EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered
into as of this 16th day of June, 1998, by and between Convergent
Communications Services, Inc., a Colorado corporation (the "Buyer"), on the
one hand, and Tie/Communications, Inc., a Delaware corporation and Debtor and
Debtor in Possession (the "Seller") under Case No. SA 98-15547-JB (the
"Case") in the United States Bankruptcy Court for the Central District of
California (the "Bankruptcy Court").
RECITALS
A. Seller is engaged in the business of distributing, maintaining and
supporting telephone systems and of selling blocks of long distance telephone
time (collectively, the "Business").
B. Seller wishes to sell to Buyer the assets described herein which it
uses in connection with the Business at the price and on the other terms and
conditions specified in detail below and Buyer wishes to so purchase and
acquire such assets from Seller.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. TRANSFER OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. On the Closing Date, as
hereinafter defined, in consideration of the covenants, representations and
obligations of Buyer hereunder, and subject to the conditions hereinafter set
forth. Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase from Seller, free and clear of all liens, claims,
interests and encumbrances, the following assets, wherever located, whether
or not identified or disclosed on Seller's books and records (collectively,
the "Property");
1.1.1 LEASES AND CONTRACTS. Seller's right, title and
interest (i) as lessee under those real property leases described on Exhibit
"A-1" to this Agreement and incorporated herein by this reference
(collectively, the "Real Property Leases"), (ii) as lessee under those
equipment, personal property and intangible property leases, rental
agreements, licenses, contracts, agreements and similar arrangements
described on Exhibit "A-2" to this Agreement and incorporated herein by this
reference (collectively, the "Other Leases"), and (iii) as a party to those
other contracts, leases, orders, purchase orders, licenses, contracts,
agreements and similar arrangements described On Exhibit "A-3" (collectively,
the "Other Contracts" and together with the Other Leases, the "Other Leases
and Contracts").
1.1.2 IMPROVEMENTS. All improvements, and all
appurtenances to such improvements, located on the real property
(collectively, the "Real Property") occupied by Seller under the Real
Property Leases assumed by Buyer and assigned by Seller at the Closing,
including, without limitation, buildings, outside storage areas, driveways,
walkways and parking
areas, but in all events only to the extent of Seller's interest in the same
(collectively, the "improvements").
1.1.3 PERSONAL PROPERTY. All of those items of equipment
and tangible personal property now or hereafter owned by Seller and used in
connection with the Business, including, without limitation, all such
furniture, vehicles, machinery, equipment, tools, spare parts, computers,
fixtures and furnishings located at or on the Real Property (collectively,
the "Personal Property"). As used in this Agreement, the Personal Property
shall not include the Inventory. The Personal Property shall also expressly
exclude any equipment or other tangible property held by Seller pursuant to a
lease, rental agreement, contract, license or similar arrangement (a
"Contract") where Buyer does not assume the underlying Contract relating to
such personal property at the Closing.
1.1.4 INTANGIBLE PROPERTY. All intangible personal
property owned or held by Seller and used in connection with the Business,
but in all cases only to the extent of Seller's interest and only to the
extent transferable, together with all books, records and like items
pertaining to the Business, including, without limitation, any interest in
the name "Tie Communications," the goodwill of the Business, trademarks,
trade names, service marks, all plans and specifications for the
Improvements, all appraisals, engineering, soils, pest control, and other
reports relating to the Real Property, catalogues, customer lists and files
and other data bases, correspondence with present or prospective customers
and suppliers, advertising materials, software programs, telephone exchange
numbers identified with the Business, employment records and any confidential
information or other documentation (including, without limitation, all
operator and user manuals, training materials, guides, listings,
specifications, and other materials for use in conjunction with, or related
to the Property) that has been reduced to writing relating to or arising out
of the Business (collectively, the "Intangible Property"). As used in this
Agreement, Intangible Property shall in all events exclude, (i) any materials
containing privileged communications or information about employees,
disclosure of which would violate an employee's reasonable expectation of
privacy and any other materials which are subject to attorney-client or any
other privilege, and (ii) any software or other item of intangible property
held by Seller pursuant to a license or other Contract where Buyer does not
assume the underlying Contract relating to such intangible personal property
at the Closing.
1.1.5 RECEIVABLES. All instruments, receivables, accounts
receivable and unbilled costs and fees and, subject to Section 1.2, all
causes of action relating or pertaining to the foregoing (collectively, the
"Receivables").
1.1.6 INVENTORY. All supplies, goods, materials, work in
process, inventory and stock in trade owned by Seller (collectively, the
"Inventory").
1.1.7 WARRANTIES. All rights of Seller under express or
implied warranties from the suppliers of Seller with respect to the Property;
1.1.8 ADDITIONAL ASSETS. Except as specifically provided
in Section 1.2 or Exhibit "A-4" hereof, all other assets and properties of
Seller which exist on the Closing Date
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whether tangible or intangible, real or personal which are used in the
Business, excluding Seller's rights under any Contract which is not assigned
to Buyer at the Closing; and
1.1.9 NON-EXECUTORY CONTRACTS. All non-executory
contracts and contractual rights, relating to the enforcement of proprietary
rights and confidentiality provisions, including, but not limited to all
non-executory contracts with customers.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, the Property shall be limited to the items identified or
described in Section 1.1 above and shall not include (i) those items excluded
pursuant to the provisions of Section 1.1 above; (ii) all cash or cash
equivalents; (iii) all preference or avoidance claims and actions of Seller,
including, without limitation, any such claims and actions arising under
Sections 544, 547, 548, 549, and 550 of the United States Bankruptcy Code;
(iv) Seller's rights under this Agreement and all cash and non-cash
consideration payable or deliverable to Seller pursuant to the terms and
provisions hereof; (v) insurance proceeds, claims and causes of action with
respect to or arising in connection with (A) any Contract which is not
assigned to Buyer at the Closing, or (B) any item of tangible or intangible
property not acquired by Buyer at the Closing; (vi) any Contract to which
Seller is a party which is not listed or described in Section 1.1.9 or on
Exhibit "▇-▇," "▇-▇" ▇▇ "▇-▇," and (vii) any Contract or asset which is
listed or described on Exhibit "A-4".
1.3 INSTRUMENTS OF TRANSFER. The sale, assignment, transfer,
conveyance and delivery of the Property to Buyer shall be made by
assignments, ▇▇▇▇ of sale, and other instruments of assignment, transfer and
conveyance provided for in Section 3 below and such other instruments as may
reasonably be requested by Buyer and which do not increase in any material
way the burdens imposed by this Agreement upon Seller.
2. CONSIDERATION.
2.1 PURCHASE PRICE
(a) The cash consideration to be paid by Buyer to Seller for
the Property (the "Purchase Price") shall be $40,000,000.
