EXHIBIT 2.4
AMENDMENT OF ASSET PURCHASE AGREEMENT
This Amendment to Asset Purchase Agreement ("Amendment") is made and
entered into as of this 11th day of January, 1999, by and between Golden Sky
Systems, Inc., a Delaware corporation, its successors or assigns (collectively,
"Buyer"), and Breda Telephone Corporation, an Iowa corporation ("Seller").
RECITALS
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase
Agreement dated November 30, 1998 (the "Purchase Agreement"), whereby Seller has
agreed to sell and Buyer has agreed to purchase substantially all of the assets
of Seller used or held for use in its business of providing DIRECTV(R)
programming services to subscribers within the Service Area (all capitalized
terms not defined herein shall have the meanings given them in the Purchase
Agreement);
WHEREAS, it was the intent of Buyer and Seller for Seller to have provided
certain financial information to Buyer as of the Closing Date; and
WHEREAS, said financial information has not been provided to Buyer as of
the Closing Date and thus the parties wish to amend the Purchase Agreement in
accordance with the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the foregoing and mutual promises and
covenants set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Section 7.2.3 of the Purchase Agreement is deleted in its entirety and
shall now read as follows:
7.2.3 As soon as available after the Closing, Seller will deliver to Buyer
copies of its correct, complete, unaudited, segmented balance sheet and
income and expense statements for the fiscal year ended December 31, 1998.
After the Closing, Seller agrees to provide Buyer, or its agents, all
information reasonably necessary for Buyer's accountants to prepare
audited, segmented cash flow statements, balance sheets and income and
expense statements for the Business for the time periods required by Buyer.
The accounting fees for conducting the audit shall be the responsibility of
Buyer. All documents delivered pursuant to this Section 7.2.3 will
accurately reflect the operating results of the Business.
2. Except as amended hereby, the Purchase Agreement shall remain in full
force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
SELLER:
Breda Telephone Corporation
By: /s/ Xxxx Xxxxxxxxx
----------------------------
Xxxx Xxxxxxxxx, President
BUYER:
Golden Sky Systems, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx, President
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EXECUTION COPY
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
GOLDEN SKY SYSTEMS, INC.
AND
BREDA TELEPHONE CORPORATION
DATED AS OF
NOVEMBER 30, 1998
--------------------------------------------------------------------------------
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into as of
this 30th day of November, 1998, by and between Golden Sky Systems, Inc., a
Delaware corporation, its successors or assigns (collectively, "Buyer") and
Breda Telephone Corporation, an Iowa corporation ("Seller").
Recitals:
Seller is engaged in the business of providing DIRECTV(R) programming
services to subscribers within the Service Area (as defined herein), and Buyer
desires to purchase and Seller desires to sell all of Seller's assets used or
held for use in the DIRECTV(R) business as conducted within the Service Area.
Contemporaneously with the execution of this Agreement, Buyer and Seller are
entering into a certain Management Agreement (the "Management Agreement")
whereby Buyer shall manage and operate the Business beginning December 10, 1998
and continuing through the Closing.
Agreement
In consideration of the above recitals and the mutual agreements stated in
this Agreement, the parties intending to be legally bound, agree as follows:
Section 1. Definitions.
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set forth
below:
1.1 Accounts Receivable. All accounts receivable of Seller generated in the
conduct of its Business, including without limitation accounts receivable from
Seller's customers and subscribers.
1.2 Affiliate. With respect to any Person, any other Person controlling,
controlled by or under common control with such Person, with "control" for such
purpose meaning the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities or voting interests, by contract or
otherwise.
1.3 Assets. All properties, privileges, rights, interests and claims, real
and personal, tangible and intangible, of every type and description (including,
without limitation, Accounts Receivable, Equipment, Intangibles, Inventory,
Licenses and Seller Contracts), that are used, or held for use, by Seller
exclusively in the Business and in which Seller has any right, title or interest
(or in which Seller hereafter acquires any right, title or interest on or before
the Closing Date), but excluding all Excluded Assets.
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1.4 Business. The business of the marketing and distribution of NRTC/Xxxxxx
DIRECTV(R) programming services to customers (such term may be used synonymously
herein with the term "subscribers"), within the Service Area as conducted by
Seller on the date of this Agreement, and as more particularly described on
Schedule 1.4 hereto.
1.5 Business Day. Any day other than Saturday, Sunday or a day on which
banking institutions in New York, New York or Kansas City, Missouri are required
or authorized to be closed.
1.6 Closing; Closing Date. The consummation of the transactions
contemplated by this Agreement, as described in Section 8, is referred to as the
Closing, and the date thereof is referred to as the Closing Date.
1.7 Encumbrance. Any mortgage, lien, security interest, security agreement,
conditional sale or other title retention agreement, limitation, pledge, option,
assessment or other such charge, restrictive agreement, restriction,
encumbrance, adverse interest, restriction on transfer, or exception to or
defect in title or other ownership interest (including reservations, rights of
way, possibilities of reverter, encroachments, easements, rights of entry,
restrictive covenants, leases and licenses), other than the Permitted
Encumbrances.
1.8 Environmental Law. Any Legal Requirement relating to pollution or
protection of public health, safety or welfare or the environment, including
those relating to emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment (including, without limitation,
ambient air, surface water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
1.9 Equipment. All product demonstration equipment, office equipment,
vehicles and other tangible personal property owned, leased, used or held for
use exclusively in the operation of the Business (other than Inventory which is
separately defined herein), including, without limitation, those described on
Schedule 1.9 hereto.
1.10 Governmental Authority. (i) The United States of America, (ii) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like), (iii) any foreign (as to the United States of America) sovereign entity
and any political subdivision thereof, or (iv) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
1.11 Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated by
any Governmental Authority,
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including, without limitation, (a) any petroleum or petroleum compounds (refined
or crude), flammable substances, explosives, radioactive materials or any other
materials or pollutants which pose a hazard or potential hazard to the Real
Property or to Persons in or about the Real Property or cause the Real Property
to be in violation of any laws, regulations or ordinances of federal, state or
applicable local governments, (b) asbestos or any asbestos-containing material
of any kind or character, (c) polychlorinated biphenyls ("PCBs"), as regulated
by the Toxic Substances Control Act; 15 U.S.C. ss. 1251 et seq., (d) "economic
poison," as defined in the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss. 135 et seq., (e) "chemical substance," "new chemical substance" or
"hazardous substance or mixture" pursuant to the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., and (f) "hazardous substances" pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 6901 et seq.
1.12 Intangibles. All intangible assets, including the telephone numbers,
subscriber lists, claims, trademarks, servicemarks, patents, copyrights, files,
records and goodwill, if any, owned, used or held for use in the Business.
1.13 Inventory. All consumer DSS units intended for sale, resale or lease
to the public including, without limitation, satellite dishes, receivers,
modems, block converters, fittings, selfinstall kits, installation supplies and
all other assets owned by Seller and intended for resale to the public and are
for use exclusively in the operation of the Business. Schedule 1.13 hereto lists
the inventory available as of the date of this Agreement and, once updated as
required herein, as of the Closing Date.
1.14 Legal Requirement. Any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or applied by any Governmental Authority, including judicial decisions applying
common law or interpreting any other Legal Requirement.
1.15 Licenses. All franchises, approvals, authorizations, permits,
licenses, easements, registration, qualifications, leases, variances and similar
rights obtained from any Governmental Authority or other governing entity
pertaining to the Business.
1.16 Permitted Encumbrances. The following Encumbrances: (a) liens for
taxes, assessments and governmental charges not yet due and payable; (b) zoning
laws and ordinances and similar Legal Requirements; provided that (i) Permitted
Encumbrances will not include any item which could materially adversely affect
the operation or the conduct of the Business and (ii) the classification of any
item as a Permitted Encumbrance will not affect any liability Seller may have
for such item, including, without limitation, pursuant to any indemnity
obligation under this Agreement.
1.17 Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.18 Programming Services. One or more tiers of subscription DIRECTV(R)
satellite
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programming sold to subscribers for which a subscriber pays a fixed monthly fee
and including pay per view events and ala carte programming services and
specifically excluding equipment leasing revenues and financing.
