing of a Notification and Report Form pursuant
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") no later than thirty (30) days
after the date of this Agreement. Each such filing shall
request early termination of the waiting period imposed by the
HSR Act. Buyer and each Shareholder shall use their respective
reasonable best efforts to respond as promptly as reasonably
practicable to any inquiries received from the Federal Trade
Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") for
additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and
requests received from any other Governmental Authority in
connection with antitrust matters; provided that nothing
contained herein shall be deemed to preclude either Buyer or
Shareholder from negotiating with any Governmental Authority
regarding the scope and content of any such requested
information or documentation. Buyer and each Shareholder shall
use their respective reasonable best efforts to overcome any
objections that may be raised by the FTC, the Antitrust
Division or any other Governmental Authority having
jurisdiction over antitrust matters. The filing fee under the
HSR Act shall be borne equally by Buyer and the Shareholders.
-21-
e. Further Actions. Each of Buyer and each Shareholder agrees to
(i) execute and deliver such instruments and take such other
actions as may reasonably be required to carry out the intent
of this Agreement, (ii) use diligent efforts to obtain the
consents of all third parties and governmental bodies
necessary for the consummation of the transactions
contemplated by this Agreement, and (iii) use diligent efforts
so that the conditions precedent to the obligations of the
parties hereto set forth herein are satisfied. Nothing in this
Agreement shall be construed as an attempt to assign any
license, contract or agreement which is by its terms either
nonassignable or nonassignable without the consent of the
other party or parties thereto unless such consent shall be
given. Each Shareholder shall, at the request of the Buyer,
cause the Company to cooperate in any reasonable arrangement,
at the expense of the Buyer, to provide the benefits of such
license, contract or agreement which cannot be assigned by
reason of the failure to obtain a consent.
f. Employees. Not less than fourteen (14) days prior to the
Closing Date, Buyer shall advise the Company, in writing, of
those employees of the Company who will not continue as
employees of the Company after the Closing Date
9. Conditions Precedent.
a. Conditions Precedent to the Obligations of Buyer. The
obligations of Buyer under this Agreement are subject, at its
option, to the satisfaction at or prior to the time of the
Closing of each of the following conditions:
i. Accuracy of Representations and Warranties. All of
the representations and warranties of Xxxxxxx and
each Shareholder to Buyer shall have been true and
correct in all material respects when made and
(except as a result of any action taken which shall
be specifically contemplated hereby) shall be true
and correct in all material respects on and as of the
Closing Date with the same force and effect as if
they had been made on and as of such date.
-22-
ii. Performance of Agreements. Each Shareholder a party
to this Agreement shall have performed in all
material respects all of its obligations and complied
in all material respects with all of its covenants
contained in this Agreement, and each agreement,
document and certificate delivered pursuant hereto or
in connection herewith, and required to be performed
or complied with on or prior to the Closing Date.
iii. Consents. Each consent material to the ownership of
the Stock and the Company and the operation of the
Company's business after the Closing Date, including,
without limitation, transfer of all Licenses, shall
have been obtained in form and substance reasonably
satisfactory to Buyer, and all such consents shall no
longer be subject to administrative or judicial
review.
iv. HSR Act Compliance. All waiting periods under the HSR
Act applicable to the transactions contemplated
hereby shall have expired or been terminated.
v. Shareholder's Counsel Opinion. Buyer shall have
received an opinion of counsel to the Shareholders,
dated as of Closing, in form and substance customary
for transactions of this type and amount.
vi. Shareholder's FCC Counsel Opinion. Buyer shall have
received an opinion of the Company's FCC counsel,
dated as of Closing, in form and substance customary
for transactions of this type and amount.
