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PURCHASE AGREEMENT
by and among
QWEST COMMUNICATIONS INTERNATIONAL INC.
SLINGSHOT NETWORKS, LLC,
and
ANSCHUTZ DIGITAL MEDIA, INC.
Dated as of September 26, 1999
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of September 26, 1999 (this "Agreement"),
by and among Qwest Communications International Inc., a Delaware corporation
(together with its permitted assigns, "Purchaser"), Slingshot Networks, LLC, a
Delaware limited liability company ("Slingshot"), and Anschutz Digital Media,
Inc., a Colorado corporation ("ADMI").
RECITALS
A. ADMI and Slingshot are engaged in the business of providing enhanced
telephony, calling card and related services and advanced digital production,
post-production and transmission facility, digital media storage and
distribution services, telephony-based data storage and enhanced services,
access and routing services and prepaid telecommunications services (the
"Business");
B. Subject to the terms and conditions contained in this Agreement, ADMI
intends to sell, transfer and assign to Purchaser, and Purchaser intends to
purchase and acquire from ADMI, certain assets of ADMI used in the operation of
the portion of the Business relating to the provision of enhanced telephony
services, including network-based telecommunications products, customer premises
telecommunications products and service bureau transactional service offerings
(the "Telecom Business"); and
C. Subject to the terms and conditions contained in this Agreement, and
in the Contribution Agreement and the Subscription Agreement referred to herein,
(1) ADMI intends to contribute certain assets of ADMI used in the operation of
the portion of the Business relating to advanced digital production, post-
production and transmission facility, digital media storage and distribution
services, telephony-based data storage and enhanced services, access and routing
services (the "Digital Media Business") to Slingshot and (2) Qwest desires,
either itself or through its permitted assigns, to purchase Class A Units (as
defined herein) in Slingshot.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"ADMI" shall have the meaning set forth in the introductory paragraph to
this Agreement.
"Affiliate" shall mean, as to any Person (i) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person, (ii) any corporation or organization (other than a
Subsidiary of such Person) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (iii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, and (iv) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person or who is a
director or officer of such Person or any of its parents or Subsidiaries. The
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with") as applied to any Person means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or other ownership interest, by contract or otherwise.
Notwithstanding the foregoing, except as otherwise expressly provided, Purchaser
and any of its Affiliates that would constitute Affiliates of ADMI, Slingshot or
PSI only by virtue of being Affiliates of Qwest Communications International
Inc. shall be deemed not to be Affiliates of ADMI for the purposes of this
Agreement; provided, that for purposes of the assignment of the Xxxxx Indemnity,
ADMI and Purchaser are Affiliates.
"Agreement" shall have the meaning set forth in the introductory paragraph
to this Agreement.
"Assets" shall have the meaning set forth in Section 2.1(a) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 2.1(c)
hereof.
"Balance Sheets" shall have the meaning set forth in Section 4.7(a) hereof.
"Balance Sheet Date" shall mean July 31, 1999.
"BFD" shall mean BFD Productions, Inc., a Nevada corporation.
"Xxxx of Sale, Assignment and Assumption Agreement" shall mean the xxxx of
sale, assignment and assumption agreement to be entered into at Closing by and
between Purchaser and ADMI, in form and substance mutually acceptable to
Purchaser and ADMI, pursuant to which (i) ADMI will transfer the Telephony
Assets held by it to Purchaser, (ii) ADMI will assign to Purchaser any rights
relating to the Telephony Assets under the Xxxxx Purchase Agreement (including
rights of indemnification), and (iii) Purchaser will assume the Assumed
Liabilities of ADMI, as contemplated by Section 2.1 of this Agreement, together
with such other instruments of transfer as the parties shall mutually agree in
each case to Purchaser and ADMI .
"Business" shall have the meaning set forth in the preamble hereto.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banks in Denver, Colorado are authorized or obligated by law or
executive order to close.
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"Capacity and Service Agreement" shall mean a master services agreement to
be entered into by Purchaser and ADMI substantially in the form of Exhibit A
hereto.
"Cleanup" shall mean all actions, whether voluntary or compelled by
Environmental Laws, required to: (i) clean-up, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment; (ii) prevent the
Release of Hazardous Materials so that they do not migrate, endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations and post-remedial monitoring and
care, or (iv) respond to any government or third-party requests for information
or documents in any way relating to clean-up, removal, treatment or remediation
or potential clean-up, removal, treatment or remediation of Hazardous Materials
in the indoor or outdoor environment.
"Class A Units" shall mean Class A units of interest in Slingshot
representing, after giving effect to the transactions contemplated by this
Agreement, 50% of the outstanding equity interests of Slingshot on a fully
diluted basis.
"Closing" shall have the meaning set forth in Section 3.3 hereof.
"Closing Date" shall have the meaning set forth in Section 3.3 hereof.
"Contribution Agreement" shall mean a contribution agreement dated the
Closing Date, between ADMI and Slingshot, substantially in the form of Exhibit D
attached hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Computer Programs" shall mean, with respect to a specified Person, (i) any
and all computer software programs and software development tools, including all
source and object code, (ii) databases and compilations, including any and all
data and collections of data, whether machine readable or otherwise, (iii) all
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (iv) all domain names and the content
contained in such Person's Internet site(s); provided such intangibles shall not
include any right or license to use the names "Anschutz" or "Xxxxx" in any
manner whatsoever, including without limitation any registered trademark, domain
names and other rights containing or incorporating the names "Anschutz" or
"Xxxxx", and (v) all documentation, including user manuals and training
materials, relating to any of the foregoing; provided that the foregoing shall
not include any shrink-wrapped or similar off-the-shelf products.
"Current Assets" shall have the meaning set forth in Section 3.1 hereof.
"Current Liabilities" shall have the meaning set forth in Section 3.1
hereof.
"Digital Media Business" shall have the meaning set forth in the preamble
hereto.
"Damages" shall have the meaning set forth in Section 9.3(a) hereof.
"Environmental Claim" shall mean, with respect to a specified Person, any
claim, action, cause of action, notice of potential responsibility, information
request, notice of violation, notice
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of potential violation, complaint, order, directive, investigation or notice by
any other Person arising out of, based on or attributable to (i) the current or
past presence, threatened Release, or Release, of any Hazardous Material at, on,
under or from, any location, whether or not owned, leased or operated by such
specified Person, including any location at which Hazardous Materials
originating on or from such specified Person's business were sent for disposal
or treatment or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all applicable federal, state, local and
common laws and regulations relating to pollution or protection of the
environment, including laws and regulations, now or hereafter in effect,
relating to Releases or threatened Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, installation,
generation, treatment, storage, disposal, transport or handling of Hazardous
Materials, and all laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials.
"Environmental Liability" shall mean any liability resulting from an
actual, threatened or potential Environmental Claim; from failure to comply with
any Environmental Law; from failure to obtain or comply with any Environmental
Permit; from a Remedial Action; or from harm or injury to any person, to public
health, or to the environment as a result of actual, threatened or potential
exposure to Hazardous Materials.
"Environmental Permits" shall mean all permits, approvals, identification
numbers, licenses, certificates, executions, approvals and any other
authorizations under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.16 hereof.
"Equipment" shall have the meaning set forth in Section 4.9(f) hereof.
"Final Closing Date Balance Sheet" shall have the meaning set forth in
Section 3.1 hereof.
"FCC" shall mean the Federal Communications Commission.
"GAAP" shall mean United States generally accepted accounting principles
and practices.
"Governmental Authority" shall mean any foreign, national, federal, state
or local judicial, legislative, executive or governmental regulatory authority.
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"Growth Share Plan" shall mean the phantom equity participation plan to be
adopted by Slingshot after the closing pursuant to which Slingshot may offer up
to 7.5% of its common equity interest to its directors, officers and employees.
"Hazardous Materials" shall mean any wastes, substances, radiation, or
materials (whether solids, liquids or gases) (i) that are hazardous, toxic,
infectious, explosive, radioactive, carcinogenic, or mutagenic; (ii) that are or
become defined or listed as a "pollutants," "contaminants," "hazardous
materials," "hazardous wastes," "hazardous substances," "toxic substances,"
"radioactive materials," "solid wastes," or other similar designations in, or
otherwise subject to regulation under, any Environmental Laws; (iii) without
limitation, that contain polychlorinated bi-phenyls (PCBs), asbestos and
asbestos-containing materials, lead-based paints, urea-formaldehyde foam
insulation, and petroleum or petroleum products (including, without limitation,
crude oil or any fraction thereof) or (iv) that pose a hazard to human or worker
health or safety, natural resources, industrial hygiene, or the environment, or
an impediment to working conditions.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"IHC" shall mean IHC Holdings, LLC, a Colorado limited liability company.
"Indebtedness" of any Person at any date shall include (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices) and
including earn-out or similar contingent purchase amounts, (ii) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (iii) all obligations of such Person under capitalized lease
obligations, (iv) all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (v) all liabilities secured by
any Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, and (vi) all
guarantees by such Person of obligations of others.
"Instruments of Transfer" shall have the meaning set forth in Section
2.1(b) hereof.
"Intellectual Property" shall mean, with respect to a specified Person, all
intellectual property rights used in or reasonably necessary for the business of
such Person as currently conducted or as presently contemplated by such Person
to be conducted, including all patents and patent applications, trademarks,
trademark registrations and applications; service marks, service xxxx
registrations and applications, logos, designs, proprietary rights, slogans and
general intangibles of like nature, together with all goodwill related to the
foregoing; trade names, copyrights, copyright registrations and applications;
Computer Programs; product plans, technology, process engineering, drawings,
schematic drawings, secret processes; proprietary knowledge, including without
limitation, trade secrets, know-how, confidential confirmation, proprietary
processes and formulae; provided such intangibles shall not include any right or
license to use the names "Anschutz" and "Xxxxx" in any manner whatsoever,
including without limitation any registered trademark, domain names and other
rights containing or incorporating
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the names "Anschutz" or "Xxxxx"; provided further, that the foregoing shall not
include any shrink-wrapped or similar off-the-shelf products. For the purposes
of this Agreement, any reference to Intellectual Property of ADMI or Slingshot
shall be deemed not to include Intellectual Property of PSI except to the extent
otherwise expressly stated.
"IRS" shall mean the Internal Revenue Service of the United States.
"Knowledge" or "knowledge" with respect to any particular representation or
warranty contained in this Agreement, when used to apply to the "knowledge of
ADMI", shall be deemed to be followed by the phrase "after due inquiry" and
shall mean the actual knowledge or conscious awareness after due inquiry of any
senior officer of ADMI; provided that for purposes of Section 4.25 hereof the
term "knowledge" means that such statement shall be deemed to be made to the
actual knowledge or conscious awareness of any senior officer of ADMI after
having shown Xxx Xxxxxx, Xxx Xxxxxxxxx and Xxxxx Xxxxxxxxx the relevant
statement and having consulted with such individuals as to whether they have
actual knowledge of any fact or circumstance that would make such statement
untrue.
"Laws" shall mean any applicable federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment, decree, administrative
order or administrative or judicial decision.
"Liabilities" shall mean debts, liabilities, commitments, obligations,
duties and responsibilities of any kind and description, whether absolute,
accrued, contingent, monetary or nonmonetary, direct or indirect, known or
unknown or matured or unmatured or of any other nature, including, but not
limited to, liabilities on account of taxes, other governmental charges or
lawsuits brought, whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement, which are not
set forth on or disclosed in either the Telecom Balance Sheet or the Slingshot
Balance Sheet, as the case may be.
"Licenses" shall have the meaning set forth in Section 4.15(d) hereof.
"Liens" shall mean any lien, pledge, mortgage, security interest, lease,
charge, option, right of first refusal, easement, servitude, transfer
restriction under any shareholder or similar agreement, or any other encumbrance
of any nature whatsoever.
"Litigation" shall mean, with respect to any specified Person, any
litigation, legal action, arbitration, proceeding, material demand, material
claim or investigation pending, or, to the knowledge of ADMI, threatened,
planned or reasonably probable, against, affecting or brought by or against such
specified Person or its present or former employees or agents relating to the
business of such specified Person or any of its assets or liabilities or binding
any of such Person's property or assets.
"Managed" shall have the meaning set forth in Section 4.13(e).
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"Management Agreement" shall mean the management agreement, dated March 16,
1999, between ADMI, the Xxxxx Sellers and RMS Limited Partnership, a Nevada
limited partnership.
"Marks" shall mean all trade names, trademarks, service marks, brand names,
brand marks, fictitious names or other Intellectual Property relating thereto;
provided such trade names, trademarks, service marks, brand names, brand marks,
fictitious names or other Intellectual Property shall not include any right or
license to use the names "Anschutz" and "Xxxxx" in any manner whatsoever,
including without limitation any registered trademark, domain names and other
rights containing or incorporating either "Anschutz" or "Xxxxx"
Unless the context otherwise requires, when used in Articles IV and V other
than as a part of the defined terms Material Adverse Change or Material Adverse
Effect, the word "material" shall mean, when used with respect to any event(s),
act(s), condition(s) or occurrence(s), affecting the Telecom Business, the
Digital Media Business or the Business, as the case may be, and an effect or
change with respect to the same or any similar event(s), act(s), condition(s) or
occurrence(s), individually or in the aggregate with respect to which Damages of
$100,000 in the aggregate or more is being, or would reasonably be expected to
be, asserted against, imposed upon or sustained by any of the Telecom Business,
Digital Media Business or the Business taken as a whole or a corresponding
increase in the liabilities (including the Assumed Liabilities).
"Material Adverse Change" shall mean, with respect to the same or any
similar events, acts, conditions or occurrences, whether individually or in the
aggregate resulting in, a material adverse effect on or a material adverse
change in (A) when referring to the Telecom Business (i) the Telecom Assets or
the Assumed Liabilities or (ii) any of the Telecom Business or condition
(financial or otherwise), operations, assets or liabilities of the Telecom
Business, (B) when referring to the Digital Media Business (i) the Slingshot
Assets and related liabilities or (ii) any of the Digital Media Business or
condition (financial or otherwise), operations, assets or liabilities of the
Digital Media Business and (C) when referring to the Business (i) the Assets or
(ii) any of the Business or condition (financial or otherwise), operations,
assets or liabilities of ADMI. For purposes of this definition and without
limiting the generality of the foregoing, an effect or change with respect to
the same or any similar event(s), act(s), condition(s) or occurrence(s)
individually or in the aggregate with respect to which ADMI or Slingshot would
reasonably be expected to have $2,000,000 in the aggregate or more in Damages
being asserted against, imposed upon or sustained by the Telecom Business, the
Digital Media Business or the Business, taken as a whole, or a corresponding
increase in related Liabilities shall constitute a "material adverse" change.
"Material Adverse Effect" shall mean, with respect to the same or any
similar events, acts, conditions or occurrences, whether individually or in the
aggregate resulting in, a material adverse effect on or a material adverse
change in (A) when referring to the Telecom Business (i) the Telecom Assets or
the Assumed Liabilities or (ii) any of the Telecom Business or condition
(financial or otherwise), operations, assets or liabilities of the Telecom
Business, (B) when referring to the Digital Media Business (i) the Slingshot
Assets and related liabilities or (ii) any of the Digital Media Business or
condition (financial or otherwise), operations, assets or
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liabilities of the Digital Media Business and (C) when referring to the Business
(i) the Assets or (ii) any of the Business or condition (financial or
otherwise), operations, assets or liabilities of ADMI, (D) the legality or
enforceability against ADMI or Slingshot of this Agreement or (E) the ability of
ADMI to perform its obligations and to consummate the transactions under this
Agreement. For purposes of clauses (A) through (C) of this definition and
without limiting the generality of the foregoing, an effect or change with
respect to the same or any similar event(s), act(s), condition(s) or
occurrence(s) individually or in the aggregate with respect to which ADMI or
Slingshot would reasonably be expected to have $100,000 in the aggregate or more
in Damages being asserted against, imposed upon or sustained by any of the
Telecom Business, Digital Media Business or the Business taken as a whole or a
corresponding increase in the liabilities (including the Assumed Liabilities)
shall constitute a "material adverse" effect.
"Material Contracts" shall have the meaning set forth in Section 4.14(a)
hereof.
"Net Working Capital" shall have the meaning set forth in Section 3.1
hereof.
"Nondelivered Telecom Assets" shall have the meaning set forth in Section
2.3 hereof.
"Note" shall mean a promissory note of Purchaser, having an initial
principal amount equal to the Purchase Price, in substantially the form of
Exhibit C hereto, and any replacement of such note.
"Other PSI Entity" shall have the meaning set forth in Section 4.3(b)
hereof.
"Other Slingshot Entity" shall have the meaning set forth in Section 4.2(c)
hereof.
"Operating Agreement" shall mean the amended and restated limited liability
company operating agreement of Slingshot.
"Ownership Interests" shall have the meaning set forth in Section 4.2(a)
hereof.
"Permits" shall mean as to any Person, all licenses, permits, franchises,
orders, approvals, concessions, registrations, authorizations and qualifications
under any foreign, federal, state or local laws with any and all Governmental
Authorities or with any and all industry or other non-governmental self-
regulatory organizations that are issued to such Person.
"Person" shall mean an individual, a corporation, a partnership, limited
liability company, an association, a trust or other entity or organization.
"PSI" shall mean Precision Systems, Inc., a Delaware corporation, and,
unless the context otherwise requires, its consolidated Subsidiaries other than
BFD.
