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EXHIBIT 10.14
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ASSET PURCHASE AGREEMENT
DATED AS OF NOVEMBER 22, 1996
BY AND BETWEEN
DIGITAL TELEVISION SERVICES OF KANSAS, LP
AND
KANSAS DBS, L.L.C.
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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 4.5 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 6.2(b) Consent of Purchaser
Schedule 8.8 Noncompetition Agreement
Schedule 11.1 Notices
[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 22nd day of November, 1996, by and between Digital Television
Services of Kansas, LP, a Georgia Limited Partnership ("Purchaser"), and Kansas
DBS, L.L.C., a Kansas limited liability company ("Seller").
RECITALS
1. Seller owns and operates the National Rural Telecommunications
Cooperative's System No. 0109 (the "System") for the exclusive distribution in
certain areas in the State of Kansas (the "Locations") 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.
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 as reflected on the Closing Date Balance Sheet
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 18A
(Accounts Receivable Aging Summary) of the NRTC Central Billing Systems Reports.
"Binder" shall mean the Fifty Thousand Dollars ($50,000) Purchaser
deposited with Seller on November 12, 1996 as a good ▇▇▇▇▇ ▇▇▇▇▇▇ to proceed
with the transactions contemplated by this Agreement.
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"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 Seller, on (i) the
calendar day of such month on which NRTC's accounting period closes after which
all of the conditions precedent set forth in Articles VIII and IX herein have
been satisfied or waived, 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 parties anticipate that the Closing will
occur on January 31, 1997. The Closing shall be 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 and
Prepaid Expenses of Seller, which will be acquired by Purchaser at Closing.
"Current Liabilities" shall mean Accounts Payables and Unearned Revenue
of Seller as reflected on the Closing Date Balance Sheet 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.
"Escrow Agent" shall mean Bank IV, a national banking association with
offices in Hays, Kansas.
"Escrow Agreement" shall mean the Escrow Agreement dated as of the date
hereof among the Escrow Agent, Purchaser and Seller which Escrow Agreement shall
be substantially in the form attached hereto as Schedule 1.1.
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"Fixed Assets" shall mean the equipment and other tangible assets,
including, without limitation, any MTE terminals, demonstration units and
DSS(TM) equipment leased to Subscribers, 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.
"Inventory" shall mean (i) all undamaged, original DSS(TM) subscriber
units in original, sealed cartons of Seller held for resale, which units shall
be valued at the lesser of each item's (a) actual cost and (b) current wholesale
value, and (ii) all used and refurbished DSS(TM) subscriber units of Seller,
which units shall be valued at $175 per unit.
"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.
"Locations" shall mean the counties and certain other areas in the
State of Kansas set forth on Schedule 1.3 attached hereto in which Seller has
the exclusive right to distribute DBS Services pursuant to the NRTC Agreements.
"Name" shall mean "Kansas DBS."
"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 November 12, 1993 by and
between the NRTC and Seller, as amended by that certain Amendment as of March
25, 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.
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"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 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 or any of its members 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) all advertising expenses of Seller
not in excess of Twenty Thousand Dollars ($20,000) per month incurred during the
period from January 1, 1997 through the Closing Date, (ii) all amounts not in
excess of Two Thousand Five Hundred Dollars ($2,500) incurred by Seller during
the thirty (30) days prior to the Closing Date in connection with the repair of
DSS(TM) subscriber units, 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.
"Purchase Price" shall mean the amount set forth in Section 4.1 herein.
"Purchased Assets" shall mean only the (i) NRTC Agreements, (ii)
Franchise, (iii) Current Assets, (iv) relationships, contracts and accounts with
Customers, (v) Fixed Assets, (vi) Records, (vii) telephone numbers used in the
Business, (viii) the Name and (ix) all other assets of Seller, whether tangible
or intangible, used in connection with the Business, excepting only the
Patronage Capital and all C-Band leases of Seller.
"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.
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"Signing Deposit" shall mean Four Hundred Fifty Thousand Dollars
($450,000) 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.
"Subscriber Sales Promotion" shall mean the six (6) months of "free"
Programming which was offered to Subscribers during the period ending on
November 15, 1996 in connection with DirecTv's promotional offer.
"Survival Termination Date" shall mean the first (1st) anniversary of
the Closing Date.
"Termination Date" shall mean April 30, 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 and as reflected on the Closing Date Balance
Sheet.
