Exhibit 10.39
EXECUTION COPY
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
ALLEGIANCE TELECOM, INC.
AND
ALLEGIANCE TELECOM COMPANY WORLDWIDE
JOINTLY AND SEVERALLY AS SELLERS
AND
XO COMMUNICATIONS, INC.
AS BUYER
FEBRUARY 18, 2004
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.........................................................2
1.1 Defined Terms.......................................................2
1.2 Other Defined Terms.................................................9
ARTICLE II TRANSFER OF ASSETS AND LIABILITIES................................12
2.1 Assets to be Sold..................................................12
2.2 Excluded Assets....................................................14
2.3 Liabilities to be Assumed by Buyer.................................16
2.4 Excluded Liabilities...............................................17
2.5 Non-Transferred Assets.............................................18
2.6 Contract Assignment................................................19
2.7 Alternative Structure..............................................19
ARTICLE III CLOSING..........................................................19
3.1 Closing; Transfer of Possession; Certain Deliveries................19
3.2 Purchase Price.....................................................21
3.3 Xxxxxxx Money Deposit..............................................22
3.4 Working Capital Purchase Price Adjustment..........................23
3.5 Cure Price Adjustment..............................................25
3.6 Performance Price Adjustment.......................................27
3.7 Allocation of Purchase Price.......................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS.........................29
4.1 Existence; Good Standing and Power.................................29
4.2 Authority..........................................................29
4.3 Execution and Binding Effect.......................................30
4.4 No Violation.......................................................30
4.5 Third Party Approvals..............................................30
4.6 Financial Statements...............................................30
4.7 No Undisclosed Liabilities.........................................31
4.8 Title to Acquired Assets; Sufficiency..............................31
4.9 Communications Licenses............................................32
4.10 Absence of Certain Developments....................................32
4.11 Tangible Personal Property.........................................32
4.12 Insurance..........................................................32
4.13 Accounts and Notes Receivable and Payable..........................32
4.14 Related Party Transactions.........................................33
4.15 Suppliers..........................................................33
4.16 Fees and Expenses..................................................33
4.17 Compliance With Laws; Licenses.....................................34
4.18 Environmental Matters..............................................34
4.19 Intellectual Property..............................................34
4.20 Contracts..........................................................35
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.21 Real Property......................................................35
4.22 Taxes..............................................................36
4.23 Employee Benefits; Labor Matters...................................37
4.24 Litigation.........................................................38
4.25 Network Facilities.................................................39
4.26 Bank Accounts......................................................39
4.27 Subsidiaries.......................................................39
4.28 Limitations on Sellers' Representations and Warranties.............39
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER............................39
5.1 Existence, Good Standing and Power.................................39
5.2 Authority..........................................................40
5.3 Execution and Binding Effect.......................................40
5.4 No Violation.......................................................40
5.5 Third Party Approvals..............................................40
5.6 Brokers and Finders................................................41
5.7 Financing..........................................................41
5.8 SEC Filings........................................................41
5.9 Capitalization.....................................................41
5.10 Limitations on Sellers' Representations and Warranties.............41
ARTICLE VI COVENANTS OF THE PARTIES..........................................41
6.1 Conduct of Business................................................41
6.2 Transition; Operating Agreement....................................43
6.3 Reorganization Process.............................................44
6.4 Insurance..........................................................46
6.5 Access; Transition Committee; Information Rights...................46
6.6 Public Announcements...............................................47
6.7 Notification of Certain Matters....................................48
6.8 Employees..........................................................48
6.9 Further Agreements.................................................50
6.10 Payment of Transfer Taxes and Tax Filings..........................51
6.11 Filing of Tax Returns..............................................51
6.12 Proration of Taxes and Certain Charges.............................52
6.13 Best Efforts.......................................................52
6.14 HSR Act and General Governmental Consents..........................52
6.15 Bulk Sales.........................................................54
6.16 Sale Order.........................................................54
6.17 Competing Transaction..............................................54
6.18 Disclosure Supplements.............................................55
6.19 Communications Licenses............................................55
6.20 FCC Applications/State PUC Applications............................55
6.21 Cooperation on Environmental Matters...............................56
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.22 Intentionally Omitted..............................................56
6.23 Non-Compete Covenants..............................................56
6.24 Use of Name........................................................56
6.25 Further Assurances.................................................57
6.26 Colocation/PRI Services Agreement..................................57
6.27 Operation of Acquired Assets.......................................57
6.28 Registration Rights................................................57
6.29 Buyer Shareholder Approval.........................................57
6.30 Sellers' Disposition of XO Common Stock............................57
6.31 Tax Matters........................................................58
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PARTIES.........................58
7.1 Conditions Precedent to Obligations of Buyer and Sellers...........58
7.2 Conditions Precedent to Obligations of Buyer.......................60
7.3 Conditions Precedent to the Obligations of Sellers.................61
7.4 Conditions Precedent to Closing....................................61
7.5 Satisfaction of All Closing Conditions; Early Funding Date.........62
ARTICLE VIII TERMINATION.....................................................62
8.1 Termination of Agreement...........................................62
8.2 Effect of Termination..............................................64
8.3 Bankruptcy Events..................................................64
ARTICLE IX MISCELLANEOUS.....................................................65
9.1 Expenses...........................................................65
9.2 Assignment.........................................................65
9.3 Parties in Interest................................................66
9.4 Notices 66
9.5 Choice of Law......................................................67
9.6 Entire Agreement; Amendments and Waivers...........................67
9.7 No Recourse Against Third Parties..................................67
9.8 Counterparts.......................................................68
9.9 Confidentiality....................................................68
9.10 Invalidity.........................................................69
9.11 Headings...........................................................69
9.12 Exclusive Jurisdiction.............................................69
9.13 Waiver of Right to Trial by Jury...................................69
9.14 Specific Performance...............................................69
9.15 Counting...........................................................69
9.16 Service of Process.................................................69
9.17 Time of Essence; Effectiveness of the Closing Date.................70
9.18 Exhibits and Schedules.............................................70
9.19 Interpretation.....................................................70
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.20 Preparation of this Agreement......................................71
iv
EXHIBITS
Exhibit A Bidding Procedures Order
Exhibit B Voting and Lockup Agreement
Exhibit C Sale Order
Exhibit D Form of Xxxx of Sale
Exhibit E Form of Assumption Agreement
Exhibit F-1 Form of Purchase Price Escrow Agreement
Exhibit F-2 Form of Adjustment Escrow Agreement
Exhibit G Calculation of Base Working Capital
Exhibit H Operating Agreement
Exhibit I Intentionally Omitted
Exhibit J Timetable
Exhibit K Current Liabilities
Exhibit L Sellers' Severance Policy
v
ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT is dated as of February 18, 2004 by and
among Allegiance Telecom, Inc., a Delaware corporation ("ATI"), Allegiance
Telecom Company Worldwide, a Delaware corporation ("ATCW" and, together with
ATI, "SELLERS" and each individually, a "SELLER"), and XO Communications, Inc.,
a Delaware corporation ("BUYER").
WITNESSETH:
WHEREAS, Sellers (together with the Operating Subsidiaries,
"ALLEGIANCE") are engaged in the business of providing certain telecommunication
products and services, including local and long-distance voice services,
broadband and other Internet and data services and wholesale services, to
business, government and other institutional users in major metropolitan areas
across the United States (excluding any Excluded Asset (as defined herein), the
"BUSINESS");
WHEREAS, on May 14, 2003, each of ATI and ATCW and their direct and
indirect Subsidiaries commenced a case (collectively, the "CASES") under chapter
11 of title 11 of the United States Code (the "BANKRUPTCY CODE") in the United
States Bankruptcy Court for the Southern District of
New York (the "BANKRUPTCY
COURT"), which cases are jointly administered under Case No. 03-13057;
WHEREAS, the sale of assets and certain liabilities of the Business
are subject to the supervision and control of Sellers subject to the approval of
the Bankruptcy Court;
WHEREAS, Sellers wish to sell to Buyer and Buyer wishes to purchase
from Sellers substantially all of the assets and to assume from Sellers certain
liabilities of the Business, pursuant to, INTER ALIA, sections 105, 363, 365,
1122, 1129 and 1146(c) of the Bankruptcy Code and the applicable Federal Rules
of Bankruptcy Procedure; PROVIDED, HOWEVER, that in the event Sellers shall have
delivered an Early Closing Election, Sellers shall not seek to sell the assets
pursuant to sections 1122 and 1129 of the Bankruptcy Code;
WHEREAS, in connection with issuance of the XO Common Stock (as
defined herein), Buyer's shareholder approval (as described in this Agreement)
may be required, and as a condition precedent to Sellers' execution and delivery
of this Agreement, Cardiff Holding LLC, the holder of a majority of the capital
stock of Buyer, has entered into a Voting and Lockup Agreement (the "VOTING
AGREEMENT") (attached hereto as EXHIBIT B) and the Voting Agreement remains in
full force and effect;
WHEREAS, the Board of Directors of each Seller has determined that it
is advisable and in the best interests of Sellers' estates and the beneficiaries
of such estates to consummate the transactions contemplated by this Agreement,
upon the terms and conditions provided for herein; and
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereof, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following respective meanings:
"ADJUSTMENT ESCROW AMOUNT" means the greater of (i) Seven Million
Dollars ($7,000,000) and (ii) the sum of Five Million Dollars ($5,000,000) plus,
to the extent positive, the Initial Working Capital Adjustment.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by or under common control with another Person where "control" means
the possession, directly or indirectly, of the power to direct the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise; PROVIDED, HOWEVER, that under no circumstances shall
creditors of Allegiance be considered Affiliates of Allegiance solely by virtue
of their ownership of creditor claims against Allegiance.
"AFFILIATED GROUP" means any affiliated group of corporations within
the meaning of Section 1504 of the Internal Revenue Code that joins in the
filing of (or is otherwise required to file) a federal consolidated Tax Return,
as well as any other group of corporations filing (or otherwise required to
file) consolidating, combined or unitary Tax Returns under state, local or
foreign Law, of which a Seller is or was a member.
"AGREEMENT" means this
Asset Purchase Agreement (together with all
schedules and exhibits referenced herein), as the same may be amended from time
to time.
"BANKRUPTCY PLAN" means Allegiance's chapter 11 plan of reorganization
that includes the sale of the Acquired Assets to Buyer as contemplated hereby,
in a form reasonably acceptable to Buyer, unless an Early Closing Election shall
have been delivered.
"BASE WORKING CAPITAL" means the Net Working Capital as of September
30, 2003 equal to $16,099,016.
"BIDDING PROCEDURES ORDER" means that certain order dated January 15,
2004 (A) establishing bidding procedures and bid protections in connection with
the sale of substantially all of the assets of Sellers, (B) approving the form
and manner of notices in connection with such sale and (C) setting a sale
hearing date.
2
"BUSINESS DAY" means any day other than a Saturday, Sunday or a legal
holiday on which banking institutions in the State of
New York are not required
to open.
"COBRA" means section 4980B of the Internal Revenue Code and Part 6 of
Subtitle B of Title I of ERISA.
"COMMUNICATIONS LICENSES" means the FCC Licenses and the State PUC
Licenses.
"CONFIDENTIALITY AGREEMENT" means the agreement entered into by and
between ATI and XO Communications, Inc. dated December 9, 2003.
"CONFIRMATION ORDER" means a final, nonappealable order to be entered
by the Bankruptcy Court in the Cases confirming the Bankruptcy Plan pursuant to
section 1129 of the Bankruptcy Code.
"CONTRACT" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement, including all
amendments thereof and supplements thereto.
"CURE AMOUNTS" means all amounts payable in order to effectuate,
pursuant to section 365 of the Bankruptcy Code, the assumption by Sellers and
the assignment to the Buyer of any Assumed Contract.
"DISCLOSURE SCHEDULES" means the various disclosure schedules referred
to herein.
"EMPLOYEE" means each active employee, full-time or part-time,
temporary or regular, of Allegiance. An "active employee" shall include any
current employee on Allegiance's payroll records, regardless of whether such
employee is absent from work, including due to short term or long term
disability, military leave, leave of absence, illness, vacation or workers'
compensation injury.
"ENVIRONMENTAL LAWS" means all Laws relating to the protection of the
environment, or to any emission, discharge, generation, processing, storage,
holding, abatement, existence, Release, threatened Release or transportation of
any Hazardous Substances, including all Laws pertaining to reporting, licensing,
permitting, investigation or remediation of emissions, discharges, Releases or
threatened Releases of Hazardous Substances into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances.
"ENVIRONMENTAL PERMITS" means any Licenses required pursuant to
Environmental Laws for operation, installation or modification of equipment,
processes, facilities or for occupancy of any of the real property owned or
leased by Sellers or the Operating Subsidiaries.
3
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the regulations promulgated thereunder.
"EXECUTORY CONTRACT" means any Contract that can be assumed or
rejected in accordance with the Bankruptcy Code.
"EXPENSE REIMBURSEMENT" means an amount payable to Buyer in accordance
with SECTION 8.2 or SECTION 8.3, to reimburse Buyer for reasonable and
documented out-of-pocket costs and expenses (including reasonable legal,
accounting and financial advisors' fees and expenses) incurred by Buyer or its
Affiliates in connection with the investigation, negotiation, execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby and the participation in and monitoring of the Cases, such
expenses to be set forth in a reasonably detailed written itemization of such
expenses (the "EXPENSE REIMBURSEMENT STATEMENT").
"EXPENSE REIMBURSEMENT STATEMENT" shall have the meaning ascribed to
such term in the definition of "Expense Reimbursement."
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means the grant by the FCC of its consent to the
transfer of the FCC Licenses in connection with the consummation of the
transactions contemplated hereby.
"FCC LICENSES" means all Licenses issued by the FCC held by Sellers or
the Operating Subsidiaries, as set forth on SCHEDULE 2.1(d) OF THE DISCLOSURE
SCHEDULES.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"GOVERNMENTAL ENTITY" means any federal, state, local or foreign
government or any subdivision, agency, instrumentality, authority, department,
commission, board or bureau thereof or any federal, state, local or foreign
court, tribunal or arbitrator (including the Bankruptcy Court).
"HAZARDOUS SUBSTANCES" means any substance or material that: (i) is or
contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials, or (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous waste,"
"hazardous substance," "toxic substance" or words of similar import thereunder.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and any successor law and the rules and regulations
promulgated thereunder or under any successor law.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
4
"LAW" means any federal, state, local, municipal or foreign statute,
law, ordinance, regulation, rule, code, order, principle of common law or
judgment enacted, promulgated, issued, enforced or entered by any Governmental
Entity, or other requirement or rule of law.
"LIABILITIES" means, as to any Person, all debts, adverse claims,
liabilities, commitments, responsibilities, damages and obligations of any kind
or nature whatsoever, direct, indirect, absolute or contingent, of such Person,
whether accrued, vested or otherwise, whether known or unknown and whether or
not actually reflected, or required to be reflected, in such Person's balance
sheets or other books and records.
"LICENSE" means all licenses, franchises, permits, consents, waivers,
registrations, certificates, and other governmental or regulatory permits,
authorizations or approvals required to be issued or granted by a Governmental
Entity for the operation of the Business and for the ownership, lease or
operation of Sellers' or the Operating Subsidiaries' properties.
"LIEN" means any lien, lease, right of first refusal, servitude,
claim, pledge, option, charge, hypothecation, easement, security interest,
right-of-way, encroachment, mortgage, deed of trust or any other encumbrance,
restriction or limitation whatsoever.
"LITIGATION" means any claim, action, suit, investigation or
proceeding before any court, arbitrator or other Governmental Entity.
"MATERIAL ADVERSE EFFECT" means any event, effect or change,
individually or in the aggregate with such other events, effects or changes,
that has had, has or could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), Liabilities, properties,
assets (including intangible assets) or results of operations of Allegiance or
the Business, in either case taken as a whole; PROVIDED THAT none of the
following shall be deemed to constitute and none of the following shall be taken
into account in determining whether there has been a Material Adverse Effect:
any adverse event, effect or change arising from or relating to (1) general
business or economic conditions; (2) national or international political
conditions, including the engagement of the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon the United States, or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States; (3)
financial, banking or securities market conditions (including any disruption
thereof and any decline in the price of any security (including any security or
creditor claims of or with respect to Allegiance) or any market index); (4)
changes in GAAP or any application of accounting standards after the date
hereof, including the American Institute of Certified Public Accountants
Statement of Position 90-7 "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" and Financial Accounting Standards Board in Statement
of Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets;" (5) the taking of any action specifically
contemplated by this Agreement and the other agreements contemplated
5
hereby or the announcement of the transactions contemplated by this Agreement;
or (6) changes in Law or binding directives issued by any Governmental Entity.
"NET WORKING CAPITAL" for any date of determination, means as of the
close of business on such date, Working Capital Assets minus Working Capital
Liabilities.
"OPERATIONAL RESTRUCTURING ACTIVITIES" means Sellers' actions taken
with the intent to preserve cash, improve the efficiency and reduce the costs of
the Business consisting of (i) reducing the number of Employees to approximately
3,000 as of September 30, 2003; (ii) rejecting Executory Contracts in the Cases
(and from and after the date hereof, solely in accordance with this Agreement);
(iii) waiving, decommissioning or abandoning assets and other rights that are
not material to the operation of the Business and in instances in which the
estimated cost of salvaging or selling such assets exceeds the anticipated
proceeds; (iv) marketing and seeking to sell certain Excluded Assets; and (v)
taking other actions in the Cases specifically approved by the Bankruptcy Court
prior to the date hereof, whether such action occurs prior to, on or subsequent
to the date hereof.
"ORDER" means any judgment, order, injunction, writ, ruling, decree,
stipulation or award of any Governmental Entity.
"ORDINARY COURSE OF BUSINESS" means the ordinary and usual course of
normal day-to-day operations of the Business by Sellers and the Operating
Subsidiaries as debtors and debtors-in-possession in the Cases consistent with
past practice through the date hereof.
"OUT OF REGION BUSINESS" means the operations of the Business
conducted outside of the states of Arizona, Colorado, Oregon, Washington and
Minnesota.
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent; (ii) any statutory Lien arising in the Ordinary Course of Business
or by operation of Law with respect to a Liability that is not yet due or
delinquent; (iii) easements, leases, reservations, licenses or other matters of
record affecting any property or assets of Allegiance, PROVIDED that such
easements, leases, reservations, licenses or other matters do not materially
detract from the value of or impair the use of such property or assets; and (iv)
Liens on Acquired Assets in favor of Allegiance's secured lenders to be released
at Closing.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a joint stock company, a labor union, an estate, a
Governmental Entity or any other entity.
"POST-PETITION" means any time after the commencement of the Cases.
"PRE-PETITION" means any time prior to the commencement of the Cases.
6
"REGULATORY TRANSITION PROCESS" means the process as set forth in this
Agreement, the Operating Agreement, the Transition Plan and other related
documents for obtaining all approvals, consents (including assignments of any
permits and rights of way), certificates, waivers and other authorizations
required to be obtained from, or filings or other notices required to be made
with or to, any Governmental Entities having jurisdiction over any of the
Acquired Assets in order to consummate the transactions contemplated by this
Agreement and the other Transaction Documents and the transfer of such Acquired
Assets, including the Non-Transferred Assets, to Buyer upon the receipt of such
approvals.
"RELEASE" means any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including the
moving of any materials through, into or upon, any land, soil, surface water,
groundwater or air, or otherwise entering into the environment.
"REPRESENTATIVE" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel or expert
retained by or acting on behalf of such Person or its Subsidiaries).
"RETAIL ENDING LINES" means the number of lines in service from
Allegiance's billing systems based upon line equivalency and consistent with the
methodology used to report retail ending lines on Allegiance's monthly flash
reports. Line equivalency is defined per product and is maintained by
Allegiance's Product Hierarchy database. For example, a fully-utilized data T-1
is counted as 24 lines.
"SALE DELAY" means the failure to adhere to the timeline attached
hereto as EXHIBIT J with respect to the Sale Order Approval Date.
"SALE HEARING" means the hearing to be scheduled and conducted by the
Bankruptcy Court to consider approval and entry of the Sale Order.
"SALE MOTION" means the motion or motions of Sellers seeking approval
and entry of the Bidding Procedures Order and the Sale Order.
"SALE ORDER" means an order in the form of EXHIBIT C hereto, and
otherwise in form and substance reasonably acceptable to ATI and Buyer.
"SALE ORDER APPROVAL DATE" means the date the Bankruptcy Court
approves the Sale Order.
"SCHEDULED FUTURE DISCONNECTS" means scheduled backlog of line
disconnects from Allegiance's backlog report as determined by Sellers in
accordance with past custom and practice.
7
"SCHEDULED FUTURE INSTALLS" means scheduled backlog of line installs
from Allegiance's backlog report as determined by Sellers in accordance with
past custom and practice.
"SELLERS' KNOWLEDGE" and any similar terms used herein means the
actual knowledge of Xxxxx X. Xxxxxxx, C. Xxxxxx Xxxx, Xxxxxx X. Xxxx, G. Xxxx
Xxxxx, Xxxxxxxxxxx XxxXxxxxxx, J. Xxxxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxxx or Xxxx
X. Xxxxxxxxxx, without any duty to investigate.
"SHARED TECHNOLOGIES" means Shared Technologies Allegiance, Inc., a
wholly owned Subsidiary of ATCW.
"STATE PUC" means any state and local public service and public
utilities commission having regulatory authority over the Business, as conducted
in any given jurisdiction.
"STATE PUC CONSENT" means the grant by any State PUC of its consent to
the assignment of the State PUC Licenses or any Non-Transferred Assets
associated with such Licenses, in connection with the consummation of the
transactions contemplated hereby.
"STATE PUC LICENSES" means all Licenses issued or granted by the State
PUC held by Sellers or any Operating Subsidiary in each applicable jurisdiction,
as set forth on SCHEDULE 2.1(d) OF THE DISCLOSURE SCHEDULES.
"SUBSIDIARY" means, with respect to any particular Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"TAX" or "TAXES" means all taxes, charges, fees, duties, levies or
other assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, license, payroll, unemployment, environmental,
customs duties, capital stock, disability, stamp, leasing, lease, user,
transfer, fuel, excess profits, occupational and interest equalization, windfall
profits, severance and employees' income withholding and Social
8
Security taxes imposed by the United States or any other country or by any
State, municipality, subdivision or instrumentality of the United States or of
any other country or by any other tax authority, including interest, penalties
or additions to tax attributable to such Taxes or any Tax Return, and shall
include any transferee or successor liability in respect of Taxes (whether by
contract or otherwise) and any liability in respect of any Taxes as a result of
being a member of any Affiliated Group.
"TAX RETURN" means any statement, report, return or other information
required to be filed with respect to any Tax (including any attachments thereto
and any amendment thereof) including any information return, claim for refund,
amended return or declaration of estimated Tax, and including, where permitted
or required, consolidating, combined or unitary returns in which any Seller or
Operating Subsidiary is or was included or includable.
"TRANSACTION DOCUMENTS" means this Agreement, the Transition Services
Agreement, the Purchase Price Escrow Agreement, the Master Services Agreement,
the Operating Agreement, the Voting Agreement, the Adjustment Escrow Agreement
and all Disclosure Schedules, certificates, contracts and agreements being
delivered or entered into pursuant to this Agreement.