"PSI Securities" shall have the meaning set forth in Section 4.3 hereof.
"Purchase Price" shall have the meaning set forth in Section 3.1 hereof.
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"Purchaser" shall have the meaning set forth in the introductory paragraph
to this Agreement.
"Purchaser Indemnified Parties" shall mean Purchaser and its successors,
assigns, Affiliates, agents and employees.
"Real Property" shall have the meaning set forth in Section 4.9(b) hereof.
"Release" shall mean any release, spill, emission, leaking, pumping,
dumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including ambient air, surface
water, groundwater and surface or subsurface strata, sewers, storm drains, or a
publicly owned treatment works), or into or out of any property, including the
movement of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
"Remedial Action" shall mean any action or proceeding to (i) cause the
removal, abatement or containment of any Hazardous Materials, or (ii) to correct
or prevent a Release, or to recover the cost of either of the foregoing by a
Government Authority or third party.
"Requirement of Law" shall mean as to any Person, the partnership
agreement, certificate of incorporation, bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
order of an arbitrator or Governmental Authority, in each case applicable to or
binding upon such Person or any of its properties or assets or to which such
Person or any of its properties or assets is subject.
"Schedules" and any references to specific items therein shall mean the
disclosure schedules hereto.
"Seller Indemnified Parties" shall mean Slingshot and ADMI and their
successors, assigns, Affiliates, agents and employees.
"Services and Option Agreements" shall mean (i) the Qwest Wholesale Private
Line Service Agreement, (ii) the Qwest Internet Transport and Video and Data
Transmission Service Agreement, (iii) the Qwest Private Line Collocation License
Agreement, (iv) the Qwest IRU Agreement and (v) the Qwest IRU Collocation
Agreement, in each case together with any exhibits and addenda thereto, each to
be entered into by Slingshot and Purchaser (or an Affiliate thereof) at Closing
in substantially the forms attached hereto as Exhibits B-1 through B-5.
"Slingshot" shall have the meaning set forth in the introductory paragraph
to this Agreement.
"Slingshot Assets" shall have the meaning set forth in Section 2.1(a)
hereof.
"Slingshot Balance Sheet" shall have the meaning set forth in Section
4.7(a) hereof.
"Xxxxx Communications" shall mean Xxxxx Communications Holdings Limited
Partnership, a Nevada limited partnership.
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"Xxxxx Indemnity" shall have the meaning set forth in Section 7.12 hereof.
"Xxxxx Productions" shall mean Xxxxx Productions Limited Partnership, a
Nevada limited partnership.
"Xxxxx Purchase Agreement" shall mean the Asset Purchase Agreement, dated
as of February 16, 1999, by and among ADMI, the Xxxxx Sellers, RMS Limited
Partnership, a Nevada limited partnership, and Xxx X. Xxxxx (as to Articles IX
and XI only).
"Xxxxx Sellers" shall mean Xxxxx Communications, Xxxxx Virtual Media
Limited Partnership, a Nevada limited partnership, Xxxxx World Wide, Xxxxx
Productions, Professional Video Services Corporation, a Delaware corporation,
and Enhanced Services of Nevada, Inc., a Nevada corporation.
"Xxxxx World Wide" shall mean Xxxxx World Wide Digital Limited Partnership,
a Nevada limited partnership.
"Subscription Agreement" shall mean a subscription agreement dated the
Closing Date, between Slingshot and Qwest Communications Corporation, or another
Affiliate of Purchaser, substantially in the form of Exhibit E attached hereto.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other organization, whether incorporated or unincorporated, of
which such Person or any other subsidiary of such person beneficially owns a
majority of the voting or equity interests.
"Systems" shall have the meaning set forth in Section 4.24 hereof.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Return" shall mean any return, report, information return or other
document (including any related or supporting information) with respect to
Taxes.
"Taxes" shall mean all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any Governmental Authority, including income, gross
receipts, excise, property, sales, gain, use, license, capital stock, transfer,
franchise, payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto.
"Telecom Assets" shall have the meaning set forth in Section 2.1(a) hereof.
"Telecom Balance Sheet" shall have the meaning set forth in Section 4.7(a)
hereof.
"Telecom Business" shall have the meaning set forth in the preamble hereto.
"Telephony Assets" shall mean all of the Telecom Assets other than the PSI
Securities.
"Third Party Software" shall have the meaning set forth in Section 4.9(f)
hereof.
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"Year 2000 Compliant" shall have the meaning set forth in Section 4.24
hereof.
Section 1.2 Terms Generally. The definitions in Sections 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation" even if not followed
actually by such phrase unless the context expressly provides otherwise. Unless
otherwise expressly defined, terms defined in the Agreement shall have the same
meanings when used in any Exhibit or Schedule and terms defined in any Exhibit
or Schedule shall have the same meanings when used in the Agreement or in any
other Exhibit or Schedule. The words "herein," "hereof," "hereto" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular provision of this Agreement. The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available by the party in question. The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the
introductory paragraph of this Agreement. References to "dollars" or "$" in this
Agreement shall mean United States dollars unless the context provides
otherwise.
ARTICLE II
ACQUISITION AND DISPOSITION OF ASSETS
Section 2.1 Purchase and Sale of Assets.
(a) At the Closing, upon the terms and subject to the conditions
set forth in this Agreement, ADMI shall transfer, assign, convey and deliver to
Purchaser and Purchaser shall receive from ADMI all right, title and interest in
and to all of the Telecom Assets free and clear of all Liens except for Assumed
Liabilities. It is the intent of the parties hereto that the term (i) "Telecom
Assets" shall mean all right, title and interest in all of the assets, tangible
or intangible, along with all contractual and leasehold rights ADMI holds
(subject to the limitations set forth in Section 2.2) relating to the Telecom
Business, including, without limitation, the assets listed in Schedule 2.1(a),
(ii) "Slingshot Assets" shall mean all right, title and interest in all assets,
tangible or intangible of ADMI other than (A) the Telecom Assets, (B) the
membership interests and assets of IHC and (C) the capital stock and assets of
BFD, and (iii) "Assets" shall mean the Telecom Assets and the Slingshot Assets
taken together.
(b) The sale, conveyance, assignment, transfer and delivery of the
Telecom Assets will be effected by delivery by ADMI to Purchaser of (i) a Xxxx
of Sale, Assignment and Assumption Agreement from ADMI, (ii) executed copies of
the filings, consents, approvals, notices or waivers, and copies of the
instruments transferring, registering or issuing the consents, approvals,
permits, licenses, permissions, registrations or other authorizations referred
to in Section 7.2 hereof, (iii) with respect to the PSI Securities, the PSI
Securities accompanied by stock powers duly executed in blank, and (iv) such
other good and sufficient instruments of conveyance, transfer and assignment
(together with the Xxxx of Sale, Assignment and Assumption Agreement, the
"Instruments of Transfer") as shall be necessary to vest in Purchaser full
right,
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title and interest in and to the Telecom Assets, free and clear of all claims
and Liens whether absolute, accrued, contingent or otherwise except the Assumed
Liabilities.
(c) Upon the terms and subject to the conditions of this
Agreement, including but not limited to the exceptions set forth in Section
2.1(d), at the Closing Purchaser will assume and agree to pay, perform and
discharge as and when due the liabilities and obligations of ADMI listed in
Schedule 2.1(c) (the "Assumed Liabilities"); provided, however, that the amount
of Assumed Liabilities as of the Closing Date shall not exceed either (i) the
amount of liabilities as set forth on the Telecom Balance Sheet or (ii) the
amount of current assets as set forth on the Telecom Balance Sheet. The
assumption of the Assumed Liabilities by Purchaser will be effected by delivery
by Purchaser to ADMI of the duly executed Xxxx of Sale, Assignment and
Assumption Agreement. Notwithstanding the foregoing, Purchaser shall not assume
any liabilities of PSI in connection with the acquisition of the PSI Securities
pursuant to this Agreement and such liabilities shall be and remain liabilities
of PSI.
(d) Except as may be expressly provided for in this Agreement,
Purchaser shall not assume and ADMI shall not assign to Purchaser and shall
remain liable for, any liability or obligation, direct or indirect, absolute or
contingent, of ADMI or any Subsidiary, division, associate or Affiliate of ADMI,
including, as of the Closing, BFD, or of any Person, relating to (i) Taxes with
respect to or attributable to the assets of ADMI (other than PSI) for all
taxable periods through the Closing Date and Taxes with respect to or
attributable to the properties, business or operations of ADMI or any
Subsidiary, division, associate or Affiliate of ADMI (other than PSI) and,
subject to Section 11.9, Taxes of ADMI with respect to or attributable to the
transactions contemplated hereby or otherwise, (ii) any Liabilities associated
with the assets of ADMI other than the Telecom Assets and (iii) any employee
benefit plan of any ADMI or any benefits or other amounts payable and provided
under any of ADMI's employee benefit plans or any contract relating to
employment or termination of employment between any of ADMI or its Affiliates
and any of their respective employees or former employees (other than (A) the
employment agreements and arrangements specified, together with the amount of
compensation payable thereunder on Schedule 2.1(d) relating to certain employees
of PSI which shall remain obligations of PSI and shall constitute Assumed
Liabilities and (B) employment related liabilities shown on the Final Closing
Date Balance Sheet) and (iv) any other Liabilities of ADMI not disclosed in
Schedule 2.1(c).
Section 2.2 Excluded Assets. It is the intention of the parties that no
assets other than the Telecom Assets be sold, transferred or conveyed to
Purchaser pursuant to this Agreement. All of ADMI's right, title and interest in
and to any assets other than the Telecom Assets shall be retained by ADMI or
Slingshot, as the case may be. As a point of clarification and without limiting
the foregoing, the parties agree that Purchaser is not purchasing the Slingshot
Assets, the membership interests in IHC or the capital stock of BFD as the same
exist as of the date hereof or as of the Closing Date. As a further point of
clarification and not in limitation of the foregoing, the parties agree that
Purchaser is purchasing only assets and not capital stock, partnership interests
or other equity or ownership interests or intercompany notes receivable or
payable held by any party hereto other than the Class A Units in Slingshot that
12
Purchaser or its permitted assigns is acquiring pursuant the Subscription
Agreement and the PSI Securities being acquired hereunder.
Section 2.3 Nondelivered Assets. Notwithstanding anything else contained
in this Agreement, in the event that any Telecom Asset is not delivered by ADMI
to Purchaser at Closing (a "Nondelivered Telecom Asset"), ADMI shall deliver
such Nondelivered Telecom Asset to Purchaser as soon as ADMI has actual
knowledge of the existence of such Nondelivered Telecom Asset.
Section 2.4 No Assignment if Breach. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement shall not constitute an agreement
to assign any of the Telephony Assets, or to assume any Assumed Liabilities, if
the attempted assignment or assumption of the same, as a result of the absence
of the consent or authorization of a third party, would constitute a breach or
default under any lease, agreement, encumbrance or commitment or would in any
way adversely affect the rights, or increase the obligations, of any party or
any Subsidiary with respect thereto or would otherwise affect the ability of
Purchaser to receive the benefit of the Telephony Assets. If any such consent or
authorization is not obtained, or if an attempted assignment or assumption would
be ineffective or would adversely affect the rights or benefits or increase the
obligations of Purchaser with respect to any such Telephony Assets, or Assumed
Liabilities, as appropriate, then the parties shall enter into such reasonable
cooperative arrangements (including without limitation, sublease, agency,
partial closing, management, indemnity or payment arrangements and enforcement
at the cost and for the benefit of Purchaser of any and all rights of ADMI
against an involved third party) to provide for Purchaser the benefit of such
Telephony Assets or such Assumed Liabilities, any transfer or assignment to
Purchaser by ADMI or a Subsidiary of ADMI, of any such Telephony Assets, or any
assumption by Purchaser of any such Assumed Liabilities, which shall require
such consent or authorization or a third party that is not obtained, shall be
made subject to such consent or authorization being obtained.
ARTICLE III
PURCHASE PRICE AND DELIVERY
Section 3.1 Purchase Price and Payment.
(a) The total purchase price under this Agreement shall be $34
million (the "Purchase Price"). On the Closing Date, Purchaser will deliver to
ADMI the Purchase Price by execution and delivery to ADMI of the Note in an
aggregate principal amount equal to the Purchase Price in accordance with the
terms and provisions set forth herein and therein.
(b) Within 90 days after the Closing Date, Purchaser will (a)
conduct a final review to determine the Net Working Capital, as defined below,
of the Telecom Business as of the Closing Date and (b) prepare a final closing
date balance sheet for the Telecom Business (the "Final Closing Date Balance
Sheet") utilizing the same accounting methodology, consistently applied, as was
used in preparing the Telecom Balance Sheet. The results of the review will be
subject to verification by ADMI's accountants or other representatives. If ADMI
and Purchaser disagree regarding the Final Closing Date Balance Sheet, and are
unable to resolve such
13
disagreement within 30 days after delivery of the Final Closing Date Balance
Sheet, the items of disagreement alone shall be referred for final determination
to PriceWaterhouseCoopers ("PWC"). PWC shall be instructed by ADMI and the
Purchaser to make its determination within 30 days. The determination of PWC
shall be final and binding. The fees of PWC shall be split equally between ADMI
and Purchaser. If the Net Working Capital as reflected in the Final Closing Date
Balance Sheet is negative, ADMI shall pay Purchaser an amount equal to the
amount that the Net Working Capital is negative. Any amounts owed pursuant to
this Section 3.1(b) shall be paid to the appropriate party in immediately
available funds within ten days after agreement or final determination of any
amounts owed, with interest at a rate of 6% per annum from the Closing Date to
the date of payment. As used herein, "Net Working Capital" means Current Assets
minus Current Liabilities. "Current Assets" shall mean cash and cash equivalents
accounts and contract receivable supplies and other current assets and
costs/earnings in excess of xxxxxxxx (other than with respect to any assets not
to be sold, transferred or conveyed pursuant to this Agreement, by reason of
Section 2.1 or otherwise), and excludes, without limitation, note receivable,
intercompany receivables and investment in subsidiary. "Current Liabilities"
shall mean all accounts payables, accrued liabilities xxxxxxxx in excess of cost
and deferred revenue other than liabilities not to be assumed by Purchaser,
including those identified in Section 2.1(d).
Section 3.2 Allocation and Tax Election.
(a) Allocation of Consideration. The aggregate consideration paid
by Purchaser to ADMI pursuant to Section 3.1 hereof, shall be allocated among
the Assets as set forth on Schedule 3.2 attached hereto. The allocation of the
Purchase Price was bargained and negotiated for and each party hereto shall file
all Tax Returns (including Form 8594 which has been agreed by Purchaser and
ADMI) in a manner consistent with Schedule 3.2. Purchaser will propose a
preliminary Form 8594 and submit such Form 8594 for ADMI's review and
concurrence.
(b) Tax Treatment of Purchase. (i) If ADMI elects to make an
election under Section 338(h)(10) of the Code (the "Section 338(h)(10)
Election"), then ADMI and Purchaser shall jointly make a timely Section
338(h)(10) Election for federal and all applicable state Tax Laws, with respect
to Purchaser's acquisition of the PSI Securities and will join in timely
executing and filing Internal Revenue Service Form 8023 and any other forms and
schedules as may be required under the Code (the "Section 338(h)(10) Forms").
Purchaser shall be responsible for the preparation and filing of all Section
338(h)(10) Forms in accordance with the Code.
(ii) If ADMI elects to make the Section 338(h)(10) Election,
then (A) Purchaser and ADMI shall negotiate in good faith to agree as soon as
practicable after Closing, but in no event later than 30 days following
determination of the amount, if any, owing pursuant to Section 3.1(b), on the
computation of the modified aggregate deemed sale price ("MADSP") (as defined
under United States Treasury Regulations), and (B) ADMI shall, upon each request
of Purchaser, execute and deliver to Purchaser such documents or forms as
Purchaser shall reasonably request to effect this Section 7.6(c).
14
(iii) If ADMI elects to make the Section 338(h)(10) Election,
then (A) the parties will negotiate in good faith to agree upon the fair market
value of the assets of PSI, (B) Purchaser shall perform or cause to be performed
an initial valuation of assets and allocation of purchase price of PSI for
purposes of Section 338 of the Code, (C) Purchaser shall provide ADMI with
drafts of such valuation of assets and allocation of MADSP within 30 days after
the determination of the amount, if any, owing pursuant to Section 3.1(b), (D)
ADMI shall have 45 days to provide Purchaser with any objections to such drafts,
and (E) any disputes relating to computation of the MDSP shall be resolved in
the same manner as provided in Section 3.1(b).
Section 3.3 Closing. Subject to the terms of Article X, the sale,
conveyance, assignment, transfer and delivery of the Telecom Assets by ADMI and
the purchase and acceptance of the Telecom Assets, and assumption of the Assumed
Liabilities, by Purchaser (hereinafter called the "Closing") shall take place at
9:00 A.M. (Denver time) at the offices of Xxxxx & Xxxxxxx L.L.P., 0000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 on the third Business Day
following the day on which all conditions set forth in Article VIII shall have
been satisfied or waived, or on such other date, time and place as may be
mutually agreed upon by the parties hereto. The date on which the Closing occurs
is referred to herein as the "Closing Date." Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, the parties hereto agree
that the closing of the transactions contemplated herein shall be deemed to take
effect at 12:01 A.M. (Denver time) on the Closing Date.