(b) The Purchase Price shall be paid as follows:
(i) Within two days (the "Deposit Date") following the
mutual execution and delivery of this Agreement (the date of such
mutual execution and delivery is sometimes referred to herein as
the "Execution Date"), Buyer shall deposit into an escrow (the
"Escrow") with an escrow agent or company (the "Escrow Holder")
reasonably designated by Seller $1,500,000 (the "Deposit") in
immediately available, good funds (funds delivered in this manner
are referred to herein as "Good Funds"), pursuant to joint escrow
instructions to be delivered to the Escrow Holder on or before the
Deposit Date. In turn, the Escrow Holder shall immediately deposit
the Deposit into an interest-bearing account. The Deposit shall
become nonrefundable upon the earlier of (x) the approval of Buyer
as the approved buyer at the hearing on the Sale Motion (as defined
in Section 8.4.2
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below), or (y) the termination of this Agreement by Seller by
reason of Buyer's default in the performance of any material
obligation of Buyer hereunder (a "Buyer Default Termination"). At
the Closing, the Deposit (and any interest accrued thereon) shall
be credited and applied toward payment of the Purchase Price. In
the event the Deposit becomes non-refundable by reason of a Buyer
Default Termination, Escrow Holder shall immediately disburse the
Deposit and all interest accrued thereon to Seller to be retained
by Seller for its own account. If the transactions contemplated
herein terminate by reason of (A) the termination of this Agreement
by reason of Seller's default in the performance of any material
obligation of Seller hereunder, (B) the termination of this
Agreement pursuant to and in accordance with Section 8.4.2 hereof,
(C) the termination of this Agreement by Buyer pursuant to and in
accordance with the provisions of Sections 3.2, 4.3, 8.4.1, 9.1 or
9.8 hereof, (D) the approval by the Bankruptcy Court of a sale to a
third party other than Buyer, or (E) any other termination of this
Agreement other than a Buyer Default Termination, the Escrow Holder
shall return to Buyer the Deposit (together with all interest
thereon);
(ii) Buyer shall receive a credit against the Purchase Price
EQUAL TO 50% OF THE FUNDS PAID PURSUANT TO SECTION 8.3; AND
(iii) On the Closing Date, Buyer shall pay and deliver,
in Good Funds, the balance of the Purchase Price.
2.2 ASSUMED LIABILITIES. Buyer shall, effective as of the Closing
Date, be assigned Seller's interest under the Real Property Leases and Other
Leases and Contracts to be assigned to Seller under this Agreement and shall
assume all liabilities of Seller accruing under the Real Property Leases and
under the Other Leases and Contracts on and after the Closing Date; provided
that, except as set forth in the following sentence, Seller shall pay all
cure amounts owing under any of the Real Property Leases and Other Leases and
Contracts as of the Closing Date which the Bankruptcy Court may order to be
paid as a condition to Seller's assumption and assignment of any Real
Property Lease or Other Lease or Contract. Except as provided in the
following sentence, Seller shall not be required to pay any such cure amounts
owing with respect to the contracts listed as items 6, 8, 13 and 18 on
Exhibit "A-3" and Seller shall not be required to pay 50% of such cure amount
owing with respect to the contract listed as item 4 on Exhibit "A-3," all of
which cure amounts not being paid by Seller will be satisfied by and be the
sole responsibility of Buyer. Buyer's obligation to make the cure payments
described in the preceding sentence shall not exceed (i) 100% of the amounts
set forth with respect to such creditors on the List of Creditors Holding
Twenty Largest Unsecured Claims filed by Seller in the Case on April 8, 1998
as to items 6 and 18 described above (50% as to item 4), (ii) $650,000 as to
such item 8 and (iii) $100,000 as to such item 13; and any amounts by which
the required cure payments exceed the amounts described in this sentence
shall be satisfied by and shall be the sole responsibility of Seller. Buyer
shall also assume all of Seller's liability for vacation, sick and personal
days accrued under Seller's current policies relating to the accrual of such
items as to all employees of Seller who become employees of Buyer on the
Closing Date; provided, however, the liability assumed by Buyer pursuant to
this sentence shall not exceed $650,000. Other than
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the liabilities and obligations of Seller expressly assumed by Buyer
hereunder, Buyer is not assuming and shall not be liable for any liabilities
or obligations of Seller.
3. CLOSING TRANSACTIONS.
3.1 CLOSING CONFERENCE. The Closing of the transactions provided
for herein (the "Closing") shall take place at the offices of Pachulski,
Stang, ▇▇▇▇▇ & Young, PC., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3.2 CLOSING DATE. The Closing shall be held on the later of (i)
eleven (11) days after entry of the Sale Approval Order (as defined in
Section 8.4.2, below) or (ii) the first business day after all conditions to
Closing have been satisfied or waived (the "Closing Date"), or such other
date as the parties may mutually agree, but in no event later than August 31,
1998 (the "Outside Date"). In the event the conditions to Closing have not
been satisfied or waived by the Outside Date, then any party who is not in
default hereunder may terminate this Agreement; provided, however, that if
Buyer is not in default on the Outside Date with respect to the conditions to
Closing it must satisfy, Buyer may extend the Outside Date for up to 30 days
during which period Seller shall not have the right to terminate this
Agreement pursuant to this Section 3.2; provided further that neither party
shall have the right to terminate the Agreement during the thirty days
following the Outside Closing Date if the only conditions not satisfied or
waived are the conditions set forth in Sections 4.1.5 and 4.2.5.
Alternatively, the parties may mutually agree to an extended Closing Date.
Until this Agreement is either terminated or the parties have agreed upon an
extended Closing Date, the parties shall diligently continue to work to
satisfy all conditions to Closing and the transaction contemplated herein
shall close as soon as such conditions are satisfied or waived.
3.3 SELLER'S DELIVERIES TO BUYER AT CLOSING. On the Closing Date,
Seller shall make the following deliveries to Buyer:
3.3.1 An Assignment and Assumption of Leases substantially
in form and content mutually satisfactory to Seller and Buyer, duly executed
by Seller, pursuant to which Seller assigns the Real Property Leases and the
Other Leases and Contracts (the "Assignments of Leases"); provided, however,
that the Assignments of Leases need not be delivered by Seller if the
Bankruptcy Court has issued an order prior to the Closing Date authorizing
the assumption and assignment of such Leases and the Other Leases and
Contracts.
3.3.2 A ▇▇▇▇ of sale, duly executed by Seller, in form and
content mutually satisfactory to Seller and Buyer pursuant to which Seller
transfers the Personal Property and the Inventory to Buyer (the "▇▇▇▇ of
Sale").
3.3.3 A counterpart assignment of intangible property,
duly executed by Seller, in form and content mutually satisfactory to Seller
and Buyer, pursuant to which Seller assigns to Buyer its interest, if any, in
and to the Intangible Property to Buyer (the "Assignment of Intangible
Property").
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3.3.4 Any such other documents, funds or other things
reasonably contemplated by this Agreement to be delivered by Seller to Buyer
at the Closing.
