ASSET PURCHASE AGREEMENT
Among
JD SERVICES, INC.
As Purchaser
And
GLOBAL LINK TELECOM CORP.
GTS HOLDING CORP., INC.
TELTIME, INC.
NETWORK SERVICES SYSTEM, INC.
NETWORK SERVICES SYSTEM, L.P.
GTS MARKETING, INC.
GLOBAL TELECOMMUNICATIONS SOLUTIONS, L.P.
NETWORKS AROUND THE WORLD, INC.
And
CENTERPIECE COMMUNICATIONS, INC.
As Sellers
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 31, 2000 (this "Agreement"),
is entered into by and among X X SERVICES, INC., a Nevada corporation
("Purchaser"), GLOBAL LINK TELECOM CORPORATION, a Delaware Corporation, GTS
HOLDING CORP., INC., a Delaware corporation, TELTIME, INC., a Delaware
corporation, NETWORK SERVICES SYSTEM, INC., a Delaware corporation, NETWORK
SERVICES SYSTEM, L.P., a Delaware limited partnership, GTS MARKETING, INC., a
Delaware corporation, GLOBAL TELECOMMUNICATIONS SOLUTIONS, L.P., a Delaware
limited partnership, NETWORKS AROUND THE WORLD, INC., a New Jersey corporation,
and CENTERPIECE COMMUNICATIONS, INC., a New Jersey corporation (each a "Seller"
and collectively the "Sellers"). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Article X.
WHEREAS, the Sellers are engaged in the business of developing, marketing,
selling and servicing prepaid phone cards as well as administering the
operations necessary to support such cards (collectively, the "Business," which
term, as used herein, refers to the business conducted by the Sellers utilizing
the Assets to be acquired by the Purchaser hereunder);
WHEREAS, each of the Sellers has filed a voluntary petition (the
"Petitions") for relief commencing cases (the "Chapter 11 Cases") under Chapter
11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), Case Nos. 99-3923 through 99-3931; and
WHEREAS, the Purchaser desires to purchase from the Sellers, and the
Sellers desire to sell, convey, assign and transfer to the Purchaser,
substantially all of the assets and properties of each Seller relating to the
Business, all in the manner and subject to the terms and conditions set forth
herein and in accordance with xx.xx. 105, 363 and 365 of the Bankruptcy Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions set forth in this Agreement, at the Closing the Sellers shall sell,
assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall
purchase and accept from the Sellers, all right, title and interest in and to
all of the assets, properties, rights, contracts, customers, and intellectual
properties owned or used by Sellers in conducting the Business as set forth on
Section 1.1 of the Company Disclosure Letter, wherever located, whether tangible
or intangible, as the same shall exist at the Closing, free and clear of all
Encumbrances (collectively referred to herein as the "Assets").
Section 1.2 Excluded Assets. The assets, properties and rights set forth on
Section 1.2 of the Company Disclosure Letter (the "Excluded Assets") are not
included in the Assets.
Section 1.3 Assumed Liabilities. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, the Purchaser shall assume from the
Sellers and thereafter pay, perform or discharge in accordance with their terms,
only those executory obligations of Sellers under the Assumed Contracts (as set
forth on Section 1.3 of the Company Disclosure Letter, which shall include an
agreement with A&P if Sellers enter into such an agreement with A&P) that first
become performable on or after the Closing Date, as well as the Sellers'
obligations to service issued and outstanding activated prepaid phonecards (the
"Issued Phonecards") (collectively the "Assumed Liabilities").
Section 1.4 Excluded Liabilities. The Sellers and the Purchaser expressly
understand and agree that the Sellers shall be solely liable for all liabilities
and obligations of Sellers other than the Assumed Liabilities (collectively, the
"Excluded Liabilities").
Section 1.5 Purchase Price.
(a) In consideration for the Assets, Purchaser shall pay, as set forth
in ss.1.5(b) of this Agreement, a total purchase price of Two Million One
Hundred Thousand Dollars ($2,100,000)(the "Purchase Price").
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(b) The Purchase Price shall be paid as follows:
(i) On the Closing Date Purchaser shall pay the amount of
$2,100,000 less the actual amount lent to the Sellers by way of cash
advances or services provided to or on behalf of the Sellers after the
Petition Date and prior to Closing, after accounting for repayments
made by Sellers (estimated to be $750,000) and less the estimated cost
of the Sellers' obligation to service the Issued Phonecards, which
obligation will be assumed by the Purchaser at Closing (the "Estimated
Cost of Servicing Issued Phonecards")(estimated to be $1,350,000);
(ii) At a date which is three months after the Closing Date,
Purchaser and Seller shall true-up and compare the actual Actual Cost
of Servicing Issued Phonecards and the Future Cost of Servicing Issued
Phonecards to the Estimated Cost of Servicing Issued Phonecards and
Purchaser shall make any required payment to Seller in accordance with
Section 1.7 hereof.
Section 1.6 Allocation of Purchase Price. Promptly following the Closing
Date, the Purchase Price shall be allocated among the Assets in such amounts as
shall be specified in a schedule to be prepared by the Purchaser, upon
consultation with the Sellers, which allocation, absent manifest error, shall be
binding upon the Purchaser and the Sellers, each of which agrees to report the
effect of the transactions contemplated hereby on all applicable Tax Returns or
filings in a manner consistent with such schedule. The Sellers and the Purchaser
will each file all Tax Returns, including IRS Form 8594, in a manner consistent
with the Allocation Schedule and shall take no position in any Tax Return, Tax
proceeding, Tax audit or otherwise which is inconsistent with the Allocation
Schedule. The Sellers and the Purchaser shall not, after filing IRS Form 8594,
revoke or amend IRS Form 8594 without the written consent of the other.
Section 1.7 True-Up for Actual Cost of Servicing Issued Phonecards.
(a) At the time of Closing, Purchaser shall provide Seller with a
statement of the Issued Phonecards. Sellers and their representatives shall have
thirty (30) days in which to review Purchaser's books and records, in an attempt
to verify the statement of Issued Phonecards provided by Purchaser.
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(b) After the Closing Purchaser shall continue to carry the traffic
from the Issued Phonecards and shall continue to provide Sellers with weekly
statements of the actual cost of carrying such traffic calculated in accordance
with the Service Agreement, dated December 21, 1999 entered into by Sellers and
Purchaser (the "Service Agreement").
(c) On the first Business day that is at least one hundred days
after the Closing Date, Purchaser shall prepare a schedule of: (i) the actual
weekly cost of carrying the traffic of Sellers' Issued Phonecards after the
Closing through the date which is three months after the Closing Date (the
"True-up Date")(the "Actual Cost of Servicing Issued Phonecards"); (ii) a
comparison of each week's weekly cost of service to the prior week's weekly cost
of service to arrive at a percent change in the weekly cost for each successive
weekly period from the Closing Date through the True-up Date; (iii) the average
weekly percent change for all weekly periods from the Closing Date through the
True-up Date; and (iv) the Future Cost of Servicing Issued Phonecards defined as
set forth below (collectively the "Schedule of Liability"). The Schedule of
Liability shall be calculated in accordance with the Service Agreement and
audited by Purchaser's independent certified public accountants. For purposes of
the Schedule of Liability Costs, the Future Cost of Servicing the Issued
Phonecards shall be arrived at by establishing estimated weekly costs for an
additional 38 future weekly periods, by applying the average percent reduction
in weekly cost, first to the weekly cost for the weekly period ending on the
True-up Date to establish the deemed weekly cost for the first of the 38 future
weekly periods, and thereafter applying the average percent reduction to the
deemed future weekly costs for each of the 37 remaining future weekly periods.
The sum of these deemed costs for the 38 future weekly periods shall be deemed
to be the Future Cost of Servicing the Issued Phonecards (the "Future Cost of
Servicing Issued Phonecards"). The Schedule of Liability shall be submitted to
Sellers for their review. Sellers and their representatives shall have thirty
(30) days in which to review Purchaser's books and records, in an attempt to
verify the Schedule of Liability provided by Purchaser. Unless, within thirty
(30) days of receipt of the Schedule of Liability, Sellers shall provide notice
to Purchaser specifying objections to the Schedule of Liability, such Schedule
shall be deemed final and adjustments in the Purchase Price shall be undertaken
in accordance with the next paragraph of this Section 1.7. In the event Sellers
shall timely provide such notice of objection, then Sellers and Purchaser shall
in good faith hold discussions to resolve such dispute. If the dispute is not
resolved in such discussions, then either party may submit such dispute to the
Bankruptcy Court for its determination.
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(d) Immediately upon determination or agreement as to the Actual
Cost of Servicing Issued Phonecards and the Future Cost of Servicing Issued
Phonecards, Purchaser shall remit to Sellers the amount by which the sum of the
Actual Cost of Servicing Issued Phonecards and the Future Cost of Servicing
Issued Phonecards is less than the Estimated Cost of Servicing Issued
Phonecards. The foregoing would be expressed as a formula as follows:
Est. Cost of Serv. Issued Phonecards
- Act. Cost of Serv. Issued Phonecards
- Future Cost of Servicing Issued Phonecards
--------------------------------------------
True-up Payment by Purchaser to Sellers
ARTICLE II
THE CLOSING
Section 2.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Klehr, Harrison,
Xxxxxx, Branzburg & Xxxxxx (Xxxxx, Xxxxxxxx), 000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx, at 10:00 a.m. local time on the second Business Day after the Sale
Order shall have been entered by the Bankruptcy Court and become a Final Order,
or at such other time, day and place as shall be fixed by agreement among the
parties (the date of the Closing being herein referred to as the "Closing
Date"). The effective time of the Closing shall be deemed to be 12:01 a.m. local
time on the Closing Date.
Section 2.2 Deliveries at Closing.
