Exhibit 2.4
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ASSET PURCHASE AGREEMENT
by and among
INTERMEDIA COMMUNICATIONS, INC.,
SHARED TECHNOLOGIES XXXXXXXXX, INC.,
SHARED TECHNOLOGIES XXXXXXXXX TELECOM, INC.,
MCI WORLDCOM COMMUNICATIONS, INC.,
WORLDCOM, INC.
AND
CYPRESS COMMUNICATIONS, INC.
Dated as of May 31, 2002
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Table of Contents
Page
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ARTICLE 1. PURCHASE AND SALE OF ACQUIRED ASSETS............................................................1
1.01. PURCHASE AND SALE.....................................................................................1
1.02. ACQUIRED ASSETS AND EXCLUDED ASSETS...................................................................1
1.03. ASSUMPTION OF CERTAIN LIABILITIES.....................................................................6
1.04. WORKING CAPITAL.......................................................................................8
1.05. PAYMENTS AND COMPUTATIONS............................................................................11
ARTICLE 2. THE CLOSING....................................................................................11
2.01. CLOSING DATE.........................................................................................11
2.02. TRANSACTIONS TO BE EFFECTED AT THE CLOSING...........................................................11
2.03. RISK OF LOSS.........................................................................................13
2.04. CONSENTS AND WAIVERS.................................................................................13
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLERS......................................................13
3.01. ORGANIZATION, STANDING AND POWER.....................................................................14
3.02. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY....................................................14
3.03. NO CONFLICTS; CONSENTS...............................................................................14
3.04. OPERATING DATA.......................................................................................15
3.05. ACQUIRED ASSETS OTHER THAN REAL PROPERTY INTERESTS AND ASSIGNED INTELLECTUAL PROPERTY; LICENSED
INTELLECTUAL PROPERTY; SOFTWARE; AND TECHNOLOGY......................................................16
3.06. REAL PROPERTY........................................................................................17
3.07. INTELLECTUAL PROPERTY................................................................................17
3.08. CONTRACTS............................................................................................18
3.09. LICENSES AND PERMITS.................................................................................20
3.10. SUFFICIENCY OF ACQUIRED ASSETS.......................................................................21
3.11. TAXES................................................................................................21
3.12. PROCEEDINGS..........................................................................................21
3.13. COMPLIANCE WITH APPLICABLE LAWS......................................................................21
3.14. TRANSACTIONS WITH AFFILIATES.........................................................................22
3.15. BENEFIT PLANS........................................................................................22
3.16. BROKERS OR FINDERS...................................................................................23
3.17. ABSENCE OF CHANGES OR EVENTS.........................................................................23
3.18. ENVIRONMENTAL MATTERS................................................................................23
3.19. NO OTHER AGREEMENTS..................................................................................23
3.20. EMPLOYEES............................................................................................24
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................24
4.01. ORGANIZATION; STANDING AND POWER.....................................................................24
4.02. AUTHORITY; EXECUTION AND DELIVERY; AND ENFORCEABILITY................................................24
4.03. NO CONFLICTS; CONSENTS...............................................................................25
4.04. LITIGATION...........................................................................................25
4.05. AVAILABILITY OF FUNDS................................................................................26
4.06. BROKERS OR FINDERS...................................................................................26
ARTICLE 5. COVENANTS......................................................................................26
5.01. COVENANTS OF SELLERS RELATING TO CONDUCT OF BUSINESS.................................................26
5.02. NO SOLICITATION......................................................................................27
5.03. ACCESS TO INFORMATION: ACCESS TO EMPLOYEES...........................................................28
5.04. CONFIDENTIALITY......................................................................................28
5.05. COMMERCIALLY REASONABLE EFFORTS; GOVERNMENTAL CONSENTS; SHARED BUILDING ARRANGEMENTS.................29
5.06. EXPENSES; TRANSFER TAXES.............................................................................29
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5.07. COLLECTION OF RECEIVABLES............................................................................29
5.08. EMPLOYEE MATTERS.....................................................................................30
5.09. PUBLICITY............................................................................................32
5.10. ACCESS TO RECORDS....................................................................................32
5.11. BULK TRANSFER LAWS...................................................................................32
5.12. FURTHER ASSURANCES...................................................................................32
5.13. PURCHASE PRICE ALLOCATION............................................................................33
5.14. EMPLOYEE NON-SOLICITATION............................................................................33
5.15. NON-COMPETITION......................................................................................34
5.16. MANAGEMENT AGREEMENT.................................................................................35
5.17. REVISIONS TO SCHEDULES...............................................................................35
ARTICLE 6. CONDITIONS PRECEDENT...........................................................................35
6.01. CONDITIONS TO EACH PARTY'S OBLIGATION................................................................35
6.02. CONDITIONS TO OBLIGATION OF PURCHASER................................................................37
6.03. CONDITIONS TO OBLIGATION OF SELLERS..................................................................37
6.04. FRUSTRATION OF CLOSING CONDITIONS....................................................................38
6.05. EFFECT OF CERTAIN WAIVERS OF CLOSING CONDITIONS......................................................38
ARTICLE 7. TERMINATION, AMENDMENT AND WAIVER..............................................................38
7.01. TERMINATION..........................................................................................38
7.02. EFFECT OF TERMINATION................................................................................39
7.03. AMENDMENTS AND WAIVERS...............................................................................39
ARTICLE 8. INDEMNIFICATION................................................................................39
8.01. INDEMNIFICATION BY SELLERS...........................................................................39
8.02. INDEMNIFICATION BY PURCHASER.........................................................................41
8.03. CALCULATION OF LOSSES................................................................................42
8.04. TERMINATION OF INDEMNIFICATION.......................................................................42
8.05. PROCEDURES...........................................................................................42
8.06. SURVIVAL OF REPRESENTATIONS..........................................................................44
8.07. NO ADDITIONAL REPRESENTATIONS........................................................................45
ARTICLE 9. GENERAL PROVISIONS.............................................................................45
9.01. ASSIGNMENT...........................................................................................45
9.02. NO THIRD-PARTY BENEFICIARIES.........................................................................45
9.03. ATTORNEY FEES........................................................................................45
9.04. NOTICES..............................................................................................45
9.05. INTERPRETATION; EXHIBITS AND SCHEDULES; CERTAIN DEFINITIONS..........................................46
9.06. COUNTERPARTS.........................................................................................47
9.07. ENTIRE AGREEMENT.....................................................................................48
9.08. SEVERABILITY.........................................................................................48
9.09. GOVERNING LAW........................................................................................48
9.10. DISPUTE SETTLEMENT...................................................................................48
9.11. WAIVER OF JURY TRIAL.................................................................................48
9.12. SPECIFIC PERFORMANCE.................................................................................49
9.13. REFUNDS..............................................................................................49
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Schedules, Exhibits and Annexes
Schedule 1.02(a)(i) Excluded Real Property
Schedule 1.02(a)(v) Assigned Intellectual Property
Schedule 1.02(a)(vi) Excluded Software
Schedule 1.02(a)(viii) Licensed Intellectual Property
Schedule 1.02(a)(ix) IP Addresses
Schedule 1.02(a)(x) Excluded Permits
Schedule 1.02(a)(xii) Assigned Contracts
Schedule 1.02(a)(xvii) Investments
Schedule 1.02(b) Excluded Assets
Schedule 1.02(b)(viii) Shared Buildings
Schedule 1.03(a)(iii) Off-Balance Sheet Liabilities
Schedule 1.03(b)(xiv) Excluded Debt
Schedule 2.04 Consents
Schedule 3.03 No Conflicts; Consents
Schedule 3.04 Operating and Performance Data
Schedule 3.05 Acquired Assets Other than Real Property
Interests and Assigned Intellectual
Property - Liens
Schedule 3.05(b) Acquired Assets Other than Real Property
Interests and Assigned Intellectual
Property - Asset Condition
Schedule 3.06(b) Real Property - Leased Property - Real
Property Leases
Schedule 3.06(c) Real Property -Liens
Schedule 3.07 Intellectual Property
Schedule 3.08(a) Contracts
Schedule 3.08(b) Contracts - Building Access Agreements
Schedule 3.08(c) Contracts - Defaults
Schedule 3.09(a) Permits
Schedule 3.10 Sufficiency of Assets
Schedule 3.11 Taxes - Material Tax Liens
Schedule 3.12 Proceedings
Schedule 3.13 Compliance with Applicable Laws
Schedule 3.14 Transactions with Affiliates
Schedule 3.15 Benefit Plans
Schedule 3.17 Absence of Changes or Events
Schedule 3.20 Employees - Covered Employees
Schedule 5.01 Covenants of Sellers Relating to Conduct
of Business
Exhibit 1.04(c) Form Closing Statement
Exhibit 2.02(a)(i) Transition Services Agreement
Exhibit 2.02(a)(ii) Wholesale Services Agreement
Exhibit 2.02(a)(iii) Internet Colocation Services Agreement
Exhibit 2.02(a)(iv) Network Colocation Services Agreement
Exhibit 2.02(a)(v) Building Rights Agreement
Exhibit 2.02(a)(vi) Management Agreement
Exhibit 4.05 Financing Commitment
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Schedule of Defined Terms
Each of the following terms shall have the meaning assigned thereto in
the Section of this Agreement set forth opposite such term:
TERM SECTION
Acquired Assets..........................................................................1.02(a)
Acquisition..............................................................................1.01
affiliate................................................................................9.05(b)
Ancillary Agreements.....................................................................1.02(b)(iv)
Applicable Law...........................................................................3.03
Assigned Contracts.......................................................................1.02(a)(xii)
Assigned Intellectual Property...........................................................1.02(a)(v)
Assigned Permits.........................................................................1.02(a)(x)
Assigned Premises........................................................................1.02(a)(i)
Assumed Liabilities......................................................................1.03(a).
Building Access Agreements...............................................................1.02(a)(xi)
Building Rights Agreement................................................................2.02(a)
Business.................................................................................Preamble
business day.............................................................................9.05(b)
Business Plan............................................................................3.04(b)
Business Property........................................................................3.06(c)
Closing..................................................................................2.01
Closing Date.............................................................................2.01
Closing Date Consideration...............................................................1.01
Closing Statement........................................................................1.04(c)
Code.....................................................................................3.11(a)
Communications Act.......................................................................3.03
Confidentiality Agreement................................................................5.04
Consent..................................................................................3.03
Contracts................................................................................1.02(a)(xi)
Covered Employee.........................................................................3.20
Customer Revenue Amount..................................................................1.04(a)
Environmental Laws.......................................................................3.18
ERISA....................................................................................3.15(a)
Exchange Act.............................................................................3.03
Excluded Assets..........................................................................1.02(b)
Excluded Debt............................................................................1.03(b)(xiv)
Excluded Liabilities.....................................................................1.03(b)
Existing Customer........................................................................5.15(a)
FCC......................................................................................3.03
Financing Commitment.....................................................................4.05
Governmental Entity......................................................................3.03
HSR Act..................................................................................3.03
including................................................................................9.05(b)
Independent Accounting Firm..............................................................1.04(d)
Intellectual Property....................................................................1.02(a)(v)
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TERM SECTION
Intermedia...............................................................................Preamble
Internet Colocation Services Agreement...................................................2.02(a)
Inventory................................................................................1.02(a)(ii)
Investments..............................................................................1.02(a)(xvii)
Judgment.................................................................................3.03
Knowledge of Purchaser...................................................................4.04
Knowledge of Sellers.....................................................................3.04(d)
Leased Property..........................................................................3.06(b)
Licensed Intellectual Property...........................................................1.02(a)(viii)
Liens....................................................................................3.05
Losses...................................................................................8.01(a)
Management Agreement.....................................................................2.02(a)
Material Landlord........................................................................3.08(b)
Network Collocation Services Agreement...................................................2.02(a)
Permits..................................................................................3.09(a)
Permitted Liens..........................................................................3.05
person...................................................................................9.05(b)
Personal Property........................................................................1.02(a)(iii)
Proceeding...............................................................................1.03(b)(iv)
PUCs.....................................................................................3.03
Purchase Price...........................................................................1.01
Purchaser................................................................................Preamble
Purchaser Material Adverse Effect........................................................4.01
Real Property Leases.....................................................................3.06(c)
Receivables..............................................................................1.02(a)(iv)
Records..................................................................................1.02(a)(xvi)
Retained Employees.......................................................................5.08(a)
Revenue Adjustment Amount................................................................1.04(a)
SEC......................................................................................5.09
Seller Benefit Plans.....................................................................3.15(a)
Seller Pension Plans.....................................................................3.15(a)
Sellers..................................................................................Preamble
Sellers Material Adverse Effect..........................................................3.01
Sellers POP Equipment....................................................................1.02(b)(ix)
Services.................................................................................5.15(a)
Shared Buildings.........................................................................1.02(b)(viii)
Software.................................................................................1.02(a)(vi)
STFI.....................................................................................Preamble
STFI Sub.................................................................................Preamble
subsidiary...............................................................................9.05(b)
Tax......................................................................................3.11(a)
Taxing Authority.........................................................................3.11(a)
Technology...............................................................................1.02(a)(vii)
Telecommunications Revenue...............................................................1.04(a)
Third-Party Claims.......................................................................8.05(a)
Transition Services Agreement............................................................2.02(a)
Vendor Contracts.........................................................................3.08(a)(v)
WARN Act.................................................................................5.08(g)
Wholesale Services Agreement.............................................................2.02(a)
Working Capital..........................................................................1.04(a)
Working Capital Adjustment Amount........................................................1.04(g)
Working Capital Assets...................................................................1.04(a)
Working Capital Liabilities..............................................................1.04(a)
Working Capital Revenue Adjustment.......................................................1.04(a)
WorldCom.................................................................................Preamble
WorldCom Sub.............................................................................Preamble
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ASSET PURCHASE AGREEMENT dated as of May 31, 2002, among INTERMEDIA
COMMUNICATIONS INC., a Delaware corporation ("Intermedia"), SHARED TECHNOLOGIES
XXXXXXXXX, INC., a Delaware corporation and a wholly owned subsidiary of
Intermedia ("STFI"), SHARED TECHNOLOGIES XXXXXXXXX TELECOM, INC., a Delaware
corporation and a wholly owned subsidiary of STFI ("STFI Sub"), MCI WORLDCOM
COMMUNICATIONS, INC., a Delaware corporation ("WorldCom Sub"), WORLDCOM, INC.,
a Georgia corporation ("WorldCom", and collectively with Intermedia, STFI, STFI
Sub and WorldCom Sub, the "Sellers"), and CYPRESS COMMUNICATIONS, INC., a
Delaware corporation ("Purchaser").
WHEREAS, Sellers currently provide shared tenant telecommunications
services in various locations in the United States utilizing in-building
distribution networks (the "Business");
WHEREAS, Sellers desire to sell certain assets relating to the
Business, and Purchaser desires to purchase such assets and assume certain
liabilities of Sellers with respect to the Business, upon the terms and
conditions hereinafter set forth; and
WHEREAS, Sellers and/or certain of their affiliates agree to provide
certain services to Purchaser, and Purchaser and/or certain of its affiliates
agree to provide certain services to Sellers and their affiliates, in each case
upon the terms and subject to the conditions set forth in the Ancillary
Agreements referred to herein.
