1
ASSET PURCHASE AND SALE AGREEMENT
DATED AS OF AUGUST 27, 1997
BY AND BETWEEN
▇▇▇▇▇ MEDIA GROUP, INC.
AS SELLER
AND
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
AS BUYER
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TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions........................................................... 1
1.1 Accounts Payable...................................................... 1
1.2 Accounts Receivable................................................... 1
1.3 Affiliate............................................................. 1
1.4 Agreement............................................................. 2
1.5 Assumed Contracts..................................................... 2
1.6 Assets................................................................ 2
1.7 Authorities........................................................... 2
1.8 Basic Subscriber...................................................... 2
1.9 Basic Subscriber Rate................................................. 2
1.10 Business.............................................................. 3
1.11 Business Day.......................................................... 3
1.12 Code.................................................................. 3
1.13 Communications Act.................................................... 3
1.14 Contracts............................................................. 3
1.15 Current Assets........................................................ 3
1.16 Current Liabilities................................................... 3
1.17 Deferred Revenue...................................................... 3
1.18 Equipment............................................................. 3
1.19 Excluded Assets....................................................... 4
1.20 FCC................................................................... 4
1.21 [Intentionally Omitted]............................................... 4
1.22 Franchises............................................................ 4
1.23 Franchise Areas....................................................... 4
1.24 GAAP.................................................................. 4
1.25 Governmental Authority................................................ 5
1.26 Governmental Permits.................................................. 5
1.27 Intangibles........................................................... 5
1.28 Legal Rules........................................................... 5
1.29 Necessary Consents.................................................... 5
1.30 Nonstandard Charges................................................... 5
1.31 Other Current Liabilities............................................. 5
1.32 Prepaid Expenses...................................................... 5
1.33 Real Property......................................................... 6
1.34 Required Consents..................................................... 6
1.35 Rules and Regulations................................................. 6
1.36 Signals............................................................... 6
1.37 Subscriber............................................................ 6
1.38 Subscriber Adjustment................................................. 6
1.39 Systems............................................................... 6
1.40 Taxes................................................................. 6
1.41 Working Capital Adjustment............................................ 7
1.42 Other Definitions..................................................... 7
ARTICLE 2 Purchase and Sale..................................................... 8
2.1 Purchase and Sale of Assets........................................... 8
2.2 Assumed Obligations................................................... 8
2.3 Purchase Price and Payment............................................ 8
2.4 Preliminary and Final Adjustments..................................... 9
2.5 Disputed Liabilities.................................................. 10
2.6 Completion of Purchase and Sale....................................... ▇▇
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ARTICLE 3 Representations and Warranties of Seller.............................. 11
3.1 Organization and Qualification........................................ 11
3.2 Seller's Authority.................................................... 11
3.3 Enforceability........................................................ 11
3.4 Approvals............................................................. 11
3.5 Compliance with Laws.................................................. 11
3.6 Compliance with Other Instruments..................................... 12
3.7 Complete System....................................................... 12
3.8 Title and Encumbrances................................................ 12
3.9 Cable Plant and Homes Passed.......................................... 13
3.10 Franchises............................................................ 13
3.11 Authorities........................................................... 13
3.12 Contracts............................................................. 13
3.13 Real Property......................................................... 14
3.14 Environmental Laws.................................................... 14
3.15 Carriage of Signals and Channel Capacity.............................. 15
3.16 FCC and Copyright..................................................... 15
3.17 Revenue Summary....................................................... 15
3.18 Litigation............................................................ 16
3.19 Employees and Employee Benefits....................................... 16
3.20 Commissions........................................................... 17
ARTICLE 4 Representations and Warranties of Buyer............................... 17
4.1 Organization and Qualification........................................ 17
4.2 Buyer Authority....................................................... 18
4.3 Enforceability........................................................ 18
4.4 Approvals............................................................. 18
4.5 Compliance with Other Instruments..................................... 18
4.6 Commissions........................................................... 19
ARTICLE 5 Covenants of Seller................................................... 19
5.1 Access to System...................................................... 19
5.2 Continuity and Maintenance of Operations.............................. 19
5.3 Compliance with Contracts and Laws.................................... 19
5.4 Adverse Changes....................................................... 19
5.5 Line Extensions and Rebuilds.......................................... 20
5.6 Taxes................................................................. 20
ARTICLE 6 Other Covenants....................................................... 21
6.1 Confidentiality....................................................... 21
6.2 HSR Notification...................................................... 22
6.3 Required Consents and Estoppel Certificates........................... 22
6.4 Franchise Transfer Expenses........................................... 23
6.5 Employee Matters...................................................... 23
ARTICLE 7 Conditions Precedent to Obligations of Buyer.......................... 26
7.1 Conditions Precedent.................................................. 26
7.2 Waiver................................................................ 27
ARTICLE 8 Conditions Precedent to Obligations of Seller......................... 27
8.1 Conditions Precedent.................................................. 27
8.2 Waiver................................................................ 28
ARTICLE 9 Closing............................................................... 28
9.1 Closing............................................................... 28
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Page
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9.2 Closing Documents..................................................... 28
ARTICLE 10 Indemnification....................................................... 30
10.1 Indemnification by Seller............................................. 30
10.2 Indemnification by Buyer.............................................. 31
10.3 Notice and Right To Defend Third-Party Claims......................... 32
10.4 Notice and Right to Remediate......................................... 33
10.5 Mitigation............................................................ 34
10.6 Exclusive Remedy...................................................... 34
ARTICLE 11 Termination........................................................... 34
11.1 Termination Events.................................................... 34
11.2 Manner of Exercise.................................................... 35
11.3 Effect of Termination................................................. 35
ARTICLE 12 General............................................................... 35
12.1 Covenant Not To ▇▇▇ and Nonrecourse to
Partners.............................................................. 35
12.2 Assignment............................................................ 36
12.3 Parties in Interest................................................... 37
12.4 Time of Essence....................................................... 37
12.5 Severability.......................................................... 37
12.6 Amendment............................................................. 37
12.7 Terms................................................................. 37
12.8 Headings.............................................................. 37
12.9 Entire Understanding; Schedules....................................... 37
12.10 Counterparts.......................................................... 37
12.11 Applicable Law........................................................ 38
12.12 Notices............................................................... 38
12.13 Further Acts.......................................................... 39
12.14 Expenses.............................................................. 39
12.15 Attorneys' Fees....................................................... 39
12.16 Judicial Proceedings.................................................. 39
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EXHIBITS
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Exhibit A Escrow Agreement
Exhibit B Franchise Consent Form
Exhibit C Assignment, Assumption & Consent - Leases
Exhibit D Assignment, Assumption & Consent - Contracts
Exhibit E Receipt
Exhibit F ▇▇▇▇ of Sale
Exhibit G FIRPTA Certificate
Exhibit H Certificate of Seller
Exhibit I Opinion of Seller's Counsel
Exhibit J Assumption Agreement
Exhibit K Opinion of Buyer's Counsel
Exhibit L Certificate of Buyer
Exhibit M Post-Closing Escrow Agreement
SCHEDULES
Schedule 1 The Businesses (including Rate Schedules)
Schedule 0 Assumed Contracts
Schedule 1.18 Vehicles
Schedule 0 Excluded Assets
Schedule 0 Franchises
Schedule 0 Necessary Consents
Schedule 0 Required Consents
Schedule 2.3 Purchase Price Allocation
Schedule 0 Contracts and Instruments
Schedule 0 Real Property
Schedule 0 Environmental Disclosure
Schedule 0 Revenue Summary
Schedule 0 Material Changes
Schedule 0 Litigation
Schedule 0 Employees and Employment Agreement
Schedule 0 Collective Agreements
Schedule 0 Employment Benefit Plans
Schedule 0(d) Seller's Welfare Plans
Schedule 6.6 Programming Services
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ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made as of August 27, 1997, by
and between ▇▇▇▇▇ MEDIA GROUP, INC., a Nevada corporation ("Seller"), and
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP ("Buyer").
RECITALS
O. Seller, through its ownership and operation of various assets,
provides cable television and related services to subscribers located in the
vicinities of Bowersville, Canon, Franklin County, Franklin Springs, ▇▇▇▇
County, Lavonia, Royston, ▇▇▇▇▇▇▇▇ County and Toccoa, Georgia, including all
franchised communities listed on SCHEDULE 1 (the "Systems").
O. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, subject to the terms and conditions contained in this Agreement,
substantially all of the assets, rights, privileges, interests, business and
properties owned, leased, held or utilized by Seller to operate and maintain the
Systems.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, Seller and Buyer
agree as follows:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the following
meanings:
1.1 Accounts Payable. The book value of all accounts payable of the
Systems relating to the conduct of the Businesses determined as of the Closing
Date in accordance with GAAP on a basis consistent with the application of such
principles in the preparation of the Financial Statements.
1.2 Accounts Receivable. All accounts receivable of Seller representing
amounts owed to Seller in connection with its operation of the Businesses.
1.3 Affiliate. With respect to any person or entity, any other person or
entity owning a majority interest in or controlling such person or entity, or
owned or controlled by or under common ownership or control with such person or
entity, where "control" (and its corollaries) includes ownership of interests
representing a majority of total voting power in an entity, and "ownership" (and
its corollaries) includes ownership of a majority of the equity interests in an
entity.
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1.4 Agreement. This Asset Purchase and Sale Agreement dated as of August
27, 1997 between Seller and Buyer, as the same may be amended from time to time.
1.5 Assumed Contracts. All contracts of the Businesses
as set forth on SCHEDULE 0.
1.6 Assets. All of Seller's right, title and interest in all properties,
privileges, rights, interests and claims, real and personal, tangible and
intangible, of every type and description that are owned, leased, held for or
used exclusively in the Businesses in which Seller has any right, title or
interest or in which Seller acquires any right, title or interest on or before
the Closing Date, including Governmental Permits, Intangibles, Contracts,
Equipment and Real Property, but excluding any Excluded Assets.
1.7 Authorities. Any and all approvals, consents, rights, certificates,
orders, franchises, determinations, permissions, licenses, authorities or grants
issued, noticed, declared, designated or promulgated by any Governmental
Authority; excluding, however, the Franchises.
