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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): December 10, 1998
JAMES CABLE PARTNERS, L.P.
JAMES CABLE FINANCE CORP.
(Exact name of each Registrant as specified in its charter)
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Delaware 333-35183 and 333-35183-01 38-2778219
Michigan (Commission File Nos.) 38-3182724
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Nos.)
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710 N. Woodward Avenue, Suite 180, Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (248) 647-1080
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 10, 1998, pursuant to an Asset Purchase Agreement dated as of
June 24, 1998, James Cable Partners, L.P. ("James") purchased the Cable Systems
(as described below) of Fannon Cable T.V., Inc. for $7.65 million in cash. A
portion of the purchase price was funded with a $3.5 million draw against James'
existing $30 million revolving bank line of credit with Canadian Imperial Bank
of Commerce and NBD Bank (refer to Exhibit 4.3 included in the Registrants'
Registration Statement on Form S-4 (Registration No. 333-35183) and Exhibit 4.7
filed with the Registrants' Form 10-Q filed for the quarterly period ended June
30, 1998). The remaining $4.15 million of the purchase price was funded with
cash-on-hand.
The acquired cable television systems (individually a "Cable System" and
collectively the "Cable Systems") serve the communities of New Tazewell,
Tazewell, Harrogate and Cumberland Gap and certain unincorporated portions of
Claiborne County in the State of Tennessee.
Included in the assets purchased were all necessary franchises, the rights
to receive and distribute cable television signals to subscribers and all of the
equipment and other personal and real property necessary for this reception and
distribution of cable television signals to such communities. James intends to
continue to use the assets in the same manner and for the same purpose as
Fannon.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
Exhibit Reference
Number Exhibit Description
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2.1 Asset Purchase Agreement by and between Fannon
Cable T.V., Inc., a Tennessee Corporation, and
James Cable Partners, L.P., a Delaware Limited
Partnership, Dated as of June 24, 1998*
* Filed herewith
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.
JAMES CABLE PARTNERS, L.P.
By: James Communications Partners
General Partner
By: Jamesco, Inc.
Partner
Date: December 22, 1998 By: /s/ William R. James
------------------------------
William R. James
President
By: James Communications Partners
General Partner
By: DKS Holdings, Inc.
Partner
Date: December 22, 1998 By: /s/ Daniel K. Shoemaker
----------------------------
Daniel K. Shoemaker
President (Principal financial
officer and chief accounting
officer)
Date: December 22, 1998
JAMES CABLE FINANCE CORP.
Date: December 22, 1998 By: /s/ William R. James
------------------------------
William R. James
President
Date: December 22, 1998 By: /s/ Daniel K. Shoemaker
----------------------------
Daniel K. Shoemaker
Treasurer (Principal financial
officer and chief accounting
officer)
3
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Exhibit Index
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Exhibit No. Description
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2.1 Asset Purchase Agreement by and between Fannon Cable T.V.,
Inc. a Tennessee Corporation, and James Cable Partners, L.P.,
a Delaware Limited Partnership, Dated as of June 24, 1998*
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* Filed herewith
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
FANNON CABLE T.V., INC.,
A TENNESSEE CORPORATION,
AND
JAMES CABLE PARTNERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP,
DATED AS OF JUNE 24, 1998
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TABLE OF CONTENTS
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1. SALE AND PURCHASE OF ASSETS; CLOSING DATE...................................................................1
1.1. Sale of Assets....................................................................................1
1.2. Excluded Assets...................................................................................3
1.3. Liabilities.......................................................................................4
1.4. Purchase Price and Non-Competition................................................................4
1.5. Closing Date and Place............................................................................6
1.6. Closing Documents.................................................................................7
2. REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................................8
2.1. Organization and Good Standing....................................................................8
2.2. Authority Relative to this Agreement..............................................................8
2.3. Corporate Authority...............................................................................8
2.4. No Violation of Agreements, Etc...................................................................8
2.5. Compliance With Authorities.......................................................................8
2.6. Title to Assets...................................................................................9
2.7. Contracts.........................................................................................9
2.8. Easements, Rights-of-Way and Permits.............................................................10
2.9. Litigation.......................................................................................10
2.10. Liabilities.....................................................................................10
2.11. Condition of Equipment..........................................................................10
2.12. Cable Franchise.................................................................................11
2.13. Licenses, Permits and Authorizations............................................................11
2.14. Disclosure......................................................................................12
2.15. Compliance with Laws and Franchise..............................................................12
2.16. Absence of Certain Changes or Events............................................................12
2.17. Absence of Undisclosed Liabilities..............................................................12
2.18. Employees.......................................................................................12
2.19. Signal Carriage.................................................................................13
2.20. Additional Cable Systems........................................................................13
2.21. Insurance and Surety Bonds......................................................................13
2.22. Records.........................................................................................13
2.23. Bulk Sales......................................................................................13
2.24. Federal Aviation Authority......................................................................13
2.25. Rate Regulation.................................................................................14
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................................................14
3.1. Organization and Good Standing...................................................................14
3.2. Authority........................................................................................14
3.3. No Violation of Agreements, Etc..................................................................14
4. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.............................................................14
4.1. Representations and Warranties...................................................................15
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4.2. Performance......................................................................................15
4.3. Consents.........................................................................................15
4.4. Delivery of Closing Documents....................................................................15
4.5. Surveys and Title Insurance......................................................................15
4.6. Seller's Certificate.............................................................................15
4.7. Corporate Authority..............................................................................16
4.8. Obtaining Financing..............................................................................16
4.9. [INTENTIONALLY OMITTED.].........................................................................16
4.10. No Material Adverse Change......................................................................16
5. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS................................................................16
5.1. Representations and Warranties...................................................................16
5.2. Performance......................................................................................16
5.3. Delivery of Closing Documents....................................................................16
5.4. Purchaser's Certificate..........................................................................16
6. NON-PERFORMANCE; RISK OF LOSS...............................................................................16
6.1. Non-Performance..................................................................................16
6.2. Risk of Loss.....................................................................................17
7. ADDITIONAL UNDERTAKINGS.....................................................................................17
7.1. Costs and Expenses...............................................................................17
7.2. Sales Taxes......................................................................................17
8. INDEMNIFICATION BY SELLER AND PURCHASER.....................................................................17
8.1. Seller's and Shareholders' Indemnification.......................................................17
8.2. Purchaser's Indemnification......................................................................18
8.3. Procedure........................................................................................18
9. ACCESS TO INFORMATION.......................................................................................19
10. CONDUCT OF BUSINESS PENDING CLOSING........................................................................20
10.1. Affirmative Covenants...........................................................................20
10.2. Negative Covenants..............................................................................21
11. MISCELLANEOUS..............................................................................................22
11.1. Survival........................................................................................22
11.2. Successors and Assigns; Assignment..............................................................22
11.3. Further Assurances..............................................................................22
11.4. Governing Law...................................................................................22
11.5. Article Headings................................................................................23
11.6. Modification....................................................................................23
11.7. Syntax..........................................................................................23
11.8. Cumulative Rights; Waiver.......................................................................23
11.9. Counterparts....................................................................................23
11.10 Limitation on Recourse..........................................................................23
11.11. Delivery of Schedules and Exhibits..............................................................23
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SCHEDULES
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1.1(a) Real Estate
1.1(b) Improvements
1.1(c) Real Estate Leases as Landlord
1.1(d) Other Real Estate Interests
1.1(e) Plant, Equipment and Inventory
1.1(f) Franchises, Permits, etc.
1.1(g) Contracts, Leases and Agreements
1.1(h) Choses-in-Action
1.1(i) Intangibles
1.1(k) Personal Property
1.1(l) Vehicles and Equipment
1.1(m) Earth Station, Facility and Radio Licenses
1.2 Excluded Assets
1.3.2(b) Bulk Subscriber Agreements
2.5 FCC Licenses
2.7 Contracts
2.9 Litigation
2.13 Licenses, Permits and Authorizations
2.18 Employees and Compensation
2.19 Signal Carriage
2.21 Insurance and Bonds
2.24 FAA Approvals and Waivers
2.25 Rate Regulation
EXHIBITS
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1. Escrow Agreement
2. Non-Competition Agreement
3. Seller's Counsel's Opinion Letter
4. Seller's FCC Counsel's Opinion Letter
5. Purchaser's Counsel's Opinion Letter
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ASSET PURCHASE AGREEMENT
AGREEMENT made as of the 24th day of June, 1998, by and among FANNON
CABLE T.V., INC., a Tennessee corporation (the "Company"), Charles Chadwell,
Letton Bush, Hollis Bush, Robert Fannon, William Fannon, Jr., Robert Chad
Fannon, Michael Fannon, William Ryan Fannon and Jennifer Fannon (the
"Shareholders"); (the Company and the Shareholders, jointly and severally, are
each hereinafter referred to as "Seller"), and JAMES CABLE PARTNERS, L.P., a
Delaware limited partnership (hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS, Seller is currently the franchisee under cable television
franchises serving the communities of New Tazewell, Tazewell, Harrogate and
Cumberland Gap and certain unincorporated portions of Claiborne County in
Tennessee (hereinafter referred to as the "Franchises"), granting Seller the
right to construct, own, operate and maintain community antenna television
systems within certain portions of such counties and the surrounding communities
(the "Franchise Area"); and
WHEREAS, Seller currently owns or leases all of the equipment and other
tangible personal property and owns or leases real property used in the
operation of the cable television systems in the Franchise Area; and
WHEREAS, each of the above-described cable television systems
(individually a "System" and collectively the "Systems) are currently in
existence and in operation and under the ownership and control of Seller; and
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
Franchises, and all of the equipment and other personal and real property owned
by Seller and used or useful in connection with the operation of the Systems.
WHEREAS, the Shareholders will receive a direct benefit from, and have
an interest in, the acquisition contemplated under this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. SALE AND PURCHASE OF ASSETS; CLOSING DATE
Subject to and in reliance upon the representations, warranties and
agreements hereinafter set forth, and subject to the terms and conditions
hereinafter set forth:
1.1. Sale of Assets. Seller shall sell, transfer, assign and
deliver to Purchaser and Purchaser shall purchase and acquire from Seller on the
Closing Date (as hereinafter defined), all
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on the terms and conditions hereinafter set forth, (i) the Systems and the
Franchises and (ii) all of Seller's right, title, interest and benefit, of
whatever kind or nature, real, personal and mixed, tangible and intangible,
whether or not reflected on Seller's books and records, known, accrued,
absolute, contingent or otherwise, in and to the assets, properties and rights
(but excluding those assets described in Section 1.2 hereof) used and useful in
connection with the operation of the Systems, all as the same exist as of the
date hereof, free and clear of and expressly excluding all debts, liabilities,
obligations, taxes, liens and encumbrances of any kind, character or
description, whether accrued, absolute, contingent or otherwise and whether or
not reflected or reserved against in the balance sheets, books of account and
records of the Seller, except as otherwise expressly provided in Section 1.3
hereof, including without limitation:
(a) All the real property currently owned or leased
by the Seller, as described (including a legal description) in Schedule 1.1(a)
attached hereto, together with any real property acquired by the Seller, whether
by ownership or lease, between the date hereof and the Closing Date (the "Real
Estate");
(b) All interests of the Seller in any and all
buildings, structures, cable television towers and fixtures, and other
improvements now or hereafter actually or constructively attached to the Real
Estate, and all modifications, additions, restorations or replacements of the
whole or any part thereof (the "Improvements"), as described in Schedule 1.1(b)
attached hereto;
(c) All interests of the Seller as landlord (whether
named as such therein or by assignment or otherwise) in all leases and
subleases, if any, of the Real Estate and the Improvements now existing or at
any time hereafter made, and any and all amendments, modifications, supplements,
renewals and extensions thereof, together with all rents, royalties, security
deposits, revenues, issues, earnings, profits, income and other benefits of the
Real Estate or the Improvements now due or hereafter to become due with respect
to the Real Estate or the Improvements or any part thereof, as described in
Schedule 1.1(c) attached hereto;
(d) All of the Seller's right, title and interest in
and to all streets, roads and public places, open or proposed, and all
easements, licenses and rights of way, public and private, tenements,
hereditaments, rights and appurtenances, now or hereafter used in connection
with the System, or belonging, incident or appertaining to, the Real Estate or
the Improvements (the "Interests"), each of which is described in Schedule
1.1(d) attached hereto;
(e) All property, plant, equipment, fixtures,
furnishings, machinery, antennae installations, inventory, cable strand,
converters, amplifiers, house drops, towers, and other property of the Seller,
as described in Schedule 1.1(e) attached hereto. The parties agree that they
shall jointly participate in preparing Schedule 1.1(e) in order to avoid
oversight or error in listing these assets to be acquired by Purchaser;
(f) All rights of the Seller under any franchise,
permit, authorization, consent or license, as described in Schedule 1.1(f)
attached hereto;
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(g) All rights of the Seller under any contract,
lease or other agreements, written or oral (including, without limitation,
unfilled purchase orders, orders for service, headend leases, pole attachment
agreements and any other agreements relating to property, plant, equipment or to
real property, but excluding Seller's affiliate agreements/programming contracts
with its cable programming providers), as described in Schedule 1.1(g) attached
hereto;
(h) All choses-in-action of Seller, as described in
Schedule 1.1(h) attached hereto;
(i) All patents, copyrights, trademarks, trade
names, service marks and common law property rights owned by Seller, the right
to the use of Seller's name and all assumed names of Seller, and all of the
rights associated therewith (including any and all applications, registrations,
extensions and renewals thereof), as described in Schedule 1.1(i) attached
hereto;
(j) All schematics, blueprints, engineering
specifications, data, other technical information concerning the System, and all
maps, plans, diagrams, billing service reports, computer master tapes, books and
records owned by Seller and relating to the operation of the Systems;
(k) All office furnishings, computer software and
other miscellaneous personal property of the Seller, as described in Schedule
1.1(k) attached hereto;
(l) All automotive equipment and motor vehicles
owned by the Seller and utilized in the System by Seller, as described in
Schedule 1.1(l) attached hereto;
(m) All earth stations and other auxiliary
facilities owned by Seller, and all commercial radio licenses, and all
applications therefore, as described in Schedule 1.1(m) attached hereto;
(n) All subscriber lists, accounts receivable,
prepaid expenses, deposits, and subscription agreements and rights with respect
thereto of the Seller; provided, however, that Purchaser agrees to comply with
applicable right of privacy laws with respect thereto; and
(o) All other assets of whatsoever nature and
wheresoever located owned by Seller and used in connection with the design,
construction or operation of the Systems, including all goodwill of the Seller
associated with, or pertaining to, the ownership and operation of the Systems.
