ASSET PURCHASE AGREEMENT

 

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND CONSTRUCTION		1
1.1	Definitions.	1
1.2	Certain Interpretive Matters.	9
1.3	Recitals.	10
ARTICLE 2 PURCHASE AND SALE		10
2.1	Acquired Assets.	10
2.2	Excluded Assets.	11
2.3	Retained Right of Use.	13
ARTICLE 3 PURCHASE PRICE		13
3.1	Purchase Price.	13
3.2	Payment of Cash Purchase Price.	13
3.3	Allocation of Consideration	13
3.4	Apportionment of Income and Expenses	13
ARTICLE 4 LIMITED ASSUMPTION OF LIABILITIES		14
4.1	Assumption of Liabilities.	14
4.2	Excluded Liabilities.	14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER		15
5.1	Organization.	15
5.2	Authority.	15
5.3	Non-Contravention.	15
5.4	Financial Matters.	16
5.5	Governmental Consents.	16
5.6	Compliance with Laws	16
5.7	Environmental Matters.	16
5.8	Permits.	17
5.9	Litigation, etc.	17
5.10	Employees and Benefits.	17
5.11	Ownership and Transfer of Acquired Assets.	18
5.12	Assets used by the Business.	18
5.13	Contracts.	18
5.14	Assigned Receivables.	19
5.15	Taxes.	19
5.16	Existing Condition.	20
5.17	Labor Matters	20
5.18	Insurance Policies.	20
5.19	Transactions with Affiliates.	20
5.20	Real Estate.	20
5.21	Brokers, Finders, etc.	23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER		23
6.1	Organization.	23
6.2	Authority.	23
6.3	Non-Contravention.	24
6.4	Governmental Consents.	24

 

 

 

6.5	Litigation, etc.	24
6.6	Brokers, Finders, etc.	24
6.7	Financial Capacity.	24
6.8	Ability to Perform Assumed Contracts.	24
6.9	Opportunity for Independent Investigation.	25
ARTICLE 7 ADDITIONAL AGREEMENTS		25
7.1	Conduct of the Business.	25
7.2	Access to Information	26
7.3	Mutual Cooperation; Further Assurances	27
7.4	Updating of Schedules.	29
7.5	Employees.	29
7.6	Public Disclosures.	29
7.7	“As Is” Condition of the Acquired Assets.	30
7.8	Bulk Sales.	30
7.9	Tax Allocations	30
7.10	Use of Name.	30
7.11	Confidentiality.	30
7.12	Insurance Proceeds, Litigation Rights.	31
7.13	Notice of Litigation.	31
7.14	Exclusivity.	31
7.15	Title Commitments; Survey; Searches.	32
7.16	Deed.	33
ARTICLE 8 CONDITIONS TO CLOSING		34
8.1	Conditions to the Obligations of Seller and Buyer.	34
8.2	Conditions to Obligations of Seller.	34
8.3	Conditions to Obligations of Buyer.	35
ARTICLE 9 CLOSING		37
9.1	Closing Date.	37
9.2	Buyer Deliveries.	37
9.3	Seller Deliveries.	38
ARTICLE 10 TERMINATION OF AGREEMENT		38
10.1	Termination.	38
10.2	Effect of Termination.	39
ARTICLE 11 INDEMNIFICATION		39
11.1	Survival of Representations and Warranties.	39
11.2	Indemnification.	40
11.3	Limitations on Indemnity.	42
11.4	Claim Procedures	44
11.5	Additional Procedures for Third-Party Claims	44
11.6	Reduction of Losses	45
11.7	Subrogation.	46
11.8	No Double Recovery.	46
11.9	Treatment of Indemnity Payments Between the Parties.	46
ARTICLE 12 GENERAL		46
12.1	Notices.	46

 

 

 

12.2	Further Assurances; Asset Returns.	47
12.3	Expenses.	47
12.4	Non-Assignability.	48
12.5	Amendment; Waiver.	48
12.6	Exhibits and Schedules.	48
12.7	No Third Party Beneficiaries.	48
12.8	Governing Law.	49
12.9	Consent to Jurisdiction.	49
12.10	Entire Agreement.	49
12.11	Severability.	49
12.12	Counterparts; Facsimile Signatures.	49
12.13	Waiver of Jury Trial.	50

 

Exhibits
Exhibit A		—		Assumption Agreement
Exhibit B		—		Bill of Sale and Assignment
Exhibit C		—		Assignment and Assumption of Lease
				C.1 — NY Lease
				C.2 — VA Lease — September 3, 1997
				C.3 — VA Lease — January 30, 1998
Exhibit D		—		Real Property Documents
				D.1 — Real Property Deed
				D.2 — Easement
Exhibit E		—		Seller Colocation Agreement
				E.1 — Omnibus Agreement
				E.2 — Deed of Colocation Lease (VA2)
				E.3 — Colocation Agreement (VA1)
				E.4 — Colocation Agreement (NY1)
				E.5 — Colocation Agreement (NY2)
				E.6 — Conduit License Agreement (VA1)
Exhibit F		—		Transition Services Agreement
Exhibit G		—		Landlord Estoppel Certificate
				G.1 — NY Lease
				G.2 — VA Lease — September 3, 1997
				G.3 — VA Lease — January 30, 1998
Exhibit H		—		Title Affidavits
Exhibit I		—		Audit Representation Letter
Exhibit J		—		Joint Escrow Instruction Letter

 

 

 

Schedules
Schedule A		Data Center Facilities
Schedule 1.1(a)		Colocation Services
Schedule 1.1(b)		Knowledge — Seller
Schedule 1.1(c)		Knowledge — Buyer
Schedule 1.1(d)		Personal Property Permitted Liens
Schedule 1.1(e)		Real Property Permitted Liens
Schedule 1.1(f)		Colocation Space
Schedule 2.1(a)(i)		Owned Real Property
Schedule 2.1(a)(ii)		Real Property Leases
Schedule 2.1(a)(iii)		Equipment
Schedule 2.2(i)(y)		Retained Contracts
Schedule 2.2(i)(z)		Non-Assignable Contracts
Schedule 2.2(k)		Conduit & Fiber Optic Cables
Schedule 2.2(n)		Other Excluded Assets
Schedule 2.3		Acquired Assets Subject to Retained Right to Use
Schedule 3.3		Purchase Price Allocation
Schedule 4.1(d)		Other Assumed Liabilities
Schedule 5.1		Jurisdictions in which Seller is Authorized to do Business
Schedule 5.3		Exceptions to No Conflicts
Schedule 5.4		Financial Statements
Schedule 5.5		Governmental Consents
Schedule 5.6		Exception to Compliance with Laws
Schedule 5.7		Environmental Matters
Schedule 5.8		Licenses
Schedule 5.10(a)/(b)		Employees and Benefit Plans
Schedule 5.11(c)		Third Parties at Owned Real Property or Leased Real Property
Schedule 5.13(a)		Colocation Contracts
Schedule 5.13(b)		Other Assumed Contracts
Schedule 5.13(c)		Assumed Contract Payment Disputes and Defaults
Schedule 5.15		Tax Matters
Schedule 5.16		Existing Conditions
Schedule 5.18		Insurance Claims
Schedule 5.20(c)/(d)		Real Estate Matters
Schedule 5.20(g)		Notices of Special Tax Assessments
Schedule 5.21		Seller Broker Agreements
Schedule 7.5		Employees to Whom Employment Shall be Offered by Buyer
Schedule 7.15		Title Commitments
Schedule 8.3(h)		Required Employees

