Execution Copy
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ASSET PURCHASE AGREEMENT
BY AND AMONG
PN ACQUISITION CORP.
COGENT COMMUNICATIONS GROUP, INC.
AND
PSINET INC.
PSI WEB INC.
TELALINK CORPORATION
PSINET EUROPE INC.
INTERNET NETWORK TECHNOLOGIES, INC.
PSINETWORKS COMPANY
TELECOM LICENSING, INC.
TELECOM LICENSING OF VIRGINIA, INC.
SPORTS ISP, INC.
UHF SPU, INC.
INTERNATIONAL DISTRIBUTION & CONSULTING, INC.
IOCOM INC.
PSINET TELECOM LIMITED
PSINET VENTURES LTD.
PSINET STRATEGIC INVESTMENTS, INC.
PSINET STRATEGIC SERVICES, INC.
PSINET NORTH AMERICA HOLDINGS INC.
PSINET IMEA HOLDINGS INC.
PSINET REALTY INC.
PSINET NEW YORK SHELF INC.
PSINET SECURITY SERVICES INC.
PSINET ASIA HOLDINGS INC.
PSINET SOUTH AMERICAN HOLDINGS INC.
R.B. INVESTMENTS DELAWARE, INC.
R.G. INVESTMENTS DELAWARE, INC.
PSINET MIAMI MANAGEMENT INC.
FEBRUARY 26, 2002
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS; INTERPRETATION............................................................................2
(a) Definitions...................................................................................2
(b) Interpretation; Construction..................................................................9
2. SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES.......................9
(a) Purchase and Sale of Acquired Assets..........................................................9
(b) Excluded Assets..............................................................................12
(c) Assumption of Liabilities....................................................................13
(d) Excluded Liabilities.........................................................................13
(e) Assumption of the Assumed Agreements.........................................................13
3. PURCHASE PRICE........................................................................................15
(a) Purchase Price...............................................................................15
(b) Adjustment for Prepaid Revenue...............................................................15
(c) Adjustment for Cure Amounts..................................................................16
(d) Allocation of Purchase Price.................................................................16
(e) Collections..................................................................................17
4. CLOSING; CLOSING DOCUMENTS............................................................................17
(a) Closing......................................................................................17
(b) Payment of Purchase Price....................................................................17
(c) Deliveries by Sellers........................................................................18
(d) Deliveries by Buyer..........................................................................18
5. REPRESENTATIONS AND WARRANTIES OF SELLERS.............................................................19
(a) Organization, Qualification and Authority....................................................19
(b) No Approvals; Conflict.......................................................................19
(c) Litigation...................................................................................20
(d) Financial Statements.........................................................................20
(e) Title to Acquired Assets.....................................................................20
(f) Schedules....................................................................................20
(g) Brokers' Fees................................................................................21
(h) Intellectual Property........................................................................21
(i) Legal Compliance.............................................................................21
(j) Customers....................................................................................21
(k) Disclaimer of other Representations and Warranties...........................................21
6. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................21
(a) Organization, Qualification and Authority....................................................21
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(b) No Approvals; Conflict.......................................................................22
(c) Litigation...................................................................................22
(d) Brokers' Fees................................................................................22
(e) Financial Capability.........................................................................22
7. EMPLOYEES.............................................................................................22
(a) Evaluation of Employees......................................................................22
(b) Identification of Employees..................................................................23
(c) Obligations of Sellers.......................................................................23
8. WARN ACT..............................................................................................23
9. COVENANTS.............................................................................................24
(a) General......................................................................................24
(b) Operation of Business........................................................................24
(c) Reasonable Access............................................................................24
(d) Notice of Developments.......................................................................24
(e) Post-Closing Access to Records...............................................................25
(f) Further Actions..............................................................................25
(g) Payment of Cure Amounts......................................................................26
(h) Non-Competition Agreement....................................................................26
(i) Transition Services..........................................................................26
(j) SEC Reporting................................................................................26
(k) Covenants, Representations and Warranties of Cogent..........................................27
(l) Right to Use Excluded Equipment and Disputed Equipment; Return...............................27
10. BANKRUPTCY COURT APPROVAL.............................................................................28
11. CONDITIONS TO CLOSING.................................................................................30
(a) Conditions to Obligation of Buyer............................................................30
(b) Conditions to Obligation of Sellers..........................................................31
12. TERMINATION...........................................................................................31
(a) Termination Events...........................................................................31
(b) Effect of Termination........................................................................32
(c) Waiver of Closing Condition..................................................................32
13. MISCELLANEOUS.........................................................................................33
(a) Survival of Representations and Warranties...................................................33
(b) Indemnification Limitation...................................................................33
(c) Transfer Taxes...............................................................................33
(d) PSINet as Agent of Sellers...................................................................34
(e) Expenses and Fees............................................................................34
(f) Waiver.......................................................................................34
(g) No Third-Party Beneficiaries.................................................................34
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(h) Entire Agreement; Amendment..................................................................35
(i) Counterparts.................................................................................35
(j) Bulk Sale or Transfer Laws...................................................................35
(k) No Impediment to Liquidation.................................................................35
(l) Notices......................................................................................35
(m) Governing Law; Jurisdiction..................................................................36
(n) Severability.................................................................................37
(o) Incorporation of Exhibits and Schedules......................................................37
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EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Form of Sale Procedures Order
Exhibit D Form of Sale Order
SCHEDULES
SCHEDULE A ASSUMABLE AGREEMENTS
1. Software Agreements
2. Circuit Agreements: Backbone/Hubbing /Peering and Dedicated
Circuits
3. POP Leases and Collocation Agreements
4. Other Assumable Agreements
SCHEDULE B ASSUMED AGREEMENTS
1. IRU Agreements
2. Real Property Leases
3. Software Agreements
4. Circuit Agreements: Backbone/Hubbing /Peering and Dedicated
Circuits
5. POP Leases and Collocation Agreements
6. Governmental Authority Licenses
7. Other Assumed Agreements
SCHEDULE C REJECTED AGREEMENTS
C-1 TRANSITION REJECTED AGREEMENTS
(a) IRU Agreements
(b) Real Property Leases
(c) Software Agreements
(d) Finance Purchases
(e) Circuit Agreements: Backbone/Hubbing /Peering and Dedicated
Circuits
(f) POP Leases and Collocation Agreements
(g) Other Transition Rejected Agreements
C-2 CLOSING REJECTED AGREEMENTS
(a) IRU Agreements
(b) Real Property Leases
(c) Software Agreements
(h) Finance Purchases
(d) Circuit Agreements: Backbone/Hubbing /Peering and Dedicated
Circuits
(e) POP Leases and Collocation Agreements
(f) Service Agreements
(g) Other Closing Rejected Agreements
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SCHEDULE D CUSTOMER CONTRACTS
1. Assumed Customer Contracts
2. Rejected Customer Contracts
SCHEDULE E SCHEDULE OF DISPUTED EQUIPMENT
SCHEDULE F SCHEDULE OF EXCLUDED NON-PHOENIX EQUIPMENT
SCHEDULE G SCHEDULE OF EXCLUDED PHOENIX EQUIPMENT
SCHEDULE H SCHEDULE OF INTELLECTUAL PROPERTY EXCEPTIONS
SCHEDULE I SCHEDULE OF EXCLUDED CLAIMS AND RIGHTS
SCHEDULE J SCHEDULE OF INTELLECTUAL PROPERTY
SCHEDULE K SCHEDULE OF TRANSITION SERVICES
1. Seller Transition Services
2. Buyer Transition Services
SCHEDULE L SCHEDULE OF NON-COMPETING SELLERS
SELLERS' REPRESENTATION AND WARRANTY DISCLOSURE SCHEDULES:
Schedule 5(a) Good Standing
Schedule 5(b) Approvals
Schedule 5(c) Litigation
Schedule 5(f) Schedules
Schedule 5(h) Intellectual Property
Schedule 5(j) Schedule of Customers
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into as of
February 26, 2002 (the "EXECUTION DATE"), by and among, PN ACQUISITION CORP., a
Delaware corporation and wholly-owned subsidiary of Cogent (as defined below)
("BUYER") and (solely for purposes of Section 9(k) hereof) COGENT COMMUNICATIONS
GROUP, INC., A DELAWARE CORPORATION ("COGENT"); and PSINET INC., a New York
corporation ("PSINET"), PSI WEB INC., a Delaware corporation, TELALINK
CORPORATION, a Tennessee corporation, PSINET EUROPE INC., a Delaware
corporation, INTERNET NETWORK TECHNOLOGIES, INC., a California corporation,
PSINETWORKS COMPANY, INC., a Delaware corporation, TELECOM LICENSING, INC., a
Delaware corporation, TELECOM LICENSING OF VIRGINIA, INC., a Virginia
corporation, SPORTS ISP, INC., a Delaware corporation, UHF SPU, INC., a Virginia
corporation, INTERNATIONAL DISTRIBUTION & CONSULTING, INC., a Pennsylvania
corporation, IOCOM INC., a Delaware corporation, PSINET TELECOM LIMITED, a
Delaware corporation, PSINET VENTURES LTD., a Delaware corporation, PSINET
STRATEGIC INVESTMENTS, INC., a Delaware corporation, PSINET STRATEGIC SERVICES,
INC., a Delaware corporation, PSINET NORTH AMERICA HOLDINGS INC., a Delaware
corporation, PSINET IMEA HOLDINGS INC., a Delaware corporation, PSINET REALTY
INC., a Delaware corporation, PSINET NEW YORK SHELF INC., a New York
corporation, PSINET SECURITY SERVICES INC., a Delaware corporation, PSINET ASIA
HOLDINGS INC., a Delaware corporation, PSINET SOUTH AMERICAN HOLDINGS INC., a
Delaware corporation, R.B. INVESTMENTS DELAWARE, INC., a Delaware corporation,
R.G. INVESTMENTS DELAWARE, INC., a Delaware corporation, and PSINET MIAMI
MANAGEMENT INC., a Delaware corporation (collectively with PSINet, "SELLERS").
W I T N E S S E T H:
WHEREAS, on May 31, 2001, Sellers filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (as defined below), Case No. 01-13213
(REG), jointly administered (the "BANKRUPTCY CASE"), before the United States
Bankruptcy Court for the Southern District of New York (the "COURT"), and
Sellers continue to operate their business as debtors-in-possession in the
Bankruptcy Case; and
WHEREAS, on January 14, 2002, PSINet and Cogent entered into that
certain Due Diligence Agreement (the "DUE DILIGENCE AGREEMENT") whereby PSINet
agreed to maintain its Network (as defined in the Due Diligence Agreement) in
operation for thirty (30) days in exchange for the payment by Cogent to PSINet
of a fee of Three Million and No/100 United States Dollars (US $3,000,000.00)
(the "FEE"), such Fee subject to refund upon the occurrence of certain
conditions set forth in Section 3 of the Due Diligence Agreement; and
WHEREAS, the Court approved the Due Diligence Agreement by order dated
January 15, 2002; and
WHEREAS, pursuant to Section 6 of the Due Diligence Agreement, PSINet
and Cogent agreed that, upon the request of Cogent, PSINet and Cogent would
negotiate in good faith and use all commercially reasonable efforts to enter
into an asset purchase agreement for the Network, as defined in the Due
Diligence Agreement; and
WHEREAS, Cogent has made such request to PSINet and formed Buyer for
such purposes, and Buyer desires to purchase and acquire from Sellers, and
Sellers desire to sell to Buyer, certain of the assets used or held for use in
connection with the Business in accordance with and subject to the terms and
conditions set forth in this Agreement; and
WHEREAS, the Acquired Assets will be sold pursuant to the terms and
conditions of this Agreement and an order of the Court approving such sale under
Sections 105, 363, 365 and 1146 of the United States Bankruptcy Code (11 U.S.C.
ss. 101 ET. SEQ.) (the "BANKRUPTCY CODE"), and such sale will include the
assumption and assignment of certain executory contracts and unexpired leases in
accordance with Section 365 of the Bankruptcy Code;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS; INTERPRETATION.