vii. No Litigation. There shall be no Legal Proceeding,
and no Judgment shall have been entered and not
vacated by a final, unappealable order by any
Governmental Authority of competent jurisdiction in
any Legal Proceeding or arising therefrom, which (a)
enjoins, restrains, makes illegal, or prohibits
consummation of the transaction contemplated by this
Agreement, or (b) requires separation or divestiture
by Buyer or all or any portion of the Stock or assets
of the Company after the Closing, and there shall be
no Legal Proceeding pending or threatened that seeks,
or which if successful would have the effect of, any
of the foregoing.
viii. Waymaker Contracts/Affiliate Leases. Prior to the
Closing Date, the Company shall have terminated that
certain Management Agreement between the Company and
the Waymaker Corporation, and the Waymaker
Corporation shall have released the Company from all
obligations under such contract. The lease agreements
between the Company and certain affiliates of the
Shareholders shall have been either (a) amended in
form and substance reasonably satisfactory to Buyer,
but in any event on terms no more and no less
favorable to the lessor than fair market terms for
similar properties, or (b) either (A) terminated by
the mutual agreement of the parties if the parties
cannot agree upon amended terms or (B) accepted on
its current terms by Buyer. Without limiting the
foregoing, the lease, dated May 1, 1998, between the
Company and Xxxxxxx with respect to the Company's
head end and tower site in South Middleton Township,
Cumberland County, Pennsylvania, shall be amended to
give the Company ten (10) options to renew such lease
for additional periods of one (1) year each. Each
such renewal shall automatically become effective as
of May 1 of each year unless the Company gives
Xxxxxxx written notice of termination at least ninety
(90) days prior to the end of the then current term
of such lease. In addition, such amendment shall
provide for a percentage increase in rent at the
lesser of five percent (5%) or the amount of the
percentage increase in the Consumer Price Index for
the statistical area which includes the head end and
tower site over the prior year.
-23-
ix. Deliveries Complete. All documents required to have
been delivered at or prior to the Closing Date by
each Shareholder and/or the Company to Buyer, and all
actions required to have been taken at or prior to
the Closing Date by each Shareholder and/or the
Company, shall have been delivered or taken at or
prior to the Closing.
x. Inventory. The Company shall have on hand a supply of
equipment parts, spares and other inventory necessary
for the operation of the Systems in amounts
customarily maintained by the Company.
xi. LPTV Transfer. The Company shall have transferred the
low power television station license and associated
assets, including FCC licenses ("LPTV Assets"), more
fully described on Exhibit 9(a)(xi) hereto, to
Xxxxxxx, or his designee.
xii. LPTV Must Carry. Xxxxxxx shall have delivered to
Buyer a release of the Company and SCTV by Xxxxxxx,
his heirs, personal representatives and assigns
forever waiving any "must carry" obligations which
may now or in the future be asserted against the
Company or SCTV.
-24-
xiii. Employees. As of the Closing Date, the Company shall
have terminated all employees ("Terminated
Employees") of the Company other than those employees
Buyer has designated as employees who will continue
as employees of the Company after the Closing. Such
Terminated Employees shall be eligible for the
benefits specified by the Employee Incentive to Stay
Severance Policy attached hereto as Exhibit 16(q). In
addition, on the Closing Date, the Company shall pay
each continuing employee in cash an amount equal to
his accrued vacation and sick time, whereupon the
accrued vacation and sick time of each such employee
shall be canceled; provided, however, each continuing
employee will be permitted to take, on an unpaid
basis, the vacation and sick days to which they would
otherwise have been entitled, but scheduled in
accordance with the Company's policies and staffing
requirements. Any employee of the Company on the
Closing Date who continues as an employee of the
Company after the Closing Date shall be given credit
for his years of service with the Company.
xiv. No Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been (a) no
material adverse change in the business of the
Company or its financial condition, taken as a whole,
other than any change arising out of matters
affecting the economy as a whole or matters
(including, without limitation, competition caused by
or arising from multichannel multipoint distribution
services and/or direct broadcast satellite and
legislation, rulemaking or regulation) affecting the
cable television industry (national or regional)
generally, and (b) no material loss, damage,
impairment, confiscation or condemnation of any of
the assets of the Company that has not been repaired
or replaced.
b. Conditions Precedent to the Obligations of each Shareholder.
