Execution Copy
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement")
is made and entered into as of April 9, 2007 by and among Kelley Communication
Company, Inc., a Nevada corporation ("Kelley"), MC SERVICES LLC, a Nevada
limited-liability company ("MCS") (each a "Member" and collectively, the
"Members") and Tuscany Services LLC, a Nevada limited-liability company (the
"Company") with reference to the following circumstances.
RECITALS
A. The Members are all of the Members of the Company.
B. The Members are concurrently entering into an Operating Agreement (as
defined below) governing the operations of the Company.
C. The Members desire to capitalize the Company in order for the Company to
begin business operations related to the installation of systems to provide high
speed internet and basic cable services to the homeowners in the community
located in Henderson, Nevada known as Tuscany and the provision of such services
(the "Business").
D. MCS desires to contribute to the Company $400,000.00 in immediately
available funds (the "MCS Contribution") in exchange for a fifty percent (50%)
membership interest in the Company. E. Kelley desires to contribute to the
Company all of its rights, titles and interests in, to and under the assets
described on Exhibit A attached hereto (the "Kelley Contribution") in exchange
for a fifty percent (50%) membership interest in the Company and the
Distribution (as defined below) to Kelley of $375,000.00 from the Company
immediately following Closing (as defined below).
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the Members agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa). Certain other terms
are defined in the text of this Agreement.
(a) "Affiliate" means a corporation or any other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the designated Member. As used in this definition
only, "control" shall mean ownership of shares of stock having at least fifty
percent (50%) of the voting power entitled to vote for the election of directors
in the case of a corporation (or, in the case of an entity that is not a
corporation, in the election of the corresponding managing authority), or
otherwise having the power to directly or indirectly control the management of
such entity.
(b) "Assumed Liabilities" shall mean all liabilities of Kelley relating to
the Business or the Kelley Contribution that are set forth on Schedule 2.02.
(c) "Business" shall have the meaning set forth in the recitals.
(d) "Excluded Liabilities" shall mean all liabilities of Kelley other than
the Assumed Liabilities shown on Schedule 2.02. Schedule 1.01(d) lists certain
specific Excluded Liabilities for the purpose of clarity with respect to those
specific Excluded Liabilities. The list of Excluded Liabilities on Schedule
1.01(d) does not, and is not intended to, include every Excluded Liability.
(e) "Governmental Body" shall mean any:
(i) nation, province, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, provincial, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
(f) "Lien" shall mean any mortgage, pledge, lien, charge, security
interest, adverse claims of ownership or use, restrictions on transfer, defect
of title or other encumbrance of any sort, other than (a) mechanic's,
materialmen's, and similar liens with respect to any amounts not yet due and
payable, and (b) liens for taxes not yet due and payable.
(g) "Permits" means all of the licenses, permits and other authorizations
issued by any Governmental Body to Kelley in connection with and which are
material to the conduct of the Business.
(h) "Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
Governmental Body or other entity.
(i) "WilTel Assets" shall mean the Retail Master Services Agreement dated
June 6, 2005 by and between the Kelley and WilTel Communications, LLC and those
assets listed on Schedule 1.01(i).
ARTICLE II ASSIGNMENT, ASSUMPTION AND CLOSING
Section 2.01 Assignments and Conveyances.
(a) Kelley hereby grants, bargains, sells, assigns, conveys and contributes
to the Company all of its rights, titles and interests in, to and under the
Kelley Contribution.
(b) MCS hereby grants, bargains, sells, assigns, conveys and contributes to
the Company all of its rights, titles and interests in, to and under the MCS
Contribution.
Section 2.02 Assumption. The Company hereby accepts the foregoing
contributions of the Kelley Contribution and the MCS Contribution and does
hereby assume and promise to satisfy all Assumed Liabilities thereunder to the
extent the same shall be applicable and accrue with respect to the period
subsequent to the Closing Date.
Section 2.03 Establishment of Values. The initial value ("Initial Value")
of the Kelley Contribution is $775,000, which the Members have determined to be
the fair market of the Kelley Contribution as of the date hereof. The Initial
Value of the MCS Contribution is $400,000.00.
Section 2.04 Capital Accounts. The capital account of each Member's
interest in the Company shall first be equal to their Initial Value, as set
forth in Section 2.03 above and after paying the "Distribution" as set forth in
Section 5.01 below, and thereafter shall be as provided in the Operating
Agreement.
Section 2.05 Accounts Receivable and Accounts Payable. Kelley shall be
entitled to collect for its account all accounts receivable related to the
Business for periods prior to the Closing Date. With respect to any accounts
receivable that are collected related to a period that contains dates both
before and after the Closing Date, Kelley and the Company shall each be entitled
to their pro rata portion of those accounts receivable based upon the number of
days in the applicable period that each owned the Business. The party that
collects such account receivable shall promptly remit the other parties' pro
rata portion of such account receivable along with a statement detailing the
amount of such account receivable belonging to each party. Kelley shall be
responsible for all accounts payable related to or arising out of the Business
prior to the Closing Date and the Company shall be responsible for all accounts
payable related to or arising out of the Business on or after the Closing Date.
The party that pays such account payable shall deliver the invoice to the other
party, who shall promptly reimburse the paying party for their pro-rata share of
the account payable.
Section 2.06 Closing, Closing Place, Time and Date. The closing of the
transactions contemplated by this Agreement (the "Closing") shall be held at the
offices of Kelley, 5625 South Arville Street, Suite E, Las Vegas, Nevada 89118,
at 11:00 a.m., local time, on the date hereof or at such other place and such
other time and/or date as the Members hereto shall mutually agree (the actual
date on which the Closing shall occur being referred to herein as the "Closing
Date").
ARTICLE III REPRESENTATIONS AND WARRANTIES OF KELLEY
Kelley hereby represents and warrants to the Company that the statements
contained in this Article III are true and correct.
Section 3.01 Organization, Qualification, and Corporate Power. Kelley
hereby represents, warrants and covenants to the Company that it (i) is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada, (ii) has obtained all necessary corporate approvals
to enter into and execute this Agreement and (iii) has the full right, power,
and authority to enter into this Agreement.