 

 

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”), is made and entered into effective as of September 27, 2006 (the “ Execution Date ”), by and between Digital Above, LLC, a Delaware limited liability company (“ Buyer ”), and AboveNet Communications, Inc., a Delaware corporation (“ Seller ”).

R E C I T A L S :

Seller provides Colocation Services at the data center facilities specified on Schedule A (the “ Business ”).

Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all right, title and interest of Seller in and to all of the tangible and intangible assets, properties and rights owned by Seller and used by Seller principally in connection with the operation of the Business, and in connection therewith, Buyer is willing to assume certain liabilities of Seller relating thereto, all upon the terms and subject to conditions contained herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, covenants and agreements herein contained, the parties agree as follows:

ARTICLE 1

DEFINITIONS AND CONSTRUCTION

1.1           Definitions .  Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below:

“ Acquired Assets ” has the meaning given to such term in Section 2.1(a).

“ Additional Remedy Ticket ” means a Colocation Contract arising after the Execution Date and prior to Closing as a result of the issuance of “remedy tickets” in the Ordinary Course of Business by Seller; provided that such additional “remedy tickets” do not result in aggregate post-Closing expenses in excess of $50,000 and where non-overhead expenses are incurred such “Remedy Tickets” have offsetting revenues.

“ Affiliate ” or “ affiliate ” of any specified Person means any Person that, directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with or of, such entity.  The term “Control” (including, with correlative meaning, the terms “controlled by” and “under common Control with”), as used with respect to any entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise.

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“ Agreement ” has the meaning given to such term in the introductory paragraph to this Agreement.

“ Assigned Receivables ” has the meaning given to such term in Section 2.1(a) (v).

“ Assumed Contracts ” means the Real Property Leases, Colocation Agreements, Other Assumed Contracts and other Contracts included in the Acquired Assets.

“ Assumed Liabilities ” has the meaning given to such term in Section 4.1.

“ Assumption Agreement ” means the Assumption Agreement, substantially in the form attached hereto as Exhibit A .

“ Bill of Sale ” means the Bill of Sale, substantially in the form attached hereto as Exhibit B .

“ Business ” has the meaning given to such term in the recitals to this Agreement.

“ Business Day ” means a day other than a Saturday, a Sunday or a day on which banks are open for domestic and foreign exchange business in New York City, New York.

“ Buyer ” has the meaning given to such term in the introductory paragraph to this Agreement.

“ Buyer Basket Exclusions ” has the meaning given to such term in Section 11.3(b).

“ Buyer’s Exception Notice ” has the meaning given to such term in Section 7.15(d).

“ Buyer Losses ” has the meaning given to such term in Section 11.2(a).

“ Cash Purchase Price ” has the meaning given to such term in Section 3.1(a).

“ Claim ” has the meaning given to such term in Section 11.4.

“ Closing ” has the meaning given to such term in Section 9.1.

“ Closing Date ” has the meaning given to such term in Section 9.1.

“ Closing Employee Election Notice has the meaning given to such term in Section 8.3(h).

“ Closing Employee Notice ” has the meaning given to such term in Section 8.3(h).

“ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

“ Colocation Contract ” means any Contract pursuant to which Seller grants any Person the right to lease, sublease, license or otherwise physically occupy or use any portion of the Owned

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Real Property or the Leased Real Property or agrees to provide any Colocation Services to any Person at the Owned Real Property or the Leased Real Property (“ Colocation Rights ”), provided, however, in any case where such Colocation Rights are granted under a Contract pursuant to which Seller provides services in addition to Colocation Rights (whether such additional services are documented by means of a separate purchase order relating to such Contract or the same purchase order), the term Colocation Contract shall refer only to the portions of such Contract relating to the Colocation Rights.

“ Colocation Services ” means the services listed on Schedule 1.1(a) .

“ Confidentiality Agreement ” means that certain Confidentiality Agreement, dated February 6, 2006, executed by Buyer or one of its Affiliates in connection with the transaction contemplated hereby.

“ Consent ” means any License of, filing or registration with, or notice to, any Person or Governmental Authority.

“ Contracts ” means all contracts, commitments, agreements and other legally binding arrangements, written or oral, to which Seller is a party or by which any of its assets is bound.

“ Customer Prepayments ” has the meaning given to such term in Section 2.1(a)(viii).

“ Customer Security Deposits ” has the meaning given to such term in Section 2.1(a)(viii).

“ Debt ” shall mean, as of any date, (without duplication) with respect to any Person, any indebtedness outstanding, secured or unsecured, contingent or otherwise, which is for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or representing the balance deferred and unpaid of the purchase price of any property (excluding, without limitation, any balances that constitute trade payables) and shall also include, to the extent not otherwise included (i) any capital lease obligations determined in accordance with GAAP, (ii) obligations of Persons other than such Person secured by a lien to which the property or assets owned or held by such Person is subject, whether or not the obligation or obligations secured thereby shall have been incurred or assumed by such Person, (iii) all indebtedness of others of the types described in the other clauses of this definition (including all dividends of other Persons) the payment of which is guaranteed, directly or indirectly, by such Person or that is otherwise its legal liability or which such Person has agreed to purchase or repurchase or in respect of which such Person has agreed contingently to supply or advance funds (whether or not such items would appear upon the balance sheet of the guarantor), (iv) all obligations for the reimbursement of any obligation or on any letter of credit, banker’s acceptance or similar credit transaction, and (v) and obligations under any currency or interest rate swap, hedge or similar protection device of any such Person.  Notwithstanding any other provision of the foregoing definition, Debt shall not include (a) any liability for federal, state, local or other taxes or (b) any trade payable arising from the purchase of goods or materials or for services obtained in the Ordinary Course of Business.