3.4 BUYER'S DELIVERIES TO SELLER AT CLOSING. On the Closing Date,
Buyer shall make or cause the following deliveries to Seller:
3.4.1 That portion of the Purchase Price to be delivered
by Buyer directly to Seller at the Closing under Section 2.1 (and Buyer shall
cause Escrow Holder to deliver the Deposit to Seller).
3.4.2 A counterpart of the Assignment of Leases, duly
executed by Buyer.
3.4.3 A counterpart of the Assignment of Intangible
Property, duly executed by Buyer.
3.4.4 Any such other documents, funds or other things
reasonably contemplated by this Agreement to be delivered by Buyer to Seller
at the Closing.
3.5 PRORATIONS. Rent, current taxes, prepaid advertising and
other items of expense (including, without limitation, any prepaid insurance
under the Real Property Leases or Other Leases and Contracts, or any of them)
under the Real Property Leases or the Other Leases and Contracts shall be
prorated between Seller and Buyer as of the Closing Date. Except as provided
in Section 2.2, all obligations due in respect of periods prior to Closing
shall be paid in full or otherwise satisfied by Seller and all obligations
due in respect of periods after Closing shall be paid in full or otherwise
satisfied by Buyer. Except as provided in Section 2.2, rent shall be
prorated on the basis of a thirty (30) day month.
3.6 SALES, USE AND OTHER TAXES. Any sales, purchases, transfer,
stamp, documentary stamp, use or similar taxes under the laws of the states
in which any portion of the Property is located, or any subdivision of any
such state, which may be payable by reason of the sale of the Property under
this Agreement or the transactions contemplated herein shall be borne and
timely paid by Buyer.
3.7 POSSESSION. Right to possession of the Property shall
transfer to Buyer on the Closing Date. Seller shall transfer and deliver to
Buyer on the Closing Date such keys, lock and safe combinations and other
similar items as Buyer shall require to obtain immediate and full occupation
and control of the Property, and shall also make available to Buyer at their
then existing locations the originals of all documents in Seller's possession
that are required to be transferred to Buyer by this Agreement.
3.8 CLOSING PAYMENTS. At the Closing, Seller shall deliver to
Seller's employees payment for all accrued wages and benefits (except those
specifically assumed by Buyer pursuant to Section 2.2) through the Closing
Date.
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4. CONDITIONS PRECEDENT TO CLOSING.
4.1 CONDITIONS TO SELLER'S OBLIGATIONS. Seller's obligation to
make the deliveries required of Seller at the Closing Date shall be subject
to the satisfaction or waiver by Seller of each of the following conditions.
4.1.1 All of the representations and warranties of Buyer
contained herein shall be true and correct as of the date when made and shall
be deemed to be made again as of the Closing Date and shall be true and
correct in all material respects at and as of such time.
4.1.2 Buyer shall have executed and delivered to Seller
the Assignment of Leases.
4.1.3 Buyer shall have delivered, or shall be prepared to
deliver at the Closing, all cash and other documents required of Buyer to be
delivered at the Closing.
4.1.4 Buyer shall have delivered to Seller appropriate
evidence of all necessary corporate action by Buyer in connection with the
transactions contemplated hereby, including, without limitation: (i)
certified copies of resolutions duly adopted by Buyer's directors approving
the transactions contemplated by this Agreement and authorizing the
execution, delivery, and performance by Buyer of this Agreement; and (ii) a
certificate as to the incumbency of officers of Buyer executing this
Agreement and any instrument or other document delivered in connection with
the transactions contemplated by this Agreement.
4.1.5 All applicable waiting periods relating to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 shall have expired or
been terminated and any proceedings that may have been filed or instituted
thereunder shall have been satisfactorily concluded.
4.1.6 No action, suit or other proceedings shall be
pending before any court, tribunal or governmental authority seeking to
restrain or prohibit the consummation of the transactions contemplated by
this Agreement, or seeking to obtain substantial damages in respect thereof,
or involving a claim that consummation thereof would result in the violation
of any law, decree or regulation of any governmental authority having
appropriate jurisdiction.
4.1.7 The Bankruptcy Court shall have entered the
Procedure Order in accordance with Section 8.4.1 below and the Sale Approval
Order as contemplated by and defined in Section 8.4.2 below and the Sale
Approval Order shall not have been stayed as of the Closing Date.
4.1.8 Buyer shall have performed or tendered performance
in all material respects of the covenants on Buyer's part to be performed
which, by their terms, are intended to be performed before the Closing.
4.1.9 Buyer shall have offered employment to at least 90%
of the employees who are employed by Seller on the Closing Date, on
substantially similar terms to those under which they are employed on the
Execution Date; provided that nothing contained herein shall (i) obligate
Buyer to assume any collective bargaining agreements or any obligations
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thereunder or (ii) be interpreted to constitute an employment agreement with
any such employees.
4.2 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligation to make
the deliveries required of Buyer at the Closing Date shall be subject to the
satisfaction or waiver by Buyer of each of the following conditions:
4.2.1 Buyer shall have performed or tendered performance
in all material respects of the covenants on Buyer's part to be performed
which, by their terms, are intended to be performed before the Closing.
4.2.2 All representations and warranties of Seller
contained herein shall be true and correct as of the date when made and shall
be deemed to be made again as of the Closing Date and shall be true and
correct in all material respects at and as of such time.
4.2.3 Seller shall have executed and be prepared to
deliver to Buyer the Assignment of Leases.
4.2.4 Seller shall have delivered, or shall be prepared to
deliver at the Closing, all other documents required of Seller to be
delivered at the Closing.
4.2.5 All applicable waiting periods relating to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 shall have expired or
been terminated and any proceedings that may have been filed or instituted
thereunder shall have been satisfactorily concluded.
4.2.6 No action, suit or other proceedings shall be
pending before any court, tribunal or governmental authority seeking to
restrain or prohibit the consummation of the transactions contemplated by
this Agreement, or seeking to obtain substantial damages in respect thereof,
or involving a claim that consummation thereof would result in the violation
of any law, decree or regulation of any governmental authority having
appropriate jurisdiction.
4.2.7 The Bankruptcy Court shall have entered the
Procedure Order in accordance with Section 8.4.1 below and the Sale Approval
Order in accordance with Section 8.4.2 below and the Sale Approval Order
shall not have been stayed as of the Closing Date.
4.2.8 Buyer shall have entered into employment contracts
in form and substance satisfactory to it in its reasonable judgment which
will become effective upon the consummation of the Closing with the following
current employees of Seller: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, R. ▇▇▇ ▇▇▇▇▇, D.
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; provided however that this condition will be
deemed to have been satisfied if Buyer has not delivered, at least two days
prior to the hearing on the Procedure Order, a written notice to Seller that
such condition has not been satisfied.
4.2.9 NOTICE TO CREDITORS. Seller shall have provided all
notices required under applicable bankruptcy law and to such parties as Buyer
may reasonably request.