Section 3.4 Deliveries by ADMI. At the Closing, ADMI shall duly execute,
if required, and deliver to Purchaser or Slingshot, as the case may be:
(a) A duly executed Xxxx of Sale, Assignment and Assumption
Agreement relating to the Telephony Assets and Assumed Liabilities referred to
in Section 2.1(a) hereof;
(b) The PSI Securities free and clear of all Liens accompanied by
stock powers duly executed in blank;
(c) Such other good and sufficient Instruments of Transfer as
shall be necessary to vest in Purchaser all of ADMI's title to the Telecom
Assets, free and clear of all Liens;
(d) The certificate of ADMI referred to in Section 8.2(d) hereof;
(e) Copies of all consents, approvals, authorizations, agreements
and other documentation required pursuant to Section 7.2 hereof;
(f) The Operating Agreement;
(g) The Contribution Agreement; and
15
(h) Such other documents, instruments and writings reasonably
requested by Purchaser at or prior to the Closing.
Purchaser will thereupon take actual possession of the Telecom
Assets and assume the Assumed Liabilities.
Section 3.5 Deliveries by Slingshot. At the Closing, Slingshot shall duly
execute, if required, and deliver to Purchaser or ADMI, as the case may be:
(a) The Contribution Agreement;
(b) The Subscription Agreement;
(c) The Class A Units;
(d) The Operating Agreement;
(e) The Services and Option Agreements;
(f) The Capacity and Service Agreement; and
(g) Such other documents, instruments and writings reasonably
requested by Purchaser at or prior to the Closing.
Section 3.6 Deliveries by Purchaser. At the Closing, Purchaser or its
Affiliates shall duly execute, if required, and deliver to ADMI or Slingshot, as
the case may be:
(a) A duly executed Xxxx of Sale, Assignment and Assumption
relating to the Telephony Assets and Assumed Liabilities, referred to in Section
2.1(a) hereof;
(b) The certificate referred to in Section 8.3(c) hereof;
(c) The Subscription Agreement;
(d) The Capacity and Service Agreement;
(e) The Services and Option Agreements;
(f) The Operating Agreement; and
(g) Such other documents, instruments and writing reasonably
requested by ADMI at or prior to the Closing.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ADMI
ADMI represents and warrants to Purchaser as follows:
Section 4.1 Authorization and Validity. Slingshot has full limited
liability company power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by Slingshot pursuant
hereto and to carry out its obligations hereunder and thereunder. The execution,
delivery and performance by Slingshot of this Agreement and the other documents
and instruments to be executed and delivered by Slingshot pursuant hereto, and
the consummation by Slingshot of the transactions contemplated hereby and
thereby, have been duly and validly authorized by the management committee of
Slingshot and no other act or proceeding on the part of Slingshot is necessary
to authorize the execution and delivery by Slingshot of this Agreement or the
other documents or instruments to be executed and delivered by Slingshot
pursuant hereto, or the consummation by Slingshot of the transactions
contemplated hereby or thereby. This Agreement and the other documents and
instruments to be executed and delivered by Slingshot pursuant hereto have been
duly and validly executed and delivered by Slingshot and, assuming this
Agreement and the other documents and instruments to be executed and delivered
by Slingshot pursuant hereto are the valid and binding obligations of such other
Persons a party hereto or thereto, constitute a valid and binding obligation of
Slingshot enforceable against Slingshot in accordance with their terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.2 Equity; Good Title.
(a) Schedule 4.2(a) sets forth, as of the date hereof, the names
of the holders of limited liability company interests of Slingshot and the
percentage and nature of ownership of such holder therein (such partnership and
other equity interests are referred to collectively as the "Ownership
Interests"). All of the outstanding Ownership Interests of Slingshot are validly
issued, fully paid and nonassessable, and have not been issued in violation of
any preemptive or similar rights.
(b) All of the outstanding Ownership Interests of Slingshot are
owned of record by the respective owners thereof identified on Schedule 4.2(a).
(c) Schedule 4.2(c)(i) sets forth the name, form of organization,
jurisdiction of organization and percentage ownership of any Person in which
Slingshot directly or indirectly owns any equity or other ownership interest (an
"Other Slingshot Entity"). Except as set forth on Schedule 4.2(c)(ii), Slingshot
has no Subsidiaries. All outstanding shares of capital stock, partnership
interests and other ownership interests of each Other Slingshot Entity are owned
beneficially and of record by Slingshot. Except as set forth on Schedule
4.2(c)(iii), since March 16, 1999, neither Slingshot nor any Other Slingshot
Entity has issued, created or entered into outstanding options, warrants, calls,
rights or commitments, or any other agreements of any
17
character relating to the sale, issuance or voting of, or the granting of rights
to acquire, any shares of capital stock of or other debt or equity interest in
Slingshot or such Other Slingshot Entity, or any securities or other instruments
convertible into, exchangeable for or evidencing the right to purchase any
shares of capital stock of or other debt or equity interest in Slingshot or any
such Other Slingshot Entity. Except for the Other Slingshot Entities, Slingshot
does not own any equity or other ownership interests in any other Person.
Section 4.3 Capitalization of PSI. The authorized capital stock of PSI
consists of 100 shares of common stock, all of which are issued and outstanding
(the "PSI Securities") and owned beneficially and of record by ADMI free and
clear of all Liens. All of the issued and outstanding shares of capital stock of
PSI have been duly authorized and validly issued, are fully paid and
nonassessable and were issued in compliance with all applicable state and
federal securities laws. Except as set forth herein or on Schedule 4.3(a) or as
contemplated by this Agreement (x) no subscription, warrant, option, convertible
security or other right (contingent or otherwise) to purchase or acquire any
shares of capital stock of PSI is authorized or outstanding, (y) PSI does not
have any obligation (contingent or otherwise) to issue any subscription,
warrant, option, convertible security or other such right or to issue or
distribute to holders of any shares of its capital stock any evidence of
indebtedness or assets of PSI, and (z) PSI does not have any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
(b) Schedule 4.3(b) sets forth the name, form of organization,
jurisdiction of organization and percentage ownership of any Person in which, to
the knowledge of ADMI, PSI directly or indirectly owns any equity or other
ownership interest (an "Other PSI Entity"). Except as set forth on Schedule
4.3(b), to the knowledge of ADMI, PSI has no Subsidiaries. To the knowledge of
ADMI, all outstanding shares of capital stock, partnership interests and other
ownership interests of each Other PSI Entity are owned beneficially and of
record by PSI. Except as set forth on Schedule 4.3(b), since July 12, 1999, no
Other PSI Entity has issued, created or entered into outstanding options,
warrants, calls, rights or commitments, or any other agreements of any character
relating to the sale, issuance or voting of, or the granting of rights to
acquire, any shares of capital stock of or other debt or equity interest in such
Other PSI Entity, or any securities or other instruments convertible into,
exchangeable for or evidencing the right to purchase any shares of capital stock
of or other debt or equity interest in any such Other PSI Entity. Except for the
Other PSI Entities, to the knowledge of ADMI, PSI does not own any equity or
other ownership interests in any other Person. Since July 12, 1999, PSI has not
acquired any equity or other ownership interest in any other Person.
Section 4.4 Organization. (a) Slingshot is a duly organized and validly
existing limited liability company under the laws of the State of Delaware, and
has full power and authority to own all of its properties and assets, including
the Slingshot Assets, and to carry on its business as it is now being conducted.
Slingshot has delivered to Purchaser a complete and correct copy of the limited
liability company agreement of Slingshot as amended to date. Such limited
liability company agreement is in full force and effect and Slingshot is not in
material violation of any provision of such limited liability company agreement.
18
(b) PSI and each of its Subsidiaries is duly organized and validly
existing under the laws of its jurisdiction of incorporation or organization,
and has full power and authority to own all of its properties and assets and to
carry on its business as it is now being conducted. PSI has delivered to
Purchaser a complete and correct copy of the Restated Certificate of
Incorporation of PSI. Prior to Closing, ADMI shall make available to Purchaser
the charter documents of each of PSI's subsidiaries.
Section 4.5 No Conflict. Except as set forth in Schedule 4.5, the
execution, delivery and performance by Slingshot of this Agreement and the other
documents and instruments to be executed and delivered by Slingshot pursuant
hereto, the consummation by Slingshot of the transactions contemplated hereby or
thereby and the compliance by Slingshot with the provisions hereof or thereof
will not (a) conflict with or result in any breach of any provision of
Slingshot's limited liability company operating agreement, (b) constitute a
change in control under or require the consent from or the giving of notice to a
third party (other than a notice or consent of a Governmental Authority
contemplated by Section 4.6), result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, or
result in the creation of any Lien upon or affecting Slingshot's properties or
assets (including the Slingshot Assets) pursuant to, any of the terms,
conditions or provisions of any contractual obligation of Slingshot, (c) violate
any order, writ, injunction, decree, statute, rule or regulation of any
Governmental Authority applicable to Slingshot or to which any of its properties
or assets (including the Slingshot Assets) may be bound, or (d) result in
triggering of any right of first refusal or other right under any partnership or
joint venture agreement to which Slingshot is a party, except in the case of
clauses (b), (c) or (d) for such violations, breaches or defaults which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.6 Governmental Consents. Except (a) under the HSR Act, (b) with
respect to the business of reselling long distance telecommunications services,
the consent of the FCC and the public service commissions of the various states
and (c) with respect to licenses to operate satellite earth stations, the
consent of the FCC, no consent, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby by ADMI or Slingshot.
Section 4.7 Balance Sheet Information.
(a) Attached hereto as Schedule 4.7(a) (i) is a copy of the
unaudited balance sheet of ADMI with respect to the Telecom Business (the
"Telecom Balance Sheet") as of July 31, 1999 (the "Balance Sheet Date").
Attached hereto as Schedule 4.7(a)(ii) is a copy of the unaudited balance sheet
of ADMI relating to the Slingshot Assets (the "Slingshot Balance Sheet" and,
together with the Telecom Balance Sheet, the "Balance Sheet") as of the Balance
Sheet Date. The Balance Sheets were prepared in accordance with GAAP applied on
a consistent basis (except to the extent disclosed therein or required by
changes in GAAP), and fairly present (x) the information presented therein to
the extent such information relates to or is derived from periods after March
16, 1999 (or July 12, 1999, with respect to information concerning PSI), (y)
19
to the knowledge of ADMI, the information presented therein that relates to or
is derived from periods prior to March 16, 1999 (or July 12, 1999, with respect
to information concerning PSI) and (z) the financial position of the Telecom
Business and the Digital Media Business, as the case may be, as of July 31, 1999
and for the period then ended. The reserves that are reflected on the Balance
Sheets and that were established since March 16, 1999 (and, to the knowledge of
ADMI, the reserves that are reflected on the Telecom Balance Sheet that were
established prior to March 16, 1999 (or July 12, 1999, with respect to
information concerning PSI)) against assets are in amounts that have been
established on a basis consistent with past practice and in accordance with
GAAP. There have been no changes in reserves of ADMI relating to the Telecom
Business or the Digital Media Business since the Balance Sheet Date other than
changes in such reserves consistent with past practice in such amounts as would
not in the aggregate reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.7(b), (i) there are no
Liabilities relating to the Telecom Business or the Digital Media Business that
were incurred on or after March 16, 1999 (or July 12, 1999, in the case of
Liabilities of PSI) that are not reflected or reserved against in the Telecom
Balance Sheet or the Slingshot Balance Sheet, as applicable, other than such
Liabilities as (A) were incurred in the ordinary course of business in a manner
consistent with past practice since the Balance Sheet Date, or (B) would not be
required to be presented in financial statements or the notes thereto prepared
in conformity with GAAP, applied in a manner consistent with past practice, in
the preparation of the Telecom Balance Sheet or the Slingshot Balance Sheet, as
applicable, and (ii) to the knowledge of ADMI, there are no Liabilities that
were incurred prior to March 16, 1999 (or July 12, 1999, in the case of PSI)
that are not reflected or reserved against in the Telecom Balance Sheet or the
Slingshot Balance Sheet, as applicable, other than such Liabilities as would not
be required to be presented in financial statements or the notes thereto
prepared in conformity with GAAP, applied in a manner consistent with past
practice, in the preparation of the Telecom Balance Sheet or the Slingshot
Balance Sheet, as applicable.
Section 4.8 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.8, since March 16, 1999 (or since July 12, 1999 with respect to PSI)
and, to the knowledge of ADMI, between December 31, 1998 and March 15, 1999 (or
between December 31, 1998 and July 11, 1999 with respect to PSI), (a) ADMI, PSI
and Slingshot have conducted the Business only in the ordinary course and
consistent with past practice, (b) there has not been any development or event
that has or could reasonably be expected to have, individually or in the
aggregate with any other development or event, a Material Adverse Effect and (c)
except as contemplated in this Agreement:
(i) Slingshot, PSI and ADMI have not adopted any amendment
to their operating agreement or certificate or articles of incorporation,
as applicable, other than such amendments which have been previously
provided to Purchaser;
(ii) (A) Slingshot, PSI and ADMI (including, for this
purpose, the Telecom Business (other than PSI) and the Digital Media
Business prior to March 16, 1999) have not sold, leased, transferred or
disposed of any assets or rights, other than
20
assets or rights that individually or in the aggregate would not be
material, in either case, in the ordinary course of business consistent
with past practice, (B) incurred any Lien thereupon, except for Liens
incurred in the ordinary course of business consistent with past practice
which Liens would not in the aggregate be material, (C) acquired or leased
any assets or rights other than assets or rights that individually or in
the aggregate would not be material in the ordinary course of business
consistent with past practice, or (D) entered into any commitment or
transaction with respect to (A), (B) or (C) above;
(iii) PSI and ADMI have not (A) incurred, assumed or
refinanced any Indebtedness or (B) made any loans, advances or capital
contributions to, or investments in, any Person other than as set forth on
Schedule 4.19;
(iv) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not paid, discharged or satisfied any liability,
obligation, or Lien other than payment, discharge or satisfaction of (A)
Indebtedness as it matures and become due and payable or (B) liabilities,
obligations or Liens in the ordinary course of business consistent with
past practice;
(v) Slingshot, PSI and ADMI have not (A) changed any of
their accounting or tax principles, practices or methods used by it, except
as required by changes in applicable Tax Laws, or (B) changed reserve
amounts or policies;
(vi) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not made any change in the compensation payable or
to become payable to any of their officers, employees, agents, consultants
or Persons acting in a similar capacity (other than general increases in
wages (not exceeding $50,000 per year in any individual case) to employees
who are not officers or Persons acting in a similar capacity in the
ordinary course consistent with past practice), or to Persons providing
management services, entered into or amended any employment, severance,
consulting, termination or other agreement or employee benefit plan or made
any loans to any of its Affiliates (other than as set forth on Schedule
4.19 officers, employees, agents or consultants or Persons acting in a
similar capacity or made any change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an
employee benefit plan or otherwise;
(vii) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not (A) paid or made any accrual or arrangement for
payment of any pension, retirement allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any officer,
employee or Person acting in a similar capacity; (B) paid or agreed to pay
or made any accrual or arrangement for payment to officers, employees or
Persons acting in a similar capacity of any amount relating to unused
vacation days, except payments and accruals made in the ordinary course
consistent with past practice;
21
(C) except for the Growth Share Plan, granted, issued, accelerated or
accrued salary or other payments or benefits pursuant to any pension,
profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or
for the benefit of any Affiliate, officer, employee, agent or consultant or
Person acting in a similar capacity, whether past or present; or (D)
amended in any material respect any such existing plan, agreement or
arrangement;
(viii) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not entered into any collective bargaining
agreement;
(ix) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not made any payments (other than regular
compensation payable to officers and employees or Persons acting in a
similar capacity of Slingshot or ADMI in the ordinary course consistent
with past practice), loans, advances or other distributions to, or entered
into any transaction, agreement or arrangement with, Slingshot's, PSI's or
ADMI's officers, employees, agents, consultants or Persons acting in a
similar capacity;
(x) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not made or authorized any capital expenditures,
except in the ordinary course consistent with past practice not in excess
of $250,000 individually or $500,000 in the aggregate;
(xi) Slingshot, PSI and ADMI have not incurred any Taxes,
except in the ordinary course of business consistent with past practice;
(xii) Slingshot, PSI and ADMI have not settled or compromised
any Tax liability or agreed to any adjustment of any Tax attribute or made
any election with respect to Taxes;
(xiii) Slingshot, PSI and ADMI have not failed to duly and
timely file any Tax Return with the appropriate Governmental Authorities
required to be filed by it in a true and complete and correct form or to
timely pay all Taxes shown to be due thereon;
(xiv) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not (A) entered into, amended, renewed or permitted
the automatic renewal of, terminated or waived any right under, any
Material Contract, or, except in the ordinary course of business consistent
with past practice, any other agreement, or (B) taken any action or failed
to take any action that, with or without either notice or lapse of time,
would constitute a default under any Material Contract;
22
(xv) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not (A) made any change in their working capital
practices generally, including accelerating any collections of cash or
accounts receivable or deferring payments or (B) failed to make timely
accruals, including with respect to accounts payable and liabilities
incurred in the ordinary course of business;
(xvi) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not failed to renew (at levels consistent with
presently existing levels), terminated or amended or failed to perform any
of their obligations or permitted any material default to exist or caused
any material breach under, or entered into (except for renewals in the
ordinary course of business consistent with past practice), any material
policy of insurance;
(xvii) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not disposed of or permitted to lapse any material
Intellectual Property;
(xviii) except in the ordinary course of business consistent
with past practice pursuant to appropriate confidentiality agreements, and
except as required by any Law, any existing agreements set forth on
Schedule 4.14 or as may be reasonably necessary to secure or protect
intellectual or other property rights, Slingshot, PSI and ADMI (including,
for this purpose, the Telecom Business (other than PSI) and the Digital
Media Business prior to March 16, 1999) have not provided any confidential
information regarding the Business to any Person other than Purchaser;
(xix) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not waived, or agreed to waive, any right of
material value to the Assets; or
(xx) Slingshot, PSI and ADMI (including, for this purpose,
the Telecom Business (other than PSI) and the Digital Media Business prior
to March 16, 1999) have not changed, or agreed to change, any of their
material business policies or practices relating to or affecting the
Telecom Assets (including, without limitation, material production,
advertising, marketing, pricing, purchasing, accounting, sales, returns,
budget or product acquisition policies or practices) in any manner that
would reasonably be expected to have a Material Adverse Effect.
