ASSET PURCHASE AGREEMENT

 

                            ASSET PURCHASE AGREEMENT

 

                                 BY AND BETWEEN

 

                         EAGLE WEST COMMUNICATIONS, INC.

 

                                       AND

 

                          CORRIDOR COMMUNICATIONS CORP.

 

                                   DATED AS OF

 

                                 August 16, 2004

 

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                            ASSET PURCHASE AGREEMENT

 

      This Asset Purchase Agreement ("Agreement") is made as of August 1016,

2004 (the "Effective Date"), by and between Eagle West Communications, Inc., a

Nevada corporation ("Seller") and Corridor Communications Corp., a Delaware

corporation ("Buyer") with Eagle West, LLC, a Kansas limited liability company

("Operator").

 

                                     RECITALS

 

      A. Operator owns and operates certain cable television systems serving

communities in Arizona, Nevada and New Mexico. Seller has entered into an asset

purchase agreement to buy said assets from Operator. Pursuant to this Agreement,

Seller will offer those assets to the Buyer.

 

      B. On February 18, 2003, Operator filed a voluntary petition for relief

under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. ss.ss. 101 et

seq. ("Bankruptcy Code") in the United States Bankruptcy Court for the District

of Arizona ("Bankruptcy Court") commencing Case No. 0302530RJH ("Bankruptcy

Case").

 

      C. On March 5, 2003, the Bankruptcy Court entered its order appointing and

designating Thomas M. Duddy ("Duddy") as representative of the

debtorinpossession with respect to the Operator and the Operator's Chapter 11

bankruptcy estate.

 

      D. Operator has agreed to sell certain assets to Seller used primarily in

connection with the operation of its cable television systems located in

Arizona, Nevada and New Mexico as more particularly described herein, and Buyer

desires to purchase such assets from Seller as set forth herein.

 

      E. The parties acknowledge on May 12, 2004 in the United States Bankruptcy

Court in an Expedited hearing the court granted the Operator the authority to

proceed with the sale of the assets to the Seller, which submitted the highest

bid ("Approval Order"). With this Order the Bankruptcy Court has approved this

sale in this Bankruptcy Case.

 

                                    AGREEMENTS

 

      In consideration of the above recitals and the mutual agreements stated in

this Agreement, the parties agree as follows:

 

1.     DEFINITIONS

 

      In addition to terms defined elsewhere in this Agreement, the following

capitalized terms, when used in this Agreement, will have the meanings set forth

below:

 

      1.1 Adjustment Time. Means 11:59 p.m., Arizona time, on the last day of

the month immediately prior to the Closing Date.

 

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      1.2 Affiliate. With respect to any Person, means any other Person

controlling, controlled by or under common control with such Person, with

"control" for such purpose meaning the possession, directly or indirectly, of

the power to direct or cause the direction of the management and policies of a

Person, whether through the ownership of voting securities or voting interests,

by contract or otherwise.

 

      1.3 Assets. As more specifically set forth in the Schedules to this

Agreement, all properties, privileges, rights, interests and claims, real and

personal, tangible and intangible, of every type and description used or held

for use in connection with the Business, now in existence or hereafter acquired

before the Closing Date, including rights under Governmental Permits (to the

extent assignable), Intangibles, rights under Contracts (to the extent

assignable), insurance policies (subject to the provisions of Sections 1.17(d)

and 2.4, Equipment, Leased Property, Included Vehicles, customer and subscriber

lists, engineering records, maps, databases, files and records, prepaid expenses

relating solely to the Business that are held by third parties for security for

Seller's performance of its obligations, but excluding any Excluded Assets and

any assets disposed of prior to the Closing Date in the ordinary course of

business and not in violation of this Agreement.

 

      1.4 Bankruptcy Case. The Bankruptcy Case as identified in the Recitals.

 

      1.5 Bankruptcy Code or Code. The Bankruptcy Code as identified in the

Recitals.

 

      1.6 Bankruptcy Court or Court. The Bankruptcy Court as identified in the

Recitals.

