EXHIBIT 10.6
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT, dated as of October 10, 2002 (this
"Agreement"), by and between Access Integrated Technologies, Inc., a Delaware
corporation (the "Purchaser"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Stockholders") and R.E. ▇▇▇▇▇▇▇▇, Inc. d/b/a ColoSolutions, a Florida
corporation, and Colo Solutions Global Services, Inc., a Florida corporation
(each shall be referred to as the "Seller" and collectively as the "Sellers").
WHEREAS, the Sellers are engaged in the business of operating
colocation facilities located at the Leased Properties (as defined in Section
1.1(a) below), at which the Sellers' customers, including KMC Telecom VI LLC,
install their own computer and telecommunication equipment in a secure
environment and connect to internet and telecommunication networks (the
"Business");
WHEREAS, the Purchaser desires to purchase, and obtain the assignment
of, from the Sellers, and the Sellers desire to sell, convey, assign and
transfer to the Purchaser, the Purchased Assets, upon the terms and subject to
the conditions set forth below; and
WHEREAS, the Purchaser, the Stockholders and the Sellers hereto desire
to enter into certain agreements and arrangements ancillary to this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties, each
intending to be legally bound hereby, agree as set forth below:
ARTICLE I.
PURCHASE AND SALE
1.1. Purchase and Sale of Assets. At the Closing (as defined in Section
1.5(a) below), the Sellers shall sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser shall purchase and accept from the Sellers, all
of the Sellers' rights, title and interests in and to the Purchased Assets, free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, Commissions (as defined in Section 2.9 hereof),
title defects, pledges, encroachments and burdens of every kind or nature
whatsoever ("Encumbrances") except as provided for in Section 1.3 (c) hereof
with respect to the Generator Leases, as defined in Section 1.3 below. The term
"Purchased Assets" means all of the assets, properties, rights, contractual
rights and claims of the Sellers in respect of the Business, tangible or
intangible, known or unknown, including, but not limited to, the following:
(a) The leasehold interest of the Sellers in and to those certain
colocation facilities (collectively, the "Datacenters") constructed and/or
operated by the Sellers at the locations set forth below (the "Leased
Properties"):
o Little Rock, AR - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
o Manchester, NH - ▇▇▇▇ ▇▇▇ ▇▇. (▇ ▇▇▇▇ ▇▇.), ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇▇▇, ▇▇ - ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ - ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇ ▇▇▇▇, ▇▇ - ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇▇, ▇▇ - ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
(b) Subject to Section 4.8 hereof, all right, title and interest of the
Sellers under the lease agreements in respect of the Leased Properties (the
"Leases"), each as more specifically set forth on Schedule 2.13(a) hereto.
(c) All leasehold improvements constructed and/or installed by the
Sellers and located at the Leased Properties as of the date hereof (the
"Improvements"), each as more specifically set forth on Schedule 2.13(a) hereto;
(d) All fixtures, furniture, machinery, computers, equipment and other
tangible personal property owned by the Sellers and currently located at the
Leased Properties, including the items set forth on Schedule 1.1(d) hereto;
(e) All rights, title and interest of the Sellers in and to the
build-out of each of the Datacenters, including, without limitation, any and all
racks, wiring, cages, power-distribution equipment, cabling and fuse panels,
each as more specifically set forth on Schedule 1.1(e) hereto;
(f) All customer contracts, licenses and agreements, including, without
limitation, those certain agreements, dated as of April 11, 2002, by and between
KMC Telecom VI LLC ("KMC") and the Seller or Sellers (the "KMC Agreement(s)"),
each as more specifically set forth on Schedule 2.12 hereto (collectively, the
"Assumed Colocation Agreements"), and any customer security deposits, letters of
credit or pre-paid service charges and all rights and claims thereunder;
(g) All rights under all warranties, representations, and guarantees
made by suppliers, manufacturers, and contractors;
(h) All rights under confidentiality, nondisclosure and similar
agreements related to the Purchased Assets;
(i) All books and records of the Sellers relating to the Purchased
Assets and/or the Business at the Leased Properties, including, without
limitation, any and all information with regard to customers at the Datacenters,
data processing records, employment and personnel records, records relating to
suppliers, supplier lists, cost information, vendor data, specifications and
drawings, correspondence and lists, product literature, artwork, design,
development and manufacturing files, quality records and other data in respect
thereof ("Books and Records");
(j) All operations manuals, methods and procedures to the extent the
same relate to the Purchased Assets and/or the Datacenters; and
(k) Any interest in and to any refund of taxes relating to the
Purchased Assets or the operations of the Datacenters to the extent such taxes
are for, or applicable to, any taxable period (or portion thereof) beginning
after the Closing Date.
1.2. Retained Assets. Notwithstanding the foregoing, the Sellers shall
retain, and the Purchased Assets shall not include, the following assets (the
"Retained Assets"): (i) the consideration to be delivered to the Sellers
pursuant to this Agreement; (ii) all other assets of the Sellers other than the
Purchased Assets; (iii) the Sellers' other rights under this Agreement or
pursuant to any of the Transaction Documents (as defined in Section 2.2 hereof);
(iv) each of the Seller's corporate charter, minute books, stock transfer books,
seal and other documents relating solely to the organization, maintenance and
existence of each of the Sellers as a corporation; (v) all claims, causes of
action and judgments in respect of any litigation matter and/or the Retained
Liabilities (as defined in Section 1.3 hereof); and (vi) all of the Sellers'
cash in banks, cash equivalents, bank and mutual fund accounts, trade and other
notes and accounts receivable, to the extent attributable to periods preceding
the Closing (subject to Section 4.10 hereof).
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1.3. Assumed Liabilities; Retained Liabilities. At the Closing, the
Purchaser shall assume from the Sellers and undertake to discharge only those
obligations of the Sellers arising from and after the Closing under (a) each of
the Assumed Colocation Agreements; (b) each of the Leases, subject to the
Sellers' ability, in accordance with Section 4.8 hereof, to obtain a Lease
Assignment for each of such Leases; and (c) the Generator Lease/Purchase
Agreements, dated July 31, 2001, January 24, 2001, May 17, 2001, and October 1,
2002 by and between Caterpillar Finance and the Seller or Sellers (the
"Generator Leases"), true and complete copies of which are attached hereto as
Exhibit A, subject to the Sellers' payment of the monthly payment due and owning
as of October 2002 (the "October Generator Payment") under the Generator Leases
(collectively, the "Assumed Liabilities"); provided, however, that the
liabilities and obligations set forth in clauses (a), (b) and (c) of this
Section 1.3 that arise, or are deemed to have arisen, as a result of any
default, breach or violation of such Agreements or Leases by the Sellers prior
to the Closing shall specifically not be, or deemed not to be, part of the
Assumed Liabilities and shall be included as part of the Retained Liabilities.
Other than the Assumed Liabilities, the Purchaser does not and shall not assume
or in any way be liable or responsible for or undertake to pay, perform, satisfy
or discharge any other liabilities, commitments, debts or obligations, whether
known or unknown, relating to the Business or not, presently existing or
hereafter arising, disclosed or undisclosed, absolute, contingent, inchoate,
fixed or otherwise, of the Sellers (the "Retained Liabilities") and the Sellers
shall pay, perform, discharge or satisfy, when due, in accordance with Section
4.6 hereof, all of the Retained Liabilities.
1.4. Purchase Price. The aggregate purchase price for the Purchased
Assets shall consist of the Purchaser's (i) payment of Three Million and Two
Hundred Fifty Thousand dollars ($3,250,000.00), and (ii) assumption of the
Assumed Liabilities (collectively, the "Purchase Price").
1.5. Closing.
(a) Closing. The transfer of the Purchased Assets and the assumption of
the Assumed Liabilities contemplated hereby shall be deemed to take place at a
closing (the "Closing") at the offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on or about October 31, 2002 (the
"Closing Date"), or on such other date as the Purchaser and the Sellers may
mutually agree to in writing, subject to the termination provisions set forth in
Section 6.1 hereof.
