EXHIBIT 2.1
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
by and between
APPLIEDTHEORY CORPORATION,
as Seller
and
FASTNET ACQUISITION CORP.,
as Purchaser
Dated as of April 17, 2002
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF ASSETS................................................................1
Section 1.1. Acquired and Excluded Assets......................................................1
Section 1.2. Contract Rejection and Assumption.................................................2
Section 1.3. Amounts Due Under Executory Contracts and Unexpired Leases; Cure Costs............2
Section 1.4. Assumed and Excluded Liabilities..................................................2
Section 1.5. Condition of Acquired Assets......................................................3
Section 1.6. Purchase Price....................................................................3
Section 1.7. Allocation of Purchase Price......................................................3
Section 1.8. Good Faith Deposit................................................................3
Section 1.9. Collection of Accounts Receivable.................................................4
ARTICLE II THE CLOSING................................................................................4
Section 2.1. Closing...........................................................................4
Section 2.2. Certain Deliveries at Closing.....................................................4
Section 2.3. Additional Deliveries at Closing..................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER...................................................5
Section 3.1. Organization......................................................................5
Section 3.2. Authority Relative to this Agreement..............................................5
Section 3.3. Consents and Approvals............................................................5
Section 3.4. Title to Property.................................................................6
Section 3.5. Brokers...........................................................................6
Section 3.6. Contracts.........................................................................6
Section 3.7. Leases............................................................................6
Section 3.8. Compliance with Law...............................................................6
Section 3.9. Intellectual Property.............................................................7
Section 3.10. Customers.........................................................................7
Section 3.11. Licenses and Permits..............................................................7
Section 3.12. Environmental Matters.............................................................7
Section 3.13. Employees.........................................................................7
Section 3.14. Assets............................................................................8
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT GUARANTOR...........................8
Section 4.1. Organization......................................................................8
Section 4.2. Authority Relative to this Agreement..............................................8
Section 4.3. Consents and Approvals............................................................8
Section 4.4. Brokers...........................................................................9
Section 4.5. Financing.........................................................................9
ARTICLE V COVENANTS..................................................................................9
Section 5.1. Conduct of Business by Seller Pending the Closing.................................9
Section 5.2. Access and Information...........................................................10
Section 5.3. Additional Matters...............................................................10
Section 5.4. Further Assurances...............................................................11
Section 5.5. Audit Right......................................................................11
Section 5.6. Right of Notice Over Certain Other Assets........................................11
ARTICLE VI CONDITIONS PRECEDENT......................................................................12
Section 6.1. Conditions Precedent to Obligation of Seller and Purchaser.......................12
Section 6.2. Conditions Precedent to Obligation of Seller.....................................12
ARTICLE VII TERMINATION...............................................................................12
Section 7.1. Termination......................................................................12
Section 7.2. Effect of Termination............................................................12
Section 7.3. Overbid Fee......................................................................13
ARTICLE VIII EMPLOYEE MATTERS..........................................................................13
Section 8.1. Hiring of Employees; No Prior Service Credit.....................................13
ARTICLE IX RISK OF LOSS..............................................................................15
Section 9.1. Risk of Loss.....................................................................15
ARTICLE X BANKRUPTCY COURT APPROVAL.................................................................16
Section 10.1. Bankruptcy Court Approval Process................................................16
Section 10.2. Acknowledgement..................................................................17
Section 10.3. Hearings Schedule................................................................17
ARTICLE XI INTENTIONALLY OMITTED.....................................................................17
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE XII DEFINITIONS...............................................................................17
Section 12.1. Definitions......................................................................17
ARTICLE XIII GENERAL PROVISIONS........................................................................22
Section 13.1. Survival of Representations and Warranties.......................................22
Section 13.2. Taxes............................................................................23
Section 13.3. Notices..........................................................................23
Section 13.4. Publicity........................................................................23
Section 13.5. Descriptive Headings.............................................................24
Section 13.6. Entire Agreement; Assignment.....................................................24
Section 13.7. Governing Law....................................................................24
Section 13.8. Expenses.........................................................................24
Section 13.9. Amendment........................................................................24
Section 13.10. Waiver...........................................................................24
Section 13.11. Counterparts; Effectiveness......................................................25
Section 13.12. Severability; Validity; Parties in Interest......................................25
Section 13.13. Bulk Sales.......................................................................25
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SCHEDULES
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Schedule 1.1 Acquired Assets
Schedule 1.2 Designated Contracts
Schedule 3.3 Consents and Approvals
Schedule 3.6 Contracts
Schedule 3.7 Leases
Schedule 3.9 Intellectual Property
Schedule 3.10 Customers
Schedule 3.11 Licenses and Permits
Schedule 8.1(a) Access Employees
EXHIBITS
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Exhibit A Sale Order
Exhibit B Sale Procedures Order
Exhibit C Assumption Agreement
Exhibit D Xxxx of Sale
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of April
17, 2002, is made by and between AppliedTheory Corporation, a Delaware
corporation and its Subsidiaries (collectively, "Seller"), and Fastnet
Acquisition Corp., a Pennsylvania corporation ("Purchaser").
WHEREAS, on April 17, 2002, Seller and its subsidiaries (the
"Subsidiaries") each filed a voluntary petition for relief under Chapter 11 of
Title 11 of the United States Code, 11 U.S.C. ss.ss.101, ET SEQ. (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") and continue to manage their
properties as debtors and debtors-in-possession pursuant to Sections 1107 and
1108 of the Bankruptcy Code;
WHEREAS, Seller and its Subsidiaries have offered their assets for sale
and Purchaser desires to purchase certain assets and assume certain liabilities
from Seller and certain of its Subsidiaries, and Seller desires to (and to cause
its Subsidiaries to) sell, convey, assign, and transfer to Purchaser such assets
and liabilities, pursuant to the terms and conditions of this Agreement;
WHEREAS, such assets will be sold pursuant to the terms of this
Agreement and an order of the Bankruptcy Court substantially in the form
attached hereto as EXHIBIT A approving such sale under Section 363 of the
Bankruptcy Code and the assumption and assignment to Purchaser of certain
executory contracts and unexpired leases under Section 365 of the Bankruptcy
Code (the "Sale Order");
WHEREAS, the Purchaser is an indirect wholly-owned subsidiary of
FASTNET Corporation, a Pennsylvania corporation (the "Parent Guarantor"), and
the Parent Guarantor is willing to guarantee to the Seller the performance of
all of Purchaser's obligations under this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. ACQUIRED AND EXCLUDED ASSETS. Pursuant to Sections 105,
363 and 365 of the Bankruptcy Code and subject to the terms and conditions set
forth in this Agreement, at the Closing, Seller shall, and shall cause its
Subsidiaries and Affiliates to, sell, assign, transfer, convey, and deliver to
Purchaser, and Purchaser shall purchase and accept from Seller and its
Subsidiaries and Affiliates, free and clear of all Liens (except for the Assumed
Liabilities), all of Seller's and its Subsidiaries' and Affiliates' right,
title, and interest in, to and under the Assets and Properties owned or used by
Seller and its Subsidiaries and Affiliates primarily in, or otherwise necessary
to the operation of, the Access Business to customers located in the Footprint
(collectively, the "Acquired Assets"). The Acquired Assets shall include,
without limitation, all Assets and Properties set forth in SCHEDULE 1.1, whether
tangible or intangible as the same shall exist on the Closing Date. It is agreed
and acknowledged that, (i) the Acquired Assets shall include each customer
contract for customers of the Access Business located in the Footprint (except
for those customer contracts that Purchaser notifies Seller in writing at or
prior to Closing it will not acquire), as well as the contracts listed in
SCHEDULE 1.1 for both access and hosting or other services, (ii) the Acquired
Assets shall include those items of tangible personal property listed in
SCHEDULE 1.1, (iii) the Acquired Assets shall not include any cash, accounts
receivable or rights to tax refunds, and (iv) other than the Acquired Assets,
the Purchaser is not acquiring or accepting any of the other Assets and
Properties of the Seller or its Affiliates. All of Seller's and its Affiliates'
Assets and Properties that are not Acquired Assets shall be referred to herein
as the "Excluded Assets".
