1
EXHIBIT 10.5(a)
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 11th day of June, 1996, by and between Digital Television
Services of Colorado, LP, a Georgia limited partnership ("Purchaser"), Omega
Cable, a Colorado general partnership ("Seller"), Xxxx Xxxxxx, a resident of the
State of Colorado ("Hazard"), and Xxxxx Xxxxxxxxx, a resident of the State of
Colorado ("Alexander") (Hazard and Alexander are hereinafter collectively
referred to as the "Owners").
RECITALS
A. Seller owns and operates an exclusive distributorship of the
National Rural Telecommunications Cooperative's DBS Services and of Xxxxxx
Communications Galaxy, Inc.'s DirecTV service (the "Business") in Xxxxxxx and
Saguache Counties, Colorado (the "Locations").
B. Owners are the general partners of Seller.
C. Seller desires to transfer and assign to Purchaser, and Purchaser
desires to acquire and accept from Seller, all of Seller's rights under the
NRTC/Member Agreement and the NRTC/Retail Agreement relating to the Locations
and certain other assets, upon the terms, and subject to the conditions, set
forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller, Purchaser and Owners hereby
agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
CABLE PROGRAMMING shall have the meaning ascribed to such term
in the NRTC/Member Agreement.
CLOSING and CLOSING DATE shall have the meanings set forth in
Section 2.3 herein.
COMMERCIAL ESTABLISHMENT shall have the meaning ascribed to
such term in the NRTC/Member Agreement.
COMMITTED MEMBER RESIDENCE shall have the meaning ascribed to
such term in the NRTC/Member Agreement.
CUSTOMER shall mean any customer of the Business (including a
Subscriber).
2
DBS SERVICES shall have the meaning ascribed to such term in
the NRTC/Member Agreement.
DIRECTV means DirecTv, Inc., a California corporation.
HCG DIRECTV shall have the meaning ascribed to such term in
the NRTC/Member Agreement.
XXXXXX shall mean Xxxxxx Communications Galaxy, Inc.
LIEN shall mean with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other adverse
claim or restriction of any kind in respect of such property or asset. For
purposes of this Agreement, any restriction or limitation with respect to a
security or other ownership interest (including any restriction on the right to
vote, sell or otherwise dispose of such security or ownership interest) shall
constitute a "Lien" thereon. For the purposes of this Agreement, a Person shall
be deemed to own subject to a Lien any property or asset which it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale relating to such property or asset.
LOCATIONS shall have the meaning set forth in Paragraph S.1 of
Schedule 1.
NON-SELECT SERVICES shall have the meaning ascribed to such
term in the NRTC/Member Agreement.
NRTC shall mean the National Rural Telecommunications
Cooperative, a District of Columbia corporation.
NRTC AGREEMENTS shall mean the NRTC/Member Agreement, the
NRTC/Retail Agreement, and any Other Assumed Agreements identified as NRTC
Agreements in Paragraph S.4 of Schedule 1.
NRTC/MEMBER AGREEMENT shall mean the NRTC/Member Agreement for
Marketing and Distribution of DBS Services between the NRTC and Seller
identified in Paragraph S.2 of Schedule 1.
NRTC/RETAIL AGREEMENT shall mean the NRTC/Member DBS Retail
product Agreement identified in Paragraph S.3 of Schedule 1.
OTHER ASSUMED AGREEMENTS shall mean the contracts and
agreements, if any, set forth in Paragraph S.4 of Schedule 1.
PERSON shall mean an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization
including a government or political subdivision or agency or instrumentality
thereof.
PROGRAMMING shall mean Cable Programming and HCG DirecTv.
2
3
SUBSCRIBER as of any date shall mean a Customer who, at a
minimum, is subscribing to a package of basic services and: (1) on the last day
of the calendar month prior to such date, whose account is not more than sixty
(60) days past due from the date payment is due; (2) who is not an employee or
agent of the service provider or charged a fee that is nominal (e.g.,
demonstration unit) or substantially below the service provider's published
rates; and (3) who has not given notice of intent to discontinue service.
SECTION 2. PURCHASE AND SALE; CLOSING.
2.1 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES.
(a) Subject to the provisions of this Agreement, Seller
agrees to transfer and assign to Purchaser, and Purchaser agrees to acquire and
accept from Seller, as of the "Closing Date" (hereinafter defined), free and
clear of any and all Liens, all: (i) NRTC Agreements, (ii) relationships,
contracts, and accounts with Customers, (iii) other tangible assets used or
useful in the provision of DBS Services, including, without limitation, any MTE
terminals and demonstration units; (iv) files, books and records relating to
the provision of DBS Services by Seller, including, without limitation,
Customer and prospective customer lists, computer programs, tapes and
electronic data processing software, accounting journals and ledgers, accounts
receivable records, copies of NRTC reports and correspondence and other
documents relating to the NRTC Agreements and compliance therewith
(collectively, "Records"); (v) exclusive rights to the telephone numbers used
in the Business; and (vi) cash in Seller's account at Huntington Bank, accounts
receivable from Customers, maintenance and security deposits, prepaid expenses,
supplies and other current assets (excluding inventory) (collectively, the
"Assets").
