4
Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
EAGLE WEST COMMUNICATIONS, INC.
AND
TELECOMMUNICATIONS PRODUCTS INC.
DATED AS OF
April 3, 2004
Asset Purchase Agreement
This Asset Purchase Agreement ("Agreement") is made as of April 3, 2004 (the
"Effective Date"), by and between Eagle West Communications, Inc., a Nevada
corporation ("Seller") and Telecommunications Products Inc. ("Buyer") with Eagle
West, LLC, a Kansas limited liability company ("Operator").
Recitals
A. Operator owns and operates certain cable television systems serving
communities in Arizona, Nevada and New Mexico. Seller has entered into an asset
purchase agreement to buy said assets from Operator. This Agreement will then
offer those assets to the Buyer.
B. On February 18, 2003, Operator filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. 101 et seq.
("Bankruptcy Code") in the United States Bankruptcy Court for the District of
Arizona ("Bankruptcy Court") commencing Case No. 03-02530-RJH ("Bankruptcy
Case").
C. On March 5, 2003, the Bankruptcy Court entered its order appointing and
designating ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") as representative of the
debtor-in-possession with respect to the Operator and the Operator's Chapter 11
bankruptcy estate.
D. Operator has agreed to sell certain assets to Seller used primarily in
connection with the operation of its cable television systems located in
Arizona, Nevada and New Mexico as more particularly described herein, and Buyer
desires to purchase such assets from Seller as set forth herein.
E. The parties acknowledge and agree that this Agreement is subject to
approval by the Bankruptcy Court in the Bankruptcy Case.
Agreements
In consideration of the above recitals and the mutual agreements stated in this
Agreement, the parties agree as follows:
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:
Adjustment Time. Means 11:59 p.m., Arizona time, on the last day of the
month immediately prior to the Closing Date.
Affiliate. With respect to any Person, means 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.
Assets. As more specifically set forth in the Schedules to this Agreement, 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 the 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),
insurance policies (subject to the provisions of Sections 1.17(d) and 2.4,
Equipment, Real Property, Included Vehicles, customer and subscriber lists,
engineering records, maps, databases, files and records, and deposits, prepaid
expenses and bonds relating solely to the 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.
Bankruptcy Case. The Bankruptcy Case as identified in the Recitals.
Bankruptcy Code or Code. The Bankruptcy Code as identified in the Recitals.
B
ankruptcy Court or Court. The Bankruptcy Court as identified in the Recitals.
Business. The cable television business conducted by Seller on the Effective
Date through and with respect to the Systems.
Business Day. Any day other than Saturday, Sunday or a day on which banking
institutions in New York, New York are required or authorized to be closed.
Cable Act. The Cable Communications Policy Act of 1984, as amended, and the FCC
rules and regulations promulgated thereunder, all as in effect from time to
time.
Closing. The consummation of the transactions contemplated by this Agreement,
as described in Section 9, the date of which is referred to as the "Closing
Date."
Contracts. All agreements (including any amendments or modifications thereto)
relating to: the Franchises, all multiple dwelling unit agreements, pole
attachment and conduit agreements, software license agreements, subscriber
agreements and other agreements, written or oral (including any amendments and
other modifications thereto), except Governmental Permits, which affect the
Assets, the Business or the operation of the Systems, and (a) which are in
effect on the Effective Date or (b) which are entered into by Seller in the
ordinary course of business and as permitted by this Agreement between the
Effective Date and the Closing Date and which by their terms are to be in effect
as of the Closing Date.
▇▇▇▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the court-appointed debtor-in-possession in the
Bankruptcy Case.
Encumbrance. Any security interest, interest retained by a transferor under a
conditional sale or other title retention agreement, mortgage, lien, pledge,
option, encumbrance, adverse interest, exception to or defect in title or other
ownership interest (including reservations, rights of entry, possibilities of
reverter, encroachments, easements, rights-of-way, restrictive covenants, leases
and licenses) of any kind, which constitutes an interest in or claim against
property, whether arising pursuant to any Legal Requirement, Governmental
Permit, Contract or otherwise.
Environmental Law. Shall include the following: (a) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et
seq. ("CERCLA"); (b) the Solid Waste Disposal Act, also known as the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. ("RCRA"); (c) the
Emergency Planning and Community ▇▇▇▇▇-▇▇-▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇, et seq.;
(d) the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq.; (e)
the Clean Air Act, 42 U.S.C. 7401 et seq. ("CAA"); (f) the Clean Water Act,
33 U.S.C. 1251 et seq.; (g) the Occupational Safety and Health Act, 29 U.S.C.
651 et seq.; (h) the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.;
(i) the Rivers and Harbors Act of 1899, 33 U.S.C. 401, et seq.; (j) the Oil
Pollution Act of 1990, 33 U.S.C. 2701, et seq.; each as amended; (k) any state
or local law similar to the foregoing; (l) all regulations issued pursuant to
the foregoing; and (m) any law or regulation relating to the use, generation,
transport, treatment, storage, disposal, removal or recovery of Hazardous
Substances.
Equipment. All electronic devices, trunk and distribution coaxial and optical
fiber cable, amplifiers, drops, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, subscriber devices (including converters, encoders,
transformers behind television sets and fittings), headend hardware (including
origination, earth stations, transmission and distribution Systems), test
equipment, Included Vehicles, inventory (except the inventory used and operated
with respect to the Reserve Business), and other tangible personal property used
or held for use primarily in connection with the Business. Schedule 1.15 lists
all material items of Equipment, including headend equipment.
[Intentionally left blank].
Excluded Assets. Any of the following, which will not be included in the
Assets:
(a) Any and 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 the Seller's cable television business and
operations located in and around Reserve, New Mexico, the tangible assets of
which are set forth in Schedule 1.17(a) (the "Reserve Business"), now in
existence or hereafter acquired by the Operator, including, with respect to the
Reserve Business, the following: 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 the Reserve Business that are held by third parties for security for
Operator's performance of its obligations.
(b) Any and all properties subject to pole access lease agreements for areas
that are not actively operating the Systems that are the subject of this
Agreement.
(c) Programming Contracts and cable guide Contracts, except those listed on
Schedule 5.5;
(d) Any and all rights and claims under any insurance policies which exist
as of the Closing Date;
(e) Bonds, letters of credit, surety instruments, and other similar items;
(f) Cash, cash equivalents and short-term investments;
(g) All claims, rights and interests in and to any refunds for Taxes or
fees, including franchising and copyright fees, for periods prior to the
Adjustment Time;
(h) Rights under any Contract for subscriber billing services and any
subscriber billing equipment (leased or owned) relating to the Reserve Business;
(i) Except as otherwise provided in Section 7.10, retransmission consent
agreements;
(j) Operator's corporate minute books and stock records;
(k) Any employee benefit plans covering employees of Operator;
(l) Any and all credit facilities and loan agreements to which Operator is a
party;
(m) Any Contract required to be described on Schedule 5.5 but not described
thereon as of the Effective Date, and any Contract entered into by Operator
after the Effective Date unless, in either case, Buyer elects in writing to
include such Contract in the Assets;
(n) The account books of original entry, general ledgers, financial records
and personnel files and records used in connection with the operation of the
Systems, provided that Operator 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 Systems),
to the extent reasonably requested by Buyer before or after the Closing Date and
in Operator's possession. Seller understands that Buyer will need sufficient
accounting information and access in order to complete an audit of the Business
for the years ending 2002 and 2003. Seller agrees to give Buyer access to the
records needed for the audit;
(o) Seller's rights under this Agreement and the Transaction Documents;
(p) The personal property and/or Intangible assets specifically listed and
set forth on Schedule 1.17(p);
(q) The real property assets specifically listed and set forth on Schedule
1.30;
(r) Any assets not specifically used in connection with and/or related to
the operations of the Business; and
(s) Any and all Vehicles used and operated with respect to the Reserve
Business, as specifically identified in Schedule 1.17(s).