Accordingly, the parties hereby agree as follows:
Article 1. Purchase and Sale of Acquired Assets
1.01. Purchase and Sale.
On the terms and subject to the conditions of this Agreement, at the
Closing, Sellers shall sell, assign, transfer, convey and deliver to Purchaser,
and Purchaser shall purchase from Sellers all the right, title and interest as
of the Closing of Sellers in, to and under the Acquired Assets, in exchange for
(a) an aggregate purchase price equal to $32,000,000 (the "Closing Date
Consideration"), plus or minus, as the case may be, the Working Capital
Adjustment Amount described in Section 1.04 (the resulting sum being, the
"Purchase Price"), payable as set forth in Section 2.02(b), and (b) the
assumption of the Assumed Liabilities. The purchase and sale of the Acquired
Assets and the assumption of the Assumed Liabilities is referred to in this
Agreement as the "Acquisition".
1.02. Acquired Assets and Excluded Assets.
(a) The term "Acquired Assets" means all right, title
and interest of Sellers in all of the properties, assets, goodwill and
rights of Sellers of whatever kind and nature, real or personal,
tangible or intangible, that are owned, leased or licensed by Sellers
on the Closing Date and primarily used or primarily held or intended
for use in the operation or conduct of the Business, other than the
Excluded Assets, including:
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(i) Except as set forth in Schedule 1.02(a)(i),
all real property, leaseholds and other interests in real
property of Sellers listed in Schedule 3.06(b), in each case
together with Sellers' right, title and interest in all
buildings, improvements and fixtures thereon and all other
appurtenances thereto (the "Assigned Premises"), which term,
for avoidance of doubt, shall exclude the Building Access
Agreements;
(ii) all finished goods, raw materials, work in
progress, supplies, parts, spare parts and other inventories
of Sellers (including those located on the Assigned Premises,
in transit, on consignment or in the possession of any third
party) on the Closing Date that are primarily used or
primarily held or intended for use in the operation or
conduct of the Business (collectively, the "Inventory");
(iii) all other tangible personal property and
interests therein, including all machinery, equipment,
furniture, furnishings and vehicles, of Sellers that are
primarily used or primarily held or intended for use in the
operation or conduct of the Business (the "Personal
Property");
(iv) all accounts receivable, together with all
unbilled usage and/or service charges, of Sellers on the
Closing Date to the extent arising out of the operation or
conduct of the Business (the "Receivables");
(v) the patents (including all reissues,
divisions, continuations and extensions thereof), patent
applications, patent rights, trademarks, trademark
registrations, trademark applications, servicemarks, trade
names, business names, Internet domain names, brand names,
logos, corporate names, copyrights, copyright registrations,
designs, design registrations, and all rights to any of the
foregoing ("Intellectual Property"), of Sellers listed on
Schedule 1.02(a)(v) (the "Assigned Intellectual Property"),
which term, for the avoidance of doubt, shall not include any
Licensed Intellectual Property;
(vi) except as set forth on Schedule
1.02(a)(vi), all computer software programs (including any
portion that was developed by, for or under contract with,
Sellers, all source codes and object codes, interfaces,
navigational devices, menus, menu structures or arrangements,
icons, help and other operational instructions and the
literal and nonliteral expression of ideas that operate,
cause, create, direct, manipulate, access or otherwise affect
such computer software programs) of Sellers and all material
documentation and user manuals related thereto which are
primarily used or primarily held or intended for use in the
operation or conduct of the Business (collectively, the
"Software"), which term, for the avoidance of doubt, shall
not include any Licensed Intellectual Property;
(vii) all trade secrets, confidential
information, inventions, know-how, formulae, processes,
procedures, research records, records of inventions, test
information, market surveys and marketing know-how of Sellers
that are primarily used or primarily held or intended for use
in the operation or conduct of
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the Business (the "Technology"), which term, for the
avoidance of doubt, shall not include any Licensed
Intellectual Property;
(viii) all rights of Sellers in to or under all
Intellectual Property, Software or Technology that any third
party has validly granted to Sellers and that the Sellers
primarily use or primarily hold or intend for use in the
Business pursuant to license, sublicense, agreement or
permission, including, but not limited to, those items listed
on Schedule 1.02(a)(viii) (the "Licensed Intellectual
Property");
(ix) all IP addresses listed on Schedule
1.02(a)(ix), or, to the extent any such IP addresses are not
freely transferable by the Sellers because of restrictions
placed on the transferability of such IP addresses by the
American Registry for Internet Numbers or NeuLevel (or
similar entity), respectively, all right, title and interest
of Sellers in such IP addresses to the full extent such
right, title and interest may be transferred;
(x) except as set forth in Schedule 1.02(a)(x),
all Permits of Sellers that are primarily used or primarily
held or intended for use in the operation or conduct of the
Business (the "Assigned Permits");
(xi) all contracts, bids, proposals, leases,
subleases, licenses, indentures, agreements, commitments and
all other legally binding arrangements (other than the
Excluded Debt), whether oral or written ("Contracts"), to
which any Seller is a party or by which any Seller is bound,
and which are primarily used or primarily held or intended
for use in, or which arise primarily out of, the operation or
conduct of the Business, pursuant to which any Seller leases
or licenses real property that provide any Seller with access
to multi-tenant office buildings from which any Seller
derives revenue, or is permitted or authorized to derive
revenue, from the sale of services in connection with the
operation or conduct of the Business, as the same are listed
in Schedule 3.08(b) ("Building Access Agreements");
(xii) all Contracts (other than Building Access
Agreement, but including purchase orders and sales orders) to
which any Seller is a party or by which any Seller is bound
that are primarily used or primarily held or intended for use
in, or that arise primarily out of, the operation or conduct
of the Business or to which the Acquired Assets are subject,
as the same are listed in Schedule 1.02(a)(xii) (collectively
with the Building Access Agreements, the "Assigned
Contracts");
(xiii) all rights in and to products sold or
leased (including products returned after the Closing and
rights of rescission, replevin and reclamation) in the
operation or conduct of the Business;
(xiv) all credits, prepaid expenses, deferred
charges, advance payments, security deposits and prepaid
items that are primarily used or primarily held or
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intended for use in, or that arise primarily out of, the
operation or conduct of the Business;
(xv) all rights, claims, causes of action,
rights of set-off, rights to payment or to enforce payment
and credits to the extent relating to any other Acquired
Asset or any Assumed Liability, including any such items
arising under insurance policies and all guarantees,
warranties, indemnities and similar rights in favor of any
Seller in respect of any other Acquired Asset or any Assumed
Liability, but not to the extent related to any Excluded
Asset or Excluded Liability, as provided in Section
1.02(b)(ii);
(xvi) all books of account, ledgers, general,
financial, accounting and personnel records and files of
Sellers relating exclusively to the Business, copies of all
books of account, ledgers, general, financial, accounting and
personnel records and files of Sellers relating primarily to
the Business, and invoices, customers' and suppliers' lists,
other distribution lists, billing records, sales and
promotional literature, manuals, facilities and colocation
drawings and specifications, customer and supplier
correspondence (in all cases, in any form or medium), of
Sellers that are primarily used or primarily held or intended
for use in, or that arise primarily out of, the operation or
conduct of the Business (the "Records");
(xvii) all partnership interests or any other
equity interest in any corporation, company, limited
liability company, partnership, joint venture, trust or other
business association ("Investments") listed in Schedule
1.02(a)(xvii), and all other Investments that are primarily
used or primarily held for use in, or that arise primarily
out of, the operation or conduct of the Business;
(xviii) all goodwill generated by or associated
with the Business; and
(xix) without duplication, all Working Capital
Assets.
(b) The term "Excluded Assets" means:
(i) all cash and cash equivalents of Sellers;
(ii) all rights, claims, causes of action,
rights of set-off, rights to payment or to enforce payment
and credits of Sellers to the extent relating to any other
Excluded Asset or any Excluded Liability, including any such
items arising under insurance policies and all guarantees,
warranties, indemnities and similar rights in favor of
Sellers in respect of any other Excluded Asset or any
Excluded Liability;
(iii) except as specifically provided in Section
5.08, all the assets of the Sellers Pension Plans;
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(iv) all rights of Sellers under this Agreement,
and the Transition Services Agreement, the Wholesale Services
Agreement, the Internet Colocation Services Agreement, the
Network Colocation Services Agreement, the Building Rights
Agreement, the Management Agreement and the other agreements
and instruments executed and delivered in connection with
this Agreement (the "Ancillary Agreements");
(v) all records prepared in connection with the
sale of the Business to Purchaser;
(vi) all books of account, ledgers, general,
financial, accounting and personnel records and files of
Sellers that do not relate exclusively to the Business,
except that Purchaser shall receive a copy of any portion of
any such records that relate to the Business in any respect;
(vii) all Contracts to which any Seller is a
party or by which any Seller is bound that are not listed in
Schedule 1.02(a)(xii);
(viii) all Contracts pursuant to which any Seller
leases or licenses real property that provide any Seller with
access to multi-tenant office buildings from which any Seller
derives revenue, or is permitted or authorized to derive
revenue, from the sale of services in connection with the
operation or conduct of the Business, but which Contracts are
not primarily used or primarily held or intended for use in,
or do not arise primarily out of, the operation or conduct of
the Business including but not limited to Contracts for the
buildings listed on Schedule 1.02(b)(viii) ("Shared
Buildings");
(ix) any and all local or long-distance voice
switches, data network devices (frame, ATM, IP), SONET
equipment, DS1/DS3/copper/fiber/coax terminating devices,
traffic aggregation equipment, cross-connect panels, or other
such equipment used by the Sellers in whole or in part in a
building to provide services to customers other than
customers of the Business ("Sellers POP Equipment");
(x) any Contracts with landlords or building
owners under which Sellers obtain the right to locate the
Sellers POP Equipment in a building, except to the extent
such a Contract is also a Building Access Agreement;
(xi) any refunds or credits of Taxes for any
taxable period (or portion thereof) ending on or prior to the
Closing Date;
(xii) all Software used in the Business but not
owned or licensed by Sellers;
(xiii) all the properties, assets, goodwill and
rights of Sellers of whatever kind and nature, real or
personal, tangible or intangible, that are owned, leased or
licensed by Sellers on the Closing Date that are not
primarily used or primarily
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held or intended for use in the operation or conduct of the
Business or not specifically listed in Section 1.02(a); and
(xiv) all assets, property, rights, contracts or
claims set forth on Schedule 1.02(b).
1.03. Assumption of Certain Liabilities.
(a) Upon the terms and subject to the conditions of this
Agreement, Purchaser shall assume, effective as of the Closing, and
from and after the Closing Purchaser shall pay, perform and discharge
when due, all the following liabilities, obligations and commitments
of Sellers (the "Assumed Liabilities"), other than any Excluded
Liabilities:
(i) all liabilities, obligations and
commitments of Sellers under the Assigned Contracts, except
obligations, liabilities or obligations arising out of any
actual or alleged breach on or prior to the Closing by
Sellers of, or nonperformance on or prior to the Closing by
Sellers under, any Assigned Contract;
(ii) all accounts payable arising exclusively
out of the operation or conduct of the Business prior to and
following the Closing;
(iii) all off-balance sheet liabilities listed on
Schedule 1.03(a)(iii);
(iv) the Working Capital Liabilities; and
(v) all other liabilities, obligations and
commitments relating to or arising primarily out of the
operation or conduct of the Business arising after the
Closing Date, whether express, implied, liquidated, absolute,
accrued, contingent or otherwise, known or unknown, and based
upon, arising out of or resulting from any fact,
circumstance, occurrence, condition, act or omission existing
or occurring after the Closing Date, but not relating to or
arising out of any fact, circumstance, occurrence, condition,
act or omission existing on or occurring prior to the Closing
Date.
(b) Notwithstanding Section 1.03(a), or any other
provision of this Agreement or any Ancillary Agreement, Purchaser
shall not assume any of the following liabilities, obligations and
commitments of Sellers (the "Excluded Liabilities"), all of which
shall be retained and paid, performed and discharged when due by
Sellers or one of their respective affiliates:
(i) any liability, obligation or commitment of
Sellers not specifically set forth in Section 1.03(a);
(ii) any liability, obligation or commitment of
Sellers, whether express or implied, liquidated, absolute,
accrued, contingent or otherwise, or known or unknown,
arising out of the operation or conduct by Sellers or any of
their affiliates of any business other than the Business;
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(iii) any liability, obligation or commitment of
Sellers arising out of any actual or alleged breach by
Sellers of, or nonperformance by Sellers under, any Contract
(including any Assigned Contract) prior to the Closing;
(iv) any liability, obligation or commitment of
Sellers arising out of (A) any claim, suit, action or
proceeding ("Proceeding") pending or, to the Knowledge of
Sellers, threatened as of the Closing Date or (B) any actual
or alleged violation by Sellers or any of their affiliates of
any Applicable Law prior to the Closing;
(v) any liability, obligation or commitment of
Sellers to the extent it relates to, or that arises out of,
any Excluded Asset, or that arises out of the distribution
to, or ownership by, Sellers of the Excluded Assets or
associated with the realization of the benefits of any
Excluded Asset;
(vi) any account payable or accrued expense of
Sellers that relates to, or that arises out of events
occurring on or before the Closing Date, to the extent the
same are not included in Working Capital Liabilities and any
indebtedness for borrowed money or guarantees thereof;
(vii) any liability, obligation or commitment for
Taxes, whether or not accrued, assessed or currently due and
payable and, whether or not disclosed or required to be
disclosed pursuant to Section 3.11 of this Agreement or
otherwise, (A) of any Seller (whether directly or as a
transferee, by contract or otherwise) or (B) relating to the
operation or ownership of the Business or the assets for any
Tax period (or portion thereof) ending on or prior to the
Closing Date (for purposes of this clause (vi), all real
property Taxes, personal property Taxes and similar ad
valorem obligations levied with respect to the Acquired
Assets for a Tax period that includes (but does not end on)
the Closing Date shall be apportioned between Sellers, as
applicable, and Purchaser (but Purchaser shall not be deemed
to have assumed any such underlying tax liability arising on
or before the Closing Date) based upon the number of days of
such period included in the pre-Closing Tax period and the
number of days of such Tax period after the Closing Date
(which period shall include the Closing Date));
(viii) except as expressly provided in Section
5.08, any liability, obligation or commitment of Sellers or
any of their affiliates under any Seller Benefit Plan;
(ix) any liability, obligation or commitment of
Sellers that relates to, or that arises out of, services
performed or products manufactured, shipped or sold by or on
behalf of Sellers on or prior to the Closing Date (including
claims of negligence, personal injury, product damage,
product liability, product warranties, promotional
obligations, strict liability, product recall or any other
claims (including workers' compensation, employer's liability
or otherwise)), whether such liability, obligation or
commitment relates to or arises out of accidents, injuries or
losses occurring on or prior to the Closing Date;
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(x) except to the extent provided in Section
5.08, any liability, obligation or commitment of Sellers that
relates to, or that arises out of, the termination of the
employment with Sellers of any employee or former employee of
the Business (including as a result of the transactions
contemplated by this Agreement) on or prior to Closing,
including, without limitation, any salary, severance,
bonuses, vacation, stock options or other employee benefits,
rights or obligations under any Seller Benefit Plan;
(xi) any liability, obligation or commitment
arising under any Environmental Law in respect of the
Acquired Assets or the Business, to the extent arising out of
conditions existing or events occurring on or prior to the
Closing Date;
(xii) any liability, obligation or commitment
arising in respect of any employees or former employees of
the Sellers in the Business (or any beneficiaries associated
with such employees and former employees), to the extent
arising out of conditions existing or events occurring on or
prior to the Closing Date or as a result of the consummation
of the Acquisition;
(xiii) any liability, obligation or commitment of
Sellers to any of their respective affiliates; and
(xiv) any liability, obligation or commitment
(the "Excluded Debt") pursuant to any Contract listed on
Schedule 1.03(b)(xiv).
