Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AND CONTRIBUTION AGREEMENT
BY AND AMONG
BALDWIN ENTERPRISES, INC.
STI PREPAID, LLC,
SAMER TAWFIK,
TELCO GROUP, INC.,
STI PHONECARD
INC.,
DIALAROUND ENTERPRISES INC.,
STI MOBILE INC.,
PHONECARD ENTERPRISES INC.,
VOIP ENTERPRISES INC.,
STI PCS, LLC,
TAWFIK & PARTNERS, SNC
STI PREPAID & CO.
STI PREPAID DISTRIBUTORS & CO.
AND
ST
FINANCE, LLC
DATED AS OF
JANUARY 23, 2007
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TABLE OF CONTENTS
PAGE
1.
DEFINITIONS..........................................................................2
1.1
Certain
Definitions...........................................................2
1.2 Other
Definitions............................................................12
2. PURCHASE
AND SALE OF ASSETS; CONTRIBUTION OF ASSETS; ASSUMPTION OF
CERTAIN
LIABILITIES.........................................................................15
2.1
Purchase and Sale of
Assets..................................................15
2.2
Excluded
Assets..............................................................16
2.3
Contributions to Capital of ST Finance, the Buyer and DR
Partnership;
and Assumption of
Liabilities................................................17
2.4
Assumption of
Liabilities....................................................17
2.5
Excluded
Liabilities.........................................................18
2.6
Further Conveyances and Assumptions; Consent of Third
Parties...............18
2.7
Bulk-Sales
Laws..............................................................20
2.8
Purchase Price
Allocation....................................................20
2.9 Right
to Control
Payment.....................................................21
2.10 Proration
of Certain
Expenses................................................21
2.11
Post-Initial Closing Receipts and
Invoices...................................21
3.
CONSIDERATION; INITIAL
CLOSING......................................................21
3.1
Purchase
Price...............................................................21
3.2
Determination of Final Working
Capital.......................................22
4. CLOSING
AND
DELIVERIES..............................................................24
4.1
Initial
Closing..............................................................24
4.2
Closing Deliveries by the
Sellers............................................25
4.3
Closing Deliveries by the
Buyer..............................................26
4.4
Closing Deliveries by ST
Finance.............................................27
4.5
Initial Closing Deliveries by DR
Entities....................................28
4.6
Initial Closing Deliveries by DR
Partnership.................................28
4.7
Initial Closing Deliveries by
ST.............................................28
5.
REPRESENTATIONS AND WARRANTIES OF ST AND THE
SELLERS................................29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.1
Organization, Authority and Qualification of the Sellers and
the
Subsidiaries.................................................................29
5.2
Qualification to Do
Business.................................................29
5.3 Power
and Authority of the
Sellers...........................................29
5.4
Consents; No
Conflict........................................................30
5.5
Assets.......................................................................30
5.6
Licenses.....................................................................31
5.7
Contracts....................................................................32
5.8 Real
Property................................................................34
5.9
Environmental
Matters........................................................34
5.10 Compliance
with
Laws.........................................................35
5.11
Intellectual
Property........................................................35
5.12 Tangible
Personal
Property...................................................38
5.13 Financial
Statements.........................................................39
5.14 Accounts
and Notes Receivable and
Payable....................................40
5.15 Conduct in
the Ordinary Course; Absence of Material Adverse
Effect..........40
5.16 Legal
Proceedings............................................................42
5.17 Taxes; Tax
Returns...........................................................42
5.18 Employment
Matters...........................................................44
5.19
Labor........................................................................47
5.20 Undisclosed
Liabilities......................................................48
5.21
Insurance....................................................................48
5.22
Inventories..................................................................48
5.23 Related
Party
Transactions...................................................48
5.24 Customers
and
Suppliers......................................................49
5.25 Banks,
Powers of
Attorney....................................................49
5.26 Full
Disclosure..............................................................49
5.27 Certain
Payments.............................................................50
5.28 Finders and
Brokers..........................................................50
5.29 Regulatory
Filings...........................................................50
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND DR
PARTNERSHIP......................50
6.1
Organization, Authority and Qualification of the Buyer and DR
Partnership..................................................................50
6.2
Qualification to Do
Business.................................................50
6.3 Power
and Authority of the Buyer and DR
Partnership..........................51
6.4
Consents; No
Conflict........................................................51
6.5
Finders and
Brokers..........................................................51
6.6 Legal
Proceedings............................................................52
6.7
Financing....................................................................52
6.8 No
Prior
Activities..........................................................52
6.9 Full
Disclosure..............................................................52
6.10 Certain
Payments.............................................................52
7.
COVENANTS...........................................................................52
7.1 Access
to Premises and Books and
Records.....................................52
7.2
Interim Operation of the Sellers and the
Subsidiaries........................53
7.3
Employee
Matters.............................................................56
7.4
Consents.....................................................................57
7.5 HSR
Notification.............................................................57
7.6
Notification of Certain
Matters..............................................57
7.7
Updated
Schedules............................................................58
7.8
Satisfaction of
Conditions...................................................58
7.9
Publicity;
Confidentiality...................................................58
7.10
Non-Competition;
Non-Solicitation............................................59
7.11 Further
Action...............................................................61
7.12 Existing
Litigation..........................................................61
7.13
Non-Solicitation.............................................................61
7.14 Change of
Name; Use of
Name..................................................62
7.15 Agreed Upon
Practices and
Procedures.........................................62
7.16 Financial
Information........................................................63
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TABLE OF CONTENTS
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7.17 Covenant of
ST...............................................................63
7.18 Audited
Financial
Statements.................................................63
7.19 WARN
Act.....................................................................63
7.20 Employment
Offers............................................................63
7.21 Covenant of
the Buyer and DR
Partnership.....................................64
7.22 Liability
Insurance..........................................................64
7.23
Intellectual Property
Covenant...............................................64
7.24 Transfer of
DR
Employees.....................................................64
8. CONDITIONS
TO
CLOSING...............................................................64
8.1
Initial Closing Conditions to the Obligations of the Buyer and
the
Sellers......................................................................64
8.2
Initial Closing Conditions to the Obligations of the
Buyer...................64
8.3
Initial Closing Conditions to Obligations of the
Sellers.....................66
8.4
Dialaround Closing
Conditions................................................66
9.
TERMINATION.........................................................................67
9.1 Events
of
Termination........................................................67
9.2 Liabilities in Event of
Termination..........................................67
10.
INDEMNIFICATION.....................................................................68
10.1 Survival of
Representations, Warranties and
Covenants........................68
10.2
Indemnification by the
Sellers...............................................69
10.3
Indemnification by BEI, the Buyer and DR
Partnership.........................69
10.4 Third Party
Claims...........................................................69
10.5 Limitations
on Indemnification -- Sellers and
ST.............................70
10.6 Limitations
on Indemnification --BEI, the Buyer and DR
Partnership..........71
10.7 Sole
Remedy; Additional Provisions Relating to
Indemnification..............72
10.8 Right of
Offset..............................................................72
10.9 Tax
Treatment of Indemnity
Payments..........................................72
10.10 Litigation
Expense
Reimbursement.............................................73
10.11 Indemnification
For Schedule 10.11 Matters...................................73
11.
TAX
MATTERS.........................................................................74
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11.1 Transfer
Taxes...............................................................74
11.2 Cooperation
on Tax
Matters...................................................74
11.3 Tax
Treatment of
Transactions................................................75
12.
MISCELLANEOUS.......................................................................75
12.1 Parties
Obligated and
Benefited..............................................75
12.2
Notices......................................................................75
12.3
Waiver.......................................................................76
12.4
Captions.....................................................................76
12.5 Governing
Law................................................................76
12.6
Terms........................................................................77
12.7 Rights
Cumulative;
Remedies..................................................77
12.8
Counterparts.................................................................77
12.9 Entire
Agreement.............................................................77
12.10
Severability.................................................................77
12.11
Construction.................................................................77
12.12
Expenses.....................................................................77
12.13 Commercially
Reasonable
Efforts..............................................78
12.14 Waiver of Jury
Trial.........................................................78
12.15 Alternate
Dispute
Resolution.................................................78
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INDEX OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1
Excluded Contracts
Schedule 2.4
Assumed Liabilities
Schedule 3.2(a)
Sample Measurement Date Reference List
Schedule 3.2(b)
Sample Working Capital and Average Gross Margin
Percentage Calculations
Schedule 5.23(b)
Related Parties
Schedule 7.15
Practices and Procedures
Schedule 7.23
Intellectual Property Covenant
Schedule 10.5
Post-Initial Closing Covenants of the Sellers
Schedule 10.6
Post-Initial Closing Covenants of the Buyer
Schedule 10.11 Schedule 10.11
Matters
Schedule A
Form of Pledge Agreement
Schedule B
Form of Confidentiality and Non-Competition Agreement
Schedule C
Form of DR Legal Opinion
Schedule D
Form of Regulatory Legal Opinion
Schedule E
Form of Bill of Sale
Schedule F
Form of Assignment and Assumption Agreement
Schedule G
Form of Dialaround Transition Services Agreement
Schedule H
Form of Employment Agreement of ST
Schedule I
Forms of Non-Foreign Status Affidavit
Schedule J
Form of DR Partnership Agreement
Schedule K
Form of Account Control Agreement
EXHIBITS
Exhibit A
Form of Buyer Operating Agreement
Exhibit B
Form of Registration Rights Agreement
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INDEX OF DEFINED TERMS
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Account Control Agreement..................2
Control....................................75
Action....................................71
Controlled Group Member...................45
Affiliate..................................2
Copyrights..................................8
Agreement..................................1
Deductible.................................72
Annual Reimbursement Period...............74
Dialaround..................................1
Appraisal.................................21
Dialaround Assets...........................4
Asset Acquisition Statement...............21
Dialaround Assumed Liabilities.............4
Assets.....................................3
Dialaround Closing.........................25
Assignment and Assumption Agreement.......26
Dialaround Closing BEI Assumed
Assumed DR Liabilities.....................2
Liabilities................................4
Assumed Liabilities........................3
Dialaround Closing BEI Purchased Assets....4
Audited Financial Statements..............40
Dialaround Closing Buyer Purchase Price...23
Average Gross Margin Percentage............3
Dialaround Closing Date...................26
Balance Sheet..............................3
Dialaround Closing STi Assumed
Baldwin....................................1
Liabilities................................4
BEI........................................1
Dialaround Closing STi Purchased Assets....4
BEI Assumed Liabilities....................1
Dialaround Transition Services Agreement...4
BEI Purchased Assets.......................1
Disclosure Schedules.......................4
Best of the Buyer's Knowledge..............3
Documents...................................4
Best of the Sellers' Knowledge.............3
DR Cash.....................................4
Bill of Sale..............................26
DR
Entities.................................4
Books and Records..........................3
DR Partnership..............................1
Business...................................3
DR Partnership Agreement...................5
Business Day...............................3
Employee Benefit Plan.....................45
Buyer......................................1
Employees...................................5
Buyer Cap.................................73
Employment Agreement......................28
Buyer Consideration.......................23
Encumbrance.................................5
Buyer Disclosure Schedules.................3
Enforceability Exceptions.................34
Buyer Operating Agreement..................2