Franchises. All cable television franchises and similar rights obtained
with respect to the Business from any Governmental Authority, including those
set forth on Schedule 5.4.
GAAP. Generally accepted accounting principles as in effect from time to time
in the United States of America.
Governmental Authority. The United States of America, any state, commonwealth,
territory or possession of the United States of America and any political
subdivision or quasi-governmental authority of any of the same, including any
court, tribunal, department, commission, board, bureau, agency, county,
municipality, province, parish or other instrumentality of any of the foregoing.
Governmental Permits. All FCC licenses and all other material approvals,
authorizations, permits, licenses, registrations, qualifications, leases,
variances and similar rights obtained with respect to the Business or Assets
from any Governmental Authority, other than the Franchises, including those set
forth on Schedule 5.4.
Hazardous Substances. The following: (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 6901 et
seq.); (b) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA) (42
U.S.C. 9601 et seq.); (c) any substance regulated by the Toxic Substances
Control Act (TSCA) (15 U.S.C. 2601 et seq.), or the Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA)(7 U.S.C. 136 et seq.); (d) friable
asbestos or asbestos-containing material of any kind or character; (e)
polychlorinated biphenyls; (f) any substances regulated under the provisions of
Subtitle I of RCRA relating to underground storage tanks; and (g) any other
substance which by any Environmental Law requires special handling, reporting or
notification of any Governmental Authority in its collection, storage, use,
treatment or disposal.
Included Vehicles. The vehicles listed on Schedule 1.23.
Intangibles. All intangible assets, including subscriber lists, accounts
receivable, claims (excluding any claims relating to Excluded Assets), patents,
copyrights and goodwill, if any, owned, used or held by Seller primarily for use
in the Business.
Legal Requirements. Applicable common law and any statute, ordinance, code, or
other law, rule, regulation, order, technical or other written standard or
procedure enacted, adopted or applied by any Governmental Authority.
Losses. Any claims, losses, liabilities, damages, penalties, costs and
expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and settlement costs, exclusive of consequential damages.
Material Adverse Effect. A material adverse effect on the operation of the
Systems or the financial condition of the Business, taken as a whole, but
without taking into account any effect resulting from any regulatory or other
change affecting the United States cable industry as a whole, including changes
in FCC regulations.
Permitted Encumbrances. The following Encumbrances: (a) those Encumbrances set
forth on Schedule 1.28, (b) liens securing Taxes, assessments and governmental
charges in an aggregate amount greater than $1,000.00, (c) any zoning law or
ordinance or any similar Legal Requirement, (d) any right reserved to any
Governmental Authority to regulate the affected property, and (e) in the case of
leased property, whether real or personal, the rights, titles and interests of
the lessor thereof, and all Encumbrances on such rights, titles and interests.
Person. Any natural person, corporation, partnership, trust, unincorporated
organization, association, limited liability company, Governmental Authority or
other entity.
Real Property. Except for the Excluded Assets (which Excluded Assets include
any and all real property specifically identified and listed in Schedule 1.30),
all of Seller's interests in real property, including leasehold interests and
easements, wire crossing permits and rights of entry (except agreements related
to multiple dwelling units).
Required Consents. All authorizations, approvals and consents required under
Governmental Permits, Contracts, Real Property or otherwise for (a) Seller to
transfer the Assets and the Business to Buyer, and (b) Buyer to own or lease the
Assets and to operate the Business in the manner in which the Business is
conducted as of the Closing Date.
Systems. Each of the cable television Systems providing cable television
services to the communities in Arizona and Nevada listed on Schedule 1.32.
System Employees. All personnel who primarily render services in connection
with the Systems.
Taxes. All levies and assessments of any kind or nature imposed by any
Governmental Authority with respect to the Assets, including all income, sales,
use, ad valorem, value added, franchise, severance, net or gross proceeds,
withholding, payroll, employment, excise or property taxes and levies, together
with any interest thereon and any penalties, additions to tax or additional
amounts applicable thereto.
Tax Return. Any return, declaration, report, claim for refund or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
Other Definitions. The following terms are defined in the Sections indicated:
Term. . . . . . . . . . . . . . . . Section
----------------------------------- ---------
Action. . . . . . . . . . . . . . . 11.4
----------------------------------- ---------
Agreement . . . . . . . . . . . . . Preamble
----------------------------------- ---------
Approval Order. . . . . . . . . . . 7.13
----------------------------------- ---------
Assumed Obligations and Liabilities 2.2
----------------------------------- ---------
Bankruptcy Case . . . . . . . . . . Recitals
----------------------------------- ---------
Bankruptcy Code . . . . . . . . . . Recitals
----------------------------------- ---------
Bankruptcy Court. . . . . . . . . . Recitals
----------------------------------- ---------
Billing Transition Services . . . . 7.7
----------------------------------- ---------
Buyer . . . . . . . . . . . . . . . Preamble
----------------------------------- ---------
Closing Date. . . . . . . . . . . . 9.1
----------------------------------- ---------
Closing Date Payment. . . . . . . . 3.1.2
----------------------------------- ---------
▇▇▇▇▇▇▇ Money Deposit . . . . . . . 3.1.1
----------------------------------- ---------
Escrow Agent. . . . . . . . . . . . 3.1.1
----------------------------------- ---------
Effective Date. . . . . . . . . . . Preamble
----------------------------------- ---------
Eligible Accounts Receivable. . . . 3.2
----------------------------------- ---------
ERISA . . . . . . . . . . . . . . . 5.14.1
----------------------------------- ---------
FINOVA. . . . . . . . . . . . . . . 2.4
----------------------------------- ---------
Indemnified Party . . . . . . . . . 11.4
----------------------------------- ---------
Indemnifying Party. . . . . . . . . 11.4
----------------------------------- ---------
IRC . . . . . . . . . . . . . . . . 3.3
----------------------------------- ---------
Outside Closing Date. . . . . . . . 9.1
----------------------------------- ---------
Reserve Business. . . . . . . . . . 1.17(a)
----------------------------------- ---------
Prime Rate. . . . . . . . . . . . . 12.11
----------------------------------- ---------
Purchase Price. . . . . . . . . . . 3.1
----------------------------------- ---------
Seller. . . . . . . . . . . . . . . Preamble
----------------------------------- ---------
Transaction Documents . . . . . . . 5.2
----------------------------------- ---------
Rules of Construction. Unless otherwise expressly provided in this
Agreement, (a) accounting terms used in this Agreement will have the meaning
ascribed to them under GAAP; (b) words used in this Agreement, regardless of the
gender used, will be deemed and construed to include any other gender,
masculine, feminine, or neuter, as the context requires; (c) the word
"including" is not limiting; (d) the capitalized term "Section" refers to
sections of this Agreement; (e) references to a particular Section include all
subsections thereof, (f) references to a particular statute or regulation
include all amendments thereto, rules and regulations thereunder and any
successor statute, rule or regulation, or published clarifications or
interpretations with respect thereto, in each case as from time to time in
effect; (g) references to a Person include such Person's successors and assigns
to the extent not prohibited by this Agreement; and (h) references to a "day" or
number of "days" (without the explicit qualification "Business") will be
interpreted as a reference to a calendar day or number of calendar days.
Purchase and Sale of Assets; Assumed Obligations and Liabilities
Purchase and Sale of Assets. Subject to the terms and conditions set forth
in this Agreement, at the Closing, Seller will convey, transfer and assign to
Buyer, and Buyer will purchase from Seller, free and clear of all Encumbrances
(except Permitted Encumbrances), the Assets, effective as of 12:01 a.m., eastern
time, on the Closing Date.
