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NETWORK PURCHASE AGREEMENT
dated as of March 11, 1997
between
ADVANTIS
and
TELCO NETWORK SERVICES, INC.
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ARTICLE I
Defined Terms
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1.01. Defined Terms................................................ 1
1.02. Other Definitions............................................ 6
1.03. Terms Generally.............................................. 7
ARTICLE II
Purchase and Sale
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2.01. Purchase and Sale............................................ 7
2.02. Delivery of Certificates and Other
Instruments of Transfer..................................... 8
2.03. Purchase Price............................................... 8
2.04. The Closing.................................................. 9
2.05. Third-Party Consents......................................... 9
2.06. Further Assurances........................................... 10
2.07. Risk of Loss................................................. 10
ARTICLE III
Assumption of Certain Liabilities
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3.01. Assumed Liabilities.......................................... 10
3.02. Liabilities Not Assumed...................................... 11
ARTICLE IV
Representations and Warranties of Seller
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4.01. Organization................................................. 11
4.02. Authority.................................................... 11
4.03. Real Property and Improvements............................... 12
4.04. Personal Property............................................ 14
4.05. Intellectual Property Rights................................. 14
4.06. Contracts.................................................... 15
4.07. Litigation................................................... 15
4.08. Compliance with Laws......................................... 15
4.09. Sole Rights to Network....................................... 15
4.10. Licenses and Permits......................................... 16
4.11. FCC Compliance............................................... 16
4.12. Environmental Matters........................................ 17
4.13. Adequacy..................................................... 18
4.14. No Brokers................................................... 19
4.15. Disclosure................................................... 19
4.16. Qwest Dedicated Capacity..................................... 19
ARTICLE V
Representations and Warranties of Purchaser
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5.01. Organization................................................. 20
5.02. Authority.................................................... 20
5.03. No Brokers................................................... 21
5.04. Ownership of Purchaser....................................... 21
5.05. Financial Capability......................................... 21
5.06. Limitation of Representations................................ 21
5.07. Completion of Due Diligence.................................. 21
ARTICLE VI
Further Covenants and Agreements
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6.01. Conduct of Business.......................................... 22
6.02. HSR Filing; Other Consents................................... 23
6.03. Access....................................................... 24
6.04. Satisfaction of Closing Conditions........................... 24
6.05. No Inconsistent Position..................................... 24
6.06. Retention of Tax Liabilities................................. 24
6.07. Post-Closing Services and Facilities......................... 25
6.08. Transition Arrangements...................................... 25
6.09. Notice of Assignment......................................... 25
ARTICLE VII
Conditions Precedent to Obligations of Purchaser
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7.01. Performance.................................................. 26
7.02. Authorization, Execution and Delivery of
Operative Agreements....................................... 26
7.03. No Default................................................... 26
7.04. Consents, etc.; Burdensome Conditions........................ 27
7.05. Governmental Rules........................................... 27
7.06. Standard Closing Documents................................... 28
7.07. Representations and Warranties............................... 28
7.08. Opinion of Counsel........................................... 28
7.09. No Material Adverse Change................................... 29
7.10. Schedules.................................................... 29
7.11. Estoppel Certificates........................................ 29
7.12. Proceedings.................................................. 29
ARTICLE VIII
Conditions Precedent to Obligations of Seller
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8.01. Performance.................................................. 30
8.02. Authorization, Execution and Delivery of
Operative Agreements...................................... 30
8.03. No Default................................................... 30
8.04. Consents, etc.; Burdensome Conditions........................ 30
8.05. Governmental Rules........................................... 31
8.06. Standard Closing Documents................................... 31
8.07. Representations and Warranties............................... 32
8.08. Opinion of Counsel........................................... 32
8.09. Proceedings.................................................. 32
ARTICLE IX
Survival and Indemnification
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9.01. Survival of Representations.................................. 33
9.02. Indemnification by Seller and Purchaser...................... 33
9.03. Notice, etc.................................................. 35
9.04. Reimbursement of Costs....................................... 35
9.05. Time Limitations............................................. 36
9.06. No Consequential Damages..................................... 36
9.07. Limitation on Remedies....................................... 36
ARTICLE X
Employment Matters
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10.01. Offers of Employment........................................ 37
10.02. Payments by Seller.......................................... 37
10.03. Nonsolicitation............................................. 38
10.04. Contracting Arrangements for Employees...................... 38
ARTICLE XI
Termination
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11.01. Termination of Agreement.................................... 39
ARTICLE XII
Miscellaneous
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12.01. Expenses.................................................... 41
12.02. Waiver of Jury Trial........................................ 41
12.03. Information for Tax Returns................................. 41
12.04. Amendments and Waivers...................................... 42
12.05. Transferability............................................. 42
12.06. Nonrecourse................................................. 43
12.07. Notices..................................................... 43
12.08. Remedies.................................................... 44
12.09. Applicable Law.............................................. 45
12.10. Jurisdiction; Consent to Service of
Process................................................. 45
12.11. Severability................................................ 46
12.12. Section Headings............................................ 46
12.13. Counterparts................................................ 46
12.14. Publicity................................................... 47
12.15. Entire Agreement............................................ 47
SCHEDULES
Schedule 1.01(a) Excluded Assets
Schedule 1.01(b) Permitted Liens
Schedule 3.01(a) Assumed Contracts
Schedule 3.01(b) Other Assumed Liabilities
Schedule 4.03 Exceptions to Real Property
and Improvements
Schedule 4.04 Exceptions to Personal
Property
Schedule 4.05 Exceptions to Intellectual
Property Rights
Schedule 4.06 Exceptions to Contracts
Schedule 4.07 Litigation
Schedule 4.08 Exceptions to Compliance with
Laws
Schedule 4.09 Shared Facilities
Schedule 4.10 Exceptions to License and
Permit Applications
Schedule 4.11 FCC Compliance
Schedule 10.01 Voice Network Employees
EXHIBITS
Exhibit A Assets, Network
Part I--Real Property
Part II--Personal Property
Part III--Intellectual Property
Rights
Part IV--Contracts
Part V--Capacity
Part VI--Leased Circuits
Exhibit B Transition Plan
Exhibit C Opinion of Counsel for Seller
Exhibit D Form of Estoppel Certificate
Exhibit E Opinion of Counsel for Purchaser
Exhibit F Telco Flex Capacity
NETWORK PURCHASE AGREEMENT dated as of
March 11, 1997 (this "Agreement"), between
ADVANTIS, a New York general partnership
("Seller"), and TELCO NETWORK SERVICES, INC., a
Nevada corporation ("Purchaser").
Purchaser desires to purchase and accept from Seller certain
assets, properties and other rights of Seller constituting a
telecommunications network, upon the terms and subject to the terms and
conditions set forth in this Agreement. Seller desires to sell and
assign such assets, properties and other rights to Purchaser.
NOW, THEREFORE, in consideration of the premises and the
respective agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINED TERMS
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1.01. DEFINED TERMS. The following terms, not defined
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elsewhere in this Agreement, shall have the following meanings:
"ASSETS" shall mean all the assets, properties, easements,
Intellectual Property Rights, permits, licenses and other Contract
rights of Seller listed on Exhibit A, including the Dedicated Capacity
and the Qwest Dedicated Capacity, comprising the Network as it is
operated on the date of execution of this Agreement and on the Closing
Date but in any event excluding the Excluded Assets.
"BURDENSOME CONDITION" shall mean any action taken, or
credibly threatened, by or before any Governmental Authority or other
Person to challenge the legality of a matter, including (i) the pendency
of a governmental investigation (formal or informal), (ii) the
institution of any litigation, or the threat thereof, (A) seeking to
restrain, enjoin or prohibit the consummation of such matter, to place
any materially adverse condition or limitation upon such consummation or
to invalidate, suspend or require modification of any material provision
of any Operative Agreement or (B) challenging the acquisition of the
Network or (iii) the issuance of any temporary
restraining order or any preliminary or final injunction having any of
the consequences described in clause (ii) or the issuance of any
subpoena, civil investigative demand or other request for documents or
information that is unreasonably burdensome in the reasonable judgment
of the applicable party.
"CAPACITY AGREEMENT" shall mean the Capacity Exchange and
Purchase Agreement dated as of March 14, 1991, as amended to date,
between SP, Qwest and MCI, including the MCI Letter Amendment.
"CONDUIT SALE AGREEMENT" shall mean the Agreement for Sale of
Installed Conduit System dated March 14, 1991, between Qwest and MCI, as
amended to date.
"CONFIDENTIALITY AGREEMENT" shall mean the Agreement for the
Exchange of Confidential Information dated December 4, 1996, between
Seller and Purchaser.
"CONSENT" shall mean consent, authorization, approval,
permission or waiver.
"CONTRACT" shall mean any contract, indenture, mortgage,
lease, license, deed, agreement or other legally binding arrangement or
understanding, whether written or oral, express or implied.
"DEDICATED CAPACITY" shall mean the telecommunications
capacity identified on Part V of Exhibit A provided by MCI to Seller
pursuant to the MCI Easement, the Capacity Agreement and the Conduit
Sale Agreement.
"D&RGW" shall mean Denver and Rio Grande Western Railroad
Company, a Delaware corporation.
"EXCLUDED ASSETS" shall mean the assets, properties and rights
listed and briefly described in Schedule 1.01(a).
"EXCLUDED LIABILITIES" shall mean all liabilities, obligations
and other commitments of Seller and its affiliates other than the
Assumed Liabilities.
"GOVERNMENTAL ACTION" shall mean any authorization, consent,
approval, order, waiver, exception, variance, franchise, permission,
permit or license of, or
any registration, filing or declaration with, by or in respect of, any
Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any court, administrative
agency or commission or other governmental agency or instrumentality,
domestic or foreign, of competent jurisdiction.
"GOVERNMENTAL RULE" shall mean any statute, law, treaty, rule,
code, ordinance, regulation, license, permit, certificate or order of
any Governmental Authority or any judgment, decree, injunction, writ,
order or like action of any court or other judicial or quasijudicial
tribunal.
"GUARANTEE" shall mean the guarantee by Telco of Purchaser's
obligations hereunder.
"INTELLECTUAL PROPERTY RIGHTS" shall mean intellectual
property, including patents, patent applications, patent rights,
trademarks, trademark registrations, trademark applications, licenses,
service marks, business marks, brand names, trade names, all other names
and slogans embodying business or product goodwill (or both), copyright
registrations, mask works, copyrights (including copyrights in computer
programs, software, including all source code and object code,
development documentation, programming tools, drawings, specifications
and data), rights in designs, trade secrets, technology, inventions,
discoveries and improvements, know-how, proprietary rights, formulae,
processes, technical information, confidential and proprietary
information, and all other intellectual property rights, whether or not
subject to statutory registration or protection.
"LIEN" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset and (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title
retention agreement relating to such asset.
Any reference to any event, change or effect being "MATERIAL"
with respect to any Person means an event, change or effect which is or,
insofar as reasonably can be foreseen, in the future will be material to
the condition (financial or otherwise), properties, assets, liabilities,
earnings, capitalization, shareholders' equity, licenses or franchises,
businesses or operation of such Person.
