EXHIBIT 2.01, 10.01
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ASSET PURCHASE AGREEMENT
by and among
▇▇▇.▇▇▇, INC.
and
NETWORK ACCESS SOLUTIONS CORPORATION, NETWORK ACCESS SOLUTIONS
LLC, NASOP, INC. AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GOLD AND ▇▇▇▇▇, A PROFESSIONAL
CORPORATION
Dated as of October 16, 2002
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS.......................................................1
ARTICLE II - PURCHASE AND SALE OF ASSETS; ASSIGNMENT AND ASSUMPTION
OF LIABILITIES................................................................8
Section 2.1 Purchase and Sale of Assets..................................8
Section 2.2 Assignment and Assumption of Liabilities....................12
ARTICLE III - PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ALLOCATION OF
PURCHASE PRICE...............................................................14
Section 3.1 Purchase Price; Payment of Purchase Price Amount............14
Section 3.2 Allocation of Purchase Price for Tax Purposes...............15
ARTICLE IV - CLOSING.........................................................15
Section 4.1 Closing.....................................................15
Section 4.2 Deliveries by the Seller at the Closing.....................16
Section 4.3 Deliveries by the Purchaser at the Closing..................16
Section 4.4 Further Assurances..........................................17
ARTICLE V - BANKRUPTCY COURT APPROVAL........................................17
Section 5.1 Bankruptcy Court Orders.....................................17
ARTICLE VI - REPRESENTATIONS OF THE SELLER...................................19
Section 6.1 Existence and Good Standing.................................19
Section 6.2 Authorization and Validity of Agreement.....................19
Section 6.3 Subsidiaries................................................19
Section 6.4 Financial Statements........................................20
Section 6.5 Absence of Certain Changes..................................20
Section 6.6 Sufficiency to Title........................................21
Section 6.7 Leases.....................................................21
Section 6.8 Material Contracts..........................................22
Section 6.9 Consents and Approvals; No Violations.......................22
Section 6.10 Litigation.................................................23
Section 6.11 Taxes and Employee Benefits................................23
Section 6.12 Intellectual Property......................................23
Section 6.13 Compliance with Laws.......................................24
Section 6.14 Environmental Matters......................................24
Section 6.15 Personnel..................................................24
Section 6.16 Broker's or Finder's Fees..................................24
Section 6.17 Accuracy of Information Furnished..........................24
ARTICLE VII - REPRESENTATIONS OF THE PURCHASER...............................25
Section 7.1 Existence and Good Standing; Authorization and Validity
of Agreement................................................25
(i)
Section 7.2 Consents and Approvals; No Violations.......................25
Section 7.3 Litigation..................................................25
Section 7.4 Available Funds.............................................26
Section 7.5 Broker's or Finder's Fees...................................26
Section 7.6 Investigation By Purchaser..................................26
ARTICLE VIII - ADDITIONAL AGREEMENTS.........................................26
Section 8.1 Conduct of Purchased Business of the Seller.................26
Section 8.2 Purchaser Access to Information.............................27
Section 8.3 Reasonable Efforts; Cooperation; Consents and Approvals.....28
Section 8.4 Exclusive Dealing...........................................29
Section 8.5 Sale Procedures.............................................29
Section 8.6 Public Disclosure...........................................30
Section 8.7 Trademarks and Tradenames...................................30
Section 8.8. Apportionment..............................................30
Section 8.9 Seller Access to Information................................31
Section 8.10. Employees.................................................31
Section 8.11. Phone Numbers.............................................32
Section 8.12. Delivery of Monthly Financial Statements..................32
Section 8.13. Post-Closing Covenants....................................32
Section 8.14. Confidential Information..................................33
Section 8.15. Prepaid Expenses..........................................33
Section 8.16 Post-Closing Agreement.....................................33
Section 8.17. Certain Required Disclosure...............................34
Section 8.18 Collection of Accounts Receivable..........................35
ARTICLE IX - CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER..................37
Section 9.1 Truth of Representations and Warranties.....................37
Section 9.2 Performance of Agreements...................................37
Section 9.3 No Injunction...............................................37
Section 9.4 Statutes....................................................37
Section 9.5 Governmental and Other Approvals............................38
Section 9.6 Bankruptcy Matters..........................................38
Section 9.7 "Non-foreign" Status Certificate............................38
Section 9.8 Delivery of Monthly Financial Statements....................38
Section 9.9 Receipt of Amendments to Conditional Assigned Leases and
Conditional Assigned Contracts..............................38
Section 9.10 Maximum Amount of Long-Term Debt/Capital Lease
Obligations................................................38
Section 9.11 No Material Adverse Effect.................................38
Section 9.12 Contractual or Legal Arrangements..........................38
Section 9.14 Real Property Lease........................................39
Section 9.14 Minimum Revenue............................................39
Section 9.15 Confidential Customer Information..........................39
ARTICLE X - CONDITIONS TO THE OBLIGATIONS OF THE SELLER......................39
Section 10.1 Truth of Representations and Warranties....................39
(ii)
Section 10.2 Performance of Agreements..................................40
Section 10.3 No Injunction..............................................40
Section 10.4 Statutes...................................................40
Section 10.5 Governmental and Other Approvals...........................40
Section 10.6 Bankruptcy Matters.........................................40
Section 10.7 Receipt of Amendments to Conditional Assigned Leases and
Conditional Assigned Contracts.............................40
ARTICLE XI - NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TERMINATION.....41
Section 11.1 No Survival of Representations or Warranties...............41
Section 11.2 Events of Termination......................................41
Section 11.3 Effect of Termination......................................42
ARTICLE XII - MISCELLANEOUS..................................................42
Section 12.1 Expenses; Fees.............................................42
Section 12.2 Transfer Taxes.............................................43
Section 12.3 APPLICABLE LAW.............................................44
Section 12.4 JURISDICTION; WAIVER OF JURY TRIAL.........................44
Section 12.5 Captions; Headings; Table of Contents......................44
Section 12.6 Notices....................................................44
Section 12.7 Assignment; Parties in Interest............................46
Section 12.8 Counterparts...............................................46
Section 12.9 Entire Agreement...........................................46
Section 12.10 Third Party Beneficiaries.................................46
Section 12.11 Severability; Enforcement.................................46
Section 12.12 Amendments; Waiver........................................47
Section 12.13 No Strict Construction....................................47
Section 12.14 Casualty, Risk of Loss....................................47
Section 12.15 Service Agreement Regarding Covad Assets..................48
(iii)
EXHIBITS
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EXHIBIT A Form of ▇▇▇▇ of Sale
EXHIBIT B Form of Assumption Agreement
EXHIBIT C Form of Section 363/365 Order
EXHIBIT D Form of Sale Procedures Order
EXHIBIT E Sale Procedures
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT"), dated as of
October 16, 2002, by and among ▇▇▇.▇▇▇, Inc., a Delaware corporation (the
"PURCHASER"), and Network Access Solutions Corporation, a Delaware corporation
(the "COMPANY"), Network Access Solutions LLC, a Virginia limited liability
company and wholly-owned subsidiary of the Company (the "LLC"), NASOP, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company ("NASOP" and
together with the Company and the LLC, the "SELLER") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gold and
▇▇▇▇▇, a Professional Corporation, a Pennsylvania professional corporation (the
"DEPOSIT ESCROW AGENT"). The Purchaser and the Seller are sometimes referred to
herein individually as a "PARTY" and, collectively as the "PARTIES"). Other
capitalized terms used herein are defined in Article I.
WITNESSETH:
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WHEREAS, the Purchaser desires to purchase certain assets of the
Seller and to assume certain liabilities of the Seller, and the Seller desires
to sell such assets to the Purchaser and to assign such liabilities to the
Purchaser, on the terms and conditions set forth in this Agreement and in
accordance with sections 105, 363 and 365 of Title 11 of the United States Code
(together with the rules and regulations promulgated thereunder, the "BANKRUPTCY
CODE") and other applicable provisions of the Bankruptcy Code;
WHEREAS, the Company and NASOP have commenced voluntary Chapter 11
cases, which are being jointly administered (the "CHAPTER 11 CASE") in the
United States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY
COURT") and the Purchased Assets will be sold pursuant to an order of the
Bankruptcy Court approving such sale under Section 363 of the Bankruptcy Code,
and such sale will include the assumption by the Purchaser of the Assumed
Liabilities under Section 365 of the Bankruptcy Code, and the terms and
conditions of this Agreement; and
WHEREAS, the Seller desires to sell the Purchased Assets and to
assign the Assumed Liabilities to further its reorganization efforts and to
enable it to consummate a plan of reorganization in the Chapter 11 Case;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, and for other good and valuable consideration
described herein, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
Asset Purchase Agreement - Page 2
"AFFILIATE" means, with respect to a specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. As used herein, the term "CONTROL" (including, with correlative
meanings, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ALLOCATION STATEMENT" shall have the meaning set forth in Section
3.2.
"APPORTIONED OBLIGATIONS" shall have the meaning set forth in
Section 8.8.
"ASSIGNED CONTRACTS" shall have the meaning set forth in Section
2.1(a)(iv).
"ASSIGNED INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 2.1(a)(v).
"ASSIGNED LEASES" shall have the meaning set forth in Section
2.1(a)(iii).
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.2(a).
"ASSUMED DEBT" shall have the meaning set forth in Section 3.1(a).
"ASSUMPTION AGREEMENT" shall have the meaning set forth in Section
4.3(c).
"AUCTION" shall mean the auction of the Seller's assets pursuant to
the Sale Procedures Order.
"BANKRUPTCY ACTIONS" means any claim or cause of action arising
under the Bankruptcy Code including, without limitation, claims or causes of
action arising under Sections 544, 547, 548, 549 and 553 of the Bankruptcy Code
and equivalent or analogous state law actions.
"BANKRUPTCY CODE" shall have the meaning set forth in the Recitals.
"BANKRUPTCY COURT" shall have the meaning set forth in the Recitals.
"▇▇▇▇ OF SALE" shall have the meaning set forth in Section 4.2(i).
"BREAK-UP FEE" means an amount equal to $525,000.
"BUSINESS" means any and all business activities of any kind that
are conducted by the Seller and its Subsidiaries prior to and as of the Closing
Date.
"BUSINESS DAY" means any day except a Saturday, a Sunday or other
day on which commercial banks are required or authorized to close in New Haven,
Connecticut or Herndon, Virginia.
Asset Purchase Agreement - Page 3
"CASH EQUIVALENTS" mean certificates of deposits, time deposits,
bankers' acceptances, commercial paper and government securities, in each case,
with maturities of less than one year.
"CASH PURCHASE PRICE" shall have the meaning set forth in Section
3.1.
"CHAPTER 11 CASE" shall have the meaning set forth in the Recitals.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"COMMISSION" shall have the meaning set forth in Section 6.4.
"COMMUNICATIONS LICENSES" means all licenses, certificates,
registrations or other authorizations issued by the Federal Communications
Commission (FCC) or state regulatory authorities and held by the Seller.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPETING TRANSACTION" means any proposed transfer or disposition
of all or substantially all of the Purchased Assets or any significant portion
thereof, or any transfer of a controlling ownership interest in the Seller, any
Subsidiary, the Purchased Business or any significant portion thereof, in a
single transaction or series of related transactions to any Person other than
the Purchaser, or any proposed Chapter 11 plan of reorganization other than a
plan of liquidation that does not contemplate the consummation of the
transactions contemplated by this Agreement.
"CONDITIONAL ASSIGNED CONTRACTS" shall have the meaning set forth in
Section 2.1(a)(iv).
"CONDITIONAL ASSIGNED LEASES" shall have the meaning set forth in
Section 2.1(a)(iii).
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 8.14(b).
"CONFIDENTIAL CUSTOMER INFORMATION" shall have the meaning set forth
in Section 8.14(b).
"CONTRACTS" shall have the meaning set forth in Section 6.8(a).
"COVAD" shall mean Covad Communications Group, Inc., a Delaware
corporation, and all of its Affiliates.
"COVAD ASSETS" means all of the Seller's broadband customer circuits
which are supported on a wholesale basis by Covad's underlying circuit
connections, all related customer
Asset Purchase Agreement - Page 4
service agreements, all installed customer premise equipment used in connection
with the provisioning of such services to such customers, all assets listed on
Schedule 1 hereto, and all other circuits and services provided by Covad.
"CURE COSTS" shall have the meaning set forth in Section 2.2(b)(x).
"DEPOSIT" shall have the meaning set forth in Section 3.1(b).
"DEPOSIT ESCROW AGENT" shall have the meaning set forth in the
Preamble.
"DEPOSIT INTEREST" shall mean all interest earned on the Deposit.
"DESIGNATED RESTRUCTURING COSTS" means all out-of-pocket fees and
expenses incurred or owed in connection with the administration of the Chapter
11 Case, including, without limitation, the U.S. Trustee fees, the fees and
expenses of attorneys, accountants, financial advisors, consultants and other
professionals retained by the Seller, the creditors' committee, all postpetition
lenders or all prepetition lenders incurred or owed in connection with the
administration of the Chapter 11 Case, and all out-of-pocket expenses of the
Seller and its Subsidiaries in connection with the transactions contemplated by
this Agreement.
"EARNED REVENUE" means the number obtained by multiplying (i)
Expected Revenue by (ii) a fraction the numerator of which is the number of days
in the period beginning on (and including in such period) the Closing Date and
ending on (and including in such period) the last day of the month in which
Closing occurs and the denominator of which is the number of days in the month
in which Closing occurs.
"EMPLOYEE PLAN" means an employment, severance or similar contract,
arrangement or policy and each plan or arrangement providing for severance,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or
benefits, including each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA, that is subject to ERISA, maintained or contributed to by
any Seller or any ERISA Affiliates of Seller.
"EMPLOYEE LIST" shall have the meaning set forth in Section 6.15.
"ENCUMBRANCES" means all liens, claims, judgments, licenses,
subleases, mortgages, pledges, security interests, conditional sales agreements,
charges, options, rights of first refusal or first offer, reservations,
restrictions or other encumbrances or defects in title of any kind.
"ENVIRONMENTAL LAW" means all Laws in effect as of the Closing Date
relating to natural resources or the environment, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, ET. SEQ., the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. Section 6901, ET. SEQ., the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 ET. SEQ., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 ET. SEQ., and the Clean Air
Act, 42 U.S.C. Section 7401, ET. SEQ.
Asset Purchase Agreement - Page 5
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, together with the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any other entity that, together with such
entity, would be treated as a single employer under Section 414 of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXCHANGE ACT DOCUMENTS" means the documents filed by the Company
under the Exchange Act since the end of its most recently completed fiscal year
through the date hereof, including without limitation, it most recent annual
report of Form 10-K.
"EXCLUDED ASSETS" shall have the meaning set forth in Section
2.1(b).
"EXCLUDED CONTRACTS" shall have the meaning set forth in Section
2.2(b)(iii).
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
2.2(b).
"EXPENSE REIMBURSEMENT" means the actual and reasonable documented
fees and expenses incurred by the Purchaser in connection with the transactions
contemplated by this Agreement, including, without limitation, fees and expenses
incurred in connection with the preparation and negotiation of the Letter of
Intent by and between Purchaser and the Company dated as of August 9, 2002
related to the Purchased Assets, this Agreement and any related agreements or
instruments, and the Purchaser's due diligence reviews and the fees and expenses
of Purchaser's professionals.
"EXPECTED REVENUE" means the number obtained by multiplying (i)
Revenue by (ii) sixty-five percent (65%).
"FIRM ASSIGNED CONTRACTS" shall have the meaning set forth in
Section 2.1(a)(iv).
"FIRM ASSIGNED LEASES" shall have the meaning set forth in Section
2.1(a)(iii).
"GAAP" means generally accepted accounting principles in the United
States of America as set forth in pronouncements of the Financial Accounting
Standards Board and the American Institute of Certified Public Accountants, as
such principles are from time to time supplemented and amended.
"GOVERNMENTAL AUTHORITY" means any (i) federal, state, local,
municipal, foreign or other government; (ii) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); or (iii) body exercising,
or entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature, including any
arbitral tribunal.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
6.12.
Asset Purchase Agreement - Page 6
"LAW" or "LAWS" means any and all statutes, laws, ordinances, codes,
proclamations, rules, regulations, published requirements, judicial decisions,
orders, decrees, consent decrees and rules or common law of any Governmental
Authority, in each case, as amended and in effect from time to time.
"LUCENT TECHNOLOGIES ACTION" means the arbitration action pending
between the Seller and Lucent Technologies, Inc.
"MANAGEMENT AGREEMENT" means a management agreement in a form
acceptable to Purchaser and Seller, effective at the Closing, that permits the
Purchaser to manage certain of the operations of the Seller relating to the
Purchased Business and certain of the Purchased Assets for a specified period of
time post-Closing while the Purchaser seeks to obtain (i) any third-party
consents or approvals (including, without limitation, from any Governmental
Authority) necessary to enable the Purchaser to establish contractual or other
legal arrangements required to operate the Purchased Assets (provided that in
the event any such contractual or other legal arrangement requires any payment
of Cure Costs by Seller or results in any increase in the obligations or
liabilities of Seller, then such contractual or other legal arrangements require
the consent of Seller) and/or (ii) any modifications to Assigned Contracts
relating to any of the foregoing.