Section 4.9 Property; Assets.
(a) Except as set forth on Schedule 4.9(a), to the knowledge of
ADMI, (x) ADMI and PSI, taken together own, or otherwise hold, and (y) after
Closing, Purchaser will own or otherwise hold a valid leasehold interest or
licenses providing sufficient and legally enforceable rights to use, all of the
property and assets necessary or otherwise material to the conduct of the
Telecom Business. Except as set forth on Schedule 4.9(a), to the knowledge of
23
ADMI, (x) ADMI owns, or otherwise holds, and (y) upon the closing under the
Contribution Agreement, Slingshot will own or otherwise hold a valid leasehold
interest or licenses providing sufficient and legally enforceable rights to use,
all of the property and assets necessary or otherwise material to the conduct of
the Digital Media Business. To the knowledge of ADMI, immediately prior to the
transactions contemplated by this Agreement, ADMI has good and marketable (other
than with respect to personal property) title to all assets reflected on the
Balance Sheets (other than assets of PSI) that were acquired before March 16,
1999, free and clear of all Liens, other than assets no longer used or useful in
the Business disposed of since the Balance Sheet Date in the ordinary course of
business consistent with past practice. To the knowledge of ADMI, immediately
prior to the transactions contemplated by this Agreement, PSI has good and
marketable (other than with respect to personal property) title to all assets of
PSI reflected on the Telecom Balance Sheet that were acquired before July 12,
1999, free and clear of all Liens, other than assets no longer used or useful in
the Business disposed of since the Balance Sheet Date in the ordinary course of
business consistent with past practice. Immediately prior to the transactions
contemplated by this Agreement, ADMI and PSI have good and marketable (other
than with respect to personal property) title to all assets of ADMI and PSI
reflected on the Balance Sheets that were acquired after March 16, 1999 (or
after July 12, 1999 with respect to assets of PSI reflected on the Telecom
Balance Sheet), free and clear of all Liens, other than assets no longer used or
useful in the Business disposed of since the Balance Sheet Date in the ordinary
course of business consistent with past practice. Such assets are generally in
good operating condition and repair (ordinary wear and tear excepted), and to
the knowledge of ADMI have been reasonably maintained consistent with standards
generally followed in the industry, are suitable for their present uses and, in
the case of owned structures, are structurally sound.
(b) Schedule 4.9(b) contains a list of all real property owned or
leased by ADMI, Slingshot or PSI (the "Real Property"), indicating whether such
property is owned or leased. The current use of the Real Property by ADMI,
Slingshot or PSI does not violate the certificate of occupancy thereof or any
local zoning or similar land use or other Laws and none of the structures on the
Real Property encroaches upon real property of another Person, and no structure
of any other Person encroaches upon any Real Property. Slingshot and ADMI have
not received notice of any pending or threatened condemnation proceeding, or of
any sale or other disposition in lieu of condemnation, affecting any of the Real
Property. Each parcel of Real Property abuts on or has direct vehicular access
to a public road.
(c) Schedule 2.1(a) sets forth as of the Balance Sheet Date, a
complete and accurate list of all furniture, equipment, automobiles and all
other tangible personal property owned by, in the possession of, or used by ADMI
and PSI in connection with the Telecom Business which have a book value in
excess of $5,000 per item. Such personal property is not held under any lease,
security agreement, conditional sales contract, or other title retention or
security arrangement or subject to any liens or encumbrances, or is located
other than in the possession of ADMI or PSI.
(d) All receivables of Slingshot, PSI or ADMI reflected on the
Balance Sheets that arose from transactions after March 16, 1999 (or July 12,
1999 with respect to receivables of PSI) or created after the Balance Sheet Date
arose from valid transactions in the ordinary course
24
of business. To the knowledge of ADMI, all receivables of Slingshot, PSI or ADMI
reflected on the Balance Sheets that arose from transactions before March 16,
1999 (or July 12, 1999 with respect to receivables of PSI) arose from valid
transactions in the ordinary course of business.
(e) Except as set forth on Schedule 4.9(e), by completing the
transactions contemplated herein Purchaser will obtain at Closing all such
assets, tangible or intangible and contractual, license and leasehold rights
necessary for Purchaser (i) to operate the business of ADMI related to the
Telephony Assets as operated on the date hereof, and (ii) to utilize the
Telephony Assets and contractual, license and leasehold rights in the same
manner as they were used on the date of this Agreement. With the exception of
those assets used in the Business pursuant to license and leasehold rights in
favor of Slingshot, PSI or ADMI, as of the date hereof (A) all of the assets
used in the Businesses and acquired since March 16, 1999 (or July 12, 1999 with
respect to receivables of PSI) are owned by Slingshot, PSI or ADMI and none are
owned by any other party, and (B) to the knowledge of ADMI, all other assets
used in the Business are owned by Slingshot, PSI or ADMI and none are owned by
any other party.
(f) The Assets identified on Schedule 2.1(a) include (i) all
machinery or equipment, including without limitation, computer hardware, with an
original market value in excess of $25,000 used to conduct the Telecom Business,
together with the date of acquisition of each piece of Equipment and the
location of each piece of Equipment and (ii) all material software and computer
programs used in the Telecom Business, including any Computer Programs not
wholly owned by Slingshot, PSI or ADMI ("Third Party Software") imbedded
therein, in machine readable source code forms and in machine executable object
code forms and all related specifications (including, without limitation, all
logic architectures, algorithms and logic flows and all physical, functional,
operating and design parameters, operation systems and procedures (including
developmental methodology), designs, design revisions, related application
software in any language, concepts, ideas, processes, techniques, software
design and test tools, Third Party Software interfaces, methods of
implementation and packaging, all associated know-how and show-how and all
related programmer and user manuals, which are used by Slingshot, PSI and ADMI
to install, operate, maintain, correct, test, repair, enhance, extend, modify,
prepare derivative works based upon design and develop software and computer
programs.
(g) Subject to Section 2.4 and except for changes resulting from
any "change of control of PSI," after giving effect to the transactions
contemplated by the Contribution Agreement, the Operating Agreement and the
Subscription Agreement (i) Qwest will hold, free and clear of any Liens created
(or knowingly suffered to exist) by ADMI, all right, title and interest to the
Telecom Assets and (ii) Slingshot will hold, free and clear of any Liens created
by (or knowingly suffered to exist) ADMI, all right, title and interest to the
Slingshot Assets held by ADMI.
Section 4.10 Litigation and Claims; Compliance with Laws.
(a) Schedule 4.10(a) sets forth all Litigation against ADMI,
Slingshot and PSI as of the date hereof that arose on or after March 16, 1999
(or July 12, 1999, in the case of
25
Litigation relating to PSI), and, to the knowledge of ADMI, prior to March 16,
1999 (or July 12, 1999, in the case of Litigation relating to PSI) and all
Litigation with respect to the Business including the name of the claimant, the
date of the alleged act or omission, a detailed narrative as to the nature of
the alleged act or omission, the date the matter was referred to an insurance
carrier (if referred) of ADMI, Slingshot or PSI, as the case may be, the
estimated amount of exposure, the amount ADMI, Slingshot or PSI has reserved, or
the amount of ADMI's, Slingshot's or PSI's claim and estimated expenses of ADMI,
Slingshot or PSI in connection with such matters. Except as set forth in
Schedule 4.10(a), there is no Litigation that arose on or after March 16, 1999
(or July 12, 1999, in the case of Litigation relating to PSI), or, to the
knowledge of ADMI, that arose prior to March 16, 1999 (or July 12, 1999, in the
case of Litigation relating to PSI) that is not fully covered by the insurance
policies referenced in Section 4.12. Since March 16, 1999 (or July 12, 1999, in
the case of PSI), and, to the knowledge of ADMI, prior to March 16, 1999 (or
July 12, 1999, in the case of Litigation relating to PSI), and except as set
forth on Schedule 4.10(a), (i) Slingshot, ADMI, PSI and the Assets have not been
subject to any order, consent decree, settlement or similar agreement with any
Governmental Authority (ii) there has not been any judgment, injunction, decree,
order or other determination of an arbitrator or Governmental Authority
specifically applicable Slingshot, ADMI, PSI or the Assets (iii) no Litigation
is pending relating to alleged unlawful discrimination or sexual harassment and
(iv) no Litigation has arisen that seeks to prevent consummation of the
transactions contemplated hereby or that seeks material damages in connection
with the transactions contemplated hereby.
(b) Except as set forth in Schedule 4.10(b), to the knowledge of
ADMI, prior to March 16, 1999 (or July 12, 1999, in the case of PSI), Slingshot,
PSI and ADMI were in compliance with all Laws applicable to them and the
Business except where the failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect. Except as set forth in Schedule
4.10(b), since March 16, 1999 (or July 12, 1999, in the case of PSI), Slingshot,
PSI and ADMI have complied and are in compliance with all Laws applicable to
them and the Business except where the failure to be in compliance would not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 4.10(b) and except for the filings contemplated by Section 4.6, (i) to
the knowledge of ADMI, Slingshot, PSI and ADMI hold all material licenses,
permits and other authorizations of Governmental Authorities necessary to
conduct the Business as now being conducted or, under currently applicable Laws,
to continue to conduct the Business as now being conducted and (ii) there is no
intent on the part of Slingshot, PSI or ADMI to make any changes in the conduct
of the Business that will result in or cause Slingshot, PSI or ADMI to be in
noncompliance with applicable Laws or that will require changes in or a loss of
any such licenses, permits or other authorizations or an increase in any
expenses related thereto except where such noncompliance, change, loss or
increase would not reasonably be expected to have a Material Adverse Effect.
Such licenses, permits and other authorizations as aforesaid held by ADMI are,
to the knowledge of ADMI, valid and in full force and effect, and, since March
16, 1999, there have not been any (a) Actions pending, or to the knowledge of
ADMI, threatened or (b) Investigations, to the knowledge of ADMI, pending or
threatened that could result in the termination, impairment or nonrenewal
thereof.
Section 4.11 Taxes. (a) Slingshot, PSI and ADMI have (i) timely filed or
caused to be filed with the appropriate federal, state and local Governmental
26
Authority all Tax Returns required to be filed (taking into account any
extensions) with respect to any period ending on or after March 16, 1999 (or
July 12, 1999 with respect to Tax Returns required to be filed by PSI) and each
such Tax Return is true, complete and correct in all material respects, and (ii)
to the knowledge of ADMI, timely filed or caused to be filed with the
appropriate federal, state and local Governmental Authority all Tax Returns
required to be filed (taking into account any extensions) with respect to any
period ending on or before March 16, 1999 (or July 12, 1999 with respect to Tax
Returns with respect to PSI) and each such Tax Return is true, complete and
correct in all material respects. All Taxes payable by Slingshot, ADMI or, to
the knowledge of ADMI, PSI, shown to be due on such Tax Returns, all such Taxes
arising from or attributable to the Assets or any other assets of Slingshot,
ADMI or PSI, required to be paid by Slingshot, ADMI or, to the knowledge of
ADMI, PSI, and all Taxes payable by Slingshot, ADMI or, to the knowledge of
ADMI, PSI, arising from or attributable to the Assets or any other assets of
Slingshot ADMI or PSI required to be withheld by or with respect to Slingshot,
ADMI or, to the knowledge of ADMI, PSI have been timely paid or, if applicable,
withheld and paid to the appropriate Governmental Authority.
(b) Since March 16, 1999 (or July 12, 1999 with respect to PSI), and to
the knowledge of ADMI, prior to such dates: (i) Slingshot, PSI and ADMI have
received no notice of any deficiencies or assessment of Taxes from any taxing
authority with respect to or attributable to the Assets or any other assets of
Slingshot, PSI or ADMI in such amounts as would in the aggregate have a Material
Adverse Effect; (ii) Slingshot, PSI and ADMI have received no notice of any
ongoing audits or examinations of any of the Tax Returns relating to or
attributable to the Assets or any other assets of Slingshot, PSI or ADMI; (iii)
Slingshot, PSI and ADMI have not granted any requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes with respect to or attributable to the Assets or any
other assets of Slingshot, PSI or ADMI; and (iv) Slingshot, PSI and ADMI have
not become aware of any material issue with respect to or attributable to the
Assets or any other assets of ADMI and PSI that could be raised by any
Governmental Authority.
Section 4.12 Insurance. Schedule 4.12 sets forth a complete and accurate
list as of the date hereof of all primary, excess and umbrella policies, bonds
and other forms of insurance owned or held by or on behalf of or providing
insurance coverage to Slingshot, ADMI and, to the knowledge of ADMI, PSI (or
their officers, salespersons, agents or employees or Persons acting in a similar
capacity) and the extent, if any, to which the limits of liability under such
policies have been exhausted. Slingshot, ADMI and PSI, have in effect motor
vehicle and comprehensive general liability insurance and workers' compensation
insurance covering the Business and fire and extended coverage insurance with
respect to the properties and assets of Slingshot ADMI and PSI. True and
complete copies of such policies of Slingshot, ADMI and PSI have been previously
provided to Purchaser. All such policies of Slingshot, ADMI and PSI, are in full
force and effect and all such policies in such amounts will be outstanding and
in full force and effect without interruption until the Closing. Slingshot, ADMI
and PSI have not received (since July 12, 1999, in the case of PSI) notice of
default under any such policy, nor has it received written notice of any pending
or threatened termination or cancellation, coverage limitation or reduction, or
material premium increase with respect to any such policy. Schedule 4.12 sets
forth a complete and accurate summary of all of the self-insurance coverage
provided
27
by Slingshot, ADMI and, to the knowledge of ADMI, PSI. Except as set forth on
Schedule 4.12, no letters of credit have been posted and no cash has been
restricted to support any reserves for insurance on the Balance Sheets.
Section 4.13 Environmental Matters.
(a) Except as specified on Schedule 4.13, since March 16, 1999
(or July 12, 1999, in the case of PSI), Slingshot, ADMI and PSI, (i) have been
and are in compliance with and have incurred no liability under the
Environmental Laws (which compliance includes the possession by each of
Slingshot, ADMI and PSI of all Environmental Permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except for such non-compliance and liability
which would not reasonably be expected to have a Material Adverse Effect, and
(ii) have not received any communication from any Person or Governmental
Authority alleging that Slingshot, ADMI or PSI is not in such compliance. Except
as specified on Schedule 4.13, there are no present (or, to the knowledge of
ADMI, past or anticipated) actions, activities, circumstances, conditions,
events or incidents that may prevent or interfere with such compliance in the
future. All Environmental Permits maintained by Slingshot, ADMI, or to the
knowledge of ADMI, PSI, are identified on Schedule 4.13. The execution and
delivery by Slingshot and ADMI of this Agreement do not, and the consummation of
the transactions contemplated hereby will not, violate, or result in the
violation of, or default (with or without notice or lapse of time, or both)
under, any provision of, or result in the termination or acceleration of, or
give rise to a right of termination or acceleration of or the loss of any
benefit under, any material Environmental Permit applicable to Slingshot, ADMI,
or, to the knowledge of ADMI, PSI, or any of the Assets, other than those
violations, defaults, terminations, accelerations or rights which would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(b) No transfers of Environmental Permits, no additional
Environmental Permits, and no notifications to, filings with or approval of any
Governmental Authority, will be required to permit the conduct of the business
of Slingshot and ADMI and, to the knowledge of ADMI, PSI, in compliance with all
applicable Environmental Laws immediately following the Closing Date as
conducted immediately prior to the Closing Date.
(c) Since March 16, 1999 (or July 12, 1999, in the case of PSI)
and, to the knowledge of ADMI, between December 31, 1998 and March 15, 1999 (or
between December 31, 1998 and July 11, 1999 in the case of PSI) no Environmental
Claims (other than investigations) have been filed and are pending against
Slingshot, ADMI or to the knowledge of ADMI, PSI, and no Environmental Claims,
to the knowledge of ADMI, are threatened against Slingshot, PSI or ADMI. To the
knowledge of ADMI, except as specified on Schedule 4.13, there are no
Environmental Claims (including investigations) pending or threatened against
any Person or entity whose liability for any Environmental Claim Slingshot, ADMI
or PSI has or may have retained or assumed either contractually or by operation
of law.
(d) Except as specified on Schedule 4.13, to the knowledge of
ADMI, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including
28
the Release or presence of any Hazardous Materials, that would reasonably be
expected to form the basis of any Environmental Claim against Slingshot, ADMI or
PSI or against any Person or entity whose liability for any Environmental Claim
Slingshot, ADMI or PSI has or may have retained or assumed either contractually
or by operation of law.