"MCI" shall mean MCI Telecommunications Corporation, a
Delaware corporation.
"MCI EASEMENT" shall mean the Easement Agreement originally
entered into as of November 9, 1987, as amended to date, by and among
SP, D&RGW, Qwest, Seller and MCI, including any Severance Agreement
entered into pursuant to Article XV thereof and the MCI Letter
Amendment.
"MCI LETTER AMENDMENT" shall mean the Tenth Amendment to the
MCI Easement dated November 4, 1993 among SP, D&RGW, Qwest, Seller and
MCI.
"NETWORK" shall mean the telecommunications network of Seller
consisting of the Assets listed on Exhibit A.
"OPERATIVE AGREEMENTS" shall mean this Agreement, the
Guarantee, the Real Property Contracts, the Qwest Release Agreement, the
Qwest Service Agreement and the license of certain Scheduled
Intellectual Property referred to in Section 4.05.
"PERMITTED LIENS" shall mean (i) mechanics', carriers',
workmen's, repairmen's or other like Liens arising from or incurred in
the ordinary course of business and securing obligations which are not
due or which are being contested in good faith (which contested Liens
are disclosed on Schedule 1.01(b)); (ii) Liens for Taxes which are not
due and payable or which may thereafter be paid without penalty or which
are being contested in good faith (which contested Liens are disclosed
on Schedule 1.01(b)); (iii) with respect to the Real Property, the
interests of the applicable head lessors, Qwest and Seller under the
leases, subleases, subsubleases and assignments included in the Real
Property Contracts or relating thereto and the liens permitted
thereunder, (iv) other imperfections of title or encumbrances, if any,
which imperfections of title or other encumbrances do not individually
or in the aggregate materially impair the continued use of the assets to
which they relate in connection with the operation of the Network by
Purchaser; and (v) the Liens described in Schedule 1.01(b).
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, joint venture, Governmental
Authority or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"QWEST" shall mean Qwest Communications Corporation, formerly
Southern Pacific Telecommunications Company, a Delaware corporation.
"QWEST AGREEMENT" shall mean the Amended and Restated Asset
and Stock Purchase Agreement dated as of September 10, 1993 between
Seller, as purchaser, and Qwest, as seller.
"QWEST DEDICATED CAPACITY" shall mean the 2,742 DS-3 miles of
the capacity identified on Part V of Exhibit A between Los Angeles,
California, and Sacramento, California, provided and to be provided by
Qwest and the 18 DS-3 circuits into and out of the Dedicated Capacity in
Sacramento, California (the MCI point of presence), and Seller's
terminal facility located at ▇▇▇ ▇ ▇▇▇▇▇▇ in Sacramento, California, to
be provided by Qwest pursuant to the Qwest Release Agreement. The Qwest
Dedicated Capacity includes six DS-3 circuits on the San Jose,
California, to San Francisco, California, route segment which remain to
be provided by Qwest (the "Remaining Qwest Capacity").
"QWEST RELEASE AGREEMENT" shall mean the Termination and
Release Agreement dated as of March 10, 1997, between Qwest and Seller
relating, among other matters, to the termination of certain provisions
of the Qwest Agreement.
"QWEST SERVICE AGREEMENT" shall mean the Service Agreement
dated as of March 10, 1997, between Qwest and Seller relating to the
provision by Qwest of the Qwest Dedicated Capacity.
"REAL PROPERTY CONTRACTS" shall mean the subleases,
subsubleases, assignments of subleases and consents related to interests
in real property contemplated hereunder to be transferred to Purchaser
to be entered into by Purchaser and Seller at the Closing.
"REASONABLE COMMERCIAL EFFORTS", when required in connection
with a covenant of a party to this Agreement, shall not, except as
otherwise specifically required by the operative covenant, obligate such
party to make any unreimbursed expenditures other than routine
administrative costs and expenditures that would have been required of
such
party in the absence of the actions required by such covenant.
"RELATED EMPLOYEES" shall mean the employees of Seller who are
primarily engaged in the maintenance and operation of the Network and
use of the Assets.
"SP" shall mean Southern Pacific Transportation Company, a
Delaware corporation.
"SP AGREEMENT" shall mean the Agreement dated November 5,
1993, among SP, D&RGW, Qwest and Seller.
"TAX" or "TAXES" shall mean any and all taxes, imposts,
duties, levies, charges, withholdings, fees or excises imposed by any
Governmental Authority, including any gross, adjusted gross or net
income tax, alternative or add-on minimum tax, franchise tax, gross
receipts tax, employment-related tax (including employee withholding,
employment, social security, workers' compensation, unemployment
compensation and employer payroll taxes), real or personal property tax,
tangible or intangible property tax, conveyance tax, value-added tax,
transfer tax, gains tax, net worth tax or sales or use tax, together
with any and all interest, penalties, additions to tax or additional
amounts imposed with respect to any of the foregoing.
"TELCO" shall mean Telco Communications Group, Inc., a
Virginia corporation.
1.02. OTHER DEFINITIONS. The following terms are defined in
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the Sections indicated:
Term Section
"Additional Purchase Price" 2.03(b)
"Antitrust Division" 6.02(a)
"Assumed Contracts" 3.01(a)
"Assumed Liabilities" 3.01
"Claims" 9.03
"Closing" 2.04
"Closing Date" 2.04
"Environmental Laws" 4.12
"Environmental Permits" 4.12
"FCC" 4.11(a)
"FTC" 6.02(a)
"Hazardous Substances" 4.12
"Improvements" 4.03(b)
"Indemnitee" 9.02(a) and (b)
"Losses" 9.02(a)
"Personal Property" 4.04
"Purchase Price" 2.03(a)
"Real Property" 4.03(a)
"Scheduled Contracts" 4.06
"Scheduled Intellectual Property" 4.05
"Telco Flex Capacity" 2.03(b)
1.03. TERMS GENERALLY. The definitions in Sections 1.01 and
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1.02 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The
words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". All references herein to
Articles, Sections, paragraphs, Exhibits and Schedules shall be deemed
references to Articles, paragraphs and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with
generally accepted accounting principles, as in effect from time to
time.
ARTICLE II
PURCHASE AND SALE
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2.01. PURCHASE AND SALE. Upon the terms and subject to the
-----------------
conditions set forth in this Agreement, Seller agrees to sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser agrees to
purchase and accept from Seller, at the Closing, all right, title and
interest of Seller in and to all the Assets; provided that certain
Intellectual Property Rights included in the Assets will either be
assigned to Purchaser or licensed to Purchaser on a nonexclusive, fully
paid-up basis, as described in Section 4.05. At the Closing, Purchaser
and Seller shall also enter into the Real Property Contracts with
respect to the terminal facilities as referred to in Part I of Exhibit A
and Schedule 4.03 or enter into other arrangements reasonably
satisfactory to Purchaser with respect to such terminal facilities or
substantially equivalent facilities. Seller's retained interest in such
terminal facilities as set forth in the Real Estate Contracts will not
be included in the Assets.
2.02. DELIVERY OF CERTIFICATES AND OTHER INSTRUMENTS OF
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TRANSFER. On the Closing Date, Seller shall deliver to Purchaser (a)
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such specific assignments, bills of sale, endorsements, leases,
subleases, subsubleases and other good and sufficient instruments of
conveyance and transfer as shall be effective to vest in Purchaser all
Seller's interest in all the Assets subject to the provisions respecting
Intellectual Property Rights and terminal facilities in Section 2.01 and
(b) copies of all general, financial and accounting records pertaining
to the Assets or the Network, records relating to Intellectual Property
Rights being transferred and other data used in connection with or
pertaining to the ownership, maintenance and operation of the Network
(but excluding Seller's specific customer records and other similar
materials pertaining to business activities of Seller that are not
necessary to the ownership, operation and maintenance of the Network).
2.03. PURCHASE PRICE. (a) In consideration of the
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transfer to Purchaser of the Assets, Purchaser shall pay to Seller as
the purchase price the sum of $170,000,000 (the "Purchase Price"),
payable to Seller at the Closing by wire transfer of immediately
available funds to an account designated by Seller. Purchaser and
Seller shall use commercially reasonable efforts to agree upon an
allocation of the Purchase Price among the Assets prior to the Closing.
(b) In addition to the payment of the Purchase Price,
Purchaser shall pay to Seller as additional consideration the sum of
$5,000,000 (the "Additional Purchase Price") if, no later than 30 months
after the Closing, MCI has reconfigured Dedicated Capacity set forth in
Attachment 2 to Part V of Exhibit A (Flex Capacity-MCI) to at least 80%
of the city pairs (i.e., at least 57 of the 71 city pairs) identified on
Exhibit F (the "Telco Flex Capacity"). In determining whether a
reconfiguration counts in meeting the 80% test, the full DS-3
requirement on Exhibit F for that city pair must be met (e.g., in the
case of Washington-Baltimore 2DS-3s and in the case of
Washington-Charleston 1 DS-3)
but any existing Dedicated Capacity set forth in such
Attachment 2 will be deemed as reconfigured (e.g., in the case of New
York-Philadelphia the 3 DS-3s required would include those currently
provided). The Additional Purchase Price will be payable on the date 30
months following the Closing Date by wire transfer of immediately
available funds to an account designated by Seller. Purchaser and
Seller will each use reasonable
commercial efforts to cause MCI to agree to the reconfiguration of the
required Dedicated Capacity set forth in such Attachment 2 to Telco Flex
Capacity by no later than 30 months following the Closing Date, and
Purchaser will take all action required under the Capacity Agreement,
including giving notices to MCI and providing any demand forecasts as
promptly as possible, to obtain reconfiguration to the Telco Flex
Capacity on a timely basis.
2.04. THE CLOSING. Upon the terms and subject to the
-----------
conditions set forth in this Agreement, the acquisition by Purchaser of
the Assets (herein called the "Closing") shall take place at 10:00 a.m.,
Chicago time, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, on the
later of the thirtieth calendar day following the date this Agreement is
executed and the third business day following the expiration or early
termination of all waiting periods under the HSR Act and the
satisfaction or waiver of the other conditions set forth in Articles VII
and VIII hereof, or at such other time, date and place as the parties
shall agree upon (the date of the Closing being herein referred to as
the "Closing Date").
2.05. THIRD-PARTY CONSENTS. To the extent that any Assumed
--------------------
Contract or Intellectual Property Rights for which assignment or license
to Purchaser is provided for herein is not assignable or licenseable
without the consent of another party, this Agreement and any other
Operative Agreement shall not constitute an assignment or license or an
attempted assignment or license thereof if such assignment or license or
attempted assignment or license would constitute a breach thereof.
