Exhibit 1.
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ASSET PURCHASE AGREEMENT
by and among
AT HOME CORPORATION,
certain SUBSIDIARIES of At Home Corporation
and
AT&T CORP.
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Dated as of
September 28, 2001
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TABLE OF CONTENTS
Page
Number
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ARTICLE 1
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Definitions
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Section 1.1 Specific Definitions.....................................1
Section 1.2 Other Terms.............................................16
Section 1.3 Knowledge Qualifiers....................................16
ARTICLE 2
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Sale of Assets; Closing
-----------------------
Section 2.1 Assets to be Acquired...................................16
Section 2.2 Excluded Assets.........................................19
Section 2.3 Assumption of Liabilities...............................20
Section 2.4 No Other Liabilities Assumed............................20
Section 2.5 Tax Treatment...........................................21
Section 2.6 Purchase Price; Consideration...........................22
Section 2.7 Changes in List of Assumed Contracts....................22
Section 2.8 Post-Closing Asset Verification.........................23
Section 2.9 Time and Place of Closing...............................23
Section 2.10 Designation of Affiliates by Buyer......................23
Section 2.11 Post-Signing Schedules and Verification Date
Physical Asset Schedule Delivery........................23
Section 2.12 Buyer's Exclusion of Certain Assets and
Contracts...............................................24
ARTICLE 3
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Representations and Warranties of Sellers
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Section 3.1 Incorporation...........................................25
Section 3.2 Authorization...........................................25
Section 3.3 Absence of Undisclosed Liabilities......................26
Section 3.4 Physical Assets Schedule and Trade Receivables..........26
Section 3.5 Assets..................................................27
Section 3.6 Absence of Certain Changes..............................27
Section 3.7 Litigation; Orders......................................28
Section 3.8 Intellectual Property...................................28
Section 3.9 Licenses, Approvals, Other Authorizations...............29
Section 3.10 Labor Matters...........................................30
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Page
Number
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Section 3.11 Compliance with Laws....................................30
Section 3.12 Contracts...............................................30
Section 3.13 Real Property...........................................32
Section 3.14 Employee Benefit Plans and Related Matters..............34
Section 3.15 Environmental and Safety Matters........................34
Section 3.16 Fees and Expenses.......................................35
Section 3.17 Disinterested Director and Special Committee
Approval and Recommendation.............................35
Section 3.18 Disclosure Schedule.....................................35
ARTICLE 4
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Representations and Warranties of Buyer
---------------------------------------
Section 4.1 Incorporation; Authorization; Etc.......................35
Section 4.2 Approvals, Other Authorizations.........................36
Section 4.3 Brokers, Finders, Etc...................................36
Section 4.4 Financing...............................................36
ARTICLE 5
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Covenants of Sellers and Buyer
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Section 5.1 Conduct of Business.....................................36
Section 5.2 Access to Information...................................39
Section 5.3 Regulatory Approvals; Reasonable Efforts;
Notification; Consents..................................40
Section 5.4 Planned Capital Expenditures............................42
Section 5.5 Cure of Defaults........................................43
Section 5.6 Bankruptcy Filings, Covenants and Agreements............43
Section 5.7 New Contracts...........................................44
Section 5.8 Sellers' Use of @Home and @Work Names...................45
Section 5.9 Transitional Excite License.............................45
Section 5.10 Assignment of Certain Rights............................45
Section 5.11 Public Announcements and Correspondence.................45
Section 5.12 Confidentiality.........................................46
Section 5.13 Further Assurances......................................46
Section 5.14 [Reserved]..............................................46
Section 5.15 Service Continuity......................................46
Section 5.16 @Work Customers.........................................46
Section 5.17 Change in Terms; New MSO Agreements.....................46
Section 5.18 Buyer Telecommunication Services........................47
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ARTICLE 6
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Employers and Employee Benefits
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Section 6.1 Employment of Sellers' Employees........................47
Section 6.2 Employee Benefits Generally for Transitioned
Employees...............................................49
Section 6.3 Welfare and Fringe Benefit Plans........................50
Section 6.4 Workers' Compensation...................................51
Section 6.5 [Reserved]..............................................51
Section 6.6 Stock Options and Stock Plans...........................51
ARTICLE 7
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Tax Matters
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Section 7.1 Tax Representations.....................................51
Section 7.2 Tax Matters.............................................52
ARTICLE 8
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Conditions of Buyer's Obligation to Close
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Section 8.1 Representations, Warranties and Covenants of
Sellers.................................................52
Section 8.2 Required Governmental Approvals; Consents...............53
Section 8.3 No Material Adverse Effect..............................53
Section 8.4 No Injunction or Action.................................53
Section 8.5 Bankruptcy Court Related Conditions.....................53
Section 8.6 Assumed Contracts.......................................54
Section 8.7 Service Continuity......................................54
ARTICLE 9
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Conditions of Sellers' Obligation to Close
------------------------------------------
Section 9.1 Representations, Warranties and Covenants of
Buyer...................................................54
Section 9.2 Required Governmental Approvals.........................54
Section 9.3 No Injunction...........................................54
Section 9.4 Bankruptcy Court Approval...............................55
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ARTICLE 10
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Survival; Indemnification
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Section 10.1 Indemnification by Sellers..............................55
Section 10.2 Indemnification by Buyer................................56
Section 10.3 Losses Net of Insurance, Etc............................56
Section 10.4 Termination of Indemnification..........................57
Section 10.5 Indemnification Procedures..............................57
Section 10.6 Indemnity Payments......................................59
ARTICLE 11
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Deliveries at Closing
---------------------
Section 11.1 Sellers' Deliveries at Closing..........................59
Section 11.2 Buyer's Deliveries at Closing...........................60
Section 11.3 Required Documents......................................60
ARTICLE 12
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Termination
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Section 12.1 Termination.............................................61
Section 12.2 Procedure and Effect of Termination.....................62
ARTICLE 13
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Miscellaneous
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Section 13.1 Survival of Representations and Warranties, Etc.........62
Section 13.2 Survival of Covenants...................................63
Section 13.3 Higher and Better Offers................................63
Section 13.4 Bankruptcy Court Approval...............................63
Section 13.5 Company as Agent and Representative.....................63
Section 13.6 Notices.................................................63
Section 13.7 Amendments; No Waivers..................................64
Section 13.8 Successors and Assigns..................................64
Section 13.9 Entire Agreement; No Third Party Beneficiaries..........65
Section 13.10 Counterparts............................................65
Section 13.11 Interpretation; Absence of Presumption..................65
Section 13.12 Severability............................................65
Section 13.13 Remedies Cumulative.....................................65
Section 13.14 Specific Performance....................................65
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Section 13.15 Governing Law...........................................66
Section 13.16 Arbitration.............................................66
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EXHIBITS
Exhibit 1 Certain Assumed Contracts
Exhibit 2.1(i) Assumed Leases
Exhibit 2.1(w) Miscellaneous Assets
Exhibit 2.6 Form of Promissory Note
Exhibit 4.2 Required Buyer Governmental Approvals
Exhibit 5.6(a) Forms of Bankruptcy Court Petitions and Filings:
Cure Procedures Order
Sale Procedures Order
Exhibit 6.1(e) Severance Benefits for Transitioned Employees Who are
Regular Employees
Exhibit 8.5 Form of Bankruptcy Court Approval Order
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SCHEDULES
Schedule 1 Additional Signatories
Schedule 2.1(n) Insurance Policies
Schedule 2.2(r) Certain Excluded Assets
Schedule 2.4 Certain Excluded Liabilities
Schedule 3 Disclosure Schedule
Schedule 3.1(b) Subsidiaries
Schedule 3.2 Required Seller Governmental Approvals
Schedule 3.3 Undisclosed Liabilities
Schedule 3.4(a) Physical Asset Schedule
Schedule 3.5(b)(i) Operating Leases
Schedule 3.5(b)(ii) Capitalized Leases
Schedule 3.8(b) Registered Intellectual Property
Schedule 3.8(c) Other Intellectual Property
Schedule 3.8(f) Due Registration of Intellectual Property
Schedule 3.8(g) Software
Schedule 3.8(g)(i) Excluded Software
Schedule 3.12(a) Contracts
Schedule 3.12(b) Notices
Schedule 3.12(c) Defaults and Consents
Schedule 3.12(e) Protective Agreements
Schedule 3.13(b)(i) Leased Real Estate
Schedule 3.13(b)(ii) Compliance with Real Estate Laws
Schedule 3.13(b)(iii) Encumbrances on Leased Real Estate
Schedule 3.13(c) Possession of Leased Real Estate
Schedule 5.1 Conduct of Business
Schedule 5.4(a) Capital Expenditure Plan
Schedule 5.15 Service and Network Performance Parameters
Schedule 6.1(a) Employees
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THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
September 28, 2001, is by and among At Home Corporation, a Delaware corporation
(the "Company"), the subsidiaries of the Company set forth on the signature page
hereto and in Schedule 1 (collectively, with the Company, "Sellers"), and AT&T
Corp., a New York corporation (together with any designated affiliates,
"Buyer").
WHEREAS, Sellers are engaged in, among other things, the business of
providing high-speed Internet service over broadband networks to consumers via
the "@Home" service and commercial customers via the "@Work" service, in each
case in the United States and Canada (the "Access Business");
WHEREAS, Sellers wish to sell to Buyer substantially all of the
assets, business and goodwill of the Access Business, and Buyer wishes to
purchase such assets, properties, business and goodwill and to assume those
liabilities relating to the Access Business as are specified herein, excluding
all Excluded Liabilities (as defined herein), all upon the terms and subject to
the conditions set forth herein;
WHEREAS, the senior management and the Board of Directors of the
Company have determined that, in light of the Company's deteriorating financial
and operating condition, it is necessary and urgent that the Company and its
subsidiaries file petitions for relief under the Bankruptcy Code (as defined
herein), and that an immediate sale of the Assets (as defined herein) pursuant
to Section 363 of the Bankruptcy Code is necessary and urgent in order to
maximize values ultimately available to the creditors and shareholders of the
Company and its subsidiaries;
WHEREAS, concurrently herewith (or shortly hereafter) each of the
Filing Sellers (as defined herein) is filing with the Bankruptcy Court a
petition for relief under the Section 301 of the Bankruptcy Code and a motion
for authorization to sell the Assets to Buyer pursuant to Section 363(b) of the
Bankruptcy Code;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
ARTICLE 1
Definitions
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Section 1.1. Specific Definitions. As used in this Agreement the
following terms shall have the following respective meanings:
"Access Business" has the meaning set forth in the recitals hereto.
"Access Business Books and Records" has the meaning set forth in
Section 2.1(l).
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"Accounting Firm" means a nationally recognized independent public
accounting firm that currently does not audit Buyer or Sellers, or an Affiliate
of either, as shall be agreed upon by Buyer and Sellers.
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority of any nature, civil,
criminal, regulatory or otherwise, in law or in equity.
"Actual Capital Expenditures" means those Planned Capital
Expenditures that have actually been expended between the date hereof and the
Closing Date, in each case in accordance in all respects with the Capital
Expenditure Plan.
"Affiliate" (and, with a correlative meaning, "affiliated") means,
with respect to any person, any direct or indirect subsidiary of such person,
and any other person that directly, or through one or more intermediaries,
controls or is controlled by or is under common control with such first person,
and, if such a person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any person who is controlled by any such member or trust;
provided, however, that neither the Company nor any of its Affiliates shall be
deemed to be an "Affiliate" of the Buyer or any of its Affiliates, and vice
versa. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"Agreement" has the meaning set forth in the first paragraph hereof.
"Allocation" has the meaning set forth in Section 2.5.
"Applicable Law" means all applicable provisions of all (a)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (b)
Governmental Approvals and (c) orders, decisions, writs, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"Application Assets" means all physical assets in which any Seller
has any right, title or interest (including leasehold) that are used or needed
to operate the applications (which applications include, but are not limited to,
e-mail, chat, client, instant messaging, news, web, personal home pages and
member services) used by customers of the Access Business.
"Assets" has the meaning set forth in Section 2.1.
"Asset Purchase" means the consummation of the transactions
described in Section 2.1.
"Assignment and Assumption Agreement" means a ▇▇▇▇ of Sale,
Assignment and Assumption Agreement in such form as may be agreed to by Buyer
and the Company.
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"Assumed Contracts" means (1) the Capacity Agreement, (2) the Joint
Offer, (3) every Contract that is of the type referred to in clauses (i) - (ix)
of Section 3.12(a) and is set forth and indicated as such on Schedule 3.12(a),
(4) all Protective Agreement Rights, (5) every Contract, if any, set forth in
Exhibit 1, (6) every New Contract for which a New Contract Consent is received
in accordance with Section 5.7, and (7) every written executory agreement,
contract, commitment and other instrument and arrangement to which any Seller is
a party or by which it is bound that is Related to the Access Business that (x)
is not a New Contract and (y) is not required to be disclosed on Schedule
3.12(a) pursuant to clauses (iv), (vi) or (ix) of Section 3.12(a) solely because
of the minimum dollar values set forth in such clauses, as applicable.
"Assumed Intellectual Property" means all Intellectual Property set
forth on Schedules 3.8(b), 3.8(c) and 3.8(g), but not including any Intellectual
Property subject to the Media IP License.
"Assumed Leases" means the real estate leases set forth on Exhibit
2.1(i).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Assumed Media Assets" means (i) the following media assets that are
Related to the Access Business: client software, customized Internet browsers,
the start page and other sub-pending pages, all diagnostic software, all
hardware and software infrastructure related to the start page and to instant
messaging, e-mail, chat, webspace and any other applications, and any
Intellectual Property and Intellectual Property Licenses related to any of the
foregoing; and (ii) the Media IP License.
"Bankruptcy Cases" has the meaning set forth in Section 5.6(a).
"Bankruptcy Code" means Title 11 of the United States Code, as
amended.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of California or any other court having jurisdiction over
Bankruptcy Cases from time to time.
"Bankruptcy Court Approval" has the meaning set forth in Section
8.5(a).
"Bankruptcy Filings" has the meaning set forth in Section 5.6(a).
"Bankruptcy Plan" means a plan of reorganization for the Sellers in
accordance with Chapter 11 of the Bankruptcy Code.
"Bankruptcy Plan Confirmation Date" means the date that the order of
the Bankruptcy Court confirming a plan of reorganization for the Sellers in
accordance with Chapter 11 of the Bankruptcy Code becomes a Final Order, or if
the Bankruptcy Cases are converted to proceedings under Chapter 7 of the
Bankruptcy Code, upon the completion of the liquidation thereunder.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close. Any
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event the scheduled occurrence of which would fall on a day that is not a
Business Day shall be deferred until the next succeeding Business Day.
"Buyer" has the meaning set forth in the first paragraph hereof.
"Buyer Indemnitees" has the meaning set forth in Section 10.1.
"Buyer's Exclusion Notice" has the meaning set forth in
Section 2.12.
"Buyer's Welfare Plans" has the meaning set forth in Section 6.3(a).
"Canadian Assets" has the meaning set forth in Section 5.3(f).
"Canadian Purchase Price" means a portion of the Purchase Price to
be determined by mutual agreement of Buyer and the Company; provided that such
price shall not be less than the amount determined by multiplying (i) the value
of the Physical Assets that are Canadian Assets, as shown on the Physical Assets
Schedule by (ii) the ratio determined by dividing the Purchase Price divided by
the aggregate value of all of the Physical Assets, as shown on the Physical
Assets Schedule.
"Capacity Agreement" means the Capacity Agreement, dated as of June
19, 2001, between the Company and the Buyer, and the amendments thereto.
"Capital Expenditure Plan" has the meaning set forth in Section
5.4(f).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 ▇.▇.▇.▇▇. 9601 et seq.
"Claims" has the meaning set forth in Section 2.2(i).
"Closing" has the meaning set forth in Section 2.9.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collocation Agreement" means any Contract by which any Seller is
permitted to locate or place any of the Core Assets or Tangible Assets on or at
real property leased or owned by another person (but excluding real property
leased by any Seller) other than, unless a New Contract Consent is received with
respect thereto, any such agreement which would also be a New Contract.
"Company" has the meaning set forth in the first paragraph hereof.
"Company Option" means every option, warrant or similar right to
purchase Company Shares (or securities or debt instruments convertible into
Company Shares) issued or granted by the Company or any of its subsidiaries,
including, without limitation, Company Plan Options.
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"Company Plan Options" has the meaning set forth in Section 6.6.
"Company Shares" means shares of Series A and Series B common stock
and preferred stock of the Company.
"Confidentiality Agreement" means the Confidentiality Agreement,
dated as of September 7, 2001, by and between the Company and the Buyer.
"Consent" means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any person, including but not limited to any Governmental Authority.
"Consultant" means an individual or entity performing services for
any Seller or any of their Affiliates as a consultant or independent contractor.
"Consulting Agreement" means a contract, offer letter or agreement
of Sellers, the Company or any of their respective Affiliates with or addressed
to any Consultant pursuant to which there is any actual or contingent liability
or obligation to provide compensation and/or benefits in consideration for past,
present or future services.
"Contracts" has the meaning set forth in Section 3.12(a).
"Core Assets" means the Application Assets, the Development Assets,
the Network Assets, the Operations Assets and the Other Core Assets.
"Cross License" means a perpetual, irrevocable, non-exclusive,
worldwide, fully paid-up, royalty-free license to the Assumed Media Assets from
Buyer to the Company, with the right to sub-license; provided that such Cross
License shall not include any updates or improvements to the Assumed Media
Assets or Intellectual Property licensed thereby which are created after the
Closing Date.
"Cure Amounts" has the meaning set forth in Section 2.4(f).
"Cure Procedures Order" means a Cure Procedures Order substantially
in the form set forth in Exhibit 5.6(a).
"Development Assets" means all equipment in which any Seller has any
right, title or interest (including leasehold) that is used or needed to
develop, test and deploy the cable modem termination systems and @Home and @Work
services including servers, test equipment, personal computers, routers and
switches.
"DGCL" means the Delaware General Corporation Law.
"Disclosed Contract" means any Contract the existence and terms of
which were disclosed to Buyer in reasonable detail on or prior to the date of
Sellers' delivery of the Post-Signing Schedules to Buyer.
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"Disclosure Schedule" means the schedule of exceptions to certain
representations and warranties attached hereto (or to be attached hereto
pursuant to Section 2.11) as Schedule 3 hereto.
"Disclosure Schedules" means the Disclosure Schedule and Schedules
3.3, 3.8(f), 3.12(b), 3.12(c), 3.12(e), 3.13(b)(ii), 3.13(b)(iii), 3.13(c) and
5.1.
"Disclosure Statement Hearing Date" means the date on which a
hearing is concluded in the Bankruptcy Court at which the Bankruptcy Court
approves for distribution to creditors and other parties in interest a
disclosure statement in respect of a Bankruptcy Plan.
"Disinterested Directors" means those directors on the Board of
Directors of the Company who are designated either "Series A Directors" or
"Additional Directors" by the Fifth Amended and Restated Certificate of
Incorporation of the Company, as amended, and who are not affiliated with AT&T
Corp.
"Distribution Agreement" means any written contract or agreement
pursuant to which any Seller provides or sells services of the Access Business,
other than, unless a New Contract Consent is received with respect thereto, any
such contract or agreement which would also be a New Contract.
"Domestic Corporation" has the meaning set forth in Section 7.2(b).
"Effective Time of Employment" has the meaning set forth in Section
6.1(b).
"Employee" means any person employed as of the date of this
Agreement by Sellers, whether in a full-time or part-time capacity, in the
operation of the Access Business or otherwise primarily related to any of the
Assets pursuant to any contract, agreement or other arrangement.
"Employee Benefit Plan" means any employee benefit plan, program,
policy, practices, or other arrangement providing benefits to any Employee that
is sponsored or maintained by Sellers, the Company or any of their respective
Affiliates or to which Sellers, the Company or any of their respective
Affiliates contribute or are obligated to contribute, whether or not written,
including without limitation any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA)
and any bonus, incentive, deferred compensation, vacation, stock purchase, stock
option, severance, employment, change of control or fringe benefit plan, program
or agreement.
"Employee Stock Purchase Plan" means the Company's Employee Stock
Purchase Plan, as amended on April 18, 2000.
"Employment Agreement" means a contract, offer letter or agreement
of Sellers, the Company or any of their respective Affiliates with or addressed
to any Employee pursuant to which there is any actual or contingent liability or
obligation to provide compensation and/or benefits in consideration for past,
present or future services.
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"Encumbrances" means any mortgages, liens, pledges, encumbrances,
restrictions upon voting or transfer, security interests, restrictions, claims,
charges, options, rights of first refusal, rights of first offer, rights of use
or occupancy or other legal or equitable encumbrances and any other matters
affecting title (including, in the case of real property, rights-of-way,
tenancys, licenses, easements and encroachments) or any other interest in
property, other than any rights of licensees under licenses existing on the date
hereof for Intellectual Property granted by Sellers to At Home Solutions or any
of the Sellers' international joint ventures, in each case existing on the date
hereof.