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4.2.10 ADEQUACY OF THE PROPERTY. The Property shall
constitute all of the assets and contract rights required to conduct in all
material respects the Business as it is presently being conducted; provided,
however, that Buyer shall use reasonable efforts to investigate the matters
described in this Section and that this condition shall be deemed satisfied
with respect to any matter of which Buyer has knowledge and fails to provide
written notice to Seller within two business days of discovering such matter.
4.2.11 COMPLIANCE WITH TELECOMMUNICATIONS REGULATIONS.
Seller shall have at all times operated the Business in compliance with all
applicable laws, rules and regulations applicable to the provision of
telecommunication services, except to the extent that any failure to do so
would not have a material adverse effect on the Business; provided, however,
that Buyer shall use reasonable efforts to investigate the matters described
in this Section and that this condition shall be deemed satisfied with
respect to any matter of which Buyer has knowledge and fails to provide
written notice to Seller within two business days of discovering such matter.
4.3 TERMINATION. If any of the above conditions to the
obligations of a party is neither satisfied nor waived on or before the date
by which the condition is required to be satisfied or, if no such date is
specified, on or before the Outside Date (including any extension of the
Outside Date as permitted pursuant to Section 3.2), such party, provided it
is not then in default hereunder, may terminate this Agreement by delivering
to the other party written notice of termination. Any waiver of a condition
shall be effective only if such waiver is stated in writing and signed by the
waiving party; provided, however, that the consent of a party to the Closing
shall constitute a waiver by such party of any conditions to Closing not
satisfied as of the Closing Date.
5. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby makes the
following representations and warranties to Buyer:
5.1 VALIDITY OF AGREEMENT. Subject only to the obtaining of the
Sale Approval Order, this Agreement constitutes the valid and binding
obligation of Seller enforceable in accordance with its terms.
5.2 ORGANIZATION, STANDING AND POWER. Subject to the applicable
provisions of bankruptcy law, Seller has all requisite corporate power and
authority to own, lease and operate its properties, to carry on its business
as now being conducted and, subject to Seller's obtaining the Sale Approval
Order, to execute, deliver and perform this Agreement and all writings
relating hereto.
5.3 AUTHORIZATION OF SELLER. Subject only to the obtaining of the
Sale Approval Order, the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, and the performance of,
fulfillment of and compliance with the terms and conditions hereof by Seller
do not and will not: (i) conflict with or result in a breach of the articles
of incorporation or the by-laws of Seller; (ii) violate any statute, law,
rule or regulation, or any order, writ, injunction or decree of any court or
governmental authority; or (ii) violate or conflict with or constitute a
default under any agreement, instrument or writing of any nature to which
Seller is a party or by which Seller or its assets or properties may be bound.
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5.4 TITLE TO PROPERTY. To Seller's knowledge (which consists only
of matters actually known to Seller's senior management), Seller has good and
marketable title to the Property; provided, however, Seller makes no
representation whatsoever as the title to the Intangible Property.
6. BUYER'S WARRANTIES AND REPRESENTATIONS. In addition to the
representations and warranties contained elsewhere in this Agreement, Buyer
hereby makes the following representations and warranties to Seller:
6.1 VALIDITY OF AGREEMENT. All action on the part of Buyer
necessary for the authorization, execution, delivery and performance of this
Agreement by Buyer, including, but not limited to. the performance of Buyer's
obligations hereunder, has been taken. This Agreement, when executed and
delivered by Buyer, shall constitute the valid and binding obligation of
Buyer enforceable in accordance with its terms.
6.2 ORGANIZATION, STANDING AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado. Buyer has all requisite corporate power and authority to own,
lease and operate its properties, to carry on its business as now being
conducted and to execute, deliver and perform this Agreement and all writings
relating hereto.
6.3 AUTHORIZATION OF BUYER. The execution, delivery and
performance of this Agreement and all writings relating hereto by Buyer have
been duly and validly authorized. The execution and delivery of this
Agreement, the consummation of the transactions herein contemplated, and the
performance of, fulfillment of and compliance with the terms and conditions
hereof by Buyer do not and will not; (i) conflict with or result in a breach
of the articles of incorporation or by-laws of Buyer; (ii) violate any
statute, law, rule or regulation, or any order, writ, injunction or decree of
any court or governmental authority; or (iii) violate or conflict with or
constitute a default under any agreement, instrument or writing of any nature
to which Buyer is a party or by which Buyer or its assets or properties may
be bound.
7. "AS IS" TRANSACTION. Buyer hereby acknowledges and agrees that,
except as otherwise expressly provided in Section 5 above, Seller makes no
representations or warranties whatsoever, express or implied, with respect to
any matter relating to the Property (including, without limitation, income to
be derived or expenses to be incurred in connection with the Property, the
physical condition of any personal property comprising a part of the Property
or which is the subject of any Other Lease or Contract to be assumed by Buyer
at the Closing, the environmental condition or other matter relating to the
physical condition of any real property or improvements which are the subject
of any Real Property Lease to be assumed by Buyer at the Closing, the zoning
of any such real property or improvements, the value of the Property (or any
portion thereof), the terms, amount, validity or enforceability of any
assumed liabilities, the merchantability or fitness of the Personal Property
or any other portion of the Property for any particular purpose, or any other
matter or thing relating to the Property or any portion thereof). Without in
any way limiting the foregoing, Seller hereby disclaims any warranty (express
or implied) of merchantability or fitness for any particular purpose as to
any portion of the Property. Buyer further acknowledges that Buyer has
conducted an independent inspection and
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investigation of the physical condition of all portions the Property and all
such other matters relating to or affecting the Property as Buyer deemed
necessary or appropriate and that in proceeding with its acquisition of the
Property, except for any representations and warranties set forth in Section
5 which by their specific terms survive the Closing, Buyer is doing so based
solely upon such independent inspections and investigations. Accordingly,
except only for such surviving representations, Buyer will accept the
Property at the Closing "AS IS, "WHERE IS," and "WITH ALL FAULTS."
8. CONDUCT AND TRANSACTION PRIOR TO CLOSING.
8.1 ACCESS TO RECORDS AND PROPERTIES OF SELLER. From and after
the date of this Agreement until the Closing Date, Seller shall afford to
Buyer's officers, independent public accountants, counsel, lenders,
consultants and other representatives, free and full access at all reasonable
times to the Property and all records pertaining to the Property or the
Business. Buyer, however, shall not be entitled to access to any materials
containing privileged communications or information about employees,
disclosure of which might violate an employee's reasonable expectation of
privacy. Buyer expressly acknowledges that nothing in this Section 8.1 is
intended to give rise to any contingency to Buyer's obligations to proceed
with the transactions contemplated herein, provided Seller is in material
compliance with the provisions of this Section 8.1.