All of the foregoing business, assets, properties and rights to be
transferred to Purchaser hereunder are collectively referred to herein as the
"Transferred Assets."
1.2. Excluded Assets. Anything in the foregoing to the
contrary notwithstanding, there shall be excluded from the Transferred Assets
(i) cash, (ii) Seller's affiliate agreements/programming contracts with its
cable programming providers, and (iii) such other assets as are listed on
Schedule 1.2 attached hereto.
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1.3. Liabilities. On the Closing Date, Purchaser shall assume
and agree to perform and discharge the following, but only the following, as
they become due for all periods from and after the Closing Date, to the extent
not theretofore performed or discharged whether or not disclosed in this
Agreement, any Schedule or Exhibit:
1.3.1. All obligations arising from and after the
Closing Date under the Franchises, and those permits, ordinances, licenses,
leases, rights-of-way, easements, pole attachment agreements, cable television
service agreements and other agreements in existence on the Closing Date as set
forth on Schedules 1.1(c), 1.1(d), 1.1(f), 1.1(g) and 1.1(m) attached hereto
unless otherwise noted on such Schedules;
1.3.2. All obligations of Seller from and after the
Closing Date under:
(a) all written residential and business subscriber
agreements with customers of the Systems, and
(b) all written or oral bulk subscriber agreements,
a list of all such agreements referred to in this subsection 1.3.2(b) being set
forth and categorized by System on Schedule 1.3.2(b) attached hereto; and
1.3.3. All obligations of Purchaser arising out of
the adjustments to be made pursuant to Section 1.4.2 hereof. All other
liabilities and obligations of Seller, whether absolute, contingent or
otherwise, shall be paid, performed and discharged by Seller.
1.4. Purchase Price and Non-Competition.
1.4.1. The total purchase price (the "Purchase
Price"), to be increased or decreased as set forth in Section 1.4.2 hereof, for
the purchase and sale of the Transferred Assets, shall be the amount of Seven
Million Six Hundred Fifty Thousand Dollars ($7,650,000). The Purchase Price
shall be payable at Seller's option by certified funds or wire transfer of
immediately available funds to a bank account designated by Seller, as follows:
(a) The sum of Two Hundred Fifty Thousand Dollars
($250,000) (the "Escrow Payment") shall be deposited in escrow with First
American Bank of Knoxville, Tennessee (hereinafter sometimes referred to as the
"Escrow Agent") on the Closing Date, to be held in escrow ("Escrow Fund")
pursuant to an Escrow Agreement among Seller, Purchaser and the Escrow Agent in
the form annexed hereto as Exhibit 1.
(b) Purchaser shall pay to the Company and the
Shareholders the aggregate sum of Three Hundred Thousand Dollars ($300,000) on
the Closing Date by certified funds or wire transfer of immediately available
funds for a covenant not to compete in the cable television business, which
covenant shall be substantially in the form annexed hereto as Exhibit 2. The
covenant not to compete shall, among other things, restrict the Company and the
Shareholders from owning or being employed by any entity involved in video
program distribution for a five year period after the Closing Date. The covenant
not to compete shall
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apply only to those counties and those counties adjacent to the counties in
which the Company currently does business.
(c) At the Closing the balance of Seven Million One
Hundred Thousand Dollars ($7,100,000), increased or decreased by adjustments set
forth in Sections 1.4.2 and 1.4.3 hereof, shall be paid at Seller's option by
certified funds or wire transfer of immediately available funds to a bank
account designated by Seller.
(d) The parties agree that the purchase price of
Seven Million Six Hundred Fifty Thousand Dollars ($7,650,000) will be allocated
as follows:
Three Hundred Thousand Dollars will be allocated to the
Covenant Not to Compete described in subparagraph (b) above;
the remaining balance of Seven Million Three Hundred Fifty
Thousand Dollars ($7,350,000) will be allocated in amount
equal to the financial book value of the Seller's tangible
personal and real property assets valued as of Closing; and
the remaining balance will be allocated to goodwill. Further,
the parties agree that they shall prepare and file those
federal tax forms required under Section 1060 of the Internal
Revenue Code in compliance with the foregoing allocation of
purchase price.
1.4.2. The Purchase Price shall be adjusted within
One Hundred Twenty (120) days after the Closing Date, as follows:
(a) Credits to Purchaser for prepaid subscription
revenues that relate to periods or services provided from and after the Closing
Date and subscriber deposits.
(b) Credits to Seller for all accounts receivable
that relate to current subscribers.
(c) Proper allocation in accordance with applicable
accounting, billing or reporting periods, as the case may be, of all franchise
or other fees, pole and other rental charges, property taxes and assessments,
utility charges, rents payable, and any other fees or charges that are properly
allocable between Seller and Purchaser.
1.4.3. Purchaser and Seller agree to use their best
efforts to adjust the Purchase Price as provided in Section 1.4.2 so that the
purchase price described in subsection 1.4.1(c) shall be known and shall be paid
to Seller at Closing, including any increased amounts in excess of the Seven
Million One Hundred Thousand Dollars ($7,100,000) described in subsection
1.4.1(c) if it is determined by the parties prior to Closing that such
additional amounts are due Seller. Alternatively, the parties will attempt to
determine prior to Closing any amounts due to Purchaser from the Escrow Fund
described in subsection 1.4.1(a) and pay it as soon as possible after Closing.
However, the parties acknowledge that all adjustments cannot be accomplished
prior to Closing so that it may be necessary for Seller to receive subsequent
payments from Purchaser, and for Purchaser to receive distributions from the
Escrow Fund. To that end, within one hundred twenty (120) days after the Closing
Date, Purchaser shall deliver to Seller a certificate (the "Closing
Certificate") to be signed by Purchaser setting forth any changes in the
adjustments made pursuant to Section 1.4.2, together with a copy of any working
papers or
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other documents relating to such Closing Certificate and such other
supporting evidence as Seller may reasonably request. If Seller shall conclude
that the Closing Certificate does not accurately reflect the changes to be made
to the adjustments made pursuant to Section 1.4.2 above, Seller shall, within
thirty (30) days after its receipt of the Closing Certificate, provide to
Purchaser its written statement of any discrepancy or discrepancies believed to
exist. William R. James, on behalf of Purchaser, and William Fannon, on behalf
of Seller (or their respective designees), shall attempt jointly to resolve the
discrepancy within thirty (30) days after receipt of Seller's discrepancy
statement, which resolution, if achieved, shall be binding upon all parties to
this Agreement and not subject to dispute or review. If William R. James and
William Fannon (or their respective designees), cannot resolve the discrepancy
to their mutual satisfaction within such thirty (30) day period, Purchaser and
Seller shall, within the following ten (10) days, jointly designate a nationally
known independent public accounting firm to be retained to review the Closing
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Seller and Purchaser. Such firm shall report its conclusions
in writing to Purchaser and Seller and such conclusions as to adjustments
pursuant to Section 1.4.2 above shall be conclusive on all parties to this
Agreement and not subject to dispute or review. After adjustment as appropriate
with respect to the amount of the aforesaid adjustments paid or credited, if
Purchaser is determined to owe an amount to Seller, Purchaser shall pay such
amount thereof to Seller, and if Seller is determined to owe an amount to
Purchaser, Seller shall pay such amount thereof to Purchaser, which amount shall
either be debited from the Escrow Fund (as defined in Section 1.4.1(a)), or be
paid directly by the Seller, at the discretion of Purchaser.
1.4.4. Any remaining amounts held in the Escrow
Fund, less any amounts to which Purchaser may be entitled under the terms of
this Agreement or the Escrow Agreement, shall be distributed to Seller (i) on
the one hundred eightieth (180th) day from the Closing Date if there remain no
claims pending under the Escrow Agreement or (ii) if there remain pending any
claims under the Escrow Agreement, the date on which such claims are finally
resolved.
1.5. Closing Date and Place.
1.5.1. The date of the closing hereunder shall take
place on June 30, 1998 or such earlier or later date (the "Closing Date")
established in accordance with this Section 1.5. Closing hereunder (the
"Closing") shall take place at 10:00 a.m. at Seller's counsel's offices, unless
otherwise mutually agreed to by the parties.
1.5.2. If at any time prior to the Closing Date all
of the conditions contained in Section 4 have been met by Seller or waived by
Purchaser, Purchaser may give notice to Seller of the Closing. Such notice shall
state a date and time, such date to be not fewer than two (2) days from the date
of the notice, for the Closing to occur.
1.5.3. If on the Closing Date all of the conditions
precedent contained in this Agreement have not been met or waived, then the
Closing shall be deferred until all such conditions have been met or waived but
not to a date later than September 30, 1998. Upon the
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last of the conditions being so met or waived, Seller or Purchaser may give
notice to the other of the Closing, which notice shall state a date and time
within two (2) days from the date of such notice, for the Closing to occur. At
any time after September 30, 1998, Seller or Purchaser may terminate this
Agreement by notice to the other party.
1.6. Closing Documents. At the Closing the following documents
shall be delivered, unless delivery at Closing of certain documents is otherwise
waived by Purchaser in writing:
1.6.1. Seller shall deliver the consents in a form
mutually agreed to by Purchaser and Seller of the Franchise authorities to the
transfer to Purchaser of the applicable Franchise listed on Schedule 1.1(f),
regardless of whether the Franchises may by their terms be assigned without the
consent of the Franchise authorities and without adverse change to the terms and
conditions of the Franchises. Seller agrees to give Purchaser written notice, at
least five (5) days in advance, of any meeting, hearing or conference with any
Franchise authority in which transfer of such will be discussed. In order to
secure the approval to the assignment of the Franchises listed on Schedule
1.1(f), Seller shall proceed immediately in good faith to prepare, file and
prosecute such applications as may be necessary to effectuate approval of the
appropriate authorities. Purchaser shall cooperate with Seller in the
preparation, filing and prosecution of such applications and agrees to furnish
all reasonable information required by said authorities. Both parties agree to
use their best efforts to effectuate such approvals.
1.6.2. Seller shall deliver such warranty deeds,
bills of sale with warranty of ownership, assignments, endorsements, checks and
other good and sufficient instruments of sale, transfer and conveyance as shall
be necessary, in the reasonable opinion of counsel to Purchaser, to vest in the
Purchaser good and marketable title to the Transferred Assets, free and clear of
any claims, liens, encumbrances, security interests, mortgages and restrictions
of any kind whatsoever.
1.6.3. Seller shall deliver all existing customer
lists, employee lists, accounts receivable lists, strand maps, construction and
system design documents and other documents reasonably requested by the
Purchaser relating to the Seller's business with respect to the Systems.
