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ASSET PURCHASE AGREEMENT
by and among
TIME WARNER TELECOM INC.
and
GST TELECOMMUNICATIONS, INC.,
GST USA, INC.,
and other parties named herein
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Dated as of September 11, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF ASSETS........................................................1
Section 1.1 Purchase and Sale of Assets...................................................1
Section 1.2 Excluded Assets...............................................................4
Section 1.3 Assumed Liabilities...........................................................5
Section 1.4 Excluded Liabilities..........................................................5
Section 1.5 Purchase Price................................................................6
ARTICLE II THE CLOSING........................................................................6
Section 2.1 Closing.......................................................................6
Section 2.2 Consideration.................................................................6
Section 2.3 Acquisition Subsidiaries......................................................7
Section 2.4 Purchase Price Allocation.....................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS......................................7
Section 3.1 Organization..................................................................8
Section 3.2 Authority Relative to this Agreement..........................................8
Section 3.3 Governmental Consents and Approvals...........................................8
Section 3.4 No Violations.................................................................8
Section 3.5 Financial Statements..........................................................9
Section 3.6 Absence of Certain Changes....................................................9
Section 3.7 Litigation....................................................................9
Section 3.8 No Default...................................................................10
Section 3.9 No Violation of Law..........................................................10
Section 3.10 FCC/State PUC Matters........................................................11
Section 3.11 Environmental Matters........................................................12
Section 3.12 Employee Benefits; Labor Matters.............................................12
Section 3.13 Real Property................................................................14
Section 3.14 Title to and Use of Property.................................................15
Section 3.15 Non-Competition Agreements...................................................16
Section 3.16 Brokers......................................................................16
Section 3.17 Contracts....................................................................16
Section 3.18 Intellectual Property........................................................16
Section 3.19 Network Facilities...........................................................18
Section 3.20 Tangible Property............................................................19
Section 3.21 Board Approval and Recommendation............................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER.....................................................................20
Section 4.1 Organization.................................................................20
Section 4.2 Authority Relative to This Agreement.........................................20
Section 4.3 No Violations................................................................20
Section 4.4 Consents and Approvals.......................................................21
Section 4.5 Brokers......................................................................21
Section 4.6 Financing....................................................................21
Section 4.7 Investment Experience........................................................21
ARTICLE V COVENANTS.........................................................................21
Section 5.1 Conduct of Business by the Sellers Pending the Closing.......................21
Section 5.2 Access and Information.......................................................23
Section 5.3 Cure of Defaults.............................................................23
Section 5.4 Surveys......................................................................24
Section 5.5 Filings; Other Action........................................................24
Section 5.6 Communications Licenses......................................................24
Section 5.7 FCC Applications/State PUC Applications......................................25
Section 5.8 Public Announcements.........................................................26
Section 5.9 Bankruptcy Actions...........................................................26
Section 5.10 Tax Returns and Filings; Payment of Taxes....................................26
Section 5.11 Sellers'Use of GST's Name....................................................26
Section 5.12 Tax Matters..................................................................27
Section 5.13 Employment Matters...........................................................27
Section 5.14 Additional Matters...........................................................29
Section 5.15 Hawaii Assets................................................................29
ARTICLE VI ADDITIONAL POST-CLOSING COVENANTS.................................................29
Section 6.1 Further Assurances...........................................................29
Section 6.2 Books and Records; Personnel.................................................29
Section 6.3 Third Party Rights...........................................................30
Section 6.4 Employee Withholding.........................................................30
Section 6.5 Continued Cooperation........................................................30
Section 6.6 Transitional Services........................................................31
Section 6.7 Undisclosed Contracts........................................................31
Section 6.8 Maintenance of Cable Sheath..................................................31
ARTICLE VII CONDITIONS PRECEDENT..............................................................31
Section 7.1 Conditions Precedent to Obligations of the Sellers and the Purchaser.........31
Section 7.2 Conditions Precedent to Obligation of the Sellers............................32
Section 7.3 Conditions Precedent to Obligation of the Purchaser..........................33
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.................................................34
Section 8.1 Termination by Mutual Consent................................................34
Section 8.2 Termination by Either the Purchaser or the Sellers...........................34
Section 8.3 Termination by the Sellers...................................................34
Section 8.4 Termination by the Purchaser.................................................34
Section 8.5 Effect of Termination and Abandonment........................................35
Section 8.6 Termination Fee..............................................................35
ARTICLE IX DELIVERIES AT CLOSING.............................................................35
Section 9.1 Sellers'Deliveries at Closing................................................35
Section 9.2 Purchaser's Deliveries at Closing............................................36
Section 9.3 Required Documents...........................................................36
ARTICLE X INDEMNIFICATION...................................................................36
Section 10.1 Indemnification by Purchaser.................................................36
Section 10.2 Losses Net of Insurance, Etc.................................................37
Section 10.3 Termination of Indemnification...............................................37
Section 10.4 Indemnification Procedures...................................................37
Section 10.5 Indemnity Payments...........................................................39
ARTICLE XI GENERAL PROVISIONS................................................................39
Section 11.1 Notices......................................................................39
Section 11.2 Descriptive Headings.........................................................41
Section 11.3 Entire Agreement; Assignment.................................................41
Section 11.4 Governing Law................................................................41
Section 11.5 Venue and Retention of Jurisdiction..........................................41
Section 11.6 Expenses.....................................................................41
Section 11.7 Amendment....................................................................41
Section 11.8 Waiver.......................................................................42
Section 11.9 Counterparts; Effectiveness..................................................42
Section 11.10 Severability; Validity; Parties in Interest..................................42
Section 11.11 Enforcement of Agreement.....................................................42
Section 11.12 Non-survival of Representations, Warranties and Agreements...................42
Section 11.13 No Other Representations.....................................................42
ARTICLE XII DEFINITIONS.......................................................................43
Section 12.1 Defined Terms................................................................43
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 11, 2000 (the "AGREEMENT"),
by and among TIME WARNER TELECOM INC., a Delaware corporation (the "PURCHASER"),
GST TELECOMMUNICATIONS, INC., a Canadian corporation ("GST"), GST USA, INC., a
Delaware corporation ("GST USA"), and the other parties identified on Exhibit A
attached hereto (together with GST and GST USA, the "Sellers"). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
Article XII.
WHEREAS, GST, through GST USA and its subsidiaries, is engaged in the
business of providing telecommunications products and services, including local
dial tone, long distance, Internet data transmission, private line services,
Internet access services and telephone access services (the "BUSINESS");
WHEREAS, each Seller has filed a voluntary petition (the "PETITIONS") for
relief commencing a case (collectively, the "CHAPTER 11 CASE") under Chapter 11
of Title 11 of the United States Code, 11 U.S.C. sections 101 et seq. (the
"BANKRUPTCY CODE") in the United States District Court for the District of
Delaware (the "BANKRUPTCY COURT"); and
WHEREAS, the Purchaser desires to purchase and obtain the assignment from
the Sellers, and the Sellers desire to sell, convey, assign, and transfer to the
Purchaser, substantially all of the assets and properties of the Sellers
relating to the Business, together with certain obligations and liabilities
relating thereto, all in the manner and subject to the terms and conditions set
forth herein and in accordance with sections 105, 363, and 365 of the Bankruptcy
Code (the "CONTEMPLATED TRANSACTIONS").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 PURCHASE AND SALE OF ASSETS. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Sellers shall sell,
assign, transfer, convey, and deliver to the Purchaser, and the Purchaser shall
purchase and accept from the Sellers, all of the Sellers' rights, title, and
interests in and to the Business, including, without limitation, in and to all
the assets, properties, rights, contractual rights of the Sellers, and claims of
the Sellers related to the Business (except as expressly excluded under Section
1.2), wherever located, whether tangible or intangible, as the same shall exist
at the Closing (such rights, title, and interests in and to all such assets,
properties, rights, contracts, and claims being collectively referred to herein
as the
"Assets"), free and clear of all interests in property as set forth in section
363 of the Bankruptcy Code (collectively, "Encumbrances"), in each case other
than Permitted Encumbrances. The Assets shall include, without limitation, all
of the Sellers' rights, title, and interests in and to the assets, properties,
rights, contracts, and claims described in clauses (a) through (s) below, but
shall specifically exclude those assets, properties, rights, contracts, and
claims set forth in Section 1.2:
(a) all furnishings, furniture, fixtures, office supplies, vehicles,
equipment, computers, and other tangible property, including, without
limitation, the assets identified on the following lists and other materials
that have been provided by Sellers to the Purchaser (except to the degree that
the lists and materials include Excluded Assets):
(i) assets contained in Sellers' Telecom Business Solutions (TBS)
database, including network equipment and equipment located at customers'
premises;
(ii) routers and ethernet switches that comprise Sellers' Internet
Protocol network;
(iii) access nodes;
(iv) inventory at Sellers' Rialto, California, warehouse and other
locations;
(v) maps of Sellers' network;
(vi) book entitled "GST Telecom Local Fiber Ring Utilization;"
(vii) computers and associated hardware;
(viii) ATM switches;
(ix) SS7 network; and
(x) long-haul regeneration sites.
(b) all Network Facilities and Customer Access Rights;
(c) all accounts receivable and related deposits, security, or collateral
therefor, including recoverable customer deposits and receivables among the
Sellers (collectively, the "TRADE RECEIVABLES");
(d) the Intellectual Property, the rights to xxx for, and remedies
against, past, present, and future infringements thereof, and the rights of
priority and protection of interests therein under applicable laws;
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(e) all copies of marketing brochures and materials and other printed or
written materials in any form or medium relating to the Sellers' ownership or
operation of the Business that the Sellers are not required by law to retain and
duplicates of any such materials that the Sellers are required by law to retain;
(f) all rights under all warranties, representations, and guarantees made
by suppliers, manufacturers, and contractors in connection with the operation of
the Business;
(g) all Permits held by any of the Sellers (or, to the extent any such
Permits are not freely transferable by the holder of such Permits, all right,
title and interest of Sellers in such Permits to the full extent such right,
title and interest may be transferred);
(h) all contracts and contract rights, including leases and subleases
listed in Section 1.1(h) of the Seller Disclosure Letter, and all Customer
Contracts that are not listed on Section 1.2(f) of the Seller Disclosure Letter
(herein the "ASSUMED CUSTOMER CONTRACTS"), in each case with such modifications
as are requested by Purchaser on or prior to the Closing (all such contracts,
including the Assumed Customer Contracts, being referred to as the "ASSUMED
CONTRACTS");
(i) all Communications Licenses (or, to the extent any such Communication
Licenses are not freely transferable by the holder of such Communication
Licenses, all right, title and interest of Sellers in such Communication
Licenses to the full extent such right, title and interest may be transferred);
(j) all carrier or other codes used or useful in the operation of the
Business, including, but not limited to, all NXXs obtained by the Sellers,
exchange carrier, ACNA, RISD, OCN, NECA, and carrier identification codes; (or,
to the extent any such codes are not freely transferable by the holder of such
codes, all right, title and interest of Sellers in such codes to the full extent
such right, title and interest may be transferred);
(k) all books and records of the Business, including, without limitation,
data processing records, employment and personnel records, customer lists, files
and records, advertising and marketing data and records, credit records, records
relating to suppliers, and other data;
(l) all credits, prepaid expenses, deferred charges, advance payments,
security deposits, and prepaid items (and, in each case, security interests from
third parties relating thereto);
(m) all goodwill relating to the Assets and the Business;
(n) all computer software programs and databases used by the Sellers,
whether owned, licensed, leased, or internally developed (in each case, subject
to applicable restrictions);
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(o) all telephone numbers and electronic mail addresses used by the
Sellers in the conduct of the Business;
(p) ownership of twelve (12) working dark fibers to be specifically
identified to Purchaser on Sellers' Inter-Island Network from Kauai, (Wailua
Golf Course) to Oahu (Makaha) to Oahu (Keawaula) and Oahu (Xxxxx Beach), to Maui
(Mokapu), and from Maui to Hawaii (Xxxxxxx Beach), including ownership of the
associated cable sheath; rights to access the GTE manholes and splice boxes at
Wailua, Xxxxx Beach, Mokapu and Xxxxxxx Beach (which access may be shared with
the Sellers or the Hawaii Owners (as defined in Section 6.8)), including rights
to splice into the fibers at such manholes; rights to access the AT&T manhole
and splice box and cablehead at Makaha, including one-half of Sellers' rack
space therein, access to at least 150 amps of DC power and access to AC power;
and rights to the AT&T cablehead at Keawaula including at least one-half of the
space in Sellers' collocation cage with access to at least 150 amps of DC power
and access to AC power and the right to physically partition the cage (all such
fibers and rights being referred to as the "HAWAII ASSETS");
(q) those items described in Section 1.1(q) of the Seller Disclosure
Letter;
(r) all rights of the Sellers to co-locate with other carriers, whether or
not included in Section 1.1(h) of the Seller Disclosure Letter; and
(s) all rights of any of the Sellers in respect of investments in
Xxxxxxxxx.xxx.
Section 1.2 EXCLUDED ASSETS. The following assets, properties, and rights
(the "Excluded Assets") are not included in the Assets and shall be retained by
the Sellers:
(a) capital stock of the Sellers or any direct or indirect subsidiary of
the Sellers;
(b) any contract (including any lease or sublease) not set forth in
Section 1.1(h) of the Seller Disclosure Letter, as may be modified in accordance
herewith;
(c) all cash and cash equivalents of the Sellers;
(d) any claims, rights or causes of action arising under sections 544
through 553, inclusive, of the Bankruptcy Code;
(e) all assets and properties located outside of the United States; and
(f) any other asset, property, right, contract or claim (including,
without limitation certain assets located in Hawaii) set forth in Section 1.2(f)
of the Seller Disclosure Letter, with such additions as are requested by
Purchaser on or prior to Closing.
