EXHIBIT 10.38
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UNIT PURCHASE AGREEMENT
by and among
U.S. TELESOURCE, INC.
and
ANSCHUTZ DIGITAL MEDIA, INC.
Dated as of June 21, 2000
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UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT, dated as of June 21, 2000 (this "Agreement"),
by and among U.S. Telesource, Inc., a Delaware corporation ("Purchaser"), and
Anschutz Digital Media, Inc., a Colorado corporation ("Seller").
RECITALS
A. Seller and Purchaser each own 50% (or 96,395,214) of the issued and
outstanding Class A Units of Slingshot Networks, LLC, a Delaware
limited liability company ("Slingshot").
B. Seller desires to sell to Purchaser 48,197,607 Class A Units of
Slingshot (the "Units"), and Purchaser desires to purchase the Units
from Seller.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"Affiliate" shall mean, as to any Person (i) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person, (ii) any corporation or organization (other than a
Subsidiary of such Person) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (iii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, and (iv) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person or who is a
director or officer of such Person or any of its parents or Subsidiaries. The
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with") as applied to any Person means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or other ownership interest, by contract or otherwise. Notwithstand-
ing the foregoing, except as otherwise expressly provided, Purchaser and any of
its Affiliates that would constitute Affiliates of Seller only by virtue of
being Affiliates of Qwest Communications International Inc. shall be deemed not
to be Affiliates of Seller for the purposes of this Agreement.
"Agreement" shall have the meaning set forth in the introductory paragraph
to this Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banks in Denver, Colorado are authorized or obligated by law or
executive order to close.
"Class A Units" shall mean Class A units of membership interest in
Slingshot.
"Closing" shall have the meaning set forth in Section 3.1 hereof.
"Closing Date" shall have the meaning set forth in Section 3.1 hereof.
"Damages" shall have the meaning set forth in Section 8.2(a) hereof.
"Existing Operating Agreement" shall mean the amended and restated limited
liability company operating agreement of Slingshot as in effect on the date
hereof.
"Governmental Authority" shall mean any foreign, national, federal, state
or local judicial, legislative, executive or governmental regulatory authority.
"Liabilities" shall mean debts, liabilities, commitments, obligations,
duties and responsibilities of any kind and description, whether absolute,
accrued, contingent, monetary or nonmonetary, direct or indirect, matured or
unmatured or of any other nature, including, but not limited to, liabilities on
account of taxes, other governmental charges or lawsuits brought, whether or not
of a kind required by generally accepted accounting principles to be set forth
on a financial statement.
"Liens" shall mean any lien, pledge, mortgage, security interest, lease,
charge, option, right of first refusal, easement, servitude, transfer re-
striction under any shareholder or similar agreement, or any other encumbrance
of any nature whatsoever.
"Note" shall have the meaning set forth in Section 2.2.
"Person" shall mean an individual, a corporation, a partnership, limited
liability company, an association, a trust or other entity or organization.
"Purchase Price" shall have the meaning set forth in Section 2.2 hereof.
"Purchaser" shall have the meaning set forth in the introductory paragraph
to this Agreement.
"Purchaser Indemnified Parties" shall mean Purchaser and its successors,
assigns, Affiliates, agents and employees.
"Restated Operating Agreement" shall mean the amended and restated limited
liability company operating agreement of Slingshot to be executed on the Closing
Date in the form attached hereto as Exhibit B.
"Seller" shall have the meaning set forth in the introductory paragraph to
this Agreement.
"Seller Indemnified Parties" shall mean Seller and its successors, assigns,
Affiliates, agents and employees.
"Slingshot" shall have the meaning set forth in the first recital to this
Agreement.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other organization, whether incorporated or unincorporated, of
which such Person or any other subsidiary of such person beneficially owns a
majority of the voting or equity interests.
"Taxes" shall mean all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any Governmental Authority, including income, gross
receipts, excise, property, sales, gain, use, license, capital stock, transfer,
franchise, payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto.