(a) DEFINITIONS. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the respective
meanings specified below:
"ACCOUNTS RECEIVABLE" means all rights to payment for goods sold,
licensed or leased or for services rendered to Customers in connection with the
Business, all sums of money or other proceeds due or becoming due thereon and
all instruments pertaining thereto;
"ACQUIRED ASSETS" has the meaning set forth in Section 2(a);
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended;
"AGREEMENT" has the meaning set forth in the preamble;
"APPORTIONED OBLIGATIONS" has the meaning set forth in
Section 13(c)(ii);
"ASSUMABLE AGREEMENTS" means the contracts, agreements, commitments,
understandings and instruments set forth on SCHEDULE A, SCHEDULE OF ASSUMABLE
AGREEMENTS;
"ASSUMED AGREEMENTS" means the contracts, agreements, commitments,
understandings and instruments set forth on SCHEDULE B, SCHEDULE OF ASSUMED
AGREEMENTS, which Schedule may be amended from time to time by Buyer in
accordance with Section 2(e)(i), PROVIDED, that any rejected contract,
agreement, commitment, understanding, instrument, assumed real property lease or
other unexpired real property lease or unexpired personal property lease set
forth on SCHEDULE C, SCHEDULE OF REJECTED AGREEMENTS as a "Rejected Agreement"
and any other agreement not expressly designated as either an "Assumed
Agreement" or "Rejected Agreement" by Buyer by the end of the Transition Period
shall not be considered an "Assumed Agreement" for purposes of this Agreement.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2(c);
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"ASSUMPTION AGREEMENT(S)" means that or those certain assignment and
assumption agreement(s) to be executed and delivered by Sellers and Buyer at
Closing, or at the time of the actual assignment and assumption of a particular
Assumed Agreement during or upon expiration of the Transition Period, as the
case may be, in substantially the form of EXHIBIT A attached hereto;
"ASSUMED CUSTOMER CONTRACTS" means the Customer Contracts assumed by
Buyer hereunder and listed as such on SCHEDULE D, SCHEDULE OF CUSTOMER
CONTRACTS;
"BANKRUPTCY CASE" has the meaning set forth in the recitals;
"BANKRUPTCY CODE" has the meaning set forth in the recitals;
"BOOKS AND RECORDS" has the meaning set forth in Section 2(a)(vi);
"BREAK-UP FEE" has the meaning set forth in Section 10(a)(i);
"BUSINESS" means Sellers' United States Internet access and web hosting
business, as generally described in the "Project Phoenix" business plan
previously presented to Cogent;
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York, are authorized or required by
Law to be closed;
"BUYER" has the meaning set forth in the preamble;
"BUYER'S CLOSING DOCUMENTS" has the meaning set forth in Section 4(d);
"CLAIM" means (i) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (ii)
a right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured;
"CLOSING" has the meaning set forth in Section 4(a);
"CLOSING DATE" has the meaning set forth in Section 4(a);
"CODE" means the Internal Revenue Code of 1986, any amendments thereto,
any successor statutes and any regulations promulgated thereunder;
"COGENT" has the meaning set forth in the preamble;
"COURT" has the meaning set forth in the recitals;
"CURE AMOUNTS" means those amounts owed by Sellers to the other parties
under the Assumed Agreements as determined by the Court or by agreement of the
parties thereto so that Buyer takes the Assumed Agreements free and clear of any
defaults and arrearages as of the
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Closing Date or, in the case of an agreement that becomes an Assumed Agreement
following the Closing pursuant to Section 2(c), as of the date such agreement is
actually assumed by Sellers and assigned to Buyer;
"CURE AMOUNTS ADJUSTMENT" means the amount payable by the Buyer to the
Sellers, or vice versa, pursuant to Section 3(c).
"CUSTOMERS" means Sellers' entire end user customer base with regard to
the Business;
"CUSTOMER CONTRACTS" means any and all contracts and agreements related
to the Customers listed on SCHEDULE D, SCHEDULE OF CUSTOMER CONTRACTS. The
SCHEDULE OF CUSTOMER CONTRACTS shall be comprised of two (2) lists: (i) Customer
contracts to be assumed by Buyer ("ASSUMED CUSTOMER CONTRACTS"), and (ii) the
Customer agreements that will not be assumed by Buyer ("REJECTED CUSTOMER
CONTRACTS");
"DISPUTED EQUIPMENT" means the assets set forth on SCHEDULE E, SCHEDULE
OF DISPUTED EQUIPMENT, PROVIDED THAT, upon the approval of any order by the
Court determining whether or not any such asset is subject to a Lien, such asset
shall cease to be a Disputed Asset and shall be deemed to constitute either (aa)
an Acquired Asset, in the event the Court determines that such asset is owned by
PSINet free and clear of any Lien, or (bb) Excluded Phoenix Equipment, in the
event the Court determines that such asset is subject to a Lien;
"DUE DILIGENCE AGREEMENT" has the meaning set forth in the recitals;
"EFFECTIVE TIME" has the meaning set forth in Section 4(a);
"EMPLOYEES" means all employees of Sellers engaged primarily in the
Business;
"ESCROW AGENT" has the meaning set forth in Section 4(b)(ii);
"ESCROW AGREEMENT" has the meaning set forth in Section 4(b)(ii);
"ESCROW AMOUNT" has the meaning set forth in Section 4(b)(ii);
"ESCROW DEPOSIT" has the meaning set forth in Section 4(b)(ii);
"EXCLUDED ASSETS" has the meaning set forth in Section 2(b);
"EXCLUDED NON-PHOENIX EQUIPMENT" means the assets set forth on SCHEDULE
F, SCHEDULE OF EXCLUDED NON-PHOENIX EQUIPMENT;
"EXCLUDED PHOENIX EQUIPMENT" means the assets set forth on SCHEDULE G,
SCHEDULE OF EXCLUDED PHOENIX EQUIPMENT;
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2(d);
"EXECUTION DATE" has the meaning set forth in the preamble;
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"FCC" means the U.S. Federal Communications Commission;
"FEE" has the meaning set forth in the recitals;
"FINANCIAL STATEMENTS" means and includes PSINet Inc. and its
Subsidiaries' audited consolidated financial statements for the fiscal year
ended December 31, 2000, the unaudited monthly operating reports for Sellers as
reported to the U.S. Bankruptcy Court for the months of June, July, August,
September, October, November and December 2001 and the monthly operating
statement aggregating the cost centers and other information for Project Phoenix
for the twelve months ended December 31, 2001 and the month ending January 31,
2002, copies of which have been provided to Buyer by Sellers;
"GAAP" means United States generally accepted accounting principles as
in effect from time to time;
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, executive,
court, commission, department, legislature, tribunal, instrumentality or
administration of the United States, a foreign country, or any state,
provincial, territorial, municipal, county, local or other governmental entity
in the United States or any foreign country, including without limitation the
FCC;
"GOVERNMENTAL PERMITS" means all licenses, permits, approvals,
consents, certificates, waivers, exemptions, orders, registrations, variances
and other authorizations from any and all Governmental Authorities, including
any state sales tax numbers, used or held for use in connection with the conduct
of the Business;
"INCREMENTAL BID AMOUNT" has the meaning set forth in Section 10(a)(i);
"INITIAL OVERBID AMOUNT REQUIREMENT" has the meaning set forth in
Section 10(a)(i);
"INTELLECTUAL PROPERTY" means all U.S., whether proprietary or pursuant
to license, as the case may be: (a) inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) registered and unregistered trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith; (c) registered and unregistered copyrightable
works and copyrights, and all applications, registrations, and renewals in
connection therewith; (d) mask works and all applications, registrations, and
renewals in connection therewith; (e) trade secrets and confidential business
information (including research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer lists, pricing and cost
information, and business and marketing plans and proposals to the extent that
any of the foregoing constitute trade secrets or confidential information used
in connection with the operation of the Business); (f) computer software
programs (including data and related documentation); (g) copyrighted software
owned by third parties and leased or licensed to any of Sellers; (h) Internet
Protocol ("IP") space and IP
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addresses allocated or otherwise made available to Sellers by ARIN or any other
third party; and (i) all source codes, object codes, executable codes, databases
and files referenced by the codes and all media containing the same and all
relevant explanations, documentation, flowcharts, logic diagrams and rules for
the source codes, in each case with respect to software that is owned by
Sellers; and (j) copies and tangible embodiments of any of the foregoing (in
whatever form or medium);
"INVENTORIES" means all inventories of raw materials, works in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies;
"KNOWLEDGE OF SELLERS" means the actual knowledge, after due inquiry,
of Xxxxxxxx X. Xxxxx, Executive Vice President and Chief Restructuring Officer;
Xxxx Xxxxx, President of U.S. Operations; Xxxxx Xxxxx, President and Chief
Executive Officer; Xxxxxxxx X. Xxxxx, Executive Vice President and General
Counsel; and Xxxx Xxxx, Senior Vice President and Corporate Controller; provided
that nothing in this Agreement shall require Xxxxxxxx X. Xxxxx to furnish any
information or perform any act that could in her reasonable discretion be deemed
to constitute or give rise to a breach of the attorney-client privilege;
"LAW" means any law, statute, regulation, rule, code, ordinance or
court order enacted, adopted, issued or promulgated by any Governmental
Authority;
"LIABILITY" or "LIABILITIES" means any and all material liabilities,
obligations, judgments, damages, charges, costs, debts and indebtedness of any
and every kind and nature whatsoever, absolute or contingent, liquidated or
unliquidated, in Law, equity or otherwise;
"LIEN" means, with respect to any asset or property of any character,
any mortgage, pledge, security interest, lien (including any mechanic's or
materialman's lien, tax lien, shipper or warehousemen lien or customs lien),
right of first refusal, option or other right to acquire, transfer for security,
charge, Claim, easement, conditional sale agreement, title retention agreement,
defect in title, or other encumbrance or adverse Claim of any nature pertaining
to or affecting such asset or property, whether voluntary or involuntary and
whether arising by Law, contract or otherwise, including without limitation, in
the case of any asset listed on SCHEDULE E, SCHEDULE OF DISPUTED EQUIPMENT, any
right or claim of any person other than Sellers upon or with respect to the
proceeds of sale thereof;
"MAINTENANCE FEE" has the meaning set forth in Section 10(a)(i);
"MATERIAL ADVERSE CHANGE" OR "MATERIAL ADVERSE EFFECT" means any change
or changes in, or effect on, the Business or the Acquired Assets that is
individually, or are in the aggregate, reasonably likely to be materially
adverse to the financial condition of the Business or the Acquired Assets, each
taken as a whole, taking into account Sellers' current status as filers under
Chapter 11 of the Bankruptcy Code, other than (i) any change or effect in any
way resulting from or arising in connection with this Agreement or any of the
transactions contemplated hereby (including any announcement with respect to
this Agreement or any of the transactions contemplated hereby); (ii) changes in
(A) economic, regulatory or political conditions generally or (B) general
business or economic conditions relating to any industries in which any of
Sellers participates, that is not specific to such Seller; (iii) any change in
or effect on the Acquired
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Assets or the Business that is cured (including by the payment of money) by the
applicable Seller or any of its Affiliates, (iv) any change in or effect on the
Acquired Assets or the Business resulting from any loss of Customers (including
any reduction in revenue therefrom), and (v) any change in or effect on the
Acquired Assets or the Business resulting from the resignations of any Employees
or the issuance of WARN Act notices pursuant to Section 8;
"MATERIAL ADVERSE EFFECT CERTIFICATE" has the meaning set forth in
Section 10(d);
"MATERIAL ADVERSE EFFECT WAIVER" has the meaning set forth in
Section 10(d);
"MOTION" has the meaning set forth in Section 10(a);
"NON-DISCLOSURE AGREEMENT" has the meaning set forth in Section 13(h);
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
Sellers and consistent with Sellers' past custom and practice (including with
respect to quantity and frequency), taking into account the commencement of the
Bankruptcy Case and the operation of Sellers as distressed companies following
the commencement of the Bankruptcy Case and including the occurrence of defaults
occasioned by the commencement of the Bankruptcy Case;
"PERMITTED ENCUMBRANCES" means (i) statutory liens for current Taxes or
assessments not yet due or delinquent, (ii) mechanics' carriers', workers',
repairers' and other similar liens arising or incurred in the Ordinary Course of
Business relating to obligations as to which there is no default on the part of
any of Sellers or the validity or amount of which is being contested in good
faith by appropriate proceedings, or pledges, deposits or other liens securing
the performance of bids, trade contracts, leases or statutory obligations
(including workers' compensation, unemployment insurance or other social
security legislation), (iii) zoning, entitlement, conservation restriction and
other land use and environmental regulations by Governmental Authorities which
do not materially interfere with the present use of the Acquired Assets, and (v)
such other liens, imperfections in or failure of title, charges, easements,
rights-of-way, encroachments, exceptions, restrictions and encumbrances which do
not materially interfere with the present use of the Acquired Assets and neither
secure indebtedness or the payment of the deferred purchase price of property,
nor individually or in the aggregate create a Material Adverse Effect;
"PERSON" means any individual, corporation, partnership,
proprietorship, joint venture, limited liability company, association,
joint-stock company, trust, unincorporated organization, Governmental Authority,
or other entity, organization or institution of any type whatsoever;
"PREPAID REVENUE ADJUSTMENT" has the meaning set forth in Section 3(b);
"PREPAID REVENUES" has the meaning set forth in Section 2(a)(ix);
"PSINET" has the meaning set forth in the preamble;
"PURCHASE PRICE" has the meaning set forth in Section 3(a);
"QUALIFYING BIDDER" has the meaning set forth in Section 10(a)(i);
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"RECONCILIATION STATEMENT" has the meaning set forth in
Section 3(b)(ii);
"REJECTED AGREEMENTS" means those contracts, agreements, commitments,
understandings and instruments designated by Buyer under this Agreement that
will not be assumed by Buyer under the Assumption Agreement(s), an initial list
of such rejected agreements, to be amended from time to time by Buyer pursuant
to Section 2(e)(i), being set forth on SCHEDULE C, SCHEDULE OF REJECTED
AGREEMENTS; and any other agreement not expressly designated as either an
"Assumed Agreement" or a "Rejected Agreement" by Buyer by the end of the
Transition Period shall be considered a "Rejected Agreement" for purposes of
this Agreement. Subject to the foregoing proviso, the SCHEDULE OF REJECTED
AGREEMENTS shall be comprised of two (2) lists: (i) a list of agreements to be
rejected at the Closing (the "CLOSING REJECTED AGREEMENTS") and (ii) a list of
agreements to be rejected no later than the expiration of the Transition Period
(the "TRANSITION REJECTED AGREEMENTS");
"REJECTED CUSTOMER CONTRACTS" means the Customer Contracts listed as
such on SCHEDULE D, SCHEDULE OF CUSTOMER CONTRACTS;
"SALE ORDER" has the meaning set forth in Section 10(a)(ii);
"SALE PROCEDURES ORDER" has the meaning set forth in Section 10(a)(i);
"SELLERS" has the meaning set forth in the preamble;
"SELLERS' CLOSING DOCUMENTS" has the meaning set forth in Section 4(c);
"SFAS 121" shall have the meaning set forth in Section 5(d);
"SUBSIDIARY" means any corporation, partnership or limited liability
company with respect to which a specified Person (or a Subsidiary thereof),
directly or indirectly, owns a majority of the common stock or other equity
interest, or has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors, managers or other governing body of such
corporation, partnership or limited liability company;
"TAX" means any federal, state, provincial, local, foreign or other
income, alternative, minimum, inheritance, accumulated earnings, personal
holding company, corporation, franchise, capital stock, net worth, capital,
profits, windfall profits, capital gain, gross receipts, value added, sales,
use, goods and services, excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, severance, environmental
(including taxes under Section 59A of the Code), real property, personal
property, ad valorem, intangibles, rent, occupancy, license, occupational,
employment, unemployment insurance, social security, disability, workers'
compensation, payroll, health care, withholding, estimated or other similar tax,
duty or other governmental charge or assessment or deficiencies thereof
(including all interest and penalties thereon and additions thereto whether
disputed or not);
"TAX RETURN" means any return, report, declaration, form, Claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof;
-8-
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 7(a);
"TRANSACTION DOCUMENTS" means, collectively, the Escrow Agreement,
Sellers' Closing Documents and Buyer's Closing Documents;
"TRANSITION PERIOD" means the period beginning on the Closing Date and
ending seventy five (75) days after the Closing Date; and
"WARN ACT" means the Worker Adjustment Retraining and Notification Act
of 1988, as amended from time to time, and the rules and regulations thereunder.