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Section 1.3 ASSUMED LIABILITIES. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, the Purchaser shall assume and/or
accept assignment from the Sellers and thereafter pay, perform, or discharge in
accordance with their terms, only the following obligations of Sellers (the
"Assumed Liabilities"):
(a) (i) the obligations of the Sellers under the Assumed Contracts that,
by the terms of such Assumed Contracts, arise after Closing, relate to periods
following the Closing and are to be observed, paid, discharged, or performed, as
the case may be, in each case at any time after the Closing Date; (ii) all cure
amounts payable in order to effectuate, pursuant to the Bankruptcy Code, the
assumption by and assignment to the Purchaser of Assumed Contracts, including
unexpired leases, assigned to the Purchaser under the Sale Order ("CURE
AMOUNTS"); PROVIDED, HOWEVER, that to the extent that any Cure Amounts are paid
by any person or entity (including any Seller) which is not the Purchaser or any
of its affiliates prior to the Closing ("PRE-CLOSING CURE AMOUNTS"), subject to
Section 8.4(d), the Purchase Price payable at Closing shall be increased by the
total amount of any such Pre-Closing Cure Amounts paid; and (iii) obligations
under any Assumed Customer Contracts in respect of any credit, prepayment or
refund balances as of Closing, in each case to the extent such balance is not
included in the calculation of Cure Amounts ("CUSTOMER CREDIT AMOUNTS");
(b) liabilities under Section 4980B of the Code or similar state law
("COBRA") as set forth in Section 5.13(e);
(c) the obligation to pay any fees, including, but not limited to, any
Transaction Fee (as defined in the engagement letter between the Sellers and
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, a true and complete copy of which has
been delivered to Purchaser) that are or become payable to Xxxxxxxx Xxxxx Xxxxxx
& Xxxxx Capital pursuant to such engagement letter as a result of the
consummation of the Contemplated Transactions, as determined not less than two
Business Days prior to the Closing Date (the "HLHZ PAYMENT OBLIGATION") without
the need for any or further approval by the Bankruptcy Court; and
(d) all of the unpaid post-Petition administrative expenses constituting
allowed fees and expenses of lawyers, accountants and other professionals
retained by the Sellers up to an aggregate amount of $3,000,000 (the
"POST-PETITION ADMINISTRATIVE EXPENSES").
Section 1.4 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained herein, the Purchaser shall not assume, or in any way be liable or
responsible for, any liabilities, commitments, or obligations of the Sellers
except for the Assumed Liabilities. Without limiting the generality of the
foregoing, the Purchaser shall not assume, and the Sellers shall remain
responsible for the following (the "Excluded Liabilities"): (a) subject to
Section 1.3(a), any liabilities or obligations (whether absolute, contingent, or
otherwise) which accrue with respect to, arising out of, or related to, the
Assets on or prior to the Closing Date, including, without limitation, (i) any
liability or obligation of any Seller or any of its employees, directors,
officers, affiliates,
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or agents arising out of, relating to, or caused by (whether directly or
indirectly), the Sellers' ownership, possession, interest in, use or control of
the Assets and (ii) any liability or obligation described on Section 1.4 of the
Seller Disclosure Letter; (b) any liability or obligation of the Sellers for any
Taxes of any kind accrued for, applicable to or arising from any period (or
portion thereof) ending on or prior to the Closing Date, including any Transfer
Taxes to the extent not exempt pursuant to section 1146 of the Bankruptcy Code;
and (c) except as provided in Section 5.13(e) with respect to COBRA, any
liability or obligation in respect of any agreement, plan or policy relating to
employees or employment matters, including, without limitation, any Seller Plan,
consulting, severance, change in control or similar agreements.
Section 1.5 PURCHASE PRICE. The consideration for the Assets shall be (i)
$640,000,000 plus the amount, if any, by which the Cap exceeds the Actual
Assumed Expenses (the "Purchase Price") and (ii) the assumption of the Assumed
Liabilities; provided that the Purchase Price may be increased pursuant to
Section 1.3(a)(ii) and decreased pursuant to Section 8.4(d). Upon execution and
delivery of this Agreement, the Purchaser shall pay to the Sellers by wire
transfer of immediately available funds to the account or accounts designated by
the Sellers a deposit in an amount equal to $10,000,000 (together with any
accrued interest thereon, collectively, the "Deposit"). The parties agree that
the Deposit shall be refunded to the Purchaser if this Agreement is terminated
pursuant to Section 8.1, 8.2 or 8.4; otherwise the Deposit shall be
nonrefundable. At the Closing, the Deposit shall be applied toward payment of
the cash portion of the Purchase Price and the remaining Purchase Price shall be
payable at the Closing in the manner provided in Section 2.2.
ARTICLE II
THE CLOSING
Section 2.1 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the New York offices of Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx at 10:00 a.m. on the second Business Day
after the conditions set forth in Article VII shall have been satisfied or
waived or at such other time, date and place as shall be fixed by agreement
among the parties (the date of the Closing being herein referred to as the
"Closing Date").
Section 2.2 CONSIDERATION. Subject to the terms and conditions hereof, at
the Closing, the Purchaser shall:
(a) pay to the Sellers, by wire transfer of immediately available funds to
an account or accounts specified in writing not less than three Business Days
prior to the Closing by the Sellers, the Purchase Price less the Deposit; and
(b) assume the Assumed Liabilities pursuant to a duly executed Assignment
and Assumption Agreement, in customary form mutually agreeable to the parties.
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Section 2.3 ACQUISITION SUBSIDIARIES. On or before the Closing Date, the
Purchaser may designate (by written notice to the Sellers) one or more of its
subsidiaries (each an "Acquisition Subsidiary") to receive all or part of the
Assets and to assume the Assumed Liabilities; provided, however, that such
designation shall not obviate the Purchaser's obligations hereunder.
Section 2.4 PURCHASE PRICE ALLOCATION. Prior to the Closing, the Purchaser
and the Sellers shall agree as to the allocation of the total purchase price
pursuant to Section 1060 of the Code and the regulations thereunder. The
Purchaser and the Sellers agree to use such allocation in filing all required
forms under Section 1060 of the Code (as defined herein), and all other Tax
Returns (as defined herein), and the Purchaser and the Sellers further agree
that they shall not take any position inconsistent with such allocation upon any
examination of any such Tax Return, in any refund claim or in any tax
litigation. The Purchaser and the Sellers further agree that the payment to
Sellers contemplated by Section 2.2(a) may be made to a single Seller that is
designated by GST in writing (delivered to Purchaser on or before the third
Business Day prior to Closing) as being authorized to act as agent for all of
the Sellers, whereupon each Seller shall be deemed to have received the purchase
price allocable to the Assets owned by such Seller in accordance with the
allocation determination under this Section 2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Purchaser specifically acknowledges and agrees to the following with
respect to the representations and warranties of the Sellers:
A. The Purchaser will not have any recourse to any Seller or to any of
the officers or directors of any Seller in the event any of the representations
and warranties made herein or deemed made are untrue as at any time of
expression thereof. The only remedy for a breach of such representations and
warranties shall be the Purchaser's option, under certain circumstances, not to
close in accordance with and subject to the limitations in Sections 7.1, 7.3 and
8.4 hereof and, without limiting the foregoing, the Purchaser shall have no
remedy whatsoever for any such breach after the Closing.
B. The Purchaser has conducted its own due diligence investigations of
the Business or has waived its right to conduct such due diligence.
C. If information provided in any Section of the schedule delivered by
the Sellers to the Purchaser by separate letter dated as of the date hereof and
made a part hereof (which schedule contains appropriate references to identify
the representations and warranties herein to which the information in such
schedule relates) (the "SELLER DISCLOSURE LETTER") is applicable to any other
Sections, then such information shall be deemed to have been provided with
respect to all such Sections.
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D. Except when the context otherwise requires, Sellers make no
representations or warranties in this Article III with respect to Excluded
Assets.
Except as otherwise disclosed to the Purchaser in the Seller Disclosure
Letter, each of the Sellers, jointly and severally, represent and warrant to the
Purchaser as follows:
Section 3.1 ORGANIZATION. Except as set forth in Section 3.1 of the Seller
Disclosure Letter, each Seller is a corporation validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority to own, use, and operate its properties and to
carry on its business as it is now being conducted or presently proposed to be
conducted except where the failure to be so validly existing and in good
standing would not reasonably be expected to, individually or in the aggregate,
result in a Seller Material Adverse Effect. Each Seller is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate have a
Seller Material Adverse Effect.
Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Except as set forth in
Section 3.2 of the Seller Disclosure Letter, each of the Sellers has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery, and performance of this
Agreement by each of the Sellers and the consummation by each of the Sellers of
the Contemplated Transactions have been duly authorized by all requisite
corporate actions. Subject to the entry and effectiveness of the Sale Order,
this Agreement has been duly and validly executed and delivered by each of the
Sellers and (assuming this Agreement constitutes a valid and binding obligation
of the Purchaser) constitutes a valid and binding agreement of each of the
Sellers, enforceable against each of the Sellers in accordance with its terms.
Section 3.3 GOVERNMENTAL CONSENTS AND APPROVALS. No material consent,
approval, authorization of, declaration, filing, or registration with, any
United States federal or state government or regulatory authority, is required
to be made or obtained by any of the Sellers in connection with the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby, except (a) for consents, approvals,
authorizations of, declarations, or filings with, the Bankruptcy Court, (b) for
the filing of a notification and report form under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or earlier termination of the applicable waiting period thereunder,
(c) for Regulatory Approvals, and (d) for consents, approvals, authorizations,
declarations, or rulings identified in Section 3.3 of the Seller Disclosure
Letter. The items referred to in clauses (a) through (d) of this Section 3.3 are
hereinafter referred to as the "Governmental Requirements."
Section 3.4 NO VIOLATIONS. Assuming that the Governmental Requirements will
be satisfied, made, or obtained and will remain in full force and effect,
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and assuming receipt of the consents, approvals and authorization of the Persons
listed in Section 3.4 of the Seller Disclosure Letter (the "Required Contractual
Consents"), neither the execution, delivery, or performance of this Agreement by
any Seller, nor the consummation by any Seller of the Contemplated Transactions,
nor compliance by any Seller with any of the provisions hereof, will (a)
conflict with or result in any breach of any provisions of the articles of
incorporation or bylaws of any Seller, (b) result in a violation, or breach of,
or constitute (with or without due notice or lapse of time) a default (or give
rise to any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension, or revocation) under any of the terms, conditions, or
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan, or other instrument or obligation
to which any Seller is a party or by which Seller's properties or assets may be
bound or affected, (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to any Seller or to any Seller's properties or
assets or (d) result in the creation or imposition of any Encumbrance other than
Permitted Encumbrances on any asset of a Seller, except in each case for
violations, breaches, defaults, terminations, cancellations, accelerations,
creations, impositions, suspensions, or revocations that (i) would not
individually or in the aggregate have a Seller Material Adverse Effect, (ii) are
excused by or unenforceable as a result of the filing of the Petitions or the
applicability of any provision of or any applicable law of the Bankruptcy Code,
or (iii) are set forth in Section 3.4 of the Seller Disclosure Letter.
Section 3.5 FINANCIAL STATEMENTS. The audited financial statements of GST
included in GST's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 and the unaudited financial statements of GST included in GST's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 have
been prepared from, and are in accordance with, the books and records of GST and
its subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto), and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows of GST and its subsidiaries at the dates and for the
periods covered thereby.
Section 3.6 ABSENCE OF CERTAIN CHANGES. Except (a) as set forth in Section
3.6 of the Seller Disclosure Letter, (b) for the commencement or pendency of the
Chapter 11 Case and (c) for orders, writs, injunctions, decrees, statutes,
rules, or regulations of general applicability to the Business, since June 30,
2000, (x) there has been no event or condition that has had (or is reasonably
likely to result in) a Seller Material Adverse Effect and (y) none of the
Sellers has taken any action that, if taken after the date hereof, would violate
Section 5.1.
Section 3.7 LITIGATION. Except for the Chapter 11 Case and except as set
forth in Section 3.7 of the Seller Disclosure Letter, there is no suit, action,
proceeding, or investigation (whether at law or equity, before or by any
federal, state, or foreign commission, court, tribunal, board, agency, or
instrumentality, or before any arbitrator) pending or, to any of the Sellers'
knowledge, threatened against or affecting any Seller,
9
the outcome of which would be reasonably likely, individually or in the
aggregate, to have a Seller Material Adverse Effect, nor is there any judgment,
decree, injunction, rule, or order of any court, governmental department,
commission, agency, instrumentality, or arbitrator outstanding against any
Seller that would be reasonably likely to have a Seller Material Adverse Effect.
Section 3.8 NO DEFAULT. Except as set forth in Section 3.8 of the Seller
Disclosure Letter and except to the extent forever excused by or unenforceable
as a result of the commencement or pendency of the Chapter 11 Case or the
application of any provision of the Bankruptcy Code (but only to the extent such
excuse, lack of enforceability or application of law will continue to apply in
favor of Purchaser and its successors and assigns following Closing), no Seller
is in violation, breach of, or default under (and no event has occurred that
with notice or the lapse of time would constitute a violation, breach of, or a
default under) any term, condition, or provision of (a) its articles of
incorporation or bylaws, (b) any note, bond, mortgage, deed of trust, security
interest, indenture, license, agreement, plan, contract, lease, commitment, or
other instrument, or obligation to which such Seller is a party or by which such
Seller's properties or assets may be bound or affected, (c) any order, writ,
injunction, decree, statute, rule, or regulation applicable to such Seller or to
such Seller's properties or assets, or (d) any permit, license, governmental
authorization, consent, or approval necessary for such Seller to conduct its
business as currently conducted, except in each case for breaches, defaults, or
violations that result from the filing of the Petitions or non-payment of
amounts owed prior to the filing of the Petitions, but only to the extent cured
in all respects upon payment of the Cure Amounts on or prior to Closing, and
except as would not reasonably be expected to, individually or in the aggregate,
result in a Seller Material Adverse Effect.
Section 3.9 NO VIOLATION OF LAW. Except as disclosed in Section 3.9 of the
Seller Disclosure Letter and except to the extent excused by or unenforceable as
a result of the commencement or pendency of the Chapter 11 Case or the
application of any provision of the Bankruptcy Code (but only to the extent such
excuse, lack of enforceability or application of law will continue to apply in
favor of Purchaser and its successors and assigns following Closing), no Seller
is in violation of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance, or judgment
(including, without limitation, any applicable environmental law, ordinance, or
regulation) of any governmental or regulatory body, any insurance company or
fire rating agency, or any other similar board, organization or authority except
for such violations, notices, or changes that would not reasonably be expected
to, individually or in the aggregate, result in a Seller Material Adverse
Effect. Except as disclosed in Section 3.9 of the Seller Disclosure Letter or
except as would not reasonably be expected to, individually or in the aggregate,
result in a Seller Material Adverse Effect and except for the Chapter 11 Case,
no investigation or review by any governmental or regulatory body or authority
is pending or, to the best knowledge of each Seller, threatened, nor has any
governmental or regulatory body or authority indicated to any Seller an
intention to conduct the same.
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Section 3.10 FCC/STATE PUC MATTERS.
(a) Except as set forth on Section 3.3 of the Seller Disclosure Letter,
each Seller has obtained all licenses, permits, certificates, franchises,
consents, waivers, registrations or other regulatory authorizations from the
appropriate governmental authority in each applicable jurisdiction including,
without limitation, state and local public service and public utilities
commissions ("STATE PUCs") (together with any renewals, extensions, or
modifications thereof and any additions thereto made as of the Closing Date, the
"STATE LICENSES") and holds all licenses, permits, certificates, franchises,
registrations, and other authorizations issued by the FCC (together with any
renewals, extensions or modifications thereof and any additions thereto made as
of the Closing Date, the "FCC LICENSES") that are required for the conduct of
its businesses as presently conducted, and for the operation and holding of the
Assets, except where failure to hold such State Licenses, FCC Licenses or
Communication Licenses would not reasonably be expected to, individually or in
the aggregate, result in a Seller Material Adverse Effect. All of the FCC
Licenses and the State Licenses (collectively, the "COMMUNICATIONS LICENSES")
are set forth in Section 3.10(a) of the Seller Disclosure Letter.
