Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
OAN Services, Inc.
and
nTelecom Holdings, Inc.
and
OAN Services of Florida, Inc.
as Seller
and
ACI Telecommunications, Inc.
as Buyer
Dated as of May 25, 2001
TABLE OF CONTENTS
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Page
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ARTICLE 1. DEFINITIONS................................................................................... 1
Section 1.01 Definitions............................................................................. 1
ARTICLE 2. PURCHASE AND SALE OF ASSETS................................................................... 6
Section 2.01 Acquired Assets......................................................................... 6
Section 2.02 Excluded Assets......................................................................... 7
Section 2.03 Assumed Liabilities..................................................................... 8
Section 2.04 Excluded Liabilities.................................................................... 8
Section 2.05 Purchase Price.......................................................................... 9
Section 2.06 Allocation of Purchase Price............................................................ 9
Section 2.07 Contingent Payout....................................................................... 9
ARTICLE 3. THE CLOSING................................................................................... 10
Section 3.01 Closing................................................................................. 10
Section 3.02 Seller Deliveries to ACI................................................................ 10
Section 3.03 ACI Deliveries.......................................................................... 11
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.................................................. 12
Section 4.01 Organization of OAN..................................................................... 12
Section 4.02 Organization of OAN Florida............................................................. 12
Section 4.03 Organization of nTelecom................................................................ 12
Section 4.04 Authority of OAN Relative to this Agreement............................................. 12
Section 4.05 Authority of OAN Florida Relative to this Agreement..................................... 13
Section 4.06 Authority of nTelecom Relative to this Agreement........................................ 13
Section 4.07 Consents and Approvals.................................................................. 13
Section 4.08 Financial Statements.................................................................... 13
Section 4.09 Certain Assets.......................................................................... 13
Section 4.10 Brokers................................................................................. 14
Section 4.11 Material Contracts...................................................................... 14
Section 4.12 Governmental Permits.................................................................... 14
Section 4.13 Intellectual Property................................................................... 15
Section 4.14 Required and Other Consents............................................................. 16
Section 4.15 Absence of Certain Changes.............................................................. 16
Section 4.16 Litigation and Proceedings.............................................................. 17
Section 4.17 Compliance with Laws and Court Orders................................................... 17
Section 4.18 Employee Relations...................................................................... 17
Section 4.19 No Violations........................................................................... 17
Section 4.20 Inventories............................................................................. 17
Section 4.21 Conflict of Activities.................................................................. 18
Section 4.22 Disclosure.............................................................................. 18
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ACI......................................................... 18
Section 5.01 Organization............................................................................ 18
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Table of contents
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(continued)
Page
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Section 5.02 Authority Relative to this Agreement.......................................................... 18
Section 5.03 Consents and Approvals........................................................................ 18
Section 5.04 No Violations................................................................................. 18
Section 5.05 Brokers....................................................................................... 19
ARTICLE 6. Intentionally Omitted............................................................................... 19
ARTICLE 7. COVENANTS........................................................................................... 19
Section 7.01 Access and Information........................................................................ 19
Section 7.02 Books and Records............................................................................. 19
Section 7.03 Additional Matters............................................................................ 20
Section 7.04 Further Assurances............................................................................ 20
Section 7.05 Employees and Benefit Programs................................................................ 20
Section 7.06 Confidential Nature of Information............................................................ 23
Section 7.07 Public Announcement........................................................................... 23
Section 7.08 Bankruptcy Court Approvals.................................................................... 23
Section 7.09 Expense Reimbursement Fee..................................................................... 24
Section 7.10 Conduct of the Transaction Processing Business................................................ 24
Section 7.11 Notices of Certain Events..................................................................... 24
Section 7.12 No Seller Defaults............................................................................ 25
Section 7.13 Rejection of Specified Contracts.............................................................. 25
Section 7.14 Accounts Receivable........................................................................... 25
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND ACI............................................... 25
Section 8.01 Bankruptcy Court Order........................................................................ 25
Section 8.02 Injunctions; Orders........................................................................... 25
Section 8.03 Rule; Regulation.............................................................................. 25
ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER................................................... 26
Section 9.01 ACI's Obligations............................................................................. 26
Section 9.02 Representations and Warranties................................................................ 26
Section 9.03 No Misrepresentation or Breach of Covenants and Warranties.................................... 26
ARTICLE 10. CONDITIONS PRECEDENT TO OBLIGATION OF ACI.......................................................... 26
Section 10.01 No Misrepresentation or Breach of Covenants and Warranties.................................... 26
Section 10.02 No Changes or Destruction of Property......................................................... 26
Section 10.03 No Restraint or Litigation.................................................................... 27
Section 10.04 Necessary Governmental Approvals.............................................................. 27
Section 10.05 Necessary Consents............................................................................ 27
Section 10.06 Key Employees................................................................................. 27
Section 10.07 Final Order................................................................................... 27
ARTICLE 11. Intentionally Omitted.............................................................................. 27
ARTICLE 12. TERMINATION, AMENDMENT AND WAIVER.................................................................. 27
Section 12.01 Termination................................................................................... 27
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Table of contents
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(continued)
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Section 12.02 Notice of Termination....................................................................... 28
Section 12.03 Effect of Termination....................................................................... 28
ARTICLE 13. GENERAL PROVISIONS............................................................................... 29
Section 13.01 Survival of Representations, Warranties, and Agreements..................................... 29
Section 13.02 Damages/Indemnity........................................................................... 29
Section 13.03 Transfer Taxes.............................................................................. 29
Section 13.04 Notices..................................................................................... 29
Section 13.05 Descriptive Headings; Certain Terms......................................................... 31
Section 13.06 Entire Agreement, Assignment................................................................ 31
Section 13.07 Governing Law; Submission to Jurisdiction................................................... 31
Section 13.08 Expenses.................................................................................... 31
Section 13.09 Amendment................................................................................... 31
Section 13.10 Waiver...................................................................................... 31
Section 13.11 Counterparts; Effectiveness................................................................. 31
Section 13.12 Severability; Validity; Parties of Interest................................................. 32
ARTICLE 14. TAX MATTERS...................................................................................... 32
Section 14.01 Tax Definitions............................................................................. 32
Section 14.02 Tax Representations and Warranties.......................................................... 33
Section 14.03 Tax Matters................................................................................. 33
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of May 25, 2001 (this
"Agreement"), is made by and among nTelecom Holdings, Inc., a Delaware
corporation ("nTelecom"), OAN Services, Inc., a Texas corporation ("OAN"), OAN
Services of Florida, Inc., a Texas corporation ("OAN Florida", and together with
nTelecom and OAN, each a "Seller Party" and collectively, the "Seller" or the
"OAN Parties"), and ACI Telecommunications, Inc., a Delaware corporation
("ACI").
WHEREAS, the Seller is engaged in, among other things, the business of
(i) serving as a telecommunication clearinghouse between telecommunications and
telecommunications related service providers ("Customers") and local exchange
carriers ("LECs"), and (ii) the billing, processing and collection of payments
and information relating to such payments, and all ancillary services performed
in connection therewith (collectively, the "Transaction Processing Business");
WHEREAS, each of the Seller Parties intends to promptly file a
voluntary petition under Chapter 11, Title 11 of the United States Code (the
"Bankruptcy Code") each commencing a case (the "Chapter 11 Cases") in the United
States Bankruptcy Court for the Central District of California (the "Bankruptcy
Court") (the date thereof hereinafter referred to as the "Petition Date");
WHEREAS, ACI desires to purchase certain assets and properties of the
Seller related to the Transaction Processing Business and assume certain
liabilities of the Seller, and the Seller desires to sell, convey, assign and
transfer to ACI, certain assets and properties related to the Transaction
Processing 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 and other applicable
provisions of the Bankruptcy Code; and
WHEREAS, the Acquired Assets (as defined in Article 1) will be sold
pursuant to an order of the Bankruptcy Court approving such sale under Section
363 of the Bankruptcy Code (the "Sale Order"), and such Sale Order will include
the assumption and assignment of certain executory contracts and liabilities
thereunder under Section 365 of the Bankruptcy Code and the terms and conditions
of this Agreement.
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 1.
DEFINITIONS
SECTION 1.01 Definitions. In this Agreement, the following terms have the
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meanings specified or referred to in this Section 1.01 and shall be equally
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applicable to both the singular and plural forms.
"ACI" has the meaning set forth in the preamble.
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"Acquired Assets" has the meaning set forth in Section 2.01.
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"Action" means any legal action, suit, arbitration, inquiry,
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proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person
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directly or indirectly controlling, controlled by, or under common control with
such other Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such person or entity, through
the ownership of more than fifty percent of the voting power through voting
securities or other equity interests, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
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"Allocation Schedule" has the meaning set forth in Section 2.06.
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"Assigned Contracts" has the meaning set forth in Section 2.01.
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"Assumed Liabilities" has the meaning set forth in Section 2.03.
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"Auction" means the auction conducted pursuant to the Auction
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Procedures.
"Auction Procedures" means auction procedures in form and substance
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mutually satisfactory to Seller and ACI.
"Balance Sheet" means the unaudited balance sheet of Seller as of
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March 31, 2001.
"Balance Sheet Date" means March 31, 2001.
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"Bankruptcy Code" has the meaning set forth in the second WHEREAS
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clause.
"Bankruptcy Court" has the meaning set forth in the second WHEREAS
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clause.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as
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amended.
"Benefit Arrangement" has the meaning set forth in Section 7.05(b)(i).
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"Cash Payment" means those amounts paid under Section 2.05(e) and
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Section 2.05(f).
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"Chapter 11 Cases" has the meaning set forth in the second WHEREAS
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clause.
"Closing" has the meaning set forth in Section 3.01.
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"Closing Date" has the meaning set forth in Section 3.01.
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"Code" has the meaning set forth in Section 14.01.
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"Contingent Payout" means the payments to be made pursuant to Section
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2.07.
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"Contracts" means all contracts, subcontracts, agreements, leases,
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subleases, licenses, sublicenses, commitments, indemnities, assignments,
understandings and arrangements, whether written or oral.
"Copyrights" means United States and foreign copyrights, copyrightable
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works and mask works, whether registered or unregistered, and all registrations,
renewals and pending applications to register the same.
"Cure Costs" means the necessary costs to cure all defaults and
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compensate the non-debtor parties under Section 365 of the Bankruptcy Code in
connection with the assumption and assignment of the Assigned Contracts.
"Customer Contracts" means those Assigned Contracts by and between
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the Seller and a Customer, as identified on Exhibit A-2.
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"Customers" has the meaning set forth in the first WHEREAS clause.
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"COBRA" has the meaning set forth in Section 7.05.
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"Designated Chapter 11 Costs" means all out of pocket fees and
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expenses incurred or owed in connection with the administration of the Chapter
11 Case, including the U.S. Trustee fees, the fees and expenses of attorneys,
accountants, financial advisors, consultants and other professionals retained
by Seller or any official committee, incurred or owed in connection with the
administration of the Chapter 11 Case, and all out of pocket expenses of the
Seller in connection with the transactions contemplated under this Agreement.
"Employee Plans" has the meaning set forth in Section 7.05.
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"Encumbrance" means any lien (statutory or other), claim, charge,
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security interest, mortgage, deed of trust, pledge, hypothecation, assignment,
license, conditional sale or other title retention agreement, preference,
priority or other security agreement or preferential arrangement of any kind or
nature, and any easement, charges, encroachment, covenant, restriction, right of
way, defect in title or other encumbrance of any kind.
"ERISA" has the meaning set forth in Section 7.05.
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"ERISA Affiliate" has the meaning set forth in Section 7.05.
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"Excluded Assets" has the meaning set forth in Section 2.02.
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"Excluded Contracts" means all Contracts to which Seller is a party,
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other than the Assigned Contracts.
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"Excluded Liabilities" has the meaning set forth in Section 2.04.
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"Expense Reimbursement Fee" has the meaning set forth in Section 7.10.
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"Final Order" has the meaning set forth in Section 10.13.
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"Financial Statements" has the meaning set forth in Section 4.04.
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"Governmental Authority" means any foreign, federal, state, local or
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other government, governmental, statutory or administrative authority or
official, regulatory body or commission or any court, tribunal, judicial or
arbitral body.
"Governmental Permits" has the meaning specified in Section 4.12.
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"including" shall always be read as "including without limitation."
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"Intellectual Property" means Copyrights, Patent Rights, Trademarks
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and Trade Secrets and all Contracts and all goodwill which relate or pertain to
any of the foregoing.
"Intellectual Property Rights" has the meaning set forth in Section
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4.13.
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"knowledge" or known means, with respect to Seller, the actual
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knowledge of the officers and directors of Seller.
"LEC" has the meaning set forth in the first WHEREAS clause.
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"LEC Consent" has the meaning set forth in Exhibit H.
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"LEC Contracts" means those Assigned Contracts by and between the
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Seller and a LEC, as identified in Exhibit A-2.
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"LEC Deposits" has the meaning set forth in Section 2.01(b).
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"Management Agreement" means the Management Support and Post-Petition
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Financing Agreement, dated as of May 25, 2001, by and between nTelecom, OAN, OAN
Florida, and ACI.
"Material Adverse Effect" means a material adverse effect on (i) the
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Acquired Assets, (ii) the Assumed Liabilities, (iii) the ability of the Seller
to consummate the transactions contemplated by this Agreement, or (iv) the
ability of ACI to operate the Transaction Processing Business after the Closing
(to the extent caused by the Seller).
"Material Contracts" has the meaning set forth in Section 4.11(a).
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"Maximum Amount" has the meaning set forth in Section 2.07.
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"Patent Rights" means United States and foreign patents, patent
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applications, provisional applications, continuations, continuations-in-part,
divisions, reissues, extensions,
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patent disclosures, inventions (whether or not patentable or reduced to
practice) and re-examinations thereof and improvements thereto.
