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EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
UNIVERSAL CABLE HOLDINGS, INC.
AND
STAR CABLE ASSOCIATES
DATED AS OF OCTOBER 14, 1999
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.................................................................................-1-
1.1 AFFILIATE............................................................................-1-
1.2 ANNUALIZED EBITDA....................................................................-1-
1.3 INTENTIONALLY LEFT BLANK.............................................................-2-
1.4 ASSETS...............................................................................-2-
1.5 BASIC SERVICES.......................................................................-2-
1.6 BUSINESS.............................................................................-2-
1.7 CCI..................................................................................-2-
1.8 BUSINESS DAY.........................................................................-2-
1.9 CLEANUP..............................................................................-2-
1.10 CLOSING..............................................................................-2-
1.11 CLOSING DATE.........................................................................-2-
1.12 COMMUNICATIONS ACT...................................................................-3-
1.13 ENCUMBRANCE..........................................................................-3-
1.14 ENVIRONMENTAL LAW....................................................................-3-
1.15 EQUIPMENT............................................................................-3-
1.16 EQUIVALENT BASIC SUBSCRIBERS (OR EBS'S)..............................................-3-
1.17 GOVERNMENTAL AUTHORITY...............................................................-4-
1.18 GOVERNMENTAL PERMITS.................................................................-4-
1.19 HAZARDOUS SUBSTANCES.................................................................-4-
1.20 INTANGIBLES..........................................................................-4-
1.21 KNOWLEDGE............................................................................-5-
1.22 LEGAL REQUIREMENT....................................................................-5-
1.23 PAY TV...............................................................................-5-
1.24 PAY UNIT.............................................................................-5-
1.25 PERMITTED ENCUMBRANCES...............................................................-5-
1.26 PERSON...............................................................................-5-
1.27 PREFERRED STOCK......................................................................-5-
1.28 REAL PROPERTY........................................................................-6-
1.29 RELEASE..............................................................................-6-
1.30 REQUIRED CONSENTS....................................................................-6-
1.31 SELLER CONTRACTS.....................................................................-6-
1.32 SERVICE AREA.........................................................................-6-
1.33 STOCK AGREEMENTS.....................................................................-6-
1.34 SYSTEM...............................................................................-6-
1.35 OTHER DEFINITIONS....................................................................-7-
SECTION 2. SALE OF ASSETS..............................................................................-8-
2.1 PURCHASE AND SALE OF ASSETS..........................................................-8-
SECTION 3. CONSIDERATION...............................................................................-9-
3.1 BASE PURCHASE PRICE..................................................................-9-
3.2 ADJUSTMENTS TO BASE PURCHASE PRICE...................................................-9-
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3.3 DETERMINATION OF ADJUSTMENTS........................................................-11-
3.4 ALLOCATION OF CONSIDERATION.........................................................-12-
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS....................................................-12-
4.1 ASSIGNMENT AND ASSUMPTION...........................................................-12-
4.2 EXCLUDED ASSETS.....................................................................-12-
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER...................................................-13-
5.1 ORGANIZATION AND QUALIFICATION......................................................-13-
5.2 AUTHORITY AND VALIDITY..............................................................-13-
5.3 NO BREACH OR VIOLATION..............................................................-13-
5.4 ASSETS..............................................................................-14-
5.5 REAL PROPERTY.......................................................................-14-
5.6 ENVIRONMENTAL MATTERS...............................................................-15-
5.7 COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS...........................................-16-
5.8 PATENTS, TRADEMARKS AND COPYRIGHTS..................................................-17-
5.9 FINANCIAL STATEMENTS................................................................-17-
5.10 LEGAL PROCEEDINGS...................................................................-18-
5.11 TAX RETURNS; OTHER REPORTS..........................................................-18-
5.12 EMPLOYMENT MATTERS..................................................................-18-
5.13 SYSTEM DATA.........................................................................-19-
5.14 FINDERS AND BROKERS.................................................................-20-
5.15 INTANGIBLES.........................................................................-20-
5.16 ACCOUNTS RECEIVABLE.................................................................-20-
5.17 BONDS; LETTERS OF CREDIT; CERTIFICATES OF INSURANCE.................................-20-
5.18 RIGHTS IN ASSETS....................................................................-20-
5.19 BOOKS AND RECORDS...................................................................-20-
5.20 DISCLOSURE..........................................................................-20-
5.21 COMMITMENTS.........................................................................-21-
5.22 TRANSACTIONS WITH AFFILIATES........................................................-21-
5.23 YEAR 2000...........................................................................-21-
5.24 ABSENCE OF CERTAIN CHANGES..........................................................-22-
5.25 OWNERSHIP OF PREFERRED STOCK........................................................-23-
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER....................................................-24-
6.1 ORGANIZATION AND QUALIFICATION......................................................-24-
6.2 AUTHORITY AND VALIDITY..............................................................-24-
6.3 NO BREACH OR VIOLATION BY TRANSMISSION, L.L.C.......................................-24-
6.4 ORGANIZATION AND QUALIFICATION OF TRANSMISSION, L.L.C...............................-24-
6.5 AUTHORITY AND VALIDITY OF TRANSMISSION, L.L.C.......................................-25-
6.6 NO BREACH OR VIOLATION..............................................................-25-
6.7 FINDERS AND BROKERS.................................................................-25-
6.8 ORGANIZATION; GOOD STANDING; QUALIFICATION OF CCI...................................-25-
6.9 AUTHORIZATION OF CCI................................................................-26-
6.10 VALID ISSUANCE OF PREFERRED AND COMMON STOCK........................................-26-
6.11 CAPITALIZATION OF CCI...............................................................-26-
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SECTION 7. ADDITIONAL COVENANTS.......................................................................-26-
7.1 ACCESS TO PREMISES AND RECORDS......................................................-26-
7.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL STATEMENTS......................-26-
7.3 EMPLOYEE MATTERS....................................................................-28-
7.4 LEASED EQUIPMENT....................................................................-29-
7.5 REQUIRED CONSENTS, ESTOPPEL CERTIFICATES AND FRANCHISE RENEWALS.....................-29-
7.6 MDU AGREEMENTS......................................................................-29-
7.7 TITLE COMMITMENTS AND SURVEYS.......................................................-29-
7.8 NO SHOPPING.........................................................................-30-
7.9 NOTIFICATION OF CERTAIN MATTERS.....................................................-30-
7.10 RISK OF LOSS; CONDEMNATION..........................................................-30-
7.11 TRANSFER TAXES......................................................................-31-
7.12 DISTANT BROADCAST SIGNALS...........................................................-31-
7.13 NON-COMPETITION AGREEMENT...........................................................-31-
7.14 UPDATED SCHEDULES...................................................................-31-
7.15 LIEN AND JUDGMENT...................................................................-32-
7.16 USE OF SELLER'S NAME................................................................-32-
7.17 SATISFACTION OF CONDITIONS..........................................................-32-
7.18 CONFIDENTIALITY.....................................................................-32-
7.19 MEMORANDA OF LEASE..................................................................-32-
7.20 HSR NOTIFICATION....................................................................-33-
7.21 ▇▇▇▇▇▇▇ MONEY.......................................................................-33-
7.22 LEGEND..............................................................................-33-
SECTION 8. CLOSING....................................................................................-33-
SECTION 9. CONDITIONS TO CLOSING......................................................................-34-
9.1 CONDITIONS TO THE OBLIGATIONS OF BUYER AND SELLER...................................-34-
9.2 CONDITIONS TO THE OBLIGATIONS OF BUYER..............................................-34-
9.3 CONDITIONS TO OBLIGATIONS OF SELLER.................................................-37-
9.4 WAIVER OF CONDITIONS................................................................-38-
SECTION 10. TERMINATION................................................................................-38-
10.1 EVENTS OF TERMINATION...............................................................-38-
10.2 LIABILITIES IN EVENT OF TERMINATION.................................................-38-
10.3 PROCEDURE UPON TERMINATION..........................................................-38-
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION............................................................................-39-
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................................-39-
11.2 INDEMNIFICATION BY SELLER...........................................................-39-
11.3 INDEMNIFICATION BY BUYER............................................................-40-
11.4 PROCEDURE FOR INDEMNIFICATION.......................................................-40-
11.5 LIMITATIONS ON INDEMNIFICATION BY SELLER............................................-41-
11.6 LIMITATIONS ON INDEMNIFICATION BY BUYER.............................................-41-
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SECTION 12. MISCELLANEOUS..............................................................................-42-
12.1 PARTIES OBLIGATED AND BENEFITTED.....................................................-42-
12.2 NOTICES..............................................................................-42-
12.3 ATTORNEYS' FEES......................................................................-43-
12.4 RIGHT TO SPECIFIC PERFORMANCE........................................................-44-
12.5 WAIVER...............................................................................-44-
12.6 CAPTIONS.............................................................................-44-
12.7 CHOICE OF LAW........................................................................-44-
12.8 VENUE................................................................................-44-
12.9 TERMS................................................................................-44-
12.10 RIGHTS CUMULATIVE....................................................................-44-
12.11 FURTHER ACTIONS......................................................................-44-
12.12 TIME.................................................................................-44-
12.13 COUNTERPARTS.........................................................................-45-
12.14 ENTIRE AGREEMENT.....................................................................-45-
12.15 SEVERABILITY.........................................................................-45-
12.16 CONSTRUCTION.........................................................................-45-
12.17 LATE PAYMENTS........................................................................-45-
12.18 EXPENSES.............................................................................-45-
12.19 BULK SALES...........................................................................-45-
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
A - ▇▇▇▇▇▇▇ Money Escrow Agreement
B - Indemnity Escrow Agreement
C - Required Consent
D - Non-Competition Agreement
E - Memorandum of Lease
F - ▇▇▇▇ of Sale
G - Assignment and Assumption Agreement
H - Assignment of Leases
I - Consent and Joinder
J - Non-Foreign Affidavit
K - Opinion of Seller's Counsel
L - Opinion of Seller's FCC Counsel
M - Opinion of Buyer's Counsel
N - Certificate of Designation
SCHEDULES
1.6 - The Business
1.15 - Owned Equipment and Vehicles
1.28 - Real Property
1.30 - Required Consents
1.31 - Seller Contracts
4.2 - Excluded Assets
5.4 - Encumbrances
5.6 - Environmental Matters
5.7.2 - Governmental Permits
5.7.4 - Towers
5.7.6 - Rate Regulation
5.10 - Proceedings and Judgments
5.11 - Tax Matters
5.12 - Employment Matters
5.17 - Bonds; Letters of Credit; Cost of Insurance
5.18 - Rights in Assets
5.21 - Binding Commitments
5.22 - Transactions with Affiliates
5.24 - Exceptions to Ordinary Course of Business
6.11 - Capitalization of CCI
7.2.1 - Capital Expenditure Plan
7.4 - Leased Equipment
7.5.2 - Extended Franchise Renewals
7.6 - MDU Agreements
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is made as of October 14,
1999, (the "Effective Date") by and between UNIVERSAL CABLE HOLDINGS, INC., a
Delaware corporation ("Buyer"), and STAR CABLE ASSOCIATES, a Pennsylvania
general partnership ("Seller").
RECITALS
Seller is engaged in the business of providing cable television service
to subscribers in the Service Area, as defined herein. Buyer desires to purchase
and Seller desires to sell substantially all assets of Seller used or useful in
connection with its cable television business in the Service Area as more fully
set forth herein.
AGREEMENTS
In consideration of the above recitals and the mutual agreements stated
in this Agreement, the parties agree as follows:
SECTION 1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set forth
below:
1.1 AFFILIATE. With respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
1.2 ANNUALIZED EBITDA. At any date of determination, the
product of (a) the sum (determined without duplication in accordance with
generally accepted accounting principles ("GAAP"), consistently applied and
consistent with Seller's financial statements) of the following: (i) the
aggregate gross operating revenue for the six (6) most recently consecutive
completed months derived in the ordinary course of business in respect of the
Systems (including revenues arising from second outlets and remotes and
advertising revenues, and including pay-per-view revenues and installation fees,
but excluding interest income, programming launch incentives and extraordinary
items) minus (ii) all operating expenses for such period, including, without
limitation, technical, programming (no credit shall be given for launch
incentives), selling and general administration expenses, and management fees,
but excluding (to the extent included in operating expenses) interest expense,
amortization, depreciation, income and withholding taxes, other non-cash charges
and
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extraordinary gains or losses plus (iii) to the extent included in operating
expenses, actual management fees paid, said amount not to exceed the lesser of:
(x) three and one-half percent (3 1/2 %) of Seller's gross operating revenue for
such period; or (y) the sum of $400,000, plus (iv) to the extent included in
operating expenses, actual home office expenses for Seller's headquarters in
Pittsburgh, Pennsylvania, said amount not to exceed $100,000, times (b) two (2).
1.3 INTENTIONALLY LEFT BLANK.
1.4 ASSETS. All properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held, used, useful, or held for use in the
Business or in the operations of the Systems 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, without limitation, Governmental Permits,
Intangibles, Seller Contracts, Equipment and Real Property, but excluding any
Excluded Assets.
1.5 BASIC SERVICES. The basic tier of cable television
programming sold to subscribers of the Systems as a package, including broadcast
and satellite programming for which a subscriber pays a fixed monthly fee to
Seller, but not including Pay TV.
1.6 BUSINESS. The cable television business conducted by
Seller through one or more Systems in and around the Service Area, as described
on Schedule 1.6, in accordance with the categories set forth in Section 5.13.
1.7 CCI. Classic Communications, Inc., a Delaware corporation.
1.8 BUSINESS DAY. Any day other than Saturday, Sunday or a day
on which banking institutions in Austin, Texas, or New York, New York, are
required or authorized to be closed.
1.9 CLEANUP. All actions required to: (1) cleanup, remove,
treat or remediate Hazardous Substances in the indoor or outdoor environment;
(2) prevent the Release of Hazardous Substances so that they do not migrate,
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential clean up, removal, treatment or remediation of
Hazardous Substances in the indoor or outdoor environment.
1.10 CLOSING. The consummation of the transactions
contemplated by this Agreement, as described in Section 8, the date of which is
referred to as the Closing Date.
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1.11 CLOSING DATE. The date described in Section 8 or such
later date as extended by Buyer or Seller in accordance with Section 10.1,
unless Buyer and Seller agree otherwise in writing.