"MATERIAL ADVERSE EFFECT" means any change or effect that (i) would
prevent, materially interfere with or materially delay the Seller from
performing its obligations under this Agreement, or (ii) is or would reasonably
be expected to be materially adverse to the assets, condition (financial or
otherwise), operations, or results of operations of the Purchased Business or
the Purchased Assets or the physical condition of the Purchased Assets;
provided, however, that a decrease in Revenue to an amount not less than $2.3
million shall not in itself be a Material Adverse Effect.
"MONTHLY FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 6.4.
"NET PURCHASE PRICE AMOUNT" shall mean the Cash Purchase Price (as
may be adjusted pursuant to Section 2.1(d)) less the sum of (a) the Deposit and
(b) the Deposit Interest.
"OTHER INTELLECTUAL PROPERTY" means (i) trade secrets and
confidential business information (whether patentable or nonpatentable and
whether or not reduced to practice), know-how, manufacturing and product
processes and techniques, operating systems (including, without limitation,
billing, customer service, provisioning and IT systems), research and
development information, unregistered copyrights, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, (ii) other proprietary rights
relating to any of the foregoing (including, without limitation, associated
goodwill and remedies against infringements thereof and rights of protection of
an interest therein under the laws of all jurisdictions), and (iii) copies and
tangible embodiments of the foregoing, in each case, owned or licensed by the
Seller which is used in the operation of the Purchased Business or necessary for
the continued operation of the Purchased Business by the Purchaser after the
Closing Date, but in any event excluding any and all Intellectual Property.
Asset Purchase Agreement - Page 7
"OVERBID" shall have the meaning set forth in Section 5.1(a).
"PARTY" and "PARTIES" shall have the meaning set forth in the
Preamble.
"PERSON" means and includes any individual, any legal entity,
including, without limitation, any partnership, joint venture, corporation,
limited liability company, limited liability partnership and trust, any
unincorporated organization, and any Governmental Authority.
"POST-CLOSING CONFIDENTIAL INFORMATION" shall have the meaning set
forth in Section 8.14(a).
"PROPOSED SALE" shall have the meaning set forth in Section 5.1(a).
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1(a).
"PURCHASE PRICE AMOUNT" shall have the meaning set forth in Section
3.1(a).
"PURCHASED ASSETS" shall have the meaning set forth in Section
2.1(a).
"PURCHASED BUSINESS" means any and all business activities of any
kind that are conducted by Seller and its Subsidiaries as of the Closing Date,
other than business activities involving exclusively the Covad Assets.
"PURCHASED FIXED ASSETS" shall have the meaning set forth in Section
2.1(a)(ii).
"PURCHASED INVENTORY" shall have the meaning set forth in Section
2.1(a)(i).
"PURCHASER" shall have the meaning set forth in the Preamble.
"REMITTANCE ADVICE" shall have the meaning set forth in Section
8.18(b).
"REVENUE" means the aggregate monthly recurring service ▇▇▇▇▇▇▇▇,
net of credits (other than credits for customer cash remittances), included in
the Seller's most recent billing run prior to the Closing Date (provided that
such ▇▇▇▇▇▇▇▇ are made in accordance with the Seller's regular billing
practices) to those customers that have made a cash remittance to the Seller
(other than in the form of a final settlement) during the 75 days immediately
prior to the second day immediately preceding the Closing Date; provided that
such cash remittance has been credited to the customer's account and deposited
in a Seller bank account.
"SALE HEARING" shall have the meaning set forth in Section 5.1(a).
"SALE PROCEDURES" shall have the meaning set forth in Section
11.2(f).
"SALE PROCEDURES HEARING" shall have the meaning set forth in
Section 5.1(a).
"SALE PROCEDURES ORDER" shall have the meaning set forth in Section
5.1(a).
"SECTION 363/365 ORDER" shall have the meaning set forth in Section
5.1(b).
Asset Purchase Agreement - Page 8
"SECURITIES ACT" shall have the meaning set forth in Section 9.16.
"SELLER" shall have the meaning set forth in the Preamble.
"SERVER ROOMS" shall have the meaning set forth in Section 9.13.
"SERVICES" shall have the meaning set forth in Section 8.16.
"STANDARD FORM CUSTOMER CONTRACTS" shall have the meaning set forth
in Section 6.8(b).
"SUBSIDIARY" shall have the meaning set forth in Rule 405 under the
Securities Act of 1933, as amended.
"TAX" or "TAXES" means any domestic or foreign, federal, state or
local income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax of any kind whatsoever, including all estimated taxes, deficiency
assessments and any interest, penalty or addition thereto.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"UNALLOCATED CASH REMITTANCES" shall have the meaning set forth in
Section 8.18(c).
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
Section 2.1 Purchase and Sale of Assets. (a) Pursuant to sections
363 and 365 (and other applicable provisions) of the Bankruptcy Code and on the
terms and subject to the conditions set forth in this Agreement, at the Closing,
subject to Section 2.1(b), Section 2.1(c) and Section 8.3(b), the Purchaser will
purchase, acquire and accept (or cause to be purchased, acquired and accepted)
from the Seller, and the Seller will sell, transfer, convey, assign and deliver
(or cause to be sold, transferred, conveyed, assigned and delivered) to the
Purchaser, against the receipt by the Seller of the consideration specified in
Section 3.1, all assets and properties of every kind, nature and description,
wherever located, real, personal or mixed, tangible, intangible, owned, held or
used in the conduct of the Purchased Business by the Seller other than the
Excluded Assets, free and clear of all Encumbrances, and including, without
limitation, all of the Seller's right, title and interest in and to the
following assets and rights (collectively, the "PURCHASED ASSETS"):
Asset Purchase Agreement - Page 9
(i) all supplies and inventory related to the Purchased
Business, wherever located (collectively, the "PURCHASED
INVENTORY");
(ii) all personal property and interests therein,
including, without limitation, all network assets and equipment
supporting broadband service to customers, customer premise
equipment, machinery, equipment, office equipment, communications
equipment, computer hardware and software (other than any software
license agreements with Microsoft Corporation), motor vehicles,
furniture, fixtures, spare and replacement parts, and other personal
property owned or used by the Seller with respect to the Purchased
Business on the Closing Date, wherever located, including, without
limitation, the equipment subject to the leases listed on Schedule
2.1(a)(ii)(A) and the equipment listed on Schedule 2.1(a)(ii)(B)
(collectively, the "PURCHASED FIXED ASSETS");
(iii) all rights under or in connection with all leases
and subleases of real property set forth in, and attached to,
Schedule 2.1(a)(iii)(A) (collectively, the "FIRM ASSIGNED LEASES")
and Schedule 2.1(a)(iii)(B) (as such leases and subleases on
Schedule 2.1(a)(iii)(B) may be amended, modified or supplemented
from time to time prior to the Closing Date in accordance with the
provisions of this Agreement)(collectively, the "CONDITIONAL
ASSIGNED LEASES"), together with the Seller's interest in all
buildings, facilities, fixtures and other improvements thereon and
all easements, rights-of-way, transferable licenses and permits and
other appurtenances thereto, except as otherwise provided in such
Schedules and subject to Section 8.3(b) (the Firm Assigned Leases
and the Conditional Assigned Leases are referred to collectively as
the "ASSIGNED LEASES");
(iv) all rights under or in connection with all
contracts, licenses, commitments, purchase orders, agreements,
instruments and unexpired leases and subleases (collectively, the
"ASSIGNED CONTRACTS"): (A) relating to the Purchased Business or
Assumed Liabilities and set forth in, and attached to, Schedule
2.1(a)(iv)(A) (collectively, the "FIRM ASSIGNED CONTRACTS") and
Schedule 2.1(a)(iv)(B) (as Schedule 2.1(a)(iv)(B) and the agreements
listed on Schedule 2.1(a)(iv)(B) may be amended or modified from
time to time prior to the Closing Date in accordance with the
provisions of this Agreement)(collectively, the "CONDITIONAL
ASSIGNED CONTRACTS"), and (B) with the customers of the Purchased
Business relating to the provision of services or equipment to such
customers;
(v) all Intellectual Property and Other Intellectual
Property owned, licensed or used by the Seller in respect of the
Purchased Business on the Closing Date, including all tradenames,
trademarks, service marks, domain names, trademark registrations and
applications therefor, service ▇▇▇▇ registrations and applications
therefor, copyright registrations and applications (including
without limitation the names and Internet protocol addresses set
forth on Schedule 2.1(a)(v)) therefor and all goodwill associated
therewith (but excluding those used exclusively in connection with
any Excluded Asset), all software license agreements (other than any
software license agreements with Microsoft Corporation), all
documents embodying proprietary information and copyright-protected
material and all evidence of ownership of such Intellectual Property
and Other Intellectual Property (collectively, the "ASSIGNED
INTELLECTUAL PROPERTY");
Asset Purchase Agreement - Page 10
(vi) true, complete and correct copies of all books,
records and other data and information relating to the Purchased
Business or to any customer of the Purchased Business, including,
without limitation, all books, records, materials, manuals,
financial and accounting statements, sales and promotional materials
and records, advertising materials, customer lists, supplier lists,
mailing lists, distribution lists, business plans, credit
information, cost and pricing information, reference catalogs, data
and information derived from management information systems, and
other similar property and rights that relate to or are used in
connection with the Purchased Business, wherever located;
(vii) any counterclaims, setoffs or defenses the Seller
may have with respect to any Assumed Liabilities;
(viii) all prepaid expenses and assets of the Seller
(including deposits), in each case to the extent related to any
other Purchased Asset, including, without limitation, any claims or
other rights under insurance policies of the Seller (other than
insurance policy deposits) relating to any other Purchased Asset,
but excluding any prepaid expenses made by Seller to any third-party
set forth on Schedule 2.1(a)(viii) that are credited to or otherwise
made available to Purchaser post-Closing by such third-parties.
(ix) all rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased
Business or the Purchased Assets, including unliquidated rights
under manufacturers' and vendors, warranties but specifically
excluding any of the foregoing in connection with the Lucent
Technologies Action;
(x) to the extent transferable, all licenses, permits or
other governmental authorizations affecting, or relating in any way
to, the Purchased Business or the Purchased Assets, including the
items listed on Schedule 2.1(a)(x), but excluding the Communications
Licenses; and
(xi) all goodwill and other intangible assets associated
with the Purchased Business or the Purchased Assets.
(b) Notwithstanding anything to the contrary in Section 2.1(a), the
Purchased Assets shall not include any of the Seller's right, title and interest
in and to the following assets and rights (collectively, the "EXCLUDED ASSETS"):
(i) all cash and Cash Equivalents of the Seller whether
on hand, in transit or in banks or other financial institutions,
security entitlements, securities accounts, commodity contracts and
commodity accounts;
(ii) all notes and accounts receivable, including any
notes and accounts receivable from any of Seller's Affiliates and
any refunds and rebates payable to the Seller by its customers;
(iii) all rights and claims under the Excluded
Contracts;
Asset Purchase Agreement - Page 11
(iv) all of the Seller's rights under this Agreement and
any Assumption Agreement;
(v) any shares of capital stock of, or other equity
interests in, the Seller or any of its Subsidiaries;
(vi) the causes of action, lawsuits, judgments, claims
and demands of any nature available being pursued by Seller (whether
arising by way of counterclaim or otherwise) in the Lucent
Technologies Action, the Chapter 11 Case and the Bankruptcy Actions;
(vii) the original copies of all books, records and
other data and information identified in Section 2.1(a)(vi), and all
accounting and tax records, taxpayer identification numbers, books
and records, accounting ledgers and organizational documents, seals,
minute books, stock transfer books and other documents relating
solely to the organization, maintenance and existence of any Seller
as a corporation or limited liability company;
(viii) the Covad Assets;
(ix) all prepaid expenses and assets (including
deposits), to the extent not referred to in Section 2.1(a)(viii);
(x) assets of any Employee Plan;
(xi) all Communication Licenses;
(xii) subject to Section 12.14, all contracts of
insurance and insurance policies and plans;
(xiii) all Tax refunds;
(xiv) all documents relating exclusively to an Excluded
Asset; and
(xv) those assets listed on Schedule 2.1(b)(xv).
(c) Notwithstanding anything to the contrary in this Agreement,
Purchaser may with the consent of the Company, simultaneously amend each of
Schedule 2.1(a)(ii)(A) and Schedule 2.1(a)(iv)(B) to delete any contract listed
on Schedule 2.1(a)(iv)(B) and add such contract (and the equipment subject to
such contract) to Schedule 2.1(a)(ii)(A), at which time Purchaser shall deliver
to the Company a revised version of such schedules. Failure by either Purchaser
or the Company to consent to such amendment shall not in itself be an event of
termination.
(d) Notwithstanding anything to the contrary in this Agreement, to
the extent any of the agreements listed on Schedule 2.1(a)(ii)(A), as such
Schedule may be amended pursuant to this Agreement, are deemed by the Bankruptcy
Court on or prior to the Closing to be executory contracts and/or true leases
(i) the purchase and sale of the equipment subject to such agreements
Asset Purchase Agreement - Page 12
pursuant to this Agreement shall be deemed to be an "assumption" of such
agreements and each such agreement will be deemed to be a Firm Assigned Contract
for purposes of this Agreement and Schedule 2.1(a)(iv)(A) shall be amended to
reflect the assumption of such agreements, and (ii) the aggregate payments, if
any, due on or after the Closing Date under such agreements as determined by
Purchaser and Seller and assumed by Purchaser pursuant to this Agreement shall
be deducted from the Cash Purchase Price.
Section 2.2 Assignment and Assumption of Liabilities. (a) On the
terms and subject to the conditions of this Agreement, at the Closing, subject
to Section 2.2(b), the Seller will assign to the Purchaser, and the Purchaser
will assume and agree to pay, perform and discharge when due the Seller's
liabilities, commitments and obligations arising from and after the Closing
under or in connection with the Assigned Leases and the Assigned Contracts
(collectively, the "ASSUMED LIABILITIES"). The Parties acknowledge that the
Assumed Liabilities shall include an aggregate of (i) no more than
$10,000,000.00 in principal of long-term debt or capital lease obligations under
the Conditional Assigned Contracts and (ii) those liabilities, commitments and
obligations arising from and after the Closing under such Assigned Leases and
Assigned Contracts.
(b) Notwithstanding anything to the contrary in Section 2.2(a) or
any other provision in this Agreement, the Purchaser is assuming only the
Assumed Liabilities and no other liability, commitment or obligation of the
Business or the Seller or any other Person whatsoever, of whatever nature
whether presently in existence or arising or asserted hereafter. The Purchaser
shall not be deemed to be a successor-in-interest to the Seller for any purposes
whatsoever. All liabilities, commitments and obligations other than the Assumed
Liabilities will be retained by, and remain liabilities, commitments and
obligations of, the Seller (collectively, the "EXCLUDED LIABILITIES") and such
Excluded Liabilities shall include, without limitation, the following:
(i) any and all liabilities, commitments and obligations
of the Seller resulting from any litigation, claim, arbitration,
investigation or other proceeding, including, without limitation,
those resulting from the Lucent Technologies Action, the Chapter 11
Case and the Bankruptcy Actions, and all other liabilities,
commitments and obligations arising in connection with all actions,
suits, claims, arbitrations, investigations or proceedings pending
on the Closing Date or arising after the Closing Date caused by or
arising out of or resulting from, directly or indirectly, any
alleged or actual acts or omissions occurring on or before the
Closing Date;
(ii) any and all liabilities, commitments and
obligations of the Seller for money borrowed, whether such
liabilities, commitments and obligations were incurred in the
operation of the Purchased Business or otherwise, other than such
liabilities, commitments and obligations assumed in connection with
the Assumed Liabilities;
(iii) any and all liabilities, commitments and
obligations of the Seller in respect of or under all, commitments,
purchase orders, agreements, instruments, leases and subleases that
do not constitute Assigned Contracts, Assigned Leases or licenses of
Assigned Intellectual Property, including the Government Prime
Contract DCA###-##-#### dated 10/16/00, as amended by and between
AT&T and the Company (collectively,
Asset Purchase Agreement - Page 13
the "EXCLUDED CONTRACTS"), and any and all liabilities, commitments
and obligations of the Seller in respect of or under all Assigned
Contracts, Assigned Leases and licenses of Assigned Intellectual
Property arising on or before the Closing Date except to the extent
such liabilities, commitments and obligations represent Assumed
Liabilities;
(iv) any and all liabilities, commitments and
obligations of the Seller relating to Employee Plans;
(v) any and all liabilities, commitments and obligations
of the Seller arising from, or related to, environmental conditions
or violations of Environmental Law existing or occurring on or prior
to the Closing Date;
(vi) except as provided in Section 8.8 and 12.2, any and
all liabilities, commitments and obligations for Taxes of the
Seller, including any and all liabilities, commitments and
obligations for Taxes attributable to the ownership of the Purchased
Assets or operation of the Purchased Business (including any such
liabilities that arise in connection with the transactions
contemplated by this Agreement) on or prior to the Closing Date;
(vii) any and all liabilities or obligations of the
Seller arising from the breach by the Seller of any term, covenant
or provisions of any of the Assigned Contracts or the Assigned
Leases;
(viii) any and all liabilities, commitments and
obligations of the Seller for Designated Restructuring Costs and any
contracts related thereto;
(ix) any and all trade and vendor accounts payable,
including, without limitation, trade and vendor accounts payable
related to the Purchased Business or the Purchased Assets;
(x) all costs of curing any and all defaults under the
Assigned Contracts and the Assigned Leases (collectively, the "CURE
COSTS"); and
(xi) any and all other liabilities, commitments and
obligations of the Seller not expressly assumed by the Purchaser
pursuant to Section 2.2(a) or any of the other provisions of this
Agreement.