(b) Upon the assignment of the Assets, Purchaser shall
assume (i) Seller's obligations to be performed after 12:01 A.M. on the date
following the Closing Date under and as set forth in the NRTC Agreements (but
not obligations required to have been performed by Seller prior to such time)
to the extent that such obligations arise out of the provision of DBS Services
to Customers on or after such time, (ii) accounts payable to the NRTC, and
(iii) Seller's liabilities associated with unearned revenue, advance payments
and Customer credit balances to the extent such liabilities are taken into
account in the price adjustments described in Section 2.4 herein. Except as
expressly set forth in this Section 2.1(b), Purchaser shall not assume or be
deemed to have assumed under this Agreement, by reason of the transactions
contemplated by this Agreement, or otherwise, any debts, liabilities,
obligations or commitments of Seller of any nature whatsoever, known or
unknown, and the execution, delivery and performance of this Agreement shall
not render Purchaser liable for any such debt, liability, obligation or
commitment.
2.2 PURCHASE PRICE. The Purchase Price for the Assets pursuant
to this Agreement (the "Purchase Price") shall be Six Hundred Thirty-Three
Thousand Dollars ($633,000), plus the assumption of certain liabilities
described in Section 2.1(b) herein, subject to adjustment as provided in Section
2.4 herein, to be paid as follows:
(a) The sum of Three Hundred Thousand Dollars ($300,000),
subject to adjustment as described in Section 2.4(a) herein, on the Closing
Date by certified or cashier's
3
4
check, or by wire transfer of immediately available funds to an account or
accounts designated in writing by Seller (the "Closing Payment").
(b) The sum of Three Hundred Thirty-Three Thousand Dollars
($333,000) on the Closing Date by the delivery of a promissory note
substantially in the form attached hereto as SCHEDULE 2.2(b) (the "Note"), less
any adjustments and reductions as provided in Section 2.4 herein and the Right
of Setoff as provided in Section 5.4 hereof. The Note will be secured pursuant
to the Security Agreement substantially in the form attached hereto as SCHEDULE
2.2(c) (the "Security Agreement").
2.3 THE CLOSING. Subject to the satisfaction of the conditions
set forth herein, the closing of the assignments and transfers provided for in
this Agreement (the "Closing") shall be held at the offices of the Purchaser at
10:00 A.M. (i) at Purchaser's election, on (a) the last business day of the
month in which all of the conditions precedent set forth in Section 4 herein
have been satisfied or waived, or (b) on the calendar day of such month on which
NRTC's accounting period closes, or (ii) such other place, time or date as the
parties may agree upon in writing (the "Closing Date"). Either party may
terminate this Agreement by written notice to the other party if the Closing has
not occurred by the Termination Date set forth in Paragraph S.6 of Schedule 1;
provided, however, the Termination Date shall be automatically extended for an
additional ninety (90) days if the consent of the NRTC to the transfer of the
NRTC Agreements to Purchaser has not been obtained.
2.4 PRORATIONS AND CONSIDERATION ADJUSTMENTS; ALLOCATION OF
PURCHASE PRICE.
(a) The Closing Payment shall be increased by the parties'
good faith estimate of the current assets of Seller relating to DBS Services
and decreased by the current liabilities of Seller relating to DBS Services,
each as determined in accordance with Paragraph (c) hereof (the "Closing
Adjustment"), which adjustment shall be subject to final adjustment as provided
in Paragraph (e) hereof.
(b) All prepaid expenses and unearned revenue in
connection with the NRTC Agreements shall be prorated among Seller and
Purchaser as of 12:01 A.M. on the day following the Closing Date. Such
prorations shall include, without limitation, all Customer programming
prepayments. Expenses, costs and liabilities incurred shall be allocated to the
time of occurrence of such programs without regard to the date of payment
therefor.
(c) (i) Promptly after the Closing, Seller shall prepare a
Schedule of current assets and current liabilities of Seller relating to the
DBS Services as of the Closing Date (the "Closing Date Accounting"). The
Closing Date Accounting shall be prepared on a basis consistent with the "Pro
Forma Accounting" attached hereto as SCHEDULE 2.4(c).