Assumed Obligations and Liabilities. At the Closing, Buyer will assume, from
the date of closing ongoing, and pay, discharge, and perform the following (the
"Assumed Obligations and Liabilities"): (a) any outstanding and ongoing
obligations and liabilities under the Governmental Permits and Contracts
assigned and transferred to Buyer at Closing; (b) general property Taxes, sales
and use Taxes, special assessments, and ad valorem Taxes levied or assessed
against any of the Assets, including those that constitute Permitted Liens; (c)
charges for utilities and other goods or services furnished to the Systems; (d)
copyright expenses; (d) those obligations and liabilities of Seller that Buyer
elects to assume at Closing; and (e) all other obligations and liabilities
arising out of Buyer's ownership of the Assets or operation of the Systems on
and after the Closing Date. The Assumed Obligations and Liabilities shall
include any of the foregoing obligations or liabilities that have accrued prior
to the Closing but are not due and payable until after the Closing.
All obligations and liabilities arising out of or relating to the Business,
the Assets or the Systems other than the Assumed Obligations and Liabilities
will remain and be the obligations and liabilities solely of Seller.
Buyer's Duty to Pay Cure Costs for Assumed Contracts. Notwithstanding
anything to the contrary herein, at Closing and in addition to the Purchase
Price, Buyer will pay any and all amounts necessary to cure any defaults (if
any) under any assumed Contracts, except the following: (i) franchise fees,
(ii) pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property
taxes relating to Seller's personalty, and (vi) real property taxes relating to
any Real Property to be sold to Buyer up to a maximum aggregate amount of
$1,000.00.
Insurance Policies. Notwithstanding the transfer of the Operator's insurance
policies to the Buyer, the Seller, Operator and FINOVA Capital Corporation
("FINOVA") shall remain as additional insureds under such policies, at no cost
to them, until the expiration of any such policies, and the Seller, Operator
(and/or FINOVA as the loss payee on any insurance policies) shall be entitled to
recover any insurance proceeds relating to any insured claims or losses arising
prior to the Closing Date.
Consideration
Purchase Price. The consideration for the Assets will be total cash
consideration of $1,700,000 plus due diligence fees (the "Purchase Price"). The
Purchase Price will be paid as follows:
3.1.1. ▇▇▇▇▇▇▇ Money Deposit. Within five (5) calendar days after the
Buyer's execution of this Agreement, Buyer shall deposit with Seller's attorney
for deposit into Seller's attorney's Trust Account ("Escrow Agent"), to be held
and disbursed by Escrow Agent in accordance with the terms and provisions of
this Agreement the cash amount of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) as
an ▇▇▇▇▇▇▇ money deposit ("▇▇▇▇▇▇▇ Money Deposit", which shall also include all
interest earned thereon, if any). The ▇▇▇▇▇▇▇ Money Deposit shall be held and
disbursed in accordance with the terms of this Agreement. At the Closing of
the purchase and sale of the Assets in accordance with the terms of this
Agreement, the full amount of the ▇▇▇▇▇▇▇ Money Deposit shall be paid to Seller
and applied toward the Purchase Price.
3.1.2. Closing Date Payment. Buyer will pay the sum of $1,600,000 plus due
diligence fees (the "Closing Date Payment"), to Seller on the Closing Date by
wire transfer of immediately available funds to the account designated by Seller
in writing at least three Business Days prior to the Closing Date.
Notwithstanding the foregoing, no monies (neither the ▇▇▇▇▇▇▇ Money Deposit not
the Closing Date Payment) shall be paid to Seller unless and until the
Bankruptcy Court has entered the Approval Order in a form satisfactory to Buyer
approving this Agreement and the Closing.
If the buyer is unable to complete 3.1.2, at the seller's option this
agreement may be voided with the buyer forfeiting any cash payment. Buyer
further grants to Seller, to secure payment and performance of the obligations
of Seller under this Agreement, a security interest in the contract, equipment,
real property and inventory listed in SCHEDULES 1.15, 1.30, 5.4, 1.23, 1.32,
5.6, 5.7, 5.13, 5.15 (see attachments A & B)
Buyer's Assistance in Collecting Seller's Accounts Receivable. Buyer will
use its best efforts to collect all of Seller's accounts receivable, and Buyer
will remit to Seller an amount equal to such collections less the Buyer's
percentage for the costs of collection, and will settle the accounts on a
monthly basis, until satisfied or until 120 days from the date of Closing. The
"Buyer's percentage for the costs of collection" shall be an amount equal to the
sum of (a) 40% of the face amount of all Eligible Accounts Receivable that are
current or 30 days or less past due as of the Adjustment Time and (b) 50% of the
face amount of all Eligible Accounts Receivable that are over 31 days past due
as of the Adjustment Time. "Eligible Accounts Receivable" will mean accounts
receivable resulting from the provision of cable television and internet
services by the Systems to active subscribers as of the Adjustment Time that
relate to periods of time prior to the Adjustment Time.
Allocation of Purchase Price. For tax purposes, the purchase price shall be
allocated among the Assets in accordance with the principles of Section 1060 of
the Internal Revenue Code of 1986 (the "IRC") and applicable Treasury
Regulations thereunder. For purposes of this paragraph and Section 1060 of the
IRC, the fair market values of the Assets shall be determined by Buyer within
ten (10) business days of the date hereof. Such determination shall be subject
to approval by the Seller, Operator and FINOVA. Buyer, Seller and Operator
will file all necessary and appropriate Tax returns, forms and schedules thereto
consistent with any such allocations, unless otherwise required by applicable
Legal Requirements.
Employee Matters
At the Closing, Buyer may, but will have no obligation to, make offers of
employment, commencing effective as of the Closing Date, to any System Employees
who otherwise meet Buyer's criteria for employment. To the extent permissible
by applicable Legal Requirements, Seller and Operator agrees to cooperate in all
reasonable respects with Buyer to allow Buyer to evaluate and interview System
Employees in order to make employment decisions, including providing reasonable
access to Seller and Operator's files with respect to the System Employees, if
requested by Buyer. Buyer will, at its cost, be permitted to conduct
pre-employment physical examinations (including drug-screening tests) and other
appropriate pre-hire investigations of System Employees, and Buyer may make any
offer of employment to any such System Employee conditional upon its receipt,
review and approval of the results of such pre-hire examinations and
investigations.
At the Closing, Seller and Operator will terminate the employment of all System
Employees to whom Buyer has made an offer of employment.
Subject to the requirements of the Bankruptcy Code and any confirmed plan of
reorganization in the Bankruptcy Case, all claims and obligations under,
pursuant to or in connection with any welfare, medical, insurance, disability or
other employee benefit plans covering any System Employee or arising under any
Legal Requirement affecting System Employees of Seller and Operator incurred
through and including the Closing Date will remain the responsibility of Seller
and Operator or its Affiliates. For purposes of this Section, a claim or
obligation will be deemed to have been incurred on the date of the occurrence of
(a) death or dismemberment in the case of claims under life insurance and
accidental death and dismemberment policies, (b) the date of the initial
disability in the case of claims under disabilities policies or (c) the date on
which the charge or expense giving rise to such claim is incurred in the case of
all other claims. Buyer will not have or assume any obligation or liability
under or in connection with any such plan maintained with respect to any System
Employee.
Except as expressly provided in this Section 4 and subject to the requirements
of the Bankruptcy Code and any confirmed plan of reorganization in the
Bankruptcy Case, Operator will remain solely responsible for, and will indemnify
Buyer and hold Buyer harmless from and against all Losses arising from or with
respect to, all salaries and all severance, vacation, medical, sick, holiday,
continuation coverage and other compensation or benefits to which System
Employees may be entitled (including "sticking" or "staying" bonuses), whether
or not such System Employees may be hired by Buyer, as a result of their
employment by Operator, the termination of their employment, the consummation of
the transactions contemplated hereby or pursuant to any applicable Legal
Requirement.