1.19 Real Property. All Assets consisting of real property, including all
appurtenances, improvements and fixtures located thereon, and all interests in
any of the foregoing.
1.20 Required Consents. "Required Consents" means all licenses,
authorizations, approvals and consents required under Licenses, Seller Contracts
or otherwise for (a) Seller to transfer the Assets and the Business to Buyer,
(b) Buyer to conduct the Business and to own, lease, use and operate the Assets
at the places and in the manner in which the Business is conducted as of the
date of this Agreement and on the Closing Date, (c) Buyer to assume and perform
the Seller Contracts, and (d) Buyer to collaterally assign the Assets to its
lenders as security for Buyer's indebtedness.
1.21 Seller Contracts. Except for those which are included in the Excluded
Assets, all contracts and agreements, oral or written, pertaining to the
ownership, operation and maintenance of the Assets or the Business or used or
held for use in the Business in which Seller has any right, title or interest
(or in which Seller hereinafter acquires any right, title or interest on or
before the Closing Date), including, without limitation, those described on
Schedule 1.21 hereto, Seller's NRTC Member Agreement(s) for Marketing and
Distribution of DSS Programming Services (collectively, the "Member Agreement")
and Seller's customer rental agreements and equipment financing agreements.
1.22 Service Area. Collectively, any areas in which Seller operates the
Business, which are the cabled and non-cabled homes located in the counties of
Sac and Fremont in the State of Iowa and Cass County in the State of Nebraska,
and the non-cabled homes located in the counties of Xxxxxxx, Xxxxxxxx and Xxxxxx
in the State of Iowa and the counties of Nemaha, Otoe and Xxxxxxxxxx in the
State of Nebraska.
1.23 Other Definitions. The following terms are defined in the Sections
indicated:
Term Section
---- -------
Action 11.4
Assumed Liabilities 4.1
Base Purchase Price 3.2
Buyer Deposit 3.1
Claiming Party 3.4.3
Disputed Adjustment Amount 3.4.3
Xxxxxxx Money Escrow Agreement 3.1
Escrow Agent 3.1
Excluded Assets 4.2
Final Adjustments Report 3.4.2
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Financial Statements 5.10
Indemnified Party 11.4
Indemnifying Party 11.4
Preliminary Adjustments Report 3.4.1
Responsible Party 3.4.3
Survival Period 11.1
Section 2. Sale of Assets
2.1 Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller will sell to
Buyer, and Buyer will purchase from Seller, all of Seller's rights, title and
interest in, to and under the Assets, free and clear of any mortgage, lien,
security interest, security agreement, conditional sale or other title retention
agreement, limitation, pledge, option, restriction, Encumbrance, or exception to
or defect in title. Except as otherwise specifically provided in this Agreement,
all the Assets are intended to be transferred to Buyer, whether or not described
in any schedules or exhibits hereto.
Section 3. Consideration
3.1 Buyer Deposit. Prior to or within ten (10) business days after
execution of this Agreement and subject to the terms of the "Xxxxxxx Money
Escrow Agreement", attached hereto as Exhibit A, Buyer will deliver to Commerce
Bank, N.A. (the "Escrow Agent") the sum of Five Hundred Thousand Dollars
($500,000) and together with all interest earned thereon, shall be referred to
herein as the "Buyer Deposit". The Buyer Deposit shall be held by the Escrow
Agent pursuant to the Xxxxxxx Money Escrow Agreement, and subject to the
following:
3.1.1 If the purchase of the Assets under this Agreement is not consummated
on or prior to January 15, 1999, or such later date mutually agreed to by the
parties in accordance with this Agreement, as a result of a breach by Buyer of
any of its obligations under this Agreement, Seller shall be entitled to the
Buyer Deposit. The payment of the Buyer Deposit by the Escrow Agent to Seller,
and Seller's receipt thereof, shall (i) be liquidated damages for any and all
defaults by Buyer of its obligations under this Agreement, (ii) be in full
settlement and release of any and all damages of any nature or kind that Seller
suffered or may allege to have suffered as a result of any such breach by Buyer,
and (iii) be Seller's sole and exclusive remedy in the event of any such breach
by Buyer. Seller specifically acknowledges that it will not be entitled to any
of the Buyer Deposit in the event the purchase of the Assets under this
Agreement is not consummated due to the refusal by the National Rural
Telecommunications Cooperative ("NRTC") or DIRECTV, Inc., successor-in-interest
to Xxxxxx Communications Galaxy, Inc., (herein, "DIRECTV") to approve the
transfer of Seller's Member Agreement on terms and conditions acceptable to
Buyer in its sole discretion.
3.1.2 If the purchase of the Assets under this Agreement is not consummated
for any reason other than as set forth in Section 3.1.1, Seller shall not be
entitled to any portion of the Buyer
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Deposit and, promptly after the termination of this Agreement, the entire Buyer
Deposit (together with all interest earned thereon) shall be paid by the Escrow
Agent to Buyer.
3.2 Base Purchase Price. Buyer will pay to Seller the total consideration
of Eight Million Two Hundred Fifty Thousand Dollars ($8,250,000) (the "Base
Purchase Price"), to be paid at the Closing as set forth below, subject to
adjustment as provided in Sections 3.3 and 3.4, and Buyer will assume certain
obligations of Seller as provided in Section 4:
3.2.1 At the Closing, Eight Million Two Thousand Five Hundred Dollars
($8,002,500) or such amount as adjusted pursuant to the terms contained herein,
will be paid to Seller (or to such payees as Seller may designate) by one or
more wire transfers of immediately available funds, in such amounts and to such
Seller or payee accounts as shall be designated by Seller; and
3.2.2 At the Closing, the Buyer Deposit (together with all interest earned
thereon) shall be released to Buyer, and Buyer shall deposit Two Hundred Forty
Seven Thousand Five Hundred Dollars ($247,500) into a new escrow account with
the Escrow Agent in accordance with the Indemnity Escrow Agreement,
substantially in the form and substance of Exhibit B attached hereto, to be
entered into on the Closing Date by Seller, Buyer and the Escrow Agent (the
"Indemnity Escrow Agreement").
3.3 Adjustments to Base Purchase Price. The Base Purchase Price will be
adjusted as follows:
3.3.1 Adjustments on a pro rata basis as of the Closing Date will be made
for all prepaid expenses (to the extent that such prepaid expenses accrue to
Buyer's benefit), prepaid income (which includes, but is not limited to,
unearned revenue) and Accounts Receivable from the sale of Programming Services
of active subscribers that are 60 days or less past due, and to reflect the
principle that all expenses and income attributable to the Business for the
period through the Closing Date are for the account of Seller and all expenses
and income attributable to the Business for the period after the Closing Date
are for the account of Buyer, all in accordance with generally accepted
accounting principles. Seller agrees to offer only advertising promotions and
discounts to customers which are economically feasible and commercially
reasonable given the nature of the Business (unless approved in writing by
Buyer).
3.3.2 Seller will receive no payment for any Accounts Receivable from the
sale of Programming Services which are inactive or whose service is disconnected
for any reason as of December 10, 1998, or for any portion of which is more than
60 days past due as of December 10, 1998. For purposes of calculating
adjustments for Accounts Receivable pursuant to this Subsection, the parties
agree to utilize the most current accounts receivable reporting information
available from the NRTC on December 10, 1998.
3.3.3 Buyer will assume responsibility for honoring all advance payments
to, or funds of third parties on deposit with Seller as of the Closing Date
relating to the Business, including
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advance payments and deposits by subscribers for customer equipment or
Programming Services. Buyer will receive credit therefore with a corresponding
reduction in the Base Purchase Price to offset such obligations.
3.3.4 All deposits relating to the Business that are held by third parties
as of the Closing Date for the account of Seller or as security for Seller's
performance of its obligations including deposits on leases assumed by Buyer and
deposits for utilities, will be credited to the account of Seller in their full
amounts and will become the property of Buyer.