(ii) The accounting data in the Closing Date
Accounting shall be derived from NRTC Central Billing System Reports,
including, but not limited to, Report 18A (Subscriber Accounts Receivable),
Report 19A (Accounts Receivable Summary), Report 17 (Unearned Revenue Report),
and the NRTC Wholesale Invoice. The Closing Date Accounting shall include: (A)
cash in the Seller's account at Huntington Bank, (B) accounts
4
5
receivable from Customers, (C) accounts payable to Customers, (D) accounts
payable to NRTC, and (E) any unearned revenue, advance payments and credit
balances associated with Customer accounts. Except as set forth in this
Paragraph (c)(ii), no other assets or liabilities shall be included in the
Closing Date Accounting. Accounts receivable shall be included at the full face
amount, less an allowance for uncollectible accounts based upon an aging
analysis and consistent with past practices and experience.
(d) No later than thirty (30) days after the Closing Date,
Seller shall deliver to Purchaser a copy of the Closing Date Accounting
together with the Seller's determination of the Closing Adjustment pursuant to
the Closing Date Accounting. The Closing Date Accounting and the determination
of the Closing Adjustment shall be subject to review by Purchaser and its
auditors at Purchaser's expense. Such review by Purchaser shall be completed
within fifteen (15) business days after delivery of the Closing Date Accounting
to Purchaser. In the event of any disagreement between Seller and Purchaser
concerning the amount of the Closing Adjustment which has not been resolved
within sixty (60) days after the Closing Date, unless such date shall have been
extended by mutual written agreement of the parties, either party may refer to
an independent accountant mutually acceptable to Seller and Purchaser, whose
final determination shall be made within thirty (30) days of such referral, and
shall be final and binding upon the parties. The fees and expenses of such
independent accountant shall be borne by Seller and Purchaser equally. The
determination of the Closing Adjustment pursuant to this Paragraph (d) shall be
referred to as the "Final Closing Adjustment."
(e) If, after the Final Closing Adjustment, Seller owes
any amount to Purchaser, then the Seller, at the Seller's option, shall (i) pay
the difference to the Purchaser in cash, within five (5) days after the
determination of the Final Closing Adjustment, or (ii) permit Purchaser to
reduce the next following payment(s) due under the Note by such amount on a
dollar-for-dollar basis. If, after the Final Closing Adjustment, Purchaser owes
any amount to Seller, then Purchaser shall pay the difference to Seller by
increasing the next following payment(s) due under the Note by such amount.
(f) If, following any final payment of a consideration
adjustment pursuant to this Section 2.4, an error (in billing or reporting by
NRTC or otherwise) is thereafter discovered which would have affected such
final payment, the parties shall agree in good faith on the amount of such
adjustment, and the next payment made pursuant to the Note shall be increased
or decreased accordingly.
(g) The Purchase Price shall be allocated by the
Purchaser and Seller as set forth on SCHEDULE 2.4(g), and the parties shall
make all federal, state and local tax filings consistent therewith.
2.5 PURCHASE OF INVENTORY. Purchaser may, by providing Seller
with at least five (5) days' written notice prior to closing, elect to purchase
the inventory identified on SCHEDULE 2.5 (the "Inventory") at Closing. If
Purchaser elects to purchase the Inventory, the purchase price for the Inventory
shall be Seller's reasonably documented wholesale cost for the Inventory, to be
paid in cash at closing, and Seller shall be deemed to have represented at
Closing that the Inventory consists solely of undamaged original units in
original sealed cartons,
5
6
located at Seller's principal place of business, and that Seller owns all of the
Inventory free and clear of any Liens and has full power and authority to
transfer the Inventory to Purchaser.
2.6 CONSENT OF NRTC AND OTHERS. Within five (5) business days
after the date of this Agreement, Seller shall cause its counsel to prepare a
request for the consent of the NRTC to the transfer of the NRTC Agreements and
such other requests for consent that Purchaser determines may be necessary or
appropriate to consummate the transactions contemplated hereby, and deliver
drafts of same to Purchaser's counsel. After review by Purchaser's counsel, but
in any event within ten (10) business days after submission to Purchaser's
counsel, Seller and Purchaser shall join in the delivery of the consents, and
they will each diligently take all steps necessary or desirable to obtain the
consents. The failure of either party to timely file or diligently seek the
consents, or to cooperate fully with the other party with respect thereto, shall
be deemed a material breach of this Agreement.
2.7 FURTHER ASSURANCES. From and after the Closing, Purchaser
and Seller shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
documents, instruments, transfers, conveyances, discharges, releases, assurances
and consents as Purchaser or Seller may, from time to time, reasonably request
to confirm, perfect and evidence the transfers, assignments and transactions
contemplated by this Agreement.