(c) Purchaser shall acquire the Acquired Assets free and
clear of all liabilities, obligations and commitments of Sellers,
other than the Assumed Liabilities, and free and clear of all Liens,
other than Permitted Liens.
1.04. Working Capital.
(a) For purposes of this Agreement,
"Customer Revenue Amount" shall mean the absolute
value of the difference between Telecommunications Service
Revenue and $22,000,000, provided however, that with respect
to up to the first $1,000,000 of such difference, only 50% of
such difference shall be included in the Customer Revenue
Amount, but in the case of any amounts in excess of
$1,000,000, 100% of such difference shall be included in the
Customer Revenue Amount.
"Revenue Adjustment Amount" shall mean an amount
calculated pursuant to the following formula: (i) 4,
multiplied by (ii) the Customer Revenue Amount, multiplied by
(iii) 0.318 (31.8%), multiplied by (iv) 2.77.
"Telecommunications Services Revenue" means, for the
three-month period ended June 30, 2002, the gross revenue of
the Business, including, but not limited to, non-recurring
revenue from integration activities and equipment sales
===============================================================================
-8-
or other non-recurring services or activities, determined in
accordance with accounting principles consistently applied
throughout such period and the methodology used in the
Business Plan; provided, however, that any revenue from
"Integration Services", determined in accordance with the
methodology used in the Business Plan, shall be included in
the determination of Telecommunications Services Revenue only
to the extent the amount of such revenue does not exceed
$3,850,000.
"Working Capital" shall mean an amount equal to (i)
the Working Capital Assets minus the Working Capital
Liabilities, all as of the close of business on the Closing
Date plus or minus (as determined below) (ii) the Revenue
Adjustment Amount. The Revenue Adjustment Amount shall either
be added to clause (i) if the Telecommunications Service
Revenue exceeds $22,000,000 or subtracted from clause (i) if
$22,000,000 exceeds the Telecommunications Service Revenue.
"Working Capital Assets" shall mean the following
current assets of the Business determined in accordance with
accounting principles consistently applied throughout the
periods indicated and the methodology used in the Business
Plan (provided that the reserve for uncollectible accounts
will be established as set forth below) to the extent such
assets are included in the Acquired Assets: (i) Receivables
at the full face value thereof net of the face amount of any
Receivables that are not collected by the 90th day after the
Closing Date; (ii) all deposits and prepaid expenses (but
only to the extent that Purchaser will obtain the benefit
thereof); and (iii) the fair market value of Inventory. For
the avoidance of doubt, Working Capital Assets shall not
include cash or cash equivalents.
"Working Capital Liabilities" shall mean the current
liabilities of the Business determined in accordance with
accounting principles consistently applied throughout the
periods indicated and the methodology used in the Business
Plan, including but not limited to the following: accounts
payable, customer deposits, advances payable, deferred
income, deferred rent and royalty advances; provided,
however, notwithstanding anything to the contrary set forth
in this Agreement, Working Capital Liabilities shall in no
event include any of the following: taxes payable, salaries,
benefits, or any other compensation obligations in respect of
any employees of Sellers or any fees, cost or expense
incurred in connection with the preparation for sale or
marketing of the Business, or the negotiation, documentation,
execution or delivery of this Agreement or any other
agreements with respect to the sale of the Business,
including, without limitation the preparation of the Business
Plan or the payment of any fees described in Section 3.16.
(b) During the period from the Closing Date until 90
days after the Closing Date, the Purchaser shall attempt to collect
all Receivables using the same efforts in collecting such receivable
as the Purchaser uses in collecting its accounts receivables, but in
no event less than commercially reasonable efforts.
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-9-
(c) Within 90 days after the Closing Date, Purchaser
shall prepare and deliver to the Sellers, a statement of the Working
Capital as of the Closing Date in the form attached hereto as Exhibit
1.04(c), which provides reasonable detail with respect to the various
components thereof (the "Closing Statement").
(d) Within 15 business days after receipt of the Closing
Statement, the Sellers will deliver to Purchaser a written statement
describing their questions or objections (if any) to the Closing
Statement. If the Sellers do not raise any questions or objections in
writing within such period, the Purchaser's good faith estimate of the
Working Capital will become final and binding upon all of the parties.
If the Sellers do raise any such questions or objections in writing,
Purchaser, Sellers and their respective accountants shall attempt in
good faith to resolve such matters within 30 days after receipt of the
same by Purchaser, and if unable to do so, Purchaser and the Sellers
shall refer all remaining disputes concerning the Closing Statement to
a mutually agreeable nationally recognized independent accounting firm
(the "Independent Accounting Firm") which shall be instructed to
resolve such disputes within 60 days of the referral. Purchaser and the
Sellers will make available to the Independent Accounting Firm at
reasonable times and upon reasonable notice at any time during the
pendency of any dispute under this Section 1.04(d), the work papers,
back-up materials and any other relevant information used in preparing
the Closing Statement. Purchaser and the Sellers shall have the right
to meet jointly with the Independent Accounting Firm during this period
and to present their respective positions. The resolution of disputes
by the Independent Accounting Firm and its determination of the Working
Capital will be set forth in writing and will be conclusive and binding
upon the parties, upon the date of such resolution.
(e) Purchaser will make the work papers and back-up
materials used in preparing the Closing Statement available to the
Sellers and their accountants and other representatives at reasonable
times, upon reasonable notice (and copies thereof at the Sellers' sole
cost and expense) at any time during (i) the review by the Sellers of
the Closing Statement and (ii) the pendency of any dispute under
Section 1.04(d) above. Until any such dispute is resolved, Purchaser
will keep these materials in the principal business office of the
Business or, if such office is moved, in a location reasonably
convenient to the Sellers (or in the offices of the Independent
Accounting Firm).
(f) The Sellers, on the one hand, and Purchaser, on the
other hand, will each pay their own fees and expenses (including
without limitation any fees and expenses of their accountants and
other representatives) in connection with the determination of the
Working Capital (excluding the fees and expenses of the Independent
Accounting Firm). The fees and expenses of the Independent Accounting
Firm pursuant to this Section 1.04 shall be borne by Purchaser and
Sellers in inverse proportion as they may prevail on Purchaser matters
resolved by the Independent Accounting Firm, which proportionate
allocations shall also be determined by the Independent Accounting
Firm at the time the determination of such firm is rendered on the
hand merits of the matters submitted.
(g) If the Working Capital, as finally determined in
accordance with this Section 1.04, exceeds zero, then an amount equal
to the Working Capital shall be paid not later than five (5) business
days following such determination by the Purchaser (by wire
===============================================================================
-10-
transfer of immediately available funds) to the Sellers. If the
Working Capital, as finally determined in accordance with this Section
1.04, is less than zero, then an amount by which the Working Capital
is less than zero shall be paid not later than five (5) business days
following such determination by the Sellers (by wire transfer of
immediately available funds) to the Purchaser. The amount of the
resulting payment to be made pursuant to Section 1.04(g) being, the
"Working Capital Adjustment Amount".
(h) No later than such time as the Working Capital
Adjustment Amount has been finally determined, in the event that any
Receivables remained uncollected as of the 90th day after Closing,
Purchaser shall, upon the request of Sellers, transfer to the Sellers
free of charge, without representation or warranty except as expressly
set forth in this clause, its right, title and interest to such
Receivables, free and clean of all Liens created by or through
Purchaser. In such event, Purchaser shall execute such documents as
the Sellers may reasonably request to evidence such transfer.
1.05. Payments and Computations.
Each party shall make each payment due to the other parties hereunder
as soon as practicable on the day when due in U.S. dollars by wire transfer in
immediately available funds. All computations of interest shall be made by the
party entitled to receive payment on the basis of a year of 365 days, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable. Whenever
any payment hereunder shall be stated to be due on a day other than a business
day, such payment shall be made on the next succeeding business day, and such
extension of time shall in such case be included in the computation of payment
of interest.
Article 2. The Closing
2.01. Closing Date.
The closing of the Acquisition (the "Closing") shall take place at the
offices of Xxxx Xxxxxxx LLP, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, at
10:00 a.m. on the day of the satisfaction (or, to the extent permitted, the
waiver) of the conditions set forth in Section 6.01, or, if on such day any
condition set forth in Section 6.02 or Section 6.03 has not been satisfied (or,
to the extent permitted, waived by the party entitled to the benefit thereof),
as soon as practicable after all the conditions set forth in Article 6 have
been satisfied (or, to the extent permitted, waived by the parties entitled to
the benefits thereof), or at such other place, time and date as shall be agreed
between Sellers and Purchaser. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
2.02. Transactions To Be Effected at the Closing.
At the Closing:
(a) Sellers shall deliver to Purchaser (i) such
appropriately executed deeds (in recordable form), bills of sale,
assignments and other instruments of transfer relating to
===============================================================================
-11-
the Acquired Assets in form and substance reasonably satisfactory to
Purchaser and its counsel, (ii) executed counterparts of a Transition
Services Agreement dated as of the Closing Date (the "Transition
Services Agreement"), among Sellers, certain of their affiliates and
Purchaser, in form and substance mutually acceptable to the parties
and substantially similar to the form attached hereto as Exhibit
2.02(a)(i), (ii) executed counterparts of a WorldCom Wholesale
Services Agreement dated as of the Closing Date (the "Wholesale
Services Agreement"), among one or more affiliates of WorldCom and
Purchaser, in form and substance mutually acceptable to the parties
and substantially similar to the form attached hereto as Exhibit
2.02(a)(ii), provided, however, that the pricing provisions
(including, but not limited to, rates, fees and other charges, but not
including the rates to be specified for existing circuits in Exhibit A
to Schedule 4 of the Wholesale Services Agreement) and revenue
commitments contained in Exhibit 2.02(a)(ii) shall not be materially
modified, (iii) executed counterparts of a United States Internet
Colocation Services Agreement dated as of the Closing Date (the
"Internet Colocation Services Agreement"), among one or more
affiliates of WorldCom and Purchaser, in form and substance mutually
acceptable to the parties and substantially similar to the form
attached hereto as Exhibit 2.02(a)(iii), provided, however, that the
pricing provisions (including, but not limited to, rates, fees and
other charges) and revenue commitments contained in Exhibit
2.02(a)(iii) shall not be materially modified, (iv) executed
counterparts of a Network Colocation Services Agreement dated as of
the Closing Date (the "Network Colocation Services Agreement"), among
one or more affiliates of WorldCom and Purchaser, in form and
substance mutually acceptable to the parties and substantially similar
to the form attached hereto as Exhibit 2.02(a)(iv), provided, however,
that the pricing provisions (including, but not limited to, rates,
fees and other charges) and revenue commitments contained in Exhibit
2.02(a)(iv) shall not be materially modified, (v) executed
counterparts of a Building Rights Agreement dated as of the Closing
Date (the "Building Rights Agreement"), among WorldCom or one or more
affiliates of WorldCom and Purchaser, in form and substance mutually
acceptable to the parties and substantially similar to the form
attached hereto as Exhibit 2.02(a)(v), (vi) subject to Section 5.16,
executed counterparts of a Management Agreement dated as of the
Closing Date (the "Management Agreement"), among the Sellers and
Purchaser, in form and substance mutually acceptable to the parties
and substantially similar to the form attached hereto as Exhibit
2.02(a)(vi), (vii) each of the Consents required pursuant to Section
6.01(d), and (viii) such other documents as Purchaser or its counsel
may reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement; and
(b) Purchaser shall deliver to Sellers (i) payment, by
wire transfer to a bank account designated in writing by Sellers (such
designation to be made at least two business days prior to the Closing
Date), immediately available funds in an amount equal to the Closing
Date Consideration, (ii) such appropriately executed assumption
agreements and other instruments of assumption providing for the
assumption of the Assumed Liabilities in form and substance reasonably
satisfactory to Sellers and their counsel, (iii) executed counterparts
of the Transition Services Agreement, (iv) executed counterparts of
the Wholesale Service Agreement, (v) executed counterparts of the
Internet Colocation Services Agreement, (vi) executed counterparts of
the Network
===============================================================================
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Colocation Services Agreement, (vii) executed counterparts of the
Building Rights Agreement, (vii) subject to Section 5.16, executed
counterparts of the Management Agreement, and (ix) such other
documents as Sellers or their counsel may reasonably request to
demonstrate satisfaction of the conditions and compliance with the
covenants set forth in this Agreement.
2.03. Risk of Loss.
Until the Closing, any loss of or damage to the Acquired Assets from
fire, casualty or any other occurrence not covered by insurance payable to
Purchaser shall be the sole responsibility of the applicable Sellers.
2.04. Consents And Waivers.
(a) Schedule 2.04 identifies each Assigned Contract
(other than Contracts pursuant to which the Sellers provide
communications services to customers) which requires the consent or
waiver of any party to be assigned, transferred, subleased or
sublicensed. To the extent any Assigned Contract is not capable of
being assigned, transferred, subleased or sublicensed without the
consent or waiver of the issuer thereof or a party thereto (other than
the Seller) or any third party (including a Governmental Entities), or
if such assignment, transfer, sublease or sublicense or attempt to
assign, transfer, sublease or sublicense would constitute a breach
thereof or a violation of Applicable Law, this Agreement shall not
constitute an assignment, transfer, sublease or sublicense thereof, or
an attempted assignment, transfer, sublease or sublicense thereof.
(b) For a period of time up until 150 days after the
Closing Date, each party agrees to use all commercially reasonable
efforts to obtain the consents and waivers referred to in this Section
2.04 hereof and to obtain any other consents and waivers necessary to
assign, convey, settle, deliver and transfer the Acquired Assets,
provided, however, that no party shall be required to pay or commit to
pay any amounts to (or incur any obligation in favor of), any person
from whom such consent may be required, if such amount or obligation
is not reasonable, as determined by such party in its reasonable
discretion, and further provided that Sellers shall pay or commit to
pay any amounts, which are reasonable, as determined by Seller in its
reasonable discretion, to any person from whom consent to assign,
convey, settle, deliver and transfer the Building Access Agreements
may be required.
(c) If any consent or waiver referred to in this Section
2.04 hereof is not obtained prior to Closing, then until such consent
is obtained, but in no event for any period in excess of 150 days
after the Closing Date, the parties shall, to the extent, permissible
under the relevant Assigned Contract, use commercially reasonable
efforts to implement an arrangement, reasonable and lawful as to both
Purchaser and Sellers, designed to afford to Purchaser the benefits of
the Acquired Assets.