"Environmental Laws" means all Applicable Laws relating to the
protection of the environment (both indoors and outdoors), to health and safety,
or to any emission, discharge, generation, processing, storage, holding,
abatement, existence, Release, threatened Release, regulation, or transportation
of any Hazardous Substances, including, without limitation: (a) CERCLA; the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section
6901 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. 651 et seq.; the Toxic Substances Control Act of 1976, as amended, 15
U.S.C. Section 2601 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Superfund Amendments and Reauthorization Act of 1986, Public
Law 99-499, ▇▇▇ ▇▇▇▇. ▇▇▇▇; the Safe Drinking Water Act, 42 U.S.C. Section
300(f) et seq.; all regulations promulgated in connection with any of the
foregoing, (b) all other requirements pertaining to reporting, licensing,
permitting, investigation or remediation of emissions, discharges, Releases or
threatened Releases of Hazardous Substances into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, and (c) all other requirements pertaining to the
protection of the health and safety of employees or the public.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Excluded Software" means the specific items of Software set forth
in Schedule 3.8(g)(i).
"Excluded Taxes" means (a) any Nonincome Taxes relating to the
Access Business, the Assets or the Assumed Liabilities for any Pre-Closing Tax
Period and (b) any Income Taxes of any of the Sellers or any of their respective
Affiliates for any period. For purposes of this Agreement, in the case of any
Straddle Period, (i) Property Taxes for the Pre-
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Closing Tax Period shall be equal to the amount of such Property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of which is the
number of days during the Straddle Period that are in the Pre-Closing Tax Period
and the denominator of which is the number of days in the entire Straddle
Period, and (ii) Taxes (other than Property Taxes and Transfer Taxes) for the
Pre-Closing Tax Period shall be computed as if such taxable period ended as of
the close of business on the Closing Date.
"FCC" has the meaning set forth in Section 3.9.
"Filing Date" means September 28, 2001.
"Filing Sellers" means the Sellers other than, to the extent it is
impracticable or inadvisable to include such entities in the Bankruptcy Cases,
the Foreign Subs.
"Final Determination" means (a) in respect of U.S. Federal income
taxes, a "determination" as defined in Section 1313(a) of the Code or the
execution of an IRS Form 870-AD, and (b) in respect of Taxes other than U.S.
Federal income taxes, any final determination of liability in respect of a Tax
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations).
"Final Order" means an order or judgment of the Bankruptcy Court (a)
that is not the subject of a pending appeal, petition for certiorari, motion for
reconsideration or other proceedings for review, rehearing, or reargument, (b)
that has not been reversed, stayed, modified or amended, and (c) respecting
which the time to appeal, to petition for certiorari, to move for
reconsideration or to seek review, rehearing or reargument shall have expired,
as a result of which such order shall have become final in accordance with Rule
8002 of the Federal Rules of Bankruptcy Procedure and other Applicable Laws.
"FIRPTA Affidavit" has the meaning set forth in Section 7.2(b).
"Foreign Subs" means the non-U.S. subsidiaries of the Company.
"Former Employee" means any person who is not employed as of the
date of this Agreement but was employed by the Sellers at any time during the
six months preceding the date of this Agreement, whether in a full-time or
part-time, in the operation of the Access Business or otherwise primarily
related to any of the Assets pursuant to any contract, agreement or other
arrangement.
"GAAP" has the meaning set forth in Section 3.4(a).
"Governmental Approval" has the meaning set forth in Section 3.2(a).
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any government authority, agency, department, board,
commission or instrumentality of the United States or any foreign
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nation, any state or any political subdivision at the United States or such
foreign nation, and any tribunal or arbitrator(s) of competent jurisdiction, and
any self-regulatory organization, and shall include, without limitation, the
Bankruptcy Court.
"Growth Capital Expenditures" means the Planned Capital Expenditures
that are, with respect to any particular customer other than Buyer and any of
its subsidiaries, necessary to permit subscriber growth.
"Hazardous Substances" means any waste, emission, materials or
substance (including gases, liquids and solids) that: (a) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum derived substances or wastes, radon gas or related
materials; (b) requires investigation, removal, containment or remediation under
any Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" (or any similar designation) thereunder; or (c)
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
Governmental Authority or under any Environmental Law.
"Inactive Employee" means an Employee who is not actively at work
due to approved leave of absence, short-term disability leave or military leave
with a guaranteed right of reinstatement.
"Incentive Stock Option Plan" means the Company's 1996 Incentive
Stock Option Plan.
"Incentive Stock Option Plan No. 2" means the Company's 1996
Incentive Stock Option Plan No. 2.
"Income Tax" means any franchise Tax and any Tax based on or
measured by gross or net income or profits (including any and all fines,
penalties and additions attributable to or otherwise imposed on or with respect
to any such Tax).
"Initial CapEx Period" means the 30-day period ending on the
thirtieth day following the date of the filing of the Sale Motion.
"Intellectual Property" means all of the following, whether owned by
any of the Sellers or a third party, as they exist in all jurisdictions
throughout the world, in each case, owned by, licensed to, authorized for use
by, or otherwise used by Sellers:
(i) patents, patent applications, and other patent rights
(including any divisions, continuations, continuations-in-part, requests
for continued examinations, substitutions, or reissues and reexaminations
thereof, whether or not patents are issued on any such applications and
whether or not any such applications are modified, withdrawn, or
resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration
thereof;
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(iii) secrets, inventions and other proprietary information;
(iv) copyright registrations and applications for registration
thereof and non-registered copyrights;
(v) trade secrets, designs, research, processes, procedures,
techniques, methods, know-how, data, mask works, inventions, and other
proprietary rights (whether or not patentable or subject to copyright, mask
work, or trade secret protection); and
(vi) all Software.
"Intellectual Property License" means all agreements, contracts,
policies, licenses, documents, instruments, arrangements or commitments pursuant
to which any Seller owns or has the right to use any of the Assumed Intellectual
Property or any of the Intellectual Property that is subject to the Media IP
License.
"Inventories" has the meaning set forth in Section 2.1(g).
"IRS" means the United States Internal Revenue Service.
"Joint Offer" means the agreement, dated February 13, 2001, between
Buyer and the Company which provides for the interconnectivity of, and joint
marketing efforts with respect to, the Buyer's and the Company's networks.
"Leased Real Estate" has the meaning set forth in Section 3.13(b).
"Liabilities" means any and all debts, losses, liabilities, claims
(including claims as defined in the Bankruptcy Code), damages, fines, costs,
royalties, proceedings, deficiencies or obligations (including those arising out
of any Action, such as any settlement or compromise thereof or judgment or award
therein), of any nature, whether known or unknown, absolute, accrued, contingent
or otherwise and whether due or to become due, and whether or not resulting from
third-party claims, and any out-of-pocket costs and expenses (including
attorneys', accountants', or other fees and expenses incurred in defending any
Action or in investigating any of the same or in asserting any rights
hereunder).
"Licenses" has the meaning set forth in Section 3.9.
"Loss" has the meaning set forth in Section 10.3.
"Material Adverse Effect" means any effect, event, occurrence or
state of facts that, individually or aggregated with other effects, events,
occurrences or states of facts, (a) is materially adverse to or materially
impairs (i) the value or condition of the Assets or the value, condition
(financial or otherwise), business, properties or results of operations of the
Access Business taken as a whole or (ii) the ability of any party hereto to
perform its obligations under this Agreement, (b) prevents or materially delays
consummation of any of the transactions contemplated by this Agreement, or (c)
gives rise to any material liability that would be an Assumed Liability or
materially increases any Assumed Liability; provided that none of the following
shall be considered a Material Adverse Effect: (1) the initiation of the
Bankruptcy
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Cases, (2) the fact that any Seller is involved in proceedings under the
Bankruptcy Code, (3) the occurrence of adverse market financial or other
conditions generally affecting the industry in which the Access Business
participates and/or affecting the economy generally (provided, in either case,
that the Access Business is not materially disproportionately affected) and (4)
any failure to make Growth Capital Expenditures when Sellers are expressly
permitted by this Agreement to not make such expenditures.
"Media IP License" means a perpetual, irrevocable, non-exclusive,
worldwide, royalty-free, fully paid-up license from Sellers to Buyer, with the
right to sublicense, to all Intellectual Property that is (i) primarily related
to the narrowband portal business of the Company to the extent necessary to
enable the broadband start-up page and also used in or reasonably necessary to
the provision of or the functioning of the broadband start-up page as currently
provided and as it currently functions, and (ii) is not included in part (i) of
the definition of Assumed Media Assets; provided that such Media IP License
shall not include any updates or improvements to the licensed Intellectual
Property, which are created after the Closing Date. The Media IP License shall
be assignable by Buyer to any of its Subsidiaries.
"Network Assets" means all routers, switches, load balancers, power
equipment, cable, network servers, caching servers, storage devices and all
other devices, equipment or other physical assets in which any Seller has any
right, title or interest (including leasehold) that allow traffic to flow from
the cable modem of the @Home customer or @Work customer, as the case may be,
through the backbone to the Internet, other users and data centers and back.
"New Contract" has the meaning set forth in Section 5.7.
"New Contract Consent" has the meaning set forth in Section 5.7.
"New MSO Agreement" has the meaning set forth in Section 5.4(a).
"1997 Equity Incentive Plan" means the Company's 1997 Equity
Incentive Plan, as amended on April 18, 2000.
"Non-Delivered Asset" means any Non-Delivered Physical Asset and any
other Asset that is not delivered by Sellers to the Buyer at the Closing.
"Non-Delivered Physical Asset" means any Physical Asset listed on
the Physical Asset Schedule that is not delivered by Sellers to the Buyer at the
Closing.
"Nonincome Tax" means any Tax (other than an Income Tax), including
any and all fines, penalties and additions attributable to or otherwise imposed
on or with respect to any such Tax.
"Note Amount" has the meaning set forth in Section 2.6(b)(ii).
"Operations Assets" means all back-office physical assets in which
any Seller has any right, title or interest (including leasehold) that are used
or are needed to provision, operate and maintain the network and @Home and @Work
services including servers, storage devices and personal computers.
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"Operating Leases" means the operating leases set forth on Schedule
3.5(b)(i).
"Other Core Assets" means any physical assets in which any Seller
has any right, title or interest (including leasehold) that are used directly in
the provision of the @Home or @Work services, are Related to the Access
Business, and are not Application Assets, Development Assets, Network Assets,
Operations Assets, Tangible Assets or Inventories.
"Peering Agreement" means any written contract or agreement that
provides for interconnection with third-party providers of Internet protocol
networks, other than, unless a New Contract Consent is received with respect
thereto, any such contract or agreement which would also be a New Contract.
"Performance Standards" means the service and network performance
parameters which must be met for Sellers to avoid incurring any penalties under
the Service Level Agreements in effect with respect to each of Comcast
Corporation and ▇▇▇ Communications, Inc. as if such Service Level Agreements
were in effect as to all of Sellers' customer relationships and under the
Distribution Agreements, as set forth on Schedule 5.15 hereto (except that for
▇▇▇▇▇▇ Cablesystem Limited and ▇▇▇▇ Cablesystem, the customer service parameters
relating to customer care shall not apply).
"Person" or "person" means and includes natural persons,
corporations, limited partnerships, limited liability companies, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and all Governmental Authorities.
"Physical Assets" means the Core Assets, the Tangible Assets and
the Inventories.
"Physical Assets Schedule" has the meaning set forth in Section
3.4(a).
"Planned Capital Expenditures" means capital expenditures, the
timing, amount and purpose of which is provided for in the Capital Expenditure
Plan.
"Post-105 Capital Expenditures" means any either of the following to
the extent incurred from and after the date that is the 106th day following the
Filing Date: (i) Planned Capital Expenditures (adjusted to account for any
Planned Capital Expenditures the Sellers become entitled not to make if and to
the extent permitted by Section 5.4(a)) and (ii) any such other capital
expenditures as may be necessary in order to permit Sellers to satisfy their
obligations under Section 5.15.
"Post-Signing Schedules" means any or all of the Disclosure
Schedules and the Warranted Schedules.
"Post-Signing Excluded Assets" has the meaning set forth in
Section 2.12.
"Pre-Closing Tax Period" means any tax period (or portion thereof)
ending on or before the Closing Date.
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"Prior Service" has the meaning set forth in Section 6.2(b).
"Promissory Note" has the meaning set forth in Section 2.6(b)(ii).
"Property Taxes" means real, personal and intangible ad valorem
property taxes.
"Protective Agreement" has the meaning set forth in Section 3.12(e).
"Protective Agreement Rights" means all of the rights of any Seller
under any Protective Agreement to the extent such rights relate to the Access
Business or any of the Assets or Assumed Liabilities.
"Purchase Price" has the meaning set forth in Section 2.6(a).
"Related to the Access Business" means relating to, used in or held
for use in connection with or otherwise necessary to the Access Business as
conducted currently.
"Release" has the meaning set forth in Section 3.15.
"Required Buyer Governmental Approvals" has the meaning set forth in
Section 4.2.
"Required Seller Governmental Approvals" has the meaning set forth
in Section 3.2(a).
"Retainee List" has the meaning set forth in Section 6.1(b).
"Return" means any return, statement, report or form, including in
each case any amendments thereto, required to be filed with any Taxing Authority
by or with respect to Taxes of the Company.
"Rules" has the meaning set forth in Section 13.16(d).
"Sale Procedures Order" means an order seeking approval of
procedures for a sale under Section 363 of the Bankruptcy Code to be entered by
the Bankruptcy Court not later than 30 days from the Filing Date and
establishing procedures for such sale, substantially in the form set forth in
Exhibit 5.6(a).
"Sale Motion" has the meaning set forth in Section 5.6(a).
"SEC" means the United States Securities and Exchange Commission.
"Section 1060 Forms" has the meaning specified in Section 2.5.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Second Capex Period" has the meaning set forth in Section 5.4(b).
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"Seller Indemnitees" has the meaning set forth in Section 10.2.
"Sellers" has the meaning set forth in the first paragraph hereof.
"Shrinkwrap Software" means commercially available Software licensed
under "shrinkwrapped" licenses and retailing for less than $1,000.
"Software" means all computer applications, programs, individual
copies of computer software programs (including applications, operating
software, network software, firmware, middleware, design software, design tools,
databases and associated computer data) including all source codes, object
codes, system documentation and instructions related thereto, and computer files
Related to the Access Business residing on personal computers, company servers
or storage systems.
"Software Cross License" means, to the extent permitted under the
terms of each such Software, a perpetual, non-exclusive, worldwide royalty-free
license to Software Cross License Software, with the right to sub-license;
provided that such Software Cross License shall not include any updates or
improvements to the Software Cross License Software licensed thereby which are
created after the Closing Date.
"Software Cross License Software" has the meaning set forth in
Section 3.8(g).
"Special Committee" means a committee of the Board of Directors of
the Company designated as the "Restructuring Committee" pursuant to resolutions
adopted by the Board of Directors of the Company on August 30, 2001.
"Straddle Period" means any period beginning prior to and ending
after the Closing Date.
"Subject Employees" means (i) until the Retainee List is delivered
pursuant to Section 6.1(b), all of the Employees and (ii) after such time, the
Employees on the Retainee List.
"Subsidiary" or "subsidiary" means, with respect to any Person, any
corporation, limited liability company, joint venture or partnership of which
such Person beneficially owns, either directly or through its subsidiaries, (a)
more than 50% of (i) the total combined voting power of all classes of voting
securities of such entity, (ii) the total combined equity interests therein, or
(iii) the capital or profit interests therein, in the case of a partnership; or
(b) otherwise has the power to vote or direct the voting of sufficient
securities to elect a majority of the board of directors or similar governing
body of such entity; provided that for purposes of this Agreement, neither the
Company nor any of its Subsidiaries shall be deemed to be a Subsidiary of Buyer
or any of its Subsidiaries; and provided, further, that none of the Company's
non-U.S. joint ventures shall be deemed Subsidiaries of the Company.
"Supply Agreements" means any written or oral contract or agreement
pursuant to which any Seller purchases or acquires products or services used in
the Access Business (other than office equipment, office supplies and
furniture), other than, unless a New Contract Consent is received with respect
thereto, any such contract or agreement which would also be a New Contract.
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"Tangible Assets" has the meaning set forth in Section 2.1(f).
"Tax" means all income, profits, franchise, gross receipts, capital,
net worth, sales, use, withholding, turnover, value added, ad valorem,
registration, general business, employment, social security, disability,
occupation, real property, personal property (tangible and intangible), stamp,
transfer, conveyance, severance, production, excise and other taxes,
withholdings, duties, levies, imposts and other similar charges and assessments
(including any and all fines, penalties and additions attributable to or
otherwise imposed on or with respect to any such taxes, charges, fees, levies or
other assessments, and interest thereon) imposed by or on behalf of any Taxing
Authority.
"Taxing Authority" means any governmental or regulatory authority,
body or instrumentality exercising any authority to impose, regulate or
administer the imposition of Taxes.
"Third Party Claim" has the meaning set forth in Section 10.5.
"Trade Receivables" means all accounts receivable and related
deposits, security or collateral therefor, including recoverable customer
deposits and receivables among the Sellers, in each case to the extent Related
to the Access Business.
"Transfer Taxes" has the meaning set forth in Section 7.2(a).
"Transitional Excite License" has the meaning set forth in Section
5.9.
"Transitioned Employees" has the meaning set forth in Section
6.1(b).
"Transport Agreements" means all written contracts, agreements and
arrangements, providing for the transport of the @Home and @Work services over
the network or the fiber, cable or copper wire of another person, other than,
unless a New Contract Consent is received with respect thereto, any such
contract or agreement which would also be a New Contract.
"2000 Equity Incentive Plan" means the Company's 2000 Equity
Incentive Plan, and related forms of agreements.
"USTs" has the meaning set forth in Section 3.15.
"Undisclosed Contract" means any Contract the existence and terms of
which were not disclosed to Buyer in reasonable detail prior to the date of
Sellers' delivery of the Post-Signing Schedules to Buyer.
"Verification Date" means the date, occurring within 30 calendar
days of the date hereof, on which the Verification Date Physical Assets Schedule
will be delivered by Sellers to the Buyer.
"Verification Date Excluded Assets" has the meaning set forth in
Section 2.12.
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"Verification Date Physical Assets" has the meaning set forth in
Section 2.8(a).
"Verification Date Physical Assets Schedule" has the meaning set
forth in Section 2.8(a).
"WARN" has the meaning set forth in Section 6.1(b).
"Warranted Schedules" means Schedules 2.1(n), 3.1(b), 3.2, 3.4(a),
3.5(b)(i), 3.5(b)(ii), 3.8(b), (c), (g) and (g)(i), 3.12(a), 3.13(b)(1) and
6.1(a).
"Welfare Benefits" means any and all benefits under any "employee
welfare benefit plan" within the meaning of Section 3(1) of ERISA.
Section 1.2. Other Terms. Other terms may be defined elsewhere in
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section 1.3. Knowledge Qualifiers. References to "Sellers'
knowledge" or "to the knowledge of the Sellers" and similar terms shall refer to
the actual knowledge of any officer of the Company who is considered by the
Company as of the date hereof to be an officer for purposes of Section 16(b)
under the Securities Exchange Act of 1934, and the rules and regulations
thereunder.