8.2 OPERATION OF SELLER'S BUSINESS PENDING CLOSING. Unless Buyer
otherwise consents, during the period prior to the Closing Date, Seller shall
operate the Business as currently operated and only in the ordinary course
and, consistent with such operation, shall use commercially reasonable
efforts to preserve intact its current business organization and its
relationships with employees and persons having dealings with it.
8.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ COOPERATION. Buyer and Seller shall
cooperate with each other (at their respective sole cost and expense) to
comply with, and provide the information required by, the premerger
notification and waiting period rules of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 (codified in Section 18(a) of Title 15, U.S. Code),
in any Federal Trade Commission regulations, and in any provisions or
regulations of or relating to the ▇▇▇▇▇▇▇ Act. In that connection, Buyer and
Seller shall use diligent efforts to make their joint pre-merger notification
filing with the Federal Trade Commission no later than two (2) business days
following the entry of the Procedure Order. Buyer shall pay 100% of the
filing fee to be paid in connection with such pre-merger notification and
Buyer shall be entitled to a credit against the Purchase Price of 50% of such
amount.
8.4 BANKRUPTCY COURT APPROVALS.
8.4.1. BANKRUPTCY COURT APPROVAL OF SALE PROCEDURES. Promptly
following the Execution Date (and in no event later than ten (10) business
days thereafter), Seller will file with the Bankruptcy Court (and personally
serve counsel for the official creditors' committee, the members of the
official creditors' committee, the creditors listed on the 20 largest list,
all creditors requesting special notice and all other parties required by law
to receive such notice) a motion (the "Sale Procedure Motion"), in form and
substance acceptable to Buyer, for an order
11
(the "Procedure Order") from the Bankruptcy Court which provides that: (i) if
(x) this Agreement has not been terminated (a) due to a breach by Buyer or
(b) by Buyer due to the failure of the condition set forth in Section 4.2.8
and (y) the Bankruptcy Court enters its order approving the sale of the
Property (or any material portion thereof) to any party other than Buyer,
Seller will on the next business day following entry of such order pay to
Buyer a flat fee payment (not dependent on amounts actually expended or
incurred by Buyer) in cash or other immediately available good funds in the
amount of $1,500,000 (the "Break-Up Fee"); (ii) all third party offers to be
considered at the hearing on the Sale Motion (as defined below in Section
8.4.2 below) shall be in writing and delivered to Seller and Buyer no later
than forty-eight (48) hours prior to such hearing, together with satisfactory
evidence of such third party's financial ability to perform its obligations
under such offer and shall be accompanied by a deposit of $1,500,000; which
funds such third party shall agree may be used by Seller to pay the Break-Up
Fee to Buyer in the situation described in clause (i) above; (iii) no
prospective purchaser will be permitted to bid at the Hearing on the Sale
Motion unless such party has been deemed "financially qualified" by ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital ("HLHZ"), Seller's investment banker; (iv) no
prospective purchaser who bids for the Property at the hearing on Buyer's
acquisition of the Property shall be entitled to purchase the Property unless
such prospective purchaser offers to purchase the Property for consideration
which is at least $4,000,000 greater than the consideration set forth in this
Agreement (including all cash, non-cash consideration and assumed
liabilities) and otherwise on terms at least as favorable to Seller as those
set forth in this Agreement, and (v) after any initial overbid, all further
overbids must include cash increments of at least $1,000,000. Should
overbidding take place, Buyer shall have the right, but not the obligation,
to participate in the overbidding and to be approved as the overbidder at the
hearing on the Sale Motion based upon any such overbid. If the Bankruptcy
Court approves a sale to Buyer based on an overbid by Buyer, Buyer shall
receive credit against the purchase price in the amount of the Break-Up Fee.
Should an overbidder other than Buyer be approved at the hearing on the Sale
Motion, Buyer shall, the day after such hearing and concurrently with the
payment of the Break-Up Fee to Buyer, deliver to the person designated by
Seller all reports, studies and the like materials obtained by Buyer from
third party consultants in connection with Buyer's due diligence
investigation.
Following the filing of the Sale Procedure Motion, Seller shall use
reasonable efforts to obtain the Procedure Order (the date on which the
Procedure Order is entered is referred to herein as the "Sale Procedure
Date"). If (i) the Bankruptcy Court declines to enter the Procedure Order, or
(ii) the Procedure Order is not entered on or before the date which is 20
days following the Execution Date (the "Procedure Order Entry Period"), then
in either such event, Buyer shall have the right, upon written notice
delivered to Seller not later than two (2) business days following the
earlier of the declination of the Court or expiration of the Procedure Order
Entry Period to terminate this Agreement. Delivery of such notice of
termination may be made by facsimile addressed to counsel for Seller. If
Buyer timely gives written notice of termination, this Agreement and the
transactions contemplated herein shall terminate and Buyer and Seller shall
be relieved of any further liability or obligation hereunder other than the
obligation to pay to Buyer the Deposit (together with interest) pursuant to
Section 2.1(b). Should Buyer decline to timely deliver to Seller written
notice of termination, Buyer shall conclusively be deemed to have waived the
condition provided for in this Section 8.4.1. Upon the timely entry of the
Procedure
12
Order in form and substance acceptable to Buyer, the condition set forth in
this Section 8.4.1 shall be deemed satisfied.
8.4.2. BANKRUPTCY COURT'S APPROVAL OF SALE. In the event that
the condition provided for in Section 8.4.1 above is either satisfied or
waived (or deemed waived), Seller shall promptly, but not more than 10 days
following the Sale Procedure Date, make a motion (the "Sale Motion") for an
order (the "Sale Approval Order") from the Bankruptcy Court (which order
shall be in form and substance acceptable to Buyer) which
(i) approves the sale of the Property to Buyer on the terms
and conditions set forth in this Agreement and authorizes Seller to proceed
with this transaction;
(ii) includes a specific finding that Buyer is a good faith
purchaser of the Property;
(iii) states that the sale of the Property to Buyer shall
be free and clear of all liens, claims, interests and encumbrances
whatsoever;
(iv) approves Seller's assumption and assignment of the
pre-petition leases and contracts to be assumed hereunder (collectively, the
"Section 365 Contracts") pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code and, except as provided in Section 2.2 hereof, orders Seller
to pay any cure amounts payable to the other parties to the Section 365
Contracts as a condition to such assumption and assignment; provided,
however, in no event shall Buyer have the right to disapprove the Sale
Approval Order or terminate this transaction by reason of the failure to
assign all of the Section 365 Contracts so long as (a) the Sale Approval
Order authorizes Seller to assume and assign not less than ninety percent
(90%) of the Section 365 Contracts and (b) included in such 90% are the
contracts listed as items 4, 5 and 6 on Exhibit "A-3"; and
(v) contains the following findings of fact and conclusions
of law by the Bankruptcy Court in form and substance satisfactory to Buyer
establishing that:
(a) the notice of sale, assignment and transfer of the
Property free and clear of liens, and the parties who were served with
copies of this notice, was in compliance with Bankruptcy Code Sections 102,
363 and 365 and Federal Rules of Bankruptcy Procedure 2002, 6004, 6006,
9014 and any other provisions of the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure or any local bankruptcy rules governing the sale of
the Property free and clear of liens and the assignment of executory
contracts and leases, if any;
(b) upon the closing of the sale of the Property to Buyer,
the Property shall be transferred, sold and delivered to Buyer free and
clear of all encumbrances, obligations, liabilities, contractual
commitments, claims, including, without limitation, any theory of successor
liability, DE FACTO merger, or substantial continuity, whether based in law
or equity, ERISA and employee benefit obligations, collective bargaining
agreements, environmental liabilities, any security interest,
13
mortgage, lien, charge against or interest in property, adverse claim,
claim of possession, license, restriction of any kind, including, but
not limited to, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership or any option to
purchase, option, charge, retention agreement which is intended as
security or other matters (collectively, "Liens") of any person or
entity that encumber or relate to, or purport to encumber or relate to,
the Property, except as specifically provided in this Agreement.