(e) Except as specified on Schedule 4.13, Slingshot and ADMI have
not, and since July 12, 1999, PSI has not, and to the knowledge of ADMI, no
other Person has, placed, stored, deposited, discharged, buried, dumped,
generated or disposed or caused the Release of (collectively, "Managed") any
Hazardous Materials at, on, beneath or adjacent to any Real Property or other
property formerly owned, operated or leased by Slingshot or ADMI or any
predecessor of Slingshot or ADMI, or to the knowledge of ADMI any property
formerly owned, operated or leased by PSI or any predecessor of PSI, except for
such Hazardous Materials Managed in the ordinary course of business (which
Hazardous Materials, if any, were and are Managed in accordance with applicable
Environmental Laws).
(f) ADMI has delivered or made available copies and results of
any reports, studies, analyses, tests or monitoring received by ADMI from the
Xxxxx Sellers pertaining to Hazardous Materials in, on, beneath or adjacent to
any Real Property relating to compliance with applicable Environmental Laws or
regarding a Cleanup, an Environmental Claim or an Environmental Liability. A
list of all such documents is set forth on Schedule 4.13.
(g) Since March 16, 1999 (or July 12, 1999, in the case of PSI),
no Real Property, and no property to which Hazardous Materials originating on or
from such properties or the Assets has been sent for treatment, storage, or
disposal, has been listed or has been proposed to be listed on the National
Priorities List or CERCLIS or on any other governmental database or list of
properties that may or do require investigation or cleanup under Environmental
Laws. To the knowledge of ADMI, prior to March 16, 1999 (or July 12, 1999, in
the case of PSI), no such property was so listed or proposed to be listed on the
National Priorities List or CERCLIS or on any other governmental database or
list of properties that may or do require investigation or cleanup under
Environmental Laws. All locations at which Slingshot, ADMI or PSI has itself
disposed of any Hazardous Materials since March 16, 1999 (or July 12, 1999, in
the case of PSI), or of which Slingshot, ADMI or PSI has written notice of the
disposal of any Hazardous Materials by any third party on their behalf since
March 16, 1999 (or July 12, 1999, in the case of PSI) are listed in Schedule
4.13. To the knowledge of ADMI, all locations at which any Person has itself
disposed of any Hazardous Materials on or prior to March 16, 1999 (or July 12,
1999, in the case of PSI) for which Slingshot, ADMI or PSI has or may have
retained or assumed contractually or by law or of which Slingshot, ADMI or PSI
has received written notice of the disposal of any Hazardous Materials by any
third party on their behalf on or prior to March 16, 1999 (or July 12, 1999, in
the case of PSI), are listed in Schedule 4.13.
Section 4.14 Material Contracts.
(a) Schedule 4.14(a) lists (without duplication) each of the
following contracts and other agreements (or, in the case of oral contracts,
summaries thereof) to which Slingshot,
29
PSI or ADMI is a party or by or to which Slingshot, PSI or ADMI or any of their
assets or properties is bound or subject (such contracts and agreements being
"Material Contracts"):
(i) any advertising, market research and other marketing
agreements that require future payments of in excess of $25,000 per year;
(ii) any employment, severance, non-competition, consulting
or other agreements of any nature with any current or former stockholder,
partner, officer or employee of Slingshot, PSI or ADMI, other than
employment agreements with any officer or employee whose annual salary
compensation is less than $100,000;
(iii) any agreements relating to the making of any loan or
advance by Slingshot or PSI that require a payment of in excess of $25,000
per year or concern assets valued in excess of $50,000;
(iv) any agreements providing for the indemnification by
Slingshot, PSI or ADMI of any Person that require a payment of in excess of
$25,000 per year or concern assets valued in excess of $25,000, other than
agreements providing for the indemnification of directors, officers,
employees or agents of Slingshot, PSI or ADMI entered into in the ordinary
course of business;
(v) any agreements with any Governmental Authority except
those entered into in the ordinary course of business which are not
material to Slingshot, PSI, ADMI or the Assets;
(vi) all (A) supplier contracts and any other contracts,
agreements and other arrangements for the sale of assets or for the
furnishing to Slingshot, ADMI or PSI, of services, goods or products (I)
with firm commitments having a value in excess of $50,000 or (II) having a
remaining term which is greater than eight months and which is not
terminable by Slingshot, PSI or ADMI on less than 90 days' notice without
the payment of any termination fee or similar payment, and (B) all customer
contracts with a remaining value in excess of $500,000;
(vii) any broker, reseller, vendor, dealer, representative
or agency agreements that require a payment of or generate revenues in
excess of $25,000 per year or concern assets valued in excess of $25,000;
(viii) any agreements (including settlement agreements)
currently in effect pursuant to which Slingshot, PSI or ADMI licenses the
right to use any Intellectual Property of Slingshot, PSI or ADMI to any
Person or from any Person, and research and development agreements;
(ix) any confidentiality agreements entered into by
Slingshot, PSI or ADMI pursuant to which confidential information has been
provided to a third party or by which Slingshot, PSI or ADMI was restricted
from providing information to third
30
parties, other than those entered into the ordinary course of business
relating to the Business or the Assets;
(x) any voting trust or similar agreements relating to any of
the Ownership Interests to which Slingshot or ADMI is a party;
(xi) any leases of Real Property that require a payment of or
generate revenues in excess of $25,000 per year or concern assets valued in
excess of $50,000;
(xii) any joint venture, partnership or similar documents or
agreements;
(xiii) any agreements that limit or purport to limit the ability
of Slingshot, PSI or ADMI to own, operate, sell, transfer, pledge or
otherwise dispose of any assets valued in excess of $25,000; and
(xiv) all other agreements, contracts or commitments not made in
the ordinary course of business which are material to ADMI or PSI.
(b) Each Material Contract entered into by Slingshot or ADMI since
March 16, 1999 and by PSI since July 12, 1999 is legal, valid and binding and
enforceable against Slingshot, PSI or ADMI, as the case may be, and, to the
knowledge of ADMI, the other parties thereto, and is in full force and effect.
To the knowledge of ADMI, each Material Contract relating to the Telecom
Business that was assigned to ADMI by the Xxxxx Sellers pursuant to the Xxxxx
Purchase Agreement is legal, valid and binding on and enforceable against ADMI
and the other parties thereto, and is in full force and effect. To the knowledge
of ADMI, each Material Contract relating to the Digital Media Business that was
assigned to ADMI by the Xxxxx Sellers pursuant to the Xxxxx Purchase Agreement
has been duly assigned to Slingshot pursuant to the Contribution Agreement and
is legal, valid and binding on and enforceable against Slingshot and the other
parties thereto, and is in full force and effect. Upon consummation of the
transactions contemplated by this Agreement, each Material Contract shall remain
in full force and effect without any loss of benefits thereunder and without the
need to obtain the consent of any party thereto to the transactions contemplated
by this Agreement, other than those contracts and agreements specified on
Schedule 4.14(b) and notice to, and consent of, landlords under certain leases
of Real Property. Slingshot and ADMI are not, and to the knowledge of ADMI, PSI
is not (and with the giving of notice or lapse of time would not be) in material
breach of, or material default under, any Material Contract and no other party
thereto is in material breach of, or material default under, any Material
Contract. Neither Slingshot nor ADMI has received, and since July 12, 1999, PSI
has not received, any written notice that any Material Contract is not
enforceable against any party thereto, that any Material Contract has been
terminated before the expiration of its term or that any party to a Material
Contract intends to terminate such Material Contract prior to the termination
date specified therein, or that any other party is in breach of, or default
under, any Material Contract. True and complete copies of all Material Contracts
or, in the case of oral agreements, if any, written summaries thereof have been
made available to Purchaser.
Section 4.15 Intellectual Property.
31
(a) Slingshot is or will be as of the Closing the sole and exclusive
owner of, or has or will have as of the Closing the valid right to use the
Intellectual Property of ADMI acquired, to the knowledge of ADMI, from the Xxxxx
Sellers relating to the Digital Media Business free and clear of all Liens.
ADMI, or, to the knowledge of ADMI, PSI, is the sole and exclusive owner of, or
has the valid right to use the Intellectual Property of ADMI or PSI or acquired
from the Xxxxx Sellers relating to the Telecom Business free and clear of all
Liens. Schedule 4.15 sets forth a complete and accurate list (including
Intellectual Property that Slingshot, ADMI or PSI is the owner or licensee
thereof) of all (i) patents and patent applications, (ii) trademark or service
xxxx registrations and applications, (iii) copyright registrations and
applications, and (iv) material unregistered copyrights, service marks,
trademarks and trade names, each as owned or licensed by Slingshot, ADMI or, to
the knowledge of ADMI, PSI. Slingshot, ADMI or PSI currently is listed in the
records of the appropriate United State, state or foreign agency as the sole
owner of record for each owned application and registration listed on Schedule
4.15.
(b) To the knowledge of ADMI, the Intellectual Property registrations
listed on Schedule 4.15 are valid and subsisting, in full force and effect in
all material respects, and have not been canceled, expired or abandoned. Except
as set forth on Schedule 4.15, there is no pending, existing, or to the
knowledge of ADMI, threatened, opposition, interference, cancellation proceeding
or other legal or governmental proceeding before any court or registration
authority in any jurisdiction against the Intellectual Property registrations
listed on Schedule 4.15. To the knowledge of ADMI, there is no pending, existing
or threatened opposition, interference, cancellation proceeding or other legal
or governmental proceeding before any court or registration authority in any
jurisdiction against any of the Intellectual Property.
(c) Schedule 4.15 lists all of the Computer Programs other than off-
the-shelf applications that are owned, licensed, leased or otherwise used by
Slingshot, ADMI or, to the knowledge of ADMI, PSI, in connection with the
operation of the Business as currently conducted, and identifies which is owned,
licensed, leased, or otherwise used, as the case may be. Each Computer Program
listed on Schedule 4.15 is either (i) owned by Slingshot, ADMI or PSI, (ii)
currently in the public domain or otherwise available to Slingshot, ADMI or PSI
without the license, lease or consent of any third party, or (iii) used under
rights granted to Slingshot, ADMI or PSI pursuant to a written agreement,
license or lease from a third party, which written agreement, license or lease
is identified on Schedule 4.15. Slingshot, ADMI and PSI use the Computer
Programs set forth on Schedule 4.15 in connection with the operation of their
businesses as conducted on the date hereof and such use does not to the
knowledge of ADMI violate the rights of any third party. Except for Third Party
Software, all Computer Programs set forth in Schedule 4.15 were either developed
by (x) employees of Slingshot, ADMI, PSI or the Xxxxx Sellers within the scope
of their employment, (y) third parties as "work-made-for-hire", as that term is
defined under Section 101 of the United States copyright laws, pursuant to
written agreements or (z) independent contractors who have assigned their rights
to Slingshot, ADMI or PSI pursuant to written agreements.
32
(d) Schedule 4.15 sets forth a complete and accurate list of all
material agreements pertaining to the use of or granting any right to use or
practice any rights under any Intellectual Property of Slingshot, ADMI or, to
the knowledge of ADMI, PSI, whether Slingshot, ADMI or PSI is the licensee or
licensor thereunder (the "Licenses") and any written settlements or assignments
relating to any such Intellectual Property. To the knowledge of ADMI, the
Licenses are valid and binding obligations of each party thereto, enforceable
against each such party in accordance with their terms, and there are no
breaches or defaults by Slingshot, ADMI or PSI under any Licenses.
(e) To the knowledge of ADMI, no trade secret or confidential know-
how material to the business of Slingshot, PSI or ADMI as currently operated has
been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the proprietary interests
of Slingshot, PSI or ADMI, as the case may be, in and to such trade secrets and
confidential know-how.
(f) To the knowledge of ADMI, the conduct of the Business does not
infringe upon any intellectual property right owned or controlled by any third
party and no third party is infringing upon any Intellectual Property owned by
Slingshot, PSI or ADMI and no such claims have been made against a third party
by Slingshot, PSI or ADMI. Except as set forth on Schedule 4.15, there are no
claims or suits pending or, to the knowledge of ADMI, threatened, and, since
March 12, 1999 (or July 12, 1999, in the case of PSI) Slingshot, PSI and ADMI
have not received any written notice of a third party claim or suit (x) alleging
that Slingshot's, PSI's or ADMI's activities or the conduct of their businesses
infringes upon or constitutes the unauthorized use of the proprietary rights of
any third party, or (y) challenging the ownership, use, validity or
enforceability of the Intellectual Property.
(g) There are no settlements, consents, judgments or orders or other
agreements that restrict the rights of Slingshot or ADMI, or to the knowledge of
ADMI, PSI to use any Intellectual Property of Slingshot, ADMI or PSI, or other
agreements that restrict the rights of Slingshot or ADMI, or to the knowledge of
ADMI, PSI to use any Intellectual Property owned by Slingshot, ADMI or PSI.
(h) The consummation of the transactions contemplated hereby will not
(i) result in the loss or impairment of the right of Purchaser or its successors
to own or use any of the Intellectual Property of ADMI or, to the knowledge of
ADMI, PSI that is included within the Telecom Assets, (ii) result in the loss or
impairment of the right of Slingshot or its successors to own or use any of the
other Intellectual Property of ADMI or Slingshot currently owned or used by
Slingshot or (iii) require the consent of any Governmental Authority or third
party in respect of any such Intellectual Property of Slingshot, ADMI or, to the
knowledge of ADMI, PSI and no present or former employee, or officer of
Slingshot, ADMI, or to the knowledge of ADMI, PSI has any right, title, or
interest, directly or indirectly, in whole or in part, in any Intellectual
Property.
Section 4.16 Employee Benefits; ERISA. (a) Except as set forth on
Schedule 4.16(a), since March 16, 1999 none of Slingshot, ADMI nor any trade or
business, whether or
33
not incorporated (an "ERISA Affiliate"), that together with Slingshot or ADMI
would be deemed a "single employer" within the meaning of Section 4001(b)(1) of
ERISA has sponsored or contributed to, or has been required to contribute to,
any "employee benefit plan," as defined by Section 3(3) of ERISA, or any other
plan, program or arrangement, including without limitation any "multiemployer
plan," as such term is defined in Section 3(37) of ERISA, for the benefit of,
relating to or with any employee of any Person.
(b)(1) Schedule 4.16(b) contains a complete list of all material
written bonus, vacation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock and stock option plans, employment or
severance contracts, medical, dental, disability, health and life insurance
plans, and other employee benefit and fringe benefit plans or other
contracts maintained or contributed to by PSI or any of its Subsidiaries
for the benefit of officers, former officers, employees, former employees,
directors, former directors, or the beneficiaries of any of the foregoing,
or pursuant to which PSI or any of its Subsidiaries may have any liability
that are contracts with, or plans maintained primarily for the benefit of,
individuals employed or rendering services in the United States and are not
multiemployer plans within the meaning of Section 4001(a)(3) of ERISA
(collectively (whether or not material), the "PSI Compensation and Benefit
Plans").
(2) ADMI has delivered to Purchaser copies of all PSI Compensation
and Benefit Plans listed on Schedule 4.16(b), including, but not limited
to, all amendments thereto, and all of such copies that have been delivered
are true and correct.
(3) To the knowledge of ADMI, each of the PSI Compensation and
Benefit Plans has been and is being administered in accordance with the
terms thereof and all applicable Laws. To the knowledge of ADMI, each
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
(each such plan, a "Pension Plan") included in the PSI Compensation and
Benefit Plans (a "PSI Pension Plan") that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and ADMI is not aware of any
circumstances which could result in the revocation or denial of any such
favorable determination letter. To the knowledge of ADMI, no material
"prohibited transaction," within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any PSI Compensation and
Benefit Plan. There is no pending or, to ADMI's knowledge, threatened
Litigation relating to any of PSI Compensation and Benefit Plans.
(4) To the knowledge of ADMI, no material liability under Title IV
of ERISA has been or is reasonably expected to be incurred by PSI or any of
its Subsidiaries or any entity which is considered one employer with PSI
under Section 4001(a)(15) of ERISA or Section 414 of the Code (any such
entity, a "PSI
34
ERISA Affiliate"), other than such liabilities that have previously been
satisfied. To the knowledge of ADMI, no notice of a "reportable event,"
within the meaning of Section 4043 of ERISA, for which the 30-day reporting
requirement has not been waived, has been required to be filed for any PSI
Pension Plan or by any PSI ERISA Affiliate within the past 12 months.
(5) To the knowledge of ADMI, all contributions, premiums and
payments required to be made under the terms of any PSI Compensation and
Benefit Plan have been made, except where the failure to do so does not,
individually or in the aggregate, have a Material Adverse Effect on PSI. To
the knowledge of ADMI, neither any PSI Pension Plan nor any single-employer
plan of a PSI ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA. To the knowledge of ADMI, neither PSI nor any of its
Subsidiaries has provided, or is required to provide, security to any PSI
Pension Plan or to any single-employer plan of a PSI ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(6) To the knowledge of ADMI, under each PSI Pension Plan that is a
defined benefit plan, as of the last day of the most recent plan year ended
prior to the date hereof, the actuarially determined present value of all
"benefit liabilities," within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in such
PSI Pension Plan's most recent actuarial valuation) did not exceed the then
current value of the assets of such PSI Pension Plan, and there has been no
adverse change in the financial condition of such PSI Pension Plan (with
respect to either assets or benefits) since the last day of the most recent
plan year.