Section 1.2 Terms Generally. The definitions in Sections 1.1 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" even if not followed
actually by such phrase unless the context expressly provides otherwise. Unless
otherwise expressly defined, terms defined in the Agreement shall have the same
meanings when used in any Exhibit and terms defined in any Exhibit shall have
the same meanings when used in the Agreement or in any other Exhibit. The words
"herein," "hereof," "hereto" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The phrase "made available" in this Agreement shall mean that the
information referred to has been made available by the party in question. The
phrases "the date of this Agreement," "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to the
date set forth in the introductory paragraph of this Agreement. References to
"dollars" or "$" in this Agreement shall mean United States dollars unless the
context provides otherwise.
ARTICLE II
PURCHASE AND SALE OF UNITS
Section 2.1 Transfer of Units. On the Closing Date and subject to the terms
and conditions set forth in this Agreement, the Seller will sell, convey,
assign, transfer and deliver the Units to the Purchaser, free and clear of all
Liens.
Section 2.2 Purchase Price. Subject to this Article II, the total
consideration (the "Purchase Price") to be paid by Purchaser to Seller for the
Units shall be $48,197,607. Payment of $4,819,760.70 shall be made by the
Purchaser by wire transfer payable to the order of Seller at Closing, with the
balance of the Purchase Price in the amount of $43,377,846.30 being payable by
the Purchaser to the Seller by means of a promissory note (the "Note") in the
form attached hereto as Exhibit C.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The delivery of the Units pursuant to Section 2.1 and
the payment of the Purchase Price pursuant to Section 2.2 (hereinafter called
the "Closing") shall take place at 10:00 a.m. (Denver time) at the offices of
▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, on June 21,
2000 or on such other date, time and place as may be mutually agreed upon by the
parties hereto. The date on which the Closing occurs is referred to herein as
the "Closing Date." Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, the parties hereto agree that the closing of the
transactions contemplated herein shall be deemed to take effect at 12:01 a.m.
(Denver time) on the Closing Date.
Section 3.2 Closing Deliveries.
(a) By Seller. At the Closing, Seller shall deliver or cause to be
delivered to the Purchaser the following:
(i) the certificate described in Section 7.2(c) here- of; and
(ii) an executed copy of the Restated Operating Agreement.
(b) By the Purchaser. At the Closing, Purchaser shall deliver or cause to
be delivered to Seller:
(i) the certificate described in Section 7.3(c) hereof;
(ii) the cash portion of the Purchase Price;
(iii) an executed copy of the Note; and
(iiii) an executed copy of the Restated Operating Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
Section 4.1 Organization; Authorization and Validity. Seller is a
corporation organized under the laws of the State of Delaware. Seller is duly
organized, validly existing and in good standing and has full power and
authority to carry on its business as presently conducted. Seller has full
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by it pursuant hereto and
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by Seller of this Agreement and the other documents and
instruments to be executed and delivered by Seller pursuant hereto, and the
consummation by Seller of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action and no other corporate
act or proceeding on the part of Seller is necessary to authorize the execution
and delivery by Seller of this Agreement or the other documents or instruments
to be executed and delivered by Seller pursuant hereto, or the consummation by
Seller of the transactions contemplated hereby or thereby. This Agreement and
the other documents and instruments to be executed and delivered by Seller
pursuant hereto have been duly and validly executed and delivered by Seller and,
assuming this Agreement and the other documents and instruments to be executed
and delivered by Seller pursuant hereto are the valid and binding obligations of
such other Persons party hereto or thereto, constitutes a valid and binding
obligation of Seller enforceable against Seller in accordance with its terms,
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
Section 4.2 No Conflict. Neither the execution, delivery or performance by
Seller of this Agreement nor the consummation of the transactions contemplated
hereby and compliance by Seller with any of the provisions hereof or thereof
will (a) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws of Seller, (b) require any consent,
approval or notice under, violate or result in the violation of, conflict with
or result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
result in the termination of, accelerate the performance required by or result
in a right of termination or acceleration, result in the loss of a material
benefit under or result in the creation of any Lien upon any of the properties
or assets of Seller under any of the terms, conditions or provisions of any
material contractual obligation of Seller or (c) violate any order, writ,
injunction, decree, statute, rule or regulation of any Governmental Authority
applicable to Seller or to which any of its properties or assets may be bound,
except in such case as would not materially impair or delay Seller in the
consummation of the transactions contemplated hereby.
