ASSET PURCHASE AGREEMENT
by and among
MCCC ICG HOLDINGS, LLC,
ICG COMMUNICATIONS, INC.,
MPOWER HOLDING CORPORATION
and
MPOWER COMMUNICATIONS CORP.
October 22, 2004
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 22, 2004,
among MCCC ICG Holdings, LLC, a Delaware limited liability company ("Parent"),
ICG Communications, Inc., a Delaware corporation and wholly owned subsidiary of
Parent ("ICG" and, each of ICG and Parent, a "Selling Party") and Mpower
Holdings Corporation, a Delaware corporation ("Holding") and Mpower
Communications Corp. ("Communications" and, collectively with Holding,
"Mpower"). Each of Parent, ICG, Holding and Communications are each referred to
as a "Party" and collectively referred to as "Parties" hereinafter.
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of July 19,
2004 (the "Merger Agreement"), by and among Parent, a wholly owned subsidiary of
Parent ("Merger Sub") and ICG, Merger Sub was merged with and into ICG (the
"Merger") and ICG is the surviving corporation; and
WHEREAS, Parent and ICG desire to sell to Mpower, and Mpower desires to
purchase from ICG and ICG's Subsidiaries, all of the assets primarily owned,
used, or held for use by ICG and ICG's Subsidiaries with respect to the
communications services business delivering access, data and voice services to
corporate customers, telecom carriers and internet service providers in the
State of California as currently conducted by ICG and ICG's Subsidiaries (the
"Purchased Business"); and
WHEREAS, Parent desires to purchase from Holding, and Holding desires to
sell to Parent, shares of Common Stock, par value $0.001 per share, of Holding
(the "Mpower Common Stock"), with an aggregate total purchase price of
$2,500,000, subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereto agree as follows:
ARTICLE I
THE ASSET SALE
Section 1.1 The Asset Sale. Upon the terms and subject to the conditions
set forth in this Agreement, the following transactions (collectively, the
"Asset Sale") shall be consummated:
(a) The Selling Parties and the Subsidiaries of the Selling Parties
shall sell, transfer and assign to Communications, and Communications shall
purchase from ICG and ICG' Subsidiaries, free and clear of all Encumbrances
other than Permitted Liens all right, title and interest in and to the assets,
properties, goodwill and business of every kind and description and wherever
located, whether tangible or intangible, real, personal or mixed directly or
indirectly owned by ICG or ICG's Subsidiaries or to which ICG or ICG's
Subsidiaries are directly or indirectly entitled and, in any case, belonging to,
owned, primarily used, intended to be used, or held for use in connection with
the Purchased Business, wherever located, including, without limitation, all
physical assets located in the State of California and all such assets or rights
acquired by ICG or ICG's Subsidiaries between the date hereof and the Closing,
other than Excluded Assets (as defined below) (the "Purchased Assets"),
including, but not limited to:
(i) the Purchased Business as a going concern;
(ii) machinery, equipment (including, without limitation,
customer premise equipment and all equipment located at collocations and
switching sites but excluding the nine Lucent 5E switches (the "Lucent
Switches")), furniture and fixtures, office equipment, computer equipment
(including all hardware owned or licensed by any Selling Party or any Subsidiary
of a Selling Party (including the related documentation)), facsimile machines,
copying machines, communications equipment, vehicles (but, as to vehicles, only
if owned by any Selling Party or a Subsidiary of a Selling Party and not subject
to a capital or operating lease, unless otherwise specifically assumed by
Mpower), spare and replacement parts, and other tangible property (and interests
in any of the foregoing) of the Selling Parties and Subsidiaries of Selling
Parties relating to the Purchased Business, including the machinery and
equipment listed on Schedule 1.1(a)(ii) hereto;
(iii) all customer accounts;
(iv) all supplies and items of inventory to the extent relating
to the Purchased Business owned by the Selling Parties and Subsidiaries of the
Selling Parties as of the Closing, whether in possession of the Selling Parties
or a third party;
(v) all licenses, Permits, registrations, approvals and
authorizations issued by any Governmental Entity or private organization
possessed by the Selling Parties or the Subsidiaries of the Selling Parties used
or useful in the operation of the Purchased Business or required for the use of
the Purchased Assets and all rights thereunder (each, a "Business License" and,
collectively, the "Business Licenses");
(vi) all rights under any contracts relating to the Purchased
Business and under any leases, subleases and other occupancy agreements with
respect to real property in effect as of the date hereof ("Leased Real
Property") relating to the Purchased Business (the "Real Property Leases") to
which any Selling Party or any of their Affiliates is a party, including any
amendments and supplements thereto, that are specifically identified by Mpower
and set forth on Schedule 1.1(a)(vi) hereto, including, without limitation, (A)
any contracts entered into by ICG relating to the Purchased Business which
Mpower and Parent agree in writing to include as Purchased Assets in which cases
Schedule 1.1(a)(vi) will be deemed updated as of the Closing Date (each such
contract or Real Property Lease, an "Assumed Contract" and, collectively, the
"Assumed Contracts");
(vii) all marketing, sales support and promotional literature,
market research studies, books, records, files, documents, financial and Tax
records, bills, accounting, internal and audit records, operating manuals,
personnel records, databases, all lists of past, present or prospective
customers, supplier lists and files, in each case relating to the Purchased
Business and including, without limitation, customer lists, documents and
records relating to past, present and prospective customers of the Purchased
Business, whether in printed form or
2
computer media and including supporting postal data, preprinted materials,
artwork, and other similar items and all other information, files, records,
data, plans and recorded knowledge, it being understood and agreed that if at
all practicable the Selling Parties shall deliver to Mpower the original
embodiments of each of the foregoing; otherwise the Selling Parties shall
deliver to Mpower full and complete copies of each of the foregoing;
(viii) all Intellectual Property owned by or licensed to any
Selling Party or any Subsidiary of a Selling Party relating to the Purchased
Business and goodwill associated therewith, rights thereunder, remedies against
infringements, dilution, misappropriation or violation thereof and rights to
protection of interests therein under the applicable Laws of all jurisdictions
(collectively, the "Business IP");
(ix) all of the Selling Parties' or their respective
Subsidiaries' accounts, accounts receivable (billed or unbilled) and notes
receivable relating to the Purchased Business arising on or after the date
hereof (including any collateral or security held by the Selling Parties or the
Subsidiaries of the Selling Parties for payment thereof and accrued but unpaid
interest thereon and proceeds thereof) arising on or after the date hereof and
existing on the Closing Date (collectively, the "Acquired Accounts Receivable");
(x) all of the Selling Parties' or their respective Subsidiaries'
rights, claims, credits, causes of action or rights of set-off against third
parties to the extent relating to the Purchased Business or the Purchased Assets
as a result of the operation of the Purchased Assets or the Purchased Business,
subject to the provisions of Section 1.4 whether arising before or after the
date hereof, including claims pursuant to all warranties, remedies, awards,
advances, bonds, deposits, retentions, representations, previously paid amounts
and guarantees made by suppliers, manufacturers, contractors and other third
parties in connection with products or services purchased by or furnished to the
Selling Parties or the Subsidiaries of the Selling Parties, except to the extent
such rights, claims, credits, causes of action or rights of set-off have been
identified on Schedule 1.4 by the Selling Parties and are being pursued by or
have been resolved by the Selling Parties on the Closing Date;
(xi) all rights to insurance claims, proceeds or awards to the
extent necessary to return the Purchased Assets and the Purchased Business to
their condition prior to the occurrence of such events, other than those claims,
proceeds or awards with respect to Purchased Assets that have already been
returned to such condition at the expense of the Selling Parties prior to the
date hereof;
(xii) all claims, rights and choses in action of the Selling
Parties or the Subsidiaries of the Selling Parties relating to the Purchased
Assets or the Purchased Business against any Person, whether matured or
unmatured, direct or indirect, known or unknown, absolute or contingent whether
arising before or after the date hereof, except to the extent such claims,
rights and choses in action are identified on Schedule 1.4 by the Selling
Parties and are being pursued by or have been resolved by the Selling Parties on
the Closing Date;
(xiii) either (A) perpetual, royalty-free, Transferable (as
defined in Section 1.2) and unsupported licenses to use; provided that such
licenses will be without any warranties, expressed or implied or (B) the Selling
Parties' or their respective Subsidiaries' right,
3
title and interest in and to: all software, software systems, source codes,
databases and database systems, in each case relating to the Purchased Assets or
the Purchased Business, whether owned, leased, or licensed by the Selling
Parties, including, without limitation, the internally developed software set
forth on Schedule 1.1(a)(xiii);
(xiv) all advertising copy, films and mechanicals of the Selling
Parties relating to the Purchased Business;
(xv) all accepted bids and outstanding proposals to the extent
relating to the Purchased Business;
(xvi) all reference materials used or useful in connection with
the Purchased Business;
(xvii) all deposits for real estate leases, customer contracts
for customers that are solely customers of the Purchased Business and vendor
contracts, including, without limitation those set forth on Schedule
1.1(a)(xvii) and, to the extent Mpower is required to post any cash collateral
or deposits to obtain a surety bond that replaces any surety bond of ICG and
ICG's Subsidiaries relating to the Purchased Business (each, an "ICG Surety
Bond"), any deposit or cash collateral securing such ICG Surety Bond set forth
on Schedule 1.1(a)(xvii), not to exceed the actual amount of cash collateral or
deposit required to be provided by Mpower for such replacement surety bond;
(xviii) all goodwill to the extent associated with the Purchased
Business or the Purchased Assets;
(xix) all other tangible and intangible assets of the Selling
Parties relating to the Purchased Business, if any, and whether or not carried
at value or listed on the books and records of the Selling Parties, and whether
or not in the possession of the Selling Parties or others.
(b) ICG shall and Parent shall cause ICG and ICG's Subsidiaries to
assign the following liabilities of ICG and ICG's Subsidiaries with respect to
the Purchased Assets and the Purchased Business (the "Assumed Liabilities") and
Mpower shall assume the Assumed Liabilities and no others: (i) liabilities with
respect to the Purchased Business and the Purchased Assets that arise and are to
be performed from and after the Closing Date with respect to the Assumed
Contracts and contracts entered into with respect to the Purchased Business
after the Closing Date except to the extent such liabilities and obligations,
but for a breach or default by the Selling Parties, would have been paid,
performed or otherwise discharged on or prior to the Closing; (ii) accounts
payable arising on or after the date hereof; (iii) right-to-use fees from and
after the Closing Date; (iv) 50% of all RTU Transfer Fees with respect to the
transactions contemplated by this Agreement; (v) the specific liabilities, as
set forth in Schedule 5.18, related to the Assumed Employees (as defined in
Section 5.18; and (vi) liabilities described on Schedule 1.1(b); and
(c) Holding shall deliver to ICG or its assigns the Stock
Consideration and the Warrant Consideration (as defined in Section 1.6).
4
Section 1.2 Licenses.
--------
(a) Pursuant to a license agreement reasonably satisfactory to the
Parties to be entered into on or prior to the Closing Date (the "License
Agreement"), Parent and ICG shall grant to Mpower and their Affiliates (i) the
non-exclusive, royalty-free and Transferable (as defined below) right to use the
tradenames "ICG" and "ICG Communications, Inc." and all marks associated
therewith until the first anniversary of the Closing Date and (ii) the
non-exclusive, perpetual, royalty-free and Transferable right to use the
tradename "iConvergence" and all marks associated therewith. After the Closing
Date, Parent and ICG shall have no obligation to continue to use or market such
licensed tradenames in connection with the operation of their businesses.
(b) For the purposes of this Section 1.2, "Transferable" shall mean
the ability to transfer the respective licenses to Affiliates, and to any other
Person party to a Change of Control Transaction with Mpower.
(c) For the purposes of this Section 1.2, a "Change of Control
Transaction" shall mean, with respect to any Person, any of the following,
occurring in a single transaction or as part of a series of related
transactions: (a) the acquisition or swap by another Person not affiliated with
Mpower of at least 20% of the assets of Mpower and its subsidiaries, taken as a
whole, (b) the acquisition by another Person of more than thirty percent (30%)
of the voting power of Mpower then outstanding, or (c) the merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Mpower which results in a Person or Persons
other than the current stockholders of Holding owning more than thirty percent
(30%) of the voting power of the surviving entity.
Section 1.3 Closing. The closing of the Asset Sale (the "Closing") will
take place promptly following the satisfaction of the conditions set forth in
Article VI on a date and at the time selected by Parent. The Closing will be
held at the offices of Xxxxxxx, Xxxxxxxxx & Xxxxxx PC, 0000 Xxxxxxxx, Xxxxx 000,
Xxxxxx, XX 00000 or such other location as the parties hereto shall agree to in
writing. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date".
Section 1.4 Excluded Assets. ICG shall retain (a) right, title and interest
in the assets owned by ICG and its Affiliates not primarily used or held for use
in the conduct of the Purchased Business, including the assets of the Purchased
Business listed on Schedule 1.4(a) (the "Shared Assets"); (b) all rights of the
Selling Parties under all contracts and Real Property Leases that Mpower does
not specifically elect in writing to acquire pursuant to Section 1.1(a)(vi); (c)
the Lucent 5E switches and (d) the assets listed on Schedule 1.4(d)
(collectively, the "Excluded Assets").
Section 1.5 Excluded Liabilities. Except for the Assumed Liabilities,
Mpower shall not assume or be obligated to pay, perform, discharge or in any way
be responsible for any liabilities of Parent or ICG or their Affiliates, and
Parent shall indemnify Mpower from and against all such liabilities. Without
limiting the foregoing, and notwithstanding anything in Section 1.1(b) to the
contrary, the Assumed Liabilities will not include and Mpower will not be
assuming any liability of Parent or ICG or any of their Affiliates with respect
to: (a) any
5
obligations with respect to the Excluded Assets; (b) 50% of all RTU Transfer
Fees; (c) all liabilities, both contingent and allocated, associated with the
remote access services business sold by ICG to Level 3 Communications, Inc.; (d)
all liabilities or responsibilities related to the employment or termination of
employment by Parent or ICG or their Affiliates of any employees of ICG other
than the specific liabilities set forth on Schedule 5.18 with respect to the
Assumed Employees; (e) any Liabilities of Parent, ICG or ICG's Subsidiaries
resulting from any lawsuit, judgment, claim or Action with respect to the
Purchased Assets and the operation and ownership of the Purchased Business prior
to the Closing Date (whether or not pending or threatened on the date hereof);
(f) any liabilities with respect to Excluded Taxes; (g) any liabilities for
indebtedness of borrowed money other than Assumed Liabilities which Mpower has
assumed pursuant to Section 1.1(b) hereof; (h) any liabilities for any breach,
act or omission by Parent, ICG or any ICG Subsidiary under any contract; (i) all
environmental liabilities arising from, because of or related to any Action,
event, circumstance or condition related to the Purchased Business or the Real
Property, in each case first arising, occurring or existing on or before the
Closing, including (A) any Release of any Hazardous Material at, to or from the
Real Property or any Former Real Property (and any additional migration of such
Hazardous Material after the Closing), (B) any transportation, disposal or
discharge, or the arrangement for such activities of any Hazardous Material
originating at the Leased Real Property or any former Leased Real Property to or
at any location (and any additional transportation, disposal or discharge of
such Hazardous Material after the Closing) and (C) any noncompliance with or
violation of any Environmental Law relating in any way to the Purchased Assets
or the Purchased Business (and any continuation of such noncompliance or
violation after the Closing); (j) all liabilities to pay a lease amendment fee
for the Real Property Lease for the property located at 000 Xxxx Xxxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 and (k) any other liability arising out of or
relating to the conduct of the Purchased Business prior to the Closing Date that
is not expressly assumed by Mpower hereunder. Liabilities of Parent, ICG and
their respective Affiliates other than the Assumed Liabilities shall be referred
to collectively as the "Excluded Liabilities". Parent and ICG will (and will
cause their respective Affiliates to) discharge when due all of their respective
liabilities relating to or arising in connection with the Purchased Business or
the Purchased Assets that are not assumed by Mpower hereunder.
Section 1.6 Consideration. Subject to Section 1.1 hereof, the consideration
for the Purchased Assets (the "Consideration") shall consist of: (a) 10,740,030
shares of Mpower Common Stock (the "Stock Consideration"); provided that if the
issuance of such number of shares of Mpower Common Stock would require approval
by the Holding shareholders, then Mpower shall be entitled to substitute cash
for all or any portion of the Stock Consideration, (b) warrants (the "Warrants")
to acquire 2,000,000 shares of Mpower Common Stock at an exercise price of
$1.383 per share (the "Warrant Consideration") and (c) the assumption by Mpower
of the Assumed Liabilities.
Section 1.7 Purchase of Mpower Common Stock.
-------------------------------
(a) As soon as reasonably practicable, but in no event later than 30
days from the Closing Date (the "Stock Purchase Date"), Parent shall purchase
from Holding, and Holding shall sell, assign, transfer, convey and deliver to
Parent (the "Stock Purchase") 1,988,894 shares of Mpower Common Stock (the
"Purchased Stock") for $2,500,000 (the "Stock Purchase Price").