(b) Other than Communications Licenses the loss of which would not
reasonably be expected to, individually or in the aggregate, result in a Seller
Material Adverse Effect and except to the extent excused by or unenforceable as
a result of the commencement or pendency of the Chapter 11 Case or the
application of any provision of the Bankruptcy Code (but only to the extent such
excuse, lack of enforceability or application of law will continue to apply in
favor of Purchaser and its successors and assigns following Closing), each of
the Communications Licenses was duly issued, is valid and in full force and
effect, has not been suspended, canceled, revoked, or modified in any adverse
manner other than in a manner which is immaterial, and is not subject to
conditions or requirements that are not generally imposed on such
authorizations.
(c) (i) Each holder of a Communications License has operated in all
material respects in compliance with all terms thereof; and (ii) each holder of
a Communications License is in all material respects in compliance with, and the
conduct of its businesses have been and are in compliance with, the
Communications Act and any applicable state or local regulations, and each such
holder has filed all registrations and reports and paid all required fees,
including any renewal applications, required by the Communications Act or any
applicable state or local regulations. Except as would not reasonably be
expected to, individually or in the aggregate, result in a Seller Material
Adverse Effect and except to the extent excused by or unenforceable as a result
of the commencement or pendency of the Chapter 11 Case or the application of any
provision of the Bankruptcy Code (but only to the extent such excuse, lack of
enforceability or application of law will continue to apply in favor of
Purchaser and its successors and assigns following Closing), (x) there is no
pending or, to the knowledge of the Sellers after due inquiry, threatened action
by or before the FCC or any State PUC to revoke, cancel, suspend, modify, or
refuse to renew any of the Communications Licenses, and (y) except as set forth
in Section 3.10(c)(ii) of the Seller Disclosure Letter, there is not now issued,
outstanding or, to the knowledge of the Sellers after due inquiry, threatened
any
11
notice by the FCC or any State PUC of violation or complaint, or any
application, complaint, or proceeding (other than applications, proceedings, or
complaints that generally affect the Sellers' industry as a whole) relating to
the business or operations of any Seller.
(d) Except as set forth in Section 3.10(d) of the Seller Disclosure Letter
or as would not reasonably be expected to, individually or in the aggregate,
result in a Seller Material Adverse Effect and except to the extent excused by
or unenforceable as a result of the commencement or pendency of the Chapter 11
Case or the application of any provision of the Bankruptcy Code (but only to the
extent such excuse, lack of enforceability or application of law will continue
to apply in favor of Purchaser and its successors and assigns following
Closing), no event has occurred which permits the revocation or termination of
any of the Communications Licenses or the imposition of any restriction thereon,
or that would prevent any of the Communications Licenses from being renewed on a
routine basis or in the ordinary course. There are no facts that would
disqualify any of the Sellers, under either the Communications Act or any
applicable state or local regulations, as an assignor in connection with any
Regulatory Approvals.
Section 3.11 ENVIRONMENTAL MATTERS. Except as set forth in Section 3.11 of
the Seller Disclosure Letter and except as would not reasonably be expected to,
individually or in the aggregate, result in a Seller Material Adverse Effect,
(a) each Seller has all permits required by or under all federal, state, and
local laws governing the pollution or protection of the environment
("Environmental Laws") and is, and for the past 12 months has been, in
compliance with such permits and is otherwise in compliance with all applicable
Environmental Laws, (b) neither GST nor any Seller has received any written
notice not subsequently resolved with respect to the business of, or any
property owned or leased by the Sellers from any governmental entity or third
party alleging that any the Sellers or any aspect of the Business is not in
compliance with any Environmental Law and no such condition of non-compliance
exists, (c) there has been no release of a hazardous substance, as these terms
are defined under Environmental Laws, in excess of a reportable quantity on any
real property that is used in the Business and (d) there is no obligation under
Environmental Laws to perform remedial action relating to any release of a
hazardous substance, waste, pollutant or contaminant.
Section 3.12 EMPLOYEE BENEFITS; LABOR MATTERS.
(a) Section 3.12(a) of the Seller Disclosure Letter contains a true and
complete list of each "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is
sponsored, maintained, or contributed to or required to be contributed to by any
Seller or by any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that together with any Seller would be deemed a "SINGLE EMPLOYER"
within the meaning of Section 4001(b) of ERISA, or to which Seller or an ERISA
Affiliate is party, for the benefit of any employee of Sellers engaged in the
Business (individually, a "SELLER PLAN," and collectively, the "SELLER PLANS").
The Purchaser is not assuming and shall have no liability in connection with any
Seller Plan.
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(b) No Seller Plan is (i) subject to Title IV of ERISA; (ii) a
multiemployer plan within the meaning of Section 3(37) of ERISA, (iii)
maintained in connection with any trust described in Section 501(c)(9) of the
Code or (iv) subject to the minimum funding standards of ERISA Section 302 or
Code Section 412. Further, neither Sellers nor any ERISA Affiliate have ever
contributed to or been obligated to contribute to a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA.
(c) Except as set forth in Section 3.12(c) of the Seller Disclosure
Letter, Seller and each ERISA Affiliate are in material compliance with, and
each Seller Plan has been operated in accordance with, the provisions of such
Seller Plan, and Seller and each ERISA Affiliate are in material compliance with
ERISA, the Code and all legal requirements governing each such Seller Plan,
including but not limited to rules and regulations promulgated by the Department
of Labor, the Pension Benefit Guaranty Corporation and the Department of the
Treasury pursuant to the provisions of ERISA and the Code.
(d) None of the Sellers nor any ERISA Affiliate is a party to any
collective bargaining agreements and there are no labor unions or other
organizations representing, purporting to represent, or attempting to represent,
any employee of the Sellers.
(e) Except as set forth in Section 3.12(e) of Seller Disclosure Letter, no
Seller has, with respect to employees engaged in the Business, violated any
provision of federal or state law or any governmental rule or regulation, or any
order, decree, judgment arbitration award of any court, arbitrator or any
government agency regarding the terms and conditions of employment of employees,
former employees or prospective employees or other labor related matters,
including, without limitation, laws, rules, regulations, orders, rulings,
decrees, judgments and awards relating to discrimination, fair labor standards
and occupational health and safety, wrongful discharge or violation of the
person rights of employees, former employees or prospective employees.
(f) There are no pending claims or lawsuits by, against, or relating to
any Seller Plan that would, if successful, result in liability of Sellers, any
ERISA Affiliate or the Purchaser, and no claims or lawsuits have been asserted,
instituted or, to the knowledge of Sellers, threatened in writing by, against,
or relating to any Seller Plan, against the assets of any trust or other funding
arrangement under any such Seller Plan, by or against any Seller with respect to
any Seller Plan, or by or against the plan administrator or any fiduciary of any
Seller Plan, and the Seller does not have knowledge of any fact that could form
the basis for any such claim or lawsuit. The Seller Plans are not presently
under audit or examination (nor has notice been received of a potential audit or
examination) by the IRS, the Department of Labor, or any other governmental
agency or entity, and no matters are pending with respect to any Seller Plan
under the IRS's Voluntary Compliance Resolution program, its Closing Agreement
Program, or other similar programs.
(g) Except as disclosed in Section 3.12(g) of the Seller Disclosure
Letter, the Sellers do not have any current liability in respect of
post-employment or post-
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retirement health or medical or life insurance benefits for any former employees
or their qualified beneficiaries.
Section 3.13 REAL PROPERTY.
(a) Section 3.13(a) of the Seller Disclosure Letter lists and describes
briefly all real property owned by any of the Sellers. With respect to each such
parcel of owned real property:
(i) the identified owner has good and marketable title to the parcel
of real property, free and clear of any Encumbrance except for Permitted
Encumbrances;
(ii) there are no pending or, to the knowledge of any of the Sellers,
threatened condemnation proceedings, lawsuits, or administrative actions
relating to the property or other matters affecting adversely the current
use, occupancy, or value thereof;
(iii) Sellers have delivered to the Purchaser prior to the execution
of this Agreement true and complete copies of all deeds, leases, mortgages,
deeds of trust, certificates of occupancy, title insurance policies, title
reports, surveys and similar documents, and all amendments thereof, in the
Sellers' possession, with respect to the parcel of real property;
(iv) except as disclosed in Section 3.13(a)(iv) of the Seller
Disclosure Letter, there are no leases, subleases, licenses, concessions,
or other agreements, written or oral, granting to any party or parties the
right of use or occupancy of any portion of the parcel of real property;
(v) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein; and
(vi) there are no parties (other than the Sellers) in possession of
the parcel of real property, other than tenants under any leases disclosed
in Section 3.13(a)(iv) of the Seller Disclosure Letter who are in
possession of space to which they are entitled.
(b) Section 3.13(b) of the Seller Disclosure Letter lists and describes
briefly all real property leased or subleased to any of the Sellers, including
the date of and parties to each real property lease, the date of and parties to
each amendment, modification and supplement thereto, the term and renewal terms
(whether or not exercised) thereof and a brief description of the leased real
property covered thereby. The Sellers have delivered to the Purchaser true,
correct, and complete copies of the leases and subleases listed in Section
3.13(b) of the Seller Disclosure Letter (as amended to date). With respect to
each lease and sublease listed in Section 3.13(b) of the Seller Disclosure
Letter, other than those that expire by their terms prior to Closing or are not
Assumed Contracts being assumed by Purchaser and except to the extent excused by
or
14
unenforceable as a result of the commencement or pendency of the Chapter 11 Case
or the application of any provision of the Bankruptcy Code (but only to the
extent such excuse, lack of enforceability or application of law will continue
to apply in favor of Purchaser and its successors and assigns following
Closing), the lease or sublease is in full force and effect, and no party to the
lease or sublease is in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default or permit
termination, modification or acceleration thereunder.
(c) Sellers shall file, and provide Purchaser with copies of, any and all
real property transfer tax returns and other similar filings required by law in
connection with the Contemplated Transactions and relating to the real property,
any part thereof or ownership interest therein, all duly and properly executed
and acknowledged by Sellers.
(d) Each Seller other than GST shall provide Purchaser with an affidavit
of an officer of each Seller, sworn to under penalty of perjury, setting forth
each Seller's name, address and Federal tax identification number and stating
that the Seller is not a "foreign person" within the meaning of Section 1445 of
the Code. If, on or before the Closing Date, Purchaser shall not have received
such affidavit, Purchaser may withhold from the cash payments to Sellers at
Closing such sums as are required to be withheld therefrom under Section 1445 of
the Code.
Section 3.14 TITLE TO AND USE OF PROPERTY.
(a) At the Closing, the Purchaser will acquire all of each Seller's right,
title and interest in, to and under all of the Assets, in each case free and
clear of any and all Encumbrances (including, without limitation, any and all
claims that may arise by reason of the execution, delivery or performance by the
Sellers of this Agreement) other than Permitted Encumbrances and with respect to
Assumed Contracts, subject to the Purchaser's obligations under Section
1.3(a)(ii);
(b) Except for any assets that are Excluded Assets, the Assets include,
without limitation, all real property interests and related rights and interests
and all personal property of the Sellers, both tangible and intangible,
materially necessary to conduct the Business as it is currently conducted by the
Sellers and/or any of their subsidiaries, to provide all services currently
provided by the Sellers and/or any of their subsidiaries, and none of such
Assets are owned by any subsidiaries of GST other than the Sellers. All of the
Excluded Assets located outside of the United States are of DE MINIMUS value and
are not material to the conduct of the Business.
(c) Except as disclosed in Section 3.3 of the Seller Disclosure Letter,
the Sellers have all Permits that are material to the conduct of the Business.
All such Permits are listed on Section 3.14(c) of the Seller Disclosure Letter
and are in full force and effect. Except as set forth on Section 3.14(c) of the
Seller Disclosure Letter, no material violations are or have been committed in
respect of any material Permit and no proceeding is pending or, to the best
knowledge of any of the Sellers, threatened to revoke or limit any material
Permit.
15
Section 3.15 NON-COMPETITION AGREEMENTS. Except as set forth in Section
3.15 of the Seller Disclosure Letter, no Seller, nor any officer, director, or
key employee of any Seller, is a party to any agreement that purports to
restrict or prohibit such Person, directly or indirectly, from engaging in the
Business or any business involving telecommunications or any other business
currently engaged in by the Sellers, or to the knowledge of the Sellers, by the
Purchaser or any corporations affiliated with the Purchaser. Except as set forth
in Section 3.15 of the Seller Disclosure Letter, no officer, director, or key
employee of a Seller is a party to any agreement, which, by virtue of such
person's relationship with such Seller, restricts such Seller from, directly or
indirectly, engaging in any of the business described above.
Section 3.16 BROKERS. Except as contemplated by Section 3.16 of the Seller
Disclosure Letter and other than the HLHZ Payment Obligation, no person is
entitled to any brokerage, financial advisory, finder's, or similar fee or
commission payable by any Seller in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
such Seller.
Section 3.17 CONTRACTS. Section 3.17 of the Seller Disclosure Letter
contains a complete and accurate list of all contracts or series of contracts
("Covered Contracts") with a common third party that involve payments by the
Sellers in excess of (i) $1,000,000 in the past 12 months or (ii) $3,000,000 to
date. True and complete copies of each such written Covered Contract (or written
summaries of the terms of any such oral Covered Contract or any oral
modification of a written Covered Contract), including any stipulations relating
to such Covered Contract, have been heretofore made available to the Purchaser.
As of the date of this Agreement, no Seller has received written notice, nor
does it otherwise have knowledge, that any party to any contracts, arrangements
or understanding (or series of related contracts, arrangements or
understandings) of any of the Sellers ("Contracts"), other than Contracts that
are Excluded Assets, involving payments or other consideration in excess of (i)
$1,000,000 in any 12 month period or (ii) $3,000,000 over the life of the
Contract intends to cancel, terminate or refuse to renew such Contract or to
exercise or decline to exercise any option or right thereunder and each such
Contract is valid and binding upon such parties in accordance with its terms,
except (x) as set forth in Section 3.17 of the Seller Disclosure Letter, (y) to
the extent excused by or unenforceable as a result of the commencement or
pendency of the Chapter 11 Case or the application of any provision of the
Bankruptcy Code (but only to the extent such excuse, lack of enforceability or
application of law will continue to apply in favor of Purchaser and its
successors and assigns following Closing) and (z) to the extent that the failure
of such Contracts to be valid and binding would not have a Seller Material
Adverse Effect.