Article 3. Representations and Warranties of Sellers
Except as disclosed in any of the schedules delivered by Sellers at
the time of execution
===============================================================================
-13-
of this Agreement, each of the Sellers hereby jointly and severally represents
and warrants to Purchaser, as of the date of this Agreement and as of the
Closing Date, as follows:
3.01. Organization, Standing and Power.
Each of the Sellers is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
full corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
lease or otherwise hold its properties and assets and to conduct the Business
as presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, could not reasonably be expected to have (i) a Sellers Material
Adverse Effect or (ii) a material adverse effect on the ability of Sellers to
consummate the Acquisition and other transactions contemplated hereby. A
"Sellers Material Adverse Effect" shall mean any change or effect that is
reasonably likely to have a material adverse effect on the assets, liabilities,
business, financial condition or results of operations of the Business
(exclusive of the Excluded Assets), other than changes relating to United
States or foreign economies in general or the industries in which the Business
operates and not specifically relating to the Business. Purchaser acknowledges
that there may have been disruption to the Business as a result of the
announcement Sellers of their intention to sell the Business (and there may be
disruption to the Business as a result of the execution of this Agreement and
the consummation of the transactions contemplated hereby), and Purchaser
acknowledges that, to the extent such disruptions can reasonably be shown to
have resulted from either the identity of the Purchaser or the execution and
delivery of this Agreement, such disruptions do not and shall not constitute a
Sellers Material Adverse Effect. Each of the Sellers is duly qualified to do
business as a foreign corporation in each jurisdiction where the character of
the Acquired Assets held by it or the nature of the Business make such
qualification necessary for it to conduct the Business as currently conducted
by it or the failure to so qualify could reasonably be expected to have a
Sellers Material Adverse Effect.
3.02. Authority; Execution and Delivery; Enforceability.
Each of the Sellers has full power and authority to execute this
Agreement and the Ancillary Agreements to which it is, or is specified to be, a
party and to consummate the Acquisition and the other transactions contemplated
hereby and thereby. The execution and delivery by each of Sellers of this
Agreement and the Ancillary Agreements to which it is, or is specified to be, a
party and the consummation by each of the Sellers of the Acquisition and the
other transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action. Each of the Sellers has duly executed and
delivered this Agreement and at or prior to the Closing Date will have duly
executed and delivered each Ancillary Agreement to which it is, or is specified
to be, a party, and this Agreement constitutes, and each Ancillary Agreement to
which it is, or is specified to be, a party will after the Closing constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity).
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3.03. No Conflicts; Consents.
Except as set forth in Schedules 2.04 and 3.03, the execution and
delivery by Sellers of this Agreement do not, the execution and delivery by
Sellers of each Ancillary Agreement to which they are, or are specified to be,
parties will not, and the consummation of the Acquisition and the other
transactions contemplated hereby and thereby and compliance by Sellers with the
terms hereof and thereof will not conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Sellers under, any provision of (a) the
certificates of incorporation or by-laws of Sellers, (b) any Contract to which
Sellers are a party or by which any of their respective properties or assets
are bound or (c) any judgment, order or decree ("Judgment") or statute, law,
ordinance, rule or regulation ("Applicable Law") applicable to Sellers or their
respective properties or assets, other than, in the case of clauses (b) and (c)
above, any such items that, individually or in the aggregate, could not
reasonably be expected to have a Sellers Material Adverse Effect or could not
reasonably be expected to prevent the consummation of the transactions
contemplated hereby. No material consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
required to be obtained or made by or with respect to Sellers in connection
with the execution, delivery and performance of this Agreement or any Ancillary
Agreement or the consummation of the Acquisition or the other transactions
contemplated hereby and thereby, other than (i) compliance with and filings
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx")
and similar foreign competition regulations, (ii) compliance with and filings
under Section 13(a) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"), (xxx) filings with and approvals of the Federal Communications
Commission (the "FCC") as required under the Communications Act of 1934 (the
"Communications Act") and the rules and regulations promulgated thereunder,
(iv) filings with and approvals of any state public utility commissions
("PUCs") or similar regulatory bodies as required by applicable statutes, laws,
rules, ordinances and regulations, (v) those that may be required solely by
reason of the participation of Purchaser (as opposed to any other third party)
in the Acquisition and other transactions contemplated hereby and by the
Ancillary Agreements or (vi) other filings or approvals that individually or in
the aggregate could not reasonably be expected to have a Sellers Material
Adverse Effect or could not reasonably be expected to prevent the consummation
of the transactions contemplated hereby.
3.04. Operating Data.
(a) Schedule 3.04 sets forth certain operating data and
certain performance data for the Business, including, without
limitation, information with respect to Sellers' historical revenues,
accounts receivable, and network assets. Such data: (i) is accurate in
all material respects; (ii) has been prepared in accordance with
accounting principles consistently applied throughout the Sellers'
operation of the Business and the methodology used in the Business
Plan; and (iii) is consistent with the information contained in the
Records (which, in turn, are accurate in all material respects).
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-15-
(b) The summary pro forma financial statements set forth
in the Confidential Information Memorandum prepared by The
Breckenridge Group, Inc. dated March 2002, (the "Business Plan") were
prepared in good faith on the basis of assumptions which management of
WorldCom, based on their knowledge at the time, believed to be
reasonable (with the understanding that such forecasts and projections
can be subject to significant uncertainties and contingencies, many of
which are beyond the control of Seller). Sellers do not provide any
representation, warranty or assurance that the forecast or projections
in the Business Plan will be achieved.
(c) The Business does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent,
unasserted or otherwise) of a nature that could reasonably be expected
to have a Sellers Material Adverse Effect, except for the Assumed
Liabilities, liabilities otherwise expressly disclosed in this
Agreement or the schedules hereto. This representation shall not be
deemed breached as a result of a change in Applicable Law after the
Closing Date.
(d) For all purposes of this Agreement, the term
"Knowledge of Sellers" shall mean the actual knowledge, after
reasonable inquiry, of Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxx and Xxxx X. Xxxxx.
3.05. Acquired Assets Other than Real Property Interests and
Assigned Intellectual Property; Licensed Intellectual Property; Software; and
Technology.
(a) Sellers have good and marketable title to all the
Acquired Assets, in each case free and clear of all mortgages, liens,
security interests, charges, easements, leases, subleases, covenants,
rights of way, options, claims, restrictions or encumbrances of any
kind (collectively, "Liens"), except (i) those set forth in Schedule
3.05(a) and (ii) mechanics', carriers', workmen's, repairmen's or
other like Liens arising or incurred in the ordinary course of
business and not material in amount, Liens of bonding companies with
respect to bonds obtained in the ordinary course of business which
bonds also constitute Assumed Liabilities, Liens arising under
original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of
business and Liens for current Taxes that are not due and payable (the
Liens described above, together with the Liens referred to in clauses
(b) through (e) of Section 3.06(c), are referred to collectively as
"Permitted Liens").
(b) Except as set forth in Schedule 3.05(b), all of the
buildings, improvements, fixtures, physical plant, machinery,
equipment and other tangible assets included in the Acquired Assets
are in good operating condition and repair, except for ordinary wear
and tear, and are useable in the ordinary course of business
consistent with past practice.
(c) This Section 3.05 does not relate to real property
or interests in real property, which are addressed in Section 3.06, or
to the Assigned Intellectual Property, Licensed Intellectual Property,
Software and Technology, which are addressed in Section 3.07.
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-16-
3.06. Real Property.
(a) The Sellers do not own any real property or fee
simple interests in real property primarily used or primarily held or
intended for use in the operation or conduct of the Business.
(b) Schedule 3.06(b) sets forth as of the date of this
Agreement a complete list (including a brief description of the
current or intended use of such property) of all real property and
interests in real property leased by each Seller and primarily used or
primarily held or intended for use in the operation or conduct of the
Business, other than any such property or interest constituting an
Excluded Asset or a Building Access Agreement (individually, a "Leased
Property"). For avoidance of doubt, Leased Property shall exclude all
Building Access Agreements which are set forth in Schedule 3.08(b).
(c) Sellers have valid leasehold estates pursuant to
leases (the "Real Property Leases"), which are identified in Schedule
3.06(b), of all Leased Property (a Leased Property being sometimes
referred to herein, individually, as a "Business Property"), in each
case free and clear of all Liens, except (a) Liens described in clause
(i) or (ii) of Section 3.05(a), (b) those set forth on Schedule
3.06(c), (c) leases, subleases and similar agreements set forth in
Schedules 3.08(a), 3.08(b) or 3.08(c), (d) easements, covenants,
rights-of-way and other similar restrictions of record, and (e) (i)
zoning, building, subdivision, environmental and other similar
restrictions, and (ii) Liens that have been placed by any developer,
landlord or other third party on property over which Sellers have
easement rights or on any Leased Property and subordination or similar
agreements relating thereto. None of the items described in clause (e)
above, individually or in the aggregate, materially impairs the
continued use and operation of the Business Property to which they
relate in the conduct of the Business as presently conducted. True and
correct copies of the Real Property Leases have been delivered or made
available to Purchaser. Each of the Real Property Leases, and each
such instrument and agreement, is in full force and effect, and
neither Sellers, to the extent that they are a party to such Real
Property Lease, or party to or beneficiary of such instrument and
agreement, nor, to the Knowledge of Sellers, any of the other parties
thereto, have received or given any notice of default thereunder which
is extant (i.e., same was not cured during the applicable grace
period), and, to the Knowledge of Sellers, no event has occurred
which, with the giving of notice or the passage of time or both, would
constitute a material default under any Real Property Lease or under
any such instrument and agreement.
3.07. Intellectual Property.
Except as set forth on Schedule 3.07:
(a) The Assigned Intellectual Property, Licensed
Intellectual Property, Software and Technology constitute all material
intellectual property used in the operation of the Business as
currently conducted.
(b) To the Knowledge of Sellers, the conduct of the
Business does not and will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with,
=======================================================================
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any intellectual property of third parties. Sellers have not received
any charge, complaint, claim, or notice alleging any such
interference, infringement, misappropriation, or violation including,
but not limited to any demand, offer or claim that the Sellers must
license or refrain from using any intellectual property rights of any
third party.
(c) With respect to each item of Assigned Intellectual
Property, Software and Technology:
(i) Sellers possess all right, title, and
interest in and to the item, except that for any unregistered
Assigned Intellectual Property, Sellers' representation shall
be qualified to the Knowledge of Sellers;
(ii) the item is not subject to any outstanding
judgment, order, decree, stipulation, injunction, charge or
lien; and
(iii) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand is
pending or, to the Knowledge of Sellers, is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item.
(d) To the Knowledge of Sellers, with respect to each
item of Licensed Intellectual Property (including any such
"off-the-shelf" software),
(i) the underlying item of Licensed
Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation, injunction, charge or
lien; and
(ii) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand is
pending, or, is threatened which challenges the legality,
validity, or enforceability of the underlying item of
Licensed Intellectual Property.
3.08. Contracts.
(a) Except as set forth in Schedule 3.08(a) and except
for any Contracts which are Excluded Assets and the Building Access
Agreements, Sellers are not a party to or bound by any Contract that
is primarily used or primarily held or intended for use in, or that
arises primarily out of, the operation or conduct of the Business and
that is:
(i) a written employment agreement or
employment contract that has an aggregate future liability in
excess of $75,000 and is not terminable by Sellers by notice
of not more than 60 days for a cost of less than $25,000;
(ii) a collective bargaining agreement or other
Contract with any labor organization, union or association;
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(iii) a covenant not to compete (other than
pursuant to any radius restriction contained in any lease,
reciprocal easement or development, construction, operating
or similar agreement) that materially limits the conduct of
the Business as presently conducted;
(iv) a lease, sublease or similar Contract with
any person under which Sellers are a lessor or sublessor of,
or makes available for use to any person, (A) any Business
Property or (B) any portion of any premises otherwise
occupied by Sellers;
(v) (A) a continuing Contract for the future
purchase of materials, supplies or equipment (other than
purchase orders for inventory in the ordinary course of
business consistent with past practice) (a "Vendor
Contract"), (B) a management, service, consulting or other
similar Contract or an advertising agreement or arrangement,
in any such case that has an aggregate future liability to
any person in excess of $50,000 and is not terminable by
Sellers by notice of not more than 60 days for a cost of less
than $2,500;
(vi) a Contract providing for the services of
any dealer, distributor or sales representative involving the
payment or receipt over the life of such Contract in excess
of $50,000 by Sellers and is not terminable by Sellers by
notice of not more than 60 days for a cost of less than
$2,500;
(vii) a Contract (including any so-called
take-or-pay or keepwell agreement) under which (A) any person
has directly or indirectly guaranteed indebtedness,
liabilities or obligations of Sellers or (B) Sellers have
directly or indirectly guaranteed indebtedness, liabilities
or obligations of any other person (in each case other than
endorsements for the purpose of collection in the ordinary
course of business), in any such case that, individually, is
in excess of $50,000;
(viii) a material Contract providing for
confidential treatment by Sellers of third party information
other than non-disclosure agreements entered into by Sellers
in the ordinary course of business consistent with past
practice;
(ix) a Contract for any Investment;
(x) a material license, sublicense, option or
other Contract relating in whole or in part to the Assigned
Intellectual Property, Licensed Intellectual Property,
Software and Technology (including any license or other
Contract under which Sellers are licensee or licensor of any
Assigned Intellectual Property, Licensed Intellectual
Property, Software and Technology);
(xi) (A) a Contract under which Sellers have
borrowed any money from, or issued any note, bond, debenture
or other evidence of indebtedness to, any person or (B) any
other note, bond, debenture or other evidence of indebtedness
issued by Sellers to any person, in any such case that,
individually, is in excess of $5,000 (other than Excluded
Debt); and
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-19-
(xii) a Contract for the sale of any Acquired
Asset (other than inventory sales in the ordinary course of
business) or the grant of any preferential rights to purchase
any Acquired Asset or requiring the consent of any party to
the transfer thereof.
(b) Schedule 3.08(b) lists all Building Access
Agreements and further identifies, by material third party landlord
and its respective affiliates (each, as defined below, a "Material
Landlord"), all Building Access Agreements to which such Material
Landlord is a party. For purposes of this Section, a Material Landlord
is one of the top 15 third party landlords (including its affiliates)
in terms of the total revenue of the Business generated by the Sellers
at such landlord's multitenant office buildings for the year ended
December 31, 2001, as set forth in the Business Plan. True and
complete copies of the Building Access Agreements shall have been
delivered or made available to Purchaser prior to the Closing Date.
(c) Except as set forth in Schedule 3.08(c), all
Assigned Contracts are valid, binding and in full force and effect and
are enforceable by Sellers, as applicable, in accordance with their
terms, except for such failures to be valid, binding, in full force
and effect or enforceable that, individually or in the aggregate,
could not reasonably be expected to have a Sellers Material Adverse
Effect (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and
to general principles of equity). Except as set forth in Schedules
3.08(a) or 3.08(c), to the Knowledge of Sellers, Sellers have
performed all obligations required to be performed by them to date
under the Assigned Contracts, and they are not (with or without the
lapse of time or the giving of notice, or both) in material breach or
default in any respect thereunder and, to the Knowledge of Sellers, no
other party to any Assigned Contract is (with or without the lapse of
time or the giving of notice, or both) in material breach or default
in any respect thereunder. Sellers have not, except as disclosed in
Schedule 3.08(c), received any notice of the intention of any party to
terminate any Assigned Contract.
3.09. Licenses and Permits.
(a) Schedule 3.09(a) sets forth as of the date of this
Agreement general descriptions of all material certificates, licenses,
permits, authorizations and approvals ("Permits") issued or granted to
Sellers by Governmental Entities that are necessary for the operation
or conduct of the Business as currently conducted. Except as set forth
in Schedule 3.09(a), (i) all such Permits are validly held by Sellers,
and Sellers have complied in all material respects with all terms and
conditions thereof; (ii) during the past 12 months, Sellers have not
received notice of any Proceedings relating to the revocation or
modification of any such Permits the loss of which, individually or in
the aggregate, could reasonably be expected to have a Sellers Material
Adverse Effect, and (iii) to the Knowledge of Sellers, none of such
Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement
or the consummation of the Acquisition.