 

      1.7 Business. The cable television business conducted by Seller on the

Effective Date through and with respect to the Systems.

 

      1.8 Business Day. Any day other than Saturday, Sunday or a day on which

banking institutions in New York, New York are required or authorized to be

closed.

 

      1.9 Cable Act. The Cable Communications Policy Act of 1984, as amended,

and the FCC rules and regulations promulgated thereunder, all as in effect from

time to time.

 

      1.10 Closing. The consummation of the transactions contemplated by this

Agreement, as described in Section 9, the date of which is referred to as the

"Closing Date."

 

      1.11 Contracts. All agreements (including any amendments or modifications

thereto) relating to: the Franchises, all multiple dwelling unit agreements,

pole attachment and conduit agreements, software license agreements, subscriber

agreements and other agreements, written or oral (including any amendments and

other modifications thereto), except Governmental Permits, which affect the

Assets, the Business or the operation of the Systems, and (a) which are in

effect on the Effective Date or (b) which are entered into by Seller in the

ordinary course of business and as permitted by this Agreement between the

Effective Date and the Closing Date and which by their terms are to be in effect

as of the Closing Date.

 

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      1.12 Duddy. Thomas M. Duddy, the courtappointed debtorinpossession in the

Bankruptcy Case.

 

      1.13 Encumbrance. Any security interest, interest retained by a transferor

under a conditional sale or other title retention agreement, mortgage, lien,

pledge, option, encumbrance, adverse interest, exception to or defect in title

or other ownership interest (including reservations, rights of entry,

possibilities of reverter, encroachments, easements, rightsofway, restrictive

covenants, leases and licenses) of any kind, which constitutes an interest in or

claim against property, whether arising pursuant to any Legal Requirement,

Governmental Permit, Contract or otherwise.

 

      1.14 Environmental Law. Shall include the following: (a) the Comprehensive

Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et

seq. ("CERCLA"); (b) the Solid Waste Disposal Act, also known as the Resource

Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq. ("RCRA"); (c) the

Emergency Planning and Community RighttoKnow Act, 42 U.S.C. ss. 11001, et seq.;

(d) the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss. 1801 et seq.;

(e) the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq. ("CAA"); (f) the Clean

Water Act, 33 U.S.C. ss.ss. 1251 et seq.; (g) the Occupational Safety and Health

Act, 29 U.S.C. ss.ss. 651 et seq.; (h) the Toxic Substances Control Act, 15

U.S.C. ss.ss. 2601 et seq.; (i) the Rivers and Harbors Act of 1899, 33 U.S.C.

ss. 401, et seq.; (j) the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701, et

seq.; each as amended; (k) any state or local law similar to the foregoing; (l)

all regulations issued pursuant to the foregoing; and (m) any law or regulation

relating to the use, generation, transport, treatment, storage, disposal,

removal or recovery of Hazardous Substances.

 

      1.15 Equipment. All electronic devices, trunk and distribution coaxial and

optical fiber cable, amplifiers, drops, power supplies, conduit, vaults and

pedestals, grounding and pole hardware, subscriber devices (including

converters, encoders, transformers behind television sets and fittings), headend

hardware (including origination, earth stations, transmission and distribution

Systems), test equipment, Included Vehicles, inventory (except the inventory

used and operated with respect to the Reserve Business), and other tangible

personal property used or held for use primarily in connection with the

Business. Schedule 1.15 lists all material items of Equipment, including headend

equipment.

 

      1.16 [Intentionally left blank].

 

      1.17 Excluded Assets. Any of the following, which will not be included in

the Assets:

 

            (a) Any and all properties, privileges, rights, interests and

      claims, real and personal, tangible and intangible, of every type and

      description used or held for use in connection with the Seller's cable

      television business and operations located in and around Reserve, New

      Mexico, the tangible assets of which are set forth in Schedule 1.17(a)

      (the "Reserve Business"), now in existence or hereafter acquired by the

      Operator, including, with respect to the Reserve Business, the following:

      rights under Governmental Permits (to the extent assignable), Intangibles,

      rights under Contracts (to the extent assignable), Equipment, Real

      Property, customer and subscriber lists, engineering records, maps,

      databases, files and records, and deposits relating solely to the Reserve

      Business that are held by third parties for security for Operator's

      performance of its obligations.

