Exhibit 7.1
CABLE SYSTEMS ACQUISITION AGREEMENT
THIS CABLE SYSTEMS ACQUISITION AGREEMENT (the "Agreement") is made
and entered into effective August 1, 2004, by and between Multiband Corporation,
a Minnesota corporation (the "Buyer"), and 21st Century Satellite
Communications, Inc, a Florida corporation (the "Seller").
WITNESSETH
WHEREAS, the Seller owns, operates and maintains cable television
systems (collectively, the "Cable Systems") serving residents of the residential
complexes identified on the attached Exhibit A (the "Properties");
WHEREAS, the Seller entered into Right of Entry Agreements identified
on the attached Exhibit B with the owners of the Properties, the terms of which
grant the Seller the right, for a period of years, to provide cable television
and/or other services at the Properties (the "Cable Agreements");
WHEREAS, the Seller has agreed to assign its rights in the Cable
Agreements and sell its goodwill associated with the business operated in
conjunction therewith (such Cable Agreements and goodwill and the other assets
identified on the attached Exhibit G to be collectively referred to in this
Agreement as the "Assets"), and the Buyer has agreed to assume the Seller's
obligations under the Cable Agreements and purchase such goodwill, all in
accordance with the terms and conditions set forth in this Agreement; and
WHEREAS, the Seller has also agreed to lease all of the Seller's
equipment used in the operation of the cable television system located at the
Properties, pursuant to the terms of an equipment lease substantially in the
form attached hereto as Exhibit C (the "Equipment Lease"), and secured by a
collateral assignment of the Cable Agreements substantially in the form attached
hereto as Exhibit H (the "Collateral Assignment").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, covenant and agree as follows:
1. Sale and Purchase of Assets.
a. Purchase and Sale Transaction/Purchase Price. At Closing
(as defined below) the Seller shall sell, assign, transfer, deliver
and convey to the Buyer, and the Buyer shall purchase and acquire
from the Seller, the Seller's entire right, title and interest in and
to the Assets for a total purchase price of One Million Dollars
($1,000,000) payable as follows:
i. Two Hundred Fifty Thousand Dollars ($250,000)
in cash or other readily available funds at Closing (the
"Cash");
ii. Three Hundred Thirty-Three Thousand Three
Hundred Thirty-Three Dollars ($333,333) by no later than
August 11, 2004, in the form of 208,333 shares of the
Buyer's common stock, par value $0.01 per share, which
when issued will be fully paid and non-assessable (the
"Shares"); and
iii. Four Hundred Sixteen Thousand Six Hundred
and Sixty-Six Dollars ($416,666), representing the
agreed-upon present value of the entire rent due (assuming
no defaults have occurred which result in the imposition
of additional rent) over a three (3) year period under the
terms of the Equipment Lease.
b. Title Conveyed/Buyer Inspection Rights. The assignment
and purchase of the Assets shall include all right, title and
interest the Seller owns in the subscribers and related gross income
generated as a result of said Cable Agreements. The Buyer shall have
the opportunity to inspect the Cable Systems prior to the Closing
Date and by consummating the agreements contained herein at the
Closing agrees that such inspection has been either conducted or
waived. The Seller shall cooperate with all reasonable requests made
by the Buyer in connection with the performance of such inspection.
c. Assignment and Assumption Agreements. The Seller and the
Buyer agree to execute and deliver assignment and assumption
agreements, substantially in the form attached as Exhibit D, whereby
the Seller will assign all of its interests in the Cable Agreements
and the Buyer will assume all of the Seller's obligations thereunder,
as of the Closing Date (the "Assignment and Assumption Agreements").
d. Assumption of Office Lease. The Seller, as tenant, and DMV SUB 2,
L.P., as landlord (the "Landlord"), are parties to that certain Industrial Lease
Agreement dated October 2002 (the "Lease"). The Seller shall assign the Lease,
and the Buyer shall assume the Lease, for a term of three (3) months, commencing
on the Closing Date and continuing for three (3) months thereafter, which term
shall be subject to automatic month-to-month renewals until the expiration of
the term of the Lease, unless either the Seller or the Buyer provides the other
party with at least sixty (60) days' prior written notice of termination of the
assumption of the Lease or the Lease is earlier terminated in accordance with
the terms of the Lease. During the term of the assumption of the Lease, the
Buyer shall pay all rent payments and any other payments due under the Lease to
the Seller, and the Buyer shall maintain all insurance required under the Lease.
The Buyer shall, at the Buyer's cost and expense, fully and completely
indemnify, defend and hold the Seller harmless from and against (and pay the
full amount of) any and all actual damage, loss, expense, claims, demands,
causes of action by or liability to third parties, and pay any and all awards of
damages assessed against the Seller, arising out of or resulting from, in whole
or in part, the Buyer's assumption of the Lease. The Seller and the Buyer
acknowledge that the Landlord has not approved the above-mentioned assumption of
the Lease.
2. Termination of Rights. On the Closing Date (as defined herein),
the Seller shall sell, transfer, assign and convey all of the Seller's rights,
title and interest in and to the Assets to the Buyer.
