ASSET PURCHASE AGREEMENT
EXHIBIT
99.2
This
ASSET PURCHASE
AGREEMENT(this “Agreement”), dated as
of January 12, 2011, by and among Capital Growth Systems, Inc. d/b/a Global
Capacity Group, Inc., a Florida corporation (the “Company”), the direct
or indirect subsidiaries of the Company set forth on the signature pages hereto
and their subsidiaries (together with the Company, each a “Seller,” and
collectively, the “Sellers”) and Pivotal
Global Capacity LLC (together with its successors, assigns and/or designees, the
“Buyer”).
RECITALS
WHEREAS,
Sellers are engaged in the business of providing telecom information and
logistics solutions to a global client set consisting of systems integrators,
telecommunications companies, and enterprise customers (collectively, the “Business”);
WHEREAS,
on July 23, 2010 (the “Petition Date”), the
Sellers commenced voluntary petitions for relief (the “Bankruptcy Cases”),
pursuant to chapter 11 of title 11 of the United States Code, 11 U.S.C.
Section 101 et seq. (the “Bankruptcy Code”), in
the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”);
and
WHEREAS,
Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers,
substantially all of the assets owned and used by Sellers in connection with the
Business (other than those assets specifically excluded hereby), (or, in the
event of an Alternative Transaction, as defined herein, to acquire equity
interests of the Company or one or more of its subsidiaries), all on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements
hereinafter contained, the parties hereby agree as follows:
ARTICLE
III
DEFINITIONS
3.1 In this
Agreement, the following terms have the meanings specified or referred to in
this Section
1.1 and shall be equally applicable to both the singular and plural
forms. Any agreement referred to below shall mean such agreement, as
amended, supplemented and modified from time to time to the extent permitted by
the applicable provisions thereof and by this Agreement. Capitalized
terms not defined herein have the meanings set forth or used in the Bankruptcy
Code or Plan.
“Accounts
Receivable” has the meaning specified in Section
2.1(h).
“Administrative
Expense Claims” shall have the meaning set forth in the Plan, as limited
by the amount of the Purchase Price agreed to be attributable thereto by Buyers
and Sellers including the amount of Professional Fees.
“Affiliate,”
means, with respect to any Person, any other Person which directly or indirectly
Controls, is Controlled by or is under common Control with such
Person.
“Agreement”
has the meaning specified in the preamble.
“Alternative
Transaction” means any sale, transfer, lease or other disposition,
directly or indirectly, of any Purchased Assets or any substantial portion of
the Business (or any agreement or understanding to do any of the foregoing)
pursuant to any transaction or series of transactions to Buyer, including
through the purchase of assets of the Company or one or more of its subsidiaries
or through the acquisition of Shares or other equity interests of the
Company or one or more of its subsidiaries (which, in such event, would render
the defined term “Purchased Assets” to include such equity interests) by direct
purchase of such equity interests, or by the cancellation of all existing
outstanding equity and issuance of new equity interests, or pursuant to the
terms of one or more mergers, consolidations, share exchanges,
recapitalizations, reorganizations or other similar transactions, with or
without redomestication or conversion of the Company or one or more of its
subsidiaries into any form of entity under the laws of any state, as authorized
by the Plan, to be effectuated prior to Closing.
“Assignment
and Assumption Agreement” has the meaning specified in Section
3.1(e)(iii).
“Assumed
Liabilities” has the meaning specified in Section
2.3.
“Auction”
means the auction for the sale of the Purchased Assets contemplated by the
Bidding Procedures Order.
“Bankruptcy
Cases” has the meaning specified in the Recitals, and includes Adversary
Proceedings by or against any of the Sellers.
“Bankruptcy
Code” has the meaning specified in the Recitals.
“Bankruptcy
Court” has the meaning specified in the Recitals.
“Bid
Submission Deadline” means the deadline for submission of bids as
established pursuant to the Bidding Procedures Order.
“Bidding
Procedures Order” means the Order (a) Approving Procedures in Connection
With Sale of Substantially All of the Debtors' Assets; (b) Scheduling Auction
and Hearing to Consider Approval of Sale; (c) Approving Procedures Related to
Assumption of Certain Executory Contracts and Unexpired Leases; (d) Approving
Form and Manner of Notice Thereof; and (e) Granting Related Relief, entered by
the Bankruptcy Court on August 24, 2010 (Docket No. 171), as modified by the
Notice of Second Modification of Bidding Procedures filed on October 13, 2010
(Docket 316) and the Notice of Change of Auction Deadline Dates and Sale Hearing
dated October 8, 2010 (Docket 305).
“Bid
Procedures” means those Bid Procedures approved by the Bidding Procedures
Order.
“Business”
has the meaning specified in the Recitals.
“Business
Day” means any day which is not a Saturday, Sunday or a statutory holiday
in the State of Delaware.
“Buyer”
has the meaning specified in the preamble, acting in its capacity as successor
Lenders.
“Buyer
Documents” has the meaning specified in Section
6.2.
“Closing”
has the meaning specified in Section
4.1.
“Closing
Cash Payment” an amount, if any, in cash due and payable at Closing equal
to the Purchase Price less the Credit Bid Amount less amounts attributable to
Assumed Liabilities, which may be funded through the Sale Facility.
“Closing
Date” has the meaning specified in Section
4.1.
“COBRA”
means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and
any similar state law.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company”
has the meaning specified in the preamble.
“Company
SEC Reports” has the meaning specified in Section
5.12
“Confirmation
Order” means the final, nonappealable order of the Bankruptcy Court that
confirms the Plan, which has not been stayed or appealed (other than as
consented to by Buyer in its sole discretion).
“Contracts”
has the meaning specified in Section
2.1(c).
“Control”
means the power, direct or indirect, to direct or cause the direction of the
management and policies or a Person through voting securities, contract or
otherwise.
“Credit
Bid Amount” has the meaning set forth in Section
3.1(d)(i).
“Creditor”
has the meaning set forth in 11 U.S.C. Section 101.
“Cure
Amount” has the meaning specified in Section
2.3(c).
“Cure
Schedule” has the meaning specified in Section
2.3(c).
“DIP
Facility” means
that certain Debtor in Possession Loan and Security Agreement dated as of July
23, 2010 by and among the Sellers, and the Buyer as successor in interest to the
Tranche A DIP Lender and the Tranche B DIP Lenders effective December 15,
2010.
“DIP
Facility Budget”
is a working capital budget of the Debtors continuing through the Closing, and
shall include all estimated revenue and expenses, including Pre-Closing
Costs. Effective as of the Sale Closing, the DIP Facility will be
increased by the Sale Facility to fund the Purchase Price, provided that Buyer
may advance portions of the Sale Facility prior to the Closing in its sole
discretion.
“DIP
Lenders” means, the Buyer as successor in interest to the Tranche A DIP
Lender and the Tranche B DIP Lenders.
“DIP
Order” means the final order of the Bankruptcy Court approving the DIP
Facility as approved by the Court as Docket 125, the rights under which were
assigned to Buyer as successor in interest to the DIP Lenders by order of the
Court at Docket 512.
“Employee
Plans” has
the meaning specified in Section
5.8(a).
“Employees”
means all individuals, whether or not actively at work as of the date hereof,
who are employed by one or more of the Sellers or their subsidiaries in
connection with the Business, together with individuals who are hired in respect
of the Business after the date hereof and prior to the Closing to the extent
Buyer approves the hire of such individuals after the date of this Agreement by
prior written consent.
“Encumbrance”
means any lien, claim, charge, security interest, encumbrance, mortgage, pledge,
easement, option, right of first refusal, conditional sale or other title
retention agreement, defect in title, covenant or other interests or
restrictions of any kind.
“Environmental
Law” means any Law relating to pollution or protection of human and
occupational health and safety and the environment, or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
transport, handling, discharge, Release, threatened Release of or exposure to
Hazardous Substances.
“Equipment”
has the meaning specified in Section
2.1(a).
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate” has the meaning specified in Section
5.8(a).
“Exchange
Act” means the Securities and Exchange Act of 1934, as
amended.
“Excluded
Assets” has the meaning specified in Section
2.2.
“Excluded
Liabilities” has the meaning specified in Section
2.4.
“Executive
Officer” means with respect to a corporation the president, chief
executive officer, chief operating officer, chief financial officer; with
respect to a partnership, the general partners, and; with respect to a limited
liability company, the managers; or their functional equivalents.
“Existing
DIP Payment Amounts” means the outstanding principal drawn by Sellers and
accrued and unpaid interest and all costs and fees pursuant to the DIP Facility
on the Closing Date.
“FCC”
means the United States Federal Communications Commission.
“Fee
Claim” means a
Claim by a Professional for compensation, indemnification or reimbursement of
expenses pursuant to sections 327, 328, 330, 331, 503(b) (excluding any fees
or expenses under sections 503(b)(3) or (4)) or 1103(a) of the
Bankruptcy Code in connection with the Bankruptcy Cases. For the avoidance of
doubt, fees or expenses sought under sections 503(b)(3) or (4) or payable under
section 506(b) are not Fee Claims.
“Fee
Payment Cap”
means the sum of $1,100,000 payable at the Closing (which sum takes into account
the full funding by the DIP Lenders of the DIP Order Carve-Out, and is to be
reduced by any pre-Closing discretionary advances, per Section 3.1(c)) by
Pivotal Global Capacity, LLC to be used to satisfy Fee Claims, U.S. Trustee Fees
for the post-Closing period and the distributions made in connection with the
Closing and Wind Down Budget obligations.
“Federal
Telecommunications Laws” means the Communications Act of 1934, as
amended, including amendments made by the Telecommunications Act of 1996, 47
U.S.C. Section 151 et seq., and the rules,
regulations and orders of the FCC.
“Financial
Statements” has the meaning specified in Section
5.12.
“GAAP”
means generally accepted accounting principles in the United States as of the
date hereof as applied in a manner consistent with the Sellers’ historical
accounting policies.
“Governmental
Body” means any foreign, federal, state, local or other governmental
authority or regulatory body.
“Hazardous
Substances” means any wastes, substances, products, pollutants or
materials, whether solid, liquid or gaseous, that (i) is or contains asbestos,
polychlorinated biphenyls, radioactive materials, oil, petroleum or any fraction
thereof, (ii) requires removal, remediation or reporting under any Environmental
Law, or is defined, listed or identified as a “contaminant”, “pollutant”, “toxic
substance”, “toxic material”, “hazardous waste” or “hazardous substance” or
words of similar meaning and regulatory effect thereunder or (iii) is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is regulated as such by any Governmental
Body under any Environmental Law.
“Intellectual
Property” has the meaning specified in Section
2.1(e).
“Knowledge”
means the actual knowledge of the Person, including, in the case of a
corporation, partnership or limited liability company, the knowledge attributed
to such entity based on the actual knowledge of its Executive Officers after due
investigation and inquiry.
“Laws”
means any law, statute, ordinance, regulation, rule, code or rule of common law
or otherwise of, or any order, judgment, injunction or decree issued,
promulgated, enforced or entered by, any Governmental Body.
“Lease
Assignments” has the meaning specified in Section
4.2(a)(iii).
“Legal
Proceeding” means any judicial, administrative or arbitral actions,
demands, suits, proceedings (public or private), audit or investigation by or
before a Governmental Body or arbitral tribunal excluding any liquidation of
claims.
“Lenders”
means Buyer as successor, collectively, to the Pre-Petition Lenders and the DIP
Lenders.
“Liability”
means any debt, claim, liability or obligation (whether direct or indirect,
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.
“Magenta”
means Magenta netLogic Limited, UK. For purposes of this Agreement,
all assets and liabilities of Magenta shall be shown on the appropriate
Schedules attached hereto, and shall be included in the Purchased Assets
acquired under this Agreement at the election of the Buyer.
“Material
Adverse Change” means a state of facts, event, change or effect with
respect to the Business, Purchased Assets, the Assumed Liabilities or the
enforceability of any Contract that results in a material adverse effect on the
value of the Purchased Assets or the Business, taken as a whole (or, in the
event of an Alternative Transaction, the value of the Shares), but excludes any
state of facts, event, change or effect caused by events, changes or
developments relating to (a) changes in economic, regulatory or political
conditions generally, and (b) the usual, customary or ordinary consequences of
the filing by a debtor of a Bankruptcy Case contemplating a reorganization or
liquidation of the debtor’s assets.
“Mission
Critical Vendors” means the utility vendors and other critical vendors as
identified on Schedule 2.3(c).
“Modified
Plan” has the meaning specified in Section
7.5.
“Non-Transferred
Assets” has the meaning specified in Section
2.5.
“Non-Transferred
Assets Documents”
means such bills of sale, deeds, endorsements, assignments and other good and
sufficient instruments of conveyance and transfer, in form reasonably
satisfactory to Buyer and its counsel, as Buyer may request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of all of Sellers’ right, title and interest in the
Non-Transferred Assets to Buyer.
“Order”
means any order, injunction, judgment, decree, ruling, writ, assessment or
arbitration award of a Governmental Body.
“Ordinary
Course of Business” means the ordinary and usual course of normal day to
day operations of the Business since the Petition Date.
“Permits”
means any approvals, authorizations, consents, licenses, permits or certificates
of a Governmental Body.
“Permitted
Encumbrance” means (i) any of those Encumbrances set forth on Schedule 1.1(a)
and/or (ii) any Encumbrance that Buyer agrees in writing to accept.
“Person”
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization or
Governmental Body.
“Personal
Property” has the meaning specified in Section
2.1(a).
“Petition
Date” has the meaning specified in the Recitals.
“Plan”
has the meaning specified in Section
7.5.
“Plan
Effective Date” means the first Business Day on which all conditions set
forth in the Plan have been satisfied or waived (other than those that, by their
terms, will be satisfied contemporaneously with or immediately upon the
occurrence of the Plan Effective Date) and no stay of the effectiveness of the
Confirmation Order is in effect.
“Pre
Closing Costs” consists of operating expenses from the Petition Date
through the Closing Date to the extent not covered by the Sellers’ operating
income, in accordance with the DIP Facility Budget. Pre Closing Costs
shall not duplicate any amounts that have previously been paid by the DIP
Facility.
“Pre-Petition
Facility” means, collectively, the secured financing facilities provided
by the Pre-Petition Lenders to Sellers before the Petition Date and all
debentures issued to, and other documentation entered into with or in favor of,
the Pre-Petition Lenders in connection therewith.
“Pre-Petition
Lenders” means the Buyer as successor to holders of the August 2009
Debentures, the July 31, 2009 Debentures, the VPP 2009 Debentures, the November
2008 Debentures and the March 2008 Debentures (as each of those terms is defined
in the Plan).
“Principal
Amount” has the meaning specified in Section
3.1(a).
“Priority
Claims” shall have the meaning set forth in the Plan as limited by the
amount of the Purchase Price agreed to be attributable thereto by Buyers and
Sellers.
“Professional
Fees” shall mean any fees to be paid by Debtors due from, paid to or on
behalf of a professional (including Capstone Investments) as limited by the
amount of the Purchase Price agreed to be attributable thereto by Buyers and
Sellers.
“Purchase
Price” has the meaning specified in Section
3.1(b).
“Purchased
Assets” has the meaning specified in Section
2.1.
“Qualified
Bidder” means any Person considered to be a qualified bidder in the
Auction pursuant to the Bidding Procedures Order.
“Real
Property Leases” has the meaning specified in Section
2.1(b).
“Regulatory
Approval Date” shall be the date 180 days following the Regulatory Filing
Date.
“Regulatory
Dates” shall be the Regulatory Filing Date and the Regulatory Approval
Date.
“Regulatory
Filing Date” shall be the date 14 days following the Sale Order
Date.
“Release”
means any release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration at, into or onto the
environment, including movement or migration through or in the environment,
whether sudden or non-sudden and whether accidental or non-accidental, or any
release, emission or discharge as those terms are defined in any applicable
Environmental Law.
“Retained
Causes of Action” means any and all claims and causes of action set forth
on Schedule
2.2(f).