Seller agrees to use reasonable commercial efforts to obtain the consent
of such other party to the assignment or license of any such Assumed
Contract or Intellectual Property Rights to Purchaser and any consent
required by Seller for the entry into of any Real Property Contract in
all cases in which such consent is or may be required therefor;
provided, however, Seller shall not be obligated to make any
unreimbursed expenditures in connection therewith (other than routine
administrative costs and any expenditures that would be required in
respect of any period ending on or prior to the Closing Date pursuant to
the terms of such Assumed Contracts or Intellectual Property Rights in
the absence of such assignment or license). If any such consent shall
not be obtained, Seller agrees to cooperate with Purchaser in any
reasonable arrangement designed to provide for Purchaser the benefits
intended to be assigned or licensed to Purchaser
under the relevant Assumed Contract or Intellectual Property Rights or
created by the relevant Real Property Contract, including enforcement at
the cost and for the account of Purchaser of any and all rights of
Seller against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. If and to the
extent that such arrangement cannot be made, Purchaser shall not have
any obligation with respect to any such Assumed Contract, Intellectual
Property Rights or Real Property Contract. This Section 2.05 does not
diminish or constitute a waiver or modification of Seller's
representations and warranties as to the assignability of Contract
rights included in the Assets or of Purchaser's right pursuant to
Section 7.04 not to consummate the transactions contemplated by this
Agreement.
2.06. FURTHER ASSURANCES. (a) Seller agrees to use
------------------
reasonable commercial efforts to assist Purchaser in connection with the
reissuance or transfer to Purchaser of all permits or other Consents of
Governmental Authorities necessary for Purchaser's maintenance,
operation and use of the Network and the Assets.
(b) From and after the Closing, upon request of Purchaser,
Seller shall do, execute, acknowledge and deliver all such further acts,
assurances, deeds, assignments, transfers, conveyances and other
instruments and papers as may be reasonably required to sell, assign,
transfer, license, convey and deliver to and vest in Purchaser, and
protect Purchaser's right, title and interest in and employment of, all
the Assets intended to be sold, assigned, transferred, licensed,
conveyed and delivered to Purchaser pursuant to this Agreement, and as
otherwise may be appropriate to carry out the transactions contemplated
in this Agreement.
2.07. RISK OF LOSS. Until the Closing, any loss of or
------------
damage to the Assets from fire, casualty or any other occurrence shall
be the total responsibility of Seller.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
---------------------------------
3.01. ASSUMED LIABILITIES. Upon the terms and subject to the
-------------------
conditions of this Agreement, Purchaser hereby assumes, effective as of
the Closing, and agrees to
pay, perform and discharge when due, and indemnify Seller against and
hold it harmless from and after the Closing from the following
obligations and liabilities of Seller (herein called the "Assumed
Liabilities"):
(a) all obligations and liabilities of Seller arising
after the Closing Date under each Contract included in the Assets and
those other Contracts referred to in Schedule 3.01(a) (collectively, the
"ASSUMED CONTRACTS"); and
(b) the obligations and liabilities of Seller listed and
briefly described in Schedule 3.01(b).
3.02. LIABILITIES NOT ASSUMED. Purchaser will acquire the
-----------------------
Assets free and clear of all obligations and liabilities except as
provided in Section 3.01 or as otherwise provided in this Agreement.
Purchaser will not assume or be responsible for as a result of such
acquisition any other obligations or liabilities of Seller or any other
Persons of any kind, known or unknown, accrued, contingent or otherwise,
asserted or unasserted, including all such obligations or liabilities,
whenever asserted, existing as of the Closing Date or arising out of
events occurring or facts or circumstances existing as of or prior to
the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants, as of the date hereof and as
of the Closing Date, to Purchaser as follows:
4.01. ORGANIZATION. Seller is validly existing as a New
York general partnership. Seller is duly qualified to do business in
each jurisdiction in which the ownership, leasing or operation of the
Network requires such qualification except where the failure so to
qualify would not have a material adverse effect upon the utilization of
the Network.
4.02. AUTHORITY. (a) Seller has full power and authority
under the partnership agreement pursuant to which it was created to
execute and deliver this Agreement and the other Operative Agreements
and instruments to be executed and delivered by Seller pursuant hereto
and to consummate
the transactions contemplated hereby and thereby. All partnership acts
and other proceedings required to be taken by or on the part of Seller
to authorize such execution, delivery and consummation have been or
prior to the Closing will be duly and properly taken.
(b) This Agreement has been duly executed and delivered by
Seller and constitutes, and such other agreements and instruments when
duly executed and delivered by Seller will constitute, legal, valid and
binding obligations of Seller enforceable in accordance with their
respective terms except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other laws of general application
relating to or affecting enforcement of creditors' rights and except
that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(c) The execution and delivery by Seller of this Agreement
and the execution and delivery by Seller of such other agreements and
instruments and the consummation by Seller of the transactions
contemplated hereby and thereby will not in any material respect violate
any law, or conflict with, result in any breach of, constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or result in the creation of a Lien on any of the Assets
pursuant to, the partnership agreement of Seller or any indenture,
mortgage, lease, agreement or other instrument to which Seller is a
party or by which Seller or its properties or assets is bound.
(d) No Consent or other action of or filing with any
Governmental Authority is required for the execution and delivery by
Seller of this Agreement and the execution and delivery by Seller of
such other agreements and instruments or the consummation by Seller of
the transactions contemplated hereby or thereby, except for filings or
Consents required pursuant to the HSR Act and such other Consents,
actions or filings the lack of which individually or in the aggregate
would not have a material adverse effect upon the Network or Seller's
ability to consummate the transactions contemplated hereby.
4.03. REAL PROPERTY AND IMPROVEMENTS. (a) Part I of Exhibit
------------------------------
A contains a complete list of all real property and interests in real
property included in the Assets as of the date of this Agreement (the
"REAL PROPERTY"). Seller has good and insurable title in fee simple to
the Real Property listed in Part I of Exhibit A as being owned by it, in
each case free and clear of all Liens except for Permitted Liens and
except as described in Schedule 4.03. Seller
is the lessee or sublessee of each of the leasehold estates listed in
Part I of Exhibit A as being leased or subleased by it and, except as
set forth in Schedule 4.03, is in possession of each of the premises
purported to be so leased or subleased and has good title to each of
such leasehold or subleasehold estates. Except as set forth in Schedule
4.03, there exists no asserted claim (including any Lien for Taxes)
which is adverse to the rights of Seller in any such leasehold or
subleasehold estate. Each such lease or sublease pursuant to which such
leasehold or subleasehold estate is purported to be granted is in full
force and effect without any default by Seller thereunder and, to the
best knowledge of Seller, without any default by any other party
thereto. Except as disclosed on Schedule 4.03, such leases or subleases
are the only leases or subleases of real property to which Seller is a
party pertaining to the Network. Schedule 4.03 includes a list of all
leases, subleases and other documents granting Seller's leasehold or
subleasehold interest in the Real Property (and the applicable
landlord's consent thereto), and true, complete and correct copies
thereof have been made available to Purchaser for its review. Except as
disclosed in Schedule 4.03, each such lease or sublease pursuant to
which Seller leases or subleases any premises pertaining to the Network
may be assigned or subleased to Purchaser without any restriction or
required Consent, or the necessary Consent has been obtained.
(b) The buildings, facilities and other improvements
located on the Real Property (the "Improvements") are and as of the
Closing will be in good operating condition and fit for operation in the
usual course of business, ordinary wear and tear excepted. The uses for
which the Improvements are zoned do not materially restrict, or in any
material manner impair, the use of the Improvements for purposes of the
operation and use of the Network and the construction of the
Improvements complies in all material respects with all applicable
building and zoning codes, ordinances and rules.
(c) Except as disclosed in Schedule 4.03, there is no
pending, or to the knowledge of Seller threatened, condemnation, eminent
domain or similar proceeding with respect to the Real Property or the
Improvements.
4.04. PERSONAL PROPERTY. Part II of Exhibit A contains a
-----------------
complete list of all machinery, equipment and other personal property
owned, leased or used by Seller included in the Assets (the "Personal
Property"). The Personal Property is in good operating condition and
fit for operation in the usual course of business, ordinary wear and
tear excepted. Except as disclosed in Schedule 4.04, Seller has good
and marketable title to the Personal Property reflected in Part II of
Exhibit A as being owned by it, free and clear of all Liens, except for
Permitted Liens. Except as disclosed on Schedule 4.04, Seller is the
lessee of all the leasehold estates purported to be granted by the
leases reflected on Part II of Exhibit A, and its possession thereof has
not been disturbed, nor has any claim been asserted against Seller
(including any Liens for Taxes) adverse to its rights in such leasehold
estates. Except as disclosed in Schedule 4.04, each such lease or
agreement pursuant to which Seller leases any Personal Property may be
assigned to Purchaser without any restriction or required Consent or the
necessary Consent has been obtained.
4.05. INTELLECTUAL PROPERTY RIGHTS. Part III of Exhibit A
----------------------------
lists all the Intellectual Property Rights owned, licensed, leased or
otherwise used by Seller included in the Assets (the "SCHEDULED
INTELLECTUAL PROPERTY") and whether such Intellectual Property Rights
are owned by Seller or licensed or leased (and identifying the
respective licensor or lessor). Except as set forth on Schedule 4.05,
Seller owns or has the right to use, without payment to any other
Person, all Scheduled Intellectual Property. Except as disclosed in
Schedule 4.05, Seller is not obligated to pay any royalty to anyone
under any of the Scheduled Intellectual Property and all rights of
Seller therein and thereto are transferable to the Purchaser as herein
contemplated without any required Consent, or the necessary Consent has
been obtained. Except as disclosed in Schedule 4.05, upon the
consummation of the transactions provided for herein, Seller either will
have assigned, to the extent permitted, to Purchaser Seller's license to
use such Scheduled Intellectual Property (to the extent such property is
owned by a third Person) or licensed to Purchaser on a nonexclusive,
fully paid-up basis the Scheduled Intellectual Property (to the extent
such property is owned by Seller). Except as disclosed in Schedule
4.05, Seller does not have any knowledge of, and has not given or
received any notice of any pending conflict with, the rights of others
with respect to any Scheduled Intellectual Property in the jurisdictions
where the Network is located.
4.06. CONTRACTS. Part IV of Exhibit A contains a complete
---------
list of all Contracts included in the Assets. Except as set forth on
Schedule 4.06, each Contract included in the Assets (collectively, the
"Scheduled Contracts") is in full force and effect and is a legal, valid
and binding agreement of Seller and, to the best knowledge of Seller,
of each other party thereto, enforceable in accordance with its terms;
Seller has performed or is performing all material obligations required
to be performed by it under the Scheduled Contracts and is not (with or
without notice or lapse of time or both) in breach or default in any
material respect thereunder; and, to the best knowledge of Seller, no
other party to any of the Scheduled Contracts is (with or without notice
or lapse of time or both) in breach or default in any material respect
thereunder. The copies of the Scheduled Contracts that have been made
available to Purchaser for its review include all Scheduled Contracts or
amendments thereto originally entered into by Seller and all
documentation provided to Seller relating to Scheduled Contracts that
were assigned to Seller pursuant to the Qwest Agreement and such copies
are, to Seller's best knowledge, true, complete and correct.