6
(b) Two days prior to the Stock Purchase Date, Parent shall provide
written notice to Holding of its intention to complete the Stock Purchase. On
the Stock Purchase Date, Parent shall deliver to Holding, by wire transfer in
immediately available funds, the Stock Purchase Price to the bank account
information provided by Holding in writing prior to the Stock Purchase Date. On
the Stock Purchase Date, Holding shall provide to Parent stock certificates
evidencing the Purchased Stock, a receipt for the Stock Purchase Price and other
closing documents customary for similar transactions.
Section 1.8 Purchase Price Escrow. On the Closing Date, a number of shares
of Mpower Common Stock equal to the quotient obtained by dividing $800,000 by
the Mpower Stock Price (the "Escrow Stock") shall be held in escrow until April
30, 2006 by Mpower for the benefit of Parent pursuant to an Escrow Agreement in
form and substance reasonably satisfactory to the Parties (the "Escrow
Agreement").
Section 1.9 Allocation of Consideration. The Consideration shall be
allocated among the Purchased Assets, and the covenant set forth in Section
5.10, as agreed upon between Marist and the Selling Parties (the "Allocation
Method"). The Parties shall use their reasonable best efforts to reach agreement
on the Allocation Method prior to December 31, 2004. The Parties shall make
consistent use of such allocation, fair market values and useful lives for all
tax purposes and in all filings, declarations and reports with the Internal
Revenue Service (the "IRS") in respect thereof, including the reports required
to be filed under Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"). In the event that the Parties do not agree to an Allocation Method
after good faith negotiation, the Parties shall submit any item in dispute for
resolution to an independent audit firm reasonable acceptable to the Parties
(the "Independent Auditors"), which independent audit firm shall not be the
auditors of any of the Parties. The Independent Auditors, promptly after such
submission, shall determine the final Allocation Method that shall be binding
and conclusive on the Parties. The fees and disbursements of the Independent
Auditors shall be shared equally between Mpower and Parent. Any subsequent
adjustments to the Consideration shall be reflected in the Allocation Method in
a manner consistent with Section 1060 of the Code and the Regulations. For all
Tax purposes, the Parties agree that the transactions contemplated in this
Agreement shall be reported in a manner consistent with the terms of this
Agreement, including the Allocation Method, and that none of the Parties will
take any position inconsistent therewith in any Tax Return, refund claim,
litigation or otherwise.
Section 1.10 Further Assurances; Post-Closing Cooperation. At any time or
from time to time after the Closing and for 90 days thereafter, at Mpower's
reasonable request and without any further consideration, Parent and its
Subsidiaries shall: (a) execute and deliver to Mpower such other instruments of
sale, transfer, conveyance, assignment and confirmation; (b) provide such
materials and information; and (c) take such actions as Mpower may reasonably
deem necessary or desirable in order more effectively to transfer, convey and
assign to Mpower, to confirm Mpower's title to, the Purchased Business.
Section 1.11 Assignment of Assumed Contracts and Business Licenses. To the
extent that transfer or assignment hereunder by a Selling Party to Mpower of any
Assumed Contract or Business License included in the Purchased Assets is not
permitted or is not permitted without notification or the consent or approval of
another Person, this Agreement shall not be deemed to
7
constitute an assignment, an attempted assignment or an undertaking to assign
such Assumed Contract or Business License if such consent or approval is not
given or if such an assignment, attempted assignment or undertaking otherwise
would constitute a breach thereof or cause a loss of benefits thereunder. Parent
and its Subsidiaries (and, subject to Section 5.6 of this Agreement, Mpower
where required) shall use their commercially reasonable efforts to obtain any
and all such third party consents or approvals under all Assumed Contracts and
Business Licenses. If any such third party consent or approval is not obtained
before the Closing, Parent shall, or shall cause ICG or any of its Subsidiaries
to, cooperate with Mpower in any reasonable arrangement designed to provide for
Mpower after the Closing the benefits intended to be assigned to Mpower under
the applicable Business License or Assumed Contract including enforcement at the
cost and for the account of Mpower of any and all rights of Parent or ICG
against the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise; provided that Mpower shall undertake
to pay or satisfy the corresponding liabilities for the enjoyment of such
benefit to the extent that Mpower would have been responsible therefor hereunder
if such consent, waiver or approval had been obtained. Parent shall, or shall
cause ICG to, without consideration therefor, pay, assign and remit to Mpower
promptly all monies, rights and other consideration received in respect of such
performance. Parent shall, or shall cause ICG to, exercise or exploit its rights
in respect of such Purchased Assets only as reasonably directed by Mpower and at
Mpower's expense. Subject to and in accordance with Section 5.6, the Parties
shall continue to use their commercially reasonable efforts to obtain all such
unobtained consents or approvals at the earliest practicable date. If and when
any such consents or approvals shall be obtained, then Parent shall, or shall
cause ICG to, promptly assign its rights and obligations thereunder to Mpower
without payment of consideration and Mpower shall, without the payment of any
consideration therefor, assume such rights and obligations to the same extent as
the Selling Parties had prior to such assignment. The Parties shall execute such
good and sufficient instruments as may be necessary to evidence such assignment
and assumption. Nothing in this Section 1.11 shall limit the closing conditions
set forth in Article VI for the benefit of Mpower.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND ICG
Except as otherwise set forth in the disclosure schedule delivered by
Parent prior to the execution of this Agreement and attached hereto, (the
"Parent Disclosure Schedule"), each Selling Party hereby represents and warrants
to Mpower as follows:
Section 2.1 Organization and Standing. Each Selling Party is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction in which such Selling Party is organized and
has the requisite corporate or other power, as the case may be, and authority to
carry on such Selling Party's business as now conducted. Each Selling Party and
its subsidiaries are duly qualified or licensed to do business and are in good
standing in each jurisdiction in which the nature of such Selling Party's
business or the ownership, leasing or operation of such Selling Party's
properties make such qualification or licensing necessary, except in each case
where the failure to be so qualified or licensed would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Each Selling Party has made available to Mpower prior to the execution of this
Agreement
8
complete and correct copies of such Selling Party's organizational documents and
the organizational documents of such Selling Party's subsidiaries, in each case,
as amended to the date hereof. Such organizational documents are in full force
and effect. For the purposes of this Agreement, the term "Material Adverse
Effect" means, (i) with respect to Parent and ICG, any change or effect that,
individually or in the aggregate with any other changes and effects, is or is
reasonably likely to (a) be materially adverse to the assets, liabilities,
business, results of operations or condition (financial or otherwise) of the
Purchased Business or the Purchased Assets or (b) prevent or materially delay
the consummation of the transactions contemplated by this Agreement and the
Related Agreements.
Section 2.2 Authority and Enforceability. Each Selling Party has all
requisite power and authority to enter into this Agreement and the Related
Agreements and, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Related Agreements by each
Selling Party and delivery and the consummation by each Selling Party of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of such Selling Party, and no other corporate
proceedings on the part of such Selling Party is necessary to authorize this
Agreement and the Related Agreements or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Related Agreements have
been duly executed and delivered by each Selling Party at the time of execution
and delivery and, assuming the due authorization, execution and delivery by the
other parties hereto and thereto, shall constitute legal, valid and binding
obligations of such Selling Party, enforceable against such Selling Party in
accordance with their respective terms.
Section 2.3 Conflicts, Consents and Approvals. Except as set forth in
Section 2.3 of the Parent Disclosure Schedule, the execution and delivery by
each Selling Party of this Agreement and the Related Agreements at the time of
execution and delivery and the consummation of the transactions contemplated
hereby and thereby will not:
(a) violate any provision of the certificate of incorporation or
by-laws (or equivalent organizational documents) of such Selling Party or any of
such Selling Party's subsidiaries;
(b) in any material respect violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or both, would constitute a default)
under, require the consent of any Person or the giving of notice to any Person
under, or entitle any Party (with the giving of notice, the passage of time or
both) to terminate, accelerate, modify, impose any monetary or other economic
penalty or call a default under, or result in the creation of any encumbrance
upon any of the properties or assets of such Selling Party or any of such
Selling Party's subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, intellectual property or
other licenses (except with respect to consents or approvals with the FCC, State
PUCs or Municipal Franchising Authorities referred to in subsection (d) below),
contract, undertaking, agreement, lease or other instrument or obligation to
which such Selling Party or any of such Selling Party's subsidiaries is a party;
(c) violate in any material respect any order, writ, injunction,
decree, statute, rule or regulation (except with respect to consents or
approvals with the FCC, State PUCs or
9
Municipal Franchising Authorities referred to in subsection (d) below)
applicable to such Selling Party or any of such Selling Party's subsidiaries; or
(d) require any material consent or approval of or registration or
filing by such Selling Party or any of its affiliates with, any third party or
any federal, national, supranational, state, county, provincial, local, foreign
or similar government, governmental agency, administrative or regulatory
authority, department, commission, board, agency or instrumentality, or any
court, tribunal or judicial or arbitral body (each, a "Governmental Entity")
which has not been received or made except for (i) any such consent or approval
of or registration or filing with the Federal Communications Commission ("FCC"),
any state public service or public utilities commission (each, a "State PUC"),
and any municipal franchising authority (each, a "Municipal Franchising
Authority") having regulatory authority over the business of such Selling Party
or its subsidiaries as conducted in any given jurisdiction and described on
Section 2.3(d) of the Parent Disclosure Schedule, and (ii) the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act
of 1934, as amended (the "Exchange Act"), state securities or "blue sky" laws
("Blue Sky Laws") and state takeover laws and described on Section 2.3(d) of the
Parent Disclosure Schedule.
Section 2.4 Financial Statements; Liabilities.
---------------------------------
(a) The unaudited pro forma financial statements (including any notes
thereto) set forth on the Parent Disclosure Schedule (the "Pro Forma
Financials") fairly present in all material respects the consolidated results of
operations of the Purchased Business for the respective periods then ended. The
Pro Forma Financials (including the notes thereto) (i) were prepared in
accordance with the books of account and other financial records of ICG and its
Subsidiaries, (ii) present fairly the results of operations of the Purchased
Business as of the dates thereof or for the periods covered thereby, (iii) have
been prepared in accordance with guidelines and accounting practices attached as
notes thereto and (iv) include all adjustments that are necessary for a fair
presentation of the consolidated financial condition of the Purchased Business
and the results of the operations of the Purchased Business as of the dates
thereof or for the periods covered thereby. The amounts set forth in the various
line items of the Pro Forma Financials are accurately categorized in all
material respects except as specified on Section 2.4(a) of the Parent Disclosure
Schedule, it being acknowledged by the Selling Parties that Mpower has relied
upon the accuracy of such Pro Forma Financials (including the various line items
thereof) in entering into this Agreement and in agreeing to be responsible for
expenses of the Purchased Business pursuant to the Interim Management Agreement.
(b) The books of account and other financial records of ICG relating
to the Purchased Business: (i) reflect all items of income and expense and all
assets and liabilities required to be reflected therein in accordance with U.S.
generally accepted accounting principles applied on a basis consistent with the
past practices of ICG, (ii) are in all material respects complete and correct,
and do not contain or reflect any material inaccuracies or discrepancies and
(iii) have been maintained in accordance with good business and accounting
practices.
Section 2.5 SEC Reports.
10
(a) ICG has timely filed with the SEC all required reports, filings,
registration statements and other documents to be filed by it with the SEC since
January 1, 2000 (the "ICG SEC Documents"), except as set forth in Section 2.5(a)
of the Parent Disclosure Schedule.
(b) As of its filing date, or as amended or supplemented prior to the
date hereof, each ICG SEC Document complied as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such ICG SEC Reports except as set forth in Section 2.5(b) of the Parent
Disclosure Schedule.
(c) No ICG SEC Document, as of its filing date, contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(d) No Subsidiary of ICG (with respect to the Purchased Business or
the Purchased Assets) is required to file any form, report or other document
with the SEC.
(e) ICG has heretofore made available to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had been
filed by ICG with the SEC pursuant to the Exchange Act, and Parent has
heretofore made available to Mpower a complete and correct copy of such
amendments or modifications that relate in any material respects to the
Purchased Business or the Purchased Assets.
Section 2.6 Compliance with Applicable Laws. (a) Except as set forth in
Section 2.6 of the Parent Disclosure Schedule, the Purchased Business is not
being conducted in violation of any law, ordinance, obligation or regulation of
any Governmental Entity (including, without limitation, the (i) Communications
Act of 1934, as amended, (ii) the rules, regulations and policies of the FCC and
State PUCs, (iii) any and all Universal Service Fund obligations, and (iv) the
Communications Assistance to Law Enforcement Act) in all material respects, and
none of the Selling Parties has received any claim or notice that it is not in
compliance with each federal, national supernational, state, provincial, local
or similar statute, law, ordinance, regulation, rule, code, order, requirement,
obligation or rule of law ("Law") of any Governmental Entity applicable to the
Purchased Business or the Purchased Assets. Each Selling Party and its
subsidiaries has in effect all material Permits necessary for it to own, lease
or operate the assets of the Purchased Business and to carry on the Purchased
Business as now conducted (including, without limitation, those required
pursuant to Environmental Laws (as defined in Section 2.8(a)), and there has
occurred no default or limitation, or an event which, with notice or lapse of
time or both, would constitute a default or limitation, with respect to any such
Permit. Each Selling Party and its subsidiaries have complied and are in
compliance in all material respects with the terms of the Permits and all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity. As of the date of this Agreement, there is no material
proceeding, Action, demand, requirement or investigation by any Governmental
Entity with respect to a Selling Party or any of its subsidiaries is pending or
to the best knowledge of such Selling Party threatened, nor has any Governmental
Entity indicated an intention to conduct the same.
11
(b) Section 2.6(b) of the Parent Disclosure Schedule sets forth a
brief description of each order, writ, award, judgment, injunction, decree,
stipulation or determination issued, promulgated or entered by or with any
Governmental Entity of competent jurisdiction ("Governmental Order") applicable
to the Selling Parties (related to the Purchased Business), or any of the
Purchased Assets or the Purchased Business, and no such Governmental Order has,
has had, or is reasonably likely to have an adverse effect on any of the
Purchased Assets or the Purchased Business in any material respects or could
affect the legality, validity or enforceability of this Agreement, any Related
Agreement or the consummation of the transactions contemplated hereby or
thereby.
Section 2.7 Communication Licenses. Each Selling Party and its subsidiaries
are the authorized legal holders or otherwise have rights to all Permits issued
by the FCC, State PUCs or any other Governmental Entity that regulates
telecommunications in each applicable jurisdiction held by such Selling Party or
its subsidiaries (collectively, "Communications Licenses"), and the
Communications Licenses constitute all of the licenses from the FCC, the State
PUCs or any other Governmental Entity that regulates telecommunications in each
applicable jurisdiction that are necessary or required for or used in the
operation of the Purchased Businesses as now conducted other than any such
licenses from any Municipal Franchising Authority or similar Governmental Entity
the absence of which would not result in any fines, penalties or other losses in
excess of $5,000 individually or $100,000 in the aggregate and which are
obtained in the ordinary course of business. All the Communications Licenses
were duly obtained and are valid and in full force and effect, unimpaired by any
material condition, except those conditions that may be contained within the
terms of such Communications Licenses. As of the date of this Agreement, no
action by or before the FCC, any State PUC or any other Governmental Entity that
regulates telecommunications in each applicable jurisdiction is pending or, to
the best knowledge of each Selling Party, threatened in which the requested
remedy is (i) the revocation, suspension, cancellation, rescission or
modification or refusal to renew any of the Communications Licenses, or (ii)
material fines and/or forfeitures. As of the date of this Agreement, the
Universal Service Administration Company has not initiated any inquiries, audits
or other proceedings against a Selling Party or its subsidiaries and, to the
best knowledge of such Selling Party, no such actions are threatened which, in
each case, could result in fines, penalties or other losses in excess of $5,000
individually or $100,000, in the aggregate, if not cured or otherwise responded
to in the ordinary course of business.
Section 2.8 Environmental Matters.
---------------------
(a) The Purchased Business is being, and has been, conducted in
compliance in all material respects with all applicable federal, state, local
and foreign statutes, laws, ordinances, rules, orders and regulations and all
common law concerning human health and safety or pollution or protection of the
environment (collectively, "Environmental Law"), and the Selling Parties hold
and are in compliance in all material respects with all Permits required under
Environmental Laws applicable to the use of the Purchased Assets or conduct of
the Purchased Business as presently conducted.