2.8 NONCOMPETITION AND CONSULTING AGREEMENT. Each of the
Owners shall enter into a Noncompetition and Consulting Agreement with Purchaser
on the Closing Date, substantially in the form attached hereto as SCHEDULE 2.8,
whereby each of the Owners will agree (i) not to engage in the Business in the
Locations or within a 100 mile radius thereof for a period of three (3) years
and (ii) to provide consulting services to Purchaser in accordance therewith
(the "Noncompetition and Consulting Agreement").
2.9 DEALER AGREEMENT. Purchaser and Seller shall enter into an
Exclusive DBS Dealer Agreement on the Closing Date substantially in the form
attached hereto as SCHEDULE 2.9 (the "Exclusive DBS Dealer Agreement").
SECTION 3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND OWNERS. To
induce the Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller and Owners hereby, jointly and
severally, represent and warrant to the Purchaser as follows:
(a) DUE AUTHORIZATION; BINDING EFFECT; NO CONFLICTS.
(i) Seller is a general partnership validly existing under the laws of the
State of Colorado and has the requisite power to carry on its business and to
consummate the transactions contemplated hereby; (ii) all actions necessary for
the authorization, execution, delivery and performance by Seller of this
Agreement, and the transactions contemplated hereby, have been taken; (iii)
this Agreement is a legal, valid and binding obligation of Seller, enforceable
in accordance with its terms; and (iv) neither the execution and delivery of
this Agreement, nor the consummation by the Seller of the transactions
contemplated hereby, or the fulfillment by the Seller of the terms hereof, will
6
7
(A) conflict with or result in a breach of any provision of the Seller's
partnership agreement or any agreement or understanding to which Seller is a
party, (B) require the consent of any third party other than NRTC, Xxxxxx and
the parties identified on SCHEDULE 3.1(A), which consents shall be obtained
prior to Closing, or (C) violate or conflict with any judgment, order, writ,
injunction, decree, statute, rule or regulation applicable to the Seller.
(b) NRTC MEMBERSHIP; DBS DISTRIBUTION RIGHTS.
(i) Attached hereto as SCHEDULE 3.1(b)(i), is a true
and complete copy of the NRTC/Member Agreement together with all amendments,
schedules and exhibits thereto.
(ii) Attached hereto as SCHEDULE 3.1(b)(ii) is a true
and complete copy of the NRTC/Retail Agreement, together with all amendments,
schedules and exhibits thereto.
(iii) Attached hereto as SCHEDULE 3.1(b)(iii) are
true and complete copies of the Other Assumed Agreements, if any, together with
all amendments, schedules and exhibits thereto.
(iv) Pursuant to the NRTC/Member Agreement, the
Seller has the exclusive right to market, sell and retain revenue from
Programming (except Non-Select Services) transmitted over the NRTC/Member
Agreement directly to Committed Member Residences in the Locations under the
terms and conditions set forth in the NRTC/Member Agreement. The Seller also
has the right to market, sell and retain revenue from the distribution of
Programming (except Non-Select Services) directly to Commercial Establishments
in the Locations under the terms and conditions set forth NRTC/Member
Agreement.
(v) Pursuant to the NRTC/Member Agreement, the Seller
has (A) the right to establish the terms and conditions upon which it will
market and sell Programming (except Non-Select Services) to Committed Member
Residences or Commercial Establishments, or both, in the Locations and is
entitled to all revenues from such marketing and sales to such Committed Member
Residences or Commercial Establishments, or both, in the Locations, subject
only to those Programming agreements set forth on SCHEDULE 3.1(b)(v)
("Marketing Revenues"), and (B) the Seller has paid all sums to NRTC or Xxxxxx,
as appropriate, required under the NRTC/Member Agreement such that the Seller
is entitled to the Marketing Revenues. The Seller has the right to receive from
NRTC, on a pro rata basis, all other net revenues received by NRTC from Xxxxxx
in connection with the Programming which are directly attributable to the
Committed Member Residences or the Commercial Establishments in the Locations.
(vi) The Seller is in full compliance in all
material respects with any and all membership, affiliation, licensing or other
requirements or arrangements as may have been established by NRTC, Xxxxxx or
DirecTv, if any, pursuant to the NRTC/Member Agreement, the DirecTv Agreement,
or otherwise.
7
8
(vii) The Seller is not in breach of the NRTC/Member
Agreement, the NRTC/Retail Agreement or any of the Other Assumed Agreements (if
any), nor has the Seller failed to perform any material obligation under the
NRTC/Member Agreement, the NRTC/Retail Agreement or any Other Assumed
Agreement. The Seller has not received notice of any such breach or
non-performance at any time. To the best of Seller's knowledge, no other party
to the NRTC/Member Agreement, the NRTC/Retail Agreement or any Other Assumed
Agreement is in default thereunder or has failed to perform any material
obligation thereunder.