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“ Easement ” means an instrument providing for an easement at the Owned Real Property, substantially in the form of Exhibit D.2.

“ Environmental Law ” includes the Comprehensive Environmental Response Compensation and Liability Act (“ CERCLA ”), 42 U.S.C. 96901 et seq., as amended; the Resource Conservation and Recovery Act (“ RCRA ”), 42 U.S.C. 6901 et seq., as amended: the Clean Air Act (“ CAA ”), 42 U.S.C. 7401 et seq., as amended; the Clean Water Act (“ CWA ”), 33 U.S.C. 1251 et seq., as amended; the Occupational Safety and Health Act (“ OSHA ”), 29 U.S.C. 655 et seq, as amended; and any other material federal or state law, statute or regulation imposing liability or establishing standards of conduct for protection of the environment.

“ Environmental Permits ” has the meaning given to such term in Section 5.7(a).

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

“ ERISA Affiliate ” means any corporation, other entity or trade or business, whether or not incorporated, that is, or at any time prior to the date hereof was, controlled by, controlling or under common control with Seller (within the meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA).

“ Earnest Money Deposit ” means the $300,000 deposited by Digital Realty Trust, L.P. with the Escrow Agent as required by the certain letter of intent, dated May 3, 2006, entered into by Seller and an affiliate of Buyer, Digital Realty Trust, L.P., a Delaware limited partnership.

“ Equipment ” means any machinery, equipment, tools, furniture, furnishings, supplies, goods and other tangible items of personal property.

“ Escrow Agent ” means Commonwealth Land Title Company.

“ Excluded Assets ” has the meaning given to such term in Section 2.2.

“ Excluded Contracts ” has the meaning given to such term in Section 2.2(i).

“ Excluded Liabilities ” has the meaning given to such term in Section 4.2.

“ Execution Date ” has the meaning given to such term in the introductory paragraph to this Agreement.

“ Exhibits ” means the exhibits to this Agreement.

“ GAAP ” means United States of America generally accepted accounting principles.

“ Governmental Authority ” means (a) the United States of America, the European Union or any foreign country, (b) any domestic or foreign state, territory, province, county, city or other unit or subdivision thereof or (c) any entity, authority, agency, department, board, commission,

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official, instrumentality, court, arbitrator or tribunal (or other judicial body) of any of the foregoing exercising legislative, judicial, regulatory or administrative functions.

“ Hazardous Substance ” means any chemicals, materials, substances or wastes which are currently defined as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “pollutants,” or “contaminants” under any Environmental Law.

“ Indemnified Buyer Group ” has the meaning given to such term in Section 11.2(a).

“ Indemnified Party ” means a Person that is entitled to the benefits of indemnification from an Indemnifying Party in accordance with the terms and conditions of Article 11 of this Agreement.

“ Indemnified Seller Group ” has the meaning given to such term in Section 11.2(b).

“ Indemnifying Party ” means a Party to this Agreement that has the obligation to indemnify an Indemnified Party in accordance with the terms and conditions of Article 11 of this Agreement.

“ Indemnity Cap ” has the meaning given to such term in Section 11.3(a).

“ IRS ” means the Internal Revenue Service.

“ Joint Escrow Instruction Letter ” is a Joint Escrow Instruction Letter substantially in the form attached hereto as Exhibit J .

“ Knowledge ” or “ knowledge ” means (a) with respect to Seller, the actual Knowledge of the Persons listed on Schedule 1.1(b) and (b) with respect to Buyer, the actual Knowledge of the Persons listed on Schedule 1.1(c) .

“ Law ” means any law, order, statute, treaty, writ, judgment, decree, injunction, rule, regulation, by-law, ordinance, code or other policy, guideline, interpretation or pronouncement having the effect of law of any Governmental Authority.

“ Lease Assignments ” means the Assignments and Assumptions of Lease, substantially in the forms attached hereto as Exhibits C-1, C-2 and C-3.

“ Leased Real Property ” means the premises demised pursuant to the Real Property Leases.

“ Leasehold Title Commitment ” has the meaning given to such term in Section 7.15(a).

“ Leasehold Title Policy ” has the meaning given to such term in Section 7.15(a).

“ Liability ” means any debts, liabilities, obligations, claims, expenses, Taxes, contracts, accounts payable or commitments of any kind, character or description, whether accrued or

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fixed, absolute or contingent, asserted or unasserted, liquidated or unliquidated, matured or unmatured, known or unknown, determined or undetermined.

“ License ” means any license, permit, certificate, authorization, approval, franchise, order, registration, qualification, waiver or similar consent issued by any Governmental Authority.

“ Lien ” means any lien, claim, encumbrance, charge, mortgage or pledge or security interest of any kind.

“ Losses ” means, collectively, Buyer Losses and Seller Losses.

“ Non-Assignable Contract ” means each Assumed Contract to the extent the sale, assignment, transfer or conveyance thereof, or attempted sale, assignment, transfer or conveyance thereof, without the consent of a third Person, would constitute a breach or violation of such Assumed Contract or affect adversely the rights of Seller or, upon such sale, assignment, transfer or conveyance, the rights of Buyer thereunder (including in the case of Colocation Contracts, as a result of the inability to sever the provisions of any such Contract in a manner which permits the assignment of  the rights and obligations of the parties with respect to the Colocation Rights while preserving for the Seller the rights and obligations of the parties with respect to any other services provided by Seller under such Contract); it being understood and agreed that upon receipt of all necessary consents and, to the extent such consents are received after Closing, the assignment and assumption of such Assumed Contract in accordance with Section 7.3(b), such Assumed Contract shall cease to be a Non-Assignable Contract.

“ On Leave Employee ” means any employee of Seller engaged in the Business (a) receiving salary continuation benefits under any short-term disability or salary continuation program, (b) on military service or other approved absence or (c) absent from work pursuant to sick leave or other leave granted or required to be granted under the terms of the Family and Medical Leave Act.

“ Ordinary Course of Business ” has the meaning given to such term in Section 5.16.

“ Other Assumed Contracts ” has the meaning given to such term in Section 5.13(b).

“ Owned Real Property ” has the meaning given to such term in Section 2.1(a) (i).

“ Package Contracts ” has the meaning given to such term in Section 7.3(c).

“ Parties ” means the parties to this Agreement.

“ Permitted Liens ” means, collectively, Personal Property Permitted Liens and Real Property Permitted Liens.

“ Person ” means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, other business organization, trust, union, association or other entity or Governmental Authority.