(b) INTERPRETATION; CONSTRUCTION.
The headings and captions of the various Sections of this Agreement
have been inserted solely for purposes of convenience, are not part of this
Agreement, and shall not be deemed in any manner to modify, explain, expand or
restrict any of the provisions of this Agreement. Unless stated to the contrary,
all references to Sections, paragraphs or clauses herein shall be to the
specified Section, paragraph or clause of this Agreement, and all references to
Exhibits and Schedules shall be to the specified Exhibits and Schedules attached
hereto. All Exhibits and Schedules attached hereto are made a part hereof. All
terms defined herein shall have the same meaning in the Exhibits and Schedules,
except as otherwise provided therein. All references in this Agreement to "this
Agreement" shall be deemed to include the Exhibits and Schedules attached
hereto. Words used herein, regardless of the number and gender used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context requires and, as
used herein, unless the context otherwise requires, the words "hereby,"
"hereof," "herein" and "hereunder," and words of similar import, shall refer to
this Agreement as a whole and not to any particular provision hereof. The term
"including" shall be deemed to mean "including, without limitation." References
to any Law shall be construed as a reference to the same as in effect on the
date of this Agreement. Unless otherwise expressly stated, all dollar amounts
stated herein are in United States currency.
2. SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS;
ASSUMPTION OF LIABILITIES.
(a) PURCHASE AND SALE OF ACQUIRED ASSETS. At the Closing,
pursuant to Sections 105, 363, 365 and 1146 of the Bankruptcy Code and on the
terms and subject to the conditions precedent of this Agreement, Sellers shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase,
accept and acquire from Sellers, free and clear of any and all Liens and Claims
(other than Permitted Encumbrances), all of Sellers' right, title and interest
in and to the following (such right, title and interest collectively, the
"ACQUIRED ASSETS"):
(i) Except as set forth in Section 2(b), all equipment
(but, in the case of Disputed Equipment, only to the extent set forth
in clause (ii) below), furniture, furnishings, automobiles, tools,
parts, Inventories and other personal property owned by Sellers and
located within the United States;
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(ii) Any asset listed on SCHEDULE E, SCHEDULE OF DISPUTED
EQUIPMENT, as to which the Court determines that Sellers own such
asset free any clear of Lien;
(iii) The Assumed Agreements, to the extent the same are
assignable under Section 365 of the Bankruptcy Code or to the extent
assignment is consented to by the counter party or counter parties to
such agreements, to the extent the same pertain to periods from and
after the Effective Time, or the time at which any such Assumed
Agreement is actually assumed by Buyer during the Transition Period,
as the case may be, including any right (A) to receive payment for
products sold or services rendered from and after any such Assumed
Agreement's actual assumption by Buyer; and (B) to assert Claims and
take other rightful actions in respect of breaches, defaults and other
violations of such contracts, arrangements, licenses, leases and other
agreements to the extent such violations occur from and after the time
at which any such Assumed Agreement is actually assumed by Buyer;
(iv) Any leasehold improvements related to an Assumed
Agreement;
(v) To the extent the same are assignable under
Section 365 of the Bankruptcy Code or assignment is otherwise
consented to, and except as set forth on SCHEDULE H, SCHEDULE OF
INTELLECTUAL PROPERTY EXCEPTIONS, all Intellectual Property used by
Sellers in connection with the Business, including without limitation
(but subject to licenses or other rights of use, written or unwritten,
granted in favor of certain third parties listed on the SCHEDULE OF
INTELLECTUAL PROPERTY EXCEPTIONS) the Intellectual Property set forth
on SCHEDULE J, SCHEDULE OF INTELLECTUAL PROPERTY, the U.S. rights to
the name "PSINet" and any derivatives thereof, and any associated
trademarks, tradenames, logos and tradedress and all related income,
royalties, damages and payments due or payable after the Effective
Time (including, without limitation, damages and payments for future
infringements or misappropriations thereof), any and all corresponding
rights that, now or hereafter, may be secured and all copies and
tangible embodiments of any such Intellectual Property; and, except to
the extent that it is employed solely in connection with Excluded
Assets, goodwill and contact telephone numbers associated therewith,
licenses and sublicenses granted and obtained with respect thereto,
remedies against infringement thereto and rights to protection of
interest therein under the laws of all jurisdictions, including any
Intellectual Property arising after the date hereof;
(vi) Originals or copies of all books, records, manuals
and other materials (in any form or medium) relating to the Acquired
Assets, Assumed Liabilities, Assumed Agreements and Transferred
Employees (subject to any necessary consents of such Transferred
Employees) (collectively, "BOOKS AND RECORDS"), including any
computerized data bases and files, and including advertising matter,
catalogues, price lists, correspondence, mailing lists, Customer
lists, distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and records,
operating records, Tax records, manufacturing and quality control
records and procedures, blueprints, research and development files and
records, data books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and
litigation files, operating, safety and maintenance manuals,
engineering design plans, blueprints and as-built plans,
specifications, procedures and similar items of
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Sellers including books of account, all Customer telephone numbers,
addresses and other contact information, lock box account numbers,
billing records and other Customer correspondence relating to the
Business, all regulatory filings and other Books and Records relating
to the rates and services provided by Sellers in connection with the
operation of the Business;
(vii) To the extent the same are assignable under
Section 365 of the Bankruptcy Code or to the extent assignment is
consented to by the grantor or issuer thereof, all manufacturer
warranties and similar rights in favor of Sellers with respect to
any Acquired Asset;
(viii) All Accounts Receivable, to the extent the same (aa)
are outstanding as of Closing, and (bb) are in excess of any
counterclaims or offsets, but without prejudice to Sellers' rights to
continue to collect Accounts Receivable in accordance with Section
3(e) prior to Closing for their own account or benefit; all guaranties
and security therefor, and all goods and services giving rise thereto;
the rights pertaining to such goods and services and all related
insurance and insurance proceeds with respect thereto;
(ix) All security deposits and prepayments, prepaid
expenses, deposits and advances related to the Acquired Assets,
whether or not reflected on Sellers' Books and Records and pertaining
to the period following the Closing Date;
(x) To the extent the same are assignable under
Section 365 of the Bankruptcy Code or to the extent assignment is
consented to by the third party or third parties to such agreements,
all confidentiality, noncompete or nondisclosure agreements executed
by vendors, suppliers or employees of Sellers or other third parties,
in each case, relating to the Business;
(xi) Except as set forth on SCHEDULE I, SCHEDULE OF
EXCLUDED CLAIMS AND RIGHTS and subject to Section 2(b)(iv), all of
the rights, Claims, causes of action, choses in action, rights of
recovery, rights of set off and rights of recoupment of any of Sellers
against a third party and relating to the Acquired Assets and the
Assumed Liabilities arising out of transactions occurring subsequent
to the Closing Date, net of any offsets or counterclaims (unless such
liabilities are assumed by Buyer) and PROVIDED THAT where such rights,
Claims or causes of action relate to both Assumed Liabilities (or
Acquired Assets) and Excluded Liabilities (or Sellers' assets that
are not Acquired Assets), Buyer and Sellers shall share such rights,
Claims or causes of action in the same proportion as their respective
Liabilities (or assets, as applicable) bear to the total liability
relating to those rights, Claims or causes of action (or the expected
value thereof, as applicable); and
(xii) To the extent the same are assignable under
Section 365 of the Bankruptcy Code or to the extent assignment is
consented to by the counterparty, all Customer lockbox accounts (but
excluding any cash deposited therein prior to 5 PM on the Closing
Date, which cash shall be the property of Sellers).
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(b) EXCLUDED ASSETS. Notwithstanding anything to the
contrary contained in Section 2(a) or any other provision of this Agreement, the
Acquired Assets shall not include the following properties and assets of Sellers
(collectively, the "EXCLUDED ASSETS"):
(i) The Excluded Phoenix Equipment, the Excluded
Non-Phoenix Equipment and the Disputed Equipment, except, in the
case of the Disputed Equipment, to the extent set forth in
Section 2(a)(ii);
(ii) All cash and cash equivalents, all bank, custody and
investment accounts (other than accounts described in Section
2(a)(xi)), and all marketable securities;
(iii) All deposits, withholdings, prepayments, credits and
refunds of Sellers (i) related to periods prior to Closing; (ii)
related to any Rejected Agreement; or (iii) not related to the
Business;
(iv) All Claims, causes of action, choses in action,
rights of recovery, rights of set off and rights of recoupment of
any Seller (x) relating to the Excluded Assets, or (y) that have
accrued, arisen or been asserted against any Person or that relate
to any period before the Effective Time, in each case which do not
relate primarily to the Acquired Assets (including fiduciary duty
claims, tort claims and Claims against current and former employees
of Sellers that accrued prior to Closing), all rights and powers of
a trustee and debtor-in-possession against any Person whatsoever,
including all avoidance powers granted to Seller under the Bankruptcy
Code and all causes of action and remedies granted pursuant to
Sections 502, 510, 541, 544, 545, 547 through 551 and 553 of the
Bankruptcy Code;
(v) All rights of Sellers in, to and under any Rejected
Agreements;
(vi) All items set forth on SCHEDULE H, SCHEDULE OF
INTELLECTUAL PROPERTY EXCEPTIONS;
(vii) All assets held by or for the account of Sellers
pursuant to the terms of any deferred compensation, incentive
compensation, welfare or other employee benefit plan, or the assets of
any related trust described in Section 401 of the Code;
(viii) All rights that accrue to Sellers under this
Agreement or the Transaction Documents;
(ix) Rights to any Tax refunds of any of Sellers, whether
such refund is received as a payment or as a credit against future
Taxes;
(x) PSINet's "dark" hosting centers located in Atlanta,
Boston, Dallas and Miami and all equipment and other assets situated
therein;
(xi) PSINet's corporate headquarters and the furniture,
fixtures, telephones, desktop computers and similar equipment located
therein;
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(xii) The office fixtures, furniture and computer equipment
in use in Sellers' warehouses in Delaware and Virginia;
(xiii) All stadium naming rights and related agreements;
(xiv) All of Sellers' accounts, accounts receivable, rights
to payment and rebates with respect to Xxxxx.xxx Global Ltd. and its
Affiliates and with respect to PSINet Consulting Solutions Holdings,
Inc.;
(xv) All intercompany accounts and intercompany
receivables owed to Sellers;
(xvi) All venture capital investments;
(xvii) Any items specifically excluded pursuant to
SCHEDULE K, SCHEDULE OF TRANSITION SERVICES; and
(xviii) Any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, phantom stock,
leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability, workmen's
compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind,
whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended.
(c) ASSUMPTION OF LIABILITIES. After the Closing Date,
Buyer shall execute and deliver to Sellers one or more Assumption Agreement(s)
pursuant to which Buyer shall assume and agree to discharge solely the
Liabilities of Sellers under the Assumed Agreements accruing from and after the
actual assumption of each such Assumed Agreement and all liabilities and
obligations related to the Acquired Assets arising from any actions or omissions
of Buyer occurring after the Closing Date (collectively, the "ASSUMED
LIABILITIES"). On the Closing Date, Buyer shall execute and deliver to Sellers
one or more Assumption Agreement(s) for those Assumed Agreements actually
assumed by Buyer on the Closing Date.
(d) EXCLUDED LIABILITIES. Notwithstanding the provisions
of Section 2(c) or any other provision hereof or any Schedule or Exhibit hereto
and regardless of any disclosure to Buyer, other than the Assumed Liabilities
or as expressly provided herein, Buyer shall not assume or be obligated or be
responsible to pay, perform, satisfy or otherwise discharge any Liabilities of
Sellers whatsoever (collectively, the "EXCLUDED LIABILITIES").
