Asset Purchase Agreement

DATED AS OF APRIL 16, 2010

 

 

 

THIS ASSET PURCHASE AGREEMENT is dated as of April 16, 2010, by and among JetBroadband VA, LLC, a Delaware limited liability company, Helicon Cable Communications, LLC, a New York limited liability company, and JetBroadband WV, LLC, a Delaware limited liability company (collectively, “Sellers”) and Shentel Cable Company, a Virginia corporation (“Buyer”) and wholly-owned subsidiary of Shenandoah Cable Television Company, a Virginia corporation and a wholly-owned subsidiary of Shenandoah Telecommunications Company, a Virginia corporation (“Shentel”), solely for purposes of Section 1 0.14, Shentel, and solely for purposes of Section 10.15, Helicon Cable Holdings, LLC, a Delaware limited liability company (the “Company”) and JetBroadband Holdings, LLC, a Delaware limited liability company (the “Member”).

A.            Sellers are in the business of providing cable television, high speed data, voice  and other services to customers in Virginia and West Virginia (the “Business”) and own and operate cable television systems (each a “System” and collectively, the “Systems”) serving the communities identified on Schedule A.

B.             The Company owns all of the issued and outstanding membership interests of Sellers, and will therefore benefit from the transactions contemplated by this Agreement;

C.             The Member owns all of the issued and outstanding membership interests of the Company and will therefore benefit from the transactions contemplated by this Agreement.

D.             Sellers desire to sell, and Buyer wishes to purchase, all of the Assets (as defined below) for the price and on the terms and subject to the conditions hereinafter set forth.

In consideration of the above recitals and the covenants and agreements contained herein, Buyer and Sellers agree as follows:

The following terms shall have the following meanings in this Agreement:

1.1           “2009 Audited Financials” means the Company’s audited consolidated balance sheet of the Company as of the fiscal year ended December 31, 2009, and the audited consolidated statements of operations and cash flows of the Company for the fiscal year then ended.

1.2           “Accounts Receivable” means the rights to payment for goods or services that are unpaid immediately prior to the Adjustment Time as reflected on the billing records of Sellers.

1.3           “Active Customers” means, as of any date of determination, the number of subscribers of the applicable service from any Seller, but excluding (i) any subscriber who is more than sixty (60) days Past Due in the payment of any amount in excess of $10 (or any subscriber who would be more than sixty (60) days Past Due in the payment of any such amount, but for the issuance of credits outside of the ordinary course of business consistent with past practice); (ii) any subscriber who has not paid at least one full month’s payment for the applicable service (after application of promotions and bundled discounts) no later than 90 days after Closing; (iii) any subscribers (A) pending disconnection for any reason (provided, that with respect to any pending disconnect for non-payment, only such subscribers that would be more than sixty (60) days Past Due at Closing will be deemed to be a pending disconnect) or (B) for which a service termination notice has been received, if any, in excess of those subscribers pending connection; and (iv) any subscribers that have been obtained after the date hereof by offers made, promotions conducted or discounts given other than those offers, promotions and discounts (X) set forth on Schedule 1.3 or which have substantially the same economic impact as the offers, promotions and discounts set forth on Schedule 1.3, (Y) in the ordinary course of business consistent with past practices in the operation of the Systems or (Z) ap proved by Buyer.

1.4           “Adjustment Time” means 12:01 a.m. on the Closing Date.

1.5           “Affiliates” of a Person means:  (i) any Person directly, or indirectly through one or more intermediaries, 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 ownership of voting securities or voting interests, by contract or otherwise); or (ii) any executive officer, director, manager or member; provided that with respect to the Sellers, the Company and the Member, “Affiliate” of such Person means any Pe rson that is the Member and its direct or indirect subsidiaries.

1.6           “Agreement” means this Asset Purchase Agreement.

1.7           “Antitrust Division” has the meaning set forth in Section 5.7.

1.8           “Assets” has the meaning set forth in Section 2.1.

1.9           “Assumed Contracts” means all contracts, agreements, leases and licenses, written or oral, to which any Seller or the Company is a party, or which is binding on any Seller’s assets, including any amendments and other modifications thereto, which are (a) listed on Schedule 3.8, or (b) in effect on the date of this Agreement that are not required to be listed as Material Contracts on Schedule 3.8, or (c) were entered into between the date of this Agreement and the Closing as permitted by and subject to thi s Agreement and that are listed on the list of Material Contracts delivered by Sellers to Buyer pursuant to Section 5.14 or that by their terms would not be required to be listed as Material Contracts.

1.10         “Assumed Liabilities” means (i) Sellers’ obligations to subscribers of the Business for (a) the delivery of any service in the conduct of the Business to the subscribers of the Systems after Closing, (b) subscriber deposits held by Sellers as of Closing, which are refundable, to the extent included as a liability in the calculation of Net Working Capital, and (c) subscriber advance payments held by Sellers as of Closing, to the extent included as a liability in the calculation of Net Working Capital; (ii) all accrued liabilities of the Business to the extent included as a liability in the calculation of Net Working Capital; (iii) those obliga tions and liabilities attributable to, and arising with respect to, periods after Closing under the Assumed Contracts (other than the contracts that are Excluded Assets) and Governmental Permits, including any Assumed Contract that is a capital lease; (iv) other obligations and liabilities of Seller only to the extent included as a liability in the calculation of Net Working Capital; and (v) all obligations and liabilities arising out of Buyer’s ownership of the Assets or operation of the Systems attributable to, and arising with respect to, the period after Closing (subject to the limitations set forth in Section 9.2, other than any Seller Environmental Liabilities).

1.11         “Base Purchase Price” has the meaning set forth in Section 2.4.1.

1.12         “Basket Amount” has the meaning set forth in Section 9.4.1.

1.13         “Basic Services” means cable television programming sold to subscribers as a package, including broadcast and satellite service programming for which a subscriber pays a fixed monthly fee, but not including Pay TV.

1.14         “Business” has the meaning set forth in Recital A of this Agreement.

1.15         “Buyer” has the meaning set forth in the preamble of this Agreement.

1.16         [INTENTIONALLY OMITTED]

1.17         “Buyer’s Cure Period” has the meaning set forth in Section 8.1.3.

1.18         “Buyer Indemnitees” has the meaning set forth in Section 9.2.

1.19         “Claim” means (i) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (ii) the right to an equitable remedy for a breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

1.20         “Claimant” has the meaning set forth in Section 9.5.1.

1.21         “Closing” means the consummation of the transactions contemplated by this Agreement in accordance with the provisions of Article 7.

1.22         “Closing Date” means the date of the Closing specified in Section 7.1.

1.23         “Closing Form 8-K”  means the Current Report on Form 8-K of the Securities and Exchange Commission to be filed by Buyer to report under Items 2.01 and 9.01 thereunder the consummation of the transactions contemplated by this Agreement.

1.24         “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

1.25         “COBRA Obligations” has the meaning set forth in Section 5.6.6.

1.26         “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

1.27         “Commercial Video Subscriber” means, with respect to any System, any subscriber which is a Governmental Authority, bulk commercial account, such as a hotel, motel, hospital, apartment house and similar multiple dwelling unit, or other commercial account which receives at least broadcast basic cable service (either alone or in combination with any other service, including commercial high speed data and/or telephony) and which is billed on a bulk basis.

1.28         “Communications Act” means the Communications Act of 1934, as amended, including the Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996, each as amended, and the FCC’s rules and regulations, policies and published decisions thereunder, each as in effect from time to time.

1.29         “Company” has the meaning set forth in the preamble of this Agreement.

1.30         “Company Consents” has the meaning set forth in Section 3.4.

1.31         “Compensation Arrangement” means any plan, program, arrangement or agreement or policy other than an Employee Plan, whether written or unwritten, which provides to current or former employees, leased employees, consultants or agents, officers, directors of the Company or any Seller any present or future rights to compensation or other benefits, whether deferred or not, in excess of base salary or wages, including, but not limited to, any bonus or incentive plan, equity-based compensation plan, deferred compensation arrangement, change in control, retention, severance pay plan, vacation, sick leave, medical, death benefit, dental, life insurance, Se ction 125 of the Code “cafeteria” or “flexible” benefit, or any other material employee fringe benefit plan.

1.32         “Confidentiality Agreement” means that certain letter agreement dated September 30, 2008 by and between MCG Capital Corporation and Shentel.

1.33         “Consents” shall mean all consents, authorizations, permits, orders, licenses, certificates, approvals or declarations of or with, or filings with, notices or notifications to Governmental Authorities and other Persons.

1.34         “Copyright Act” means the Copyright Act of 1976, as amended, and the published rules and regulations and decisions of the United States Copyright Office thereunder, as in effect from time to time.

1.35         “Copyright Office” means the United States Copyright Office.

1.36         “Core Representations” has the meaning set forth in Section 9.1.

1.37         “Designated Employees” has the meaning set forth in Section 5.6.1.

1.38         “Digital Services” means an optional tier of digital programming services offered as a package by the Systems to their customers.

1.39         “Direct Claim” has the meaning set forth in Section 9.5.1.

1.40         “Effect” has the meaning specified in Section 1.86.

1.41         “Employee Plan” means any retirement or welfare plan or arrangement or any other employee benefit plan as defined in Section 3(3) of ERISA to which the Company or any Seller sponsors, maintains or contributes to or has any obligation to maintain or contribute to, for the benefit of any employees of the Company or any Seller.

1.42         “Enforceability Exceptions” means the exceptions or limitations to the enforceability of contracts or agreements under principles of general application relating to bankruptcy, reorganization, insolvency, moratorium or similar Legal Requirement affecting creditors’ rights and relief of debtors generally, and rules of law and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

1.43         “Environmental Claim” means any written claim or notice of any proceeding against the Company or any Seller before a Governmental Authority arising under or pertaining to any Environmental Legal Requirement or Hazardous Substance.

1.44         “Environmental Legal Requirement” means any Legal Requirement pertaining to land use, air, soil, surface water, groundwater (including the protection, cleanup, removal, remediation or damage thereof), the handling, storage, treatment or disposal of waste, including hazardous waste, and the handling, storage, manufacture, treatment or transportation of hazardous materials, or to the protection of public health and safety, or any other environmental matter (including the following statutes: (A) Clean Air Act (42 U.S.C. § 7401, et seq.); (B) Clean Water Act (33 U.S.C. § 1251, et seq.); (C) Resource Conservation and Recovery Act (42 U.S.C. &# 167; 6901, et seq.); (D) Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.); (E) Safe Drinking Water Act (42 U.S.C. 300f, et seq.); (F) the Hazardous Materials Transportation Act; (G) the Federal Insecticide, Fungicide and Rodenticide Act and (H) Toxic Substances Control Act (15 U.S.C. § 2601, et seq.).

1.45         “Environmental Permits” means all permits, licenses, registrations, and other authorizations required under applicable Environmental Legal Requirements.

1.46         “Environmental Survey” has the meaning specified in Section 5.10.

1.47         “Equivalent Billing Units” or “EBUs” means, as of any date of determination, the sum of: (i) the number of Active Customers of the Systems that subscribe to either Basic Service or Expanded Basic Service in a single household (without duplication) and (ii) the number of Active Customers of the Systems that are Commercial Video Subscribers to either Basic Service or Expanded Basic Service (without duplication); provided, that the number of Active Customers of the Systems that are Commercial Video Subscribers shall be determined by dividing the gross bulk-rate revenue for Basic Servi ce or Expanded Basic Service (but not revenues from tier or premium services, installation or converter rental or from any outlet or connection other than such customer’s first or from any pass-through charges for sales taxes, line-itemized franchise fees, fees charged by the FCC and the like) attributable to such Commercial Video Subscribers during the most recent billing period ended prior to the date of calculation (but excluding billings in excess of a single month’s charge) by the applicable subscription rate for Basic Service and/or Expanded Basic Service for individual households within the System to which such Commercial Video Subscriber subscribes.