 

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            (b) Any and all properties subject to pole access lease agreements

      for areas that are not actively operating the Systems that are the subject

      of this Agreement.

 

            (c) Programming Contracts and cable guide Contracts, except those

      listed on Schedule 5.5;

 

            (d) Any and all rights and claims under any insurance policies which

      exist as of the Closing Date;

 

            (e) Bonds, letters of credit, surety instruments, and other similar

      items;

 

            (f) Cash, cash equivalents and shortterm investments;

 

            (g) All claims, rights and interests in and to any refunds for Taxes

      or fees, including franchising and copyright fees, for periods prior to

      the Adjustment Time;

 

            (h) Rights under any Contract for subscriber billing services and

      any subscriber billing equipment (leased or owned) relating to the Reserve

      Business;

 

            (i) Except as otherwise provided in Section 7.10, retransmission

      consent agreements;

 

            (j) Operator's corporate minute books and stock records;

 

            (k) Any employee benefit plans covering employees of Operator;

 

            (l) Any and all credit facilities and loan agreements to which

      Operator is a party;

 

            (m) Any Contract required to be described on Schedule 5.5 but not

      described thereon as of the Effective Date, and any Contract entered into

      by Operator after the Effective Date unless, in either case, Buyer elects

      in writing to include such Contract in the Assets;

 

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            (n) The account books of original entry, general ledgers, financial

      records and personnel files and records used in connection with the

      operation of the Systems, provided that Operator will provide copies of,

      or information contained in such books, ledgers, records and files (other

      than information pertaining to programming agreements, except programming

      agreements specific to the Systems), to the extent reasonably requested by

      Buyer before or after the Closing Date and in Operator's possession.

      Seller understands that Buyer will need sufficient accounting information

      and access in order to complete an audit of the Business for the years

      ending 2002 and 2003. Seller agrees to give Buyer access to the records

      needed for the audit;

 

            (o) Seller's rights under this Agreement and the Transaction

      Documents;

 

            (p) The personal property and/or Intangible assets specifically

      listed and set forth on Schedule 1.17(p);

 

            (q) The real property assets specifically listed and set forth on

      Schedule 1.30;

 

            (r) Any assets not specifically used in connection with and/or

      related to the operations of the Business; and

 

            (s) Any and all Vehicles used and operated with respect to the

      Reserve Business, as specifically identified in Schedule 1.17(s).

 

      1.18 Franchises. All cable television franchises and similar rights

obtained with respect to the Business from any Governmental Authority, including

those set forth on Schedule 5.4.

 

      1.19 GAAP. Generally accepted accounting principles as in effect from time

to time in the United States of America.

 

      1.20 Governmental Authority. The United States of America, any state,

commonwealth, territory or possession of the United States of America and any

political subdivision or quasigovernmental authority of any of the same,

including any court, tribunal, department, commission, board, bureau, agency,

county, municipality, province, parish or other instrumentality of any of the

foregoing.

 

      1.21 Governmental Permits. All FCC licenses and all other material

approvals, authorizations, permits, licenses, registrations, qualifications,

leases, variances and similar rights obtained with respect to the Business or

Assets from any Governmental Authority, other than the Franchises, including

those set forth on Schedule 5.4.