Subject to the requirements of the Bankruptcy Code and any confirmed plan of
reorganization in the Bankruptcy Case, Operator will retain full responsibility
and liability for offering and providing "continuation coverage" to any
"qualified beneficiary" who is covered by a "group health plan" sponsored or
contributed to by Operator and who has experienced a "qualifying event" or is
receiving "continuation coverage" through and including the Closing Date. As
used in this Section 4.5, "continuation coverage," "qualified beneficiary,"
"group health plan," and "qualifying event" all will have the meanings given
such terms under Internal Revenue Code Section 4980B.
Nothing in this Section 4 or elsewhere in this Agreement will be deemed to make
any employee of the parties a third party beneficiary of this Agreement.
Representations and Warranties of Seller and Operator
To the best of its knowledge, Seller and Operator (but specifically not ▇▇▇▇▇)
represents and warrants to Buyer, as of the Effective Date and as of the
Closing, as follows:
Authority and Validity.
Subject only to the requirements and restrictions of the Bankruptcy Code
and subject to the Bankruptcy Court's approval, Operator has full power and
authority to possess the Assets and to carry on the operation of the Systems
pursuant to the Approval Order.
Subject to the approval of the Court, and any conditions that the Court may
impose, this Agreement will constitute a valid and binding agreement of Seller,
enforceable in accordance with its terms.
No Conflict; Required Consents. Except for the approval of the Court and
obtaining the Required Consents (if necessary and/or if not otherwise authorized
by the Approval Order), the execution and delivery by Seller of, the performance
of Seller under, and the consummation by Seller of the transactions contemplated
by, this Agreement and any other agreements or documents contemplated by this
Agreement (the "Transaction Documents") to which Seller is a party do not and
will not: (a) violate any Legal Requirement; (b) require any consent, approval
or authorization of, or filing of any certificate, notice, application, report
or other document with any Governmental Authority or other Person; or (c) (i)
violate or result in a breach of or constitute a default under (without regard
to requirements of notice, lapse of time, or elections of any Person, or any
combination thereof), (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 Contract or any other
instrument evidencing any of the Assets or by which Seller or any of its assets
is bound or affected.
Assets. Subject to the approval of the Court, Seller, on the Closing Date, will
have the authority to transfer, and will transfer, good and marketable title to
(or, in the case of Assets that are leased, valid leasehold interests in) the
Assets. Pursuant to the Approval Order and 363 of the Bankruptcy Code, the
sale of the Assets shall be free and clear of all Encumbrances, except (a)
Permitted Encumbrances and (b) Encumbrances described on Schedule 5.3.
Otherwise, pursuant to 363 of the Bankruptcy Code, Seller is transferring the
Assets "as is, where is" to Buyer.
Franchises and Governmental Permits. All Franchises and Governmental Permits
are listed on Schedule 5.4. Seller has provided to Buyer complete and correct
copies of all Franchises and Governmental Permits. Except as set forth on
Schedule 5.4, each Franchise and Governmental Permit is in full force and effect
and Seller is not, and the other party thereto is not, in breach or default of
any material terms or conditions thereunder. Except as set forth on Schedule
5.4, there is no legal action, governmental proceeding or investigation pending
or threatened to terminate, suspend or modify any Franchise or Governmental
Permit.
Contracts. All Contracts are described on Schedule 5.5, except for: (a)
subscription agreements with individual residential subscribers for the cable
services provided by the Systems in the ordinary course of business which may be
canceled by the Systems without penalty on not more than 30 days' notice; (b)
miscellaneous service Contracts terminable-at-will without penalty; (c)
Contracts involving any immaterial monetary or non-monetary obligation of
Seller, (d) bank financing documents; and (e) Contracts constituting Excluded
Assets. Seller has provided to Buyer true and complete copies of each of the
written Contracts, including any amendments thereto, other than Contracts
described in clauses (a) through (e) above. Each Contract is unmodified and is
in full force and effect and constitutes the valid, legal, binding and
enforceable obligation, and neither Seller nor any other party thereto, is in
breach or default of any material terms or conditions thereunder. If requested
in writing by Buyer, Seller shall, at Buyer's expense, produce copies of any
contracts relating to the Business not described on Schedule 5.5.
Real Property. All Assets consisting of owned or leased Real Property interests
are described on Schedule 5.6. Seller has valid and enforceable leasehold
interests in Real Property shown as being leased by Seller on Schedule 5.6 and,
with respect to other Real Property not owned or leased by Seller, Seller has
the valid and enforceable right to use all such other Real Property pursuant to
easements, licenses, rights-of-way or other rights, including those easements,
licenses, rights-of-way or other rights described on Schedule 5.6, subject only
to Permitted Encumbrances. There is no easement or other real property
interest, other than the Real Property, that is required, or that has been
asserted by a Governmental Authority or other Person to be required, to conduct
the Business or operate the Systems. All leased Real Property (including the
improvements thereon) (a) is in good condition and repair (ordinary wear and
tear excepted) consistent with its present use, (b) will be available to Buyer
for immediate use in the conduct of the Business or operation of the Systems in
accordance herewith, (c) has access to and over public streets or private
easements for which Seller has a valid right of ingress and egress, and (d)
conforms in its use to all material restrictive covenants, if any, or other
material Encumbrances affecting all or part of such parcel.
Environmental Matters.
Except as disclosed in Schedule 5.7, the leased Real Property has not been
used in connection with the operation of the Systems for the generation,
storage, discharge or disposal of any Hazardous Substances except as permitted
under applicable Environmental Laws. Except as set forth in Schedule 5.7, the
Seller has not received any written notice from any Governmental Authority
alleging that the owned or leased Real Property is in violation of any
Environmental Law, and no claim based on any applicable Environmental Law has
been asserted in writing in the past or is currently pending or threatened with
respect to any owned or leased Real Property.
Seller has provided to Buyer complete and correct copies of (a) all studies,
reports, surveys or other materials in Seller's possession relating to the
presence or alleged presence of Hazardous Substances at, on or affecting the
owned or leased Real Property, (b) all notices or other materials in Seller's
possession that were received from any Governmental Authority administering or
enforcing any Environmental Laws relating to current or past ownership, use or
operation of the owned or leased Real Property or activities at such Real
Property, and (c) all materials in Seller's possession relating to any
litigation or allegation by any Person under or concerning any Environmental Law
as it relates to the owned or leased Real Property.
Compliance with Legal Requirements.
Except as set forth on Schedule 5.8, the operation of the Business is in
compliance with all applicable Legal Requirements, including the Cable Act,
except to the extent that the failure to so comply with any of the foregoing
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Seller has provided to Buyer true and complete copies
of all FCC rate forms that have been prepared with respect to the Systems and
copies of all correspondence with any Governmental Authority relating to rate
regulation generally or specific rates charged to subscribers of the Systems.
Schedule 5.8 sets forth a list of (a) all pending complaints with respect to any
rates which have been filed with the FCC for the Systems and (b) those
franchising authorities that have filed FCC Form 328 for certification to
regulate any of the rates of the Systems.
To the extent necessary and appropriate, Seller has made the required filings
with respect to the Business under Section 111 of the Copyright Act for the past
three reporting periods, if requested in writing by Buyer, Seller shall, at
Buyer's expense, produce copies of any such filings.
Patents, Trademarks and Copyrights. Except for Excluded Assets and except
as described in Schedule 5.9, Seller does not possess any patent, patent right,
trademark or copyright material to the operation of the Business, and Seller is
not a party to any license or royalty agreement with respect to any such patent,
trademark or copyright except for licenses respecting program material and
obligations under the Copyright Act of 1976 applicable to cable television
systems generally and commercially available software. The Business and the
Systems have been operated in such a manner so as not to violate or infringe
upon the rights of, or give rise to any rightful claim of any Person for
copyright, trademark, service ▇▇▇▇, patent, license, trade secret infringement
or the like.