4.07. LITIGATION. Except as disclosed in Schedule 4.07,
----------
there is no action, suit, proceeding or investigation pending, or to the
knowledge of Seller threatened, against or by Seller relating to the
Network in any court or before any Governmental Authority or any
arbitrator of any kind. There is no outstanding judgment, order or
decree of any Governmental Authority or arbitrator applicable to Seller
which has or is likely to have an adverse effect on the maintenance,
operation and use of the Network.
4.08. COMPLIANCE WITH LAWS. Except as disclosed on Schedule
--------------------
4.08, Seller has complied in all material respects with all Governmental
Rules and licensing requirements applicable to the operation and use of
the Network, including any thereof relating to the sale and leasing of
telecommunications capacity.
4.09. SOLE RIGHTS TO NETWORK. (a) Except as set forth in
----------------------
Schedule 4.09, there are not any outstanding Contracts giving any Person
any present or future right which has not been waived (for example, the
right of first offer of MCI set forth in the Tenth Amendment) to require
Seller to transfer to any Person any ownership or possessory interest
in, or to grant any Lien on, any of the Assets
except pursuant to this Agreement. Except as set forth on Schedule
4.09, there are no shared facilities or services which are used in
connection with the Network and with other operations of Seller.
(b) In each state in which any Assets are located (i)
Seller is not engaged in the business of selling such Assets or similar
assets and, as of the Closing Date, will not have engaged in other
transactions in which it shall have sold, either individually or in the
aggregate, a substantial amount of such Assets located in such state
within the twelve months prior to the Closing Date; or (ii) such Assets
constitute substantially all the operational assets of Seller in the
business in which such Assets are used in such state.
4.10. LICENSES AND PERMITS. (a) Seller has, or as disclosed
--------------------
on Schedule 4.10 has applied for and in due course expects to receive,
all licenses, permits and other governmental authorizations and
approvals required for the maintenance, operation and use of the Network
except where the failure to have such licenses and permits would not
have a material adverse effect on Seller's ability to maintain, operate
and use the Network. All licenses and permits held by Seller which are
material to the maintenance, operation and use of the Network are valid
and in full force and effect and there are not pending or, to the
knowledge of Seller, threatened any proceedings which could result in
the termination or impairment of any such license or permit which
termination or impairment would materially interfere with the
maintenance, operation or use of the Network, as presently maintained,
operated and used.
(b) To the best knowledge of Seller, the conduct of the
business operations of Seller does not subject Seller to regulation as a
common carrier.
4.11. FCC COMPLIANCE. (a) Except as disclosed on Schedule
--------------
4.11, the Network does not include any license, permit or authorization
issued by the Federal Communications Commission (the "FCC") or any other
Governmental Authority, the transfer or assignment of which would
require the approval of a Governmental Authority.
(b) The Network has been operated and maintained, and will
continue to be operated and maintained prior to Closing, in full
compliance with all Governmental Rules, including the rules and
regulations of the FCC, except where
a failure to do so would not have a material adverse effect on the
Network or Seller's ability to operate the Network.
4.12. ENVIRONMENTAL MATTERS. To the knowledge of Seller,
---------------------
Seller is not in violation of any Environmental Laws applicable to the
Assets, and no material Lien has been attached to any real or personal
property of Seller included in the Assets pursuant to any Environmental
Laws nor are there any circumstances that could reasonably give rise to
such Lien; Seller's utilization of haulers and transporters to dispose
of any Hazardous Substance has been in material compliance with
Environmental Laws; there has been no disposal or release of any
Hazardous Substance by any Person on any property which at any time was
owned, operated or leased by Seller except in compliance with
Environmental Laws except for such instances of noncompliance that could
not reasonably be expected to give rise to a material adverse effect on
the Network or the Assets or a liability to Purchaser; there are no
sites, locations or operations included in the Assets or used in
connection with the Network at which Seller is currently undertaking, or
has completed, any remedial or response action relating to any such
disposal or release as required by Environmental Laws. Seller has
obtained, and is in compliance with, all permits, licenses,
authorizations, registrations and other Consents required by
Environmental Laws from any Governmental Authority applicable to the
Assets ("ENVIRONMENTAL PERMITS") except for such instances of
noncompliance that could not reasonably be expected to give rise to a
material adverse effect on the Network, and all such Environmental
Permits are transferable to Purchaser under the circumstances presented
by the transactions contemplated hereby. Seller has not received
written notice of any civil, criminal or administrative claims, actions,
suits, hearings, investigations or proceedings pending or threatened
that are based on any Environmental Laws applicable to the Assets.
The term "ENVIRONMENTAL LAWS" means any federal, state,
provincial, regional, territorial, municipal, local or foreign statute,
code, ordinance, rule and regulation (including the requirement to
register underground storage tanks), any permit, consent, approval and
license issued by an environmental regulatory agency, and any judgment,
order, writ, decree, injunction or other authorization, relating to:
(a) emissions, discharges, releases or threatened releases
of Hazardous Substances into the natural
environment, including into ambient air, soil, sediments, land surface
or subsurface, buildings or facilities, surface water, groundwater,
publicly-owned treatment works, septic systems or land;
(b) the generation, treatment, storage, disposal,
handling, manufacturing, transportation or shipment of Hazardous
Substances; or
(c) otherwise relating to the pollution or protection of
health or safety or the environment or to solid waste handling,
treatment or disposal.
The term "HAZARDOUS SUBSTANCES" means those materials
regulated by Environmental Laws, including (1) hazardous materials,
contaminants, constituents, hazardous wastes and hazardous substances as
those terms are defined in the following statutes and their implementing
regulations: the Hazardous Materials Transportation Act, 49 U.S.C.
9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. 9601 et seq., the Clean Water Act, 33
U.S.C. 1251 et seq., the Toxic Substances Control Act, 15 U.S.C.
7401 et seq., (2) petroleum, including crude oil and any fractions
thereof; (3) natural gas, synthetic gas and any mixtures thereof, (4)
asbestos and/or asbestos-containing material, (5) PCBs or PCB-containing
materials or fluids in excess of 50 parts per million, (6) any other
substance with respect to which any federal, state or local agency or
other Governmental Authority may require either an environmental
investigation or environmental remediation and (7) any other hazardous
or noxious substance, material, pollutant or solid or liquid waste that
is regulated by, or forms the basis of liability under, any
Environmental Laws.
4.13. ADEQUACY. On the Closing Date, the Network as it will
be conveyed to Purchaser will be operational in accordance with general
industry standards for the transmission of basic switched voice
communications traffic in the manner presently utilized by Seller and
will include facilities, equipment and other rights used to connect the
Network to points of presence and local exchange carriers. It is
understood, however, that the Network as conveyed will not include
certain components (such as leased lines) of the voice communications
network presently operated by Seller, but the exclusion of such
components will not adversely
affect the functionality of the Network to be conveyed. If any item of
tangible personal property listed in Part II of Exhibit A is not
delivered to Purchaser on the Closing Date, or if Seller and Purchaser
agree that any additional item of tangible personal property should have
been listed in Part II of Exhibit A on the Closing Date (neither of
whose agreement will be unreasonably withheld), Seller agrees that it
shall provide to Purchaser either such item or an acceptable,
substantially equivalent substitute therefor as promptly as possible.
Nothing in this Section 4.13 shall be deemed a waiver of the rights of
Purchaser in Article VII or IX of this Agreement.
4.14. NO BROKERS. Seller has not incurred any liability
----------
for any broker's or finder's fees or commissions or similar payments in
connection with any of the transactions contemplated by the Operative
Agreements.
4.15. DISCLOSURE. Seller has not knowingly failed to
----------
disclose to Purchaser any facts material to the Network or the Assets.
To Seller's knowledge, no material representation or warranty by Seller
contained in this Agreement and no material statement contained in any
document, certificate, Exhibit or Schedule furnished or to be furnished
by Seller or on its behalf to Purchaser or any of its representatives
pursuant to any of the Operative Agreements or in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made or
will be made, in order to make the statements herein or therein not
misleading or necessary in order to fully and fairly provide the
information required to be provided in any such document, certificate,
Exhibit or Schedule.
4.16. QWEST DEDICATED CAPACITY. Qwest is providing the
------------------------
Qwest Dedicated Capacity (other than the Remaining Qwest Capacity) to
Seller and is obligated to provide the Remaining Qwest Capacity to
Seller as provided in the Qwest Release Agreement. The Qwest Release
Agreement is not being assigned to Purchaser except that Purchaser will
have the benefit of certain rights thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants, as of the date hereof and
as of the Closing Date, to Seller as follows:
5.01. ORGANIZATION. Purchaser is a corporation duly
------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
5.02. AUTHORITY. (a) Purchaser has full corporate power and
---------
authority to execute and deliver this Agreement and the other Operative
Agreements and instruments to be executed and delivered by it pursuant
hereto and to consummate the transactions contemplated hereby and
thereby. All corporate acts and other proceedings required to be taken
by or on the part of Purchaser or its stockholders to authorize
Purchaser to execute, deliver and perform this Agreement and such other
agreements and instruments and to consummate the transactions
contemplated hereby and thereby have been duly and properly taken.
(b) This Agreement has been duly executed and delivered by
Purchaser and constitutes, and such other agreements and instruments
when duly executed and delivered by Purchaser will constitute, legal,
valid and binding obligations of Purchaser enforceable in accordance
with their respective terms except as enforcement may be limited by
bankruptcy, insolvency, reorganization and other laws of general
application relating to or affecting enforcement of creditors' rights
and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before
which any proceeding therefor may be brought.
(c) The execution and delivery by Purchaser of this
Agreement and the execution and delivery by Purchaser of such other
agreements and instruments and the consummation by Purchaser of the
transactions contemplated hereby and thereby will not violate any law,
or conflict with, result in any breach of, constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or result in the creation of a Lien on any of the properties or
assets of Purchaser pursuant to, the certificate of incorporation or
by-laws of Purchaser
or any indenture, mortgage, lease, agreement or other
instrument to which Purchaser is a party or by which Purchaser or its
properties or assets are bound.
(d) No Consent or other action of or filing with any
Governmental Authority is required for the execution and delivery by
Purchaser of this Agreement and the execution and delivery by Purchaser
of such other agreements and instruments or the consummation by
Purchaser of the transactions contemplated hereby or thereby, except for
filings or Consents required pursuant to the HSR Act and such other
Consents, actions or filings the lack of which individually or in the
aggregate would not have a material adverse effect upon Purchaser's
ability to consummate the transactions contemplated hereby.
5.03. NO BROKERS. Purchaser has not incurred any liability
----------
for any broker's or finder's fees or commissions or similar payments in
connection with any of the transactions contemplated by the Operative
Agreements.
5.04. OWNERSHIP OF PURCHASER. Purchaser is a wholly-owned
----------------------
subsidiary of Telco Global Solutions Inc., which is a wholly-owned
subsidiary of Telco.
5.05. FINANCIAL CAPABILITY. Purchaser has the financial
--------------------
capability to pay the purchase price to be paid by it at the Closing and
to perform its other obligations hereunder.