 

      1.22 Hazardous Substances. The following: (a) any "hazardous waste" as

defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.

ss.ss.6901 et seq.); (b) any "hazardous substance" as defined by the

Comprehensive Environmental Response, Compensation and Liability Act of 1980

(CERCLA) (42 U.S.C. ss.ss.9601 et seq.); (c) any substance regulated by the

Toxic Substances Control Act (TSCA) (15 U.S.C. ss.ss.2601 et seq.), or the

Federal Insecticide, Fungicide and Rodenticide Act (FIFRA)(7 U.S.C. ss.ss.136 et

seq.); (d) friable asbestos or asbestoscontaining material of any kind or

character; (e) polychlorinated biphenyls; (f) any substances regulated under the

provisions of Subtitle I of RCRA relating to underground storage tanks; and (g)

any other substance which by any Environmental Law requires special handling,

reporting or notification of any Governmental Authority in its collection,

storage, use, treatment or disposal.

 

                                        5

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      1.23 Included Vehicles. The vehicles listed on Schedule 1.23.

 

      1.24 Intangibles. All intangible assets, including subscriber lists,

accounts receivable, claims (excluding any claims relating to Excluded Assets),

patents, copyrights and goodwill, if any, owned, used or held by Seller

primarily for use in the Business.

 

      1.25 Legal Requirements. Applicable common law and any statute, ordinance,

code, or other law, rule, regulation, order, technical or other written standard

or procedure enacted, adopted or applied by any Governmental Authority.

 

      1.26 Losses. Any claims, losses, liabilities, damages, penalties, costs

and expenses, including interest that may be imposed in connection therewith,

expenses of investigation, reasonable fees and disbursements of counsel and

other experts, and settlement costs, exclusive of consequential damages.

 

      1.27 Material Adverse Effect. A material adverse effect on the operation

of the Systems or the financial condition of the Business, taken as a whole, but

without taking into account any effect resulting from any regulatory or other

change affecting the United States cable industry as a whole, including changes

in FCC regulations.

 

      1.28 Permitted Encumbrances. The following Encumbrances: (a) those

Encumbrances set forth on Schedule 1.28, (b) liens securing Taxes, assessments

and governmental charges in an aggregate amount greater than $1,000.00, (c) any

zoning law or ordinance or any similar Legal Requirement, (d) any right reserved

to any Governmental Authority to regulate the affected property, and (e) in the

case of leased property, whether real or personal, the rights, titles and

interests of the lessor thereof, and all Encumbrances on such rights, titles and

interests.

 

      1.29 Person. Any natural person, corporation, partnership, trust,

unincorporated organization, association, limited liability company,

Governmental Authority or other entity.

 

      1.30 Real Property. Except for the Excluded Assets (which Excluded Assets

include any and all real property specifically identified and listed in Schedule

1.30), all of Seller's interests in leased real property, including leasehold

interests and easements, wire crossing permits and rights of entry (except

agreements related to multiple dwelling units).

 

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      1.31 Required Consents. All authorizations, approvals and consents

required under Governmental Permits, Contracts, Lease Property or otherwise for

(a) Seller to transfer the Assets and the Business to Buyer, and (b) Buyer to

own or lease the Assets and to operate the Business in the manner in which the

Business is conducted as of the Closing Date.

 

      1.32 Systems. Each of the cable television Systems providing cable

television services to the communities in Arizona and Nevada listed on Schedule

1.32.

 

      1.33 System Employees. All personnel who primarily render services in

connection with the Systems.

 

      1.34 Taxes. All levies and assessments of any kind or nature imposed by

any Governmental Authority with respect to the Assets, including all income,

sales, use, ad valorem, value added, franchise, severance, net or gross

proceeds, withholding, payroll, employment, excise or property taxes and levies,

together with any interest thereon and any penalties, additions to tax or

additional amounts applicable thereto.

 

      1.35 Tax Return. Any return, declaration, report, claim for refund or

information return or statement relating to Taxes, including any schedule or

attachment thereto, and including any amendment thereof.