Section 1.2. CONTRACT REJECTION AND ASSUMPTION. SCHEDULE 1.2 is a list
of executory contracts and unexpired leases (each a "Designated Contract" and
collectively, the "Designated Contracts") that Seller shall assume and assign to
Purchaser at Closing. (For greater certainty, (a) the contracts and leases on
that list labeled "Reject" or any similar label and (b) those customer contracts
that Purchaser notifies Seller in writing at or prior to Closing it will not
acquire, shall not be assumed and assigned and shall not be deemed to be
"Designated Contracts" for purposes of this Agreement.) The Designated Contracts
are included within the Acquired Assets.
Section 1.3. AMOUNTS DUE UNDER EXECUTORY CONTRACTS AND UNEXPIRED
LEASES; CURE COSTS. Purchaser shall pay any and all cure and reinstatement costs
or expenses of or relating to the assumption and assignment of the Designated
Contracts in full satisfaction of all due and unpaid Liabilities under the
Designated Contracts through the Closing Date for those contracts that remain
Designated Contracts at Closing (the "Cure Amounts"). Except to the extent
provided in the preceding sentence, Purchaser shall have no liability for any
amounts due under the Designated Contracts which arose or accrued on or prior to
the Closing Date.
Section 1.4. ASSUMED AND EXCLUDED LIABILITIES. Subject to the terms and
conditions set forth in this Agreement, at the Closing, Purchaser shall assume
from Seller and its Affiliates and thereafter pay, perform, or discharge in
accordance with their terms, only those obligations that arise after the Closing
under the Designated Contracts. The Liabilities to be assumed pursuant to this
Agreement shall be referred to herein as the "Assumed Liabilities" and all other
Liabilities shall be referred to herein as the "Excluded Liabilities". Purchaser
shall not be obligated to assume or pay, perform, succeed to, discharge, become
subject to or be responsible for any of the Liabilities of Seller or its
Affiliates other than the Assumed Liabilities. Without limiting the generality
of the foregoing, Purchaser shall not assume or pay, perform, succeed to,
discharge, become subject to or be responsible for any of the Liabilities of
Seller or any of its Affiliates (a) pursuant to any Contract that is not a
Designated Contract or (b) related to any products or services provided by
Seller or any of its Affiliates at or prior to the Closing. The Sale Order shall
provide for the release and discharge of Purchaser and all of its Affiliates as
provided herein with respect to the Excluded Liabilities, as well as an
injunction prohibiting any action by any party against the Purchaser or any of
its Affiliates in connection with the Excluded Liabilities. The assumption by
Purchaser of the Assumed Liabilities shall not expand the rights or remedies of
any third party either against Purchaser or Seller as compared to the rights and
remedies that such third party would have had against Seller had Purchaser not
assumed the Assumed Liabilities. Without limiting the generality of the
foregoing, the assumption by Purchaser of the Assumed Liabilities shall not
create any third party beneficiary rights.
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Section 1.5. CONDITION OF ACQUIRED ASSETS. Except as otherwise stated
in this Agreement, Purchaser is taking the Acquired Assets and Assumed
Liabilities on an "as is, where is" basis, without representation or warranty of
any kind whatsoever. In entering into this Agreement, Purchaser acknowledges
that, except for the specific representations and warranties of Seller contained
herein, none of Seller, nor any of its directors, officers, employees,
Affiliates, controlling persons, agents, advisors or representatives, makes or
shall be deemed to have made any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information
(including, without limitation, any reserve estimates, projections, forecasts or
other forward-looking information) provided or otherwise made available to
Purchaser or any of its directors, officers, employees, Affiliates, controlling
persons, agents, advisors or representatives (including, without limitation, in
any management presentations, information or offering memorandum, supplemental
information or other materials or information with respect to any of the above).
It is acknowledged and agreed that nothing contained in this Section 1.5 shall
in any way affect Purchaser's right to terminate this Agreement pursuant to
Section 7.1(d).
Section 1.6. PURCHASE PRICE. In consideration for the Acquired Assets,
Purchaser shall pay to Seller an amount (the "Purchase Price") equal to Four
Million Dollars ($4,000,000). The Purchaser shall pay the Purchase Price to
Seller at the Closing; PROVIDED that the amount of such payment shall be reduced
by the amount of the Good Faith Deposit.
Section 1.7. ALLOCATION OF PURCHASE PRICE. To the extent required by
Law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder. Such statements or forms and any other
tax filings shall be consistent with the allocation, if any, of all or a portion
of the Purchase Price and the Assumed Liabilities among the Acquired Assets
requested by Purchaser and agreed to by Seller prior to the Closing. Such
allocation of the Purchase Price will not be binding in the Cases upon the
Seller's and its Affiliates' creditors or other parties in interest and will not
have precedential value with respect to any allocations of value contained in a
plan or plans under Chapter 11 of the Bankruptcy Code or otherwise related to
the Cases involving Seller or its Affiliates.
Section 1.8. GOOD FAITH DEPOSIT. Within three (3) days of the execution
of this Agreement, Purchaser shall have delivered to Seller a certified check
payable to the order of Seller's attorneys or a wire transfer to Seller's
attorneys' bank account designated by Seller, in the amount of Ninety Thousand
Dollars ($90,000), to be held by Seller's attorneys and applied as provided in
this Agreement (together with any interest earned thereon, the "Good Faith
Deposit"). The Good Faith Deposit shall be applied toward the Purchase Price at
Closing or returned to Purchaser as provided in Section 7.2(b). Unless otherwise
agreed by Purchaser and Seller and approved by the Bankruptcy Court, the Good
Faith Deposit shall be returned to Purchaser if the Agreement is terminated,
except as may otherwise be provided in Section 7.2(b).
Section 1.9. COLLECTION OF ACCOUNTS RECEIVABLE. With respect to all
accounts receivable from customers of the Access Business (whether or not such
customers are located in the Footprint) in existence on the Closing Date (the
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"CLOSING RECEIVABLES"), Purchaser shall use good faith efforts to collect
promptly such Closing Receivables on behalf of the Seller (or shall appoint a
Person reasonably acceptable to Seller to make such collections), and shall
promptly turn over to Seller any amounts that Purchaser collects with respect to
such Closing Receivables. From and after the Closing Date, none of Seller, its
Affiliates or any of their respective successors or assigns shall, directly or
indirectly, take any actions to collect (or authorize, permit or direct any
other Person to collect) the Closing Receivables, unless otherwise requested by
Purchaser. Purchaser agrees that on or prior to December 31, 2002, Purchaser
shall collect and remit to Seller no less than an aggregate of $2,500,000 of
Closing Receivables. If Purchaser shall not have collected and remitted to
Seller an aggregate of $2,500,000 of Closing Receivables on or prior to December
31, 2002, then Purchaser shall pay to Seller on such date, as additional
consideration hereunder, an amount equal to such difference. Purchaser shall
have no obligation to collect any Closing Receivables after December 31, 2002
that have not been collected on or prior to such date.
ARTICLE II
THE CLOSING
Section 2.1. CLOSING. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxx,
Xxxxx & Bockius LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 3:00 p.m. on
Thursday, May 30, 2002 or at such other time, date, and place as shall be agreed
upon by the parties (the date of the Closing being herein referred to as the
"Closing Date").
Section 2.2. CERTAIN DELIVERIES AT CLOSING. The sale, transfer,
assignment and delivery by Seller and its Affiliates of the Acquired Assets to
Purchaser and the assumption by Purchaser of the Assumed Liabilities, as
provided herein, shall be effected on the Closing Date by the execution and
delivery by Seller and its Affiliates and Purchaser of (i) one or more
assignment and assumption agreement(s) with regard to the Designated Contracts
substantially in the form of Exhibit C hereto (the "Assumption Agreement") and
(ii) one or more bills of sale or deeds, as applicable, with respect to the
Acquired Assets substantially in the form of Exhibit D hereto (the "Bills of
Sale").
Section 2.3. ADDITIONAL DELIVERIES AT CLOSING.
(a) At the Closing, Seller shall (and shall cause its Affiliates to)
deliver to Purchaser executed copies of the Definitive Agreements to which it is
a party and such additional documents, instruments or certificates required to
be delivered in connection with Seller's obligations under this Agreement, or as
Purchaser or its counsel may reasonably request.