(b) Except as described in Section 2.8(b) of the Parent Disclosure
Schedule: (i) neither Selling Party nor any of such Selling Party's subsidiaries
are subject to any litigation related to, and have not received from any
Governmental Entity or other Person any
12
notice, report or other information regarding any violation of or any
liabilities (contingent or otherwise) or obligations arising under, any
Environmental Law with respect to any of the current or past operations of such
Selling Party or any of its subsidiaries, or any of the currently or formerly
owned, leased or used property, facilities or assets of such Selling Party or
any of its Subsidiaries; (ii) neither Selling Party nor any of such Selling
Party's subsidiaries have any liability relating to Environmental Law, and
neither Selling Party nor any of its subsidiaries nor any other person has
caused or taken any action that will result in any liability or obligation on
the part of such Selling Party or any of its Subsidiaries relating to
Environmental Law, including, without limitation, (A) the environmental
conditions on, under, or about the real property or other properties, facilities
or assets currently or formerly owned, leased, operated or used in connection
with the Purchased Business or (B) the past or present use, management,
handling, transport, treatment, generation, storage, disposal, arrangement for
or permitted disposal, or Release of, or exposure to, any Hazardous Materials;
neither Selling Party nor any of its Subsidiaries is subject to any outstanding
order from, or contractual or other obligation with, investigation by, any
Governmental Entity or other person in respect of which such Selling Party or
any of its Subsidiaries may be required to incur costs arising from the Release
or threatened Release of a Hazardous Material; (iv) neither Selling Party nor
any of its Subsidiaries has, either expressly or by operation of law, assumed or
become subject to any liability or obligation of any other person relating to
Environmental Laws, other than the obligations to comply with Environmental Laws
in the operation of such Selling Party and its Subsidiaries in the ordinary
course of business; (v) neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will require any remedial
action or notice to or consent of any Governmental Entity or third party; and
(vi)each Selling Party has furnished or made available to Mpower all
environmental audits, reports and other material environmental documents
relating to its or its Subsidiaries' (or their respective affiliates' or
predecessors') past or current properties, facilities or operations which are in
its possession or under its reasonable control which are related to the
Purchased Business. "Hazardous Material" shall mean any chemical, substance or
other material that is classified or regulated as "hazardous", "toxic", a
pollutant or similar designation, or otherwise subject to imposition of
liability, pursuant to any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls, petroleum and urea-formaldehyde insulation.
Section 2.9 Network Facilities.
------------------
(a) Section 2.9(a) of the Parent Disclosure Schedule sets forth the
following information relating to the network of the Purchased Business: (i) all
switches and switch locations of the Purchased Business, (ii) all material
inventory of the Purchased Business, (iii) a description of fibers and fiber
miles owned or leased used in the Purchased Business, and (iv) any pending sale
of any of the foregoing. The information provided in Section 2.9(a) of the
Parent Disclosure Schedule is accurate and complete in all material respects;
provided, however, that the operation of the network of the Purchased Business
is subject to embedded software owned by third parties and licensed to a Selling
Party or its Subsidiaries, as to which (unless indicated otherwise in Section
2.9(a) of the Parent Disclosure Schedule) such Selling Party has valid licenses
that will continue to be legal, valid, binding, enforceable and in full force
and effect on identical terms immediately following the consummation of the
transactions contemplated by this Agreement.
13
(b) Except as disclosed in Section 2.9(b) of the Parent Disclosure
Schedule, each of the network facilities described in Section 2.9(b) of the
Parent Disclosure Schedule is working, functional, fit for the purpose intended
and has been maintained, subject to ordinary wear and tear.
(c) Section 2.9(c) of the Parent Disclosure Schedule sets forth the
anticipated capital expenditures for the Purchased Business that are necessary
and appropriate in the ordinary course of business so that the representation
and warranty made in Section 2.9(b) remains true and accurate through December
31, 2004.
Section 2.10 Material Contracts.
------------------
(a) Section 2.10 of the Parent Disclosure Schedule sets forth a
correct and complete list of all Material Contracts related to the Purchased
Business. True and complete copies of all written Material Contracts, and all
amendments, modifications or waivers thereto have been delivered or made
available by Parent to Mpower. For the purposes of this Agreement, "Material
Contracts" mean any written or oral lease, license, contract, agreement or
obligation to which a Selling Party or any of its Subsidiaries is a party or by
which any of them or any of their properties may be bound (other than this
Agreement and the Related Agreements) involving the exchange of goods or
services or payments by or receipts to such Selling Party or its Subsidiaries in
excess of $50,000 per annum related to the Purchased Business or the Purchased
Assets or that is otherwise material to the business, financial position or
results of operations of the Purchased Business or the ability to consummate the
transactions contemplated by this Agreement and the Related Agreements,
including, but not limited to, in each case to the extent related to the
Purchased Business or the Purchased Assets:
(i) employment, collective bargaining, severance, stay bonuses,
retention, consulting, employee benefit and similar plans and agreements;
(ii) contracts between any Selling Party and any stockholder,
director, officer or employee or other Affiliate of any Selling Party or
its Affiliates;
(iii) contracts under which the amount payable by any Selling
Party is dependent on the revenues or income or similar measure of the
Purchased Business, or in which any Selling Party is obligated to pay
royalties, commissions or similar payments to any person or entity;
(iv) pledges, security agreements, sale/leaseback arrangements
and equipment leases;
(v) license and other similar arrangements in which any Selling
Party is either licensee or licensor with respect to any proprietary rights
or any databases;
(vi) any contracts relating to the lease or rental of any data,
information or lists, whether any Selling Party is the provider or consumer
of such information;
(vii) any settlement agreements pursuant to which any Selling
Party is entitled to future payments (whether lump sum or by installment);
and
14
(viii) any contracts with any Governmental Entity to which any
Selling Party or any of its Subsidiaries is a party.
(b) Except as set forth in Part I of Section 2.10(b) of the Parent
Disclosure Schedule, each Material Contact is valid, binding and enforceable and
in full force and effect and there have been no amendments, modifications or
supplemental arrangement to or in respect of any Material Contract, and none of
the Selling Parties nor any of their Subsidiaries is, or to the best knowledge
of such Selling Party is alleged to be, in breach of or default thereunder, and
no other party is alleged by such Selling Party or any of its Subsidiaries to be
in breach of or default thereunder, and no event has occurred which (whether
with or without notice or lapse of time or both) would constitute such a breach
or default or would permit termination, modification or acceleration thereunder,
in any material respect. To the best knowledge of the Selling Parties, none of
the Selling Parties or their Affiliates has received any notice of termination,
cancellation, breach or default under any Material Contract. Except as set forth
in Part II of Section 2.10(b) of the Parent Disclosure Schedule and for such
month-to-month contracts which expire or are terminated in accordance with their
terms, each Material Contract will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms immediately
following the Closing Date, subject to the receipt of required consents as set
forth in Section 2.3 of the Parent Disclosure Schedule.
Section 2.11 Labor Relations. None of the Selling Parties nor any of their
Subsidiaries is a party to, or bound by, any collective bargaining or other
labor union agreement, contract or other understanding with a labor union or
labor organization applicable to such Selling Party's employees that work in the
Purchased Business and no collective bargaining agreement is being negotiated
related to the Purchased Business. None of the Selling Parties nor any of their
Subsidiaries is delinquent in any material respect in payments to any of its
employees or consultants for any wages, salaries, commissions, bonuses or other
compensation for any services. As of the date of this Agreement, (a) there is no
labor dispute, strike or work stoppage against relating to the Purchased
Business pending or to the best knowledge of each Selling Party threatened which
may interfere with the Purchased Business, (b) neither Selling Party nor any of
its Subsidiaries nor any of their respective representatives or employees has
committed any unfair labor practice in connection with the operation of the
Purchased Business, (c) except as set forth on Section 2.11 of the Parent
Disclosure Schedule, no charge or complaint against a Selling Party or any of
its Subsidiaries with respect to employment practices by or on behalf of any
employee or other individual or any Governmental Entity (including the National
Labor Relations Board or any comparable governmental agency) is pending or, to
the best knowledge of such Selling Party, threatened that could reasonably be
expected to have a Material Adverse Effect, and (d) no termination of employees
of such Selling Party and its Subsidiaries which could require reporting under
the federal Worker Adjustment and Retraining Notification Act of 1988 has been
effected.
Section 2.12 Real Estate.
-----------
(a) There is no real property owned by a Selling Party or any of its
Subsidiaries necessary or useful in the operation of the Purchased Business.
15
(b) Section 2.12(b) of the Parent Disclosure Schedule lists all Real
Property Leases to which such Selling Party or any of its Subsidiaries is a
party. Such Selling Party or its applicable Subsidiary has a good and valid
leasehold interest in and to all of the Leased Real Property under which it is a
tenant or lessee, subject to no Encumbrances except for Permitted Liens. Each
Real Property Lease is in full force and effect and is enforceable in accordance
with its terms as of the date hereof. Except as disclosed in Section 2.12(b) of
the Parent Disclosure Schedule, to the best knowledge of such Selling Party,
there exists no default or condition which, with the giving of notice, the
passage of time or both, could become a material default under any Real Property
Lease. Such Selling Party has previously delivered to Mpower or provided Mpower
with access to true, complete, and correct copies of all the Real Property
Leases. Except as described in Section 2.12(b) of the Parent Disclosure
Schedule, (i) no consent, waiver, approval or authorization by a landlord is
required under any Real Property Lease as a result of the execution of this
Agreement or the Related Agreements or the consummation of the transactions
contemplated hereby or thereby; provided, however, that with respect to
co-location agreements and right of entry agreements entered in the ordinary
course of business, no consent, waiver, approval or authorization by a landlord
is required except as, individually or in the aggregate, would affect the
Purchased Business in any material respect; except as set forth in Section
2.12(b)(ii) of the Parent Disclosure Schedule, no security deposit or portion
thereof deposited with respect to any Real Property Lease has been applied or is
reasonably expected to be applied in respect of a breach or default under such
Real Property Lease which has not been redeposited in full; (iii) neither
Selling Party nor any Subsidiary owes, or will owe in the future, any brokerage
commissions or finder's fees with respect to any Real Property Lease; (iv) the
other party to such Real Property Lease is not an affiliate of, and otherwise
does not have any economic interest in, such Selling Party or any Subsidiary;
(v) neither Selling Party nor any of such Selling Party's Subsidiaries has
subleased, licensed or otherwise granted any person the right to use or occupy
such Leased Real Property or any portion thereof other than pursuant to
co-location rights granted in the ordinary course of business; and (vi) neither
Selling Party nor any of such Selling Party's Subsidiaries has collaterally
assigned or granted any other security interest in any Real Property Lease or
any interest therein.
(c) The Leased Real Property constitutes all of the real property
owned, leased, occupied or otherwise used in connection with the Purchased
Business. Except as disclosed in Section 2.12(c) of the Parent Disclosure
Schedule, other than a Selling Party and its Subsidiaries and, with respect to
co-location agreements entered into in the ordinary course of business, the
parties to such agreements, there are no parties in possession or parties having
any current or future right to occupy any of the Leased Real Property. The
Leased Real Property and all plants, buildings and improvements located thereon
conform in all material respects to all applicable building, zoning and other
laws, ordinances, rules and regulations. All permits, licenses and other
approvals necessary to the current occupancy and use of the Leased Real Property
have been obtained and are in full force and effect in all material respects.
There exists no material violation by a Selling Party or any of its Subsidiaries
of any such permit, license or other approval or any covenant, condition,
restriction, easement, agreement or order affecting any portion of the Leased
Real Property. Each of the Leased Real Property subject to a Real Property Lease
that constitutes a Material Contract is in good condition and repair and is
sufficient and appropriate for the conduct of the business of such Selling Party
and its Subsidiaries, ordinary wear and tear excepted. There is no pending or to
the best knowledge of a Selling Party threatened condemnation proceedings
affecting any material portion of the Leased
16
Real Property. Except as disclosed in Section 2.12(c) of the Parent Disclosure
Schedule, there are no outstanding options or rights of first refusal with
respect to the purchase or use of any of the Leased Real Property, any portion
thereof or interest therein, other than co-location agreements entered into in
the ordinary course of business and other than any such options or rights held
by a Selling Party or any of its Subsidiaries with respect to real property of
third parties. Except as disclosed in Section 2.12(c) of the Parent Disclosure
Schedule, neither Selling Party nor any of its Subsidiaries is obligated to
purchase any Leased Real Property.
Section 2.13 Insurance. Section 2.13 of the Parent Disclosure Schedule
contains a complete and correct list and description (including the name of the
insurer(s), name of the insured(s), amount of coverage, type of coverage,
deductible amounts and significant exclusions) of all material insurance
policies maintained (excluding group life insurance provided by each Selling
Party to its employees, collision insurance on any motor vehicles owned or
leased by such Party and directors' and officers' liability insurance) by or on
behalf of such each Selling Party and its Subsidiaries with respect to the
Purchased Business or the Purchased Assets (the "Business Policies"), including
policies that have expired (the "Expired Policies") but have been renewed by
such Selling Party but in respect of which such Selling Party has not yet
received a new policy (the "Replacement Policies"); provided, that any
Replacement Policy shall not contain any significant exclusions that are
materially more adverse to such Selling Party than those contained in the
Expired Policy. Parent has made available to Mpower complete and correct copies
of all such policies together with all riders and amendments thereto. Except as
noted in Section 2.13 of the Parent Disclosure Schedule, such policies are valid
and in full force and effect, and all premiums due thereon have been paid. Each
Selling Party and its Subsidiaries have complied in all material respect with
the terms and provisions of such policies and have no liability relating
thereto. Except as noted in Section 2.13 of the Parent Disclosure Schedule or
otherwise agreed to by Mpower, none of the insurance policies will terminate or
lapse (or be affected in any other materially adverse manner) by reason of the
execution, delivery or performance of this Agreement and the Related Agreements
by such Selling Party or the consummation of the transactions contemplated
hereby or thereby. None of the Selling Parties has received any notice of
cancellation or non-renewal, or proposed material increase in the premiums
payable for coverage under, any such Business Policies. Section 2.13 of the
Parent Disclosure Schedule contains a complete and correct list of all
outstanding surety or performance bonds with respect to the Purchased Business
or the Purchased Assets.
Section 2.14 Taxes. Except as provided in Section 2.14 of the Parent
Disclosure Schedule:
(a) (i) each of the Selling Parties and its Subsidiaries has timely
filed all Tax Returns required to be filed with respect to the Purchased Assets
or the Purchased Business; (ii) all such Tax Returns are correct and complete in
all material respects and have been prepared in compliance with all applicable
laws and regulations; (iii) all Taxes due and owing by any of the Selling
Parties and their Subsidiaries (whether or not shown on any Tax Return) with
respect to the Purchased Assets or the Purchased Business have been timely paid;
(iv) no adjustment relating to such Tax Returns has been proposed formally or
informally by any Governmental Entity (insofar as it relates to the Purchased
Assets or the Purchased Business); and (v) there are no pending, or to the
knowledge of the Selling Parties, threatened actions for the assessment or
collection of Taxes in respect of the Purchased Assets or the Purchased
Business.
17
(b) There are no (and will not be at Closing) Encumbrances for Taxes
(other than Permitted Liens) upon any of the Purchased Assets.
(c) (i) The Selling Parties have not received any notice or inquiry
from any jurisdiction where the Selling Parties do not currently file Tax
Returns to the effect that such filings may be required with respect to the
Purchased Assets or the Purchased Business or that the Purchased Assets or the
Purchased Business may otherwise be subject to taxation by such jurisdiction;
(ii) the Selling Parties have properly and timely withheld, collected or
deposited all amounts required to be withheld, collected or deposited in respect
of Taxes with respect to the Purchased Assets or the Purchased Business.
Section 2.15 Business Employees. Section 2.15 of the Parent Disclosure
Schedule lists all employees of the Selling Parties or any Affiliate engaged in
the conduct of the Purchased Business and located in California and certain
employees, as agreed to between Parent and Mpower, (i) expected to become
engaged in the conduct of the Purchased Business or (ii) engaged in the conduct
of the Purchased Business and located outside of California (each a "Business
Employee" and collectively, the "Business Employees"), including (and
designating as such) any such employee who is an inactive employee on paid or
unpaid leave of absence, short-term disability or long-term disability, and
indicating the date and location of employment, current title, compensation and
other benefits accrued as of a recent date. For each Business Employee, Section
2.15 of the Parent Disclosure Schedule lists the date and location of
employment, current title, compensation and other benefits accrued as of October
14, 2004. The information set forth on Section 2.15(a) of the Parent Disclosure
Schedule is accurate and complete.
Section 2.16 Employee Benefit Plans. Section 2.16(a) of the Parent
Disclosure Schedule lists each Employee Benefit Plan that each Selling Party or
any of its Subsidiaries maintains, to which each Selling Party or any of its
Subsidiaries contributes or has any obligation to contribute, or with respect to
which each Selling Party or any of its Subsidiaries has any liability to which
any Business Employee is a party or in which any Business Employee participates.
Each Selling Party has made available to Mpower correct and complete copies of
each such Employee Benefit Plan.
Section 2.17 Intellectual Property. Section 2.17 of the Parent Disclosure
Schedule sets forth a complete and accurate list of all of each Selling Party's
and its Subsidiaries' United States and foreign (a) patents and patent
applications, if any, (b) registered and material unregistered trademarks and
service marks and pending trademark or service xxxx registration applications,
(c) domain name registrations, and (d) registered copyrights, indicating for
each, the applicable jurisdiction, registration number (or application number),
and date issued (or date filed), which are necessary or useful in the operation
of the Purchased Business. All registered trademarks, patents and registered
copyrights are currently in material compliance with all legal requirements of
the applicable registration authority (including the timely post-registration
filing or affidavits of use and incontestability and renewal applications with
respect to trademarks, and the payment of filing, examination and maintenance
fees and proof of working or use with respect to patents) are not subject to any
maintenance fees or actions falling due within 120 days after the date hereof.