 

      1.36 Other Definitions. The following terms are defined in the Sections

indicated:

 

    Term                                                              Section

    ----                                                               -------

    Action                                                               11.4

    Agreement                                                        Preamble

    Approval Order                                                        7.13

    Assumed Obligations and Liabilities                                   2.2

    Bankruptcy Case                                                  Recitals

    Bankruptcy Code                                                  Recitals

    Bankruptcy Court                                                 Recitals

    Billing Transition Services                                           7.7

 

    Buyer                                                            Preamble

    Closing Date                                                           9.1

    Closing Date Payment                                                3.1.2

    Earnest Money Deposit                                               3.1.1

    Escrow Agent                                                         3.1.1

    Effective Date                                                   Preamble

    Eligible Accounts Receivable                                          3.2

    ERISA                                                               5.14.1

    FINOVA                                                                2.4

    Indemnified Party                                                    11.4

    Indemnifying Party                                                   11.4

 

                                        7

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    Term                                                              Section

    ----                                                              -------

    IRC                                                                    3.3

    Outside Closing Date                                                  9.1

    Reserve Business                                                  1.17(a)

    Prime Rate                                                          12.11

    Purchase Price                                                        3.1

    Seller                                                           Preamble

    Transaction Documents                                                 5.2

 

      1.37 Rules of Construction. Unless otherwise expressly provided in this

Agreement, (a) accounting terms used in this Agreement will have the meaning

ascribed to them under GAAP; (b) words used in this Agreement, regardless of the

gender used, will be deemed and construed to include any other gender,

masculine, feminine, or neuter, as the context requires; (c) the word

"including" is not limiting; (d) the capitalized term "Section" refers to

sections of this Agreement; (e) references to a particular Section include all

subsections thereof, (f) references to a particular statute or regulation

include all amendments thereto, rules and regulations thereunder and any

successor statute, rule or regulation, or published clarifications or

interpretations with respect thereto, in each case as from time to time in

effect; (g) references to a Person include such Person's successors and assigns

to the extent not prohibited by this Agreement; and (h) references to a "day" or

number of "days" (without the explicit qualification "Business") will be

interpreted as a reference to a calendar day or number of calendar days.

 

2. PURCHASE AND SALE OF ASSETS; ASSUMED OBLIGATIONS AND LIABILITIES

 

      2.1 Purchase and Sale of Assets. Subject to the terms and conditions set

forth in this Agreement, at the Closing, Seller will convey, transfer and assign

to Buyer, and Buyer will purchase from Seller, free and clear of all

Encumbrances (except Permitted Encumbrances), the Assets, effective as of 12:01

a.m., eastern time, on the Closing Date.

 

      2.2 Assumed Obligations and Liabilities. At the Closing, Buyer will

assume, from the date of closing ongoing, and pay, discharge, and perform the

following (the "Assumed Obligations and Liabilities"): (a) any outstanding and

ongoing obligations and liabilities under the Governmental Permits and Contracts

assigned and transferred to Buyer at Closing; (b) general property Taxes, sales

and use Taxes, special assessments, and ad valorem Taxes levied or assessed

against any of the Assets, including those that constitute Permitted Liens; (c)

charges for utilities and other goods or services furnished to the Systems; (d)

copyright expenses; (d) those obligations and liabilities of Seller that Buyer

elects to assume at Closing; and (e) all other obligations and liabilities

arising out of Buyer's ownership of the Assets or operation of the Systems on

and after the Closing Date. The Assumed Obligations and Liabilities shall

include any of the foregoing obligations or liabilities that have accrued prior

to the Closing but are not due and payable until after the Closing.

 

 

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            All obligations and liabilities arising out of or relating to the

Business, the Assets or the Systems other than the Assumed Obligations and

Liabilities will remain and be the obligations and liabilities solely of Seller.

 

      2.3 Buyer's Duty to Pay Cure Costs for Assumed Contracts. Notwithstanding

anything to the contrary herein, at Closing and in addition to the Purchase

Price, Buyer will pay any and all amounts necessary to cure any defaults (if

any) under any assumed Contracts, except the following: (i) franchise fees, (ii)

pole attachment fees, (iii) FCC fees, (iv) copyright fees, (v) property taxes

relating to Seller's personalty, and (vi) real property taxes relating to any

Real Property under lease to be transferred to Buyer up to a maximum aggregate

amount of $1,000.00.