ARTICLE 2
Sale of Assets; Closing
-----------------------
Section 2.1. Assets to be Acquired. Subject to the satisfaction or
waiver in writing of the conditions set forth herein and to the other terms,
conditions and provisions hereof, at the Closing, Sellers shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire, accept
and pay for, all of the right, title and interest, free and clear of all
Encumbrances (other than Assumed Liabilities), of Sellers in each and all of the
following properties, assets and rights of every nature, tangible and intangible
(including goodwill and rights in intellectual property), whether real, personal
or mixed, wherever located, whether now existing or hereafter acquired
(excluding the Excluded Assets) (collectively, the "Assets"):
(a) the Application Assets;
(b) the Development Assets;
(c) the Network Assets;
(d) the Operations Assets;
(e) the Other Core Assets;
(f) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment, motor
vehicles, tools and other
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tangible personal property, other than the Core Assets, that are Related to the
Access Business or are set forth in Section (vi) of Schedule 3.4(a) (the
"Tangible Assets");
(g) to the extent not included in the Tangible Assets, all
inventories of raw materials, work in process, finished products, goods, spare
parts, replacement and component parts, and office and other supplies
(collectively, the "Inventories"), including Inventories held at any location
controlled by any Seller or any Affiliate, Inventories previously purchased and
in transit to any Seller or any Affiliate, Inventories consigned to vendors,
resellers or customers, and Inventories in transit to such vendors, resellers or
customers in each case that are Related to the Access Business;
(h) the Assumed Contracts;
(i) the Assumed Leases;
(j) the Assumed Intellectual Property and all rights thereunder or
in respect thereof, including, but not limited to, rights to ▇▇▇ and collect for
and remedies against past, present and future infringements or misappropriations
thereof, and rights of priority and protection of interests therein under the
laws of any jurisdiction worldwide and all tangible embodiments thereof;
(k) to the extent (x) relating to Sellers' ownership or operation
of the Assets or Related to the Access Business and (y) not part of the Assumed
Intellectual Property:
(i) all copies of, network or systems design specification
materials and other printed or written materials in any form or medium that
Sellers are not required by law to retain and duplicates of any such
materials that Sellers are required by law to retain;
(ii) subject to Applicable Law, all telephone numbers and
electronic mail addresses and domain names related to the operating system
software or the Transitioned Employees;
(iii) all technical information, data, specifications, research and
development information, engineering drawings, operating and maintenance
manuals, flow charts, plans, algorithms, formulas, models and surveys (to
the extent within Sellers' possession);
(iv) all Internet protocol addresses Related to the Access
Business;
(v) all Inventory-related records and data held by third parties;
(vi) all interactive television Software, navigation and delivery
systems, and any other equipment related to or developed under a
development arrangement between AT&T Broadband, LLC and the Company;
(l) subject to Applicable Law and agreements with third parties, all
books, records, data and billing information of the Sellers that relate
primarily to the Access Business, to customers or end users of the services
provided by the Access Business, to the Assets or to the
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Transitioned Employees, including data processing records, sales and pricing
data, customer lists, employment and personnel records, records relating to
suppliers, supplier lists, cost information, end-user usage data, vendor data,
specifications and drawings, correspondence and lists, product literature,
artwork, design, development and manufacturing files, quality records and other
data (collectively, the "Access Business Books and Records"); provided, however,
Sellers may retain copies of (x) all books and records included in the Assets to
the extent necessary or useful for the administration of the Bankruptcy Cases of
the Sellers or any other Action to which it is a party, the filing of any Tax
Return or compliance with any Applicable Laws and (y) all personnel files;
(m) all (i) credits, (ii) claims for refund, (iii) prepaid expenses,
(iv) deferred charges, (v) advance payments, (vi) security or other deposits,
including recoverable deposits under Assumed Contracts or Assumed Leases, and
(vii) prepaid items (and, in each case, security interests relating thereto)
arising from or in connection with, or related to, the Assets or the Access
Business, including, without limitation, other than as relate solely to Excluded
Assets, all expenses and payments of or for the benefit of the Access Business
prepaid or advanced for periods after the Closing Date;
(n) all rights (including proceeds, reserves, benefits or claims)
under insurance policies and all rights in the nature of insurance,
indemnification or contribution relating to the Assets or Assumed Liabilities in
each case pursuant to insurance policies as listed on Schedule 2.1(n); provided,
however, Sellers shall have no obligation to maintain any insurance policy after
the Closing Date;
(o) subject to Applicable Law and agreements with third parties,
all rights under confidentiality, nondisclosure and similar agreements to the
extent related to the Assets or the Transitioned Employees;
(p) any interest in and to any refund of Taxes relating to the
Assets or the Access Business to the extent such Taxes are for, or applicable
to, any taxable period (or portion thereof) beginning after the Closing Date;
(q) [Reserved]
(r) all Licenses;
(s) all stationery, purchase order and other forms, labels, shipping
materials, brochures, art work, photographs, advertising materials and any
similar items related to the Assets or the Access Business;
(t) all guarantees, warranties, indemnities and similar rights in
favor of any Seller or any Affiliate with respect to any Asset and all letters
of credit and performance bonds issued to the extent that the Access Business is
a beneficiary;
(u) all rights to causes of action, lawsuits, judgments, claims and
demands of any nature available to or being pursued by any Seller or any
Affiliate whether arising by way of counterclaim or otherwise (except arising
pursuant to the transactions contemplated hereby) that (i) are Related to the
Access Business or the ownership, use, function or value of any Asset, and
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(ii) (1) with respect to any Physical Asset relate to any period of time, and
(2) with respect to any other Asset or aspect of the Access Business relate to
the period of time from and after the Closing;
(v) the Assumed Media Assets (subject to the Cross License); and
(w) any assets or rights set forth in Exhibit 2.1(w), including as
such Schedule may be amended after the date hereof pursuant to Section 2.12.
Section 2.2. Excluded Assets. Anything to the contrary herein
notwithstanding, all Sellers' and their Affiliates' right, title and interest in
all of the following properties, assets and other rights (the "Excluded Assets")
shall be excluded from the Assets:
(a) shares of capital stock of any Seller or securities convertible
into, exchangeable or exercisable for shares of capital stock of any Seller;
(b) any Contract that is not an Assumed Contract or Assumed Lease;
(c) any Distribution Agreements;
(d) all cash and cash equivalents of the Sellers;
(e) any claims, rights or causes of action arising under
Sections 544 through 553, inclusive, of the Bankruptcy Code other than any such
claims, rights or causes of action related to any Assumed Contract;
(f) any interest in and to any refund of Taxes of the Sellers for
any period and any interest in and to any refund of Taxes relating to the Assets
or the Access Business for, or applicable to, the Pre-Closing Tax Period,
including, without limitation, any Transfer Taxes;
(g) all books and records of the Sellers that are not Access
Business Books and Records; provided that Buyer shall be entitled to copies of
all books and records that relate to, but do not relate primarily to, the Assets
or Transitioned Employees;
(h) any assets of any Employee Benefit Plan and any rights under
any Employee Benefit Plan or any contract, agreement or arrangement between any
Employee or Consultant and the Company or any of its subsidiaries;
(i) all rights, demands, claims, Actions and causes of action
(whether for personal injuries or property, consequential or other damages of
any kind) (collectively, "Claims") that any Seller, any Affiliate, or the Access
Business may have, on or after the date hereof, against any Governmental
Authority for refund or credit of any type with respect to Sellers' Taxes for
the Pre-Closing Tax Period or Income Taxes of the Sellers for any period;
(j) all Claims that any Seller, any Affiliate, or the Access
Business may have against any person (including without limitation shareholder
derivative claims) except for Claims described in Section 2.1(w) above;
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(k) Employment Agreements and Consulting Agreements;
(l) Excluded Software;
(m) the Trade Receivables; it being acknowledged and understood that
Buyer shall have no authority to waive or relinquish any right of Seller in
respect of receivables due to Seller from customers or other persons or
entities.
(n) the assets of Webshots Corporation, and any subsidiaries
thereof;
(o) narrowband traffic redirect capability;
(p) the assets of Matchlogic, Inc. and any subsidiaries thereof;
(q) assets, property, rights, contracts or claims relating primarily
to the international joint ventures of the Company and its subsidiaries; and
(r) any other asset, property, right, contract or claim set forth in
Schedule 2.2(r), including as such Schedule may be amended after the date hereof
pursuant to Section 2.12. For the avoidance of doubt, any item listed on
Schedule 2.2(r) shall be an Excluded Asset regardless of whether it would
otherwise be an Asset pursuant to any other provision or Schedule hereto.
Section 2.3. Assumption of Liabilities. At the Closing, Buyer will
assume only the following obligations of Sellers (the "Assumed Liabilities"),
and no others: all Liabilities and obligations of any Seller under each Assumed
Contract with respect to which the relevant Seller shall have satisfied any
Liability or obligation thereunder arising from or relating to any Seller's
operations or conduct prior to the Closing Date (including, without limitation,
liability or obligation for breach, misfeasance or under any other theory
relating to any Seller's conduct, performance or non-performance).
Section 2.4. No Other Liabilities Assumed. Anything to the contrary
contained herein notwithstanding, other than the Assumed Liabilities, the
parties hereto agree that Buyer shall not and does not assume any other
Liability or obligation whatsoever (including without limitation, Liabilities
and obligations relating to the conduct of the Access Business or to the Assets
(and use thereof) at any time on or prior to the Closing Date), whether relating
to or arising out of the Access Business or Assets or otherwise, fixed or
contingent, disclosed or undisclosed (collectively, the "Excluded Liabilities").
Without limiting the foregoing, and anything in Section 2.3 to the contrary
notwithstanding, Buyer shall not and does not assume any of the following (each
of which shall be included within the definition of "Excluded Liability"):
(a) any liabilities, commitments or obligations that arise (whether
under the Assumed Contracts or otherwise) with respect to the Assets or the use
thereof on or prior to the Closing Date or relate to periods on or prior to the
Closing Date or are to be observed, paid, discharged or performed on or prior to
the Closing Date (in each case, including any liabilities that result from,
relate to or arise out of tort or other product liability claims);
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(b) litigation and related claims and Liabilities, tax liabilities
or any other Claims against any Seller of any kind or nature whatsoever
involving or relating to facts, events or circumstances arising, relating to or
occurring prior to the Closing, no matter when raised (including, without
limitation, Liability or obligation for breach, misfeasance or under any other
theory relating to Sellers' conduct, performance or non-performance);
(c) Company Options;
(d) Liabilities specifically identified as the responsibility of
Sellers in Article 6, including any Liabilities relating to any contract,
agreement or arrangement between any Employee or Consultant and the Company or
any of its subsidiaries;
(e) except as set forth in Section 6.3(b), any liability, commitment
or obligation of the Sellers with respect to any employees or employment matters
of Sellers, including any liabilities under COBRA, the WARN Act, any Employee
Benefit Plan or any Employment Agreement, Consulting Agreement, severance
arrangement, change-in-control agreement or other similar agreement to which any
Seller is a party other than such agreements entered into by Buyer with any
Transitioned Employees;
(f) any amounts payable pursuant to Section 365(b)(1)(A) or (B) of
the Bankruptcy Code in order to effectuate, pursuant to the Bankruptcy Code, the
assumption by Sellers and assignment to Buyer of Assumed Contracts under the
Sale Order ("Cure Amounts");
(g) any Liability or obligation of any kind under any Contract that
is not an Assumed Contract or Assumed Lease, including, without limitation,
the Distribution Agreements;
(h) any reserve for discontinued operations;
(i) any note, bond or other evidence of indebtedness of any Seller;
(j) any Liability or obligation of any kind relating to or arising
out of any Excluded Assets;
(k) any Liability or obligation for fraud, breach, misfeasance or
under any other theory relating to any Seller's conduct, performance or
non-performance; and
(l) any Liabilities set forth on Schedule 2.4.
Section 2.5. Tax Treatment. Buyer and each Seller shall agree on an
allocation of the Purchase Price (the "Allocation"); provided, however, that (a)
the Allocation shall be reasonable, based on fair market values, consistent with
the Code and based on an initial proposal by Buyer, and (b) any dispute between
Buyer and Sellers in determining such allocation shall be resolved by the
Accounting Firm, the fees and expenses of which shall be shared equally by the
parties. Except as otherwise required pursuant to a Final Determination, Buyer
and each Seller agree to act in accordance with the Allocation for all Tax
purposes, including for purposes of any Returns (such as IRS Form 8594 or any
other forms or reports required to be filed pursuant to Section 1060 of the Code
or any comparable provisions of local, state or foreign law
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("Section 1060 Forms")), and to refrain from taking any position inconsistent
with the Allocation. Buyer and Sellers agree to cooperate in the preparation of
any such Section 1060 Forms and to timely file such Section 1060 Forms in the
manner required by Applicable Law. The parties agree to treat all payments made
under any indemnity provision contained in this Agreement as adjustments to the
Purchase Price for Tax purposes, unless otherwise required pursuant to a Final
Determination.
Section 2.6. Purchase Price; Consideration. (a) The purchase
price for the Assets shall be three hundred and seven million dollars
($307,000,000)(as adjusted pursuant to Section 5.4(c) or 5.4(d), the
"Purchase Price").
(b) Subject to the terms and conditions hereof, in consideration of
the Asset Purchase provided for in Section 2.1, at the Closing, Buyer shall:
(i) pay to the Company, by wire transfer of same day funds to the
account or accounts specified in writing not less than three Business Days
prior to the Closing by the Sellers, an amount equal to the Purchase Price
less the Note Amount and, if the closing with respect to Canadian Assets
referred to in Section 5.3(f) is to occur on a date other than the Closing
Date, less the Canadian Purchase Price;
(ii) issue to the Company, as designee of, and for the benefit of,
Sellers, a non-negotiable promissory note of Buyer, having an aggregate
initial principal amount equal to 10% of the Purchase Price (the "Note
Amount") subject to adjustment as provided for herein and therein, a term
of one year or the earlier confirmation of a Plan of Reorganization by the
Bankruptcy Court, with simple interest at 3.5% per annum, subject to
adjustment as provided herein and therein, and having such other terms and
conditions as are set forth in Exhibit 2.6 hereto (the "Promissory Note");
and
(iii) assume (without duplication) the Capacity Agreement and the
Assumed Liabilities pursuant to the Assignment and Assumption Agreement.
(b) At the Closing, Sellers shall grant the Transitional Excite
License and Media IP License to Buyer and its Subsidiaries, and Buyer shall
grant the Cross License to the Company, in each case effective as of the Closing
Date.
Section 2.7. Changes in List of Assumed Contracts. (a) The parties
hereto agree that, from time to time after the date hereof and prior to the
Closing, (i) Buyer and the Company, by mutual agreement, may add or remove
Disclosed Contracts from the list of Assumed Contracts, and (ii) Buyer, in its
sole discretion, may add or remove Undisclosed Contracts from the list of
Assumed Contracts. Nothing in this paragraph shall affect Buyer's rights under
Section 2.12.
(b) If Buyer adds any Contract to the Assumed Contracts in
accordance with paragraph (a) above, then, at Buyer's request, Sellers shall
take such steps as are necessary to cause such contract to be assumed by, and
assigned to, Buyer, with any Cure Amounts associated therewith to be borne by
Sellers.
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Section 2.8. Pre-Closing Asset Verification. (a) Within thirty (30)
calendar days following the date the Accounting Firm is retained, which Buyer
and the Company agree shall be not later than the 10th day after the date
hereof, Sellers shall prepare and deliver to the Company a schedule (the
"Verification Date Physical Assets Schedule") setting forth in detail the
Physical Assets in which Sellers hold any ownership, leasehold, possessory or
any other interest or right as of the Verification Date (such Physical Assets,
the "Verification Date Physical Assets"), which schedule shall be prepared using
the same account classifications and prepared using accounting methods
consistent with the preparation of the Physical Asset Schedule pursuant to
Section 3.4 hereof, and shall be based on a physical inventory performed by the
Accounting Firm selected by the mutual agreement of the Company and Buyer. All
of the accountants' fees and other costs related to the Pre-Closing Asset
Verification or otherwise arising under this Section 2.8 shall be borne in full
by Sellers.
(b) To the extent the Accounting Firm requests the assistance of or
seeks to consult with any employee, officer or representative of Sellers, Buyer
shall be afforded the opportunity, with reasonable advance notice, to have a
representative present. From and after delivery of the Verification Date
Physical Assets Schedule, Sellers shall provide Buyer and its authorized
representatives full access during normal business hours to (i) all books,
records and employees of the Sellers having relevant information concerning the
Verification Date Physical Assets Schedule, (ii) Sellers' accountants who
assisted Sellers in preparing the Verification Date Physical Assets Schedule,
and such accountants' relevant supporting work papers and (iii) to the extent
necessary to verify the Verification Date Physical Assets Schedule, each of the
locations at which the Verification Date Physical Assets are located.
(c) If the inclusion or exclusion of any Asset on or from the
Verification Date Physical Assets Schedule is disputed, then the parties shall
submit such dispute to arbitration in accordance with Section 13.16 hereof.
Section 2.9. Time and Place of Closing. The closing of the Asset
Purchase (the "Closing") shall take place at the offices of Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York
City time, on the 2nd Business Day after the conditions to Closing set forth in
Articles 8 and 9 (other than those to be satisfied by an action to be taken at
the Closing, which shall be satisfied or waived at the Closing) have been
satisfied (or waived by the party entitled to waive such condition), or such
other place, date and time as the parties may agree.
Section 2.10. Designation of Affiliates by Buyer. Prior to the
Closing, upon at least one day's written notice to Sellers, Buyer may designate
one or more Affiliates to acquire at the Closing all or part of the Assets, in
which event all references herein to "Buyer" shall be deemed to refer to each
such Affiliate with respect to the Assets to be acquired by such Affiliate;
provided, however, that no such designation shall in any event limit or affect
the obligations of Buyer under this Agreement to the extent not performed by
such Affiliates.
Section 2.11. Post-Signing Schedules and Verification Date Physical
Asset Schedule Delivery. The Post-Signing Schedules have not been delivered by
Sellers as of the date hereof, and any of such schedules that are to be
delivered by Sellers (rather than Buyer) shall be delivered by Sellers to the
Buyer on or before the 30th day following the date hereof, except for
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Schedules 3.8(b), (c) and (g), 3.12(a), and Schedule 3.13(b)(i), which shall be
delivered no later than the 15th Business Day following the date hereof. Upon
delivery of the Disclosure Schedules, Buyer may in its reasonable discretion,
within 30 days of receipt, (1) accept the Disclosure Schedules or any part
thereof, whereupon such Disclosure Schedules, or the accepted part thereof,
shall be adopted and deemed part of this Agreement as if delivered on the date
hereof; and/or (2) reject the Disclosure Schedules or any part thereof. If the
Disclosure Schedules or any part thereof is rejected, Sellers may amend and
resubmit to Buyer such rejected whole or part within 5 days of such rejection.
Upon delivery of such redelivered Disclosure Schedules or parts thereof, Buyer
shall within 5 days thereof take the action described either in clause (1) or
clause (2) above in this paragraph, whereupon any such rejected portion shall
not be deemed to have been delivered or included in or made a part of this
Agreement. Upon delivery of the Warranted Schedules, such Schedules shall be
deemed to be delivered and made a part of this Agreement, subject to Buyer's
right to terminate this Agreement if it determines any such schedules to be
unacceptable or inadequate in its reasonable discretion. Subject to Buyer's
rights under Sections 2.7 and 2.12 and any provision relating to New Contracts,
any of the Disclosure Schedules with respect to which Buyer does not respond
within the 30 day period referred to above shall be deemed to have been
accepted. Sellers shall deliver the Verification Date Physical Assets Schedule
to Buyer on the Verification Date.
Section 2.12. Buyer's Exclusion or Addition of Certain Assets and
Contracts. Buyer may designate one or more of the Verification Date Physical
Assets, Operating Leases, Capitalized Leases, Assumed Leases, items of Assumed
Intellectual Property or any other Asset listed on a Schedule that is delivered
subsequent to the date of this Agreement, as Excluded Assets (such Verification
Date Physical Assets, if any, designated as Excluded Assets to be the
"Verification Date Excluded Assets"; and any such other Assets, collectively,
the "Post-Signing Excluded Assets") by giving written notice (the "Buyer's
Exclusion Notice") to the Company: (a) in the case of the Verification Date
Excluded Assets, within thirty (30) calendar days after Buyer's receipt of the
Verification Date Physical Assets Schedule, setting forth any Verification Date
Excluded Assets, whereupon the Verification Date Excluded Assets will be deemed
included in Schedule 2.2(r) as if so included on the date hereof; and (b) in the
case of the Post-Signing Excluded Assets, within thirty (30) calendar days after
Buyer's receipt of all of the Post-Signing Schedules, setting forth any
Post-Signing Excluded Assets, whereupon the Post-Signing Excluded Assets will be
deemed included in Schedule 2.2(r) as if so included on the date hereof. At any
time through and including the 15th Business Day after the delivery of the last
delivered Post-Signing Schedule, Buyer may deliver, if not previously delivered,
and thereafter amend, Exhibits 1, 2.1(i) and 2.1(w) and Schedule 2.4 by adding
or deleting items therefrom.
ARTICLE 3
Representations and Warranties of Sellers
-----------------------------------------
Buyer specifically acknowledges and agrees that Buyer will not have
any recourse to any of the officers or directors of any Seller in the event any
of the representations and warranties made herein or deemed made are untrue as
at any time of expression thereof or as at the Closing Date.
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Sellers, jointly and severally, hereby represent and warrant to
Buyer as follows, except as disclosed in the Seller Disclosure Schedule in
accordance with Section 3.18:
Section 3.1. Incorporation. (a) Each of the Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted except where the failure to be so validly existing and in good
standing would not reasonably be expected to (individually or in the aggregate)
have a Material Adverse Effect. Each of the Company and each of the other
Sellers is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect.
(b) Schedule 3.1(b) lists each subsidiary of the Company, its form
of organization, its respective jurisdiction of incorporation or formation, if
applicable, and the holders of the outstanding capital stock or other equity
interests of such subsidiaries.