(e) ASSUMPTION OF THE ASSUMED AGREEMENTS. The Sale Order
shall provide for the assumption by the applicable Sellers and assignment to
Buyer of the Assumed Agreements, effective upon the Closing or at the time of
the actual assumption of any such Assumed Agreement during the Transition
Period, as the case may be, on the following terms and conditions:
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(i) ASSUMPTION AND ASSIGNMENT. At the time of the actual
assumption of each such Assumed Agreements (either on the Closing Date
or during or upon termination of the Transition Period, as the case
may be), the applicable Sellers shall assume, and such Sellers shall
assign to Buyer, the Assumed Agreements. Each Assumed Agreement shall
be identified by its date and by the name of the other party or
parties to it. SCHEDULE A, SCHEDULE OF ASSUMABLE AGREEMENTS, SCHEDULE
B, SCHEDULE OF ASSUMED AGREEMENTS, and SCHEDULE C, SCHEDULE OF
REJECTED AGREEMENTS shall be subject to amendment as follows:
(A) Until the Court enters the Sale Order, Buyer,
in its sole discretion, by delivery of written notice to
Sellers, may amend the SCHEDULE OF ASSUMED AGREEMENTS, the
SCHEDULE OF ASSUMABLE AGREEMENTS and the SCHEDULE OF
REJECTED AGREEMENTS at any time and from time to time,
provided however that Buyer shall not, without Sellers'
consent, add to the SCHEDULE OF ASSUMED AGREEMENTS or the
SCHEDULE OF ASSUMABLE AGREEMENTS any agreement that, as of
the Execution Date, is a Rejected Agreement.
(B) After the Sale Order is entered by the Court
through the end of the Transition Period, Buyer, in its sole
discretion, by delivery of written notice to Sellers, may
(1) add any Assumable Agreement to the SCHEDULE OF ASSUMED
AGREEMENTS; and (2) add any Assumable Agreement to the
SCHEDULE OF REJECTED AGREEMENTS, and Buyer shall not acquire
any rights or assume any liabilities with respect to any
agreement so added to the SCHEDULE OF REJECTED AGREEMENTS.
Any Assumable Agreement not designated by Buyer as either an
Assumed Agreement or a Rejected Agreement by the end of the
Transition Period shall be deemed a Rejected Agreement, and
Buyer shall not acquire any rights or assume any Liabilities
with respect thereto.
(ii) REJECTION OF AGREEMENTS. Sellers may reject as of the
Closing Date any Closing Rejected Agreement listed as such in Part 1
of SCHEDULE C. After the expiration of the Transition Period, Sellers
may reject any Rejected Agreement; PROVIDED, HOWEVER, that Sellers may
reject any Transition Rejected Agreement listed as such in Part 2 of
SCHEDULE C prior to the expiration of the Transition Period if (but
only if) Sellers have obtained the written consent of Buyer or Buyer
has failed to pay any amount required pursuant to Section 2(e)(iv)
within five (5) Business Days of receiving notice thereof, except to
the extent such payment is the subject of a BONA FIDE dispute.
(iii) PAYMENT OF CURE AMOUNTS. As between the parties
hereto, Sellers shall be responsible for the payment of any and all
Cure Amounts related to the Assumed Agreements scheduled as such as
of the Execution Date, and any additional Cure Amounts related to any
Assumable Agreements that are designated by Buyer as Assumed
Agreements after the Execution Date; PROVIDED HOWEVER that if the
aggregate Cure Amounts for all agreements as determined by the Court
in connection with the Sale Order exceeds Three Million Dollars (US
$3,000,000), Sellers shall notify Buyer in writing to such effect and,
if Buyer does not elect, within three (3) Business Days after receipt
of such written notice either (x) to move Assumable Agreements or
Assumed Agreements to the Schedule of Rejected Agreements in order to
reduce the aggregate Cure Amounts to
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less than Three Million Dollars (US $3,000,000) or (y) to agree
irrevocably to reimburse Sellers for the amount by which the aggregate
Cure Amounts exceed Three Million Dollars (US $3,000,000) at the time
such amounts become due, Sellers may, within six (6) Business Days
following the date upon which Sellers provide written notice to Buyer,
terminate this Agreement. In the event the aggregate Cure Amounts for
the Assumed Agreements (including any Assumable Agreements that are,
subsequent to the Execution Date, designated as Assumed Agreements) is
less than Three Million Dollars ($3,000,000), Sellers shall pay to
Buyer, as an adjustment to the Purchase Price, an amount corresponding
to ten percent (10%) of such shortfall, in accordance with Sections
3(a) and 3(c).
(iv) MAINTENANCE COSTS. Buyer shall timely pay or, at
Sellers' option, reimburse Sellers for any and all amounts directly
attributable to the Assumable Agreements and Transition Rejected
Agreements, for services or products supplied during the period (A)
commencing (aa) in the case of Assumable Agreements, on the date of
entry of the Sale Procedures Order and (bb) in the case of the
Transition Rejected Agreements, at the Effective Time, and (B)
terminating on the earliest of (aa) the date the Buyer informs Sellers
that it does not wish to add such Assumable Agreement to SCHEDULE B,
SCHEDULE OF ASSUMED AGREEMENTS, (bb) the date that the Court enters an
order approving a sale of any of the Acquired Assets to another party,
(cc) the expiration of the Transition Period, and (dd) the date of
termination of this Agreement. The foregoing notwithstanding, but
without prejudice to any obligation to assume excess Cure Amounts that
may be undertaken by Buyer pursuant to Section 2(e)(iii), Buyer shall
not be required to pay or reimburse Sellers for any amounts that are
in arrears or delinquent as of the date of entry of the Sale
Procedures Order, in the case of the Assumable Agreements, or the
Closing Date, in the case of the Transition Rejected Agreements.
3. PURCHASE PRICE.
(a) PURCHASE PRICE. The purchase price for the Acquired
Assets shall be Seven Million Dollars (US $7,000,000.00), reduced (but not by
more than Five Hundred Thousand Dollars (US $500,000)) by the amount of all
Customer deposits and advance payments relating to services to be provided
after the Effective Time ("Prepaid Revenues") outstanding as of the Closing
Date, as further provided in paragraph (b) (the "PREPAID REVENUE ADJUSTMENT")
and reduced or increased, as the case may be, by the Cure Amounts Adjustment,
as provided in paragraph (c).
(b) ADJUSTMENT FOR PREPAID REVENUE.
(i) For purposes of determining the amount payable at
Closing, the amount of the Prepaid Revenue Adjustment shall be
estimated to be Five Hundred Thousand Dollars (US $500,000).
(ii) Not less than seventy five (75) days following
Closing, Seller may, but shall not be required to, furnish Buyer a
reconciliation statement (the "RECONCILIATION STATEMENT") showing the
actual amounts of Prepaid Revenues as of the Closing Date. The
Reconciliation Statement shall contain or be accompanied by such
calculations,
-15-
breakdowns or supporting worksheets and documentation as may be
reasonably necessary to permit Buyer to verify the accuracy of the
data and calculations contained therein. In the event that the amount
of Prepaid Revenues outstanding as of the Closing Date, as shown in
the Reconciliation Statement, is less than Five Hundred Thousand
Dollars (US $500,000), Buyer shall promptly (and in any event not
later than ten (10) Business Days following receipt by Buyer of the
Reconciliation Statement) pay Sellers the amount of the difference, by
wire transfer of immediately available funds to such bank account or
accounts as Sellers shall in writing designate, provided that no such
payment shall be required if the amount of the difference is less than
Ten Thousand Dollars (U.S. $10,000). In the event Buyer disputes any
item on the Reconciliation Statement, or reasonably requires
additional information in order to determine the accuracy of the
amounts set forth therein, Buyer shall so inform Sellers in writing
not less than ten (10) Business Days following receipt of the
Reconciliation Statement and shall remit any amount not in dispute. In
such event, the parties shall use their commercially reasonable
efforts to resolve such dispute promptly, failing which either party
may apply to the Bankruptcy Court for relief. In the event Buyer does
not object to the Reconciliation Statement or request additional
information with respect thereto within the period specified above,
the Reconciliation Statement shall be deemed to be final and binding
on the parties. In the event Sellers do not furnish a Reconciliation
Statement to Buyer, the estimated adjustment made at Closing shall be
final and binding.
(c) ADJUSTMENT FOR CURE AMOUNTS. Promptly following the
assumption of the final Assumed Agreement (including any Assumable Agreement
subsequently designated as an Assumed Agreement pursuant to Section 2(e)(i)),
Sellers shall furnish to Buyer a statement of the aggregate Cure Amounts for
such agreements. In the event the aggregate amount is less then Three Million
Dollars, Sellers shall refund to Buyer, as an adjustment to the Purchase Price,
an amount corresponding to ten percent (10%) of such difference. In the event
the aggregate Cure Amounts exceed Three Million Dollars (US $3,000,000) and
Buyer has agreed, pursuant to Section 2(e)(iii), to assume Cure Amounts in
excess of Three Million Dollars (US $3,000,000), Buyer shall promptly pay to
Sellers, as an adjustment to the Purchase Price, the amount of such excess (less
any amounts previously paid by Buyer to Sellers in respect of excess Cure
Amounts).
(d) ALLOCATION OF PURCHASE PRICE. Immediately following
the termination of the Transition Period, Buyer and Sellers shall use all
commercially reasonable efforts to agree as to the allocation of the Purchase
Price pursuant to Section 1060 of the Code and the rule and regulations
thereunder. Buyer and Sellers agree to use such allocation in filing all
required forms under Section 1060 of the Code and all other Tax Returns, and
Buyer and Sellers further agree that they shall not take any position
inconsistent with such allocation upon any examination of any such Tax Return,
in any refund claim or in any Tax litigation. Upon the request of the other,
Buyer and Sellers agree to provide the other information reasonably necessary to
complete Form 8594. Not later than thirty (30) days prior to the filing of their
respective Forms 8594 relating to this transaction, each party shall deliver to
the other party a copy of its Form 8594. In the event of a dispute with respect
to any part of the allocation of the Purchase Price, Buyer and Sellers shall
attempt to reconcile their differences and any resolution by them as to any
disputed allocation shall be final, binding and conclusive on the parties. If
Buyer and Sellers are unable to
-16-
reach a resolution on such differences within thirty (30) days after the date
any such dispute arise, Buyer and Sellers shall submit the disputed allocations
for determination and resolution to the Court, which shall be instructed to
determine and report to the parties, upon such disputed allocations, and such
report shall be final, binding and conclusive on the parties hereto with respect
to the disputed allocations. The parties stipulate and agree that the amounts
allocated to any of the Acquired Assets pursuant to this paragraph shall not be
deemed dispositive of the value of such assets for any other purpose.
(e) COLLECTIONS. Prior to the Effective Time, Sellers
shall be entitled to all revenue associated with the provision of services
under the Customer Contracts and (subject to Section 2(e)(iv)) shall be
responsible for all costs incurred in connection therewith. From and after
the Effective Time, Buyer shall be entitled to all revenue associated with
the Customer Contracts and shall be responsible for all costs incurred in
connection therewith. The foregoing notwithstanding, (i) Buyer shall be
entitled to all Accounts Receivable outstanding as of the Effective Time;
(ii) Sellers shall be entitled to collect and retain for their own account,
prior to the Effective Time, Accounts Receivable for services provided by
Sellers prior to the Effective Time (such collections by Sellers prior to the
Closing Date to be no more zealous than in the Ordinary Course of Business),
and (iii) subject to Section 3(b), Sellers shall be entitled to retain for
their own account any funds collected by Sellers prior to the Effective Time
in the Ordinary Course of Business, for services to be provided by Buyer
after the Closing Date. Sellers shall use their commercially reasonable
efforts to assist Buyer in connection with the collection of Accounts
Receivable outstanding as of Closing, shall hold in trust for Buyer any
amounts received by Sellers after 5:00 p.m. on the Closing Date that are due
to Buyer hereunder and shall promptly remit any such amounts to Buyer. Should
Sellers fail to remit to Buyer any funds collected by Sellers and owed to
Buyer pursuant to this Section 3(e), the parties shall cause the Escrow Agent
to remit to Buyer the amount of any funds so due to Buyer hereunder. Further,
each party shall have the right to inspect the Books and Records of the other
party to verify to compliance with the terms and provisions of this
Section 3(e).
4. CLOSING; CLOSING DOCUMENTS.
(a) CLOSING. The closing ("CLOSING") of the transactions
contemplated hereby shall take place as soon as practicable following the date
of entry by the Court of the Sale Order in the Bankruptcy Case (provided that
the Sale Order is not subject to any stay) (such date, the "CLOSING DATE"), at
the offices of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, XX 00000 (or such other place as may be mutually agreeable to the
parties). Closing shall be effective as of 12:01 a.m. on the Business Day
immediately following the Closing Date (the "EFFECTIVE TIME").
(b) PAYMENT OF PURCHASE PRICE. At the Closing, Buyer
shall deliver, or cause to be delivered:
(i) to PSINet by wire transfer in immediately available
funds to an account designated in writing by PSINet to Buyer at least
one (1) Business Day prior to the Closing, the estimated Purchase Price
(determined in accordance with Section 3(b)) MINUS the Escrow Deposit,
and
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(ii) an escrow deposit of US $350,000.00 (the "ESCROW
DEPOSIT") into the care of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, as
escrow agent (the "ESCROW AGENT"), pursuant to the terms and
conditions of this Section 4(b) and of an escrow agreement in the
form attached hereto as EXHIBIT B (the "ESCROW Agreement") to be
executed by Buyer, Seller and the Escrow Agent. Upon termination of
the Transition Period the balance of the Escrow Deposit and interest
accrued thereon (the "ESCROW AMOUNT") shall be released to Sellers at
the end of the Transition Period, PROVIDED THAT, in the event Buyer
has asserted a good faith claim to any portion of the Escrow Fund and
such claim is unresolved at the end of the Transition Period, the
disputed amount (but only such amount) shall be retained by the
Escrow Agent until the resolution of such dispute.