ARTICLE III
PURCHASE PRICE;
PAYMENT OF PURCHASE PRICE;
ALLOCATION OF PURCHASE PRICE
Section 3.1 Purchase Price; Payment of Purchase Price Amount. (a) An
aggregate purchase price (the "PURCHASE PRICE") of $17,000,000.00, consisting of
Purchaser's assumption of long-term debt and capital lease obligations of the
Seller included in the Assumed Liabilities
Asset Purchase Agreement - Page 14
in an aggregate amount of no more than $10,000,000.00 in principal and, subject
to 2.1(d), an amount in cash (the "CASH PURCHASE PRICE") equal to $7,000,000.00
less the sum of the (i) actual and documented direct amounts paid or incurred,
if any, by Purchaser to the provider of services described in Section 9.12 in
connection with establishing the contractual or other legal arrangements set
forth in Section 9.12 and (ii) the Earned Revenue (the "PURCHASE PRICE AMOUNT")
shall be payable to the Company by the Purchaser at the Closing as consideration
for the sale, conveyance, transfer and assignment of the Purchased Assets. In
the event the aggregate principal amount of long-term debt and capital lease
obligations (the "ASSUMED DEBT") included in the Assumed Liabilities is less
than $10,000,000, then the Purchaser will issue, execute and deliver an
unsecured promissory note to the Company at Closing in a form acceptable to
Purchaser and the Company in an amount equal to one-half of the difference
between $10,000,000 and the aggregate principal amount of the Assumed Debt,
taken as a whole. The term, the interest rate and the payment terms of such note
shall be substantially the same terms the Purchaser is subject to with respect
to such Assumed Debt, taken as a whole; provided, however, that the promissory
note shall be assignable by the Company without the consent of Purchaser to the
extent allowable by law.
(b) Within one Business Day of the execution of this Agreement, the
Purchaser shall deliver $500,000.00 to the Deposit Escrow Agent by wire transfer
of immediately available funds to a bank account designated by the Deposit
Escrow Agent (the "DEPOSIT"), which Deposit shall be held by the Deposit Escrow
Agent in a segregated interest-bearing bank account subject to the jurisdiction
of the Bankruptcy Court. If this Agreement is terminated in accordance with
Article XI for any reason other than pursuant to Section 11.2(c) or is
terminated pursuant to Section 12.14, the Deposit and Deposit Interest shall be
returned within two Business Days to the Purchaser. If this Agreement is
terminated pursuant to Section 11.2(c), the Deposit and the Deposit Interest
shall be delivered to the Company.
(c) At the Closing, the Purchase Price shall be paid as follows:
(i) The Purchaser and the Seller shall cause the Deposit
and the Deposit Interest to be paid by the Deposit Escrow Agent to
the Company, acting on behalf of the Seller, which amounts shall be
credited against the Purchase Price; and
(ii) The Purchaser shall deliver to the Company, acting
on behalf of the Seller, the Net Purchase Price Amount by wire
transfer of federal or other immediately available funds to a bank
account designated at least two Business Days prior to the Closing
by the Company (acting on behalf of the Seller) or, if the Company
fails to give the Purchaser written wire instructions, by delivery
of a check payable in immediately available funds to the order of
the Company.
Section 3.2 Allocation of Purchase Price for Tax Purposes. The
Seller and the Purchaser shall use their respective commercially reasonable
efforts to allocate the aggregate purchase price to be paid for the Purchased
Assets in accordance with Section 1060 of the Code. No later than sixty (60)
days following the Closing Date, the Purchaser shall prepare and provide to the
Seller a draft allocation of the aggregate purchase price among the Purchased
Assets (the "ALLOCATION STATEMENT"), such Allocation Statement to be prepared in
accordance with the methodology set
Asset Purchase Agreement - Page 15
forth in the Code. The Seller shall notify the Purchaser within thirty (30) days
of receipt of such draft Allocation Statement of any objections that the Seller
may have thereto. The Seller and the Purchaser shall negotiate in good faith to
resolve any disagreement with respect to such Allocation Statement. Under no
circumstances, however, shall the failure to agree on the allocation of the
aggregate purchase price among the Purchased Assets or to resolve any
disagreements with respect to such allocation be or be claimed to be a breach of
this Agreement. In addition, the Seller and the Purchaser shall timely file any
information required to be filed pursuant to the Treasury Regulations
promulgated under Section 1060 of the Code, and, if the allocations of the
Purchase Price for Tax purposes shall have been agreed by the Parties upon as
contemplated by this Section 3.2, shall use the allocation determined pursuant
to this Section 3.2 in connection with the preparation of IRS Form 8594 (and any
supplemental filings required in connection therewith) as such form relates to
the transactions contemplated by this Agreement. If the allocations of the
Purchase Price for Tax purposes shall have been agreed upon as contemplated by
this Section 3.2, neither the Seller nor the Purchaser shall file any Tax Return
or otherwise take any position or action for Tax purposes that is inconsistent
with the allocation determined pursuant to this Section 3.2, except as may be
adjusted by subsequent agreement following an audit by the Internal Revenue
Service or by court decision. Notwithstanding the foregoing, the allocation
referred to herein shall not be binding on the Seller or its creditors for the
purpose of determining any distribution by the Seller of the funds received
hereunder and/or the value of the liens of any creditors in such funds.
ARTICLE IV
CLOSING
Section 4.1 Closing. Subject to the terms and conditions set forth
in this Agreement, the closing of the purchase and sale of the Purchased Assets
and the assignment and assumption of the Assumed Liabilities (the "CLOSING")
will be at 10:00 A.M. (Eastern Standard Time) at the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
location agreed to by the Purchaser and the Company, on the first Business Day
to occur following the date on which all of the conditions to the Parties'
obligations under Articles IX and X hereof have been satisfied or waived by the
appropriate Party, or such other date as may be agreed upon by the Purchaser and
the Company (the date of the Closing being herein referred to as the "CLOSING
DATE"). The Parties will use reasonable efforts to have the Closing take place
on or before December 1, 2002.
Section 4.2 Deliveries by the Seller at the Closing. At the Closing,
the Seller will:
(a) deliver, or cause to be delivered, to the Purchaser, one or more
duly executed bills of sale, as reasonably requested by the Purchaser, with
respect to Purchased Assets (other than as covered under Sections 4.2(c) and (d)
below) set forth in Section 2.1(a), each substantially in the form annexed
hereto as Exhibit A (each, a "▇▇▇▇ OF SALE");
(b) deliver, or cause to be delivered, to the Purchaser duly
executed instruments of assignment in a form reasonably acceptable to the
Purchaser of all interests, titles and other rights
Asset Purchase Agreement - Page 16
in, to and under all contracts, agreements, permits, licenses and authorizations
which are included in the Purchased Assets;
(c) deliver, or cause to be delivered, to the Purchaser all such
other quit-claim deeds, endorsements, assignments and other instruments,
documents and agreements as are reasonably necessary to carry out the transfers
and assignments contemplated by this Agreement and to comply with the terms
hereof;
(d) deliver, or cause to be delivered, to the Purchaser duly
executed copies of the consents referred to in Section 6.9;
(e) deliver, or cause to be delivered, to the Purchaser all
consents, orders and approvals of the Bankruptcy Court (including, without
limitation, a certified copy of the Section 363/365 Order substantially in the
form annexed hereto as Exhibit C (provided that any changes to such form of
order must be reasonably acceptable to the Purchaser)), and all necessary
creditors and other parties to the Chapter 11 Case and all other third parties,
if any, necessary to effectuate transfer of the Purchased Assets and to
consummate the transactions contemplated hereby;
(f) deliver, or cause to be delivered, to the Purchaser the
certificates referred to in Sections 9.1, 9.2 and 9.11; and
(g) if agreed by the Purchaser and the Seller, deliver, or cause to
be delivered, to the Purchaser the Management Agreement duly executed by the
Seller.
Section 4.3 Deliveries by the Purchaser at the Closing. At the
Closing, the Purchaser will:
(a) deliver, or cause to be delivered, to the Seller the Assumption
Agreement(s) providing for the assumption by the Purchaser of the Assumed
Liabilities, duly executed by the Purchaser;
(b) pay to the Seller the Net Purchase Price Amount in accordance
with Section 3.1(c);
(c) deliver, or cause to be delivered, to the Seller one or more
duly executed general assignment and assumption agreements, as reasonably
requested by the Seller, with respect to the Assumed Liabilities set forth in
Section 2.2(a), each substantially in the form annexed hereto as Exhibit B
(each, an "ASSUMPTION AGREEMENT");
(d) deliver, or cause to be delivered, to the Seller the
certificates referred to in Sections 10.1 and 10.2;
(e) if agreed by the Purchaser and the Seller, deliver, or cause to
be delivered, to the Seller the Management Agreement duly executed by the
Purchaser; and
Asset Purchase Agreement - Page 17
(f) deliver amendments to the Conditional Assigned Leases and
Conditional Assigned Contracts that are included in the Assigned Leases and
Assigned Contracts in accordance with this Agreement.
Section 4.4 Further Assurances. After the Closing and without
further consideration, each Party will from time to time, at the reasonable
request and expense of the requesting Party, execute and deliver such other
instruments of conveyance and transfer and such other instruments, documents and
agreements and take such other actions as such other Party may reasonably
request or as may be reasonably requested by any applicable Governmental
Authorities or third parties, in each case in order to more effectively or more
expeditiously consummate any of the transactions contemplated in this Agreement
and to vest in the Purchaser the right, title and interest in, to and under the
Purchased Assets, to assist the Purchaser in the collection and reduction to
possession of the Purchased Assets (and the exercise of rights with respect
thereto) and to provide for the assumption by the Purchaser of the Assumed
Liabilities; provided that the requesting Party will prepare any additional
documents and instruments and will handle any submittal, applications,
processing, recording and registrations. Without limiting the provisions of
Section 12.4, the Purchaser and the Seller hereby irrevocably consent to the
personal and subject-matter jurisdiction of the Bankruptcy Court for all
purposes necessary to effectuate this Section 4.4. The Seller will seek to
include in any plan of reorganization in the Chapter 11 Case supported by it a
provision for retained jurisdiction of the Bankruptcy Court to effectuate this
Section 4.4, and will use commercially reasonable efforts to oppose any such
plan of reorganization which fails to include such a provision.
ARTICLE V
BANKRUPTCY COURT APPROVAL
Section 5.1 Bankruptcy Court Orders. (a) Within one (1) Business Day
following full the execution and delivery of this Agreement, the Seller shall
file a motion or motions with the Bankruptcy Court seeking on an expedited basis
an order approving, among other things, the Sale Procedures in connection with
the Seller's request to sell and assign, as applicable, the Purchased Assets and
the Assumed Liabilities to the Purchaser pursuant to this Agreement and Sections
363 and 365 of the Bankruptcy Code, free and clear of all Encumbrances in or on
the Purchased Assets (including any and all "claims and interests" in the assets
within the meaning of Section 363(f) of the Bankruptcy Code), such that the
Purchaser will not, among other things, incur any liability as an alleged
successor to the Purchased Business (the "PROPOSED SALE", and the hearing to
consider approval of the Proposed Sale, the "SALE HEARING"), establishing notice
and service requirements to creditors and parties in interest of the Proposed
Sale, approving the Break-up Fee and Expense Reimbursement contemplated hereby,
establishing a deadline for submission of competing bids for the Purchased
Assets, and establishing thresholds for initial and subsequent overbids, and
setting a date for the Sale Hearing (the "SALE PROCEDURES ORDER", and the
hearing to consider approval of the Sale Procedures Order, the "SALE PROCEDURES
HEARING"). The Sale Procedures Order shall provide that the Seller shall
consider a Competing Transaction to be a "higher or better" offer only if such
Competing Transaction meets the following requirements (an "OVERBID"): (i) the
Overbid shall consist of an agreement in a form substantially similar to this
Asset Purchase Agreement - Page 18
Agreement, marked to show any changes thereto, that contains terms and
conditions, taken as a whole, no less favorable to the Seller than those
contained in this Agreement; (ii) the initial Overbid shall be at least $675,000
higher than the Purchase Price; (iii) the Overbid must be accompanied by a
deposit of at least $500,000 to be held in escrow; (iv) the Overbid shall
provide for the purchase of not less than all of the Purchased Assets; and (v)
the Person submitting such Overbid shall provide written evidence reasonably
satisfactory to the Company demonstrating that such bidder has the financial
ability to consummate the proposed purchase of the Purchased Assets at the
Overbid amount.
(b) The Seller shall as promptly as reasonably practicable, and in
any event within one (1) Business Day following the execution of this Agreement,
file a motion with the Bankruptcy Court seeking to schedule the Sale Hearing.
The Sale Procedures Order will be substantially in the form annexed hereto as
Exhibit D, and the order approving the Proposed Sale (the "SECTION 363/365
ORDER") will be substantially in the form annexed hereto as Exhibit C (provided
that, in each case, any changes to such form of order must be reasonably
acceptable to Purchaser and such acceptance shall be conclusively presumed
unless Purchaser notifies Seller in writing that either the Sale Procedures
Order or the Section 363/365 Order is not acceptable (indicating the reasons for
same) within one business day after such orders are entered by the Bankruptcy
Court), and the motions relating to the Sale Procedures Order and the Section
363/365 Order will be in form and substance reasonably satisfactory to the
Purchaser.
(c) Subject to the Seller's obligations to comply with any order of
the Bankruptcy Court (including, without limitation, the Sale Procedures Order),
the Seller and the Purchaser will promptly make any filings, take all actions
and use reasonable efforts to obtain any and all other approvals and orders
necessary or appropriate for consummation of the transactions contemplated
hereby.
(d) In the event an appeal is taken, or a stay pending appeal is
requested or reconsideration is sought, from either the Sale Procedures Order or
the Section 363/365 Order, the Seller will immediately notify the Purchaser of
such appeal or stay request and will provide to the Purchaser within two (2)
Business Days a copy of the related notice of appeal or order of stay or
application for reconsideration. The Seller will also provide the Purchaser with
written notice and copies of any other or further notice of appeal, motion or
application filed in connection with any appeal from, or application for
reconsideration of, any of such orders and any related briefs.
(e) The Seller will notify, as is required by the Bankruptcy Code
and reasonably requested by the Purchaser, all parties entitled to notice of all
motions, notices and orders required to consummate the transactions contemplated
by this Agreement, including, without limitation, the Sale Procedures Order
and/or the Section 363/365 Order, as modified by orders in respect of notice
which may be issued at any time and from time to time by the Bankruptcy Court.
Asset Purchase Agreement - Page 19
ARTICLE VI
REPRESENTATIONS OF THE SELLER
Each Seller represents and warrants to the Purchaser as follows:
Section 6.1 Existence and Good Standing. The Company is a
corporation duly incorporated, validly existing and at Closing will be in good
standing under the laws of the State of Delaware. Each Seller and Subsidiary of
the Seller is duly organized, validly existing and at Closing will be in good
standing under the laws of the jurisdiction in which it was formed.
Section 6.2 Authorization and Validity of Agreement. Subject to any
necessary authority from the Bankruptcy Court, each Seller has full power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Seller, and the consummation
by the Seller of the transactions contemplated hereby have been duly authorized
and approved by the Seller's respective Boards of Directors, or managers, as the
case may be, and no other corporate or limited liability company action on the
part of any Seller or their respective directors, managers, stockholders or
members is necessary to authorize the execution, delivery and performance of
this Agreement by the Seller and the consummation by the Seller of the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Seller and, assuming it constitutes a valid and
binding obligation of the Purchaser, will be a valid and binding obligation of
the Seller enforceable against the Seller in accordance with its terms upon the
entry of the Section 363/365 Order, except for the provisions of the Sale
Procedures which will become the binding obligations of the Seller upon the
entry of the Sale Procedures Order. Each agreement or instrument which has been
or shall be entered into or executed and delivered by the Seller in connection
with the transactions contemplated hereby has been (or will be) duly authorized,
executed and delivered by the Seller, and is (or will be when authorized,
executed and delivered) a valid and binding obligation of Seller, enforceable
against the Seller in accordance with its terms.
Section 6.3 Subsidiaries. LLC, NASOP and NASAC, Inc. are the only
Subsidiaries of the Company. None of the equity interests of LLC or NASOP is
owned of record or beneficially by any Person other than the Company. The sole
asset of the LLC is the interconnection agreement by and between the LLC and
▇▇▇▇ Atlantic Virginia Inc. dated as of June 20, 2000. NASAC, Inc. owns no
tangible assets.