(c) all requirements imposed by Bankruptcy Code Section 363
and applicable case law for the sale of assets free and clear of Liens have
been satisfied;
(d) Buyer is a purchaser in "good faith" of the Property
pursuant to Bankruptcy Code Section 363(m);
(e) Buyer and Seller did not engage in any conduct which
would allow this Agreement to be set aside pursuant to Bankruptcy Code
Section 363(n);
(f) all of the requirements imposed by Bankruptcy Code
Section 365 and applicable case law for the assumption and assignment of
executory contracts and leases in connection with the sale of assets free
and clear of Liens have been satisfied;
(g) any other provisions of the Bankruptcy Code governing
the sale of assets free and clear of Liens have been satisfied;
(h) the transactions consummated pursuant to this Agreement
are entitled to the protections of Section 363(m) of the Bankruptcy Code;
(i) pursuant to Section 105 of the Bankruptcy Code, any
creditors of Seller are prohibited from taking any actions against Buyer or
the Property, except in connection with liabilities expressly assumed by
Buyer;
(j) the transfers made pursuant to this Agreement are made
under the Bankruptcy Code and not subject to any taxes under applicable
laws; and
(k) the terms and provisions of this Agreement are fair and
reasonable.
Moreover, the order approving the sale shall state as follows:
(aa) This Order is and shall be effective as a determination
that, upon transfer of the Property to Buyer, all Liens existing as to the
Property conveyed to Buyer have been and hereby are adjusted and declared
to be unconditionally released, discharged and terminated, and shall be
binding upon and govern the acts of all entities, including, all filing
agents, filing officers, administrative agencies or units, governmental
departments or units, secretaries of state, federal, state and local
officials and all other persons and entities who may be required by
operation of law, the duties of their office, or
14
contract, to accept, file, register or otherwise record or release any
documents or instruments, or who may be required to report or insure any
title or state of title in or to the Property conveyed to Buyer. All
Liens of record as of the date of this Order, except as otherwise
provided in this order, shall be forthwith removed and stricken as
against the Property. All such entities described in paragraph (bb)
immediately below are authorized and specifically directed to strike all
such recorded Liens against the Property from their records, official
and otherwise.
(bb) If any person or entity which has filed statements or other
documents or agreements evidencing Liens on, or interests in, any of the
Property does not deliver to the Buyer prior to the closing of the sale of
the Property to Buyer, in proper form for filing and executed by the
appropriate parties, termination statements, instruments of satisfaction,
releases of Liens and easements, and any other documents necessary for the
purpose of documenting the release of all Liens which the person or entity
has or may assert with respect to any of the Property, Buyer is hereby
authorized and directed to execute and file such statements, instruments,
releases and other documents on behalf of such persons or entity with
respect to any of the Property.
Following the filing of the Sale Motion, Seller shall use reasonable
efforts to obtain the Sale Approval Order. Both Buyer's and Seller's
obligations contemplated in this Agreement (other than the payment of the
Break-Up Fee and as to repayment of the Deposit under Section 2.1 hereof)
shall be conditioned upon the Bankruptcy Court's entry of the Sale Approval
Order on or before the date 30 days following the entry of the Procedure
Order. If (xx) the Bankruptcy Court refuses to issue the Sale Approval Order
(except for the failure addressed in the proviso to clause (iv) above) or
(yy) a third party purchaser for the Property or any material portion thereof
is approved by the Bankruptcy Court at the hearing on the Sale Motion, or
(zz) the Sale Approval Order is for any other reason not entered on or before
the Outside Date (or the date to which the Outside Date is extended by Buyer
pursuant to Section 3.2 hereof), then in any such event, this Agreement shall
automatically terminate and Seller and Buyer shall be relieved of any further
liability or obligation thereunder (other than the return of the Deposit
(plus interest) pursuant to Section 2.1(b) hereof and the payment of the
Break-Up Fee). Upon timely entry of the Sale Approval Order in form and
substance acceptable to Buyer (such entry date being referred to herein as
the "Sale Approval Date"), the condition set forth in this Section 8.4.2
shall conclusively be deemed satisfied.
9. MISCELLANEOUS.
9.1 DAMAGE AND DESTRUCTION: CONDEMNATION. Seller shall notify
Buyer immediately of the occurrence of any material damage to or destruction
of the Property which occurs prior to the Closing Date, or the institution or
maintenance of any condemnation or similar proceedings with respect to any of
the Property. In the event of any material damage to or destruction of the
Property which is not fully covered by insurance, or in the event any such
condemnation or other proceedings are instituted or maintained, Buyer, at its
option, may either (i) terminate this Agreement, or (ii) consummate the
purchase provided for by this Agreement. In all other events or in the event
that Buyer elects to consummate the purchase pursuant to (ii) above, all
insurance or condemnation proceeds, including business interruption and
rental
15
loss proceeds, collected by Seller prior to the Closing Date, together with
an amount equal to all deductible amounts under the insurance policies
covering such damage or destruction and amounts of damage or destruction not
covered by insurance (which amounts shall be agreed upon in good faith by
Seller and Buyer and approved by the Bankruptcy Court), shall be credited
against the Purchase Price on Buyer's account, and Buyer shall be entitled to
and Seller shall pay to Buyer all other insurance or condemnation proceeds
arising out of such damage or destruction or proceedings and collected
following the Closing Date.
9.2 ATTORNEYS' FEES. In the event that either party hereto brings
an action or other proceeding to enforce or interpret the terms and
provisions of this Agreement, the prevailing party in that action or
proceeding shall be entitled to have and recover from the non-prevailing
party all such fees, costs and expenses (including, without limitation, all
court costs and reasonable attorneys' fees) as the prevailing party may
suffer or incur in the pursuit or defense of such action or proceeding.