"Permitted Exceptions" means imperfections of title, restrictions or
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encumbrances, if any, that (a) either (i) would not involve material costs to
correct or remove or (ii) do not materially impair the use and operation of the
property affected thereby or (b) are caused solely by ACI.
"Person" means an individual, corporation, partnership (general or
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limited), limited liability company, joint stock company, joint venture,
association, trust or other entity or organization, including a Governmental
Authority or political subdivision or an agency or instrumentality thereof.
"Petition Date" means the date on which each of the Seller Parties
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files a petition for relief under the Bankruptcy Code in the Bankruptcy Court.
"Pre-Closing Tax Period" has the meaning set forth in Section 14.01.
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"Purchase Price" has the meaning set forth in Section 2.05(a).
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"Requirements of Law" means any foreign, federal, state or local laws,
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statutes, regulations, rules, codes, ordinances or requirements enacted,
adopted, issued or promulgated by any Governmental Authority (including, without
limitation, those pertaining to electrical, building, zoning, subdivision, land
use, environmental and occupational safety and health requirements) or common
law.
"Sale Order" means an order of the Bankruptcy Court, in the form set
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forth in Exhibit C hereto, or otherwise in form and substance mutually
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satisfactory to Seller and ACI.
"Seller" has the meaning set forth in the Preamble.
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"Seller's Employee Liabilities" has the meaning set forth in Section
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7.05.
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"Seller's Representatives" has the meaning set forth in Section
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7.02(b).
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"Software" means computer software programs and software systems,
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including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, whether in source code,
object code or human readable form, together with all related documentation,
technical manuals and materials, and any licenses or rights with respect to the
foregoing.
"Straddle Period" has the meaning set forth in Section 14.01.
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"Sub-Contract" has the meaning set forth in Section 2.01(d).
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"Tax" and "Taxes" have the meaning set forth in Section 14.01.
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"Taxing Authority" has the meaning set forth in Section 14.01.
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5
"Tax Return" and "Tax Returns" have the meaning set forth in Section
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14.01.
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"Trade Secrets" means confidential ideas, trade secrets, know-how,
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concepts, methods, processes, formulae, reports, financial information, research
and development, designs, drawings, data, customer lists, mailing lists,
business plans or other proprietary information.
"Trademarks" means United States, state and foreign trademarks,
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service marks, logos, trade dress and trade names (including all assumed or
fictitious names under which the Transaction Processing Business is conducting
its business or has within the previous three years conducted its business),
whether registered or unregistered, all goodwill associated therewith, and all
registrations and renewals of and pending applications to register the
foregoing.
"Transferred Employees" has the meaning set forth in Section 7.05.
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"Transaction Processing Business" has the meaning set forth in the
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first WHEREAS clause.
ARTICLE 2.
PURCHASE AND SALE OF ASSETS
Section 2.01 Acquired Assets. On the terms and subject to the conditions
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precedent set forth in this Agreement, at the Closing the Seller shall sell,
assign, transfer, convey, and deliver to ACI, and ACI shall purchase and accept
from the Seller, free and clear of all Encumbrances (other than Permitted
Exceptions) all of the Seller's rights, title, and interests in, to and under
all of the assets, property, rights and claims of the Seller set forth in
Exhibit A-1 (including the Assigned Contracts, as defined herein, listed in
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Exhibit A-2) (collectively, the "Acquired Assets"); provided, that the Acquired
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Assets shall not include the Excluded Assets as provided in Section 2.02.
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Pursuant to Section 365 of the Bankruptcy Code, at the Closing the Seller shall
assume and assign to ACI and ACI shall accept from the Seller, all of the
Seller's rights under and title and interest in all of the contracts (the
"Assigned Contracts") that constitute executory contracts or unexpired leases
within the meaning of Section 365 of the Code. From and after the Closing, the
Acquired Assets will be owned solely by ACI.
(a) Customer Contracts. The parties acknowledge that the Customer
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Contracts listed in Exhibit A-2 may not be assumed and assigned to ACI
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under Section 365 of the Bankruptcy Code on the terms set forth herein
without the consent of the Customer. Seller shall use commercially
reasonable efforts to assist ACI in obtaining the consent of each Customer.
It is a condition precedent to the obligations of ACI that Seller shall
have received and delivered to ACI prior to the Closing Instruments of
Consent to Assignment for Customer Contracts representing at least
10,800,000 call records or $540,000 in processing fees on a monthly basis.
(b) LEC Contracts. The parties acknowledge that the LEC Contracts
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must be cured by payment of the Cure Costs prior to the assignment and
assumption under Section 365 of the Bankruptcy Code. Seller hereby
covenants and agrees to pay the Cure Costs for the LEC Contracts prior to
the Closing and to assume the LEC Contracts and assign the LEC Contracts to
ACI under Section 365 of the Bankruptcy Code pursuant to
6
Bankruptcy Court Approval. After Closing and after assignment of the LEC
Contracts to ACI, ACI shall own all of the deposits held by the LECs at the
Closing (the "LEC Deposits").
(c) Additional Consents. If requested by ACI as to any other
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Assigned Contract, Seller shall use commercially reasonable efforts to
obtain any and all third Person consents for the assignment of the Assigned
Contracts to ACI, including, if requested, causing each LEC to deliver to
ACI at the Closing a LEC Consent. Notwithstanding anything in this
Agreement to the contrary, (i) ACI shall not be obligated to pay any
consideration to any third Person in connection therewith, except for the
Contingent Payout as provided in Section 2.07 (ii) the Seller shall not
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make any agreement or understanding affecting the Acquired Assets as a
condition to obtaining any such consents or waivers without the prior
written consent of ACI, and (iii) this Agreement shall not constitute an
agreement to assign any of the Assigned Contracts or Governmental Permits
if an attempted assignment thereof without the consent of a third Person
thereto (whose consent is not obviated by the Bankruptcy Court Order) would
constitute a breach thereof.
(d) In the event and to the extent that the parties are unable to
obtain any third Person consent required for the assignment to ACI of any
Assigned Contracts, or if any attempted assignment would be ineffective or
would constitute a Material Adverse Effect on the rights of ACI with
respect to the Acquired Assets so that ACI would not in fact receive all
the rights with respect to the Acquired Assets and ACI elects to close the
transactions contemplated by this Agreement, at the request of ACI, Seller
will cooperate (to the extent permitted by law or the terms of any
applicable agreement) with ACI and enter into a mutually agreeable
subcontract arrangement ("Sub-Contract") with ACI to allow ACI, to the
extent possible, to obtain the benefits and assume the obligations with
respect to such Assigned Contract in accordance with this Agreement,
including sub-contracting, sub-licensing, or sub-leasing to ACI, or under
which Seller would enforce for the benefit of ACI with ACI assuming
Seller's obligations, any and all rights of the Seller against a third
party thereto. Seller shall, without further consideration therefor, pay
and remit to ACI promptly all monies, rights, and other considerations
received in respect to ACI's performance of such obligations. Following the
Closing, the Seller shall use commercially reasonable efforts to obtain
required consents with respect to any Assigned Contracts which are not
assigned to ACI pursuant to the Final Order. If and when any such consent
shall be obtained or such Assigned Contract shall otherwise become
assignable or able to be novated, Seller shall promptly assign and novate
all its rights and obligations thereunder to ACI without the payment of any
further consideration therefor, and ACI shall assume such rights and
obligations after the Closing. The foregoing shall not limit the right of
ACI to require the Seller to assign any Assigned Contract to it or
constitute a waiver to any condition precedent to Closing.
SECTION 2.02 Excluded Assets. Notwithstanding the foregoing, ACI
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expressly understand and agree that (a) the assets and properties of the Seller
listed on Exhibit B (as amended from time to time by ACI and the Seller prior to
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Closing) and (b) the Excluded Contracts (collectively, the "Excluded Assets")
shall be excluded from the Acquired Assets.
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SECTION 2.03 Assumed Liabilities. ACI shall not assume any debt,
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liability or obligation of the Seller of any kind or nature whatsoever,
including, any liability in respect of Taxes for which the Seller is liable
pursuant to Section 14.03(a)(i), except that:
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(a) ACI shall assume all obligations arising and to be performed
after the Closing under the Assigned Contracts;
(b) ACI shall assume those obligations set forth in the Management
Agreement; and
(c) ACI shall assume all obligations for amounts under the LEC
contracts which are accrued and unpaid, but not owing, to the LECs as of
the Petition Date; it being understood that all amounts accrued and unpaid
and owing as of the Petition Date shall be paid by OAN.
SECTION 2.04 Excluded Liabilities. Notwithstanding any provision in this
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Agreement or any other writing or commitment (written or oral) to the contrary,
ACI is not assuming any debt, liability or obligation of the Seller (or any
predecessors of the Seller or any prior owners of all or part of its businesses
and assets) of whatever nature, whether presently in existence or arising
hereafter, other than the assumption by ACI of the Assumed Liabilities. All
such other liabilities and obligations shall be retained by and remain
obligations and liabilities of the Seller (all such liabilities and obligations
not being assumed being herein referred to as the "Excluded Liabilities").
Notwithstanding anything to the contrary in Section 2.03, none of the following
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shall be Assumed Liabilities for the purposes of this Agreement:
(a) any intercompany payables or other liabilities or obligations of
the Seller to any of its Affiliates;
(b) any of Seller's Employee Liabilities, any liability or obligation
under or with respect to any Employee Plan or Benefit Arrangement, or any
other liability or obligation related to employees of the Seller, whether
written or oral;
(c) any liability or obligation for Designated Chapter 11 Costs and
any contracts related thereto;
(d) any liability or obligation for indebtedness for borrowed money
or evidenced by bonds or notes (including accrued interest and fees with
respect thereto);
(e) any liability in respect of Taxes for which the Seller is liable
pursuant to Section 14.03(a)(i);
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(f) any liability or obligation relating to an Excluded Asset;
(g) any liability or obligation arising and to be performed prior to
the Closing Date under any of the Assigned Contracts, except for Post-
Petition defaults assumed by ACI under the Management Agreement;
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(h) any liability, claim or obligation arising out of, or otherwise
relating to any Actions (i) pending, as of the Closing Date, against Seller
(whether or not related to the Transaction Processing Business) or any of
its Affiliates, or (ii) instituted after Closing to the extent based upon,
or arising out of, any fact, condition, event or circumstance which occurs
or is otherwise existing on or prior to the Closing Date, including without
limitation any liability, claim or obligation relating to Actions by
stockholders of Seller, creditors of Seller or Governmental Authorities;
(i) any obligations of Seller or any of its Affiliates to indemnify
any Person; and
(j) any liability of Seller or any of its Affiliates for infringement
of Patent Rights, Trademarks or Copyrights of any third party, including
Software, or any misappropriation or disclosure of any Trade Secrets or
confidential information.
SECTION 2.05 Purchase Price. The purchase price (the "Purchase Price")
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for the purchase, sale, assignment and conveyance of Seller's right, title and
interest in and to the Acquired Assets shall be (a) the cancellation by ACI of
all indebtedness owed by Seller to ACI under the Management Agreement, (b) ACI's
assumption and guarantee of any liability for Post-Petition defaults under the
Assigned Contracts (as provided in the Management Agreement), (c) ACI's
assumption and performance of Seller's obligations after the Closing under the
Assigned Contracts (including, (i) the Customer Contracts, and (ii) the LEC
Contracts), (d) ACI's payment of the Contingent Payout referred to in Section
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2.07, (e) cash in an amount equal to the difference between the LEC Deposits
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minus the amounts assumed by ACI under Section 2.03(c), subject to verification
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of the LECs, and (f) cash in an amount equal to the difference between
$1,000,000 and the amount of the DIP Loan provided under the Management
Agreement.
SECTION 2.06 Allocation of Purchase Price. The Purchase Price (including
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the Assumed Liabilities), shall be allocated among the Acquired Assets in a
manner consistent with the values set forth on a schedule to be prepared by ACI
and Seller prior to Closing (the "Allocation Schedule"). The Allocation Schedule
shall be reasonable and shall be prepared in accordance with Section 1060 of the
Code and the Treasury regulations thereunder. ACI and the Seller agrees to file
Internal Revenue Service Form 8594, and all federal, state, local and foreign
Tax Returns, in accordance with the Allocation Schedule.
SECTION 2.07 Contingent Payout. Seller is a party to each of the Customer
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Contracts. Provided none of the Customer Contracts is in material default (other
than a payment default existing as of the Petition Date and set forth on
Schedule 2.07) Seller shall assume, as of the Closing, each of the Customer
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Contracts and assign each of the Customer Contracts to ACI in accordance with
Section 365 of the Bankruptcy Code and subject to Bankruptcy Court approval.
For purposes of the transactions contemplated by this Agreement, and not in
connection with any other purchase by a bidder of Seller's assets, provided that
such Customers remain as customers of ACI after the assumption and assignment of
the respective Customer Contract until the Maximum Amount is paid, ACI hereby
agrees to pay an amount not to exceed 20% of the Cure Costs (the "Maximum
Amount") to such Customers in accordance with the payment schedule specified in
such Customer's Instrument of Consent to Assignment as a condition to the
9
assignment of the Customer Contracts to ACI. ACI shall immediately cease any and
all payments of the Contingent Payout to a Customer if such Customer terminates
its Customer Contract at any time prior to payment of the Maximum Amount. All
Cure Costs shall be paid by Seller (out of its estate) at Closing, except for
amounts waived by the Customer in such Customer's Instrument of Consent to
Assignment (as defined herein).
ARTICLE 3.
THE CLOSING
SECTION 3.01 Closing. The consummation of the transactions contemplated
-------
by this Agreement (the "Closing") shall take place (a) at 10 a.m. on the first
business day after the conditions set forth in Articles 8, 9, 10 and 11 shall
have been satisfied or waived or (b) at such other time and date as shall be
fixed by agreement among ACI and the Seller at the offices of Sidley Xxxxxx
Xxxxx & Xxxx, 000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
or at such other place as shall be agreed by ACI and the Seller (the date of the
Closing being herein referred to as the "Closing Date").