Section 3.02 Authorization.
(a) Kelley has full power and authority to execute and deliver this
Agreement and the Exhibits attached hereto, and to consummate the transactions
contemplated hereunder and to perform its obligations hereunder, and no other
proceedings on the part of Kelley are necessary to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement constitutes the valid and legally binding obligations of
Kelley, enforceable against Kelley in accordance with its respective terms and
conditions, except as such enforceability may be limited by principles of public
policy and subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
(c) Except as set forth in Schedule 3.02, and the execution and delivery by
Kelley of this Agreement and the Exhibits attached hereto, and the consummation
of the transactions contemplated hereby and thereby, will not conflict with or
result in any violation of, or default under, or give rise to the loss of any
benefit under: (i) any provision of the certificate of incorporation or bylaws
of Kelley; (ii) any contract or other agreement to which Kelley or the Kelley
Contribution are subject; or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Kelley or the Kelley Contribution.
Section 3.03 Kelley Contribution.
(a) Kelley has good and transferable title to all of the Kelley
Contribution, free and clear of any Liens.
(b) Except as set forth in Schedule 3.03(b), there are no contracts,
licenses or agreements to which Kelley is obligated with respect thereto, and
there are no consents required from any other Person to permit the Company to
fully exploit, any of the Kelley Contribution. Except for the WilTel Assets, the
Kelley Contribution owned by the Company immediately following the Closing Date
and the rights possessed by the Company immediately following the Closing Date
(including the rights acquired by the Company under the Transferred Contracts
(defined in Section 3.05 below)) include all assets, tangible or intangible, of
any nature whatsoever, of Kelley that: (i) are used or held for use by Kelley in
the operation or conduct of the Business, or (ii) are necessary for the
operation or conduct of the Business by the Company in substantially the same
manner as currently conducted.
Section 3.04 Condition of Tangible Personal Property. Each item of the
tangible personal property that constitutes part of the Kelley Contribution is
in good operating condition and repair, ordinary wear and tear excepted, is
suitable for immediate use by the Company in the ordinary course of business
and, to Kelley's knowledge, is free from latent or patent defects. No item of
the tangible personal property constituting part of the Kelly Contribution is in
need of maintenance, repair or replacement, except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
Section 3.05 Transferred Contracts. Each contract to be transferred to the
Company pursuant to this Agreement is set forth on Schedule 3.05 (the
"Transferred Contracts"). Each Transferred Contract is in full force and effect
and Kelley is not subject to any default thereunder, nor to the knowledge of
Kelley is any other party to such Transferred Contract subject to any default
thereunder. Kelley has neither breached, violated or defaulted under, nor
received notice that Kelley has breached, violated or defaulted under, any of
the terms or conditions of any Transferred Contract.
Section 3.06 Brokers' Fees. Except as set forth on Schedule 3.06, Kelley
has no liability for any fee, commission or payment to any broker, finder or
agent with respect to the contribution of the Kelley Contribution or the
consummation of the transactions contemplated by this Agreement. The brokers'
fees listed on Schedule 3.06 shall be paid by Kelley and shall not be an Assumed
Liability of the Company.
Section 3.07 Permits. Schedule 3.07 includes a true and complete list of
the Permits held by Kelley in the operation of the Business or ownership of the
Kelley Contribution. The Permits listed on Schedule 3.07 are validly issued, and
are in full force and effect. The Business is being conducted in all material
respects in accordance with the Permits.
Section 3.08 Taxes. Except for its 2005 corporate income tax return, Kelley
has filed or caused to be filed on a timely basis all tax returns and all
reports with respect to taxes that are or were required to be filed for the
Business pursuant to applicable legal requirements. All tax returns and reports
filed by Kelley are true, correct and complete. Kelley has paid, or made
provision for the payment of, all taxes that have or may have become due for all
periods covered by the tax returns or otherwise, or pursuant to any assessment
received by Kelley. There are no Liens on the Kelley Contribution that arose in
connection with any failure (or alleged failure) to pay any tax, and no
assertion of any Claims (as defined below) attributable to taxes which, if
adversely determined, would result in any such Lien.
Section 3.09 No Proceeding. There is no pending or, threatened proceeding
by or against Kelley or that otherwise relates to or may affect the Business of,
or the Kelley Contribution or that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated by this Agreement.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MCS
MCS hereby represents and warrants to the Company that the statements
contained in this Article IV are true and correct.
Section 4.01 Organization, Qualification, and Corporate Power. MCS hereby
represents, warrants and covenants to the Company that it (i) is a limited
liability company duly formed, validly existing, and in good standing under the
laws of the State of Nevada, (ii) has obtained all necessary limited liability
company approvals to enter into and execute this Agreement and (iii) has the
full right, power, and authority to enter into this Agreement.
Section 4.02 Authorization.
(a) MCS has full power and authority to execute and deliver this Agreement,
and to consummate the transactions contemplated hereunder and to perform its
obligations hereunder, and no other proceedings on the part of MCS are necessary
to authorize the execution, delivery and performance of this Agreement.
(b) This Agreement constitutes the valid and legally binding obligations of
MCS, enforceable against MCS in accordance with its respective terms and
conditions, except as such enforceability may be limited by principles of public
policy and subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
(c) The execution and delivery by MCS of this Agreement and the Exhibits
attached hereto, and the consummation of the transactions contemplated hereby
and thereby, will not conflict with or result in any violation of, or default
under, or give rise to the loss of any benefit under: (i) any provision of the
articles of organization of MCS; (ii) any contract or other agreement to which
MCS is subject; or (iii) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to MCS or the MCS Contribution.
Section 4.03 Brokers' Fees. MCS has no liability for any fee, commission or
payment to any broker, finder or agent with respect to the contribution of the
MCS Contribution or the consummation of the transactions contemplated by this
Agreement.