The obligations of each Shareholder under this Agreement are,
at its option, subject to the satisfaction, at or prior to the
time of Closing, of each of the following conditions:
i. Accuracy of Representations and Warranties. All
representations and warranties of Buyer shall be true
and correct in all material respects when made and
(except as a result of any action taken which shall
be specifically contemplated hereby) shall be true
and correct in all material respects on and as of the
Closing Date with the same force and effect as if
they had been made on and as of such date.
ii. Performance of Agreements. Buyer shall have performed
in all material respects all obligations and
agreements and complied in all material respects with
all covenants contained in this Agreement and each
agreement, document or certificate delivered pursuant
hereto or in connection herewith and required to be
performed or complied with on or prior to the Closing
Date.
-25-
iii. No Litigation. There shall be no Legal Proceeding,
and no Judgment shall have been entered and not
vacated by a final, unappealable order by any
Governmental Authority of competent jurisdiction in
any Legal Proceeding or arising therefrom, which
enjoins, restrains, makes illegal, or prohibits
consummation of the transaction contemplated by this
Agreement, and there shall be no Legal Proceeding
pending or threatened that seeks, or which if
successful would have the effect of, any of the
foregoing.
iv. Deliveries Complete. All documents required to have
been delivered by Buyer to each Shareholder and all
actions required to have been taken by Buyer, shall
have been delivered or taken at or prior to the
Closing.
v. HSR Act Compliance. All waiting periods under the HSR
Act applicable to the transactions contemplated
hereby shall have expired or been terminated.
vi. Consents. Each consent material to the transfer of
all Licenses, shall have been obtained in form and
substance reasonably satisfactory to Xxxxxxx.
10. Documents to be Delivered by each Shareholder and Xxxxxxx. At the
Closing, each Shareholder shall deliver or cause to be delivered to
Buyer the following:
a. The original stock certificate(s) evidencing the Stock to be
sold by the Shareholder hereunder, endorsed in blank, in form
sufficient to transfer ownership thereof to Buyer.
b. A certificate of each Shareholder, dated the Closing Date, to
the effect that except as set forth in such certificate: (i)
all the representations and warranties of Shareholder
contained in Section 6 of this Agreement were true and correct
in all material respects when made and are true and correct in
all material respects on and as of the Closing Date and (ii)
Shareholder has performed in all material respects all
obligations and covenants to Buyer.
c. The original of each consent, and each other document required
to be delivered pursuant to Section 9(a) hereof.
d. Such other documents and instruments as shall be reasonably
necessary to effect the intent of this Agreement and
consummate the transaction contemplated by this Agreement,
including, without limitation, a certificate of Xxxxxxx, dated
the Closing Date, to the effect that except as set forth in
such certificate all the representations and warranties of
Xxxxxxx contained in Section 5 of this Agreement were true and
correct in all material respects when made and are true and
correct in all material respects on and as of the Closing
Date.
-26-
11. Documents to be Delivered by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to each Shareholder:
a. Payment by wire transfer of the Purchase Price; and
b. A certificate of an authorized officer of Buyer, dated the
Closing Date, to the effect that except as set forth in such
certificate: (i) all the representations and warranties of
Buyer contained in this Agreement were true and correct in all
material respects when made and are true and correct in all
material respects on and as of the Closing Date and (ii) Buyer
has performed in all material respects all obligations and
covenants to each Shareholder.