Section 4.3 Ownership of Units. The Units are owned by Seller free and
clear of all Liens, other than any restrictions imposed by federal and state
securities laws. Upon the consummation of the transactions contemplated hereby,
Purchaser will acquire good title to the Units free and clear of all Liens,
other than the restrictions on subsequent transfers imposed by federal and state
securities laws.
Section 4.4 Governmental Consents. No consent, order or authorization of,
or registration, declaration or filing with, any Governmental Authority is
required in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby by Seller.
Section 4.5 Units. Except as set forth in the Existing Operating Agreement,
there are no subscriptions, options, warrants, calls, rights, contracts,
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, transfer or voting of the Units, including any rights of
conversion or exchange under any outstanding securities or other instruments.
Section 4.6 No Undisclosed Liabilities. To the knowledge of ADMI, Slingshot
has no Liabilities that would be material to Slingshot taken as a whole, except
for such Liabilities as (a) are reflected on Slingshot's balance sheetdated
March 31, 2000 or (b) were incurred since March 31, 2000 in the ordinary course
of business consistent with past practices and which individually and in the
aggregate have not had and could not reasonably be expected to have a material
adverse effect on the business and operations of Slingshot taken as a whole.
Section 4.7 Absence of Certain Changes. To the knowledge of ADMI, since
October 22, 1999 there have not been any developments or events which have had
or could reasonably be expected, with the passage of time, to have, a material
adverse effect on the business and operations of Slingshot taken as a whole.
Section 4.8 Brokers, Finders, Etc. Seller has not employed and is not
subject to the valid claim of, nor has Seller incurred any Liability that would
be payable by Seller, for any brokerage, finder's or other fees or commissions
of any broker, finder or other financial intermediary in connection with the
transactions contemplated by this Agreement.
Section 4.9 Other Information. No representations or warranty of Seller in
this Agreement, nor any statement, certificate or other document furnished or to
be furnished by Seller to Purchaser pursuant to this Agreement, contains any
untrue statements or a material fact, or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 5.1 Organization; Authorization and Validity. Purchaser is a
corporation organized under the laws of the State of Delaware. Purchaser is duly
organized, validly existing and in good standing and has full power and
authority to carry on its business as presently conducted. Purchaser has full
corporate power and authority to enter into this Agreement nd the other
documents and instruments to be executed and delivered by it pursuant hereto and
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by Purchaser of this Agreement and the other documents and
instruments to be executed and delivered by Purchaser pursuant hereto, and the
consummation by Purchaser of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action and no other
corporate act or proceeding on the part of Purchaser is necessary to authorize
the execution and delivery by Purchaser of this Agreement or the other documents
or instruments to be executed and delivered by Purchaser pursuant hereto, or the
consummation by Purchaser of the transactions contemplated hereby or thereby.
This Agreement and the other documents and instruments to be executed and
delivered by Purchaser pursuant hereto have been duly and validly executed and
delivered by Purchaser and, assuming this Agreement and the other documents and
instruments to be executed and delivered by Purchasers pursuant hereto are the
valid and binding obligations of such other Persons a party hereto or thereto,
constitutes a valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, except that (a) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (b) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 5.2 No Conflict. Neither the execution, delivery or performance by
Purchaser of this Agreement and the Note nor the consummation of the
transactions contemplated hereby and compliance by Purchaser with any of the
provisions hereof or thereof will (a) conflict with or result in any breach of
any provision of the certificate of incorporation or bylaws of Purchaser, (b)
require any consent, approval or notice under, violate or result in the
violation of, conflict with or result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by or result in a right of termination or acceleration,
result in the loss of a material benefit under or result in the creation of any
Lien upon any of the properties or assets of Purchaser under any of the terms,
conditions or provisions of any material contractual obligation of Purchaser or
(c) violate any order, writ, injunction, decree, statute, rule or regulation of
any Governmental Authority applicable to Purchaser or to which any of its
properties or assets may be bound, except in such case as would not materially
impair or delay Purchaser in the consummation of the transactions contemplated
hereby.
Section 5.3 Governmental Consents. No consent order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby by Purchaser.
