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EXHIBIT 10.15
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ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 19, 1997
BY AND BETWEEN
DIGITAL TELEVISION SERVICES OF GEORGIA, LLC
AND
▇▇▇▇▇▇▇▇ ELECTRIC MEMBERSHIP CORPORATION
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LIST OF SCHEDULES
Schedule 1.1 Escrow Agreement
Schedule 1.2 Fixed Assets
Schedule 1.3 Locations
Schedule 1.4 NRTC/Member Agreement
Schedule 1.5 NRTC/Retail Agreement
Schedule 1.6 Other Assumed Agreements
Schedule 2.1(a) Assignment and Assumption Agreement
Schedule 2.1(b) ▇▇▇▇ of Sale
Schedule 4.3(c) Promissory Note
Schedule 4.3(d) Letter of Credit
Schedule 4.5 Allocation of Purchase Price
Schedule 5.2(b) Consent of Seller
Schedule 5.3(a) Liens
Schedule 5.4 Fixed Assets Needing Repairs
Schedule 5.9 Changes or Events
Schedule 5.10 Licenses and Permits
Schedule 5.13 Litigation
Schedule 6.2(b) Consent of Purchaser
Schedule 8.9 Noncompetition Agreement
[Schedules have been omitted but will be furnished upon request]
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 19th day of February, 1997, by and between Digital Television
Services of Georgia, LLC, a Georgia limited liability company ("Purchaser"), and
▇▇▇▇▇▇▇▇ Electric Membership Corporation, a nonprofit Georgia electric
membership corporation ("Seller").
RECITALS
1. Seller owns and operates the National Rural Telecommunications
Cooperative's System No. 0422 (the "System") for the exclusive distribution in
certain areas in the State of Georgia of DBS Services offered by DirecTv (the
"Business").
2. Purchaser desires to acquire from Seller, and Seller desires to sell
to Purchaser all of Seller's rights under the NRTC/Member Agreement and the
NRTC/Retail Agreement relating to the Locations, any residual rights of Seller
as a member or affiliate of the NRTC to distribute DBS Services in the Locations
after the termination of the NRTC Agreements and certain of the assets used in
the Business, subject to the terms and conditions of this Agreement. Purchaser
acknowledges and agrees that it is not acquiring and Seller shall retain all
assets relating to its Electric Business, all Leased Subscriber Equipment and
all accounts receivable related thereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged, Seller and
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article shall have the following respective
meanings for all purposes of this Agreement, and the following definitions are
equally applicable to both the singular and plural forms of the terms defined:
"Accounts Payable" shall mean all accounts payable of Seller to the
NRTC as of the Closing Date relating to the Business; including, without
limitation, accounts payable to the NRTC with respect to wholesale bills,
equipment and other services.
"Accounts Receivable" shall mean all of the accounts receivable of
Seller as of the Closing Date for all Customers which are listed on Report 19A
(Accounts Receivable Summary) of the NRTC Central Billing Systems Reports, other
than accounts receivable of Seller relating to the rental or lease of Leased
Subscriber Equipment to Customers, whether arising prior to or after the Closing
Date.
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"Binder" shall mean the One Hundred Seven Thousand Two Hundred Twenty
Dollars ($107,220) of the Two Hundred Thousand Dollars ($200,000) Purchaser
deposited with Seller as agent for the Georgia DBS Sellers, on December 17, 1996
as a good ▇▇▇▇▇ ▇▇▇▇▇▇ to proceed with the transactions contemplated by this
Agreement.
"Cable Programming" shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
"Cash" shall mean all cash in Seller's bank accounts at Huntington Bank
as of the Closing Date.
"Closing" shall mean the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of this
Agreement and shall be held at 10:00 a.m. at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., First Union Plaza, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) at Purchaser's election, on the later of (a) the last
business day of the month in which all of the conditions precedent set forth in
Articles VIII and IX herein have been satisfied or waived, or (b) April 30,
1997; or (ii) such other date or at such other time or place (including via
mail, overnight courier or facsimile transmission) as the parties may mutually
agree upon in writing. The Closing shall be as effective as of the close of
business on the Closing Date.
"Closing Date" shall mean the date on which the Closing actually
occurs.
"Commercial Establishment" shall have the meaning ascribed to such term
in the NRTC/Member Agreement.
"Committed Member Residence" shall have the meaning ascribed to such
term in the NRTC/Member Agreement.
"Current Assets" shall mean Cash, Accounts Receivable, Inventory (if
purchased pursuant to Section 4.4(b) hereof) and Prepaid Expenses of Seller,
which will be acquired by Purchaser at Closing.
"Current Liabilities" shall mean Accounts Payables and Unearned Revenue
of Seller which will be assumed by Purchaser at Closing.
"Customers" shall mean those Persons, including Subscribers, which have
purchased DBS Services, or entered into a binding agreement to purchase DBS and
related services, from Seller at any time during the five (5) year period
immediately preceding the Closing Date.
"DBS Services" shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
"DirecTv" shall mean DirecTv, Inc., a California corporation, the
successor in interest and rights holder to ▇▇▇▇▇▇ Communications Galaxy, Inc.
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"Electric Business" shall mean the electric distribution system and
business of Seller operated in the State of Georgia and all assets related
thereto, including, without limitation, all real estate, motor vehicles, cash
and accounts receivable.
"Escrow Agent" shall mean Synovus Trust Company, a Georgia trust
company with offices in Albany, Georgia.
"Escrow Agreement" shall mean the Escrow Agreement dated as of the date
hereof among the Escrow Agent, Purchaser and the Georgia DBS Sellers which
Escrow Agreement shall be substantially in the form attached hereto as Schedule
1.1.
"Excluded Assets" shall mean (i) all Leased Subscriber Equipment, (ii)
all assets (including, but not limited to, real estate, motor vehicles, cash and
accounts receivable) of Seller relating to or used in connection with the
Electric Business, and (iii) all Patronage Capital and capital credits.
"Fixed Assets" shall mean the equipment and other tangible assets,
including, without limitation, any MTE terminals and demonstration units owned
by Seller and used or useable in connection with the Business, which equipment
and tangible assets are listed on Schedule 1.2 attached hereto.
"Franchise" shall mean any residual rights of Seller, if any, as a
member or affiliate of the NRTC to distribute DBS Services in the Locations
after the termination of the NRTC Agreements.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Georgia DBS Sellers" shall mean Seller, Washington Electric Membership
Corporation, Planters Electric Membership Corporation and DigiCom Services, Inc.
"Inventory" shall mean any DSS(TM) subscriber equipment of Seller held
for resale, other than Leased Subscriber Equipment, which Purchaser notifies
Seller pursuant to Section 4.4(b) hereof it desires to purchase pursuant to this
Agreement, which Inventory shall be valued at the lesser of each item's (i)
actual cost and (ii) current wholesale value.
"Leased Subscriber Equipment" shall mean all DSS(TM) subscriber
equipment of Seller leased or rented to Subscribers, all accounts receivable
arising therefrom and all records associated therewith.
"Lien" shall mean with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance, claim, escrow, right of
first refusal, indenture, easement, license or other adverse claim or
restriction of any kind in respect of such property or asset. For purposes of
this Agreement, any restriction or limitation with respect to a security or
other ownership interest (including any restriction on the right to vote, sell
or otherwise dispose of such security or ownership interest) shall constitute a
"Lien" thereon. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any property or asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
relating to such property or asset.