"TRANSFER TAX" or "TRANSFER TAXES" means any federal, state, county,
local, foreign and other sales, use, transfer, conveyance, documentary transfer,
recording or other similar tax, fee or charge imposed upon the sale, transfer or
assignment of property or any interest therein or the recording thereof, and any
penalty, addition to tax or interest with respect thereto, but such term shall
not include any tax on, based upon or measured by, the net income, gains or
profits from such sale, transfer or assignment of the property or any interest
therein.
"WARN ACT" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended, and any successor law, and the rules and regulations
promulgated thereunder and under any successor law, and any similar state, local
or foreign law, regulation or ordinance.
"WORKING CAPITAL ASSETS" means the consolidated current assets of
Allegiance set forth on EXHIBIT G, determined in accordance with GAAP applied on
a basis consistent with the most recent balance sheet included in the Financial
Statements to the extent they are included in the Acquired Assets.
"WORKING CAPITAL LIABILITIES" means the consolidated current
liabilities of Allegiance set forth on EXHIBIT G, determined in accordance with
GAAP applied on a basis consistent with the most recent balance sheet included
in the Financial Statements to the extent they are included in the Assumed
Liabilities.
1.2 OTHER DEFINED TERMS. The following additional terms shall have the
meanings defined for such terms in the Sections set forth below:
9
Term Section
------------------------------------------------------------------- -------
Accounting Referee 3.4(d)
Acquired Assets 2.1
Additional Amount 3.6(d)
Adjustment Escrow Account 3.2(b)(iii)
Adjustment Escrow Agent 3.2(b)(iii)
Adjustment Escrow Agreement 3.2(b)(iii)
Allegiance Recitals
Allocation Schedule 3.7
Antitrust Laws 6.14(b)
Approval Motions 6.3(a)
Assumed Contracts 3.5(d)
Assumed Contracts List 3.5(d)
Assumed Liabilities 2.3
ATCW Preamble
ATI Preamble
Avoidance Actions 2.2(e)
Balance Sheet 4.6(a)
Balance Sheet Date 4.6(a)
Bankruptcy Code Recitals
Bankruptcy Court Recitals
bulk sale 6.15
Business Recitals
Buyer Preamble
Buyer Group 9.7
Cases Recitals
Cash and Cash Equivalents 2.2(a)
Cash Purchase Price 3.2(a)
Claim Over 9.7
Claims 2.1(f)
Closing 3.1(a)
Closing Date 3.1(a)
Committee 6.5(c)
Competing Transaction 6.17(a)
Deposit Adjustment Amount 3.5(b)
Designated Change 6.14(b)
Disclosure Statement 6.3(a)
Early Closing Election 8.3(c)
Early Funding Date 3.1
Early Funding Date Working Capital 3.4(b)
Xxxxxxx Money Deposit 3.3
Employee Benefit Plans 4.23(a)
Employee Schedule 6.8(a)
Equipment 2.1(b)
ERISA Affiliate 4.23(a)
10
Estimated Early Funding Date Working Capital 3.4(a)
Exchange Act 4.6(c)
Excluded Assets 2.2
Excluded Liabilities 2.4
Exclusivity Period 6.3(d)(iii)
Final Performance Adjustment Amount 3.6(b)
Final Working Capital 3.4(i)
Financial Statements 4.6(a)
Form 10-Q 5.8
good faith 6.3(b)
Guidance 6.28(a)
ILECs 3.5(a)
ILEC Cure Amounts 3.5(a)
ILEC Set Off Amounts 3.5(a)
Initial Working Capital Adjustment 3.4(f)
Intellectual Property 2.1(i)
Liquidated Damages 8.2
Losses 9.7
Master Services Agreement 6.26
Multiemployer Plan 4.23(d)
multiple employer plan 4.23(a)
No Action Relief 6.28(a)
Non-Compete Covenants 6.1(j)
Non-ILEC Cure Adjustment 3.5(c)
Non-ILEC Cure Amounts 3.5(c)
Non-ILEC Set Off Amounts 3.5(c)
Non-Recourse Person 9.7
Non-Transferred Assets 2.5
Operating Agreement 7.2(g)
Operating Subsidiaries 2.1(s)
Owned Real Property 2.2(l)
Performance Adjustment Amount 3.6(a)
Personal Property Leases 2.1(c)
Purchase Price 3.2
Purchase Price Cash Escrow 3.2(b)
Purchase Price Escrow Agent 3.2(b)
Purchase Price Escrow Agreement 3.2(b)
Purchase Price Escrow Amount 3.2(b)
Purchase Price Stock Escrow 3.2(b)
Real Property Leases 2.1(a)
Required Interconnection Agreements 2.5
SEC 4.6(c)
Securities Act 6.28
Seller Marks 6.24
11
Term Section
------------------------------------------------------------------- ---------
Sellers Preamble
Sellers' Intentional Breach 8.2
Senior Credit Agreement 4.12
Shared Hosting Business 6.1
Shareholder Approval 6.29
Third Person 9.7
Total Gross End User Revenue 3.6(a)
Total Retail Net Ending Lines 3.6(a)
Transferred Employees 6.8(b)
Transition Plan 6.2(a)
Transition Services Agreement 7.3(d)
Voting Agreement Recitals
XO Common Stock 3.2(a)
ARTICLE II
TRANSFER OF ASSETS AND LIABILITIES
2.1 ASSETS TO BE SOLD. Subject to SECTIONS 2.2, 2.5, 2.6, 2.7 and 6.2,
the other provisions of this Agreement and the Sale Order, at the Closing,
Sellers shall sell, convey, assign, transfer and deliver to Buyer or a designee
of Buyer free and clear of all Liens and Liabilities (other than Permitted Liens
of the type included in clause (iii) of the definition of Permitted Liens), and
Buyer shall purchase, acquire, and accept all of Sellers' right, title and
interest in and to all of Sellers' properties, assets and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, whether accrued, contingent or otherwise and
whether now existing or hereafter acquired, including the following
(collectively, the "ACQUIRED ASSETS"):
(a) The leases or subleases and all amendments thereto under which
any of Sellers is a lessor or lessee or sublessor or sublessee of real property
(collectively, the "REAL PROPERTY LEASES") as set forth on the Assumed Contracts
List, including all improvements, fixtures and other appurtenances thereto and
rights in respect thereof and any related security deposits;
(b) The furniture, fixtures, equipment, machinery, supplies,
vehicles, inventory, and other tangible personal property, including the network
equipment assets and facilities owned or used by Sellers (collectively, the
"EQUIPMENT");
(c) The leases which relate to Equipment and leases of dark fiber
(collectively, the "PERSONAL PROPERTY LEASES") as set forth on the Assumed
Contracts List;
(d) All Communications Licenses and any other Licenses, including
those listed on SCHEDULE 2.1(d) OF THE DISCLOSURE SCHEDULES, to the extent the
same are transferable or assignable pursuant to section 365 of the Bankruptcy
Code or as
12
otherwise permitted by Law (or, to the extent not transferable or assignable,
all right, title and interest in such Licenses, to the fullest extent such
right, title and interest may be transferred or assigned); PROVIDED, that to the
extent that Buyer does not require any such Communications License or Licenses,
it may in its sole discretion decline to acquire such Communications License or
Licenses by providing written notice to Sellers prior to the Closing Date, in
which case such a License shall not be an Acquired Asset hereunder.
(e) The Assumed Contracts not described in SECTION 2.1(a) or 2.1(c)
above, including any related security deposits (including the deposits described
in SECTION 3.5(b) hereof), advance payments, customer advances and customer
deposits;
(f) Except as set forth in SECTION 2.2(e) and 2.2(f), all rights,
demands, claims, actions, rights of set off, counterclaims and causes of action
of any kind (collectively, the "CLAIMS") brought by or for the benefit of any
Seller or Operating Subsidiary relating to the operation of the Business;
(g) Accounts, notes and other receivables of Sellers (other than
pre-Petition carrier gross accounts receivable, including those of ILECs which
were recorded on the books and records of Sellers as of May 14, 2003, in an
amount up to $58.3 million);
(h) Any books, records, files or papers of Sellers, whether in hard
copy or computer format, relating to the Acquired Assets or the Non-Transferred
Assets (upon such assets becoming Acquired Assets) or to the operation of the
Business, including management information systems or software owned by Sellers,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, personnel and employment records, customer
lists, customer information, vendor lists, catalogs, research material, source
codes, carrier identification codes, technical information, trade secrets,
technology, know-how, specifications, designs, drawings, processes and quality
control data, if any, or any other intangible property and applications for the
same but excluding any books, records, files or papers that relate to any Taxes
of Sellers that are Excluded Liabilities;
(i) Any of Sellers' right, title or interest in or to any of
Sellers' patents, patent registrations, patent applications, trademarks
(including "ALLEGIANCETELECOM,INC." and design), trademark registrations,
trademark applications, tradenames, copyrights, copyright applications, and
copyright registrations relating to the Business and the rights to xxx for, and
remedies against, past, present and future infringements thereof and the rights
of priority and protection of interests therein under applicable laws
(collectively, the "INTELLECTUAL PROPERTY");
(j) Any computer software programs and databases used by any Seller
or Operating Subsidiary, whether owned, licensed, leased, or internally
developed to the extent the same are transferable or assignable pursuant to
section 365 of the Bankruptcy Code or as otherwise permitted by Law (or, to the
extent not transferable or
13
assignable, all right, title and interest in such programs and databases, to the
fullest extent such right, title and interest may be transferred or assigned);
(k) All taxation matrixes utilized by Sellers in the determination
of the taxability of products sold by Sellers, other than those which are
commercially available;
(l) Any telephone numbers, electronic mail addresses, carrier
identification codes and local exchange codes used by Sellers in the conduct of
the Business;
(m) All of Sellers' currently allocated, assigned, used and unused
internet protocol addresses, domain names, and autonomous system numbers from
applicable authorities governing the use and structure of the Internet,
including the American Registry for Internet Numbers;
(n) All bank accounts and lock-boxes, including those listed on
SCHEDULE 2.1(n) OF THE DISCLOSURE SCHEDULES;
(o) All transferable rights of Sellers under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers and
contractors to the extent relating to products sold, or services provided, to
Sellers or to the extent affecting any Acquired Assets;
(p) All rights of Sellers under non-disclosure, confidentiality,
non-compete or non-solicitation agreements with employees or agents of Sellers
or with third parties;
(q) All insurance claims and insurance proceeds (other than with
respect to any director and officer, errors and omissions, fiduciary and
commercial crime policies) in respect of an Acquired Asset or an Assumed
Liability, and with respect to insurance proceeds, to the extent received by
Allegiance after the Early Funding Date;
(r) All security, vendor, utility and other deposits;
and
(s) All equity interests including capital stock held by ATCW in
each of its direct and indirect reorganized Subsidiaries, other than the stock
of Shared Technologies, and the corporate books and records relating to the
organization and existence of each such reorganized direct and indirect
Subsidiary (collectively, without including Shared Technologies, the "OPERATING
SUBSIDIARIES").
2.2 EXCLUDED ASSETS. The Acquired Assets shall not include any of
Sellers' or the Operating Subsidiaries' right, title or interest in or to any
assets or properties of Sellers or the Operating Subsidiaries that are expressly
enumerated below (collectively, the "EXCLUDED ASSETS"):
14
(a) Subject to SECTION 2.1(q), cash and cash equivalents, short-term
and long-term investments, or similar type investments, uncollected checks and
funds in transit to the extent there is a corresponding reduction in accounts
receivable included in Acquired Assets, Treasury bills and other marketable
securities existing as of the Closing Date ("CASH AND CASH EQUIVALENTS");
(b) Bank accounts and lock-boxes described as "Excluded Assets" on
SCHEDULE 2.1(n) OF THE DISCLOSURE SCHEDULES;
(c) Any security, vendor, utility or other deposits (but only to the
extent such deposits specifically relate to Excluded Assets or Excluded
Liabilities);
(d) Any Contracts other than the Assumed Contracts;
(e) All Claims that Sellers or any of their respective Affiliates
may have against any third party, including any Governmental Entity, for causes
of action based on Chapter 5 of the Bankruptcy Code ("AVOIDANCE ACTIONS") and
for refund or credit of any type with respect to Taxes accrued or paid with
respect to periods (or any portion thereof) ending on or prior to the Closing
Date;
(f) All Claims which Sellers or any of their respective Affiliates
may have against any third Person with respect to any Excluded Asset or Excluded
Liability;
(g) The capital stock of Shared Technologies, which is a Subsidiary
of ATCW, but is not a Seller hereunder, its assets, and assets used primarily in
the Shared Technology business and set forth in SCHEDULE 2.2(g) OF THE
DISCLOSURE SCHEDULES;
(h) The Shared Hosting Business, including Contracts, accounts
receivable, equipment and Intellectual Property specifically related thereto;
(i) The capital stock of each Seller and each Seller's corporate
books and records relating to its organization and existence;
(j) Any director and officer, errors and omissions, fiduciary or
commercial crime insurance policies and related insurance claims and insurance
proceeds;
(k) All insurance policies;
(l) Any real property which is owned by any of Sellers ("OWNED REAL
PROPERTY") including any proceeds received in connection with the sale thereof;
(m) Any loans or notes payable to any Seller or Operating Subsidiary
from any employee of any Seller or Operating Subsidiary, other than Ordinary
Course of Business employee advances;
15
(n) Pre-Petition carrier gross accounts receivable, including those
of ILECs, which were recorded on Allegiance's books and records as of May 14,
2003, in an amount up to $58.3 million; and
(o) Any assets set forth in SCHEDULE 2.2(o) OF THE DISCLOSURE
SCHEDULES.
2.3 LIABILITIES TO BE ASSUMED BY BUYER. Subject to SECTIONS 2.4, 2.5
and 6.2, upon the transfer of the Acquired Assets on the Closing Date, Buyer
shall assume only the following Liabilities of Sellers (collectively, the
"ASSUMED LIABILITIES"):
(a) Liabilities arising out of or relating to the ownership of the
Acquired Assets and the operation of the Business by Buyer or any of its
assignees, including Liability for personal injury of customers or employees,
but in each case only to the extent that the event or state of facts giving rise
to such Liability occurs after the Early Funding Date;
(b) (i) Liabilities under the Assumed Contracts, but only to the
extent that the event or state of facts giving rise to such Liability occurs
after the Early Funding Date, and (ii) any post-Petition Liabilities under the
Assumed Contracts incurred in the Ordinary Course of Business but only to the
extent such Liabilities are reflected in Allegiance's financial statements as of
the Early Funding Date and taken into account in the determination of Closing
Working Capital;
(c) (i) Liabilities under trade accounts payable arising in the
Ordinary Course of Business and (ii) current Liabilities arising in the Ordinary
Course of Business under the accounts set forth on EXHIBIT K, and in each case
only to the extent that (x) the event or state of facts giving rise to such
Liability occurs post-Petition and (y) such Liabilities are reflected in
Allegiance's financial statements as of the Early Funding Date and taken into
account in the determination of Closing Working Capital; PROVIDED, HOWEVER, that
Buyer shall not assume any of Sellers' Liabilities for professional fees and
other related costs of administering the Cases;
(d) Liabilities for fifty percent (50%) of any and all Transfer
Taxes due as a result of the transactions contemplated by this Agreement as set
forth in SECTION 6.10;
(e) Liabilities for severance costs (the amount thereof in
accordance with Allegiance's currently existing severance policy and past
practice as described in EXHIBIT L) related to non-Transferred Employees who are
Employees on the date hereof or hired in the Ordinary Course of Business
thereafter and are terminated at Buyer's request after the date hereof and
Liabilities to Allegiance's employees pursuant to SECTION 6.8(b); PROVIDED,
HOWEVER, that in no event shall Buyer be responsible for more than six (6)
months of severance per Employee;
(f) Liabilities associated with customers of the Business, including
credits or refunds due such customers for any reason, to the extent that the
event or state of facts giving rise to such Liabilities occurs after the Early
Funding Date; and
16
(g) Liabilities related to any obligations under Section 4980B of
the Internal Revenue Code to provide continuation of group medical coverage on
and after the Early Funding Date with respect to any employee or former employee
employed in connection with the Business or other qualified beneficiary but only
to the extent Buyer may be required to assume any such Liability by Law.
2.4 EXCLUDED LIABILITIES. Buyer shall not assume, and shall not be
deemed to have assumed, any Liabilities of Sellers, and Sellers shall be solely
and exclusively liable and shall indemnify and hold harmless Buyer and its
Affiliates with respect to all Liabilities of Sellers other than the Assumed
Liabilities, including those Liabilities set forth below (collectively, the
"EXCLUDED LIABILITIES"):
(a) Any Liabilities which arise, whether before, on or after the
Closing, out of, or in connection with, the Excluded Assets, including any
Contract which is not an Assumed Contract;
(b) Any Liabilities under the Assumed Contracts or accounts payable
to the extent not assumed pursuant to SECTION 2.3;
(c) Any Liabilities arising from a breach of an Assumed Contract to
the extent that the event or state of facts giving rise to such Liability occurs
prior to the Early Funding Date;
(d) Any Liabilities arising out of, or in connection with, any
pending or threatened Litigation arising out of the operation of the Business to
the extent that the event or state of facts giving rise to such Liability occurs
prior to the Early Funding Date;
(e) Any Liabilities arising out of or in connection with any
indebtedness of Sellers or any of their respective Affiliates to their lenders,
noteholders or otherwise (other than, to the extent provided in SECTION 2.3,
post-petition Liabilities relating to Assumed Contracts which are characterized
as capital leases by Sellers);
(f) Any Liabilities for which Sellers have received an invoice which
is not taken into account in the determination of Early Funding Date Working
Capital;
(g) Liabilities related to Shared Technologies or the Shared Hosting
Business;
(h) Liabilities related to the Owned Real Property;
(i) Any Liabilities of Sellers or any Affiliate thereof (or any
predecessor thereto) relating to Taxes (other than Transfer Taxes referred to in
SECTION 2.3(d) and Taxes described on EXHIBIT K), including all Taxes
attributable to or incurred in any period (or portion thereof) ending on or
before the Early Funding Date;
(j) All Liabilities of any Seller, any of their Affiliates or any
predecessor of any Seller resulting from, caused by or arising out of, directly
or
17
indirectly, the conduct of the Business or any Sellers' or any of their
Affiliates ownership, operation or lease of any properties or assets or any
properties or assets previously used in the Business by any Seller, any of their
Affiliates or any predecessor of any Seller or any of their Affiliates at any
time prior to the Early Funding Date, that constitute, may constitute or are
alleged to constitute a violation of or Liability arising under any
Environmental Law or other Law including any state or federal communications law
or regulation;
(k) All Liabilities arising from or relating to the employment, or
termination of employment, of any Employee, former Employee, independent
contractor or contingent worker with respect to the Business, including pursuant
to Employee Benefit Plans, other than those specifically assumed pursuant to
SECTION 2.3 and 6.8 herein; and
(l) All Liabilities arising from or relating to any collective
bargaining agreement, including any obligation for benefits to employees covered
thereunder and, specifically, any Multiemployer Plan liability.
2.5 NON-TRANSFERRED ASSETS. Notwithstanding the foregoing provisions
of ARTICLE II, and subject to SECTION 6.2 and the Operating Agreement, the
parties agree that, to the extent that as of the Closing (i) certain of the
Acquired Assets cannot be transferred to Buyer pending the issuance of further
FCC Consents or State PUC Consents or (ii) certain of the Acquired Assets are
associated with one or more interconnection agreements, for which the ILEC's
consent is required and which are reasonably necessary, in Buyer's sole
discretion, to the operation of the Acquired Assets ("REQUIRED INTERCONNECTION
AGREEMENTS") and receipt of any ILEC consents or expiration of any notice
periods necessary to assign such Required Interconnection Agreements remains
pending as of the Closing, Sellers shall retain such assets (the
"NON-TRANSFERRED ASSETS") pending receipt of such consents or expiration of such
notice periods. For the avoidance of doubt, Buyer shall have the right, in its
sole discretion, to designate any Acquired Asset (including any Required
Interconnection Agreement) as a Non-Transferred Asset. During the period that
the Non-Transferred Assets are held by Sellers, Buyer will provide management
services to Sellers pursuant to the Operating Agreement. Upon receipt from time
to time of any such necessary consents, such Non-Transferred Assets as are
subject to such consents shall be transferred to Buyer and Buyer will assume all
related Assumed Liabilities; and within five (5) Business Days of Buyer's
written request, Sellers will deliver a xxxx of sale and the requirements of
SECTION 3.1 below shall have been deemed to be satisfied as if such
Non-Transferred Assets and related Assumed Liabilities had otherwise been
transferred to and assumed by Buyer at the Closing. With respect to assets that
are designated by Buyer as Non-Transferred Assets and which are not subject to
obtaining any further consents after the Closing, such Non-Transferred Assets
shall be transferred to Buyer and Buyer will assume all related Assumed
Liabilities, within five (5) Business Days of Buyer's written request, at which
time Sellers will deliver a xxxx of sale and the requirements of SECTION 3.1
below shall have been deemed to be satisfied as if such Non-Transferred Assets
had otherwise been transferred to Buyer at the Closing. In addition,
Non-Transferred Assets shall include all of the Seller Marks, which shall be
licensed to Buyer upon the Closing as set forth in the
18
Operating Agreement. After the expiration or termination of the Operating
Agreement, upon the written request of Buyer, all right, title and interest in
and to the Seller Marks shall be transferred to and vest in Buyer.
2.6 CONTRACT ASSIGNMENT. Notwithstanding any provision to the contrary
herein, Buyer and Sellers agree that there shall be excluded from the Acquired
Assets any Assumed Contract that is not assignable or transferable pursuant to
the Bankruptcy Code without the consent of any Person other than Sellers or any
Affiliate of Sellers, to the extent that such consent shall not have been given
on or prior to the Closing; PROVIDED, HOWEVER, that Sellers shall use
commercially reasonable efforts (including prosecution of appropriate motions
pursuant to Section 365 of the Bankruptcy Code) to endeavor to obtain all
necessary consents to the assignment thereof, and, upon obtaining the requisite
consents thereto, such Acquired Asset shall be assigned to Buyer.
Notwithstanding any provision to the contrary herein, Buyer and Sellers agree
that all reasonable out-of-pocket costs and expenses (other than Cure Amounts)
incurred relating to Sellers' assignment to Buyer of the Assumed Contracts set
forth on SCHEDULE 2.6 OF THE DISCLOSURE SCHEDULES shall be shared equally
between Buyer on the one hand and Sellers on the other hand.
2.7 ALTERNATIVE STRUCTURE. Notwithstanding SECTION 2.1, after the Sale
Order Approval Date, Buyer shall have the right, on at least fifteen (15)
Business Days notice to ATI, to require Sellers to transfer immediately prior to
the Closing, some or all of the Equipment or other Acquired Assets to one or
more newly formed Delaware limited liability companies to be formed and owned by
one or more Sellers. If Buyer gives such notice, the membership interests in
such limited liability companies shall be deemed Acquired Assets hereunder and
Buyer shall acquire such membership interests at the Closing without the payment
of any additional consideration. Buyer shall be permitted to give one or more
notices pursuant to this SECTION 2.7. In addition, at Buyer's option, a similar
procedure will apply to any Equipment or other Acquired Assets which constitutes
a Non-Transferred Asset. Fifty percent (50%) of all reasonable out-of-pocket
costs and expenses incurred in connection with Sellers' performance of this
SECTION 2.7 shall be borne by each of Buyer on the one hand and Sellers on the
other hand.