Environmental Claims.......................5
Buyer Organizational Documents............51
Environmental Costs and Liabilities........5
Buyer Purchase Price......................22
Environmental Laws..........................5
Buyer Required Consents...................52
Environmental Permit.......................5
Buyer Uncapped Losses.....................73
ERISA.......................................5
Buyer's Perpetual Representations.........69
Excluded Assets............................17
Cap.......................................72
Excluded Contracts..........................5
Cash Shortfall Amount.....................23
Excluded Liabilities......................19
CLEC Agreements...........................34
Extraordinary Events......................72
COBRA.....................................45
FCC.........................................6
Code.......................................3
Final Statement............................24
Communications Act.........................3
Financial Statements......................40
Communications Laws.......................33
Former Employees............................6
Company Regulatory Licenses...............32
Furniture and Equipment....................6
Confidential Information..................60
GAAP........................................6
Confidentiality Agreement.................60
Governmental Authority.....................6
Contracts..................................4
Governmental Regulator.....................6
1
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Hardware...................................6
Permitted Investments.....................10
Hazardous Substances.......................6
Person.....................................10
Hired Employees............................6
Personal Property Leases..................40
HSR Act....................................7
Phonecard Enterprises......................1
Indebtedness...............................7
Pledge Agreement...........................11
Indemnified Party.........................71
Post-Initial Closing Covenants............10
Indemnifying Party........................71
Pre-Initial Closing Covenants.............10
Independent Accounting Firm...............24
Provider Marks.............................63
Independent Appraiser.....................21
Provider Marks License....................63
Initial Closing...........................25
Purchase Price.............................22
Initial Closing Assumed Liabilities........7
Purchased Assets...........................16
Initial Closing BEI Assumed Liabilities....7
Purchased Contracts........................10
Initial Closing BEI Purchased Assets.......7
Purchased DR Assets.........................2
Initial Closing Cash Amount...............22
Purchased Intellectual Property...........10
Initial Closing Date......................25
Purchased Technology......................10
Initial Closing Purchase Price Adjustment.23
Real Property..............................10
Initial Closing Purchased Assets...........7
Real Property Leases......................35
Initial Closing STi Assumed Liabilities....7
Reference Balance Sheet Date..............10
Initial Closing STi Purchased Assets.......7
Registration Rights Agreement.............28
Intellectual Property......................8
Regulatory Legal Opinion..................27
Intellectual Property Licenses.............8
Regulatory Surcharges.....................10
Interim Period.............................1
Reimbursable Action........................74
IRS.......................................45
Reimbursable Amounts......................74
Law........................................8
Reimbursed Party...........................74
Leased Real Property......................35
Related Persons............................49
Legal Proceeding...........................8
Representatives............................62
Liability..................................8
Required Consents..........................31
Licenses...................................8
Restricted Business........................61
Litigation Reimbursement Period...........74
Restricted Period..........................61
Losses.....................................8
Rules......................................79
Marks......................................8
Schedule 10.5 Covenants...................72
Material Adverse Effect....................9
Schedule 10.6 Covenants...................73
Material Contract.........................33
Secured Account............................10
Measurement Date Reference List............9
Security Account Amount...................23
Multiemployer Plan........................47
Seller......................................1
Nonassignable Assets......................20
Sellers.....................................1
Non-DR Entities............................9
Sellers' Perpetual Representations........69
Non-Foreign Status Affidavit..............27
Software...................................11
Open Source Software.......................9
Sole Arbitrator............................79
Order......................................9
ST..........................................1
Organizational Documents..................30
ST Finance..................................1
Partnership Purchase Price................23
State PUC..................................11
Patents....................................8
State PUC
Consent..........................11
Pension Plan..............................45
State PUC Licenses.........................11
Permits....................................9
Statement..................................23
Permitted Encumbrances.....................9
STi Assumed Liabilities....................2
2
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STi CC 1...................................1
Termination Fee............................69
STi CC 2...................................1
Third Party................................12
STi Mobile.................................1
Total Consideration........................22
STi PCS....................................1
Trade Secrets...............................8
STi Phonecard..............................1
Transaction Documents.....................30
STi Prepaid & Co...........................1
Transfer
Taxes.............................12
STi Prepaid Distributors & Co..............1
U.S. Cash..................................12
STi Purchased Assets.......................1
Unaudited Financial Statements............40
Subsidiaries..............................11
Uncapped Losses............................72
T&P........................................1
VoIP Enterprises............................1
Takeover Proposal.........................63
WARN.......................................48
Tax Return................................11
Welfare Plan...............................45
Taxes.....................................11
Wireless Business..........................12
Technology................................11
Wireline Business..........................12
Telco......................................1
Working Capital............................12
Telco Award Agreements....................12
Working Capital Calculation Date..........13
Telecommunication Licenses................12
Working Capital Shortfall Amount..........23
Telecommunications Company................61
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3
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ASSET PURCHASE AND CONTRIBUTION AGREEMENT
This Asset Purchase and Contribution Agreement (this "Agreement")
is
made as of the 23rd day of January, 2007, by and among ST Finance,
LLC, a
Delaware limited liability company ("ST Finance"), STi Prepaid, LLC
(the
"Buyer"), a Delaware limited liability company and indirect
subsidiary of
Baldwin Enterprises, Inc. ("Baldwin"), a Colorado corporation and
indirect
wholly owned subsidiary of Leucadia National Corporation, a New
York
corporation, Samer Tawfik, an individual residing at 23 Shorewood
Drive, Port
Washington, NY 11050 ("ST"), Telco Group, Inc., a Delaware
corporation
("Telco"), STi Phonecard Inc., a Delaware corporation ("STi
Phonecard"),
Dialaround Enterprises Inc., a Delaware corporation ("Dialaround"),
STi Mobile
Inc., a Delaware corporation ("STi Mobile"), Phonecard Enterprises
Inc., a
Delaware corporation ("Phonecard Enterprises"), VoIP Enterprises
Inc., a
Delaware corporation ("VoIP Enterprises"), STi PCS, LLC, a Delaware
limited
liability company ("STi PCS"), Tawfik & Partners, SNC, a
Luxembourg general
partnership, ("T&P"), STi Prepaid & Co., a Dominican
Republic partnership ("STi
Prepaid & Co."), and STi Prepaid Distributors & Co., a
Dominican Republic
partnership ("STi Prepaid Distributors & Co." and together with
Telco, STi
Phonecard, Dialaround, STi Mobile, Phonecard Enterprises, VoIP
Enterprises, STi
PCS, T&P and STi Prepaid & Co., collectively the "Sellers"
and each individually
a "Seller").
----------
WHEREAS, the Sellers and the Subsidiaries (such term and others
used but
not defined in these recitals shall have the meaning set forth in
Section 1)
conduct the Business;
WHEREAS, Baldwin or an affiliate thereof ("BEI") holds 100% of
the
membership interest in the Buyer and, through the Buyer's wholly
owned
subsidiaries, STi CC 1, LLC, a Delaware limited liability company
("STi CC 1")
and STi CC 2, LLC, a Delaware limited liability company ("STi CC
2"), will hold
100% of the partnership interest in a newly formed Dominican
Republic
partnership ("DR Partnership") and subject to the terms and
conditions set forth
in this Agreement, will make capital contributions aggregating
$120,000,000 to
the Buyer and DR Partnership;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Non-DR Entities shall sell, transfer and assign to
the Buyer and
the Buyer shall (i) acquire for cash from the Non-DR Entities an
undivided 75%
interest in all of the Non-DR Entities' right, title and interest
in and to the
Purchased Assets (the "BEI Purchased Assets") and (ii) assume 75%
of the Assumed
Liabilities of the Non-DR Entities (the "BEI Assumed Liabilities"),
all as more
specifically provided herein;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Non-DR Entities shall contribute to the capital of
ST Finance and
ST Finance shall (i) acquire from the Non-DR Entities the remaining
undivided
25% interest in all of the Non-DR Entities' right, title and
interest in and to
the Purchased Assets (the "STi Purchased Assets"), (ii) assume the
remaining 25%
of the Assumed Liabilities of the Non-DR Entities (the "STi
Assumed
Liabilities") and (iii) issue 100% of the membership interests in
ST Finance to
the Non-DR Entities, all as more specifically provided herein;
1
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WHEREAS, subject to the terms and conditions set forth in this
Agreement, ST Finance shall contribute all of the STi Purchased
Assets to the
capital of the Buyer and the Buyer (i) shall acquire from ST
Finance all of the
STi Purchased Assets, (ii) assume all of the STi Assumed
Liabilities and (iii)
issue 25% of the membership interest in the Buyer to ST Finance,
all as more
specifically provided herein;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, ST Finance and BEI will enter into the Amended and
Restated Limited
Liability Company Agreement of Buyer, a copy of which is attached
hereto as
Exhibit A (the "Buyer Operating Agreement");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the DR Entities shall sell, transfer and assign to DR
Partnership and
DR Partnership shall (i) acquire for cash from the DR Entities, all
of the DR
Entities' right, title and interest in and to the Purchased Assets
(the
"Purchased DR Assets") and (ii) assume all of the Assumed
Liabilities of the DR
Entities (the "Assumed DR Liabilities"), all as more specifically
provided
herein;
WHEREAS, subject to the terms and conditions set forth in the
Agreement,
the Buyer will, through STi CC 1 and STi CC 2, make capital
contributions to the
DR Partnership, all as more specifically provided herein;
WHEREAS, the purpose of this Agreement is to set forth the
definitive
terms upon which such purchase, sale, assumption and contribution
will take
place.
----------
In consideration of the above recitals and the representations,
warranties and agreements stated in this Agreement, the parties
agree as
follows:
1.
DEFINITIONS.
1.1
Certain Definitions. In addition to terms defined elsewhere in
this Agreement, the following capitalized terms, when used in this
Agreement,
will have the meanings set forth below:
Account Control Agreement. The Securities Account Control
Agreement,
dated as of the Initial Closing Date, among ST, BEI and JPMorgan
Chase Bank, NA,
relating to the Secured Account, substantially in the form attached
as Schedule
K hereto.
Affiliate. With respect to any Person, any other Person
controlling,
controlled by or under common control with such Person, with
"control" for such
purpose meaning the possession, directly or indirectly, of the
power to direct
or cause the direction of the management and policies of a Person,
whether
through the ownership of voting securities or voting interests, by
contract or
otherwise.
Assets. Any and all (a) properties, assets and rights of any
kind,
nature and description, whether real, personal or mixed, tangible
or intangible,
and (b) right, title and interest in and to any of the
foregoing.
2
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Assumed Liabilities. All Liabilities of the Sellers and the
Subsidiaries
set forth on Schedule 2.4 hereof.
Average Gross Margin Percentage. Average gross margin
percentage
relating to prepaid phone cards and wireless cards for the three
month period
ending on the last calendar day of the month prior to the Initial
Closing Date,
which shall be calculated in accordance with GAAP as revenue minus
the cost of
sales in such period divided by the revenue, in each case,
generated in such
period.
Quarterly Balance Sheet. The combined balance sheet of the Sellers
and
Subsidiaries as at the most recently completed fiscal quarter.
Best of the Buyer's Knowledge. The actual knowledge of David Larsen
as
regards a particular state of facts.
Best of the Sellers' Knowledge. The actual knowledge of any of
ST,
Douglas Barley, Mohamed Ahmed, Baher Ahmed, Tom D'Aurio, Jason
Welch, Richard
Rebetti, Chris Zarate, Darren Chick and Jeannine Malloy as regards
a particular
state of facts.
Books and Records. All records, files, data, accounts,
drawings,
blueprints, schematics, reports, lists, plans and processes of the
Sellers and
the Subsidiaries.
Business. The Wireline Business and the Wireless Business.
Business Day. Any day other than Saturday, Sunday or a day on
which
banking institutions in New York, New York are required or
authorized to be
closed.
Buyer Disclosure Schedules. The Buyer's disclosure schedules
annexed to
this Agreement.
Code. The Internal Revenue Code of 1986, as amended, and the rules
and
regulations promulgated thereunder and currently in effect.
Communications Act. The U.S. Communications Act of 1934, as
amended, and
the rules and regulations of the FCC promulgated thereunder and
currently in
effect.
Contracts. All contracts, memoranda of understanding, consent
decrees,
arrangements and agreements, whether written or oral, to which any
of the
Sellers or a Subsidiary is a party or with respect to which any of
their Assets
are affected.
Dialaround Assets. All of Dialaround's right, title and interest in
and
to the Purchased Assets.
Dialaround Assumed Liabilities. All of the Dialaround Closing
BEI
Assumed Liabilities and the Dialaround Closing STi Assumed
Liabilities.
Dialaround Closing BEI Assumed Liabilities. All of the BEI
Assumed
Liabilities to the extent that such liabilities arise from the
Dialaround
Assets.
3
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Dialaround Closing BEI Purchased Assets. All of the BEI Purchased
Assets
that consist of an interest in the Dialaround Assets.
Dialaround Closing STi Assumed Liabilities. All of the STi
Assumed
Liabilities to the extent that such liabilities arise from the
Dialaround
Assets.