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“ Personal Property Permitted Liens ” means any (a) Lien for Taxes not yet due or payable or, if due, being contested in good faith; (b) mechanic’s, workman’s, warehouseman’s, carrier’s or materialman’s Lien and any other like Lien arising in the Ordinary Course of Business for sums not yet due or payable or, if due, being contested in good faith; (c) title retention or security interests under conditional sales contracts and equipment leases with third parties entered into in the Ordinary Course of Business; (d) Lien arising from the failure of Seller to comply with bulk sales Laws in any jurisdiction; (e) Lien listed on Schedule 1.1(d) ; or (f) Lien which, individually or in the aggregate, would not reasonably be expected to materially detract from the value or impair the existing use of the Acquired Assets subject to such Lien.

“ Plans ” has the meaning given to such term in Section 5.10(b).

“ Pre-Closing Tax Period ” shall mean (i) any Tax period ending before the Closing Date and (ii) with respect to any Straddle Period, the portion of such period prior to the Closing Date.

“ Property Taxes ” has the meaning given to such term in Section 7.9.

“ Purchase Price ” has the meaning given to such term in Section 3.1(a).

“ Real Property Deed ” means an instrument providing for the conveyance of the Owned Real Property, substantially in the form of Exhibit D.1.

“ Real Property Leases ” has the meaning given to such term in Section 2.1(a) (ii).

“ Real Property Permitted Liens ” means (x) with respect to the Leased Real Property, any (a) restriction contained in any covenant or deed of record; (b) easement, license, covenant, right-of-way or other similar restriction, including any other agreement or restriction which would be shown by a current title report or other similar report or listing; (c) condition that may be shown by a current survey, title report or physical inspection; (d) zoning, land use, building or other similar restriction, so long as none of the items in (a), (b), (c) or (d) renders the title of such real property unmarketable or prevents the use of such real property substantially as currently used; (e) any Lien listed on Schedule 1.1(e) ; (f) any Lien which affects only the underlying fee simple property and not the Seller’s interest in such property under the Real Property Lease or (g) the pre-printed exceptions set forth in, and the exceptions set forth on Schedule B-Part 2 to, the Leasehold Title Commitments other than those exceptions that are removed through delivery of the Title Affidavits, and (y) with respect to the Owned Real Property, (i) the pre-printed exceptions set forth in, and the exceptions set forth on Schedule B-Part 2 to, the Title Commitment other than those exceptions that are removed through delivery of the Title Affidavits and (ii) the exclusions and reservations set forth in the Real Property Deed.

 “ Retained Businesses ” means the businesses of Seller other than the Business and shall include the Internet exchange facilities, telecommunications networks and facilities based IP access businesses of Seller and the provision of Colocation Services at the data center facilities located at 150 South First Street, San Jose, California 95119.

“ Retained Receivables ” has the meaning given to such term in Section 2.2(g).

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“ Schedule ” means the disclosure schedules delivered by the Parties hereto on the date hereof and attached hereto.

“ Searches ” has the meaning given to such term in Section 7.15(c).

“ Seller ” has the meaning given to such term in the introductory paragraph of this Agreement.

“ Seller Basket Exclusions ” has the meaning given to such term in Section 11.3(a).

“ Seller Colocation Agreement ” means, collectively, an Omnibus Agreement substantially in the form of Exhibit E.1, a Deed of Colocation Lease substantially in the form of Exhibit E.2, a Colocation Agreement (VA1), substantially in the form of Exhibit E.3, a Colocation Agreement (NY1) substantially in the form of Exhibit E.4, a Colocation Agreement (NY2) substantially in the form of Exhibit E.5 and a Conduit License Agreement (VA1), substantially in the form of Exhibit E.6,  pursuant to which Seller leases or licenses the right to use the conduits and portions of the available colocation space listed on Schedule 1.1(f) at the Owned Real Property or the Leased Real Property.

“ Seller Losses ” has the meaning given to such term in Section 11.2(b).

“ Seller Material Adverse Effect ” means a material adverse effect upon (a) the business, financial condition or results of operation of the Business, taken as a whole, or (b) the ability of Seller to consummate the transactions contemplated by the Agreement; provided , however , a Seller Material Adverse Effect shall not include any change in or effect upon Seller or the Business directly or indirectly arising out of or attributable to (i) conditions, events or circumstances generally affecting the United States economy as a whole or the industries or segments in which Seller or the Business operates or (ii) entering into this Agreement.

“ Straddle Period ” has the meaning given to such term in Section 7.9.

“ Subsequent Title Defects ” has the meaning given to such term in Section 7.15(d).

“ Survey ” has the meaning given to such term in Section 7.15(b).

“ Taxes ” means all federal, provincial, territorial, state, municipal, local, foreign or other taxes (including governmental imposts, levies and other assessments) including all income, franchise, gains, capital, profits, gifts, real property, goods and services, transfer, value added, gross receipts, windfall profits, severance, ad valorem, personal property, production, sales, use, license, stamp, documentary stamp, mortgage recording, excise, employment, payroll, social security, unemployment, disability, estimated or withholding taxes, and all customs and import duties, together with any interest, additions, fines or penalties with respect thereto or in respect of any failure to comply with any requirement regarding Tax Returns and any interest in respect of such additions, fines or penalties.

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“ Tax Return ” means any return, report, information statement or similar document filed or required to be filed under applicable Law by any Person with respect to Taxes.

“ Title Company ” shall mean Commonwealth Land Title Insurance Company.

“ Third-Party Claim ” has the meaning given to such term in Section 11.5.

“ Threshold ” has the meaning given to such term in Section 11.3(a).

“ Title Commitment ” has the meaning given to such term in Section 7.15(a).

“ Title Objections ” has the meaning given to such term in Section 7.15(d).

“ Title Policy ” has the meaning given to such term in Section 7.15(a).

 “ Transaction Documents ” means this Agreement, the Assumption Agreement, the Bill of Sale, the Lease Assignments, the Real Property Deed, the Easement, the Seller Colocation Agreements, the Transition Services Agreement and the other agreements, documents and instruments to be executed and delivered in connection with any of the foregoing.

“ Transfer Taxes ” has the meaning given to such term in Section 12.3.

“ Transferred Employees ” has the meaning given to such term in Section 7.5(a).

“ Transition Services Agreement ” means the Transition Services Agreement substantially in the form attached hereto as Exhibit F.

“ Treasury Regulations ” means the United States Treasury regulations promulgated under the Code from time to time.

 “ Vehicles ” means all motor vehicles, automobiles, buses, trucks, other vehicles or rolling stock.