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"Locations" shall mean the counties and certain other areas in the
State of Georgia set forth on Schedule 1.3 attached hereto in which Seller has
the exclusive right to distribute DBS Services pursuant to the NRTC Agreements.
"Non-Select Services" shall have the meaning ascribed to such term in
the NRTC/Member Agreement.
"NRTC" shall mean the National Rural Telecommunications Cooperative, a
District of Columbia corporation.
"NRTC Agreements" shall mean the NRTC/Member Agreement, the NRTC/Retail
Agreement and any Other Assumed Agreements.
"NRTC/Member Agreement" shall mean the NRTC/Member Agreement for
Marketing and Distribution of DBS Services dated December 18, 1992 by and
between the NRTC and Seller, as amended by that certain Amendment as of March
31, 1994 and as may be further amended from time to time, together with all
schedules and exhibits thereto, a copy of which is attached as Schedule 1.4.
"NRTC/Retail Agreement" shall mean the NRTC/Member DBS Product Retail
Agreement dated August 3, 1993 by and between the NRTC and Seller, as amended
from time to time, together with all schedules and exhibits thereto, a copy of
which is attached hereto as Schedule 1.5.
"Other Assumed Agreements" shall mean the contracts and agreements, if
any, set forth on Schedule 1.6 attached hereto, including any contracts and
agreements with DirecTv, copies of which are attached to such Schedule.
"Patronage Capital" shall mean the amount of patronage capital
dividends credited to the account of Seller at the NRTC for the period through
the Closing Date pursuant to Article XII of the NRTC Bylaws, as amended.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, joint
venture or other entity or organization including a government, political
subdivision or agency or instrumentality thereof.
"Prepaid Expenses" shall mean (i) Two Hundred Seventy-Five Dollars
($275) for each activation of a new Subscriber in the Locations to a Total
Choice Package (or its equivalent) from the date hereof to the Closing Date;
(ii) One Hundred Twenty-Five Dollars ($125) for each activation of a new
Subscriber to an Economy Choice Package (or its equivalent) from the date hereof
to the Closing Date; and (iii) all prepaid property taxes, prepaid supplies,
advances, deposits, deferred charges and other prepaid expenses (other than
prepaid insurance) shown on Seller's books and records as of the Closing Date
relating to the Business which Prepaid Expenses can be credited to Purchaser's
account after the Closing Date, as determined in accordance with GAAP.
"Programming" shall mean Cable Programming and any programming provided
DirecTv pursuant to the NRTC Agreements.
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"Purchase Price" shall mean the amount set forth in Section 4.1 herein.
"Purchased Assets" shall mean only (i) the NRTC Agreements, (ii)
Franchise, (iii) Current Assets, (iv) relationships, contracts and accounts with
Customers, (v) Fixed Assets, (vi) Records, and (vii) all other assets of Seller,
whether tangible or intangible, used in connection with the Business, and shall
specifically exclude the Excluded Assets.
"Records" shall mean all files, books and records relating to the
provisions of DBS Services by Seller in the Locations, including, without
limitation, copies of Customer and prospective customer lists, computer
programs, tapes and electronic data processing software, accounting journals and
ledgers, accounts receivable records, and all NRTC reports, correspondence and
other documents relating to the NRTC Agreements and Other Assumed Agreements and
compliance therewith, other than the books and records associated with the
Leased Subscriber Equipment.
"Signing Deposit" shall mean Two Hundred Fourteen Thousand Four Hundred
Forty Dollars ($214,440) of the Four Hundred Thousand Dollars ($400,000) to be
deposited by Purchaser with the Escrow Agent on the date hereof.
"Subscriber" as of any date shall mean a Customer who, at a minimum,
(i) is an active subscriber subscribing to a package of basic services, (ii) on
the last day of the calendar month prior to such date, whose account is not more
than sixty (60) days past due from the date payment is due, (iii) is not an
employee or agent of the service provider or charged a fee that is nominal
(e.g., demonstration unit) or substantially below the service provider's
published rates, and (iv) has not given notice of intent to discontinue service.
"Survival Termination Date" shall mean the last day of the eighteenth
(18th) month after the Closing Date.
"Termination Date" shall mean May 31, 1997.
"Unearned Revenue" shall mean all unearned revenue, advance payments
and deposits associated with Customer credit balances of Seller as of the
Closing Date which are listed on Report 17 (Unearned Revenue Report) of the NRTC
Central Billing System Reports.
ARTICLE II
SALE AND PURCHASE OF THE ASSETS
2.1. SALE AND PURCHASE OF ASSETS. Subject to the terms and conditions
of this Agreement, Seller shall sell, transfer, assign and convey the Purchased
Assets to Purchaser, and Purchaser shall purchase, acquire and accept from
Seller all of Seller's right, title and interest in and to the Purchased Assets,
free and clear of any and all Liens, on the Closing Date for the consideration
set forth in this Agreement. The sale, transfer, assignment and conveyance of
the Purchased Assets shall be made by the execution and delivery at Closing of
(i) an Assignment and Assumption Agreement substantially in the form attached
hereto as Schedule 2.1(a) (the "Assignment"), and (ii) a ▇▇▇▇ of sale
substantially in the form attached hereto as Schedule 2.1(b) (the "▇▇▇▇ of
Sale"), and (iii) such other recordable instruments of assignment, transfer and
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conveyance as Purchaser shall reasonably request.
ARTICLE III
ASSUMPTION OF LIABILITIES/EXPRESS EXCLUSIONS
3.1. LIABILITIES OF SELLER. As of the Closing Date, Purchaser shall
assume and agree to pay, perform and otherwise discharge all obligations of
Seller with respect to the following:
(a) the NRTC Agreements to the extent the obligations therein
arise out of the provision of DBS Services to Customers and accrue on or after
the Closing Date; and
(b) all Current Liabilities as of the Closing Date and all
services to Customers associated with the Unearned Revenue.
Anything in this Agreement to the contrary notwithstanding, except for
the liabilities specifically set forth in this Section 3.1, Purchaser shall not
assume or be deemed to have assumed under this Agreement, by reason of the
transactions contemplated by this Agreement, or otherwise, any other trade or
other accounts payable, accrued expenses, debts, liabilities, obligations or
commitments of Seller of any nature whatsoever, known or unknown, and the
execution, delivery and performance of this Agreement shall not render Purchaser
liable for any such debt, liability, obligation or commitment.
By way of example and not as an exhaustive list, the following
liabilities and obligations of Seller are expressly not assumed by Purchaser,
pursuant to this Agreement or otherwise:
A. any liabilities or obligations of Seller under or with
respect to any employment agreement or any pension, profit-sharing, retirement,
disability or other benefit plan entered into or established by Seller with or
for the benefit of any employee of Seller; and
B. any liabilities or obligations of any kind arising out of
incidents, occurrences, actions or failures to act by or pertaining to Seller,
which occurred prior to the Closing Date, including, without limitation,
liabilities or obligations arising from (i) the distribution, sale or provision
of any services of Seller, or (ii) any failure or alleged failure to comply with
any federal, state or local law, rule or regulation applicable to Seller or the
Business.
Purchaser agrees to promptly notify Seller of any claims which Purchaser obtains
knowledge of which arise out of or result from liabilities of Seller not assumed
by Purchaser pursuant to this Agreement.