(viii) Except as disclosed on SCHEDULE 3.1(b)(viii),
none of the DBS Services distributed by the Seller has been suspended at any
time since inception.
(ix) SCHEDULE 3.1(b)(ix) (as supplemented by
applicable NRTC reports) sets forth all Customers, identified as Committed
Member Residence and Commercial Establishment, including the number of months
such Customer has been a Customer, whether such Customer's account is past due,
the amount of the receivable, and the aging of amounts due thereunder. SCHEDULE
3.1(b)(ix) will be updated not more than three (3) days prior to the Closing
Date. The accounts receivables will be fully and completely collectible by
Purchaser in the ordinary course of business within one hundred and twenty
(120) days of the Closing Date without resort to legal proceedings. The Seller
has maintained full and complete information regarding the location of each
Customer's descrambler. As soon as practicable after the Closing Date, Seller
shall also provide to Purchaser a list of Customers and programs in the form of
NRTC's Report 30 (Average Service Retail Report), dated as of the Closing Date.
(c) TRUE AT CLOSING; SURVIVES CLOSING. The
representations and warranties of Seller and Owners set forth in this Section
3.1 are and will be true both on the date of this Agreement and on and as of
the Closing. All of the representations and warranties by Seller and Owners,
and the agreement in Section 5 herein to indemnify the Purchaser for a breach
thereof, shall survive the Closing.
(d) DISCLOSURE BY SELLER. No representation or warranty
made by Seller and Owners in this Agreement and no statement made in any
certificate, Exhibit or Schedule or other document furnished or to be furnished
in connection with the transactions herein contemplated, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make such representation or warranty or any such
statement not misleading to a prospective purchaser of assets of the Seller who
is seeking full information with respect to the Seller.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. To induce
Seller and Owners to enter into this Agreement and consummate the transactions
contemplated hereby, the Purchaser hereby represents and warrants to the Seller
as follows:
(a) DUE AUTHORIZATION; BINDING EFFECTS; NO CONFLICTS.
(i) Purchaser is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Georgia and has the requisite
power to carry on its business and to consummate the actions contemplated
hereby; (ii) all actions necessary for the authorization, execution, delivery
8
9
and performance by Purchaser of this Agreement and the actions contemplated
hereby, have been taken; (iii) this Agreement is a legal, valid and binding
obligation of Purchaser, enforceable in accordance with its terms; and (iv)
neither the execution and delivery of this Agreement, nor the consummation by
the Purchaser of the transactions contemplated hereby, or the fulfillment by
the Purchaser of the terms hereof, will (A) conflict with or result in a breach
of any provision of the Purchaser's organizational documents or any agreement
or understanding to which Purchaser is a party, (B) require the consent of any
third party unless such consent shall be obtained prior to Closing, or (C)
violate or conflict with any judgment, order, writ, injunction, decree,
statute, rule or regulation applicable to the Purchaser.
(b) TRUE AT CLOSING; SURVIVES CLOSING. The
representations and warranties of Purchaser set forth in this Section 3.2 are
and will be true both on the date of this Agreement and on and as of the
Closing. All of the representations and warranties by Purchaser, and the
agreement in Section 5 herein to indemnify the Seller for a breach thereof,
shall survive the Closing.
(c) DISCLOSURE BY PURCHASER. No representation or warranty
made by Purchaser in this Agreement and no statement made in any certificate,
Exhibit or Schedule or other document furnished or to be furnished in
connection with the transactions herein contemplated, contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary to make such representation or warranty or any such
statement not misleading.
SECTION 4. CONDITIONS TO CLOSING.
4.1 CONSENT. The obligations of Seller and Purchaser to
consummate the transactions contemplated by this Agreement are subject to
satisfaction at the time of Closing of the condition that NRTC and Xxxxxx shall
have issued all necessary authorizations, consents and approvals in connection
with the transactions contemplated by this Agreement, without conditions which
are materially adverse to either Purchaser or Seller.
4.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. Purchaser's
obligation to consummate the transactions contemplated by this Agreement is
subject to:
(a) The satisfactory completion, in Purchaser's sole
discretion, of Purchaser's due diligence investigation concerning the Business.
(b) Satisfaction (or waiver by Purchaser) on or before the
Closing Date of each of the following conditions:
(1) Each of the representations and warranties of
Seller and Owners contained in this Agreement shall have been
true and correct in all material respects when made and as of
the Closing Date.
(2) Seller and Owners shall have performed and
complied with, in all material respects, all agreements,
covenants, conditions
9
10
and obligations contained in this Agreement and required to be
performed or complied with by them on or before the Closing
Date.