(b) Deliveries by the Purchaser. At the Closing, the Purchaser shall
deliver the following:
(i) A wire transfer of federal funds in accordance with
Section 1.4 pursuant to complete wire transfer instructions delivered
by Sellers to Purchaser in writing at least five days prior to Closing.
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(ii) An instrument of assumption in form and substance
reasonably satisfactory to the Seller;
(iii) A certified copy of resolutions of the Purchaser,
providing authority for the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
(iv) A certificate, dated the Closing Date, executed on behalf
of the Purchaser by a duly authorized officer of the Purchaser, to the
effect that the Purchaser has fulfilled the conditions specified in
Sections 5.2(a), 5.2(b) and 5.2(c); and
(v) Such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated
hereby.
(c) Deliveries by the Seller. At the Closing, the Sellers and/or the
Stockholders, as applicable, shall deliver the following:
(i) A general assignment and ▇▇▇▇ of sale for the Purchased
Assets in form and substance reasonably satisfactory to the Purchaser;
(ii) The Lease Assignment(s) (as defined in Section 4.8
hereof) and Estoppel Certificate(s) (as defined in Section 4.4 hereof)
or the New Lease(s) (as defined in Section 4.8 hereof), as applicable;
(iii) The Assignments of the Assumed Colocation Agreements (as
defined in Section 5.1(h) hereof) and any consents necessary to
effectuate the transactions contemplated hereby;
(iv) The Releases and/or Commission Releases (each, as defined
in Section 4.5 hereof), as applicable;
(v) Written evidence reasonably satisfactory to the Purchaser
of the Sellers' payment of the October Generator Payment;
(vi) Any necessary payoff and release letters from creditors
of the Sellers together with UCC-3 termination statements with respect
to any financing statements filed against the Purchased Assets;
(vii) A certificate signed by a duly authorized officer of the
Seller, providing authority for the execution, delivery and performance
of this Agreement and the transactions contemplated hereby;
(viii) An opinion of counsel to the Sellers in form and
reasonably satisfactory to the Purchaser;
(ix) A certificate, dated the Closing Date, executed on behalf
of each of the Sellers by a duly authorized officer of the Seller, to
the effect that the conditions specified in Sections 5.1(c), 5.1(d),
5.1(e) and 5.1(f) have been fulfilled; and
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(x) Such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated
hereby.
(d) Closing Agreements. At the Closing, the parties shall (or shall
cause the appropriate party to) execute, acknowledge and deliver such other
instruments or documents as may be necessary or appropriate to carry out the
transactions contemplated by this Agreement and to comply with the terms hereof.
1.6. Allocation of Purchase Price. The Purchase Price shall be
allocated as follows: Equipment of $840,000.00 and Goodwill of $2,688,280.00.
The Purchaser and the Sellers shall report the Federal, state and local income
and other tax consequences of the purchase and sale contemplated hereby in a
manner consistent with such allocation and shall not take any position
inconsistent therewith upon examination of any tax return, in any refund claim,
in any litigation, or otherwise.
1.7. Proration of Expenses. All accrued expenses associated with the
Leases and/or the Business, such as electricity, gas, water, sewer, telephone,
property taxes, security services and similar items, shall be prorated between
the Purchaser and the Sellers as of the Closing Date.
1.8. Passage of Title. Title to all of the Purchased Assets shall pass
from the Sellers to the Purchaser at the Closing, subject to the terms and
conditions of this Agreement. The Purchaser assumes no risk of loss to any of
the Purchased Assets prior to the Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS and the stockholders
The Sellers and the Stockholders each hereby represents and warrants to
the Purchaser as follows:
2.1. Due Organization and Qualification. Each of the Sellers is a
corporation duly incorporated, validly existing and in good standing under the
laws of Florida. Each of the Sellers has all corporate power and authority to
carry on the Business as now conducted (and as conducted at the Closing). Each
of the Sellers is duly qualified to transact business and is in good standing in
each jurisdiction in which the nature of the Business or the locations of the
Leased Properties requires such qualification, except where the failure to do so
would not have a material adverse effect on the Business or the Sellers'
operations, assets or condition (financial or otherwise).
2.2. Power and Authority. Each of the Sellers has the requisite
corporate power and authority, and the Stockholders are legally competent to,
execute and deliver this Agreement and all other agreements, schedules,
exhibits, documents and instruments contemplated by this Agreement
(collectively, the "Transaction Documents") and to perform its obligations
hereunder and thereunder. The execution, delivery and performance of the
Transaction Documents and the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of the
Seller. Each of the Transaction Documents has been duly executed and delivered
by the Sellers and the Stockholders and is, or will be, the valid and binding
obligation of the Sellers and/or the Stockholders, as the case may be,
enforceable against the Sellers and the Stockholders, as applicable, in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, moratorium, insolvency, reorganization or other similar
laws now or hereafter in effect generally affecting the enforcement of
creditors' rights, specific performance, injunctive or other equitable remedies.
When executed and delivered by the Sellers and the Stockholders at the Closing,
each of the Transaction Documents will be the valid and binding obligation of
the Sellers and the Stockholders, enforceable against the Sellers and the
Stockholders, as applicable, in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws now or hereafter in effect generally
affecting the enforcement of creditors' rights, specific performance, injunctive
or other equitable remedies.
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2.3. Compliance with Laws. Each of the Sellers is in compliance in all
material respects with all Federal, state, local and foreign laws, statutes,
ordinances, regulations, orders, judgments, injunctions, awards or decrees
(collectively, "Laws") applicable to it or any of its properties or operations.
The Sellers have not received any notice from any foreign, domestic, Federal,
state or local governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization, or any
regulatory administrative or agency, or political or other subdivision,
department or branch of any of the foregoing (a "Governmental Authority") of a
material violation or alleged material violation of any Law by it. The Sellers
have all licenses, permits, consents, orders, approvals or other authorizations
issued or granted by any Governmental Authority currently required under any law
(the "Permits") for the conduct of the Business and operation of each of the
Datacenters. The Permits are in full force and effect. The Sellers are in
compliance with all Permits, except where the failure to so comply has not had,
and could not reasonably be expected to have, a material adverse effect on the
Business, the Purchased Assets or the Leased Properties. The Sellers or the
Stockholders have not received written notice from any Governmental Authority of
any pending or threatened investigations or surveys that could reasonably be
expected to result in (a) the loss or revocation of any Permit or (b) the
suspension or cancellation of any Permit.
2.4. No Breach; Consents. Neither the execution and delivery of this
Agreement or any of the Transaction Documents to which the Sellers and the
Stockholders are or are to become a party, the consummation of the transactions
contemplated hereby or thereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof or thereof by the Sellers or the
Stockholders will: (i) contravene any provision of any certificate or articles
of incorporation or by-laws (the "Governing Documents") of the Seller; (ii)
conflict with, result in a breach of, constitute a default or an event of
default (or an event that might, with the passage of time or the giving of
notice or both, constitute a default or event of default) under any of the terms
of, result in the termination of, result in the loss of any right under, or give
to any other person or entity the right to cause such a termination of or loss
under, any of the Assumed Colocation Agreements or any other contract, agreement
or instrument by which any of the Purchased Assets may be bound or affected;
(iii) result in the creation, maturation or acceleration of any of the Assumed
Liabilities or any other liability of the Sellers affecting any of the Purchased
Assets (or give to any other Person (as defined below) the right to cause such a
creation, maturation or acceleration); (iv) violate any Laws or violate any
judgment or order of any Governmental Authority to which the Sellers are subject
and by which any of the Purchased Assets or Datacenters may be bound or
affected; or (v) result in the creation or imposition of any Encumbrance upon
any of the Purchased Assets or any of the Datacenters or give to any other
Person any interest or right therein. The term "Person" means an individual,
partnership (general or limited), corporation, joint venture, business trust,
limited liability company, cooperative, association or other form of business
organization, trust, estate or any other entity. Except for the consent of each
of the landlords of the Leased Properties (each, a "Landlord" and collectively,
the "Landlords") to the Lease Assignment, (each, a "Landlord's Consent" and
collectively, the "Landlords' Consents"), no consent, approval or authorization
of, or registration or filing with, any person or entity or Governmental
Authority is required in connection with the execution and delivery by the
Sellers or the Stockholders of this Agreement, the Assumed Colocation Agreements
or any of the Transaction Documents to which the Sellers or the Stockholders are
or are to become a party pursuant to the provisions hereof or the consummation
by the Sellers and the Stockholders of the transactions contemplated hereby or
thereby.