12. Shareholder's Indemnity.
a. Notwithstanding the Closing, each Shareholder shall indemnify
and hold Buyer, its affiliates, officers, directors,
employees, agents, and representatives, and any person
claiming by or through any of them, as the case may be,
harmless from and against any loss, cost, claim or expense
("Loss") arising out of or resulting from (i) any
misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of such Shareholder
under this Agreement or any document delivered to Buyer in
connection with the transactions contemplated hereby, and (ii)
any misrepresentation or breach of warranty of Xxxxxxx under
Section 5 of this Agreement; provided, however, that Buyer
shall not be entitled to indemnification for any Loss unless
and until the aggregate amount of all Losses exceeds $50,000,
at which point Buyer shall be entitled to indemnification for
all Losses.
b. If, by any reason of the claim of any third party relating to
any of the matters subject to such indemnification, a lien,
attachment, garnishment, or execution is place or made upon
any of the Stock under this Section, in addition to any
indemnity obligation of Shareholder under this Section,
Shareholder shall furnish a bond sufficient to obtain the
prompt release thereof within five days from receipt of notice
relating thereto.
c. The indemnification obligation of each Shareholder pursuant to
Section 12(a) shall be several and not joint and shall be in
the same proportion as the Purchase Price paid to such
Shareholder bears to the aggregate
-27-
Purchase Price paid to all Shareholders. This Section 12 sets
forth the sole remedy of the Buyer for any Loss. Buyer shall
seek recovery of any indemnifiable Loss solely from the
Indemnity Reserve Escrow Amount.
13. Buyer's Indemnity. Notwithstanding the Closing, and regardless of any
investigation made at any time by or on behalf of a Shareholder or any
information a Shareholder may have, Buyer shall indemnify and hold such
Shareholder, and any person claiming by or through him, her or it, as
the case may be, from and against any Losses arising out of or
resulting from any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Buyer under
this Agreement or any document delivered by Buyer in connection with
the sale of the Stock. This Section 13 sets forth the sole remedy of
each Shareholder for any Loss.
14. Procedure for Indemnified Third Party Claim. Promptly after receipt
by a party entitled to indemnification under this Agreement (the
"Indemnitee") of written notice of the assertion or the commencement of
any Legal Proceeding with respect to any matter referred to in Sections
12 and 13, the Indemnitee shall give written notice thereof to the
party from whom indemnification is sought pursuant hereto (the
"Indemnitor") and thereafter shall keep the Indemnitor reasonably
informed with respect thereto. Failure of the Indemnitee to give the
Indemnitor notice as provided herein shall not relieve the Indemnitor
of its obligations hereunder unless the Indemnitee's failure to give
the Indemnitor timely notice materially limits or prejudices the
Indemnitor's ability to defend, in which case such failure of the
Indemnitee to give the Indemnitor notice shall relieve the Indemnitor
of its indemnification obligations. In case any Legal Proceeding shall
be brought against any Indemnitee, the Indemnitor shall be entitled to
direct the defense thereof with counsel mutually satisfactory to the
Indemnitor and the Indemnitee, at the Indemnitor's sole expense. Such
Legal Proceeding may not be settled by the Indemnitee without the
consent of the Indemnitor, which consent shall not be unreasonably
withheld. If the Indemnitor and the Indemnitee cannot agree of the
choice of a single counsel, both the Indemnitor and the Indemnitee
shall have separate counsel at the Indemnitor's sole expense. If the
Indemnitor shall assume the defense of any Legal Proceeding, it shall
not settle the Legal Proceeding unless the settlement shall include as
an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, satisfactory to the
Indemnitee, from all liability with respect to such Legal Proceeding.