Legal Proceedings. Except for the Bankruptcy Case pending before the Bankruptcy
Court and as set forth in Schedule 5.10: (a) with respect to the Systems, there
is no claim, investigation or litigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal by or against Seller or
the Assets, which, if adversely determined, could have a Material Adverse Effect
or could materially and adversely affect the ability of Seller to perform its
obligations under this Agreement.
Tax Matters. Except as set forth on Schedule 5.11, there are no unresolved
claims concerning any Tax liability relating to the Assets or the Systems.
Seller has not received any notice of deficiency or assessment or of a proposed
deficiency or assessment from any taxing Governmental Authority pertaining to
the Assets or the Systems.
Employment Matters.
Seller has separately provided to Buyer on a confidential basis a list of
names and positions of all System Employees as of the date set forth in such
list, along with other pertinent employment information. Except as set forth on
Schedule 5.12, no System Employee is party to any employment agreement, either
written or oral, the Business has complied with applicable 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 insurance, worker's compensation, equal
employment opportunity, age and disability discrimination, immigration control
and the payment and withholding of Taxes.
System Employees are not a party to any collective bargaining agreements. There
are not pending any unfair labor practice charges relating to System Employees,
any demand for recognition or any other request or demand from a labor
organization for representative status with respect to any System Employee.
System Information. Schedule 5.13 sets forth the approximate number of
plant miles (aerial and underground) for the Systems, the stations and signals
carried by the Systems and the channel position of each such signal and station,
and the counties, cities and towns served by the Systems. Schedule 5.13 also
sets forth the approximate number of homes passed by the Systems, the channel
lineup of the Systems, and the monthly rates charged for each class of service
for the Systems.
Finders and Brokers. Except for ▇▇▇▇▇▇ Capital Corporation , the fees of which
will be the sole responsibility of Seller, Seller 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 for which Buyer (directly or
indirectly) could be liable.
Bonds. Except as set forth on Schedule 5.15, there are no franchise,
construction, fidelity, performance or other bonds, or letters of credit, posted
or required to be posted in connection with the Systems or the Assets.
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 the Business, and are subject to no offset or
reduction of any nature.
Buyer's Representations and Warranties
Buyer represents and warrants to Seller, as of the Effective Date and as of the
Closing, as follows:
Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite power and authority to own, lease and use the assets owned,
leased or used by it and to conduct its business as it is currently conducted.
Authority and Validity. Buyer has all requisite power and authority to execute
and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which Buyer is a party. 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 and the Transaction Documents to
which Buyer is a party have been duly and validly authorized by all necessary
action by or on behalf of Buyer. This Agreement has been, and when executed and
delivered by Buyer the Transaction Documents will be, duly and validly executed
and delivered by Buyer and the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
No Conflicts; Required Consents. The execution and delivery by Buyer, the
performance of Buyer under, and the consummation by Buyer of the transactions
contemplated by, this Agreement and the Transaction Documents to which Buyer is
a party do not and will not (a) violate any provision of the articles of
incorporation or bylaws of Buyer, (b) violate any Legal Requirement, (c) require
any consent, approval or authorization of, or filing of any certificate, notice,
application, report or other document with any Governmental Authority or other
Person, or (d) (i) violate or result in a breach of or constitute a default
under (without regard to requirements of notice, lapse of time or elections of
any Person or any combination thereof), (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 the validity, binding effect or enforceability
of this Agreement or on the ability of Buyer to perform its obligations under
this Agreement or the Transaction Documents to which it is a party.
Finders and Brokers. 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 for which Seller (directly or indirectly) could be liable.
Legal Proceedings. There are no claims, actions, suits, proceedings,
investigations or litigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal, by or against or
affecting or relating to Buyer and, no facts or circumstances exist which could
reasonably be expected to give rise to any such claim, investigation or
litigation, which, if adversely determined, would restrain or enjoin the
consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
Additional Covenants
Access to Premises and Records. Between the Effective Date and the Closing
Date, Seller will give Buyer and its counsel, accountants and other
representatives full access during normal business hours upon reasonable notice
to all the premises and books and records of the Business and to all the Assets
and to the Systems' general manager and will furnish to Buyer and such
representatives all such documents, financial information, and other information
regarding the Business and the Assets as Buyer from time to time reasonably may
request; provided that no such investigation will affect or limit the scope of
any of Seller's representations, warranties, covenants and indemnities in this
Agreement or any Transaction Document or limit liability for any breach of any
of the foregoing.
Continuity and Maintenance of Operations. Except as Buyer may otherwise consent
in writing (which consent will not be withheld unreasonably), between the
Effective Date and the Closing, Seller will comply with the following:
Seller will conduct the Business and operate the Systems only in the usual,
regular and ordinary course consistent with its past practices, and will use
commercially reasonable efforts to (a) preserve the Business intact, including
preserving existing relationships with franchising authorities, suppliers,
customers and others having business dealings with Seller relating to the
Business, (b) keep available the services of its employees and agents providing
services in connection with the Business, and (c) continue making marketing,
advertising and promotional expenditures with respect to the Business consistent
with past practices.
Seller will perform regular maintenance on the Assets to maintain the Assets in
good repair, order and condition (ordinary wear and tear excepted), will
maintain equipment and inventory at historical levels consistent with past
practices, will maintain in full force and effect, policies of insurance with
respect to the Business in amounts consistent with good industry practice, and
will maintain its books, records and accounts in the usual, regular and ordinary
manner on a basis consistent with past practices.
Seller will not (a) change the rates charged for any programming services
provided by the Systems or add, delete, re-tier or repackage any such
programming services except to the extent required under any Legal Requirement,
(b) sell, transfer or assign any portion of the Assets other than sales in the
ordinary course of business, or permit the creation of any Encumbrance on any
Asset other than a Permitted Encumbrance or any Encumbrance which will be
released at or prior to the Closing, (c) modify in any material respect,
terminate, suspend or abrogate any Governmental Permits, material Contracts or
any other material agreement (other than those constituting Excluded Assets), or
(d) enter into any Contract or commitment relating to the Systems involving an
expenditure in excess of $5,000, other than as required by the Franchises or as
contemplated by this Agreement, other than contracts or commitments which are
cancelable on 60 days' notice or less without penalty.
Seller will promptly notify Buyer of any fact, circumstance, event or action by
it or otherwise (a) which, if known at the Effective Date, would have been
required to be disclosed in or pursuant to this Agreement or (b) the existence,
occurrence or taking of which would result in any of Seller's representations
and warranties in this Agreement or any Transaction Document not being true,
complete and correct, if not already qualified by materiality, in all material
respects, and if qualified by materiality, in all respects, in each case when
made or at the Closing.
Required Consents.
Prior to the Closing, Seller will use commercially reasonable efforts to
either (a) obtain an order (which may be within the Approval Order) from the
Bankruptcy Court in the Bankruptcy Case authorizing the Seller to assume and
assign to Buyer, pursuant to 365 of the Bankruptcy Code, any and all
Contracts, and/or Government Permits, without regard to and/or notwithstanding
the failure or refusal of any third party to any such Contracts or Government
Permits to consent to such assignment; or (b) obtain in writing, as promptly as
possible and at its expense, all the Required Consents, and any other consent,
authorization or approval required to be obtained by Seller in order to transfer
the Assets to Buyer in connection with the transactions contemplated by this
Agreement, each in form and substance reasonably satisfactory to Buyer (which,
in the case of Contracts, may include estoppel language with respect to the
status of the Contract), and deliver to Buyer copies of such Required Consents
and such other consents, authorizations or approvals promptly after they are
obtained by Seller. To the extent required under 11 U.S.C. 365, Seller shall
cure any defaults relating to the payment of (i) franchise fees, (ii) pole
attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes
relating to Seller's personalty, and/or (vi) real property taxes relating to any
Real Property to be sold to Buyer, up to a maximum aggregate amount of
$1,000.00, which cures are or may be necessary to permit the assumption and
assignment to Buyer of any Contracts to be assumed by Buyer and that are in
default due to the Seller's failure to pay any such (i) franchise fees, (ii)
pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes
relating to Seller's personalty, and/or (vi) real property taxes relating to any
Real Property to be sold to Buyer. Other than the cost to cure such defaults,
commercially reasonable efforts do not require that Seller (a) pay any amounts
in excess of reasonable processing or application fees or (b) institute,
threaten or settle any litigation. Buyer will cooperate with Seller to obtain
all Required Consents, but Buyer will not be required to accept or agree or
accede to any modifications or amendments to, or changes in, or the imposition
of any condition to the transfer to Buyer of any Contract or Governmental Permit
that are not reasonably acceptable to Buyer.