3.4 Determination of Adjustments. Preliminary and final adjustments to the
Base Purchase Price will be determined as follows:
3.4.1 At least five Business Days prior to the Closing Date, Seller will
deliver to Buyer a report (the "Preliminary Adjustments Report"), certified as
to completeness and accuracy by Seller, showing in detail the preliminary
determination of the adjustments referred to in Section 3.3, which are
calculated as of the Closing Date (or as of any other date agreed by the
parties) and any documents substantiating the adjustments proposed in the
Preliminary Adjustments Report. The Preliminary Adjustments Report will include
a schedule setting forth advance payments and deposits made to or by Seller, as
well as Accounts Receivable information relating to the Business (showing sums
due and their respective aging as of the Closing Date). Seller also will furnish
to Buyer its billing report for the most current NRTC billing cycle preceding
the Closing Date. The net adjustment shown in the Preliminary Adjustments Report
will be reflected as an adjustment to the portion of the Base Purchase Price
payable at the Closing. The parties agree that adjustments will be reconciled
either forward or backward, as the case may be, from the most recent NRTC
billing cycle.
3.4.2 Within 60 days after the Closing, Seller will deliver to Buyer a
report (the "Final Adjustments Report"), similarly certified by Seller, showing
in detail the final determination of all adjustments which were not calculated
as of the Closing Date and containing any corrections to the Preliminary
Adjustments Report, together with any documents substantiating the adjustments
proposed in the Final Adjustments Report. Upon not less than 48 hours' notice,
Buyer will give Seller and its representatives full access at reasonable times
to all the premises and books and records of the Business and to all the Assets
which are under the control of Buyer and which are necessary for Seller to
prepare the Final Adjustments Report or as necessary to comply with any law,
regulation, other governmental requirement or any other reasonable business
purpose. Buyer agrees it, its officers and employees will cooperate with and
assist Seller in its reasonable requests for information.
3.4.3 Within 30 days after receipt of the Final Adjustments Report, Buyer
will give Seller written notice of Buyer's objections, if any, to the Final
Adjustments Report. If Buyer makes any such objections, the parties will agree
on the amount, if any, which is not in dispute within 30 days after Seller's
receipt of Buyer's notice of objections to the Final Adjustments Report. Any
undisputed amount will serve as an adjustment to the portion of the Base
Purchase Price payable under Section 3.2.1. The adjustment of the Base Purchase
Price payable under 3.2.1, as so adjusted (but excluding any amounts disputed),
will be paid by Buyer to Seller, or paid by Seller to Buyer,
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whichever the case may be, within 120 days after the Closing Date or within
three Business Days after agreement on the undisputed portion of the Final
Adjustments Report, if later. Any disputed amounts will be determined in
accordance with this Agreement within 180 days after the Closing Date by the
accounting firm of Price Waterhouse, Kansas City, Missouri, (or any other
accounting firm acceptable to both Buyer and Seller), whose determination (the
"Final Determination") will be conclusive. Seller and Buyer will bear the fees
and expenses payable to such firm in connection with such determination in
reverse proportion to the manner in which the disputed amounts are allocated by
the accountants. The payment required after determination of all disputed
amounts (the "Disputed Adjustment Amount") will be made by the responsible party
("Responsible Party") by wire transfer of immediately available funds to the
other party ("Claiming Party") within three Business Days after the date on
which the Final Determination is issued.
3.5 Allocation of Consideration. The consideration payable by Buyer under
this Agreement will be allocated among the Assets as set forth in Schedule 3.5
hereto. Buyer and Seller agree to be bound by the allocation and will not take
any position inconsistent with such allocations and will file all returns and
reports with respect to the transactions contemplated by this Agreement,
including all federal, state and local tax returns, on the basis of such
allocations, including, without limitation, IRS Form 8594. The parties agree
that Schedule 3.5 hereto shall be negotiated and finalized on or prior to the
Closing Date, unless otherwise mutually agreed.
Section 4. Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. Seller will assign, and Buyer will assume
and perform only the Assumed Liabilities, which are defined as: (a) Seller's
obligations to subscribers of the Business for (i) subscriber deposits held by
Seller as of the Closing Date and which are refundable, in the amount for which
Buyer received credit under Section 3.3.3 (ii) subscriber advance payments held
by Seller as of the Closing Date for services to be rendered by the Business
after the Closing Date, in the amount for which Buyer received credit under
Section 3.3.3 and (b) obligations accruing and relating to periods after the
Closing Date under Licenses and Seller Contracts. Buyer will not assume, or have
any responsibility for any liabilities or obligations of Seller other than the
Assumed Liabilities. In no event will Buyer assume or have any responsibility
for any liabilities or obligations associated with the Excluded Assets. Buyer
does not, pursuant to this Agreement or otherwise, agree to perform, pay,
discharge or indemnify Seller against, or otherwise have any responsibility for,
any liabilities or obligations of Seller, fixed, contingent or otherwise,
relating to or arising out of the Seller's operation of the Business, except as
expressly set forth in this paragraph as an Assumed Liability. It is expressly
understood that the parties intend that the Buyer shall not be considered a
successor to Seller by reason of any theory of law or equity or otherwise.
4.2 Excluded Assets. The excluded assets (the "Excluded Assets"), which
will be retained by Seller, will consist of the following: (a) all insurance
policies and rights and claims thereunder; (b) all bonds, letters of credit,
surety instruments and other similar items; (c) all cash, investments, savings
accounts, certificates or other cash equivalents; (d) all of Seller's rights
under any agreement governing or evidencing an obligation of Seller for borrowed
money; (e) all of Seller's rights under
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any contract, license, authorization, agreement or commitment other than those
listed as Seller Contracts (Schedule 1.21 hereto) or those creating or
evidencing Assumed Liabilities; (f) patronage capital certificates and any
patronage dividends; (g) all Real Property of Seller; (h) all personal property
of Seller used in its cable television and telephone businesses; (i) all of
Seller's investments in an equity positions in other corporations, limited
liability companies and partnerships; and (j) all of the assets described on
Schedule 4.2 hereto.
Section 5. Representations and Warranties of Seller.
To induce Buyer to enter into this Agreement, Seller makes the following
representations and warranties to Buyer, as of the date of this Agreement and as
of the Closing:
5.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Iowa, and is authorized to
do business and is in good standing in the State of Nebraska.
5.2 Qualification. Seller has all requisite power and authority to own,
lease and use the Assets as they are currently owned, leased and used and to
conduct the Business as it is currently conducted.
5.3 Authority and Validity. Seller has all requisite corporate power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance by Seller of its obligations under, and the
consummation by Seller of the transactions contemplated by, this Agreement have
been duly authorized by all requisite action, including, without limitation,
approval by Seller's Board of Directors. This Agreement has been duly executed
and delivered by Seller and is a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
5.4 No Breach or Violation. Subject to obtaining the Required Consents, all
of which are listed on Schedule 5.4 hereto, the execution, delivery and
performance of this Agreement by Seller will not (a) violate any provision of
its organization documents; (b) violate any Legal Requirement; (c) require any
consent, approval or authorization of, or any filing with or notice to, any
Person which has not been obtained, or (d) (i) violate, conflict with or
constitute a breach of or default under (without regard to requirements of
notice, passage of time or elections of any Person), (ii) permit or result in
the termination, suspension or modification of, (iii) result in the acceleration
of (or give any person the right to accelerate) the performance of Seller under,
or (iv) result in the creation or imposition of any Encumbrance under, any
Seller Contract or any other instrument evidencing any of the Assets or any
instrument or other agreement to which it is a party or by which it or any of
its assets is bound or affected.
5.5 Assets. Seller has exclusive, good and marketable title to (or in the
case of Assets that are leased, valid leasehold interests in) the Assets (other
than Real Property, as to which the representations and warranties in Section
5.6 apply). The Assets are all of the assets of Seller, other
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than the Excluded Assets, and are free and clear of all Encumbrances of any kind
or nature, except (a) Permitted Encumbrances, (b) restrictions stated in the
Seller Contracts or Licenses and (c) Encumbrances disclosed on Schedule 5.5
hereto which will be removed or otherwise released of record effective at or
prior to the Closing, or for which executed releases in form appropriate for
filing by, and in form acceptable to, Buyer will be delivered to Buyer at
Closing. The Equipment and Inventory are in good and operable condition and
repair, ordinary wear and tear excepted, and are suitable and adequate for
continued use in the manner they are presently used. The Assets are all the
assets necessary to permit Buyer to conduct the Business substantially as it is
currently being conducted on the date of this Agreement.
