EXHIBIT 2.2
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ASSET PURCHASE AGREEMENT
BY AND AMONG
CAVALIER EAST, L.L.C.
CAVALIER TELEPHONE,. LLC
AND
NET2000 COMMUNICATIONS, INC.
NET2000 COMMUNICATIONS HOLDINGS, INC.
NET2000 COMMUNICATIONS GROUP, INC.
NET2000 INVESTMENTS, INC.
NET2000 COMMUNICATIONS OPERATIONS, INC.
NET2000 COMMUNICATIONS CAPITAL EQUIPMENT, INC.
NET2000 COMMUNICATIONS SERVICES, INC.
NET2000 COMMUNICATIONS REAL ESTATE, INC.
XXX0000 XXXXXXXXXXXXXX XX XXXXXXXX, LLC
FREBON INTERNATIONAL CORPORATION AND
VISION IT
NOVEMBER 15, 2001
TABLE OF CONTENTS
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1. DEFINITIONS; INTERPRETATION 1
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(a) Definitions.....................................................................................1
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(b) Interpretation..................................................................................7
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2. SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES 7
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(a) Purchase and Sale of Acquired Assets............................................................7
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(b) Excluded Assets.................................................................................8
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(c) Assumption of Liabilities.......................................................................9
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(d) Excluded Liabilities...........................................................................10
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(e) Cure of Defaults...............................................................................10
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(f) Excluded Accounts Agreement....................................................................10
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(g) Master Services Agreement......................................................................10
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3. PURCHASE PRICE 10
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(a) Purchase Price.................................................................................10
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(b) Allocation.....................................................................................11
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4. CLOSING; CLOSING DOCUMENTS 11
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(a) Closing........................................................................................11
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(b) Deliveries by Sellers..........................................................................11
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(c) Deliveries by Buyer............................................................................12
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5. REPRESENTATIONS AND WARRANTIES OF SELLERS 13
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(a) Organization, Qualification and Authority......................................................13
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(b) No Approvals; Conflict.........................................................................13
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(c) Litigation.....................................................................................13
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(d) Financial Statements...........................................................................14
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(e) Title to Acquired Assets.......................................................................14
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(f) Assumed Contracts..............................................................................14
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(g) Employees......................................................................................14
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(h) Brokers' Fees..................................................................................14
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(i) Intellectual Property..........................................................................15
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(j) Disclaimer of other Representations and Warranties.............................................15
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6. REPRESENTATIONS AND WARRANTIES OF BUYER 15
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(a) Organization, Qualification and Authority......................................................15
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(b) No Approvals; Conflict.........................................................................16
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(c) Litigation.....................................................................................16
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(d) Brokers' Fees..................................................................................16
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(e) Financing Contingencies........................................................................16
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(f) Confidentiality................................................................................16
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(g) Employees......................................................................................16
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7. COVENANTS 17
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(a) General........................................................................................17
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(b) Operation of Business..........................................................................17
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(c) Reasonable Access..............................................................................17
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(d) Notice of Developments.........................................................................18
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(e) Bankruptcy Court Approval......................................................................18
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(f) Order Approving Notices Procedures.............................................................19
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(g) Post-Closing Access to Records.................................................................19
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(h) Further Actions................................................................................19
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(i) Disclosure Letter..............................................................................20
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8. CONDITIONS TO CLOSING 21
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(a) Conditions to Obligation of Buyer..............................................................21
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(b) Conditions to Obligation of Sellers............................................................21
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9. EXPENSES AND FEES 22
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10. DEPOSIT AND LIQUIDATED DAMAGES 22
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11. TERMINATION 23
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(a) Mutual Agreement...............................................................................23
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(b) Termination by Buyer...........................................................................23
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(c) Termination by Sellers.........................................................................23
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(d) Effect of Termination..........................................................................23
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12. MISCELLANEOUS 23
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(a) Survival of Representations and Warranties.....................................................23
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(b) Transfer Taxes.................................................................................23
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(c) Waiver.........................................................................................24
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(d) Press Releases and Public Announcements........................................................24
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(e) No Third-Party Beneficiaries...................................................................24
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(f) Entire Agreement; Amendment....................................................................24
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(g) Succession and Assignment......................................................................24
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(h) Counterparts...................................................................................25
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(i) Headings.......................................................................................25
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(j) Notices........................................................................................25
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(k) Governing Law; Jurisdiction....................................................................26
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(l) Severability...................................................................................26
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(m) Incorporation of Disclosure Letter.............................................................27
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EXHIBITS
Exhibit A Master Services Agreement
Exhibit B Bid Procedures Order
Exhibit C Breakup Fee Order
Exhibit D Sale Order
Exhibit E Escrow Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of November
15, 2001 by and among Cavalier East, L.L.C., a Delaware limited liability
company ("BUYER"); Cavalier Telephone, LLC a Delaware limited liability company
(with respect to Section 7(k), only)("CAVALIER"); and Net2000 Communications,
Inc., a Delaware corporation; Net2000 Communications Holdings, Inc., a Delaware
corporation; Net2000 Communications Group, Inc., a Delaware corporation; Net2000
Investments, Inc., a Delaware corporation; Net2000 Communications Operations,
Inc., a Delaware corporation; Net2000 Communications Capital Equipment, Inc., a
Delaware corporation; Net2000 Communications Services, Inc., a Delaware
corporation; Net2000 Communications Real Estate, Inc., a Delaware corporation;
Net2000 Communications of Virginia, LLC, a Virginia limited liability company;
FreBon International Corporation, a Virginia corporation; and Vision IT, a
California corporation (collectively, "SELLERS").
RECITALS
A. Sellers desire to sell to Buyer, and Buyer desires to purchase
and acquire from Sellers, substantially all of the assets used or held for use
in connection with the Business (as defined below) in accordance with and
subject to the terms and conditions set forth in this Agreement.
B. Following the execution of this Agreement, Seller plans to file
a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (as
defined below) (the "BANKRUPTCY CASE") in accordance with the United States
Bankruptcy Court for the District of Delaware (the "COURT").
C. The Acquired Assets (as defined below) 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. Section 101 et. seq. ((the "BANKRUPTCY CODE"), and such sale
will include the assumption and assignment of certain executory contracts and
unexpired leases and liabilities in accordance with Section 365 of the
Bankruptcy Code.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties 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, 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) hereof.
