ASSET PURCHASE AGREEMENT
by and between
▇▇▇▇▇▇ TELEVISION SYSTEMS, INC.
and
MAGNAVISION CORPORATION
As of February 29, 2000
TABLE OF CONTENTS
I. PURCHASE AND SALE OF ASSETS..............................................1
1.1 Purchase and Sale of Assets.......................................1
1.2 Excluded Assets...................................................2
1.3 No Assumed Liabilities............................................3
1.4 Assumed Obligations...............................................3
1.5 Excluded Liabilities and Obligations..............................3
II. CONSIDERATION FOR TRANSFER...............................................4
2.1 Consideration.....................................................4
2.2 Payment of Consideration..........................................4
2.3 Disputes Regarding Statements.....................................6
2.4 Allocation........................................................8
2.5 Due Diligence; Escrow.............................................8
2.6 Certain Pre-Closing Testing of Cable System Assets................9
III. THE CLOSING AND TRANSFER OF ASSETS.......................................9
3.1 Closing ..........................................................9
3.2 Deliveries by the Buyer...........................................9
3.3 Deliveries by the Seller.........................................10
3.4 Mutual Deliveries................................................12
3.5 Conditions to Each Party's Obligations Under this Agreement......12
3.6 Conditions to Buyer's Obligations Under This Agreement...........13
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER............................14
4.1 Organization and Qualification...................................14
4.2 Authorization....................................................14
4.3 No Violation.....................................................14
4.4 Title to Assets..................................................15
4.5 Subsidiaries.....................................................15
4.6 Governmental Authorization.......................................15
4.7 SEC Documents....................................................16
4.8 Computer Software................................................16
4.9 Other Proprietary Rights.........................................17
4.10 Absence of Certain Changes.......................................17
4.11 Contracts........................................................18
4.12 Taxes ...........................................................19
4.13 Compliance with Applicable Laws; Permits and Licenses............19
4.14 Regulatory Reports...............................................20
4.15 Agreements with Regulatory Agencies..............................20
4.16 Customers of the Seller..........................................21
4.17 Representatives..................................................21
4.18 Business Warranties..............................................21
4.19 Litigation.......................................................21
4.20 No Undisclosed Liabilities.......................................22
4.21 Brokers' Fees and Commissions....................................22
4.22 Disclosure.......................................................22
4.23 Copies of Documents..............................................22
V. REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................22
5.1 Organization and Qualification...................................22
5.2 Authorization....................................................22
5.3 No Violation.....................................................23
5.4 Consents and Approvals...........................................23
5.5 Broker's Fees and Commissions....................................23
5.6 Disclosure.......................................................23
5.7 FCC Qualifications...............................................24
5.8 Financing........................................................24
VI. COVENANTS OF THE SELLER.................................................24
6.1 Interim Conduct of Business......................................24
6.2 Cooperation; Access..............................................25
6.3 Confidentiality..................................................26
6.4 Certain Payments.................................................26
6.5 Records and Documents............................................26
6.6 Best Efforts.....................................................26
6.7 Further Assurances...............................................26
6.8 Employee Matters.................................................26
6.9 Covenant Not to Compete..........................................27
6.10 Collateral Nonsolicitation Agreements............................28
VII. COVENANTS OF THE BUYER..................................................29
7.1 Best Efforts.....................................................29
7.2 Further Assurances...............................................29
VIII. MUTUAL COVENANTS........................................................29
8.1 Bulk Sales.......................................................29
8.2 Notice of Changes................................................29
8.3 Regulatory Approvals.............................................29
8.4 Accounts Receivable, etc.........................................30
IX. SURVIVAL AND INDEMNIFICATION............................................31
9.1 Survival.........................................................31
9.2 Indemnification of the Buyer.....................................31
9.3 Indemnification of the Seller....................................33
9.4 Indemnification Procedure for Third Party Claims Against
Indemnified Parties........................................33
9.5 Failure to Give Timely Third Party Indemnification Notice........35
9.6 Notice of Claims as Between Buyer and Seller; Arbitration........35
9.7 Escrow Agreement.................................................36
X. MISCELLANEOUS PROVISIONS................................................36
10.1 Waiver; Modification.............................................36
10.2 Invalidity.......................................................36
10.3 Parties in Interest..............................................36
10.4 Expenses.........................................................37
10.5 Notices..........................................................37
10.6 Governing Law; Forum.............................................38
10.7 Counterparts.....................................................38
10.8 Headings.........................................................38
10.9 Integration......................................................38
10.10 Assignment.......................................................38
10.11 Publicity........................................................38
10.12 References to the Seller.........................................39
10.13 Rightful Termination.............................................39
10.14 Procedure and Effect of Termination..............................39
10.15 Consents 40
Attachments:
-----------
Disclosure Schedule
Exhibits:
A Escrow Agreement
B Instrument of Assumption
C ▇▇▇▇ of Sale
D Trademark Assignment
E-1, E-2 Nonsolicitation Agreements
F Cross Receipt
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
February 29, 2000, by and among ▇▇▇▇▇▇ TELEVISION SYSTEMS, INC., a Connecticut
corporation (the "Buyer"), and MAGNAVISION CORPORATION, a Delaware corporation
(the "Seller").
WHEREAS, the Seller is engaged, among other pursuits, in the
business of designing, installing, and servicing cable television and data
systems for and providing cable television and data service to commercial
clients (the "Business"), including those which are parties to the various
Customer Contracts (as defined in Section 4.11(a)) listed on Section 4.11(a) of
the Disclosure Schedule (as defined in Article IV);
WHEREAS, the Business is conducted primarily through the
Seller's wholly-owned subsidiary, MagnaVision Private Cable, Inc., a Delaware
corporation (the "Subsidiary"); and
WHEREAS, the Buyer desires to purchase from the Seller and the
Seller desires to sell to the Buyer those assets, rights, and claims of the
Seller and the Subsidiary relating to the Business on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements, and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets. At the Closing (as defined
in Section 3.1), the Seller shall, and shall cause the Subsidiary to, sell,
transfer, assign, and deliver to the Buyer, and the Buyer shall purchase,
accept, assume, and receive, all of the Seller's and the Subsidiary's right,
title, and interest in, to or arising from the Purchased Assets (as defined
below in this Section 1.1).
The "Purchased Assets" are all of the assets, rights, and
claims constituting the Business as a going concern, which consist of all of the
Seller's and the Subsidiary's right, title, and interest in, to, and/or under
the following:
a) All Material Contracts listed in Section 4.11(a) of the
Disclosure Schedule;
b) All other assets related to the Business (the "Cable
System Assets"), including the following:
(i) all satellite dishes;
(ii) all satellite receivers, channelized modulators,
agile modulators, television or video monitors;
(iii) all equipment boxes and rack systems;
(iv) all amplifiers, wiring, cabling, conduits, and
outlets;
(v) all point-to-point microwave relays;
(vi) all cable modems, ethernet cabling, ethernet
cards, routers, fanouts, and other items used in providing
data services;
(vii) all other hardware and software related to the
provision of services under the Material Contracts listed in
Section 4.11(a) of the Disclosure Schedule including,
without limitation, the Computer Systems (as defined in
Section 4.8); and
(viii) all intellectual property rights of the Seller
or the subsidiary relating to the Purchased Assets, the
Business or the provision of services under the Material
Contracts, including, without limitation, all rights to the
name "MagnaVision" (and any derivatives thereof) and any
trademarks therefor.
c) All documents and records relating to the Cable System
Assets (including registration and warranty materials,
instruction manuals, specification sheets, "as-builts" systems
documentation, wiring diagrams, narrative descriptions, and
repair records and receipts);
d) All documents and records relating to the operations of
the Business (including historical costing and pricing data,
research and development files and studies, market studies
(including studies of competitors), sales histories, and quality
control histories);
e) All permits, licenses, franchises, product registrations,
filings, authorizations, approvals, and indicia of authority (and
pending applications for any thereof) used to conduct the
operations of the Business and to own, engineer, distribute,
install, operate, service, and maintain any service, product,
fixture, facility, equipment, machinery, or installation of the
Business (including, but not limited to, those identified on
Section 4.13(c) of the Disclosure Schedule), and any rights to
use customer-owned equipment referenced in the Disclosure
Schedule;
f) All prepaid expenses of the Business, and all security
deposits and cash advanced by customers of the Business, the
economic value of which (net of associated liabilities) shall be
conveyed to the Buyer through the provisions of Section 2.2(c)
below; and
g) All claims, causes of action, and other rights related to
the Purchased Assets (including the right to enforce any
performance obligation secured by a prepaid expense or to ▇▇▇ for
reimbursement thereof in the case of nonperformance).
1.2. Excluded Assets. All other assets of the Seller and the
Subsidiary other than the Purchased Assets, including, without limitation, any
cash or bank accounts, any securities (including the capital stock of the Seller
and the Subsidiary), any prepaid expenses, to the extent they do not relate to
Purchased Assets or the Business, any office leases, employment or consulting
agreements, or other contracts relating to the Seller or the Subsidiary
generally and not specifically relating to the Customer Contracts or the Cable
System Assets (including, for example, any transmission capacity leases or
rights with respect to transmission capacity leases which do not relate to the
Cable System Assets or the Business, including, without limitation, any
agreements for lease of channel capacity with the Archdiocese of New York and
any and all instructional television fixed service ("ITFS") and other fixed
service ("OFS") rights, other than as set forth in Section 1.1(b)(v))), and all
of the accounts and notes receivable, debts, and obligations due to the Seller
and the Subsidiary from their respective commercial customers and others through
the Closing Date (including, but not limited to, that certain note receivable
from Fordham University and the security agreement relating thereto), however
evidenced, as recorded on the books and records of the Seller or the Subsidiary,
are expressly excluded.
1.3. No Assumed Liabilities. The Buyer shall neither assume
nor discharge any liabilities of the Business, the Seller, the Subsidiary nor
any other affiliate of the Seller, except as set forth in Section 1.4 below.
1.4. Assumed Obligations. At Closing, the Buyer shall assume
and thereafter discharge all obligations of the Seller and/or the Subsidiary (a)
under the Material Contracts listed in Section 4.11(a) of the Disclosure
Schedule in accordance with their terms and (b) relating to those liabilities
arising under those items set forth on the Closing Statement (as defined in
Section 2.2(c)(ii)) (the "Assumed Obligations").
1.5. Excluded Liabilities and Obligations. Except as expressly
set forth in Section 1.4 above, the Buyer shall not assume and shall not be
liable or responsible for any debt, obligation, or liability of the Business,
the Seller, the Subsidiary or any other affiliate of the Seller, or any claim
against any of the foregoing, of any kind, whether known or unknown, fixed,
contingent, absolute, or otherwise (the "Excluded Liabilities and Obligations").
Without limiting the generality of the foregoing, the Buyer shall not assume,
undertake, or accept, and shall have no responsibility with respect to, the
following liabilities or obligations, all of which shall be Excluded Liabilities
and Obligations:
a) Liabilities and obligations related to or arising from
transactions with any affiliate of the Seller, including
interdivisional, intracompany, or intercompany payables,
obligations, or agreements;
b) Liabilities and obligations for taxes of any kind,
howsoever denominated, including federal, state, and local taxes
on income, sales, and use; ad valorem duties and assessments;
worker's compensation; unemployment taxes; excise taxes; FICA
contributions; payroll taxes; profit sharing deductions; and all
taxes and charges related to or arising from the transfers
contemplated hereby;
c) Liabilities and obligations for damage or injury (real or
alleged) to person or property arising from the ownership,
possession, or use of any product designed, manufactured,
assembled, installed, processed, treated, distributed, sold, or
serviced or any service rendered by the Seller through the
Closing Date;
d) Any liabilities for the Seller's or the Subsidiary's
breach or default prior to Closing under any contract or
agreement assigned to the Buyer hereunder;
e) Liabilities and obligations of the Seller or the
Subsidiary with respect to any litigation, action, proceeding, or
investigation; any legal, administrative, arbitration, or other
method of settling disputes or disagreements; or any governmental
investigations, if any, pending at the Closing or threatened on
or prior to the Closing, or arising after Closing solely as a
result of events occurring prior to Closing;
f) Any liability of the Seller or the Subsidiary as a result
of any act, omission, or event occurring prior to the Closing
Date, whether or not the related cause of action or damage
occurred after the Closing Date; and
g) Any liability or obligation of the Seller or the
Subsidiary arising from, relating to, or under any excluded asset
referred to in Section 1.2.
After the Closing, the Seller shall (and shall cause the
Subsidiary to) discharge and satisfy in full when due all Excluded Liabilities
and Obligations which are not specifically assumed by the Buyer pursuant to
Section 1.4.