ARTICLE IV
PURCHASE PRICE; PAYMENT OF PURCHASE PRICE
4.1. PURCHASE PRICE. The purchase price for the Purchased Assets (the
"Purchase Price") shall be Eleven Million Three Hundred Forty-Two Thousand Seven
Hundred Thirty-Four Dollars ($11,342,734), subject to adjustment as provided in
Section 4.4 herein.
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4.2. ESCROW DEPOSIT. Contemporaneously with the execution of this
Agreement, Purchaser has delivered to the Escrow Agent the Signing Deposit and
Seller has delivered to the Escrow Agent the Binder (collectively, the "Escrow
Deposit") to be held by the Escrow Agent pursuant to the Escrow Agreement.
4.3. PAYMENT OF PURCHASE PRICE. On the Closing Date, Purchaser shall
pay the Purchase Price to Seller as follows:
(a) The Escrow Deposit shall continue to be held by the Escrow
Agent pursuant to the Escrow Agreement. Purchaser shall also deposit with the
Escrow Agent Two Hundred Fourteen Thousand Four Hundred Dollars ($214,400) to be
held by the Escrow Agent pursuant to the Escrow Agreement (the "Additional
Deposit").
(b) An aggregate amount not to exceed Ten Million Eight
Hundred Six Thousand Six Hundred Seventy-Four Dollars ($10,806,674), subject to
adjustment as provided for in Section 4.4 herein, by certified or cashier's
check, or by wire transfer of immediately available funds to an account or
accounts designated in writing by Seller (together with the Escrow Deposit and
the Additional Deposit, the "Closing Payment"). Seller shall notify Purchaser no
later than thirty (30) days prior to the Closing Date of the actual amount of
the Closing Payment.
(c) The balance of the Purchase Price by the delivery of a
Promissory Note substantially in the form attached hereto as Schedule 4.3(c)
(the "Note"). The Note will be secured by an irrevocable standby letter of
credit substantially in the form attached hereto as Schedule 4.3(d) (the "Letter
of Credit"). The Letter of Credit shall be issued by a financial institution
with offices in, and with authority to transact business in, the United States
and which has capital surplus and undivided profits aggregating at least $500
million. The Letter of Credit, by its terms, shall not expire or be released
until all amounts due Seller under the Note have been paid. Purchaser shall have
the right to replace the Letter of Credit with a Letter of Credit issued by a
financial institution meeting the requirements set forth above (the "Substitute
Letter of Credit"); provided that the Substitute Letter of Credit shall be in an
amount equal to the principal amount of the Note at the time of such
substitution; and provided further that the written consent of Seller is
required prior to the issuance of a Substitute Letter of Credit, which consent
shall not be unreasonably withheld.
4.4. ADJUSTMENT TO PURCHASE PRICE.
(a) The Closing Payment shall be increased by the parties'
good faith estimate of the Current Assets of Seller and decreased by the
parties' good faith estimate of the Current Liabilities of Seller as of the
Closing Date (the "Closing Adjustment"), which adjustment shall be subject to
final adjustment as provided for in paragraph (c) below.
(b) No later than sixty (60) days after the Closing Date, or
within three (3) days after receipt of the necessary accounting data from the
NRTC Central Billing System, whichever is later, Purchaser shall make and
deliver to Seller a balance sheet reflecting the Current Assets and Current
Liabilities of Seller as of the Closing Date (the "Closing Date Balance Sheet"),
prepared on a basis consistent with GAAP. For purposes of the Closing Adjustment
and the Final Closing Adjustment (as hereinafter defined), the amount of
Accounts
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Receivable of Seller to be included in the Closing Date Balance Sheet shall
include only Accounts Receivable of Subscribers as reflected on Report 18A
(Subscriber Accounts Receivable Aging By Account) of the NRTC Central Billing
System Reports less a reserve of six percent (6%) for Accounts Receivable which
are not collectible. In addition, the Closing Date Balance Sheet and the Final
Closing Adjustment shall not include as a Current Asset any accounts receivable
arising from Leased Subscriber Equipment. Purchaser may, by providing Seller
with written notice at least five (5) days prior to the Closing, elect to
purchase all, or certain of, the DSS(TM) subscriber equipment owned by Seller
(other than Leased Subscriber Equipment) on the Closing Date; provided, however,
Purchaser shall not have the right to acquire any assets attributable to
Seller's Electric Business. Any such equipment which is purchased by Purchaser
shall be included as Inventory in the Closing Date Balance Sheet. Except as set
forth in this Section 4.4(b), no other assets or liabilities shall be included
in the Closing Date Balance Sheet. Seller shall make available to Purchaser such
documentation, back-up, invoices, and books and records of Seller as Purchaser
may reasonably request.
(c) Seller and Purchaser shall negotiate in good faith to
reconcile any discrepancies which may arise in connection with the determination
of the Closing Date Balance Sheet. If Seller and Purchaser are unable to
reconcile such discrepancies, Seller shall have fifteen (15) days from
presentment of the Closing Date Balance Sheet by Purchaser to notify Purchaser
if Seller wishes to have Purchaser's determination examined. If Seller elects to
have Purchaser's determination examined, it shall be submitted to the
determination in Atlanta, Georgia, by the Certified Public Accounting firm of
KMPG Peat Marwick (or any other independent Certified Public Accounting firm
mutually acceptable to Seller and Purchaser), the cost of such examination to be
paid fifty percent (50%) by Seller and fifty percent (50%) by Purchaser. The
determination by Purchaser shall be final and binding on the parties unless
Seller elects to have an examination as provided herein, in which case the
results of the examination shall be made within thirty (30) days of such
referral, and shall be final and binding on the parties (the "Final Closing
Adjustment").
(d) To the extent the Final Closing Adjustment is less than
the Closing Adjustment, Seller shall pay the difference in cash to Purchaser
within five (5) days after the final determination. In the event the Final
Closing Adjustment is greater than the Closing Adjustment, Purchaser shall pay
such excess in cash to Seller within five (5) days after the final
determination. If, following any payment pursuant to this Section 4.4(d), an
error (in billing or reporting by NRTC or otherwise) is thereafter discovered
which would have affected the Final Closing Adjustment, the party in whose favor
the error was made shall immediately pay in cash the amount of such error to the
other party.
4.5. ALLOCATION OF PURCHASE PRICE. The parties have agreed, after
arms-length negotiations, to allocate the Purchase Price among the Purchased
Assets on the basis set forth on Schedule 4.5 to be delivered at the Closing,
and the parties shall make all federal, state and local tax filings consistent
therewith.
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ARTICLE V
SELLER'S REPRESENTATIONS AND WARRANTIES
To induce Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller hereby represents and warrants to
Purchaser as follows:
5.1. ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia, with all
requisite power and authority to own and operate the Business as it is now
conducted and to own the Purchased Assets in the places where the Business is
now conducted and where the Purchased Assets are now owned or operated.