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-20-
(b) Sellers possess or have applied for all Permits
necessary to own or hold under lease and operate the Acquired Assets
and to conduct the Business as currently conducted, other than such
Permits the absence of which, individually or in the aggregate, could
not reasonably be expected to have a Sellers Material Adverse Effect.
3.10. Sufficiency of Acquired Assets.
The Acquired Assets, together with the Excluded Assets, comprise all
the assets employed by Sellers in connection with the Business. Except as set
forth on Schedule 3.10, the Acquired Assets, together with the services to be
provided pursuant to the Ancillary Agreements, are sufficient for the conduct
of Business immediately following the Closing in substantially the same manner
as currently conducted.
3.11. Taxes.
(a) For purposes of this Agreement:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Tax" means any tax, governmental fee or other like
assessment or charge of any kind whatsoever (including any
tax imposed under Subtitle A of the Code and any net income,
alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding tax on amounts paid,
payroll, employment, excise, severance, stamp, capital stock,
occupation, property, environmental, telecommunications or
windfall profit tax, premium, custom, duty or other tax),
together with any interest, penalty, addition to tax or
additional amount due, imposed by any Governmental Entity
(domestic or foreign) responsible for the imposition of any
such tax (a "Taxing Authority").
(b) Except as set forth in Schedule 3.11, no material
Tax Liens have been filed and no material claims are being asserted in
writing with respect to any Taxes.
(c) No Seller is a "foreign person" within the meaning
of Section 1445 of the Code.
3.12. Proceedings.
Schedule 3.12 sets forth a list as of the date of this Agreement of
each pending or, to the Knowledge of Sellers, threatened Proceeding, arising
out of the conduct of the Business or against any Acquired Asset and that could
reasonably be expected to (a) have a Sellers Material Adverse Effect or (b)
prevent the consummation of the transactions contemplated by this Agreement.
Except as set forth in Schedule 3.12, Sellers are not a party or subject to or
in default under any Judgment applicable to the conduct of the Business or any
Acquired Asset or Assumed Liability, other than for such Judgments that,
individually and in the aggregate, could not reasonably be expected to have a
Sellers Material Adverse Effect.
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3.13. Compliance with Applicable Laws.
The Business is in compliance with all Applicable Laws, except for
instances of noncompliance that, individually or in the aggregate, could not
reasonably be expected to have a Sellers Material Adverse Effect. Except as set
forth in Schedule 3.13, Sellers have not received any written communication
from a Governmental Entity that alleges that the Business is not in compliance
in any material respect with any Applicable Law. This Section 3.13 does not
relate to matters with respect to Taxes, which are the subject of Section 3.11
or environmental matters, which are the subject of Section 3.18.
3.14. Transactions with Affiliates.
Except as set forth in Schedule 3.14, none of the Contracts set forth
in Schedules 3.08(a), 3.08(b), and 3.08(c) between the Business, on the one
hand, and Sellers or any of their affiliates, on the other hand, will continue
in effect subsequent to the Closing.
3.15. Benefit Plans.
(a) Schedule 3.15 contains a list of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained or contributed to by Sellers or any of their affiliates for
the benefit of any officers or employees of the Business ("Seller
Pension Plans") and all "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA), bonus, stock option, stock purchase,
deferred compensation plans or arrangements and other employee fringe
benefit plans maintained, or contributed to, by Sellers or any of
their affiliates for the benefit of any officers or employees of the
Business (all the foregoing, including Seller Pension Plans, being
herein called "Seller Benefit Plans"). Sellers have made available to
Purchaser true, complete and correct copies of (i) each Seller Benefit
Plan, (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Seller Benefit Plan (if
any such report was required), (iii) the most recent summary plan
description for each Seller Benefit Plan for which such a summary plan
description is required and (iv) each trust agreement, group annuity
contract or other funding and financing arrangement relating to any
Seller Benefit Plan.
(b) Each Seller Benefit Plan has been administered in
all material respects in accordance with its terms. Seller and all the
Seller Benefit Plans are in compliance in all material respects with
the applicable provisions of ERISA and the Code and all applicable
collective bargaining agreements.
(c) No Seller contributes to, has ever contributed to,
or has ever been required to contribute to any "multiemployer plan"
(as defined in Section 3(37) of ERISA) and no Seller has any liability
(including withdrawal liability) under any multiemployer plan.
(d) No Seller has incurred any cost, fee, expense,
liability, claim, suit, obligation or other damage under Title IV of
ERISA that could give rise to the imposition of any liability, cost,
fee, expense or obligation which would reasonably be expected to
become a liability of Purchaser and, to the Knowledge of Sellers, no
facts or circumstances exist that could give rise to any such cost,
fee, expense, liability, claim, suit, obligation or other damage,
which would be reasonably expected to become a liability of Purchaser.
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3.16. Brokers or Finders.
Except for the fees and expenses of The Breckenridge Group, Inc.,
which will be paid by the Sellers, the Sellers have no liability to any agent,
broker, investment banker or other firm or person for any broker's or finder's
fee or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement for which the Purchaser could
become liable or obligated.
3.17. Absence of Changes or Events.
Since January 1, 2002, there has not been any change that individually
or in the aggregate, has or could reasonably be expected to have a Sellers
Material Adverse Effect. From January 1, 2002 to the date of this Agreement,
Sellers have caused the Business to be conducted in the ordinary course and in
substantially the same manner as previously conducted, other than as set forth
in the Business Plan or otherwise disclosed in writing in connection with (a)
the management and other presentations and (b) due diligence activities, in all
cases, occurring on or before May 10, 2002, and as could not otherwise
reasonably be expected to have, individually or in the aggregate, a Sellers
Material Adverse Effect. Since January 1, 2002, except as set for in Schedule
3.17, no Seller has, in each case insofar as the Business is concerned sold,
leased, licensed or otherwise disposed of any assets of the Business (or
entered into any contract to do any of the foregoing), except Inventory and
obsolete or worn out equipment sold in the ordinary course of business
consistent with past practice which was not otherwise material (individually or
in the aggregate) to the Business or canceled any material indebtedness or
waived any material claims or rights of material value.
3.18. Environmental Matters.
Except for any matters that, individually or in the aggregate, could
not reasonably be expected to have a Sellers Material Adverse Effect, (i)
Sellers and their affiliates have been, with respect to the Business, in
compliance with all laws, rules and regulations relating to protection of the
environment ("Environmental Laws"), (ii) Sellers possess and are in compliance
with all permits, licenses and authorizations necessary under Environmental
Laws for the operation of the Business and (iii) there are no pending, or to
the Knowledge of Sellers, threatened, claims, proceedings or investigations
against Sellers alleging that the Business or the Acquired Assets are not in
compliance with any Environmental Laws.
3.19. No Other Agreements.
No Seller has any legal obligation, absolute or contingent, to any
other Person to sell, directly or indirectly, the Acquired Assets or to sell
the Business. No Seller has any legal obligation, absolute or contingent, to
any other Person to effect any merger, share exchange, consolidation, business
combination, recapitalization, liquidation or other reorganization of any
Seller which is the owner of or enjoys the right to use any of the Acquired
Assets or to enter into any agreement with respect thereto, except such as has
not had and could not reasonably be expected to have (i) a Sellers Material
Adverse Effect or (ii) a material adverse effect on the ability of Sellers to
consummate the Acquisition and other transactions contemplated hereby.
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3.20. Employees.
Schedule 3.20 sets forth each employee of Sellers whose employment is
primarily related to the operation of the Business (each a "Covered Employee")
as well as a copy of the most recent payroll for each Covered Employee. In
addition, Sellers shall deliver to Purchaser on the Closing Date, with respect
to each employee on Purchaser's list of not less than 300 Covered Employees
delivered to Sellers pursuant to Section 5.08(a), a listing of the amount of
any severance benefits to which each such employee would be entitled if
terminated by Sellers immediately prior to the Closing Date. There are no
employee unions (nor any other similar labor or employee organizations) under
local statutes, custom or practice with respect to any employee of Sellers
whose employment is primarily related to the operation of the Business. No
Seller has experienced any attempt by organized labor or its representatives to
make Sellers conform to demands of organized labor relating to any employee of
Sellers whose employment is primarily related to the operation of the Business.
With respect to the Business, there is no labor strike or labor disturbance
pending or, to the Knowledge of Sellers, threatened against any Seller nor is
any grievance currently being asserted, and no Seller has experienced a work
stoppage or other labor difficulty, and is not and has not engaged in any
unfair labor practice. From and after the Closing, Sellers shall remain
exclusively liable for the payment to its employees of all salaries, wages and
benefits, including severance benefits, under claims incurred but not paid as
of and through the Closing Date.
Article 4. Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to each Seller, as of the
date of this Agreement and as of the Closing Date, as follows:
4.01. Organization; Standing and Power.
Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has full
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
lease or otherwise hold its properties and assets and to carry on its business
as presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, have not had and could not reasonably be expected to have a material
adverse effect on (i) the assets, liabilities, business, financial condition or
results of a operations of the Purchaser (a "Purchaser Material Adverse
Effect") or (ii) the ability of Purchaser to consummate the Acquisition and
other transactions contemplated hereby.
4.02. Authority; Execution and Delivery; and Enforceability.
Purchaser has full power and authority to execute this Agreement and
the Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Acquisition and the other transactions contemplated hereby and
thereby. The execution and delivery by Purchaser of this Agreement and the
Ancillary Agreements to which it is, or is specified to be, a party and the
consummation by Purchaser of the Acquisition and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. Purchaser has duly executed and delivered this Agreement and
prior to the Closing will have
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duly executed and delivered each Ancillary Agreement to which it is, or is
specified to be, a party, and this Agreement constitutes, and each Ancillary
Agreement to which it is, or is specified to be, a party will after the Closing
constitute, its legal, valid and binding obligation, enforceable against it in
accordance with its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity).
4.03. No Conflicts; Consents.
The execution and delivery by Purchaser of this Agreement do not, the
execution and delivery by Purchaser of each Ancillary Agreement to which it is,
or is specified to be, a party will not, and the consummation of the
Acquisition and the other transactions contemplated hereby and thereby and
compliance by Purchaser with the terms hereof and thereof will not conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Purchaser or any of its subsidiaries under, any provision of (a) the
certificate of incorporation or by-laws of the Purchaser or any of its
subsidiaries, (b) any material Contract to which Purchaser or any of its
subsidiaries is a party or by which any of their respective properties or
assets is bound or (c) any Judgment or Applicable Law applicable to Purchaser
or any of its subsidiaries or their respective properties or assets, other
than, in the case of clauses (b) and (c) above, any such items that,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Purchaser Material Adverse Effect. No Consent of or
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by or with respect to Purchaser or any of its subsidiaries
in connection with the execution, delivery and performance of this Agreement or
any Ancillary Agreement or the consummation of the Acquisition or the other
transactions contemplated hereby and thereby, other than (i) compliance with
and filings under the HSR Act and similar foreign competition regulations, (ii)
compliance with and filings under Section 13(a) of the Exchange Act, (iii)
filings with and approvals of the FCC as required under the Communication Act,
(iv) filings with and approvals of any PUC or similar regulatory bodies as
required by applicable entities, laws, rules, ordinances and regulations, (v)
those that may be required solely by reason of the participation of Sellers (as
opposed to any other third party) in the Acquisition and other transactions
contemplated hereby and by the Ancillary Agreements or (vi) other filing
approvals that, individually or in the aggregate, could not reasonably be
expected to have a Purchaser Material Adverse Effect or could not reasonably be
expected to prevent the consummation of the transactions contemplated hereby.
4.04. Litigation.
There are not any (a) outstanding Judgments against Purchaser or any
of its subsidiaries, (b) Proceedings pending or, to the Knowledge of Purchaser,
threatened against Purchaser or any of its subsidiaries or (c) investigations
by any Governmental Entity that are, to the Knowledge of Purchaser, pending or
threatened against Purchaser or any of its subsidiaries that, in any case,
individually or in the aggregate, have had or could reasonably be expected to
have a Purchaser Material Adverse Effect. For purposes of this Agreement, the
term "Knowledge of Purchaser" shall mean the actual knowledge, after reasonable
inquiry, of the officers and directors of Purchaser.
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4.05. Availability of Funds.
Exhibit 4.05 attached hereto sets forth complete and correct copies of
a commitment letter from LaSalle Bank for debt financing to enable Purchaser to
pay the Closing Date Consideration (the "Financing Commitment"). As of the date
of this Agreement, the Financing Commitment has not been withdrawn or
terminated. The Financing Commitment, together with equity funds that Purchaser
can obtain without the prior consent, approval or other discretionary action
of, any third party, constitute all of the financing required to be provided by
Purchaser for the consummation of the transactions contemplated by this
Agreement.
4.06. Brokers or Finders.
Purchaser has no liability to any agent, broker, investment banker or
other firm or person for any broker's or finder's fee or any other commission
or similar fee in connection with any of the transactions contemplated by this
Agreement for which the Sellers could become liable or obligated.
Article 5. Covenants
5.01. Covenants of Sellers Relating to Conduct of Business.
(a) Except for matters set forth in Schedule 5.01, as
otherwise expressly permitted or required by the terms of this
Agreement or with the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, delayed or conditioned,
from the date of this Agreement to the Closing Date, Sellers shall
conduct the Business in the ordinary course consistent with past
practice and in a manner otherwise consistent with the Business Plan
or otherwise disclosed in writing to Purchaser. In addition (and
without limiting the generality of the foregoing), except as set forth
in Schedule 5.01, or otherwise expressly permitted or required by the
terms of this Agreement, Sellers shall not do any of the following in
connection with the Business without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, delayed
or conditioned:
(i) (A) increase in any manner the cash
compensation and other non-equity based benefits of any
Covered Employee except in the ordinary course of business
consistent with past practice; (B) pay or agree to pay any
pension, retirement allowance or other employee benefit not
required, or enter into or agree to enter into any agreement
or arrangement with any Covered Employee, whether past or
present, relating to any such pension, retirement allowance
or other employee benefit, except as required under currently
existing agreements, plans or arrangements in accordance with
their present terms or under any renewal of any existing
collective bargaining agreements to which Sellers are bound;
(C) grant any severance or termination pay to, or enter into
any employment or severance agreement with, Covered Employee,
except as required under currently existing plans in
accordance with their present terms; or (D) except as may be
required to
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comply with Applicable Law or any collective bargaining
agreement to which Sellers are bound or any renewal thereof;
become obligated under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit
arrangement, or similar plan or arrangement, that was not in
existence on the date hereof; including any bonus, incentive,
deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay,
retirement or other benefit plan, agreement or arrangement,
or employment or consulting agreement with or for the benefit
of any Covered Employee, or amend, terminate or take any
discretionary action with respect to any of such plans or any
of such agreements in existence on the date hereof; provided,
however, that this clause (D) shall not prohibit Sellers from
renewing any such plan, agreement or arrangement already in
existence on terms no more favorable to the parties to such
plan, agreement or arrangement;
(ii) authorize, recommend, propose or announce
an intention to authorize, recommend or propose, or enter
into any agreement in principle or an agreement with respect
to, any sale, transfer, lease, license, Lien, or other
disposition of the Acquired Assets other than in the ordinary
course of business consistent with past practice;
(iii) terminate, amend or modify in any material
respect any material Contract other than in the ordinary
course of business consistent with past practice;
(iv) enter into any Vendor Contract not in the
ordinary course of business consistent with past practice or
any Contract which requires aggregate payments in excess of
$50,000 by Purchaser and is not terminable by Purchaser by
notice of not more than 30 days for a cost of less than
$15,000;
(v) authorize or commit to make capital
expenditures for the Business in excess of $2.0 million per
calendar quarter, with unused amounts being rolled over to
succeeding quarters;
(vi) make any change in the accounting methods
or accounting practices of the Business;
(vii) cause any Acquired Asset to be designated
Sellers POP Equipment; or
(viii) agree to do any of the foregoing.