1.6.4. Seller shall deliver the consent of any and
all authorities or other appropriate third parties to the transfer or assignment
(without adverse change in terms and conditions to those now held by Seller) of
any microwave systems, earth stations, contracts, franchises, agreements,
permits, licenses, rights-of-way, pole attachment agreements, easements, leases
and other rights, properties and interests listed in any schedule to this
Agreement as required by law or agreement; provided, however, that Seller shall
not be required to deliver any such consent with respect to Seller's affiliate
agreements/programming contracts with its cable programming providers.
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1.6.5. The parties shall execute and deliver to each
other such documents as may be required under the Escrow Agreement among Seller,
Purchaser and the Escrow Agent in the form annexed hereto as Exhibit 1.
1.6.6. The Company, the Shareholders, and Purchaser
shall execute and deliver to each other a Non-Competition Agreement in the form
annexed hereto as Exhibit 2.
1.6.7. Seller and Purchaser shall each deliver to
the other an opinion of their respective counsel or counsels in substantially
the forms annexed hereto as Exhibits 3, 4 and 5.
1.6.8. Seller and Purchaser shall execute and
deliver all such other documents and instruments as are reasonably required by
their respective counsel to consummate the transactions contemplated by this
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants and agrees, knowing and intending that
Purchaser shall rely thereon in entering into this Agreement and performing the
obligations on its part to be performed hereunder, that the following
representations and warranties are true and correct to the best of Seller's
knowledge on the date hereof.
2.1. Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and is duly qualified to transact business in the State of
Tennessee and in all other states where, due to the business or conduct of, or
property owned by, the Seller, such qualification is required by applicable law.
2.2. Authority Relative to this Agreement. Except as set forth
in Section 2.5 below relative to compliance with authorities, Seller has the
power and authority to conduct all of its business activities, to own and lease
all of the properties owned and leased by it in the places where such properties
are now owned and leased and to carry on its businesses as such businesses are
now conducted.
2.3. Corporate Authority. The execution of this Agreement by
Seller and its delivery to Purchaser has been duly authorized and approved by
the Board of Directors and Shareholders of Seller.
2.4. No Violation of Agreements, Etc. This Agreement
constitutes a valid and binding obligation of Seller enforceable against Seller
in accordance with its terms, and this Agreement and all transactions
contemplated hereby will not result in the violation of any terms of the
Articles of Incorporation or By-Laws of Seller or to the best of Seller's
knowledge, any law or agreement to which Seller is a party or by which it is
bound, subject to Seller obtaining the consents required pursuant to the terms
of this Agreement.
2.5. Compliance With Authorities. Except as set forth
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herein, to the best of its knowledge, Seller is, and on the Closing Date Seller
will be, in compliance with the terms, conditions, rules and regulations of the
local franchising authorities' authorizations for the Systems. Seller is, and on
the Closing Date Seller will be, in substantial compliance with the rules and
regulations of the Federal Communications Commission ("FCC"). Although Seller
has filed certain notices and reports, statements and forms required to be filed
with the FCC with respect to the Systems, Seller is unable to verify that all
required notices and reports, statements and forms required to be filed with the
FCC have in fact been filed. Prior to Closing Purchaser will have adequate
opportunity to inspect Seller's equipment and make necessary measurements at
Purchaser's unfettered discretion and shall make its own determination regarding
signal leakage. Attached hereto as Schedule 2.5 is a list of all FCC licenses
related to the Systems, specifying (i) the type of license, (ii) the date of
grant and, (iii) the date of expiration. Seller has not filed any notice,
report, or supplement required to be filed with the United States Copyright
Office with respect to the Systems or paid fees required to be paid with respect
to the Systems under the terms of the United States Copyright Act of 1976
(Public Law 94-553) during the three years immediately preceding the execution
and delivery of this Agreement. To the best of its knowledge, Seller has
obtained all required certificates, permits, and clearances from governmental
agencies with respect to all of Seller's towers, earth stations, business
radios, and frequencies carried by the Systems, except that Seller cannot verify
that all aeronautical frequency carriage notices/reports have been filed with
the FCC. Further, Seller has not elected to obtain a domestic fixed satellite
receive-only earth station authorization from the FCC for any such facilities
utilized by the Systems. True copies of all notices and reports, statements and
forms which Seller believes have been filed with the FCC and which have been
located by Seller are set forth in Schedule 2.5. To the best of its knowledge,
Seller has filed every annual FCC employment report for each of Seller's
employment units. Except as set forth above, to the best of its knowledge,
Seller is in compliance with the Cable Communications Policy Act of 1984, the
Cable Television Consumer Protection and Competition Act of 1992, and the
Telecommunications Act of 1996, including without limitation those provisions
concerning commercial use, privacy, lockboxes and equal employment opportunity.
2.6. Title to Assets. On the Closing Date, Seller will have
good and marketable title, right or leasehold interest, free and clear of any
mortgage, lien, restriction, encumbrance, or adverse claim to all Transferred
Assets, real, personal, tangible, and intangible, to be sold, assigned,
licensed, or conveyed to Purchaser hereunder, and none of said Transferred
Assets is now subject to any restriction which would prevent or materially
adversely affect the use presently made thereof. To the extent such exist,
Seller will provide Purchaser with surveys of all Real Property. Evidence as to
the ownership and marketability of title of all Real Property and Improvements
listed in Schedules 1.1(a) and (b) will be furnished to Purchaser prior to
Closing in the form of a commitment or commitments for title insurance.
2.7. Contracts. To the best of Seller's knowledge, those
contracts, agreements, commitments and understandings to which Seller is a
party, written or oral, connected with or relating in any material respect to
the present or future operation of the System, or its property or assets (except
agreements for cable service that expire within one (1) year) which are to be
assigned to Purchaser pursuant to this Agreement, are listed and correctly
described on the Schedules attached hereto and Seller will furnish Purchaser,
upon request, copies of any or all
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such documents prior to Closing. The Seller does not have, and will not have at
the Closing, any contracts or commitments with respect to the Systems
(including, without limitation, purchase orders, leases, employment agreements
that cannot be terminated within thirty (30) days, agreements with any labor
unions, bonus, pension, profit sharing, retirement or other similar plans
providing benefits) extending beyond the date hereof, except as provided in said
Schedules. To the extent that any lease, contract, undertaking, or other
commitment set forth on said Schedules requires the consent of any other person
or party to its assignment, Seller will procure such consent and deliver it to
Purchaser on or prior to Closing; provided, however, that Seller shall not be
required to deliver any such consent with respect to Seller's affiliate
agreements/programming contracts with its cable programming providers. To the
best of its knowledge, Seller is not, and on the Closing Date will not be, in
breach of or in default under any contracts, except those which have been
disclosed to Purchaser prior to the execution of this Agreement and are
specifically identified on the Schedules.
2.8. Easements, Rights-of-Way and Permits. To the best of its
knowledge, Seller (a) has all easements, rights-of-way and other land use
permits, pole agreements, and similar rights that are necessary for the
operation of the Systems as it is now being operated, (b) is not infringing upon
the property rights of others in conducting such operation and (c) is conducting
its operations in compliance with the terms of such permits, pole agreements and
similar rights-of-way. To the best of Seller's knowledge, all easements,
licenses and rights of way are listed and correctly described on Schedule
1.1(d). To the best of Seller's knowledge, no person, firm, corporation or other
entity, upon whose property are located, maintained, installed or operated any
items of Seller's personal property or equipment (whether or not such use is
subject to recorded valid easements, rights-of-way or permits in full force and
effect), has manifested an intention to challenge the continued location,
maintenance, installation or operation of such item on such property.
2.9. Litigation. Except as disclosed in Schedule 2.9, there
is: (a) no claim, litigation, investigation or proceeding pending, or to
Seller's knowledge threatened, which affects the property or assets intended to
be assigned or transferred hereunder, or which would prevent or adversely affect
in any material respect the ownership, use, or operation of the same by
Purchaser, nor does Seller know of any basis for any such claim, litigation,
investigation or proceeding, or of any governmental investigation relative to
Seller or the Systems, properties or business of Seller; (b) no threatened or
pending investigation or proceeding based on violation of any state or federal
law, rule or regulation; and (c) no complaint or litigation pending before any
local, state or federal agency or any court or any strike or unresolved labor
dispute.
2.10. Liabilities. Except for such amounts that are to be
pro-rated in accordance with Section 1.4.2, Seller has paid, or will have paid
by the Closing Date, all franchise fees, taxes, assessments, copyright fees, or
other charges or fees to be paid with respect to the property and assets to be
transferred or assigned hereunder which are due for the period prior to the
Closing Date whether payable prior to, at, or after the Closing Date.
2.11. Condition of Equipment. To the best of Seller's
knowledge, the Systems and all major component parts, including specifically,
but not limited to, "headend" receiving
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and processing equipment, "headend" modulators, processors, receivers, decoders,
amplifiers and associated equipment, line amplifiers, trunk line cable, and
distribution cable, are, and on the Closing Date will be, in good operating
condition. To the best of Seller's knowledge, the Systems, as constructed, meet
all of the material technical requirements and specifications of the FCC and as
set forth in the Franchise, and throughout each of the Systems, there is: (a) a
minimum signal strength at all tap levels of +14dBmV; and (b) a maximum drop
length of 400 feet. The parties agree that the equipment relating to the
Systems, including but not limited to the cable plant and major component parts
listed in this Section 2.11, are being sold on an "as is/where is" basis.
Further, prior to Closing Purchaser will have adequate opportunity to inspect
Seller's equipment at Purchaser's unfettered discretion and shall make its own
determination as to the acceptability of the Seller's equipment.
2.12. Cable Franchise. Schedule 1.1(f) contains a complete
list and description of the cable Franchises, together with all amendments
thereto, required to operate the Systems. To the best of Seller's knowledge, the
Franchises listed on Schedule 1.1(f) are the only franchise issued and currently
in force and effect in the Franchise Area. Except as set forth in Schedule
1.1(f) or as contained in such franchise agreements, said Franchises have been
validly issued and are in full force and effect and are not subject to any
conditions or restrictions other than such as may exist by virtue of any act of
Congress, the rules and regulations of any federal regulatory agency, or any law
or rule adopted by the various local governing authorities. To the best of
Seller's knowledge, other than orders, actions, proceedings, or investigations
generally applicable to the cable television industry in the United States,
there are no proceedings pending or, to the best of Seller's knowledge,
threatened against or affecting the validity of any Franchise or which may
materially or adversely affect the terms and provisions thereof, and Seller has
no knowledge of any fact or matter that would constitute a legally valid basis
for revocation or non-renewal of any Franchise. To the best of Seller's
knowledge, except as set forth in Schedules 1.1(f) and (g), no other franchise,
contract, lease or agreement is associated with or required in the operation of
the System. To the best of its knowledge, Seller has timely invoked the renewal
procedures of Section 626 of the Communications Act in the event that any
Franchise's expiration date is 36 months or less after the Closing Date.
2.13. Licenses, Permits and Authorizations. Schedule 2.13
contains a true and complete list of all currently outstanding licenses,
authorizations, permits, and orders issued by the FCC and other governmental
authorities to Seller which are to be sold to Purchaser, including, but not
limited to, those relating to Seller's cable television Franchises, licenses, or
authorizations for stations in the Business Radio Service and for earth stations
and other communications systems. To the best of Seller's knowledge, the Systems
and stations are in compliance with the provisions of said licenses,
authorizations, permits, and orders, and Seller has no knowledge of any
violation of applicable federal, state or local laws or FCC rules in connection
with the System and such stations. To the best of Seller's knowledge, no
conditions or restrictions, except as stated in the licenses, authorizations,
permits, or orders, or in Schedule 2.13 apply to said licenses, authorizations,
permits or orders, other than such as may exist by virtue of any act of Congress
or the various local governing authorities or the rules or regulations of any
federal or state regulatory agency or the various local governing authorities.
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2.14. Disclosure. To the best of Seller's knowledge, no
representation or warranty made by Seller in this Agreement, nor any statement
or certificate furnished or to be furnished by the Seller to the Purchaser
pursuant hereto, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit a material fact necessary to make the statements contained herein or
therein not misleading.
2.15. Compliance with Laws and Franchise. Except as set forth
in Section 2.5 above, to the best of its knowledge, Seller is, at the execution
of this Agreement, and will, at the Closing, be in compliance in all material
respects with all applicable laws, rules, regulations and requirements of all
federal, state, and local governing authorities or agencies having jurisdiction
over its Franchises, Systems, licenses, property, business, or affairs. Without
limiting the generality of the foregoing, to the best of its knowledge, Seller
has complied with all applicable zoning laws and building permits, and the
National Electric Safety Code. To the best of Seller's knowledge, the Systems
have been operated and are in compliance in all respects with the provisions of
all franchises, permits, licenses, consents and other authorizations from
governmental authorities, utilities and other third parties needed for and
pursuant to which the Systems are owned and operated (collectively, the
"Authorizations"), and all instruments granting the Authorizations (the "CATV
Instruments").