ARTICLE III
CLOSING
3.1 CLOSING; TRANSFER OF POSSESSION; CERTAIN DELIVERIES.
(a) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to ARTICLE
VIII hereof, the closing of the transactions contemplated herein (the "CLOSING")
shall take place no later than the fifth (5th) Business Day following the date
on which the conditions set forth in ARTICLE VII have been satisfied or waived
(other than those conditions with respect to actions of the parties to be taken
at the Closing itself, but subject to the satisfaction or waiver of such
conditions), or on such other date as the parties hereto shall mutually agree;
PROVIDED, HOWEVER, that if the Closing would be scheduled to occur less than two
(2) Business Days after the receipt of the performance
19
reports for the prior month referred to in SECTION 6.5(d) hereof, Buyer shall
not be required to close until two (2) Business Days after its receipt of such
performance reports. The Closing shall be held at the offices of Xxxxxxxx &
Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 5:00 p.m., local
time, unless the parties hereto otherwise agree. The actual time and date of the
Closing are herein called the "CLOSING DATE."
(b) At the Closing, Sellers shall deliver to Buyer:
(i) A duly executed xxxx of sale substantially in the form
attached hereto as EXHIBIT D;
(ii) A certified copy of the Sale Order;
(iii) The officer's certificate required to be delivered pursuant
to SECTION 7.2(c) hereof;
(iv) Assignments of lease and customary title affidavits;
(v) A certification of non-foreign status for each Seller in
the form required under Treasury Regulation Section 1.1445-2(b); and
(vi) All other instruments of conveyance and transfer, in form
and substance reasonably acceptable to Buyer and Sellers, as may be necessary to
convey the Acquired Assets to Buyer or Buyer's designee.
(c) At the Closing, Buyer and Sellers shall take the actions
specified in SECTION 3.2(c) and Buyer shall deliver to ATI (on behalf of
Sellers):
(i) All certificates required by all relevant taxing
authorities that are necessary to support any available exemption from the
imposition of Transfer Taxes;
(ii) Certified resolutions of the Board of Directors of Buyer
authorizing the execution, delivery and performance of the Transaction Documents
and the transactions contemplated by this Agreement;
(iii) To the extent shareholder approval is required, certified
resolutions of shareholders of Buyer authorizing the execution, delivery and
performance of the Transaction Documents and the transactions contemplated by
this Agreement;
(iv) The officer's certificate required to be delivered pursuant
to SECTION 7.3(c); and
(v) An assumption agreement substantially in the form attached
hereto as EXHIBIT E.
20
(d) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to ARTICLE
VIII hereof, no later than the fifth (5th) Business Day following the date on
which the conditions set forth in SECTIONS 7.1, 7.2 and 7.3 have been satisfied
or waived, or at such other date as the parties hereto shall mutually agree (the
"EARLY FUNDING DATE"), (i) Buyer shall (A) deliver (1) the Cash Purchase Price,
plus or minus, the applicable adjustments to the Purchase Price as set forth in
SECTION 3.2(b) below and (2) the XO Common Stock, into escrow as described in
SECTION 3.2, (B) execute and deliver the Operating Agreement and (C) commence
operation of the Business under the terms of the executed Operating Agreement,
(ii) Seller shall execute and deliver the Operating Agreement and (iii) upon the
Early Funding Date, the risk of loss shall transfer to Buyer, and Buyer's
obligation to close the transactions contemplated hereby shall become
unconditional and irrevocable.
3.2 PURCHASE PRICE.
(a) The "PURCHASE PRICE" consists of: (i) Three Hundred Eleven
Million and Two Hundred Thousand Dollars ($311,200,000.00) (the "CASH PURCHASE
PRICE"), as such amount is adjusted pursuant to SECTION 3.2(b), and (ii)
45,380,000 shares of common stock of Buyer, par value $.01 per share (the "XO
COMMON STOCK") (subject to adjustment for stock splits, stock dividends, share
exchanges, recapitalizations, share combinations and reorganizations and other
similar transactions occurring after the date hereof).
(b) In the event of an Early Funding Date, Buyer shall (i) wire
transfer the sum of:
(1) the Cash Purchase Price, plus or minus
(2) the Initial Working Capital Adjustment (if any) set
forth in SECTION 3.4(f), minus
(3) the Adjustment Escrow Amount, minus
(4) the Xxxxxxx Money Deposit, minus
(5) the portion of the Performance Adjustment Amount that is
to be settled in cash (if any) as determined in accordance with
SECTION 3.6(a), plus
(6) the Deposit Adjustment Amount (if any), plus
(7) the Non-ILEC Cure Adjustment set forth in SECTION 3.5(c)
(The Cash Purchase Price, as so adjusted is referred to herein as
the "ADJUSTED CASH PURCHASE PRICE") and
(ii) deliver 45,380,000 shares of XO Common Stock (subject to
adjustment for stock splits, stock dividends, share exchanges,
recapitalizations, share
21
combinations and reorganizations and other similar transactions occurring after
the date hereof) (the "PURCHASE PRICE ESCROW STOCK" and together with the
Adjusted Cash Purchase Price, the "PURCHASE PRICE ESCROW"), in each case into an
escrow account (the "PURCHASE PRICE ESCROW ACCOUNT") with a bank to be mutually
agreed upon to act as escrow agent (the "PURCHASE PRICE ESCROW AGENT") pursuant
to an escrow agreement, to be entered into on the Early Funding Date (the
"PURCHASE PRICE ESCROW AGREEMENT"), among ATI, ATCW, Buyer and the Purchase
Price Escrow Agent, substantially in the form of EXHIBIT F-1 hereto, and
otherwise in form and substance reasonably acceptable to ATI, ATCW and Buyer.
After the Early Funding Date and until the Closing Date, Buyer shall make
additional deposits of common stock of Buyer in the event of any stock splits,
stock dividends, share exchanges, recapitalizations, share combinations and
reorganizations and other similar transactions occurring after the Early Funding
Date.
(iii) wire transfer the Adjustment Escrow Amount into an escrow
account (the "ADJUSTMENT ESCROW ACCOUNT") with a bank to be mutually agreed upon
to act as escrow agent (the "ADJUSTMENT ESCROW AGENT") pursuant to an escrow
agreement, to be entered into on the Early Funding Date (the "ADJUSTMENT ESCROW
AGREEMENT"), among ATI, ATCW, Buyer and the Adjustment Escrow Agent,
substantially in the form of EXHIBIT F-2 hereto, and otherwise in form and
substance reasonably acceptable to ATI, ATCW and Buyer.
Any payment Sellers are obligated to make to Buyer pursuant to SECTIONS 3.4
and/or 3.6 shall be paid from the Adjustment Escrow Amount plus accrued interest
thereon. After payment of any required amounts pursuant to SECTIONS 3.4 and 3.6,
the Adjustment Escrow Agent shall release the residual amounts of the Adjustment
Escrow Amount remaining in the Adjustment Escrow Account to ATI. Notwithstanding
the provisions of this SECTION 3.2(b), in the event the Closing occurs before
the Early Funding Date, the Closing Date shall be substituted for the Early
Funding Date for all purposes and for all of the provisions of this SECTION
3.2(b).
(c) Upon the Closing Date, (i) Buyer shall, subject to the terms and
conditions of this Agreement, assume the Assumed Liabilities, and (ii) Buyer and
Sellers shall deliver a joint written notice to the Purchase Price Escrow Agent
directing the Purchase Price Escrow Agent to pay to ATI (on behalf of Sellers)
by wire transfer of immediately available funds to an account or accounts
designated by ATI (on behalf of Sellers) the Adjusted Cash Purchase Price and
the Xxxxxxx Money Deposit, to deliver to ATI (on behalf of Sellers) the Purchase
Price Escrow Stock and deliver to Buyer all earnings accrued thereon in the
Purchase Price Escrow Account.
3.3 XXXXXXX MONEY DEPOSIT. On February 9, 2004, Buyer paid an xxxxxxx
money deposit equal to Thirty Million Dollars ($30,000,000) (the "XXXXXXX MONEY
DEPOSIT") in immediately available funds, by wire transfer to ATI. Within five
(5) Business Days following the execution of this Agreement, Sellers will
deposit the Xxxxxxx Money Deposit into the Purchase Price Escrow Account. At the
Early Funding Date, the Xxxxxxx Money Deposit shall be deducted from the Cash
Purchase Price in accordance with SECTION 3.2(b). If Buyer terminates this
Agreement in breach of SECTION 8.1 hereof or if ATI terminates this Agreement
pursuant to SECTION 8.1(b) (when Buyer
22
does not have the right to terminate this Agreement pursuant to SECTION 8.1(b)
due to breach of the Agreement by Buyer) or SECTION 8.1(d) pursuant to a breach
by Buyer, then Buyer and Sellers shall within two (2) Business Days of such
termination (i) deliver a joint written notice to the Purchase Price Escrow
Agent to deliver the Xxxxxxx Money Deposit to Sellers and (ii) deliver the
accrued interest thereon to Buyer, by wire transfer of immediately available
funds, and Sellers shall have no further obligations to Buyer, PROVIDED, THAT in
no event shall the payment of the Xxxxxxx Money Deposit limit any other remedies
Sellers may have against Buyer in the event of any such termination. If this
Agreement is terminated for any other reason, then Buyer and Sellers shall
within two (2) Business Days of such termination deliver a joint written notice
to the Purchase Price Escrow Agent to deliver the Xxxxxxx Money Deposit plus
accrued interest thereon to Buyer by wire transfer of immediately available
funds.
3.4 WORKING CAPITAL PURCHASE PRICE ADJUSTMENT.
(a) Not less than five (5) Business Days prior to the Early Funding
Date, Sellers will prepare and deliver to Buyer a good faith estimate of the Net
Working Capital as of the close of business on the day immediately preceding the
Early Funding Date (the "ESTIMATED EARLY FUNDING DATE WORKING CAPITAL"). Sellers
will prepare the Estimated Closing Working Capital in accordance with GAAP and
consistent with ATI's preparation of its unaudited balance sheet as of September
30, 2003.
(b) As promptly as practicable, but no later than sixty (60)
Business Days after the Early Funding Date, Buyer will prepare and deliver to
ATI a good faith calculation of Net Working Capital as of the Early Funding Date
(the "EARLY FUNDING DATE WORKING CAPITAL"). Buyer will prepare the Early Funding
Date Working Capital in accordance with GAAP and consistent with ATI's
preparation of its unaudited balance sheet as of September 30, 2003. Attached as
EXHIBIT G is a schedule showing the calculation of Base Working Capital.
(c) If Sellers disagree with Buyer's calculation of Early Funding
Date Working Capital, Sellers may, within fifteen (15) Business Days after
delivery by Buyer of the statement pursuant to SECTION 3.4(b), deliver a notice
to Buyer disagreeing with such calculation and setting forth Sellers'
calculation of such amount. Any such notice of disagreement shall specify those
items or amounts as to which Sellers disagree, and Sellers shall be deemed to
have agreed with all other items and amounts contained in the calculation of the
Early Funding Date Working Capital. If Sellers do not raise any objections to
the Early Funding Date Working Capital within the period described herein, the
Early Funding Date Working Capital will become final and binding upon Buyer and
Sellers.
(d) If a notice of disagreement shall be duly delivered pursuant to
SECTION 3.4(c), Buyer and Sellers shall, during the fifteen (15) days following
such delivery, use their commercially reasonable efforts to reach agreement on
the disputed items or amounts in order to determine, as may be required, the
amount of Early Funding Date Working Capital. If during such period, Buyer and
Sellers are unable to reach such agreement, they shall promptly thereafter cause
representatives from the
23
Dallas office of Ernst & Young LLP (or, if the Dallas office of Ernst & Young
LLP is not independent of Buyer and Sellers, then an alternative "Big Four"
accounting firm mutually agreeable to Buyer and Sellers) which representatives
have not been engaged or employed within the past five (5) years by Buyer,
Sellers or any of their Affiliates (or, if Sellers and Buyer agree to another
nationally recognized independent accounting firm, such other firm) (the
"ACCOUNTING REFEREE") to review this Agreement and the disputed items or amounts
for the purpose of calculating Early Funding Date Working Capital (it being
understood that in making such calculation, the Accounting Referee shall be
functioning as an expert and not as an arbitrator). In making such calculation,
the Accounting Referee shall consider only those items or amounts as to which
the parties have disagreed. The Accounting Referee shall deliver to Buyer and
Sellers, as promptly as practicable (but in any case no later than thirty (30)
days from the date of engagement of the Accounting Referee), a report setting
forth such calculation. Such report shall be final and binding upon Buyer and
Sellers. The cost of such review and report shall be borne by Buyer and Sellers
in the reverse proportion that the aggregate dollar amounts of disputed items
which are resolved in favor of Buyer or Sellers (as applicable) bears to the
aggregate dollar amount of all disputed items resolved by the Accounting
Referee.
(e) Buyer and Sellers shall, and shall cause their respective
Representatives to, cooperate and assist in the calculation of Early Funding
Date Working Capital and in the conduct of the review referred to in SECTION
3.4(d), including providing reasonable and timely access to the books, records,
work papers and personnel involved in preparing these calculations.
(f) If Estimated Early Funding Date Working Capital (i) exceeds Base
Working Capital, then at the Early Funding Date, Buyer shall pay into the
Adjustment Escrow Account an additional amount of cash equal to such excess or
(ii) is less than Base Working Capital, then the Cash Purchase Price will be
reduced by an amount equal to such deficiency. Any adjustment pursuant to this
SECTION 3.4(f) is referred to herein as the "INITIAL WORKING CAPITAL
ADJUSTMENT."
(g) If Final Working Capital equals Estimated Early Funding Date
Working Capital, and if no further payments are or may become due pursuant to
SECTION 3.6 hereof, then within three (3) Business Days of the later of the
Closing Date or the final determination of such amount pursuant to this SECTION
3.4, Buyer and Sellers shall deliver a joint written notice to the Adjustment
Escrow Agent pursuant to the Adjustment Escrow Agreement instructing the
Adjustment Escrow Agent to pay the Adjustment Escrow Amount plus the accrued
interest on such amount (by wire transfer of immediately available funds) to
Sellers.
(h) If Final Working Capital exceeds Estimated Early Funding Date
Working Capital, then within three (3) Business Days of the later of the Closing
Date or the final determination of such amount pursuant to this SECTION 3.4,
Buyer shall pay such amount (by wire transfer of immediately available funds) to
Sellers and, if no further payments are or may become due pursuant to SECTION
3.6 hereof, Buyer and Sellers shall deliver a written notice to the Adjustment
Escrow Agent pursuant to the
24
Adjustment Escrow Agreement instructing the Adjustment Escrow Agent to pay the
Adjustment Escrow Amount plus the accrued interest on such amount (by wire
transfer of immediately available funds) to Sellers.
(i) If Final Working Capital is less than Estimated Working Capital,
then within three (3) Business Days of the later of the Closing Date or the
final determination of such amount pursuant to this SECTION 3.4, Sellers and
Buyer shall deliver a written notice to the Adjustment Escrow Agent pursuant to
the Adjustment Escrow Agreement instructing the Adjustment Escrow Agent to pay
such deficit amount plus the accrued interest thereon out of the Adjustment
Escrow Account (by wire transfer of immediately available funds) to Buyer;
PROVIDED that the Adjustment Escrow Account shall be the sole source of payment
for any such deficiency and in no event shall Sellers be otherwise liable for
any such deficiency. To the extent any Adjustment Escrow Amount remains after
payment of any such deficit, and if no further payments are or may become due
pursuant to SECTION 3.6 hereto, Buyer and Sellers shall deliver a written notice
to the Adjustment Escrow Agent pursuant to the Adjustment Escrow Agreement
instructing the Adjustment Escrow Agent to pay the remaining Adjustment Escrow
Amount plus the accrued interest on such amount (by wire transfer of immediately
available funds) to Sellers. For purposes of this Agreement, "FINAL WORKING
CAPITAL" means Early Funding Date Working Capital (i) as shown in Buyer's
calculation delivered pursuant to SECTION 3.4(b) if no notice of disagreement
with respect thereto is duly delivered pursuant to SECTION 3.4(c); or (ii) if
such a notice of disagreement is delivered, (A) as agreed by Buyer and Sellers
pursuant to SECTION 3.4(d) or (B) in the absence of such agreement, as shown in
the Accounting Referee's calculation delivered pursuant to SECTION 3.4(d).
(j) Any adjustment under this SECTION 3.4 shall be treated as an
adjustment to the Purchase Price for federal, state and local income Tax
purposes.
3.5 CURE PRICE ADJUSTMENT.
(a) The Cure Amounts, if any, as determined by the Bankruptcy Court,
necessary to cure all defaults, if any, under Allegiance's interconnection
agreements with incumbent local exchange carriers ("ILECS"), together with any
other payments made to settle pre-Petition disputes between any of Sellers or
the Operating Subsidiaries and ILECs under such agreements, under tariffs or
otherwise after the date hereof (the "ILEC CURE AMOUNTS") shall be resolved in
accordance with this SECTION 3.5(a). Buyer and Sellers shall work cooperatively
and in good faith with respect to paying, objecting to and settling the ILEC
Cure Amounts, it being understood that all pre-Petition accounts receivable of
Sellers or the Operating Subsidiaries owed by ILECs (the "ILEC SET OFF AMOUNTS")
shall be set off against the ILEC Cure Amounts and thereby used as currency to
pay the ILEC Cure Amounts. Sellers shall pay all ILEC Cure Amounts (whether in
cash or by application of the ILEC Set Off Amounts). Buyer and Sellers agree
that subject to this SECTION 3.5(a), Buyer should have standing in the Cases
with regard to ILEC Cure Amounts and the parties shall take such position in the
Cases.
25
Notwithstanding anything herein to the contrary (including SECTION
6.1(k)), prior to the Sale Order Approval Date, as between Buyer and Sellers,
Sellers shall have sole control over their business relationships, including
without limitation, the exclusive right to negotiate and settle with the ILECs,
and shall be permitted to terminate, adopt and amend interconnection agreements
but shall not prior to such time settle any ILEC Cure Amounts in a manner which
would be injurious in any material respect to Buyer without Buyer's consent
(which will not be unreasonably withheld) or take any action (including as
specified above) if the intent or reasonably anticipated consequence thereof is
or would be to injure in any material respect to Buyer's continuing relationship
with such ILEC after the Closing Date. Buyer shall be permitted to participate
in any such negotiations and shall be kept reasonably informed by Sellers of the
process.
(b) If deposits are required by ILECs in connection with
establishing new interconnection agreements for the Business between the date
hereof and the Early Funding Date and such deposits are outstanding at the time
of the Early Funding Date, the Cash Purchase Price shall be increased by an
amount (the "DEPOSIT ADJUSTMENT AMOUNT") equal to seventy-five percent (75%) of
the first $13 million of such deposits and one hundred percent (100%) of the
deposits above $13 million.
(c) The Cure Amounts, if any, as determined by the Bankruptcy Court,
necessary to cure all defaults, if any, under the Assumed Contracts, other than
the ILEC Cure Amounts (the "NON-ILEC CURE AMOUNTS") shall be resolved in
accordance with this SECTION 3.5(c). Buyer and Sellers shall work cooperatively
and in good faith with respect to paying, objecting to and settling the Non-ILEC
Cure Amounts, it being understood that all pre-Petition accounts receivable of
Sellers and the Operating Subsidiaries owed by non-ILECs (the "NON-ILEC SET OFF
AMOUNTS") shall be set off against the Non-ILEC Cure Amounts and thereby used as
currency to pay the Non-ILEC Cure Amounts. Buyer and Sellers agree that given
this SECTION 3.5(c), Buyer should have standing in the Cases with regard to
Non-ILEC Cure Amounts and the parties shall take such position in the Cases. The
treatment of the Non-ILEC Cure Amounts and all matters related thereto under the
Bankruptcy Plan shall be reasonably acceptable to Buyer. Sellers shall pay all
Non-ILEC Cure Amounts (whether in cash or by application of the Non-ILEC Set Off
Amounts); PROVIDED that if the Non-ILEC Cure Amounts are more than $11 million,
the Cash Purchase Price shall be increased by an amount equal to the lesser of
(A) two-thirds of the amount by which the Non-ILEC Cure Amounts exceed $11
million and (B) $8 million.
The adjustment to the Cash Purchase Price pursuant to this SECTION
3.5(c) is referred to herein as the "NON-ILEC CURE ADJUSTMENT." If as of the
time of the Early Funding Date any reserves are established with respect to
disputed Non-ILEC Cure Amounts pending resolution of such disputes, the Purchase
Price adjustment PROVIDED in this SECTION 3.5(c) shall be made, with respect to
the agreed Non-ILEC Cure Amounts, at the Early Funding Date, and with respect to
any such reserved amounts, within two (2) Business Days following the resolution
of the disputes.
(d) Subject to SECTION 8.3, (i) on February 13, 2004, Buyer
designated the (A) Real Property Leases identified on SCHEDULE 4.21 OF THE
DISCLOSURE
26
SCHEDULES and (B) other Executory Contracts that are designated with
an asterisk on SCHEDULE 4.20 that are to be assumed by Allegiance and not
rejected pursuant to section 365 of the Bankruptcy Code and (ii) at least (20)
days prior to the date of the Bankruptcy Court's confirmation of the Bankruptcy
Plan, Buyer shall designate other Executory Contracts that are to be assumed by
Allegiance and not rejected pursuant to section 365 of the Bankruptcy Code
(collectively, the "ASSUMED CONTRACTS LIST") (those Contracts ultimately set
forth on the Assumed Contracts List and as Additional Assumed Contracts pursuant
to SECTION 8.3, if applicable are referred to herein as the "ASSUMED
CONTRACTS"). Such assumption and, in the case of Assumed Contracts to which
either Seller is a party, assignment by Sellers shall be made at the Closing;
PROVIDED, HOWEVER, that the assignment to Buyer of any Assumed Contract related
to Non-Transferred Assets shall occur on the later of (i) the Closing or (ii)
State PUC Consent or FCC Consent, as applicable. At Buyer's discretion,
Allegiance agrees to assume or reject any Executory Contract, in whole or in
part, to the extent portions of such Executory Contracts are severable. Buyer
and Sellers agree to keep confidential and not disclose to anyone except (x)
legal counsel for the Creditors Committee in the Cases and the agent to Sellers'
senior lenders, PROVIDED, THAT, such counsel and agent have executed
confidentiality agreements reasonably acceptable to Buyer and Sellers prior to
such disclosure and (y) as otherwise required by Law, the Executory Contracts
that are identified by Buyer as Assumed Contracts.
3.6 PERFORMANCE PRICE ADJUSTMENT.
(a) At least two (2) Business Days prior to the Early Funding Date,
ATI shall prepare and deliver to Buyer a certificate setting forth the
following: (i) total Retail Ending Lines as determined by ATI in accordance with
past custom and practice, as of the last day of the last full calendar month
prior to the date of the Early Funding Date PLUS Scheduled Future Installs LESS
Scheduled Future Disconnects as of such day ("TOTAL RETAIL NET ENDING LINES")
and (ii) total gross end user revenue for the last full calendar month prior to
the date of the Early Funding Date (the "TOTAL GROSS END USER REVENUE"). The
Purchase Price shall be reduced by the greater of the following (the
"PERFORMANCE ADJUSTMENT AMOUNT"): (x) the product of $625.00 and the amount, if
any, by which the Total Retail Net Ending Lines for Allegiance's Out of Region
Business is less than 730,000; and (y) the product of fifteen (15) and the
amount, if any, by which Total Gross End User Revenue for Allegiance's Out of
Region Business is less than $28 million. To the extent Cash and Cash
Equivalents immediately prior to the Early Funding Date exceed One Hundred
Eighty Seven Million Dollars ($187,000,000), the Performance Adjustment Amount
(if any) shall reduce the Cash Purchase Price. To the extent such Cash and Cash
Equivalents immediately prior to the Early Funding Date are less than or equal
to One Hundred Eighty Seven Million Dollars ($187,000,000), any remaining
portion of the Performance Adjustment Amount shall be a reduction in the number
of shares of the XO Common Stock (calculated using a $7.625 per share value).