15. Termination.
a. This Agreement may be terminated at any time prior to the
Closing Date:
i. by mutual written consent of Buyer and all
Shareholders;
-28-
ii. by the Shareholders, acting as a group, if Buyer
shall have breached any of its representations,
warranties, covenants or agreements contained in this
Agreement, or any such representation or warranty
shall have become untrue, in any such case such that
the conditions precedent to the obligation of
Shareholders to close specified in Section 9(b) will
not be satisfied and such breach has not been
promptly cured within thirty (30) days following
receipt by Buyer of written notice of such breach;
iii. by Buyer if any Shareholder shall have breached any
of such Shareholder's representations, warranties,
covenants or agreements contained in this Agreement,
or any such representation or warranty shall have
become untrue, in any such case such that the
conditions precedent to the obligation of Buyer to
close specified in Section 9(a) will not be satisfied
and such breach has not been promptly cured within
thirty (30) days following receipt by such
Shareholder of written notice of such breach; or
iv. by either Buyer or Shareholders, acting as a group,
if the Closing Date has not occurred on or prior to
June 30, 1999; provided, however, that the right to
terminate this Agreement under this Section 15 shall
not be available to any party whose breach of
representations, warranties, covenants or agreements
contained in this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur by
such date or the inability of such condition to be
satisfied.
b. If this Agreement is terminated pursuant to Section 16(a)
above or Section 16(t) below, this Agreement shall forthwith
become void and there shall be no liability or obligation on
the part of any party hereto, except (i) nothing herein shall
relieve any party from liability for any breach hereof and
each party shall be entitled to any remedies at law or in
equity for such breach, and (ii) this Section 16(b) and
Sections 12, 13 and 14 shall remain in full force and effect
and survive any termination of this Agreement and shall be
enforceable at law or in equity. Without limiting the remedies
available to the parties hereto, each of the Buyer and each
Shareholder acknowledges that damages at law will be
insufficient in the event that the other party violates the
terms of the Agreement, and that any party not in violation of
the terms of the Agreement may specifically enforce the terms
of the Agreement.
16. Miscellaneous.
a. Split Dollar Insurance Agreement. Buyer acknowledges that the
Company is a party to a Split Dollar Insurance Agreement,
dated December 24, 1992, between the Company and Farmers Trust
Company, Trustee, a
-29-
copy of which Agreement is attached as Exhibit 16(a). Pursuant
to the Split Dollar Insurance Agreement, the Company agrees to
pay the annual premium (which Buyer acknowledges that the
Company has been paying in quarterly installments). Buyer
covenants that it shall cause the Company to continue to meet
all obligations under the Split Dollar Insurance Agreement,
including but not limited to the payment of all premium
amounts for the policy on a quarterly basis before the
expiration of the grace period for the payment. In the event
that Company defaults on any of its obligations after notice
and an opportunity to cure by the person declaring such
default, Buyer agrees that the Trustee's obligations under the
Split Dollar Insurance Agreement, including but not limited to
the obligation to return the amount of premiums advanced by
the Company on behalf of Xxxxxxx, shall cease.
x. Xxxxxxx Employment Agreement. Buyer shall cause the Company to
honor the Company's obligations under the Executive Employment
Agreement, dated November 4, 1998, by and between Company and
Xxxxxxx. The Executive Employment Agreement is attached hereto
as Exhibit 16(b).
x. Xxxxxxxx and Xxxxxxxx Agreements. Buyer shall cause the
Company to honor the Executive Employment Agreements between
L. Xxxxxxx Xxxxxxxx ("Xxxxxxxx") and the Company and between
Xxx X. Xxxxxxxx ("Xxxxxxxx")and the Company, each dated
November 4, 1998. Additionally, Buyer shall cause the Company
to honor the Deferred Compensation Plans between the Company,
Waymaker Co. and Xxxxxxxx and between the Company, the
Waymaker Co. and Xxxxxxxx, each dated October 31, 1997, each
as amended. The Executive Employment Agreements and Deferred
Compensation Plans are attached hereto as Exhibit 16(c).
d. Further Assurances. From time to time after the Closing, each
Shareholder shall, if requested by Buyer, make, execute and
deliver to Buyer such additional assignments, bills of sale
and other instruments of transfer, as may be necessary or
proper to transfer to Buyer all of each Shareholder's right,
title, and interest in and to the Stock and the Company. Such
efforts and assistance shall be without cost to Buyer.
e. Waivers and Amendments. This Agreement may be amended,
modified or supplemented only by written instrument executed
by the parties hereto. The provisions of this Agreement may
only be waived by an instrument in writing executed by the
party granting the waiver. No failure or delay by any party in
exercising any right, power or privilege hereunder (and no
course of dealing between or among any of the parties) shall
operate as a waiver of any such right, power, or privilege.
