Page 1 of 3
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 2, 1996
--------------------------------
Phoenix Leasing Cash Distribution Fund III, A California Limited Partnership
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 0-16615 68-0062480
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2401 Kerner Blvd, San Rafael CA 94901-5527
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 485-4500
--------------
<PAGE>
Page 2 of 3
Item 2. Acquisition or Disposition of Assets.
(a) Phoenix Leasing Cash Distribution Fund III and Phoenix Concept Cablevision
of Indiana, L.L.C. (collectively referred to as "the Partnership") entered into
a Commercial Code Section 9505 Agreement (the "Agreement") with Concept
Cablevision of Indiana, Inc., a cable television company that the Partnership
had extended credit. Phoenix Concept Cablevision of Indiana, L.L.C is a newly
formed limited liability company and wholly owned subsidiary of Phoenix Leasing
Cash Distribution Fund III. The closing date of the Agreement was February 2,
1996. This Agreement allowed the Partnership to foreclosure upon the cable
television system (the collateral for the note) of Concept Cablevision of
Indiana, Inc. The Partnership's net carrying value for this outstanding note
receivable was $4,321,098 at December 31, 1995. In addition, the Partnership is
required to make a cash payment of $200,000, will assume certain liabilities
including a note payable of $600,000 and certain other miscellaneous accounts
payable as specified in the agreement.
The assets received through foreclosure generally consists of headend equipment,
cable plant, franchise agreements, subscriber lists, leased property, land,
tools, vehicles and miscellaneous other assets. The Partnership plans to
continue the operations of the cable television company received through
foreclosure.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) Financial Statements of Businesses Acquired.
b) Pro forma financial information.
It is impracticable at this time to provide financial statements for Concept
Cablevision of Indiana, Inc. and pro forma financial information for the
Registrant, since December 31, 1995 financial statements of Concept Cablevision
of Indiana, Inc. are not available. The Registrant plans to file the financial
statements and pro forma financial information within 60 days from the date of
this filing.
c) Exhibits:
(2) Commercial Code Section 9505 Agreement. (37 pages)
<PAGE>
Page 3 of 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHOENIX LEASING CASH DISTRIBUTION FUND III
A CALIFORNIA LIMITED PARTNERSHIP
(Registrant)
Date Title Signature
February 16, 1996 Senior Vice President, /S/ Bryant J. Tong
Financial Operations ------------------
(Principal Accounting Officer) (Bryant J. Tong)
of Phoenix Leasing Incorporated
the General Partner
<PAGE>
EXHIBIT (2)
COMMERCIAL CODE SECTION 9505 AGREEMENT
This Commercial Code Section 9505 Agreement ("Agreement") is
entered into as of this 29th day of December 1995, by and among Concept
Cablevision of Indiana, Inc., a Delaware corporation ("Borrower"), Phoenix
Leasing Incorporated, a California corporation, Phoenix Leasing Cash
Distribution Fund III, a California limited partnership, Phoenix Concept
Cablevision of Indiana, L.L.C., a Delaware limited liability company ("Phoenix
Concept"), Helen P. Belisle ("H. Belisle"), B. Richer Belisle ("B. Belisle") and
Belisle Communications, Inc., a Delaware corporation ("BCI"), with reference to
the following facts which shall conclusively be presumed to be true between the
parties.
RECITALS
A. Borrower owns cable television systems serving portions of
the Indiana counties of Benton, Parke, Greene, Montgomery, Putnam, Boone,
Hendricks, Clinton, Hamilton and Madison (individually and collectively referred
to as the "Systems").
B. Borrower is indebted to Phoenix Leasing Incorporated pursuant
to that certain senior loan agreement executed by Borrower in favor of Phoenix
Leasing Incorporated dated December 2, 1987 ("Senior Loan Agreement"), pursuant
to which Borrower made, executed and delivered to Phoenix Leasing Incorporated
that certain promissory note in the original principal amount of $4,350,000
dated December 2, 1987 ("Note").
C. The loan made pursuant to the Senior Loan Agreement and Note
is hereinafter referred to as the "Loan."
D. The proceeds of the Loan evidenced by the Senior Loan
Agreement and Note were used to finance the acquisition and improvement of the
Systems.
E. The Loan is secured by a first priority and valid and
enforceable security interest in all of the Borrower's assets ("Collateral"),
including, but not limited to (i) the Systems; (ii) the Real Property (as
defined below); (iii) those certain franchises more particularly described in
Exhibit "A" attached hereto and incorporated herein ("Franchises"); and (iv)
those certain leases more particularly described in Exhibit "B" attached hereto
and incorporated herein ("Leases"), as evidenced by that certain security
agreement, dated December 2, 1987, made, executed and delivered to Phoenix
Leasing Incorporated by Borrower, and by certain UCC financing statements
(individually and collectively referred to as the "Security Agreement").
1
<PAGE>
F. The Loan is further secured by a first priority and valid and
enforceable security interest in 100 shares of previously issued stock of
Borrower ("Stock"), which Stock is owned by H. Belisle, as evidenced by that
certain stock pledge agreement dated December 2, 1987, made, executed and
delivered by Belisle to Phoenix Leasing Incorporated ("Stock Pledge Agreement").
The Stock represents 100% of the previously issued and outstanding stock of
Borrower.
G. The Loan is further secured by that certain mortgage made,
executed and delivered to Phoenix Leasing Incorporated by Borrower on certain
real property located in the county of Boone, Indiana, and recorded on November
30, 1987 ("Mortgage") covering that certain real property described in Exhibit
"C" attached hereto and incorporated herein ("Real Property").
H. On or about December 2, 1987, H. Belisle and B. Belisle made,
executed and delivered to Phoenix Leasing Incorporated their guarantees
(individually the "Guarantee" and collectively the "Guarantees") pursuant to
which they agreed to guarantee and pay to Phoenix Leasing Incorporated all
amounts owed by Borrower to Phoenix Leasing Incorporated under the Loan.
I. The Guarantee executed by B. Belisle in favor of Phoenix
Leasing Incorporated was further secured by that certain collateral assignment
of note made, executed and delivered to Phoenix Leasing Incorporated by B.
Belisle dated December 2, 1987 in which, inter alia, Phoenix Leasing
Incorporated was assigned all of B. Belisle's right and interest in that certain
promissory note dated September 30, 1986 in the original principal amount of
$256,000 executed by Realsearch International, Ltd. ("Collateral Assignment of
Note").
J. On or about December 2, 1987, Borrower, as owner of the
Systems, and H. Belisle, as manager, entered into that certain management
agreement ("Management Agreement"). In connection with the Loan, H. Belisle,
Borrower and Phoenix Leasing Incorporated entered into that certain
subordination agreement re management fees dated December 2, 1987
("Subordination Agreement"), which Subordination Agreement provided, in part,
that H. Belisle subordinate all monies owing from Borrower to H. Belisle in
respect to management fees to all indebtedness owing from Borrower to Phoenix
Leasing Incorporated. Thereafter, BCI also entered into a management agreement
with the Borrower.
K. On or about December 2, 1987, Phoenix Leasing Incorporated,
Borrower, and Quality CATV, Inc., Sheridan C.A.T.V. Limited Partnership,
Darlington Limited Partnership, Mid-Indiana Limited Partnership, Central Indiana
Limited Partnership, and Rural Cable of Indiana, Ltd. (collectively referred to
as "Sellers") entered into that certain subordination agreement ("Seller
Subordination Agreement"),
2
<PAGE>
which Seller Subordination Agreement provided, inter alia, that all amounts owed
by Borrower to the Sellers of the Systems pursuant to the terms of a $600,000
promissory note executed by Borrower in favor of Sellers ("Sellers Note") would
be subordinated to all amounts owed by Borrower to Phoenix Leasing Incorporated.
That subsequent to December 2, 1987, Borrower, H. Belisle and B. Belisle
believe, to the best of their knowledge, the Sellers transferred all of their
right, title and interest in the Sellers Note and all documents executed in
connection therewith to various individuals and entities, more specifically
described in Exhibit X attached hereto and incorporated herein (the
"Noteholders").
L. That in June of 1988, Phoenix Leasing Incorporated, Borrower
and B. Belisle entered into that certain collateral assignment ("Collateral
Assignment"), which Collateral Assignment provided that $256,000 being paid to
Borrower by Realsearch International, Ltd. would be paid by Borrower to Phoenix
Leasing Incorporated and would be deposited by Phoenix Leasing Incorporated in a
certificate of deposit, which certificate of deposit would secure repayment of
the amounts owed to Phoenix Leasing Incorporated under the Loan by Borrower
and/or B. Belisle pursuant to the terms of his Guarantee.
M. That subsequent to the execution of the Note, Senior Loan
Agreement, Security Agreement, Stock Pledge Agreement, Collateral Assignment of
Note, Mortgage, Guarantees, Subordination Agreement, Seller Subordination
Agreement, Collateral Assignment and all documents and instruments executed in
connection therewith, all rights, obligations and duties thereunder were
assigned by Phoenix Leasing Incorporated to Phoenix Leasing Cash Distribution
Fund III and thereafter to Phoenix Concept. Phoenix Leasing Incorporated and
Phoenix Leasing Cash Distribution Fund III are hereinafter collectively referred
to as "Phoenix."
N. Borrower, H. Belisle and B. Belisle are currently in default
of the performance of their obligations to Phoenix Concept. By virtue of said
defaults, Phoenix Concept has terminated making advances to Borrower under the
Senior Loan Agreement and Note, accelerated the unpaid balance of all
indebtedness owed by Borrower to Phoenix Concept, and declared all obligations
and indebtedness of Borrower to Phoenix Concept to be immediately due, owing and
payable. In addition, Phoenix Leasing Cash Distribution Fund III previously
foreclosed on the certificate of deposit pledged to repay the Loan by Borrower
and B. Belisle pursuant to the terms of Collateral Assignment.
O. As of December 1, 1995, the unpaid principal balance owed
under the Loan plus accrued and unpaid interest is $5,900,044.33, and other
unpaid costs and expenses, including attorneys' fees and costs, all of which
continue to accrue
3
<PAGE>
(which are individually and collectively referred to as the "Phoenix
Obligations").
P. On or about December 14, 1994, Borrower, H. Belisle and B.
Belisle filed a verified complaint for temporary restraining order and/or
preliminary injunction and other relief in the United States District Court for
the Western District of Pennsylvania, Civil Action No. 94-2128 (the "Federal
Court Action"), seeking to, inter alia, enjoin Phoenix Leasing Incorporated from
taking certain actions to foreclose on certain collateral which secured
repayment of the Loan and the Guarantee executed by B. Belisle and H. Belisle.