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").
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 on or after the Closing Date;
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(b) all liabilities associated with the Subscriber Sales
Promotion;
(c) all liabilities incurred in connection with activations
after the Closing Date with respect to DirecTv's "$200 Cash Back" promotional
offer; and
(d) all Current Liabilities as of the Closing Date.
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 of any services of
Seller except for the liabilities assumed by Purchaser as set forth above, 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 Fourteen Million Four Hundred Thousand Dollars
($14,400,000), subject to adjustment as provided in Section 4.4 herein.
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.
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4.3. PAYMENT OF PURCHASE PRICE. On the Closing Date, Purchaser shall
pay the Purchase Price to Seller as follows:
(a) The Escrow Deposit by certified or cashier's check, or by
wire transfer of immediately available funds to an account or accounts
designated in writing by Seller at least three (3) business days prior to the
Closing Date.
(b) The balance of the Purchase Price, 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, the "Closing
Payment").
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 thirty (30) 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 this Agreement. For purposes of the Closing
Adjustment and the Final Closing Adjustment (as hereinafter defined), (i) the
amount of Accounts Receivable of Seller to be included in the Closing Date
Balance Sheet shall include only Accounts Receivable as reflected on Report 18A
(Subscriber Accounts Receivable Aging by Account) of the NRTC Central Billing
System Reports less a reserve for Accounts Receivable which are not collectible
as determined in accordance with GAAP ("Bad Debt Reserve"), and (ii) the amount
of Inventory of Seller to be included in the Closing Date Balance Sheet shall
not exceed (a) $100,000 for all undamaged, original units in original sealed
cartons and (b) $20,000 for all used and refurbished units. In addition, the
Closing Date Balance Sheet and the Final Closing Adjustment shall not include as
a Current Asset the net book value of any DSS(TM) subscriber units of Seller
leased by it to any of its Customers and any accounts receivable arising from
such leases. 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 Kansas City, Missouri, by the Certified Public Accounting firm
of KMPG Peat Marwick (or any other
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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; provided the fees of such firm
shall not exceed $10,000. 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, provided such error is discovered within six (6)
months of the Closing Date, 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.
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 limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Kansas, 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), 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
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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 organization
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.
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 (other than the subscriber units of Seller leased to Subscribers)
are in need of any repairs which are outside the ordinary course of maintenance
and repair 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.
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(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 shall be usable in the ordinary course of
business and shall comply in all respects with industry standards of quality and
marketability. 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 (i) undamaged, original units in original, sealed cartons, and (ii)
used and refurbished units. 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.
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.
5.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 5.9 attached hereto, to the best of Seller's knowledge, since December
31, 1995 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;
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(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, and in any judgment, decision,
decree or order of any court or governmental agency, department or authority.
5.11. TAX MATTERS.
(a) Seller has timely filed all federal, state, local and
foreign 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 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, local and foreign 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.
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5.13. LITIGATION. 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 partnership 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.
As of the Closing Date, Purchaser shall have the right to transact business as a
foreign limited partnership in the State of Kansas.
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 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 certificate of
limited partnership or limited partnership 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.
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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;
(f) use its best efforts to preserve intact the current
business organizations and relationships with employees, suppliers, advertisers,
Customers and other Persons having dealings with Seller relating to the
Business; provided, however, Seller may enter into employment agreements and
stay bonus arrangements with key personnel of Seller; provided further that
Purchaser shall not have any liability with respect to such agreements or
arrangements;
(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
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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 the Closing, 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, 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 June 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 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.
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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 the
parties reasonably deem 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. CONFIDENTIALITY. 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; provided, however, that Seller shall not be deemed to have
breached this Section 7.4 if one of its members fails to maintain the
confidentiality of this Agreement if Seller has requested such member to keep
such information confidential.
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, directly or indirectly, encouraging,
initiating, soliciting or continuing any discussions or negotiations with, or
any other offers from, any other Person concerning a merger, sale of any of the
member interests in Seller or any similar transaction concerning Seller which
would affect the Business, or the sale of the Purchased Assets or any portion
thereof.
7.7. 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
or its members in their energy and water distribution or telephone businesses,
Purchaser will make such services available to Seller or its members 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.
7.8. SELLER AS AGENT. If Seller or its members 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 the Locations 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, such as key
contracts or national accounts).
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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.