 

      2.4 Insurance Policies. Notwithstanding the transfer of the Operator's

insurance policies to the Buyer, the Seller, Operator and FINOVA Capital

Corporation ("FINOVA") shall remain as additional insureds under such policies,

at no cost to them, until the expiration of any such policies, and the Seller,

Operator (and/or FINOVA as the loss payee on any insurance policies) shall be

entitled to recover any insurance proceeds relating to any insured claims or

losses arising prior to the Closing Date.

 

3. CONSIDERATION

 

      3.1 Purchase Price. The consideration for the Assets will be total cash

consideration of $1,700,000 (the "Purchase Price"). The Purchase Price will be

paid as follows:

 

            3.1.1. Earnest Money Deposit. Within one (1) calendar day after the

      Buyer's execution of this Agreement, Buyer shall deposit with Seller's

      attorney for deposit into Seller's attorney's Trust Account ("Escrow

      Agent"), to be held and disbursed by Escrow Agent in accordance with the

      terms and provisions of this Agreement the cash amount of TWO HUNDRED &

      FIFTY THOUSAND DOLLARS ($250,000.00) as an earnest money deposit ("Earnest

      Money Deposit", which shall also include all interest earned thereon, if

      any). The Earnest Money Deposit shall be held and disbursed in accordance

      with the terms of this Agreement. At the Closing of the purchase and sale

      of the Assets in accordance with the terms of this Agreement, the full

      amount of the Earnest Money Deposit shall be paid to Seller and applied

      toward the Purchase Price.

 

            3.1.2. Closing Date Payment. Buyer will pay the sum of $1,450,000

      (the "Closing Date Payment"), to Seller on the Closing Date by wire

      transfer of immediately available funds to the account designated by

      Seller in writing at least three Business Days prior to the Closing Date.

      Notwithstanding the foregoing, no monies (neither the Earnest Money

      Deposit nor the Closing Date Payment) shall be paid to Seller before the

      Bankruptcy Court has entered the Formal Approval Order in a form

      authorizing the sale of the assets.

 

 

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                  If the Buyer is unable to complete 3.1.2, at the Seller's

      option this agreement may be voided with the Buyer forfeiting any cash

      payment. Buyer further grants to Seller, to secure payment and performance

      of the obligations of Seller under this Agreement, a security interest in

      the contract, equipment, lease of real property and inventory listed in

      SCHEDULES 1.15, 1.30, 5.4, 1.23, 1.32, 5.6, 5.7, 5.13, 5.15 (see

      attachments A & B)

 

      3.2 Buyer's Assistance in Collecting Seller's Accounts Receivable. Buyer

will use its best efforts to collect all of Seller's accounts receivable, and

Buyer will remit to Seller an amount equal to such collections less the Buyer's

percentage for the costs of collection, and will settle the accounts on a

monthly basis, until satisfied or until 120 days from the date of Closing. The

"Buyer's percentage for the costs of collection" shall be an amount equal to the

sum of (a) 25% of the face amount of all Eligible Accounts Receivable that are

current or 30 days or less past due as of the Adjustment Time and (b) 25% of the

face amount of all Eligible Accounts Receivable that are over 31 days past due

as of the Adjustment Time. "Eligible Accounts Receivable" will mean accounts

receivable resulting from the provision of cable television and internet

services by the Systems to active subscribers as of the Adjustment Time that

relate to periods of time prior to the Adjustment Time.

 

      3.3 Allocation of Purchase Price. For tax purposes, the purchase price

shall be allocated among the Assets in accordance with the principles of Section

1060 of the Internal Revenue Code of 1986 (the "IRC") and applicable Treasury

Regulations thereunder. For purposes of this paragraph and Section 1060 of the

IRC, the fair market values of the Assets shall be determined by Buyer within

ten (10) business days of the date hereof. Such determination shall be subject

to approval by the Seller, Operator and FINOVA. Buyer, Seller and Operator will

file all necessary and appropriate Tax returns, forms and schedules thereto

consistent with any such allocations, unless otherwise required by applicable

Legal Requirements.