(3) All authorizations and approvals of or consents
of, or filings with, any governmental authority or other
Person required to be obtained or made by Seller in connection
with the Closing (including, without limitation, any consents
required under any Other Assumed Agreements) shall have been
obtained or made and shall be in full force and effect.
(4) Seller shall have at least 400 Committed Member
Residences and Commercial Establishments which subscribe for
DBS Services from Seller on the Closing Date.
(c) Receipt by the Purchaser, at the Closing of
(1) Such bills of sale, assignments and other
instruments of transfer required to effectively transfer and
assign good and marketable title to the Assets to Purchaser in
accordance therewith.
(2) Certified copies of resolutions duly adopted by
the Owners approving this Agreement and the transactions
contemplated hereby.
(3) All Records or copies of the Records pursuant to
Section 2.1(a) herein.
(4) A certificate signed by the Owners dated the
Closing Date, to the effect that the conditions set forth in
Paragraph (b) of this Section 4.2 have been satisfied.
(5) Owners shall have executed and delivered to
Purchaser the Noncompetition and Consulting Agreement and the
Exclusive DBS Dealer Agreement.
(6) Updated Schedule 3.1(b)(ix).
(7) Such other documents and instruments as may be
reasonably requested and satisfactory to Purchaser and its
counsel in connection with the Seller's and Owners'
satisfaction of each of its obligations hereunder.
4.3 CONDITIONS TO OBLIGATIONS OF SELLER. Seller's obligation
to consummate the transaction contemplated by this Agreement is subject to:
10
11
(a) Satisfaction (or waiver by Seller) on or before the
Closing Date of each of the following conditions:
(1) Each of the representations and warranties of
Purchaser contained in this Agreement shall have been true and
correct when made and as of the Closing Date.
(2) Purchaser shall have performed and complied with,
in all material respects, all agreements, covenants,
conditions and obligations contained in this Agreement and
required to be performed or complied with by Purchaser on or
before the Closing Date.
(3) All authorizations and approvals of or consents
of, or filings with, any governmental authority or other
Person required to be obtained or made by Purchaser in
connection with the Closing shall have been obtained or made
and shall be in full force and effect.
(b) Receipt by the Seller, at the Closing, of
(1) The Closing Payment, the Note and the Security
Agreement described in paragraph 2.2 herein executed and
delivered by the Purchaser.
(2) A certified copy of Resolutions of the general
partner of Purchaser approving this Agreement and the
transactions contemplated hereby.
(3) A certificate signed by the Purchaser's general
partner, dated the Closing Date, to the effect that the
conditions set forth in paragraph (a) of this Section 4.3 have
been satisfied.
(4) Purchaser shall have executed and delivered to
the Owners the Exclusive DBS Dealer Agreement.
(5) Such other documents and instruments as may be
reasonably requested and satisfactory to Seller and its
counsel in connection with the Purchaser's satisfaction of
each of its obligations hereunder.
(c) Execution and delivery of the Noncompetition and
Consulting Agreement.
11
12
SECTION 5. INDEMNIFICATION.
5.1 RIGHT TO INDEMNIFICATION.
(a) Seller and each of the Owners, jointly and severally,
shall indemnify, reimburse, and hold harmless Purchaser from and against all
claims, losses, damages, costs (including, without limitation, court costs and
attorneys' fees), expenses and liabilities suffered, incurred, or sustained by
Purchaser on account of (i) any misrepresentation, breach of warranty or
nonfulfillment of any term, covenant or agreement on the part of Seller and
Owners under this Agreement, or in any certificate, Schedule or other document
delivered pursuant hereto, (ii) the failure of Seller to pay and perform
promptly when due all of its obligations, liabilities and debts as provided
under this Agreement, (iii) the operation of the Business prior to the Closing
Date, (iv) any breach or default prior to the Closing by Seller under the
NRTC/Member Agreement, the NRTC/Retail Agreement or any of the Other Assumed
Agreements, and (v) any liability, obligation or claim with respect to the
Business arising prior to the Closing (other than liabilities specifically
assumed by Purchaser under this Agreement).
(b) Purchaser shall indemnify, reimburse, and hold
harmless Seller from and against all claims, losses, damages, costs (including,
without limitation, court costs and attorneys' fees), expenses and liabilities
suffered, incurred, or sustained by Seller on account of (i) any
misrepresentation, breach of warranty or nonfulfillment of any term, covenant
or agreement on the part of Purchaser under this Agreement, or in any
certificate, Schedule or other document delivered pursuant hereto, (ii) the
failure of Purchaser to pay and perform promptly when due all of its
obligations, liabilities, and debts as provided under this Agreement, (iii) the
operation of the Business after the Closing Date, and (iv) any breach or
default after the Closing by Purchaser under the NRTC/Member Agreement, the
NRTC/Retail Agreement or any Other Assumed Agreement; provided, however, that
Seller shall in no event be entitled to indemnification hereunder with respect
to matters arising under contracts, commitments or agreements of Seller not
specifically assumed by Purchaser under this Agreement.