Q. On January 4, 1995, Phoenix Leasing Cash Distribution Fund
III filed a verified complaint for money in the Superior Court of California,
County of Marin against Borrower, H. Belisle and B. Belisle, Marin County
Superior Court Case No. 162683 (the "Action") seeking to, inter alia, collect
the outstanding amounts owed on the Loan.
R. In August, 1995, an order was entered in the Action
dismissing the complaint in response to a motion to quash service of summons
filed by Borrower, H. Belisle and B. Belisle. In addition, in June of 1995,
Phoenix Leasing Incorporated, Borrower, H. Belisle and B. Belisle entered into a
stipulation in the Federal Court Action extending the time for Phoenix Leasing
Incorporated to file a responsive pleading to and including October 13, 1995 in
order to provide the parties with an opportunity to engage in settlement
discussions. Thereafter, Phoenix Leasing Incorporated, Borrower, H. Belisle and
B. Belisle entered into a subsequent stipulation in which Phoenix Leasing
Incorporated received a further extension of time to file a responsive pleading
in the Federal Action to and including January 30, 1996.
S. After a review of the options and alternatives, Borrower, H.
Belisle and B. Belisle hereby request Phoenix Concept to accept transfer of the
Collateral in full satisfaction of the Phoenix Obligations. BCI is the owner of
certain real property located in Sheridan, Indiana upon which is located certain
head end equipment of the Systems, more specifically described in Exhibit "AA"
attached hereto and incorporated herein ("Sheridan Property"). In connection
with the transfer of the collateral to Phoenix Concept, BCI is willing to sell
and transfer ownership of the Sheridan Property to Phoenix Concept subject to
the terms and conditions set forth below.
T. Phoenix and Phoenix Concept are willing to agree to the
transfer of the Collateral to Phoenix Concept in full satisfaction of the
Phoenix Obligations, provided that Borrower, BCI, H. Belisle and B. Belisle, and
each of them, enter into this Agreement and specifically acknowledge the
defaults of Borrower to Phoenix Concept and Phoenix, and make certain
4
<PAGE>
representations, warranties, waivers and agreements, and satisfy all conditions
precedent to the effectiveness of this Agreement as provided for below.
NOW, THEREFORE, in consideration of the above Recitals and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
AGREEMENT
1. Recitals and Loan Documents. The Recitals are incorporated
herein by this reference, as are all exhibits and schedules, and the parties
agree that the information recited above is true and correct. The Note, Senior
Loan Agreement, Security Agreement, Stock Pledge Agreement, Collateral
Assignment of Note, Mortgage, Guarantees, Subordination Agreement, Seller
Subordination Agreement, Collateral Assignment and any documents and instruments
executed in connection therewith and/or related thereto shall be individually
and collectively referred to as "Loan Documents." All terms not defined herein
shall have the meanings given them in the Loan Documents.
2. Acknowledgment. Subject to and as of the Closing Date,
Borrower, H. Belisle and B. Belisle, and each of them, acknowledge that they are
in default under the Loan Documents according to their terms and that all said
amounts have been accelerated and are immediately due and payable in full.
Borrower, H. Belisle and B. Belisle, and each of them, specifically acknowledge
and confirm that they have no valid offset or defense to the obligations
evidenced by the Loan Documents, nor do Borrower or H. Belisle or B. Belisle, or
any of them, have any valid claim or claims against Phoenix and/or Phoenix
Concept, and therefore Borrower, H. Belisle and B. Belisle, and each of them,
acknowledge, admit and confirm that they do not have any legal right or theory
on which to invoke or obtain legal or equitable relief, whether injunctive
relief or otherwise, in order to abate, postpone or terminate enforcement by
Phoenix and/or Phoenix Concept of the obligations under the Loan Documents and
specifically waive and relinquish any such right to legal or equitable relief to
cause any such abatement, postponement or termination of enforcement
proceedings.
3. Conditions Precedent. The "Closing Date" shall mean the date
on which Phoenix Concept shall have received all of the following documents,
agreements, certificates and other instruments, in a form satisfactory to
Phoenix and Phoenix Concept in their sole and absolute discretion, opinion and
judgment, or the following having occurred:
5
<PAGE>
A. The original Bill of Sale (as defined in Section 4
below) in the form attached hereto as Exhibit "D" and incorporated herein, fully
executed and acknowledged;
B. The original Assignment(s) of Cable Television
Franchise ("Assignment(s) of Franchises") in the form attached hereto as Exhibit
"E" and incorporated herein, fully executed and acknowledged;
C. The original Assignment(s) of Lease, Easement and
Pole Attachment Agreements (collectively the "Assignment(s) of Lease") in the
form attached hereto as Exhibit "F" and incorporated herein, fully executed and
acknowledged;
D. Applications for transfers and/or transfers of
certificates of title, registrations and/or evidence of ownership pertaining to
any vehicles owned by Borrower;
E. The original Warranty Deed ("Warranty Deed"), in the
form attached hereto as Exhibit "G" and incorporated herein, fully executed and
acknowledged;
F. The original Environmental Agreement and
Indemnification ("Environmental Indemnification"), in the form attached hereto
as Exhibit "H" and incorporated herein, fully executed and acknowledged;
G. The original Covenant Not to Compete (as defined in
Section 4 below), in the form attached hereto as Exhibit "I" and incorporated
herein, fully executed and acknowledged;
H. The original Subscriber Report and Receivables
Certificate (as defined in Section 6 below), in the form attached hereto as
Exhibit "J" and incorporated herein, fully executed and acknowledged;
I. Record ownership and title to the Sheridan Property
shall be transferred from James and Janice Woodrum to Phoenix Concept, free and
clear of all liens and encumbrances;
J. A resolution of Borrower and BCI evidencing approval
and authorization of the transactions contemplated hereunder and of the
execution, delivery and performance of this Agreement, and each of the documents
and instruments to be executed and/or delivered by Borrower or BCI, as the case
may be;
K. Evidence of the completion of all recordings and
filings as may be necessary or, in the opinion of Phoenix, necessary to complete
the transfer of all right, title and interest in the Collateral to Phoenix
Concept;
6
<PAGE>
L. Certificate(s) of good standing showing that
Borrower and BCI are in good standing under the laws of the state of
incorporation and/or formation and certificates indicating that Borrower and BCI
have qualified to transact business;
M. ALTA Policies of Title Insurance and endorsements in
a form acceptable to Phoenix Concept, showing Phoenix Concept's interest in the
Real Property and Sheridan Property, free and clear of liens and encumbrances,
except as provided for in Exhibits "W and "Y" attached hereto and incorporated
herein, to be obtained at the expense of Phoenix Concept; and
N. The favorable opinion of Buchanan Ingersoll, counsel
to Borrower, BCI, H. Belisle and B. Belisle, in form and substance satisfactory
to Phoenix and Phoenix Concept, as to such matters as they reasonably request.
4. Transfer of Collateral in Full Satisfaction of
Phoenix Obligations.
A. Subject to the terms and conditions of this
Agreement and in partial consideration of the satisfaction of the Phoenix
Obligations, upon the Closing Date, Borrower shall transfer to Phoenix Concept
all right, title and interest in the Collateral in full satisfaction of the
Phoenix Obligations. Borrower, H. Belisle and B. Belisle, and each of them,
specifically acknowledge and agree that such transfer of the Collateral in full
satisfaction of the Phoenix Obligations is a benefit to Borrower, H. Belisle and
B. Belisle, and each of them, and that Phoenix and Phoenix Concept are acting in
good faith. Borrower shall execute and deliver to Phoenix Concept that certain
bill of sale ("Bill of Sale"), Exhibit "D" hereto, which Bill of Sale provides,
in part, that Borrower sells, transfers, assigns, conveys and delivers to
Phoenix Concept all of its right, title and interest in the Collateral.
B. Borrower, H. Belisle and B. Belisle, and each of
them, hereby waive and renounce any right that they may have to notice of any
proposals to transfer the Collateral in full satisfaction of the Phoenix
Obligations, including, but not limited to, any notice required under Uniform
Commercial Code section 9505 and/or any notice requirement under California,
Indiana, or any other state law, and any notice requirement contained in the
Loan Documents, including, but not limited to, the Security Agreement, and agree
that any notice requirement shall be deemed to have occurred and been satisfied,
fulfilled, terminated and waived by Borrower, H. Belisle and B. Belisle, and
each of them. Borrower, H. Belisle and B. Belisle, and each of them, further
waive and renounce any right they may have to object to such transfer of the
Collateral to Phoenix Concept. Borrower, H. Belisle and B. Belisle, and each of
them, further waive and renounce any and all rights they may have to redeem
7
<PAGE>
the Collateral. Borrower, H. Belisle and B. Belisle, and each of them, hereby
specifically agree and acknowledge that all such waivers are made after default.
C. Borrower, H. Belisle and B. Belisle, and each of
them, hereby acknowledge and agree that Borrower has, without duress,
voluntarily and freely relinquished possession and control of the Collateral to
Phoenix Concept. Borrower, H. Belisle and B. Belisle, and each of them, hereby
consent and authorize Borrower to turn over possession of the Collateral to
Phoenix Concept upon the Closing Date. Phoenix, Phoenix Concept and their agents
and representatives shall be entitled, at all times and upon notice to Borrower
before the Closing Date, to visit and inspect the Collateral and to conduct such
tests and examinations as Phoenix and Phoenix Concept may wish, including, but
not limited to, an audit, at Phoenix Concept's expense, of the books and records
of Borrower.
D. Borrower, H. Belisle and B. Belisle, and each of
them, acknowledge and agree that Phoenix Concept has a legal right to accept
transfer of the Collateral and that such transfer shall remain, validly
perfected, proper in all respects and in full force and effect.
E. Borrower, H. Belisle and B. Belisle, and each of
them, agree not to object to the transfer of the Collateral to Phoenix Concept
nor to invoke or obtain legal or equitable relief, whether injunctive relief or
otherwise, in order to abate, postpone or terminate such transfer. Borrower, H.
Belisle and B. Belisle, and each of them, hereby relinquish any right they may
have to prevent the transfer of the Collateral to Phoenix Concept, and
acknowledge Phoenix Concept shall have an absolute right to accept transfer of
the Collateral in consideration of the forgiveness of the Phoenix Obligations.