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3. Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include any Excluded Assets, as defined below,
and any assets disposed of prior to the Closing Date in the ordinary course of
business and not in violation of this Agreement. For purposes of this Agreement,
"Excluded Assets" shall mean any of the following: (a) programming contracts and
cable guide contracts; (b) insurance policies and rights and claims thereunder;
(c) bonds, letters of credit, surety instruments, and other similar items; (d)
cash, cash equivalents and short-term investments; (e) all trademarks, trade
names, service marks, service names, logos and similar proprietary rights; (f)
all claims, rights and interests in and to any refunds for taxes or fees,
including franchising and copyright fees, for periods prior to the Closing Date;
(g) rights under any contract for subscriber billing services and any subscriber
billing equipment (leased or owned); (h) the Seller's employee benefit plans
covering employees of the Seller; (i) any and all credit facilities and loan
agreements to which the Seller is a party; (j) head-end equipment (including
origination, earth stations, transmission and distribution systems) and
miscellaneous testing equipment not located on the Properties; (k) the account
books of original entry, general ledgers, financial records and personnel files
and records used in connection with the operation of the Cable Systems, provided
that the Seller will provide copies of, or information contained in such books,
ledgers, records and files (other than information pertaining to programming
agreements, except programming agreements specific to the Cable Systems), to the
extent reasonably requested by the Buyer before or after the Closing Date and in
the Seller's possession; (l) all Franchises; (m) all vehicles used in connection
with the Seller's business; (n) all causes of action and similar rights arising
prior to the Closing Date; (o) all accounts receivable resulting from the
provision of cable television and internet services by the Cable Systems to
active subscribers of the Properties prior to August 1, 2004; and (p) test
equipment.
4. Representations, Warranties and Covenants of the Seller. The
Seller represents and warrants to the Buyer as follows:
a. Valid Existence. The Seller is validly existing and in
good standing under the laws of the State of Florida and has all
requisite power and authority to own the Cable Systems.
b. Due Authorization and Enforceability. The execution,
delivery and performance of this Agreement by the Seller has been
duly and validly authorized. When duly and validly executed and
delivered by the Seller, this Agreement shall constitute the valid
and binding agreement of the Seller, enforceable against the Seller
in accordance with its terms, except to the extent such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and general principles of equity.
c. Power to Convey. The Seller owns the Cable Systems and
has the full right, power and authority to sell, transfer, assign and
convey the Cable Systems to the Buyer.
d. Free of Liens and Encumbrances. The Seller shall deliver
the Cable Systems to the Buyer free and clear of any liens or
encumbrances at time of transfer.
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e. Absence of Litigation. There is no litigation, action,
suit or proceeding pending or, to the best of the Seller's knowledge,
threatened against or relating to the Assets.
f. Cable Systems. The schedules of equipment attached to
the form of Equipment Lease attached as Exhibit C contain a true and
complete list of the equipment and other tangible property included
in the Cable Systems.
g. Cable Agreements. Except as set forth on Exhibit E, the
Cable Agreements are in full force and effect and the Seller is not
in breach or default of any terms or conditions thereunder, and no
event has occurred that, if notice was delivered, would constitute a
breach or default under the terms of the Cable Agreements.
h. Legal Compliance. The Seller is aware of no facts and
has not received any notice or other communication from any person
stating or alleging that the Seller is not in compliance in any
material respect with all requirements of (i) the FCC rules and
regulations of the Cable Act, (ii) any authorization, or that any
authorization has been revoked, suspended, has expired, or is
otherwise not in full force and effect or (iii) any other applicable
legal requirement, the noncompliance with which would have a
materially adverse effect on the Seller's business.
i. Unit Subscribers. Exhibit F contains a true and complete
list of the number of dwelling units receiving services under the
Cable Agreements as of the Closing Date and the gross subscriber
revenues collected in the year of 2003 with respect to such units
(the "2003 Gross Subscriber Income Collected").
5. Representations, Warranties and Covenants of the Buyer. The Buyer
represents and warrants to the Seller as follows:
a. Valid Existence. The Buyer is validly existing and in
good standing under the laws of Minnesota.
b. Due Authorization and Enforceability. The execution,
delivery and performance of this Agreement, the Shares, the Equipment
Lease, the Collateral Assignment, the Assignment and Assumption
Agreements, and other instruments deliverable thereunder
(collectively, the "Buyer Deliverables") by the Buyer have been duly
and validly authorized. When duly and validly executed and delivered
by the Buyer, the Buyer Deliverables shall constitute the valid and
binding agreements of the Buyer, enforceable against the Buyer in
accordance with their terms, except to the extent such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and general principles of equity.
c. No Conflicts. The execution and delivery of the Buyer
Deliverables do not, and the consummation of the transactions
contemplated by the Buyer Deliverables will not, violate (i) any
provisions of the Buyer's articles of incorporation or bylaws; (ii)
any material terms of any material contractual restrictions or
commitments of any kind or character to which the Buyer is a party or
by which they or their properties are bound; or (iii) to the best of
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the Buyer's knowledge, any law, regulation, rule, judgment or order
binding upon the Buyer.
d. Issuance of the Securities. The Shares are duly
authorized and, when issued in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassesable, free and
clear of all liens. The Buyer has available and has reserved from its
duly authorized capital stock the maximum number of Shares issuable
pursuant to Section 1.a.ii.
e. Private Placement. No registration under the Securities
Act of 1933, as amended (the "Securities Act") is required for the
issuance of the Shares to the Seller as contemplated hereby, based on
exemptions provided by the Securities Act for transactions of this
type. The issuance of the Shares hereunder does not contravene the
rules and regulations of the Nasdaq SmallCap Market, on which the
Buyer's common stock is currently listed for trading.