ARTICLE II. CONSIDERATION FOR TRANSFER
2.1. Consideration. The aggregate consideration for the
Purchased Assets shall be as follows:
a) $7,500,000, subject to adjustment as provided herein (the
"Purchase Price"); and
b) Assumption by the Buyer of the Assumed Obligations set
forth in Section 1.4 hereof.
2.2. Payment of Consideration.
a) At the Closing, the Buyer shall deliver and the Seller
shall accept the following:
(i) the Purchase Price, less the Escrow Amount (as
defined in, and as determined pursuant to, Section 2.5) , in
immediately available funds, which shall be sent by way of
wire transfer to an account of the Seller previously
designated in writing by the Seller to the Buyer; and
(ii) an executed instrument of assumption with respect
to the Assumed Obligations.
b) At Closing, the Seller, the Buyer and the Escrow Agent
named therein (the "Escrow Agent") shall execute and deliver that
certain escrow agreement, substantially in the form of that
attached hereto as Exhibit A (the "Escrow Agreement"). For a
nine-month period following the Closing Date, the Escrow Agent
shall hold the remaining portion of the Purchase Price not
delivered at Closing in escrow pursuant to Section 2.5 hereof and
the terms of such Escrow Agreement, to help pay for any claims,
setoffs, or expenses of the Buyer that, pursuant to the terms
hereof, are the responsibility of the Seller and to fund
remediation of the Disputed Items set forth on the Due Diligence
Punch-List (as defined in Section 2.5) which the Buyer claims
remain unremedied at Closing pursuant to Section 2.5. Any amounts
not expended for such purposes will be paid to the Seller upon
the close of escrow, as more fully set forth in the Escrow
Agreement.
c) The Purchase Price shall be subject to adjustment at
Closing as follows:
(i) At Closing, the Seller shall deliver to the Buyer a
detailed statement, certified by the chief financial officer
of the Seller and in a form satisfactory to the Buyer (the
"Stub Period Income Statement"), setting forth all payments
received from customers of the Business relating to services
provided by the Business from and after March 1, 2000
through the Closing Date, less any expenses of the Business
paid by the Seller in running the Business during such
period (but excluding any prepaid expenses appearing on the
Closing Statement). The Seller hereby represents and
warrants to the Buyer (and the chief financial officer of
the Seller shall also certify to the following effect upon
delivery of the Stub Period Income Statement) that the Stub
Period Income Statement shall be true and complete as of the
Closing Date for the period covered thereby and shall have
been prepared in accordance with the cash basis method of
accounting and the Seller's books and records, and that the
expenses charged against the revenues indicated thereon
shall have been incurred solely in the ordinary course of
business of the Business, consistent with past practice. The
Seller shall also deliver to the Buyer any supporting
documentation reasonably requested by the Buyer with respect
thereto. If, following the Closing, the Seller receives any
invoices requesting payment for services provided to the
Business from and after March 1, 2000 which were not
reflected on the Stub Period Income Statement, the Seller
will promptly forward them to the Buyer for payment directly
to the vendor supplying the invoiced service.
(ii) At Closing, the Seller shall deliver to the Buyer
a closing statement, certified by the chief financial
officer of the Seller and in a form satisfactory to the
Buyer, setting forth a true and accurate accounting of (1)
all prepaid expenses of the Seller or the Subsidiary
relating to the Business, (2) all customer advances and
security deposits under any Customer Contract, and (3) all
accounts payable and obligations to customers of the
Business for future services in connection with customer
prepayments under Customer Contracts as of the Closing Date,
in each case other than those already reflected on the Stub
Period Income Statement (the "Closing Statement"). The
Seller hereby represents and warrants to the Buyer (and the
chief financial officer of the Seller shall also certify to
the following effect upon delivery of the Closing Statement)
that the Closing Statement shall be true and complete as of
the Closing Date and shall have been prepared in accordance
with U.S. generally accepted accounting principles,
consistently applied ("GAAP"), and the Seller's books and
records, and that the prepaid expenses indicated thereon
shall have been incurred solely in the ordinary course of
business of the Business, consistent with past practice. The
Seller shall also deliver to the Buyer any supporting
documentation reasonably requested by the Buyer with respect
thereto.
(iii) The Purchase Price shall be adjusted at Closing
based upon the Stub Period Income Statement and the Closing
Statement (collectively, the "Statements") as follows: (A)
in the event that the Stub Period Income Statement shows a
net loss, the Purchase Price payable to the Seller at
Closing shall be increased by the amount of such net loss,
and in the event that the Stub Period Income Statement shows
a net profit, the Purchase Price payable to the Seller at
Closing shall be decreased by the amount of such net profit;
and (B) in the event that the Closing Statement shows that
the assets set forth therein are greater than the
liabilities set forth therein (i.e., the amounts set forth
in clause (1) of Section 2.2(c)(ii) above exceed the sum of
the amounts set forth in clauses (2) and (3) of Section
2.2(c)(ii) above), the Purchase Price shall be increased by
the difference thereof, and in the event that the Closing
Statement shows that the assets set forth therein are less
than the liabilities set forth therein (i.e., the amounts
set forth in clauses (2) and (3) of Section 2.2(c)(ii) above
exceed the amounts set forth in clause (1) of Section
2.2(c)(ii) above), the Purchase Price shall be decreased by
the difference thereof.
d) The Purchase Price, as adjusted pursuant to the terms of
Section 2.2(c), shall be further adjusted by reducing the
Purchase Price at Closing by the agreed-upon estimate of the cost
of rectifying and remedying those items on the Due Diligence
Punch-List which the Buyer and the Seller agree at Closing
(pursuant to Section 2.5) remain unremedied as of the Closing
Date. The Buyer agrees to undertake good faith efforts to remedy
each such item promptly following Closing, and in any event by
the nine-month anniversary date of the Closing. To the extent
that, on such nine-month anniversary date, the Buyer has not
commenced efforts to remedy any such item, the Buyer shall
promptly pay to the Seller the agreed-upon estimate of the cost
of rectifying and remedying such item.
2.3. Disputes Regarding Statements. Disputes with respect to
the Statements shall be dealt with as follows:
a) The Buyer shall have thirty (30) business days following
the Closing (the "Dispute Period") to dispute the net Purchase
Price adjustment amount reflected in the Statements (a "Statement
Dispute"). If the Buyer has a Statement Dispute, the Buyer shall
deliver to the Seller written notice (a "Dispute Notice") within
the Dispute Period setting forth in reasonable detail a
description of the Statement Dispute. Within ten (10) days after
the Buyer's delivery of any such Dispute Notice, the Buyer and
the Seller shall meet at a mutually acceptable time and place and
thereafter as often as such parties reasonably deem necessary and
shall, in good faith, cooperate in an attempt to resolve such
Statement Dispute and agree in writing upon an appropriate
adjustment to the disputed amounts reflected in the Statements.
Without limiting the generality of the foregoing, in connection
with any such Statement Dispute, the Seller agrees to furnish or
cause the Seller's accountants to afford to the Buyer and its
accountants and agents full access to all working papers, books,
records, financial data and other documentation used in the
calculation of the amounts set forth on the Statements.
b) If any Statement Dispute is not finally resolved within
twenty (20) business days after the Buyer shall have delivered a
Dispute Notice, as aforesaid, or if the parties shall fail to
meet within ten (10) days after the Buyer's delivery of any such
Dispute Notice, then the Statement Dispute shall be referred to a
mutually acceptable, independent, accounting firm (the
"Arbitrator") for resolution in accordance with the terms hereof
(the "Statements Arbitration"), and in any event as soon as
practicable. The Seller and the Buyer represent and warrant to
each other that such Arbitrator is an independent entity which
has not represented, nor has had any other business or financial
relationship with, such party or any affiliate thereof within the
past ten (10) years.
c) In the event that such accounting firm is then unwilling
or unable to serve as the Arbitrator, the parties hereto shall
select by mutual written agreement another nationally recognized
certified public accounting firm to serve as the Arbitrator,
which firm is not then rendering (and during the preceding ten
(10) year period has not rendered) services to any party hereto
or any affiliate thereof, nor shall such firm then have or have
had during the past ten (10) years any other business or
financial relationship with such party or affiliate thereof.
d) The Arbitrator shall hold a hearing within fifteen (15)
days of the submission of the Statement Dispute for arbitration
(the "Hearing") and shall render a decision within ten (10) days
of the conclusion of such hearing. In preparation for its
presentation at such Hearing, the each party may depose such
directors, officers, employees or agents of the other party or
their respective outside accountants or advisors, and any third
parties, as it may deem reasonably necessary for such
preparation. Each party hereto may file with the Arbitrator such
briefs, affidavits and supporting documents as they deem
appropriate. The Seller shall provide the Arbitrator with all
working papers, books, records, financial data and other
documentation used in the calculation of the amounts set forth on
the Statements, as well as any other documentation requested by
the Arbitrator. Any decision made by the Arbitrator within the
scope of its authority shall be final, binding and
non-appealable.
e) The Arbitrator shall be authorized to decide in favor of
and choose the position of either of the parties hereto or to
decide upon a compromise position between the ranges presented by
the parties to such arbitration. The Arbitrator shall base its
decision solely upon the presentations of the parties hereto at
the Hearing and any materials made available to it hereunder and
not upon independent fact-gathering. The Arbitrator shall not
place any reliance in reaching its determination in respect of
any disputed item that such item was treated in a particular
manner in a balance sheet previously certified or reviewed by the
Seller's accountants.
f) The Arbitrator's decision regarding its final resolution
of any Statement Dispute (the "Arbitrator's Decision") shall be
in writing, shall set forth the calculations made in reaching its
decision, shall describe the manner in which such calculations
were made and shall include a representation that the manner so
used was in accordance with GAAP and the specific terms of this
Agreement relative to the calculation of the amounts set forth in
the Statements. The Arbitrator's Decision shall specifically set
forth the amount of any adjustment required to be made to the
Purchase Price pursuant to this Agreement.
g) Any such Statements Arbitration shall take place in the
borough of Manhattan in New York, NY, unless the parties shall
mutually agree on another location. The Statements Arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C.
▇▇.▇▇. 1 through 16, and judgment upon the award of the
Arbitrator may be entered by any court having jurisdiction
thereof.
h) The fees and expenses of the Arbitrator shall be borne
(i) by the Seller in the event that the Buyer's calculation of
the net Purchase Price adjustment was closer in dollar amount to
the Arbitrator's determination than was the Seller's calculation
thereof, and (ii) by the Buyer in the event that the Seller's
calculation of the net Purchase Price adjustment was closer in
dollar amount to the Arbitrator's determination than was the
Buyer's calculation thereof. Subject to the foregoing, each of
the parties hereto shall bear their own costs and expenses
related to any such Statements Arbitration. Upon the request of
the Arbitrator, each party hereto agrees to enter into an
arbitration agreement providing reasonable protection to the
Arbitrator, in such form as may be mutually acceptable to the
Arbitrator and the parties hereto.
i) If the Arbitrator's decision would result in an
adjustment to the Purchase Price, then the Purchase Price shall
be so adjusted by the parties in accordance with such
determination. To the extent a downward adjustment is warranted,
the Buyer may seek non-exclusive remuneration therefor out of the
Escrow Amount under the Escrow Agreement.
2.4. Allocation. The allocation of the consideration for the
Purchased Assets shall be agreed to in writing by the Buyer and the Seller prior
to the Closing. Such allocation shall be used for all purposes, including the
preparation and filing of Internal Revenue Service Form 8594 with respect to the
transactions contemplated hereby.