1.12 COMMUNICATIONS ACT. Title VI of the Communications Act
and all other provisions of the Cable Communications Policy Act of 1984, Pub. L.
No. 98-549, the Cable Television Consumer Protection and Competition Act of
1992, Pub. L. No. 102-385, and the provisions of the Telecommunications Act of
1996 amending Title VI of the Communications Act, as such statutes may be
amended from time to time, and the rules and regulations promulgated thereunder.
1.13 ENCUMBRANCE. Any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement,
limitation, pledge, option, charge, assessment, restrictive agreement,
restriction, encumbrance, adverse interest, restriction on transfer or any
exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
1.14 ENVIRONMENTAL LAW. Any Legal Requirement relating to
pollution or protection of public health, safety, or welfare or the environment,
including those relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment (including ambient air,
surface water, ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
1.15 EQUIPMENT. All towers, tower equipment, antennae,
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, office
equipment, vehicles and other tangible personal property owned, leased, used or
held for use in the Business, as described on Schedule 1.15 (and with respect to
leased Equipment, on Schedule 1.31).
1.16 EQUIVALENT BASIC SUBSCRIBERS (OR EBS'S). As of any date
and for each franchise area served by a System, the number derived by dividing
(a) the total monthly ▇▇▇▇▇▇▇▇ for sales of Basic Services by the System during
the most recent month ended prior to the date of calculation (including ▇▇▇▇▇▇▇▇
to single family residences and dwelling units in multiple dwelling unit
buildings, subscribers in commercial and other buildings and bulk subscribers,
whether on a discounted or undiscounted basis, but excluding ▇▇▇▇▇▇▇▇ in excess
of a single month's charges for any account), by (b) the standard monthly rate
(without discount of any kind) charged by Seller during such month to single
family residences for Basic Services sold by the System, which monthly rate will
not be less than the amount specified in Schedule 1.6. For purposes of the
foregoing, there will be excluded (i) all ▇▇▇▇▇▇▇▇ to any
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subscriber who is sixty (60) days or more past due in the payment of any amount
payable to Seller, (ii) all ▇▇▇▇▇▇▇▇ to any subscriber who has not paid at least
one full month's payment for Basic Services and all installation charges owed
and due, (iii) that portion of the ▇▇▇▇▇▇▇▇ to each subscriber representing an
installation or other non-recurring charge, a charge for equipment or for any
outlet or connection other than the first outlet or first connection in any
single family residence or, with respect to a bulk account, in any residential
unit (e.g., an individual apartment or rental unit), or a pass-through charge
for sales taxes, line-itemized franchise fees and charges and the like, (iv) all
▇▇▇▇▇▇▇▇ to any subscriber whose service is pending disconnection for any
reason, and (v) all ▇▇▇▇▇▇▇▇ to any subscriber who was solicited since the
Effective Date of this Agreement, to purchase such services by any non-standard
promotion or by offer of a non-standard discount. For purposes of this
Agreement, payments on account of monthly ▇▇▇▇▇▇▇▇ to a subscriber of a System
will be deemed to be due on the first day of the month during which the service
to which such ▇▇▇▇▇▇▇▇ relate is provided.
1.17 GOVERNMENTAL AUTHORITY. (i) The United States of America,
(ii) any state, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities and the like), (iii) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof or (iv) any
agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
1.18 GOVERNMENTAL PERMITS. All franchises, franchise
applications (if any), approvals, agreements, authorizations, ordinances,
permits, licenses (including, without limitation, television translator station
licenses, microwave licenses (including, without limitation, cable television
relay service), business radio licenses and TVRO earth station registration),
easements, registrations, qualifications, leases, variances and similar rights
issued or obtained from any Governmental Authority.
1.19 HAZARDOUS SUBSTANCES. Any pollutant, contaminant,
chemical, industrial, toxic, hazardous or noxious substance or waste which is
regulated by any Governmental Authority, including (a) any petroleum or
petroleum compounds (refined or crude), flammable substances, explosives,
radioactive materials or any other materials or pollutants which pose a hazard
or potential hazard to the Real Property or to Persons in or about the Real
Property or cause the Real Property to be in violation of any laws, regulations
or ordinances of federal, state or applicable local governments, (b) asbestos or
any asbestos-containing material of any kind or character, (c) polychlorinated
biphenyls ("PCBs"), as regulated by the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., (d) any materials or substances designated as "hazardous
substances" pursuant to the Clean Water Act, 33 U.S.C. Section 1251 et seq., (e)
"economic poison," as defined in the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 135 et seq., (f) "chemical substance," "new
chemical substance" or "hazardous substance or mixture" pursuant to the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., (g) "hazardous
substances" pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq., and
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(h) "hazardous waste" pursuant to the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.
1.20 INTANGIBLES. All intangible assets, including subscriber
lists, accounts receivable, claims (excluding any claims relating to Excluded
Assets), patents, trademarks and trade names (as described in Section 5.15),
copyrights, goodwill, going concern value, proprietary information, technical
information and data, machinery and equipment warranties, maps, computer disks
and tapes, phones, diagrams, blueprints and schematics, and all files of
correspondence, lists, records, and reports concerning subscribers and
prospective subscribers of the Systems, signal and program carriage, and
dealings with Governmental Authorities (including, without limitation, all
reports filed by or on behalf of Seller with the FCC with respect to the
Systems, all correspondence between Seller and Governmental Authorities relating
to any of the Systems, and statements of account filed by or on behalf of Seller
with the U.S. Copyright Office with respect to the Systems), if any, owned, used
or held for use in the Business.
1.21 KNOWLEDGE. With respect to any entity, actual knowledge
of any of the executive officers or of the entity specified and any of the
executive officers of its partners and its individual partners. For Seller, the
executive officers shall include, without limitation, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.22 LEGAL REQUIREMENT. Any statute, ordinance, code, law,
rule, regulation, order or other requirement, standard or procedure enacted,
adopted or applied by any Governmental Authority, including decisions, orders,
writs, awards, or injunctions of an arbitrator or a court or other Governmental
Authority.
1.23 PAY TV. Premium programming services selected by and sold
to subscribers on an a la carte basis for monthly fees in addition to the fee
for Basic Services.
1.24 PAY UNIT. Each Pay TV service subscribed for by any
subscriber of a System.
1.25 PERMITTED ENCUMBRANCES. The following Encumbrances: (a)
liens for taxes, assessments and governmental charges not yet due and payable;
(b) zoning laws and ordinances and similar Legal Requirements; (c) rights
reserved to any Governmental Authority to regulate the affected property; and
(d) as to Real Property interests, any easements, rights-of-way, servitudes,
permits, restrictions, reservations, licenses, severances of oil, gas or other
mineral estates, utilities as installed, and minor imperfections or
irregularities in title which are reflected in the public records or are
apparent from an inspection or survey of the Real Property and which do not
individually or in the aggregate materially interfere with the right or ability
to own, use or operate such parcel of Real Property for the purposes for which
it is currently being used or to convey indefeasible title to
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such Real Property; provided that Permitted Encumbrances will not include any
item which could materially adversely affect in any way the conduct of the
Business.
1.26 PERSON. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.27 PREFERRED STOCK. CCI's Cumulative Redeemable Convertible
Preferred Stock (Series A), which shall be convertible upon an initial public
offering at $36.00 per share and at the option of CCI, two years following the
Closing Date, at $32.00 per share to Class A Common Stock of CCI, with one (1)
vote per share of such common stock ("Class A Common Stock").
1.28 REAL PROPERTY. All Assets consisting of realty, including
appurtenances, improvements and fixtures located on such realty, and any other
interests in real property, including, without limitation, fee and leasehold
interests on which Seller's offices and headend sites are located, as described
on Schedule 1.28. All interests for which consideration includes the provision
of any free cable services will be set forth on Schedule 1.28.
1.29 RELEASE. Any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or property.
1.30 REQUIRED CONSENTS. As set forth on Schedule 1.30, all
franchises, licenses, authorizations, approvals and consents required under
Governmental Permits, material Seller Contracts or otherwise for (a) Seller to
transfer the Assets and the Business to Buyer as provided in this Agreement, (b)
Buyer to conduct the Business and to own, lease, use and operate the Assets at
the places and in the manner in which the Business is conducted as of the date
of this Agreement and on the Closing Date, (c) Buyer to assume and perform the
Governmental Permits and Seller Contracts, and (d) Buyer to collaterally assign
the Assets to its lenders as security for Buyer's indebtedness. Schedule 1.30
will specifically identify all FCC television translator licenses under the
heading Governmental Permits. Such television translator licenses will be
transferred in accordance with Section 9.2.4 of this Agreement.
1.31 SELLER CONTRACTS. All contracts and agreements, other
than Governmental Permits, pertaining to the ownership, operation and
maintenance of the Assets or the Business or used or held for use in the
Business other than programming contracts except those which are to be
transferred to Buyer as set forth on Schedule 1.31, and Real Property leasehold
interests and easements set forth on Schedule 1.28.
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1.32 SERVICE AREA. The area in which Seller operates the
Business, specifically in and around the Systems set forth on Schedule 1.6.
1.33 STOCK AGREEMENTS. That certain Stockholders' Agreement
dated July 28, 1999, among CCI, Brera Classic, L.L.C., and the additional
parties named therein (the "Stockholders' Agreement"), and that certain
Registration Rights Agreement dated July 28, 1999, among CCI, Brera Classic,
L.L.C., and the additional parties named therein.
1.34 SYSTEM. A complete cable television reception and
distribution system operated in the conduct of the Business, consisting of one
or more headends, subscriber drops and associated electronic and other
equipment, and which is, or is capable of being, without modification, operated
as an independent system without interconnections to other systems. Any systems
which are interconnected or which are served in whole or in part by a common
headend will be considered a single System. "Systems" means the Systems owned
and operated by Seller in the Service Area.
1.35 OTHER DEFINITIONS. The following terms are defined in the
Sections indicated:
Term Section
---- -------
Annual Financial Statements 5.9
Assumed Liabilities 4.1
Base Purchase Price 3.1
Buyer Damages 11.5
CCI Derivative Securities 6.11
CCI Equity Securities 6.11
Certificate of Designation 3.1.4
Claiming Party 3.3.3
Class A Common Stock 1.27
Communications Act 1.12
Deposit 7.21
Dispute Adjustment Amount 3.3.3
▇▇▇▇▇▇▇ Money Escrow Agreement 3.1.2
ERISA 5.12.1
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Term Section
---- -------
Escrow Agent 3.1.2
Excluded Assets 4.2
Extended Franchises 7.5.2
FAA 5.7.4
FCC 5.4
Final Adjustments Report 3.3.2
Final Determination 3.3.3
Financial Statements 5.9
GAAP 1.2
Homes passed 5.13
HSR Act 7.20
Indemnitee 11.4
Indemnitor 11.4
Indemnity Escrow Agreement 3.1.3
Interim Financial Statements 5.9
ISP Contract 4.2
Material Adverse Effect 5.3
▇▇▇▇▇▇ System 4.2
Preliminary Adjustments Report 3.3.1
Prime Rate 12.17
Responsible Party 3.3.3
Securities Act 5.25
Seller Damages 11.6
Stockholders' Agreement 1.33
Survival Period 11.1
Taking 7.10.2
Transmission, L.L.C. 2.1
Year 2000 Problem 5.23
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SECTION 2. SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions set forth in this Agreement, at the Closing, Seller will sell,
convey, assign, transfer and deliver to Buyer, and Buyer will purchase from
Seller, free and clear of all Encumbrances (other than Permitted Encumbrances),
and with full warranties of title and with full substitution and subrogation to
all rights and actions of warranty against all preceding owners, all of Seller's
rights, title and interest in, to and under the Assets. All television
translator licenses identified on Schedule 1.30 shall be transferred and
assigned to Classic Network Transmission, L.L.C. ("Transmission, L.L.C.").
Except as otherwise specifically provided in this Agreement, all the Assets are
intended to be transferred to Buyer, whether or not described in the Schedules.
SECTION 3. CONSIDERATION
3.1 BASE PURCHASE PRICE. As consideration for the Assets and
for the covenant of Seller contained in the Non-Competition Agreement attached
hereto as Exhibit D, Buyer will pay to Seller total consideration of One Hundred
Thirty Million Dollars ($130,000,000) (the "Base Purchase Price"), paid at the
Closing as set forth below, subject to adjustment as provided in Sections 3.2
and 3.3, and Buyer will assume certain obligations of Seller as provided in
Section 4:
3.1.1 $102,000,000 to be paid by Buyer to Seller at the
Closing by wire transfer of immediately available funds, at the accounts
designated by Seller not less than five (5) days prior to the Closing;
3.1.2 $3,000,000 to be paid by Buyer to Norwest Bank
Texas, N.A. (the "Escrow Agent"), subject to the ▇▇▇▇▇▇▇ money escrow agreement,
substantially in the form of Exhibit A, to be entered into on the Effective Date
of this Agreement by Seller, Buyer and the Escrow Agent (the "▇▇▇▇▇▇▇ Money
Escrow Agreement");
3.1.3 $5,000,000 to be paid by Buyer to the Escrow
Agent, subject to the indemnity escrow agreement, substantially in the form of
Exhibit B, to be entered into on the Closing Date by Seller, Buyer and the
Escrow Agent (the "Indemnity Escrow Agreement"); and
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3.1.4 Subject to the terms and conditions of and in
reliance upon the representations, warranties and covenants contained in this
Agreement, at the Closing Date, Buyer's corporate parent, CCI, shall issue to
Seller 20,000 shares of Preferred Stock with an initial stated value of $1,000
per share. In the event the Closing of the transaction contemplated by this
Agreement occurs after a Qualified Initial Public Offering, as defined in the
Certificate of Designation in the form attached hereto as Exhibit N (the
"Certificate of Designation"), Seller shall be issued an amount of Class A
Common Stock pursuant to the Optional Conversion provisions in the Certificate
of Designation as if the Preferred Stock referenced in the preceding sentence
had been issued as of the date hereof.
3.2 ADJUSTMENTS TO BASE PURCHASE PRICE. The portion of the
Base Purchase Price payable pursuant to Section 3.1.1 will be adjusted as
follows:
3.2.1 If the Business has fewer than 56,820 EBS's as of
the Closing Date, the Base Purchase Price will be reduced by an amount equal to
$2,288 multiplied by the difference between (x) 56,820 and (y) the number of
EBS's as of the Closing Date.