Section 6.4 Financial Statements. Each of the financial statements
of the Company and the related notes contained in the Exchange Act Documents
other than the Monthly Financial Statements (as defined below) present fairly,
in accordance with GAAP, the financial position of the Company and its
Subsidiaries as of the dates indicated, and the results of its operations and
cash flows for the periods therein specified consistent with the books and
records of the Company and its Subsidiaries, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which are not expected to be material in amount. Such financial
statements (including the related notes but excluding the Monthly Financial
Statements) have been prepared in accordance with GAAP applied on a consistent
Asset Purchase Agreement - Page 20
basis throughout the periods therein specified, except as may be included in the
notes to such financial statements, or in the case of unaudited interim
statements, as may be permitted by the Securities and Exchange Commission (the
"COMMISSION") on Form 10-Q under the Exchange Act and except as disclosed in the
Exchange Act Documents. The other financial information contained in the
Exchange Act Documents has been prepared on a basis consistent with the
financial statements of the Company. Except as set forth in Schedule 6.4, the
monthly operating reports filed by the Company with the Bankruptcy Court (the
"MONTHLY FINANCIAL STATEMENTS") and filed with the Commission pursuant to the
Exchange Act fairly present the financial position of the Company as of the
dates indicated and the results of operations for the periods therein specified
consistent with the books and records of the Company.
Section 6.5 Absence of Certain Changes. (a) Except as contemplated
or expressly required or permitted by this Agreement or as set forth in the
Exchange Act Documents filed prior to the date hereof or in Schedule 6.5(a),
since June 4, 2002, the Seller has not taken any action which, if taken
subsequent to the execution of this Agreement and on or prior to the Closing
Date without the consent of the Purchaser, would constitute a breach of the
Seller's agreements set forth in Section 8.1(a).
(b) Except as contemplated or expressly required or permitted by
this Agreement or as set forth in the Exchange Act Documents filed prior to the
date hereof or in Schedule 6.5(b), since June 4, 2002, the Purchased Business
has been conducted in the ordinary course of business consistent with past
practice, and there has not been:
(i) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the Purchased
Business or any Purchased Asset, which losses in the aggregate
exceed $50,000;
(ii) any event or occurrence affecting the Purchased
Business or any Purchased Asset that, individually or in the
aggregate, has had or would reasonably be expected to have a
Material Adverse Effect;
(iii) any sale, lease or other disposition of any assets
of the Seller or any Purchased Asset with an original purchase
price, when acquired, in excess of $10,000, other than sales of
products and services in the ordinary course of business consistent
with past practice;
(iv) any incurrence, assumption or guarantee by the
Seller of any indebtedness for borrowed money that will be binding
upon Purchaser, except any incurrence, assumption or guarantee
agreed to in writing in advance by Purchaser; or
(v) any creation or other incurrence of any Encumbrance
on any asset of the Seller that will be binding upon Purchaser,
except any incurrence, assumption or guarantee agreed to in writing
in advance by Purchaser.
Section 6.6 Sufficiency to Title. (a) Except for the Excluded
Assets, the Purchased Assets constitute all of the assets and property currently
used or held for use by the Seller in the
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Purchased Business. Except for the Excluded Contracts, the Purchased Assets
constitute all of the assets and properties necessary for the continued
operation of the Purchased Business in the manner in which the Purchased
Business is operated by Seller on the date hereof.
(b) The entry of the Section 363/365 Order and the delivery to the
Purchaser of the instruments of transfer of ownership contemplated by this
Agreement will convey to Purchaser all Seller's right, title and interest in and
to the Purchased Assets, and with respect to such Purchased Assets being
transferred to the Purchaser by the LLC, are being transferred free and clear of
all Encumbrances.
(c) The Seller has or will give due notice as required by the
Bankruptcy Code and the Bankruptcy Rules of all motions seeking approval of, or
otherwise relating to, the Sales Procedures Order, the Section 363/365 Order,
any assumption and assignment of contracts or leases, or any other matter
relating to this Agreement or the transactions contemplated by this Agreement.
(d) Except with respect to any customer identified on Schedule
6.6(d), neither the Seller nor its Subsidiaries are parties to any contract
with, or provide any service to, any current customer of the Purchased Business
other than such contracts and services that are part of the Purchased Assets and
the Purchased Business.
Section 6.7 Leases. Schedule 6.7 contains a list of all leases and
subleases of real property or personal property to which any of the Seller or
the Seller's Subsidiaries is a party or is bound that relates in any way to the
Purchased Business or the Purchased Assets, in each case specifically
identifying the property to which each lease relates. The Seller has heretofore
delivered or made available to the Purchaser true and complete copies of all
such leases and subleases, including all amendments, modifications, schedules
and supplements thereto and all waivers (including descriptions of oral waivers)
with respect thereto.
Section 6.8 Material Contracts. (a) Schedule 6.8(a) contains a list
of all material contracts, agreements and instruments to which any of the Seller
or the Seller's Subsidiaries is a party or is bound that relates in any way to
the Purchased Business or the Purchased Assets (collectively, the "CONTRACTS").
(b) Set forth in Schedule 6.8(b) are true and complete copies of the
standard forms of contracts the Seller has entered into with customers of the
Purchased Business relating to the provision of services or equipment to such
customers (the "STANDARD FORM CUSTOMER CONTRACTS"). All of the Seller's
contracts with customers of the Purchased Business relating to the provision of
services or equipment to such customers are set forth in written agreements and
are in the form of the Standard Form Customer Contracts without any changes or
modifications thereto (whether or not such changes or modifications are
contained in such written agreement or any other document) except with respect
to each such contract changes or modifications which would not, individually or
in the aggregate, materially increase the obligations or liabilities of the
Purchaser.
Asset Purchase Agreement - Page 22
(c) The Seller has heretofore delivered or made available to the
Purchaser true and complete copies of all the Contracts, including all
amendments, modifications, schedules and supplements thereto and all waivers
(including descriptions of oral waivers) with respect thereto. Except as set
forth in Schedule 6.8(c) and assuming the entry of the Section 363/365 Order, as
of the Closing, each Assigned Contract will be in full force and effect and
enforceable in accordance with its terms (assuming that such Assigned Contract
is a legal, valid and binding obligation of each of the other parties to such
Assigned Contract). Since December 31, 2001, neither the Seller nor its
Subsidiaries has received any written notice of any cancellation or termination
of, or any written notice of any breach or default that (with the passage of
time, notice or both) would give any Person the right to terminate or cancel or
result in the any cancellation or termination of, any of the Assigned Contracts.
None of the Assigned Contracts is the subject of, or since December 31, 2001 has
been threatened to be made the subject of, any arbitration, suit or other legal
proceeding (other than the bankruptcy proceedings related to the Chapter 11
Case).
(d) Set forth in Schedule 6.8(d)(i) is a list of all network
contracts that are Assigned Contracts. Set forth in Schedule 6.8(d)(ii) is a
complete list of all network circuits and services ordered by Seller in respect
of the Purchased Business (including the recurring cost for each such circuit or
service), except for local circuits connecting an end user's premises to the
Company's network.
Section 6.9 Consents and Approvals; No Violations. Assuming (i) the
receipt of the necessary approvals of the Bankruptcy Court (including, without
limitation, the Section 363/365 Order), the execution and delivery of this
Agreement by the Seller and the consummation of the transactions contemplated
hereby by the Seller (a) will not contravene or conflict with the provisions of
the respective certificate of incorporation, certificate of formation, or
by-laws or other organizational documents of the Seller or its Subsidiaries, and
(b) except as set forth in Schedule 6.9, will not require any filing with, or
permit, consent or approval of, or the giving of any notice to, any third-party
or any Governmental Authority other than regulatory filings with, approvals of
and notices to the Federal Communications Commission and state public utility
commissions.
Section 6.10 Litigation. Except as set forth in Schedule 6.10, there
is no action, suit or proceeding in equity or at law by any Person or any
arbitration or any administrative or other proceeding by or before any
Governmental Authority (excluding claims under insurance or reinsurance policies
not involving pending or threatened litigation), pending or, to the knowledge of
the Seller, threatened against the Seller or its Subsidiaries relating to the
Purchased Business or the Purchased Assets which, if adversely determined, would
materially and adversely affect the Purchased Business or the Purchased Assets,
or would prevent, materially interfere or delay the Seller from performing its
obligations under this Agreement. Neither the Seller nor its Subsidiaries are
subject to any judgment, order or decree entered in any lawsuit or proceeding
that will be binding upon Purchaser at or after the Closing other than the Sales
Procedures Order or the Section 363/365 Order.
Section 6.11 Taxes and Employee Benefits. (a) Schedule 6.11 sets
forth a true and complete list of every state with which the Seller or any of
its Subsidiaries are or were at any
Asset Purchase Agreement - Page 23
time prior to the Closing Date required to file Tax Returns, including every
state in which the Seller or any of its Subsidiaries has filed or should have
filed at any time prior to the Closing Date any Tax Returns. Schedule 6.11 also
sets forth a true and complete list of all states in which the Seller has ever
conducted any business.
(b) Each Employee Plan subject to any provision of ERISA has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Employee Plan, including but not limited to ERISA and the
Code except as would not have a Material Adverse Effect. Each Employee Plan
which is intended to be qualified under Section 401(a) of the Code is so
qualified and has been so qualified from the period of its adoption to date.
Neither the Seller nor any ERISA Affiliate maintains or has ever maintained or
contributed to any "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA or any employee benefit plan subject to Title IV of ERISA.
Section 6.12 Intellectual Property. Set forth in Schedule 6.12 is a
list of the domestic and foreign patents, patent applications, patent licenses,
software licenses (other than "shrink-wrap" or "click-wrap" license agreements),
domain names, Internet protocol addresses, trade names, trademarks, service
marks, trademark registrations and applications therefor, service ▇▇▇▇
registrations and applications therefor, copyright registrations and
applications therefor, in each case, owned or used by the Seller or its
Subsidiaries which are used in the operation or conduct of the Purchased
Business or necessary for the continued operation or conduct of the Purchased
Business after the Closing by the Purchaser as it is currently being operated by
Seller (collectively, the "INTELLECTUAL PROPERTY"). Except as set forth in
Schedule 6.12, the operation and conduct of the Purchased Business as it is
currently being operated by Seller requires no material rights under
intellectual property other than the Assigned Intellectual Property. Except as
set forth in Schedule 6.12, there are no pending or, since December 31, 2001 to
the knowledge of the Seller, threatened proceedings or litigation or other
adverse claims affecting, or with respect to, the Assigned Intellectual
Property.
Section 6.13 Compliance with Laws. Except as permitted for
debtors-in-possession under the Bankruptcy Code or as set forth in Schedule
6.13, to the best of Seller's knowledge the Purchased Business has been since
December 31, 2001 and is being conducted, and the Purchased Assets are, in
compliance in all material respects with all applicable Laws.
Section 6.14 Environmental Matters. Except as set forth in Schedule
6.14:
(a) to the best of Seller's knowledge, no facts or circumstances
exist with respect to any Purchased Asset currently owned or operated by the
Seller which would reasonably be expected to give rise to any liability, claim,
proceeding or action, under any Environmental Law; and
(b) there are no claims, proceedings or actions by any Governmental
Authority pending or, to the Seller's knowledge, threatened against the Seller
or its Subsidiaries under any Environmental Law.
Asset Purchase Agreement - Page 24
Section 6.15 Personnel. The Seller has delivered to the Purchaser a
true, correct and complete list (the "EMPLOYEE LIST") of (a) the names and
current salaries of all officers and employees of the Seller and its
Subsidiaries engaged in the conduct of the Purchased Business as of a recent
date (which date shall be specified in the Employee List) and (b) the wage rates
for non-salaried and non-executive salaried employees of the Seller and its
Subsidiaries engaged in the conduct of the Purchased Business as of the date
specified in the Employee List.
Section 6.16 Broker's or Finder's Fees. No agent, broker, Person or
firm acting on behalf of the Seller is, or will be, entitled to any commission
or broker's or finder's fees from any Party, from any Affiliate of any Party or
from any of the Seller's Subsidiaries, in connection with any of the
transactions contemplated by this Agreement, except SSG Capital Advisors, L.P.
Section 6.17 Accuracy of Information Furnished. To the Seller's
knowledge, no representation or warranty by the Seller contained in this
Agreement, including any exhibits and schedules, and no statement contained in
the Seller's Schedules of assets and liabilities filed in the Chapter 11 Case in
accordance with Rule 1007 of the Federal Rules of Bankruptcy Procedures, or in
any certificate furnished or to be furnished by or on behalf of the Seller at
the Closing contains or will contain as of the date such representation and
warranty is made or such certificate is delivered, any untrue statement of a
material fact, or omits or will omit to state as of the date such representation
or warranty is made or such certificate is furnished, any material fact that is
necessary to make the statements contained herein or therein not misleading.
ARTICLE VII
REPRESENTATIONS OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 7.1 Existence and Good Standing; Authorization and Validity
of Agreement. (a) The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Purchaser has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Purchaser, and the consummation by the
Purchaser of the transactions contemplated hereby, have been duly authorized and
approved by the Purchaser's Board of Directors. No further corporate or
shareholder action on the part of the Purchaser or its shareholders is necessary
to authorize the execution, delivery and performance of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby. This Agreement been duly executed and delivered by the Purchaser and,
assuming it constitutes a valid and binding obligation the Seller, is a valid
and binding obligation of the Purchaser, enforceable against the Seller in
accordance with its terms. Each agreement or instrument which has been or shall
be entered into or executed and delivered by Purchaser in connection with the
transactions contemplated hereby has been (or will be) duly authorized, executed
and delivered by Purchaser and is (or will be
Asset Purchase Agreement - Page 25
when authorized, executed and delivered) a valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms.
Section 7.2 Consents and Approvals; No Violations. Assuming (i) the
receipt of the necessary approvals of the Bankruptcy Court (including, without
limitation, the Section 363/365 Order), and (ii) compliance with any applicable
requirements of the Exchange Act, the execution and delivery of this Agreement
by the Purchaser and the consummation of the transactions contemplated hereby by
the Purchaser (a) will not violate any provisions of the certificate of
incorporation or by-laws of the Purchaser, (b) will not violate any Law by which
the Purchaser is bound or by which any of its properties or assets are bound,
(c) will not require any filing with, or permit, consent or approval of, or the
giving of any notice to, any Governmental Authority on or prior to the Closing
Date other than regulatory filings with, approvals of and notices to the Federal
Communications Commission and state public utility commissions.
Section 7.3 Litigation. There is no action, suit, proceeding in
equity or at law, arbitration or administrative or other proceeding by or before
(or, to the knowledge of the Purchaser, any investigation by) any Person
(including, without limitation, any Governmental Authority) pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser or the
Purchaser's assets which, if adversely determined, would materially and
adversely affect the Purchaser's ability to satisfy the Assumed Liabilities or
would prevent, materially interfere with or delay the Purchaser from performing
its obligations under this Agreement or the consummation of the transactions
contemplated by this Agreement.
Section 7.4 Available Funds. The Purchaser has, and will have on the
Closing Date, sufficient funds available to it to perform all of its obligations
under this Agreement, including, without limitation, to pay the Purchase Price
Amount in accordance with the terms of this Agreement and to assume the Assumed
Liabilities.
Section 7.5 Broker's or Finder's Fees. No agent, broker, Person or
firm acting on behalf of the Purchaser or any of its Affiliates is, or will be,
entitled to any commission or broker's or finder's fees from any Party, or from
any Affiliate of any Party, in connection with any of the transactions
contemplated by this Agreement.
Section 7.6 Investigation By Purchaser. Purchaser acknowledges that
it has conducted an independent review and analysis of the Purchased Business
and the Purchased Assets as well as the financial condition thereof and
acknowledges that Seller has provided Purchaser with access to the properties,
premises and records of the Purchased Business and the Purchased Assets for this
purpose. In entering into this Agreement, Purchaser has relied solely upon its
own investigation and analysis and the representations and warranties contained
in this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Conduct of Purchased Business of the Seller. (a) During
the period from the date of this Agreement through the Closing Date, the Seller
and its Subsidiaries shall use
Asset Purchase Agreement - Page 26
commercially reasonable efforts to conduct the Purchased Business in the
ordinary course consistent with past practice, subject to the requirements of
the Bankruptcy Code and the Bankruptcy Court. Without limiting the generality of
the foregoing, without the prior written consent of the Purchaser, the Seller
shall, and shall cause its Subsidiaries to, (i) maintain the Purchased Assets in
good operating order and condition (subject to reasonable wear and tear); (ii)
maintain the insurance covering the Purchased Assets in effect on the date
hereof; (iii) take such steps as are necessary so that each Seller is in good
standing by the Closing Date; (iv) use commercially reasonable efforts to
preserve its current business relationships with customers, suppliers,
wholesalers and each party to an Assigned Lease or Assigned Contract, subject to
its status as a debtor-in-possession under the Bankruptcy Code; (v) not sell,
lease, license or otherwise dispose of any Purchased Assets; (vi) except as
provided in Section 8.3(a)(vi) not terminate, modify, amend or waive compliance
with any provision of, any of the Assigned Contracts or Assigned Leases, or fail
to take any reasonable action necessary to preserve the benefits of any of the
Assigned Contracts and Assigned Leases in each case, other than in the ordinary
course of business consistent with past practice; or (vii) agree or commit to do
any of the foregoing. The Seller shall not, and shall cause its Subsidiaries not
to, (i) take or agree or commit to take any action that would make any
representation and warranty of the Seller set forth in this Agreement inaccurate
in any respect at, or as of any time prior to, the Closing Date or (ii) omit or
agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any time.