2.5. Due Diligence; Escrow. The parties hereto acknowledge
that the Buyer has been afforded an opportunity to conduct certain due diligence
with respect to the Seller and the Business prior to the date hereof, with the
full permission of the Seller, and is being afforded the continued right to
conduct a due diligence investigation prior to the Closing. Attached hereto as
Schedule 2.5 is a detailed statement listing and/or describing, as of the date
hereof, any unsatisfactory results of the Buyer's due diligence investigation of
the Business, and setting forth a mutually acceptable calculation of the cost of
rectifying and remedying the items on such list, which has been executed by the
parties hereto as of the date hereof so as to indicate their acceptance thereof
(as updated, the "Due Diligence Punch-List"). At Closing, the Seller shall
deliver to the Buyer an updated Due Diligence Punch-List, certified by an
executive officer of the Seller, representing and warranting as to the status of
the repair of the items listed thereon. Prior to the Closing, the Seller shall
have afforded the Buyer the opportunity to inspect, test and verify the results
of the Seller's remediation efforts and the status of the Due Diligence
Punch-List. In the event that the Buyer agrees at Closing that any item on the
Due Diligence Punch-List has been remedied prior to the Closing, then such item
shall be removed from such list, and no deduction to the Purchase Price shall be
made pursuant to Section 2.2(d) with respect thereto. In the event that the
Buyer claims at Closing that any item which the Seller claims has been remedied
has not so been remedied, then the mutually agreed upon cost of remedying such
item shall be included in the Escrow Amount. In any event, the reduction to the
Purchase Price contemplated by Section 2.2(d) shall consist only of the mutually
agreed upon costs of remedying those items on the Due Diligence Punch-List which
the parties hereto mutually agree remain unremedied as of Closing. The Escrow
Amount delivered to the Escrow Agent at Closing under the Escrow Agreement shall
be comprised of the sum of (i) the mutually-agreed upon costs for remedying and
rectifying those items remaining on the Due Diligence Punch-List at Closing
which the Seller claims were remedied but as to which the Buyer disagrees (the
"Disputed Items"), plus (ii) $222,418 (the "Escrow Amount").
2.6. Certain Pre-Closing Testing of Cable System Assets.
Promptly following execution hereof, and as far in advance of the Closing as
practicable (but not less than five (5) days in advance of the Closing), the
Seller shall commence performing certain cumulative signal leakage testing of
those Cable System Assets which were not substantially built (as defined in 47
C.F.R. 76.620(a)) as of January 1, 1998, as such testing may be required by FCC
(as defined in Section 3.3) regulations. The Seller shall invite the Buyer to
participate in and observe such testing, and the parties shall reasonably
cooperate with each other with respect thereto, and such testing shall be
conducted on an expedited basis prior to the Closing at the expense and cost of
the Seller. The Seller shall promptly provide the Buyer with the results of such
tests as they are conducted, indicating, in particular, performance levels, so
that the Buyer can objectively determine whether any of such tested Cable System
Assets are not in compliance with applicable regulatory standards therefor. The
Seller covenants and agrees to take such actions as are necessary, at its cost
and expense, to cause any Cable System Assets which such tests indicate are not
in compliance with applicable regulatory standards to, in fact, comply by the
Closing, or, at the option of the Seller, to reduce the Purchase Price at
Closing by the agreed upon cost of remediation.
ARTICLE III. THE CLOSING AND TRANSFER OF ASSETS
3.1. Closing. The transfer of assets contemplated by this
Agreement (the "Closing") shall occur at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
Four Stamford Plaza, Stamford, Connecticut, once all of the conditions to
Closing have been met or waived, on such date and at such time as the parties
shall mutually agree upon (the "Closing Date"). The effective time of the
Closing shall be deemed to be 12:01 a.m. on the Closing Date.
3.2. Deliveries by the Buyer. At the Closing, the Buyer shall
deliver the following to the Seller (or the Escrow Agent, as the case may be):
a) The payment required by Section 2.2(a)(i);
b) The Escrow Amount, which shall be delivered to the Escrow
Agent to be held pursuant to the Escrow Agreement;
c) An executed instrument of assumption in substantially the
form of Exhibit B;
d) A certificate of the Secretary of the Buyer, attesting as
to the incumbency of those officers executing this Agreement and
any other agreements in connection herewith on behalf of the
Buyer, and attaching thereto a certified copy of resolutions of
the board of directors of the Buyer providing authority for the
execution, delivery, and performance by the Buyer of this
Agreement, and the other agreements to which the Buyer is a party
entered into in connection herewith, and the transactions
contemplated hereby and thereby;
e) An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Buyer,
in form and substance reasonably satisfactory to the Seller;
f) A certificate, dated the Closing Date, in form reasonably
satisfactory to the Seller, executed on behalf of the Buyer by a
duly authorized officer of the Buyer, to the effect that the
Buyer has fulfilled the conditions specified in Section 3.5; and
g) Such other instruments or documents as may be necessary
or appropriate to carry out the transactions contemplated hereby.
3.3. Deliveries by the Seller. At the Closing, the Seller
shall deliver the following to the Buyer:
a) A general assignment and ▇▇▇▇ of sale for the Purchased
Assets in substantially the form of Exhibit C attached hereto;
b) Consents from the customers party to the respective
Customer Contracts representing at least 55% of the Seller's 1999
revenues, in a form satisfactory to the Buyer;
c) Evidence of the assignment of all items identified in
Section 1.1(e) hereof;
d) A trademark assignment in substantially the form of
Exhibit D attached hereto;
e) Evidence of the satisfaction and termination of all
judgments and liens indicated on the reports submitted pursuant
to Section 3.6(d);
f) A copy of the most recent notice provided to the Federal
Communications Commission ("FCC") by the Seller pursuant to
Sections 76.615 and 76.620(a) of Title 47 of the United States
Code of Federal Regulations, as well as evidence of compliance
(in such form as the Buyer may reasonably request and the Seller
shall be reasonably able to supply) with all FCC regulations
applicable to the Business (including, but not limited to, the
cumulative signal leakage index requirements under Section 76.611
of Title 47 of the United States Code of Federal Regulations)
except as otherwise provided in Section 2.6;
g) A copy of the most recent statement of account provided
to the Register of Copyrights by the Seller pursuant to Section
111 of Title 17 of the United States Code, as well as evidence of
payment of all fees payable thereunder or under any other
Sections of Title 17 or United States Copyright Office
regulations applicable to the Business;
h) A certificate of the Secretary of the Seller, attesting
as to the incumbency of those officers executing this Agreement
and any other agreements in connection herewith on behalf of the
Seller or the Subsidiary, and attaching thereto:
(i) a certified copy of resolutions of the board of
directors of the Seller providing authority for the
execution, delivery, and performance of this Agreement, and
the other agreements to which the Seller is a party entered
into in connection herewith, and the transactions
contemplated hereby and thereby;
(ii) a certified copy of resolutions of the
shareholders of the Seller providing authority for the
execution, delivery, and performance of this Agreement, and
the other agreements to which the Seller is a party, and the
transactions contemplated hereby and thereby; and
(iii) a certified copy of the current Certificate of
Incorporation and Bylaws of the Seller and the Subsidiary;
i) An opinion of ▇▇▇▇▇▇▇▇ & English, counsel to the Seller,
in form and substance reasonably satisfactory to the Buyer;
j) A certificate, dated as of the Closing Date, reasonably
satisfactory to the Buyer, executed on behalf of the Seller by a
duly authorized officer of the Seller, to the effect that the
conditions specified in Sections 3.5 and 3.6 have been fulfilled;
k) An updated Disclosure Schedule of the Seller, revised to
reflect any changes to the original Disclosure Schedule submitted
to the Buyer upon execution hereof which are necessary in order
to render such Disclosure Schedule fully accurate and complete as
of the Closing Date; provided, it shall be a condition to Closing
that such revised Disclosure Schedule shall not, in the Buyer's
determination, be materially different from the version thereof
submitted upon execution of this Agreement, and, provided,
further, that the submission of such updated Disclosure Schedule
shall not excuse the Seller from any inaccurate or misleading
disclosure, or failure to disclose any matter, which, upon
execution should have been so disclosed in order to make the
Seller's representations and warranties true upon execution;
l) A "good standing certificate" with respect to the Seller
and the Subsidiary from each jurisdiction where each entity is
incorporated and qualified to do business;
m) Copies of fully-executed nonsolicitation agreements,
substantially in the form of Exhibits E-1 and E-2 attached hereto
(each, a "Nonsolicitation Agreement"), binding the three (3)
executives of the Seller referred to in Section 6.10 hereof; and
n) Such other instruments or documents as may be necessary
or appropriate to carry out the transactions contemplated hereby.
3.4. Mutual Deliveries. At the Closing, the parties shall
execute, acknowledge, and deliver to each other the following:
a) A Cross-Receipt, in substantially the form attached
hereto as Exhibit F;
b) The Escrow Agreement; and
c) Such other instruments or documents as may be necessary
or appropriate to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
3.5. Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under Articles I and II of
this Agreement shall be subject to the satisfaction, or the waiver by such party
hereto, at or prior to the Closing, of each of the following conditions
precedent:
a) The representations and warranties of the other party
contained herein shall be true in all respects on and as of the
Closing Date with the same force and effect as if made on and as
of such date (except as they may specifically relate to another
date), and the other party hereto shall have performed in all
respects all obligations and agreements, and complied in all
respects with all covenants, and satisfied all conditions to
Closing, contained in this Agreement to be performed, complied
with and/or satisfied by such party at or prior to the Closing
Date;
b) No injunction, restraining order, or other ruling or
order issued by any court of competent jurisdiction or
governmental, quasi-governmental, or regulatory department or
authority or other law, rule, regulation, legal restraint, or
prohibition preventing the purchase and sale of the Purchased
Assets, and no investigation by any governmental,
quasi-governmental, or regulatory department or authority, shall
be in effect as of or shall have commenced on or prior to the
Closing Date, and no action, suit, or proceeding brought by any
governmental, quasi-governmental, or regulatory department or
authority shall be pending or threatened as of the Closing Date
that seeks any injunction, restraining order, or other order that
would prohibit the purchase and sale of the Purchased Assets or
materially impair the ability of the Buyer to own and operate the
Business after the Closing;
c) The Seller and the Buyer shall have prepared and filed
with the FCC those certain FCC Applications (as defined in
Section 8.3) referred to in Section 8.3 below; and
d) The Escrow Agent shall have executed and delivered the
Escrow Agreement.
3.6. Conditions to Buyer's Obligations Under This Agreement.
The obligations of the Buyer under Articles I and II of this Agreement shall be
further subject to the satisfaction, or waiver by the Buyer, at or prior to the
Closing, of each of the following conditions precedent:
a) The Buyer shall have completed its due diligence
investigation with respect to the Seller, the Business and the
Purchased Assets, and the Seller shall have delivered an updated
Due Diligence Punch-List at Closing, certifying as to the
corrective actions taken with respect thereto since the version
delivered upon execution hereof.
b) All consents by third parties (including Governmental
Authorities, as defined in Section 4.3(c)) that are required for
the transfer of the Business and the Purchased Assets, and for
the consummation of the transactions contemplated hereby,
including, without limitation, the consents of the customers
party to the Customer Contracts, shall have been obtained or
provided for; provided, however, for purposes hereof, it shall
suffice, with respect to any consent required from the FCC, if
the FCC shall have granted "special temporary authority" in
response and with respect to the STA Application (as defined in
Section 8.3) filed pursuant to Section 8.3 below.
c) Since the date of execution hereof, the Business and the
Purchased Assets shall not have been materially adversely
affected in any way by any act of God, fire, flood, war, labor
disturbance, legislation (proposed or enacted), or other event or
occurrence, and there shall not have occurred any event,
condition, or state of facts of any character that has materially
and adversely affected or may reasonably be anticipated to
materially and adversely affect the Business or the Purchased
Assets.
d) The Seller shall have caused to be performed a
comprehensive tax lien, UCC lien, and judgment search with
respect to the Seller, the Subsidiary, and the Purchased Assets,
in all appropriate jurisdictions and shall have delivered the
results thereof to the Buyer, and shall have terminated and/or
satisfied all of such liens and judgments to the complete
satisfaction of the Buyer prior to Closing (as set forth in
Section 3.3(d) above).
e) Without limiting any other conditions to Closing, the
Rochester Consent (as defined in Section 4.11(e)) shall be in
full force and effect and shall not have been revoked or
modified.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth on the schedules attached hereto and
incorporated herein by reference (the "Disclosure Schedule"), the Seller
represents and warrants to the Buyer, as of the date hereof and as of the
Closing Date, as follows:
4.1. Organization and Qualification. Each of the Seller and
the Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of its respective state of incorporation, with all
requisite power and authority and legal right to own and operate its assets and
to carry on the Business. Each of the Seller and the Subsidiary is duly licensed
and qualified to do business as a foreign corporation and is in good standing in
every jurisdiction where the ownership or operation of its assets or the conduct
of the Business requires such qualification, except in such jurisdictions where
the failure to so qualify would not have a material adverse effect on the
Business, the Purchased Assets, or the prospects of the Business (a "Material
Adverse Effect") or would not adversely effect the ability of the Buyer to
enforce any material rights included in the Purchased Assets.