(a) At the Closing, each of the Sellers shall deliver to the
Purchaser:
(i) a duly executed xxxx of sale and such other duly executed
instruments of conveyance, transfer and assignment as may be required
to transfer to the Purchaser all of the Sellers' right, title and
interest in and to the Assets, including but not limited to (A)
applicable assignments of each lease as to real property leasehold
interests held by Sellers, if made a part of the Assumed Contracts,
each in a form and substance reasonably acceptable to the Purchaser,
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(B) applicable assignments of the Names and the other Intellectual
Property and (C) applicable assignments of the Assumed Contracts,
which assignments shall include any consents of third parties required
to assign such Assumed Contracts to the Purchaser, each in a form and
substance reasonably acceptable to the Purchaser;
(ii) a Certificate of such Seller certifying as to the continued
accuracy of the representations and warranties of the Sellers and
compliance with the covenants and conditions precedent to the Closing
which are incumbent upon the Sellers;
(iii) a Certificate of the Corporate Secretary of each Seller
certifying copies of its Board of Directors consents and/or meeting
minutes evidencing authorization of the transactions contemplated
herein;
(iv) an Incumbency Certificate certifying as to the authority of
such Seller's signatories to sign on behalf of Seller;
(v) a Company Disclosure Letter that is updated as of the Closing
Date; and
(vi) the Sale Order.
(b) At the Closing, Purchaser shall deliver to the Sellers:
(i) such duly executed instruments as may be required to
effectuate the assumption by the Purchaser of the Assumed Liabilities,
including liabilities under the Assumed Contracts, and such other duly
executed documents and certificates as may be required to be delivered
by the Purchaser pursuant to the terms of this Agreement;
(ii) the payments and deliveries required pursuant to Section
1.5;
(iii) a Certificate of the Corporate Secretary of the Purchaser
certifying copies of the Board of Directors' consents and/or meeting
minutes evidencing authorization of the transactions contemplated
herein;
(iv) an Incumbency Certificate certifying as to the authority of
the Purchaser's signatories to sign on behalf of the Purchaser; and
(v) a Purchaser Disclosure Letter that is updated as of the
Closing Date.
(c) At Closing, the obligations for payment of all real estate Taxes
and assessments with respect to the real property for the taxable period
beginning before and ending after the Closing Date shall be apportioned between
the Sellers and the Purchaser as of the Closing Date in accordance with Section
164(d) of the Code. All personal property, motor vehicle (including road use)
and ad valorem Taxes levied or imposed upon the Assets by any governmental
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authority for the taxable period beginning before and ending after the Closing
Date shall be apportioned or prorated on a per diem basis between Sellers and
Purchaser as of 11:59 p.m., E.S.T., on the day before the Closing Date. If the
actual amounts to be prorated are not known as of the Closing Date, the
prorations shall be made on the basis of Taxes assessed for the prior taxable
period. Except as set forth below, no proration shall be made for utility
charges including, without limitation, water, wastewater, gas and electricity.
Sellers shall terminate Sellers' accounts relating to the Business and the
Assets being acquired by Purchaser hereunder (but where Purchaser has made
arrangements to retain the service, Sellers shall not terminate the service
itself) with the providers of all such services as of the Closing Date, unless
made a part of the Assumed Contracts. Sellers shall not be required to terminate
any accounts relating to the Excluded Assets. Prior to the Closing Date, the
Purchaser shall make application to the service providers for the continuation
of such services in the name of the Purchaser. It is anticipated that, in
connection with all such utility services, the meters will be read on or about
the Closing Date, and Sellers shall be responsible for paying the bills for such
services on or prior to the Closing Date and the Purchaser shall be responsible
for the payment of all such bills occurring after the Closing Date. If any such
accounts are not paid in full and terminated, they shall be prorated as of the
Closing Date with the Sellers being charged and credited for all of the same up
to such date and for all prior months during the Sellers' ownership and the
Purchaser being charged and credited for all of the same on or after such date.
If all amounts to be prorated are not known as of the Closing Date, the
prorations shall be made on the basis of the prior month's xxxx. Except for
those instances in which the Sellers have not paid a utility account in full and
terminated such account, in which case any deposit held by the applicable
utility service provider shall be first applied to any outstanding amounts due
and owing and any balance remaining shall then be returned to the Sellers, the
Sellers shall keep and retain all rights to any deposits held by any utility
service providers. The provisions of this subsection shall survive the Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise disclosed to the Purchaser in a schedule attached
hereto and made a part hereof (which schedule contains appropriate references to
identify the representations and warranties herein to which the information in
such schedule relates) (the "Company Disclosure Letter"), the Sellers jointly
and severally represent and warrant to the Purchaser as follows:
Section 3.1 Organization. Each of the Sellers is a corporation or limited
partnership validly existing and in good standing under the laws of the
jurisdiction of its formation and has the power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted or presently proposed to be conducted.
Each of the Sellers is duly qualified as a foreign corporation or limited
partnership to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not individually or in the aggregate have a Company Material
Adverse Effect. None of the Sellers has any interest in any subsidiary or other
entity which is not a Seller and which owns or has any interest in any of the
Assets or any other property or assets necessary for the conduct of the
Business.
Section 3.2 Authority Relative to this Agreement. Subject to the approval
of the Bankruptcy Court, each of the Sellers has the power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery, and performance of this Agreement by each of the Sellers
and the consummation by each of the Sellers of the transactions contemplated
hereby have been authorized by the written consent of the Board of Directors and
shareholders or General Partner of such Seller as the case may be. Subject to
the entry by the Bankruptcy Court of the Sale Order in the Chapter 11 Cases,
this Agreement has been duly and validly executed and delivered by each of the
Sellers and (assuming this Agreement constitutes a valid and binding obligation
of the Purchaser) constitutes a valid and binding agreement of each of the
Sellers, enforceable against each of the Sellers in accordance with its terms
subject to general equitable principles.
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Section 3.3 Consents and Approvals. No consent, approval, or authorization
of, or declaration, filing or registration with, any United States or foreign
federal, state, county, municipal or other governmental or regulatory authority
or other Person is required to be made or obtained by any Seller in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except (a) for consents,
approvals, or authorizations of, or declarations or filings with, the Bankruptcy
Court, (b) for consents, approvals, authorizations, declarations or filings
identified in Section 3.3 of the Company Disclosure Letter, including with
respect to the transfer of any Company Permits to the Purchaser, and (c) for
consents, approvals, authorizations, declarations, filings or registrations,
which, if not obtained, would not, individually or in the aggregate, have a
Company Material Adverse Effect. The items described in clauses (a) and (b) of
this Section 3.3 are hereinafter referred to as the "Governmental Requirements."
Section 3.4 No Violations. Assuming that the consents, approvals,
authorizations, declarations and filings referred to in Section 3.3 have been
made or obtained and shall remain in full force and effect, neither the
execution, delivery or performance of this Agreement by any of the Sellers, nor
the consummation by any of the Sellers of the transactions contemplated hereby,
nor compliance by any of the Sellers with any of the provisions hereof, will (a)
conflict with or result in any breach of any provisions of the certificate or
articles of incorporation, as the case may be, or bylaws of any of the Sellers,
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, vesting, payment, exercise, acceleration, suspension
or revocation) under any of the terms, conditions, or provisions of any note,
bond, mortgage, deed of trust, security interest, indenture, license, Contract
(including any of the Assumed Contracts) or other instrument or obligation to
which a Seller is a party or by which a Seller's properties or assets may be
bound or affected, (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to a Seller or a Seller's properties or assets,
(d) result in the creation or imposition of any Encumbrance on any property or
asset of a Seller, or (e) cause the suspension or revocation of any Company
Permit necessary for any Seller to conduct its business as currently conducted,
except in the case of clauses (b), (c), (d) and (e) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations that (i) would not individually or in the aggregate
have a Company Material Adverse Effect, (ii) are excused by or unenforceable as
a result of the Sellers' filing of the Petitions and obtaining the Sale Order,
or (iii) are set forth in Section 3.4 of the Company Disclosure Letter.
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Section 3.5 Absence of Certain Changes; Events Subsequent to Filing of
Petitions. Except as set forth in Section 3.5 of the Company Disclosure Letter,
since December 15, 1999, there has been no event or condition that has had (or
is reasonably likely to result in) a Company Material Adverse Effect other than
the filing of the Chapter 11 Cases and the Sellers have in all material respects
conducted their businesses in the ordinary course of business consistent with
past practice and have not taken any action since such date that, if taken after
the date hereof, would violate Section 5.1 hereof. Since the Petition Date, (i)
the Sellers have conducted their respective businesses and affairs in accordance
with the requirements of the Bankruptcy Code and (ii) all acts or omissions of
the Sellers outside the ordinary course of business have been described in
Section 3.5 of the Company Disclosure Letter.
Section 3.6 Litigation. Except as disclosed in Section 3.6 of the Company
Disclosure Letter, there is no suit, action, proceeding or investigation
(whether at law or equity, before or by any federal, state or foreign
commission, court, tribunal, board, agency or instrumentality, or before any
arbitrator) pending or, to the best knowledge of the Company, threatened against
or affecting the Sellers, the outcome of which, in the reasonable judgment of
the Company, is likely individually or in the aggregate to have a Company
Material Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Sellers having, or that insofar as can
reasonably be foreseen in the future may have, a Company Material Adverse
Effect. None of the matters disclosed in Section 3.6 of the Company Disclosure
Letter is a claim for personal injuries.
Section 3.7 Absence of Undisclosed Liabilities. Except for (i) liabilities
or obligations accrued or reserved against in the Sellers' books and records and
(ii) liabilities or obligations disclosed in Section 3.7 of the Company
Disclosure Letter, the Sellers do not have any liabilities or obligations
(whether absolute, accrued, contingent or otherwise, asserted or unasserted,
known or unknown) which singly or in the aggregate constitute or are reasonably
likely to result in a Company Material Adverse Effect.
