ASSET PURCHASE AGREEMENT

EXHIBIT 2.9

 

Confidential

 

ASSET PURCHASE AGREEMENT

 

by and between

 

GLOBAL CROSSING TELECOMMUNICATIONS, INC.

 

and

 

MATRIX TELECOM, INC.

 

Dated as of March 19, 2005

TABLE OF CONTENTS

 

 

i

 

ii

 

iii

EXHIBITS AND SCHEDULES

 

 

iv

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, dated as of March 19, 2005, is by and between Global Crossing Telecommunications, Inc., a Michigan corporation (“ Seller ”), and Matrix Telecom, Inc., a Texas corporation (“ Buyer ”).

 

RECITALS

 

WHEREAS, Seller, through its business unit known as the Small Business Group (“ SBG ”), is a provider of voice, local and data products to small and medium sized business enterprises;

 

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, certain assets relating to SBG, and Buyer desires to assume from, and Seller desires to transfer to Buyer, certain liabilities relating to SBG, in each case upon the terms and subject to the conditions of this Agreement; and

 

WHEREAS, concurrently with the execution of this Agreement, Platinum Equity, LLC is guaranteeing the performance of certain payment obligations of Buyer hereunder pursuant to a guarantee in the form attached hereto as Exhibit A1 (the “ Guarantee ”), and Buyer and Seller are entering into a Management Services Agreement attached hereto as Exhibit A2 (the “ MSA ”).

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements of the parties contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1 Defined Terms . As used herein, the terms below shall have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

 

“ Action ” means any action, Claim, suit, litigation or other proceeding.

 

“ affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.

 

“ Aggregate Target Accounts Receivable ” means $9,425,136.

 

“ Agreement ” means this Asset Purchase Agreement, including all Exhibits and Schedules hereto (including the Disclosure Schedules), as the same may be amended, modified or supplemented from time to time in accordance with its terms.

“ Ancillary Agreements ” means, collectively, (a) the Guarantee, (b) the Bill of Sale, (c) the Assignment of Contracts, (d) the Assumption Agreement, (e) the Transition Services Agreement , (f) the Carrier Services Agreement (g) the MSA and (h) all other instruments, certificates and documents delivered by the parties pursuant to this Agreement, as each may be amended, modified or supplemented from time to time in accordance with its terms.

 

“ Applicable Cash Purchase Price ” means an amount equal to the product of (x) $40,500,000 minus the MSA Holdback Amount and (y) the percentage equal to a fraction, the numerator of which is equal to the aggregate revenue of SBG attributable to the SBG customers that are being transferred to Buyer at any Applicable Closing Date and the denominator of which is equal to the aggregate revenue of SBG as a whole, both as reflected on Schedule A , subject to adjustment in accordance with Sections 2.8 and 2.9.

 

“ Applicable Closing Date ” means, (a) with respect to any date of determination, the date that is (i) the third (3) Business Day following receipt by Seller of written notice from Buyer electing to have a Closing; provided , that the parties shall have satisfied or waived all of the conditions precedent to their obligations set forth in Articles VII and VIII (other than the conditions which are not capable of being satisfied until the Applicable Closing Date), except that Buyer may not elect to have a Closing until the parties shall have received all Federal Regulatory Approvals and state Regulatory Approvals to transfer Applicable Purchased Assets accounting for 50% or more of the revenue of SBG as reflected on Schedule A; and, provided , further , that in no event shall Buyer have the right to elect to have more than a total of four Closings under this Agreement and (ii) the third (3) Business Day following the satisfaction or waiver of all the conditions precedent to the obligations of the parties set forth in Articles VII and VIII (other than the conditions which are not capable of being satisfied until the Applicable Closing Date) , and (b) the Holdback Release Date.

 

“ Applicable Purchased Assets ” means the Purchased Assets that are sold, conveyed, transferred, assigned and delivered to Buyer on the Applicable Closing Date, which shall include all Purchased Assets that have not been transferred as of such date other than Holdback Assets in existence as of such date.

 

“ Applicable Synthetic Assets ” means those Purchased Assets that would have been Applicable Purchased Assets on an Applicable Synthetic Closing Date if Buyer elected to have an Applicable Closing Date instead of an Applicable Synthetic Closing Date.

 

“ Applicable Synthetic Cash Purchase Price ” means an amount equal to the product of (x) $40,500,000 minus the MSA Synthetic Holdback Amount and (y) the percentage equal to a fraction, the numerator of which is equal to the aggregate revenue of SBG attributable to the SBG customers that are Applicable Synthetic Assets at any Applicable Synthetic Closing Date and the denominator of which is equal to the aggregate revenue of SBG as a whole, both as reflected on Schedule A .

 

“ Applicable Synthetic Closing Date ” means, with respect to the Applicable Synthetic Assets, the date on which the parties have satisfied or waived all of the conditions precedent to their obligations set forth in Articles VII and VIII, including under Sections 7.4 and 8.4, but except for those conditions which are not capable of being satisfied until the Applicable

 

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Closing Date, and Buyer pays to Seller the Applicable Cash Purchase Price but elects not to have Seller transfer the Applicable Synthetic Assets to Buyer and not to assume the Assumed Liabilities relating to the Applicable Purchased Assets relating thereto at such date.

 

“ Business Day ” means any day other than Saturday, Sunday or any day that is a legal holiday or a day in which banking institutions in New York are authorized by Law or other governmental action to close.

 

“ Business Employees ” means employees of Seller whose employment primarily relates to SBG.

 

“ Buyer Employees ” means Business Employees who accept offers of employment from Buyer pursuant to Section 6.4(a) hereof.

 

“ Claim ” means any claim, demand, cause of action, chose in action, right of recovery or right of set-off of whatever kind or description against any person.

 

“ COBRA ” shall mean the continuation coverage requirements set forth in Sections 601 et seq. of ERISA and Section 4980B of the Code.

 

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

 

“ Competing Offer ” means any inquiry, proposal or offer relating to a Competing Transaction.

 

“ Competing Transaction ” means any of the following: a sale, transfer or other disposition of all or substantially all of the assets of SBG in a single transaction or series of related transactions.

 

“ Confidentiality Agreement ” means that certain confidentiality agreement dated November 29, 2004 by and between an affiliate of Buyer and an affiliate of Seller.

 

“ Contract ” means all written contracts, subcontracts, agreements, leases, licenses, commitments, loan agreements, mortgages, security agreements, trust indentures, sales and purchase orders, statements of work, and other instruments, arrangements or understandings of any kind, including any amendments or alterations thereto.

 

“ Disclosure Schedules ” means the disclosure schedules delivered by Seller to Buyer and by Buyer to Seller on the date hereof which, among other things, set forth certain exceptions to the representations and warranties contained in Article IV and Article V hereof. Each reference in this Agreement to any numbered Schedule is a reference to that numbered Schedule in the Disclosure Schedules.