5.2. AUTHORITY.
(a) Seller has full power and authority to execute, deliver
and perform this Agreement and all agreements and transactions contemplated
hereby. The execution, delivery and performance of this Agreement and all
transactions contemplated hereby have been duly authorized by Seller and, except
for the consent of the NRTC, DirecTv and the other Persons set forth on Schedule
5.2(b) attached hereto, no other action or proceeding on the part of any other
party is necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller and constitutes, and each of the other agreements to be
executed by Seller pursuant to the terms hereof will constitute upon execution
and delivery, a legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
(b) Except for the NRTC, DirecTv and the other Persons set
forth on Schedule 5.2(b) attached hereto, the execution, delivery and
performance of this Agreement or any document related hereto by Seller and the
consummation by Seller of all of the transactions contemplated hereby or thereby
will not (with or without the giving of notice or the lapse of time or both) (i)
violate or require any consent or approval under any applicable provision of any
judgement, order, writ, injunction, decree, rule, regulation or law; (ii)
require any consent under, conflict with, result in termination of, accelerate
the performance required by, result in a breach of, constitute a default under
or otherwise violate the terms of any agreements, instruments or other
obligations to which Seller is a party or by which Seller or any of the
Purchased Assets may be bound or affected; (iii) require any consent or approval
by, notice to or registration with any governmental authority or any other
Person; (iv) conflict with or violate any provision of Seller's organizational
documents; or (v) result in the creation of a Lien upon any of the Purchased
Assets howsoever arising.
5.3. TITLE TO THE PURCHASED ASSETS.
(a) Seller has good and marketable title to all of the
Purchased Assets, free and clear of all Liens except those Liens disclosed on
Schedule 5.3(a) attached hereto.
(b) Immediately following the Closing, Purchaser shall have
sufficient title in and to the Purchased Assets to operate and conduct the
Business in the same fashion as Seller was conducting the Business in the
ordinary course prior to the Closing Date.
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5.4. CONDITION OF FIXED ASSETS. All of the Fixed Assets set forth on
Schedule 1.2 are in good operating condition, in a state of good maintenance and
repair, and are adequate and suitable for the purposes which are presently being
used. All appropriate repair and maintenance of the Fixed Assets has been
performed on a current basis and in accordance with generally accepted industry
standards. Except as set forth on Schedule 5.4 attached hereto, none of the
Fixed Assets are in need of any repairs which are outside the ordinary course of
maintenance and repairs routinely performed by Seller in the past, and no
currently needed repairs are reasonably likely to cost, either singularly or in
the aggregate with respect to all Fixed Assets, in excess of Five Thousand
Dollars ($5,000).
5.5. NRTC MEMBERSHIP; DBS DISTRIBUTION RIGHTS.
(a) Attached hereto as Schedules 1.4, 1.5 and 1.6 are true and
complete copies of each of the NRTC/Member Agreement, the NRTC/Retail Agreement,
and the Other Assumed Agreements, if any, respectively, together with all
amendments, schedules and exhibits thereto. The NRTC/Member Agreement grants
Seller the exclusive right to distribute DBS Services in the Locations, except
as set forth in the NRTC/Member Agreement.
(b) Seller has paid all sums to NRTC or DirecTv, as
appropriate, required under the NRTC/Member Agreement such that Seller is
entitled to the marketing and sales revenues as provided therein.
(c) Seller is in full compliance in all material respects with
any and all membership, affiliation, licensing or other requirements or
arrangements as may have been established by NRTC or DirecTv pursuant to the
NRTC Agreements, or otherwise.
(d) Seller is not in breach of the NRTC Agreements, nor has
Seller failed to perform any material obligation under the NRTC Agreements.
Seller has not received notice of any such breach or non-performance at any time
of such NRTC Agreements. To the best of Seller's knowledge, no other party to
any of the NRTC Agreements is in default thereunder or has failed to perform any
material obligation thereunder.
5.6. INVENTORY. The Inventory will not, as of the Closing Date, include
any items below standard quality, obsolete or sub-prime. The Inventory shall
consist solely of undamaged, original units in original, sealed cartons. Seller
owns all of the Inventory free and clear of any and all Liens and has full power
and authority to transfer the Inventory to Purchaser.
5.7. ACCOUNTS RECEIVABLE. The Accounts Receivable represent arms'
length transactions with Customers made in the ordinary course of business and
none of the Accounts Receivable are subject to any counterclaim or setoff.
5.8. PREPAID EXPENSES. Each of the Prepaid Expenses is reasonable in
amount, was incurred and paid in the ordinary course of business and can be
utilized in the Business after the Closing Date.
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5.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 5.9 attached hereto and other than changes or events which have
affected the DBS industry in general, since December 31, 1995 to the best
knowledge, information and belief of Seller there has not been:
(a) any change in the position, financial or otherwise,
assets, liabilities, earnings, book value, Business, operations or prospects of
Seller which is materially adverse, singularly or in the aggregate;
(b) any obligation or liability incurred by Seller (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
other than obligations or liabilities incurred in the ordinary course of
business and consistent with past practices;
(c) any termination or waiver of any rights of Seller of
material value to the Business or to Seller;
(d) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Business or the Purchased Assets;
(e) the adoption of any statute, rule, regulation or order
which adversely affects the Business or the Purchased Assets;
(f) any sale, transfer or other disposition of any of the
Purchased Assets to any party, except for dispositions of surplus or used
equipment or other dispositions in the ordinary course of business; or
(g) any agreement to do any of the foregoing.
5.10. LICENSES AND PERMITS. Attached hereto in Schedule 5.10 is a list
of all federal, state, local and foreign permits, certificates, licenses,
approvals and other authorizations necessary in the conduct of the Business. All
such licenses and permits of Seller are in full force and effect, and no
violations are or have been recorded in respect thereof, and no proceeding is
pending or threatened to revoke or limit any thereof. Seller and its conduct of
the Business is in compliance with all applicable laws, statutes, ordinances,
rules, regulations and order of any federal, foreign, state or local government
and any other government department or agency having regulatory jurisdiction
over Seller, and in any judgment, decision, decree or order of any court or such
governmental agency, department or authority.
5.11. TAX MATTERS.
(a) Seller has timely filed all federal, state and local tax
returns and tax reports required to be filed with respect to the Business with
the appropriate governmental agency in all jurisdictions in which such returns
and reports are required to be filed. All such returns and reports are true,
correct and complete, and all amounts shown as owing on them have been paid,
including all interest, penalties, deficiencies and assessments heretofore
levied or assessed against Seller. Seller has duly withheld, collected and
timely paid over, or holds for such payment, to the proper governmental
authorities all taxes required to be withheld or collected by it. There is no
agreement for extension of time of assessment or payment of any taxes of
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Seller. No waiver of any statute of limitations has been executed by Seller for
any tax year which remains open or unsettled. To the best knowledge, information
and belief of Seller, there is no examination or audit pending by the Internal
Revenue Service or by any state or local taxing authority with respect to the
tax matters of Seller. There is no liability for taxes or any tax deficiency or
the existence of any basis from which liability for taxes or tax deficiency,
including interest and penalties, might be asserted against Seller for any
period in excess of the applicable reserve for taxes, if any, and Seller has no
knowledge of any such liability or deficiency or the existence of any basis
therefor.
(b) All federal, state and local income, profits, franchise,
sales, use, occupation, property, excise and other taxes (including interest and
penalties), if any, payable by Seller or relating to or chargeable against the
Purchased Assets or chargeable against Seller's revenue or income have been
fully paid or are not past due and are fully disclosed and accrued on the books
and records of Seller and the proper amount of reserves exist for the payment
thereof.
5.12. DISCLOSURES. No representation or warranty made by Seller in this
Agreement, and no statement made in any Schedule, exhibit, certificate or other
writing delivered or to be delivered in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact, or omits or will omit any statement of a material fact necessary to make
the statements contained herein or therein not misleading.