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Section 3.8 No Default. Except for any default caused by reason of the
filing of the Petitions and, except as set forth in Section 3.8 of the Company
Disclosure Letter, no Seller is in violation or breach of, or default under (and
no event has occurred that with notice or the lapse of time or both would
constitute a violation or breach of, or a default under) any term, condition or
provision of (a) its articles or certificate of incorporation, as the case may
be, or bylaws, (b) any note, bond, mortgage, deed of trust, security interest,
indenture, license, agreement, plan, Contract (including any Assumed Contracts)
or other instrument or obligation to which a Seller is a party or by which a
Seller's properties or assets may be bound or affected, (c) any order, writ,
injunction, decree, statute, rule or regulation applicable to a Seller or a
Seller's properties or assets, or (d) any Company Permit necessary for a Seller
to conduct its business as currently conducted, except in the case of clauses
(b), (c) and (d) above for breaches, defaults or violations that (i) would not
individually or in the aggregate have a Company Material Adverse Effect or (ii)
are excused by or unenforceable as a result of the Sellers' filing of the
Petitions.
Section 3.9 No Violation of Law. Except as disclosed in Section 3.9 of the
Company Disclosure Letter, no Seller is in violation of, or has been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations, which, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect. Except as disclosed in Section 3.9 of the Company Disclosure Letter, as
of the date of this Agreement, no investigation or review by any governmental or
regulatory body or authority is pending or, to the best knowledge of the
Company, threatened, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not have a Company
Material Adverse Effect, and the Sellers have all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents,
and approvals necessary to conduct their businesses as presently conducted
(collectively, the "Company Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, individually or in the aggregate, would not have a Company
Material Adverse Effect. The Sellers are not in violation of the terms of any
Company Permit, except for delays in filing reports or violations, which, in
either case, individually or in the aggregate, would not have a Company Material
Adverse Effect.
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Section 3.10 Title and Condition to Property.
(a) Except as set forth in Section 3.10(a) of the Company
Disclosure Letter and except for matters that would not, individually or in the
aggregate, reasonably be expected to constitute or give rise to a Company
Material Adverse Effect:
(i) except as set forth in Schedule 3.10(a)(i) of the Company
Disclosure Letter, the Sellers have good and valid title to the Assets
and all such Assets will be conveyed to the Purchaser on the Closing
Date in good working condition and free and clear of any and all
mortgages, pledges, liens, charges, encumbrances, defects, judgments,
abstracts, security interests, claims, options and restrictions of all
kinds (collectively, "Encumbrances");
(ii) all real estate or equipment or other tangible personal
property constituting any part of the Assets that is used or held by
the Sellers pursuant to any lease or other contractual arrangement
other than by ownership is designated in Section 3.10(a)(ii) of the
Company Disclosure Letter, and no Seller has incurred any liability
which could result in a mechanic's or other similar lien being filed
against any such real estate, equipment or other property;
(iii) Sellers have valid leasehold interests in, or have other
valid contractual rights to use, all of the Assets being acquired by
Purchaser hereunder of the type described in Section 3.10(a)(ii);
(iv) Sellers are in peaceful and undisturbed possession of the
space or estate under the leases or other agreements under which they
are tenants or entitled to use the properties of a type described in
Section 3.10(a)(ii);
(v) As to all properties being acquired by Purchaser hereunder of
the type described in Section 3.10(a)(ii) above, either (A) Sellers
are in no respect in default or delinquent in performing their
obligations under such leases or other agreements, or (B) any such
default or delinquency will be fully cured, or otherwise may not be
asserted against Purchaser or the Assets, as a result of the entry by
the Bankruptcy Court of the Sale Order, such that Sellers' rights in
and under all such leases or other agreements shall vest in Purchaser
upon the Closing without reversion or diminution; and
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(vi) Sellers have good and valid rights of ingress and egress to
and from all the real property owned or leased by them and
constituting part of the Assets being sold from and to the public
street systems for all usual street, road, and utility purposes.
(b) The Assets include, without limitation, all real property
interests and related rights and interests and all personal property and other
assets and rights of any kind, both tangible and intangible, that are, either
individually or in the aggregate, material to the conduct of the Business as it
was conducted by the Sellers for the sixty (60) day period prior to the Petition
Date. The Assets, both tangible and intangible, whether owned or leased, are in
normal operating condition and repair (reasonable wear and tear excepted) and
are suitable for the purposes for which they are presently being used, and such
Assets conform to all applicable laws, ordinances and regulations.
Section 3.11 Brokers. Except as set forth in Section 3.11 of the Company
Disclosure Letter, no person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by any of the Sellers in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Sellers.
Section 3.12 Contracts. Section 3.12 of the Company Disclosure Letter
contains a complete and accurate list of all written Contracts and oral
contracts for which Sellers have had more than $500,000 in revenue during 1999,
related to the Business or by which any of the Assets is subject or bound
including without limitation those meeting any of the descriptions set forth
below:
(a) any lease for switches or any other machinery, equipment or
other personal property involving payment of aggregate rentals in
excess of five thousand dollars ($5,000);
(b) any Contract for the purchase of any materials or supplies or
services in excess of five thousand dollars ($5,000) except those
incurred in the ordinary course of business and having a term of one
year or less;
(c) any Contract for the purchase of equipment or any
construction or other similar agreement involving any expenditure in
excess of five thousand dollars ($5,000);
(d) any purchase order, agreement or commitment obligating the
Sellers to sell or deliver any products or services (i) at a price
which does not cover the cost (including labor, materials and
production overhead) plus the customary profit margin associated with
such product or service; or (ii) for more than five thousand dollars
($5,000) to any one customer or related group of customers;
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(e) any instrument evidencing or related to indebtedness,
obligation or liability for borrowed money (irrespective of amount),
or any liability for the deferred purchase price of property
(excluding normal trade payables arising out of the ordinary course of
business), or any instrument guaranteeing any indebtedness, obligation
or liability, or any obligation to incur any indebtedness, obligation
or liability, none of which shall be included among the Assumed
Contracts;
(f) any joint venture, partnership or other cooperative
arrangement or any other agreement involving a sharing of profits with
any other Person;
(g) any sales agency, brokerage, license, royalty, distribution
or similar contract, as well as a listing of all agreements or
relationships with any distributor, designer, consultant, agent or
other representative anywhere, who is entitled to fees, commissions,
royalties or any other payments, for the right to manufacture, design,
sell or distribute any products currently manufactured, designed, sold
or distributed by the Sellers;
(h) any deed, lease, agreement or other instrument pursuant to
which the Sellers derive their right, title and interest in or to any
material portions of their real properties or to any material rights
of way or other means of access to their real properties;
(i) any employment, consulting or similar Contract; any sales or
commission agent Contract; any Employee Benefit Plans; and any other
written plan, Contract or policy for officers, directors, consultants
or employees with respect to salaries, insurance, bonuses, incentive
compensation, pensions, deferred compensation, hospitalization,
retirement payments, profit sharing, paid vacations or other benefits;
(j) any Contract with any labor union;
(k) any Contract which requires the consent of any Person not a
party hereto for the consummation of the transactions contemplated by
this Agreement;
(l) any Contract upon which the Business of the Sellers is
materially dependent including without limitation licenses or leases
for the use of software programs and databases used for customer
billing or switch operations;
(m) any Contract pursuant to which Sellers have access to the
telephone or other communications network (whether voice, data or
video) of another Person and any contracts for the resale of any
network capacity of Sellers; and
(n) any other Contract related to the Business (other than
Contracts excluded by an express exception from the descriptions set
forth above) which (i) provides for payment or performance by
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either party thereto having an aggregate value of five thousand
dollars ($5,000) or more or (ii) otherwise is or could reasonably be
expected to be material to the Business.
True and complete copies of each such written Contract (or written summaries of
the terms of any such Contract) listed pursuant to (a) through (n) above have
been or will be made available to the Purchaser on or prior to 5:00 p.m.,
Eastern time, January 31, 2000. Except as set forth in Section 3.12 of the
Company Disclosure Letter, all of the Contracts are in full force and effect, no
defaults on the part of any Seller or, to the knowledge of the Sellers, any
other party thereto exist under any of the Contracts and the Sellers have not
received notice, nor do they otherwise have knowledge, that any party to any
such Contract intends to cancel, terminate, or refuse to renew such Contract or
to exercise or decline to exercise any option or right thereunder. Sellers do
not have any reason to expect that any material change will occur (whether as a
result of the sale of the Assets to the Purchaser or otherwise) in the goodwill
or relationships of the Sellers with their customers or suppliers, or in the
level of their customer accounts, that would have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.13 Intellectual Property and Other Intangible Property.
(a) Section 3.13 of the Company Disclosure Letter sets forth a
complete and correct list of all of Sellers' material Intellectual Property used
in the Business. Sellers own or have the right to use, pursuant to license,
sublicense, Contract or permission, all of the Intellectual Property and other
intangible assets materially necessary for the operation of the Business as it
is currently being conducted. Sellers have provided the Purchaser with access to
copies of any of the Intellectual Property as requested by the Purchaser.
Section 3.13(a) of the Company Disclosure Letter separately identifies each item
of Intellectual Property that any third party owns and that Sellers use pursuant
to license, sublicense, Contract or permission and describes such relationship
and lists such third party. Sellers have supplied the Purchaser with correct and
complete copies of all such licenses, sublicenses, Contracts and permissions (as
amended to date), and all of the Intellectual Property will be assigned to the
Purchaser at Closing.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
Letter, (i) no proceedings have been instituted, nor to the knowledge of Sellers
are any pending or threatened, which challenge any rights in respect of the
Intellectual Property or any other intangible property of Sellers or the
15
validity thereof; (ii) Sellers' use of any such rights and the operation of the
Business as it is currently conducted does not infringe upon the Intellectual
Property or other proprietary rights of any Person, nor to the knowledge of
Sellers do any facts exist which indicate a likelihood of any infringement or
mis appropriation by, or conflict with, any Person with respect to such rights;
(iii) Sellers have not infringed upon, misappropriated or otherwise conflicted
with any proprietary rights of any Persons, nor are Sellers aware of any such
infringement, misappropriation or conflict which will occur as a result of the
transactions contemplated herein; and (iv) each item of Intellectual Property
and any other intangible property owned or used by Sellers immediately prior to
the Closing hereunder will be owned or available for use by the Purchaser on
identical terms and conditions immediately subsequent to the Closing hereunder.