F. Borrower, H. Belisle and B. Belisle, and each of
them, specifically acknowledge and agree that the transfer of the Collateral to
Phoenix Concept in full satisfaction of the Phoenix Obligations constitutes a
full and complete transfer of all right, title and interest in and to the
Collateral for fair and adequate consideration, in exchange for reasonably
equivalent value and made in good faith, by and between Borrower, BCI, H.
Belisle, B. Belisle, on the one hand, and Phoenix and Phoenix Concept, on the
other hand.
G. The transfer of the Collateral to Phoenix Concept
shall be immediate and absolute, and after the Closing Date neither Borrower nor
BCI nor H. Belisle nor B. Belisle, or any of them, shall have (and none of them
reserves) any right, title or interest of any kind whatsoever in or to the
Collateral, including, without limitation, any legal, beneficial or equitable
interest, all of which are negated on the Closing Date. Borrower, BCI, H.
Belisle and B. Belisle, and each of
8
<PAGE>
them, represent and warrant that the transfer of the Collateral is absolute and
that Borrower, BCI, H. Belisle and B. Belisle do not have equitable or other
liens on the Collateral and that the Bill of Sale, Assignment(s) of Franchises
and Assignment(s) of Lease are not in any way to be construed as an equitable or
other lien. Borrower, BCI, H. Belisle and B. Belisle, and each of them, hereby
waive and release (to the maximum extent permitted by law) any and all
equitable, legal, beneficial or other rights, titles or interests, if any, which
Borrower, BCI, H. Belisle, or B. Belisle, or any of them, might have or
otherwise have had after the Closing Date in connection with the Collateral.
H. Borrower, H. Belisle and B. Belisle, and each of
them, hereby represent and warrant that the value of the Collateral is
substantially less than the total outstanding balance of the Phoenix Obligations
and the Sellers Note. Borrower, H. Belisle, B. Belisle, Phoenix Concept and
Phoenix further specifically and individually agree that the valuation of the
Collateral has been fairly, justly and impartially established by appraisal and
in open negotiations between the parties, without duress of any kind, and as a
result of Borrower's voluntary offer to permit Phoenix Concept to strictly
foreclose upon the Collateral in exchange for the forgiveness of the Phoenix
Obligations, following the inability of Borrower, H. Belisle and B. Belisle and
their agents and representatives to locate a willing and able buyer in the open
market for the Collateral at a purchase price greater than or equal to the sum
of the Phoenix Obligations and the Sellers Note.
I. Subsequent to the Closing Date, Borrower shall
cooperate with Phoenix Concept to assist Phoenix Concept in obtaining written
consents, approvals, notifications, assignments and other documents and
agreements from various persons or entities with respect to (i) franchises,
substantially in the form of Exhibit "L" attached hereto and incorporated herein
(the "Franchise Consents"), and (ii) written consents in substantially the form
of Exhibit "M" attached hereto and incorporated herein, necessary for the
operation of the Systems, approvals and authorizations from the Federal
Communications Commission and agreements for the use of head-end sites and
public utility and municipal facilities, including, without limitation, all
necessary leases, pole attachment contracts, railroad crossing permits,
easements and use permits (the "Other Consents"). Borrower shall not incur any
expense in obtaining the Franchise Consents and the Other Consents, but shall
cooperate with Phoenix Concept in order to obtain the Franchise Consents and the
Other Consents.
J. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, hereby represent and warrant to Phoenix and Phoenix Concept, and
Phoenix and Phoenix Concept are relying thereon, that all of Borrower's debts,
obligations and liabilities, including, but not limited to, all wages, salaries,
bonuses, overtime pay, vacation pay, holiday pay, payroll taxes,
9
<PAGE>
employment fees, employment contracts, pension plan benefits, deferred
compensation plan benefits, hospitalization benefits, life benefits, disability
benefits, health insurance plans benefits or other employee benefits (except as
to Phoenix and/or Phoenix Concept) are set forth on Exhibit "N" attached hereto
and incorporated herein. Borrower agrees to pay in the normal course of business
all of the debts, obligations and liabilities listed on Exhibit "O" which are
due and owing up to the Closing Date. Borrower, H. Belisle and B. Belisle hereby
agree to indemnify, defend and hold Phoenix and Phoenix Concept harmless from
and against any and all suits, claims, liabilities, losses, damages and costs,
including attorneys' fees, interest and penalties, incurred by Phoenix and/or
Phoenix Concept as a result of or in connection with any liability for any
amount of such debts, obligations and liabilities (i) which are not paid by
Borrower as provided for on Exhibit "O"; and/or (ii) which are not disclosed on
Exhibit "N" attached hereto and incorporated herein.
K. Except for those liabilities expressly and
specifically set forth in Exhibit "Z" attached hereto and incorporated herein,
neither Phoenix nor Phoenix Concept directly or indirectly assume any liability
or responsibility for the performance, payment, discharge or other resolution of
any liability, obligation, indebtedness, litigation, action, proceeding,
contract, lien, security interest, encumbrance, claim or other problem or matter
which has been created or assumed by Borrower, or which Borrower is involved in
including, but not limited to, any wages, salaries or overtime pay, bonuses,
vacation pay or holiday pay, payroll taxes, employment fees, employment
contracts (or the retention or employment of any of Borrower's employees) and
other benefits owing from Borrower, including, but not limited to, pension
plans, deferred compensation plans, hospitalization, life, disability, health
insurance plan or other employee benefit plan. With respect to the liabilities
set forth in Exhibit "Z" attached hereto and incorporated herein, Phoenix
Concept agrees to pay in the ordinary course of its business the liabilities set
forth therein ("Paid Liabilities") and no others. Phoenix and Phoenix Concept
hereby agree to indemnify, defend and hold H. Belisle and B. Belisle harmless
from and against any and all suits, claims, liabilities, losses, damages and
costs, including attorneys' fees, interest and penalties, incurred by H. Belisle
and/or B. Belisle as a result of any failure of Phoenix and/or Phoenix Concept
to pay the Paid Liabilities in the manner set forth in this Section 4K.
L. In the event the Closing Date does not occur by
February 9, 1996, then this Agreement shall terminate and be without force and
effect, and Phoenix Concept reserves (and continues to have) all of its rights,
remedies and recourse, including, but not limited to, rights, remedies and
recourse against Borrower, H. Belisle and B. Belisle, and each of them. In that
event, Borrower, H. Belisle and B. Belisle, and each of
10
<PAGE>
them, shall remain liable and responsible on all of their liabilities and
obligations to Phoenix Concept. In the event this Agreement is set aside for any
reason whatsoever and/or Phoenix Concept is required to return or restore any of
the Collateral transferred to Phoenix Concept, or any portion thereof, then (i)
all liabilities, obligations and indebtedness under the Loan Documents shall
automatically be revived, reinstated and restored and shall exist as though such
payments had never been made to Phoenix and/or the transfer of the Collateral in
satisfaction of Phoenix Obligations never occurred; and (ii) all payments made
by Phoenix Concept and/or Phoenix to Borrower, H. Belisle and B. Belisle
hereunder, or any of them, shall forthwith be refunded and paid to Phoenix
and/or Phoenix Concept.
M. Borrower, H. Belisle and B. Belisle, and each of
them, acknowledge and agree that:
(1) As a consequence of the transfer of the Collateral
in full satisfaction of the Phoenix Obligations described in this Agreement,
Phoenix and/or Phoenix Concept must file a Form 1099, Acquisition or Abandonment
of Secured Property, with the Internal Revenue Service which (among other
things) may require Phoenix to state the actual fair market value of the
Collateral as agreed to and to report any forgiveness of debt to Borrower;
(2) The transfer of the Collateral in full satisfaction
of the Phoenix Obligations is a compromise by Phoenix and Phoenix Concept which,
among other things, considers the fact that Phoenix and Phoenix Concept was
entitled to be paid under the Loan Documents in cash, without Phoenix and
Phoenix Concept having to incur the significant carrying costs and risks
associated with the Collateral; and
(3) Each party accepts the risks associated with the
valuation of Borrower's assets and the Collateral and Borrower, H. Belisle and
B. Belisle, and each of them, shall have no right to any proceeds from any sale
made by Phoenix Concept of the assets of Borrower and/or the Collateral.
N. Borrower, H. Belisle and B. Belisle, and each of
them, confirm, acknowledge and agree that all of Borrower's right, title and
interest in and to the Collateral owned by Borrower upon the Closing Date is
being transferred to Phoenix Concept and that Borrower holds no right, title or
interest in the Collateral. Should any party discover subsequent to the Closing
Date that any property of Borrower was not included in the Collateral
transferred to Phoenix Concept, Borrower, BCI, H. Belisle and B. Belisle, and
each of them, hereby confirm, acknowledge and agree that they will immediately
take such action and execute such documents and instruments deemed necessary or
advisable by Phoenix and/or Phoenix Concept, in their sole and absolute
discretion, opinion and judgment, to transfer title to
11
<PAGE>
such omitted Collateral. BCI, Borrower, H. Belisle and B. Belisle, and each of
them, acknowledge and agree that they will indemnify and hold Phoenix and
Phoenix Concept harmless from any costs and expenses incurred by Phoenix and
Phoenix Concept including, but not limited to, attorneys' fees, in the event
that it is necessary for Phoenix Concept and/or Phoenix to take additional steps
to obtain title to such omitted Collateral.
O. As partial consideration for the transfer of the
Collateral in full satisfaction of the Phoenix Obligations, Borrower, BCI, H.
Belisle and B. Belisle, and each of them, upon the Closing Date, shall execute
and deliver that certain Covenant Not to Compete, in the form of Exhibit "I"
attached hereto and incorporated herein ("Covenant"), which Covenant is given as
partial consideration for the transfer of the Collateral to Phoenix Concept in
full satisfaction of the Phoenix Obligations.
P. Until the Closing Date, Borrower, BCI, H. Belisle
and B. Belisle shall continue to operate the Systems and maintain the assets of
the Borrower diligently and in the same manner as Borrower, BCI, H. Belisle and
B. Belisle have been operating the Systems and shall not destroy, tamper with,
modify or make unavailable any books and records relating to the operations of
the Systems. Borrower, BCI and H. Belisle hereby agree to terminate the
Management Agreement and any amendments, modifications, renewals or replacements
thereof, and any other management agreements, as of the Closing Date. Neither
Phoenix Concept nor Phoenix shall have any liability or responsibility of any
kind or nature for the performance, payment, discharge of the Management
Agreement or any other management agreements after the Closing Date.