(b) At the Closing, Purchaser shall deliver to Seller (i) executed
copies of the Definitive Agreements to which it is a party and such additional
documents, instruments or certificates required to be delivered in connection
with Purchaser's obligations under this Agreement, or as Seller or its counsel
may reasonably request and (ii) the Purchase Price (reduced by the amount
specified in the proviso to Section 1.6) by wire transfer of immediately
available funds to an account or accounts designated by Seller.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser and Parent Guarantor as of
the date hereof and as of the Closing Date as follows:
Section 3.1. ORGANIZATION. Each of Seller and those of its Affiliates
that are transferring Acquired Assets hereunder (collectively, the "Selling
Companies") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its 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 and to enter into this
Agreement and each of the other Definitive Agreements to which it is a party and
to carry out its obligations hereunder and thereunder. Each Selling Company is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the operations of its business are conducted, except
where the failure to be so qualified would not individually or in the aggregate
either have a material adverse effect on its business, on the Acquired Assets or
Assumed Liabilities, on the Access Business in the Footprint or on the Selling
Companies' ability to consummate the transactions contemplated herein or
materially hinder or delay such consummation (any of the foregoing, a "Material
Adverse Effect").
Section 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Subject to the entry
and effectiveness of the Sale Order, this Agreement and each of the other
Definitive Agreements has been duly and validly authorized, executed and
delivered by Seller and its Affiliates party thereto and (assuming this
Agreement and each of the other Definitive Agreements constitutes a valid and
binding obligation of Purchaser) constitutes a valid and binding agreement of
Seller and such Affiliates, enforceable against Seller and its Affiliates party
thereto in accordance with their respective terms.
Section 3.3. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE
3.3, no consent, approval, or authorization of, waiver from or declaration,
filing, or registration with, any Governmental or Regulatory Authority or other
Person (including without limitation any party to any Designated Contract) is
required to be made or obtained in connection with the execution, delivery, and
performance of this Agreement and each of the other Definitive Agreements by
Seller and its Affiliates party thereto and the consummation of the transactions
contemplated hereby and thereby, except for consents, approvals, or
authorizations of, or declarations or filings with, the Bankruptcy Court, all of
which will be satisfied by the entry and effectiveness of the Sale Order. Except
as set forth on SCHEDULE 3.3, the execution, delivery and performance by Seller
and its Affiliates of this Agreement and each of the other Definitive Agreements
and the consummation of the transactions contemplated hereby and thereby do not
and will not (i) result in a breach of any material obligation, (ii) constitute
a default or an event creating rights of acceleration, termination or
cancellation or a loss of any material rights or (iii) result in the creation or
imposition of any Lien upon any of the Acquired Assets, in each case under any
provision of (A) the certificates of incorporation, bylaws or other constitute
documents of Seller and its Affiliates or (B) any Contract to which Seller or
any of its Affiliates is a party.
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Section 3.4. TITLE TO PROPERTY. Upon entry and effectiveness of, and in
accordance with the terms of, the Sale Order and the Bankruptcy Code, each
Selling Company (a) shall have the power and right to sell, assign, transfer and
deliver, as the case may be, to Purchaser the Acquired Assets and (b) on the
Closing Date shall sell, assign, transfer and deliver to the Purchaser the
Acquired Assets free and clear of all Liens, except for the Assumed Liabilities.
Section 3.5. BROKERS. No person other than Xxxxxxx & Associates, L.P.,
is entitled to any brokerage, financial advisory, finder's or similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller or any Affiliate of
Seller. Seller shall be responsible for all of the fees and expenses of Xxxxxxx
& Associates, L.P.
Section 3.6. CONTRACTS. True and complete copies of each written
Designated Contract (or written summaries of the terms of any oral Designated
Contract) have been heretofore made available to Purchaser. There are no
Contracts (other than Contracts which Purchaser has directed Seller in writing
to reject) to which the Seller or its Affiliates are parties that are material
to any of the Designated Contracts or to the operation of the Access Business in
the Footprint, in each case other than the Designated Contracts and other than
as set forth on SCHEDULE 3.6 HERETO. Except as set forth on SCHEDULE 3.6, Seller
and its Affiliates have not amended, waived, assigned, transferred, pledged or
otherwise conveyed any of their rights under any of such agreements. Except as
set forth on such SCHEDULE 3.6, neither Seller nor any of its Affiliates is
delinquent with respect to any post-petition payments due under any of the
Designated Contracts.
Section 3.7. LEASES. True and complete copies of each written lease
included in the Acquired Assets have been heretofore made available to
Purchaser. Except as set forth on SCHEDULE 3.7, no other facilities, real
property or improvements are necessary or used by Seller and its Affiliates in
connection with the Acquired Assets or the Access Business to customers in the
Footprint.
Section 3.8. COMPLIANCE WITH LAW. Except as disclosed in a writing
delivered by Seller to Purchaser no later than two days prior to the Closing
Date, which writing shall specify that it is being delivered pursuant to this
Section 3.8, none of the Selling Companies or any of their Affiliates (i) is
subject to any material Action or Proceeding with regard to, or (ii) has
violated in a material manner any Law or Order applicable to, the Acquired
Assets, the Assumed Liabilities or the delivery of services as part of the
Access Business in the Footprint.
Section 3.9. INTELLECTUAL PROPERTY. SCHEDULE 3.9 of this Agreement
contains a true, correct and complete list of all Intellectual Property owned,
held, used or licensed for use by the Seller or any of its Affiliates in
connection with the Acquired Assets or the Access Business. No Intellectual
Property, other than that identified on the schedule referred to in the
preceding sentence, is used or necessary in the conduct by the Seller or any of
its Affiliates of such activities referred to in the preceding sentence. Except
as disclosed in SCHEDULE 3.9, (x) each Selling Company is the owner of all
right, title and interest in and to each item of Intellectual Property ascribed
to it on SCHEDULE 3.9 and/or has the full, complete and exclusive right to use
such Intellectual Property and (y) all such rights, titles and interests are
part of the Acquired Assets and will be acquired, free and clear of all Liens,
by Purchaser upon the Closing. Except as disclosed in SCHEDULE 3.9, with respect
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to the Intellectual Property identified on such SCHEDULE 3.9 (i) all
applications and registrations for such Intellectual Property are valid and in
full force and effect and are not subject to the payment of any unpaid Taxes or
maintenance fees or the taking of any other actions by the Seller or any of its
Affiliates to maintain their validity or effectiveness, (ii) there are no
restrictions on the direct or indirect transfer of any such Intellectual
Property, (iii) neither the Seller nor any of its Affiliates is, and no such
Person has received any notice that it is, in default (or with the giving of
notice or lapse of time or both, would be in default) under any License to use
such Intellectual Property, (iv) neither the Seller nor any of its Affiliates
has granted any License, authorization or other permission to use such
Intellectual Property and (v) neither the Seller nor any of its Affiliates in
its use of any of such Intellectual Property is infringing or has infringed any
Intellectual Property of any other Person, and no claim is pending or, to the
knowledge of any Selling Company or any of their Affiliates, has been threatened
with respect to the ownership, validity, license or use of, or any infringement
resulting from, such Intellectual Property.
Section 3.10. CUSTOMERS. SCHEDULE 3.10 of this Agreement contains a
true, correct and complete list of all customers of the Access Business to whom
services are provided in the Footprint. Except as disclosed on SCHEDULE 3.10, no
customer has ceased or threatened to cease or materially reduced or threatened
to materially reduce its purchases from, or subscriptions to, the Access
Business at any time during the period from January 1, 2002. To the knowledge of
Seller, no such customer is threatened with bankruptcy or insolvency.
Section 3.11. LICENSES AND PERMITS. SCHEDULE 3.11 to this Agreement
contains a true, correct and complete list of all Licenses or other agreements
used in or necessary for the operation of the Access Business and all permits
and governmental approvals used in or necessary for the operation of the Access
Business. All such Licenses, agreements, permits and approvals are in full force
and effect and neither Seller nor any of its Affiliates is in breach or other
default thereunder.
Section 3.12. ENVIRONMENTAL MATTERS. The operations and activities of
Seller with respect to the Access Business have at all times complied with all
applicable Environmental Laws and Seller has not generated, manufactured,
refined, treated, stored or disposed of any hazardous materials in violation of
any Environmental Laws.