3.2.2 Adjustments on a pro rata basis as of the Closing
Date will be made for all prepaid expenses (to the extent such prepayments may
accrue to Buyer's benefit), prepaid income and accounts receivable of active
subscribers, and to reflect the principle that all expenses (including real
estate taxes, stand by fees and assessment by any taxing authority for the Real
Property) and income attributable to the Business for the period prior to the
Closing Date are for the account of Seller, and all expenses and income
attributable to the Business for the period on and after the Closing Date are
for the account of Buyer; provided, however, that Seller and Buyer shall not
prorate any items or expense payables under any Excluded Assets, all of which
shall remain and be solely for the account of Seller. Seller will receive no
credit for any accounts receivable (i) any portion of which is more than sixty
(60) days past due as of the Closing Date, or (ii) from subscribers whose
accounts are inactive or whose service is pending disconnection for any reason
as of the Closing Date.
3.2.3 All advance payments to, or funds of third parties
on deposit with, Seller as of the Closing Date, relating to the Business,
including advance payments and deposits by subscribers served by the Business
for converters, encoders, decoders, cable television service and related sales,
will be retained by Seller and will reduce the Base Purchase Price accordingly.
3.2.4 All deposits relating to the Business that are
held by third parties as of the Closing Date for the account of Seller or as
security for Seller's performance of its obligations (other than with respect to
(i) Excluded Assets; and (ii) any other deposits the full benefit of which will
not be available to Buyer following the Closing Date); provided, however, credit
will be given for those deposits for which partial credit can be determined,
including deposits on leases and deposits for utilities, will be credited to the
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account of Seller in their full amounts to increase the Base Purchase Price and
will become the property of Buyer.
3.2.5 The Base Purchase Price payable pursuant to
Section 3.1.1 will be reduced by an amount equal to the difference between (i)
the amounts of the required cumulative capital expenditures for each of the
categories designated as Items 1 through 9 as set forth on Schedule 7.2.1
through the month of the Closing and (ii) the amount of the capital expenditures
actually incurred and paid in cash by Seller through the Closing Date in
connection with each such corresponding capital expenditure categories. By way
of example, Schedule 7.2.1 sets forth a budgeted $5,000 per month in the year
2000 in capital expenditures for the category of New Construction. If the
Closing Date were to occur in February 2000, the cumulative monthly capital
expenditures for that category through February 2000 would total $247,000. To
the extent that Seller had only expended $242,000 in cash in this category
through the Closing Date, the reduction in the Base Purchase Price payable
pursuant to Section 3.1.1 would be $5,000. Similar adjustments would be made on
a category by category basis.
3.2.6 The Base Purchase Price payable pursuant to
Section 3.1.1 will be reduced by an amount equal to the difference between (i)
the amounts of the Cumulative Capital Expenditures for the category designated
as Item 10 as set forth on Schedule 7.2.1 through the month of the Closing and
(ii) the amount of the capital expenditures actual incurred and paid in cash by
Seller through the Closing Date in connection with the category designated as
Item 10 of Schedule 7.2.1; provided, however, to the extent that through the
date of Closing Seller has exceed the capital expenditure budgeted amounts for
any of the capital categories designated as Items 1 through 9 on Schedule 7.2.1,
such amounts shall be allowed as credit against any reduction otherwise to be
made pursuant to this Section 3.2.6.
3.3 DETERMINATION OF ADJUSTMENTS. Preliminary and final
adjustments to the Base Purchase Price will be determined as follows:
3.3.1 At least three (3) Business Days prior to the
Closing, Seller will deliver to Buyer a report (the "Preliminary Adjustments
Report"), certified as to completeness and accuracy by Seller, showing in detail
the preliminary determination of the adjustments referred to in Section 3.2,
which are calculated as of the Closing Date (or as of any other date agreed to
by the parties) and any documents substantiating the adjustments proposed in the
Preliminary Adjustments Report. The Preliminary Adjustments Report will include
a detailed calculation of the number of Equivalent Basic Subscribers and a
schedule setting forth advance payments and deposits made to or by Seller, as
well as accounts receivable information relating to the Business (showing sums
due and their respective aging as of the Closing Date). Also included in the
Preliminary Adjustments Report will be a calculation of actual capital
expenditures in cash through the Closing Date on a category by category basis
per Schedule 7.2.1 as compared to the cumulative monthly budgets for capital
expenditures as set forth in Schedule 7.2.1. Seller also will furnish to Buyer
its billing report
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for the most current period as of the Closing Date. The net adjustment shown in
the Preliminary Adjustments Report will be reflected as an adjustment to the
portion of the Base Purchase Price payable at the Closing pursuant to Section
3.1.1.
3.3.2 Within sixty (60) days after the Closing, Seller
will deliver to Buyer a report (the "Final Adjustments Report"), similarly
certified by Seller, showing in detail the final determination of all
adjustments which were not calculated as of the Closing Date and containing any
corrections to the Preliminary Adjustments Report, together with any documents
substantiating the adjustments proposed in the Final Adjustments Report. Buyer
will provide Seller with reasonable access to all records which Buyer has in its
possession and which are necessary for Seller to prepare the Final Adjustments
Report.
3.3.3 Within thirty (30) days after receipt of the Final
Adjustments Report, Buyer will give Seller written notice of Buyer's objections,
if any, to the Final Adjustments Report. If Buyer makes any such objection, the
parties will agree on the amount, if any, which is not in dispute within thirty
(30) days after Seller's receipt of Buyer's notice of objections to the Final
Adjustments Report. Any undisputed amount will serve as an adjustment to the
portion of the Base Purchase Price payable under Section 3.1.1. The adjustment
of the Base Purchase Price payable under Section 3.1.1, as so adjusted (but
excluding any amounts disputed), will be paid by Buyer to Seller, or paid by
Seller to Buyer, whichever the case may be, within ninety (90) days after the
Closing Date or within three (3) Business Days after agreement on the undisputed
portion of the Final Adjustments Report, if later. Any disputed amounts will be
determined within one hundred twenty (120) days after the Closing Date by the
accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, whose determination will be conclusive.
Seller and Buyer will bear the fees and expenses payable to such firm in
connection with such determination in reverse proportion to the manner in which
the disputed amounts are allocated by the accountants. The payment required
after determination of all disputed amounts (the "Dispute Adjustment Amount")
will be made by the responsible party (the "Responsible Party") by wire transfer
of immediately available funds to the other party (the "Claiming Party") within
three (3) Business Days after the final determination (the "Final
Determination").
3.4 ALLOCATION OF CONSIDERATION. Buyer and Seller will use
their best efforts to agree on an allocation of the Base Purchase Price
(excluding transaction costs incurred by each of them) within forty-five (45)
days after the Closing. Upon such agreement, each of Buyer and Seller will
complete Form 8594, Asset Acquisition Statement of Allocation, consistent with
such mutually agreed allocation and each will file a copy of such form with its
federal income tax return for the applicable tax year, and will file all returns
and reports with respect to the transactions contemplated by this Agreement,
including all federal, state and local tax returns, on the basis of such
allocation. Buyer and Seller further agree not to take any position inconsistent
with such mutually agreed allocation for any tax purpose. If, after good-faith
efforts, Buyer and Seller are unable to agree upon an allocation within sixty
(60) days after the Closing, then each party will be free to report its own
position to the Internal Revenue Service and other taxing authorities.
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SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 ASSIGNMENT AND ASSUMPTION. Seller will assign, and Buyer
will assume and perform, the "Assumed Liabilities," which are defined as: (a)
Seller's obligations to subscribers of the Business for (i) subscriber deposits
held by Seller as of the Closing Date and which are refundable, in the amount
for which Buyer received credit under Section 3.3, (ii) subscriber advance
payments held by Seller as of the Closing Date for services to be rendered by a
System on or after the Closing Date, in the amount for which Buyer received
credit under Section 3.3 and (iii) the delivery of cable television service to
subscribers of the Business on or after the Closing Date; (b) obligations
accruing and relating to periods after the Closing Date under Governmental
Permits and Seller Contracts; and (c) capital expenditures actually incurred by
Seller as set forth in Section 3.2.5 through the Closing Date, but not paid in
cash by Seller prior to Closing, provided that Buyer has received a reduction in
the Base Purchase Price pursuant to Section 3.2 of an equal amount. Buyer will
not assume or have any responsibility for any liabilities or obligations of
Seller other than the Assumed Liabilities. In no event will Buyer assume or have
any responsibility for any liabilities or obligations associated with the
Excluded Assets.
4.2 EXCLUDED ASSETS. The excluded assets (the "Excluded
Assets"), which will be retained by Seller and are specifically excluded from
the Assets, will consist of the following: (a) programming contracts (other than
those listed on Schedule 1.31); (b) insurance policies and rights and claims
thereunder (except as otherwise provided in Section 7.10); (c) bonds, letters of
credit, surety instruments and other similar items; (d) cash and cash
equivalents; (e) Seller's rights under any agreement governing or evidencing an
obligation of Seller for borrowed money; (f) Seller's rights under any contract,
license, authorization, agreement or commitment other than those creating or
evidencing Assumed Liabilities; (g) billing agreements; (h) that certain ISP
Channel Affiliate Agreement dated April 30, 1999, by and between ISP Channel,
Inc., a subsidiary of Softnet Systems, Inc., and Seller (the "ISP Contract");
provided, however, that Buyer shall accept through a partial assignment the
benefits and obligations under the ISP Contract, in a form satisfactory to
Buyer's counsel, solely as it relates to the system deployed as of the Effective
Date by ISP Channel, Inc. in Seller's ▇▇▇▇▇▇, Ohio system (the "▇▇▇▇▇▇ System")
and Buyer shall assume the obligations of Seller under the ISP Contract solely
as it relates directly to the ▇▇▇▇▇▇ System; and (i) the office equipment,
furnishings and other personal property located at Seller's headquarters at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as set
forth in Schedule 4.2.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement, Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the Closing, as
follows:
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5.1 ORGANIZATION AND QUALIFICATION. Seller is a general
partnership duly organized and validly existing under the laws of its
jurisdiction set forth in the forepart of this Agreement and has all requisite
power and authority to own, lease, use and operate the Assets as they are
currently owned, leased, used and operated and to conduct the Business as it is
currently conducted. Seller is duly qualified or licensed to do business under
the laws of each jurisdiction in which the character of the properties owned,
leased, used or operated by it or the nature of the activities conducted by it
makes such qualification necessary, except any such jurisdiction where the
failure to be so qualified or licensed would not have a material adverse effect
on Seller or on the validity, binding effect or enforceability of this
Agreement.
5.2 AUTHORITY AND VALIDITY. Seller has all requisite
organizational power and authority to execute and deliver, to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement. The execution and delivery by Seller of, the performance by Seller of
its obligations under, and the consummation by Seller of the transactions
contemplated by, this Agreement have been duly authorized by all requisite
organizational action of Seller. This Agreement has been duly executed and
delivered by Seller and is the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except insofar as
enforceability may be affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
5.3 NO BREACH OR VIOLATION. The execution, delivery and
performance of this Agreement by Seller does not and will not: (a) conflict with
or violate any provision of the partnership agreement of Seller; (b) violate any
Legal Requirement; (c) except as set forth on Schedule 1.30, require any
consent, approval or authorization of, or any filing with or notice to, any
Person; or (d) (i) violate, conflict with or constitute a breach of or default
under, (ii) permit or result in the termination, suspension or modification of,
(iii) result in the acceleration of (or give any Person the right to accelerate)
the performance of Seller under, or (iv) result in the creation or imposition of
any Encumbrance under, any Seller Contract or any other instrument evidencing
any of the Assets or any instrument or other agreement to which Seller is a
party or by which Seller or any of its assets is bound or affected, except for
purposes of this clause (d) such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications, and accelerations as would not,
individually or in the aggregate, have a material adverse effect on any System,
the financial condition, results of operations or prospects of the Business or
Seller (a "Material Adverse Effect"); provided, however, that such an occurrence
in fewer than five (5) Systems having fewer than 2,000 in the aggregate EBS will
not be deemed to have a Material Adverse Effect.
5.4 ASSETS. Seller has good and marketable title to (or, in
the case of Assets that are leased, valid leasehold interests in) the Assets
claimed by Seller (other than Real Property, as to which the representations and
warranties in Section 5.5 apply). The Assets are free and clear of all
Encumbrances of any kind or nature, except (a) Permitted Encumbrances, (b)
restrictions stated in the Governmental Permits and (c) Encumbrances disclosed
on
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Schedule 5.4 which will be removed and released at or prior to the Closing.
Except as set forth on Schedule 1.31, none of the Equipment is leased by Seller
from any other Person. The Assets, together with the Excluded Assets, are all
the assets and rights necessary to permit Buyer to conduct the Business
substantially as it is being conducted on the date of this Agreement in
compliance with all material Legal Requirements, and under the rules and
policies of the Federal Communications Commission (the "FCC"), and to perform
all the Assumed Liabilities. All the Equipment is suitable and adequate for
continued use in the manner it is presently used. Except as set forth on
Schedule 5.4, no Person other than Seller is operating or, to Seller's
Knowledge, has proposed to operate, a cable television system in the Service
Area.
5.5 REAL PROPERTY.
5.5.1 All the Assets consisting of Real Property
interests are described on Schedule 1.28. Except as otherwise disclosed on
Schedule 1.28, Seller holds indefeasible fee simple title to the Real Property
shown as being owned by Seller on Schedule 1.28 and the valid and enforceable
right to use and possess such Real Property, subject only to the Permitted
Encumbrances. Seller has valid leasehold interests in Real Property pursuant to
the leases described on Schedule 1.28 with respect to other Real Property not
owned or leased by Seller, Seller has the valid and enforceable right to use all
other Real Property pursuant to the easements, licenses, rights-of-way or other
rights described on Schedule 1.28, subject only to Permitted Encumbrances. The
Real Property includes all the real property interests necessary to permit Buyer
to conduct the Business substantially as it is being conducted on this date in
compliance with all Legal Requirements.
5.5.2 The documents delivered by Seller to Buyer as
evidence of each lease of Real Property constitute the entire agreement with the
landlord in question and are valid and in full force and effect. There are no
leases or other agreements, oral or written, granting to any Person other than
Seller the right to occupy or use any Real Property, except Permitted
Encumbrances or as described on Schedule 1.28. All leases, easements,
rights-of-way and other rights appurtenant to, or which are necessary for
Seller's current use of, any Real Property are valid and in full force and
effect, and Seller has not given or received any notice with respect to the
termination or breach of any rights or obligations under such agreements. Each
parcel of Real Property, any improvements constructed thereon and their current
use conform to (a) all applicable Legal Requirements, including zoning
requirements and the Americans with Disabilities Act, and (b) all restrictive
covenants, if any, or other Encumbrances affecting all or part of such parcel.
5.6 ENVIRONMENTAL MATTERS.
5.6.1 The Real Property currently complies with and, to
Seller's Knowledge, has previously been operated in compliance with, all
Environmental Laws. Seller has not generated, released, stored, used, treated,
handled, discharged or disposed of any Hazardous Substances at, on, under, in or
about, or in any other manner affecting, any Real
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Property, transported any Hazardous Substances to or from any Real Property or
discharged any Hazardous Substances from any Real Property into any body of
water, directly or indirectly, and, to Seller's Knowledge, no other present or
previous owner, tenant, occupant or user of any Real Property or any other
Person has committed or suffered any of the foregoing. To Seller's Knowledge, no
release of Hazardous Substances outside the Real Property has entered or
threatens to enter any Real Property, nor is there any pending or threatened
claim based on Environmental Laws which arises from any condition of the land
surrounding any Real Property. Except as set forth on Schedule 5.6, no claim or
investigation based on Environmental Laws which relates to any Real Property or
any operations on it (a) has been asserted or conducted in the past or is
currently pending against or with respect to Seller or, to Seller's Knowledge,
any other Person, or (b) to Seller's Knowledge, is threatened or contemplated,
and Seller is not aware of any condition that could give rise to such a claim or
investigation.
5.6.2 Except as described on Schedule 5.6, (a) no
underground storage tanks are currently or, to the Knowledge of Seller, have
been located on any Real Property, (b) to the Knowledge of Seller, no Real
Property has been used at any time as a gasoline service station or any other
facility for storing, pumping, dispensing or producing gasoline or any other
petroleum products or wastes, (c) to the Knowledge of Seller, no building or
other structure on any Real Property contains asbestos, (d) to the Knowledge of
Seller, no Real Property contains any equipment using PCB's, and (e) to the
knowledge of Seller, there are no incinerators, septic tanks or cesspools on the
Real Property and all sanitary waste is discharged into a public sanitary sewer
system.
5.6.3 Seller has provided Buyer with complete and
correct copies of (a) all studies, reports, surveys or other materials in
Seller's possession or to which Seller has access relating to the presence or
alleged presence of Hazardous Substances at, on or affecting the Real Property,
(b) all notices or other materials in Seller's possession or to which Seller has
access that were received from any Governmental Authority having the power to
administer or enforce any Environmental Laws relating to current or past
ownership, use or operation of the Real Property or activities at the Real
Property and (c) all materials in Seller's possession or to which Seller has
access relating to any claim, allegation or action by any private third party
under any Environmental Law.
5.7 COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS.
5.7.1 The ownership, leasing and use of the Assets as
they are currently owned, leased and used and the conduct of the Business as it
is currently conducted do not violate any Legal Requirement, which violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Systems, the Business, or Seller. Seller has not
received notice claiming a violation by the Business of any Legal Requirement
applicable to Seller or the Business as it is currently conducted and, to
Seller's Knowledge, there is no basis for any claim that such a violation
exists.
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5.7.2 Complete and correct copies of the Governmental
Permits, all of which are listed on Schedule 5.7.2, have been delivered by
Seller to Buyer. The Governmental Permits are currently in full force and
effect, are not in default, and are valid under all applicable Legal
Requirements according to their terms. There is no legal action, governmental
proceeding or investigation, pending or threatened, to terminate, suspend or
modify any Governmental Permit and, except as set forth on Schedule 5.7.2,
Seller is in material compliance with the terms and conditions of all the
Governmental Permits and with other applicable requirements of all Governmental
Authorities relating to the Governmental Permits, including all requirements for
notifications, filing, reporting, posting and maintenance of logs and records.
5.7.3 Without limiting the generality of the foregoing,
(a) Seller has made all required registration statement filings and annual
report filings with the FCC; (b) Seller has filed all required annual employment
reports with the FCC pursuant to the FCC's employment opportunity rules; and (c)
each System is in substantial and material compliance with all signal leakage
criteria prescribed by the FCC and all must carry requirements and has received
all necessary retransmission consents. Seller has delivered to Buyer complete
and correct copies of all reports and filings with respect to the Business for
the past three (3) years made or filed pursuant to the Communications Act or FCC
rules and regulations, and all notices alleging non-compliance with the
Communications Act, the rules and regulations of the FCC.
5.7.4 All necessary Federal Aviation Administration
("FAA") and FCC approvals and waivers have been obtained and all required
filings have been timely made with respect to the height and location of towers
used in connection with the operation of the Systems and such towers are being
operated in compliance in all material respects with applicable FAA and FCC
rules. True and correct information relating to all towers used in connection
with the operation of the System is set forth on Schedule 5.7.4, which will
include for each tower (i) location, (ii) coordinates, (iii) height above ground
level, (iv) height above mean sea level, (v) distance to nearest airport runway,
and (vi) FAA study number, if applicable.
5.7.5 A request for renewal has been timely filed
pursuant to Section 626(a) of the Cable Act with the proper Governmental
Authority with respect to any franchise that expires within thirty-six (36)
months after the date of this Agreement.
5.7.6 Except as set forth on Schedule 5.7.6, as of the
date of this Agreement (i) to Seller's Knowledge, the rates charged by Seller to
subscribers of the Systems for the "cable programming services tier" (as such
term is defined in the FCC's rate regulations) offered by the Systems are in
compliance with FCC rules and orders, (ii) to Seller's Knowledge, there are no
rate complaints pending at the FCC with respect to the Systems, and (iii) no
Governmental Authority is presently regulating the "basic tier" rates being
charged to subscribers of the Systems nor has Seller received from any
Governmental Authority a copy
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of any FCC Form 328 filed by such Governmental Authority with the FCC requesting
rate regulation certification with respect to the Systems.
5.7.7 Schedule 1.30 sets forth all franchises, licenses,
authorizations, approvals and consents required under Governmental Permits,
Seller Contracts or otherwise for (a) Seller to transfer the Assets and the
Business to Buyer as provided in this Agreement, (b) Buyer to conduct the
Business and to own, lease, use and operate the Assets at the places and in the
manner in which the Business is conducted as of the date of this Agreement and
on the Closing Date, (c) Buyer to assume and perform the Governmental Permits
and Seller Contracts, and (d) Buyer to collaterally assign the Assets to its
lenders as security for Buyer's indebtedness.
5.8 PATENTS, TRADEMARKS AND COPYRIGHTS. Seller has timely and
accurately made all requisite filings and payments with the Register of
Copyrights and is otherwise in substantial and material compliance with all
applicable rules and regulations of the Copyright Office. Seller has delivered
to Buyer complete and correct copies of all current reports and filings, and all
reports and filings for the past three (3) years, made or filed pursuant to
copyright rules and regulations with respect to the Business. Seller does not
possess any patent, patent right, trademark or copyright and is not a party to
any license or royalty agreement with respect to any patent, trademark or
copyright except for licenses respecting program material and obligations under
the Copyright Act of 1976 applicable to cable television systems generally. The
operations of the Business as currently conducted do not violate or infringe
upon the rights of any Person in any copyright, trademark, service ▇▇▇▇, patent,
license, trade secret or the like, and, to the Knowledge of Seller, no such
violation or infringement is threatened
5.9 FINANCIAL STATEMENTS. Seller has delivered to Buyer
correct and complete copies of the following: (i) its audited balance sheets for
the fiscal years ended December 31, 1996, 1997 and 1998 (collectively, the
"Annual Financial Statements"), and (ii) its unaudited balance sheets as of
August 31, 1997, 1998 and 1999 and the related statements of income and cash
flows for the six-month periods then ended (collectively, the "Interim Financial
Statements," and, together with the Annual Financial Statements, the "Financial
Statements"). The Financial Statements were prepared in the ordinary course of
business and fairly present, in all material respects, the financial condition,
statements of earnings and cash flows of Seller for the periods or as of the
dates set forth therein, in each case in accordance with GAAP applied on a
consistent basis through the periods covered, except (i) as stated therein or,
where applicable, in the notes thereto, or (ii) with respect to the Interim
Financial Statements, for normal year-end adjustments consistent with past
practice.
Except as set forth on Schedule 5.24 or disclosed by, or reserved
against in, the most recent balance sheet included in the Financial Statements,
Seller did not have, as of the date of such balance sheet, any liability or
obligation, whether accrued or unaccrued, absolute, fixed or contingent
(including liabilities for taxes or unusual forward or long-term commitments),
which was or would be material to the Business or the results of operations or
financial
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condition of the Business, nor to Seller's Knowledge does any aspect of the
Business form a basis for any claim by a third party which, if asserted, could
result in a liability not set forth on Schedule 5.24 or disclosed by or reserved
against in such balance sheet.
5.10 LEGAL PROCEEDINGS. Except as set forth on Schedule 5.10,
there is no judgment or order outstanding, or any claim, action, suit,
complaint, proceeding or investigation by or before any Governmental Authority
or any arbitrator pending, or, to Seller's Knowledge, threatened, involving or
affecting all or any part of the Business.
5.11 TAX RETURNS; OTHER REPORTS. Seller has duly and timely
filed in proper form all income, franchise, sales, use, occupation, service,
transfer, property, excise, payroll, withholding, and other tax returns and all
information and other reports (whether or not relating to taxes) required to be
filed with the appropriate Governmental Authority. All such tax returns and
information and other reports were or will be true, correct and complete when
filed. All taxes, fees and assessment of whatever nature due and payable by
Seller to any Governmental Authority (including, without limitation, interest
additions and penalties) have been paid, except such amounts as are being
contested diligently and in good faith and are not in the aggregate material.
There are no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local or foreign income tax return
for any period, and except as set forth on Schedule 5.11, there are no tax
audits pending.
5.12 EMPLOYMENT MATTERS.
5.12.1 Schedule 5.12 includes a complete and correct
list of names and positions of all employees of Seller directly engaged in the
Business, their dates of hire and their current hourly wages or monthly salaries
and other compensation. Seller has complied in all material respects with all
Legal Requirements relating to the employment of labor, including the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), continuation
coverage requirements with respect to group health plans, and those relating to
wages, hours, collective bargaining, unemployment compensation, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of taxes. No reportable
event, within the meaning of Title IV of ERISA, has occurred and is continuing
with respect to any "employee benefit plan" or "multiemployer plan" (as those
terms are defined in ERISA) maintained by Seller or any Affiliate of Seller. No
prohibited transaction, within the meaning of Title I of ERISA, has occurred
with respect to any such employee benefit plan or multiemployer plan, and no
material accumulated funding deficiency (as defined in Title I of ERISA) or
withdrawal liability (as defined in Title IV of ERISA) exists with respect to
any such employee benefit plan or multiemployer plan.
5.12.2 Seller is not a party to any contract with any
labor organization, and Seller has not recognized or agreed to recognize or is
required to recognize any union or other collective bargaining unit with respect
to the Business. No union or other
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collective bargaining unit been certified as representing any of its employees,
nor has Seller received any requests from any party for recognition as a
representative of employees for collective bargaining purposes. To Seller's
Knowledge, employees are not engaged in organizing activity with respect to any
labor organization. Seller has no employment agreement of any kind, oral or
written, express or implied, that would require Buyer to employ any Person after
the Closing Date.
5.13 SYSTEM DATA. As of August 31, 1999, the Systems consisted
of approximately 3,215 miles of trunk and distribution plant and approximately
97,600 "homes passed" and have approximately 58,395 EBS's. As used in this
Agreement, "homes passed" means each single family residence or dwelling unit
within a building containing multiple dwelling units plus commercial and other
buildings actually served by the Systems, but does not include dwelling units
within multiple dwelling unit buildings to which the Company has been denied a
right of access to the building by an owner or manager. Schedule 1.6 sets forth
as to each System, as of August 31, 1999:
(i) the approximate number of miles of plant that will be
included in the Assets:
(ii) for the eight-month period ended August 31, 1999, the
number of subscribers of each of the Systems as reflected in Seller's billing
reports;
(iii) for the eight-month period ended August 31, 1999, a
description of basic and optional or tier services available from the Systems
and the rates charged by Seller for each, the number of subscribers receiving
each basic and optional or tier service and the rates charged for each, the date
and amount of the last rate increase for System service, and an explanation of
how subscribers are counted (e.g. does a subscriber with an HBO multiplex count
as one or multiple subscribers?);
(iv) for each of the years ended December 31, 1997 and 1998,
the number of subscribers of each of the Systems and the number of subscribers
receiving basic or optional tier services and the rates charged for each;
(v) the stations and signals carried by the Systems and the
channel position of each such signal and station;
(vi) the MHZ of visual and aural signal that such System is
capable of delivering to substantially all of such System's subscriber terminals
such that the delivered signal meets or exceeds the requirements of part 76,
Paragraph 76.605 of the FCC's rules and regulations;
(vii) the channel capacity for each of the Systems (including
a breakdown of channels utilized and channels available);
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(viii) the disconnection policies of the Systems; and
(ix) the cities, towns, townships, villages and boroughs
served by each System.
5.14 FINDERS AND BROKERS. Other than ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company,
Inc., and as disclosed on Schedule 5.10, Seller has not employed, directly or
indirectly, any financial advisor, broker or finder or incurred any liability
for any financial advisory, brokerage, finder's or similar fee or commission in
connection with the transactions contemplated by this Agreement. Seller will pay
all amounts due and owing to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
5.15 INTANGIBLES. Seller neither uses nor holds any
copyrights, trademarks, trade names, service marks, service names, logos,
licenses, permits or other similar intangible property rights and interest in
the operations of the Systems that do not incorporate the name "Star Cable,"
"Star Cable Company," "Star," or variations thereof. In the operation of the
Systems, Seller has no Knowledge that it is infringing upon or otherwise acting
adversely to any such intangible property rights and interests owned by any
other Person or Persons, and there is no claim or action pending, or to Seller's
Knowledge threatened, with respect thereto.
5.16 ACCOUNTS RECEIVABLE. The accounts receivable relating to
the Systems are actual and bona fide receivables representing obligations for
the total dollar amount thereof shown on the books of Seller which resulted from
the regular course of Seller's business. The accounts receivable for which
Seller will receive credit pursuant to Section 3.2.2 will be fully collectible
in accordance with their terms, subject to no offset or reduction of any nature.
5.17 BONDS; LETTERS OF CREDIT; CERTIFICATES OF INSURANCE.
Except as set forth on Schedule 5.17, there are no franchise, construction,
fidelity, performance, or other bonds or letters of credit posted, or
certificates of insurance issued, by Seller in connection with the Systems or
the Assets.
5.18 RIGHTS IN ASSETS. Except as set forth in Schedule 5.18,
no Person (including any Governmental Authority) has any right to acquire an
interest in the Systems or any material Asset (including any right of first
refusal or similar right), other than rights of condemnation or eminent domain
afforded by law (none of which have been exercised and no proceedings therefor
have been commenced).
5.19 BOOKS AND RECORDS. All of the books, records, and
accounts of the Business are in all material respects true and complete, are
maintained in accordance with good business practice and all applicable Legal
Requirements, accurately present and reflect in all material respects all of the
transactions therein described, and are reflected accurately in the Financial
Statements.
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5.20 DISCLOSURE. To Seller's Knowledge, all material facts
relating to the condition of the Systems have been disclosed to Buyer in or in
connection with this Agreement. No representation or warranty by Seller in this
Agreement or in any Schedule or Exhibit to this Agreement, or any certificate
furnished or to be furnished by Seller pursuant to this Agreement, contains or
will contain any untrue statement of material fact, or omits or will omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances in
which made. Without limiting the generality of the foregoing, the information
set forth in Schedule 1.6 concerning the Business is accurate and complete in
all material respects.
5.21 COMMITMENTS. Except as described in Schedule 5.21, there
are no unfulfilled binding commitments for capital improvements which Seller is
obligated to make in connection with the Systems. There are no liabilities to
subscribers or to other users of Seller's services which are material to the
Business, except: (i) with respect to deposits made by such subscribers or such
other users; and (ii) the obligation to supply services to subscribers in the
ordinary course of business, pursuant to any franchises. There are no complaints
by subscribers or other users of Seller's services that, individually or in the
aggregate, could materially and adversely affect the financial condition,
Assets, liabilities, operations or prospects for the Systems. Except with
respect to the Persons listed on Schedule 5.21, there is no free service
liability to subscribers existing with respect to the Systems. Except with
respect to deposits for converters, encoders, decoders and related equipment,
and any other item which is to be adjusted pursuant to Section 3.2 hereof,
Seller has no obligations or liability for the refund of monies or for the
provision of rebates to its subscribers. Except as set forth in any franchises
set forth in Schedule 5.7.2, with respect to the Systems, Seller has not made a
commitment to any franchising authority to maintain a local office in any
location. Seller has not made any commitment to any of the municipalities served
by the Systems to pay franchise fees to any such municipalities in excess of the
amounts set forth in the franchises as described in Schedule 5.7.2.
5.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in
Schedule 5.22, none of Seller's partners, their relatives nor any of their
respective Affiliates is involved in any business arrangement or relationship
with Seller, and none of Seller's partners, their relatives nor any of their
respective Affiliates owns any property or right, tangible or intangible, which
is used by Seller in connection with the Business.
5.23 YEAR 2000. Seller has (a) completed a review and
assessment of all areas within the Business and the Systems that could
reasonably be expected to be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by the Business may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (b) developed a plan for
addressing the Year 2000 Problem on a timely basis, which plan has been made
available to Buyer, and (c) to date, implemented the plan. All of Seller's
computer applications that are material to the Business and the Systems will on
a timely basis be able to perform
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date-sensitive functions for all dates before and after January 1, 2000, except
to the extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
5.24 ABSENCE OF CERTAIN CHANGES. Except as described in
Schedule 5.22 or Schedule 5.24, since December 31, 1998, Seller has conducted
the Business in the ordinary and usual course, and there has not been any of the
following:
(a) any material damage, destruction or loss (whether or
not covered by insurance) with respect to any material Assets of Seller;
(b) any change by Seller of its accounting methods,
principles or practices;
(c) any declaration, setting aside or payment of any
dividends or distributions in respect of partnership interests in Seller, or any
redemption, purchase or other acquisition by Seller of its partnership
interests;
(d) any entry into or amendment of any material
employment or severance compensation agreement or consulting or similar
agreement with, or any material increase in the compensation or benefits payable
or the establishment or amendment of any plans to, any employee of Seller;
(e) any re-evaluation by Seller of any of its Assets,
including the writing down or off of Assets, other than in the ordinary course
of business;
(f) any material commitment, agreement or transaction
entered into, amended or terminated (or any waiver of any rights or remedies
under any of the foregoing) by Seller (including any agreement with respect to
any ongoing or threatened litigation), other than in the ordinary course of
business;
(g) any amendment to the partnership agreement of Seller;
(h) any acquisition or disposition of Assets by Seller,
other than acquisitions or dispositions made in the ordinary course of business;
(i) any material amendment of any instrument of
indebtedness, or any Encumbrance, material lease or consent;
(j) any default, event of default or breach (or any event
which, with notice or the passage of time or both, would constitute a default,
event of default or breach) by Seller of any credit, financing or other
agreement or instrument relating to any material indebtedness;
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(k) any sale, payment, loan or advance of any amount or
any transfer or lease of any properties or Assets to, or any agreement or
arrangement with any of Seller's officers or directors, except for directors'
fees and compensation to officers at rates not exceeding the rates of
compensation paid during the year ended December 31, 1998;
(l) any adoption of a plan of or any agreement or
arrangement with respect to resolutions providing for the liquidation,
dissolution, merger, consolidation or other reorganization of Seller;
(m) any settlement or compromise of any claim, other than
those in which the amount paid does not exceed $25,000 individually or in the
aggregate;
(n) any change, condition, occurrence, circumstance or
other event that, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect; or
(o) any commitment or agreement to do any of the
foregoing, except as otherwise required or expressly permitted by this
Agreement.
5.25 OWNERSHIP OF PREFERRED STOCK. Seller does not own more
than one percent (1%) of the outstanding voting stock of CCI (each of "own" and
"voting stock" as defined for purposes of Section 203 of the Delaware General
Corporation Law). Seller is acquiring the Preferred Stock under this Agreement
for its own account solely for the purpose of investment and not with a view to,
or for sale in connection with, any distribution thereof in violation of the
U.S. Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"). Seller acknowledges that the
Preferred Stock has not been registered under the Securities Act and may be sold
or disposed of in the absence of such registration only pursuant to an exemption
from the registration requirements of the Securities Act. Seller and each of its
members is an accredited investor as defined in Rule 501 of Regulation D under
the Securities Act. Except for the express representations and warranties set
forth in Section 6, Seller agrees that (i) no representation or warranty, either
express or implied, has been made or deemed to have been made and (ii) it is not
relying on any representation or warranty, either express or implied, made or
deemed to have been made, in each case, by Buyer or any of its representatives,
with respect to the Preferred Stock as to the accuracy or completeness of any of
the information (including, without limitation, any reserve estimates,
projections, forecasts or other forward-looking information) provided or
otherwise made available to Seller or any of its representatives with respect to
(w) the appropriateness of the conversion price of the Preferred Stock, (x) the
value of the Preferred Stock, (y) the length of time that Seller will be
required to hold the Preferred Stock, or (z) the business, assets or condition
(financial or otherwise) of Buyer or its subsidiaries. Seller agrees that it
shall not be entitled to any recission rights with respect to the Preferred
Stock or to any further indemnification rights or claims of any nature
whatsoever in respect thereof (whether by contract, common law, statute, law,
regulation or otherwise), other than indemnification rights related to the
representations and warranties made pursuant to Section 6 hereof, all of
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which Seller hereby waives; provided, however, that nothing herein is intended
to waive any claims for intentional fraud.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller as of the date of this Agreement and as of the Closing, as
follows:
6.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite corporate power and authority to carry on its business as
currently conducted and to own, lease, use and operate its assets. Buyer is duly
qualified or licensed to do business and is in good standing under the laws of
each jurisdiction in which the character of the properties owned, leased used or
operated by it or the nature of the activities conducted by it makes such
qualification necessary, except any such jurisdiction where the failure to be so
qualified or licensed and in good standing would not have a Material Adverse
Effect on Buyer or on the validity, binding effect or enforceability of this
Agreement.
6.2 AUTHORITY AND VALIDITY. Buyer has all requisite corporate
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement. The
execution and delivery by Buyer of, the performance by Buyer of its obligations
under, and the consummation by Buyer of the transactions contemplated by, this
Agreement have been duly authorized by all requisite corporate action of Buyer
and this Agreement constitutes the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except insofar as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
6.3 NO BREACH OR VIOLATION BY TRANSMISSION, L.L.C. The
assumption of the television translator licenses by Transmission, L.L.C. will
not: (a) violate any provision of the charter or regulations of Transmission,
L.L.C.; (b) violate any Legal Requirement; (c) require any consent, approval or
authorization of, or any filing with or notice to, any Person; or (d) (i)
violate, conflict with or constitute a breach of or default under (without
regard to requirements of notice, passage of time or elections of any Person),
(ii) permit or result in the termination, suspension or modification of, (iii)
result in the acceleration of (or give any Person the right to accelerate) the
performance of Transmission, L.L.C. under, or (iv) result in the creation or
imposition of any Encumbrance under, any instrument or other agreement to which
Transmission, L.L.C. is a party or by which Transmission, L.L.C. or any of its
assets is bound or affected, except for purposes of this clause (d) such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications, and accelerations as would not, individually or in the aggregate,
have a Material Adverse Effect on Transmission, L.L.C. or on the validity,
binding effect or enforceability of this Agreement.
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6.4 ORGANIZATION AND QUALIFICATION OF TRANSMISSION, L.L.C.
Transmission, L.L.C. is a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
organizational power and authority to carry on its business as currently
conducted and to own, lease, use and operate its assets. Transmission, L.L.C. is
duly qualified or licensed to do business and is in good standing under the laws
of each jurisdiction in which the character of the properties owned, leased used
or operated by it or the nature of the activities conducted by it makes such
qualification necessary, except any such jurisdiction where the failure to be so
qualified or licensed and in good standing would not have a Material Adverse
Effect on Transmission, L.L.C. or on the validity, binding effect or
enforceability of this Agreement.
6.5 AUTHORITY AND VALIDITY OF TRANSMISSION, L.L.C.
Transmission, L.L.C. has all requisite organizational power and authority to
assume the television translator licenses as contemplated by this Agreement. The
assumption of the television translator licenses by Transmission, L.L.C. and any
related transactions contemplated by this Agreement have been duly authorized by
all requisite organizational action of Transmission, L.L.C. and the assumption
of the television translator licenses under this Agreement constitutes the valid
and binding obligation of Transmission, L.L.C., enforceable against
Transmission, L.L.C. in accordance with its terms, except insofar as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
6.6 NO BREACH OR VIOLATION. Subject to obtaining the Required
Consents, all of which are listed on Schedule 1.30, the execution, delivery and
performance of this Agreement by Buyer will not: (a) violate any provision of
the charter or bylaws of Buyer; (b) violate any Legal Requirement; (c) require
any consent, approval or authorization of, or any filing with or notice to, any
Person; or (d) (i) violate, conflict with or constitute a breach of or default
under (without regard to requirements of notice, passage of time or elections of
any Person), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Buyer under, or (iv) result in the
creation or imposition of any Encumbrance under, any instrument or other
agreement to which Buyer is a party or by which Buyer or any of its assets is
bound or affected, except for purposes of this clause (d) such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications, and
accelerations as would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer or on the validity, binding effect or enforceability of
this Agreement.
6.7 FINDERS AND BROKERS. Other than Communications Equity
Associates, Inc., Buyer has not employed any financial advisor, broker or finder
or incurred any liability for any financial advisory, brokerage, finder's or
similar fee or commission in connection with the transactions contemplated by
this Agreement. Buyer's obligation to Communications Equity Associates, Inc. is
limited to $400,000.
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6.8 ORGANIZATION; GOOD STANDING; QUALIFICATION OF CCI. CCI is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and to issue and deliver the Preferred Stock and the Class A Common
Stock issuable upon conversion thereof, and to carry out the provisions in the
Certificate of Designation in the form attached hereto as Exhibit N. CCI is duly
qualified and is authorized to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, properties, prospects, or
financial condition.
6.9 AUTHORIZATION OF CCI. All corporate action on the part of
CCI, its officers, directors and stockholders necessary for the authorization,
issuance (or reservation for issuance), and delivery of the Preferred Stock
being issued hereunder and the Class A Common Stock issuable upon conversion
thereof has been taken or will be taken prior to the Closing.
6.10 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The
Preferred Stock that is being issued to Seller hereunder, when issued and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Stockholders' Agreement
and under applicable state and federal securities laws. The Class A Common Stock
issuable upon conversion of the Preferred Stock under this Agreement has been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Certificate of Designation in the form attached hereto as Exhibit
N, will be duly and validly issued, fully paid, and nonassessable and will be
free of restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws.
6.11 CAPITALIZATION OF CCI. Schedule 6.11 contains a complete
and correct list of the authorized, issued and outstanding common stock,
preferred stock and any other class of capital stock of CCI ("CCI Equity
Securities") and any subscriptions, options, conversion rights, warrants, or
other agreements, securities or commitments of any kind obligating CCI to issue,
grant, deliver or sell, or cause to be issued, granted, delivered or sold, any
CCI Equity Securities, or securities convertible into or exchangeable for CCI
Equity Securities ("CCI Derivative Securities") as of the date hereof.
SECTION 7. ADDITIONAL COVENANTS
7.1 ACCESS TO PREMISES AND RECORDS. Between the date of
execution and delivery of this Agreement and the Closing Date, and upon not less
than forty-eight (48) hours' notice, Seller will give Buyer and its
representatives full access at reasonable times to all the premises and books
and records of the Business and to all the Assets and will furnish to Buyer and
its representatives all information regarding the Business and the Assets as
Buyer may from time to time reasonably request. Notwithstanding any
investigation that Buyer may
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conduct of the Business and the Assets, Buyer may fully rely on Seller's
representations, warranties, covenants and indemnities, which will not be waived
or affected by or as a result of such investigation; provided, however, that
Buyer has a good faith obligation to provide Seller with written notification of
any actual knowledge of any material variation related to any representation or
warranty discovered prior to the Closing Date.
7.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL
STATEMENTS. Except as Buyer may otherwise agree in writing, until the Closing:
7.2.1 Seller will continue to operate the Business in
the ordinary course consistent with past practices and will use its best efforts
to keep available the services of its employees employed in connection with the
Systems and to preserve any beneficial business relationships with customers,
suppliers and others having business dealings with Seller relating to the
Business. Seller will continue to construct line extensions required by the
Systems and Governmental Permits in the ordinary course of business and make
capital expenditures to the Systems substantially in accordance with past
practice and as agreed to in the Capital Expenditure Plan set forth on Schedule
7.2.1. Without limiting the generality of the foregoing, Seller will maintain
the Assets in existing condition and repair, will make reasonable efforts to
maintain appropriate staff and management personnel at the Systems, consistent
with past practices, will maintain adequate inventories of spare Equipment
consistent with past practice, will maintain insurance as in effect on the date
of this Agreement and will keep all of the Business' books, records and files in
the ordinary course of business in accordance with past practices. Seller shall
duly comply in all material respects with all applicable material Legal
Requirements and perform all its material obligations under all of the
Governmental Permits and material Seller Contracts without default. Seller will
not itself, and nor will it permit any of its officers, directors, shareholders,
agents or employees to, pay any of the Systems' subscriber accounts receivable
(other than for their own residences) prior to the Closing Date. Seller will
continue to implement its procedures with respect to the Business for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent in accordance with those in effect on the date of this Agreement.
7.2.2 Except as set forth on Schedule 7.2.1, Seller will
not, without the prior written consent of Buyer, (a) change the rate charged for
Basic Services, Pay TV or other services or goods charged to subscribers and
will not add or delete any program services, in either case, unless required to
do so by law, including, without limitation, the Rate Regulation Act or the Rate
Regulation Rules; (b) sell, transfer or assign any of the Assets (other than in
the ordinary course of business) or permit the creation of or fail to take any
action that would result in any material Encumbrance on any Asset; (c) permit
the amendment or cancellation of any of the Governmental Permits, Seller
Contracts or any other material contract or agreement (other than those
constituting Excluded Assets) which affects or is applicable to any System or
the Business; (d) enter into any contract or commitment or incur any
indebtedness or other liability or obligation of any kind relating to any System
or the Business involving an expenditure in excess of $10,000, if such contract,
commitment, indebtedness, liability or obligation, by its terms, will survive
the Closing; (e) implement any
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extraordinary promotions or discounts the terms of which are materially
inconsistent with past practice; or (f) take or omit to take any action that
would cause Seller to be in breach of any of its representations or warranties
in this Agreement. Notwithstanding the foregoing, Seller may, at any time prior
to or at the Closing, transfer, distribute, assign or sell, the Excluded Assets.
No adjustment will be made to the Base Purchase Price by reason of the
distribution, transfer, assignment or sale or retention by Seller of the
Excluded Assets, unless such action results in an adjustment under Section 3.3.
7.2.3 Seller will deliver to Buyer copies of unaudited
monthly balance sheets and statements of operating cash flow for the Business
and any reports with respect to the operations of each System within twenty (20)
days after each month end, which are true and correct in all material respects,
regularly prepared by or for Seller at any time between the date of this
Agreement and the Closing. Seller represents and warrants that all financial
statements so delivered will fairly present, in all material respects, the
financial position, statements of earnings and cash flow for Seller for the
periods or as of the dates set forth therein, in each case in accordance with
federal income tax basis of accounting applied on a consistent basis through the
periods covered, consistent with past practice, subject to normal year end
adjustments, none of which shall materially affect Annualized EBITDA. Seller
covenants to cooperate with Buyer and Buyer's accountants to convert such
financial statements to GAAP basis, and to allow Buyer and Buyer's accountants
access to Seller's books, records and accounting data to facilitate such
conversion.
7.3 EMPLOYEE MATTERS.
7.3.1 Seller will pay to employees employed in the
Business all compensation, including salaries, commissions, bonuses, deferred
compensation, severance, insurance, pensions, profit sharing, vacation, sick pay
and other compensation or benefits to which they are entitled for periods prior
to the Closing. Seller will not, without the prior written consent of Buyer,
change the compensation or benefits of any employees of the Business; provided,
however, that Seller may provide salary increases upon employee anniversary
dates which are consistent with Seller's past practice. Buyer may, but will have
no obligation to, offer employment to any of the current employees of the
Business as Buyer may desire. Buyer anticipates that it will offer employment to
Seller field personnel, but will not retain Seller corporate employees.
7.3.2 Seller will be responsible for maintenance and
distribution of benefits accrued under any employee benefit plan (as defined in
ERISA) maintained by Seller pursuant to the provisions of such plans. Buyer will
assume neither any liability or any such accrued benefits nor any fiduciary or
administrative responsibility to account for or dispose of any such accrued
benefits under any employee benefit plans maintained by Seller.
7.3.3 All claims and obligations under, pursuant to or
in connection with any welfare, medical, insurance, disability or other employee
benefit plans of
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Seller or arising under any Legal Requirement affecting employees of Seller
incurred before the Closing Date or resulting or arising from events or
occurrences occurring or commencing prior to the Closing Date will remain the
responsibility of Seller, whether or not such employees are hired by Buyer after
the Closing. Buyer will have and assume no obligations or liability under or in
connection with any such plan and will assume no obligation of Seller with
respect to any pre-existing condition of any employee of Seller who is hired as
an employee of Buyer. Nothing in this Section 7.3 or in any other provision of
this Agreement is intended to confer upon any employee of Seller or such
employee's legal representative or heirs any rights as a third party beneficiary
or otherwise or any remedies of any kind whatsoever under or by reason of this
Agreement, or the transactions contemplated hereby, including, without
limitation, any rights of employment or continued employment. All rights and
obligations created by this Agreement are solely between the parties.
7.4 LEASED EQUIPMENT. Except as set forth on Schedule 7.4,
Seller will pay the remaining balances on any leases for Equipment used in the
Business and deliver title to such Equipment free and clear of all Encumbrances
(other than Permitted Encumbrances) to Buyer at the Closing.
7.5 REQUIRED CONSENTS, ESTOPPEL CERTIFICATES AND FRANCHISE
RENEWALS.
7.5.1 Seller will use commercially reasonable efforts to
obtain, as soon as possible and, except as otherwise expressly provided in this
Agreement, at its expense, the Required Consents, in form and substance
reasonably satisfactory to Buyer. Any Required Consent will be deemed to be
satisfactory to Buyer if it is identical in all material respects to the
applicable form attached as Exhibit C. Buyer will cooperate with Seller to
obtain the Required Consents, but Buyer will not be required to agree to any
adverse changes in, or the imposition of any condition to the transfer to Buyer
of, any Seller Contract or Governmental Permit as a condition to obtaining any
Required Consent. Seller also will use commercially reasonable efforts to
obtain, at its expense, such estoppel certificates, landlord waivers,
non-disturbance agreements or similar documents from lessors and other Persons
who are parties to Seller Contracts as Buyer may reasonably request.
7.5.2 Seller will use commercially reasonable efforts to
obtain, and Buyer will use commercially reasonable efforts in cooperation with
Seller to obtain, renewals or extensions, at the option of Buyer, of those
franchises (the "Extended Franchises"), set forth on Schedule 7.5.2 for the
required renewal or extension period set forth on Schedule 7.5.2 measured from
or after the expiration date as set forth on Schedule 7.5.2, and upon other
terms and conditions satisfactory to Buyer.
7.6 MDU AGREEMENTS. A list of all multiple dwelling unit
projects that are subject to common ownership which currently receive cable
television service from the Business, including the rates and terms of the
agreements under which services are provided, is provided on Schedule 7.6, has
been delivered to Buyer and all such agreements are
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transferable to Buyer without consent of any other party, except for Required
Consents set forth on Schedule 1.30.
7.7 TITLE COMMITMENTS AND SURVEYS.
7.7.1 Within thirty (30) days after the execution of
this Agreement, Seller will order (a) commitments for owner's title insurance
policies on all Real Property owned by Seller and on easements which provide
access to headend or tower sites, (b) commitments for lessee's title insurance
policies for the Real Property leased by Seller which is used for headend or
tower sites and which are designated by Buyer within ten (10) days after the
execution of this agreement, and (c) to the extent necessary to obtain a clean
title commitment, a perimeter survey on each parcel of Real Property for which a
title insurance policy is to be obtained. Costs for such commitments and surveys
will be shared equally by Buyer and Seller. The title commitments will evidence
a commitment to issue an ALTA title insurance policy insuring good, marketable
and indefeasible fee simple (or easement or leasehold, if applicable) title to
each parcel of the Real Property for such amount as Buyer directs and will
contain no exceptions except for items which in Buyer's reasonable opinion do
not adversely affect (other than in an immaterial way as to any individual
parcel) the good, marketable and indefeasible title to or Buyer's access or
quiet use or enjoyment of such Real Property in the manner the Real Property is
presently used or in the normal conduct of the Business. At the Closing, Seller
will deliver to Buyer such title commitments updated to a date and time near
Closing from title companies acceptable to Buyer. In the event Seller has not
eliminated or caused to be eliminated all unacceptable exceptions from such
policies or commitments prior to Closing, and Buyer elects to proceed with the
Closing, Buyer will be entitled to indemnification with respect to such
exceptions as provided in Section 11.2.
7.7.2 Title insurance policies on all Real Property in
such amounts as Buyer directs (but not to exceed one hundred fifty percent
(150%) of the fair market value thereof) will be delivered to Buyer within
thirty (30) days after the Closing Date, evidencing title to the Real Property
vested in Buyer consistent with the commitments delivered at the Closing
pursuant to Section 7.7.1. Costs for such title insurance policies will be
shared equally by Buyer and Seller.
7.8 NO SHOPPING. Neither Seller nor any agent or
representative of it will, during the period commencing on the date of this
Agreement and ending with the earlier to occur of the Closing or the termination
of this Agreement, directly or indirectly (a) solicit or initiate the submission
of proposals or offers from any Person for, (b) participate in any discussions
pertaining to, or (c) furnish any information to any Person other than Buyer
relating to, any direct or indirect acquisitions or purchase of all or any
portion of the Assets, the Systems or the Business. If Seller or any agent or
representative of it receives from any Person, directly or indirectly, such
solicitation or informational request, Seller will promptly advise such Person,
by written notice, of the terms of this Section 7.8 and will promptly, orally
and in writing, advise Buyer of such solicitation or informational request and
deliver a copy of such notice to Buyer.
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7.9 NOTIFICATION OF CERTAIN MATTERS. Seller will promptly
notify Buyer of any material fact, event, circumstance or action (a) which, if
known on the date of this Agreement, would have been required to be disclosed to
Buyer pursuant to this Agreement or (b) the existence or occurrence of which
would cause any of Seller's representations or warranties under this Agreement
not to be correct and complete.
7.10 RISK OF LOSS; CONDEMNATION.
7.10.1 Seller will bear the risk of any loss or damage
to the Assets resulting from fire, theft or other casualty (except reasonable
wear and tear) at all times prior to the Closing. If any such loss or damage is
so substantial as to prevent normal operation of any material portion of a
System or the replacement or restoration of the lost or damaged property within
twenty (20) days after the occurrence of the event resulting in such loss or
damage, Seller will immediately notify Buyer of that fact and Buyer, at any time
within ten (10) days after receipt of such notice, may elect by written notice
to Seller either (i) to waive such defect and proceed toward consummation of the
acquisition of the Assets in accordance with terms of this Agreement, in which
event Seller shall assign to Buyer all insurance proceeds and insurance policies
relating thereto, or (ii) to adjust the Base Purchase Price commensurate with
such loss or damage on a replacement cost basis.
7.10.2 If, prior to the Closing, any material part of or
interest in the Assets is taken or condemned as a result of the exercise of the
power of eminent domain, or if a Governmental Authority having such power
informs the affected Seller or Buyer that it intends to take or condemn all or
any part of the Assets (such event being called, in either case, a "Taking"),
then (a) Buyer will have the sole right, in the name of Seller, if Buyer so
elects, to negotiate for, claim, contest and receive all damages with respect to
the Taking, (b) Seller will be relieved of its obligation to convey to Buyer the
Assets or interests that are the subject of the Taking, (c) at the Closing,
Seller will assign to Buyer all of Seller's rights to all damages and costs
payable with respect to such Taking and will pay to Buyer all damages and costs
previously paid to Seller with respect to the Taking and (d) following the
Closing, Seller will give Buyer such further assurances of such rights and
assignment with respect to the Taking as Buyer may from time to time reasonably
request. To the extent damages for such taking do not equal replacement cost, a
further adjustment to the Base Purchase Price will be made equal to the
difference between the two values.
7.11 TRANSFER TAXES. Seller will be responsible for the
payment of any state or local sales, use, transfer, excise, documentary or
license taxes or fees or any other charge (including filing fees) imposed by any
Governmental Authority with respect to the transfer of any of the Assets
pursuant to this Agreement; provided, however that Buyer and Seller will equally
share fees related directly to transfer of Seller's motor vehicles.
7.12 DISTANT BROADCAST SIGNALS. If requested by Buyer, at no
cost to Buyer, Seller will delete on or prior to the Closing Date, any distant
broadcast signals which Buyer determines will result in unacceptable liability
on the part of Buyer for copyright
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payments after Closing in excess of those payable by Seller with respect to
carriage of such signals, provided, however, that Seller will not be required to
delete any distant broadcast signals if Seller is bound by a retransmission
agreement or similar contract to carry such signal.
7.13 NON-COMPETITION AGREEMENT. At the Closing, Seller will,
and will cause ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇., to, sign and deliver Non-Competition Agreements to Buyer in the
form of Exhibit D.