"AFFILIATE" means, with respect to any Person, (i) a spouse or member of
the immediate family of such Person, (ii) any member, manager, director, officer
or partner of such Person, (iii) any corporation, partnership, business,
association, limited liability company, firm or other entity of which such
Person is a member, manager, director, officer or partner or owns or controls,
directly or indirectly, more than fifty percent (50%) of the voting stock or
other equity interests and (iv) any other Person that directly or indirectly
controls, is controlled by or is under direct or indirect common control with
such first Person.
"ASSUMED CONTRACTS" has the meaning set forth in Section 2(a)(iii).
"ASSUMED LIABILITIES" has the meaning set forth in Section 2(b).
"ASSUMPTION AGREEMENT" means that certain assignment and assumption
agreement to be executed and delivered by the parties at Closing in form and
substance satisfactory to Buyer.
"BANKRUPTCY CASE" has the meaning set forth in the preamble to this
Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code, 11 U.S.C.
Sections 1.01 et. seq., as in effect on the date Sellers file their voluntary
petitions for relief with the Court as set forth in the preamble to this
Agreement.
"BID PROCEDURES ORDER" has the meaning set forth in Section 7(f).
"XXXX OF SALE" has the meaning set forth in Section 4(b).
"BREAKUP FEE" shall be a payment to be made subject to the Breakup Fee
Order in the amount of 5% of the Purchase Price of the Acquired Assets if an
alternative transaction is approved by the Court and provided Buyer is ready,
willing and able to close at the time of the Sale Order hearing, or any
substitution therefore or alternative thereto approved by the Court at or in
connection with the hearing on the Sale Option, which amount shall be payable at
the closing of the counterbid.
"BREAKUP FEE ORDER" shall mean the order approving the Breakup Fee that
shall provide the Breakup Fee shall be payable at the closing of the counterbid
which order shall be in form acceptable to Buyer in its reasonable discretion.
"BUSINESS" means the Sellers' United States network operations business,
which business consists of the provision of state-of-the-art broadband
telecommunications services, including a bundled package of high-speed data
services, internet services, local telephone services and long distance
telephone services, through a single broadband connection.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in Washington, D.C., are authorized or required by Law
to be closed.
"BUYER" has the meaning set forth in the preface above.
"BUYER CLOSING DOCUMENTS" has the meaning set forth in Section 4(c).
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"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.
"CONFIDENTIAL INFORMATION" means all trade secrets and all proprietary
and confidential information concerning the businesses and affairs of Sellers
and their Affiliates, the Acquired Assets or the Business that are not already
generally available to the public.
"COURT" has the meaning set forth in the preamble to this Agreement.
"DEFERRED PURCHASE PRICE" has the meaning set forth in Section 3(a).
"DEFERRED PURCHASE PRICE DOCUMENTS" has the meaning set forth in
Section 4(c).
"DISCLOSURE LETTER" has the meaning set forth in Section 5.
"EFFECTIVE TIME" has the meaning set forth in Section 4(a).
"EMPLOYEES" has the meaning set forth in Section 5(g).
"ESCROW AGENT" has the meaning set forth in Section 10.
"ESCROW AGREEMENT" has the meaning set forth in Section 10.
"EXCLUDED ACCOUNTS" means the accounts of the Sellers' pending or
existing customers in the New Jersey, New York, Rhode Island and Massachusetts
markets.
"EXCLUDED ACCOUNTS AGREEMENT" has the meaning set forth in Section 2(f).
"EXCLUDED ACCOUNTS AMOUNT" has the meaning set forth in Section 2(f).
"EXCLUDED ASSETS" has the meaning set forth in Section 2(b).
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2(c).
"FINANCIAL STATEMENTS" means Seller's audited financial statements for
the Business for the fiscal year ended December 31, 2000 and unaudited financial
statements for the six (6) months ended June 30, 2001, copies of which have been
provided to Buyer by Seller.
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"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, telecom
regulatory authorities, 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 a foreign country.
"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 solely or primarily in connection with
the conduct of the Business.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, any amendments thereto, any successor statutes and any regulations
promulgated thereunder.
"HSR FILING" means any filings required to be made under the HSR Act by
either of the parties hereto in connection with this Agreement and the
consummation of the transactions described herein.
"INTELLECTUAL PROPERTY" means all U.S. and foreign, 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); and (g) copies and tangible embodiments thereof (in whatever
form or medium).
"INVENTORIES" means all inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies.
"KNOWLEDGE OF SELLERS" means the actual knowledge of Xxxxxxx X. Xxxxxx,
Xx.; Xxxxxx Xxxxxx and Xxxxx Xxxxx.
"LAW" means any law, statute, regulation, rule, code, ordinance or court
order enacted, adopted, issued or promulgated by any Governmental Authority.
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"LEASED REAL PROPERTY," means all leased real property and improvements.
"LIABILITY" or "LIABILITIES" means any and all 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 mechanics or
materialmen 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.
"MASTER SERVICES AGREEMENT" has the meaning set forth in Section 2(g).
"MATERIAL ADVERSE EFFECT" means any event, occurrence, fact, condition,
change or effect, that is materially adverse to the business, assets or results
of operations of the Business, taken as a whole, taking into account the
operation of the Sellers as distressed companies prior to and following the
commencement of the Bankruptcy Case provided, that: (i) commencement and conduct
of the Bankruptcy Case as referenced in and contemplated by this Agreement; (ii)
defaults under Governmental Permits, real property leases and personal property
leases including the Acquired Assets, or contracts (including the Assumed
Contracts) occasioned solely by the commencement of the Bankruptcy Case; and
(iii) the insufficiency of working capital of the Business occasioned by the
inability to obtain additional funding, shall not, individually or in the
aggregate, be deemed to constitute a Material Adverse Effect.
"MOTION TO APPROVE MASTER SERVICES AGREEMENT" has the meaning set forth
in Section 7(e).
"MOTION TO APPROVE SALE" has the meaning set forth in Section 7(e).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
Seller and consistent with Sellers' past customs and practices (including with
respect to quantity and frequency), taking into account the commencement of the
Bankruptcy Case and the operation of the Sellers as distressed companies prior
to and following the commencement of the Bankruptcy Case including the
occurrence of the following events: (i) defaults under Governmental Permits,
real property leases and personal property leases including the Acquired Assets,
or contracts (including the Assumed Contracts) occasioned solely by the
commencement of the Bankruptcy Case; and (ii) the insufficiency of working
capital of the Business occasioned by the inability to obtain additional
funding.