SECTION 3.02 Seller Deliveries to ACI. Subject to fulfillment or waiver
------------------------
of the conditions set forth in Articles 8 and 9, at the Closing Seller shall
deliver to ACI all of the following:
(a) Copies of the Certificate of Incorporation, as amended, of each
Seller Party certified as of a recent date by the Secretary of State of
such Seller Party's state of incorporation;
(b) Certificate of good standing of each Seller Party issued as of a
recent date by the Secretary of State of such Seller Party's state of
incorporation;
(c) Certificate of the secretary or an assistant secretary of each
Seller Party, dated the Closing Date, in form and substance reasonably
satisfactory to ACI, as to (i) no amendments to the Certificate of
Incorporation of such Seller Party since a specified date; (ii) the By-laws
of such Seller Party; (iii) the resolutions of the Board of Directors of
such Seller Party authorizing the execution and performance of this
Agreement and the transactions contemplated hereby; and (iv) incumbency and
signatures of the officers of such Seller Party executing this Agreement;
(d) The Instrument of Assignment duly executed by each Seller Party,
as set forth in Exhibit D;
---------
(e) The Instrument of Assumption duly executed by each Seller Party,
as set forth in Exhibit F;
---------
(f) Lien releases from RFC Capital Corporation ("RFC") or any other
secured party which relate to Encumbrances on any of the Acquired Assets.
(g) Instruments of assignment of the Patent Rights, assignment of the
Trademarks and assignment of the Copyrights that are included in the
Acquired Assets, duly executed by each Seller Party, in form for
recordation with the appropriate
10
Governmental Authorities, in form and substance reasonably satisfactory to
ACI, and any other assignments or instruments with respect to any
Intellectual Property included in the Acquired Assets for which an
assignment or instrument is required to assign, transfer and convey such
assets to ACI;
(h) Such other deeds, bills of sale, endorsements, assignments and
Contracts, and any other instruments of sale, assignment, transfer and
conveyance that, in the reasonable judgment of ACI, are reasonable and
necessary to effectively vest in ACI good and valid title to and perfect
the interests of ACI in and to, the Acquired Assets, free and clear of all
Encumbrances (other than Permitted Exceptions), pursuant to the terms of
this Agreement;
(i) The certificates contemplated by Sections 10.01 and 10.02, duly
-------------- -----
executed by the CEO of each Seller Party;
(j) An Instrument of Consent to Assignment, as set forth in Exhibit
-------
G, for each of the Customer Contracts listed in Schedule 4.14.
- -------------
(k) A LEC Consent, as set forth in Exhibit H, or order of the
---------
Bankruptcy Court in form and substance satisfactory to Buyer, for each of
the LEC Contracts listed in Schedule 4.14.
-------------
(l) The Mutual Release duly executed by each Seller Party, as set
forth in Exhibit E; and
---------
(m) A certified copy of the Sale Order.
In addition to the above deliveries, Seller shall take all steps and
actions as ACI may reasonably request or as may otherwise be necessary to put
ACI in actual possession or control of the Acquired Assets or to perfect ACI's
rights in and to the Acquired Assets.
Section 3.03 ACI Deliveries. Subject to fulfillment or waiver of the
--------------
conditions set forth in Articles 8 and 10, at the Closing ACI shall deliver to
Seller all of the following:
(a) The Instrument of Assumption duly executed by ACI, as set
forth in Exhibit F;
---------
(b) Evidence of cancellation by ACI of all indebtedness of
Seller to ACI under the Management Agreement;
(c) A Mutual Release duly executed by ACI, as set forth in
Exhibit E;
---------
(d) The certificate contemplated by Section 9.02, duly executed
------------
by an officer of ACI;
(e) An Instrument of Consent to Assignment, as set forth in
Exhibit G for each of the Customer Contracts listed in Schedule 4.14.
--------- -------------
11
(f) A LEC Consent, as set forth in Exhibit H, or order of the
---------
Bankruptcy Court, for each of the LEC Contracts listed in Schedule 4.14.
-------------
(g) The Cash Payment.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to ACI as follows:
Section 4.01 Organization of OAN. OAN is a corporation duly organized and
-------------------
validly existing under the laws of the State of Texas. OAN has the corporate
power and authority and all necessary governmental approvals to own, lease,
operate and use the Acquired Assets and to carry on the Transaction Processing
Business as now conducted. OAN is in good standing under the laws of the
jurisdiction of its incorporation and in each jurisdiction where the operations
of the Transaction Processing Business require such qualification, except where
the failure to be in good standing would not individually or in the aggregate
have a Material Adverse Effect. True and complete copies of the Certificate of
Incorporation and all amendments thereto and of the By-laws, as amended to date,
of OAN have been delivered to ACI.
Section 4.02 Organization of OAN Florida. OAN Florida is a corporation
---------------------------
duly organized and validly existing under the laws of the State of Texas. OAN
Florida has the corporate power and authority and all necessary governmental
approvals to own, lease, operate and use the Acquired Assets and to carry on the
Transaction Processing Business as now conducted. OAN Florida is in good
standing under the laws of the jurisdiction of its incorporation and in each
jurisdiction where the operations of the Transaction Processing Business require
such qualification, except where the failure to be in good standing would not
individually or in the aggregate have a Material Adverse Effect. True and
complete copies of the Certificate of Incorporation and all amendments thereto
and of the By-laws, as amended to date, of OAN Florida have been delivered to
ACI.
Section 4.03 Organization of nTelecom. nTelecom is a corporation duly
------------------------
organized and validly existing under the laws of the State of Delaware.
nTelecom has the corporate power and authority and all necessary governmental
approvals to own, lease, operate and use the Acquired Assets and to carry on the
Transaction Processing Business as now conducted. nTelecom is in good standing
under the laws of the jurisdiction of its incorporation and in each jurisdiction
where the operations of the Transaction Processing Business require such
qualification, except where the failure to be in good standing would not
individually or in the aggregate have a Material Adverse Effect. True and
complete copies of the Certificate of Incorporation and all amendments thereto
and of the By-laws, as amended to date, of nTelecom have been delivered to ACI.
Section 4.04 Authority of OAN Relative to this Agreement. Subject to
-------------------------------------------
Bankruptcy Court approval, OAN has the corporate power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by OAN and the
consummation by OAN of the transactions contemplated
12
hereby have been duly authorized by all requisite corporate action. This
Agreement has been duly and validly executed and delivered by OAN and (assuming
this Agreement constitutes a valid and legally binding obligation of ACI), will
constitute a valid and legally binding obligation of OAN after the Petition Date
upon the entry of the Sale Order.
Section 4.05 Authority of OAN Florida Relative to this Agreement. Subject
---------------------------------------------------
to Bankruptcy Court approval, OAN Florida has the corporate power and authority
to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by OAN
Florida and the consummation by OAN Florida of the transactions contemplated
hereby have been duly authorized by all requisite corporate action. This
Agreement has been duly and validly executed and delivered by OAN Florida and
(assuming this Agreement constitutes a valid and legally binding obligation of
ACI), will constitute a valid and legally binding obligation of OAN Florida
after the Petition Date upon the entry of the Sale Order.
Section 4.06 Authority of nTelecom Relative to this Agreement. Subject to
------------------------------------------------
Bankruptcy Court approval, nTelecom has the corporate power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement by nTelecom and the
consummation by nTelecom of the transactions contemplated hereby have been duly
authorized by all requisite corporate action. This Agreement has been duly and
validly executed and delivered by nTelecom and (assuming this Agreement
constitutes a valid and legally binding obligation of ACI), will constitute a
valid and legally binding obligation of nTelecom after the Petition Date upon
the entry of the Sale Order.
Section 4.07 Consents and Approvals. No consent, approval, order, or
----------------------
authorization of, or declaration, filing or registration with, any Governmental
Authority is required to be made or obtained by the Seller in connection with
the execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby, except, for (a) consents,
orders, approvals or authorizations of, or declarations or filings with, the
Bankruptcy Court, (b) consents, orders, approvals, authorizations, declarations,
filings or registrations, which, if not obtained, would not, individually or in
the aggregate, have a Material Adverse Effect; and (c) the consents and
approvals of third parties and Governmental Authorities identified in Schedule
--------
4.14.
----
Section 4.08 Financial Statements. The Seller has heretofore delivered or
--------------------
made available to ACI unaudited financial statements (the "Financial
Statements") as of and for the three months ended March 31, 2001 and the twelve
months ended December 31, 2000. The Financial Statements (i) fairly present in
all material respects the financial condition, cash flows, changes in
stockholders' equity and results of operations of the Seller on a consolidated
basis as at the dates thereof and for the periods then ending in accordance with
GAAP applied on a consistent basis (except for the lack of footnotes and for
normal, immaterial year-end audit adjustments), and (ii) are consistent with the
books and records of Seller.
Section 4.09 Certain Assets. Seller owns or has the right to use all of
--------------
the assets currently used in the Transaction Processing Business. Seller has
good and marketable title to all of the Acquired Assets, free and clear of all
Encumbrances, except for Permitted Exceptions and except as set forth in
Schedule 4.09. Upon delivery to ACI on the Closing Date of the instruments of
13
transfer contemplated by Section 3, Seller will thereby transfer to ACI good and
---------
marketable title to the Acquired Assets, subject to no Encumbrances, other than
Permitted Exceptions. Except as set forth in Schedule 4.09 and except for
-------------
Contracts listed on Exhibit B, to Seller's knowledge ACI will have the right
---------
after the Closing to use all services provided by third parties currently
provided to Seller with respect to the Acquired Assets on terms no less
favorable than those available to Seller as of the date hereof, provided that
the foregoing shall not be deemed to be a representation or warranty that any
particular third Persons will perform pursuant to such agreements following the
Closing. To Seller's knowledge, all of the equipment, machinery, computers,
computer programs and data processing systems included in the Acquired Assets
are free from material defects, have been maintained in accordance with Seller's
historical practice, are in good operating condition and repair (subject to
normal wear and tear), and are suitable for the purposes for which they are
currently used. No Governmental Authorities have seized any assets of Seller
which are used, or held for use in, or relate to the Transaction Processing
Business. Except for the Excluded Assets, the Acquired Assets constitute all
assets that are owned, leased or licensed by Seller and used or held for use in
the Transaction Processing Business.
Section 4.10 Brokers. No person is entitled to any brokerage, financial
-------
advisory or finder's fee or similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.
Section 4.11 Material Contracts.
------------------
(a) Schedule 4.11(a) sets forth a true and correct list of all
----------------
material contracts ("Material Contracts") to which Seller is a party or
otherwise bound and which relate to the Transaction Processing Business.
(b) Except for payment defaults set forth on Schedule 4.11(b), the
----------------
Seller is not in default or breach in under the terms of any Assigned
Contract and no event or circumstance has occurred that, with notice or
lapse of time or both, would constitute a default or breach thereunder
(except for defaults and breaches caused solely by filing the Chapter 11
Case). True and complete copies of each written Assigned Contract have been
delivered or will be made available to ACI prior to the Closing.
(c) Set forth on Schedule 4.11(c) is a true and correct description
----------------
of all material commitments and other obligations of Seller under each of
the oral Assigned Contracts.
Section 4.12 Governmental Permits. Seller owns, holds or possesses all
--------------------
licenses, franchises, permits, registrations, certifications, privileges,
immunities, approvals and other authorizations from all Governmental Authorities
which are necessary, advisable or customary to entitle Seller to own or lease,
operate and use the Acquired Assets and to carry on and conduct the Transaction
Processing Business substantially as currently conducted (herein collectively
called the "Governmental Permits"), and has made all filings with, or
notifications to, all Governmental Authorities required pursuant to Requirements
of Law, except in each case where to do so would not, individually or in the
aggregate, have a Material Adverse Effect.
14
Except as set forth in Schedule 4.12, (a) with respect to the
-------------
Transaction Processing Business, Seller has fulfilled and performed its
obligations under the Governmental Permits, and no event has occurred or
condition or state of facts exists which constitutes or, after notice or lapse
of time or both, would constitute a material breach or default under any such
Governmental Permit or which permits or, after notice or lapse of time or both,
would permit revocation or termination of any such Governmental Permit, or which
might materially adversely affect the rights of Seller, under any such
Governmental Permit; (b) no notice of cancellation, of default or of any dispute
concerning any Governmental Permit, or of any event, condition or state of facts
described in the preceding clause, has been received by, or is known to, Seller;
and (c) each of the Governmental Permits is valid, existing and in full force
and effect.
Section 4.13 Intellectual Property.
---------------------
(a) Schedule 4.13(a) contains a list of all Copyrights, Trademarks,
----------------
Patent Rights, Trade Secrets, Software (other than commercially available
Software licensed for less than $5,000 in any individual license) and
internet domain name registrations included in the Acquired Assets
(collectively, the "Intellectual Property Rights"). The Intellectual
Property Rights constitute all the Intellectual Property, internet domain
registrations and Software (i) used, held for use or intended to be used by
the Seller in the Transaction Processing Business as of the date of this
Agreement, and (ii) necessary in the conduct of the Transaction Processing
Business of the Seller as such business is currently conducted. The
Intellectual Property Rights are sufficient to conduct the Transaction
Processing Business of the Seller as such business is currently conducted.
(b) Except as specified in Schedule 4.13(b), the Seller is the sole
and exclusive owner or has a valid right to use and exploit all the
Intellectual Property Rights, and except as set forth on Schedule 4.14, the
-------------
Seller has the right to license, sublicense or assign all the Intellectual
Property Rights without the material liability to, or requirement of
consent from, any other Person. All Intellectual Property Rights are
either owned by the Seller free and clear of all Encumbrances or are used
pursuant to a license agreement; each such license agreement is valid and
in full force and effect; the Seller is not in material default thereunder,
and to Seller's knowledge no corresponding licensor is in material default
thereunder. The Seller has not granted any license or other right to any
other person that is not an Affiliate with respect to the Intellectual
Property Rights. The execution, delivery and performance of this Agreement
and the transactions contemplated thereby shall not invalidate or terminate
any of the Intellectual Property Rights.