Notwithstanding the foregoing, Seller has filed various motions to reject
executory contracts pursuant to Section 365 of the Bankruptcy Code, and may file
further motions to do so with respect to any executory contracts and unexpired
leases which are not being assumed by Purchaser hereunder which shall not by
itself be a breach of this Section 8.1; provided, however, that the Seller may
not file any motions to reject any executory contracts that would interfere with
the legal arrangements contemplated by Section 9.12 hereof.
(b) During the period from the date of this Agreement through the
Closing Date, the Seller shall, and shall cause its Subsidiaries to, give prompt
notice to Purchaser of:
(i) the occurrence, or failure to occur, or any event
which occurrence or failure would be likely to cause any
representation or warranty contained in this Agreement or in any
Schedule hereto to be untrue or inaccurate ;
(ii) any event or occurrence which has, or which would
reasonably be expected to have, a Material Adverse Effect;
(iii) any failure of the Seller or its Subsidiaries to
comply with, perform or satisfy, in any material respect, any
covenant, condition or agreement to be complied with, performed by
or satisfied by them under this Agreement or any Schedule hereto;
(iv) 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;
Asset Purchase Agreement - Page 27
(v) any notice or other communication from any
governmental or regulatory agency or authority in connection with
the transactions contemplated by this Agreement; and
(vi) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened
against, relating to or involving or otherwise affecting the Seller,
the Purchased Business or any Purchased Asset or that relates in any
way to the transactions contemplated by this Agreement.
Section 8.2 Purchaser Access to Information. The Seller shall, and
shall cause its Subsidiaries to, (i) give the Purchaser, its counsel, financial
advisors, financing sources, auditors and other authorized representatives full
access to the offices, properties, books and records related to the Business or
the Purchased Assets during normal business hours, (ii) furnish to the
Purchaser, its counsel, financial advisors, financing sources, auditors and
other authorized representatives such financial and operating data and other
information relating to the Business as such Persons may reasonably request,
(iii) instruct their employees, counsel and financial advisors to cooperate with
the Purchaser in its investigation of the Business and the Purchased Assets and
(iv) provide Purchaser with contact information for any Person that is a party
to an Assigned Contract (other than customer contracts that are Assigned
Contracts) and permission to engage in discussions with such Persons as
necessary to enable the Purchaser to effectuate the transactions contemplated
hereby; provided that any investigation pursuant to this Section shall be
conducted in such manner as not to interfere unreasonably with the conduct of
the Business.
Section 8.3 Reasonable Efforts; Cooperation; Consents and Approvals.
(a) Subject to the Seller's obligations as debtors-in-possession to comply with
any order of the Bankruptcy Court (including, without limitation, the Sale
Procedures Order) and subject to the Seller's duty to seek and obtain the
highest and best price for the Purchased Assets as required by the Bankruptcy
Code, each of the Parties shall use its commercially reasonable efforts to take,
or cause to be taken, all action to do or cause to be done, and to assist and
cooperate with each other Party in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement (in each case, to
the extent that the same is within the control of such Party), including,
without limitation, (i) complying with any Bankruptcy Court approvals, consents
and orders, (ii) obtaining all necessary waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings and the taking of all reasonable steps as may be necessary to obtain any
approval or waiver from, or to avoid any action or proceeding by, any
Governmental Authority, (iii) obtaining of all necessary consents, approvals or
waivers from third parties, (iv) defending any lawsuits or any other legal
proceedings whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, (v) causing the
conditions set forth in Articles IX (in the case of the Seller) and X (in the
case of the Purchaser) to be satisfied, (vi) obtaining amendments to the
Conditional Assigned Contracts set forth on Schedule 2.1(a)(iv)(B) on the date
of this Agreement on terms and conditions acceptable to the Purchaser and the
Seller, each in its sole discretion, (vii) causing the establishment of the
legal arrangements set forth in Section 9.12 and (viii) assisting and
cooperating, and taking commercially reasonable efforts to cause the Company's
accountants to assist and cooperate, in the preparation by the Seller and the
audit by Purchaser of the required
Asset Purchase Agreement - Page 28
financial and other information referenced in Section 8.17 (as well as such
post-Closing assistance as may be reasonably requested by Purchaser with respect
to issues arising from Purchaser's audit of such financial and other information
or in response to comments of the Commission to the extent practical taking into
account Seller's debtor-in-possession status); provided, however, that all
reasonable third-party fees and expenses incurred or paid by Seller in
connection with the required financial and other information referenced in
Section 8.17, including the fees and expenses of the Company's accountants,
shall be promptly reimbursed by Purchaser. Except as otherwise expressly set
forth in the Sale Procedures, the Seller shall use its commercially reasonable
efforts to obtain from the Bankruptcy Court all orders, consents and approvals
necessary to consummate the transactions contemplated by this Agreement.
(b) To the extent that the assignment to the Purchaser of any
unexpired contract, agreement, license, lease, permit or authorization pursuant
to this Agreement is not permitted without the consent of another Person and
such restriction cannot be effectively overridden or canceled by the Section
363/365 Order, or other related order of the Bankruptcy Court, then this
Agreement will not be deemed to constitute an assignment of or an undertaking or
attempt to assign the same or any right or interest therein if such consent is
not given; provided that the Seller will use its reasonably commercial efforts,
both before and after the Closing, to obtain all such consents; and provided,
further, that if any such consents are not obtained prior to the Closing, the
Seller will, at the Purchaser's request and with the consent of the Seller, such
consent not to be unreasonably withheld or delayed, reasonably cooperate with
the Purchaser in any lawful and feasible arrangement designed to provide the
Purchaser (such arrangement to be at the sole cost and expense of the Purchaser)
with the benefits and obligations of any such contract, agreement, license,
lease, permit or authorization.
Section 8.4 Exclusive Dealing. (a) Subject to the obligations of the
Company and NASOP as debtors-in-possession under the Bankruptcy Code, from the
date of this Agreement until the entry of the Sales Procedures Order or another
order by the Bankruptcy Court approving the Break-up Fee and the Expense
Reimbursements contemplated by Section 12.1(b) or the entry of an order denying
the Sales Procedures Order by the Bankruptcy Court, neither the Seller nor any
of its Affiliates, agents or representatives shall, directly or indirectly,
initiate, encourage or solicit (other than by transmitting copies of pleading
and exhibits filed of record in the Bankruptcy Case) any discussions or
negotiations with any Person (other than the Purchaser) concerning a Competing
Transaction; provided, however, that, notwithstanding anything to the contrary
in this sentence, the Seller and its Affiliates, agents or representatives may
consider and respond to inquiries from, engage in discussions or negotiations
with, and provide any information to, any Person concerning a Competing
Transaction as long as such inquiries were not initiated, encouraged or
solicited by the Seller or any of its Affiliates, agents or representatives in
violation of this Agreement; and provided, further however, that the Seller
shall not provide any information to any Person in connection with a Competing
Transaction that Seller has not also provided to Purchaser. The Seller shall
promptly notify Purchaser of any proposal by any Person with respect to a
Competing Transaction.
(b) During the period from the date of entry of the Section 363/365
Order to the earlier of the termination of this Agreement in accordance with its
terms and the Closing, subject to their obligations as debtors-in-possession
under the Bankruptcy Code, neither the Seller nor
Asset Purchase Agreement - Page 29
any of their Affiliates or representatives shall seek any relief or approval
from the Bankruptcy Court which is inconsistent with this Agreement or the
Section 363/365 Order.
(c) Notwithstanding anything to the contrary in this Section 8.4, if
the Bankruptcy Court approves a Competing Transaction, the Seller will have the
right to terminate this Agreement pursuant to Section 11.2(f).
Section 8.5 Sale Procedures. The Seller (a) will conduct the auction
process in accordance with the open auction procedures as set forth in the Sale
Procedures (as may be entered by the Bankruptcy Court) and (b) will not amend,
waive, modify or supplement in any material respect the Sale Procedures except
as set forth herein or therein or as required by the Bankruptcy Court.
Section 8.6 Public Disclosure. Except as otherwise required by law,
regulation or the Nasdaq Stock Market as advised by counsel or as may be
necessary or appropriate in connection with the Chapter 11 Case in respect of
the Seller, each of the Purchaser and the Seller will consult with the other,
and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
matters contained herein and will not issue any such press release or make any
such public statement prior to such consultation. Promptly after the execution
and delivery of this Agreement, the Purchaser and the Company will issue (i) a
joint press release that is in form and substance reasonably acceptable to each
of them and (ii) a communication to the customers of the Purchased Business
relating to the transactions contemplated by this Agreement that is in form and
substance reasonably acceptable to each of them. All communications sent or made
available to customers of the Purchased Business relating to the transactions
contemplated by this Agreement shall be in a form reasonably acceptable to each
of Company and Purchaser and each of the Company and Purchaser shall use
commercially reasonable efforts to cooperate and assist the other in connection
with any such communications. In the event of any termination of this Agreement
pursuant to Article XI, the Purchaser and the Company agree to issue a joint
press release that is in form and substance reasonably acceptable to each of
them. Notwithstanding the foregoing, this Section 8.6 shall not preclude either
Party from issuing press releases, making such other public statements or making
such other filings with governmental authorities or courts as such Party in good
faith believes to be required by Law.
Section 8.7 Trademarks and Tradenames. As soon as reasonably
practicable after the Closing Date, the Seller shall eliminate the use of all of
the trademarks, tradenames, service marks and service names included in the
Assigned Intellectual Property, in any of their forms or spellings, on all
advertising, stationery, business cards, checks, purchase orders and
acknowledgments, customer agreements and other contracts and business documents.
As soon as reasonably practicable after the Closing Date, the Seller shall
change the corporate name of the Company so as to bear no resemblance to its
current name.
Section 8.8 Apportionment. All real property Taxes, personal
property Taxes and similar ad valorem obligations levied with respect to the
Purchased Assets for a taxable period which includes (but does not end on) the
Closing Date (collectively, the "APPORTIONED OBLIGATIONS") shall be apportioned
between the Seller and the Purchaser as of the Closing Date based on the
Asset Purchase Agreement - Page 30
number of days of such taxable period included in the pre-Closing Tax period and
the number of days of such taxable period included in the post-Closing Tax
period. The Seller shall be liable for the proportionate amount of such Taxes
that is attributable to the pre-Closing Tax period, and the Purchaser shall be
liable for the proportionate amount of such Taxes that is attributable to the
post-Closing Tax period. Within ninety (90) days after the Closing, the Company
and the Purchaser shall present a statement to the other setting forth the
amount of reimbursement to which each is entitled under this Section 8.8
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the Party owing it
to the other within fifteen (15) days after delivery of such statement.
Thereafter, the Company shall notify the Purchaser upon receipt of any ▇▇▇▇ for
real or personal property Taxes relating to the Purchased Assets, part or all of
which are attributable to the post-Closing Tax period, and shall promptly
deliver such ▇▇▇▇ to the Purchaser who shall promptly pay the part which is
attributable to the post-Closing Tax period to the appropriate Governmental
Authority, and if such ▇▇▇▇ includes amounts which are attributable to the
pre-Closing Tax period, the Company shall also remit, and shall cause such other
Seller to remit, prior to the due date of assessment to the Purchaser payment
for the proportionate amount of such ▇▇▇▇ that is attributable to the
pre-Closing Tax period, unless the Seller is not required to remit such amounts
under the Bankruptcy Code or applicable bankruptcy law. If either the Seller or
the Purchaser shall thereafter make a payment for which it is entitled to
reimbursement under this Section 8.8, the other Party shall make such
reimbursement promptly but in no event later than thirty (30) days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting Party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. Any payment
required under this Section 8.8 and not made within fifteen (15) days of
delivery of the statement shall bear interest at the rate per annum determined,
from time to time, under the provisions of Section 6621(a)(2) of the Code for
each day until paid.
Section 8.9 Seller Access to Information. After the Closing, the
Purchaser will give, or cause to be given, to the Seller and their
representatives, during normal business hours and upon reasonable notice, such
reasonable access to the personnel, properties, books and records to the extent
necessary to allow the Seller to obtain information to determine any matter
relating to its pending bankruptcy case and its rights and obligations hereunder
or to any period ending on or before the Closing Date; provided, however, that
any such access by the Seller shall not unreasonably interfere with the conduct
of the business of Purchaser.
Section 8.10 Employees. Purchaser shall offer, prior to Closing,
full-time employment effective as of the Closing Date to no less than 55 of the
individuals listed on the Employee List. Purchaser agrees that such individuals
who accept employment with Purchaser will not be terminated by Purchaser without
"cause" (as such term is defined in Purchaser's 2001 Stock Option and Incentive
Plan) for a period of ninety (90) days following the Closing Date and such
employee's place of employment shall not be moved during such 90-day period more
than 25 miles from the Company's principal executive office on the date hereof.
Each such offer of employment by Purchaser shall be for a substantially similar
position as such employee held immediately prior to the Closing and at no less
than the same salary or regular wage rate received by such employee immediately
prior to the Closing as set forth on the Employee List. Purchaser shall use its
reasonable best efforts to make available to such employees the same respective
Asset Purchase Agreement - Page 31
employee benefits that are generally available to Purchaser's employees. To the
extent permitted by such employee benefit plans, Purchaser shall take into
account for purposes of eligibility and vesting under such employee benefit
plans of Purchaser (other than stock option or stock purchase plans of
Purchaser) the service of each such employee with the Seller as if such service
were with the Purchaser, to the same extent to which such service would have
been credited under the applicable benefit plan of Purchaser. Purchaser shall
take into account for purposes of determining an employee's eligibility for
vacation under Purchaser's generally applicable vacation policy the service of
each such employee with the Seller as if such service were with the Purchaser.
Purchaser shall request its health care providers to give effect to all
deductible amounts paid in the current fiscal year in connection with Seller's
health care plans by any individual on the Employee List who accepts employment
with Purchaser to the same extent as if such deductible amount had been paid
under Purchaser's health care plans. The Seller shall, and shall cause its
Subsidiary to, cooperate with Purchaser to provide reasonable access to their
respective employees and their employment records during the period Purchaser is
making determination of employment offers.
Section 8.11 Phone Numbers. The Seller and its Affiliates shall use
their respective commercially reasonable efforts (but without any payment of
money by the Seller or its Affiliates) to transfer the telephone numbers used in
the Purchased Business that the Seller has published or provided to its
customers for its customers to contact the Seller regarding customer service and
other customer communications that the Purchaser requests be transferred.
Section 8.12 Delivery of Monthly Financial Statements. During the
period from the date of this Agreement through the Closing Date, the Company, on
behalf of the Seller, shall as soon as practicable, but in any event within
three business days after their filing with the Bankruptcy Court, deliver to the
Purchaser true and complete copies of (i) the Company's Monthly Financial
Statements filed with the Bankruptcy Court and (ii) all other documents that are
filed on behalf of the Seller relating to the Company with the Bankruptcy Court.
All such Monthly Financial Statements shall fairly present the financial
position of the Company as of the dates indicated, and the results of operations
for the periods therein specified and shall be consistent with the books and
records of the Company except for such inconsistencies which do not materially
affect the fairness of such Monthly Financial Statements.
Section 8.13 Post-Closing Covenants. (a) At the request of
Purchaser, Seller agrees that it shall not reject the sublease by and between
Seller and SBC Communications with respect to the warehouse located at ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ for a period not to exceed thirty (30)
days following the Closing Date. During such period, Seller shall permit
Purchaser to store at such location equipment and other tangible assets
purchased hereunder or subject to an Assumed Lease hereunder and provide
Purchaser with reasonable access to the warehouse premises during normal
business hours. Purchaser agrees to pay to Seller a pro rata portion of the
monthly rent of $7,156.15 based on the number of days Purchaser stores equipment
in such warehouse space, such payment to be made by check made payable to the
Company without reduction or set-off no later than thirty (30) days following
the last day the Purchaser utilizes such warehouse space. Purchaser shall remove
all equipment and other tangible assets purchased hereunder from such warehouse
space no later than thirty (30) days
Asset Purchase Agreement - Page 32
following the Closing Date, and such warehouse space shall have no damage as a
result of Purchaser's use thereof.
(b) For a period of two years following the Closing Date, the Seller
shall, and shall cause its Subsidiaries, directors, officers, employees and
Affiliates to, not solicit, directly or indirectly, any customer of the
Purchased Business on the date hereof or on the Closing Date (including any
customer with a signed contract with Seller whether or not such customer's
service has been activated); provided, however, that the foregoing restriction
shall not restrict Seller, its Subsidiaries, directors, officers, employees and
Affiliates from conducting general mass marketing activities that do not
specifically target such customers of the Purchased Business.