1.8 Basic Subscriber. As of any date and for each Franchise Area served
by the Systems, without duplication, the aggregate of all of the following which
are receiving basic cable television service ("Basic Services") provided by the
Systems: (a) private residential customer accounts that are billed by individual
unit (regardless of whether such accounts are in single family homes or in
individually billed units in apartment houses and other multi-unit buildings)
(excluding Nonstandard Charges (as defined herein)) each of which shall be
counted as one "Basic Subscriber;" and (b) all commercial, bulk-billed and other
accounts not billed by individual unit, such as hotels, motels, apartment houses
and multi-family homes, provided that the number of "Basic Subscribers" serviced
by each such account shall be deemed to be an amount equal to the quotient of
(x) the aggregate monthly Basic Services revenue and expanded basic cable
television service revenue derived by the Systems from such accounts (excluding
any Nonstandard Charges), in each case for the last calendar month preceding the
date of such determination, divided by (y) the Basic Subscriber Rate in effect
on the date of such determination. Notwithstanding the foregoing, the term
"Basic Subscriber" shall not include any commercial, residential or other
subscriber who (A) has not paid for at least one (1) month of service, or (B) is
more than sixty (60) days delinquent from the date of billing on five dollars
($5.00) or more due to Seller.
1.9 Basic Subscriber Rate. For each Franchise Area, the monthly fees and
charges for the provision of both "basic service" and "expanded basic service"
(as such terms are customarily used in the cable television industry and
excluding
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any charges for additional outlets and installation fees and revenues derived
from the rental of converters, remote control devices and other like charges for
equipment) charged to customers served by the Systems, as of the end of the last
full month prior to the Closing Date.
1.10 Businesses. The individual cable television businesses conducted by
Seller on the date of this Agreement through the Systems in the Franchise Areas,
as described on SCHEDULE 1.
1.11 Business Day. Any day other than Saturday, Sunday or a day on which
banking institutions in either San Francisco, California or New York, New York
are required or authorized to be closed.
1.12 Code. The Internal Revenue Code of 1986, as amended.
1.13 Communications Act. The Communications Act of 1934, as amended,
including, but not limited to, by the Cable Communication Policy Act of 1984 and
by the Cable Television Consumer Protection and Competition Act of 1992, and the
rules and regulations promulgated thereunder.
1.14 Contracts. Any and all leases of real and personal property,
private easements, rights-of-way, rights of access, contracts for easements,
pole line or pole attachment agreements, joint line agreements, underground
conduit agreements, wire or cable crossing agreements, contracts with
Subscribers, bulk and commercial service agreements relating to the Systems, and
any other agreements with third parties relating to the Systems.
1.15 Current Assets. The sum of (a) Accounts Receivable as of the
Closing Date which have not been outstanding for more than ninety (90) days, net
of any credit balances due to subscribers, and (b) Prepaid Expenses.
1.16 Current Liabilities. The sum of (a) Accounts Payable, (b) Deferred
Revenue, and (c) Other Current Liabilities.
1.17 Deferred Revenue. Liabilities to Subscribers representing advance
▇▇▇▇▇▇▇▇ for services to be performed by Buyer after the Closing Date.
1.18 Equipment. All electronic devices, trunk and distribution coaxial
and optical fiber cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, Subscriber's devices (including
converters, encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
system), test equipment, vehicles and other tangible personal property owned,
leased, used or held for use
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in the Businesses. SCHEDULE 1.18 lists each vehicle owned, used or held for use
in the Businesses.
1.19 Excluded Assets. All (a) insurance policies and rights and claims
thereunder; (b) bonds, letters of credit, surety instruments, notes and other
similar items; (c) cash and cash equivalents; (d) Seller's rights under any
agreement governing or evidencing an obligation of Seller for borrowed money;
(e) Seller's rights under any contract, license, authorization, agreement or
commitment other than those creating or evidencing Assumed Contracts; (f)
claims, rights and interests in and to any refunds for federal, state or local
franchise, income or other taxes or fees (including, without limitation,
copyright fees) of any nature whatsoever relating to such taxes or fees payable
for taxable periods, or portions thereof, ending on or prior to the Closing
Date; (g) assets or properties owned by Seller that are unrelated to the
Businesses; (h) assets of any Employee Plan or arrangement, except as expressly
provided in Section ; (i) Seller's names and all trademarks, servicemarks and
copyrights owned by Seller; (j) Seller's billing contracts; provided that Seller
shall offer Buyer billing services related to the Businesses at Seller's actual
cost at the time of providing such service, for a period of ninety (90) days
following the Closing, which period shall be extended at Buyer's option for an
additional thirty (30) days, and shall cooperate with Buyer to effect the
transition of billing services from Seller's service provider to Buyer's service
provider; (k) programming and carriage agreements, except as described on
SCHEDULE 0; and (l) the assets described on SCHEDULE 0.
1.20 FCC. The Federal Communications Commission or any successor agency.
1.21 [Intentionally Omitted]
1.22 Franchises. The franchises set forth on SCHEDULE hereof.
1.23 Franchise Areas. The areas in which Seller is authorized to provide
cable television service under the Franchises, and the areas, if any, served by
the Systems in which Seller provides cable television service without a
Franchise.
1.24 GAAP. Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
1.25 Governmental Authority. Any nation or government,
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any state, province or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.26 Governmental Permits. All franchises, approvals, authorizations,
permits, licenses, easements, registrations, qualifications, leases and similar
rights obtained from any Governmental Authority.
1.27 Intangibles. All intangible assets, including subscriber lists,
accounts receivable, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held for use in the
Businesses.
1.28 Legal Rules. The requirements of all federal, state, municipal or
local laws, codes, statutes, ordinances, orders, judgments, decrees,
injunctions, franchises, determinations, approvals, rules, regulations, permits,
licenses, authorizations, certificates, notices, demand letters, circulars,
opinion letters and directions, of all Governmental Authorities.
1.29 Necessary Consents. All material franchises, licenses,
authorizations, approvals and consents required under Governmental Permits,
Contracts or otherwise for (a) Seller to transfer the Assets and the Businesses
to Buyer, (b) Buyer to conduct the Businesses and to own, lease, use and operate
the Assets at the places and in the manner in which the Businesses are conducted
as of the date of this Agreement and on the Closing Date and (c) Buyer to assume
and perform the Governmental Permits and Contracts. SCHEDULE 0 sets forth all
Necessary Consents.
1.30 Nonstandard Charges. Any charges for taxes, second connects,
additional outlets, installation fees, deposits and other non-recurring items
and any charges for the rental of converters, remote control devices and other
like charges for equipment.
1.31 Other Current Liabilities. All current liabilities (including, but
not limited to, accrued vacation pay of employees of Seller, subscriber security
deposits and customer advance payments, but excluding (i) Accounts Payable and
(ii) Deferred Revenue) of the Systems relating to the conduct of the Businesses
determined as of the Closing Date in accordance with GAAP on a basis consistent
with the application of such principles in the preparation of the Financial
Statements.
1.32 Prepaid Expenses. The book value of prepaid expenses and
miscellaneous prepaids (in each case, only to the extent constituting a current
asset) of the Systems with respect to the Businesses determined as of the
Closing Date in
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accordance with GAAP on a basis consistent with the application of such
principles in the preparation of the Financial Statements, to the extent that
such prepaid expenses will accrue to the benefit of Buyer upon and after the
Closing Date.
1.33 Real Property. All assets consisting of realty, including
appurtenances, improvements and fixtures located on such realty, and any other
interests in real property, including fee interests in Seller's offices and
headend sites and leasehold interests and easements, licenses, rights-of-way or
other real property rights used or held for use in the Businesses, but excluding
any Excluded Assets.
1.34 Required Consents. Those Necessary Consents which must be obtained
prior to Closing. SCHEDULE 0 sets forth all Required Consents.
1.35 Rules and Regulations. Rules and Regulations of the FCC, as in
effect from time to time.
1.36 Signals. The transmissions, except radio signals (whether
television, satellite or otherwise), of video programming or other information
that the Systems make available to all Subscribers generally.
1.37 Subscriber. A Basic Subscriber of the Systems.
1.38 Subscriber Adjustment. An amount equal to the product of (x) $1,535
and (y) the difference between 7,400 and the actual number of Basic Subscribers
in the Systems as of the Closing Date if such difference is greater than 74.
1.39 Systems. The individual cable television reception and distribution
systems operated in the conduct of the Businesses, each of which is capable of
being operated, without modification, as an independent system without
interconnections to other systems.
1.40 Taxes. Any and all governmental or quasi-govern- mental fees
(including, without limitation, license, filing and registration fees), taxes
(including, without limitation, income, gross receipts, franchise, sales, use,
property, real or personal, tangible or intangible taxes), interest equalization
and stamp taxes, assessments, levies, imposts, duties, charges, required
contributions or withholdings of any kind or nature whatsoever, together with
any and all penalties, fines or interest thereon. For purposes of determining
any Tax cost or Tax benefit to any person, such amount will be the actual cost
or benefit recognized by such person at the time of actual payment of the
additional Tax or actual recognition of the Tax benefit. In the event that any
payment or other amount is required to be determined on an after-Tax basis, such
payment or other amount will initially be determined without regard to any Tax
cost or Tax benefit not actually recognized currently, and appropriate
adjustments will be made when and to
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the extent that such Tax cost or Tax benefit is actually recognized.
1.41 Working Capital Adjustment. The number obtained by subtracting (x)
the sum of the Current Liabilities existing (as defined and determined in
accordance with GAAP) of Seller existing on the Closing Date which constitute
assumed Current Liabilities, from (y) the sum of the Current Assets (as defined
and determined in accordance with GAAP, except that inventory and cash shall not
be included as a current asset) of Seller on the Closing Date which are included
within the Assets.
1.42 Other Definitions. In addition, the following terms have the
meanings given them in the following sections:
Term Section
---- -------
Adjustment Time 0
Buyer's DC Plan 0
Buyer's Welfare Plans 0
CLI 0
Closing 0
Closing Date 0
COBRA 0
Copyright Act 0
Deposit 0
Employee Plans 0
Employment Transfer Date 0
Environmental Law 0
ERISA 0
ERISA Affiliate 0
Final Adjustments Report 0
Hazardous Substance 0
HSR Act 0
HSR Adjustment 0
Indemnifiable Damages 0
Indemnitee 0
Indemnitor 0
Lien 0
New Employees 0
Nonrecourse 0
Nontransferring Employees 0
Preliminary Adjustments Report 0
Prospective Employees 0
Purchase Price 0
Seller's DC Plan 0
Seller's Welfare Plans 0
Transaction Document 0
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ARTICLE 2
Purchase and Sale
2.1 Purchase and Sale of Assets. Subject to the terms and conditions
hereinafter set forth, Buyer hereby agrees to purchase from Seller, and Seller
hereby agrees to sell to Buyer, the Assets. Seller will retain, and Buyer hereby
does not purchase, the Excluded Assets.