5.13. LITIGATION. Except as set forth in Schedule 5.13 attached hereto,
there are no actions, suits, proceedings, orders, investigations or claims
pending or, to the best of Seller's knowledge, any threats against or affecting
Seller, the Purchased Assets or the Business, at law or in equity, before any
court, arbitration panel, tribunal or governmental department, commission,
board, bureau, agency or instrumentality.
ARTICLE VI
PURCHASER'S REPRESENTATIONS AND WARRANTIES
To induce Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser hereby represents and warrants to
Seller as follows:
6.1. ORGANIZATION. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Georgia, with all requisite power to own and operate its business as it is now
conducted.
6.2. AUTHORITY.
(a) Purchaser has full power and authority to execute,
deliver, and perform this Agreement. The execution, delivery and performance of
this Agreement and all transactions contemplated hereby have been duly
authorized by Purchaser and no other action or proceeding on the part of any
other party is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser, and constitutes, and each of the other
agreements to be executed pursuant to the terms hereof upon execution and
delivery will constitute, a legal, valid and
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binding obligation of Purchaser, enforceable in accordance with its terms.
(b) Except for the NRTC, DirecTv and the other Persons set
forth on Schedule 6.2(b) attached hereto, the execution, delivery and
performance of this Agreement or any other document related hereto by Purchaser
and the consummation by Purchaser of all of the transactions contemplated hereby
or thereby will not (with or without the giving of notice or the lapse of time
or both) (i) violate or require any consent or approval under any applicable
provision of any judgment, order, writ, injunction, decree, rule, regulation or
law; (ii) require any consent under, conflict with, result in the termination
of, accelerate the performance required by, result in the breach of, constitute
a default under or otherwise violate the terms of any agreements, instruments or
other obligations to which Purchaser is a party; (iii) require any consent or
approval by, notice to or registration with any governmental authority or any
other Person; or (iv) violate any provision of Purchaser's Articles of
Organization or Operating Agreement.
6.3. DISCLOSURES. No representation or warranty made by Purchaser in
this Agreement, and no statement made in any Schedule, exhibit, certificate or
other writing delivered or to be delivered in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact, or omits or will omit any statement of a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE VII
COVENANTS
7.1. CONDUCT OF THE BUSINESS PRIOR TO CLOSING DATE. From the date
hereof through and until the Closing Date, unless performance of the following
obligations is waived by Purchaser (in its sole discretion) in advance and in
writing, Seller shall:
(a) consult with Purchaser on a regular basis with respect to
all decisions which might adversely affect the Business or the Purchased Assets;
(b) not modify, amend, alter or terminate any of the NRTC
Agreements, or waive any default or breach thereunder;
(c) comply in all material respects with the NRTC Agreements,
use its best efforts to cure any default or breach thereunder, and promptly
notify Purchaser upon receipt of notice of any default or breach thereunder;
(d) maintain its Records in accordance with prior practice,
maintain the Purchased Assets and the Inventory in their present condition,
ordinary wear and tear excepted, consistent with past practice, and otherwise
use its best efforts to operate the Business as currently operated and in the
ordinary course in accordance with practices during the twelve (12) months
preceding the date of this Agreement;
(e) not sell, transfer, dispose or permit a Lien, directly or
indirectly, on any of the Purchased Assets or Inventory, except for sales or
dispositions of Inventory in the ordinary course of business;
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(f) use its best efforts to preserve intact the current
business organization and relationships with employees, suppliers, advertisers,
Customers and other Persons having dealings with Seller relating to the
Business;
(g) operate the Business in all material respects in
accordance with the NRTC Agreements, comply in all material respects with all
laws, rules and regulations applicable to it, including the regulations and
policies of the NRTC and DirecTv;
(h) provide to Purchaser, concurrently with filing, sending or
receipt thereof, copies of all reports to and other filings and correspondence
with the NRTC and DirecTv;
(i) provide to Purchaser, promptly upon receipt thereof by
Seller, a copy of (i) any notice of the revocation, suspension or limitation of
the rights under, or of any proceeding for the revocation, suspension, or
limitation of the rights under, any of the NRTC Agreements, and (ii) copies of
all protests, complaints, challenges or other documents submitted to or filed
with the NRTC or DirecTv by third parties concerning the Business and, promptly
upon the filing or making thereof, copies of Seller's responses thereto; and
(j) notify Purchaser in writing immediately upon learning of
the institution or threat of any action against Seller in any court, or any
action against Seller before any governmental agency, and notify Purchaser in
writing promptly upon receipt of any administrative or court order relating to
the Business. Without limiting the generality of the foregoing, Seller shall not
take any of the actions (over which Seller can exercise control) listed in
Section 5.9 herein.
7.2. ACCESS.
(a) Prior to March 31, 1997, Purchaser may, through its
employees, agents and representatives, make or cause to be made such
investigation of Seller, its Records and the Business as Purchaser deems
necessary or advisable and shall have full access to the auditors and attorneys
of Seller. Seller shall permit Purchaser and its employees, agents and
representatives, on reasonable notice, to have access during normal business
hours to its premises, personnel and Records. Seller shall cooperate to provide
access to its Customers, suppliers, lenders and such other parties as Purchaser
may reasonably request. Seller shall, and shall cause its officers, attorneys
and accountants to, furnish Purchaser with such financial and operating data and
other information as Purchaser from time to time shall reasonably request,
including, but not limited to, Seller's balance sheets for the Business as of
December 31, 1995 and September 30, 1996. No investigation by Purchaser shall in
any way affect or otherwise diminish the representations, warranties and
covenants of Seller hereunder; provided, however, that Purchaser shall advise
Seller as soon as practicable after it obtains knowledge of any breach or
nonperformance of the representations, warranties or covenants of Seller.
(b) Purchaser will hold, and will cause its authorized
representatives (including its investors and lending institutions) to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or official request or by other requirements of law, all documents and
information concerning Seller and the Business furnished to Purchaser in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
Purchaser, (ii) in the public
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domain through no fault of Purchaser, or (iii) later lawfully acquired by
Purchaser from other sources) and will not release or disclose such information
to any other Person, except its auditors, attorneys, financial advisors and
other consultants and advisors and lending institutions (including banks) in
connection with this Agreement, it being understood that such Persons shall be
informed by such party of the confidential nature of such information and shall
be directed by such party and shall have agreed to treat such information as
confidential. In the event that the transactions contemplated herein are not
consummated for any reason, Purchaser will, upon request by Seller, promptly
return to Seller all copies of any Schedules, statements, documents or other
written information obtained in connection herewith, without retaining any
copies or summaries thereof, and shall maintain such confidence except to the
extent such information comes into the public domain through no fault of
Purchaser.
7.3. CONSENT OF NRTC, DIRECTV AND OTHERS. Seller and Purchaser shall
join in and deliver the requests for the consent of the NRTC and DirecTv to the
transfer of the NRTC Agreements, and such other requests for consent that
Purchaser reasonably determines may be necessary or appropriate to consummate
the transactions contemplated hereby, and they will each diligently take all
steps necessary or desirable to obtain such consents. The failure of either of
the parties to timely file or diligently seek the consents, or to cooperate
fully with the other party with respect thereto, shall be deemed a material
breach of this Agreement.