"PERMITTED ENCUMBRANCES" means the following: (i) Liens that constitute
Assumed Liabilities pursuant to the terms of this Agreement; (ii) easements,
leases, reservations or other rights of others in, or minor defects and
irregularities in title to, property or assets of Sellers or their Subsidiaries,
provided that such easements, leases, reservations, rights, defects or
irregularities do not materially detract from the value of or impair the use of
such property or assets for the purposes for which they are held; (iii) any Lien
or privilege vested in any lessor,
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licensor or permittor for rent or other obligations with respect to property or
assets of Sellers [or their Subsidiaries] so long as the payment of such rent or
the performance of such obligations is not delinquent; and (iv) until, but not
following, the Effective Time, Liens on Acquired Assets granted as security for
the Toronto Dominion Credit Agreement.
"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.
"PURCHASE PRICE" has the meaning set forth in Section 3(a).
"REJECTED CONTRACTS" has the meaning set forth in Section 7(b).
"SALE ORDER" means an order entered by the Court pursuant to Sections
105, 363, 365 and 1146 of the Code approving this Agreement and the Assumption
Agreement and the transactions provided for herein and therein, which order
shall be in form acceptable to Buyer in its reasonable discretion.
"SELLERS" has the meaning set forth in the preface above.
"SELLERS' CLOSING DOCUMENTS" has the meaning set forth in Section 4(b).
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof), directly or indirectly, owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"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.
"TORONTO DOMINION CREDIT AGREEMENT" means that certain Third Amended and
Restated Credit Agreement dated as of April 12, 2001 by and among Net2000
Communications Group, Inc., Toronto Dominion (Texas), Inc., as Administrative
Agent, TD Securities (USA) Inc., as Lead Arranger and Book Manager, Royal Bank
of Canada as Syndication Agent, Xxxxxxx Xxxxx Credit Partners, L.P., as
Co-Documentation Agent, First Union Securities, Inc., as Documentation Agent,
and the Lenders named therein, and any of the Loan Documents referred to therein
(as in effect from time to time) necessary to consummate the transactions
contemplated herein, shall have been obtained and shall be in full force and
effect.
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"TRANSACTION DOCUMENTS" means, collectively, Sellers' Closing Documents
and Buyer Closing Documents.
(b) Interpretation.
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 "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." Accounting
terms used herein shall have the meanings given to them by GAAP applied on a
consistent basis by the Person to which they relate. 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.
Upon the terms and subject to the conditions of this Agreement,
on the Closing Date, 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 as of the Effective Time in and to the
properties and assets of Sellers that are used or held for use in connection
with the conduct of the Business, of every kind, nature, character and
description, tangible or intangible, personal or mixed, whether accrued,
contingent or otherwise, wherever located and whether or not specifically
referred to, listed or described on Section 2(a) of the Disclosure Letter,
including all such assets and properties acquired by Sellers or arising between
the date hereof and the Closing Date, but excluding the Excluded Assets
(collectively, the "ACQUIRED ASSETS"), including all those items in the
following categories that conform to the definition of the term Acquired Assets:
(i) All telecommunications and computer equipment,
furniture, furnishings, automobiles, tools, parts and similar property
(including any of the foregoing purchased subject to any conditional
sales or title retention agreement in favor of any other Person)
including those assets set forth on Section 2(a)(i) of the Disclosure
Letter;
(ii) all Inventories held at any location controlled
by Sellers and Inventories previously purchased and in transit to
Sellers at such locations;
(iii) all of the contracts, agreements, and leases
(including all personal property leases and real property leases) of the
Sellers arising solely or primarily relating to the conduct of the
Business as specified on Section 2(a)(iii) of the Disclosure Letter and
such other contracts specifically disclosed in this Agreement which are
entered into between the date hereof and the Closing Date, which Buyer
may, in its sole discretion, agree in writing to assume, pertaining to
all periods from and after the Effective Time, including any right (A)
to
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receive payment for products sold or services rendered after the
Effective Time 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 following the Effective Time (collectively, the
"ASSUMED CONTRACTS");
(iv) all Intellectual Property to the extent
permitted by Law, 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, and rights thereunder, 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;
(v) all real estate owned by the Sellers, including
all buildings, fixtures and improvements thereon as specified on Section
2(a)(v) of the Disclosure Letter;
(vi) all books, records, manuals and other materials
(in any form or medium) solely or primarily relating to the Business,
including advertising matter, catalogues, price lists, correspondence,
mailing lists, lists of customers, distribution lists, photographs,
production data, sales and promotional materials and records, purchasing
materials and records, [personnel records (subject to any necessary
employee consents)], manufacturing and quality control records and
procedures, blueprints, research and development files, records, data
books, Intellectual Property disclosures, media materials and plates,
accounting records, sales order files and litigation files;
(vii) to the extent their transfer is permitted by
law, all Governmental Permits, including all applications therefor;
(viii) all manufacturer warranties and similar rights
in favor of Sellers with respect to any Acquired Asset; and
(ix) all accounts (other than Excluded Accounts),
Accounts Receivable, notes and notes receivable which are payable to Sellers or
their Affiliates, all guaranties and security therefor, and all goods and
services giving rise thereto and the rights pertaining to such goods and
services.
(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) all cash and cash equivalents, all bank, custody
and investment accounts, all marketable securities;
(ii) all deposits, withholdings, prepayments, credits
and refunds of Sellers or their Affiliates; all security deposits and
prepayments, prepaid expenses, deposits and advances, whether or not
reflected on Sellers' books and records relating to the Assumed
Contracts.
(iii) Excluded Accounts;
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(iv) all claims, causes of action, choses in action,
rights of recovery, rights of set off and rights of recoupment (y)
relating to the Excluded Assets, or (z) 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 the 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 or incorporated in Sections 502, 510, 541, 544, 545,
547 through 551 and 553 of the Bankruptcy Code;
(v) all rights of Sellers and their Affiliates in,
to and under any agreement, lease or other contract other than Assumed
Contracts;
(vi) all capital stock of Sellers and Sellers'
Subsidiaries;
(vii) the certificate of incorporation, qualifications
to conduct business as a foreign corporation, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank
stock certificates, and other corporate documents and records relating
to the organization or maintenance of the corporate existence of
Sellers;
(viii) all assets held by or for the account of Sellers
or their Affiliates 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;
(ix) all insurance policies of Sellers or their
Affiliates and any proceeds received thereunder;
(x) all rights that accrue to Sellers under this
Agreement;
(xi) all assets of Sellers' Video Services Group,
consisting of (i) sales of interactive video communications equipment,
(ii) installations, maintenance and training services, and (iii) the
circuits listed on Section 2(b)(x) of the Disclosure Letter;
(xii) any Governmental Permit or similar right that by
its terms or applicable Law is not transferable to Buyer; and
(xiii) all tangible and intangible properties and
assets of Sellers not used or held for use primarily in connection with
the conduct of the Business.