2.2 Assumed Obligations. Concurrently with the purchase described in
Section and subject to the terms and conditions hereinafter set forth, Buyer
shall assume and agree to pay when due, and perform, those obligations, but only
those obligations, that (i) constitute the Current Liabilities, (ii) arise on or
after the Closing Date under all Franchises and Assumed Contracts, or (iii)
arise out of its ownership and operation of the Assets after the Closing Date.
2.3 Purchase Price and Payment.
(a) The consideration to be paid for the Assets shall be eleven million,
three hundred sixty thousand dollars ($11,360,000) in cash adjusted as
hereinafter provided (the "Purchase Price"). SCHEDULE 2.3 sets forth the manner
in which the Purchase Price is to be allocated among the Assets. Notwithstanding
the foregoing, in the event that after the adjustments the Purchase Price is
less than ten million, seven hundred ninety-two thousand dollars ($10,792,000),
at Seller's option, this Agreement may be terminated prior to Closing and, if so
terminated, the parties shall have no further rights or obligations hereunder,
except for the respective obligations of the parties under Sections , 12.1 and .
(b) On the Closing Date, the Purchase Price shall be:
(i) either
(A) decreased by the Working Capital Adjustment to the
extent it is a negative amount as of the Closing Date; or
(B) increased by the Working Capital Adjustment to the
extent it is a positive amount as of the Closing Date; and
(ii) either increased (up to a maximum of $568,000) or decreased,
as the case may be, for the Subscriber Adjustment, if any.
(c) To secure Buyer's obligations under this Agreement and the agreement
to be entered into in connection with the acquisition by Buyer of cable systems
located in Aiken and Greenwood, South Carolina, among others, immediately upon
execution of this Agreement, Buyer shall either (i) deposit the
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amount of $1,000,000 into an escrow account, under an escrow agreement, the form
of which is attached hereto as EXHIBIT A (the "Escrow Agreement"), or (ii)
obtain an irrevocable letter of credit in favor of the Seller in the amount of
$1,000,000 issued by a financial institution reasonably acceptable to the Seller
(in either case, the "Deposit").
(d) All revenues and all expenses arising from the operations of the
Systems until 12:01 a.m. on the Closing Date (the "Adjustment Time") shall be
prorated between Buyer and Seller as of the Adjustment Time in accordance with
GAAP on the principle that Seller shall receive all revenues (other than with
respect to Accounts Receivable being purchased by Buyer hereunder) and shall be
responsible for all expenses, costs and liabilities allocable to the period
prior to the Adjustment Time and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the period
after the Adjustment Time.
2.4 Preliminary and Final Adjustments. Preliminary and final adjustments
to the Purchase Price will be determined as follows:
(a) At least ten (10) Business Days prior to the Closing Date, Seller
will deliver to Buyer a report (the "Preliminary Adjustments Report"), prepared
in good faith and on a reasonable basis and in a manner consistent with the
Financial Statements, setting forth in reasonable detail a pro forma
determination as of the Closing Date of the adjustments and prorations set forth
in Section 0. The Preliminary Adjustments Report shall: (i) contain all
information reasonably necessary to determine such adjustments and prorations
and such other information as may be reasonably requested by Buyer; (ii) be
prepared in accordance with GAAP; and (iii) be certified by an authorized
officer of Seller to be true, correct and complete as of the date thereof.
Within five (5) Business Days after receipt of such report, Buyer shall give
Seller written notice of any objections. If Buyer makes any such objections, the
parties shall agree on the amount, if any, which is not in dispute within two
(2) Business Days after Seller's receipt of Buyer's objections thereto. Any
undisputed amounts shall be paid by the party responsible therefor to the other
party upon the Closing, and the remaining disputed amounts shall be determined
in the Final Adjustments Report.
(b) Within sixty (60) days after the Closing Date, Buyer shall deliver
to Seller a report (the "Final Adjustments Report"), prepared in good faith and
on a reasonable basis and similarly certified by Buyer, setting forth in
reasonable detail the final determination of all adjustments that were not
calculated as of the Closing Date and containing any corrections to the
Preliminary Adjustments Report.
(c) Within fifteen (15) days after receipt of the Final Adjustments
Report, Seller shall notify Buyer of its
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objections, if any. Any amount which is not in dispute shall, within five (5)
Business Days of the expiration of the review period, be paid in cash by wire or
interbank transfer in immediately available funds as follows: (i) if the
Purchase Price calculated based on the Final Adjustments Report is greater than
the Purchase Price calculated based on the Preliminary Adjustments Report, Buyer
shall pay such difference to Seller, or (ii) if the Purchase Price is less,
Seller shall pay such difference to Buyer. In the event any payment required by
this Section 0(c) or by Section 2.4(d) is not made when due, Seller or Buyer, as
appropriate, shall make the payment required by this Section 0(c) with interest
accruing from the date such payment was due at a rate of ten percent (10%) per
annum.
(d) Any disputed amounts will be determined within ninety (90) days
after the Closing Date by the San Francisco, California office of the accounting
firm of Price Waterhouse, whose determination will be conclusive. Seller and
Buyer will bear equally the fees and expenses payable to such firm in connection
with such determination. The payment required after determination of all
disputed amounts will be made by the responsible party by wire transfer of
immediately available funds to the other party within three (3) Business Days
after the final determination.
2.5 Disputed Liabilities. If a proration or adjustment to the Purchase
Price is made in Buyer's favor for any liability assumed by Buyer but is in good
faith being contested by Seller as of the Closing Date, and if Buyer is relieved
of this liability, Buyer shall pay to Seller or its designee in cash (by means
of wire or interbank transfer in immediately available funds) an amount equal to
the portion of this liability so relieved within five (5) Business Days after
the date Buyer is relieved of this liability. In the event any payment required
by this Section 0 is not made by Buyer when due, Buyer shall make the payment
required by this Section 0 with interest accruing from the date Buyer was
relieved of such liability at a rate of ten percent (10%) per annum.
2.6 Completion of Purchase and Sale. The purchase and sale of the Assets
shall be completed in accordance with Article 0 (the "Closing"). Within five (5)
Business Days of fulfillment of all conditions to Closing, Buyer and Seller
shall mutually agree upon the date of Closing (the "Closing Date"), which date
shall not be later than December 31, 1997. The Closing shall take place in the
offices of Pillsbury Madison & Sutro LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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ARTICLE 3
Representations and Warranties of Seller
As a material inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer the following:
3.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Nevada and
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 Businesses as currently
conducted. Seller is duly qualified or licensed to do business and is in good
standing under the laws of the State of Georgia.
3.2 Seller's Authority. Seller has the corporate right, power, legal
capacity and authority to execute, deliver and (subject to the receipt of the
Necessary Consents) perform its obligations under this Agreement and the
documents, instruments and certificates to be executed and delivered by Seller
pursuant to this Agreement. The execution and delivery of, and performance of
the obligations contained in, this Agreement by Seller and the transactions
contemplated hereby have been, and all documents, instruments and certificates
have been or as of the Closing will be, duly authorized by all necessary
partnership action on the part of Seller.
3.3 Enforceability. The terms and provisions of this Agreement and all
documents, instruments and certificates made or delivered from time to time by
Seller hereunder and thereunder constitute valid and legally binding obligations
of Seller, enforceable against Seller in accordance with the terms hereof and
thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
3.4 Approvals. SCHEDULE 0 sets forth all Necessary Consents. Except for
the Necessary Consents and compliance with the HSR Act, the execution, delivery
and performance of this Agreement by Seller does not require any material
consent which has not been made, given or otherwise accomplished.
3.5 Compliance with Laws. Seller is in material compliance with all
Legal Rules imposed by any Governmental Authority having jurisdiction over
Seller, the Businesses, the Assets or the Systems, and of any jurisdiction in
which the Systems are being operated or conducted, including, but not limited
to, the Communications Act.
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3.6 Compliance with Other Instruments.
(a) The execution and delivery of this Agreement and (subject to the
receipt of the Necessary Consents) the consummation of the transactions
contemplated hereunder do not and will not result in a breach or violation of
any term or provision of, or result in the imposition of any Lien upon any
Assets or any properties of Seller pursuant to, or constitute a breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under the articles of incorporation
or bylaws of Seller or under any material contract, agreement, Authority, Legal
Rule, license, lease, indenture, mortgage, loan agreement or note, as to which
Seller is a party or by which any of the Assets may be affected, except for such
breaches or violations as would not have a material adverse effect on the
Businesses or materially impair the ability of Seller to perform its obligations
under this Agreement.
(b) Seller has complied with all provisions of and is not in breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under any contract, lease, instrument
affecting any parcel of real property, authority or franchise, or obligation to
which it is a party or by which it is or any of the Assets may be bound or
affected, except for such breaches or violations as would not have a material
adverse effect on the Businesses or materially impair the ability of Seller to
operate its business as presently operated.
3.7 Complete System. The Assets constitute fully operational cable
television systems and include the assets, properties, franchises, licenses,
permits, consents, certificates, authorities, operating rights, leases,
easements, licenses, rights-of-way, contracts, agreements, commitments and
arrangements (excluding programming and carriage agreements) necessary to
operate and maintain the same as operated and maintained on the date hereof.
3.8 Title and Encumbrances. Seller has good title to and possession of
all of the Assets, free and clear of all Liens, except for the Permitted Liens.
A "Lien" is any interest in property securing an obligation, whether such
interest is based on common law, statute or contract, and including, but not
limited to, any security interest or lien arising from a mortgage, claim,
encumbrance, pledge, charge, easement, servitude, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall also include reservations, exceptions,
covenants, conditions, restrictions, leases, sub-leases, licenses, occupancy
agreements, pledges, equities, charges, assessments, covenants, reservations,
defects in title, encroachments and other burdens, and other title exceptions
and encumbrances affecting property of any nature, whether accrued or unaccrued,
or absolute or contingent.
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"Permitted Liens" are (a) Liens for taxes not yet due and payable; (b) any
carrier's, warehousemen's, mechanic's, materialmen's, repairmen's or other like
lien arising in the ordinary course of business; (c) easements, rights-of-way,
restrictions, minor encroachments and other similar nonmonetary encumbrances (i)
incurred in the ordinary course of business, and (ii) which do not render the
Asset subject thereto unusable for the purpose intended, materially detract from
the value of the Asset or interfere with the ordinary use of the Asset in the
ordinary course of business; and (d) in the case of real property leased to
Seller, the rights of the fee owner and any lien encumbering the fee interest in
such property.