“Sale
Facility” shall be an increase in the DIP Facility funded as of the
Closing Date in an amount up to the portion of the Purchase Price and shall
consist of the amount of the Existing DIP Payment Amounts and the amounts
described in Section 3.1(b)(ii), equal to the Fee Payment Cap to pay Fee Claims,
U.S. Trustee Fees incurred as a result of Closing disbursements and
post-Closing, and Wind Down Budget in an aggregate amount
not exceeding $1,500,000, Cure Amounts to the extent not paid from operating
funds estimated at $6,731,000 for Mission Critical Vendors plus $123,000 for
other executory contract holders, and Priority Claims estimated at $706,000 as
agreed by the Buyer and Sellers in the Sale Facility Budget.
“Sale
Facility Budget” shall consist of the Fee Payment Cap, Cure Amounts, and
Priority Claims (including postpetition Taxes). The Sale Facility Budget is an
increase in the DIP Facility Budget (which covered Administrative Expenses) to
fund the Purchase Price at the Closing.
“Sale
Hearing” has the meaning specified in Section
7.3.
“Sale
Motion” means the motion filed in the Bankruptcy Court by the Sellers on
August 12, 2010 as Docket 115.
“Sale
Order” has the meaning specified in Section
7.1.
“Sale
Order Date” shall be the date 15 days after the Sale Order is entered,
provided there is no stay or appeal.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Seller”
and “Sellers”
have the meanings specified in the preamble.
“Sellers
Documents” has the meaning specified in Section
5.2.
“Shares” means all the issued and
outstanding equity securities of the Company and, at the option of Buyer, one or
more of the Sellers or other subsidiaries of the Company.
“State
Regulatory Commission” means the agency, board, commission, department,
or other instrumentality of a State, Territorial, District of Columbia, or
Commonwealth government within or associated with the United States, having
jurisdiction under that government’s laws to regulate the provision of
intrastate telecommunications services.
“State
Telecommunication Laws” means state statutes governing intrastate
telecommunications in the States of the United States, the District of Columbia,
and Territories and Commonwealths within or associated with the United States
(the “States”),
and the rules, regulations, and orders of the State Regulatory Commissions
applicable to such intrastate telecommunications.
“Straddle
Period” has the meaning specified in Section
10.3.
“Straddle
Period Taxes” has the meaning specified in Section
10.3.
“Tax”
(and, with correlative meaning, “Taxes” and “Taxable”)
means:
(i) any
federal, state or local net income, gross income, gross receipts, windfall
profit, severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
transfer, stamp, or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any governmental authority; and
(ii) any
liability for the payment of amounts with respect to payments of a type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation under
any Tax sharing arrangement or Tax indemnity agreement.
“Tax
Return” means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
“Taxing
Authority” means any federal, state, local or foreign government, or any
agency, instrumentality or employee thereof, charged with the administration of
any Law relating to Taxes.
“Telecommunications
Laws” means the Federal Telecommunications Laws and the State
Telecommunications Laws.
“Tranche A
DIP Lender” means
Downtown CP-CGSY, LLC.
“Tranche A
Loan” means the
loan by Buyer as successor to the Tranche A DIP Lender pursuant to the DIP
Facility.
“Tranche B
DIP Lenders”
means the Tranche B DIP Lenders party to the DIP Facility and any other
Pre-Petition Lender and, with the consent of the existing Tranche B DIP Lenders,
any other person that elects to become a Tranche B Lender under the DIP
Facility.
“Tranche B
Loan” means the
loans by Buyer as successor to the Tranche B DIP Lenders pursuant to the DIP
Facility.
“Transfer
Taxes” means all sales (including bulk sales), use, transfer, value
added, goods and services, filing, recording, ad valorem, privilege,
documentary, gross receipts, registration, conveyance, excise, license, stamp or
similar Taxes and fees arising out of, in connection with or attributable to the
transactions contemplated by this Agreement.
“Transferred
Employees” has the meaning specified in Section
9.1.
“Undisclosed
Contract” has the meaning specified in Section
2.1.
“U.S.
Trustee Fees”
means fees due to the U.S. Trustee by the Sellers, before or after the Closing,
arising under 28 U.S.C. § 1930(a)(6) or otherwise, and, to the extent
applicable, accrued interest thereon arising under 31 U.S.C. §
3717.
“WARN”
or “WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988,
as amended, and any similar state Law, and the rules and regulations
thereunder.
“Wind Down
Budget” has the
meaning ascribed to such term in the Plan, as limited to the amount agreed to by
Buyer and Sellers as part of the Purchase Price.
ARTICLE
II
PURCHASE AND
SALE
2.1 Purchased
Assets. Upon the terms and subject to the conditions of this
Agreement, effective as of the Closing Date, in exchange for the Purchase Price,
Buyer shall purchase, acquire and accept out of the bankruptcy estate of the
Sellers, and the Sellers on behalf of the Sellers’ estate shall sell, transfer,
assign, convey and deliver, free and clear of all Encumbrances (other than any
Permitted Encumbrances) to the extent permissible under Sections 363 and 365 of
the Bankruptcy Code, to Buyer, on an as-is, where is basis, with no
representations or warranties except as otherwise set forth herein, all of the
Sellers’ right, title and interest in, to and under the Purchased Assets (which,
in the event of an Alternative Transaction involving the acquisition by Buyer of
any Shares, is effected through the transfer of all such Shares)
.. “Purchased Assets”
shall mean all assets, properties, interests and rights of the Sellers, other
than the Excluded Assets, as of the Closing, used or useful in connection with
or related to the Business, including:
(a) all
tangible personal property of Sellers, including without limitation all
machinery, equipment (including, without limitation, telecommunications
equipment, computer equipment, routers, switches, concentrators, peripherals and
related hardware) (“Equipment”),
furniture, fixtures, leasehold improvements and all other fixed or tangible
assets owned or leased under assumed Contracts, including, without limitation,
those items described on Schedule 2.1(a)
(collectively, the “Personal Property”),
except those items to be retained by Sellers pursuant to Section 2.2
hereto;
(b) all real
property leases and subleases as set forth in Schedule 2.1(b) (the
“Real Property
Leases”);
(c) all of
Sellers’ rights in or under (i) all contracts with customers, and all software
licenses, including without limitation those listed on Schedule 2.1(c)(i)
and (ii) all telecommunication circuit contracts, and call contracts with
vendors, software developers and others and the equipment leases listed on Schedule 2.1(c)(ii)
(collectively, the “Contracts”) and all
claims and causes of action thereunder, provided that any contracts with
customers not listed on Schedule 2.1(c)(i)
shall be deemed included on that Schedule, unless specifically listed as
excluded on Schedule
2.2(e);
(d) all of
Sellers’ rights in and to security and vendor deposits, prepayments and refunds
existing with respect to the assumed and assigned Real Property Leases and
Contracts, including, without limitation, those listed on Schedule
2.1(d);
(e) all of
Sellers’ intellectual property and intangible property, including without
limitation all of Sellers’ (1) trademarks, service marks, brand names,
certification marks, collective marks, d/b/a’s, domain names, logos, symbols,
trade dress, product configurations, assumed names, fictitious names, Internet
protocol addresses, trade names, indicia of origin, all applications and
registrations for all of the foregoing, together with all goodwill associated
with any of the foregoing and symbolized thereby, including all extensions,
modifications and renewals or same; (2) inventions, discoveries and ideas,
whether patentable or not, and all patents, registrations and applications
therefore, including divisions, continuations, continuations-in-part and renewal
applications, and including renewals, extensions and reissues; (3) confidential
and proprietary information, trade secrets and know-how relating to the
Business, including processes, schematics, databases, customer and other
resource lists, formulae, drawings, prototypes, models, designs, and any
confidential, secret or proprietary aspects of the Business, including, without
limitation, marketing information, pricing arrangements with customers and
suppliers or financial information relating to the Business; (4) all proprietary
computer software of Sellers, including, without limitation, all computer
programs, object code, source code, user interface, databases and documentation;
(5) rights in works of authorship, including databases and other compilations of
information; and (6) other intellectual property or proprietary rights owned by
Sellers including without limitation those utilized in, developed in connection
with or material to the Business, including without limitation any of the
foregoing listed on Schedule 2.1(e)
(collectively, the “Intellectual
Property”) and all Contracts pursuant to which any Seller is granted a
license to, or any rights under, any Intellectual Property of any third Person
and all Contracts pursuant to which any Seller grants to a third Person a
license to, or any rights under, any Intellectual Property;
(f) all
rights of setoff and recoupment with respect to the Assumed
Liabilities;
(g) all
actions under 11 U.S.C. Sections 544 through 550 (except as are specifically
retained by the Sellers under Schedule 2.2(f)), and
all counterclaims, offsets, defenses and denials against claims of creditors,
and all rights and claims of Sellers, whether known or unknown, absolute or
contingent, matured or unmatured, or otherwise, against third parties whether in
tort, contract or otherwise, other than those relating to or arising under the
Contracts (except with respect to all matters referred to in this subsection
(g), to the extent necessary to setoff against claims of Creditors or to recover
claims for damages against Sellers’ estates, as set forth on Schedule 2.1(g),
provided that such exception does not extend to actions against any and all (i)
Mission Critical Vendors, (ii) counterparties to contracts assumed and assigned
to Buyer under this Agreement, (iii) customers of the Business, and (iv) any
other party determined by Buyer in its sole discretion to be important to the
operation of the Business, and designated by Buyer prior to the
Closing. No actions against (i), (ii), (iii) or (iv) defendants shall
be pursued by Sellers, as all such actions are included in the Purchased Assets,
and Sellers shall consult with Buyer before pursuing any potential Retained
Actions/Excluded Actions, and obtain Buyer’s written confirmation that such
action is not within the scope of (i), (ii), (iii) or (iv)).
(h) all
accounts receivable, trade accounts and other amounts owed to any of the Sellers
relating to, or arising in connection with the operation and conduct of, the
Business (including overdue accounts receivable and all accounts receivable that
have been billed by Sellers in advance for services or products that have not
yet been provided prior to the Closing Date) and any other rights of any of the
Sellers to payment from any other Seller, any subsidiary of any Seller or any
third party and the full benefit of all security for such accounts or rights to
payment, including, together with any and all proceeds of any of the foregoing
(collectively, the “Accounts
Receivable”);
(i) all cash
and cash equivalents whether on hand, in transit or in banks or other financial
institutions, security entitlements, securities accounts, commodity contracts
and commodity accounts and including any cash collateral that is collateralizing
any letters of credit, or obligation with respect thereto, assumed by the Buyer,
but excluding any cash tendered as part of the Purchase Price, including all net
operating income (in whatever form) to the extent not used in accordance with
final orders entered by the Bankruptcy Court or in accordance with the DIP
Facility Budget, prior to the Closing;
(j) at the
option of Buyer, in its sole discretion, all Shares, including, without
limitation, all shares of the capital stock of Magenta, whether or not an this
Agreement is effected through an Alternative Transaction;
(k) all of
Sellers’ books of account, records, files (including those relating to customers
and carriers), customer lists, invoices and similar financial books, records and
information, employment records and files, and Sellers’ engineering and other
technical books, papers, files and records (including all data and other
information stored on discs, tapes, including back up tapes, or other media)
relating to the Business, provided that Sellers shall have the right to make
copies of such books and records to the extent Sellers determine that they are
necessary to enable Sellers to wind down Sellers’ estates and/or are otherwise
required for legal or regulatory reasons;
(l) all
rights to enforce any and all agreements between Sellers and their respective
employees relating to noncompetition, invention assignment, proprietary
information and/or confidentiality; except that Seller shall retain any cause of
action against any Employee for damages to the extent of loss or damage suffered
by the Sellers or their estates on account of employee conduct occurring prior
to the Closing Date;
(m) all other
rights of Sellers relating to the Business, including, without limitation, all
goodwill relating to the Business;
(n) all
Permits and licenses, other than non-transferrable Permits and licenses which
are not material to the Business as determined and approved by Buyer in its sole
discretion;
(o) all
telephone, fax numbers, carrier identification codes, other than those not
transferable which are not material to the Business as determined and approved
by Buyer in its sole discretion;
(p) all
websites;
(q) all
rights under warranties relating to the Purchased Assets; and
(r) all
proceeds of insurance arising from damage to, destruction of or loss relating to
the Purchased Assets or covering claims, if any, for which Buyer may have
successor liability, provided, however, with respect to any successor liability
claims, such proceeds shall be used solely either to satisfy such liability
directly or, if Buyer or the Sellers have already satisfied such a claim, to
reimburse Buyer or the Sellers to the extent of such satisfaction.
(In the
event of an Alternative Transaction, the enumeration of items in 2.1(a)-(r)
above shall, with respect to any entity whose Shares are being acquired, refer
to such entity’s right, title or interest therein, it being the intent that
Buyer shall acquire such assets indirectly through the purchase of such
Shares.)
Notwithstanding
anything to the contrary contained herein, (x) Sellers may at any time up to the
date of the Sale Hearing, supplement Schedule 2.1(b),
Schedule
2.1(c)(i) or Schedule 2.1(c)(ii),
as applicable, to add any contract or lease that was not previously listed
thereon, in which case such contract or lease shall be, subject to the consent
of Buyer in its sole discretion, as applicable, a Purchased Asset, or (y) Buyer
may, in its sole discretion, at any time prior to the Closing remove from Schedule 2.1(b),
Schedule
2.1(c)(i) or Schedule 2.1(c)(ii),
as applicable, any contract or lease listed thereon, in which case such contract
or lease shall be an Excluded Asset. In the case of any contract or lease
the existence of which was not disclosed to Buyer in reasonable detail prior to
the date hereof (an “Undisclosed
Contract”), Buyer may add such Undisclosed Contract to Schedule 2.1(b),
Schedule
2.1(c)(i) or Schedule 2.1(c)(ii),
as applicable, at any time prior to the date of the Sale Hearing, and Sellers
shall take all actions desirable or necessary including filing any necessary or
desirable motions or applications and obtaining any appropriate Orders from the
Bankruptcy Court, in order to effectuate the assignment of such Undisclosed
Contract to Buyer. It is the intention of the parties that all assets
of Sellers other than Excluded Assets are to be included in the sale
hereunder. Accordingly, if any asset of Sellers, which is not an
Excluded Asset, is not transferred to Buyer at Closing, in the sole discretion
of Buyer, Sellers shall cause it to be transferred to Buyer for no additional
consideration, subject to Bankruptcy Court approval including any requirement to
pay any Cure Amount (which Cure Amount shall be paid by Buyer if Buyer elects to
acquire such asset but without any increase in the Purchase Price, unless Buyer
determines, in its sole discretion, to increase the Purchase Price therefor),
including assuming and assigning any executory contracts and unexpired
leases. At Buyer’s option, Sellers shall cause, prior to the Closing
Date, any or all assets of Magenta to be transferred to Sellers by
Magenta.
2.2 Excluded
Assets. Any provision herein to the contrary notwithstanding,
the Purchased Assets shall not include any of the following assets (the “Excluded
Assets”):
(a) the
Purchase Price;
(b) at the
option of Buyer, in its sole discretion, any and all Shares of the capital stock
or any equity interest of any of the Sellers or any of their
subsidiaries;
(c) any: (i)
confidential personnel and medical records pertaining to any Employee to the
extent such records may not be transferred to Buyer pursuant to applicable Law;
(ii) other books and records that the Sellers are required by Law to retain
including, without limitation, Tax Returns, taxpayer and other identification
numbers, financial statements and corporate or other entity filings provided,
that Buyer shall have the right to make copies of any portions of such retained
books and records to the extent that such portions relate to the Business or any
of the Purchased Assets; (iii) any information management systems of the
Sellers, other than those used in or useful in connection with or related to the
Business; and (iv) (except in the event of an Alternative Transaction) minute
books, stock ledgers, equity books, equity ledgers, equity certificates and
stock certificates of any Seller or any of its Subsidiaries which do not
constitute Purchased Assets; in each case (i)-(iv) above, subject to Buyer’s
ability to make copies thereof as Buyer deems necessary and proper;
(d) assets of
any Employee Plan, which shall be terminated or disposed of prior to the Closing
if an Alternative Transaction is implemented;
(e) those
assets described on Schedule 2.2(e), and
any Contracts and Real Property Leases not listed on Schedule 2.1(b),
2.1(c)(ii) as
specifically assumed, all of which assets shall be terminated or disposed of
prior to the Closing if an Alternative Transaction is implemented; Buyer may, in
its sole discretion, at any time prior to Closing, move Personal Property, Real
Property Leases and Contracts from Schedules 2.1(a),
2.1(b) and
2.1(c)(i) and
(ii) to Schedule 2.2(e) after
further due diligence; provided, however,
that so moving any Personal Property, Real Property Leases or Contracts shall
not result in any reduction of the Purchase Price; and
(f) the
Retained Causes of Action set forth on Schedule 2.2(f), subject to
the restrictions in Section 2.1(g).