(c) DELIVERIES BY SELLERS. Subject to the fulfillment or
waiver of the conditions set forth in Section 11(b), at Closing, Sellers shall
deliver, or cause to be delivered, to Buyer the following (the "SELLERS' CLOSING
DOCUMENTS"):
(i) One or more duly executed Xxxx(s) of Sale for the
assets to be conveyed to Buyer;
(ii) Duly executed counterpart(s) of one or more
Assumption Agreement(s) for Assumed Agreements to be assigned and
assumed by Buyer on the Closing Date;
(iii) A certified copy of the Sale Order;
(iv) Title certificates for all vehicles owned by Sellers
and conveyed to Buyer hereunder;
(v) The most recent monthly operating statement
aggregating the cost centers and other information for Project
Phoenix;
(vi) Such other endorsements, assignments and instruments
as are contemplated by this Agreement or as are reasonably deemed
necessary by Buyer or Buyer's legal counsel to consummate the sale
transactions (as contemplated in the Sale Order), duly executed by the
applicable Sellers, as appropriate; and
(vii) Duly executed Non-Competition Agreements from each
Seller listed on SCHEDULE L, SCHEDULE OF NON-COMPETING SELLERS.
(d) DELIVERIES BY BUYER. Subject to the fulfillment or
waiver of the conditions set forth in Section 11(a), at Closing, Buyer shall
deliver to Sellers the following (the "BUYER'S CLOSING DOCUMENTS"):
(i) Duly executed counterpart(s) to one or more
Assumption Agreement(s) for Assumed Agreements to be assigned to and
assumed by Buyer on the Closing Date; and
(ii) Such other endorsements, assignments and instruments
as are contemplated by this Agreement or as are reasonably deemed
necessary by Sellers or
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Sellers' legal counsel to consummate the sale transactions (as
contemplated in the Sale Order), duly executed by Buyer, as
appropriate; and
5. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Subject in each case to the applicable provisions of the Bankruptcy
Code, Sellers represent and warrant to Buyer that the statements contained in
this Section 5 are true, correct and complete as of the Execution Date and will
be true, correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the Execution Date throughout this
Section 5 except to the extent that any such representation and warranty speaks
as of a particular date), except as set forth in the disclosure schedules
accompanying this Agreement (the "DISCLOSURE SCHEDULES"). The Disclosure
Schedules shall be arranged in accordance with and correspond to the lettered
and numbered paragraphs contained in this Section 5.
(a) ORGANIZATION, QUALIFICATION AND AUTHORITY. Except
as set forth on SCHEDULE 5(c), each of Sellers is a corporation or other
entity duly organized, validly existing and in good standing under the laws
of its respective jurisdiction. Sellers have full corporate or other entity
power and authority (i) to own or lease and to operate their properties and
assets (including the Acquired Assets) and to carry on the Business as it is
now being conducted and (ii) to enter into this Agreement and each of the
other Transaction Documents to be entered into by Sellers and in the event
the Sale Order is entered by the Court, to carry out their obligations
hereunder and thereunder. The execution, delivery and performance by Sellers
of this Agreement and each other Transaction Document to be entered into by
Sellers, and the consummation by Sellers of the transactions contemplated
hereby and thereby, have been approved by all necessary corporate or other
entity action on the part of Sellers. This Agreement and each of the
Transaction Documents to which it is a party shall have been duly executed
and delivered by Sellers and in the event the Sale Order is entered by the
Court, shall constitute the legal, valid and binding agreement of Sellers,
enforceable against each of Sellers in accordance with their terms, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.
(b) NO APPROVALS; CONFLICT. Except for (and subject to
obtaining) the approval of the Court and any other approvals of Governmental
Authorities identified in SCHEDULE 5(b), and except for (and subject to
obtaining) any consents required in connection with the assignment to Buyer of
the Assumed Agreements (which consents are identified in SCHEDULE 5(b)), the
execution, delivery and performance by Sellers of this Agreement and the
Transaction Documents, the fulfillment of and compliance with the respective
terms and provisions hereof and thereof by Sellers, and the consummation of the
transactions contemplated hereby and thereby by Sellers do not and will not (i)
require any consent, authorization or approval of or any filing or registration
with any Governmental Authority or other Person; (ii) result in a breach of any
material obligation; (iii) constitute a default or an event creating rights of
acceleration, termination or cancellation or a loss of material rights; or (iv)
result in the creation or imposition of any Lien upon any of the Acquired
Assets, in each case under any provision of (A) the certificates of
incorporation or by-laws of any of Sellers; or (B) any material contract, lease
or agreement to which any of Sellers is a party and except where such breach,
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default or failure to obtain such consent, would not, individually or in the
aggregate have a Material Adverse Effect.
(c) LITIGATION. Except as set forth on SCHEDULE 5(c) and
except for the Bankruptcy Case, to the Knowledge of Sellers, as of the date
hereof there is no litigation, action, lawsuit, Claim, audit, review,
examination, inquiry, proceeding or investigation pending or, to the Knowledge
of Sellers, threatened against Sellers which individually or in the aggregate
would have a Material Adverse Effect: (i) that relates to any of the Acquired
Assets or the Business, (ii) in which any of Sellers is the plaintiff or
claimant, which in any such case, is material to any of the Acquired Assets or
the Business; or (iii) that questions the legality or propriety of the
transactions contemplated by this Agreement or any of the other Transaction
Documents. Except as set forth in SCHEDULE 5(c), to the Knowledge of Sellers, as
of the date hereof there is no outstanding order, writ, injunction, or decree of
any Governmental Authority against or affecting any of the Acquired Assets or
the Business that individually or in the aggregate would have a Material Adverse
Effect.
(d) FINANCIAL STATEMENTS. Sellers have made available to
Buyer the Financial Statements. Except as noted below, the Financial Statements
(including applicable notes thereto) (i) were derived from PSINet Inc.'s
consolidated historical records; and (ii) have been prepared in accordance with
GAAP, applied on a consistent basis throughout the period covered thereby. The
unaudited monthly operating reports filed with the U.S. Bankruptcy Court for the
Sellers for the months of June, July, August, September, October, November and
December 2001 and the monthly operating statement aggregating the cost centers
and other information for Project Phoenix for the twelve months ended December
31, 2001 and the month ending January 31, 2002, have not been prepared in
accordance with GAAP because Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("SFAS 121") has not been applied. Sellers expect that, upon
application of SFAS 121, the carrying amount of its long-lived assets will be
written down by a material amount; however, at this time it is not possible to
determine such amount. In the opinion of Sellers, all other accounting
principles applicable to the financial statements and all adjustments necessary
for a fair presentation of such information have been made consistently applied
throughout the periods discussed above.
(e) TITLE TO ACQUIRED ASSETS. At the Closing Buyer shall
obtain good and marketable title to, or a valid license or leasehold interest
in, all of the Acquired Assets, free and clear of all Liens (other than
Permitted Encumbrances).
(f) SCHEDULES. SCHEDULE A, SCHEDULE OF ASSUMABLE
AGREEMENTS, SCHEDULE B, SCHEDULE OF ASSUMED AGREEMENTS and SCHEDULE C,
SCHEDULE OF REJECTED AGREEMENTS, collectively list all of the agreements of
Sellers (other than Customer Contracts) that relate principally to the Business,
except for such omissions as are not, individually or in the aggregate,
material in nature or value to the Business and to the Buyer or the Acquired
Assets. Except as set forth on SCHEDULE 5(f), Sellers have not assigned,
transferred, pledged or otherwise conveyed their rights under any of such
agreements. Except as set forth on SCHEDULE 5(f), no Seller is delinquent
with respect to any post-petition payments due under any Assumable Agreement
or any Assumed Agreement, except for such delinquencies as are not,
individually or in the aggregate, material.
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(g) BROKERS' FEES. Neither Sellers nor any of their
Subsidiaries have any Liability to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated. The payment of any such fees
or commissions shall be the sole and exclusive responsibility of Sellers. Buyer
shall not be liable to any broker or agent retained by any of Sellers in any way
and Sellers shall jointly and severally indemnify and hold Buyer harmless from
any attempts by such brokers or agents to collect any such fees or commissions
from Buyer, notwithstanding any limitation of liability set forth elsewhere in
this Agreement.
(h) INTELLECTUAL PROPERTY. Except as set forth in
SCHEDULE 5(h), Sellers own or are licensed to use the Intellectual Property
used in connection with the Business. To the Knowledge of Sellers, as of the
date hereof, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of any of Sellers or their Subsidiaries.
(i) LEGAL COMPLIANCE. To the Knowledge of Sellers,
Sellers are in compliance with all applicable laws (including rules,
regulations, codes, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local and foreign governments (and all
agencies thereof), except where such non compliance would not, individually or
in the aggregate have a Material Adverse Effect.
(j) CUSTOMERS. SCHEDULE 5(j) lists the Customers. Said
list is complete and correct (except for such errors or omissions as are not
individually or in the aggregate material) as of the date that is five (5)
Business Days prior to the Execution Date.
(k) DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
Except as expressly set forth in this Section 5, Sellers make no representation
or warranty, express or implied, at law or in equity, in respect of any of their
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, adequacy or sufficiency of the Acquired
Assets to undertake the Business, and any such other representations or
warranties are hereby expressly disclaimed. Buyer hereby acknowledges and agrees
that Buyer is purchasing the Acquired Assets on an "as-is, where-is" basis.
Without limiting the generality of the foregoing, Sellers make no representation
or warranty regarding any assets other than the Acquired Assets, and none shall
be implied at law or in equity.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to each of Sellers that the
statements contained in this Section 6 are true, correct and complete as of the
Execution Date and will be true, correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
Execution Date throughout this Section 6).
(a) ORGANIZATION, QUALIFICATION AND AUTHORITY. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has full corporate power and authority to enter
into this Agreement and each of the other Transaction Documents to be entered
into by Buyer and to carry out its obligations hereunder
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and thereunder. The execution, delivery and performance by Buyer of this
Agreement and of each other Transaction Document to be entered into by Buyer,
and the consummation by Buyer of the transactions contemplated hereby and
thereby, have been approved by all necessary corporate action on the part of
Buyer. This Agreement and each of the Transaction Documents shall have been duly
executed and delivered by Buyer and shall constitute the legal, valid and
binding agreement of Buyer, enforceable against it in accordance with their
terms except that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally or general principles of equity.
(b) NO APPROVALS; CONFLICT. Except for the approval of
the Court, the execution, delivery and performance by Buyer of this Agreement
and the other Transaction Documents, the fulfillment of and compliance with the
respective terms and provisions hereof and thereof by Buyer and the consummation
of the transactions contemplated hereby and thereby by Buyer do not and will not
(i) require any consent, authorization or approval of or any filing or
registration with any Governmental Authority or other Person; (ii) result in a
breach of any material obligation; or (iii) as of the Closing Date, constitute a
default or an event creating rights of acceleration, termination or cancellation
or a loss of material rights, in each case under any provision of (A) the
certificates of incorporation or by-laws of Buyer; or (B) any material contract,
lease or agreement to which Buyer is a party.
(c) LITIGATION. There is no litigation, action, lawsuit,
Claim, audit, review, examination, inquiry, proceeding or investigation
involving Buyer pending or, to Buyer's knowledge, threatened which questions the
legality or propriety of the transactions contemplated by this Agreement or any
of the other Transaction Documents.
(d) BROKERS' FEES. Buyer has no Liability to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement or for which Sellers could become
liable or obligated. The payment of any such fees or commissions shall be the
sole and exclusive responsibility of Buyer. Sellers shall not be liable to any
broker or agent retained by Buyer in any way and Buyer shall indemnify and
hold Sellers harmless from any attempts by such brokers or agents to collect any
such fees or commissions from Sellers.
(e) FINANCIAL CAPABILITY. The Buyer has the financial
resources and capabilities necessary to consummate the transactions contemplated
hereby, by the Transaction Documents and under the Assumed Agreements, and
perform its obligations hereunder and thereunder, including payment in full of
the Purchase Price and amounts due under the Assumed Agreements and the return
of the Disputed Equipment and the Excluded Phoenix Equipment.
7. EMPLOYEES.
(a) EVALUATION OF EMPLOYEES. As soon as reasonably
practical after the Execution Date, Sellers shall provide to Buyer a list
setting forth the name, title and base salary of each Employee. Commencing with
the approval of the Sale Procedures Order and until the end of the Transition
Period, Buyer may evaluate Employees for purposes of identifying those Employees
to whom Buyer would like to make an offer of employment and Buyer may at any
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time, at its sole discretion, offer (contingent upon the Closing) employment to
any Employee (Employees who accept such offers of employment from Buyer are
referred to herein as "TRANSFERRED EMPLOYEES"). Such employment by Buyer shall
be based on terms and conditions acceptable to both Buyer and the Transferred
Employees, and the Transferred Employees shall, on the date of employment by
Buyer, be eligible to participate in the benefit plans available to employees of
Buyer generally. For avoidance of doubt, the parties hereto stipulate that
Sellers shall not be required to compel or instruct any Employee to be
interviewed by Buyer, nor shall Seller be required to disclose to Buyer any
information contained in any personnel files, unless the Employee specifically
consents in writing to such disclosure.