3.9 Cable Plant and Homes Passed.
As of the Closing Date, the Systems will pass no fewer than ten thousand
eight hundred fifty (10,850) homes and will consist of no greater than three
hundred twenty (320) miles of cable plant.
3.10 Franchises.
(a) SCHEDULE 0 lists each Franchise held by Seller in connection with
the operation or maintenance of the Systems, and the coverage area serviced
thereby.
(b) To Seller's knowledge, each Franchise is in full force and effect
and no proceeding to revoke, cancel, encumber or adversely affect in any manner
any such Franchise has been initiated or threatened, and Seller is in material
compliance therewith.
3.11 Authorities. Seller has all Authorities that are necessary to carry
on the business of the Systems as conducted on the date hereof, except for such
Authorities the failure of which to obtain would not have a material adverse
effect on the Systems. To Seller's knowledge, each such Authority is in full
force and effect and no proceeding to revoke, cancel, encumber or adversely
affect in any manner any such Authority has been initiated or threatened, and
Seller is in material compliance therewith.
3.12 Contracts. SCHEDULE 0 lists all presently effective Contracts that
are material to the conduct of the Businesses as they are now conducted. Copies
of such Contracts as currently in effect have been, or prior to the Closing will
be, made available to Buyer. To Seller's knowledge, each Contract is in full
force and effect and no action to revoke, cancel or adversely affect in any
manner any such Contract has been initiated or threatened, and Seller is in
material compliance therewith.
3.13 Real Property.
SCHEDULE 0 contains a list of all Real Property owned in
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fee or leased by Seller which is used for headend equipment, microwave equipment
and satellite earth receiving stations and related facilities, tower and antenna
sites and office facilities in connection with the Systems.
3.14 Environmental Laws.
(a) Except as disclosed on SCHEDULE 0, to Seller's Actual Knowledge: (i)
none of Seller's operations on the Real Property is currently subject to any
judicial or administrative proceeding alleging the violation of an Environmental
Law; (ii) none of the Real Property is the subject of any investigation by any
Governmental Authority concerning any release of any Hazardous Substance on the
Real Property; (iii) Seller has not filed any written notice under any
Environmental Law indicating past or present treatment, storage or disposal of a
hazardous waste on the Real Property or reporting a spill or release of a
Hazardous Substance into the environment from its operations on the Real
Property; (iv) Seller has no material contingent liability in connection with
any release of any Hazardous Substance into the environment from the Real
Property; (v) no lien in favor of any Governmental Authority for (A) any
liability under Environmental Laws, or (B) damages arising from or costs
incurred in response to a release of any Hazardous Substance into the
environment has been filed or attached to any of the Real Property; and (vi) no
underground storage tanks are currently located on the Real Property and no
building or other structure on the Real Property contains friable asbestos.
(b) "Environmental Law" means a law, regulation, statute or ordinance
pertaining to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof) including, without
limitation, the following laws: (i) Clean Air Act (42 U.S.C. Section 7401, et
seq.); (ii) Clean Water Act (33 U.S.C. Section 1251, et seq.); (iii) Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.); (iv)
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.); (v) Safe Drinking Water Act (42 U.S.C. Section 300f, et
seq.); and (vi) Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.).
(c) "Hazardous Substance" means any matter that is designated or
regulated as a pollutant, contaminant or hazardous or toxic substance,
constituent or waste under any Environmental Law.
(d) "Seller's Actual Knowledge" means that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ has current actual knowledge of the accuracy of such statement, without
any duty of investigation or inquiry.
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3.15 Carriage of Signals and Channel Capacity. Seller has the legal
right and authority, including (without limitation) all necessary authority from
the FCC and the requisite compulsory copyright license under section 111 of
Title 17 of the United States Code, as amended, and all rules and regulations
promulgated thereunder, as amended (the "Copyright Act"), to carry and use in
the conduct of the Businesses all of the Signals. Other than requests for
network nonduplication and syndex protection, no written notices have been
received by Seller from the FCC or the United States Copyright Office
challenging or questioning the right of Seller or the Systems to carry or
furnish any of the Signals.
3.16 FCC and Copyright.
(a) Seller has Cumulative Leakage Index, as defined by the Rules and
Regulations ("CLI"), monitoring equipment which is required by the Rules and
Regulations, and has in connection with its CLI obligations under the Rules and
Regulations (i) maintained appropriate log books and other recordkeeping, and
(ii) filed all annual FCC Form 320s with the FCC.
(b) Seller has made all material submissions (including, without
limitation, registration statements) required under the Communications Act.
Seller has delivered to Buyer complete and correct copies of all reports and
filings made or filed pursuant to the Communications Act with respect to the
Systems, a completed and accurate Form 393, Form 1200 Series or other FCC rate
document for the Systems, and all notices alleging noncompliance with the
Communications Act or the Franchises. Seller has made all material filings
required to be made with the FCC, including cable television registration
statements, annual reports and aeronautical frequency usage notices. Seller has
all material FCC licenses necessary to operate the Systems and operate such
licensed facilities in conformance with the terms and conditions of such
licenses. The Systems are in compliance with all "must carry" requirements and
have received all retransmission consents.
(c) Seller has deposited with the United States Copyright Office all
statements of account and other documents and instruments, and paid all
royalties, supplemental royalties, fees and other sums to the United States
Copyright Office required under the Copyright Act with respect to the business
and operations of the Systems as are required to obtain, hold and maintain the
compulsory copyright license for cable television systems prescribed in section
111 of the Copyright Act.
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3.17 Revenue Summary.
(a) The revenue summary with respect to the Systems furnished by Seller
to Buyer as SCHEDULE 0, which shall include information for the year ended
December 31, 1996 (other than information described as estimated) is true,
complete and correct in all material respects for the respective dates and
periods thereof, subject to changes resulting from normal audit and year-end
adjustments.
(b) Except as disclosed on SCHEDULE 0, since June 30, 1997, there has
been no material adverse change in the condition, financial or otherwise,
results of operations, revenues, expenses, gross operating profits, assets or
liabilities (contingent or otherwise) of the Businesses.
3.18 Litigation. Except as set forth on SCHEDULE 0, (a) there is no
material claim, grievance, action, proceeding or governmental investigation
pending or, to Seller's knowledge, threatened against Seller or affecting any of
the Assets or the Systems; and (b) there is no material outstanding or
unsatisfied judgment, order or decree to which Seller is a party or which
involves the transactions contemplated herein.
3.19 Employees and Employee Benefits.
(a) Employment Agreements. SCHEDULE 0 sets forth a list of all employees
of the Systems as of June 30, 1997 and the position and base compensation paid
or payable to each such individual. Except as described on SCHEDULE 0, Seller is
not a party to any written employment contract, agreement, commitment or
arrangement with any individual identified on SCHEDULE 0.
(b) Collective Agreements. Except as described in SCHEDULE 0, (i) Seller
is not party to or subject to any labor union or collective bargaining agreement
with respect to any employee of the Systems, (ii) Seller is not party to any
labor or employment dispute as it relates to the Systems and their employees,
and (iii) to the knowledge of Seller, no labor union or bargaining agent holds
bargaining rights with respect to any employee of the Systems or has applied or
indicated an intention to apply to be certified as the bargaining agent of any
employee of the Systems.
(c) Employee Benefit Plans. SCHEDULE 0 lists each pension benefit,
welfare benefit, stock option, stock purchase, disability, vacation pay,
incentive bonus, severance pay, deferred compensation, supplemental income or
other employee benefit plan, policy or arrangement or agreement, including each
"employee benefit plan" within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained by or
contributed to by Seller covering current or former employees of the Systems or
their dependents or survivors (collectively referred to as "Employee Plans").
Seller has provided or, upon Buyer's request, will
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provide or make available to Buyer prior to the Closing Date complete, accurate
and current copies of the plan document(s) of each Employee Plan, summary plan
descriptions and other descriptive materials provided to employees and, in the
case of an Employee Plan intended to qualify under section 401(a) of the Code, a
copy of the most recent Internal Revenue Service determination letter of such
Employee Plan's qualified status.
(d) Employee Benefit Plan Compliance. No material liabilities, other
than for payment of benefits in the ordinary course, have been incurred with
respect to the Employee Plans.
Having made due inquiry, Seller:
(i) Knows of no circumstances relating to an Employee Plan
intended to qualify under section 401(a) of the Code that would likely
be treated by the Internal Revenue Service as a disqualifying defect;
(ii) Knows of no facts reasonably likely to result in any
material liability (whether or not asserted as of the date hereof) of
Seller arising by virtue of any event, act or omission occurring prior
to the Closing Date with respect to any Employee Plan; and
(iii) Knows of no liens under Code section 412(n) or ERISA
section 4069(a), nor liabilities under ERISA section 4069(a) or 4201(a),
in effect with respect to any Employee Plan that would have a material
adverse effect on the Assets, and know of no facts reasonably likely to
result in the assertion of any such liens or liabilities.
3.20 Commissions. Seller has not entered into an agreement, commitment
or obligation with regard to any brokerage commission or finder's fee which
would be payable by Buyer arising out of the execution, delivery or performance
of this Agreement or the transactions contemplated hereby. Seller has employed
▇▇▇▇▇▇▇ & Associates and will be responsible for its fees and expenses.
ARTICLE 4
Representations and Warranties of Buyer
As a material inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller the following for the benefit of Seller:
4.1 Organization and Qualification. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Washington and, prior to Closing, will be authorized to transact business in all
states
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in which the Assets are located. Buyer has all necessary partnership power and
authority to own, lease and utilize its properties and assets and to engage in
the business or businesses in which it is presently engaged and in the places
where such property and assets are now owned, leased or utilized or as such
business is now conducted.
4.2 Buyer Authority. Buyer has the right, power, legal capacity and
authority to execute, deliver and perform its obligations under this Agreement
and the documents, instruments and certificates to be executed and delivered by
Buyer pursuant to this Agreement. The execution, delivery and performance of
this Agreement by Buyer and the transactions contemplated hereby have been, and
all documents, instruments and certificates have been or as of the Closing will
be, duly authorized by all necessary partnership action on the part of Buyer.