5.06. LIMITATION OF REPRESENTATIONS. Anything herein or in
-----------------------------
any other Operative Agreement to the contrary notwithstanding, Purchaser
acknowledges that it is acquiring the Network without any representation
or warranty by Seller or any of its partners or other affiliates except
as expressly set forth herein and that neither Seller nor any of its
partners or other affiliates shall be deemed to have made any
representation or warranty, express or implied, as to the Assets, the
operation of the Network or otherwise, except as expressly set forth
herein. In furtherance of the foregoing, and not in limitation thereof,
Purchaser acknowledges that neither Seller nor any of its partners or
other affiliates has made any representation or warranty, express or
implied, with respect to the revenues or profitability of the operation
of the Network after the Closing.
5.07. COMPLETION OF DUE DILIGENCE. Purchaser has completed
---------------------------
its due diligence and business review with respect
to all aspects of the Network, the Assets and the feasibility of the
operation of the Network as intended to meet the objectives of
Purchaser, and the results of such review are satisfactory to Purchaser
in all material respects. This Section 5.07 does not constitute a
waiver of any rights of Purchaser pursuant to Article VII or IX.
ARTICLE VI
FURTHER COVENANTS AND AGREEMENTS
--------------------------------
6.01. CONDUCT OF BUSINESS. (a) Except as otherwise
-------------------
expressly provided herein, from and after the date of this Agreement and
until the Closing, Seller shall (i) operate and maintain the Network in
the ordinary course of business consistent with past practice; (ii) use
reasonable commercial efforts to preserve the Assets and maintain the
integrity of the Network; (iii) use reasonable commercial efforts to
keep available the services of the Related Employees; (iv) not sell or
transfer any of the Assets without the prior written consent of
Purchaser, which shall not be unreasonably withheld; (v) not amend or
terminate any Contract constituting part of the Assets or waive any
default or breach thereunder without the prior written consent of
Purchaser, which shall not be unreasonably withheld; (vi) comply in all
material respects with the Assumed Contracts and Operative Agreements
and use reasonable efforts to cure any default or breach by Seller
thereunder and notify Purchaser upon receipt of notice of any default or
breach; and (vii) not, without the prior written consent of Purchaser,
enter into any other contract materially affecting the Network or the
Assets, such consent not to be unreasonably withheld. Seller will
promptly notify Purchaser of any material adverse effect on, or on the
value of, any of the Assets or the Network. From the date hereof to the
Closing, Seller will not take any action or engage in any transaction
which would render any of its representations and warranties inaccurate
in any material respect as of the date hereof or as of the Closing Date.
(b) In the event that Seller acquires assets or enters
into Contracts in the ordinary course of business after the date of
execution of this Agreement and prior to the Closing for use in the
Network and such assets or Contracts are of the type that would have
been included within the Assets if held by Seller on the date of
execution of this Agreement, Exhibit A will be amended on or prior
to
the Closing Date to include such assets or Contracts as Assets. In
addition, such Exhibit will be amended to delete assets or Contracts
disposed of after the date of execution of this Agreement in accordance
with Section 6.01(a). No such amendment shall affect the Purchase
Price.
(c) Until the Closing, Seller shall maintain in full force
and effect all insurance policies presently in effect relating to the
Assets.
6.02. HSR FILING; OTHER CONSENTS. (a) As promptly as
--------------------------
possible, but in any event not later than ten days after the execution
hereof, Purchaser and Seller will cause their respective parents to each
file with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust
Division") a premerger notification in accordance with the HSR Act with
respect to the sale of the Assets by Seller to Purchaser pursuant to
this Agreement. Each of Purchaser and Seller agrees to cause their
respective parents to furnish promptly to the FTC and the Antitrust
Division any additional information requested by either of them pursuant
to the HSR Act in connection with such filings and shall diligently
take, or cooperate in the taking of, all steps that are necessary or
desirable and proper to expedite the termination of the waiting period
under the HSR Act; provided, however, that no party shall be required to
comply with any Burdensome Condition. Purchaser and Seller (or their
parents) shall each be responsible for the payment of their own filing
fees required in connection with their respective filings.
(b) Each of Purchaser and Seller will use reasonable
commercial efforts to obtain or make at the earliest practicable date
and in any event before the Closing all other Consents, estoppel
certificates and filings required to be obtained by it or which may be
reasonably necessary to the consummation of the transactions
contemplated by this Agreement or which are reasonably requested by the
other party.
(c) On or prior to the Closing Date, Seller shall use its
reasonable commercial efforts to obtain all such Consents under any
indenture, loan agreement or security agreement to which Seller is a
party as are necessary to prevent a breach or violation of, or default
under, any such indenture, loan agreement or security agreement as a
result
of the consummation of the transactions contemplated by this Agreement.
6.03. ACCESS. From the date hereof to and including the
------
Closing Date, Seller shall continue to afford to the officers,
employees, agents, attorneys, accountants and other authorized
representatives of Purchaser reasonable access, during normal business
hours, to the offices, plants, personnel, properties, Contracts, Assets,
books and records of Seller relating to the Network in order that
Purchaser may prepare for transition of ownership of the Assets on the
Closing Date and operation of the Network thereafter. Seller shall
furnish Purchaser such information with respect to the Assets and the
Network as Purchaser may from time to time reasonably request and Seller
shall cause its officers and employees to assist Purchaser and cause its
counsel, accountants, engineers and non-employee representatives to be
reasonably available to Purchaser for such purposes.
6.04. SATISFACTION OF CLOSING CONDITIONS. Between the date
----------------------------------
hereof and the Closing Date, Seller and Purchaser shall each use
reasonable commercial efforts to fulfill the conditions to its own
obligations hereunder and to cause its representations and warranties to
remain true and correct in all material respects as of the Closing Date.
6.05. NO INCONSISTENT POSITION. (a) Seller and Purchaser
------------------------
agree that they will not take any position with any taxing authority
which is not consistent with the Purchase Price allocation to be agreed
pursuant to Section 2.03 prior to the Closing.
(b) The parties acknowledge that the MCI Easement contains an
acknowledgement and agreement by SP and MCI that the provision of the
"Dedicated Capacity" as specified in the MCI Easement constitutes the
provision of long distance telecommunications services by MCI under a
long-term service contract.
6.06. RETENTION OF TAX LIABILITIES. Seller hereby agrees to
----------------------------
retain responsibility for, and agrees to pay when due (except while and
to the extent being contested in good faith), any and all Taxes of every
nature and description relating to the Network or the Assets for any
taxable period or portion of a taxable period which period or portion
ends on or prior to the Closing Date. In the event that Purchaser
reasonably determines that a Lien on
the Assets (based upon unpaid Taxes payable by Seller under this
Agreement or by law) is imminent and notifies Seller accordingly, then,
unless Seller provides adequate protection (such as a bond or letter of
credit) reasonably satisfactory to Purchaser to ensure that there is no
risk to Purchaser's ownership of the Assets, at Purchaser's election,
and in Purchaser's sole discretion, Purchaser may pay any such Taxes on
Seller's behalf and Seller hereby agrees to reimburse Purchaser within
10 days after receiving notice thereof for any such Taxes so paid. The
provisions of this Section shall survive the termination of this
Agreement.
6.07. POST-CLOSING SERVICES AND FACILITIES. Purchaser
------------------------------------
agrees to provide capacity to Qwest as provided in Section 7(c) of the
Qwest Release Agreement on the terms and conditions provided in such
Section. Purchaser agrees to work in good faith with third party
service providers where required by Qwest with respect to the
utilization of conduit as provided in Section 4(b) of the Qwest Release
Agreement. The parties acknowledge that Seller has the right to assign
to Purchaser certain rights under the Qwest Release Agreement.
6.08. TRANSITION ARRANGEMENTS. Purchaser and Seller agree
-----------------------
that the Transition Plan annexed hereto as Exhibit B, which the parties
will amend in writing prior to the Closing to provide additional detail,
shall be implemented in connection with Seller's continued access to the
Network and Purchaser's assumption of management thereof during the
period referred to therein.
6.09. NOTICE OF ASSIGNMENT. On or prior to the Closing
--------------------
Date, Seller shall send a notice, in form and substance reasonably
satisfactory to Purchaser, to each other party to an Assumed Contract,
informing such party of the assignment of the rights of Seller under
such Assumed Contract to Purchaser and directing that any notices to
Seller under such Assumed Contract be provided to Purchaser.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser to effect the Closing hereunder
are, at the option of Purchaser, subject to the conditions precedent
that, at the Closing:
7.01. PERFORMANCE. Seller shall have performed and complied
-----------
in all material respects with each agreement, covenant and condition in
each Operative Agreement to which Seller is or is specified to be a
party, which agreement, covenant or condition is required to be
performed or complied with by Seller at or before the Closing. At the
Closing, Seller shall have sold, assigned, transferred, conveyed and
delivered to Purchaser all right, title and interest of Seller in and to
the Assets subject to the provisions respecting Intellectual Property
Rights and terminal facilities in Section 2.01 and shall have delivered
such specific assignments, bills of sale, endorsements, leases,
subleases, subsubleases and instruments of conveyance and transfer, in
form and substance reasonably satisfactory to Purchaser, as shall be
effective to vest in Purchaser title to and all the interest in the
Assets of Seller subject as aforesaid.
7.02. AUTHORIZATION, EXECUTION AND DELIVERY OF OPERATIVE
--------------------------------------------------
AGREEMENTS. Each party thereto (other than Purchaser) shall have duly
----------
authorized, executed and delivered each Operative Agreement to which
such Person is or is specified to be a party, and an executed
counterpart thereof shall have been delivered to Purchaser.
7.03. NO DEFAULT. Each Operative Agreement and material
----------
Scheduled Contract shall be in full force and effect without any event
having occurred or condition existing that constitutes, or with the
giving of notice or passage of time (or both) would constitute, a
default thereunder or breach thereof (except by Purchaser or any of its
affiliates) or would give any party thereto the right to terminate or
not to perform any obligation thereunder; and Purchaser shall have
received copies of the Qwest Release Agreement executed by Qwest which
constitutes the termination of its right of first offer relating to the
transfer of the Network and the Dedicated Capacity pursuant to the Qwest
Agreement and the waiver executed by MCI of its right of first offer
relating to the transfer of the Dedicated Capacity pursuant to the MCI
Letter Amendment.
7.04. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) All
-------------------------------------
Governmental Actions, including the issuance or transfer of all permits
or other Consents of Governmental Authorities necessary for Purchaser's
ownership, maintenance, operation and use of the Network, required to be
taken, given or obtained in connection with the transactions
contemplated hereby shall (i) have been taken, given or obtained, (ii)
be in full force and effect and (iii) not be subject to any pending
proceedings or appeals, administrative, judicial or otherwise (and the
time for appeal shall have expired or, if an appeal shall have been
taken, it shall have been dismissed).