Dialaround Closing STi Purchased Assets. All of the STi Purchased
Assets
that consist of an interest in the Dialaround Assets.
Dialaround Transition Services Agreement. The Transition
Services
Agreement, dated as of the Initial Closing Date, by and between
Dialaround and
Buyer, substantially in the form of Schedule G.
Disclosure Schedules. The disclosure schedules annexed to this
Agreement.
Documents. All files, documents, instruments, papers, books,
reports,
records, tapes, microfilms, photographs, letters, budgets,
forecasts, ledgers,
journals, title policies, lists of past, present and/or prospective
customers,
supplier lists, regulatory filings, operating data and plans,
technical
documentation (design specifications, functional requirements,
operating
instructions, logic manuals, flow charts, etc), user documentation
(installation
guides, user manuals, training materials, release notes, working
papers, etc.),
marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc..),
and other similar materials related to the Business and the
Purchased Assets, in
each case whether or not in electronic form.
DR Cash. The United States cash and United States cash equivalents
held
by any of the DR Entities.
DR Entities. STi
Prepaid & Co. and STi Prepaid Distributors & Co.
DR Partnership Agreement. The Partnership Agreement of DR
Partnership,
to be entered into by and between STi CC 1 and STi CC 2 prior to
the Initial
Closing substantially in the form attached as Schedule J
hereto.
Employees. All employees of the Sellers and/or the
Subsidiaries.
Encumbrance. Any mortgage, lien, security interest, security
agreement,
conditional sale or other title retention agreement, pledge,
option, assessment,
claim, easement or any other restriction on transfer.
Environmental Claims. Any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or
administrative
proceeding, judgment, letter or other communication from any
governmental
agency, department, bureau, office or other authority, or any third
party
alleging any violation of or liabilities under any Environmental
Laws or
Releases of Hazardous Substances.
Environmental Costs and Liabilities. With respect to any Person,
all
liabilities, obligations, responsibilities, Remedial Actions,
losses, damages,
punitive damages, consequential damages, costs and expenses
(including all
reasonable fees, disbursements and expenses of counsel, experts and
consultants
4
<PAGE>
and costs of investigation and feasibility studies), fines,
penalties, sanctions
and interest incurred as a result of any claim or demand by any
other Person or
in response to any violation of Environmental Law, whether known or
unknown,
accrued or contingent, whether based in contract, tort, implied or
express
warranty, strict liability, criminal or civil statute, to the
extent based upon,
related to, or arising under or pursuant to any Environmental Law,
Environmental
Permit, order or agreement with any Governmental Body or other
Person, which
relates to any environmental, health or safety condition, violation
of
Environmental Law or a Release or threatened Release of Hazardous
Substances.
Environmental
Laws. All laws (including common law) pertaining to
protection of the environment, natural resources, or exposure to
toxic or
Hazardous Substances or liability for the release of Hazardous
Substances
including, but not limited to, the Comprehensive Environmental
Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as amended;
the Resource
Conservation and Recovery act, 42 U.S.C. 6901 et seq., as amended;
the Clean Air
Act, 42 U.S.C. 7401 et seq., as amended; the Clean Water Act, 33
U.S.C. 1251 et
seq., as amended; the Occupational Safety and Health act, 29 U.S.C.
655 et seq.;
and any other federal, state, local or municipal laws, statutes,
regulations,
rules or ordinances imposing liability or establishing standards of
conduct for
protection of the environment.
Environmental Permit. Any Permit required by Environmental Laws for
the
operation of the Business.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended,
and the rules and regulations promulgated thereunder and currently
in effect.
Excluded Contracts. All Employee Benefit Plans (except the
existing
Aetna health plan) and any other Contract that by the terms of this
Agreement
has expressly not been assumed or that is set forth in Schedule
1.1.
FCC. The U.S. Federal Communications Commission and any
successor
Governmental Authority.
Former Employees. All individuals (including common law
employees,
independent contractors and individual consultants) who were
employed or engaged
by the Sellers or the Subsidiaries in connection with the Business
but who are
no longer so employed or engaged on the date of this Agreement.
Furniture and Equipment. All furniture, fixtures, furnishings,
equipment, vehicles, leasehold improvements, and other tangible
personal
property owned or used by the Sellers and the Subsidiaries in the
conduct of the
Business, including all artwork, desks, chairs, tables, Hardware,
copiers,
telephone lines and numbers, telecopy machines and other
telecommunication
equipment, cubicles and miscellaneous office furnishings and
supplies.
GAAP. Generally accepted accounting principles as in effect from
time to
time in the United States of America applied in a manner consistent
with past
practices.
Governmental Authority. (a) The United States of America or any
other
sovereign nation; (b) any state, commonwealth, territory or
possession of the
United States of America or any other sovereign nation and any
political
5
<PAGE>
subdivision thereof (including counties, municipalities and the
like); or (c)
any agency, authority or instrumentality of any of the foregoing,
including any
court, tribunal, department, bureau, commission or board.
Governmental
Regulator. Any and all Governmental Authorities having
regulatory jurisdiction and/or oversight over the Business or the
Sellers.
Hardware. Any and all computer and computer-related hardware,
including,
but not limited to, computers, file servers, facsimile servers,
scanners, color
printers, laser printers and networks.
Hazardous Substances. (a) Any "hazardous waste" as defined by
the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.
ss.ss. 6901 et
seq.), as amended, and the rules and regulations promulgated
thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental
Response,
Compensation and Liability Act of 1980 (42 U.S.C. ss.ss. 9601 et
seq.) (CERCLA),
as amended, and the rules and regulations promulgated thereunder;
(c) asbestos
or asbestos-containing material of any kind or character; (d)
polychlorinated
biphenyls; (e) any substances regulated under the provisions of
Subtitle I of
RCRA relating to underground storage tanks; and (f) any other
material,
substance or waste which requires special handling, reporting or
notification of
any Governmental Authority in its collection, storage, use,
treatment or
disposal, under Environmental Laws including any substance,
material or waste
regulated, classified or characterized as "hazardous," "toxic," a
"pollutant" or
"contaminant" under Environmental Laws.
Hired Employees. The U.S. individuals who, prior to the Initial
Closing,
accept the Buyer's written offer of employment (on an "at will"
basis, except as
otherwise provided in a duly executed employment agreement with the
Buyer) at
the same salary or hourly wage rate and position in effect
immediately prior to
the Initial Closing Date and the Employees of the DR Entities
transferred in
accordance with the Laws of the Dominican Republic.
HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as
amended, and the rules and regulations promulgated thereunder.
Indebtedness. With respect to any specified Person and without
duplication, any liability (contingent or otherwise, but excluding
any
Intercompany Liabilities) relating to: (a) indebtedness, including
interest and
any prepayment penalties, expenses, or fees thereon created, issued
or incurred
by such Person for borrowed money (whether by loan or the issuance
and sale of
debt securities or the sale of property to another Person subject
to an
understanding or agreement, contingent or otherwise, to repurchase
such property
from such Person); (b) reimbursement obligations and obligations
with respect to
letters of credit, bankers' acceptances, bank guarantees, surety
bonds and
performance bonds, whether or not matured; (c) obligations of such
Person to pay
the deferred purchase or acquisition price of property or services,
other than
indemnification obligations, trade accounts payable arising, and
accrued
expenses incurred, in the ordinary course of its business and
consistent with
such Person's customary trade practices; (d) obligations with
respect to
interest rate swap agreements, interest rate cap agreements,
interest rate
collar agreements, interest rate insurance agreements, foreign
exchange
contracts, currency swap or option agreements, forward contracts,
commodity
swap, purchase or option agreements, other commodity price hedging
arrangements
6
<PAGE>
and all other similar Contracts specifically designed to alter the
risks of any
Person arising from fluctuations in interest rates, currency values
or commodity
prices; (e) indebtedness secured by a lien on the property of such
Person,
whether or not the respective indebtedness so secured is a primary
obligation of
or has been assumed by such Person; (f) capital lease obligations
of such
Person; and (g) indebtedness of others guaranteed by such
person.
Initial Closing Assumed Liabilities. All of the Assumed
Liabilities,
except to the extent that such liabilities arise from the
Dialaround Assets.
Initial Closing BEI Assumed Liabilities. All of the BEI Assumed
Liabilities, except for the Dialaround Closing BEI Assumed
Liabilities.
Initial Closing BEI Purchased Assets. All of the BEI Purchased
Assets,
except for the Dialaround Closing BEI Purchased Assets.
Initial Closing Purchased Assets. All of the Purchased Assets,
except
for the Purchased Assets that consist of an interest in the
Dialaround Assets.
Initial Closing STi Assumed Liabilities. All of the STi Assumed
Liabilities, except for the Dialaround Closing STi Assumed
Liabilities.
Initial Closing STi Purchased Assets. All of the STi Purchased
Assets,
except for the Dialaround Closing STi Purchased Assets.
Intellectual Property. All right, title and interest in or relating
to
intellectual property, whether protected, created or arising under
the laws of
the United States or any other jurisdiction, including: (i) all
patents and
applications therefor, including all continuations, divisionals,
and
continuations-in-part thereof and patents issuing thereon, along
with all
reissues, reexaminations and extensions thereof (collectively,
"Patents"); (ii)
all trademarks, service marks, trade names, service names, brand
names, trade
dress rights, logos, corporate names, trade styles, logos and other
source or
business identifiers and general intangibles of a like nature,
together with the
goodwill associated with any of the foregoing, along with all
applications,
registrations, renewals and extensions thereof (collectively,
"Marks"); (iii)
all Internet domain names; (iv) all copyrights and all mask work,
database and
design rights, whether or not registered or published, all
registrations and
recordations thereof and all applications in connection therewith,
along with
all reversions, extensions and renewals thereof (collectively,
"Copyrights");
(iv) all proprietary or confidential information of the Sellers or
the
Subsidiaries relating to the Business ("Trade Secrets"); (v) all
other
intellectual property rights arising from or relating to
Technology, and (vi)
all Contracts granting any right relating to or under the
foregoing.
Intellectual Property Licenses. Any grant by (i) the Sellers or
any
Subsidiary to another Person of any right relating to or under the
Purchased
Intellectual Property or Purchased Technology and (ii) another
Person to any
Seller or any Subsidiary of any right relating to or under any
third Person's
Intellectual Property or Purchased Technology.
7
<PAGE>
Law. Any statute, ordinance, code, law, rule, regulation, order or
other
written requirement, standard or procedure enacted, adopted or
applied by any
Governmental Authority.
Legal Proceeding. Any judicial, administrative or arbitral
action,
suits, mediation, investigation, inquiries, proceedings or claims
(including
counterclaims) by or before a Governmental Authority.
Liability. Any debt, loss, damage, adverse claim, fines,
penalties,
liability or obligation (whether direct or indirect, known or
unknown, asserted
or unasserted, absolute or contingent, accrued or unaccrued,
matured or
unmatured, determined or determinable, liquidated or unliquidated,
or due or to
become due, and whether in contract, tort, strict liability or
otherwise), and
including all costs and expenses relating thereto including all
fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants
and costs of investigation.
Licenses. Any and all licenses, permits, authorizations,
certificates,
exemptions and approvals of Governmental Authorities necessary or
proper for the
current use, occupancy or operation of an asset or a business.
Losses. Any losses, legal liabilities, damages, penalties,
obligations,
judgments, costs (including, without limitation, costs of
investigation or
enforcement) and expenses, including interest that may be imposed
in connection
therewith, expenses of investigation, reasonable fees and
disbursements of
counsel and other experts, and settlement costs, including, without
limitation,
to the extent actually assessed, punitive damages, which are paid
by the
indemnified party as a result of a third party action, in each case
net of
insurance proceeds actually received by the party suffering such
Losses.
Material Adverse Effect. Any change, circumstance, effect or event
that,
individually or when taken together, is or would reasonably be
expected to be
materially adverse to (A) the business, assets, liabilities,
condition
(financial or other) or results of operations of the Sellers and
their
Subsidiaries, in each case taken as a whole, or (B) the ability of
the Sellers
or ST to perform their respective obligations under this Agreement,
the Buyer
Operating Agreement, or the DR Partnership Agreement to which they
are a party
or to consummate the transactions contemplated hereby or thereby,
including as a
consequence of any material impediment, interference or delay.