Section 3.2. Authorization. (a) Each Seller has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by each Seller and the consummation by each Seller of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of each Seller including by any action or required
approval of the stockholder or stockholders of each Seller. This Agreement has
been duly executed and delivered by each Seller and, assuming due execution and
delivery by the Buyer and receipt of Bankruptcy Court Approval, constitutes a
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, after giving effect
to the Cure Procedures Order and the Bankruptcy Court Approval, conflict with,
or result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or to a loss of a benefit under,
or result in the creation of any Encumbrance upon any of the Assets under, (i)
the certificate of incorporation or bylaws of the Company or the comparable
charter or organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lien, lease or any other
contract, agreement, instrument, permit, commitment, concession, franchise or
license applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or their respective properties or assets. No Consent, approval,
grant, concession, agreement, franchise, order, license, permit, waiver or
authorization of, or registration, declaration or filing with or exemption,
notice, application, or certification by or to any Governmental Authority (each,
a "Governmental Approval") is required by or with respect to the Company or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by Sellers or the consummation by Sellers of the transactions
contemplated by this Agreement, except for (A)
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receipt of the Bankruptcy Court Approval and the Cure Procedures Order and (B)
the Governmental Approvals listed on Schedule 3.2 (the approvals listed on such
schedule, the "Required Seller Governmental Approvals"). Assuming receipt of the
Bankruptcy Court Approval from the Bankruptcy Court, neither the entering into
of this Agreement nor the consummation of any of the transactions contemplated
hereby or performance of any obligations provided for herein requires the
affirmative vote, consent or approval of or by holders of any class or series of
capital stock (or securities convertible into or exchangeable for capital stock)
or voting debt of the Company.
(b) Subject to receipt of Bankruptcy Court Approval, Sellers have
all requisite power to transfer to Buyer good and marketable title to the Assets
free and clear of all Encumbrances except for the Assumed Liabilities.
Section 3.3. Absence of Undisclosed Liabilities. Neither the Company
nor any of its subsidiaries has any material Liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) arising out of the
Access Business or Assets or Related to the Access Business, except for (i) such
Liabilities that will be Excluded Liabilities and will not be Assumed
Liabilities as of and from and after the Closing, (ii) such Liabilities and
obligations set forth in Schedule 3.3, and (iii) such Liabilities and
obligations arising under or in connection with the Assumed Contracts in
accordance with the terms of such Assumed Contracts as in effect on the date
hereof.
Section 3.4. Physical Assets Schedule and Trade Receivables. To
Sellers' knowledge, when delivered, Schedule 3.4(a) (the "Physical Assets
Schedule," which consists of the Verification Date Asset Schedule, giving effect
to the result of any Buyer's Exclusion Notice) will contain a true and correct
description on an asset-by-asset basis (specifying item, count, location and
gross book value (i.e., original cost without giving effect to any depreciation)
as determined in accordance with United States generally accepted accounting
principles ("GAAP")) of the following (including, in each case, work-in-process
and assets held by vendors):
(i) all Applications Assets;
(ii) all Development Assets;
(iii) all Network Assets;
(iv) all Operations Assets;
(v) all Other Core Assets; and
(vi) all computers and other electronic data processing equipment
and other office equipment (such as copiers) that are included in the
Tangible Assets.
The Accounting Firm will be instructed to prepare the Physical Asset
Schedule, to the best of its ability, so that the items listed thereon will be
categorized according to the six categories (i) - (vi) provided above, and it
may, in its discretion, consult with the Seller and Buyer with respect to such
categorization.
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Section 3.5. Assets. (a) As of the Closing Date, Sellers have good
and marketable title to each of the Assets that is owned by any of the Sellers,
and valid leasehold interests in each of the Assets that is leased by any of the
Sellers. The Assets, taken as a whole, constitute all the properties, assets and
rights (other than the Distribution Agreements) necessary for Buyer to conduct
and operate the Access Business as conducted and operated currently (except
Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, contracts fully performed, properties or assets replaced by
equivalent or superior properties or assets (in each case, in the ordinary
course of business)). Each of the Assets: (i) as of the Closing Date is free and
clear of all Encumbrances except for such imperfections or irregularities of
title or Encumbrances as do not affect the use of the properties or assets
subject thereto or affected thereby or otherwise impair business operations at
such properties; (ii) as of the Closing Date is not subject to any pending
Actions relating to any such property; (iii) has received all approvals of
Governmental Authorities (including Licenses) required in connection with the
ownership or operation thereof and has been operated and maintained in
accordance with Applicable Laws, rules and regulations; and (iv) is not subject
to any lease, sublease, license, concession, or other agreement, written or
oral, granting to any party or parties the right of use or occupancy of any
portion of any property or right of way. As of the Closing, each item of Core
Assets and Tangible Assets is in the working order and state of repair it was in
on the date of this Agreement, ordinary wear and tear excepted. The Company will
deliver with the Assets any network diagrams for any Network Assets for which
such diagrams exist.
(b) As of the date Schedules 3.5(b)(i) and 3.5(b)(ii) are delivered
and as of the Closing Date, each Asset that is held pursuant to an operating
lease is listed on Schedule 3.5(b)(i), and each Asset that is held pursuant to a
capitalized (financing) lease is listed on Schedule 3.5(b)(ii). Schedules
3.5(b)(i) and 3.5(b)(ii) disclose with respect to each such Asset whether the
relevant lease is an operating lease or a capitalized (financing) lease for
accounting purposes. All obligations of Sellers with respect to the Assets
listed on Schedule 3.5(b)(ii) or otherwise held under a capitalized lease
constitute secured debt and any such Assets shall be delivered to the Buyer free
and clear of Encumbrances. True and complete copies of each operating or
capitalized lease have been provided to Buyer. Other than the Capacity
Agreement, the Assumed Liabilities do not include any liability or obligation
arising under capitalized leases. The Assumed Liabilities do not include any
liability or obligation arising under operating leases and relating to periods
ending on or prior to the Closing or to be observed, paid, discharged or
performed on or prior to the Closing. All such liabilities and obligations
referred to in the preceding sentence shall be included in the Cure Amounts paid
by Sellers pursuant to Section 5.5 to the extent that they arise under Assumed
Contracts.
(c) The Assets constitute all of the properties, assets and rights,
other than the Excluded Assets, that are Related to the Access Business.
Section 3.6. Absence of Certain Changes. (a) Since June 30, 2001,
Sellers and their Affiliates have conducted the Access Business only in the
ordinary course consistent with prior practice and, without limiting the
foregoing, have not as of the date of this Agreement, received or issued any
notice of termination (written or, to the knowledge of Sellers, oral) of any
Assumed Contract or Assumed Lease, the termination of which, individually or
together with other Assumed Contracts or Assumed Lease with respect to which a
termination notice has been received or issued, could reasonably be expected to
have a Material Adverse Effect.
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(b) Since the date of this Agreement, Sellers and their Affiliates
have not suffered any Material Adverse Effect or any other effect that could
reasonably be expected to have a Material Adverse Effect.
Section 3.7. Litigation; Orders. There are no Actions, pending or,
to Sellers' knowledge, threatened against Seller or any of its Affiliates in
connection with the Assets or the Access Business or which could give rise to or
increase an Assumed Liability. There are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency, or by arbitration) against any Seller or any of its
Affiliates or any of their respective properties or businesses that would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect or that could prohibit or make unlawful the Asset Purchase.
Section 3.8. Intellectual Property.
(a) [Reserved]
(b) Registered Intellectual Property. Schedule 3.8(b) lists all of
the registered Intellectual Property of the Sellers that is either Related to
the Access Business or potentially an Assumed Media Asset or potentially subject
to the Media IP License, specifying as to each owned item, as applicable: (i)
the nature of the item, including the title, (ii) the owner of the item, (iii)
the jurisdictions in which the item is issued or registered or in which an
application for issuance or registration has been filed, and (iv) the issuance,
registration, or application numbers and dates. Except as disclosed in Schedule
3.8(b), no notices have been given nor claims have been asserted by any person
(x) to the effect that the manufacture, use or sale of any product, service,
invention, design, machine, process, technology, know-how, information,
literature, copyright table work, name, trade name, trademark, service ▇▇▇▇ or
trade dress as now manufactured, sold or used by any Seller or any Affiliate in
connection with the Access Business infringes on or misappropriates any patents,
intellectual property or other right, (y) challenging the ownership, validity,
transferability or effectiveness of, or right to use, sell or license any of the
such Intellectual Property or (z) demanding, requesting or otherwise seeking
that a Seller take or consider taking a license under, or cease using, any of
the such Intellectual Property. Except as set forth on Schedule 3.8(b), Sellers
own or have the exclusive right to use pursuant to license, sublicense,
agreement or permission all of the Intellectual Property referred to in the
prior sentence, free from any Encumbrances and free from any requirement of any
past, present or future royalty payments, license fees, charges or other
payments, or conditions or restrictions whatsoever.
(c) Other Assumed Intellectual Property. Schedule 3.8(c) sets forth
(i) all of the Intellectual Property Sellers that is not set forth on Schedule
3.8(b) and is either Related to the Access Business or potentially an Assumed
Media Asset or potentially subject to the Media IP License and (ii) each
Intellectual Property License. The Assumed Intellectual Property and the
Intellectual Property subject to the Media IP License comprise all of the
intellectual property necessary for Buyer to conduct and operate the Access
Business as conducted during the past six months, including to meet anticipated
subscriber growth. The Assumed Intellectual Property comprises all of the
Intellectual Property of Sellers that is Related to the Access Business or is an
Assumed Media Asset.
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(d) Transfer. Subject to Bankruptcy Court Approval, Sellers have all
requisite power to transfer ownership of or rights to use (as the case may be)
the Intellectual Property set forth on Schedules 3.8(b) and 3.8(c) to Buyer,
free from any Encumbrances and on terms and conditions no less favorable than as
in effect as of the date hereof.
(e) No Infringement. Except as disclosed in Schedule 3.8(b), and
other than as would not have a Material Adverse Effect, neither the conduct of
the Access Business nor the use of the Intellectual Property set forth on
Schedules 3.8(b) and 3.8(c) infringes, misappropriates or otherwise conflicts
with any rights of any person in respect of any patents, trademarks, service
marks, trade names, copyrights, trade secrets, confidential information,
know-how or any other intellectual property or right. To the knowledge of the
Sellers, none of the Assumed Intellectual Property is being infringed or, to the
knowledge of the Sellers (except as to intellectual property licensed by any of
the Sellers), otherwise used or available for use, by any other person.
(f) Due Registration, Etc. Except as set forth on Schedule 3.8(f),
the Assumed Intellectual Property, to the extent it may be registered, filed or
issued, has been duly registered with, filed in or issued by, as the case may
be, the United States Patent and Trademark Office, United States Copyright
Office or such other filing offices, domestic or foreign. To Sellers' knowledge,
each Seller and its Affiliates have taken such other actions, and to the
knowledge of the Sellers, no other actions will be required to be taken within
the 180-day period commencing the date hereof, to ensure full protection under
any Applicable Laws or regulations, and such registrations, filings, issuances
and other actions remain in full force and effect, in each case, to the extent
Related to the Access Business.
(g) Software. All Software (other than Excluded Software, and other
than Shrinkwrap Software) included in the Intellectual Property set forth on
Schedules 3.8(b) and 3.8(c) is described in Schedule 3.8(g) and is held by
Sellers legitimately, is fully and freely transferable to the Buyer without any
third-party consent (except as set forth in Schedule 3.8(g)) and, to the
knowledge of the Sellers, is free from any significant software defect, performs
in conformance with its documentation, and to the knowledge of the Sellers does
not contain any bugs or viruses or any code or mechanism that may be reasonably
likely to materially interfere with the operation of such Software as used by
Sellers as of the date hereof. All other Software owned or otherwise used by
Sellers that is not used in the operation of the Assets or that is not Related
to the Access Business (the "Software Cross License Software") is set forth on
Schedule 3.8(g)(i). The Software Cross License Software and any other Software
owned or otherwise used by Sellers that are not used in the operation of the
Assets and are not Related to the Business are retained by Sellers ("Excluded
Software").
Section 3.9. Licenses, Approvals, Other Authorizations. No licenses,
certificates, permits or other authorizations issued by any Governmental
Authority are required for or used in to the operation of the Access Business as
currently conducted (collectively, "Licenses"). There is not issued, pending,
or, to the knowledge of Sellers, threatened, any notice of violation or
complaint by the Federal Communications Commission ("FCC") or any other
Governmental Authority against the Company with respect to the Access Business
or the transactions contemplated hereby, except for violations or complaints
that could not reasonably be expected to have a Material Adverse Effect.
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Section 3.10. Labor Matters. As of the date hereof: (i) there are no
collective bargaining agreements or similar agreements or arrangements with
labor unions or associations representing Employees of the Access Business and
no such agreements are being negotiated; (ii) no work stoppage against the
Access Business is pending or, to Sellers' knowledge, threatened; (iii) the
Access Business is not a party to or, to the knowledge of Sellers, threatened
with any labor dispute, arbitration, lawsuit or administrative proceeding
relating to labor matters (excluding routine workers' compensation claims)
involving the Employees of the Access Business; and (iv) no labor organization
or group of employees of the Company or any of its subsidiaries has made a
pending demand for recognition or certification, and there are no representation
or certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority.
Section 3.11. Compliance with Laws. The Assets and conduct by the
Company and its subsidiaries of the Access Business are and, to the knowledge of
Sellers, have been in compliance with all statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees, applicable thereto, except for
violations or failures so to comply, if any, that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect or
give rise to material fines or other material civil penalties or any criminal
liabilities. Neither the Company nor any subsidiary has received any notice or
other communications relating to any alleged violation of any statute, law,
regulation, ordinance, rule, judgment, order or decree from any Governmental
Authority, or of any investigation with respect thereto, applicable to the
Access Business or any Asset which has not been satisfactorily addressed except
for violations, if any, that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect and could not
reasonably be expected to give rise to material fines or other material civil
penalties or any criminal liabilities.
Section 3.12. Contracts. (a) Schedule 3.12(a) contains a complete
and accurate list of all contracts, leases, subleases, licenses, agreements,
arrangements, franchises, permits, or other instruments (collectively,
"Contracts") of the types described below (1) by which, after giving effect to
the transactions contemplated by this Agreement, any of the Assets are bound or
affected or (2) to which any Seller or any Affiliate is a party or by which it
is bound or affected in connection with the Access Business or the Assets, other
than any which relate solely to Employee Benefit Plans:
(i) any Transport Agreement;
(ii) any Peering Agreement;
(iii) any Collocation Agreement;
(iv) (A) any Supply Agreement, and (B) any other contract or
agreement, other than any Capacity Agreement, for the purchase by Sellers
of products or services that either (1) has a term of one year or longer or
(2) is reasonably expected to result in purchases or sales in excess of
$250,000 over the term of such contract or agreement (assuming all renewals
and extensions are taken);
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(v) any commercial agreements relating to the @Work service;
(vi) (A) any lease for or relating to Core Assets and (B) any lease
for Tangible Assets in which the amount of payments that the Company is
required to make, or is expected to receive, on an annual basis exceeds
$50,000, and, in each of cases (A) and (B), any related maintenance
agreements;
(vii) any Intellectual Property License;
(viii) any agreement or contract by which any Seller has secured any
rights, licenses, easements, permits, rights of way, and/or other
agreements with third parties to access, construct, install, operate,
upgrade, replace or maintain Core Assets;
(ix) any agreement or contract relating to any outstanding
commitment for capital expenditures in excess of $100,000 individually or
$250,000 in the aggregate, or any partially or fully executory agreement or
contract relating to the acquisition or disposition of rights or assets
having a value of in excess of $100,000 individually or $200,000 in the
aggregate, in each case Related to the Access Business;
(x) any other agreement, contract, policy, license, document,
instrument, arrangement or commitment (A) having a term of one year or
longer, (B) providing for aggregate payments by or to the Company and/or
its subsidiaries (singly or together with other related agreements) of
$500,000 or more, or (C) that is material to the Access Business;
(xi) any sale-leaseback, conditional sale, exclusive dealing,
brokerage, finder's fee or take-or-pay contract or agreement;
(xii) any employment, consulting, severance, termination, or
indemnification agreement, contract or arrangement, written or, to Sellers'
knowledge, oral, with any current officer, consultant, director or
employee, whose services related to or relate to the Access Business;
(xiii) any agreement, contract, policy, license, document,
instrument, arrangement or commitment that materially limits the freedom of
the Company or any of its subsidiaries or any of its employees to compete
in any line of business or with any person or in any geographic area or
that would so materially limit the freedom of the Access Business or Buyer
or any of its subsidiaries after the Closing Date;
(xiv) any joint venture contract or arrangement or any other
agreement that has involved or is expected to involve a sharing of revenues
of $500,000 per annum or more with other persons; and
(xv) each Distribution Agreement.
Each Contract required to be listed in Schedule 3.12(a) shall be listed under
each subsection for which such Contract satisfies the relevant criteria. With
respect to each Transport Agreement,
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section (i) of Schedule 3.12(a) shall indicate which MSO territories are served
by each such agreement.
(b) No Seller has received written notice, nor does it otherwise
have knowledge, that any party to any Contract intends to cancel, terminate, or
refuse to renew such Contract or to exercise or decline to exercise any option
or right thereunder or to assert that such Contract may not be assigned without
the consent of the non-debtor party thereto, and each such Contract is valid and
binding and enforceable against Sellers and each other party thereto in
accordance with its terms, and, assuming the Cure Procedures Order is entered,
shall be (as of the Closing) in full force and effect and enforceable against
the Sellers and each other party thereto, except as set forth in Schedule
3.12(b). Sellers have delivered to Buyer a true and correct copy of each
Contract of the type referred to in clauses (i) through (xv) of Section 3.12(a),
or that are set forth or required to be set forth in Schedule 3.12(a), including
all modifications, amendments and supplements thereto, whether written or oral.
(c) Except as set forth in Schedule 3.12(c), (i) no Seller that is a
party to a Contract is, and to the knowledge of the Sellers, no other party
thereto is, in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained in any Contract, and no
event caused by, relating to or affecting any Seller has occurred that, with or
without the giving of notice or lapse of time, or both, would constitute a
breach, default or violation by a Seller thereunder, and (ii) to the knowledge
of the Sellers, no event caused by, relating to or affecting any other party
thereto has occurred that, with or without the giving of notice or lapse of
time, or both, would constitute a breach, default or violation by such other
party thereunder, except, in each case, for such breaches, defaults or
violations (x) as are set forth in Schedule 3.12(c) or (y) as are excused by the
commencement or pendency of the Bankruptcy Cases or the application or provision
of the Bankruptcy Code (but only to the extent such excuse, lack of
enforceability or application of law will continue to apply in favor of Buyer
and its successors and assigns following Closing). Except as set forth in
Schedule 3.12(c), if the Cure Procedures Order is entered, no Consent of any
third party is required under any Assumed Contract as a result of or in
connection with, and the enforceability of each Assumed Contract will not be
affected in any manner by, the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
(d) As of the Closing, none of the Assumed Contracts will be
subject to any Encumbrance or any claim, counterclaim, right of recoupment,
defense or right of set-off, and the Bankruptcy Court Approval shall so provide.
(e) Except as set forth on Schedule 3.12(e), none of the Sellers is
a party to, or otherwise is subject to, any no-hire, no-solicitation,
confidentiality or other similar agreement (each, a "Protective Agreement") that
is not freely assignable to Buyer, either in full or with respect to the Access
Business, the Assets and Assumed Liability.
Section 3.13. Real Property. (a) Neither the Company nor any of
its subsidiaries owns any real property.
(b) Schedule 3.13(b)(i) sets forth a complete and accurate list of
all real property (including all land and buildings) which is leased, subleased
or otherwise occupied by
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the Company or any of its subsidiaries related to the Access Business (the
"Leased Real Estate"), such description including, for each Leased Real Estate,
an identification of the lease or sublease agreement therefor (including all
amendments and modifications), the names of the lessor and lessee (or sublessor
and sublessee) thereunder, the address and approximate size of the premises
leased thereunder, and the use of such premises. The Company has delivered or
caused to be delivered to Buyer complete and accurate copies of the leases and
subleases thereto, including all amendments and modifications pursuant to which
the Company or its subsidiaries lease the Leased Real Estate. Except as
disclosed in Schedule 3.13(b)(ii), neither the Company nor any of its
subsidiaries has received notice of, or has knowledge of, condemnation or
eminent domain proceedings pending or threatened against any Leased Real Estate.