2.3 Assumed
Liabilities. Upon the terms and subject to the conditions of
this Agreement, effective as of the Closing Date, Buyer shall assume and agree
to discharge the following, and only the following, Liabilities of Sellers (the
“Assumed
Liabilities”):
(a) all
Liabilities relating to the operation of the Business acquired hereunder that
arise from events, facts or circumstances that occur on or after the
Closing;
(b) all of
Sellers’ obligations under the Contracts and the Real Property Leases acquired
hereunder and obligations to pay Taxes of Governmental Units, which accrue after
the Closing
(c) all of
Sellers’ (a) accounts payable and other obligations under the Contracts and the
Real Property Leases assumed and assigned hereunder and (b) obligations to pay
Taxes of Governmental Units, in each case that are current, accrued and unbilled
obligations incurred postpetition, which Buyer will pay when invoiced and due in
the ordinary course after Closing;
(d) all
amounts payable under Section 365 of the Bankruptcy Code to cure monetary
defaults under the Contracts and the Real Property Leases acquired hereunder in
accordance with the Assignment Notices described in Section 7.3 herein between
Sellers and the counterparty to such Contracts and Real Property
Leases or as otherwise provided in an Order of the Bankruptcy Court,
to the extent not previously paid by Seller as an Administrative Expense; provided, however, that Buyer’s
assumption of each Contract and each Real Property Lease is predicated upon the
Cure Amount not exceeding the amount set forth on Schedule 2.3(c) (the
“Cure
Schedule”) or such greater amount as the Bankruptcy Court shall determine
is the Cure Amount for each Contract and Real Property Lease to be assumed by
Buyer in accordance with such Assignment Notice, subject to Buyer’s right to
reject any of such Contracts or Real Property Leases prior to the Closing Date
and further subject to Buyer’s ability, in its sole discretion, to increase the
Purchase Price for any additional Cure Amount which may be required prior to the
Closing Date (collectively, the “Cure
Amount”).
For the
avoidance of doubt, the parties agree that (i) the portion of the Cure Amount
payable on the Closing Date shall be paid by the Sellers as an Administrative
Expense (but separately allocated outside the aggregate Administrative Expense
limit in the Purchase Price), using part of the Closing Cash Payment at Closing
and first using any funds deemed not to collateralize the Pre-Petition Facility,
(ii) Buyer’s assumption of the Assumed Liabilities shall be without duplication
of the expenses paid by Buyer as Pre-Closing Costs or otherwise advanced as part
of the Sale Facility or DIP Facility, and (iii) any Closing Cash Payments shall
be without duplication of amounts advanced as part of the DIP
Facility.
2.4 Excluded
Liabilities. Notwithstanding anything to the contrary
contained in this Agreement or otherwise, Buyer shall not assume or be obligated
to pay, perform or otherwise discharge any liability or obligation of Sellers,
direct or indirect, known or unknown, absolute or contingent, not expressly
assumed by Buyer pursuant to Section 2.3 (all such
liabilities and obligations not being assumed being herein called the “Excluded
Liabilities”). Without limiting the generality of the
foregoing, all of the following shall be Excluded Liabilities for purposes of
this Agreement:
(a) all
Liabilities of the Sellers relating to or otherwise arising, whether before, on
or after the Closing Date, out of, or in connection with, any of the Excluded
Assets;
(b) all
accounts payable arising from the Business (including without limitation those
arising under Contracts and Real Property Leases) which accrue or arise prior to
the Closing Date and which remain unpaid on the Closing Date, except insofar as
they are within 2.3(c);
(c) claims of
Creditors not expressly assumed hereunder;
(d) all
Liabilities with respect to all Employee Plans, policies, agreements and
arrangements of the Sellers and their Affiliates, including all Employee Plans,
and any Liability to or in respect of, or arising out of or in connection with,
the employment by any of the Sellers or cessation of employment with any of the
Sellers of any Employees or independent contractors or former employees or
independent contractors of any of the Sellers, including any severance
obligations that arise on or prior to the Closing Date and any WARN liability
associated with the termination of Employees;
(e) any and
all federal or state regulatory charges or assessments in respect of operations
of Sellers prior to the Closing Date, including but not limited to all universal
service fund charges, federal excise taxes, FCC charges for network access,
local number portability charges, telecommunications relay service charges,
local communications taxes, state gross receipts taxes, state utility privilege
taxes and 911 fees, other than those paid by the allocation to Priority Claims
of a portion of the Purchase Price;
(f) all Taxes
payable or that become payable by Sellers arising from the conduct of the
Business prior to the Closing Date other than those paid by the allocation to
Priority Claims of a portion of the Purchase Price (which shall encompass Taxes
incurred postpetition in the course of operation of the Business, for purposes
of this Agreement). All sales Taxes and universal service charges
collected by Buyer attributable to a sale that occurred prior to the Closing
Date shall be remitted to the appropriate Taxing Authority or universal service
administrative company for credit to Sellers’ account;
(g) any debt
of the Sellers, except to the extent otherwise expressly included in Assumed
Liabilities;
(h) any Claim
or Interest or any kind or nature in any of the Shares;
(i) any
liabilities or obligations of Sellers arising prior to the Closing Date, except
as expressly assumed by Buyer in writing, including any obligations to any
holders of Claims and/or Interests in the Sellers or affiliates
thereof.
(In the
event of an Alternative Transaction, the enumeration of items in 2.4(a)-(i)
above shall, with respect to any entity whose Shares are being acquired, refer
to such entity’s liabilities and shall require the termination of such
liabilities as a condition of Closing, it being the intent that Buyer shall
acquire such Shares of such entity only if such liabilities of such entity have
been discharged or otherwise disposed of.)
For the
avoidance of doubt, amounts paid by Buyer on behalf of the Existing DIP Payment
Amounts, Pre Closing Expenses, Administrative Expense Claims including
Professional Fees, and Priority Claims at Closing shall be in the nature of
payment of the Purchase Price and shall be allocated by Sellers as set forth in
the Plan, with Administrative Expense Claims and the Cure Amount first using any
funds deemed not to collateralize the Pre-Petition Facility. No presumption
shall arise as to the assumption by Buyer of any liabilities related to any of
Administrative Expense Claims including Professional Fees or Priority Claims by
virtue of payments of amounts allocated by Sellers to such
categories.
2.5 Non-Transferred
Assets.
(a) Notwithstanding
anything in this Agreement to the contrary, the parties agree that, to the
extent that as of the Closing certain of the Purchased Assets cannot be
transferred to Buyer (i) pending Buyer obtaining the requisite
telecommunications regulatory authorizations from State and Federal regulatory
agencies and/or consent of State and Federal regulatory agencies to the transfer
of such Purchased Assets or (ii) if an attempted assignment of any Contract or
Real Property Lease, without the consent of any other Person that is a party
thereto, would constitute a breach thereof or in any way negatively affect the
rights of Buyer (unless the restrictions on assignment would be rendered
ineffective pursuant to sections 9-406 through 9-409, inclusive, of the Uniform
Commercial Code, as amended), as the assignee of such Contract or Real Property
Lease, as the case may be, thereunder (or, in the event of an Alternative
Transaction, if the acquisition by Buyer of any Shares or other equity interests
of Company or one or more subsidiaries is not consummated because certain
Transferred Assets cannot be owned by Buyer or by entities whose Shares or other
equity interests are owned by Buyer), Sellers shall retain title to such assets
(the “Non-Transferred
Assets”) and any Assumed Liabilities related to such assets, pending
receipt of such authorizations and consents, and shall hold and treat such
assets in accordance with the terms set forth in a management agreement to be
agreed upon between Buyer and Sellers. Upon receipt from time to time
of any such necessary consents, such Non-Transferred Assets as are subject to
the consents so received, shall be transferred to Buyer pursuant to subsection
2.5(b) below, and Buyer shall assume all related Assumed Liabilities (or, in the
event of an Alternative Transaction, the applicable Shares or other equity
interests of the Company or one or more of its subsidiaries shall be transferred
to Buyer or otherwise caused to be acquired by Buyer by direct purchase of such
equity interests, or pursuant to the terms of one or more mergers,
consolidations, share exchanges, recapitalizations, reorganizations or other
similar transactions, with or without redomestication or conversion of the
Company or one or more of its subsidiaries into any form of entity under the
laws of any state).
(b) Subject
to and in accordance with the terms and conditions of this Agreement and without
limiting the obligations of the parties, it is hereby acknowledged, confirmed
and agreed by the parties that each of the parties will execute, deliver, or
cause to be delivered the Non-Transferred Asset Documents upon receipt of the
consents and approvals, if any, referred to in clauses 2.5(a)(i) and 2.5(a)(ii)
above. Upon delivery of such duly executed Non-Transferred Asset Documents, the requirements of Article XI below
shall be deemed to be satisfied as if such Non-Transferred Assets and related
Assumed Liabilities had been transferred to and assumed by Buyer at the Closing,
and the Purchase Price will not be affected by Non-Transferred
Assets.
2.6 Prorations
at Closing. All items of income, expense, charges, fees and
costs covered by this Agreement, to the extent earned, incurred or accrued for a
period that starts before and ends after the Closing Date, shall be pro-rated as
of the Closing Date with Sellers receiving or responsible for the pro-rated
amount for the period before the Closing Date and Buyer receiving or responsible
for the pro-rated amount from and after the Closing Date. Such
pro-rated amounts shall be determined at Closing or, if it is not possible to
calculate them at that time because of insufficient information, promptly after
such information becomes available. To the extent that either party
requests a post-closing reconciliation of pro-rations at Closing, such
reconciliation shall be made within 45 days after Closing.
2.7 Sellers’
Access to Records and Personnel. Sellers, so long as any of
them remain a debtor in a case under any chapter of the Bankruptcy Code, shall,
at reasonable times and on reasonable notice, have access to all records and
Transferred Employees for all actions that are reasonably necessary or
reasonably proper to administer such case under the Bankruptcy
Code.
ARTICLE
III
PURCHASE
PRICE
3.1 Purchase
Price.
(a) Each of
the parties hereby acknowledges, confirms and agrees that the Debtors have
incurred indebtedness under the DIP Facility.
(i) Buyer
agrees that from subject to the terms and conditions of the DIP Facility, it
will continue to fund the DIP Facility following entry of the Sale Order to the
Closing Date as agreed by Buyer and Seller in the DIP Facility
Budget.
(ii) Buyer
shall satisfy the Existing DIP Payment Amounts on the Closing Date from the Sale
Facility; provided, however that the Existing DIP Payment Amounts may be
satisfied by Buyer’s assumption and continued funding of the DIP Facility as
part of the Sale Facility, continuing in effect all of Buyer’s right, title and
interests in the DIP Facility, and the Collateral for the DIP
Facility.
(b) The
purchase price for the Purchased Assets (the “Purchase Price”)
shall be an amount not to exceed $28,643,000 (plus assumption of Assumed
Liabilities), as follows:
(i) An amount
equal to the Sale Facility, which will fund
|
(A)
|
The
Existing DIP Payment Amounts in the estimated amount of
$10,983,000
|
|
(B)
|
An
amount not to exceed $8,660,000 consisting of the sum of the following (w)
Cure Amounts (estimated at $6,731,000 for Mission Critical Vendors plus
$123,000 for other executory contract holders), plus (x) Priority Claims
(estimated at $706,000), plus (y) $1,100,000 for the Fee Payment
Cap;
|
|
(C)
|
Credit
bid of $9,000,000 of the Pre-Petition Facility, which Buyer may assume and
satisfy post-Closing, in its sole
discretion;
|
(ii) plus assumption of
the Assumed Liabilities.
(c) Not later
than one (1) Business Day prior to the Closing Date, the Sellers and Buyer shall
cooperatively prepare a closing statement consisting of (i) the amount necessary
to pay off amounts drawn on the DIP Payment Amounts; (ii) amounts attributable
to the Cure Amount to be paid on the Effective Date pursuant to the Confirmation
Order from an additional draw on the Sale Facility (which statement shall set
forth in reasonable detail the basis for the calculation of the Cure Amount);
(iii) amounts necessary to fund the Fee Payment Cap components not previously
paid by the DIP Facility or Sale Facility (for the avoidance of doubt, advances
by Purchaser in its discretion from the Sale Facility to satisfy amounts within
the Fee Payment Cap reduce, dollar
for dollar, the Sale Facility and the total amount that will be funded on the
Closing for the Fee Payment Cap), amounts attributable to Priority
Claims, amounts due under the Wind Down Budget (to the extent not previously
paid by the DIP Facility), all to be satisfied from an additional draw on the
Sale Facility. Under no circumstances shall the foregoing exceed, on an
aggregate basis, the remaining Purchase Price; provided however, that all
Administrative Expense Claims (as defined in the Plan) and all other claims and
liabilities of Seller not expressly assumed by Buyer shall have been paid,
satisfied or discharged by the Plan and the Confirmation Order, with
Administrative Expense Claims along with the Cure Amount first satisfied by
using any funds deemed not to collateralize the Pre-Petition
Facility.
(d) At the
Closing, the Purchase Price shall be payable,
(i) with
respect to the DIP Facility, in the form of a credit in an amount equal to
Sellers’ obligations under the DIP Facility, in accordance with § 363(k) of the
Bankruptcy Code (the “Credit Bid”), or by assumption of the DIP Payment Amounts
by Buyer;
(ii) with
respect to amounts attributable to the Cure Amount, the Fee Payment Cap, and the
Priority Claims in cash by advances from the Sale Facility (to the extent not
previously paid by the Debtors using DIP Facility financing and operating income
under the DIP Budget, and the Purchase Price is reduced to the extent of such a
payment and, to the extent any such payment is a Fee Payment Cap item, such
payment also reduces the amount available under the Fee Payment Cap);
and
(iii) with
respect to the amount of the Assumed Liabilities described in Section 2.3, by
assuming such Assumed Liabilities through a duly executed assignment and
assumption agreement reasonably agreed to by Buyer and Sellers (the “Assignment and Assumption
Agreement”) or such other instrument(s) of conveyance and transfer, in
form and substance reasonably acceptable to Sellers, as may be necessary to
convey the Purchased Assets to Buyer (which, in the event of an Alternative
Transaction, shall acknowledge that the Assumed Liabilities of any entity whose
Shares are being acquired remain li0abilities of such entity and are not being
directly assumed by Buyer).
(e) Amounts
necessary to fund estimated draws under the Sale Facility shall be funded by
Buyer on the Closing Date.
