ASSET PURCHASE AGREEMENT BY AND BETWEEN EAGLE WEST COMMUNICATIONS, INC. AND TELECOMMUNICATIONS PRODUCTS INC. DATED AS OF

 

 

 

                                        4

Exhibit   10.1

 

                            ASSET PURCHASE AGREEMENT

 

                                 BY AND BETWEEN

 

                         EAGLE WEST COMMUNICATIONS, INC.

 

                                        AND

 

                        TELECOMMUNICATIONS PRODUCTS INC.

 

                                   DATED AS OF

 

                                  April 3, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

<PAGE>

                            Asset Purchase Agreement

 

This   Asset   Purchase   Agreement   ("Agreement") is made as of April 3, 2004 (the

"Effective   Date"),   by   and   between   Eagle West Communications, Inc., a Nevada

corporation ("Seller") and Telecommunications Products Inc. ("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. This Agreement will then

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.     101 et seq.

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

Arizona   ("Bankruptcy   Court")   commencing   Case   No.   03-02530-RJH ("Bankruptcy

Case").

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

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

debtor-in-possession   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   and   agree   that   this Agreement is subject to

approval   by   the   Bankruptcy   Court   in   the   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:

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

month   immediately   prior   to   the   Closing   Date.

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.

 

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,   Real   Property,   Included   Vehicles,   customer and subscriber lists,

engineering   records,   maps, databases, files and records, and deposits, prepaid

expenses   and   bonds   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.

 

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

 

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

B

ankruptcy   Court or Court.   The Bankruptcy Court as identified in the Recitals.

 

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

Date   through   and   with   respect   to   the   Systems.

 

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.

 

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.

 

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."

 

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.

 

Duddy.   Thomas   M.   Duddy,   the   court-appointed   debtor-in-possession   in   the

Bankruptcy   Case.

 

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, rights-of-way, 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.

 

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

 

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

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

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

Emergency   Planning and Community Right-to-Know Act, 42 U.S.C.    11001, et seq.;

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

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

33 U.S.C.     1251 et seq.; (g) the Occupational Safety and Health Act, 29 U.S.C.

651   et   seq.;   (h) the Toxic Substances Control Act, 15 U.S.C.     2601 et seq.;

(i)   the   Rivers   and Harbors Act of 1899, 33 U.S.C.    401, et seq.; (j) the Oil

Pollution Act of 1990, 33 U.S.C.    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.

 

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.

[Intentionally   left   blank].

 

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.

(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   short-term   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;

(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).

 

     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.

 

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

in   the   United   States   of   America.

 

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

territory   or   possession   of   the   United   States   of America and any political

subdivision   or   quasi-governmental   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.

 

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.

 

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

the   Resource   Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.    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.    9601   et   seq.);   (c)   any   substance regulated by the Toxic Substances

Control   Act   (TSCA)   (15   U.S.C.    2601   et   seq.), or the Federal Insecticide,

Fungicide   and   Rodenticide   Act   (FIFRA)(7   U.S.C.    136   et seq.); (d) friable

asbestos   or   asbestos-containing   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.

 

Included   Vehicles.   The   vehicles   listed   on   Schedule   1.23.

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.

 

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.

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.

 

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.

 

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.

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

organization,   association, limited liability company, Governmental Authority or

other   entity.

 

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 real property, including leasehold interests and

easements,   wire crossing permits and rights of entry (except agreements related

to   multiple   dwelling   units).

 

Required   Consents.   All   authorizations,   approvals and consents required under

Governmental   Permits,   Contracts,   Real 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.

 

Systems.   Each   of   the   cable   television   Systems   providing   cable television

services   to   the   communities   in   Arizona   and Nevada listed on Schedule 1.32.

System   Employees.   All   personnel   who   primarily render services in connection

with   the   Systems.

 

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.

 

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.

 

Other   Definitions.   The   following terms are defined in the Sections indicated:

<TABLE>

<CAPTION>

 

 

 

<S>                                   <C>

 

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

-----------------------------------   ---------

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

-----------------------------------   ---------

</TABLE>

 

 

 

 

     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.

Purchase   and   Sale   of   Assets;   Assumed   Obligations   and   Liabilities

 

     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.

 

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.

 

     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.

 

     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   to   be   sold   to   Buyer up to a maximum aggregate amount of

$1,000.00.

 

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.

Consideration

 

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

consideration of $1,700,000 plus due diligence fees (the "Purchase Price").   The

Purchase   Price   will   be   paid   as   follows:

 

     3.1.1.      Earnest   Money Deposit.   Within five (5) calendar days 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 ONE HUNDRED THOUSAND DOLLARS ($100,000.00) 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 $1,600,000 plus due

diligence   fees   (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 not

the   Closing   Date   Payment)   shall   be   paid   to   Seller   unless   and until the

Bankruptcy   Court has entered the Approval Order in a form satisfactory to Buyer

approving   this   Agreement   and   the   Closing.

 

     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,

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)

 

     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) 40% 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) 50% 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.

 

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.

Employee   Matters

 

     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

pre-employment   physical examinations (including drug-screening tests) and other

appropriate   pre-hire 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   pre-hire   examinations   and

investigations.

 

At   the Closing, Seller and Operator will terminate the employment of all System

Employees   to   whom   Buyer   has   made   an   offer   of   employment.

 

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.

 

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.

 

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.

 

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.

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:

 

     Authority   and   Validity.

 

     Subject   only   to   the requirements and restrictions of the Bankruptcy Code

and   subject   to   the   Bankruptcy   Court's approval, Operator has full power and

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

pursuant   to   the   Approval   Order.

 

Subject   to   the   approval   of   the Court, and any conditions that the Court may

impose,   this Agreement will constitute a valid and binding agreement of Seller,

enforceable   in   accordance   with   its   terms.

 

     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.

 

Assets.   Subject to the approval of the Court, 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    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    363 of the Bankruptcy Code, Seller is transferring the

Assets   "as   is,   where   is"   to   Buyer.

 

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.

 

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   terminable-at-will   without   penalty;   (c)

Contracts   involving   any   immaterial   monetary   or   non-monetary   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   t