ATI's certificate shall include a calculation of the Performance Adjustment
Amount.
(b) If Buyer disagrees with the certificate delivered by ATI
pursuant to SECTION 3.6(a) hereof, Buyer may, within thirty (30) days after
Early Funding Date, deliver a notice to ATI disagreeing with the calculations
contained in such certificate
28
and setting forth Buyer's calculations. Any such notice of disagreement shall
specify those items or amounts as to which Buyer disagrees, and Buyer shall be
deemed to have agreed with all other items and amounts contained in the
calculation of the Performance Adjustment Amount. If Buyer does not raise any
objections to the Performance Adjustment Amount within the period described
herein, the Performance Adjustment Amount will become final and binding upon
Buyer and Sellers (the "FINAL PERFORMANCE ADJUSTMENT AMOUNT"). In such event, if
no further payments are or may become due pursuant to SECTION 3.4 hereof, ATI,
ATCW and Buyer shall deliver a written notice to the Adjustment Escrow Agent
pursuant to the Adjustment Escrow Agreement instructing the Adjustment Escrow
Agent to pay the Adjustment Escrow Amount plus the accrued interest on such
amount (by wire transfer of immediately available funds) to ATI.
(c) If a notice of disagreement shall be duly delivered pursuant to
SECTION 3.6(b), Buyer and Sellers shall, during the five (5) days following such
delivery, use their commercially reasonable efforts to reach agreement on the
disputed items or amounts in order to determine, as may be required, the Final
Performance Adjustment Amount. If during such period, Buyer and Sellers are
unable to reach such agreement, they shall promptly thereafter cause the
Accounting Referee to review the disputed items or amounts for the purpose of
calculating the Final Performance Adjustment Amount (it being understood that in
making such calculation, the Accounting Referee shall be functioning as an
expert and not as an arbitrator). In making such calculation, the Accounting
Referee shall consider only those items or amounts as to which the parties have
disagreed. The Accounting Referee shall deliver to Buyer and Sellers, as
promptly as practicable (but in any case no later than fifteen (15) days from
the date of engagement of the Accounting Referee), a report setting forth such
calculation. Such report shall be final and binding upon Buyer and Sellers. The
cost of such review and report shall be borne by Buyer and Sellers in the
reverse proportion that the aggregate dollar amounts of disputed items which are
resolved in favor of Buyer or Sellers (as applicable) bears to the aggregate
dollar amount of all disputed items resolved by the Accounting Referee.
(d) If the parties hereto agree, or the Accounting Referee
determines, that the Final Performance Adjustment Amount is greater (the
"ADDITIONAL AMOUNT") than the amount set forth in ATI's certificate delivered
pursuant to SECTION 3.6(a), then within two (2) Business Days of such
determination pursuant to this SECTION 3.6, Buyer and Sellers shall deliver a
written notice to the Adjustment Escrow Agent pursuant to the Adjustment Escrow
Agreement instructing the Adjustment Escrow Agent to pay the Additional Amount
plus the accrued interest on such amount (by wire transfer of immediately
available funds) to Buyer, and, if no further payments are or may become due
pursuant to SECTION 3.4 hereof, the balance of the Adjustment Escrow Amount plus
the accrued interest thereon to ATI. The Adjustment Escrow Account shall be the
sole source of payment for any payment obligation of Sellers pursuant to SECTION
3.6.
3.7 ALLOCATION OF PURCHASE PRICE. Buyer shall, within 120 days after
the Closing Date, prepare and deliver to Sellers a schedule (the "ALLOCATION
SCHEDULE") allocating the Purchase Price and the Assumed Liabilities among the
Acquired Assets in
28
accordance with Treasury Regulation Section 1.1060-1 (or any comparable
provisions of state or local tax law) or any successor provision. ATI may
propose to Buyer specific changes in the Allocation Schedule within ten (10)
days of the receipt thereof. If no such changes are proposed in writing to Buyer
within such time, Sellers will be deemed to have agreed to the Allocation
Schedule. If such changes are proposed, Buyer and ATI will negotiate in good
faith and will use their best efforts to agree upon the Purchase Price
allocation. If Buyer and ATI cannot mutually resolve ATI's reasonable objections
to the Allocation Schedule within ten (10) days after Buyer's receipt of such
objections, such dispute with respect to the Allocation Schedule shall be
presented to the Accounting Referee, on the next day for a decision that shall
be rendered by the Accounting Referee within thirty calendar days thereafter and
shall be final and binding upon each of the parties. The fees, costs and
expenses incurred in connection therewith shall be shared in equal amounts by
Buyer, on the one hand, and Sellers, on the other hand. Buyer and Sellers each
shall report and file all Tax Returns (including amended Tax Returns and claims
for refund) consistent with the Allocation Schedule, and shall take no position
contrary thereto or inconsistent therewith (including in any audits or
examinations by any taxing authority or any other proceedings). Buyer and
Sellers shall cooperate in the filing of any forms (including Form 8594) with
respect to such allocation. Notwithstanding any other provisions of this
Agreement, the foregoing agreement shall survive the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby, jointly and severally, represent and warrant to Buyer
that as of December 18, 2003 (unless another date is specified):
4.1 EXISTENCE; GOOD STANDING AND POWER. Each Seller and Operating
Subsidiary is a corporation validly existing and in good standing under the laws
of the state of its incorporation, and has all requisite power and authority to
own, lease and operate the Acquired Assets to be sold hereunder and to carry on
its business as presently conducted. Each Seller and Operating Subsidiary is
qualified or licensed to do business as a foreign corporation and is in good
standing in every jurisdiction where the nature of the business conducted by it
or the properties owned or leased by it requires qualification, except where the
failure to be so qualified, licensed or in good standing would not reasonably be
expected to have a Material Adverse Effect. Each Seller has all requisite power
and authority (a) to execute and deliver this Agreement and the other
Transaction Documents and (b) subject to entry of the Sale Order, to perform its
obligations hereunder and thereunder.
4.2 AUTHORITY. The execution, delivery and performance of this
Agreement and the other Transaction Documents by each Seller, the performance of
SECTIONS 6.17(a) and 6.17(b) by each Seller, and subject to entry of the Sale
Order, the performance by each Seller of its other obligations hereunder and
thereunder and the consummation by each Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of each Seller.
29
4.3 EXECUTION AND BINDING EFFECT. This Agreement has been and each of
the other Transaction Documents has been or will be at Closing, duly and validly
executed and delivered by each Seller and constitutes, and, following the
entering of the Sale Order, this Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby will constitute (assuming in
each case the due and valid authorization, execution and delivery thereof by the
other parties hereto and thereto), a valid and legally binding obligation of
such Seller enforceable against such Seller in accordance with its terms.
4.4 NO VIOLATION. Except as disclosed in SCHEDULE 4.4 OF THE
DISCLOSURE SCHEDULES, the execution, delivery and performance by each Seller of
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, do not and will not conflict with or result in,
with or without the giving of notice or lapse of time or both, any violation of
or constitute a breach or default, or give rise to the creation of a Lien upon
any of the Acquired Assets (or the assets of the Operating Subsidiaries) or to
any right of acceleration, payment, amendment, cancellation or termination,
under (a) the certificate of incorporation or bylaws of any Seller or any
Operating Subsidiary or any resolution adopted by the board of directors of such
Seller or any Operating Subsidiary and not rescinded, (b) subject to entry of
the Sale Order, any agreement or other instrument to which any Seller or
Operating Subsidiary is a party or by which such Seller or Operating Subsidiary
or any of its respective properties or assets is bound, (c) subject to entry of
the Sale Order, any Order of any Governmental Entity to which any Seller or any
Operating Subsidiary is bound or subject, or (d) subject to entry of the Sale
Order, any Law applicable to or binding on any Seller or any of its respective
properties or assets or any Operating Subsidiary, except, in the case of clauses
(b), (c) and (d) of this SECTION 4.4, to the extent such conflict, violation,
breach, default, creation of Lien or right would not be reasonably expected to
have a Material Adverse Effect.
4.5 THIRD PARTY APPROVALS. Except for (a) any approvals required in
order to comply with the provisions of the HSR Act, (b) any FCC Consent and
State PUC Consent as required by applicable Law, (c) the Sale Order and (d) any
other third party approvals as are reflected on SCHEDULE 4.5 OF THE DISCLOSURE
SCHEDULES hereto, including with respect to any computer software program and
databases, the execution, delivery and performance by Sellers of this Agreement,
the other Transaction Documents and the transactions contemplated hereby and
thereby, do not require any consents, waivers, authorizations or approvals of,
or filings with, any third Persons which are both material to the Business and
which have not been obtained by Sellers.
4.6 FINANCIAL STATEMENTS.
(a) ATI has delivered to Buyer copies of (i) the audited
consolidated balance sheets of ATI and its Subsidiaries as of December 31, 2002
and 2001 and the related audited consolidated statements of income and of cash
flows of ATI and its Subsidiaries for the years then ended and (ii) the
unaudited consolidated balance sheets of ATI and its Subsidiaries as at
September 30, 2003 and the related consolidated statements of income and cash
flows of ATI and its Subsidiaries for the nine (9) month
30
period then ended (such audited and unaudited statements, including the related
notes and schedules thereto, are referred to herein as the "FINANCIAL
STATEMENTS"). Each of the Financial Statements has been prepared in accordance
with GAAP consistently applied throughout the periods presented and presents
fairly in all material respects the consolidated financial position, results of
operations and cash flows of ATI and its Subsidiaries as at the dates and for
the periods indicated.
For the purposes hereof, the audited consolidated balance sheet of ATI
and its Subsidiaries as at December 31, 2002 is referred to as the "BALANCE
SHEET" and December 31, 2002 is referred to as the "BALANCE SHEET DATE."
(b) ATI has delivered or made available to Buyer copies of each of
Sellers' and each Operating Subsidiaries' (i) post-Petition monthly latest flash
reports and (ii) post-Petition monthly operating reports that Sellers' and the
Operating Subsidiaries have filed with the Bankruptcy Court. To Sellers'
Knowledge, each such monthly operating report is, and each monthly operating
report to be filed with the Bankruptcy Court will be, complete, accurate and
truthful. Each flash report to be delivered to Buyer pursuant to SECTION 6.5(d)
hereof will be prepared in good faith consistent with past practice and based on
the Sellers' preliminary books and records.
(c) Seller has made all required filings with the U.S. Securities
and Exchange Commission (the "SEC") since December 31, 2001. As of their
respective dates of filing, all such filings complied as to form in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC filings, and such SEC filings did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4.7 NO UNDISCLOSED LIABILITIES. Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
Allegiance has no indebtedness, obligation or Liability of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due),
that would have been required to be reflected in, reserved against or otherwise
described on a balance sheet of a Seller or Operating Subsidiary or in the notes
thereto in accordance with GAAP which (i) is not shown or described on the
Balance Sheet or the other Financial Statements or the notes thereto, (ii) is
not shown or described on SCHEDULES 4.7, 4.9, 4.17(b) and 4.20 OF THE DISCLOSURE
SCHEDULES or (iii) was not incurred in the Ordinary Course of Business since the
Balance Sheet Date.
4.8 TITLE TO ACQUIRED ASSETS; SUFFICIENCY. Except as set forth on
SCHEDULE 4.8 OF THE DISCLOSURE SCHEDULES, Sellers own and have good title to
each of the Acquired Assets (and the assets of the Operating Subsidiaries to the
extent such assets are not Excluded Assets), including the capital stock of the
Operating Subsidiaries, and the Operating Subsidiaries own and have good title
to their assets other than the Excluded Assets, in each case free and clear of
all Liens other than Permitted Liens. The Acquired
31
Assets constitute all of the assets and properties used in or held for use in
the Business (other than the Excluded Assets) and are sufficient for Buyer to
conduct the Business (other than the Excluded Assets) from and immediately after
the Closing Date without interruption and in the Ordinary Course of Business.
4.9 COMMUNICATIONS LICENSES. Sellers and the Operating Subsidiaries
are the authorized legal holders or otherwise have rights to the Communications
Licenses, which licenses constitute all of the material Licenses, from the FCC
or the State PUCs that are necessary or required for and/or used in the
operation of the Business as presently operated. All the Communications Licenses
were duly obtained and are valid and in full force and effect, unimpaired by any
condition, except those conditions that may be contained within the terms of
such Communications Licenses which would not have a Material Adverse Effect on
the Business as presently operated. Except as set forth on SCHEDULE 4.9 OF THE
DISCLOSURE SCHEDULES, Sellers are in compliance in all material respects with
the Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC and all applicable State PUCs. There is not now pending or,
to Sellers' Knowledge, threatened, any action by or before the FCC or any State
PUC in which the requested remedy is the revocation, suspension, cancellation,
rescission or modification of any of the Communications Licenses. SCHEDULE
2.1(d) OF THE DISCLOSURE SCHEDULES contains a complete and correct list of
Sellers' Communications Licenses.
4.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly contemplated
by this Agreement or the Operational Restructuring Activities, as set forth on
SCHEDULE 4.10 OF THE DISCLOSURE SCHEDULES or in connection with the filing of
the Cases, from the Balance Sheet Date through December 18, 2003 Sellers have
conducted the Business only in the Ordinary Course of Business.
4.11 TANGIBLE PERSONAL PROPERTY. All items of tangible personal
property which are Acquired Assets and which, individually or in the aggregate,
are material to the operation of the Business are in good condition and in a
state of good maintenance and repair (ordinary wear and tear excepted) and are
suitable for the purposes used.
4.12 INSURANCE. Allegiance has insurance policies in full force and
effect for such amounts as are sufficient for all requirements of Law and the
Credit and Guaranty Agreement dated as of February 15, 2000 among Allegiance and
the lenders party thereto (the "SENIOR CREDIT AGREEMENT").
4.13 ACCOUNTS AND NOTES RECEIVABLE AND PAYABLE.
(a) All accounts and notes receivable of Sellers and the Operating
Subsidiaries have arisen from bona fide transactions in the Ordinary Course of
Business, and in the case of accounts and notes receivable that are not Excluded
Assets, are payable on ordinary trade terms and are reflected on the books and
records of Sellers and the Operating Subsidiaries in accordance with GAAP
consistently applied, including reserves for returns and doubtful accounts.
32
(b) All accounts payable of Sellers and the Operating Subsidiaries
reflected in the Balance Sheet or arising after the date thereof are the result
of bona fide transactions in the Ordinary Course of Business and have been paid,
are not yet due and payable or are being disputed in good faith and are
reflected on the books and records of Sellers and the Operating Subsidiaries in
accordance with GAAP consistently applied.
4.14 RELATED PARTY TRANSACTIONS.
(a) Except as set forth in SCHEDULE 4.14(a) OF THE DISCLOSURE
SCHEDULES, none of Sellers, any Affiliate of any Seller or any of their
respective directors and officers with a title of Senior Vice President or
higher (i) owns any direct or indirect material interest of any kind in, or
controls or is a director, officer, employee or partner of, or consultant to, or
lender to or borrower from or has a material right to participate in the profits
of, any Person which is (A) a competitor, supplier, customer, landlord, tenant,
of any Seller or Operating Subsidiary, (B) engaged in a business related to the
Business, or (C) a participant in any transaction (including a loan transaction,
other than employee advances in the Ordinary Course of Business) to which any
Seller or Operating Subsidiary is a party or (ii) is a party to any Contract
with any Seller or any Operating Subsidiary.
(b) Except as set forth in SCHEDULE 4.14(b) OF THE DISCLOSURE
SCHEDULES, each Contract, agreement, or arrangement between any Seller or
Operating Subsidiary on the one hand, and any Affiliate of any Seller or
Operating Subsidiary or any director of any Seller or any officer of Sellers
with a title of Senior Vice President or higher on the other hand, is on
commercially reasonable terms no more favorable to the Affiliate, director,
officer or employee of such Seller or Operating Subsidiary than what any third
party negotiating on an arms-length basis would expect.
4.15 SUPPLIERS. Set forth on SCHEDULE 4.15 OF THE DISCLOSURE SCHEDULES
is a complete and accurate list of (a) the ten (10) most significant equipment
suppliers and (b) the ten (10) most significant maintenance suppliers (based
upon dollars billed to Allegiance) during the quarter ended September 30, 2003,
showing the approximate total xxxxxxxx to Allegiance from each such supplier
during such quarter. Except as set forth on SCHEDULE 4.15 OF THE DISCLOSURE
SCHEDULES, since September 30, 2003, there has not been any (i) termination,
cancellation or curtailment of the business relationship of any Seller or
Operating Subsidiary, as applicable, with any of the suppliers set forth on
SCHEDULE 4.15 OF THE DISCLOSURE SCHEDULES or (ii) written notice from any of the
suppliers set forth on SCHEDULE 4.15 OF THE DISCLOSURE SCHEDULES of an intent or
request to so terminate, cancel, curtail or change, and, to Sellers' Knowledge,
no written threat or written indication that any such termination, cancellation,
curtailment or change is reasonably foreseeable, except, in each case, for such
termination, cancellation, curtailment or change which would not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.
4.16 FEES AND EXPENSES. Sellers have engaged the firm of Xxxxxxxxx &
Co., LLC to assist them in connection with the matters contemplated by this
Agreement and will be responsible for the fees and expenses of such firm. Other
than as described in
33
the preceding sentence or as is payable by Sellers or their Affiliates and not
by Buyer, no broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of any Seller or any of their
respective Affiliates.
4.17 COMPLIANCE WITH LAWS; LICENSES.
(a) Except as set forth on SCHEDULE 4.17(a) OF THE DISCLOSURE
SCHEDULES, since December 31, 2002 (i) Allegiance has complied in all material
respects with all Laws relating to the operation of the Business; and (ii) no
Seller or Operating Subsidiary has received any written or other notice of or
been charged with the violation of any Laws. To Sellers' Knowledge, no Seller or
Operating Subsidiary is under investigation with respect to any material
violation of any Laws.
(b) SCHEDULE 4.17(b) OF THE DISCLOSURE SCHEDULES contains a list of
all material Licenses (other than Communications Licenses) which are required
for the operation of the Business as presently conducted and as presently
intended to be conducted. Except as set forth on SCHEDULE 4.17(b) OF THE
DISCLOSURE SCHEDULES, Allegiance currently has all such material Licenses which
are required for the operation of the Business as presently conducted. No Seller
or Operating Subsidiary is in default or violation, and no event has occurred
which, with notice or the lapse of time or both, would constitute a default or
violation, in any material respect of any term, condition or provision of such
License to which it is a party, to which the Business is subject or by which its
properties or assets are bound other than any such violation that would not
reasonably be expected to have a Material Adverse Effect.
4.18 ENVIRONMENTAL MATTERS. To Sellers' Knowledge, except as described
on the attached SCHEDULE 4.18 of the Disclosure Schedules:
(a) Each Seller and Operating Subsidiary and the operations of each
Seller and Operating Subsidiary are in compliance with all applicable
Environmental Laws, except to the extent such noncompliance would not reasonably
be expected to have a Material Adverse Effect.
(b) No Seller or Operating Subsidiary is the subject of any Order or
has received any written notice of any violations or Liabilities, including any
investigatory, remedial or corrective obligations, arising under Environmental
Laws and relating to the operation of the Business, except notices of such
violation or Liability which would not reasonably be expected to have a Material
Adverse Effect.
4.19 INTELLECTUAL PROPERTY. SCHEDULE 4.19 OF THE DISCLOSURE SCHEDULES
contains an accurate and complete list of all Intellectual Property owned by any
Seller or Operating Subsidiary, other than unregistered trademarks, tradenames
and copyrights, none of which is material to the operation of the Acquired
Assets. Except as set forth in SCHEDULE 4.19 OF THE DISCLOSURE SCHEDULES, there
is no pending, or to Sellers' Knowledge, threatened claims or Litigation of any
nature materially affecting or relating to the
34
Intellectual Property. SCHEDULE 4.19 OF THE DISCLOSURE SCHEDULES lists all
written notices or written claims currently pending or received by any Seller or
Operating Subsidiary that claim infringement of any material domestic or foreign
letters patent, patent applications, patent licenses, software licenses and
know-how licenses, trade names, trademark registrations and applications,
service marks, copyrights, copyright registrations or applications, trade
secrets, technical knowledge, know-how or other confidential proprietary
information. Except as set forth on SCHEDULE 4.19 OF THE DISCLOSURE SCHEDULES,
there is, to Sellers' Knowledge, no reasonable basis upon which any claim may be
asserted against any Seller or Operating Subsidiary for material infringement or
misappropriation of any of the foregoing. None of Sellers, any Operating
Subsidiary, or to Sellers' Knowledge, any other Person, is in material default
or violation of any Contract pursuant to which any Seller or Operating
Subsidiary licenses Intellectual Property for the Business.
4.20 CONTRACTS. Except as set forth on SCHEDULE 4.20 OF THE DISCLOSURE
SCHEDULES, SCHEDULE G of Sellers' schedule of assets and liabilities as filed
with the Bankruptcy Court contains a list of all pre-Petition material
Contracts, including: (i) each Executory Contract containing a Non-Compete
Covenant, (ii) each Executory Contract related to the purchases or sales of
indefeasible rights of use or leases of capacity and (iii) each interconnection
agreement with an ILEC. SCHEDULE 4.20 OF THE DISCLOSURE SCHEDULES sets forth as
of December 18, 2003, each material Executory Contract to which any Seller or
any Operating Subsidiary is a party and by or to which any Seller, Operating
Subsidiary or any of their properties is currently bound or subject or may be
bound or subject. True and complete copies of all material Executory Contracts
have been delivered or made available to Buyer. All of the Assumed Contracts are
valid, binding and enforceable in accordance with their respective terms, except
as designated on the attached SCHEDULE 4.20 OF THE DISCLOSURE SCHEDULES and
except as such enforceability may be limited by (i) applicable insolvency,
bankruptcy, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) applicable equitable principles (whether
considered in a proceeding at law or in equity). Except as set forth on SCHEDULE
4.20 OF THE DISCLOSURE SCHEDULES, no Seller is, and to Sellers' Knowledge, no
other party thereto is, in material default in the performance, observance or
fulfillment of any obligation under any Assumed Contract (other than any Cure
Amounts to be paid hereunder by Buyer or Sellers, as applicable), and, to
Sellers' Knowledge, no event has occurred, which with or without the giving of
notice or lapse of time, or both, would constitute a material default
thereunder. Except as set forth on EXHIBIT A of SCHEDULE 4.20 OF THE DISCLOSURE
SCHEDULES, Sellers have not entered into any material post-Petition Contracts
(including interconnection agreements).
4.21 REAL PROPERTY.
(a) SCHEDULE 4.21(a) OF THE DISCLOSURE SCHEDULES lists, all Real
Property Leases relating to the operation of the Business to which any Seller or
any Operating Subsidiary is a party.