ARTICLE
IV
CLOSING
4.1 Closing
Date. Subject to the satisfaction of the conditions set forth
in Article XI
hereof (or the waiver thereof by the party entitled to waive that condition) and
subject to Buyer’s right to terminate this Agreement pursuant to Section 7.5; the
closing of the purchase and sale of the Purchased Assets and the assumption of
the Assumed Liabilities, including through the Alternative Transaction provided
for in Article II hereof, if applicable (collectively, the “Closing”) shall take
place at 10:00 a.m. (Phoenix time) on the Business Day selected by Buyer
occurring as soon as practicable after satisfaction or waiver of the conditions
set forth in Article
XI; provided that (i) the
Closing will not be delayed until the Regulatory Approval Date if all Regulatory
Approvals have been obtained and all other conditions to Closing have been
satisfied prior to that date, but shall occur as soon as all conditions to
Closing are met, and (ii) the Closing Date shall be no later than the Regulatory
Approval Date. Buyer may decide, in its sole and absolute discretion,
to proceed with the Closing prior to a Plan Effective Date.
The
Closing shall take place at the offices of Xxxxx and Xxxx, LLP (or at such other
place as the parties may designate in writing). The date on which the
Closing shall be held is referred to in this Agreement as the “Closing
Date.”
4.2 Closing
Deliveries.
(a) Sellers’
Deliveries. At the Closing, the Sellers shall deliver to
Buyer:
(i) If an
Alternative Transaction is implemented, execution of any and all documents
necessary to effectuate the acquisition of Shares and/or other equity interests
of the Company or one or more of its subsidiaries (which, in such event, would
render the defined term “Purchased Assets” to include such equity interests) by
direct purchase of such equity interests, or by the cancellation of all existing
outstanding equity and issuance of new equity interests, or pursuant to the
terms of one or more mergers, consolidations, share exchanges,
recapitalizations, reorganizations or other similar transactions, with or
without redomestication or conversion of the Company or one or more of its
subsidiaries into any form of entity under the laws of any state, including
without limitation an assignment of certificate of stock or other equity
interest, articles of redomestication or conversion or merger or share exchange
or any other documents required to be filed by any state having jurisdiction
over the entities who are parties to an Alternative Transaction or formed or to
be formed in connection with an Alternative Transaction;
(ii) bills of
sale, deeds, endorsements, assignments and other good and sufficient instruments
of conveyance and transfer, in form reasonably satisfactory to Buyer and its
counsel, as Buyer may request or as may be otherwise necessary to evidence and
effect the sale, assignment, transfer, conveyance and delivery of all of
Sellers’ right, title and interest in the Purchased Assets to Buyer, duly
executed by the Sellers;
(iii) original books
and records, including, without limitation, originals of any title documents
related to the Purchased Assets and originals of any of the Purchased Assets,
including contracts, real property leases, Intellectual Property and Permits and
any and all passwords, user names, log ins and similar codes related to any of
the Purchased Assets;
(iv) a duly
executed Assignment and Assumption Agreement;
(v) an
assignment and assumption of each Real Property Lease (collectively, the “Lease Assignments”),
duly executed by the applicable Seller that holds the leasehold interest in such
Real Property Lease;
(vi) duly
executed assignments of (i) the patents and trademarks that are included in
Intellectual Property (if applicable), in forms suitable for recording in the
United States Patent and Trademark Office, and (ii) duly executed assignments of
the copyright registrations and applications for copyright registration owned by
the Seller that are included in Intellectual Property (if
applicable);
(vii) duly
executed assignments, in form and substance acceptable to Buyer, of any Contract
relating to licensed Intellectual Property;
(viii) the
Executive Officer’s certificate required to be delivered pursuant to and
certifying to the matters set forth in Section 11.1(a) and
Section
11.1(b), in form and substance satisfactory to Buyer;
(ix) an
executed management agreement, if applicable;
(x) a copy of
all orders entered by the Bankruptcy Court pertaining to the transactions
contemplated herein, including the Sale Order and, if applicable, the
Confirmation Order;
(xi) all
consents obtained, and all notices to third parties given, by the Sellers as of
the Closing Date regarding the transfer of the Purchased Assets;
(xii) final
copies of the Schedules hereto;
(xiii) certified
resolutions from the board of directors of each of the Sellers approving and
authorizing this Agreement and the transactions contemplated
herein;
(xiv) an
affidavit of non-foreign status meeting the requirements of Section 1445(b)(2)
of the Code; and
(xv) all other
instruments of conveyance and transfer, in form and substance reasonably
acceptable to Buyer, as may be necessary to convey the Purchased Assets to
Buyer.
(b) Buyer’s
Deliveries. At the Closing, Buyer shall:
(i) advance
additional amounts as necessary from the Sale Facility to meet Closing
obligations including Closing Cash Payments;
(ii) if an
Alternative Transaction is implemented, execution of any and all documents
necessary to effectuate the acquisition of Shares and/or other equity interests
of the Company or one or more of its subsidiaries (which, in such event, would
render the defined term “Purchased Assets” to include such equity interests) by
direct purchase of such equity interests, or by the cancellation of all existing
outstanding equity and issuance of new equity interests, or pursuant to the
terms of one or more mergers, consolidations, share exchanges,
recapitalizations, reorganizations or other similar transactions, with or
without redomestication or conversion of the Company or one or more of its
subsidiaries into any form of entity under the laws of any state, with or
without redomestication or conversion of the Company or one or more of its
subsidiaries into any form of entity under the laws of any state, including
without limitation a subscription for purchase of stock or other equity
interest, an acceptance of assignment of certificate of stock or
other equity interest
(iii) execute
and deliver to Sellers the Assignment and Assumption Agreement;
(iv) execute
and deliver to Sellers the Lease Assignments; and
(v) deliver
an officer’s certificate, duly executed by a senior officer of the Buyer,
certifying to the matters set forth in Section 11.2(a) and Section 11.2(b), in
form and substance satisfactory to the Seller.
ARTICLE
V
REPRESENTATIONS AND
WARRANTIES OF SELLERS
As an
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Sellers (for purposes of this Agreement,
including Articles V and VII herein, the term “Sellers” expressly includes each
Seller and each such Seller’s direct and indirect subsidiaries) represent and
warrant to Buyer and agree as follows:
5.1 Organization
of Sellers. Except as set forth on Schedule 5.1, each
Seller is a corporation or limited liability
company duly organized, validly existing and in good standing under the Laws of
its respective state of formation as identified on Schedule 5.1, and
subject to the authority of the Bankruptcy Court each Seller has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now conducted, except for any failure to be in good standing or to
have requisite power and authority that in the aggregate could not reasonably be
expected to result in a Material Adverse Change. Schedule 5.1
identifies the only jurisdictions in which the ownership, use or leasing of each
Sellers assets and properties, or the conduct or nature of its business, makes
such qualification, licensing or admission necessary, except for those
jurisdictions in which the adverse effects of all such failures by such Seller
to be qualified, licensed or admitted and in good standing could not in the
aggregate reasonably be expected to result in a Material Adverse Change, and
Schedule 11.1(h)(i) sets forth all jurisdictions in which qualification,
licensing or other regulatory approvals are to be filed or obtained by
Sellers.
5.2 Authority
of Sellers. Each Seller has, upon entry of the Sale Order and
Bankruptcy Court approval, all requisite power and authority to execute and
deliver this Agreement and each Seller has, upon entry of the Sale Order and
Bankruptcy Court approval, all requisite power and authority to execute and
deliver each other agreement, document, instrument or certificate contemplated
by this Agreement or to be executed by such Seller in connection with the
consummation of the transactions contemplated by this Agreement (the “Sellers Documents”),
to perform their respective obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Sellers Documents and the
consummation of the transactions contemplated hereby and thereby will be duly
authorized by all requisite action on the part of each Seller prior to the
Closing. This Agreement has been, and each of the Sellers Documents
will be at or prior to the Closing, duly executed and delivered by each Seller
which is a party thereto and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto, the entry of the Sale Order)
this Agreement constitutes, and each of the Sellers Documents when so executed
and delivered will constitute, legal, valid and binding obligations of each
Seller, enforceable against the Sellers in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
5.3 Conflicts; Consents of Third
Parties.
(a) Except as
set forth on Schedule
5.3(a), none of the execution and delivery by the Sellers of this
Agreement or the Sellers Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Sellers with any of the
provisions hereof or thereof will conflict with, or result in any breach,
violation of or default (with or without notice or lapse of time, or both)
under, result in the creation of any Encumbrance, or give rise to a right of
acceleration, termination or cancellation under any provision of: (i) the
certificate of incorporation and bylaws or comparable organizational documents
of the Sellers; (ii) subject to entry of the Sale Order, any Contract or
material Permit to which any Seller is a party or by which any of the properties
or assets of Sellers are bound; or (iii) subject to entry of the Sale Order, any
applicable Law.
(b) Except as
set forth on Schedule
5.3(b) and subject to entry of the Sale Order, no material consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any other Person or Governmental Body (other than the
Bankruptcy Court) is required on the part of any Seller in connection with the
execution and delivery of this Agreement or the Sellers Documents, the
compliance by any Seller with any of the provisions hereof or thereof, the
consummation of the transactions contemplated hereby or the taking by any Seller
of any other action contemplated hereby. No other filings or
regulatory approvals are necessary for the Operation of the Business, other than
those listed on Schedule
11.1(h)(ii).
5.4 Title to
Assets; Sufficiency of Assets. The Sellers are
the owners of the Purchased Assets existing as of the date hereof, provided,
however, that with respect to an Alternative Transaction, Sellers are not owners
of the Shares, but are entitled under the Plan and Bankruptcy Court orders to
effect a transfer of the Shares to Buyer, by direct purchase of the Shares, or
by the cancellation of all existing outstanding equity and issuance of new
equity interests, or pursuant to the terms of one or more mergers,
consolidations, share exchanges, recapitalizations, reorganizations or other
similar transactions, with or without redomestication or conversion of the
Company or one or more of its subsidiaries into any form of entity under the
laws of any state.. The Sellers have good, valid and marketable title
to the Purchased Assets, except, in the event of an Alternative Transaction,
with respect to the Shares, which the Sellers nonetheless are authorized to
transfer. Subject to the entry of the Sale Order, and provided such
order has not been stayed, modified, vacated or reversed, upon the Closing,
Buyer shall acquire all of each Seller’s right, title and interest in the
Purchased Assets, free and clear of all Encumbrances, Claims and
Interests. The Purchased Assets (including without limitation the
computer software and Magenta assets), whether transferred directly or
transferred indirectly through an Alternative Transaction, are sufficient to
conduct the Business substantially as presently conducted.
5.5 Real
Property.
(a) No Seller
owns any real property.
(b) With
respect to the Real Property Leases:
(i) The
Sellers have made available to Buyer accurate and complete copies of (x) the
Real Property Leases under which any Seller holds a leasehold interest in each
leased real property, together with any amendments, modifications and
assignments of such Real Property Leases, and (y) all overleases in the
possession or control of Sellers with respect to the Real Property Leases
referred to in clause (x) above; and
(ii) The
Sellers own the Real Property Leases and the leasehold interests created
thereby, free and clear of all Encumbrances except for Permitted
Encumbrances.
(c) The
Sellers believe in good faith, after due investigation and inquiry, that the
Cure Amount and Cure Schedule for payment thereof set forth on Schedule 2.3(c) with
respect to the Real Property Leases is true and correct in all material
respects. No monetary defaults exist under any Real Property Leases
other than the monetary defaults required to be cured pursuant to Section 365 of
the Bankruptcy Code and listed on Schedule
2.3(c). To the Knowledge of Sellers, no non-monetary defaults
exist under any Real Property Leases other than the non-monetary defaults listed
on Schedule
5.5(c).
(d) Upon
Buyer’s acquisition of the Purchased Assets, Buyer will be able to operate the
Real Property Leases in substantially the same manner as operated by the Sellers
without violating any applicable zoning, use, subdivision or similar
law.
(e) To the
Knowledge of Sellers, no Seller has received written notice that any of the
improvements located on the Real Property Leases are not presently used and
operated in compliance with all material covenants, easements and restrictions
affecting such Real Property Leases.
(f) Except as
indicated on Schedule
5.5(f), the Real Property Leases comprise all of the real property used
or occupied in the operation of the Business.
5.6 Intellectual
Property.
(a) Except as
set forth on Schedule
5.6(a), to the best of Sellers’ Knowledge: (i) with respect to any
Intellectual Property owned by Sellers (as opposed to Intellectual Property of
which Sellers are a licensee), Sellers have all right, title and interest to all
Intellectual Property, without any conflict with the rights of others, (ii) no
Person other than the Sellers has the right to use the Intellectual Property
owned by the Sellers, (iii) the Sellers have the valid right to use, pursuant to
a license, sublicense or other agreement, any Intellectual Property used in the
Business that is owned by a party other than the Sellers, and (iv) Sellers’ use
of Intellectual Property owned by others does not conflict with the rights of
others.
(b) To the
Knowledge of Sellers, set forth on Schedule 2.1(e) are
all items of Intellectual Property used or useful in connection with or related
to the Business. Except as set forth on Schedule 5.6(b), the
Sellers have not granted any sublicense or similar right with respect to the
Intellectual Property.
(c) With
respect to each item that is required to be identified on Schedule 2.1(e) and
except as otherwise set forth on Schedule 5.6(c), (i)
at the Closing, to the Knowledge of Sellers, Buyer shall hold sole and exclusive
rights to all such Intellectual Property, and no other Person shall have
existing or contingent rights to use such Intellectual Property except with
respect to software that is licensed from unaffiliated third persons or to the
extent of licenses granted by Sellers, (ii) Sellers own or possess sufficient
rights in or to such item to assign to Buyer all rights of Sellers in such
Intellectual Property, and (iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of Sellers, is threatened, as of the date hereof, that challenges the
legality, validity, enforceability, registrations, use, or ownership of the
item.
5.7 Contracts.
(a) Schedule 2.1(c)(i)
and (ii) sets
forth a list, as of the date hereof, of all material Contracts to which each
Seller is a party or by which it is bound and that are used in or related to the
Business or the Purchased Assets. To the extent written, the Sellers
have delivered or made available to Buyer true, correct and complete copies of
all of the Contracts listed or required to be listed on Schedule 2.1(c)(i)
and (ii),
including all schedules, exhibits, annexes, amendments, and modifications
relating thereto.
(b) Except as
set forth on Schedule
5.7(b), each material Contract is a valid and binding agreement of such
Seller, and is in full force and effect, no Seller or, to the Knowledge of
Sellers, any other party thereto is in default or breach, and to the Knowledge
of Sellers, no event or condition has occurred which after notice or with the
lapse of time or both would constitute a default or breach, in any respect under
the terms of any material Contract. No Seller has received any
written notice of the intention of any party to terminate any material Contract
or that any party considers any Seller to be in material breach or material
default thereunder or in potential breach in a material respect or default
thereunder.
(c) The
Sellers reasonably believe in good faith, after due investigation and inquiry,
that the amounts set forth on Schedule 2.3(c) with
respect to the Contracts represent an accurate and complete statement of the
amounts due and owing and unpaid in respect of monetary defaults under the
Contracts (exclusive of any pecuniary loss, including legal fees and interest,
that may be asserted to be due and owing on account of such
defaults). No monetary defaults exist under any Contracts other than
the monetary defaults required to be cured pursuant to Section 365 of the
Bankruptcy Code and listed on Schedule
2.3(c). To the Knowledge of Sellers, no non-monetary defaults
exist under any Contract other than the non-monetary defaults listed on Schedule
5.7(c).
5.8 Employee
Benefits.
(a) Set forth
on Schedule
5.8(a) is a complete and correct list of all “employee benefit plans” as
defined by Section 3(3) of ERISA (whether or not subject thereto) and all
employment, consulting, retention, deferred compensation, bonus or other
incentive compensation, severance or termination pay, stock purchase, stock
option and other equity compensation, and all other employee benefit plans,
programs or arrangements of any kind that are or were sponsored, maintained or
contributed to, or required to be contributed to, by any Seller or an entity
which is (or at any relevant time was) a member of a “controlled group of
corporations” with or under “common control” with any Seller as defined in
Section 414(b) or (c) of the Code (an “ERISA Affiliate”) and
which provides or has provided benefits to any current or former Employee or
independent contractor of any Seller (collectively the “Employee
Plans”). The Sellers have made available to Buyer copies of
the documents comprising each Employee Plan.