2.16. Absence of Certain Changes or Events. Between the date
of execution of this Agreement and the Closing Date, there shall have been no
material adverse changes in the financial condition, assets, or business of any
single System or the Systems. "Material adverse change" shall mean destruction
of equipment with an aggregate cost value of more than Twenty Five Thousand
Dollars ($25,000). Without limiting the generality of the foregoing, since the
date of execution of this Agreement to the Closing Date, there shall not have
been, with respect to any single System:
2.16.1. Any damage, destruction, or loss or any event
or condition of any character materially and adversely affecting the System's
properties or business;
2.16.2. Any sale, transfer, assignment, pledge,
hypothecation or mortgage of any of the Transferred Assets;
2.16.3. Any material transaction with respect to the
System entered into other than in the ordinary course of business, except this
Agreement.
2.17. Absence of Undisclosed Liabilities. To the best of
Seller's knowledge, there are no material undisclosed or contingent liabilities
or commitments with respect to the Systems, Transferred Assets or Franchises.
"Material liabilities" shall mean liabilities in the aggregate exceeding Twenty
Five Thousand Dollars ($25,000).
2.18. Employees. On the Closing Date, Seller shall have paid
all wages, salaries, employment taxes of any kind, and employee benefits of all
employees of the System due for the period prior to Closing. Schedule 2.18 is a
true and complete list as of the date of this
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Agreement setting forth the names of each person employed by Seller and, with
respect to each such person, current annual rate of, or the method of
determining his or her, compensation and any fringe benefits.
2.19. Signal Carriage. Annexed hereto as Schedule 2.19 is a
list of all stations or signals carried by the Seller on the Systems, with an
indication as to how each signal is delivered to the headend, e.g. microwave,
satellite earth station or off-air reception. Except as set forth in Section 2.5
above, Seller has the legal right and authority, including, without limitation,
all necessary authorizations from the FCC and all state or local regulatory
authorities having jurisdiction over the Systems, and retransmission consent or
"must carry" assertion by the applicable broadcaster, to continue to carry and
use all signals now being carried. Seller will make its best efforts to assure
that all broadcast signals that are carried at the Closing Date will qualify for
compulsory copyright licenses provided for in Section 111 of the Copyright Act
of 1976 and, subject to any changes in circumstances that occur after the
Closing Date, their carriage will not subject Purchaser to payment of any 3.75%
copyright liability.
2.20. Additional Cable Systems. To the best of Seller's
knowledge, there are no plans of any third party for the establishment of any
additional community antenna television systems, wireless, SMATV, MDS, MMDS,
DBS, or other broad or narrow band video distribution systems within the
Franchise Area.
2.21. Insurance and Surety Bonds. Annexed hereto as Schedule
2.21 is a list of all insurance policies and surety bonds presently in effect
that insure the property and liability of the Systems. Seller has provided
Purchaser with copies of all such insurance policies and surety bonds. To the
best of Seller's knowledge, all such policies and bonds are sufficient for
compliance with all material requirements of law and of all agreements to which
Seller is a party.
2.22. Records. Seller's records with respect to the Systems
relating to trade or other recurring payables, subscriber lists, billings,
payments received, bank statements, check records, and deposit records have been
brought up to date as of the date of this Agreement and are complete, correct
and accurate in all material respects.
2.23. Bulk Sales. Neither the sale and transfer of the
Transferred Assets pursuant to this Agreement, nor Purchaser's possession and
use thereof from and after the Closing because of such sale and transfer, will
be subject to (a) any law pertaining to bulk sales or transfers or to the
effectiveness of bulk sales or transfers as against creditors of Seller, or (b)
the imposition of any liability upon Purchaser for appraisal rights or other
liability owing to any shareholder of Seller.
2.24. Federal Aviation Authority. To the best of its
knowledge, Seller has obtained all necessary Federal Aviation Authority ("FAA")
approvals and waivers with respect to the Systems' towers, each of which is
listed on Schedule 2.24. Seller has furnished to Purchaser true and complete
copies of all documents listed on Schedule 2.24 as well as all correspondence
with any governmental authorities having a material relevance thereto. To the
best of Seller's knowledge, all existing towers of the Systems are obstruction
marked and lighted
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in accordance with the rules and regulations of the FAA. To the best of Seller's
knowledge, to the extent required by the rules and regulations of the FAA,
Seller has provided proper notice to the FAA prior to the construction or
alteration of radio towers used in the operation of the Systems. Prior to
Closing Purchaser will have adequate opportunity to inspect the Systems' towers
at Purchaser's unfettered discretion and shall make its own determination as to
the acceptability of the Systems' towers.
2.25. Rate Regulation. Except as disclosed in Schedule 2.25,
there is: (a) no existing rate regulation affecting any Franchise or System; (b)
no claim, litigation, investigation or proceeding pending, or to Seller's
knowledge threatened, relating to any existing rate regulation affecting any
Franchise or Systems; and (c) no investigation or proceeding pending, or to
Seller's knowledge threatened, regarding the adoption of any rate regulation
which would affect any Franchise or System.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents, warrants and agrees, knowing and intending that
Seller shall rely thereon in entering into this Agreement and performing the
obligations on its part to be performed hereunder, that the following
representations and warranties are true and correct on the date hereof.
3.1. Organization and Good Standing. Purchaser is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware.
3.2. Authority. The execution, delivery and consummation of
this Agreement have been duly authorized and will not conflict with, or result
in a default under, any provision of the Certificate of Limited Partnership of
Purchaser or any agreement or instrument to which Purchaser is a party or by
which it is bound. This Agreement constitutes a valid and binding obligation of
Purchaser enforceable upon and in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally. The General Partner of Purchaser,
James Communications Partners, has the authority to execute this Agreement on
behalf of Purchaser and to execute, deliver and perform such other documents
necessary to consummate the transactions contemplated hereby.
3.3. No Violation of Agreements, Etc. This Agreement
constitutes a valid and binding obligation of Purchaser, and this Agreement and
all transactions contemplated hereby will not result in the violation of the
Partnership Agreement of Purchaser or any law or other agreement to which it is
bound.
4. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Purchaser's obligations hereunder are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions, any one or more of
which may be waived in whole or in part by Purchaser by giving written notice to
Seller to that effect:
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4.1. Representations and Warranties. Seller's representations
and warranties contained herein and in any certificate or document delivered to
Purchaser pursuant hereto shall be deemed to have been made again at and as of
the date of the Closing and shall then be true and correct in all material
respects.
4.2. Performance. Seller shall have performed and complied
with all covenants and agreements by it required to be performed prior to or at
the Closing.
4.3. Consents. The required governmental and regulatory
authorities and third parties shall have approved in writing in form
satisfactory to Purchaser the assignment from Seller to Purchaser of the
Franchises, and all licenses, permits, authorizations, pole attachment
agreements, contracts, and leases necessary for operation of the Systems within
the Franchise Area; provided, however, that Seller shall not be required to
deliver any such consent with respect to Seller's affiliate
agreements/programming contracts with its cable programming providers. Seller
shall have delivered to Purchaser a certificate, reasonably satisfactory to
Purchaser, of an appropriate official of each municipal authority that has
issued Seller a CATV Instrument, as defined in Section 2.15, for the Systems, to
the effect that such CATV Instrument is valid, in full force and effect and not
in default, has been approved for transfer to Purchaser, and that Purchaser has
all necessary approvals to own or operate the Systems from each respective
authority.
4.4. Delivery of Closing Documents. Seller shall have entered
into, and delivered to Purchaser, such documents as may be required by the
Escrow Agreement as set forth at Exhibit 1 hereto, the Non-Competition Agreement
as set forth at Exhibit 2 hereto, the Opinions of Counsel as set forth in
Exhibits 3 and 4 hereto and all other closing documents required to be delivered
by Seller to Purchaser pursuant to Section 1.6 hereof.
4.5. Surveys and Title Insurance. Seller shall have delivered
to Purchaser surveys of the Real Estate (excluding leasehold estates having a
remaining term of less than five (5) years, including all renewal options)
prepared by a registered or licensed engineer or surveyor in accordance with the
American Land Title Association Standards and a commitment or commitments for
title insurance for the benefit of Purchaser covering all of the Real Estate,
insuring title to such Real Estate in a manner and in an amount satisfactory to
Purchaser, with only those exceptions as Purchaser shall approve. The
above-referenced surveys shall be currently dated, shall bear a proper
certificate by the surveyor, which certificate shall include the legal
description of the Real Estate and shall be made in favor of Purchaser and the
title insurance company, and shall show the outline of the Real Estate, all
buildings, structures, paving, driveways, fences and other improvements thereon,
all easements, encroachments and other matters affecting the Real Estate, and
the square footage or acreage of the Real Estate. The cost of obtaining such
surveys and title insurance, commitments and all premiums with respect to the
title insurance policies to be issued thereto, shall be paid by Purchaser.
4.6. Seller's Certificate. Seller shall deliver to Purchaser a
certificate of its President, dated the Closing Date, certifying, in such form
as Purchaser may reasonably request, as to the fulfillment of the conditions set
forth in Sections 4.1, 4.2, and 4.10.
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4.7. Corporate Authority. The execution of this Agreement by
Seller and its delivery to Purchaser shall have been duly authorized and
approved by the Board of Directors and Shareholders of Seller.
4.8. Obtaining Financing. Purchaser shall have obtained
financing for this transaction on terms and conditions acceptable in every
regard to Purchaser in its sole and complete discretion.
4.9. [INTENTIONALLY OMITTED.]
4.10. No Material Adverse Change. From June 25, 1996 to the
Closing Date, there shall not have been any material adverse change in the
Transferred Assets, any Franchise or any System.
5. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Seller's obligations hereunder are subject to the fulfillment prior to
or at the Closing Date of each of the following conditions:
5.1. Representations and Warranties. The Purchaser's
representation and warranties contained herein and in any certificate or
document delivered to Seller pursuant hereto shall be deemed to have been made
again at and as of the date of the Closing and shall then be true and correct in
all material respects.
5.2. Performance. Purchaser shall have performed and
complied with all covenants and agreements required of Purchaser prior to or at
the Closing.
5.3. Delivery of Closing Documents. Purchaser shall have
entered into, and delivered to Seller, such documents as may be required by the
Escrow Agreement as set forth at Exhibit 1 hereto, the Non-Competition Agreement
as set forth at Exhibit 2 hereto, the Opinion of Counsel as set forth in Exhibit
5 and all closing documents required to be delivered by Purchaser to Seller
pursuant to Section 1.6 hereof.
5.4. Purchaser's Certificate. Purchaser shall deliver to
Seller a certificate of its general partner, dated the Closing Date, certifying
as to the fulfillment of the conditions set forth in Sections 5.1 and 5.2.
6. NON-PERFORMANCE; RISK OF LOSS
6.1. Non-Performance. Either Seller or Purchaser shall have
the right to terminate this Agreement at or prior to the Closing in the event
that another party shall default in the performance of any of its material
obligations to be performed hereunder, or should any covenant, warranty or
representation made by the other party in this Agreement prove to be incorrect
in any material sense; provided, however, that the party against whom such
termination is to be imposed shall have the right, for a period of ten (10) days
after receiving written notice from the other of the alleged default, to correct
or satisfy the condition or covenant giving rise to the default. It is
recognized that the Transferred Assets are special and unique and that money
damages payable to Purchaser may be impossible to ascertain and an inadequate
remedy in
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respect of a breach or non-performance of this Agreement by Seller, so it is
mutually agreed that, in addition to any other remedies available to either
party under this Agreement or at law or equity, either party shall have the
right to require specific performance of this Agreement by the other party
and to enforce this Agreement by injunctive or other equitable relief.
6.2. Risk of Loss. Any 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 Transferred Assets until the Closing Date shall be the responsibility of
Seller. If such loss or damage shall be sufficiently substantial to preclude the
resumption of normal operation or a substantially complete restoration of any
substantial part of the System within thirty (30) days, or if such loss or
damage materially and adversely affects the value of the Transferred Assets to
the extent of more than five percent (5%) of the fair market value thereof,
Seller shall immediately notify Purchaser in writing. Purchaser, at any time
within fifteen (15) days after receipt of such notice, may elect to either (i)
accept the proceeds of any insurance coverage and consummate the transactions
contemplated by this Agreement, or (ii) terminate this Agreement. In the latter
event, all parties hereto shall stand fully released and discharged from any and
all obligations under this Agreement. If Purchaser elects to consummate the
transactions contemplated by this Agreement, the Purchase Price shall be reduced
by the amount of such loss or damage not compensated by insurance proceeds
accepted by Purchaser on or before the Closing Date.