5.2 RIGHT TO CONTEST. If the Seller or Purchaser, as the case
may be (the "Indemnified Party") receives notice or has knowledge of any claim
for which it believes the other party hereto is obligated to provide
indemnification pursuant to Section 5.1 herein (the "Indemnifying Party"), the
Indemnified Party shall notify the Indemnifying Party in writing of such claim
within twenty (20) days of its receipt of same. The Indemnified Party shall, at
the expense of the Indemnifying Party, provide all information regarding the
contest or defense of the claim and cooperate fully with the Indemnifying Party
in the conduct of any such contest or defense. Before being required to make any
payment pursuant to Section 5.1 herein, the Indemnifying Party may, at its own
expense, elect to undertake and control the defense of, and take all necessary
steps properly to contest any claim in respect thereof involving third parties
or to prosecute such claim to conclusion or settlement satisfactory to the
Indemnified Party. If the Indemnifying Party makes the foregoing election, then
the Indemnified Party shall have the right to participate, at its own expense,
in all proceedings but shall not admit any liability, settle, compromise, pay or
discharge the claim without the prior written consent of the Indemnifying Party.
If the Indemnifying Party does not make such election, it shall be obligated to
pay the costs of defending or prosecuting such claim and shall be bound by
whatever result is obtained by the Indemnified Party respecting such claim.
12
13
5.3 LIMITATION OF CLAIMS. Any claim by a party hereunder
arising from a claimed breach by the other party of any representation, warranty
or covenant hereunder shall be made in writing and delivered to such other party
no later than forty-eight (48) months after the Closing Date.
5.4 RIGHT OF OFFSET. Purchaser shall have the right to offset
against the amounts owing to the Seller pursuant to the Note any amounts owing
to Purchaser by Seller or the Owners pursuant to this Agreement, including,
without limitation, amounts due Purchaser pursuant to Sections 2.4 and 5 hereof
(the "Right of Offset"). Before exercising its Right of Offset, Purchaser shall
provide written notice of its intent to exercise such right.
SECTION 6. MISCELLANEOUS.
6.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Unless performance
of the following obligations is waived by Purchaser (in its sole discretion) in
advance and in writing, Seller shall:
(a) not modify, amend, alter or terminate the NRTC/Member
Agreement, the NRTC/Retail Agreement or any Other Assumed Agreement, or waive
any default or breach thereunder except as may be coordinated with Purchaser;
(b) comply in all material respects with the NRTC/Member
Agreement, the NRTC/Retail Agreement and any Other Assumed Agreements, use its
best efforts to cure any material default or breach thereunder, and promptly
notify Purchaser upon receipt of notice of any default or breach thereunder;
(c) maintain its books and records in accordance with
prior practice, maintain all of its property and assets in their present
condition, ordinary wear and tear excepted, maintain technical materials,
supplies, inventory and spare parts consistent with past practice, and
otherwise use its best efforts to operate the business in the ordinary course
in accordance with practices during the twelve (12) months preceding the date
of this Agreement;
(d) use its best efforts to keep its business organization
intact, make available the services of key employees, and maintain good
relationships with its key employees, suppliers, advertisers and others having
business relations with it;
(e) operate the Business in all material respects in
accordance with the NRTC Agreements, comply in all material respects with all
laws, rules and regulations applicable to it, including the regulations and
policies of the NRTC, Xxxxxx and DirecTv;
(f) provide to Purchaser, concurrently with filing,
sending or receipt thereof, copies of all reports to and other filings and
correspondence with the NRTC, Xxxxxx and DirecTv;
(g) provide to Purchaser, promptly upon receipt thereof by
Seller, a copy of (i) any notice of the revocation, suspension, or limitation
of the rights under, or of any proceeding for the revocation, suspension, or
limitation of the rights under any NRTC
13
14
Agreements, and (ii) copies of all protests, complaints, challenges or other
documents submitted to or filed with the NRTC, Xxxxxx or DirectTv by third
parties concerning the business and, promptly upon the filing or making
thereof, copies of Seller's responses thereto; and
(h) notify Purchaser in writing immediately upon
learning of the institution or threat of any action against Seller in any
court, or any action against Seller before any governmental agency, and notify
Purchaser in writing promptly upon receipt of any administrative or court order
relating to the Business.
6.2 LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
the choice of law provisions thereof.