5.6 Real Property. There is no Real Property being transferred hereunder.
5.7 Environmental Matters. Intentionally deleted.
5.8 Compliance with Laws. The ownership, leasing and use of the Assets as
they are currently owned, leased and used by Seller and the conduct of the
Business as it is currently conducted do not violate any Legal Requirement,
which violation, individually or in the aggregate, would have an adverse effect
on the Business. Seller has not received any notice claiming a violation by it
or the Business of any Legal Requirement applicable to it or the Business as it
is currently conducted and there is no basis for any claim that such a violation
exists.
5.9 Patents, Trademarks and Copyrights. Other than those listed on Schedule
5.9 hereto, Seller does not possess any patent, patent right, trademark or
copyright and there is no application pending with any Governmental Authority
for any of the foregoing. Seller is not a party to any license or royalty
agreement with respect to any patent, trademark or copyright except for licenses
respecting obligations under the Copyright Act of 1976 applicable to the
Business generally. The operations of the Business as currently conducted do not
violate or infringe upon any Person's name, right of privacy, copyright,
trademark, service xxxx, license, patent, trade secret, or the like, and there
are no suits, claims or proceeding threatened or outstanding with respect to the
same or any facts or circumstances which could substantiate any of the
foregoing.
5.10 Financial Statements. Seller shall deliver to Buyer, immediately after
the execution of this Agreement, copies of its audited 1997 segment balance
sheets and income and expense statements for the most recent fiscal year ended,
together with its unaudited balance sheets and income and expense statements for
the nine months ending September 30, 1998 (collectively, the "Financial
Statements"), which shall be attached hereto as Schedule 5.10. The Financial
Statements are true and correct, have been prepared in accordance with generally
accepted accounting principles, consistently applied, and fairly present
Seller's financial condition and results of operations as of the date and for
the periods indicated. Such Financial Statements have been prepared using the
accrual method of accounting. Since the opening date of the most recent
operating statements included in the Financial Statements, (i) the Business has
been operated only in the ordinary course of business, (ii) it has not sold or
disposed of any Business assets other than in the ordinary course of business,
and (iii) there has been no material adverse change in and no event has occurred
which is likely,
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individually or in the aggregate, to result in any material adverse change in,
the business, operations, assets or condition (financial or otherwise) of the
Business. Except as set forth on Schedule 5.10 hereto or disclosed by, or
reserved against in the most recent balance sheets included in the Financial
Statements, Seller, as of the date of such balance sheet, does not have any
liability or obligation whether accrued or unaccrued, absolute, fixed or
contingent (including liabilities for taxes or unusual forward or long-term
commitments), which was or would be material to the Business or the results of
operations or financial condition of the Business.
5.11 Legal Proceedings. Except as set forth on Schedule 5.11 hereto, there
is no judgment or order outstanding, or any action, suit, complaint, proceeding
or investigation by or before any Governmental Authority or any arbitrator
pending or threatened, involving or affecting all or any part of the Assets or
the Business.
5.12 Tax Returns; Other Reports. (i) Seller has duly and timely filed in
proper form with the appropriate Governmental Authority all income, franchise,
sales, use, property, excise, payroll and other tax returns, and all other
reports (whether or not relating to taxes), required to be filed with respect to
the Business; (ii) all taxes, fees and assessments, including, without
limitation, any interest and penalties with respect thereto, of whatever nature
due and payable by Seller with respect to the Business have been paid, except
such amounts as are being contested diligently and in good faith and are not in
the aggregate material; and (iii) there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal, state,
local or foreign income tax return for any period and there are no tax audits
pending.
5.13 Employment Matters.
5.13.1 Seller has no employment agreement of any kind, oral or written,
express or implied, that would require Buyer to employ any Person after the
Closing Date. Seller is in compliance with all federal and state laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and is not engaged in, nor has it committed, any unfair labor
practice as defined in the National Labor Relations Act of 1947, as amended.
Seller has not received any notice of violation of any Legal Requirement
relating to the employment of labor.
5.13.2 Seller shall continue its existence and operate to the fullest
extent necessary to comply with all Legal Requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended. Buyer shall not
assume or be responsible for any COBRA requirements or obligations of Seller.
5.13.3 Seller acknowledges and agrees that all existing and potential
liabilities, obligations, responsibilities or duties relating to any Plan shall
not be assumed by Buyer and shall remain the sole and exclusive liability,
obligation, responsibility or duty of Seller, its ERISA Affiliates or any
fiduciary or plan administrator, as the case may be, of such Plan. The term
"Plan" shall mean any pension, profit sharing, thrift or other retirement plan,
employee stock ownership plan, deferred
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compensation, stock option, stock purchase, performance, share, bonus or other
incentive plan, severance plan, health, group insurance, cafeteria or other
welfare plan, or other similar plan, agreement, policy or understanding,
including, without limitation, any "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), under which Seller, or any Person or trade or business under common
control with Seller (an "ERISA Affiliate"), as determined under Section 414(b),
(c) or (m) of the Internal Revenue Code of 1986, as amended, has any current or
future obligation or liability or under which any present or former employee of
Seller or an ERISA Affiliate, or such present or former employee's dependents or
beneficiaries, has any current or future right to benefits.
5.13.4 No present or former employee of Seller has, or will as of the
Closing Date have, any claim against Seller (whether under federal, state or
local law, any employment agreement, or otherwise) on account of or for (a)
overtime pay, other than overtime pay for the then current payroll period, (b)
wages or salary for any period other than the current payroll period, (c)
vacation, time off or pay in lieu of vacation or time off, other than that
earned in respect of the current fiscal year or accrued on Seller's books and
records, or (d) any violation of any statute, ordinance or regulation relating
to minimum wages or maximum hours of work. All amounts required to be withheld
by Seller from its employees have been properly withheld and will be timely
deposited and all contributions required to be paid by Seller in respect of its
employees have been paid in accordance with the applicable provisions of
federal, state and local laws regarding income tax withholding and social
security, workers compensation, unemployment compensation or similar taxes or
contributions. Seller has no direct or indirect, express or implied, obligation
to pay severance or termination pay to any officer or employee of Seller or to
pay any amounts to any consultant, agent or similar person or entity. All claims
of any employee against Seller arising or incurred on or prior to the date of
Closing will remain the responsibility of Seller, whether or not the respective
employee is hired by Buyer on or after Closing.
5.13.5 Seller has not received any notice from any Person or federal,
state, or local Governmental Authority or official notifying it that Seller or
any property or asset of Seller is in violation of, or in noncompliance with,
the Americans with Disabilities Act (the "ADA"). Seller has not received any
notice of a claim or potential claim under the Civil Rights Act of 1991 for any
violation of the ADA.
5.14 Revenue. Seller has at least $136,500 of total gross monthly revenue
from the sale of Programming Services as reported on NRTC Report 17, from the
most recent NRTC billing cycle prior to this Agreement. Seller does not maintain
any accounts with Huntington National Bank.
5.15 System Data. As of October, 1992, Seller has the right to provide
Programming Services to approximately 24,392 homes, 16,135 of which do not have
access to a cable television provider(s) and 8,257 of which have access to a
cable television provider. Schedule 1.4 hereto sets forth rates charged by
Seller for satellite services, rate history with dates and amounts of rate
increases for those services, breakdown of the channel packages sold, and a
general description of marketing promotions and discounts offered to subscribers
since January 1, 1997, and those which will affect the Business
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after the Closing Date.
5.16 Finders and Brokers. Seller will be responsible for payment of any
finder's commission or similar fee to any financial advisor, broker or finder it
has retained for any financial advice or brokerage services in connection with
the transactions contemplated by this Agreement.