Q. On or after the Closing Date, Phoenix Concept shall
operate the Systems in any manner it chooses in its sole and absolute
discretion, opinion and judgment and neither Borrower nor BCI nor H. Belisle nor
B. Belisle shall have any right to participate in the operation and/or
management of the Systems.
R. On the Closing Date, Borrower, BCI, H. Belisle and
B. Belisle, and each of them, shall deliver to Phoenix Concept all assets of the
Borrower, all books, records and other data in Borrower's or BCI's or H.
Belisle's or B. Belisle's possession relating to the Collateral, including, but
not limited to, all cash, monies in any bank, deposit, payroll and checking
accounts, customer lists, suppliers, cost sheets, employee lists, copy of
payroll records and accounting records, plans, strand maps, house counts,
maintenance records, market studies, copies of insurance policies, copies of any
and all correspondence, reports, memoranda, modifications and/or amendments by
and among Borrower, BCI, H. Belisle, B. Belisle and any telephone and/or utility
company franchising authority,
12
<PAGE>
the Federal Communications Commission ("FCC") or any other governmental
instrumentality and other documents reasonably requested by Phoenix Concept.
S. On or before ten days after the Closing Date,
Phoenix Leasing Incorporated, Borrower, B. Belisle and H. Belisle shall enter
into a stipulation in the form attached hereto as Exhibit "P" (the
"Stipulation") which shall provide that the Federal Action shall be dismissed
with prejudice and that all parties thereto shall bear their own attorneys' fees
and costs in connection with the prosecution and defense of the Federal Action.
Within ten days after the Stipulation has been executed, the Borrower, H.
Belisle and B. Belisle shall file a motion with the District Court in the
Federal Action, at their own expense, to obtain an order approving of the
Stipulation.
T. On (i) 180 days from the Closing Date; or (ii) ten
days after Phoenix Concept's receipt of all of the executed Franchise Consents,
whichever first occurs, Phoenix shall pay to H. Belisle and B. Belisle the total
sum of $200,000 in consideration for the releases and the Covenant provided by
them hereunder.
U. On or before ten days after the Closing Date,
Phoenix Concept shall (1) cancel and mark the Note "Paid in Full" and (2) return
to H. Belisle and B. Belisle their original Guarantees.
V. Subsequent to the Closing Date, but prior to
February 15, 1996, Borrower shall deliver to Phoenix Concept the fully executed
Discounted Payoff Agreement substantially in the form attached hereto as Exhibit
"K" and incorporated herein and satisfactory to Phoenix Concept in its sole and
absolute discretion, opinion judgment (the "Discounted Payoff Agreement"). Upon
the Noteholders timely and punctual performance of all terms, conditions and
acts required to be performed as set forth in the Discounted Payoff Agreement,
Phoenix Concept shall pay to Borrower the total sum of $100,000, in addition to
the $200,000 to be paid to H. Belisle and B. Belisle as provided for in Section
4T above, in consideration for Borrower's negotiation of the discounted payoff
of the Sellers Note provided for in the Discounted Payoff Agreement. In the
event the Noteholders do not timely and punctually perform all terms, conditions
and acts set forth in the Discounted Payoff Agreement and are in breach thereof
and/or do not execute the Discounted Payoff Agreement, then Phoenix Concept
shall have no obligation whatsoever to pay to Borrower the $100,000 provided for
in this Section 4.
V. On the Closing Date, Phoenix Concept shall acquire
record title and ownership of the Sheridan Real Property, free and clear of all
liens and encumbrances.
13
<PAGE>
5. Costs and Expenses.
Borrower, BCI, H. Belisle, B. Belisle, Phoenix Concept and
Phoenix shall each bear their own attorneys fees, costs and expenses arising out
of the negotiation, execution, delivery and performance of this Agreement, the
dismissal of the Action and/or the Federal Action, and the consummation of the
transactions contemplated hereby.
6. Security Deposits and Subscribers.
A. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, represent and warrant that as of December 1, 1995, the total deposits
for cable equipment and credit balances due and owing to Borrower's subscribers
are $ 4,325.00 ("Security Deposits"). Borrower, BCI, H. Belisle and B. Belisle,
and each of them, represent and warrant that prior to the Closing Date, they
shall not make any disbursements of the Security Deposits, except for legitimate
refunds made by Borrower to Borrower's subscribers under binding written
contracts between the parties.
B. Borrower shall execute, acknowledge and deliver that
certain subscriber report and receivables certificate which shall set forth the
total number of subscribers of the Borrower and receivables owed to the Borrower
as of the Closing Date ("Subscriber Report and Receivables Certificate"), in the
form of Exhibit "J", attached hereto and incorporated herein.
C. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, represent and warrant that Borrower possesses - 0 - FCC licenses or
registrations and no other FCC licenses or registrations.
7. Borrower's, BCI's, H. Belisle's and B. Belisle's
Representations and Warranties. Except as specifically and expressly set forth
in Exhibit "Q" attached hereto and incorporated herein, Borrower, BCI, H.
Belisle and B. Belisle, and each of them, represent and warrant to Phoenix and
Phoenix Concept as of the Closing Date, and Phoenix and Phoenix Concept are
relying thereon, as follows:
A. Phoenix Concept has a first-priority, perfected
security interest in the Collateral by virtue of the Loan Documents;
B. The security interest in the Collateral is valid,
binding and enforceable, in accordance with the terms of the Loan Documents.
C. The Collateral has not been pledged, hypothecated,
encumbered or conveyed, except as to Phoenix Concept pursuant to the Loan
Documents and is owned by Borrower, free and clear of all security interests,
claims, liens
14
<PAGE>
(voluntary or involuntary), encumbrances, judgment liens, leases and rights of
others except as to Phoenix Concept. Borrower, H. Belisle and B. Belisle, and
each of them, further represent and warrant that Borrower has the full right,
power and authority to transfer and deliver to Phoenix Concept, in accordance
with this Agreement, the Collateral free and clear of all liens, charges,
claims, equities, restrictions, encumbrances, preemptive and other similar
rights and that the transfer of the Collateral does not constitute a breach or a
violation of, or default under, any will, deed of trust, agreement or other
instrument by which they are bound.
D. The execution and carrying out of the provisions of
this Agreement and compliance with the provisions will not violate any provision
of law and will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Borrower pursuant to its articles of incorporation, bylaws, or any indenture,
mortgage, deed of trust, agreement or other instrument to which the Borrower is
a party or by which it is bound or affected;
E. Attached hereto and incorporated herein by this
reference as though set forth in full as Exhibit "R" are statement of income and
retained earnings of the Borrower for the period ending October 31, 1995 and a
balance sheet of the Borrower the period ending October 31, 1995 (collectively
referred to as "Financial Statements") which have been prepared by Borrower and
present fairly and accurately the financial condition and results of the
operation of the Borrower.
F. Attached hereto as Exhibit "S" and incorporated
herein by this reference is a true and complete list, as of the date hereof,
showing the names of all persons who are entitled to receive compensation from
the Borrower for the period ending October 31, 1995; the name of each bank in
which the Borrower has an account or safe deposit box, and the names of all
persons authorized to draw thereon or to have access thereto and the names of
all persons, if any, holding tax or other powers of attorney from the Borrower
and a summary of the terms thereof.
G. Except as to the extent reflected or reserved in the
Financial Statements attached hereto as Exhibit "R", the Borrower, as of the
date of the Financial Statements, had no liabilities of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
known or unknown, including without limitation, tax liabilities due or to become
due, and incurred in respect of or measured by the Borrower's income for any
period up to such date, arising out of transactions entered into, or any state
of facts existing prior thereto and/or personal property taxes and assessments
owed to any state and county taxing authority.
15
<PAGE>
H. Since October 31, 1995, the Borrower has not:
(i) Incurred any obligation or liability,
absolute or contingent, known or unknown, except current
liabilities incurred in the ordinary course of business;
(ii) Discharged or satisfied any lien or
encumbrance, or paid any obligation or liability, absolute or
contingent, other than current liabilities shown on the
Financial Statements, and current liabilities incurred since
such date in the ordinary course of business;
(iii) Declared or paid any dividends, made any
payment or distribution of any kind to shareholders, or
purchased or redeemed or otherwise acquired any shares of
capital stock;
(iv) Mortgaged, pledged, or subjected to lien,
charge or other encumbrance, any of its assets, tangible or
intangible;
(v) Sold or transferred any of its tangible
assets, or canceled any debts or claims, except in the
ordinary course of business;
(vi) Engaged in any transactions affecting its
business or properties not in the ordinary course of business,
or suffered any extraordinary losses or waived any rights of
substantial value;
(vii) Made or authorized any change in its
outstanding stock, or in its articles of incorporation or
bylaws;
(viii) Granted or agreed to grant any increase in
compensation to, or paid or agreed to pay any bonus to, or
made any similar arrangement with any of its directors,
officers, employees, or agents;
(ix) Suffered any damage, destruction, or loss
(whether or not covered by insurance) materially and adversely
affecting its properties or business; or
(x) Experienced any labor trouble, or any event
or condition of any character, materially and adversely
affecting its business or properties.
I. Since October 31, 1995, there have been no
material changes in the assets, liabilities, business, or condition of the
Borrower other than changes in the ordinary course of business, which changes
have not adversely affected its business, properties, prospects, or condition.
16
<PAGE>
J. Except in each case as listed in Exhibit "T",
attached hereto and incorporated herein by this reference, the Borrower is not a
party to any written or oral:
(i) Contract for the employment of any officer or
individual employee;
(ii) Contract with any labor union;
(iii) Contract for the purchase of materials,
supplies, services, machinery, or equipment involving payment
by the Borrower of more than $1,000.00 in each case, or more
than $5,000.00 in the aggregate;
(iv) Contract continuing over a period of more
than one year from the date hereof;
(v) Contract not terminable on thirty (30) days'
notice or less without liability on the part of the Borrower;
(vi) Distributor, sales agency, or advertising
contract, or contract for the sale of its products or
services;
(vii) Lease;
(viii) Contract with any subcontractor;
(ix) Bonus, pension, profit-sharing, retirement,
stock purchase, stock option, hospitalization, insurance, or
similar plan or practice, formal or informal, in effect with
respect to its employees or others; or
(x) Contract not made in the ordinary course of
business.
K. Except as set forth in the Recitals hereto, the
Borrower has performed all obligations required to be performed by it to date,
and is not in default under any contract, agreement, lease, commitment,
indenture, mortgage, deed of trust, or other document to which it is a party.