(b) Except as set forth on SCHEDULE 4.21(b) OF THE DISCLOSURE
SCHEDULES, the Real Property Leases constitute all interests in real property
used or held
35
for use as of December 18, 2003 in connection with the Business by Sellers and
the Operating Subsidiaries and which are necessary for the continued operation
of the Business by Sellers and the Operating Subsidiaries as the Business was
conducted as of December 18, 2003.
4.22 TAXES. Except as described on the attached SCHEDULE 4.22 OF THE
DISCLOSURE SCHEDULES:
(a) (i) all income Tax Returns and all other material Tax Returns
required to be filed by or on behalf of Sellers, the Operating Subsidiaries or
any Affiliated Group have been duly and timely filed with the appropriate
Governmental Entity in all material respects, in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any valid
extensions of time in which to make such filings), and all such Tax Returns are
true, complete and correct in all material respects, (ii) except as prohibited
or stayed by the Bankruptcy Code, all Taxes payable by or on behalf of Sellers,
the Operating Subsidiaries or any Affiliated Group have been fully and timely
paid or adequately reserved for on Allegiance's Financial Statements (in each
case, other than Taxes that, in the aggregate, are not material in amount), and
any Taxes not yet due have been adequately accrued in accordance with GAAP, and
(iii) no waivers of statutes of limitation have been given or requested with
respect to any Tax Return required to be filed by or on behalf of Sellers, the
Operating Subsidiaries or any Affiliated Group;
(b) except as prohibited or stayed by the Bankruptcy Code, for all
open Tax years all Taxes required to be withheld, collected or deposited by
Sellers or the Operating Subsidiaries have been timely withheld, collected and
deposited in all material respects and, to the extent required by Law, all such
Taxes have been paid when due to the appropriate Governmental Entity and each
Seller and Operating Subsidiary is in compliance in all material respects with
respect to all withholding and information reporting requirements under all
applicable Laws;
(c) no federal, state, local or foreign Tax audits or administrative
or judicial Tax proceedings are pending or being conducted with respect to
Allegiance, and neither Allegiance nor any predecessor has received from any
federal, state, local or foreign Governmental Entity (including jurisdictions
where Sellers have not filed a Tax Return) any (A) notice indicating an intent
to open an audit or other review, or commence any other administrative or
judicial Tax proceeding that is still active, (B) request for information
related to Tax matters where the examination or investigation giving rise to
such request is still open, or (C) notice of deficiency or proposed adjustments
for any amount of Tax proposed, asserted, or assessed by any Governmental Entity
that remains unpaid. No written claim has been made by a Governmental Entity in
a jurisdiction where such Seller or Operating Subsidiary does not file Tax
Returns that such Seller or Operating Subsidiary is or may be subject to
taxation by that jurisdiction; and
(d) Buyer and the Acquired Assets will not be bound by a Tax
sharing, Tax allocation, Tax indemnity or other similar agreements or
arrangements (whether or
36
not written) with respect to or involving Sellers or the Acquired Assets after
the Closing Date.
4.23 EMPLOYEE BENEFITS; LABOR MATTERS.
(a) SCHEDULE 4.23(a) OF THE DISCLOSURE SCHEDULES sets forth a list
of all material "employee benefit plans," as defined in section 3(3) of ERISA
(whether or not subject to ERISA) other than a "multiemployer plan," as defined
in Section 3(37) of ERISA, and each material cafeteria, material bonus,
incentive or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, loan, performance or other employee or retiree benefit or
compensation plan, program, arrangement, agreement, policy or understanding,
whether written or unwritten, under which any Employee or former Employee
(including any beneficiaries and dependents thereof) is or may become eligible
to participate or derive a benefit and that is or has been maintained,
established or contributed to or required to be contributed to by Allegiance
("EMPLOYEE BENEFIT PLANS"). With respect to each Employee Benefit Plan, a copy
of each of the following documents (if applicable) has been PROVIDED or made
available to Buyer: (i) the most recent plan document for any Employee Benefit
Plan covered by ERISA and all amendments thereto; (ii) the most recent summary
plan description; (iii) the most recent trust document or any third party
funding vehicle (including insurance) and all amendments thereto; (iv) the two
most recent Forms 5500 required to have been filed with the IRS and all
schedules thereto, and the most recent IRS determination letter. All
contributions required to have been made by Allegiance under any Employee
Benefit Plan or any applicable Law to any trusts established thereunder or in
connection therewith have been made by the due date therefore (including any
extensions). The Employee Benefit Plans have been administered in accordance
with their terms in all material respects and are in compliance with applicable
Law in all material respects. Neither Allegiance nor any trade or business
(whether or not incorporated) which is or has ever been under common control, or
which is or has ever been treated as a single employer, with Allegiance under
Section 414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE") have at any time
within the last six years, maintained, contributed to, or had any obligation to
contribute to, or has any liability (fixed or contingent) with respect to, any
"single-employer plan" as defined in Section 4001(a)(15) of ERISA or any plan
subject to Sections 4063 or 4064 of ERISA ("MULTIPLE EMPLOYER PLAN").
(b) Each Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code, and the trust (if any) forming a part thereof, is
qualified and tax exempt under Code Section 401(a) and 501(a) and has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
Section 501(a) of the Code, which determination letter covers the GUST
Amendments and to the Knowledge of Sellers, nothing has occurred since the date
of such determination letter that could reasonably be expected to adversely
affect such qualification or tax-exempt status.
(c) Allegiance does not provide nor is it obligated to provide, any
life insurance or health benefits, including prescription drugs (whether or not
insured) to any
37
individual after his or her termination of employment or service with any of the
Sellers or the Operating Subsidiaries, except as may be required under COBRA and
at the expense of the individual or the individual's beneficiary and except as
PROVIDED under severance agreements. Sellers and their ERISA Affiliates which
maintain a "group health plan" within the meaning of Section 5000(b)(1) of the
Code have complied in all material respects with the notice and continuation
requirements of COBRA and the regulations thereunder and comparable state laws.
(d) SCHEDULE 4.23(d) OF THE DISCLOSURE SCHEDULES lists each
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the
Sellers or their ERISA Affiliates are obligated to contribute ("MULTIEMPLOYER
PLAN"), and there is no potential liability under any other multiemployer plan
to which the Sellers or their ERISA Affiliates are, or within the preceding six
(6) years were, obligated to contribute. To Sellers' Knowledge: (i) no condition
exists and (ii) no event has occurred with respect to any Multiemployer Plan
that presents a material risk of a complete or partial withdrawal of the Sellers
or any ERISA Affiliate under subtitle E of Title IV of ERISA and the Sellers and
their ERISA Affiliates have not, within the preceding six years, withdrawn in a
complete or partial withdrawal from any multiemployer plan or incurred any
contingent liability under Section 4204 of ERISA. To the Sellers' Knowledge, no
Multiemployer Plan is in "reorganization" or "insolvent."
(e) There are no collective bargaining agreements with any labor
union representing Employees. There is no Employee labor strike, dispute,
slowdown, or stoppage pending or, to the Sellers' Knowledge, threatened by
Employees against Allegiance. To Sellers' Knowledge: (i) no collective
bargaining agreement is currently being negotiated and (ii) no organizing effort
is currently being made or has been threatened with respect to the Employees.
Allegiance is and has been in material compliance with all Laws relating to
employment practices, terms and conditions of employment (including termination
of employment), wages, hours of work and occupational safety and health, and
worker classification and at all times since November 23, 1999, has been in
material compliance with the requirements of the Immigration Reform Control Act
of 1986. Allegiance is in compliance with WARN and any similar state or local
"mass layoff" or "plant closing" Law in all material respects. There is no
unfair labor practice complaint pending or, to Sellers' Knowledge, threatened
against Allegiance before the National Labor Relations Board.
(f) There is no Assumed Contract covering any person that,
individually or collectively, could give rise to the payment of any amount that
would constitute an "excess parachute payment" within the meaning the Section
280G of the Internal Revenue Code or any similar provision of foreign, state or
local Law.
4.24 LITIGATION. Except as set forth on SCHEDULE 4.24 OF THE
DISCLOSURE SCHEDULES and for Claims that will be discharged pursuant to the
Bankruptcy Court Order:
(a) other than the Cases, there is no Litigation pending or, to
Sellers' Knowledge, threatened against, relating to or affecting Allegiance or
any Subsidiary
38
with respect to the Business or any of the Acquired Assets which would
reasonably be expected (i) to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or (ii) to have a Material
Adverse Effect; and
(b) except for Orders of the Bankruptcy Court, there are no Orders
outstanding against Allegiance which would reasonably be expected to have a
Material Adverse Effect.
4.25 NETWORK FACILITIES. SCHEDULE 4.25 OF THE DISCLOSURE SCHEDULES
contains certain information relating to Allegiance's network. SCHEDULE 4.25 OF
THE DISCLOSURE SCHEDULES sets forth: (i) for each segment, the number of fibers,
fiber miles owned or leased by Allegiance, route and name of third party
provider, if any and (ii) for Allegiance's IP backbone, route and circuit type
(including XX0x, XX0x, XX00x, XX00 and lambda waves). The information provided
on SCHEDULE 4.25 OF THE DISCLOSURE SCHEDULES is accurate and current in all
material respects.
4.26 BANK ACCOUNTS. SCHEDULE 2.1(n) OF THE DISCLOSURE SCHEDULES
contains a true and complete list of all of Allegiance's bank accounts and
lock-boxes.
4.27 SUBSIDIARIES. Except for ATCW, the Operating Subsidiaries and
Shared Technologies, ATI has no Subsidiaries.
4.28 LIMITATIONS ON SELLERS' REPRESENTATIONS AND WARRANTIES. Except
for the representations and warranties contained in this Agreement, Sellers make
no other express or implied representation or warranty, including,
representations or warranties as to the condition of the Acquired Assets, their
contents, the income derived or potentially to be derived from the Acquired
Assets or the Business and Sellers hereby expressly disclaim all such
representations or warranties of any kind or nature, or the expenses incurred or
potentially to be incurred in connection with the Acquired Assets or the
Business. Sellers are not, and will not be, liable or bound in any manner by
express or implied warranties, guarantees, statements, promises, representations
or information pertaining to the Acquired Assets or the Business, made or
furnished by any Representatives or other person representing or purporting to
represent Sellers, unless and to the extent the same is expressly set forth in
this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
5.1 EXISTENCE, GOOD STANDING AND POWER. Buyer is a corporation
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate the property
it now owns, leases and operates. Buyer has all requisite power and authority to
conduct its business as presently conducted, to execute and deliver this
Agreement, the Transaction Documents and to perform its obligations hereunder
and thereunder. Buyer is duly authorized, qualified and licensed to transact
business as a foreign corporation, and is in good
39
standing, in every jurisdiction where the nature of its business conducted by it
or the properties owned or licensed by it requires qualification, except where
that failure would not have a material adverse effect on Buyer or its business,
or the consummation of the transactions contemplated by this Agreement.
5.2 AUTHORITY. The execution, delivery and performance of this
Agreement and the Transaction Documents to which Buyer is or will be a party and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Buyer.
5.3 EXECUTION AND BINDING EFFECT. This Agreement has been, and each
of the Transaction Documents to which Buyer is or will be a party has been or
will be at Closing, duly and validly executed and delivered by Buyer and
constitutes, and this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby will constitute (assuming, in each case, the due
and valid authorization, execution and delivery thereof by the other parties
thereto), a valid and legally binding obligation of Buyer, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
5.4 NO VIOLATION. Except as disclosed in the attached SCHEDULE 5.4 OF
THE DISCLOSURE SCHEDULES, the execution, delivery and performance by Buyer of
this Agreement and the Transaction Documents and the transactions contemplated
hereby and thereby, do not and will not conflict with or result in, with or
without the giving of notice or lapse of time or both, any violation of or
constitute a breach or default, or give rise to any right of acceleration,
payment, amendment, cancellation or termination, under (a) the certificate of
incorporation or bylaws of Buyer or any resolution adopted by the board of
directors of Buyer and not rescinded, (b) any agreement or other instrument to
which Buyer is a party or by which Buyer or any of its properties or assets is
bound, (c) any Order of any Governmental Entity to which Buyer is bound or
subject or (d) any Law applicable to or binding on Buyer or any of its
properties or assets except, in the case of clauses (b)-(d), for such conflicts,
violations, breaches, defaults or creation of rights as would not, individually
or in the aggregate, have a material adverse effect on the business of Buyer or
the ability of Buyer to consummate the transactions contemplated by this
Agreement and each of the Transaction Documents.
5.5 THIRD PARTY APPROVALS. Except for (a) any approvals required in
order to comply with the provisions of the HSR Act, (b) any FCC Consent and
State PUC Consent as required by applicable Law and (c) any other third party
approvals as are reflected on the attached SCHEDULE 5.5 OF THE DISCLOSURE
SCHEDULES, the execution, delivery and performance by Buyer of this Agreement
and the Transaction Documents and the transactions contemplated hereby and
thereby do not require any consents, waivers, authorizations or approvals of, or
filings with, any third Persons which have not been obtained by Buyer.
40
5.6 BROKERS AND FINDERS. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement, based upon arrangements made by or on behalf of
Buyer or any of its Affiliates.
5.7 FINANCING. As of the date hereof and as of the Closing Date,
Buyer has and will have sufficient unrestricted funds on hand or committed lines
of credit to consummate the transactions contemplated by this Agreement
(including the payment of all fees and expenses incurred in connection with the
transactions contemplated hereunder).
5.8 SEC FILINGS. Buyer has made all required filings with the SEC
since December 31, 2001. The Form 10-K filed with the SEC for Buyer's year ended
December 31, 2002 and the Form 10-Q filed with the SEC for Buyer's quarter ended
September 30, 2003 (the "FORM 10-Q"), as of the dates of their respective
filings, each complied as to form in all material respects with the requirements
of the Exchange Act, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC filing and such SEC filing did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.9 CAPITALIZATION. The Form 10-Q sets forth the authorized shares of
capital stock of the Buyer as of the date hereof and the number of shares of its
common stock that were issued and outstanding as of October 28, 2003. The XO
Common Stock of Buyer to be delivered at Closing will be validly and legally
issued, free and clear of any and all Liens, and will be fully paid and
non-assessable.
5.10 LIMITATIONS ON SELLERS' REPRESENTATIONS AND WARRANTIES. Buyer
acknowledges and agrees that it shall acquire the Acquired Assets "AS IS,"
"WHERE IS" and "WITH ALL FAULTS" on the Closing Date and after giving effect to
the Closing, subject to the terms and conditions of this Agreement.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS. Except for the Operational Restructuring
Activities, as expressly contemplated by this Agreement (including the
prosecution of the Cases) or as otherwise consented to by Buyer in writing,
during the period from the date of this Agreement and continuing until the Early
Funding Date, each Seller shall and shall cause each Operating Subsidiary to:
(a) (i) conduct its business in the Ordinary Course of Business and
(ii) keep the Acquired Assets intact in accordance with the Ordinary Course of
Business and not transfer any of such assets to Shared Technologies;
41
(b) not knowingly take or fail to take any action if the intent of
such action or failure to act is or would be to cause any representation or
warranty of Sellers made in ARTICLE IV to be untrue or incorrect if such
representation or warranty were made immediately following the taking or failure
to take such action;
(c) not waive, release, grant, transfer or permit to lapse any
rights of value, to which any Seller or any Operating Subsidiary has any right
on the date of this Agreement other than immaterial waivers in the Ordinary
Course of Business;
(d) comply in all material respects with all provisions of any
Assumed Contract to which such Seller or Operating Subsidiary is a party;
(e) comply in all material respects with all applicable Laws that
relate to or affect the operation of the Business;
(f) not enter into any new or amended contract, agreement, side
letter or memorandum of understanding with any unions representing Employees;
(g) notify Buyer in writing of any incidents or accidents occurring
on or after the date of this Agreement involving any property owned or operated
by any Seller or Operating Subsidiary that resulted or could reasonably be
expected to result in damages or losses in excess of One Million Dollars
($1,000,000);
(h) notify Buyer in writing of the commencement of any material
Litigation against any Seller or any Operating Subsidiary;
(i) not enter into any business or arrangement or otherwise take any
action that would reasonably be expected to have a material adverse impact on
the ability of the Sellers and the Buyer to obtain any material consents of
Governmental Entities necessary in connection with this Agreement;
(j) not enter into any Contract containing covenants purporting to
limit the freedom of any Seller or any of their respective Affiliates to compete
or participate in any line of business or activities in any geographic area
("NON-COMPETE COVENANTS");
(k) not enter into any material Contract or renew, fail to renew,
extend, terminate, reject, amend, modify or waive any material provision of any
Contract designated with an asterisk on SCHEDULE 4.20 TO THE DISCLOSURE
SCHEDULES, except (i) that if within five (5) Business Days after notice
provided by Sellers to Buyer of its intent to take any such actions, Buyer does
not object in writing to Sellers, then Buyer shall be deemed to have provided
consent to such action and (ii) for those actions for which a motion has been
filed with the Bankruptcy Court on or prior to the date hereof; and
(l) not enter into any agreement or understanding in excess of
twelve months with any other party containing any exclusivity or similarly
restrictive provision.
42
Notwithstanding anything herein to the contrary, Sellers shall have
the right to consummate a sale of (i) the shared web hosting business segment of
the Business (the "SHARED HOSTING BUSINESS"), (ii) the Owned Real Property,
and/or (iii) the assets or capital stock of Shared Technologies, and retain any
proceeds from any such transactions as an Excluded Asset.
Notwithstanding anything herein to the contrary, Allegiance shall have
the right, subject to Bankruptcy Court approval, but only after the Sale Order
Approval Date, to pay up to $100 million of the amount outstanding under its
Senior Credit Agreement.
6.2 TRANSITION; OPERATING AGREEMENT.
(a) As promptly as practicable after the execution and delivery of
this Agreement and in any event within the earlier of (A) forty-five (45) days
thereafter and (B) the Closing Date, Sellers and Buyer shall use their best
efforts to (i) identify the Non-Transferred Assets and (ii) design and implement
a plan (the "TRANSITION PLAN") to effectuate the separation of the
Non-Transferred Assets to be retained by Sellers, in order to facilitate the
transfer of the Non-Transferred Assets to Buyer as promptly as possible upon
subsequent receipt of any necessary consents. Such plan shall include the
ability of Sellers to (1) retain the stock of any Operating Subsidiary
containing a Non-Transferred Asset or (2) distribute any Non-Transferred Asset
to ATI, ATCW, any of their Affiliates or a trust established for the purpose of
acquiring each non-Transferred Asset. Subject to applicable law, Buyer shall
have ultimate discretion regarding the terms of such Transition Plan; provided,
that Buyer shall not require the transfer of any Non-Transferred Assets in
violation of any contractual obligations of Sellers or that would otherwise
adversely impact Sellers', Operating Subsidiaries' or Shared Technologies'
Chapter 11 estate. The Transition Plan shall be subject to amendment from time
to time as reasonably appropriate to achieve the foregoing objective and permit
the Closing to occur on the Closing Date. Sellers and Buyer shall exercise their
best efforts to implement the Transition Plan, as it may be amended from time to
time, to provide for separation of the Non-Transferred Assets prior to the
Closing and the transfer of Non-Transferred Assets as promptly as possible.
(b) Sellers and Buyer shall enter into an Operating Agreement
substantially in the form of EXHIBIT H hereto effective as of the Early Funding
Date. Pursuant to and as set forth in the Operating Agreement, Buyer shall agree
to provide management and related services to Sellers, on behalf of Sellers and
subject to the ultimate direction of Sellers and consistent with all applicable
law and regulation. Pursuant to SECTIONS 1.1 and 2.5, (i) at such time as any
necessary FCC Consent and/or State PUC Consent shall have been issued and (ii)
the parties shall have received any necessary ILEC consents, or the notice
period shall have expired, for the assignment of any Required Interconnection
Agreements, the corresponding Non-Transferred Assets shall be transferred to
Buyer and Buyer shall assume all related Assumed Liabilities.
43
6.3 REORGANIZATION PROCESS.
(a) Unless Sellers shall have delivered an Early Closing Election,
Sellers shall, as soon as reasonably practicable after the date hereof, prepare
and file with the Bankruptcy Court: (i) a Disclosure Statement with respect to
the Bankruptcy Plan meeting the requirements of section 1125(b) of the
Bankruptcy Code (the "DISCLOSURE STATEMENT"); (ii) a motion to approve the
Disclosure Statement; and (iii) the Bankruptcy Plan (items (i) through (iii)
collectively, the "APPROVAL MOTIONS"). Unless Sellers shall have delivered an
Early Closing Election, the Bankruptcy Plan, any and all exhibits and
attachments to the Bankruptcy Plan, the Disclosure Statement, and the other
Approval Motions and the orders approving the same (including the Confirmation
Order) to the extent any of the foregoing adversely impacts the Sale Assets
shall be reasonably acceptable in form and substance to the Buyer. Sellers and
the Operating Subsidiaries shall have the sole discretion to negotiate, propose
and implement the terms of the Bankruptcy Plan as they relate to the treatment
of creditors and the distributions on account of such creditors' claims in any
manner not inconsistent with the Transaction Documents. Until the Closing, the
Sellers shall consult with the Buyer and obtain Buyer's consent, which shall not
be unreasonably withheld, prior to taking any material action with respect to
the Cases. Unless Sellers shall have delivered an Early Closing Election, the
Buyer shall provide the Sellers with all information concerning the Buyer
required to be included in the Disclosure Statement. This SECTION 6.3(a) shall
not be applicable if Sellers shall have delivered an Early Closing Election.
(b) The Confirmation Order shall provide, among other things, that
(i) the Bankruptcy Plan has been proposed in good faith and not by any means
forbidden by Law, (ii) Buyer and its Affiliates, and their respective members,
shareholders, partners and Representatives are released from any claims of any
party related to Sellers, the Business or the Cases, whether arising prior to or
during the Cases, except for the Assumed Liabilities, (iii) Buyer and its
Affiliates, and their respective members, shareholders, partners and
Representatives have acted in "GOOD FAITH" within the meaning of section 1125(e)
of the Bankruptcy Code in compliance with the applicable provisions of the
Bankruptcy Code and Bankruptcy Rules in connection with all their respective
activities relating to the solicitation of acceptances to the Bankruptcy Plan
and their participation in the activities described in section 1125 of the
Bankruptcy Code and are entitled to the protections afforded by section 1125(e)
of the Bankruptcy Code and the exculpation and any other release provisions set
forth in the Bankruptcy Plan and (iv) all Persons are enjoined from commencing
any action in violation of such release and exculpation provisions. This SECTION
6.3(b) shall not be applicable if Sellers shall have delivered an Early Closing
Election.
(c) The Sellers shall take such actions and cause any filings and
actions to be taken by one or more of the Sellers as applicable in compliance
with the dates set forth in the timetable attached hereto as EXHIBIT J;
PROVIDED, HOWEVER, that in the event Sellers shall have delivered an Early
Closing Election, any such filings and actions relating to the Bankruptcy Plan
or Disclosure Statement shall no longer be required or subject to the timetable
attached hereto as EXHIBIT J.