Transfer Taxes. Any state or local sales, use, transfer, or documentary
transfer Taxes or fees or any other charge (including filing fees) imposed by
any Governmental Authority arising from or payable by reason of the transfer of
the Assets as contemplated by this Agreement will be paid by Seller, subject to
any Bankruptcy Code requirements or restrictions and subject to the terms of a
confirmed plan of reorganization in the Bankruptcy Case.
Use of Names and Logos. After the Closing, Buyer will remove or delete the name
"Eagle West, LLC" from the Business and Assets as soon as reasonably practicable
but in any event by the 120th day following the Closing. Notwithstanding the
foregoing, nothing in this Section 7.5 will require Buyer to remove or
discontinue using any such name or ▇▇▇▇ that is affixed to converters or other
items in or to be used in consumer homes or properties, or as are used in a
similar fashion making such removal or discontinuation impracticable. Seller
and Operator agrees that Seller's name, Eagle West Communications, Inc., is
acceptable to be utilized in all future business operations.
Satisfaction of Conditions. Each party will use commercially reasonable 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 8.
Transition Services. Seller will provide assistance to Buyer with respect to
the operation of the billing systems, software and related fixed assets used by
Seller in connection with the Systems (the "Billing Transition Services") for a
period of up to 120 days following the Closing to allow for transition of such
services to Buyer and the conversion of existing billing arrangements. Buyer
will reimburse Seller, on a monthly basis, for all direct expenses, including
personnel expenses, incurred by Seller in providing the Billing Transition
Services or other transition services.
Leased Equipment and Other Capital Leases. Seller will assign to Buyer any
capital leases for Equipment that Buyer agrees to assume, and Buyer will assume
all of Seller's rights, responsibilities and liabilities under any such capital
leases. Further, to the extent that any lessors under such capital leases
require any form of "adequate assurance of future performance" under 365 of
the Bankruptcy Code, Buyer will exercise its best efforts to provide such
assurances.
Post-Closing Access to Personnel Records. Except as otherwise prohibited by
applicable Legal Requirements, for a period ending on the first anniversary of
the Closing Date, Seller will, at no cost to Buyer, provide Buyer from time to
time, during normal business hours and upon reasonable notice from Buyer, with
access to, and the right to make copies or extracts of, pertinent information
from the personnel files and records of Seller and Operator relating to System
Employees who are hired by Buyer in connection with any claim, investigation or
litigation, payment of Taxes or any other valid business reason.
Retransmission Consent Agreements. On or prior to the date which is 20 days
prior to the Closing Date, Seller will provide to Buyer a list (and provide
copies, to the extent not previously provided) of all local retransmission
consent agreements then in effect with respect to the Systems. By written
notice delivered to Seller at least 10 days prior to the Closing Date, Buyer
may, in its sole discretion, elect to assume one or more of Seller's
retransmission consent agreements. Any such retransmission consent agreements
that Buyer elects to assume pursuant to this Section 7.10 will be deemed to be
included in the Assets for all purposes under this Agreement.
Court Approval. Upon execution of this Agreement, Seller will exercise its
diligent, good faith efforts to obtain entry of an order of the Bankruptcy Court
authorizing Seller's execution, delivery and performance of this Agreement,
authorizing the sale of the Assets to Buyer in accordance with the terms of this
Agreement and in such form and content as Buyer may reasonably request (the
"Approval Order"). The parties acknowledge that the Court may sign an Approval
Order subject to (i) the opportunity of interested parties to object to the
conduct of a hearing thereon, and/or (ii) higher and better bids from third
party purchasers. The Court may conduct a hearing to receive such objections
and competing bids before signing the Approval Order.
Conditions Precedent
Conditions to the Obligations of Buyer and Seller. The obligation of each
party to consummate the transactions contemplated by this Agreement is subject
to the satisfaction, at or before the Closing, of the following conditions,
which may be waived by the parties to the extent permitted by applicable Legal
Requirements:
Absence of Legal Proceedings. Other than the Bankruptcy Case, no action,
suit, investigation or proceeding is pending before, or threatened by, any
Governmental Authority, no judgment will have been entered and not vacated by
any Governmental Authority and no Legal Requirement will have been enacted,
promulgated or issued or become or deemed applicable to any of the transactions
contemplated by this Agreement by any Governmental Authority, which could
reasonably be expected to prevent or make illegal the purchase and sale of the
Assets contemplated by this Agreement.
Consents.
8.1.2.a. Seller and Buyer will have received either:
(a) an order from the Bankruptcy Court in the Bankruptcy Case authorizing
the transfer of the Assets free and clear all claims, liens and encumbrances,
and authorizing the assignment of all assigned Contracts and Government Permits
relating to the Mesa, Arizona System; or
(b) evidence, in form and substance satisfactory to Buyer, that all of the
Required Consents with respect to the assigned Contracts and Government Permits
relating to the Mesa, Arizona System have been obtained or given and are in full
force and effect.
8.1.2.b. With respect to all cable television systems owned and operated
by Seller other than the Mesa, Arizona system, Seller will use its best efforts
to obtain either:
(a) an order from the Bankruptcy Court in the Bankruptcy Case authorizing
the assignment of all assigned Contracts and Government Permits relating to such
systems; or
(b) evidence, in form and substance satisfactory to Buyer, that all of the
Required Consents with respect to the assigned Contracts and Government Permits
relating to such systems have been obtained or given and are in full force and
effect.
Court Approval. An Approval Order will have become effective as provided
in Section 7.11 and be final and non-appealable.
Conditions to the Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Buyer to the extent permitted by applicable Legal Requirements:
Representations and Warranties. The representations and warranties of
Seller in this Agreement, if qualified by a reference to materiality, are true,
complete and correct and, if not so qualified, are true, complete and correct in
all material respects, at and as of the Closing with the same effect as if made
at and as of the Closing, except for changes, if any, permitted or contemplated
by this Agreement and except to the extent a different date is specified
therein, in which case such representation and warranty will be true and correct
as of such date.
Performance of Agreements. Seller will have performed in all material respects
all obligations and agreements and complied in all material respects with all
covenants in this Agreement and any Transaction Document to be performed or
complied with by Seller at or before the Closing.
No Material Adverse Effect. Since the Effective Date, no event will have
occurred which has had, or could reasonably be expected to result in, a Material
Adverse Effect.
Retransmission Consent Agreements. Buyer will have entered into, or received a
valid assignment of, a retransmission consent agreement with respect to each
local broadcast signal carried by the Systems other than pursuant to a valid
must carry election under the Cable Act.
Programming Deletion. Upon written notice from Buyer to Seller given at least
30 days prior to Closing, or given 30 days prior to the date designated by Buyer
for deletion, if earlier than Closing, Seller will have deleted from the Systems
any programming services that (i) Buyer does not have the right to carry on the
Systems after Closing or (ii) Buyer determines, in its reasonable judgment,
could potentially result in liability on the part of Buyer for copyright
payments after Closing in excess of those payments made by Seller with respect
to carriage of such signals prior to Closing. If Buyer designates any
programming services for deletion prior to Closing, Buyer and Seller will use
commercially reasonable efforts to agree upon substitute programming to be added
to the Systems to replace such deleted programming.