1.48         “ERISA” means Employee Retirement Income Security Act of 1974, as amended.

1.49         “Escrow Agent” means Branch Banking and Trust Company.

 

1.50         “Escrow Agreement” has the meaning specified in Section 2.5.

1.51         “Escrow Amount” has the meaning specified in Section 2.4.2.

1.52         “Excluded Liabilities” has the meaning set forth in Section 2.8.

1.53         “Excluded Assets” has the meaning specified in Section 2.2.

1.54         “Expanded Basic Services” means an optional tier of video services offered by a System to its customers other than Basic Services, a la carte tiers, premium services, digital video services, Pay TV, pay-per-view television, and Internet.

1.55         “FCC” means the Federal Communications Commission.

1.56         “FCC License” means any license, permit, registration, approval or authorization granted or issued by the FCC to the Sellers and used exclusively in the construction and/or operation of the Systems, including all amendments, modifications and renewals thereof; provided, however, the term “FCC License” shall not include any Franchise or Telecommunications Authorization.

1.57         “FCC Telecommunications Authorization” means an authorization granted or issued by the FCC to provide Telecommunications Services.

1.58         “Final Report” has the meaning specified in Section 2.6.3.

1.59         “Financial Statements” means (i) the Company’s consolidated audited balance sheets as of December 31, 2007, and the related consolidated statements of operations and cash flows for the year then ended, (ii) the Company’s consolidated audited balance sheets as of December 31, 2008 and the related consolidated statements of operations and cash flows for the year then ended and (iii) the 2009 Audited Financials.

1.60         “Franchise” means any franchise, permit, license, resolution, contract, certificate, agreement or similar authorization, or any amendment, modification or renewal thereof, granted or issued by a Franchising Authority, which are necessary or required to authorize the construction and operation of the Systems; provided, however, the term “Franchise” shall not include any FCC License or Telecommunications Authorization.

1.61         “Franchising Authority” means any Governmental Authority which has issued a Franchise relating to the operation of any Systems.

1.62         “FTC” has the meaning set forth in Section 5.7.

1.63         “GAAP” means United States generally accepted accounting principles, consistently applied, as in effect as of any date of determination.

1.64         “Governmental Authority” means any United States federal, state, commonwealth, territorial, local (including county or municipal) or foreign governmental, regulatory or administrative, department, board, bureau, authority, agency, division, instrumentality or commission or any court of any of the same.

1.65         “Governmental Order” means any statute, rule, regulation, order, decree, judgment, writ, injunction, stipulation or determination issued, promulgated or entered by any Governmental Authority of competent jurisdiction.

1.66         “Governmental Permits” means all Franchises, FCC Licenses, Telecommunications Authorizations and all other Licenses that are required and held for use in the operation of the Systems, including all amendments, modifications and renewals thereof.

1.67         “Guarantors” means, collectively, Shentel, the Member and the Company.

1.68         “Hazardous Substance” means any pollutant, contaminant, hazardous or toxic substance, material, constituent or waste or any pollutant or any release thereof that is labeled or regulated as such by any Governmental Authority pursuant to an Environmental Legal Requirement, including, to the extent so labeled or regulated, electromagnetic fields, mold, petroleum or petroleum compounds, radioactive materials, asbestos or any asbestos-containing material, or polychlorinated biphenyls or that poses a hazard to human health, safety, natural resources, employees or the environment.

1.69         “High Speed Internet Services” means Internet services and backbone connectivity services offered by the Systems to their customers through a cable modem and cable modem termination system.

1.70         “Hired Employees” has the meaning set forth in Section 5.6.1.

1.71         “HSI Subscribers” means, as of any date of determination, the number of Active Customers of the Systems who subscribe for High Speed Internet Services, including residential and commercial high speed internet, fiber and WAN services.

1.72         “HSR Act” means Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

1.73         “Indemnifying Party” has the meaning specified in Section 9.5.1.

1.74         “Indemnity Escrow” has the meaning set forth in Section 2.5.

1.75         “Insurance Costs” means any direct actual costs incurred by a Claimant in connection with any Third Party Reimbursement received by a Claimant, including any deductibles (without duplication), retroactive or retrospective actual premium adjustments to the extent relating to the applicable Loss.

1.76         “Intellectual Property” means patents, patent applications, trademarks, service marks, trade names, service names, logos, copyrights, trade secrets, domain names, URLs, copyrightable materials, logos, trade secrets, software, source codes, object codes, proprietary information, technical information and data, machinery and equipment warranties, maps, computer disks and tapes, plans, diagrams, blueprints and schematics and other intellectual property rights (any goodwill associated with any of the foregoing), applied for, issued to, transferred to, or owned by any Seller or under which any Seller is licensed or franchised or which are used or held f or use in connection with the Business, together with any additions thereto between the date of this Agreement and the Closing Date.

1.77         “Interim Financial Statements” has the meaning set forth in Section 5.12.

1.78         “IRS” means the United States Internal Revenue Service.

1.79         “Knowledge of Seller,” “to Sellers’ Knowledge,” and words of similar import shall mean the knowledge of Bill Barbour, Tony Barlage, Dan Nofs, Melvin Bryant and George Psyllos after reasonable due inquiry.

1.80         “Leased Real Property” has the meaning set forth in Section 3.7.2.

1.81         “Legal Requirement” means, as in effect on any date of determination, applicable common law or any applicable statute, permit, ordinance, code or other law, rule, regulation or order enacted, adopted, promulgated or applied by any Governmental Authority, including any applicable Governmental Order.

1.82         “Licenses” means permits, licenses, variances, exemptions and approvals issued by any Governmental Authority (other than the Franchises and Telecommunications Authorizations).

1.83         “Liens” means claims, liabilities, mortgages, liens, pledges, conditions, rights of first refusal, options to purchase, charges or encumbrances of any nature whatsoever.

1.84         “Liquidated Damages” has the meaning set forth in Section 8.2.3.

1.85         “Losses” has the meaning set forth in Section 9.2.

1.86         “Management Agreement” has the meaning set forth in Section 5.16.

1.87         “Management Period” has the meaning set forth in Section 5.16.

1.88         “Material Adverse Effect” means any event, condition, change, occurrence, development, circumstance, effect or state of facts (each, an “Effect”) that, individually or in the aggregate with any such other Effect, (a) prevents any Seller from consummating the transactions contemplated by this Agreement or performing its obligations under this Agreement, or (b) is materially adverse to the assets, properties, operations, business, financial condition or results of operations of the Business, taken as a whole, except for any such Effect arising out of, resulting from or attributable t o (i) the transactions contemplated by this Agreement or other actions required to be taken or not to be taken by this Agreement or taken with Buyer’s written consent, (ii) any federal, state, local or foreign governmental actions, including proposed or enacted legislation or regulatory changes, except to the extent such changes or legislation disproportionately affect (relative to other participants in the industry in which Sellers operate) the Business, (iii) changes in GAAP, except to the extent such changes disproportionately affect (relative to other participants in the industry in which Sellers operate) the Business, (iv) conditions generally applicable to the industry in which Sellers operate, except to the extent such conditions disproportionately affect (relative to other participants in the industry in which Sellers operate) the Business, (v) changes in conditions in the United States or global economy or capital, credit or financial markets generally, except to the extent such changes dispro portionately affect (relative to other participants in the industry in which Sellers operate) the Business, and (vi) changes caused by hostilities, acts of terrorism or war, or any material escalation of any such hostilities, acts of terrorism or war existing as of the date hereof.

1.89         “Material Contract” means any contract, agreement, lease or license which: (i) provides for annual obligations on the part of any Seller in excess of $100,000 individually, or more than $250,000 in the aggregate; (ii) contains noncompetition covenants limiting the Company’s or any Seller’s right to engage in any line of material business in any material geographic area or to compete with any Person; (iii) is an employment, consulting (or other personal services by an independent contractor), sales, commissions, or severance Assumed Contract, including contracts to employ executive officers and other contracts with officers or directors of such Person; (iv) relates to, or is evidence of, or is a guarantee of, or provides security for, indebtedness for borrowed money or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by any asset of the Company or any Seller); (v) is a letter of credit, bond or similar arrangement running to the account of, or for the benefit of, the Company or any Seller; (vi) is a Real Property Lease; (vii) is a lease or agreement under which the Company or any Seller is a lessor of or permits any other Person to hold or operate any Real Property or material Personal Property, owned or controlled by the Company or any or any Seller; (viii) is a license or other agreement of the Company or any of its Subsidiaries relating to the use of material Intellectual Property, except for any of the foregoing related to the use of generally available off-the-shelf computer software; (ix) is a collective bargaining agreement to which the Company or any Seller is a party; (x) is a joint venture or partnership agreement or a limited liability company operating agreement to which the Company or any Seller is a party; (xi) is a pension, profit sharing, option, employee stock purchase, stock appreciation right, phantom stock option or other plan of the Company or any Seller providing for deferred or other compensation to employees or any other employee benefit plan, or any contract with any labor union; (xii) is a contract or agreement under which the Company or any Seller has advanced or loaned, or agreed to advance or loan, any other Person in any amount; (xiii) is a general power of attorney or other similar Assumed Contract of the Company or any Seller; (xiv) is a contract with any Affiliate of the Company other than the Sellers; or (xv) is a franchise or similar agreement with a Franchising Authority (except in all cases other than any contract, agreement, lease or license that is an Excluded Asset).

1.90         “Member” has the meaning set forth in the preamble of this Agreement.

1.91         “Net Working Capital” means as of the Adjustment Time (a) the value of all current assets (excluding cash and cash equivalents), of the Sellers, on a consolidated basis, as of the Adjustment Time, less (b) the amount of all current liabilities (excluding (1) any amounts relating to the Payoff Amount and indebtedness (including fees, expenses and any interest relating thereto) and (2) any current liabilities due to Seller Employees or with respect to any Seller Employees) on a consolidated basis, of the Sellers as of the Adjustment Time, determined in each case in accordance with GAAP and the accounting policies and practices of the Sellers (to the extent not inconsistent with GAAP), less (c) liabilities with respect to any capital leases of the Business that are listed on Schedule 3.8 (excluding for purposes of this clause (c) the current portion of such liabilities included under clause (b)), and less (d) any current liability associated with any Excluded Asset.  For the avoidance of doubt, for purposes of calculating Net Working Capital, Accounts Receivable shall be valued at an amount equal to their respective face values, less the amount reserved (in accordance with past practices) for bad debt.

1.92         “Organizational Documents” means, with respect to any Person (other than an individual), the articles or certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company operating agreement, and all other organizational documents of such Person.

1.93         “Owned Real Property” has the meaning set forth in Section 3.7.1.

1.94         “Parties” means Buyer and each Seller, collectively, and “Party” means each of Buyer and each Seller, individually.

1.95         “Past Due” shall mean any subscriber account, payment on which has not been made one day after the due date of the period to which the billing relates.

1.96         “Payoff Amount” means the aggregate amount set forth in the Payoff Letters.