Section 5.4 Brokers, Finders, Etc. Purchaser has not employed, and is not
subject to the valid claim of, nor has Purchaser incurred any liability that
would be payable by Purchaser, for any brokerage, finder's or other fees or
commissions of any broker, finder or other financial intermediary in connection
with the transactions contemplated by this Agreement.
Section 5.5 Other Information. No representations or warranty of Purchaser
in this Agreement, nor any statement, certificate or other document furnished or
to be furnished by Purchaser to Seller pursuant to this Agreement, contains any
untrue statements or a material fact, or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 5.6 Purchase for Investment. Purchaser is acquiring the Units for
investment purposes and not with a view toward any resale or distribution
thereof. Purchaser acknowledges that the securities to be acquired in accordance
herewith have not been registered for the purpose of the transactions
contemplated by this Agreement or otherwise under the Securities Act of 1933, as
amended, or under any state securities laws. urchaser will not sell or otherwise
distribute all or any portion of the securities acquired hereunder except in
compliance with applicable laws relating to the sale or other distribution of
securities.
ARTICLE VI
COVENANTS
Section 6.1 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto agrees to use commercially reasonable efforts to take, or cause
to be taken, all actions 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.
(b) In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
shall use their commercially reasonable efforts to take, or cause to be taken,
all such necessary actions.
Section 6.2 Filings and Consents. The parties hereto shall use all
commercially reasonable efforts to obtain and to cooperate in obtaining any
consent, approval, authorization or order of, and in making any registration or
filing with, any Governmental Authority or other third party required in
connection with the execution, delivery or performance of this Agreement and the
other documents and instruments to be executed pursuant hereto.
Section 6.3 Publicity. Without the prior consent of the other party hereto,
which consent shall not be unreasonably withheld or delayed, neither of the
parties hereto shall, nor shall any of them permit Affiliates which any of them
control to, issue or cause the publication of any press release or other public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby except as may be required by law or by obligations pursuant
to any listing agreement with a national securities exchange. A party making any
statement or announcement pursuant to the requirements of applicable law or the
listing agreement of a national securities exchange shall provide a copy thereof
to the other parties hereto to the extent possible prior to issuing such
statement or announcement.
Section 6.4 Expenses. Whether or not the transactions contemplated hereby
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such costs and expenses.
Section 6.5 No Liens. Seller covenants and agrees that, except for actions
taken to implement this Agreement and the transactions contemplated hereby or as
consented to by Purchaser, from and after the date of this Agreement and until
the Closing Date Seller will not sell, transfer, encumber, grant or make any
commitment to grant, any Liens upon, or otherwise dispose of the Units.
Section 6.6 Further Assurances. From and after the Closing Date, Seller and
Purchaser shall promptly execute, acknowledge and deliver any other assurances
or documents reasonably requested by another party hereto to permit such other
party to satisfy its obligations hereunder or to evidence title, or to provide
such other party with the benefits enumerated in this Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to the Obligations of Purchaser and Seller. The
obligations of each party hereto are subject to the satisfaction (or waiver) at
or prior to the Closing of the following conditions:
(a) No Injunction or Litigation. No temporary restraining order,
preliminary or permanent injunction or other order or decree which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, and no statute, rule or regulation shall have been enacted by
any Governmental Authority which makes the consummation of the transactions
contemplated hereby illegal. No litigation shall have been commenced and be
continuing that seeks to prevent consummation of the transactions contemplated
hereby or that seeks material damages from Purchaser, Seller or any of their
Affiliates, in connection with the transactions contemplated hereby.
(b) Consents. All consents, approvals, permits or authorizations required
to be obtained, declarations or filings required to be made and waiting periods
or terminations required to have occurred prior to the Closing from or with any
Governmental Authority in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, shall
have been obtained, made or occurred.
Section 7.2 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to effect the Closing is subject to the satisfaction (or waiver by
Purchaser) at or prior to the Closing, of the following conditions:
(a) Representation and Warranties. The representations and warranties of
Seller contained herein shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Closing.
(b) Covenants. Seller shall have performed in all respects the covenants
and obligations required to be performed by it on or prior to the Closing.