Except as disclosed in Schedule 3.13(b)(ii), neither the Company nor any of its
subsidiaries has received any notice from any city, village or other
Governmental Authority of, or otherwise has any knowledge of, any zoning,
ordinance, building, fire or health code or other legal violation in respect of
any Leased Real Estate, other than violations which have been corrected or
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. Other than for exceptions to the following which
are set forth in Schedule 3.13(b)(iii):
(i) the Company or its subsidiaries has good, marketable and
insurable title to the Leased Real Estate pursuant to the Assumed Leases,
and the Assumed Leases are in full force and effect and are valid, binding
and enforceable in accordance with their respective terms and are not
subject to any Encumbrance;
(ii) no amount payable under any Assumed Lease is past due;
(iii) the Company or the relevant subsidiary is in compliance in all
material respects with all commitments and obligations on its part to be
performed or observed under such Assumed Lease and is not aware of the
failure by any other party to such Assumed Leases to comply in all material
respects with all of its commitments and obligations;
(iv) neither the Company nor any subsidiary has received any notice
(A) of a default (which has not been cured), offset or counterclaim under
any Assumed Lease, or any other communication calling upon it to comply
with any provision of any Assumed Lease or asserting noncompliance
therewith or asserting that the Company or any subsidiary has waived or
altered its rights thereunder, and, to the Company's knowledge, no event or
condition has happened or presently exists which constitutes a default or,
after notice or lapse of time or both, would constitute a default under any
Assumed Lease on the part of the Company, its subsidiaries or on the part
of any other party, or (B) of any Action against any party under any
Assumed Lease which if adversely determined would result in such Assumed
Lease being terminated or cut off; and
(v) neither the Company nor any subsidiary has assigned,
mortgaged, pledged or otherwise encumbered its interest under any Assumed
Lease or entered into any sublease with respect to any Leased Real Estate,
nor has any such party entered into any agreement or commitment to take any
such action.
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(c) The Leased Real Estate constitutes, in the aggregate, all of the
real property used to conduct the Access Business in the manner conducted during
the six months ending on the date hereof. Each Leased Real Estate is suitable
and adequate in all material respects for its current use, operation and
occupancy. Except as set forth in Schedule 3.13(c), the Company and its
subsidiaries are in exclusive possession of the Leased Real Estate and no Leased
Real Estate is subject to any third party rights or encumbrances other than the
rights of the lessors under the Assumed Leases. There are no pending or, to the
Company's knowledge, threatened proceedings (i) regarding the amount of the
Taxes on, or the assessed valuation of, the Leased Real Estate, (ii) which might
interfere with the quiet enjoyment by the Company or its Subsidiaries of any
Leased Real Estate or (iii) relating to condemnation or eminent domain
proceedings of any portion of the Leased Real Estate or impact fees, special
assessments or similar matters with respect thereto. No work is required to be
performed on any Leased Real Estate in order to bring such property into
compliance with any Assumed Lease, law or insurance company requirement.
Section 3.14. Employee Benefit Plans and Related Matters. Sellers
have provided to Buyer (i) a written description of all material terms and
conditions of each Employee Benefit Plan (including the summary plan description
thereof, if one exists), and (ii) a copy of each Employment Agreement and each
Consulting Agreement.
Section 3.15. Environmental and Safety Matters. Other than as would
not be expected to have a Material Adverse Effect, the Access Business of the
Sellers has been operated, the Assets, the Company and its Subsidiaries and the
Leased Real Estate are, and at all times have been, in compliance with all
applicable Environmental Laws (which compliance includes, but is not limited to,
the possession by the Sellers of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof). Sellers are not, and to Sellers' knowledge,
never have been liable for any costs, obligations, penalties, fines, or
forfeitures for failure to comply with any Environmental Laws, or with respect
to any environmental conditions or any intentional or unintentional spilling,
leaking, disposing, discharging, emitting, depositing, injecting, leaching,
escaping, release or presence (collectively, a "Release") of any Hazardous
Substances, nor are they required or have they ever been required to remedy or
remove any existing condition or Hazardous Substance from any real property
rented or used by them relating to any Assumed Leases, Assets or the Access
Business. Sellers have not received any notice, request for information, order,
complaint or warning from any Government Authority with respect to any failure
or alleged failure by Sellers to comply with any Environmental Laws or from any
third party with respect to any claims based on environmental conditions or the
Release of any Hazardous Substances on any property subject to the Assumed
Leases, or related to any Assets or the Access Business. To Sellers' knowledge,
no Leased Real Estate contains any Hazardous Substances. To Sellers' knowledge,
there are no underground storage tanks ("USTs"), active or abandoned, including
petroleum storage tanks, on or under any of the Leased Real Estate. No Seller
has received any material citation from the Occupational Safety and Health
Administration or any comparable Government Authority or any Government
Authority inspector setting forth any respect in which the facilities or
operations of such Seller relating to the Assets or the Access Business are not
in compliance with Environmental Laws in any material respect, which
non-compliance has not been corrected or remedied to the satisfaction of such
Government Authority or inspector. There are no circumstances or conditions
involving Sellers or any Leased Real Estate
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that would reasonably be expected to result in any claim, investigation or Loss
under or in connection with any Environmental Laws. Each Seller has heretofore
delivered to Buyer true and complete copies of all reports, surveys or
evaluations of, or with respect to, the environmental condition of any Leased
Real Estate that are in Sellers' possession or that were prepared during the
Sellers' possession of such Leased Real Estate.
Section 3.16. Fees and Expenses. Other than as is payable by the
Company and not by Buyer and is not and will not result in any or increase any
Assumed Liability, no broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company or
any of its subsidiaries. No such engagement letters obligate the Access Business
or the owner of the Assets to continue to use the services of any broker,
investment banker, financial advisor or other person or pay fees or expenses in
connection with any future transaction.
Section 3.17. Disinterested Director and Special Committee Approval
and Recommendation. The Disinterested Directors, based on the recommendation of
the Special Committee, unanimously have (i) determined that, in light of the
Company's deteriorating financial and operating condition, it is necessary and
urgent that the Company and its subsidiaries file petitions for relief under the
Bankruptcy Code, (ii) determined that an immediate sale of the Assets pursuant
to Section 363 of the Bankruptcy Code must be pursued to prevent deterioration
of the value of the Company's assets, and therefore preserve the value available
to the creditors and stockholders of the Company and its subsidiaries, and (iii)
determined that this Agreement and the transactions contemplated hereby are
advisable and in the best interests of those persons to whom the directors owe
fiduciary duties under applicable law and approved this Agreement and the
transactions contemplated hereby.
Section 3.18. Disclosure Schedule . The Disclosure Schedule shall be
reasonably organized into sections to correlate the disclosures to sections and
subsections of this Agreement to which such disclosures relate. Any disclosure
in one section shall be deemed disclosed in any other section only to the extent
the applicability to such other section or section is reasonably apparent from
the face of the disclosure. Any other provision of this Agreement to the
contrary notwithstanding, nothing contained or disclosed in the Disclosure
Schedule shall limit, modify, or be an exception to (i) the representation and
warranty made in Section 3.6(b), any representation or warranty that contains or
refers to a specific schedule other than the Disclosure Schedule.
ARTICLE 4
Representations and Warranties of Buyer
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows:
Section 4.1. Incorporation; Authorization; Etc. Buyer is duly
incorporated, validly existing and in good standing under the laws of New York.
Buyer has full corporate power to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance of Buyer's obligations hereunder
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have been duly and validly authorized by all necessary corporate proceedings on
the part of Buyer and no other corporate or stockholder proceedings or actions
on the part of Buyer or its Affiliates, or any of their partners, boards of
directors or stockholders, as the case may be, are necessary therefor. The
execution, delivery and performance of this Agreement will not (a) violate any
provision of the charter or bylaws or similar organizational instrument of Buyer
or any of its Affiliates, or (b) violate or conflict with any statute, rule or
regulation applicable to Buyer, any of its Affiliates or any of their properties
or assets or any other material restriction of any kind or character to which
Buyer or any of its Affiliates is subject that would prohibit or make unlawful
the Asset Purchase. This Agreement has been duly executed and delivered by
Buyer, and, assuming the due execution hereof by Sellers, this Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
Section 4.2. Approvals, Other Authorizations. No Governmental
Approval is required by or with respect to Buyer or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Buyer or the
consummation by the Buyer of the transactions contemplated by this Agreement,
except for (i) those that become applicable solely as a result of the specific
regulatory status of any Seller or any of its Affiliates, (ii) where the failure
to make, file, give or obtain any of them would not prohibit or make unlawful
the consummation of the Asset Purchase, and (iii) the Governmental Approvals
listed on Exhibit 4.2 (the approvals listed on such Exhibit, the "Required Buyer
Governmental Approvals").
Section 4.3. Brokers, Finders, Etc. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission from the Company in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer.
Section 4.4. Financing. Buyer has available sufficient financing
to consummate the Asset Purchase in accordance with its terms and the terms
of this Agreement.
ARTICLE 5
Covenants of Sellers and Buyer
------------------------------
Section 5.1. Conduct of Business. During the period from the date
of this Agreement to and through the Closing or earlier termination of this
Agreement, the Company shall, and shall cause its subsidiaries to, carry on the
Access Business in the ordinary course of business in conformity with all
Applicable Laws and, to the extent consistent therewith, use all reasonable
efforts to preserve the Access Business intact and preserve the good will of and
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with the Access Business, other than (except as
otherwise provided for herein) any such persons having business dealings with
the Access Business pursuant to a Contract that is not an Assumed Contract and
other than any customer or distributor under any Distribution Agreement that has
been rejected or terminated if and to the extent permitted by Section 5.4.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to and through the Closing, except as disclosed on
Schedule 5.1, the Company shall not, and shall not permit any of its
subsidiaries to, without the prior written approval of Buyer (to the extent
permitted by law):
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(a) (i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock, other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its parent, (ii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (other than in connection
with the exercise of Company Plan Options in accordance with the terms thereof
as in effect on the date hereof, as contemplated by Section 6.6);
(b) amend its articles of incorporation, bylaws or other comparable
charter or organizational documents in any manner that is inconsistent with
prompt consummation of the transactions contemplated hereby in accordance with
the terms hereof or that could otherwise reasonably be expected to have a
Material Adverse Effect;
(c) amend, modify or waive any material provision of or fail to
honor or enforce in any material respect the Transport Agreements, Supply
Agreements, Collocation Agreements, Peering Agreements, Intellectual Property
Licenses or Distribution Agreements or make any material change to the
operations, services, or policies relating to customers or suppliers, except,
(i) such amendments or modifications as are necessary to permit the Company to
comply with its obligation under Section 5.15(a) and will be of no effect from
and after the Closing Date and (ii) in the case of Distribution Agreements, as
otherwise permitted by Section 5.4(b);
(d) other than as would not result in any Liability that would be
or would increase an Assumed Liability as of or subsequent to the Closing,
mortgage, pledge or subject to Encumbrances, any property, business or any of
the Assets, held in connection with the Access Business; or lease, license,
surrender, relinquish, sell, transfer, convey, assign or otherwise dispose of,
or take any action in order to monetize, relinquish or part with, directly or
indirectly, any Assets;
(e) incur or permit to be incurred any Liability that would be or
would increase an Assumed Liability as of or subsequent to the Closing;
(f) [Reserved]
(g) make or rescind any material tax election or take any material
tax position (unless required by law) or file any Return or change its fiscal
year or financial or tax accounting methods, policies or practices (except as
required by changes in GAAP) or settle or compromise any material income tax
liability, except, in the case of any such tax election, tax position, Return,
financial or tax accounting method, tax accounting policy or tax accounting
practice or tax liability, as would not reasonably be expected to affect the
Buyer;
(h) fail to replenish the Access Business's Inventories and supplies
in a normal and customary manner consistent with its current practice;
(i) institute, settle or agree to settle any litigation, Action or
proceeding before any court or governmental body relating to the Access Business
or the Assets, other than as would not reduce the value of any Asset, or result
in any Liability that would be or would
-37-
increase any Assumed Liability as of or subsequent to the Closing and does not
contain any non-monetary terms that would be applicable to or otherwise affect
the Assets, Assumed Liabilities or the Access Business after the Closing;
(j) enter into any transaction, contract or commitment other than
in the ordinary course of business or pay or agree to pay any legal, accounting,
brokerage, finder's fee, Taxes or other expenses in connection with, or incur
any severance pay obligations by reason of, this Agreement or the transactions
contemplated hereby other than as would not reduce the value of any Asset or
result in any Liability that would be or would increase any Assumed Liability as
of or subsequent to the Closing;
(k) no Seller shall establish or increase the benefits under, or
promise to establish, modify or increase the benefits under, any agreement, plan
or policy relating to employees or employment matters, including any Employee
Benefit Plans or any consulting, severance, change in control or similar
agreements, or otherwise increase the compensation payable to any directors,
officers, or employees of such Seller, establish, adopt or enter into any
collective bargaining agreement, except (i) in accordance with any
non-discretionary terms of any such plans in effect as of the date of this
Agreement, and (ii) for benefits and compensation payable to any directors,
officers, or employees of such Seller, established, modified or increased after
commencement of the Bankruptcy Cases in order to retain such directors,
officers, or employees through the pendency of the Bankruptcy Cases in a manner
that does not increase the base pay or non-discretionary bonus entitlement of
any such individual;
(l) other than to the extent permitted by clause (i) or (ii) of
Section 5.1(c), (i) abandon any rights under any of the Assumed Contracts, (ii)
terminate, amend, modify or supplement the terms of any of the Assumed Contracts
without the express written permission of Buyer, or (iii) act in any way
otherwise than to continue to honor and perform the Assumed Contracts;
(m) transfer or grant any rights under, or enter into any settlement
regarding the breach or infringement of, any Assumed Intellectual Property or
Intellectual Property subject to the Media IP License, or modified any existing
rights with respect thereto;
(n) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries that is inconsistent with prompt
consummation of the transactions contemplated hereby in accordance with the
terms hereof or could otherwise reasonably be expected to have a Material
Adverse Effect;
(o) make any acquisition, by means of merger, consolidation or
otherwise, of any direct or indirect ownership interest in or assets comprising
any business enterprise or operation;
(p) except as would have no effect on or be enforceable against the
Assets, the Access Business or the owner of the Assets or Access Business or its
Affiliates from and after the Closing, enter into any agreement containing any
provision or covenant limiting the ability of the Company or any of its
subsidiaries to (i) sell any products or services of or to any other
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person, (ii) engage in any line of business or (iii) compete with or to obtain
products or services from any person or limiting the ability of any person to
provide products or services to the Company or any of its subsidiaries;
(q) (i) take, or agree or commit to take, any action that would
reasonably be expected to make any representation or warranty of the Sellers
hereunder materially inaccurate in any respect at, or as of any time prior to,
the Closing Date, (ii) omit, or agree or commit to omit, to take any
commercially reasonable action reasonably likely to be necessary to prevent any
such representation or warranty from being materially inaccurate in any respect
at any such time, (iii) take, or agree or commit to take, any action that would
reasonably be expected to result in, or is reasonably likely to result in, any
of the conditions set forth in Article 8 not being satisfied, or (iv) omit, or
agree or commit to omit, to take any commercially reasonable action if such
omission would reasonably be expected to result in, or is reasonably likely to
result in, any of the conditions set forth in Article 8 not being satisfied;
(r) fail to maintain any Leased Real Estate under any Assumed Lease
in its current condition, ordinary wear and tear excepted; or
(s) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 5.2. Access to Information. (a) From the date hereof to and
through the Closing, Sellers shall give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access (during normal
business hours and upon reasonable notice) to the offices, properties, officers,
employees, accountants, auditors, counsel and other representatives, books and
records of the Company and its subsidiaries, will furnish to Buyer, its counsel,
financial advisors, auditors and other authorized representatives such
financial, operating and property related data and other information as such
persons may request, and will instruct the Company's and its subsidiaries'
employees, counsel and financial advisors to cooperate with Buyer in its
investigation of the business of the Company and the subsidiaries including,
without limitation, in connection with Buyer's obtaining title reports, surveys,
environmental reports and similar reports or studies with respect to the Leased
Real Estate, and will exercise all reasonable efforts to obtain from landlords
such estoppel certificates as Buyer may request; provided that no investigation
pursuant to this Section 5.2 shall affect any representation or warranty given
by the Company hereunder. It is intended that Buyer will exercise its rights
hereunder in a manner that does not interfere with Sellers' normal business
operations and, at the request of the Seller, Buyer shall direct all inquiries
and requests for information through one or more designated representatives of
Seller; provided, however, that nothing in this sentence shall affect or reduce
Buyer's rights under this Section 5.2(a), and any representatives designated by
Sellers to respond to inquiries and requests shall respond and provide
information or coordinate access on a timely basis. Information obtained in
accordance with this paragraph (a) shall be held in confidence in accordance
with the Confidentiality Agreement. In consultation with the Sellers, Buyer
shall have a right to designate any of Buyer's employees or representatives as a
transition team that, from and after the date that the Sale Procedures Order is
entered, may work in a manner reasonably acceptable to Sellers from the Sellers'
premises in order to facilitate an orderly transfer of the Assets to Buyer in
accordance with the terms of this Agreement.
-39-
(b) From the Closing Date through the date the Bankruptcy Cases are
closed, Buyer shall give to the Company, its counsel, financial advisors,
auditors and other authorized representatives full access (during normal
business hours and upon reasonable notice) to the books and records of the
Access Business to the extent such books and records relate to pre-Closing
periods, and will furnish to the Company, its counsel, financial advisors,
auditors and other authorized representatives such financial, operating and
property-related data and other information relating to the Access Business, and
relating solely to pre-Closing periods, as may be necessary for administration
of the Bankruptcy Cases. It is intended that the Company will exercise its
rights hereunder in a manner that does not interfere with Buyer's normal
business operations (including operation of the Access Business), and, at the
request of the Buyer, the Company shall direct all inquiries and requests for
information through one or more designated representatives of Buyer; provided
that nothing in this sentence shall affect or reduce Sellers' rights under this
Section 5.2(b), and any representatives designated by Buyer to respond to
inquiries and requests shall respond and provide information or coordinate
access on a timely basis. Information obtained in accordance with this paragraph
(b) shall be held in confidence in accordance with the Confidentiality
Agreement.
Section 5.3. Regulatory Approvals; Reasonable Efforts; Notification;
Consents. (a) Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking, or agreement
with any Governmental Authority regarding any such filings or any such
transaction. Neither party shall participate in any meeting with any
Governmental Authority in respect of any such filings, investigation or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Authority, the opportunity to attend and
participate.
(b) Each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Asset Purchase and the other transactions contemplated
by this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, Consents and approvals from Governmental Authorities and
the making of all other necessary registrations and filings (including other
filings with Governmental Authorities, if any), (ii) the obtaining of all
necessary Consents, approvals or waivers from third parties, (iii) the
preparation of the Bankruptcy Filings, any and all petitions, filings, notices,
motions, certificates as may be necessary or desirable in connection with the
Bankruptcy Cases, and (iv) the execution and delivery of any additional
certificates, agreements, instruments, reports, schedules, statements, consents,
documents and information necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement.
(c) Neither Buyer nor any of its subsidiaries shall be required to
(A) divest, or cause or permit the Company or its subsidiaries or Affiliates to
divest, any of their respective businesses, product lines or assets, (B) hold
the Assets separately, or (C) take or agree to take any other actions or agree
to any limitations that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or an adverse effect on the value,
condition (financial or otherwise), prospects, business or results of operations
or prospects of Buyer or its pre-Closing subsidiaries that would be material to
an entity having assets, liabilities,
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revenues and earnings similar in amount to those of the Company, and (ii) Buyer
shall not be required to waive any of the conditions to this Agreement set forth
in Article 8.
(d) The Company shall give prompt notice to Buyer of (i) upon any of
Sellers becoming aware of any representation or warranty made by any of the
Sellers contained in this Agreement becoming untrue or inaccurate in any
material respect, (ii) the failure by any of Sellers to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement (iii) the receipt or issuance of any
notice of termination (written or, to the knowledge of Sellers, oral) of any
Assumed Contract or Assumed Lease the termination of which, individually or
together with other Assumed Contracts and Assumed Leases with respect to which a
termination notice has been received or issued, could reasonably be expected to
have a Material Adverse Effect; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement, including any right to indemnification hereunder. Buyer shall give
prompt notice to the Company of (A) any representation or warranty made by Buyer
contained in this Agreement becoming untrue or inaccurate in any material
respect or (B) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement,
including any right to indemnification hereunder.
(e) The Company shall give prompt notice to Buyer, and Buyer shall
give prompt notice to the Company, of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with
the transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; and
(iii) any Actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting it or any of its subsidiaries which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to any provision of Article 3 or which relate to
the consummation of the transactions contemplated by this Agreement.