1.97         “Payoff Letters” means letters from each of the Company’s senior and subordinated lenders and the Member’s subordinated lenders setting forth the amounts required to satisfy all indebtedness for borrowed money, notes payable, letters of credit or similar facilities, including all principal, interest, default interest, penalties prepayment penalties, premiums and make-whole amounts in respect thereof to such lenders as of the Closing.

1.98         “Pay TV” means premium programming services selected by and sold to subscribers on an a la carte and/or bundled price basis for monthly fees in addition to the fee for Basic Services.

1.99         “Permitted Encumbrances” means any of the following liens or encumbrances:  (i) landlord’s liens and liens for current taxes, assessments and governmental charges not yet due and for which adequate reserves have been established or being contested in good faith; (ii) statutory liens or other encumbrances that are minor or technical defects in title; (iii) leased interests in property leased to third parties; (iv) restrictions set forth in, or rights granted to Franchising Authority as set forth in, the Franchise, or any other Governmental Authority or applicable Legal Requirements relating thereto; (v) any interest or title of a les sor under an operating lease or capitalized lease or of any licensor under a license, (vi) zoning, building or similar restrictions relating to or affecting property; (vii) immaterial imperfections of title; or (viii) liens listed on Schedule B (all of which shall be released and discharged as of Closing).

1.100       “Person” means any natural person, Governmental Authority, corporation, general or limited partnership, limited liability company, joint venture, trust, association or unincorporated entity of any kind.

1.101       “Personal Property” means all of the tangible and intangible personal property (other than personal property that is an Excluded Asset) used in connection with the ownership and operation of the Systems, including Governmental Permits, the Assumed Contracts, the Accounts Receivable, customer premise equipment and related spare parts, subscriber lists and billing records of the Company and Sellers relating to the Systems, motor vehicles, office furnishings and office equipment plus such additions thereto and deletions therefrom as permitted by Section 5.1 of this Agreement between the date hereof and the Closing Date.

1.102       “Preliminary Report” has the meaning specified in Section 2.6.2.

1.103       “Present Fair Salable Value” means with respect to a Person the amount that may be realized if its aggregate assets (including goodwill) were sold in one or more transactions on a going concern basis each with reasonable promptness in an arm’s length transaction between a willing buyer and a willing seller, neither being under a compulsion to buy or sell, under ordinary conditions for the sale of comparable business enterprises.

1.104       “Purchase Price” has the meaning specified in Section 2.4.1.

1.105       “Real Property” means all of the real property interests of the Company and Sellers used in connection with the ownership and operation of the Systems including fee interests in Owned Real Property (together with the buildings and other improvements located thereon), leasehold interests in Leased Real Property, easements, licenses, rights to access, rights-of-way and other real property interests that are owned or leased by the Company or any Seller and used as of the date hereof in the business or operations of the Systems.

1.106       “Release” means any presence, emission, spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, migration, or release of Hazardous Substances from any source into or upon the environment, including the air, soil, improvements, surface water, groundwater, sewer, septic system, storm drain, publicly owned treatment works, or waste treatment, storage, or disposal systems.

1.107       “RGUs” means the sum of EBUs, HSI Subscribers and Telephony Subscribers.

1.108       “Seller Employees” has the meaning set forth in Section 3.12.1.

1.109       “Seller Environmental Liabilities” means liabilities and obligations of any Seller under Environmental Legal Requirements arising from facts, circumstances or conditions occurring prior to the Closing Date, whether asserted before or after the Closing Date.

 

1.110       “Seller Indemnitees” has the meaning set forth in Section 9.3.

1.111       “Sellers” has the meaning set forth in the preamble of this Agreement, and “Seller” shall mean any one of the Sellers.

1.112       “Seller Expenses” has the meaning set forth in Section 8.2.3.

1.113       [INTENTIONALLY OMITTED]

1.114       “Sellers’ Cure Period” has the meaning set forth in Section 8.1.2.

1.115       “Shentel” has the meaning set forth in the preamble of this Agreement.

1.116       “Solvent” means when used with respect to any Seller, that, as of the Closing Date, its Present Fair Salable Value of its assets will, as of such date, exceed all of its liabilities, contingent or otherwise, as of such date.

1.117       “State Regulatory Authority” means any state Governmental Authority with authority over the provision of Telecommunications Service.

1.118       “State Telecommunications Authorization” means an authorization granted or issued by a State Regulatory Authority to provide Telecommunications Services.

1.119       “Surveys” has the meaning set forth in Section 5.9.

1.120       “System” or “Systems” has the meaning set forth in Recital A of this Agreement.

1.121       “Tangible Personal Property” means all of the equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, spare parts, and other tangible personal property which are owned or leased by the Company or any Seller and used or held for use in the conduct of the business or operations of the Systems.

1.122       “Target Working Capital” is Zero Dollars ($0).

1.123       “Tax” or “Taxes” means any and all federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs, duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other taxes of any kind whatsoever, including any interest, penalty (including any penalty for failure to fi le a Tax Return) or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

1.124       “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any associated schedules, attachments or amendments.

1.125       “Telecommunications Authorization” means any FCC Telecommunications Authorization or State Telecommunications Authorization that authorizes the provision of international, interstate or intrastate Telecommunications Services over the Systems; provided, however, the term “Telecommunications Authorization” shall not include any Franchise or FCC License.

1.126       “Telecommunications Service” shall have the meaning set forth in Section 3(46) of the Communications Act as of the date of this Agreement, 47 U.S.C. Section 153(46).

1.127       “Telephony Subscriber” means, as of any date of determination, the number of Active Customers of the Systems who subscribe for any level of circuit-switched or VoIP telephony service.

1.128       [INTENTIONALLY OMITTED]

1.129       “Third Party Claim” has the meaning set forth in Section 9.5.1.

1.130       “Third Party Reimbursement” has the meaning set forth in Section 9.6.1.

1.131       “Title Commitments” has the meaning set forth in Section 5.9.

1.132       “Transaction Documents” means this Agreement and the Escrow Agreement.

1.133       “Transaction Proposal” has the meaning set forth in Section 5.13.

1.134       “Transfer Taxes” has the meaning set forth in Section 5.4.

1.135       “TSA” has the meaning set forth in Section 5.18.

1.136       “Unclaimed Escrow Amount” means, as of any date of determination, an amount equal to the Indemnity Escrow, minus (a) the amount of the Indemnity Escrow released in accordance with Section 2.5 prior to such date of determination, (b) any amount of the Indemnity Escrow released to Buyer in satisfaction of a claim by a Buyer Indemnitee pursuant to Section 9.2, and (c) the amount of any outstanding and unpaid indemnification claim made pursuant to, and in compliance with, Sectio n 9.2 (whether disputed or undisputed).

2.             SALE AND PURCHASE OF ASSETS

2.1           Agreement to Sell and Purchase.  Subject to the terms and conditions set forth in this Agreement, each Seller hereby agrees to sell, transfer, assign and deliver to Buyer on the Closing Date, and Buyer agrees to purchase from such Seller on the Closing Date, all of such Seller’s right, title and interest in the real, personal and mixed assets, rights, benefits and privileges, both tangible and intangible, wheresoever situated or located, used, useful or held for use in connection with the conduct of the Business or operation of the Systems (other than the Excluded Assets), including the following (collectively, the “Assets”), free and clear of all Liens, other than Permitted Encumbrances:

2.1.1        all Personal Property, including the Tangible Personal Property, relating to the Systems;

2.1.2        the Real Property;

2.1.3        all Franchises and other Governmental Permits;

2.1.4        all Accounts Receivable;

2.1.5        all Assumed Contracts;

2.1.6        all then existing customer records and other records of every kind, books, documents, files, accounts receivable information and credit history and customer lists to the extent permitted under Legal Requirements;

2.1.7        all Intellectual Property relating to the Systems, including filings with the FCC;

2.1.8        all training materials, manuals, technical documents and other information relating to the Systems;

2.1.9        all prepaid expenses, charges and deposits paid by Sellers or any Affiliate of Sellers prior to the Closing Date relating to the operation of the Systems to the extent included as an asset in the calculation of Net Working Capital;

2.1.10      all goodwill associated with the Business; and

2.1.11      the proceeds of all outstanding property and casualty insurance claims as of Closing with respect to any Assets to the extent that any Asset with respect to such claim has not been repaired or replaced as of Closing or payment has not been rendered by a Seller with respect to such repair or replacement, except to the extent included in Net Working Capital.

2.2           Excluded Assets.  Notwithstanding Section 2.1, the Assets shall not include any of the following (the “Excluded Assets”), all rights, titles and interests which are retained by Sellers:

2.2.1        Subject to Section 2.1.12, insurance policies of Sellers and rights and claims thereunder (including any refund of premiums);

2.2.2        bonds, letters of credit, surety instruments, and other similar items;

2.2.3        cash and cash equivalents;

2.2.4        any rights under any contract governing or evidencing an obligation for borrowed money, other than capital leases listed on Schedule 3.8;

2.2.5        all claims with respect to the Business for the period prior to Closing (including claims for refunds or Taxes);

2.2.6        each Seller’s Tax, corporate, personnel and financial records that are not primarily related to the operation of the Systems;

2.2.7        intercompany receivables and any advances to Affiliates, including advances to any employee of the Member, Company or Sellers;

2.2.8        personnel records and Member’s, Company’s and Sellers’ financial records subject to Section 5.19;

2.2.9        all items of Tangible Personal Property consumed or disposed of in the ordinary course of business between the date of this Agreement and the Closing Date;

2.2.10      the employee benefit plans and arrangements of the Company or any Seller and any and all assets associated therewith;

2.2.11      all rights of the Sellers under this Agreement and any other agreement, certificate, instrument or other document executed and delivered by Sellers in connection with the transactions contemplated hereby;

2.2.12      all bank and other depository accounts of Sellers;

2.2.13      any Real Property leased or owned and not located in the Commonwealth of Virginia or the State of West Virginia;

2.2.14      all rights of the Sellers to equity ownership interests in CoBank;

2.2.15      any off-the-shelf office computer software that is not transferable; and

2.2.16      the rights, assets, and properties described on Schedule 2.2.

2.3           Assumed Liabilities.  At Closing, Buyer shall assume, and shall agree to pay, perform and discharge the Assumed Liabilities.  Other than the Assumed Liabilities, Buyer shall not assume, and shall not have any responsibility for, any liabilities or obligations of any Seller, the Company or Member.

2.4           Purchase Price.

2.4.1        As consideration for the transfer of the Assets, Buyer shall pay the Sellers One Hundred Forty Eight Million and No/100ths Dollars ($148,000,000.00) (the “Base Purchase Price”), as adjusted in accordance with Section 2.6 (the Base Purchase Price, as so adjusted, the “Purchase Price”).

2.4.2        The Purchase Price will be paid at Closing as follows: (a) Ten Million Dollars ($10,000,000.00) (the “Escrow Amount”) will be delivered by Buyer to the Escrow Agent (as provided in Section 2.5) by wire transfer of immediately available funds in accordance with written instructions delivered by the Escrow Agent at least three (3) days prior to Closing, (b) the Payoff Amount will be delivered by Buyer by wire transfer of immediately available funds in accordance with the respective wire instructions set forth in the Payoff Letters, and (c) the balance of the Purchase Price will be paid by the Buyer to the Sellers, by wire transfer of immediately available f unds in accordance with written instructions delivered by the Sellers at least three (3) days prior to Closing.