(c) Certificate. Seller shall have furnished Purchaser with a certificate
dated the Closing Date, signed on its behalf by an authorized signatory of
Seller, to the effect that the conditions set forth in Sections 7.2(a) and (b)
have been satisfied.
(d) Seller Deliveries. Seller shall have duly executed, if called for, and
delivered to Purchaser each document, instrument and other writing required to
be delivered by Seller pursuant to Section 3.2(a).
Section 7.3 Conditions to the Obligations of Seller. The bligations of
Seller to effect the Closing is subject to the satisfaction (or waiver by
Seller) on or prior to the Closing, of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Purchaser contained herein shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Closing.
(b) Covenants. Purchaser shall have performed in all respects the covenants
and obligations required to be performed by it at or prior to the Closing.
(c) Certificate. Purchaser shall have furnished Seller with a certificate
dated the Closing Date, signed on its behalf by an authorized signatory of
Purchaser, to the effect that the conditions set forth in Sections 7.3(a) and
(b) have been satisfied.
(d) Purchaser Deliveries. Purchaser shall have executed, if called for, and
delivered to Seller each document, instrument and other writing required to be
delivered by Purchaser pursuant to Section 3.2(b).
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties. Each of the
representations and warranties made by Purchaser and Seller in this Agreement
shall terminate on the date which is 12 months from the Closing Date; provided,
however, that the representations and warranties set forth in Section 4.3 shall
survive indefinitely. In the event notice of any claim for indemnification under
Section 8.2 or 8.3 hereof shall have been given within the applicable survival
period, the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved. The covenants and agreements of the parties set forth in this
Agreement and the indemnification obligations of the parties hereunder shall
survive indefinitely except as expressly provided herein.
Section 8.2 Indemnification by Seller.
(a) Subject to the other provisions of this Article VIII, Seller shall
indemnify, defend and hold harmless the Purchaser Indemnified Parties from and
against any and all costs, expenses, losses, damages and liabilities (including
reasonable attorneys' fees and expenses)("Damages") suffered by any of the
Purchaser Indemnified Parties to the extent resulting from, arising out of, or
incurred with respect to, or (in the case of claims asserted against any of the
Purchaser Indemnified Parties by a third party) alleged to result from, arise
out of or have been incurred with respect to, (i) any breach of or inaccuracy in
any representation or warranty as of the date made or as of the Closing Date of
Seller contained in this Agreement and (ii) any breach of any covenant of any of
Seller contained in this Agreement.
(b) In no event shall Seller be liable to the Purchaser Indemnified Parties
with respect to any breaches of representations and warranties unless the
aggregate Damages therefrom exceed $250,000, and then only to the extent the
Damages exceed $250,000. In no event shall the aggregate liability of Seller for
Damages resulting from breaches of the representations and warranties set forth
in Article IV exceed $1,000,000; provided, however, that no such limitation
shall apply to Damages incurred by Purchaser resulting from breaches by Seller
of the representations set forth in Section 4.3.
Section 8.3 Indemnification by Purchaser.
(a) Subject to the other provisions of this Article VIII, Purchaser shall
indemnify, defend and hold harmless the Seller Indemnified Parties from and
against any and all Damages suffered by any of the Seller Indemnified Parties to
the extent resulting from, arising out of, or incurred with respect to, or (in
the case of claims asserted against any of the Seller Indemnified Parties by a
third party) alleged to result from, arise out of or have been incurred with
respect to, (i) any breach of or inaccuracy in any representation or warranty as
of the date made or as of the Closing Date of Purchaser contained in this
Agreement and (ii) any breach of any covenant of any of Purchaser contained in
this Agreement.
(b) In no event shall Purchaser be liable to the Seller Indemnified Parties
with respect to any breaches of representations and warranties unless the
aggregate Damages therefrom exceed $250,000, and then only to the extent the
Damages exceed $250,000. In no event shall the aggregate liability of Purchaser
for Damages resulting from breaches of the representations and warranties set
forth in Article V exceed $1,000,000.
Section 8.4 Notice and Resolution of Claim.