Section 3.14 Employee Plans; Labor Matters. Except as set forth in Section
3.14 of the Company Disclosure Letter:
(a) The Sellers do not maintain any "employee benefit plans" and
"employee welfare plans," as defined in Sections 3(1) and 3(3) of ERISA and have
not maintained, contributed to, been required to contribute to, or been a party
to or a participating employer in, any "employee pension benefit plan," as
defined in Section 3(2) of ERISA, including any multiemployer employee pension
benefit plan (the "Employee Benefit Plans"). The Sellers are not parties to any
collective bargaining or other labor agreements.
(b) The Employee Benefit Plans (i) are qualified to the extent
required by law under Section 401 of the Internal Revenue Code of 1986, as
amended and to the best knowledge of Sellers there exists no fact which would
adversely affect the qualified status of any such Employee Benefit Plan; (ii)
have been operated and administered in all material respects in accordance with
ERISA, the Internal Revenue Code and all other applicable law; (iii) have not
engaged in any transactions (as such term is defined for purposes of ERISA and
the Internal Revenue Code); (iv) have not, since the last annual report filed,
been amended so as to materially increase benefits thereunder or experienced a
material increase (more than 20%) in the number of participants covered
thereunder; and (v) if terminated on the date hereof, would not give rise to
liability under Title IV of ERISA.
16
(c) Each Seller, at all times, has complied with all applicable
provisions of the Employee Benefit Plans and is not in default thereunder. Full
payment has been made of all amounts which any Seller is required to pay under
the terms of each of the Employee Benefit Plans as a contribution or premium to
or in respect of such plans as of the last day of the most recent fiscal year of
each of the Employee Benefit Plans ended prior to the date of this Agreement,
any such contribution has been accrued as a liability on the books of the
Sellers and none of the Employee Benefit Plans nor any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or
not waived with respect to the most recent fiscal year of each of the Employee
Benefit Plans ended prior to the date of this Agreement.
(d) There are no pending, anticipated or, to Sellers' knowledge,
threatened claims against or otherwise involving any of the Employee Benefit
Plans, or any fiduciary thereof, by or on behalf of such plans, any employee or
beneficiary covered under the plans or otherwise involving the plans (other than
routine claims for benefits). There is no judgment, decree, injunction, rule or
order of any court, governmental body, commission, agency or arbitrator
outstanding against or in favor of any plan or any fiduciary thereof.
(e) None of the Sellers has ever experienced a strike or other
similar collective labor dispute. The Sellers' relations with their employees
are satisfactory.
Section 3.15 Environmental Matters; Health and Safety and Other Laws.
Except as set forth in Section 3.15 of the Company Disclosure Letter, the
Sellers are, and on the Closing Date will be, in material compliance with all
federal, state and local laws, regulations, permits, orders and decrees,
including those relating to protection of the environment and employee health
and safety ("Applicable Requirements"). The Sellers have not received any
written notice to the effect that their operations are not in compliance with
any of the Applicable Requirements or the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or other substance (including petroleum
products) into the environment and no Seller knows of any facts which could
constitute the basis for any thereof.
17
Section 3.16 Records. The books and records, correspondence, employment
records and files of or relating to the Business and the Assets are, and on the
Closing Date will be, complete and correct in all material respects, and there
have been, and will be, no material transactions which are required to be set
forth therein which have not been so set forth.
Section 3.17 Disclosure. The representations and warranties of Sellers
contained in this Agreement, the Company Disclosure Letter, each exhibit, each
schedule and certificate or other written statement delivered pursuant to this
Agreement or in connection with the transactions contemplated herein are
accurate, correct and complete in all material respects, do not contain any
untrue statement of a material fact or, in light of the circumstances in which
made, omit to state a material fact necessary in order to make the statements
and information contained herein or therein not misleading.
Section 3.18 SEC Filings. None of the Sellers is required to file any
forms, reports or other documents with the SEC. However, the parent of certain
of the Sellers is a public company and intends to make all necessary filings
with the with the SEC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as otherwise disclosed to the Sellers in a schedule annexed hereto
(which schedule contains appropriate references to identify the representations
and warranties herein to which the information in such schedule relates) (the
"Purchaser Disclosure Letter"), the Purchaser represents and warrants to the
Sellers as follows:
Section 4.1 Organization. The Purchaser is a corporation validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
the corporate power and authority and all necessary governmental approvals to
own, lease, and operate its properties and to carry on its business as it is now
being conducted or presently proposed to be conducted.
18
Section 4.2 Authority Relative to this Agreement. The Purchaser has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery, and performance of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
corporate actions. This Agreement has been duly and validly executed and
delivered by the Purchaser and (assuming this Agreement constitutes a valid and
binding obligation of the Sellers) constitutes a valid and binding agreement of
each of the Purchaser, enforceable against the Purchaser in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium,
and other laws affecting creditors' rights generally from time to time in effect
and to general equitable principles.
Section 4.3 Consents and Approvals. No consent, approval, or authorization
of, or declaration, filing or registration with, any United States or foreign
federal, state, county, municipal or other governmental or regulatory authority
or other Person is required to be made or obtained by the Purchaser in
connection with the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby, except for consents,
approvals, authorizations, declarations, or filings, or registrations, which, if
not obtained, would not, individually or in the aggregate, materially impair the
ability of the Purchaser to perform its obligations hereunder or to consummate
the transactions contemplated hereby (a "Purchaser Material Adverse Effect").
Section 4.4 No Violations. Assuming that the consents, approvals,
authorizations, declarations, and filings referred to in Section 4.3 have been
made or obtained and shall remain in full force and effect, neither the
execution, delivery or performance of this Agreement by the Purchaser nor the
consummation by the Purchaser of the transactions contemplated hereby, nor
compliance by the Purchaser with any of the provisions hereof, will (a) conflict
with or result in any breach of any provisions of the articles or certificate of
incorporation, as the case may be, or bylaws of the Purchaser, (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time) a default (or give rise to any right of termination, cancellation,
acceleration, vesting, payment, exercise, suspension, or revocation) under any
of the terms, conditions, or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan, or
other instrument or obligation to which the Purchaser is a party or by which the
Purchaser or the Purchaser's properties or assets may be bound or affected, (c)
violate any order, writ, injunction, decree, statute, rule, or regulation
19
applicable to the Purchaser or the Purchaser's properties or assets, (d) result
in the creation or imposition of any Encumbrance on any asset of the Purchaser,
or (e) cause the suspension or revocation of any permit, license, governmental
authorization, consent, or approval necessary for the Purchaser to conduct its
business as currently conducted, except in the case of clauses (b), (c), (d),
and (e) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions, or revocations that would
not individually or in the aggregate have a Purchaser Material Adverse Effect or
except as set forth in Section 4.4 of the Purchaser Disclosure Letter.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business by the Sellers Pending the Closing. Subject
to any obligations or fiduciary duties of any Seller as a debtor or debtor-in
possession under the Bankruptcy Code, or to any order of the Bankruptcy Court
not sought by the Sellers, the Sellers shall, from the date hereof until the
Closing Date, conduct their businesses in the ordinary course of business
consistent with past practice, including, without limitation, meeting their
obligations as they become due and fulfilling their commitments to customers.
The Sellers shall also preserve intact their respective business organizations
and the level of their customers accounts, keep available the services of those
of their officers, employees and consultants who are integral to the operation
of their businesses as presently conducted and preserve their present
relationships with significant customers, significant suppliers and with other
persons with whom they have significant business relations.
Section 5.2 Public Announcements. Prior to filing the Sale Motion, the
Purchaser and the Company shall consult with each other before any party hereto
issues any press release or otherwise makes any public statement with respect to
the transactions contemplated by this Agreement, and no party shall issue any
such press release or make any such public statement prior to such consultation
except as may be required, upon the advice of counsel, by applicable law or
requirements of the Securities Act, the Exchange Act, Nasdaq, the New York Stock
Exchange or any other national securities exchange, in which case the parties
shall use their reasonable efforts to consult with each other prior to issuing
20
such a release or making such a public statement. Notwithstanding the foregoing,
prior to filing the Sale Motion, the Company may deliver (i) a redacted copy of
this Agreement which does not make reference to the name of the Purchaser to the
Committee, if one is formed, and (ii) a complete copy of this Agreement to any
lender considering providing debtor-in-possession financing to the Sellers upon
receipt by Sellers of a confidentiality agreement satisfactory to them executed
by such lender. Upon filing of the Sale motion, Purchaser and Sellers each shall
issue a press release in the respective forms of Exhibits B and C hereto.
Section 5.3 Bankruptcy Court Actions -- Overbid Procedures Motion. The
Purchaser and the Sellers acknowledge that this Agreement is the culmination of
an extensive process undertaken by the Sellers to identify and negotiate a
transaction with a bidder who was prepared to pay the highest and best purchase
price for the assets of the Sellers while assuming or otherwise satisfying
relevant liabilities in order to maximize value for the Sellers' constituents.