2.5           Indemnity Escrow.  The Escrow Amount shall be deposited in escrow with the Escrow Agent pursuant to the terms of that certain escrow agreement in the form of Exhibit A attached hereto (the “Escrow Agreement”).  At Closing, Buyer and Sellers shall execute and deliver the Escrow Agreement and use commercially reasonable efforts to cause the Escrow Agent named therein to execute and deliver the Escrow Agreement.  The Escrow Amount plus any interest or earnings thereon (the “Indemnity Escrow”) will be available to satisfy any amounts owed by Sellers to Buyer or the Buyer Indemnitees pursuant to Section 9.2 and in accordance with the terms of this Agreement and the Escrow Agreement.  Fifty percent (50%) of the Unclaimed Escrow Amount shall be released by the Escrow Agent to the Sellers on the six (6) month anniversary of the Closing Date.  Fifty percent (50%) of the Unclaimed Escrow Amount remaining after the distribution on the sixth month anniversary of the Closing Date shall be released by the Escrow Agent to the Sellers on the twelve (12) month anniversary of the Closing Date and the remaining Unclaimed Escrow Amount shall be released in full on the eighteen (18) month anniversary of the Closing Date.  Any remaining Indemnity Escrow that the Sellers thereafter becomes entitled to receive under the terms of this Agreement and the Escrow Agreement shall thereafter be released in accordance with the Escrow Agreement.

2.6           Adjustments.

2.6.1        The Base Purchase Price shall be decreased by the amount Net Working Capital is less than Target Working Capital.

2.6.2        At least three (3) business days prior to the Closing, Sellers will deliver to Buyer the data and work papers (the “Preliminary Report”), showing in reasonable detail the Sellers’ good faith estimate of the Net Working Capital, the other adjustments to be made in accordance with this Section 2.6 and the Purchase Price based thereon, and any documentation substantiating Sellers’ calculation of Net Working Capital and the other adjustments proposed in the Preliminary Report.  The parties shall negotiate in good faith to resolve any dispute related to such calculation within three (3) business days of the Sellers’ delivery of the Preliminary Report; provided, however, if the parties are unable to reach agreement within such three (3) business day period with respect to any such dispute, the parties will nevertheless proceed to Closing, subject to the terms and conditions set forth herein, utilizing the information contained in the Preliminary Report and the calculation of the Purchase Price set forth therein.  If the parties are able to reach agreement within such (3) business day period with respect to any such dispute, the Base Purchase Price shall be adjusted in accordance with such agreement, and the parties will proceed to Closing, subject to the terms and conditions set forth herein, utilizing the information contained in the Preliminary Report as so adjusted and the calculation of the Purchase Price set forth therein.  A sample Preliminary Report, reflecting adjustments made to the Base Purchase Price that would be required as if the Closing Date were February 28, 2010 is attached hereto as Schedule 2.6.2.

 

 

2.6.3        Within 60 days after the Closing Date, Buyer shall deliver to the Sellers the data and work papers (the “Final Report”), showing in reasonable detail Buyer’s good faith calculation of the Net Working Capital and the other adjustments made in accordance with this Section 2.6 and the final Purchase Price based thereon.  If the Sellers dispute any matter or item set forth in the Final Report, the Sellers may, within 30 days after receipt of the Final Report, provide to Buyer a written statement of such disputes.  Buyer and the Sellers shall use good faith efforts to jointly resolve such disputes within 30 days after Buyer’s receipt of the Sellers’ written statement, whi ch resolution, if achieved, shall be binding upon all parties to this Agreement and not subject to dispute or judicial review.  If Buyer and the Sellers cannot resolve such disputes to their mutual satisfaction within such 30-day period, Buyer and the Sellers shall, within the following 10 days, jointly engage an independent public accounting firm jointly selected by them to review the Final Report together with the Sellers’ statement of disputes and any other relevant documents.  In the event that Buyer and Sellers cannot agree on an independent public accounting firm during such timeframe, then each of Buyer, on the one hand, and Sellers, on the other hand, shall select an independent public accounting firm within 10 days of the end of such 10 day period, which two firms in turn shall select a third independent public accounting firm within in 10 days of their selection and such third independent public accounting firm shall be jointly engaged by Buyer and Sellers within 10 days o f its selection.  In the event that the two firms fail to agree on a third independent public accounting firm within the 10-day period, then each shall choose 2 independent public accounting firms and out of such 4 firms one shall be randomly selected from a hat, and such selected independent public accounting firm shall be jointly engaged by Buyer and Sellers within 10 days of selection.  The parties agree that the foregoing independent public accounting firm shall not be one that is regularly engaged by Buyer or the Sellers.  Such independent public accounting firm shall calculate the Net Working Capital and the other adjustments using the items included in the Final Report which are not disputed by Buyer and Sellers and shall make its own determination of any item which is disputed by Buyer and Sellers, but otherwise in accordance with the provisions of this Agreement; provided, however, in no event shall any such determination by such firm be higher or lower than the respect ive amount therefor proposed by Buyer and Sellers.  The determination of such firm shall be accompanied by a certificate of such firm that its determination was prepared in accordance with this Agreement with respect to such dispute.  Such firm shall report its conclusions as to such disputes and its determination of Net Working Capital and the Purchase Price based thereon pursuant to this Section 2.6 no later than 30 days after it is engaged by the Sellers and Buyer, which determination shall be conclusive on all parties to this Agreement and not subject to further dispute or judicial review.

2.6.4        The fees and expenses (including any related indemnity obligation to such independent public accounting firm) of such independent public accounting firm shall be borne one-half by Buyer and one-half by the Sellers.  If, after adjustment as appropriate with respect to the Purchase Price and/or the Net Working Capital, Buyer or the Sellers are determined to owe an amount to the other, the appropriate party shall pay such amount to the other by wire transfer of immediately available funds within five (5) business days after receipt of such determination.

2.7           Allocation of Purchase Price.  Buyer and Sellers shall, within 180 days following Closing (subject to the resolution of any unusual contingencies), agree to an allocation of the Purchase Price.  The parties agree to (i) file Forms 8594 with their respective federal income tax returns for the Tax year in which the Closing Date occurs in a manner consistent with such allocation, and (ii) not take a position on any Tax Return that is inconsistent with the terms of any such allocation without the written consent of the other party.   ;The parties shall promptly advise each other of the existence of any Tax audit or litigation related to any allocation hereunder.

 

 

2.8           Excluded Liabilities.  Specifically, and without in any way limiting the generality of Section 2.3, the Assumed Liabilities shall not include, and in no event shall Buyer assume, agree to pay, discharge or perform, and Sellers shall continue to be responsible for, any and all liabilities and obligations of Sellers other than the Assumed Liabilities (the “Excluded Liabilities”), including all liabilities:

2.8.1        attributable to or arising out of the conduct of the Business prior to the Closing, except to the extent included in Net Working Capital;

2.8.2        of any Seller or of the Member or the Company, for the payments of wages, benefits or earned vacation to employees of such Person and under or relating to any Employee Plan of such Person, including any liability of such Person to make any payment or payments to any other Person thereunder as a result of the transactions contemplated hereby (including any employee severance or similar liability), whether or not such liability arises prior to, on or following the Closing Date;

2.8.3        for any and all indebtedness relating to the Business that exists on the Closing Date, except for capital lease obligations related to any Assumed Contracts;

2.8.4        relating to, resulting from, or arising out of Claims based on violations of Legal Requirements or actions taken or that occurred, in each case, prior to the Closing except to the extent included in Net Working Capital;

2.8.5        arising from any claim, action, suit, proceeding, arbitration, investigation, hearing or other activity or procedure to the extent relating to any act or omission occurring on or prior to the Closing, including all liabilities relating to any claim, action, suit, proceeding, arbitration, investigation, hearing or other activity or procedure set forth on Schedule 3.10 and Schedule 3.12.5;

2.8.6        pertaining to any Excluded Asset;

2.8.7        arising or incurred in connection with the negotiation, preparation and execution hereof and the transactions contemplated hereby and any fees and expenses of counsel, accountants, brokers, financial advisors or other experts of Sellers, subject to Schedule 5.4;

2.8.8        any and all liabilities for (i) Taxes of Seller, (ii) Taxes that relate to the Assets or the Assumed Liabilities for taxable periods (or portions thereof) ending on or before the Closing Date and (iii) payments under any Tax allocation, sharing or similar agreement (whether oral or written);

2.8.9        interest and penalties related to any payment obligations to third parties assumed by Buyer for which payment was delinquent at the date of Closing;

2.8.10      subject to the limitations set forth in Section 9.2, that are Seller Environmental Liabilities;

2.8.11      relating to or arising in respect of the employment by Sellers of the Seller Employees, including all liabilities that are incurred in or attributable to any period during which such employees are employed by any Seller; and

2.8.12      relating to or arising in respect of any matter disclosed on Schedule 3.9, Schedule 3.10 and Schedule 3.11.

3.             REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers hereby jointly and severally represent and warrant to Buyer as follows:

3.1           Organization; Authority.  Each Seller is a limited liability company duly organized, validly existing and in good standing under the laws of its formation, and has all requisite limited liability company power and authority necessary to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  Each Seller is qualified to do business and is in good standing under the laws of each jurisdiction in which the ownership, leasing or use of the assets owned, leased or used by it or the na ture of its activities makes such qualification necessary, except where the failure to so qualify has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Buyer has been provided true and correct copies of the Organizational Documents of each Seller, each as in effect on the date hereof.

3.2           Capitalization; Ownership.  Except as disclosed on Schedule 3.2.1, there are no options, warrants or other rights to subscribe for or purchase any limited liability company membership interests of any of Sellers, or securities convertible into or exchangeable for, or which otherwise confer on the holder thereof any right to acquire, any limited liability company membership interests of the Sellers, nor is any of Sellers committed to issue any such option, warrant or other right.   The Company owns all of the outstanding limited liability company interests in each of the Sellers.

3.3           Authorization; Enforceability.  The execution and delivery by each Seller of this Agreement and the other Transaction Documents to which it is a party, the performance by each Seller of its obligations hereunder and thereunder, and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary limited liability company action on the part of each Seller.  This Agreement has been (and each other Transaction Document to be executed by any Seller at or prior to the Closing will b e) duly and validly executed and delivered by such party and, assuming the due authorization, execution and delivery thereof by Buyer, constitutes (or will constitute) a valid and binding obligation of each Seller, enforceable against such Person in accordance with its terms, subject to the Enforceability Exceptions.