5.17 Disclosure. No representation or warranty made by Seller in this
Agreement or in any Schedule or Exhibit to this Agreement, or any statement,
list or certificate furnished or to be furnished by it pursuant to this
Agreement, contains or will contain any untrue statement of material fact, or
omits or will omit any material fact required to be stated therein or necessary
to make the statements contained therein not misleading in light of the
circumstances in which made. Without limiting the generality of the foregoing,
the information set forth in Schedule 1.4 hereto concerning the Business is
accurate and complete in all material respects.
5.18 Seller Contracts. Schedule 1.21 hereto contains a complete and
accurate list, and Seller has delivered to Buyer true and complete copies, of
all Seller Contracts. Except as set forth in Schedule 1.21: (i) each Seller
Contract is in full force and effect and is valid and enforceable in accordance
with its terms; (ii) Seller is, and at all times has been, in full compliance
with all applicable terms and requirements of each Seller Contract under which
Seller has or had any obligation or liability or by which Seller or any of the
Assets is or was bound; (iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give Seller or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Seller Contract; and
(iv) Seller has not given or received from any other Person, at any time any
notice or other communication (whether oral or written) regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
Seller Contract. Seller currently holds the Member Agreement which gives Seller
exclusive rights to provide Programming Services to homes in the Service Area,
and such agreement is in full force and effect with no defaults thereunder.
Section 6. Representations and Warranties of Buyer.
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller as of the date of this Agreement and as of the Closing, as
follows:
6.1 Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to carry on its business as currently
conducted and to own, lease, use and operate its assets.
6.2 Authority and Validity. Buyer has all requisite corporate power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement. The execution and
delivery by Buyer of, the performance by Buyer of its obligations
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under, and the consummation by Buyer of the transactions contemplated by, this
Agreement have been duly authorized by all requisite corporate action of Buyer
and this Agreement constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
6.3 No Breach or Violation . Subject to obtaining the Required Consents,
all of which are listed on Schedule 5.4 hereto, the execution, delivery and
performance of this Agreement by Buyer will not: (a) violate any provision of
the charter or bylaws of Buyer; (b) violate any Legal Requirement; (c) require
any consent, approval or authorization of, or any filing with or notice to, any
Person, which has not been obtained or (d) (i) violate, conflict with or
constitute a breach of or default under (without regard to requirements of
notice, passage of time or elections of any Person), (ii) permit or result in
the termination, suspension or modification of (iii) result in the acceleration
of (or give any Person the right to accelerate) the performance of Buyer under,
or (iv) result in the creation or imposition of any Encumbrance under, any
instrument or other agreement to which Buyer is a party or by which Buyer or any
of its assets is bound or affected, except for purposes of this clause (d) such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications, and accelerations as would not, individually or in the aggregate
have a material adverse effect on Buyer or on the validity, binding effect or
enforceability of this Agreement.
6.4 Disclosure. No representation or warranty by Buyer in this Agreement or
Exhibit to this Agreement, or any statement or certificate furnished or to be
furnished by Buyer pursuant to this Agreement, contains or will contain any
untrue statement of material fact, or omits or will omit any material fact
required to be stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which made.
Section 7. Additional Covenants.
7.1 Access to Premises and Records. Between the date of this Agreement and
the Closing Date, and upon not less than 48 hours' notice, Seller will give
Buyer and its representatives full access at reasonable times to all the
premises and books and records of the Business and to all the Assets which are
under the control of Seller and will furnish to Buyer and its representatives
all information regarding the Business and the Assets as Buyer may from time to
time reasonably request. Seller agrees it, its officers and employees will
cooperate with and assist Buyer in its reasonable requests for information.
7.2 Continuity and Maintenance of Operations; Financial Statements. Except
as Buyer may otherwise agree in writing, until the Closing:
7.2.1 Seller will continue to operate its business in the ordinary course
consistent with past practices and will use its best efforts to keep available
the services of its employees employed in connection with the Business and to
preserve any beneficial business relationships with customers, suppliers and
others having business dealings with the Seller relating to the Business.
Without limiting the generality of the foregoing, Seller will maintain the
Assets in good condition and repair, will
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maintain adequate inventories of Equipment consistent with past practice, will
maintain insurance as in effect on the date of this Agreement, and will keep all
of its business books, records and files in the ordinary course of business all
in accordance with past practices. Seller will not itself, and nor will it
permit any of its officers, directors, shareholders, agents or employees to, pay
any of the subscriber accounts receivable prior to the Closing Date. Seller will
continue to implement its procedures for disconnection and discontinuance of
service to subscribers whose accounts are delinquent in accordance with those in
effect on the date of this Agreement. Buyer will operate the Business pursuant
to the Management Agreement in the ordinary course consistent with Buyer's past
practices.
7.2.2 Seller agrees it will not: (a) make any material business decisions
which could adversely affect the Business or the Assets; (b) change the rates
charged for Programming Services from those listed on Schedule 1.4 hereto except
as suggested by the NRTC in writing; (c) sell, transfer or assign any of the
Assets (other than in the ordinary course of business) or permit the creation of
any material Encumbrance on any Asset; (d) permit the amendment or cancellation
of any License or Seller Contract or any other material contract or agreement
(other than those constituting Excluded Assets) which affects or is applicable
to the Business; (e) enter into any contract or commitment or incur any
indebtedness or other liability or obligation of any kind relating to the
Business involving an expenditure which, in the aggregate, would exceed $50,000,
if such contract, commitment, indebtedness, liability or obligation, by its
terms, will survive the Closing; or (f) take or omit to take any action that
would cause Seller to be in breach of any of its representations or warranties
in this Agreement. Notwithstanding the foregoing, Seller may, at any time prior
to or at the Closing, transfer, distribute, assign or sell to any Person, or
retain for Seller's own account, any or all of the Excluded Assets (none of
which are to be transferred to Buyer at the Closing). No adjustment shall be
made to the Base Purchase Price by reason of the distribution, transfer,
assignment or sale or retention by Seller of the Excluded Assets, unless such
action results in any adjustment under Section 3.3.
7.2.3 Up to and through the Closing, Seller agrees to cooperate with Buyer
in providing all necessary information for Buyer's accountants to prepare
audited cash flow, balance sheets and income and expense statements for the
Business for the time periods required by Buyer.
7.3 Leased Equipment. Seller will pay the remaining balances on any leases
for Equipment used in the Business, if any, and deliver title to such Equipment
free and clear of all Encumbrances to Buyer at the Closing.
7.4 Required Consents.
7.4.1 Within ten (10) business days after execution of this Agreement,
Buyer and Seller shall submit to the NRTC, and thereafter, as required by the
NRTC, to DIRECTV, an application to transfer to Buyer the Member Agreement. Each
of the parties will take all additional action that may be necessary, proper or
advisable and will furnish each other such necessary information and reasonable
assistance as the other may reasonably request in connection with its
preparation of filings or submissions required by either the NRTC or DIRECTV.
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7.4.2 Seller and Buyer agree to use their best efforts to obtain all
Required Consents, but Buyer will not be required to agree to any material
adverse changes in, or the imposition of any material adverse condition upon the
transfer to Buyer of any Seller Contract or License as a condition to obtaining
any Required Consent. Seller will use its best efforts to obtain, at its
expense, such estoppel certificates or similar documents from lessors and other
Persons who are parties to Seller Contracts as Buyer may reasonably request.
7.5 No Shopping. Neither Seller nor any employee, agent or representative
of Seller will, during the period commencing on the date of this Agreement and
ending with the earlier to occur of the Closing or the termination of this
Agreement, directly or indirectly (a) solicit or initiate the submission of
proposals or offers from any Person for, (b) participate in any discussions
pertaining to, or (c) furnish any information to any Person other than Buyer
relating to, any direct or indirect acquisitions or purchase of all or any
portion of the Assets or the securities of Seller, whether by purchase, merger
or otherwise, or any such business combination. The Seller shall cause their
respective officers, employees, representatives, agents and affiliates to
refrain from doing any of the foregoing.
7.6 Notification of Certain Matters. Seller will promptly notify Buyer of
any fact, event, circumstance or action (a) which, if known to Seller on the
date of this Agreement, would have been required to be disclosed by Seller to
Buyer pursuant to this Agreement, or (b) the existence or occurrence of which
would cause any of Seller's representations or warranties under this Agreement
not to be correct; and Buyer will promptly notify Seller of any fact, event,
circumstance or action (a) which, if known to Buyer on the date of this
Agreement, would have been required to be disclosed by Buyer to Seller pursuant
to this Agreement, or (b) the existence or occurrence of which would cause any
of Buyer's representations or warranties under this Agreement not to be correct.