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2.5. Condition of Assets; Business; Title. The Purchased Assets have
been maintained in accordance with good business practice, are in good working
order and are reasonably suitable for the purposes for which they are used in
the Business. The Purchased Assets are all located at the Datacenters and
constitute, and on the Closing Date will constitute, all of the assets that are
necessary for the Purchaser to operate the Business in substantially the same
manner as such operations have heretofore been conducted through the date
hereof. The Improvements represent all improvements or alterations made at the
Datacenters. Except as set forth on Schedule 2.5 hereto, including the
Landlord's Consent, the Sellers have good, marketable and exclusive title to all
of the Purchased Assets, free and clear of all Encumbrances and, upon the
consummation of the transactions contemplated hereby and the Transaction
Documents, the Purchaser will acquire good, marketable and exclusive title to
all of such Purchased Assets, free and clear of all Encumbrances.
2.6. Sellers' Financial Information. The revenues for the Datacenters
for the three- (3) month period ended June 30, 2002, as reflected on Schedule
2.6(a) hereto (the "Revenues"), and the expenses for the Datacenter for the
three- (3) month period ended June 30, 2002, as reflected on Schedule 2.6(b)
hereto (the "Expenses"), have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") and fairly present in all
material respects the financial condition, Revenues, Expenses and results of
operations of the Sellers in respect of the operation of each of the Datacenters
in the ordinary course of business as of the dates and for the periods indicated
thereby. The Revenues do not, nor will the revenues reflected in the Updated
Revenues and Expenses (as defined in Section 4.9 hereof), reflect any accounts
receivable of the Sellers in respect of transactions that are more than ninety
(90) days past due, unless such customer has made a payment within thirty (30)
days from the date hereof.
2.7. Accounts Receivable. Schedule 2.7 hereto sets forth a true and
complete list of all accounts receivable, together with any unpaid interest or
fees accrued thereon or other amounts due with respect thereto, of the Sellers
in respect of the Datacenters as of August 31, 2002 (the "Accounts Receivable").
Each of the Accounts Receivable arose (i) pursuant to the Assumed Colocation
Agreements and (ii) from bona fide transactions in the ordinary course of
business consistent with the Sellers' past practices. To the knowledge of the
Sellers and the Stockholders, there are no setoffs or counterclaims in respect
of such Accounts Receivable.
2.8. Litigation. Except as set forth on Schedule 2.8 hereto, there are
no suits or actions, administrative, arbitration or other proceedings or
governmental investigations pending or, to Sellers' knowledge or the
Stockholders' knowledge, threatened against or affecting any of the Purchased
Assets or the Assumed Liabilities or the transactions contemplated by any of the
Transaction Documents. There are no judgments, orders, injunctions, decrees or
awards against the Sellers in respect of the Purchased Assets or the Assumed
Liabilities that are not satisfied or remain outstanding or that would prohibit
the execution and delivery of any of the Transaction Documents. The Sellers have
received no written claim that has not been resolved regarding any breach of
warranty, product liability or infringement relating to the Business, the
Purchased Assets or the Datacenters.
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2.9. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.9 hereto, the Sellers do not have any liabilities, commitments or
obligations (including any commissions that are owed by the Sellers or will
become due by Sellers to any third party in respect of the Purchased Assets
("Commissions")), whether accrued, absolute, contingent, continuing, future or
otherwise, affecting the Business or any of the Purchased Assets.
2.10. Absence of Certain Changes. Since May 31, 2002, the Sellers have
conducted the Business only in the ordinary course consistent with past
practice. Without limiting the generality of the foregoing sentence, since May
31, 2002, except as set forth on Schedule 2.10 hereto, there has not been any:
(i) material adverse change in the earnings, revenues, Purchased Assets,
Accounts Receivable, Assumed Liabilities, Business, colocation customers or
earning power or prospects in respect of the Business, Purchased Assets or the
Datacenters; (ii) damage or destruction to or loss of any of the Purchased
Assets or any portion of the Datacenters, whether or not covered by insurance;
(iii) creation of any Encumbrance on any of the Purchased Assets or the
Datacenters; (iv) sale, transfer, lease, license or other disposition of any of
the Purchased Assets (other than inventory in the ordinary course of business
consistent with past practice); (v) any failure to pay, perform, discharge or
satisfy, when due, any of the obligations set forth in clauses (i), (ii) and
(iii) of Section 1.3 hereof; (vi) creation, termination or amendment of, or
waiver of any right under, any of the Assumed Colocation Agreements or the
Leases; (vii) other than as contemplated by this Agreement or commitment by the
Sellers or the Stockholders to do any of the foregoing; or (viii) any
bankruptcy, reorganization, debt arrangement or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution, winding-up or liquidation
proceeding in respect of the Seller.
2.11. Taxes. The Sellers have no liability for any tax in respect of
the Purchased Assets or the Business.
2.12. Assumed Colocation Agreements; Compliance. Set forth on Schedule
2.12 hereto is a true and complete list and a brief description of each of the
Assumed Colocation Agreements, and any customer security deposits, letters of
credit or pre-paid service charges and all rights and claims thereunder. Each of
the Assumed Colocation Agreements is legal, valid, binding and enforceable and
is in full force and effect and is validly assignable to Purchaser. The Sellers
have performed all material obligations required to be performed by it under
each of the Assumed Colocation Agreements and is not in breach or default, and
is not alleged to be in breach or default, in any respect thereunder, and no
event has occurred (including the assignment of the Assumed Colocation
Agreements) and no condition or state of facts exists (or would exist upon the
giving of notice or the lapse of time or both) that would become or cause a
breach, default or event of default thereunder, would give to any person or
entity the right to cause such a termination or would cause an acceleration of
any obligation thereunder. Provided that the Sellers obtain all consents
required to be obtained from the other party or parties to the Assumed
Colocation Agreements by virtue of execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby in order to avoid
termination thereof, a breach or default thereunder or any other material change
or modification to the terms thereof, the consummation of the transactions
contemplated hereby will not cause, or result in, a default of, termination of,
or acceleration of any rights (including change of control payments) under any
of the Assumed Colocation Agreements. Except as set forth on Schedule 2.12
hereto, no consent or approval of any Person is necessary to assign to the
Purchaser, on the terms of the Transaction Documents, any and all rights and
interests of the Sellers in the Assumed Colocation Agreements. The Sellers have
delivered to the Purchaser true and complete copies of each of the written
Assumed Colocation Agreements. Except as set forth on Schedule 2.12 hereto, all
payments due to the Sellers by the Datacenter customers under the Assumed
Colocation Agreements are, as of the date hereof, current. Neither the Sellers
nor the Stockholders are currently renegotiating any of the Assumed Colocation
Agreements nor have the Sellers or the Stockholders received any notice of
non-renewal, intent to terminate or any other modification that would adversely
affect the rights of the Sellers with respect to any of the Assumed Colocation
Agreements. Neither the Sellers nor the Stockholders have any reason to believe
that any of the Datacenter customers under the Assumed Colocation Agreements
would not continue after the Closing under the same terms and provisions
thereunder. Except for the Assumed Colocation Agreements and the Leases, there
are no other agreements, contracts or understandings that are material to the
Business.
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2.13. Leased Properties.