 

“ Employee Records ” means, with respect to Buyer Employees, copies of all job-related employment documents with the exception of non-work-related medical records or other records the transfer of which to Buyer in connection with the acquisition of the Purchased Assets would be in violation of applicable Law.

 

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“ Encumbrance ” means any lien, pledge, charge, easement, deed of trust, mortgage, right-of-way, restriction, encumbrance or other security interest of any kind or nature.

 

“ Environmental Laws ” means all applicable Laws or Governmental Orders relating to pollution, contamination or protection of the environment (including, without limitation, all applicable Laws or Governmental Orders relating to Hazardous Materials in effect as of the date of this Agreement), including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 6901 et. seq., the Clean Air Act, 42 U.S.C. Sections 7401 et. seq., the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et. seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et. seq. and similar state Laws.

 

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

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Excluded Assets ” means any and all assets, properties, rights or interests not described in the definition of Purchased Assets in this Section 1.1. Without limiting the generality of the foregoing sentence, the term Excluded Assets includes the following assets of Seller as of any Applicable Closing Date relating to or used in connection with SBG, which, notwithstanding any other provision of this Agreement, are expressly excluded from the Purchased Assets and are not to be acquired by Buyer pursuant to this Agreement:

 

(a) all cash, cash equivalents and bank deposits relating to the operation of SBG and generated by SBG prior to the Applicable Closing Date;

 

(b) all accounts receivable relating to the operation of SBG that are Holdback Assets as of the Applicable Closing Date;

 

(c) all SBG customer Contracts that are Holdback Assets as of the Applicable Closing Date;

 

(d) all of Seller’s rights and remedies pursuant to this Agreement and the Ancillary Agreements, including, without limitation, all Claims in favor of Seller against Buyer, whether arising by counterclaim or otherwise;

 

(e) the Global Crossing network and network assets;

 

(f) the name “Global Crossing” or any related or similar trade name, trademark, service mark, domain name or logo;

 

(g) all assets of Seller or any affiliate thereof that are not used primarily in the operation of SBG;

 

(h) all Contracts between Seller and its affiliates, except for such agreements specifically identified as Purchased Assets;

 

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(i) except as set forth in Section 6.4 hereof, all assets held by any Seller Plan;

 

(j) all refunds, credits or claims for refunds or credits related to Taxes of Seller or any affiliate thereof;

 

(k) all personnel records that are not Employee Records;

 

(l) all Claims in favor of Seller arising prior to the Applicable Closing Date, other than those pertaining to Purchased Assets or Assumed Liabilities (except for cross-claims and counterclaims pertaining to Purchased Assets or Assumed Liabilities in the event Seller is defending a Claim pertaining to Purchased Assets or Assumed Liabilities, which cross-claims and counterclaims shall constitute Excluded Assets);

 

(m) all Claims in favor of Seller against third parties, whether arising by way of counterclaim or otherwise, not relating to an Assumed Liability;

 

(n) all insurance policies relating to SBG and the Purchased Assets held by Seller and all Claims, credits or rights thereunder, including, without limitation, title insurance;

 

(o) any of Seller’s or any of Seller’s affiliates’ organizational documents, including certificates of incorporation and minute books;

 

(p) all Permits held by Seller or its affiliates;

 

(q) all Intellectual Property of Seller and its affiliates, except as set forth on Schedule 1.1(b) ; and

 

(r) all access loops used in connection with operations of the SBG.

 

“ Final Closing Date ” means the date of a Closing on which there are no remaining Holdback Assets or the date of the Holdback Release Date (within the meaning of clause (ii) of the definition thereof) unless Buyer elects to delay the date of such Final Closing Date to a date no later than March 31, 2006.

 

“ First Applicable Closing Date ” means the first Applicable Closing Date to occur after the date of this Agreement.

 

“ Fixtures and Equipment ” means all of the equipment (including personal computers, phones, handsets and other computer equipment), furniture, fixtures, furnishings, machinery and other tangible personal property owned by Seller and used primarily in connection with SBG.

 

“ GAAP ” means United States generally accepted accounting principles.

 

“ Governmental Authority ” means any court, government (federal, state, local, foreign or multinational) or other regulatory, administrative or governmental agency or authority.

 

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“ Governmental Order ” means any judgment, decision, consent decree, injunction, ruling, writ or order of or entered by any Governmental Authority that is binding on any person or its property under applicable Law.

 

“ Hazardous Materials ” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any federal, state or local law, statute, code, ordinance, regulation, rule or other requirement relating to such substance or otherwise relating to the environment or human health or safety, including without limitation any petroleum and petroleum products, asbestos and asbestos containing products, PCBs, waste, material, substance, pollutant or contaminant that might cause any injury to human health or safety or to the environment or might subject SBG to any imposition of costs or liability under any Environmental Law.

 

“ Holdback Assets ” means the Purchased Assets that cannot be transferred on any Applicable Closing Date because such transfer would be in violation of applicable Regulatory Law, which shall include the SBG customer Contracts and related accounts receivable for SBG customers located in states for which the parties have not yet received Regulatory Approval to consummate the transactions contemplated herein.

 

“ Holdback Liabilities ” means the Assumed Liabilities that cannot be transferred on any Applicable Closing Date because such transfer would be in violation of applicable Regulatory Law, which shall include the performance obligations arising under SBG customer Contracts for SBG customers located in states for which the parties have not yet received Regulatory Approval to consummate the transactions contemplated herein.

 

“ Holdback Release Date ” means the earlier to occur of (i) in the event there shall have occurred the First Applicable Closing Date, the date all the state Regulatory Approvals have been received that are required under applicable Regulatory Law in order to transfer all of the Purchased Assets, including all SBG Contracts and (ii) December 30, 2005; provided that the conditions precedent to the obligations of the parties set forth in Articles VII and VIII have been satisfied or waived (other than conditions which by their terms are not capable of being satisfied until the Applicable Closing Date), provided , further that, in the event there shall have occurred the First Applicable Closing or any Applicable Synthetic Closing Date, for purposes of this clause (ii), the Revenue Threshold in each of Sections 7.4 and 8.4 with respect to the receipt of state Regulatory Approvals shall not apply and shall not be deemed a condition precedent to the parties’ obligations to Close, it being understood and agreed that any Holdback Assets may not be transferred in connection with any Closing.

 

“ Independent Accounting Firm ” means KPMG or such other independent accounting firm of national reputation mutually appointed by Seller and Buyer.