Section 3.18 INTELLECTUAL PROPERTY.
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(a) "INTELLECTUAL PROPERTY" shall mean all of the following as they exist
in all jurisdictions throughout the world, in each case, to the extent used in
the conduct of the Business and owned by, licensed to, or otherwise used by the
Sellers:
(i) patents, patent applications, and other patent rights (including
any divisions, continuations, continuations-in-part, substitutions, or
reissues thereof, whether or not patents are issued on any such
applications and whether or not any such applications are modified,
withdrawn, or resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration
thereof;
(iii) copyright registrations and applications for registration
thereof and non-registered copyrights;
(iv) trade secrets, designs, research, processes, procedures,
techniques, methods, know-how, data, mask works, inventions, and other
proprietary rights (whether or not patentable or subject to copyright, mask
work, or trade secret protection); and
(v) computer software programs, including, without limitation, all
source codes, object codes, and material documentation related thereto (the
"SOFTWARE").
(b) INTELLECTUAL PROPERTY DISCLOSURE. Section 3.18(b) of the Seller
Disclosure Letter sets forth all United States and foreign patents and patent
applications, trademark and service xxxx registrations and applications, and
copyright registrations and applications owned or licensed by any Seller,
specifying as to each owned item, as applicable: (i) the nature of the item,
including the title; (ii) the owner of the item; (iii) the jurisdictions in
which the item is issued or registered or in which an application for issuance
or registration has been filed; and (iv) the issuance, registration, or
application numbers and dates.
(c) OWNERSHIP. Except as would not reasonably be expected to, individually
or in the aggregate, result in a Seller Material Adverse Effect, each Seller
will own or have the right to use as of the Closing Date and transfer to the
Purchaser, free and clear of any and all Encumbrances, and as of the Closing
Date will have the unrestricted right to use, sell, or license, all Intellectual
Property used in the conduct of the Business.
(d) CLAIMS. Except as would not reasonably be expected to, individually or
in the aggregate, result in a Seller Material Adverse Effect, no Seller has
been, during the three (3) years preceding the date hereof, a party to any claim
or action, nor, to the knowledge of any Seller, is any claim or action
threatened that challenges the validity, enforceability, ownership, or right to
use, sell, or license any Intellectual Property. Except as would not reasonably
be expected to, individually or in the
17
aggregate, result in a Seller Material Adverse Effect, to the knowledge of any
Seller, no third party is infringing upon any Intellectual Property.
(e) ADMINISTRATION AND ENFORCEMENT. Except as would not reasonably be
expected to, individually or in the aggregate, result in a Seller Material
Adverse Effect, the Sellers have taken all necessary and desirable action to
maintain and protect each item of Intellectual Property owned by the Sellers.
(f) SOFTWARE. All Software used in the Business is described in Section
3.18(f) of the Seller Disclosure Letter. Such Software is held by the Sellers
legitimately, is fully and freely transferable to the Purchaser without any
third party consent (except as set forth in Section 3.18(f) of the Seller
Disclosure Letter), and to the knowledge of any Seller is free from any
significant software defect, performs in conformance with its documentation, and
does not contain any bugs or viruses or any code or mechanism that may be
reasonably likely to materially interfere with the operation of such Software.
Section 3.19 NETWORK FACILITIES.
(a) Section 3.19(a) of the Seller Disclosure Letter describes Sellers'
longhaul fiber network and each longhaul segment therein, setting forth, for
each longhaul segment, the number of route miles in the segment and the number
of fibers and fiber miles available to Sellers; the number of fibers on each
route provided by Sellers to third parties through indefeasible right to use
("IRU") or lease agreements; and the number of fibers on each route provided by
third parties to Sellers through IRU or lease agreements. Fibers that are
"available" to Sellers on Section 3.19(a) of the Seller Disclosure Letter
encompasses both fibers that are currently equipped for the transmission of
telecommunications services and those that are not yet so equipped (i.e., both
"lit" and "dark" fiber).
(b) Section 3.19(b) of the Seller Disclosure Letter describes accurately
Sellers' metropolitan area fiber networks, organized by each metropolitan area,
and setting forth, for each metropolitan area, the number of lit and dark fibers
owned by Sellers or used by Sellers pursuant to lease or IRU agreements; the
number of associated route and fiber miles and number of lit and dark fibers
owned by Sellers; and the number of lit and dark fibers in each metropolitan
area provided by Sellers to third parties pursuant to lease or IRU agreements.
(c) Section 3.19(c) of the Seller Disclosure Letter describes the conduit
(both completed and under construction) that is either available to Sellers
(meaning that it is available for Sellers' own use or provision by Sellers to
third parties) or is being provided by Sellers to third parties (or will be
provided upon completion) pursuant to IRU agreements, plus the minimum conduit
size and the approximate route miles, with such conduits organized by route
segment.
(d) Except to the extent that they can access the Sellers' Customer Base
directly through the facilities scheduled in Sections 3.19(a) and 3.19(b) of the
Seller
18
Disclosure Letter, the Sellers have all rights necessary to offer
telecommunication services to the Sellers' Customer Base on a resale or other
basis ("CUSTOMER ACCESS RIGHTS") from each incumbent local exchange carrier.
Section 3.19(d) of the Seller Disclosure Letter sets forth all of the Customer
Access Rights, organized by state.
(e) All of the facilities listed in Sections 3.19(a) through (c) of the
Seller Disclosure Letter that the Sellers represent are owned, or subject to an
IRU or other agreement in favor of Sellers as of or after the date of this
Agreement or other agreement transferring to each such Seller such facility,
shall be known as the "NETWORK FACILITIES."
(f) The Sellers have good and marketable title to all of the material
Network Facilities that they own pursuant to Sections 3.19(a) through (c) of the
Seller Disclosure Letter. Each of the Network Facilities owned by the Sellers:
(i) is located on property having good and marketable title or is operating with
valid rights of way; (ii) is free and clear of any Encumbrance except for
Permitted Encumbrances; (iii) is not subject to any pending lawsuits or
administrative actions relating to any such property or right of way; (iv)
except as described in Section 3.3 of the Seller Disclosure Letter, has received
all approvals of governmental authorities (including franchises, licenses and
permits) required in connection with the ownership or operation thereof and has
been operated and maintained in accordance with applicable laws, rules and
regulations; and (v) is not subject to any lease, sublease, license, concession,
or other agreement, written or oral, granting to any party or parties the right
of use or occupancy of any portion of any property or right of way.
(g) Except to the extent excused by or unenforceable as a result of the
commencement or pendency of the Chapter 11 Case or the application of any
provision of the Bankruptcy Code (but only to the extent such excuse, lack of
enforceability or application of law will continue to apply in favor of
Purchaser and its successors and assigns following Closing), each IRU or other
agreement permitting a Seller to use Network Facilities is legal, valid and
binding on the parties thereto, permits (or, as applicable, will permit) each
Seller to use the applicable Network Facilities listed in Sections 3.19(a)
through (c) of the Seller Disclosure Letter, and is enforceable in accordance
with its terms. Each Seller has an IRU or other agreement permitting it to use
all of the Network Facilities that it does not own. Any third party from whom
Seller has purchased or acquired possession of, Network Facilities, has been and
is in material compliance with, and the conduct of its businesses have been and
are in material compliance with, any applicable state or local regulations, and
any such third party has filed all material registrations and reports and paid
all required fees, including any renewal applications, required by any
applicable state or local regulations.
Section 3.20 TANGIBLE PROPERTY. The furnishings, furniture, fixtures,
office supplies, vehicles, equipment, computers, real property, and other
tangible property material to the Business (the "Tangible Property") are in good
operating condition and repair, subject to continued repair and replacement in
accordance with past practice, and are suitable for their intended use. During
the past 12 months there has not been any significant interruption of the
operations of the Business due to inadequate maintenance of the Tangible
Property.
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Section 3.21 BOARD APPROVAL AND RECOMMENDATION. The Boards of Directors of
the Sellers have determined that an immediate sale and assignment of the Assets
pursuant to this Agreement under sections 105, 363 and 365 of the Bankruptcy
Code is in the best interests of the Sellers ("Sellers' Boards Determination").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as otherwise disclosed to the Sellers in a schedule annexed hereto
(which schedule contains appropriate references to identify the representations
and warranties herein to which the information in such schedule relates) (the
"PURCHASER DISCLOSURE LETTER"), the Purchaser represents and warrants to the
Sellers as follows:
Section 4.1 ORGANIZATION. The Purchaser is a corporation validly existing
and in good standing under the laws of its jurisdiction of incorporation.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Purchaser has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery, and performance of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
corporate actions. This Agreement has been duly and validly executed and
delivered by the Purchaser and (assuming this Agreement constitutes a valid and
binding obligation of the Sellers) constitutes a valid and binding agreement of
the Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium, and
other laws affecting creditors' rights generally from time to time in effect and
to general equitable principles.
Section 4.3 NO VIOLATIONS. Neither the execution, delivery, or performance
of this Agreement by the Purchaser, nor the consummation by the Purchaser of the
transactions contemplated hereby, nor compliance by the Purchaser with any of
the provisions hereof, will (a) except for the Governmental Requirements,
require the Purchaser to obtain any consent, approval or action of, or make any
filing with or give notice to, any governmental or regulatory body or any other
Person, (b) conflict with or result in any breach of any provisions of the
certificate of incorporation or bylaws of the Purchaser, (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time) a default (or give rise to any right of termination, cancellation,
acceleration, vesting, payment, exercise, suspension, or revocation) under any
of the terms, conditions, or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract agreement, plan, or other
instrument or obligation to which the Purchaser is a party or by which the
Purchaser or the Purchaser's properties or assets may be bound or affected, (d)
violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to the Purchaser or the Purchaser's properties or assets, or (e)
result in the creation or imposition of any Encumbrance on any asset of the
Purchaser, except in the case of clauses (c), (d), and (e), for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions, or
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revocations that would individually or in the aggregate not have a material
adverse effect on the assets, condition (financial or otherwise) or operations
of the Purchaser (a "Purchaser Material Adverse Effect") and except as set forth
in Section 4.3 of the Purchaser Disclosure Letter.
Section 4.4 CONSENTS AND APPROVALS. Except for Governmental Requirements,
no consent, approval, or authorization of, or declaration, filing, or
registration with, any United States federal or state government or regulatory
authority is required to be made or obtained by the Purchaser in connection with
the execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby.
Section 4.5 BROKERS. Other than Xxxxxxxxx, Xxxxxx & Xxxxxxxx and the HLHZ
Payment Obligation, no Person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by the Purchaser in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
Section 4.6 FINANCING. The Purchaser represents that as of the date hereof
it has, and on the Closing Date it will have, access to sufficient funds to
deliver the Purchase Price to the Sellers.
Section 4.7 INVESTMENT EXPERIENCE. The Purchaser acknowledges that it is
able to fend for itself, can bear the risks associated with the Assets and
Assumed Liabilities hereunder and is a sophisticated investor capable of
evaluating the merits and risks of the Contemplated Transactions.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS BY THE SELLERS PENDING THE CLOSING. Subject
to any obligations as a debtor in possession under the Bankruptcy Code, prior to
the Closing Date, each of the Sellers shall use all commercially reasonable
efforts to conduct its businesses in the ordinary course consistent with past
practice taking into account the filing of the Petitions, including, without
limitation, meeting its post-Petition obligations as they become due. Prior to
the Closing Date, each of the Sellers shall also use all commercially reasonable
efforts to preserve intact its business organizations and relationships with
third parties (other than in respect of contracts that expire by their terms
prior to Closing) and to keep available the services of its present officers and
key employees, subject to the terms of this Agreement; provided, that the
foregoing shall not prevent Sellers from rejecting contracts that are not
Assumed Contracts being assumed by Purchaser hereunder, so long as such
rejection will not interrupt any significant functions of the Business prior to
Closing or otherwise prevent an orderly transfer of the Business to Purchaser.
Without limiting the generality of the foregoing, and except with respect to
immaterial delays, each Seller shall pay when due its obligations to vendors as
permitted by the Bankruptcy Code. Except as otherwise contemplated under this
Agreement or
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ordered by the Bankruptcy Court, from the date hereof until the Closing Date,
without the prior written consent of the Purchaser, which consent will not be
unreasonably withheld or delayed:
(a) no Seller shall adopt or propose any change in its certificate of
incorporation or bylaws, except a change that would not have any adverse effect
on the Contemplated Transactions;
(b) no Seller shall declare, set aside, or pay any dividend or other
distribution with respect to any shares of its capital stock, or split, combine,
or reclassify any of its capital stock, or repurchase, redeem, or otherwise
acquire any shares of its capital stock;
(c) other than as a result of asset transfers solely among or between the
Sellers, no Seller shall merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(d) no Seller shall lease, license, or otherwise surrender, relinquish,
encumber, or dispose of any Assets other than the disposition of obsolete or
damaged immaterial Assets in the ordinary course of its business (it being
expressly understood that, without limiting the foregoing, except as described
in Section 5.1(d) of the Seller Disclosure Letter, no Seller shall grant any
IRU, sell fiber or conduit or change the terms of any existing IRU, swap or
joint construction agreement, absent Purchaser's prior written consent);
(e) no Seller shall change any method of accounting or accounting practice
used by it, except for any change required by GAAP;
(f) no Seller shall establish or increase the benefits under, or promise
to establish, modify or increase the benefits under, any agreement, plan or
policy relating to employees or employment matters, including but not limited to
any Seller Plan or any consulting, severance, change in control or similar
agreements, or otherwise increase the compensation payable to any directors,
officers, or employees of such Seller, or establish, adopt or enter into any
collective bargaining agreement, except (i) in accordance with existing plans
and agreements or consistent with past practice, (ii) for benefits and
compensation payable to any directors, officers, or employees of such Seller
established, modified or increased after commencement of the Chapter 11 Case in
order to retain such directors, officers, or employees through the pendency of
the Chapter 11 Case and (iii) as set forth in Section 5.1(f) of the Seller
Disclosure Letter;
(g) with respect to Contracts which are Assets, no Seller shall abandon
its rights or fail to timely perform its obligations in respect of its existing
IRU, swap or joint construction agreements or any other arrangements relating to
its network builds;
(h) no Seller shall make a Material Decision except as set forth in
Section 5.1(h) of the Seller Disclosure Letter;
(i) no Seller shall agree or commit to do any of the foregoing; and
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(j) except to the extent necessary to comply with the requirements of
applicable laws, regulations or Bankruptcy Court orders, no Seller shall (i)
take, agree, or commit to take, any action that would make any representation or
warranty of the Sellers hereunder materially inaccurate in any respect at, or as
of any time prior to, the Closing Date, (ii) omit, or agree or commit to omit,
to take any action necessary to prevent any such representation or warranty from
being materially inaccurate in any respect on the Closing Date, or (iii) take,
agree, or commit to take, any action that would result in, or is reasonably
likely to result in, any of the conditions set forth in Article VII not being
satisfied.