(a) Schedule 2.13(a) hereto contains an accurate list and description
of all of the Sellers' leasehold interest in the Leased Properties and all of
the Improvements used in or necessary to conduct the operations of the Business
at each of such Leased Properties.
(b) Except as set forth on Schedule 2.13(b) hereto, the Sellers have
good and valid title to the leasehold estates conveyed under each of the Leases,
free and clear of all Encumbrances or other rights of occupancy or use for all
or any portion of any of the Leased Properties, options, covenants, conditions,
restrictions, rights of way, easements, encroachments (onto or by improvements
on such Properties) and any other matters affecting title, and the Sellers are
in exclusive possession of the property described thereunder with respect
thereto. Each of the Leases is valid and in full force and effect and is binding
and enforceable in accordance with its terms, and neither the Sellers nor any
other party to any such Leases (including, without limitation, any guarantor of
the Sellers' obligations thereunder) is in default under any of such Leases.
Except as provided on Schedule 2.13(b) hereto, none of the Leased Properties is
leased, sublet or assigned to any Person.
(c) The Datacenters and the Improvements made under any of the Leases,
conforms in all material respects with the applicable Leases and all applicable
Laws. All such Improvements are in good condition and repair, reasonable wear
and tear excepted, and are sufficient for the operation of the Sellers' Business
on the applicable Leased Properties.
(d) The Sellers have the right to quiet enjoyment of each of the Leased
Properties for the full term, including all renewal rights, of each of the
Leases or similar agreements relating thereto. The Sellers have not received any
written notice of any proposed, planned or actual curtailment of service of any
utility supplied to any of the Datacenters. Such public utilities are all
connected pursuant to valid permits, are all in good working order and are
adequate to service the operations of the Datacenters as currently conducted and
permit full compliance with all requirements of applicable Laws. The Sellers
have not received written notice of any pending, threatened or contemplated
action to take by eminent domain or otherwise to condemn any part of the Leased
Properties.
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(e) Schedule 2.13(e) hereto sets forth a true and complete list of all
contractors, subcontractors, materialmen and consultants (collectively, the
"Providers") who, within the eight (8) months preceding the date hereof, have
provided any services or materials in connection with any work, changes,
improvements, additions, repairs, installations or other alterations to any of
the Leased Properties (the "Alterations") made by, or on behalf of, the Sellers
in respect of any of the Leased Properties. All payments due and owing to the
Providers for the Alterations have been paid in full by the Sellers, and the
Sellers have provided the Purchaser with a copy of each release and satisfaction
of lien received by the Sellers from each of the Providers in respect of such
payments.
2.14. Environmental Matters. Except as disclosed on Schedule 2.14
hereto:
(a) Compliance; No Liability. The Sellers have operated the Business
and each of the Leased Properties in compliance with all laws, statutes,
regulations, rules or orders that relate to or otherwise impose Liability or a
standard of conduct concerning the discharge, emission, storage, treatment,
transportation, handling, release, threatened release, or disposal of Hazardous
Materials (as defined below), including, but not limited to, the Air Pollution
Control Act, as amended, the Federal Water Pollution Control Act, as amended,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Toxic Substances Control Act of 1976, as amended, and any other
similar foreign, federal, state or local statutes (collectively, "Environmental
Laws"). The Sellers are not subject to any liability, penalty or expense
(including legal fees), and the Purchaser will not suffer or incur any loss,
liability, penalty or expense (including legal fees) by virtue of any violation
of any Environmental Law by the Sellers on or in respect of any of the Leased
Properties occurring at or prior to the Closing or any environmental activity
conducted by the Sellers on or with respect to any of the Leased Properties at
or prior to the Closing. Within the last three (3) years, the Sellers have not
received any notice or order from any Governmental Authority advising it that
the Seller, in connection with the Business, is responsible for or a potentially
responsible party for remediation or paying for the cost of investigation or
remediation of any Hazardous Materials, nor has any of the Sellers entered into
any agreement pertaining thereto. "Hazardous Materials" means any pollutant,
contaminant, hazardous, radioactive or toxic substance, material, constituent or
waste, or any other waste, substance, chemical or material regulated under any
Environmental Law, including (i) petroleum, crude oil and any fractions thereof,
(ii) natural gas, synthetic gas and any mixtures thereof, (iii) asbestos and/or
asbestos-containing materials, (iv) radon and (v) polychlorinated biphenyls
("PCBs"), or materials or fluids containing PCBs.
(b) Treatment; CERCLIS. The Sellers have not treated, stored,
generated, recycled or disposed of any Hazardous Materials on any of the Leased
Properties, and no other Person, to each of the Seller's knowledge or the
Stockholders' knowledge, has treated, stored, recycled or disposed of any
Hazardous Materials on any part of the Leased Properties. There has been no
release by the Sellers of any Hazardous Materials at, on or under any of the
Leased Properties. The Sellers have not transported any Hazardous Materials or
arranged for the transportation of any Hazardous Materials to any location that
is listed or proposed for listing on the National Priorities List pursuant to
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
42 U.S.C. Sections 6901 et seq., as amended ("Superfund"), or the Comprehensive
Environmental Response Compensation Liability Information System List
("CERCLIS") or any other location that is the subject of Federal, state or local
enforcement action or other investigation that may lead to claims against the
Sellers for cleanup costs, remedial action, damages to natural resources, to
other property or for personal injury including claims under Superfund. None of
the Leased Properties is listed or, to the knowledge of the Sellers or the
Stockholders' knowledge (without due inquiry), proposed for listing on the
National Priorities List pursuant to Superfund, CERCLIS or any state or local
list of sites requiring investigation or cleanup.
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(c) Notices; Existing Claims; Certain Hazardous Materials. The Sellers
have not received any request for information, notice of claim, demand or other
notification that it is or may be potentially responsible with respect to any
investigation, abatement or cleanup of any threatened or actual release of any
Hazardous Materials. Except as set forth on Schedule 2.14(c) hereto, the Sellers
have not transported any Hazardous Materials for recycling, treatment, disposal,
other handling or otherwise to any of the Leased Properties.
2.15. Customer Relations. There exists no condition or state of facts
or circumstances involving the Sellers' customers, any customers or partners of
the Sellers' customers, suppliers, distributors or representatives in connection
with any of the Datacenters, including KMC, Qwest Communications International
Inc., MSN or AOL Time Warner, that the Sellers can reasonably foresee could
materially adversely affect the Business or the Purchased Assets after the
Closing Date.
2.16. Insurance. The Purchaser has been provided with a copy of each
insurance policy for the last three (3) years as to which the Sellers are the
owner, insured or beneficiary, whether on an "occurrence" or a "claims made"
basis, together with a summary of such policies and copies of certificates of
insurance executed by each insurer or its authorized agent evidencing such
insurance.
2.17. Books and Records. The Sellers have made and kept Books and
Records that, in reasonable detail, accurately reflect the activities and
business affairs of the Sellers in all material respects.
2.18. Finders' Fees. Neither the Seller, nor any of its officers,
directors or employees, including the Stockholders, have employed any broker or
finder or incurred any liability for any brokerage fee, commission or finders'
fee in connection with any of the transactions contemplated hereby or by any of
the Transaction Documents.
2.19. Accuracy of Information Furnished. No representation or warranty
by the Sellers or the Stockholders contained in this Agreement, including the
Schedules hereto, and no statement contained in any certificate or other
document furnished or to be furnished by or on behalf of the Sellers or the
Stockholders at the Closing contains or will contain as of the date such
representation and warranty is made or such Schedule or certificate is delivered
any untrue statement of a material fact or omits or will omit to state as of the
date such representation or warranty is made or such Schedule or certificate is
delivered any material fact that is necessary to make the statements contained
herein or therein not misleading.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
3.1. Due Organization and Qualification. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware. The Purchaser has all corporate power and authority to carry on its
business as now conducted.