(f) (i) Subject to Applicable Law, including any fraudulent
conveyance laws, Sellers agree to take any and all actions reasonably necessary
to transfer to the Buyer all of the Assets that are located outside of the
United States or owned or held by a Foreign Sub, including, if requested, the
commencement of a foreign bankruptcy case and/or proceedings under Section 304
of the Bankruptcy Code. With respect to any Assets held by any Foreign Sub
incorporated in or organized under the laws of Canada or any of its provinces
("Canadian Assets"), the parties acknowledge that it may be necessary to cause
the Canadian Assets to be transferred pursuant to a separate purchase or similar
agreement, the closing of which could occur at a different time from the
Closing; provided that (i) the parties hereto acknowledge that
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the Purchase Price includes the full consideration for any such Canadian Assets,
and no consideration allocated to such Assets or provided for in any such
separate purchase agreement shall increase or be in addition to the Purchase
Price, and (ii) any such agreement shall not cause Buyer to assume or incur, and
shall provide that Sellers shall indemnify and hold harmless Buyer for, any
Liability that Buyer would not have incurred had such Canadian Assets been a
part of the U.S. Assets, including, without limitation, being subject to the
Bankruptcy Court Approval. The foregoing notwithstanding, Buyer agrees to bear
50% of the amount of any Transfer Taxes payable (net of any credit or refund
obtained by the Buyer) as a result of the transfer of Canadian Assets. Sellers
agree to use reasonable efforts to take steps to minimize such Transfer Taxes to
the extent such steps are satisfactory to Buyer. If Sellers and Buyer jointly
agree that the transfer of Canadian Assets qualifies for an exemption to any
goods and services tax, they shall take all steps necessary to avail themselves
of such exemption.
(ii) The parties agree that if Sellers comply with this Section
5.3(f), no failure to effectuate such transfers will be a breach of this
Agreement or will cause any reduction in the Purchase Price (other than
relief of the Buyer's obligation to deliver any portion of the Purchase
Price that represents the Canadian Purchase Price) nor give any claim by
Buyer to indemnity hereunder for such failure.
Section 5.4. Planned Capital Expenditures.
(a) Sellers agree to make all Planned Capital Expenditures in
accordance with the Capital Expenditure Plan in all respects, including but not
limited to timing, amount and purpose. The foregoing notwithstanding, other than
with respect to AT&T or any of its subsidiaries or businesses, Sellers shall not
be obligated to make Growth Capital Expenditures with respect to any particular
customer in the event the Initial CapEx Period has passed and Buyer has failed
to enter into a new distribution agreement or arrangement with such customer
that replaces the existing Distribution Agreement in effect as of the date
hereof with such customer (any such new agreement, a "New MSO Agreement");
provided that Sellers' obligation to make Growth Capital Expenditures with
respect to a particular customer shall be reinstated in the event that a New MSO
Agreement is subsequently entered into between such customer and the Company
and/or Buyer prior to the end of the Second Capex Period. For the avoidance of
doubt, a New MSO Agreement will be deemed to have been "entered" when executed,
even if it does not take effect until the period after the Closing Date. With
respect to AT&T or any of its subsidiaries or businesses, the Sellers agree to
continue to make Growth Capital Expenditures until the Closing Date.
(b) If the Initial Capex Period expires with no New MSO Agreement
being entered into between a customer who is party to any particular
Distribution Agreement and Buyer, then upon three days' notice to such customer,
Sellers may file a pleading with the Bankruptcy Court setting forth the Sellers'
intent to reject after thirty days such particular Distribution Agreement.
During the period beginning on the date after the expiration of the Initial
CapEx Period and ending on the date that is 33 days later (the "Second Capex
Period"), Buyer and/or Sellers may elect to continue to seek a New MSO Agreement
with such customer. If any New MSO Agreement is entered into during this period,
Buyer agrees to disclose the terms of such New MSO Agreement to the Company, and
to disclose it publicly or to the Bankruptcy Court to the extent required by
Applicable Law. If no such agreement is reached
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during this period, Seller may elect to proceed with the hearing to seek
rejection of the Distribution Agreement (and any applicable Service Level
Agreement), and, after the expiration of the Second Capex Period, reject or
terminate such Distribution Agreement and, from and after the effectiveness of
such rejection or termination, shall have no obligation under this Agreement to
comply with such Service Level Agreement of the Distribution Agreement. Sellers
agree that no termination or rejection of any Distribution Agreement as to which
AT&T or any of its subsidiaries or businesses is the customer shall be effective
prior to the Closing Date.
(c) If Actual Capital Expenditures are less than Planned Capital
Expenditures required to be paid by Sellers (adjusted to account for any Planned
Capital Expenditures the Sellers become entitled not to make if and to the
extent permitted by Section 5.4(a) or 5.4(b)), then the Purchase Price shall be
reduced by the difference between those two amounts.
(d) Sellers shall not make any Post-105 Capital Expenditures without
Buyer's prior written consent. However, if requested by Buyer, Sellers agree to
make all Post-105 Capital Expenditures; provided that the Purchase Price shall
be increased by the amount of any Post-105 Capital Expenditures.
(e) Sellers agree to submit to the Company on a monthly basis,
by 5 p.m. E.S.T. on the second Business Day of every calendar month, a written
report (i) detailing all capital expenditures made (A) during the period from
the date of the most previously delivered report, and (B) in total from the date
hereof through the end of the week month preceding delivery of such report, and
(ii) setting forth any deviations from the Planned Capital Expenditures. The
foregoing notwithstanding, the Company shall make commercially reasonable
efforts to provide such written reports on a weekly basis.
(f) "Capital Expenditure Plan" means the Capital Expenditure Plan
agreed to by the parties and attached hereto as Schedule 5.4(a).
Section 5.5. Cure of Defaults. (a) Subject to Bankruptcy Court
Approval, the Sellers shall, on or prior to the Closing, cure any and all
defaults and breaches under and satisfy any Liability or obligation arising from
or relating to pre-Closing periods under the Assumed Contracts so that such
Assumed Contracts may be assumed by the Filing Sellers and assigned to the Buyer
in accordance with the provisions of Section 365 of the Bankruptcy Code and this
Agreement (including, without limitation, Section 2.3 hereof). Each Filing
Seller agrees that it will promptly take such actions as are reasonably
necessary or desirable to obtain a Final Order of the Bankruptcy Court assuming
and assigning to Buyer the contracts to be assigned to Buyer pursuant hereto.
(b) Anything herein to the contrary notwithstanding, Seller shall
set aside, from the Purchase Price, an amount sufficient to pay all trade
payables for delivery of goods and services used in the operation of the Access
Business after the commencement of the Bankruptcy Cases that arise under an
Assumed Contract, relate to the period from the effective date of the applicable
Cure Amount determination to the Closing Date and are not Assumed Liabilities.
Section 5.6. Bankruptcy Filings, Covenants and Agreements. (a) Not
later than the close of business on the Filing Date, each of the Filing Sellers
shall file with the
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ a petition for relief under Section 301 of the Bankruptcy Code.
Not later than the close of business on the first Business Day following the
Filing Date, each of the Filing Sellers shall file with the Bankruptcy Court
applications or motions seeking approval of the Sale Procedures Order and an
Cure Procedures Order and seeking hearings on the Cure Procedures Order and the
Sale Procedures Order not later than the date 30 days after the Filing Date. Not
later than the close of business on the fourth Business Day following the Filing
Date, each of the Filing Sellers shall file with the Bankruptcy Court
applications or motions seeking that the Bankruptcy Court enter the order that
shall be the Bankruptcy Court Approval (the "Sale Motion"). Each application or
motion referred to in this paragraph shall be reasonably satisfactory in form
and substance to Buyer. The petitions, motions and filings referred to in this
Section 5.6(a), shall be deemed the "Bankruptcy Filings," and the proceedings
initiated by the filing of the Bankruptcy Filings, together with all related
proceedings, shall be deemed the "Bankruptcy Cases."
(b) Buyer agrees that it will promptly take such actions as are
reasonably requested by Filing Sellers, on behalf of the Filing Sellers, to
assist in obtaining Bankruptcy Court Approval, including without limitation,
furnishing affidavits or other documents or information for filing with the
Bankruptcy Court for purposes, among others, of providing necessary assurances
of performance by Buyer under the Agreements and demonstrating that Buyer is a
"good faith" Buyer under section 363(m) of the Bankruptcy Code. In the event the
order granting Bankruptcy Court Approval shall be appealed, Filing Sellers shall
use all reasonable efforts to defend such appeal.
(c) Buyer and Sellers agree that none of them will retain or request
that the Bankruptcy Court appoint a trustee, examiner or any other person of
similar capacity to administer or oversee the Company or any part of the Access
Business.
(d) Other than in connection with the Auction in accordance with
Rule 363 under the Bankruptcy Code, Sellers agree that prior to the earlier of
the Closing or the termination of this Agreement in accordance with its terms,
none of them or any of their officers, directors, employees, attorneys,
investment bankers, accountants or other agents or representatives shall, as an
alternative to the Auction process, solicit any inquiries, proposals, offers or
bids from any person or entity other than Buyer relating to the Assets, the
Access Business or the capital stock of any Seller or otherwise take any
affirmative action to cause, promote or assist the purchase of the Assets,
Access Business or such capital stock by a third party or the recapitalization
or restructuring of the Company or the Access Business as an alternative to the
Auction.
(e) Sellers agree that until termination of this Agreement in
accordance with its terms, Sellers will not negotiate or enter into any
agreement for the sale of all or any portion of the Assets, Access Business or
capital stock of any Seller.
Section 5.7. New Contracts. From the date of this Agreement through
the date Bankruptcy Court Approval is received, no Seller shall enter into any
New Contract unless such New Contract would not be, give rise to or increase an
Asset or Assumed Liability as of or subsequent to the Closing without the
express written Consent of Buyer in accordance with the provisions of this
Section 5.7. In the event any Seller shall enter into any New Contract, such
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Seller shall deliver a copy of such New Contract to Buyer not later than the
second Business Day following the date such New Contract is entered into. Any
such New Contract shall be an Excluded Asset (and any Liability or obligations
arising thereunder shall be Excluded Liabilities), unless prior to the Closing
Buyer shall have delivered written notice to the Company (each, an "New Contract
Consent") stating that such New Contract shall be an Assumed Contract (assuming
Sellers have complied with Section 5.5 with respect thereto as of the Closing).
From the date Bankruptcy Court Approval is received through the Closing Date,
without the prior written Consent of Buyer, no Seller shall enter into any New
Contract. The term "New Contract" means any Contract entered after the date of
this Agreement that is (x) of the type referred to in clauses (i) - (ix) of
Section 3.12(a), (y) of the type referred to in clause (7) of the definition of
Assumed Contract or (z) any other agreement entered after the date of this
Agreement that is material to the Access Business or the entering into of which,
or the loss of which after its execution, could reasonably be expected to have a
Material Adverse Effect.
Section 5.8. Sellers' Use of @Home and @Work Names. Each Seller
covenants that at the Closing, or as soon thereafter as is practicable (but in
no event later than the tenth day after the Closing Date), it will not use any
name, ▇▇▇▇, service ▇▇▇▇, slogan, logo, trade name or trademark incorporating
"At Home," "@Home," "At Work" or "@Work" in any business activity except as is
necessary or convenient for the administration of the Bankruptcy Cases.
Section 5.9. Transitional Excite License. At the Closing, Sellers
will grant to Buyer and its subsidiaries a personal, irrevocable, non-exclusive,
non-transferable, non-assignable, fully paid-up, worldwide royalty-free limited
right to use any name, ▇▇▇▇, service ▇▇▇▇, slogan, logo, trade name or trademark
incorporating "Excite" including any goodwill associated therewith, in
connection with the Access Business for a term of six months, provided that such
license shall be subject to any rights of licensees under licenses existing on
the date hereof relating to the "Excite" name and ▇▇▇▇ granted by Sellers to any
of the Sellers' international joint ventures (the "Transitional Excite
License").
Section 5.10. Assignment of Certain Rights. From and after the date
hereof, each Seller shall not enter into any Protective Agreement that is not
freely assignable to Buyer upon consummation of the Asset Purchase, either in
full or with respect to the Access Business, the Assets and Assumed Liability,
effective as of the Closing Date.
Section 5.11. Public Announcements and Correspondence. Buyer and the
Company will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release, court filing or
pleading or other public statements with respect to the transactions
contemplated by this Agreement, including the Asset Purchase and the Bankruptcy
Cases, and shall not issue any such press release or make any such public
statement prior to such consultation and, in the case of statements by the
Company, without the prior approval of Buyer, in each case except as may be
required by Applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or with The Nasdaq Stock
Market. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be in the form
previously agreed to by the parties. Sellers agree that any communications with
Buyer's customers shall be
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in form and substance reasonably acceptable to Buyer. Buyer and each Seller
shall cause its employees, officers and directors to comply with this Section
5.11.
Section 5.12. Confidentiality. After the Closing, Sellers shall, and
shall use commercially reasonable efforts to cause their current and future
employees, officers, directors, agents and advisors to, maintain the
confidentiality of all non-public information with respect to the Assets, the
Assumed Contracts, the Assumed Leases and the Assumed Liabilities.
Section 5.13. Further Assurances. Sellers and Buyer agree that,
from time to time, whether before, at or after the Closing Date, each of them
will, and will cause their respective Affiliates to, execute and deliver such
further instruments of conveyance and transfer and take such other action as may
be reasonably requested to carry out the purposes and intents of this Agreement,
including the purchase of the Assets by Buyer and the assumption of the Assumed
Contracts, the Assumed Leases and the Assumed Liabilities by Buyer.
Section 5.14. [Reserved]
Section 5.15. Service Continuity. (a) Subject to Section 5.4(b),
Sellers' shall continue to honor and perform all obligations under each of the
Distribution Agreements, and will at all times meet or exceed all of the
Performance Standards which must be met for Sellers to avoid incurring any
penalties under the Service Level Agreements in effect with respect to each of
Comcast Corporation and ▇▇▇ Communications, Inc. as if such Service Level
Agreements were in effect as to all of Sellers' customer relationships and
Distribution Agreements (except that for Rogers Cablesystem Limited and Shaw
Cablesystem, the Performance Standards relating to customer care shall not
apply); provided that any failure to so meet or exceed any such parameters shall
be excused solely to the extent that such failure is due to the failure to
expend the Growth Capital Expenditures with respect to any customer at any time
during which Sellers are permitted or entitled to not spend such Growth Capital
Expenditures with respect to such customer pursuant to Section 5.4(a).
(b) Sellers agree to submit on a weekly basis to the Company, by
5 p.m. E.S.T. Tuesday of each week, any performance reports with respect to the
Performance Standards produced or received during the preceding week Until the
Closing, Sellers agree to generate and produce any performance reports as may be
required by the Service Level Agreements or that are of the type ordinarily
produced in the Company's ordinary course of business.
Section 5.16. @Work Customers. In the event that, after the
Closing, Buyer wishes to terminate service to any customers of Sellers, Buyer
shall do so in compliance with Applicable Laws.
Section 5.17. Change in Terms; New MSO Agreements. (a) In the event
that after the date hereof but on or before the expiration of the Second Capex
Period, the Buyer (or Buyer and Seller) enters into a New MSO Agreement or other
arrangement, which provides for the provision of service to such customer during
the period prior to the Closing Date, with a customer (other than AT&T or any of
its Subsidiaries) of the @Home service that is a party to a Distribution
Agreement, then:
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(i) subject to clauses (ii) and (iii) below, Sellers hereby agree
to be bound by and subject to the terms and provisions of and provide
service under any such New MSO Agreement, during the period from the
effectiveness of such New MSO Agreement through the Closing Date, in
accordance with any capital expenditure requirements and with the service
level standards provided for therein; provided that the Company's consent
is required to any term of any such New MSO Agreement that increases any
non-economic obligation of Sellers relative to the relevant existing
Distribution Agreement; provided, however, that with respect to any such
increase that is not material, such consent shall not be withheld or
delayed unreasonably;
(ii) if the economic terms of such New MSO Agreement, taken as a
whole, are less favorable to the Sellers than the existing Distribution
Agreement for the period between the effective date of the New MSO
Agreement and the Closing Date or earlier termination of this Agreement,
the Buyer shall, during the period from the effective date of such New MSO
Agreement to the Closing Date or earlier termination of this Agreement,
make such payments, or cause such payments to be made, to the Sellers, such
that Sellers receive an economically equivalent outcome under the New MSO
Agreement or new arrangement as they would have received under the terms of
the existing Distribution Agreement assuming Sellers comply with the
obligations of the service provider under such New MSO Agreement, as
provided for in clause (i) above; provided that any such payments shall be
subject to compliance by Sellers with their obligations with respect to
such New MSO Agreement as provided for in clause (i) above; and
(iii) any other provision of this Agreement notwithstanding, if a
New MSO Agreement is entered into and Sellers are obligated to perform
under it in accordance with clause (i) above: then any other obligation of
Sellers under this Agreement to make capital expenditures or to maintain
service levels with respect to the customer whose Distribution Agreement
was replaced by the New MSO Agreement shall be deemed to be satisfied if
Sellers make capital expenditures and maintain service levels as and to the
extent provided for in the New MSO Agreement.
Section 5.18. Buyer Telecommunication Services. Buyer shall provide
telecommunications services (other than those that are the subject of the
Capacity Agreement, which shall continue to be governed by the terms of the
Capacity Agreement) to Sellers on terms customary as between the parties
provided that Sellers are current in their payment, have provided reasonably
satisfactory assurances of payment for such services and are paying Buyer for
such services on terms no less favorable to Buyer than those afforded other
post-petition suppliers to the Sellers.
ARTICLE 6
Employers and Employee Benefits
-------------------------------
Section 6.1. Employment of Sellers' Employees. (a) Each Seller shall
use its reasonable efforts, and shall cause its Affiliates to use their
reasonable efforts, to retain all
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Subject Employees, and to maintain in good standing through the Closing all
relationships and agreements with Consultants, in each case from the date hereof
through the Closing Date and to assist Buyer in hiring the Employees offered
employment pursuant to Section 6.1(b); provided, that the foregoing shall not
require that the Seller or any of its Affiliates offer any compensation or other
incentives in addition to the compensation and benefits being provided or
required to be provided as of the date of this Agreement. Subject to Applicable
Law, Sellers have delivered to Buyer a written notice (hereinafter referred to
as "Schedule 6.1(a)") setting forth a list of all the Employees and Former
Employees, with relevant details of their employment, including their position,
job description, level, whether the Employee is or Former Employee was exempt or
non-exempt, work location, home address, annual base salary or wage rate, most
recent annual bonus, date of hire, and whether any given Employee is an Inactive
Employee. Schedule 6.1(a) shall be updated at least each week, and a final
updated list shall be provided on the Closing Date.
(b) Following the later of the date of entry of the Sales Procedure
Order and the date of Sellers' delivery of Schedule 6.1(a), the Buyer shall use
commercially reasonable efforts to provide to the Company, within thirty (30)
Business Days of such later date, a written list of not more than 1400 Employees
who are then employed by Sellers (by name or by category) that the Buyer would
like to hire as of the Closing Date (such list the "Retainee List"). Sellers
agree that the Buyer retains sole and complete discretion with respect to which
Employees the Buyer shall offer employment. The time at which the employment by
the Buyer or one of its Affiliates of each such Subject Employee who is not an
Inactive Employee as of the Closing and who accepts such offer of employment
shall become effective (the "Effective Time of Employment") shall be the
Closing. A Subject Employee who is an Inactive Employee as of the Closing shall
become employed by the Buyer provided such Subject Employee returns to active
status and reports to work with Buyer or its Affiliate, as applicable,
immediately following the earlier of (i) the conclusion of his or her disability
or leave of absence or (ii) date which is one hundred eighty (180) days
following the Closing Date. The Effective Time of Employment of any such
Inactive Employee shall be the date he or she returns to active status as
provided in the preceding sentence. Each Subject Employee who is employed by
Sellers immediately before the Closing and becomes employed by Buyer or one of
its Affiliates in accordance with this paragraph shall be considered a
"Transitioned Employee" from and after his or her Effective Time of Employment.
The Sellers shall be responsible for any notification and liability under the
Worker Adjustment and Retraining Notification Act or similar state law ("WARN")
relating to any termination of any of the Sellers' employees occurring on or
after the date of this Agreement, and shall at the request of Buyer provide any
notifications under WARN requested by the Buyer within five (5) Business Days of
such request; provided that Buyer shall use commercially reasonable efforts to
assist the Sellers in identifying the Employees to whom any WARN notices may be
required to be given, as and to the extent Buyer makes its determinations of
which Employees it will offer to hire, and at the request of the Buyer, the
Sellers shall notify Employees to whom Buyer intends to make offers of
employment of Buyer's intent notwithstanding that a WARN notice has been or will
be provided to such Employees. Sellers shall indemnify and hold Buyer harmless
from any and all damages, liabilities, claims or expenses incurred by Buyer as a
result of the failure of any Seller to comply with any of the requirements of
WARN, including applicable notice requirements. Sellers will provide Buyer with
copies of all notices to be given to Employees regarding the Asset Purchase as
promptly as
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practicable (and in the case of notices required by WARN or other statutes, at
least five (5) Business Days in advance of giving such notice to Employees).