4.3 Enforceability. The terms and provisions of this Agreement and all
documents, instruments and certificates made or delivered from time to time by
Buyer hereunder and thereunder constitute valid and legally binding obligations
of Buyer enforceable against Buyer in accordance with the terms hereof and
thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
4.4 Approvals. Except for compliance with the HSR Act, the execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby do not require any material
consent which consent has not been made, given or otherwise accomplished and
satisfactory evidence thereof has been delivered to Seller.
4.5 Compliance with Other Instruments.
(a) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereunder do not and will not result in a breach
or violation of any term or provision of Buyer's partnership agreement or under
any contract, agreement, Authority, Legal Rule, license, lease, indenture,
mortgage, loan agreement or note, as to which Buyer is a party, except for such
breaches or violations as would not materially impair the ability of Buyer to
perform its obligations under this Agreement.
(b) Buyer has complied with all provisions of and is not in breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under its partnership agreement or
any contract, lease, instrument affecting any parcel of real property, authority
or franchise, or obligation to which it is a party or by which it is bound or
affected, except for such breaches or defaults as would not materially impair
the ability
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of Buyer to operate the Businesses as presently operated.
4.6 Commissions. Buyer has entered into no agreement, commitment or
obligation with regard to any brokerage commission or finder's fee which would
be payable by Seller arising out of the execution, delivery or performance of
this Agreement or the transactions contemplated hereby.
ARTICLE 5
Covenants of Seller
5.1 Access to System. Prior to the Closing Date, Seller shall give
Buyer's employees and representatives, during normal business hours and with
reasonable prior notice, access to all of the properties, books, accounts,
records, contracts, agreements, commitments, arrangements and documents of or
relating to the Assets and the Systems, and shall permit the making of copies or
extracts thereof. Prior to the Closing Date, Seller shall furnish to Buyer and
its representatives such existing documentation concerning the operation and
financial condition of the Assets and the Systems as Buyer or any such
representative shall reasonably request.
5.2 Continuity and Maintenance of Operations. Except as to actions which
Buyer has been advised and to which it has consented in writing and except as
specifically permitted or required by this Agreement or required by any Legal
Rule, Seller shall from the date hereof to the Closing Date, operate the
Businesses in the ordinary course consistent with past practices, and use
reasonable efforts to preserve any beneficial business relationships with
customers, suppliers and others having business dealings with it that are
material to the Businesses and use reasonable efforts to keep available to Buyer
the services of present employees of the Systems.
5.3 Compliance with Contracts and Laws. From the date hereof to the
Closing Date, Seller shall keep in full force and effect and shall comply in all
material respects with all Franchises, Authorities and material Contracts to
which it is a party or by which it or the Assets may be bound or affected and
which are material to the Businesses.
5.4 Adverse Changes. From the date hereof to the Closing Date, Seller
shall promptly notify Buyer in writing of any material adverse developments
affecting the Systems which become known to Seller, including, without
limitation: (a) any material adverse change in the condition, financial or
otherwise, of the Systems; (b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting any of the Assets or the
Systems; or (c) any material notice of violation, forfeiture or complaint under
any Franchise.
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5.5 Line Extensions and Rebuilds. All line extensions made by Seller
from the date hereof until the Closing Date shall be built and spaced to operate
at a minimum of 450 MHz. On the Closing Date, Buyer shall reimburse Seller for
any and all rebuild expenditures incurred by Seller and approved by Buyer from
the date hereof until the Closing Date.
5.6 Taxes.
(a) Seller agrees to timely file all sales or transfer tax returns with
respect to sales, including the sale of Assets hereunder, occurring on or before
the Closing Date, in connection with the Systems, and Seller shall timely pay
all sales or transfer taxes applicable to the sales reported on such tax
returns, provided that Buyer cooperates, to the extent required, in the
preparation and execution of such tax returns and related filing.
(b) Seller and Buyer shall cooperate fully as and to the extent
reasonably requested by the other party in connection with any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Seller and Buyer agree (i) to retain all books and records with
respect to Tax matters pertinent to the Assets relating to all taxable periods
until the statute of limitations (including any extensions) as to any taxable
year that may be affected thereby shall have run, (ii) to abide by all record
retention agreements entered into with any Governmental Authority, and (iii) to
give the other party reasonable written notice prior to destroying or discarding
any such books and records and, if one party so requests, shall allow the
requesting party to take possession of such books and records proposed for
destruction or discard.
(c) No new elections with respect to Taxes or any changes in current
elections with respect to Taxes affecting the Assets shall be made after the
date of this Agreement without the prior written consent of Buyer.
ARTICLE 6
Other Covenants
6.1 Confidentiality.
(a) Neither of the parties hereto shall make any public announcement
regarding the transactions contemplated in this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed;
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provided, however, that either of the parties may at any time make announcements
which are required by applicable law so long as the party so required to make an
announcement promptly upon learning of such requirement notifies the other party
of such requirement and discusses with the other party in good faith the exact
wording of any such announcement.
(b) Each party shall keep strictly confidential any and all information
furnished to it or to its Affiliates, agents or representatives in the course of
negotiations relating to this Agreement or any transaction contemplated by this
Agreement, and the business and financial reviews and investigation conducted by
such party in connection with this Agreement. Each party has instructed its
officers, employees and other representatives having access to such information
of such party's obligation of confidentiality. If this Agreement is terminated,
each party shall promptly deliver to the other party or certify as to the
destruction of all originals and copies (including all notes, extracts and
computer disks) of documents, work papers and other written material concerning
or obtained from such other party or its agents, employees or representatives in
connection with such negotiations and business and financial reviews and
investigations, whether so obtained before or after the execution hereof.
Neither party shall use any information so obtained except in connection with
the transactions contemplated by this Agreement or disclose or divulge such
information to any other person, and each party will keep confidential any
information so obtained.
(c) Notwithstanding the foregoing, either party may disclose any
information which such party is obligated under this Section to keep
confidential after consultation with the other party as follows:
(i) to which the other party consents in
writing;
(ii) to representatives, agents, consultants and attorneys of the
disclosing party who need to know such confidential information for the
purpose of assisting or advising such party, provided that the
disclosing party informs each such representative, agent, consultant and
attorney of the confidential nature of such information and requires
them to be bound by the provisions of this Section 6.1 prior to
disclosure;
(iii) to third parties whose consent or approval is required for
consummating the transactions contemplated herein;
(iv) in compliance with applicable Legal Rules; or
(v) in order to use such information as
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evidence in or in connection with any pending or threatened litigation
related to this Agreement or any transaction contemplated hereunder;
but in each case only to the extent such disclosure is necessary in connection
with the purpose for which disclosure is permitted. The obligations of
confidentiality set forth herein shall not apply to information generally
available to the public or in the possession of the receiving party on a
non-confidential basis.
6.2 HSR Notification. As soon as practicable, if required by applicable
Legal Rules, Seller and Buyer shall complete and file, or cause to be completed
and filed, any notification and report required to be filed under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the parties will take or cause to be taken any additional action
that may be necessary, proper or advisable, will cooperate to prevent
inconsistencies between their respective filings and will furnish to each other
such necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of necessary filings or submissions
under the HSR Act. Buyer and Seller shall use commercially reasonable efforts
(including the filing of a request for early termination) to obtain the early
termination of the waiting period under the HSR Act. Buyer and Seller shall
share equally all HSR filing fees and any other fees to a governmental authority
in connection with the transfer of the Assets.
6.3 Required Consents and Estoppel Certificates. Seller will use
reasonable commercial efforts to obtain, as soon as possible, all the Required
Consents, in form and substance satisfactory to Buyer. Required Consents will be
deemed to be satisfactory to Buyer if they are similar in all material respects
to the applicable form attached as EXHIBIT B, C OR D. Seller will provide copies
of all correspondence to or from, any parties in connection with the Required
Consents. Buyer will cooperate with Seller to obtain all Required Consents.
Buyer and Seller shall bear equally any costs or fees in connection with
obtaining the Required Consents.
6.4 Franchise Transfer Expenses.
Buyer and Seller shall share equally all administrative fees and
expenses, if any, required by any Governmental Authority in connection with the
transfer to Buyer of all Franchises.
6.5 Employee Matters.
(a) Employment. SCHEDULE 0 sets forth a list of all employees of the
Systems as of June 30, 1997, showing then- current positions and rates of
compensation. At least forty-five (45) days prior to the Closing, Buyer shall
notify Seller
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of the employees ("Prospective Employees") it intends to hire and shall offer
employment as of the Closing Date to all Prospective Employees for a position
with at least comparable responsibility. Prospective Employees who accept
Buyer's offer of employment and become employees of Buyer within six (6) months
of the Closing Date are referred to herein as "New Employees" and all other
employees of the Systems are referred to as "Nontransferring Employees." Subject
to the provisions of this Section as to any particular benefit, Buyer shall
provide New Employees with compensation and employee benefits that are
substantially similar to those provided to similarly situated Buyer employees.
Buyer shall indemnify and hold Seller and its Affiliates harmless from and
against all claims, expenses (including reasonable attorneys' fees), loss and
liability arising either (i) out of Seller's submission of personnel records or
information to Buyer about the employees of the Systems, or (ii) with respect to
the New Employees' employment with Buyer after the Closing. Except as otherwise
specifically provided in this Agreement, Seller and its Affiliates shall
indemnify and hold Buyer and its Affiliates harmless from and against all
claims, expenses (including reasonable attorneys' fees), loss and liability
arising out of the New Employees' and Nontransferring Employees' employment with
Seller or its Affiliates prior to the Closing.
(b) Service Credit for New Employees. Subject to the provisions of this
Section as to any particular benefit, Buyer shall recognize all prior service of
New Employees with Seller and any Affiliate that is aggregated with Seller under
section 414(b), 414(c) or 414(m) of the Code ("ERISA Affiliate") for tenure
purposes, and for all benefit plan purposes, other than benefit accrual under a
defined benefit plan, at least to the extent recognized under the comparable
Seller employee benefit plan as in effect on the Closing Date, but without
regard to any amendment increasing such service adopted or made effective less
than twelve (12) months prior to the Closing Date. On or before the Closing
Date, Seller shall provide Buyer with a list setting forth the service accrued
by each Prospective Employee. Seller agrees that Buyer shall be under no
obligation to and shall not assume sponsorship of any Employee Plan.
(c) Qualified Defined Contribution Plan. Seller is currently a
participating company in the InterMedia Partners Tax-Deferred Savings Plan
("Seller's DC Plan"). New Employees shall not accrue any further benefits under
Seller's DC Plan as of any date after the Closing (unless employed by Seller or
its ERISA Affiliates).