9.3 REASONABLE ACCESS TO RECORDS AND CERTAIN PERSONNEL;
COOPERATION. So long as the Case is pending, (i) Buyer shall permit Seller's
counsel and other professionals employed in the Case reasonable access to the
financial and other books and records relating to the Property or the
Business (whether in documentary or data form) for the purpose of the
continuing administration of the Case (including, without limitation, the
pursuit of any avoidance, preference or similar action), which access shall
include (xx) the right of such professionals to copy, at Seller's expense,
such documents and records as they may request in furtherance of the purposes
described above, and (yy) Buyer's copying and delivering to such
professionals such documents or records as they may request, but only to the
extent such professionals furnish Buyer with reasonably detailed written
descriptions of the materials to be so copied and reimburse Buyer for the
reasonable costs and expenses thereof), and (ii) Buyer shall provide Seller
and such professionals with reasonable access to persons still employed by
Buyer as follows: (1) for the first 90 days after the Closing Date, Seller
shall have access to Senior Management (consisting of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇) for up to an aggregate of 60 hours;
Accounting (▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇) for up to an aggregate
of 50 hours; Personnel/Human Resources (▇▇▇▇ Chick & staff) for up to an
aggregate of 25 hours; Tax (▇▇▇▇▇ Henpeck & staff) for up to an aggregate of
20 hours; Accounts Payable (▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & staff) for up to an aggregate of
120 hours); Long Distance (▇▇▇▇ ▇▇▇▇▇▇▇▇) for up to an aggregate of 10 hours;
Other (Disney Reese) for up to an aggregate of 15 hours; provided that such
access to such employees shall not exceed for each employee 8 hours per week
(unless Buyer, in its sole discretion, consents to provide additional time);
(2) after 90 days after the Closing Date, Seller and such professionals shall
have reasonable access to the aforementioned employees for an aggregate of up
to 20 hours per week, provided that such access shall not exceed for each
employee 4 hours per week; provided further that, Seller shall reimburse
Buyer for the out of pocket expenses incurred by Buyer (including the
salaries of such employees for the time devoted by such employees to
fulfilling such requirement) (except during the first 90 days after the
Closing for salaries with respect to the first 200 hours of access to such
employees). Seller shall cooperate (at no cost to Seller) with Buyer in
making joint application to have all regulatory permits, approvals, licenses
or similar items held by Seller with respect to the providing of
telecommunication services transferred to Buyer.
16
9.4 NOTICES. Unless otherwise provided herein, any notice,
tender, or delivery to be given hereunder by either party to the other may be
effected by personal delivery in writing, or by registered or certified mail,
postage prepaid, return receipt requested, and shall be deemed communicated
as o the date of mailing. Mailed notices shall be addressed as set forth
below, but each party may change his address by written notice in accordance
with this paragraph.
To Seller: Tie Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Attn.: D. ▇▇▇▇▇▇▇ ▇▇▇▇
With a copy to: Pachulski, Stang, ▇▇▇▇▇ & Young
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
To Buyer: Convergent Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: General Counsel
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
9.5 ENTIRE AGREEMENT. This instrument and the documents to be
executed pursuant hereto contain the entire agreement between the parties
relating to the sale of the Property. Any oral representations or modifications
concerning this Agreement or any such other document shall be of no force and
effect excepting a subsequent modification in writing, signed by the party to be
charged.
9.6 MODIFICATION. This Agreement may be modified, amended or
supplemented only by a written instrument duly executed by all the parties
hereto.
9.7 CLOSING DATE. All actions to be taken on the Closing pursuant to
this Agreement shall be deemed to have occurred simultaneously, and no act,
document or transaction shall be deemed to have been taken, delivered or
effected until all such actions, documents and transactions have been taken,
delivered or effected.
17
9.8 SEVERABILITY. Should any term, provision or paragraph of this
Agreement be determined to be illegal or void or of no force and effect, the
balance of the Agreement shall survive except that, if Buyer cannot acquire
and Seller cannot assign, after using diligent efforts, including, but not
limited to, making any required cure payments, at least ninety percent (90%)
of the Section 365 Contracts, which 90% must include the assumption of the
contracts listed as items 4, 5, and 6 on Exhibit "A-3," Buyer may terminate
this Agreement, and it shall be of no further force and effect, unless Buyer
agrees in writing to the contrary.
9.9 CAPTIONS. All captions and headings contained in this
Agreement arc for convenience of reference only and shall not be construed to
limit or extend the terms or conditions of this Agreement.
9.10 FURTHER ASSURANCES. Each party hereto will execute,
acknowledge and deliver any further assurance, documents and instruments
reasonably requested by any other party hereto for the purpose of giving
effect to the transactions contemplated herein or the intentions of the
parties with respect thereto.
9.11 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the party making the
waiver.
9.12 BROKERAGE OBLIGATIONS. Seller is represented by HLHZ as its
exclusive sale agent with respect to the transactions contemplated herein
pursuant to that certain order entered by the Bankruptcy Court on May 7, 1998
and HLHZ's commission, fees and expenses are to be paid by Seller in
accordance with the terms and provisions of such order. Seller and Buyer each
represent and warrant to the other that, except for HLHZ, such party has
incurred no liability to any investment banker, broker or agent with respect
to the payment of any commission regarding the consummation of the
transaction contemplated hereby. Except for any claims of HLHZ (which are to
be handled and satisfied by Seller in accordance with the above referenced
order), it is agreed that if any claims for commissions, fees or other
compensation, including, without limitation, brokerage fees, finder's fees,
or commissions are ever asserted against Buyer or Seller in connection with
this transaction, all such claims shall be handled and paid by the party
whose actions with respect to such banker, broker or agent form the basis of
such claim and such party shall indemnify, defend (with counsel reasonably
satisfactory to the party entitled to indemnification), protect and save and
hold the other harmless from and against any and all such claims or demands
asserted by any person, firm or corporation in connection with the
transaction contemplated hereby.
9.13 PAYMENT OF FEES AND EXPENSES. Except as provided in Section
9.2 above, each party to this Agreement shall be responsible for, and shall
pay, all of its own fees and expenses, including those of its counsel,
incurred in the negotiation, preparation and consummation of the Agreement
and the transaction described herein.
9.14 INVESTIGATIONS AND SURVIVAL. The respective representations,
warranties, covenants and agreements of Seller and Buyer herein, or in any
certificates or other documents
18
delivered prior to or at the Closing, shall not be deemed waived or otherwise
affected by any investigation made by any party hereto nor shall they be
affected by the Closing.
9.15 ASSIGNMENTS. This Agreement shall not be assigned by either
party hereto without the prior written consent of the other party hereto.
9.16 BINDING EFFECT. Subject to the provisions of Section 9.15
above, this Agreement shall bind and inure to the benefit of the respective
heirs, personal representatives, successors, and assigns of the parties
hereto.
9.17 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of Delaware.