Section 5.2 ACCESS AND INFORMATION. Each of the Sellers shall afford to the
Purchaser and to the Purchaser's financial advisors, legal counsel, accountants,
consultants, financing sources, and other authorized representatives access
during normal business hours and without material disruption to the Business
throughout the period prior to the Closing Date to all its books, documents,
records, properties, plants, and personnel that relate to the Business and,
during such period, shall furnish as promptly as practicable to the Purchaser
(a) a copy of each report, schedule, and other document filed or received by
them pursuant to the requirements of federal or state securities laws and (b)
all other information as the Purchaser reasonably may request in furtherance of
the Contemplated Transactions; no investigation pursuant to this Section 5.2
shall affect any representations or warranties made herein or the conditions to
the obligations of the respective parties to consummate the Contemplated
Transactions. Without limiting the foregoing, (i) Purchaser and its
representatives shall be given such access in order to conduct interviews,
assessments, studies and procedures (including, without limitation, sampling)
which Purchaser determines is reasonably necessary to confirm that it will not
incur any liabilities, costs or expenses under Environmental Laws as a result of
its ownership of the Assets or operation of the Business; and (ii) Purchaser
shall have a right to designate any of Purchaser's employees and representatives
as a transition team which may work from Sellers' premises in order to
facilitate the orderly transfer of the Business to Purchaser in accordance with
the terms of this Agreement. Such transition team shall be given full access to
Sellers' management and other employees, including through attendance by such
management and employees at meetings with the transition team at Purchaser's
headquarters (provided that such attendance does not require more than
reasonable travel expenses and does not unreasonably interfere with the
operation of the Business). Sellers shall, and shall cause their auditors to,
provide all information regarding the Business being purchased hereunder that is
required to be included in Purchaser's filings with the SEC in connection with
the Contemplated Transactions, including by providing relevant financial
statements and work papers.
Section 5.3 CURE OF DEFAULTS. Subject to the prior approval of the
Bankruptcy Court and to the reduction in Purchase Price contemplated by Section
8.4(d), the Purchaser shall, on or prior to the Closing, cure or provide the
Sellers with the means necessary to cure any and all monetary defaults and
breaches under and satisfy (or, with respect to any Assumed Liability or
obligation that cannot be rendered non-contingent and liquidated prior to the
Closing Date, make effective provision reasonably satisfactory to the Bankruptcy
Court for satisfaction from funds of the Purchaser) any Assumed Liability or
obligation that must be so satisfied so that such Assumed Contracts may be
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assumed by the Sellers and assigned to the Purchaser in accordance with the
provisions of Section 365 of the Bankruptcy Code and this Agreement (including,
without limitation, Section 1.3). Purchaser and each Seller agree that each of
them will promptly take such actions as are reasonably necessary to obtain the
Sale Order.
Section 5.4 SURVEYS. The Sellers will provide Purchaser full and adequate
legal descriptions of each parcel of real property listed on Section 3.13(a) of
the Seller Disclosure Letter within thirty (30) days following the date hereof.
The Purchaser shall have the right to conduct title searches and obtain title
insurance policies on each parcel of Sellers' owned real property and, at
Purchaser's request and expense, Sellers shall fully cooperate with the
Purchaser in those efforts.
Section 5.5 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, as promptly as practicable, the Sellers and the Purchaser shall
(a) promptly make all filings and submissions under the HSR Act, (b) use all
commercially reasonable efforts to cooperate with each other in (i) determining
which filings are required to be made prior to the Closing Date with, and which
material consents, approvals, permits, or authorizations are required to be
obtained prior to the Closing Date from, governmental or regulatory authorities
of the United States and the several states or the District of Columbia, and
foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions, and (ii) timely
making all such filings and timely seeking all such consents, approvals,
permits, or authorizations, and (c) use all commercially reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other things reasonably necessary or appropriate to consummate the Contemplated
Transactions, as soon as practicable. In connection with the foregoing, the
Sellers will promptly provide the Purchaser, and the Purchaser will promptly
provide the Sellers, with copies of all correspondence, filings, or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to all filings and submissions required hereunder. The parties
acknowledge that certain actions may be necessary with respect to the foregoing
in making notifications and obtaining clearances, consents, approvals, waivers,
or similar third party actions that are material to the consummation of the
Contemplated Transactions, and each party agrees to take all commercially
reasonable actions as are necessary, to complete such notifications and obtain
such clearances, approvals, waivers, or third party actions, except if such
consequence, event, or occurrence would have a Purchaser Material Adverse Effect
or a Seller Material Adverse Effect, as the case may be.
Section 5.6 COMMUNICATIONS LICENSES. Each Seller shall use its commercially
reasonable efforts not, by any act or omission, to surrender, or to permit an
adverse modification of, forfeiture of, or failure to renew under regular terms,
any of the Communications Licenses, cause the FCC or any other governmental
authority to institute any proceeding for the revocation, suspension, or
modification of any such authorization, or to fail to prosecute with due
diligence any pending applications with respect to Communications Licenses,
including any renewals thereof. Each Seller shall
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make all filings and reports and pay all fees necessary or reasonably
appropriate for the continued operation of the Business, as and when such
approvals, consents, permits, licenses, filings, or reports or other
authorizations are necessary or appropriate.
Section 5.7 FCC APPLICATIONS/STATE PUC APPLICATIONS.
(a) As promptly as practicable, and in any event within 20 Business Days,
after the execution and delivery of this Agreement, the parties shall prepare
all appropriate applications for FCC approval, and such other documents as may
be required, with respect to the assignment of each of the Seller's FCC Licenses
set forth in Section 3.10(a) of the Seller Disclosure Letter to the Purchaser
(collectively, the "FCC APPLICATIONS"). As soon as practicable after the
execution and delivery of this Agreement, the parties shall file, or cause to be
filed, the FCC Applications. If the Closing shall not have occurred for any
reason within any applicable initial consummation period relating to the FCC's
grant of the FCC Applications, and neither the Sellers nor the Purchaser shall
have terminated this Agreement pursuant to Sections 8.1, 8.2, 8.3 or 8.4, the
Purchaser and the Sellers shall jointly request one or more extensions of the
consummation period of such grant.
(b) The Purchaser and the Sellers shall cooperate to determine a plan to
expeditiously obtain applicable governmental approvals, clearances, consents and
authorizations necessary to effectuate the Contemplated Transactions. Subject to
the determination of such plan, as promptly as practicable, and in any event
within 20 Business Days, after the execution and delivery of this Agreement, the
parties shall prepare all required applications for approval by State PUCs, and
such other documents as may be required, with respect to the assignment of such
Seller's State PUC Licenses and Customer Base (as defined herein) set forth in
Section 3.10(a) of the Seller Disclosure Letter (collectively, the "STATE PUC
APPLICATIONS"). As soon as practicable after the execution and delivery of this
Agreement, the parties shall file, or cause to be filed, the State PUC
Applications. If the Closing shall not have occurred for any reason within any
applicable consummation period relating to any State PUC's grant of any State
PUC Application, and neither the Purchaser nor any of the Sellers shall have
terminated this Agreement pursuant to Sections 8.1, 8.2, 8.3 or 8.4, the
Purchaser and the Sellers shall jointly request one or more extensions of the
consummation period of such grant.
(c) Each of the Purchaser and the Sellers shall bear its own expenses in
connection with the preparation and prosecution of the FCC Applications and the
State PUC Applications. The Purchaser and the Sellers shall each use their
commercially reasonable efforts to prosecute the FCC Applications and the State
PUC Applications in good faith and with due diligence before the FCC and the
State PUCs and in connection therewith shall take such action or actions as may
be necessary or reasonably required in connection with the FCC Applications and
the State PUC Applications, including furnishing to the FCC and the State PUCs
any documents, materials, or other information requested by the FCC and the
State PUCs in order to obtain such approvals as expeditiously as practicable
and, in the case of the Sellers, notifying the Purchaser of any material adverse
events with respect to any of the Communications Licenses, any of the
25
Sellers' Customer Base, or any of the FCC Applications or State PUC
Applications. No party hereto shall knowingly take, or fail to take, any action
if the intent or reasonably anticipated consequence of such action or failure to
act is, or would be, to cause the FCC, any State PUC, or other regulatory
authority not to grant approval of any FCC Application or of any State PUC
Application or materially delay either such approval or the consummation of the
assignment of Communications Licenses and Customer Base of the Sellers.
Section 5.8 PUBLIC ANNOUNCEMENTS. The Purchaser, on the one hand, and the
Sellers, on the other hand, agree that they will not issue any press release or
respond in writing to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the other parties
(which approval will not be unreasonably withheld), except as may be required by
applicable law, the Bankruptcy Court or any requirement of any stock exchange or
inter-dealer quotation system on which the stock of either party is listed or
quoted.
Section 5.9 BANKRUPTCY ACTIONS. Within three (3) Business Days following
the date of this Agreement, the Sellers will file with the Bankruptcy Court a
copy of this Agreement and a form of Sale Order, in form and substance
reasonably satisfactory to the Purchaser, seeking the Bankruptcy Court's
approval of this Agreement, the Sellers' performance under this Agreement, and
the assumption and assignment of the Assumed Contracts. The Sellers and the
Purchaser shall use their commercially reasonable efforts to obtain entry of the
Sale Order.
Section 5.10 TAX RETURNS AND FILINGS; PAYMENT OF TAXES. Each Seller (or GST
on its behalf) shall prepare all of its Tax Returns for all periods and shall be
responsible for paying all of its Taxes for all periods (or portions thereof)
ending on or prior to the Closing Date. At Closing, the Sellers shall provide
Purchaser with tax clearance certificates (to the extent available) or other
reasonable assurances of Sellers' payment of any and all accrued but unpaid
sales, use, value-added, property or other similar state or local taxes relating
to any such period, all in a form satisfactory to Purchaser, all as of the
latest practicable date prior to Closing (all such amounts, the "Unpaid Tax
Amounts"). Sellers' agreement to reduce the Purchase Price otherwise payable
hereunder by an amount equal to such Unpaid Tax Amounts shall be considered
reasonable assurance of payment for purposes of the foregoing.
Section 5.11 SELLERS' USE OF GST'S NAME. Each Seller covenants that at the
Closing, or as soon thereafter as is practicable (but in no event later than the
ninetieth day after the Closing Date), it will not use any name, xxxx, logo,
trade name, or trademark incorporating "GST Telecommunications, Inc." or "GST"
in any business activity except as is necessary for the administration of the
Chapter 11 Case and except in the conduct or operation of any Excluded Assets.
26
Section 5.12 TAX MATTERS. The parties acknowledge that all personal
property transfer, documentary, sales, use, registration, value-added and other
similar Taxes (including interest, penalties and additions to Tax) incurred in
connection with the Contemplated Transactions ("Transfer Taxes") assessable in
the United States are exempt pursuant to Section 1146 of the Bankruptcy Code.
Section 5.13 EMPLOYMENT MATTERS.
(a) Each of the Sellers shall use their commercially reasonable efforts to
retain all of the employees engaged in the Business, and to maintain in good
standing through the Closing all relationships and agreements with employees,
independent contractors, or consultants necessary to the Business, in each case
from the date hereof through the Closing Date and to cooperate with the
Purchaser in hiring employees engaged in the Business who are offered employment
by the Purchaser; provided, that the foregoing shall not require that any Seller
offer any compensation or other incentives in addition to the compensation and
benefits being provided or required to be provided as of the date of this
Agreement.
(b) The Sellers will terminate all Purchaser Hires as of the Closing Date.
It is the intention of the Purchaser to hire some, and perhaps all, of the
persons employed by Sellers in the Business as of the Closing Date. Sellers
agree that the Purchaser retains sole and complete discretion with respect to
which employees of Sellers the Purchaser shall offer employment. From the date
hereof through the Closing, the Sellers shall permit the Purchaser to
communicate in writing with the Sellers' employees and consultants, at
reasonable times and upon reasonable notice, concerning the Purchaser's plans,
operations, business, customer relations, and general personnel matters and to
interview the Sellers' employees and consultants and review the personnel
records and such other information concerning the Sellers' employees and
consultants as the Purchaser may reasonably request (subject to obtaining any
legally required written permission of any affected employee or consultant and
to other applicable law). The Sellers shall be solely responsible for any
notification and liability under WARN relating to any termination of any of
Seller's employees occurring on or after the date of this Agreement. Employees
hired by the Purchaser effective on or after the Closing Date shall be referred
to herein as a "PURCHASER HIRE." The Sellers shall indemnify and hold Purchaser
harmless from any and all damages, liabilities, claims or expenses incurred by
the Purchaser as a result of the failure of the Sellers to comply with any of
the requirements of WARN, including applicable notice requirements. Sellers will
provide Purchaser with copies of all notices to be given to employees regarding
the Contemplated Transactions as promptly as practicable (and in the case of
notices required by WARN or other statutes, at least five (5) Business Days) in
advance of giving such notice to employees.
(c) Sellers will be responsible for all liabilities for employee or agent
compensation and benefits accrued or otherwise arising out of services rendered
prior to Closing or arising by reason of actual, constructive or deemed
termination at Closing. Without limitation of the preceding sentence, on the
Closing Date Sellers shall pay all of the Purchaser Hires engaged in the
Business the full amount, if any, to which they may be
27
entitled for any compensation or accrued benefits, including but not limited to
vacation, sick leave or other leave, accrued bonuses and commissions, and for
severance benefits. No accrued vacation, sick leave or other leave shall carry
over to any employment of such employees by Purchaser.
(d) The Purchaser will recognize all years of service of the Purchaser
Hires with the Sellers for purposes of eligibility to participate in and to vest
under those employee benefit plans, within the meaning of Section 3(3) of ERISA,
of the Purchaser in which the Purchaser Hires are eligible to participate in
after the Closing Date. The Purchaser shall recognize all years of service of
the Purchaser Hires with the Seller for purposes of vacation accrual under the
Purchaser's vacation policies, subject to the pro-rating schedules applicable to
new employees of Purchaser as described in Purchaser's "Paid Time Off" policy.
The Purchaser shall cause all pre-existing condition exclusions under any
medical and dental plans made available by the Purchaser to Purchaser Hires to
be waived in respect of such employees and dependents, but only to the extent
Seller's medical and dental plans recognize such Purchaser Hires and their
dependents as having satisfied any pre-existing conditions exclusion under
Seller's medical and dental plans. The Purchaser shall take commercially
reasonable efforts to ensure that the medical and dental plans made available by
Purchaser to Purchaser Hires credit such Purchaser Hires' and their dependents
with the amount of deductibles satisfied under the Sellers' medical and dental
plans in the same plan year.