(b) Except as
otherwise provided in Schedule
5.8(b):
(i) (A) each
Employee Plan has been operated and administered in all material respects in
accordance with its terms and applicable Law, including but not limited to ERISA
and the Code, (B) each Employee Plan that is intended to be “qualified” within
the meaning of Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service as to the qualified status of the
Employee Plan and, to the Knowledge of Sellers, nothing has occurred that could
reasonably be expected to cause the revocation of such letter, (C) none of the
Employee Plans is subject to Title IV of ERISA or Section 302 of ERISA or is a
“multiemployer plan” within the meaning of Section 3(37) of ERISA, and (D)
neither the Seller nor any ERISA Affiliate has incurred or could reasonably be
expected to incur any liability under Title IV or Section 302 of
ERISA;
(ii) none of
the Employee Plans provides coverage for medical or death benefits beyond
termination of service or retirement, other than pursuant to COBRA, or any
similar state or local Law;
(iii) neither
the execution and delivery of this Agreement or any of the ancillary agreements
by any Seller, nor the consummation of the transactions contemplated hereby or
thereby (either alone or contingent upon the occurrence of any additional or
subsequent events) will result in forgiveness of indebtedness or the
acceleration or creation of any rights of any Transferred Employee to
compensation or benefits under any Employee Plan (including the acceleration of
the accrual or vesting of any benefits under any Employee Plan or the
acceleration or creation of any rights under any severance, parachute or change
in control agreement or the right to receive any transaction bonus or other
similar payment); and
(iv) each
Employee Plan which provides for the payment of nonqualified deferred
compensation under Section 409A of the Code has been operated at all times in
good faith compliance with all applicable requirements of Section 409A of the
Code and the regulations promulgated thereunder.
5.9 Litigation. Except
for the Bankruptcy Cases or as set forth on Schedule 5.9, there
are no Legal Proceedings pending, or to the Knowledge of Sellers threatened,
against or affecting the Business, any Purchased Assets or any Transferred
Employee, other than those Legal Proceedings relating to routine claims and
those relating to claims covered by insurance.
5.10 No
Finder. Except as set forth on Schedule 5.10, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for any Seller in connection with the transactions contemplated by this
Agreement and no Person acting on behalf of any Seller is entitled to any fee or
commission or like payment from Buyer in respect thereof.
5.11 Environmental
Matters. To the Knowledge of Sellers: (a) the Purchased Assets
are in material compliance with all applicable Laws, regulations, or other legal
requirements relating to the protection of the environment or human health and
safety as it relates to Hazardous Materials (“Environmental Laws”),
(b) no Seller has received written notice of any investigation, suit, claim,
action, or proceeding relating to or arising under Environmental Laws with
respect to the Purchased Assets or the Business, nor are any of the same being
threatened in writing against any Seller or any Real Property Lease, (c) no
Seller has received any written notice of, or entered into, any obligation,
order, settlement, judgment, injunction, or decree involving outstanding
requirements relating to or arising under Environmental Laws and (d) there has
been no release of any Hazardous Materials into the environment at, onto, or
from any property leased by any Seller that would reasonably be expected to
result in material liability, costs or claims relating to any Environmental
Law. To the Knowledge of Sellers, Sellers have obtained and maintain
all Permits, licenses and other authorizations required under all applicable
Environmental Laws to operate the Business as it is currently being operated at
the real property leased by Sellers, and all such Permits, licenses and
authorizations are in full force and effect.
5.12 SEC
Filings; Financial Statements. Except as set forth on Schedule 5.12, the
Company has filed or furnished all registration statements, reports, schedules
and other documents required to be filed or furnished by it or any of the
Sellers with the SEC since December 31, 2007 (collectively, including any
amendments thereto, the “Company SEC
Reports”). As of their respective filing dates (or, if
amended, as of the date of such amendment), the Company SEC Reports were
prepared in accordance with, and complied in all material respects with, the
requirements of the Exchange Act and the Securities Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder, and none of the
Company SEC Reports contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except to the extent corrected by a Company SEC Report
filed subsequently (but prior to the date hereof). The Company has
made available to Buyer complete and correct copies of all amendments and
modifications effected prior to the date of this Agreement that have not yet
been filed by the Company with the SEC but which are required to be
filed. Each of the financial statements (including the related notes
and schedules) of the Company included in, or incorporated by reference into,
the Company SEC Reports (the “Financial
Statements”) complies in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP (except, in the case of unaudited
financial statements, as permitted by applicable rules and regulations of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations for the
periods then ended (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and the absence of footnotes). The
Sellers have no current intention to correct or restate, and to the Knowledge of
the Sellers, there is not any basis to correct or restate any of the Financial
Statements other than as set forth on Schedule 5.12. The Sellers have
not had any disagreement with any of their auditors regarding material
accounting matters or policies during any of its past three (3) full fiscal
years or during the current fiscal year-to-date other than as set forth on
Schedule 5.12.
5.13 Undisclosed
Liabilities. Except (i) as disclosed in the Financial
Statements and Bankruptcy Schedules or, (ii) for Liabilities incurred in the
Ordinary Course of Business since June 30, 2010 and (iii) as disclosed on Schedule 5.13, to the
Knowledge of Sellers, the Business does not have any liability of any nature,
whether or not absolute, accrued, contingent or otherwise, that would be
required to be disclosed on or in the Financial Statements pursuant to
GAAP. All Liabilities of Magenta as of October 31, 2010 are also
disclosed on Schedule
5.13.
5.14 Compliance
with Laws; Permits. Each Seller (i) has complied with, is in
compliance with and has operated the Business in compliance with all applicable
Laws in all material respects, and (ii) holds all material Permits, concessions,
grants, licenses, easements, variances, exemptions, consents, orders,
franchises, authorizations and approvals of all Governmental Bodies necessary
for the lawful conduct of the Business, except for any non-compliance or
non-possession that individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Change. No Seller has received any
written notice or other written communication from any Governmental Body or
other Person, other than as set forth on Schedule 5.17 with respect to Taxes,
(i) asserting any violation of, or failure to comply with, any requirement of
any Permit or (ii) notifying Seller of the non-renewal, revocation or withdrawal
of any Permit. Seller is in material compliance with the terms of the
Permits.
5.15 Absence
of Certain Changes. Since the Petition Date:
(a) there has
not been any Material Adverse Change;
(b) except as
set forth on Schedule
5.15(b) or with respect to expenditures approved as part of the DIP
Budget or otherwise by the Bankruptcy Court order, no Seller has paid,
discharged or satisfied any material claim, liability or obligation (whether
absolute, accrued, contingent or otherwise) outside the Ordinary Course of
Business;
(c) there has
not been any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the Business or any Purchased Assets which has resulted
in a Material Adverse Change;
(d) except as
set forth on Schedule
5.15(d), or with respect to the DIP Facility senior lien, no Seller has
permitted or allowed any of the Purchased Assets (real, personal or mixed,
tangible or intangible) to be subject to any Encumbrances which shall not be
released as of the Closing Date, provided that Buyer may assume $9,000,000 of
Pre-Petition Facilities under Section 3.1(b)(1)(C);
(e) no Seller
has sold, transferred, or otherwise disposed of any material properties or
assets (real, personal or mixed, tangible or intangible) outside the Ordinary
Course of Business;
(f) no Seller
has waived or otherwise released any material causes of actions, lawsuits,
judgments, claims and demands except in the Ordinary Course of
Business;
(g) no Seller
has disposed of, abandoned or permitted to lapse any material rights to the use
or registration of any Intellectual Property, or entered into any exclusive
license with respect to any of the Intellectual Property, or disposed of or
disclosed to any Person, other than representatives of Sellers, Buyer and the
other participants, and their respective representatives, in the Auction to
acquire the Business and the Purchased Assets pursuant to non-disclosure
agreements, any trade secret, formula, process, know-how not theretofore a
matter of public knowledge;
(h) except as
set forth on Schedule
5.15(h), there has not been any transaction or commitment made, or any
contract or agreement entered into, by any Seller material to the Business,
other than transactions and commitments in the Ordinary Course of Business
consistent with past practices and those contemplated herein and other than
approved by the Bankruptcy Court;
(i) except as
set forth on Schedule
5.15(i), there has not been any (A) employment, retention, bonus,
deferred compensation, severance, retirement or other similar agreement entered
into with any Employee, consultant or director (or any amendment to any such
existing agreement), (B) grant of any severance or termination pay to any
Employee, consultant or director or (C) change in compensation or other benefits
payable to any Employee, consultant or director pursuant to any severance or
retirement plans or policies thereof, in each case other than in the Ordinary
Course of Business; and
(j) no Seller
has agreed, whether in writing or otherwise, to take any action described in
this Section
5.15.
5.16 Accounts
Receivable. All Accounts Receivable of the Business are
reflected properly on the books relating to the Business, are to the Knowledge
of Sellers, valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their terms at
their recorded amounts, subject only to (a) the reserve for bad debts set forth
on the face of the Financial Statements as adjusted for operations and
transactions through the Closing Date in accordance with the Ordinary Course of
Business and (b) the asserted offsets set forth on Schedule
5.16.
5.17 Tax
Matters. Except as set
forth on Schedule
5.17:
(a) The
Sellers have timely filed with the appropriate Tax Authorities all Tax Returns
required to be filed with respect to the Purchased Assets and the income and
operations of the Business. All such Tax Returns are true, complete,
and correct in all material respects.
(b) The
Sellers have duly paid in full all Taxes and as of the Closing Date, there will
be no Encumbrances for Taxes (other than for current Taxes not yet due and
payable) upon the Purchased Assets.
(c) There is
no audit or other matter in controversy with respect to any Taxes due and owing
by any of the Sellers insofar as any such matter pertains to the Purchased
Assets or the income and operations of the Business, and there is no Tax
deficiency or claim assessed or, to the Knowledge of Sellers, proposed or
threatened (whether orally or in writing) against any of the Sellers, insofar as
any such deficiency or claim pertains to the Purchased Assets or the income and
operations of the Business.
(d) The
Sellers have withheld all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any Employee, independent contractor,
creditor, stockholder, or other third party, and such withheld Taxes have either
been duly paid to the proper Taxing Authority or set aside in accounts for such
purpose.
(e) The
Sellers have not waived any statutory period of limitations for the assessment
of any Taxes relating to the Purchased Assets or the income and operations of
the Business, or agreed to any extension of time with respect to an assessment
or deficiency for such Taxes, other than in the case of any such waivers or
extensions in respect of an assessment or deficiency of Tax the liability of
which has been satisfied or settled.
(f) The
Sellers are not foreign persons within the meaning of Section 1445 of the
Code.
(g) Sellers
shall separately provide to Buyer a list of all Priority Tax and Priority
Non-Tax Claims unpaid as of the execution date of this Agreement.
5.18 Labor
Matters.
(a) None of
the Sellers is a party or subject to any labor agreement with respect to its
Employees with any labor organization, union, group or association and the
Sellers do not have any employee unions (nor any other similar labor or employee
organizations) under local statutes, custom or practice. In the past
two years, none of the Sellers has experienced any attempt by organized labor or
its representatives to make any Seller conform to demands of organized labor
relating to any Employees or to enter into a binding agreement with organized
labor that would cover any Employee. There is no labor strike or
labor disturbance pending or, to the Knowledge of Sellers, threatened against
any Seller nor is any material grievance currently being asserted, and in the
past two years no Seller has experienced a work stoppage or other labor
difficulty, and is not and has not engaged in any unfair labor practice or been
subject to any unfair labor practice complaint or related or successor employer
application and no such complaints or applications are, to the Knowledge of
Sellers, threatened.
(b) Except as
set forth in Schedule
5.18, during the last year there has been no “mass layoff” or “plant
closing” as defined by WARN in respect of any Seller, and none of the Sellers
has been affected by any transactions or engaged in layoffs or employment
terminations sufficient in number to trigger application of any state, local or
foreign Law or regulation which is similar to WARN.
5.19 Employment
Matters.
(a) Sellers
shall separately provide to Buyer a list of all individuals, whether or not
actively at work as of the date hereof, who are employed by any of the Sellers
in connection with the Business and: (i) their department; (ii) their dates of
hire; (iii) their annual salary equivalent; and Sellers represent and warrant
that there are no non-standard bonus, commission or incentive plans or
agreements for or with them; or outstanding loans or advances made by or to
them; or verbal or written employment agreements which impacts or establishes
the terms of employment of those persons, and that such list is accurate and
complete as of the date indicated thereon (which date is the most recent date
for which the information contained thereon is readily available to the Sellers
as of the execution date of this Agreement). Correct and complete
copies of all employment agreements have been delivered to Buyer.
(b) Schedule 5.19(b)
contains a list of all independent contractors currently engaged by any Seller
and: (i) their address; (ii) their payment arrangements; and (iii) a brief
description of their jobs or projects currently in progress. Schedule 5.19(b) is
accurate and complete as of the date indicated thereon (which date is the most
recent date for which the information contained thereon is readily available to
the Sellers). Correct and complete copies of all written agreements
with such contractors have been delivered to Buyer.
(c) Except
for any limitations of general application which may be imposed under applicable
employment Laws or otherwise set forth on Schedule 5.19(c), and
except for any employment agreements otherwise disclosed to Buyer, each of the
Sellers has the right to terminate the employment of its Employees at will and
to terminate the engagement of any of its independent contractors without
payment to such Employee or independent contractor other than for services
rendered through termination and without incurring any penalty or
liability.
(d) To the
Knowledge of Sellers, the Sellers are in compliance, in all material respects,
with all Laws relating to employment practices. The Sellers have
delivered to Buyer accurate and complete copies of all current employee manuals
and handbooks, disclosure materials, policy statements and other materials
prepared, disclosed or promulgated by any Seller at any time during the last
three years relating to the employment of the current and former Employees of
any Seller.
5.20 Customers
and Suppliers. Schedule 5.20 sets
forth a complete and correct list of the twenty largest customers and the twenty
largest suppliers (each measured by dollar volume of sales and purchases as the
case may be) of the Business as of and for each of the last two (2) calendar
years, and the amount of such business done (by dollar volume of sales and
purchases as the case may be) with each such customer or supplier as of and for
each such year. No Seller has received any notice from any such
customer or supplier that such customer or supplier has ceased, or will cease,
to purchase or sell, as applicable, products or services to or from any Seller
or will or intends to substantially reduce such purchases or sales, as
applicable.
5.21 No
Outstanding Transactions. Other than this Agreement, the
Sellers are not bound by any agreement with respect to a possible sale, transfer
or disposition of any of the Purchased Assets or the Shares.
ARTICLE
VI
REPRESENTATIONS AND
WARRANTIES OF BUYER
As an
inducement to Sellers to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to
Sellers and agrees as follows:
6.1 Organization
of Buyer. Buyer is a newly formed corporation, duly organized,
validly existing and in good standing under the Laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted, except for any failure
to be in good standing or to have requisite power and authority that in the
aggregate could not reasonably be expected to result in a Material Adverse
Change.
6.2 Authority
of Buyer. Buyer has full power and authority to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement or to be executed by Buyer in
connection with the consummation of the transactions contemplated by this
Agreement (the “Buyer
Documents”), to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery by Buyer of this Agreement and the Buyer Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action on behalf of
Buyer. This Agreement has been, and each Buyer Document will be at or
prior to the Closing, duly executed and delivered by Buyer and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Buyer Document when so executed and
delivered will constitute, the legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws
affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including, without limitation,
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
6.3 Conflicts; Consents of Third
Parties.
(a) None of
the execution and delivery by the Buyer of this Agreement or the Buyer
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by Buyer with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination or
cancellation under any provision of (i) the organizational documents of Buyer,
(ii) any contract or permit to which Buyer is a party or by which
Buyer or its properties or assets are bound or (iii) any applicable
Law.