ARTICLE V OTHER AGREEMENTS AND COVENANTS
Section 5.01 Distribution to Kelley. At Closing, the Company shall
distribute $375,000.00 to Kelley (the "Distribution"). For convenience of the
Members, MCS shall pay the Distribution to Kelley on behalf of the Company and
such amounts shall be deemed to be a part of the MCS Contribution. Kelley's
capital account shall be reduced by the amount of the Distribution.
Section 5.02 Additional Head-End Expenses. At Closing, MCS shall pay Kelley
$15,000 (the "Estimated Head-End Expense Payment"), which is equal to 50% of the
estimated expenses in excess of $47,500 that Kelley incurred in connection with
the installation of the digital head-end at the Tuscany Community (the
"Additional Head-End Expenses") prior to Closing. Within 10 business days,
Kelley shall deliver to MCS an invoice setting forth in reasonable detail the
Additional Head-End Expenses. If 50% of the Additional Head-End Expenses exceed
the Estimated Head-End Expense Payment, then MCS shall promptly pay the amount
of such excess to Kelley. If the Estimated Head-End Expenses exceed 50% of the
Additional Head-End Expenses, the Kelley shall promptly pay the amount of such
excess to MCS. If the Estimated Head-End Expense Payment is equal to 50% of the
Additional Head-End Expenses, then no further payments are required under this
Section.
Section 5.03 Additional Documents and Further Assurances. Each Member
hereto, at the request of another Member hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby. Each of the Parties will use their reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement.
Section 5.04 Consents. If Kelley does not obtain consent to the assignment
of the contracts set forth on Schedule 3.03(b) as of the Closing, then, in the
case of each contract as to which such consent was not obtained (or otherwise is
not in full force and effect) (the "Non-Consent Contracts"), notwithstanding
anything to the contrary in this Agreement, neither this Agreement nor any other
document related to the consummation of the transactions contemplated hereby
shall constitute a sale, assignment, assumption, transfer, conveyance or
delivery or an attempted sale, assignment, assumption, transfer, conveyance or
delivery of the Non-Consent Contracts, and, following the Closing, the parties
shall cooperate with each other to obtain the consent, approval or waiver
relating to each Non-Consent Contract as promptly as practicable following the
Closing. Pending the obtaining of such consent, approval or waiver relating to
any Non-Consent Contract, Kelley will continue to perform its obligations
pursuant to the Non-Consent Contracts and shall require the other parties to the
Non-Consent Contracts to continue to perform their obligations under the
Non-Consent Contracts in order to provide to the Company the benefits and
burdens of use of each Non-Consent Contract for its term (or any right, benefit,
obligation or duty arising thereunder, including the enforcement for the benefit
of the Company of any and all rights of Kelley against a third party thereunder)
(the "Non-Consent Services"). The Company shall be responsible for all
liabilities and expenses arising out of the Non-Consent Contracts or the
provision of the Non-Consent Services following Closing, except to the extent
that such liabilities or expenses arose solely out of Kelley's failure to obtain
consent to the assignment of any Non-Consent Contract prior to Closing. The
Non-Consent Services shall continue until the earlier of (A) such time as the
applicable consent, approval or waiver has been obtained and such Non-Consent
Contract has been duly assigned to the Company or (B) the expiration of the term
of such Non-Consent Contract, as such term may be extended or renewed. After the
consent, approval or waiver for the sale, assignment, assumption, transfer,
conveyance and delivery of a Non-Consent Contract is obtained, Kelley shall
promptly assign, transfer, convey and deliver such Non-Consent Contract to the
Company, and the Company shall assume the obligations under such Non-Consent
Contract assigned to the Company from and after the date of this Agreement to
Company assignment and assumption agreement in a form reasonably satisfactory to
the parties.
Section 5.05 Commerce Associates, LLC. The Company agrees to honor the
terms and obligations of Kelley to Commerce Associates, LLC as set forth in
Sections 6.1 and 7.1.1 of the Cable Television Infrastructure and Services
Agreement between Kelly and Commerce dated April 22, 2002, a copy of which is
attached hereto as Exhibit D (the "Commerce Agreement"), as if the Company were
a party to the Commerce Agreement in place of Kelley.
Section 5.06 Kelley's Payment of Taxes and Liabilities. Kelley shall
promptly after the Closing Date prepare and file all reports and returns
required by laws relating to the Business to and including the Closing Date.
Kelley shall pay in a timely manner all taxes resulting from or payable in
connection with the transfer of the Kelley Contribution pursuant to this
Agreement, regardless of the Person on whom such taxes are imposed by laws. In
addition to payment of taxes, Kelley shall pay, or make adequate provision for
the payment, in full all of the Excluded Liabilities and other liabilities of
Kelley under this Agreement.
ARTICLE VI INDEMNIFICATION
Section 6.01 Indemnification.
(a) Indemnification of the Company by Kelley. Kelley shall indemnify and
hold harmless each of the Company and its Affiliates, and the directors,
officers, and employees of the Company and each Person that serves as an agent,
employee, director, officer, partner, executor, manager or member or trustee of
the Company or such Affiliate (or in a similar capacity), and the successors and
assigns of any of the foregoing (the "Company Indemnitees"), from and against
and will reimburse the Company Indemnitees for any and all liabilities, demands,
settlements, claims, actions, suits, penalties, fines, costs and expenses
(including, without limitation, costs of investigation and defense and
reasonable attorneys' fees and other expenses of settlement) (any of the
foregoing, a "Claim") whether incurred by any Company Indemnitee, or any
diminution of value, whether or not based upon a Claim of a third party,
(collectively, "Damages"), arising from or in connection with: (i) any breach of
any representation or warranty made by Kelley in (A) this Agreement (B) any
transfer instrument for the Kelley Contribution or (C) any other certificate,
document, writing or instrument delivered by Kelley pursuant to this Agreement;
(ii) any breach of any covenant or obligation of Kelley in this Agreement or in
any other certificate, document, writing or instrument delivered by Kelley
pursuant to this Agreement; (iii) any liability arising out of the ownership or
operation of the Kelley Contribution prior to the Closing Date other than the
Assumed Liabilities; (iv) any brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding made, or alleged to
have been made, by any Person with Kelley in respect of the assignment,
contribution, conveyance and transfer of the Kelley Contribution to the Company
or the consummation of the transactions contemplated by this Agreement; (v) any
noncompliance with any fraudulent transfer law in respect of the assignment,
contribution, conveyance and transfer of the Kelley Contribution to the Company;
(vi) any liability under the WARN Act or any similar state or local law that may
result from an "Employment Loss", as defined by 29 U.S.C. sect. 2101(a)(6),
caused by any action of the Company prior to the Closing Date or by the
Company's decision not to hire previous employees of Kelley; (vii) any employee
welfare or benefit plan established or maintained by Kelley or (viii) any
failure of Kelley to pay, perform or otherwise discharge any Excluded Liability.