Measurement Date Reference List. The combined trial balance list of
the
Sellers and the Subsidiaries as of the end of the day on the
Working Capital
Calculation Date, whose components are fairly stated in accordance
with GAAP,
and prepared consistent with past practice, as adjusted on a pro
forma basis to
exclude any Excluded Liabilities or Excluded Assets.
Non-DR Entities. The Sellers and Subsidiaries, other than the
DR
entities.
Open Source Software. All software that is open source, shareware,
or
freeware and that requires as a condition of use, modification
and/or
distribution of such software that other software incorporated
into, derived
from or distributed with such software (a) be disclosed or
distributed in source
code form; (b) be licensed for the purpose of making derivative
works; or (c) be
redistributable at no charge.
8
<PAGE>
Order. Any order, injunction, judgment, doctrine, decree, ruling,
writ,
assessment or arbitration award of a Governmental Authority.
Permits. Any approvals, authorizations, consents, licenses, permits
or
certificates of a Governmental Authority.
Permitted Encumbrances. The following Encumbrances: (a) liens for
Taxes,
assessments and governmental charges not yet due and payable and/or
which are
being contested in good faith by appropriate proceedings and for
which adequate
reserves have been established in accordance with GAAP; (b) zoning
laws and
ordinances and similar Laws; (c) any right reserved to any
Governmental
Authority to regulate the affected property; (d) in the case of any
leased
Asset, any Encumbrance granted thereunder; (e) capital leases, to
the extent
listed on Section 5.12(b) of the Disclosure Schedules; (f)
materialmens',
mechanics', workmen's, repairmen's or other like Encumbrances
arising in the
ordinary course of business, consistent with past practices; (g)
any Encumbrance
(other than an Encumbrance securing a monetary obligation) that
does not
individually or in the aggregate interfere with the continued use
of the Assets
subject thereto in the operation of the Business as currently being
used; and
(h) pledges or deposits in connection with workers' compensation,
unemployment
insurance and other social security Laws.
Permitted Investments. Any (i) cash, (ii) investments in
obligations
issued or guaranteed by the United States government or any agency
thereof and
(iii) money market funds collateralized by any investment in
obligations issued
or guaranteed by the United States government or any agency
thereof.
Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability
company,
Governmental Authority or other entity.
Post-Initial Closing Covenants. Any covenant, agreement or
obligation
contained in this Agreement that by its nature is required to be
performed after
the Initial Closing.
Pre-Initial Closing Covenants. Any covenant, agreement or
obligation
contained in this Agreement that by its nature is required to be
performed by,
through, at or prior to the Initial Closing.
Purchased Contracts. All Contracts related to the Business,
including
those listed on Section 5.7 of the Disclosure Schedules and
Intellectual
Property Licenses but excluding any Excluded Contracts.
Purchased Intellectual Property. All Intellectual Property related
to,
held for use or contemplated to be used in connection with the
Business.
Purchased Technology. All Technology related to, held for use
or
contemplated to be used in connection with the Business.
Real Property. The Assets owned or leased by any of the Sellers or
the
Subsidiaries consisting of realty, including appurtenances,
improvements and
fixtures located on such realty, and any other interests in real
property,
9
<PAGE>
including fee interests, leasehold interests and easements, wire
crossing
permits, and rights of entry.
Reference Balance Sheet Date. December 31, 2005.
Regulatory Surcharges. All federal, state, local or foreign
charges,
fees, imposts, levies or other assessments of any kind or nature
imposed by any
Governmental Regulator, including all federal and state
telecommunications fees
and levies, including but not limited to universal service
contributions,
telecommunications relay service fees, local number portability
fees, and FCC
and State PUC regulatory fees, together with any interest thereon
and any late
fees, penalties, or interest.
Secured Account. The account of ST which has been pledged to BEI
and the
Buyer pursuant to the Pledge Agreement attached as Schedule A
hereto (the
"Pledge Agreement") securing all obligations of ST, Sellers and
Subsidiaries
under Section 10.
Software. Any and all (i) computer programs, including any and
all
software implementations of algorithms, models and methodologies,
whether in
source code or object code; (ii) databases and compilations,
including any and
all data and collections of data, whether machine readable or
otherwise; (iii)
descriptions, flow-charts and other work product used to design,
plan, organize
and develop any of the foregoing, screens, user interfaces, report
formats,
firmware, development tools, templates, menus, buttons and icons;
and (iv) all
documentation, including user manuals and other training
documentation related
to any of the foregoing.
State PUC means any state or local public service or public
utilities
commission (or the equivalent) having regulatory authority over the
Business, as
conducted in any given jurisdiction.
State PUC Consent means the grant by any State PUC of its consent
to the
assignment of the State PUC Licenses or any Non-Transferred Assets
associated
with such Licenses, in connection with the consummation of the
transactions
contemplated hereby.
State PUC Licenses means all Licenses issued or granted by the
State PUC
held by the Sellers or any Operating Subsidiary in each applicable
jurisdiction,
as set forth on Section 5.6 of the Disclosure Schedules.
Subsidiaries. TGI S.a.r.l., a Luxemburg limited liability company,
TGI
S.a.r.l. Schaffhausen, a Swiss branch of TGI S.a.r.l., and the DR
Entities.
Tax Return. Any return, report or statement required to be filed
with
respect to any Tax, declarations, schedules or attachments thereto,
and any
amendment thereof) including any information return, amended return
or
declaration of estimated Tax, and including, where permitted or
required,
combined, consolidated or unitary returns for any group of entities
that
includes the Sellers, any of the Subsidiaries, or any of their
Affiliates.
Taxes. (i) All federal, state, local or foreign taxes, charges,
fees,
imposts, levies or other assessments of any kind or nature imposed
by any
Governmental Authority, other than Regulatory Surcharges, including
all income,
capital, sales, use, ad valorem, value added, franchise, severance,
net or gross
proceeds, withholding, social security, payroll, employment,
excise, property
10
<PAGE>
and estimated taxes, customs, duties, fees, assessments, charges
and levies of
any kind whatsoever, and (ii) any items described in clause (i)
payable by
reason of Contract, assumption, transferee liability, operation of
Law, Treasury
Regulation Section 1.1502-6(a) (or any predecessor or successor
thereof of any
analogous or similar provision under Law) or otherwise.
Technology. Collectively, all database technologies, Software,
systems,
product specifications, data, samples, structures, and
architectures (and
related processes, formulas, compositions, improvements, devices,
know-how,
inventions, discoveries, concepts, ideas, designs, methods,
sketches,
photographs, graphs, drawings and information), inventions (whether
patentable
or unpatentable and whether or not reduced to practice), all
improvements
thereto, past, current and planned research and development,
current and planned
research and distribution methodologies and processes, all
analytical
approaches, frameworks and methodologies, and all notes, analyses,
compilations,
studies, summaries, confidential business information, client and
customer
lists, databases and data collections and all rights therein,
current and
anticipated client and customer requirements, price lists, market
studies,
business plans, however and whether or not documented, other
material prepared
by or for a Person containing or based, in whole or in part, on any
information
included in the foregoing, however documented, and any other
related information
or technology, that are used in, incorporated in, embodied in,
displayed by or
relate to, or are used in the design, development, reproduction,
maintenance or
modification of, any of such Person's products.
Telco Award Agreements. Those agreements between Telco and
certain
Employees or former Employees, listed on Section 1.1 of the
Disclosure
Schedules.
Telecommunication Licenses. All Licenses granted to the
applicable
Sellers and/or Subsidiaries by the FCC, the State PUCs, or other
Governmental
Regulators for the operation of the Business.
Third Party. Any Person other than the Sellers, the Subsidiaries,
the
Buyer, DR Partnership, and their respective Affiliates.
Transfer Taxes. Any federal, state, county, local, foreign and
other
sales, use, transfer, conveyance, documentary, recording or other
similar tax,
fee or charge imposed upon the sale, transfer or assignment of
property or any
interest therein or the recording thereof, and any penalty,
addition to tax or
interest with respect thereto, but such term shall not include any
tax on, based
upon or measured by, the net income, gains or profits from such
sale, transfer
or assignment of the property or any interest therein.
U.S. Cash. The United States cash and United States cash
equivalents of
the Non-DR Entities.
Wireless Business. The prepaid wireless business of the
applicable
Sellers and Subsidiaries.
Wireline Business. Business engaged in by the Sellers and the
Subsidiaries, except for the Wireless Business, and including
prepaid calling
card services, wholesale services offered to other
telecommunications service
11
<PAGE>
providers, the dial-around ("10-10-XXX") business and any related
or
contemplated additional services.
Working Capital. The combined current assets of the Sellers and
the
Subsidiaries as of a specified date less the combined current
liabilities of the
Sellers and the Subsidiaries as of such specified date, in each
case determined
in accordance with GAAP, consistently applied, except for (i)
deferred revenue
which shall, for purposes of calculating Working Capital, be an
amount equal to
the actual deferred revenue balance as of such specified date
multiplied by a
factor equal to 100% minus the Average Gross Margin Percentage and
(ii) shall
not include any asset or liability relating to income Tax. It is
the intention
of the parties that all financial results (whether income or
expense) of the
Sellers and the Subsidiaries from the Working Capital Calculation
Date to the
Initial Closing Date shall be for the benefit, or burden, of and
belong to, or
be the responsibility of, the Buyer; and ST, the Sellers and the
Subsidiaries so
covenant and agree.
Working Capital Calculation Date The last calendar day of the
calendar
month that immediately precedes the calendar month in which the
Initial Closing
occurs.
1.2
Other Definitions. The following terms are defined in the
Sections indicated:
Term
Section
----
-------
Action
10.4
Agreement
Recitals
Annual Reimbursement Period
10.10(a)
Appraisal
2.8
Asset Acquisition Statement
2.8
Assignment and Assumption Agreement
4.2(a)
Assumed DR Liabilities
Recitals
Audited Financial Statements
5.13
Baldwin
Recitals
BEI
Recitals
BEI Assumed Liabilities
Recitals
BEI Purchased Assets
Recitals
Bill of Sale
4.2(a)
Buyer
Recitals
Buyer Cap
10.6
Buyer Consideration
3.1(b)
Buyer Operating Agreement
Recitals
Buyer Organizational Documents
6.1
Buyer Purchase Price
3.1(b)
Buyer Required Consents
6.4(a)
Buyer Uncapped Losses
10.6
Buyer's Perpetual Representations
10.1(a)
Cap
10.5
Cash Shortfall Amount
3.1(b)
CLEC Agreements
5.7(a)
COBRA
5.18(b)
Communications Laws
5.6(b)
12
<PAGE>
Term
Section
----
-------
Company Regulatory Licenses
5.6(a)
Confidential Information
7.9(c)
Confidentiality Agreement
7.9(b)
Control
10.11
Controlled Group Member
5.18(a)
Deductible
10.5
Dialaround
Recitals
Dialaround Closing
4.1(b)
Dialaround Closing Buyer Purchase Price
3.1(b)
Dialaround Closing Date
4.1(b)
DR Partnership
Recitals
Employee Benefit Plans
5.18(a)
Enforceability Exception
5.7(b)
Excluded Assets
2.2
Excluded Liabilities
2.5
Extraordinary Events
10.5
Final Reference List
3.2(b)
Final Statement
3.2(b)
Financial Statements
5.13(b)
Indemnified Party
10.4
Indemnifying Party
10.4
Independent Accounting Firm
3.2(b)
Independent Appraiser
2.8
Initial Closing
4.1(a)
Initial Closing Cash Amount
3.1(b)
Initial Closing Date
4.1(a)
IRS
5.18(c)
Leased Real Property
5.8(b)
Litigation Reimbursement Period
10.10(a)
Material Contract
5.7(a)
Multiemployer Plan
5.18(f)
Nonassignable Assets
2.6(c)
Non-Foreign Status Affidavit
4.2(a)
Organizational Documents
5.1
Partnership Purchase Price
3.1
Pension
Plan
5.18(a)
Personal Property Leases
5.12(b)
Phonecard Enterprises
Recitals
Provider Marks
7.14(b)
Purchase Price
3.1(a)
Purchased Assets
2.1(c)
Purchased DR Assets
Recitals
Real Property Leases
5.8(b)
Registration Rights Agreement
4.3(a)
Regulatory Legal Opinion
4.2(a)
13
<PAGE>
Term
Section
----
-------
Reimbursable Action
10.10(b)
Reimbursable Amounts
10.10(a)
Reimbursed Party
10.10(b)
Related Persons
5.23
Representatives
7.13(a)
Required Consents
5.4(a)
Restricted Business
7.10(a)
Restricted Period
7.10(a)
Rules
12.15
Schedule 10.5 Covenants
10.5
Schedule 10.6 Covenants
10.6
Security Account Amount
3.1(b)
Seller
Recitals
Sellers
Recitals
Sellers' Perpetual Representations
10.1(a)
Sole Arbitrator
12.15
ST
Recitals
ST Finance
Recitals
Statement
3.2(a)
STi Assumed Liabilities
Recitals
STi CC 1
Recitals
STi CC 2
Recitals
STi Mobile
Recitals
STi PCS
Recitals
STi Phonecard
Recitals
STi Prepaid
& Co.