Except as set forth in Section 2.17 of the Parent Disclosure Schedule, (i) no
trademark or service xxxx is currently involved in any opposition or
cancellation proceeding and to the best
18
knowledge of each Selling Party no such action has been threatened in writing
with respect to any such trademarks or service marks or trademark or service
xxxx registration applications, (ii) to the best knowledge of each Selling
Party, no trademarks, service marks, patents or patent applications of any third
party infringe in any material respect upon such Selling Party's registered
trademarks or service marks, patents or patent applications necessary or useful
in the Purchased Business and (iii) to the best knowledge of each Selling Party,
no claim has been asserted to such Selling Party that the conduct of the
Purchased Business infringes in any material respect upon or misappropriates the
intellectual property rights of any third party.
Section 2.18 Litigation. Except as set forth in Section 2.18 of the Parent
Disclosure Schedule, there is no suit, claim, Action, proceeding or
investigation pending or to the best knowledge of each Selling Party threatened
against any Selling Party or any of their Subsidiaries or its or their
properties with respect to the Purchased Business or the Purchased Assets, and,
to the best knowledge of each Selling Party, there is no reasonable basis for
any such Action. None of the matters set forth in Section 2.18 of the Parent
Disclosure Schedule has, has had or is reasonably likely to adversely affect the
Purchased Business or the Purchased Assets in any material respects, or could
affect the legality, validity or enforceability of this Agreement, any of the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby.
Section 2.19 Customers and Suppliers. Section 2.19 of the Parent Disclosure
Schedule sets forth a true and complete list of all material suppliers of any
Selling Party with respect to the Purchased Business who supplied goods or
services to any Selling Party in an amount in excess of $10,000 on an annualized
basis as of January 2004 and September 2004. Section 2.19 of the Parent
Disclosure Schedule sets forth a true and complete list of all customers and
associated revenue of the Purchased Business for the period from August 16, 2004
to September 16, 2004 and a true and complete list of material customers as of
January 2004. Except as set forth in Section 2.19 of the Parent Disclosure
Schedule, since June 30, 2004 through the date hereof, no Selling Party nor any
of such Selling Party's Subsidiaries have received any notice to, and, to the
best knowledge of such Selling Party, such parties do not know of any suppliers
or customers that intend to terminate, cancel, curtail or change any Material
Contract other than notices with respect to matters arising in the ordinary
course of business.
Section 2.20 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement or the Related Agreements based upon arrangements made by or on
behalf of a Selling Party.
Section 2.21 Inventory. The inventory of the Purchased Business is, and
will be on the Closing Date, at a normal and customary level based on ICG's past
practice, is in quantity and quality useable or saleable in the ordinary course
of business, and the amount of such inventory is sufficient to conduct the
Purchased Business consistent with the past practices of ICG. To the best
knowledge of the Selling Parties, there is no adverse condition affecting or
likely to affect the supply of materials available to Mpower with respect to the
Purchased Business.
Section 2.22 Absence of Certain Changes or Events. Except as set forth on
Section 2.22 of the Parent Disclosure Schedule, since June 30, 2004, each
Selling Party has operated the
19
Purchased Business only in the usual and ordinary course consistent with past
practice and no Selling Party has (or has committed to), with respect to the
Purchased Business or the Purchased Assets (a) suffered any damage, destruction
or casualty loss, whether covered by insurance or not, which individually
exceeds $25,000; (b) sold, transferred, leased, assigned or otherwise disposed
of (i) any material assets or (ii) assets in excess of $25,0000 in the
aggregate, other than sales of inventory in the ordinary course of business
consistent with past practice; (c) made any, or any commitments for, capital
expenditures, additions or improvement of the Purchased Assets, except for those
which do not exceed $25,000 in the aggregate; (d) amended, terminated, cancelled
or compromised any material claims of the Selling Parties or waived any other
rights of substantial value to the Selling Parties; (e) made any increase in the
base compensation, bonuses, benefits or paid vacation time allowed or made any
other change in employment terms, for any Business Employees, except for normal
periodic increases in base compensation for employees and officers made pursuant
to established compensation policies of the Selling Parties applied on a basis
consistent with that of prior years; (f) entered into any employment contract or
collective bargaining agreement, written or oral, or amended, modified the terms
of, or permitted the termination of any existing contract or agreement; (g)
suffered any material change in the business relationship with any of its
material customers, distributors or suppliers; (h) delayed or postponed the
payment of any accounts payable or commissions or any other liability or agreed
or negotiated with any Person to extend the payment date of any accounts payable
or commissions or any other liability or accelerated the collection of (or
discounted) any accounts or notes receivable; (i) made any material changes in
the customary methods of operations, including practices and policies relating
to purchasing, inventories, marketing, selling and pricing; (j) allowed any
Permit or Environmental Permit to lapse or terminate or failed to renew any
insurance policy, Permit or Environmental Permit that is scheduled to terminate
or expire within 45 calendar days of the Closing, (k) failed to maintain the
Purchased Assets in good repair and operating condition, ordinary wear and tear
excepted or (l) suffered the occurrence of one or more events or conditions or
the existence of any circumstances that, individually or in the aggregate, have
had or are reasonably likely to have a Material Adverse Effect.
Section 2.23 Sufficiency of Assets; Encumbrances. Except as expressly set
forth on Schedule 1.4(a), the Purchased Assets include all assets primarily used
in or necessary for the current conduct of the Purchased Business (in the manner
operated during the 12-month period preceding the date of this Agreement) and
are sufficient to conduct the operations of the Purchased Business as currently
conducted (including an amount of any customer premise IAD equipment sufficient
to fulfill the current backlog of sales orders as of the date hereof and other
reasonable levels of inventory). Each Selling Party and each Subsidiary of a
Selling Party have good and marketable title to or a valid leasehold or license
interest in each item of personal property used by it in the Purchased Business
and included in the Purchased Assets, free and clear of any Encumbrances other
than Permitted Liens and other than the other Encumbrances listed on Section
2.23 of the Parent Disclosure Schedule. The delivery to Mpower of the
instruments of transfer of ownership contemplated by this Agreement will, upon
such delivery, vest good and marketable title to or a valid leasehold or license
interest in the Purchased Assets in Mpower, free and clear of any Encumbrances,
other than Permitted Liens. Without limiting the foregoing, (i) one or more
Selling Parties or a Subsidiary of a Selling Party owns all Purchased Assets and
is a party to each Material Contract and (ii) no Affiliate of any Selling Party
(other than another Selling Party or a Subsidiary of a Selling Party) has any
rights in any Purchased Assets or any rights under any Material Contract. The
Shared Assets are (A) not
20
primarily used or useful in the conduct of the Purchased Business as currently
conducted or as conducted within the previous twelve months and (B) the only
material assets used or useful in the conduct of the Purchased Business as
currently conducted or as conducted within the past twelve months (in either
case, to any extent whatsoever) that are not primarily used or useful in the
conduct of the Purchased Business.
Section 2.24 Tariffs. All tariffs on file with the State of California
accurately represent the terms and conditions of sale of services to the
customers of the Purchased Business.
Section 2.25 Accredited Investor. Parent understands that the issuance of
shares of Mpower Common Stock, the Warrants and the shares of Mpower Common
Stock issuable upon the exercise of the Warrants (the "Warrant Shares" and,
collectively with the Mpower Common Stock and the Warrants, the "Securities")
hereunder is intended to be exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof. Parent has received all
requested documents and information about Mpower's business, management and
financial affairs, and has had the opportunity to ask all questions of and
receive answers from the management of Mpower regarding the terms and conditions
of this investment contemplated herein. Parent is acquiring the Securities
issued hereunder solely for the purpose of investment and not with a view to, or
for offer or sale in connection with, any distribution thereof. The Parent does
not have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Securities. Parent has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Securities, and Parent is capable
of bearing the economic risks of such investment, including a complete loss of
its investment in the Securities and further consequential losses and is able to
bear the economic risk of such investment for an indefinite period of time.
Parent understands and agrees that it may not sell or dispose of any of the
shares of Mpower Common Stock issued pursuant to this Agreement other than
pursuant to a registered offering or in a transaction exempt from the
registration requirements of the Securities Act. Parent is an accredited
investor as that term is defined in Regulation D under the Act.
Section 2.26 Trading in Securities of Mpower. None of the Selling Parties
or any of their Affiliates have purchased or sold, nor have they caused,
directed, encouraged or in any way facilitated any other Person to purchase or
sell, any Securities at any time during the period commencing 20 Business Days
prior to the date of this Agreement.
Section 2.27 No General Solicitation. Parent is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement. Parent has relied
only upon the filings of Holding under the Securities Exchange Act of 1934, as
amended and this Agreement and the representations and warranties of Mpower
contained in this Agreement. Parent agrees that Parent and each of Parent's
Affiliates will not offer or sell the Securities by means of any form of
directed selling efforts, general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act, including, but not limited (i)
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
21
Section 2.28 Deposits and Cash Collateral. Schedule 1.1(a)(xvii)(3) is a
true and complete list of the (i) deposits of those customers of ICG that are
solely customers of the Purchased Business as of the date hereof, (ii) Security
Deposits (as defined in Schedule 1.1(a)(xvii)) as of the date hereof and (iii)
cash collateral securing surety bonds related to the Purchased Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MPOWER
Except as otherwise set forth in any document filed by Holding with the SEC
or in the disclosure schedule delivered by Mpower prior to the execution of this
Agreement and attached hereto, (the "Mpower Disclosure Schedule"), Each of
Holding and Communications hereby represents and warrants to Parent and ICG as
follows:
Section 3.1 Organization and Standing. Holding is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on
Holding's business as now conducted. Communications is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has the requisite corporate power and authority to carry on
Communications' business as now conducted. Mpower and Mpower's subsidiaries are
duly qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of such party's business or the ownership,
leasing or operation of such party's properties make such qualification or
licensing necessary, except in each case where the failure to be so qualified or
licensed would not reasonably be expected to (a) adversely affect the ability of
Mpower to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Related Agreements, or (b) have,
individually or in the aggregate, a Material Adverse Effect. Mpower has made
available to Parent prior to the execution of this Agreement complete and
correct copies of Mpower's organizational documents and the organizational
documents of Mpower's subsidiaries, in each case, as amended to the date hereof.
Such organizational documents are in full force and effect. For the purposes of
this Agreement, the term "Material Adverse Effect" means, with respect to
Mpower, means any change or effect that, individually or in the aggregate with
any other changes and effects, is or is reasonably likely to (i) be materially
adverse to the business, assets, liabilities, condition (financial or otherwise)
or results of operations of Mpower and its Subsidiaries taken as a whole or (ii)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement and the Related Agreements.
Section 3.2 Authority and Enforceability. Mpower has all requisite power
and authority to enter into this Agreement and the Related Agreements and, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Mpower and the
consummation by Mpower of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of Mpower, and no other
corporate proceedings on the part of Mpower is necessary to authorize this
Agreement and the Related Agreements or to consummate the transactions
contemplated
22
hereby or thereby. This Agreement and the Related Agreements have been duly
executed and delivered by Mpower at the time of execution and delivery and,
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, shall constitute legal, valid and binding obligations of
Mpower, enforceable against Mpower in accordance with their respective terms.
Section 3.3 Conflicts, Consents and Approvals. Except as set forth in
Section 3.3 of the Mpower Disclosure Schedule, the execution and delivery by
Mpower of this Agreement and the Related Agreements at the time of execution and
delivery and the consummation of the transactions contemplated hereby and
thereby will not:
(a) violate any provision of the certificate of incorporation or
by-laws (or equivalent organizational documents) of Mpower or any of Mpower's
subsidiaries;
(b) in any material respect violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or both, would constitute a default)
under, require the consent of any Person or the giving of notice to any Person
under, or entitle any Person (with the giving of notice, the passage of time or
both) to terminate, accelerate, modify, impose any monetary or other economic
penalty or call a default under, or result in the creation of any encumbrance
upon any of the properties or assets of Mpower or any of Mpower's subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, intellectual property or other licenses (except with
respect to consents or approvals with the FCC, State PUCs or Municipal
Franchising Authorities referred to in subsection (d) below), contract,
undertaking, agreement, lease or other instrument or obligation to which Mpower
or any of Mpower's subsidiaries is a party;
(c) violate in any material respect any order, writ, injunction,
decree, statute, rule or regulation (except with respect to consents or
approvals with the FCC, State PUCs or Municipal Franchising Authorities referred
to in subsection (d) below) applicable to Mpower or any of Mpower's
subsidiaries; or
(d) require any material consent or approval of or registration or
filing by Mpower or any Affiliate of Mpower with, any third party or
Governmental Entity which has not been received or made except for (i) any such
consent or approval of or registration or filing with the FCC, any State PUC,
and any Municipal Franchising Authority having regulatory authority over the
business of Mpower or Mpower's subsidiaries as conducted in any given
jurisdiction and (ii) the requirements of the Securities Act, the Exchange Act,
Blue Sky Laws and state takeover laws.
Section 3.4 Capitalization.
--------------
(a) The authorized capital stock of Holding, as of the date of this
Agreement, consists of (i) 1,000,000,000 shares of Mpower Common Stock,
78,518,300 shares of which are issued and outstanding and (ii) 50,000,000 shares
of preferred stock, par value $0.10 per share, 100,000 shares of which are
designated Series A Preferred Stock, no shares of which are issued and
outstanding.
23
(b) Under Holding's Stock Option Plan I and II (the "Plan"), (i)
578,534 shares of Mpower Common Stock have been issued pursuant to restricted
stock purchase agreements and/or the exercise of outstanding options, (ii)
options to purchase 18,581,231 shares of Mpower Common Stock have been granted
and are currently outstanding, and (iii) 4,504,457 shares of Mpower Common Stock
remain available for future issuance to officers, directors, employees and
consultants of Holdings and its Affiliates.
(c) Other than as set forth on Section 3.4(c) of the Mpower Disclosure
Schedule and except for the shares reserved for issuance under the Plan and
those shares that may be issued pursuant to the Agreement, there are not
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from Holding of any of Holding's
securities.
Section 3.5 SEC Filings.
-----------
(a) Mpower has delivered or made available to Parent (through
reference to documents filed by XXXXX or otherwise) accurate and complete copies
of all reports or registration statements filed by Holding with the SEC on or
after May 18, 2004, all in the form so filed (as amended to date, the "Mpower
SEC Reports"). As of their respective filing dates (or if amended or superseded
by a filing prior to the date of this Agreement, then on the filing date of such
amending or superseding filing), the Mpower SEC Reports (i) were prepared in
accordance and complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Mpower SEC Reports and (ii)
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Mpower SEC Reports (the
"Mpower Financials"), including each Mpower SEC Report filed after the date
hereof until the Closing Date, as of their respective filing dates, (i) complied
as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, (ii) was prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act)
and (iii) fairly presented the financial position of Holding as at the
respective dates thereof and the results of Holding's operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements may not contain footnotes and were or are subject to normal and
recurring year-end adjustments.
(c) Mpower has heretofore made available to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC, to agreements, documents or other instruments which previously had
been filed by Holding with the SEC pursuant to the Exchange Act.
24
Section 3.6 Absence of Certain Changes or Events. Since June 30, 2004, (i)
Mpower and Mpower's Subsidiaries have conducted their respective businesses only
in the ordinary course of business and (ii) there shall not have occurred one or
more events or conditions and there shall not have arisen any circumstances
that, individually or in the aggregate, have had or are reasonably likely to
have a Material Adverse Effect.
Section 3.7 Stock Consideration. All of the Stock Consideration and Warrant
Consideration issuable in accordance with this Agreement (and the Mpower Common
Stock issuable upon exercise of the Warrant Consideration) will be, when so
issued, duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights. Except as set forth in this Agreement, the Stock
Consideration and Warrant Consideration, when issued in accordance and pursuant
to this Agreement, will not be subject to any transfer restrictions under (a)
any provision of the certificate of incorporation, as amended, or bylaws, as
amended, of Holding, or (ii) any contract to which Holding is a party.
Section 3.8 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement or the Related Agreements based upon arrangements made by or on
behalf of Mpower.