(b) Indemnification of the Company by MCS. MCS shall indemnify and hold
harmless the Company Indemnitees from and against and will reimburse the Company
Indemnitees for any and all Damages costs of investigation and defense and
arising from or in connection with (i) any breach of any representation or
warranty made by MCS in (A) this Agreement; (ii) any breach of any covenant or
obligation of MCS in this Agreement; and (iii) any brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with MCS in respect of the
assignment, contribution, conveyance and transfer of the MCS Contribution to the
Company or the consummation of the transactions contemplated by this Agreement.
(c) Procedure. A Member that intends to Claim indemnification under this
Section 6.01 (the "Indemnitee") shall promptly notify the other Member (the
"Indemnitor") in writing of any Claim in respect of which the Indemnitee intends
to require such indemnification provided that the failure to notify the
Indemnitor will not relieve the Indemnitor of any liability that it may have to
any Indemnitee, except to the extent that the Indemnitor demonstrates that the
defense of such Claim is prejudiced by the Indemnitor's failure to give such
notice. If an Indemnitee gives notice to the Indemnitor of the assertion of a
Claim, the Indemnitor shall be entitled to participate in the defense of such
Claim and, to the extent that it wishes (unless (i) the Indemnitor is also a
Person against whom the Claim is made and the Indemnitee determines in good
faith that joint representation would be inappropriate or (ii) the Indemnitor
fails to provide reasonable assurance to the Indemnitee of its financial
capacity to defend such Claim and provide indemnification with respect to such
Claim), to assume the defense of such Claim with counsel satisfactory to the
Indemnitee. After notice from the Indemnitor to the Indemnitee of its election
to assume the defense of such Claim, the Indemnitor shall not, so long as it
diligently conducts such defense, be liable to the Indemnitee for any fees of
other counsel or any other expenses with respect to the defense of such Claim,
in each case subsequently incurred by the Indemnitee in connection with the
defense of such Claim, other than reasonable costs of investigation. If the
Indemnitor assumes the defense of a Claim, (i) such assumption will conclusively
establish for purposes of this Agreement that the allegations made in that Claim
are within the scope of and subject to indemnification, and (ii) no compromise
or settlement of such Claims may be effected by the Indemnitor without the
Indemnitee's prior written consent unless (A) there is no finding or admission
of any violation of law or any violation of the rights of any Person; (B) the
sole relief provided is monetary Damages that are paid in full by the
Indemnitor; and (C) the Indemnitee shall have no liability with respect to any
compromise or settlement of such Claims effected without its proper written
consent. If notice is given to an Indemnitor of the assertion of any Claim and
the Indemnitor does not, within ten (10) days after the Indemnitee's notice is
given, give notice to the Indemnitee of its election to assume the defense of
such Claim, the Indemnitor will be bound by any determination made in such Claim
or any compromise or settlement effected by the Indemnitee. Notwithstanding the
foregoing, if an Indemnitee determines in good faith that there is a reasonable
probability that a Claim may adversely affect it or its Affiliates other than as
a result of monetary damages for which it would be entitled to indemnification
under this Agreement, the Indemnitee may, by notice to the Indemnitor, assume
the exclusive right to defend, compromise or settle such Claim, but the
Indemnitor will not be bound by any determination of any Claim so defended for
the purposes of this Agreement or any compromise or settlement effected without
its Consent (which may not be unreasonably withheld). With respect to any Claim
subject to indemnification: (i) both the Indemnitee and the Indemnitor, as the
case may be, shall keep the other Member fully informed of the status of such
Claim and any related proceedings at all stages thereof where such Person is not
represented by its own counsel, and (ii) the Parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any Claim. With respect to any Claim subject
to indemnification, the Parties agree to cooperate in such a manner as to
preserve in full (to the extent possible) the confidentiality of all
confidential information and the attorney-client and work-product privileges. In
connection therewith, each Member agrees that: (i) it will use its best efforts,
in respect of any Claim in which it has assumed or participated in the defense,
to avoid production of confidential information (consistent with applicable law
and rules of procedure), and (ii) all communications between any Member hereto
and counsel responsible for or participating in the defense of any Claim shall,
to the extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege. A claim for indemnification for any matter not
involving a Claim may be asserted by notice to the Member from whom
indemnification is sought and shall be paid promptly after such notice.
Section 6.02 Limitations on Indemnity and Liability.
(a) Cap. Kelley's aggregate liability for Claims or Damages under this
Agreement related to breaches of this Agreement, including under the
representations, warranties, covenants and indemnities will not exceed an amount
equal to $100,000 (the "Cap"); provided that, the limitation contemplated hereby
will not be applicable with respect to (i) breaches of Sections 3.01, 3.03(a)
and 3.06, (ii) instances of actual fraud by Kelley or (iii) to any breach of any
of Kelley's representations and warranties of which Kelley had actual knowledge
at any time prior to the date on which such representation and warranty is made
or any intentional breach by Kelley of any covenant or obligation. MCS'
aggregate liability for Claims or Damages under this Agreement related to
breaches of this Agreement, including under the representations, warranties,
covenants and indemnities will not exceed an amount equal to the Cap provided
that, the limitation contemplated hereby will not be applicable with respect to
(i) breaches of Sections 4.01, and 4.03, (ii) instances of actual fraud by MCS
or (iii) to any breach of any of MCS' representations and warranties of which
MCS had actual knowledge at any time prior to the date on which such
representation and warranty is made or any intentional breach by MCS of any
covenant or obligation.