6.3 NOTICE. All notices, requests, demands, or other
communications under this Agreement shall be in writing. Notice shall be
sufficiently given for all purposes as follows:
(a) PERSONAL DELIVERY. When personally delivered to the
recipient, notice is effective on delivery.
(b) CERTIFIED MAIL. When mailed certified mail, postage
paid, return receipt requested, notice is effective on receipt, if delivery is
confirmed by a return receipt.
(c) OVERNIGHT DELIVERY. When delivered by Federal Express,
Airborne, United Parcel Service, or DHL WorldWide Express, charges prepaid or
charged to the sender's account, notice is effective on delivery, if delivery
is confirmed by the delivery service.
(d) TELEX OR FAX TRANSMISSION. When sent by telex or fax
to the last telex or fax number of the recipient known to the party giving
notice, notice is effective on receipt of a confirmed transmission; provided
that (a) a duplicate copy of the notice is promptly given by first-class or
certified mail or by overnight delivery, or (b) the receiving party delivers a
written confirmation of receipt. Any notice given by telex or fax shall be
deemed received on the next business day if it is received by 5:00 p.m.
(recipient's time) or on a non-business day.
Addresses for purpose of giving notice are:
DIGITAL TELEVISION SERVICES OMEGA CABLE
OF COLORADO, LP 000 Xxxxxx Xxxxxx
Xxxxxxxx 000, Xxxxx 000 P. O. Box 627
1080 Xxxxxxx Bridge Road Saguache, Colorado 81149-0627
Xxxxxxx, Xxxxxxx 00000 Attn: Xxxxx Xxxxxxxxx
14
15
with a copy to: with a copy to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx Xxxxx, Esq.
Scarborough, L.L.P. X.X. Xxx 000
XxxxxxxXxxx Xxxxxxxxx Xxxxxx Xxxxxxxx, Xxxxxxxx 00000
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: C. Xxxx Xxxxx, Esq.
Any correctly addressed notice that is refused, unclaimed, or
undeliverable because of an act or omission of the party to be notified shall be
deemed effective as of the first day that said notice was refused, unclaimed, or
deemed undeliverable by the postal authorities, messenger, or overnight delivery
service.
Any party may change its address or telex or fax number by giving the
other party notice of the change in any manner permitted in this Agreement.
6.4 ASSIGNMENT; BINDING EFFECT. This Agreement may not be
assigned by Purchaser (except to a party which, directly or indirectly, is
controlled by, controls or is under common control with, Purchaser) or by Seller
prior to the Closing without the prior written consent of the other party. This
Agreement shall be binding upon, and shall inure to the benefit of the parties
hereto and their successors and permitted assigns, if any.
6.5 AMENDMENT; WAIVER. This Agreement may be amended only by a
written instrument signed by Purchaser and Seller. No provisions of this
Agreement may be waived except by an instrument in writing signed by the party
sought to be bound. No failure or delay by any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, and a waiver of a particular
right or remedy on one occasion shall not be deemed a waiver of any other right
or remedy or a wavier on any subsequent occasion.
6.6 ENTIRE AGREEMENT. This Agreement, together with the
Schedules attached hereto, sets forth the entire understanding between the
parties relating to the subject matter hereof, any and all prior correspondence,
conversations and memoranda or other writings being merged herein and replaced.
No promises, covenants, or representations of any character or nature other than
those expressly stated herein have been made to induce either party to enter
into this Agreement.
6.7 CONFIDENTIALITY; INITIAL NOTICE TO PUBLIC. Seller and
Purchaser shall mutually agree in advance on the manner in which the public is
first informed of the execution of this Agreement. Each of the parties hereto
agree to maintain the confidentiality of this Agreement and the terms thereof
and any information exchanged by the parties in connection with the consummation
of the transactions contemplated hereby prior to Closing, and neither party
shall make any disclosure thereof to any third party without the prior consent
of the other party, except as may be required by law.
15
16
6.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in two or more counterparts, each of which will be deemed an original, and all
of which together shall constitute one and the same Agreement.
6.9 FACSIMILE SIGNATURE. Facsimile signatures shall be
considered original signatures for purposes of execution and enforcement of the
rights delineated in this Agreement.
6.10 SCHEDULES. The Schedules referred to in this Agreement
are attached hereto, made a part hereof and incorporated herein by this
reference.
16
17
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
PURCHASER:
Digital Television Services of Colorado, LP
By: Columbia DBS Management, LLC
Its: General Partner
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
SELLER:
Omega Cable
By:
---------------------------------------
Its:
---------------------------------
(SEAL)
------------------------------------
Xxxx Xxxxxx
(SEAL)
------------------------------------
Xxxxx Xxxxxxxxx
17
18
Schedules have been omitted. Copies shall be furnished upon request.