3.2. Power and Authority. The Purchaser has the requisite corporate
power and authority to execute and deliver the Transaction Documents and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance of the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Purchaser. This Agreement has been
duly executed and delivered by the Purchaser and is, or will be, the valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, moratorium, insolvency, reorganization or other similar
laws now or hereafter in effect generally affecting the enforcement of
creditors' rights, specific performance, injunctive or other equitable remedies.
When executed and delivered by the Purchaser at the Closing, each of the
Transaction Documents will be the valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws now or hereafter in effect generally
affecting the enforcement of creditors' rights, specific performance, injunctive
or other equitable remedies.
3.3. No Breach; Consents. Neither the execution and delivery of any of
the Transaction Documents to which the Purchaser is or is to become a party, the
consummation of the transactions contemplated hereby or thereby nor the
compliance with or fulfillment of the terms, conditions or provisions hereof or
thereof by the Purchaser will: (i) contravene any of the Governing Documents of
the Purchaser; or (ii) violate any Law or violate any judgment or order of any
Governmental Authority to which the Purchaser is subject. No consent, approval
or authorization of, or registration or filing with, any person or entity or
Governmental Authority is required in connection with the execution and delivery
by the Purchaser of the Transaction Documents to which the Purchaser is or is to
become a party pursuant to the provisions hereof or the consummation by the
Purchaser of the transactions contemplated hereby or thereby.
3.4. Litigation. Except as set forth on Schedule 3.4 hereto, there are
no suits or actions, administrative, arbitration or other proceedings or
governmental investigations pending or, to Purchaser's knowledge, threatened
against or affecting any of the transactions contemplated by any of the
Transaction Documents. There are no judgments, orders, injunctions, decrees or
awards against the Purchaser that are not satisfied or remain outstanding and
that would prohibit the execution and delivery of any of the Transaction
Documents.
3.5. Finders' Fees. Neither the Purchaser nor any of its officers,
directors or employees has employed or dealt with any broker or finder or
incurred any liability for any brokerage fee, commission or finders' fee in
connection with any of the transactions contemplated hereby.
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ARTICLE IV.
CERTAIN COVENANTS
4.1. Conduct of Business Pending Closing. From and after the date
hereof and until the Closing Date or earlier termination hereof, unless the
Purchaser shall have otherwise consented in writing, the Sellers shall, and the
Stockholders shall cause the Sellers to, conduct its affairs as follows:
(a) Ordinary Course; Compliance. The Sellers shall use its best efforts
to conduct the Business only in the ordinary course and consistent with past
practice and shall not take any action inconsistent therewith. The Sellers
shall, in accordance with good business practice, maintain the Purchased Assets
in good condition in their current state of repair, excepting normal wear and
tear, make scheduled payments in accordance with the terms of the Assumed
Liabilities and shall comply in a timely fashion with the provisions of the
Leases and all of the Assumed Colocation Agreements and any of its other
agreements and commitments in respect of the Business. The Sellers shall keep
available the services of certain of its present employees at the Datacenters
and employ its best efforts consistent with past practices to preserve intact
the relationships and the goodwill of its suppliers, customers and others having
business relations with it in connection with the Datacenters. The Sellers shall
allow, at the Purchaser's expense, certain personnel selected by the Purchaser
to prepare the operations of the Datacenters by the Purchaser after the Closing.
The Sellers shall maintain in full force and effect its policies of insurance,
subject only to variations required by the ordinary operations of the Business,
or else shall obtain, prior to the lapse of any such policy, substantially
similar coverage with insurers of recognized standing.
(b) Transactions. The Sellers shall not: (i) sell, transfer or
otherwise dispose of any of the Purchased Assets; (ii) enter into any contract
or commitment, or modify or amend any of its existing contracts, other than in
the ordinary course of business, that will survive the Closing or otherwise
materially affect the use, operation or enjoyment of the Purchased Assets after
the Closing; (iii) enter into any contract or commitment, the performance of
which could be reasonably expected to extend the Closing Date; (iv) fail to pay,
perform, discharge or satisfy, when due, any of the obligations set forth in
clauses (i), (ii) and (iii) of Section 1.3 hereof; (v) incur or become subject
to, nor agree to incur or become subject to any debt, obligation or liability,
contingent or otherwise, except current liabilities and contractual obligations
in the ordinary course of business, (vi) take any action or omit to take any
action that could be reasonably expected to cause a breach or termination of any
of the Leases or any of the Assumed Colocation Agreements; or (vii) take any
other actions that could cause the representations and warranties in this
Agreement not to be true in any material respect on the Closing Date.
4.2. Access to and Inspection of the Purchased Assets; Books and
Records.
(a) Access to and Inspection of the Purchased Assets. Each of the
Sellers and the Stockholders covenants and agrees that from and after the date
of the execution of this Agreement until the Closing or earlier termination of
this Agreement, the Purchaser and its employees, contractors, agents and/or
representatives (including accountants, attorneys, environmental consultants and
engineers) (collectively, the "Purchaser's Representatives") may enter upon any
portion of the Datacenters or the Leased Properties from time to time during
reasonable business hours, or otherwise at a time agreed to by the Seller,
without any disruption of the normal conduct of the Business, and upon
reasonable notice to the Seller, for the purpose of inspections, making surveys
and testing, and examination of title and operating condition of the Purchased
Assets and the Leased Properties and showing the Datacenters to prospective
customers. The Sellers shall similarly make available to the Purchaser's
Representatives all of the properties, books, contracts, commitments, records,
officers, personnel, accountants (including independent public accountants and
their workpapers) and current customers of the Sellers in respect of the
Purchased Assets or the Leased Properties, and shall furnish the Purchaser all
such documents and copies of documents and all information with respect to the
Purchased Assets and Leased Properties as the Purchaser may reasonably request.
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(b) Books and Records. The Sellers covenant and agree that, from and
after the date of the execution of this Agreement until the Closing or earlier
termination of this Agreement, the Sellers shall make available to the
Purchaser's Representatives all financial statements, trial balances, accounts
receivable and accounts payable records, and fixed asset details for a period of
three (3) fiscal years prior to the Closing Date, including all documents
necessary for the Purchaser's accountants to conduct an audit for such time
period (the "Financial Statements"). The Purchaser shall have the right to have
audited financial statements prepared at Purchaser's cost and the Sellers shall
cooperate and assist Purchaser in preparing such audited financial statements,
including executing any documents required by the auditors. The Sellers shall
not destroy or dispose of any books, records or files relating to the Business
or the Purchased Assets to the extent that they pertain to the Business of the
Sellers prior to the Closing Date for a period of three (3) years from the
Closing Date or for the applicable statute of limitations for any tax liability.
4.3. Acquisition Proposals. The Sellers and the Stockholders shall not
(nor shall they permit any of their affiliates to) directly or indirectly,
solicit, initiate or encourage any inquiries or the making of any proposals
from, engage or participate in any negotiations or discussions with, provide any
confidential information or data to, or enter into (or authorize) any agreement
or agreement in principle with any person or announce any intention to do any of
the foregoing, with respect to any offer or proposal to acquire all or any part
of the Purchased Assets, whether by merger, purchase of capital stock or assets
or otherwise.
4.4. Fulfillment of Agreements. The Purchaser, the Stockholders and the
Sellers shall each use reasonable best efforts to cause all of those conditions
to the obligations of the other under Article V hereof that are not beyond his
or its reasonable control to be satisfied on or prior to the Closing and shall
use its reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement and the
Transaction Documents. Without limiting the foregoing, each of the Sellers and
the Stockholders shall, prior to the Closing, use reasonable best efforts to
obtain from each of the Landlords a Landlord's Consent and an estoppel
certificate (the "Estoppel Certificate") and any other consents (including the
consent to the assignment of the KMC Agreements) necessary to effectuate the
Closing.