Section 8.14 Confidential Information. (a) After the Closing, the
Seller shall, and shall cause its Subsidiaries, directors, officers, employees
and Affiliates to, not disclose to any third-party, or use for their own benefit
or for any purpose other than to effect the transactions contemplated hereby or
to collect accounts receivable that are included as part of the Excluded Assets,
any trade secrets or other confidential or proprietary information relating to
the Purchased Assets or the Purchased Business (the "POST-CLOSING CONFIDENTIAL
INFORMATION").
(b) Notwithstanding paragraph (a) hereof, on and after the date of
this Agreement (both before and after the Closing), Seller shall, and shall
cause its Subsidiaries, directors, officers, employees and Affiliates to, (i)
keep confidential all information by which a customer of the Purchased Business
can be identified, including, but not limited to, such customer's name, address,
telephone number, e-mail address, IP address and domain name, and (ii) not use
such information for their own benefit or for any purpose other than to (x)
effect the transactions contemplated hereby, (y) collect accounts receivable
that are included as part of the Excluded Assets or (z) operate its Business
prior to Closing in the ordinary course of business (the "CONFIDENTIAL CUSTOMER
INFORMATION," and together with the Post-Closing Confidential Information, the
"CONFIDENTIAL INFORMATION.") Notwithstanding the foregoing, Confidential
Customer Information shall not include customer information provided to
Purchaser prior to the date hereof.
(c) Notwithstanding the foregoing, the restrictions set forth in
paragraphs (a) and (b) hereof shall not extend to Confidential Information
required to be disclosed by Law or legal or judicial process; provided, however,
that prior to such disclosure such person shall promptly notify Purchaser and
take reasonable steps to assist Purchaser in contesting such request,
requirement or order, and provided that all third-party fees and expenses
incurred shall be promptly paid by Purchaser. In addition, the restrictions set
forth in paragraphs (a) and (b) hereof shall not in any way limit the disclosure
of Confidential Information by Seller as required by an order of Bankruptcy
Court; provided, however, that Seller shall disclose Confidential Customer
Information only to, and only to the extent required by the Bankruptcy Court,
and will only disclose such Confidential Customer Information under seal.
Section 8.15 Prepaid Expenses. To the extent Purchaser receives
credit for any portion of the prepaid expenses paid by Seller prior to the
Closing Date to any third-party set forth on
Asset Purchase Agreement - Page 33
Schedule 2.1(a)(viii), Purchaser shall pay to Seller the aggregate amount of
such prepaid expenses within thirty (30) days of such receipt.
Section 8.16 Post-Closing Agreement . In connection with the e-mail
and web hosting services provided to customers of the Purchased Business by
Seller and the domain name services related to such e-mail and web hosting
services (the "SERVICES"), for a period of 90 days following the Closing Date,
Seller shall, and shall cause its Subsidiaries to, (a) maintain and operate on a
continuous basis and without disruption the Services, including maintaining and
operating all equipment, circuits and software used in connection with providing
the Services, (b) use commercially reasonable efforts to assist the Purchaser in
the transitioning of the Services onto Purchaser's network, provided that all
third-party fees and expenses incurred in connection with such assistance shall
be promptly paid by Purchaser, (c) not transfer, assign, or otherwise encumber
any equipment used by Seller in connection with the Services (except with
respect to such equipment, any Encumbrances in effect on the date hereof) and
(d) not file a motion and obtain an order to reject the Gebran Software License
Agreement, dated on or about November 21, 2001, as amended, by and between
▇▇▇▇▇▇.▇▇▇ and the Company. Purchaser shall pay to Seller a fee of $10,000 for
each 30-day period, pro-rated for any portion of such period, during which
Seller provides the Services for Purchaser's customers, such payment to be made
by check made payable to the Company within thirty days following each such
period. In the event of any breach of (i) paragraph (a) above which has not been
cured, Purchaser shall have immediate access to, and permission to enter, the
premises where such equipment is located and the right to operate all such
equipment for the remaining portion of the 90-day period or (ii) paragraphs (c)
or (d) above which has not been cured, Seller shall support any request of
Purchaser for an expedited hearing on any matter related thereto, and not file a
response or otherwise contest any opposition to any motion by Purchaser to take
any action prohibited by paragraphs (c) or (d), except that Seller may oppose
any such motion solely on the grounds that there was no breach of paragraphs (c)
or (d).
Section 8.17. Certain Required Disclosure. For purposes of allowing
Purchaser to comply with the financial reporting requirements of the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and the Exchange Act, including
the information required by Rule 3-05 and Article 11 of Regulation S-X of the
General Rules and Regulations under the Securities Act and the Exchange Act,
Seller shall deliver to Purchaser the following financial statements and other
information prior to the Closing: (a) with respect to the Purchased Business (i)
a Balance Sheet at each of December 31, 2000 and 2001 and related Statements of
Operations, Statements of Cash Flows and Statements of Changes in Shareholders
Equity/Deficit for each of the fiscal years of Seller ended December 31, 2000
and December 31, 2001; (ii) comparatively, a Balance Sheet at September 30, 2001
and September 30, 2002 and Statements of Operations, Statements of Cash Flows
and Statements of Changes in Shareholders Equity/Deficit for the nine (9) months
ended September 30, 2001 and September 30, 2002; and (iii) for each month
subsequent to September 30, 2002 prior to the month in which Closing occurs, a
Balance Sheet as of the last day of each such month and related Statements of
Operations and Statements of Cash Flows for each such monthly period; and (b)
reconciliations of all such financial statements to Seller's audited
consolidated financial statements for the same periods listed in (a)(i) above
and to Seller's unaudited consolidated financial statements for the same periods
listed in (a)(ii) and (a)(iii) above along with all such consolidated financial
statements of Seller. All financial statements to
Asset Purchase Agreement - Page 34
be delivered shall be prepared in accordance with GAAP, consistently applied
(included footnotes required thereby) and accompanied by a written statement
from either the Chief Executive Officer or Chief Financial Officer of the
Company that all such financial statements fairly present the financial
condition and performance of the Purchased Business or Seller, as applicable,
and that the internal controls related to the aforementioned financial
statements have been maintained, evaluated and determined to be effective and,
to the best of such officer's knowledge and belief there are no material
omissions to the delivered financial statements. Notwithstanding the foregoing,
if the Commission advises Purchaser in writing prior to the Closing that the
Commission will permit Purchaser to file either consolidated financial
statements of the Seller or more limited disclosure than that otherwise required
under the Securities Act and the Exchange Act (including the rules and
regulations thereunder), Purchaser shall immediately notify Seller in writing of
such permitted disclosure and Section 8.17 shall be adjusted in accordance with
such letter from the Commission.
Section 8.18 Collection of Accounts Receivable. (a) All accounts
receivable of Seller relating to the Purchased Business through and including
the most recent regular billing run prior to the Closing Date shall remain the
property of Seller. Purchaser shall not ▇▇▇▇ customers of the Purchased Business
until thirty days after the date of the Seller's most recent billing run prior
to the Closing Date and such bills shall relate solely to services provided by
the Purchaser on or after thirty days after the date of the Seller's most recent
billing run prior to the Closing Date, except that Purchaser may issue bills
relating to up-front installation fees to customers of the Purchased Business at
any time on or after the Closing Date. All accounts receivable billed by
Purchaser as provided above shall solely be the property of Purchaser. Seller
shall cease billing customers of the Purchased Business as of the most recent
regular billing run prior to the Closing Date. Seller shall cease charging
credit cards of customers of the Purchased Business with respect to services
rendered on or after the first regular billing run following the Closing Date.
Except as otherwise provided below, it shall be the responsibility of each of
Purchaser and Seller to pursue collection of their respective accounts
receivable.
(b) With respect to each customer of the Purchased Business, any
payment received by Purchaser or Seller (or its agents) which is accompanied by
a remittance slip or other written direction or notation, on the check or
otherwise from the customer (the "REMITTANCE ADVICE"), specifying the invoice
for which such payment is being made and for which the payment received equals
or is less than the amount of such invoice, shall be applied in its entirety to
such invoice and shall be promptly forwarded, along with the Remittance Advice
and a record of all such payments received, to (i) the Purchaser, in the case of
payments specifying an invoice issued on or after the Closing Date by the
Purchaser, or (ii) the Seller, in the case of payments specifying an invoice
issued prior to the Closing Date by the Seller.
(c) With respect to each customer of the Purchased Business, any
payment received by Purchaser or Seller (or its agents) during the period
beginning on the Closing Date and ending on the date which is 120 days after the
date of the most recent billing run prior to the Closing Date which is not
accompanied by a Remittance Advice or is in amount which is greater than the
amount specified on such Remittance Advice (the "UNALLOCATED CASH REMITTANCES"),
shall be allocated and promptly forwarded as follows:
Asset Purchase Agreement - Page 35
(i) 100% of the Unallocated Cash Remittances received
during the period beginning on the Closing Date and ending on the
55th day after the date of the most recent billing run prior to the
Closing Date less the sum of (x) 100% of the up-front installation
fees billed by, but not specifically remitted to, Purchaser on or
after the Closing Date and (y) all Unallocated Cash Remittances in
excess of the accounts receivable balance of such customer on the
Closing Date, as such balance has been adjusted to reflect payments
or other credits, shall be allocated to Seller. The sum of the
amounts set forth in (x) and (y) of this paragraph (c)(i) shall be
allocated to Purchaser.
(ii) 100% of the Unallocated Cash Remittances received
during the period beginning 56 days following the date of the most
recent billing run prior to the Closing Date and ending on (and
including) the date which is 120 days following the date of the most
recent billing run prior to the Closing Date less the sum of (x)
100% of all amounts billed by, but not specifically remitted to,
Purchaser on or after the Closing Date and (y) all Unallocated Cash
Remittances in excess of the accounts receivable balance of such
customer on the Closing Date, as such balance has been adjusted to
reflect payments or other credits, shall be allocated to Seller. The
sum of the amounts set forth in (x) and (y) of this paragraph
(c)(ii) shall be allocated to Purchaser.
(iii) Any Unallocated Cash Remittances received
beginning 121 days following the date of the most recent billing run
prior to the Closing Date shall be allocated in their entirety to
the Party receiving such payment.
(d) Each Party shall, and shall direct its cash remittance processing
agent(s)to, (1)(A) maintain a record of all Unallocated Cash Remittances and (B)
maintain all Unallocated Cash Remittances and not deposit such amounts in any
bank account; and (2) deliver to the other Party a record of Unallocated Cash
Remittances within three business days after the end of each calendar week.
During the period beginning on the Closing Date and ending one week
after 120 days following the date of the most recent billing run prior to the
Closing Date, the Parties shall arrange for a representative to meet at the
business offices of the remittance processing agents of both Parties once each
week (or less frequently as the Parties may agree) subsequent to Closing in
order to allocate the Unallocated Cash Remittances in accordance with this
Section 8.18 and to arrange for the prompt delivery of the Unallocated Cash
Remittances to the appropriate Party. At each such meeting, Purchaser and Seller
shall provide to each other a report, by customer, of all payments received by
such party during the period commencing on the Closing Date and ending on a date
no earlier than six days prior to the meeting date with respect to the accounts
receivable of the Purchased Business along with, as of the same report date, a
list of all of the Party's accounts receivable, by customer, of the Purchased
Business and, solely with respect to the Purchaser, a report of all of its
▇▇▇▇▇▇▇▇ (including up front installation fees) to customers of the Purchased
Business on or after the Closing Date. Purchaser and Seller shall permit each
other to inspect their books and records relating to the billing, accounts
receivable and the collection of said accounts receivable during reasonable
business hours to verify the accuracy of such reports. The Parties'
representatives shall attend such meetings and the Parties shall each provide
such reports and conduct such inspections at their own expense. To the extent
the allocation of an
Asset Purchase Agreement - Page 36
Unallocated Cash Remittance can not be agreed to by the Parties, then the
Parties agree to have the allocation be finally determined by
PricewaterhouseCoopers LLP or another accounting firm acceptable to both
parties, and to equally share the expense, if any, of such final determination.
To the extent any payment of any account receivable (whether such payment has
been paid by cash, check, credit card or otherwise) has been misapplied by any
Party (or its agent), such amounts shall be promptly paid to the Party to whom
such amount is owed.
(e) Purchaser and Seller agree to assist and cooperate, and to use
reasonable commercial efforts to cause their cash remittance processing agents
to assist and cooperate, in (i) setting up billing and cash remittance
arrangements to timely carry out the procedures set forth in this Section 8.18
and (ii) transitioning to Purchaser the right to charge customer credit cards
for services related to the Purchased Business (to the extent Seller has such
right), provided that all reasonable third-party fees and expenses incurred in
connection with clause (ii) shall be promptly paid by Purchaser.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to consummate transactions
contemplated by this Agreement to be consummated at the Closing are conditioned
upon the satisfaction or waiver in writing (subject to applicable law), on or
prior to the Closing Date, of the following conditions:
Section 9.1 Truth of Representations and Warranties. Each of the
representations and warranties of the Seller contained in this Agreement,
disregarding all qualifications with respect to materiality or Material Adverse
Effect, shall be true and correct in all material respects as of the Closing, as
if made on such date (except for representations and warranties that relate to a
specific date, which shall be true and correct in all material respects as of
such date), and the Seller shall have delivered to the Purchaser a certificate,
dated the Closing Date, to such effect.
Section 9.2 Performance of Agreements. Each and all of the
agreements of the Seller to be performed on or prior to the Closing pursuant to
the terms hereof shall have been duly performed in all material respects, and
the Seller shall have delivered to the Purchaser a certificate, dated the
Closing Date, to such effect.
Section 9.3 No Injunction. No court or other Governmental Authority
shall have issued an order or stay pending appeal which shall then be in effect
restraining or prohibiting the completion of the transactions contemplated
hereby.
Section 9.4 Statutes. No Law of any kind shall have been enacted,
entered, promulgated or enforced by any Governmental Authority which restrains,
prohibits, or has the effect of making illegal, the consummation of the
transactions contemplated hereby.
Section 9.5 Governmental and Other Approvals. All consents and
approvals of any Person (other than a Party), including any Governmental
Authority, necessary to permit the
Asset Purchase Agreement - Page 37
consummation of the transactions contemplated by this Agreement shall have been
received and be in full force and effect.
Section 9.6 Bankruptcy Matters. All authorizations, consents, orders
and approvals of the Bankruptcy Court necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained. The Seller
shall have provided timely and proper service of notice of the Section 363/365
Order and the Sales Hearing to all Persons listed on Schedule 6.9 and Schedule
6.11. The Section 363/365 Order shall have been entered by the Bankruptcy Court
and such order shall not have been stayed, modified, reversed or amended in any
manner; and the Seller shall have received from the Bankruptcy Court all other
orders, approvals and consents required to transfer the Purchased Assets and to
consummate the transactions contemplated by this Agreement.
Section 9.7 "Non-foreign" Status Certificate. The Seller shall have
delivered to the Purchaser a properly executed "non-foreign" affidavit in form
and substance reasonably acceptable to the Purchaser.
Section 9.8 Delivery of Monthly Financial Statements. The Company
shall have delivered to Purchaser the Monthly Financial Statements in accordance
with Section 8.12.
Section 9.9 Receipt of Amendments to Conditional Assigned Leases and
Conditional Assigned Contracts. The Purchaser shall have received amendments to
each of the Conditional Assigned Leases and Conditional Assigned Contracts, in
form and substance acceptable to Purchaser, in its sole discretion.
Section 9.10 Maximum Amount of Long-Term Debt/Capital Lease
Obligations. The aggregate amount of the long-term debt or capital lease
obligations of the Seller under the Conditional Assigned Contracts included in
the Assumed Liabilities shall not exceed $10,000,000 in principal.
Section 9.11 No Material Adverse Effect. There shall have been no
event or occurrence which has or which would reasonably be expected to have a
Material Adverse Effect, and the Seller shall have delivered a certificate,
dated the Closing Date, to such effect.
Section 9.12 Contractual or Legal Arrangements. An agreement shall
have been executed or other legal arrangements shall have been established
providing for the transfer to the Purchaser of the (i) collocation space, (ii)
network facilities and (iii) circuits necessary to enable the Purchaser to
operate the Purchased Assets and to provide service to the acquired customers,
in each case pursuant to terms and conditions satisfactory to the Purchaser and
Seller, and with no obligations or liabilities other than for services rendered
on and after the Closing Date.
Section 9.13 Real Property Lease. Purchaser shall either have
entered into (i) an agreement providing for the lease or sublease of Seller's
headquarters on such terms as are reasonably acceptable to each of Seller and
Purchaser, or (ii) an agreement in form and substance acceptable to Purchaser
and Seller providing for the transition of the Purchased Assets from Seller's
principal executive office to a new location identified by the Purchaser for the
operation
Asset Purchase Agreement - Page 38
of the Purchased Business; provided, however, that all fees and expenses payable
to third parties arising directly from such transition shall be paid by
Purchaser; and provided, further, that any sublease pursuant to clause (i)
hereof or any agreement pursuant to clause (ii) hereof shall provide (x)
Purchaser with control of, and access to, the rooms (the "Server Rooms") where
the server equipment that are Purchased Fixed Assets are located and (y) Seller
with access to such Server Rooms twenty-four hours a day, seven days a week,
subject to commercially reasonable security procedures of Purchaser, to maintain
and operate equipment that are not included as Purchased Fixed Assets, in such
manner as is acceptable to Purchaser and the Company.