(c) [Reserved]
(d) From the date hereof through the Closing, Sellers shall permit
Buyer to communicate with the Employees and Consultants, at reasonable times and
upon reasonable notice, concerning Buyer's plans, operations, business, customer
relations and general personnel matters and to interview the Employees and
Consultants and review the personnel records and such other information
concerning the Employees and Consultants as Buyer may reasonably request
(subject to obtaining any legally required written permission of any affected
Employee or Consultant and to other applicable law), provided that such contacts
shall be conducted in a manner that is reasonably acceptable to Sellers.
(e) In the event the employment with Buyer and its Affiliates of any
Transitioned Employee is involuntarily terminated (other than for cause) during
the first 180 days after the Closing, such Transitioned Employee shall receive a
severance benefit equal to a number of weeks' base pay calculated in accordance
with the schedule of benefits set forth in Exhibit 6.1(e), taking into account
such Transitioned Employee's Prior Service and service with Buyer and its
Affiliates from and after the Closing. Thereafter, each Transitioned Employee
who remains employed by Buyer or any of its Affiliates shall be eligible to
participate in the applicable severance pay plan of Buyer and its Affiliates,
and benefits payable under the terms of such plan shall be based on such
Transitioned Employee's actual service with Buyer from and after the Closing.
Except as specifically provided above in this Section 6.1(e), Sellers shall be
solely responsible for any and all Liabilities relating to or arising in
connection with any actual, constructive or deemed termination of employment
(including without limitation severance or separation pay or benefits or other
similar compensation or benefits under any applicable law, regulation or
Employee Benefit Plan) (i) to or with respect to any Employee other than a
Transitioned Employee, whether as a result of the consummation of the
transactions contemplated hereby or otherwise, and whether before, on or after
the Closing Date, or (ii) to any Transitioned Employee as a result of (A) the
consummation of the transaction contemplated hereby, (B) any event occurring
before the Closing or (C) any action or failure to act of Sellers. Except as
provided in Section 6.2(c), Buyer shall be solely responsible for any and all
Liabilities relating to or arising in connection with any actual, constructive
or deemed termination of employment of any Transitioned Employee with Buyer and
its Affiliates after such Transitioned Employee's Effective Time of Employment.
Section 6.2. Employee Benefits Generally for Transitioned Employees.
(a) For a period of not less than one year following the Closing, Buyer shall
provide, and shall cause its Affiliates to provide, employee benefit plans and
arrangements (other than severance benefits during the 180-day period provided
for in Section 6.1(e)) to Transitioned Employees that are substantially
comparable in the aggregate to the benefits provided to similarly situated
employees of Buyer and its Affiliates.
(b) As soon as practicable after the date of this Agreement, but in
any event before the Closing, Sellers shall prepare, subject to Buyer's approval
(which shall not be unreasonably withheld), a schedule setting forth, for each
Employee listed on Schedule 6.1(a),
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such Employee's length of service with Sellers and their Affiliates before the
Closing (such scheduled service, "Prior Service"). Following the Closing, Buyer
and its Affiliates shall recognize each Transitioned Employee's Prior Service
(i) for purposes of determining eligibility to participate in and vesting, under
any qualified savings, or profit-sharing plans in which Transitioned Employees
may participate, but not for purposes vesting or benefit accruals in any defined
benefit pension plan in which Transitioned Employees may participate, and (ii)
for purposes of determining eligibility to participate in, and the schedule of
benefits provided by any group health plans, vacation and other paid time off
plans and policies and other welfare benefit plans established or maintained by
Buyer and its Affiliates on or after the Closing Date, but not for purposes of
the schedule of benefits under severance or disability plans of Buyer and its
Affiliates; provided however, that for the balance of calendar year in which the
Closing Date occurs, each Transitioned Employee shall be entitled to at least
the amount of vacation, sick leave, personal days and similar time off for which
they are eligible (and which remains unused) under Sellers' vacation policy in
effect immediately prior to the Closing, and for all subsequent years, shall be
entitled to the amount of vacation as determined under the applicable vacation
and paid time off policy of Buyer and its Affiliates, based on such Transitioned
Employee's Prior Service.
(c) Without limiting the generality of any other provision of this
Article 6, Sellers shall remain solely responsible for any and all Liabilities
relating to or arising in connection with the Employee Benefit Plans, whether
arising before, on or after the Closing Date.
Section 6.3. Welfare and Fringe Benefit Plans. (a) Buyer shall
provide, or cause its Affiliates to provide, the Transitioned Employees, during
their employment by Buyer or its Affiliates, and their eligible dependents and
beneficiaries, Welfare Benefits under any plans, programs, policies or
arrangements established or maintained by Buyer for such persons ("Buyer's
Welfare Plans") for claims incurred after the Closing Date, subject to the terms
of Buyer's Welfare Plans maintained in accordance with Section 6.2(a).
(b) From and after the Closing Date, Sellers shall remain solely
responsible for any and all Liabilities relating to or arising in connection
with (i) the requirements of Section 4980B of the Code to provide continuation
of health care coverage under any Plan in respect of (A) Employees who are not
Transitioned Employees, and their beneficiaries and dependents, and (B)
Transitioned Employees and their beneficiaries and dependents arising as a
result of qualifying events that occur on or before the Transitioned Employee's
Effective Time of Employment, and (ii) claims for Welfare Benefits incurred by
Transitioned Employees and their beneficiaries and dependents before the
Transitioned Employee's Effective Time of Employment. Buyer shall be responsible
for any and all Liabilities relating to or arising in connection with (i) the
requirements of Section 4980B of the Code to provide continuation of health care
coverage in respect of Transitioned Employees and their beneficiaries and
dependents arising as a result of qualifying events after the Transitioned
Employee's Effective Time of Employment, and (ii) claims for Welfare Benefits
incurred by Transitioned Employees and their beneficiaries and dependents after
the Transitioned Employee's Effective Time of Employment.
(c) For purposes of this Agreement, the following claims and
Liabilities shall be deemed to be incurred as follows: (i) life, accidental
death and dismemberment and business
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travel accident insurance benefits, upon the death, disability or accident
giving rise to such benefits; (ii) salary continuation or other short-term
disability benefits, or long-term disability, upon satisfaction of the
conditions set forth in the respective plan or program giving rise to such
benefit; (iii) hospital-provided health, dental, prescription drug or other
benefits, which become payable with respect to any continuous period of hospital
confinement, upon commencement of such confinement; and (iv) health, dental
and/or prescription drug benefits, upon provision of such services, materials or
supplies.
Section 6.4. Workers' Compensation. (a) From and after the Closing
Date: (i) Sellers shall remain solely responsible for any and all Liabilities
relating to or arising in connection with any and all claims for workers'
compensation benefits (A) incurred by or in respect of any Employee who is not a
Transitioned Employee on, prior to or after the Transitioned Employee's
Effective Date of Employment, and (B) incurred by or in respect of Transitioned
Employees on or before the Transitioned Employee's Effective Date of Employment
and (ii) Buyer shall be solely responsible for any and all Liabilities to or in
respect of any Transitioned Employee relating to or arising in connection with
any and all claims for workers' compensation benefits incurred after the
Transitioned Employee's Effective Date of Employment.
(b) For purposes of this Section 6.4, a claim for workers'
compensation benefits shall be deemed to be incurred when the first event giving
rise to the claim occurs.
Section 6.5. [Reserved]
Section 6.6. Stock Options and Stock Plans. In accordance with
Section 18.1 of the 1997 Equity Incentive Plan, Section 18.1 of the 2000 Equity
Incentive Plan, Section 16.1 of the Incentive Stock Option Plan, Section 16.1 of
the Incentive Stock Option Plan No. 2 and Section 14 of the Employee Stock
Purchase Plan, Sellers and Buyer agree that neither Buyer nor any of its
Affiliates shall assume the options or other awards issued or granted pursuant
to any of the 1997 Equity Incentive Plan, the 2000 Equity Incentive Plan, the
Incentive Stock Option Plan, the Incentive Stock Option Plan No. 2 or the
Employee Stock Purchase Plan (the "Company Plan Options").
ARTICLE 7
Tax Matters
-----------
Section 7.1. Tax Representations. None of the Assets is "tax exempt
use property" within the meaning of Section 168(h) of the Code. None of the
Assets is a lease made pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954. There are no liens for Taxes (except liens for Taxes not yet due)
and no claims for Taxes have been asserted in writing with respect to the
Assets, the Assumed Liabilities or the Access Business. Each Seller has withheld
or paid all Taxes required to be withheld or paid by them with respect to the
Access Business, the Assets or the Assumed Liabilities. No Tax is required to be
withheld pursuant to Section 1445 of the Code in connection with the
transactions contemplated by this Agreement.
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Section 7.2. Tax Matters. (a) All real and personal property
transfer, documentary, sales, use, registration, value-added and other similar
Taxes (including interest, penalties and additions to Tax) incurred in
connection with the transactions contemplated by this Agreement ("Transfer
Taxes") shall be borne by Sellers.
(b) Each Seller that is a "domestic corporation" within the meaning
of Sections 7701(a)(3) and (4) of the Code and Section 1.897-1(j) of the
applicable Treasury regulations (a "Domestic Corporation") shall deliver to
Buyer at Closing an affidavit (a "FIRPTA Affidavit"), in form and substance
reasonably satisfactory to Buyer, duly executed and acknowledged, certifying
that such Seller is a Domestic Corporation. Sellers shall deliver to Buyer at
Closing an affidavit, in form and substance reasonably satisfactory to Buyer,
duly executed and acknowledged, certifying, for purposes of Section 897 of the
Code, that each Asset that is a United States real property interest within the
meaning of Section 897(c) of the Code is and has been held by, and will be
transferred to the Buyer by, a Domestic Corporation.
(c) Buyer and Sellers shall, and shall cause their respective
Affiliates to, cooperate with respect to Tax matters.
(d) In the case of any Return with respect to a Straddle Period
required to be filed by Buyer after the Closing Date, Sellers shall pay Buyer
the amount of any Excluded Tax that is or would be payable with respect to such
Return at least five Business Days prior to the earlier of the date such Return
is required to be filed or payment is due.
ARTICLE 8
Conditions to Buyer's Obligation to Close
-----------------------------------------
Buyer's obligation to consummate the Asset Purchase shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions (each of which may be waived, in whole or in part, by Buyer, in its
sole discretion, to the extent permitted by Applicable Law):
Section 8.1. Representations, Warranties and Covenants of Sellers.
(i) Each Seller shall have performed in all material respects its covenants and
agreements under this Agreement, except for those covenants and agreements
contained in Section 5.15, which each Seller shall have substantially performed
in all respects, and (ii) the representations and warranties of such Seller set
forth in this Agreement that are qualified as to "materiality," "Material
Adverse Effect" or similar term shall be true and correct when made and at and
as of the Closing as if made at and as of such time (except for representations
and warranties that are expressly made as of a specific time, which shall be
true and correct only as of such time), and the representations and warranties
set forth in this Agreement that are not so qualified shall be true and correct
in all material respects when made and at and as of the Closing as if made at
and as of such time (except for representations and warranties that are
expressly made as of a specific time, which shall be true and correct in all
material respects only as of such time); and Buyer shall have received a
certificate of the Chief Executive Officer or a Vice President of each such
Seller to that effect.
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Section 8.2. Required Governmental Approvals; Consents . (a) Sellers
shall have obtained and shall have delivered to Buyer copies of (i) all Required
Seller Governmental Approvals, and (ii) all Consents as are necessary in order
to consummate the Asset Purchase, including all those as may be material and
necessary in order to obtain the benefit of the Assumed Contracts, the Assumed
Intellectual Property and the Assumed Leases.
(b) All Required Buyer Governmental Approvals and all Required
Seller Governmental Approvals shall have been made or granted without
limitation, restriction or condition, except where the failure to have obtained
such Required Buyer Governmental Approval, or where any limitation, restriction
or condition thereon, would not have a Material Adverse Effect (or an effect on
Buyer and its subsidiaries that, were such effect applied to the Company and its
subsidiaries, would constitute a Material Adverse Effect).
Section 8.3. No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the date hereof that, individually or in the aggregate, has
constituted or resulted in, or would reasonably be expected to constitute or
result in, a Material Adverse Effect.
Section 8.4. No Injunction or Action. No statute, rule, regulation,
executive order, decree, ruling, or preliminary or permanent injunction shall
have been enacted, entered, promulgated, or enforced by any U.S. federal or
state court or Governmental Authority that prohibits, restrains, enjoins, or
restricts the consummation of the Asset Purchase that has not been withdrawn or
terminated; and no Action shall have been commenced or threatened in writing by
or before any Governmental Authority or arbitral body against the Buyer or any
Seller, seeking to prevent, prohibit or make illegal or materially and adversely
alter the Asset Purchase or which would result in a Material Adverse Effect;
provided, however, that the provisions of this Section 8.4 shall not apply to
any party hereto that has, directly or indirectly, solicited or encouraged any
such Action.
Section 8.5. Bankruptcy Court Related Conditions. (a) The Bankruptcy
Court shall have entered an order or orders (the "Bankruptcy Court Approval")
substantially in the form set forth in Exhibit 8.5 hereto which, among other
things, (i) approves, pursuant to Section 363(b) of the Bankruptcy Code, (A) the
execution, delivery and performance by Sellers of this Agreement, including each
and every term and condition hereof, and the other instruments and agreements
contemplated hereby, (B) the sale of the Assets to Buyer on the terms set forth
herein and (C) the performance by Sellers of their respective obligations under
this Agreement; (ii) authorizes and directs the Sellers to assume and assign to
Buyer the Assumed Contracts to be assigned to Buyer pursuant hereto, and (iii)
finds that Buyer is a "good faith" Buyer within the meaning of Section 363(m) of
the Bankruptcy Code. The Bankruptcy Court Approval shall have become a Final
Order.
(b) Sellers shall have delivered to Buyer (i) a certified copy of
the order providing for Bankruptcy Court Approval, and (ii) copies of all
affidavits of service of Sellers' motion seeking Bankruptcy Court Approval or
notice of such motion filed by or on behalf of Sellers in the Bankruptcy Cases.
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(c) The Sales Procedures Order and the Cure Procedures Order shall
each be entered by the Bankruptcy Court and shall have become Final Orders.
Section 8.6. Assumed Contracts. All of the Assumed Contracts shall
(i) other than for such failures as would not have, individually or in the
aggregate, a Material Adverse Effect, (A) be in full force and effect, and (B)
be assignable to and assumable by Buyer without Consent of any other party
thereto, or consent to assignment to and assumption by Buyer shall have been
obtained with respect thereto, and (ii) have had breaches and defaults
thereunder cured, if necessary, in accordance with Section 5.5 hereof.
Section 8.7. Service Continuity. (i) Sellers shall have continued to
honor and perform all obligations under each of the Distribution Agreements
(other than, from and after the effective date of any such rejection or
termination, Distribution Agreements that have been rejected or terminated if
and to the extent permitted by Section 5.4 hereof), (ii) Seller shall have
substantially complied with its obligations under Section 5.15, and Buyer shall
not be entitled to terminate this Agreement pursuant to Section 12.1(h). On the
Closing Date, no Seller shall have a reasonable expectation that the condition
set forth in the preceding sentence would not be satisfied as of the tenth day
following Closing assuming the Access Business were operated as it is operated
as of the Closing Date.
ARTICLE 9
Conditions of Sellers' Obligation to Close
------------------------------------------
The obligation of Sellers to consummate the Asset Purchase shall be
subject to the satisfaction on or prior to the Closing Date, of all of the
following conditions (each of which may be waived, in whole or in part, solely
by the Company, in its sole discretion, to the extent permitted by Applicable
Law):
Section 9.1. Representations, Warranties and Covenants of Buyer.
Buyer shall have performed in all material respects its covenants and agreements
under this Agreement, and the representations and warranties of Buyer set forth
in this Agreement that are qualified as to "materiality," "Material Adverse
Effect" or similar term shall be true and correct when made at and as of the
Closing as if made as at and as of such time, and the representations and
warranties set forth in this Agreement that are not so qualified shall be true
and correct in all material respects when made as at and as of the closing as if
made at and as of such time; and the Company shall have received certificates of
an officer of Buyer to that effect.
Section 9.2. Required Governmental Approvals. (a) Buyer shall have
obtained and shall have delivered to Sellers copies of all Required Buyer
Governmental Approvals in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(a) All Required Seller Governmental Approvals shall have been made
or granted.
Section 9.3. No Injunction. No statute, rule, regulation, executive
order, decree, ruling, or preliminary or permanent injunction shall have been
enacted, entered, promulgated, or
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enforced by any U.S. federal or state court or Governmental Authority that
prohibits, restrains, enjoins or restricts the consummation of the Asset
Purchase that has not been withdrawn or terminated; and no Action shall have
been commenced or threatened in writing by or before any Governmental Authority
or arbitral body against the Buyer or any Seller, seeking to prevent, prohibit
or make illegal or materially and adversely alter the Asset Purchase or which
would result in a Material Adverse Effect; provided, however, that the
provisions of this Section 9.3 shall not apply to any party hereto that has,
directly or indirectly, solicited or encouraged any such Action.
Section 9.4. Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the Bankruptcy Court Approval.
ARTICLE 10
Survival; Indemnification
-------------------------
Section 10.1. Indemnification by Sellers. Sellers, jointly and
severally, covenant and agree to indemnify and hold harmless Buyer, its
officers, directors, employees, agents, advisers, representatives and Affiliates
(collectively, the "Buyer Indemnitees") from and against, and pay or reimburse
the Buyer Indemnitees for, any and all Losses, (a) as provided for in Section
7.2 and (b) resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by any
Seller herein or any certificate delivered pursuant to this Agreement and
which survive the Closing;
(ii) any failure of any Seller to perform any covenant or agreement
hereunder or fulfill any other obligation in respect hereof;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any failure of any Seller to comply with any applicable bulk
sales laws in connection with the transfer of Assets of Foreign Subs
(unless any Losses thereunder arise as a result of Buyer's failure to
satisfy the Assumed Liabilities);
(v) any Excluded Taxes and any Transfer Taxes;
(vi) any Non-Delivered Assets; and
(vii) the operation of the Sellers' business by Sellers or Sellers'
ownership, operation or use of the Assets on or prior to the Closing Date.
Sellers' obligations under this Article 10 shall not be affected or
reduced by any knowledge of the Buyer at or prior to the Closing of any breach
by any of the Sellers of any representation, warranty, covenant or agreement,
regardless of whether Buyer gave notice thereof to Seller, or vice versa, and
regardless of whether Buyer elected to consummate the Asset Purchase despite
such knowledge. As to indemnification for inaccuracies in the representations
and warranties contained in this Agreement (other than those in Sections 3.1 and
3.2, as to which
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the following limitations shall not apply), Sellers shall not be required to
indemnify the Buyer Indemnitees with respect to any unrelated claims which
individually do not exceed $100,000 (provided that all Non-Delivered Assets
shall be deemed to be related claims), and in any event shall not be required to
indemnify the Buyer Indemnitees unless and until the aggregate amount of all
claims against the Sellers with respect thereto exceeds 1% of the Purchase Price
in the aggregate; provided, however, that, if such aggregate amount of such
claims exceeds 1% of the Purchase Price, Sellers shall be obligated to pay the
entire amount thereof. The aggregate liability of Sellers under Sections
10.1(b)(i), (ii) and (vi) shall not exceed the Purchase Price. The limits set
forth in the preceding sentence shall not apply to intentional
misrepresentations nor shall they apply to Losses under Sections 10.1(b)(iii),
(iv), (v) and (vii).
Section 10.2. Indemnification by Buyer. Buyer covenants and agrees
to indemnify and hold harmless each Seller, its officers, directors, employees,
agents, advisers, representatives and Affiliates (collectively, the "Seller
Indemnitees") from and against, and pay or reimburse the Seller Indemnitees for,
any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by Buyer made
or contained in this Agreement;
(ii) any failure of Buyer to perform any covenant or agreement made
or contained in this Agreement or fulfill any other obligation in respect
thereof;
(iii) the Assumed Liabilities;
(iv) the operation of the Access Business by Buyer or Buyer's
ownership, operation or use of the Assets on or after the Closing Date;
except, in the case of clauses (iii) and (iv), to the extent such Losses result
from or arise out of the Excluded Liabilities or constitute Losses for which
Sellers are required to indemnify the Buyer Indemnitees under Section 10.1.