(c) Assumption of Liabilities.
As additional consideration for the Acquired Assets, Buyer
agrees to assume, pay, perform and discharge the Assumed Contracts (other than,
in each case, any Liability accruing prior to the Effective Time or with respect
to any matters occurring prior to the Effective Time) provided that (x) Sellers
shall have satisfied their obligations to cure under Section 365 of the
Bankruptcy Code and (y) all parties to such Assumed Contracts shall have
reasonable prior notice of the Motion to Approve Sale (collectively, the
"ASSUMED LIABILITIES").
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(d) Excluded Liabilities.
Notwithstanding the provisions of Section 2(b) or any other
provision hereof, the Disclosure Letter or any other schedule or exhibit hereto
and regardless of any disclosure to Buyer, other than the Assumed Liabilities,
Buyer shall not assume or be obligated or be responsible to pay, perform,
satisfy or otherwise discharge any Liabilities whatsoever whether or not such
Liabilities arise in connection with or under the Assumed Contracts
(collectively, the "EXCLUDED LIABILITIES").
(e) Cure of Defaults.
With respect to each and all defaults, arrearages, or other obligations
arising under or with respect to Assumed Contracts, whether arising before or
after the filing of the Bankruptcy Case that are Acquired Assets, Sellers shall
have satisfied their obligations to cure under Section 365 of the Bankruptcy
Code.
(f) Excluded Accounts Agreement.
Subject to approval of the Court and state regulatory agencies
(if applicable), Sellers and Buyer shall enter into the Excluded Accounts
Agreement in form and substance satisfactory to the parties (the "EXCLUDED
ACCOUNTS SALVAGE AGREEMENT") pursuant to which Sellers grant to Buyer the right
to salvage by sale the Excluded Accounts to third party providers commencing on
the date of this Agreement. In the event that Buyer is not the successful bidder
of the Acquired Assets, all proceeds derived from the sale of Excluded Accounts
(collectively, the "EXCLUDED ACCOUNTS AMOUNT") shall be paid to the Sellers net
of any expenses incurred by Buyer in connection with selling such Excluded
Accounts. In the event that Buyer is the successful bidder of the Acquired
Assets, the Excluded Accounts Amount shall be deducted from the Purchase Price
paid by the Buyer for the Acquired Assets. Notwithstanding the foregoing, in no
event shall Buyer have any Liability whatsoever, directly or indirectly, for the
cost of servicing the customers representing the Excluded Accounts pending
disposition by salvage or otherwise.
(g) Master Services Agreement.
Simultaneously with the execution of this Agreement, Net2000
Communications, Inc., a Delaware corporation ("NET2000") and Buyer shall enter
into the Master Services Agreement in the form of Exhibit A hereto (the "MASTER
SERVICES AGREEMENT") pursuant to which Buyer agrees to provide certain
telecommunications services to Net2000 in accordance with the terms set forth
therein. In the event that Buyer is not the successful bidder at the hearing on
the Sale Order, then, notwithstanding Section 2(c ) of this Agreement, the
successful bidder shall agree to assume all Liabilities of Net2000 under the
Master Services Agreement.
3. PURCHASE PRICE.
(a) Purchase Price.
The purchase price for the Acquired Assets shall be Twenty Five
Million and 00/100 Dollars ($25,000,000.00) consisting of (i) a cash payment
equal to Fifteen Million and 00/100 Dollars ($15,000,000) payable at Closing
(the "CASH PURCHASE PRICE") and (ii) a cash
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payment of Ten Million and 00/100 Dollars ($10,000,000) payable with interest at
the rate of 4% per annum, in two (2) equal installments of Five Million and
00/100 Dollars ($5,000,000.00) on the 60th and 90th day after the Closing)(the
"DEFERRED PURCHASE PRICE", together with the Cash Purchase Price, the "PURCHASE
PRICE") less the Excluded Accounts Amount, if applicable, pursuant to Section
2(f). At Closing, Buyer shall pay the Cash Purchase Price, less the Deposit as
provided in Section 10, to Sellers by wire transfer in immediately available
funds to such account or accounts as shall have been designated by Sellers.
Buyer's obligation to pay the Deferred Purchase Price shall be secured by a
security interest granted in favor of the Sellers on the Accounts Receivable
that are being purchased by the Buyer pursuant to this Agreement. The security
interest will be effected and perfected by a lock box mechanism in form and
substance satisfactory to Sellers' lenders.
(b) Allocation.
The parties agree to allocate the Purchase Price (and other
capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) within thirty (30) days following the
Closing.
4. CLOSING; CLOSING DOCUMENTS.
(a) Closing.
The closing ("CLOSING") of the transactions contemplated hereby
shall take place as soon as practicable following the earliest of: (i) the date
that is eleven days after the entry by the Court of the Sale Order in the
Bankruptcy Case (provided that the Sale Order states that it shall not be
subject to any stay), and (ii) December 31, 2001 (such date, the "CLOSING
DATE"), at the offices of Xxxxx Xxxxxxx Xxxxxxx & Xxxxx, LLP, 0000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx (or such other place as may be mutually agreeable to
the parties). Closing shall be effective as of 12:01 a.m. on the Closing Date
(the "EFFECTIVE TIME").
(b) Deliveries by Sellers.
Subject to the fulfillment or waiver of the conditions set forth
in Section 8(b), at Closing, Sellers shall deliver, or cause to be delivered, to
Buyer the following (the "SELLER'S CLOSING DOCUMENTS"):
(i) a Xxxx of Sale and Assignment for the tangible
assets to be conveyed to Buyer hereunder in form and substance
satisfactory to Buyer (the "XXXX OF SALE");
(ii) such Deferred Purchase Price Documents to which
Sellers are a party;
(iii) the Assumption Agreement;
(iv) a certified copy of the Sale Order;
(v) a certificate of Sellers, duly executed by
Sellers, dated the Closing Date, certifying that Sellers'
representations and warranties contained in this Agreement shall
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be true and correct in all material respects on the Closing Date and
that Sellers have performed in all material respects all of their
covenants and obligations hereunder which by the terms hereof are to be
performed on or before the Closing Date;
(vi) title certificates for all vehicles owned by
Sellers and conveyed to Buyer hereunder;
(vii) originals of all delivery receipts contemplated
by Section 7(e)(ii);
(viii) 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).