Recitals
STi Prepaid Distributors & Co.
Recitals
STi Purchased Assets
Recitals
T&P
Recitals
Takeover Proposal
7.13(c)
Telco
Recitals
Termination Fee
9.2(b)
Total Consideration
3.1(a)
Transaction Documents
5.3(a)
Unaudited Financial Statements
5.13(b)
Uncapped Losses
10.5
VoIP Enterprises
Recitals
WARN
5.18(m)
Welfare Plan
5.18(a)
Working Capital Calculation Date
3.1(b)
14
<PAGE>
2. PURCHASE
AND SALE OF ASSETS; CONTRIBUTION OF ASSETS; ASSUMPTION OF
CERTAIN LIABILITIES.
2.1
Purchase and Sale of Assets. Subject to the terms and
conditions
set forth in this Agreement:
(a)
at the Initial Closing, the Sellers shall (and shall cause the
Subsidiaries to) sell, assign, transfer, convey and deliver to (i)
the Buyer,
and the Buyer shall acquire, accept and purchase from the Sellers
and the
Subsidiaries, all of the Sellers' and the Subsidiaries' right,
title and
interest in, to and under the Initial Closing BEI Purchased Assets,
free and
clear of all Encumbrances except for Permitted Encumbrances,
subject to the
assumption by the Buyer of the Initial Closing BEI Assumed
Liabilities described
in Section 2.4(a)(i) hereof and (ii) DR Partnership, and DR
Partnership shall
acquire, accept and purchase from the Sellers, all of the DR
Entities' right,
title and interest in, to and under the Purchased DR Assets, free
and clear of
all Encumbrances except for Permitted Encumbrances, subject to the
assumption by
DR Partnership of the Assumed DR Liabilities described in Section
2.4(a)(ii)
hereof; and
(b)
at the Dialaround Closing, the Sellers shall (and shall cause
the Subsidiaries to) sell, assign, transfer, convey and deliver to
the Buyer,
and the Buyer shall acquire, accept and purchase from the Sellers
and the
Subsidiaries, all of the Sellers' and the Subsidiaries' right,
title and
interest in, to and under the Dialaround Closing BEI Purchased
Assets, free and
clear of all Encumbrances except for Permitted Encumbrances,
subject to the
assumption by the Buyer of the Dialaround Closing BEI Assumed
Liabilities
described in Section 2.4(b)(i) hereof.
(c)
"Purchased Assets" shall mean all of the business, assets,
properties, contractual rights, goodwill, going concern value,
rights and claims
of the Sellers and the Subsidiaries related to, used in or useful
to the
Business, wherever situated and of whatever kind and nature, real
or personal,
tangible or intangible, whether or not reflected on the Books and
Records (other
than the Excluded Assets), including each of the following
assets:
(i)
all cash, cash equivalents, bank deposits or similar
cash items and accounts receivable of the Sellers and the
Subsidiaries (other
than the amount of DR Cash that is retained by the DR Entities
pursuant to the
last proviso of Section 3.1(b)(iii));
(ii) all
inventory used or intended to be used primarily in
connection with the Business;
(iii) all
tangible personal property intended to be used
primarily in connection with the Business, including Furniture and
Equipment,
other than such tangible personal property which is an Excluded
Asset;
(iv) all
deposits (including customer deposits and security
for rent, electricity, telephone or otherwise) and credits, prepaid
charges and
expenses, including any prepaid rent, of the Sellers and the
Subsidiaries;
(v)
all rights of the Sellers and the Subsidiaries under
each Real Property Lease, together with all improvements, fixtures
and other
appurtenances thereto and rights in respect thereof;
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(vi) the
Purchased Intellectual Property and the Purchased
Technology;
(vii) all rights
of the Sellers and the Subsidiaries under the
Purchased Contracts including all claims or causes of action with
respect to the
Purchased Contracts;
(viii) all Documents,
including Documents relating to products,
services, marketing, advertising, promotional materials, Purchased
Intellectual
Property, personnel files for Hired Employees and all files,
customer files and
documents (including credit information), supplier lists, records,
literature
and correspondence, whether or not physically located on any of the
premises
referred to in clause (e) above, but excluding personnel files for
Employees of
the Sellers or the Subsidiaries who are not Hired Employees;
(ix) all
Permits, including Environmental Permits, used by
the Sellers and the Subsidiaries in the Business (which includes
all Permits
necessary to conduct the Business as currently conducted) and all
rights, and
incidents of interest therein;
(x)
all supplies owned by the Sellers and the Subsidiaries
and used in connection with, used in or useful to the Business;
(xi) all
rights of the Sellers and the Subsidiaries under
non-disclosure or confidentiality, non-compete, or non-solicitation
agreements
with Former Employees, Employees and agents of the Sellers or any
Subsidiary or
with third parties to the extent relating to the Business or the
Purchased
Assets (or any portion thereof);
(xii) all rights
of the Sellers and the Subsidiaries under or
pursuant to all warranties, representations and guarantees made by
suppliers,
manufacturers and contractors to the extent relating to products
sold or
services provided to the Sellers and the Subsidiaries or to the
extent affecting
any Purchased Assets;
(xiii) all third-party
property and casualty insurance
proceeds, and all rights to third-party property and casualty
insurance
proceeds, in each case to the extent received or receivable in
respect of the
Business;
(xiv) any
claims, causes of actions, counterclaims, setoffs or
defenses and insurance coverage the Sellers or their Subsidiaries
may have with
respect to any Assumed Liabilities;
(xv) all
goodwill and other intangible assets associated with
the Business, including customer and supplier lists and the
goodwill associated
with the Purchased Intellectual Property (and any securities of or
interests in
entities other than the Subsidiaries); and
(xvi) all
pending or future recoveries received in connection
with any telecommunications carrier dispute.
2.2
Excluded Assets. Nothing herein contained shall be deemed to
sell, transfer, assign or convey the Excluded Assets to Buyer, and
the Sellers
or a Subsidiary shall retain all right, title and interest to, in
and under the
Excluded Assets. "Excluded Assets" shall mean (a) the Ameritrade
Litigation, (b)
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all intercompany receivables, (c) all minute books, organizational
documents,
stock registers and such other Books and Records as pertain to
ownership,
organization or existence of each of the Sellers and Subsidiaries
and (d) the
INDOTEL Special Registration granted to STi Prepaid & Co. and
the Free Zone
permits held by the DR Entities.
2.3
Contributions to Capital of ST Finance, the Buyer and DR
Partnership; and Assumption of Liabilities.
(a)
Subject to the terms and conditions set forth in this
Agreement,
at the Initial Closing as described below, the following shall
occur:
(i)
the Sellers shall (and shall cause the Subsidiaries
(other than the DR Entities) to) contribute to the capital of ST
Finance all of
their right, title and interest in and to the Initial Closing STi
Purchased
Assets, free and clear of all Encumbrances except for Permitted
Encumbrances,
subject to the assumption by ST Finance of all of the Initial
Closing STi
Assumed Liabilities pursuant to Section 2.4(a)(iii), and ST Finance
will issue
to the Sellers and the Subsidiaries (other than the DR Entities)
100% of the
membership interest in ST Finance, in accordance with the ST
Finance LLC
Operating Agreement;
(ii) ST
Finance shall contribute to the capital of the Buyer
all of its right, title and interest in and to the Initial Closing
STi Purchased
Assets, free and clear of all Encumbrances except for Permitted
Encumbrances,
subject to the assumption by the Buyer of all of the Initial
Closing STi Assumed
Liabilities pursuant to Section 2.4(a)(iv), and the Buyer will
issue to ST
Finance a 25% membership interest in the Buyer; and
(iii) the Buyer
shall cause STi CC 1 and STi CC 2 to
contribute to the capital of DR Partnership an amount equal to the
Partnership
Purchase Price.
(b)
Subject to the terms and conditions set forth in this
Agreement,
at the Dialaround Closing as described below, the following shall
occur:
(i)
the Sellers shall (and shall cause the Subsidiaries
(other than the DR Entities) to) contribute to the capital of ST
Finance all of
their right, title and interest in and to the Dialaround Closing
STi Purchased
Assets, free and clear of all Encumbrances except for Permitted
Encumbrances,
subject to the assumption by ST Finance of all of the Dialaround
Closing STi
Assumed Liabilities pursuant to Section 2.4(b)(ii); and
(ii) ST
Finance shall contribute to the capital of the Buyer
all of its right, title and interest in and to the Dialaround
Closing STi
Purchased Assets, free and clear of all Encumbrances except for
Permitted
Encumbrances, subject to the assumption by the Buyer of all of the
Dialaround
Closing STi Assumed Liabilities pursuant to Section
2.4(b)(iii).
2.4
Assumption of Liabilities.
(a)
Subject to the terms and conditions set forth in this
Agreement,
at and effective as of the Initial Closing (i) the Buyer shall
assume, all of
the Initial Closing BEI Assumed Liabilities, subject to the sale of
the Initial
Closing BEI Purchased Assets to the Buyer pursuant to Section
2.1(a)(i) hereof,
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(ii) DR Partnership shall assume, all of the Assumed DR
Liabilities, subject to
the sale of the Purchased DR Assets to DR Partnership pursuant to
Section
2.1(a)(ii) hereof, (iii) ST Finance shall assume all of the Initial
Closing STi
Assumed Liabilities, subject to the contribution to the capital of
ST Finance of
the Initial Closing STi Purchased Assets pursuant to Section
2.3(a)(i) and (iv)
the Buyer shall assume the Initial Closing STi Assumed Liabilities
previously
assumed by ST Finance pursuant to Section 2.4(a)(iii) hereof,
subject to the
contribution of the Initial Closing STi Purchased Assets to the
capital of Buyer
pursuant to Section 2.3(a)(ii).
(b)
Subject to the terms and conditions set forth in this
Agreement,
at and effective as of the Dialaround Closing (i) the Buyer shall
assume, all of
the Dialaround Closing BEI Assumed Liabilities, subject to the sale
of the
Dialaround Closing BEI Purchased Assets to the Buyer pursuant to
Section
2.1(b)(i) hereof, (ii) ST Finance shall assume all of the
Dialaround Closing STi
Assumed Liabilities, subject to the contribution to the capital of
ST Finance of
the Dialaround Closing STi Purchased Assets pursuant to Section
2.3(b)(i), and
(iii) Buyer shall assume the Dialaround Closing STi Assumed
Liabilities
previously assumed by ST Finance pursuant to Section 2.4(b)(ii)
hereof, subject
to the contribution of the Dialaround Closing STi Purchased Assets
to the
capital of Buyer pursuant to Section 2.3(b)(ii).