(b) All Consents of any other Person necessary in order to
consummate the transactions contemplated hereby, including the transfer
to Purchaser of the Contracts and Intellectual Property Rights included
in the Assets, or necessary for the maintenance, operation or use of the
Network, except for Consents in respect of Contracts or Intellectual
Property Rights that individually or in the aggregate are not material
to the maintenance, operation or use of the Network as maintained,
operated and used at the date of this Agreement, shall have been
obtained and shall be in full force and effect.
(c) The waiting period under the HSR Act shall have
expired or been terminated.
(d) No Burdensome Condition (other than a Burdensome
Condition which is subject to the indemnification by Seller pursuant to
Section 9.02(a)(iv)) shall exist with respect to Purchaser in connection
with the transactions contemplated hereby.
7.05. GOVERNMENTAL RULES. (a) No Governmental Rule shall
------------------
have been instituted, threatened, issued or proposed to restrain, enjoin
or prevent the transactions contemplated hereby or to invalidate,
suspend or require modification of any material provision of any
Operative Agreement.
(b) No change shall have occurred since the date of this
Agreement in any Governmental Rule that, in Purchaser's good faith
opinion, would make it illegal for Purchaser to consummate the
transactions contemplated hereby or subject Purchaser to any fine,
penalty or other liability under or pursuant to any Governmental Rule in
connection with any such transaction.
7.06. STANDARD CLOSING DOCUMENTS. Purchaser shall have
--------------------------
received, with respect to Seller:
(a) certificates, dated the Closing Date, of the
secretary, assistant secretary or another appropriate authorized
signatory of Seller certifying:
(i) that a true and correct copy of the resolutions,
delegations or other written evidence of partnership action and, if
applicable, of the partners of Seller duly authorizing or ratifying the
execution, delivery and performance of the Operative Agreements to which
the partnership is or is specified to be a party and the consummation of
the transactions contemplated thereby, is attached to such certificate,
and as to the absence of other resolutions, delegations or other
partnership action relating thereto; and
(ii) as to the absence of proceedings for the merger,
consolidation, sale of all or substantially all the assets, dissolution,
liquidation or similar proceedings with respect to Seller;
(b) an incumbency certificate signed by an appropriate
officer or other authorized signatory of Seller dated the Closing Date
as to the signatures and titles of the officers or authorized
signatories of Seller executing any Operative Agreement and any other
documents delivered in connection with the Operative Agreements; and
(c) a certificate signed by an appropriate officer or
other authorized signatory of Seller dated the Closing Date certifying
that the conditions set forth in Sections 7.01, 7.02 and 7.07 (with
respect to Seller) have been satisfied by Seller.
7.07. REPRESENTATIONS AND WARRANTIES. The representations
------------------------------
and warranties set forth in Article IV shall be true and correct in all
material respects as of the date of this Agreement and at the Closing
with the same effect as if made at and as of the Closing.
7.08. OPINION OF COUNSEL. Purchaser shall have received an
------------------
opinion or opinions addressed to it, dated the Closing Date, of H. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Vice President,
Secretary and General Counsel of Seller, in the form of Exhibit C.
7.09. NO MATERIAL ADVERSE CHANGE. Since the date of
--------------------------
execution hereof, neither the Assets nor the Network shall have been
adversely affected in any material way by, or sustained any material
loss, whether or not insured, which has not been remedied by Seller to
Purchaser's reasonable satisfaction, as a result of, any fire, flood,
accident, explosion or other calamity or casualty or any strike, labor
disturbance, riot or act of God or the public enemy, and no condemnation
proceedings affecting any material portion of the Real Property and
Improvements shall have been commenced and the Seller shall not have
received notice of the proposed commencement of any such proceedings.
7.10. SCHEDULES. Purchaser shall have received amended
---------
Schedules as of a date no later than three business days before the
Closing Date reflecting any changes in the Schedules since the date of
execution of this Agreement, and each such amended Schedule shall be
reasonably satisfactory in form, substance and scope to Purchaser in all
material respects.
7.11. ESTOPPEL CERTIFICATES. Purchaser shall have received
---------------------
certificates from each party to the MCI Easement, dated within 20 days
of the Closing Date, pursuant to Section 16.04 of the MCI Easement, the
certificate from MCI to be substantially in the form attached hereto as
Exhibit D.
7.12. PROCEEDINGS. All partnership and legal proceedings
-----------
taken by Seller in connection with the transactions contemplated hereby
and all documents relating thereto shall be reasonably satisfactory in
form and substance to Purchaser and its counsel, and certified or other
copies of all relevant documents as Purchaser shall have reasonably
requested shall have been provided to Purchaser or its counsel.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller to effect the Closing hereunder are,
at its option, subject to the conditions precedent that, at the Closing:
8.01. PERFORMANCE. Purchaser shall have performed and
-----------
complied in all material respects with each agreement, covenant and
condition in each Operative Agreement to which it is or is specified to
be a party, which agreement, covenant or condition is required to be
performed or complied with by Purchaser at or before the Closing.
8.02. AUTHORIZATION, EXECUTION AND DELIVERY OF OPERATIVE
---------------------------------------------------
AGREEMENTS. Each party thereto (other than Seller) shall have duly
----------
authorized, executed and delivered each Operative Agreement to which
such Person is or is specified to be a party, and an executed
counterpart thereof shall have been delivered to Seller. The Guarantee
shall have been duly authorized, executed and delivered by Telco and
shall be in form and substance satisfactory to Purchaser.
8.03. NO DEFAULT. Each Operative Agreement shall be in
----------
full force and effect without any event having occurred or condition
existing that constitutes, or with the giving of notice or passage of
time (or both) would constitute, a default under or breach of such
Operative Agreement (other than by Seller or any of its affiliates) or
would give any party to such Operative Agreement the right to terminate
or not to perform any obligation under such Operative Agreement.
8.04. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) All
-------------------------------------
Governmental Actions required to be taken, given or obtained in
connection with the transactions contemplated hereby shall (i) have been
taken, given or obtained, (ii) be in full force and effect and (iii) not
be subject to any pending proceedings or appeals, administrative,
judicial or otherwise (and the time for appeal shall have expired or, if
an appeal shall have been taken, it shall have been dismissed).
(b) All Consents of any other Person necessary or
advisable in order to consummate the transactions
contemplated hereby shall have been obtained and shall be in full force
and effect.
(c) The waiting period under the HSR Act shall have
expired or been terminated.
(d) No Burdensome Condition shall exist with respect to
Seller in connection with any transactions contemplated hereby.
8.05. GOVERNMENTAL RULES. (a) No Governmental Rule shall
------------------
have been instituted, threatened, issued or proposed to restrain, enjoin
or prevent the transactions contemplated hereby or to invalidate,
suspend or require modification of any material provision of any
Operative Agreement.
(b) No change shall have occurred since the date of this
Agreement in any Governmental Rule that, in the good faith opinion of
Seller, would make it illegal for Seller to consummate the transactions
contemplated hereby or subject Seller to any fine, penalty or other
liability under or pursuant to any Governmental Rule in connection with
any such transaction.
8.06. STANDARD CLOSING DOCUMENTS. Seller shall have
--------------------------
received, with respect to Purchaser and Telco:
(a) a certificate, dated the Closing Date, of the
secretary, assistant secretary or another appropriate authorized
signatory of such entity certifying:
(i) that a true and correct copy of the charter and by-laws of
such entity is attached to such certificate;
(ii) that a true and correct copy of the resolutions,
delegations or other written evidence of corporate action, duly
authorizing or ratifying the execution, delivery and performance of the
Operative Agreements to which such entity is or is specified to be a
party and the consummation of the transactions contemplated thereby, is
attached to such certificate, and as to the absence of other
resolutions, delegations or other corporate action relating thereto; and
(iii) as to the absence of proceedings for the merger,
consolidation, sale of all or substantially all the assets, dissolution,
liquidation or similar proceedings with respect to such entity;
(b) an incumbency certificate signed by an appropriate
officer or other authorized signatory of such entity dated the Closing
Date as to the signatures and titles of the officers or authorized
signatories of such entity executing any Operative Agreement and any
other documents delivered in connection with the Operative Agreement;
and
(c) a certificate signed by an appropriate officer or
other authorized signatory of Purchaser dated the Closing Date
certifying that the conditions set forth in Sections 8.01, 8.02 and 8.07
(with respect to Purchaser) have been satisfied.
8.07. REPRESENTATIONS AND WARRANTIES. The representations
------------------------------
and warranties of Purchaser set forth in Article V shall be true and
correct in all material respects as of the date of this Agreement and at
the Closing with the same effect as if made at and as of the Closing.
8.08. OPINION OF COUNSEL. Seller shall have received an
------------------
opinion or opinions addressed to it, dated the Closing Date, of ▇▇▇▇▇▇▇
& Berlin, counsel for Purchaser and Telco, in the form of Exhibit E.
8.09. PROCEEDINGS. All corporate and legal proceedings
-----------
taken by Purchaser and Telco in connection with the transactions
contemplated hereby and all documents relating thereto shall be
reasonably satisfactory in form and substance to Seller and its counsel,
and certified or other copies of all relevant documents as Seller shall
have reasonably requested shall have been provided to Seller or its
counsel.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
----------------------------
9.01. SURVIVAL OF REPRESENTATIONS. The representations,
---------------------------
warranties, covenants and agreements contained in this Agreement, and in
any agreements, certificates or other instruments delivered pursuant to
this Agreement, shall survive the Closing and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any
party, but subject to all limitations and other provisions contained in
this Agreement including Section 9.05.
9.02. INDEMNIFICATION BY SELLER AND PURCHASER. (a) Subject
---------------------------------------
to the other provisions of this Article IX, Seller hereby agrees to
indemnify and hold harmless Purchaser (and its officers, directors,
employees, agents and representatives) (each an "Indemnitee") from and
against any and all Losses (as defined below) asserted against, imposed
upon or incurred by an Indemnitee arising from, based upon or caused by
any of the following:
(i) Excluded Liabilities;
(ii) any default by Seller in the performance of any of its
agreements or covenants set forth in any Operative Agreement;
(iii) any breach of a representation or warranty of Seller
contained in any Operative Agreement; and
(iv) *
provided, however, that Seller shall not have any liability under this
-----------------
Section 9.02 to the extent the liability or obligation arises as a
result of the operation of the Network after the Closing or any action
taken or omitted to be taken by any Indemnitee of Seller.
*Confidential Treatment Requested.
The redacted material separately filed
with the Commission.
As used herein, the term "LOSSES" shall mean, collectively,
any and all claims, damages, liabilities, liens, losses or other
obligations whatsoever, together with costs and expenses, including
reasonable fees and disbursements of counsel (except as limited by
Section 9.03) and any consultants or experts and expenses of
investigation. Losses with respect to a representation or warranty
providing for a materiality threshold prior to breach shall include all
Losses in excess of $200,000 arising from, based upon or caused by a
breach of such representation or warranty, for the purposes of the
indemnification under this Article IX only, determined without reference
to the materiality threshold.