4.2. Authorization. The Seller has full corporate power,
authority, and legal right to execute and deliver, and to perform its
obligations under, this Agreement and such other agreements as shall be entered
into by the Seller in connection herewith. The execution and delivery of this
Agreement by the Seller and such other agreements as shall be entered into by
the Seller in connection herewith and the performance by the Seller of its
obligations hereunder and thereunder will have been duly authorized by all
requisite corporate action by the time of the Closing. No other action on the
part of the Seller is necessary to authorize the execution and delivery of this
Agreement or the other agreements to be entered into by the Seller in connection
herewith or the performance of its obligations hereunder or thereunder. This
Agreement has been, and the other documents to be delivered at Closing by the
Seller will be, duly and validly executed and delivered by the Seller and, upon
receipt of requisite shareholder approval, will constitute the legal, valid, and
binding obligation of the Seller, enforceable against the Seller in accordance
with their respective terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors' rights and
remedies generally, or the application of equitable principles.
4.3. No Violation. Neither the execution and delivery of this
Agreement or the other agreements to be entered into by the Seller in connection
herewith by the Seller, nor the performance by the Seller of its obligations
hereunder or thereunder, will:
a) Violate or result in any breach of any provision of the
Certificate of Incorporation or By-Laws of the Seller;
b) Violate, conflict with, result in a breach or permit the
termination or acceleration of, require the consent of any other
party to, or constitute a default (with or without due notice,
lapse of time, or both), entitle any party to accelerate any
obligation, result in the loss of any benefit, or give rise to
the creation of any options, pledges, security interests, liens,
mortgages, claims, debts, charges, or other encumbrances or
restrictions of any kind whatsoever (each, an "Encumbrance") upon
any of the Purchased Assets under any of the terms, conditions,
or provisions of, any contract, agreement, or arrangement,
whether written or oral, to which the Seller or the Subsidiary is
a party or by which the Seller or the Subsidiary or any of their
assets are bound, assuming compliance with the matters referred
to in Section 4.6 below; nor
c) Violate any order, writ, judgment, injunction, decree,
statute, law, rule, regulation, or ordinance of any federal,
state, local or foreign court or governmental,
quasi-governmental, or regulatory department or authority
("Governmental Authority") applicable to the Seller or the
Subsidiary or their properties or assets.
4.4. Title to Assets.
The Seller or the Subsidiary, as the case may be, has good and marketable title
to all of the tangible assets which constitute the Purchased Assets, including,
without limitation, all installed cable, wiring, conduits and fixtures, free and
clear of any and all Encumbrances. The Seller or the Subsidiary, as the case may
be, holds, as the licensee, authorized holder or franchisee, as the case may be,
all of the licenses, authorizations and franchises that comprise the Purchased
Assets, free and clear of any and all Encumbrances. The Seller or the
Subsidiary, as the case may be, holds all rights as itself as stated in and
under each contract that is a Purchased Asset, free and clear of any and all
Encumbrances. The Seller or the Subsidiary, as the case may be, owns all
fixtures, cable, conduit and wiring constituting Purchased Assets and installed
at the property of third parties, free and clear of any and all Encumbrances
other than (i) such rights to fixtures, cable, and wiring as are granted to
another party by the terms of the contract calling for the installation and use
of the fixtures, which such contracts are set forth on Section 4.11 of the
Disclosure Schedule, and (ii) the rights of such other party to retain or
purchase the fixtures under the provisions of state law or FCC regulations upon
the expiration or termination of such contract or the cessation of private cable
service to a subscriber. The Purchased Assets constitute all of the properties
and assets that are used in, necessary for and relevant to the Business. Section
4.4 of the Disclosure Schedule lists all Cable System Assets whose respective
dates of "substantial completion," as such term is referred to in the FCC
regulations, was on or after January 1, 1998.
4.5. Subsidiaries. All of the outstanding capital stock of the
Subsidiary is owned directly by the Company, free and clear of any Encumbrance
and free of any other material limitation or restriction on its rights as owner
thereof (including any restriction on the right to vote such capital stock),
other than those imposed by applicable law with respect to the sale or transfer
of such shares of stock. There are no existing options, calls or commitments of
any character relating to the issued or unissued capital stock or other
securities or equity interests of the Subsidiary.
4.6. Governmental Authorization. Other than the consents and
approvals of or filings or registrations with the governmental or
quasi-governmental or regulatory departments and authorities listed on Section
4.6 of the Disclosure Schedule, no filing or registration with, no notice to,
and no permit, authorization, consent, or approval of any Governmental
Authority, is necessary for the execution and delivery of this Agreement, the
consummation of the purchase and sale of the Business and the Purchased Assets,
or to enable the Buyer to continue to conduct the Business after the Closing in
a manner that is consistent with that in which it is presently conducted.
4.7. SEC Documents. The Seller has filed a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement required to be filed by the Seller with the Securities and Exchange
Commission (the "SEC") (as such documents have since the time of their filing
been amended, the "SEC Documents"), all of which are available on the SEC's
▇▇▇▇▇ filing system. As of their respective dates, and with respect to the
Purchased Assets and the Business, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and the rules and regulations of the SEC
thereunder applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, with
respect to the Purchased Assets and the Business. The financial statements of
the Seller relating to the Purchased Assets and the Business included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared from and are in accordance with the books
and records of the Seller and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments) the consolidated
financial position of the Seller and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended, in each case in conformity with generally accepted
accounting principles applied on a consistent basis during such periods (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC).
4.8. Computer Software. Section 4.8 of the Disclosure Schedule
identifies (i) all of the electronic data processing systems, information
systems, computer software programs, program specifications, charts, procedures,
routines, report layouts and formats, record file layouts, computer databases,
and related material (collectively, the "Computer Systems") that are material to
the conduct of the Business, (ii) whether such Computer Systems are owned or
licensed by the Seller or the Subsidiary and, (iii) if licensed, the name of
such licensor. The Seller or the Subsidiary has, and the Buyer shall have
following the Closing, all legal right to use the Computer Systems as they are
currently being used. The use of the Computer Systems does not infringe upon the
rights of any other person or entity, nor has the Seller or the Subsidiary
received any notice of a claim of such infringement. Except as set forth in
Section 4.8 of the Disclosure Schedule, there are no licenses, sublicenses, or
other agreements relating to the use of the Computer Systems by the Seller or
the Subsidiary or third parties.
4.9. Other Proprietary Rights.
a) Set forth in Section 4.9(a) of the Disclosure
Schedule is a list of all patents, copyrights, trademarks
and trade names (and all applications therefor and licenses
thereof), inventions, trade secrets, logos, proprietary
processes, formulas and all other proprietary information,
know-how and intellectual property rights (other than the
Computer Systems referred to in Section 4.8) in which the
Seller or the Subsidiary has proprietary rights (hereinafter
referred to collectively as the "Proprietary Rights").
b) The use of the Proprietary Rights does not infringe
upon the rights of any other person or entity, whether or
not registered, patented or copyrighted. The Seller has not
received any notice of a claim of such infringement nor have
any such claims been the subject of any action, suit or
proceeding involving the Seller or any of the Purchased
Assets.
c) The Seller has no knowledge of any infringement or
improper use by any third party of the Proprietary Rights,
nor has the Seller instituted any action, suit or proceeding
in which an act constituting an infringement of any of the
Proprietary Rights was alleged to have been committed by a
third party. Without limiting the provisions of this Section
4.9, in the conduct of the Business, the Seller has the
right to use the corporate name "MagnaVision" in the State
of New Jersey and the federally registered ▇▇▇▇
"MagnaVision" in the United States and, to the Seller's
knowledge, no person uses or has the right to use any of
such names or marks or any derivation thereof in connection
with the industry of the Business.
d) There are no licenses, sublicenses or agreements
relating to (i) the use by third parties of the Proprietary
Rights or (ii) the use by the Seller of the Proprietary
Rights.
4.10. Absence of Certain Changes. Except as disclosed in the
SEC Documents, the Seller and the Subsidiary have at all times conducted the
Business only in the ordinary and usual course, and, since the date of the
latest SEC Document (the "Balance Sheet Date"), the Business has been conducted
only in the ordinary and usual course, and, without limiting the generality of
the foregoing, since the Balance Sheet Date there has not occurred with respect
to the Business or the Purchased Assets:
a) Any event, change, or condition of any character in,
to or on the business, properties, assets, financial
condition, results of operations or prospects of the Seller
or the Subsidiary that, individually or in the aggregate,
have had or could reasonably be expected to have a Material
Adverse Effect;
b) Any sale, lease, license, Encumbrance, or other
transfer or disposition of any material assets or properties
relevant to the Business (either singly or in the
aggregate);
c) Any cancellation of, default under, modification to,
or termination of any Material Contract, nor has any notice
of any of the foregoing been sent or received by the Seller;
d) Any damage, destruction, or loss to or of any of the
Purchased Assets, whether or not covered by insurance, that
has had or may have a Material Adverse Effect; or
e) Any failure by the Seller or Subsidiary to take all
reasonable efforts to preserve its goodwill with its
suppliers, customers and others with which each has business
relationships.
4.11. Contracts.
a) Section 4.11(a) of the Disclosure Schedule sets
forth a list of all of the contracts, agreements, and
arrangements, whether written or oral, formal or informal,
to which the Seller or the Subsidiary is a party that relate
to the provision of private cable television and data
services by the Seller or the Subsidiary to its customers
(the "Customer Contracts") and otherwise support or relate
to the Cable System Assets, including, without limitation,
all retransmission contracts and consents (sometimes
hereinafter collectively referred to as the "Material
Contracts"), accurate, complete and current copies of all of
which have been delivered to the Buyer. The Material
Contracts were negotiated at arms' length and in good faith
on the part of the Seller or the Subsidiary, and are
enforceable in accordance with their respective terms.
b) Neither the Subsidiary nor the Seller is in material
default with respect to any obligation to be performed under
any Material Contract.
c) The Seller has no knowledge of any material default
by any third party under any Material Contract, nor is the
Seller aware of any fact, condition, or event, including,
without limitation, the execution, delivery, and performance
of this Agreement, that could cause any third party to
terminate any Material Contract. There exists no event,
occurrence, condition, or act that, with the giving of
notice or the lapse of time, would become a material default
by the Seller or the Subsidiary or any third party under any
Material Contract, the result of which could have a Material
Adverse Effect. Neither the Subsidiary nor the Seller has
received, or given, notice of termination, non-renewal or
cancellation of any Material Contract, nor is the Seller
aware of any reasonable basis for the occurrence of any of
the foregoing.
d) No consent by, notice to, or approval from any third
party is required under any Material Contract as a result of
or in connection with the execution, delivery, or
performance of this Agreement and the consummation of the
transactions contemplated herein, and all Material Contracts
shall continue in full force and effect following the
consummation of the transactions contemplated herein.
e) Without limiting the foregoing, the University of
Rochester has provided the Seller with written evidence of
its acceptance and approval of the installation by the
Seller of such institution's private cable system (the
"Rochester Consent"), a copy of which is attached as Section
4.11(e) of the Disclosure Schedule. The Rochester Consent
is, and as of the Closing shall be, valid, enforceable in
accordance with its terms and in full force and effect, in
the form so delivered and so attached.
4.12. Taxes.
a) The Seller has:
(i) timely filed or caused to be filed with appropriate
governmental agencies or departments all Federal, state,
local, and foreign returns (the "Tax Returns") for Taxes (as
defined in Section 4.12(c)) required to be filed (including,
without limitation, estimated tax returns, employer's
withholding tax returns, other withholding tax returns, and
Federal Unemployment Tax Act returns);
(ii) made available to the Buyer complete and
accurate copies of such Tax Returns; and
(iii) paid or caused to be paid, or have made
adequate provision or set up an adequate accrual or
reserve for the payment of, all Taxes required to be
paid in respect of the periods for which such Tax
Returns are due, and will establish an adequate accrual
or reserve for the payment of all Taxes payable in
respect of the period, including portions thereof,
subsequent to the last of said periods required to be
so accrued or reserved, up to and including the Closing
Date.
b) The Tax Returns are complete and accurate in all
material respects, and the calculations and deductions set
forth therein have been made, in all respects, in compliance
with generally accepted accounting principles, consistent
with historic practice and consistently applied throughout
the relevant periods, and all applicable Tax statutes, laws,
rules, and regulations.
c) For the purposes of this Section 4.12, the term
"Tax" shall include all taxes, charges, withholdings, fees,
levies, penalties, additions, interest, or other assessments
imposed by any United States Federal, state, local, foreign,
or other taxing department or authority on the Seller and
its subsidiaries (including, without limitation, as a result
of being a member of an affiliated, combined, or unitary
group or as a result of any obligation arising out of an
agreement to indemnify any other person), and including, but
not limited to, those related to income, gross receipts,
gross income, sales, use, excise, occupation, services,
leasing, valuation, transfer, license, customs duties, or
franchise.