(b) Sellers shall promptly advise Purchaser in writing
of the occurrence of any matter or event that could reasonably be
expected to have a Sellers Material Adverse Effect.
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5.02. No Solicitation.
Sellers shall not, nor shall they authorize or knowingly permit any
officer, director or employee of or any investment banker, attorney, accountant
or other representative retained by them to, (a) solicit, initiate or encourage
any "other bid", (b) enter into any agreement with respect to any other bid or
(c) participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any other bid. Sellers promptly shall advise Purchaser
orally and in writing of any other bid or any inquiry with respect to or which
could lead to any other bid and the identity of the person making any such
other bid or inquiry. As used in this Section 5.02, "other bid" shall mean any
proposal to acquire in any manner any Acquired Asset, other than (A) the
transactions contemplated by this Agreement, (B) the acquisition of Inventory
in the ordinary course of business and (C) for the avoidance of doubt, any
Excluded Asset described in Section 1.02(b).
5.03. Access to Information: Access to Employees.
(a) Sellers shall afford to Purchaser and its employees,
accountants, counsel and other representatives reasonable access, upon
reasonable notice during normal business hours during the period prior
to the Closing, to all the personnel, properties, books, contracts,
commitments, Tax returns and Records of or related to the Business
(other than the Excluded Assets), and during such period shall furnish
promptly to Purchaser any information concerning the Business as
Purchaser may reasonably request; provided, however, that such access
does not unreasonably disrupt the normal operations of Sellers or the
Business.
(b) Sellers shall afford to Purchaser reasonable access
to Covered Employees, upon reasonable notice during normal business
hours during the period prior to the Closing, to allow Purchaser to
comply with its obligation to make offers of employment to Covered
Employees as contemplated by Section 5.08; provided, however, that
such access does not unreasonably disrupt the normal operations of
Sellers or the Business.
5.04. Confidentiality.
Purchaser acknowledges that the information being provided to it in
connection with the Acquisition and the consummation of the other transactions
contemplated hereby is subject to the terms of a confidentiality agreement
between U.S. RealTel, Inc. and WorldCom dated as of March 7, 2002 (the
"Confidentiality Agreement"), the terms of which are incorporated herein by
reference.
(a) Effective upon, and only upon, the Closing, the
Confidentiality Agreement shall terminate with respect to information
relating solely to the Business and the Acquired Assets; provided,
however, Purchaser acknowledges that any and all other information
provided to it by Sellers concerning Sellers shall remain subject to
the terms and conditions of the Confidentiality Agreement after the
Closing Date.
(b) Sellers shall keep confidential, and cause their
affiliates and instruct their officers, directors, employees and
advisors to keep confidential, all information relating to the
Business, except as required by law or administrative process and
except for
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information that is available to the public on the Closing Date, or
thereafter becomes available to the public other than as a result of a
breach of this Section 5.04(b).
(c) At the Closing, Sellers shall assign, or cause their
financial advisor to assign, to Purchaser all rights with respect to
the Business or the Acquired Assets under any confidentiality
agreements executed by or on behalf of Sellers in connection with the
potential sale of the Business, but only to the extent such assignment
may be made by Sellers or their financial advisor without the consent
of the other parties to those confidentiality agreements.
5.05. Commercially Reasonable Efforts; Governmental Consents;
Shared Building Arrangements.
(a) On the terms and subject to the conditions of this
Agreement, each party shall use its commercially reasonable efforts to
cause the Closing to occur, including taking all reasonable actions
necessary to comply promptly with all legal requirements that may be
imposed on it or any of its affiliates with respect to the Closing,
including, but not limited to, the Purchaser obtaining all consents,
orders or approvals of authorization of, or actions by the FCC, the
PUCs and foreign similar regulatory authorities, in each case that are
necessary for the consummation of the Acquisition.
(b) Sellers agree to use all commercially reasonable
efforts to implement an arrangement, reasonable and lawful as to both
Purchaser and Sellers and permissible under the relevant Contract, to
afford to Purchaser continued use of and access to the Acquired Assets
and continued operation and benefit of the Business in the Shared
Buildings.
5.06. Expenses; Transfer Taxes.
(a) Except as set forth in Sections 1.04, 2.04(b) and
9.03 and Article 8, all costs and expenses incurred in connection with
this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby shall be paid by the party incurring
such expense, including all costs and expenses incurred pursuant to
Section 5.05.
(b) All transfer Taxes applicable to the conveyance and
transfer from Sellers to Purchaser of the Acquired Assets and any
other transfer or documentary Taxes or any filing or recording fees
applicable to such conveyance and transfer shall be paid by the
Purchaser, provided that WorldCom shall reimburse Purchaser upon
request for 50% of all such amounts. Each party shall use reasonable
efforts to avail itself of any available exemptions from any such
Taxes or fees, and to cooperate with the other parties in providing
any information and documentation that may be necessary to obtain such
exemptions.
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5.07. Collection of Receivables.
From and after the Closing and subject to Section 1.04(h), Purchaser
shall have the right and authority to collect for its own account all
Receivables and other related items that are included in the Acquired Assets
and to endorse with the names of Sellers, any checks or drafts received with
respect to any Receivables or such other related items. Sellers shall promptly
deliver to Purchaser any cash or other property received directly or indirectly
by them with respect to the Receivables and such other related items, including
any amounts payable as interest.
5.08. Employee Matters.
(a) No later than June 18, 2002, or such later date as
the Sellers and Purchaser mutually agree, the Purchaser shall deliver
to Sellers a list of the names of not less than 300 Covered Employees
which Purchaser intends to employ in connection with the Business
after the Closing Date. The Purchaser will notify each such employee
on the Closing Date of the terms and conditions of such employee's
position with Purchaser, which position shall be of responsibility
substantially similar to his or her position immediately before the
Closing Date and at substantially similar base pay as that identified
on Schedule 3.20 and include a statement reasonably satisfactory to
Sellers and Purchaser concerning the transition of such employee's
transfer of employment providing that, if accepted, such offer of
employment shall commence immediately upon the occurrence of the
Closing Date so as to avoid any "gap" between employment of such
individual by Sellers immediately prior to the Closing and by and
Purchaser, immediately following the Closing. All Covered Employees to
whom such notices are delivered and who actually continue in such
position with the Purchaser after the Closing Date shall hereinafter
be referred to as the "Retained Employees." The Purchaser will not
have any liability whatsoever with respect to any current or former
employee of the Sellers in the Business who are not Retained
Employees.
(b) The Sellers shall be solely responsible for all
Seller Benefit Plans and obligations and liabilities thereunder. The
Purchaser shall not assume any Seller Benefit Plans or any obligation
or liability thereunder. The Sellers shall retain, bear and discharge,
all liabilities pursuant to Section 4980B of the Code and Part 6 of
Title 1 of ERISA with respect to all employees and former employees of
the Sellers in the Business (and all other beneficiaries associated
with such employees and former employees). WorldCom shall contribute
its standard matching contribution to its 401(k) plan with respect to
the Retained Employees, for the current plan year and ending with the
period that includes the Closing Date.
(c) With respect to the Retained Employees, the Sellers'
vested and accrued employee vacation liabilities or obligations for
such Retained Employees through the Closing Date shall be paid by
Sellers (or released by the employee) on or before the Closing Date
(with Sellers providing evidence thereof satisfactory to Purchaser).
(d) Solely as between Sellers and Purchaser, the parties
intend that the transactions contemplated by this Agreement shall not
constitute a severance of employment of any Retained Employee prior to
or upon the consummation of the transactions contemplated hereby, and
that such employees will have continuous and uninterrupted employment
immediately before and immediately after the Closing. To the
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extent the payment of severance benefits to any such employee is
nevertheless required, however, as a result of the consummation of the
transactions contemplated by this Agreement and the consequent
transfers of employment, notwithstanding that Purchaser has employed,
or made an offer of employment to, such employee in accordance with
the provisions of this Section 5.08, such severance benefits shall be
the sole responsibility of Seller. To effectuate the foregoing:
(i) Purchaser shall indemnify and hold harmless
Sellers and their affiliates, and each of their respective
officers, directors and employees, from all costs, expenses
or other damages that may result in respect of claims made by
any Retained Employee for severance or other separation
benefits solely to the extent arising out of or in connection
with the Purchaser's termination of employment of any
Retained Employee after the Closing Date; and
(ii) Subject to the last sentence of clause (e)
below, Sellers shall, jointly and severally, indemnify and
hold harmless Purchaser and its affiliates, and each of their
respective officers, directors and employees, from all costs,
expenses or other damages that may result in respect of
claims made by any employee or former employee of Sellers or
any of their affiliates for severance or other separation
benefits solely to the extent arising out of or in connection
with matters relating to the employment of or the termination
of the employment relationship with such person by Sellers or
their affiliates whether before or after the Closing Date.
(e) The Purchaser shall cause all Retained Employees to
be eligible to participate on the day after the Closing Date in all
employee benefit plans in which similarly situated employees of the
Purchaser and its affiliates participate, under the terms and
conditions of each such plan. For purposes of any length of service
requirement, waiting periods, vesting periods (other than with respect
to any Purchaser stock option program) or differential benefits, if
any, based on length of service in any such plan for which a Retained
Employee will be eligible, the Purchaser shall ensure that service by
such Retained Employee with the Sellers shall be deemed to have been
service with the Purchaser. Nothing contained in this Agreement shall
confer upon any Retained Employee any right with respect to the
continuance of employment with the Purchaser, nor shall anything
herein interfere with the right of the Purchaser to terminate the
employment of any of the Retained Employees at any time, with or
without cause, or restrict the Purchaser in the exercise of its
independent business judgment in modifying any of the terms and
conditions of the employment of the Retained Employees. With respect
to Purchaser's termination of employment without cause of any Retained
Employee within three (3) months after the Closing Date, Purchaser
shall provide such Retained Employee with severance benefits
substantially equivalent to the level of such benefits that such
Retained Employee would have received from Sellers if such Retained
Employee had not continued in employment with Purchaser (as identified
to Purchaser in writing on the Closing Date), and rather had been
terminated by Sellers on the Closing Date as identified on Schedule
3.20.
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(f) The parties shall cooperate to and the Sellers shall
transfer or otherwise provide to the Purchaser, all payroll,
compensation, service and other necessary information about the
Retained Employees in order to facilitate the notices of continued
employment, transition to new benefit plans, service crediting and all
other requirements imposed on Purchaser hereunder.
(g) Through the Closing Date, Sellers shall have taken
all necessary actions (if any) to comply with the Worker Adjustment
and Retraining Notification Act, as amended (the "WARN Act"), and any
similar statute, and to otherwise comply with any such statute with
respect to any "plant closing" or "mass lay off" (as defined in the
WARN Act) or similar event affecting any employees of Sellers
(including as a result of the consummation of the transactions
contemplated by this Agreement).
5.09. Publicity.
From the date hereof through the Closing Date, no public filing,
release or announcement concerning the transactions contemplated hereby shall
be issued by any party without the prior consent of the other parties (which
consent shall not be unreasonably withheld), except as such filing, release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange or the United States Securities and
Exchange Commission (the "SEC"), in which case the party required to make the
filing, release or announcement shall allow the other party reasonable time to
comment on such filing, release or announcement in advance of such issuance;
provided, however, that Sellers and Purchaser may make internal announcements
to their respective employees that are consistent with the parties' prior
public disclosures regarding the transactions contemplated hereby after
reasonable prior notice to and consultation with the other.
5.10. Access to Records.
For a period of seven (7) years after the Closing Date, Purchaser
shall retain all Records relating to the Business to be transferred hereunder
and shall afford Sellers' and their accountants and representatives reasonable
access to and the ability to copy such Records during normal business hours.
For a period of seven (7) years after the Closing Date, Sellers shall retain
all Records relating to the Business which will not otherwise be transferred to
Purchaser pursuant to this Agreement and shall afford Purchaser and its
accountants and representatives reasonable access to and the ability to copy
such Records during normal business hours. Upon written notice to the other
parties, a party may extend the applicable retention period benefiting such
party for a reasonable period of time in connection with a pending audit.
5.11. Bulk Transfer Laws.
Purchaser hereby waives compliance by Sellers with the provisions of
any so-called "bulk transfer law" of any jurisdiction in connection with the
sale of the Acquired Assets to Purchaser. Sellers hereby, jointly and
severally, agree to indemnify and hold Purchaser harmless from any claims
relating to the failure to comply with any such provisions.
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5.12. Further Assurances.
From time to time, as and when requested by any party, each party
shall execute and deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be taken, all such
further or other actions (subject to Section 5.05), as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement, including, in the case of Sellers, executing
and delivering to Purchaser such assignments, deeds, bills of sale, consents
and other instruments as Purchaser or its counsel may reasonably request as
necessary or desirable for such purpose.
5.13. Purchase Price Allocation.
As soon as practicable following the final determination of the
Purchase Price, Sellers and Purchaser shall mutually agree on an allocation of
the Purchase Price among the Acquired Assets according to the relative fair
market values of such assets on the Closing Date in accordance with Section
1060 of the Code (and applicable regulations thereunder). If Sellers and
Purchaser are unable to agree on such fair market values, Sellers and Purchaser
shall elect an independent appraisal firm to determine such values. The
conclusions of such appraisal firm shall be conclusive and binding. The fees
and expenses of such appraisal firm shall be shared equally by Sellers and
Purchaser. Following such determination, Sellers and Purchaser in connection
with their respective U.S. Federal, state and local income tax returns and
other filings, shall not take any position inconsistent with the allocation
determined pursuant to this Section 5.13
5.14. Employee Non-Solicitation.
(a) Neither Sellers nor any of their affiliates shall
for a period of 2 years after the Closing Date induce or attempt to
induce any Retained Employee of the Business as of the date hereof or
the Closing Date to leave their employ with Purchaser or in any way
interfere with the relationship between Purchaser or any of its
affiliates and any such Retained Employee.
(b) Neither Purchaser nor any of its affiliates shall
for a period of 2 years after the Closing Date induce or attempt to
induce any employee of Sellers or any of their affiliates (other than
Covered Employees) as of the date hereof or the Closing Date to leave
their employ with Sellers or any of their affiliates or in any way
interfere with the relationship between Sellers or any of their
affiliates and any such employee.
(c) In neither case shall the prohibitions in Sections
5.14(a) and (b) be construed to prohibit such solicitation as may
occur through broad based, widely disseminated public media such as
newspapers, magazines or web based recruiting efforts which are not
specifically directed at the employees of the other party or its
affiliates.
(d) It is understood that a breach of any term of the
provisions of Sections 5.14(a) and (b) may materially and irreparably
harm Sellers or the Purchaser, as the case may be, and that money
damages may accordingly not be an adequate remedy for any breach of
these provisions of this Agreement and that Sellers and Purchaser, as
the case may be, in their sole discretion and in addition to any other
remedies they may have at law or in equity may apply to any court of
law or equity of competent jurisdiction (without posting
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any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any violations of these
provisions of this Agreement.
