1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made as of November __, 1995, by and
between NORTHLAND CABLE PROPERTIES FOUR LIMITED PARTNERSHIP, a Washington
limited partnership ("Buyer"), and UACC MIDWEST, INC., a Delaware corporation
("Seller").
RECITALS
A. Seller owns the cable television system and currently is engaged in
the business of providing cable television services in the unincorporated
community of LeGrand and nearby areas of Merced County, California.
B. Buyer desires to purchase, and Seller desires to sell and convey,
substantially all of the assets of Seller used or useful in connection with such
cable television business, all as more particularly described below.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS
The following terms shall have the following meanings:
1.1 Agreement shall mean this Asset Purchase Agreement, as amended,
supplemented or modified from time to time, including all agreements,
instruments and documents delivered in connection with this Agreement and all
Schedules and Exhibits annexed hereto.
1.2 Assets shall include all of the franchises, licenses, permits,
certificates, and other similar authorities used or usable in connection with
the operations of the CATV System, all real and personal property, all converter
and other deposits, all prepaid revenues and accounts receivable, and all other
tangible and intangible assets comprising and used or usable in connection with
the operations of the System, except only for the Excluded Assets as defined in
Section 1.12. Assets include without limitation the items which are listed in
Schedule 1.2 (except only the Excluded Assets listed in Schedule 1.12).
Notwithstanding the generality of the foregoing, Assets include only the assets
of Seller that relate specifically to the CATV System, it being understood and
acknowledged by Buyer that Seller owns assets that relate to cable television
systems operated by Seller in areas that are in close proximity to the CATV
System, which assets may have been used tangentially by Seller in the operation
of the CATV System but are excluded from the Assets.
Asset Purchase Agreement Page 1
2
1.3 Basic Package Services shall mean the package of cable television
programming, including broadcast and satellite service programming (but
excluding premium or pay-television programming) offered at the monthly rate of
$17.38 per subscriber.
1.4 Basic Subscribers shall mean, as of any date and for any franchise
area served by the CATV System, an individually billed residential subscriber to
Basic Package Services of the CATV System (which will not include "additional
outlets" or "second connects" as such terms are commonly understood in the CATV
industry), except any such subscriber (a) who is more than sixty (60) calendar
days past due (from the original due date as stated on the billing statement) in
the payment of any amount exceeding Ten Dollars ($10), (b) who have not paid at
least two (2) months' payment for Basic Package Services in full without
discount and all installation charges billed therefor, or (c) whose service is
pending disconnection for any reason.
1.5 CATV System shall refer to Seller's complete cable television
reception and distribution system as presently conducted by Seller in and around
the unincorporated community of LeGrand and nearby areas of Merced County,
California.
1.6 CLI Rules shall refer to the Cumulative Leakage Index ("CLI")
standards under applicable FCC rules and regulations.
1.7 Closing and Closing Date shall refer to the consummation of the
transactions contemplated by this Agreement, to be held at the place and on the
date specified in Section 8.1. The day on which such meeting takes place shall
be referred to as the "Closing Date."
1.8 Closing Documents shall refer to the agreements, contracts,
instruments and other documents listed in Exhibit G.
1.9 Contracts shall refer to all instruments, agreements, leases, and
contracts listed in Schedule 1.2.
1.10 Equivalent Billing Units shall mean a hypothetical equivalent to a
Basic Subscriber determined, as of any date and for each franchise area served
by the CATV System, by dividing (a) the total monthly billings for sales by the
CATV System to bulk and commercial accounts for Basic Package Services during
the most recent full month ended prior to the date of calculation, by (b) the
standard monthly rate (without discount of any kind) charged during such month
to single family households for Basic Package Services sold by the CATV System,
except any such bulk subscriber (a) who is more than sixty (60) calendar days
past due (from the original due date as stated on the billing statement) in the
payment of any amount exceeding Ten Dollars ($10), (b) who have not paid at
least two (2) months' payment for Basic Package Services in full without
discount and all installation charges billed therefor, or (c) whose service is
pending disconnection for any reason.
Asset Purchase Agreement Page 2
3
1.11 Equivalent Subscribers shall mean with respect to the CATV System,
the sum of (a) the number of Basic Subscribers, and (b) the number of Equivalent
Billing Units.
1.12 Excluded Assets shall include (a) Seller's cash on hand, accounts,
and investments which are not related to converter and other CATV System
deposits, (b) all PrimeStar and DMX commercial accounts of Seller, (c) all pole
attachment agreements, all programming agreements and all retransmission consent
agreements, (d) all of Seller's trade names, and (e) those assets listed on
Schedule 1.12.
1.13 FCC shall mean the Federal Communications Commission.
1.14 Required Consents shall refer to the third party consents listed
in Schedule 5.6.
1.15 Security Interest shall mean any mortgage, deed-of-trust, lien,
security agreement, limitation, pledge, hypothecation, assignment for security
purposes, option, put, charge, capital or financing lease arrangement, priority,
encumbrance, claim, suit, judgment or restraint on transfer (including, without
limitation, any agreement to give or suffer to exist any of the foregoing)
against title with respect to any Asset to be sold under this Agreement, except
for those security interests that Buyer has agreed to assume and are listed in
Schedule 4.1.
SECTION 2. SALE OF ASSETS
2.1 Agreement to Purchase and Sell. Subject to the terms and conditions
set forth in this Agreement, at Closing Buyer shall purchase and Seller shall
sell, transfer, assign, convey and deliver the Assets to Buyer.
2.2 Assets to Be Sold. Except as otherwise specifically provided in
this Agreement, all of the Assets are intended to be sold, transferred,
assigned, conveyed and delivered to Buyer, free and clear of all Security
Interests.
SECTION 3. PURCHASE PRICE
3.1 Purchase Price. Buyer shall pay to Seller total consideration of
Two Hundred Sixty Eight Thousand Seven Hundred Fifty Dollars ($268,750) (the
"Purchase Price"), as adjusted pursuant to Sections 3.2 and 3.3. The Purchase
Price shall be paid as follows:
3.1.1 Cash. At Closing, Buyer shall pay to Seller Two Hundred
Fifty Five Thousand Two Hundred Fifty Dollars ($255,250) as adjusted pursuant to
Section 3.2, by wire transfer of immediately available funds on the Closing
Date; and
3.1.2 Escrow. At Closing, Buyer shall deposit into an escrow
account Thirteen Thousand Five Hundred Dollars ($13,500), pursuant to an Escrow
Agreement substantially in the
Asset Purchase Agreement Page 3
4
form of Exhibit F, which escrow account shall be held back from Seller until the
earlier of (i) one hundred twenty (120) days after the Closing Date, or (ii)
immediately after payment of the post- Closing adjustment has been made as
provided in Section 3.3. The escrow account shall be subject to Buyer's
continuing right to offset or recoup for post-closing adjustments to be made
pursuant to Section 3.3.
3.2 Adjustments and Prorations to the Purchase Price at Closing .
Appropriate adjustments to the Purchase Price and the portion thereof payable
under Section 3.1.1 shall be made on a prorata basis as of the Closing Date to
the extent reasonably possible for all prepaid expenses, accrued expenses and
prepaid revenue, all as determined in accordance with generally accepted
accounting principles, to reflect the principle that all expenses arising out of
and all income attributable to the CATV System for the period prior to 11:59
p.m. local time on the Closing Date are for the account of Seller, and that all
expenses arising out of and all income attributable to the CATV System for the
period after 11:59 p.m. local time on the Closing Date are for the account of
Buyer. Such adjustments shall be made on the basis of a certificate delivered by
Seller to Buyer at least five (5) business days prior to Closing setting forth
Seller's good faith estimate of any adjustments or prorations required by this
Section 3.2. All overlapping items of income or expense shall be prorated or
reimbursed, as the case may be, as of 11:59 p.m. local time on the Closing Date,
including without limitation the following: expenses and deposits prepaid by
Seller; deposits and prepayments received but unearned by Seller; liabilities
for incurred but unpaid expenses; real and personal property taxes and utility
charges relating to the CATV System; and all other items normally prorated in
the sale of the assets of a going concern cable television business. In
addition, the Purchase Price and the portion thereof payable under Section 3.1.1
shall be reduced by the amount payable by Seller for one-half (1/2) of the fees
and expenses payable under the Escrow Agreement in substantially the form
attached hereto as Exhibit E. Finally, the Purchase Price and the portion
thereof payable under Section 3.1.1 shall be increased by the value of Seller's
accounts receivable existing as of the Closing Date with respect to subscribers
to the CATV System in accordance with the following:
(i) For accounts receivable aged zero (0) through thirty
(30) days, one hundred percent (100%) of the
aggregate amount of such accounts receivable; and
(ii) For accounts receivable aged thirty one (31) through
ninety (90) days, eighty five percent (85%) of the
aggregate amount of such accounts receivable.
No adjustments to the Purchase Price shall be made with respect to accounts
receivable aged over ninety (90) days. The age of such accounts receivable shall
be measured from the original due date of billing as stated on Seller's billing
statements.
3.3 Post-Closing Adjustments. As soon as practicable, but in any event
within sixty (60) days after the Closing Date, Seller shall prepare and deliver
to Buyer a certificate setting
Asset Purchase Agreement Page 4
5
forth Seller's computations of the amount of all prorations and adjustments, if
any, called for in Section 3.2. Buyer and Seller shall work together in good
faith to resolve any disagreement with respect to any matter set forth in such
certificate. A payment shall be made by Seller or Buyer within five (5) business
days after reaching agreement as to the proper amounts of the adjustments. If
Seller and Buyer are unable to agree upon the amounts of the adjustments within
fifteen (15) days of Seller's delivery of the certificate to Buyer, then the
matter shall be submitted to an accounting firm mutually acceptable to Buyer and
Seller for prompt resolution, and the fees for such firm shall be paid one-half
by Buyer and one-half by Seller.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in such amounts as set forth in Schedule 3.4. Buyer and Seller
agree to be bound by such allocation and to file all federal, state, and local
tax returns on the basis of such allocation.
SECTION 4. ASSUMPTION OF LIABILITIES
4.1 Limited Assumption of Liabilities. All of Seller's obligations with
respect to the CATV System are set forth in the agreements listed in Schedule
1.2. Except as specifically set forth in Schedule 4.1, Buyer will not assume any
of Seller's obligations at Closing. It is expressly understood and agreed that
Buyer shall not be liable for, and does not assume, any obligations or
liabilities of Seller of any kind or nature, other than obligations expressly
assumed by Buyer pursuant to the terms of this Section or the Assignment and
Assumption Agreement to be executed by Buyer and Seller in substantially the
form attached hereto as Exhibit B.
4.2 Sales and Transfer Taxes; Third-Party Consents. Seller shall assume
the liability for and shall pay any and all taxes that may be imposed on Seller
on the basis of Seller's income. Buyer shall assume the liability for and shall
pay any and all other reasonable costs, fees and taxes associated with the
consummation of the transactions contemplated by this Agreement, including
without limitation the expenses associated with obtaining the consent or
agreement of any governmental authority or any independent third-party with whom
Seller is contractually bound; provided, however, that Buyer shall not be
obligated under this Section either to pay any unreasonable fees or expenses or
to undertake any unreasonable obligations as a part of Buyer's performance.
Notwithstanding the foregoing, unless specifically set forth herein, each party
shall bear the expenses of its own attorneys, accountants and experts.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement, Seller represents and
warrants to Buyer as follows:
5.1 Organization and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to transact business in the State of California and in all
other jurisdictions in which the failure to so qualify
Asset Purchase Agreement Page 5
6
would have a material adverse effect on its business or properties; openly and
lawfully does business under the names "UACC Midwest, Inc.," "TCI" and "TCI
Cablevision of Merced," but no other name; has full power and authority to
execute, deliver, and perform this Agreement; has all requisite power and
authority to carry on its business as currently conducted and to own, lease,
use, and operate the Assets at the places they are located and in the manner in
which the CATV System is conducted; has taken all corporate action required by
law, its articles of incorporation and otherwise, and as of Closing will have
received all necessary consents and approvals, including without limitation the
approval of the directors of Seller, to authorize the execution, delivery, and
performance of this Agreement; and has not, since December 2, 1991, changed its
name, been the surviving entity of a merger or consolidation, or acquired all or
substantially all of the assets of any person, company or entity.
5.2 Schedules. The Schedules to this Agreement are true, accurate, and
complete in all material respects.
5.3 No Breach or Violation. To Seller's knowledge, the execution of
this Agreement and the consummation of the transactions contemplated hereby will
not violate or cause a default under any agreement to which Seller is a party or
give rise to any Security Interest with respect to the Assets, except such
violations, defaults, or security interests as would not, individually or in the
aggregate, have a material adverse effect on the validity, binding effect or
enforceability of this Agreement, on the CATV System, or on the ability of
Seller to perform its obligations under this Agreement. The Agreement
constitutes the legal, valid, and binding obligation of Seller, enforceable in
accordance with its terms, except insofar as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
now or hereafter in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
5.4 Effectiveness of Contracts. All of the Contracts are currently in
full force and effect and are valid and enforceable in accordance with their
respective terms, except insofar as enforceability may be affected by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws now or
hereafter in effect affecting creditors' rights generally or by principles
governing the availability of equitable remedies, and Seller is not in violation
or default of any material provision of any Contract. To Seller's knowledge,
Seller is in compliance with the applicable requirements of all governing or
regulatory authorities relating to the Contracts. To Seller's knowledge, the
Contracts represent all of the agreements necessary for Seller to operate the
CATV System in the ordinary course of business, as and in the manner in which it
presently is conducted and in accordance with all applicable federal, state and
local laws. True, correct and complete copies of all Contracts have been
delivered by Seller to Buyer.
5.5 Title to Assets. Seller has good, marketable and indefeasible
title, both legal and equitable, to all of the Assets which are owned, and a
valid leasehold interest in all of the Assets which are leased; and the Assets
are free and clear of all Security Interests of any kind or nature,
Asset Purchase Agreement Page 6
7
except for those Security Interests which shall be removed and released at or
prior to Closing. To Seller's knowledge, the Assets and the programming offered
over the CATV System are free and clear of any rightful claim of any third
person by way of copyright infringement, and Seller has timely made all
requisite filings with and payments to, and is otherwise in material compliance
with, all applicable rules and regulations of the Copyright Office. The real
property is accessible by roads over which Seller has a valid right-of-way, the
real property is served by all utilities and services reasonably necessary or
convenient for its normal and intended use, improvements on the real property do
not encroach on the property of others, and Seller has all easements and rights
of way necessary for the operation, repair, and maintenance of the CATV System.
5.6 Required Consents. Schedule 5.6 sets forth a true, correct and
complete list of all Required Consents, including without limitation all
governmental and third-party franchises, approvals, licenses, consents,
landlord's consents, other agreements, and other approvals necessary or required
for Buyer to conduct the CATV System and to own, lease, use, and operate, as the
case may be, the Assets at the places and in the manner in which the CATV System
and Assets are presently conducted or used and will be conducted or used on the
Closing Date.
5.7 FCC Compliance. As of Closing, Seller shall be duly authorized
under and in material compliance with applicable rules, regulations and orders
of the FCC and any other governmental authority necessary to conduct the
business of the CATV System in the manner in which such business has been
conducted prior to Closing, including without limitation the CLI Rules. Prior to
Closing, Seller will have delivered to Buyer true and correct copies of all
current and past reports, filings and notices, for the immediately past two
years, from or with, or necessary to support compliance with, FCC rules and
regulations for the immediately past two years. As of Closing, Seller will have
materially complied with and will have provided Buyer with true, correct and
complete copies of all Syndicated Exclusivity, Network Nonduplication and Sports
Blackout requests and all notices received by Seller relating to the mandatory
carriage of off-air broadcast signals on the CATV System.
5.8 Assets and CATV Business. Except as expressly set forth in the
Schedules to this Agreement, at Closing all Assets shall be in operating
condition, ordinary wear and tear excepted. None of the Assets materially
violate applicable laws, ordinances, codes, regulations or restrictive
covenants. The CATV System and the Assets are suitable for continued use in the
manner in which they are presently operated without the need for repairs or
replacement (except such repairs and replacements as would be expected of a
cable system of the same age and in the same geographical location as the CATV
System). All cable used in the CATV System is coaxial, and, except for such
conditions as might be expected for a cable system of its age and geographic
location, is water-tight and properly joined and connected.
5.9 Litigation and Proceedings. There is no litigation at law, or in
equity, and there is no other proceeding or investigation pending or, to
Seller's knowledge, threatened against, Seller
Asset Purchase Agreement Page 7
8
which reasonably could be expected, individually or in the aggregate, to have a
material adverse effect on the CATV System or on Seller's ability to perform its
obligations under this Agreement, and Seller does not know of any basis for such
litigation or proceedings. Seller is not materially in default in any manner
with respect to any order, writ, injunction, or decree of any court or federal,
State, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality which relates to the operation of the CATV System,
and Seller has materially complied with all laws, rules, or regulations
applicable to the CATV System and the operation thereof.
5.10 Subscribers, Fees, Rates and Homes Passed. The CATV System has no
fewer than 215 Equivalent Subscribers. The number of Equivalent Subscribers, the
monthly rates currently charged by Seller for each of the services offered on
the CATV System, and the number of homes passed by the CATV System are listed on
Schedule 5.10. The monthly Basic Package Services rate of at least $17.38, and
the other rates listed on Schedule 5.10 have been in effect for no fewer than
two standard billing cycles and Seller has not been ordered by any governmental
or franchising authority to reduce such rates.
5.11 Finders and Brokers. Neither Seller nor its officers, directors,
shareholders or employees has entered into any contract, arrangement, or
understanding with any person or firm which may result in the obligation of
Seller or Buyer to pay any finder's, brokerage, or agent's fees, commission or
other like payment or compensation. Within the three years preceding the date of
this Agreement, Seller has not entered into any agreement, whether written,
oral, express or implied, directly or indirectly regarding the sale or other
disposition of the CATV System.
5.12 Overbuilds; Competition. To Seller's knowledge, no area presently
served by the CATV System or within the scope of any of Seller's CATV franchises
is presently subject to, or to Seller's knowledge is likely to become subject to
within the foreseeable future, an overbuild situation or competition from a
multipoint distribution service, multichannel multipoint distribution service or
other wireless cable services, or any other circumstances which would have a
negative material impact on the CATV System or Seller's business, except for
Choice TV, PrimeStar and DMX Services.
5.13 Financial Information. To Seller's knowledge, the financial
information pertaining to the CATV System attached as Schedule 5.13: (i) has
been prepared in the ordinary course of business for the purpose of calculating
franchise fees of the CATV System on a consistent basis throughout the period
involved; and (ii) is true, correct, complete and accurate in all material
respects, subject to normal year-end adjustments.
5.14 Free CATV Service. Except as set forth in Schedule 5.14 to this
Agreement, there is no agreement, obligation or other requirement for Seller to
provide free cable television service to any person, entity or firm.
Asset Purchase Agreement Page 8
9
SECTION 6. BUYER'S REPRESENTATIONS AND WARRANTIES
6.1 Organization and Authority. Buyer represents and warrants to Seller
that Buyer is a limited partnership duly formed and validly existing under the
laws of the State of Washington; has full power and authority to execute,
deliver and perform this Agreement; and has taken all partnership action
required by law and otherwise to authorize the execution, delivery and
performance of this Agreement. This Agreement constitutes the legal, valid and
binding obligation of Buyer enforceable in accordance with its terms, except
insofar as enforceability may be affected by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
6.2 Finders and Brokers. Neither Buyer nor its officers or employees
has entered into any contract, arrangement, or understanding with any person or
firm, which may result in the obligation of Seller or Buyer to pay any finder's,
brokerage, or agent's fees, commission or other like payment or compensation.
6.3 No Breach or Violation. To Buyer's knowledge, the execution,
delivery and performance of this Agreement will not (a) conflict with or result
in a breach or violation by Buyer of, or (b) constitute default by Buyer under,
any statute, ordinance, rule, regulation or order, or any material agreement,
lease, instrument, document or arrangement, except such conflicts, breaches,
violations or defaults as would not, individually or in the aggregate, have a
material adverse effect on Buyer's ability to perform its obligations pursuant
to this Agreement.
6.4 No Consents. Except as provided in Schedule 5.6, Buyer does not
need to give any notice to, make any filing with, or obtain any authorization,
consent or approval of any government or governmental agency in order for the
consummation of the transactions contemplated by this Agreement.
SECTION 7. CONDUCT PENDING CLOSING
7.1 Access to Premises and Records. Between the date of execution and
delivery of this Agreement and the Closing Date, Seller shall allow Buyer full
access at reasonable times to all of the premises and books and records of
Seller and the CATV System and shall furnish to Buyer and its representatives
all information regarding the business and properties of Seller as may
reasonably be requested by Buyer or its representatives. In particular, Seller
shall allow Buyer to perform, at Buyer's expense, a "Level I" environmental
audit of any real property used in connection with the CATV System. Buyer (a)
will treat and hold, and will cause its employees and representatives to treat
and hold, as confidential any information concerning the business and affairs of
Seller that is not already generally available to the public received by Buyer,
its employees, or its representatives from Seller pursuant to this Section 7.1
or otherwise, (b) will not use any such information except in connection with
this Agreement, and (c) if this
Asset Purchase Agreement Page 9
10
Agreement is terminated for any reason whatsoever, will return to Seller all
tangible embodiments (and copies thereof) of such information in its possession.
7.2 Continuity and Maintenance of Operations. Seller shall continue to
operate the CATV System, shall maintain the Assets (including maintenance and
replenishment of all inventories of spare equipment and parts reasonably
adequate for the needs of the CATV System for a period of one month, including
without limitation those listed in Schedule 1.2), and shall keep all of its
business books, records, and files all in the ordinary course of business in
accordance with past practices, consistently applied.
7.3 Existing Relationships. Except as otherwise requested by Buyer,
Seller shall use its best efforts to preserve the CATV System as a going concern
and to preserve existing relation ships with suppliers, customers, governmental
entities and others having business dealings with Seller.
7.4 Approvals. Seller shall deliver to Buyer for Buyer's review and
approval a copy of Seller's request for each Required Consent, together with
evidence of such consent satisfactory to Buyer.
SECTION 8. CLOSING; CLOSING DATE; TERMINATION
8.1 Closing Date. Subject to the terms and conditions of this
Agreement, Closing shall be conducted at the offices of Buyer or such other
location on a Closing Date as may be mutually agreed to by the parties. Timing
of the Closing shall be subject to the following terms: Closing shall take place
not later than twenty (20) Business Days after Seller has obtained all Required
Consents and has complied with all other terms and conditions of this Agreement;
or on such later date as may be acceptable to Buyer and Seller.
8.2 Termination. This Agreement may be terminated at any time prior to
Closing (a) by the mutual written consent of Seller and Buyer; (b) by Buyer in
its reasonable discretion, if Seller fails to demonstrate to Buyer's reasonable
satisfaction that the CATV System has at least 215 Equivalent Subscribers, or if
Seller after using its best efforts, is unable to obtain each and every Required
Consent; (c) by either Seller or Buyer, in the event of a material breach or
misrepresentation under this Agreement by the other party which breach or
misrepresentation remains uncured fifteen (15) days after the receipt of notice
of such breach given by the other party; (d) by Buyer if Buyer gives written
notice to Seller of termination within ten (10) days of giving notice to Seller
of its dissatisfaction with the technical, engineering or financial inspections,
or environmental audit pursuant to Section 10.1; or (e) by either party in such
party's sole and absolute discretion, if the transactions contemplated by this
Agreement shall not have been consummated on or before January 31, 1996.
Asset Purchase Agreement Page 10
11
SECTION 9. SELLER'S OBLIGATIONS AT AND PRIOR TO CLOSING
Unless delivery is required prior to Closing by the terms of this
Agreement, Seller, at its sole cost and expense, shall deliver to Buyer at the
Closing all of the following (collectively, the "Closing Documents"): (a)
executed originals of a bill of sale, an assignment and assumption agreement, an
assignment and assumption of franchises, a Seller's certificate, a
Noncompetition Agreement and an Escrow Agreement, each substantially in the
forms of Exhibits A, B, C, D, E and F, respectively; (b) all documents,
certificates and papers which are reasonably necessary or appropriate to vest in
Buyer all right, title, and interest in and to the Assets free and clear of all
Security Interests, which documents, certificates and papers shall be listed on
the Closing Documents Checklist in the form of Exhibit G; (c) UCC searches, tax
lien searches, pending litigation searches and judgment searches of the county
and state public records from each county in which any of the Assets are
located, performed at Seller's sole expense, within thirty (30) days after the
execution of this Agreement, and any releases necessary to remove any liens on
the Assets and evidence of the dismissal of any suits or the satisfaction of any
judgments revealed by such searches; and (d) certificates from each appropriate
taxing authority stating that all applicable state and/or local taxes due in
connection with the transactions contemplated by this Agreement have been timely
paid in full and that no obligation or liability is outstanding in connection
therewith.
SECTION 10. BUYER'S OBLIGATIONS PRIOR TO, AT, AND AFTER CLOSING
10.1 Prior to Closing. Prior to Closing, Buyer will notify Seller of
its reasonable dissatisfaction, including therein the reasons for such
dissatisfaction, with the results and findings of Buyer's technical and
engineering inspections, financial inspections, and "Level I" environmental
audit with respect to the Assets within ten (10) days after Buyer's receipt of
the results of such inspections or audit, but in no event less than twenty (20)
days prior to the latest date that Seller and Buyer reasonably anticipate will
be the Closing Date.
10.2 At Closing. At Closing, Buyer shall: (a) deliver to Seller payment
of the portion of the Purchase Price required by Section 3.1.1; (b) deposit into
the escrow account of the portion of the Purchase Price pursuant to the Escrow
Agreement (in the form of Exhibit F); and (c) deliver to Seller executed
originals of an assignment and assumption agreement, an assignment and
assumption of franchises, a Noncompetition Agreement and an Escrow Agreement,
each substantially in the forms of Exhibits B, C, E and F, respectively.
10.3 After Closing. After Closing, Buyer shall perform and pay any
and all obligations assumed by it pursuant to Section 4.1.
Asset Purchase Agreement Page 11
12
SECTION 11. CONDITIONS OF BUYER'S OBLIGATIONS
Buyer's obligations to close hereunder are subject to the satisfaction
of all of the following conditions, each of which must be satisfied on or before
the Closing Date and any of which may be waived in writing by Buyer: (a) the
representations and warranties contained in Section 5 of this Agreement shall be
true, accurate, and complete; (b) Seller shall have updated all Schedules at
Closing and certified that such updated Schedules conform to the appropriate
representations and warranties made by Seller in this Agreement; (c) Seller
shall have certified to Buyer its compliance with the CLI Rules and with all
other applicable technical standards; (d) Seller shall have complied in all
material respects with all covenants and performed in all material respects all
actions required under Section 7 of this Agreement; (e) Seller shall have
complied with all of its obligations contained in Section 9 of this Agreement;
and (f) the CATV System shall not have suffered, on or prior to the Closing, any
loss, claim, casualty, or calamity that materially adversely affects the Assets
or the operations or future prospects of the CATV System.
SECTION 12. CONDITIONS OF SELLER'S OBLIGATIONS
Seller's obligations to close are subject to all of the following
conditions, any of which may be waived in writing by Seller: (a) Buyer shall
have performed in all material respects all of its agreements and covenants
under this Agreement to the extent such are required to be performed at or prior
to Closing, and (b) Buyer shall have certified to Seller that Buyer's
representations and warranties set forth in this Agreement are true and correct
as of Closing.
SECTION 13. INDEMNIFICATION
13.1 Seller's Indemnification of Buyer. Seller shall defend, indemnify
and hold harmless Buyer, its affiliates, subsidiaries, shareholders, directors,
officers, agents, and assigns, from and against any loss, liability, damage, or
expense (including attorney's and other experts' fees) (a) resulting from any
claim by any third party relating to Seller's ownership and operation of the
Assets prior to and on the Closing Date, or (b) arising from any breach of any
representation, warranty, or covenant by Seller in this Agreement, including
without limitation any liabilities and costs arising from any pending or
threatened litigation involving Seller, or (c) resulting from any claim asserted
against Buyer for any finder's, brokerage, or agent's fees, commission or other
like payments or compensation.
13.2 Buyer's Indemnification of Seller. Buyer shall defend, indemnify
and hold harmless Seller, its affiliates, subsidiaries, shareholders, directors,
officers, agents, and assigns, from and against any loss, liability, damage, or
expense (including attorney's and other experts' fees) (a) resulting from any
claim by any third party relating to Buyer's ownership and operation of the
Assets after the Closing Date, or (b) arising from any breach of any
representation, warranty, or covenant by Buyer in this Agreement, or (c)
resulting from any claim asserted
Asset Purchase Agreement Page 12
13
against Seller for any finder's, brokerage, or agent's fees, commission or other
like payments or compensation.
SECTION 14. MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
14.2 Assignment of Agreement. Neither party may assign this Agreement
or any interest in this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld; provided, however, that
Buyer may assign and delegate, at or prior to Closing, all or a part of its
rights and obligations under this Agreement to one or more entities formed and
controlled by Buyer without the prior written consent of Seller. In no event
shall any such assignment and delegation relieve Buyer from any liability under
this Agreement, including without limitation the payment of the Purchase Price.
14.3 Entire Agreement; Amendments. This Agreement constitutes and
embodies the entire agreement and understanding between the parties with respect
to the subject matter hereof and supersedes all prior or contemporaneous written
or oral agreements and understandings between the parties with respect thereto.
This Agreement may not be modified or amended except by a written instrument
executed by the parties.
14.4 Survival of Representations and Obligations. The obligations of
Seller pursuant to Sections 5.5, 13.1(a) and 13.1(c), shall survive the Closing
indefinitely. All other obligations of Seller, Seller's affiliates, and their
respective shareholders, pursuant to the terms of this Agreement, including
without limitation the provisions of Section 13.1(b), and the covenants,
representations and warranties of Seller, Seller's affiliates, and their
respective shareholders, directors, and officers, made in this Agreement, shall
survive the Closing for a period of eighteen (18) months. The obligations of
Buyer pursuant to Sections 13.2(a) and 13.2(c) shall survive the Closing
indefinitely. All other obligations of Buyer pursuant to the terms of this
Agreement, including without limitation the provisions of Section 13.2(b), and
the covenants, representations and warranties of Seller, Seller's affiliates,
and their respective shareholders, directors, and officers, made in this
Agreement, shall survive the Closing for a period of eighteen (18) months.
14.5 Notices. All notices and communications required or permitted to
be given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by messenger, by
overnight delivery service, by facsimile transmission (receipt confirmed), or
mailed by first class certified mail, return receipt requested, addressed to the
parties at the addresses set forth below or at such other addresses as either
party shall notify the other in accordance with this Section 14.5:
Asset Purchase Agreement Page 13
14
If to Buyer: and to:
Northland Cable Properties Four
Limited Partnership John E. Iverson, Esq.
1201 Third Avenue, Suite 3600 Ryan Swanson & Cleveland
Seattle, Washington 98101 1201 Third Avenue, Suite 3400
Attn: John S. Whetzell and James A. Penney Seattle, Washington 98101
Facsimile (206) 623-9015 Facsimile (206) 583-0359
If to Seller: and to:
UACC Midwest, Inc. UACC Midwest, Inc.
c/o Tele-Communications, Inc. c/o Tele-Communications, Inc.
Terrace Tower Terrace Tower
5619 DTC Parkway 5619 DTC Parkway
Englewood, Colorado 80111-3000 Englewood, Colorado 80111-3000
Attention: Gary S. Howard and Attention: Legal Department
Ramona L. Whitman Facsimile: (303) 488-3217
Facsimile: (303) 488-3209
15.6 Legal Expenses. If any proceeding is brought by either party to
enforce or interpret any term or provision of this Agreement, the substantially
prevailing party in such proceeding shall be entitled to recover, in addition to
all other relief as set forth in this Agreement, such party's reasonable
attorneys' and experts' fees and expenses.
15.7 Seller's Knowledge. As used throughout this Agreement, the phrase
"to Seller's knowledge" means the actual knowledge of a particular matter of any
of the executive officers of Seller or on-site general managers of the CATV
System, after reasonable investigation of the CATV System.
BUYER: NORTHLAND CABLE PROPERTIES FOUR
LIMITED PARTNERSHIP
By Northland Communications Corporation,
Managing General Partner
By /s/ James A. Penney
---------------------------
Its Vice President
---------------------------
Asset Purchase Agreement Page 14
15
SELLER: UACC MIDWEST, INC.
By /s/ Gary S. Howard
---------------------------
Its Vice President
---------------------------
Asset Purchase Agreement Page 15
16
AMENDMENT
TO
ASSET PURCHASE AGREEMENT
Section 8.2 of the Asset Purchase Agreement dated as of November 17,
1995 by and between Northland Cable Properties Four Limited Partnership and
UACC Midwest, Inc. is hereby amended by deleting January 31, 1996 and inserting
in its place February 29, 1996. This amendment will be effective as of January
31, 1996.
UACC MIDWEST, INC.
By: /s/ Gary S. Howard
----------------------------------
Gary S. Howard, Vice President
NORTHLAND CABLE PROPERTIES
FOUR LIMITED PARTNERSHIP
By: Northland Communications Corporation, G.P.
By: /s/ James A. Penney
----------------------------------
James A. Penney, Vice President