Buyer is a participating company in the Northland Telecommunications
Corporation 401(k) Plan ("Buyer's DC Plan"). The account balances of New
Employees in Seller's DC Plan shall be transferred to Buyer's DC Plan as soon as
reasonably practicable following the Closing in accordance with this Subsection.
Buyer represents and warrants that Buyer's DC Plan and related trust meet the
requirements for qualification
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under section 401 and related sections of the Code and shall continue to meet
such requirements as of the date of the transfer described in this Subsection 0.
Prior to such transfer, but in no event later than two (2) months after the
Closing Date, Buyer shall provide to Seller satisfactory evidence that Buyer's
DC Plan complies with such requirements, including copies of Buyer's DC Plan and
the most recent determination letter issued by the Internal Revenue Service (and
any subsequent determination letter application filed with the Internal Revenue
Service).
As soon as reasonably practicable after the Closing and provision of
satisfactory evidence pursuant to this Subsection , the trustee of Seller's DC
Plan shall transfer to the trustee of Buyer's DC Plan cash and/or assets,
including plan loan obligations, equal to the value of the account balances of
each New Employee under Seller's DC Plan as of the last valuation date
immediately preceding the transfer date, which amount shall be credited to the
respective account or accounts under Buyer's DC Plan. The foregoing
notwithstanding, the amount to be so transferred with respect to any New
Employee shall be reduced by any withdrawals and other distributions made from
Seller's DC Plan to the New Employee between such valuation date and such
transfer date.
Buyer agrees that once the transfers made herein have been made, the
sole and exclusive responsibility for providing the benefits accrued by the New
Employees under Seller's DC Plan as of the transfer date and transferred to
Buyer's DC Plan shall be that of Buyer's DC Plan and Buyer.
(d) Welfare Plans. Each New Employee shall be eligible for coverage as
of the later of the Closing Date or the date on which he or she becomes a New
Employee (the "Employment Transfer Date") under any medical, dental, vision,
prescription drug, life insurance and other welfare benefit plans (within the
meaning of section 3(1) of ERISA) maintained by Buyer for its employees
("Buyer's Welfare Plans"). Buyer agrees to (i) waive any waiting periods and
preexisting condition limitations in Buyer's Welfare Plans, except to the extent
coverage would have been denied or restricted on a similar basis under the
welfare benefit plans of Seller for employees of the Systems ("Seller's Welfare
Plans") and (ii) coordinate deductibles, maximum benefit restrictions and
"out-of-pocket" maximums so that (A) New Employees receive credit toward any
deductibles under Buyer's Welfare Plans for deductibles paid under Seller's
Welfare Plans during the coverage year of Buyer's Welfare Plans in which the
Employment Transfer Date occurs and (B) New Employees receive credit for
eligible claims incurred under Seller's Welfare Plans during the coverage year
of Buyer's Welfare Plans in which the Employment Transfer Date occurs toward any
"out-of-pocket" maximums under Buyer's Welfare Plans. As soon as reasonably
practicable after the Closing Date, Seller shall prepare and deliver to Buyer
SCHEDULE 0, setting forth the information needed for Buyer to
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comply with the preceding sentence. Seller will pay or cause to be paid all
eligible unpaid claims incurred by New Employees prior to the Employment
Transfer Date and which are timely submitted for reimbursement in accordance
with Seller's Welfare Plans. Seller will be responsible for providing
continuation health care ("COBRA") coverage as required by section 4980B of the
Code and sections 601-608 of ERISA to or with respect to any of Seller's
employees who incurs a "qualifying event" prior to the Employment Transfer Date,
including a qualifying event that occurs as a result of the transaction
contemplated by this Agreement. Buyer will be responsible for providing COBRA
coverage to or with respect to any New Employee who incurs a "qualifying event"
after the Employment Transfer Date.
(e) Vacation. As of the Closing Date, Buyer shall assume Seller's
liability for each New Employee's vacation pay for up to and including four
weeks of vacation accrued under Seller's vacation policy but not taken before
the Closing Date. The aggregate dollar value of the liabilities so assumed by
Buyer shall be an "Other Current Liability."
(f) Sick Leave. As of the Closing Date, Buyer shall assume Seller's
liability for each New Employee's sick (short-term disability) days for up to
and including ten (10) days of sick leave accrued under Seller's sick leave
policy but not taken before the Closing Date. The aggregate dollar value of the
liabilities so assumed by Buyer shall be an "Other Current Liability."
(g) General. Seller and Buyer shall give any notices required by law and
take whatever other actions with respect to the plans described in this Section
as may be necessary to carry out the arrangements described in this Section 0.
Seller and Buyer shall provide each other with such plan documents and
descriptions, employee data and other information as may reasonably be required
to carry out the arrangements described in this Section. If any of the
arrangements in this Section is determined by the Internal Revenue Service or
other applicable governmental authority, or by a court of competent
jurisdiction, to be prohibited by law, Seller and Buyer shall modify such
arrangement to as closely as possible retain the intent of the parties, as
reflected herein, in a manner that is not so prohibited.
(h) No Third Party Beneficiaries. Except as set forth in Section 10.2,
nothing in this Section or elsewhere in this Agreement shall be deemed to make
any employee of Seller a third party beneficiary of this Agreement.
ARTICLE 7
Conditions Precedent to Obligations of Buyer
7.1 Conditions Precedent. The obligations of Buyer to
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consummate the transactions contemplated on the Closing Date are subject to the
satisfaction, on or before the Closing Date, of all the following conditions:
(a) If required under applicable Legal Rules, all filings required under
the HSR Act shall have been made and the applicable waiting period shall have
expired or been earlier terminated without the receipt of any objection or the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the transactions
contemplated by this Agreement.
(b) Seller shall have performed and complied in all material respects
with all covenants, conditions and obligations required by this Agreement to be
performed or complied with by Seller on or before the Closing Date.
(c) All representations and warranties of Seller, including, without
limitation, those made to the knowledge of Seller, contained in this Agreement,
shall be true, correct and complete in all material respects on and as though
made on the Closing Date.
(d) Each of the Franchises transferred pursuant to this Agreement and
listed on SCHEDULE 0 hereof shall have a term expiring no earlier than one (1)
year after the Closing Date.
(e) Seller shall have obtained and delivered to Buyer all Required
Consents.
(f) As of the Closing Date, no action or proceeding shall be completed,
pending or threatened against Buyer or Seller that has or may result in a
judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement or have a material adverse effect on
the Systems and there shall be in effect no order restraining or prohibiting the
consummation of the transactions contemplated by this Agreement nor any
proceedings pending with respect thereto.
(g) Seller shall have tendered to Buyer all documents which Seller is
required by Section 0 to deliver to Buyer.
7.2 Waiver. Buyer may waive any or all of the conditions set forth in
Section 0 hereof in whole or in part; however, no such waiver of a condition
shall constitute a waiver by Buyer of any of its other rights or remedies under
this Agreement or otherwise at law or in equity if Seller should be in default
of any of the covenants, agreements, representations or warranties of Seller
under this Agreement.
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ARTICLE 8
Conditions Precedent to Obligations of Seller
8.1 Conditions Precedent. The obligations of Seller to consummate the
transactions contemplated on the Closing Date are subject to the satisfaction,
on or before the Closing Date, of all the following conditions:
(a) If required under applicable Legal Rules, all filings required under
the HSR Act shall have been made and the applicable waiting period shall have
expired or been earlier terminated without the receipt of any objection or the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the transactions
contemplated by this Agreement.
(b) Buyer shall have performed and complied in all material respects
with all covenants, conditions and obligations required by this Agreement to be
performed or complied with by Buyer on or before the Closing Date.
(c) All representations and warranties made by Buyer, including, without
limitation, those made to the knowledge of Buyer, contained in this Agreement
shall be true, correct and complete in all material respects at and as of the
Closing Date as though made on such date.
(d) Seller shall have obtained all Required Consents, provided that this
condition shall be deemed to be satisfied as to Seller with respect to any
Required Consent if Buyer at or prior to Closing waives the requirement that
such consent be obtained prior to Closing.
(e) As of the Closing Date, no action or proceeding shall be completed,
pending or threatened against Seller or Buyer that has or is likely to result in
a judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement and there shall be in effect no order
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement nor any proceedings pending with respect thereto.
(f) Buyer shall have tendered to Seller the Purchase Price and all
documents which Buyer is required by Section 0(b) to deliver to Seller.
8.2 Waiver. Seller may waive any or all of such conditions set forth in
Section 8.1 hereof in whole or in part; however, no such waiver of a condition
shall constitute a waiver by Seller of any of its other rights or remedies under
this Agreement or otherwise at law or in equity if Buyer should be in default of
any of the covenants, agreements, representations or warranties made by Buyer
under this Agreement.
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ARTICLE 9
Closing
9.1 Closing. The Closing shall take place on the Closing Date at the
place set forth in Section 0. At the Closing, each of the parties shall take all
action and deliver all documents, instruments, certificates, agreements and
other items as required under this Agreement in order to perform, fulfill and
observe all covenants, conditions and agreements on its part to be performed,
fulfilled and observed at or prior to the Closing Date (and not theretofore
accomplished) and cause all conditions precedent to the other party's
obligations hereunder to be satisfied in full.
9.2 Closing Documents.
(a) At the Closing, Seller shall deliver to Buyer all of the following:
(i) a certificate of Seller that all appropriate action
authorizing the execution, performance and delivery of this Agreement
has been taken;
(ii) a copy of each instrument pursuant to which a Governmental
Authority or other person consents to the transfer of the Franchise
which it issued, substantially in the form of EXHIBIT B;
(iii) wire transfer instructions for the Purchase Price and a
receipt, substantially in the form of EXHIBIT E, for the Purchase Price;
(iv) a ▇▇▇▇ of sale, substantially in the form of EXHIBIT F;
(v) for each parcel of Real Property a deed in the form
customarily used in the jurisdiction where the real property is located;
(vi) Certification of Nonforeign Status for Seller pursuant to
section 1.1445-2(b)(2) of the United States Treasury Income Tax
Regulations, substantially in the form of EXHIBIT G;
(vii) for each lease of real property listed on SCHEDULE 3.13 for
which a consent is required, an assignment, assumption and consent, if
required, substantially in the form of EXHIBIT C, duly executed by
Seller and the third party, if any, whose consent is required for the
assignment of such lease;
(viii) for each Contract the assignment of
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which requires a Required Consent, an assignment, assumption and consent
substantially in the form of EXHIBIT D, duly executed by Seller and the
third party to such Contract;
(ix) documents of title for any motor vehicles included within
the Assets;
(x) a certificate of Seller, substantially in
the form of EXHIBIT H;
(xi) a written opinion dated the Closing Date, from Pillsbury
Madison & Sutro LLP, counsel to Seller, in the form annexed hereto as
EXHIBIT I;
(xii) all data, books and records which relate primarily to the
Systems and the Assets;
(xiii) a Certificate of Good Standing for Seller certified to by
the Secretary of State of the State of Nevada and a Certificate of
Qualification certified to by the Secretary of State of the State of
Georgia;
(xiv) such other documents and certificates as Buyer may
reasonably request.
(b) At the Closing, Buyer shall deliver to Seller the following
documents:
(i) a Certificate of Good Standing of Buyer certified to by the
Secretary of State of the State of Washington and a Certificate of
Qualification of Buyer certified to by the Secretary of State of the
State of Georgia;
(ii) a Certificate of Buyer that all appropriate action authorizing
the execution, performance and delivery of this Agreement has been
taken;
(iii) an assumption agreement, substantially in the form of EXHIBIT J
and an executed counterpart of each assignment, assumption and consent
delivered by Seller pursuant to and in accordance with Section
hereof;
(iv) a written opinion dated the Closing Date, from Buyer's counsel,
in the form annexed hereto as EXHIBIT K;
(v) a certificate of Buyer, substantially in the form of EXHIBIT
L;
(vi) a wire transfer of the Purchase Price pursuant to
instructions received from Seller; and
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(vii) such other documents and certificates as Seller may reasonably
request.
ARTICLE 10
Indemnification
10.1 Indemnification by Seller.
(a) Seller agrees severally, and for its own account only, to indemnify
Buyer and hold it harmless on an after-Tax basis, from any and all losses,
liabilities, claims, suits, proceedings, demands, judgments, damages, expenses
and costs, including, without limitation, counsel fees and disbursements, expert
fees and costs and expenses incurred in the investigation, defense or settlement
of any claims covered by this indemnity (in this Section 0, collectively, the
"Indemnifiable Damages") which Buyer may suffer or incur by reason of (i) the
inaccuracy of any representation or warranty of Seller contained in this
Agreement; (ii) the breach by Seller of any covenant made by it in any of the
Transaction Documents; (iii) the ownership, operation or transfer of the Assets
or the Systems on or prior to the Closing Date and any liabilities relating to
the Systems not assumed by Buyer, provided that in no case shall this Subsection
0 apply to or include Indemnifiable Damages caused by, relating to or arising
under Environmental laws, including contamination of the Real Property, which
are intended to be covered by Subsection 0. The foregoing obligation of Seller
shall be subject to and limited by each of the qualifications set forth in this
Article 0.
(b) Except as set forth in subparagraphs (i) and (ii) below or with
respect to bona fide and valid claims for which notice has been given within
twelve (12) months of the Closing Date, each representation, warranty and
covenant made by Seller in this Agreement or pursuant hereto shall survive until
the date which is twelve (12) months following the Closing Date, and thereafter
all such representations, warranties and covenants shall be extinguished:
(i) the representations, warranties and covenants made by Seller
in Section 0 (Taxes) shall survive until the end of any statutory
limitation period with respect thereto; and
(ii) the representations, warranties and covenants made by Seller in
the first sentence of Section 0 (title) shall survive indefinitely.
(c) The indemnity obligations of Seller hereunder shall not apply (i) to
the extent that Buyer is compensated for the same loss under Buyer's insurance
policies in the absence of
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any indemnity hereunder if the insurers under such policy waive their rights of
subrogation with respect thereto; (ii) if the damages to Buyer do not exceed
$250,000; and (iii) if such damages exceed $250,000, the indemnity obligations
hereunder shall only apply to that portion of the damages that exceed such
$250,000 threshold and thereafter losses shall be paid up to a maximum of
$1,000,000.
(d) Fifty five thousand dollars ($55,000) of the Purchase Price shall be
held in escrow pursuant to a mutually acceptable form of escrow agreement, a
form of which is attached hereto as EXHIBIT M (the "Post-Closing Escrow
Agreement") for a period of six (6) months after the Closing as security for the
indemnity obligations of Seller hereunder.
10.2 Indemnification by Buyer.
(a) Buyer agrees to indemnify Seller and its Affiliates, directors,
partners, agents and employees against and hold each of them harmless on an
after-Tax basis, from any and all Indemnifiable Damages which any such
indemnified party may suffer or incur by reason of or in connection with (i) the
inaccuracy of any representation or warranty of Buyer contained in this
Agreement or any document, certificate or agreement delivered pursuant hereto;
(ii) the breach by Buyer of any covenant made by it in any of the Transaction
Documents; (iii) the ownership and operation of the Assets after the Closing
Date; and (iv) any obligation or liability assumed by Buyer hereunder or under
any document, certificate or agreement delivered pursuant hereto. The foregoing
obligation of Buyer shall be subject to and limited by each of the
qualifications set forth below.
(b) Except as set forth in the next succeeding sentence, or with respect
to bona fide and valid claims for which notice has been given prior to the date
twelve (12) months from the Closing Date, each representation, warranty and
covenant made by Buyer in this Agreement or pursuant hereto and the indemnity
obligations set forth in this Section shall survive until the date twelve (12)
months from the Closing Date, and thereafter all such representations,
warranties, covenants and indemnity obligations and any liability thereunder
shall be extinguished. The right of Seller to assert claims for Indemnifiable
Damages arising out of the ownership or operation of the Assets or the Systems
after the Closing Date and any obligation or liability assumed by Buyer
hereunder or pursuant hereto shall survive indefinitely.
(c) The indemnity obligations of Buyer hereunder shall not apply (i) to
the extent that Seller or any Affiliates are compensated for the same loss under
Seller's or any Affiliate's insurance policies in the absence of any indemnity
hereunder if the insurers under such policy waive their rights of subrogation
with respect thereto; (ii) if the damages to Seller or any Affiliates do not
exceed $250,000; and (iii) if such
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damages exceed $250,000, the indemnity obligations hereunder shall only apply to
that portion of the damages that exceed such $250,000 threshold and thereafter
losses shall be paid up to a maximum of $1,000,000.
10.3 Notice and Right To Defend Third-Party Claims.
(a) Upon receipt of written notice of any claim, demand or assessment or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought on account of an indemnity agreement contained in this Article,
the party seeking indemnification (the "Indemnitee") shall promptly, but in no
event later than twenty (20) days prior to the date a response or answer thereto
is due (unless a response or answer is due within fewer than twenty (20) days
from the date of Indemnitee's receipt of notice thereof), inform the party
against whom indemnification is sought (the "Indemnitor") in writing thereof.
The failure, refusal or neglect of such Indemnitee to notify the Indemnitor
within the time period specified above of any such claim or action shall relieve
such Indemnitor from any liability which it may have to such Indemnitee in
connection therewith, if the effect of such failure, refusal or neglect is to
prejudice materially the rights of the Indemnitor in defending against the claim
or action.
(b) In case any claim, demand or assessment shall be asserted or suit,
action or proceeding commenced against an Indemnitee, and such Indemnitee shall
have timely and properly notified the Indemnitor of the commencement thereof,
the Indemnitor shall assume the defense, conduct or settlement thereof, with
counsel selected by the Indemnitor. After assumption of the defense, conduct or
settlement thereof, the Indemnitor will not be liable to the Indemnitee for
expenses incurred by Indemnitee in connection with the defense, conduct or
settlement thereof, except for such expenses as may be reasonably required to
enable the Indemnitor to take over such defense, conduct or settlement.
(c) The Indemnitee will at its own expense cooperate with the Indemnitor
in connection with any such claim, make personnel, witnesses, books and records
relevant to the claim available to the Indemnitor at no cost, and grant such
authorizations or powers of attorney to the agents, representatives and counsel
of the Indemnitor as the Indemnitor may reasonably request in connection with
the defense or settlement of any such claim.
(d) Notwithstanding the foregoing in this Section 0, the Indemnitee
shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be its fees and expenses unless (i) the Indemnitor has
agreed to pay such fees and expenses, (ii) the Indemnitor has failed to assume
the defense of such action, claim or
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proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both the Indemnitor and the Indemnitee
and the Indemnitee has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnitor (in which case, if the Indemnitee informs the
Indemnitor in writing that it elects to employ separate counsel at the expense
of the Indemnitor, the Indem- nitor shall not have the right to assume the
defense of such action, claim or proceeding on behalf of the Indemnitee, it
being understood, however, that the Indemnitor shall not, in connection with any
one such action, claim or proceeding or separate but substantially similar or
related actions, claims or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for the
Indemnitee, which firm shall be designated in writing by the Indemnitee).
10.4 Notice and Right to Remediate. Anything in this Agreement to the
contrary notwithstanding, Seller shall have no obligation to indemnify Buyer
with respect to Indemnifiable Damages arising under Environmental Laws,
including damages due to any necessary investigation, remediation or cleanup of
Hazardous Substances at the Real Property, unless Buyer first gives Seller an
option to conduct any necessary response or perform any required work and Seller
refuses to do so. Such an option should be given with the written notice
required by Section 0, but in any case, shall be given prior to any Buyer
expenditure of what it considers to be Indemnifiable Damages. Seller shall
respond to the option in writing within thirty (30) Business Days. If Seller
exercises its option, Seller shall perform all work in a safe and workmanlike
manner in compliance with all applicable Environmental Laws to the satisfaction
of the appropriate Governmental Authority. In addition, Seller will afford Buyer
a reasonable opportunity to comment (at Buyer's sole expense) in advance of
Seller's proposed responses or submissions to Governmental Authorities or third
parties relating to activities on the Property, including reports and workplans,
provided that such comment period does not delay or interfere with Seller's
obligations to any third party. Seller shall consider Buyer's comments in good
faith, but are under no obligation to accept or incorporate Buyer's comments.
Buyer, its representatives and agents will not make comments or submissions to
any Governmental Authority or third parties with respect to environmental
conditions as to which Seller has exercised its option. Any conflicts between
Section and this Section 0 shall be resolved in favor of this Section 0.
10.5 Mitigation. Nothing herein contained shall affect a party's legal
duty to mitigate damages.