(e) The Purchaser shall be responsible for providing continuation coverage
as required by COBRA, under a group health plan maintained by the Purchaser, to
those employees of the Sellers engaged in the Business and other qualified
beneficiaries under COBRA with respect to such employees, who have a COBRA
qualifying event (due to termination of employment with the Sellers or
otherwise) prior to or in connection with the transactions contemplated by this
Agreement (the "CONTINUEES"). The Purchaser shall indemnify and hold Seller
harmless from any and all damages, liabilities, claims or expenses incurred by
the Seller as a result of the failure of the Purchaser to comply with any of the
requirements of COBRA, including applicable notice requirements.
(f) No provision of this Section 5.13 shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Seller or of any of its subsidiaries in
respect of continued employment (or resumed employment) with either the
Business, the Purchaser any of its Affiliates and no provision of this Section
5.13 shall create any such rights in any such Persons in respect of any benefits
that may be provided, directly or indirectly, under any of Seller's Plans or any
plan or arrangement which may be established by the Purchaser or any of its
Affiliates. No provision of this Agreement shall constitute a limitation on
rights to amend, modify or terminate after the Closing Date any such plans or
arrangements of the Purchaser or any of its Affiliates.
(g) Purchaser shall assume all responsibilities and take all action
necessary to obtain any required H-1 Visas for any Purchaser Hires.
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Section 5.14 ADDITIONAL MATTERS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the Contemplated Transactions,
including using all commercially reasonable efforts to obtain all necessary
waivers, consents, and approvals in connection with the Governmental
Requirements and to effect all necessary registrations and filings and to obtain
all Required Contractual Consents.
Section 5.15 HAWAII ASSETS. Sellers shall use commercially reasonable
efforts to obtain all third party consents, if any, that may be required from
AT&T, GTE or any other party in order to convey the Hawaii Assets to the
Purchaser. At Sellers' request, the Purchaser shall use commercially reasonable
efforts to assist Sellers in these efforts. Sellers' ability to convey the
Hawaii Assets to the Purchaser shall not be a condition precedent to the
obligation of Purchaser under Section 7.3 to effect the Contemplated
Transactions, but if Sellers are unable to convey all Hawaii Assets to the
Purchaser at Closing in accordance herewith, either by obtaining any necessary
consents or pursuant to an order of the Bankruptcy Court, the Purchase Price
otherwise payable hereunder shall be reduced by $30,000,000
ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
Section 6.1 FURTHER ASSURANCES. In addition to the provisions of this
Agreement, from time to time after the Closing Date, the Sellers and the
Purchaser will use all commercially reasonable efforts to execute and deliver
such other instruments of conveyance, transfer, or assumption, as the case may
be, and take such other action as may be reasonably requested to implement more
effectively the conveyance and transfer of the Assets to the Purchaser and the
assumption of the Assumed Liabilities by the Purchaser.
Section 6.2 BOOKS AND RECORDS; PERSONNEL. For a period ending upon the
earlier of (i) the seventh (7th) anniversary of the Closing Date (or such later
date as may be required by any governmental or regulatory body or authority or
ongoing Legal Proceeding) and (ii) the closure of the Chapter 11 Case:
(a) Unless the Purchaser shall first give 60 days prior written notice to
Sellers, the Purchaser shall not dispose of or destroy any of the business
records and files of the Business other than in connection with a sale or other
disposition of the Business or any portion thereof. If the Purchaser wishes to
dispose of or destroy such records and files after that time, it shall first
give sixty (60) days prior written notice to the Sellers and the Sellers shall
have the right, at their option and expense, upon prior written notice to the
Purchaser within such sixty-day period, to take possession of the records and
files within ninety (90) days after the date of the notice from the Sellers.
After that time, Purchaser may dispose of or destroy any such records at its
discretion.
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(b) The Purchaser shall allow the Sellers and any of their directors,
officers, employees, legal counsel, financial advisors, representatives,
accountants, and auditors (collectively, "SELLERS REPRESENTATIVES") access to
all business records and files of the Sellers or the Businesses that are
transferred to the Purchaser in connection herewith, that are reasonably
required by such Seller Representative in the administration of the Chapter 11
Case anticipation of, or preparation for, any existing or future Legal
Proceeding involving a Seller, Tax Return preparation, litigation, or Excluded
Liability, during regular business hours and upon reasonable notice at the
Purchaser's principal place of business or at any location where such records
are stored, and the Sellers Representatives shall have the right to make copies
of any such records and files; PROVIDED, HOWEVER, that any such access or
copying shall be had or done in such a manner so as not to interfere with the
normal conduct of the Purchaser's business or operations.
(c) For a period not to exceed eighteen months, the Purchaser shall
provide the Sellers Representatives with office space at the place of business
where the business records relating to the Assets are retained from which to
conduct and conclude the Chapter 11 Case, together with access to telephone,
telefax, copy and similar office equipment; provided, that the provision of such
space and equipment shall not interfere with the normal conduct of the
Purchaser's business or operations and that the cost of such provisions are DE
MINIMUS, as determined by Purchaser in good faith.
Section 6.3 THIRD PARTY RIGHTS. No provision of this Agreement shall create
any third party beneficiary rights in any employee or former employee of a
Seller or any other persons or entities (including any beneficiary or dependent
thereof), in respect of continued employment (or resumed employment) for any
specified period of any nature or kind whatsoever, and no provision of this
Agreement shall create such third party beneficiary rights in any such persons
or entities in respect of any benefits that may be provided, directly or
indirectly, under any Seller Plan.
Section 6.4 EMPLOYEE WITHHOLDING. The Sellers agree that, pursuant to the
"Alternative Procedure" provided in Section 5 of Revenue Procedure 96-60, 1996-2
C.B. 399, with respect to filing and furnishing IRS Forms W-2, W-3, W-4, W-5,
and 941, (a) the Sellers shall report on a "predecessor-successor" basis, as set
forth therein, (b) the Sellers shall be relieved from furnishing Forms W-2 to
any of the Purchaser Hires, and (c) the Purchaser shall assume the obligations
of the Sellers to furnish such Forms W-2 to any such Purchaser Hires for the
year in which the Closing occurs; provided, that, in each case Sellers shall
fully cooperate with Purchaser in such transition procedures by supplying
Purchaser with all relevant wage and withholding information in respect of
periods prior to Closing on a timely basis.
Section 6.5 CONTINUED COOPERATION. If the Closing occurs at a time when not
all Regulatory Approvals have been obtained, the parties shall (i) continue to
abide by their obligations hereunder to obtain all Regulatory Approvals, and
(ii) cooperate in continuing to operate the Business, to the extent commercially
practicable, in the ordinary course in those states with respect to which
Regulatory Approvals have not been obtained, with the Purchaser receiving the
economic benefits of such operation.
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Section 6.6 TRANSITIONAL SERVICES. The parties (including Sellers'
successors) shall negotiate in good faith transitional services agreements
providing the Sellers (including Sellers' successors) with access to certain
services and facilities of the Business following Closing (for a period not
exceeding 180 days except as provided below) in support of the Excluded Assets
in return for which the Purchaser shall receive fair compensation (which is
expected to include a xxxx-up above actual costs). The parties expect that such
agreement(s) will cover services such as billing (training and system support),
network alarm monitoring, CARE account record exchange support, customer
service, various types of technical training, application and database support,
switch translation, sharing of network access (with respect to Hawaii,
facilitating access by the Hawaii Owners to the landing sites for the Hawaii
inter-island fiber network in the event that they cannot obtain that access
directly through AT&T or GTE), network capacity to service the portion of
Sellers' long distance resale business constituting Excluded Assets and leased
space and maintenance . Sellers or their successors may extend the transitional
services to they extent they support the hospitality/operator services
businesses and the services with respect to access to the Hawaii landing sites
for an additional 180 days at their option, subject only to Purchaser's right to
discontinue providing any network or switch capacity after the initial 180-day
period if Purchaser's continued provision of those services to Sellers or their
successors would result in capacity constraints that would adversely affect
Purchaser's sales of services to its customers.
Section 6.7 UNDISCLOSED CONTRACTS. Notwithstanding anything Section 1.2(b)
hereof, if after Closing, the Purchaser discovers any executory contract of any
of the Sellers that was not included in the list of executory contracts
disclosed to Purchaser and filed with the Bankruptcy Court prior to Closing
then, at the Purchaser's request, Sellers shall take such steps as are necessary
to cause such contract to be assumed by, and assigned to, the Purchaser, with
any cure costs associated therewith to be borne by Sellers.
Section 6.8 MAINTENANCE OF CABLE SHEATH. Purchaser will assume GST's
maintenance contract with Tyco (or enter into a new contract with Tyco or other
qualified party) for maintenance of the cables included in the cable sheath
described in Section 1.1(p). The Purchaser's obligation to provide such
maintenance for cables it does not own is subject to Sellers (and each of
successors or assigns of the cables included in such sheath that constitute
Excluded Assets, referred to herein as "HAWAII OWNERS") sharing the cost of such
maintenance contract with Purchaser on a per-fiber basis.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS AND THE
PURCHASER. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
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(a) any waiting period applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the Department of
Justice or the Federal Trade Commission challenging or seeking to enjoin the
consummation of the transactions contemplated by this Agreement, which action
shall not have been withdrawn or terminated without requiring the Purchaser to
dispose of or divest any of its assets or businesses (including, without
limitation, any material Asset or Business following the Closing), or
discontinue or refrain from conducting any of its operations or those acquired
hereunder;
(b) no statute, rule, regulation, executive order, decree, ruling, or
preliminary or permanent injunction shall have been enacted, entered,
promulgated, or enforced by any federal or state court or governmental authority
that prohibits, restrains, enjoins, or restricts the consummation of the
transactions contemplated by this Agreement that has not been withdrawn or
terminated;
(c) no claim, action, suit, arbitration, inquiry, proceeding or
investigation (each, an "ACTION") shall have been commenced by or before any
United States federal, state, or local or any foreign government, governmental,
regulatory, or administrative authority, agency, or commission or any court,
tribunal or judicial or arbitral body against the Purchaser or any Seller,
seeking to restrain or materially and adversely alter the transactions
contemplated by this Agreement; provided, however, that the provisions of this
Section 7.1(c) shall not apply to any party that has directly or indirectly
solicited or encouraged any such Action; and
(d) all consents (including consents to assignments of permits and rights
of way), waivers, approvals, certificates, and other authorizations required to
be obtained from the FCC, including the FCC Applications, or from any other
governmental authority asserting jurisdiction over the Purchaser, the Sellers or
one of their subsidiaries, including the State PUC Applications (collectively,
the "REGULATORY APPROVALS") that are required in order to consummate the
Contemplated Transactions or to permit Purchaser to operate the Business as
currently conducted or planned to be conducted, shall have been obtained by a
Final Order (or either (i) waived in whole or in part in a writing executed by
the parties hereto, unless such a waiver is prohibited by law, or (ii) if
applicable, the Purchaser shall have received adequate assurances satisfactory
to it that all such approvals, clearances, consents, and authorizations will be
given) and all parties shall have complied with the conditions, if any, imposed
in connection with the grant of the Regulatory Approvals (provided that the
Purchaser shall not be required to accept or comply with any condition that
would be unreasonably burdensome or that would have an adverse effect on it or
on the value of the relevant Asset(s) and shall not be obligated to effect the
Contemplated Transactions if such conditions are imposed). Other than those
which in the aggregate do not result in a Seller Material Adverse Effect, all
filings and notices required to be made by the Sellers prior to the consummation
of the Contemplated Transactions shall have been made.
Section 7.2 CONDITIONS PRECEDENT TO OBLIGATION OF THE SELLERS. The
obligation of the Sellers to effect the transactions contemplated by this
Agreement shall
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be subject to the satisfaction at or prior to the Closing Date of the following
additional conditions:
(a) the Purchaser shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing Date, the representations and warranties of the Purchaser contained
in this Agreement that are qualified with respect to materiality (i.e., with
respect to the occurrence or likely occurrence of a Purchaser Material Adverse
Effect or materiality) shall be true and correct in all respects, and such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as if made at and as of such dates, except with
respect to representations and warranties which speak as to an earlier date,
which shall be at and as of such dates, and the Sellers shall have received a
certificate signed by an officer of the Purchaser as to the satisfaction of this
condition; and
(b) the Sale Order shall have been entered by the Bankruptcy Court in
substantially the form contemplated by this Agreement (unless the Sellers shall
have agreed to modify such form) and shall not have been reversed, stayed,
modified, or amended in any manner materially adverse to the Sellers and shall
have become a Final Order.
Section 7.3 CONDITIONS PRECEDENT TO OBLIGATION OF THE PURCHASER. The
obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following additional conditions (compliance with which or the occurrence
of which may be waived in whole or in part in a writing executed by the
Purchaser, unless such a waiver is prohibited by law):
(a) each Seller shall have performed in all material respects their
obligations under this Agreement required to be performed by them at or prior to
the Closing Date, the representations and warranties of the Sellers contained in
this Agreement that are qualified with respect to materiality shall be true and
correct in all respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as if made at and as of
such dates, except with respect to representations and warranties which speak as
to an earlier date, which shall be at and as of such date; and the Purchaser
shall have received a certificate signed by an officer of each of the Sellers as
to the satisfaction of this condition;
(b) the Sale Order shall have been entered by the Bankruptcy Court in
substantially the form contemplated by this Agreement and shall not have been
reversed, stayed, modified, or amended in any manner materially adverse to the
Purchaser;
(c) the Sellers shall have obtained the Required Contractual Consents
material to the Business.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
at any time prior to the Closing Date by mutual written agreement of the
Purchaser and the Sellers.
Section 8.2 TERMINATION BY EITHER THE PURCHASER OR THE SELLERS. This
Agreement may be terminated at any time prior to the Closing Date by either the
Purchaser or the Sellers if (a) a United States federal or state court of
competent jurisdiction or United States federal or state governmental regulatory
or administrative agency or commission shall have issued an order, decree, or
ruling or taken any other action permanently restraining, enjoining, or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement and either (i) thirty (30) days shall have elapsed from the issuance
of such order, decree, or ruling or other action and such order, decree, or
ruling or other action has not been removed or (ii) such order, decree, ruling,
or other action shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this clause (ii) shall
have used all reasonable efforts to remove such injunction, order, or decree, or
(b) the Closing Date shall not have occurred on or before December 1, 2000;
provided, however, that neither party may terminate this Agreement pursuant to
this Section 8.2(b) on or before February 1, 2001 if the conditions to the
Purchaser's obligations to consummate the transactions contemplated hereunder
have not been satisfied on or prior to December 1, 2000 solely on account of the
failure to receive the Regulatory Approvals; and provided, however, that the
right to terminate this Agreement pursuant to this Section 8.2(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of the failure of the Closing Date to have
occurred on or prior to such date.