(b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any other Person or Governmental Body is
required on the part of Buyer in connection with the execution and delivery of
this Agreement or the Buyer Documents, the compliance by Buyer with any of the
provisions hereof or thereof, the consummation of the transactions contemplated
hereby without any material delay, the performance by Buyer of their respective
obligations hereunder, or the taking by Buyer of any other action contemplated
hereby, or for Buyer to conduct the Business.
6.4 No
Finder. Other than as listed on Schedule 5.10, no
other Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Buyer in connection with the transactions contemplated by this
Agreement, and no Person is entitled to any fee or commission or like payment
from Buyer in respect thereof.
6.5 No
Representation. Notwithstanding anything to the contrary
herein, Buyer makes no representation or warranty as to the fair market value of
the Purchased Assets being acquired hereunder.
6.6 Solvency. Buyer
is solvent and will not be left insolvent or with an unreasonably small capital
as a result of this transaction.
6.7 Buyer's
Investigation. As of the Closing Date, Buyer will have conducted its due
diligence investigation of Sellers, provided, however, that such investigation
does not limit in any way the representations and warranties of the Sellers
under this Agreement.
6.8 Sufficiency
of Funds. Buyer has unencumbered cash on hand or credit or capital
contribution arrangements with financially responsible third parties, or a
combination thereof, in an aggregate amount sufficient to enable it to pay the
Purchase Price and all other amounts payable by it in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE
VII
BANKRUPTCY COURT
MATTERS
7.1 Bankruptcy
Court Approvals. Sellers have filed and served the Sale Motion
pursuant to Sections 105, 363, and 365 of the Bankruptcy Code, as applicable,
and shall use all reasonable efforts and act in good faith to seek entry of an
order in form and substance satisfactory to Buyer (the “Sale Order”), which
among other things, authorizes the Sellers pursuant to (without limitation)
Sections 363(b), 363(f), 363(k), 363(1) and 365(b) of the Bankruptcy Code to
enter into and perform this Agreement and contains findings of fact and
conclusions of law including (without limitation) those to the following effect:
(i) that the Bankruptcy Court has core jurisdiction to enter the Sale Order;
(ii) that due and proper notice of the motion for entry of the Sale Order was
given to all parties entitled thereto; (iii) that the transactions contemplated
by this Agreement are supported by the Sellers’ sound business judgment; (iv)
that the transactions contemplated by this Agreement are in the best interests
of the Sellers and their bankruptcy estates; (v) that the consideration to be
received by Sellers under this Agreement is fair and reasonable; (vi) that
predicates exist under one or more applicable subsections of Section 363(f) of
the Bankruptcy Code to authorize a sale to Buyer of the Purchased Assets free
and clear of interests of all parties in the Purchased Assets; (vii) that the
Contracts and the Real Property Leases are executory contracts and unexpired
leases; (viii) that the Purchased Assets are sold free and clear of all
Encumbrances; (ix) that no third party consents are needed for closing other
than consents from Governmental Bodies; (x) that Sellers are relieved of any
future performance obligation under assigned Contracts and Real Property Leases
pursuant to Section 365(k) of the Bankruptcy Code; (xi) that the Buyer is a
good-faith purchaser entitled to the protections of Section 363(m); (xii)
authorizing the assumption and assignment of the Contracts and Real Property
Leases; (xiii) liquidating each default to be cured as a prerequisite to
assumption or setting such default for hearing; (xiv) (A) directing that each
liquidated default be cured within ten days after Closing by payment or
provision for payment of a liquidated sum, tender of which shall constitute a
complete satisfaction of all claims arising from defaults (both monetary and
non-monetary), or (B) provision for segregating such sum to cure those defaults,
following their liquidation as the Court may deem necessary to constitute
adequate assurance of prompt cure of defaults, or (C) authorizing the curing of
those defaults in such time and in such manner as may be agreed by the Buyer and
the counterparty to such contract or lease; (xv) authorizing the parties to
close; (xvi) over-ruling all objections to entry of the Sale Order; (xvii)
reserving jurisdiction to construe and enforce the Sale Order; (xviii) providing
that Buyer is not a successor in interest to Sellers or the business of Sellers
with respect to all parties having notice of the sale; (xix) providing that
Buyer shall not be liable for any pre- or post-petition debts of the Sellers
other than with respect to payment of the Purchase Price as allocated among the
Assumed Liabilities, Administrative Expense Claims including Fee Claims,
Priority Claims and Wind Down Obligations as set forth in this Agreement; (xx)
containing such other findings and provisions as may be reasonably requested by
Buyer; (xxi) that any and all additional amounts advanced under the DIP Facility
and Sale Facility shall be approved by the Court; (xxii) that all obligations of
the Sellers under and with respect to the DIP Facility and Sale Facility will be
secured by, pursuant to sections 364(c)(2) and section 364(d)(1) of the
Bankruptcy Code, a first priority lien senior to all prepetition and post
petition liens and security interests of all prepetition and post petition
lenders, and will also receive and be entitled, pursuant to Section 364(c)(1) of
the Bankruptcy Code, to a super-priority administrative expense claim over all
other costs and expenses of the kinds specified in, or ordered pursuant to,
sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b), 726 or any other
provisions of the Bankruptcy Code; (xxiii) that all advances made pursuant to
the DIP Facility and Sale Facility shall be deemed to be included in the Pivotal
GC Indemnification and Reimbursement Claim (as defined in the DIP Order); (xxiv)
that all obligations of the Sellers to any prepetition secured or unsecured
lenders have been released or shall be released through the Confirmation Order
as of the date thereof; (xxv) that the transfer of any assets from Magenta in
consideration for release and extinguishment of intercompany notes is for fair
value, if applicable; (xxvi) that Magenta has not received any prepetition or
post-petition advances from any prepetition or post petition lender; (xvii) to
the extent possible after exerting the best efforts of each of the parties, that
the provisions of Bankruptcy Rules 6004(g) and 6006(d) shall not apply to the
Sale Order; (xxviii) that the Buyer has not acted in a collusive manner with any
Person and the Purchase Price was not controlled by any agreement among bidders;
(xxix) that nothing contained in the Plan or any plan of reorganization or
liquidation will alter, conflict with, or derogate from, the provisions of this
Agreement, provided however, that if the Buyer elects to consummate this
transaction under the Plan, the terms of the Plan shall be conformed
to the extent that any provision of this Agreement is inconsistent therewith;
and (xxx) in the event of an Alternative Transaction, (i) the transfer of the
Shares to the Buyer pursuant to, and subject to the terms of, the Alternative
Transaction shall constitute a legal, valid and effective transfer of the
Shares, and shall, upon the consummation of the Closing, vest in the Buyer good
and marketable title in and to the Shares, free and clear of all Interests,
Claims, liens and Encumbrances of any kind or nature whatsoever, (ii) all
persons and entities, including, but not limited to, all debt security holders,
equity security holders, governmental, tax and other regulatory authorities,
lenders, trade and other creditors holding any claims to the Shares, are forever
barred and estopped from asserting against the Buyer, its successors or assigns
(to the extent allowed by law), its property, its officers, directors and
shareholders or the Shares, such persons’ or entities’ Claims and Interests, and
(iii) all such Claims and Interests shall be unconditionally released and
terminated as to the Shares.
7.2 Cooperation. Sellers
and Buyer shall consult with one another regarding pleadings which either of
them intends to file, or positions either of them intends to take before the
Bankruptcy Court in connection with, or which might reasonably affect the
Bankruptcy Court’s approval of the Sale Order, the Confirmation Order, the Sale
Facility or this Agreement. Sellers shall promptly and reasonably
provide Buyer and its counsel with all notices and communications received by
Sellers relative to any of the transactions contemplated by this Agreement,
provided that Sellers shall be entitled to maintain in confidence all
communications to and from prospective buyers other than Buyer, except as
required to make such communications public by the Bankruptcy
Court.
7.3 Seller
Actions. The Sellers shall use their commercially reasonable
efforts to have the Bankruptcy Court schedule a hearing on the Sale Motion and
Plan Confirmation as soon as possible so as to obtain entry by the Bankruptcy
Court of the Sale Order and Confirmation Order by no later than February 1, 2011
(the “Sale
Hearing”). The Sellers shall also use their commercially
reasonable efforts to obtain any other approvals or consents from the Bankruptcy
Court that may be reasonably necessary to consummate the transactions
contemplated in this Agreement. Furthermore, the Sellers shall serve
on all counterparties to the Contracts and Real Property Leases that are to be
transferred pursuant to Section 2.1(b) and
2.1(c)(i) to the extent not previously notified, a notice specifically
stating that the Sellers are or may be seeking the assumption and assignment of
such Contracts and Real Property Leases (“Assignment Notice”)
and shall notify such parties of the deadline for objecting to the assumption
and assignment and Cure Amount, which deadline shall not be less than two (2)
days prior to the Sale Hearing unless otherwise provided in the Bidding
Procedures Order. In cases in which the Sellers are unable to
establish that a default exists, the relevant Cure Amount shall be set at
$0.00. The Sale Motion and Assignment Notice shall reflect Buyer’s
agreement to perform from and after the Closing under the Contracts and Real
Property Leases, which, subject to Bankruptcy Court approval shall be the only
adequate assurance of future performance necessary to satisfy the requirements
of section 365 of the Bankruptcy Code in respect of the assignment to Buyer of
such Contracts and Real Property Leases.
7.4 Further
Actions. Buyer agrees that it will promptly take such actions
as are reasonably requested by the Sellers to assist in obtaining the Sale Order
and implementing the Bidding Procedures Order, including, without limitation,
furnishing affidavits or other documents or information for filing with the
Bankruptcy Court for the purposes, among others, of providing necessary
assurances of performance by Buyer under this Agreement and demonstrating that
Buyer is a “good faith” purchaser under section 363(m) of the Bankruptcy Code
and can provide assurance of future performance under the Contracts and Real
Property Leases. Buyer and Sellers agree to cooperate to make all necessary
regulatory filings by the Regulatory Filing Date and take any other necessary or
desirable actions to facilitate the performance of their obligations
hereunder.
7.5 Plan of
Reorganization. The parties acknowledge that the sale
contemplated by this Agreement is a component of Sellers’ Plan of Reorganization
(the “Plan”) filed with the Bankruptcy Court herewith. The Plan shall
be modified to conform the Plan to the terms and conditions of this
Agreement. The parties further agree that confirmation of the Plan
and the Effective Date of the Plan are not preconditions to the approval or
Closing of the Sale to Buyer under the terms and conditions set forth
herein.
ARTICLE
VIII
COVENANTS
The
respective parties hereto covenant and agree to take the following actions
between the date hereof and the Closing Date.
8.1 Access to
the Business. Sellers shall afford to the officers, employees
and authorized representatives of Buyer (including, without limitation,
independent public accountants and attorneys) reasonable access during normal
business hours to the offices, properties, Employees and business and financial
records of the Sellers to the extent Buyer shall reasonably deem necessary or
desirable and shall furnish to Buyer or its authorized representatives such
additional information concerning the Purchased Assets, the Business and the
operations of Sellers as shall be reasonably requested, including all such
information as shall be necessary to enable Buyer or its representatives to
verify the accuracy of the representations and warranties contained in this
Agreement, to verify that the covenants of Sellers contained in this Agreement
have been complied with, and to determine whether the conditions set forth in
Article XI have been satisfied. Buyer agrees that such investigation shall be
conducted in such a manner as not to interfere unreasonably with the operations
of Sellers. No investigation made by Buyer or its representatives
hereunder shall affect the representations and warranties of Sellers
hereunder. Buyer expressly acknowledges that any information it
receives pursuant to this Section 8.1 is
subject to the confidentiality provisions set forth in Section
13.2.
8.2 Preserve
Accuracy of Representations and Warranties. Each of the
parties hereto shall refrain from taking any action that would render any
representation or warranty contained in Article V or VI of this Agreement
inaccurate as of the Closing Date.
8.3 Operations
Prior to the Closing Date. Between the Sale Hearing and the
Closing, Sellers will cause the Business to be operated in the Ordinary Course
of Business and pursuant to the terms of the DIP Facility Budget, and shall not
take any action inconsistent with the transactions contemplated hereby and will
not permit any material transaction outside the Ordinary Course of Business in
respect of the Business without the express written approval of Buyer (which
shall not be unreasonably withheld) or unless so ordered by the Bankruptcy Court
after notice to Buyer. Sellers shall take no action to the detriment
of Buyer or the operation of the Business by Buyer, following the Sale Hearing.
Sellers acknowledge and agree that prior to the Closing Date Sellers are
operating the Business on behalf of, and in trust for, the Buyer, and shall take
no action in contravention thereof. Without limiting the generality of the
foregoing, Sellers shall not, without the express written approval of Buyer,
which shall not be unreasonably withheld, or authorization by order of the
Bankruptcy Court:
(a) except as
set forth on Schedule
5.6(c), fail to maintain or renew all copyright, trademark and patent
applications or fail to maintain any registered copyrights, trademarks or
patents;
(b) fail to
maintain in good working order any Equipment, unless it has a de minimis impact
upon the Business;
(c) fail to
maintain all insurance covering loss or destruction of the Purchased Assets or
conduct of the Business currently in effect;
(d) fail to
maintain all material relationships with lessors, licensors, suppliers,
customers, and employees of the Business;
(e) fail to
preserve the strict confidence of all trade secrets related to the Business,
subject to the Sellers’ ability to disclose information to other prospective
bidders and their advisers in accordance with the terms of the standard
non-disclosure agreement furnished to prospective bidders;
(f) enter
into any contract, agreement, undertaking or commitment affecting the Business
outside of the Ordinary Course of Business or enter into any agreement,
undertaking or commitment that will have the effect of competing with Buyer’s
operation of the Business;
(g) sell,
lease (as lessor), transfer or otherwise dispose of (including any transfers
from a Seller to any of its Affiliates), or mortgage or pledge, or impose or
suffer to be imposed any Encumbrance on, any of the Purchased Assets or Shares,
other than consenting to the assignment of the DIP Facility from the
DIP Lenders to Buyer pursuant to the terms hereof;
(h) unless to
Sellers’ benefit or in the Ordinary Course of Business, amend, modify, extend,
renew or terminate any Contract or Real Property Lease that is to be assumed by
Buyer, or terminate, waive or amend any right under any of the Contracts or Real
Property Leases that are to be assumed by Buyer;
(i) enter
into any business or arrangement or otherwise take any action that would
reasonably be expected to have a material adverse impact on the ability of the
Buyer to obtain any material consents of Governmental Bodies necessary in
connection with the Business;
(j) intentionally
fail to notify Buyer in writing of the commencement of any material litigation
against any Seller or the Business;
(k) hire any
new individuals or increase salaries or wages, declare bonuses, increase
compensation or benefits or institute any new employment arrangement, benefit
plan or program with respect to any Employee, except as required by law, as
required by the terms of previously existing Employee Plans or in the Ordinary
Course of Business;
(l) intentionally
fail to notify Buyer in writing of the proposed entry into any Contract or Real
Estate Lease and the intention to reject any Contract or Real Estate Lease;
or
(m) enter
into any commitment for capital expenditures except pursuant to the DIP Facility
Budget; or
(n) fail to
comply with all requirements of Law applicable to the Purchased Assets, and
promptly after receipt thereof, give Sellers copies of any notice received from
any Governmental Body or other Person alleging any violation of or liability
under any such Requirements of Law.
To the
extent that there is any ambiguity as to whether a contract, agreement,
undertaking or commitment affects the Business or the Purchased Assets or is
outside of the Ordinary Course of Business, Sellers shall consult with Buyer in
good faith prior to entering into such contract, agreement, undertaking or
commitment. For purposes of clarity, nothing in this Section 8.3 shall be
construed to in any way limit Sellers’ ability to auction the Purchased Assets
to the highest bidder at the Auction.
8.4 Notification
by Sellers of Certain Matters. During the period prior to the
Closing Date, Sellers will promptly advise Buyer in writing of (a) any notice,
objection or other communication from any third Person alleging that the consent
of such third Person is or may be required in connection with the transactions
contemplated by this Agreement, (b) any material default under any Contract or
Real Property Lease or event which, with notice or lapse of time or both, would
become such a default on or prior to the Closing Date and of which Sellers have
Knowledge, and (c) any Material Adverse Change.