 

4. EMPLOYEE MATTERS

 

      4.1 At the Closing, Buyer may, but will have no obligation to, make offers

of employment, commencing effective as of the Closing Date, to any System

Employees who otherwise meet Buyer's criteria for employment. To the extent

permissible by applicable Legal Requirements, Seller and Operator agrees to

cooperate in all reasonable respects with Buyer to allow Buyer to evaluate and

interview System Employees in order to make employment decisions, including

providing reasonable access to Seller and Operator's files with respect to the

System Employees, if requested by Buyer. Buyer will, at its cost, be permitted

to conduct preemployment physical examinations (including drugscreening tests)

and other appropriate prehire investigations of System Employees, and Buyer may

make any offer of employment to any such System Employee conditional upon its

receipt, review and approval of the results of such prehire examinations and

investigations.

 

 

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      4.2 At the Closing, Seller and Operator will terminate the employment of

all System Employees to whom Buyer has made an offer of employment.

 

      4.3 Subject to the requirements of the Bankruptcy Code and any confirmed

plan of reorganization in the Bankruptcy Case, all claims and obligations under,

pursuant to or in connection with any welfare, medical, insurance, disability or

other employee benefit plans covering any System Employee or arising under any

Legal Requirement affecting System Employees of Seller and Operator incurred

through and including the Closing Date will remain the responsibility of Seller

and Operator or its Affiliates. For purposes of this Section, a claim or

obligation will be deemed to have been incurred on the date of the occurrence of

(a) death or dismemberment in the case of claims under life insurance and

accidental death and dismemberment policies, (b) the date of the initial

disability in the case of claims under disabilities policies or (c) the date on

which the charge or expense giving rise to such claim is incurred in the case of

all other claims. Buyer will not have or assume any obligation or liability

under or in connection with any such plan maintained with respect to any System

Employee.

 

      4.4 Except as expressly provided in this Section 4 and subject to the

requirements of the Bankruptcy Code and any confirmed plan of reorganization in

the Bankruptcy Case, Operator will remain solely responsible for, and will

indemnify Buyer and hold Buyer harmless from and against all Losses arising from

or with respect to, all salaries and all severance, vacation, medical, sick,

holiday, continuation coverage and other compensation or benefits to which

System Employees may be entitled (including "sticking" or "staying" bonuses),

whether or not such System Employees may be hired by Buyer, as a result of their

employment by Operator, the termination of their employment, the consummation of

the transactions contemplated hereby or pursuant to any applicable Legal

Requirement.

 

      4.5 Subject to the requirements of the Bankruptcy Code and any confirmed

plan of reorganization in the Bankruptcy Case, Operator will retain full

responsibility and liability for offering and providing "continuation coverage"

to any "qualified beneficiary" who is covered by a "group health plan" sponsored

or contributed to by Operator and who has experienced a "qualifying event" or is

receiving "continuation coverage" through and including the Closing Date. As

used in this Section 4.5, "continuation coverage," "qualified beneficiary,"

"group health plan," and "qualifying event" all will have the meanings given

such terms under Internal Revenue Code Section 4980B.

 

      4.6 Nothing in this Section 4 or elsewhere in this Agreement will be

deemed to make any employee of the parties a third party beneficiary of this

Agreement.

 

5. REPRESENTATIONS AND WARRANTIES OF SELLER AND OPERATOR

 

      To the best of its knowledge, Seller and Operator (but specifically not

Duddy) represents and warrants to Buyer, as of the Effective Date and as of the

Closing, as follows:

 

 

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      5.1 Authority and Validity.

 

            5.1.1 Subject only to the requirements and restrictions of the

Bankruptcy Code and subject to the Bankruptcy Court's Order, Operator has full

power and authority to possess the Assets and to carry on the operation of the

Systems pursuant to the Approval Order.