Section 3.9 No General Solicitation. Holding agrees that Holding and each
of Holding's Affiliates will not offer or sell the Securities by means of any
form of directed selling efforts, general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act, including but not
limited (i) any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, or (ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Asset Sale. During the period
from the date of this Agreement to the Closing Date, Parent shall, and shall
cause its Subsidiaries to, carry on the Purchased Business in the ordinary
course consistent with past practice (subject to such departures therefrom as
may be made in accordance with any relevant Interim Management Agreement or as
may be otherwise agreed to by Mpower) and in compliance in all material respects
with all applicable laws and regulations and, to the extent consistent
therewith, use all commercially reasonable efforts to preserve intact their
current business organizations, licenses and authorizations, use all reasonable
efforts to keep available the services of their current officers and other key
employees and preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired at the Closing Date. Without limiting the generality of the
foregoing, Parent shall, and shall cause any of its Subsidiaries to, unless
recommended by the Manager under the Interim Management Agreement or otherwise
agreed to by Mpower, prior to the Closing:
25
(a) use its reasonable best efforts to maintain the Purchased Assets
and any other assets which the Selling Parties or their Affiliates will utilize
to provide services to Mpower in accordance with the Interim Management
Agreement in good operating condition and repair in accordance with past
practices;
(b) maintain its corporate existence;
(c) use its reasonable best efforts to (w) preserve the organization
of the Purchased Business intact, (x) preserve intact the goodwill of the
Purchased Business, (y) retain all Business Licenses, and (z) preserve the
existing contracts, business and goodwill of the customers, suppliers, personnel
and others having business relations with the Purchased Business;
(d) use its reasonable best efforts to protect the Business IP or
Intellectual Property licensed to Mpower under Section 1.1(a)(viii) in a manner
consistent with past practice;
(e) maintain the books, accounts and records of the Purchased Business
in accordance with prior practice;
(f) pursuant and subject to the Interim Management Agreement, maintain
in effect all Business Policies held by them or on their behalf relating to the
Purchased Business or the Purchased Assets;
(g) use its best efforts pursuant and subject to the terms of this
Agreement to obtain all consents from third parties which are required to
consummate the transactions contemplated by this Agreement;
(h) pursuant and subject to the Interim Management Agreement, pay and
discharge when due all Taxes, assessments and governmental charges (other than
those contested in good faith by appropriate proceedings) imposed upon any of
the Purchased Assets or the Purchased Business, or upon the income or profit
therefrom;
(i) pursuant and subject to the Interim Management Agreement, perform
all obligations under and comply in all respects with all Material Contracts and
any other obligations under contracts to be included as Assumed Liabilities;
(j) pursuant and subject to the Interim Management Agreement, comply
in all respects with applicable Laws, including with respect to any conduct
related to its employees;
(k) pursuant and subject to the Interim Management Agreement, pay all
trade payables (other than those contested in good faith by appropriate
proceedings) consistent with past practice;
(l) notify Mpower in writing promptly after learning of (A) the
institution of any material Action against any Selling Party before any
Governmental Entity and upon receipt of any Governmental Order relating to the
Purchased Assets and (B) any fact, event or condition that affects or could
reasonably be likely to affect the Purchased Business in any material respect;
26
(m) pursuant and subject to the Interim Management Agreement, continue
in the ordinary course of business in accordance with past practice all
marketing and promotions relating to the Purchased Business;
(n) pursuant and subject to the Interim Management Agreement, continue
in the ordinary course of business consistent with past practice to provide
service delivery to customers of the Purchased Business, including, without
limitation, providing new features to customers (at no cost to Mpower);
(o) pursuant and subject to the Interim Management Agreement, continue
in the ordinary course of business consistent with past practice to xxxx
customers and collect accounts receivables from customers; and
(p) pursuant and subject to the Interim Management Agreement, use all
commercially reasonable efforts to keep available the services of the Business
Employees and all agents of the Purchased Business and provide prompt written
notice to Mpower of any Business Employee who shall have given notice of such
Employee's intention to terminate employment with the Selling Parties.
(q) Without limiting the generality of the foregoing, and, except as
otherwise expressly provided in this Agreement and except to the extent that
Mpower shall take actions, or cause the Selling Parties or their Affiliates to
take actions at variance with this Section 4.1 under the Interim Management
Agreement, prior to the Closing Date, without the prior written consent of
Mpower, with respect to the Business, no Selling Party shall do any of the
things enumerated in Section 2.22.
No action or failure to take any action by a Party approved by or in
accordance with an Interim Management Agreement shall be deemed, and the
reasonably foreseeable consequences of such action or inaction shall not be
deemed to have resulted in, a breach by such Party of its obligations pursuant
to this Section 4.1.
Section 4.2 Advise of Changes
(a) Each Party shall, in each case as soon as possible upon becoming
aware, from time to time prior to the Closing Date, supplement in writing the
Disclosure Schedule hereto with respect to any matter hereafter arising that, if
existing or known as of the date of this Agreement, would have been required to
be set forth or described in the Sections hereto; provided, however, that none
of such disclosures shall be deemed to modify, amend or supplement the
representations and warranties of such Party or the Sections hereto for the
purposes of this Agreement (including Article VI and Article VII), unless the
other Party shall have consented thereto in writing. Each Party shall promptly
notify the other Party in writing of (a) all events, circumstances, facts and
occurrences arising subsequent to the date of this Agreement which could result
in any breach of a representation or warranty or covenant of such Party in this
Agreement or which could have the effect of making any representation or
warranty of such Party in this Agreement untrue or incorrect in any respect and
(b) all other material developments affecting the assets, liabilities, business,
financial condition, operations, results of
27
operations, customer or supplier relations, employee relations, projections or
prospects of the Purchased Business or the Purchased Assets.
(b) Parent shall promptly advise Mpower in writing of its receipt of
any notice of, or notice of the intent or request to, terminate, cancel, curtail
or change any Material Contract or the business relationship of a Selling Party
or any of its Subsidiaries with any of their customers or significant equipment
or maintenance suppliers outside of the ordinary course of business.
Section 4.3 Obligations and Taxes. Parent shall, and shall cause each of
its Subsidiaries to, pay all of its material obligations promptly and in
accordance with their terms as well as all material lawful claims for labor,
materials and supplies or otherwise which, if unpaid, would become a Lien or
charge upon any Purchased Asset or any part thereof, before the same shall
become in default; provided, however, that Parent and each Subsidiary shall not
be required to pay and discharge or to cause to be paid and discharged any such
obligation or claim so long as the validity or amount thereof shall be contested
in good faith by appropriate proceedings.
Section 4.4 Interim Management Agreement. As of the date hereof, the
Parties shall enter into a management agreement substantially in the form
attached hereto as Exhibit A (the "Interim Management Agreement").
Section 4.5 VoicePipe Agreement. As of the date hereof, the Parties shall
enter into an agreement substantially in the form attached hereto as Exhibit B
(the "VoicePipe Agreement"), pursuant to which for a period of five years
commencing on the Closing Date, ICG shall provide, or shall cause its
Subsidiaries to provide, Mpower at any given time with (a) 2,500 VoicePipe seats
at no cost to Mpower and (b) 2,500 VoicePipe seats at a cost of $12 per
VoicePipe seat per month. For the purpose of clarity, at any given time, the
first 2,500 VoicePipe seats used by Mpower shall be provided at no cost to
Mpower, and the next 2,500 VoicePipe seats shall be at a cost of $12 per
VoicePipe seat per month, regardless of the actual customers that are using such
VoicePipe seats.
Section 4.6 No Solicitation by the Parties. Each Selling Party shall not,
nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit
any of its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information) any inquiries
or the making of any proposal which constitutes an Acquisition Proposal (as
defined below), (ii) participate in any discussions or negotiations regarding
any Acquisition Proposal, or (iii) enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the Asset
Sale or any other transaction contemplated by this Agreement or the Related
Agreements. For purposes of this Agreement, "Acquisition Proposal" means any
inquiry, proposal or offer from any person relating to any (x) direct or
indirect acquisition or purchase of the Purchased Business or any other assets
of ICG, whether alone or as part of a transaction to acquire all or
substantially all of the assets of such Selling Party or any of its Subsidiaries
or (y) merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving such Selling Party or
any of its Subsidiaries which
28
includes the Purchased Business or any other assets of ICG, other than the
transactions contemplated by this Agreement or the Related Agreements.
Section 4.7 Integration and Transition Plan. ICG and Mpower will
collaborate in good faith to: (i) communicate with each of the vendors
associated with the Purchased Assets regarding the Asset Sale and prevent the
assessment of RTU Transfer Fees; and (ii) in developing an integration and
transition plan that minimizes RTU Transfer Fees. ICG and Mpower each shall be
responsible for 50% of the RTU Transfer Fees; provided that Parent shall not be
responsible for any such RTU Transfer Fees (i) incurred without Parent's written
approval, such approval not to be unreasonably withheld or delayed or (ii) with
respect to equipment or software that Mpower does not intend to use in the
operation of the Purchased Business.
Section 4.8 Shared Customers and Shared Suppliers. The Parties acknowledge
and agree that there are certain customer accounts of the Purchased Business,
whether pursuant to the terms of an Assumed Contract or an Excluded Asset, that
will also be customer accounts of ICG after the consummation of the transactions
contemplated by this Agreement, (each of such customers, a "Shared Customer").
Notwithstanding anything in this Agreement, customer accounts relating to Shared
Customers to the extent associated with services provided within the State of
California are Purchased Assets under Section 1.1 for all purposes of this
Agreement. The Parties shall negotiate in good faith to allocate revenue,
expenses and deposits with respect to Shared Customers. If an agreement is not
reached on any allocation matter within fifteen days of the Closing Date, each
Party shall designate a senior executive with decision making authority to
negotiate in good faith. If such executives fail to agree on an appropriate
allocation within ten days, then the parties shall submit the dispute to binding
arbitration to a single arbitrator chosen in accordance with the procedures of
the American Arbitration Association. Parent and Mpower shall each submit a
written allocation with supporting argument to the arbitrator and the arbitrator
will choose one of the allocations submitted. The costs and expenses of the
arbitrator will be paid by the non-prevailing Party. The Parties intend that,
with respect to Shared Customers, the expenses associated with any revenue,
including, without limitation, accrued commissions, shall be allocated to the
Party to which such revenue has been allocated. The Parties shall cooperate in
the preparation of a strategic plan to deal with customers and suppliers and in
the execution of such plan consistent with the guidelines set forth on Schedule
4.8. The Parties shall cooperate to coordinate all initial contacts with Shared
Customers to notify Shared Customers of the transactions contemplated by this
Agreement. The Parties agree that the primary goals of the allocation procedure
and the communications with Shared Customers shall be to avoid jeopardizing
customer relationships, maintain customer revenue and maximize opportunity for
revenue growth for all Parties. The Parties agree that supplier relationships
shall be managed to minimize costs and expenses. If the Parties are not able to
obtain consents to assignments on reasonable terms and conditions from Shared
Customers, suppliers or landlords, the Parties shall negotiate in good faith to
make arrangements to provide the benefits to the Parties intended by this
Agreement.
29
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Access to Information; Confidentiality. To the extent permitted
by applicable law and subject to the confidentiality agreement, dated March 5,
2004, between ICG and Communications (the "Confidentiality Agreement"), Parent
shall, and shall cause its Subsidiaries, representatives and agents to, afford
Mpower and the officers, employees, accountants, counsel, financial advisors and
other representatives of Mpower, reasonable access during normal business hours
during the period prior to the Closing Date to all of its respective offices,
properties, plants, books, contracts, commitments, personnel and records and,
during such period, Parent shall, and shall cause each of its Subsidiaries,
representatives and agents to, furnish promptly to Mpower all other information
concerning its business, properties and personnel as Mpower may reasonably
request.
Section 5.2 Insurance. Parent and its Subsidiaries shall maintain with
financially sound and reputable insurers insurance with respect to the assets
and business of the Purchased Business against such casualties and contingencies
as shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent and
reasonably satisfactory to Mpower. Parent and it Subsidiaries shall cooperate
with Mpower and use commercially reasonable efforts in pursuing all rights to
insurance claims, proceeds or awards included in the Purchased Assets and shall
provide to Mpower such authorizations and assignments to pursue such claims as
may be reasonably requested by Mpower.
Section 5.3 Communications License. Parent shall, and shall cause its
Subsidiaries to, maintain the validity of the Communications Licenses and comply
in all material respects with all requirements of the Communications Licenses
and the rules and regulations of the FCC and State PUCs. Parent shall, and shall
cause its Subsidiaries to, use reasonable commercial efforts to (a) refrain from
taking any action which may jeopardize the validity of any of the Communications
Licenses or result in the revocation, surrender or any adverse modification of,
forfeiture of, or failure to renew under regular terms, any of the
Communications Licenses, (b) prosecute with due diligence any pending
applications with respect to the Communications Licenses, including any renewals
thereof, and (c) with respect to Communications Licenses, make all filings and
reports and pay all fees necessary or reasonably appropriate for the continued
operation of the Purchased Business, as and when such approvals, consents,
permits, licenses, filings, or reports or other authorizations are necessary or
appropriate.
Section 5.4 FCC Applications and State PUC Applications.
(a) As promptly as practicable after the date hereof, the Parties
hereto shall prepare and file, or cause to be prepared and filed, the necessary
application or applications with the FCC seeking the consent or approval of the
FCC in connection with the consummation of the transactions contemplated by this
Agreement and the Related Agreement (the "FCC Consents"). Each Party shall
provide the other Parties with all information necessary for the preparation of
such applications on a timely basis, including those portions of such
applications which are required to be completed by the first party.
30
(b) As promptly as practicable after the date hereof, the Parties
hereto shall prepare and file, or cause to be prepared and filed, the necessary
application or applications with the State PUCs seeking the consent or approval
of the applicable State PUCs in connection with the consummation of the
transactions contemplated by this Agreement and the Related Agreements (the
"State PUC Consents"). Each Party shall provide the other Parties with all
information necessary for the preparation of such applications on a timely
basis. In addition, the Parties hereto shall cooperate to make any notice
filings required in connection with this matter on a timely basis.
Section 5.5 Delivery of Regulatory Counsel's Opinion. At or prior to the
Closing Date, Parent shall provide Mpower with an opinion of its regulatory
counsel to the effect that the representations and warranties set forth in
Section 2.7 hereof are true and correct at and as of the Closing Date and
otherwise in a form reasonably acceptable to Mpower.
Section 5.6 Commercially Reasonable Efforts; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Parties agrees to act in good faith and to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other Parties
in doing, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the Asset Sale and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, including, without
limitation, the FCC Consents and the State PUC Consents, (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
prohibiting or otherwise restraining the consummation of the transactions
contemplated hereby entered by any court or other Governmental Entity vacated or
reversed, (iv) the satisfaction of the closing conditions applicable to the
Parties in Article VI prior to the Closing Date and (v) the execution and
delivery of any additional instruments, certificates and other documents
necessary or advisable to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement; provided, however, that Mpower
shall have no obligation to give any guarantee or other consideration of any
nature in connection with any such notice, consent or estoppel certificate or to
consent to any change in the terms of any agreement or arrangement which Mpower
in its sole discretion may deem adverse to the interests of Mpower, the
Purchased Assets or the Purchased Business.
(b) The Parties agree that, in the event that any consent, approval or
authorization necessary or desirable to preserve for the Purchased Business or
the Purchased Assets any right or benefit under any lease, license, contract,
commitment or other agreement or arrangement to which the Selling Parties or any
of their Subsidiaries is a party is not obtained prior to the Closing, the
Selling Parties shall, subsequent to the Closing, cooperate with Mpower in
attempting to obtain such consent, approval or authorization as promptly
thereafter as
31
practicable. If such consent, approval or authorization cannot be obtained, the
Selling Parties shall use their best efforts to provide Mpower or its Affiliates
with the rights and benefits of the affected lease, license, contract,
commitment or other agreement or arrangement for the term of such lease,
license, contract or other agreement or arrangement, and, if any Selling party
provides such rights and benefits, Mpower or its Affiliate, shall assume the
obligations and burdens thereunder.
Section 5.7 Public Announcements. The Parties will consult with each other
before issuing, and provide each other the opportunity to review, comment upon
and concur with, any press release or other public statements with respect to
the transactions contemplated by this Agreement or the Related Agreements,
including the Asset Sale, and shall not issue any such press release or make any
such public statement prior to such consultation, except as either party may
determine is required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities exchange. The
Parties will consult with each other before giving notice to any customers of
the Asset Sale and the form of any such notice shall be approved by Parent and
Mpower.
Section 5.8 Technical Space and Interconnection.
-----------------------------------
(a) Pursuant to the Master Services Agreement, Mpower shall grant to
ICG for a period of three years after the Closing Date a right to use (the
"RTU") the technical space required for the racks identified in the Master
Services Agreement associated with (i) ICG's national MPLS-equipped OC48
backbone and OC3, which traverse through the Los Angeles and San Xxxx nodes, and
the backhaul that diversely interconnects the OC48 and OC3 from such nodes to
the Qwest POP and between such nodes (the circuits that comprise such backhaul,
as set forth in the Master Services Agreement, the "Backhaul Circuits") and (ii)
ICG's SS7 network, including the circuits listed in the Master Services
Agreement (the "SS7 Circuits"). At the request of ICG, the Parties shall
negotiate in good faith to provide ICG with any additional technical space
required for the OC48 backbone or the SS7 network at applicable commercial
rates. Mpower shall maintain such equipment, at ICG's expense for out-of-pocket
expenses associated with providing the RTU, including, but not limited to, the
applicable portion of rent, utilities, loop costs, maintenance costs and early
termination fees. ICG shall have the right to connect customers through Mpower's
node to ICG's OC48. Mpower shall be entitled to receive interconnection fees at
commercially reasonable rates and Mpower shall invoice ICG for all out-of-pocket
costs and expenses and all interconnection fees, and ICG shall pay such invoiced
amounts all in accordance with the terms and conditions of the Master Services
Agreement. Upon the conclusion of the three-year period, Parent and Mpower shall
negotiate in good faith to agree upon commercial rates pursuant to which the
services described in this Section 5.8(a) would be continued.