7.4. PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Seller and Purchaser shall
mutually agree in advance as to timing, form and content before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated hereby and shall not issue any press release or make
any public statement prior to reaching mutual agreement, except as may be
required by law, contractual relationship with an auditor, auditor requirements
or lender requirements; provided, however, that neither party shall disclose the
Purchase Price hereunder without the prior written consent of the other party.
In the event that prior to the Closing Date either party is required by law to
make a statement with respect to the transactions contemplated herein, such
party shall notify the other party in writing as to the timing, form and content
of such statements. Seller and Purchaser agree to maintain the confidentiality
of this Agreement and the terms hereof and any information exchanged by the
parties in connection with the consummation of the transaction contemplated
hereby.
7.5. BEST EFFORTS. Subject to the terms and conditions herein provided,
Seller and Purchaser agree to use their best efforts to take, execute,
acknowledge and deliver, or cause to be taken, executed, acknowledged and
delivered, all actions, deeds, assignments, documents, instruments, transfers,
conveyances, discharges, releases, assurances and consents, and to do, or cause
to be done, all things necessary, proper or advisable under this Agreement and
all applicable laws and regulations to consummate, confirm, perfect, evidence
and otherwise make effective the transactions contemplated by this Agreement,
including actions necessary to obtain all requisite assignments of agreements
and contracts, and to fulfill the requirements of Articles VIII and IX hereof on
or prior to the Closing Date.
7.6. EXCLUSIVE DEALING. During the period from the date of this
Agreement to the Closing Date, Seller will refrain, and will cause all of its
agents and employees to refrain, from taking, directly or indirectly, any action
to encourage, initiate, solicit or continue any discussions or negotiations
with, or any other offers from, any other Person concerning a merger, sale of
substantial stock or any similar transaction concerning Seller which would
affect the Business,
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or the sale of the Purchased Assets or any portion thereof.
7.7. SUBSCRIBER LEASES. From and after the date hereof, Seller
covenants and agrees to use its best efforts to keep in full force and effect
all leases or rentals of Leased Subscriber Equipment between Seller and
Subscribers and shall refrain from taking, directly or indirectly, any action to
encourage any Subscribers to terminate such leases. Notwithstanding any other
provisions of this Agreement, the parties hereto agree that all accounts
receivable of Seller relating to the lease or rental of Leased Subscriber
Equipment prior to or after the Closing Date shall remain the property of Seller
and shall not be transferred hereunder. In the event that after the Closing Date
Purchaser collects any rental or lease payments from Subscribers of Leased
Subscriber Equipment, Purchaser shall remit to Seller such payments within
thirty (30) days after receipt thereof. At the request of Seller, Purchaser
shall provide to Seller an accounting of such accounts receivable and receipts.
7.8. NEW SERVICES. In the event that in the future new satellite
services become available to Purchaser as a result of its license with NRTC
(such as satellite meter reading or load management) which are useful to Seller
in the Electric Business, Purchaser will make such services available to Seller
or its affiliates at a price equal to Purchaser's cost plus a royalty not to
exceed 2% of such cost; provided that making such services available does not
interfere with Purchaser's ability to provide DBS services to its Subscribers.
7.9. SELLER AS AGENT. If Seller or its affiliates desire to become
agents of Purchaser, Purchaser will permit them to act as agents in their own
name and will compensate them at a rate no less than favorable than the rate
which Purchaser is paying to any of its agents in Georgia with respect to
contracts entered into by Purchaser with such agents (i.e. excluding contracts
which apply to the entire country or major portions thereof).
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Purchaser's obligations to perform this Agreement and consummate the
transactions contemplated hereby is subject to the satisfaction (or waiver by
Purchaser), on or before the Closing Date, of each of the following conditions
precedent:
8.1. TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Seller contained in this Agreement, and all
representations and warranties set forth in any Schedule or exhibit attached
hereto, shall have been true, complete and correct when made and as of the
Closing Date, without the necessity of any material amendment or modification,
with the same force and effect as if made as of the Closing Date.
8.2. PERFORMANCE. Each of the agreements, obligations, conditions and
covenants to be performed or complied with by Seller on or before the Closing
Date pursuant to the terms hereof shall have been duly performed or complied
with on or before the Closing Date.
8.3. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date and except
as otherwise permitted by this Agreement, there shall not have occurred any
material adverse change in the financial condition, Business, assets, results of
operations or prospects of Seller or the Purchased Assets.
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8.4. NO LITIGATION THREATENED. No action, suit or other proceeding
shall be pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim, the consummation of which would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
8.5. CONSENTS. All authorizations and approvals of or consents of, or
filings with, any governmental authority or other Person required to be obtained
or made by Seller in connection with the Closing including, without limitation,
NRTC and DirecTv consent as provided for in Section 7.3 herein, shall have been
duly obtained by Seller and shall be in full force and effect without conditions
which are materially adverse to Purchaser.
8.6. SUBSCRIBERS. On the Closing Date, the Georgia DBS Sellers shall
collectively have at least 14,000 Subscribers.
8.7. REVIEW OF SELLER. Purchaser shall have completed its due diligence
investigation covering the Business as provided for in Section 7.2 herein and no
fact or circumstances shall have come to the attention of Purchaser as a result
of such investigation which in the exercise of Purchaser's reasonable judgement
materially or adversely affects the business, prospects or financial condition
of the Business.
8.8. CLOSING OF ACQUISITIONS OF THE GEORGIA DBS SELLERS. Purchaser
shall have consummated the transactions contemplated by the Asset Purchase
Agreements dated as of the date hereof between Purchaser, on the one hand, and
each of the Georgia DBS Sellers, on the other hand, relating to the acquisition
of all of the DBS assets with respect to NRTC System Nos. 0422, 1071, 0073 and
0120.
8.9. SELLER'S CLOSING DELIVERIES. Seller shall have delivered to
Purchaser the following at Closing:
(a) the Assignment, the ▇▇▇▇ of Sale and other instruments of
transfer to effectively assign, transfer and convey good and marketable title to
the Purchased Assets as Purchaser shall reasonably request, in form and
substance reasonably satisfactory to Purchaser;
(b) copies of the Records which Purchaser may reasonably
request;
(c) a certified copy of Resolutions of the Board of Directors
of Seller authorizing the execution, delivery and performance of this Agreement;
(d) a certificate of good standing of Seller from the
Secretary of State of Georgia;
(e) evidence satisfactory to Purchaser that all Liens
described on Schedule 5.3(a) herein have been removed or otherwise addressed to
Purchaser's satisfaction;
(f) a list of the Accounts Receivable from all Customers
(Reports 18A and 19A) and a list of the Unearned Revenue (Report 17), each as of
the last NRTC billing period
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ending prior to the Closing Date;
(g) a certificate signed by Seller's president, dated the
Closing Date, to the effect that the conditions set forth in this Article VIII
have been satisfied;
(h) an opinion of ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq., counsel to Seller,
in form and substance reasonably acceptable to Purchaser;
(i) a certificate signed by Seller's president, dated the
Closing Date, regarding the transfer of Seller's account at Huntington Bank;
(j) a Noncompetition Agreement with Seller substantially in
the form attached hereto as Schedule 8.9; and
(k) such other documents and instruments as may be reasonably
requested and satisfactory to Purchaser and its counsel in connection with
Seller's satisfaction of each of its obligations hereunder.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Seller's obligation to perform this Agreement and consummate the
transactions contemplated hereby is subject to the satisfaction (or waiver by
Seller), on or before the Closing Date, of each of the following conditions
precedent:
9.1. TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Purchaser contained in this Agreement, and all
representations and warranties set forth in any Schedule or exhibit attached
hereto, shall have been true, complete and correct when made and as of the
Closing Date, without the necessity of any material amendment or modification,
with the same force and effect as if made as of the Closing Date.