44
(d) Prior to the Closing, neither any Seller nor any Operating
Subsidiary shall, without the prior written consent of Buyer:
(i) seek or consent to the conversion of the Cases to cases
under chapter 7 of the Bankruptcy Code or the appointment of a trustee or
examiner with managerial powers under section 1104 of the Bankruptcy Code;
(ii) consent to any relief from the automatic stay under
section 362 of the Bankruptcy Code with respect to any Acquired Assets having an
aggregate market value of more than $150,000;
(iii) file any plan of reorganization other than the Bankruptcy
Plan, file any material amendment to the Bankruptcy Plan, consent to the
reduction of the exclusivity period under section 1121 of the Bankruptcy Code
for the filing of a plan of reorganization (the "EXCLUSIVITY PERIOD") or fail
timely to file motions seeking to obtain orders of the Bankruptcy Court
extending the Exclusivity Period; PROVIDED, HOWEVER, that in the event Sellers
shall have delivered an Early Closing Election, this SECTION 6.3(d)(iii) shall
be inapplicable;
(iv) sell or abandon, or file any motion to sell or abandon,
any Acquired Assets, other than sales in the Ordinary Course of Business or
except as contemplated by the Operational Restructuring Activities;
(v) commence or continue to prosecute Avoidance Actions
against any Seller or Operating Subsidiary or related to the Business, or
against any employee of, creditor of or other party to a contract with any
Seller or Operating Subsidiary;
(vi) commence or continue any Claims that Sellers or any of
their respective Affiliates may have against any active Employee of, creditor of
or other party to an existing Contract with any Seller or Operating Subsidiary
(other than Contracts that are Excluded Assets); or
(vii) authorize, or commit or agree to take, any of the
foregoing actions.
(e) At the Closing, Sellers shall reject in the Cases all Executory
Contracts that do not constitute Assumed Contracts other than any such Executory
Contracts (A) relating to the Excluded Assets or (B) assigned to any other
Person. At Buyer's written request, Sellers shall delay the effective date of
the rejection of any Executory Contract designated by Buyer; PROVIDED THAT, for
any such delay in the effective date, Buyer shall be responsible for all
expenses directly or indirectly arising due to such delay in effective date on
or after the Closing Date. PROVIDED, FURTHER, that if Buyer requests a delay in
rejection of an Executory Contract that results in rejection beyond the Closing
Date, then Sellers shall retain such Executory Contract and it shall be treated
as a Non-Transferred Asset and subject to (i) SECTIONS 2.5 and 6.2 hereof, and
(ii) the Operating Agreement.
45
(f) At Buyer's reasonable direction and sole expense, Sellers (i)
shall file all requisite pleadings with the Bankruptcy Court, or any other
applicable forum, to recharacterize any capital lease as a secured financing,
(ii) agree, after the Sale Order Approval Date, to assume or reject any capital
lease, in whole or in part, to the extent portions of such lease are severable,
and (iii) agree to allow Buyer to participate in any negotiations with
counterparties with respect to restructuring or recharacterizing the capital
leases. The Sale Order shall provide that the Buyer has standing to participate
in any disputes regarding such capital leases.
6.4 INSURANCE. Effective upon the Closing, to the extent
Allegiance's insurance policies are designated by Buyer as Non-Transferred
Assets, Allegiance shall take all actions necessary to cause Buyer to be
designated as an additional loss-payee on such policies and shall maintain such
insurance policies on the same terms as currently in effect at Buyer's sole
expense.
6.5 ACCESS; TRANSITION COMMITTEE; INFORMATION RIGHTS.
(a) Subject to any relevant Antitrust Laws, from the date hereof
until the Closing Date, Sellers shall allow Buyer's employees and other
Representatives during regular business hours (and in a manner so as not to
interfere with the normal business operations of Sellers) to make such
investigation of the Sellers' employees, the Business and Sellers' books and
records related thereto, as Buyer reasonably deems necessary or advisable, and
Sellers shall instruct Sellers' employees to cooperate in any such
investigation. Buyer shall be permitted to make extracts from or to make copies
of such books and records.(1)
(b) From and after the Closing Date, Buyer hereby acknowledges that
it shall grant to Sellers upon Sellers' request full and complete access, as
promptly as practicable but in no event no later than two (2) days after
receiving a request, to any records related to Sellers' operation of the
Business prior to the Closing Date, upon Sellers' request, and Sellers shall be
permitted to copy, and retain a copy of, any such records. Buyer shall keep such
records in a manner consistent with Buyer's past practice and such records shall
not be destroyed until the later of seven (7) years from the Closing Date or the
conclusion of all bankruptcy proceedings related to the Business. Sellers hereby
agree that from and after the Closing Date they will grant to Buyer upon Buyer's
reasonable request access during normal business hours (and instruct its
employees to reasonably cooperate with Buyer), in a reasonably prompt manner but
in any event no later than five (5) days after receiving a request, to any tax
records relating to the Acquired Assets or to Allegiance's operation of the
Business prior to the Closing Date (including any Tax Liabilities for which
Buyer may be held liable). Buyer shall be permitted to copy, and retain a copy
of, any such records (including any Tax Returns). To the extent that any Seller
retains any books and records related to the Business, such Seller shall keep
such records in a manner consistent with
----------
(1) NOTE: During the period from the Early Funding Date through the Closing
Date the Operating Agreement shall contain broad access rights.
46
Sellers' past practice and such records shall not be destroyed before such
Seller offers such records to Buyer.
(c) Subject to any relevant Antitrust Laws, immediately upon the
Bankruptcy Court approval of the Sale Order and subject to compliance with any
regulatory restrictions, Allegiance and Buyer shall establish a joint transition
committee (the "COMMITTEE") to plan the steps necessary to efficiently implement
the purchase of the Business by Buyer and to agree upon changes to the Business
which will increase operating efficiencies. The Committee will be chaired by a
Buyer Representative, shall have one (1) individual from Communications
Technology Advisors LLC ("CTA") (who shall be entitled to attend all meetings
and receive all documents prepared for the Committee) shall have appropriate
Representatives of both Allegiance and Buyer, and shall meet in person or
telephonically as frequently as shall be reasonably determined by Buyer. The
Committee shall establish working groups to discuss the following specific
aspects of the transactions contemplated hereby: (i) human resources, (ii)
network, (iii) operations, (iv) sales and marketing, (v) finance and (vi)
information technology and shall agree as promptly as possible as to actions
that will be taken to more efficiently operate the Business prior to Closing;
PROVIDED that no such actions implemented prior to Closing shall have, or be
reasonably expected to have, a detrimental impact on the ability of Allegiance
to conduct the auction in a manner customary in similar proceedings, and further
PROVIDED that all such actions shall be conducted in full compliance with the
relevant Antitrust Laws. All reasonable costs associated with the establishment
and the operation of the Committee shall be borne by Buyer. Prior to any
meetings of the Committee, Allegiance and Buyer shall implement appropriate
procedures for the protection of the confidential information of both Allegiance
and Buyer in the event the transaction is not concluded for any reason.
(d) As soon as practicable, but in no event less than fifteen (15)
days after the end of each month, ATI shall provide Buyer with a copy of its
monthly flash report, together with a performance report of the Total Retail Net
Ending Lines (as of the end of the month covered by the flash report) and Total
Gross End User Revenue (as of the end of the month covered by the flash report),
including a certification as to the number of Scheduled Future Installs and
Scheduled Future Disconnects as of the end of the month covered by the flash
report.
6.6 PUBLIC ANNOUNCEMENTS. Neither Seller nor any Operating Subsidiary
shall issue a press release or otherwise make any public statements with respect
to the transactions contemplated hereby, except as may be required by Law, by
obligations pursuant to any listing agreement with any national securities
exchange or over-the-counter market or with respect to filings to be made with
the Bankruptcy Court in connection with this Agreement (in which case such
Seller shall notify Buyer as promptly as practicable and prior to making such
public statement), without the prior consent of Buyer, which consent shall not
be unreasonably withheld or delayed. To the extent reasonably practicable, Buyer
shall consult with ATI before Buyer issues any press release or otherwise makes
any public statements with respect to the transactions contemplated hereby and
consider any comments ATI may have with respect thereto.
47
6.7 NOTIFICATION OF CERTAIN MATTERS. Allegiance shall give prompt
notice to Buyer, and Buyer shall give prompt notice to Allegiance, of (i) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated by
this Agreement and (ii) any written objection, litigation or administrative
proceeding that challenges the transactions contemplated hereby or the entry of
the Bidding Procedures Order or the Sale Order.
6.8 EMPLOYEES.
(a) Sellers shall deliver to Buyer not later than fifteen (15)
Business Days after the date of this Agreement: a complete and accurate schedule
(the "EMPLOYEE SCHEDULE") setting forth, as of a recent date prior to the
delivery of the Employee Schedule, (x) the name and position of each Employee,
(y) the annual base salary or hourly rate, as applicable, for each Employee and
(z) the date each Employee commenced employment with Allegiance. Sellers and
Buyer shall cooperate in identifying those employees for which Buyer shall offer
full-time employment effective as of the Closing Date.
(b) Buyer anticipates extending offers of employment to
substantially all of Allegiance's Employees who provide services related to or
associated with the Acquired Assets. Buyer shall make offers of employment in
accordance with its normal hiring practices. Those Employees who accept Buyer's
offer of employment effective as of the Closing Date are referred to as the
"TRANSFERRED EMPLOYEES." Following the Closing, Buyer shall provide any Employee
who does not receive an offer of employment from the Buyer and any Employee who
receives an offer of employment which does not provide for the terms of
employment described in SECTION 6.8(d) with severance benefits in accordance
with Allegiance's severance policies and past practice, PROVIDED, HOWEVER, any
Transferred Employee shall not be eligible to receive severance benefits
pursuant to this Agreement.
(c) Pursuant to the "Alternative Procedure" provided in section 5 of
Revenue Procedure 96-60, 1996-2 C.B. 399, (i) Buyer and Sellers shall report on
a predecessor/successor basis as set forth therein, (ii) Sellers will be
relieved from filing a Form W-2 with respect to the Transferred Employees and
(iii) Buyer will undertake to file (or cause to be filed) a Form W-2 for each
such Transferred Employee for the year that includes the Closing Date (including
the portion of such year that such Employee was employed by Allegiance). Sellers
will provide Buyer on a timely basis with all payroll and employment-related
information with respect to each such Employee.
(d)
(i) Buyer shall grant each Transferred Employee service credit
with Sellers (based on the employment commencement date set forth in the
Employee Schedule), for purposes of eligibility and participation in the benefit
plans, programs and arrangements (including the vacation and the severance
policies), of Buyer, excluding
48
service credit for benefit accruals under the defined benefit pension plan and
eligibility for the retiree medical plan.
(ii) Unless otherwise required by any collective bargaining
agreement to which any of Buyer's employees are subject to as of the Closing
Date, with respect to Transferred Employees who will be subject to such
collective bargaining agreement after the Closing, effective on the Closing
Date, Buyer shall provide the Transferred Employees with (i) a salary or regular
wage rate and bonus opportunity (if applicable) which is substantially the same
in the aggregate as the salary or wage rate received or bonus opportunity
available to such Transferred Employee immediately prior to the Closing, (ii) a
job location no more than 75 miles from such Transferred Employee's current job
location and (iii) health, welfare and other employee benefits on the same basis
as similarly situated employees of Buyer (or an Affiliate of Buyer), as
determined by Buyer and in accordance with the terms of the plans governing such
benefits.
(iii) As of the Closing Date, Buyer (or an Affiliate of Buyer)
shall credit the Transferred Employees for all deductibles and out-of pocket
expenses incurred by the Transferred Employees with respect to such benefits
during the calendar year in which the Closing Date occurs and shall further
waive (to the extent waived under Sellers' employee benefit plans) all
pre-existing conditions, exclusions and waiting periods under Buyer's employee
benefit plans for Transferred Employees.
(iv) Except as otherwise provided in this Agreement, Buyer
shall not assume any Employee Benefit Plan or any liability or obligation
thereunder, and, except as expressly provided in this SECTION 6.8, the terms of
a Transferred Employee's employment with Buyer (or an Affiliate) after the
Closing shall be upon such terms and conditions as Buyer, in its sole
discretion, shall determine.
(e) Sellers and any Operating Subsidiary shall cause the accounts of
all Transferred Employees under any tax-qualified defined contribution plan
maintained by Sellers or any Operating Subsidiary to become fully vested as of
the Closing, and shall permit distribution of such accounts in accordance with
the terms of any such plan. Notwithstanding the foregoing, Sellers or any
Operating Subsidiary shall amend such defined contribution plan to permit the
rollover of promissory notes evidencing outstanding participant loans of
Transferred Employees, without default of such loan, to a tax-qualified defined
contribution plan established by Buyer, and Buyer shall cause, as of a specified
date within 90 days of Closing as determined by Buyer, such plan to accept such
rollovers, PROVIDED that Allegiance has provided the Buyer evidence satisfactory
to the Buyer of the qualified status of the Allegiance's Internal Revenue Code
Section 401(k) arrangement under Internal Revenue Code Section 401(a). Buyer
shall take all action necessary and appropriate to ensure that, as of the
Closing, Buyer maintains a tax-qualified defined contribution plan.
(f) Allegiance shall cause, and Buyer agrees to assume, the health
care and dependent care flexible spending accounts (and any corresponding assets
and liabilities thereto) maintained with respect to Transferred Employees under
any cafeteria
49
plan maintained by Allegiance to be transferred to Buyer's flexible benefits
plan in accordance with IRS Revenue Ruling 2002-32.
(g) Allegiance shall not, at any time between the date hereof and
the Early Funding Date, or at any time prior to 60 days after the Early Funding
Date, effectuate a "plant closing" or "mass layoff," as those terms are defined
in the WARN Act, affecting in whole or in part any site of employment, facility,
operating unit or Employee, without complying with the notice requirements and
other provisions of the WARN Act except to the extent arising from Buyer's
actions, in which case Buyer shall be responsible for any Liabilities related
thereto. In order to protect all parties, to the extent required by the WARN
Act, Sellers agree to give notice in compliance with the WARN Act in a form
satisfactory to Buyer, to all Employees required under the WARN Act to receive
such notice not less than sixty (60) days and no more than ninety (90) days
prior to the anticipated Closing Date, and shall repeat such notice, if
necessary, due to any delay of Closing; PROVIDED, HOWEVER, to the extent any
Seller is unable to provide notice in compliance with the WARN Act due to any
act, omission or direction of Buyer, Buyer shall be responsible for any
Liabilities related thereto.
(h) Except where prohibited by law, Sellers shall provide promptly
to Buyer, at Buyer's request, any information or copies of personnel records
(including addresses, dates of birth, dates of hire and dependent information)
relating to the Transferred Employees or relating to the service of Transferred
Employees with Sellers prior to the Closing. Sellers and Buyer shall each
cooperate with the other and shall provide to the other such documentation,
information and assistance as is reasonably necessary to effect the provisions
of this SECTION 6.8(h).
(i) As part of the Transition Plan, certain Employees of Sellers
will be retained by Sellers as of the Closing. Those Employees may or may not be
Transferred Employees as referenced in this SECTION 6.8. The parties will
cooperate in developing the Transition Plan such that, to the extent permitted
by law, such Employees are subject to the same terms and conditions as they
would have been if they had not been retained by Sellers at Closing, and instead
had become Transferred Employees or been terminated, as the case may be, at
Closing. For purposes of SECTIONS 6.8(a), (b), (c), (d), (e), (f) and (h) in the
case of an Employee who remains with the Sellers subsequent to the Closing Date
for the purposes of continuing to conduct the Business with respect to the
Non-Transferred Assets and who receives and accepts an offer of employment from
the Buyer post-Closing, references to the "Closing Date" shall be replaced with
the date of hire by the Buyer, or as otherwise specified in the Operating
Agreement.
6.9 FURTHER AGREEMENTS. Sellers authorize and empower Buyer after
the Closing Date to receive and to open all mail received by Buyer relating to
the Acquired Assets, the Business or the Assumed Liabilities and to deal with
the contents of such communications in any proper manner. Sellers shall (a)
promptly deliver to Buyer, any mail or other communication received by them
after the Closing Date, (b) promptly wire transfer in immediately available
funds to Buyer, any cash, electronic credit or deposit received by Sellers and
(c) promptly forward to Buyer, any checks or other
50
instruments of payment that it received, in each case relating to the Acquired
Assets, the Business or the Assumed Liabilities. Buyer shall (a) promptly
deliver to Sellers, any mail or other communication received by it after the
Closing Date, (b) promptly wire transfer in immediately available funds to ATI,
any cash, electronic credit or deposit received by Buyer and (c) promptly
forward to ATI, any checks or other instruments of payment that it receives, in
each case relating to the Excluded Assets or any Excluded Liabilities. From and
after the Closing Date, Sellers shall refer all inquiries with respect to the
Business, the Acquired Assets and the Assumed Liabilities to Buyer, and Buyer
shall refer all inquiries with respect to the Excluded Assets and the Excluded
Liabilities to Sellers.
6.10 PAYMENT OF TRANSFER TAXES AND TAX FILINGS.
(a) Fifty percent (50%) of all Transfer Taxes arising out of the
transfer of the Acquired Assets and any Transfer Taxes required to effect any
recording or filing with respect thereto shall be paid by each of Buyer on the
one hand and Sellers on the other hand. The parties shall use commercially
reasonable efforts to have included in the Sale Order and Confirmation Order a
provision that provides that the transfer of the Acquired Assets shall be free
and clear of any stamp or similar taxes under section 1146(c) of the Bankruptcy
Code. At least twenty (20) Business Days prior to Closing, Sellers shall submit
to Buyer a list of all Transfer Taxes (by tax name, tax jurisdiction and general
description of the Acquired Assets subject to such tax) that it anticipates
collecting from Buyer at Closing. Buyer may submit to Sellers evidence that it
believes such Transfer Tax should not be applicable. Sellers shall review such
evidence in a timely and good faith manner and respond to Buyer prior to
Closing. Sellers and Buyer shall cooperate to timely prepare and file any
returns or other filings relating to such Transfer Taxes, including any claim
for exemption or exclusion from the application or imposition of any Transfer
Taxes.
(b) Each party shall furnish or cause to be furnished to the others,
upon request, as promptly as practicable, such information and assistance
relating to the Acquired Assets and the Business as is reasonably necessary for
filing of all Tax Returns, including any claim for exemption or exclusion from
the application or imposition of any Taxes or making of any election related to
Taxes, the preparation for any audit by any taxing authority and the prosecution
or defense of any claim, suit or proceeding relating to any Tax Return.
(c) Sellers acknowledge and agree that Buyer shall have an
administrative expense claim with respect to Sellers' share of any Transfer
Taxes arising out of the transfer of the Acquired Assets under this SECTION 6.10
that have not been paid when due.
6.11 FILING OF TAX RETURNS.
Sellers shall prepare and file, or cause to be prepared and filed, all
Tax Returns for or on behalf of Sellers and any Affiliated Group that are
required to be filed for periods that include or end on or prior to the Closing
Date. Subject TO SECTION 2.3(c),
51
Sellers shall pay, or shall cause to be paid, all Taxes due and payable by
Sellers with respect to periods that include or end on or prior to the Closing
Date when due.
6.12 PRORATION OF TAXES AND CERTAIN CHARGES. Except as provided in
SECTION 6.10, all real property Taxes, personal property Taxes or similar ad
valorem obligations levied with respect to the Acquired Assets for any taxable
period that includes the day before the Early Funding Date and ends after the
Early Funding Date, whether imposed or assessed before or after the Early
Funding Date, shall be prorated between Sellers and Buyer as of 12:01 A.M. on
the Early Funding Date. If any Taxes subject to proration are paid by Buyer, on
the one hand, or Sellers, on the other hand, the proportionate amount of such
Taxes paid (or in the event a refund of any portion of such Taxes previously
paid is received, such refund) shall be paid promptly by (or to) the other after
the payment of such Taxes (or promptly following the receipt of any such
refund). Notwithstanding the foregoing proration, any interest, penalties or
additions to Tax relating to a Tax that is subject to proration shall be borne
by the party whose actions or omissions gave rise to such item, and shall be
reimbursed (and any refund remitted) consistent with the preceding sentence.
6.13 BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each of
the parties hereto shall use its respective best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, all things necessary, proper or
advisable under applicable Laws and regulations to ensure that the conditions
set forth in this Agreement are satisfied and to consummate and make effective,
in the most expeditious manner practicable, the transactions contemplated by
this Agreement, including prosecuting confirmation of the Bankruptcy Plan
notwithstanding the objection of any party in interest. Subject to the terms and
conditions of this Agreement, the parties shall not take any action or refrain
from taking any action, the effect of which would be to delay or impede the
ability of Allegiance and Buyer to consummate the transactions contemplated by
this Agreement, unless in such party's reasonable judgment, taking such action
or refraining from action is consistent with achieving the ultimate objective of
consummating the transactions contemplated hereby.
(b) Without limiting the generality of the foregoing, the parties
hereto shall furnish to each other such necessary information and reasonable
assistance, as each may request in connection with preparation and filing of
applications and motion papers, including the Sale Motion needed to obtain
Bankruptcy Court approval of the transactions contemplated by this Agreement.
6.14 HSR ACT AND GENERAL GOVERNMENTAL CONSENTS.
(a) Subject to the terms and conditions of this Agreement, each of
the parties hereto shall use its respective best efforts to (1) obtain from any
Governmental Entity, any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Sellers or Buyer or
any of their respective
52
Subsidiaries, or to avoid any action or proceeding by any Governmental Entity
(including those in connection with the HSR Act), in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, (2) subject to any restrictions under
Antitrust Laws (as defined herein), to the extent practicable, (A) promptly
notify each other of any communication to that party from any Governmental
Entity with respect to this Agreement and the transactions contemplated hereby,
(B) permit a Representative of the other party reasonably acceptable to the
first party to attend and participate in meetings (telephonic or otherwise) with
any Governmental Entity and (C) permit the other party to review in advance, as
reasonable, any proposed written communication to any Governmental Entity, and
(3) make all necessary filings (including, to the extent applicable, appropriate
filing of a notification and report form pursuant to the HSR Act on or prior to
the date that is five (5) Business Days after the date of execution of this
Agreement), and thereafter make any other required submissions, with respect to
this Agreement and the transactions contemplated hereby under any applicable
Law. Sellers and Buyer shall cooperate with each other in connection with the
making of all such filings, including (i) providing all information required or
appropriate for any application or other filing and (ii) as reasonably
practicable, providing copies of all such documents to the other party and its
advisors prior to filing and, if requested, accepting all reasonable additions,
deletions or changes suggested in connection therewith.
(b) In furtherance and not in limitation of the foregoing, the
parties shall use their best efforts to resolve such objections, if any, as may
be asserted with respect to the transactions contemplated by this Agreement
under any antitrust, competition or trade regulatory Laws of any Governmental
Entity ("ANTITRUST LAWS"). The parties agree to take any action (including
agreeing to hold separate or to divest any of the Acquired Assets (a "DESIGNATED
CHANGE") that may be required by or would otherwise resolve any objections made
by (1) the applicable Governmental Entity (including the Antitrust Division of
the United States Department of Justice or the Federal Trade Commission) in
order to resolve any objections as such Governmental Entity or authority may
have to such transactions under such Antitrust Law, or (2) by any domestic or
foreign court or similar tribunal, in any suit brought by a private party or
Governmental Entity challenging the transactions contemplated by this Agreement
as violative of any Antitrust Law, in order to (i) avoid material delay in the
closing of such transactions or (ii) avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order or other order that
has the effect of preventing the consummation of any of such transactions. The
entry by a court, in any suit brought by a private party or Governmental Entity
challenging the transactions contemplated by this Agreement as violative of any
Antitrust Law, of an order or decree permitting the transactions contemplated by
this Agreement, but requiring a Designated Change, or that would otherwise limit
the Buyer's freedom of action with respect to, or its ability to retain, the
Acquired Assets, shall not be deemed a failure to satisfy the conditions
specified in SECTION 7.1(a) or SECTION 7.1(c) hereof. Notwithstanding any other
provision of this Agreement, nothing herein shall require Buyer or any of its
Affiliates to hold separate or to divest any of the businesses, product lines or
assets of Buyer or its Affiliates.