Section 8.3 TERMINATION BY THE SELLERS. This Agreement may be terminated at
any time prior to the Closing Date by action of the Boards of Directors of the
Sellers if (a) there has been a breach by the Purchaser of any representation or
warranty contained in this Agreement that is qualified as to materiality or a
material breach of any representation and warranty that is not so qualified,
which breach is not curable, or if curable, is not cured within thirty (30) days
after written notice of such breach is given by any Seller to the Purchaser; or
(b) there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of the Purchaser, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by any Seller to the Purchaser.
Section 8.4 TERMINATION BY THE PURCHASER. This Agreement may be terminated
at any time prior to the Closing Date by the Purchaser if (a) there has been a
breach by any Seller of any representation or warranty contained in this
Agreement that is qualified as to materiality or a material breach of any
representation and warranty that is not so qualified, which breach is not
curable, or if curable, is not cured within thirty (30) days after notice of
such breach is given by the Purchaser to the Sellers; (b) there has
34
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of any Seller, which breach is not curable or, if curable,
is not cured within thirty (30) days after written notice of such breach is
given by the Purchaser to the Sellers; (c) the Sale Order shall not have been
entered by the Bankruptcy Court on or before September 15, 2000 in substantially
the form contemplated by this Agreement; (d) the aggregate sum of the Cure
Amounts (including any Pre-Closing Cure Amounts required to be paid to Sellers
as an increase in purchase price pursuant to Section 1.3(a)(ii)), the Customer
Credit Amounts, the HLHZ Payment Obligations, plus the Post-Petition
Administrative Expenses (such aggregate sum, the "Actual Assumed Expenses")
exceeds $50,000,000 (collectively, the "Cap") and the Sellers shall not have
agreed to amend this Agreement to reduce the Purchase Price by such excess; (e)
the Sellers shall not have executed and delivered a completed and amended Seller
Disclosure Letter to Purchaser by the close of business September 11, 2000,
together with a notice indicating that such letter is being delivered pursuant
to this Section 8.4(e); or (f) by the open of business on September 14, 2000,
Purchaser shall notify GST in writing that it is not satisfied with such
completed Seller Disclosure Letter and is terminating this Agreement pursuant to
this Section 8.4(f).
Section 8.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement pursuant to this Article VIII, written notice
thereof shall as promptly as practicable be given to the other party to this
Agreement and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein (a) there shall be no
liability or obligation on the part of the Sellers, the Purchaser, or their
respective officers, directors, and affiliates, and all obligations of the
parties shall terminate, except for the obligations of the parties pursuant to
Sections 5.8, 8.5, 8.6, 11.4, 11.5 and 11.6, Article X and the Confidentiality
Agreement and except, in the case of the Purchaser, the forfeiture of the
Deposit, as applicable, in accordance with Section 1.5 and (b) all filings,
applications, and other submissions made pursuant to the transactions
contemplated by this Agreement shall, to the extent practicable, be withdrawn
from the agency or Person to which made.
Section 8.6 TERMINATION FEE. The Sellers acknowledge and agree that
Purchaser may be entitled to a "Termination Fee" in accordance with the form
of order that was agreed by the parties and that was submitted to the
Bankruptcy Court by the Sellers' on September 11, 2000, and Sellers and
Purchaser expressly agree to abide by such the terms therein and the Sellers
acknowledge and agree that such agreement by Sellers is a material inducement
to Purchaser's execution of this Agreement.
ARTICLE IX
DELIVERIES AT CLOSING
Section 9.1 SELLERS' DELIVERIES AT CLOSING. In addition to the other things
required to be done hereby, at the Closing, the Sellers shall deliver, or cause
to be delivered, to the Purchaser the following:
35
(a) all documents, certificates, and agreements reasonably necessary to
transfer to the Purchaser all of each Seller's right, title and interest in, to
and under all of the Assets, free and clear of any and all Encumbrances thereon,
including:
(i) a duly executed Assignment and Assumption Agreement, in customary
form mutually agreeable to the parties; and
(ii) an assignment of lease, dated as of the Closing Date, with
respect to each Assumed Contract that is a lease, in form reasonably
acceptable to the Purchaser, together with any necessary transfer
declarations or other filings (and in recordable form if required by the
Purchaser); and
(b) certified copies of all orders of the Bankruptcy Court pertaining to
the Contemplated Transactions, including the Sale Order.
Section 9.2 PURCHASER'S DELIVERIES AT CLOSING. In addition to the other
things required to be done hereby, at the Closing, the Purchaser shall deliver,
or cause to be delivered, to the Sellers the following:
(a) a certificate dated the Closing Date and validly executed on behalf of
the Purchaser to the effect that the conditions set forth in Section 7.2(a) have
been satisfied;
(b) a copy of the resolutions of the Board of Directors of the Purchaser,
or similar enabling document, authorizing the execution, delivery, and
performance hereof by the Purchaser, and a certificate of its secretary or
assistant secretary, dated as of the Closing Date, that such resolutions were
duly adopted and are in full force and effect; and
(c) a duly executed Assignment and Assumption Agreement, in customary form
mutually agreeable to the parties.
Section 9.3 REQUIRED DOCUMENTS. All documents to be delivered by the
Sellers or to be entered into by the Sellers and the Purchaser necessary to
carry out the transactions contemplated by this Agreement or contemplated by the
terms of this Agreement shall be reasonably satisfactory in form and substance
to the Purchaser and counsel to the Purchaser and all documents to be delivered
by the Purchaser necessary to carry out the transactions contemplated by this
Agreement or to be entered into by the Sellers and the Purchaser necessary to
carry out the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Sellers and counsel to the Sellers.
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees
to indemnify and hold harmless each Seller, its officers, directors, employees,
36
agents, legal counsel, advisers, representatives and Affiliates (collectively,
the "Seller Indemnitees") from and against, and pay or reimburse the Seller
Indemnitees for, any and all Losses resulting from or arising out of:
(a) any inaccuracy in any representation or warranty by Purchaser made or
contained in this Agreement;
(b) any failure of Purchaser to perform any covenant or agreement made or
contained in this Agreement or fulfill any other obligation in respect thereof;
(c) the Assumed Liabilities;
(d) the operation of the Business by Purchaser or Purchaser's ownership,
operation or use of the Assets on or after the Closing Date;
except, in the case of clauses (c) and (d), to the extent such Losses result
from or arise out of the Excluded Assets or Excluded Liabilities.
Section 10.2 LOSSES NET OF INSURANCE, ETC. The amount of any Loss for which
indemnification is provided under this Article X shall be net of any amounts
actually recovered or recoverable by any Seller Indemnitees under insurance
policies with respect to such Loss, but shall not be net of any tax benefit or
cost with respect thereto.
Section 10.3 TERMINATION OF INDEMNIFICATION. The obligations to indemnify
and hold harmless any party (a) pursuant to clause (a) of Section 10.1, shall
terminate upon the Closing and (b) pursuant to the other clauses of Section
10.1, shall terminate at the expiration of the applicable statute of
limitations.
Section 10.4 INDEMNIFICATION PROCEDURES.
(a) Any Seller Indemnitee entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement of
any action or proceeding by any third party (a "THIRD PARTY CLAIM") with respect
to which a claim for indemnification may be made pursuant to this Article X, but
the failure of any indemnified party to provide such notice shall not relieve
the indemnifying party of its obligations under the preceding paragraphs of this
Article X, except to the extent the indemnifying party is actually materially
prejudiced thereby, and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Article X. In case any Third Party Claim is brought against an indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, unless in the
reasonable opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof jointly with any other indemnifying
party similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party that it so chooses, the indemnifying party shall
not be liable to such indemnified party for any legal
37
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that (i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the action or proceeding within twenty (20) days
after receiving notice from such indemnified party that the indemnified party
believes it has failed to do so; or (ii) if such indemnified party who is a
defendant in any Third Party Claim which is also brought against the
indemnifying party reasonably shall have concluded that there may be one or more
legal defenses available to such indemnified party which are not available to
the indemnifying party; or (iii) if representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, then, in any such case, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction) and the
indemnifying party shall be liable for any expenses therefor. No indemnifying
party shall, without the written consent of the indemnified party, which consent
shall not be unreasonably withheld, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim. Anything in the foregoing to the contrary
notwithstanding, (1) notice given by Purchaser to GST shall constitute valid
notice to all Seller Indemnitees, and (2) with respect to any Third Party Claim
with respect to which more than one Seller Indemnitee is an indemnified party or
potential indemnified party, all such Seller Indemnitees shall select a single
Seller Indemnitee to act as representative for all such Seller Indemnitees with
respect to such Third Party Claim, and (x) such representative shall be
authorized to make authorizations and consents on behalf of each such Seller
Indemnitee, and (y) Purchaser shall, with respect to all matters relating to
such Third Party Claim, be entitled to rely on the statements, authorizations
and consents of such representative as being the statement, authorization or
consent of each such Seller Indemnitee.
(b) Anything to the contrary in this Section 10.4 notwithstanding: (i)
Purchaser shall be entitled to assume and control the defense in all respects,
including with respect to settlement, with counsel selected by Purchaser and
(ii) Sellers shall facilitate such assumption and control by Purchaser, which
facilitation shall include the prompt delivery, and in any event the delivery
within five Business Days after receipt by any Seller or Affiliate thereof of a
request therefor, copies of all notices and documents (including court papers)
received by any Seller or Affiliate thereof to the extent relating to the Third
Party Claim and any power of attorney reasonably requested by Purchaser
Indemnitee with respect to such Third Party Claim.
(c) In the event any indemnified party should have an indemnification
claim against any indemnifying party under the Agreement that does not involve a
Third Party Claim being asserted against or sought to be collected from such
indemnified party, the indemnified party shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any indemnified
party so to notify the indemnifying party shall not relieve the indemnifying
party from any liability that it may
38
have to such indemnified party, except to the extent that the indemnifying party
has been actually prejudiced by such failure. If the indemnifying party disputes
its liability with respect to such claim, the indemnifying party and the
indemnified party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved by litigation in the Bankruptcy Court or, if the Bankruptcy Court
declines to resolve or take jurisdiction over such dispute in an appropriate
court of competent jurisdiction.
Section 10.5 INDEMNITY PAYMENTS. In the event Purchaser agrees to or is
determined to have any obligation to indemnify any Seller Indemnitee pursuant to
this Article X, Purchaser shall promptly pay to the Sellers by wire transfer of
immediately available funds to the account or accounts designated by the
Sellers.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 NOTICES. All notices, claims, demands, and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (c) the expiration of
three (3) Business Days after the day when mailed by registered or certified
mail (postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
he specified by like notice):
(a) If to the Purchaser, to:
Time Warner Telecom Inc.
00000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx, Esq. and Xxxx Xxxxx, Esq.
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq. and
Xxxxxxx X. Xxxxx, Esq.
(b) If to any Seller prior to Closing, to it:
39
c/o GST Telecom, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx and Xxxxxx Xxxxx
with a copy to:
Xxxxxx & Xxxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq. and
Xxxxxxx X. Xxxxxx, Esq.
and
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(c) If to any Seller following Closing, to it at such address(es) as shall
be specified in writing delivered to the Purchaser, in each case
with a copy to:
Xxxxxx & Xxxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq. and
Xxxxxxx X. Xxxxxx, Esq.
and
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
40
Section 11.2 DESCRIPTIVE HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Schedules and Exhibits, the Seller Disclosure Letter, the Purchaser Disclosure
Letter, the Confidentiality Agreement, and the other documents and instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, between the
parties, with respect to the subject matter hereof, including, without
limitation, any transaction between the parties hereto, and (b) shall not be
assigned by operation of law or otherwise; provided, however, that the Purchaser
may assign its rights and obligations hereunder to any Subsidiary, but: (a) the
Purchaser shall not be relieved of its obligations hereunder as a result of such
assignment; and (b) to the extent any such assignment by the Purchaser relates
to the assignment by any Seller of an executory contract or unexpired lease
hereunder and occurs prior to Closing such that, at Closing, this Agreement will
provide for Sellers' assignment of such executory contract or unexpired lease to
a party other than the Purchaser, such assignment by the Seller shall be subject
to all applicable provisions of the Bankruptcy Code. Notwithstanding anything to
the contrary contained herein, Purchaser may assign its rights and obligations
hereunder in respect of Assets to one or more third parties; provided, that, (x)
such assignment does not, in the aggregate with all other such assignments,
constitute an assignment of the right to purchase all or substantially all of
the Assets; (y) such assignment does not relieve Purchaser of its obligations
hereunder and does not delay the Closing or reduce the purchase price paid to
Sellers hereunder; and (z) to the extent any such assignment by the Purchaser
relates to the assignment by any Seller of an executory contract or unexpired
lease hereunder and occurs prior to Closing such that, at Closing, this
Agreement will provide that Sellers' assignment of such executory contract or
unexpired lease to a party other than the Purchaser, such assignment by the
Seller shall be subject to all applicable provisions of the Bankruptcy Code.
Section 11.4 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to the rules
of conflict of laws of the State of Delaware or any other jurisdiction.
Section 11.5 VENUE AND RETENTION OF JURISDICTION. All actions brought,
arising out of, or related to the Contemplated Transactions shall be brought in
the Bankruptcy Court, and the Bankruptcy Court shall retain jurisdiction to
determine any and all such actions.
Section 11.6 EXPENSES. Except as otherwise provided herein, whether or not
the actions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expenses.
Section 11.7 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
41
Section 11.8 WAIVER. At any time prior to the Closing Date, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 11.9 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective when each party hereto shall have received counterparts thereof
signed by all the other parties hereto.
Section 11.10 SEVERABILITY; VALIDITY; PARTIES IN INTEREST. If any provision
of this Agreement or the application thereof to any person or circumstance is
held invalid or unenforceable, the remainder of this Agreement, and the
application of such provision to other persons or circumstances, shall not be
affected thereby, and to such end, the provisions of this Agreement are agreed
to be severable. Nothing in this Agreement, express or implied, is intended to
confer upon any person not a party to this Agreement any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 11.11 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to all
other remedies available at law or in equity.
Section 11.12 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations, warranties and (except as set forth in the following
sentence) covenants set forth in this Agreement or in any certificate, document
or other instrument delivered in connection herewith other than those covenants
and agreements set forth in Article X hereof, which shall terminate in
accordance with Section 10.3, shall terminate at the earlier of (i) the Closing
and (ii) termination of this Agreement in accordance with Article VIII hereof.
Only those covenants that contemplate actions to be taken or obligations in
effect after the Closing or termination of this Agreement, as the case may be,
shall survive in accordance with their terms and to the extent so contemplated.