9.2. PERFORMANCE. Each of the agreements, obligations, conditions and
covenants to be performed or complied with by Purchaser on or before the Closing
Date pursuant to the terms hereof shall have been duly performed or complied
with on or before the Closing Date.
9.3. NO LITIGATION THREATENED. No action, suit or other proceeding
shall be pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim, the consummation of which would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
9.4. CONSENTS. All authorizations and approvals of or consents of, or
filings with, any governmental authority or other Person required to be obtained
or made by Purchaser in connection with the Closing (including, without
limitation, NRTC consent as provided for in Section 7.3 herein) shall have been
duly obtained by Purchaser and shall be in full force and effect without
conditions which are materially adverse to Seller.
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9.5. PURCHASER'S CLOSING DELIVERIES. Purchaser shall have delivered to
Seller the following at Closing:
(a) the Closing Payment;
(b) the Note;
(c) the Letter of Credit;
(d) a certified copy of Resolutions of the member of Purchaser
authorizing the execution, delivery and performance of this Agreement;
(e) a certificate signed by Purchaser's member, dated the
Closing Date, to the effect that the conditions set forth in this Article IX
have been satisfied;
(f) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.,
counsel to Purchaser, in form and substance reasonably acceptable to Seller; and
(g) a certificate signed by Purchaser's member, dated the
Closing Date, regarding the transfer of Seller's account at Huntington Bank.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
10.1. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise specifically provided herein, each and every representation and
warranty contained in this Agreement shall expire with, and be terminated and
extinguished by the Closing or the termination of this Agreement pursuant to
Section 11.13 hereof, and thereafter, except and to the extent otherwise
specifically provided herein, neither Purchaser, Seller or any partner or
representative thereof shall be under any liability whatsoever with respect to
any such representation or warranty. The representations and warranties
hereunder shall not be affected or diminished by any investigation at any time
by or on behalf of the party for whose benefit such representations and
warranties were made. All statements contained herein or in any Schedule,
exhibit, certificate, list or other document delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties.
10.2. INDEMNIFICATION OF PURCHASER. Seller and its representatives,
successors, and assigns shall indemnify, reimburse and hold Purchaser and each
of its partners, subsidiaries, affiliates, successors, assigns and agents
harmless from, against, for and in respect of any and all damages, losses,
settlement payments, obligations, liabilities, claims, demands, actions or
causes of action, judgments, encumbrances, costs and expenses (including
reasonable attorneys' fees) (collectively, the "Indemnifiable Damages") relating
to, resulting from or arising out of (i) any misrepresentation, untruth,
inaccuracy, breach or nonfulfillment of any representation, warranty, agreement
or covenant of Seller contained in or made in connection with this Agreement or
in any Schedule, exhibit, certificate or other document delivered pursuant
hereto, (ii) the failure of Seller to pay, perform or discharge promptly when
due any of its obligations,
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liabilities and debts except as provided under this Agreement, (iii) any
liability or obligation relating to the operation of the Business prior to the
Closing Date, (iv) any breach or default prior to the Closing Date by Seller
under any of the NRTC Agreements, (v) any state or local sales, use, excise,
personal property or similar tax liability (including penalties and interest) of
Seller, (vi) any liability or obligation relating to the operation of the
Electric Business prior to or after the Closing Date, and (vii) any other
liabilities, obligations or claims, whether absolute or contingent, known or
unknown, matured or unmatured and not expressly assumed by Purchaser hereunder.
10.3. INDEMNIFICATION OF SELLER. Subject the limitations hereinafter
set forth, Purchaser shall indemnify, reimburse and hold Seller and its
shareholders, subsidiaries, affiliates, officers and directors harmless from,
against, for and in respect of any and all Indemnifiable Damages (as defined in
Section 10.2 above) relating to, resulting from or arising out of (i) any
misrepresentation, untruth, inaccuracy, breach or nonfulfillment of any
representation, warranty, agreement or covenant of Purchaser contained in or
made in connection with this Agreement or in any Schedule, exhibit, certificate
or other document delivered pursuant hereto, (ii) the failure of Purchaser to
pay, perform or discharge promptly when due (a) its obligations set forth in
Section 4.3 herein, or (b) the Current Liabilities, (iii) the assertion against
Seller of any liability or obligation relating to Purchaser's operation of the
Business after the Closing Date, and (iv) any breach or default after the
Closing Date by Purchaser under the NRTC Agreements.
10.4. EXPIRATION OF INDEMNIFICATION OBLIGATIONS. The indemnification
obligations of Seller under Sections 10.2(i), (ii), (iii), (iv) and (vii) and
Purchaser under Section 10.3 above shall expire and terminate on the Survival
Termination Date, unless, prior to such termination, the party entitled to
indemnification hereunder (the "Indemnified Party") shall have provided written
notice to the other party hereto obligated to provide indemnification pursuant
to Sections 10.2 or 10.3 herein (the "Indemnifying Party") of an assertion by
the Indemnified Party of a right to indemnification under Sections 10.2 or 10.3
("Indemnification Claim").
10.5. RIGHT TO CONTEST.
(a) If the Indemnified Party receives notice or has knowledge
of any claim for which it believes the Indemnifying Party is obligated to
provide indemnification, the Indemnified Party shall provide the Indemnifying
Party with an Indemnification Claim within twenty (20) days of its receipt of
same, but in no event later than ten (10) days prior to the date a responsive
pleading with respect to such Indemnification Claim is due. The Indemnification
Claim shall set forth a brief description of the facts giving rise to such a
claim and the amount (or reasonable estimate) of the Indemnifiable Damages
suffered or which may be suffered by the Indemnified Party. The Indemnified
Party shall, at the expense of the Indemnifying Party, provide all information
regarding the contest or defense of the claim and cooperate fully with the
Indemnifying Party in the conduct of any such contest or defense. Before being
required to make any payment pursuant to Sections 10.2 or 10.3 herein, the
Indemnifying Party may, at its own expense, elect to undertake and control the
defense of, and take all necessary steps properly to contest any claim in
respect thereof involving third parties or to prosecute such claim to conclusion
or settlement satisfactory to the Indemnified Party. If the Indemnifying Party
makes the foregoing election, then the Indemnified Party shall have the right to
participate, at its own expense, in all proceedings but shall not admit any
liability, settle, compromise, pay or discharge the claim without the prior
written consent of the Indemnifying Party. If the
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Indemnifying Party does not make such election, it shall be obligated to pay the
costs of defending or prosecuting such claim and shall be bound by whatever
result is obtained by the Indemnified Party respecting such claim.
(b) Except as otherwise specifically provided herein, the
remedies provided in this Agreement shall be cumulative and shall not preclude
assertion by any party of any other rights or the seeking of any other remedies
against any other party hereto.