(c) Deliveries by Buyer.
Subject to the fulfillment or waiver of the conditions set forth
in Section 8(a), at Closing, Buyer shall deliver to Sellers the following (the
"BUYER CLOSING DOCUMENTS"):
(i) the Cash Purchase Price;
(ii) the secured promissory note, security agreement,
financing statements and other agreements reasonably necessary to
evidence Sellers' security interest in the Accounts Receivable and the
lockbox mechanism in accordance with Section 3(a)(collectively, the
"DEFERRED PURCHASE PRICE DOCUMENTS");
(iii) the Assumption Agreement;
(iv) a certificate of Buyer, duly executed by Buyer,
dated the Closing Date, certifying that each of the Buyer's
representations and warranties contained in this Agreement shall be true
and correct in all material respects on the Closing Date and that Buyer
has performed in all material respects all of its covenants and
obligations hereunder which by the terms hereof are to be performed on
or before the Closing Date; and
(v) such other instruments as are contemplated by
this Agreement or as are reasonably deemed necessary by Seller or
Sellers' legal counsel to consummate the sale transactions, duly
executed by Buyer as appropriate.
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5. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers represent and warrant to Buyer that the statements contained in
this Article 5 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article 5), except as set forth in the disclosure letter
accompanying this Agreement and initialed by the Parties (the "DISCLOSURE
LETTER"). The Disclosure Letter will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Agreement
(a) Organization, Qualification and Authority.
Subject to the entry of a Sale Order by the Court, Sellers have
requisite corporate 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 Transaction Documents to be entered into by Sellers and to carry out
their obligations hereunder and thereunder. The execution, delivery and
performance by Sellers of this Agreement and of each 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
action on the part of Sellers. This Agreement has been duly executed and
delivered by Sellers and upon approval of the Court will constitute the legal,
valid and binding agreement of Sellers, enforceable against Sellers in
accordance with its terms.
(b) No Approvals; Conflict.
Except for (and subject to obtaining) the approval of the Court
and any other approvals of Governmental Authorities identified in Section 5(b)
of the Disclosure Letter, and except for (and subject to obtaining) any consents
required in connection with the assignment to Buyer of the Assumed Contracts
(which consents are identified in Section 5(b) of the Disclosure Letter), 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 material 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 material Lien upon
any of the Acquired Assets, in each case under any provision of (A) and of the
certificates of incorporation or by-laws of Sellers; or (B) any material
contract, lease or agreement to which any of the Sellers is a party.
(c) Litigation.
Except as set forth on Section 5(c) of the Disclosure Letter and
except for the Bankruptcy Case, there is no litigation, action, lawsuit, Claim,
audit, review, examination, inquiry, proceeding or investigation pending or, to
the Knowledge of Sellers, threatened against Sellers: (i) which relates to the
Acquired Assets or the Business, (ii) in which any of the Sellers is the
plaintiff or claimant, which in any such case, is material to the Business; and
(iii) which questions the legality or propriety of the transactions contemplated
by this Agreement or any of
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the Transaction Documents. Except as set forth in Section 5(c) of the Disclosure
Letter, there is no outstanding order, writ, injunction, or decree of any
Governmental Authority against or affecting the Acquired Assets or the Business.
(d) Financial Statements.
The Financial Statements (i) were derived from Sellers'
historical records relating to the Business and were prepared in accordance with
GAAP (ii) fairly present in all material respects the items contained thereon,
including the assets and liabilities of the Sellers for the respective periods
covered thereby. The Financial Statements do not reflect the operations of any
entity or business not intended to constitute a part of the Business after
giving effect to the transactions contemplated by this Agreement, reflect all
material costs that historically have been incurred by the Business (other than
the Excluded Liabilities) and present fairly the results of operations of the
Business for the periods indicated.
(e) Title to Acquired Assets.
Except for Permitted Encumbrances, Sellers have 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, except as set forth on
Section 5(e) of the Disclosure Letter. Upon the execution and delivery to Buyer
on the Closing Date of the Xxxx of Sale, the Assumption Agreement and any other
instruments of transfer and assignment contemplated by this Agreement, and
subject to the entry of a Sale Order by the Court, Sellers will transfer to
Buyer all of its interest in and to the Acquired Assets, in each case free and
clear of all Liens (other than Permitted Encumbrances).
(f) Assumed Contracts.
Section 2(a)(iii) of the Disclosure Letter contains a true and
complete list of all Assumed Contracts. Sellers have delivered to Buyer complete
and correct copies of all Assumed Contracts listed on Section 2(a)(iii) of the
Disclosure Letter (including all amendments and modifications thereof). Except
for the Assumed Contracts, Sellers are not a party to any contract or agreement,
written or oral, that is material to the operation of the Business. Except as
set forth in Section 5(f) of the Disclosure Letter, Sellers have not assigned,
transferred, pledged or otherwise conveyed their rights under any of the Assumed
Contracts.
(g) Employees.
Section 5(g) of the Disclosure Letter lists or contains (i) all
current employees of Sellers or their Subsidiaries working in the Business (the
"EMPLOYEES"), (ii) each Employee's current salary, and accrued but unused
vacation, personal or sick time; and )(iii) all employment agreements between
Sellers and the Employees.
(h) Brokers' Fees.
Except for any obligations Sellers may have to Jefferies & Co.,
Inc. (as previously disclosed by Sellers to Buyer), Sellers have no liability or
obligation to pay any fees or commissions to any broker or finder with respect
to the transactions contemplated by this Agreement for which Buyer could become
liable or obligated.
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(i) Intellectual Property.
Except as set forth in Section 5(i) of the Disclosure Letter,
Sellers own or is licensed to use the Intellectual Property used by Seller in
connection with the Business. Section 5(i)(1) of the Disclosure Letter
identifies each patent or registration which has been issued to Sellers with
respect to any of their respective Intellectual Property, identifies each
pending patent application or pending application for registration which Sellers
have made with respect to any of its Intellectual Property, and identifies each
license or sublicense which Sellers have granted to any third party with respect
to any of its Intellectual Property. Section 5(i)(2) of the Disclosure Letter
identifies each item of Intellectual Property that any third party owns and that
Sellers use pursuant to license or, sublicense, other than "shrink-wrap" or "off
the shelf" software.
(j) Disclaimer of other Representations and Warranties.