f. SEC Reports; Financial Statements. Since December 31,
2002, the Buyer has filed, and subsequent to the date hereof will use
its "best efforts" to timely file all reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that were and are required to be filed by it under
the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with the Securities and Exchange Commission
("SEC") including, but not limited to, Forms 10-K, Forms 10-Q, Forms
8-K and Proxy Statements (and all such reports, registrations and
statements have been or will be made available by the Buyer to the
Seller) (all such reports and statements are collectively referred to
as the "SEC Reports"). As of their respective dates, the SEC Reports
complied with, and with respect to filings made after the date of this
Agreement, will at the date of filing comply with, in all material
respects, all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed. As
of their respective dates, the SEC Reports do not contain and, with
respect to the filings made after the date of this Agreement, will not
at the date of filing contain, any untrue statement of a material fact
or omit to state a material fact required to be stated therein in
order to make the statement therein, in light of the circumstances
under which they were made, not misleading.
g. Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as
disclosed in the SEC Reports, there has been no event, occurrence or
development that has had or that could reasonably be expected to
result in a material adverse effect to the Buyer's business,
operations, earnings or net worth. The Buyer does not have pending
before the SEC any request for confidential treatment of information.
h. Litigation. Except as disclosed in the SEC Reports,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Buyer, threatened
against or affecting the Buyer, any Subsidiary or any of their
respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
"Action") which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Buyer Deliverables or (ii)
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could, if there were an unfavorable decision, have or reasonably be
expected to have a material adverse effect on the Buyer's business,
results of operations or net worth. Neither the Buyer or any
subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the
Buyer, there is not pending or contemplated, any investigation by any
governmental authority involving the Buyer or any current or former
director or officer of the Buyer. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration
statement filed by the Buyer or any subsidiary under the Exchange Act
or the Securities Act.
i. NASDAQ SmallCap Market Listing. The Buyer's common stock
is listed and traded on the Nasdaq SmallCap Market, and the Buyer is
not aware of any pending or contemplated action or proceeding of any
kind to suspend the trading of its common stock.
j. SEC and State Investigations. The Buyer is not currently
the subject of, nor is the Buyer aware of any potential SEC or state
securities authorities investigations.
k. Assumption of Liabilities. On the Closing Date, the
Buyer assumes all of the Seller's obligations and duties under the
Cable Agreements as of the Closing Date. The Seller is responsible
for any liabilities incurred or outstanding prior to the Closing
Date.
l. Registration of Shares. If, at any time, within one (1)
year from the Closing Date, the Buyer is required to perform an
additional SEC registration of stock shares due to a subsequent
financing and the terms of said financing do not expressly prohibit,
"piggy back registration rights", then Buyer will add the Seller's
Shares to said registration.
6. Conditions Precedent.
a. Conditions Precedent to the Obligations of the Buyer.
The obligation of the Buyer to be performed at or prior to the
Closing shall be subject to the fulfillment on or prior to the
Closing Date of all the conditions set forth below:
i. Each of the representations and warranties of
the Seller contained in this Agreement shall have been
true when made and at all times after the date when made,
to and including the Closing Date.
ii. The Seller shall have performed all of its
obligations under this Agreement, to the extent such
obligations were required to have been performed on or
prior to the Closing Date.
The Buyer shall have the right to waive any of the
conditions set forth above.
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b. Conditions Precedent to the Obligations of the Seller.
The obligation of the Seller to be performed at or prior to the
Closing shall be subject to the fulfillment on or prior to the
Closing Date of all the conditions set forth below:
i. Each of the representations and warranties of
the Buyer contained in this Agreement shall have been true
when made and at all times after the date when made, to
and including the Closing Date.
ii. The Buyer shall have performed all of its
respective obligations under this Agreement, to the extent
such obligations were required to have been performed on or
prior to the Closing Date.
The Seller shall have the right to waive any of the
conditions set forth above.
7. Closing Date Deliveries.
a. The Seller's Deliveries. The Seller shall deliver or
cause to be delivered to the Buyer on the Closing Date the following:
i. Countersigned originals of the Equipment
Lease; and
ii. Countersigned originals of the Assignment and
Assumption Agreements.
b. The Buyer's Deliveries. The Buyer shall deliver
or cause to be delivered to the Seller on the Closing Date, or on such other
date stated below, the following:
i. The Cash;
ii. Countersigned originals of the Equipment
Lease;
iii. By no later than August 11, 2004, one or
more stock certificates, duly executed in accordance with
the Buyer's bylaws, representing the Shares;
iv. Countersigned originals of the Assignment and
Assumption Agreements; and
v. Countersigned originals of the Collateral
Assignment.
8. Indemnification. The Seller shall indemnify, hold harmless and
defend the Buyer from and against any and all damages, costs and expenses
(including reasonable attorneys' fees) arising from any material
misrepresentation, breach of warranty or non-fulfillment of any agreement,
covenant, term or condition under this Agreement. The Buyer shall indemnify,
hold harmless and defend the Seller from and against any and all material
damages, costs and expenses (including reasonable attorneys' fees) arising from
any misrepresentation, breach of warranty or nonfulfillment of any agreement,
covenant, term or condition under this Agreement.