The waiver by any party hereto of a breach of any provision of
this Agreement shall not
-30-
operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach.
No single or partial exercise of any such right, power, or
privilege shall preclude the further or full exercise thereof.
f. Survival of Representations, Warranties and Covenants. Each of
the representations, warranties and covenants of Xxxxxxx and
each Shareholder and Buyer contained herein or in any
certificate, document or exhibit delivered in connection
herewith shall survive for a period of fifteen (15) months
after the date hereof except that (i) the representation and
warranties with regard to taxes shall survive until the
statute of limitations relating to such matter shall have
expired; (ii) the representation and warranties with respect
to title to Real Property and Stock shall survive indefinitely
and (iii) the indemnity provisions of Sections 12, 13 and 14
shall survive the date hereof so long as any claim may be
asserted thereunder.
g. Expenses. Each of Buyer and each Shareholder, severally,
shall bear its own costs and expenses, including, without
limitation, any legal fees and expenses, in connection with
the completion of the transaction contemplated hereby. Each
Shareholder acknowledges and agrees that BIPC was retained by
the Company to assist the Company to maximize shareholder
value. In addition, the Shareholders acknowledge that the
transaction contemplated by this Agreement will result in a
benefit to all Shareholders and that, while BIPC does not
represent the Shareholders individually or as a group, the
services rendered by BIPC in connection with this Agreement
and the transactions contemplated hereby benefit all
Shareholders, but not Buyer. In consideration of such benefit,
each Shareholder agrees to reimburse the Company for the
amounts paid to BIPC by the Company in connection with this
Agreement and the transactions contemplated hereby for all
periods after November 30, 1998. Each Shareholder agrees that
his, her or its reimbursement obligation pursuant to the
preceding sentence shall be satisfied by reducing the amount
of the Purchase Price payable to such Shareholder at the
Closing by the prorata amount of such obligation, which shall
be determined based upon the relative amount of the Purchase
Price allocated to such Shareholder.
h. Notices. All notices, consents, requests, instructions and/or
communications which are intended to be (i) delivered pursuant
to this Agreement shall be validly given, made or served if in
writing and delivered personally or (ii) sent by overnight
courier, postage prepaid or (iii) telecopied (with
confirmation of receipt), addressed as follows:
-31-
If to Shareholders: To the address set forth below
his, her or its name on the
signature page hereof
If to Buyer: Xxxxxxx Raystay Holdings, Inc.
c/o 000 Xxxxxxx Xxxxxxxxx
Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telecopier: (000) 000-0000
The designation of the person to be so notified or the address
of such person for the purposes of such notice may be changed
from time to time by a similar notice to be effective ten days
(10) after such change of address is supplied. Notices by mail
shall be deemed to have been given on the date on which the
party actually received or refused such written notice.
i. Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and
assigns.
j. Assignment. The rights and obligations set forth in this
Agreement are not assignable without the written consent of
all parties hereto; provided, however, that Buyer may assign
its rights and obligations hereunder to any person
controlling, controlled by or under common control with Buyer.
k. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements and understandings between the
parties hereto with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and
understandings, inducements, covenants, conditions,
representations and warranties, express or implied, oral or
written, except as contained therein or expressly contemplated
thereby. This Agreement may be modified only by a writing
signed by the party against whom enforcement of any
modification is sought.
l. Controlling Law. The parties hereto agree that this Agreement
shall be governed by and construed and enforced in accordance
with the internal laws of the Commonwealth of Pennsylvania
without giving effect to any principles of conflict of laws.
m. Counterparts. This Agreement may be executed in one or more
counterparts with the same effect as if all of the signatures
on such counterparts appeared on one document. A telecopied
fascimile of a signature shall be deemed for all purposes to
constitute and shall be treated by the parties as an original
signature. All executed counterparts shall together constitute
one and the same agreement.