(c) Schedule 4.13(c) contains a list (showing in each case the
----------------
parties thereto) of all Assigned Contracts that relate to any Intellectual
Property Rights.
(d) None of the Intellectual Property Rights infringe, misappropriate
or otherwise conflict with any intellectual property rights or other right
of any Person; there is no pending or threatened litigation, adversarial
proceeding, administrative action or other challenge or claim relating to
any Intellectual Property Rights, and to the knowledge of the Seller there
is no valid basis for any such claim; there is no outstanding order
relating to any Intellectual Property Rights; there is currently no
infringement,
15
misappropriation or other conflict by any Person of any Intellectual
Property Rights; and, to the knowledge of the Seller, the Intellectual
Property Rights are valid and enforceable.
(e) The Seller has taken all reasonable steps to protect, maintain
and safeguard the Intellectual Property Rights, including any such
Intellectual Property Rights for which improper or unauthorized disclosure
would impair its value or validity materially, and has executed and
required appropriate nondisclosure and patent disclosure agreements and
made appropriate filings and registrations in connection with the
foregoing. Except as set forth in Schedule 4.13(e), (i) all employees and
----------------
independent contractors of the Seller have signed appropriate
confidentiality, patent disclosure and Intellectual Property assignment
agreements and (ii) to the Seller's knowledge no employee or independent
contractor of the Seller is in violation of any term of any such agreement
or any other contract or agreement relating to Intellectual Property.
Section 4.14 Required and Other Consents. Schedule 4.14 sets forth each
--------------------------- -------------
Assigned Contract which requires the consent, including, without limitation, any
consent with respect to a change of control, or other action by any Person as a
result of the execution, delivery and performance of this Agreement, unless such
document can be assumed and assigned without such consent under the Bankruptcy
Code.
Section 4.15 Absence of Certain Changes. (a) Except as disclosed in
--------------------------
Schedule 4.15, since the Balance Sheet Date, there has not been:
-------------
(i) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the Transaction Processing Business or any
Acquired Assets which, individually or in the aggregate, has had or could
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect; or
(ii) any sale or other disposition of any material assets other than
sales of products in the ordinary course of business.
(b) Except as set forth in Schedule 4.15, since the Balance Sheet
-------------
Date, Seller has conducted the Transaction Processing Business and the other
businesses of Seller only in the ordinary course and in conformity with past
practice. Without limiting the generality of the foregoing, since the Balance
Sheet Date, except as set forth in such Schedule, Seller has not:
(i) canceled, compromised, waived or released any debts owed to or
claims related to the Transaction Processing Business (including the settlement
of any claims or litigation) or waived any other rights held by Seller other
than in the ordinary course of the Transaction Processing Business consistent
with past practice;
(ii) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money or entered into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial Accounting
Standards No. 13), other than any indebtedness or capitalized lease obligation
that could not result in an Encumbrance on the Acquired Assets following the
Closing; or
16
(iii) paid any claims (including the settlement of any claims and
litigation or the payment or settlement of any obligations or liabilities) other
than in the ordinary course of the Transaction Processing Business consistent
with past practice in an aggregate amount not exceeding $50,000.
Section 4.16 Litigation and Proceedings. Schedule 4.16 contains an
-------------------------- -------------
accurate list of all Actions pending as of the date hereof against the Seller,
whether or not stayed pursuant to Section 362 of the Bankruptcy Code. Except as
described in Schedule 4.16, there is no Action pending against or, to Seller's
-------------
knowledge, threatened in writing against or affecting the Transaction Processing
Business or Acquired Assets before any Governmental Authority.
Section 4.17 Compliance with Laws and Court Orders. Except as set forth in
-------------------------------------
Schedule 4.17, the Transaction Processing Business has been conducted in
-------------
compliance with all material Requirements of Law applicable to the Acquired
Assets or the conduct of the Transaction Processing Business and since January
1, 2000, the Seller has not received any written communication from a
Governmental Authority that alleges that the Transaction Processing Business has
not been conducted in compliance with any Requirements of Law.
Section 4.18 Employee Relations. Except as set forth in Schedule 4.18,
------------------ -------------
Seller has complied in respect of the Transaction Processing Business with all
material applicable laws, rules and regulations which relate to prices, wages,
hours, discrimination in employment and collective bargaining and to the
operation of the Transaction Processing Business and is not liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing. Seller is not a party to, and is not affected by or threatened with,
any dispute or controversy with a union or with respect to unionization or
collective bargaining involving the employees of Seller. Seller is not
materially affected by any dispute or controversy with a union or with respect
to unionization or collective bargaining involving any supplier or customer of
Seller.
Section 4.19 No Violations. Neither the execution, delivery or performance
-------------
of this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby, will (a) conflict with or result in any breach of any
provisions of the Articles of Incorporation, or Bylaws of any Seller Party, or
(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, 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 Seller is a party or
by which Seller or Seller's properties or assets may be bound or affected,
except for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations that would not
individually or in the aggregate have a Material Adverse Effect on Seller's
ability to complete the transactions contemplated by this Agreement.
Section 4.20 Inventories. There are no inventories related to the
-----------
Transaction Processing Business.
17
Section 4.21 Conflict of Activities. Each Seller Party is the debtor and
----------------------
debtor in possession in its respective Chapter 11 Case. All of the operations
of the Transaction Processing Business are operated by OAN or its authorized
subcontractor EDS.
Section 4.22 Disclosure. None of the representations or warranties of
----------
Seller contained herein, none of the information contained in the Schedules
referred to in Article 4, and none of the other information or documents
furnished to ACI or any of its representatives by Seller or its representatives
pursuant to the terms of this Agreement, is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements herein or therein not misleading in any material respect.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF ACI
ACI represents and warrants to the Seller as follows:
Section 5.01 Organization. ACI is a corporation duly formed, validly
------------
existing and in good standing under the laws of the state of Delaware. ACI has
the corporate power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted. ACI is duly qualified 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 make such qualification appropriate,
except where the failure to be so qualified would not individually or in the
aggregate have a material adverse effect on ACI's ability to complete the
transactions contemplated by this Agreement.
Section 5.02 Authority Relative to this Agreement. ACI has the corporate
------------------------------------
power and authority to execute and deliver this Agreement and to carry out its
obligations hereunder. The execution, delivery, and performance of this
Agreement by ACI and the consummation by ACI of the transactions contemplated
hereby have been duly authorized by all requisite corporate action. This
Agreement has been duly and validly executed and delivered by ACI and (assuming
this Agreement constitutes a valid and legally binding obligation of Seller)
constitutes a valid and legally binding agreement of ACI, enforceable against
ACI in accordance with its terms.
Section 5.03 Consents and Approvals. Except for consents, approvals or
----------------------
authorizations which may be required under the Bankruptcy Code, no consent,
approval, or authorization of, or declaration, filing or registration with, any
Governmental Authority is required to be made or obtained by ACI in connection
with the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby.
Section 5.04 No Violations. Neither the execution, delivery or performance
-------------
of this Agreement by ACI, nor the consummation by ACI of the transactions
contemplated hereby, will (a) conflict with or result in any breach of any
provisions of the Articles of Incorporation, or Bylaws of ACI, (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,
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,
18
contract, agreement, plan or other instrument or obligation to which ACI is a
party or by which ACI or ACI's properties or assets may be bound or affected, or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to ACI or ACI's properties or assets, except for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations that would not individually or in the
aggregate have a material adverse effect on ACI's ability to complete the
transactions contemplated by this Agreement.
Section 5.05 Brokers. No person is entitled to any brokerage, financial
-------
advisory, finder's or similar fee or commission payable by ACI in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of ACI
Section 5.06 Disclosure. None of the representations or warranties of
----------
Seller contained herein, none of the information contained in the Schedules
referred to in Article 4, and none of the other information or documents
furnished to ACI or any of its representatives by Seller or its representatives
pursuant to the terms of this Agreement, is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements herein or therein not misleading in any material respect.
ARTICLE 6.
Intentionally Omitted
ARTICLE 7.
COVENANTS
Section 7.01 Access and Information. The Seller shall afford to ACI and to
----------------------
its financial advisors, legal counsel, accountants, consultants, and other
authorized representatives full and complete access at ACI's expense during
normal business hours upon reasonable notice throughout the period prior to the
Closing Date to the books, records, properties and personnel of the Seller and,
during such period, shall furnish as promptly as practicable to ACI any and all
such information as ACI reasonably may request, including all pleadings and
other documents or schedules filed with the Bankruptcy Court or the Office of
the United States Trustee; provided, however, that any such access shall be had
-------- -------
in such a manner so as not to unreasonably interfere with the normal conduct of
Seller's business or operations.
Section 7.02 Books and Records.
-----------------
19
(a) ACI shall allow the Seller and any of its then current directors,
officers, employees, counsel, representatives, accountants and auditors
(collectively, the "Seller's Representatives"), at ACI's expense,
reasonable access to all business records and files of each Seller Party or
the Transaction Processing Business that are transferred solely to ACI in
connection herewith, which are reasonably required by such Seller Party's
Representatives in order to complete the respective Chapter 11 Case or for
other valid business purposes, during regular business hours and upon
reasonable notice to ACI. Each Seller Party's 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 unreasonably interfere with the normal conduct of ACI's or Seller's
business or operations.
(b) This Section 7.02 shall cease to be enforceable after the Seller
------------
closes the Chapter 11 Cases. The provisions of Article 14 shall control
access to records for the matters covered by Article 14 relating to Taxes.
Section 7.03 Additional Matters. Subject to the terms and conditions
------------------
herein, except as provided by the Bankruptcy Code, the Bankruptcy Rules or any
other orders entered or approvals or authorizations granted by the Bankruptcy
Court in the Chapter 11 Cases, 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, including
under applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement, including using all commercially
reasonable efforts to obtain all necessary waivers, consents and approvals
required under this Agreement.
Section 7.04 Further Assurances. In addition to the other provisions of
------------------
this Agreement, from time to time after the Closing Date, the Seller and ACI
will use all commercially reasonable efforts to execute and deliver such other
instruments of conveyance, sale, transfer or assumption, as the case may be, and
take such other actions as may be reasonably requested to implement more
effectively the transactions contemplated by this Agreement. ACI and the Seller
hereby irrevocably consent to the personal and subject-matter jurisdiction of
the Bankruptcy Court for all purposes necessary to effectuate this Section 7.04.
------------
The Seller will seek to include in any plan of reorganization in the Chapter 11
Cases supported by it, provision for retained jurisdiction of the Bankruptcy
Court to effectuate this Section 7.04, and will use commercially reasonable
------------
efforts to oppose any such plan of reorganization which fails to include such
provisions.
Section 7.05 Employees and Benefit Programs.
------------------------------
(a) Employee Benefits Definitions. The following terms, as used in
this Agreement, having the following meanings:
"Benefit Arrangements" has the meaning set forth in Section
-------
7.05(b)(i).
----------
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA or any similar state law, and Section 7980 of the Code.
"Employee Plans" has the meaning set forth in Section 7.05(b)(i).
------------------
20
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"Seller's Employee Liabilities" means all liabilities, obligations and
commitments arising out of or related to the employment (or termination of
employment) by the Seller of its employees and former employees, including, but
not limited to, any obligation or liability for (a) accrued but unpaid wages,
salary, incentive or bonus compensation, vacation benefits and pay, unpaid
contributions to any Employee Plans or other compensation, (b) all claims for
severance or other termination benefits, (c) all workers compensation claims,
(d) employee tort claims or claims under federal and state employee
discrimination or sexual harassment laws including claims under Title VII of the
Civil Rights Act of 1964, as amended, and (e) any Actions brought by employees
or former employees.
"Transferred Employees" has the meaning set forth in Section
-------
7.05(c)(ii).
-----------
(b) ERISA Representations. The Seller represents and warrants to ACI
---------------------
that:
(i) Schedule 7.05(b)(i) lists (A) each "employee benefit plan,"
-------------------
as such term is defined in Section 3(3) of ERISA, which is maintained,
administered or contributed to by the Seller or any of its ERISA
Affiliates, or to which the Seller or any of its ERISA Affiliates has
any obligation to contribute, which covers employees of Seller or any
of its ERISA Affiliates or in which such employees participate
(hereinafter referred to collectively as the "Employee Plans") and (B)
each employment, severance or other similar contract and each policy,
plan or arrangement providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits
which (1) is not an Employee Plan, and (2) is entered into, maintained
or contributed to (or to which there is an obligation to contribute),
as the case may be, by the Seller or any of its subsidiaries to cover
employees or former employees of the Seller or any of its
subsidiaries. Such contracts, policies, plans and arrangements
described in clause (B) of the preceding sentence are hereinafter
referred to collectively as the "Benefit Arrangements."
(ii) No Employee Plan is a multiemployer plan, as defined in
Section 3(37) of ERISA, and no Employee Plan is subject to Title IV of
ERISA or Section 412 of the Code. Neither the Seller nor any of the
Seller's ERISA Affiliates has incurred any liability under Title IV of
ERISA arising in connection with the termination of any plan covered
or
21
previously covered by Title IV of ERISA or has maintained a plan
subject to Section 412 of ERISA, for which any liability remains
outstanding.
(iii) With respect to the employees of the Seller or any of the
Seller's Subsidiaries, there are no employee post-
retirement medical or health plans in effect, except as
required by COBRA.
(c) Employees and Offers of Employment.
----------------------------------
(i) Schedule 7.05(c)(i) sets forth a true and complete list of
-------------------
the names, titles, and annual salaries of all employees of the Seller.