L. Borrower has filed all federal and state tax
returns which are required to be filed, and has paid all taxes which have become
due pursuant to such returns or pursuant to any assessment received by Borrower.
The amounts set up as a provision for taxes on the Financial Statements are
sufficient for the payment of all accrued and unpaid federal, state, county, and
local taxes of Borrower for the period ending on said date, and for all fiscal
years prior thereto. Borrower acknowledges that Phoenix and/or Phoenix Concept
do not have any knowledge of any tax deficiency proposed or threatened against
the Borrower.
17
<PAGE>
M. Borrower is not a party to any contract or
agreement, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, property, assets, operations, or
conditions, financial or otherwise, and Borrower is not a party to any contract
or agreement for the sale, transfer, assignment, or other disposition of the
Collateral, any of the assets of Borrower and/or any of the Systems.
N. Borrower has complied with, and is complying with,
all applicable laws, orders, rules, and regulations promulgated by any federal,
state, municipal, or other governmental authority relating to the operation and
conduct of the property and business of Borrower, and there are no material
violations of any such law, order, rule, or regulation existing or threatened.
Borrower has not received any notices of violation of any applicable zoning
regulation or order, or other law, order, regulation, or requirement relating to
the operation of its business or to its properties. Borrower, BCI, H. Belisle
and B. Belisle, and each of them, represent and warrant that they have conducted
an appropriate inquiry into previous uses and ownership of the Systems, the
property underlying the Systems and the Collateral, and after such inquiry, have
determined that, except as otherwise disclosed to Phoenix Concept in writing,
the Collateral or the property underlying the Systems has never been used by
Borrower, BCI, H. Belisle and B. Belisle and/or previous owners and/or operators
in the disposal of or to refine, generate, manufacture, produce, store, handle,
treat, transfer, release, process or transport any hazardous substance, except
in compliance with all applicable state and federal environmental laws, and
further represent and warrant that Borrower, BCI, H. Belisle and B. Belisle have
never received a summons, citation, notice, directive, letter or other
communication, written or oral, from the Environmental Protection Agency or
other federal, state, or local governmental agency or instrumentality concerning
any action or omission by Borrower, BCI, H. Belisle or B. Belisle, or any of
them, resulting in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying, dumping or otherwise disposing of hazardous substances in connection
with the Collateral, the Systems, or the property underlying the Systems or the
environment resulting in damages thereto or to fish, shellfish, wildlife, biota
or other natural resources.
O. Borrower has good and sufficient title in and to
all of the assets listed on the Financial Statements or acquired by it after
such date, other than inventories sold or otherwise disposed of in the ordinary
course of business subsequent to such date; and such assets are in each case
free and clear of all mortgages, liens, charges, encumbrances, equities,
pledges, conditional sales agreements, or claims of any nature whatsoever,
except as stated in the Financial Statements.
18
<PAGE>
P. The assets of Borrower are in good operating
condition and repair, and conform with all applicable ordinances, regulations,
zoning, and other laws.
Q. All accounts receivable reflected in the Financial
Statements are current and collectible, except to the extent of the reservation
for bad debts included therein, and to the extent that they have been collected
since the date of the Financial Statements. All accounts receivable arising
since the date of the Financial Statements, to the extent remaining unpaid as of
the date hereof, are current and collectible.
R. No representation or warranty contained herein,
and no statement made in any certificate or schedule furnished in connection
with or attached to this Agreement, contains any untrue statement of a material
fact or omits to state any material fact necessary to make any such
representation, warranty, or statement not misleading to a prospective purchaser
of all of the capital stock of Borrower.
S. Borrower and BCI are Delaware corporations, in
good standing and duly organized and existing under the laws of the State of
Delaware. Each person executing this Agreement and the documents and instruments
executed in connection with this Agreement in a representative capacity has been
duly authorized to execute said documents and instruments by all appropriate
action and is empowered to do so;
T. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, agree that they will not (i) take any action which would interfere with
the performance of this Agreement or the documents and instruments executed in
connection with this Agreement by any of the parties hereto, (ii) take any
action which would interfere with the efforts of Phoenix Concept to operate, use
or manage the Systems in any way Phoenix Concept sees fit, or (iii) take any
action to exercise rights, titles and interests of Phoenix Concept, which would
adversely affect any of the rights provided for herein;
U. This Agreement and the documents and instruments
executed in connection with this Agreement constitute legal, valid and binding
obligations of Borrower, BCI and H. Belisle and B. Belisle, and each of them, as
the case may be, to Phoenix Concept and Phoenix;
V. All actions, suits or proceedings pending, or to
the knowledge of Borrower, BCI, H. Belisle or B. Belisle, or any of them, after
due inquiry and investigation, threatened or affecting Borrower, BCI, H. Belisle
or B. Belisle, or any of them, are described in the litigation list ("Litigation
List") attached hereto as Exhibit "U" and incorporated herein. There are no
actions, suits or proceedings pending, or to the knowledge of Borrower, BCI, H.
Belisle or B. Belisle, or any of them, after due inquiry and investigation,
threatened against them or
19
<PAGE>
affecting Borrower, BCI, H. Belisle or B. Belisle, or actions, suits or
proceedings involving the validity or enforceability of this Agreement, the
documents and instruments executed in connection with this Agreement or any of
the Loan Documents or the priority of the liens thereof, at law or in equity, or
before or by any governmental agency;
W. Borrower, BCI, H. Belisle or B. Belisle, or any of
them, are not aware, after due inquiry and investigation, of any matter, defect
or problem existing with respect to the condition of the Systems, the Collateral
which has not been disclosed in writing to Phoenix Concept prior to the Closing
Date;
X. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, have consulted their independent tax advisors, counsel and/or
accountants to advise them with respect to the tax consequences of the transfer
of the Collateral to Phoenix Concept in full satisfaction of the Phoenix
Obligations and each is aware of such tax consequences. Neither Phoenix nor
Phoenix Concept shall have any responsibility or liability to Borrower, BCI, H.
Belisle or B. Belisle, or any of them, for the tax consequences to Borrower,
BCI, H. Belisle or B. Belisle, or any of them, which may result from the effects
of consummation of this Agreement or the timing thereof, and neither Phoenix,
Phoenix Concept nor any officer, employee, attorney or agent of Phoenix or
Phoenix Concept has made any representation or warranty of any kind whatsoever
or provided any advice to Borrower, BCI, H. Belisle or B. Belisle, or any of
them, with respect to the tax consequences, if any, to Borrower, BCI, H. Belisle
or B. Belisle, or any of them;
Y. Borrower, H. Belisle or B. Belisle, or any of
them, has not made or suffered any transfer which constitutes a fraudulent or
otherwise voidable transfer under Section 548 or any other provision of the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended from time
to time (the "Bankruptcy Code") or under any other applicable law. Borrower, H.
Belisle or B. Belisle, or any of them, have not made an assignment for the
benefit of creditors, or suffered or applied for, or consented to the
appointment of, any receiver, custodian or trustee for any of their property;
Z. Phoenix Concept may sell any or all of the
Collateral in any manner that it wishes without any notice to, or consent from,
Borrower, BCI, H. Belisle or B. Belisle, or any of them;
AA. Borrower owns the entire fee interest in and to
the Real Property, subject to no (1) purchase option, (2) lease or equitable
estate or ownership interest, (3) right to purchase or possession of any other
person or entity, or (4) other lien, claim, or encumbrance, except for those
lien claims or encumbrances set forth in Exhibit "W" attached hereto
20
<PAGE>
and incorporated herein. Borrower owns only the real property described in
Exhibit "C" and no other real property. BCI owns the entire fee interest in and
to the Sheridan Property, subject to no (1) purchase option, (2) lease or
equitable estate or ownership interest, (3) right to purchase or possession of
any other person or entity, or (4) other lien, claim, or encumbrance, except for
those lien claims or encumbrances set forth in Exhibit "Y" attached hereto and
incorporated herein.
BB. Borrower has an enforceable leasehold interest,
as lessee, in all of the Leases subject to the terms and conditions reflected in
each individual Lease. There are no rights or powers in any entity or person
which would terminate Borrower's leasehold interests and each said Lease is in
full force and effect;
CC. Borrower, BCI, H. Belisle or B. Belisle, or any
of them, have not filed any voluntary petition or have sought any other relief
under the Bankruptcy Code, or under any other state or federal law granting
relief to debtors. No involuntary petition has been filed against Borrower, BCI,
H. Belisle or B. Belisle, or any of them, by any person or entity under any
provision of the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy or reorganization or other relief for debtors;
DD. Neither Borrower nor BCI nor H. Belisle nor B.
Belisle is a "foreign person" and Borrower, BCI, H. Belisle and B. Belisle are
each a "United States Person" as such term is defined in Section 7701(a)(30) of
the Internal Revenue Code, as amended (Title 26 of the United States Code);
EE. Attached hereto as Exhibit "V" and incorporated
herein by this reference is a true and complete list of all of the personal and
real property assets of the Borrower;
FF. Borrower shall pay or will pay in full, to the
extent received by Borrower, all charges, bills and invoices for utilities,
labor, goods, materials and services of any kind relating to the Systems for the
period prior to the Closing Date as described in Exhibit "O" attached hereto;
GG. There are, and as of the Closing Date, there will
be, no pending or contemplated actions, suits, arbitrations, claims or
proceedings, at law or in equity, affecting all or any portion of the Systems,
Collateral and/or Stock. Borrower, BCI, H. Belisle and B. Belisle, or any of
them, do not know, after due inquiry and investigation, of the existence of any
threatened or contemplated actions, claims or proceedings or of the existence of
any facts which might give rise to such actions, claims or proceedings;
HH. Borrower, BCI, H. Belisle and/or B. Belisle, and
each of them, have no knowledge of, after due inquiry and
21
<PAGE>
investigation, and have not received notice to the contrary, of any plan, study
or effort which in any way would materially affect the use of the Systems, or
any portion thereof, for its present uses or any intended public improvements
which will result in any charge being levied against or any lien assessed upon
the Systems;
II. No notices of violations of governmental
regulations relating to the Systems and/or Collateral have been issued to or
entered against any Borrower or received by Borrower, BCI, H. Belisle or B.
Belisle, or any of them, and, to the best of their knowledge, after due inquiry
and investigation, no such violations exist. The present use and operation of
the Systems are authorized by and in compliance with all governmental
regulations. The improvements located at the Real Property and the real property
subject to the Leases are permitted, conforming structures under applicable
zoning and building laws and ordinances and the present uses thereof are
permitted, conforming uses under applicable zoning and building laws and
ordinances.