Section 3.13. EMPLOYEES. On or prior to the third business day
following the date hereof, the Seller shall provide to Purchaser SCHEDULE 3.13,
which shall set forth the names of all current employees whose services are used
primarily in, or otherwise necessary to the operation of, the Access Business
and with respect to each such employee, such employee's job title, current
salary, the date and amount of such employee's most recent salary increase and
the amount of any bonuses or other compensation paid since January 1, 2002 to
such employee. Since January 1, 2000, there have been no strikes, work stoppages
or any demands for collective bargaining by any union or other labor
organization made against the Seller, nor have any unions or labor organizations
been operating within Seller. There are no collective bargaining agreements
applicable to any such employees. There is no unfair labor practice or labor
arbitration proceeding pending, or to the knowledge of Seller, threatened
against Seller relating to the Access Business.
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Section 3.14. ASSETS. There are no Assets and Properties of Seller or
any of its Affiliates that are used primarily in, or otherwise necessary for the
conduct of, the Access Business, in each case which are not subject to the
Cases.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND PARENT GUARANTOR
Purchaser and Parent Guarantor represent and warrant to Seller as of
the date hereof and as of the Closing Date as follows:
Section 4.1. ORGANIZATION. Each of Purchaser and Parent Guarantor is a
corporation duly organized, 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. Each of Purchaser and Parent Guarantor is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified would not individually or in the aggregate
either have a material adverse effect on its ability to consummate the
transactions contemplated hereby or materially hinder or delay such
consummation.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Purchaser
and Parent Guarantor 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 Purchaser and Parent Guarantor and the
consummation by Purchaser and Parent Guarantor 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 Purchaser and
Parent Guarantor and constitutes a valid and binding agreement of Purchaser and
Parent Guarantor, enforceable against Purchaser and Parent Guarantor in
accordance with its terms.
Section 4.3. CONSENTS AND APPROVALS. No consent, approval, or
authorization of, or declaration, filing or registration with, any Governmental
or Regulatory Authority or other Person is required to be made or obtained by
Purchaser or Parent Guarantor in connection with the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 4.4. BROKERS. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser or Parent Guarantor.
Section 4.5. FINANCING. On the Closing Date Purchaser will have cash on
hand or commitments for financing sufficient to deliver the Purchase Price to
Seller.
8
ARTICLE V
COVENANTS
Section 5.1. CONDUCT OF BUSINESS BY SELLER PENDING THE CLOSING. Except
as reasonable and necessary to the continued prosecution of its Chapter 11
reorganization case, or as otherwise required by the Bankruptcy Code, between
the date of execution of this Agreement and the Closing, Seller will cause the
Acquired Assets and the Assumed Liabilities to be operated in the ordinary
course of business, other than the sale of Seller's hosting and professional
services business, consistent with past custom and practice, and shall not take
any action inconsistent with the transactions contemplated hereby and will not
permit any material transactions outside the ordinary course of business (other
than the sale of Seller's hosting or professional services business in a manner
not inconsistent with the transactions contemplated hereby) without the prior
written consent of Purchaser. In any case, and without limiting the generality
of the foregoing, Seller will (and will cause its Affiliates to) observe the
following, except with the prior consent of Purchaser:
(a) use commercially reasonable efforts to maintain the Acquired Assets
in good working order and condition, ordinary wear and tear excepted;
(b) not move, relocate or reconfigure any Acquired Asset in a manner
that materially affects any of the Acquired Assets;
(c) not sell or dispose of any Acquired Assets or create or incur any
Lien on any Acquired Assets;
(d) comply, in all material respects, with all Laws and Orders
applicable to the Acquired Assets, and promptly following receipt thereof, give
Purchaser copies of any notice received from any Governmental or Regulatory
Authority or other Person alleging any violation of or any Liability under any
such Law or Order;
(e) not enter into, amend, modify, terminate (partially or completely),
grant any waiver under or give any consent with respect to any Designated
Contract or any other Contract relating to the Access Business or (whether or
not a Designated Contract) any License related to the Access Business or any
Acquired Assets, in each case except as required pursuant to an Order of the
Bankruptcy Court reasonably satisfactory in all material respects to the
Purchaser;
(f) not waive any right of the Selling Companies relating to the Access
Business, the Acquired Assets or the Assumed Liabilities; and
(g) not enter into any agreement to do or engage in any of the
foregoing.
Section 5.2. ACCESS AND INFORMATION.
(a) Seller shall afford to Purchaser and to Purchaser's financial
advisors, legal counsel, accountants, consultants, financing sources, and other
authorized representatives access during normal business hours throughout the
period prior to the Closing Date to all Books and Records, Assets and
Properties, and personnel of Seller or its Affiliates that pertain to the Access
9
Business, the Acquired Assets or the Assumed Liabilities and, during such
period, shall furnish as promptly as practicable to Purchaser any and all such
information as Purchaser reasonably may request pertaining to the Access
Business, the Acquired Assets or the Assumed Liabilities (including, without
limitation, copies of Contracts, Leases, Licenses and other Books and Records).
Without limiting the foregoing, Seller agrees to cooperate with Purchaser to
enable Purchaser (at Purchaser's expense) to prepare in advance of the Closing
for the acquisition and use of all of the Acquired Assets, and the assumption of
all of the Designated Contracts, from and after the Closing Date. Such
cooperation shall include, without limitation, (i) reasonable cooperation to
assist Purchaser in hiring, after the announcement of the commencement of the
Case but in advance of the Closing, management personnel, technical personnel
and customer relationship personnel of Seller and its Affiliates that Purchaser
identifies as desirable to help Purchaser in planning for the use by Purchaser
of any Acquired Assets (or performance of any Assumed Liabilities) after the
Closing Date, (ii) access for Purchaser to all facilities to consider and plan
for the use of any Acquired Assets after the Closing Date and (iii) permitting
Purchaser to relocate, prior to Closing, Acquired Assets to locations designated
by Purchaser (at the expense of Purchaser), it being understood that such Assets
will remain subject to the ownership and control of Seller and its Affiliates
until the Closing Date; PROVIDED, that if this Agreement is terminated other
than due to a default by Seller hereunder, Purchaser shall (upon request by
Seller) return, at Purchaser's expense, any such Acquired Assets relocated by
Purchaser to the locations from which they were moved by Purchaser; and
PROVIDED, FURTHER, that Purchaser shall not relocate, prior to the Closing, any
Acquired Assets to any location if such relocation would materially impair the
ability of Seller to promptly access and use such relocated Acquired Assets if
this Agreement is terminated.
(b) Without limiting any other provision of this Agreement, from and
after Closing, Seller shall cooperate with Purchaser (at Purchaser's expense) to
maintain, protect and preserve any Acquired Assets pending delivery to and
possession by Purchaser. Such cooperation (all at Purchaser's expense) shall
include, without limitation, Seller using its usual and customary business
practices to hold and preserve (and to provide appropriate security and storage
conditions for) Acquired Assets which are located in any facilities not being
acquired by Purchaser, pending removal by Purchaser of such Acquired Assets.
Section 5.3. ADDITIONAL MATTERS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all commercially reasonable efforts to obtain
all necessary waivers, consents, and approvals required under this Agreement. No
changes in the Sale Order from the form of Exhibit A shall be made unless such
changes are acceptable to the Purchaser.
Section 5.4. FURTHER ASSURANCES. In addition to the provisions of this
Agreement, at any time and from time to time after the Closing Date, Seller, its
Affiliates and 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 actions as may be reasonably requested to
10
implement more effectively, the conveyance and transfer of the Acquired Assets
to Purchaser and the assumption of the Assumed Liabilities by Purchaser. Without
limiting the foregoing, from time to time after the Closing, Seller and its
Affiliates shall take such actions as may be reasonably requested by Purchaser
so that (or to confirm that) all right, title and interest of Seller and its
Affiliates in and to the Acquired Assets are, as requested by Purchaser, either
extinguished or transferred to Purchaser.