7. ADDITIONAL UNDERTAKINGS
7.1. Costs and Expenses. Purchaser and Seller shall each pay
any and all of their own costs and expenses, including attorneys' fees, relating
to the execution and delivery of this Agreement and the consummation of all
transactions contemplated herein. Purchaser shall pay to Communications Equity
Associates ("CEA") such fee as is due and payable to CEA if the transactions
contemplated in this Agreement are consummated and a fee is thereby due and
payable to CEA. Other than the agreement between Purchaser and CEA, the parties
are aware of no other broker, finder or agent involved in the negotiation,
execution or consummation of this Agreement or the transactions contemplated in
this Agreement. Seller represents that it has not enlisted the services of any
broker and based on that representation that it shall not be liable for any
brokerage fees or commissions.
7.2. Sales Taxes. Seller shall pay all sales, transfer or
similar taxes or fees, if any, incurred as a result of the consummation of the
transaction contemplated hereby.
8. INDEMNIFICATION BY SELLER AND PURCHASER
8.1. Seller's and Shareholders' Indemnification. From and
after the Closing Date, Seller and Shareholders shall and do hereby jointly and
severally indemnify and hold Purchaser harmless from and against the following:
8.1.1. Any and all liabilities and obligations of,
or claims against, Seller or the Transferred Assets arising from or relating to
the operation of the Systems or the
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Transferred Assets prior to the Closing Date, whether such charges were payable
prior to, at, or after the Closing Date;
8.1.2. Any and all liabilities and obligations of,
or claims against, Seller or the Transferred Assets not expressly assumed by
Purchaser pursuant to the terms of this Agreement;
8.1.3. Any and all losses, claims, liabilities,
damages or deficiencies resulting from any misrepresentation, breach of
warranty, covenant or non-fulfillment of any agreement on the part of Seller
contained in this Agreement, including without limitation claims for brokerage
fees or commissions, or in any statement, schedule, list, agreement or
certificate furnished or to be furnished to Purchaser pursuant hereto or in
connection with the transactions contemplated hereby; and
8.1.4. Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including
reasonable attorneys' fees and disbursements, incident to any of the foregoing.
8.2. Purchaser's Indemnification. From and after the Closing
Date, Purchaser shall and does hereby indemnify and hold Seller harmless from
and against the following:
8.2.1. Any and all liabilities and obligations of,
or claims against, Seller arising from or relating to the operation of the
Systems or the Transferred Assets on or after the Closing Date;
8.2.2. Any and all losses, claims, liabilities,
damages or deficiencies resulting from any misrepresentation, breach of
warranty, covenant or nonfulfillment of any agreement on the part of Purchaser
contained in this Agreement or in any statement, schedule, list, agreement or
certificate furnished or to be furnished to Seller pursuant hereto or in
connection with the transaction contemplated hereby; and
8.2.3. Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including
reasonable attorney's fees and disbursements, incident to any of the foregoing.
8.3. Procedure. The party seeking indemnification
("Indemnitee") shall give prompt notice to the other party[ies] ("Indemnitor")
of any claim, liability or other circumstance as to which recovery may be sought
because of the indemnity set forth in this Section 8 and shall permit
Indemnitor, at its sole cost and expense, to assume the defense of any claim or
any litigation resulting from such claim. Failure by Indemnitor to notify
Indemnitee of its election to defend any such action within fifteen (15) days
after notice thereof shall be deemed a waiver by Indemnitor to its right to
defend such action. If Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, the obligations of Indemnitor hereunder as to
such claim shall be limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom and to hold the
Indemnitee harmless from and against any and all
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<PAGE> 23
losses, damages and liabilities caused by or arising out of any settlement or
any judgment in connection with such claim or litigation resulting therefrom.
Indemnitor shall not, in the defense of such claim or any litigation resulting
therefrom, consent to the entry of any judgment (except with the written consent
of Indemnitee) or enter into any settlement (except with the written consent of
Indemnitee), which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnitee of a release from all
liability in respect to such claim or litigation. If such defense is
unsuccessful or abandoned by Indemnitor, then, upon Indemnitor's failure to pay
an amount sufficient to discharge any such claim or judgment, Indemnitee may pay
and settle the same and Indemnitor's liability shall be conclusively established
by any such payment.
8.3.1. If Indemnitor shall not assume the defense of
any such claim or litigation resulting therefrom, Indemnitee may defend against
and settle such claim or litigation in such manner as it may deem appropriate
and reasonable, and Indemnitor shall promptly reimburse Indemnitee for the
amount of all expenses, legal or otherwise, incurred by Indemnitee for the
amount of all expenses, legal or otherwise, incurred by Indemnitee in connection
with the defense against or settlement of such claim or litigation. If no
settlement is made, Indemnitor shall promptly reimburse Indemnitee for the
amount of any judgment rendered with respect to such claim or such litigation
and of all expenses, legal or otherwise, incurred by the Indemnitee in the
defense thereof.
8.3.2. If Indemnitee is entitled to indemnification
hereunder, then to the extent that Indemnitor shall have failed to make prompt
payment thereof Indemnitee shall have the right to utilize the funds deposited
with the Escrow Agent.
8.4. Limitation on Indemnification. Notice of any claim,
liability, or other circumstances as to which the purchase price may be adjusted
pursuant to Section 1.4.2 must be given on or before the one hundred and
twentieth day after the Closing Date. Notice of any claim, liability, or other
circumstance as to which recovery may be sought under any other provision of
this Agreement, must be given in accordance with Section 8.3 on or before the
one hundred eightieth day after the Closing Date. Purchaser may not seek
indemnification from Seller or the Shareholders pursuant to the terms of this
Agreement in an aggregate amount in excess of the amount held pursuant to terms
of the Escrow Agreement. Similarly, the Company and Shareholders may not seek
indemnification from Purchaser in an aggregate amount in excess of $250,000.
9. ACCESS TO INFORMATION
The parties agree that the assets are sold "as is, where is" to
Purchaser. As such, Seller shall accord reasonable access during normal business
hours prior to the Closing Date to Purchaser, and its representatives, to all of
Seller's physical properties, employees, contracts, and commitments to be
assumed by Purchaser, accounting records relating to the System to be sold
hereunder, technical records, and records pertaining to subscriber payments and
obligations, and shall furnish Purchaser during such period with all information
concerning operation of the System that Purchaser reasonably may request. Any
and all information, disclosures,
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knowledge, or facts regarding Seller and its operations and properties, derived
from or resulting from Purchaser's acts or conduct (including, but not limited
to, acts or conduct of Purchaser's agents, attorneys, employees,
representatives, or any of them) under the provisions of this paragraph and this
Agreement ("Evaluation Material") shall be confidential and shall not, except as
may be required by law or authorized in writing by Seller, be divulged,
disclosed, or communicated to any other person (including brokers), firm,
corporation, or entity. If the transactions contemplated in this Agreement are
not consummated within the time required, Purchaser shall return the tangible
portion of the Evaluation Material relating to Seller, including but not limited
to, documents, records, files, other papers, computer diskettes and the like,
within three business days after receipt of written demand for same by Seller.
10. CONDUCT OF BUSINESS PENDING CLOSING
The Seller covenants that pending the Closing Date:
10.1. Affirmative Covenants. From the date hereof until the
Closing Date, the Seller shall, with respect to each System:
10.1.1. Maintain the general character of the
System's business and conduct its business in the ordinary and usual manner;
10.1.2. Maintain its usual business and accounting
records;
10.1.3. Maintain the System's properties in good
repair and condition;
10.1.4. Observe and perform all material contracts
and agreements now existing or hereafter entered into;
10.1.5. Maintain presently existing insurance
coverage;
10.1.6. Require performance according to their terms
of all contractual provisions now existing or hereafter entered into designed
for the benefit or protection of the System's business;
10.1.7. Pay all costs and expenses incurred in
connection with the operation of the System's business;
10.1.8. Pay all federal, state, and local taxes and
fees with respect to the System, its operation or this sale and file all returns
required therefor;
10.1.9. Use its best efforts to comply with all
applicable statutes and ordinances and rules and regulations of public
authorities with respect to the System, and obtain and maintain all required
licenses or permits and pay all license or permit fees required therefor; and
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10.1.10. Maintain the tangible personal property used
in the operation of the System in a normal state of repair and operating
efficiency.
10.2. Negative Covenants. From the date hereof until the
Closing Date, the Seller shall not, with respect to any System, without first
obtaining Purchaser's prior written consent:
10.2.1. Enter into any agreement, contract, or
commitment other than in the ordinary course of business, or as required by this
Agreement;
10.2.2. Increase the compensation of any of the
System's employees; or
10.2.3. Sell, transfer or otherwise dispose of any
interest in the Seller or the System's assets or properties.
10.3. NOTICES
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given when either
personally served, mailed by certified or registered mail return receipt
requested, delivered by an overnight courier service with guaranteed next day
delivery or sent by facsimile:
(a) To Purchaser at:
Mr. William R. James
James Cable Partners, L.P.
710 North Woodward Avenue
Bloomfield Hills, MI 48304
FAX: (248) 647-1321
with a copy to:
Brad B. Arbuckle, Esq.
Miller, Canfield, Paddock and Stone, P.L.C.
1400 N. Woodward Avenue, Suite 100
Bloomfield Hills, MI 48304
FAX: (248) 258-3036
(b) To Seller at:
Fannon Cable T.V., Inc.
Mr. William Fannon
500 Central Avenue
LaFollette, TN 37766
FAX: (423) 566-2212
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with a copy to:
Dale C. Allen, Esq.
Woolf, McClane, Bright, Allen & Carpenter
900 River View Tower
900 S. Gay Street
Knoxville, TN 37902-1810
FAX: (423) 215-1001
(c) To Shareholders at:
Fannon Cable T.V., Inc.
Mr. William Fannon
500 Central Avenue
LaFollette, TN 37766
FAX: (423) 566-2212
or to such other address or facsimile number or to such other persons as
Purchaser, Seller, or Shareholders shall have last designated by written notice
to the other parties.
11. MISCELLANEOUS
11.1. Survival. The representations and warranties of Seller,
Purchaser, and Shareholders contained herein, and/or in any certificates or
documents submitted pursuant to or in connection with the Agreement, and the
affirmative obligations undertaken herein shall survive the Closing Date and the
sale and delivery of the Transferred Assets hereunder.
11.2. Successors and Assigns; Assignment. This Agreement shall
be binding upon, and shall inure to the benefit of, each of the parties hereto
and their respective successors and assigns. The privileges, benefits, duties,
obligations, powers and responsibilities of each party to this Agreement (other
than Purchaser) under this Agreement are personal unto such party and shall not
be assigned, pledged, hypothecated, encumbered, or otherwise transferred without
the prior written consent of Purchaser. Unless otherwise expressly authorized by
Purchaser, no such assignment, pledge, hypothecation, encumbrance or other
transfer by any such party shall relieve such party from any of its obligations
under this Agreement. Purchaser may assign this Agreement to any of its partners
or any affiliate of any of its partners at any time.
11.3. Further Assurances. The parties agree that they shall
execute and deliver any and all additional writings, instruments, and other
documents contemplated hereby or referred to herein and shall take such further
action as shall be reasonably required in order to effectuate the terms and
conditions of this Agreement.
11.4. Governing Law. This Agreement shall be governed by and
construed according to the substantive law (and not the conflicts of law
principles) of the State of Tennessee.
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11.5. Article Headings. The article headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
11.6. Modification. This Agreement shall not be amended,
modified or supplemented at any time unless by a writing executed by the parties
hereto. No amendment, supplement or termination of this Agreement shall affect
or impair any rights or obligations which have heretofore matured hereunder.
11.7. Syntax. All references made and pronouns used herein
shall be construed in a singular or plural, and in such gender as the sense and
circumstance require.
11.8. Cumulative Rights; Waiver. Each and every right granted
to a party hereunder, or in any other document contemplated hereby, or delivered
hereunder or executed concurrently herewith, or by law or equity (unless
otherwise limited by this or any other agreement), shall be cumulative and may
be exercised at any time, or from time to time. No failure on the part of any
party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right. The failure of any party at any time, or from time to time, to require
performance by any other party of any term, condition or provision of this
Agreement shall in now way alter or otherwise affect the right of such party at
a later time to enforce the same. No waiver by any party of any condition or of
the breach of any term, covenant or provision contained in this Agreement,
whether by conduct or otherwise, at any time or from time to time, shall be
deemed to be or be construed as a further or continuing waiver of any such
condition or breach or as a waiver of any other condition or subsequent breach
of the same or any other term, covenant or provision.