JJ. All licenses, approvals, permits and certificates
from the authorities or private parties necessary for the operation of the
Systems are possessed by Borrower.
KK. Borrower, BCI, H. Belisle and/or B. Belisle, and
each of them, have no knowledge, after due inquiry and investigation, and have
not received any notice that any taxes or that any special assessments or
charges have been levied against the Systems and/or Real Property or will result
from work, activities or improvements done to the Real Property by Borrower, H.
Belisle and/or B. Belisle, or any of them.
LL. Except as set forth in this Agreement, there will
be no change in the ownership, operation or control of the Systems and
Collateral from the date hereof until the Closing Date;
MM. To the best of Borrower's, BCI's, H. Belisle's
and B. Belisle's knowledge, after due inquiry and investigation, there are no
physical or mechanical defects or deficiencies in the condition of the Systems
and Collateral or any part thereof;
NN. To the best of Borrower's, BCI's, H. Belisle's
and B. Belisle's knowledge, after due inquiry and investigation, there are no
defects which will impair the present use and operation of the Systems, or any
portion thereof. To the best of Borrower's, BCI's, H. Belisle's and B. Belisle's
knowledge, after due inquiry investigation, the soil condition of the Real
Property is such that they will support all the improvements located thereon for
their foreseeable life without the need for unusual or new subsurface
excavations, fill, footings, or other installations;
22
<PAGE>
OO. Borrower, BCI, H. Belisle and B. Belisle, and
each of them, have not received any notices from any insurance company of any
defects or inadequacies in the Systems; and
PP. Borrower, BCI, H. Belisle and B. Belisle, or any
of them, have not entered into any contracts for the sale of the Systems, the
Stock and/or Collateral or any portion thereof or interest therein, nor do there
exist any rights of first refusal, options to purchase or offers by Borrower to
sell the Systems, the Stock and/or Collateral or any portion thereof.
All representations, warranties and covenants of the Borrower,
H. Belisle and B. Belisle shall survive the execution of this Agreement and the
consummation of the transfers provided for hereunder.
8. Phoenix's and Phoenix Concept's Representations and
Warranties. Phoenix and Phoenix Concept represent and warrant to Borrower, BCI,
H. Belisle and B. Belisle on the Closing Date, and they are relying thereon, as
follows:
A. Phoenix Leasing Incorporated is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and Phoenix Concept is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
with full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby; and
B. Phoenix Concept alone is the owner and holder of
the Loan Documents free and clear of all liens and Phoenix Concept's execution
of this Agreement does not require the authorization, consent, approval, order
or license of any third party.
9. Covenants. In addition to any other covenants given
by Borrower, BCI, H. Belisle and B. Belisle, or any of them, Borrower, BCI, H.
Belisle and B. Belisle, and each of them, will:
A. Execute any and all documents as Phoenix or
Phoenix Concept may request in connection with this Agreement;
B. Cooperate fully with and assist Phoenix with
respect to the transfer of the Collateral to Phoenix Concept;
C. Deliver to Phoenix Concept all books, records and
data and the operating systems and software necessary to maintain and retrieve
the books, records and data relating to the Collateral, including, but not
limited to the Systems; and
D. On or before the Closing Date, deliver the
Collateral and all assets of Borrower to Phoenix Concept.
23
<PAGE>
10. No Joint Venture, Management and Control. Notwithstanding
any provision of this Agreement, any documents or instruments executed in
connection with this Agreement and/or the Loan Documents:
A. Prior to the Closing Date of this Agreement,
Phoenix or Phoenix Concept has not and shall not be construed to have been a
partner, joint venturer, alter ego, manager, controlling person or other
business associate or participant of any kind of Borrower, BCI, H. Belisle or B.
Belisle, or any of them, or any other persons or entities;
B. Prior to the Closing Date of this Agreement,
Phoenix or Phoenix Concept shall not be deemed responsible to perform nor
participate in any acts, omissions or decisions of Borrower, BCI, H. Belisle or
B. Belisle, or any of them; and
C. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, do not have any claims, causes of action or defenses to their
respective obligations to Phoenix and/or Phoenix Concept based on any
allegations of management or control exercised by Phoenix and Phoenix Concept.
Borrower, BCI, H. Belisle and B. Belisle, and each of them, acknowledge and
agree that Phoenix and Phoenix Concept do not manage or control them in any way.
11. Release of Phoenix and Phoenix Concept.
A. Excepting only the obligations imposed by this
Agreement, Borrower, BCI, H. Belisle and B. Belisle, and each of them, do hereby
forever, finally, fully, unconditionally and completely indemnify, release,
relieve, acquit, remise, discharge, and hold harmless Phoenix Concept and
Phoenix and their subsidiaries, parents, holding companies, partners,
affiliates, successors, predecessors and assigns, and past and present
employees, officers, directors, agents, representatives, attorneys, accountants,
and shareholders, and each of them, each in their individual and representative
capacities, from those certain claims, debts, liabilities, demands, obligations,
promises, acts, agreements, liens, losses, costs and expenses (including,
without limitation, attorneys' fees), damages, injuries, suits, actions and
causes of action, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, contingent or fixed, at law or in equity based on,
arising out of or pertaining to, any such matters, facts, cases, events or
things alleged or set forth in Recitals A through R, inclusive, set forth above;
the origination and/or administration and/or servicing and/or enforcement of the
Loan Documents; all breaches or defaults under the Loan Documents; management
fees and/or monies owed by Borrower to H. Belisle and/or B. Belisle and/or BCI;
the transfer of the Collateral to Phoenix Concept in full satisfaction of the
Phoenix Obligations; and any claims arising under any provisions of the
Bankruptcy Code, including, but not limited to, claims based upon or arising out
of preferential
24
<PAGE>
transfers and/or fraudulent conveyances, or any part or portion thereof, all
individually and collectively.
B. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, acknowledge and agree that each has been informed by its attorneys and
advisors of, and each is familiar with and hereby expressly waives, any and all
rights under section 1542 of the California Civil Code, and any similar statute,
code, law or regulation of any state of the United States, or of the United
States, to the fullest extent that they may waive such rights and benefits.
Section 1542 provides:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
C. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, acknowledge that each is aware that he, she or it may hereafter
discover claims presently unknown or unsuspected, or facts in addition to or
different from those which each now knows or believes to be true, as to the
matters released herein. Nevertheless, it is the intention of Borrower, BCI, H.
Belisle and B. Belisle, and each of them, through this release, to fully,
finally and forever release all such matters, and all claims related thereto,
which do now exist, may exist or heretofore have existed. In furtherance of such
intention, the releases herein given shall be and remain in effect as full and
complete releases of such matters, notwithstanding the discovery or existence of
any such additional or different claims or facts related thereto by Borrower,
BCI, H. Belisle and B. Belisle, or any of them. In entering into this Agreement,
Borrower, BCI, H. Belisle, and B. Belisle, and each of them, do not rely upon
any statement, representation or promise of any other party or any other person
or entity, except as expressly stated in this Agreement.
D. In entering into this Agreement and releases
provided for herein, Borrower, BCI, H. Belisle and B. Belisle, and each of them,
assume the risk of any misrepresentation, concealment, or mistake, and if
Borrower, BCI, H. Belisle and B. Belisle, or any of them, should subsequently
discover that any facts Borrower, BCI, H. Belisle and B. Belisle, or any of
them, relied upon in entering into this Agreement were untrue or that any facts
were concealed from them, or that any understanding of the facts or of the law
was incorrect, Borrower, BCI, H. Belisle and B. Belisle, or any of them, shall
not be entitled to set aside this Agreement or the releases provided for herein
by reason thereof, regardless of any claim of fraud, misrepresentation, promise
made without the intention of performing it, concealment of fact, mistake of
fact or law or any other circumstances whatsoever. Borrower, BCI, H. Belisle
25
<PAGE>
and B. Belisle, and each of them, and their attorneys, have made such
investigation of the facts pertaining to this release as they deem necessary.
E. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, each individually and in their representative capacities, represent and
warrant that each is the sole and lawful owner of all right, title and interest
in and to every claim and other matter which each releases herein, and that each
has not heretofore assigned or transferred, or purported to assign or transfer,
to any individual, partnership, corporation, firm or entity any claims or other
matters herein released. Borrower, BCI, H. Belisle and B. Belisle, and each of
them, shall, jointly and severally, indemnify Phoenix and Phoenix Concept and
defend and hold them harmless against all claims based upon or arising in
connection with prior assignments or purported assignments or transfers of any
claims or matters released herein.
12. Release of Borrower, BCI, H. Belisle and B. Belisle.
A. Excepting the obligations, indemnities,
representations and warranties set forth in this Agreement and the documents and
instruments executed herewith, Phoenix and Phoenix Concept do hereby forever,
finally, fully, unconditionally and completely indemnify, release, relieve,
acquit, remise, discharge, and hold harmless Borrower, BCI, H. Belisle and B.
Belisle from those certain claims, debts, liabilities, demands, obligations,
promises, acts, agreements, liens, losses, costs and expenses (including,
without limitation, attorneys' fees), damages, injuries, suits, actions and
causes of action, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, contingent or fixed, at law or in equity, based on,
arising out of or pertaining to, any such matters, facts, causes, events or
things alleged or set forth in Recitals A through R, inclusive, set forth above.
B. Phoenix and Phoenix Concept acknowledge and agree
that they have been informed by their attorneys and advisors of, and each is
familiar with and, as to the matters released herein, hereby expressly waives,
any and all rights under section 1542 of the California Civil Code, and any
similar statute, code, law or regulation of any state of the United States, or
of the United States, to the fullest extent that it may waive such rights and
benefits. Section 1542 provides:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
26
<PAGE>
C. Phoenix and Phoenix Concept acknowledge that they
are aware that they may hereafter discover claims presently unknown or
unsuspected, or facts in addition to or different from those which they now know
or believe to be true, as to the matters released herein. Nevertheless, it is
the intention of Phoenix and Phoenix Concept through this release, to fully,
finally and forever release all such matters, and all claims related thereto,
which do now exist, may exist or heretofore have existed. In furtherance of such
intention, the releases herein given shall be and remain in effect as full and
complete releases of such matters, notwithstanding the discovery or existence of
any such additional or different claims or facts related thereto by Phoenix and
Phoenix Concept. In entering into this Agreement, Phoenix and Phoenix Concept do
not rely upon any statement, representation or promise of any other party or any
other person or entity, except as expressly stated in this Agreement.