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9. True Up. Within ninety (90) days after the Closing Date, the Buyer
may conduct an independent audit of such books and records of the Seller
necessary for the calculation of the 2003 Gross Subscriber Income Collected. If
such audit shows that the 2003 Gross Subscriber Income Collected is less than
95% of the amounts represented herein by Seller as stated on Exhibit F (the
"Represented Amount"), then Buyer shall have the right to reduce, dollar for
dollar, the purchase price of the Cable Systems by the difference between the
2003 Gross Subscriber Income Collected amount and the Represented Amount. Such
purchase price reduction shall be effected by reducing the then-outstanding
remaining rent due on the Equipment Lease (which such reduction shall be
allocated over the remaining term of the Equipment Lease).
10. Closing. Closing of this Agreement (the "Closing") shall take
place on or before August 6, 2004, or such other date as may be mutually agreed
upon by the parties at Closing (the "Closing Date"), at a place and time
mutually acceptable to the Seller and the Buyer.
11. Additional Documents. Each party shall, at the request of the
other party, whether before or after the Closing, execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary for effecting completely the consummation of this Agreement and the
transactions herein contemplated.
12. Termination. Unless such date is extended in writing by the
parties, this Agreement shall terminate if the Closing does not take place on or
before August 6, 2004. Upon such a termination, the parties shall have no
further liability to each other under this Agreement.
13. Entire Agreement and Modifications. No representations, promise,
inducement, or statement of intention has been made by the Seller or the Buyer
which is not embodied in this Agreement or in the exhibits or other documents
delivered pursuant hereto or in connection with the transaction contemplated
hereby, and neither the Seller nor the Buyer shall be bound by or liable for any
alleged representation, promise, inducement, or statement of intention not so
set forth. This Agreement may be modified or amended only by written instrument
signed by each of the parties hereto.
14. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota. The parties agree the
jurisdiction relating to any dispute hereunder shall be held in Hennepin County
District Court Minneapolis, Minnesota or Federal District Court Minneapolis,
Minnesota, whichever is applicable.
16. Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered or
three business days after being mailed by first class U.S. mail, return receipt
requested, or upon machine confirmation of receipt of facsimile transmission, if
sent by facsimile, telecopy or other electronic transmission device. Notices,
demands and communications to the Buyer or the Seller will, unless another
address is specified in writing, be sent to the address indicated below:
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Notices to the Seller: with a copy to:
21st Century Satellite Communications Saxon ▇▇▇▇▇▇▇ et. al.
Attention: ▇▇▇▇▇ ▇.▇▇▇▇▇, Trustee Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notices to the Buyer: with a copy to:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Multiband Corporation Multiband Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
17. Counterparts/Faxed Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Signatures delivered by
facsimile shall be binding to the same extent as an original and each party to
this Agreement covenants to deliver an original signed Agreement to all other
parties immediately upon the request of any party hereto.
18. Waiver. Waiver of any breach or default of any provision of this Agreement
by either party hereto at any time, or from time to time, is not and shall not
be construed to be a waiver of any subsequent breach or default by the breaching
party.
19. Attorneys' Fees. In the event either party hereto institutes legal action to
enforce the provisions of this Agreement, the prevailing party therein shall be
entitled to seek an award by the court for the reasonable costs of such legal
action, including, but not limited to: (i) reasonable fees and expenses of
employees, agents, subcontractors, attorneys, paralegals, expert witnesses,
consultants and other persons; (ii) costs of transcripts; (iii) printing of
briefs and records on appeal; (iv) copying charges; (v) court costs; and (vi)
other reasonable expenses incurred in connection with such legal action.
20. Time is of the Essence. The parties agree that time is of the
essence.
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IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be executed by their duly authorized representatives as of the date
first written above.
SELLER
21st Century Satellite Communications, Inc, a
Florida corporation
By:
------------------------------------------
Print Name:
----------------------------------
Title:
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BUYER
Multiband Corporation, a Minnesota corporation
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
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EXHIBIT A
DESCRIPTION OF PROPERTIES
A-1
EXHIBIT B
DESCRIPTION OF CABLE AGREEMENTS
B-1
EXHIBIT C
FORM OF EQUIPMENT LEASE
(see attached.)
C-1
CABLE SYSTEMS LEASE
THIS CABLE SYSTEMS LEASE ("Lease") is entered into effective August
1, 2004 (the "Lease Commencement Date"), by and between Multiband Corporation, a
Minnesota corporation ("Multiband") and 21st Century Satellite Communications,
Inc. ("21st")
1. Equipment Leased/Permitted Use/Inspection. Multiband agrees to lease
from 21st the equipment listed on Exhibit A hereto (the "Equipment").
The Equipment may only be used by Multiband to provide cable and/or
high-speed Internet services to certain real properties pursuant to
the cable services agreements described on Exhibit B hereto, each of
which agreements has been assigned by 21st to Multiband (the "Cable
Agreements"). The Equipment shall not be relocated, displaced, moved
or used to provide services other than pursuant to the Cable
Agreements without 21st's prior written consent, which will not be
unreasonably withheld. Multiband shall obtain all permits and
licenses, if any, necessary for the Equipment. 21st shall have the
right, upon reasonable prior notice to Multiband and during regular
business hours, to inspect the Equipment.
2. Term of Lease: This Lease will begin on the Lease Commencement Date
and will remain in effect for sixty (36) months, unless earlier
terminated as provided herein (the "Term").
3. Rent. Multiband shall pay 21st the following rent amounts, with five
percent (5%) interest on such rent amounts as due (collectively, the
"Rent"): (i) $83,333 in rent shall be due on July 31, 2005; (ii)
$50,000 in rent shall be due on October 31, 2005; (iii) $50,000 in
rent shall be due on July 31, 2006; and (iv) $233,333 in rent shall
be due on July 31, 2007.