11.9. Counterparts. This Agreement may be executed in
counterpart versions.
11.10 Limitation on Recourse. Recourse for performance of
Purchaser's obligations under this Agreement, including but not limited to
payment of the Purchase Price or any fees, expenses, indemnities, claims or
damages (or other amounts of any kind), or recourse under or upon any
obligation, covenant or agreement of Purchaser in this Agreement shall be
limited to the assets of the Purchaser and no recourse shall be had against any
past, present or future partner of the Purchaser (including any general
partner), or any officer, director, manager, employee, past, present or future,
of the Purchaser or any past, present or future partner of the Purchaser
(including any general partner) or of any successor corporation or partnership
or against the property or assets of any such partner, officer, employee,
manager or director, either directly or through the Purchaser or any partner of
the Purchaser (including any general partner) or any successor corporation or
partnership.
11.11. Delivery of Schedules and Exhibits. The parties hereto
acknowledge that the form and substance of Exhibits 1 - 5 have not been agreed
upon and that all of the Schedules and supporting documentation to be delivered
hereunder have not been delivered. As soon as practicable after the execution of
this Agreement by both Seller and Purchaser, but not later than thirty (30) days
after the execution of this Agreement by both Seller and Purchaser, Seller shall
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deliver to Purchaser the Schedules together with all supporting documentation.
Purchaser shall have the right to rescind this Agreement, by written notice to
Seller, for a period of fifteen (15) days after the date that Purchaser shall
have received the last of the Schedules and supporting documentation if the
information contained in such Schedules or supporting documentation differs
materially from the information previously provided to Purchaser. In the event
of such rescission by Purchaser, this Agreement shall be terminated and have no
further force or effect, the parties hereto shall have no further obligations or
liabilities hereunder and the Escrow Payment, together with interest and
earnings thereon, shall be returned to Purchaser. In the event Purchaser does
not notify Seller of such rescission, the Schedules shall be deemed approved.
Purchaser and Seller shall use their best efforts to agree on the appropriate
form and substance of Exhibits 1 - 5, inclusive, not later than forty-five days
after the execution of this Agreement by both Seller and Purchaser. If the
parties do not agree on the appropriate form and substance of such Exhibits
within such time, then each party shall have the right to rescind this
Agreement. In the event of such rescission, this Agreement shall be terminated
and have no further force or effect, the parties hereto shall have no further
obligations or liabilities hereunder and the Escrow Payment, together with
interest and earnings thereon, shall be returned to Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed, sealed and delivered as of the date first above written.
COMPANY SHAREHOLDERS
FANNON CABLE T.V., INC.,
a Tennessee corporation ______________________________
Charles Chadwell,
Individually as a Shareholder
By ___________________________
William Fannon
Its President ______________________________
Letton Bush,
Individually as a Shareholder
______________________________
Hollis Bush,
Individually as a Shareholder
______________________________
Robert Fannon,
Individually as a Shareholder
______________________________
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<PAGE> 29
William Fannon, Jr.,
Individually as a Shareholder
______________________________
Robert Chad Fannon,
Individually as a Shareholder
______________________________
Michael Fannon,
Individually as a Shareholder
______________________________
William Ryan Fannon,
Individually as a Shareholder
______________________________
Jennifer Fannon,
Individually as a Shareholder
PURCHASER
James Cable Partners, L.P., a
Delaware limited partnership
By: James Communications
Partners, a Michigan
co-partnership and
its General Partner
By: Jamesco, Inc.,
a Michigan
corporation and a
General Partner of
James Cable
Partners, L.P.
By __________________________
William R. James
Its President
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<PAGE> 30
EXHIBIT 1
---------
THIS ESCROW AGREEMENT (this "Agreement"), dated as of ______________,
199___, by and among FANNON CABLE T.V., INC., a Tennessee corporation
("Seller"), JAMES CABLE PARTNERS L.P., a Delaware limited partnership ("Buyer"),
and FIRST AMERICAN BANK OF KNOXVILLE, a ______________ (the "Escrow Agent").
W I T N E S E T H:
WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement
of even date herewith (the "Asset Purchase Agreement") for the purchase by Buyer
of franchises, assets, licenses, rights and business of Seller relating to
certain cable television systems; and
WHEREAS, Buyer has agreed to deposit with the Escrow Agent on the
Closing Date, as defined in the Asset Purchase Agreement, the sum of Two Hundred
Fifty Dollars ($250,000), to be held for the benefit of Seller and Buyer;
WHEREAS, the parties desire that the funds deposited hereunder shall be
held and disbursed pursuant to the terms of this Agreement; and
WHEREAS, all capitalized terms not defined herein shall have the
meanings specified in the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1 Appointment of Escrow Agent. Buyer and Seller hereby appoint
Escrow Agent to act as escrow agent on the terms and conditions set forth herein
and Escrow Agent hereby accepts such appointment on such terms and conditions.
2 Deposit of Funds with Escrow Agent. On the Closing Date, Buyer
shall deposit the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the
"Escrow Fund") with Escrow Agent, which amount Escrow Agent shall hold in escrow
for the benefit of Seller and Buyer (the "Escrow Account"). Escrow Agent shall
be the sole signatory on the Escrow Account.
3 Retention of Funds in Escrow Account. At the Closing, Seller
and Buyer shall deliver a joint or counterpart notice to the Escrow Agent
directing the deposit of the Escrow Fund into the Escrow Account.
4 Investment of Funds. Escrow Agent shall invest and reinvest
amounts in the Escrow Account at a major banking institution or in such manner
as jointly directed by Seller and Buyer in writing.
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<PAGE> 31
5 Earnings on Escrow; Ownership of Fund. All interest and other
earnings on the Escrow Fund (the "Earnings") shall be added to the Escrow
Account, but shall not become part of the Escrow Fund. All Earnings on the
Escrow Fund earned on or after the Closing Date shall belong to Seller;
provided, however, that Earnings on any portion of the Escrow Fund which may be
paid to Buyer pursuant to this Agreement shall belong to Buyer. On and after the
Closing Date the Seller shall be deemed to be the owner of the Escrow Fund and
Earnings for tax purposes.
6 Distributions and Termination.
(a) If at any time prior to one hundred eighty (180) days
after the Closing Date, the Escrow Agent receives written instructions
from either (i) Buyer to make a payment to Seller, or (ii) Seller to
make a payment to Buyer, then the Escrow Agent shall make such payments
out of the Escrow Fund (together with the Earnings on such amount
through the date of payment) to Buyer or Seller, as applicable, in
accordance with such instructions, unless the amounts in the Escrow
Account shall be insufficient to comply with such instructions, in
which case the Escrow Agent shall pay the Escrow Fund (together with
the Earnings thereon through the date of payment) to the appropriate
party, shall advise Buyer and Seller in writing of the amount of such
payment and this Escrow Agreement shall be deemed terminated.
(b) Prior to one hundred eighty (180) days after the Closing
Date, Seller and Buyer may jointly deliver to the Escrow Agent a notice
(the "Instruction Notice") setting forth the amounts, if any, due to
Buyer or Seller pursuant to the Asset Purchase Agreement. The Escrow
Agent shall, upon receipt of such notice, pay to either Seller or Buyer
the amount stated in the Instruction Notice and the Earnings on such
amount through the date of payment.
(c) The Escrow Agent may make any payment out of the Escrow
Fund that may at the time be permitted to be made under the provisions
of Sections 8 and 9 below, and shall make all such payments that at the
time are required to be made under such Sections or are jointly
requested in writing by the Buyer and the Seller.
(d) All remaining amounts held in the Escrow Account, less any
amounts to which Buyer may be entitled under the terms of the Asset
Purchase Agreement or this Agreement, shall be distributed to Seller
(i) on the one hundred eightieth (180th) day from the Closing Date if
there remain no Unresolved Claims pending under this Agreement or (ii)
if there remain pending Unresolved Claims under this Agreement, the
date on which such claims are finally resolved.
(e) Upon payment of all remaining amounts held in the Escrow
Account under Section 7(d) above, this Agreement shall terminate,
provided, however, that this Agreement shall terminate on the earlier
date, if any, that no funds continue to be held by Escrow Agent.
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<PAGE> 32
(f) In the event the Escrow Fund is insufficient to pay in
full any amounts required pursuant to the Asset Purchase Agreement,
nothing therein or herein shall prejudice the right of the party to
whom the amount is due to collect from the other party the balance due
(including any reasonable costs and expenses, including without
limitation, reasonable attorneys' fees and disbursements, and fees and
costs incurred by the Escrow Agent) after application of all sums paid
by Escrow Agent.
7. Unresolved Claims; Definition. The term "Unresolved Claims"
shall mean any claim or request made pursuant to the Asset Purchase Agreement
which may be made against the Escrow Fund, or any Earnings thereon, in
accordance with the Asset Purchase Agreement or this Agreement, which is the
subject of a Notice of Request as referred to in Section 8 below, until such
time as such claim or request has been paid in full or otherwise fully settled,
compromised or adjusted by the parties and the Escrow Agent.
8. Request for Payment. If at any time prior to one hundred
eighty (180) days after the Closing Date, any party believes that it is entitled
to any portion of the Escrow Fund, then such party shall furnish to the Escrow
Agent (with a simultaneous copy to the other party), a notice (the "Notice of
Request") setting forth the amount to which such party believes it is entitled
and the reasons for such belief. If the Escrow Agent does not receive, within
ten (10) business days after receipt of the Notice of Request, a notice from the
other party (the "Dispute Notice") that a dispute (the "Dispute") exists
relating to Buyer's or Seller's right to that portion of the Escrow Fund claimed
in the Notice of Request, and if the Escrow Agent has received satisfactory
proof that a simultaneous copy of the Notice of Request has been given to the
other party, the Escrow Agent shall, immediately after such ten (10) day period,
pay the portion of the Escrow Fund claimed in the Notice of Request to the party
giving the Notice of Request together with Earnings on such amount to the date
of payment. In the event the Escrow Agent receives the Dispute Notice within
such ten (10) day period, the Escrow Agent shall promptly notify the party
giving the Notice of Request to that effect, and the parties shall attempt to
resolve the Dispute amicably within a period of thirty (30) days from the
receipt of the Escrow Agent's notice by the party giving the Notice of Request.
9. Disputes. In the event the Escrow Agent receives a Dispute
Notice in accordance with Section 8 above that a Dispute exists, the Escrow
Agent shall retain custody of that portion of the Escrow Fund which relates to
the Unresolved Claim together with Earnings thereon until the first to occur of
the following event:
(a) receipt by the Escrow Agent of a notice ("Settlement
Notice") signed by both Buyer and Seller that the Dispute has been resolved,
said Notice to contain instructions to the Escrow Agent regarding delivery of
that portion of the Escrow Fund together with Earnings thereon through the date
of payment which relates to the Unresolved Claim; or
(b) receipt by the Escrow Agent of official notice of a
confirmation by a court of competent jurisdiction resolving the
Dispute, which confirmation has become a final order from which no
appeal has been or can be had, after which the Escrow Agent shall
promptly pay that portion of the Escrow Fund which relates to the
Unresolved Claim
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<PAGE> 33
together with Earnings thereon through the date of payment in
accordance with the Settlement Notice or the final judgment by a court
of competent jurisdiction.
10. Payment of Fees and Costs. In the event that a party shall be
determined by (i) a court of competent jurisdiction, (ii) an arbitrator's
binding award, or (iii) a written settlement agreement or release between the
parties, to be entitled to payment as set forth in a Notice of Request, a party
submitting a Dispute Notice or otherwise disputing such right to payment shall
reimburse such party entitled to payment for all its reasonable costs incurred
enforcing its Notice of Request or otherwise pursuing its right to payment
(including, without limitation, reasonable attorneys' fees and disbursements and
all fees and costs incurred by Escrow Agent in connection therewith).
11. Limitations on Liability of Escrow Agent. Upon termination of
this Agreement, the Escrow Agent shall be released and discharged from all
further obligations hereunder. It is understood and agreed that the duties of
the Escrow Agent hereunder are purely ministerial in nature and that it shall
not be liable for any error of judgment, fact or law, or any acts done or
omitted to be done, except for its own gross negligence or willful misconduct.
If a determination as to whether an event or condition has occurred, or has been
met or satisfied, or as to whether a provision of the Asset Purchase Agreement
or this Agreement has been complied with, or as to whether sufficient evidence
of the event or condition or compliance with the provision has been furnished to
it, shall not subject it to any claim, liability or obligation whatsoever, even
if it shall be found that such determination was improper or incorrect,
provided, only, that the Escrow Agent shall not have been guilty of gross
negligence or willful misconduct in making such determination. Subject to the
foregoing, Seller and Buyer, acting severally to the extent of 50% each and not
jointly, will agree to indemnify and hold Escrow Agent harmless from any and all
claims and demands made against it in respect of its position as Escrow Agent
and to reimburse Escrow Agent for all reasonable costs and expenses (including
reasonable attorneys' fees) arising from a defense against any claim and
demands.