D. Phoenix and Phoenix Concept represent and warrant
that they are the sole and lawful owners of all right, title and interest in and
to every claim and other matter which it releases herein, and that they have not
heretofore assigned or transferred, or purported to assign or transfer, to any
individual, partnership, corporation, firm or entity any claims or other matters
herein released. Phoenix and Phoenix Concept shall indemnify H. Belisle and B.
Belisle and defend and hold them harmless against all claims based upon or
arising in connection with prior assignments or purported assignments or
transfers of any claims or matters released herein.
13. Miscellaneous.
A. Warranty of Accuracy of Recitals. Borrower, BCI,
H. Belisle and B. Belisle, and each of them, hereby represent and warrant that
the material contained in the Recital paragraphs, Recitals A through T above,
has been reviewed in detail by them and they know of their own knowledge that
such statements are accurate.
B. Not a Novation. This Agreement and the documents
and instruments executed in connection with this Agreement are not to be
construed as a release or modification of any of the terms, conditions,
warranties, waivers or rights set forth in the Loan Documents, except as
provided by this Agreement.
C. Survival of Warranties. All agreements,
representations, and warranties made herein shall survive the execution and
delivery of this Agreement and the documents and instruments executed in
connection with this Agreement and will survive the transfer of the Collateral
to Phoenix Concept.
D. Failure or Indulgence Not Waiver. No failure or
delay on the part of Phoenix or Phoenix Concept in the
27
<PAGE>
exercise of any right, power, or privilege hereunder, under the documents or
instruments referred to herein, including the Loan Documents, shall operate as a
waiver thereof, and no single or partial exercise of any such power, right or
privilege shall preclude a further exercise of any right, power or privilege.
E. Notices. Except for any notices required
under applicable law or this Agreement to be given in another manner:
(i) Any notice to Borrower, BCI, H. Belisle
or B. Belisle shall be addressed as follows:
Helen and B. Richer Belisle
P. O. Box 1203
Coraopolis, PA 15108-1203
Fax No.: (412) 262-5518
With a copy to:
Buchanan Ingersoll
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
Attention: Hugh Van der Veer
Fax No.: (412) 562-1041
(ii) Any notice to Phoenix and/or Phoenix Concept
shall be addressed as follows:
PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, California 94901
Attention: Gary Martinez, Sr. Vice President
Fax No.: (415) 485-4551
With a copy to:
FRANDZEL & SHARE
A Law Corporation
100 Pine Street, 26th Floor
San Francisco, California 94111-5212
Attention: Robert B. Kaplan, Esq.
Fax No.: (415) 291-9153
All notices, requests, demands, directions, and other
communications provided for in this Agreement must be in writing and must be
mailed, telegraphed, delivered, or sent by telex, facsimile or cable to the
appropriate party at that party's respective address set forth above; provided,
however, that
28
<PAGE>
notice shall be deemed sufficient if actually received by the party regardless
of the mode of transmission or delivery.
F. Applicable Law. This Agreement and the documents
and instruments required to be executed herein, except as otherwise expressly
stated, and the rights and obligations of the parties hereto shall be governed
by and construed in accordance with the laws of the State of California, except
to the extent that Phoenix or Phoenix Concept has greater rights or remedies
under federal law, in which case such choice of California law shall not be
deemed to deprive Phoenix or Phoenix Concept of such rights and remedies as may
be available under federal law.
G. Assignability. This Agreement shall be binding
upon and inure to the benefit of the parties, and their respective successors
and assigns, except that Borrower's, BCI's H. Belisle's or B. Belisle's rights
are not assignable without the prior written consent of Phoenix Concept, which
Phoenix Concept may give or withhold in its sole and absolute discretion,
opinion and judgment. Borrower's, BCI's, H. Belisle's or B. Belisle's
obligations hereunder shall not be delegated, assumed or transferred.
H. Expenses and Fees. In the event that any party to
this Agreement employs attorneys to remedy, prevent or obtain relief from a
breach and/or default of this Agreement or the documents and instruments
executed in connection with this Agreement, or arising out of a breach and/or
default of this Agreement or the documents and instruments executed in
connection with this Agreement or in connection with, or contesting the validity
of, this Agreement, any of the terms, covenants, provisions, and/or any
conditions hereof or thereof or of any of the matters referred to herein, the
prevailing party shall be entitled to be reimbursed for all of its reasonable
attorneys' fees, whether or not suit is filed, and including, without
limitation, those incurred in each and every action, suit or proceeding, appeals
and petitions therefrom, and all fees and costs incurred by the prevailing
party. In the event any party to this Agreement employs attorneys in connection
with any bankruptcy proceeding, the prevailing party shall be entitled to be
reimbursed for all of its reasonable attorneys' fees, whether or not suit is
filed, including, without limitation, bankruptcy appeals and petitions
therefrom, and all fees and costs incurred by the prevailing party, as provided
for by applicable bankruptcy law. In the event that any party to this Agreement
obtains a judgment in connection with the enforcement or interpretation of this
Agreement, the prevailing party shall be entitled to recover from the losing
party all costs and expenses incurred in connection with the enforcement of such
judgment, including, without limitation, attorneys' fees, whether incurred prior
to or after the entry of the judgment. The provisions of this Section 13H. are
severable from the other provisions of this Agreement and the documents
29
<PAGE>
and instruments executed in connection with this Agreement, shall survive the
entry of any judgment referred to herein and shall not be deemed merged into any
judgment.
I. Modifications and Amendments. This Agreement may
only be modified or amended by written agreement duly executed by the party to
be charged.
J. Integration. This Agreement, the documents and
instruments referred to herein and the Loan Documents constitute the entire
agreement of the parties hereto relative to the subject matter hereof. This
Agreement, together with the documents and instruments executed in connection
with this Agreement and the Loan Documents, is intended by the parties as a
final expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or acquiescence in
a course of performance rendered under this Agreement shall not be relevant in
determining the meaning of this Agreement, even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection. No covenants, agreements, representations or warranties of any
kind whatsoever have been made by any party hereto, except as specifically set
forth in this Agreement and the documents and instruments referred to herein.
All prior discussions and negotiations have been and are merged and integrated
into and are superseded by this Agreement and the documents and instruments
executed in connection herewith.
K. Severability. If any provision of this Agreement
is found to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by severance from this Agreement.
L. Acknowledgment.
(1) Borrower, BCI, H. Belisle and B. Belisle, and
each of them, represent and warrant, and Phoenix and Phoenix Concept are relying
thereon, that all of the terms, conditions, waivers, warranties and promises set
forth in this Agreement are reasonable.
(2) Borrower, BCI, H. Belisle and B. Belisle, and
each of them, further represent and warrant, and Phoenix and Phoenix Concept are
relying thereon, as follows:
(A) Borrower, BCI, H. Belisle and
B. Belisle, and each of them, have: (i) received
30
<PAGE>
independent legal advice from attorneys of their choice
with respect to the advisability of executing this
Agreement and the documents and instruments executed in
connection with this Agreement; (ii) prior to the
execution of this Agreement and the documents and
instruments executed in connection with this Agreement,
reviewed this Agreement and the documents and
instruments executed in connection with this Agreement
with their respective attorneys; and (iii) carefully
discussed this Agreement and the documents and
instruments executed in connection with this Agreement
with their respective attorneys;
(B) Except as expressly stated in this
Agreement and the documents and instruments executed in
connection with this Agreement, neither Phoenix,
Phoenix Concept nor any other person or entity has made
any statement or representation to Borrower, BCI, H.
Belisle and B. Belisle, or any of them, regarding facts
which are relied upon by Borrower, BCI, H. Belisle and
B. Belisle, and each of them, in entering into this
Agreement and the documents and instruments executed in
connection with this Agreement;
(C) Borrower, BCI, H. Belisle and B. Belisle,
and each of them, do not rely upon any statement,
representation or promise of Phoenix or Phoenix Concept
or any other person or entity in executing this
Agreement and the documents and instruments executed in
connection with this Agreement, except as expressly
stated in this Agreement and the documents and
instruments executed in connection with this Agreement;
and
(D) The terms of this Agreement are
contractual and not a mere recital.
(3) This Agreement and the documents and instruments
executed in connection with this Agreement have been carefully read by, the
contents hereof are known and understood by, and they are signed freely and
without duress by Borrower, BCI, H. Belisle and B. Belisle, and each of them.
(4) This Agreement and the releases contained herein
are intended to be final and binding between the parties hereto, and each party
expressly relies on the finality of this Agreement and the documents and
instruments executed in connection with this Agreement as a substantial,
material factor inducing that party's execution of this Agreement and the
documents and instruments executed in connection with this Agreement.
31
<PAGE>
M. Rights of Third Parties. Except as expressly
provided herein, nothing contained in this Agreement or the documents and
instruments executed in connection with this Agreement is intended, nor shall it
be construed or deemed, to confer any rights, powers or privileges on any
person, firm, partnership, corporation or other entity not an express party
hereto or a successor-in-interest, or any person or entity being released
pursuant to Sections 11 and 12 above.
N. Construction. Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement. All representations, warranties conditions and covenants made in this
Agreement by Borrower, BCI, H. Belisle and B. Belisle, and each of them, are
made in their individual and representative capacities. All schedules and
exhibits to this Agreement, either as originally existing or as the same may
from time to time be supplemented, modified or amended, are incorporated herein
by reference. Any reference to this Agreement or any other document shall
include such document both as originally executed and as it may from time to
time be supplemented and modified. References herein to paragraphs, articles,
sections and exhibits shall be construed as references to this Agreement unless
a different document is named. The term "document" is used in its broadest sense
and encompasses agreements, certificates, opinions, consents, instruments and
other written material of every kind. The terms "including" and "include" shall
mean "including (include), without limitation." The obligations of Borrower,
BCI, H. Belisle and B. Belisle, and each of them, hereunder are joint and
several. Whenever the context so requires, the masculine gender shall include
the feminine or neuter, and the singular number shall include the plural, and
vice versa.
O. Counterparts. This Agreement may be executed in
one or more counterparts but all of the counterparts shall constitute one
Agreement. This Agreement shall not be effective and enforceable unless and
until it is executed by Phoenix and Phoenix Concept.
P. Neutral Interpretation. This Agreement and the
documents and instruments executed in connection with this Agreement constitute
the product of the negotiation of the parties hereto, and the enforcement hereof
shall be interpreted in a neutral manner and not more strongly for or against
any party based upon the source of the draftsmanship hereof.