7.14 UPDATED SCHEDULES. Not less than three (3) days prior to
Closing, Seller will deliver to Buyer revised copies of Schedules 1.6 through
7.6 which shall have been updated to show any changes occurring between the
Effective Date of this Agreement and the date of delivery; provided, however,
that for purposes of Seller's representations and warranties and covenants in
this Agreement, all references to the Schedules will mean the version of the
Schedules attached to this Agreement on the date of signing, and provided
further that if the effect of any such updates to Schedules is to disclose any
one or more additional properties, privileges, rights, interests or claims as
Assets, Buyer, at or before Closing, will have the right (to be exercised by
written notice to Seller) to cause any one or more of such items to be
designated as and deemed to constitute Excluded Assets for all purposes under
this Agreement.
7.15 LIEN AND JUDGMENT. Seller will deliver to Buyer, not more
than thirty (30) days after the date of this Agreement, (a) the results of a
lien search conducted by a professional search company of records in the offices
of the secretaries of state in each state and county clerks in each county where
there exist tangible Assets, and in the state and county where Seller's
principal offices are located, including copies of all financing statements or
similar notices or filings (and any continuation statements) discovered by such
search company and (b) the results of a search of the dockets of the clerk of
each federal and state court of general jurisdiction sitting in the city, county
or other applicable political subdivision where such principal offices or any
material Assets of Seller may be located, with respect to judgments, orders,
writs or decrees against or affecting Seller or any of the Assets. Buyer and
Seller will equally share the costs for such searches under this Section 7.15.
7.16 USE OF SELLER'S NAME. Buyer may continue to operate the
Systems using Seller's tradenames and all derivations and abbreviations of such
name and related marks.
7.17 SATISFACTION OF CONDITIONS. Each party will use its best
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, as set forth in Section 9, provided that Buyer will not be
required to agree to any increase in the amount payable with respect to, or any
modification that makes more burdensome in any material respect, any of the
Assumed Liabilities.
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7.18 CONFIDENTIALITY. Neither party will issue any press
release or make any other public announcement regarding this Agreement or the
transactions contemplated hereby without the consent of the other party. Each
party will hold, and will cause its employees, consultants, advisors and agents
to hold, in confidence, the terms of this Agreement and any non-public
information concerning the other party obtained pursuant to this Agreement.
Notwithstanding the preceding, a party may disclose such information to the
extent required by any Legal Requirement (including disclosure requirements
under federal and state securities laws), but the party proposing to disclose
such information will first notify and consult with the other party concerning
the proposed disclosure, to the extent reasonably feasible. Each party also may
disclose such information to employees, consultants, advisors, agents and actual
or potential lenders whose knowledge is necessary to facilitate the consummation
of the transactions contemplated by this Agreement. Each party's obligation to
hold information in confidence will be satisfied if it exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information.
7.19 MEMORANDA OF LEASE. Seller will use commercially
reasonable efforts to provide Buyer with recorded documentation of each headend
site lease or easement, by recording the lease or easement or by obtaining from
the appropriate lessor and recording a Memorandum of Lease in substantially the
form set forth on Exhibit E.
7.20 HSR NOTIFICATION. As soon as practicable after the
execution of this Agreement, but in any event no later than ten (10) Business
Days after such execution, Seller and Buyer will each 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"). Seller and Buyer will take 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 will equally share the cost of any filing fee
applicable to any notification or report under the HSR Act.
7.21 ▇▇▇▇▇▇▇ MONEY. To secure Buyer's obligations under this
Agreement, within five (5) Business Days from the Effective Date of this
Agreement, Buyer will deposit either (a) an irrevocable letter of credit payable
for the amount of $3,000,000, or (b) the amount of $3,000,000 in immediately
available funds, or (c) a combination thereof totaling $3,000,000 (the
"Deposit") into an escrow account pursuant to the ▇▇▇▇▇▇▇ Money Escrow
Agreement.
7.22 LEGEND. Seller agrees to the placement on (i)
certificates representing the Preferred Stock issued to Seller hereunder, and
(ii) any certificate issued at any time in exchange or substitution for any
certificate bearing such legend, of a legend substantially as set forth below:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE COMPANY HAS
RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSFER IS BEING MADE IN
COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE
TRANSFER OF SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
FURTHER RESTRICTIONS, OBLIGATIONS AND OTHER CONDITIONS SPECIFIED IN THE
STOCKHOLDERS' AGREEMENT DATED AS OF JULY 28, 1999 AMONG THE COMPANY AND
CERTAIN STOCKHOLDERS."
SECTION 8. CLOSING
Seller shall provide Buyer with notice of the later to occur of (i) the
expiration of any applicable waiting period occurs or clearance under the HSR
Act has been received, and (ii) Required Consents have been received. The
Closing will be held on the last day of the month which is ten (10) Business
Days after receipt of said notice, or on such date as the parties may agree upon
as soon as both parties are ready to proceed to Closing. The Closing will take
place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as Buyer and Seller may
agree, or by courier and telecopier service.
SECTION 9. CONDITIONS TO CLOSING
9.1 CONDITIONS TO THE OBLIGATIONS OF BUYER AND SELLER. The
obligations of each party to consummate the transactions contemplated by this
Agreement to take place at the Closing are subject to the satisfaction or
waiver, to the extent permitted by applicable Legal Requirements, at or prior to
the Closing Date, of each of the following conditions:
9.1.1 No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (a) prohibit Buyer's ownership or operation of all or a material portion
of any System, the Business or the Assets, (b) compel Buyer to dispose of or
hold separate all or a material portion of any Systems, the Business or the
Assets as a result of any of the transactions contemplated by this Agreement or
(c) prevent or make illegal the consummation of any transactions contemplated by
this Agreement.
9.1.2 All filings required under the HSR Act, if any,
have been made and the applicable waiting period has expired or been earlier
terminated without the receipt of any objection or the commencement or threat of
any litigation by a
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Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
9.2 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the transactions contemplated by this Agreement to take
place at the Closing are subject to the satisfaction or waiver, to the extent
permitted by applicable Legal Requirements, at or prior to the Closing Date, of
each of the following conditions:
9.2.1 All representations and warranties of Seller
contained in this Agreement are, if not specifically qualified by materiality,
true and correct in all respects and, if so qualified, are true and correct in
all material respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, except for changes contemplated
or permitted by this Agreement.
9.2.2 Seller has in all material respects performed and
complied with each obligation, agreement, covenant and condition required by
this Agreement to be performed or complied with by Seller at or prior to the
Closing.
9.2.3 Seller has executed (or caused to be executed) and
delivered to Buyer each of the following items:
(a) an ▇▇▇▇▇▇▇ Money Escrow Agreement in the form attached
as Exhibit A;
(b) a ▇▇▇▇ of Sale in the form attached as Exhibit F;
(c) an Assignment and Assumption Agreement in the form
attached as Exhibit G;
(d) an Assignment of Leases in the form attached as
Exhibit H and, if requested by Buyer, short forms or memoranda of such
Assignments in recordable form, as to each leasehold interest of Seller;
(e) Non-Competition Agreements in the form attached as
Exhibit D;
(f) motor vehicle title certificates endorsed for
transfer;
(g) General Warranty Deeds in form reasonably acceptable
to Buyer for each parcel of Real Property owned in fee by Seller;
(h) the Consent to and Joinder in Stock Agreements in the
forms attached as Exhibit I;
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(i) an affidavit of Seller, under penalty of perjury,
that Seller is not a "foreign person" (as defined in the Foreign Investment in
Real Property Tax Act and applicable regulations) and that Buyer is not required
to withhold any portion of the consideration payable under this Agreement under
the provisions of such Act in the form attached as Exhibit J; and
(j) such other transfer instruments as Buyer may deem
necessary or advisable to transfer the Assets to Buyer and to perfect Buyer's
rights in the Assets, including, without limitation, such affidavits,
indemnities and other documents that the title company may require in connection
with the issuance of the title policies and commitments described in Section
7.7.
9.2.4 Seller has delivered to Buyer: (a) evidence, in
form and substance satisfactory to Buyer, that the Required Consents have been
obtained or given and are in full force and effect; and (b) to the extent
obtained, the estoppel certificates or similar documents described in Section
7.5. Seller will deliver to Buyer evidence that with respect to all television
translator licenses identified on Schedule 1.30 that Required Consents to
transfer such licenses to Transmission, L.L.C., or a related entity as may be
identified by Buyer, have been obtained or given and are in full force and
effect.
9.2.5 Buyer has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC, counsel for Seller, dated the Closing Date, in the form
set forth in Exhibit K.
9.2.6 Buyer has received the opinion of Wiley, Rein &
Fielding, FCC counsel for Seller, dated the Closing Date, in the form set forth
in Exhibit L.
9.2.7 Except for those agreements which are to be
transferred to Buyer, Buyer has received documentation satisfactory to it of the
termination of all agreements as they relate to the Systems or deletion of the
Systems from Seller's ongoing agreements which are not being assumed by Buyer,
without obligation for payment of any amounts under such agreements to Buyer.
9.2.8 No action, proceeding or investigation has been
instituted or threatened prior to Closing which would, if determined adversely
to Buyer's interest, materially impair the ability of Buyer to realize the
benefits of the transactions contemplated by this Agreement.
9.2.9 Seller has delivered releases, in form
satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other
than Permitted Encumbrances) and, to the extent that the relevant jurisdictions
provide them, a certificate of no taxes due with respect to the Assets issued by
appropriate state taxing authorities as of a date no earlier than ten (10) days
prior to the Closing.
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9.2.10 Seller has delivered to Buyer: (a) a certificate,
dated the Closing Date, signed by Seller's chief executive officer, stating
that, to his or her Knowledge, the conditions set forth in Sections 9.2.1 and
9.2.2 are satisfied; and (b) a copy of the partnership resolutions of Seller
authorizing the execution, delivery and performance of this Agreement by Seller,
and a certificate of Seller, dated as of the Closing, that such resolutions were
duly adopted and are in full force and effect as of the date of Closing, and (c)
such other documents as Buyer may reasonably request in connection with the
transactions contemplated by this Agreement.
9.2.11 Buyer has received title insurance commitments
referred to in Section 7.7.1.
9.2.12 The Extended Franchises have been obtained on
terms and conditions reasonably satisfactory to Buyer.
9.2.13 The Business has no fewer than (a) 56,000 EBS's
and (b) Annualized EBITDA of no less than $12,400,000.
9.2.14 Seller will have terminated the management
agreements, if any, relating to the Assets and will provide a certificate
indicating that all amounts due and owing under the management agreements, if
any, have been paid in full. In addition, Seller and its Affiliates will have
terminated all affiliated management agreements, if any, relating to the Assets,
and will provide a certificate indicating that all amounts due and owing under
the management agreements, if any, have been paid in full.
9.2.15 Between December 31, 1998 and the Closing Date,
there will have been (i) no material adverse change in the financial conditions
of the Assets, the Assumed Liabilities, operations or prospects of the Systems,
whether or not caused by conditions beyond the control of Seller, other than any
change caused by any adjustment to rates or rate rollbacks required in
connection with rate regulation of the Systems or by legislation, rule making or
regulation affecting the cable television industry generally, and (ii) no
material loss, damage, impairment, confiscation or condemnation of any of the
Assets that has not been repaired or replaced.
9.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement to take
place at the Closing are subject to the satisfaction or waiver by Seller, to the
extent permitted by applicable law, at or prior to the Closing Date, of each of
the following conditions:
9.3.1 Buyer has paid the Base Purchase Price required to
be paid at the Closing, as adjusted in accordance with this Agreement and has
delivered to Seller certificates representing the Preferred Stock.
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9.3.2 All representations and warranties of Buyer
contained in this Agreement are, if not specifically qualified by materiality,
true and correct in all respects and, if so qualified, are true and correct in
all material respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
9.3.3 Buyer has in all material respects performed and
complied with each obligation, agreement, covenant and condition required by
this Agreement to be performed or complied with by Buyer at or prior to the
Closing.
9.3.4 Buyer has executed and delivered to Seller an
Assignment and Assumption Agreement in the form attached as Exhibit G.
9.3.5 Buyer has delivered to Seller: (a) a certificate,
dated the Closing Date, signed by the chief executive officer of Buyer, stating
that, to his or her Knowledge, the conditions set forth in Sections 9.3.2 and
9.3.3, are satisfied; (b) a copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement, and
a certificate of Buyer, dated as of the Closing, that such resolutions were duly
adopted and are in full force and effect as of the date of Closing; and (c) such
other documents as Seller may reasonably request in connection with the
transactions contemplated by this Agreement.
9.3.6 Seller has received the opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C., counsel for Buyer, dated the Closing Date, in the form
of Exhibit M.
9.3.7 A Certificate of Designation in the form attached
as Exhibit N as well as all other required charter amendments shall have been
filed by CCI with the Delaware Secretary of State and shall have become and
remain effective.
9.3.8 Buyer has delivered to Seller the fully-executed
(except as to Seller) Consent to and Joinder in Stock Agreements in the forms
attached as Exhibit I.
9.4 WAIVER OF CONDITIONS. Any party may waive in writing any
or all of the conditions to its obligations under this Agreement.
SECTION 10. TERMINATION
10.1 EVENTS OF TERMINATION. This Agreement may be terminated
and the transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
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(b) by Buyer if (i) the conditions to Buyer's obligation
to close set forth in Section 9.2 have not been met by Seller, or waived by
Buyer, on or before ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) the failure of such conditions to be
met is not the result of a material breach of any provision of this Agreement by
Buyer; provided, that, in such instance, Buyer may, in its sole and absolute
discretion, extend such date to a later date, but in no event later than July
31, 2000;
(c) by Seller if (i) the conditions to Seller's obligation
to close set forth in Section 9.3 have not been met by Buyer, or waived by
Seller, on or before ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) the failure of such conditions to be
met is not the result of a material breach of any provision of this Agreement by
Seller; provided, that, in such instance, Seller may, in its sole and absolute
discretion, extend such date to a later date but in no event later than July 31,
2000;
(d) by Seller at any time after Buyer breaches its
covenant set forth in Section 7.21; or
(e) by either Buyer or Seller if the Closing has not
occurred before July 31, 2000.