12. Notice. All notices, demands, and requests hereunder shall be
in writing and shall be deemed to have been given upon receipt:
(a) To Buyer at:
Mr. William R. James
James Cable Partners, L.P.
710 North Woodward Avenue
Bloomfield Hills, MI 48304
FAX: (248) 647-1321
with a copy to:
J. Kevin Trimmer, Esq.
Miller, Canfield, Paddock and Stone, P.L.C.
1400 N. Woodward Avenue, Suite 100
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<PAGE> 34
Bloomfield Hills, MI 48304
FAX: (248) 258-3036
(b) To Seller at:
Fannon Cable T.V., Inc.
Mr. William Fannon
500 Central Avenue
LaFollette, TN 37766
FAX: (423) 566-2212
with a copy to:
Dale C. Allen, Esq.
Woolf, McClane, Bright, Allen & Carpenter
900 River View Tower
900 S. Gay Street
Knoxville, TN 37902-1810
FAX: (423) 215-1001
c) To the Escrow Agent at:
First American Bank of Knoxville
-----------------------------------
Knoxville, TN ________
Attn: ____________________________
FAX: ____________________________
or at such other addresses or facsimile numbers or to such other person as the
parties hereto designate by written notice to the other parties.
13. Escrow Agent's Fees. The Escrow Agent shall be paid its
reasonable customary custodial fees as compensation for its services hereunder,
which compensation shall be paid equally by Buyer and Seller and Escrow Agent is
hereby authorized to deduct the same from the Escrow Fund prior to final
disbursement of funds therefrom to Buyer and Seller.
14. Miscellaneous.
(a) This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof, and cannot be
changed or terminated orally.
(b) This Agreement shall be governed by and construed in
accordance with the substantive law (and not the conflicts of law
principles) of the State of Michigan.
(c) This Agreement shall inure to the benefit and be binding
upon the parties hereto and their respective personal representatives,
successors and assigns, except that
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<PAGE> 35
no provision of this Escrow Agreement shall confer rights or benefits
upon any person not a party hereto.
(d) This Agreement may be executed in one or more
counterparts, each of which is to be deemed an original, or which
together constitute one and the same instrument.
(e) The provisions of this Agreement are severable, and if any
provision shall be held invalid or illegal, the validity and legality
of the remainder of this Agreement shall not be affected.
(f) No modification or amendment of this Agreement shall be
valid unless the same is in writing and is signed by the parties hereto
and consented to by the Escrow Agent.
(g) Notwithstanding anything contained herein to the contrary,
the parties hereto may jointly direct the Escrow Agent, in writing, to
perform any action contemplated herein, and upon receipt of such joint
direction, the Escrow Agent shall act in compliance therewith and be
protected thereby.
(h) The headings assigned to Sections of this Agreement are
for convenience only and shall be disregarded in construing this
Agreement.
(i) Neither Seller nor Buyer shall pledge, hypothecate or
otherwise transfer or attempt to transfer its rights, title or interest
hereunder without the prior written consent of the other parties
hereto.
(j) Recourse for performance of any obligations of Buyer under
this Agreement, including but not limited to payment of any costs,
fees, judgments, expenses, indemnities, claims or damages (or other
amounts of any kind), or recourse under or upon any obligation,
covenant or agreement of Buyer in this Agreement shall be limited to
the assets of the Buyer and no recourse shall be had against any past,
present or future partner of the Buyer (including any general partner),
or any officer, director, manager, employee, past, present or future of
the Buyer or any past, present or future partner of the Buyer
(including any general partner) or of any successor corporation or
partnership or against the property or assets of any such partner,
officer, employee, manager or director, either directly or through the
Buyer or any partner of the Buyer (including any general partner) or
any successor corporation or partnership.
E-1-6
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have set their hands on the date
first above written.
SELLER:
FANNON CABLE T.V., INC.,
a Tennessee Corporation
By _______________________________________
William Fannon
Its President
BUYER:
James Cable Partners, L.P., a Delaware
limited partnership
By: James Communications Partners, a
Michigan co-partnership and
its General Partner
By: Jamesco, Inc.,
a Michigan
corporation and a
General Partner of
James Cable
Partners, L.P.
By _________________________________
William R. James
Its President
ESCROW AGENT:
FIRST AMERICAN BANK OF KNOXVILLE
By _______________________________________
Its _____________________________
E-1-7
<PAGE> 37
EXHIBIT 2
---------
NON-COMPETITION AGREEMENT
This Non-Competition Agreement, dated this ___ day of __________,
199__, by and among James Cable Partners, L.P., a Delaware limited partnership
("Purchaser"), and William Fannon and other signatory parties hereto (the
"Shareholders") and FANNON CABLE T.V., INC., a Tennessee corporation (the
"Company"; the Shareholders and the Company, jointly and severally, are each
referred to herein as the "Seller").
WITNESSETH:
WHEREAS, Seller has operated cable television systems serving certain
portions of the County of Claiborne, Tennessee, and the surrounding areas (the
"Cable Systems"); and
WHEREAS, Purchaser is acquiring on this date the Cable Systems under an
Asset Purchase Agreement between Purchaser and Seller, dated _____________,
199__; and
WHEREAS, the parties agree that the assets are of little value unless
Seller is restricted from competing with Purchaser in the operation of the Cable
Systems:
NOW, THEREFORE, the parties covenant and agree as follows:
1. For a period of five (5) years from and after the date of this
Agreement, Seller (and each of them) will not, directly or indirectly in any
individual or representative capacity whatsoever, manage, operate, control, own,
engage in, or be connected, whether as a principal, agent, shareholder, partner,
joint venture, employee or investor or otherwise, with any person, firm or
corporation engaged in the cable, broad or narrow band video distribution
system, wireless, MDS, MMDS, SMATV, DBS, community antenna television business
or any similar activity serving any area of the County of Claiborne, Tennessee,
or any county adjacent to the County of Claiborne, Tennessee.
2. The parties hereby acknowledge that money damages alone would not
adequately compensate Purchaser in the event of a breach of the foregoing
restrictive covenant. Therefore, Seller (and each of them) hereby agrees that in
addition to all of the remedies available at law or in equity, Purchaser shall
be entitled to injunctive relief for the enforcement of the covenant.
3. The existence of any claim or cause of action by Seller (or any of
them) against Purchaser, relating to the Asset Purchase Agreement, shall not
constitute a defense to the enforcement by Purchaser of the foregoing covenants,
but shall be litigated separately.
4. For and in consideration of the aforesaid covenants, Purchaser has
paid to Seller the total aggregate sum of Three Hundred Thousand Dollars
($300,000) as prepayment in full of the amount required and in full satisfaction
of the terms of this Agreement. The parties hereby acknowledge and agree that
the amount of Three Hundred Thousand Dollars ($300,000) paid to Seller hereunder
is ordinary income and shall be treated as such for income tax purposes.
E-2-1
<PAGE> 38
5. This Agreement contains the entire understanding between the parties
with respect to the subject matter hereof and no change, addition or amendment
shall be made to any of its terms, covenants or conditions except by written
agreement signed by the parties.
6. This Agreement shall be construed and enforced in accordance with
the substantive law (and not the conflicts of law principles) of the State of
Michigan.
7. The duties and obligations of Seller under this Agreement are
personal and may not be assigned or otherwise transferred by Seller. This
Agreement shall inure to the benefit of and be binding upon Purchaser and its
successors and assigns.
8. This Agreement may be executed in one or more counterparts, each of
which is to be deemed an original, or which together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have set their hands on the date
first written above.
SELLER:
FANNON CABLE T.V., INC.
a Tennessee corporation
By ______________________________________
William Fannon
Its President
-----------------------------------------
William Fannon, Individually
SHAREHOLDERS:
-----------------------------------------
Charles Chadwell,
Individually as a Shareholder
-----------------------------------------
Letton Bush,
Individually as a Shareholder
-----------------------------------------
Hollis Bush,
Individually as a Shareholder
-----------------------------------------
E-2-2
<PAGE> 39
Robert Fannon,
Individually as a Shareholder
-----------------------------------------
William Fannon, Jr.,
Individually as a Shareholder
-----------------------------------------
Robert Chad Fannon,
Individually as a Shareholder
-----------------------------------------
Michael Fannon,
Individually as a Shareholder
-----------------------------------------
William Ryan Fannon,
Individually as a Shareholder
-----------------------------------------
Jennifer Fannon,
Individually as a Shareholder
PURCHASER:
James Cable Partners, L.P., a Delaware
limited partnership
By: James Communications Partners, a
Michigan co-partnership and
its General Partner
By: Jamesco, Inc.,
a Michigan
corporation and a
General Partner of
James Cable
Partners, L.P.
By _____________________________
William R. James
Its President
E-2-3
<PAGE> 40
EXHIBIT 3
---------
(Letterhead of Seller's Counsel)
James Cable Partners, L.P.
710 N. Woodward Ave.
Suite 180
Bloomfield Hills, MI 48304
Attn: Mr. William R. James
Gentlemen:
Pursuant to the Asset Purchase Agreement ("Agreement"), dated
___________, 199___ between Fannon Cable T.V., Inc., William Fannon and other
"Shareholders" (collectively referred to as "Seller"), and James Cable Partners,
L.P. ("Purchaser"), Seller has agreed to sell and Purchaser has agreed to
purchase all of the assets of those certain cable television systems referred to
in the Agreement. Our opinion has been requested on certain matters in our
capacity as counsel for Seller.
In connection with rendering this opinion, we have examined and are
familiar with the corporate documents of Seller, the Agreement, the documents
referred to in the Agreement and such other documents and instruments of Seller
and certificates of public officials as we deemed necessary or appropriate. With
respect to various questions of fact material to this opinion, we have relied
upon and assumed, without investigation or inquiry, the truthfulness and
accuracy of the representations and warranties made by Seller in the Agreement
and in the documents referred to therein and various certificates of public
officials and officers of Seller furnished to us.
In connection with our examination, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures,
the legal capacity of natural persons and conformity to originals of all
documents submitted to us as copies. In addition, we have assumed that the
parties, other than Seller, to the Agreement and other instruments, documents
and agreements referred to therein, have all necessary power and authority to
enter into the transactions contemplated thereby, and that each of the same was
duly and validly authorized, executed and delivered by, and is binding on, all
such other parties.
Our conclusions hereunder are specifically qualified by reference to,
and are based solely upon, laws, rulings and regulations in effect on the date
hereof and are subject to modification to the extent that such laws, rulings and
regulations are changed in the future.
Based upon and subject to the foregoing, and subject to the
qualifications that follow, we are of the opinion that:
E-3-1
<PAGE> 41
(1) Fannon Cable T.V., Inc. is a Tennessee corporation duly organized
validly existing and in good standing under the laws of the State of Tennessee
and is duly qualified to transact business in the State of Tennessee and in all
other states where, due to the business or conduct of or property owned by, the
Seller, such qualification is required by applicable law, with all requisite
power to own its properties and to engage in its business as presently being
conducted.
(2) Seller has the capacity and power to enter into the Agreement and
perform its obligations thereunder and to sell, convey, transfer and deliver or
cause to be delivered to Purchaser all of the Transferred Assets, as defined in
the Agreement.
(3) The Agreement and the instrument of conveyance and assignment used
to convey the Transferred Assets to Purchaser have been duly authorized,
executed and delivered by Seller, and constitute the legal, valid and binding
obligations of Seller enforceable in accordance with their terms, subject to
laws of general application affecting the enforcement of creditors' rights and
to the application of general principles of equity.
(4) The instruments of conveyance and assignments executed and
delivered to Purchaser by Seller effectively vest in Purchaser all of Seller's
right, title and interest in and to the Transferred Assets, free and clear of
all claims, liens, encumbrances, security interests, mortgages or restrictions.
(5) All proceedings required to be taken by Seller, under Fannon Cable
T.V., Inc.'s Articles of Incorporation and Bylaws to authorize the Agreement and
Seller's performance thereunder have been fully and properly taken.
(6) The execution of the Agreement and the consummation of the
transactions contemplated thereby will not constitute a violation or default
under any provision of Fannon Cable T.V., Inc.'s Articles of Incorporation or
Bylaws or under any contract, agreement, indenture, or any instrument to which
Seller is a party or by which Seller is bound.
(7) There is no pending or threatened litigation, action, claim,
proceeding or investigation to which Seller is a party or the outcome of which
would have a material adverse effect on the transactions contemplated by the
Agreement or on any of the property or assets of Seller.