4.13. Compliance with Applicable Laws; Permits and Licenses.
a) The Seller or the Subsidiary holds all material
licenses, franchises, permits, consents, and authorizations
necessary for the lawful conduct of the Business, and the
Business is not being and has not, during the relevant
statute of limitations period, been conducted in violation
of any provision of any federal, state, local, or foreign
statute, law, ordinance, rule, regulation, judgment, decree,
order, concession, grant, franchise, permit, consent, or
license or other governmental authorization or approval
applicable to the Seller, the Subsidiary, the Business or
the Purchased Assets, including, without limitation, any
cumulative signal leakage index requirements, any
environmental laws and the Employee Retirement Income
Security Act of 1974, as amended. Without limiting the
foregoing, the Seller represents and warrants that, to the
best knowledge of the Seller, the Cable System Assets have
been installed and maintained in accordance with, and are
currently and as of the Closing will be in compliance with,
all specifications and standards therefor required by
applicable law or regulation.
b) The Seller has not received any notification of any
uncured or unresolved failure by the Seller or the
Subsidiary to comply with any such federal, state, local, or
foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession, grant, franchise, permit,
consent, or license or other governmental authorization or
approval applicable to the Business.
c) Section 4.13(c) of the Disclosure Schedule sets
forth all of the licenses, franchises, permits, consents,
and authorizations necessary for the lawful conduct of the
Business.
d) The conduct of the Business does not require or
engage in wireline crossing of public rights-of-way. To the
Seller's knowledge, all easements relevant to the conduct of
the Business have been validly obtained by customers of the
Business, where applicable, and are in full force and
effect. The Seller, or the Subsidiary, has all rights
necessary to use such easements in the conduct of the
Business.
e) To the extent required, the Seller or the Subsidiary
has obtained retransmission consent for carriage of
broadcast signals by the Business.
f) For all accounting periods from the second half of
1996 through the present, the Seller or the Subsidiary has
filed copyright statements of account with the U.S.
Copyright Office pursuant to Section 111 of the Copyright
Act of 1976, as amended (the "Copyright Act"), for each
portion of the Business constituting a copyright filing
entity and has made all royalty fee payments in connection
therewith. There are no outstanding inquiries to the Seller
or the Subsidiary from the Copyright Office nor any claim or
complaint from any third party involving the Business's
compliance with the Copyright Act or related rules and
regulations of the Copyright Office.
4.14. Regulatory Reports. The Seller has filed or caused to be
filed all material reports, registrations, and statements, together with any
amendments required to be made with respect thereto, that was required to be
filed in respect of the Business with any Governmental Authority, and has paid
or caused to be paid all fees or assessments due and payable in connection
therewith. Except for normal periodic examinations conducted by the applicable
Governmental Authority in the regular course of the Business, no Governmental
Authority has initiated any proceeding or investigation into the Business in the
last five (5) year period, nor has the Seller, the Subsidiary or any third party
initiated any such proceeding. There is no unresolved violation, criticism, or
exception by any Governmental Authority with respect to any report or statement
relating to an examination of the Business.
4.15. Agreements with Regulatory Agencies. Neither the
Subsidiary nor the Seller is subject to any cease-and-desist or other order
issued by, or a party to any written agreement or memorandum of understanding
with, any Governmental Authority that restricts or may adversely impact the
conduct of the Business.
4.16. Customers of the Seller. To the Seller's knowledge, the
Seller's and the Subsidiary's relationship with the parties to the Material
Contracts is good, and the Seller does not know of any fact, condition, or event
that would adversely affect the relationship of the Seller or the Subsidiary
with such parties.
4.17. Representatives. Neither the Subsidiary nor the Seller
has engaged any third parties to perform any services on its behalf to customers
of the Business, and neither owes any monies to any such representative for
provision of any such services.
4.18. Business Warranties. All equipment installed or sold by
the Seller or the Subsidiary (including, without limitation, any Cable System
Assets) and any services rendered by either in connection with the Business have
been in conformity with all applicable contractual commitments, customer
specifications, expressed or implied warranties and laws and regulations, except
for such instances of nonconformance which would not have a Material Adverse
Effect. No liability or claim exists, nor is the Seller aware of any reasonable
basis for any liability or claim arising, which could have a Material Adverse
Effect, for repair, replacement, or damage in connection with such installations
or sales or performance of services, other than those resulting from the
ordinary wear and tear on the Cable System Assets relating thereto. Section 4.18
of the Disclosure Schedule sets forth an accurate, correct, and complete
statement of all warranties relating to the Business. In furtherance of the
Buyer's due diligence investigation, the Seller has furnished to the Buyer
copies of certain systems documentation, "as builts" documentation, customer
specifications and plans relating to the installation, maintenance and
performance of the Cable System Assets (the "Cable System Assets' Customer
Specifications"), and, on or prior to the Closing, the Seller will have
furnished to the Buyer copies of all remaining Cable System Assets' Customer
Specifications (other than those which are the subject of items on the Due
Diligence Punch-List, which the Seller shall use its best efforts to locate and
deliver to the Buyer as soon after the Closing as possible) such that, by the
Closing, the Buyer will have received from the Seller any and all Cable System
Assets' Customer Specifications relevant to all of the Cable System Assets
(except as provided immediately above in this sentence), all of such materials
being true, accurate and complete and representing all materials of such
substance relevant to the continued operation of the Cable System Assets.
4.19. Litigation. There is no action, suit, inquiry, claim,
judicial or administrative proceeding, arbitration, or investigation pending or,
to the Seller's knowledge, threatened against the Seller, the Subsidiary, any
other affiliate, or any of their properties, assets, or rights, which relate to
the Business or the Purchased Assets, before any court, arbitrator, or
administrative or governmental body, nor is there any judgment, decree,
injunction, rule, or order of any court, governmental department, commission,
agency, instrumentality, or arbitrator outstanding against, and unsatisfied by,
the Seller or an affiliate thereof, nor does the Seller know of any fact, event,
or condition that could reasonably be expected to serve as a basis for the
assertion of any such action, suit, inquiry, claim, judicial or administrative
proceeding, arbitration, or investigation. Section 4.19 of the Disclosure
Schedule sets forth an accurate, correct, and complete list and summary
description of all existing claims, duties, responsibilities, liabilities, and
obligations arising from or alleged to arise from any injury or damage to person
or property as a result of the ownership, possession, or use of any equipment
installed or sold, or service performed, with respect to the Business. All such
claims are fully covered by the Seller's liability insurance or otherwise
provided for by the Seller, and the Seller shall properly satisfy and discharge
all such claims.
4.20. No Undisclosed Liabilities. Since the Balance Sheet
Date, neither the Seller nor any of its subsidiaries has incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, which have, or could reasonably be expected to have, a Material
Adverse Effect on the Seller, the Purchased Assets, the Business or the
Subsidiary, or that would be required by generally accepted accounting
principles to be reflected on a consolidated balance sheet of the Seller and its
subsidiaries (including the notes thereto).
4.21. Brokers' Fees and Commissions. The Seller is solely
responsible for any and all fees and expenses due any investment banker, broker,
finder, or intermediary engaged on behalf of the Seller or any affiliate thereof
in connection with the transactions contemplated herein, including, without
limitation, any fees owing to ▇▇▇▇▇▇▇ & Associates, L.P.
4.22. Disclosure. No representation or warranty as to the
Seller, the Purchased Assets, or the Business contained in this Agreement and no
statement contained in the Disclosure Schedule or any document, instrument, or
agreement delivered pursuant hereto or in connection herewith contains any
untrue statement of a material fact, or omits to state any material fact
necessary, in light of the circumstances under which it was made, in order to
make the statement herein or therein not misleading.
4.23. Copies of Documents. The Seller has delivered or caused
to be made available for inspection and copying by the Buyer and its advisers
true, complete, and correct copies of all documents referred to in any Section
of the Disclosure Schedule.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller, as of the
date hereof and as of the Closing Date, as follows:
5.1. Organization and Qualification. The Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Connecticut, with all requisite power and authority to own
and operate its properties and assets and to carry on its business as it is now
being conducted, and is duly qualified and licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or operation of its assets or the conduct of its business requires such
licensing or qualification, except in such jurisdictions wherein the failure to
so qualify would not have a material adverse effect on the business, revenues,
financial condition, properties, assets, or prospects of the Buyer.
5.2. Authorization. The Buyer has full corporate power and
authority to execute and deliver, and to perform its obligations under, this
Agreement and the other agreements to be entered into by the Buyer in connection
herewith. The execution and delivery of this Agreement by the Buyer and the
other agreements to be entered into by the Buyer in connection herewith and the
performance by the Buyer of its obligations hereunder and thereunder have been
duly authorized by all requisite corporate action on the part of the Buyer. No
other action on the part of the Buyer is necessary to authorize the execution
and delivery of this Agreement and the other agreements to be entered into by
the Buyer in connection herewith, or the performance of its obligations
hereunder and thereunder. This Agreement has been, and the other documents to be
delivered at the Closing by the Buyer will be, duly and validly executed and
delivered by the Buyer and constitute the legal, valid, and binding obligation
of the Buyer, enforceable against the Buyer in accordance with their terms,
except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally, or the
application of equitable principles.
5.3. No Violation. Neither the execution and delivery of this
Agreement by the Buyer, nor the performance by the Buyer of its obligations
hereunder, will:
a) Violate or result in any material breach of any
provision of the Certificate of Incorporation or By-Laws of
the Buyer; or
b) Violate any order, writ, judgment, injunction,
decree, statute, rule, or regulation of any court or
Governmental Authority applicable to the Buyer or its
properties or assets that, in any case, could reasonably be
expected to have a material adverse effect on the business,
revenues, financial condition, results of operations,
properties, assets, or prospects of the Buyer.
5.4. Consents and Approvals. Other than the consents and
approvals of or filings or registrations with the Governmental Authorities
listed on Section 5.4 of the Disclosure Schedule, no filing or registration
with, no notice to, and no permit, authorization, consent, or approval of any
governmental, quasi-governmental, or regulatory department or authority is
necessary for the execution and delivery by the Buyer of this Agreement or the
consummation by the Buyer of the purchase and sale of the Business and the
Purchased Assets.
5.5. Broker's Fees and Commissions. Neither the Buyer nor any
of its shareholders, directors, officers, employees, or agents has employed any
investment banker, broker, finder, or intermediary, and no such fee or other
commission is owed by the Buyer to any third party, in connection with the
transactions contemplated herein.
5.6. Disclosure. No representation or warranty as to the Buyer
contained in this Agreement and no statement made by the Buyer in the Disclosure
Schedule or any document, instrument, or agreement delivered pursuant hereto or
in connection herewith contains any untrue statement of a material fact, or
omits to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statement herein or therein not
misleading.
5.7. FCC Qualifications. The Buyer is qualified under the
Communications Act of 1934, as amended, and FCC regulations to hold the
FCC-issued authorizations listed in Section 4.6 of the Disclosure Schedule.
5.8. Financing. The Buyer shall use all commercially
reasonable efforts to obtain financing for the transactions contemplated by this
Agreement pursuant to the terms and conditions set forth in the draft financing
commitment letter that has been previously provided by the Buyer to the Seller
and such other terms and conditions that are reasonably satisfactory to the
Buyer.