10.6 Exclusive Remedy. This Article shall be the sole and exclusive
basis of any remedy that each party may have
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against the other party for an inaccuracy or breach of a representation,
warranty or covenant under this Agreement or any agreement contemplated hereby,
and each party hereby waives any claim (other than under this Article 0) it may
have against the other party with respect to the inaccuracy or breach of any
such representation, warranty or covenant.
ARTICLE 11
Termination
11.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of Buyer and Seller;
(b) by either Buyer or Seller, upon written notice to the other, if the
conditions to its obligations set forth in Sections 0 and 0, respectively, shall
not have been satisfied or waived on or before December 31, 1997 for any reason
other than a breach or default by such party of its respective covenants,
agreements, or other obligations hereunder, or any of its representations or
warranties herein not being true and accurate when made or when otherwise
required by this Agreement to be true and accurate;
(c) By Seller, in the event that the Closing does not occur by reason of
breach or default by Buyer under this Agreement and provided that Seller has not
breached or defaulted hereunder and has performed or stands ready, willing, and
able to perform, its obligations under this Agreement in all material respects;
(d) By Buyer, in the event that the Closing does not occur by reason of
a breach or default by Seller under this Agreement and provided that Buyer has
not breached or defaulted hereunder and has performed or stands ready, willing,
and able to perform, its obligations under this Agreement in all material
respects; or
(e) By Seller in the event that the Closing does not occur because the
Purchase Price, as adjusted, is less than the threshold set forth in Section
2.3(a).
11.2 Manner of Exercise. In the event of the termination of this
Agreement by either Buyer or Seller pursuant to this Article 0, notice thereof
shall forthwith be given to the other party and this Agreement shall terminate
and the transactions contemplated hereunder shall be abandoned without further
action by Buyer or Seller.
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11.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to this Article 0 and prior to the Closing, all obligations
of the parties hereunder shall terminate, except for the respective obligations
of the parties under Sections 0 (Confidentiality) and 0 (Expenses); provided,
however, that no termination of this Agreement shall (a) relieve a defaulting or
breaching party from any liability to the other party or parties hereto for or
in respect of such default or (b) result in the rescission of any transaction
theretofore consummated hereunder. If this Agreement is terminated by Seller in
accordance with Section 11.1(c) or by Buyer other than in accordance with
Section 11.1, Seller shall be entitled to retain the Deposit.
ARTICLE 12
General
12.1 Covenant Not To ▇▇▇ and Nonrecourse to Partners.
(a) Buyer agrees that notwithstanding any other provision in this
Agreement, any agreement, instrument, certificate or document entered into
pursuant to or in connection with this Agreement or the transactions
contemplated herein or therein (each a "Transaction Document") and any rule of
law or equity to the contrary, to the fullest extent permitted by law, Seller's
obligations and liabilities under all Transaction Documents and in connection
with the transactions contemplated therein shall be nonrecourse to all direct
and indirect general and limited partners of Seller.
(b) "Nonrecourse" means that the obligations and liabilities are limited
in recourse solely to the assets of Seller (for those purposes, any capital
contribution obligations of the general and limited partners of Seller or any
negative capital account balances of such partners shall not be deemed to be
assets of Seller) and are not guaranteed directly or indirectly by, or the
primary obligations of, any general or limited partner of Seller, and neither
Seller nor any general or limited partner or any officer, director, partner,
employee or agent of Seller or any general or limited partner of any successor
partnership, either directly or indirectly, shall be personally liable in any
respect (except to the extent of their respective interests in the assets of
Seller) for any obligation or liability of Seller under any Transaction Document
or any transaction contemplated therein.
(c) "Direct" partners include all general and limited partners of
Seller, and "indirect" partners include all general and limited partners and
members of each direct partner and all general and limited partners and members
of each such indirect partner and all such further indirect partners and members
thereof and each such indirect partner.
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(d) Buyer hereby covenants for itself, its successors and assigns that
it, its successors and assigns will not make, bring, claim, commence, prosecute,
maintain, cause or permit any action to be brought, commenced, prosecuted,
maintained, either at law or equity, in any court of the United States or any
state thereof against any direct or indirect member or general or limited
partner of Seller or any officer, director, partner, employee or agent of Seller
or any direct or indirect member or general or limited partner of Seller for (i)
the payment of any amount or the performance of any obligation under any
Transaction Document or (ii) the satisfaction of any liability arising in
connection with any such payment or obligation or otherwise, including without
limitation, liability arising in law for tort (including, without limitation,
for active and passive negligence, negligent misrepresentation and fraud),
equity (including, without limitation, for indemnification and contribution) and
contract (including, without limitation, monetary damages for the breach of
representation or warranty or performance of any of the covenants or obligations
contained in any Transaction Document or with the transactions contemplated
herein or therein).
12.2 Assignment. Neither Buyer nor Seller may assign its rights and
obligations under, or grant a security interest in, this Agreement to any person
or entity other than an Affiliate of such party without the consent of the other
parties hereto.
12.3 Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties hereto,
whether herein so expressed or not. Except as provided in Sections 0, 0 and 0,
no person other than Buyer and Seller and their respective Affiliates may rely
upon any provision of this Agreement or any agreement, instrument, certificate
or document executed pursuant to this Agreement.
12.4 Time of Essence. Time is of the essence in each and every provision
in this Agreement.
12.5 Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement or affecting the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
12.6 Amendment. Except as otherwise provided herein, Buyer and Seller
may amend, modify or supplement this Agreement at any time, but only in writing
duly executed by all parties hereto.
12.7 Terms. Defined terms used herein are equally applicable to the
singular and plural forms as appropriate.
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Unless otherwise expressly stated herein, references to Articles and Sections
are to articles and sections of this Agreement and references to parties,
Exhibits and Schedules are to the parties, and the exhibits and schedules
attached, to this Agreement.
12.8 Headings. The headings preceding the text of Sections of this
Agreement are for convenience only and shall not be deemed a part hereof.
12.9 Entire Understanding; Schedules. The terms set forth in this
Agreement including its Schedules and Exhibits are intended by the parties as a
final, complete and exclusive expression of the terms of their agreement and may
not be contradicted, explained or supplemented by evidence of any prior
agreement, any contemporaneous oral agreement or any consistent additional
terms. The Schedules and Exhibits attached to this Agreement are made a part of
this Agreement. All documents or information disclosed in the Schedules are
intended to be disclosed for all purposes under this Agreement and will also be
deemed to be incorporated by reference in each Schedule to which they may be
relevant without further disclosure.
12.10 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.11 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California.
12.12 Notices. Any notice or demand desired or required to be given
hereunder shall be in writing and deemed given when personally delivered, sent
by telecopier, overnight courier or deposited in the mail, postage prepaid, sent
certified or registered, return receipt requested, and addressed as set forth
below or to such other address as either party shall have previously designated
by such a notice. Any notice so delivered personally or by telecopy shall be
deemed to be received on the date of delivery or transmission by telecopier; any
notice so sent by overnight courier shall be deemed to be received one (1)
Business Day after the date sent; and any notice so mailed shall be deemed to be
received on the date stamped on the receipt (rejection or other refusal to
accept or inability to deliver because of a change of address of which no notice
was given shall be deemed to be receipt of the notice).
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If to Seller:
▇▇▇▇▇ Media Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Pillsbury Madison & Sutro LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Northland Cable Properties Seven Limited Partnership
c/o Northland Telecommunications Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ & Cleveland
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
12.13 Further Acts. If, at any time before, on or after the Closing
Date, any further action by either party is necessary to carry out the purposes
of this Agreement, such party shall take all such necessary action or use such
party's reasonable best efforts to cause such action to be taken.
12.14 Expenses. Except as set forth in Sections 6.2, 6.3 and 6.4, Seller
and Buyer shall each bear its own costs and expenses incurred in connection with
the negotiation, preparation or execution of this Agreement (including, but not
limited to, fees and expenses of attorneys, accountants, brokers, consultants,
finders and investment bankers), whether or not the Closing occurs. In the event
that one of the parties hereto breaches this Agreement, however, and fails to
consummate the transaction contemplated hereby, such breaching party shall be
responsible for all costs and expenses incurred by the non-breaching party in
connection herewith.
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12.15 Attorneys' Fees. If any action or proceeding is commenced between
the parties with respect to the Transaction Documents, the prevailing party
shall be entitled to all fees and expenses incurred by it in connection with
such action or proceeding, including reasonable attorneys' fees.
12.16 Judicial Proceedings. Each party consents to the jurisdiction over
it of the courts of the State of California in the City and County of San
Francisco, and of the United States Courts in the Northern District of
California and agrees that personal service of all process may be made by
registered or certified mail pursuant to the provisions of Section 0.
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
SELLER:
▇▇▇▇▇ MEDIA GROUP, INC.
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
BUYER:
NORTHLAND CABLE PROPERTIES SEVEN
LIMITED PARTNERSHIP
By: ____________________________________
Northland Communications
Corporation
Its Managing General Partner
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DO NOT DELETE THESE PAGES
References used in this doc - please update as needed
o required consents
o assumed contracts
o excluded assets
o purchase and sale of assets
o purchase price & payment
o purchase price
o consideration for assets
o adjustment time
o preliminary & final settlements
o preliminary adjustments report
o final adjustments report
o disputed liabilities
o closing
ERROR! REFERENCE SOURCE NOT FOUND. closing date
o completion of purchase and sale
o title & encumbrances
ERROR! REFERENCE SOURCE NOT FOUND. franchises
o contracts
o real property
o environmental laws
o environmental law
o hazardous substance
o copyright act
o cli
o financial statements
o profit (a)
o material changes
o sellers taxes
o employees
o employment agreements
o collective agreements
o employee benefit plans
o employee plans
o erisa
o sellers taxes
o confidentiality
o hsr act
o employee matters
o nontransferring employees
o new employees
ERROR! REFERENCE SOURCE NOT FOUND. prospective employees
o erisa affiliates
o qualified defined contribution
o buyer's dc plan
o sellers' dc plan
o welfare plans
o sellers' welfare plans
o buyer's welfare plans
o cobra
o employment transfer date
-41- ASSET PURCHASE AND
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o buyers conditions precedent
Article 0 article 9
o closing docs-seller delivers
o closing documents
Article 0 article 10
o indemnification by seller
o indemnifiable damages
o indemnification by buyer
o notice and right
o notice and right (a)
o indemnitee
o indemnitor
o mitigation
Article 0 article 11
o covenant not to ▇▇▇ & nonrecourse
o transaction document
o nonrecourse
o notices
o expenses
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