4.5. Certain Transitional Matters. Each of the Sellers and the
Stockholders shall cooperate with and assist the Purchaser (at the Purchaser's
cost) and the Purchaser's Representatives in order to provide, to the extent
reasonably requested by the Purchaser, an efficient transfer of control of the
Business and the Purchased Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date, including,
without limitation: (i) sufficient notification, in a form approved by the
Purchaser, prior to the Closing, to all of the Datacenters customers (the
"Customers Notice") by the Sellers of this Agreement and the transactions
contemplated hereby, which notice shall instruct such customers to make all
payments, subject to and following the Closing, directly to the order of the
Purchaser and (ii) assistance with any attempts made by the Purchaser to hire
any of the Datacenters employees; provided, however, that, in no event shall the
Purchaser be obligated to hire any of such employees after the Closing. In that
regard, the Sellers and the Stockholders shall each use reasonable best efforts
to ensure that all of the Assumed Colocation Agreements, including the KMC
Agreements, and any rights under all warranties, representations and guaranties,
including those made by any of the Providers, under terms no less favorable than
those existing as of the date hereof, are properly assigned to the Purchaser by
the Closing. The Sellers shall notify the Purchaser immediately of any default
or breach, or any alleged default or breach by the Sellers or any counterparty
under the Leases or any of the Assumed Colocation Agreements. The Sellers also
shall not hire or obtain the services of any of the Providers to perform any
Alterations. To the extent that any Encumbrance in respect of Alterations exists
at any time from the date hereof until the Closing, the Sellers shall obtain an
appropriate release and satisfaction of lien, reasonably satisfactory to the
Purchaser (the "Releases"). To the extent that any Commissions are due or will
become due relating to the Business, Purchased Assets or Assumed Colocation
Agreements, the Sellers shall obtain an appropriate release, reasonably
satisfactory to the Purchaser (the "Commission Releases").
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4.6. Retained Liabilities. From and after the Closing, the Sellers
shall promptly pay, perform, discharge or satisfy, when due, all of the Retained
Liabilities.
4.7. Covenant Against Competition and Disclosure. The Sellers shall not
directly or indirectly: (i) for the period after the Closing Date through March
31, 2006, control (as hereinafter defined) the operation of any colocation
facility within a one hundred (100) mile radius, measured by automobile, of any
colocation facility owned and controlled, directly or indirectly, by the
Purchaser on the Closing Date, as set forth on Schedule 4.7 hereto; or (ii)
disclose to anyone, or use in competition with the Purchaser, any information
with respect to any confidential or secret aspect of the operations of the
Business. Each of the Sellers acknowledge that the remedy at law for breach of
the provisions of this Section 4.7 will be inadequate and that, in addition to
any other remedy the Purchaser may have, they will be entitled to an injunction
restraining any such breach or threatened breach, without any bond or other
security being required. If any court construes the covenant in this Section 4.7
or any part thereof, to be unenforceable because of its duration or the area
covered thereby, the court shall have the power to reduce the duration or area
to the extent necessary so that such provision is enforceable. Until the second
(2nd) anniversary of the Closing Date, the Sellers shall not directly or
indirectly solicit or offer employment to any person who is then an employee of
the Purchaser or was an employee of the Purchaser at any time after the Closing
to engage in any business similar to or in competition with the business of the
Sellers as it has been conducted prior to Closing. As used herein, the term
"control" shall mean, directly or indirectly, either voting or operational
management authority sufficient to determine the conduct of a business, or the
right to make financial, booking and/or personnel decisions for the business.
The ownership of fifty percent (50%) of the equity of a corporation or fifty
percent (50%) of an interest in a partnership shall be deemed control, with or
without any operational or any other authority.
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4.8. Lease Assignment; New Lease; Performance of Lease Obligations. On
or before the Closing, each of the Sellers shall use its reasonable best efforts
to obtain, with respect to each Lease, a Landlord's Consent in connection with
an assignment of such Lease to Purchaser or its designee, on terms no less
favorable than each of such Leases, including the form, amount and burndown of
the security deposit, and reasonably satisfactory to the Purchaser (each, a
"Lease Assignment" and collectively, the "Lease Assignments"); provided,
however, that, in the event that the Sellers shall not be able to obtain a Lease
Assignment for any of the Leases, the Purchaser, the Stockholders and the
Sellers each shall, with respect to such Lease, use his or its reasonable best
efforts to effect a new lease agreement between the Purchaser, or its designee,
and the Landlord under such Lease, on terms no less favorable than such Lease
and on such terms acceptable to the Purchaser in its sole and absolute
discretion (a "New Lease"). Prior to and up until the Closing Date, the Sellers
shall perform all of its obligations under the terms of the Leases. With respect
to each Lease Assignment, from and after the Closing Date, the Purchaser, or its
designee, shall perform all of the obligations of the Sellers under the terms of
the applicable Lease, and the Purchaser, or its designee, shall use its
reasonable best efforts to remove the Sellers from any post-Closing obligations
under the Leases.
4.9. Supplemental Disclosure. The Sellers agree that, with respect to
their representations and warranties made in this Agreement, they will have a
continuing obligation to promptly provide detailed disclosure to the Purchaser
with respect to any matter hereafter arising or discovered that, if existing or
known at the date of this Agreement and on the Closing Date, would have been
required to be set forth or described in the Schedules hereto; provided,
however, that none of such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of the Sellers or the schedules
herein, unless the Purchaser shall have consented thereto in writing. Within
five (5) days before the Closing, the Sellers shall provide to the Purchaser
updated information regarding the Revenues and Expenses as of the last day of
the month preceding the Closing (the "Updated Revenues and Expenses"), which
shall have been prepared in accordance with GAAP.
4.10. Receipt of Accounts Receivables. Prior to the Closing, the
Sellers shall make all arrangements, including providing the Customers Notice
and executing a power of attorney, necessary to ensure that the Purchaser, after
the Closing Date, will receive all of the Accounts Receivable; provided,
however, that, upon receipt thereof, the Purchaser shall, in turn, remit payment
thereof to the Seller; and provided, further, that although the Purchaser shall
use commercially reasonable efforts to collect the Accounts Receivable, the
Purchaser shall not, under no circumstances, be liable for any non-collection by
the Purchaser or the Sellers of such Accounts Receivable. Within one (1) day
before the Closing, the Sellers shall provide to the Purchaser an aged schedule
of the accounts receivable as of such date (the "Updated Accounts Receivable").
4.11. Further Assurances. The Purchaser, the Stockholders and the
Sellers hereby agree to execute and deliver at the Closing, such other
documents, certificates, agreements and other writings and to take such other
actions, including obtaining assignments (and consents thereto) of the Assumed
Colocation Agreements, each on terms no less favorable than those existing as of
the date hereof, and consents, as may be necessary or reasonably desirable, to
consummate the transactions contemplated hereby.
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ARTICLE V.
CONDITIONS TO CLOSING; TERMINATION
5.1. Conditions of Purchaser's Obligation to Close. The obligation of
the Purchaser to close under this Agreement is subject to the satisfaction of
the following conditions, any of which may be waived by the Purchaser in writing
at or prior to the Closing:
(a) Due Diligence. The Purchaser shall have completed by October 25,
2002, to its satisfaction, its business, legal, tax and accounting due
diligence.
(b) Financing. The Purchaser shall have obtained financing on terms
satisfactory to Purchaser in an amount sufficient to consummate the transaction
contemplated by this Agreement.
(c) Agreements and Conditions. On or before the Closing Date, the
Sellers shall have complied with and duly performed in all material respects all
agreements, covenants and conditions on its part to be complied with and
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(d) Representations and Warranties. The representations and warranties
of the Sellers contained in this Agreement, or otherwise made in connection with
the transactions contemplated hereby, shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date,
except for representations and warranties that contain materiality or knowledge
standards or qualifications, which representations and warranties shall be true
in all respects on and as of the Closing Date with the same force and effect as
if made on and as of such date (except as they may specifically relate to
another date).