The parties also acknowledge that, under the Bankruptcy Code, the Sellers must
take reasonable steps to demonstrate that they have sought to obtain the highest
and best price possible for the Assets, including, but not limited to, giving
notice of the transactions contemplated by this Agreement to creditors and other
interested parties as ordered by the Bankruptcy Court, providing information
about the Business to responsible bidders subject to appropriate confidentiality
agreements, entertaining higher and better offers from responsible bidders, and,
if necessary, conducting an auction. To facilitate the foregoing, the Sellers
shall, within two Business Days after Sellers shall have executed this Agreement
and received from Purchaser the list of Identified Contracts, file a motion (the
"Overbid Procedures Motion") (and seek expedited and emergency consideration of
such motion by the Bankruptcy Court) seeking the entry of an order (the "Overbid
Procedures Order") providing for procedures substantially similar to the
following procedures:
(a) The Sellers may give notice of the transactions contemplated
by this Agreement and of the auction procedure described in the Overbid
Procedures Order to all Persons whom have expressed interest in the Sellers
assets and to whom Sellers sent notice of the fact the Sellers were seeking to
sell some or all of their assets and shall give notice to such other Persons and
in such manner as the Bankruptcy Court shall direct. Sellers may inform
potential bidders only of the name and telephone number of other potential
bidders that have contacted Sellers and indicated an interest in purchasing all
or some of the Assets without disclosing any other information.
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(b) At 10:00 a.m., E.S.T., on the second Business Day before the
date set for hearing on the motion for approval of the transactions contemplated
by this Agreement (the "363 Hearing"), Sellers shall hold an auction at the
Wilmington, Delaware offices of Xxxxx Xxxxxxxx, counsel for the Sellers (the
"Auction"). The following procedures shall be in effect at the Auction:
(i) In order for a Person or group of Persons to make a bid at
the Auction, it or they shall, one Business Day before the Auction
(the third Business Day before the 363 Hearing), provide to Sellers or
their counsel, with (x) appropriate evidence of its or their financial
ability to consummate the transactions contemplated by its or their
bid on or prior to the Closing Date and (y) a certified or bank check
payable to the Seller, Global Link, on behalf of all of the Sellers,
as a good faith deposit in the amount of at least $250,000 (the
"Bidder Deposit") and (z) their bids, in writing, to purchase the
Assets pursuant to the terms of this Agreement;
(ii) prior to the Auction, Sellers shall determine whether there
is a bid or combination of bids (collectively, an "Overbid") for the
Assets of not less than $250,000 in excess of the Purchase Price (the
"Upset Price"), after consideration of all contingencies, adjustments
and liabilities being assumed, which bid or bids Sellers wish to
accept. Any such Overbid must provide for sufficient cash at Closing
to payoff, in full, any amount due, including interest and fees, under
any Debtor in Possession Financing and post-petition first priority
security interests approved by the Bankruptcy Court ;
(iii) If Sellers determine there is such an Overbid, at the
Auction Sellers shall announce the amount of such Overbid and the
names of the bidder or bidders;
(iv) at the Auction, Sellers shall then ask whether any other
Person wishes to make a further bid, which must be at least $100,000
more than the then announced Overbid. If a Person makes such a bid,
the auction shall continue in the same manner until there is no
further bid (or combination of bids) topping the previous bid (or
combination of bids) by at least $100,000;
(v) The Purchaser or the highest bidder (or combination of
bidders) (as determined by the Sellers) shall be the successful
purchaser(s), subject to the approval of the Bankruptcy Court at the
363 Hearing;
22
(c) If Purchaser is not the successful bidder at the Auction, Purchaser
shall be entitled to an upset fee of $75,000, plus its actual costs incurred for
attorneys, accountants and travel expenses up to $25,000 (the "Break-up Fee").
The Break-up Fee shall be allowed as an administrative expense claim in
the Sellers Chapter 11 Cases pursuant to 11.U.S.C. ss.503(b) as an actual,
necessary expense to preserve the value of the bankruptcy estates. The Sellers
acknowledge that the receipt of the offer herein provides significant benefit to
the Chapter 11 Cases in maximizing value to the estates, by, among other things,
serving as the catalyst for any competing higher bids under the auction process
set forth in this Agreement.
(d) Purchaser shall be deemed a party in interest with standing to
appear and be heard in connection with any motion, hearing, or other proceeding
relating to this Agreement or any overbid.
Section 5.4 Bankruptcy Actions -- Sale Motion.
(a) No later than two Business Days after filing the Overbid Procedures
Motion, Sellers will file with the Bankruptcy Court a motion, supporting papers,
and a form of Sale Order, all in form and substance reasonably satisfactory to
Purchaser, seeking the Bankruptcy Court's approval of this Agreement, the
Sellers' performance under this Agreement, and the sale and assignment of the
Assets, the assumption of the Assumed Liabilities and the assumption and
assignment of the Assumed Contracts to the Purchaser pursuant to, inter alia,
Sections 105, 363(b), 363(f) and 365 of the Bankruptcy Code, made returnable not
more than thirty (30) days after filing of such motion (or if the thirtieth day
thereafter is not a Business Day, on the next succeeding Business Day) (the
"Sale Motion").
(b) The Sellers will provide the Purchaser with copies of all motions,
applications, and supporting papers prepared by the Sellers (including forms of
orders and notices to interested parties) relating in any way to Purchaser or
the transactions contemplated by this Agreement as far in advance as practicable
prior to the service and filing thereof in the Chapter 11 Cases.
(c) The Sellers shall promptly give appropriate notice in accordance
with Rules 6004 and 6006 of the Federal Rules of Bankruptcy Procedure and any
order of the Bankruptcy Court, and provide appropriate opportunity for hearing,
to all parties entitled thereto, of all motions, orders, hearings, or other
proceedings relating to this Agreement or the transactions contemplated hereby.
23
Section 5.6 Tax Returns and Filings; Payment of Taxes. Sellers shall
prepare all Tax Returns of Sellers or with respect to the Assets and Business
for periods ending on or prior to the Closing Date. Sellers shall be responsible
for paying all Taxes of Sellers or with respect to the Assets for periods ending
on or prior to the Closing Date. All sales, gross receipts, transfer, filing,
recordation and similar Taxes and fees (including all real estate transfer and
gains Taxes and conveyance and recording fees, if any), and all stamp Taxes,
registration Taxes, excise Taxes, duties or other charges arising from or
associated with the sale and transfer of the Assets as contemplated herein shall
be paid by the Purchaser.
Section 5.7 Notification of Certain Matters. Each of the Sellers and the
Purchaser shall give prompt notice to the other of the following:
(a) the occurrence or non-occurrence after the date hereof of any event
whose occurrence or nonoccurrence would be likely to cause either (i) any
representation or warranty of such party contained in this Agreement to be or
become untrue or inaccurate in any material respect at any time from the date
hereof through the Closing, or (ii) directly or indirectly, a Company Material
Adverse Effect with respect to the Sellers or a Purchaser Material Adverse
Effect with respect to the Purchaser, as the case may be;
(b) any material failure of such party, or any officer, director,
employee or agent of any thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
(c) any notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by it subsequent to the date hereof and prior to the Closing Date,
under any note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, Contract (including any Assumed Contract), lease,
commitment or other instrument or obligation material to the financial
condition, properties, businesses or results of operations of it taken as a
whole to which it is a party or is subject;
(d) any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; and
(e) any objection to the motions to approve the Overbid Procedures Order
or to approve the transactions contemplated by this Agreement or the initiation
of any legal action or proceeding with respect to the transactions contemplated
by
24
this Agreement, including any motion to require Sellers to assume or reject
executory contracts; provided, however, that the delivery of any notice pursuant
to this Section 5.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice hereunder.
Section 5.8 Additional Matters. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all commercially reasonable efforts to obtain
all necessary waivers, consents, and approvals in connection with the
Governmental Requirements and to effect all necessary registrations and filings.
Section 5.9 Satisfaction or Discharge of Encumbrances. Between the date
hereof and the Closing, the Sellers shall take all actions necessary, including
transferring the Encumbrances to the proceeds of sale or the payment of money,
to satisfy or discharge all Encumbrances on the Assets so that, at the Closing,
the Assets are transferred to the Purchaser free and clear of all Encumbrances.
Section 5.10 Assumption of Contracts.
(a) Not later than two Business Days prior to filing the Overbid
Procedures Motion, the Purchaser shall notify the Sellers in writing as to any
executory contracts that Purchaser wishes to assume at Closing (the "Identified
Contracts"). Sellers will set forth the amount Sellers believe is the amount
required to cure defaults or pay damages, as provided in ss.365 of the
Bankruptcy Code, for each such contract (the "Stated Cure Amount"). If a party
to an Assumed Contract fails to object to the Sellers' Stated Cure Amount, such
amount shall be considered the Actual Cure Amount. If a party to an Assumed
Contract has objected to the Sellers' Stated Cure Amount and alleged a different
cure amount (the "Alleged Cure Amount"), then Sellers shall present the dispute
as to Actual Cure Amount to the Bankruptcy Court for determination. To the
extent that the Stated Cure Amounts, Actual Cure Amounts and/or Alleged Cure
Amounts, in the aggregate, exceed $50,000, Sellers shall not be required to
assume and assign any contracts that would cause the Cure Amount to exceed
$50,000. However, notwithstanding the foregoing, Purchaser may (but shall not be
25
required to) pay such Actual Cure Amounts in excess of $50,000, in which event,
Sellers shall assume and assign such contracts to Purchaser.
(b) Notwithstanding the foregoing, in order to permit the Purchaser to
enforce the Restrictive Covenant contained in Section 6.2 of the Merger
Agreement, Sellers shall assume and assign or cause to be assigned to Purchaser,
and Purchaser shall assume the rights and obligations under the following
agreements (as modified in accordance with the Agreement Regarding The
Assignment of Contracts, Cure Amounts and Related Matters, annexed hereto as
Exhibit __): (i) Merger and Reorganization Agreement, dated as of January 31,
1998, among Global Telecommunication Solutions, Inc., Networks Acquisition
Corp., Networks Around the World, Inc., Xxxxxxxx Xxxxxxx and Xxxx Xxxxxxx, (ii)
Non-Negotiable Promissory Note, dated January 31, 1998, in the amount of
$900,000 payable to Xxxxxxxx Xxxxxxx, executed by Global Telecommunication
Solutions, Inc., (iii) Non-Negotiable Promissory Note, dated January 31, 1998,
in the amount of $100,000 payable to Xxxx Xxxxxxx, executed by Global
Telecommunication Solutions, Inc., (iv) Earn Out Agreement, dated as of January
31, 1998 among Global Telecommunication Solutions, Inc. and Xxxxxxxx Xxxxxxx,
(v) Employment Agreement, dated January 31, 1998, between Global
Telecommunication Solutions, Inc. and Xxxxxxxx Xxxxxxx, and (vi) Employment
Agreement, dated January 31, 1998, between Global Telecommunication Solutions,
Inc. and Xxxx Xxxxxxx. The contracts specifically identified in this Section
5.10(b), collectively shall be referred to as the "Conditional Contracts".