4. End of Lease Option: At the end of the Term, provided Multiband is
not in default of its obligations under this Lease, Multiband or its
assigns shall have the right to purchase and take title to the
Equipment for $1.00. At Multiband's request, 21st will supply a ▇▇▇▇
of sale to Multiband once title to the equipment is transferred. If
Multiband does not exercise its option to purchase the Equipment, the
Equipment shall be returned to 21st.
5. Events of Default and Remedies:
(a) Events of Default Defined. An "Event of Default" will
occur if (i) Multiband fails to pay when due any
installment of the Rent and that failure continues for
fifteen (15) calendar days following the date such payment
was due; (ii) Multiband breaches or fails to observe or
perform any provision of this Lease and that breach or
failure continues for thirty (30) calendar days following
written notice by 21st to Multiband; (iii) Multiband
becomes insolvent, is liquidated or dissolved, or a
petition is filed by or against Multiband under any
bankruptcy or insolvency law; (iv) Multiband fails to
maintain in effect any insurance required under this
Lease; (v) the attempted sale, lease, rejection,
C-2
revocation of acceptance or encumbrance of this Lease or
any Equipment or the attempted sale, transfer or
assignment of the Cable Agreements; or (vi) the
dissolution, termination of existence or discontinuance of
Multiband's business.
(b) Remedies. Upon the occurrence of an Event of Default by
Multiband, and at any time thereafter, 21st will be
entitled to exercise any or all of the following remedies:
(i) 21st will be entitled to recover immediate
possession of the Equipment, without posting
any bond;
(ii) 21st will be entitled to exercise its rights
under a certain Collateral Assignment of the
Cable Agreements executed by Multiband and
21st;
(iii) all accrued and unpaid Rent and all Rent
payable over the remainder of the Term of this
Lease, together with late charges, legal fees
and costs, will be immediately due and payable,
without setoff, reduction or abatement;
(iv) sell any or all of the Equipment at public or
private sale, with or without notice to
Multiband or advertisement, or otherwise
dispose of, hold, use, operate, lease to others
or keep idle such Equipment, all free and clear
of any rights of Multiband and without any duty
to account to Multiband for such action or
inaction or for any proceeds with respect
thereto; and
(v) exercise any other right or remedy which may be
available to 21st under applicable law
including the right to recover damages for the
breach hereof.
No remedy provided in this Section 5(b) is intended to be
exclusive and each is cumulative. The non-breaching
party's rights against the breaching party will not be
reduced by any collection rights the non-breaching party
has against any other party as a result of the breaching
party's breach of this Lease. The provisions of this
Section 5(b) shall survive expiration or termination of
this Lease.
6. Title and Condition of Equipment:
(a) Title. 21st shall hold title to all Equipment until
Multiband exercises its end of lease option as stated
herein.
(b) Condition of Equipment. Multiband shall, at its sole
expense, maintain the Equipment in good working order and
condition, free and clear of all claims, liens and
encumbrances, other than those which result from acts of
21st or its assigns. All items of Equipment shall at all
times remain personal property notwithstanding that any
such Equipment may be affixed to realty. Multiband shall
C-3
not make any alterations, modifications, additions or
improvements to the Equipment without the prior written
consent of 21st.
7. Risk of Loss and Insurance. Multiband agrees to assume the risk of
loss of the Equipment until it is returned to 21st. During the Term
hereof, Multiband shall, at its expense, maintain (a) property and
casualty insurance with a carrier satisfactory to 21st, insuring the
Equipment at not less than its full replacement cost, naming 21st and
its assigns as the sole loss payee, and (b) comprehensive public
liability and third-party property insurance naming 21st and its
assigns as additional loss payees, in an amount and with a carrier
satisfactory to 21st. All such insurance shall provide for not less
than thirty (30) days prior written notice to 21st or its assigns of
cancellation, restriction or reduction of coverage. On the Lease
Commencement date, Multiband shall provide 21st with copies of such
insurance policies. Multiband shall be responsible for any deductible
payment under any such insurance, and 21st shall have the right, on
behalf of itself and Multiband, to make claims for, receive payment
of, and execute and endorse all documents, checks or drafts received
in payment for loss or damage under said insurance policies.
8. Assignments. This Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Multiband, however, shall not assign, transfer, pledge,
encumber or otherwise dispose of this Lease, by operation of law or
otherwise, or sublet any of the Equipment without first obtaining the
prior written consent of 21st and its assigns. 21st may assign, sell
or encumber all or any part of this Lease, the Equipment and the Rent
and other amounts due hereunder. In the event of any such assignment
and written direction by 21st to Multiband, Multiband shall pay
directly to any such assignee without abatement, deduction or set-off
all Rent and other sums under this Lease. Any such assignee shall
have all of the rights, but none of the obligations, of 21st under
this Lease, and Multiband shall not assert against any such assignee
any defense, counterclaims or set-off which Multiband may have
against 21st. Any such assignment (a) shall be subject to Multiband's
right to possess and use the Equipment pursuant to Section 1, and (b)
shall not release any of 21st's obligations hereunder or any claim
which Multiband has against 21st.