8.5 Regulatory
Approvals. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to apply to all applicable Governmental Bodies for any approval required for the
consummation of the transactions contemplated by this Agreement, shall prosecute
such applications in good faith and with due diligence before the Governmental
Bodies, and in connection therewith shall take such action or actions as may be
necessary or reasonably required in connection with the applications, including
furnishing to the Governmental Bodies any documents, materials, or other
information requested by them in order to obtain the required approvals as
expeditiously as practicable. In addition, to the extent practicable, the
parties hereto shall use their best efforts to (a) promptly notify each other of
any communication to that party from any Governmental Body with respect to the
applications described in this paragraph, (b) permit a representative of the
other party reasonably acceptable to the first party to attend and participate
in meetings (telephonic or otherwise) with any Governmental Body, and (c) permit
the other party to review in advance, as reasonable, any proposed written
communication to a Governmental Body. No party hereto shall knowingly take, or
fail to take, any action if the intent or reasonably anticipated consequence of
such action or failure to act is, or would be, to cause any Governmental Body
not to grant approval of any application or materially to delay such approval,
to the material detriment of the other party. However, Buyer shall be
solely responsible for obtaining authorization to offer telecommunications
services in any jurisdiction in which it does not currently hold such
authorization. Sellers shall provide Buyer with such assistance in
obtaining such authorizations as Buyer shall reasonably request, and DIP
Facility funds shall be made available for all Regulatory Approval actions of
Buyer and Sellers. Buyer shall also file all reports, and cause to be
delivered all notices to Sellers’ telecommunications service customers required
by 47 C.F.R. Section 64.1120(e) and comparable State regulations.
8.6 Publicity. Neither
the Sellers nor Buyer shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other party hereto, which approval
will not be unreasonably withheld or delayed, unless, in the sole judgment of
Buyer or the Sellers, disclosure is otherwise required by applicable Law or by
the Bankruptcy Court with respect to filings to be made with the Bankruptcy
Court in connection with this Agreement or by the applicable rules of any stock
exchange on which Buyer or the Sellers list securities, provided that the party
intending to make such release shall use its reasonable efforts consistent with
such applicable Law or Bankruptcy Court requirement to consult with the other
party with respect to the text thereof.
8.7 Sellers’
Name Change. The Sellers shall, following the Closing, upon
any request of Buyer, execute and deliver to Buyer appropriate documents to
change the names of each Seller (except a Seller whose Shares have been acquired
by Buyer) to a name substantially dissimilar to “Global Capacity”, “20/20
Technologies”, “Capital Growth”, “CentrePath”, “CenterPath”, “Nexvu
Technologies” and “FNS 2007.” The Sellers shall thereafter file any necessary
documents to reflect the foregoing name changes with the appropriate
Governmental Body for each jurisdiction in which each Seller is organized and/or
qualified to do business. Notwithstanding the foregoing, nothing herein shall be
deemed to limit or restrict the ability of Buyer to utilize such names in
connection with its operation of the Business or otherwise.
8.8 Additional
Matters. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper, or advisable under applicable Laws and
regulation 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. Prior to the Closing, Sellers shall take any and all
necessary actions to transfer, assign, record or perfect in its name record
title to any of its Purchased Assets that is not presently held or recorded in
its name, including, without limitation, filing any necessary notices of
assignment in the United States Patent and Trademark Office or United States
Copyright Office, as applicable, with respect to the Intellectual
Property.
8.9 Post-Closing
Operation of Non-Transferred Assets. Subsequent to Closing, to
the extent any Non-Transferred Assets exist, Buyer or Seller, in the sole
determination of Buyer, shall operate the Non-Transferred Assets pursuant to a
management agreement agreed to between Sellers and Buyer until the
Non-Transferred Assets are transferred to Buyer.
ARTICLE
IX
AGREEMENTS REGARDING
EMPLOYEES
9.1 Employees. Buyer
shall have the right, but not the obligation, to employ or engage as contractors
any or all of the Employees as Buyer determines in its sole and absolute
discretion. The terms of employment offered to any Employees shall be
determined by Buyer in its sole and absolute discretion. Any
Employees actually employed by Buyer are referred to herein as “Transferred
Employees.” Buyer shall deliver a list of the Employees it
intends to hire prior to the Sale Order Date. Sellers shall deliver
to Buyer on or before the Closing Date all personnel files and employment
records relating to the Transferred Employees (including completed I-9 forms and
attachments with respect to all Transferred Employees, except for such employees
as Seller certifies in writing are exempt from such requirement). Buyer may, at
its option in its sole discretion offer a management incentive plan to any of
the Transferred Employees on rates commensurate with the industry in
consideration for nonsolicitation of the Sellers’ existing customers for a
period of one year following the Closing Date in the event they are terminated
within such time period. Nothing herein shall limit Sellers’ covenants set forth
herein not to compete with Buyer prior to or following the Sale Hearing. In the
event of an Alternative Transaction, Buyer may require, as a condition of
Closing, that Company terminate or cause to be terminated any Employees
designated by Buyer, in its sole and absolute discretion.
9.2 Employee
Plans. Unless the Buyer, in its sole discretion, elects on or
after the Closing, to adopt any of Sellers’ Employee Plans, the Sellers shall
retain (or, in the event of an Alternative Transaction, Sellers shall otherwise
cause to be terminated, assumed by one or more third parties, or otherwise
disposed of) (i) all liabilities and obligations in respect of its past, present
and future employees under applicable Laws and (ii) all liabilities and
obligations under any “employee benefit plan” within the meaning of Section 3(3)
of ERISA and any other employee benefit plan or program maintained or
contributed to by Sellers or any ERISA Affiliate, including any Employee Plans,
and Buyer shall have no liability or obligation whatsoever under the Employee
Plans nor shall Buyer assume the sponsorship of the Employee Plans. Buyer may,
at its option, in its sole discretion, offer such benefit plans or employee
plans to any Transferred Employees on such terms and conditions as are
commensurate with other companies of the size of Sellers in the industry,
provided that nothing herein shall require Buyer to offer any employee or other
benefit plans to Transferred Employees.
9.3 Other
Obligations. Except as otherwise required by Law, specified in
this Agreement, set forth on Schedule 9.3, or otherwise agreed in
writing by Buyer and/or its Affiliates (including by inclusion in the Wind Down
Budget), neither Buyer nor its Affiliates shall be obligated to provide any
severance, separation pay, or other payments or benefits, including any key
employee retention payments, to any Employee of the Sellers on account of any
termination of such Employee’s employment on or before the Closing Date, and
such benefits (if any) shall remain obligations of the Sellers.
9.4 Forms W-2
and W-4. The Sellers and Buyer shall adopt the “standard
procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements) and
Forms W-4 (Employee’s Withholding Allowance Certificate) regarding the
Transferred Employees. Under this procedure, Sellers shall keep on
file all IRS Forms W-4 provided by the Transferred Employees for the period
required by applicable law concerning record retention and Buyer shall obtain
new IRS Forms W-4 with respect to each Transferred Employee.
9.5 Employee
Communications. Prior to making any written or oral
communications to the Employees pertaining to compensation or benefit matters
that are affected by the transactions contemplated by this Agreement, Sellers
shall provide Buyer with a copy of the intended communication.
ARTICLE
X
TAXES
10.1 Transfer
Taxes. No Seller owns any real property. Buyer shall have no
liability hereunder for any Transfer Taxes. The Sellers shall seek to
include in the Sale Order with respect to this Agreement a provision that
provides that the transfer of the Purchased Assets shall be free and clear of
any stamp or similar taxes under Section 1146(a) of the Bankruptcy
Code. The Sellers and Buyer shall cooperate and otherwise take
commercially reasonable efforts to obtain any available refunds of Transfer
Taxes.
10.2 Purchase
Price Allocation. The allocation of the Purchase Price (plus
any Assumed Liabilities, to the extent permitted by the Code) among the
Purchased Assets shall be determined pursuant to Schedule 10.2
prepared by Buyer as soon as practicable on or after the Closing Date (or, in
the event of an Alternative Transaction, in accordance with such other method as
is customary and in accordance with generally accepted accounting principles in
connection with an acquisition of equity interests). Buyer and the
Sellers hereby covenant and agree that the values assigned to the Purchased
Assets in Schedule
10.2 shall be conclusive and final for all purposes of this Agreement, to
the extent permitted by the Code. Buyer and the Sellers further
covenant and agree not to take a position on any Tax Return or in any judicial
or administrative proceeding that is inconsistent with the allocations specified
in Schedule
10.2, provided that nothing contained herein shall prevent the Sellers
and Buyer from settling any proposed deficiency or adjustment by any Taxing
Authority based upon or arising out of the Purchase Price allocation, and
neither the Sellers nor Buyer shall be required to litigate before any court,
any proposed deficiency or adjustment by any Taxing Authority challenging such
allocation. Buyer and the Sellers each shall file with their
respective U.S. federal income Tax Returns (if otherwise required to be filed)
for the tax year in which the Closing occurs an IRS Form 8594 (or other
applicable form) in accordance with Schedule
10.2. Buyer and the Sellers each shall deliver to the other a
copy of the IRS Form 8594 (or other applicable form), as so filed with its
respective U.S. federal income Tax Return, if any, within thirty (30) days of
the filing of such return.
10.3 Tax
Returns. Sellers
shall prepare or cause to be prepared all Tax Returns relating to the Purchased
Assets for the periods ending on or prior to the Closing Date. Buyer
shall prepare and file all Tax Returns relating to all real property taxes,
personal property taxes, or similar ad valorem obligations levied with respect
to the Purchased Assets (excluding any Transfer Taxes) for any taxable period
beginning on or before and ending after the Closing Date (a “Straddle Period,” and
such taxes, “Straddle
Period Taxes”), whether imposed or assessed before or after the Closing
Date, other than Straddle Period Tax Returns that Sellers are required to file
by applicable law. The Liability for payment of each such Straddle
Period Tax shall be prorated between Buyer and Sellers at the Closing Date based
on 100% of the amount of such Straddle Period Tax imposed for the prior taxable
period. The portion of each such Straddle Period Tax that is
allocable to the Sellers shall be the product of (i) 100% of the amount of such
tax for the prior taxable period and (ii) a fraction, the numerator of which is
the number of days in the Tax period ending on the Closing Date and the
denominator of which is the number of days in the entire tax
period. The amount of tax allocable to the Sellers pursuant to this
section in excess of amounts allocated thereto as provided for as Priority
Claims or Administrative Expense Claims shall be withheld from the Purchase
Price, and the Buyer shall be responsible for remitting all Straddle Period
Taxes to the appropriate Taxing Authority when due.
10.4 Cooperation. Sellers
and Buyer agree to furnish to each other upon request, as promptly as
practicable, such information and assistance relating to the Purchased Assets
and the Business (including access to books and records related to the Business)
as is reasonably necessary for the filing of all Tax Returns and other tax
filings, the making of any election related to taxes, the preparation for any
audit by any Taxing Authority, and the prosecution or defense of any claim, suit
or proceeding relating to any Tax Return. Sellers and Buyer shall
cooperate with each other in the conduct of any audit or other proceeding
related to taxes. Sellers and Buyer shall provide timely notice to
each other in writing of any pending or threatened tax audits, assessments or
litigation with respect to the Purchased Assets or the Business for any taxable
period for which the other party may have Liability under this
Agreement.
ARTICLE
XI
CONDITIONS
PRECEDENT
11.1 Conditions
Precedent to Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by Buyer in whole or in part to
the extent permitted by applicable Law):
(a) each of
the representations and warranties of the Sellers set forth in Article V shall
be true and correct in all material respects as of the Closing Date (or on the
date when made in the case of any representation and warranty which specifically
relates to an earlier date) with the same force and effect as though made on and
as of the Closing Date (or such earlier date), and Buyer shall have received a
certificate signed by an authorized officer of the Sellers on behalf of all the
Sellers, dated the Closing Date, to the foregoing effect;
(b) the
Sellers shall have performed and complied in all material respects with all
obligations and agreements required in this Agreement to be performed or
complied with by them prior to the Closing Date, and Buyer shall have received a
certificate signed by an Executive Officer of the Sellers on behalf of all
Sellers, dated the Closing Date, to the forgoing effect;
(c) all
required consents and all other consents, approvals and actions of, filings with
and notices to any Governmental Body or any other Person set forth on Schedule 5.3(b) shall
have been duly obtained, delivered, made or given and shall be in full force and
effect, provided that Buyer may waive this requirement and Close on the
Regulatory Approval Date, with certain Purchased Assets as Non-Transferred
Assets under Section 2.5, in its sole discretion;
(d) there
shall not have occurred an event or failure to act causing a Material Adverse
Change;
(e) the
Sellers shall have delivered, or caused to be delivered, to Buyer all of the
items set forth in Section
4.2(a);
(f) Buyer
shall not have otherwise terminated this Agreement in accordance with the terms
of Section
12.1;
(g) the Sale
Order and Confirmation Order, as applicable, shall have been entered and shall
not be subject to a appeal or a stay and the Bankruptcy Court shall have
provided such other relief as may be necessary or appropriate to allow the
consummation of the transactions contemplated by this Agreement. The
Confirmation Order shall be acceptable to Buyer and shall contain terms and as
requested by Buyer. The Sale Order and Confirmation Order, as applicable, shall
have become final and non-appealable orders, unless this condition has been
waived by Buyer in its sole discretion;
(h) Telecommunications
Regulatory Matters.
(i) Buyer
will have been duly licensed and/or registered as a provider of regulated
telecommunications services and be in good standing to so provide such regulated
telecommunications services in each of the jurisdictions set forth in Schedule 11.1(h)(i)
hereto, in which jurisdictions the nature of the business to be conducted by
Buyer after the Closing Date makes such licensing or registration of Buyer
necessary, unless waived by Buyer in its sole discretion.
(ii) Schedule 11.1(h)(ii)
hereto sets forth a list of all filings and regulatory approvals required to be
obtained under the Telecommunications Laws to enable Buyer to purchase the
Purchased Assets and consummate the transaction contemplated by this Agreement,
other than such filings and regulatory approvals that pertain solely to Buyer’s
authorization to operate the Purchased Assets after the Closing Date (i.e., applications for
certificates of public convenience and necessity or similar authorizations), and
includes all filings and regulatory approvals required for Sellers to hold full
and complete qualification, licensing and other regulatory approvals for all
conduct of the Business.
(iii) All
necessary consents, approvals, and authorizations required under the State
Telecommunications Laws for the transfer to Buyer of the customer accounts and
other assets of Sellers used in providing intrastate telecommunications services
will have been obtained, except for approvals relating solely to Non-Transferred
Assets approved by Buyer in its sole discretion.
(iv) There
shall be no action, order, claim, suit proceeding, litigation, review, notice
or, to the Knowledge of Sellers, investigation or inquiry, pending before the
FCC or any State Regulatory Commission, relating to or affecting Sellers or any
of their respective properties or assets or any officer or director or
shareholder of Sellers, or the payments of sums owing to such authorities as set
forth on Schedule 5.12 hereto; and
(i) Any
necessary management agreement shall have been entered into and any necessary
Bankruptcy Court approvals obtained to do so;
(j) All
necessary documents, assignments and agreements have been executed to document
the DIP Facility and Sale Facility and the Buyer has a fully perfected first
priority security interest and priming lien in all prepetition and postpetition
assets; and
(k) All
assets of Magenta have been included as Purchased Assets, if the Buyer has given
Sellers notice regarding such assets; further, all liabilities of Magenta have
been discharged or released, under the Plan or otherwise.