7.7 Risk of Loss. Seller will maintain up to and through the Closing Date,
present policies of insurance covering the Assets. Seller will bear the risk of
any loss or damage to the Assets resulting from fire, theft or other casualty
(except reasonable wear and tear) at all times prior to the Closing. If any such
loss or damage is so substantial as to prevent normal operation of any material
portion of the Business or the replacement or restoration of the lost or damaged
property within 20 days after the occurrence of the event resulting in such loss
or damage, Seller will promptly notify Buyer of that fact and Buyer, at any time
within 10 days after receipt of such notice, may elect by written notice to
Seller either (i) to terminate this Agreement, in which case, Buyer and Seller
will be discharged of any and all obligations hereunder and, in such case, Buyer
shall be entitled to the Buyer Deposit, or (ii) proceed to consummate the
transactions contemplated by this Agreement. If Buyer elects to consummate the
transactions contemplated by this Agreement notwithstanding such loss or damage
and does so, there will be no adjustment in the consideration payable to Seller
on account of such loss or damage but all insurance proceeds payable as a result
of the occurrence of the event resulting in such loss or damage will be
delivered by Seller to Buyer, or the rights to such proceeds will be assigned by
Seller to Buyer if not yet paid over to Seller.
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7.8 Transfer Taxes. In the event that any Governmental Authority shall at
any time impose or otherwise require or demand payment by or from either Seller
or Buyer of any state or local sales, use, transfer, excise, documentary or
license taxes or fees or any other charge (including filing fees) with respect
to Seller's sale or transfer to Buyer of the Assets, Seller and Buyer shall
equally share the responsibility for payment of such amounts.
7.9 Non-Competition Agreements. At the Closing, Seller shall sign and
deliver to Buyer a Non-Competition Agreement substantially in the form of
Exhibit F-1, attached hereto and incorporated herein by reference. The
consideration for the Non-Competition Agreement executed by Seller shall be
allocated as part of the purchase price paid to Seller in accordance with
Section 3.5 above. At the Closing, Buyer shall sign and deliver to Seller a
NonCompetition Agreement substantially in the form of Exhibit F-2, attached
hereto and incorporated herein by reference.
7.10 Updated Schedules. Not less than five business days prior to Closing,
Seller will deliver to Buyer revised copies of Schedules which shall have been
updated to show any changes occurring between the date of this Agreement and the
date of delivery; provided, however, that for purposes of Seller's
representations and warranties and covenants in this Agreement, all references
to the Schedules will mean the version of the Schedules attached to this
Agreement on the date of signing, and provided further that if the effect of any
such updates to Schedules is to disclose any one or more additional properties,
privileges, rights, interests or claims as Assets, or disclose previously
undisclosed liabilities, Buyer, at or before Closing, will have the right (to be
exercised by notice to Seller) to cause any one or more of such items to be
designated as and deemed to constitute Excluded Assets for all purposes under
this Agreement. Notwithstanding the foregoing, in the event any update to one or
more Schedules is determined by Buyer in its reasonable discretion to materially
affect the Business or the Assets, Buyer may, at its option: (i) proceed with
consummating the transaction hereunder with a corresponding reduction in the
Purchase Price which Buyer and Seller agree upon; or (ii) refuse to consummate
the transaction hereunder, and in no event shall either option constitute a
breach by Buyer of this Agreement nor entitle Seller to any of the Buyer
Deposit.
7.11 Satisfaction of Conditions. Each party will use its reasonable best
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, as set forth in Section 9, provided that Buyer will not be
required to agree to any increase in the amount payable with respect to, or any
modification that makes more burdensome in any material respect any of the
Assets or Assumed Liabilities.
7.12 Confidentiality. No party, nor their respective officers, employees,
trustees, agents, representatives or affiliates, will issue any press release or
make any other public announcement regarding this Agreement or the transactions
contemplated hereby without the consent of the other parties. Each party will
hold, and will cause its employees, consultants, advisors and agents to hold, in
confidence, the terms of this Agreement and any non-public information
concerning the other party obtained pursuant to this Agreement. Notwithstanding
the preceding, (i) a party may disclose such information to the extent required
by any Legal Requirement (including disclosure requirements under federal and
state securities laws), but the party proposing to disclose such information
will first notify
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and consult with the other party concerning the proposed disclosure, to the
extent reasonably feasible; and (ii) after the Closing, Seller may disclose the
terms of this Agreement to its shareholders. Each party also may disclose such
information to employees, consultants, advisors, agents and actual or potential
lenders whose knowledge is necessary to facilitate the consummation of the
transactions contemplated by this Agreement. Each party's obligation to hold
information in confidence will be satisfied if it exercises the same care with
respect to such information as it would exercise to preserve the confidentiality
of its own similar information.
7.13 Transition. Seller shall cooperate in good faith with Buyer to assure
a smooth transition of the Assets and operation of the Business after Closing.
In connection with the foregoing, Seller agrees to continue to accept payment of
Accounts Receivable for the benefit of Buyer for a period of ninety (90) days
after Closing and shall submit all such payments to Buyer within five (5) days
of receipt of the same. Seller shall not, without the prior written consent of
Buyer, take any action to collect any Accounts Receivable after Closing, other
than as set forth in this Section 7.13. Seller and Buyer shall execute the
Management Agreement immediately after the execution of this Agreement, such
agreement to be effective December 10, 1998.
Section 8. Closing.
The date of Closing will be designated by Buyer and Seller, but shall not
occur earlier than January 4, 1998 or later than January 15, 1999, unless
mutually extended by the parties. The Closing will be held in the offices of
Polsinelli, White, Xxxxxxxx & Xxxxxxx, P.C. at 000 Xxxx 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx Xxxx, Xxxxxxxx or such other place as Buyer and Seller may agree.
Section 9. Conditions to Closing.
9.1 Conditions to the Obligations of Buyer and Seller. The obligations of
each party to consummate the transactions contemplated by this Agreement to take
place at the Closing are subject to the satisfaction or waiver to the extent
permitted by applicable Legal Requirements, at or prior to the Closing Date, of
each of the following conditions:
9.1.1 No action, suit or proceeding is pending or threatened by or before
any Governmental Authority and no Legal Requirement has been enacted,
promulgated or issued or deemed applicable to any of the transactions
contemplated by this Agreement by a Governmental Authority, which would (a)
prohibit Buyer's ownership of the Business or the Assets, (b) compel Buyer to
dispose of or hold separate all or a material portion of the Business or the
Assets as a result of any of the transactions contemplated by this Agreement, or
(c) prevent or make illegal the consummation of any transactions contemplated by
this Agreement.
9.2 Conditions to the Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement to take place at the
Closing are subject to the satisfaction or waiver, to the extent permitted by
applicable Legal Requirements, at or prior to the
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Closing Date, of each of the following conditions:
9.2.1 All representations and warranties of Seller contained in this
Agreement are, if not specifically qualified by materiality, true in all
respects and, if so qualified, are true in all material respects, in each case
on and as of the Closing Date with the same effect as if made on and as of the
Closing Date, except for changes specifically permitted or contemplated by this
Agreement.
9.2.2 Seller has performed and complied in all material respects with each
obligation, agreement, covenant and condition required by this Agreement to be
performed or complied with by Seller at or prior to the Closing.