Section 5.5. AUDIT RIGHT. Without limiting the rights afforded
Purchaser pursuant to Section 5.2, Purchaser shall have the right from time to
time to conduct one or more physical audits (each, an "Audit") during Seller's
normal business hours and upon reasonable notice to Seller to verify the
presence of the Assets and Properties set forth on the Site Ledgers. Purchaser
shall endeavor to minimize the disruption to Seller's business in connection
with any such Audit. Seller shall provide Purchaser the access and information
rights set forth in Section 5.2 in connection with any Audit and shall otherwise
reasonably cooperate with Purchaser in connection with the Audit. Purchaser
shall give Seller reasonable notice of any such Audit and, if requested by
Seller, shall permit Seller and its representatives to participate in such
Audit. Promptly upon completion of any Audit, Purchaser may deliver a list (the
"Purchaser Asset Notice") of any Assets and Properties set forth on the Site
Ledgers which are not located pursuant to the Audit. After delivery of any
Purchaser Asset Notice, Seller shall have the right to provide other evidence
reasonably satisfactory to Purchaser regarding the location and availability to
Purchaser (without any cost or expense to Purchaser) of any such Assets and
Properties set forth on the Purchaser Asset Notice. If, prior to Closing, Seller
fails to provide evidence reasonably satisfactory to Purchaser regarding the
location and availability to Purchaser (without any cost or expense to
Purchaser) of any such Assets and Properties set forth on any Purchaser Asset
Notice, such Assets and Properties shall be deemed to be "Non-Delivered Assets."
Section 5.6. RIGHT OF NOTICE OVER CERTAIN OTHER ASSETS. Purchaser and
Seller acknowledge that Purchaser desires to acquire some (or all) of certain
other assets of the Seller including, without limitation, the Network Operating
Center (collectively, the "Other Assets"), as the Purchaser endeavors to grow
its business. The Purchaser and Seller acknowledge and agree that the
acquisition of such Other Assets is not a condition precedent to the closing of
the transaction otherwise described herein. Nevertheless, the Seller shall make
reasonable efforts to give the Purchaser prompt written notice of any third
party's interest in acquiring the Other Assets and afford the Purchaser the
right to participate in discussions with the Seller with respect to acquiring
such Other Assets, including the right, exercisable in the Purchaser's sole
discretion, to make an offer for such Other Assets.
Section 5.7. NETWORK OPERATING CENTER. Seller shall use its best
efforts to cause the purchaser of its hosting business to provide to Purchaser
access to Seller's Network Operating Center to effect the transition of Seller's
network operations functions to Purchaser's systems or shall otherwise use its
best efforts to assist Purchaser in making any necessary arrangements for such
access directly with the landlord for the Network Operating Center.
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER AND
PURCHASER. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following condition: the Sale Order shall have been entered by the Bankruptcy
Court and such order shall not have been stayed, modified, reversed or amended.
Section 6.2. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The
obligation of Seller to effect the transactions contemplated by this Agreement
shall be subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional condition: Purchaser shall have performed in all
material respects its obligations under this Agreement required to be performed
by Purchaser at or prior to the Closing Date including, without limitation,
payment of the Purchase Price and the representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all material
respects as of the Closing Date as if made at and as of such date, except as
otherwise contemplated by this Agreement.
ARTICLE VII
TERMINATION
Section 7.1. TERMINATION. This Agreement may be terminated:
(a) by mutual written agreement of Seller and Purchaser prior to the
Closing Date;
(b) by either Seller or Purchaser if the Bankruptcy Court approves a
higher or better offer for the Acquired Assets;
(c) by Seller if any of the conditions set forth in Section 6.1 or
Section 6.2 shall not have been satisfied by May 31, 2002 and shall not have
been waived by Seller, provided Seller is not then in breach of this Agreement;
(d) by Purchaser if any of the conditions set forth in Section 6.1
shall not have been satisfied by May 31, 2002 and shall not have been waived by
Purchaser, provided Purchaser is not then in breach of this Agreement; or
(e) by Purchaser in accordance with Article IX.
Section 7.2. EFFECT OF TERMINATION.
(a) If this Agreement is validly terminated pursuant to Section 7.1,
this Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of Seller, Purchaser, Parent Guarantor or
their respective Affiliates (or any of their respective officers, directors,
employees, agents or other representatives), except as provided in Section
7.2(b) and except that the provisions with respect to the Overbid Fee in Section
7.3 and expenses in Section 13.8 will continue to apply following any such
termination.
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(b) In the event of a termination of this Agreement for any reason
(other than a valid termination by Seller pursuant to Section 7.1(c) under the
circumstances referred to in the following sentence), Seller shall return the
Good Faith Deposit to Purchaser. Seller shall be entitled to retain the proceeds
from the Good Faith Deposit in the case of a valid termination by Seller
pursuant to Section 7.1(c) as a result of Purchaser's breach of its obligation
to deliver the payment at Closing required under Section 1.6 under circumstances
where all conditions under Section 6.1 to closing have been satisfied.
Section 7.3. OVERBID FEE. If this Agreement is terminated pursuant to
Section 7.1(b), then in such case Seller shall (in addition to Purchaser's right
to a return of the Good Faith Deposit pursuant to Section 7.2(b)) pay to
Purchaser a termination fee in cash in the amount of Three Hundred Twenty-Five
Thousand Dollars ($325,000) (the "Overbid Fee"). The Overbid Fee shall be paid
by Seller on the closing date of the other sale from the proceeds of such sale.
Seller shall ensure that the Over Bid Fee is secured by an allowed
administrative expense claim with a first-priority senior lien which shall
attach to all proceeds arising from such sale. The provision for the payment of
the Overbid Fee in this Section 7.3 is an integral part of the transactions
contemplated by this Agreement and without this provision Purchaser would not
have entered into this Agreement. Accordingly, if payment shall become due and
payable pursuant to this Section 7.3, and, in order to obtain such payment, suit
is commenced which results in a judgment against Seller, Seller shall pay to
Purchaser all of Purchaser's reasonable costs and expenses, including attorneys'
fees, in connection with such suit, together with court costs and prejudgment
interest. The provisions of this Section 7.3 shall be included within the Sale
Procedures Order.
ARTICLE VIII
EMPLOYEE MATTERS
Section 8.1. HIRING OF EMPLOYEES; NO PRIOR SERVICE CREDIT.
(a) Immediately prior to the Closing, the employment of all Employees
involved in the Access Business to customers in the Footprint (the "Access
Employees") as shall be identified by Purchaser on SCHEDULE 8.1(A) to whom
Purchaser has determined to give offers of employment, shall be terminated by
Seller and its Affiliates. Seller may choose to retain any or all of its
employees that are not identified on SCHEDULE 8.1(A). Purchaser may, in its sole
discretion, offer employment to any or all Access Employees on such terms and
conditions as shall be determined by Purchaser in its sole discretion. Seller
recognizes that Purchaser intends to make offers of employment on terms and
conditions of employment different from those provided by Seller and its
Affiliates and that it is uncertain how many Access Employees of Seller and its
Affiliates will be offered or will accept employment.
(b) In furtherance thereof, commencing on the date hereof, Seller shall
identify to Purchaser certain key management and operating personnel whom Seller
agrees that Purchaser may contact to discuss its staffing requirements.
Purchaser shall have the right, but not the obligation, to contact and negotiate
employment terms with those key members of the Access Employees as Purchaser may
determine are necessary to operate the Access Business or to achieve
satisfaction of one or more of the conditions to Closing. Seller shall cooperate
13
with Purchaser in this regard and, without limitation, Seller agrees to the
following to the extent requested by Purchaser:
(i) On a date selected by Purchaser no earlier than four (4)
Business Days after execution of the Agreement, Seller shall send a
letter to the Access Employees, advising them, among other things, that
Seller intends to divest itself of its assets. The letter will be in
form and substance reasonably satisfactory to Seller and Purchaser.
(ii) Seller shall permit Purchaser to send, in the same
package or separately, a separate letter to any or all of the Access
Employees. The letter will be in a form and substance reasonably
satisfactory to Seller and Purchaser.
(iii) From time to time, Seller shall cooperate with Purchaser
to permit Purchaser (a) to review personnel files of Access Employees
who have signed authorization/release forms, (b) to meet with
supervisors and managers of Seller to discuss employment opportunities
with Purchaser and other issues such as the performance of Access
Employees who have signed authorization/release forms, and (c) to
interview Access Employees and perform pre-employment drug testing.