3.4           No Violation or Conflict.  Except for, and subject to the receipt of, the Consents disclosed on Schedule 3.4 (collectively, the “Company Consents”), the execution, delivery and performance by each of the Sellers of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby (with or without notice or lapse of time or both): (a) do not require any Consent of any Governmental Authority; (b) do not violate or result in a breach of any provision of the respective Organizational Documents of such Person; (c) do not violate, conflict with, or result in a breach of any Legal Requirement to which any Seller is bound; (d) do not conflict with, violate, constitute grounds for termination, modification, amendment, or cancellation of, or loss of any benefits or rights under, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, or give rise to any obligation of any Seller to make payment under, any (i) Assumed Contract, or (ii) License to which any Seller is bound; and (e) do not and will not result in the creation of any Liens, upon any Seller’s assets, other than Permitted Liens, except, in the case of clauses (c) and (d) of this Section 3.4, that have not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.5           Licenses.  Schedule 3.5 lists, as of the date hereof, all material Licenses that are required and held for use in the conduct of the Business and operations of the Systems as currently conducted as of the date hereof.  Copies of such Licenses have been provided to Buyer.  Such Licenses constitute all material Licenses that are necessary to enable any Seller to carry on the Business.  All such Licenses are valid, binding and in full force and effect in all material respects.  No proceedings are pending or, to the Seller’s Knowledge, threatened, to revoke, terminate or cancel any of such Licenses.  Except as set forth on Schedule 3.11, each Seller is in full compliance with all of the terms and requirements of each such Licenses in all material respects and no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) (i) constitute or result directly or indirectly in a material violation of or a material failure to comply with any material term or material requirement of any such License, or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, termination or material modification of any such License.  No Seller has received any notice or other communication (in writing) from any Governmental Authority or any Person, regarding (A) any actual, alleged, possible or poten tial violation of or failure to comply with any term or requirement of any such License, or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination or material modification of any such License.  Notwithstanding any other provision of this Agreement, Buyer acknowledges and agrees that no representations or warranties are being given by any Seller, the Company or the Member with respect to the Communications Act, the Copyright Act or FCC matters in this Section 3.5.

3.6           Title, Condition and Sufficiency of Assets.  The Sellers have good and valid title to, or a valid and enforceable leasehold interest in, or other valid rights to use, the Assets, free and clear of all Liens, other than Permitted Encumbrances.  All items of Tangible Personal Property which, individually or in the aggregate, are material to the operation of the Business are in adequate operating condition for their respective present uses and operation, ordinary wear and tear excepted.  Except with respect to any services provided by the Sellers pursuant to the TSA and except with respect to the Excluded Assets, the Assets are all the assets necessary  to permit Buyer to conduct the Business substantially as it is being conducted on the date of this Agreement.

3.7           Real Property.

3.7.1        Schedule 3.7.1 lists all Real Property owned by any Seller and used exclusively in the operation of the Systems and located in the Commonwealth of Virginia or the State of West Virginia (“Owned Real Property”).  Except as set forth in Schedule 3.7.1, a Seller has good and marketable title in fee simple to such premises and all buildings, improvements and fixtures thereon, free and clear of all Liens, other than Permitted Encumbrances.

3.7.2        Schedule 3.7.2 lists all leases (copies of which have been delivered to Buyer) of Real Property used in the operation of the Systems and located in the Commonwealth of Virginia or the State of West Virginia (the “Leased Real Property”).  No Seller is in breach in any material respect of any lease identified on Schedule 3.7.2 and, to the Knowledge of Sellers no other party to any such lease is in breach thereof.  All tenant fixtures and improvements owned or leased by the Company or any Seller and located on Leased Real Property are in adequate operating condition for thei r respective present uses and operation, ordinary wear and tear excepted.  There does not exist any actual (or, to the Knowledge of Sellers, threatened) condemnation or eminent domain proceedings, planned public improvements, annexation, special assessments, zoning or subdivision changes, or other adverse claims affecting any Owned Real Property or any part thereof, and no Seller has received any written notice of the intention of any Governmental Authority or other Person to take or use all or any part thereof.  Except as set forth on Schedule 3.7.2, there are no Assumed Contracts entered into by any Sellers, granting to any Person other than the Company or any Seller, the right to occupy any Owned Real Property or, to any Seller’s Knowledge, any Leased Real Property.

3.7.3        There is no private restrictive covenant or governmental use restriction (including zoning) on all or any portion of the Owned Real Property or, to the Sellers’ Knowledge, the Leased Real Property that prohibits or materially interferes with the current use of the Owned Real Property or the Leased Real Property.

3.7.4        All material permits required for the occupancy and operation of the Owned Real Property and Leased Real Property as presently being used by Sellers have been obtained and are in full force and effect, and, as of the date hereof, no Seller has received any notices of material default or material violations in connection with such items.

3.7.5        Sellers have paid all Taxes, assessments, or other charges payable by any of them with respect to the Owned Real Property or the Leased Real Property.

3.8           Contracts.  Schedule 3.8 lists, as of the date hereof, each of the Material Contracts, except for subscription agreements for the delivery of any service to subscribers in Virginia and West Virginia in the conduct of the Business, the form of which, as in effect on the date hereof, is attached to Schedule 3.8.  The Company has made available to Buyer true, correct and complete copies of all Material Contracts.& #160; Except as set forth on Schedule 3.8, each Material Contract is in full force and effect (subject to expiration at the end of its current term) and is valid, binding and enforceable upon the Seller which is a party thereto and, to the Knowledge of the Sellers, the other parties thereto in accordance with its terms, subject to the Enforceability Exceptions.  Except as disclosed on Schedule 3.8, the Seller which is a party thereto is in compliance in all material respects with, and not in material default under, the terms of each Material Contract, and to the Knowledge of the Sellers, as of the date hereof, each other party to each Material Contract is in compliance in all material respects with, and not in material default under, the terms of such Material Contract.

3.9           Taxes.  Except as set forth on Schedule 3.9:

3.9.1        Sellers have filed with the appropriate taxing authorities when due all Tax Returns required to be filed by them and all such Tax Returns were correct and complete in all material respects.

3.9.2        Sellers have timely paid all Taxes due and payable with respect to the Systems and their operations other than those Taxes being disputed in good faith by appropriate proceedings, which have been properly accrued or paid.

3.9.3        All monies required to be withheld by Sellers in connection with any amounts paid or owing to any employee, independent contractor, creditor, equity holder or other third party for Taxes have been collected or withheld and either timely paid to the respective Tax authority or set aside in accounts for such purpose.

3.9.4        No Seller is a party to any Tax allocation or sharing agreement, nor do they have any liability for the Taxes of any Person as a transferee or successor, by contract, or otherwise.

3.9.5        Sellers have, at all times since their organization, been classified as disregarded entities for federal income tax purposes, and none of them has made an election to be classified as an association that is subject to federal income taxation as a corporation.

3.10         Claims and Legal Actions.  Except for any investigations and rule-making proceedings affecting the cable industry or telecommunications industry generally, and except as identified on Schedule 3.10, as of the date hereof, there is (i) no Governmental Order against any Seller, and (ii) no claim, action, suit, proceeding or arbitration in progress or pending, or to the Knowledge of the Sellers, threatened against any Seller or the Assets, in each case, other than routine disputes undertaken in the ordinary course of business consistent with past practice.

3.11         Compliance with Laws.  Except as set forth on Schedule 3.11, the ownership, leasing and use of the Assets as they are currently owned, leased and used, and the conduct of the Business as it is currently conducted, comply in all material respects with all applicable Legal Requirements.  Since September 1, 2007, no Seller has received any written notice of the material violation of any Legal Requirement by any Seller.  Notwithstanding any other provision of this Agreement, Buye r acknowledges and agrees that no representations or warranties are being given by any Seller, the Company or the Member with respect to the Communications Act, the Copyright Act or FCC matters in this Section 3.11.

3.12         Employees and Employee Benefit Plans Employees.

 

3.12.1       Schedule 3.12.1 lists as of the date hereof all of the employees of Sellers engaged in the operation of the Business, including the names and positions of each such employee, the hourly wage or salary information, bonus opportunity and accrued vacation for such employees and their respective dates of hire.  Each employee set forth on Schedule 3.12.1 who is employed by Seller immediately prior to the Closing and each additional employee who is hired to perform services for any Seller following the date hereof who is employed by any Seller immediately prior to the Closing shall be referred to herein as a “Seller Employee” and, collectively, as the “Seller Employees.”

3.12.2      Except as disclosed on Schedule 3.12.2, the employment of all Seller Employees is terminable at will by Sellers without any penalty or severance obligation incurred by Sellers.

3.12.3      Except as set forth on Schedule 3.12.3, as of the date hereof, there is not pending or, to the Knowledge of the Sellers, threatened in writing against any Seller, any labor dispute, strike or work stoppage that affects or interferes with the operation of any Seller, and to the Knowledge of the Sellers, there is no organizational effort currently being made or threatened by or on behalf of any labor union with respect to any Seller Employees.  No Seller has experienced any strike, work stoppage or other similar significant labor difficulties within the twenty-four (24) months preceding the date of this Agreement.

3.12.4      Except as set forth on Schedule 3.12.4 hereto, as of the date hereof, (i) no Seller is a signatory or a party to, or otherwise bound by, any collective bargaining agreement which covers any Seller Employees or former Seller Employees, (ii) no Seller has agreed to recognize any union or other collective bargaining unit with respect to any Seller Employees, and (iii) no union or other collective bargaining unit has been certified as representing any Seller Employees.

3.12.5      Except as set forth on Schedule 3.12.5, as of the date hereof, there are no pending or, to the Knowledge of Sellers, threatened in writing, proceedings, complaints, claims, disputes, investigations or charges relating to any alleged violation of any Legal Requirement pertaining to labor relations or employment matters relating to any Seller Employees or former Seller Employees.

3.13         Employee Benefits.

3.13.1      List of Benefit Plans.  All of the Employee Plans and Compensation Arrangements are listed on Schedule 3.13.1.  Except as disclosed on Schedule 3.13.1, no Seller sponsors, maintains or contributes to or has any obligation to maintain or contribute to, or has any direct or indirect liability, whether contingent or otherwise, with respect to any Employee Plan or Compensation Arrangement.  Sellers have made available to Buyer true and correct copies of the Employee Plans and Compensation Arrangements (or to the extent no such copy exists, or an Employee Plan or a Compensation Ar rangement is not in writing, a materially accurate written description of the material terms thereof) with their related trust, if applicable, and amendments.

3.13.2      Compliance.  Except as disclosed on Schedule 3.13.2, (i) each Employee Plan or Compensation Arrangement has been established and operated in compliance with its own terms and in material compliance with the requirements of all applicable Legal Requirements, including ERISA and the Code, (ii) there exists no suit or claim pending, or to the Knowledge of the Sellers, threatened in writing with respect to any Employee Plan or Compensation Arrangement (other than routine claims for benefits in the ordinary course), and (iii) all required contributions to or in respect of each Employee Plan or Compensation Arrangement have been timely made.

3.13.3      Liabilities.  Except as disclosed on Schedule 3.13.3, with respect to each Employee Plan or Compensation Arrangement, there does not currently exist any condition or event, and no condition or event is reasonably expected to occur, that could subject, directly or indirectly, Buyer to any material liability, contingent or otherwise, or to the imposition of any Liens on the Assets under ERISA or the Code.  Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS or has a determination letter application pending with the IRS, or is entitled to rely on a favorable opi nion letter issued by the IRS, and to the Knowledge of the Sellers no fact or event has occurred since the date of such determination letter or letters from the IRS that would reasonably be expected to adversely affect the qualified status of any such Employee Plan or the exempt status of any such trust.  No Employee Plan is subject to Title IV of ERISA.

3.13.4      Additional Payments.  Except as disclosed on Schedule 3.13.4, the consummation of the transactions contemplated hereby, either alone or in combination with another event, will not (i) entitle any Seller Employees to any payment, (ii) increase the amount of compensation due to any Seller Employee, (iii) accelerate the time of vesting of any compensation, stock incentive or other benefit or (iv) result in any “parachute payment” under Section 280G of the Code whether or not such payment is considered to be reasonable compensation for services rendered.