Subscriber List. Seller will have delivered to Buyer, at least 10 days prior to
the Closing, a current list of subscribes of the Systems, including billing
address and related account information.
Seller's Cure. Seller will have cured, or made arrangements for the prompt cure
of, any defaults relating to the payment of (i) franchise fees, (ii) pole
attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes
relating to Seller's personalty, and/or (vi) real property taxes relating to any
Real Property to be sold to Buyer, up to a maximum aggregate amount of
$1,000.00, which cures are or may be necessary to permit the assumption and
assignment to Buyer of any Contracts to be assumed by Buyer and that are in
default due to the Seller's failure to pay any such (i) franchise fees, (ii)
pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes
relating to Seller's personalty, and/or (vi) real property taxes relating to any
Real Property to be sold to Buyer.
Conditions to Obligations of Seller. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Seller to the extent permitted by applicable Legal Requirements:
Representations and Warranties. The representations and warranties of
Buyer in this Agreement, if qualified by a reference to materiality, are true,
complete and correct and, if not so qualified, are true, complete and correct in
all material respects, at and as of the Closing with the same effect as if made
at and as of the Closing, except for changes, if any, permitted or contemplated
by this Agreement and except to the extent a different date is specified
therein, in which case such representation and warranty will be true and correct
as of such date.
Performance of Agreements. Buyer will have performed in all material respects
all obligations and agreements, and complied in all material respects with all
covenants and conditions in this Agreement and any Transaction Document to be
performed or complied with by Buyer at or before the Closing.
The Closing
The Closing; Time and Place. The Closing will be held on a date mutually
agreed upon by the parties after all conditions to the Closing contained in this
Agreement (other than those based on acts to be performed at the Closing) have
been satisfied or waived (the "Closing Date"). In no event will the Closing
occur after May 15, 2004 (the "Outside Closing Date"), unless the parties
otherwise agree. The Closing will be held via facsimile and overnight courier,
or at such place and at such time as Buyer and Seller may agree. If the Closing
Date is not a Business Day, then Buyer will pay the Purchase Price on the
immediately following Business Day.
Seller's Delivery Obligations. At the Closing, Seller will deliver (or cause to
be delivered) to Buyer the following:
an executed ▇▇▇▇ of Sale and Assignment and Assumption in the form of
Exhibit A to this Agreement; possession of the Assets; to the extent not
previously provided or included in the Excluded Assets, copies of all Contracts,
customer and subscriber lists, engineering records, maps, databases, files,
records, codes, combinations, passwords, keys and other entry and identification
information to permit operation of the Assets and used by Seller in connection
with the operation of the Systems (provision of the foregoing will be deemed
made to the extent such records are then located at any offices included in the
Real Property); and such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
Seller Cooperation; Covenant Not to Compete; and Termination of Rights at
Closing:
Seller shall cooperate with Buyer to achieve a smooth transition of utility
and other similar services furnished to the Systems.
For a period of one (1) year after the Closing, Operator shall not, either
directly or indirectly, solicit business from any customer of the Business, and
shall not directly or indirectly own, manage, operate, control or participate in
the ownership, management, operation or control, or be connected in any manner,
either as owner, proprietor, partner, stockholder, director, officer, employee,
agent or otherwise, of any business that competes with the Business anywhere
that the Business transacts business as of the day before the Closing Date. In
the event of a breach of this covenant, Buyer shall be entitled to injunctive
relief in addition to all remedies provided by law.
Operator shall have no right, title or interest of any kind in the Assets, and
shall not transfer, assign or convey or purport to transfer, assign or convey
any of the Assets or any interest therein, including, without limitation, any of
the Intangibles, to any person other than the Buyer.
Buyer's Delivery Obligations. At the Closing, Buyer will deliver (or cause
to be delivered) to Seller the following:
the Closing Date Payment; an executed ▇▇▇▇ of Sale and Assignment and
Assumption in the form of Exhibit A to this Agreement; and such other documents
as Seller may reasonably request in connection with the transactions
contemplated by this Agreement.
Termination
Termination Events. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned:
At any time by the mutual written agreement of Buyer and Seller;
By either party at any time upon 30 days prior written notice to the other, if
the other is in material breach or default of any of its covenants, agreements
or other obligations in this Agreement and fails to cure such breach or default
within the 10-day period following such written notice or, if such breach or
default is incapable of being cured within such 10-day period and the defaulting
party promptly initiates and diligently pursues such cure to completion upon
receipt of such notice, within a reasonable period of time;
By either party upon written notice to the other, if the Closing has not
occurred by the Outside Closing Date, for any reason other than a breach or
default by such party of its respective covenants, agreements or other
obligations under this Agreement; or
As otherwise provided herein.
Effect of Termination; Limitation of Liability. If this Agreement is
terminated pursuant to Section 10.1, all obligations of the parties under this
Agreement will terminate, except (a) as set forth in Section 10.3, (b) that each
party will pay the costs and expenses incurred by it in connection with this
Agreement, and neither party will be liable to the other for any costs, expenses
or damages except as expressly provided herein; (c) that each party will
redeliver all documents, work papers and other material of the other party
relating to the transactions contemplated hereby, whether so obtained before or
after execution hereof, to the party furnishing the same; and (d) as provided in
Sections 12.4 and 12.16. Notwithstanding a party's right to pursue remedies for
breach of contract upon termination of this Agreement in accordance with Section
10.1, no remedies for breaches of representations and warranties will be
available if this Agreement is so terminated pursuant to Sections 10.1.1 or
10.1.3. Furthermore, except as provided in Section 10.3, in the event the
Closing does not occur, no party to this Agreement will be liable for any
incidental, consequential, exemplary, special or punitive damages in connection
with any claim for breach of this Agreement. In the event of a breach by
Seller, any and all of Buyer's claims under this Section 10.2 and under Section
12.4 shall be deemed administrative expenses under 11 U.S.C. 503, entitled to
priority under 11 U.S.C. 507(a).
▇▇▇▇▇▇▇ Money Deposit. If Buyer fails to purchase the assets in accordance with
the terms of this Agreement, or if Buyer breaches its obligations under this
Agreement, and fails to cure any such failure or breach(es) within five (5) days
of receiving written notice thereof, and the transaction contemplated in this
Agreement fails to close by reason of such failures and/or breach(es), then
Escrow Agent shall deliver the ▇▇▇▇▇▇▇ Money Deposit to Seller and Seller's sole
remedy for such failures and breach(es) shall be to recover the ▇▇▇▇▇▇▇ Money
Deposit as liquidated damages. If this Agreement is terminated or the
transaction contemplated herein fails to close for any other reason, the ▇▇▇▇▇▇▇
Money Deposit shall be returned to Buyer, and subject to the limitations set
forth elsewhere in this Agreement, Buyer shall have all rights and remedies
available to it for Seller's breach hereof. If the Court fails to enter the
Approval Order, or if one or more of the Required Consents are not obtained, due
to the Buyer's (or any of its principals', affiliates' or employees') actions,
inactions or status, then the failure to satisfy the requirement of obtaining
the Approval Order and/or the Required Consent shall be deemed to be a breach by
Buyer and the ▇▇▇▇▇▇▇ Money Deposit shall be delivered to Seller.
Survival of Representations and Warranties; Indemnification
Survival of Representations and Warranties. Except for the representations
and warranties of Seller set forth in Sections 5.1, 5.2, 5.3, 5.7, 5.8 and 5.9
of this Agreement, the respective representations and warranties of Buyer and
Seller in this Agreement shall not survive the Closing, and no claim for breach
thereof may be made pursuant to this Section 11.