9. Disclaimer. 21st makes no warranty, representation or covenant,
express or implied, as to any matter whatever, including, but not
limited to, the merchantability of the Equipment, or its fitness for
any particular purpose, the design, quality, capacity or condition of
the Equipment, compliance of the Equipment with the requirement of
any law, rule, specification or contract, patent or copyright
infringement, or latent defects. 21st makes no representation as to
the treatment by Multiband of this Lease for financial statement or
tax purposes. Multiband leases the Equipment "AS IS". Multiband
agrees, regardless of cause, not to assert any claim whatsoever
against 21st for any indirect, consequential, incidental or special
damages or loss, of any kind, including, without limitation, any loss
of business, lost profits or interruption of service.
10. No Offset. This Lease is a net lease. Multiband's obligations to pay
all amounts under this Lease shall be absolute and unconditional, and
shall not be subject to any set-off, counterclaim, abatement,
reduction, recoupment, interruption or defense for any reason
C-4
whatsoever, including defects or failure in, loss of use or
possession of, or discontinuance of the Equipment. This Lease cannot
be terminated by Multiband unless agreed in writing by 21st.
11. Further Assurances. Multiband authorizes 21st to prepare and file
financing statements, with respect to the Equipment and this Lease.
12. Taxes.
(a) Multiband shall timely pay all assessments, license fees,
taxes (including sales, use, excise, personal property, ad
valorem, stamp, documentary and other taxes) and all other
governmental charges, fees, fines, or penalties whatsoever,
whether payable by 21st or Multiband, on or relating to the
Rent or Equipment, or the use, registration, shipment,
transportation, delivery, ownership or operation thereof,
and on or relating to this Lease; excluding, however, 21st
net income taxes. Applicable sales and use taxes shall be
paid with the Rent unless Multiband provides evidence of
direct payment authority or an exemption certificate valid
in the state where the Equipment is located.
(b) Multiband agrees that it will not list or report any
Equipment for property tax purposes unless otherwise
directed in writing by 21st. Upon receipt of any property
tax ▇▇▇▇ pertaining to the Equipment from the appropriate
taxing authority, 21st will pay such tax and invoice
Multiband for the expense. Multiband will reimburse 21st
for such expense within thirty (30) days of the date of
invoice.
13. Late Charges/Time is of the Essence. A charge on any Rent or other
sums due hereunder which are past due shall accrue at the rate of
twelve percent (12%) per annum, or if such rate exceeds the maximum
rate allowed by law, then at such maximum rate, and shall be payable
on demand. The parties agree that time is of the essence.
14. Indemnification. As between Multiband and 21st, Multiband assumes
liability for, and agrees to and does hereby indemnify, protect and
keep harmless, 21st, its successors and assigns, and their respective
agents, employees, officers and directors from and against any and
all claims, liability, loss, cost, damage or expense (including
reasonable attorneys' fees), of whatsoever kind and nature, arising
out of the use, condition, operation, possession, control, selection,
delivery or return of any item of Equipment, regardless of where,
how, and by whom operated, and any failure by Multiband to comply
with this Lease.
15. Survival/Severability. All of Multiband's indemnities and assumptions
of liability shall continue in full force and effect notwithstanding
the expiration or termination of any Term. Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability, without invalidating the remaining
provisions hereof. Such remaining provisions shall be construed to
effectuate the intent of the parties as set forth herein. To the
extent permitted by applicable law, Multiband hereby waives any
C-5
provision of law which prohibits or renders unenforceable any
provision hereof in any respect.
16. Notices/Parties. All notices or demands required or permitted
hereunder shall be given to the parties in writing and by personal
delivery, certified mail, facsimile or overnight courier service at
the address set forth below or to such other address as the parties
may hereafter substitute by written notice given in the manner
prescribed in this Section. Such notices or demands shall be deemed
given upon receipt in the case of personal delivery and upon mailing
or transmission or pickup in the case of mail, facsimile or overnight
courier service, respectively.
Notices to 21st : with a copy to:
21st Century Satellite Communications Saxon ▇▇▇▇▇▇▇ et. al.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notices to Multiband: with a copy to:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Multiband Corporation Multiband Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
17. Construction/Jury Trial. This Lease shall in all respects be governed
by and construed in accordance with the laws of the State of
Minnesota. The titles of the Sections of this Lease are for
convenience only and shall not define or limit any of the terms or
provisions hereof. Multiband acknowledges that 21st would not enter
into this Lease unless the laws of the State of Minnesota applied
hereto. Multiband hereby submits to the non-exclusive jurisdiction of
any federal or state court in Minneapolis, Minnesota in any action or
proceeding arising out of or relating to this Lease, waives all
objections to venue or based on inconvenience of forum with respect
to any such court and agrees that all claims in respect to such
action or proceeding may be heard and determined in any such court.
Multiband and 21st waive all rights to trial by jury in any
litigation arising from this Lease.
18. Entire Agreement/Amendments/Waivers. This Lease constitutes the
entire agreement between 21st and Multiband with respect to the
Equipment, the Rent and other amounts due hereunder, and supersedes
all prior proposals, communications and agreements, both written and
oral, between the parties. No term or provision of this Lease may be
changed, waived, amended or terminated except by a written agreement
signed by both 21st and Multiband. 21st's failure at any time to
require strict performance by Multiband of any provisions of this
Lease shall not waive or diminish 21st's right thereafter to demand
strict performance. Waiver of any Event of Default shall not be a
waiver of any other or further Event of Default.
C-6
IN WITNESS WHEREOF, 21st and Multiband have each caused this Lease to
be duly executed as of the date first above written.