3.13.5      Post-Retirement Benefits.  Except as disclosed on Schedule 3.13.5, no Seller has any obligation to provide benefits, including death or medical benefits (whether or not insured) with respect to any Seller Employee or former Seller Employee beyond his or her retirement or other termination of service other than (i) coverage under COBRA, or (ii) disability benefits under any employee welfare plan that have been fully provided for by insurance.

3.14         Environmental Matters.

(a)           Except as disclosed on Schedule 3.14(a), each Seller’s operations comply in all material respects with all applicable Environmental Legal Requirements and no Seller has any material liability with respect to any Real Property under Environmental Legal Requirements.

(b)           Except as disclosed on Schedule 3.14(b), no Seller has used any Real Property for the manufacture, transportation, treatment, storage or disposal of Hazardous Substances, except for such uses of Hazardous Substances (e.g., cleaning fluids, solvents and other similar substances) that are customary in the maintenance and operation of businesses similar to the Business and in amounts or under circumstances that would not reasonably be expected to give rise to material liability for remediation.

(c)           Except as disclosed on Schedule 3.14(c), no Environmental Claim has been filed or issued or, to the Knowledge of the Sellers, threatened against any Seller.

(d)           Except as set forth in Schedule 3.14(d), each Seller possesses and is in material compliance with all Environmental Permits required under such Environmental Legal Requirements to operate the Business as it presently operates.  A true, correct and complete list of all such Environmental Permits is set forth in Schedule 3.14(d)

(e)           Except as set forth in Schedule 3.14(e), all such Environmental Permits are transferable and none requires consent, notification or other action to remain in full force and effect following the Closing.

(f)            Except as set forth in Schedule 3.14(f), there has been no Release of Hazardous Substances by Sellers at, on, under or from the Real Property and, to the Knowledge of Sellers, there are no other facts, circumstances or conditions, existing, initiated or occurring prior to the Closing Date, that have or will result in liability under Environmental Legal Requirements.

(g)           Except as set forth in Schedule 3.14(g), no Seller has received any written communication from a third party, including a Governmental Authority, alleging that Sellers’ conduct of the Business is in material violation of or that Sellers have Liability under any Environmental Legal Requirements, which allegation is not fully resolved.

(h)           Except as set forth in Schedule 3.14(h), no Seller has received any written notification alleging that it is liable for or requesting information pursuant to section 104(e) of the Comprehensive Environmental Response, Compensation and Liability Act or a similar state statute, concerning any Release or threatened Release of Hazardous Substances at any location used in connection with the Business, which is not fully and finally resolved.

(i)            Except as set forth on Schedule 3.14(i), to the Knowledge of Sellers, none of the following is present at the Real Property: (i) underground improvements, including treatment or storage tanks, or underground piping associated with such tanks, used currently or in the past for the management of Hazardous Substances; (ii) any dump or landfill or other unit for the treatment or disposal of Hazardous Substances; (iii) PCBs; (iv) toxic mold; (v) lead-based materials, the presence of which constitutes a violation of applicable Environmental Legal Requirements; or (vii) asbestos-containing materials, the presence of which constitutes a violation of applicable Environmental Legal Requirements.

(j)            Sellers have furnished to Buyer copies of all environmental assessments, reports, audits and other documents in its possession that relate to Sellers’ compliance with Environmental Legal Requirements in connection with the Business or the environmental condition of the Real Property.

3.15          FCC and Copyright Compliance.

(a)           Except as provided in Schedule 3.15(a), each Seller’s operation of its Systems is in compliance in all material respects with the applicable provisions of the Communications Act and the Copyright Act.  No Seller has received written notice claiming a violation by such Seller or the Business of any Legal Requirements applicable to the Systems or the Business as it is currently conducted.

(b)           Each Seller is permitted under all applicable Legal Requirements, including the Communications Act and the Copyright Act, to distribute the video programming and other information that it currently makes available to the customers of its Systems.   Each Seller is permitted under all applicable Legal Requirements, including the Communications Act, to utilize all frequencies generated by the operation of its Systems, and, where required, is licensed to operate all the facilities required by applicable Legal Requirements to be licensed by the FCC.  Each Seller has delivered to Buyer complete and correct copies of all written notices and requests from the FCC or the United States Copyright Office relating to such Seller’s operation of the Sys tems during the period of such Seller’s ownership of the Systems and any FCC-licensed or registered facility used in conjunction with Sellers’ operation of the Systems that have been received by Sellers.  All reports, fees, filings, applications and other submissions of Sellers to the FCC and to the Copyright Office are true and correct in all material respects.  As of the date hereof, no written requests have been received by Seller, during the period of Seller’s ownership of the Systems, from the FCC or the United States Copyright Office challenging or questioning the right of Seller’s operation of any System or any FCC-licensed or registered facility used in conjunction with Seller’s operation of any System.

(c)           The Sellers make no representation or warranty with respect to the effect of the cable television industry-wide dispute concerning music licensing fees.

(d)           Except as set forth on Schedule 3.15(d), each Seller has submitted to the FCC, all material filings with respect to the Systems and the Business, including cable television registration statements, current annual reports, aeronautical frequency usage notices, and current cumulative leakage index reports, that are required under the Communications Act.  Each System is in material compliance with signal leakage criteria prescribed by the FCC, is in material compliance with the must-carry and retransmission consent provisions of the Communications Act, as well as with all provisions or terms in each Seller’s must-carry elections or retransmission consent agreements.

(e)           All necessary United States Federal Aviation Administration approvals have been obtained and all related notifications have been submitted and are effective with respect to the height and location of towers included in the Assets and all FCC antenna structure registrations have been filed with respect to such towers.

(f)            Except as set forth on Schedule 3.15(f), the notice contemplated by Section 626 of the Communications Act has been timely filed with respect to all System franchises included in the Governmental Permits that expire within thirty months following the date of this Agreement.

(g)           Schedule 3.15(g) lists, as of the date hereof, the stations within the Systems that have elected must-carry or retransmission consent status pursuant to the Communications Act.  Except as described on Schedule 3.15(g), each station carried by the Systems is carried pursuant to a written retransmission consent agreement, written must-carry election or other written programming agreement, copies of which have been delivered to Buyer.

(h)           Schedule 3.15(h) lists, as of the date hereof, all material FCC Licenses and Telecommunications Authorizations that are required and held for use in the conduct of the Business and operations of the Systems as currently conducted as of the date hereof.  Copies of such FCC Licenses and Telecommunications Authorizations have been provided to Buyer.  Such FCC Licenses and Telecommunications Authorizations constitute all material FCC Licenses or Telecommunications Authorizations that are necessary to enable any Seller to carry on the Business as currently conducted as of the date hereof.  All such FCC Licenses and Telecommunications Authorizations are valid, binding and in full f orce and effect in all material respects.  No proceedings are pending or, to the Seller’s Knowledge, threatened, to revoke, terminate or cancel any of such FCC Licenses or Telecommunications Authorizations.  Except as set forth on Schedule 3.15(h), each Seller is in full compliance with all of the terms and requirements of each such FCC Licenses and Telecommunications Authorizations in all material respects and no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) (i) constitute or result directly or indirectly in a material violation of or a material failure to comply with any material term or material requirement of any such FCC License or Telecommunications Authorization, or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, termination or material modification of any such FCC License or Telecommunications Authori zation.  No Seller has received any notice or other communication (in writing) from any Governmental Authority or any Person, regarding (A) any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any such FCC License or Telecommunications Authorization, or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination or material modification of any such FCC License and Telecommunications Authorization.

3.16         Financial Statements; Absence of Certain Changes; No Undisclosed Liabilities.

3.16.1      Attached to Schedule 3.16.1 are true and complete copies of the Financial Statements.  The Financial Statements have been prepared from, and are in accordance, in all material respects, with, the books and records of the Company.  The Financial Statements including the footnotes thereto: (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered; and (ii) fairly present in all material respects the financial position of the Company and its Subsidiaries and the results of operations and cash flows of the Company and its Subsidiaries on a consolidated basis, in each case, as of the date thereof and for the periods presented therein.

3.16.2      Except as set forth on Schedule 3.16.2, since December 31, 2009 through the date hereof, (i) there has been no event, change or circumstance with respect to any Seller that has had, or would reasonably be expected to have, a Material Adverse Effect; and (ii) each Seller has carried on and operated the Business in the ordinary course.

3.16.3      Except as set forth on Schedule 3.16.3, no Seller has any material liabilities or obligations of any kind or nature, whether known or unknown, absolute or contingent, accrued or unaccrued, which are Assumed Liabilities and which would be required to be disclosed on a balance sheet prepared in accordance with GAAP, except for Assumed Liabilities  (a) which are reflected or reserved for in the Financial Statements, (b) which are included in the calculation of Net Working Capital or (c) which are current liabilities incurred in the ordinary course of business since December 31, 2009.  No Seller has any off-balance sheet arrangements (as such term is defined in Regulation S-K, Item 303), except to the extent otherwis e set forth in the footnotes to the Financial Statements.

3.17         Intellectual Property.  Except as set forth on Schedule 3.17, Sellers have good and valid title to, or license or otherwise have the valid right to use all Intellectual Property used in the operation of the Systems, free and clear of all Liens, other than Permitted Encumbrances.  Schedule 3.17 sets forth, as of the date hereof, all patents, federally registered trademarks and service marks and registered copyrights, and a ny pending applications therefor, and any Internet domain names held by Sellers and used, useful or held for use in the operation of the Business.  No Seller has, as of the date hereof, received any written notice alleging that any Seller has violated any Intellectual Property rights of any other Person.  Except as set forth on Schedule 3.17, no Seller is infringing upon the Intellectual Property rights of any other Person nor, to the Knowledge of the Sellers, as of the date hereof, is any third party infringing upon the Intellectual Property rights of any Seller.  Notwithstanding any other provision of this Agreement, Buyer acknowledges and agrees that no representations or warranties are being given by any Seller, the Company or the Member with respect to the Communications Act, the Copyright Act or FCC matters in this Section 3.17.

3.18         Insurance.  Schedule 3.18 lists all insurance policies now in force and held or owned by any Seller relating to the Assets, the Systems or the operation of the Business, specifying the insurer, the amount of and nature of coverage, and the risk insured against.  No Seller has been refused or denied renewal of any insurance coverage or received any written correspondence thereof.

3.19         [Intentionally Omitted].

3.20         Transactions with Affiliates.  Except as disclosed on Schedule 3.20, no Seller is currently a party to any Assumed Contract with the Member or any Affiliate of Member, or directors or officers of the Member or any such Affiliates (other than the Company and Sellers).

3.21         No Broker.  Except as set forth on Schedule 3.21, no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Sellers in connection with this Agreement or the transactions contemplated by this Agreement or is entitled to any payment in connection herewith or therewith which, in either case, would result in any obligation or liability on the part of Buyer.

3.22         System Information; RGUS; Homes Passed.

(a)           Schedule 3.22(a) sets forth a true and accurate description of the following information relating to each System by headend and/or franchise, as applicable, in each case, as of the date hereof:

(i)            a list of the Basic Services, Digital Services, High Speed Internet Services and other services (e.g., Expanded Basic Services, Pay TV and a la carte services available from the Systems), and the rates charged by Sellers for each such service (excluding pass-throughs and other charges) provided by the Systems;

(ii)           the stations and signals carried by the Systems and the channel position of each such signal and station;

(iii)          the approximate total number of miles of cable plant of the Systems; and

(iv)          the bandwidth capacity of the Systems specified in Mhz and the number of channels activated throughout the Systems.

(b)           As of March 15, 2010, (a) the aggregate number of RGUs, (b) the aggregate number of HSI Subscribers, (c) the aggregate number of Telephony Subscribers, and (d) the aggregate number of EBUs, in each case, was no less than the amount set forth in Schedule 3.22(b).

(c)           Except as set forth on Schedule 3.22(c) and other than direct broadcast satellite services providers and the certificated local exchange carrier, as of the date hereof, to Sellers’ Knowledge, other than the Systems, there are no other providers of cable television services that have constructed, or publicly announced plans to construct, plants for the provision of cable television services within the service areas of the Systems.

3.23         Accounts Receivable.  All of each Seller’s existing Accounts Receivable relating to the Systems represent valid obligations of customers of such Seller arising from bona fide transactions entered into in the ordinary course of business.  Schedule 3.23(a) sets forth such Seller’s existing Accounts Receivable as of the date specified on Schedule 3.23(a), together with an aging report for such Accounts Receivable , as of such date.

3.24         Solvency.  Sellers are Solvent.

3.25         Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 3, OR ANY SCHEDULE, CERTIFICATE OR OTHER DOCUMENT DELIVERED BY ANY SELLER PURSUANT TO THIS AGREEMENT, INCLUDING THE OTHER TRANSACTION DOCUMENTS, NO SELLER MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, INCLUDING, ANY WARRANTY OF TITLE, MERCHANTABILITY OR FITNESS OF ANY ASSET FOR A PARTICULAR PURPOSE OR WITH RESPECT TO ANY PROJECTIONS OR FUTURE PERFORMANCE OF THE SYSTEMS, THE COMPANY OR THE SELLERS.

4.             REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers as follows:

4.1           Organization, Standing and Authority.  Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia and is qualified to conduct business as a foreign corporation in all jurisdictions where qualification is required.  Buyer has the requisite corporate power and authority to execute and deliver this Agreement and to perform and comply with all of the terms, covenants and conditions to be performed and complied with by Buyer hereunder.

4.2           Authorization and Binding Obligation.  The execution and delivery by Buyer of this Agreement and the other Transaction Documents to which it is a party, the performance by Buyer of its obligations hereunder and thereunder, and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of Buyer.  This Agreement has been duly executed and delivered by Buyer, and, assuming the due authorization, execution and delivery thereof by each of the Sellers, this Agreement constitutes a valid and legally binding obligation of Buyer, enforceable against it in accordance with its terms, except as enforceability may be limited by the Enforceability Exceptions.

4.3           Absence of Conflicting Agreements.  Subject to obtaining the Company Consents, the execution, delivery and performance of this Agreement by Buyer will not: (i) require the consent, approval, permit or authorization of, or declaration to or filing with any Governmental Authority, or any other third party;  (ii) violate the certificate of incorporation or bylaws of Buyer; (iii) violate any material law, judgment, order, ordinance, injunction, decree, rule or regulation of any court or governmental instrumentality binding on Buyer; or (iv) c onflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license or permit to which Buyer is a party or by which Buyer may be bound, in all such cases, such that Buyer could not perform hereunder and acquire or operate the Assets.

4.4           Buyer Qualification.  Buyer knows of no reason why it cannot become the owner of the Assets pursuant to the Franchises, and to Buyer’s Knowledge, Buyer has the requisite qualifications to own and operate the Systems.

4.5           Availability of Funds.  Buyer will have available at the Closing sufficient funds to enable it to consummate the transactions contemplated hereby.

4.6           No Broker.  Except as set forth on Schedule 4.6, no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Buyer in connection with this Agreement or the transactions contemplated by this Agreement or is entitled to any payment in connection herewith or therewith which, in either case, would result in any obligation or liability on the part of any Seller.

5.             COVENANTS OF THE PARTIES

5.1           Conduct of the Business of the Systems.  Except as contemplated by this Agreement, as set forth on Schedule 5.1 or with the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), between the date hereof and the Closing Date, Sellers shall operate the Systems in the ordinary course of business in accordance with past practices.  Without limiting the generality of the foregoing, except as set forth on Schedule 5.1 or except w ith the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), each Seller shall, to the extent applicable:

(a)           not sell, lease, assign, transfer or otherwise dispose of any of the Assets;

(b)           use commercially reasonable efforts to maintain relations and goodwill generally with suppliers, customers, distributors and others having business relations with Sellers;

(c)           comply in all material respects with all Legal Requirements applicable to Sellers, and keep in full force and effect in all material respects all Governmental Permits applicable to Sellers;

(d)           use commercially reasonable efforts to keep in full force and effect the insurance policies (comparable in amount and scope) covering Sellers and the Systems as of the date hereof;

(e)           not (i) acquire (including by merger, consolidation or acquisition of stock or assets) any corporation, partnership, or other business organization or any division thereof or any material amount of assets except for acquisitions of inventory and the purchase of raw materials, supplies and equipment in the ordinary course of business consistent with past practice; or (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee, endorse, or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans or advances or incur any other indebtedness for borrowed money that would be outstanding as of the Closing and an Assumed Liability;

(f)            use commercially reasonable efforts to maintain the Assets in adequate operating condition for their respective present uses and operation, ordinary wear and tear excepted;

(g)           deliver to Buyer, within 30 days following the end of each calendar month, all financial statements, financial reports, and other related information that are prepared in the ordinary course of business for regular review by executive management of any Seller;

(h)           deliver to Buyer, within 10 days following the end of each calendar month,  true and complete copies of monthly subscriber reports and subscriber account receivable aging reports with respect to the operation of the Business; and

(i)            not mortgage, pledge or otherwise subject to any Lien other than Permitted Encumbrances, any of the Assets;

(j)            not adopt a plan of liquidation, dissolution, merger, consolidation, restructuring, recapitalization or reorganization;

(k)           not make or rescind any express or deemed election relating to Taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or change any of its methods of reporting income or deductions on its income Tax Returns, or the classifications of its existing property and assets, for any taxable period ending on or after December 31, 2009, in each case, to the extent such action could materially adversely affect Buyer after Closing, and not deviate from the federal depreciation schedules for its property and assets, except in either case as may be required by Legal Requirement or the IRS;

(l)            not make any change in any method of accounting or accounting practice or policy other than those required by GAAP or applicable Legal Requirement;

(m)           not implement any material increase or decrease in the rates charged to the subscribers of the Systems or make any material changes in programming or give any notices to subscribers or local authorities concerning any material changes in rates or programming, or make any commitment regarding changes in or continuation of rates or programming, except as obligated pursuant to applicable Legal Requirement or Material Contracts and other than marketing and promotional activities in the ordinary course of business, consistent with past practice;

(n)           continue to implement its procedures for disconnecting and discontinuance of service to subscribers whose accounts are delinquent, in accordance with past practice;

(o)           not enter into, modify, renew or amend an Assumed Contract that would be a Material Contract, except in the ordinary course of business consistent with past practice; and

(p)           not agree or commit to do any action prohibited by this Section 5.1.1.

5.2           Access to Information.  Subject to the Confidentiality Agreement, each Seller shall allow Buyer and its authorized representatives reasonable access upon reasonable advance notice and at Buyer’s expense during normal business hours to the Sellers and their respective properties, equipment, books, records, Governmental Permits, Assumed Contracts, documents and key personnel for the purpose of inspection, it being understood that the rights of Buyer hereunder shall not be exercised in such a manner as to unreasonably interfere with the operatio ns of the Sellers’ business, nor shall Buyer contact or otherwise discuss the transactions described herein with any franchisor, vendor, customer, Seller Employee (subject to Section 5.6 hereof) or any other party, except upon the Sellers’ prior approval (not to be unreasonably withheld, conditioned or delayed).  From and after the Closing, Buyer and Sellers shall afford to each other, and their respective counsel, accountants and other authorized agents and representatives, including any Party’s appraiser of the Assets, during normal business hours reasonable access to the employees, books, records and other data relating to the Company, Sellers and the Systems in its possession with respect to periods prior to the Closing, and the right to make copies and extracts therefrom, to the extent that such access may be reasonably required by the requesting party (a) to facilitate the investigation, litigation and final di sposition of any claims which may have been or may be made against any such party or Person or its Affiliates, (b) for the preparation of Tax Returns and audits, (c) the determination of the Net Working Capital, (d) such other matters as may be reasonably necessary for the operation of the Systems following Closing and (e) to comply with any post-Closing covenants in this Agreement, including the allocation of the Purchase Price pursuant to Section 2.7.  Neither Buyer nor Sellers shall dispose of, alter or destroy any such materials without giving 45 days’ prior written notice to the other Party so that such Party may, at its expense, examine, make copies or take possession of such materials.  The primary point of contact of the Sellers for any post-Closing access by Buyer shall be George Psyllos and the primary point of contact of Buyer for any post-Closing access by Sellers shall be Adele Skolits; provided that eithe r Sellers or Buyer may change such designation by written notice (which may come in the form of an email) to the other party’s primary point of contact.

5.3           Consents.  Following the execution hereof, the Sellers shall make applications to the Franchising Authority and other third parties whose Consents are listed on Schedule 3.4 and required for the consummation of the transaction contemplated hereby and shall otherwise use their commercially reasonable efforts to obtain the Consents listed on Schedule 3.4 as expeditiously as possible.  Following the execution here of until the earlier of the Closing or the termination of this Agreement in accordance with Section 8.1, the Parties shall use their commercially reasonable efforts to obtain as expeditiously as possible the Company Consents.  Notwithstanding anything to the contrary contained herein, in no event shall any Seller be required, as a condition of obtaining such Consents, to expend any monies on, before or after the Closing Date (other than professional fees and expenses incurred in connection with the efforts to obtain such Consents, the applicable customary transfer fee and its administrative costs and expenses, which shall be paid prior to Closing), or to offer or grant any accommodations or concessions or to offer or grant any accommodations or concessions materially adverse to the Business; provided, that the Company and its Subsidiaries may grant, and Buyer hereby agrees to accept, accommodations and concessions to obtain any such C onsents that are customary and commercially reasonable.  Buyer shall use its commercially reasonable efforts to promptly assist Sellers and shall take such prompt and affirmative actions as may reasonably be necessary in obtaining such Consents, and, except as set forth in the immediately preceding sentence, in no event shall Buyer be required, as a condition of obtaining any such Consent to expend any monies on, before or after the Closing, or to offer or grant any accommodations, concessions, changes or conditions materially adverse to the Business (including any amendment, modification, supplement or change to any Franchise or Assumed Contract to which any such Consent related), and in no event shall any Seller agree to (a) the payment of any amount by Buyer after Closing or, (b) except as set forth in the immediately preceding sentence, any accommodation, concession, charge or condition to any Assumed Contract or Franchise to which such Consent relates attributable to the period after Closing i n connection with obtaining any such Consents that Buyer would not be required to accept pursuant to this Section 5.3.  Buyer agrees that it shall not, prior to the Closing, without the prior written consent of the Sellers, seek amendments or modifications to any Franchise.

5.4           Taxes, Fees and Expenses.  Except as provided in Schedule 5.4, the Sellers and the Buyer shall each pay one-half (1/2) of all sales, use, transfer and similar Taxes (“Transfer Taxes”) arising out of or payable by reason of the transactions contemplated herein or the fees arising in connection with the filings described in Section 5.7.  Sellers shall prepare and timely file all Tax Returns required to be filed in respect of Transfer Taxes.  Sellers’ preparation of any such Tax Returns shall be subject to Buyer’s approval (which approval shall not be unreasonably withheld, conditioned or delayed).  Except as specifically provided herein, including in Schedule 5.4, each Party shall pay its or their own expenses incurred in connection with the authorization, preparation, negotiation, execution, delivery and performance of this Agreement and the other Transaction Documents, including all fees and expenses of its counsel, accountants, agents and other representatives.

5.5           Bonds, Letters of Credit, Etc.  Buyer shall use commercially reasonable efforts to execute and deliver all documents to insure that on the Closing Date Buyer has delivered such bonds, letters of credit, indemnity agreements and similar instruments in such amounts and in favor of such Franchising Authority and other persons requiring the same in connection with the Governmental Permits to the extent they are reasonable and customary in the industry for similarly situated cable system operators in terms of size and financi al and operating qualifications.

5.6           Employee Matters.

5.6.1        Effective as of the Closing Date, Buyer shall offer employment to substantially all of the Seller Employees who are employed in Virginia and West Virginia immediately prior to the Adjustment Time (the “Designated Employees”).  Not later than 30 days prior to the Closing Date, Buyer shall notify Sellers in writing of any Seller Employees to whom Buyer does not plan to offer employment in accordance with the previous sentence.  Any Designated Employee to whom Buyer has made an offer of employment and who has accepted such offer of employment (each, a “Hired Employee”) shall be subject, from and after the Closing, to the policies estab lished from time to time by Buyer with respect to employment and employee benefits; provided, however, that Buyer shall offer each such Designated Employee an annualized base salary or hourly rate of pay that is no less than that paid by any Seller as of the date of this Agreement.  Nothing in this Agreement will be deemed to prevent or restrict in any way the right of the Buyer to terminate, reassign, promote or demote any of the Hired Employees after the Closing or to change adversely or favorably the title, powers, duties, responsibilities, functions, locations, compensation, benefits or terms or conditions of employment of such employees.  Sellers shall terminate the employment of the Hired Employees as of 11:59 p.m. on the day before the Closing Date.  Seller shall be responsible for any liability arising under the Worker Adjustment and Retraining Notification Act of 1988 and other similar statutes or regulations of any jurisdiction with respect to any termination of employ ment of any Seller Employee.

5.6.2        Sellers shall pay to the Seller Employees all compensation, including salaries, commissions, bonuses, deferred compensation, severance, insurance, pensions profit sharing, vacation, sick pay and other compensation or benefits to which the Seller Employees are entitled up to the date before the Closing Date and for any payments that are triggered as a result of the Closing and/or the termination of such Designated Employees’ employment with Sellers (including severance payments).  No Seller shall, without the prior written consent of Buyer, change the compensation or benefits of any Designated Employees, other than in the ordinary course of business consistent with past practice.

5.6.3        Sellers shall be responsible for maintenance and distribution of benefits accrued under any Employee Plan pursuant to the provisions of such plans.  Buyer assumes neither any liability for any such accrued benefits nor any fiduciary or administrative responsibility to account for or dispose of any such accrued benefits under any Employee Plan.

5.6.4        All claims and obligations under, pursuant to or in connection with any welfare, medical, insurance, disability or other employee benefit plans of any Seller or arising under any Legal Requirement affecting Seller Employees incurred on or before the Closing, or resulting or arising from events or occurrences occurring or commencing on or prior to the Closing, shall remain the responsibility of Sellers, whether or not such employees become Hired Employees.  Buyer shall have and assume no obligation or liability under or in connection with any such plan.

5.6.5        Notwithstanding anything to the contrary in this Section 5.6, Buyer shall (i) permit the Hired Employees and the Hired Employees’ spouses and dependents to participate in Buyer’s employee benefit plans (other than any defined benefit plans) to the same extent as Buyer’s similarly situated employees and their dependents; (ii) to the extent permitted under Buyer’s employee benefit plans, waive any waiting periods with respect to any of Buyer’s medical, dental or vision insurance employee benefit plans; and (iii) not subject any Hired Employee to any limitations on benefits for pre-existing conditions under its employee benefit plans, including any group health and disability plans.

5.6.6        Effective as of the Closing, Buyer shall assume responsibilities and obligations for continuation coverage under COBRA (the “COBRA Obligations”) and any state continuation coverage requirements with respect to the Hired Employees and their beneficiaries solely with respect to COBRA “qualifying events” that occur after a Seller Employee becomes a Hired Employee.  Except as provided in the immediately preceding sentence, Sellers shall retain responsibility and liability for COBRA Obligations.  Buyer shall provide no incentive, directly or indirectly, for any Hired Employee to elect COBRA coverage under any group health plan of Sellers.

5.6.7        Subsequent to Closing, Hired Employees’ vested account balances shall be payable to them from Sellers’ 401(k) plan in accordance with its terms.  Buyer shall accept rollovers of cash and of promissory notes that relate to loans made to Hired Employees from Sellers’ 401(k) plan, if any.

5.7           HSR Act Filing.  As soon as practicable after the execution of this Agreement, but in any event no later than fifteen (15) business days after such execution (subject to extension for a period of up to an additional fifteen (15) business days, if reasonably necessary for a party to complete its notification and report if not filed by the expiration of such fifteen (15) business day period), the Parties will each complete and file, or cause to be completed and filed, any notification and report required to be filed under the HSR Act.  The Parties shall use commercially reasonable efforts to respond as promptly as reasonably practicable to any inquiries received from the Federal Trade Commission (the “FTC”) and the Antitrust Division of the Department of Justice (the “Antitrust Division”) for additional information or documentation and use commercially reasonable efforts to respond as promptly as reasonably practicable to all inquiries and requests received from any other Governmental Authority in connection with antitrust matters.  The Parties shall use commercially reasonable efforts to overcome any objections which may be raised by the FTC, the Antitrust Division or any other Governmental Authority having jurisdiction over antitrust matters.

5.8           Financing.  Without limiting the Buyer’s obligation to consummate the transactions contemplated hereby, subject only to the conditions specified in Section 6.1, the Buyer shall use commercially reasonable efforts to obtain financing in connection with the consummation of the transactions contemplated by this Agreement in an amount that will be sufficient to pay the Purchase Price hereunder at the Closing and shall use its commercially reasonable efforts to consummate such financ ing.

5.9           Title Commitments and Surveys.  Buyer may order at its own expense (i) commitments for owner’s or lender’s or leasehold title insurance policies (the “Title Commitments”) on any parcel of Real Property owned or leased by the Company or any Seller, and (ii) an ALTA survey (the “Surveys”) on any parcel of Owned Real Property for which a title insurance policy is to be obtained certified to Buyer and the T itle Company.  Sellers shall cooperate, at Buyer’s sole cost and expense, in all commercially reasonable respects with Buyer in obtaining the Title Commitments and Surveys; provided that no Seller shall be required to provide any representation or warranty that would be more extensive than the representations and warranties provided by Sellers herein.

5.10         Environmental Matters.  Subject to the Confidentiality Agreement, Buyer may, at its expense, obtain environmental surveys commonly known as Phase I environmental surveys, conducted by an environmental company with respect to all Leased Real Property and Owned Real Property (each, an “Environmental Survey”), and Sellers shall cooperate with Buyer, in all commercially reasonable respects and at Buyer’s sole cost and expense, in obtaining such Environmental Surveys, including granting Buye r and Buyer’s representatives access to such properties for purposes of obtaining such surveys and reports, subject to Buyer’s agreement to commercially reasonable indemnification and liability arrangements; provided that Buyer shall provide Sellers with reasonable advance written notice of the date(s) on which Buyer desires access to the Leased Real Property and Owned Real Property.

5.11         Tax Matters.

5.11.1           Sellers shall timely file all Tax Returns required to be filed by them when due on or before the Closing Date.

5.11.2           Buyer, on the one hand, and Sellers, on the other hand, shall provide the other party, at the expense of the requesting party, with such assistance as may reasonably be requested by any of them in connection with the preparation of any Tax Return, any audit or other examination by any Governmental Authority, or any judicial or administrative proceedings relating to liability for Taxes.

5.12         Financial Statements.  Sellers shall, at Sellers’ expense, prepare and deliver to Buyer on or before the Closing Date the Company’s unaudited consolidated balance sheets of the Company as of the end of the applicable interim fiscal periods, and the unaudited consolidated statements of operations and cash flows of the Company for the applicable interim fiscal periods  (the “Interim Financial Statements”).  The Interim Financial Statements delivered pursuant to t his Section 5.12 shall be in accordance with the representations and warranties in Section 3.16.  Sellers shall use their reasonable best efforts to cause the Company’s independent public accountants to furnish their consent to the inclusion of the auditor’s reports of the Company’s accountants in any applicable filings of Buyer required by the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the rules of the Securities Exchange Commission promulgated thereunder.  From the date hereof until the Closing, Seller shall, at Seller’s expense, prepare and deliver to Buyer the unaudited balance sheets of the Company and the related statements of operations and cash flows of the Company for the month ended March 31, 2010 and for ea ch month thereafter, within twenty-five (25) days after the end of each such month if such month is the end of a calendar-quarter and otherwise within thirty (30) days after the end of each such month.  Sellers shall use commercially reasonable efforts to cooperate with and assist Buyer and Buyer’s accountants, at Buyer’s expenses, with Buyer’s preparation of any financial statements of Sellers required by the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the rules of the Securities Exchange Commission promulgated thereunder.

5.13         No Shopping.  During the period from the date of this Agreement until the earlier of the termination of this Agreement or the Closing, the Sellers shall not, directly or indirectly, through any officer, director, employee, representative, Affiliate or agent, (a) take any action to solicit, initiate, encourage or support any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock (including by way of a t ender offer) or similar transactions involving the Sellers, other than the transactions contemplated by this Agreement (any of the foregoing inquiries or proposals being referred to herein as a “Transaction Proposal”), (b) engage in negotiations or discussions concerning, or provide any non-public information to any Person relating to, any Transaction Proposal, or (c) agree to approve or recommend any Transaction Proposal.  Sellers shall notify Buyer within 48 hours after receipt by any Seller of any Transaction Proposal or any request for nonpublic information in connection with a Transaction Proposal or for access to the properties, books or records of the Company or any Seller by any Person that informs the Sellers that it is considering making, or has made, a Transaction Proposal. Sellers shall, and shall cause their respective officers, directors, employees, representatives, Affiliates or agents to, immediately cease and cause to be terminated any existing discussions or negotiations with any Persons (other than Buyer) conducted heretofore with respect to any Transaction Proposal.

5.14         Updated Schedules.  Not less than five (5) days prior to Closing, Sellers may deliver to Buyer revised copies of the Schedules to this Agreement which may be updated to show any changes occurring between the date of this Agreement and the date of delivery; provided, however, that for purposes of Sellers’ representations and warranties and covenants in this Agreement, all references to the Schedules shall mean the version of t he Schedules attached to this Agreement on the date of this Agreement.  Not less than five (5) days prior to Closing, Sellers shall deliver to Buyer a list of all Material Contracts entered into by Sellers between the date of this Agreement and the Closing Date.

5.15         Notification of Certain Matters.  Until the Closing, each Party shall promptly notify the other Parties in writing if it becomes aware (which shall mean such Party’s actual knowledge) of any fact, change, condition, circumstance, or occurrence or nonoccurrence of any event that causes any representation or warranty of such Party to be inaccurate such that such inaccuracy will result in the conditions of the other party set forth in Section 6 becoming incapable of being satisfied.

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