(b) IDENTIFICATION OF EMPLOYEES. To the extent Buyer has,
prior to the entry of the Sale Order, identified Employees to whom it is
considering making an offer of employment, Buyer shall provide to Sellers prior
to the entry of the Sale Order the names of such Employees and the general terms
of such proposed offers. After the entry of the Sale Order until the end of the
Transition Period, Buyer shall notify Sellers as soon as commercially
practicable of (i) the decision by Buyer to offer employment to any other
Employees and the identities of such Employees, and (ii) the decision by Buyer
to opt not to offer employment to any Employees previously identified.
(c) OBLIGATIONS OF SELLERS. Nothing contained in this
Agreement shall obligate Buyer to employ any persons who are or who have been
Employees. Each Seller shall retain the sole responsibility for all matters
relating to the maintenance of personnel and payroll records with respect to its
Employees, the withholding and payment of federal, state and local income and
payroll taxes, the payment of workers' compensation and unemployment
compensation insurance, salaries, wages and pension, welfare and other fringe
benefits, including any severance and/or pay-out of accrued vacation pay that
may be triggered as a result of any termination of employment (including all
severance and vacation pay Liabilities incurred on or prior to the Closing Date)
and the conduct of all other matters relating to labor relations. Each of
Sellers shall retain Liability for compliance with all applicable labor and
employment Laws relating to its Employees, and each Seller shall indemnify Buyer
(and its successors, assigns, officers, directors and employees), without regard
to the indemnification limitation set forth in Section 13(b), for any Liability
or legal or other expenses that Buyer incurs from any legal action alleging
noncompliance with such Laws by Seller. Sellers shall retain the Liability for
any workers' compensation or similar workers' protection Claims with respect to
any such Employee, whether incurred prior to, on or after the Closing Date.
8. WARN ACT.
Sellers shall be solely responsible for issuing any required WARN Act
notice with respect to any Employee and may issue such notices at any time and
at their absolute discretion to any Employee, regardless of whether such
Employee has been identified to Sellers pursuant to Section 7(b) for possible
employment by Buyer. Sellers shall provide copies or summaries of such WARN Act
notices to Buyer promptly after issuance.
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9. COVENANTS.
(a) GENERAL. Subject to Section 10 and the procedures set
forth in the Sale Procedures Order, each of the Parties shall use its
commercially reasonable efforts to take all actions and do all things reasonably
necessary, proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement, including satisfaction, but not
waiver, of the closing conditions set forth in Section 11, below.
(b) OPERATION OF BUSINESS.
(i) Except as otherwise contemplated by this Agreement
or the Project Phoenix business plan, and except as required by the
Court, during the period commencing on the Execution Date and ending
at the end of the Transition Period, Sellers shall not engage in any
practice, take any action, or enter into any transaction outside the
Ordinary Course of Business, except that subject to Section 10 and the
other provisions of this Agreement, Sellers may take actions to sell
their assets other than the Acquired Assets or to assign their
Liabilities other than Assumed Liabilities. Sellers shall (A) operate
the Business in the Ordinary Course of Business; (B) other than as
expressly contemplated by this Agreement or otherwise permitted in
writing by Buyer, preserve the Business; (C) endeavor to preserve the
goodwill and relationships with customers, suppliers and others having
business dealings with the Business, in each case, taking into account
each of Sellers' status as debtors under Chapter 11 of the Bankruptcy
Code; and (D) subject to the treatment of Cure Amounts pursuant to
Section 2(e)(iii) pay, on a current basis, any Liabilities pursuant to
any agreements that are not Rejected Agreements.
(ii) Prior to Closing, without the prior written consent
of Buyer, none of Sellers shall (A) terminate, extend or otherwise
amend any licenses with the FCC; (B) other than Permitted
Encumbrances, create, incur, assume or suffer to exist any Lien upon
the Acquired Assets; (C) cause to increase or accelerate any of the
Assumed Liabilities; or (D) sell, lease (as lessor), transfer or
otherwise dispose of, any of the Acquired Assets, in each case, other
than in the Ordinary Course of Business.
(c) REASONABLE ACCESS. Until the end of the Transition
Period, Sellers shall use their commercially reasonable efforts to permit
representatives of Buyer to have access, at all reasonable times and in a
manner so as not to interfere with the normal business operations of Sellers,
to all premises, properties, Books and Records, contracts, and documents of
or pertaining to Sellers related to the Business, the Acquired Assets and the
Assumed Liabilities. Buyer's representatives shall likewise have access to
personnel of Sellers, but in accordance with guidelines to be agreed between
the parties, and provided that Sellers shall have the right to designate one
or more representatives to participate in any meetings (but not job
interviews) between Buyer's representatives and Sellers' personnel.
(d) NOTICE OF DEVELOPMENTS. At any time prior to Closing,
Sellers shall provide Buyer prompt notice of (i) material developments relating
to the Business or the Acquired Assets, including any development causing a
material breach of any of their representations and warranties hereunder; (ii)
the occurrence, or failure to occur, of any event which occurrence or failure to
occur would cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
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hereof to the Closing Date; (iii) any material failure on any of their parts to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; and (iv) the occurrence, to the knowledge of
Sellers, of (A) any litigation or administrative proceeding pending or
threatened against any of Sellers which could, if adversely determined, have a
Material Adverse Effect and (B) any material damage or destruction of any of the
Acquired Assets. In addition, Sellers shall, prior to Closing, supplement the
Disclosure Schedules hereto with respect to any matter coming to the Knowledge
of Sellers that, if existing or known as of the date hereof, would have been
required to have been set forth or described in the Disclosure Schedules. Any
such supplemental disclosure shall not be deemed to cure any breach of any
representation or warranty made herein as of the date hereof, nor shall it be
deemed to have been disclosed to Buyer as of the date hereof for the purposes of
determining whether or not Buyer has any further obligation to consummate the
transactions contemplated hereby PROVIDED, HOWEVER, that the decision of either
party thereafter to consummate the transactions contemplated hereby shall be
deemed a waiver of such misrepresentation, to the extent of the facts disclosed
in such written notice.
(e) POST-CLOSING ACCESS TO RECORDS. For a period of
three (3) years after the Closing Date, each party and its representatives
shall have reasonable access to all Books and Records relating to the
Business or the Acquired Assets, including, without limitation, all
information pertaining to the Assumed Agreements, all Transferred Employee
records or other personnel and medical records required by law, legal process
or subpoena, in the possession of the other party to the extent that such
access may reasonably be required by such party in connection with the
Assumed Liabilities or the Excluded Liabilities, or other matters relating to
or affected by the operation of the Business and the Acquired Assets. Such
access shall be afforded by the party in possession of such Books and Records
upon receipt of reasonable advance notice and during normal business hours;
PROVIDED, HOWEVER, that (i) any such access shall be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
any party or its Affiliates, (ii) no party shall be required to take any
action which would constitute a waiver of the attorney-client privilege, and
(iii) no party need supply the other party with any information which such
party is under a legal obligation not to supply. The party exercising this
right of access shall be solely responsible for any costs or expenses
incurred by it pursuant to this Section 9(e). If the party in possession of
such Books and Records shall desire to dispose of any such Books and Records
upon or prior to the expiration of such period, such party shall, prior to
such disposition, give the other party a reasonable opportunity at such other
party's expense, to segregate and remove such Books and Records as such other
party may select.
(f) FURTHER ACTIONS.
(i) Sellers and Buyer agree to use commercially
reasonable efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions
contemplated hereby by the Closing Date.
(ii) Sellers and Buyer will, as promptly as practicable,
file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by any
of them pursuant to applicable Law in connection with this Agreement
and the Transaction Documents, the sale and transfer of the Acquired
Assets
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pursuant to this Agreement and the consummation of the other
transactions contemplated thereby.
(iii) Sellers and Buyer, as promptly as practicable, will
use all commercially reasonable efforts to obtain, or cause to be
obtained, all material consents (including consents to assignment of
Governmental Permits and any consents required under any Sellers'
Agreement) necessary to be obtained by any of them in order to
consummate the sale and transfer of the Acquired Assets pursuant to
this Agreement.
(iv) Sellers and Buyer will, and will cause each of their
Affiliates to, coordinate and cooperate with each of the other parties
in exchanging such information and supplying such assistance as may be
reasonably requested by Sellers or Buyer in connection with the filings
and other actions contemplated by this Section 9(f).
(v) At all times prior to the Closing, each party shall
promptly notify the other in writing of any fact, condition, event or
occurrence that will or may likely result in the failure of any of the
conditions contained in Section 10 to be satisfied, promptly upon
becoming aware of the same.
(g) PAYMENT OF CURE AMOUNTS. Sellers shall pay any Cure
Amounts and cure any defaults under the Assumed Agreements prior to the Closing
Date.
(h) NON-COMPETITION AGREEMENT. Each of Sellers listed on
SCHEDULE L, SCHEDULE OF NON-COMPETING SELLERS shall enter into a Non-Competition
Agreement with Buyer substantially in the form attached hereto as EXHIBIT C for
all areas within the United States.
(i) TRANSITION SERVICES. Sellers and Buyer shall perform
the services specified in SCHEDULE K, SCHEDULE OF TRANSITION SERVICES.
(j) SEC REPORTING. Sellers shall use commercially
reasonable efforts, during the Transition Period, to assist Buyer and Cogent
to compile any financial statements of Sellers or the Business that Buyer or
Cogent, in the opinion of their advisers, are required to file with the U.S.
Securities and Exchange Commission ("SEC"), PROVIDED THAT (i) Buyer and Cogent
shall use their commercially reasonable efforts to secure, as promptly as
practicable following Closing, a determination from the SEC that the filing of
audited accounts is not required or, if a filing is required, limiting to the
maximum extent possible the scope and extent of such filing requirement, (ii)
Sellers shall, as promptly as practicable following Closing, identify and
make available to Buyer and Cogent any source documents, compilations,
reports and statements in their possession that Cogent may reasonably require
for purposes of compiling accounts, but Sellers shall not be required to
generate or compile any financial report or statement not generated or
compiled by them in the ordinary course, (iii) Sellers hereby expressly
disclaim any representation or warranty that the source documents and other
records in their possession are adequate for the compilation of auditable
accounts, (iv) the parties acknowledge that Sellers shall have no
responsibility to Buyer or Cogent in the event that the compilation of
auditable accounts is not possible notwithstanding Sellers' commercially
reasonable efforts in accordance with this paragraph, (v) no director,
officer or employee of any Seller shall be required to sign any statement or
make any representation with respect to any accounts if he or she believes,
in his or
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her absolute discretion, taking into account their interpretation of any legal,
ethical or professional rules and standards, that he or she cannot do so, and
(vi) Sellers shall not be required to retain or hire any employee or incur any
other expense solely or principally for purposes of fulfilling their obligations
under this paragraph. In the event that Buyer and Cogent are unable to obtain a
determination from the SEC that the filing of accounts is not required, Sellers
shall upon request reimburse Buyer for fifty percent (50%) of the documented
external audit fees incurred by Buyer and Cogent in connection with the auditing
of any accounts compiled pursuant to this paragraph, up to a maximum
reimbursement of One Hundred Thousand Dollars (US $100,000).
(k) COVENANTS, REPRESENTATIONS AND WARRANTIES OF COGENT.
Cogent shall (i) contribute to Buyer, from time to time, such amounts as Buyer
may require in order to perform its obligations under this Agreement, the
Transaction Documents and the Assumed Agreements, and (ii) cause Buyer, solely
in its capacity as a stockholder thereof, to perform timely and fully its
obligations hereunder and thereunder, including without limitation the return of
the Excluded Phoenix Equipment and Disputed Equipment pursuant to Section 9(l).
Cogent shall be responsible for the timely return by Buyer of the Excluded
Phoenix Equipment and the Disputed Equipment. The covenants set forth in this
Section 9(k) shall survive until the later of (x) the date upon which all
obligations of Buyer hereunder have been fully performed, and (y) such date as
Sellers no longer have any actual or contingent liability under any Assumed
Agreements. Cogent represents and warrants to each of the Sellers that: (i)
Cogent has full corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder, (ii) the execution, delivery and
performance by Cogent of this Agreement and the consummation by Cogent of the
transactions contemplated hereby, have been approved by all necessary corporate
action on the part of Cogent, (iii) this Agreement shall have been duly executed
and delivered by Cogent and shall constitute the legal, valid and binding
agreement of Cogent, enforceable against it in accordance with its terms except
that such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity, (iv) the delivery
and performance by Cogent of this Agreement, the fulfillment of and compliance
with the respective terms and provisions hereof by Cogent and the consummation
of the transactions contemplated hereby by Cogent do not and will not (A)
require any consent, authorization or approval of or any filing or registration
with any Governmental Authority or other Person; (B) result in a breach of any
material obligation; or (C) constitute a default or an event creating rights of
acceleration, termination or cancellation or a loss of material rights, in each
case under any provision of (aa) the certificates of incorporation or by-laws of
Cogent; or (bb) any material contract, lease or agreement to which Cogent is a
party.