(e) No Legal Proceedings. No court or governmental action or proceeding
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby, and on the Closing Date there will be no court
or governmental actions or proceedings pending or threatened against or
affecting Sellers that involve a demand for any judgment or liability, whether
or not covered by insurance, and that may result in any material adverse change
in the Business or any of the Purchased Assets.
(f) Absence of Material Changes. The Sellers shall have not suffered
any material adverse change in the Business or any of the Purchased Assets since
May 31, 2002.
(g) Certificate. The Purchaser shall have received a certificate dated
the Closing Date and executed by the Stockholders and an authorized officer of
Sellers to the effect that the conditions expressed in Sections 5.1(c), 5.1(d),
5.1(e) and 5.1(f) have been fulfilled.
(h) Consents. The Purchaser shall have obtained the assignments of the
Assumed Colocation Agreements ("Assignments of the Assumed Colocation
Agreements") and shall have received all consents necessary to effectuate this
Agreement (including the consent to the assignment of the KMC Agreements) and to
consummate the transactions contemplated hereby.
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(i) Lease Assignment; New Lease. The Sellers shall have obtained, in
respect of each of the Leases, the applicable Lease Assignment and Estoppel
Certificate or the Purchaser shall have executed a New Lease(s), as applicable.
(j) Releases; Commission Releases. The Sellers shall have received all
of the Releases and the Commission Releases.
(k) Opinion of Counsel. The Sellers shall have furnished to the
Purchaser an opinion of counsel for the Seller, dated as f the Closing Date, in
form and substance reasonably satisfactory to the Purchaser.
(l) Bills of Sale. The Purchaser shall have received such bills of
sale, assignments and other documents, in form and substance reasonably
satisfactory to the Purchaser, providing for the transfer or conveyance of the
Purchased Assets to the Purchaser.
(m) Updated Revenues and Expenses. The Purchaser shall have received a
copy of the Updated Revenues and Expenses from the Seller, which shall not
reflect a material decrease from the Revenues or a material increase from the
Expenses.
(n) Receipt of Accounts Receivable. The Purchaser shall have received
the Updated Accounts Receivable and the Sellers shall have made appropriate
arrangements, in accordance with Section 4.5 hereof, to ensure that the
Purchaser will receive the Accounts Receivable on behalf of the Sellers after
the Closing.
(o) Financial Statements. The Purchaser shall have received the
Financial Statements.
(p) Closing Deliveries. The Purchaser shall have received at or prior
to the Closing all documents set forth in this Section 5.1 and such other
documents, instruments, or certificates as the Purchaser may reasonably request,
including, without limitation, a certificate signed by an authorized
representative of the Sellers attesting to the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement.
(q) Releases and Commission Releases. The Purchaser shall have received
the Releases and the Commission Releases.
5.2. Conditions of the Sellers' Obligation to Close. The obligation of
the Sellers to close under this Agreement is subject to the following conditions
any of which may be waived by the Sellers in writing at or prior to the Closing:
(a) Agreements and Conditions. On or before the Closing Date, the
Purchaser shall have complied with and duly performed in all material respects
all agreements, covenants and conditions on its part to be complied with and
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(b) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date, except for representations and warranties that contain materiality
or knowledge standards or qualifications, which representations and warranties
shall be true in all respects on and as of the Closing Date with the same force
and effect as if made on and as of such date (except as they may specifically
relate to another date).
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(c) No Legal Proceedings. No court or governmental action or proceeding
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby.
(d) Closing Certificate. The Sellers shall have received a certificate
dated the Closing Date and executed by authorized officers of the Purchaser to
the effect that the conditions contained in Sections 5.2(a), 5.2(b) and 5.2(c)
have been fulfilled.
(e) Assumption. The Sellers shall have received such assumption
agreements and/or other documents, in form and substance reasonably satisfactory
to the Seller, providing for the assumption by the Purchase of the Assumed
Liabilities.
(f) Consents. The Sellers shall have received all consents necessary to
effectuate this Agreement and to consummate the transactions contemplated
hereby, unless the Purchaser shall have waived this condition, including,
without limitation, the consents necessary to effect an assignment of all of the
Assumed Colocation Agreements.
(g) Closing Deliveries. The Sellers shall have received at or prior to
the Closing all documents set forth in this Section 5.2 and such other
documents, instruments, or certificates as the Sellers may reasonably request,
including, without limitation, a certificate signed by authorized
representatives of the Purchaser attesting to the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement.
ARTICLE VI.
TERMINATION
6.1. Termination.
This Agreement may be terminated at any time prior to Closing:
(a) at any time by the mutual consent in writing of the parties hereto;
(b) by the Sellers or the Purchaser in writing if the Closing shall not
have occurred by November 30, 2002, but only if the Closing shall not have
occurred for a reason other than the breach by such terminating party of any of
its representations, warranties, covenants or agreements contained herein;
(c) at any time by the Purchaser in writing upon a material breach of
any of the representations, warranties, covenants or agreements of the Sellers
contained in this Agreement; provided, however, that the right to terminate this
Agreement pursuant to this Section 6.1(c) shall only be available to the
Purchaser after the Sellers have received written notice of such breach and has
been given a reasonable opportunity (of not less than ten (10) days) to sure (to
the extent curable) the same; or
(d) at any time by the Sellers in writing upon a material breach of any
of the representations, warranties, covenants or agreements of the Purchaser
contained in this Agreement; provided, however, that the right to terminate this
Agreement pursuant to this Section 6.1(d) shall only be available to the Sellers
after the Purchaser has received written notice of such breach and has been
given a reasonable opportunity (of not less than ten (10) days) to sure (to the
extent curable) the same.
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In the event of termination of this Agreement by the Sellers or the
Purchaser prior to the Closing as set forth above, this Agreement shall
forthwith terminate and there shall be no liability on the part of the Sellers
or the Purchaser; provided, however, that no party shall be relieved of any
loss, damage or liability occurring or sustained as a result of a termination
following such party's material breach of any representation, warranty, covenant
or agreement contained in this Agreement. Notwithstanding any termination of
this Agreement, the provisions of this Section 6 and Section 8 hereof shall
survive.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. Survival of Representations. The representations and warranties of
the Sellers in this Agreement or in any document delivered pursuant hereto shall
survive the Closing Date for a period of three (3) years, and shall then
terminate; provided, however, that (i) any such representation and warranty
shall survive the time it would otherwise terminate only with respect to claims
of which notice has been given as provided in this Agreement prior to such
termination and (ii) such time limitation shall not apply to the representations
and warranties set forth in Sections 2.2 (Power and Authority), 2.5 (Condition
of Assets; Business; Title), 2.11 (Taxes), 2.14 (Environmental Matters), 2.18
(Finders' Fee), 3.2 (Power and Authority) and 3.5 (Finder's Fee) hereof, which
shall survive until the expiration of the applicable statute of limitations.
7.2. Indemnitors; Indemnified Persons. For purposes of this Section 7,
each party that, pursuant to this Section 7, shall agree to indemnify any other
person or entity shall be referred to, as applicable, as the "Indemnitor", and
each such person and entity who is entitled to be indemnified by any Indemnitor
shall be referred to as the "Indemnified Person" with respect to such
Indemnitor.
7.3. Indemnity of Seller. Subject to Section 7.1 hereof, the Sellers
and the Stockholders hereby agree to defend, indemnify, hold harmless and
reimburse the Purchaser and its affiliates, directors, officers, agents,
consultants, successors and employees from and against any and all claims,
liabilities, losses, damages and expenses incurred by such Indemnified Persons
(including reasonable attorneys' fees and disbursements) that shall be caused by
or related to or shall arise out of: (a) any breach (or alleged breach in
connection with a claim asserted by a third party) of any representation or
warranty of the Sellers or the Stockholders, as applicable, contained in this
Agreement and in any certificate delivered by the Sellers or the Stockholders,
as applicable, pursuant hereto; (b) any breach of any covenant or agreement of
the Sellers or the Stockholders, as applicable, contained in this Agreement; and
(c) any failure by the Sellers or the Stockholders, as applicable, to satisfy
the Retained Liabilities and the operation of the Business prior to the Closing,
and shall reimburse such Indemnified Persons for all costs and expenses
(including reasonable attorneys' fees and disbursements) as they shall be
incurred, in connection with paying, investigating, preparing for or defending
any action, claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, that shall be caused by or
related to or shall arise out of such breach (or alleged breach in connection
with a claim asserted by a third party), whether or not any such Indemnified
Person shall be named as a party thereto and whether or not any liability shall
result therefrom. The Sellers and the Stockholders further agree that he or it
shall not, without the prior written consent of the Purchaser settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder unless such settlement, compromise or consent shall include an
unconditional release of each Indemnified Person under this Section 7.3 from all
liability arising out of such claim, action, suit or proceeding.