21ST
21st Century Satellite Communications, Inc, a
Florida corporation
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
MULTIBAND
Multiband Corporation, Inc., a Minnesota
corporation
By:
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
C-7
EXHIBIT A
TO LEASE
LIST OF EQUIPMENT
C-8
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made and
entered into effective August 1, 2004 (the "Effective Date"), by and between
21st Century Satellite Communications, Inc., a Florida Corporation ("21st") and
Multiband Corporation, a Minnesota corporation" ("Multiband").
R E C I T A L S:
A. 21st provides certain cable television services pursuant to the terms
of the agreement(s) identified on Exhibit A hereto (collectively, the
"Cable Agreement").
B. 21st wishes assign to Multiband all of 21st's right, title and
interest, claims and causes of action in, to and arising out of the
Cable Agreement on or after the Effective Date (collectively, the
"Assigned Rights") and Multiband intends to assume all of 21st's
liabilities, obligations, covenants and agreements arising out of the
Cable Agreement (collectively, the "Assumed Obligations"), all as
pursuant to the terms and conditions set forth herein.
C. Multiband intends to provide the services required under the terms of
the Cable Agreement using equipment leased from 21st pursuant to the
terms of that certain Cable Systems Lease, dated as of the Effective
Date, between 21st and Multiband (the "Equipment Lease
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and the premises
and mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Assignment; Representations and Warranties. 21st hereby sells, assigns,
grants, transfers, sets over and conveys to Multiband and its successors and
assigns (subject to the prohibition on subsequent assignments specified in
Section 3 hereunder), as of the Effective Date, all of its Assigned Rights. In
conjunction therewith, 21st hereby represents and warrants to Multiband that the
Cable Agreement is in full force and effect, 21st is not in default thereunder
and no event has occurred that if notice was delivered, would constitute a
breach or default under the terms of the Cable Agreement.
2. Acceptance and Assumption. Multiband hereby accepts the foregoing assignment
and hereby assumes and agrees to perform and discharge all of the covenants,
agreements and obligations of 21st under the Assumed Obligations.
D-1
3. Rights of Assignees/Prohibition on Subsequent Assignments. The parties hereto
intend that Multiband succeed to all the rights, interests, liabilities and
obligations of 21st and that Multiband be substituted for 21st for all purposes
thereunder. Notwithstanding the foregoing, Multiband agrees that it will not
assign any rights in the Cable Agreement to any third party, until such time as
all Rent (as defined in the Equipment Lease) has been paid in full under the
Equipment Lease.
4. Continued Effectiveness. Except as set forth herein, the Assigned Rights
remain in full force and effect in accordance with their respective terms.
5. Cooperation. The parties agree without further consideration to execute any
further documents and instruments and to perform such other acts as the other
party may reasonably request to further evidence the assignment and assumption
evidenced hereby.
6. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such
subject matter.
(b) Amendment; Waiver. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged,
modified or terminated in any manner other than as provided
herein or by an instrument in writing signed by the party
against whom the enforcement of the change, waiver,
discharge, modification or termination is sought.
(c) Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties, their legal
representatives, successors and assigns. Neither this
Agreement nor any rights or obligations hereunder may be
assigned by Multiband unless consented to in writing by
21st. 21st may assign this Agreement and any rights and
obligations hereunder without Multiband's consent.
(d) Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of
Minnesota.
(e) Severability. If any provision of the Agreement is
prohibited by or is unlawful under any applicable law or
regulation of any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition only, without invalidating the remaining
provisions hereof.
D-2
(f) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an
original and which together shall constitute one and the
same instrument.
(g) Attorneys' Fees. In the event either party hereto
institutes legal action to enforce the provisions of this
Agreement, the prevailing party therein shall be entitled
to seek an award by the court for the reasonable costs of
such legal action, including, but not limited to: (i)
reasonable fees and expenses of employees, agents,
subcontractors, attorneys, paralegals, expert witnesses,
consultants and other persons; (ii) costs of transcripts;
(iii) printing of briefs and records on appeal; (iv)
copying charges; (v) court costs; and (vi) other reasonable
expenses incurred in connection with such legal action.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the date written above.
21ST
21st Century Satellite Communications, Inc, a
Florida corporation
By:
------------------------------------------
Print Name:
----------------------------------
Title:
---------------------------------------
MULTIBAND
Multiband Corporation, a Minnesota corporation
By:
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
D-3
EXHIBIT E
CABLE AGREEMENTS DISCLOSURE
E-1
EXHIBIT F
STATEMENT OF PROPERTY UNIT SUBSCRIBERS AND 2003 GROSS SUBSCRIBER INCOME
COLLECTED
F-1
EXHIBIT G
ADDITIONAL ASSETS
All properties, privileges, rights, interests and claims, real and personal,
tangible and intangible, of every type and description used or held for use in
connection with 21st's business, now in existence or hereafter acquired before
the Closing Date, including rights under governmental permits (to the extent
assignable), intangibles, rights under contracts (to the extent assignable),
equipment, real property, customer and subscriber lists, engineering records,
maps, databases, files and records, and deposits relating solely to 21st's
business that are held by third parties for security for Seller's performance of
its obligations, but excluding any Excluded Assets and any assets disposed of
prior to the Closing Date in the ordinary course of business and not in
violation of this Agreement.
G-1
EXHIBIT H
FORM OF COLLATERAL ASSIGNMENT
(see attached.)