53
(c) Buyer shall bear sole responsibility for all filing fees under
the HSR Act.
6.15 BULK SALES. Each of the parties hereto waives compliance with
any applicable provisions of the Uniform Commercial Code Article 6 (bulk sales
or bulk transfers) or analogous provisions of Law, as adopted in the states in
which the Business is conducted, as such provisions may apply to the
transactions contemplated by this Agreement.
6.16 SALE ORDER. Buyer and Sellers shall cooperate to obtain entry
of the Sale Order. With respect to the Assumed Contracts, Buyer shall cooperate
with Sellers to provide adequate assurance of future performance as required by
section 365 of the Bankruptcy Code.
6.17 COMPETING TRANSACTION.
(a) Following the Sale Order Approval Date and until such time as
this Agreement has been terminated (other than a termination by Sellers in
violation of this Agreement), Sellers shall not, nor shall it authorize or
permit any Representative of Sellers to, (A) directly or indirectly solicit,
initiate or encourage the submission of any offer or proposal concerning any (x)
sale, lease or other disposition directly or indirectly by merger,
consolidation, business combination, share exchange, joint venture or otherwise,
of any or all of the Acquired Assets, (y) issuance or sale of any equity
interests in any Seller, or (z) transaction pursuant to which any Person will
acquire beneficial ownership or the right to acquire beneficial ownership of
equity interests in any Seller (any of the foregoing, a "COMPETING
TRANSACTION"), (B) directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate the making of, any proposal or
expression of interest that constitutes or is reasonably likely to lead to a
Competing Transaction, or (C) enter into any agreement with respect to any
Competing Transaction.
(b) Allegiance shall not furnish information concerning their
business, properties or assets to any third party, except (i) in the Ordinary
Course of Business to potential and current vendors, customers and agents, (ii)
to Governmental Entities or (iii) pursuant to a confidentiality agreement with
terms and conditions no less restrictive than those contained in the
Confidentiality Agreement as modified by SECTION 9.9 below. Allegiance shall not
release any third party from, or waive any provision of, any such
confidentiality agreement to which any Seller is a party other than to the
extent a similar release or waiver was granted to Buyer. Sellers shall use
reasonable efforts to promptly provide, or identify and make available to Buyer
any non-public information concerning Sellers, the Acquired Assets or the
Business provided to any other Person after the date hereof which was not
previously provided to Buyer. To the extent that this SECTION 6.17(b) conflicts
with the Bidding Procedures Order, the Bidding Procedures Order shall govern.
54
6.18 DISCLOSURE SUPPLEMENTS. Prior to the Early Funding Date, Sellers
shall deliver updated Disclosure Schedules hereto with respect to any matter
hereafter arising or any information obtained after the date hereof which, if
existing, occurring or known at or prior to the date of this Agreement, would
have been required to be set forth or described in the Disclosure Schedules, or
which is necessary to complete or correct any information in such schedule or in
any representation and warranty of Sellers which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the conditions set
forth in ARTICLE VII hereof, no such supplement or amendment shall be
considered.
6.19 COMMUNICATIONS LICENSES. Allegiance shall maintain the validity
of the Communications Licenses and, except as disclosed on SCHEDULE 4.9 OF THE
DISCLOSURE SCHEDULES, comply in all material respects with all requirements of
the Communications Licenses and the rules and regulations of the FCC and State
PUCs. Allegiance shall use reasonable commercial efforts to (a) refrain from
taking any action which may jeopardize the validity of any of the Communications
Licenses or result in the revocation, surrender or any adverse modification of,
forfeiture of, or failure to renew under regular terms, any of the
Communications Licenses, (b) prosecute with due diligence any pending
applications with respect to the Communications Licenses, including any renewals
thereof, and (c) with respect to Communications Licenses, make all filings and
reports and pay all fees necessary or reasonably appropriate for the continued
operation of the Business, as and when such approvals, consents, permits,
licenses, filings, or reports or other authorizations are necessary or
appropriate.
6.20 FCC APPLICATIONS/STATE PUC APPLICATIONS.
(a) As promptly as practicable after the execution and delivery of
this Agreement and in no event later than three (3) Business Days after the date
of execution of this Agreement, the parties hereto shall prepare and file, or
cause to be prepared and filed, the necessary application or applications with
the FCC seeking the FCC Consents. Each party shall provide the other party with
all information necessary for the preparation of such applications on a timely
basis, including those portions of such applications which are required to be
completed by the first party.
(b) As promptly as practicable after the execution and delivery of
this Agreement and in no event later than ten (10) Business Days after the date
of execution of this Agreement, the parties hereto shall prepare and file, or
cause to be prepared and filed, the necessary application or applications with
the State PUCs seeking the State PUC Consents. Each party shall provide the
other party with all information necessary for the preparation of such
applications on a timely basis, including those portions of such applications
which are required to be completed by the first party. In addition, the parties
hereto shall cooperate to make any notice filings required in connection with
this matter on a timely basis.
(c) Each of Buyer and Sellers (or the Operating Subsidiaries where
applicable) shall bear its own expenses in connection with the preparation and
prosecution of the FCC applications and the State PUC applications. Subject to
the
55
terms and conditions of this Agreement, each of the parties hereto shall use its
best efforts to prosecute the FCC applications and the State PUC applications in
good faith and with due diligence before the FCC and the State PUCs and in
connection therewith shall take such action or actions as may be necessary or
reasonably required in connection with the FCC applications and the State PUC
applications, including furnishing to the FCC and the State PUCs any documents,
materials, or other information requested by the FCC and the State PUCs in order
to obtain the FCC Consent and the State PUC Consents as expeditiously as
practicable. In addition, to the extent practicable, the parties hereto shall
use their best efforts to (i) promptly notify each other of any communication to
that party from the FCC or any State PUC with respect to the FCC applications or
the State PUC applications, as applicable, (ii) permit a Representative of the
other party reasonably acceptable to the first party to attend and participate
in meetings (telephonic or otherwise) with the FCC or any State PUC and (iii)
permit the other party to review in advance, as reasonable, any proposed written
communication to the FCC or any State PUC. No party hereto shall knowingly take,
or fail to take, any action if the intent or reasonably anticipated consequence
of such action or failure to act is, or would be, to cause the FCC or any State
PUC not to grant approval of any FCC application or of any State PUC application
or materially delay either such approval, to the material detriment of the other
party.
6.21 COOPERATION ON ENVIRONMENTAL MATTERS. Sellers agree to
cooperate with Buyer and to assist Buyer in identifying the permits required
under Environmental Laws required by Buyer to operate the business from and
after the Closing Date and either transferring existing Environmental Permits of
Buyer, where permissible, or obtaining new Environmental Permits for Buyer (at
Buyer's sole expense).
6.22 Intentionally Omitted.
6.23 NON-COMPETE COVENANTS. Sellers shall use its reasonable efforts
to identify to Buyer those material Contracts containing Non-Compete Covenants
within ten (10) Business Days following the date of this Agreement.
6.24 USE OF NAME. Sellers hereby agrees that upon the consummation of
the transactions contemplated hereby, Buyer shall be granted a license as set
forth in the Operating Agreement to the name "Allegiance Telecom" or similar
names, and any other names used in the business to be managed by Buyer pursuant
to the Operating Agreement, or any service marks, trademarks, trade names,
identifying symbols, logos, emblems or signs containing or comprising the
foregoing or otherwise used in the business to be managed by Buyer pursuant to
the Operating Agreement, including any name or xxxx confusingly similar thereto
(collectively, the "SELLER MARKS") and Sellers shall not, and shall not permit
any of their Affiliates to, use such name or any variation or simulation
thereof, except in connection with the completion of the Cases. In furtherance
thereof, upon expiration or termination of the Operating Agreement, Sellers
shall remove, strike over or otherwise obliterate all Seller Marks from all
materials owned by Sellers or the Operating Subsidiaries and used or displayed
publicly including any sales and marketing materials, displays, signs,
promotional materials and other materials. On or before the Closing, at Buyer's
expense, Sellers shall take any action reasonably requested
56
by Buyer to perfect the chain of title in all of Sellers' registered trademarks
used in the Business.
6.25 FURTHER ASSURANCES. Buyer shall use commercially reasonable best
efforts to obtain any material Governmental Entity License, approval or consent
reasonably necessary to operate as a local exchange carrier in any jurisdiction
where the Business is operated and Buyer represents and warrants that it or its
Affiliate has and, Buyer shall, maintain through the Closing Date such License,
approval or consent in California, Illinois, Michigan and Texas.
6.26 COLOCATION/PRI SERVICES AGREEMENT. At the Early Funding Date, if
requested by ATI and subject to Bankruptcy Court approval, ATCW or an Affiliate
of ATCW and Buyer shall enter into a Master Services Agreement (the "MASTER
SERVICES AGREEMENT"), pursuant to which Buyer shall provide colocation, primary
rate interface and other services to ATCW (or such Affiliate) on terms specified
on SCHEDULE 6.26 OF THE DISCLOSURE SCHEDULES and as otherwise mutually
satisfactory to ATCW and Buyer.
6.27 OPERATION OF ACQUIRED ASSETS. Upon the Early Funding Date and
Buyer's funding of the Purchase Price Escrow Amount and the Adjustment Escrow
Amount into the Purchase Price Escrow Account and the Adjustment Escrow Account,
respectively, Buyer shall operate the Acquired Assets in accordance with the
Operating Agreement; PROVIDED, HOWEVER, that Buyer shall not assume any
management or control of Sellers' bankruptcy estate or the Bankruptcy Plan
process.
6.28 REGISTRATION RIGHTS. Buyer agrees to use its best efforts to
ensure that the issuance and distribution of the XO Common Stock complies with
Section 1145 of the Bankruptcy Code.
(a) If Buyer is unable to obtain assurance to its satisfaction that
the issuance of the XO Common Stock will be exempt from registration under
Section 5 of the Securities Act, as provided in section 1145 of the Bankruptcy
Code, Buyer will promptly and diligently file and cause to become effective, a
registration statement registering the XO Common Stock under the Securities Act
of 1933, as amended.
(b) Buyer hereby agrees to cause its legal counsel to issue an
opinion reasonably requested by its transfer agent with respect to the issuance
of the XO Common Stock, including an opinion that no legend restricting the
transfer of such XO Common Stock is required.
6.29 BUYER SHAREHOLDER APPROVAL.
Prior to the Early Funding Date, Buyer shall obtain the approval of
its shareholders to the extent required to issue the XO Common Stock (the
"SHAREHOLDER APPROVAL"). Buyer shall give prompt written notification to Sellers
when the Shareholder Approval is obtained.
57
6.30 SELLERS' DISPOSITION OF XO COMMON STOCK.
Sellers agree that they will not dispose of the XO Common Stock except
pursuant to the Bankruptcy Plan.
6.31 TAX MATTERS.
(a) Sellers shall use commercially reasonable efforts to provide
good faith estimates, prior to the Closing Date, of (i) the adjusted basis in
the Acquired Assets (or the amount of any excess loss accounts), (ii) each
Operating Subsidiary's adjusted basis in its assets and properties, (iii) the
amount of any net operating loss, net capital loss, unused investment or other
credits, unused foreign tax credit, or excess charitable contribution (and the
carryovers of any of the foregoing) allocable to the Operating Subsidiaries, as
well as any limitations that might apply and (iv) the amount of any deferred
gain or loss allocable to the Operating Subsidiaries arising out of any
intercompany transactions.
(b) At Buyer's written request, Sellers shall consider such tax
elections and other actions with respect to the Operating Subsidiaries that will
not adversely affect Sellers, including any election or elections under Section
338(h)(10) of the Internal Revenue Code of 1986, as amended.
(c) Buyer shall make a reasonable determination of the income tax
treatment of the transactions contemplated by this Agreement, (including without
limitation whether the transaction qualifies for a reorganization under Section
368 of the Internal Revenue Code of 1986, as amended), and so long as such
determination is not adverse to Sellers, Sellers shall file all tax returns in a
manner consistent with such determination.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLERS. The
respective obligations of Buyer, on the one hand, and Sellers, on the other
hand, on the Early Funding Date shall be subject to the satisfaction or waiver
at or prior to the Early Funding Date of the following conditions:
(a) NO INJUNCTION. No preliminary or permanent injunction or other
order issued by, and no Litigation or Order by or before any United States
Governmental Entity nor any Law or Order promulgated or enacted by any United
States Governmental Entity shall be in effect or pending which materially
delays, restrains, enjoins or otherwise prohibits or seeks to restrain, enjoin
or otherwise prohibit the transactions contemplated hereby; PROVIDED that with
respect to pending Litigation, such condition shall only apply to Litigation
commenced by a Governmental Entity.
(b) THE SALE ORDER. The Bankruptcy Court shall have entered the Sale
Order, which approves this Agreement and all of the terms and conditions hereof
and authorizes Allegiance to consummate the transactions contemplated hereby.
The Sale Order shall provide that (A) this Agreement results from Sellers having
completed a full and complete auction process and, so long as the Agreement has
not been
58
terminated in accordance with its terms, Sellers shall not be entitled to
entertain or enter into a Competing Transaction; (B) the Acquired Assets sold to
Buyer pursuant to this Agreement shall be transferred to Buyer free and clear of
all Liens (other than Permitted Liens of the type included in clause (C) of the
definition of Permitted Liens) and Liabilities of any Person (other than Assumed
Liabilities), such Liens and Liabilities to attach to the Purchase Price payable
pursuant to SECTION 3.2(a); (D) the Regulatory Transition Process is approved
pursuant to sections 105, 363 and 365 of the Bankruptcy Code; (E) Buyer has
acted in good faith within the meaning of section 363(m) of the Bankruptcy Code
and, as such, is entitled to the protections afforded thereby; (F) this
Agreement was negotiated, proposed and entered into by the parties without
collusion, in good faith and from arm's length bargaining positions; (G) Buyer
is not acquiring or assuming any of Sellers' or any other Person's Liabilities
except as expressly provided in this Agreement and in no event shall Buyer have
any Liability or responsibility for any Excluded Liability; (H) the transactions
contemplated herein shall be exempt from stamp, transfer, or similar taxes to
the extent provided by Section 1146(c) of the Bankruptcy Code; (I) Buyer will
not have any successor or transferee liability for liabilities of Sellers
(whether under federal or State law or otherwise) as a result of the sale,
purchase, transfer or assignment of the Acquired Assets, and will be exempt from
any so-called "bulk sale" laws in all applicable jurisdictions; (J) all Assumed
Contracts shall, at Closing, be assumed by Sellers and assigned to Buyer
pursuant to section 365 of the Bankruptcy Code and, as required by this
Agreement, Sellers shall be obligated to pay all Cure Amounts in respect
thereof, in accordance with this Agreement; (K) Buyer will have the right to
participate in any of Sellers' negotiations and settlements regarding ILEC and
Non-ILEC Cure Amounts in accordance with SECTION 3.5, (L) in accordance with
SECTION 3.5 Buyer will have standing to participate in any disputes before the
Bankruptcy Court regarding ILEC and non-ILEC Cure Amounts, (M) the Bankruptcy
Court shall retain jurisdiction to resolve any controversy or claim arising out
of or relating to this Agreement, or the breach hereof as provided in SECTION
9.12 hereof; (N) all Liens held by Sellers' senior secured lenders on the
Non-Transferred Assets shall be released at the Closing and the Buyer shall be
granted a Lien on all Non-Transferred Assets pending FCC Consent and State PUC
Consent, as applicable and (O) this Agreement and the transactions and
instruments contemplated hereby shall be specifically performable and
enforceable against and binding upon, and not subject to rejection or avoidance
by, Sellers or any chapter 7 or chapter 11 trustee of Sellers and its estate.
Sellers shall provide each applicable taxing authority in each jurisdiction in
which it is subject to Tax with copies of any motion for entry of the Sale Order
at least 10 days prior to the hearing on such motion. In the event that the
Bankruptcy Court does not approve the Sale Order, Buyer shall, within one (1)
Business Day, decide and inform Sellers and the Bankruptcy Court and communicate
to Sellers whether Buyer consents to the Sale Order, as modified. For the
avoidance of doubt, if Buyer consents to modifications to the Sale Order, then
Buyer agrees that the condition in SECTION 7.1(b) has been satisfied.
(c) HSR ACT. Any applicable waiting period under the HSR Act shall
have expired or shall have been earlier terminated.
59
(d) PURCHASE PRICE ESCROW AGREEMENT. ATI, ATCW and Buyer shall have
entered into the Purchase Price Escrow Agreement, and such agreement shall be in
full force and effect.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation of
Buyer to fund on the Early Funding Date is subject to the satisfaction (or
waiver by Buyer) at or prior to the Early Funding Date of each of the following
additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Sellers contained herein shall be true and correct, without
regard to any qualifications concerning materiality or Material Adverse Effect,
as of the Early Funding Date (or, if made as of a specific date, at and as of
such date), with the same force and effect as though such representations and
warranties had been made on and as of the Early Funding Date, except where the
effect of all such inaccuracies of representations and warranties would not
reasonably be expected to, in the aggregate, have a Material Adverse Effect.
(b) PERFORMANCE OF AGREEMENTS. Sellers shall have performed and
complied in all material respects with all material covenants and material
agreements contained in this Agreement required to be performed or complied with
by them prior to or on the Early Funding Date.
(c) OFFICER'S CERTIFICATE. Buyer shall have received a certificate,
dated the Early Funding Date, of an officer of Sellers to the effect that the
conditions specified in SECTIONS 7.2(a) and (b) above have been fulfilled.
(d) [INTENTIONALLY OMITTED].
(e) SELLERS' DELIVERIES. Sellers shall have delivered to Buyer all
items set forth in SECTION 3.1(b).
(f) ASSUMED CONTRACTS. (i) All Contracts set forth on SCHEDULE
7.2(f) OF THE DISCLOSURE SCHEDULES relating to the Sellers, or the extent an
Early Closing Election is delivered, the Operating Subsidiaries, shall have been
assumed and validly assigned to Buyer, such assignment to be effective as of the
Closing Date, (and Sellers and the Operating Subsidiaries, if applicable, shall
have obtained all consents, waivers and approvals (if any) necessary for such
assumption and/or assignment) and (ii) all of the other Assumed Contracts (other
than those set forth on SCHEDULE 2.6 OF THE DISCLOSURE SCHEDULES or EXHIBIT A to
SCHEDULE 4.5 OF THE DISCLOSURE SCHEDULES) shall have been assumed by the
applicable Seller and, to the extent an Early Closing Election is delivered the
applicable Operating Subsidiary, and assigned to Buyer, such assignment to be
effective as of the Closing Date, (and Sellers and Operating Subsidiaries, if
applicable, shall have obtained all consents, waivers and approvals (if any)
necessary for such assumption and/or assignment), except, in the case of this
clause (ii), where the failure to assume and assign such Contracts would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
60
(g) OPERATING AGREEMENT. Sellers and Buyer shall have executed and
delivered the Operating Agreement (the "OPERATING AGREEMENT") attached hereto as
EXHIBIT H, and such agreement shall be in full force and effect.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS. The
obligation of Sellers to enter into the Operating Agreement on the Early Funding
Date is subject to the satisfaction (or waiver by Sellers) at or prior to the
Early Funding Date of each of the following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained herein shall be true and correct, without
regard to any qualifications concerning materiality or material adverse effect,
as of the Early Funding Date (or, if made as of a specific date, at and as of
such date), with the same force and effect as though such representations and
warranties had been made on and as of the Early Funding Date, except where the
effect of all such inaccuracies of representations and warranties would not
reasonably be expected to, in the aggregate, have a material adverse effect on
Buyer.
(b) PERFORMANCE OF AGREEMENTS. Buyer shall have performed and
complied in all material respects with all material covenants and material
agreements contained in this Agreement required to be performed or complied with
by it prior to or at the Early Funding Date.
(c) OFFICER'S CERTIFICATE. ATI shall have received a certificate,
dated the Early Funding Date, of an officer of Buyer to the effect that the
conditions specified in SECTIONS 7.3(a) and (b) above have been fulfilled.
(d) TRANSITION SERVICES AGREEMENT FOR SHARED TECHNOLOGIES. Shared
Technologies and Buyer shall have entered into a Transition Services Agreement
(the "TRANSITION SERVICES AGREEMENT") in the form of EXHIBIT 7.3(d) attached
hereto.
(e) The Voting Agreement shall remain in full force and effect and
Cardiff Holding LLC shall not be in breach thereof.
(f) SHAREHOLDER APPROVAL. Buyer shall have obtained shareholder
approval necessary to issue the XO Common Stock.
(g) OPERATING AGREEMENT. Sellers and Buyer shall have executed and
delivered the Operating Agreement attached hereto as EXHIBIT H, and such
agreement shall be in full force and effect.
(h) MASTER SERVICES AGREEMENT. Buyer and ATCW (or an Affiliate
thereof) shall have executed and delivered the Master Services Agreement, if
applicable, and such agreement shall be in full force and effect.
7.4 CONDITIONS PRECEDENT TO CLOSING. The obligation of Buyer and
Sellers to close under this Agreement is subject to the satisfaction (or waiver
by Sellers) at or prior to the Closing Date of each of the following additional
conditions:
61
(a) APPROVAL OF PLAN. (i) All conditions to the "Effective Date" set
forth in the Bankruptcy Plan (including the entry of the Confirmation Order by
the Bankruptcy Court) shall have been satisfied or duly waived, with the express
written consent of Buyer, such consent not to be unreasonably withheld, in
accordance with the applicable provisions of the Bankruptcy Plan and (ii) the
transactions contemplated by the Bankruptcy Plan to occur on or prior to the
Closing shall have been or shall be consummated simultaneously with the Closing
in accordance with the Bankruptcy Plan; PROVIDED, THAT in the event of the
delivery by either Buyer or Seller of an Early Closing Election, this SECTION
7.4(a) shall be deemed waived by both Buyers and Sellers.
(b) NON-TRANSFERRED ASSETS. The Non-Transferred Assets shall have
been retained by Sellers.
(c) SELLERS' DELIVERIES. Sellers shall have delivered to Buyer all
items set forth in SECTION 3.1(b).
(d) BUYER'S DELIVERIES. Buyer shall have delivered to Sellers all
items set forth in SECTION 3.1(c).