1.2      Certain Interpretive Matters .  In this Agreement, unless the context otherwise requires:

(a)      words of the masculine or neuter gender shall include, as applicable, the masculine, neuter and/or feminine gender, and words in the singular number or in the plural number shall each include, as applicable, the singular number or the plural number;

(b)     reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity;

(c)      any accounting term used and not otherwise defined in this Agreement or any Transaction Document has the meaning assigned to such term in accordance with GAAP;

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(d)      “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term;

(e)      reference to any law (including statutes and ordinances) means such law as amended, modified codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder;

(f)      the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement and not to any particular provision of this Agreement;

(g)      the terms “Article” or “Section” refer to the specified Article or Section of this Agreement;

(h)      section headings are for reference purposes only and shall not affect the meaning or interpretation of this Agreement; and

(i)       all monetary amounts specified in this Agreement shall represent United States Dollars.

The Parties further acknowledge and agree that:  (i) this Agreement is the result of negotiations between the Parties and shall not be deemed or construed as having been drafted by any one party, (ii) each Party and its counsel have reviewed and negotiated the terms and provisions of this Agreement (including any Exhibits and Schedules attached hereto) and have contributed to its revision, (iii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement, and (iv) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

1.3  Recitals .  The Recitals set forth above are incorporated herein by this reference.

ARTICLE 2

PURCHASE AND SALE

2.1  Acquired Assets .  (a) On the terms, and subject to the conditions of this Agreement (including Sections 2.1(b), 2.2 and 2.3), on the Closing Date, Seller shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all Liens other than Permitted Liens, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to all tangible and intangible assets, properties and rights primarily used in the operation of the Business (such assets, properties and rights being referred to herein as the “ Acquired Assets ” ), including the following assets, properties and rights:

       (i)  Owned Real Property .  Those parcels of real property set forth on Schedule 2.1(a)(i) and all rights arising out of the ownership thereof or appurtenant thereto,

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together with all buildings, structures, facilities, fixtures and other improvements thereon (collectively, the “ Owned Real Property ”);

            (ii)      Real Property Leases .  The leases or subleases of real property set forth on Schedule 2.1(a)(ii) , including all amendments, modifications and supplements thereto, regardless of the form of such documents or instruments, and all leasehold improvements appurtenant to such leases or subleases as of the date of this Agreement (collectively, the “ Real Property Leases ”);

            (iii)     Equipment .  All Equipment described on Schedule 2.1(a) (iii) ;

            (iv)     Books and Records .  Originals or copies of all material files, documents, instruments, computer files, papers, books and records of Seller relating primarily to the Business;

            (v)      Receivables .   All accounts receivable, notes and other amounts receivable from third parties for services provided by the Business on or after the Closing Date under the Colocation Contracts or other Assumed Contracts (including under any such Contracts which are Non-Assignable Contracts not being transferred on the Closing Date), whether billed or unbilled, whether or not in the Ordinary Course of Business, together with any unpaid financing charges or interest thereon from and after the Closing Date (collectively, “ Assigned Receivables ”);

            (vi)     Contracts .  All Colocation Contracts and other Assumed Contracts;

            (vii)    Licenses .  All Licenses granted or issued to Seller which are primarily used in the Business, to the extent transferable to Buyer; and

            (viii)   Customer Security Deposits and Prepayments .  Any amounts deposited by any customer with Seller in accordance with the terms of, and solely to secure such customer’s obligations under, any Colocation Contract (other than any such Contract which is an Excluded Contract) (the “ Customer Security Deposits ”) and any prepayment by a customer of its obligations under a Colocation Contract for services to be rendered from and after the Closing Date (other than any such Contract which is an Excluded Contract) (“ Customer Prepayments ”).

(b)      Restrictions on Acquired Assets .  It is understood and agreed that the Acquired Assets in Sections 2.1(a) (iii), (iv), (vi) and (vii) above shall not include any assets, properties or rights of Seller which are primarily used by it in the operation of any business other than the Business, including the Retained Businesses.

2.2      Excluded Assets .  Notwithstanding the foregoing, Seller shall not sell, assign, transfer, convey or deliver, and Buyer shall not purchase, pursuant to this Agreement, and the term “ Acquired Assets ” shall not include, any of the following assets, properties or rights (collectively, the “ Excluded Assets ”):

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(a)      Non-Business Assets .  Any assets, properties or rights of Seller (i) not used in the Business or (ii) of the kind described in Sections 2.1(a)(iii), (iv), (vi) or (vii) which are primarily used by Seller in the operation of a business other than the Business, including the Retained Businesses;

(b)      Cash .  All cash and cash equivalents, other than any Customer Security Deposits and Customer Prepayments;

(c)      Corporate Accounts, etc.   Any interest in and to the capital stock of Seller and all minute books, stock records, Tax Returns, income Tax records and similar corporate documents of Seller;

(d)           Rights Under Transaction Documents .  All rights of Seller under this Agreement and the other Transaction Documents;

(e)      Rights to Tax Refunds .  Any rights with respect to any Tax refunds, credits or other Tax attributes except for such rights directly related to Taxes paid or assumed by Buyer under this Agreement;

(f)      Rights to Insurance Policies .  Any insurance policies and any rights or claims thereunder;

(g)      Retained Receivables .  Any receivable of Seller from any of its Affiliates and any accounts receivable, notes and other amounts receivable from third parties for services provided by the Business prior to the Closing Date, whether billed or unbilled, whether or not in the Ordinary Course of Business, together with any unpaid financing charges or interest thereon through the Closing Date (“ Retained Receivables ”);

(h)      Prepaid Expenses and Security Deposits .  Any prepaid expenses, excess premiums or other like assets and any amounts deposited by or on behalf of Seller in connection with any Real Property Lease or other Assumed Contract;

(i)       Excluded Contracts .  Each (x) Contract between Seller and any of its Affiliates, (y) Contract of the nature described on Schedule 2.2(i)(y) and (z) Non-Assignable Contract listed on Schedule 2.2(i)(z) and Additional Remedy Ticket that remains a Non-Assignable Contract as of the Closing ((x) through (z) collectively, the “ Excluded Contracts ”);

(j)       Seller Colocation Equipment .  Any Equipment installed or stored in any colocation space leased or licensed by Seller from Buyer pursuant to a Seller Colocation Agreement;

(k)      Seller Conduit and Fiber .  Any conduit and fiber optic cables listed in Schedule 2.2(k) ;

(l)       Corporate Trade Name .  The name “AboveNet” and any trademarks, service marks, logos, trade names, corporate names and Internet domain names, whether or not registered, including all common law rights therein, and registrations and applications for registration thereof used by the Business;

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(m)     Corporate Administrative Services Assets .  The assets, properties and rights used by Seller in connection with the provision of corporate administrative service functions (including legal, accounting, finance, sales, marketing, collections and network services) to the Retained Businesses; and

(n)      Other Assets .  The assets, properties and rights listed on Schedule 2.2(n) .

2.3      Retained Right of Use .   In addition to the rights of Seller under the Seller Colocation Agreement(s), Seller shall have the right to use the Acquired Assets listed on Schedule 2.3 in the ordinary course of operating the Retained Businesses and in a manner consistent with past practice without any consideration therefor being payable to Buyer.

ARTICLE 3

PURCHASE PRICE

3.1      Purchase Price .  The aggregate purchase price to be paid by Buyer for the Acquired Assets shall be (i) forty million seventy five thousand dollars ($40,075,000) (the “ Cash Purchase Price ”), and (ii) the assumption by Buyer of the Assumed Liabilities (collectively, the “ Purchase Price ”).

3.2      Payment of Cash Purchase Price .  The Cash Purchase Price shall be payable by Buyer by wire transfer of immediately available federal funds to such bank account or accounts as shall be designated by Seller to Buyer prior to the Closing.  The Cash Purchase Price payable by Buyer hereunder shall be reduced by an amount equal to the Earnest Money Deposit actually released to Seller at the Closing.

3.3      Allocation of Consideration .  (a) The Purchase Price shall be allocated among the Acquired Assets in accordance with Schedule 3.3 .  The Parties agree (i) that the allocations set forth in Schedule 3.3 have been made in accordance with the applicable provisions of the Code and the Treasury Regulations, (ii) to treat and report for income tax purposes the transactions contemplated hereby in a manner consistent with such allocation and (iii) not to take any action for income tax purposes inconsistent with such allocation.  The Parties acknowledge and agree that the allocations made pursuant to this Section 3.3 are solely for income tax purposes.

(b)   Not later than ten (10) days prior to the filing of its respective IRS Form 8594 relating to this transaction, each Party shall deliver to the other Party a copy of its IRS Form 8594.

3.4      Apportionment of Income and Expenses .  All revenue and expenses pertaining to the Business, including, without limitation, all prepaid sums and fees, service charges, advertising, rental charges, utility charges, payroll taxes, payments under assigned agreements, and accrued and prepaid expenses, shall be prorated between Buyer and Seller as of

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the Closing Date so that the Seller shall receive all revenues and shall be responsible for all expenses and liabilities allocable to the period prior to the Closing Date and Buyer shall receive all revenues and shall be responsible for all expenses and liabilities allocable to the period beginning on and continuing after the Closing Date, provided, however, in no event shall Seller be obligated to give Buyer credit for or on account of any accrued revenue which remains uncollected as of the Closing Date.  Buyer and Seller shall cooperate with each other in calculating all such prorated items and shall make a payment one to the other, as appropriate, within sixty (60) days after the Closing Date of the net amount of such prorated items.

ARTICLE 4

LIMITED ASSUMPTION OF LIABILITIES

4.1      Assumption of Liabilities . On the terms and subject to the conditions, representations and warranties contained herein, on the Closing Date, Buyer will hereby assume, and agree to pay, perform and discharge when due, the following liabilities of Seller relating to Business (collectively, the “ Assumed Liabilities ”):

(a)       the Liabilities of Seller which are to be paid, performed or discharged from and after the Closing Date under the Assumed Contracts;

(b)      any liability or obligation for Taxes required to be paid by Buyer pursuant to Section 12.3 or otherwise arising out of or relating to operation of the Business on or after the Closing Date, it being agreed that the Taxes of Buyer for any Straddle Period shall be determined in accordance with Section 7.9;

(c)      the Liabilities and obligations undertaken or assumed by Buyer pursuant to the other provisions of this Agreement or the other Transaction Documents; and

(d)      the Liabilities set forth on Schedule 4.1(d) .

4.2       Excluded Liabilities . Except for the Assumed Liabilities, Buyer shall not assume, pay, perform or discharge any other Liabilities of Seller under this Agreement (the “ Excluded Liabilities ”) including:

(a)      any Debt of Seller;

 

(b)      any liability or obligation for Taxes of Seller for any Pre-Closing Tax Period (including all liabilities of Seller for Taxes related to the transactions contemplated by this Agreement except to the extent such Taxes are to be paid by the Buyer pursuant to Section 12.3 hereof), it being agreed that the Taxes of Seller for any Straddle Period shall be determined in accordance with Section 7.9;

 

(c)      any liability or obligation arising out of or relating to an Excluded Asset;

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(d)      the obligations, liabilities and expenses (including for any accounting, legal, investment banking, brokerage or similar fees or expenses) incurred by Seller in connection with the negotiation and preparation of this Agreement and each of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby; and

 

(e)      the obligations or liabilities relating to employees or former employees of Seller, including Transferred Employees, for periods prior to the Closing Date.

The Parties expressly understand and agree that the Assumed Liabilities shall not include any Liabilities to the extent attributable to (a) the ownership of the Acquired Assets or the operation of the Business prior to the Closing and (b) any Excluded Asset.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

5.1      Organization .   Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.  Seller is duly licensed or qualified to do business in each jurisdiction in which the ownership of the Acquired Assets or the operation of the Business makes such licensing or qualification necessary, except where the failure to be so licensed or qualified to do business would not reasonably be expected to result in a Seller Material Adverse Effect.  Each such jurisdiction is disclosed on Schedule 5.1 .

5.2      Authority .    Seller has all requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  Seller has obtained all necessary corporate approvals for the execution and delivery of this Agreement and the other Transaction Documents to which it is a party, the performance of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby.  This Agreement has been, and upon execution and delivery by Seller of each of the other Transaction Documents to which it is a party will be, duly executed and delivered by Seller and (assuming due authorization, execution and delivery by the other parties hereto and thereto) constitutes or will constitute, as applicable, Seller’s legal, valid and binding obligations, enforceable against Seller in accordance with their respective terms, except as such enforceability may be (a) limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditor’s rights, or (b) subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

5.3      Non-Contravention .   Except as disclosed on Schedule 5.3 , none of the execution and delivery by Seller of this Agreement or the other Transaction Documents to which it is a party, the performance of its obligations hereunder or thereunder or the consummation by

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Seller of the transactions contemplated hereby or thereby (a) will conflict with Seller’s certificate of incorporation or by-laws or (b) will, with or without notice, the passage of time or both, constitute a breach or violation of, conflict with, or constitute or create a default under, or result in the creation or imposition of any Liens upon any Acquired Assets pursuant to, any material Contract to which Seller is a party or by which it or any of its material properties are bound, except, in the case of (b), for such breaches, violations, conflicts and defaults which would not reasonably be expected to result in a Seller Material Adverse Effect.

 

5.4      Financial Matters .   Set forth as Schedule 5.4 are complete and accurate schedules of:

(i)       all revenue generated by the Business and by each data center included in the Business (but excluding any revenue associated with the Contracts referenced in item 2 of Schedule 2.2(i)(y)) during the six calendar month period ending June 30, 2006;

 

(ii)     all direct expenses paid or payable by Seller in connection with the operation of each data center included in the Business with respect to the six calendar month period ended June 30, 2006 (it being understood that such direct expenses exclude personal property taxes, insurance, SG&A and other allocated general expenses); and

 

(iii)     all Customer Security Deposits and Customer Prepayments as of June 30, 2006.

5.5      Governmental Consents .   Except as disclosed on Schedule 5.5 , no Consents of any Governmental Authority are required on the part of Seller under applicable Law in connection with the execution and delivery of this Agreement, the performance of its obligations hereunder or the consummation by Seller of the transactions contemplated hereby, other than any Consents which have already been obtained or made or the failure to obtain or the absence of which would not reasonably be expected to result in a Seller Material Adverse Effect.

5.6      Compliance with Laws .  Except as disclosed on Schedule 5.6 and for any failure to comply which would not reasonably be expected to result in a Seller Material Adverse Effect, to the Knowledge of Seller, Seller has conducted and continues to conduct the Business in compliance with all applicable Laws.  No notice has been received from, and, to the Knowledge of Seller, no investigation or review is pending or threatened by, any Governmental Authority with regard to any alleged violation of any such law by Seller in connection with the operation of the Business, other than any violation which would not reasonably be expected to result in a Seller Material Adverse Effect.

5.7      Environmental Matters .    Except as set forth on Schedule 5.7 hereto:

(a)     Seller holds and is in material compliance with all Licenses required under Environmental Laws applicable to the Business and the Acquired Assets (the “ Environmental Permits ”);

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(b)                      Seller has not stored, treated, generated, transported or released any Hazardous Substances at any Owned Real Property or Leased Real Property in violation of any Environmental Law, except for any such violations that would not reasonably be expected to result in a Seller Material Adverse Effect; and

 

(c)      Seller has not entered into nor is Seller subject to any outstanding judgment, decree, order or other directive issued by or consent arranged with any Governmental Authority under any Environmental Law, with respect to clean up, remediation, or removal of Hazardous Substances.

 

5.8      Permits .    Schedule 5.8 sets forth all Licenses (other than any License to do business in any jurisdiction), including certificates of occupancy with respect to occupancy of the Owned Real Property and the Leased Real Property by Seller, granted to Seller in connection with the ownership of the Acquired Assets, use of the Acquired Assets as currently used or operation of the Business as currently conducted.  Each License set forth on Schedule 5.8 is valid and in full force and effect.  None of the Licenses set forth on Schedule 5.8 will be terminated or impaired or become terminable as a result of the transactions contemplated hereby, provided, however, Seller makes no representation as to the assignability or transferability of any such License.

5.9      Litigation, etc.   There are no judicial or administrative actions, suits, arbitrations or proceedings pending or, to the Knowledge of Seller, threatened involving the Business or the Acquired Assets which would reasonably be expected to result in a Seller Material Adverse Effect.

5.10    Employees and Benefits.    (a)   Schedule 5.10(a) sets forth a list of all of the employees of Seller primarily engaged in the Business and their respective salaries, in each case as of the date set forth on such Schedule (including all On Leave Employees (with all such On Leave Employees and their respective reasons for leave being appropriately disclosed on Schedule 5.10(a) )).

(b)     Schedule 5.10(b) lists all material employee benefit plans of Seller covering or otherwise benefiting employees or former employees of Seller engaged in the Business, including any plan, program, arrangement, agreement or commitment that is an employment, consulting, severance, termination, deferred compensation or change in control agreement, or any bonus, stock option, stock purchase, pension, incentive, profit sharing, deferred compensation, executive compensation, retiree medical or life insurance, supplemental retirement, severance, life, health, disability, accident, medical or dental insurance, vacation or other welfare or other employee benefit plan, program, arrangement, agreement or commitment (whether oral or written, whether for the benefit of a single individual or more than one individual), including any “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject thereto (collectively, the “ Plans ”).

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(c)          Each Plan (and Seller’s operation of each Plan) is in compliance in all material respects with its respective terms and with the applicable provisions of the Code and ERISA.

(d)         Neither Seller nor any ERISA Affiliate has contributed to, contributes to or has any Liability under ERISA or the Code with respect to (i) any “multiemployer pension plan,” as such term is defined in Section 3(37) of ERISA, (ii) any “employer benefit plan,” as defined in Section 3(3) of ERISA that is or was subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code or (iii) any employer benefit plan that provides retiree medical benefits (other than any health care continuation to the extent required by ERISA or the Code) or benefits to any persons outside the United States.

5.11         Ownership and Transfer of Acquired Assets .  (a)   Seller has good and marketable title to or, in the case of leased or subleased Acquired Assets, valid and subsisting leasehold interests in, all of the Acquired Assets which are tangible personal property (other than the Owned Real Property and the Lease Real Property which are addressed in Section 5.11(b) below), free and clear of all Liens other than Personal Property Permitted Liens.

(b)        To the Knowledge of Seller, Seller is the record owner and has good and marketable fee simple title to the Owned Real Property, free and clear of all Liens other than Real Property Permitted Liens.    Prior to Closing, Seller shall deliver to the Title Company for recording in the land records of Fairfax County, Virginia a proper instrument formally and affirmatively terminating the Lease dated June 15, 1999, between 1807 Faraday Court Limited Partnership, a Virginia limited partnership, as landlord, and Seller, as tenant.

(c)         Other than Seller and the other parties to the Colocation Contracts and as set forth on Schedule 5.11(c) , there are no parties physically occupying or using any portion of the Owned Real Property or Leased Real Property nor do any other parties have the right to physically occupy or use any portion of such premises.

(d)        To the Knowledge of Seller, Seller has or at Closing will have a valid leasehold interest in each of the Real Property Leases, free and clear of all Liens other than Permitted Liens.

5.12         Assets used by the Business .  There is no material intellectual property used in the Business except (a) to the extent intellectual property is imbedded in Equipment used in the Business and (b) the “know how” of the employees of the Seller engaged in the Business.    Other than the Excluded Assets and the “know how” possessed by an individual employee who is not a Transferred Employee, the Acquired Assets constitute all of the assets, properties and rights necessary to conduct the Business in substantially the manner as currently conducted by Seller.

5.13         Contracts .  (a)  Schedule 5.13(a) lists the Colocation Contracts (other than Colocation Contracts arising as a result of Additional Remedy Tickets) and separately lists all Colocation Contracts which are Package Contracts.

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(b)        Schedule 5.13(b) lists each Contract (other than Colocation Contracts, Real Property Leases and Plans) to which Seller is a Party and which is primarily used in the Business (the “ Other Assumed Contracts ”).

(c)         Seller has furnished or made available to Buyer a true, complete and correct copy of each Real Property Lease, Colocation Agreement (except to the extent such Colocation Contracts are bracketed on Schedule 5.13(a) or arose as a result of Additional Remedy Tickets) and Other Assumed Contract.  Except as disclosed on Schedule 5.13(a) or (b) , each Assumed Contract is a legal, valid obligation of Seller, is in full force and effect, and is enforceable in accordance with its terms except as enforcement may be (i) limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditor’s rights, or (ii) subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). Seller has paid in full all amounts which are due and payable by Seller under the Assumed Contracts and has satisfied in all material respects its liabilities and obligations which are due and payable thereunder, except for amounts or liabilities disputed in good faith by Seller as described on Schedule 5.13(c).  The Seller is not in default under any Assumed Contract, nor to the Knowledge of the Seller, except as set forth on Schedule 5.13(c), does any condition exist that, with notice or lapse of time or both, would reasonably be expected to constitute a default thereunder, other than in each case any default which would not reasonably be expected to result in a Seller Material Adverse Effect.  To the Knowledge of the Seller, except as set forth on Schedule 5.13(c), no other party to any Assumed Contract is in default thereunder, nor, except as set forth on Schedule 5.13(c), does any condition exist that, with notice or lapse of time or both, would reasonably be expected to constitute a default thereunder, other than in each case any default which would not reasonably be expected to result in a Seller Material Adverse Effect.

5.14         Assigned Receivables .  The Assigned Receivables represent, or will represent, as applicable, amounts billed to customers for services to be provided in the Ordinary Course of the Business under the Colocation Contracts and other Assumed Contracts after the Closing.  Seller has good and valid title to the Assigned Receivables, free and clear of Liens other than Personal Property Permitted Liens.

5.15         Taxes .   Except as disclosed on Schedule 5.15 , all Tax Returns required to be filed by Seller covering Taxes of the Business which are due and payable prior to the Closing Date have been or will be filed, and all Taxes (other than Property Taxes for the Straddle Period which shall be apportioned in accordance with Section 7.9) which are shown to be due and payable on such Tax Returns have been paid, other than such amounts as are being contested by Seller in good faith by appropriate proceedings. All Taxes relating to the Acquired Assets or the Business, including, without limitation, Taxes imposed by any foreign taxing authority on the employees of the Business, which have been claimed in writing to be due by any taxing authority from Seller, have been properly paid other than such amounts as are being contested by Seller in good faith by appropriate proceedings as described on Schedule 5.15.   Except as disclosed on Schedule 5.15 , the Seller has not received any notice of assessment or proposed assessment in connection with any of the Acquired Assets.  Except as disclosed on Schedule 5.15 , there is no

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pending, or to the Knowledge of the Seller, threatened Tax audit of any Tax Return filed by or on behalf of the Seller or with respect to the Seller’s income, assets or operations, including the Acquired Assets.  The Seller has made all deposits required by Law to be made with respect to employees’ withholding and other employment Taxes including, without limitation, the portion of such deposits relating to Taxes imposed upon the Seller.

5.16         Existing Condition .  Except as set forth on Schedule 5.16 , since June 30, 2006, Seller has operated the Business in the ordinary course of business, consistent with past practice and without violation of the provisions of this Agreement (the “ Ordinary Course of Business ”), and there has not been any event, condition, change, action, failure to act or transaction which, individually or in the aggregate, has had or would reasonably be expected to have a Seller Material Adverse Effect.

5.17         Labor Matters .  (a)  Seller is not a party to any collective bargaining agreement covering any employee of Seller engaged in the Business and, to the Knowledge of Seller, no collective bargaining agreement is currently being negotiated; to the Knowledge of Seller, there is no labor union representing any employee of Seller engaged in the Business; to the Knowledge of Seller, no attempt is currently being made or has been made during the past three (3) years to organize Seller’s employees engaged in the Business to form or enter a labor union or similar organization; and, to the Knowledge of Seller, there are no pending or threatened representations, campaigns, elections, certification proceedings or petitions seeking a representation proceeding brought or filed with the National Labor Relations Board regarding Seller’s employees engaged in the Business.

(b)        There is no organized labor strike or walkout by Seller’s employees engaged in the Business occurring presently or, to the Knowledge of Seller, threatened, and Seller has not been notified of any employee grievances which would lead to any of the foregoing.  Seller has not experienced any organized labor strike or walkout by its employees engaged in the Business during the past three (3) years.

5.18         Insurance Policies .  Set forth on Schedule 5.18 is a list and brief description of all claims in excess of $25,000 (including pending claims) relating to the Business or the Acquired Assets made by the Seller under Seller’s policies of fire, casualty, liability, product liability, burglary, fidelity, worker’s compensation, life, vehicular or other forms of insurance relating to the Business or the Acquired Assets held by or on behalf of the Seller during Seller’s past two (2) fiscal years and the amount paid out, if any, under each policy with respect to such claims.

5.19         Transactions with Affiliates .  The Company is not party to any transactions with any of its Affiliates which relate in any manner to the Business.

5.20         Real Estate .

(a)         Improvements .  The improvements, buildings and structures located on the Owned Real Property and the Leased Real Property are to the knowledge of Seller (i) structurally sound with no known defects and (ii) in operating condition and repair suitable for the use by the

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Business as currently operated, subject to ordinary wear and tear.  All improvements, repairs, alterations and any other work required to be performed as of the Execution Date by the landlord under any of the Real Property Leases for Seller’s benefit, and all payments required to be made by Seller to any landlord for such work, have been fully performed and paid in full.

(b)        Title Commitment .  Except as reflected in the Title Commitment, Seller has not, and on or prior to Closing shall not, (i) grant any easements and/or rights-of-way and/or other encumbrances over or through the Owned Real Property, (ii) enter into any agreements or any proffers or other commitments encumbering title to the Owned Real Property, other than Colocation Agreements and other agreements with customers and agreements with contractors, in each case, entered into by Seller in the Ordinary Course of Business,  (iii) further e