Purchaser shall be responsible for complying with all applicable laws
in the interviewing and hiring process, and any liability incurred in
the interviewing and hiring process based on conduct of Purchaser shall
be the responsibility of Purchaser; PROVIDED, that in no event will
Purchaser be responsible for any severance payments to Employees of
Seller or any strike or strike-related conduct by any Employees or any
unions.
(iv) In addition, at Purchaser's request prior to the Closing
Date, Seller's counsel shall provide to Purchaser's labor and
employment legal counsel (but not to Purchaser) demographic information
on a confidential basis concerning each of the Access Employees for the
purpose of evaluating compliance with applicable employment laws.
Purchaser will not use the demographic information in the interviewing
and hiring process.
(c) All such Access Employees (or any other Employees formerly with
Seller or any of its Affiliates) who are offered and accept employment with
Purchaser are hereinafter referred to as the "Purchaser Employees." Except as
Purchaser may otherwise agree in its sole discretion with any Purchaser
Employee, each Purchaser Employee shall be deemed to have accrued no prior
service credit for any purpose (including but not limited to participation,
vesting and benefit accrual under any Plan, arrangement or program, and
seniority, title or duties with respect to employment) in respect of their
period of employment with Seller and its Affiliates, or any prior employer, in
connection with their employment with Purchaser or under any Plan, program or
policy which Purchaser may, in its sole discretion, establish for the benefit of
the Purchaser Employees.
(d) Seller shall be responsible for any and all wages, bonuses,
commissions, employee benefits and other compensation (including all obligations
under any Plans) to the Employees arising out of their employment with Seller
and its Affiliates prior to and as of the Closing. Purchaser shall be
responsible for any and all wages, bonuses, commissions, employee benefits and
14
other compensation that may be due to the Purchaser Employees arising out of
their employment with Purchaser after the Closing. Further, in respect of
notices and payments relating to events occurring on or prior to the Closing,
Seller shall be responsible for and assume all Liability for any and all
notices, payments, fines or assessments due to any Governmental or Regulatory
Authority or to any other Person, pursuant to any Law, Order or Contract, with
respect to the employment, discharge or layoff of Employees by the Seller or its
Affiliates as of or before the Closing, including but not limited to the Worker
Adjustment and Retraining Notification Act and any related rules or regulations.
(e) Nothing in this Article VIII express or implied shall confer upon
any Access Employee, any Purchaser Employee or other Person or legal
representative thereof any rights or remedies, including any right to employment
or compensation or benefits of any nature or kind whatsoever including the right
to the payment of any obligation identified in Section 8.1(d).
ARTICLE IX
RISK OF LOSS
Section 9.1. RISK OF LOSS. In the event that any Acquired Assets which
are Non-Delivered Assets include items of Equipment and Machinery that either
(a) are individually, or in the aggregate, a material portion of the Assets or
Properties included in the Acquired Assets or (b) are material to the Access
Business, then Purchaser shall have the right to terminate this Agreement by
giving notice to Seller at any time prior to the Closing Date. In addition, and
without limiting the foregoing, if prior to the Closing all of the Acquired
Assets or a portion of the Acquired Assets, the loss of which would have a
Material Adverse Effect, shall be stolen, taken, damaged or destroyed by fire or
other casualty or is otherwise not delivered (for any reason) to Purchaser
pursuant to the terms hereof, Purchaser shall have the right to terminate this
Agreement by giving notice to Seller at any time prior to the Closing Date. If
any of the foregoing events occurs and Purchaser does not terminate this
Agreement, Purchaser shall perform its obligations hereunder in accordance with
this Agreement and the Purchase Price shall not be reduced, and Seller's rights
to (i) any award, right or other compensation resulting from such taking that
relate to the Access Business or the Acquired Assets or (ii) any insurance
proceeds resulting from such fire, theft or other casualty or event (less any
reasonable sums expended by Seller for repair and restoration) that relate to
the Access Business or the Acquired Assets, shall be assigned by Seller to
Purchaser at the Closing; PROVIDED, HOWEVER, that the Purchase Price shall be
reduced by the amount of any "deductible" or "co-insurance payment" deducted or
deductible from any insurance proceeds. If all or any part of any of the
Acquired Assets are taken by condemnation or eminent domain and Purchaser shall
not have terminated this Agreement as provided above, Purchaser shall have the
exclusive right to conduct all proceedings and make all agreements that relate
to the Access Business or the Acquired Assets in connection therewith in its
name, or in the name of Seller. Seller shall cooperate with Purchaser in
connection with those proceedings and hereby appoints Purchaser as its
attorney-in-fact with respect to any proceedings that relate to the Access
Business or the Acquired Assets, such appointment being irrevocable and coupled
with an interest, to execute and deliver any documents that relate to the Access
Business or the Acquired Assets required in connection with any condemnation or
eminent domain proceeding or any agreement reached between those authorized to
exercise such right.
15
ARTICLE X
BANKRUPTCY COURT APPROVAL
Section 10.1. BANKRUPTCY COURT APPROVAL PROCESS. As soon as
practicable, but in any event within three (3) Business Days after the date
hereof, Seller shall file and serve a motion (the "Motion") pursuant to
Bankruptcy Code Sections 105, 363 and 365, as applicable, in a form approved by
counsel for Purchaser:
(a) seeking entry of an order, on an expedited basis, substantially in
the form attached hereto as EXHIBIT B (the "Sale Procedures Order"), among other
things (A) approving the payment of a break-up fee of Three Hundred Twenty-Five
Thousand Dollars (US$325,000) (the "Break-Up Fee") (which amount shall be deemed
inclusive of Purchaser's expenses), as administrative priority claims under
Bankruptcy Code Section 503(b) and 507(a); (B) approving the procedures for the
sale of the Acquired Assets, including the requirement of an overbid amount of
Three Hundred Twenty-Five Thousand One Dollars (US$325,001) over the Purchase
Price for bidders other than Purchaser (the "Initial Overbid Amount
Requirement"), an incremental bid amount of US$100,000.00 (the "Incremental Bid
Amount"); PROVIDED, that for the limited purpose of determining the value of any
incremental bid submitted by Purchaser, Seller shall credit the amount of the
Break-Up Fee towards the satisfaction of this requirement; (C) setting dates for
the auction sale of the Acquired Assets no later than May 22, 2002 (the
"Auction"), and the hearing on the sale of the Acquired Assets no later than May
23, 2002; (D) providing that for any Person other than Purchaser to be
considered a qualifying bidder (a "Qualifying Bidder"), such Person shall
provide sufficient evidence to Seller of its financial ability to consummate a
closing of the transactions contemplated hereby and such Person's bid shall (1)
at a minimum, meet the Initial Overbid Amount Requirement, (2) provide, as
determined by the Seller in consultation with its advisors, as good as or better
terms as contained in this Agreement, (3) be accompanied by a good faith deposit
of Ninety Thousand Dollars (US$90,000) in cash or certified or cashier's check
payable to Seller, and (4) be in the form of this Agreement; and (E) providing
that if Purchaser is not the successful bidder at the Auction and Seller fails
to consummate a closing with a Qualifying Bidder thereafter, Seller shall give
Purchaser written notice five (5) Business Days prior to shutting down or
otherwise disposing of the Access Business or any material portion of Seller's
network in order to allow Purchaser and Seller to negotiate a purchase price and
consummate a closing of the sale of the Acquired Assets and the Access Business;
(b) seeking entry of the Sale Order substantially in the form attached
hereto as EXHIBIT A, which, among other things, (A) authorizes Seller to sell,
transfer and assign the Acquired Assets to Purchaser pursuant to this Agreement
and Bankruptcy Code Sections 105, 363, 365 and 1146, as applicable, free and
clear of all Liens; (B) determines that Purchaser is a good faith purchaser
under Section 363(m) of the Bankruptcy Code and that Purchaser has acted in good
faith, is a bona fide purchaser for value, and that the Purchase Price is fair
and reasonable; (C) provides that the Designated Contracts are assigned to
Purchaser pursuant to Bankruptcy Code Section 365, that Purchaser assumes no
Liabilities for Liens or Cure Amounts under the Designated Contracts except as
specifically provided herein and that all Designated Contracts are enforceable
against the nondebtor parties; (D) provides that Purchaser is not a successor in
16
interest to Seller or Seller's business, and (E) provides that the ten (10) day
periods provided for in Federal Rules of Bankruptcy Procedure 6004(g) and
6006(d) are waived.