9.2.3 Seller has executed (or caused to be executed) and delivered to Buyer
each of the following items:
(a) the Xxxxxxx Money Escrow Agreement;
(b) the Indemnity Escrow Agreement substantially in the form attached
hereto as Exhibit B;
(c) the Xxxx of Sale substantially in the form attached hereto as
Exhibit C;
(d) the Assignment and Assumption of Contracts Agreement substantially
in the form attached hereto as Exhibit D;
(e) the Assignment and Assumption of Equipment Rental Agreements
substantially in the form attached hereto as Exhibit E;
(f) Non-Competition Agreements signed by Seller and Buyer in the form
attached hereto as Exhibits F-1 and F-2;
(g) an opinion letter from Seller's legal counsel dated the Closing
Date substantially in the form attached hereto as Exhibit G (the final
opinion letter must be approved by Buyer at least two (2) days prior to
Closing);
(h) certificates of good standing for Seller from the Iowa and
Nebraska Secretaries of State; and
(i) motor vehicle title certificates and such other transfer
instruments as Buyer may reasonably deem necessary or advisable to transfer
the Assets to Buyer and to perfect Buyer's rights in the Assets.
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9.2.4 Seller has delivered to Buyer: (a) evidence, in form and substance
satisfactory to Buyer, that all of the Required Consents have been obtained or
given on terms and conditions acceptable to Buyer in its sole discretion and are
in full force and effect, including without limitation approval of the transfer
to Buyer of the Member Agreement on terms and conditions acceptable to Buyer in
its sole discretion; and (b) to the extent obtained by Seller, the estoppel
certificates or similar documents described in Section 7.4; and (c) evidence, in
form and substance satisfactory to Buyer, from the NRTC that all invoices due
have been paid and Seller is not in default with the NRTC.
9.2.5 No action, proceeding or investigation has been instituted or
threatened prior to Closing by or before any court or Governmental Authority
which would, if determined adversely to Buyer's interest, materially impair the
ability of Buyer to realize the benefits of the transactions contemplated by
this Agreement. Nothing in this Section 9 shall be construed so as to give Buyer
any unfair option to delay or avoid closing on this transaction and in any
event, there must be a reasonable basis supported by fact to invoke the
protection of this provision.
9.2.6 Seller has delivered releases, in form reasonably satisfactory to
Buyer, of all Encumbrances affecting any of the Assets (other than Permitted
Encumbrances) and, to the extent that the relevant jurisdictions provide them, a
certificate of no taxes due with respect to Seller and the Assets issued by
appropriate state taxing authorities as of a date no earlier than 10 days prior
to the Closing, or, if no such certificate is available, a certificate signed by
the chief financial officer of Seller stating that all taxes currently due have
been paid in full.
9.2.7 Seller has delivered to Buyer: (a) a certificate, dated the Closing
Date, signed by Seller's chief executive officer, stating that to the best of
his knowledge in his corporate capacity the conditions set forth in Sections
9.2.1 and 9.2.2 are satisfied; (b) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and performance of this
Agreement by Seller, and a certificate of Seller, dated as of the Closing, that
such resolutions were duly adopted and are in full force and effect as of the
date of Closing; and (c) such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.3 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement to take place at the
Closing are subject to the satisfaction or waiver by Seller, to the extent
permitted by applicable Legal Requirement, at or prior to the Closing Date, of
each of the following conditions:
9.3.1 Buyer has paid the Base Purchase Price required to be paid at the
Closing, as adjusted in accordance with this Agreement.
9.3.2 All representations and warranties of Buyer contained in this
Agreement are, if not specifically qualified by materiality, true and correct in
all respects and, if so qualified, are true and correct in all material
respects, in each case on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, except for changes specifically permitted or
contemplated
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by this Agreement.
9.3.3 Buyer in all material respects has performed and complied with each
obligation, agreement, covenant and condition required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing.
9.3.4 Buyer has executed and delivered to Seller each of the following
items:
(a) the Xxxxxxx Money Escrow Agreement;
(b) the Indemnity Escrow Agreement substantially in the form attached
hereto as Exhibit B;
(c) the Assignment and Assumption of Contracts Agreement substantially
in the form attached hereto as Exhibit D;
(d) the Assignment and Assumption of Equipment Rental Agreements
substantially in the form attached hereto as Exhibit E; and
(e) Non-Competition Agreements substantially in the form attached
hereto as Exhibits F-1 and F-2.
9.3.5 Buyer has delivered to Seller the following: (a) a certificate, dated
the Closing Date, signed by the chief executive officer of Buyer, stating that
to the best of his knowledge in his corporate capacity, the conditions set forth
in Sections 9.3.2 and 9.3.3 are satisfied; (b) a copy of the resolutions of the
board of directors of Buyer authorizing the execution, delivery and performance
of this Agreement by Buyer, and a certificate of Buyer, dated as of the Closing,
that such resolutions were duly adopted and are in full force and effect as of
the date of Closing; and (c) such other documents as Seller may reasonably
request in connection with the transactions contemplated by this Agreement.
9.4 Waiver of Conditions. Any party may waive in writing any or all of the
conditions to its obligations under this Agreement.
Section 10. Termination.
10.1 Events of Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing:
(a) by the mutual written consent of Buyer and Seller; or
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(b) by Buyer or Seller, if the transactions contemplated by this
Agreement to take place at the Closing have not been consummated on or
before January 15, 1999, other than as extended by mutual agreement of the
parties, provided, however, that if the failure to consummate the
transactions is the result of (i) a breach or default by such party in the
performance of any of its obligations under this Agreement or (ii) the
failure of any representation or warranty of such party to be accurate,
then subject to the terms of Section 3.1 hereof, the termination of this
Agreement shall not limit the right of the other party to pursue an action
for damages resulting from such breach or failure except that Buyer and
Seller will have no liability in any event if, for any reason whatsoever,
the NRTC or DIRECTV do not approve transfer to Buyer of Seller's Member
Agreement, provided the entire Buyer Deposit is returned to Buyer without
offset or reduction; or
(c) by Buyer under the conditions described in Section 7.7 above.
10.2 Liabilities in Event of Termination. Subject to the provisions of
Section 3.1, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement, except that Buyer will have
no liability in any event upon exercise of its right to terminate pursuant to
Section 10.1(c).
10.3 Procedure Upon Termination. In the event of the termination of this
Agreement by Buyer or Seller pursuant to this Section 10, notice of such
termination will promptly be given by the terminating party to the other.
Section 11. Survival of Representations and Warranties; Indemnification.
11.1 Survival of Representations and Warranties. The representations and
warranties of Seller in this Agreement and in the documents and instruments to
be delivered by Seller pursuant to this Agreement will survive the Closing
without limitation until the first anniversary of the Closing Date, except that
all such representations and warranties with respect to any federal, state or
local taxes, title, litigation, Environmental Law or copyright matter will
survive until the expiration of the applicable statute of limitations (including
any extensions) for such federal, state or local taxes, title, litigation,
Environmental Law or copyright matter, respectively. The representations and
warranties of Buyer in this Agreement and in the documents and instruments to be
delivered by Buyer pursuant to this Agreement will survive the Closing without
limitation until the first anniversary of the Closing Date. The periods of
survival of the representations and warranties prescribed by this Section 11.1
are referred to as the "Survival Period". The liabilities of the parties under
their respective representations and warranties will expire as of the expiration
of the applicable Survival Period; provided, however, that such expiration will
not include, extend or apply to any representation or warranty, the breach of
which has been asserted by Buyer in written notice to Seller before such
expiration or about which Seller has given Buyer written notice before such
expiration indicating the facts or conditions existing that, with the passage of
time or otherwise, can reasonably be expected to result in a breach (and
describing such potential breach in reasonable detail). All covenants of Seller
and Buyer in this Agreement shall survive the Closing.
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11.2 Indemnification by Seller. Seller will indemnify, defend and hold
harmless Buyer and its shareholders and its and their respective Affiliates; and
the shareholders, directors, officers, employees, agents, successors and assigns
of any of such Persons, from and against:
(a) all losses, damages, liabilities, deficiencies or obligations of
or to Buyer resulting from or arising out of (i) any breach of any then
surviving representation or warranty made by Seller in this Agreement, (ii)
any breach of any covenant, agreement or obligation of Seller contained in
this Agreement, (iii) any third party claim with respect to any act or
omission of Seller with respect to Seller's operation of the Assets or
Seller's conduct of the Business, which act or omission occurred prior to
or on the Closing Date without regard to whether such third party claim
with respect to such act or omission is asserted before or after the
Closing Date, including any matter described on Schedule 5.10 hereto and
including all taxes of Seller relating to the Business, (iv) any liability
or obligation of Seller not included in the Assumed Liabilities, (v) any
claim that the transactions contemplated by this Agreement violate any
fraudulent conveyance laws of any jurisdiction, (vi) Seller's failure to
deliver any Required Consent to Buyer, notwithstanding that Buyer shall
have consented to close in the absence of any such Required Consent; (vii)
any liability or obligation of Buyer relating to the parties noncompliance
with any applicable bulk sales laws, including without limitation, bulk
sales laws under the Uniform Commercial Code; and (viii) any claim relating
in any manner to the operation of the Business prior to and on the Closing
Date; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including,
without limitation, settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing.