Section 9.14 Minimum Revenue. Revenue from customers of the
Purchased Business other than such customers who have cancelled service prior to
the Closing Date, shall be at least $2.3 million and the Seller shall have
delivered to Purchaser documentation of such Revenue in a form reasonably
acceptable to Purchaser two days prior to the Closing.
Section 9.15 Confidential Customer Information. Neither the Seller
nor any of its Subsidiaries, directors, officers, employees and Affiliates have
disclosed any Confidential Customer Information except to, and only to the
extent required by, the Bankruptcy Court under seal so that all such
Confidential Customer Information is disclosed solely to the Bankruptcy Court,
other than any inadvertent disclosure of Confidential Customer Information
which, individually or in the aggregate, is not material.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE SELLER
The obligations of the Seller to consummate the transactions
contemplated by this Agreement to be consummated at the Closing are conditioned
upon the satisfaction or waiver in writing (subject to applicable law), on or
prior to the Closing Date, of the following conditions:
Section 10.1 Truth of Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this Agreement,
disregarding all qualifications with respect to materiality or Material Adverse
Effect, shall be true and correct in all material respects as of the Closing, as
if made on such date (except for representations and warranties that relate to a
specific date, which shall be true and correct in all material respects as of
such date), and the Purchaser shall have delivered to the Seller a certificate,
dated the Closing Date, to such effect.
Section 10.2 Performance of Agreements. Each and all of the
agreements of the Purchaser to be performed on or prior to the Closing pursuant
to the terms hereof shall have been duly performed in all material respects, and
the Purchaser shall have delivered to the Seller a certificate, dated the
Closing Date, to such effect.
Section 10.3 No Injunction. No court or other Governmental Authority
shall have issued an order or stay pending appeal which shall then be in effect
restraining or prohibiting the completion of the transactions contemplated
hereby.
Asset Purchase Agreement - Page 39
Section 10.4 Statutes. No Law of any kind shall have been enacted,
entered, promulgated or enforced by any Governmental Authority which restrains,
prohibits, or has the effect of making illegal, the consummation of the
transactions contemplated hereby.
Section 10.5 Governmental and Other Approvals. All material consents
and approvals of any Person (other than a Party), including any Governmental
Authority, necessary to permit the consummation of the transactions contemplated
by this Agreement shall have been received and be in full force and effect,
unless the Purchaser shall have waived in writing the requirement to obtain any
such consent or approval; provided, however, any such waiver by Purchaser shall
not have material adverse consequences for Seller.
Section 10.6 Bankruptcy Matters. All necessary authorizations,
consents, orders and approvals of the Bankruptcy Court necessary for the
consummation of the transactions contemplated by this Agreement shall have been
obtained. The Section 363/365 Order shall have been entered by the Bankruptcy
Court and such order shall not have been stayed, modified, reversed or amended
in any manner materially adverse to the Seller; and the Seller shall have
received from the Bankruptcy Court all other orders, approvals and consents
required to transfer the Purchased Assets and to consummate the transactions
contemplated by this Agreement.
Section 10.7 Receipt of Amendments to Conditional Assigned Leases
and Conditional Assigned Contracts. The Purchaser shall have received
amendments, if any, to each of the Conditional Assigned Leases and Conditional
Assigned Contracts, in form and substance acceptable to the Seller, in its sole
discretion.
ARTICLE XI
NON-SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; TERMINATION
Section 11.1 No Survival of Representations or Warranties. The
representations and warranties of the Parties will not survive beyond the
Closing and none of the Parties (or their Subsidiaries, directors, officers,
employees and Affiliates) will have any liability therefor after the Closing.
Section 11.2 Events of Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing:
(a) by mutual consent of the Company, on behalf of the Seller, and
the Purchaser;
(b) by the Company, on behalf of the Seller, or the Purchaser, if
the Closing Date shall not have occurred within seventy-five (75) days after the
date of this Agreement; provided that the right to terminate this Agreement
under this Section 11.2(b) shall not be available to such Party whose failure
(including for purposes of this Section 11.2(b), any failure by any Affiliate of
such Party) to fulfill any obligation under this Agreement shall be the cause of
the failure of the Closing Date to occur on or before such date; and provided,
further, that such date shall be extended as deemed necessary by the Purchaser
to obtain regulatory filings, approvals and notices with federal
Asset Purchase Agreement - Page 40
and state utility commissions to a date not more than 120 days after the date of
this Agreement (or such later date as the Purchaser and the Company, on behalf
of the Seller, may agree upon);
(c) by the Company, on behalf of the Seller, if there has been a
material breach of any covenant or a material breach of any representation or
warranty of the Purchaser; provided that any such breach of a covenant or
representation or warranty, as the case may be, has not been cured within ten
(10) Business Days following receipt by the Purchaser of written notice from the
Company of such breach;
(d) by the Purchaser, if there has been a material breach of any
covenant or a material breach of any representation or warranty of the Seller;
provided that any such breach of a covenant or representation or warranty, as
the case may be, has not been cured within ten (10) Business Days following
receipt by the Seller of written notice from the Purchaser of such breach;
(e) by the Company, on behalf of the Seller, or the Purchaser if
there shall be any Law binding upon the Parties that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or if any
judgment, injunction, order or decree of any competent authority prohibiting
such transactions is entered and such judgment, injunction, order or decree
shall have become final and non-appealable;
(f) by the Company, on behalf of the Seller, or the Purchaser,
subject to the payment of the Break-up Fee and Expense Reimbursement in
accordance with the provisions of Section 12.1(b), if a Competing Transaction is
approved by the Bankruptcy Court, whether or not in accordance with the sale
procedures annexed hereto as Exhibit E, as the same may be modified by order of
the Bankruptcy Court (collectively, the "SALE PROCEDURES");
(g) by the Purchaser, if the Sale Procedures Order has not been
executed or entered by the Bankruptcy Court within twenty (20) days after the
execution of this Agreement; or
(h) by the Purchaser, if the Section 363/365 Order has not been
executed or entered by the Bankruptcy Court within sixty-five (65) days after
the execution of this Agreement; or
(i) by the Company, on behalf of the Seller, if the Section 363/365
Order has not been executed or entered by the Bankruptcy Court within sixty-five
(65) days after the execution of this Agreement; provided that the right of the
Company to terminate this Agreement under this Section 11.2(i) shall not be
available to the Company if there has been a breach of any covenant or a breach
of any representation or warranty of the Seller and all such breaches have not
been cured within ten (10) Business Days following receipt by the Company of
written notice from the Purchaser of such breach.
Section 11.3 Effect of Termination. If this Agreement shall be
terminated pursuant to Section 11.2, all further obligations of the Parties
under this Agreement shall terminate without further liability or obligation of
any Party to any other Party hereunder except for those provisions that
expressly survive the termination of this Agreement; provided, however, that (a)
no Party or any Affiliate of such Party shall be released from liability
hereunder if this Agreement is terminated and the transactions abandoned by
reason of (i) failure of such Party or
Asset Purchase Agreement - Page 41
its Affiliates to have performed its obligations hereunder or (ii) any knowing
misrepresentation made by such Party or its Affiliates of any matter set forth
herein and (b) Sections 3.1(b), the next to the last sentence of 8.6, 11.3,
12.1, 12.3, 12.4 and 12.6 shall survive any termination of this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Expenses; Fees. (a) Except as otherwise provided in
this Agreement, the Parties shall pay all of their own expenses relating to the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of their respective counsel, financial advisors and
accountants.
(b) The Seller shall pay the Purchaser the amounts set forth in this
Section 12.1(b) unless there has been a material breach of any covenant or a
material breach of any representation or warranty of the Purchaser that has not
been cured within ten (10) Business Days following receipt by the Purchaser of
written notice from the Company of such breach.
(i) If the Bankruptcy Court approves the sale of the
Purchased Assets to an entity other than the Purchaser and such sale
is consummated, then the Purchaser shall be entitled to the Break-up
Fee, which shall be deemed an allowed administrative expense
entitled to the benefits of Sections 503(b) and 507(a) of the
Bankruptcy Code. The Break-up Fee shall be paid to the Purchaser
(which payment shall be by wire transfer of immediately available
funds to an account designated by the Purchaser) at the time such
sale is consummated from the proceeds of such sale. The Break-up Fee
pursuant to this Section may be approved by the Bankruptcy Court
independent of its approval of the remainder of this Agreement.
(ii) If the Bankruptcy Court approves the sale of the
Purchased Assets to an entity other than the Purchaser and such sale
is not consummated, then the Seller shall reimburse Purchaser for
the Expense Reimbursement in an aggregate amount not to exceed
$300,000, which shall be deemed an allowed administrative expense
entitled to the benefits of Sections 503(b) and 507(a) of the
Bankruptcy Code. The Expense Reimbursement payable pursuant to this
Section 12.1(b)(ii) shall be paid to the Purchaser (which payment
shall be by wire transfer of immediately available funds to an
account designated by the Purchaser) on or before the earlier of (x)
the tenth Business Day after the definitive agreement with respect
to such sale is terminated or such sale is abandoned and (y) the
thirtieth day after the termination of this Agreement. The Expense
Reimbursement pursuant to this Section may be approved by the
Bankruptcy Court independent of its approval of the remainder of
this Agreement.
(iii) If this Agreement is terminated by Purchaser
pursuant to Section 11.2(d), or terminated by Seller and no Break-up
Fee or Expense Reimbursement fee is payable pursuant to Sections
12.1(b)(i) or (ii), respectively, to the Purchaser, then the Seller
Asset Purchase Agreement - Page 42
shall reimburse the Purchaser for the Expense Reimbursement in an
aggregate amount not to exceed $200,000, which shall be deemed an
allowed administrative expense entitled to the benefits of Sections
503(b) and 507(a) of the Bankruptcy Code. The Expense Reimbursement
payable pursuant to this Section 12(b)(iii) shall be paid to the
Purchaser (which payment shall be made by wire transfer of
immediately available funds to an account designated by the
Purchaser) within ten (10) Business Days of the Purchaser's written
request therefor. The Expense Reimbursement pursuant to this Section
may be approved by the Bankruptcy Court independent of its approval
of the remainder of this Agreement. For purposes of clarity,
Seller's failure to satisfy the closing condition set forth in
Section 9.15 shall not in itself be a breach of a material breach of
any covenant, representation or warranty of Seller.
Section 12.2 Transfer Taxes. In accordance with section 1146(c) of
the Bankruptcy Code, the making or delivery of any instrument of transfer under
a plan confirmed under section 1129 of the Bankruptcy Code will not be taxed
under any law imposing a transfer tax, stamp tax or similar tax. The Seller will
seek to include in any order confirming its plan of reorganization in the
Chapter 11 Case language to the effect that the transactions contemplated herein
are exempt from transfer taxes, stamp taxes or similar taxes pursuant to 11
U.S.C. ss.1146(c). In the event any sales, use or other similar Taxes (other
than those Taxes exempted pursuant to said Section 1129 of the Bankruptcy Code)
are assessed at Closing or at any time thereafter on the transfer of any
Purchased Assets pursuant to this Agreement, such Taxes incurred as a result of
the transactions contemplated hereby will be paid fifty percent by the Seller
and fifty percent by the Purchaser. In the event either the Purchaser or Seller,
as the case may be, is required to pay any sales, use or similar taxes incurred
as a result of the transaction contemplated herein, the Seller or Purchaser, as
the case may be, shall reimburse the Purchaser or Seller, respectively, for all
amounts in excess of fifty percent of the payment of such taxes within fifteen
(15) days of such payment provided such Party has provided proof of payment of
such taxes. The Purchaser and the Seller will cooperate in providing each other
with any appropriate resale exemption certifications and other similar
documentation in order to minimize the amount of such Taxes.
Section 12.3 APPLICABLE LAW. THIS AGREEMENT IS TO BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH FEDERAL BANKRUPTCY LAW, TO THE EXTENT APPLICABLE,
AND WHERE STATE LAW IS IMPLICATED, THE LAWS OF THE STATE OF CONNECTICUT SHALL
GOVERN, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
Section 12.4 JURISDICTION; WAIVER OF JURY TRIAL. (a) THE BANKRUPTCY
COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR AMONG THE
PARTIES, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY AGREEMENT CONTEMPLATED HEREBY; PROVIDED THAT IF THE BANKRUPTCY COURT IS
UNWILLING OR UNABLE TO HEAR ANY SUCH DISPUTE, THE COURTS OF THE STATE OF
CONNECTICUT AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN
THE STATE OF CONNECTICUT WILL HAVE SOLE JURISDICTION OVER ANY AND ALL DISPUTES
BETWEEN OR AMONG THE PARTIES, WHETHER IN LAW OR EQUITY,
Asset Purchase Agreement - Page 43
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED
HEREBY.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.5 Captions; Headings; Table of Contents. The Article and
Section captions and the headings and table of contents set forth herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 12.6 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, sent by
overnight courier, or sent by telecopier and a confirmation of transmission is
obtained, as follows:
(a) if to the Seller, to:
Network Access Solutions Corporation
Three Dulles Tech Center
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gold And ▇▇▇▇▇, a Professional Corporation
Suite ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq. and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchaser, to it at:
▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Asset Purchase Agreement - Page 44
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Deposit Escrow Agent, to it at:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gold and ▇▇▇▇▇, a Professional Corporation
Suite ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person or address as any Party shall specify by notice in
writing to each of the other Parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof, except for a notice of a change of address, which shall be
effective only upon receipt thereof.
Section 12.7 Assignment; Parties in Interest. This Agreement may not
be transferred, assigned, pledged or hypothecated by any Party or the Deposit
Escrow Agent, without the prior written consent of the Purchaser (which consent
with respect to a transfer or assignment by the Deposit Escrow Agent shall not
be unreasonably withheld, conditioned or delayed); provided that the Purchaser
may transfer or assign, in whole or from time to time in part, to one or more of
its Affiliates, the right to purchase all or a portion of the Purchased Assets
and to assume all or a portion of the Assigned Contracts, Assigned Leases or
Assumed Liabilities, but no such transfer or assignment will relieve the
Purchaser of its obligations hereunder; and provided, further however that such
assignment shall not by itself have any adverse impact on Purchaser's ability to
satisfy Purchaser's conditions to Closing set forth in Article IX, including any
delay of such Closing. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and permitted
assigns.
Section 12.8 Counterparts. This Agreement may be executed in two or
more counterparts, in original form or by facsimile, each of which shall be
deemed an original, but all of which together will constitute one and the same
document.
Asset Purchase Agreement - Page 45
Section 12.9 Entire Agreement. This Agreement, including the
Exhibits, Schedules and other documents referred to herein which form a part
hereof, including the confidentiality agreement dated as of May 14, 2002 between
the Company and the Purchaser and the letter agreement dated May 3, 2001 between
the Company and the Purchaser, contains the entire understanding of the Parties
with respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter.
Section 12.10 Third Party Beneficiaries. Each Party intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the Parties.
Section 12.11 Severability; Enforcement. The invalidity of any
portion hereof shall not affect the validity, force or effect of the remaining
portions hereof. If it is ever held that any restriction hereunder is too broad
to permit enforcement of such restriction to its fullest extent, each Party
agrees that a court of competent jurisdiction may enforce such restriction to
the maximum extent permitted by law, and each Party hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding brought
to enforce such restriction.
Section 12.12 Amendments; Waiver. This Agreement may not be changed
orally, but only by an agreement in writing signed by the Purchaser and Seller;
provided, however, that any amendment that increases the obligations of the
Deposit Escrow Agent shall require the written consent of the Deposit Escrow
Agent which consent may be withheld in its sole discretion; provided, further,
however, that the Schedules to this Agreement may be modified by Purchaser after
the date hereof as contemplated by this Agreement and delivered to Seller
pursuant to Sections 2.1(c) and (d). The Seller on the one hand and the
Purchaser on the other may, by written notice to the other, (a) extend the time
for the performance of any of the obligations or other actions of the other
under this Agreement; (b) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement; (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement; or (d) waive or modify
performance of any of the obligations of the other under this Agreement. Except
as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver by the Party taking such
action of compliance with any representations, warranties, covenants conditions
or agreements contained in this Agreement. The failure of any Party to enforce
at any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part hereof or the right of such Party thereafter to
enforce each and every such provision. No waiver of any breach of or
non-compliance with this Agreement shall be held to be a waiver of any other or
subsequent breach or non-compliance.
Asset Purchase Agreement - Page 46
Section 12.13 No Strict Construction. The Seller and Purchaser
hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event any ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Seller
and Purchaser hereto, and no presumption or burden of proof shall arise favoring
or disfavoring the Seller and Purchaser by virtue of the authorship of any
provision of this Agreement.