Section 11.13 NO OTHER REPRESENTATIONS. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent of each party
hereto that the Sellers are making no representation or warranty whatsoever,
express or implied, except those representations and warranties contained in
Article III above. It is understood that, except to the extent otherwise
expressly provided herein, the Purchaser takes the Assets "as is" and "where
is."
42
ARTICLE XII
DEFINITIONS
Section 12.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings.
"ACQUISITION SUBSIDIARY" has the meaning set forth in Section 2.3.
"ACTUAL ASSUMED EXPENSES" has the meaning set forth in Section 8.4.
"ACTION" has the meaning set forth in Section 7.1(c).
"AGREEMENT" has the meaning set forth in the Preamble.
"ASSETS" has the meaning set forth in Section 1.1.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means a Xxxx of Sale, Assignment and
Assumption Agreement in such form as may be agreed to by the Purchaser and the
Sellers.
"ASSUMED CONTRACTS" has the meaning set forth in Section 1.1(h).
"ASSUMED LIABILITIES" has the meaning set forth in Section 1.3.
"BANKRUPTCY CODE" has the meaning set forth in the Recitals.
"BANKRUPTCY COURT" has the meaning set forth in the Recitals.
"BID" has the meaning set forth in the Order Approving Bidding Procedures
with Respect to the Proposed Sale of Substantially All of the Debtors' Assets
entered by the Bankruptcy Court on June 12, 2000.
"BUSINESS" has the meaning set forth in the Recitals.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other day
on which banking institutions in New York, New York are authorized or required
by law or executive order to close.
"CAP" has the meaning set forth in Section 8.4.
"CHAPTER 11 CASE" has the meaning set forth in the Recitals.
"CLOSING" has the meaning set forth in Section 2.1.
"CLOSING DATE" has the meaning set forth in Section 2.1.
"COBRA" has the meaning set forth in Section 1.3(c).
43
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended, and
the rules and regulations (including those issued by the FCC) promulgated
thereunder.
"COMMUNICATIONS LICENSE" or "COMMUNICATIONS LICENSES" have the meaning set
forth in Section 3.10(a).
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement, dated as
of December 15, 1999 by and between Xxxxxxx Xxxxx Barney Inc. on behalf of GST
and the Purchaser.
"CONTEMPLATED TRANSACTIONS" has the meaning set forth in the Recitals.
"CONTINUEES" has the meaning set forth in Section 5.13(e).
"CONTRACTS" has the meaning set forth in Section 3.17.
"CURE AMOUNTS" has the meaning set forth in Section 1.3(a).
"CUSTOMER ACCESS RIGHTS" has the meaning set forth in Section 3.19(d).
"CUSTOMER BASE" means those Persons to which Sellers provides
telecommunication services.
"CUSTOMER CONTRACTS" means all customer contracts related to the Business
including, without limitation, all customer contracts made available by Sellers
for Purchaser's review prior to the date hereof, which includes all contracts
with carrier customers, all co-location contracts and all contracts with the top
20 (by build revenue) non-carrier customers.
"DEPOSIT" has the meaning set forth in Section 1.5.
"ENCUMBRANCES" has the meaning set forth in Section 1.1.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 3.11.
"ERISA" has the meaning set forth in Section 3.12(a).
"ERISA AFFILIATE" has the meaning set forth in Section 3.12(a).
"EXCLUDED ASSETS" has the meaning set forth in Section 1.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 1.4.
"FCC" means the Federal Communications Commission.
"FCC APPLICATIONS" has the meaning set forth in Section 5.7(a).
"FCC LICENSES" has the meaning set forth in Section 3.10(a).
44
"FINAL ORDER" shall mean an order or determination by the Bankruptcy Court,
the FCC, or other regulatory authority (including State PUCs) (x) that is not
reversed, stayed, enjoined, set aside, annulled, or suspended within the
deadline, if any, provided by applicable statute or regulation, (y) with respect
to which no request for stay, motion or petition for reconsideration,
application or request for review, or notice of appeal or other judicial
petition for review that is filed within such period is pending, and (z) as to
which the deadlines, if any, for filing any such request, motion, petition,
application, appeal or notice, and for the entry by the FCC or other regulatory
authority of orders staying, reconsidering, or reviewing on its own motion have
expired.
"GAAP" has the meaning set forth in Section 3.5.
"GOVERNMENTAL REQUIREMENTS" has the meaning set forth in Section 3.3.
"GST" has the meaning set forth in the Preamble.
"GST USA" has the meaning set forth in the Preamble.
"HAWAII ASSETS" has the meaning set forth in Section 1.1(p).
"HAWAII OWNERS" has the meaning set forth in Section 6.8.
"HLHZ PAYMENT OBLIGATION" has the meaning set forth in Section 1.3(d).
"HSR ACT" has the meaning set forth in Section 3.3.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 3.18(a).
"IRS" means the Internal Revenue Service.
"IRU" has the meaning set forth in Section 3.19(a).
"KNOWLEDGE" means the actual knowledge of the persons named in Section 12.1
of the Seller Disclosure Letter.
"LEGAL PROCEEDING" means any judicial, administrative, regulatory or
arbitral proceeding, investigation or inquiry or administrative charge or
complaint pending at law or in equity before any governmental or regulatory body
or authority.
"LOSS" or "LOSSES" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim, default
or assessment).
"MATERIAL DECISION" shall mean any of the following to the extent the same
may affect the Assets, the Assumed Liabilities, or the Business following the
Closing:
45
(i) any entering into any material contract, including purchase orders the
payment of which shall become due after the Closing, involving in excess of
$250,000; (ii) any termination of any Assumed Contract that involves future
payments in excess of $250,000; (iii) any material amendment or waiver of any of
any Seller's rights in respect of any Assumed Contract (for purposes of this
clause (iii), "material" shall mean a value in excess of $250,000); (iv) the
acceptance of any material customer Assumed Contract that deviates in any
material respect from the terms and conditions of current pricing policies; (v)
any action to respond to any material customer or regulatory complaint outside
of the normal course of business; (vi) any general communication with customers
related to (A) the Business not made in the ordinary course of the Business or
(B) the Contemplated Transactions; (vii) any material change of any Seller's
methods of collecting Trade Receivables or any making or agreeing to make any
settlement concerning a Trade Receivable in excess of $100,000; or (viii) a
material change in pricing, promotional, marketing, or any other decision that
would reduce in any material respect a Seller's customary profit margins;
provided that for purposes of the application of this definition in Section 3.6,
but only with respect to the period beginning June 30, 2000 and ending on the
date hereof, all of the foregoing references to $250,000 shall be deemed to mean
$500,000.
"NETWORK FACILITIES" has the meaning set forth in Section 3.19(e).
"PERMITTED ENCUMBRANCES" means with respect to or upon any of the property
or assets of the Sellers, whether owned as of the date hereof or thereafter, any
(1) easement, encroachment or similar reservation which does not impair the
current use, occupancy, or value, or the marketability of title, of such Asset
and which would not individually (or in the aggregate with others) be reasonably
expected to have a material adverse effect on the Business or the use or
enjoyment of such Asset; (2) liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of debt), statutory obligations,
surety, customs and appeal bonds and other obligations of like nature, incurred
as an incident to and in the ordinary course of the Business; (3) liens imposed
by law, such as carriers', warehouseman's, mechanics', materialmen's,
landlords', laborers', suppliers' and vendors' liens, incurred in good faith in
the ordinary course of the Business and securing obligations which are not yet
due or which are being contested in good faith by appropriate proceedings as to
which the Sellers shall, to the extent required by GAAP, have set aside on its
books appropriate provision for liability; and (4) extensions, renewals and
replacements of liens referred to in (1) through (3) of this sentence; provided,
that any such extension, renewal or replacement lien shall be limited to the
property or assets covered by the lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or replacement lien shall
be in an amount not greater than the amount of the obligations secured by the
original lien extended, renewed or replaced, none of which, individually or in
the aggregate, have a Seller Material Adverse Effect upon the value of the
property subject thereto or the use to which such property is presently put.
"PERMITS" means all permits, licenses, franchises, certificates of
occupancy, variances, exemptions, orders and other governmental authorizations,
46
consents, waivers, registrations and approvals necessary to conduct the Business
as presently conducted other than the Communications Licenses.
"PERSON" means any natural person, firm, partnership, limited liability
company, association, corporation, Seller, trust, business trust or other
entity.
"PETITIONS" has the meaning set forth in the Recitals.
"POST-PETITION ADMINISTRATIVE EXPENSES" has the meaning set forth in
Section 1.3(d).
"PRE-CLOSING CURE AMOUNTS" has the meaning set forth in Section 1.3(a).
"PURCHASE PRICE" has the meaning set forth in Section 1.5.
"PURCHASER" has the meaning set forth in the Preamble.
"PURCHASER DISCLOSURE LETTER" has the meaning set forth in Article IV.
"PURCHASER HIRE" has the meaning set forth in Section 5.13(b).
"PURCHASER MATERIAL ADVERSE EFFECT" has the meaning set forth in Section
4.3.
"REGULATORY APPROVALS" has the meaning set forth in Section 7.1(d).
"REQUIRED CONTRACTUAL CONSENTS" has the meaning set forth in Section 3.4.
"SALE ORDER" means an order or orders of the Bankruptcy Court in
substantially the form of Exhibit B, with such modifications as are acceptable
to Purchaser.
"SEC" means the Securities and Exchange Commission.
"SELLER" or "SELLERS" have the meaning set forth in the Preamble.
"SELLERS' BOARDS DETERMINATION" has the meaning set forth in Section 3.20.
"SELLER DISCLOSURE LETTER" has the meaning set forth in Article III.
"SELLER INDEMNITEES" has the meaning set forth in Section 10.1.
"SELLER MATERIAL ADVERSE EFFECT" means any events, conditions or matters in
respect of the Business (other than the filing of the Petitions and the pendency
of the Chapter 11 Case and any proceedings with respect thereto) which would
result in or would reasonably be expected to result in (i) a material adverse
effect on the properties, results of operations or condition (financial or
otherwise) of the Business taken as a
47
whole or (ii) a material adverse effect on the ability of the Sellers to perform
their obligations hereunder.
Without limiting the generality of the foregoing, any of the following
shall be considered a Seller Material Adverse Effect: (x) the discovery of any
damage, title defect or routing gap, or the termination or other loss of
contractual rights, in or to the Network Facilities and Customer Access Rights
which is not reasonably capable of cure or would reasonably be expected to cost
more than $10,000,000, individually or in the aggregate, to repair, purchase, or
construct in order to operate such Network Facilities and Customer Access Rights
as intended or (y) any material interruption in significant functions of the
Business, including, but limited to, customer service, billing or ordering
functions, that has a continuing effect.
"SELLER PLAN" or "SELLER PLANS" have the meaning set forth in Section
3.12(a).
"SELLERS' REPRESENTATIVES" has the meaning set forth in Section 6.2(b).
"SOFTWARE" has the meaning set forth in Section 3.18(a)(v).
"STATE LICENSES" has the meaning set forth in Section 3.10(a).
"STATE PUCs" shall have the meaning set forth in Section 3.10(a).
"STATE PUC APPLICATIONS" has the meaning set forth in Section 5.7(b).
"SUBSIDIARY" shall mean any subsidiary of the Purchaser.
"TAXES" means all federal, state, local, and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"TAX RETURNS" means all federal, state, local, and foreign tax returns,
declarations, statements, reports, schedules, forms, and information returns and
any amended Tax Returns relating to Taxes.
"TERMINATION FEE" has the meaning set forth in Section 8.6.
"THIRD PARTY CLAIM" has the meaning set forth in Section 10.4(a).
"TRADE RECEIVABLES" has the meaning set forth in Section 1.1(c).
"TRANSFER TAXES" has the meaning set forth in Section 5.12.
"WARN" has the meaning set forth in Section 1.3(b).
48
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
SELLERS
GST TELECOMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title:
GST USA, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM INC.
By:
------------------------------------
Name:
Title:
GST PACIFIC LIGHTWAVE, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM CALIFORNIA, INC.
By:
------------------------------------
Name:
Title:
GST TUCSON LIGHTWAVE, INC.
By:
------------------------------------
Name:
Title:
49
GST TELECOM HAWAII, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM NEW MEXICO, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM TEXAS, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM NEVADA, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM IDAHO, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM WASHINGTON, INC.
By:
------------------------------------
Name:
Title:
GST REALCO, INC.
By:
------------------------------------
Name:
Title:
50
GST NET, INC.
By:
------------------------------------
Name:
Title:
GST NET (AZ), INC.
By:
------------------------------------
Name:
Title:
GST TELECOM MICRONESIA, INC.
By:
------------------------------------
Name:
Title:
GST HUI KELEKA`A'KE, INC.
By:
------------------------------------
Name:
Title:
GST INTERNET, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM UTAH, INC.
By:
------------------------------------
Name:
Title:
HOL DEVELOPMENT, INC.
By:
------------------------------------
Name:
Title:
51
GST TELECOM OREGON, INC.
By:
------------------------------------
Name:
Title:
GST INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
WASATCH INTERNATIONAL
NETWORK SERVICES, INC.
By:
------------------------------------
Name:
Title:
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
By:
------------------------------------
Name:
Title:
GST SWITCHCO, INC.
By:
------------------------------------
Name:
Title:
GST EQUIPCO, INC.
By:
------------------------------------
Name:
Title:
52
GST HOME, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM COLORADO, INC.
By:
------------------------------------
Name:
Title:
GST CONSTRUCTION, INC.
By:
------------------------------------
Name:
Title:
GST GOVERNMENT SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
GST EQUIPMENT FUNDING, INC.
By:
------------------------------------
Name:
Title:
VIETELCO, INC.
By:
------------------------------------
Name:
Title:
GST CALL AMERICA, INC.
By:
------------------------------------
Name:
Title:
53
TRISTAR RESIDENTIAL COMMUNICATIONS CORP.
By:
------------------------------------
Name:
Title:
TOTALNET COMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM ARIZONA, INC.
By:
------------------------------------
Name:
Title:
GST ACTION TELECOM, INC.
By:
------------------------------------
Name:
Title:
GST UNIVERSAL, INC.
By:
------------------------------------
Name:
Title:
GST TELECOM PACIFIC, INC.
By:
------------------------------------
Name:
Title:
GST WHOLE EARTH NETWORKS, INC.
By:
------------------------------------
Name:
Title:
54
GST NETWORK FUNDING, INC.
By:
------------------------------------
Name:
Title:
ICON COMMUNICATIONS CORP.
By:
------------------------------------
Name:
Title:
GST FIBERNET LLC
By:
------------------------------------
Name:
Title:
KLP, INC.
By:
------------------------------------
Name:
Title:
GST TRANSFER, INC.
By:
------------------------------------
Name:
Title:
55
PURCHASER
TIME WARNER TELECOM INC.
By:
------------------------------------
Name:
Title:
