EXHIBIT 2.2
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this "Amendment") is
made as of February 6, 2003, by and between LDMI TELECOMMUNICATIONS, INC., a
Michigan corporation, ("Buyer"), and MPOWER COMMUNICATIONS CORP., a Nevada
corporation ("MCC") and MPOWER LEASE CORP., a Nevada corporation ("MLC" and,
collectively with MCC, the "Seller").
The Buyer and the Seller are parties to an Asset Purchase Agreement,
dated January 8, 2003 (the "Agreement"), whereby Seller has agreed to sell to
Buyer and Buyer has agreed to purchase from Seller, the Acquired Assets (as
defined in the Agreement) upon such terms and subject to the conditions of the
Agreement.
The Buyer and the Seller wish to amend the Agreement in the manner
provided herein in order to reflect certain matters agreed to between the Seller
and the Buyer subsequent to the date of the Agreement.
NOW THEREFORE, in consideration of the foregoing premises and the
respective covenants, representations, warranties and conditions set forth in
the Agreement as amended by this Amendment, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. All capitalized terms which are used in this Amendment without
definition will have the meanings given to such terms in the Agreement.
2. Section 1.7(a) of the Agreement is hereby amended in its entirety to
read as follows:
(a) The purchase price for the Acquired Assets shall be One Million
Six Hundred and Fifty Thousand Dollars ($1,650,000) (the "Initial
Purchase Price"), subject to certain prorations as described in
Section 1.7(b), plus the Revenue-Based Consideration as described in
Section 1.8 (the Initial Purchase Price and the Revenue-Based
Consideration, collectively, the "Purchase Price"). The Initial
Purchase Price shall be deposited by Buyer not later than five
business days after the date of the Amendment into an escrow account
to be held by JPMorgan Chase Bank (the "Escrow Agent") in accordance
with the terms of that certain Escrow Agreement, dated as of the date
of the Amendment, among the Buyer, the Seller and the Escrow Agent
(the "Escrow Agreement"), and to be paid at the First Closing by wire
transfer to an account specified by Seller in accordance with the
terms of the Escrow Agreement.
3. Section 1.8 of the Agreement is hereby amended in its entirety to
read as follows:
1.8 Revenue-Based Consideration. Subject to adjustment as provided
herein, the "Revenue-Based Consideration" will be equal to the sum of
(i) the total revenue generated during the thirty day period ending
February 28, 2003 (the "Second Month Revenue Period") by the customers
of the Business as of January 8,
2003 for Services provided to such customers by Seller prior to
January 8, 2003, net of allowance for bad debt, sales credits and
other normal and customary adjustments, calculated in accordance with
U.S. generally accepted accounting principles, consistently applied
("GAAP"), multiplied by two (the "Second Month Consideration") and
(ii) the total revenue generated during the thirty day period ending
April 30, 2003 (the "Fourth Month Revenue Period") by the customers of
the Business as of January 8, 2003 for Services provided by the Seller
prior to January 8, 2003, net of allowance for bad debt, sales credits
and other normal and customary adjustments (the "Fourth Month
Consideration"). The Revenue-Based Consideration shall be adjusted by
deducting a credit (the "RBC Credit") of 1/2 of the Transfer Expenses
(as defined in Section 9.10) incurred by Buyer pursuant to Section
5.14; provided, however, that the RBC Credit shall have a maximum
value of $400,000. The amount of the Revenue-Based Consideration shall
be paid by wire transfer by Buyer to an account specified by Seller.
As soon as practicable, but in no event more than 2 business days,
after the calculation of each of the Second Month Consideration and
the Fourth Month Consideration becomes binding and conclusive on the
parties pursuant to Section 1.9, or, if later, on the First Closing
Date, Buyer shall make the wire transfer payment provided for in this
Section 1.8.
4. Schedule 1.10 to the Agreement is hereby amended in its entirety to
read as follows:
Two Hundred and Fifty Thousand Dollars ($250,000) of the Purchase
Price and Assumed Liabilities will be allocated to the Noncompetition
Agreement, One Hundred Thousand Dollars ($100,000) of the Purchase
Price and Assumed Liabilities will be allocated to customer lists
included in the Acquired Assets and the remainder will be allocated
among fixed assets included in the Acquired Assets, based on their
respective fair market values.