2.5
Excluded Liabilities. Notwithstanding anything to the contrary
in this Agreement, neither the Buyer nor DR Partnership will assume
or be liable
for any Excluded Liabilities. The Sellers shall, and shall cause
the
Subsidiaries to, timely perform, satisfy and discharge in
accordance with their
respective terms all Excluded Liabilities unless such an Excluded
Liability is
disputed in good faith; provided, however, that even if disputed in
good faith,
the Sellers and the Subsidiaries shall timely perform, satisfy and
discharge in
accordance with their respective terms such Excluded Liability if
the failure to
do so would reasonably be expected to have a Material Adverse
Effect on the
Buyer or DR Partnership so long as the Sellers or the Subsidiaries
are able to
reserve (contractually or at law) their right to litigate their
dispute with
respect to the underlying obligation. If the Sellers or
Subsidiaries, as the
case may be, are unable to reserve (contractually or at law) their
right to
litigate their dispute with respect to the underlying obligation
notwithstanding
their good faith attempt to do so, then the Buyer or DR Partnership
may perform,
satisfy or discharge such Excluded Liabilities, and the Sellers
shall be
entitled to arbitrate pursuant to Section 12.15 with the Buyer
and/or DR
Partnership the underlying merits of such dispute that was
performed, satisfied
or discharged by the Buyer and/or DR Partnership. In the event such
arbitration
is resolved in the Sellers' favor in whole or in part, none of the
Sellers, the
Subsidiaries and ST shall be responsible to indemnify the Buyer or
DR
Partnership for any such losses, except to the extent such
arbitration is
resolved in the Buyer's and/or DR Partnership's favor, with costs
and expenses
to be allocated in accordance with Section 12.15. In the event such
arbitration
is resolved in the Buyer's and/or DR Partnership's favor in whole
or in part,
the Sellers, the Subsidiaries and ST shall be responsible to
indemnify the Buyer
or DR Partnership for any such losses, including the costs and
expenses of such
arbitration as provided for in Section 12.15, but only to the
extent such
arbitration is resolved against the Sellers, the Subsidiaries or
ST, with cost
and expenses to be allocated pursuant to Section 12.15. "Excluded
Liabilities"
shall mean all Liabilities of the Sellers and the Subsidiaries
other than the
Assumed Liabilities.
2.6
Further Conveyances and Assumptions; Consent of Third Parties.
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(a)
From time to time following the Initial Closing at the Buyer's
cost and expense and except as prohibited by Law, ST and the
Sellers shall, or
shall cause their Affiliates to, make available to the Buyer and DR
Partnership,
as the case may be, such data and personnel records of Hired
Employees as is
reasonably necessary for the Buyer and DR Partnership, as the case
may be, to
transition such Employees into the Buyer's and DR Partnership's
records, as the
case may be.
(b)
From time to time following the Initial Closing Date, in the
case of the Initial Closing (or in the case of the Dialaround
Closing, the
Dialaround Closing Date) at the Buyer's cost and expense, ST, the
Sellers, the
Buyer and DR Partnership shall, and shall cause their respective
Affiliates to,
execute, acknowledge and deliver all such further conveyances,
notices,
assumptions, releases and aquittances and such other instruments,
and shall take
such further actions, as may be necessary or appropriate to assure
fully to the
Buyer and DR Partnership and their respective successors or
assigns, all of the
properties, rights, titles, interests, estates, remedies, powers
and privileges
intended to be conveyed to the Buyer and DR Partnership under this
Agreement and
the Transaction Documents and to assure fully to ST, the Sellers
and their
Affiliates and their successors and assigns, the assumption of the
liabilities
and obligations intended to be assumed by the Buyer and DR
Partnership under
this Agreement and the Transaction Documents, and to otherwise make
effective
the transactions contemplated hereby and thereby.
(c)
Nothing in this Agreement nor the consummation of the
transactions contemplated hereby shall be construed as an attempt
or agreement
to assign any Purchased Asset, including any Contract, Permit,
certificate,
approval, authorization or other right, which by its terms or by
Law is
nonassignable without the consent of a third party or a
Governmental Body or is
cancelable by a third party in the event of an assignment
("Nonassignable
Assets") unless and until such consent shall have been obtained.
Sections 5..6
and 5.7 of the Disclosure Schedules set forth a true and complete
list of all
Nonassignable Assets. To the extent permitted by Law, the Sellers
shall, and
shall cause their Affiliates to, use their commercially reasonable
efforts to
cooperate with the Buyer and DR Partnership at their request in
endeavoring to
obtain such consents promptly. To the extent permitted by
applicable Law, in the
event consents to the assignment thereof cannot be obtained, such
Nonassignable
Assets shall be held, as of and from the Initial Closing Date, in
the case of
the Initial Closing Purchased Assets (or with respect to Dialaround
Assets, the
Dialaround Closing Date), by the Sellers or the applicable
Affiliate of the
Sellers in trust for the Buyer and DR Partnership, as the case may
be, and the
covenants and obligations thereunder shall be performed by the
Buyer and DR
Partnership, as the case may be, in the Sellers' or such
Affiliate's name and
all benefits and obligations existing thereunder shall be for the
Buyer's and DR
Partnership's account, as the case may be. The Sellers shall take
or cause to be
taken at the Buyer's expense such actions in their names or
otherwise as the
Buyer or DR Partnership may reasonably request so as to provide the
Buyer or DR
Partnership, as the case may be, with the benefits of the
Nonassignable Assets
and to effect collection of money or other consideration that
becomes due and
payable on or after the Initial Closing Date, in the case of the
Initial Closing
(or in the case of the Dialaround Closing, the Dialaround Closing
Date) under
the Nonassignable Assets, and the Sellers or the applicable
Affiliate of the
Sellers shall promptly pay over to the Buyer and DR Partnership, as
the case may
be, all money or other consideration received by it on or after the
Initial
Closing Date, in the case of the Initial Closing (or in the case of
the
Dialaround Closing, the Dialaround Closing Date) in respect of all
Nonassignable
Assets, net of applicable Taxes, if any, actually paid by the
Sellers as a
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direct result of such collection. As of and from the Initial
Closing Date, in
the case of the Initial Closing (or in the case of the Dialaround
Closing, the
Dialaround Closing Date), the Sellers on behalf of themselves and
their
Affiliates authorizes the Buyer and DR Partnership, as the case may
be, to the
extent permitted by applicable Law and the terms of the
Nonassignable Assets, at
the Buyer's or DR Partnership's expense, to perform all the
obligations and
receive all the benefits of the Sellers or their Affiliates under
the
Nonassignable Assets and appoints the Buyer and DR Partnership, as
the case may
be, their attorney-in-fact to act in their name on their behalf or
in the name
of the applicable Affiliate of the Sellers and on such Affiliate's
behalf with
respect thereto.
2.7
Bulk-Sales Laws. The Buyer and DR Partnership hereby waives
compliance by the Sellers and the Subsidiaries with the
requirements and
provisions of any "bulk-transfer" tax Laws of any jurisdiction that
may
otherwise be applicable with respect to the sale of any or all of
the Purchased
Assets to the Buyer and DR Partnership; provided, however, that the
Sellers
agrees (i) to pay and discharge when due or to contest or litigate
all claims of
creditors which are asserted against the Buyer and DR Partnership
or the
Purchased Assets by reason of such noncompliance, (ii) to
indemnify, defend and
hold harmless the Buyer and DR Partnership from and against any and
all such
claims in the manner provided in Section 10 and (iii) to take
promptly all
necessary action to remove any Encumbrance which is placed on the
Purchased
Assets by reason of such noncompliance.
2.8
Purchase Price Allocation. Prior to the Initial Closing, the
parties shall obtain the services of Duff & Phelps (the
"Independent Appraiser")
to assist the parties in determining the fair value of the
Purchased Assets
solely for purposes of allocating the Total Consideration among the
Purchased
Assets under this Section 2.8, and the parties agree to accept the
Independent
Appraiser's determination of the fair value of the Purchased Assets
(the
"Appraisal"). The cost of the Appraisal shall be borne equally by
BEI and ST. At
or prior to the Initial Closing, the Buyer shall prepare and
deliver to ST (on
behalf of the Sellers and the Subsidiaries) a copy of each Form
8594 and any
required exhibits thereto (the "Asset Acquisition Statement")
allocating the
Total Consideration among the Purchased Assets in a manner
consistent with the
Appraisal. ST (on behalf of the Sellers and the Subsidiaries) shall
have an
opportunity to review each Form 8594. To the extent the Buyer and
ST disagree on
any part of any Form 8594, they shall negotiate in good faith to
resolve any
differences among the parties for the lesser of (a) a period of
fifteen (15)
days and (b) a period commencing on the receipt by the Buyer of
ST's objections
and ending fifteen (15) days before the due date (after giving
effect to
extensions thereof) for filing the Form 8594. If the parties do not
resolve
their differences during the period described above, the
Independent Appraiser
shall resolve any such differences and its resolution shall be
final, the costs
of which shall be borne equally by BEI and ST. The Buyer, the
Sellers and the
Subsidiaries agree (i) to prepare and file all income Tax Returns
and reports
(including Forms 8594) filed consistently with the Asset
Acquisition Statement,
(ii) that none of the Buyer or the Sellers or any of their
respective Affiliates
shall take any position inconsistent with the Asset Acquisition
Statement in
connection with any Tax proceeding, except to the extent required
by applicable
Law, and (iii) that if any Governmental Authority disputes such
Asset
Acquisition Statement, the party receiving notice of the dispute
shall promptly
notify the other party hereto of such dispute, and the parties
hereto shall
cooperate in good faith in responding to such dispute in order to
preserve the
effectiveness of such statement. For purposes of this Section 2.8,
the Purchased
Assets shall not include the covenant not to compete as set forth
in Section
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7.10, and shall be considered Assets contributed by the Sellers and
the
Subsidiaries, in their capacities as members, to the Buyer and DR
Partnership,
respectively.
2.9
Right to Control Payment. Subject to Section 2.5, the Buyer
shall have the right, but not the obligation, to make any payment
due from the
Sellers or the Subsidiaries with respect to any Reimbursable
Amounts under
Section 10.10; provided, however, that the Buyer will not settle or
compromise
any Reimbursable Action unless (i) such compromise or settlement is
on
exclusively monetary terms and shall be paid entirely by the Buyer
and (ii) such
settlement or compromise does not contain any admission of
wrongdoing on the
part of any of Sellers or the Subsidiaries.
2.10
Proration of Certain Expenses. Except for Assumed Liabilities,
all real property taxes, personal property taxes, or ad valorem
obligations and
similar recurring taxes and fees on the Purchased Assets for
taxable periods
beginning before, and ending after, the Working Capital Calculation
Date shall
be prorated, as applicable, between Buyer and DR Partnership, on
the one hand,
and Sellers, on the other hand, as of 11:59 p.m. eastern time on
the Working
Capital Calculation Date. With respect to Taxes described in this
Section 2..10,
Sellers shall timely file (or cause to be timely filed) all Tax
Returns due
before the Initial Closing Date (or with respect to the Dialaround
Assets, the
Dialaround Closing Date) with respect to such Taxes and Buyer or DR
Partnership,
as applicable, shall prepare and timely file all Tax Returns due
after the
Initial Closing Date (or with respect to the Dialaround Assets, the
Dialaround
Closing Date) with respect to such Taxes. If one party remits to
the appropriate
taxing authority payment for Taxes, which are subject to proration
under this
Section 2.10 and such payment includes the other party's share of
such Taxes,
such other party shall promptly reimburse the remitting party for
its share of
such Taxes.
2.11
Post-Initial Closing Receipts and Invoices. The Sellers shall
provide reasonable assistance to the Buyer in the collection of
accounts
receivable, at the sole cost and expense of the Buyer. If the
Sellers or any of
the Subsidiaries shall receive payment in respect of any of the
Purchased
Assets, then the Sellers or the Subsidiaries, as the case may be,
shall promptly
forward such payment to the Buyer. If the Sellers or any of the
Subsidiaries
receive an invoice for an Assumed Liability, then the Sellers or
the
Subsidiaries, as the case may be, shall promptly forward such
invoice to the
Buyer for payment. If the Buyer or any of its subsidiaries receive
an invoice
for any Excluded Liability then the Buyer or any of its
subsidiaries, as the
case may be, shall promptly forward such invoice to the Sellers for
payment.
3.
CONSIDERATION; INITIAL CLOSING.
3.1
Purchase Price.