ARTICLE XI
MISCELLANEOUS
11.1. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given, upon
personal delivery, upon receipted delivery by overnight courier, charges prepaid
or charged to the sender's account if delivery is confirmed by the delivery
service, upon receipt of a confirmed transmission if by facsimile transmission,
or three (3) days after mailing if mailed by certified or registered mail,
postage prepaid, return receipt requested, as follows (or at such other address
for a party as shall be specified by like notice; provided that notice of a
change of address shall be effective only upon receipt thereof):
To Purchaser: Digital Television Services of
Georgia, LLC
Building C-200
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
with a copy to: C. ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.
NationsBank Corporate Center, Suite 3350
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Seller: ▇▇▇▇▇▇▇▇ Electric Membership Corporation
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Manager
with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq.
▇.▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
11.2. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
agreement.
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11.3. GOVERNING LAW. This Agreement shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
Georgia, without regard to the choice of law provisions thereof.
11.4. WAIVERS. No provisions of this Agreement may be waived except by
an instrument in writing signed by the party sought to be bound. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or of the same right
or remedy or a waiver on any future occasion.
11.5. SEVERABILITY. The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
11.6. SECTION AND ARTICLE HEADING REFERENCES. The Section and Article
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
11.7. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and permitted assigns, if any, of the parties hereto. Except as
otherwise expressly provided herein, nothing expressed or implied herein is
intended or shall be construed to confer upon or give any Person, other than the
parties hereto, any right or remedy hereunder or by reason hereof. This
Agreement may not be assigned by Purchaser (except to a party which, directly or
indirectly is controlled by, controls or is under common control with,
Purchaser) or Seller without the prior written consent of the other party.
11.8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Schedules
attached hereto constitute the entire agreement and understanding of the parties
in respect of the transactions contemplated hereby and supersede all prior
correspondence, conversations, agreements, arrangements, understandings and
other writings, including the Term Sheet dated December 13, 1996 between the
Georgia DBS Sellers and Columbia DBS Management, LLC. No promises, covenants or
representations of any character or nature other than those expressly stated
herein have been made to induce either party to enter into this Agreement. This
Agreement may be amended or modified only by a written instrument signed by
Purchaser and Seller.
11.9. EXPENSES. Each of the parties hereto shall pay its own expenses
incurred in connection with the negotiation and consummation of this Agreement,
including the charges of its respective attorneys, accountants and other
representatives. Purchaser shall pay up to Five Thousand Dollars ($5,000) of any
transfer or similar fees due the NRTC and up to one hundred twenty percent
(120%) of the NRTC's costs and expenses incurred to complete the transfer and
assignment in connection with the transactions contemplated by this Agreement.
Seller shall pay any transfer fees due the NRTC in excess of the amounts
required to be paid by Purchaser pursuant to the immediately preceding sentence.
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11.10. KNOWLEDGE OF SELLER. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to knowledge,
Seller confirms that it has made or caused to be made due and diligent inquiry
as to the matters that are the subject of such representations and warranties.
11.11. FACSIMILE SIGNATURES. Facsimile signatures shall be considered
original signatures for purposes of execution and enforcement of the rights
delineated in this Agreement.
11.12. SCHEDULES. The Schedules referred to in this Agreement are
attached hereto, made a part hereof and incorporated herein by this reference.
11.13. TERMINATION OF AGREEMENT.
(a) Notwithstanding any other provision herein contained to the
contrary, this Agreement may be terminated at any time prior to the Closing Date
by (i) the mutual written consent of Seller and Purchaser, (ii) either party
upon written notice to the other party if the Closing has not occurred on or
before the Termination Date, (iii) Seller, if Sections 9.1, 9.2 or 9.5 have not
been complied with or performed by Purchaser and such noncompliance and
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Purchaser on or before the sixtieth (60th) day
following written notice thereof from Seller; provided that Seller has not
defaulted in any material respect with respect to any of its obligations
hereunder, (iv) Purchaser, if the covenants and conditions set forth in Articles
VII and VIII (other than Section 8.7) required to be complied with and performed
by Seller have not been complied with or performed by Seller and such
noncompliance and nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by Seller on or before the sixtieth
(60th) day following written notice thereof from Purchaser; provided that
Purchaser shall not have defaulted in any material respect with respect to any
of its obligations hereunder, or (v) Purchaser if the conditions set forth in
Section 8.7 required to be complied with and performed by Seller have not been
complied with or performed by Seller on or prior to March 31, 1997; provided
that Purchaser shall not have defaulted in any material respect with respect to
any of its obligations hereunder.
(b) In the event of termination pursuant to this Section 11.13, written
notice thereof shall be given to the other party and this Agreement shall
terminate immediately. In the event of such termination pursuant to Section
11.13(a)(i) or (ii), no party hereto (or any of their respective directors,
officers or partners) shall have any liability or further obligation to the
other party to this Agreement.
(c) In the event of termination pursuant to Section 11.13(a)(iii),
Purchaser recognizes that Seller would be damaged, the extent to which is
extremely difficult and impractical to ascertain. The parties, therefore, agree
that if this Agreement is terminated pursuant to Section 11.13(a)(iii), Seller
shall be entitled to the sum equal to the Escrow Deposit. The parties agree that
this sum shall constitute liquidated damages and shall be in lieu of any and all
other relief to which Seller might otherwise be entitled due to Purchaser's
failure to consummate, or Purchaser's default under, this Agreement. In the
event the Escrow Deposit is held by the Escrow Agent at the ▇▇▇▇ ▇▇▇▇▇▇ becomes
entitled to the liquidated damages hereunder, Seller and Purchaser shall
instruct the Escrow Agent to pay the Escrow Deposit to Seller.
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(d) In the event of termination pursuant to Section 11.13(a)(iv) or
(v), Purchaser shall be entitled to recover from Seller all damages, losses,
costs and expenses (including reasonable attorneys' fees) provided by law.
11.14. POWER OF ATTORNEY. Seller hereby appoints Purchaser, and all
agents, officers, and employees designated by Purchaser, irrevocably for six (6)
months from and after the Closing Date, as its true and lawful attorney-in-fact
and duly authorized agent to:
(i) open Seller's mail and endorse and collect any checks, notes,
drafts or any other items payable to Seller from Subscribers or
otherwise issued in connection with the Business, and deposit same to
the account of Purchaser in any depository institution;
(ii) sign receipts and other papers necessary for the collection of any
and all amounts due from Subscribers;
(iii) notify Subscribers that the accounts have been assigned to
Purchaser; and
(iv) direct such Subscribers to make all payments due from them
directly to Purchaser.
Purchaser shall furnish Seller with a copy of any notice issued pursuant to
Sections 11.14(iii) or (iv) above and Seller hereby agrees that any such notice,
in Purchaser's sole discretion, may be sent on Seller's stationary, in which
event Seller shall, upon demand, co-sign such notice with Purchaser. This Power
of Attorney shall not affect Seller's right to receive revenues from the Leased
Subscriber Equipment as provided for in Section 7.7 herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASER:
Digital Television Services of Georgia, LLC
By: DTS Management, LLC
Its: Member
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. President
and Manager
SELLER:
▇▇▇▇▇▇▇▇ Electric Membership Corporation
By:
---------------------------------------
Its:
----------------------------------
Each of the undersigned has duly executed this Agreement as of the date
first above written for the sole purpose of agreeing to the provisions of
Section 4.3 hereof.
Digital Television Services, LLC
By: DTS Management, LLC
Its: Manager
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. President
and Manager
DTS Management, LLC
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. President and
Manager
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