11.2 Conditions
Precedent to the Obligations of Sellers. The obligations of
the Sellers to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by the Sellers in whole
or in part to the extent permitted by applicable Law):
(a) each of
the representations and warranties of Buyer set forth in Article VI shall be
true and correct in all material respects on and as of the date hereof and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date) with the same force and
effect as though made on and as of the Closing Date (or such earlier date),
except that those representations and warranties that are qualified by
materiality, Material Adverse Change or similar phrase shall be true and correct
in all respects as of the date hereof and on and as of the Closing Date (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date) with the same force and effect as
though made on and as of the Closing Date (or such earlier date), and Sellers
shall have received a certificate signed by an authorized officer of Buyer,
dated the Closing Date, to the foregoing effect;
(b) Buyer
shall have performed and complied in all material respects with all obligations
and agreements required by this Agreement to be performed or complied with by
Buyer on or prior to the Closing Date, and the Sellers shall have received a
certificate signed by an authorized officer of Buyer, dated the Closing Date, to
the foregoing effect;
(c) all
required consents, approvals and actions of, filings with and notices to any
Governmental Body or any other Person set forth on Schedule 5.3(b) shall
have been duly obtained, made or given and shall be in full force and
effect;
(d) Buyer
shall have delivered, or caused to be delivered, to the Sellers all of the items
set forth in Section
4.2(b);
(e) at or
prior to the Closing, Buyer shall have made arrangements, satisfactory to the
Buyer in its sole discretion, to promptly pay the Cure Amount set forth on the
Cure Schedule,
so that the Contracts and Real Property Leases may be assumed by the Sellers and
assigned to Buyer in accordance with the provisions of section 365 of the
Bankruptcy Code;
(f) at or
prior to the Closing, Buyer shall have paid the Closing Cash Payment through an
advance on the Sale Facility;
(g) Buyer
shall hold authorization to offer telecommunications services, if required, in
each jurisdiction in which Sellers provide such services; or, in those States in
which Non-Transferred Assets are located, Buyer shall know of no reason why it
cannot obtain all such authorizations from State Regulatory Commissions in the
Ordinary Course of Business;
(h) The
Sellers shall not have otherwise terminated this Agreement in accordance with
the terms of Section
12.1; and
(i) Buyer
shall have provided Sellers with the Sale Facility on substantially the same
terms and conditions (including priority of liens) as the DIP
Facility.
ARTICLE
XII
TERMINATION
12.1 Termination. Anything
contained in this Agreement to the contrary notwithstanding, this Agreement may
be terminated at any time prior to the Closing Date:
(a) by the
mutual consent of Buyer and Sellers.
(b) automatically
and without any action or notice by either the Sellers to Buyer, or Buyer to the
Sellers, immediately upon:
(i) the
issuance of a final and nonappealable order, decree, or ruling or any other
action by a Governmental Body to restrain, enjoin or otherwise prohibit the
transfer of the Purchased Assets or any material portion thereof contemplated
hereby;
(ii) approval
by the Bankruptcy Court of a transaction otherwise selling or disposing of the
Purchased Assets; or
(iii) acceptance
by Sellers of a transaction otherwise selling or disposing of the Purchased
Assets or the Shares pursuant to an Alternative Transaction).
(c) by Buyer,
in its sole discretion:
(i) if the
Bankruptcy Court has not entered the Sale Order by February 1,
2011;
(ii) if there
has been a violation or breach by the Sellers of any material representation,
warranty or covenant contained in this Agreement that has not been waived by
Buyer;
(iii) on or at
any time after the Regulatory Approval Date if the Closing shall not have
occurred due to failure to obtain the Regulatory Approval of a Governmental
Body;
(iv) if, prior
to the Closing Date, Sellers’ Bankruptcy Cases shall be converted into a case
under Chapter 7 of the Bankruptcy Code or dismissed, or if a trustee or examiner
with expanded powers is appointed in the Bankruptcy Cases;
(v) if there
shall be excluded from the Purchased Assets any Contract that is not assignable
or transferable pursuant to the Bankruptcy Code or otherwise without the consent
of any Person other than any Seller, to the extent that such consent shall not
have been given prior to the Closing and such Contract shall, in the opinion of
Buyer in its absolute discretion, prevent it from effectively operating the
Business; or
(vi) Buyer and
Sellers fail to agree to a Wind Down Budget or a Sale Facility Budget by the
Closing Date.
(d) by
Sellers, prior to the Closing:
(i) if there
has been a violation or breach by Buyer of any material representation or
warranty contained in this Agreement or any action has occurred with respect to
the condition precedent set forth in Section 11.2 that (x) has rendered the
satisfaction of any condition to the obligations of Sellers impossible or is not
curable or, if curable, has not been cured within ten (10) days following
receipt by Buyer of written notice of such breach from Sellers, and (y) has not
been waived by Sellers;
(ii) at any
time after the Regulatory Approval Date if the Closing shall not have occurred
due to failure to obtain the approval of a Governmental Body;
(iii) if
Buyer’s obligation to close (other than the accuracy of any Seller’s
representations or warranties) have been met, there is no pending appeal and
stay pending appeal of the sale contemplated hereunder, Sellers are ready,
willing and able to close the sale contemplated hereunder, no Seller is in
default of this Agreement, nor is there an event which, with the giving of
notice or passing of time, would be a default to this Agreement, and Buyer fails
to consummate the Closing within thirty (30) Business Days following the date of
satisfaction of the last such condition to Closing;
(iv) if Buyer
and Sellers fail to agree to a Wind Down Budget or a Sale Facility Budget by the
Closing Date.
12.2 Effect of
Termination. In the event of termination pursuant to Section 12.1, this
Agreement shall become null and void and have no effect and no party shall have
any liability to any other (other than pursuant to the provisions of this Article XII, Article XIII,
provisions of this Agreement that relate to sale of all or part of the Purchased
Assets to a purchaser other than the Buyer, and any other provisions of this
Agreement that expressly survive termination), provided, however, that nothing
in this Section
12.2 shall relieve Buyer or Seller of any liability for a breach of this
Agreement prior to the date of termination. Should Sellers be in
breach of any of their representations or warranties contained in this
Agreement, Buyer shall be entitled to waive such breach or elect to terminate
this Agreement. If Buyer elects to waive such breach and close the
transactions contemplated herein, Buyer shall not be entitled to any damages as
a result of such breach and shall not be entitled to set off any of the monies
it owes to Sellers under this Agreement as a result of such breach of
representation or warranty.
ARTICLE
XIII
MISCELLANEOUS
13.1 Survival. No
representations, warranties, covenants and agreements of Seller and Buyer made
in this Agreement, including Buyer’s assumption of the Assumed Liabilities,
shall survive the Closing Date except where, and only to the extent that, the
terms of any such covenant or agreement expressly provide for obligations
extending after the Closing, or as otherwise expressly provided in this
Agreement.
13.2 Confidential
Nature of Information. The following paragraph is subject to
any disclosure requirements under the Bankruptcy Code or imposed by the
Bankruptcy Court:
Buyer on
the one hand and Sellers on the other hand, each agree that it will treat in
confidence all documents, materials and other information which it shall have
obtained regarding the 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, at
the request of the disclosing party, will return to the other party all copies
of nonpublic documents and materials which have been furnished in connection
therewith and all transcripts, notes and summaries thereof. Such non-public
documents, materials and information shall not be communicated to any third
Person (other than to Buyer’s and Sellers’ counsel, accountants or financial
advisors, in each case subject to the recipient’s agreement to keep the same
confidential). No other party shall use any confidential information in any
manner whatsoever except solely for the purpose of evaluating the proposed
purchase and sale of the Purchased Assets; provided, however, that after the
Closing, Buyer may use or disclose any confidential information included in the
Purchased Assets or otherwise reasonably related to the Purchased Assets and the
Business. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) is or becomes available to such party from a source other than the
disclosing party, (ii) is or becomes available to the public other than as a
result of disclosure by such party or its agents or (iii) is required to be
disclosed under applicable law or judicial process, but only to the extent it
must be disclosed. Notwithstanding clause (iii) of the preceding
sentence, in the event that any party is required to disclose any confidential
information by applicable law, judicial process or rule of any national
securities exchange, it is agreed that the party subject to such requirement
will provide the other party with prompt notice of such requirement and such
party may seek an appropriate protective order if it so desires.
13.3 Notices. Any
notices, demands, requests, consents, approvals, reports or other communications
required or permitted by this Agreement must be (i) in writing and is deemed
given when (a) delivered personally to the recipient, (b) sent by confirmed
facsimile before 5:00 p.m. Eastern Time on a Business Day with a copy of such
facsimile sent to the recipient by reputable overnight courier service (charges
prepaid) on the same day, (c) five (5) days after deposit in the U.S. mail,
mailed by registered or certified mail, return receipt requested, postage
prepaid, or (d) one Business Day after being sent to the recipient by reputable
overnight courier service (charges prepaid); and (ii) addressed to the other
party at the address set forth below, or at such other address as either party
may designate from time to time in writing in accordance with this
Section.
|
If
to Buyer, to:
|
Pivotal
Global Capacity LLC
c/o
Pivotal Group, Inc.
0000
X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX
00000
Attention: Xxxxx
Xxxxx
Telephone: 000-000-0000
Facsimile:
000-000-0000
XXxxxx@XxxxxxxXxxxx.xxx
|
|
with
a copy to:
|
|
|
Xxxxx
and Roca, LLP
00
Xxxxx Xxxxxxx Xxx
Xxxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile:
000-000-0000
XXxxxxxx@XXXxx.xxx
|
|
|
If
to Sellers, to:
|
Global
Capacity Group, Inc., et
al.
000
Xxxxx Xxxxxx Xxxxx – Xxxxx 0000
Xxxxxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxx, CEO, Global Capacity
Telephone: 000-000-0000
Facsimile:
000-000-0000
|
|
with
a copy to:
|
|
|
Heller,
Draper, Xxxxxx, Xxxxxxx & Horn, L.L.C.
000
Xxxxxxx Xxxxxx - Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx
X. Xxxxxx
Telephone: 000-000-0000
Facsimile:
000-000-0000
|
|
|
and
|
|
|
Xxxxxxx
& Xxxxxxxx Ltd
000
Xxxx Xxxxxx Xxxxx – Xxxxx 0000
Xxxxxxx,
XX 00000
Attention: Xxxxxxxx
X. Xxxxxxxxx
Telephone: (000)
000-0000
Facsimile:
(000) 000-0000
|
13.4 Successors
and Assigns.
(a) Buyer
shall have the right to assign to an Affiliate any of its rights or obligations
under this Agreement in whole or in part (including the right to acquire any of
the Purchased Assets). In the event of any assignment pursuant to
this Section
13.4(a), Buyer shall not be relieved of any liability or obligation
hereunder.
(b) Buyer
shall have the right to assign this Agreement or any of its rights or
obligations hereunder as collateral to any lender of Buyer; provided, however, that no such
assignment shall relieve Buyer of its obligations to the Sellers
hereunder.
(c) Sellers
shall not assign this Agreement or any of their rights or obligations hereunder
and any such assignment shall be void and of no effect.
(d) This
Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto, including any trustee appointed in
any of the Bankruptcy Cases or subsequent chapter 7. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any Person or entity not a party to this Agreement except as provided in this
Section
13.4.
13.5 Access to
Records after Closing. For a
period of five (5) years after the Closing Date, Sellers and their
representatives shall have reasonable access to all of the books and records of
the Purchased Assets transferred to Buyer hereunder to the extent that such
access may reasonably be required by Sellers in connection with matters relating
to or affected by the operations of the Business on or prior to the Closing
Date. Such access shall be afforded by Buyer upon receipt of
reasonable advance notice and during normal business hours. Sellers
shall be solely responsible for any costs or expenses incurred by them pursuant
to this Section
13.5. If Buyer shall desire to dispose of any of such books
and records prior to the expiration of such five-year period, Buyer shall, prior
to such disposition, give Sellers a reasonable opportunity, at Sellers’ expense,
to segregate and remove such books and records as Sellers may
select. In the event Sellers seek and receive approval from the
Bankruptcy Court to abandon or destroy books and records, Sellers shall advise
Buyer of said order and Buyer shall be relieved of its obligations under this
Section 13.5
and may, in its sole discretion, destroy any and all books and records related
to the Business.
13.6 Entire
Agreement; Amendments. This Agreement (including the Schedules
and Exhibits hereto and any management agreement) represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is
sought. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained
herein. The waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
13.7 Interpretation. Article
titles and headings to sections herein are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. The Schedules and Exhibits referred
to herein shall be construed with and as an integral part of this Agreement to
the same extent as if they were set forth verbatim herein. No party
shall benefit from any rule construing this Agreement against that party as
drafter, and it is acknowledged that the document is jointly
drafted.
13.8 Expenses. Each
party hereto will pay all costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants, except as otherwise provided in this Agreement.
13.9 Partial
Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be
unreasonable.
13.10 Execution
in Counterparts; Facsimile and E-mail Delivery. This Agreement
may be delivered via facsimile or e-mail transmission of an executed counterpart
of or signature page to this Agreement and may be executed in one or more
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of Sellers and Buyer and any facsimile, e-mail pdf
or photocopy of an executed counterpart of or signature page to this Agreement
shall be given the same effect as the original.
13.11 Further
Assurances. On and after the Closing Date (i) Sellers shall
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of Sellers in, to or under any or all of the Purchased
Assets, and (ii) Sellers shall take all steps as may be reasonably necessary to
put Buyer in actual possession and control of all the Purchased Assets and to
obtain the full benefit thereof.
13.12 Governing
Law; Forum. This Agreement shall be construed, performed and
enforced in accordance with, and governed by, the Laws of the State of Delaware
(without giving effect to the principles of conflicts of laws thereof), except
to the extent that the Laws of such State are superseded by the Bankruptcy Code
or other applicable federal Law. For so long as Seller is subject to
the jurisdiction of the Bankruptcy Court or the Bankruptcy Court accepts
jurisdiction, the parties irrevocably elect, as the sole judicial forum for the
adjudication of any matters arising under or in connection with the Agreement,
and consent to the exclusive jurisdiction of, the Bankruptcy
Court. After Sellers are no longer subject to the jurisdiction of the
Bankruptcy Court, the parties irrevocably elect, as the sole judicial forum for
the adjudication of any matters arising under or in connection with this
Agreement, and consent to the jurisdiction of, any state or federal court having
competent jurisdiction in Delaware.
13.13 Waiver of
Jury Trial. EACH PARTY HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, ANTITRUST CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON-LAW OR STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH LEGAL COUNSEL OF ITS OWN CHOOSING, OR HAS HAD AN
OPPORTUNITY TO DO SO, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS, HAVING HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT WITHOUT A JURY.
13.14 Negotiated
Agreement. Each of the Sellers and Buyer acknowledges that it
has been advised and represented by counsel in the negotiation, execution and
delivery of this Agreement and accordingly agrees that, if an ambiguity exists
with respect to any provision of this Agreement, such provision shall not be
construed against any party because such party or its representatives drafted
such provision.
[Signature
page follows]
IN WITNESS WHEREOF, the
partial hereto have caused this Agreement to be executed the day and year that
above written.
SELLERS:
|
CAPITAL
GROWTH SYSTEMS, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
20/20
TECHNOLOGIES, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
20/20
TECHNOLOGIES I, LLC
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
CENTREPATH,
INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
GLOBAL
CAPACITY GROUP, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
CAPITAL
GROWTH ACQUISITION, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
GLOBAL
CAPACITY DIRECT, LLC, (GCD)
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
NEXVU
TECHNOLOGIES, LLC
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
FNS
2007, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
GLOBAL
CAPACITY HOLDCO, LLC
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
BUYER:
|
PIVOTAL
GLOBAL CAPACITY, LLC, an Arizona limited liability
company
|
||||
|
By:
|
FFN
Investments, LLC, an Arizona limited liability company,
|
|||
|
Its:
|
Sole
Member
|
|||
|
By:
|
Pivotal
Capital Corporation, an Arizona corporation
|
|||
|
Its:
|
Manager
|
|||
|
By:
|
||||
|
Xxxxxxx
Xxxxxx
|
||||
|
Its:
|
Treasurer
|
|||