5. The first paragraph of Section 2.1 of the Agreement is hereby
amended in its entirety to read as follows:
(a) Subject to the conditions set forth in this Agreement, the
purchase and sale of the Acquired Assets (other than the Regulated
Assets) pursuant to this Agreement (the "First Closing") shall take
place at the offices of Buyer's counsel, at 000 Xxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, at 10:00 o'clock A.M., local time, at the
later of (i) Xxxxx 0, 0000 (xx) the third Business Day following the
satisfaction or waiver of all conditions to the obligations of the
parties set forth in Sections 6.1 and 6.2, or (iii) at such other
time, place and date as shall be mutually agreed on by Buyer and
Seller in writing. The date on which the First Closing is to occur is
herein referred to as the "First Closing Date" and the First Closing
shall be deemed to be effective as of the opening of business on the
First Closing Date.
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6. Schedule 3.3 to the Agreement is hereby amended in its entirety to
read as follows:
Federal Communications Commission Approval to transfer assets as
required by 47 CFR ss.63.04.
Federal Communications Commission Approval to transfer assets as
required by 47 CFR ss.63.24.
Schedule 3.12(b) Material Contracts Requiring Consents
incorporated herein by reference.
7. Section 7.6 of the Agreement is hereby amended in its entirety to
read as follows:
7.6 Right of Setoff. Upon notice to Seller specifying in reasonable
detail the basis therefore, Buyer may set off any amount to which it
may be entitled under this Article VII against amounts otherwise
payable to Seller as the Net Revenue Adjustment and deposit such
amount in escrow, pending resolution of such indemnification claim in
accordance with Section 9.2 of this Agreement. Neither the exercise of
nor the failure to exercise such right of setoff will constitute an
election of remedies or limit Buyer in any manner in the enforcement
of any other remedies that may be available to it.
8. Section 8.1 of the Agreement is hereby amended in its entirety to
read as follows:
8.1 Termination. This Agreement may be terminated at any time prior
to First Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
breach of any representation, warranty, covenant or agreement on the
part of the other party set forth in this Agreement;
(c) by Buyer or Seller if the First Closing shall not have
occurred by April 28, 2003 by reason of the material failure of the
other party to meet any of the conditions specified in Sections 6.1
or 6.2, as the case may be, and such failure has not been waived by
the terminating party (unless the failure results primarily from
terminating party itself breaching any representation, warranty or
covenant contained in this Agreement);
(d) by either Buyer or Seller if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any
other action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
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(e) by Seller if the First Closing shall not have occurred by
May 5, 2003 by reason of the failure of the Seller to obtain all
consents as required by Section 6.1(d), unless such condition is
waived by Buyer and Buyer indemnifies Seller for all costs and
expenses incurred as a result of the consummation of the
transactions contemplated by this Agreement without obtaining such
consents.
This Agreement may be terminated at any time after the First Closing
but prior to Second Closing:
(x) by mutual consent of Buyer and Seller;
(y) by either Buyer or Seller if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any
other action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or
(z) by either Buyer or Seller by written notice to the other
party if the Second Closing shall not have been consummated on or
before May 12, 2003; provided, however, that the right to terminate
this Agreement under this Section 8.1(z) shall not be available to
any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in,
the failure of the Second Closing to occur on or prior to such date.
9. Each of Buyer and Seller hereby confirm that, except for (i) the
passage of the requisite period of time of notification of customers of the
Business informing them of the transfer of those customers from Seller to Buyer
pursuant to 47 C.F.R. 64.1120(e) and (ii) the obtaining of assurances from MPSC
staff as described on Schedule 4.3, the obligations of each of the Buyer and the
Seller to consummate the transactions provided for by the Agreement are subject
to having obtained, prior to the First Closing, all material consents,
authorizations, assignments, registrations and waivers from third parties and
governmental agencies necessary to permit the transactions contemplated by the
Agreement.
10. Each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import will mean and be a reference to the
Agreement, as amended hereby.
11. Except as specifically amended hereby, the Agreement will remain in
full force and effect, and is hereby ratified and confirmed.
12. This Amendment shall be governed by, construed, interpreted and the
rights of the parties determined in accordance with the laws of the State of
Michigan (regardless of the laws that might be applicable under principles of
conflicts of law).
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13. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Amendment will be binding on any party hereto
once signed by such party and a signature by facsimile, with an original hard
copy to follow, will be deemed to be due execution.
[Signatures on next page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LDMI TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. X'Xxxxx
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Its: Chief Executive Officer
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MPOWER COMMUNICATIONS CORP.
By: /s/ Xxxxxxx Xxxxxxxxx
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Its: Senior Vice President and
General Counsel
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MPOWER LEASE CORP.
By: /s/ Xxxxxxx Xxxxxxxxx
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Its: Senior Vice President and
General Counsel
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