(a) An indemnified party under this Agreement shall promptly give written
notice to the indemnifying party after obtaining knowledge of any third party
claim or litigation against the indemnified party as to which recovery may be
sought against the indemnifying party because of the indemnity set forth in
Sections 8.2 and 8.3, specifying in reasonable detail the claim or litigation
and the basis for indemnification; provided, however, that the failure of the
indemnified party promptly to notify the indemnifying party of any such matter
shall not release the indemnifying party, in whole or in part, from its
obligations under this Article VIII except to the extent the indemnified party's
failure to so notify in breach of this Section 8.4(a) materially prejudices the
indemnifying party's ability to defend against such third party claim or
litigation. The indemnified party shall permit the indemnifying party to assume
the defense of any such claim, litigation or any litigation resulting from such
third party claim.
(b) If the indemnifying party assumes the defense of any such third party
claim or litigation, the obligations of the indemnifying party under this
Agreement shall include taking all steps necessary in the investigation, defense
or settlement of such claim or litigation (including the retention of legal
counsel) and holding the indemnified party harmless from and against any and all
losses caused by or arising out of any settlement approved by the indemnifying
party or any judgment in connection with such claim or litigation. The
indemnifying party shall not, in the defense of such claim or litigation,
consent to entry of any judgment (except with the written consent of the
indemnified party) or enter into any settlement (except with the written consent
of the indemnified party): (i) that does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the indemnified party a
complete release from, all liability in respect of such claim or litigation, or
(ii) the effect of which is to permit any injunction, declaratory judgment,
other order or other equitable relief to be entered, directly or indirectly,
against any indemnified party. The indemnifying party shall permit the
indemnified party to participate in such defense or settlement through counsel
chosen by the indemnified party, with the fees and expenses of such counsel
borne by the indemnified party.
(c) Failure by the indemnifying party to notify the indemnified party of
its election to assume the defense of any such claim or litigation by a third
party within 30 days after notice thereof has been given to the indemnifying
party shall be deemed a waiver by the indemnifying party of its right to assume
the defense of such claim or litigation. If the indemnifying party does not
assume the defense of such claim or litigation by a third party, the indemnified
party may defend or settle such clam or litigation in such matter as the
indemnified party may deem appropriate and may settle such claim or litigation
on such terms as it may deem appropriate.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time prior
to Closing:
(a) by written agreement of Purchaser and Seller;
(b) by Seller or Purchaser, by giving written notice of such termination to
the other party, if the Closing shall not have occurred on or prior to June 21,
2000; provided, however, that the right to terminate this Agreement under this
Section 9.1(b) shall not be available to any party whose failure to perform any
material covenant or obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date;
(c) by either Purchaser or Seller by giving written notice of termination
to the other party, if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties set forth in
this Agreement on the part of the other party, which breach is not cured within
10 days following written notice given by the terminating party to the party
committing such breach, or which breach, by its nature, cannot be cured prior to
the Closing; provided, however, that the right to terminate this Agreement under
this Section 9.1 shall not be available if at the time the terminating party is
in material breach of any representation, warranty, covenant or other agreement
contained herein; or
(d) by either Purchaser or Seller by written notice of termination to the
other party if any Governmental Authority of competent jurisdiction shall have
issued any statute, rule, regulation, order, decree or injunction or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such statute, rule, regulation,
order, decree or injunction or other action shall have become final.
Section 9.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 9.1 hereof, this Agreement shall thereafter
become void and have no effect, and no party thereto shall have any liability to
any other party hereto or any of its respective Affiliates, officers or
employees, except for the obligations of the parties hereto contained in this
Section 9.2 and in Sections 10.1, 10.5, 10.6 and 10.8 hereof, and provided that
nothing contained in this Section 9.2 shall relieve any party from liability for
a breach of any provision of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by facsimile, provided, however, that the facsimile is
promptly followed by telephone confirmation thereof to the appropriate person at
the address set forth below, or at such other address as may be designated in
writing hereafter, in the same manner, by such person.