(b) Limitation. The Company Indemnitees may not recover for any Claims from
Kelley pursuant to Section 6.01 until the aggregate amount of damages relating
to such Claims or Damages for which the Company Indemnitees, in the aggregate,
are seeking indemnification exceeds $10,000 (the "Basket"), and then all of such
claims may be pursued to the extent such damages exceed the Basket; provided
that, the limitation contemplated hereby will not be applicable with respect to
(i) breaches of Sections 3.01, 3.03(a), 3.06 and 3.08, (ii) instances of actual
fraud by Kelley or (iii) to any breach of any of Kelley's representations and
warranties of which Kelley had knowledge at any time prior to the date on which
such representation and warranty is made or any intentional breach by Kelley of
any covenant or obligation.
(c) Survival. All representations, warranties, covenants and agreements
made in this Agreement shall survive the Closing. All Claims for indemnification
must be made within 12 months of the Closing Date or shall be forever barred;
provided, however, that Claims for indemnification based on liability associated
with the matters addressed in Sections 3.01, 3.03(a), 3.06, 3.08 shall only be
limited by their respective statute of limitations.
Section 6.03 Exclusive Remedy. Except for cases involving fraud or willful
misconduct, the indemnification provisions provided by this Article VI shall be
the exclusive remedy of the parties with respect to any claim for a breach of
any representation, warranty, covenant or agreement found in this Agreement.
ARTICLE VII CLOSING DELIVERIES
Section 7.01 Kelley's Closing Deliveries. At the Closing, Kelley shall
deliver the following to the Company:
(a) a bandwidth service agreement in substantially the form attached hereto
as Exhibit B pursuant to which Kelley provides the Company bandwidth for use in
providing high speed internet service (the "Bandwidth Service Agreement"), duly
executed by Kelley; and
(b) an Operating Agreement of the Company in substantially the form
attached hereto as Exhibit C (the "Operating Agreement") duly executed by
Kelley.
Section 7.02 MCS' Closing Deliveries.
(a) At the Closing, MCS shall deliver the Operating Agreement duly executed
by MCS to the Company.
(b) At the Closing, Kelley shall deliver the following to Kelley:
(i) the Distribution (on behalf of the Company pursuant to Section
5.01); and (ii) the Estimated Head-End Expense Payment.
Section 7.03 The Company's Closing Deliveries. At the Closing, the Company
shall deliver the Bandwidth Service Agreement duly executed by the Company to
Kelley.
ARTICLE VIII MISCELLANEOUS
Section 8.01 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties, and their
respective successors and permitted assigns, other than as specifically set
forth herein.
Section 8.02 Force Majeure. Except with respect to the payment of money, in
the event any Member hereto is prevented from or delayed in the performance of
any of its obligations hereunder by reason of acts of God, terrorism, war,
invasion, strikes, riots, earthquakes, storms, fires, energy shortage, acts of
government or governmental agencies, or any other cause whatsoever beyond the
reasonable control of the Member, the Member so prevented or delayed shall be
excused from the performance of any such obligation to the extent and during the
period of such prevention or delay.
Section 8.03 Limitation of Liability. NO PARTY SHALL BE LIABLE TO ANY OTHER
PARTY OR ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL
DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE
SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS
BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN
AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR
LIKELIHOOD OF SAME.
Section 8.04 Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
Section 8.05 Amendment. This Agreement may be amended by the mutual consent
of the Parties or any successor thereto by execution of an instrument in
writing.
Section 8.06 Waivers. The rights and remedies of the Parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any Member in exercising any right, power or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (i) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one Member, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other Member; (ii) no waiver
that may be given by a Member will be applicable except in the specific instance
for which it is given; and (iii) no notice to or demand on one Member will be
deemed to be a waiver of any obligation of such Member or of the right of the
Member giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
Section 8.07 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. This Agreement shall not be assigned by any
Member hereto without the prior written consent of the other Parties. This
Agreement will be binding upon any permitted assignee of any Member. No
assignment shall have the effect of relieving any Member to this Agreement of
any of its obligations hereunder.
Section 8.08 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
Section 8.09 Interpretation. The captions and headings to this Agreement
are for convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement. Unless specified to the
contrary, references to Articles, Sections or Exhibits mean the particular
Articles, Sections and Exhibits to this Agreement and references to this
Agreement include all such subparts. Unless context otherwise clearly requires,
whenever used in this Agreement: (i) the words "include" or "including" shall be
construed as incorporating, also, "but not limited to" or "without limitation;"
(ii) the word "day" or "year" means a calendar day or year unless otherwise
specified; (iii) the word "notice" means notice in writing (whether or not
specifically stated) and shall include notices, consents, approvals and other
written communications contemplated under this Agreement; (iv) the words
"hereof," "herein," "hereby" and derivative or similar words refer to this
Agreement (including any and all subparts); (v) the word "or" shall be construed
as the inclusive meaning identified with the phrase "and/or;"(vi) provisions
that require that a Member, the Parties or any committee hereunder "agree,"
"consent" or "approve" or the like shall require that such agreement, consent or
approval be specific and in writing, whether by written agreement, letter,
approved minutes or otherwise; (vii) words of any gender include the other
gender; (viii) words using the singular or plural number also include the plural
or singular number, respectively; and (ix) references to any specific Law or
article, section or other division thereof shall be deemed to include the
then-current amendments thereto or any replacement law thereof.
Section 8.10 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by certified or registered first class mail, postage
prepaid, return receipt requested, (b) upon delivery, if delivered by hand, (c)
one (1) business day after the business day of deposit with Federal Express or
similar overnight courier, freight prepaid or (d) one (1) business day after the
business day of facsimile transmission, if delivered by facsimile transmission
with copy by certified or registered first class mail, postage prepaid, return
receipt requested and shall be addressed to the intended recipient as set forth
below:
If to MCS:
Addressed to: MC Services, Inc.