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, Seller shall have at least 8,300
Subscribers.
8.7. REVIEW OF SELLER. The satisfactory completion, in Purchaser's
reasonable discretion, of Purchaser's due diligence investigation covering the
Business as provided for in Section 7.2 herein.
8.8. SELLER'S CLOSING DELIVERIES. Seller shall have delivered to
Purchaser the following at Closing:
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(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 Managers
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 Kansas;
(e) evidence satisfactory to Purchaser that all Liens
described on Schedule 5.3(a) herein have been removed or Purchaser shall have
received a payoff letter from the secured party holding such liens obligating
such party to release such liens upon receipt of the amount reflected in the
payoff letter;
(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 billing period ending prior to the Closing Date;
(g) a certificate signed by a member or manager of Seller,
dated the Closing Date, to the effect that the conditions set forth in this
Article VIII have been satisfied;
(h) an opinion of counsel to Seller, in form and substance
reasonably acceptable to Purchaser;
(i) a certificate signed by a member or manager of Seller,
dated the Closing Date, regarding the transfer of Seller's account at Huntington
Bank;
(j) Noncompetition Agreements with Seller and each of its
members, substantially in the form attached hereto as Schedule 8.8; 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:
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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.
9.5. PURCHASER'S CLOSING DELIVERIES. Purchaser shall have delivered to
Seller the following at Closing:
(a) the Closing Payment;
(b) a certified copy of Resolutions of the general partner of
Purchaser authorizing the execution, delivery and performance of this Agreement;
(c) a certificate signed by Purchaser's general partner, dated
the Closing Date, to the effect that the conditions set forth in this Article IX
have been satisfied;
(d) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.,
counsel to Purchaser, in form and substance reasonably acceptable to Seller; and
(e) a certificate signed by Purchaser's general partner, 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
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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. Subject to the limitations
hereinafter set forth, Seller and its members, representatives, successors,
heirs 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 (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, 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 which is not
specifically assumed by Purchaser pursuant to this Agreement, (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, and (vi) 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 to 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 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 (vi) 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
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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 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 Article X 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.
10.6. DISTRIBUTION RESERVE. Seller acknowledges and agrees that
distributions to its members which render Seller unable to satisfy
Indemnification Claims hereunder will constitute wrongful distributions pursuant
to the Kansas Limited Liability Company Act. Accordingly, Seller agrees, at
Purchaser's sole option, to either (i) make no distributions of the Purchase
Price unless and until Seller receives recontribution agreements from its
members enforceable by Purchaser to the extent Purchaser is entitled to
indemnification under this Article X and to maintain a reserve of cash or cash
equivalents of at least Five Hundred Thousand Dollars ($500,000) through
December 1, 1997 and after December 1, 1997 the amount sufficient to pay pending
but unresolved Indemnification Claims or (ii) deposit into escrow Five Hundred
Thousand Dollars ($500,000) to be held pursuant to the Escrow Agreement through
December 1, 1997 as a reserve to satisfy Indemnification Claims of Purchaser.
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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
Kansas, LP
Building C-200
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
with a copy to: C. ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.
NationsBank Corporate Center, Suite 3350
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Seller: Kansas DBS, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇
with a copy to the entities set forth on Schedule 11.1 attached hereto.
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.
11.3. GOVERNING LAW. This Agreement shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
Kansas, 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.
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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 November 8, 1996 between Seller
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.
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.
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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 7.3, 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 tenth (10th) 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, or (iv)
Purchaser, if the covenants and conditions set forth in Articles VII and VIII
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 tenth (10th) 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.
(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, the parties to the Escrow
Agreement shall instruct the Escrow Agent to pay the Escrow Deposit to Seller.
(d) In the event of termination pursuant to Section 11.13(a)(iv),
Purchaser shall be entitled to recover from Seller all damages, losses, costs
and expenses provided by law.
11.14. POWER OF ATTORNEY. Seller hereby irrevocably appoints Purchaser,
and all agents, officers, and employees designated by Purchaser, from and after
the Closing Date, as its true and lawful attorney-in-fact and duly authorized
agent to:
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(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 with the sole
exception of any checks from NRTC for Patronage Capital;
(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.
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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 Kansas, LP
By: Columbia DBS Management, LLC
Its: General Partner
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. President
and Manager
SELLER:
Kansas DBS, L.L.C.
By:
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Its:
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