(8) Seller has good and marketable title to all of the Transferred
Assets and the Transferred Assets are owned free and clear of any and all liens,
claims and encumbrances.
(9) Seller owns all licenses, permits, franchises and authorizations
necessary for the conduct of its business, all of which were validly created,
validly issued to Seller and are in full force and effect without default or
other grounds for cancellation.
(10) The sale, transfer and assignment of the Transferred Assets to
Purchaser in accordance with the Agreement is exempt from any law of the State
of Tennessee regulating or in any way restricting or imposing conditions on the
bulk sale or transfer of assets.
E-3-2
<PAGE> 42
(11) All approvals or authorizations required by governmental
authorities in connection with the Franchises, as defined in the Agreement, have
been obtained and such approvals and authorizations are in full force and effect
and upon acceptance by Purchaser of such transfers, Purchaser will have all
rights as a franchisee under the respective Franchises and in accordance with
the respective terms of such Franchises.
(12) All approvals or consents required to be obtained by third parties
to effect the transaction contemplated under the Agreement have been obtained.
Very truly yours,
E-3-3
<PAGE> 43
EXHIBIT 4
---------
(Letterhead of Seller's FCC Counsel)
James Cable Partners, L.P.
710 N. Woodward Ave.
Ste. 180
Bloomfield Hills, MI 48304
Attn: Mr. William R. James
Gentlemen:
Pursuant to the Asset Purchase Agreement ("Agreement"), dated
____________, 199___, between Fannon Cable T.V., Inc., William Fannon and other
"Shareholders" (collectively referred to as "Seller"), and James Cable Partners,
L.P. ("Purchaser"), Seller has agreed to sell and Purchaser has agreed to
purchase all of the assets of those certain cable television systems referred to
in the Agreement. Our opinion has been requested on certain matters in our
capacity as Federal Communications Commission counsel for Seller. Capitalized
terms defined in the Agreement, and not otherwise defined in this letter, are
used herein with the same meanings as in the Agreement.
In order to provide the opinion requested, we have examined such
records, certificates and other documents and have considered such questions of
law as we deem necessary or appropriate for purposes of evaluating the cable
television systems referred to in the Agreement and noted on Schedule I attached
hereto as to their compliance with the Communications Act of 1934, as amended,
the Cable Communications Policy Act of 1984, the Cable Television Consumer
Protection and Competition Act of 1992, the Telecommunications Act of 1996
(collectively "Communications Acts"), the Rules and Regulations of the Federal
Communications Commission ("FCC"), the Copyright Act of 1976 ("Copyright Act"),
the Rules and Regulations of the United States Copyright Office (the "Copyright
Office"), the Rules and Regulations of the Federal Aviation Administration
("FAA") and the Franchises. We have not conducted an independent field
inspection of the Systems, have not examined their actual day-to-day operations,
and express no opinion with respect to these matters. In rendering this opinion,
we have relied on certain statements and representations of officers, agents,
and employees of the Seller with respect to matters of fact, and we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and the conformity to original documents of all documents
submitted to us as certified or photocopies.
Based upon and limited by the foregoing, and subject to the exceptions
noted on Schedule II attached hereto, it is our opinion that:
E-4-1
<PAGE> 44
1. Schedule I to this letter lists all authorizations, licenses,
franchises, and permits of the FCC, FAA and any other governmental authority
pertaining to the Systems, and the same constitute the only authorizations,
licenses, franchises and permits required by the FCC, FAA and any other
governmental authority in connection with the operation of the Systems as now
conducted. Each such license, permit, franchise and authorization has been
validly issued and is in full force and effect, and the Systems are in
compliance with each such license, permit, franchise and authorization.
2. Registration Statements and 1987 FCC Forms 325, Schedule 2,
specifying each of the signals the Systems currently provide to customers and
identifying each frequency used by the Systems, are on file with the FCC. All
required Forms 325, Schedule 1 and Schedule 2 and Forms 395A are on file with
the FCC and all FCC authorizations needed to utilize those frequencies currently
used have been obtained. Carriage of these signals is consistent with the
Communications Acts and the Rules and Regulations of the FCC. Seller has the
legal right and authority, including, without limitation, all necessary
authorizations from the FCC, and all state or local regulatory authorities
having jurisdiction over the Systems, to continue to carry and use all signals
now being carried. Seller has obtained retransmission consent or is in
compliance with "must carry" requirements with respect to all broadcast signals
carried on the Systems. Seller has obtained every annual EEO Certification for
each of the Seller's EEO employment units. All notices and reports, statements,
forms and other filings required to be filed with the FCC and all other
governmental authorities by Seller with respect to the Systems have been filed,
including without limitation, quarterly and annual CLI reports prepared and
filed as required, and all such notices and reports, statements, forms and other
filings are accurate and complete in all material respects.
3. There is no FCC judgment, decree, forfeiture, notice of apparent
liability or other order (including, without limitation, any order or
investigation relating to the subscriber rates charged by the Systems) which has
been issued with respect to the Systems. To the best of our knowledge after due
inquiry, and except with respect to general rulemakings and similar matters
relating generally to the cable television industry, there is no FCC order,
action, proceeding or investigation (including, without limitation, any order or
investigation relating to the subscriber rates charged by the Systems) pending
or threatened by the FCC with respect to the Systems, which would materially
adversely affect the operations of the Systems.
4. All Notices, Statements of Account, supplements, and other documents
required under the Copyright Act and under the rules of the Copyright Office
have been completed and timely filed with the Copyright Office and are accurate
and complete in all material respects, and all fees required to be paid with
respect to the Systems under the terms of the Copyright Act (Public Act 94-553)
have been properly computed and paid by Seller. All royalties required by the
Rules and Regulations of the Copyright Office have been paid. The filing of said
documents and the payment of said fees constitute the only authority required
under the Copyright Act for carriage of the broadcast signals carried on the
Systems. To the best of our knowledge, there have been no inquiries received
from the Copyright Office or any other party which question the copyright
filings or payments made with respect to the Systems, and there is no claim,
action,
E-4-2
<PAGE> 45
investigation or demand for copyright infringement or for non-payment of
royalties pending or threatened against the Systems.
5. To the best of our knowledge after due inquiry, all towers and other
facilities (including without limitation any facilities used for transmitting or
receiving radio frequencies) relating to the Systems are in compliance with
applicable Rules and Regulations of the FAA and the FCC, and Seller has obtained
all necessary FAA and FCC approvals, licenses, permits and waivers with respect
to the Systems' towers and other facilities. Seller has obtained all required
certificates, licenses, permits, and clearances from governmental agencies with
respect to all of Seller's towers, earth stations, business radios, microwave
systems, and any other radio frequencies carried or used by the Systems and all
such approvals, licenses, permits, certificates and clearances are in full force
and effect.
6. All of the Statements and Reports referenced in Schedule III
attached hereto are in full force and effect except as shown in Schedule III.
7. All consents and authorizations from the FCC, FAA, local franchising
authorities and any other governmental authority necessary to effect the
transaction contemplated under the Agreement have been obtained.
8. Seller has provided the written renewal notice specified in 47
U.S.C. sections 546(a) with respect to any of the Franchises affecting the
Systems which expire within three years of the Closing Date.
9. To the best of our knowledge and after due inquiry, Seller and the
Systems are in substantial compliance with the Franchises, and Seller has
received no notice and opportunity to cure within the meaning of 47 U.S.C.
sections 546(d) except as set forth in Schedule IV.
10. To the best of our knowledge after due inquiry, the Systems are
being operated in full compliance with the Communications Acts, including,
without limitation, those provisions concerning commercial use, privacy,
lockboxes, subscriber rate regulation, cable system renewal standards and signal
quality, and equal employment opportunity; the Copyright Act; and all Rules and
Regulations, orders, policies and procedures of the FCC, the FAA, local
franchising authorities and such authorities' authorizations for the Systems,
and the Copyright Office.
Very truly yours,
E-4-3
<PAGE> 46
EXHIBIT 5
---------
(Letterhead of Purchaser's Counsel)
Fannon Cable T.V., Inc.
Attention: Mr. William Fannon
Gentlemen:
Pursuant to the Asset Purchase Agreement ("Agreement"), dated
___________, 199___, between Fannon Cable T.V., Inc., William Fannon and other
"Shareholders" (collectively referred to as "Seller"), and James Cable Partners,
L.P. ("Purchaser"), Seller has agreed to sell and Purchaser has agreed to
purchase all of the assets of those certain cable television systems referred to
in the Agreement. Our opinion has been requested on certain matters in our
capacity as counsel for Purchaser.
In connection with rendering this opinion, we have examined and are
familiar with the Limited Partnership Agreement of Purchaser dated as of January
12, 1988 ("Partnership Agreement"), as amended from time to time, the Agreement
and such other documents and instruments of Purchaser and certificates of public
officials as we deemed necessary or appropriate. With respect to various
questions of fact material to this opinion, we have relied upon and assumed,
without investigation or inquiry, the truthfulness and accuracy of the
representations and warranties made by Purchaser and Seller in the Agreement and
in the documents referred to therein and various certificates of public
officials and officers of Purchaser furnished to us.
In connection with our examination, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures,
the legal capacity of natural persons and conformity to originals of all
documents submitted to us as copies. In addition, we have assumed that the
parties, other than Purchaser, to the Agreement and other instruments, documents
and agreements referred to therein, have all necessary power and authority to
enter into the transactions contemplated thereby, and that each of the same was
duly and validly authorized, executed and delivered by, and is binding on, all
such other parties.
Our conclusions hereunder are specifically qualified by reference to,
and are based solely upon, laws, rulings and regulations in effect on the date
hereof and are subject to modification to the extent that such laws, rulings and
regulations are changed in the future.
E-5-1
<PAGE> 47
Based upon and subject to the foregoing, and subject to the
qualifications that follow, we are of the opinion that:
1. Purchaser is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2. The execution, delivery and consummation of the Agreement will not
conflict with any provision of Purchaser's Agreement of Limited Partnership, or
with any provision under any contract, agreement, indenture, or any instrument
to which Purchaser is a party or by which Purchaser is bound.
3. Purchaser has the capacity and power to execute the Agreement and to
carry out its obligations thereunder, and the Agreement is a legal, valid and
binding obligation of Purchaser enforceable in accordance with its terms,
subject to bankruptcy, insolvency, moratorium and similar laws affecting the
enforcement of creditors' rights generally and to the application of general
principles of equity.
We are members of the bar of the State of Michigan and our opinion is
limited to the laws of the State of Michigan and we express no opinion as to the
laws of any other jurisdiction.
This opinion is delivered to you and is solely for your information. It
is not to be quoted in whole or in part or otherwise referred to, except in a
list of closing documents, and is not to be filed with any governmental agency
or other person without our prior written consent. We express no opinion as to
any matter not specifically addressed herein. No one other than the addressee is
entitled to rely upon this opinion.
Very truly yours,
Miller, Canfield, Paddock and
Stone, P.L.C.
E-5-2
<PAGE> 48
THE CITY OF TAZEWELL, TENNESSEE
______________, 199___
James Cable Partners, L.P.
710 N. Woodward Avenue, Suite 180
Bloomfield Hills, Michigan 48304
Dear Sir of Madam:
The City of Tazewell entered into a Franchise Agreement dated August
14, 1990 (the "Franchise Agreement"), with Fannon Cable T.V., Inc. ("Fannon"),
to allow Fannon to establish, acquire, and construct a cable television system
within the city limits of Tazewell, Tennessee. We understand that James Cable
Partners, L.P. ("James"), has entered into a contract with Fannon to buy
Fannon's assets and assume Fannon's rights and obligations under the Franchise
Agreement.
The City of Tazewell hereby confirms that it has received notification
of the proposed transfer and assignment of the Franchise Agreement from Fannon
to James.
The City of Tazewell also confirms that as of the date of this letter:
(1) the Franchise Agreement is in full force and effect in accordance with its
terms; (2) the Franchise Agreement has not been modified in any way since its
creation; (3) there exists no default under the Franchise Agreement; and, (4) no
event has occurred which would lead to an event of default under the Franchise
Agreement.
Finally, the City of Tazewell confirms that James may pledge or create
a security interest in the Franchise Agreement in favor of a creditor of James,
and that the City of Tazewell has received any notification required under the
Franchise Agreement pursuant to the creation of any such security interest. Any
creditor of James that takes such a security interest shall only have
responsibilities under the Franchise Agreement in the event it foreclosures on
the indebtedness, and only after a proper foreclosure sale and notification to
the City of Tazewell.
THE CITY OF TAZEWELL, TENNESSEE
By: ________________________________________
Its: ________________________________________