Notwithstanding the provisions of Sections 1.5(a) and 1.5(b)(iv) hereof, the
Sellers, not the Purchaser, shall be responsible to pay any Cure Amounts due
under the Conditional Contracts. In addition, to the extent any payment
obligations will come due under the Note payable to Xxxxxxx, listed as (ii)
above, the Note payable to Xxxxxxx, listed as (iii) above, or the Earn-out
Agreement, listed as (iv) above, after Seller shall have assigned and Purchaser
shall have assumed the Conditional Contracts, Purchaser shall be given a credit
against the Purchase Price for the amount of such ongoing obligations at
Closing.
(c) Sellers also shall assign or cause to be assigned to Purchaser and
Purchaser shall assume the rights and obligations under the lease for the
Sellers' principal place of business located at 00 Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxx Xxxxxx 00000.
(d) The Identified Contracts, together with the Conditional Contracts,
collectively shall be referred to as the "Assumed Contracts".
26
Section 5.11 Designation of Assets. Not later than two Business Days prior
to the filing of the Overbid Procedures Motion and the Sale Motion, Purchaser
shall notify Sellers in writing whether it wishes not to acquire any specific
Assets, in which event such designated items shall be deemed to be Excluded
Assets for all purposes of this Agreement. Any designation pursuant to this
Section 5.11 shall not result in any adjustment to the Purchase Price.
ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
Section 6.1 Further Assurances. In addition to the provisions of this
Agreement, from time to time after the Closing Date, the Sellers and the
Purchaser will use all commercially reasonable efforts to execute and deliver
such other instruments of conveyance, transfer or assumption, as the case may
be, and take such other action as may be reasonably requested to implement more
effectively the conveyance and transfer of the Assumed Contracts and other
Assets to the Purchaser and the assumption of the Assumed Liabilities by the
Purchaser, including without limitation the filing with any state public utility
commissions or other regulatory agencies of applications for nunc pro tunc
approval of the transfers of the Assets (including Company Permits) and the
Assumed Contracts from Sellers to Purchaser. If any of the Assumed Contracts
requires the consent of any party thereto which is not obtained, the Sellers
shall use their best efforts to otherwise provide the benefits of such Assumed
Contract to the Purchaser. With respect to the books and records of the Sellers,
the originals of which are to be retained by the Sellers hereunder, from time to
time after the Closing Date, the Sellers shall, upon reasonable request of
Purchaser, provide Purchaser with access to and/or copies of such books and
records as may be reasonably requested and obtained without unreasonable efforts
at no cost or expense to Sellers.
Section 6.2 Third Party Rights. No provision of this Agreement shall create
any third party beneficiary rights in any employee or former employee of the
Sellers or any other persons or entities (including any beneficiary or dependent
thereof) in respect of continued employment (or resumed employment) for any
specified period of any nature or kind whatsoever, and no provision of this
Agreement shall create such third party beneficiary rights in any such persons
or entities in respect of any benefits that may be provided, directly or
indirectly, under any Employee Benefit Plan except to the extent such
obligations are specifically assumed.
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Section 6.3 Employment of the Sellers' Employees. Purchaser shall have the
right, but not the obligation, to offer, effective as of the Closing, to hire
any or all of Sellers' employees. Those employees to be given offers shall be
listed in Section 6.3 of the Purchaser Disclosure Letter, which list shall be
completed not later than three (3) Business Days prior to Closing and which list
shall be mutually agreed upon by Sellers and Purchaser (the "Transferred
Employees"). Sellers shall not unreasonably reject a request by the Purchaser to
include an employee on the list comprising Section 6.3 of the Purchaser
Disclosure Letter. Except as otherwise set forth in Section 6.3 of the Purchaser
Disclosure Letter at such time, salaries of the Transferred Employees shall be
on substantially equivalent terms as existed with Sellers as of the date hereof.
All offers of employment to the Transferred Employees shall require that such
Transferred Employee resign from their employment with Sellers immediately
before the Closing (subject to the occurrence of the Closing). Sellers shall be
obligated to pay any amounts due such employees relating to their employment by
Sellers or the termination of such employment. Purchaser shall provide
substantially similar medical benefits, including insurance, subject to
applicable waiting periods, to the Transferred Employees that Purchaser provides
to its other similarly situated employees.
Section 6.4 Corporate Name.
(a) Prior to the Closing, the Sellers will cooperate with the Purchaser
to assist the Purchaser to qualify to do business in any jurisdiction with any
consents to use of name that are necessary to so qualify with a corporate name
containing the names "Global Link" or "GTS." Immediately after the Closing Date,
the Sellers, at their sole cost and expense, shall promptly take all
commercially reasonable actions (and shall make all filings with all government
entities, including the applicable Secretaries of State) necessary to
discontinue using the names "Global Link" or "GTS," respectively, or any
confusingly similar names as part of the Sellers' corporate names. In connection
therewith, Sellers will take such action as may be required to notify all the
telephone companies and all listing agencies of the termination or expiration of
Sellers' right to use any telephone number and any classified and other
telephone directory listings associated with such Names and to authorize the
transfer of the same to Purchaser (provided, that with respect to telephone
numbers that Sellers have the right to use for the period specified in Section
6.5, Sellers shall not be required to take such action until after the
expiration of such specified period).
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(b) Sellers hereby acknowledge that, from and after the Closing Date,
Purchaser will be the owner of the Names and any goodwill established thereby
shall inure to the exclusive benefit of the Purchaser. The Sellers further agree
that after the Closing Date, the Sellers will not directly or indirectly at any
time use any of the Names whether in connection with the Excluded Assets or
Excluded Liabilities or otherwise, except that Sellers may, in winding up their
affairs, state that they formerly were known by such Names.
Section 6.5 Sellers' Right to Use Certain Assets to Wind Up Operations. For
a period not to exceed twelve (12) months after the Closing Date, Purchaser
shall permit Sellers to use the premises described in Section 6.5 of the Company
Disclosure Letter (provided that such use shall not unreasonably interfere with
Purchaser's use of such premises) and the furniture and fixtures and phone
numbers listed in Section 6.5 of the Company Disclosure Letter solely for the
purpose of winding up their operations; provided that during such period,
Sellers shall pay all rental expenses and other expenses associated with the
upkeep and maintenance of such premises, furniture and fixtures and phone
numbers. Sellers may terminate such use at any time on thirty days' written
notice to Purchaser.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions Precedent to Obligation of the Sellers and the
Purchaser. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction (or mutual
waiver) at or prior to the Closing Date of the following conditions:
(a) no statute, rule, regulation, executive order, decree, ruling, or
preliminary or permanent injunction shall have been enacted, entered,
promulgated, or enforced by any federal or state court or governmental authority
that materially prohibits, restrains, enjoins, or restricts the consummation of
the transactions contemplated by this Agreement;
(b) prior to entry of the Sale Order, no claim, action, suit,
arbitration, inquiry proceeding, or investigation (each, an "Action") shall have
been commenced by or before any United States federal, state, or local or any
foreign government, governmental, regulatory, or administrative authority,
agency, or commission or any court tribunal or judicial or arbitral body against
the Purchaser or the Sellers, seeking to restrain or materially and adversely
alter the transactions contemplated by this Agreement that, in the reasonable
good faith determination of any party, is likely to render it impossible or
unlawful to consummate such transactions; provided, however, that the provisions
of this Section 7.1(b) shall not apply to any party that directly or indirectly
solicited or encouraged any such Action; and
29
(c) the Sale Order shall have been entered by the Bankruptcy Court and
become a Final Order.
Section 7.2 Conditions Precedent to Obligation of the Sellers. The
obligation of the Sellers to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following additional conditions (which conditions may be waived by
Sellers in Sellers' sole discretion):
(a) the Purchaser shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing Date;
(b) with respect to those representations and warranties qualified by
any materiality standard, the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all respects and, with
respect to all other representations and warranties, such representations and
warranties shall be true and correct in all material respects, in each case as
of the date of this Agreement and as of the Closing Date as if made at and as of
such date; and
(c) the Purchaser shall have delivered to the Sellers all items required
to be delivered by them pursuant to Section 2.2.
Section 7.3 Conditions Precedent to Obligation of the Purchaser. The
obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following additional conditions (which conditions may be waived by
Purchaser in Purchaser's sole discretion):
(a) (i) the Sellers shall have performed in all material respects their
obligations under this Agreement required to be performed by them at or prior to
the Closing Date and (ii) with respect to those representations and warranties
qualified by any materiality standard, the representations and warranties of the
Sellers contained in this Agreement shall be true and correct in all respects
and with respect to all other representations and warranties, such
representations and warranties shall be true and correct in all material
30
respects, in each case as of the date of this Agreement and at and as of the
Closing Date as if made at and as of such date;
(b) the Business and the Assets shall not have been materially adversely
affected in any way by any act of God, fire, flood, war, labor disturbance,
material tax legislation enacted, loss of customers, sales representatives,
suppliers or decline in business therewith having a Company Material Adverse
Effect, or other material event or occurrence, and there shall have been no
changes since the date of this Agreement including, but not limited to, any
changes reflected by the updated Company Disclosure Letter that have had or may
reasonably be expected to have a Company Material Adverse Effect; and
(c) Sellers shall have delivered to the Purchaser all the items required
to be delivered by them pursuant to Section 2.2.
ARTICLE VIII
TERMINATION, AGREEMENT, AND WAIVER
Section 8.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Closing Date by mutual written agreement of Purchaser
and Sellers.