 

“ Intellectual Property ” means (a) all patents and patent rights, trademarks and trademark rights, inventions, copyrights and copyright rights, and all pending applications for registration of patents, trademarks and copyrights, all as used or held for use by Seller or any of its affiliates, (b) business names, Internet domain names, brand names, logos, any and all trade secrets, confidential information, inventions, know-how, formulae, process, procedures, research records, market surveys and any and all other intellectual property rights owned or licensed to

 

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Seller or any of its affiliates and (c) all other computer software programs and subsequent versions thereof, including all source code, object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data, materials, manuals, design notes and other items and documentation related thereto or associated therewith relating to, owned or licensed to Seller or any of its affiliates.

 

“ Laws ” means any laws, statutes, ordinances, regulations, rules, decrees, executive orders, court decisions and orders of any Governmental Authority.

 

“ Leased Property ” means the leasehold real property leased by Seller that is located at 2737 South Ridge Road, Green Bay, WI 54304 and 1120 Pittsford-Victor Road, Pittsford, NY 14534.

 

“ Liabilities ” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any person of any type, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, asserted or unasserted, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those liabilities, indebtedness and obligations arising under any Law, Claim, Action, threatened Action, Governmental Order or any award of any arbitrator of any kind, and those arising under any Contract, commitment or undertaking.

 

“ Losses ” means, in respect of the indemnification obligations of any party pursuant to this Agreement, any and all actual costs, losses, liabilities, obligations, damages, deficiencies and other reasonable out-of-pocket expenses, including, without limitation, interest, penalties, reasonable attorneys’ fees and all amounts paid in investigation, defense or settlement of Actions relating to Losses.

 

“ Material Adverse Effect ” any material adverse change in, or material adverse effect on, the Purchased Assets, financial condition or results of operations of SBG, individually or taken as a whole, that was not reasonably foreseeable at the date hereof, provided that any such change or effect arising out of or resulting from (a) any change in economic conditions generally or in the industries in which SBG operates, (b) any continuation of an adverse trend or condition at substantially the same historical rate, (c) any change in Law or GAAP or interpretations thereof, (d) any materially adverse change in or effect on the Purchased Assets which is cured (including by the payment of money) by Seller to the reasonable satisfaction of Buyer before the termination of this Agreement in accordance with its terms, or (e) this Agreement or the transactions contemplated hereby, including, without limitation, the announcement or pendancy thereof, shall not be considered when determining whether a Material Adverse Effect has occurred.

 

“ MSA Holdback Amount ” means $1,000,000.

 

“ MSA Synthetic Holdback Amount ” means $8,000,000.

 

“ ordinary course of business ” or “ ordinary course ” or any similar phrase means the ordinary course of the business conducted by Seller with respect to SBG.

 

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“ Permits ” means all permits, licenses, franchises and other governmental authorizations, consents and approvals.

 

“ Permitted Encumbrances ” means (a) Encumbrances imposed by Law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’ and laborers’ liens incurred in the ordinary course of business and securing obligations which are not yet due or which are being contested in good faith and for which appropriate reserves have been established in accordance with GAAP, consistently applied, (b) Permitted Tax Liens, (c) planning restrictions, easements, licenses, rights of way, declarations, reservations, provisions, covenants, conditions, waivers, irregularities, survey exceptions or other title matters or Encumbrances (and, with respect to leasehold interests, Encumbrances and other obligations incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee) which do not materially impair the use (in the manner currently used) or value of the parcel of property to which they relate, (d) zoning, entitlement, conservation restriction and other land use and environmental regulations imposed by Governmental Authorities and (e) any extensions, renewals and replacements of any of the foregoing.

 

“ Permitted Tax Liens ” means (a) Encumbrances securing the payment of Taxes which are either not delinquent or being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, consistently applied and (b) Encumbrances for current Taxes not yet due and payable.

 

“ person ” means an individual, a partnership, a corporation, a limited liability company, a trust, an unincorporated organization, a government or any department or agency thereof or any other entity.

 

“ Primary Closing Date ” means the earlier to occur of (i) the First Applicable Closing Date and (ii) the Holdback Release Date.

 

“ Purchased Assets ” means all of Seller’s and its affiliates’ right, title and interest in and to the properties, assets and rights primarily related to SBG, including, without limitation:

 

(a) all assets owned or leased by Seller located at the Leased Properties and used primarily with respect to SBG;

 

(b) all SBG Contracts;

 

(c) all Fixtures and Equipment used primarily by the Buyer Employees;

 

(d) all deposits, credits, security deposits, advance payments, prepaid items and expenses and deferred charges primarily relating to SBG with respect to the Purchased Assets or services to be provided following the Primary Closing Date;

 

(e) all billed and unbilled accounts receivable relating to the operation of SBG;

 

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(f) all books, operating records and similar items of Seller relating primarily to the Purchased Assets except to the extent it contains trade secrets of Seller used in Seller’s businesses other than SBG;

 

(g) all Employee Records;

 

(h) all Intellectual Property set forth on Schedule 1.1(b); and

 

(i) all Claims arising prior to the Final Closing Date pertaining to the Purchased Assets or Assumed Liabilities (other than cross claims and counterclaims in the event Seller is defending a Claim pertaining to Excluded Assets or Retained Liabilities, which cross-claims and counterclaims to the extent relating to a particular Claim shall constitute Excluded Assets);

 

(j) the local Internet dial-up numbers used by SBG under the GRIC Contract and the related access information, to the extent Seller is able to receive the approval of the other parties to the GRIC Contract to transfer such dial-up numbers pursuant hereto; and

 

(k) the New Lockbox.

 

Notwithstanding the foregoing, the Purchased Assets shall not include any of the Excluded Assets. For the avoidance of doubt, the parties acknowledge and agree that any services to be provided to Buyer under the Ancillary Agreements and any assets, properties or rights held by Seller and used in connection with the provision of such services do not primarily relate to SBG and are therefore Excluded Assets.

 

“ Release ” means the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material.

 

“ Representative ” means, with respect to any person, any officer, director, principal, attorney, agent, employee or other authorized representative of such person.

 

“ Retained Liabilities ” means all Liabilities of Seller relating to SBG other than the Assumed Liabilities and the Holdback Liabilities (in existence as of any given Applicable Closing Date), which, notwithstanding any other provision of this Agreement, will not be assumed by Buyer, including, without limitation:

 

(a) all Liabilities of Seller relating to Excluded Assets;

 

(b) all Liabilities of Seller for Taxes other than Liabilities that are apportioned to Buyer pursuant to Section 2.5 or 2.6 hereof;

 

(c) all payment obligations of Seller for goods and services provided to Seller before the Primary Closing Date;

 

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(d) subject to Section 6.4 hereof, all Liabilities under Seller Plans, including for wages, pensions, retiree or other benefits, overtime, workers compensation benefits, occupational safety and health liabilities and other similar Liabilities in respect of Business Employees relating to the periods or events occurring before the Primary Closing Date, and all Liabilities with respect to Business Employees who do not become Buyer Employees, whether arising prior to, on or after the Primary Closing Date;

 

(e) all Liabilities in respect of indebtedness for borrowed money or outstanding checks or drafts;

 

(f) all Liabilities of any kind of Seller to any affiliate of Seller, or of any affiliate of Seller to Seller or any other affiliate of Seller (except as provided in any of the Ancillary Agreements);

 

(g) all Liabilities arising out of or resulting from any breach of any SBG Contract by Seller or any of its affiliates on or prior to the Applicable Closing Date on which such SBG Contract is an Applicable Purchased Asset;

 

(h) all Liabilities to any person for the refund of any amounts paid to Seller or any of its affiliates for any reason;

 

(i) all litigation related to or arising out of the operation of SBG prior to the Applicable Closing Date, regardless of when such litigation is commenced; and

 

(j) any other Liability arising with respect to events occurring prior to the Applicable Closing Date.