H-1
COLLATERAL ASSIGNMENT OF
CABLE AGREEMENTS
THIS ASSIGNMENT is made and entered into effective as of August 1,
2004, by and between Multiband Corporation, a Minnesota corporation
("MULTIBAND"), having a mailing address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, and 21st Century Satellite Communications, Inc., a Florida corporation
("21St"), having a mailing address of ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. ▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, 21st has leased or is about to lease to Multiband certain
equipment evidenced by a Cable Systems Lease dated of even date herewith between
Multiband and 21st (the "LEASe"); and
WHEREAS, Multiband has agreed to secure the payments under the Lease
by assigning to 21st certain agreements described on Exhibit "A" attached hereto
and made a part hereof (the "CABLE AGREEMENTS") to provide cable television
and/or other services to those properties described on Exhibit "B" attached
hereto and made a part hereof (the "PROPERTIES").
NOW, THEREFORE, for value received and as additional security for the
payment of the Lease, the parties hereto hereby agree as follows:
1. Multiband hereby assigns, transfers and sets over to 21st all of
its right, title and interest in, to and under the Cable Agreements (whether now
existing or hereafter made, executed or delivered), related to the Properties
and all revenues relating to or arising out of the Cable Agreements related to
the Properties (the "REVENUES").
2. REVENUES. With respect to the Revenues, Multiband hereby agrees:
(a) That 21st is authorized and empowered to collect the
Revenues as they shall become due, and to direct each and all of the residents
on the Properties to pay the Revenues as may now be due or shall hereafter
become due to 21st upon demand for payment thereof by 21st. It is understood and
agreed, however, that no such demand shall be made unless and until there has
been an Event of Default under the Lease; and, until such demand is made,
Multiband is authorized to collect, or continue collecting, the Revenues, but
such privilege to collect, or continue collecting, as aforesaid by Multiband,
shall not operate to permit the collection by Multiband of (and Multiband hereby
covenants and agrees with 21st that Multiband will not collect, demand or
receive) any of the Revenues in advance of the due date thereof.
(b) That the authority and power of 21st to collect the
Revenues as set forth herein may be exercised and the Revenues collected without
the necessity of (but nothing herein contained shall be construed to prohibit
21st from) instituting an action upon the Lease or an action upon this
H-2
Assignment directly against the residents under the Cable Agreements assigned
herewith.
(c) That:
(i) 21st is additionally authorized and empowered
to by its employees, agents, or representatives, at the option of 21st upon the
occurrence of any Event of Default, as aforesaid, to collect, in the name of
Multiband or in its own name as assignee, the Revenues accrued but unpaid and in
arrears at the date of such Event of Default, as well as the Revenues thereafter
accruing and becoming payable during the period this Assignment is operative;
and to this end, Multiband further agrees to cooperate and to assist 21st, its
employees, agents or representatives, in all reasonable ways with collection of
said Revenues;
(ii) 21st may, (but nothing herein shall be
deemed to require or obligate 21st to), take over and assume the operation of
the Cable Agreements, (d) That Multiband shall not further assign the Revenues
or any portion thereof.
3. PERFORMANCE OF OBLIGATIONS TO THIRD PARTIES. Multiband covenants
and agrees (i) to keep, observe and perform all of the covenants and agreements
on the part of Multiband to be kept, observed and performed in the Cable
Agreements; and (ii) to cause to be timely satisfied any and all conditions
precedent to the obligations of the other party or parties to each such document
and instrument. If Multiband fails to keep, observe or perform any such covenant
or agreement or to timely satisfy any such condition, then 21st shall have the
right, in the exercise of its sole discretion, to do so on behalf of Multiband
and/or to avail itself of any and all remedies afforded thereto under the Lease
in consequence thereof. If 21st shall at any time exercise the rights granted to
21st by the preceding sentence, then 21st shall be entitled to recover from
Multiband, immediately upon demand, any expenses incurred or amounts advanced by
21st in connection therewith, together with interest from the date each such
advance was made or expense incurred at the highest lawful rate per annum
permitted under the laws of the State of Florida. Should Multiband fail to repay
21st any such expenses or advances as herein provided, 21st may avail itself of
any and all remedies afforded thereto under the Lease in consequence thereof.
4. NONWAIVER. It is expressly understood and agreed that neither the
existence of this Assignment nor the exercise by 21st of any privileges or
rights granted hereunder shall be construed as a waiver by 21st, or its
successors or assigns, of the right to enforce payment under the Lease in strict
accordance with the terms and provisions of the Lease, for which this Assignment
is given as additional security.
5. BINDING EFFECT. This Assignment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
6. GOVERNING LAW. This Assignment shall be governed by the laws of
the State of Minnesota.
H-3
7. GENERAL. Paragraph headings and subheadings are for indexing
purposes only and are not to be used to interpret, construe, apply, or enforce
the provisions of this Assignment. Multiband and 21st intend the provisions of
this Assignment, and the Lease, to be interpreted, construed, applied, and
enforced so as to avoid inconsistencies or conflicting results. This Assignment
may be amended only by written instrument, executed by Multiband and 21st with
the same formalities as this Assignment. Multiband authorizes 21st to prepare
and file financing statements with respect to this Agreement.
IN WITNESS WHEREOF, Multiband has caused this Assignment to be
executed and delivered as of the date first above written.
MULTIBAND
Multiband Corporation, a Minnesota corporation
By:
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
H-4
EXHIBIT "A"
CABLE AGREEMENTS
▇-▇
▇▇▇▇▇▇▇ "▇"
THE PROPERTIES
H-6