(ii) Subject to further due diligence and negotiation, ACI
intends to offer employment as of the Closing to certain of Seller's
active employees engaged in the Transaction Processing Business;
provided, that ACI may terminate at any time the employment of any
employee who accepts such offer. The employees engaged in the
Transaction Processing Business who accept and commence employment
with ACI as of the Closing are hereinafter collectively referred to as
the "Transferred Employees." The Seller will not take, and will cause
each of its subsidiaries not to take, any action which would impede,
hinder, interfere or otherwise compete with ACI's effort to hire any
of Seller's employees as of the Closing.
(d) Seller's Employee Liabilities and Benefit Plans. All (i) Seller's
Employee Liabilities, and (ii) obligations and liabilities under and with
respect to the Employee Plans and Benefit Arrangements, shall not be ACI Assumed
Liabilities and shall be satisfied by, and at the exclusive expense of, Seller.
No assets of any Employee Plan or Benefit Arrangement shall be an Acquired Asset
transferred to ACI or any of its Affiliates or to any plan of ACI or any of its
Affiliates. Seller shall, at its own expense, take such actions as may be
necessary to cause the termination of each Employee Plan and file all required
forms in connection therewith as soon as practicable after the Closing Date.
(e) Seller's Cooperation. Schedule 7.05(e) identifies all employees and
-------------------- ----------------
former employees of the Transaction Processing Business entitled to continued
health coverage pursuant to COBRA or who will be entitled to such coverage upon
their termination of employment with Seller. Seller agrees to provide ACI with
such information as it requests that is helpful to ACI in identifying, offering
and providing such coverage as ACI shall determine in its sole discretion to
such employees and former employees and persons who are qualified beneficiaries
with respect to such employees and former employees.
(f) No Third Party Beneficiaries. No provision of this Section 7.05 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
22
Transaction Processing Business, ACI or any of its Affiliates and no
provision of this Section 7.05 shall create any such rights in any such
------------
Persons in respect of any benefits that may be provided, directly or
indirectly, under any plan or arrangement which may be established by ACI
or any of its Affiliates.
Section 7.06 Confidential Nature of Information. Each party agrees that
----------------------------------
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding any other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection herewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of ACI, to its counsel, accountants, financial
advisors or lenders, and in the case of Seller, to its counsel, accountants or
financial advisors or lenders). No party shall use any confidential information
in any manner whatsoever except solely for the purpose of evaluating the
proposed purchase and sale of the Acquired Assets and the enforcement of its
rights hereunder; provided, however, that after the Closing ACI may use or
-------- -------
disclose any confidential information included in the Acquired Assets and may
use other confidential information which is otherwise reasonably related to the
Transaction Processing Business or the Acquired Assets for purposes of
conducting activities related to the Acquired Assets or the Transaction
Processing Business. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (a) is or becomes available to such party from a source other than another
party hereto, (b) is or becomes available to the public other than as a result
of disclosure by such party or its agents, (c) is required to be disclosed under
applicable law or judicial process, but only to the extent it must be disclosed
and only to the extent that written notice is given to the non-disclosing party,
or (d) such party reasonably deems necessary to disclose to obtain any of the
consents or approvals contemplated hereby, provided that prior written notice is
given to the non-disclosing party.
Section 7.07 Public Announcement. Neither Seller nor ACI shall, without
-------------------
the approval of the other parties, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law or the
rules of any stock exchange, in which case the other parties shall be advised
and the parties shall use their commercially reasonable efforts to cause a
mutually agreeable release or announcement to be issued; provided, that the
--------
foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting and
Securities and Exchange Commission disclosure obligations or an order of the
Bankruptcy Court.
Section 7.08 Bankruptcy Court Approvals. Seller shall as soon as
--------------------------
practicable use its best efforts to obtain an order of the Bankruptcy Court
approving the Auction Procedures, including payment of the Expense Reimbursement
Fee (as defined below) to ACI, if applicable, as set forth therein.
Specifically, Seller shall use commercially reasonable efforts to obtain an
order of the Bankruptcy Court (i) approving the Auction Procedures within ten
(10) days after the Petition Date, and (ii) setting the sale hearing for forty-
five (45) days after the Petition Date.
23
In addition, Seller shall use commercially reasonable efforts to obtain
Bankruptcy Court approval, in the form of the Sale Order, of the transactions
described herein which order shall be entered as a Final Order within eleven
(11) days after the Sale Order has been entered.
Section 7.09 Expense Reimbursement Fee. In consideration of ACI's entry
-------------------------
into this Agreement and the time and expenses ACI has spent and incurred in
connection herewith, and in recognition of the benefits which it provides Seller
in seeking to sell the Transaction Processing Business for the highest and best
offer at the Auction, Seller agrees subject to Bankruptcy Court approval (in
addition to all other rights and remedies as ACI may have hereunder) to pay ACI
an expense reimbursement fee (the "Expense Reimbursement Fee") in an amount
equal to $400,000 to cover ACI's costs and expenses incurred in connection with
the transactions contemplated by this Agreement and the Management Agreement,
which sum shall be payable to ACI at the time set forth in the Auction
Procedures in the event that (i) ACI's bid is not declared the highest and best
offer at the conclusion of the Auction or as determined by the Bankruptcy Court;
or (ii) ACI terminates this Agreement pursuant to Section 12.01(g) or Section
---------------- -------
12.01(i).
--------
Section 7.10 Conduct of the Transaction Processing Business. Except as
otherwise provided herein or the Management Agreement or authorized by the
Bankruptcy Court prior to the date hereof, from the date hereof until the
Closing Date, the Seller, subject to the reasonable consent rights of ACI:
(a) shall conduct the Transaction Processing Business in the
ordinary course and shall use commercially reasonable efforts to preserve
intact the business or organizations and relationships with employees and
third parties ;
(b) shall not take or agree to commit to take any action that
would make any representation or warranty of Seller hereunder inaccurate in
any material respect at, or as of any time prior to, the Closing Date;
(c) shall not offer to change pricing terms to any customers or
offer any pricing terms to a potential customer, unless approved by ACI;
(d) shall not enter into any contract relating to the
Transaction Processing Business other than in the ordinary course of
business, except for the Management Agreement;
(e) shall not borrow funds from any Person or make advances to
any Person other than RFC;
(f) shall not cancel or modify any existing insurance policies;
and
(g) shall use its commercially reasonable efforts to maintain
the Acquired Assets in their current condition, ordinary wear and tear
excepted.
Section 7.11 Notices of Certain Events. The Seller shall promptly notify
-------------------------
ACI of damage or destruction by fire or other casualty of any material Acquired
Asset or in the event that any material Acquired Asset becomes the subject of
any proceeding or, to the knowledge of the
24
Seller, threatened proceeding for the taking thereof or any part thereof or
of any right relating thereto by condemnation, eminent domain or other similar
governmental action.
Section 7.12 No Seller Defaults. As ACI may reasonably request, Seller
------------------
shall obtain and deliver to ACI written assurances, estoppel certificates and
similar instruments from other parties to the Assigned Contracts or Governmental
Permits verifying the existence of such Assigned Contracts or Governmental
Permits and verifying whether Seller has fulfilled and performed all of its
obligations thereunder and is not in or alleged to be in breach or default (or
as applicable, specifying the nature of any breach or default).
Section 7.13 Rejection of Specified Contracts. Seller shall, on or prior
--------------------------------
to the Closing, reject each of the Contracts specified in Schedule 7.13 hereto
-------------
and each other Contract related to the Transaction Processing Business as may be
specified in writing by ACI.
Section 7.14 Accounts Receivable. Effective as of the Closing, Seller
-------------------
irrevocably designates, makes, constitutes and appoints ACI (and all persons
designated by ACI) as Seller's true and lawful attorney in fact, to (i) demand
payment of all Post-Petition accounts receivable included in the Acquired
Assets, (ii) enforce payment of all such accounts receivable by legal
proceedings or otherwise, (iii) exercise all of the Seller's rights and remedies
with respect to proceedings brought to collect any such accounts receivable,
(iv) sell or assign any such accounts receivable upon such terms, for such
amount and at such time or times as ACI deems advisable, and (v) take control in
any manner of any item of payment or proceeds of any such accounts receivable.
If, after the Closing, Seller shall receive payment from any account debtor with
respect to accounts receivable included in the Acquired Assets, Seller shall
promptly endorse or remit such payment to ACI.
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER AND ACI
The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
Section 8.01 Bankruptcy Court Order. The Sale Order shall have been
----------------------
entered by the Bankruptcy Court and shall be in full force and effect, and all
conditions contemplated by the Sale Order to consummate the transactions
contemplated hereby shall have been satisfied.
Section 8.02 Injunctions; Orders. There shall be no injunction, order,
-------------------
judgment, ruling or decree of any nature of any court or Government Authority of
competent jurisdiction that is in effect that prohibits or materially restrains
the consummation of the transactions contemplated under this Agreement.
Section 8.03 Rule; Regulation. No statute, rule or regulation shall have
----------------
been promulgated by any Governmental Authority which prohibits the consummation
of the transactions contemplated by this Agreement.
25
ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligation of the Seller to effect the transactions contemplated
by this Agreement shall be subject to the satisfaction or waiver at or prior to
the Closing Date of the following additional conditions:
Section 9.01 ACI's Obligations. ACI shall have performed in all material
-----------------
respects its obligations under this Agreement required to be performed by ACI at
or prior to the Closing Date; and
Section 9.02 Representations and Warranties. The representations and
------------------------------
warranties of ACI contained in this Agreement shall be true and correct in all
material respects as of the Closing Date as if made at and as of such date,
except as otherwise contemplated by this Agreement, and there shall have been
delivered to Seller a certificate to such effect, dated the Closing Date and
signed on behalf of ACI by the President or a Vice President of ACI.
Section 9.03 No Misrepresentation or Breach of Covenants and Warranties.
----------------------------------------------------------
There shall have been no material breach by ACI in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
ACI contained or referred to herein shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date; and there shall
have been delivered to Seller a certificate to such effect, dated the Closing
Date, and signed on behalf of ACI by the President of ACI.
ARTICLE 10.
CONDITIONS PRECEDENT TO OBLIGATION OF ACI
The obligation of ACI to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
Section 10.01 No Misrepresentation or Breach of Covenants and Warranties.
----------------------------------------------------------
There shall have been no material breach by Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Seller contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date; and
there shall have been delivered to ACI a certificate to such effect, dated the
Closing Date, and signed on behalf of each Seller Party by the CEO of such
Seller Party.
Section 10.02 No Changes or Destruction of Property. Between the date
-------------------------------------
hereof and the Closing Date, there shall have been (a) no material adverse
change in the Acquired Assets or the Transaction Processing Business or the
value thereof ; provided, however that none of the following shall constitute a
-------- -------
material adverse change for purposes of this clause (a): (1) the departure of
any employee who does not receive an offer of employment from ACI prior to
Closing or an employee who accepts an offer of employment from ACI after the
Closing, (2) the impact of the departure of any employee or employees referred
to in clause (1) above, or (3) loss or deferral of expected new business
resulting from the announcement or implementation of the
26
transactions contemplated hereby; (b) no material adverse federal or state
legislative or regulatory change, affecting the Transaction Processing Business
or its products or services or the Acquired Assets or the values thereof; and
(c) no material damage to the Acquired Assets by fire, flood, casualty, act of
God or public enemy or other cause, regardless of insurance coverage for such
damage; and there shall have been delivered to ACI a certificate to such effect,
dated the Closing Date and signed on behalf of each Seller Party by the CEO of
such Seller Party.
Section 10.03 No Restraint or Litigation. No Action shall have been
--------------------------
instituted or threatened to restrain or prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
Section 10.04 Necessary Governmental Approvals. Except to the extent not
--------------------------------
obviated by the Bankruptcy Court Order, the parties shall have received all
approvals and actions of or by all Governmental Authorities which are necessary
to consummate the transactions contemplated hereby, which are either specified
in Schedule 4.14 or otherwise required to be obtained prior to the Closing by
-------------
applicable Requirements of Laws or which are necessary to prevent a material
adverse change in the Acquired Assets, the Transaction Processing Business or
the operations, liabilities, profits, or condition (financial or otherwise) of
the Transaction Processing Business.
Section 10.05 Necessary Consents. Except to the extent not obviated by
------------------
the Bankruptcy Court Order as determined by ACI in its sole discretion, Seller
shall have received all required consents listed on Schedule 4.14, including (i)
-------------
those Instruments of Consent to Assignment for Customer Contracts required by
Section 2.01(a) and (ii) LEC Consents for each of the LEC Contracts in form and
-------------
substance reasonably satisfactory to ACI, to the transactions contemplated
hereby from the other parties to the Assigned Contracts (other than software
licenses that can be replaced by ACI or for less than $50,000 in the aggregate).
Section 10.06 Key Employees. ACI shall have hired [and entered into
------------- -------------
employment agreements with] (effective as of the Closing) certain key employees
of Seller (as set forth in a mutually agreed upon list) on terms and conditions
acceptable to ACI in its sole discretion.
Section 10.07 Final Order. The Sale Order shall have become a final
------------- -----------
order (i.e., an order that has not been reversed, stayed, modified or amended
and as to which (i) the time to appeal or seek review, reargument or rehearing
has expired and as to which no appeal or petition for certiorari, review or
rehearing is pending, or (ii) if appeal, review, reargument, rehearing or
certiorari of such order has been sought, such order has been affirmed and the
time to request a further review, reargument, rehearing or certiorari has
expired, as a result of which such order has become final and nonappealable in
accordance with applicable law (a "Final Order").
ARTICLE 11.
Intentionally Omitted
ARTICLE 12.