 

“ SBG Contracts ” means all Contracts between Seller or any of its affiliates, on the one hand, and a third party, on the other hand, relating primarily to the operation of SBG, including all customer Contracts of SBG and any Contract that generated revenue as reflected on the revenue statements of SBG.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Seller Plans ” means (a) bonus, deferred compensation, pension, retirement, profit-sharing, equity, thrift, savings, employment, time-off, disability insurance, sickness, termination, severance, compensation, life insurance, retiree health benefits, workers’ compensation, medical, health or other plans, agreements, policies or arrangements that cover the Business Employees; (b) any “employee welfare benefit plan,” as defined in Section 3(1) of ERISA or any “employee pension benefit plan,” as defined in Section 3(2) of ERISA, which Seller or any affiliate of Seller sponsors or to which Seller or any affiliate of Seller contributes or is required to contribute, or under which Seller or any affiliate of Seller may incur any Liability, and which covers any Business Employee or former Business Employee, including each multi-employer welfare benefit plan; and (c) any “multi-employer plan,” as defined in Section 4001(a)(3) of ERISA, to which Seller or any affiliate of Seller has contributed or been obligated to contribute within the past six years, and which covers any Business Employee or former Business Employee.

 

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“ Sublease Agreements ” means the sublease agreements in form and substance reasonably satisfactory to the parties.

 

“ Subleased Property ” means the real property located at 161 Chestnut Street, Rochester, NY 14604 and 2737 South Ridge Road, Green Bay, WI 54307.

 

“ Taxes ” means all taxes (including franchise taxes), charges, fees, levies or other assessments imposed by any Taxing Authority and based on or measured solely with respect to net income or profits, including any interest, penalties or additions attributable or imposed with respect thereto, and all taxes, charges, levies, fees or other assessments, including, but not limited to, transfer, gross receipt, sales, use, service, telecommunications, occupation, ad valorem, property, payroll, personal property, excise, severance, premium, stamp, documentary, license, registration, social security, employment, unemployment, disability, environmental (including taxes under Section 59A of the Code), add-on, value-added, withholding (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return therefor), commercial rent and occupancy taxes, and any estimated taxes, deficiency assessments, interest, penalties and additions to tax or additional amounts in connection therewith, imposed by any Taxing Authority.

 

“ Tax Return ” means any return, report or similar statement or form required to be filed with respect to any Tax (including any attached schedules and related or supporting information), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.

 

“ Taxing Authority ” means any Governmental Authority responsible for the imposition of any Tax or exercising Tax regulatory authority.

 

“ Total Cash Purchase Price ” means the sum of all Applicable Cash Purchase Price payments and the MSA Holdback Amount, which shall equal $40,500,000, subject to adjustments made in accordance with Sections 2.8 and 2.9.

 

1.2 Other Defined Terms . The following terms shall have the meanings defined for such terms in the Sections set forth below:

 

 

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1.3 Seller’s Knowledge . Whenever a phrase herein is qualified by “to the knowledge of Seller” or a similar phrase, it shall mean the actual knowledge, without independent investigation, of the employees of Seller listed on Schedule 1.3 .

 

ARTICLE II.

PURCHASE AND SALE OF ASSETS

 

2.1 Transfer of Assets . Upon the terms and subject to the conditions set forth in this Agreement, at the Applicable Closing Date, Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller’s rights, title and interests in and to the Applicable Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances. To the extent any of the Applicable Purchased Assets are owned by an affiliate of Seller and are not owned by Seller, Seller shall cause the owner of such Applicable Purchased Assets to either transfer such assets to Seller prior to the Applicable Closing Date or shall cause such affiliate to transfer such assets to Buyer without additional consideration at the Applicable Closing Date, and, upon request, to execute and deliver a bill of sale or other instrument of transfer evidencing such transfer to Buyer. Without limiting the generality of the foregoing, whenever this Agreement requires Seller to take any action, such requirement shall be deemed to include an undertaking on the part of Seller to cause its affiliates to take such action, as necessary and any representation and warranty contained herein shall be deemed to refer to Seller and its other affiliates that conduct SBG, as a collective group.

 

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2.2 Assumption of Liabilities .

 

(a) Upon the terms and subject to the conditions set forth in this Agreement, at the Applicable Closing Date, Buyer shall assume, pay, perform and discharge in due course the following Liabilities (the “ Assumed Liabilities ”):

 

(i) all Liabilities relating to the Applicable Purchased Assets (other than Liabilities caused or incurred by Seller prior to the Applicable Closing Date);

 

(ii) all Liabilities of Seller and its affiliates incurred after the Applicable Closing Date (other than Liabilities arising from events occurring prior to the Applicable Closing Date), arising with respect to events occurring after the Applicable Closing Date, under all SBG Contracts, other than Holdback Assets in existence as of such Applicable Closing Date, and real and personal property Leases included in the Purchased Assets;

 

(iii) all Liabilities with respect to Buyer Employees for which Buyer is responsible pursuant to Section 6.4 hereof, and all Liabilities incurred after the Primary Closing Date (other than Liabilities arising from events occurring prior to the Primary Closing Date), with respect to Buyer Employees;

 

(iv) all Liabilities for Taxes with respect to the Purchased Assets for which Buyer is liable pursuant to Sections 2.5 and 2.6 hereof and all Liabilities with respect to any Tax that may be imposed by any Governmental Authority or Taxing Authority on the ownership, sale, operation or use of the Applicable Purchased Assets after the Applicable Closing Date to the extent arising out of events occurring after the Applicable Closing Date;

 

(v) all Liabilities that Buyer or any of its affiliates has assumed or agreed to pay for or be responsible for, or will assume or agree to pay for or be responsible for, pursuant to the Ancillary Agreements; and

 

(vi) without limiting the generality of the foregoing, all Liabilities arising out of the ownership (other than with respect to Liabilities caused or incurred by Seller prior to Closing), sale, operation, use or condition of the Applicable Purchased Assets after the Applicable Closing Date, including all Liabilities in respect of any Actions against Seller or its affiliates that arise out of the ownership (other than Liabilities arising from events occurring prior to the Applicable Closing Date), sale, operation, use or condition of the Applicable Purchased Assets after the Applicable Closing Date, except to the extent Buyer is expressly indemnified for such Liabilities pursuant to the terms of this Agreement.

 

Notwithstanding the foregoing, the Assumed Liabilities shall not include any of the Retained Liabilities.

 

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(b) Buyer shall take, or cause to be taken, all actions reasonably necessary to cause the assumption on the Applicable Closing Date by Buyer of the Assumed Liabilities, including, without limitation, the execution and delivery at each such time of the applicable Assumption Agreement.

 

2.3 Purchase Price . The Purchase Price for the Purchased Assets (the “ Purchase Price ”) shall be an amount equal to (a) the Total Cash Purchase Price plus (b) the assumption of the Assumed Liabilities.

 

2.4 Allocation of Purchase Price . Seller and Buyer agree that as soon as reasonably practical after the Final Closing Date and prior to the filing of any Tax Return which includes information related to the transactions contemplated by this Agreement, the Purchase Price shall be allocated among the Purchased Assets, the licenses referred to in Section 6.5, and the non-compete referred to in Section 9.7, in accordance with an allocation schedule (the “ Purchase Price Allocation Schedule ”) proposed by Seller and reasonably acceptable to Buyer, which shall be prepared in a manner required by Section 1060 of the Code and other applicable Law and delivered by Seller to Buyer within thirty (30) days after the date that each of the Actual Closing Accounts Receivable is finally determined in accordance with Section 2.9 (it being understood and agreed that Seller shall deliver the Purchase Price Allocation Schedule (or any relevant portion thereof) to Buyer as promptly as practicable, and within a reasonable period of time prior to the date an IRS Form 8594 “Asset Acquisition Statements Under Section 1060” or other applicable Tax filing required to be filed with the applicable Taxing Authorities prior to the Final Closing Date). In connection therewith, Seller and Buyer shall discuss the allocation of the Purchase Price and attempt in good faith to reach agreement with respect thereto. Seller and Buyer may jointly agree to obtain the services of an Independent Accounting Firm to assist the parties in determining the fair value of the Purchased Assets if agreement is not reached with respect to the Purchase Price Allocation Schedule. If such an appraisal is made, both Seller and Buyer agree to accept the Independent Accounting Firm’s determination of the fair value of the Purchased Assets. The parties shall jointly select the Independent Accounting Firm. The cost of the appraisal shall be borne equally by Seller and Buyer. If agreement is reached with respect to the allocation of the Purchase Price, Seller and Buyer shall prepare mutually acceptable and substantially identical IRS Form 8594 “Asset Acquisition Statements Under Section 1060” consistent with the Purchase Price Allocation Schedule which the parties shall use to report the transactions contemplated by this Agreement to the applicable Taxing Authorities. Each of Seller and Buyer agree to provide the other promptly with any other information required to complete IRS Form 8594.

 

2.5 Closing Costs; Transfer Taxes and Fees . Buyer and Seller shall be responsible for, and share equally the costs of, (a) all sales, use, transfer and other Taxes and fees, if any, imposed by reason of the transfer of the Purchased Assets provided hereunder (and any deficiency, interest or penalty asserted with respect thereto) and (b) all recording, filing and registration fees or other charges in connection with or as a direct result of the transfer of the Purchased Assets (collectively, the “ Transfer Fees ”). Buyer shall file all necessary documentation and Tax Returns with respect to such Transfer Fees and Seller shall reasonably cooperate upon Buyer’s request.

 

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2.6 Proration and Certain Tax Matters .

 

(a) Proration . Except as provided in this Agreement (including Section 2.6 hereof), Buyer and Seller agree that the items listed below relating to the Purchased Assets will be prorated as of the Primary Closing Date, with Seller liable to the extent such items relate to (i) any time period ending prior to 12:01 a.m. on the Primary Closing Date and (ii) any time period beginning before the Primary Closing Date and ending after 12:01 a.m. on the Primary Closing Date, but only with respect to the portion of such time period up to and not including 12:01 a.m. on the Primary Closing Date (such portion, a “ Pre-Closing Partial Period ”) (the sum of all such amounts for which Seller is liable, the “ Seller Proration Amount ”), and Buyer liable to the extent such items relate to (i) any time period beginning on or after 12:01 a.m. on the Primary Closing Date and (ii) any time period beginning before the Primary Closing Date and ending after 12:01 a.m. on the Primary Closing Date, but only with respect to the portion of such time period beginning on or after 12:01 a.m. on the Primary Closing Date (such portion, a “ Post-Closing Partial Period ”) (the sum of all such amounts for which Buyer is liable, the “ Buyer Proration Amount ”):

 

(i) real property Taxes, personal property Taxes and similar ad valorem obligations levied on or with respect to the Purchased Assets;

 

(ii) other periodic charges and expenses that are unpaid as of the Primary Closing Date.

 

Notwithstanding the foregoing, Buyer shall not be responsible for any corporate allocations to SBG by Seller or its affiliates.

 

(b) Calculation . In connection with the prorations referred to in (a) above, all real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Purchased Assets for a taxable period which includes (but does not end on) the Primary Closing Date shall be apportioned between Seller and Buyer based on the number of days of the Pre-Closing Partial Period and the number of days of the Post-Closing Partial Period. In the event that actual figures are not available at the time of calculation, the proration shall be based upon the actual Taxes or fees for the preceding year (or appropriate period) for which actual Taxes or fees are available and such Taxes or fees shall be reprorated and payment attributable to such reproration shall be made within twenty (20) days of the date that the actual final amounts become available. Seller and Buyer agree to furnish each other with such documents and other records as may be reasonably requested in order to confirm all adjustment and proration calculations made pursuant to this Section 2.6.

 

(c) Tax Returns . With respect to Taxes to be prorated in accordance with this Section 2.6 only, Buyer shall prepare and timely file all Tax Returns required to be filed after the Primary Closing Date with respect to the Purchased Assets, if any, and shall duly and timely pay all Taxes shown to be due on such Tax Returns, subject to prompt reimbursement by Seller in accordance with this Section 2.6. Buyer’s preparation of any such Tax Returns shall be subject to Seller’s approval, which approval shall not be unreasonably withheld, conditioned or delayed. Buyer shall make such Tax Returns available for Seller’s review and approval no later than fifteen (15) Business Days prior to the due date for filing such Tax Return.

 

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(d) Cooperation . Each of Buyer and Seller shall provide the other with such assistance as may reasonably be requested by the other party in connection with the preparation of any Tax Return, any audit or other examination by any Taxing Authority, or any judicial or administrative proceedings relating to Liability for Taxes with respect to the Purchased Assets. Any information obtained pursuant to this Section 2.6(d) or pursuant to any other Section hereof providing for the sharing of information or review of any Tax Return or other schedule relating to Taxes shall be kept confidential by the parties hereto in accordance with Section 6.9 hereof.

 

2.7 Further Assurances and Regulatory Approvals .

 

(a) Upon the terms and subject to the conditions contained herein, each of the parties agrees, both before and after the Final Closing Date, (i) to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including using its reasonable best efforts to satisfy the conditions precedent to each party’s obligations hereunder, (ii) to execute any documents, instruments or conveyances of any kind which may be reasonably necessary or advisable to carry out any of the transactions contemplated hereunder and (iii) to cooperate with each other in connection with the foregoing. In furtherance and not in limitation of the foregoing, each party hereto agrees to file all necessary applications for Regulatory Approvals (as defined below), including pursuant to all Regulatory Laws (as defined below) at the appropriate Governmental Authority with respect to the transactions contemplated hereby as promptly as practical after the date hereof.

 

(b) Each of Buyer and Seller shall, in connection with the efforts referenced in Section 2.7(a) to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under all applicable Regulatory Law (“ Regulatory Approvals ”), use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any Action initiated by a private party, (ii) promptly inform the other party of any communication received by such party from, or given by such party to, the Federal Communications Commission (the “ FCC ”), state telecommunications regulatory agencies (“ PUCs ”) or any other Governmental Authority and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby and (iii) in each case regarding any of the transactions contemplated hereby, consult with each other in advance of any meeting or conference with the FCC, PUCs or any such other Governmental Authority or, in connection with any Action by a private party, with any other person, and to the extent permitted by the FCC, PUCs or such other applicable Governmental Authority or other person, give the other party the opportunity to attend and participate in such meetings and conferences. With respect to pre-Closing matters (i) Buyer and Seller joint filings shall be initially prepared by Buyer, and Seller shall review and have the right to comment on and approve (which approval shall not be unreasonably

 

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withheld, conditioned or delayed) in advance drafts of all communications, petitions, applications and other filings made or prepared by Buyer in connection with obtaining the requisite approvals and authorizations from the appropriate Governmental Authorities for the transactions contemplated hereby and (ii) with respect to filings that are not Buyer and Seller joint filings, each party shall have the right to review, comment on and approve (which approval shall not be unreasonably withheld, conditioned or delayed) in advance drafts of all communications, petitions, applications and other filings made or prepared by the other party in connection with obtaining the requisite approvals and authorizations from the appropriate Governmental Authorities for the transactions contemplated hereby. In furtherance of and not in limitation of the foregoing, the parties agree to file all necessary applications for required consents with PUCs jointly to the extent permitted under applicable Laws and to the extent reasonably necessary under the circumstances. For purposes of this Agreement, “ Regulatory Law ” means the Communications Act of 1934, as amended (the “ Communications Act ”) and all other Laws that are designed or intended to regulate the provision of telecommunications or other services. Except with respect to counsel or other advisors retained by a party, for which such party shall bear its own expenses, the parties shall share equally in all costs, including attorneys fees, filings fees and the like, incurred in seeking and obtaining the necessary Regulatory Approvals.

 

2.8 Accrued Employee Payments .

 

(a) Seller shall deliver to Buyer, not later than three (3) Business Days prior to the Primary Closing Date, a good faith estimate of Accrued Employee Payments (the “ Employee Estimated Statement ”) as of the close of business on the day immediately preceding the Primary Closing Date. Such estimate shall be signed by the chief financial officer or other authorized officer of Seller, who shall certify that such estimate was prepared in good faith in accordance with GAAP and from the books and records of Seller. The Applicable Cash Purchase Price payable by Buyer at the Primary Closing Date shall be reduced by an amount equal to the Accrued Employee Payments as set forth on the Employee Estimated Statement.

 

(b) Seller shall prepare and deliver to Buyer, not later than forty-five (45) days after the Primary Closing Date, a statement (the “ Actual Statement ”) setting forth a calculation of Accrued Employee Payments, both as of the close of business on the day immediately preceding the Primary Closing Date (and as such may be adjusted following resolution of disputes in accordance with this Section 2.8 (the “ Actual Closing Accrued Employee Payments ”)). Such statement shall be signed by the chief financial or other authorized officer of Seller, who shall certify that such statement was prepared in good faith in accordance with GAAP from the books and records of Seller. In connection with the calculation and preparation of the Actual Statement, Buyer shall provide Seller and its independent certified public accountants reasonable access to Buyer Employees and related personnel and all books and records of the Purchased Assets.

 

(c) If within forty-five (45) days following receipt of the Actual Statement by Buyer, Buyer has not provided Seller written notice of its objection as to the calculation of the Actual Statement (the “ Dispute Notice ”), then the determination of Actual Accrued

 

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Employee Payments, as calculated by Seller shall be binding and conclusive on the parties. Buyer may waive this forty-five (45) day period by providing written notice to Seller of its acceptance of the Actual Statement. During such period, Seller shall give Buyer reasonable access to the personnel and books and records of Seller relevant to the calculation of Actual Closing Accrued Employee Payments.

 

(d) If Buyer timely delivers to Seller the Dispute Notice (which notice shall state the basis of Buyer’s objection) within such forty-five (45) day period, Seller and Buyer shall use commercially reasonable efforts for a period of ten (10) days after Seller’s receipt of the Dispute Notice (or such longer period as Seller and Buyer shall mutually agree upon) to resolve any disputes raised by Buyer with respect to the calculation of Actual Closing Accrued Employee Payments, and Buyer and Seller shall provide information to the other party (as reasonably requested) related to the items of disagreement set forth in the Dispute Notice. Buyer and its Representatives shall have all reasonable rights of access to the personnel and books and records of Seller that are primarily related to SBG for such purposes. If at the end of such ten (10) day period, Buyer and Seller fail to resolve the issues outstanding with respect to the Actual Statement, Buyer and Seller shall refer any remaining disagreements to the Independent Accounting Firm.

 

(e) If issues are submitted to the Independent Accounting Firm for resolution: (i) each of Buyer and Seller shall submit to the Independent Accounting Firm their respective calculation of Actual Closing Accrued Employee Payments (each an “ Accounts Proposed Amount ”) within ten (10) days after the ten (10) day resolution period discussed in Section 2.8(d); (ii) Buyer and Seller shall furnish or cause to be furnished to the Independent Accounting Firm such work papers and other documents and information relating to the disputed issues as the Independent Accounting Firm may reasonably request and are available to that party or its Representatives and shall be afforded the opportunity to present to the Independent Accounting Firm any material relating to the disputed issues and to discuss the issues with the Independent Accounting Firm; and (iii) the Independent Accounting Firm shall make its own determination of the matters in dispute, as set forth in a notice to be delivered to Buyer and Seller (“ Closing Statement ”) within thirty (30) days of the submission to the Independent Accounting Firm of the Accounts Proposed Amounts, which shall be final, binding and conclusive on the parties and which shall not be less than as set forth in the Actual Statement nor greater than as set forth in the Dispute Notice.

 

(f) The fees and expenses of the Independent Accounting Firm (including any retainers) shall be borne equally by Buyer and Seller. Buyer and Seller shall each bear its own legal, accounting and other fees and expenses of participating in such dispute resolution procedure.

 

(g) The Total Closing Cash Purchase Price shall be (x) decreased by an amount equal to the difference between the Actual Closing Accrued Employee Payments and the Accrued Employee Payments in the Employee Estimated Statement in the event such difference is a positive number or (y) increased by an amount equal to the absolute value of the difference between the Actual Closing Accrued Employee Payments and the Accrued Employee Payments in the Employee Estimated Statement in the event such difference is a negative number.

 

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(h) Any adjustment to the Total Closing Cash Purchase Price pursuant to Section 2.8(g) shall be paid by wire transfer of immediately available funds to the account specified by Seller, if Seller is owed payment, or to the account specified by Buyer, if Buyer is owed payment, within three (3) days after (A) the Independent Accounting Firm’s determination of Actual Closing Accrued Employee Payments as set forth on the Closing Statement has become final and binding in accordance with Section 2.8(e) or (B) the date the Actual Statement has become final and binding in accordance with Section 2.8(c).

 

(i) Any payment made pursuant to this Section 2.8 shall (1) be accompanied by the payment of interest on the amount so paid, from and including the Primary Closing Date but excluding the date of the payment, calculated on a monthly basis at the prime rate of interest published in the Wall Street Journal, Eastern Edition in effect from time to time during the period beginning on the date of the Primary Closing Date and ending on the date of payment and (2) be treated for all purposes as an adjustment to the Purchase Price.

 

2.9 Accounts Receivable Adjustment .

 

(a) Seller shall deliver to Buyer, not later than three (3) Business Days prior to the Primary Closing Date, a good faith estimate of (i) SBG billed accounts receivable in respect of the Applicable Purchased Assets transferred as of such Primary Closing Date (the “ Primary Closing Accounts Receivable Estimated Statement ”) as of the close of business on the day immediately preceding the Primary Closing Date. Such estimate shall be signed by the chief financial officer or other authorized officer of Seller, who shall certify that such estimate was prepared in good faith in accordance with GAAP and from the books and records of Seller. If the aggregate SBG billed accounts receivable amount as set forth on the Primary Closing Accounts Receivable Estimated Statement (the “ Primary Closing Estimated Accounts Receivable ”) is equal to or exceeds the product of (x) a percentage equal to a fraction the numerator of which is equal to the aggregate revenue of SBG attributable to the SBG customers that are being transferred on the Primary Closing Date and the denominator of which is equal to the aggregate revenue of SBG as a whole, both as reflected on Schedule A and (y) the Aggregate Target Accounts Receivable (the “ Primary Target Accounts Receivable ”), the Applicable Cash Purchase Price payable by Buyer on the Primary Closing Date shall not be adjusted. If the Primary Target Accounts Receivable exceeds the Primary Closing Estimated Accounts Receivable, the Applicable Cash Purchase Price payable by Buyer on the Primary Closing Date shall be reduced by an amount equal to such excess (the “ Primary Closing Adjustment Amount ”). During the period between the date hereof and the Primary Closing Date, Seller shall bill the customers of SBG only in the ordinary course of business consistent with its past billing practices.

 

(b) Seller shall deliver to Buyer, not later than three (3) Business Days prior to the Final Closing Date, a good faith estimate of (i) SBG billed accounts receivable in

 

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respect of the Applicable Purchased Assets transferred during the period from the Primary Closing Date to and including the Final Closing Date ( provided that the Primary Closing Date is not the date of the Final Closing Date) (the “ Final Closing Accounts Receivable Estimated Statement ”) as of the close of business on the day immediately preceding the Final Closing Date. Such estimate shall be signed by the chief financial officer or other authorized officer of Seller, who shall certify that such estimate was prepared in good faith in accordance with GAAP and from the books and records of Seller. If the aggregate SBG billed accounts receivable amount as set forth on the Final Closing Accounts Receivable Estimated Statement (the “ Final Closing Estimated Accounts Receivable ”) is equal to or exceeds the product of (x) a percentage equal to a fraction the numerator of which is equal to the aggregate revenue of SBG attributable to the SBG customers that have been transferred the period from the Primary Closing Date to and including the Final Closing Date or are being transferred on the Final Closing Date and the denominator of which is equal to the aggregate revenue of SBG as a whole, both as reflected on Schedule A and (y) the Aggregate Target Accounts Receivable (the “ Final Closing Target Accounts Receivable ”), the Applicable Cash Purchase Price payable by Buyer on the Final Closing Date shall not be adjusted. If the Final Closing Target Accounts Receivable exceeds the Final Closing Estimated Accounts Receivable, the Applicable Cash Purchase Price payable by Buyer on the Final Closing Date shall be reduced by an amount equal to such excess (the “ Final Closing Adjustment Amount ”). During the period between the date hereof and the Final Closing Date, Seller shall bill the customers of SBG only in the ordinary course of business consistent with its past billing practices.

 

(c) Seller shall prepare and deliver to Buyer, not later than forty-five (45) days after each of the Primary Closing Date and the Final Closing Date ( provided that the Primary Closing Date is not the date of the Final Closing Date), a statement (each, an “ Actual Accounts Receivable Statement ”) setting forth a calculation of the aggregate SBG billed accounts receivable that constituted Applicable Purchased Assets transferred as of the Primary Closing Date and from the Primary Closing Date to and including the Final Closing Date (as applicable), in each case measured as of the close of business on the day immediately preceding each such Applicable Closing Date (and as such may be adjusted following resolution of disputes in accordance with this Section 2.9, each an “ Actual Accounts Receivable ”). Such statement shall be signed by the chief financial or other authorized officer of Seller, who shall certify that such statement was prepared in good faith in accordance with GAAP from the books and records of Seller. In connection with the calculation and preparation of the Actual Accounts Receivable Statement, Buyer shall provide Seller and its independent certified public accountants reasonable access to Buyer Employees and related personnel and all books and records of the Purchased Assets.

 

(d) If within forty-five (45) days following receipt of any Actual Accounts Receivable Statement by Buyer, Buyer has not provided Seller written notice of its objection as to the calculation of such Actual Accounts Receivable Statement (each, an “ Accounts Receivable Dispute Notice ”), then the determination of Actual Closing Accounts Receivable, as calculated by Seller shall be binding and conclusive on the parties. Buyer may waive this forty-five (45) day period by providing written notice to

 

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Seller of its acceptance of the Actual Accounts Receivable Statement. During such period, Seller shall give Buyer reasonable access to the personnel and books and records of Seller relevant to the calculation of Actual Accounts Receivable.

 

(e) If Buyer timely delivers to Seller an Accounts Receivable Dispute Notice (which notice shall state the basis of Buyer’s objection) within such forty-five (45) day period, Seller and Buyer shall use commercially reasonable efforts for a period of ten (10) days after Seller’s receipt of such Accounts Receivable Dispute Notice (or such longer period as Seller and Buyer shall mutually agree upon) to resolve any disputes raised by Buyer with respect to the calculation of Actual Accounts Receivable, and Buyer and Seller shall provide information to the other party (as reasonably requested) related to the items of disagreement set forth in the Accounts Receivable Dispute Notice. Buyer and its Representatives shall have all reasonable rights of access to the personnel and books and records of Seller that are primarily related to SBG for such purposes. If at the end of such ten (10) day period, Buyer and Seller fail to resolve the issues outstanding with respect to such Actual Accounts Receivable Statement, Buyer and Seller shall refer any remaining disagreements to the Independent Accounting Firm.

 

(f) If issues are submitted to the Independent Accounting Firm for resolution: (i) each of Buyer and Seller shall submit to the Independent Accounting Firm their respective calculation of Actual Closing Accounts Receivable (each an “ Accounts Receivable Proposed Amount ”) within ten (10) days after the ten (10) day resolution period discussed in Section 2.9(d); (ii) Buyer and Seller shall furnish or cause to be furnished to the Independent Accounting Firm such work papers and other documents and information relating to the disputed issues as the Independent Accounting Firm may reasonably request and are available to that party or its Representatives and shall be afforded the opportunity to present to the Independent Accounting Firm any material relating to the disputed issues and to discuss the issues with the Independent Accounting Firm; and (iii) the Independent Accounting Firm shall make its own determination of the matters in dispute, as set forth in a notice to be delivered to Buyer and Seller (each, an “ Accounts Receivable Closing Statement ”) within thirty (30) days of the submission to the Independent Accounting Firm of the Accounts Receivable Proposed Amounts, which shall be final, binding and conclusive on the parties and which shall not be greater than as set forth in the Actual Accounts Receivable Statement nor less than as set forth in the Accounts Receivable Dispute Notice.

 

(g) The fees and expenses of the Independent Accounting Firm (including any retainers) shall be borne equally by Buyer and Seller. Buyer and Seller shall each bear its own legal, accounting and other fees and expenses of participating in such dispute resolution procedure.

 

(h) (i) If the aggregate amount of Total Cash Purchase Price was decreased at the Primary Closing Date pursuant to Section 2.9(a) by the Primary Closing Adjustment Amount and the Primary Closing Target Accounts Receivable exceeds the Actual Accounts Receivable for the Primary Closing Date, then the Total Cash Purchase Price shall be (x) increased by an amount equal to the Primary True Up Amount in the event the Primary True Up Amount is a positive number or (y) decreased by an amount equal to

 

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the absolute value of the Primary True Up Amount in the event the Primary True Up Amount is a negative number, (ii) if the Total Cash Purchase Price was not adjusted at the Primary Closing Date pursuant to Section 2.9(a) and the Primary Closing Target Accounts Receivable exceeds the Actual Accounts Receivable for the Primary Closing Date, then the Total Cash Purchase Price shall be decreased by the amount of any such excess and (iii) if the Total Cash Purchase Price was not adjusted at the Primary Closing Date pursuant to Section 2.9(a) and the Actual Accounts Receivable for the Primary Closing Date is greater than the Primary Target Accounts Receivable, then there shall be no adjustment to the Total Cash Purchase Price. For the purposes of this Section 2.9, the “ Primary True Up Amount ” means the difference between Actual Closing Accounts Receivable at the Primary Closing Date and the Primary Closing Estimated Accounts Receivable, which may be a positive or negative number.

 

(i) If the aggregate amount of Total Cash Purchase Price was decreased at the Final Closing Date pursuant to Section 2.9(b) by the Final Closing Adjustment Amount and the Final Closing Target Accounts Receivable exceeds the Actual Accounts Receivable for the period from the Primary Closing Date to and including the Final Closing Date, then the Total Cash Purchase Price shall be (x) increased by an amount equal to the Final True Up Amount in the event the Final True Up Amount is a positive number or (y) decreased by an amount equal to the absolute value of the Final True Up Amount in the event the Final True Up Amount is a negative number, (ii) if the Total Cash Purchase Price was not adjusted at the Final Closing Date pursuant to Section 2.9(b) and the Final Closing Target Accounts Receivable exceeds the Actual Accounts Receivable for the Primary Closing Date, then the Total Cash Purchase Price shall be decreased by the amount of any such excess and (iii) if the Total Cash Purchase Price was not adjusted at the Final Closing Date pursuant to Section 2.9(b) and the Actual Accounts Receivable for the Final Closing Date is greater than the Final Target Accounts Receivable, then there shall be no adjustment to the Total Cash Purchase Price. For the purposes of this Section 2.9, the “ Final True Up Amount ” means the difference between Actual Closing Accounts Receivable at the Final Closing Date and the Final Closing Estimated Accounts Receivable, which may be a positive or negative number.

 

(j) Any adjustment to the Total Cash Purchase Price pursuant to Section 2.9(g) or (h) shall be paid by wire transfer of immediately available funds to the account specified by Seller, if Seller is owed payment, or to the account specified by Buyer, if Buyer is owed payment, within three (3) days after (A) the Independent Accounting Firm’s determination of Primary Closing Accounts Receivable or Final Closing Accounts Receivable as set forth on each of the respective Actual Accounts Receivable Statements has become final and binding in accordance with Section 2.9(e) or (B) the date the Actual Accounts Receivable Statement has become final and binding in accordance with Section 2.9(c).

 

(k) Any payment made pursuant to this Section 2.9 shall (1) be accompanied by the payment of interest on the amount so paid, from and including the Applicable Closing Dates but excluding the date of the payment, calculated on a monthly basis at the prime rate of interest published in the Wall Street Journal, Eastern Edition in effect from time to time during the period beginning on the date of the Applicable Closing Dates and ending on the date of payment and (2) be treated for all purposes as an adjustment to the Purchase Price.

 

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(l) For the purposes of this Section 2.9, no effect will be given to the reversal of any credit since October 31, 2004, other than in respect of direct compensation to SBG customers or the provision of services to SBG customers.

 

ARTICLE III.

CLOSING AND HOLDBACK

 

3.1 Closing . Unless this Agreement shall have been terminated in accordance with Section 10.1 hereof, the closing of the purchase and sale of the Purchased Assets, the assumption of the Assumed Liabilities and the consummation of the other transactions contemplated herein, including the Holdback Assets and the Holdback Liabilities to be transferred on each Applicable Closing Date, (in each applicable case, a “ Closin