(7) Neither PSI nor any of its Subsidiaries contributes to or is
required to contribute to any multiemployer plan within the meaning of
Section 4001(c)(3) of ERISA ("PSI Multiemployer Plan"). To the knowledge of
ADMI, neither PSI nor any of its Subsidiaries has incurred any material
withdrawal liability (within the meaning of Section 4201 of ERISA) under
any PSI Multiemployer Plan within the past 5 years that has not been
satisfied, nor could any such material withdrawal liability reasonably be
expected to be incurred.
(8) To the knowledge of ADMI, except as set forth in the PSI
Compensation and Benefit Plans listed in Schedule 4.16(b), the execution
of, and performance of the transactions contemplated in, this Agreement
will not (either alone or upon the occurrence of any additional or
subsequent events):
(A) constitute an event under any PSI Compensation and
Benefit Plan, trust or loan that will or may result in any
payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting,
distribution, increase in
35
benefits or obligation to fund benefits with respect to any
officers and directors of PSI;
(B) result in any payment or benefit that will or may
be made by PSI, any of its Subsidiaries or any of their
respective affiliates that will be characterized as an
"excess parachute payment," within the meaning of Section
280G(b)(1) of the Code; or
(C) provide for any payment to any employee or
independent contractor of PSI that is not deductible under
Section 162(a)(1) or 404 of the Code.
(9) To the knowledge of ADMI, the contributions of PSI and any of
its Subsidiaries to any trust described in Section 501(c)(9) of the Code
have complied with Section 419A of the Code.
(10) To the knowledge of ADMI, neither PSI nor its Subsidiaries have
any obligations for retiree health and life benefits under any PSI
Compensation and Benefit Plan, except as set forth in Schedule 4.16(b). To
the knowledge of ADMI, PSI or its Subsidiaries may amend or terminate any
such plan under the terms of such plan at any time without incurring any
material liability thereunder.
(11) Anything in this Agreement to the contrary notwithstanding the
representations and warranties set forth in this Section 4.16(b) shall not,
to the extent that they relate to any facts, events or circumstances prior
to July 12, 1999, survive the Closing and to such extent shall not be
subject to the indemnification provisions of Article IX.
Section 4.17 Labor Matters. Except as set forth on Schedule 4.17, (i)
there is no labor strike, dispute, slowdown, stoppage or lockout actually
pending, or to the knowledge of ADMI, threatened against or affecting Slingshot,
PSI or ADMI, (ii) Slingshot and ADMI are not, and to the knowledge of ADMI, PSI
is not party to or bound by any collective bargaining or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of Slingshot, PSI
or ADMI, (iii) none of the employees of Slingshot or ADMI or to the knowledge of
ADMI, PSI is represented by any labor organization and ADMI has no knowledge of
any union organizing activities among the employees of Slingshot, PSI and ADMI
since March 16, 1999 (or July 12, 1999, in the case of PSI), nor does any
question concerning representation exist concerning such employees, (iv)
Slingshot, ADMI and PSI are, and have been at all times since March 16, 1999 (or
July 12, 1999, in the case of PSI), in compliance, in all material respects,
with all applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable Laws, (v) there is no unfair
labor practice charge or complaint against Slingshot, ADMI or , to the knowledge
of ADMI, PSI pending or, to the knowledge of ADMI,
36
threatened before the National Labor Relations Board or any similar state or
foreign agency, (vi) to the knowledge of ADMI, no charges with respect to or
relating to Slingshot, PSI or ADMI are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention of
unlawful employment practices, (vii) since March 16, 1999 (or July 12, 1999, in
the case of PSI), Slingshot, ADMI and PSI have not received a notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment Laws to conduct an investigation with respect
to or relating to Slingshot, PSI or ADMI and, to the knowledge of ADMI, no such
investigation is in progress, and (x) there are no complaints, lawsuits or other
proceedings pending or, to the knowledge of ADMI, threatened in any forum by or
on behalf of any present or former employee of Slingshot, ADMI or, to the
knowledge of ADMI, PSI, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract or employment, any Laws
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship.
Section 4.18 Records.
(a) The record books of Slingshot contain complete and accurate
records of all actions taken by the management committee of Slingshot. Complete
and accurate copies of all such minute books have been made available to
Purchaser. All officers of Slingshot have been properly elected.
(b) The accounting books and records of each of Slingshot and
ADMI are complete and correct, have been maintained in accordance with
applicable Laws and good business practices and accurately reflect the basis for
the financial condition and results of operations of Slingshot and ADMI set
forth in the financial statements of Slingshot and ADMI.
(c) The record books of PSI contain complete and accurate records
of all actions taken by the board of directors and stockholders of PSI since
July 12, 1999 and, to the knowledge of ADMI, prior to July 12, 1999. Copies of
all such minute books have been made available to Purchaser. All officers of PSI
have been properly elected.
(d) With respect to all entries made since July 12, 1999, and, to
the knowledge of ADMI, with respect to entries made prior to July 12, 1999, the
accounting books and records of PSI are complete and correct, have been
maintained in accordance with applicable Laws and good business practices and
accurately reflect the basis for the financial condition and results of
operations of PSI set forth in the financial statements of PSI.
Section 4.19 Affiliate Transactions.
(a) Schedule 4.19 lists all agreements, arrangements and currently
proposed agreements and arrangements that have been entered into since March 16,
1999, by or between Slingshot or ADMI, on the one hand, with or for the benefit
of any current or former shareholder, partner, officer or other Affiliate of
Slingshot or ADMI or any entity in which any such Person has a direct or
indirect material interest, on the other hand. Schedule 4.19 lists all payments
of any kind in any one case in excess of $25,000 since March 16, 1999 from
Slingshot or ADMI to
37
or for the benefit of any current or former partner, officer or other Affiliate
of Slingshot or ADMI or any of such Persons' Affiliates, or any entity in which
any such Person has a direct or indirect material equity interest. All
outstanding debts and other obligations of Slingshot or ADMI incurred since
March 16, 1999 to any of its owners were incurred in return for fair and
adequate consideration paid or delivered by them in cash or other property.
(b) Schedule 4.19 lists all agreements, arrangements and currently
proposed agreements and arrangements that have been entered into since July 12,
1999, by or between PSI on the one hand, with or for the benefit of any current
or former shareholder, partner, officer or other Affiliate (other than Slingshot
or ADMI) of PSI or any entity in which any such Person has a direct or indirect
material interest, on the other hand. Schedule 4.19 lists all payments of any
kind in any one case in excess of $25,000 since July 12, 1999 from PSI to or for
the benefit of any current or former partner, officer or other Affiliate (other
than Slingshot or ADMI) of PSI or any of such Persons' Affiliates, or any entity
in which any such Person has a direct or indirect material equity interest. All
outstanding debts and other obligations of PSI incurred to ADMI or any Affiliate
of ADMI were incurred in return for fair and adequate consideration paid or
delivered by them in cash or other property. As of the Closing there will not be
any outstanding debt or other obligations of PSI to ADMI or any Affiliate of
ADMI.
Section 4.20 Brokers, Finders, Etc. Slingshot, PSI and ADMI have not
employed and are not subject to the valid claim of, nor has Slingshot, PSI or
ADMI incurred any Liability that would be payable by Slingshot, PSI or ADMI, for
any brokerage, finder's or other fees or commissions of any broker, finder or
other financial intermediary in connection with the transactions contemplated by
this Agreement.
Section 4.21 Questionable Payments. Since March 16, 1999 (or July 12,
1999, in the case of PSI) Slingshot, ADMI and, to the knowledge of ADMI, PSI,
and their officers (or Person of similar capacity), have not used any funds of
Slingshot, PSI and ADMI for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, have not made any direct
or indirect unlawful payments to government officials or employees from
corporate funds, have not established or maintained any unlawful or unrecorded
fund or corporate moneys or other assets, and have not made any false or
fictitious entries on the books or records of any such corporations, made any
bribe, payoff, kickback or other unlawful payment.
Section 4.22 Other Information. No representation or warranty of ADMI in
this Agreement, nor any statement, certificate or other document furnished or to
be furnished by Slingshot, ADMI or PSI to Purchaser pursuant to this Agreement,
nor the Exhibits and Schedules hereto prepared by Slingshot, ADMI or PSI,
contains any untrue statement of a material fact, or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 4.23 Customer and Supplier Relationships; Warranty Claims. Except
as set forth in Schedule 4.23, since March 16, 1999 (or July 12, 1999, in
the case of PSI) Slingshot, ADMI and PSI have
38
not received any notice that any customer or supplier intends to discontinue or
alter the prices or terms of, or substantially diminish its relationship with
Slingshot, PSI or ADMI, as the case may be. Other than as set forth in Schedule
4.23, since March 16, 1999 (or July 12, 1999, in the case of PSI) Slingshot,
ADMI and PSI have not received notice of any outstanding warranty claims against
Slingshot, PSI or ADMI or the Xxxxx Sellers by any of their customers with
respect to products sold or services rendered by Slingshot, PSI or ADMI or the
Xxxxx Sellers.
Section 4.24 Year 2000 Program.
(a) Except as set forth in Schedule 4.24, to the knowledge of ADMI, all
devices, systems, machinery, information technology, computer software and
hardware and other date sensitive technology (collectively, the "Systems")
necessary to carry on the Business are Year 2000 Compliant to the extent
necessary to ensure no material disruption of the operations of Purchaser. As
used herein, "Year 2000 Compliant" means that the Systems are designed to be
used prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without error relating to date or date
sensitive data, specifically including any error relating to, or the product of,
date data which represents or references difference centuries or more than one
century.
(b) ADMI has (and, to the knowledge of ADMI, since July 12, 1999, PSI has)
taken reasonable and practicable steps, including, without limitation, (i)
evaluating computer software utilized in their respective businesses and (ii)
obtaining certifications and other information concerning the date-handling
capabilities of third party computer software included in PSI's or ADMI's
computer software products to identify, address, and remediate problems relating
to the failure to be Year 2000 Compliant. ADMI has fully disclosed and made
available to Purchaser any and all information and materials relating to
problems with any computer software utilized in the Business being Year 2000
Compliant.
Section 4.25 PSI Merger Agreement. Except to the extent set forth in
Schedule 4.25, to the knowledge of ADMI, all of the representations and
warranties made by PSI pursuant to the Agreement and Plan of Merger dated as of
March 15, 1999 among ADMI, PSI and PS Acquisitions, Inc. were true and correct
as of the closing of the merger contemplated therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES AS TO ADMI
ADMI represents and warrants to Purchaser as to ADMI as follows:
Section 5.1 Organization; Authorization and Validity. ADMI is duly
organized and validly existing corporation under the laws of the State of
Colorado, and has full power and authority to own all of its properties and
assets and to carry on its business as it is now being conducted. ADMI has full
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by ADMI pursuant hereto
(to the extent that such Person is a party hereto or thereto) and to carry out
its obligations hereunder and thereunder. The execution, delivery and
performance by ADMI of this Agreement and the other documents and instruments to
be executed and delivered by ADMI pursuant hereto, and the
39
consummation by ADMI of the transactions contemplated hereby and thereby, have
been duly and validly authorized by the Board of Directors of ADMI and no other
act or proceeding on the part of ADMI or its shareholders is necessary to
authorize the execution and delivery by ADMI of this Agreement or the other
documents or instruments to be executed and delivered by ADMI pursuant hereto,
or the consummation by ADMI of the transactions contemplated hereby or thereby.
This Agreement and the other documents and instruments to be executed and
delivered by ADMI pursuant hereto have been duly and validly executed and
delivered by ADMI and, assuming this Agreement and the other documents and
instruments to be executed and delivered by ADMI pursuant hereto are the valid
and binding obligations of the other Persons a parties hereto or thereto,
constitutes a valid and binding obligation of ADMI enforceable against ADMI in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 5.2 Assignments to Slingshot and Qwest. Except as set forth on
Schedule 5.2(a), and except for the Telecom Assets and the capital stock or
other securities of IHC and BFD, pursuant to the Contribution Agreement, ADMI
will transfer to Slingshot at or prior to Closing all of ADMI's tangible or
intangible assets, and ADMI's contractual, license and leasehold rights and all
liabilities of ADMI relating to the conduct of the Digital Media Business,
including the Slingshot Assets. Schedule 5.2(b) sets forth all investments made
by ADMI in the Digital Media Business since March 16, 1999, whether by advance,
capital contribution, forgiveness or otherwise. Prior to the transfer to Qwest
of the Telecom Assets, ADMI shall cause PSI to dividend, distribute or otherwise
transfer and dispose of all of the outstanding capital stock or other securities
of BFD to ADMI or its assignee.
Section 5.3 Telecom Assets and Slingshot Assets.
(a) The Telecom Assets constitute all of the assets of ADMI
relating to the portion of the Business consisting of enhanced telephony
services, other than IHC and BFD and their assets relating to the provision of
enhanced telephony services.
(b) The Slingshot Assets represent all of the assets of ADMI
other than IHC and BFD relating to advanced digital production, post-production
and transmission facility, digital media storage and distribution services.
Section 5.4 No Conflict. Except as set forth in Schedule 5.4, the
execution, delivery and performance of this Agreement by ADMI and the other
documents and instruments to be executed and delivered by ADMI pursuant hereto,
the consummation by ADMI of the transactions contemplated hereby or thereby and
the compliance by ADMI with the provisions hereof or thereof will not (a)
conflict with or result in any breach of any provision of the articles of
incorporation or bylaws of ADMI or PSI, (b) constitute a change in control of
ADMI under or require the consent from or the giving of notice to a third party
(other than a notice to or consent from a Governmental Authority contemplated by
Section 4.6), result in a violation or breach of,
40
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
contractual obligation of ADMI, or result in the creation of any Lien upon or
affecting any properties or assets of ADMI, (c) to the knowledge of ADMI with
respect to contracts entered into prior to July 12, 1999, constitute a change in
control of PSI under or require the consent from or the giving of notice to a
third party (other than a notice to or consent from a Governmental Authority
contemplated by Section 4.6), result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any contractual obligation of PSI, or
result in the creation of any Lien upon or affecting any properties or assets of
PSI, (d) violate any order, writ, injunction, decree, statute, rule or
regulation of any Governmental Authority applicable to ADMI or to which its
properties or assets may be bound, (e) to the knowledge of ADMI, violate any
order, writ, injunction, decree, statute, rule or regulation of any Governmental
Authority applicable to PSI or to which its properties or assets may be bound,
or (f) result in triggering of any right of first refusal or other right under
any partnership or joint venture agreement to which ADMI or, to the knowledge of
ADMI, PSI, is a party, except in the case of clauses (b), (c), (d), (e) or (f)
for such violations, breaches or defaults which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to ADMI as follows:
Section 6.1 Organization; Authorization and Validity. Purchaser is a
corporation organized under the laws of the State of Delaware. Purchaser is duly
organized, validly existing and in good standing and has full power and
authority to carry on its business as presently conducted. Purchaser has full
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by it pursuant hereto and
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by Purchaser of this Agreement and the other documents and
instruments to be executed and delivered by Purchaser pursuant hereto, and the
consummation by Purchaser of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action and no other
corporate act or proceeding on the part of Purchaser is necessary to authorize
the execution and delivery by Purchaser of this Agreement or the other documents
or instruments to be executed and delivered by Purchaser pursuant hereto, or the
consummation by Purchaser of the transactions contemplated hereby or thereby.
This Agreement and the other documents and instruments to be executed and
delivered by Purchaser pursuant hereto have been duly and validly executed and
delivered by Purchaser and, assuming this Agreement and the other documents and
instruments to be executed and delivered by Purchasers pursuant hereto are the
valid and binding obligations of such other Persons a party hereto or thereto,
constitutes a valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
41
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 6.2 No Conflict. Neither the execution, delivery or performance by
Purchaser of this Agreement nor the consummation of the transactions
contemplated hereby and compliance by Purchaser with any of the provisions
hereof or thereof will (a) conflict with or result in any breach of any
provision of the articles of incorporation or bylaws of Purchaser, (b) require
any consent, approval or notice under, violate or result in the violation of,
conflict with or result in a breach of any provisions of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by or result in a right of termination or acceleration, result in the
loss of a material benefit under or result in the creation of any Lien upon any
of the properties or assets of Purchaser under any of the terms, conditions or
provisions of any material contractual obligation of Purchaser or (c) violate
any order, writ, injunction, decree, statute, rule or regulation of any
Governmental Authority applicable to Purchaser or to which any of its properties
or assets may be bound, except in such case as would not materially impair or
delay Purchaser in the consummation of the transactions contemplated hereby.
Section 6.3 Governmental Consents. Except under the HSR Act, no consent,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby by Purchaser.
Section 6.4 Brokers, Finders, Etc.. Purchaser has not employed, and is
not subject to the valid claim of, nor has Purchaser incurred any liability that
would be payable by Purchaser, for any brokerage, finder's or other fees or
commissions of any broker, finder or other financial intermediary in connection
with the transactions contemplated by this Agreement.
Section 6.5 Other Information. No representations or warranty of Purchaser
in this Agreement, nor any statement, certificate or other document furnished or
to be furnished by Purchaser to Slingshot or ADMI pursuant to this Agreement,
contains any untrue statements or a material fact, or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 6.6 Purchase for Investment. Purchaser is acquiring the PSI
Securities and any other securities to be acquired by it pursuant to the terms
of this Agreement for investment purposes and not with a view toward any resale
or distribution thereof. Purchaser acknowledges that the securities to be
acquired in accordance herewith have not been registered for the purpose of the
transactions contemplated by this Agreement or otherwise under the Securities
Act of 1933, as amended, or under any state securities laws. Purchaser will not
sell or otherwise distribute all or any portion of the securities acquired
hereunder except in compliance with applicable laws relating to the sale or
other distribution of securities.