P.O. Box 53001
Henderson, NV 89053
Attention: Robert E. Broz
Facsimile: (928) 763-3315
With a copy to: Lionel Sawyer & Collins
300 S. 4th Street, Suite 1700
Las Vegas, NV 89101
Attention: Mark Goldstein
Facsimile: (702) 383-8845
If to Kelley:
Addressed to: Kelley Communication Company, Inc.
5625 S. Arville St., Suite E
Las Vegas, NV 89118
Attention: Christopher G. Pizzo
Facsimile: (702) 889-8237
With a copy to: McAfee & Taft P.C.
10th Floor, Two Leadership Square
211 N. Robinson
Oklahoma City, OK 73102
Attention: Justin L. Jackson
Facsimile: (405) 228-7440
If to the Company:
Addressed to: Tuscany Services LLC
5625 S. Arville St., Suite E
Las Vegas, NV 89118
Attention: Michael Kelley
Facsimile: (702) 889-8237
Any Member may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties ten (10) days advance written notice to the other Parties pursuant
to the provisions above.
Section 8.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Nevada without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Nevada or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Nevada.
Section 8.12 JURISDICTION; SERVICE OF PROCESS. EACH PARTY (i) CONSENTS TO
THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF
NEVADA (AND ANY CORRESPONDING APPELLATE COURT) IN ANY PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED BY THIS AGREEMENT,
ii) WAIVES ANY VENUE OR INCONVENIENT FORUM DEFENSE TO ANY PROCEEDING MAINTAINED
IN SUCH COURTS, AND iii) EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, AGREES
NOT TO INITIATE ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY AGREEMENT CONTEMPLATED BY THIS AGREEMENT IN ANY OTHER COURT OR FORUM.
Section 8.13 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
Section 8.14 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Member by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Section 8.15 Attorneys' Fees. If any legal proceeding or other action
relating to this Agreement is brought or otherwise initiated, the prevailing
Member shall be entitled to recover reasonable attorney's fees, costs and
disbursements (in addition to any other relief to which the prevailing Member
may be entitled).
Section 8.16 Further Assurances. The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other Parties may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
[The remainder of this page left intentionally blank; signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on of the
date first above written.
KELLEY COMMUNICATION COMPANY, INC., a
Nevada corporation
By: /s/ James Michael Kelley
Name: James Michael Kelley
Title: President
MC SERVICES LLC, a Nevada limited-liability
company
By: /s/ Robert E. Broz
Name: Robert E. Broz
Title: Manager
TUSCANY SERVICES LLC, a Nevada limited-
liability company
By: /s/ Robert E. Broz
Name: Robert E. Broz
Title: Manager
EXHIBIT A
Kelley Contribution
1. Domain name: www.tuscanycable.com
2. Trade name: Tuscany Cable
3. The Transferred Contracts to the extent such contracts are not
Non-Consent Contracts as defined in Section 5.04 of the Agreement.
4. $25,000 cash.
5. The tangible assets listed below.
Distribution Materials Active/Passive
Materials List
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
Item # Description Part Number VENDOR 6B 6C 12 18 19 24 25 IVN Total
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
1 SA Gainmaker UBTRP OVCS 1 1 1 2 1 2 5 2 15
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
2 SA Gainmaker LE OVCS 2 4 2 5 3 4 4 6 30
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
3 SA Gainmaker Node UBTRP OVCS 0 1 1 0 1 0 0 2 5
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
4 Power Supply Modual BLI 1 1 1 0 1 1 0 2 7
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
5 2 port tap-4 DT55G-204 Kaigon 0 1 0 0 1 0 0 1 3
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
6 2 port tap-8 DT55G-208 Kaigon 0 2 0 0 1 0 0 0 3
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
7 2 port tap-11 DT55G-211 Kaigon 3 4 1 0 2 1 2 0 13
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
8 2 port tap-14 DT55G-214 Kaigon 3 6 3 0 4 1 0 13 30
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
9 2 port tap-17 DT55G-217 Kaigon 5 4 0 0 3 1 1 20 34
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
10 2 port tap-20 DT55G-220 Kaigon 6 3 6 0 1 0 1 17 34
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
11 2 port tap-23 DT55G-223 Kaigon 2 1 1 0 0 0 0 21 25
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
12 4 port tap-8 DT55G-408 Kaigon 3 0 0 2 3 1 3 8 20
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
13 4 port tap-11 DT55G-411 Kaigon 2 1 1 12 6 4 14 8 48
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
14 4 port tap-14 DT55G-414 Kaigon 2 1 2 11 6 4 14 10 50
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
15 4 port tap-17 DT55G-417 Kaigon 1 3 4 11 4 6 18 15 62
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
16 4 port tap-20 DT55G-420 Kaigon 2 2 2 13 5 7 2 26 55
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
17 4 port tap-23 DT55G-423 Kaigon 0 3 2 8 5 5 2 11 36
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
18 Line power inserter RPI-100 ARRIS 0 1 1 0 1 1 1 4 9
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
19 Line two-way RLS10-2 ARRIS 2 3 2 2 4 2 2 15 30
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
20 Line three-way RLS10-3 ARRIS 0 0 0 0 0 0 0 6 6
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
21 Line DC-8 RLS10-8 ARRIS 2 1 0 3 0 0 0 0 6