(b) Subject to the other provisions of this Article IX,
Purchaser hereby agrees to indemnify and hold harmless Seller (and its
partners, officers, directors, employees, agents and representatives)
(each an "Indemnitee") from and against any and all Losses asserted
against, imposed upon or incurred by such Indemnitee arising from, based
upon or caused by any of the following:
(i) Assumed Liabilities;
(ii) any default by Purchaser in the performance of any of its
agreements or covenants set forth in any Operative Agreement; and
(iii) any breach of a representation or warranty of Purchaser
contained in any Operative Agreement;
provided, however, that Purchaser shall not have any liability under
-----------------
this Section 9.02 to the extent the liability or obligation arises as a
result of the operation of the Network before the Closing or any action
taken or omitted to be taken by any Indemnitee of Purchaser.
(c) Seller and Purchaser shall not have any liability
under Section 9.02(a) or (b), as applicable, unless the aggregate of all
Losses for which such party would, but for this sentence, be liable
exceeds on a cumulative pre-tax basis an amount equal to $3,000,000 and
then only to the extent of any such excess. In addition, the aggregate
amount payable by an indemnifying party to its respective Indemnitees
pursuant to this Article IX shall not exceed $50,000,000.
Notwithstanding any other provision in this Article IX, the liability of
Seller under Section 9.02(a)(iv) shall not be subject to the
foregoing
limitations on amount (i.e., $3,000,000 and $50,000,000) and shall apply
only to Losses consisting of costs and expenses incurred by Purchaser as
a party to the indemnified litigation, including all reasonable fees and
disbursements of counsel and any consultants or experts and expenses of
investigation, and any amounts which are due from Purchaser to plaintiff
as the result of a judgment in the litigation or a settlement thereof.
The limitations on amount also shall not apply to indemnification
pursuant to Section 9.02(a)(i) or 9.02(b)(i).
9.03. NOTICE, ETC. Each Indemnitee agrees to give the
-----------
indemnifying party prompt written notice of any action, claim, demand,
discovery of fact, proceeding or suit (collectively, "Claims") for which
such Indemnitee intends to assert a right to indemnification under this
Agreement. The indemnifying party shall have the right to participate
jointly with the Indemnitee in the Indemnitee's defense, settlement or
other disposition of any Claim. With respect to any Claim relating
solely to the payment of money damages and which would not result in the
Indemnitee becoming subject to injunctive or other relief or otherwise
adversely affect the business of the Indemnitee in any manner, and as to
which the indemnifying party shall have acknowledged in writing the
obligation to indemnify the Indemnitee in full hereunder without regard
to any monetary limitation on indemnification in Section 9.02(c), the
indemnifying party shall have the right to defend, settle or otherwise
dispose of such Claim, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate. If the indemnifying party
assumes such defense, the Indemnitee shall have the right to participate
in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the indemnifying
party has not assumed the defense thereof. The indemnifying party shall
obtain the written consent of the Indemnitee prior to ceasing to defend,
settling or otherwise disposing of any Claim if as a result thereof the
Indemnitee would become subject to injunctive or other equitable relief
or the business of the Indemnitee would be adversely affected in any
manner.
9.04. REIMBURSEMENT OF COSTS. The costs and expenses,
----------------------
including reasonable fees and disbursements of counsel and expenses
of
investigation, incurred by any Indemnitee in connection with any Claim
shall be reimbursed on a quarterly basis by the applicable indemnifying
party, without prejudice to the indemnifying party's right to contest
the Indemnitee's right to indemnification and subject to refund in the
event the indemnifying party is ultimately held not to be obligated to
indemnify the Indemnitee.
9.05. TIME LIMITATIONS. (a) Notwithstanding anything to
----------------
the contrary contained herein, the obligation of Seller and Purchaser to
indemnify their respective Indemnitees for any Loss shall, except as
otherwise provided below, terminate at 11:59 p.m., New York City time,
on the second anniversary of the Closing Date.
(b) The obligation of either party to indemnify for any
Losses based upon or caused by default in the performance of an
agreement or covenant set forth in an Operative Agreement required to be
performed after the Closing shall terminate on the second anniversary of
the Closing or, if later, the second anniversary of the date the other
party knew or should have known of the defaulting party's failure to
perform.
(c) The obligation of Seller or Purchaser to indemnify an
Indemnitee for any Losses based upon any Excluded Liabilities or Assumed
Liabilities, respectively, shall survive without any limitation as to
time.
(d) Claims for indemnification pending on, or asserted
prior to, the expiration of the applicable time period specified above
may continue to be asserted and indemnified against and the related
obligation to indemnify shall not terminate.
9.06. NO CONSEQUENTIAL DAMAGES. In no event will any
------------------------
indemnifying party be liable to an Indemnitee under this Article IX for
punitive damages, incidental damages or lost profits, lost savings or
any other special, indirect or consequential damages, even if such party
has been advised of the possibility of such damages, resulting from the
breach by it of any of its obligations under this Agreement.
9.07. LIMITATION ON REMEDIES. The rights of Purchaser and
----------------------
Seller to indemnification set forth in this Article IX shall be the sole
and exclusive remedy against Purchaser or Seller with respect to any and
all claims for
damages with respect to the subject matter of the Operative Agreements,
in lieu of any and all other rights which they may have under the
Operative Agreements or otherwise with respect to the transactions
contemplated hereby.
ARTICLE X
EMPLOYMENT MATTERS
------------------
10.01. OFFERS OF EMPLOYMENT. At or prior to the Closing,
--------------------
Purchaser may, at its option, offer employment to any employees of
Seller listed on Schedule 10.01, which contains the names of employees
of Seller (other than certain senior executives) who are currently
employed supporting the voice network of Seller. Purchaser shall not be
under any obligation to offer employment to any employees of Seller
listed on Schedule 10.01 but shall notify Seller promptly upon
Purchaser's making of an offer. Such notification will include the
salary and location of any offer. In addition, Purchaser and Seller
agree to consult with each other on the employment start-date for any
employee of Seller hired by Purchaser. With respect to employees listed
in Schedule 10.01, the terms of any offers will be in the sole
discretion of Purchaser; provided, that Purchaser agrees to comply with
applicable employment law and will be responsible for its conduct and
any claims or actions resulting from the selection of, offers to or
hiring of employees of Seller that would expose Seller or Purchaser to
any damages, liabilities or other Losses as a result of Purchaser's
wrongful conduct in connection therewith.
10.02. PAYMENTS BY SELLER. (a) To the extent any employees
------------------
of Seller that may be hired by Purchaser at or subsequent to the Closing
are entitled to any accrued benefits through the date of hiring under
any employee benefit plans or arrangements of Seller, whether with
respect to retirement, medical and dental coverage, vacation pay, life
insurance, disability or otherwise, Seller shall be solely responsible
for the benefits and agrees to pay all amounts and make all
distributions due to such employees promptly in accordance with such
employees' terms of employment, including applicable benefit plans.
(b) In addition to matters funded by Seller pursuant to
Section 10.02(a), Seller shall retain responsibility for any and all
other liabilities relating to any of its employees hired by Purchaser,
which liabilities
have been incurred, or arise from facts or events occurring, prior to
the Closing Date; provided, that Purchaser shall be responsible for any
and all liabilities relating to any employees of Seller whether or not
hired by Purchaser, to the extent arising from a breach of its
obligations in Section 10.01. To the extent Purchaser is required to
pay any such liabilities for which Seller retains responsibility, Seller
shall promptly reimburse Purchaser for the amount paid.
10.03. NONSOLICITATION. Prior to 12 months following the
---------------
Closing Date, Seller will not hire or solicit for employment any
individual hired by Purchaser pursuant to Section 10.01 without the
prior written consent of Purchaser.
10.04. CONTRACTING ARRANGEMENTS FOR EMPLOYEES. (a) In the
--------------------------------------
event that Purchaser has not hired all employees of Seller listed on
Schedule 10.01 but Purchaser wishes that the services of certain of such
employees are available to Purchaser during the period between the
Closing Date and December 31, 1997, Purchaser will identify such
employees to Seller. In such event Seller and Purchaser will enter into
a contracting arrangement whereby Seller will make the services of such
employees available to Purchaser (to the extent such employees remain
employed by Seller) as contract employees on a month to month basis
until December 31, 1997. Unless otherwise expressly agreed in the
transition plan contemplated by Section 6.08, Purchaser agrees to pay to
Seller an amount equal to 150% of the applicable monthly base salary of
each such employee for each month Seller provides such services.
(b) In addition, in the event Purchaser hires any employee of
Seller listed on Schedule 10.01 but Seller wishes that the services of
certain of such employees are available to Seller during the period
between the Closing Date and December 31, 1997, Seller will identify
such employees to Purchaser. In such event Purchaser and Seller will
enter into a contracting arrangement whereby Purchaser will make the
services of such employees available to Seller (to the extent such
employees remain employed by Purchaser) as contract employees on a month
to month basis until December 31, 1997. Unless otherwise expressly
agreed in the transition plan contemplated by Section 6.08, Seller
agrees to pay to Purchaser an amount equal to 150% of the applicable
monthly base salary of each such employee for each month Purchaser
provides such services.
ARTICLE XI
TERMINATION
-----------
11.01. TERMINATION OF AGREEMENT. (a) Notwithstanding
------------------------
anything to the contrary in this Agreement, this Agreement may be
terminated and the transactions contemplated hereby abandoned at any
time prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Purchaser if there has been a material breach of any
representation, warranty, covenant or agreement contained
in any Operative Agreement on the part of Seller or if
any of the conditions set forth in Article VII shall have
become incapable of fulfillment and shall not have been
waived by Purchaser, provided that if such breach is
susceptible of cure, it has not been cured within 30 days
after written notice from Purchaser to Seller;
(iii)by Seller if there has been a material breach of any
representation, warranty, covenant or agreement contained
in any Operative Agreement on the part of Purchaser or if
any of the conditions set forth in Article VIII shall
have become incapable of fulfillment and shall not have
been waived by Seller, provided that if such breach is
susceptible of cure, it has not been cured within 30 days
after written notice from Seller to Purchaser;
(iv) by Seller or Purchaser if, in its reasonable opinion, a
Burdensome Condition (other than a Burdensome Condition which
is subject to the indemnification by Seller pursuant to
Section 9.02(a)(iv)) has been imposed on it with respect to
the transactions contemplated hereby;
(v) by Seller or Purchaser, in its sole discretion, (x) if the
Closing does not occur on or prior to June 30, 1997, other
than as a result of a breach by the party seeking termination
of its obligations hereunder, the Real Property Contracts (or
alternative arrangements reasonably satisfactory to Purchaser)
not having been executed or the Consents required pursuant to
the HSR Act or the Real Property
Contracts (or such alternative arrangements) not having been
obtained; or (y) if the Closing does not occur on or prior to
September 30, 1997, other than as a result of a breach by the
party seeking termination of its obligations hereunder; or
(vi) by Purchaser if, prior to Closing, Assets constituting
tangible personal property are materially damaged and Seller
has not either provided a reasonably satisfactory replacement
therefor or made a payment or purchase price adjustment in an
amount sufficient to acquire a reasonably satisfactory
replacement; or by Purchaser or Seller if, prior to Closing, a
material default (other than by Seller) shall have occurred
with respect to Assets constituting Contracts or material
Assets constituting Contracts are no longer in full force and
effect.
provided, however, that the party seeking termination pursuant to clause
-----------------
(ii), (iii), (iv), (v) or (vi) is not in breach in any material respect
of any of its representations, warranties, covenants or agreements
contained in any Operative Agreement.