Indemnification by Seller. Following the Closing, Seller will indemnify and
hold harmless, to the extent of available bankruptcy estate assets, Buyer and
its owners, directors, officers, employees, agents, successors and assigns and
any Person claiming by or through any of them, as the case may be, from and
against all Losses resulting from or arising out of any breach of any surviving
representation or warranty made by Seller in this Agreement.
Indemnification by Buyer. Following the Closing, Buyer will indemnify and hold
harmless Seller and its shareholders, owners, directors, officers, employees,
agents, successors and assigns, and any Person claiming by or through any of
them, as the case may be, from and against all Losses resulting from or arising
out of:
any breach of any covenant, agreement or obligation of Buyer contained in
this Agreement or in the Transaction Documents delivered by Buyer;
the Assumed Obligations and Liabilities; and
the ownership of the Assets or operation of the Systems and the Business on and
after the Closing Date.
Third Party Claims. Promptly after the receipt by any party of notice of
any claim, action, suit or proceeding by any Person who is not a party to this
Agreement (collectively, an "Action"), which Action is subject to
indemnification under this Agreement, such party (the "Indemnified Party") will
give reasonable written notice to the party from whom indemnification is claimed
(the "Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) notifies the Indemnified Party in writing of the
Indemnifying Party's intention to assume such defense, (b) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (c) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action, it being
understood that counsel to each of Buyer and Seller named in this Agreement will
be deemed reasonable. The other party will cooperate with the party assuming
the defense, compromise or settlement of any such Action in accordance with this
Agreement in any manner that such party reasonably may request. If the
Indemnifying Party so assumes the defense of any such Action, the Indemnified
Party will have the right to employ separate counsel and to participate in (but
not control) the defense, compromise or settlement of the Action, but the fees
and expenses of such counsel will be at the expense of the Indemnified Party
unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii)
any relief other than the payment of money damages is sought against the
Indemnified Party, or (iii) the Indemnified Party will have been advised by its
counsel that there may be one or more defenses available to it which are
different from or additional to those available to the Indemnifying Party, and
in any such case that portion of the fees and expenses of such separate counsel
that are reasonably related to matters covered by the indemnity provided in this
Section 11 will be paid by the Indemnifying Party, provided that the
Indemnifying Party will have no obligation to pay the reasonable fees and
expenses of more than one law firm (in addition to the Indemnifying Party's law
firm). The Indemnified Party will not settle or compromise any such Action for
which it is entitled to indemnification under this Agreement without the prior
written consent of the Indemnifying Party, unless the Indemnifying Party has
failed, after reasonable notice, to undertake control of such Action in the
manner provided in this Section 11.4. The Indemnifying Party will not settle or
compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period, unless the Indemnified Party
consents in writing to such compromise or settlement. Any and all of Buyer's
claims under this Section 11.4 shall be deemed to be administrative expenses
under 11 U.S.C. 503, entitled to priority under 11 U.S.C. 507(a).
Sole Remedy. Each party acknowledges and agrees that, should the Closing occur,
its sole and exclusive remedy against the other with respect to any breach of
representation, warranty, covenant, agreement or obligation, this Agreement or
the transactions contemplated by this Agreement, will be pursuant to the
indemnification provisions set forth in this Section 11.
Miscellaneous
Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the other party, neither party may assign
any of its rights under this Agreement or delegate any of its duties under this
Agreement, provided that Buyer may assign its rights and obligations under this
Agreement to any Affiliate or in connection with any transaction that includes
the sale or transfer of all or substantially all of its cable Systems assets
located in the State of Arizona or Nevada.
Notices. All notices and communications hereunder will be in writing and will
be deemed to have been duly given to a party when delivered in person, sent by
facsimile transmission (with confirmation of receipt), delivered by first class,
postage prepaid, registered or certified mail, or sent by a nationally
recognized overnight courier service, and addressed as follows:
Seller:
Eagle West Communications, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
with copy to:
Johnson, Rasmussen, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.L.C.
▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Buyer:
Telecommunication Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone (▇▇▇)▇▇▇-▇▇▇▇
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. Any
notice of a change of address will be effective only upon actual receipt.
Right to Specific Performance. Each party acknowledges that the unique
nature of the transactions contemplated by this Agreement and the circumstances
under which this Agreement has been entered into renders money damages for a
breach of the parties' respective obligations to consummate the transactions
contemplated by this Agreement an inadequate remedy, and the parties agree that
either party will be entitled to pursue specific performance as a remedy for
such breach without the requirement of posting a bond or other security
therefor.
Attorneys' Fees. In the event of any action or suit based upon or arising out
of any alleged breach by any party of any representation, warranty, covenant or
agreement contained in this Agreement, the prevailing party will be entitled to
recover reasonable attorneys' fees and other costs of such action or suit from
the other party.
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.
Captions. The captions of this Agreement are for convenience only and do not
constitute a part of this Agreement.
GOVERNING LAW This Agreement shall be construed in accordance with, and governed
by the laws of the State of Arizona
Rights Cumulative. Except as expressly provided in this Agreement, 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.
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.
Time. 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.
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
Bank of New York as its "reference rate" (the "Prime Rate") plus two percentage
points per annum, adjusted as and when changes in the Prime Rate are made.
Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original. This Agreement may be executed by facsimile
signature(s), which will be deemed an original.
Entire Agreement; Amendments. This Agreement (including the Exhibits and
Schedules referred to in this Agreement, which are incorporated in and
constitute a part of this Agreement) and the Transaction Documents contain the
entire agreement of the parties and supersede all prior oral or written
agreements and understandings with respect to the subject matter hereof and
thereof. There are no representations, warranties, covenants or agreements made
by either party except as expressly stated herein and in the Schedules and
Transaction Documents. This Agreement may not be amended or modified except by
a writing signed by the parties, except in open court as stipulated to by the
parties and approved by the Bankruptcy Court.
Severability. Any term or provision of this Agreement which is invalid or
unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
Construction. This Agreement has been negotiated by Buyer and Seller and their
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.
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.
Risk of Loss. In the event of any loss or damage to the Assets resulting from
fire, theft, tornado, flood, lightening or any other similar casualty (excluding
reasonable wear and tear) prior to the Closing Date, which loss or damage is
sufficiently substantial so as to preclude and prevent resumption of normal
operations of any material portion of the Systems or the replacement or
restoration of the lost or damaged property within 45 days from the occurrence
of the event resulting in such loss or damage, Seller will immediately notify
Buyer in writing of its inability to resume normal operations or to replace or
restore the lost or damaged Assets, as well as the likely amount of any
insurance coverage for such loss or damage. Buyer, at any time within 30 days
after receipt of such notice, may elect by written notice to Seller to either
(a) waive such loss or damage and proceed toward consummation of the transaction
in accordance with terms of this Agreement (including all other conditions to
Buyer's obligations set forth in Sections 8.1 and 8.2), or (b) terminate this
Agreement. If Buyer elects to so terminate this Agreement, Buyer and Seller
will stand fully released and discharged of any and all obligations hereunder
(except for obligations intended to survive hereunder), and Buyer's deposit
shall be refunded. If Buyer elects to consummate the transactions contemplated
by this Agreement notwithstanding such loss or damage and does so, all insurance
proceeds paid or payable as a result of the occurrence of the event resulting in
such loss or damage will be delivered by Seller to Buyer, or the rights thereto
will be assigned by Seller to Buyer if not yet paid over to Seller, and Buyer
will have no further recourse against Seller with respect to such loss or damage
arising out of or in connection with any representation or warranty of Seller
hereunder.
[Signature Page Follows]
The parties have executed this Agreement as of the day and year first above
written.
SELLER:
EAGLE WEST COMMUNICATIONS, INC.
By/s/ ▇▇▇▇ ▇. ▇. ▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
Chief Executive Officer and
President, Eagle West Communications, Inc.
BUYER:
Telecommunications Products, Inc.,
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
Telecommunications Products, Inc.