10.2 LIABILITIES IN EVENT OF TERMINATION. The termination of
this Agreement will in no way limit any obligation or liability of any party
based on or arising from a breach or default by such party with respect to any
of its representations, warranties, covenants or agreements contained in this
Agreement, except that Buyer will have no liability in any event upon exercise
of its right to terminate pursuant to Section 10.1(b) or (e); and provided that
(i) Buyer's liability in the event of termination by Seller pursuant to Section
10.1(c) and 10.1(d) shall be limited to the amount deposited with the Escrow
Agent under the ▇▇▇▇▇▇▇ Money Escrow Agreement; and (ii) Seller shall have no
liability if Seller terminates the Agreement pursuant to Section 10.1(c) or
Section 10.1(e).
10.3 PROCEDURE UPON TERMINATION. In the event of the
termination of this Agreement by Buyer or Seller pursuant to this Section 10,
notice of such termination will promptly be given by the terminating party to
the other.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller and Buyer in this Agreement and in the
documents and instruments to be delivered pursuant to this agreement will
survive the Closing without limitation until eighteen (18) months after the
Closing Date, except that (a) all such representations and warranties with
respect to any Environmental Law will survive until sixty (60) days after the
expiration of the applicable statute of limitations (including any extensions)
for such Environmental Law (b) all representations and warranties with respect
to any federal, state
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or local taxes will survive until three (3) years after the Closing, and (c) the
representations and warranties as to ownership of Real Property set forth in
Section 5.5 will survive the Closing and will continue in full force and effect
without limitation. The periods of survival of the representations and
warranties prescribed by this Section 11.1 are referred to as the "Survival
Period." The liabilities of the parties under their respective representations
and warranties will expire as of the expiration of the applicable Survival
Period, provided, however, that such expiration will not include, extend or
apply to any representation or warranty, the breach of which has been asserted
by either party in written notice to the other before such expiration or about
which either party has given the other written notice before such expiration
indicating the facts or conditions existing that, with the passage of time or
otherwise, can reasonably be expected to result in a breach (and describing such
potential breach in reasonable detail). The covenants and agreements of the
parties in this Agreement and in the other documents and instruments to be
delivered by Seller or Buyer pursuant to this Agreement will survive the Closing
and will continue in full force and effect without limitation.
11.2 INDEMNIFICATION BY SELLER. Seller will indemnify, defend
and hold harmless Buyer and its shareholders and its and their respective
Affiliates, and the shareholders, directors, officers, employees, agents,
successors and assigns of any of such Persons, from and against:
(a) all losses, damages, liabilities, deficiencies or
obligations of or to Buyer or any such other indemnified Person resulting from
or arising out of (i) any breach of any representation or warranty made by
Seller in this Agreement, (ii) any breach of any covenant, agreement or
obligation of Seller contained in this Agreement, (iii) any claim with respect
to, or any event or circumstance related to, the ownership or operation of the
Assets or the conduct of the Business, if such claim arises from or is asserted
in connection with any act, omission, event, or circumstance which occurred or
existed prior to or at the Closing Date, without regard to whether a claim with
respect to such matter is asserted before or after the Closing Date, including
any matter described on Schedule 5.10, (iv) any liability or obligation of
Seller not included in the Assumed Liabilities, (v) any title defect Seller
fails to eliminate as an exception from a title insurance commitment referred to
in Section 7.7.1, (vi) any claim that the transactions contemplated by this
Agreement violate the Worker Adjustment and Retraining Notification Act, as
amended, or any similar state or local law or any bulk transfer or fraudulent
conveyance laws of any jurisdiction, (vii) the presence, generation, removal,
Release or transportation of a Hazardous Substance on or from any of the Real
Property prior to the Closing Date, or non-compliance with any Environmental Law
prior to the Closing Date, including the costs of Clean-up of such Hazardous
Substance and other compliance with the provisions of any Environmental Laws
(whether before or after Closing), or (viii) any rate refund ordered by a
governmental authority for periods prior to the Closing Date; and
(b) all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts' and other
fees, costs and expenses) incident or relating to or resulting from any of the
foregoing.
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In the event that an indemnified item arises under both clause (a)(i) and under
one or more of clauses (a)(ii) through (a)(viii) of this Section 11.2, Buyer's
rights to pursue its claim under clauses (a)(ii) through (a)(viii), as
applicable, will exist notwithstanding the expiration of the Survival Period
applicable to such claim under clause (a)(i).
11.3 INDEMNIFICATION BY BUYER. Buyer will indemnify, defend
and hold harmless Seller and Seller's officers, employees, agents, successors
and assigns, from and against:
(a) all losses, damages, liabilities, deficiencies or
obligations of or to Seller or any such other indemnified Person resulting from
or arising out of (i) any breach of any representation or warranty made by Buyer
in this Agreement, (ii) any breach of any covenant, agreement or obligation of
Buyer contained in this Agreement, (iii) the failure by Buyer to perform any of
its obligations in respect of the Assumed Liabilities, or (iv) any claim with
respect to, or any event or circumstance related to, the ownership or operation
of the Assets or the conduct of the Business, if such claim arises from or is
asserted in connection with any act, omission, event, or circumstance which
occurs or exists after the Closing Date; and
(b) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including, without limitation, settlement costs and reasonable legal,
accounting, experts' and other fees, costs and expenses) incident or relating to
or resulting from any of the foregoing.
In the event that an indemnified item arises under both clause (a)(i) and under
one or more of clauses (a)(ii) or (a)(iii) of this Section 11.3, Seller's rights
to pursue its claim under clauses (a)(ii) or (a)(iii), as applicable, will exist
notwithstanding the expiration of the Survival Period applicable to such claim
under clause (a)(i).
11.4 PROCEDURE FOR INDEMNIFICATION. In the event that either
party to this Agreement shall incur any damages in respect of which indemnity
may be sought by such party pursuant to this Section 11 or any other provision
of this Agreement, the party indemnified hereunder (the "Indemnitee") shall
notify the party providing indemnification (the "Indemnitor") promptly. In the
case of third party claims, such notice shall in any event be given as soon as
possible of the filing or assertion of any claim against the Indemnitee stating
the nature and basis of such claim; provided, however, that any delay or failure
to notify any Indemnitor of any claim shall not relieve it from any liability
except to the extent that the Indemnitor demonstrates that the defense of such
action has been materially prejudiced by such delay or failure to notify. In the
case of third party claims, the Indemnitor shall, within 10 days of receipt of
notice of such claim, notify the Indemnitee of its intention to assume the
defense of such claim if the Indemnitor concurrently assumes the obligation to
indemnify the Indemnitee. If the Indemnitor assumes the defense of the claim,
the Indemnitor shall have the right and obligation (a) to conduct any
proceedings or negotiations in connection therewith and necessary or appropriate
to defend the Indemnitee, (b) to take all
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other required steps or proceedings to settle or defend any such claims, and (c)
to employ counsel to contest any such claim or liability in the name of the
Indemnitee or otherwise. If the Indemnitor shall not assume the defense of any
such claim or litigation resulting therefrom, the Indemnitee may defend against
any such claim or litigation in such manner as it may deem appropriate and the
Indemnitee may settle such claim or litigation on such terms as it may deem
appropriate, and assert against the Indemnitor any rights or claims to which the
Indemnitee is entitled. Payment of Seller or Buyer damages, as the case may be,
shall be made within ten (10) days of a final determination of a claim. A final
determination of a disputed claim shall be (v) a judgment of any court
determining the validity of the disputed claim, if no appeal is pending from
such judgment or if the time to appeal therefrom has elapsed, (w) an award of
any arbitration determining the validity of such disputed claim, if there is not
pending any motion to set aside such award or if the time within to move to set
such award aside has elapsed, (x) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(y) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (z) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
11.5 LIMITATIONS ON INDEMNIFICATION BY SELLER. Seller will not
be liable for indemnification arising solely under Section 11.2(a)(i) for (a)
any losses, damages, liabilities, deficiencies or obligations of or to Buyer or
any other person entitled to indemnification from Seller or (b) any claims,
actions, suits, proceedings, demands, judgments, assessments, fines, interest,
penalties, costs and expenses (including settlement costs and reasonable legal,
accounting, experts' and other fees, costs and expenses) incident or relating to
or resulting from any of the foregoing (the items described in clauses (a) and
(b) collectively being referred to for purposes of this Section 11.5 as "Buyer
Damages") unless the amount of Buyer Damages for which Seller would, but for the
provisions of this Section 11.5, be liable exceeds, on an aggregate basis,
$100,000, in which case Seller will be liable for all such Buyer Damages, which
will be due and payable within thirty (30) days after Seller's receipt of a
statement therefor. In no event will Seller be liable for Buyer Damages in
excess of $37,000,000.
11.6 LIMITATIONS ON INDEMNIFICATION BY BUYER. Buyer will not
be liable for indemnification arising solely under Section 11.3(a)(i) for (a)
any losses, damages, liabilities, deficiencies or obligations of or to Seller or
any other person entitled to indemnification from Buyer or (b) any claims,
actions, suits, proceedings, demands, judgments, assessments, fines, interest,
penalties, costs and expenses (including settlement costs and reasonable legal,
accounting, experts' and other fees, costs and expenses) incident or relating to
or resulting from any of the foregoing (the items described in clauses (a) and
(b) collectively being referred to for purposes of this Section 11.6 as "Seller
Damages") unless the amount of Seller Damages for which Buyer would, but for the
provisions of this Section 11.6, be liable exceeds, on an aggregate basis,
$100,000, in which case Buyer will be liable for all such Seller Damages, which
will be due and payable within thirty (30) days after Buyer's receipt of a
statement therefor. In no event will Buyer be liable for damages in excess of
$37,000,000.
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SECTION 12. MISCELLANEOUS
12.1 PARTIES OBLIGATED AND BENEFITTED. Subject to the
limitations set forth below, this Agreement will be binding upon the parties and
their respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other party, neither party
will assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that Buyer may, without the consent of Seller,
(i) assign or delegate its rights or obligations under this Agreement to any
Affiliate of Buyer, and such assignee will be substituted for Buyer under this
Agreement as though it were the original party to this Agreement and Buyer will
be released from all obligations under this Agreement, (ii) make a collateral
assignment of its rights hereunder to Buyer's or such assignee's secured
lenders, and (iii) assign or delegate its rights or obligations under this
Agreement to any successor of Buyer in the event of a merger, consolidation or
sale of stock or to any purchaser of all or substantially all of the Assets, and
to any transferee of all or a substantial part of any of Buyer's assets or
business and any such transferee shall be entitled to enforce Buyer's rights on
an individual basis.
12.2 NOTICES. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given only if delivered in person
or by first class, prepaid, registered or certified mail, or sent by courier or,
if receipt is confirmed, by telecopier:
To Buyer at:
Universal Cable Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With a further copy (which will not constitute
notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chairman of the Board
Classic Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a further copy (which will not constitute
notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller at:
Star Cable Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 12.2. All
notices will be deemed to have been received on the date of delivery or on the
third Business Day after mailing in accordance with this Section, except that
any notice of a change of address will be effective only upon actual receipt.
12.3 ATTORNEYS' FEES. In the event of any action or suit based
upon or arising out of any alleged breach by any party of any representation,
warranty, covenant or agreement contained in this Agreement, the prevailing
party will be entitled, subject to the provisions of Sections 11.5 and 11.6, to
recover reasonable attorneys' fees and other costs of such action or suit from
the other party.
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12.4 RIGHT TO SPECIFIC PERFORMANCE. Both parties acknowledge
that the unique nature of the Assets to be purchased by Buyer pursuant to this
Agreement renders money damages an inadequate remedy for the breach by either of
its obligations under this Agreement, and both parties agree that in the event
of such breach, either party will, upon proper action instituted by it, be
entitled to a decree of specific performance of this Agreement.
12.5 WAIVER. This Agreement or any of its provisions may not
be waived except in writing. The failure of any party to enforce any right
arising under this Agreement on one or more occasions will not operate as a
waiver of that or any other right on that or any other occasion.
12.6 CAPTIONS. The article and section captions of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
12.7 CHOICE OF LAW. This agreement and the rights of the
parties under it will be governed by and construed in all respects in accordance
with the laws of the State of Delaware, without regard to the conflicts of laws
rules of the State of Delaware.
12.8 VENUE. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought by or against any of the parties to this Agreement in the courts of the
State of Delaware, County of New Castle, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein.
12.9 TERMS. Terms used with initial capital letters will have
the meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than a limiting sense.
12.10 RIGHTS CUMULATIVE. All rights and remedies of each of
the parties under this Agreement will be cumulative, and the exercise of one or
more rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law.
12.11 FURTHER ACTIONS. Seller and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting party, such
further assignments, certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full effect to this
Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
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12.12 TIME. Time is of the essence under this Agreement. If
the last day permitted for the giving of any notice or the performance of any
act required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act will be extended to the next succeeding Business Day.
12.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original.
12.14 ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits referred to in this Agreement, which are incorporated in
and constitute a part of this Agreement) contains the entire agreement of the
parties and supersedes all prior oral or written agreements and understandings
with respect to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
12.15 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining rights of the Person intended to be benefitted by such provision or
any other provisions of this Agreement.
12.16 CONSTRUCTION. This Agreement has been negotiated by
Buyer and Seller and its respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement will not
apply in any construction or interpretation of this Agreement.
12.17 LATE PAYMENTS. If either party fails to pay the other
any amounts when due under this Agreement, the amounts due will bear interest
from the due date to the date of payment at the annual rate publicly announced
from time to time by Citibank, N.A. at its prime rate (the "Prime Rate") plus
three percent (3%), adjusted as and when changes in the Prime Rate are made.
12.18 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
12.19 BULK SALES. Buyer and Seller agree to waive compliance
with any "Bulk Sales," "Bulk Transfers," or other similar provision of the Legal
Requirements of any state or political subdivision thereof. Seller hereby agrees
to indemnify and hold harmless Buyer, its Affiliates or any institution
providing financing to Buyer from any liabilities arising out of or resulting
from the failure of Seller and/or Buyer to comply with any such "Bulk Sales,"
"Bulk Transfers," or other similar provision of the Legal Requirements of any
state or political subdivision thereof.
* * * *
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The parties have executed this Agreement as of the day and year first
written above.
BUYER:
UNIVERSAL CABLE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. SEACH
-------------------------------------
▇▇▇▇▇▇ ▇. Seach
President and Chief Financial Officer
SELLER:
STAR CABLE ASSOCIATES
By: STAR CABLE MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: Executive Vice President and
Chief Financial Officer
-------------------------------