TERMINATION, AMENDMENT AND WAIVER
Section 12.01 Termination. This Agreement may be terminated:
-----------
27
(a) by the mutual consent of ACI and the Seller;
(b) by ACI in the event that the Seller does not obtain an order
of the Bankruptcy Court approving the Auction Procedures, including the
Expense Reimbursement Fee set forth therein, within ten (10) days after the
Petition Date, or by ACI in the event that such order is not entered within
twelve (12) days after the Petition Date;
(c) by ACI if the Sale Order has not been entered within ninety
(90) days after the Petition Date ;
(d) by ACI if the Sale Order has not become a Final Order within
eleven (11) days after the Sale Order has been entered, 2;
(e) by ACI, at any time on or after the expiration of the Term of
the Management Agreement ;
(f) by Seller if the Sale Order has been entered and if all of
the other conditions in Articles 8 and 10 have been satisfied, and ACI does
not proceed with the Closing within 10 business days after the last of such
conditions has been satisfied ;
(g) by ACI in the event of any material breach by Seller of any
of Seller's agreements, representations or warranties contained herein and
the failure of Seller to cure such breach within ten calendar days after
receipt of written notice from ACI requesting such breach to be cured or by
ACI in the event of any material breach by Seller of any of Seller's
agreements, representations or warranties contained herein and the failure
of Seller to cure such breach within twenty calendar days after receipt of
written notice from ACI requesting such breach be cured;
(h) by Seller in the event of any material breach by ACI of any
of its agreements, representations or warranties contained herein and the
failure of ACI to cure such breach within seven days after receipt of
notice from Seller requesting such breach to be cured; or
(i) by ACI in the event of any material breach by Seller of the
Auction Procedures.
Section 12.02 Notice of Termination. Any party desiring to terminate
---------------------
this Agreement pursuant to Section 12.01 shall give notice in writing of such
-------------
termination to all other parties to this Agreement.
Section 12.03 Effect of Termination. In the event that this Agreement shall
---------------------
be terminated pursuant to this Article 12, all further obligations of the
parties under this Agreement (other than Sections 7.06, 7.07, 7.08, 7.10,
-----------------------
13.02(a), 13.07 and 13.08) shall be terminated without further liability of any
---------------- -----
party to the other, provided that nothing herein shall relieve any party from
--------
liability for its willful breach of this Agreement. ACI shall have no liability
whatsoever for terminating this Agreement in accordance with the terms herein.
28
ARTICLE 13.
GENERAL PROVISIONS
Section 13.01 Survival of Representations, Warranties, and Agreements.
-------------------------------------------------------
None of the representations or warranties contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive beyond the Closing
Date. The covenants contained in Sections 2.03, 2.04, 2.06, 7.02, 7.04, 7.05,
--------------------------------------------
7.06, 7.07, 13.02, 13.03, 13.07, 13.08 and 14.03 shall survive the Closing.
--------------------------------------- -----
Section 13.02 Damages/Indemnity.
-----------------
(a) Subject to the approval of this Agreement by the Bankruptcy
Court, if the Seller breaches this Agreement, ACI's damages shall be deemed
an administrative priority claim under 11 U.S.C. Sections 503(b) and
507(a).
(b) The Seller shall indemnify ACI for any liability or expense
resulting from the payment by ACI of an Excluded Liability that it pays
with express written consent of the Seller.
(c) ACI shall indemnify Seller for any liability or expense
resulting from ACI's failure to pay any Assumed Liability in accordance
with its terms
Section 13.03 Transfer Taxes. The Seller shall seek an order approving
--------------
this Agreement which provides that (a) in accordance with section 1146(c) of the
Bankruptcy Code, the making or delivery of any instrument of transfer under a
plan confirmed under section 1129 of the Bankruptcy Code shall not be taxed
under any law imposing a stamp or similar Tax, and (b) the instruments
transferring the Acquired Assets to ACI shall contain the following endorsement:
"Because this [instrument] has been authorized pursuant to
Order of the United States Bankruptcy Court for the Central
District of California relating to a plan of reorganization
of the Grantor, it is exempt from transfer taxes, stamp taxes
or similar taxes pursuant to 11 U.S.C. (S) 1146(c)."
In the event transfer Taxes are required to be paid in order to consummate the
transactions hereunder, or in the event any such Taxes are assessed at any time
thereafter, such transfer Taxes incurred as a result of the transactions
contemplated hereby shall be paid by the Seller. In the event sales, use or
other similar Taxes are assessed at Closing or at any time thereafter on the
transfer of any of the Acquired Assets, such Taxes incurred as a result of the
transactions contemplated hereby shall be paid by the Seller. ACI and the
Seller shall cooperate in providing each other with any appropriate resale
exemption certifications and other similar documentation.
Section 13.04 Notices. All notices, requests, 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 business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the
29
respective parties at the following addresses (or such other address for a party
as shall be specified by like notice):
(a) If to ACI, to:
ACI Telecommunications, Inc.
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, III
with the copy (which shall not constitute notice) to:
Sidley Xxxxxx Xxxxx & Xxxx
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx Xxxxxx
and
Xxxxxxxx Xxxxxxxx & Xxxxxx
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to the Seller, to:
OAN Services, Inc.
OAN Services of Florida, Inc.
nTelecom Holdings, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: President and General Counsel
with a copy to:
Xxxxx Xxxxxxx Xxxxx, a Law corporation
1901 Avenue of the Stars
Xxxxx 0000
00
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Section 13.05 Descriptive Headings; Certain Terms. 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. All references to "$" or
dollars shall be to United States dollars and all references to "days" shall be
to calendar days unless otherwise specified.
Section 13.06 Entire Agreement, Assignment. This Agreement (including the
----------------------------
Exhibits, Schedules and the other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof. No party shall assign its rights
hereunder prior to the Closing without the written consent of the other, except
that ACI may assign its rights prior to the Closing, without the consent of the
other parties, to any Person that is an Affiliate of ACI. No such assignment
shall relieve the assignor of any of its obligations hereunder. Following the
Closing, any party may assign any of its rights hereunder, but no such
assignment shall relieve it of any of its obligations hereunder.
Section 13.07 Governing Law; Submission to Jurisdiction. This Agreement
-----------------------------------------
shall be governed by and construed in accordance with the laws of the State of
California without regard to the rules of conflict of laws of the State of
California or any other jurisdiction. ACI and Seller irrevocably and
unconditionally consent to submit to the jurisdiction of the Bankruptcy Court
for any litigation arising out of or relating to this Agreement and the
transactions contemplated thereby (and agree not to commence any litigation
relating thereto except in the Bankruptcy Court).
Section 13.08 Expenses. Except as set forth in this Agreement, whether or
--------
not the transactions contemplated by this Agreement are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses. The foregoing shall not affect the legal right, if any, that any
party hereto may have to recover expenses from any other party that breaches its
obligations hereunder.
Section 13.09 Amendment. This Agreement and the Exhibits and Schedules
---------
hereto may not be amended except by an instrument in writing signed on behalf of
all the parties hereto.
Section 13.10 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 (and after) set forth in an
instrument in writing signed on behalf of such party (and delivered to all other
parties hereto).
Section 13.11 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
31
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 13.12 Severability; Validity; Parties of 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.
ARTICLE 14.
TAX MATTERS
Section 14.01 Tax Definitions. The following terms, as used in this
---------------
Agreement, have the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Pre-Closing Tax Period" means any tax period ending on or before the
----------------------
Closing Date and the portion of any Straddle Period ending on the Closing Date.
"Straddle Period" means any taxable period beginning on, or before and
---------------
ending after the Closing Date.
"Tax" and, with correlative meaning, "Taxes" means with respect to any
---
Person (1) all federal, state, local, county, foreign and other taxes,
assessments or other government charges, including any income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, registration, recording,
documentary, conveyancing, gains, withholding, payroll, employment,
unemployment, disability, excise, severance, stamp, occupation, premium,
property (real or personal), environmental or windfall profit tax, custom duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or additional
amount imposed by any Governmental Authority (a "Taxing Authority") responsible
for the imposition of any such tax (domestic or foreign), or (2) liability for
the payment of any amounts of the type described in (1) relating to any other
Person as a result of being party to any agreement to indemnify such other
Person, being a successor or transferee of such other Person, or being a member
of the same affiliated, consolidated, combined, unitary or other group with such
other Person.
"Tax Returns" means any return (including information return), report,
-----------
notice, form, declaration, claim for refund, estimate, election, or information
statement or other document relating to any Tax, including any schedule or
attachment thereto, and any amendment thereof filed or to be filed with any
Taxing Authority in connection with the determination, assessment or collection
of Taxes.
32
Section 14.02 Tax Representations and Warranties. The Seller hereby
----------------------------------
represents and warrants to ACI that:
(a) Except as set forth on Schedule 14.02(a), (i) the Seller
-----------------
has, in respect of the Transaction Processing Business and the Acquired
Assets, timely filed all Tax Returns which are required to be filed and
paid all Taxes due pursuant to such Tax Returns; (ii) all such Tax Returns
are complete and accurate and disclose all Taxes required to be paid in
respect of the Transaction Processing Business and the Acquired Assets; and
(iii) the Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return. The Seller has delivered or made
available to ACI complete and accurate copies of all Tax Returns filed with
a Taxing Authority for all open tax years of the Seller. The Seller has
timely paid or will timely pay, or has otherwise made provision for the
payment of, all Taxes that have or may become due in respect of any Pre-
Closing Tax Period, the non-payment of which would result in an Encumbrance
on any Acquired Asset (that would not be released pursuant to the Sale
Order).
(b) Except as set forth on Schedule 14.02(b), all Taxes that the
-----------------
Seller is or was required to withhold or collect (including from employees
of the Seller for income Taxes and social security and other payroll Taxes)
have been duly withheld or collected and either paid to the respective
Taxing Authority, set aside in accounts for such purpose, or accrued,
reserved against and entered upon the books of the Seller. Except where
payment of sales, use or other similar Taxes have been made, the Seller has
properly requested, received and retained all necessary exemption
certificates and other documentation supporting any claimed exemption or
waiver of sales, use or other similar Taxes as to which the Seller would
have otherwise been obligated to collect or withhold Taxes.
(c) The transactions contemplated herein are not subject to the
Tax withholding provisions of Section 3406 or of Subchapter A of Chapter 3
of the Code or of any other provisions of federal, state, local or foreign
law and no sales Taxes, use Taxes, real estate transfer Taxes or other
similar Taxes will be imposed on the transfer of the Acquired Assets or the
assumption of the Assumed Liabilities pursuant to this Agreement.
Section 14.03 Tax Matters.
-----------
(a) Liability for Taxes.
(i) The Seller shall be liable for and pay, and
shall indemnify ACI against, (a) all Taxes (including any
amounts owed by a Buyer in respect of Taxes relating to a
contract or otherwise) applicable to the Transaction
Processing Business, the Acquired Assets and the Assumed
Liabilities, in each case attributable to taxable years or
periods ending on or prior to the Closing Date and, with
respect to any Straddle Period, the portion of such Straddle
Period ending on and including the Closing Date and (b) all
Taxes imposed on the Seller pursuant to Section 13.03 or any
-------------
33
other provision of this Agreement. Without limiting the generality of
the foregoing, Seller shall, in respect of liabilities for use or
other similar Taxes disclosed on Schedule 14.02(a), set aside and
-----------------
reserve from the Cash Proceeds an amount sufficient to pay such Taxes.
(ii) ACI shall be liable for and pay, and shall indemnify
Seller against, all Taxes applicable to the Acquired Assets and
Assumed Liabilities that are attributable to taxable years or periods
beginning after the Closing Date and, with respect to any Straddle
Period, the portion of such Straddle Period beginning after the
Closing Date; provided, however, that ACI shal-not be liable for or
-------- -------
pay, and shall not indemnify Seller against, any Taxes for which
Seller is liable under this Agreement (including, Section 14.03(a)(i).
-------------------
(b) For purposes of this Section 14.03, any Straddle Period shall be
-------------
treated on a "closing of the books" basis as two partial periods, one ending at
the close of the Closing Date and the other beginning on the day after the
Closing Date, except that Taxes (such as property Taxes) imposed on a periodic
basis shall be allocated on a daily basis.
(c) Notwithstanding Section 14.03(a)(ii), any sales Tax, use Tax, real
--------------------
property transfer or gains Tax, asset transfer Tax, documentary stamp Tax or
similar Tax attributable to the sale or transfer of the Transaction Processing
Business, the Acquired Assets and the Assumed Liabilities shall be paid by the
Seller. ACI agrees to timely sign and deliver such certificates or forms as may
be necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns with respect to, such Taxes.
(d) ACI and the Seller agree to (i) furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Transaction Processing Business, the Acquired Assets
and the Assumed Liabilities (including access to books and records) as is
reasonably necessary for the filing of all Tax Returns, the making of any
election relating to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
regarding any Tax relating to the Transaction Processing Business, the Acquired
Assets and the Assumed Liabilities; (ii) cooperate fully in preparing for any
audits of, or disputes with Taxing Authorities regarding, any Tax relating to
the Transaction Processing Business, the Acquired Assets or the Assumed
Liabilities; (iii) provide timely notice to each other in writing of any pending
or threatened Tax audits or assessments relating to the Transaction Processing
Business. the Acquired Assets or the Assumed Liabilities for taxable periods for
which the others may have a liability; (iv) furnish each other with copies of
all correspondence received from any Taxing Authority in connection with any Tax
audit or information request with respect to any such taxable period; and (v)
timely provide to the others powers of attorney or similar authorizations
necessary to carry out the purposes of this Article 14. ACI shall retain all
books and records with respect to Taxes pertaining to the Acquired Assets for a
period of at least six years following the Closing Date. The Seller shall retain
any records retained by the Seller related to Taxes for a period of at least ___
years following the Closing Date. Each party shall provide the other with at
least ten days prior written notice before destroying
34
or transferring custody of any such books and records, during which period the
party receiving such notice can elect to take possession, at its own expense, of
such books and records.