9.18 GOOD FAITH. All parties hereto agree to do all acts and
execute all documents required to carry out the terms of this Agreement and
to act in good faith with respect to the terms and conditions contained
herein before and after Closing.
9.19 CONSTRUCTION. In the interpretation and construction of this
Agreement, the parties acknowledge that the terms hereof reflect extensive
negotiations between the parties and that this Agreement shall not be deemed,
for the purpose of construction and interpretation, drafted by either party
hereto.
9.20 COUNTERPARTS. This Agreement may be signed in counterparts.
The parties further agree that this Agreement may be executed by the exchange
of facsimile signature pages provided that by doing so the parties agree to
undertake to provide original signatures as soon thereafter as reasonable in
the circumstances.
9.21 TIME IS OF THE ESSENCE. Time is of the essence in this
Agreement, and all of the terms, covenants and conditions hereof.
9.22 BANKRUPTCY COURT JURISDICTION. BUYER AND SELLER AGREE THAT THE
BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ALL DISPUTES AND
OTHER MATTERS RELATING TO (i) THE INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT OR ANY ANCILLARY DOCUMENT EXECUTED PURSUANT HERETO; AND/OR (ii) THE
PROPERTY AND/OR ASSUMED LIABILITIES, AND BUYER EXPRESSLY CONSENTS TO AND
AGREES NOT TO CONTEST SUCH EXCLUSIVE JURISDICTION.
19
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the day and year first above written.
Convergent Communications Services, Inc.,
a Colorado corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Its: Chairman and Chief Executive
Officer
Tie/Communications, Inc., a Delaware corporation,
Debtor and Debtor in Possession
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Its: President & COO
--------------------------------------
20
AMENDMENT TO
ASSET PURCHASE AGREEMENT
This Amendment to Asset Purchase Agreement (the "Amendment") is made and
entered into as of this 20th day of July 1998 and amends the Asset Purchase
Agreement (the "Agreement") entered into as of the 16th day of June, 1998, by
and between Convergent Communications Services, Inc., a Colorado corporation
(the "Buyer"), on the one hand, and Tie/Communications, Inc., a Delaware
corporation and Debtor and Debtor in Possession (the "Seller") under Case No.
SA 98-15547-JB (the "Case") in the United States Bankruptcy Court for the
Central District of California (the "Bankruptcy Court").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to amend the
Agreement as follows:
1. AMENDMENT OF SECTION 1.1.4. Section 1.1.4 of the Agreement is
hereby amended by adding the following clause to the end of the last sentence:
provided, however, that Intangible Property shall be deemed to include any
claim or chose in action relating to payments by Buyer to
PricewaterhouseCoopers (or its predecessors) for audit work performed in
connection with the proposed acquisition contemplated by the letter
agreement between Claricom, Inc., Seller and others, dated as of February
17, 1998; provided further, however, that Buyer shall not be deemed to
assume any liabilities in connection with such letter agreement.
2. AMENDMENT OF SECTION 4.2.1. Section 4.2.1 of the Agreement is
hereby amended and restated in its entirety as follows:
4.2.1 Seller shall have performed or tendered performance in
all material respects of the covenants on Seller's part to be
performed which, by their terms, are intended to be performed before
the Closing.
3. AMENDMENT OF SECTION 8.4.1. Section 8.4.1 of the Agreement is
hereby amended as follows:
by replacing the reference to "Section 4.2.8" with "Section 4.2.5";
by replacing the figure "$1,500,000" each time it appears with
"$1,250,000"; and
by replacing the figure "$4,000,000" with "$3,000,000".
4. AMENDMENT OF EXHIBITS A-2 AND A-3. Exhibit A-2 of the Agreement
shall be amended by adding the leases listed on Exhibit B-2 hereof to Exhibit
A-2. Exhibit A-3 of the Agreement shall be amended by adding the contracts
listed on Exhibit B-3 to Exhibit A-3.
5. ASSIGNMENT OF ADDITIONAL EXECUTORY CONTRACTS. In addition to the
Contracts assigned pursuant to the Agreement, Seller shall assume and assign
to Buyer any Contracts agreed to in writing by Buyer and Seller.
6. CLOSING DATE. The Closing Date shall be effective at 12:01 a.m.
July 27, 1998, or such other date as the parties shall mutually agree.
7. AMENDMENT OF SECTION 9.14. Section 9.14 of the Agreement is hereby
amended and restated in its entirety as follows:
9.14 INVESTIGATIONS AND SURVIVAL. The respective representations,
warranties, covenants and agreements of Seller and Buyer herein, or in any
certificates or other documents delivered prior to or at the Closing, shall
not be deemed waived or otherwise affected by any investigation made by any
party hereto nor shall they be affected by the Closing; provided however
that all representations and warranties (but not covenants or agreements,
including without limitation the provisions of Sections 3.6 and 9.3) of
both parties (including without limitation any statements and
representations regarding title to the Property contained in Section 1.1
and 5.4 of the Agreement) shall expire 60 days after the Closing (except
with respect to claims that have been asserted in writing prior to the
expiration of such period for breaches of such representations and
warranties).
8. AMENDMENT OF SECTION 4.1.9. Section 4.1.9 of the Agreement is
hereby amended and restated in its entirety as follows:
4.1.9 Buyer shall have offered employment to (A) at least 90%
of the employees who are employed by Seller on the Closing Date, and (B) at
least 90% of the employees who are employed by Seller on the Closing Date
at Seller's Overland Park, Kansas facility; provided that nothing contained
herein shall (i) obligate Buyer to assume any collective bargaining
agreements or any obligations thereunder or (ii) be interpreted to
constitute an employment agreement with any such employees.
9. LIMITED INDEMNIFICATION. Without limiting any other rights of
Seller in the Agreement, Buyer agrees to indemnify Seller with respect to any
and all expenses or payments for claims, reasonable attorneys fees or other
out-of-pocket expenses, in each case actually incurred by Seller ("Payments")
due to a breach of Buyer's obligation to assume the Contracts described in
Item 21 of Exhibit A-3 to the Agreement; provided, however, that Buyer shall
not indemnify Seller with respect to any Payments arising out of any act or
omission by Seller; provided, further, that Buyer shall not indemnify Seller
with respect to (i) Payments relating to any matter of which Seller fails to
provide Buyer with written notice within three business days of Seller
becoming aware of such matter, and (ii) Payments paid by Seller to any person
without Buyer's written consent (which consent shall not be unreasonably
withheld).
10. DEFINED TERMS. All capitalized terms used but not defined herein
shall have the meanings given to them in the Agreement.
11. NO OTHER CHANGES. Except as specifically set forth in this Amendment,
the Agreement shall remain in full force and effect.
[INTENTIONALLY BLANK -- SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
Convergent Communications Services, Inc.,
a Colorado corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President and Chief Operating
Officer
Tie/Communications, Inc., a Delaware corporation,
Debtor and Debtor in Possession
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President & Chief Operating Officer
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