ARTICLE VII
COVENANTS
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Section 7.1 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions hereof, each of
the parties hereto agrees to use commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(b) In case at any time after the Closing Date any further action
is necessary or desirable to carry out the purposes of this Agreement, the
parties shall use their commercially reasonable efforts to take, or cause to be
taken, all such necessary actions.
Section 7.2 Filings and Consents. The parties hereto shall use all
commercially reasonable efforts to obtain and to cooperate in obtaining any
consent, approval, authorization or order of, and in making any registration or
filing with, any Governmental Authority or other third party required in
connection with the execution, delivery or performance of this Agreement and the
other documents and instruments to be executed pursuant hereto.
Section 7.3 Publicity. Without the prior consent of the other parties
hereto, which consent shall not be unreasonably withheld or delayed, none of the
parties hereto shall, nor shall any of them permit Affiliates which any of them
control to, issue or cause the publication of any press release or other public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby except as may be required by law or by obligations pursuant
to any listing agreement with a national securities exchange. A party making any
statement or announcement pursuant to the requirements of applicable law or the
listing agreement of a national securities exchange shall provide a copy thereof
to the other parties hereto to the extent possible prior to issuing such
statement or announcement.
Section 7.4 Notification of Certain Matters. ADMI shall give prompt notice
to Purchaser upon becoming aware of, and Purchaser shall give prompt notice to
ADMI upon becoming aware of, (a) the occurrence or non-occurrence of any event,
the occurrence or non-occurrence of which would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Closing Date and (b) any material failure of ADMI or
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 7.4 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 7.5 Expenses. Except as set forth in Section 11.6, whether or not
the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such costs and expenses.
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Section 7.6 Conduct of Business of ADMI. ADMI covenants and agrees that,
except for actions taken to implement this Agreement and the transactions
contemplated hereby or as disclosed in Schedules hereto or as consented to by
Purchaser, from and after the date of this Agreement and until the Closing Date
ADMI will not operate the Telecom Assets other than in the ordinary course of
business consistent with past practices. In furtherance thereof and not in
limitation of the foregoing, ADMI will not take, and will not permit Slingshot
or PSI to take, any action or elect to omit to take any action the result of
which in either case will be to:
(a) Issue, grant or make any commitment to grant, any Ownership
Interests or other rights relating to the Ownership Interests or PSI's debt
instruments or other securities;
(b) Redeem, repurchase or otherwise reacquire any Ownership
Interests or make any commitment with respect thereto, or declare or pay any
distribution of any assets constituting Slingshot Assets to the owners of
Slingshot or their Affiliates other than as contemplated by the terms of this
Agreement;
(c) Cause PSI or ADMI to suffer any adverse change that is
material to the Telecom Assets;
(d) Incur any Liabilities relating to the Telecom Assets except
Liabilities (x) incurred in the ordinary course of business and consistent with
past practice and (y) Liabilities not incurred in the ordinary course of
business in an aggregate amount of no greater than $250,000 (including
Liabilities arising from one transaction or a series of similar transactions,
and all periodic installments or payments under any lease or other agreement
providing for periodic installments or payments, as a single Liability);
(e) Pay, discharge or satisfy any claim or Liabilities relating to
the Telecom Assets other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of Liabilities
reflected or reserved against in the Balance Sheets or incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date;
(f) Permit or allow any of the Telecom Assets (real, personal or
mixed, tangible or intangible) to become subject to any Lien except in the
ordinary course of business consistent with good financial practices;
(g) Write off as uncollectible any notes or accounts receivable
that constitute Telecom Assets except for immaterial write-offs in the ordinary
course of business and consistent with past practice;
(h) Cancel any debts or waive any claims or rights relating to the
Telecom Assets that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect;
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(i) Sell, transfer, or otherwise dispose of any of the Telecom
Assets (real, personal or mixed, tangible or intangible), except (i) in the
ordinary course of business and consistent with past practice and (ii) transfers
and other dispositions not in the ordinary course of business in an aggregate
amount not exceeding $100,000 with respect to all other assets and properties;
(j) Capitalize any work, project or other form of services
performed or to be performed in connection with the Telecom Assets or by the
Telecom Business, except in accordance with generally accepted accounting
principles;
(k) Introduce any new, or significantly change any, management
operation or accounting policy relating to the Telecom Assets, including tax
accounting methods and procedures, or operate its properties or assets other
than substantially as previously operated and in the ordinary course;
(l) Suffer any damage, destruction or loss to the Telecom Assets
(whether or not covered by insurance) which could have been prevented by
reasonably prudent action on the part of the PSI or ADMI; or
(m) Make or commit to make any capital expenditures for Telecom
Assets not in the ordinary course of business for any single item in excess of
$25,000 other than as required by any contract listed on Schedule 4.14
Section 7.7 Access and Inspection. Slingshot and ADMI shall afford to the
officers, employees, accountants, counsel and other representatives of
Purchaser, access, upon reasonable prior request or notice, during normal
business hours from the date hereof until the Closing Date, to Slingshot's,
ADMI's and PSI's offices, properties, books, contracts, commitments and records
and, during such period, Slingshot, ADMI and PSI shall furnish promptly to
Purchaser all other information concerning its business, properties and
personnel as Purchaser may reasonably request. Purchaser will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement.
Section 7.8 Management Agreement; Xxxxx Indemnity. Pursuant to the Xxxx of
Sale, Assignment and Assumption Agreement, at Closing, ADMI shall assign to
Purchaser, and Purchaser shall assume, all of the rights and obligations under
the Management Agreement and the Xxxxx Purchase Agreement, to the extent that
each relates to the Telecom Assets.
Section 7.9 Consents. Prior to the Closing, Slingshot and ADMI shall use
all commercially reasonable efforts to obtain all consents necessary to the
consummation of the transactions contemplated hereby. All such consents will be
in writing and executed counterparts thereof will be delivered to Purchaser at
or prior to the Closing. Notwithstanding any other provision of this Agreement,
the parties hereto agree that ADMI or Slingshot may seek to obtain any consents
or waivers from any Persons necessary to consummate the transactions
contemplated hereby; provided that ADMI or Slingshot and their
45
respective representatives shall use their best efforts to restrict access to
any information concerning this Agreement and the transactions contemplated
hereby to those Persons that "need to know"; provided further, that Slingshot,
ADMI and their respective representatives will request and encourage those
Persons who are informed of this Agreement or the transactions contemplated
hereby to treat any such information so provided in accordance with the terms of
the Confidentiality Agreement as if such Persons were a party thereto.
Section 7.10 No Solicitation. For a period of two years following the
Closing, without the prior written consent of Qwest's most senior executive
primarily engaged in Qwest's human resources department, Slingshot and ADMI
shall not, and shall cause their respective representatives not to, directly or
indirectly, solicit or attempt to solicit, or assist any other Person to solicit
or to attempt to solicit, any employee of Qwest (other than Xxxx Xxxx and Xxxxxx
Xxxxxxx to terminate his or her employment with Qwest or to interfere or attempt
to interfere with the relationship between Qwest and any of its employees.
Nothing contained in this Agreement or any other document or instrument to be
executed and delivered pursuant hereto will be deemed to limit or otherwise
affect the right of any employee of Qwest to seek employment with or to be
employed by Slingshot, ADMI or any of their respective Affiliates if Slingshot,
ADMI and such Affiliates have not solicited such employee in violation of the
preceding sentence.
Section 7.11 Supplements to Schedules. From time to time prior to the
Closing, Slingshot and ADMI shall promptly supplement or amend any Schedule
hereto with respect to any matter, condition or occurrence hereafter arising
which, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in such Schedule; provided that for
purposes of the conditions to Closing, no such supplement or amendment will be
deemed to cure any breach of any representation, warranty or covenant and
Purchaser may elect, as its sole remedy, to terminate this Agreement pursuant to
Section 10.1(c). The parties hereto recognize and acknowledge that certain
assets will be acquired and disposed of and that certain liabilities will be
incurred and discharged in the ordinary course of business; provided, however,
that the parties do not intend for this sentence to alter or modify the
conditions or prohibitions of taking such actions contained elsewhere in this
Agreement.
Section 7.12 Further Assurances. From and after the Closing Date,
Slingshot, ADMI and Purchaser shall promptly execute, acknowledge and deliver
any other assurances or documents reasonably requested by another party hereto
to permit such other party to satisfy its obligations hereunder or to evidence
title, or to provide such other party with the benefits enumerated in this
Agreement, including without limitation, the execution, acknowledgment and
delivery of any assurances or documents necessary to assign the benefits of the
provisions in the Xxxxx Purchase Agreement related to the Telecom Assets
including the indemnity provisions (the "Xxxxx Indemnity") and the rights and
obligations of ADMI under the Management Agreement related to the Telecom
Assets.
Section 7.13 IHC Interests. Notwithstanding any other provision of this
Agreement or any other document or instrument to be delivered pursuant hereto,
ADMI shall not transfer to
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Slingshot or to Purchaser (i) any interest in securities of IHC owned by ADMI,
(ii) any interest in any properties or assets acquired by ADMI from IHC, or
(iii) any Liabilities related thereto.
Section 7.14 Insurance. Purchaser acknowledges that, as of the Closing
Date, all insurance coverage with respect to the Telecom Assets that is provided
through ADMI or its Affiliates will be terminated and that any insurance
coverage of the Telecom Assets thereafter will be the sole responsibility of
Purchaser.
Section 7.15 Inter-Company Accounts. Prior to the Closing, (a) ADMI will
contribute to the capital of PSI and its Subsidiaries other than BFD the
outstanding amount of any inter-company account payable by PSI or any such
Subsidiary to ADMI and (b) ADMI will cause PSI to contribute to the capital of
BFD the outstanding amount of any inter-company account payable by BFD to PSI.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to the Obligations of Purchaser, Slingshot and
ADMI. The obligations of each party hereto effect the Closing are subject to the
satisfaction (or waiver) at or prior to the Closing of the following conditions:
(a) No Injunction or Litigation. No temporary restraining order,
preliminary or permanent injunction or other order or decree which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, and no statute, rule or regulation shall have been enacted by
any Governmental Authority which makes the consummation of the transactions
contemplated hereby illegal. No litigation shall have been commenced and be
continuing that seeks to prevent consummation of the transactions contemplated
hereby or that seeks material damages from Purchaser, Slingshot, PSI, ADMI or
any of their Affiliates, in connection with the transactions contemplated
hereby.
(b) Consents. All consents, approvals, permits or authorizations
required to be obtained, declarations or filings required to be made and waiting
periods or terminations required to have occurred prior to the Closing from or
with any Governmental Authority in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been obtained, made or occurred.
Section 8.2 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to effect the Closing is subject to the satisfaction (or waiver by
Purchaser) at or prior to the Closing, of the following conditions:
(a) Representation and Warranties. The representations and
warranties of ADMI contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing.
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(b) Covenants. Slingshot and ADMI shall have performed in all
respects the covenants and obligations required to be performed by them on or
prior to the Closing.
(c) No Material Adverse Change. There shall not have been, or no
event shall have occurred, which could reasonably be expected to result in, a
Material Adverse Change with respect to the Business.
(d) Slingshot's and ADMI's Certificates. Slingshot and ADMI shall
each have furnished Purchaser with a certificate, dated the Closing Date, to the
effect that the conditions set forth in Sections 8.2(a), (b) and (c) have been
satisfied.
(e) Slingshot and ADMI Deliveries. Slingshot and ADMI shall have
duly executed, if called for, and delivered to Purchaser each document,
instrument and other writing required to be delivered by Slingshot or ADMI
pursuant to Sections 3.4 and 3.5.
(f) Consents. All material consents and approvals required to be
obtained prior to the Closing from or with any third party (other than a
Governmental Authority) in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, shall
have been obtained.
Section 8.3 Conditions to the Obligations of Slingshot and ADMI. The
obligations of Slingshot and ADMI to effect the Closing is subject to the
satisfaction (or waiver by Slingshot and ADMI) on or prior to the Closing, of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing.
(b) Covenants. Purchaser shall have performed in all respects the
covenants and obligations required to be performed by it at or prior to the
Closing.
(c) Certificate. Purchaser shall have furnished Slingshot and
ADMI with a certificate dated the Closing Date, signed on its behalf by an
authorized signatory of Purchaser, to the effect that the conditions set forth
in Sections 8.3(a) and (b) have been satisfied.
(d) Purchaser Deliveries. Purchaser shall have executed, if
called for, and delivered to Slingshot or ADMI, as the case may be, each
document, instrument and other writing required to be delivered by Purchaser
pursuant to Section 3.6.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties. Each of the
representations and warranties made by Purchaser in this Agreement shall
terminate on the date which is 18 months from the Closing Date. Each of the
representations and warranties made by ADMI in this Agreement shall terminate on
the date which is 18 months from the Closing Date; provided,
48
however, that (i) the representations and warranties contained in Sections 4.11,
4.16(a) and, to the extent not covered by clause (ii), 4.16(b) shall survive the
Closing until 90 days following the expiration of the applicable statute of
limitations, (ii) to the extent that they relate to any facts, events or
circumstances prior to July 12, 1999, the representations and warranties set
forth in Section 4.16(b) shall not survive the Closing and to such extent shall
not be subject to the indemnification provisions of this Article IX, and (iii)
the representations and warranties contained in Section 4.13 shall survive the
Closing until the sixth anniversary of the Closing Date. In the event notice of
any claim for indemnification under Section 9.2, 9.3, 9.4 or 9.5 hereof shall
have been given within the applicable survival period, the representations and
warranties that are the subject of such indemnification claim shall survive
until such time as such claim is finally resolved. The covenants and agreements
of the parties set forth in this Agreement and the indemnification obligations
of the parties hereunder shall survive indefinitely except as expressly provided
herein.
Section 9.2 Xxxxx Indemnity.
(a) (i) ADMI agrees to assign all rights under the Xxxxx
Indemnity that relate to the Telecom Assets to Purchaser at the Closing.
(ii) ADMI agrees to assign all rights under the Xxxxx
Indemnity that relate to the Slingshot Assets to Slingshot at the Closing.
(b) In the event of a breach of a representation, warranty or
covenant under the Xxxxx Purchase Agreement, Purchaser's only recourse for such
breach shall be to seek indemnification in accordance with the Xxxxx Indemnity.
The parties agree that they will cooperate with the other party's reasonable
requests in such party's assertion of rights under the Xxxxx Indemnity. ADMI
agrees that, subject to receipt of reasonably satisfactory indemnification from
Purchaser, it will act as the named plaintiff in any action under the Xxxxx
Indemnity at the reasonable direction of Purchaser if necessary in order for
Purchaser to assert any rights thereunder.
(c) If Purchaser would be entitled to recover any amounts (the
"Blocked Amounts") under the Xxxxx Indemnity but is prevented from recovering
such amounts by reason of the $50,000,000 cap on indemnification specified in
Section 9.2(b) of the Xxxxx Purchase Agreement, and the aggregate amount
recovered by Purchaser under the Xxxxx Indemnity is less than $10,000,000, ADMI
agrees that it will pay to Purchaser the Blocked Amounts, provided, that ADMI
shall not be required to pay Purchaser in excess of an aggregate of $10,000,000
for all Blocked Amounts and amounts under Section 9.3 relating to the Telecom
Business.
Section 9.3 Base Indemnification by ADMI.
(a) Subject to the other provisions of this Article IX, ADMI shall
indemnify, defend and hold harmless Purchaser Indemnified Parties from and
against any and all costs, expenses, losses, damages and liabilities (including
reasonable attorneys' fees and expenses) ("Damages") suffered by any of
Purchaser Indemnified Parties to the extent resulting from, arising out of, or
incurred with respect to, or (in the case of claims asserted against any of
49
Purchaser Indemnified Parties by a third party) alleged to result from, arise
out of or have been incurred with respect to (i) any breach of or inaccuracy in
any representation or warranty as of the date made or as of the Closing Date of
ADMI contained in this Agreement (other than with respect to PSI), (ii) any
breach of any covenant of Slingshot or ADMI contained in this Agreement (other
than with respect to PSI) and (iii) all Litigation arising on or after March 16,
1999 relating to the Assets and the operations of the Business (other than with
respect to PSI) after March 16, 1999 and prior to the Closing (the "Base
Indemnity").