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
22 QR 860 Cable QR 860 JCASS Commscope 1500 2200 2000 3000 1800 2950 5100 2500 21050
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
23 QR 540 Cable QR 540 JCASS Commscope 4000 6800 3000 7000 9900 8100 10700 13100 62600
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
24 QR 860 Connectors G2-860-CH-QR GILBERT 3 4 2 5 4 4 2 50 74
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
25 QR 540 Connectors G2-540-CH-QR GILBERT 60 72 40 125 85 68 40 10 500
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
26 HSE to HSE conn G-KS-KS-MLK-T CATV SERVICES 12 8 8 20 10 8 8 7 81
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
27 90 deg conn GP-90-T TVC 15 8 8 25 6 8 8 2 80
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
28 Block conn G-SPB-2.75 TVC 2 2 1 2 4 2 1 2 16
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
29 Line term GTR-KS-M-T CATV SERVICES 8 10 4 10 16 8 4 10 70
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
30 Shrink Tube Large CFTV-1700-48T ARRIS 1 1 1 2 1 1 1 7 15
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
31 Shrink Tube Medium CFTV-1500-48T ARRIS 4 12 5 12 12 10 5 10 70
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
32 Ground Wire TVC 90 80 90 90 120 90 90 100 750
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
33 Fiber Transmitter 1 1
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
34 Fiber return Reciever 3 3
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
35
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
36 Launch Amps 1 1
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
37 48 count fiber 3000 3000
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
38 24 count 5000 5000
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
39 12 count 6000 6000
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
40 12 count/tail 11 11
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
41 Fiber enclosers 6 6
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
42 Fiber tray 1 1
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
43 Fiber Splitters 1 1
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
44 Drop cable 1189a Beldin 7400 8700 0 7500 11000 7500 10000 11000 63100
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
45 Drop amp CTHDA 1P cable tronic 2 6 9
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
46 Drop splitters 2/3 ways toner 40 40
- --------- ----------------------- ------------- ---------------- ----- ----- ---- ------ ------- ------- ----- ------- --------
HEAD END MATERIALS
- ---------- ---------------------------------------- ------------------------- ---------------- -------------
ITEM # MATERIALS MODEL # VENDOR QTY
- ---------- ---------------------------------------- ------------------------- ---------------- -------------
1 Satellite Dish/C-band 3.8M PRT 380 PATRIOT 2
2 SATELLITE MULTI FEED SUP-380-3 PATRIOT 2
3 SATELLITE MNT BRACKET PRT-MOUNTAZ PATRIOT 2
4 SATELLITE LNB C PAT-8515 PATRIOT 8
5 SATELLITE LNB KU PAT-4206A PATRIOT 0
6 Satellite Dish/Dss 1.8 M PRT 1.8 M PATRIOT 1
7 Receivers DIRECT TV D10 HUGHS Perfect 10 66
8 Satellite Rec/c-band PDI-60SR-IRD PDI 1
9 COMPLETE DIGITAL H/E/ (SEE BELOW) MOTOROLA 0
10 DIGITAL SAT RECEIVER DSR 4400MD MOTOROLA 0
11 DIGITAL UPCONVERTER SEM MOTOROLA 0
12 DIGITAL CONV DATA OTM1000 MOTOROLA 0
13 DIGITAL CONTROL MOD RADD V100 MOTOROLA 0
14 FIBER TRANSMITTER SA PDI 4
15 FIBER RECEIVER SA PDI 4
16 FIBER MODUAL RACK PDI
17 Fiber splitter 1 in 3 out Fiberdyne PDI 1
18 FIBER DISTRIBUTION TRAY PDI 1
19 ISP ROUTER Arris Cadant C3 AL-TER 1
20 ISP SERVICES COMPUTER DELL AL-TER 1
21 ISP REMOTE P/S ACC APC RM P/S AL-TER 1
22 ISP MANAGE SWITCH SMC6424L AL-TER 1
23 RACK SHELF ENCLOSER PDI 10
24 RACK SHELF PDI 13
25 Pwr strips 12 REC/15AMP PDI 9
26 Off-air digital receivers Samsung local 11
27 Character Generators DELL W/VIDEO CARD 1
28 44 RU HE Racks MRK 44-26 MIDDLE ATL 9
29 1 RU SPACERS EB-1 MIDDLE ATL 74
30 UNINTERRUPTIBLE P/S 1500 AXL2 UA PDI 9
31 QAM MODULATOR C6U MOTOROLA 0
32 Stereo Modulators PDI-60CMS PDI 41
33 Modulators PDI-60CM PDI 37
34 DIGITAL SET TOP DCT 2000 MOTOROLA 0
35 CHANNEL COMBINERS PDI-HC12 PDI 9
36 HDTV RECEIVER DD860 HDTV DRAKE 0
37 HDTV QAM CONVERTER TMQAM HDTV DRAKE 0
38 HDTV UPCONVERTER DUC 860 HDTV DRAKE 0
39 HDTV MODUAL RACK DR MM12 DRAKE 0
40 HDTV POWER SUPPLY PS8 DRAKE 0
41 2 WAY MULTI SWITCH V2 D-4 SPAUN 0
42 4 WAY MULTI SWITCH MS3X4 PDI 1
43 6 WAY MULTI SWITCH SMS 3603NF SPAUN 0
44 16 WAY MULTI SWITCH TSMS 2150X 16A PICO 10
45 2 WAY COMBINER 2WMS PDI 2
46 8 WAY COMBINER 8WMVS-2 PDI 2
47 BroadBand Antenna HD8200P WINEGARD 1
48 Tower 20 FT VALMONT 0
49 27 to 30" (NOT 37") LG LCD 1
50 Motorola Cable Modems 4100 MBS 50
51 Motorola Cable Modems 5100 MBS 130
52 TVC; VSST-S-G; Drop Tag Green TVC 10
53 TVC; VSST-S-Y; Drop Tag Yellow TVC 10
54 TVC; VSST-S-O; Drop Tag Orange TVC 10
55 TVC; VSST-S-B; Drop Tag Blue TVC 10
56 TVC; GRB-1; Ground Block TVC 200
58 TVC; T120I; Cable Tie Black TVC 1000
59 Arcom; MNE-A-1; Trap Arcom 200
60 Arcom; MNE-A-2; Trap Arcom 200
61 Arcom; AHP-50; Highpass Filter Arcom 200
62 Arcom; FRP; Filter Arcom 200
63 Arcom; Shields; Shields Arcom 250
64 Vonage phone & internet router wrtp54g Linksys 1
65 GE phone 5.8 ghz GE 1
66 Wireless Back Haul Canoipy Motorola 2
Equipment Located at Kelley Warehouse
- ------------------------------------- ------------------------------------------- ----------
Item Description Quantity
- ------------------------------------- ------------------------------------------- ----------