(a)
Subject to the terms and conditions set forth in this Agreement
and subject to adjustment under Section 3.1(b)(iii) and Section
3.2, and in
consideration of the sale, assignment, transfer, delivery and
conveyance by the
Sellers and the Subsidiaries to (i) the Buyer of the BEI Purchased
Assets and
(ii) DR Partnership of the Purchased DR Assets, the aggregate
purchase price to
be paid for the Purchased Assets (the "Purchase Price") is
One-Hundred Twenty
Million Dollars ($120,000,000), payable as set forth below, and the
assumption
of 75% of the Assumed Liabilities (together with the Purchase
Price, the "Total
Consideration").
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(b)
The Purchase Price shall be paid as follows:
(i)
at the Initial Closing (x) the Buyer will pay
One-Hundred Nine Million Dollars ($109,800,000) ("Buyer Purchase
Price"),
payable as follows: Eighty-Nine Million Dollars ($89,800,000) will
be payable in
cash (the "Initial Closing Cash Amount") and Twenty Million
Dollars
($20,000,000) (the "Security Account Amount") shall be deposited in
the Secured
Account and invested in Permitted Investments, and the Buyer will
assume the
Initial Closing BEI Assumed Liabilities (together with the Buyer
Purchase Price,
the "Buyer Consideration") and (y) DR Partnership will pay Ten
Million Dollars
($10,000,000) ("Partnership Purchase Price"), payable in cash, and
assume the
Assumed DR Liabilities; and
(ii) at
the Dialaround Closing (if it occurs), the Buyer will
pay Two Hundred Thousand Dollars ($200,000)("Dialaround Closing
Buyer Purchase
Price"), payable in cash, and assume the Dialaround Closing BEI
Assumed
Liabilities.
(iii) prior to
the Initial Closing (but no less than one
Business Day before the Initial Closing Date), the Sellers shall
deliver to the
Buyer an estimated Measurement Date Reference List and a
preliminary Statement
(each of which shall be calculated in a manner consistent with the
sample
calculations set out on Schedules 3.2(a) and 3.2(b) hereof), which
shall be used
to determine the payment of the Buyer Purchase Price and the
Partnership
Purchase Price at the Initial Closing, as follows: If the U.S. Cash
as set forth
on the preliminary Statement is less than $42,600,000 (the amount
by which the
U.S. Cash reflected on the preliminary Statement is less than
$42,600,000 being
the "Cash Shortfall Amount") or the Working Capital is less than
negative
$2,400,000 (the amount by which the Working Capital is less than
negative
$2,400,000 being the "Working Capital Shortfall Amount"), the
Initial Closing
Cash Amount and the Partnership Purchase Price set forth in (i)
above shall be
reduced (pro rata based on the percentage of the Purchase Price
represented by
such amounts) by an amount equal to the greater of (x) the Cash
Shortfall Amount
or (y) the Working Capital Shortfall Amount (the entire amount by
which the
Purchase Price is reduced, being the "Initial Closing Purchase
Price
Adjustment"); provided, however, that in the event the Purchase
Price is reduced
by the Initial Closing Purchase Price Adjustment, the DR Entities
shall be
entitled to retain any DR Cash up to the amount of the Initial
Closing Purchase
Price Adjustment.
(c)
The Buyer shall be entitled to withhold and deduct from the
Purchase Price otherwise payable to the Sellers and the
Subsidiaries pursuant to
this Section 3.1 such amounts as the Buyer is required to withhold
under the
Code or any other provision of state, local or foreign Tax law
determined in
good faith by the Buyer. To the extent so withheld and deducted,
such amounts
shall be treated for all purposes of this Agreement as having been
paid to the
applicable Seller or Subsidiary. The Buyer shall remit all
aforementioned
withholdings and deductions to the appropriate tax authorities in
accordance
with applicable Law.
3.2
Determination of Final Working Capital.
(a)
As soon as practicable, but in no event later than ninety (90)
calendar days after the Initial Closing Date, the Buyer shall
prepare and
deliver to the Sellers the Measurement Date Reference List. The
Measurement Date
Reference List shall be accompanied by a statement (the
"Statement") setting
forth the actual Working Capital as of the close of business on the
Working
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Capital Calculation Date (which may be a negative Working Capital)
and the
Average Gross Margin Percentage, setting forth in reasonable detail
the
calculations thereof and the supporting details therefor. The
Measurement Date
Reference List shall be calculated in a manner consistent with the
sample
Measurement Date Reference List set out on Schedule 3.2(a) hereof,
and the
Working Capital and the Average Gross Margin Percentage shall be
calculated in a
manner consistent with the sample Working Capital and Average Gross
Margin
Percentage calculations set out on Schedule 3.2(b) hereof.
(b)
The Sellers shall have sixty (60) calendar days following
receipt of the Measurement Date Reference List and the Statement
during which to
dispute in writing any item contained in the Measurement Date
Reference List or
the Statement. Such notice of dispute shall set forth in reasonable
detail the
items disputed and the Sellers' proposed adjustment to such items.
If the
Sellers fail to notify the Buyer in writing of any such dispute
within such
sixty (60) day period, the Measurement Date Reference List shall be
the "Final
Reference List" and the Statement shall be the "Final Statement."
If the Sellers
timely notify the Buyer in writing of any such dispute, and the
Buyer and the
Sellers cannot resolve any such dispute within thirty (30) calendar
days after
receipt by the Buyer of such notice of dispute, such dispute shall
be resolved
by a nationally recognized independent accounting firm (the
"Independent
Accounting Firm") mutually selected by the Buyer and the Sellers;
provided that,
unless agreed to by the parties hereto, such Independent Accounting
Firm shall
not have been retained or hired by, or provided services to, any of
the parties
to this Agreement or any of their respective Affiliates on or prior
to the date
of this Agreement. The determination of the selected Independent
Accounting Firm
shall be made as promptly as practicable and shall be final and
binding on the
Buyer and the Sellers. If no such selection is made within twenty
(20) calendar
days, the Independent Accounting Firm shall be selected according
to the
following procedure: (i) the top twenty Independent Accounting
Firms shall be
ranked in descending order according to revenue earned for the most
recently
reported fiscal year ending prior to the Initial Closing Date and
(ii) the
Independent Accounting Firm selected shall be the first such firm
(x) to which
none of the parties to this Agreement or any of their respective
Affiliates have
paid for services rendered of more than two hundred thousand
dollars ($200,000)
in cash or the fair market value of other consideration for the
fiscal year
ending immediately prior to the Initial Closing Date and (y) for
which none of
the parties to this Agreement or any of their respective Affiliates
have current
engagements in the fiscal year in which the Initial Closing occurs
that would
result in the payment for services rendered to such Independent
Accounting Firm
of two hundred thousand dollars ($200,000) or more in the aggregate
of cash or
the fair market value of other consideration. Any fees and expenses
relating to
the engagement of the selected Independent Accounting Firm shall be
apportioned
between the Buyer and the Sellers based on the total dollar value
of the dispute
resolved in favor of the Buyer on the one hand or the Sellers on
the other hand,
with each such party bearing such percentage of the fees and
disbursements of
the selected Independent Accounting Firm as the aggregate disputes
resolved
against that party bears to the total dollar value of all disputed
exceptions
considered by the selected Independent Accounting Firm. In the
event of a
dispute, the Measurement Date Reference List and Statement, as
agreed by the
Buyer and the Sellers, or determined by the selected Independent
Accounting
Firm, as the case may be, shall be the "Final Reference List" or
the "Final
Statement," as the case may be.
(c)
If the (i) Working Capital, as set forth in the Final
Statement,
exceeds negative $2,400,000 and (ii) U.S. Cash, as set forth in the
Final
Statement, exceeds $42,600,000, the Buyer and DR Partnership shall
pay, (pro
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rata based on the percentage of the Total Consideration paid by
each of them) to
Sellers, an amount in cash equal to the lesser of (x) the excess
amount by which
Working Capital exceeds negative $2,400,000 and (y) the amount by
which the U.S.
Cash exceeds $42,600,000, not later than five (5) Business Days
from the date of
such Final Statement.
(d)
If (i) the Working Capital, as set forth in the Final
Statement,
is less than negative $2,400,000 or (ii) U.S. Cash, as set forth in
the Final
Statement, is less than $42,600,000, Sellers shall pay to the Buyer
and DR
Partnership, (pro rata based on the percentage of the Total
Consideration paid
by each of them) an aggregate amount equal to the greater of (x)
the amount by
which Working Capital is less than negative $2,400,000 and (y) the
amount by
which the U.S. Cash is less than $42,600,000, not later than five
(5) Business
Days from the date of such Final Statement. The thresholds with
respect to
Working Capital and Unrestricted Cash must be met independently and
any amount
in excess of one of these thresholds cannot be applied to the
other.
(e)
Any adjustment under this Section 3.2 shall be treated as an
adjustment to the Purchase Price for federal, state and local
income Tax
purposes. Any adjustment otherwise required pursuant to Section
3.2(c) or
Section 3.2(d) shall take into account and give credit to any
Initial Closing
Purchase Price Adjustments made at the Initial Closing.
4. CLOSING
AND DELIVERIES
4.1
Initial Closing.
(a)
Upon the terms and subject to the conditions of this Agreement,
the sale and purchase of the Initial Closing Purchased Assets and
the assumption
of the Initial Closing Assumed Liabilities contemplated hereby
shall take place
at a closing (the "Initial Closing") to be held at the offices of
Weil, Gotshal
& Manges LLP at 767 Fifth Avenue, New York, New York 10153 at
10:00 a.m. New
York time on fifth Business Day following the last to occur of the
following:
(x) the receipt of all approvals of the FCC and other Governmental
Regulators
required by applicable Law with respect to the transfer of direct
or indirect
ownership of or control over the Telecommunications Licenses other
than the
Dialaround Licenses; (y) the expiration or termination of all
applicable waiting
periods under the HSR Act; and (z) the satisfaction or waiver of
all other
conditions to the obligations of the parties set forth in Section 8
(other than
conditions that are not capable of being satisfied until the
Closing, but
subject to the satisfaction or waiver of those conditions) or at
such other
place or at such other time or at such other date as the Sellers
and the Buyer
may mutually agree in writing (the day on which the Initial Closing
takes place
being the "Initial Closing Date").
(b)
Upon the terms and subject to the conditions of this Agreement,
the sale and purchase of the Dialaround Closing Purchased Assets
and the
assumption of the Dialaround Closing Assumed Liabilities
contemplated hereby
shall take place at a closing (the "Dialaround Closing") to be held
at the
offices of Weil, Gotshal & Manges LLP at 767 Fifth Avenue, New
York, New York
10153 at 10:00 a.m. New York time on the fifth Business Day
following the last
to occur of the following: (x) the receipt of all approvals of the
FCC and other
Governmental Regulators required by applicable Law with respect to
the transfer
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of direct or indirect ownership of or control over the Dialaround
Licenses and
(y) the satisfaction or waiver of all other conditions to the
obligations of the
parties set forth in Section 8 (other than conditions that are not
capable of
being satisfied until the Closing, but subject to the satisfaction
or waiver of
those conditions) or at such other place or at such other time or
at such other
date as the Sellers and the Buyer may mutually agree in writing
(the day on
which the Dialaround Closing takes place being the "Dialaround
Closing Date").
4.2
Closing Deliveries by the Sellers.
(a)
At the Initial Closing, the Sellers will deliver (or cause to
be
delivered) to the Buyer the following:
(i)
A certificate of ST and a duly authorized officer of the
Sellers, respectively, and the Subsidiaries, dated the Initial
Closing Date, to
the effect that the conditions specified in Section 8.2(a), Section
8.2(b) and
Section 8.2(c) have been satisfied;
(ii) A
bill of sale substantially in the form attached as
Schedule E hereto (a "Bill of Sale"), duly executed by each of the
Sellers, the
Subsidiaries and ST Finance, with respect to the Initial Closing
Purchased
Assets and Initial Closing Assumed Liabilities;
(iii) An
Assignment and Assumption Agreement substantially in
the form attached as Schedule F hereto (an "Assignment and
Assumption
Agreement"), duly executed by each of the Sellers, the Subsidiaries
and ST
Finance, with respect to the Initial Closing Purchased Assets and
Initial
Closing Assumed Liabilities;
(iv)
[Intentionally Omitted];
(v)
Confidentiality and Non-Competition Agreements, duly
executed by each of the persons listed in Section 4.2(a)(v) of the
Disclosure
Schedules, substantially in the form attached as Schedule B hereto,
subject to
Section 8.2(d);
(vi) A
certificate duly executed by the Secretary or the
competent corporate body of each of the Sellers and the
Subsidiaries certifying
as to the Organizational Documents of each of the Sellers and the
Subsidiaries;
(vii) (A)
Certificates dated as of recent dates certifying the
existence and good standing of each of the Non-DR Entities issued
by the
jurisdiction where it is organized, formed or created and (B) a
Certification
issued by the Chamber of Commerce and Production of Santo Domingo,
Inc., stating
that the DR Entities are duly recorded at the Mercantile
Registry;
(viii) A certificate
duly executed by an executive officer of
the Sellers and the Subsidiaries certifying that, based upon the
Books and
Records, and based on such executive's best estimate made in good
faith, as of
the Working Capital Calculation Date, the Sellers and the
Subsidiaries have at
least $42,600,000 in U.S. Cash and Working Capital is at least
negative
$2,400,000;
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(ix)
Affidavits of non-foreign status that comply with
Section 1445 of the Code, substantially in the form attached as
Schedule I
hereto (a "Non-Foreign Status Affidavit"), duly executed by ST and
each Seller
(other than Dialaround) that is not a foreign person under Sections
897 or 1445
of the Code;
(x)
A copy of the Dialaround Transition Services Agreement,
duly executed by Dialaround;
(xi) A
legal opinion from regulatory counsel to the Sellers,
substantially in the form attached as Schedule D hereto (the
"Regulatory Legal
Opinion"); and
(xii) A legal
opinion from, Headrick Rizik Alvarez &
Fernandez, Dominican Republic counsel to the Sellers, substantially
in the form
attached as Schedule C hereto (the "DR Legal Opinion").
(b)
At the Dialaround Closing, the Sellers will deliver (or cause
to
be delivered) to the Buyer the following:
(i)
A certificate of ST and a duly authorized officer of the
Sellers, respectively, and the Subsidiaries, dated the Dialaround
Closing Date,
to the effect that the conditions specified in Section 8.4(a) have
been
satisfied;
(ii) A
Bill of Sale, duly executed by Dialaround and ST
Finance with respect to the Dialaround Assets and the Dialaround
Assumed
Liabilities;
(iii) An
Assignment and Assumption Agreement, duly executed by
Dialaround and ST Finance with respect to the Dialaround Assets and
the
Dialaround Assumed Liabilities;
(iv)
Evidence of all consents required in connection with the
assignment of the Dialaround Assets; and
(v)
A Non-Foreign Status Affidavit, duly executed by
Dialaround.
4.3
Closing Deliveries by the Buyer.
(a)
At the Initial Closing, the Buyer will deliver (or cause to be
delivered) to the Sellers the following:
(i)
The Initial Closing Cash Amount and the Partnership
Purchase Price (as such may be reduced pursuant to Section
3.1(b)(iii)) by wire
transfer in immediately available funds to an account designated at
least two
(2) Business Days prior to the Initial Closing Date by the Sellers
in a written
notice to the Buyer;
(ii) The
Security Account Amount by deposit of such amount in
the Secured Account;
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(iii) A
certificate of a duly authorized officer of the Buyer,
dated the Initial Closing Date, to the effect that the conditions
specified in
Section 8.3(a) and Section 8.3(b) have been satisfied;
(iv) (A) A
certificate dated as of a recent date certifying
the existence and good standing of each of the Buyer, STi CC 1, and
STi CC 2
issued by the jurisdiction where it is organized, formed or created
and (B) a
Certification issued by the Chamber of Commerce and Production of
Santo Domingo,
Inc., stating that DR Partnership is duly recorded at the
Mercantile Registry;
(v)
An Assignment and Assumption Agreement, duly executed by
the Buyer with respect to the Initial Closing Purchased Assets and
the Initial
Closing Assumed Liabilities;
(vi) A
copy of the Buyer Operating Agreement, duly executed
by BEI; and
(vii) A copy of
the Dialaround Transition Services Agreement,
duly executed by the Buyer;
(viii) A copy of the
Account Control Agreement, duly executed
by the Buyer and BEI; (ix) A copy of the Pledge Agreement, duly
executed by the
Buyer and BEI;
(x)
Duly executed resale certificate(s) for purposes of all
applicable sales Tax Laws; and
(xi) A
copy of the Registration Rights Agreement,
substantially in the form attached as Exhibit B hereto (the
"Registration Rights
Agreement"), duly executed by the Buyer; and
(xii) A copy of
the Employment Agreement in the form attached
as Schedule H hereto (the "Employment Agreement"), effective as of
the Initial
Closing Date, duly executed by the Buyer.
(b)
At the Dialaround Closing, the Buyer will deliver (or cause to
be delivered) to the Sellers the following:
(i)
The Dialaround Closing Buyer Purchase Price; and
(ii) An
Assignment and Assumption Agreement, duly executed by
the Buyer with respect to the Dialaround Assets and the Dialaround
Assumed
Liabilities.
4.4
Closing Deliveries by ST Finance.
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(a)
At the Initial Closing, ST Finance will deliver (or cause to be
delivered) to the Buyer the following:
(i)
A copy of the Buyer Operating Agreement, duly executed
by ST Finance;
(ii) A
Non-Foreign Status Affidavit, duly executed by ST
Finance; and
(iii) A copy of
the Registration Rights Agreement, duly
executed by ST Finance.
(b)
At the Dialaround Closing, ST Finance will deliver (or cause to
be delivered) to the Buyer the following:
(i) A Bill of Sale, duly
executed by ST Finance with respect
to the Dialaround Assets and the Dialaround Assumed
Liabilities;
(ii) An
Assignment and Assumption Agreement, duly executed by
ST Finance with respect to the Dialaround Assets and the Dialaround
Assumed
Liabilities; and
(iii) Evidence
of all consents required in connection with the
assignment of the Dialaround Assets.
4.5
Initial Closing Deliveries by DR Entities. At the Initial
Closing, DR Entities will deliver (or cause to be delivered) to DR
Partnership
the following:
(a)
A Bill of Sale, duly executed by DR Entities with respect to
the
Purchased DR Assets and the Assumed DR Liabilities; and
(b)
An Assignment and Assumption Agreement, duly executed by DR
Entities with respect to the Purchased DR Assets and the Assumed DR
Liabilities.
4.6
Initial Closing Deliveries by DR Partnership. At the Initial
Closing, DR Partnership will deliver (or cause to be delivered) to
the DR
Entities the following:
(a)
An Assignment and Assumption Agreement, duly executed by DR
Partnership with respect to the Purchased DR Assets and the Assumed
DR
Liabilities.
4.7
Initial Closing Deliveries by ST. At the Initial Closing, ST
will deliver (or cause to be delivered) to the Buyer the
following:
(a)
A copy of the Account Control Agreement, duly executed by ST;
(b)
A copy of the Pledge Agreement, duly executed by ST;
(c)
A copy of the Employment Agreement, effective as of the Initial
Closing Date, duly executed by ST.
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5.
REPRESENTATIONS AND WARRANTIES OF ST AND THE SELLERS.
ST and each of the Sellers hereby, jointly and severally, represent
and
warrant to the Buyer, DR Partnership and BEI, as of the date of
this Agreement
and as of (i) the Initial Closing Date and, (ii) solely with
respect to the
Business and Purchased Assets consisting of the Dialaround Assets
(and not with
respect to any of the Business and the Purchased Assets sold or
transferred at
the Initial Closing), the Dialaround Closing Date (it being
acknowledged and
agreed that as of the Dialaround Closing Date, references in
Section 5 to the
Initial Closing Date shall be deemed to be references to the
Dialaround Closing
Date and references to the Initial Closing shall be deemed to be
references to
the Dialaround Closing), as follows:
5.1
Organization, Authority and Qualification of the Sellers and
the
Subsidiaries. Each of the Sellers and the Subsidiaries is duly
organized,
validly existing and in good standing under the laws of the
jurisdiction of its
organization and has all the requisite power and authority to own,
lease or
otherwise hold its Assets as they are currently owned, leased or
held. True and
correct copies of the certificates or articles of incorporation,
organization,
formation or partnership or similar documents filed on behalf of
each of the
Sellers and the Subsidiaries with Governmental Authorities in the
jurisdictions
of their respective organization, and of the related by-laws,
limited liability
agreements, operating agreements or partnership agreements or
similar documents
(collectively, the "Organizational Documents") have been delivered
by the
Sellers to the Buyer.
5.2
Qualification to Do Business. Each of the Sellers and its
Subsidiaries is duly qualified to do business as a foreign
corporation, limited
liability company, or other equivalent, as the case may be, and, if
applicable,
is in good standing, in every jurisdiction in which the character
of the
properties owned or leased by it or the nature of the business
conducted by it
makes such qualification necessary, except where the failure to be
so qualified
or, if applicable, in good standing, would not, individually or in
the
aggregate, reasonably be expected to have a Material Adverse
Effect.
5.3
Power and Authority of the Sellers.
(a)
ST and the Sellers have all requisite power and authority to
execute and deliver, to perform their respective obligations under,
and to
consummate the transactions contemplated by, this Agreement and all
other
documents and instruments to be executed and delivered in
connection with the
transactions contemplated by this Agreement (collectively, the
"Transaction
Documents") to which ST or the Sellers is a party. The execution
and delivery by
ST and the Sellers of, the performance by ST and the Sellers of
their respective
obligations under, and the consummation by ST and the Sellers of
the
transactions contemplated by, this Agreement and the Transaction
Documents to
which ST or the Sellers is a party have been duly authorized by all
requisite
action on the part of ST and the Sellers. This Agreement is, and
when executed
and delivered by ST and the Sellers, the other Transaction
Documents to which ST
and the Sellers is a party will be, the legal, valid and binding
obligations of
ST and the Sellers, enforceable against ST and the Sellers in
accordance with
their respective terms, except insofar as enforceability may be
affected by the
Enforceability Exception. ST and the Sellers shall have presented,
prior to or
on the Initial Closing Date, a resolution from the competent
corporate body of
the DR Entities that separately and expressly (i) authorizes the
sale of the
Purchased DR Assets in compliance with the terms and conditions of
this
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Agreement and (ii) concedes ST or a Seller, as the case may be, is
the necessary
proxy for the signature of this Agreement.
(b)
Except as disclosed on Section 5.3(b) of the Disclosure
Schedules, ST owns, directly or indirectly, all of the outstanding
shares of
capital stock, limited liability company interests or partnership
interests, as
the case may be, of the Sellers and the Subsidiaries beneficially
and of record,
in each case, free and clear of any Encumbrances other than
Permitted
Encumbrances.
5.4
Consents; No Conflict.
(a)
The execution and delivery by ST and the Sellers, the
performance of ST and the Sellers under, and the consummation by
the Sellers of
the transactions contemplated by, this Agreement and the
Transaction Documents
to which ST or the Sellers is a party do not and will not require
any consent,
approval, authorization or other order of, action by, filing with
or
notification to any Person, except (i) as described in Section 5.4
of the
Disclosure Schedules, (ii) the notification requirements of the HSR
Act and
(iii) filings required under, and compliance with other applicable
rules,
regulations and requirements of, the Government Regulators set
forth on Section
5.4 of the Disclosure Schedules (collectively, the "Required
Consents").
(b)
Assuming that all Required Consents have been obtained or
performed, the execution and delivery by ST and the Sellers, the
performance of
ST and the Sellers under, and the consummation by the Sellers of
the
transactions contemplated by, this Agreement and the other
Transaction Documents
to which the Sellers is a party do not and will not: (a) violate
any provision
of the Organizational Documents; (b) violate any Law or any order,
judgment or
decree of any court or other governmental or regulatory authority
applicable to
ST or the Sellers or any of the Subsidiaries; or (c) (i) violate,
conflict with
or constitute (with due notice or lapse of time or both) a breach
o