Buyer has conducted a thorough review and analysis of the
Business, assets (including the Acquired Assets and Assumed Contracts),
liabilities, results of operations, financial condition, Intellectual Property
and prospects of the Sellers and acknowledges that Buyer has been provided
access to the personnel, properties, premises and records of the Sellers for
such purpose. 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 THE ACQUIRED ASSETS), LIABILITIES OR
OPERATIONS, INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. Buyer hereby acknowledges and agrees that, except to the
extent specifically set forth in this Section 5, 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 the Sellers that the
statements contained in this Article 6 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 6), except as set forth in the Disclosure
Letter.
(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 requisite
corporate power and authority to enter into this Agreement and each of the
Transaction Documents to be entered into by Buyer and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance by
Buyer of this Agreement and of each 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 has been duly
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executed and delivered by Buyer and constitutes the legal, valid and binding
agreement of Buyer, enforceable against it in accordance with its terms.
(b) No Approvals; Conflict.
Except for the approval of the Court, and the Federal Trade
Commission and Justice Department in connection with the HSR Filing, the
execution, delivery and performance by Buyer of this Agreement and the
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, (iii) constitute a material 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 material Lien upon any of
the Acquired Assets, in each case under any provision of (A) the certificate of
incorporation or by-laws of Buyer, (B) any material contract, lease or agreement
to which Buyer is a party or (C) any Law to which Buyer or any of the Acquired
Assets is or are subject.
(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 Transaction Documents.
(d) Brokers' Fees.
Buyer has no liability or obligation to pay any fees or
commissions to any broker or finder with respect to the transactions
contemplated by this Agreement for which Sellers could become liable or
obligated.
(e) Financing Contingencies.
Buyer's ability to consummate Closing hereunder is not subject
to any financing contingency.
(f) Confidentiality.
Buyer acknowledges that its undertakings pursuant to the
Confidentiality Agreement dated October 26, 2001 entered into between Buyer and
Sellers (the "CONFIDENTIALITY AGREEMENT") remain in full force and effect and
Buyer represents and warrants that Buyer and its officers, directors, employees,
agents, contractors and consultants, as applicable, are, and at all relevant
times have been, in compliance in all material respects with the terms and
conditions of the Confidentiality Agreement.
(g) Employees.
The Sellers will cooperate with the Buyer in connection with the
retention of Employees. Buyer shall have the right, but not the obligation, to
include any employment
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contract with any Employee among those subject to the Assumption Agreement, and
Sellers shall cooperate with the Buyers in the retention of Employees deemed by
the Buyer to be necessary or helpful to the Business.
7. COVENANTS.
(a) General.
Subject to Section 7(f), below and the procedures set forth in
the Bid Procedures Order, each of the Parties will 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 Article 9 8, below.
(b) Operation of Business.
Except as otherwise contemplated by this Agreement, Sellers will
not engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business, except that Sellers may (i) reject any
executory contracts listed on Schedule 7(b) of the Disclosure Letter ("REJECTED
CONTRACTS") and (ii) take other actions permitted under the Bankruptcy Code that
are deemed beneficial to Sellers, provided that (x) such actions will not affect
or impair the Acquired Assets (y) such actions will not have a Material Adverse
Effect upon the Acquired Assets and (z) Sellers notify Buyer prior to taking
such action, and will refrain from taking such action upon reasonable request of
the Buyer. Notwithstanding the foregoing, in no event shall Sellers reject any
executory contract (other than Rejected Contracts) without the Buyer's consent,
which shall not be unreasonably withheld and be given within five days of the
Seller's written request, provided that Buyer agrees (in writing), after
receiving notice from Sellers and denying the Seller's request to reject an
executory contract, to pay to the Sellers any amounts accruing on or after the
Effective Time deemed reasonably necessary by the Court to preserve Sellers'
right to utilize the beneficial interest in such contracts while preserving the
right to reject such contracts or such other amounts mutually agreed upon
between Buyer and the third parties of such contracts.
(c) Reasonable Access.
Prior to Closing, Sellers will use their commercially reasonable
efforts to take all action and to do all things necessary, proper or advisable
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, personnel, books, records (including tax
records), contracts, and documents of or pertaining to Sellers related to the
Business and the Acquired Assets. Buyer will treat and hold as such any
Confidential Information it receives from Sellers in the course of the reviews
contemplated by this Section 7(C), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, will return to Sellers all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
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(d) Notice of Developments.
At any time prior to Closing, Sellers shall provide Buyer due
and sufficient notice of material developments relating to the Business,
including any development causing a material breach of any of their
representations and warranties hereunder. In addition, Sellers shall, prior to
Closing, supplement the Disclosure Letter 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 Letter. Any such supplemental disclosure shall not be deemed to cure
any material 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.
(e) Bankruptcy Court Approval.
(i) Within two (2) business days of filing the
Bankruptcy Case, Sellers shall file a motion to approve the Master Services
Agreement ("MOTION TO APPROVE MASTER SERVICES AGREEMENT"), in form satisfactory
to the Buyer in its reasonable discretion. Promptly after filing the Motion to
Approve Master Services Agreement, Sellers shall use reasonable efforts to
obtain a hearing thereon at the earliest available date.
(ii) Within twenty (20) calendar days after the date
hereof, Sellers shall file with the Court (i) a motion with the Court (the
"MOTION TO APPROVE SALE") seeking among other things, the entry of the Bid
Procedures Order, the Breakup Fee Order and the Sale Order substantially in the
forms as attached hereto as Exhibits B, C and D, respectively. Promptly after
the filing of the Motion to Approve Sale, Sellers shall use reasonable efforts
to obtain a hearing thereon at the earliest available date . After filing the
Motion to Approve Sale, Sellers shall not (without prior written consent of
Buyer which consent shall not be unreasonably withheld) amend, modify or
withdraw such motion. Sellers shall use its best efforts to obtain, promptly,
entry of a the Bid Procedures Order, the Breakup Order and the Sale Order, and
Sellers shall take all necessary actions in connection therewith. Sellers shall
provide due and sufficient notice of the hearing to be held in the Court
regarding the Motion to Approve Sale 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 Securities and
Exchange Commission, (iii) the Internal Revenue Service, (iv) the Office of the
United States Trustee, (v) the taxing authorities for each of the States of
Maryland, New York, New Jersey, the Commonwealths of Virginia, Pennsylvania and
Massachusetts and the District of Columbia and any appropriate political
subdivisions of any thereof, (vi) counsel to any statutory committee of
creditors appointed by the Office of the United States Trustee in the Bankruptcy
Case, (vii) Buyer and its counsel, (viii) the employment agencies for each of
the States of Maryland, New York, New Jersey, the Commonwealths of Virginia,
Pennsylvania and Massachusetts and the District of Columbia, (ix) each party
(other than Seller) to each Assumed Contract, (x) each Person that has asserted
a Lien on, or in, any of the Acquired Assets, as to whom service shall be made
and (xi) any other Person that Buyer reasonably requests in writing be served,
in each case, by United States mail, postage prepaid, or courier in Sellers'
reasonable discretion; provided that, with respect to any Persons designated in
paragraphs (ix) and (x) of this Section 7 (e)(ii) and other Persons designated
by Buyer in its reasonable discretion, service shall be made by United
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States certified mail, return receipt requested (or the substantial equivalent
as to any such Person beyond areas served by the U.S. Postal Service).