Q. No Representations by Phoenix or Phoenix Concept.
Except as specifically and expressly set forth above, by accepting or approving
anything required to be observed, performed or fulfilled, or to be given to
Phoenix or Phoenix Concept pursuant hereto or pursuant to any of the documents
or instruments executed in connection with this Agreement or the Loan Documents,
Phoenix or Phoenix Concept shall not be deemed to have warranted or represented
the sufficiency, legality,
32
<PAGE>
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by Phoenix or
Phoenix Concept.
R. Authority to File and Record Notices. Borrower,
BCI, H. Belisle and B. Belisle, and each of them, irrevocably appoint, designate
and authorize Phoenix and Phoenix Concept (and any of their officers, employees
or agents) as their agent (said agency being coupled with an interest) to file
for record any notices that Phoenix and Phoenix Concept deem necessary or
desirable to protect their interests hereunder, under any documents or
instruments executed in connection with this Agreement or under the Loan
Documents, or to endorse the names of Borrower, H. Belisle and B. Belisle, or
any of them, on any checks, notes, acceptances, money orders, drafts, UCC
financing statements, deeds of trust, modifications, amendments, or other
documents or instruments, and to do all acts necessary to carry out the intent
of this Agreement.
S. No Admission of Liability. Nothing contained
herein shall be construed as an admission by Phoenix or Phoenix Concept of any
liability of any kind, all such liability being expressly denied.
T. Risk of Loss. Until the Closing Date, Borrower, H.
Belisle and B. Belisle, and each of them, shall have the risk of loss by reason
of fire, explosion, earthquake, windstorm, accident, flood, act of God, war,
seizure or activities of the armed forces, or other casualty, ordinary wear and
tear excepted, of any of the Collateral. If such loss or damage shall be
sufficiently substantial to preclude the resumption of normal operation or a
substantially complete restoration of service to more than 100 subscribers
within 60 days, Borrower shall immediately notify Phoenix Concept in writing.
Phoenix Concept, at any time within 10 days after receipt of such notice, as its
sole remedy may elect to either (i) accept the proceeds of any insurance
coverage, if any, relating to the Collateral, and consummate the transactions
contemplated by this Agreement or (ii) terminate this Agreement. In the latter
event, Phoenix and Phoenix Concept shall be fully released and discharged from
any and all obligations under this Agreement.
U. No Broker. There is no brokerage or sales
commission or finder's or other such fees to be paid in connection with the
closing of the transactions contemplated in this Agreement and/or any sale of
the Systems. Borrower, BCI, H. Belisle and B. Belisle, and each of them, agree
and warrant to Phoenix and Phoenix Concept and Phoenix and Phoenix Concept are
relying thereon, that no broker, finder or any other person can or will claim a
right to a commission, finder's fee or other compensation respecting the
transfer of the Collateral to
33
<PAGE>
Phoenix Concept and/or the transfer of the Collateral and Systems to a third
party. Borrower, BCI, H. Belisle and B. Belisle, and each of them, further
represent and warrant to Phoenix and Phoenix Concept, and Phoenix and Phoenix
Concept are relying thereon, that neither Borrower, nor H. Belisle nor BCI, nor
B. Belisle, nor any of them are entitled to any brokerage or sales commission or
finder's or other such fee to be paid in connection with the closing of the
transactions contemplated in this Agreement or any other transactions relating
to the sale of the Systems. Borrower, BCI, H. Belisle and B. Belisle, and each
of them, shall, jointly and severally, indemnify and hold Phoenix and Phoenix
Concept harmless from and against any loss, cost, expense, claim, cause of
action or liability of any kind (including, but not limited to, court costs and
attorneys' fees), resulting from any claim for a fee, commission or compensation
by any such broker, finder or other person in connection with the transfer of
the Collateral or any other transactions contemplated in this Agreement.
V. WAIVER OF RIGHT TO JURY TRIAL. BORROWER, BCI, H.
BELISLE AND B. BELISLE, AND EACH OF THEM, HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT (WHETHER ARISING UNDER THE CONSTITUTION OF THE
UNITED STATES, THE STATE OF CALIFORNIA OR ANY OTHER STATE, OR ANY FOREIGN
JURISDICTION, UNDER ANY STATUTES REGARDING OR RULES OF CIVIL PROCEDURE
APPLICABLE IN ANY STATE OR FEDERAL OR FOREIGN LEGAL PROCEEDING, UNDER COMMON
LAW, OR OTHERWISE) TO DEMAND OR HAVE A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE DOCUMENTS
AND INSTRUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR IN ANY WAY
CONNECTED WITH OR RELATED TO OR INCIDENTAL TO THE DISCUSSIONS, DEALINGS OR
ACTIONS OF BORROWER, BCI, H. BELISLE, B. BELISLE, PHOENIX AND/OR PHOENIX
CONCEPT, OR ANY OF THEM, (WHETHER ORAL OR WRITTEN) WITH RESPECT THERETO, OR TO
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH SUCH
PERSON HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY TRIAL COURT WITHOUT A JURY, AND THAT PHOENIX OR
PHOENIX CONCEPT MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF BORROWER'S, BCI'S, H. BELISLE'S AND B.
BELISLE'S WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER, BCI, H. BELISLE AND B.
BELISLE, AND EACH OF THEM, ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND EACH OTHER PROVISION OF EACH
OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR PHOENIX AND PHOENIX CONCEPT ACCEPTING THIS AGREEMENT. BY
WAIVING A JURY TRIAL, BORROWER, BCI, H. BELISLE AND B. BELISLE, AND EACH OF
THEM, INTEND CLAIMS AND DISPUTES TO BE RESOLVED BY A JUDGE ACTING WITHOUT A JURY
IN ORDER TO AVOID THE DELAYS, EXPENSE AND RISKS OF MISTAKEN INTERPRETATIONS
WHICH EACH PARTY ACKNOWLEDGES TO BE GREATER WITH JURY TRIAL THAN WITH NON-JURY
TRIALS.
34
<PAGE>
Initials: HPB HPB HPB BRB GM
--- --- --- --- ---
W. Confidentiality. Borrower, BCI, H. Belisle and B.
Belisle, and each of them, promise and agree to keep the terms of this Agreement
confidential, and not to reveal the terms, or any of the provisions of this
Agreement and agree to exercise the same degree of care to keep the terms and
provisions of this Agreement confidential that they would normally exercise for
their own confidential information.
X. Scope of and Termination of Indemnities. In the
event that it is necessary for Phoenix and/or Phoenix Concept to pursue any
claims against Borrower, BCI, H. Belisle and B. Belisle, or any of them, as a
result of any indemnities set forth in this Agreement in favor of Phoenix and/or
Phoenix Concept, Phoenix and Phoenix Concept agree that in the event they
determine, in their sole and absolute discretion, opinion and judgment, that
potential insurance coverage exists with respect to the claims which are the
subject of said indemnities, Phoenix and/or Phoenix Concept shall make a claim
on the insurance policy or policies. In the event that any such claim is not
paid within 90 days after it is made on the insurance policy or policies, then
Phoenix and/or Phoenix Concept shall therefore be free to exercise all rights
and remedies available at law, equity and otherwise to enforce the indemnities
provided in this Agreement without further notice to Borrower, BCI, H. Belisle
and B. Belisle, or any of them. All of the indemnities provided in this
Agreement by Borrower, BCI, H. Belisle and B. Belisle, and each of them, in
favor of Phoenix and Phoenix Concept, shall survive the closing of this
Agreement for a period of three years from the Closing Date and then expire,
unless prior to the end of such period, Phoenix and/or Phoenix Concept shall
have made a specific written claim or claims upon Borrower, BCI, H. Belisle and
B. Belisle, or any of them, based upon such indemnifications, whereupon such
indemnifications shall continue, but only with respect to such specific written
claim or claims; provided, however, in the event that Phoenix Concept closes a
sale of all of the Systems on or before two years from the Closing Date, then
the indemnities set forth in this Agreement shall survive the closing of this
Agreement for a period of two years from the Closing Date and then expire,
unless prior to the end of such two year period, Phoenix and/or Phoenix Concept
shall have made a specific written claim or claims upon Borrower, BCI, H.
Belisle and B. Belisle, or any of them, based upon such indemnifications,
whereupon such indemnifications shall continue, but only with respect to such
specific written claim or claims.
Y. Time of the Essence. The parties hereto expressly
acknowledge and agree that time is of the essence and that all deadlines of time
periods provided for under this Agreement are ABSOLUTE and FINAL.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto and their respective
attorneys have approved and executed this Agreement on the dates set forth
opposite their respective signatures.
Dated: December 29, 1995 CONCEPT CABLEVISION OF INDIANA
------------ INC., a Delaware corporation
By: /S/ Helen P. Belisle
---------------------
Its: President
Dated: December 29, 1995 /S/ Helen P. Belisle
------------ -------------------------------
HELEN P. BELISLE, an individual
Dated: December 29, 1995 /S/ B. Richer Belisle
------------ --------------------------------
B. RICHER BELISLE, an individual
Dated: December 29, 1995 BELISLE COMMUNICATIONS, INC.,
----------- a Delaware corporation
By: /S/ Helen P. Belisle
---------------------
Its: President
Dated: December 29, 1995 PHOENIX LEASING INCORPORATED,
----------- a California corporation
By: /S/ Gary Martinez
------------------
Its: Sr. V.P.
[SIGNATURES CONTINUED]
36
<PAGE>
Dated: December 29 , 1995 PHOENIX CONCEPT CABLEVISION
------------- INDIANA, L.L.C., a Delaware
limited liability company
By: PHOENIX LEASING INCORPORATED,
Its Manager
By: /S/ Gary Martinez
------------------
Its: Sr. V.P.
Dated: December 29 , 1995 PHOENIX LEASING CASH DISTRIBUTION
------------- FUND III, a California limited
partnership
By: PHOENIX LEASING INCORPORATED,
a California corporation, its
general partner
By: /S/ Gary Martinez
------------------
Its: Sr. V.P.
APPROVED AS TO FORM
AND CONTENT:
Dated: December 29, 1995
BUCHANAN INGERSOLL
By: /S/ Hugh Van Der Veer
---------------------
HUGH VAN DER VEER
Attorneys for Borrower, BCI,
H. BELISLE and B. BELISLE
Dated: December 29, 1995
FRANDZEL & SHARE
A Law Corporation
By: /S/ Robert B. Kaplan
--------------------
ROBERT B. KAPLAN
Attorneys for PHOENIX AND
PHOENIX CONCEPT
37