(b) Parent and ICG acknowledge and agree that the Backhaul Circuits
will not be used for any purpose other than to (i) connect the ICG node
collocated in Mpower's facility to and from the interconnection of the OC48 or
OC3 backbone and (ii) connect the ICG node to and from the Internet transit or
peering points. For the purpose of clarity, the Backhaul Circuits will not be
used to provide end user circuits (whether for private line, Internet Access,
voice, or video) in competition with Mpower. Parent and ICG further acknowledge
and agree that any rights with respect to the RTU granted to ICG pursuant to
Section 5.8(a) shall terminate 18
32
months after any sale, transfer or assignment of, or any change of control,
joint venture or business combination involving, the Backhaul Circuits unless
terminated earlier in accordance with the terms of Section 5.8(a).
(c) Notwithstanding anything else in this Agreement, any rights with
respect to the RTU granted to ICG pursuant to this Section 5.8 with respect to
the SS7 Circuits shall expire at the earlier of (i) three years from the date of
this Agreement and (ii) the termination of the applicable contract between ICG
or any of its Subsidiaries and its customer with respect to any individual XX0
Xxxxxxx.
Section 5.9 IRU Capacity. Mpower agrees to (i) continue to provide the
current capacity provided under the IRU agreements between ICG and Qwest
Communications Corporation and (ii) provide additional capacity if required
under such agreements (and otherwise satisfy the terms outlined in such IRU
agreements), each of the foregoing at the compensation rates contained in such
IRU Agreements and solely with use of the Purchased Assets and not any other
network assets of Mpower.
Section 5.10 Non-Compete and Non-Solicitation.
--------------------------------
(a) Parent and its Subsidiaries shall not, directly or indirectly,
engage or participate in, acquire, manage, operate, control or participate in
the management, operation or control of, either alone or jointly, any Person
that engages in any business similar to the Purchased Business in the State of
California (a "Competing Business")for a period of three years after the Closing
Date; provided, however, that Parent and its Subsidiaries may be acquired by,
merge with, or be a party to any other business combination with, a Competing
Business. Notwithstanding the foregoing, Parent and ICG may, however, provide
services to independent third parties, which may in turn compete with Mpower in
California.
(b) Mpower shall not, directly or indirectly, solicit any Shared
Customers to induce such Shared Customers to purchase the services being
provided as of the date hereof under any applicable Shared Customer contract in
the geographic regions in which ICG currently provides services other than in
the State of California for a period of one year after the Closing Date;
provided, however, that this restriction shall not apply to any services being
provided at the time of such transaction by any entity that acquires or is
acquired by, merges with, or is a party to any other business combination with
Mpower.
(c) The Selling Parties and their respective Affiliates covenant and
agree that they will not, directly or indirectly, for a period from the date
hereof until two years after the Closing Date solicit to hire or hire, any
Business Employee employed by Mpower or its Affiliates as of the Closing Date or
any employee currently employed by Mpower or its Affiliates as of the date
hereof or employed by Mpower or its Affiliates prior to the Closing Date;
provided, however, that the foregoing will not prohibit (i) a general
solicitation to the public of general advertising or (ii) a solicitation of any
employee that has been terminated by Mpower or its Affiliates and provided
further that nothing in this Section 5.10 shall prohibit the Selling Parties or
any of their Affiliates from employing any person who contacts them on his or
her own initiative (including in response to a general solicitation) and without
any direct or indirect solicitation by the Selling Parties or any of their
Affiliates.
33
(d) Mpower and its Affiliates covenant and agree that they will not,
directly or indirectly, for a period from the date hereof until one year after
the Closing Date solicit to hire or hire, any employee of ICG or its Affiliates
identified in the letter from Parent to Mpower, dated as of the date hereof;
provided, however, that the foregoing will not prohibit (i) a general
solicitation to the public of general advertising or (ii) a solicitation of any
employee that has been terminated by ICG or its Affiliates and provided further
that nothing in this Section 5.10 shall prohibit Mpower and its Affiliates from
employing any person who contacts them on his or her own initiative (including
in response to a general solicitation) and without any direct or indirect
solicitation by Mpower or its Affiliates.
(e) The Parties agree that the restrictive covenants contained herein
are reasonable under the circumstances and further agree that the covenants
contained in this Section 5.10 should be interpreted in such a manner as to be
effective and valid under applicable Law. In the event any provision of this
Section 5.10 or portion thereof shall be held to be illegal or unenforceable,
the remainder of this Section 5.10 or such provision shall remain in full force
and effect. If any one or more of the provisions contained in this Section 5.10
shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, such provision shall be construed by
limiting or reducing it so as to be enforceable to the maximum extent compatible
with applicable Law.
(f) For purposes of this Section 5.10, the term "Selling Parties"
shall include their successors and assigns.
Section 5.11 Restrictions on Transfer of Mpower Common Stock. The
Securities shall be subject to the transfer restrictions set forth in the form
of Investor Rights Agreement attached hereto as Exhibit C (the "Investor Rights
Agreement").
Section 5.12 Cooperation in Tax Matters. The Parties shall provide each
other with such cooperation and information as either of them reasonably may
request of the other in preparing, executing and filing any Tax Return, amended
Tax Return or claim for refund, determining a liability for Taxes or a right to
a refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes, in each case, to the extent relating to the Purchased Assets or the
Purchased Business.
Section 5.13 Retention of and Access to Records. For the period ending on
the later of (i) seven years following the Closing Date, (ii) seven years
following the due date for any applicable Tax Returns, or (iii) the expiration
of the statute of limitations for the taxable periods to which any such Tax
Returns relate (in any case, without regard to extensions except to the extent
notified by the other party in writing of such extensions), each Party shall
retain all books and records (including all Tax Returns, customer records,
regulatory applications and approvals and all related schedules, work papers,
records and other documents) in its possession that relate to the Purchased
Business or the Purchased Assets for any taxable period ending on or before, or
including, the Closing Date. Upon the expiration of such period, each Party
shall provide the other Party reasonable opportunity to obtain copies, at such
other Party's expense, of any of such books and records. In addition to the
foregoing, from and after the Closing, each Party shall afford the other Party
and its counsel, accountants and other authorized agents and representatives,
during normal business hours, reasonable access to its officers, employees, and
34
any books, records and other data relating to the Purchased Business, the
Purchased Assets, the Assumed Liabilities, the Business Employees and the
Excluded Liabilities in its possession and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting Party (i) to facilitate the investigation, litigation and final
disposition of any claims which may have been or may be made against or by any
such party or Person, or its Affiliates, and (ii) for the preparation of Tax
Returns and audits provided that the requesting Party shall pay all reasonable
out-of-pocket costs, charges and expenses arising therefrom. Any information
obtained under this Section 5.13 shall be kept confidential in accordance with
the Confidentiality Agreement except as may otherwise be necessary in connection
with the filing of Tax Returns or claims for refunds or in conducting an audit
or other proceeding.
Section 5.14 Equitable Remedies. The Selling Parties and Mpower each
acknowledge that any breach or threatened breach of either of the provisions of
Sections 4.7 and 5.10 will cause irreparable injury to Mpower, for which an
adequate monetary remedy does not exist. Accordingly, in the event of any such
breach or threatened breach, Mpower shall be entitled, in addition to the
exercise of other remedies, to seek and (subject to court approval) obtain
injunctive relief, without necessity of posting a bond, restraining the Selling
Parties and their Affiliates from committing such breach or threatened breach.
Section 5.15 Intellectual Property. If the Selling Parties, any of their
respective Affiliates and/or any Person owned or controlled by them own or shall
at any time hereafter acquire any rights in any Intellectual Property relating
to the Purchased Business and any goodwill relating thereto or symbolized
thereby, such party shall promptly cause such property to be transferred or
licensed as the case may be to Mpower. Such party shall transfer or license any
such property (a) for no additional consideration and (b) through the execution
and delivery of such instruments and documents as Mpower shall reasonably
request.
Section 5.16 Proration of Taxes and Certain Charges.
--------------------------------------
(a) All installments of special assessments or other charges on or
with respect to the Purchased Assets payable by the Selling Parties for any
period in which the Closing Date shall occur, including, without limitation,
base rent, common area maintenance, royalties, all municipal, utility or
authority charges for water, sewer, electric or gas charges, garbage or waste
removal, and cost of fuel, shall be apportioned as of the Closing Date and each
Party shall pay its proportionate share promptly upon the receipt of any xxxx,
statement or other charge with respect thereto. If such charges or rates are
assessed either based upon time or for a specified period, such charges or rates
shall be prorated as of 12:01 A.M. on the Closing Date. If such charges or rates
are assessed based upon usage of utility or similar services, such charges shall
be prorated based upon meter readings taken on the Closing Date.
(b) The prorations pursuant to this Section 5.16 may be calculated
after the Closing Date, as each item to be prorated (including, without
limitation, any such Tax, obligation, assessment, charge, refund, reimbursement,
rent installment, fee or revenue) accrues or comes due, provided that, in any
event, any such proration shall be calculated not later than thirty (30) days
after the party requesting proration of any item obtains the information
required to calculate such proration of such item.
35
Section 5.17 Transaction Costs.
-----------------
(a) Other than as expressly set forth in this Agreement, the Selling
Parties shall pay all transaction costs and expenses (including legal,
accounting and other professional fees and expenses) that they incur in
connection with the negotiation, execution and performance of this Agreement and
the consummation of the transactions contemplated hereby, whether or not the
transactions contemplated hereby are consummated.
(b) Other than as expressly set forth in this Agreement, Mpower shall
pay all transaction costs and expenses (including legal, accounting and other
professional fees and expenses) that they incur in connection with the
negotiation, execution and performance of this Agreement and the consummation of
the transactions contemplated hereby, whether or not the transactions
contemplated hereby are consummated.
(c) Conveyance Taxes. The Selling Parties and Mpower shall cooperate
in the preparation, execution and filing of all Tax Returns regarding any
Conveyance Taxes and shall cooperate to seek any available exemption from such
Taxes; it being understood and agreed that the Selling Parties, on the one hand,
and Mpower, on the other hand, shall each pay fifty percent (50%) of any and all
Conveyance Taxes. For clarity, Mpower shall not be responsible in any manner for
the payment of any Taxes on any gross or net income, gross or net receipts or
gain which any Selling Parties may realize as a result of the sale of the
Purchased Assets or otherwise related to the transactions contemplated by this
Agreement.
(d) Payments to Contract Parties. Notwithstanding anything herein to
the contrary, except with respect to the lease amendment fee with respect to the
property at 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, if and to the extent it
is necessary to make any payment to one or more unaffiliated third parties in
order to (i) obtain consents from any such third party to the assignment of the
Material Contracts from the Selling Parties to Mpower, (ii) cause any such third
party to enter into a new contract with Mpower or to otherwise provide Mpower
with the benefits of any existing contractual arrangement between any Selling
Party and such third party that does not constitute a Material Contract (other
than, in the case of clause(i) and clause (ii), a payment that would be owed
irrespective of such assignment, which shall be borne solely by the party owing
such payment) and (iii) upon the written agreement of the Selling Parties and
Mpower, otherwise affect the transfer of the Purchased Assets and the assumption
of the Assumed Liabilities, the Selling Parties, on the one hand, and Mpower, on
the other hand, shall each pay fifty percent (50%) of any and all such payments.
Mpower and the Selling Parties shall use commercially reasonably efforts to
minimize the amount of any such costs and expenses and shall cooperate with one
another and keep each other informed as to the status of any negotiations with
the Persons from whom required consents are being sought.
Section 5.18 Employees and Employee Benefit Matters. As soon as
practicable, but in no event later than thirty (30) days from the date hereof
(the date of such written notice, the "Designated Employee Notice Date"), Mpower
shall provide Parent and ICG with written notice (the "Designated Employee
Notice") of each Business Employee Mpower intends to offer employment to prior
to the Closing Date (the "Designated Employees"), it being understood and agreed
that Mpower will offer employment to at least 73% of the Business Employees who
have not voluntarily terminated their employment or been terminated for Cause
prior to the applicable
36
Designated Employee Notice Date and that Business Employees who are not set
forth on the Designated Employee Notice shall not be engaged in the conduct of
the Purchased Business after the Designated Employee Notice Date except as
otherwise provided in the Management Agreement. Mpower shall, at any time from
the Designated Employee Notice Date and prior to the Closing Date, on an
individual Designated Employee basis, make an offer of employment (an
"Employment Offer") to each Designated Employee on terms to be determined in the
sole discretion of Mpower. The Selling Parties and Mpower acknowledge and agree
that no Business Employee (including any Business Employee set forth on the
Designated Employee Notice) shall be employed by Mpower or deemed to be employed
by Mpower for any purposes prior to the date the Designated Employee commences
employment with Mpower (each such Business Employee, an "Assumed Employee", and
such date, an "Assumed Employee Employment Date"), notwithstanding the fact that
each Business Employee shall be managed by Mpower and/or its Affiliates until
the Closing Date in accordance with the terms and conditions of the Interim
Management Agreement. On the earlier of (i) the Closing Date or (ii) the
applicable Assumed Employee Employment Date, the Selling Parties shall pay to
each Designated Employee the full amount of such Designated Employee's accrued
salary and other amounts owed to such Designated Employees as of such date
except, with respect to Assumed Employees, for amounts with respect to the
liabilities set forth on Schedule 5.18. On or prior to the earlier of (a) the
Closing Date or (b) the applicable Assumed Employee Employment Date, the
applicable Selling Party shall deliver to each Designated Employee a letter,
reasonably satisfactory to Mpower, stating (x) that such Designated Employee's
employment with such Selling Party shall be terminated on the Closing Date, (y)
that such Selling Party remains responsible for any claims and other liabilities
with respect to such Designated Employee's employment on or prior to the Closing
Date other than, in the event such Designated Employee accepts an offer of
employment from Mpower, with respect to the benefits set forth on Schedule 5.18
and (z) that Mpower has agreed to provide the Designated Employee, in the event
such Designated Employee accepts an offer of employment from Mpower, with the
benefits set forth in the Employment Offer. To the extent that service is
relevant for the purposes of eligibility to receive any benefits provided by
Mpower to their employees, Mpower shall recognize (to the same extent recognized
by Mpower with respect to their other employees) all service of the Designated
Employees with the Selling Parties or any Affiliate or predecessor thereof,
except as would cause duplication of benefits; provided, however, that any
specific terms set forth in such Assumed Employee's Employment Offer shall
supersede any benefits that would otherwise be recognized as a result of the
service of such Assumed Employee with the Selling Parties. Notwithstanding
anything else in this Agreement, no Business Employee who does not receive and
accept an Employment Offer from Mpower and commence employment with Mpower shall
become an Assumed Employee.
Section 5.19 Decommissioning of Equipment.
(a) As soon as practicable but in no event later than 30 days after
the Closing Date, Parent shall pay to Mpower an amount equal to $65,000 as
payment for the labor costs to be incurred with respect to Business Employees or
Assumed Employees for the purpose of decommissioning ICG assets which are not
Purchased Assets.
(b) Parent and ICG shall pay, and shall indemnify and hold Mpower and
its Affiliates harmless from, all costs and expenses that are incurred in
connection with the
37
decommissioning of ICG assets which are not Purchased Assets, other than the
labor costs incurred with respect to Business Employees or Assumed Employees as
set forth in Section 5.19(a).
Section 5.20 Line Cost Reductions. In efforts to minimize cost and expenses
the Parties shall cooperate in good faith and use commercially best effort to
take actions to optimize line costs in accordance with the plan to optimize line
costs prepared by ICG (the "Line Cost Optimization Plan"); provided that the
Line Cost Optimization shall not in any way impair the Purchased Business;
provided further that any circuits that are to be disconnected with respect to
which traffic is uncertain shall be disconnected by the Parties such that the
circuits may be restored upon a restoration request delivered within 48 hours of
the initial circuit disconnection. Parent and ICG agree to reimburse Mpower for
the direct recurring costs less usage of the costs set forth on Schedule
1.1(a)(vi)(5) (calculated consistently with the Pro Forma Financials) to the
extent such costs less usage in the aggregate exceed by more than $160,000 (i)
$1,094,000 in November 2004, (ii) $1,076,000 in December 2004 and (iii)
$1,057,000 for each month thereafter.
Section 5.21 No Integration. Mpower shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to Parent or that would
be integrated with the offer or sale of the Securities.
Section 5.22 Bonding; Letters of Credit. Mpower shall take all commercially
reasonable action necessary to replace or otherwise obtain the release and
termination of any performance bonds or letters of credit or similar surety
arrangements posted or pledged by Parent, ICG or any of ICG's Subsidiaries
related to the Transferred Business.