(l) RIGHT TO USE EXCLUDED EQUIPMENT AND DISPUTED
EQUIPMENT; RETURN. In consideration of the sum of Ten Dollars (US $10.00) and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Sellers hereby lease to Buyer, for the
Transition Period, the Excluded Phoenix Equipment and the Disputed Equipment.
Following expiration of the Transition Period Buyer shall further have an
exclusive right to use any item of equipment listed on the SCHEDULE E,
SCHEDULE OF DISPUTED EQUIPMENT until the date upon which the Court approves
an order determining whether Sellers own such item of equipment free any
clear of Lien. The foregoing notwithstanding, in the event the Court
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(prior to or following Closing) approves an order for the provision of adequate
protection with respect to any item of Disputed Equipment, Buyer shall within
three (3) Business Days after receiving notice from Sellers, elect (such
election to take effect on the date that is the later of (aa) sixty (60) days
following the date of such order or (bb) the day following expiration of the
Transition Period), either (xx) to assume all adequate protection obligations as
of such date, or (yy) decommission and return such items of equipment in
accordance with the following sentence. At or prior to the expiration of the
Transition Period (or with respect to the Disputed Equipment such later date as
may apply pursuant to this paragraph), Buyer shall decommission the Excluded
Phoenix Equipment and Disputed Equipment and tag and return the same or any
PSINet equipment that may be substituted for the Excluded Equipment, in as good
condition as at the date of possession, ordinary wear and tear excepted, to
Sellers at Sellers' warehouse in Delaware. Sellers shall use their commercially
reasonable efforts to remove any Excluded Non-Phoenix Equipment from any
facilities to be acquired by Buyer hereunder prior to the Closing Date, provided
that if any Excluded Non-Phoenix Equipment is not removed from such facilities
prior to Closing, Buyer shall afford Sellers reasonable access to such
facilities subsequent to Closing for such purposes.
10. BANKRUPTCY COURT APPROVAL
(a) As soon as practicable, but in any event within
three (3) Business Days after the Execution Date, Sellers shall file and serve
a motion (the "MOTION") pursuant to Bankruptcy Code Sections 105, 363, 365 and
1146, as applicable, in a form reasonably approved by counsel for Buyer:
(i) seeking entry of an order, on an expedited basis,
substantially in the form attached hereto as EXHIBIT D (the "SALE
PROCEDURES ORDER"), among other things (A) approving the payment of
(aa) a break-up fee of Three Hundred Thousand Dollars (US $300,000)
(the "BREAK-UP FEE") (which amount shall be deemed inclusive of
Buyer's expenses), (bb) the Fee under the Due Diligence Agreement and
(cc) the amount of any maintenance costs with respect to Assumable
Agreements and Transition Rejected Agreements actually paid by Buyer
pursuant to Section 2(e)(iv) of this Agreement (the "MAINTENANCE
FEE"), as administrative priority claims under Bankruptcy Code
Sections 503(b) and 507(a); (B) approving the procedures for the sale
of the Acquired Assets, including the requirement of an overbid amount
of US $3,900,000.00 over the Purchase Price for bidders other than
Buyer (the "INITIAL OVERBID AMOUNT REQUIREMENT"), an incremental bid
amount of US $100,000.00 (the "INCREMENTAL BID AMOUNT"), provided that
for the limited purpose of determining the value of any incremental
bid submitted by Buyer, Sellers shall credit the amount of the Fee,
the Break-Up Fee and the Maintenance Fee towards the satisfaction of
this requirement; (C) setting dates for the auction sale of the
Acquired Assets no later than March 25, 2002 (the "AUCTION"), and the
hearing on the sale of the Acquired Assets no later than March 27,
2002; (D) providing that for any Person other than Buyer to be
considered a qualifying bidder ("QUALIFYING BIDDER"), such Person
shall provide sufficient evidence to Sellers of its financial ability
to consummate a closing of the transactions contemplated hereby and
such Person's bid shall (1) at a minimum, meet the Initial Overbid
Amount Requirement, (2) provide, as determined by the Debtor in
consultation with its advisors and the Official Committee of Unsecured
Creditors, as good as or better terms as contained in this Agreement,
(3) be accompanied by a good faith deposit of Xxx Xxxxxxx xxx Xx/000
Xxxxxx Xxxxxx Dollars (US $1,000,000.00) in cash or certified or
cashier's check payable to Sellers, and (4) be in the form of
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this Agreement with any proposed changes to be redlined; and (E)
providing that if Buyer is not the successful bidder at the Auction
and Sellers fail to consummate a closing with a Qualifying Bidder
thereafter, Sellers shall give Buyer written notice ten (10) Business
Days prior to decommissioning the Business or any material portion of
Sellers' network in order to allow Buyer and Sellers to negotiate a
purchase price and consummate a closing of the sale of the Acquired
Assets and the Business.
(ii) seeking entry of an order substantially in the form
attached hereto as EXHIBIT E (the "SALE ORDER"), which, among other
things, (A) authorizes Seller to sell, transfer and assign the
Acquired Assets to Buyer pursuant to this Agreement and Bankruptcy
Code Sections 105, 363, 365 and 1146, as applicable, free and clear of
all Liens and Claims, except for Permitted Encumbrances (B) determines
that Buyer is a good faith purchaser under Section 363(m) of the
Bankruptcy Code and that Buyer has acted in good faith, is a bona fide
purchaser for value, the Purchase Price is fair and reasonable; (C)
provides that the Assumed Agreements are assigned to Buyer pursuant to
11 U.S.C. Section 365, that Buyer assumes no Liabilities for Claims or
Cure Amounts under the Assumed Agreements except as specifically
provided herein and that all Assumed Agreements are enforceable
against the nondebtor parties; (D) provides that Assumable Agreements
designated Assumed Agreements during the Transition Period shall be
assumed and assigned by Sellers to Buyer under 11 U.S.C. ss. 365, that
Buyer assumes no Liabilities for Claims or Cure Amounts under the
Assumed Agreements except as specifically provided herein, and that
all such Assumed Agreements are enforceable against the nondebtor
parties; (E) provides that Sellers assume any obligation to cure prior
to the entry of the Sale Order the Assumed Agreements listed on the
SCHEDULE OF ASSUMED AGREEMENTS as of the date of the entry of the Sale
Order; (F) provides that Section 1146(c) applies to the sale; (G)
provides that Buyer is not a successor in interest to Sellers or
Sellers' business, and (H) provides that the ten (10) day periods
provided for in Federal Rules of Bankruptcy Procedure 6004(g) and
6006(d) are waived.
(b) Sellers confirm that their negotiation of this
Agreement with Buyer is critical to their obtaining the highest and best
price for their assets, and that without Buyer's commitment of substantial
time and expense to the process, Sellers would have to employ a less orderly
process for the sale of their assets and therefore risk attracting lower
prices. Sellers further confirm that the payment of the Fee pursuant to the
Due Diligence Agreement was critical to their maintaining the Business
operational so that any sale of their assets would be feasible. Sellers
acknowledge that Buyer would not have invested the time and incurred the
expense of negotiating and documenting the transaction if it were not
entitled to the Break-Up Fee and reimbursement of the Fee pursuant to the Due
Diligence Agreement.
(c) Sellers shall seek to obtain hearings on the Motion
promptly upon the expiration of the applicable notice periods, and shall take
all reasonably necessary actions in connection therewith. Sellers shall provide
due and sufficient notice of the hearing to be held in the Court regarding the
Motions to: (i) each person or entity that has filed a notice of appearance, or
that has otherwise filed a written request to receive copies of pleadings, in
the Bankruptcy Case, (ii) the SEC, (iii) the Internal Revenue Service, (iv) the
Office of the United States Trustee, (v) the taxing authorities of each state
where Acquired Assets are located and any appropriate political subdivisions of
any thereof, (vi) counsel to the Official Committee of Unsecured Creditors in
the Bankruptcy Case, (vii) Buyer and its counsel, (viii) the employment
-29-
agencies of each state where any Employees are employed, (ix) each party (other
than Sellers) to each Assumed Agreement, (x) each person or entity that has
asserted a Lien on, or in, any of the Acquired Assets, and (xi) Buyer and any
other person or entity that Buyer reasonably requests in writing be served.
(d) If an Auction is conducted pursuant to this
Section 10, Buyer shall furnish to Sellers on the date and prior to the
commencement of the Auction, a certificate (a "MATERIAL ADVERSE EFFECT
CERTIFICATE") stating (A) whether, as of the close of business on the day
immediately preceding the day of the Auction, a Material Adverse Effect has,
to Buyer's knowledge, occurred, including, if applicable, a description of
the events or circumstances that Buyer alleges constitute or give rise to
such Material Adverse Effect, and (B) if Buyer alleges a Material Adverse
Effect has occurred, whether Buyer nonetheless irrevocably agrees to waive
any right arising under this Agreement arising out of or related to such
Material Adverse Effect or the events or circumstances constituting or giving
rise thereto, including, without limitation, any remedy for breach of
warranty or breach of covenant, except to the extent provided in Section
12(a) (a "MATERIAL ADVERSE EFFECT Waiver"). If no Auction is conducted
pursuant to Section 10, Buyer shall furnish to Sellers, on the date of and
prior to the commencement of the sale hearing, a Material Adverse Effect
Certificate as of close of business on the day immediately preceding the date
of the sale hearing conforming to the requirements set forth in the preceding
sentence. In the event any Material Adverse Effect Certificate furnished
hereunder contains a statement by Buyer that it believes a Material Adverse
Effect to have occurred, and such Material Adverse Effect Certificate does
not also contain a Material Adverse Effect Waiver, Sellers may, but shall not
be required to, treat such statement as a purported election by Buyer to
terminate the Agreement (without prejudice to any remedies Sellers may have
hereunder for wrongful termination). In the event the Material Adverse Effect
Certificate states that, to Buyer's knowledge, no Material Adverse Effect has
occurred as of the applicable date, Buyer shall thereafter be estopped from
asserting any Material Adverse Effect of which it had knowledge as of such
date. The Material Adverse Effect Certificate shall in no way hinder Buyer's
right to recognize a Material Adverse Effect or Material Adverse Change that
occurs after the date of the Material Adverse Effect Certificate.
11. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of
Buyer to pay the Purchase Price and consummate the transactions to be performed
by it in connection with Closing is subject to satisfaction, or waiver by Buyer
at its sole discretion, of the following conditions:
(i) The representations and warranties of Sellers set
forth in Section 5 above shall be true and correct in all material
respects at and as of the date of Closing Date, except to the extent
that any such representation and warranty speaks as of a particular
date;
(ii) Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through Closing;
-30-
(iii) There shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement through Closing;
(iv) Sellers shall have delivered to Buyer all of Sellers'
Closing Documents, duly executed by Sellers as applicable on or before
the Closing Date;
(v) All material actions, consents or approvals required
to be obtained in connection with the consummation of the transactions
contemplated by this Agreement or by the Transaction Documents as set
forth on SCHEDULE 5(b) (other than the approval of the FCC or any
state public utility commission for the transfer of any Governmental
Permit), shall have been obtained (copies of which shall have been
delivered to Buyer) and be in full force and effect; and
(vi) There shall have been no Material Adverse Change or
Material Adverse Effect since Buyer's issuance of the Material Adverse
Effect Certificate.
(b) CONDITIONS TO OBLIGATION OF SELLERS. The obligation
of Sellers to consummate the transactions to be performed by it in connection
with Closing is subject to satisfaction of the following conditions:
(i) The representations and warranties of Buyer and
Cogent set forth in Sections 6 and 9(k) above shall be true and
correct in all material respects at and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through Closing;
(iii) There shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) Buyer shall have delivered to Sellers all of Buyer's
Closing Documents, duly executed by Buyer as applicable; and
(v) All actions, consents or approvals required to be
obtained from Governmental Authorities in connection with the
consummation of the transactions contemplated by this Agreement or
by the Transaction Documents shall have been obtained (copies of
which shall have been delivered to Sellers) and be in full force and
effect, including the Sale Order from the Court (PROVIDED THAT the
Sale Order states that it shall not be subject to any stay).
12. TERMINATION.
(a) TERMINATION EVENTS. The parties may terminate this
Agreement at any time before Closing as follows:
(i) by mutual written agreement of the parties hereto;
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(ii) by Buyer, upon written notice to Sellers, if (A) the
SALE PROCEDURES ORDER has not been entered by March 25, 2002; (B) the
auction pursuant to the SALE PROCEDURES ORDER has not occurred by
April 15, 2002 (C) the Sale Order has not been entered by April 22,
2002; and (D) any other condition set forth in Section 11 has become
incapable of fulfillment or has not been satisfied on or before May 7,
2002;
(iii) automatically, upon the sale of the Acquired Assets
to a purchaser other than Buyer pursuant to Section 10;
(iv) by Buyer, upon written notice to Sellers, in the
event of any material breach by Sellers of any of Sellers' agreements,
representations or warranties contained herein, if such breach is not
cured within five (5) Business Days after receipt of such notice;
(v) by Sellers, upon written notice to Buyer, in the
event of any material breach by Buyer of any of its agreements,
representations or warranties contained herein, if such breach is
not cured within five (5) Business Days after receipt of such notice;
(vi) by Buyer, upon written notice to Sellers, in the
event that a substantial portion of Sellers' domestic
telecommunications network that comprises part of the Acquired
Assets is de-commissioned or ceases to operate (other than for
normal outages); or
(vii) by Sellers pursuant to Section 2(e)(iii).