7.5 SATISFACTION OF ALL CLOSING CONDITIONS; EARLY FUNDING DATE.
After the Early Funding Date, SECTION 7.1, SECTION 7.2, and SECTION
7.3 shall be deemed to be satisfied in their entirety and upon an Early Closing
Election or satisfaction of the condition set forth in SECTION 7.4(a), Buyer's
and Sellers' obligations to close the transactions contemplated by this
Agreement will be unconditional.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. This Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to the Closing:
(a) By mutual written consent of Buyer and ATI;
(b) By Buyer or ATI if neither the Early Funding Date nor the
Closing Date shall have occurred on or before August 18, 2004; PROVIDED,
HOWEVER, that if neither the Early Funding Date nor the Closing shall have
occurred on or before such date due to a breach of this Agreement by Buyer or
any Seller, Buyer or ATI (if a Seller is the breaching party), as the case may
be, may not terminate this Agreement pursuant to this SECTION 8.1(b);
(c) By Buyer, immediately if any of the following shall have
occurred:
(i) Any Seller (A) agrees in writing, (B) publicly announces
its intention (including by selecting a competing bidder at the Bankruptcy
Court's auction
62
relating to the transactions contemplated hereby), or (C) is authorized by its
board of directors to proceed with a Competing Transaction, irrespective of
whether such Competing Transaction is approved by the Bankruptcy Court and/or
consummated;
(ii) Prior to the Closing, any Seller abandons or files a
motion with the Bankruptcy Court to abandon all or any material portion of the
Acquired Assets;
(iii) Prior to the Closing, any Seller files any plan of
reorganization other than the Bankruptcy Plan, files any material amendment to
the Bankruptcy Plan, withdraws the Bankruptcy Plan or consents to the reduction
of the Exclusivity Period or fails timely to file motions to obtain orders of
the Bankruptcy Court extending the Exclusivity Period or the Bankruptcy Court
denies confirmation of the Bankruptcy Plan; PROVIDED, HOWEVER, that to the
extent either Sellers or Buyer has delivered an Early Closing Election, this
SECTION 8.1(c)(iii) shall be inapplicable;
(iv) The Bankruptcy Court terminates the Exclusivity Period or
declines to extend the Exclusivity Period; PROVIDED, HOWEVER, that to the extent
either Sellers or Buyer shall have delivered an Early Closing Election, this
SECTION 8.1(c)(iv) shall be inapplicable;
(v) The voluntary dismissal or conversion of any of the Cases
to a case under chapter 7 of the Bankruptcy Code; or
(vi) Upon the appointment in the Cases of a trustee or examiner
with managerial powers under section 1104 of the Bankruptcy Code; or
(vii) Prior to the Early Funding Date, any Order is entered by
the Bankruptcy Court which would result in the failure of any of the conditions
to the obligations of Buyer set forth in SECTION 7.1 or 7.2; PROVIDED, that
following the Early Funding Date, this SECTION 8.1(c) shall have no further
force or effect.
(d) By Sellers, on the one hand, or Buyer, on the other, if Buyer or
Sellers, as the case may be, materially breach any of its covenants under this
Agreement, unless such breach shall be cured within ten (10) Business Days after
such other party shall have received notice of such breach in accordance with
the terms hereof.
(e) Prior to the Early Funding Date, by Buyer if there is a breach
of any representation or warranty contained in ARTICLE IV hereof (without regard
to any qualifications concerning materiality or Material Adverse Effect
contained in ARTICLE IV), which breach, in the aggregate with all other such
breaches, if any, would give rise to a failure of the condition set forth in
SECTION 7.2(a) (with the date of such termination being substituted for the
references to Early Funding Date therein) and which breach could not reasonably
be expected to be cured using reasonable efforts by the date set forth in
SECTION 8.1(b); PROVIDED, that following the Early Funding Date, this SECTION
8.1(e) shall have no further force or effect.
63
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to this Article VIII, written notice thereof shall be given
to the other party of this Agreement as promptly as practicable and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by Buyer or Sellers. If this Agreement is
terminated as provided herein there shall be no liability or obligation on the
part of Sellers or Buyer, unless (i) this Agreement is terminated (A) by Buyer
pursuant to SECTION 8.1(b) when ATI does not have the right to terminate this
Agreement pursuant to SECTION 8.1(b) due to breach of the Agreement by Sellers,
or (B) by Buyer pursuant to SECTION 8.1(c) or (d); or (ii) Buyer terminates this
Agreement pursuant to SECTION 8.1(e) as a result of Sellers' gross negligence or
willful, wanton or reckless action or inaction taken or not taken with an intent
to cause the termination of this Agreement or otherwise negatively impact the
transactions contemplated hereby (collectively, a "SELLERS' INTENTIONAL BREACH")
or Buyer elects not to close because the condition set forth in SECTION 7.2(a)
has not been satisfied as a result of a Sellers' Intentional Breach; PROVIDED,
HOWEVER, that with respect to any such termination of this Agreement pursuant to
SECTION 8.1(b), (c) or (d) following the Sale Order Approval Date, or (ii)
Buyer's election to terminate this Agreement pursuant to SECTION 8.1(c) or not
to close, in each case because the condition set forth in SECTION 7.2(a) has not
been satisfied, as a result of a Sellers' Intentional Breach following the Sale
Order Approval Date, Buyer shall be entitled to terminate this Agreement
immediate payment, as liquidated damages and not as a penalty, of (i) the
Expense Reimbursement (which Expense Reimbursement shall not exceed $10 million)
and (ii) $30 million (the ("LIQUIDATED DAMAGES"). Sellers and Buyer acknowledge
that the damage suffered by the Buyer in the event of any such termination would
be impossible to calculate, and the Liquidated Damages constitutes a reasonable
estimate of such damages. In the event prior to the Early Funding Date Buyer
terminates this Agreement pursuant to SECTION 8.1(e) or elects not to close, in
each case because the condition set forth in SECTION 7.2(a) has not been
satisfied as a result of some reason other than a Sellers' Intentional Breach,
Buyer shall be entitled to immediate payment of the Expense Reimbursement (which
Expense Reimbursement shall not exceed $5 million). Except as provided in
SECTION 9.14, Buyer's sole and exclusive remedy under this Agreement shall be
limited to the recovery of the amounts set forth in this SECTION 8.2. None of
the amounts payable under this SECTION 8.2 or 8.3 shall prime the Liens held by
the Sellers' senior secured lenders and any such amounts payable shall be
subordinate to the carve out for professional fees and fees under 28 U.S.C.
Section 1930 as provided in the Bankruptcy Court's order authorizing Sellers to
use cash collateral that was entered in the Cases.
8.3 BANKRUPTCY EVENTS.
(a) At anytime prior to Closing, Sellers in their sole discretion,
after consultation with the statutory committee of unsecured creditors appointed
in the Chapter 11 Cases and the Sellers' pre-Petition senior lenders, may
deliver an Early Closing Election to Buyer.
(b) In the event that Sellers fail to comply with the timeline set
forth on EXHIBIT J, or at anytime from and after June 30, 2004 and prior to
Closing, Buyer may deliver an Early Closing Election to Sellers.
64
(c) In the event an Early Closing Election is delivered pursuant to
the terms hereof, the provisions of SECTION 3.5 hereof shall apply; PROVIDED,
HOWEVER, that Sellers shall serve, at least twenty (20) days prior to the
Closing, the notice of Sellers' intent to assume and assign the Assumed
Contracts on all non-debtor parties to the Assumed Contracts, rather than at
least twenty (20) days prior to the hearing to confirm the Bankruptcy Plan.
Within three (3) Business Days of receipt by Sellers or Buyer, as applicable, of
an Early Closing Election notice, Buyer will provide to Sellers a list of
Executory Contracts to be assumed by Allegiance and in the case of Sellers,
assigned to Buyer (the "ADDITIONAL ASSUMED CONTRACTS") and Sellers shall
immediately notify the counterparties to such Additional Assumed Contracts
substantially in the form of notice attached to the Sale Order. Except as
provided above, the Closing following an Early Closing Election shall occur no
sooner than twenty (20) Business Days after the delivery of such notice. For the
avoidance of doubt, to the extent the Early Closing Election is exercised,
Section 7.4(a) shall have no further force and effect. For the purposes of this
Agreement "EARLY CLOSING ELECTION" shall mean the delivery by Sellers to Buyer
or by Buyer to Sellers, as applicable, of a written irrevocable election to
close the transactions contemplated by this Agreement pursuant to an asset sale
rather than a sale of stock of the direct Subsidiaries of ATCW. To the extent an
Early Closing Election is delivered, the Operating Subsidiaries shall be deemed
to constitute Sellers under this Agreement and each Operating Subsidiary shall
sell its assets to Buyer. Notwithstanding anything to the contrary contained
herein, the Bankruptcy Plan shall provide that Buyer is not assuming liabilities
of the Operating Subsidiaries of the types and in the nature of those listed in
SECTION 2.4 in connection with Buyer's acquisition of the stock of the Operating
Subsidiaries in accordance with the terms and conditions hereof.
ARTICLE IX
MISCELLANEOUS
9.1 EXPENSES. Except as set forth in this Agreement (e.g., Liquidated
Damages provisions and the expense sharing arrangements set forth in SECTIONS
2.6, 2.7 and 6.10) and whether or not the transactions contemplated hereby are
consummated, each party shall bear its own costs and expenses incurred or to be
incurred by such party in connection with this Agreement and the consummation of
the transactions contemplated hereby.
9.2 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Sellers without the prior written
consent of Buyer, or by Buyer without the prior written consent of ATI;
PROVIDED, HOWEVER, that, Buyer may assign its rights and obligations hereunder,
in whole or in part, to any wholly-owned Subsidiary of Buyer, PROVIDED that no
such assignment shall relieve Buyer of its liabilities and obligations hereunder
if such assignee does not perform such obligations and PROVIDED, FURTHER that
this Agreement may be assigned to one or more trustees appointed by the
Bankruptcy Court to succeed to the rights of Sellers. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and except as otherwise
expressly provided herein, no other Person shall have any right, benefit or
obligation hereunder.
65
9.3 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of Sellers and Buyer, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement. Without limiting the foregoing, no direct or indirect holder of any
equity interests or securities of either Sellers (other than Sellers themselves)
or Buyer (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any Affiliate of either Sellers or Buyer, nor any
Representative or other controlling person of each of the parties hereto and
their respective Affiliates shall have any liability or obligation arising under
this Agreement or the transactions contemplated thereby.
9.4 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and shall be delivered in person or by courier or
facsimile transmission (with such facsimile transmission confirmed by sending a
copy of such notice, request, instruction or other document by certified mail,
return receipt requested, or overnight mail) or mailed by certified mail,
postage prepaid, return receipt requested (such mailed notice to be effective on
the date such receipt is acknowledged), as follows:
If to Sellers:
c/o Allegiance Telecom, Inc.
000 X. Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Executive Vice President, General Counsel and
Secretary
Fax: (000) 000-0000
With a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxx LLP
000 Xxxx 00xx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Xxxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
If to Buyer:
XO Communications, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to (which shall not constitute notice):
66
Xxxxx Xxxxxxx Berlack Israels
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxx
Fax: (000) 000-0000
(000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party. Notices sent as provided
herein shall be deemed given on the date received by the recipient. If a
recipient rejects or refuses to accept a notice given pursuant to this Section,
or if a notice is not deliverable because of a changed address or fax number of
which no notice was given in accordance with the provisions hereof, such notice
shall be deemed to be received two (2) days after such notice was mailed
(whether as the actual notice or as the confirmation of a faxed notice) in
accordance with the terms hereof.
9.5 CHOICE OF LAW. This Agreement shall be construed and interpreted,
and the rights of the parties shall be determined, in accordance with the
Bankruptcy Code and the substantive laws of the State of
New York for contracts
expected and likely to be performed solely within such state without regard to
the conflict of laws principles thereof or of any other jurisdiction.
9.6 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
(including the schedules and exhibits hereto) and the other Transaction
Documents constitute the entire agreement between the parties pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties. No
supplement, modification or waiver of this Agreement (including any schedule
hereto) shall be binding unless the same is executed in writing by all parties.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), and
no such waiver shall constitute a continuing waiver unless otherwise expressly
provided.
9.7 NO RECOURSE AGAINST THIRD PARTIES. Buyer agrees for itself and
for all of its officers, directors, shareholders, Affiliates, attorneys, agents
and any other parties making any claim by, through or under the rights of such
persons (collectively, the "BUYER GROUP") that no member of the Buyer Group
shall have any rights against any creditor, officer, director, shareholder
(other than Sellers themselves), Affiliate, attorney or agent of Allegiance
(each, individually, a "NON-RECOURSE PERSON") for any damages, suits, claims,
proceedings, fines, judgments, costs or expenses (including attorneys' fees and
incidental, consequential or punitive damages) (collectively, "LOSSES") that any
Buyer Party may suffer in connection with this Agreement. If any member of the
Buyer Group makes a claim against any person or entity other than Buyer that is
not a Non-Recourse Person (a "THIRD PERSON") that in any way gives rise to a
claim by such Third
67
Party against any Non-Recourse Person asserting that such Non-Recourse Person is
or may be liable to such Third Party with respect to any Losses arising in
connection with this Agreement (whether by way of indemnification, contribution,
or otherwise on any theory whatever) (a "CLAIM OVER"), such member of the Buyer
Group shall reduce or credit against any judgment or settlement such member of
the Buyer Group may obtain against such Third Party the full amount of any
judgment or settlement such Third Party may obtain against the Non-Recourse
Person on such Claim Over, and shall, as part of any settlement with such Third
Party, obtain from such Third Party for the benefit of such Non-Recourse Person
a satisfaction in full of such Third Party's Claim Over against the Non-Recourse
Person. The provisions of this SECTION 9.7, however, shall not apply as to any
fraud claims.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be as
effective as delivery of a manually executed counterpart of this Agreement. In
proving this Agreement, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom enforcement is
sought.
9.9 CONFIDENTIALITY. Prior to the Closing and after any termination
of this Agreement, the provisions of the Confidentiality Agreement shall
continue in full force and effect; PROVIDED, HOWEVER, that effective as of the
date hereof the provisions of the Confidentiality Agreement restricting Buyer
and its Affiliates from discussing the transaction contemplated by this
Agreement with third parties shall no longer apply. After the Closing, Buyer
shall no longer be subject to the provisions of the Confidentiality Agreement,
except to the extent the confidential information specifically relates to Shared
Technologies. In the event of any conflict between the provisions of this
Agreement and the Confidentiality Agreement, the provisions of this Agreement
shall prevail. From and after the Closing, Sellers agree to keep confidential
all confidential information relating to the Business, and agree not to disclose
such information except as required by Law. Notwithstanding anything herein to
the contrary, Buyer and Sellers (and each Affiliate and person acting on behalf
of any such party) agree that each party (and each Representative of such party)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to such party or
such person relating to such tax treatment and tax structure, except to the
extent necessary to comply with any applicable federal or state securities laws.
This authorization is not intended to permit disclosure of any other
information, including (i) any portion of any materials to the extent not
related to the tax treatment or tax structure of the transaction, (ii) the
identities of participants or potential participants in the transaction, (iii)
the existence or status of any negotiations, (iv) any pricing or financial
information (except to the extent such pricing or financial information is
related to the tax treatment or tax structure of the transaction) or (v) any
other term or detail not relevant to the tax treatment or the tax structure of
the transaction.
68
9.10 INVALIDITY. If anyone or more of the provisions contained in this
Agreement (other than any of the provisions contained in Article II or Article
III hereof) or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, the
parties shall use their best efforts, including the amendment of this Agreement,
to ensure that this Agreement shall reflect as closely as practicable the intent
of the parties hereto on the date hereof.
9.11 HEADINGS. The table of contents and the headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of, or to affect the meaning or interpretation of, this
Agreement.
9.12 EXCLUSIVE JURISDICTION. Without limiting any party's right to
appeal any order of the Bankruptcy Court, (a) the Bankruptcy Court shall retain
exclusive jurisdiction to enforce the terms of this Agreement and to decide any
claims or disputes which may arise or result from, or be connected with, this
Agreement, any breach or default hereunder, or the transactions contemplated
hereby, and (b) any and all claims, actions, causes of action, suits and
proceedings related to the foregoing shall be filed and maintained only in the
Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in SECTION 9.4 hereof.
9.13 WAIVER OF RIGHT TO TRIAL BY JURY. Each party to this Agreement
waives any right to trial by jury in any action, matter or proceeding regarding
this Agreement or any provision hereof.
9.14 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
that the other party hereto would be irreparably damaged in the event any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, each of the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions thereof in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction, in
addition to any other remedy to which the parties may be entitled, at law, in
equity or pursuant to this Agreement.
9.15 COUNTING. If the due date for any action to be taken under this
Agreement (including the delivery of notices) is not a Business Day, then such
action shall be considered timely taken if performed on or prior to the next
Business Day following such due date.
9.16 SERVICE OF PROCESS. Each party irrevocably consents to the
service of process in any action or proceeding by receipt of mailed copies
thereof by national courier service or registered United States mail, postage
prepaid, return receipt requested, to its address as specified in or pursuant to
SECTION 9.4 hereof. However, the foregoing shall not limit the right of a party
to effect service of process on the other party by any other legally available
method.
69
9.17 TIME OF ESSENCE; EFFECTIVENESS OF THE CLOSING DATE. With regard
to all dates and time periods set forth or referred to in this Agreement, time
is of the essence. In the event the Closing Date occurs prior to the occurrence
of the Early Funding Date, for purposes of Article II, Sections 6.1, 7.1, 7.2,
7.3, and 8.1, all references to Early Funding Date shall be replaced with
references to the Closing Date.
9.18 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached to,
delivered with and identified to this Agreement are a part of this Agreement the
same as if fully set forth herein and all references herein to any Section of
this Agreement shall be deemed to include a reference to any Schedule named
therein. Any disclosure made in any Schedule to this Agreement which is
applicable to another Schedule to this Agreement shall be deemed to be made with
respect to such other Schedule regardless of whether or not a specific cross
reference is made thereto if the relevance of such disclosure to such other
schedule is reasonably apparent on its face.
9.19 INTERPRETATION.
(a) Whenever the words "include," "includes" or "including" are used
in this Agreement they shall be deemed to be followed by the words "without
limitation."
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both singular and plural forms of such terms.
(d) Words denoting any gender shall include all genders. Where a
word or phrase is defined herein, each of its other grammatical forms shall have
a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(g) All references to "$" and "dollars" shall be deemed to refer to
United States currency unless otherwise specifically provided.
(h) All references to any financial or accounting terms shall be
defined in accordance with GAAP.
70
9.20 PREPARATION OF THIS AGREEMENT. Buyer and Sellers hereby
acknowledge that (i) Buyer and Sellers jointly and equally participated in the
drafting of this Agreement and all other agreements contemplated hereby, (ii)
Buyer and Sellers have been adequately represented and advised by legal counsel
with respect to this Agreement and the transactions contemplated hereby, and
(iii) no presumption shall be made that any provision of this Agreement shall be
construed against either party by reason of such role in the drafting of this
Agreement and any other agreement contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
71
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Sellers and Buyer as of the date
first above written.
SELLERS:
ALLEGIANCE TELECOM, INC.
By:
---------------------------------------
Name:
Title:
ALLEGIANCE TELECOM COMPANY WORLDWIDE
ADGRAFIX CORPORATION
ALGX BUSINESS INTERNET, INC.
ALLEGIANCE INTERNET, INC.
ALLEGIANCE TELECOM INTERNATIONAL, INC.
ALLEGIANCE TELECOM OF ARIZONA, INC.
ALLEGIANCE TELECOM OF CALIFORNIA, INC.
ALLEGIANCE TELECOM OF COLORADO, INC.
ALLEGIANCE TELECOM OF FLORIDA, INC.
ALLEGIANCE TELECOM OF GEORGIA, INC.
ALLEGIANCE TELECOM OF ILLINOIS, INC.
ALLEGIANCE TELECOM OF INDIANA, INC.
ALLEGIANCE TELECOM OF MARYLAND, INC.
ALLEGIANCE TELECOM OF MASSACHUSETTS, INC.
ALLEGIANCE TELECOM OF MICHIGAN, INC.
ALLEGIANCE TELECOM OF MINNESOTA, INC.
ALLEGIANCE TELECOM OF MISSOURI, INC.
ALLEGIANCE TELECOM OF NEVADA, INC.
ALLEGIANCE TELECOM OF NEW JERSEY, INC.
ALLEGIANCE TELECOM OF
NEW YORK, INC.
ALLEGIANCE TELECOM OF NORTH CAROLINA, INC.
ALLEGIANCE TELECOM OF OHIO, INC.
ALLEGIANCE TELECOM OF OKLAHOMA, INC.
ALLEGIANCE TELECOM OF OREGON, INC.
ALLEGIANCE TELECOM OF PENNSYLVANIA, INC.
ALLEGIANCE TELECOM OF TEXAS, INC.
ALLEGIANCE TELECOM OF THE DISTRICT OF COLUMBIA, INC.
ALLEGIANCE TELECOM OF VIRGINIA, INC.
ALLEGIANCE TELECOM OF WASHINGTON, INC.
ALLEGIANCE TELECOM OF WISCONSIN, INC.
ALLEGIANCE TELECOM PURCHASING COMPANY
ALLEGIANCE TELECOM SERVICE CORPORATION
COAST TO COAST TELECOMMUNICATIONS, INC.
XXXXXXX.XXX, INC.
INTERACCESS TELECOMMUNICATIONS CO.
(SIGNATURES CONTINUED)
XXXX.XXX, INC.
VIRTUALIS SYSTEMS, INC.
By:
-----------------------------------------
Name:
Title:
(SIGNATURES CONTINUED)
BUYER:
XO COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
Title:
EXHIBIT G
BASE WORKING CAPITAL CALCULATION
CURRENT ASSETS
Accounts Receivable:
Net of Shared Technologies (Net of allowance for doubtful accounts)
Net of Shared Hosting (Net of allowance for doubtful accounts)
Net of pre-Petition carrier access xxxxxxxx A/R (Net of allowance for doubtful
accounts)
Net of Level 3 Communications Integrated Solutions Network Purchase Agreement
(Net of allowance for doubtful accounts)
Prepaid Expenses and other Current Assets:
Prepaid Rent and Leases - Net of Shared Technologies
Prepaid Insurance
Prepaid Services
CURRENT LIABILITIES:
Accounts Payable
Net of Administrative Fees related to the Cases
Net of Excluded Amvescap Group, Xxxxxx Consulting Group, Ceridian
Contracts: Benefits Services, Cigna Behavioral Health, Connecticut
General Life, Equiserve, My Benergy, Xxxxxxx Xxxxx
Barney, TMP Worldwide, The Hartford Financial Services,
Vision Service Plan, Xxxxxx Xxxxx & Company, KMC
Telecom Primary Rate Interface Services Agreement
Net of Shared Technologies and Shared Hosting related Payables
Accrued Liabilities Accrued Liabilities - Other - Net of Shared Technologies and Shared Hosting
Accrued Liabilities - Legal - Net of Shared Technologies and Shared Hosting
Accrued Liabilities - Audit Fees - Net of Shared Technologies and Shared Hosting
(SIGNATURES CONTINUED)
Accrued Customer Invoice Processing Fees - Net of Shared Technologies and Shared
Hosting
Post-Petition Accrued Network Costs - Net of Shared Technologies and Shared
Hosting
EXHIBIT K
CURRENT LIABILITIES
Wage Accruals
Payroll Taxes, to the extent related to wage accruals
Bonus
Commissions
Vacation
IBNR Medical/Dental
Workers Comp/Auto Liability
Legal Fees, not related to the Cases
Audit Fees, not related to the Cases
Invoice Processing
Network Accruals
Other Accrued Liabilities, not related to the Cases
Network Expense Settlements
Subscriber Taxes, other than Subscriber Taxes relating to Tax audit liabilities
Deferred Revenue - End User
Deferred Revenue - Set Up
EXHIBIT L
SELLERS' SEVERANCE PRACTICES
ESTIMATED
WEEKS OF
EMPLOYEE GROUP SEVERANCE
----------------------------------------------------------
Non-Exempt 2
Non-management Exempt 2
Supervisors 2
Managers 2
Directors 2
Commissionable Directors 2
VPs 4
SVPs Case by Case
Above SVPs Case by Case