ARTICLE VI. COVENANTS OF THE SELLER
The Seller hereby agrees to keep, perform, and fully discharge
the following covenants and agreements:
6.1. Interim Conduct of Business. From the date hereof until
the Closing, the Seller shall (and shall cause the Subsidiary to) preserve,
protect, and maintain the Business and the Purchased Assets and shall (and shall
cause the Subsidiary to) operate the Business consistent with prior practice and
in the ordinary course of business. Without limiting the generality of the
foregoing, from the date hereof until the Closing, except for transactions
expressly approved in writing by the Buyer, the Seller shall (and shall cause
the Subsidiary to), with respect to the Business:
a) Not sell, lease, or otherwise dispose of or agree to
sell, lease, or otherwise dispose of any Purchased Assets;
b) Maintain the Cable System Assets in good repair,
order, and condition (reasonable wear and tear excepted);
c) Maintain and keep in full force and effect all
insurance on or relating to the Business and the Purchased
Assets presently carried;
d) Preserve intact the organization and reputation of
the Business, afford the Buyer and its representatives
access to the Seller's employees and agents for the purposes
of allowing the Buyer to discuss and negotiate potential
employment opportunities with the Buyer following the
Closing, and maintain the good will of suppliers, customers,
and others having material business relationships with the
Business (and, in connection with the foregoing, the Buyer
shall provide the Seller with copies of all offers made to
such employees and agents (which the Seller shall hold in
confidence), and the terms of such offers, including the
location of employment, the relevant position or title,
compensation and job duties);
e) Not amend, modify or terminate, or agree to amend,
modify or terminate, any Material Contracts (except for
renewals in the ordinary course of business on terms
identical to or better for the Seller than those most
recently in effect thereunder);
f) Proceed toward remedying and correcting the items
listed on the Due Diligence Punch-List and provide the Buyer
with status reports in respect thereof;
g) At the Seller's option, proceed toward fulfilling
the Seller's obligations under Section 2.6 hereof and
provide the Buyer with status reports in respect thereof;
h) Neither waive any rights nor forgive any claims
under any Material Contract that would otherwise exist
following the Closing, other than in the ordinary course of
business;
i) Not take any action to seek, encourage, solicit, or
support or cooperate with any inquiry, proposal, expression
of interest, or offer from, nor engage in negotiations or
discussions with, any other person or entity with respect to
an acquisition, combination, or similar transaction
involving the Business or the Purchased Assets, and the
Seller will promptly inform the Buyer of the existence of
any such inquiry, proposal, expression of interest, or offer
and shall not furnish any information to or participate in
any discussions or negotiations with any other person or
entity regarding the same;
j) Not make any material change in the program
offerings or other aspects of any service package provided
to any customer of the Seller with respect to the Business;
k) Continue to meet the contractual obligations of, and
to pay obligations relating to, the Business as they mature
in normal course, consistent with past practice, including
accounts payable and performance of the Material Contracts
in a manner consistent with past practices and good business
practice, and otherwise continue to comply with all
applicable laws, regulations, orders and permits relating to
the Business; and
l) Not take any action that would be required to be
disclosed under the terms of Section 4.10.
The Seller shall promptly notify the Buyer of any material
change in the financial condition, results of operations, properties, or
prospects of the Business and shall keep the Buyer fully informed of such
events, as well as the occurrence or failure to occur, as the case may be, of
any of the foregoing.
6.2. Cooperation; Access. From the date hereof through the
Closing Date, the Seller shall cooperate fully in assisting the Buyer in the
planning and implementation of a transitional plan for the transfer of the
Business. Without limiting the foregoing, the Seller shall afford to
representatives of the Buyer reasonable access to its customers, offices,
plants, properties, books, and records, including all financial and operating
data, of the Business as the Buyer may from time to time request, provided, that
no such investigation pursuant to this Section 6.2 or Section 3.6(a) shall
affect any representation or warranty given by the Seller hereunder.
6.3. Confidentiality. For a period of three (3) years
following the Closing, the Seller shall not use, publish, or disclose to any
third person (including a successor in interest to the Seller or any subsidiary
of the Seller) any confidential or proprietary information relating to the
Business; provided, however, that the foregoing restrictions shall not apply to
information that: (i) is necessary to enforce its rights under or defend against
a claim asserted under this or any other agreement with the Buyer, (ii) is
necessary or appropriate to disclose to any regulatory authority or governmental
agency having jurisdiction over the Seller or the Subsidiary or as otherwise
required by law, or (iii) becomes generally known other than through a breach of
this Agreement by the Seller. The Seller acknowledges that there is not an
adequate remedy at law for the breach of this Section 6.3 and that, in addition
to any other remedies available, injunctive relief may be granted for any such
breach.
6.4. Certain Payments. Promptly following Closing, the Seller
shall (and shall cause the Subsidiary to) pay and fully discharge all sales
taxes collected in the conduct of the Business, and all liabilities and
obligations to customers and suppliers of the Business that are not expressly
assumed by the Buyer as and when due, and shall otherwise (and shall cause the
Subsidiary to) pay, discharge, or make adequate provision for all other
liabilities and obligations of the Business, including all Excluded Liabilities
and Obligations. The Seller shall (and shall cause the Subsidiary to) promptly
pay and fully discharge any income, excise, employment, sales, or use taxes
arising as a result of the sale, transfer, conveyance, or assignment of the
Purchased Assets. The Seller shall retain responsibility after the Closing Date
for all pending litigation related to the Business and liability for claims
therein asserted against the Buyer, the Purchased Assets, or the Business.
6.5. Records and Documents. For five (5) years following the
Closing Date, the Seller shall grant to the Buyer and its representatives, at
the Buyer's request, access to and the right to make copies of those records and
documents related to the Business, possession of which is retained by the
Seller, as may be necessary or useful in connection with the Buyer's conduct of
the Business after the Closing. If during such period the Seller elects to
dispose of such records, the Seller shall first give the Buyer sixty (60) days'
written notice, during which period the Buyer shall have the right to take such
records without further consideration.
6.6. Best Efforts. The Seller shall use its commercially
reasonable best efforts to satisfy or cause to be satisfied all of the
conditions to Closing applicable to it and to consummate the transactions
contemplated by this Agreement.
6.7. Further Assurances. Following the Closing, the Seller
shall take all action reasonably requested by the Buyer to confirm, facilitate,
or perfect the transfer of the Purchased Assets, including, without limitation,
assisting the Buyer with respect to the Buyer's obtaining of any permits or
governmental approvals necessary for the conduct of the Business.
6.8. Employee Matters. The Seller shall use its commercially
reasonable best efforts to assist the Buyer in the Buyer's efforts to retain
those employees of the Seller specifically identified in writing to the Seller
whom the Buyer indicates an interest in potentially hiring following the
Closing. Notwithstanding the foregoing, the Buyer shall not be responsible for,
and the Seller shall indemnify and hold the Buyer harmless against, any
severance or termination pay obligations based upon prior policies of the Seller
arising from the transaction contemplated hereby. The Buyer shall not assume or
be responsible for any employee benefit or welfare plans of the Seller or the
Subsidiary or any liabilities related thereto. Without limiting the foregoing,
the Seller shall provide notices, if any, required under the Workers Adjustment
and Retraining Notification Act and satisfy any state law notice requirements.
6.9. Covenant Not to Compete.
a) The Seller covenants and agrees, on behalf of itself
and its subsidiaries, that, for a period of three (3) years
following the Closing Date, it will (and will cause its
subsidiaries, including the Subsidiary):
(i) not directly or indirectly own, operate,
manage, join, control, participate in the ownership,
management, operation or control of, or be paid or
employed by, or acquire any securities of, or otherwise
become associated with or provide assistance to any
business entity or activity which provides private
cable television or data services, other than wireless
terrestrial micro-wave transmission services (the
"Services") in the Territory (as defined in clause (d)
immediately below); provided, however, that the
foregoing shall not prevent the Seller from acquiring
the securities of or an interest in any business,
provided such ownership of securities or interest
represents at the time of such acquisition, but
including any previously held ownership interest, less
than five percent (5%) of any class or type of
securities of, or interest in, such business;
(ii) not directly induce any customers to whom the
Buyer is providing any Services, including, without
limitation, the customers party to the Customer
Contracts, to not renew their contracts for Services
with the Buyer or to transfer their patronage from the
Buyer to any other business or company engaged in a
business which is directly or indirectly competitive
with the Services conducted by the Buyer, including the
Business;
(iii) not hire, or attempt to hire for employment,
in any business enterprise or activity, any person who
is an employee of the Buyer or any affiliates thereof
(unless such employee leaves the employment of the
Buyer or such affiliates, in which case the Seller will
refrain from hiring or attempting to hire such an
employee for six (6) months after such employee leaves
the employment of the Buyer), or induce any such person
to terminate his employment with the Buyer or any
affiliates thereof, as the case may be.
Notwithstanding the foregoing, the Buyer acknowledges and agrees that Section
6.9(a)(i) shall not be binding upon a Successor Company. For purposes hereof, a
"Successor Company" shall mean an unaffiliated third party into which the Seller
merges or consolidates following the Closing, whether or not the Seller is the
surviving entity in such merger or consolidation.
b) The Seller agrees that damages would be an
inadequate remedy for the Buyer in the event of a breach or
threatened breach of this Section 6.9 and thus, in the event
of any such breach or threatened breach, either with or
without pursuing any potential damage remedies, the Buyer
may immediately obtain and enforce an injunction prohibiting
the Seller from violating this Section 6.9 in any court of
law or equity.
c) Any provision of Section 6.9(a) which is deemed
invalid, illegal or unenforceable in any jurisdictions
shall, as to the jurisdiction and subject to this Section
6.9(c), be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting in any way
the remaining provisions of Section 6.9(a) in such
jurisdiction or rendering that or any other provision of
Section 6.9(a) invalid, illegal or unenforceable in any
other jurisdiction. If any covenant or agreement contained
in Section 6.9(a) shall be deemed invalid, illegal or
unenforceable because its scope is deemed too broad, such
covenant or agreement shall be modified so that the scope of
the covenant or agreement is reduced only to the minimum
extent necessary to render the modified covenant or
agreement valid, legal and enforceable.
d) For purposes hereof, "Territory" shall refer to the
United States of America.
e) Following the Closing, the Seller shall not use, nor
permit any affiliate of it to use, the name "MagnaVision",
or any similar name, except that such entities may continue
to use that name as part of their respective corporate names
until such time as Seller modifies its governing
organizational documents, and those of its affiliates, by
effectuating a name change in compliance with this Section
6.9(e), which the Seller agrees to effect on or prior to the
90th day following the Closing Date.
6.10. Collateral Nonsolicitation Agreements. The Seller
covenants and agrees to enter into Nonsolicitation Agreements with each of the
following executives of the Seller prior to the Closing: (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
(ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and (iii) ▇▇▇▇▇ ▇▇▇▇▇▇. The Seller acknowledges and
agrees that the Buyer shall not be responsible for any obligation on the part of
the Seller to pay any of such individuals any severance benefits in connection
therewith. The Seller covenants and agrees to enforce such Noncompetition
Agreements following the Closing at the Seller's expense; provided, the Buyer is
hereby assigned the right to join in the enforcement of such Nonsolicitation
Agreements at the Buyer's expense; provided, further, that, in the event the
Seller does not take prompt action to enforce such Nonsolicitation Agreements
following the Closing, the Buyer may do so directly, in the name of the Seller.
Without limiting the foregoing, the Seller further covenants and agrees to
enforce any and all other noncompetition agreements relating to the Business in
accordance with their terms.
ARTICLE VII. COVENANTS OF THE BUYER
The Buyer hereby agrees to keep, perform, and fully discharge
the following covenants and agreements:
7.1. Best Efforts. The Buyer shall use its commercially
reasonable best efforts to satisfy or cause to be satisfied all of the
conditions to Closing applicable to it and to consummate the transactions
contemplated by this Agreement.
7.2. Further Assurances. Following the Closing, the Buyer
shall take all action reasonably requested by the Seller to confirm, facilitate,
or perfect the transfer of the Purchased Assets.
ARTICLE VIII. MUTUAL COVENANTS
8.1. Bulk Sales. The Buyer and the Seller hereby waive
compliance with the provisions of the bulk sales laws of any state, including
without limitation, the Uniform Commercial Code - Bulk Transfer provisions. The
Seller agrees to indemnify, defend, and hold harmless the Buyer from and against
any liability, loss, cost, or expense (including reasonable attorney's fees) in
connection with or as a result of such waiver and non-compliance.
8.2. Notice of Changes. Each party will promptly advise the
other party in writing (i) of any event known to its executive officers
occurring subsequent to the date of this Agreement that would render any
representation or warranty of such party contained in this Agreement, if made on
or as of the date of such event, untrue, inaccurate or misleading in any
material respect (other than an event so affecting a representation or warranty
which is expressly limited to a state of facts existing at a time prior to the
occurrence of such event) and (ii) of the occurrence of any event which has had
or reasonably may have a Material Adverse Effect upon the Business or the
ability of such party to satisfy the conditions to Closing.
8.3. Regulatory Approvals. Prior to the Closing Date, each
party shall execute and file, or join in the execution and filing of, any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any Governmental Authority, which may be
reasonably required, or that the other party may reasonably request, in
connection with the consummation of the transactions contemplated hereby. Each
party shall use its commercially reasonable best efforts to obtain all such
authorizations, approvals and consents. Promptly upon execution hereof, the
Seller and the Buyer shall join in an application or applications to the FCC, to
be filed on the appropriate FCC forms (the "Assignment Application"), requesting
the FCC's written consent to the assignment of the FCC-issued authorizations
listed in Section 4.6 of the Disclosure Schedule. In addition, commensurate with
the preparation and filing of the Assignment Application, the Seller and the
Buyer shall join in an application or applications to the FCC, to be filed on
the appropriate FCC forms, requesting that the FCC grant "special temporary
authority" permitting the Buyer to temporarily operate those certain microwave
radio stations used in the Business pending final FCC approval of the Assignment
Application (the "STA Application;" together with the Assignment Application,
being referred to herein collectively as the "FCC Applications"). Each party
shall pay its own costs in preparing the FCC Applications and shall pay one-half
(1/2) of any FCC filing fee associated with the FCC Applications. Each of the
Seller and the Buyer shall, at its own expense, cooperate in providing all
information and taking all steps necessary, desirable and appropriate to
expedite the preparation, filing, prosecution and granting of such applications.