-32-
n. Date. The date set forth in Section 4.4 of the Shareholders
Agreement (which is currently June 15, 1999), shall be
automatically extended without further action of the parties
thereto by one day for each day that this Agreement is in
effect, until this Agreement terminates. The consummation of
the transactions contemplated by this Agreement shall not
constitute a violation of the Shareholders' Agreement.
o. Limitation. Notwithstanding anything to the contrary contained
in this Agreement, including, without limitation, the failure
to disclose any matter on any Schedule to the Agreement, Buyer
agrees that no representation or warranty made by Xxxxxxx or
any Shareholder in this Agreement shall be deemed to be
inaccurate or incorrect, and neither Xxxxxxx nor any
Shareholder shall be deemed to be in breach of this Agreement,
if Buyer or its representatives had written knowledge on the
date hereof of any such undisclosed matter or that any such
representation or warranty was inaccurate or incorrect.
p. Definition. As used herein, the phrase "to the best of the
Xxxxxxx'x knowledge, after due inquiry" means the actual
knowledge of Xxxxxxx, the knowledge that Xxxxxxx reasonably
would have upon inquiry of Xxxxxxxx and Xxxxxxxx of the
Company, and the knowledge that Xxxxxxx reasonably should have
in his capacity as President of the Company.
x. Xxxxxxxxx Plan. The Buyer shall cause the Company, and
Suburban Cable TV Co. Inc. ("SCTV"), to honor the Employee
Severance Policy (the "Policy") attached hereto as Exhibit
16(q). Buyer agrees that all employees entitled to benefits
under that policy shall be third party beneficiaries of this
Agreement and shall be entitled to seek to enforce that Policy
against the Company, SCTV and the Buyer. In addition, for a
period of two years after the Closing Date, the Buyer shall
cause the Company and SCTV to post notices of all job openings
at the principal offices of the Company in Carlisle,
Pennsylvania (and mail at regular intervals notice of such job
openings to former employees of the Company who are terminated
on or after the Closing Date other than for cause) and
employees of the Company or SCTV, who are entitled to benefits
pursuant to Section 1 of the Policy (including those employees
of the Company who are terminated pursuant to Section
9(a)(xiii)) and who apply for any such jobs, will, subject to
applicable law and the requirements of any applicable
collective bargaining agreements, be given preference over
other candidates with equal qualifications.
r. Publicity. No party shall issue or cause to be issued any
press release or public disclosure relating to the subject
matter of this Agreement without the prior written approval of
Xxxxxxx and Buyer, which shall not be unreasonably withheld,
conditioned, delayed or denied (and no such
-33-
press release shall contain any reference to the Purchase
Price or the Enterprise Value of the Company); provided,
however, that any party may make any public disclosure it
believes in good faith is required by law or regulation (in
which case the disclosing party shall advise the other
parties, and provide them with a copy of the proposed
disclosure prior to making the disclosure and the opportunity
to discuss such disclosure).
s. Shareholder Release. Each Shareholder hereby releases any and
all claims that he, she or it may have against the directors
and officers of the Company for any action or inaction of such
directors and officers in their capacities as such for all
periods on and prior to the Closing Date.
t. Alternate Transaction Structure.
i. If fewer than all Shareholders have executed and
delivered this Agreement by February 4, 1999, Buyer
shall provide irrevocable notice to Xxxxxxx, as the
designated representative of such Shareholders, not
later than the close of business on February 5, 1999,
either (A) that, subject to the provisions of Section
15(a), Buyer nevertheless will proceed to Closing
with the Shareholders who have executed and delivered
the Agreement by February 4, 1999, or (B) that the
Agreement is terminated as of the date of such
notice, whereupon the provisions of Section 15(b)
shall apply. If Buyer agrees to proceed to Closing,
each Shareholder who has executed and delivered this
Agreement covenants and agrees with Buyer that this
Agreement is a binding obligation of such Shareholder
and that such Shareholder will proceed to Closing and
perform each and every obligation of such Shareholder
contained herein. Each Shareholder further covenants
and agrees with Buyer that, upon Buyer's written
notice, which may be delivered at any time prior to
the Closing, such Shareholder shall (i) cause the
Board of Directors of the Company to do or cause to
be done each and every thing necessary to merge the
Company with a wholly-owned subsidiary of Buyer, such
that the Company is the surviving corporation in the
merger, whereupon this Agreement shall constitute a
Plan of Merger, provided that the merger shall (A) be
effected on the same terms and conditions specified
herein, mutatis mutandis, including, without
limitation, the acknowledgement by the Shareholders
of the sufficiency of the Purchase Price, (B) the tax
consequences of the merger to the Shareholders and
Buyer shall be not less favorable than the tax
consequences of a purchase of the Stock and (C) Buyer
shall agree not to liquidate the Company for at least
one (1) year following the merger, and (ii) to vote
his, her or its shares of Common Stock in favor of
such merger, and (iii) to waive all
-34-
dissenters rights available under the Pennsylvania
Business Corporation Law, as amended.
ii. In the event that the transaction contemplated by
this Agreement is effected by means of a merger
pursuant to this Section 16(t), Buyer shall, at the
written request of one or more of the persons who are
serving as the directors or officers of the Company
immediately prior to the Closing (which request is
received by Buyer prior to or at the Closing), Buyer
shall maintain in effect directors and officers
liability insurance covering such directors and/or
officers on terms requested by such directors and/or
officers, provided that such directors and/or
officers shall pay and be solely responsible for the
payment of all premiums and other payments and/or
deductibles relating to the maintenance of such
insurance.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
-35-
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the day and year first written above.
WITNESS:
_________________________________ __________________________(SEAL)
XXXXXX X. XXXXXXX
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
WITNESS:
_________________________________ __________________________(SEAL)
XXXXXX X. XXXXXXX, AS CO-
TRUSTEE OF TRUST UNDER WILL
OF XXXXXX X. XXXXXXX
c/o 000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
WITNESS:
_________________________________ __________________________(SEAL)
XXXX XXXX XXXXX, AS CO-
TRUSTEE OF TRUST UNDER WILL
OF XXXXXX X. XXXXXXX
c/o 000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
WITNESS:
_________________________________ __________________________(SEAL)
XXXXX X. XXXXXXX
0000 Xxxxx Xxxxx
Xxxx, XX 00000
(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)
WITNESS:
__________________________________ __________________________(SEAL)
XXXXXXX X. XXXXXXX
00000 000xx Xxxxxx, Xxxxx
Xxxxx, XX 00000
WITNESS:
__________________________________ __________________________(SEAL)
XXX X. XXXXXXX
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
WITNESS:
__________________________________ __________________________(SEAL)
XXXXX X. XXXXXXXX
000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
WITNESS:
__________________________________ __________________________(SEAL)
XXXXXXXX (XXXXXXX) XXXX
00 Xxxxxx xx Xxxxxxxx Xxxxxxx
00000 Xxxxx, Xxxxxx
with a copy to: Xxxx Xxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
WITNESS:
_________________________________ __________________________(SEAL)
XXXX XXXX XXXXX, AS TRUSTEE
FOR XXXXXXX XXXXX
c/o 000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)
WITNESS:
__________________________________ __________________________(SEAL)
XXXX XXXX XXXXX, AS TRUSTEE
FOR XXXXXXX XXXXX
c/o 000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
ATTEST: XXXXXXX RAYSTAY HOLDINGS, INC.
__________________________________ By:_______________________(SEAL)
Xxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxxx,
Secretary Vice President