Section 5.23 Lucent Switch Removal. Mpower and ICG shall each make
commercially reasonable best efforts to migrate customers off the Lucent 5E
switches (the "Lucent Switches") as soon as possible to preserve their value.
The parties recognize that the initial data cleansing of the granite data must
be completed prior to the completion of switch conversions, and that preserving
the integrity of the customer circuits is of paramount importance. Mpower shall
assign up to seven (7) employees, as from time to time required, to the switch
conversion project as part of Mpower's commercially reasonable best efforts
commitment. The Parties agrees that (i) the earliest likely date that Mpower
will be able to migrate all customers off two Lucent Switches is April 30, 2005
and such migration is highly likely to occur by June 30, 2005, (ii) the earliest
likely date that Mpower will be able to migrate all customers off an aggregate
of five Lucent Switches is May 31, 2005 and such migration is highly likely to
occur by July 31, 2005 and (iii) the earliest likely date that Mpower will be
able to migrate all customers off an aggregate of nine Lucent Switches is June
30, 2005 and such migration is highly likely to occur by August 31, 2005.
Decommissioning shall commence upon each switch immediately following a switch
being cut from service. Mpower shall be responsible for migration costs. Parent
and ICG shall be responsible for the costs of decommissioning the Lucent
Switches. The Parties shall each use their commercially reasonable best efforts,
including seeking an extension of the applicable CALEA compliance date, to
eliminate or minimize any costs resulting from the failure to migrate all
customers off the nine Lucent Switches by August 31, 2004. The Parties
38
agree to share the costs associated with CALEA compliance up to $50,000 per
Lucent Switch and ICG shall be responsible for all costs in excess of $50,000
per Lucent Switch.
ARTICLE VI
CLOSING CONDITIONS
Section 6.1 Mutual Conditions. The obligations of the parties hereto to
consummate the Merger shall be subject to the fulfillment of each and all of the
following conditions:
(a) Merger. The Merger shall have been consummated.
(b) Certain Governmental and Regulatory Approvals. All consents,
approvals, and actions of, filings with and notices to any Governmental Entity
required of any Party or any of its Subsidiaries to consummate the Asset Sale
and the other transactions contemplated by this Agreement or by the Related
Agreements, the failure of which to be obtained or taken would have a Material
Adverse Effect, shall have been obtained in form and substance reasonably
satisfactory to each of the Parties; provided, however, that the failure to
obtain, provide or take any consent, approval or action with, filing with and
notice to the FCC or any State PUC or Municipal Franchising Authority having
regulatory authority over the business of such Party or its Subsidiaries as
conducted in any given jurisdiction shall be deemed to have a Material Adverse
Effect for the purpose of this subsection 6.1(b).
(c) No Injunctions, Restraints or Litigation. No temporary restraining
order, preliminary or permanent injunction or other order or decree issued by a
court of competent jurisdiction or Governmental Entity of competent jurisdiction
or other legal restraint or prohibition (collectively, "Restraints") which
prevents the consummation of the material transactions contemplated hereby or
Law making illegal or otherwise prohibiting such consummation shall have been
issued and remain in effect; provided, however, that the parties invoking this
condition shall use reasonable efforts to have any such order or injunction
vacated. There shall not be threatened, instituted or pending any Law, Action,
proceeding, application, counterclaim or investigation by any Governmental
Entity or before any court or governmental regulatory or administrative agency,
authority or tribunal which (i) if adversely determined would have a Material
Adverse Effect or (ii) challenges or seeks to challenge, restrain or prohibit
the consummation of the material transactions contemplated hereby.
(d) Interim Management Agreement. The Parties shall have entered into
the Interim Management Agreement, which shall be in full force and effect as of
the Closing Date.
(e) VoicePipe. The Parties shall have entered into the VoicePipe
Agreement, which shall continue to be in full force and effect as of the Closing
Date.
(f) Transition Services Agreement. The Parties shall have entered into
the Transition Services Agreement substantially in the form attached hereto as
Exhibit D (the "Transition Services Agreement"), and such Transition Services
Agreement shall be in full force and effect as of the Closing Date.
39
(g) Master Services Agreement. The Parties shall have entered into a
master services agreement substantially in the form attached hereto as Exhibit E
(the "Master Services Agreement") pursuant to which, among other things, Mpower
shall provide on-network services required for (i) ICG's core transport and
internet protocol infrastructure and (ii) other in-place services for ICG's
current customers until such customer's service agreements are terminated.
(h) Investor Rights Agreement. The Parties shall have entered into the
Investor Rights Agreement, which shall be in full force and effect as of the
Closing Date.
Section 6.2 Conditions to Obligations of Mpower. The obligation of Mpower
to effect the Asset Sale is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and ICG set forth herein shall be true and correct as of the Closing
Date, except to the extent such representations and warranties are expressly
stated to be limited to another date, in which case such representations and
warranties shall be true and correct as of such other date, and except, in each
case, as would not, individually or in the aggregate, have a Material Adverse
Effect on Parent or ICG.
(b) Third Party Consents. Parent shall have obtained on terms
reasonably satisfactory to Mpower, and delivered to Mpower evidence thereof, all
consents, waivers, approvals and assignments set forth on Section 2.3(b) of the
Parent Disclosure Schedule the failure of which to be obtained would not,
individually or in the aggregate, have a Material Adverse Effect on Parent or
ICG.
(c) Performance of Obligations of Parent and ICG. Each of Parent and
ICG shall have performed in all material respects all, and shall not have
breached any, material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, subject to a ten-day grace period
following notice.
(d) No Material Adverse Effect. Since the date of this Agreement there
shall not have occurred one or more events or conditions and there shall not
have arisen any circumstances that, individually or in the aggregate, have had
or are reasonably likely to have a Material Adverse Effect on Parent, ICG or the
Purchased Business.
(e) Officer's Certificate. Each of Parent and ICG shall have furnished
Mpower with a certificate dated the Closing Date, in each case signed by an
executive officer to the effect that the conditions set forth in Sections
6.2(a), (b), (c) and (d) have been satisfied.
(f) Regulatory Legal Opinion. Mpower shall have received the legal
opinion of Parent's regulatory legal counsel with respect to regulatory matters
in form and substance satisfactory to Mpower.
(g) Title and Right of Way to Fiber Cable Purchased Assets. Provided
that Mpower shall have used commercially reasonable efforts with respect to the
subject matter of this clause, Mpower shall have received all necessary
documentation to provide Mpower with legal, valid and binding title to the fiber
cable of the Selling Parties that is part of the Purchased Business and legal,
valid and binding right of way for the beneficial use of such fiber cables.
40
Section 6.3 Conditions to Obligations of Parent and ICG. The obligation of
Parent and ICG to effect the Merger is further subject to satisfaction or waiver
of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Mpower set forth herein shall be true and correct as of the Closing Date,
except to the extent such representations and warranties are expressly stated to
be limited to another date, in which case such representations and warranties
shall be true and correct as of such other date, and except, in each case, as
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent or ICG.
(b) Performance of Obligations of Mpower. Mpower shall have performed
in all material respects all, and shall not have breached any, material
obligations required to be performed by Mpower under this Agreement at or prior
to the Closing Date, subject to a ten-day grace period following notice.
(c) No Material Adverse Effect. Since the date of this Agreement there
shall not have occurred one or more events or conditions and there shall not
have arisen any circumstances that, individually or in the aggregate, have had
or are reasonably likely to have a Material Adverse Effect on Mpower.
(d) Officer's Certificate. Mpower shall have furnished Parent and ICG
with a certificate dated the Closing Date signed by an executive officer of each
of Holding and Communication to the effect that the conditions set forth in
Sections 6.3(a), (b) and (c) have been satisfied.
(e) Regulatory Legal Opinion. Parent shall have received the legal
opinion of Mpower's regulatory legal counsel with respect to regulatory matters
in form and substance satisfactory to Parent.
(f) Securities Legal Opinion. Parent shall have received the legal
opinion of Shearman & Sterling, corporate legal counsel to Mpower, dated as of
the Closing Date substantially in the form attached hereto as Exhibit F (the
"Securities Legal Opinion").
Section 6.4 Closing Deliveries of the Selling Parties. At the Closing upon
satisfaction or waiver of the conditions set forth in Section 6.1 and 6.2, the
Selling Parties shall deliver, or cause to be delivered, to Mpower the following
instruments, certificates and other documents in order to consummate the
transactions contemplated hereby, including the transfer of the Purchased Assets
to Mpower pursuant to Section 1.1:
(a) Assignments and Assumptions of Lease, in form and substance
reasonably acceptable to Mpower, duly executed by each Selling Party (the
"Assignments and Assumptions of Lease"), assigning the Real Property Leases
other than the Real Property Leases that are not Assumed Contracts;
(b) a Xxxx of Sale, in form and substance reasonably acceptable to
Mpower, duly executed by each Selling Party (the "Xxxx of Sale");
41
(c) an Assignment and Assumption Agreement, in form and substance
reasonably acceptable to Mpower, duly executed by each Selling Party (the
"Assignment and Assumption Agreement");
(d) to the extent that any Intellectual Property are included in the
Purchased Assets, Assignments of Intellectual Property, in form and substance
reasonably acceptable to Mpower, duly executed by each Selling Party (the
"Assignments of Intellectual Property");
(e) copies of any documents and filings required in connection with
the payment of transfer Taxes by the Selling Parties under Section 5.17(c);
(f) executed counterparts of each Related Agreement to which the
Seller is a party;
(g) a receipt for the number of shares of Mpower Common Stock as
calculated in Section 1.6 and for the Warrant Consideration;
(h) a true and complete copy, certified by the Secretary or an
Assistant Secretary of each respective Selling Party, of the resolutions duly
and validly adopted by the Board of Directors of such Selling Party evidencing
its authorization of the execution and delivery of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby;
(i) a certificate of the Secretary or an Assistant Secretary of each
Selling Party certifying the names and signatures of the officers of such
Selling Party authorized to sign this Agreement and the Related Agreements and
the other documents to be delivered hereunder and thereunder;
(j) with respect to each Real Property Lease which is an Assumed
Contract, the Selling Parties shall have obtained and delivered to Mpower a
letter of estoppel in form and substance reasonably satisfactory to Mpower,
stating (i) that the applicable Real Property Lease is in full force and effect,
(ii) that there is no default by the lessee thereunder, (iii) the date through
which the rent has been paid, (iv) the expiration date of the Real Property
Lease, and (v) such other statements reasonably requested by Mpower and their
lenders and that are of a type customarily included in estoppel letters signed
by lessors. Each such letter of consent and estoppel shall also consent to the
assignment of the Real Property Lease by the applicable Selling Party to Mpower;
(k) a certificate of non-foreign status (in a form reasonably
acceptable to Mpower) pursuant to Section 1.1445-2(b)(2) of the Regulations;
(l) the Seller's notification pursuant to Section 4.2;
(m) an opinion of FCC counsel to the Selling Parties, dated as of the
Closing reasonably satisfactory to Mpower covering FCC and telecommunications
regulatory matters of the type customarily covered in legal opinions involving
similar transactions; and
42
(n) such other deeds and instruments as may be reasonably requested by
Mpower.
Section 6.5 Closing Deliveries of Mpower. At the Closing, upon satisfaction
or waiver of the conditions set forth in Section 6.1 and 6.3, Mpower shall
deliver, or cause to be delivered, to the Selling Parties the following
instruments, certificates and other documents in order to pay for the Purchased
Assets and effect the assumption of all Assumed Liabilities from the Selling
Parties pursuant to Section 1.1:
(a) a share certificate for the number of shares of Mpower Common
Stock as calculated pursuant to Section 1.6, less the Escrowed Consideration;
(b) a warrant for the Warrant Consideration;
(c) the Assignments and Assumptions of Lease, duly executed by
Communications;
(d) the Assignment and Assumption Agreement, duly executed by
Communications;
(e) executed counterparts of each Related Agreement to which Mpower is
a party;
(f) all other instruments and certificates of assumption as the
Selling Parties may reasonably request in order to effectively make Mpower
responsible for all Assumed Liabilities.
(g) a true and complete copy, certified by the Secretary or an
Assistant Secretary of each of Holding and Communications, of the resolutions
duly and validly adopted by the Board of Directors of each evidencing the
authorization of the execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby;
(h) a certificate of the Secretary or an Assistant Secretary of each
of Holding and Communications certifying the names and signatures of the
officers of Holding and Communications, respectively, authorized to sign this
Agreement and the Related Agreements and the other documents to be delivered
hereunder and thereunder;
(i) Mpower's notification pursuant to Section 4.2;
(j) an opinion of FCC counsel to Mpower, dated as of the Closing
reasonably satisfactory to Parent covering FCC and telecommunications regulatory
matters of the type customarily covered in legal opinions involving similar
transactions; and
(k) the Securities Legal Opinion; and
(l) such other instruments as may be reasonably requested by the
Selling Parties.
43
Section 6.6 Frustration of Closing Conditions. No Party may rely on the
failure of any condition set forth in this Article VI, as the case may be, to be
satisfied if such failure was caused by such Party's failure to use commercially
reasonable efforts to consummate the Asset Sale and the other transactions
contemplated by this Agreement, as required by and subject to Section 5.6(b).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of Parent and Mpower;
(b) by either Parent or Mpower:
(i) if the Asset Sale shall not have been consummated on or
before March 31, 2005; provided, that the right to terminate
this Agreement pursuant to this Section 7.1(b)(i) shall not
be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure
of the Asset Sale to be consummated by such time;
(ii) if any Restraint having the effect set forth in Section
6.1(c) shall be in effect and shall have become final and
nonappealable; provided, that the party seeking to terminate
this Agreement pursuant to this Section 7.1(b)(ii) shall
have used its reasonable best efforts to prevent the entry
of and to remove such Restraint;
(c) by Parent, if Mpower or any of its Subsidiaries makes a general
assignment for the benefit of creditors, or any proceeding shall be instituted
by or against Mpower or any of its Subsidiaries seeking to adjudicate any of
them a bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or reorganization;
(d) by Mpower, if Parent or ICG makes a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against Parent
or ICG seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization;
(e) by Mpower, if (i) prior to the Closing Date, (A) any
representations and warranties of the Parent or ICG contained in this Agreement
(1) that are not qualified by "materiality" or "Material Adverse Effect" shall
not have been true and correct in all material respects when made or (2) that
are qualified by "materiality" or "Material Adverse Effect" shall not have been
true and correct when made and such breach is (x) incapable of being cured or is
not cured or waived within 30 days of receipt of written notice thereof from
Mpower and (y)
44
Mpower is not in material breach of this Agreement or any Ancillary Agreement,
or (B) Parent or ICG shall have failed to perform in any material respect any of
its material covenants or other agreements contained in this Agreement or the
Related Agreements which breach or failure (1) is not cured within the
applicable cure period set forth in the Related Agreement or, with respect to
this Agreement, is not cured within 30 days after written notice thereof or (2)
is incapable of being cured by Parent;
(f) by Parent, if (i) prior to the Closing Date (A) any
representations and warranties of Mpower contained in this Agreement (1) that
are not qualified by "materiality" or "Material Adverse Effect" shall not have
been true and correct in all material respects when made or (2) that are
qualified by "materiality" or "Material Adverse Effect" shall not have been true
and correct when made and such breach is (x) incapable of being cured or is not
cured or waived within 30 days of receipt of written notice thereof from Parent
and (y) Parent and ICG are not in material breach of this Agreement or any
Ancillary Agreement, or (B) Mpower shall have failed to perform in any material
respect any of its material covenants or other agreements contained in this
Agreement or the Related Agreements which breach or failure to perform (1) is
not cured within the applicable cure period set forth in the Related Agreement
or, with respect to this Agreement, is not cured within 30 days after written
notice thereof or (2) is incapable of being cured by Mpower.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by any Party as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of the Parties except (a) as set forth in Section 7.3(a), and (b) that
nothing herein shall relieve either Party from liability for any breach of this
Agreement.
Section 7.3 Other Provisions Relating to Termination. (a) Survival. The
obligations of the parties under Sections 5.1, 5.7, and Articles VII and VIII
shall survive any termination of this Agreement and remain in full force and
effect.
(b) Notice. In the event of termination of this Agreement and
abandonment of the transactions contemplated hereby by either or both of the
parties pursuant to Section 7.1, written notice thereof shall forthwith be given
by the terminating party to the other party.