In the event any person requests the FCC to deny any FCC Application, or
otherwise challenges the grant of any FCC Application, or in the event the FCC
consents to the assignment of any such authorization to the Buyer and any person
appeals or otherwise challenges such consent before the FCC or through a
judicial proceeding, the Seller shall, unless otherwise directed by the Buyer,
oppose such petition or challenge, or defend such action and the order of the
FCC, diligently and in good faith, with the Seller bearing the expense of the
same if and to the extent such challenge relates to the qualifications of the
assignor or the existence of the challenged permit or license, and with the
Buyer bearing the expense of the same if and to the extent such challenge
relates to the qualifications of the Buyer as assignee, to the end that the
transactions contemplated by this Agreement may be finally consummated.
8.4. Accounts Receivable, etc. At Closing, the Seller shall
deliver to the Buyer an accounts receivable aging report (by customer) with
respect to the Business, which shall reflect the Seller's accounts receivable
outstanding as of the Closing Date, shall be true, accurate and complete and
shall have been prepared in accordance with GAAP and the books and records of
the Seller (the "Accounts Receivable Report"). The Seller and the Buyer shall
mutually cooperate with each other with respect to the giving of any notices by
the Buyer to third parties advising them of the transaction and to whom payments
with respect to any outstanding or future invoices should be directed. Upon
Closing, other than as expressly permitted by the Buyer pursuant to the
immediately preceding sentence, the Seller shall refrain (and shall cause the
Subsidiary to refrain) from contacting any customers of the Business for the
purpose of requesting payment of invoices of the Seller or the Subsidiary
outstanding as of the Closing Date. For so long as the amounts indicated on the
Accounts Receivable Report remain unpaid, but not later than the 90th day
following the Closing (the "Collection Period"), the Buyer covenants and agrees
to use commercially reasonable efforts to collect, on behalf of the Seller, the
Seller's accounts receivable listed on the Accounts Receivable Report from
customers of the Business. Any amounts received by the Buyer from customers of
the Business with respect to the Seller's accounts receivable outstanding as of
the Closing Date shall be remitted to the Seller within five (5) business days
of the Buyer's receipt thereof. If more than one invoice is outstanding for any
customer of the Business, any payments received by the Buyer shall be applied to
the oldest outstanding invoice, unless the customer's payment by its terms
specifies or clearly indicates the particular invoice to which it relates.
Within ten (10) business days following expiration of the Collection Period, the
Buyer and the Seller may mutually agree for the Seller to sell to the Buyer, at
a discounted rate to be mutually agreed upon within such period, any accounts
receivable of the Business listed on the Accounts Receivable Report still
outstanding, in which case the Buyer shall be permitted to pursue those
receivables for its own account. To the extent not so purchased by the Buyer,
the Seller shall have the right to contact its delinquent account payors
directly and collect its outstanding accounts receivable in its own name. The
Seller shall provide the Buyer with immediate written notice of the Seller's
receipt of any of its pre-Closing accounts receivable of the Business so that
the Buyer may update the Accounts Receivable Report on a rolling basis during
the Collection Period to facilitate the administration of the foregoing
arrangement. To the extent the Seller (or any of its affiliates) receives a
payment from a third party, including, without limitation, any customer of the
Business, which is rightfully property of the Buyer, the Seller shall notify the
Buyer of such occurrence and forward such monies to the Buyer within five (5)
business days of its receipt.
ARTICLE IX. SURVIVAL AND INDEMNIFICATION
9.1. Survival. All representations, warranties, covenants, and
agreements contained in this Agreement, and in any certificate, schedule,
document, or other writing delivered pursuant hereto or in connection with the
transactions contemplated herein, shall be in all cases deemed to have been
relied upon by the parties hereto, and shall survive the Closing; provided,
however, that the representations and warranties shall be fully effective and
enforceable only for a period of one (1) year after the Closing Date, and shall
thereafter be of no further force or effect, except in the case of fraud, in
which case they shall survive until such fraud is discovered and a claim
therefor is finally adjudicated or settled, and except further that the
representations and warranties of the Seller set forth in Section 4.12 shall
survive for the applicable statute of limitations, and the representations and
warranties of the Seller set forth in Section 4.4(a) shall survive indefinitely.
Additionally, the parties agree that the indemnification obligations set forth
in this Article IX shall survive with respect to any claims made within the
applicable survival period until finally resolved or judicially determined,
including any appeal thereof. The representations, warranties, covenants, and
agreements contained in this Agreement or any certificate, schedule, document,
or other writing delivered pursuant hereto shall not be affected by any
investigation, verification, or examination by any party hereto or by any person
acting on behalf of any such party.
9.2. Indemnification of the Buyer. From and after the Closing,
the Seller agrees to indemnify, defend, and save the Buyer and its directors,
officers, employees, owners, agents, affiliates, and their successors and
assigns or heirs and personal representatives, as the case may be (each a "Buyer
Indemnified Party"), harmless from and against, and to promptly pay to a Buyer
Indemnified Party or reimburse a Buyer Indemnified Party for any and all losses,
damages, expenses (including, without limitation, court costs, amounts paid in
settlement, judgments, reasonable attorneys' fees, or other expenses for
investigation and defense, including, without limitation, those arising out of
the enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities, or obligations (collectively, the "Losses") sustained or incurred
by such Buyer Indemnified Party relating to, caused by, or resulting from:
a) Any misrepresentation or breach of warranty by the
Seller under, or failure to fulfill or satisfy any covenant
(including, without limitation, those set forth in Sections
2.5, 2.6, 6.10, 8.3 and 10.15 hereof) or agreement made by
the Seller contained in this Agreement or any certificate,
schedule, document, or other writing delivered by the Seller
pursuant hereto (provided, however, that inaccuracies in the
Statements shall be addressed exclusively through the
provisions of Section 2.3), or pursuant to any covenant or
agreement made by the Seller in any certificate, schedule,
document, or other writing delivered by the Seller pursuant
hereto; provided, however, that the Seller shall have no
liability for repair or remediation of any item on the Due
Diligence Punch-List which was the subject of a Purchase
Price reduction under Section 2.2(d), and, provided,
further, that the Seller's liability with respect to those
specific Disputed Items remaining on the Due Diligence
Punch-List shall be limited to the portion of the Escrow
Amount respectively allocated to such items on the Due
Diligence Punch-List; and provided, further, however, that
the Due Diligence Punch-List shall not be deemed to
otherwise exculpate the Seller from the breach of any other
representation, warranty or covenant hereunder; without
limiting the foregoing proviso clause, and by way of
example, to the extent the Seller did not provide the Buyer
with Cable System Assets' Customer Specifications for any
particular Cable System Asset prior to delivery of the Due
Diligence Punch-List on the date hereof, the failure of the
Buyer to list or describe in any fashion any problems
related to compliance with the customer specifications of
such related Cable System Asset on the initial Due Diligence
Punch-List shall not relieve the Seller from any liability
therefor under this Agreement;
b) Any causes of action or claims arising in connection
with the Business, the Purchased Assets or the Assumed
Obligations based, in whole or in part, upon actions or
omissions that occurred prior to the Closing, or relate to
the period prior to the Closing;
c) The Excluded Liabilities and Obligations;
d) Any amounts owing to the Buyer by virtue of any
post-Closing resolution of a Closing Statement Dispute;
e) Any overpayments made by the Buyer to the Seller
pursuant to Section 8.4 hereof, including those made because
of an overstatement by the Seller in the Accounts Receivable
Report; and
f) The non-compliance of the Seller with the provisions
of any applicable bulk sales act governing the purchase and
sale of the Purchased Assets.
Notwithstanding the foregoing provisions of this Section 9.2, in no event shall
the maximum aggregate amount of Losses for which the Seller shall have an
indemnification obligation hereunder exceed $1,000,000.
9.3. Indemnification of the Seller. From and after the
Closing, the Buyer agrees to indemnify, defend, and save the Seller and its
respective legal representatives, heirs, successors, assigns, agents, and
affiliates (each, a "Seller Indemnified Party"), forever harmless from and
against, and to promptly pay to a Seller Indemnified Party or reimburse a Seller
Indemnified Party for, any and all Losses sustained or incurred by such Seller
Indemnified Party relating to, caused by, or resulting from:
a) Any misrepresentation or breach of warranty by the
Buyer under, or failure to fulfill or satisfy any covenant
or agreement made by the Buyer contained in, this Agreement
or any certificate, schedule, document, or other writing
delivered by the Buyer pursuant hereto or pursuant to any
covenant or agreement made by the Buyer in any certificate,
schedule, document, or other writing delivered by the Buyer
pursuant hereto;
b) Any causes of action or claims arising in connection
with the Business, the Purchased Assets or the Assumed
Obligations based upon actions or omissions of or by the
Buyer that occurred following the Closing, or relate to the
period following the Closing; and
c) Any amounts owing to the Seller by virtue of any
post-Closing resolution of a Closing Statement Dispute.
9.4. Indemnification Procedure for Third Party Claims Against
Indemnified Parties.
a) In the event that subsequent to the Closing any
Buyer Indemnified Party or Seller Indemnified Party (each,
an "Indemnified Party") receives notice of the assertion of
any claim or of the commencement of any action, suit, or
proceeding by any entity that is not a party to this
Agreement (including, without limitation, any governmental,
quasi-governmental, or regulatory agencies) (a "Third Party
Claim") against such Indemnified Party, with respect to
which the Buyer or the Seller, as the case may be, is
required to provide indemnification under this Agreement
(the "Indemnifying Party"), the Indemnified Party shall
promptly give written notice, together with a statement of
any available information regarding such claim
(collectively, the "Third Party Indemnification Notice"), to
the Indemnifying Party within thirty (30) days after
learning of such claim (or within such shorter time as may
be necessary to give the Indemnifying Party a reasonable
opportunity to respond to such claim). The Indemnifying
Party shall have the right, upon delivering written notice
to the Indemnified Party (the "Defense Notice") within
thirty (30) days after receipt from an Indemnified Party of
a Third Party Indemnification Notice, to conduct, at the
Indemnifying Party's sole cost and expense, the defense
against such Third Party Claim in the Indemnifying Party's
own name, or, if necessary, in the name of the Indemnified
Party; provided, however, that the Indemnified Party shall
have the right to reasonably approve the defense counsel
representing the Indemnifying Party, which approval shall
not be unreasonably withheld, and, in the event that the
Indemnifying Party and the Indemnified Party cannot agree
upon such counsel within ten (10) days after the Defense
Notice is provided, the Indemnifying Party shall propose an
alternate defense counsel, which shall be subject again to
the Indemnified Party's reasonable approval in accordance
with the terms hereof.
b) In the event that the Indemnifying Party shall fail
to give the Defense Notice within the time and as prescribed
by Section 9.4(a) hereof, then in any such event the
Indemnified Party shall have the right to conduct such
defense in good faith with counsel reasonably acceptable to
the Indemnifying Party, but the Indemnified Party shall be
prohibited from compromising or settling any such claim
without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld and shall
be deemed given in the absence of providing the Indemnified
Party with a written response within ten (10) days of any
request therefor. If the Indemnified Party fails to
diligently defend such claim with counsel reasonably
satisfactory to the Indemnifying Party, or settles any such
claim without the Indemnifying Party's prior written consent
or otherwise breaches this Article IX, the Indemnified Party
will be liable for all costs, expenses, settlement amounts,
or other Losses paid or incurred in connection therewith,
and the Indemnifying Party shall have no obligation to
indemnify the Indemnified Party with respect to such claim.
c) In the event that the Indemnifying Party does
deliver a Defense Notice and thereby elects to conduct the
defense of the subject Third Party Claim, the Indemnified
Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as the
Indemnifying Party may reasonably request, all at the sole
cost and expense of the Indemnifying Party. Regardless of
which party defends such claim, the other party hereto shall
have the right at its own cost and expense to participate in
the defense, assisted by counsel of its own choosing.