(b) In the event of termination by Seller or Purchaser
pursuant to this Section 11.01, written notice thereof shall forthwith
be given to the other party hereto and the transactions contemplated by
this Agreement shall be terminated, without further action by any party.
If the transactions contemplated by this Agreement are terminated as
provided herein (i) Purchaser shall return all documents and other
material received from Seller relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to
Seller; and (ii) all confidential information received by Purchaser with
respect to the businesses of Seller shall be treated in accordance with
the Confidentiality Agreement which shall remain in full force and
effect notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 11.01,
this Agreement shall become null and
void and of no further force and effect, except for the provisions of
Sections 12.01, 12.02, 12.06, 12.08, 12.14 and Articles IX and XI.
Nothing in this Section 11.01 shall be deemed to release any party from
any liability for any breach by such party of any of its
representations, warranties, covenants or agreements as set forth in the
Operative Agreements.
ARTICLE XII
MISCELLANEOUS
-------------
12.01. EXPENSES. Except as otherwise specifically provided
--------
in this Agreement, each party will pay its own expenses incident to this
Agreement and the transactions contemplated hereby, including legal and
accounting fees and disbursements. Any sales, transfer or other similar
Taxes or fees applicable to the conveyance and transfer from Seller to
Purchaser of the Assets, including transfer Taxes, recording and filing
fees and documentary stamp Taxes, shall be borne and paid by Purchaser.
12.02. WAIVER OF JURY TRIAL. Each party waives, to the
--------------------
fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation arising out of or relating to
the Operative Agreements. Each party (i) certifies that no
representative, agent or attorney of another party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it has been induced to enter into the Operative Agreements by,
among other things, the mutual waivers and certifications set forth
above in this Section.
12.03. INFORMATION FOR TAX RETURNS. (a) If, in order
---------------------------
properly to prepare its Tax returns, other documents or reports required
to be filed with Governmental Authorities or its financial statements or
to fulfill its obligations hereunder, it is necessary that a party be
furnished with additional information, documents or records relating to
the Assets or the Network, and such information, documents or records
are in the possession or control of the other party hereto, such other
party agrees to use reasonable commercial efforts to furnish or make
available such information, documents or records (or copies thereof) at
the recipient's request, cost and expense.
(b) Each party to this Agreement hereby agrees that it
shall cooperate with the other by executing and/or filing or causing to
be executed and/or filed any required documents (including any Tax
returns required to be filed with respect to the transactions
contemplated by this Agreement) and by making available to the other,
without limitation, all work papers, records and notes of any kind, at
all reasonable times, for the purpose of allowing the appropriate party
to complete Tax returns, respond to audits, obtain refunds, make any
determination required under this Agreement, verify issues and negotiate
settlements with Tax authorities or defend or prosecute Tax claims.
12.04. AMENDMENTS AND WAIVERS. (a) No failure or delay of
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a party to this Agreement in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the parties hereunder are cumulative
and are not exclusive of any rights or remedies which the parties would
otherwise have. No waiver of any provision of this Agreement or consent
to any departure therefrom shall in any event be effective unless the
same shall be permitted by Section 12.04(b), and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given. No notice or demand on either party to this
Agreement in any case shall entitle such party to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by authorized signatories of the
parties hereto. To be effective, any consent, approval, notice, waiver
or demand required or permitted under this Agreement must refer
specifically to this Agreement and the provisions to which it relates,
describe with particularity any right or obligation consented to,
approved, waived or purported to be violated and demonstrate knowledge
of the consequences of the action so taken.
12.05. TRANSFERABILITY. The respective rights and
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obligations of each party hereto shall not be assignable by such party
without the written consent of the other party
hereto, except that prior to or after the Closing Purchaser may assign
its rights and obligations hereunder to Telco, or any direct or indirect
wholly owned subsidiary of Telco, if all the obligations of such
assignee hereunder are unconditionally guaranteed by Telco, and after
the Closing (a) Purchaser may assign its rights hereunder (but excluding
any right to indemnification pursuant to Article IX) to any transferee
of ownership of the Network (which shall not include any Person that
purchases telecommunications capacity from Purchaser but does not
acquire an ownership interest in the Network), (b) Seller may assign its
rights under this Agreement to its general partners or any affiliate
thereof and (c) Purchaser may assign its rights under this Agreement to
any successor of Purchaser in the event of a merger, consolidation,
liquidation or dissolution of Purchaser, if such assignee pursuant to
the foregoing clause (b) or (c) executes and delivers to the other party
hereto an agreement satisfactory in form and substance to such other
party under which such assignee assumes and agrees to perform and
discharge all the obligations and liabilities of the assigning party,
but any such permitted assignment shall not relieve the assigning party
of its obligations hereunder or any guarantor of such obligations. This
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing
herein expressed or implied is intended to confer upon any Person, other
than the parties hereto and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, unless such Person is expressly stated to be
entitled to any such right, remedy or claim.
12.06. NONRECOURSE. Notwithstanding anything to the
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contrary contained herein, no partner of Seller shall have any duty,
obligation or liability under or in respect of this Agreement as a
result of its status as a partner of Seller, nor shall any direct or
indirect owner of any such partner have any duty, obligation or
liability as a result of its direct or indirect beneficial ownership of
such partner; it being understood and agreed that all duties,
obligations and liabilities of Seller are expressly nonrecourse to the
respective direct and indirect beneficial owners.
12.07. Notices. Any notice, request or other document to be
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given hereunder to a party hereto shall be in writing and delivered by
hand, courier, overnight delivery
service or registered or certified mail. Any notice or other
communication under this Agreement shall be deemed given when received
and shall be directed to the following address:
(a) If to Seller, addressed to it at:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention of General Counsel
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) If to Purchaser, addressed to it at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Operating Officer
with a copy to:
▇▇▇▇▇▇▇ & Berlin
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Either party hereto may change its address for receiving notices,
requests and other documents by giving written notice of such change to
the other party hereto.
12.08. REMEDIES. Except as may otherwise be specifically
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provided herein, the rights and remedies of the parties hereunder are
cumulative and are not exclusive of any rights or remedies which the
parties hereto would otherwise have. Equitable relief, including the
remedies of
specific performance and injunction, shall be available with respect to
any actual or attempted breach hereof.
12.09. APPLICABLE LAW. This Agreement shall be governed by
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and construed in accordance with the internal laws of the State of New
York applicable to agreements made and to be performed entirely within
such State, without regard to the conflicts of law principles of such
State.
12.10. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
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Each party to this Agreement hereby irrevocably and unconditionally
submits, for itself and its property, to the jurisdiction of any New
York state court sitting in the County of New York or any Federal court
of the United States of America sitting in the Southern District of New
York, and any appellate court from any such court, in any suit, action
or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment resulting from any such suit,
action or proceeding, and each party hereby irrevocably and uncondi-
tionally agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in such New York state court or,
to the extent permitted by law, by removal or otherwise, in such Federal
court.
(b) It shall be a condition precedent to each party's right
to bring any such suit, action or proceeding that such suit, action or
proceeding, in the first instance, be brought in such New York state
court or, to the extent permitted by law, by removal or otherwise, in
such Federal court (unless such suit, action or proceeding is brought
solely to obtain discovery or to enforce a judgment), and if each of
such New York State court and Federal court refuses to accept
jurisdiction with respect thereto, such suit, action or proceeding may
be brought in any other court with jurisdiction; provided that the
foregoing condition precedent shall not apply to any suit, action or
proceeding by a party seeking indemnification or contribution pursuant
to this Agreement or otherwise in respect of a suit, action or
proceeding against such party if such suit, action or proceeding by such
party seeking indemnification or contribution is brought in the same
court as the suit, action or proceeding against such party.
(c) No party to this Agreement may move to (i) transfer any
such suit, action or proceeding from such New York State court or
Federal court to another jurisdiction, (ii) consolidate any such suit,
action or proceeding
brought in such New York state court or Federal court with a suit,
action or proceeding in another jurisdiction or (iii) dismiss any such
suit, action or proceeding brought in such New York state court or
Federal court for the purpose of bringing the same in another
jurisdiction.
(d) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, (i) any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement in any New York state court sitting in the
County of New York or any Federal court sitting in the Southern District
of New York, (ii) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and
(iii) the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such party.
(e) Each party to this Agreement irrevocably consents to
service of process in the manner provided for the giving of notices
pursuant to this Agreement. Nothing in this Agreement shall affect the
right of any party to such agreement or instrument to serve process in
any other manner permitted by law.
12.11. SEVERABILITY. In the event any one or more of the
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provisions contained in this Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
12.12. SECTION HEADINGS. The section headings and table of
----------------
contents contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
12.13. COUNTERPARTS. This Agreement may be executed in
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multiple counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
12.14. PUBLICITY. (a) Neither party shall issue any press
---------
release or make any other public announcement with respect to this
Agreement or the transactions contemplated hereby without obtaining the
prior written approval of the other party (which will not be
unreasonably withheld or delayed), except as may be required by
Governmental Rule or the regulations of any securities exchange. In the
event any such release or announcement is to be made because it is
required by a Governmental Rule or such regulations, such party shall
(or shall cause the Person required to issue the release or make the
announcement to) first (i) allow the other party reasonable time to
comment on such release or announcement in advance of its issuance and
(ii) use reasonable efforts to accept the reasonable and good faith
comments of the other party.
(b) Prior to the Closing, Purchaser shall not, without
Seller's prior written consent, consult any Persons that have been
identified to Purchaser by Seller as customers, vendors, clients,
prospects or other Persons with whom Seller has a business relationship
regarding such Person's relationship with Seller; provided, however,
Purchaser shall not be deemed to waive its right to be satisfied that
all conditions precedent to the Closing set forth in Article VII have
been satisfied.
(c) Except as required by Governmental Rule or the
regulations of any securities exchange, neither party will give a copy
of this Agreement to any Person which is not an affiliate of such party
or a partner, officer, director, employee, stockholder, agent,
representative or professional adviser to such party or affiliate,
without the prior written consent of the other party. The disclosing
party shall take reasonable actions to prevent any recipient of a copy
of this Agreement from providing a copy of this Agreement to any
additional Person without written consent.
12.15. ENTIRE AGREEMENT. This Agreement, the other
----------------
Operative Agreements and the Exhibits, Schedules, Appendices and
Attachments hereto and thereto and the Confidentiality Agreement
constitute the entire agreement of the parties with respect to the
subject matter thereof and
supersede all prior written and oral agreements and understandings with
respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
ADVANTIS
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
by____________________________
Title:Executive Vice President
and CEO
TELCO NETWORK SERVICES, INC.
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
by__________________________
Title:Chief Executive Officer
and CEO