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7.4. Indemnity of Purchaser. Subject to Section 7.1 hereof, the
Purchaser hereby agrees to defend, indemnify, hold harmless and reimburse the
Sellers and its affiliates, directors, officers, agents, consultants, successors
and employees, including the Stockholders, from and against any and all claims,
liabilities, losses, damages and expenses incurred by them (including reasonable
attorneys' fees and disbursements) that shall be caused by or related to or
shall arise out of: (a) any breach (or alleged breach in connection with a claim
asserted by a third party) of any representation or warranty of the Purchaser
contained in this Agreement; (b) any breach of any covenant or agreement of the
Purchaser contained in this Agreement and in any certificate delivered by
Purchaser and/or Parent pursuant hereto; and (c) any failure by the Purchaser to
satisfy the Assumed Liabilities and the operation of the Business after the
Closing, and shall reimburse such Indemnified Persons for all costs and expenses
(including reasonable attorneys' fees and disbursements) as shall be incurred,
in connection with paying, investigating, preparing for or defending any action,
claim, investigation, inquiry or other proceeding, whether or not in connection
with pending or threatened litigation, that shall be caused by or related to or
shall arise out of such breach (or alleged breach in connection with a claim
asserted by a third party), whether or not such Indemnified Persons shall be
named as a party thereto and whether or not any liability shall result
therefrom. The Purchaser further agrees that it shall not, without the prior
written consent of the Sellers or the Stockholders settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
unless such settlement, compromise or consent shall include an unconditional
release of each Indemnified Person under this Section 7.4 from all liability
arising out of such claim, action, suit or proceeding.
7.5. Procedures for Indemnification; Defense. Promptly after receipt by
an Indemnified Person of notice of the commencement of any action or proceeding
with respect to which indemnification may be sought hereunder, such Indemnified
Person shall notify the Indemnitor of the commencement of such action or
proceeding; provided, however, that failure to so notify the Indemnitor shall
not relieve the Indemnitor from any liability that the Indemnitor may have
hereunder or otherwise, unless the Indemnitor shall be materially prejudiced by
such failure. If the Indemnitor shall so elect, the Indemnitor shall assume the
defense of such action or proceeding, including the employment of counsel
reasonably satisfactory to such Indemnified Person, and shall pay the fees and
disbursements of such counsel. In the event, however, that such Indemnified
Person shall reasonably determine in its judgment that having common counsel
would present such counsel with a conflict of interest or alternative defenses
shall be available to an Indemnified Person or if the Indemnitor shall fail to
assume the defense of the action or proceeding in a timely manner, then such
Indemnified Person may employ separate counsel to represent or defend it in any
such action or proceeding and the Indemnitor shall pay the reasonable fees and
disbursements of such counsel; provided, however, that the Indemnitor shall not
be required to pay the fees and disbursements of more than one (1) separate
counsel for all Indemnified Persons in any jurisdiction in any single action or
proceeding. In any action or proceeding the defense of which the Indemnitor
shall assume, the Indemnified Person shall have the right to participate in (but
not control) such litigation and to retain its own counsel at such Indemnified
Person's own expense except as otherwise provided above in this Section 7.5, so
long as such participation does not interfere with the Indemnitor's control of
such litigation.
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7.6. Limitation on Indemnification. Notwithstanding any provision of
this Section 7 to the contrary, no Indemnified Person shall be entitled to
assert any claim for indemnification in respect of claims for breach of
representations or warranties under each of Sections 7.3(a) and 7.4(a) hereof
until such time as claims for indemnification thereunder shall exceed $5,000;
provided, however, that the dollar amount of such indemnification obligations
may not exceed, in the aggregate, the amount of the Purchase Price to the extent
actually paid (the "Claims Limitation"), unless the Indemnitor shall have
provided information to the Purchaser or the Seller, as the case may be, in
connection herewith, or made representations or warranties hereunder, that, in
either case, were fraudulent or made in bad faith, in which event the Claims
Limitation shall not apply; and provided, further, that the Purchaser's
post-Closing obligations under Section 4.10 hereof shall not be subject to the
provisions of this Section 7.
7.7. Exclusive Remedy. Each of the Purchaser, the Stockholders and the
Sellers hereby acknowledges and agrees that, from and after the Closing that
(absent fraud and subject to applicable Law), his or its sole exclusive remedy
(at law or equity) with respect to any and all claims against the other party
shall be made pursuant to the indemnification provisions set forth in this
Section 7.
ARTICLE VIII.
MISCELLANEOUS
8.1. Costs and Expenses. The Purchaser and the Sellers shall each pay
their respective costs and expenses incurred in connection with the negotiation,
preparation, execution and performance of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, all fees and expenses of agents,
representatives, counsel, brokers or finders and accountants. All transfer taxes
incurred as a result of the transfer of the Purchased Assets shall be paid by
the Seller.
8.2. Further Assurances. Each party shall, at any time and from time to
time on and after the Closing Date, upon request by the other party and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Purchased Assets to the requesting
party.
8.3. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when delivered by hand or by
facsimile transmission, when telexed, or upon receipt when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
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(a) if to the Purchaser, to:
Access Integrated Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(b) if to the Seller or Sellers, to:
R.E. ▇▇▇▇▇▇▇▇, Inc. d/b/a ColoSolutions ▇.▇. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Colo Solutions Global Services, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
(c) if to the Stockholders, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Any party hereto may change the address to which notice to it, or
copies thereof, shall be addressed, by giving notice thereof to the other
parties hereto in conformity with the foregoing.
8.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such jurisdiction
8.5. Transferability. This Agreement and all the rights and powers
granted hereby shall bind and inure to the benefit of the parties hereto and
their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto, except
that the Purchaser may make such assignments to any affiliate of the Purchaser,
provided, that the Purchaser remains liable hereunder.
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8.6. Amendment and Waiver. To be effective, any amendment or waiver
under this Agreement must be in writing and be signed by the party against whom
enforcement of the same is sought. Neither the failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or to insist
upon compliance by any other party with its obligations hereunder, nor any
custom or practice of the parties at variance with the terms hereof shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance.
8.7. Entire Agreement. This Agreement and the Schedules and Exhibits
hereto set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written.
8.8. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
8.10. No Third-Party Beneficiaries.
This Agreement is not intended, and shall not be deemed, to confer upon
or give any Person (including, without limitation, any past or current employee
of the Business), except the parties hereto (and, with respect to Article VII
hereof, the Indemnitor and the Indemnified Person) and their respective
successors and permitted assigns any remedy, claim, liability, reimbursement,
cause of action or other right under or by reason of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PURCHASER:
ACCESS INTEGRATED TECHNOLOGIES, INC.
By: /s/ A. ▇▇▇▇ ▇▇▇▇
---------------------------------
Name: A. ▇▇▇▇ ▇▇▇▇
Title: President
STOCKHOLDERS:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
SELLERS:
R.E. ▇▇▇▇▇▇▇▇, INC. D/B/A COLOSOLUTIONS
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
R.E. ▇▇▇▇▇▇▇▇, INC. D/B/A COLOSOLUTIONS
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
COLO SOLUTIONS GLOBAL SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
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