(b) In no event shall ADMI be liable to the Purchaser Indemnified
Parties under the Base Indemnity with respect to any breaches of representations
and warranties unless the aggregate Damages therefrom and amounts under Section
9.4 relating to PSI exceed $350,000, and then only to the extent the Damages
exceed $350,000. In no event shall the aggregate liability of ADMI for Damages
resulting from breaches of the representations and warranties set forth in
Articles IV or V (i) with respect to the Telecom Business (other than amounts
under Section 9.4) together with amounts under Section 9.2 exceed $10,000,000
and (ii) with respect to the Digital Media Business exceed $20,000,000; provided
that ADMI shall indemnify Purchaser without limitation in respect of any Damages
suffered by any Purchaser Indemnified Party which arise out of any Liabilities
of ADMI other than (i) Assumed Liabilities or (ii) Liabilities associated with
the Slingshot Assets. For purposes of this Section 9.3, Damages that relate to
representations or warranties or Litigation covered by the Base Indemnity with
respect to the Slingshot Assets or the Digital Media Business, shall include any
Damages of Slingshot to the extent not a direct Damage of a Purchaser
Indemnified Party, and in such case shall be an amount equal to that portion of
Slingshot's Damages based on the percentage equity interest held by Purchaser
and its Affiliates in Slingshot at the time the Damages were incurred. As an
example, if Slingshot incurs any Damage that would be covered by the Base
Indemnity if the representations and warranties contained herein were made to
Slingshot and the Base Indemnity were made for the benefit of Slingshot, and if
Purchaser's Affiliates then held an aggregate 50% equity interest in Slingshot,
the Purchaser Indemnified Parties will be entitled to indemnification hereunder
(subject to the other limitations in this Article IX) as if the Purchaser
Indemnified Parties had suffered direct Damages in an amount equal to 50% of the
Slingshot Damages.
(c) Notwithstanding the foregoing, the parties agree that neither
ADMI nor Slingshot shall be liable to the Purchaser Indemnified Parties for any
costs, expenses, losses, damages and liabilities (including reasonable
attorneys' fees and expenses) suffered by any of Purchaser Indemnified Parties
to the extent that such costs, expenses, losses, damages and liabilities are
covered by the Xxxxx Indemnity, other than in accordance with Section 9.2(c).
Section 9.4 PSI Indemnification by ADMI.
(a) Subject to the other provisions of this Article IX, ADMI shall
indemnify, defend and hold harmless Purchaser Indemnified Parties from and
against any and all Damages suffered by any of Purchaser Indemnified Parties to
the extent resulting from, arising out of, or incurred with respect to, or (in
the case of claims asserted against any of Purchaser Indemnified Parties by a
third party) alleged to result from, arise out of or have been incurred with
respect to
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(i) any breach of or inaccuracy in any representation or warranty as of the date
made or as of the Closing Date of ADMI contained in this Agreement relating to
PSI, (ii) any breach of any covenant of Slingshot or ADMI contained in this
Agreement relating to PSI and (iii) all Litigation arising on or after July 12,
1999 relating to PSI and its operations prior to the Closing (the "PSI
Indemnity").
(b) In no event shall the aggregate liability of ADMI for Damages
resulting from breaches of the representations and warranties set forth in
Articles IV or V under the PSI Indemnity exceed $10,000,000.
Section 9.5 Indemnification by Purchaser.
(a) Subject to the other provisions of this Article IX, Purchaser
shall indemnify, defend and hold harmless the Seller Indemnified Parties from
and against any and all Damages suffered by any of the Seller Indemnified
Parties to the extent resulting from, arising out of, or incurred with respect
to, or (in the case of claims asserted against any of the Seller Indemnified
Parties by a third party) alleged to result from, arise out of or have been
incurred with respect to, (i) any breach of or inaccuracy in any representation
or warranty as of the date made or as of the Closing Date of Purchaser contained
in this Agreement, (ii) any breach of any covenant of any of Purchaser contained
in this Agreement, (iii) the Assumed Liabilities and (iv) all litigation
relating to the operation of the Telecom Assets and the ownership of PSI
subsequent to Closing.
(b) In no event shall Purchaser be liable to the Seller
Indemnified Parties with respect to any breaches of representations and
warranties unless the aggregate Damages therefrom exceed $100,000, and then only
to the extent the Damages exceed $100,000. In no event shall the aggregate
liability of Purchaser for Damages resulting from breaches of the
representations and warranties set forth in Article VI exceed $1,000,000.
Section 9.6 Notice and Resolution of Claim.
(a) An indemnified party under this Agreement shall promptly give
written notice to the indemnifying party after obtaining knowledge of any third
party claim or litigation against the indemnified party as to which recovery may
be sought against the indemnifying party because of the indemnity set forth in
Sections 9.2 through 9.5, specifying in reasonable detail the claim or
litigation and the basis for indemnification; provided, however, that the
failure of the indemnified party promptly to notify the indemnifying party of
any such matter shall not release the indemnifying party, in whole or in part,
from its obligations under this Article IX except to the extent the indemnified
party's failure to so notify in breach of this Section 9.6(a) materially
prejudices the indemnifying party's ability to defend against such third party
claim or litigation. The indemnified party shall permit the indemnifying party
to assume the defense of any such claim, litigation or any litigation resulting
from such third party claim.
(b) If the indemnifying party assumes the defense of any such
third party claim or litigation, the obligations of the indemnifying party under
this Agreement shall include taking all steps necessary in the investigation,
defense or settlement of such claim or litigation
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(including the retention of legal counsel) and holding the indemnified party
harmless from and against any and all losses caused by or arising out of any
settlement approved by the indemnifying party or any judgment in connection with
such claim or litigation. The indemnifying party shall not, in the defense of
such claim or litigation, consent to entry of any judgment (except with the
written consent of the indemnified party) or enter into any settlement (except
with the written consent of the indemnified party): (i) that does not include as
an unconditional term thereof the giving by the claimant or the plaintiff to the
indemnified party a complete release from, all liability in respect of such
claim or litigation, or (ii) the effect of which is to permit any injunction,
declaratory judgment, other order or other equitable relief to be entered,
directly or indirectly, against any indemnified party. The indemnifying party
shall permit the indemnified party to participate in such defense or settlement
through counsel chosen by the indemnified party, with the fees and expenses of
such counsel borne by the indemnified party.
(c) Failure by the indemnifying party to notify the indemnified
party of its election to assume the defense of any such claim or litigation by a
third party within 30 days after notice thereof has been given to the
indemnifying party shall be deemed a waiver by the indemnifying party of its
right to assume the defense of such claim or litigation. If the indemnifying
party does not assume the defense of such claim or litigation by a third party,
the indemnified party may defend or settle such clam or litigation in such
matter as the indemnified party may deem appropriate and may settle such claim
or litigation on such terms as it may deem appropriate.
(d) The parties agree that they will cooperate with any other
party's reasonable requests in such party's assertion of rights under the Xxxxx
Indemnity.
ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated at any time
prior to Closing:
(a) by written agreement of Purchaser and each of Slingshot and
ADMI;
(b) by ADMI or Purchaser, by giving written notice of such
termination to the other party, if the Closing shall not have occurred on
or prior to December 31, 1999; provided, however, that the right to
terminate this Agreement under this Section 10.1(b) shall not be available
to any party whose failure to perform any material covenant or obligation
under this Agreement has been the cause of or resulted in the failure of
the Closing to occur on or before such date;
(c) by either Purchaser or ADMI by giving written notice of
termination to the other party, if there shall have been a material breach
of any of the covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other party,
which breach is not cured within ten days following written notice given by
the terminating party to the party committing such breach, or which breach,
by
52
its nature, cannot be cured prior to the Closing; provided, however, that
the right to terminate this Agreement under this Section 10.1 shall not be
available if at the time the terminating party is in material breach of any
representation, warranty, covenant or other agreement contained herein; or
(d) by either Purchaser or ADMI by written notice of termination
to the other party if any Governmental Authority of competent jurisdiction
shall have issued any statute, rule, regulation, order, decree or
injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such statute, rule, regulation, order, decree or injunction or other action
shall have become final.
Section 10.2 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 10.1 hereof, this Agreement shall
thereafter become void and have no effect, and no party thereto shall have any
liability to any other party hereto or any of its respective Affiliates,
officers or employees, except for the obligations of the parties hereto
contained in this Section 10.2 and in Sections 11.1, 11.5, 11.6 and 11.8 hereof,
and provided that nothing contained in this Section 10.2 shall relieve any party
from liability for a breach of any provision of this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by facsimile, provided, however, that the facsimile is
promptly followed by telephone confirmation thereof to the appropriate person at
the address set forth below, or at such other address as may be designated in
writing hereafter, in the same manner, by such person.
To Slingshot:
Slingshot Networks, LLC
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
53
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
One Xxxxx Center
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
To ADMI:
Anschutz Digital Media, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
One Xxxxx Center
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
To Purchaser:
Qwest Communications International Inc.
000 Xxxxx Xxxxx
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx
54
with a copy to:
O'Melveny & Xxxxx LLP
Century City
1999 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Any such notice shall be deemed delivered (a) on the date delivered if by
personal delivery, (b) on the date upon which the return receipt is signed or
delivery is refused or the notice is designed by the postal authorities as a not
deliverable, as the case may be, if mailed by registered or certified mail, (c)
on the next succeeding business day if sent by national courier service, or (d)
on the date telecommunicated if by telecopier if confirmed by telephone
confirmation.
Section 11.2 Amendment, Waiver. Any provision of this Agreement may be
amended or waived if, and only if such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser, ADMI and Slingshot, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section 11.3 Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto; provided that any party may assign any of its rights
and obligations hereunder in whole or in part to any of its respective
Affiliates without obtaining the consent of the other parties hereto.
Section 11.4 Entire Agreement. This Agreement (including all Exhibits and
Schedules hereto) contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
Section 11.5 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Purchaser, ADMI, Slingshot or
their successors or permitted assigns, any rights or remedies under or by reason
of this Agreement.
Section 11.6 Expense. All and expenses incurred by Purchaser in connection
with this Agreement and the transactions contemplated hereby, shall be borne by
Purchaser and all costs and expenses incurred by ADMI in connection with this
Agreement and the transactions contemplated hereby shall be borne by ADMI;
provided that the Purchaser and ADMI shall share
55
equally the $45,000 filing fee in respect of the filing of a notification and
report form under the HSR Act with respect to the transactions contemplated
hereby.
Section 11.7 Governing Law; Jurisdiction; Service of Process. This
Agreement shall be governed by the laws of the State of Colorado, its rules of
conflict of laws notwithstanding. Purchaser and ADMI hereby agree and consent to
be subject to the non-exclusive jurisdiction of the federal and state courts of
the State of Colorado in any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby. Each party hereby irrevocably
consents to the service of any and all process in any such suit, action or
proceeding by the delivery of such process to such party at the address and in
the manner provided in Section 11.1.
Section 11.8 Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 11.9 Transfer and Similar Taxes. Notwithstanding any other
provision of this Agreement to the contrary, Purchaser and Seller shall share
evenly and cooperate to pay when due all sales, property, use, privilege,
transfer, documentary, gains, stamp, duties, recording and similar Taxes and
fees (including any penalties, interest or additions) imposed upon any party
incurred in connection with the transactions contemplated by this Agreement.
Section 11.10 Headings. The heading references herein and in the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement, and shall not be deemed to limit or affect any of the provisions
hereof.
[SIGNATURE PAGE FOLLOWS]
56
SIGNATURES
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to
be executed as of the date first written above.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/ Drake S. Tempest
-------------------------------
Name: Drake S. Tempest
---------------------------
Title: Executive Vice President and
----------------------------
General Counsel
----------------------------
ANSCHUTZ DIGITAL MEDIA, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: Executive Vice President
---------------------------
SLINGSHOT NETWORKS, LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: Executive Vice President
---------------------------
Signature Page
EXHIBIT A
Form of Capacity and Service Agreement
--------------------------------------
EXHIBIT B-1 through B-5
Forms of Services and Option Agreements
---------------------------------------
EXHIBIT C
Form of Note
------------
EXHIBIT D
Form of Contribution Agreement
------------------------------
EXHIBIT E
Form of Subscription Agreement
------------------------------
--------------------------------------------------------------------------------
SCHEDULES TO ASSET PURCHASE AGREEMENT
--------------------------------------------------------------------------------
[TO BE PROVIDED BY ADMI]
TABLE OF CONTENTS
Title Page
----- ----
ARTICLE I DEFINITIONS AND TERMS...................................................................... 1
Section 1.1 Certain Definitions................................................................ 1
Section 1.2 Terms Generally.................................................................... 11
ARTICLE II ACQUISITION AND DISPOSITION OF ASSETS..................................................... 11
Section 2.1 Purchase and Sale of Assets........................................................ 11
Section 2.2 Excluded Assets.................................................................... 12
Section 2.3 Nondelivered Assets................................................................ 13
Section 2.4 No Assignment if Breach............................................................ 13
ARTICLE III PURCHASE PRICE AND DELIVERY.............................................................. 13
Section 3.1 Purchase Price and Payment......................................................... 13
Section 3.2 Allocation and Tax Election........................................................ 14
Section 3.3 Closing........................................................................... 15
Section 3.4 Deliveries by ADMI................................................................. 15
Section 3.5 Deliveries by Slingshot............................................................ 16
Section 3.6 Deliveries by Purchaser............................................................ 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ADMI.................................................... 17
Section 4.1 Authorization and Validity......................................................... 17
Section 4.2 Equity; Good Title................................................................. 17
Section 4.3 Capitalization of PSI.............................................................. 18
Section 4.4 Organization....................................................................... 18
Section 4.5 No Conflict........................................................................ 19
Section 4.6 Governmental Consents.............................................................. 19
Section 4.7 Balance Sheet Information.......................................................... 19
Section 4.8 Absence of Certain Changes or Events............................................... 20
Section 4.9 Property, Assets................................................................... 23
Section 4.10 Litigation and Claims, Compliance with Laws....................................... 25
Section 4.11 Taxes............................................................................. 26
Section 4.12 Insurance......................................................................... 27
Section 4.13 Environmental Matters............................................................. 28
Section 4.14 Material Contracts................................................................ 29
Section 4.15 Intellectual Property............................................................. 31
Section 4.16 Employee Benefits; ERISA.......................................................... 33
Section 4.17 Labor Matters..................................................................... 36
Section 4.18 Records........................................................................... 37
Section 4.19 Affiliate Transactions............................................................ 37
Section 4.20 Brokers, Finders, Etc............................................................. 38
Section 4.21 Questionable Payments............................................................. 38
Section 4.22 Other Information................................................................. 38
Section 4.23 Customer and Supplier Relationships; Warranty Claims.............................. 38
Section 4.24 Year 2000 Program................................................................. 39
i
Section 4.25 PSI Merger Agreement.............................................................. 39
ARTICLE V REPRESENTATIONS AND WARRANTIES AS TO ADMI.................................................. 39
Section 5.1 Organization; Authorization and Validity........................................... 39
Section 5.2 Assignment to Slingshot and Qwest.................................................. 40
Section 5.3 Telecom Assets and Slingshot Assets................................................ 40
Section 5.4 No Conflict........................................................................ 40
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................... 41
Section 6.1 Organization; Authorization and Validity........................................... 41
Section 6.2 No Conflict........................................................................ 42
Section 6.3 Governmental Consents.............................................................. 42
Section 6.4 Brokers, Finders, Etc.............................................................. 42
Section 6.5 Other Information.................................................................. 42
Section 6.6 Purchase for Investment............................................................ 42
ARTICLE VII COVENANTS................................................................................ 42
Section 7.1 Commercially Reasonable Efforts.................................................... 43
Section 7.2 Filings and Consents............................................................... 43
Section 7.3 Publicity.......................................................................... 43
Section 7.4 Notification of Certain Matters.................................................... 43
Section 7.5 Expenses........................................................................... 43
Section 7.6 Conduct of Business of ADMI........................................................ 44
Section 7.7 Access and Inspection.............................................................. 45
Section 7.8 Management Agreement; Xxxxx Indemnity.............................................. 45
Section 7.9 Consents........................................................................... 45
Section 7.10 No Solicitation................................................................... 46
Section 7.11 Supplements to Schedules.......................................................... 46
Section 7.12 Further Assurances................................................................ 46
Section 7.13 IHC Interests..................................................................... 46
Section 7.14 Insurance......................................................................... 47
Section 7.15 Inter-Company Accounts............................................................ 47
ARTICLE VIII CONDITIONS TO CLOSING................................................................... 47
Section 8.1 Conditions to the Obligations of Purchaser, Slingshot and ADMI..................... 47
Section 8.2 Conditions to the Obligations of Purchaser......................................... 47
Section 8.3 Conditions to the Obligations of the Slingshot and ADMI............................ 48
ARTICLE IX SURVIVAL AND INDEMNIFICATION.............................................................. 48
Section 9.1 Survival of Representations and Warranties......................................... 48
Section 9.2 Xxxxx Indemnity.................................................................... 49
Section 9.3 Base Indemnification by ADMI....................................................... 49
Section 9.4 PSI Indemnification by ADMI........................................................ 50
Section 9.5 Indemnification by Purchaser....................................................... 51
Section 9.6 Notice and Resolution of Claim..................................................... 51
ARTICLE X TERMINATION................................................................................ 52
Section 10.1 Termination....................................................................... 52
Section 10.2 Effect of Termination............................................................. 53
ARTICLE XI MISCELLANEOUS............................................................................. 53
Section 11.1 Notices........................................................................... 53
ii
Section 11.2 Amendment, Waiver................................................................. 55
Section 11.3 Assignment........................................................................ 55
Section 11.4 Entire Agreement.................................................................. 55
Section 11.5 Parties in Interest............................................................... 55
Section 11.6 Expense........................................................................... 55
Section 11.7 Governing Law; Jurisdiction; Service of Process................................... 56
Section 11.8 Specific Performance.............................................................. 56
Section 11.9 Transfer and Similar Taxes........................................................ 56
Section 11.10 Headings......................................................................... 56
iii
EXHIBITS
A -- Form of Capacity and Service Agreement
B -- Forms of Services and Option Agreements
C -- Form of Note
D -- Form of Contribution Agreement
E -- Form of Subscription Agreement