Without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, the
Indemnifying Party will not enter into any settlement of any
Third Party Claim if pursuant to or as a result of such
settlement, such settlement would lead to liability or
create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not
entitled to indemnification hereunder. If a firm decision is
made to settle a Third Party Claim, which offer the
Indemnifying Party is permitted to settle under this Section
9.4(c), and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give at
least five (5) days' prior written notice to the Indemnified
Party to that effect, setting forth in reasonable detail the
terms and conditions of any such settlement (the "Settlement
Notice"). If the Indemnified Party objects to such firm
offer within ten (10) calendar days after its receipt of
such Settlement Notice, the Indemnified Party may continue
to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will not exceed the amount of such
settlement offer described in the Settlement Notice, plus
costs and expenses paid or incurred by the Indemnified Party
up to the point such Settlement Notice had been delivered.
If an Indemnified Party settles any Third Party Claim
without the prior written consent of the Indemnifying Party,
the Indemnifying Party shall have no obligation to indemnify
the Indemnified Party under this Article IX with respect to
such Third Party Claim.
d) Any judgment entered or settlement agreed upon in
the manner provided herein shall be binding upon the
Indemnifying Party, and shall be conclusively deemed to be
an obligation with respect to which the Indemnified Party is
entitled to prompt indemnification hereunder, subject to the
Indemnifying Party's right to appeal an appealable judgment
or order. Such indemnification shall be required to be made
no later than the tenth (10th) day following the expiration
of any period in which an appeal may be taken, and shall be
satisfied by payment of the amount thereof in cash.
9.5. Failure to Give Timely Third Party Indemnification
Notice. Any failure by an Indemnified Party to give a timely, complete, and
accurate Third Party Indemnification Notice as provided in this Article IX will
not affect the rights or obligations of any party hereunder except and only to
the extent that, as a result of such failure, any party entitled to receive such
Third Party Indemnification Notice was deprived of its right to recover any
payment under its applicable insurance coverage or was otherwise adversely
affected or damaged as a result of such failure to give a timely, complete, and
accurate Third Party Indemnification Notice.
9.6. Notice of Claims as Between Buyer and Seller;
Arbitration. In the case of a claim for indemnification under Section 9.2 or
Section 9.3 hereof, upon determination by a Buyer Indemnified Party or a Seller
Indemnified Party, as the case may be, that it has a claim for indemnification,
the Indemnified Party shall deliver notice of such claim to the Indemnifying
Party, setting forth in reasonable detail the basis of such claim for
indemnification (each, an "Indemnification Notice"). Upon the Indemnification
Notice having been given to the Indemnifying Party, the Indemnifying Party shall
have thirty (30) days in which to notify the Indemnified Party in writing (the
"Dispute Notice") that the amount of the claim for indemnification is in
dispute, setting forth in reasonable detail the basis of such dispute. In the
event that a Dispute Notice is not given to the Indemnified Party within the
required thirty (30) day period, the Indemnifying Party shall be obligated to
pay to the Indemnified Party the amount set forth in the Indemnification Notice
within sixty (60) days after the date that the Indemnification Notice had been
given to the Indemnifying Party.
In the event that a Dispute Notice is timely given to an
Indemnified Party, the parties hereto shall have thirty (30) days to resolve any
such dispute. All negotiations in connection with such dispute shall be
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence. In the event that such dispute is not
resolved by such parties within such period, then the dispute shall be resolved
by final and binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), as the same may be
modified by the terms of this Agreement, including, without limitation, the
AAA's provisions with respect to expedited rules of discovery. Within ten (10)
days of the expiration of the thirty (30) day period referenced above, the
demanding party may initiate arbitration by making a written demand for
arbitration on the other party and simultaneously filing copies of the demand,
together with the required fees, with the office of the AAA in New York, New
York (or such other regional office as is in closest proximity to the situs of
the arbitration, as provided below). Within ten (10) business days after receipt
of such demand by the other party, each party shall designate one arbitrator and
the two arbitrators named by the parties will, within ten (10) business days
thereafter, select a third arbitrator (the three arbitrators being collectively
referred to herein as the "Arbitration Panel"). The Arbitration Panel shall
cause a hearing to be held within thirty (30) calendar days after the date the
third arbitrator is selected and shall render an award within forty-five (45)
calendar days from the commencement date of the hearing based on the unanimous
or majority decision of the arbitrators. The arbitration shall be conducted in
the borough of Manhattan in New York, NY. The parties expressly covenant and
agree to be bound by the decision of the Arbitration Panel and accept any such
decision as the final determination of the matter in dispute. Any decision,
award and/or judgment rendered by the Arbitration Panel may be entered in any
court having competent jurisdiction. In no event shall any demand for
arbitration be made after the date that institution of legal or equitable
proceedings based upon the claim, dispute or other matter would be barred by
this Agreement. The expenses and fees of the Arbitration Panel shall be borne as
set forth in the award of the Arbitration Panel. Otherwise, each party shall
bear its own legal fees and expenses. The procedures specified in this Section
shall be the sole and exclusive procedures for the resolution of a dispute;
provided, however, that a party, without prejudice to the above procedures, may
seek a preliminary injunction or other provisional judicial relief, if in its
sole judgment such action is necessary to avoid irreparable damage or to
preserve the status quo.
9.7 Escrow Agreement. As more fully set forth in the Escrow
Agreement, the Buyer shall have the right to satisfy a successful
indemnification claim out of the escrowed funds held in escrow under the Escrow
Agreement.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1. Waiver; Modification. No provision of this Agreement may
be modified, waived, or discharged unless such modification, waiver, or
discharge is agreed to in writing and signed by a duly authorized representative
of each of the parties hereto. The Closing of the transactions contemplated
hereby shall not be deemed to constitute a waiver by either party of the other
party's obligations hereunder (including, without limitation, such other party's
pre-Closing covenants). No waiver by either party hereto at any time of
compliance with, or any breach by the other party hereto of, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
10.2. Invalidity. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or invalid
to any extent, the remainder of this Agreement shall not be affected thereby,
and this Agreement shall be construed to the fullest extent possible to as to
give effect to the intentions of the provision found unenforceable or invalid.
10.3. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
10.4. Expenses. Except as otherwise specifically provided for
herein, each party hereto shall bear all expenses incurred by it in connection
with this Agreement including, without limitation, the charges of its counsel,
accountants, and other experts.
10.5. Notices. All notices and other communications provided
for hereunder shall be in writing and shall be delivered to each party hereto by
hand or sent by reputable overnight courier, with receipt verified, or
facsimile, with receipt verified, or registered or certified mail, return
receipt requested, addressed as follows:
a) If to the Buyer:
▇▇▇▇▇▇ Television Systems, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four Stamford Plaza
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
b) If to the Seller:
MagnaVision Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & English
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective five (5)
business days after the same shall have been deposited, postage prepaid, in the
mail, upon delivery when the same shall have been delivered by hand, one (1)
business day after the same shall have been deposited (charges prepaid) with an
overnight courier, or upon receipt of electronic confirmation if sent via
facsimile transmission, as the case may be.
10.6. Governing Law; Forum. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws of
the State of Connecticut without regard to the conflicts of law principles
thereof. The parties hereto do hereby consent and submit to the venue and
jurisdiction of the State or Federal Courts sitting in Connecticut as the sole
and exclusive forum for such matters of dispute, and further agree that, in the
event of any action or suit as to any matters of dispute between the parties,
service of any process may be made upon the other party by mailing a copy of the
summons and/or complaint to the other party at the address set forth herein and
a party's refusal to accept any such notice shall be equivalent to service.
10.7. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10.8. Headings. All headings contained in this Agreement are
for reference purposes only and shall not in any way effect the meaning or
interpretation of any provision or provisions of this Agreement.
10.9. Integration. This Agreement, and the documents to be
delivered in connection therewith, and the exhibits and schedules thereto, set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersede all prior and contemporaneous agreements,
promises, covenants, arrangements, understandings, arrangements, communications,
representations, or warranties, whether oral or written, by any officer,
employee, or representative of any party hereto, and any prior agreement of the
parties hereto in respect of the subject matter contained herein is hereby
terminated and cancelled. No agreements or representations, whether written,
oral, express, or implied, with respect to the subject matter hereof have been
made by either party that are not set forth expressly in this Agreement and the
other documents to be delivered in connection herewith and therewith.
10.10. Assignment. Prior to the Closing, this Agreement shall
not be assignable by either party without the express prior written consent of
the other party. An assignment of this Agreement by the Seller following the
Closing shall not release the Seller of any of its obligations hereunder and the
Seller shall remain primarily liable therefor. Any assignment in contravention
of this Section shall be null and void. This Agreement shall be binding upon and
shall inure to the benefit of the Seller and the Buyer and their respective
successors and permitted assigns.
10.11. Publicity. Neither party shall issue any press release
or public announcement of any kind concerning the transactions contemplated by
this Agreement without the prior written consent of the other party hereto,
except as may be required by law or by the rules of any stock exchange, and if
so required the parties shall to the extent that it is reasonably practicable
consult with each other prior to such publicity. The parties agree to issue an
announcement following the Closing in form and content satisfactory to each of
the parties hereto.
10.12. References to the Seller. Throughout this Agreement,
references to the "knowledge" or "awareness" of the Seller, or the giving or
receipt by the Seller of any notice or the taking or omission of any action by
the Seller, as the case may be, shall be deemed to include the Subsidiary, any
other affiliates of the Seller, and its and their respective directors,
officers, employees and agents.
10.13. Rightful Termination. This Agreement may be terminated
and the purchase and sale of the Purchased Assets contemplated herein may be
abandoned at any time prior to the Closing:
a) by mutual written consent of the Buyer and the
Seller; or
b) by either the Buyer or the Seller if (i) a court of
competent jurisdiction or a Governmental Authority shall
have issued an order, decree or ruling or taken any other
action (which order, decree, ruling or action the parties
hereto shall use their best efforts to lift or dissolve), in
each case restraining, enjoining or otherwise prohibiting
the purchase and sale of the Purchased Assets or the other
transactions contemplated herein or attempting to do the
same, or (ii) the other party has materially breached a
provision hereof and not cured said breach to the
satisfaction of the non-breaching party, or (iii) the
Closing has not occurred by March 31, 2000; provided,
however, notwithstanding the foregoing, if the only
unsatisfied condition to the Buyer's obligation to close
shall be receipt of the "special temporary authority" from
the FCC referred to in Section 3.6(b), then the parties
hereto agree to extend the deadline referred to in clause
(iii) of this Section 10.13(b) to April 30, 2000, or such
later period as they shall agree to if they believe in good
faith that such special temporary authority is reasonably
imminent.
10.14. Procedure and Effect of Termination. In the event of
the termination of this Agreement and the abandonment of the purchase and sale
of the Purchased Assets pursuant to Section 10.13 hereof, written notice thereof
shall forthwith be given to the other party to this Agreement and this Agreement
shall terminate and the purchase and sale of the Purchased Assets shall be
abandoned, without any further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
a) upon request therefor, each party will redeliver all
documents, work papers and other materials of the party
relating to the transactions contemplated herein, whether
obtained before or after the execution hereof, to the party
furnishing the same; and
b) no party hereto shall have any further liability or
further obligation to any other party to this Agreement
resulting from such termination, except that the provisions
of this Section 10.14 shall remain in full force and effect.
It is mutually understood and agreed that the foregoing shall not limit, or
constitute a waiver of, any party's right to pursue all remedies at law
available to it in the event that the other party breaches a covenant or
obligation hereunder prior to Closing which results in a failure to close the
transactions contemplated hereby.
10.15. Consents. To the extent that any consent or
authorization of another party (including, without limitation, any Governmental
Authority) is required in order to provide the Buyer with the full benefit of
this Agreement and the Purchased Assets, but such consent or authorization was
not obtained prior to the Closing, the Seller and the Buyer shall use their
respective commercially reasonable efforts to obtain such consent or
authorization following the Closing. Until any such consent or authorization
shall be obtained, the Seller shall cooperate with the Buyer in any arrangement
designed to provide for the Buyer the benefits intended to be assigned or
transferred to the Buyer with respect to the related Purchased Asset, including
undertakings by the Buyer to complete contracts as the agent of the Seller. In
any such arrangement, the Buyer shall have the sole responsibility with respect
to the performance of any obligations following the Closing, and shall be solely
entitled to the benefits thereof, and the Seller shall indemnify the Buyer
against and hold the Buyer harmless with respect to any Losses it shall suffer
as a result of the failure to obtain such consent or authorization, unless, in
the case of any requisite consent from a Governmental Authority, the failure to
so obtain was due to the Buyer's having failed to meet any qualifications
imposed by the Governmental Authority as a condition precedent to granting the
consent or approval so sought.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
MAGNAVISION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ TELEVISION SYSTEMS, INC.
By /s/ ▇▇▇▇▇▇▇ F. X. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ F. X. ▇▇▇▇▇
Title: Vice President, Chief
Financial Oficer