5.15. Non-Competition.
(a) Neither Sellers nor any of their affiliates shall,
directly or indirectly, for a period of 18 months after the Closing
Date, within the continental United States do any of the following:
(i) contract with any customer of the Business
as of the Closing Date ("Existing Customer") to provide to
such Existing Customer any of the shared tenant
telecommunications services using in-building distribution
networks that such Existing Customer was obtaining from the
Business as of the Closing Date ("Services"),
(ii) use or permit the use by third parties of
Records or any other information obtained by Sellers prior to
the Closing Date in connection with the Business to induce or
attempt to induce any Existing Customer to enter into a
customer relationship with Sellers or other third parties for
the purchase of such Services.
(b) Notwithstanding the foregoing, this Section shall
not be construed to prohibit such solicitation as may occur through
broad based, widely disseminated public media such as newspapers,
magazines or web based recruiting efforts which are not specifically
directed at the Existing Customers. In addition, the foregoing shall
not prohibit a Seller or any of its Affiliates:
(i) from providing or contracting to provide
Services directly to any Existing Customer in response to
such Existing Customer 's request to provide such Services
(whether in response to a request for proposals or
otherwise), other than as a result of a breach of this
Section 5.15;
(ii) from providing or contracting to provide
Services indirectly through a third party that is not an
Affiliate to any such Existing Customer (whether in the
context of a reseller, sales agent, prime contractor, systems
integrator or other arrangement) so long as such third party
has no access to and does not otherwise use information
relating to such Existing Customer gathered or obtained by
Sellers in connection with the Business prior to the Closing
Date;
(iii) from providing Services that the Sellers
are currently providing under Contracts that are not Assigned
Contracts; and
(iv) from providing or contracting to provide
Services to any Existing Customer who ceases receiving
Services from the Business after the Closing Date other than
as a result of a breach of this Section 5.15;
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(c) It is understood that a breach of any term of the
provisions of Section 5.15 may materially and irreparably harm the
Purchaser, and that money damages may accordingly not be an adequate
remedy for any breach of these provisions of this Agreement and that
Purchaser, in its sole discretion and in addition to any other
remedies Purchaser may have at law or in equity may apply to any court
of law or equity of competent jurisdiction (without posting any bond
or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of these provisions of this
Agreement.
5.16. Management Agreement.
The parties acknowledge that the Purchaser is required to obtain the
Consents of the FCC and various PUCs in order to consummate its acquisition of
certain of the Acquired Assets. Purchaser acknowledges that it has made all
necessary filings and applications with the FCC and various PUCs in order to
obtain the Consents necessary to acquire, run and operate the Acquired Assets.
Notwithstanding the foregoing, if, on the Closing Date, Purchaser shall not
have obtained all of such necessary Consents, the Closing shall proceed in
accordance with the terms of this Agreement, provided that the Sellers shall
not sell, assign, transfer or convey to Purchaser such Acquired Assets which
Purchaser would not be able to own due to failure to obtain the necessary FCC
and PUC Consents. In such event, on the Closing Date, the parties shall enter
into the Management Agreement which shall govern the relationship between the
parties with respect to such Assets and the parties shall continue to
cooperate, using commercially reasonable efforts, to expeditiously obtain any
and all outstanding PUC or FCC consents.
5.17. Revisions to Schedules.
The parties acknowledge that all Schedules delivered hereunder are in
draft form as of the date of this Agreement. Sellers agree to provide to
Purchaser final versions of such schedules as soon as practicable, but in no
event later than June 18, 2002, or such later date as the parties shall
mutually agree, which final versions shall not differ from the draft versions
in any material respect, except with the prior consent of Purchaser. For
purposes of determining (i) the accuracy of the representations and warranties
contained in Article 3 in order to determine the fulfillment of the conditions
set forth in Section 6.02(a), and (ii) the Acquired Assets and Excluded Assets,
any schedule delivered by Sellers under the terms of this Agreement shall be
deemed to include that information contained therein on the date the final
version of such schedule is delivered to and, if necessary, accepted by
Purchaser.
Article 6. Conditions Precedent
6.01. Conditions to Each Party's Obligation.
The obligation of Purchaser to purchase and pay for the Acquired
Assets and the obligation of Sellers to sell the Acquired Assets to Purchaser
is subject to the satisfaction or waiver on or prior to the Closing of the
following conditions:
(a) Governmental Approvals. The waiting period under the
HSR Act, if applicable to the consummation of the Acquisition, shall
have expired or been terminated.
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Subject to Section 5.16, all material Consents by the FCC, the PUCs
and foreign antitrust or similar regulatory authorities, in each case
that are necessary for the consummation of the Acquisition shall have
been obtained. All consents, orders or approvals required by the U.S.
Department of Justice in connection with the Acquisition shall have
been obtained.
(b) No Injunctions or Restraints. No Applicable Law or
Injunction enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition preventing
the consummation of the Acquisition shall be in effect.
(c) Absence of Proceedings. There shall not be pending
by any Governmental Entity any Proceeding (i) challenging or seeking
to restrain or prohibit the Acquisition or any other transaction
contemplated by this Agreement or the Ancillary Agreements or seeking
to obtain from Purchaser or any of its subsidiaries in connection with
the Acquisition any damages that are material in relation to Purchaser
and its respective subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by Purchaser or any of
its subsidiaries of any material portion of the business or assets of
Purchaser (including the Business) or any of its subsidiaries, or to
compel Purchaser or any of its subsidiaries to dispose of or hold
separate any material portion of the business or assets of Purchaser
(including the Business) or any of its subsidiaries, in each case as a
result of the Acquisition or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose limitations on
ability of Purchaser to acquire or hold, or exercise full rights of
ownership of, the Acquired Assets or (iv) seeking to prohibit
Purchaser or any of its subsidiaries from effectively controlling in
any material respect the Business.
(d) Consents Of Certain Third Parties. Sellers shall
have obtained Consents from Material Landlords, which Consents shall
cover all necessary or appropriate authorization to permit the
transfer to Purchaser of Building Access Agreements relating to not
less than 80% of all of the multi-tenant office buildings subject to
the Building Access Agreements to which such Material Landlords are
party and in which the Sellers currently generate revenue.
(e) Sellers and Purchaser shall have entered into the
Transition Services Agreement;
(f) MCI WorldCom Communications, Inc., and Purchaser
shall have entered into the Wholesale Service Agreement;
(g) MCI WorldCom Communications, Inc., and Purchaser
shall have entered into the Internet Colocation Service Agreement;
(h) MCI WorldCom Network Services, Inc., and Purchaser
shall have entered into the Network Colocation Service Agreement; and
(i) MCI WorldCom Network Services, Inc., and Purchaser
shall have entered into the Building Rights Agreement.
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(j) Subject to Section 5.16, Sellers and Purchaser shall
have entered into the Management Agreement.
6.02. Conditions to Obligation of Purchaser.
The obligation of Purchaser to purchase and pay for the Acquired
Assets is subject to the satisfaction (or waiver by Purchaser) on or prior to
the Closing Date of the following conditions:
(a) Representations and Warranties of Sellers. The
representations and warranties of each Seller in this Agreement and
the Ancillary Agreements that are qualified as to materiality or
Sellers Material Adverse Effect shall be true and correct, and those
not so qualified shall be true and correct in all material respects,
as of the Closing Date as though made on the Closing Date, except to
the extent such representations and warranties expressly relate to an
earlier date (in which case on and as of such earlier date), in each
case where not so qualified except for breaches as to matters that,
individually or in the aggregate, could not reasonably be expected to
have a Sellers Material Adverse Effect. Purchaser shall have received
a certificate signed by an authorized officer of each Seller to such
effect.
(b) Performance of Obligations of Sellers. Each Seller
shall have performed or complied in all material respects with all
material obligations and covenants required by this Agreement to be
performed or complied with by each Seller by the time of the Closing,
and Purchaser shall have received a certificate signed by an
authorized officer of each Seller to such effect.
(c) No Sellers Material Adverse Effect. From the date of
this Agreement until the Closing Date, there shall have not occurred
any Sellers Material Adverse Effect.
6.03. Conditions to Obligation of Sellers.
The obligation of Sellers to sell, assign, convey, and deliver the
Acquired Assets and enter into the other transactions contemplated hereby is
subject to the satisfaction (or waiver by Sellers) on or prior to the Closing
Date of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Purchaser made in this Agreement and the Ancillary
Agreement that are qualified as to materiality or Purchaser Material
Adverse Effect shall be true and correct, and those not so qualified
shall be true and correct in all material respects, as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case, on and as of such earlier date), in each case where not so
qualified except for breaches as to matters that, individually or in
the aggregate, could not reasonably be expected to have a Purchaser
Material Adverse Effect. Sellers shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(b) Performance of Obligations of Purchaser. Purchaser
shall have performed or complied in all material respects with all
material obligations and covenants required by
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this Agreement to be performed or complied with by Purchaser by the
time of the Closing, and Sellers shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(c) No Purchaser Material Adverse Effect. From the date
of this Agreement until the Closing Date, there shall have not
occurred any Purchaser Material Adverse Effect.
6.04. Frustration of Closing Conditions.
Neither Purchaser nor Seller may rely on the failure of any condition
set forth in this Article 6 to be satisfied if such failure was caused by such
party's failure to act in good faith or to use its commercially reasonable
efforts to cause the Closing to occur, as required by Section 5.05.
6.05. Effect of Certain Waivers of Closing Conditions.
If prior to the Closing any party has knowledge of any breach by any
other party of any representation, warranty or covenant contained in this
Agreement or any Ancillary Agreement, and such other party expressly
acknowledges in writing that the effect of such breach is a failure of any
condition to the waiving party's obligations set forth in this Article 6 and
the waiving party proceeds with the Closing, the waiving party shall, unless
the parties enter into a subsequent written agreement regarding such matter, be
deemed to have waived such breach and the waiving party and its successors,
assigns and affiliates shall not be entitled to be indemnified pursuant to
Article 8, to xxx for damages or to assert any other right or remedy for any
losses arising from any matters relating to such condition or breach,
notwithstanding anything to the contrary contained herein or in any certificate
delivered pursuant hereto.
Article 7. Termination, Amendment and Waiver
7.01. Termination.
(a) Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the Acquisition and
the other transactions contemplated by this Agreement abandoned at any
time prior to the Closing:
(i) by mutual written consent of Sellers and
Purchaser;
(ii) by Sellers if any of the conditions set
forth in Section 6.01 or Section 6.03 shall have become
incapable of fulfillment, and shall not have been waived by
Sellers;
(iii) by Purchaser if any of the conditions set
forth in Section 6.01 or Section 6.02 shall have become
incapable of fulfillment, and shall not have been waived by
Purchaser; or
(iv) by Sellers or Purchaser, if the Closing
does not occur on or prior to August 1, 2002, provided,
however, that the party seeking termination pursuant to
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clause (ii), (iii) or (iv) is not then in material breach of
any of its representations, warranties, covenants or
agreements contained in this Agreement.
(b) In the event of termination by Sellers or Purchaser
pursuant to this Section 7.01, written notice thereof shall forthwith
be given to the other(s) and the transactions contemplated by this
Agreement shall be terminated, without further action by any party. If
the transactions contemplated by this Agreement are terminated as
provided herein:
(i) Purchaser shall return all documents and
other material received from Sellers relating to the
transactions contemplated hereby, whether so obtained before
or after the execution hereof, to Sellers; and
(ii) all confidential information received by
Purchaser with respect to the businesses of Sellers shall be
treated in accordance with the Confidentiality Agreement,
which shall remain in full force and effect notwithstanding
the termination of this Agreement.
7.02. Effect of Termination.
If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in Section 7.01, this Agreement shall become
null and void and of no further force and effect (and there shall be no
liability or obligation on the parties hereto or on their respective directors
or officers), except for the provisions of (a) Section 5.04 relating to the
obligation of Purchaser to keep confidential certain information and data
obtained by it from Sellers, (b) Section 5.06 relating to certain expenses, (c)
Sections 3.16 and 4.06 relating to finder's fees and broker's fees, (d) Section
7.01 and this Section 7.02, (e) Section 5.09 relating to publicity, (f) Section
7.03, and (f) Article 9. Nothing in this Section 7.02 shall be deemed to
release any party from any liability for any willful material breach by such
party of the terms and provisions of this Agreement or to impair the right of
any party to compel specific performance by any other party of its obligations
under this Agreement.
7.03. Amendments and Waivers.
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. By an instrument in writing
Purchaser, on the one hand, or Sellers, on the other hand, may waive compliance
by the other party with any term or provision of this Agreement that such other
party was or is obligated to comply with or perform.
Article 8. Indemnification
8.01. Indemnification by Sellers.
(a) From and after the Closing, each Seller, jointly and
severally, shall indemnify Purchaser and its affiliates and each of
their respective officers, directors, employees, stockholders, agents
and representatives against, and hold them harmless from, any loss,
liability, claim, damage or expense (including reasonable legal fees
and expenses)
===============================================================================
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("Losses"), as incurred (payable promptly upon receipt of written
request together with reasonable supporting documentation), to the
extent arising from:
(i) any breach of any representation or
warranty of any Seller that survives the Closing and is
contained in this Agreement or in any Ancillary Agreement;
(ii) any breach of any covenant of any Seller
contained in this Agreement or in any Ancillary Agreement
requiring performance after the Closing Date;
(iii) any Excluded Liability, including, without
limitation, any liability under any bulk sales or transfer
laws; any claim, action, suit or proceeding arising out of,
relating to or resulting from any transaction, event,
condition or occurrence involving Sellers, the business or
the Acquired Assets with respect to any period prior to the
Closing which does not constitute an Assumed Liability or
which, if successful, would give rise to an Excluded
Liability; and any action, suit, proceeding, investigation or
claim by any third-party against or affecting any Purchaser
Indemnitee, or the Acquired Assets which, if successful,
would give rise to or evidence an Excluded Liability;
(iv) any claim, action, suit or proceeding
alleging any violation of any Environmental Laws in respect
of any period prior to Closing;
(v) any Excluded Assets or businesses of
Sellers or their affiliates other than the Business;
(vi) any claim, action, suit or proceeding
brought by any affiliate, member or stockholder of Sellers
(other than claims properly brought by a Seller Indemnitee
pursuant to this Article 8); and
(vii) any fees, expenses or other payments
incurred or owed by any Seller to any brokers, financial
advisors or comparable other persons retained or employed by
it in connection with the transactions contemplated by this
Agreement.
(b) Sellers shall not be required to indemnify any
person, and shall not have any liability:
(i) under Section 8.01(a) unless the aggregate
of all Losses for which Sellers would, but for this clause
(i), be liable exceeds on a cumulative basis an amount equal
to $250,000, and then only to the extent of any such excess;
(ii) under Section 8.01(a) in excess of 30% of
the Purchase Price in aggregate;
(iii) under Section 8.01(a) for any breach if
Section 6.05 is applicable to such breach; and
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(iv) under Section 8.01(a) to the extent the
liability or obligation arises as a result of any action
taken or omitted to be taken by Purchaser or any of its
affiliates;
provided, however, the thresholds and limits set forth in clause (i) and (ii)
of this Section 8.01(b) shall not be applicable to Losses arising as a result
of fraud, any willful breach of any covenant by Sellers or any Excluded
Liabilities.