Section 10.2. ACKNOWLEDGEMENT. Seller confirms that its negotiation of
this Agreement with Purchaser is critical to its obtaining the highest and best
price for its assets, and that without Purchaser's commitment of substantial
time and expense to the process, Seller would have to employ a less orderly
process for the sale of its assets and therefore risk attracting lower prices.
Seller acknowledges that Purchaser would not have invested the time and incurred
the expense of negotiating and documenting the transaction if it were not
entitled to the Break-Up Fee.
Section 10.3. HEARINGS SCHEDULE. Seller shall seek to obtain hearings
on the Motion promptly upon the expiration of the applicable notice periods, and
shall take all reasonably necessary actions in connection therewith. Seller
shall provide due and sufficient notice of the hearing to be held in the Court
regarding the Motions to: (i) each Person that has filed a notice of appearance,
or that has otherwise filed a written request to receive copies of pleadings, in
the Cases, (ii) the SEC, (iii) the Internal Revenue Service, (iv) the Office of
the United States Trustee, (v) the taxing authorities of each state where
Acquired Assets are located and any appropriate political subdivisions of any
thereof, (vi) counsel to the Official Committee of Unsecured Creditors in the
Cases, (vii) Purchaser and its counsel, (viii) the employment agencies of each
state where the Employees are employed, (ix) each party (other than Seller) to
each Designated Contract, (x) each person or entity that has asserted a Lien on,
or in, any of the Acquired Assets, and (xi) any Person that Purchaser reasonably
requests in writing be served.
ARTICLE XI
INTENTIONALLY OMITTED
ARTICLE XII
DEFINITIONS
Section 12.1. DEFINITIONS. As used in this Agreement, the following
defined terms have the meanings indicated below:
"ACCESS BUSINESS" means the network and internet (including maintenance
and customer circuit services and customer equipment under purchase, maintenance
or rental agreements) business other than the hosting and professional service
business conducted by Seller and its Affiliates.
"ACCESS EMPLOYEES" has the meaning set forth in Section 8.1(a).
"ACQUIRED ASSETS" has the meaning set forth in Section 1.1.
"ACTION OR PROCEEDING" means any claim, action, complaint,
counterclaim, joinder, investigation, suit, order, notice of violation,
arbitration, audit or other proceeding, whether civil or criminal, in law or in
equity, whether or not before any court, arbitrator or other Governmental or
Regulatory Authority, by any Governmental or Regulatory Authority or by any
other Person.
17
"AFFILIATE" means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. Without limiting the foregoing and for avoidance of
doubt, Affiliates of Seller include any Affiliates whether or not involved in
the Cases and whether or not organized in a jurisdiction within the United
States.
"AGREEMENT" means this Asset Purchase Agreement and the Exhibits and
the Schedules hereto and the certificates and other documents and instruments
delivered in connection herewith, as the same shall be amended from time to
time.
"ASSETS AND PROPERTIES" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
documents, instruments, general intangibles, Real Property, Equipment and
Machinery, Inventory and Intellectual Property.
"ASSUMED LIABILITIES" has the meaning set forth in Section 1.4.
"ASSUMPTION AGREEMENT" has the meaning set forth in Section 2.2.
"AUCTION" has the meaning set forth in Section 10.1(a).
"AUDIT" has the meaning set forth in Section 5.5.
"BANKRUPTCY CODE" has the meaning set forth in the recitals hereto.
"BANKRUPTCY COURT" has the meaning set forth in the recitals hereto.
"BENEFIT PLAN" means any Plan, existing at the Closing Date or prior
thereto, contributed to, maintained or sponsored by the Seller or any of its
Affiliates, or any predecessor of any of the foregoing, or to which any of the
foregoing is a party, or with respect to which the Seller or any of its
Affiliates has any Liability or potential Liability, and under which any present
or former Employee, director, agent or independent contractor of Seller or any
of its Affiliates or any beneficiary thereof is covered, is eligible for
coverage or has benefit rights.
"BILLS OF SALE" has the meaning set forth in Section 2.2.
"BOOKS AND RECORDS" of any Person means (in whatever form or medium)
all files, documents, instruments, papers, books and records relating to the
business, operations, condition (financial or other), results of operations and
Assets and Properties of such Person, including without limitation financial
statements, tax returns and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans; PROVIDED, that "Books and Records" of
Seller and its Affiliates shall mean only such items as relate to the Access
Business, the Acquired Assets and the Assumed Liabilities.
18
"BREAK-UP FEE" has the meaning set forth in Section 10.1(a).
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"CASES" means the Chapter 11 cases of Seller and certain Affiliates
filed in the Bankruptcy Court to be jointly administered for procedural
purposes.
"CLOSING" has the meaning set forth in Section 2.1.
"CLOSING DATE" has the meaning set forth in Section 2.1.
"CLOSING RECEIVABLES" has the meaning set forth in Section 1.9.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"CONTRACT" means any agreement, evidence of indebtedness, bond,
commitment, indemnity, indenture, instrument, lease, License, mortgage, security
agreement or other contract, commitment, undertaking or understanding, whether
or not in writing.
"CURE AMOUNTS" has the meaning set forth in Section 1.3.
"DEFINITIVE AGREEMENTS" means the Assumption Agreement and the Bills of
Sale.
"DESIGNATED CONTRACTS" has the meaning set forth in Section 1.2.
"EMPLOYEE" means each employee, officer or consultant of Seller or any
Affiliate of Seller.
"ENVIRONMENTAL LAWS" means all federal, state, local, foreign, civil
and criminal laws, environmental permits, and common law in effect in any
applicable jurisdiction relating to the protection of the environment and human
health or safety related thereto, including the handling, use, generation,
treatment, storage, transportation or disposal of hazardous substances.
"EQUIPMENT AND MACHINERY" means all machinery, equipment, routers,
switches, apparatus, electrical equipment and substations, automobiles, trucks
and other vehicles, forms, molds, patterns, tools, tooling, jigs, designs,
drawings, engineering data, blueprints, spare and exchange parts, display racks,
fittings, furniture, furnishings, fixtures, computer hardware and peripheral
equipment, office and maintenance supplies and other tangible personal property
wherever located or on consignment, and all rights arising out of the ownership
or lease thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"EXCLUDED ASSETS" has the meaning set forth in Section 1.1.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 1.4.
19
"FOOTPRINT" means the geographic region covering the states of New
York, Pennsylvania, New Jersey, Maryland and Virginia and the District of
Columbia.
"GOOD FAITH DEPOSIT" has the meaning set forth in Section 1.8.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any authority, agency,
commission, official, court, tribunal, arbitrator or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"INCREMENTAL BID AMOUNT" has the meaning set forth in Section 10.1(a).
"INITIAL OVERBID AMOUNT REQUIREMENT" has the meaning set forth in
Section 10.1(a).
"INTELLECTUAL PROPERTY" means, wherever located worldwide, all patents
and patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service xxxx rights, service names and service name
rights, copyrights and copyright rights, brand names, trade dress, business and
product names, domain names, corporate names, logos, slogans, trade secrets,
inventions, processes, formulae, industrial models, designs, specifications,
data, technology, methodologies, computer programs (including all source codes),
confidential and proprietary information, whether or not subject to statutory
registration, all related technical information, manufacturing, engineering and
technical drawings, know-how, all pending applications for and registrations of
patents, trademarks, service marks and copyrights, all obligations of third
parties relating to the protection of the foregoing, the goodwill associated
with the foregoing, and the right to xxx for past payment, if any, in connection
with any of the foregoing, and all documents, disks and other media on which any
of the foregoing is stored.
"INVENTORY" means all raw materials, ingredients, work in process,
finished goods, spare parts, replacement parts, components, goods in transit,
returns, labels, packaging, containers, shipping materials and supplies,
wherever located and whether or not consigned.