Section 12.14 Casualty, Risk of Loss. The Seller shall bear the risk
of all loss or damage to the Purchased Assets from all causes and all loss or
damage arising out of or related to the operation of the Purchased Business
through the Closing. If at any time prior to the Closing any portion of the
Purchased Assets is damaged or destroyed as a result of fire, other casualty or
for any reason whatsoever, or in the event condemnation or eminent domain
proceedings (or private purchase in lieu thereof) shall be commenced by any
public or quasi-public authority having jurisdiction against all or any part of
the Purchased Assets, the Seller shall immediately give notice thereof to the
Purchaser. The Purchaser shall have the right, in its sole and absolute
discretion, within 10 days of receipt of such notice, to (i) if any material
portion of the Purchased Assets is so damaged, destroyed or condemned, elect not
to proceed with the Closing and terminate this Agreement in which case the
Deposit and Deposit Interest shall be returned to the Purchaser within two
Business Days of such election and the Parties shall have no further obligation
or liability to one another, or (ii) proceed to Closing and consummate the
transactions contemplated hereby and receive any and all insurance proceeds
received together with all deductible amounts or receivable by the Seller on
account of any such casualty.
Section 12.15 Service Agreement Regarding Covad Assets. If requested
by Seller or the Person that enters into a definitive agreement with the Seller
to purchase the Covad Assets that is approved by the Bankruptcy Court, the
Purchaser will negotiate in good faith with such Person to reach an agreement to
provide, for a period of up to ninety (90) days after the Closing and for fees
that are reasonably acceptable to the Purchaser, services that are necessary for
such Person to continue to operate the Covad Assets that the Seller provided
prior to the Closing using the Purchased Assets; provided, however, that such
services shall not, in the good faith and reasonable determination of Purchaser,
disrupt the operation of the Purchased Business by Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Asset Purchase Agreement - Page 47
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed by its officers thereunto duly authorized, all as of the day and
year first above written.
▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman & CEO
NETWORK ACCESS SOLUTIONS CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: CEO
NETWORK ACCESS SOLUTIONS, LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: CEO
NASOP, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: CEO
For purposes of 3.1(b) and 11.3 only:
Asset Purchase Agreement - Page ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, A
PROFESSIONAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
---------
▇▇▇▇ OF SALE AND INSTRUMENT OF ASSIGNMENT
This ▇▇▇▇ of Sale and Instrument of Assignment (this "▇▇▇▇ of Sale")
dated as of ___, 2002 by Network Access Solutions Corporation, a Delaware
corporation (the "Company"), Network Access Solutions LLC, a Virginia limited
liability company and wholly-owned subsidiary of the Company (the "LLC"), NASOP,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company ("NASOP"
and together with the Company, the LLC and NASOP, the "Seller"), to ▇▇▇.▇▇▇,
Inc., a Delaware corporation (the "Purchaser"):
WITNESSETH:
WHEREAS, Seller and Purchaser have entered into an Asset Purchase
Agreement dated as of October 16, 2002 (the "Agreement"), which, among other
things, provides for the purchase and sale of certain of the assets of Seller
for the cash consideration described in the Agreement and the assumption by
Purchaser of certain liabilities of Seller;
WHEREAS, the Company and NASOP have commenced voluntary Chapter 11
cases, which are being jointly administered in the United States Bankruptcy
Court for the District of Delaware and the Purchased Assets will be sold
pursuant to an order of the Bankruptcy Court approving such sale under Section
363 of the Bankruptcy Code, and such sale will include the assumption by
Purchaser of the Assumed Liabilities under Section 365 of the Bankruptcy Code,
and the terms and conditions of the Agreement; and
WHEREAS, Seller and Purchaser now desire to carry out the intents
and purposes of the Agreement by the execution and delivery by Seller to
Purchaser of this ▇▇▇▇ of Sale evidencing the sale, transfer, assignment and
delivery to Purchaser by Seller of those assets of Seller described below.
NOW, THEREFORE, in consideration of the mutual covenants and other
good and valuable consideration set forth in the Agreement, the receipt and
sufficiency of which are hereby acknowledged, and upon the terms and subject to
the conditions set forth in the Agreement, Seller hereby sells, transfers,
assigns and delivers to Purchaser, free and clear of all Encumbrances, all of
Seller's right, title and interest in and to the following assets and rights
(collectively the "Purchased Assets"), and specifically including all right,
title and interest of Seller in, to and under the following:
(i) all supplies and inventory related to the Purchased
Business, wherever located;
(ii) all personal property and interests therein,
including, without limitation, all network assets and equipment
supporting broadband service to customers, customer premise
equipment, machinery, equipment, office equipment, communications
equipment, computer hardware and software (other than any software
license agreements
A-1
with Microsoft Corporation), motor vehicles, furniture, fixtures,
spare and replacement parts, and other personal property owned or
used by Seller with respect to the Purchased Business on the Closing
Date, wherever located, including, without limitation, the equipment
subject to the leases listed on Annex 2.1(a)(ii)(A) and the
equipment listed on Annex 2.1(a)(ii)(B) to this ▇▇▇▇ of Sale;
(iii) all rights under or in connection with all leases
and subleases of real property set forth in, and attached to, Annex
2.1(a)(iii)(A) to this ▇▇▇▇ of Sale and Annex 2.1(a)(iii)(B) to this
▇▇▇▇ of Sale (as such leases and subleases on Annex 2.1(a)(iii)(B)
to this ▇▇▇▇ of Sale may have been amended, modified or supplemented
from time to time prior to the Closing Date in accordance with the
provisions of the Agreement), together with Seller's interest in all
buildings, facilities, fixtures and other improvements thereon and
all easements, rights-of-way, transferable licenses and permits and
other appurtenances thereto, except as otherwise provided in such
Annexes and subject to Section 8.3(b) of the Agreement;
(iv) all rights under or in connection with all
contracts, licenses, commitments, purchase orders, agreements,
instruments and unexpired leases and subleases: (A) relating to the
Purchased Business or Assumed Liabilities and set forth in, and
attached to, Annex 2.1(a)(iv)(A) to this ▇▇▇▇ of Sale and Annex
2.1(a)(iv)(B) to this ▇▇▇▇ of Sale (as Annex 2.1(a)(iv)(B) and the
agreements listed on Annex 2.1(a)(iv)(B) to this ▇▇▇▇ of Sale may
have been amended or modified from time to time prior to the Closing
Date in accordance with the provisions of the Agreement); and (B)
with the customers of the Purchased Business relating to the
provision of services or equipment to such customers;
(v) all Intellectual Property and Other Intellectual
Property owned, licensed or used by Seller in respect of the
Purchased Business on the Closing Date, including all tradenames,
trademarks, service marks, domain names, trademark registrations and
applications therefor, service ▇▇▇▇ registrations and applications
therefor, copyright registrations and applications (including
without limitation the names and Internet protocol addresses set
forth on Annex 2.1(a)(v) to this ▇▇▇▇ of Sale) therefor and all
goodwill associated therewith (but excluding those used exclusively
in connection with any Excluded Asset), all software license
agreements (other than any software license agreements with
Microsoft Corporation), all documents embodying proprietary
information and copyright-protected material and all evidence of
ownership of such Intellectual Property and Other Intellectual
Property;
(vi) true, complete and correct copies of all books,
records and other data and information relating to the Purchased
Business or to any customer of the Purchased Business, including,
without limitation, all books, records, materials, manuals,
financial and accounting statements, sales and promotional materials
and records, advertising materials, customer lists, supplier lists,
mailing lists, distribution lists, business plans, credit
information, cost and pricing information, reference catalogs, data
and information derived from management information systems, and
other similar property and rights that relate to or are used in
connection with the Purchased Business, wherever located;
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(di) any counterclaims, setoffs or defenses Seller may
have with respect to any Assumed Liabilities;
(dii) all prepaid expenses and assets of Seller
(including deposits), in each case to the extent related to any
other Purchased Asset, including, without limitation, any claims or
other rights under insurance policies of Seller (other than
insurance policy deposits) relating to any other Purchased Asset,
but excluding any prepaid expenses made by Seller to any third-party
set forth on Annex 2.1(a)(viii) to this ▇▇▇▇ of Sale that are
credited to or otherwise made available to Purchaser post-Closing by
such third-parties;
(diii) all rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased
Business or the Purchased Assets, including unliquidated rights
under manufacturers' and vendors, warranties but specifically
excluding any of the foregoing in connection with the Lucent
Technologies Action;
(div) to the extent transferable, all licenses, permits
or other governmental authorizations affecting, or relating in any
way to, the Purchased Business or the Purchased Assets, including
the items listed on Annex 2.1(a)(x) to this ▇▇▇▇ of Sale, but
excluding the Communications Licenses; and
(dv) all goodwill and other intangible assets associated
with the Purchased Business or the Purchased Assets.
TO HAVE AND TO HOLD the same unto Purchaser and its successors and
assigns forever.
Notwithstanding anything to the contrary set forth in this ▇▇▇▇ of
Sale, Seller shall not sell, transfer, assign or deliver (or cause to be sold,
transferred, assigned or delivered) to Purchaser, and Purchaser shall not
purchase and acquire from Seller hereunder, any of the Excluded Assets, which
shall remain the exclusive property of Seller.
The Purchased Assets are being sold and transferred by Seller to Purchaser and
purchased by Purchaser from Seller on an "AS IS" and "WHERE IS" basis and "WITH
ALL FAULTS." SELLER DISCLAIMS ALL WARRANTIES CONCERNING THE PURCHASED ASSETS,
STATUTORY, EXPRESS, AND IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER
WARRANTY OF QUALITY IN RESPECT OF THE TANGIBLE PURCHASED ASSETS. The Purchaser
and Seller hereby acknowledge that all Cure Costs (as defined in the Agreement)
related to any Purchased Asset are the responsibility of the Seller.
To the extent that the assignment to Purchaser of any unexpired
contract, agreement, license, lease, permit or authorization pursuant to this
▇▇▇▇ of Sale or the Agreement is not permitted without the consent of another
Person and such restriction cannot be effectively overridden or canceled by the
Section 363/365 Order, or other related order of the Bankruptcy Court, then this
▇▇▇▇ of Sale or the Agreement will not be deemed to constitute an assignment of
or an undertaking or attempt to assign the same or any right or interest therein
if such consent is
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not given; provided that Seller will use its reasonably commercial efforts, both
before and after the Closing, to obtain all such consents.
After the Closing and without further consideration, each Party will
from time to time, at the reasonable request and expense of the requesting
Party, execute and deliver such other instruments of conveyance and transfer and
such other instruments, documents and agreements and take such other actions as
such other Party may reasonably request or as may be reasonably requested by any
applicable Governmental Authorities or third parties, in each case in order to
more effectively or more expeditiously consummate any of the transactions
contemplated in the Agreement and to vest in Purchaser the right, title and
interest in, to and under the Purchased Assets, to assist Purchaser in the
collection and reduction to possession of the Purchased Assets (and the exercise
of rights with respect thereto); provided that the requesting Party will prepare
any additional documents and instruments and will handle any submittal,
applications, processing, recording and registrations.
This ▇▇▇▇ of Sale shall be binding upon Seller and its respective
successors and assigns and shall inure to the benefit of Purchaser and its
successors and assigns. The covenants of Seller contained in the preceding
paragraph shall survive the execution and delivery of this ▇▇▇▇ of Sale in
accordance with the terms of the Agreement.
This ▇▇▇▇ of Sale shall be governed by and construed in accordance
with Federal Bankruptcy Code, to the extent applicable, and where state law is
implicated, the laws of the State of Connecticut shall govern, without reference
to choice of law principles, including all matters of construction, validity and
performance.
If there is any conflict as to the terms of this ▇▇▇▇ of Sale and
the terms of the Agreement, then the terms of the Agreement shall prevail.
Capitalized terms used and not otherwise defined in this ▇▇▇▇ of
Sale shall have the respective meanings ascribed to such terms in the Agreement.
[REMAINDER PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Seller has caused this ▇▇▇▇ of Sale to
be executed and delivered by its duly authorized officer as of the date first
above written.
NETWORK ACCESS SOLUTIONS CORPORATION
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NETWORK ACCESS SOLUTIONS LLC
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NASOP, INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT B
---------
INSTRUMENT OF ASSUMPTION
This Instrument of Assumption (this "Instrument of Assumption")
dated as of ___, 2002 by ▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Purchaser")
to Network Access Solutions Corporation, a Delaware corporation (the "Company"),
Network Access Solutions LLC, a Virginia limited liability company and
wholly-owned subsidiary of the Company (the "LLC"), and NASOP, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company ("NASOP" and together
with the Company, the LLC, and NASOP, the "Seller"):
WITNESSETH:
WHEREAS, Seller and Purchaser have entered into an Asset Purchase
Agreement dated as of October 16, 2002 (the "Agreement"), which, among other
things, provides for the purchase and sale of certain of the assets of Seller
for the cash consideration described in the Agreement and the assumption by
Purchaser of certain liabilities of Seller;
WHEREAS, the Company and NASOP have commenced voluntary Chapter 11
cases, which are being jointly administered in the United States Bankruptcy
Court for the District of Delaware and the Purchased Assets will be sold
pursuant to an order of the Bankruptcy Court approving such sale under Section
363 of the Bankruptcy Code, and such sale will include the assumption by
Purchaser of the Assumed Liabilities under Section 365 of the Bankruptcy Code,
and the terms and conditions of the Agreement; and
WHEREAS, Seller and Purchaser now desire to carry out the intents
and purposes of the Agreement by the execution and delivery by Purchaser to
Seller of this Instrument of Assumption evidencing the assumption by Purchaser
of those liabilities of Seller described below.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS that, as partial
consideration for the sale, transfer, assignment and delivery of the Purchased
Assets and upon the terms and subject to the conditions set forth in the
Agreement, Purchaser hereby assumes, and shall pay, perform and discharge when
due the following liabilities, commitments and obligations arising from and
after the Closing (collectively the "Assumed Liabilities"), but not others:
(i) all liabilities, commitments and obligations under or in
connection with all leases and subleases of real property set forth in, and
attached to, Annex 2.1(a)(iii)(A) to this Instrument of Assumption and Annex
2.1(a)(iii)(B) to this Instrument of Assumption (as such leases and subleases on
Annex 2.1(a)(iii)(B) to this Instrument of Assumption may have been amended,
modified or supplemented from time to time prior to the Closing Date in
accordance with the provisions of the Agreement), together with Seller's
interest in all buildings, facilities, fixtures and other improvements thereon
and all easements, rights-of-way, transferable licenses and permits and other
appurtenances thereto, except as otherwise provided in such Annexes and
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subject to Section 8.3(b) of the Agreement (collectively the "Assigned Leases"),
as such liabilities, commitments and obligations arising out of the Assigned
Leases and Assigned Contracts listed on Schedule 2.1(a)(iii)(B) may have been
amended, modified or supplemented in a manner acceptable to Purchaser and
Seller, each in its sole discretion (except that any such amendments or
modifications to an Assigned Contract listed on Part II of Schedule
2.1(a)(iii)(B) that do not increase Seller's liabilities, commitments and
obligations under an Assigned Lease shall be automatically deemed to be
acceptable to Seller); and
(ii) all liabilities, commitments and obligations under or in
connection with all contracts, commitments, purchase orders, agreements,
instruments and unexpired leases and subleases (collectively the "Assigned
Contracts"): (A) relating to the Purchased Business or Assumed Liabilities and
set forth in, and attached to Annex 2.1(a)(iv)(A) to this Instrument of
Assumption and Annex 2.1(a)(iv)(B) to this Instrument of Assumption (as Annex
2.1(a)(iv)(B) and the agreements listed on Annex 2.1(a)(iv)(B) to this
Instrument of Assumption may have been amended or modified from time to time
prior to the Closing Date in accordance with the provisions of the Agreement);
or (B) with the customers of the Purchased Business relating to the provision of
services or equipment to such customers, as such liabilities, commitments and
obligations are amended or modified in a manner acceptable to Purchaser and
Seller, each in its sole discretion.
The Parties acknowledge that the Assumed Liabilities shall include
an aggregate of no more than $10,000,000.00 in principal of long-term debt or
capital lease obligations of Seller under the Conditional Assigned Contracts.
Notwithstanding anything to the contrary in this Instrument of
Assumption or in the Agreement, Purchaser is assuming only the Assumed
Liabilities and no other liability, commitment or obligation of the Business or
Seller or any other Person whatsoever, of whatever nature whether presently in
existence or arising or asserted hereafter. Purchaser shall not be deemed to be
a successor-in-interest to Seller for any purposes whatsoever. All liabilities,
commitments and obligations other than the Assumed Liabilities will be retained
by, and remain liabilities, commitments and obligations of, Seller including,
but not limited to, the Excluded Liabilities.
This Instrument of Assumption shall be binding upon Seller and its
respective successors and assigns and shall inure to the benefit of Purchaser
and its successors and assigns.
This Instrument of Assumption shall be governed by and construed in
accordance with the Bankruptcy Code, to the extent applicable, and where state
law is implicated, the laws of the State of Connecticut shall govern, without
reference to choice of law principles, including all matters of construction,
validity and performance.
If there is any conflict as to the terms of this Instrument of
Assumption and the terms of the Agreement, then the terms of the Agreement shall
prevail.
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Capitalized terms used and not otherwise defined in this Instrument
of Assumption shall have the respective meanings ascribed to such terms in the
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Purchaser has caused this Instrument of
Assumption to be duly executed and delivered by a duly authorized officer as of
the date first above written.
▇▇▇.▇▇▇, INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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