(f) Order Approving Notices Procedures.
Buyer and its legal counsel have read and understand the order
of the Bankruptcy Court approving the global bid procedures substantially in
form and substance satisfactory to Buyer in its reasonable discretion (the "BID
PROCEDURES ORDER") which order will be filed with the Court after the date
hereof. The Bid Procedures Order shall require any Person bidding on the
Acquired Asset to (i) make a counterbid of not less that $28,875,000 and (ii) to
accompany such counterbid with a deposit in an amount equal to $1,000,000
payable in cash or certified funds. Buyer agrees and understands this Agreement
is subject to the Bid Procedures Order and any other applicable order or act of
the Court.
(g) Post-Closing Access to Records.
Following Closing and subject to the execution of a post-Closing
confidentiality agreement, Buyer agrees to permit representatives of Sellers to
have access, at reasonable times and in a manner so as not to interfere with the
normal business operations of Buyer, to the books and records of Buyer
(including all books and records acquired from Sellers hereunder) relating to
the Acquired Assets or the conduct of the Business prior to the Closing Date so
as to enable Sellers to prepare tax, financial or court filings or reports, to
respond to court orders, subpoenas, or inquiries, investigations, audits or
other proceedings of Governmental Authorities, to prosecute or defend legal
actions or for other like proper purposes. Buyer agrees to preserve such records
in its possession for a period of at least five years from the Closing Date.
(h) Further Actions.
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.
(i) 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 pursuant to this Agreement and the consummation of
the other transactions contemplated thereby, including the HSR Filings.
(ii) 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 Contract)
necessary to be obtained by any of them in order to consummate the sale
and transfer of the Acquired Assets pursuant to this Agreement.
(iii) 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
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supplying such assistance as may be reasonably requested by Sellers or
Buyer in connection with the filings and other actions contemplated by
this Section 7(h).
(iv) 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 8 to be satisfied, promptly upon
becoming aware of the same.
(i) Disclosure Letter.
Except for Sections 2(a)(iii), 2(b)(iii) and 7(b) of the
Disclosure Letter attached hereto, the Disclosure Letter has not been finalized
as of the date of execution of this Agreement. Sellers agree to deliver the
proposed draft of the Disclosure Letter to Buyer on November 20, 2001. The Buyer
shall notify Sellers in writing of any discrepancies between the due diligence
and other information and documentation pertaining to the Sellers and the
Business and the proposed Disclosure Letter by November 26, 2001. If by November
29, 2001, Buyers and Sellers are unable to agree on the final form of the
Disclosure Letter, then the matter shall be submitted to the Bankruptcy Court
for final determination. After the date hereof and until the Closing, Sellers
shall supplement the Disclosure Letter with respect to any matter coming to
their knowledge that, if existing or known as of the date of this Agreement, or
if the Disclosure Letter had otherwise been completed as of the date hereof,
would have been required to be set forth or described in any such Section of the
Disclosure Letter. No such supplemental disclosure shall be deemed to have been
disclosed as of the date of this Agreement for purposes of determining whether
or not the conditions to Closing set forth in Section 8(a) have been satisfied
(but such supplemental disclosure will be deemed to have amended the Disclosure
Letter and to have cured any misrepresentation or breach of warranty that
otherwise might have existed hereunder in the absence of such supplemental
disclosure).
(j) Capitalization.
No later than forty-eight (48) hours prior to the date of the
auction, Buyer shall provide Sellers evidence that establishes, to Sellers'
satisfaction, that Buyer has sufficient financial ability to purchase the
Acquired Assets and otherwise consummate the transactions contemplated herein.
(k) Assignment to Cavalier.
No later than December 6, 2001, Buyer and Cavalier shall deliver
to Sellers an executed agreement pursuant to which (i) Buyer shall assign to
Cavalier, and Cavalier shall accept the assignment of, all of Buyer's right
title and interest in and to this Agreement and (ii) Cavalier shall assume all
of Buyer's obligations under this Agreement including, without limitation,
Buyer's obligations under Section 10, below.
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8. 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 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 as of the date made and as if made on the Closing Date;
(ii) Sellers shall have performed and complied with
all of their 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) Sellers shall have delivered to Buyer all of
Sellers' Closing Documents, duly executed by Sellers as applicable;
(v) [Intentionally Omitted]
(vi) from and after the date of this Agreement, with
the exception of the filing with the Bankruptcy Court, (A) there shall
have been no material adverse change in or to the Acquired Assets,
Assumed Liabilities, or the Seller's rights and interests therein, nor
shall any other fact or circumstances then exist that diminishes the
value of the Acquired Assets or Buyer's reasonable expectation of
benefit therein; and (B) there shall have arisen no Material Adverse
Effect;
(vii) Sellers shall have satisfied their obligations
to cure under Section 365 of the Bankruptcy Code.
(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 set
forth in Section 6 above shall be true and correct in all material
respects as of the date made and as if made on the Closing Date;
(ii) Buyer shall have performed and complied with all
of its covenants hereunder in all material respects through Closing;
(iii) The Cash Purchase Price shall have been paid by
Buyer via wire transfer of immediately available funds, in U.S.
currency, to an account designated by Sellers;
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(iv) 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;
(v) Buyer shall have delivered to Sellers all of
Buyer's Closing Documents, duly executed by Buyer as applicable; and
(vi) 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).
9. EXPENSES AND FEES.
Except to the extent that Buyer may be entitled to the Breakup Fee, 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.
10. DEPOSIT AND LIQUIDATED DAMAGES.
Within two (2) business days of the execution of this Agreement, the
Buyer shall deposit the sum of One Million and 00/100 Dollars ($1,000,000.00)
(the "Deposit") with Wilmington Trust Company (the "Escrow Agent"). The Escrow
Agent shall perform its services pursuant to the Escrow Agreement substantially
in the form as attached as Exhibit E (the "ESCROW AGREEMENT"). If the Buyer is
the successful bidder at the hearing on the Sale Order, at the Closing, the
Deposit (and earnings thereon) shall be delivered to the Sellers pursuant to the
Escrow Agreement and credited toward the Cash Purchase Price.
(i) Except as set forth in Sections 10 (ii) and (iii),
below, if the Closing does not occur and this Agreement is terminated, whether
pursuant to Section 11 or otherwise, then the Deposit (and earnings thereon)
shall be immediately delivered to the Buyer in accordance with the Escrow
Agreement; provided, however, that if this Agreement is terminated by Sellers
because Buyer is not the successful bidder at the hearing on the Sale Order (nor
the second highest bidder at the hearing on the Sale Order), then the Deposit
(and earnings thereon) shall be paid to the Buyer at the closing of the
counterbid.
(ii) If the Buyer is in material breach or provides written
repudiation of this Agreement (provided that Sellers are not in material breach
of this Agreement) on or before December 6, 2001, Sellers' remedies against
Buyer shall be limited to retention of the Deposit as liquidated damages
pursuant to the terms of the Escrow Agreement, which shall be sole remedy of
Sellers for such breach, and Sellers shall have no other recourse against Buyer,
Cavalier or any of their respective affiliates on account of this Agreement nor
otherwise.
(iii) If the Buyer is in material breach of this Agreement
(provided that Sellers
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are not in material breach of this Agreement) after December 6, 2001, Sellers
shall have full recourse against the Buyer and the Deposit shall secure Sellers'
claim against the Buyer pending liquidation of such claim.
11. TERMINATION. This Agreement shall terminate as provided below:
(a) Mutual Agreement.
Buyer and Sellers may terminate this Agreement by mutual written
consent at any time prior to Closing.
(b) Termination by Buyer.
Buyer may terminate this Agreement by giving written notice to
Sellers on or prior to Closing (i) in the event of a Material Adverse Effect
effecting the Acquired Assets and such Material Adverse Effect shall have
continued without cure for a period of ten (10) Business Days after the date the
notice of such was received by Sellers, (ii) for failure of the Court to enter
each of the Bid Procedure Order on or before December 15, 2001, the Breakup Fee
Order on or before December 31, 2001 and the Sale Order on or before January 15,
2002, (iii) if the Closing does not occur on or prior to February 15, 2002, or
(iv) if the Court approves a purchaser other than the Buyer at the hearing on
the Sale Order.
(c) Termination by Sellers.
Sellers may terminate this Agreement by giving written notice to
Buyer on or prior to the Closing (i) in the event that the Court does not
approve the Bidding Procedures Order and the Breakup Fee Order, or (ii) if the
Court approves a purchaser other than the Buyer at the hearing on the Sale
Order, provided that Sellers pay the Breakup Fee to the Buyer at the closing of
the counterbid.
(d) Effect of Termination.
In the event of the termination of this Agreement pursuant to
this Section 11, this Agreement, except for the provisions of Sections 9, 12(d)
and 12(k) shall forthwith become null and void and have no effect. Nothing in
this Section 12 shall, however, relieve any party to this Agreement of for
liability for breach of this Agreement occurring prior to such termination, or
for breach of any provision of this Agreement which specifically survives
termination.
12. MISCELLANEOUS.
(a) Survival of Representations and Warranties.
None of the representations and warranties of the parties hereto
contained in this Agreement or in any of the Transaction Documents shall survive
Closing hereunder
(b) Transfer Taxes.
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
-23-
sale of the Acquired Assets, the assignment of Assumed Contracts or any other
action contemplated by this Agreement will be paid by Buyer. 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.
(c) 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.
(d) Press Releases and Public Announcements.
No party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement prior to entry of
a Sale Order without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable Law or any listing or trading agreement concerning its
publicly-traded securities.
(e) 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.
(f) Entire Agreement; Amendment.
This Agreement, the Disclosure Letter 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, however, that the Confidentiality Agreement remains in full force and
effect. 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 (ii) this Agreement may not be amended in any material manner
after entry of a Sale Order without Court approval, and (ii) the Disclosure
Letter may be amended at any time prior to the Effective Time to the extent that
such amendments are not material.
(g) Succession and Assignment.
This Agreement shall be binding upon and inure to the benefit of
the parties named herein and their respective successors and permitted assigns.
No party may assign either
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this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other party; provided, however, that Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder, in any or all of which cases Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder. In
the event Buyer assigns or delegates any of its rights hereunder as provided in
the foregoing sentence, Buyer shall cause such Affiliate to be capitalized, or
shall guarantee or otherwise provide financial support for the obligations of
any such Affiliate to the extent such capitalization or financial support may be
required in order to avoid objection to the assignment of the Assumed Contracts
to such Affiliate under the provision of Section 365 of the Bankruptcy Code.
(h) 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.
(i) Headings.
The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) Notices.
All notices, requests, demands or other communications required
or permitted by this Agreement: (i) shall be in writing; (ii) shall be deemed to
have been given, forwarded, made or delivered: (A) if delivered in person or by
overnight courier service, when so delivered, (B) if sent by facsimile
transmission, when received, or (C) if sent by registered, certified or express
mail, return receipt requested and postage prepaid, on the date of receipt (or
on the date of attempted delivery if delivery is refused); and (iii) shall be
addressed as follows:
If to Buyer:
-----------
Cavalier East, LLC and/or Cavalier Telephone, LLC
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. XxXxxxxx, Esq.
Phone: (000) 000-0000 (direct line)
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Facsimile: (000) 000-0000
Cellular: (000) 000-0000
If to Sellers:
-------------
Net2000 Communications, Inc.
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxx Xxxxxxx Arsht & Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (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.
(k) Governing Law; Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE STATE AND FEDERAL
COURTS OF THE STATE OF DELAWARE SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO PERTAINING DIRECTLY
OR INDIRECTLY TO THIS AGREEMENT OR TO ANY MATTER ARISING HEREUNDER OR RELATED
HERETO.
(l) 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
-26-
and provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(m) Incorporation of Disclosure Letter.
The Disclosure Letter identified in this Agreement is
incorporated herein by reference and made a part hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
CAVALIER EAST, LLC
By:/s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: President
CAVALIER TELEPHONE, LLC
(with respect to Section 7(k), only)
By:/s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: President
NET2000 COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS HOLDINGS, INC.
By:/s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS OPERATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS CAPITAL EQUIPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS REAL ESTATE, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
XXX0000 XXXXXXXXXXXXXX XX XXXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
FREBON INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
VISION I.T.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