(c) Withdrawal of Filings; Return of the Business. If this Agreement
is terminated as provided herein, all filings, applications and other
submissions made pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made. In addition,
in the event of any termination of this Agreement pursuant to Section 7.1, the
Parties shall work together in good faith and use their best efforts to return
the operation and control of the Purchased Assets and the Purchased Business to
the Selling Parties in substantially the same condition as they existed
immediately prior to the date hereof in accordance with the terms and conditions
of the Interim Management Agreement, to provide the Selling Parties with the
economic results of the operation by Mpower of the Purchased Assets and the
Purchased Business under the Interim Management Agreement, including Mpower's
transfer of the revenues and account receivable during the period during which
Mpower operated the Purchased Assets and the Selling Parties' assumption of
expenses and liabilities incurred in connection with the operation of the
Purchased Assets during such period, including all expenses
45
and liabilities incurred in Mpower's or their Affiliates' names other than
liabilities caused by the negligence or willful misconduct of Mpower.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall survive the Closing until the
later of April 30, 2006 and the first anniversary of the Closing Date. Neither
the period of survival nor the liability with respect to the representations and
warranties in this Agreement shall be reduced by any investigation made at any
time by or on behalf of any Party. If written notice of a claim has been given
by an Indemnified Party (as defined below) to the Indemnifying Party prior to
the expiration of the representations and warranties, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
Section 8.2 Indemnification. Each Party (an "Indemnifying Party") shall
indemnify and hold harmless each other Party and its affiliates, officers,
directors, employees, attorneys, agents, representatives, successors and assigns
(each, an "Indemnified Party") for and against any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments and penalties
(including attorneys' and consultants' fees and expenses) actually suffered or
incurred by such Indemnified Parties (including any Action brought or otherwise
initiated by any of Indemnified Party) (a "Loss"), arising out of or resulting
from the breach of any representation, warranty or covenant made by such Party
in this Agreement, and Parent shall indemnify Mpower for any and all Losses
arising out of or resulting from the Excluded Liabilities and the ownership of
the Purchased Assets prior to the Closing Date.
Section 8.3 Defense of Actions. An Indemnified Party seeking
indemnification pursuant to Section 8.2 of any Loss, including any Loss arising
from a claim asserted by a third party ("Third Party Claim"), shall give written
notice ("Notice of Claim") to the Indemnifying Party. An Indemnified Party shall
give the Indemnifying Party notice of any matter which an Indemnified Party has
determined has given or could give rise to a right of indemnification under this
Agreement, stating the amount of the Loss, if known, the method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises. The
obligations and liabilities of the Indemnifying Party under this Section 8.3
with respect to Losses arising from Third Party Claims shall be governed by and
be contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnifying Party notice of such Third Party Claim within
30 days of the receipt by the Indemnified Party of such notice; provided,
however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Article VIII except,
with respect to the particular Third Party Claim in question, to the extent and
only to the extent that the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party from any other obligation
or liability that it may have to any Indemnified Party under this Section 8.3.
If the Indemnifying Party acknowledges in writing its obligation to indemnify
the Indemnified Party hereunder against any Losses that may result from such
Third Party Claim, then the Indemnifying Party shall be entitled to assume and
control the defense of
46
such Third Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the Indemnified Party within ten days
of the receipt of such notice from the Indemnified Party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the Indemnified Party in its
sole and absolute discretion for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel in each jurisdiction for which the
Indemnified Party determines, on the advice of counsel, that counsel is
required, at the expense of the Indemnifying Party; provided, further, that the
Indemnifying Party shall not be entitled to assume and control the defense of a
Third Party Claim if (x) the Indemnified Party reasonably believes that there is
substantial possibility that the Indemnifying Party does not have sufficient
financial or other resources to vigorously defend the Third Party Claim and to
pay its obligations hereunder with respect to such claim, (y) the Indemnified
Party reasonably believes that an adverse determination with respect to the
Third Party Claim would be materially detrimental to or injure the Indemnified
Party's reputation or future business prospects or (z) the Third Party Claim
seeks an injunction or equitable relief against the Indemnified Party. In the
event that the Indemnifying Party exercises the right to undertake any such
defense against any such Third Party Claim as provided above, the Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party, at the Indemnifying Party's expense and at
reasonable hours and upon reasonable notice, all witnesses, pertinent records,
materials and information in the Indemnified Party's possession or under the
Indemnified Party's control relating thereto as are reasonably required by the
Indemnifying Party. Similarly, in the event the Indemnified Party is, directly
or indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party's
expense, at reasonable times and upon reasonable notice all such witnesses,
records, materials and information in the Indemnifying Party's possession or
under the Indemnifying Party's control relating thereto as are reasonably
required by the Indemnified Party. No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party.
Section 8.4 Limitations. No Indemnifying Party hereto shall be required to
indemnify or hold harmless any Indemnified Party with respect to any claim for
indemnification of a breach of any representation or warranty, until the
aggregate amount of Losses of the Indemnified Parties, as the case may be
exceeds $25,000 (the "Threshold"); provided, however, that once the Threshold is
exceeded, the Indemnifying Party shall be liable for all such Losses, including
those comprising the Threshold. Absent fraud, in no event shall the cumulative
indemnification obligation for any breach of any representation or warranty of
Mpower, on the one hand, and Parent and ICG, on the other hand, exceed the
Purchase Price.
Section 8.5 Satisfaction of Indemnification. Parent and ICG may satisfy any
claim for indemnification by electing to apply the Escrow Stock in satisfaction
of such claim in accordance with the Escrow Agreement or returning to Mpower
shares of Mpower Common Stock. The Mpower Common Stock shall be valued at the
Mpower Stock Price. If Parent and ICG do not promptly satisfy any agreed upon,
settled or finally adjudicated claim for indemnification, then Mpower may elect
to apply the Escrow Stock in satisfaction of such claim in accordance with the
Escrow Agreement.
47
Section 8.6 Tax Effect of Indemnification. The Parties agree to treat all
payments made by either to or for the benefit of the other under any indemnity
provisions of this Agreement as adjustments to the Consideration for tax
purposes.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given at the time of receipt if delivered personally, upon acknowledgment by the
recipients' facsimile equipment if telecopied (which is confirmed) or on the
first Business Day after deposit with a reputable courier if sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Mpower, to:
Mpower Holding Corporation
000 Xxxxx'x Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to Mpower) to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Parent or Merger Sub, to:
Columbia Capital LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
and
ICG Communications, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
48
with a copy (which shall not constitute notice to Parent or ICG)
to:
Xxxxxxx, Xxxxxxxxx & Xxxxxx PC
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Section 9.2 Definitions.
"Action" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Entity.
"Affiliate" shall mean , with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"best knowledge", with respect to a party, shall mean the actual
knowledge of such party as well as knowledge attributable to such party of such
matters which a reasonable person in such capacity or position should know in
the ordinary course of discharging the duties assigned to such capacity or
position after reasonable investigation.
"Business Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banking institutions in the State of Delaware are not
required to open.
"Conveyance Taxes" shall mean any and all real property transfer or
gains, sales, use, transfer, value added, stock transfer and stamp Taxes, any
transfer, recording, registration, and other fees and any similar Taxes which
become payable in connection with the transactions contemplated by this
Agreement.
"Employee Benefit Plan" shall mean an employee benefit plan within the
meaning of Section 3(2) of ERISA or stock, incentive, bonus, severance, deferral
or other employment plan, policy, program, contract, agreement or arrangement.
"Encumbrance" shall mean any security interest, pledge, hypothecation,
mortgage, lien (including environmental and tax liens), violation, charge,
lease, license, encumbrance, servient easement, adverse claim, reversion,
reverter, preferential arrangement, restrictive covenant, condition or
restriction of any kind, including any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Environment" shall mean surface waters, groundwaters, soil,
subsurface strata and ambient air.
"Environmental Permits" shall mean all Permits, approvals,
identification numbers, licenses and other authorizations required under or
issued pursuant to any applicable Environmental Law.
49
"Excluded Taxes" shall mean (i) all Income Taxes owed by the Selling
Parties or any of their Affiliates for any period; (ii) all Taxes relating to
the Excluded Assets or Excluded Liabilities for any period; (iii) all Taxes
relating to the Purchased Assets, the Purchased Business or the Assumed
Liabilities for any taxable period (or portion thereof) ending on or prior to
the Closing Date; and (iv) Taxes imposed on Mpower or in respect of the
Purchased Assets or the Purchased Business, as a result of any breach of
warranty or misrepresentation under Section 2.14 hereof, or breach by any
Selling Party of any covenant relating to Taxes. For purposes of this Agreement,
in the case of any taxable period beginning on or before and ending after the
Closing Date, any real and personal property Taxes and other Taxes that are
apportionable based on an actual or deemed closing of the books and that are
payable by the Selling Parties or any of their Affiliates with respect to any
taxable period beginning on or prior to and ending after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be deemed to equal the amount that would be payable if
the taxable year ended on the Closing Date, and, in the case of all other Taxes
that are payable by the Selling Parties or any of their Affiliates with respect
to any taxable period beginning on or prior to and ending after Closing Date,
the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be equal to the amount of such Tax for the
entire period multiplied by a fraction, the numerator of which is the number of
days in the portion of the period ending on the Closing Date and the denominator
of which is the number of days in the entire period.
"Income Taxes" shall mean Taxes imposed on or measured by reference to
gross or net income or receipts, and franchise, net worth, capital or other
doing business Taxes.
"Intellectual Property" shall mean (i) patents, patent applications
and statutory invention registrations, (ii) trademarks, service marks, domain
names, trade dress, logos, trade names, corporate names and other identifiers of
source or goodwill, including registrations and applications for registration
thereof and including the goodwill of the business symbolized thereby or
associated therewith, (iii) mask works and copyrights, including copyrights in
computer software, and registrations and applications for registration thereof,
and (iv) confidential and proprietary information, including trade secrets,
know-how and invention rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute thereto.
"knowledge", with respect to a party, shall mean the actual knowledge
of such party.
"Mpower Stock Price" shall mean $1.257.
"Permit" shall mean any licenses, permits, orders, consents,
approvals, registrations, authorizations, qualifications and filings with and
under all federal, state, local or foreign laws and Governmental Entities
(including all pending applications therefor or relating thereto and renewals,
extensions or modifications thereof and any additions thereto between the date
hereof and each Closing hereunder).
50
"Permitted Liens" shall mean:
(a) real estate Taxes, which are not yet due and payable as of the
Closing Date, or which are being contested in good faith;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or similar liens for labor, materials or supplies incurred in the ordinary
course of business that do not materially detract from the value of the property
or the use thereof and which are for amounts which are not due and payable;
(c) zoning, building codes and other land use laws regulating the use
or occupancy of real property or the activities conducted thereon which are
imposed by any Governmental Entity having jurisdiction over such real property
which are not violated by the current use or occupancy of such real property or
the operation of the Purchased Business;
(d) easements, covenants, conditions, restrictions and other similar
matters of record affecting title to Leased Real Property which do not or would
not materially impair the use or occupancy of such Leased Real Property in the
operation of the Purchased Business and do not render title to the property
encumbered thereby unmarketable ;
(e) any interest or title of a lessor under any lease entered into by
a Party or any of its Subsidiaries in the ordinary course of business and
covering only the assets so leased; and
(f) Encumbrances in existence on the date hereof listed in Schedule
9.2; provided that no such Encumbrance is spread to cover any additional
property after the date hereof.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Purchase Price" shall mean $13,500,000.
"Regulations" shall mean the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Related Agreements" shall mean (a) the Assignments and Assumptions of
Lease, (b) the Xxxx of Sale, (c) the Assignment and Assumption Agreement, (d)
the Assignments of Intellectual Property, (e) Interim Management Agreement, (f)
the Warrants (g) Transition Services Agreement, (h) the Master Services
Agreement, (i) the VoicePipe Agreement (j) the Escrow Agreement, (k) the
Investor Rights Agreement, (l) the License Agreement and any other agreements
executed in connection with this Agreement or the transactions contemplated
herein.
"Release" shall mean disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like into or upon any land or water or air or otherwise entering into the
Environment.
"Revenue" shall mean any revenue associated with the Purchased
Business excluding any revenue associated with the Qwest IRU Agreements and
reciprocal compensation.
51
"RTU Transfer Fees" shall mean fees required to be paid in connection
with the transfer of the right to use software for the eleven Tellabs Titan
digital cross-connect systems included in the Purchased Assets, but shall not
include that portion of any such fees that reflect prices, terms and conditions
that are inconsistent with normal industry practices that have been agreed to in
exchange for preferential prices, terms and conditions with respect to support
and maintenance services and fees and other ongoing fees and services.
"SEC" shall mean the United States Securities and Exchange Commission.
"Subsidiary" shall mean, with respect to a Person, any corporation,
limited liability company, partnership, trust or unincorporated organization of
which securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or other governing body
performing similar functions with respect to such corporation, limited liability
company, partnership, trust or unincorporated organization (or, if there are no
such voting interests, 50% or more of the equity interests of which) are
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries.
"Tax" or "Taxes" shall mean any and all (i) taxes, assessments, fees,
levies, duties, tariffs, imposts, and other similar charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth and other taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added, or
gains taxes, license, registration and documentation fees, and customs' duties,
tariffs, and similar charges, (ii) any liability for the payment of any amount
of a type described in clause (i) arising as a result of being or having been a
member of any consolidated, combined, unitary or other group or being or having
been included or required to be included in any Tax Return related thereto, and
(iii) any liability for the payment of any amount of a type described in clause
(i) or (ii) as a result of any obligation to indemnify or otherwise assume or
succeed to the liability of any other person (whether imposed by Law or
contractual arrangement).
"Tax Return" shall mean any return, declaration, report, election,
claim for refund or information return or other statement or form relating to,
filed or required to be filed with any Tax authority, including any schedule or
attachment thereto or any amendment thereof.
Section 9.3 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. "Material" and "materially" have correlative
meanings. Any representation or warranty with reference to the "validity,"
"binding" nature, "enforceability," or "force and effect" of a contract,
agreement or other instrument, shall be interpreted as being subject to the
exception to the extent that such validity, enforceability or force and effect
may be subject to (i) bankruptcy, insolvency, fraudulent transfer and
conveyance, reorganization,
52
moratorium or other similar laws relating to the rights and remedies of
creditors generally, (ii) general principles of equity and (iii) the discretion
of the court before which any proceeding in respect of the contract, agreement
or instrument or the transactions contemplated thereby may be brought. The
phrases "reasonable efforts," "commercially reasonable efforts," and "best
efforts," and words or phrases to similar effect unless otherwise expressly set
forth herein shall not be interpreted to impose any obligation on any Party to
maintain or initiate any litigation, sell, liquidate or dispose of any assets,
or incur any material amount of indebtedness or seek any financing. All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The phrases "ordinary course," "ordinary course of business"
and words to similar effect shall be interpreted to exclude payments upon
acceleration and to include any payment, transaction, contract, action or
activity that is in furtherance of the performance by a Party or any of its
Subsidiaries of their respective obligations under this Agreement or the Related
Agreements or the transactions contemplated hereby and thereby and shall take
into account distressed financial conditions. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
Section 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Parties.
Section 9.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Article VIII relating to indemnified parties, are not intended to
confer upon any person, including and employee or former employee of the Selling
Parties, other than the parties hereto any legal or equitable rights, benefits
or remedies.
Section 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other parties; provided, however, that Mpower
may assign this Agreement or any of its rights and obligations hereunder to one
or more Affiliates of Mpower without the consent of the Selling Parties and
53
Parent may assign this Agreement or any of its rights and obligations hereunder
to one or more Subsidiaries of Parent; provided further that no assignment shall
relieve an assigning party of its obligations hereunder if such assignee does
not perform such obligations. Any assignment in violation of the preceding
sentence shall be void. Subject to the preceding two sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 9.8 Consent to Jurisdiction. This Agreement will be governed by and
construed and interpreted in accordance with the substantive Laws of the State
of New York applicable to contracts executed in and to be performed in that
State, without giving effect to any choice of law or conflicts of Law provision
or rule that would cause the application of the Laws of a jurisdiction other
than New York. All Actions arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York federal court sitting in the
Borough of Manhattan of The City of New York, provided, however, that if such
federal court does not have jurisdiction over such Action, such Action shall be
heard and determined exclusively in any New York state court sitting in the
Borough of Manhattan of The City of New York. Consistent with the preceding
sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of
any federal or state court sitting in the Borough of Manhattan of The City of
New York for the purpose of any Action arising out of or relating to this
Agreement brought by any party hereto and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such Action, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts.
Section 9.9 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in anyway the meaning or
interpretation of this Agreement.
Section 9.10 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 9.11 Amendment. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements of the other
party or conditions to such party's obligations contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or condition
of this Agreement. The failure of either party hereto to
54
assert any of its rights hereunder shall not constitute a waiver of any of such
rights. All rights and remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
Section 9.12 Fees and Expenses. Except as otherwise provided herein, each
Party shall bear its own fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
Section 9.13 Waiver of Jury Trial.. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO.
Section 9.14 No Successor Liability. It is expressly understood that the
Parties intend that Mpower shall not be considered a successor to the Selling
Parties or any of their Affiliates by reason of any theory of law or equity, and
that Mpower shall have no liability except as otherwise provided in this
Agreement for any obligation or liability of the Selling Parties or any of their
Affiliates.
[Signature Page Follows]
55
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
MPOWER HOLDING CORPORATION
By: _____________________________
Name:
Title:
MPOWER COMMUNICATIONS CORP.
By: _____________________________
Name:
Title:
MCCC ICG HOLDINGS, LLC
By: _____________________________
Name:
Title:
ICG COMMUNICATIONS, INC.
By: _____________________________
Name:
Title:
56