 

            5.1.2 Subject to the Bankruptcy Court's Order and any conditions

that the Court has imposed, this Agreement will constitute a valid and binding

agreement of Seller, enforceable in accordance with its terms.

 

      5.2 No Conflict; Required Consents. Except for the approval of the Court

and obtaining the Required Consents (if necessary and/or if not otherwise

authorized by the Approval Order), the execution and delivery by Seller of, the

performance of Seller under, and the consummation by Seller of the transactions

contemplated by, this Agreement and any other agreements or documents

contemplated by this Agreement (the "Transaction Documents") to which Seller is

a party do not and will not: (a) violate any Legal Requirement; (b) require any

consent, approval or authorization of, or filing of any certificate, notice,

application, report or other document with any Governmental Authority or other

Person; or (c) (i) violate or result in a breach of or constitute a default

under (without regard to requirements of notice, lapse of time, or elections of

any Person, or any combination thereof), (ii) permit or result in the

termination, suspension or modification of, (iii) result in the acceleration of

(or give any Person the right to accelerate) the performance of Seller under, or

(iv) result in the creation or imposition of any Encumbrance under any Contract

or any other instrument evidencing any of the Assets or by which Seller or any

of its assets is bound or affected.

 

      5.3 Assets. Subject to the Bankruptcy Court's Order, Seller, on the

Closing Date, will have the authority to transfer, and will transfer, good and

marketable title to (or, in the case of Assets that are leased, valid leasehold

interests in) the Assets. Pursuant to the Approval Order and ss. 363 of the

Bankruptcy Code, the sale of the Assets shall be free and clear of all

Encumbrances, except (a) Permitted Encumbrances and (b) Encumbrances described

on Schedule 5.3. Otherwise, pursuant to ss. 363 of the Bankruptcy Code, Seller

is transferring the Assets "as is, where is" to Buyer.

 

      5.4 Franchises and Governmental Permits. All Franchises and Governmental

Permits are listed on Schedule 5.4. Seller has provided to Buyer complete and

correct copies of all Franchises and Governmental Permits. Except as set forth

on Schedule 5.4, each Franchise and Governmental Permit is in full force and

effect and Seller is not, and the other party thereto is not, in breach or

default of any material terms or conditions thereunder. Except as set forth on

Schedule 5.4, there is no legal action, governmental proceeding or investigation

pending or threatened to terminate, suspend or modify any Franchise or

Governmental Permit.

 

      5.5 Contracts. All Contracts are described on Schedule 5.5, except for:

(a) subscription agreements with individual residential subscribers for the

cable services provided by the Systems in the ordinary course of business which

may be canceled by the Systems without penalty on not more than 30 days' notice;

(b) miscellaneous service Contracts terminableatwill without penalty; (c)

Contracts involving any immaterial monetary or nonmonetary obligation of Seller,

(d) bank financing documents; and (e) Contracts constituting Excluded Assets.

Seller has provided to Buyer true and complete copies of each of the written

Contracts, including any amendments thereto, other than Contracts described in

clauses (a) through (e) above. Each Contract is unmodified and is in full force

and effect and constitutes the valid, legal, binding and enforceable obligation,

and neither Seller nor any other party thereto, is in breach or default of any

material terms or conditions thereunder. If requested in writing by Buyer,

Seller shall, at Buyer's expense, produce copies of any contracts relating to

the Business not described on Schedule 5.5.

 

 

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      5.6 Real Property. All Assets consisting of leased Real Property interests

are described on Schedule 5.6. Seller has valid and enforceable leasehold

interests in Real Property shown as being leased by Seller on Schedule 5.6 and,

with respect to other Real Property not owned or leased by Seller, Seller has

the valid and enforceable right to use all such other Real Property pursuant to

easements, licenses, rightsofway or other rights, including those easements,

licenses, rightsofway or other rights described on Schedule 5.6, subject only to

Permitted Encumbrances. There is no easement or other real property interest,

other tha