Section 8.2 Termination by Sellers. This Agreement may be terminated at any
time on or prior to the Closing Date by the Sellers if:
(a) a condition precedent to the obligations of the Sellers hereunder to
be fulfilled by the Purchaser has not been fulfilled by the time stated herein
for such condition to be fulfilled or, if no such time is stated, by March 15,
2000;
(b) there has been a material breach of any of the representations,
warranties, covenants or agreements set forth in this Agreement on the part of
the Purchaser, which breach is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach is given by Sellers to the
Purchaser;
(c) the Sellers have withdrawn, modified, or changed in a manner adverse
to the Purchaser its approval or recommendation of this Agreement in order to
approve and permit the Sellers to execute a definitive agreement relating to an
Overbid in accordance with Section 5.3 or an overbid procedures order entered by
the Bankruptcy Court; or
31
(d) the Closing does not occur by March 15, 2000, except if such failure
is caused by Sellers' actions or inactions in breach of their obligations under
this Agreement.
Section 8.3 Termination by Purchaser. This Agreement may be terminated at
any time on or prior to the Closing Date by Purchaser if:
(a) a condition precedent to the obligations of the Purchaser hereunder
to be fulfilled by the Sellers has not been fulfilled by the time stated herein
for such condition to be fulfilled or, if no such time is stated, by March 15,
2000;
(b) there has been a material breach of any of the representations,
warranties, covenants or agreements set forth in this Agreement on the part of
the Sellers resulting in a Company Material Adverse Effect, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Purchaser to the Sellers;
(c) the Sellers have withdrawn, modified, or changed in a manner adverse
to the Purchaser its approval or recommendation of this Agreement in order, or
the Sellers otherwise determine, to approve and permit the Sellers to execute a
definitive agreement relating to an Overbid in accordance with Section 5.3 or an
overbid procedures order entered by the Bankruptcy Court;
(d) since the date hereof, there have been one or more events causing a
Company Material Adverse Effect; or
(e) the Closing does not occur by March 15, 2000, except if such failure
is caused by Purchaser's actions or inactions in breach of its obligations under
this Agreement.
Section 8.4 Effect of Termination and Abandonment. In the event of
termination of the Agreement pursuant to this Article VIII, written notice
thereof shall as promptly as practicable be given to the other parties to this
Agreement and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein there shall be no liability
or obligation on the part of the Sellers, the Purchaser or their respective
officers, directors, agents and attorneys, and all obligations of the parties
shall terminate, except:
32
(a) the obligations of the parties pursuant to Sections 5.2, 5.3, 8.4,
8.5, 9.5, 9.6, and 9.11 shall survive;
(b) if this Agreement is terminated by the Sellers pursuant to Section
8.2(a), (b) or (d), Sellers shall receive a credit of $250,000 against amounts
owed under the Service Agreement as liquidated damages (it being agreed that, in
such event, it will not be possible to calculate Sellers' actual damages);
(c) if this Agreement is terminated by Sellers pursuant to Section 8.2(c),
Purchaser shall be entitled to the Break-up Fee set forth in Section 8.5 hereof;
and
(d) if this Agreement is terminated by Purchaser pursuant to Section
8.3(c), Purchaser shall be entitled to the Break-up Fee set forth in Section 8.5
hereof.
Section 8.5 Upset Fee and Expense Reimbursement. Subject to Bankruptcy
Court approval:
(a) Sellers agree and acknowledge that Purchaser's negotiation and
execution of the Agreement have resulted from a substantial investment of
management time and have required significant commitment of financial and other
resources by Purchaser, and that the negotiation and execution of this Agreement
have provided value to Sellers. Therefore, the parties agree that in the event
this Agreement is terminated pursuant to Sections 8.2(c) or 8.3(c), Purchaser
shall be entitled to an Upset Fee and expense reimbursement (collectively
"Break-up Fee") in the amount and to the extent approved by the Bankruptcy Court
in the Overbid Procedures Order;
(b) the obligations hereunder shall survive any termination of this
Agreement, and shall constitute an administrative expense of Sellers under
Sections 503(b) and 507(a)(1) of the Bankruptcy Code
(c) Purchaser shall submit to Sellers an itemized statement reflecting
such actual reasonable expenses. Within five days thereafter, Sellers shall make
an Expense Reimbursement for any amounts not in dispute without further order of
the Bankruptcy Court;
(d) with respect to any amounts reasonably disputed by Sellers, Sellers
and Purchaser shall, in good faith, cooperate with each other to reach an
agreement as to the portion of such disputed amount with respect to which
Purchaser will be entitled to reimbursement hereunder and, within five days
after such agreement is reached, Sellers shall make an Expense Reimbursement for
such amounts without further order of the Bankruptcy Court;
33
(e) if the parties are unable, within thirty days, to resolve a dispute,
either party may submit the dispute to the Bankruptcy Court for its
determination.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 No Merger. The representations, warranties, covenants, and
agreements contained in or made pursuant to this Agreement shall not merge, be
extinguished or otherwise affected by the Closing, and all of such
representations, warranties and agreements shall survive the Closing and
continue for the period specified herein.
Section 9.2 Notices. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed given upon (a) facsimile
transmission, (b) confirmed delivery by a standard overnight carrier or when
delivered by hand, or (c) the expiration of five (5) Business Days after the day
when mailed by registered or certified mail (postage prepaid, return receipt
requested), addressed to the respective parties at the following addresses (or
such other address for a party as shall be specified by like notice):
(a) If to the Purchaser to:
JD Services, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention:Xxxxxx X. Xxxxx
Telecopier: (000)000-0000
with copies to
JD Services, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention:Xxxx Xxxxx, Esq.
Telecopier: (000)000-0000
34
(b) If to the Sellers, to
Global Link Telecom Corporation
00 Xxxx Xxxx -- Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxx R. Montellaro
Telecopier: (000) 000-0000
with copies to
Xxxxxxxxxx, Xxx Xxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
and
Klehr, Harrison, Xxxxxx,
Branzburg & Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Section 9.3 Descriptive Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the construction
or interpretation of this Agreement.
Section 9.4 Entire Agreement; Assignment.
(a) This Agreement (including the Exhibits, if any, the Purchaser
Disclosure Letter, the Company Disclosure Letter, and the other documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings both written and oral, among the
parties or any of them, with respect to the subject matter hereof, including,
without limitation, any transaction between or among the parties hereto.
(b) The rights and obligations of the Purchaser under this Agreement
with respect to any specified Assets may be assigned by the Purchaser to any
third party, subject to the assumption by such assignee of the obligations of
the Purchaser hereunder with respect to such specified Assets. After any such
35
assignment, the assignee shall be deemed to be the Purchaser with respect to
such specified Assets for all purposes of this Agreement. Notwithstanding the
foregoing, any such assignment shall not release the Purchaser from any of its
obligations hereunder.
Section 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the rules of conflict of laws of the State of Delaware or any other
jurisdiction. Each of the parties hereto irrevocably and unconditionally
consents to submit to the jurisdiction of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") for any litigation arising out
of or relating to this Agreement and the transactions contemplated thereby (and
agrees not to commence any litigation relating thereto except in such court),
waives any objection to the laying of venue of any such litigation in the
Bankruptcy Court, and agrees not to plead or claim that such litigation brought
in the Bankruptcy Court has been brought in an inconvenient forum.
Section 9.6 Expenses. Except as set forth in Sections 5.6, 8.4 and 8.5,
whether or not the transactions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses.
Section 9.7 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties hereto.
Section 9.8 Waiver. At any time prior to the Closing Date, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in instrument in
writing signed on behalf of such party.
Section 9.9 Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be in original but
all of which shall constitute one and the same agreement. This Agreement shall
36
become effective when each party hereto shall have received counterparts thereof
signed by all the other parties hereto.
Section 9.10 Severability; Validity; Parties in Interest. If any provision
of this Agreement or the application thereof to any person or circumstance is
held invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances, shall not be
affected thereby, and to such end, the provisions of this Agreement are agreed
to be severable. Nothing in this Agreement, expressed or implied, is intended to
confer upon any person not a party to this Agreement any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 9.11 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any state or federal court in
the State of Michigan, this being in addition to any other remedy to which they
are entitled at law or in equity.
ARTICLE X
DEFINITIONS
Section 10.1 Defined Terms. As used herein, the terms below shall have the
following meanings.
"Action" has the meaning set forth in Section 7.1(b).
"Agreement" has the meaning set forth in the Preamble to this
Agreement.
"Assets" has the meaning set forth in Section 1.1.
"Applicable Requirements" has the meaning set forth in Section 3.15.
37
"Assumed Contracts" has the meaning set forth in Section 5.10.
"Assumed Liabilities" has the meaning set forth in Section 1.3.
"Auction" has the meaning set forth in Section 5.3(b).
"Bankruptcy Code" has the meaning set forth in the Recitals to this
Agreement.
"Bankruptcy Court" has the meaning set forth in the Recitals to this
Agreement.
"Bidder Deposit" has the meaning set forth in Section 5.3(b).
"Break-up Fee" has the meaning set forth in Section 8.5.
"Business" has the meaning set forth in the Recitals to this Agreement.
"Business Day" means a day other than Saturday or Sunday on which banks
are not required or authorized to be closed in the City of New York, State of
New York.
"Chapter 11 Cases" has the meaning set forth in the Recitals to this
Agreement.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Official Committee of Unsecured Creditors of the
Sellers appointed in the Chapter 11 Cases.
"Company Disclosure Letter" has the meaning set forth in Article III.