(b) EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to clause (i), clause (ii) (except as set forth below)
clause (vi) or clause (vii) of paragraph (a) of this Section 12, all
obligations of the Parties shall terminate without further liability of any
party to the other. If the Agreement is terminated pursuant to clause (iii)
of paragraph (a) of this Section 12, Buyer shall be entitled to (A) the
Break-Up Fee, and (B) reimbursement of the Fee paid pursuant to the Due
Diligence Agreement and any maintenance costs with respect to Assumable
Agreements and Transition Rejected Agreements actually paid by Buyer pursuant
to Section 2(e)(iv), and no party shall have any further liability or
recourse whatsoever. If this Agreement is terminated by Buyer pursuant to
clause (iv) of paragraph (a) of this Section 12, and provided that Buyer is
not itself in default of any material obligation hereunder, Sellers shall
reimburse Buyer for its reasonable and documented out-of-pocket costs and
expenses, up to a maximum of One Hundred Thousand Dollars (US $100,000) and
Sellers shall have no further liability whatsoever. If this Agreement is
terminated by Buyer pursuant to clause (vi) of paragraph (a) of this Section
12, and the cessation of operation of Sellers' network results from
intentional acts or omissions on the part of Sellers, Sellers shall reimburse
Buyer for its reasonable documented out-of-pocket costs and expenses, up to a
maximum of One Hundred Thousand Dollars, plus any amounts paid by Buyer
pursuant to Section 2(e)(iv).
(c) WAIVER OF CLOSING CONDITION. If any of the conditions
to Buyer's obligation to close are not satisfied, and Buyer elects to waive the
unsatisfied conditions and proceed with the Closing, such waiver shall likewise
be deemed a waiver of any remedy
-32-
otherwise available to Buyer arising out of the failure to satisfy such Closing
condition and Buyer shall have no further recourse against Sellers with respect
thereto.
13. MISCELLANEOUS.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise expressly set forth, the representations and warranties of the parties
contained herein and in any of the Transaction Documents shall survive until the
end of the Transition Period.
(b) INDEMNIFICATION LIMITATION. Subject to Section 10(a),
Sellers shall indemnify Buyer from and against any claims or losses incurred or
sustained by Sellers arising out of the breach of any representation, warranty
or covenant made or to be performed by Sellers hereunder (including without
limitation the obligation to account to Buyer for the collection of Accounts
Receivable collected after Closing pursuant to Section 3(e)), up to an aggregate
amount of Three Hundred Fifty Thousand Dollars (US $350,000), PROVIDED THAT such
limitation shall not apply as regards (i) claims or losses resulting from fraud
on the part of the Sellers, or (ii) breaches of the representation of the
Sellers set forth in Section 5(g). If Sellers fail to pay any amount due and
owing by Sellers to Buyer within the time periods prescribed in Section 3(e),
Buyer may recover the amounts due from Sellers from the Escrow Amount in
accordance with the terms of the Escrow Agreement. With respect to breaches by
Sellers of representations, warranties or covenants contained in or made
pursuant to this Agreement or the Transaction Documents, and any obligation of
Sellers to indemnify Buyer hereunder for such breaches (as determined by the
Court), such obligations of Sellers shall be satisfied solely from amounts held
by the Escrow Agent pursuant to the Escrow Agreement and Buyer shall have no
other recourse whatsoever against Sellers hereunder or thereunder. Subject to
the proviso set forth in the first sentence of this paragraph, in the event
Buyer seeks to invoke any equitable remedy (including, without limitation,
injunctive relief or specific performance), and such relief results (or if
awarded would result) in Sellers incurring any cost or expense, such cost or
expense shall be applied against the indemnification limit specified in this
paragraph, and no such equitable relief shall be granted if and to the extent
that the cost or expenses resulting to Seller would, when aggregated with the
amount of all other claims under this Agreement, either at law or in equity,
exceed the indemnification limit specified herein, unless Buyer undertakes to be
responsible for such excess costs. Buyer shall not seek to invoke any equitable
remedy based upon the existence of such indemnification limit. Buyer shall have
no remedy whatsoever against Seller except as expressly set forth in this
Section; provided, however, that the limitation set forth in this Section shall
not apply to Sellers' indemnification obligation set forth in Section 7(c).
(c) TRANSFER TAXES.
(i) Any federal, state, provincial or local transfer
Taxes, including gains, transfer, conveyance, sales, documentary
stamp and similar Taxes, payable as a result of the purchase and sale
of the Acquired Assets, the assignment of Assumed Agreements or any
other action contemplated by this Agreement shall be divided equally
between Buyer and Sellers, with each of Buyer and Sellers paying
fifty percent (50%) of any such Taxes. Buyer and Sellers will
cooperate in the preparation, execution and filing of all Tax
Returns, questionnaires, applications or other like documents
regarding any such Taxes.
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(ii) All real property Taxes, personal property Taxes and
similar ad valorem obligations levied with respect to the Acquired
Assets for any Tax period that includes (but does not end on) the
Closing Date (collectively, the "APPORTIONED OBLIGATIONS") shall be
apportioned between Sellers and Buyer based on the number of days of
such Tax period up to and including the Closing Date and the number of
days of such Tax period after the Closing Date. Sellers shall be
liable for the proportionate amount of such Taxes that is attributable
to the portion of the Tax period up to and including the Closing Date,
and Buyer shall be liable for the proportionate amount of such taxes
that is attributable to the portion of the Tax period beginning after
the Closing Date.
(d) PSINET AS AGENT OF SELLERS. Sellers (other than
PSINet) hereby constitute PSINet as their true and lawful agent and
attorney-in-fact for purposes of this Agreement, on their behalf, to give and
receive any notice, to sign and deliver any instrument (including without
limitation the Transaction Documents and any other document required to be
delivered at Closing), to receive any and all sums falling due hereunder, to
take possession of the Excluded Phoenix Equipment and the Disputed Equipment,
to exercise, refrain from exercising or waive any right or remedy arising
hereunder or relating hereto, and otherwise to perform any and all acts that
PSINet in its absolute discretion deems necessary or appropriate under this
Agreement. Accordingly, (aa) any action taken by PSINet pursuant to this
Agreement shall, unless the contrary is expressly stated, be deemed to have
been taken by PSINet on behalf of the Sellers as a whole, and (bb) any
performance tendered by Buyer to PSINet, including without limitation the
payment of any amount due hereunder and the return of the Excluded Phoenix
Equipment and Disputed Equipment shall be deemed tendered to PSINet on behalf
of the Sellers as a whole.
(e) EXPENSES AND FEES. Each party shall pay its own
costs and expenses incident to the preparation and negotiation of this
Agreement and the Transaction Documents, the consummation of the transactions
contemplated hereby and thereby and its compliance with all its agreements
and conditions contained herein or therein, including all legal and
accounting fees and disbursements and all costs of obtaining necessary
consents.
(f) WAIVER. No terms or provisions hereof, including
the terms and provisions contained in this sentence, shall be waived,
modified or altered so as to impose any additional obligations or liability
or grant any additional right or remedy, and no custom, payment, act,
knowledge, extension of time, favor or indulgence, gratuitous or otherwise,
or words or silence at any time, shall impose any additional obligation or
liability or grant any additional right or remedy or be deemed a waiver or
release of any obligation, liability, right or remedy except as set forth in
a written instrument properly executed and delivered by the party sought to
be charged, expressly stating that it is, and the extent to which it is,
intended to be so effective. No assent, express or implied, by either party,
or waiver by either party, to or of any breach of any term or provision of
this Agreement or of the Schedules shall be deemed to be an assent or waiver
to or of such or any succeeding breach of the same or any other such term or
provision.
(g) NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the parties and
their respective successors and permitted assigns.
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(h) ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Due
Diligence Agreement, the Non-Disclosure Agreement previously entered into
between PSINet and Cogent, the Exhibits and Schedules referred to herein and the
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter contained herein or therein and supersede in their
entirety all prior or concurrent oral or written agreements, offers, proposals
and understandings between the parties with respect to such subject matter,
provided that the Non-Disclosure Agreement shall continue in full force and
effect and shall be deemed to bind each of the Parties hereto. This Agreement
may not be amended in any respect whatsoever except by a further agreement, in
writing, fully executed by each of the parties; PROVIDED, HOWEVER, that this
Agreement may not be amended in any material manner after entry of a Sale Order
without Court approval.
(i) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(j) BULK SALE OR TRANSFER LAWS. Buyer hereby waives
compliance by Sellers with the provisions of the bulk sales or transfer laws of
all applicable jurisdictions.
(k) NO IMPEDIMENT TO LIQUIDATION. Nothing herein shall be
deemed or construed so as to limit, restrict or impose any impediment to the
Sellers' right to liquidate, dissolve and wind-up their affairs and to cease all
business activities and operations at such time as it may determine following
the expiration of the Transition Period. Sellers shall not be obligated to
retain assets or employees or to continue operations following the expiration of
the Transition Period (or to retain outsource assistance) in order to satisfy
its obligations hereunder.
(l) NOTICES. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given with respect
to this Agreement shall be in writing and shall be delivered (charges prepaid,
receipt confirmed or return receipt requested (if available)) by hand, by
internationally and nationally recognized air courier service, or by registered,
certified or express mail, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Notice shall
be deemed given and effective (i) if delivered by hand or by internationally or
nationally recognized air courier service when so delivered, or (ii) if sent by
registered, certified or express mail, on the date of receipt (or on the date of
attempted delivery if delivery is refused). Delivery by facsimile transmission
or electronic mail shall not constitute notice under this Agreement.
If to Buyer:
-----------
PN Acquisition Corp.
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Tel: (000) 000-0000
with a copy (which shall not constitute notice) to:
-00-
Xxxxxxx Xxxxxx Shereff Xxxxxxxx, LLP
Xxxxx 000
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, Esq.
Xxxxxx X. Xxx, Esq.
Tel: (000) 000-0000
If to Sellers:
-------------
PSINet, Inc.
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
with copies (which shall not constitute notice) to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X.
Attn: Xxxxx Xxxxxxxxx, Esq.
Tel: (000) 000-0000
-- and --
Xxxxx Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Tel: (000) 000-0000
Each party may designate by notice in writing a new or additional address to
which any notice, request, demand or communication may thereafter be so given,
served or sent. Notices, requests, demands and other communications hereunder
may be given by the attorney of any party.
(m) GOVERNING LAW; JURISDICTION.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS PERFORMED WHOLLY
WITHIN THE STATE EXCEPT WHERE THE BANKRUPTCY CODE REQUIRES OTHERWISE. FOR THE
DURATION OF THE PERIODS IN WHICH SELLERS ARE DEBTORS OR DEBTORS-IN-POSSESSION IN
THE BANKRUPTCY CASE, THE COURT WILL HAVE EXCLUSIVE JURISDICTION OVER ANY
DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH PARTY AGREES NOT
TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH ACTION,
SUIT OR PROCEEDING, ANY CLAIM THAT IT
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IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT.
EACH PARTY FURTHER IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUCH ACTION, SUIT OR PROCEEDING.
(n) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction; PROVIDED,
HOWEVER, that the parties may agree to either terminate or amend this
Agreement as necessary should such invalid or unenforceable term or provision
be essential to the consummation of the transactions contemplated by this
Agreement.
(o) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date first above written.
"BUYER":
PN ACQUISITION CORP., a Delaware corporation
By: /s/ XXXXX XXXXXXXXX
----------------------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
"SELLERS":
PSINET INC., a New York corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Executive Vice President &
Chief Restructuring Officer
PSI WEB INC., a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
R.B. INVESTMENTS DELAWARE, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
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R.G. INVESTMENTS DELAWARE, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
TELALINK CORPORATION, a Tennessee corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
INTERNET NETWORK TECHNOLOGIES, INC., a
California corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET VENTURES LTD., a Delaware limited
company
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET REALTY INC., a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
-39-
PSINET STRATEGIC SERVICES, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET EUROPE INC., a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINETWORKS COMPANY, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
TELECOM LICENSING, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
TELECOM LICENSING OF VIRGINIA, INC., a
Virginia corporation
By: /s/ XXXXXXXX X. XXXXX
----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
-40-
SPORTS ISP, INC., a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
UHF SPU, INC., a Virginia corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
INTERNATIONAL DISTRIBUTION & CONSULTING, INC.,
a Pennsylvania corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
IOCOM INC., a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET TELECOM LIMITED, a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
-41-
PSINET STRATEGIC INVESTMENTS, INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET NORTH AMERICA HOLDINGS INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET IMEA HOLDINGS INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET NEW YORK SHELF INC., a New York
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
-42-
PSINET SECURITY SERVICES INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET ASIA HOLDINGS INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET SOUTH AMERICAN HOLDINGS INC., a
Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
PSINET MIAMI MANAGEMENT INC., a Delaware
corporation
By: /s/ XXXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxxx X. Xxxxx
Attorney-in-Fact
-43-
With respect to Section 9(k) only, the
undersigned hereby executes this Asset
Purchase Agreement as of the day and year
first above written.
"COGENT":
------
COGENT COMMUNICATIONS GROUP, INC., a Delaware
corporation
By: /s/ XXXXX XXXXXXXXX
-----------------------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
-44-
EXHIBITS AND SCHEDULES
The Exhibits and Schedules to the Asset Purchase Agreement that are listed and
described in the table of contents above have been omitted pursuant to Item
601(b)(2) of Regulation S-K. Such Exhibits and Schedules shall be furnished
supplementally to the Securities and Exchange Commission upon its request.
-45-