11.3 Indemnification by Buyer. Buyer will indemnify, defend and hold
harmless Seller and its shareholders and its and their respective Affiliates,
and the shareholders, directors, officers, employees, agents, successors and
assigns of any of such Persons, from and against:
(a) all losses, damages, liabilities, deficiencies or obligations of
or to Seller or any such other indemnified Person resulting from or arising
out of (i) any breach of any representation or warranty made by Buyer in
this Agreement, (ii) the breach of any covenant, agreement or obligation of
Buyer contained in this Agreement or (iii) the failure by Buyer to perform
any of its obligations in respect of the Assumed Liabilities; and (iv) any
third party claim with respect to any act or omission of Buyer with respect
to Buyer's operation of the Assets or Buyer's conduct of the Business,
which act or omission occurred after the Closing Date; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including,
without limitation, settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing.
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11.4 Third Party Claims. Promptly (and in any event within 30 days) after
the receipt by any party of notice of any claim, action, suit or proceeding by
any Person who is not a party to this Agreement (collectively, an "Action"),
which Action is subject to indemnification under this Agreement, such party (the
"Indemnified Party") will give reasonable written notice to the party from whom
indemnification is claimed (the "Indemnifying Party"). The Indemnified Party
will be entitled, at the sole expense and liability of the Indemnifying Party,
to exercise full control of the defense, compromise or settlement of any such
Action unless the Indemnifying Party, within a reasonable time (and in any event
within 30 days) after the giving of such notice by the Indemnified Party, (a)
admits in writing to the Indemnified Party the Indemnifying Party's liability to
the Indemnified Party for such Action under the terms of this Section 11, (b)
notifies the Indemnified Party in writing of the Indemnifying Party's intention
to assume such defense, (c) provides evidence reasonably satisfactory to the
Indemnified Party of the Indemnifying Party's ability to pay the amount, if any,
for which the Indemnified Party may be liable as a result of such Action, and
(d) retains legal counsel reasonably satisfactory to the Indemnified Party to
conduct the defense of such Action. The other party will cooperate with the
party assuming the defense, compromise or settlement of any such Action in
accordance with this Agreement in any reasonable manner. The Indemnified Party
will have the right to employ separate counsel and to participate in (but not
control) the defense, compromise or settlement of the Action, but the fees and
expenses of such counsel will be at the expense of the Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) any
relief other than the payment of money damages is sought against the Indemnified
Party or (iii) the Indemnified Party will have been advised by its counsel that
there may be one or more defenses available to it which are different from or
additional to those available to the Indemnifying Party, and in any such case
that portion of the fees and expenses of such separate counsel that are
reasonably related to matters covered by the indemnity provided in this Section
11 will be paid by the Indemnifying Party. No Indemnified Party will settle or
compromise any such Action for which it is entitled to indemnification under
this Agreement without prior written consent of the Indemnifying Party, unless
the Indemnifying Party has failed, after reasonable notice, to undertake control
of such Action in the manner provided in this Section 11.4. No Indemnifying
Party will settle or compromise any such Action (A) in which any relief other
than the payment of money damages is sought against any Indemnified Party or (B)
in the case of any Action relating to the Indemnified Party's liability for any
tax, if the effect of such settlement would be an increase in the liability of
the Indemnified Party for the payment of any tax for any period beginning after
the Closing Date, unless the Indemnified Party consents in writing to such
compromise or settlement.
Section 12. Miscellaneous.
12.1 Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the Buyer, Seller will not assign any of
its rights under this Agreement or delegate any of its duties under this
Agreement.
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12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or sent by
first class, prepaid, registered or certified mail (return receipt requested),
or delivered by commercial courier (e.g., United Parcel Service or Federal
Express) or, if receipt is confirmed, by telecopier:
To Buyer at: Golden Sky Systems, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President and
Jo Xxxxx Xxxx, Corporate Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy (which will not constitute notice) transmitted by telecopier
to:
Polsinelli, White, Xxxxxxxx & Shalton, P.C.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq. and
Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Seller at: Breda Telephone Corporation
Xxxxxxx 000 Xxxx
X.X. Xxx 000
Xxxxx, Xxxx 00000-0000
Attention: Xxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy (which will not constitute notice) transmitted by telecopier
to:
Wilcox, Polking, Gerken, Schwarzkopf, Xxxx & Copeland, P.C.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
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Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 12.2. All
notices will be deemed to have been received on the date of delivery or on the
third Business Day after mailing in accordance with this Section, except that
any notice of a change of address will be effective only upon actual receipt.
12.3 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any alleged breach by any party of any representation, warranty,
covenant or agreement contained in this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees and other costs of such action or
suit from the other party.
12.4 Right to Specific Performance. Seller acknowledges that the unique
nature of the Assets to be purchased by Buyer pursuant to this Agreement renders
money damages an inadequate remedy for the breach by Seller of its obligations
under this Agreement, and Seller agrees that in the event of such breach, Buyer
will upon proper action instituted by it, be entitled to a decree of specific
performance of this Agreement.
12.5 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.6 Captions. The article and section captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.7 Choice of Law. This Agreement and the rights of the parties under it
will be governed and construed in all respects in accordance with the laws of
the State of Iowa. The appropriate jurisdiction and venue in connection with the
interpretation of any disputes concerning this Agreement will be in the District
Court of Xxxxxxx County, Iowa. Seller and Buyer hereby waive any and all
right(s) to remove any dispute concerning this Agreement to Federal Court.
12.8 Terms. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. The word "include" and derivatives of that word are used in this
Agreement in an illustrative sense rather than a limiting sense.
12.9 Rights Cumulative. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
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12.10 Further Actions. Seller and Buyer will execute and deliver to the
other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents, assurances
or things as may be reasonably necessary to give full effect to this Agreement
and to allow each party fully to enjoy and exercise the rights accorded and
acquired by it under this Agreement.
12.11 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
12.13 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) contains the entire agreement of the parties and
supersedes all prior oral or written agreements and understandings with respect
to the subject matter herein. This Agreement may not be amended or modified
except by a writing signed by the parties.
12.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
12.15 Construction. This Agreement has been negotiated by Buyer and Seller
and its respective legal counsel, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.16 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by Citibank, N.A. at its prime rate (the "Prime Rate") plus 3%, adjusted as
and when changes in the Prime Rate are made.
12.17 Expenses. Except as otherwise expressly provided in this Agreement,
each party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
The parties have executed this Agreement as of the day and year first above
written.
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SELLER:
Breda Telephone Corporation
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx, President
BUYER:
Golden Sky Systems, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx, President
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EXHIBIT LIST
Exhibit A Xxxxxxx Money Escrow Agreement
Exhibit B Indemnity Escrow Agreement
Exhibit C Xxxx of Sale
Exhibit D Assignment and Assumption of Contracts Agreement
Exhibit E Assignment and Assumption of Equipment Rental Agreements
Exhibit F-1 Seller Non-Competition Agreement
Exhibit F-2 Buyer Non-Competition Agreement
Exhibit G Opinion Letter of Seller's Counsel
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LIST OF SCHEDULES
Schedule 1.4 Business
Schedule 1.9 Equipment
Schedule 1.13 Inventory
Schedule 1.21 Seller Contracts
Schedule 3.5 Allocation of Consideration
Schedule 4.2 Excluded Assets
Schedule 5.4 Required Consents
Schedule 5.5 Encumbrances
Schedule 5.9 Patents, Trademarks and Copyrights
Schedule 5.10 Financial Statements
Schedule 5.11 Legal Proceedings
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