"IRS" means the United States Internal Revenue Service.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LIABILITIES" means all indebtedness, obligations and other liabilities
of any kind of a Person (whether absolute or contingent, accrued or unaccrued,
known or unknown, fixed or otherwise, due or to become due, matured or
unmatured, liquidated or unliquidated).
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Person.
"LIENS" means any lien, claim, pledge, judgment, liability, obligation
(including, without limitation, title claims and claims of taxing authorities),
license, lease, sublease, option, charges, easement, encumbrance or interest of
any kind, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, any contingent sale or other title retention agreement or lease in the
nature thereof, and any "claim" or "lien" or "security interest" as those terms
are defined in the Bankruptcy Code.
20
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 3.1.
"MOTION" has the meaning set forth in Section 10.1.
"NON-DELIVERED ASSETS" has the meaning set forth in Section 5.5.
"ORDER" means any writ, judgment, decree (including consent decrees),
injunction or similar order of any Governmental or Regulatory Authority (in each
such case whether preliminary or final).
"OTHER ASSETS" has the meaning set forth in Section 5.6.
"OVERBID FEE" has the meaning set forth in Section 7.3.
"PARENT GUARANTOR" has the meaning set forth in the recitals to this
Agreement.
"PERSON" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"PURCHASE PRICE" has the meaning set forth in Section 1.6.
"PURCHASER" has the meaning set forth in the heading to this Agreement.
"PURCHASER ASSET NOTICE" has the meaning set forth in Section 5.5.
"PURCHASER EMPLOYEES" has the meaning set forth in Section 8.1(c).
"QUALIFYING BIDDER" has the meaning set forth in Section 10.1(a).
"REAL PROPERTY" means all lands, buildings, plants, structures, and
other improvements together with all rights (including, without limitation,
leasehold interests) which benefit or pertain to the foregoing.
"SALE ORDER" has the meaning set forth in the recitals hereto.
21
"SALE PROCEDURES ORDER" has the meaning set forth in Section 10.1(a).
"SELLER" has the meaning set forth in the heading to this Agreement.
"SELLING COMPANIES" has the meaning set forth in Section 3.1.
"SITE LEDGERS" means the Site Ledgers listing various Assets and
Properties and separately identified by Seller and Purchaser.
"SUBSIDIARIES" has the meaning set forth in the recitals hereto.
"TAX" means (i) any federal, state, local or foreign net or gross
income, minimum, alternative minimum, sales, value added, use, excise,
franchise, real or personal property, transfer, environmental, gross receipts,
capital stock, production, business and occupation, disability, employment,
payroll, severance, withholding or other tax, assessment, duty, fee, levy or
charge of any nature whatever, whether disputed or not, imposed by any
Governmental or Regulatory Authority, any interest, penalties (civil or
criminal), additions to tax or additional amounts related thereto or to the
nonpayment thereof, and (ii) any obligations under any Contract or other
arrangement with respect to any item described in clause (i) above.
Unless the context of this Agreement otherwise requires, (i) words of any gender
include each other gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; (iii) the terms "hereof,"
"herein," "hereby" and derivative or similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (v) all references to "$" or "dollars" herein
means U.S. dollars; and (vi) the words "include" or "including" shall mean
"include without limitation" and "including without limitation" respectively,
whether or not expressly stated.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate on and as of the Closing Date. All
covenants and agreements contained in this Agreement shall survive until the
earlier of (i) the sixtieth (60th) day following the expiration of any
applicable statute of limitations with respect thereto and (ii) the substantial
consummation of the Seller's plan of liquidation in the Cases.
Section 13.2. TAXES. All sales, use, transfer and documentary taxes or
fees, if any, payable in connection with the sale, conveyance, assignments,
transfers and deliveries to be made to Purchaser hereunder shall be borne by
Seller and paid simultaneously with the Closing.
Section 13.3. NOTICES. All notices, claims, demands, and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission or (b) confirmed delivery by
a standard overnight carrier or when delivered by hand, in each case addressed
to the respective parties at the following addresses (or such other address for
a party as shall be specified by like notice):
22
(a) If to Purchaser or to Parent Guarantor, to
FASTNET Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
(b) If to Seller, to
AppliedTheory Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to
Angel & Xxxxxxx, P.C.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Section 13.4. PUBLICITY. No party to this Agreement shall issue any
press release or other publicity concerning the proposed transaction without the
prior approval of the other party, except as otherwise required by law. Each
party shall provide to the other party a reasonable opportunity to review any
press release prior to its issuance.
Section 13.5. DESCRIPTIVE HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 13.6. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement amends and
restates in its entirety that certain Asset Purchase Agreement by and among the
parties hereto dated April 17, 2002. This Agreement (including the Exhibits,
23
Schedules and the other documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all other prior agreements,
negotiations, drafts 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,
provided, however, that the terms of any confidentiality agreement executed in
connection with Purchaser's investigation and due diligence of the Acquired
Assets shall survive execution of this Agreement, and (ii) shall not be assigned
by operation of law or otherwise. The Purchaser may designate one or more
wholly-owned subsidiaries of the Parent Guarantor to acquire and receive
Acquired Assets or to assume Assumed Liabilities on the Closing Date and in such
event the guaranty by the Parent Guarantor hereunder shall continue.
Section 13.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the rules of conflict of laws of the State of New York or any other
jurisdiction. Each of the parties hereto irrevocably and unconditionally
consents to submit to the jurisdiction of the courts of the State of New York
and the United States of America located in New York, New York, including 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 courts), waives any objection to
the laying of venue of any such litigation therein, and agrees not to plead or
claim that such litigation has been brought in an inconvenient forum.
Section 13.8. EXPENSES. 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. The foregoing shall not affect the legal
right, if any, that any party hereto may have to recover expenses from any other
party that breaches its obligations hereunder. Without limiting the foregoing,
Seller shall be responsible for all fees and expenses of Xxxxxxx & Associates,
L.P.
Section 13.9. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties hereto.
Section 13.10. WAIVER. At any time prior to the Closing Date, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 13.11. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by the other parties hereto.
Section 13.12. 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,
24
and the application of such provision to other Persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Nothing in this Agreement, express or implied, is
intended to confer upon any person not a party to this Agreement any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 13.13. BULK SALES. Purchaser and Seller hereby waive compliance
with any bulk sales or other similar laws in any applicable jurisdiction in
respect of the transactions contemplated by this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, Seller and Purchaser have caused this Amended and
Restated Asset Purchase Agreement to be executed on their behalf by their
officers thereunto duly authorized, as of the date first above written.
APPLIEDTHEORY CORPORATION
By:
-------------------------------------------
Name:
Title:
FASTNET ACQUISITION CORP.
By:
-------------------------------------------
Name:
Title:
By its signature below, FASTNET Corporation, a Pennsylvania
corporation, hereby unconditionally and irrevocably guarantees the due and
punctual payment and performance by the Purchaser of all agreements and
obligations of the Purchaser under this Agreement and under any other document,
instrument or agreement executed by the Purchaser in connection with the
transactions contemplated hereby. In furtherance of the foregoing, the
undersigned shall be deemed to be separately liable for each of the agreements
and obligations of the Purchaser in connection with the transactions
contemplated hereby, and the undersigned's liability for such agreements and
obligations shall not be affected by any bankruptcy, insolvency, dissolution or
similar condition or event relating to the Purchaser.
FASTNET CORPORATION
By:
--------------------------------------------------
Name:
Title:
SCHEDULE 1.1
ACQUIRED ASSETS
SCHEDULE 1.2
DESIGNATED CONTRACTS
SCHEDULE 3.3
CONSENTS AND APPROVALS
SCHEDULE 3.6
CONTRACTS
SCHEDULE 3.7
LEASES
SCHEDULE 3.9
INTELLECTUAL PROPERTY
SCHEDULE 3.10
CUSTOMERS
SCHEDULE 3.11
LICENSES AND PERMITS
SCHEDULE 8.1(a)
ACCESS EMPLOYEES
[To be provided by Purchaser promptly following approval of the Sale Order]
EXHIBIT A
SALE ORDER
EXHIBIT B
SALE PROCEDURES ORDER
EXHIBIT C
FORM OF ASSUMPTION AGREEMENT
EXHIBIT D
FORM OF BILLS OF SALE