To Seller:
Anschutz Digital Media, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
One ▇▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Purchaser:
U.S. Telesource, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
1999 Avenue of the Stars
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Any such notice shall be deemed delivered (a) on the date delivered if by
personal delivery, (b) on the date upon which the return receipt is signed or
delivery is refused or the notice is designed by the postal authorities as a not
deliverable, as the case may be, if mailed by registered or certified mail, (c)
on the next succeeding business day if sent by national courier service, or (d)
on the date telecommunicated if by telecopier if confirmed by telephone
confirmation.
Section 10.2 Amendment, Waiver. Any provision of this Agreement may be
amended or waived if, and only if such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Seller, or in the case of
a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 10.3 Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto; provided that any party may assign any of its rights
and obligations hereunder in whole or in part to any of its respective
Affiliates.
Section 10.4 Entire Agreement. This Agreement (including all Exhibits
hereto) contains the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and under-
standings, oral or written, with respect to such matters.
Section 10.5 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Purchaser, Seller or their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement.
Section 10.6 Expense. All costs and expenses incurred by Purchaser in
connection with this Agreement and the transactions contemplated hereby, shall
be borne by Purchaser and all costs and expenses incurred by Seller in
connection with this Agreement and the transactions contemplated hereby shall be
borne by Seller.
Section 10.7 Governing Law; Jurisdiction; Service of Process. This
Agreement shall be governed by the laws of the State of Colorado, its rules of
conflict of laws notwithstanding. Purchaser and Seller hereby agree and consent
to be subject to the non-exclusive jurisdiction of the federal and state courts
of the State of Colorado in any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby. Each party hereby
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by the delivery of such process to such party at the
address and in the manner provided in Section 10.1.
Section 10.8 Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 10.9 Transfer and Similar Taxes. Notwithstanding any other
provision of this Agreement to the contrary, Purchaser and Seller shall each pay
when due 50% of all sales, property, use, privilege, transfer, documentary,
gains, stamp, duties, recording and similar Taxes and fees (including any
penalties, interest or additions) imposed upon any party incurred in connection
with the transactions contemplated by this Agreement.
Section 10.10 Headings. The heading references herein and in the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement, and shall not be deemed to limit or affect any of the provisions
hereof.
[Signature page follows]
Signature Page
SIGNATURES
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to
be executed as of the date first written above.
U.S. TELESOURCE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
ANSCHUTZ DIGITAL MEDIA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TABLE OF CONTENTS
Title Page
ARTICLE I DEFINITIONS AND TERMS......................................1
Section 1.1 Certain Definitions........................................1
Section 1.2 Terms Generally............................................3
ARTICLE II PURCHASE AND SALE OF UNITS.................................3
Section 2.1 Transfer of Units..........................................3
Section 2.2 Purchase Price.............................................3
ARTICLE III THE CLOSING................................................4
Section 3.1 Closing....................................................4
Section 3.2 Closing Deliveries.........................................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...................4
Section 4.1 Organization; Authorization and Validity...................4
Section 4.2 No Conflict................................................5
Section 4.3 Ownership of Shares........................................5
Section 4.4 Governmental Consents......................................5
Section 4.5 Units......................................................5
Section 4.5 Units......................................................6
Section 4.6 Brokers, Finders, Etc......................................6
Section 4.7 Other Information..........................................6
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER................6
Section 5.1 Organization; Authorization and Validity...................6
Section 5.2 No Conflict................................................7
Section 5.3 Governmental Consents......................................7
Section 5.4 Brokers, Finders, Etc......................................7
Section 5.5 Other Information..........................................7
Section 5.6 Purchase for Investment....................................7
ARTICLE VI COVENANTS..................................................8
Section 6.1 Commercially Reasonable Efforts............................8
Section 6.2 Filings and Consents.......................................8
Section 6.3 Publicity..................................................8