(e) The Seller shall deliver to ACI at the Closing all necessary forms and
certificates complying with applicable law, duly executed and acknowledged,
certifying that the transactions contemplated hereby are exempt from withholding
under Section 1445 of the Code.
--- Remainder of Page Intentionally Left Blank---
35
IN WITNESS WHEREOF, the Seller and ACI have caused this Agreement to
be executed on their behalf by their officers thereunto duly authorized, as of
the date first above written.
OAN Services, Inc. OAN Services of Florida, Inc.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
--------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
------------------------- -----------------------------
Title: President Title: President
------------------------ ----------------------------
ACI Telecommunications, Inc. nTelecom Holdings, Inc.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx
-----------------------------
Title: President Title: President
----------------------------
Exhibit A-1
-----------
Acquired Assets
---------------
Exhibit A-2
-----------
Assigned Contracts
------------------
Exhibit B
---------
Excluded Assets
---------------
Exhibit C
---------
Sale Order
----------
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
--------------------------------
In re Chapter 11
______________, Case No. _______________
Debtor.
--------------------------------
ORDER PURSUANT TO, INTER ALIA, 11 U.S.C. (S)(S) 105, 363, 365 APPROVING (i)
ASSET PURCHASE AGREEMENT BETWEEN DEBTOR AND
ACI TELECOMMUNICATIONS, INC.
(ii) SALE OF ASSETS COMPRISING DEBTOR'S TRANSACTION
PROCESSING BUSINESS, FREE AND CLEAR OF ALL LIENS,
CLAIMS, ENCUMBRANCES AND INTERESTS, AND (iii)
ASSUMPTION AND ASSIGNMENT OF CERTAIN
EXECUTORY CONTRACTS AND UNEXPIRED LEASES OF THE DEBTOR
-------------------------------------------------------
Upon the motion dated _________, 2001 (the "Motion"), as supplemented
on ___________, 2001 by the filing of that certain Asset Purchase Agreement
dated __________, 2001, by and among nTelecom Holdings, Inc. OAN Services, Inc.
and OAN Services of Florida, Inc., collectively, as Seller and ACI
Telecommunications, Inc. ("ACI") as Buyer (the "Asset Purchase Agreement"),/1/
____________, the debtor and debtor in possession herein (the "Debtor"), by its
then-proposed attorneys, _______________ ____________, for the entry of orders
pursuant to Bankruptcy Code sections 105(a), 363(b), (f) and (m), and 365 and
Rules 2002, 6004, 6006, 9006, 9014, and 9019 of the Federal Rules of Bankruptcy
Procedure, (a) authorizing the sale of assets comprising the Debtor's
transaction processing business (the "Acquired Assets") to ACI, pursuant to the
terms and conditions of the Asset Purchase
__________________
/1/ Unless defined herein, all capitalized terms shall have the same meaning
ascribed to them in the Asset Purchase Agreement.
Agreement, free and clear of all claims, liens, encumbrances and interests,
subject to higher and better offers, and authorizing the assumption and
assignment of certain executory contracts pursuant to section 365 of the
Bankruptcy Code in conjunction with such transaction, (b) establishing auction
and bidding procedures and approving the form of notice of the intended sale,
and establishing a hearing date to consider the same, and (c) granting such
other and further relief as is just; and upon the order to show cause, dated
___________ 2001 (the "Order to Show Cause"), setting a hearing on approval of
the Bidding Procedures; and upon the record of the First Hearing held on
__________, 2001; and upon the order entered at the First Hearing (the
"Procedures Order"); and due notice of the Motion and relief sought therein and
of the hearings held thereunder having been given to all parties entitled
thereto under the Order to Show Cause and the Procedures Order, as evidenced by
the affidavits of service and publication filed with the Court; and upon the
record of the hearing held on __________, 2001 (the "Second Hearing"), and based
on the pleadings, testimony of witnesses, if any, and arguments of counsel, and
good and sufficient cause appearing therefor;
IT IS HEREBY FOUND AND DETERMINED THAT:
1. This Court has jurisdiction to hear and determine the Motion
pursuant to 28 U.S.C. (S) 157(b)(2)(A), (N) and (O). The statutory predicates
for the relief sought herein are sections 105, 363, and 365 of the United States
Code, 11 U.S.C. (S)(S) 101 et seq. as amended (the "Bankruptcy Code") and
-- ---
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") 2002, 6004, 6006,
9006, 9014, and 9019.
2. The Debtor has followed the procedures for the giving of notice of
the Motion and the First Hearing and the Second Hearing (the "Hearings") as set
forth in the Order to Show Cause and the Procedures Order. Proper, timely and
adequate notice of the Motion and the Hearings has been provided in accordance
with section 102(1) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004,
6006, 9006 and 9014 and the Order to Show Cause and the
Procedures Order, and no other or further notice of the Motion, the Hearings or
the entry of this Order is required.
3. The Debtor has full corporate power and authority to execute the
Asset Purchase Agreement and all other documents contemplated thereby and the
sale of the Acquired Assets by the Debtor has been duly and validly authorized
by all necessary corporate action of the Debtor. No consents or approvals, other
than entry of this Order, are required for the Debtor to consummate such
transactions.
4. The sale of the Acquired Assets, including, without limitation,
the assumption and assignment of the contracts included therein, reflects the
Debtor's sound business judgment.
5. Approval of the Asset Purchase Agreement and consummation of the
sale of the Acquired Assets at this time are in the best interests of the
Debtor, its creditors and estate. The Debtor has demonstrated good and
sufficient business justification for the sale of the Acquired Assets pursuant
to section 363(b) of the Bankruptcy Code outside of a plan of reorganization,
and for the assumption and assignment of the Section 365 Assumed Rights pursuant
to section 365 of the Bankruptcy Code, in that, among other things:
6. a. In the absence of a prompt sale of the Acquired Assets, their
value will steadily decline because the Debtor lacks sufficient cash to continue
its business operations and does not have assurances of further funding;
b. A sale pursuant to section 363(b) is likely to produce a greater
return to creditors in the Debtor's case than if the Acquired Assets were sold
in connection with a
liquidating plan of reorganization, because the unavoidable delay and expense
required to confirm such a plan would deprive the Debtor's estate of the
opportunity to realize the maximum value of the Acquired Assets available
through an immediate sale;
c. Each of the Assigned Contracts is an executory contract or
unexpired lease within the meaning of section 365(a) of the Bankruptcy Code;
d. Claims against the Debtor's estate will be minimized as a result
of the prompt consummation of the sale of the Acquired Assets, and the
concomitant assumption and assignment of the Assigned Contracts to ACI;
e. A sale to ACI of the Acquired Assets at this time will result in
the highest possible sale price; and
f. Unless a sale to ACI is concluded expeditiously as provided for
under the Asset Purchase Agreement, (i) the value of the Acquired Assets will
decline precipitously and (ii) the Debtor, its estate and its creditors will
realize substantially less value for the Acquired Assets.
7. The terms and conditions of the Asset Purchase Agreement are fair
and reasonable. The Asset Purchase Agreement represents the highest and best
offer for the Acquired Assets, the Purchase Price is fair and reasonable and
constitutes reasonably equivalent value under the Bankruptcy Code and California
law.
8. The cure amounts in respect of the Assigned Contracts as
determined by the Court (the "Cure Amounts"), if any, are the sole amounts
necessary to cure all defaults, if
any, and to pay all actual or pecuniary losses that resulted from such defaults
under the Assigned Contracts.
9. ACI has provided adequate assurance of ACI's future performance
under the Assigned Contracts within the meaning of sections 365(b)(1)(C) and
(f)(2)(B) of the Bankruptcy Code. The assumption and assignment of Assigned
Contracts pursuant to the Asset Purchase Agreement is in the best interests of
the Debtor, its creditors and estate.
10. The Management Agreement and the Asset Purchase Agreement were
negotiated, proposed and entered into by the parties without collusion, in good
faith, and from arm's length bargaining positions. ACI is a good faith
purchasers under section 363(m) of the Bankruptcy Code and, as such, is entitled
to the protections afforded thereby. Neither the Debtor nor ACI has engaged in
any conduct that would cause or permit the Asset Purchase Agreement to be
avoided under section 363(n) of the Bankruptcy Code.
11. ACI will be acting in good faith within the meaning of section
363(m) of the Bankruptcy Code in closing the transactions contemplated by the
Asset Purchase Agreement, including without limitation, the assumption and
assignment of the Assigned Contracts, at any time after the entry of this Sale
Order, unless a stay pending appeal is in effect at the time of the closing.
12. The transfer of the Acquired Assets and the assignment of the
Assigned Contracts pursuant to the Asset Purchase Agreement (a) are or will be
legal, valid and effective transfers of property of the Debtor's estate to ACI,
and (b) vest or will vest ACI with all right, title, and interest of the Debtor
in and to the Acquired Assets free and clear of all liens, claims,
encumbrances and interest pursuant to section 363(f) of the Bankruptcy Code, as
and to the extent provided in the Asset Purchase Agreement.
13. The transfers contemplated by the Asset Purchase Agreement do not
and will not subject ACI to any liability for claims against the Debtor by
reason of such transfers under the laws of the United States, any state,
territory or possession thereof, except as provided in the Asset Purchase
Agreement.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion be, and hereby is, granted in all respects.
2. All objections, if any, to the Motion or the relief requested
therein that have not been withdrawn, waived, or settled, are overruled on their
merits.
3. The terms and conditions of the Asset Purchase Agreement are
hereby approved in all respects pursuant to section 363(b) and 365 of the
Bankruptcy Code and the Debtor and ACI are directed and authorized (without
regard to the automatic stay of Bankruptcy Code Section 362(a), which without
the necessity of further Court order is hereby modified to permit the parties to
the Asset Purchase Agreement to take any action provided for in the Asset
Purchase Agreement) to immediately take such actions as are necessary to
consummate, implement, and otherwise exercise any and all rights and remedies
under, the Asset Purchase Agreement.
4. Pursuant to sections 363(b) and 365 of the Bankruptcy Code, the
Debtor is hereby authorized and empowered to fully assume, perform under,
consummate, and implement the Asset Purchase Agreement, together with such
additional instruments and documents that
may be reasonably necessary or desirable to implement the Asset Purchase
Agreement, and to take all further actions as may reasonably be requested by ACI
for the purpose of assigning, transferring, granting, conveying and conferring
to ACI, or reducing to ACI's possession, any or all of the Acquired Assets, or
as may be necessary or appropriate to the performance of the obligations
contemplated by the Asset Purchase Agreement.
5. Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code, the
Acquired Assets shall be transferred to ACI and upon the closing under the Asset
Purchase Agreement shall be free and clear of all mortgages, security interests,
pledges, liens, claims, judgments, demands, encumbrances, restrictions or
charges of any kind or nature, fixed or contingent (collectively, the "Liens"),
whether arising prior to or subsequent to the commencement of the Debtor's
chapter 11 case, and whether imposed by agreement, understanding, law, equity or
otherwise.
6. Except as may be specifically provided for in the Asset Purchase
Agreement, all persons and entities holding Liens of any kind and nature with
respect to the Acquired Assets are hereby barred from asserting such Liens of
any kind or nature against ACI, their successors or assigns, or the Acquired
Assets.
7. Except as may be specifically provided for in the Asset Purchase
Agreement, (a) ACI shall not be liable for any claims (including, but not
limited to any and all "claims" as defined in Section 101(5) of the Bankruptcy
Code and any and all rights and claims under any bulk transfer statutes and
similar laws) against the Debtor or its estate, (b) ACI shall have no successor
or vicarious liabilities of any kind or character whether known or unknown as of
the closing under the Asset Purchase Agreement, now existing or hereafter
arising, whether
fixed or contingent, with respect to the Debtor or its estate, (c) ACI is not
successor to the Debtor or the Debtor's bankruptcy estate, and (d) ACI is not
assuming nor shall they in any way whatsoever be liable or responsible, as
successor or otherwise, for any other liabilities, debts or obligations of the
Debtor or any other liabilities, debts or obligations in any way whatsoever
relating to or arising from the Acquired Assets or the Debtor's operation or use
of the Acquired Assets prior to the consummation of the transactions
contemplated by the Asset Purchase Agreement, or any liabilities calculable by
reference to the Debtor or its assets or operations, or relating to continuing
conditions existing on or prior to consummation of the transactions contemplated
by the Asset Purchase Agreement, which liabilities, debts and obligations are
hereby extinguished insofar as they may give rise to successor liability,
without regard to whether the claimant asserting any such liabilities, debts or
obligations has delivered to ACI a release thereof.
8. Except as may be specifically provided for in the Asset Purchase
Agreement, no person or entity, including without limitation, any federal, state
or local government agency, department or instrumentality, shall assert against
ACI or its successors in interest any liability, debt or obligation relating to
or arising from the Debtor's Acquired Assets or operations or any liabilities
calculable by reference to the Debtor or its Acquired Assets or operations, and
all persons and entities are hereby enjoined from asserting any such
liabilities, debts or obligations against ACI.
9. The Debtor is hereby authorized and directed, subject to the terms
and conditions of the Asset Purchase Agreement, to (a) assume and assign to ACI
each of the Assigned Contracts pursuant to the provisions of section 365 of the
Bankruptcy Code, in each case free and clear of all Liens, and (b) execute and
deliver to ACI such documents or other
instruments as may be reasonably necessary to assign and transfer such Assigned
Contracts to ACI.
10. The cure amounts, if any, for any of the Assigned Contracts being
assigned to ACI shall be paid by ACI to the extent provided for in the Asset
Purchase Agreement and the balance shall be paid by the Debtor from the cash
proceeds of the sale.
11. The Assigned Contracts delineated in the Asset Purchase Agreement
hereto shall, upon assignment to ACI, be deemed to be valid and binding and in
full force and effect and enforceable in accordance with their terms, and
pursuant to section 365(k) of the Bankruptcy Code, the Debtor shall be relieved
from any further liability with respect to such Assigned Contracts after such
assignment.
12. Each non-debtor party to an Assigned Contract is hereby barred
from asserting against the Debtor or ACI any default existing as of the date of
the Second Hearing if such default or claim was not timely raised or asserted in
response to the Motion.
13. On and after the date of ACI's payment to the Debtor of the
Purchase Price as required under the Asset Purchase Agreement (the "Closing
Date"), each of the Debtor's creditors asserting a Lien is authorized and
directed to execute such documents and take all other actions as may be
necessary to release its Liens on or against the Acquired Assets being
transferred pursuant to the Asset Purchase Agreement, as such Liens may have
been recorded or otherwise exist; provided, that the failure of any such
creditors to comply with the provisions of this paragraph 13 shall in no way
limit the release, discharge and termination of any such Lien against the
Acquired Assets purchased as otherwise provided by this Sale Order.
14. As to the Asset Purchase Agreement and Acquired Assets
transferred thereby, this Sale Order (a) is and shall be effective as a
determination that, on the Closing Date and the payment of the Purchase Price
required to be paid on the Closing Date, all Liens existing as to the Acquired
Assets prior to the Closing Date have been unconditionally released, discharged
and terminated, and (b) is and shall be binding upon and govern the acts of all
entities including without limitation, all filing agents, filing officers, title
agents, title companies, recorders of mortgages, recorders of deeds, registrars
of deeds, registrars of patents, trademarks or other intellectual property,
administrative agencies, governmental departments, secretaries of state,
federal, state, and local officials, and all other persons and entities who may
be required by operation of law, the duties of their office, or contract, to
accept, file, register or otherwise record or release any documents or
instruments, or who may be required to report or insure any title or state of
title in or to any of the Acquired Assets.
15. All entities who are presently, or on the Closing Date may be, in
possession of some or all of the Acquired Assets are hereby directed to
surrender possession of said Acquired Assets to ACI on the Closing Date.
16. Each and every federal, state, and local governmental agency or
department is directed to accept any and all documents and instruments necessary
and appropriate to consummate the transactions contemplated by the Asset
Purchase Agreement.
17. ACI is not a successor corporation or successor entity to the
Debtor, the Debtor's estate, or the claims or liabilities of either.
18. Article 6 of the Uniform Commercial Code governing Bulk Sale
Transfers is not applicable to the sale of Acquired Assets to ACI.
19. This Court shall retain jurisdiction (i) to enforce and implement
the terms and provisions of the Asset Purchase Agreement, all amendments
thereto, any waivers and consents thereunder, and of each of the agreements
executed in connection therewith, (ii) to compel delivery of the Acquired Assets
to ACI, (iii) to compel delivery of the Purchase Price, (iv) to compel specific
performance of the Debtor's and ACI's obligations under the Asset Purchase
Agreement, (v) to resolve any disputes arising under or related to the Asset
Purchase Agreement, except as otherwise provided herein, (vi) to interpret,
implement and enforce the provisions of this Sale Order, and (vii) determine any
disputes relating to or concerning the receipt, use, application or retention of
the proceeds from the sale of the Acquired Assets.
20. Nothing contained in any plan of reorganization or liquidation
confirmed in this case or the order of confirmation confirming such plan shall
conflict with or derogate from the provisions of the Asset Purchase Agreement or
this Sale Order.
21. ACI is in good faith of the Acquired Assets and are entitled to
all of the protections afforded by section 363(m) of the Bankruptcy Code.
22. The terms and provisions of the Asset Purchase Agreement,
together with the terms and provisions of this Sale Order, shall be binding in
all respects upon, and shall inure to the benefit of, the Debtor, its estate and
creditors, ACI, and its affiliates, successors and assigns, and any affected
third parties including but not limited to all non-debtor parties to the
Assigned Contracts being assigned to ACI pursuant to the Asset Purchase
Agreement and persons asserting a claim against or interest in the Debtor's
estate or any of the Acquired Assets to be sold to ACI pursuant to the Asset
Purchase Agreement, notwithstanding any subsequent
appointment of any trustee for the debtor under any chapter of the Bankruptcy
Code, as to which trustee such terms and provisions likewise shall be binding in
all respects.
23. The Asset Purchase Agreement and any related agreements,
documents or other instruments may be modified, amended or supplemented by the
parties thereto in accordance with the terms thereof without further order of
the Court, provided that any such modification, amendment or supplement is not
material.
24. Pursuant to section 365(a) of the Bankruptcy Code, the Debtor is
hereby authorized to reject all of its executory contracts with ________________
_____.
25. The failure specifically to include any particular provision of
the Asset Purchase Agreement in this Sale Order shall not diminish or impair the
efficiency of such provision, it being the intent of the Court that the Asset
Purchase Agreement be authorized and approved in its entirety.
26. The provisions of Federal Rules of Bankruptcy Procedure 6004(g)
and 6006(d) staying the effectiveness of this Sale Order for ten (10) days are
hereby waived, and this Order shall be effective immediately upon entry thereof.
27. The Debtor is hereby authorized and directed to take all actions
reasonable and necessary to effectuate the terms of the Asset Purchase
Agreement, the transactions contemplated thereunder and the provisions of this
Sale Order, all without the necessity of any further order of this Court.
Dated: Los Angeles, California
_____________, 2001
________________________________
United States Bankruptcy Judge
Exhibit D
---------
Instrument of Assignment
------------------------
Pursuant to that certain Asset Purchase Agreement, dated as of May
___, 2001 (the "Purchase Agreement") by and among OAN Services, Inc. ("OAN")
Telecom Holdings, Inc. ("nTelecom"), OAN Services of Florida, Inc. ("OAN
Florida"), and together with OAN and nTelecom the "Seller"), and ACI
Telecommunications, Inc. ("ACI"), for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller does hereby
absolutely, unconditionally and irrevocably sell, assign, transfer, convey and
deliver unto ACI, and its successors and assigns, each and all of the Acquired
Assets (as such term is defined in the Purchase Agreement) and all of Sellers
right, title and interest in and to such Acquired Assets; provided, however, as
-------- -------
to any lease, contract, agreement, permit or other authorization included in the
Acquired Assets which cannot be sold, transferred, assigned, conveyed or
delivered effectively without the consent of a third party, which consent has
not been obtained, this Instrument of Assignment shall be of no force or effect
until such requisite consent is obtained, whereupon this Instrument of
Assignment shall become of full force thereto.
This Instrument of Assignment shall be binding upon, and inure to the
benefit of the successors and assigns of the parties hereto.
This Instrument of Assignment shall be governed by and construed in
accordance with the laws of the State of California without regard to the rules
of conflict of laws of the State of California or any other jurisdiction.
The Seller and ACI will use all commercially reasonable efforts to
execute and deliver such other instruments of conveyance, sale, transfer or
assumption, as the case may be, and take such other action as may be reasonably
requested to implement more effectively the assignments contemplated by the
Purchase Agreement and this Instrument of Assignment.
IN WITNESS WHEREOF, Seller has caused this Instrument of Assignment to
be executed as of the ____ day of _______, 2001 by its officer thereunto duly
authorized.
OAN Services of Florida, Inc. OAN Services, Inc.
By: ____________________________ By: _____________________________
Name: ____________________________ Name: _____________________________
Title:____________________________ Title:_____________________________
Telecom Holdings, Inc.
By: _____________________________
Name: _____________________________
Title:_____________________________
Exhibit E
---------
Mutual Release Agreement
------------------------
May __, 2001
A. OAN Services, Inc. and ACI
1. Effective immediately upon execution and delivery of this Mutual
Release Agreement OAN Services, Inc. (on behalf of itself and its bankruptcy
estate), nTelecom Holdings, Inc. (on behalf of itself and its bankruptcy estate)
and OAN Services of Florida, Inc. (on behalf of itself and its bankruptcy
estate) (collectively, "Debtor") hereby fully releases, remises, acquits, waives
and forever discharges ACI (defined below) from any and all claims including
liabilities, losses, claims, demands, accounts, debts, dues, sums of money,
claims for professionals (including but not limited to attorneys) fees or costs,
reckoning, costs, bonds, bills, expenses, rights of recoupment, obligations,
covenants, contracts, controversies, agreements, promises, variances, torts
(including any type of conduct or misconduct of Xxxxx whether negligent,
intentional or otherwise) omissions, representations, breaches of contract,
breaches of obligations to perform, actions, causes of action, suits, damages
(whether actual compensatory, punitive or exemplary), judgments, executions,
defenses, counterclaims, or setoffs that the Debtor ever had or may now have
against ACI of any nature whatsoever, whether direct, indirect or derivative,
whether presently existing or which may hereafter arise whether in law or
equity, whether sounding in contract, tort or any other basis, whether matured
or unmatured, whether liquidated or unliquidated, whether contingent or not
contingent, and whether known or unknown, and whether having arisen in whole or
in part from the beginning of time through the execution and delivery of this
Mutual Release Agreement (the "Debtor-Xxxxx Release"). In the preceding
sentence, ("ACI") means ACI Telecommunications, Inc. its shareholders (solely in
their capacities as shareholders) and their officers, directors, employees,
attorneys, and agents, as applicable, solely to the extent of their acting or
omitting to act in the capacities as such.
2. The Debtor-ACI Release shall not constitute a release of ACI from any
of its obligations under the Sections of that certain Asset Purchase Agreement
by and among OAN Services, Inc. nTelecom Holdings, Inc., and OAN Services of
Florida, Inc. as Seller and ACI Telecommunications, Inc. as Buyer dated as of
___________, 2001 (the "Asset Purchase Agreement"), that survive the Closing
pursuant to Section 13.01 thereof.
3. Effective immediately upon execution and delivery of this Mutual
Release Agreement ACI hereby fully releases, remises, acquits, waives and
forever discharges the Debtor from any and all claims including liabilities,
losses, claims, demands, accounts, debts, dues, sums of money, claims for
professionals (including but not limited to attorneys) fees or costs, reckoning,
costs, bonds, bills, expenses, rights of recoupment, obligations, covenants,
contracts, controversies, agreements, promises, variances, torts (including any
type of conduct or misconduct of the Debtor whether negligent, intentional or
otherwise) omissions, representations, breaches of contract, breaches of
obligations to perform, actions, causes of action, suits, damages (whether
actual compensatory, punitive or exemplary), judgments, executions, defenses,
counterclaims, or setoffs that ACI ever had or may now have against the Debtor
of any nature whatsoever, whether direct, indirect or derivative, whether
presently
existing or which may hereafter arise whether in law or equity, whether sounding
in contract, tort or any other basis, whether matured or unmatured, whether
liquidated or unliquidated, whether contingent or not contingent, and whether
known or unknown, and whether having arisen in whole or in part from the
beginning of time through the execution and delivery of this Mutual Release
Agreement (the "ACI-Debtor Release"). In the preceding sentence, the term
"Debtor" means OAN Services, Inc., its bankruptcy estate, nTelecom Holdings,
Inc., its bankruptcy estate, and OAN Services of Florida, Inc., its bankruptcy
estate, and their shareholders (solely in their capacities as shareholders), and
their officers, directors, employees, attorneys, and agents of each of the
foregoing, as applicable, solely to the extent of their acting or omitting to
act in the capacities as such.
4. The ACI-Debtor Release shall not constitute a release of the Debtor
from any of its obligations under the Sections of the Asset Purchase Agreement
that survive Closing pursuant to Section 13.01 thereof.
5. This Mutual Release Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Mutual Release
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
OAN Services of Florida, Inc. OAN Services, Inc.
By: ___________________ By: _________________________________
Name: ___________________ Name:_________________________________
Title: ___________________ Title:
nTelecom Holdings, Inc.
By: ________________________________
Name: ________________________________
Title:________________________________
ACI Telecommunications, Inc.
By: ________________________________
Name: ________________________________
Title:________________________________
Exhibit F
---------
Instrument of Assumption
------------------------
Instrument of Assumption dated as of _________ ____, 2001 by and among
OAN Services, Inc. a Delaware corporation ("OAN"), nTelecom Holdings, Inc.
("nTelecom") and OAN Services of Florida, Inc. ("OAN Florida and together with
nTelecom and OAN, the "Seller") and ACI Telecommunications, Inc. ("ACI").
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
May __, 2001 (the "Purchase Agreement") by and among Seller and ACI, Seller is
conveying to ACI certain assets defined in the Purchase Agreement as the
Acquired Assets; and
WHEREAS, in partial consideration for such sale, the Purchase
Agreement requires ACI to assume and agree to discharge certain obligations and
liabilities of Seller.
NOW, THEREFORE, pursuant to the Purchase Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ACI does hereby assume and undertake and agree to discharge in
accordance with the terms of the Purchase Agreement each of the Assumed
Liabilities referred to in Section ___ of the Purchase Agreement.
This Instrument of Assumption shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto.
This Instrument of Assumption shall be governed by and construed in
accordance with the laws of the State of California without regard to the rules
of conflict of laws of the State of California or any other jurisdiction.
The Seller and ACI will use all commercially reasonable efforts to
execute and deliver such other instruments of conveyance, sale, transfer or
assumption, as the case may be, and take such other action as may be reasonably
requested to implement more effectively the assumption of liabilities
contemplated by the Purchase Agreement and this Instrument of Assumption.
IN WITNESS WHEREOF, ACI and Seller have caused this Instrument of
Assumption to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ACI Telecommunications, Inc. OAN Services, Inc.
By: ______________________ By: ________________________________
Name:______________________ Name: ________________________________
Title:_____________________ Title:________________________________
nTelecom Holdings, Inc. OAN Services of Florida, Inc.
By: ________________________ By: ________________________________
Name: ________________________ Name: ________________________________
Title:________________________ Title:________________________________
Exhibit G
---------
Instrument of Consent to Assignment
-----------------------------------
Exhibit H
---------
LEC Consent
-----------