38
"Company Material Adverse Effect" means any events, conditions, or
matters in respect of the Sellers, the Assets and the Assumed Liabilities
(collectively, the "Acquired Businesses"), other than the filing of the Chapter
11 Cases, that in the aggregate taking into account all events, conditions or
matters in respect of the Acquired Businesses (whether or not in connection with
the same or any similar representation, warranty or matter) materially impair
the ability of the Sellers to perform their obligations hereunder or to
consummate the transactions contemplated hereby or which result in or are
reasonably expected to result in a loss, cost, or charge to the Acquired
Businesses not in the ordinary course of the Sellers' business which exceeds
$1,000,000, provided, however, that any of the events, conditions or matters
that exist on the date hereof and have been reflected in this Agreement or
disclosed in the Company Disclosure Letter as presented on the date of this
Agreement (in each case without taking into account any dollar threshold) shall
not be deemed to constitute a Company Material Adverse Effect, except for and
expressly excluding, however, those events, conditions or matters which were to
be voided or otherwise made unenforceable against the Assets once the Assets
were transferred to Purchaser pursuant to the Sale Order, but which events,
conditions or matters have in fact not been voided or made unenforceable, in
which case such events, conditions or matters shall be included in the
determination of a Company Material Adverse Effect.
"Company Permits" has the meaning set forth in Section 3.9.
"Conditional Contracts" has the meaning set forth in Section 5.10.
"Contract" means any contract, agreement, understanding or arrangement
(whether written or oral) entered into by any of the Sellers and including all
conditional and executory contracts, agreements, understandings and
arrangements.
"Cost of Servicing Issued Phonecards" has the meaning set forth in
Section 1.5(b)(i).
"Cure Amounts" has the meaning set forth in Section 5.10(a).
"Employee Benefit Plans" has the meaning set forth in Section 3.14.
39
"Encumbrances" has the meaning set forth in Section 3.10(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" has the meaning set forth in Section 1.2.
"Excluded Liabilities" has the meaning set forth in Section 1.4.
"Final Order" means an order of the Bankruptcy Court in the Chapter 11
Cases which (a) shall not have been reversed, stayed, modified or amended and
with respect to which (i) the time to appeal from or seek review or rehearing of
such order shall have expired; and (ii) no motion for rehearing,
reconsideration, amendment or new trial is pending; or (b) with respect to the
363 Order, although subject to appeal, no stay of the order being appealed from
has been obtained, whether by supersedeas bond, collateral security or
otherwise.
"Governmental Requirements" has the meaning set forth in Section 3.3.
"Issued Phonecards" has the meaning set forth in Section 1.3.
"Intellectual Property" means all United States (a) patents and patent
applications (including reissues, divisions, continuations-in-part and
extensions thereof), invention disclosures, inventions, know- how and
improvements thereto; (b) trademarks, trade names, service marks, trade dress
and logos and registrations and applications for registration thereof; (c)
copyrights and registrations thereof; (d) software, programs, databases and the
like; and (e) licenses of any of the foregoing.
"Legal Proceeding" means any judicial, administrative, regulatory or
arbitral proceeding, investigation or inquiry or administrative charge or
complaint pending at law or in equity before any court, governmental or
regulatory body or authority.
40
"Overbid" has the meaning set forth in Section 5.3.
"Overbid Procedures Motion" has the meaning set forth in Section 5.3.
"Overbid Procedures Order" has the meaning set forth in Section 5.3.
"Person" means any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust or other
entity.
"Petition Date" means October 28, 1999, the date on which the Petitions
were filed with the Bankruptcy Court.
"Petitions" has the meaning set forth in the Recitals to this
Agreement.
"Purchase Price" has the meaning set forth in Section 1.5.
"Purchaser" has the meaning set forth in the Preamble to this
Agreement.
"Purchaser Disclosure Letter" has the meaning set forth in Article IV.
"Purchaser Material Adverse Effect" has the meaning set forth in
Section 4.3.
"Sale Motion" has the meaning specified in Section 5.4.
"Sale Order" means an order of the Bankruptcy Court, in form and
substance reasonably satisfactory to the Purchaser and the Sellers, approving
and authorizing the sale of the Business and the Assets, and approving the
assumption and assignment of all Assumed Contracts by the Sellers to the
Purchaser under this Agreement pursuant to, inter alia, Sections 105, 363 and
365 of the Bankruptcy Code.
The Sale Order shall provide that: (a) this Agreement and the
transactions contemplated herein, including the transfer of the Assets by the
Sellers to the Purchaser as provided in this Agreement are approved and
41
authorized; (b) the transfer of the Assets by Sellers to Purchaser is or will be
a legal, valid, and effective transfer of the Assets notwithstanding any
requirement for approval or consent by any entity (as defined in Section 101(15)
of the Bankruptcy Code); (c) the transfer of the Assets by Sellers to Purchaser
vests the Purchaser with good and indefeasible title to the Assets free and
clear of all liens, claims and Encumbrances, except those expressly assumed by
the Purchaser hereunder and any such liens or claims which existed prior to the
Closing or which arise as a result of any Employee Benefit Plan shall attach to
the Purchase Price paid to Sellers; and (d) the transfer of the Assets is in
exchange for consideration being paid by the Purchaser that constitutes
reasonably equivalent value and fair consideration under the Bankruptcy Code and
under the laws of the United States, any state, territory, possession, or the
District of Columbia.
The Sale Order shall further provide that (t) the Bankruptcy
Court retains jurisdiction to enforce the provisions of this Agreement in all
respects, including retaining jurisdiction to protect Purchaser against any of
the Excluded Liabilities; (u) the transactions contemplated by this Agreement
are undertaken by the Purchaser in good faith, as that term is used in Section
363(m) of the Bankruptcy Code, and the Purchaser is entitled to the rights and
protection granted thereby; (v) there exist exigent business reasons for the
sale of the Assets to the Purchaser; (w) the sale is in the best interests of
the debtors' (Sellers') estates, their creditors, their Customers and their
equity security holders and is otherwise in the public interest; (x) there has
been such notice as is appropriate in the particular circumstances given to all
parties required by law to receive notice of the sale and such opportunity for
hearing as is appropriate in the particular circumstances; (y) the Business and
the Assets have been adequately marketed and will lose value absent a sale; and
(z) all of the requirements of Section 363 of the Bankruptcy Code have been met.
The Sale Order also shall provide that (a) all defaults of
Sellers under the Assumed Contracts arising prior to the Closing (without giving
effect to any acceleration clauses or any default provisions in such contracts
of a kind specified in Section 365(b)(2) of the Bankruptcy Code) have been cured
or will be promptly cured by Sellers such that Purchaser shall have no liability
or obligation with respect to any default or obligation payable prior to the
Closing, except as may otherwise be specifically agreed as set forth in this
Agreement; (b) any actual pecuniary loss resulting from a default by Sellers has
been or will be promptly compensated by Sellers to the extent ordered by the
Bankruptcy Court such that Purchaser shall have no liability or obligation with
respect to any default or obligation incurred prior to the Closing; (c) the
Purchaser has provided adequate assurance of future performance of the Assumed
42
Contracts within the meaning of Section 365(f)(2) of the Bankruptcy Code; and
(d) the Assumed Contracts (other than Excluded Liabilities) will be transferred
to and remain in full force and effect for the benefit of the Purchaser,
notwithstanding any provisions in such Assumed Contracts or in applicable law
(including, without limitation, those described in Sections 365(b)(2) and (f) of
the Bankruptcy Code) that prohibit, restrict, or limit in any way such
assignment or transfer.
In addition, the Sale Order shall not impose any material
obligations on the Purchaser or Sellers not contemplated herein.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller"or "Sellers" have the meanings set forth in the Preamble to
this Agreement.
"Stated Cure Amount" has the meaning set forth in Section 5.10(a).
"Tax" or "Taxes" means (a) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other taxes, charges, fees,
registration fees, revenue permit fees, levies or other assessments whatsoever,
including without limitation, gross receipts, franchise, profits, sales, use,
occupation, value added, ad valorem, transfer, withholding, payroll employment,
environmental, social security, disability, unemployment fund contributions,
alternative or add-on minimum, estimated, excise, or property taxes, together
with any interest, penalties or additions to tax imposed with respect thereto
and (b) any obligations under any agreements or arrangements with respect to any
Taxes described in clause (a) above.
"Tax Returns" means all federal, state, local, and foreign tax returns,
declarations, statements, reports, schedules, forms, and information returns and
any amended Tax Returns relating to Taxes.
"Transferred Employees" has the meaning set forth in Section 6.3.
"Upset Price" has the meaning set forth in Section 5.3(b).
43
"363 Hearing" has the meaning set forth in Section 5.3.
IN WITNESS WHEREOF, the Sellers and Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunder duly
authorized, as of the date first above written.
PURCHASER:
JD SERVICES, INC.
/s/ Xxxxxx X. Xxxxx
By:__________________________
Name: Xxxxxx X. Xxxxx
Title: CEO
SELLERS:
GLOBAL LINK TELECOM CORPORATION
/s/ Xxx X. Xxxxxxxxxx
By: ____________________________
Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O.
TELTIME, INC. NETWORK SERVICES SYSTEM, INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
By:_____________________________ By: ___________________________
Name: Xxx X. Xxxxxxxxxx Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O. Title: V.P. & C.F.O.
NETWORK SERVICES SYSTEM, L.P. GTS MARKETING, INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
By:__________________________ By: ____________________________
Name: Xxx X. Xxxxxxxxxx Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O. Title: V.P. & C.F.O.
44
NETWORKS AROUND THE WORLD, INC. GTS HOLDING CORP., INC.
/s/ Xxx X. Xxxxxxxxxx /s/ Xxx X. Xxxxxxxxxx
By:____________________________ By: ______________________________
Name: Xxx X. Xxxxxxxxxx Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O. Title: V.P. & C.F.O.
CENTERPIECE COMMUNICATIONS, INC.
/s/ Xxx X. Xxxxxxxxxx
By: _____________________________
Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O.
GLOBAL TELECOMMUNICATIONS SOLUTIONS, L.P.
/s/ Xxx X. Xxxxxxxxxx
By: _____________________________________
Name: Xxx X. Xxxxxxxxxx
Title: V.P. & C.F.O.
45