Commscope QR540JCASS Underground Cable 540 12000
Commscope QR860JCASS Underground Coax truck cable 860 4888
Belden 1189A RG6 cable quad shield 4000
Belden 1190A RG6 cable CATV burial 7000
TVC W588 8' Ground rods 37
4 port tap-11 DT55G-411 2
4 port tap-14 DT55G-414 10
4 port tap-17 DT55G-417 20
4 port tap-20 DT55G-420 10
4 port tap-23 DT55G-423 10
Sci Atlanta 1112841012114000 Amplifier, Unbalanced trip GM 806Mhz 1
T&B SNS6Qs RG6 F connectors compression 1400
TVC VSSTSG Drop Tag Green 5
TVC VSSTSy Drop Tag Yellow 5
TVC VSSTSO Drop Tag Orange 7
TVC VSSTSB Drop Tag Blue 9
TVC GRB1 Ground Block 7
TVC T1201 Cable tie, black 700
Arcom MNE-A-1 Trap 200
Arcom MNE-A-2 Trap 193
Arcom AHP50 High Pass Filter 200
Arcom FRP Filter 200
Arcom Shields Shields 250
Sci Atlanta 6940 Optical Receiver Node Station w/return 1
Motorola SB5100 Cable modem 50
Motorola RPD2000 Return Path demodulator 1
Line Trunk Pads 5
Power supply modual 1
Ground Rod clamps 100
Distribution Material
Underground
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
PAR 6-B PAR 6-C PAR 12 PAR 18 PAR 19 PAR 22 PAR 24 PAR 25 INV TOTAL
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
Item # Description QTY QTY QTY QTY QTY QTY QTY QTY QTY QTY
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
1 2" PVC TRUNK (sch 40) 1,500 2,500 1,650 3,000 3,000 1,500 2,000 5,000 280 20,430
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
2 2" PVC FEEDER (sch 40) 3,000 6,500 3,000 10,000 7,000 2,500 6,000 10,000 48,000
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
3 2" PVC SWEEPS 36"-90 60 150 54 260 150 60 120 100 6 958
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
4 1" PVC DROP 1,000 2,200 1,200 9,000 2,800 1,000 2,400 6,000 1400 27,000
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
5 1" PVC SWEEPS 18"- 90 150 261 110 450 280 120 288 600 42 2301
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
6 PULL ROPE TWINE 0 9,000 0 0 1,000 0 9,000 0 19,000
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
7 TRUNK PEDS 1 2 1 2 3 1 2 5 1 18
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
8 L. E. PEDS 2 4 3 6 2 1 4 6 6 34
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
9 N-16 Vault 0 12 0 40 18 0 18 0 88
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
10 B-24 Vault 0 30 0 0 36 0 25 0 91
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
11 N-36 Vault 28 1 21 60 3 14 0 60 7 194
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
12 1" COUPLERS 40 50 60 300 50 25 50 100 20 695
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
13 2" COUPLERS 50 80 30 250 100 25 50 150 5 740
- ------- ------------------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ------- --------
EXHIBIT B
Bandwidth Service Agreement
EXHIBIT C
Operating Agreement
EXHIBIT D
Copy of Commerce Agreement
Schedule 1.01(d)
Excluded Liabilities
Amount
Outstanding
------------
Al-Ter Computers $ 3,757.98
Anixter 2,423.21
Arcom 3,191.14
Commscope Inc 2,274.89
Gruber Industries 3,702.80 1
Jones Broadband 10,030.50 1
MBS/TTCD 2,750.00
Patriot Antenna Systems 3,220.00
Spirit Underground 22,732.40 1
Subscriber Technologies 352.00
Taikan Co 1,486.48
Tech Depot 269.88
TVC Communications 7,254.07
Wired or Not 64,409.60 1
------------
$127,854.95
============
Note 1 - these vendors are currently being paid by Kelley under weekly payment
plans that have been agreed to by the vendors.
Schedule 1.01(i)
WilTel Assets
MATERIALS MODEL # VENDOR QTY
Wireless Management Module Canopy Motorola 1
24 port ethernet switch SMC 1
1 gig ethernet router 2616 Cisco 1
Schedule 2.02
Assumed Liabilities
1. All liabilities and obligations first arising and to the extent
attributable to the ownership and operation of the Kelley Contribution or
the Business at and after the Closing Date under any Transferred Contracts
as set forth on Schedule 3.05, subject to Section 5.04 with respect to any
Non-Consent Contracts.
2. All liabilities and obligations arising from the ownership, use,
possession, or operation of the Kelley Contribution or the Business to the
extent attributable to conditions or circumstances first occurring or
existing at and after the Closing Date.
Schedule 3.02
Authorization
See Schedule 3.03(b).
Schedule 3.03(b)
Required Consents
1. General Service Agreement dated June 1, 2005 by and between Kelly and
Access Tech, Inc.
2. Lease Agreement with Insurance Waiver Addendum between Kelley and Williams
Scotsman, Inc.
3. Residential SMATV Viewing Agreement between Kelley and DirectTV dated July
14, 2006.
4. Affiliation Agreement between Kelley and Gemstar-TV Guide Interactive, LLC
dated December 1, 2006.
5. TV Guide Channel License and Distribution Agreement dated December 1, 2006
between Kelley and TV Guide Networks, Inc.
6. Music Choice Affiliation Agreement dated September 29, 2006 between Kelley
and Music Choice
Schedule 3.05
Transferred Contracts
1. Each contract listed on Schedule 3.03(b) to the extent such contracts are
not Non-Consent Contracts as defined in Section 5.04 of the Agreement.
2. Tuscany Cable TV Broadband Installation and Bulk-Rate Service Agreement
dated April 18, 2005 between Kelley and Tuscany Master Association.
3. SubscriberNet Software Agreement dated October 29, 2004 between Kelley and
CUO, Inc.
Schedule 3.06
Brokers' Fees
1. Kelley is obligated to pay brokers' fees of 4% of the Distribution to
Daniels and Associates and 5% of the Distribution to John White.
Schedule 3.07
Permits
1. Business License for the City of Henderson, Nevada.