As to indemnification for inaccuracies in the representations and
warranties contained in this Agreement, Buyer shall not be required to indemnify
the Seller Indemnitees with respect to any unrelated claims which individually
do not exceed $100,000, and in any event shall not be required to indemnify the
Seller Indemnitees unless and until the aggregate amount of all claims against
Buyer with respect thereto exceeds 1% of the Purchase Price in the aggregate;
provided, however, that, if such aggregate amount of such claims exceeds 1% of
the Purchase Price, Buyer shall be obligated to pay the entire amount thereof.
The aggregate liability of Buyer under Sections 10.2(i) and (ii) shall not
exceed the Purchase Price. The limits set forth in the preceding sentence shall
not apply to intentional misrepresentations nor shall they apply to Losses under
Sections 10.2(iii) and (iv).
From and after the Closing Date, the indemnification rights provided
in this Article 10 shall be Buyer's sole remedy for any breach of any
representation, warranty or covenant contained in this Agreement.
Section 10.3. Losses Net of Insurance, Etc. The amount of any loss,
Liability, cost or expense ("Loss") for which indemnification is provided under
this Article 10 shall be net
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of any amounts actually recovered or recoverable by the indemnified party under
insurance policies with respect to such Loss, but shall not be net of any tax
benefit or cost with respect thereto.
Section 10.4. Termination of Indemnification. The obligations to
indemnify and hold harmless any party (a) pursuant to clause (i) of each of
Sections 10.1 and 10.2, shall terminate when the applicable representation or
warranty terminates pursuant to Section 13.1 and (b) pursuant to the other
clauses of Section 10.1 and 10.2 shall terminate at the expiration of the
applicable statute of limitations; provided that the foregoing notwithstanding,
all indemnification obligations pursuant to this Article 10 shall terminate on
the later to occur of (x) the Disclosure Statement Hearing Date and (y) the
first Business Day on or after the date that is the six-month anniversary of the
Closing Date; provided, however, that no termination pursuant to this sentence,
nor any termination of any survival period set forth in Section 13.1, shall
affect, bar or limit any claim asserted prior to such termination, and any plan
of reorganization for the Sellers in accordance with Chapter 11 of the
Bankruptcy Code shall provide for the satisfaction of any such claim asserted
prior to such termination that is ultimately determined to be a Loss that is
indemnifiable by any Seller to any Buyer Indemnitee.
Section 10.5. Indemnification Procedures. (a) Any Buyer Indemnitee
or Seller Indemnitee entitled to indemnification under this Agreement shall
notify promptly the indemnifying party in writing of the commencement of any
action or proceeding by any third party (a "Third Party Claim") with respect to
which a claim for indemnification may be made pursuant to this Article 10, but
the failure of any indemnified party to provide such notice shall not relieve
the indemnifying party of its obligations under the preceding paragraphs of this
Article 10, except to the extent the indemnifying party is actually materially
prejudiced thereby, and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Article 10. In case any Third Party Claim is brought against an indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, unless in
the reasonable opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof jointly with any other indemnifying
party similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party that it so chooses, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
(i) if the indemnifying party fails to take reasonable steps necessary to defend
diligently the action or proceeding within twenty (20) days after receiving
notice from such indemnified party that the indemnified party believes it has
failed to do so; or (ii) if such indemnified party who is a defendant in any
Third Party Claim which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal defenses
available to such indemnified party which are not available to the indemnifying
party; or (iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct,
then, in any such case, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm of
counsel for all indemnified parties in each jurisdiction, except, in the case of
Buyer Indemnitees only, to the extent any such indemnified party or parties
reasonably shall
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have concluded that there may be legal defenses available to such party or
parties which are not available to the other indemnified parties or to the
extent representation of all indemnified parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct) and
the indemnifying party shall be liable for any expenses therefor. No
indemnifying party shall, without the written consent of the indemnified party,
which consent shall not be unreasonably withheld, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim, (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party and (iii) does not include any
injunctive or other non-monetary relief. Anything in the foregoing to the
contrary notwithstanding, (1) notice given by Buyer to the Company shall
constitute valid notice to all Seller Indemnitees, and (2) with respect to any
Third Party Claim with respect to which more than one Seller Indemnitee is an
indemnified party or potential indemnified party, all such Seller Indemnitees
shall select a single Seller Indemnitee to act as representative for all such
Seller Indemnitees with respect to such Third Party Claim, and (x) such
representative shall be authorized to make authorizations and consents on behalf
of each such Seller Indemnitee, and (y) Buyer shall, with respect to all matters
relating to such Third Party Claim, be entitled to rely on the statements,
authorizations and consents of such representative as being the statement,
authorization or consent of each such Seller Indemnitee.
(b) Anything to the contrary in this Section 10.5 notwithstanding:
(i) Buyer shall be entitled to assume and control the defense in all respects,
including with respect to settlement, with counsel selected by Buyer, of any
Third Party Claim for Taxes, which Third Party Claim for Taxes includes or could
reasonably be expected to include a claim for both Excluded Taxes and Taxes that
are Assumed Liabilities, (ii) Sellers shall facilitate such assumption and
control by Buyer, which facilitation shall include the prompt delivery, and in
any event the delivery within five Business Days after receipt by any Seller or
Affiliate thereof of a request therefor, copies of all notices and documents
(including court papers) received by any Seller or Affiliate thereof to the
extent relating to the Third Party Claim and any power of attorney reasonably
requested by Buyer Indemnitee with respect to such Third Party Claim, (iii)
Sellers shall reimburse Buyer Indemnitee for any fees and expenses attributable
to the defense of such Third Party Claim to the extent such fees and expenses
are attributable to the portion of such claim for which Sellers are required to
indemnify Buyer and its Affiliates hereunder.
(c) In the event any indemnified party should have an
indemnification claim against any indemnifying party under the Agreement that
does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party. The
failure by any indemnified party so to notify the indemnifying party shall not
relieve the indemnifying party from any liability that it may have to such
indemnified party, except to the extent that the indemnifying party has been
actually prejudiced by such failure. If the indemnifying party disputes its
liability with respect to such claim, the indemnifying party and the indemnified
party shall proceed in good faith to negotiate a resolution of such dispute and,
if
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not resolved through negotiations, such dispute shall be resolved by litigation
in the Bankruptcy Court or, if the Bankruptcy Court declines to resolve or take
jurisdiction over such dispute in an appropriate court of competent
jurisdiction.
Section 10.6. Indemnity Payments. In the event an indemnifying party
agrees to or is determined to have any obligation to indemnify any indemnified
party pursuant to this Article 10, such indemnifying party shall promptly pay to
the indemnified party or parties by wire transfer of immediately available funds
to the account or accounts designated by such indemnified party or parties,
except that (i) Buyer shall set off against its obligations under the Promissory
Note any amount due to Buyer pursuant to this Agreement, including this Article
10 and (ii) if Buyer has any obligation to make any payment to any of the
Sellers pursuant to this Agreement, including this Article 10, prior to the
final maturity of the Promissory Note, then in lieu of making the payment by
wire transfer as provided for above, Buyer may, at its option, cause the then
outstanding principal balance under the Promissory Note to be increased by the
amount of such obligation.
ARTICLE 11
Deliveries at Closing
---------------------
Section 11.1. Sellers' Deliveries at Closing. In addition to the
other things required to be done hereby, at the Closing, Sellers shall deliver,
or cause to be delivered, to Buyer the following:
(a) a certificate dated the Closing Date and validly executed on
behalf of each Seller to the effect that the conditions set forth in Sections
8.1 and 8.2(b) have been satisfied;
(b) a copy of the resolutions of the Board of Directors of each
Seller, or similar enabling document, authorizing the execution, delivery and
performance hereof by each Seller, and adopting the Company Board Determination
and a certificate of its secretary, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(c) evidence or copies of any Consents required pursuant to Section
8.2;
(d) all documents, certificates and agreements necessary to transfer
to Buyer good and marketable title to the Assets, free and clear of any and all
Encumbrances thereon, including:
(i) a duly executed Assignment and Assumption Agreement;
(ii) assignments of all Assumed Contracts, Assumed Intellectual
Property and any other agreements and instruments constituting Assets,
dated the Closing Date, assigning to Buyer all of Sellers' right, title
and interest therein and thereto, with any required Consent endorsed
thereon;
(iii) an assignment of lease, dated as of the Closing Date, with
respect to each Assumed Lease, in form reasonably acceptable to Buyer,
together with any necessary transfer declarations or other filings (and in
recordable form if required by Buyer); and
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(iv) certificates of title to all motor vehicles included in the
Assets to be transferred to Buyer hereunder, duly endorsed for transfer to
Buyer as of the Closing Date;
(e) all documents necessary to transfer to Buyer the Assumed
Intellectual Property;
(f) the Transitional Excite License;
(g) the Media IP License;
(h) certified copies of all orders of the Bankruptcy Court; and
(i) the FIRPTA Affidavits described in Section 7.2(b).
Section 11.2. Buyer's Deliveries at Closing. In addition to the
other things required to be done hereby, at the Closing, Buyer shall deliver, or
cause to be delivered, to Sellers the following:
(a) a certificate dated the Closing Date and validly executed on
behalf of Buyer to the effect that the conditions set forth in Sections 9.1 have
been satisfied;
(b) a copy of the resolutions of the Board of Directors of Buyer, or
similar enabling document, authorizing the execution, delivery and performance
hereof by Buyer, and a certificate of its secretary or assistant secretary,
dated as of the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(c) evidence or copies of any Consents required pursuant to Section
9.2;
(d) a duly executed Assignment and Assumption Agreement;
(e) payment of the Purchase Price in accordance with Section 2.6
(less, if applicable, the Canadian Purchase Price); and
(f) the Cross License.
Section 11.3. Required Documents. All documents to be delivered by
Sellers or to be entered into by Sellers and Buyer necessary to carry out the
transactions contemplated by this Agreement or contemplated by the terms of this
Agreement shall be satisfactory in form and substance to Buyer and counsel to
Buyer and all documents to be delivered by Buyer necessary to carry out the
transactions contemplated by this Agreement or to be entered into by Sellers and
Buyer necessary to carry out the transactions contemplated by this Agreement
shall be satisfactory in form and substance to Sellers and counsel to Sellers.
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ARTICLE 12
Termination
-----------
Section 12.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing by:
(a) written agreement of the Company and Buyer;
(b) by Buyer or the Company if the Closing has not occurred by the
180th calendar day after the date of this Agreement, provided that the
terminating party is not in material breach of any of its representations and
warranties contained in this Agreement and has not failed in any material
respect to perform any of its obligations hereunder;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Asset Purchase illegal or otherwise
prohibited or if any judgment, injunction, order or decree permanently
restraining, prohibiting or enjoining Buyer or the Company from consummating the
Asset Purchase is entered and such judgment, injunction, order or decree shall
become final and applicable;
(d) the Company, if there shall have been a breach by Buyer of any
of its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure to satisfy one or more of
the conditions set forth in Article 9 and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within 15
days after written notice thereof shall have been received by Buyer;
(e) by Buyer, if there shall have been a breach by any Seller of any
of its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure to satisfy one or more of
the conditions set forth in Article 8, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within 15
days after written notice thereof shall have been received by the Company;
(f) by Buyer, if (i) the Bankruptcy Court does not schedule a
hearing to occur not later than the date 30 days after the Filing Date on
motions or applications submitted by Sellers on the Filing Date as part of the
Bankruptcy Filings seeking approval of the Sale Procedures Order and the Cure
Procedures Order, or (ii) the Bankruptcy Court has not approved the Sale
Procedures Order and the Cure Procedures Order on or before the date that is 35
days after the Filing Date, or (iii) any of the Sales Procedures Order or the
Cure Procedures Order shall fail to be in full force and effect or shall have
been stayed, reversed, modified or amended in any respect without the prior
written consent of Buyer;
(g) by Buyer, if (i) Sellers fail to satisfy their obligations set
forth under Section 5.4, Section 5.15 or Section 5.17(a)(iii), and in either
case such failure continues for an aggregate of 14 days, or (ii) at any time,
Sellers intentionally terminate, or intentionally cause to be terminated, the
@Home or @Work services with respect to or affecting either (A) direct customers
of the Access Business who, collectively, provide service to a material number
of end users, or (B) a material number of end users, other than, in the case of
this clause (ii), any termination of services governed by any Distribution
Agreement which Sellers were permitted to
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reject or terminate in accordance with Section 5.4(b) and such rejection or
termination has become effective;
(h) if the Closing has not occurred solely because the Bankruptcy
Court Approval has not become a Final Order, then by Buyer or the Company on or
after the 45th day following the filing of the appeal or commencement of other
proceeding as a result of which Bankruptcy Court Approval has not become a final
order; provided that all of the conditions to the closing obligations of the
party that is not seeking to terminate (other than Bankruptcy Court Approval
becoming a Final Order) shall have been satisfied;
(i) by Buyer, in accordance with Section 2.11;
(j) by either Buyer or the Company, if Buyer is not the Successful
Bidder in the Auction, as those terms are used in the Sale Procedures Order.
Section 12.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the Sellers and Buyer
pursuant to Section 12.1, written notice thereof shall forthwith be given by the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto;
provided, however, that such termination shall not relieve any party hereto of
any liability for any willful breach of this Agreement; and provided, further,
that in connection with any such termination each party shall be and shall
remain liable for any payments owed or that become owed pursuant to, or that
arise as a result of any such termination pursuant to, the Sale Procedures
Order.
ARTICLE 13
Miscellaneous
-------------
Section 13.1. Survival of Representations and Warranties, Etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, any examination by or on behalf of the parties hereto, and
the completion of the transactions contemplated herein, until the earlier of (a)
the later of (1) the Disclosure Statement Hearing Date and (2) the first
Business Day on or after date that is the six month anniversary of the Closing
Date the Bankruptcy Plan Confirmation Date and (b) the applicable date set forth
in the following clauses:
(i) except as set forth in clause (ii) and (iii) below, until the
third anniversary of the Closing Date;
(ii) with respect to the representations and warranties contained in
Sections 3.1, 3.2, and 4.1, survive without limitation;
(iii) with respect to the representations and warranties contained
in Section 7.1, survive as to any Tax covered by such representations and
warranties until 60 days after the date until which the applicable statute
of limitations for such Tax remains open, in whole or in part, including
by reason of waiver of such statute of limitations.
-62-
Section 13.2. Survival of Covenants. The covenants and agreements of
the parties contained in this Agreement shall survive the Closing in accordance
with the terms hereof. Any and all covenants relating to Taxes shall survive so
long as the applicable statute of limitations remains open, in whole or in part,
including by reason of waiver of such statute of limitations.
Section 13.3. Higher and Better Offers. Anything herein to the
contrary notwithstanding, this Agreement and the rights and obligations of the
parties hereunder are subject to offers from third parties for the purchase of
all or substantially all of the Assets that are received, accepted and approved
as higher and better offers by the Bankruptcy Court or pursuant to procedures
established by the Bankruptcy Court. In the event that, at any time prior to
Bankruptcy Court Approval, any such offer or offers from third parties are so
approved by the Bankruptcy Court, this Agreement shall terminate with the effect
set forth in Section 12.2.
Section 13.4. Bankruptcy Court Approval. Sellers' obligations under
this Agreement are subject to Bankruptcy Court Approval to the extent (and only
to the extent) required by law.
Section 13.5. Company as Agent and Representative. Any obligation by
Buyer to make payment or deliveries to all or any Sellers shall be satisfied by
payment or delivery, as the case may be, to the Company. The Company is
authorized by this Agreement, as a specific term of the Asset Purchase provided
for herein, to act on behalf of and as representative of Sellers and their
successors for all purposes under this Agreement or in connection with the
transactions contemplated hereby.
Section 13.6. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given,
if to Buyer, to:
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇, Esq.
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if to the Company
or to any Seller, to:
At Home Corporation
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attn: General Counsel
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
and
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered at the address specified
in this Section.
Section 13.7. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Closing if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and Buyer, or, in the case of a waiver, by the party against whom
the waiver is to be effective.
(b) 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. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 13.8. Successors and Assigns. The provisions of this
Agreement shall be binding, upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
transfer or assign, in whole or from time to time in part, any or all of its
rights or obligations, but any such transfer or assignment will not relieve
Buyer of its obligations under this Agreement to the extent not timely satisfied
by such assignee.
-64-
Section 13.9. Entire Agreement; No Third Party Beneficiaries. (a)
This Agreement (including the Schedules and Exhibits hereto, the Confidentiality
Agreement and the other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Section 13.10. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 13.11. Interpretation; Absence of Presumption. (a) For the
purposes hereof, (i) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other
genders as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, and (v) provisions shall apply, when appropriate, to
successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 13.12. Severability. Any provision hereof which is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 13.13. Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.
Section 13.14. Specific Performance. The parties hereto each
acknowledge that, in view of the uniqueness of the subject matter hereof, each
of the parties would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms, and
therefore agree that each party shall be entitled to specific
-65-
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
Section 13.15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the conflicts of law principles thereof or any other jurisdiction,
except with respect to any matter as to which the Bankruptcy Code preempts
Delaware law, in which case the Bankruptcy Code shall apply.
Section 13.16. Arbitration. (a) Dispute Resolution. Except as
otherwise provided in Section 2.5, all controversies, disputes or claims arising
among the parties in connection with, or with respect to, any provision of this
Agreement which has not been resolved within twenty (20) days after either
Buyer, on the one hand, or Sellers, on the other hand, have notified the other
in writing of such controversy, dispute or claim, shall be submitted for
arbitration in accordance with the rules of the American Arbitration Association
or any successor thereof. Arbitration shall take place at an appointed time and
place in New York, New York.
(b) Selection of Arbitrators. Buyer, on the one hand, and Sellers,
on the other hand each shall select one arbitrator (who shall not be counsel for
such party), and the two so designated shall select a third arbitrator. If
either party shall fail to designate an arbitrator within seven calendar days
after arbitration is requested, or if the two arbitrators shall fail to select a
third arbitrator within 14 calendar days after arbitration is requested, then
such arbitrator shall be selected by the American Arbitration Association or any
successor thereto upon application of either party. Judgment upon any award of
the majority of arbitrators shall be binding and shall be entered in a court of
competent jurisdiction. Subject to the provisions of this Agreement, the award
of the arbitrators may grant any relief that a court of general jurisdiction has
authority to grant, including, without limitation, an award of damages and/or
injunctive relief, and shall assess, in addition, the cost of the arbitration,
including the reasonable fees of the arbitrator, reasonable attorneys' fees and
costs of all prevailing parties, against all non-prevailing parties.
(c) Temporary Injunctive Relief. Nothing herein contained shall bar
the right of any of the parties to seek and obtain temporary injunctive relief
from a court of competent jurisdiction in accordance with applicable law against
threatened conduct that will cause loss or damage, pending completion of the
arbitration, and the prevailing party therein shall be entitled to an award of
its reasonable attorneys' fees and costs.
(d) Arbitration Rules. All disputes and claims shall be determined
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "Rules") in effect on the date hereof,
except that such Rules shall be modified by this Agreement.
(e) Arbitration Proceedings. All arbitral proceedings arising under,
or in connection with, this Agreement shall be governed by the Federal Rules of
Civil Procedure. The previous sentence notwithstanding, the arbitrators' award
shall be made no later than ninety (90) days after their appointment. Subject to
the parties' right to be treated fairly, the arbitrators may shorten the periods
of time otherwise applicable to the arbitral proceedings under the Rules or the
Federal Rules of Civil Procedure to permit the award to be made within the time
limitation set forth in the previous sentence.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the day first above written.
BUYER: AT&T CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: : Executive Vice President -
Corporate Strategy and
Business Development
SELLERS: AT HOME CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: :President and Chief Executive Officer
(Additional Seller Signatures Appear on Following Pages)
[Signature Page to Asset Purchase Agreement]
AT HOME HOLDINGS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
AT HOME INTERNATIONAL HOLDINGS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
AT HOME L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
AT HOME NETWORK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
▇▇▇▇▇▇.▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
(Additional Seller Signatures Appear on Following Pages)
[Signature Page to Asset Purchase Agreement (Continued)]
CLASSIFIED 2000, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
E-MEDIA LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
EXCITE@HOME ▇▇▇▇.▇▇▇ HOLDING CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
EXCITE@HOME CANADA INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
FULL FORCE SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
(Additional Seller Signatures Appear on Following Pages)
[Signature Page to Asset Purchase Agreement (Continued)]
IMALL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
JOIN SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
KENDARA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
MAC CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
MATCHLOGIC, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
(Additional Seller Signatures Appear on Following Pages)
[Signature Page to Asset Purchase Agreement (Continued)]
NARRATIVE COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
NETBOT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
POGO ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
THE ▇▇▇▇▇▇▇▇ GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
WEBSHOTS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: : President and Chief Executive Officer
[Signature Page to Asset Purchase Agreement (Continued)]