Section 6.4 Expenses...................................................8
Section 6.5 No Liens...................................................8
Section 6.6 Further Assurances.........................................8
ARTICLE VII CONDITIONS TO CLOSING......................................9
Section 7.1 Conditions to the Obligations of Purchaser and Seller......9
Section 7.2 Conditions to the Obligations of Purchaser.................9
Section 7.3 Conditions to the Obligations of Seller....................9
ARTICLE VIII SURVIVAL AND INDEMNIFICATION..............................10
Section 8.1 Survival of Representations and Warranties................10
Section 8.2 Indemnification by Seller.................................10
Section 8.3 Indemnification by Purchaser..............................11
Section 8.4 Notice and Resolution of Claim............................11
ARTICLE IX TERMINATION...............................................12
Section 9.1 Termination...............................................12
Section 9.2 Effect of Termination.....................................12
ARTICLE X MISCELLANEOUS.............................................13
Section 10.1 Notices...................................................13
Section 10.2 Amendment, Waiver.........................................14
Section 10.3 Assignment................................................14
Section 10.4 Entire Agreement..........................................14
Section 10.5 Parties in Interest.......................................14
Section 10.6 Expense...................................................14
Section 10.7 Governing Law; Jurisdiction; Service of Process...........15
Section 10.8 Specific Performance......................................15
Section 10.9 Transfer and Similar Taxes................................15
Section 10.10 Headings..................................................15
EXHIBIT LIST
Exhibit A:........Restated Operating Agreement
Exhibit B:........Promissory Note
[EXHIBIT A
RESTATED OPERATING AGREEMENT]
EXHIBIT B
PROMISSORY NOTE
PROMISSORY NOTE
$43,377,846.30 Date: June 21, 2000
FOR VALUE RECEIVED, the undersigned U.S. Telesource, Inc., a Delaware
corporation, promises to pay to the order of Anschutz Digital Media, Inc.
(together with its registered assigns, "Holder") at Denver, Colorado (or such
other place as the Holder may designate in writing to the undersigned) the
principal sum of FORTY-THREE MILLION THREE HUNDRED AND SEVENTY-SEVEN THOUSAND
EIGHT HUNDRED AND FORTY-SIX DOLLARS AND THIRTY CENTS ($43,377,846.30) on
December 21, 2000 (the "Payment Date"), together with interest on the unpaid
principal balance hereof, computed on the basis of a 360-day year of twelve
30-day months for the actual number of days elapsed, (1) at the rate of 8% per
annum from the date hereof until the principal amount hereof shall have become
due and payable, and (2) to the extent permitted by law, in the event the
Payment Date occurs subsequent to December 21, 2000, until such time as the
principal and any accrued interest hereon is paid in full at a rate per annum
equal to 5% over the rate of interest published in the Wall Street Journal from
time to time as the "base" or "prime" rate. This is the Note referred to in the
Unit Purchase Agreement, dated as of June 21, 2000, among the undersigned and
Anschutz Digital Media, Inc., a Colorado corporation.
This Note is subject to the terms and conditions of, and entitled to the
benefits of the Unit Purchase Agreement. Capitalized terms not defined herein
shall have the meanings given in the Unit Purchase Agreement.
No delay or failure on the part of the Holder in the exercise of any right
or remedy hereunder, under the Unit Purchase Agreement or at law or in equity,
shall operate as a waiver thereof, and no single or partial exercise by the
Holder of any right or remedy hereunder, under the Unit Purchase Agreement or at
law or in equity shall preclude or estop another or further exercise thereof or
the exercise of any other right or remedy. Principal and interest on this Note
shall be payable and paid in lawful money of the United States of America.
The undersigned and all endorsers waive presentment, notice of dishonor and
protest.
Time is of the essence of this Note and, in case this Note is collected by
law or through an attorney at law, or under advice therefrom, the undersigned
agree to pay all costs of collection, including reasonable attorneys'fees.
The provisions of this Note shall be construed and interpreted and all
rights and obligations of the parties hereunder determined in accordance with
the laws of the State of Colorado.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed and
delivered in Denver, Colorado, in its corporate name, by and through its duly
authorized officers, as of the day and year first above written.
U.S. TELESOURCE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Director
By its signature below, Qwest Communications International Inc., a Delaware
corporation and through a wholly owned subsidiary the indirect owner of all of
the outstanding capital stock of U.S. Telesource, Inc., hereby guarantees the
payment and performance of this Note without further presentment, demand or
other notification or obligation on the part of the Holder hereof in the event
the Notes is not fully paid (including principal and all interest thereon) by
December 21, 2000.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Drake S. Tempest
Name: Drake S. Tempest
Title: Executive Vice President and General Counsel
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Director