(c) Except as otherwise specifically provided in this
Agreement, Purchaser acknowledges that its sole and exclusive remedy
after the Closing with respect to any and all claims relating to this
Agreement, the Management Agreement, the Transition Services
Agreement, the Acquisition, and, the Business and its assets and
liabilities (other than claims of, or causes of action arising from,
fraud) shall be pursuant to the indemnification provisions set forth
in this Article 8. In furtherance of the foregoing, Purchaser hereby
waives, from and after the Closing, to the fullest extent permitted
under Applicable Law, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud) it may
have against Sellers arising under or based upon this Agreement, any
Ancillary Agreement, any document or certificate delivered in
connection herewith, any Applicable Law (including any relating to
environmental matters), common law or otherwise (except pursuant to
the indemnification provisions set forth in this Section 8.01).
(d) In the event that Sellers are obligated to indemnify
any person for a Loss hereunder, the Sellers shall have the option of
crediting the amount of such Loss against amounts payable by the
Purchaser and due to the Sellers under any or all of the Wholesale
Services Agreement, the Internet Colocation Service Agreement and the
Network Colocation Service Agreement over a period of time not to
exceed six months. Purchaser acknowledges that this provision does not
create any set-off right in favor of Purchaser.
8.02. Indemnification by Purchaser.
(a) From and after the Closing, Purchaser shall
indemnify Sellers, their respective affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any
Loss, as incurred (payable promptly upon written request), for or on
account of or arising from or in connection with or otherwise with
respect to (a) any breach of any representation or warranty of
Purchaser contained in this Agreement or in any Ancillary Agreement,
(b) any breach of any covenant of Purchaser contained in this
Agreement or in any Ancillary Agreement, (c) any Assumed Liability or
Acquired Asset, (d) any fees, expenses or other payments incurred or
owed by Purchaser to any brokers, financial advisors or other
comparable persons retained or employed by it in connection with the
transactions contemplated by this Agreement or by any Ancillary
Agreement, (e) claims, legal actions, or proceedings commenced after
the Closing Date which arise out of Purchaser's acts or omissions
after the Closing Date, (f) claims made in respect of bonds and
letters of credit issued as to which Sellers are an indemnitor with
respect to any contracts or bids
===============================================================================
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or proposals of Sellers or (g) claims arising out of or relating to
Purchaser's actions taken in interviewing the Covered Employees and
selecting and hiring the Retained Employees.
(b) Except as otherwise specifically provided in this
Agreement, Sellers acknowledge that their sole and exclusive remedy
after the Closing with respect to any and all claims relating to this
Agreement, the Management Agreement, the Transition Services
Agreement, the Acquisition, and the Business and its assets and
liabilities (other than claims of, or causes of action arising from,
fraud) shall be pursuant to the indemnification provisions set forth
in this Article 8. In furtherance of the foregoing, Sellers hereby
waive, from and after the Closing, to the fullest extent permitted
under Applicable Law, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud) it may
have against Purchaser arising under or based upon this Agreement, any
Ancillary Agreement, any Applicable Law (including any relating to
environmental matters), common law or otherwise (except pursuant to
the indemnification provisions set forth in this Section 8.01).
8.03. Calculation of Losses.
The amount of any Loss for which indemnification is provided under
this Article 8 shall be net of any amounts actually recovered or recoverable by
the indemnified party under insurance policies with respect to such Loss. Any
indemnification payment made pursuant to this Article 8 shall be treated as an
adjustment to the Purchase Price for U.S. Federal income tax purposes.
8.04. Termination of Indemnification.
The obligations to indemnify and hold harmless any party, (a) pursuant
to Section 8.01(a)(i), Section 8.01(a)(ii) or Section 8.02(a), shall terminate
when the applicable representation, warranty, covenant or agreement terminates
pursuant to Section 8.06 and (b) pursuant to the other clauses of Section 8.01
and Section 8.02 shall not terminate; provided, however, that such obligations
to indemnify and hold harmless shall not terminate with respect to any item as
to which the person to be indemnified shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice of such claim
(stating in reasonable detail the basis of such claim) pursuant to Section 8.05
to the party to be providing the indemnification.
8.05. Procedures.
(a) Third-Party Claim. In order for a party to be
entitled to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim made by any person
against the indemnified party (a "Third-Party Claim"), such
indemnified party must notify the indemnifying party in writing (and
in reasonable detail) of the Third-Party Claim within 30 business days
after receipt by such indemnified party of notice of the Third-Party
Claim; provided, however, that failure to give such notice shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of
such failure. Thereafter, the indemnified party shall deliver to the
indemnifying party, within five business days after
===============================================================================
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the indemnified party's receipt thereof, copies of all notices and
documents (including court papers) received by the indemnified party
relating to the Third-Party Claim; provided, however, that failure to
deliver such materials shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure.
(b) Assumption. If a Third-Party Claim is made against
an indemnified party, the indemnifying party shall be entitled to
participate in the defense thereof and, if it so elects in writing, to
assume the defense thereof with counsel selected by the indemnifying
party; provided, however, that such counsel is not reasonably objected
to by the indemnified party. Should the indemnifying party so elect to
assume the defense of a Third-Party Claim, the indemnifying party
shall not be liable to the indemnified party for any legal expenses
subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party, it being understood that
the indemnifying party shall control such defense. The indemnifying
party shall be liable for the reasonable fees and expenses of counsel
employed by the indemnified party for any period during which the
indemnifying party has not assumed the defense thereof (other than
during any period in which the indemnified party shall have failed to
give notice of the Third-Party Claim following the 30 business day
period set forth in clause (a) of this Section 8.05, as provided
above). If the named parties to a Third-Party Claim include both the
indemnifying party and the indemnified party and the indemnified party
have been advised by counsel that there is a conflict of interest
requiring the indemnified party to have separate counsel, the
indemnifying party shall be liable for all reasonable fees and
expenses of one such separate counsel for all indemnified parties in
connection with that Third-Party Claim. The indemnifying party shall
be liable for the reasonable fees and expenses of one local counsel,
if required. If the indemnifying party chooses to defend or prosecute
a Third-Party Claim, all the indemnified parties shall cooperate in
the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the indemnifying party's request) the provision to
the indemnifying party of records and information that are reasonably
relevant to such Third-Party Claim, and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the
indemnifying party assumes the defense of a Third-Party Claim, the
indemnified party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third-Party Claim without the
indemnifying party's prior written consent (which consent shall not be
unreasonably withheld). If the indemnifying party assumes the defense
of a Third-Party Claim, the indemnified party shall agree to any
settlement, compromise or discharge of a Third-Party Claim that the
indemnifying party may recommend and that by its terms obligates the
indemnifying party to pay the full amount of the liability in
connection with such Third-Party Claim, which releases the indemnified
party completely in connection with such Third-Party Claim.
===============================================================================
-43-
(c) Other Claims. In the event any indemnified party
should have a claim against any indemnifying party under Section 8.01
or Section 8.02 that does not involve a Third-Party Claim being
asserted against or sought to be collected from such indemnified
party, the indemnified party shall deliver notice of such claim with
reasonable promptness to the indemnifying party. Subject to Section
8.04 and Section 8.06, the failure by any indemnified party so to
notify the indemnifying party shall not relieve the indemnifying party
from any liability that it may have to such indemnified party under
Section 8.01 or Section 8.02, except to the extent that the
indemnifying party demonstrates that it has been actually prejudiced
by such failure. If the indemnifying party does not notify the
indemnified party within 30 calendar days following its receipt of
such notice that the indemnifying party disputes its liability to the
indemnified party under Section 8.01 or Section 8.02, such claim
specified by the indemnified party in such notice shall be
conclusively deemed a liability of the indemnifying party under
Section 8.01 or Section 8.02 and the indemnifying party shall pay the
amount of such liability to the indemnified party on demand or, in the
case of any notice in which the amount of the claim (or any portion
thereof) is estimated, on such later date when the amount of such
claim (or such portion thereof) becomes finally determined.
(d) Mitigation. Purchaser and Sellers shall cooperate
with each other with respect to resolving any claim or liability with
respect to which one party is obligated to indemnify the other party
hereunder, including by making commercially reasonable efforts to
mitigate or resolve any such claim or liability. In the event that
Purchaser or Sellers shall fail to make such commercially reasonable
efforts to mitigate or resolve any claim or liability, then
notwithstanding anything else to the contrary contained herein, the
other party shall not be required to indemnify any person for any
loss, liability, claim, damage or expense that could reasonably be
expected to have been avoided if Purchaser or Sellers, as the case may
be, had made such efforts.
8.06. Survival of Representations.
The representations, warranties, covenants and agreements contained in
this Agreement and in any document delivered in connection herewith (except for
the representations and warranties set forth in Sections 3.02, 3.05, 3.11,
3.15, 3.18 and 4.02 and any covenant specifying a termination date) shall
survive the Closing solely for purposes of Article 8 and shall terminate at the
close of business 12 months following the Closing Date. The representations and
warranties set forth in Sections 3.02, 3.05 and 4.02 shall remain in full force
and effect without regard to time. The representations and warranties set forth
in Section 3.11 shall remain in full force and effect until the expiration of
the applicable statute of limitations plus 90 days with respect to the matters
addressed in such sections. Any covenant or other agreement expressly
specifying a period for applicability thereof shall survive for such stated
period. The representations and warranties set forth in Section 3.18 shall
remain in full force and effect for five years following the Closing Date with
respect to the matters addressed in such section. Each party hereto shall be
entitled to rely upon the representations and warranties of the other party set
forth in this Agreement or any Ancillary Agreement. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of a claim made by
===============================================================================
-44-
such party in a writing received by the other party prior to the expiration of
the applicable survival period provided herein.
8.07. No Additional Representations.
Purchaser acknowledges that none of the Sellers or any other person
has made any representation or warranty, expressed or implied, as to the
accuracy or completeness of any information regarding the Business furnished or
made available to Purchaser and its representatives, except as expressly set
forth in this Agreement, the Ancillary Agreements or the Schedules, and none of
the Sellers or any other person shall have or be subject to any liability to
Purchaser or any other person resulting from the distribution to Purchaser, or
Purchaser's use of, any such information, including the Business Plan, and any
information, documents or material made available to Purchaser in any "data
rooms", management presentations or in any other form in expectation of the
transactions contemplated hereby.
Article 9. General Provisions
9.01. Assignment.
This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Purchaser or Sellers (including by operation of
law in connection with a merger or consolidation of Purchaser or Sellers)
without the prior written consent of the other parties hereto; provided that
Sellers or any of its affiliates may assign or transfer its rights and
obligations hereunder and under any Ancillary Agreement to which it is or is
specified to be a party to one or more wholly-owned subsidiaries without the
consent of any other party hereto or thereto. Any attempted assignment in
violation of this Section 9.01 shall be void.
9.02. No Third-Party Beneficiaries.
Except as provided in Article 8, this Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.
9.03. Attorney Fees.
A party in breach of this Agreement shall, on demand, indemnify and
hold harmless the other party for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled.
9.04. Notices.
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by
facsimile or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when received, as
follows:
===============================================================================
-45-
(i) if to Purchaser,
Cypress Communications, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention of Xxxxxxx X. XxXxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxx Xx., XX
Xxxxx 0000
Xxxxxxx, XX 00000
Attention of Xxxxx X. Xxxxxxxx, Xx. or
Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000 or 6961
Telephone: (000) 000-0000 or 3661
(ii) if to any Seller,
In care of WorldCom, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention of K. Xxxxxxx Xxxxxx, Xx.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
WorldCom, Inc.
0000 00xx Xx., X.X.
Xxxxxxxxxx, XX 00000
Attention of Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
9.05. Interpretation; Exhibits and Schedules; Certain Definitions.
(a) The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table of contents to this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Any matter set
forth in any provision, subprovision, section or subsection of any
Schedule shall, unless
===============================================================================
-46-
the context otherwise manifestly requires, be deemed set forth for all
purposes of the Schedules. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part of
this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein,
shall have the meaning as defined in this Agreement. When a reference
is made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". 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. The definitions
contained in this Agreement are applicable to the singular as well as
the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument
or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) For all purposes hereof:
"affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with,
such first person.
"business day" means any day that is not a Saturday,
a Sunday or other day on which commercial banks are required
or authorized by law to be closed in the City of New York.
"including" means including, without limitation.
"person" means any individual, firm, corporation,
partnership, limited liability company, trust, joint venture,
Governmental Entity or other entity.
"subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect
at least a majority of its board of directors or other
governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned
directly or indirectly by such first person or by another
subsidiary of such person.
9.06. Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
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9.07. Entire Agreement.
This Agreement, the Ancillary Agreements and the Confidentiality
Agreement, along with the Schedules and Exhibits thereto, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the Ancillary Agreements or the Confidentiality Agreement.
9.08. Severability.
If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect by
a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
9.09. Governing Law.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
9.10. Dispute Settlement.
Except for claims or disputes relating to Section 1.04, if a claim or
dispute between the parties arises in connection with this Agreement, the
parties will attempt in good faith to resolve through negotiation such claim or
dispute. If the parties cannot mutually resolve such matter within 20 business
days of the initial notice of such dispute, the parties agree that such claim
or dispute shall be settled by arbitration in Washington, DC, in accordance
with the then-current rules of the alternative dispute resolutions firm JAMS or
its successor, or if no successor exists then in accordance with the
then-current commercial arbitration rules of the American Arbitration
Association. The arbitrator(s) shall be experienced in conducting arbitrations
in the U.S. communications industry, selected mutually by Sellers, on the one
hand, and Purchaser, on the other hand. The cost of the arbitration, including
the fees and expenses of the arbitrator(s), shall be shared equally by the
parties unless the award provides otherwise. Judgment upon the award rendered
by the arbitrator(s) may be entered into any court of competent jurisdiction,
and shall be fully enforceable and only appealable in accordance with the
United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. The parties agree that,
except as required by applicable law or regulation, the existence, outcome, and
contents of any arbitration proceeding shall be kept confidential and that the
arbitrator(s) shall be required to adhere to the same obligation of
confidentiality.
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9.11. Waiver Of Jury Trial.
Each party hereby waives to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect to any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, any Ancillary Agreement or any transaction contemplated hereby or
thereby.
9.12. Specific Performance.
Each party acknowledges and agrees that the other parties hereto would
be damaged irreparably in the event any of the provisions of this Agreement are
not performed in accordance with their specific terms or otherwise are
breached. Accordingly, each party hereto agrees that, notwithstanding anything
to the contrary in Section 9.10, the other parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically (without posting bond) this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter, in addition to any other remedy to which they may be entitled, at law
or in equity.
9.13. Refunds.
Sellers shall be entitled to any refunds or credits of Taxes with
respect to the Acquired Assets for any taxable period (or portion thereof)
ending on or prior to the Closing Date. Purchaser shall be entitled to any
refunds or credits of Taxes with respect to the Acquired Assets for any taxable
period (or portion thereof) beginning after the Closing Date.
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-49-
IN WITNESS WHEREOF, Sellers and Purchaser have duly executed this
Agreement as of the date first written above.
INTERMEDIA COMMUNICATIONS, INC.,
By:
----------------------------------------
Name:
Title:
SHARED TECHNOLOGIES XXXXXXXXX, INC.,
By:
----------------------------------------
Name:
Title:
SHARED TECHNOLOGIES XXXXXXXXX TELECOM, INC.,
By:
----------------------------------------
Name:
Title:
MCI WORLDCOM COMMUNICATIONS, INC.
By:
----------------------------------------
Name:
Title:
WORLDCOM, INC.
By:
----------------------------------------
Name:
Title:
CYPRESS COMMUNICATIONS, INC.,
By:
----------------------------------------
Name:
Title:
