Document:

Exhibit

10.1

 

 

ASSET

PURCHASE AGREEMENT

 

 

by and

between

 

 

COUNSEL

SPRINGWELL COMMUNICATIONS LLC

and

RSL COM

U.S.A., INC.

 

 

Regarding

the sale of the business and assets of

the retail or Enterprise business

 

 

Dated as

of March 25, 2002

 

 

 

TABLE OF CONTENTS

 

	

  ARTICLE I DEFINED TERMS

  
	

   

  
	

   

  	

  1.1 . 

  DEFINED TERMS

  
	

   

  	

  1.2 .  OTHER RULES OF CONSTRUCTION

  
	

   

  
	

  ARTICLE II PURCHASE AND SALE

  
	

   

  
	

   

  	

  2.1 .  PURCHASE AND SALE

  
	

   

  	

  2.2 . 

  PURCHASE PRICE

  
	

   

  	

  2.3 .  POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE

  
	

   

  	

  2.4 . 

  ESCROW

  
	

   

  	

  2.5 . 

  CLOSING

  
	

   

  
	

  ARTICLE III ASSUMPTION OF LIABILITIES

  
	

   

  
	

   

  	

  3.1 .  LIMITED ASSUMED LIABILITIES

  
	

   

  
	

  ARTICLE IV REPRESENTATIONS AND

  WARRANTIES  OF THE SELLER

  
	

   

  
	

   

  	

  4.1 . 

  ORGANIZATION

  
	

   

  	

  4.2 .  AUTHORIZATION; ENFORCEABILITY

  
	

   

  	

  4.3

  .  NO VIOLATION OR CONFLICT

  
	

   

  	

  4.4

  .  CONSENTS AND APPROVALS

  
	

   

  	

  4.5 .  TITLE TO PROPERTY AND ASSETS; LIENS, ETC.

  
	

   

  	

  4.6 . 

  REAL PROPERTY

  
	

   

  	

  4.7 .  CONDITION OF ASSETS; RELATED MATTERS.

  
	

   

  	

  4.8 . 

  CONTRACTS.

  
	

   

  	

  4.9 . 

  LITIGATION

  
	

   

  	

  4.10

  .  EMPLOYEE BENEFIT PLANS.

  
	

   

  	

  4.11 .  EMPLOYMENT AND LABOR MATTERS.

  
	

   

  	

  4.12 .  NOVEMBER 30 BALANCE SHEET

  
	

   

  	

  4.13 .  LICENSES AND CERTIFICATIONS

  
	

   

  	

  4.14

  .  ENVIRONMENTAL MATTERS

  
	

   

  	

  4.15 .  CIRCUITS AND SWITCHING SERVICES

  
	

   

  	

  4.16 . 

  BROKERS

  
	

   

  
	

  ARTICLE V REPRESENTATIONS AND WARRANTIES OF

  THE PURCHASER

  
	

   

  
	

   

  	

  5.1 . 

  ORGANIZATION

  
	

   

  	

  5.2 .  AUTHORIZATION; ENFORCEABILITY

  
	

   

  	

  5.3 . 

  NO VIOLATION OR CONFLICT

  
	

   

  	

  5.4 . 

  CONSENTS AND APPROVALS

  
	

   

  	

  5.5 . 

  BROKERS

  
	

   

  	

  5.6 . 

  FINANCING

  
	

   

  
	

  ARTICLE VI COVENANTS

  
	

   

  
	

   

  	

  6.1 . 

  ACCESS

  
	

   

  	

  6.2 . 

  CUSTOMER INFORMATION

  
	

   

  	

  6.3 . 

  CONDUCT OF BUSINESS

  
	

   

  	

  6.4 . 

  ESSENTIAL SERVICES

  
	

   

  	

  6.5 . 

  ASSIGNED CONTRACTS

  
	

   

  	

  6.6 . 

  OFFERS OF EMPLOYMENT

  
	

   

  	

  6.7 . 

  BANKRUPTCY ORDERS, ETC

  
	

   

  	

  6.8 . 

  CONSENTS

  
	

   

  	

  6.9 . 

  ALLOCATION OF PURCHASE PRICE

  

 

 

	

   

  	

  6.10 . 

  SOLICITATION

  
	

   

  	

  6.11

  .  INDEMNIFICATION OF BROKERAGE

  
	

   

  	

  6.12 .  REGULATORY REQUIREMENTS

  
	

   

  	

  6.13 . 

  FURTHER ASSURANCES

  
	

   

  
	

  ARTICLE VII CERTAIN BANKRUPTCY MATTERS

  
	

   

  
	

   

  	

  7.1 .  BANKRUPTCY COURT APPROVAL

  
	

   

  	

  7.2 . 

  BANKRUPTCY NOTICES

  
	

   

  	

  7.3 . 

  BIDDING PROCEDURES

  
	

   

  	

  7.4 . 

  STAND-BY BID

  
	

   

  
	

  ARTICLE VIII INDEMNIFICATION

  
	

   

  
	

   

  	

  8.1 .  INDEMNIFICATION BY SELLER

  
	

   

  	

  8.2

  .  INDEMNIFICATION BY PURCHASER

  
	

   

  	

  8.3 . 

  PROCEDURE

  
	

   

  
	

  ARTICLE IX CONDITIONS TO THE PURCHASER’S

  OBLIGATIONS

  
	

   

  
	

   

  	

  9.1 .  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

  9.2 . 

  PERFORMANCE

  
	

   

  	

  9.3 . 

  NO INJUNCTION

  
	

   

  	

  9.4 .  GOVERNMENTAL AUTHORIZATIONS AND REGULATORY

  REQUIREMENTS

  
	

   

  	

  9.5 . 

  MATERIAL ADVERSE CHANGE

  
	

   

  	

  9.6 .  BANKRUPTCY COURT APPROVAL

  
	

   

  	

  9.7 . 

  CERTIFICATES

  
	

   

  
	

  ARTICLE X CONDITIONS TO THE SELLER’S

  OBLIGATIONS

  
	

   

  
	

   

  	

  10.1

  .  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

  10.2 . 

  PERFORMANCE

  
	

   

  	

  10.3 . 

  NO INJUNCTION

  
	

   

  	

  10.4

  .  GOVERNMENTAL AUTHORIZATIONS

  
	

   

  	

  10.5 . 

  CERTIFICATES

  
	

   

  	

  10.6 .  ORDER APPROVING BIDDING PROCEDURES

  
	

   

  	

  10.7

  .  BANKRUPTCY COURT APPROVAL

  
	

   

  
	

  ARTICLE XI TERMINATION AND ABANDONMENT

  
	

   

  
	

   

  	

  11.1 .  METHODS OF TERMINATION

  
	

   

  	

  11.2 .  EFFECT OF TERMINATION

  
	

   

  
	

  ARTICLE XII MISCELLANEOUS

  
	

   

  
	

   

  	

  12.1 . 

  NOTICES

  
	

   

  	

  12.2 . 

  SURVIVAL

  
	

   

  	

  12.3 . 

  ENTIRE AGREEMENT

  
	

   

  	

  12.4 . 

  ASSIGNMENT

  
	

   

  	

  12.5 . 

  WAIVER AND AMENDMENT

  
	

   

  	

  12.6 . 

  BOOKS AND RECORDS

  
	

   

  	

  12.7 .  NO THIRD PARTY BENEFICIARY

  
	

   

  	

  12.8 . 

  SEVERABILITY

  
	

   

  	

  12.9 . 

  EXPENSES

  
	

   

  	

  12.10 . 

  ANNOUNCEMENTS

  
	

   

  	

  12.11 . 

  HEADINGS

  
	

   

  	

  12.12 . 

  REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE

  
	

   

  	

  12.13 . 

  GOVERNING LAW; JURISDICTION

  
	

   

  	

  12.14 . 

  COUNTERPARTS

  
	

   

  	

  12.15 . 

  DISCLOSURES

  

 

ii

 

EXHIBITS

AND SCHEDULES

 

	

  Exhibits

  	

   

  
	

   

  	

   

  
	

  Exhibit A

  	

  Form of Sale Order

  
	

   

  	

   

  
	

  Exhibit B

  	

  Form of Escrow Agreement

  
	

   

  	

   

  
	

  Exhibit C

  	

  Form of General Assignment and Bill of Sale

  
	

   

  	

   

  
	

  Exhibit D

  	

  Form of Assumption Agreement

  
	

   

  	

   

  
	

  Schedules

  	

   

  
	

   

  	

   

  
	

  Schedule 1.1(d)

  	

  Major Network Assets

  
	

   

  	

   

  
	

  Schedule 2.3(a)

  	

  November 30, 2001 Balance Sheet

  
	

   

  	

   

  
	

  Schedule 2.3(c)

  	

  Sold Assets

  
	

   

  	

   

  
	

  Schedule 3.1

  	

  Assumed Liabilities

  
	

   

  	

   

  
	

  Schedule 4.4

  	

  Consents and Approvals

  
	

   

  	

   

  
	

  Schedule 4.5

  	

  Personal Property Leases

  
	

   

  	

   

  
	

  Schedule 4.6

  	

  Real Property Leases

  
	

   

  	

   

  
	

  Schedule 4.9

  	

  Litigation

  
	

   

  	

   

  
	

  Schedule 4.11

  	

  Employment and Labor Matters

  
	

   

  	

   

  
	

  Schedule 4.13

  	

  Licenses and Certifications

  
	

   

  	

   

  
	

  Schedule 6.5

  	

  Assigned Contracts

  

 

iii

 

THIS

ASSET PURCHASE AGREEMENT is made this 25th day of March, 2002, by and between COUNSEL

SPRINGWELL COMMUNICATIONS LLC, a Delaware limited liability company (the “Purchaser”)

and RSL COM U.S.A., INC., a Delaware corporation (the “Seller”).

 

RECITALS

 

WHEREAS, the Seller provides data and long

distance voice services, including frame relay, to small and medium size

businesses (the “Direct Business”) and long distance and other voice

services to small businesses and residences (the “A&R Business” and,

together with the Direct Business, the “Business”);

 

WHEREAS, on March 16, 2001 the Seller sought

relief under Chapter 11 of title 11 of the United States Code (the “Bankruptcy

Code”) by filing a case (the “Bankruptcy Case”) in the United States

Bankruptcy Court for the Southern District of New York (the “Bankruptcy

Court”);

 

WHEREAS, on March 28, 2001, an official

committee of unsecured creditors (“Committee”) was appointed;

 

WHEREAS, the Seller desires to sell to the

Purchaser, and the Purchaser desires to purchase and assume from the Seller,

the Assets and the Assumed Liabilities (each as defined herein) relating to the

Business, in accordance with sections 105(a), 363(b) and 365 and other

applicable provisions of the Bankruptcy Code and pursuant to authorization to

be granted by the Bankruptcy Court as provided in a sale order substantially in

the form attached hereto as Exhibit A (“Sale Order”);

 

WHEREAS, the Seller desires to sell the Assets

on an expedited basis to avoid deterioration of the Assets and to further the

Seller’s reorganization efforts;

 

WHEREAS, on February 4, 2002, the Seller, the

Committee and the Purchaser entered into a letter of intent which described the

general terms upon which the parties intended to enter into a definitive asset

purchase agreement to accomplish the sale of the Business (the “Sale”);

 

WHEREAS, the Purchaser and Seller intend the

Sale to be subject to higher and better offers pursuant to bidding procedures

set forth in this asset purchase agreement (“Agreement”) and to be

approved by the Bankruptcy Court;

 

NOW,

THEREFORE, for

good, valid and binding consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties hereto, intending to be legally bound, agree

as follows:

 

 

ARTICLE I

 

DEFINED TERMS

 

1.1.  Defined Terms.  The following terms, not defined elsewhere

in this Agreement, shall have the following meanings:

 

“Accepting Employees” shall have the meaning set forth in

Section 6.6.

 

“Accountants” shall have the meaning set forth in Section 2.3.

 

“Assets” shall mean all tangible and intangible assets of the

Seller relating to or used in the operation of the Business, wherever such

assets are located and whether or not listed for accounting purposes on the

balance sheet of the Seller, together with the business as a going concern

associated with such assets, including the following (but specifically

excluding the Excluded Assets):

 

(a)          all customer accounts served by the

Direct Business or the A&R Business (the “Customer Accounts”);

 

(b)         all customer data associated with the

Customer Accounts, including all associated letters of authorization, customer

service records, all related computer tapes and/or records, accounts receivable

status and history reports and all customer service and provisioning history;

 

(c)          all right, title and interest in and to

the accounts receivable associated with the Customer Accounts;

 

(d)         all fixed assets, switches, machinery,

equipment and other tangible personal property (including all furnishings and

fixtures, materials, supplies and other miscellaneous items) located at the

premises of the Seller at 1001 Brinton Road, Pittsburgh, Pennsylvania and each

of the switch sites and colocation facilities of the Seller in New Brunswick,

New Jersey; Austell, Georgia; Hayward, California; Willow Springs, Illinois;

Dallas, Texas; Los Angeles, California; Washington, District of Columbia; and

New York, New York; and all other fixed assets, switches, machinery, equipment

and other tangible personal property related to or used in connection with the

Business, including all furnishings and fixtures, materials, supplies and other

miscellaneous items of tangible personal property whether located at the

foregoing premises, switch sites or 

colocation facilities of the Seller or at the premises of any customer

or supplier or at any other location, including the major network assets

identified on Schedule 1.1(d);

 

(e)          all right, title and interest in and to

the Assigned Contracts and any related leasehold improvements;

 

(f)            all patents, patent applications,

copyrights, whether or not registered, 

trademarks and service marks, trademark and service mark registrations

(and applications 

 

2

 

therefor), trade names, business names, brand names

(including all rights of the Seller in the 

“RSL COM” name) and logos, devices, insignias, formats, titles and

subtitles and all registrations issued and all applications pending with

respect to the foregoing, currently owned or used in connection with the

Business;

 

(g)         all trade secrets, inventions, protocols,

know-how, formulae, processes, procedures, records of inventions, test

information, drawings, diagrams, designs, operating manuals and other proprietary

information used in or related to the Business;

 

(h)         all claims and rights against third

parties relating to the Assets, including insurance claims, rights under

manufacturers’ and vendors’ warranties, rights of recovery, credits, and

Business-related setoff rights existing on the Closing Date that arose

post-petition;

 

(i)             all financial, commercial, marketing and

administrative books and records relating to the Business in any form or

medium, including, computer databases, correspondence files, administrative

guidelines, personnel records relating to Accepting Employees and employee

manuals and all accounting and tax files and records used in connection with or

relating to the Business, as well as files relating to litigation that has been

settled, closed, or otherwise dismissed; provided, however, that Seller’s estate

shall enjoy a continuing right of reasonable access during normal business

hours to such assets for purposes of claims resolution, litigation, and

administration of the Seller’s estate;

 

(j)             all computer systems and software, and

all electronic databases and other data processing and storage materials

(regardless of format or medium), used in or related to the Business;

 

(k)          all Universal Service Fund refunds; and

 

(l)             all materials, supplies, personal

property and other assets, tangible or intangible, used in or relating to the

Business, including the goodwill of the Business as a going concern.

 

“Assigned Contracts” shall mean (a) the Contracts and Leases set

forth on Schedule

6.5 and (b) the contracts entered into or to be entered into by the

Seller with each of MCI WorldCom, Inc. and Global Crossing Bandwidth, Inc.

consistent with the terms and conditions set forth in the Contracts Letter; provided,

however, that the Assigned Contracts shall in no event include any

of the Non-Assignable Contracts.

 

“Assumed Liabilities” shall mean (i) those specific liabilities

of the Seller relating to the Business listed in Schedule 3.1, (ii) the

“Accrued Operating Expenses—Post Petition” with respect to the Assigned

Contracts as set forth in the Closing Statement and (iii) liabilities under the

Assigned Contracts with respect to periods following the Closing Date, or the

date of assumption and assignment, as the case may be.

 

“Assumption Agreement” shall have the meaning set forth in

Section 3.1.

 

“Assumption and Assignment Orders” shall have the meaning set

forth in Section 4.4.

 

3

 

“Bankruptcy Auction” shall mean the auction of the Assets held

in accordance with the Bidding Procedures.

 

“Bankruptcy Case” shall have the meaning set forth in the

Recitals.

 

“Bankruptcy Code” shall have the meaning set forth in the

Recitals.

 

“Bankruptcy Court” shall have meaning set forth in the Recitals.

 

“Bankruptcy Orders” means, collectively, the Sale Order, the

Assumption and Assignment Orders, and any other order of the Bankruptcy Court

necessary to consummate the transactions contemplated herein.

 

“Bidding Procedures” shall have the meaning set forth in

Section 7.3.

 

“Business” shall have the meaning set forth in the Recitals.

 

“Business Day” shall mean any day other than a Saturday, Sunday

or other day on which banks are authorized or required to be closed in New York

City.

 

“Closing” shall have the meaning set forth in Section 2.5.

 

“Closing Statement” shall have the meaning set forth in Section

2.3.

 

“Closing Date” shall mean (a) the first Business Day after the

day on which the last of the consents, approvals, authorizations, actions,

filings or notices described in ARTICLE IX and ARTICLE X has been obtained,

made or given, as applicable, or (b) such other date as the Purchaser and the

Seller mutually agree upon in writing.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Confidentiality Agreement 2001” shall have the meaning set

forth in Section 6.2.

 

“Confidentiality Agreement 2002” shall have the meaning set

forth in Section 6.2.

 

“Confidentiality Agreements” shall mean the Confidentiality

Agreement 2001 and the Confidentiality Agreement 2002 collectively.

 

“Contracts” shall mean leases, agreements, contracts, purchase

orders and other legally binding commitments, whether written or oral, of

Seller relating to the Business.

 

“Contracts Letter” shall mean the instrument delivered by the

Seller to the Purchaser dated March 25, 2002 disclosing terms and conditions of

the Seller’s agreements with MCI WorldCom, Inc. and Global Crossing Bandwidth,

Inc.

 

“Current Assets” shall mean “Net Accounts Receivable”,

“Inventory”, “Prepaid Expenses” and “Other Current Assets” as set forth in the

Closing Statement.

 

4

 

“Customer Information” shall mean the prioritized customer lists

(regarding the volume of business such customer conducts with the Seller and

the name and address of each customer and the name and contact information for

each customer representative), customer contracts and access and information

obtained from customer representatives.

 

“Dancris Notes” means the Promissory Notes made by Dancris

Telecom LLC in favor of the Seller in connection with the sale of the Seller’s

wholesale carrier business and the Ericsson AXE 10.

 

“Deposit” shall have the meaning set forth in Section 2.4.

 

“Dispute Notice” shall have the meaning set forth in Section

2.3.

 

“ERISA” shall mean the Employee Retirement Income Security Act

of 1974, as amended.

 

“ERISA Affiliate” shall mean any entity required to be

aggregated with the Seller pursuant to Section 414(b), (c), (m) or (o) of the

Code.

 

“Escrow Agent” shall have the meaning set forth in Section 2.4.

 

“Escrow Agreement” shall have the meaning set forth in Section

2.4.

 

“Essential Services” shall have the meaning set forth in Section

6.4.

 

“Excluded Assets” shall mean (a) consideration received in

connection with the sale of the Assets; (b) cash; (c) cash equivalents

(including the Dancris Notes); (d) accounts receivable generated by Seller’s

former wholesale carrier business that was sold to Dancris Telecom LLC on July

31, 2001 and the Seller’s former prepaid calling card business that was sold to

IDT Corporation on February 9, 2001; (e) any Contracts that are not Assigned

Contracts; (f) any regulatory or tax refunds (including any refunds in

connection with California High Cost Fund-B, California Teleconnect Fund,

Universal Lifeline Telephone Service, or Telecommunications Infrastructure

Maintenance fees); (g) proceeds of any preference or fraudulent conveyance

actions or turnover proceedings brought by the Seller’s estate (including the

proceeding initiated by the Seller against OAN Services, Inc.); (h) equipment

related to or used in connection with the divested wholesale carrier and

prepaid calling card businesses, which equipment is not included on the

November 30 Balance Sheet, and the proceeds from any sale thereof (including

but not limited to the Ericsson AXE 10 and the NACT equipment); (i)

intercompany claims between the Seller, on the one hand, and, on the other

hand, RSL Communications Ltd., RSL COM plc, RSL COM Europe Limited, and any

past or present affiliates of either; (j) rights against third parties in

connection with actions of the Seller that have been commenced (through proof

of claim or otherwise), and the dispute between the Seller and Sprint

Communications relating to Sprint Communications’ failure to add an

authorization code to the call detail records, notwithstanding that no action

has been commenced; (k) payments to be received by Seller in connection with

legal actions related to actions or omissions that occurred prior to the

Closing, including the settlement with Total Communications, Inc., but

excluding actions to recover any Current Assets; (l) insurance proceeds (other

than proceeds received due to any Asset-related casualty occurring after the

date hereof) and prepaid D&O insurance premiums; (m) the IRU

 

5

 

Agreement between the Seller and Qwest Communications

Corporation dated May 30, 2000; (n) all setoffs that are not included

within subsection (h) of the definition of “Assets”; (o) at the Seller’s option,

the sublease between the Seller and The Horah Group for the offices located at

49 West 37th Street, and the owned office furniture, computer

server, personal computer, and related equipment located in these offices

(excluding any personal computers used by Accepting Employees and copies of

records and computer files related to the Business; provided, however, that the

Seller shall not disclose such records and computer files to any third party,

shall use such records and computer files solely for the purpose of resolving

claims and administration of the Seller’s estate and shall destroy all such

copies when no longer needed); provided, further that in the event that

there are any Accepting Employees at such subleased offices, the Seller shall

make space available there for such Accepting Employees and the Purchaser shall

pay to the Seller in exchange a pro-rated portion of the rent and other related

expenses for so long as the sublease is in effect; and (p) all of the Seller’s

licenses, authorizations, and certifications issued by the Federal

Communications Commission and any state public utility commission (or

equivalent state agency).

 

“Final Purchase Price” shall have the meaning set forth in

Section 2.3.

 

“General Assignment” shall have the meaning set forth in Section

2.5.

 

“Governmental Entity” shall mean any court or any federal,

state, municipal or local government or any political subdivision, governmental

department, board, commission, agency or instrumentality thereof, and any

administrative or regulatory agency.

 

“Highest Bidder” shall mean the bidder that is determined by the

Bankruptcy Court to have submitted the highest and best bid in the Bankruptcy

Auction.

 

“Indemnitee” shall have the meaning set forth in

Section 8.3.

 

“Indemnitor” shall have the meaning set forth in

Section 8.3.

 

“Knowledge” shall mean the actual knowledge of an executive

officer of the relevant Person, without a duty to investigate.

 

“Leases” shall mean the Personal Property Leases and the Real

Property Leases.

 

“Lien” shall mean any lien, pledge, mortgage, security interest,

claim, charge, option, right of first refusal, restriction, easement or other

encumbrance, including a “Claim” as defined in the Bankruptcy Code.

 

“Losses” shall have the meaning set forth in Section 8.1.

 

“Material Party” means any vendor of the Business with which the

Seller transacts at least $250,000 per annum in business, or any customer of

the Business with which the Seller transacts at least $100,000 per annum in

business.

 

6

 

“Non-Assignable Contracts” shall mean the Seller’s existing

Contracts with Sprint, AT&T, Cable & Wireless, Qwest and any of their

respective affiliates, and all employment agreements.

 

“November 30 Balance Sheet” shall have the meaning set forth in

Section 2.3(a).

 

“Person” shall mean any natural person, corporation,

unincorporated organization, partnership, association, limited liability

company, joint stock company, joint venture, trust or government, or any agency

or political subdivision of any government, or any other entity.

 

“Personal Property Leases” shall have the meaning set forth in

Section 4.5.

 

“Plan” shall have the meaning set forth in Section 4.10(a).

 

“Purchase Price” shall have the meaning set forth in Section

2.2.

 

“Purchaser” shall have the meaning set forth in the Recitals.

 

“Purchaser Review Period” shall have the meaning set forth in

Section 6.2.

 

“Purchaser Material Adverse Effect” shall mean a material

adverse effect on the results of operations, condition (financial or

otherwise), business, assets or liabilities of the Purchaser that materially

affects the ability of the Purchaser to fulfill its obligations hereunder.

 

“Real Property Leases” shall have the meaning set forth in

Section 4.6.

 

“Regulatory Requirements” shall mean the notices to, filings

with, and authorizations, consents and approvals of Governmental Entities,

including the Federal Communications Commission and state public utility

commissions, required for the Purchaser to operate the Business following the

Closing.

 

“Review Period” shall have the meaning set forth in Section 7.3.

 

“Sale” shall have the meaning set forth in the Recitals.

 

“Sale Order” shall have the meaning set forth in the Recitals.

 

“Seller” shall have the meaning set forth in the Recitals.

 

“Seller Material Adverse Effect” shall mean a material adverse

effect on the results of operations, condition (financial or otherwise),

business, assets or liabilities of the Business.

 

“Survival Period” shall have the meaning set forth in Section

12.2.

 

“Tax” shall mean (a) any net income, gross income, gross

receipts, alternative or add-on minimum, sales, use, ad valorem, franchise,

profits, license, withholding, payroll, employment, excise, transfer,

recording, severance, stamp, occupation, premium, property, environmental,

custom duty, or other tax, governmental fee or other like assessment or charge

of any kind whatsoever, together with any interest and any penalty, addition to

Tax or additional amount

 

7

 

imposed by a taxing authority; (b) any liability of

any person for the payment of any amounts of the type described in clause (a)

for any taxable period resulting from the application of Treasury Regulation

Section 1.1502-6 or, in the case of any similar provision applicable under

state, local or foreign law; and (c) any liability of any person for the

payment of any amounts described in clause (a) as a result of any express or

implied obligation to indemnify any other party or as successor or transferee.

 

“Termination Date” shall mean December 31, 2002; provided,

that if all conditions to the Closing shall have been satisfied or shall be

capable of being satisfied as of December 31, 2002 other than the obtaining

and/or satisfaction of the Regulatory Requirements, the Termination Date shall,

at the option of the Seller, be extended to March 31, 2003.

 

“WorldxChange” shall mean WorldxChange Corp., a Delaware

corporation and subsidiary of the Purchaser.

 

1.2.  Other

Rules of Construction. 

References in this Agreement to sections, schedules and exhibits are to

sections of, and schedules and exhibits to, this Agreement unless otherwise

indicated.  Words in the singular

include the plural and in the plural include the singular.  The word “or” is not exclusive.  The words “including”, “includes”,

“included” and “include”, when used, are deemed to be followed by the words

“without limitation”.

 

ARTICLE II

 

PURCHASE AND SALE

 

2.1.  Purchase and Sale.  On the terms and subject to the conditions

set forth herein, the Seller hereby agrees to sell, assign, transfer, convey

and deliver the Assets to the Purchaser, and the Purchaser hereby agrees to

purchase and accept the Assets from the Seller at the Closing, free and clear

of all Liens other than the Assumed Liabilities, as provided for in

Section 2.5.

 

2.2.  Purchase Price.  Subject to the provisions of Section 7.4, in

payment for the Assets, the Purchaser shall pay to the Seller the amount of

$15,500,000 (the “Purchase Price”).

 

2.3.  Post-Closing Adjustments to

Purchase Price

 

(a)          Within 35 days following the Closing

Date, the Purchaser shall deliver to the Seller a statement of the Seller’s

Current Assets and the Assumed Liabilities prepared by the Purchaser as of the

Closing Date (the “Closing Statement”). 

The Closing Statement shall be prepared in accordance with United States

generally accepted accounting practices applied in a manner consistent with the

November 30 Balance Sheet, a copy of which is attached hereto as Schedule

2.3(a) (the “November 30 Balance Sheet”).  In order to allow meaningful review by the

Seller of the Closing Statement, for the period from Closing and including 15

Business Days after delivery of the Closing Statement, the Purchaser shall

provide the Seller with full and unhindered access during normal business hours

to all financial, commercial, marketing and administrative books and records

relating to the Business.

 

8

 

(b)         In the event that the Seller disputes the

presentation of any item or items contained in the Closing Statement, the

Seller shall notify the Purchaser in writing (the “Dispute Notice”) of

the amount, nature and basis of such dispute, within 15 Business Days after

delivery of the Closing Statement.  In

the event of such a dispute, the Purchaser and the Seller shall first use their

best efforts to resolve such dispute between themselves.  If the Purchaser and the Seller are unable

to resolve the dispute within 25 calendar days after delivery of the Closing Statement,

the dispute shall be submitted to an office of KPMG located in a Mid-Atlantic

state (the “Accountants”).  The

Accountants shall be required to resolve the dispute within 30 days after

submission, and their determination shall be binding and conclusive upon the

Parties.  The fees and expenses of the

Accountants in connection with the resolution of disputes hereunder shall be

apportioned between the Seller and the Purchaser as part of the determination

of the relevant dispute or controversy, in such manner as the Accountants shall

deem equitable in light of the issues raised and the degree to which the Seller

or the Purchaser shall have prevailed on each such issue, it being the parties’

intention that a prevailing party should not bear such costs.

 

(c)          Immediately upon the expiration of the

15-day period for giving the Dispute Notice, if no Dispute Notice is given, or

upon the resolution of disputes, if any, pursuant to Section 2.3(b), the

Purchase Price shall be adjusted (as so adjusted, the “Final Purchase Price”)

as follows:

 

(i)                                     If the value of the Current Assets as of

the Closing Date is less than $11,639,000, the Purchase Price shall be reduced

by the amount of such difference;

 

(ii)                                  If the value of the Current Assets as of

the Closing Date exceeds $11,639,000, the Purchase Price shall be increased by

50% of the amount of such excess;

 

(iii)                               The Purchase Price will be reduced by the

amount of proceeds, if any, received by the Seller in connection with the sale

or other disposition, between November 30, 2001 and the date hereof, of any

assets that, but for such sale, would have constituted Assets, which assets are

listed in Schedule

2.3(c);

 

(iv)                              If the Assumed Liabilities as of the

Closing Date (including liabilities arising after the date hereof under the

Assigned Contracts) exceed $5,150,000, the Purchase Price will be reduced by

the amount of such excess; and

 

(v)                                 If the Assumed Liabilities as of the

Closing Date (including liabilities arising after the date hereof under the

Assigned Contracts) are less than $5,150,000, the Purchase Price will be

increased by the amount of such difference.

 

(d)         If the Final Purchase Price determined on

the basis of the Closing Statement exceeds the Purchase Price, the amount of

such excess shall be paid within three Business Days of such determination by

the Purchaser to the Seller by wire transfer of immediately

 

9

 

available

funds.  If the Final Purchase Price is

less than the Purchase Price, the Seller shall within three Business Days of

such determination pay to the Purchaser the amount of such shortfall by wire

transfer of immediately available funds.

 

2.4.  Escrow.  The Purchaser shall deposit in escrow with

LeBoeuf, Lamb, Greene & MacRae, L.L.P., as Escrow Agent (in such capacity,

the “Escrow Agent”) a deposit equal to $2,600,000 upon execution of this

Agreement, (the “Deposit”), and the disbursement of the Deposit funds

shall be governed by the Escrow Agreement attached hereto as Exhibit B (the “Escrow

Agreement”).

 

2.5.  Closing.  The closing of the transactions contemplated

hereby (the “Closing”) will take place at the offices of LeBoeuf, Lamb,

Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York 10019, or

at such other place as the Purchaser and the Seller mutually agree, at 10:00

A.M. local time, on the Closing Date. 

At the Closing, subject to Section 6.3, (a) the Seller shall assign and

transfer to Purchaser good and valid title in and to the Assets (free and clear

of all Liens, other than Assumed Liabilities) by delivery of a General

Assignment and Bill of Sale substantially in the form of Exhibit C (the “General Assignment”),

duly executed by the Seller; (b) the Purchaser and the Seller shall instruct

the Escrow Agent to deliver the Deposit to the Seller, (c) the Purchaser shall

pay the balance of the Purchase Price to the Seller, together with any

additional amounts owed to the Seller pursuant to Section 6.3(c), in good and

immediately available funds by wire transfer, (d) the Purchaser and the Seller

shall execute and deliver any required or appropriate instruments of assignment

with respect to all Assigned Contracts; and (e) the Seller and the Purchaser

shall deliver the certificates and other contracts, documents, and instruments

required to be delivered under ARTICLE IX and ARTICLE X and such other

ancillary documents as may be necessary or appropriate to consummate the

transactions contemplated hereby.

 

ARTICLE III

 

ASSUMPTION OF LIABILITIES

 

3.1.  Limited

Assumed Liabilities.  In addition

to the payment of the Purchase Price, the Purchaser hereby agrees to assume the

liabilities set forth on Schedule 3.1 hereto (the “Assumed

Liabilities”) at the Closing, pursuant to an Assumption Agreement in the

form of Exhibit D

(the “Assumption Agreement”). 

Notwithstanding any provision in this Agreement or any other writing to

the contrary, the Purchaser is assuming only the Assumed Liabilities and is not

assuming any other liability or obligation of the Seller (or any predecessor of

the Seller or any prior owner of all or part of its businesses and assets) of

whatever nature, whether presently in existence or arising hereafter.  Notwithstanding anything to the contrary

contained herein, the Seller agrees that it shall retain liability for the

payment of any and all cure amounts that become payable with respect to the

Assigned Contracts and Real Property Leases. 

All such other liabilities and obligations shall be retained by and

remain obligations and liabilities of the Seller against its estate.

 

10

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES 

OF THE SELLER

 

The Seller makes the following representations and warranties to the

Purchaser:

 

4.1.  Organization.  The Seller is a corporation duly organized,

validly existing and in good standing under the laws of the State of

Delaware.  The Seller has all requisite

corporate right, power and authority to (a) own or lease and operate the

properties and assets of the Business (including the Assets), (b) conduct

the Business as presently conducted, and (c) subject to the entry of the

Bankruptcy Orders, engage in and consummate the transactions contemplated

hereby.  The Seller is duly qualified or

otherwise authorized as a foreign corporation to transact business and is in

good standing in each jurisdiction in which such qualification or authorization

is required by applicable law except where the failure so to qualify or be

authorized would not reasonably be likely to cause a Seller Material Adverse

Effect.

 

4.2.  Authorization;

Enforceability.  Subject

to the entry of the Bankruptcy Orders, the Seller has all requisite corporate

right, power and authority to enter into this Agreement, and to perform its

obligations hereunder and to consummate the transactions contemplated

hereby.  This Agreement has been duly

executed and delivered by the Seller. 

This Agreement shall constitute the legal, valid and binding obligation

of the Seller, enforceable in accordance with its terms, except to the extent

that its enforcement is limited by bankruptcy, insolvency, reorganization or

other laws relating to or affecting the enforcement of creditors’ rights

generally and by general principles of equity.

 

4.3.  No Violation

or Conflict.  Subject to

the entry of the Bankruptcy Orders, the execution, delivery and performance of

this Agreement by the Seller and the consummation by the Seller of the

transactions contemplated hereby: 

(a) will not violate or conflict with (i)  any provision of

law or regulation, or any writ, order, judgment or decree of any Governmental

Entity, except where such violation or conflict would not be reasonably likely

to cause a Seller Material Adverse Effect, or (ii) any provision of the

certificate of incorporation or bylaws of the Seller, or any license, franchise

or permit to which the Seller is a party or to which the Seller, the Assets

and/or the Business is subject; and (b) will not, with or without the

passage of time or the giving of notice, or both, result in the breach of, or

constitute a default, or give rise to any right of termination, cancellation or

acceleration of any obligation or loss of any benefit or make additional

liabilities or fees due under, or require any consent under, or result in the

creation of any Lien on any property or assets of the Seller pursuant to any

note, mortgage, license, franchise, permit, lease, contract, instrument or

agreement to which the Seller is a party or by which the Seller or any of its

properties may be bound or affected, except where such breach, default or right

of termination, cancellation or acceleration would not be reasonably likely to

have a Seller Material Adverse Effect.

 

4.4.  Consents and

Approvals.  Except for the Sale

Order, any orders of the Bankruptcy Court authorizing the assumption and

assignment of any Assigned Contracts pursuant to Section 365 of the

Bankruptcy Code (“Assumption and Assignment Orders”), and except as

otherwise set forth on Schedule 4.4 hereto, no consent, approval,

waiver or

 

11

 

authorization of, or registration, qualification or filing with or

notice to any Governmental Entity, or any other Person, is required to be made

by the Seller in connection with the execution, delivery or performance of this

Agreement and/or the consummation by the Seller of the transactions

contemplated hereby, except as it would not be reasonably likely to cause a

Seller Material Adverse Effect.  The

Assumption and Assignment Orders shall include the following: (a) language that

those designated circuits and services provided pursuant to applicable tariffs

and/or purchase orders utilized by the Seller and its customers as of the

Closing Date are assigned to the Purchaser; (b) that Purchaser shall have no

obligations related to the assigned circuits for services rendered prior to the

date of the assignment; (c) provided that Purchaser complies with applicable

tariffs and purchase orders relating to the assigned circuits, the underlying

service providers shall be enjoined from taking any action to interfere with

the assignment of such circuits or to terminate service for such circuits, and

(d) that any stipulations entered into pursuant to the Bankruptcy Case between

the Seller and any party to an Assigned Contract shall expire as of the

effective date of the assumption and assignment of such Assigned Contract.  The form of the Assumption and Assignment

Orders shall be mutually agreed by the Seller and the Purchaser.

 

4.5.  Title

to Property and Assets; Liens, Etc.

 

(a)          Schedule 4.5 is a true, correct and complete schedule of all

material leases, subleases, licenses and other agreements under which the

Seller uses or has the right to use any of the Assets (the “Personal

Property Leases”).  Schedule 4.5

sets forth (i) the date of and parties to each Personal Property Lease,

(ii) a brief description of the personal property covered thereby,

(iii) the monthly base rents payable thereunder, and (iv) the term

thereof.  True, correct and complete

copies of all Personal Property Leases and all amendments and modifications

thereto have been made available to the Purchaser.  On the Closing Date, each Personal Property Lease will be in full

force and effect, all rent and other sums and charges payable by the Seller as

tenant thereunder will be current, no notice of default or termination under

any Personal Property Lease will be outstanding, and no termination event or

condition or uncured default on the part of the Seller or, to the Knowledge of

the Seller, of the lessor shall exist under any Personal Property Lease.

 

(b)          Except as set forth in Schedule 4.5,

the Seller owns all the properties and assets included in the Assets.  At the Closing, the Assets will be conveyed

to the Purchaser, and the Purchaser will acquire good and marketable title to

the Assets, free and clear of all Liens, except Liens that would not,

individually or in the aggregate, be reasonably likely to have a Seller

Material Adverse Effect.

 

4.6.  Real

Property.  The Seller does not

own any real property which relates to the Business.  Schedule 4.6 is a true, correct and complete schedule

of all leases, subleases, licenses and other agreements included within the

Assets which relate to the Business and under which the Seller uses or occupies

or has the right to use or occupy any real property (“Real Property Leases”).  Schedule 4.6 sets forth (a) the

date of and parties to each Real Property Lease, (b) a brief description

of the real property covered thereby, (c) the monthly base rents payable

thereunder, and (d) the term thereof. 

True, correct and complete copies of all Real Property Leases and all

amendments and modifications thereto have been made available to the

Purchaser.  On the Closing Date, each

Real Property Lease will be in full force and effect, all

 

12

 

rent and other

sums and charges payable by the Seller as tenant thereunder will be current, no

notice of default or termination under any Real Property Lease will be

outstanding, and no termination event or condition or uncured default on the

part of the Seller or, to the Knowledge of the Seller, of the landlord, shall

exist under any Real Property Lease.

 

4.7.  Condition of

Assets; Related Matters. 

The personal property included within the Assets is in normal working

order, reasonable wear and tear excepted, except where the failure to be in

normal working order would not reasonably be likely to cause a Seller Material

Adverse Effect.  The Assets constitute all of the tangible and

intangible assets relating to, used in, held for use in, or necessary for the

conduct of the Business as currently conducted.

 

4.8.  Contracts.  The Seller has made available to the

Purchaser true and complete copies of all material Contracts, all Contracts

with customers of the Direct Business, all Contracts with agents of the Seller

with respect to the A&R Business and all Contracts involving annual Seller

obligations in excess of $25,000. 

Except where the same would not reasonably be likely to cause a Seller

Material Adverse Effect, each Assigned Contract will be, upon the entry of the

Bankruptcy Orders, legal, valid, binding and enforceable against the Seller

and, to the Knowledge of the Seller, against any other Person party thereto in

accordance with its terms, except to the extent such enforceability may be

limited by applicable bankruptcy or other laws affecting creditors’ rights, or

by general equity principles.

 

4.9.  Litigation.  Except as set forth on Schedule 4.9, there is no

litigation, action, complaint, claim or suit, judicial or administrative

action, audit, proceeding or governmental investigation pending against the

Seller involving, affecting or relating to the Business, the Assets or the

transactions contemplated hereby.  The

Seller is not in default in any material respect under any judgment, order or decree

of any Governmental Entity.  Upon entry

of the Bankruptcy Orders, there will be no judgment, order, decree, injunction,

stipulation or settlement to which the Seller or any of the Assets is subject

or which is reasonably likely to prevent, enjoin or materially alter or delay

any of the transactions contemplated by this Agreement or that would reasonably

be likely to cause a Seller Material Adverse Effect.

 

4.10.  Employee Benefit Plans.

 

(a)          For purposes of this Agreement, “Plan”

means each plan, program, arrangement, agreement or commitment sponsored or

maintained by or on behalf of the Seller or any ERISA Affiliate or to which the

Seller or any ERISA Affiliate makes or is obligated to make contributions or

which is a pension, profit sharing, savings, thrift or other retirement plan,

deferred compensation, stock purchase, stock option, performance share, bonus

or other incentive plan, severance pay plan, policy or procedure, life, health,

disability or accident insurance plan, including each “employee benefit plan”

as defined in section 3(3) of ERISA, or vacation or other employee benefit

plan, program, arrangement, agreement or commitment, whether or not written.

 

(b)         The Seller has complied in all material

respects with the provisions of each Plan and the applicable provisions of the

Code and ERISA, has administered each such Plan in material compliance with the

provisions of each such Plan and the applicable requirements of the Code and

ERISA, has timely made all required contributions thereto

 

13

 

and has not

directly or indirectly withdrawn or borrowed against any amounts in any such

Plan.

 

(c)          The Seller is not subject to any

obligation to pay retiree medical or other retiree welfare or similar benefits.

 

4.11.  Employment and Labor Matters.

 

(a)          The Seller is not a party to any

collective bargaining agreements and there are no labor unions or other

organizations representing, or to the Seller’s Knowledge, purporting to

represent, or attempting to represent, any employee of the Seller.

 

(b)         Except as otherwise set forth on Schedule

4.11, the Seller has not violated any provision of federal or state

law or any governmental rule or regulation, or any order, decree, judgment or

arbitration award of any court, arbitrator or any government agency regarding

the terms and conditions of employment of employees, former employees or

prospective employees or other labor related matters, including laws, rules,

regulations, orders, rulings, decrees, judgments and awards relating to

discrimination, fair labor standards and occupational health and safety,

wrongful discharge or violation of the personal rights of employees, former

employees or prospective employees, except where such violations would not

reasonably be likely to cause a Seller Material Adverse Effect.

 

(c)          On or before the Closing Date, the Seller

will pay any and all amounts owing to employees of the Seller under any

retention plans or other retention arrangements.

 

4.12.  November

30 Balance Sheet.  The November

30 Balance Sheet (a) has been prepared from, and is consistent with, the books

and records of the Seller, (b) has been prepared in accordance with United

States generally accepted accounting principles consistently applied during the

period covered thereby, except as specifically identified in Schedule

2.3(a), (c) fairly presents the financial condition of the Business

as of November 30, 2001, and (d) does not include any of the Excluded Assets

other than certain Ericsson and NACT equipment.  The financial books and records of the Seller relating to the

Business are accurate and complete in all material respects and are maintained

in accordance with customary business practices in the industry and all

materially applicable legal requirements. 

Except as set forth in the November 30 Balance Sheet, as of November 30,

2001 there were no liabilities or obligations relating to the Business, whether

known or unknown, fixed or contingent and whether arising out of any condition

or state of facts existing on or prior to November 30, 2001.

 

4.13.  Licenses

and Certifications.  The Seller

has in force, and is in all material respects in compliance with, the terms and

conditions of all licenses, permits, exemptions, consents, certifications,

authorizations and approvals of all Governmental Entities (“Licenses and

Certifications”) required under any existing federal, state, local or

foreign statute, law, ordinance or rule or regulation in connection with the

Business as presently conducted.  Schedule

4.13 sets forth a complete and accurate list of all such Licenses

and Certifications.

 

4.14.  Environmental

Matters.  To the Seller’s

Knowledge, neither the Seller nor any real property at which the operations of

the Seller are, or have been, conducted is in violation of, or subject to any

liabilities as a result of any past or current violations of, any existing

 

14

 

Federal, state or local law (including common law), statute, ordinance,

rule or regulation (or any proposed law, statute, ordinance, rule or

regulation), relating to occupational health and safety or relating to

pollution or protection of the environment, including, statutes, laws,

ordinances, rules and regulations relating to the emission, discharge, spillage,

leakage, storage, off-site dumping, release or threatened release of hazardous

substances into ambient air, surface water, ground water or land, or otherwise

relating to the manufacture, processing, distribution, use, treatment, storage,

disposal, transport or handling of hazardous substances, and no material

expenditures are required in connection with the operation of the Business as

presently conducted in order to comply with any such existing statute, law,

ordinance, rule or regulation.

 

4.15.  Circuits

and Switching Services.  All

voice and data circuits and switching services utilized by the Seller and the

customers of the Business are provided either under Contracts, true and

complete copies of which have been made available to the Purchaser, or under

applicable tariffs and purchase orders.

 

4.16.  Brokers.  The Seller has not employed any financial

advisor, broker or finder, other than Benedetto Gartland & Company, the

fees and expenses of which the Seller shall bear, and has not incurred and will

not incur any other broker’s, finder’s, investment banking or similar fees,

commissions or expenses, in connection with the origination, negotiation or

execution of this Agreement.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser makes the following representations and warranties to the

Seller:

 

5.1.  Organization.  The Purchaser is a limited liability

company, duly organized, validly existing and in good standing under the laws

of the State of Delaware.  The Purchaser

has all requisite limited liability company right, power and authority to

(a) own or lease and operate its properties and assets, (b) conduct

its business as presently conducted, and (c) engage in and consummate the

transactions contemplated hereby.

 

5.2.  Authorization;

Enforceability.  The

Purchaser has all requisite limited liability company right, power and

authority to enter into this Agreement, to perform its obligations hereunder

and to consummate the transactions contemplated hereby.  This Agreement has been duly authorized,

executed and delivered by the Purchaser. 

This Agreement constitutes the legal, valid and binding obligations of

the Purchaser, enforceable in accordance with its terms, except to the extent

that its enforcement is limited by bankruptcy, insolvency, reorganization or

other laws relating to or affecting the enforcement of creditors’ rights

generally and by general principles of equity.

 

5.3.  No Violation or Conflict.  The execution, delivery and performance of

this Agreement and the consummation by the Purchaser of the transactions

contemplated hereby:  (a) do not

and will not violate or conflict with (i)  any provision of law or

regulation, or any writ, order, judgment or decree of any Governmental Entity,

except where such violation or conflict would not be reasonably likely to cause

a Purchaser Material Adverse Effect, or (ii) any

 

15

 

provision of the Purchaser’s certificate of formation or Limited

Liability Company Agreement, or any license, franchise or permit to which the

Purchaser is a party or by which it is bound; and (b) do not, and will

not, with or without the passage of time or the giving of notice, or both,

result in the breach of, or constitute a default, or give rise to any right of

termination, cancellation or acceleration of any obligation or loss of any

benefit or make additional liabilities or fees due under, or require any

consent under, or result in the creation of any Lien on any property or assets

of the Purchaser pursuant to any note, mortgage, license, franchise, permit,

lease, contract, instrument or agreement to which the Purchaser is a party or

by which the Purchaser or any of its properties may be bound or affected,

except where such breach, default or right of termination, cancellation or

acceleration would not be reasonably likely to cause a Purchaser Material

Adverse Effect.

 

5.4.  Consents and Approvals.  Except for the Sale Order, the Assumption

and Assignment Orders, the Regulatory Requirements and consents of third

parties required to enter into contracts included within the Assets, no

consent, approval, waiver or authorization of, or registration, qualification

or filing with or notice to any Governmental Entity, or any other Person, is

required to be made by the Purchaser in connection with the execution, delivery

or performance of this Agreement by the Purchaser or the consummation by the

Purchaser of the transactions contemplated hereby.  As of the date the motion for the Sale Order is filed, the

Purchaser shall have assigned its rights under this Agreement to WorldxChange

in accordance with Section 12.4. 

WorldxChange possesses all licenses, authorizations, and certifications

required by the Federal Communications Commission and each state public utility

commission (or equivalent state agency) in order to engage in the sale and

provision of interexchange telecommunications services in all fifty states.

 

5.5.  Brokers.  The Purchaser has not employed any financial

advisor, broker or finder and has not incurred and will not incur any broker’s,

finder’s, investment banking or similar fees, commissions or expenses, in

connection with the origination, negotiation or execution of this Agreement.

 

5.6.  Financing.  The Purchaser possesses adequate financial

resources to consummate the transactions contemplated by this Agreement, and

this Agreement is not subject to any financing contingencies.

 

ARTICLE VI

 

COVENANTS

 

6.1.  Access.  From and after the date hereof until the

Closing Date, the Seller, upon reasonable advance notice by the Purchaser, will

afford to the Purchaser and its counsel, accountants, and other representatives

reasonable access during normal business hours to the management, offices,

warehouses, properties, books and records of the Seller reasonably requested by

the Purchaser, to the extent provision of such access or information is not

prohibited by applicable law and relates to the Business or the Assets and will

furnish (subject to applicable law) as promptly as practicable to the Purchaser

any and all such information as the Purchaser may reasonably request,

including, but not limited to, all pleadings and other

 

16

 

documents or schedules filed with the Bankruptcy Court or the Office of

the United States Trustee; provided, however, that such access and

information will not constitute an enlargement of or any addition to the

representations and warranties of the Seller expressly set forth herein.  In addition to the foregoing, following the

entry of the Sale Order, the Purchaser and its representatives shall have the

right, (i) during normal business hours, to discuss the affairs of the Business

with the directors, officers, employees, customers, vendors, consultants and

advisors of the Business (and the Seller agrees to cooperate with the Purchaser

to facilitate such discussions), (ii) to participate in any material

discussions by the Seller with customers and vendors of the Business which are

Material Parties (and the Seller shall use reasonable efforts to give the

Purchaser notice of any such discussions in sufficient time to permit the

Purchaser to have a representative present at such discussions) and (iii) to

have a representative on site at the Seller’s offices at 1001 Brinton Road,

Pittsburgh, Pennsylvania during normal business hours (and the Seller agrees to

provide such representative with appropriate office space).  Notwithstanding the foregoing, Seller shall

be solely responsible for directing the conduct of the Business through the

Closing Date, subject to the provisions of Section 6.3.  Following the entry of the Sale Order, the

Purchaser shall deliver to the Seller all filings made with any stock exchange

or the Securities and Exchange Commission by any affiliate of the Purchaser,

including Counsel Corporation, the parent corporation of the Purchaser.

 

6.2.  Customer Information.  Purchaser has completed all its due

diligence except with respect to the Customer Information.  Seller shall provide Purchaser with the

Customer Information for a period (the “Purchaser Review Period”) ending

at the close of business on April 10, 2002, or such later date as the Purchaser

and Seller may agree in writing, and the Purchaser shall be entitled during the

Purchaser Review Period to contact the customers for the purposes of verifying

the Customer Information.  The Seller

shall cooperate and assist the Purchaser in connection with the customer

contacts, such cooperation and assistance to include reasonable efforts to obtain

the cooperation and assistance of such customers.  Upon or prior to the expiration of the Purchaser Review Period,

the Purchaser shall, if it is not satisfied with the Customer Information and

it wishes to terminate this Agreement, provide written notice to such effect to

the Seller.  If such written notice is

delivered to the Seller on or prior to the expiration of the Purchaser Review

Period, this Agreement shall automatically terminate.  If no such notice is delivered, this Agreement shall remain in full

force and effect.  The Purchaser shall

at all times maintain all Customer Information as confidential in accordance

with applicable laws, including Federal Communications Commission regulations,

and in accordance with the provisions of the Confidentiality Agreement, dated

July 30, 2001, between the Purchaser and the Seller (the “2001

Confidentiality Agreement”). 

Purchaser hereby acknowledges that all references to “Counsel

Communications” in the Confidentiality Agreement are references to the

Purchaser, and all obligations of “Counsel Communications” to the Seller under

the Confidentiality Agreement are obligations from the Purchaser to the Seller

under the Confidentiality Agreement. 

The Seller and the Purchaser have also entered into a supplemental agreement

of even date hereto (the “2002 Confidentiality Agreement”).

 

6.3.  Conduct of Business.  Subject to any obligations as

debtors-in-possession under the Bankruptcy Code and except as otherwise

contemplated herein or with the prior consent of the Purchaser, not to be

unreasonably withheld, from the date of this Agreement to the Closing Date, the

Seller

 

17

 

(a)          will conduct the Business consistent with

the ordinary and normal course of business during its Bankruptcy Case and use

reasonable efforts to preserve its relationships (such as they exist on the

date hereof) with its customers and suppliers and will use reasonable efforts

to retain the services of its officers, employees and agents;

 

(b)         will promptly notify Purchaser of any

order entered in the Bankruptcy Case that materially affects or will materially

affect the operation and value of the Business and promptly deliver a copy of

each such Order to Purchaser;

 

(c)          will not, without the prior written

consent of the Purchaser

 

(i)                                     enter into or engage in any material

transaction or agreement in connection with the Business other than, in

consultation with the Purchaser, the agreements described in the Contracts

Letter;

 

(ii)                                  sell, transfer or otherwise dispose of

any of the Assets;

 

(iii)                               enter into term commitments extending

beyond September 30, 2002 for feature group and voice only customer circuits,

unless mutually agreed upon by Seller and Purchaser on a circuit by circuit

basis;

 

(iv)                              enter into term commitments extending

beyond September 30, 2002 for up to 50% of all existing voice IMT circuits with

the specific excluded circuits to be agreed upon by Seller and Purchaser within

seven days of the date hereof; or

 

(v)                                 take any action or course of action

inconsistent with its compliance with its covenants and agreements hereunder or

the consummation of the transactions contemplated hereby or which would

materially adversely affect the interests of the Purchaser hereunder or

materially diminish the value of the Business;

 

provided,

however, that the Seller may continue its practice of

migrating off from various telecommunications providers and suppliers in

accordance with plans previously disclosed to the Purchaser.  Notwithstanding anything set forth in this

Section 6.3, in the event the Seller wishes to enter into a circuit term

commitment for any circuit that falls outside of the categories and/or

percentages described in subsections (iii) and (iv) of this Section 6.3(c), the

Seller shall give the Purchaser not less than five Business Days’ written

notice before entering into any such term commitment.  The Purchaser may request that Seller not enter into such circuit

term commitment, and if Seller complies with such request, Purchaser shall

compensate Seller for 75% of the lost financial savings resulting from the less

favorable month-to-month pricing for such circuit, calculated as the difference

between the 12-month term pricing and the month-to-month pricing charged to

Seller for such circuits through the Closing Date and payable at the Closing.

 

In addition to the foregoing, the Seller agrees that it will use its

reasonable efforts to identify and hire, as soon as possible following the date

hereof and at its expense, six or more

 

18

 

additional sales personnel and that it will purchase,

for cash and at its expense, a Nortel Shasta Box for use in developing the

Seller’s IP/VPN business.

 

6.4.  Essential Services.   The Seller shall transfer to the Purchaser

all of its right, title and interest in and to all voice and data circuits and

switching services utilized by the Seller and the customers of the Business as

of the Closing Date pursuant to applicable tariffs and purchase orders (the “Essential

Services”), and shall provide the Purchaser with a complete and accurate

inventory thereof as of the Closing Date. 

The Seller shall further insure that the Purchaser shall have no

obligation to pay any pre-petition claims or cure amounts that may become

payable with respect to the Essential Services.

 

6.5.  Assigned Contracts.  Schedule 6.5 and the Contracts

Letter set forth a complete list of all Contracts and Leases that the Purchaser

has designated, as of the date hereof, as Assigned Contracts.  The Purchaser may, between the date hereof

and that date which is 30 days following the entry of the Sale Order, elect to

designate, pursuant to the terms of the Sale Order, any other Contracts and

Leases as additional Assigned Contracts. 

The Seller agrees and acknowledges that, notwithstanding anything to the

contrary contained herein, the Purchaser shall have no liability for the

payment of any cure amounts that become payable with respect to the Assigned

Contracts listed in Schedule 6.5 and any other Contract or

Lease, if the Purchaser designates any such Contract or Lease as an Assigned

Contract pursuant to the terms of this Section 6.5 and the terms of the Sale

Order.

 

6.6.  Offers of Employment.  The Seller agrees that from and after the

date hereof the Purchaser may make offers of employment to any persons employed

by the Seller, which employment will become effective as of the Closing Date

and only if the Closing occurs.  Only if

the Closing occurs, any person who accepts such an offer of employment with the

Purchaser shall be an “Accepting Employee” and shall be employed by the

Purchaser on such terms and conditions as the Purchaser and each such Accepting

Employee may mutually agree.  None of

Seller’s employees or personnel who become Accepting Employees shall be

subject, after the Closing Date, to any non-compete, non-piracy,

confidentiality or similar obligation with respect to their employment with

Seller or any affiliates of Seller, except that any confidentiality obligation

affecting the Excluded Assets shall continue to be enforceable.  The order of the Bankruptcy Court approving

the Bidding Procedures shall contain a provision ratifying the provisions of

this Section 6.6.

 

6.7.  Bankruptcy Orders,

Etc.  The parties hereto shall use

their reasonable efforts to obtain the Bankruptcy Orders.  The Seller agrees that it shall retain at

least $2,600,000 of the Purchase Price in the Seller’s bankruptcy estate until

the expiration of the Survival Period and further agrees that it will not seek

rejection in the Bankruptcy Case of the Real Property Lease in Dallas, Texas,

as set forth on Schedule 4.6, for at least 90 days after the Closing Date.

 

6.8.  Consents

 

(a)          The Seller and the Purchaser shall use

their reasonable efforts to obtain the consent of third parties (including

Governmental Entities necessary to fulfill all Regulatory Requirements)

necessary to accomplish the execution, delivery or performance of this

Agreement and the Assigned Contracts, in all cases in which such consent is

required for such assignment.

 

19

 

(b)         Notwithstanding the foregoing, within 30

days after the entry of the Sale Order, the Purchaser shall, with the

reasonable assistance of and in consultation with the Seller, prepare and file,

or cause to be prepared and filed, any and all applications necessary to

fulfill all Regulatory Requirements. 

The Purchaser and the Seller shall prosecute such applications with all

reasonable diligence and otherwise use their reasonable best efforts (including,

with respect to the Purchaser, providing financial assurance to a Governmental

Entity, to the extent required) to obtain grants of approval as expeditiously

as practicable.  The Purchaser shall

bear all reasonable fees payable by the Purchaser and/or the Seller to any

Governmental Entity (and including reasonable local counsel fees, where

necessary) in connection with the filing and prosecution of the applications

necessary to fulfill all Regulatory Requirements.

 

6.9.  Allocation of Purchase

Price.  Following the completion of

the Closing Statement, the Seller and the Purchaser shall agree as set forth on

a schedule to allocate the Purchase Price among the Assets in accordance with

Code Section 1060.  The parties shall

follow such Purchase Price allocation for purposes of filing Internal Revenue

Form 8594 and all Tax returns and for all other Tax purposes, and shall not

voluntarily take any position inconsistent therewith (including, in any audit

or judicial or administrative proceeding).

 

6.10.  Solicitation.  From and after the date hereof, Seller may

not solicit bidders, provided, however, that Seller may

discuss, solicit and negotiate any proposals or offers for the acquisition of

the Assets or provide access to any other person or entity if such a buyer has

first contacted the Seller or has previously contacted the Seller in connection

with the sale of the Assets. 

Notwithstanding this provision, Seller may not provide access to

Customer Information to any person or entity in connection with the purchase of

the Assets, except as set forth in Section 7.3.

 

6.11.  Indemnification

of Brokerage.  Each of

the Seller and the Purchaser agrees to indemnify and hold harmless the other

from any demand or claim for commission or other compensation by any financial

advisor, broker or finder claiming to have been employed by or on behalf of the

Seller and/or the Purchaser, respectively, and to bear the cost of legal

expenses incurred in defending against any such demand or claim.

 

6.12.  Regulatory

Requirements.  In

conjunction with the obligations of the Purchaser and the Seller under Section

6.8, the Purchaser will cause its regulatory counsel to prepare and deliver to

the Seller and its regulatory counsel, Holland & Knight LLP (“Seller’s

Regulatory Counsel”), on or before June 15, 2002, a report detailing the

status of the Purchaser’s efforts to obtain and/or satisfy all of the

Regulatory Requirements.  The Seller

shall, promptly thereafter, cause Seller’s Regulatory Counsel to prepare and

deliver to the Purchaser a report with its recommendations for expediting the

process of obtaining and/or satisfying the Regulatory Requirements.  In the event that the Closing shall not have

occurred and all Regulatory Requirements shall not have been obtained and/or

satisfied by August 1, 2002, the Purchaser shall permit Seller’s Regulatory

Counsel to conduct an ongoing audit of the status of, and to participate in,

the obtaining and/or satisfaction of the Regulatory Requirements.

 

6.13.  Further Assurances.  From and after the date hereof, upon written

request from any party to this Agreement, the requested party shall execute,

acknowledge and deliver all

 

20

 

such further acts, assurances, deeds, assignments, transfers,

conveyances and other instruments and papers as may be reasonably required to

sell, assign, transfer, convey and deliver the Assets to the Purchaser, and for

the Purchaser to assume the Assumed Liabilities.

 

ARTICLE VII

 

CERTAIN BANKRUPTCY MATTERS

 

7.1.  Bankruptcy Court Approval

 

(a)          The Seller hereby confirms that it is

critical to the process of arranging an orderly sale of the Business to proceed

by selecting the Purchaser to enter into this Agreement and to present the

Bankruptcy Court with arrangements for obtaining the highest realizable prices

for the Business.

 

(b)         As promptly as practicable after the date

hereof, the Seller and the Purchaser shall use commercially reasonable efforts

to obtain the entry of the Sale Order no later than sixty days from the date

hereof.  The Sale Order shall, among other

things, (i) permit the sale of the Assets to the Purchaser pursuant to

Sections 363(b) and 365 of the Bankruptcy Code, (ii) include a

finding of the Purchaser’s good faith under Section 363(e) of the

Bankruptcy Code, (iii) provide for finality under Section 363(m) of

the Bankruptcy Code and a waiver of the stays set forth in Bankruptcy Rules

6004(g) and 6006(d), (iv) provide that the Purchaser shall have no liability

for any claims existing prior to the Closing Date which may be asserted against

the Seller or Seller’s bankruptcy estate including any “successor liability”

claims, and (v) provide for the retention of jurisdiction by the Bankruptcy

Court to resolve any and all disputes that may arise under this Agreement as

between Seller and Purchaser, and further to hear and determine any and all

disputes between Seller and/or Purchaser, as the case may be, and any

non-Seller party to, among other things, any Assigned Contract concerning, inter alia,

Seller’s assumption and assignment thereof to Purchaser under this Agreement.

 

(c)          As promptly as practicable after the

entry of the Sale Order, upon designation pursuant to Section 6.5 by the

Purchaser under the Sale Order of the Contracts it wishes to have the Seller

assume and assign to the Purchaser, the Seller shall promptly move before the

Bankruptcy Court to obtain the Assumption and Assignment Orders.

 

(d)         Subject to the Sale Order, each of the

Seller and the Purchaser shall promptly make any filings, take all actions, and

use reasonable efforts to obtain any and all other approvals and orders

necessary or appropriate for consummation of the transactions contemplated

hereby.

 

(e)          In the event an appeal is taken, or a

stay pending appeal is requested or reconsideration is sought, from the Sale

Order, the Seller shall immediately notify the Purchaser of such appeal or stay

request and shall provide to the Purchaser within one Business Day a copy of

the related notice of appeal or order of stay or application for

reconsideration.  The Seller shall also

provide the Purchaser with written notice, (and copies of) any other or further

notice of appeal, motion or application filed in connection

 

21

 

with any appeal

from or application for reconsideration of, either of such orders and any

related briefs.

 

7.2.  Bankruptcy Notices.  The Seller shall notify the Purchaser and,

as is required by the Bankruptcy Code, all parties entitled to notice of all

motions, notices and orders required to consummate the transactions contemplated

by this Agreement, including the Sale Order, as modified by orders in respect

of notice which may be issued at any time and from time to time by the

Bankruptcy Court.

 

7.3.  Bidding Procedures.  Promptly after execution of this Agreement,

the Seller shall file with the Bankruptcy Court a motion for approval of

bidding procedures acceptable to the Purchaser pursuant to which the Seller

will negotiate for higher and better bids for the Assets (the “Bidding

Procedures”).  Seller shall seek

imposition of the following requirements:

 

(a)          the initial overbid shall be at least

$1,000,000 in excess of the Purchase Price, and any subsequent bids shall be,

at least, in increments of $250,000;

 

(b)         all bidders shall be required to execute

and submit an asset purchase agreement substantially similar to, or more

favorable from the Seller’s perspective than, this Agreement, including a

requirement for an initial deposit of $2,600,000, but without the reimbursement

or break-up fee provided for in Section 7.3(e);

 

(c)          provided that the Highest Bidder, if the

Purchaser is not the Highest Bidder, shall have entered into an agreement with

the Seller substantially similar to the Confidentiality Agreement 2002

(including provisions substantially identical to Sections 7 and 11 thereof and

including a provision that such agreement will be assigned to the Purchaser in

the event that the Purchaser consummates the Closing), the Seller may provide

the Highest Bidder for a period of 15 days following the designation of the Highest

Bidder (the “Review Period”) with Customer Information relating to 10

customers selected by the Seller.  The

Seller shall select only customers who have each previously entered into a

Contract with the Seller for a term that extends for at least one year after

the date of designation of the Highest Bidder. 

If, on or prior to the expiration of the Review Period, such Highest

Bidder does not provide a written termination notice to the Seller, the Sale to

such Highest Bidder shall be deemed authorized by the Bankruptcy Court, and

this Agreement shall automatically terminate unless (i) the Purchaser, on or

prior to the expiration of the Review Period, provides a written request to the

Seller that this Agreement remain in effect, and (ii) the Seller accepts such

request in writing, in which case this Agreement shall remain in effect and the

Purchase Price shall remain the same as it was prior to the commencement of the

Bidding Procedures;

 

(d)         if the Purchaser is the Highest Bidder

the Sale to the Purchaser shall be deemed authorized by the Bankruptcy Court,

and the Purchase Price shall be the Purchaser’s highest bid under the Bidding

Procedures; and

 

(e)          if the Purchaser is not the Highest

Bidder, and the Sale of the Assets is consummated to another buyer, and

provided also that the Purchaser is not in default under this Agreement,

Purchaser shall be reimbursed up to $150,000 in the aggregate of

 

22

 

the Purchaser’s

documented reasonable due diligence fees and reasonable out-of-pocket costs

paid to third parties, including reasonable legal fees and reasonable

out-of-pocket costs of negotiating and finalizing this Agreement, and Purchaser

shall be paid a break-up fee of $475,000. 

The amounts to be paid to the Purchaser pursuant to this Section 7.3(e)

shall be the sole remedy of the Purchaser against the Seller in connection with

the sale of the Assets to the Highest Bidder, and the Seller shall not have any

other obligation or liability to the Purchaser in respect thereof.  Any amounts owed to the Purchaser pursuant

to this Section 7.3(e) shall be payable at the closing of the sale of the

Assets to the Highest Bidder.

 

7.4.  Stand-By Bid.  If, on or prior to the expiration of the

Review Period, the Highest Bidder provides a written termination notice to the

Seller, this Agreement shall continue in effect and the Purchase Price shall

remain the same, except that if the Purchaser submitted any bid pursuant to

Section 7.3(a) and the Bidding Procedures, the Purchaser’s highest bid under

the Bidding Procedures shall be the Purchase Price.

 

ARTICLE VIII

 

INDEMNIFICATION

 

8.1.  Indemnification

by Seller.  Subject to

the other provisions of this ARTICLE VIII, from and after the date hereof the

Purchaser shall indemnify and hold the Seller, its affiliates, officers,

directors, shareholders, employees, trustees, attorneys and representatives and

each Person who controls the Purchaser within the meaning of the Securities

Exchange Act of 1934, harmless from and against any and all losses, costs,

expenses, liabilities, or legal damages (including reasonable fees and

disbursements of counsel) (collectively, “Losses”) suffered by such

persons arising out of or resulting from: (a) any material inaccuracy or breach

of any representation or warranty made by the Seller in this Agreement, (b) the

failure of the Seller to perform any covenant, undertaking, agreement or other

obligation of the Seller contained in this Agreement and (c) any liability or

obligation of the Seller, except for the Assumed Liabilities.

 

8.2.  Indemnification

by Purchaser.  Subject to

the other provisions of this ARTICLE VIII, from and after the date hereof the

Purchaser shall indemnify and hold the Seller, its affiliates, officers,

directors, shareholders, employees, trustees, attorneys and representatives and

each Person who controls the Seller within the meaning of the Securities

Exchange Act of 1934, harmless from and against any and all Losses suffered by

such persons arising out of or resulting from: (a) the breach of any

representation or warranty made by the Purchaser in this Agreement; (b) the

failure of the Purchaser to perform any covenant or obligation by the Purchaser

contained in this Agreement; and (c) the failure of the Purchaser to pay and

perform any of the Assumed Liabilities.

 

8.3.  Procedure.  Each party entitled to be indemnified

pursuant to Sections 8.1 and 8.2 (an “Indemnitee”) shall notify the

indemnifying party (“Indemnitor”) in writing of any action against such

Indemnitee in respect of which the Indemnitor is or may be obligated to provide

indemnification pursuant to Sections 8.1 and 8.2 promptly after the

receipt of notice of the commencement thereof. 

The omission of an Indemnitee so to notify the Indemnitor of any

 

23

 

such action shall not relieve the Indemnitor from any liability which

the Indemnitor may have to such Indemnitee except to the extent the Indemnitor

shall have been materially prejudiced by the omission of such Indemnitee so to

notify the Indemnitor, pursuant to this Section 8.3.  In case any such action shall be brought

against any Indemnitee and it shall notify the Indemnitor of the commencement

thereof, the Indemnitor shall be entitled to participate therein and, to the

extent that the Indemnitor may wish, to assume the defense thereof, with

counsel reasonably satisfactory to such Indemnitee, and after notice from the

Indemnitor to such Indemnitee of its election so to assume the defense thereof,

the Indemnitor will not be liable to such Indemnitee Party under

Sections 8.1 and 8.2 for any legal or other expense subsequently incurred

by such Indemnitee in connection with the defense thereof nor for any

settlement thereof entered into without the consent of the Indemnitor; provided,

however, that (a) if the Indemnitor shall elect not to assume

the defense of such claim or action or (b) if the Indemnitee reasonably

determines (i) that there may be a conflict between the positions of the

Indemnitor and of the Indemnitee in defending such claim or action or

(ii) that there may be legal defenses available to such Indemnitee

different from or in addition to those available to the Indemnitor, then

separate counsel for the Indemnitee shall be entitled to participate in and

conduct the defense, in the case of clause (i) above, or such different

defenses, in the case of clause (ii) above, and the Indemnitor shall be liable

for any reasonable legal or other expenses incurred by the Indemnitee in

connection with the defense; provided, however, that an Indemnitor

shall not be liable for the fees or expenses of more than one counsel to the

Indemnitees in connection with any one action or related actions in respect of

which indemnification is sought hereunder. 

The Indemnitor shall not settle or compromise any action without the

prior written consent of the Indemnitee, unless (x) such settlement does

not impose any restrictions or limitations on the assets or operations of the

business of such Indemnitee, (y) all relief provided is paid or satisfied

in full by the Indemnitor or an affiliate thereof, and (z) there is no

finding or admission of any violation of law or the rights of any Person other

than the claiming party by any Indemnitee.

 

ARTICLE IX

 

CONDITIONS TO THE PURCHASER’S OBLIGATIONS

 

The obligation of the Purchaser under this Agreement to consummate the

Closing is subject to the satisfaction, on or before the Closing, of each of

the following conditions, unless  waived

in writing by the Purchaser:

 

9.1.  Representations

and Warranties.  The

representations and warranties of the Seller contained in this Agreement shall

be true and correct in all respects (in the case of any representation or

warranty qualified as to materiality) or in all material respects (in the case

of any representation or warranty not so qualified) at and as of the Closing

Date with the same effect as though such representations and warranties were

made at and as of the Closing Date, except (a) for changes expressly

contemplated by this Agreement and (b) that representations and warranties

given as of a specific date or time shall be true and correct in all respects

(in case of any representation or warranty qualified as to materiality) or in

all material respects (in the case of any representation or warranty not so qualified)

as of such date or time.  If the

Purchaser has Knowledge of a breach that would constitute a basis for not

closing, but the Purchaser

 

24

 

nevertheless elects to consummate the Closing, such election shall

constitute a waiver of such breach and a release of any right to damages from

the Seller in respect thereof.

 

9.2.  Performance.  The Seller shall have performed and complied

in all material respects with all agreements and covenants required by this Agreement

to be performed or complied with by it on or prior to the Closing, and shall

have provided to the Purchaser such evidence of Seller’s performance and

compliance as the Purchaser may reasonably request, including evidence that the

Essential Services will continue to be supplied following the Closing as

provided in Section 6.4.

 

9.3.  No Injunction.  There shall not be any statute, rule or

regulation, enjoining or prohibiting the consummation of the Closing and no

court of competent jurisdiction shall have issued, and there shall not have

been commenced and be continuing any action by any Governmental Entity seeking,

any order, decree or ruling enjoining or prohibiting the consummation of the

Closing.

 

9.4.  Governmental

Authorizations and Regulatory Requirements.  All authorizations, consents, orders and

approvals of Governmental Entities (including the Regulatory Requirements) and

of the Bankruptcy Court necessary for the consummation of the transactions

contemplated by this Agreement shall have been obtained, except for such

authorizations, consents, orders and approvals as to which the failure to

obtain the same would not cause a Seller Material Adverse Effect.  For purposes of this Section 9.4, the

failure to obtain the approval of the public utility commission (or equivalent

agency) of a state, which approval is required in order to transfer the portion

of the Business conducted in such state, shall be deemed to be a Seller

Material Adverse Effect.

 

9.5.  Material Adverse

Change.  There shall not have

occurred, between the date hereof and the Closing Date, a change in the

Business or the Assets that has resulted in a Seller Material Adverse Effect.

 

9.6.  Bankruptcy

Court Approval.  The

Bankruptcy Orders shall have been entered by the Bankruptcy Court and such

orders shall not have been stayed, modified, reversed or amended in any manner

adverse to the Purchaser; and the Seller shall have received from the

Bankruptcy Court all other orders, approvals and consents required to transfer

the Assets and the Assumed Liabilities and to consummate the transactions

contemplated by this Agreement, and the Purchaser shall have received evidence

thereof satisfactory to the Purchaser and its counsel.

 

9.7.  Certificates.  The Seller shall have furnished the Purchaser

with a certificate of an officer of the Seller to the effect that the

conditions set forth in Sections 9.1 and 9.2 hereof have been satisfied.

 

25

 

ARTICLE X

 

CONDITIONS TO THE SELLER’S OBLIGATIONS

 

The obligations of the Seller under this Agreement to consummate the

Closing are subject to the satisfaction, on or before the Closing, of each of

the following conditions, unless  waived

in writing by the Seller:

 

10.1.  Representations

and Warranties.  The representations

and warranties of the Purchaser contained in this Agreement shall be true and

correct in all respects (in the case of any representation or warranty

qualified as to materiality) or in all material respects (in the case of any

representation or warranty not so qualified) at and as of the Closing Date with

the same effect as though such representations and warranties were made at and

as of the Closing Date, except (a) for changes expressly contemplated by this

Agreement and (b) that representations and warranties given as of a specific

date or time, which shall be true and correct in all respects (in the case of

any representation or warranty qualified as to materiality) or in all material

respects (in the case of any representation or warranty not so qualified) as of

such date or time.

 

10.2.  Performance.  The Purchaser shall have performed and

complied in all material respects with all agreements and covenants required by

this Agreement to be performed or complied with by it on or prior to the

Closing.

 

10.3.  No Injunction.  There shall not be any statute, rule or

regulations, enjoining or prohibiting the consummation of the Closing and no

court of competent jurisdiction shall have issued, and there shall not have

commenced and be continuing any action by any Governmental Entity seeking, any

order, decree or ruling enjoining or prohibiting the consummation of the

Closing.

 

10.4.  Governmental

Authorizations.  All

authorizations, consents, orders and approvals of Governmental Entities and of

the Bankruptcy Court necessary for the consummation of the transactions

contemplated by this Agreement shall have been obtained.  For purposes of this Section 10.4, the

failure to obtain the approval of the public utility commission (or equivalent

agency) of a state, which approval is required in order to transfer the portion

of the Business conducted in such state, shall be deemed to be a Purchaser

Material Adverse Effect.

 

10.5.  Certificates.  The Purchaser shall have furnished the

Seller with a certificate of an officer of the Purchaser to the effect that the

conditions set forth in Sections 10.1 and 10.2 hereof have been satisfied.

 

10.6.  Order

Approving Bidding Procedures. 

The Bankruptcy Court shall have entered an order scheduling the

Bankruptcy Auction and the hearing on the Sale and approving the Bidding

Procedures.

 

10.7.  Bankruptcy

Court Approval.  The

Bankruptcy Orders shall have been entered by the Bankruptcy Court and such

orders shall not have been stayed, modified, reversed or amended; and the

Seller shall have received from the Bankruptcy Court all other orders,

approvals and consents required to transfer the Assets and the Assumed

Liabilities and to

 

26

 

consummate the transactions contemplated by this Agreement, and the

Seller shall have received evidence thereof satisfactory to the Seller and its

counsel.

 

ARTICLE XI

 

TERMINATION AND ABANDONMENT

 

11.1.  Methods of Termination.  This Agreement shall automatically terminate

under the circumstances set forth in Section 7.3(c) or in the event the

consummation of the sale of the Assets to the Highest Bidder, and may also be

terminated as follows:

 

(a)          by mutual written agreement of the Seller

and the Purchaser, prior to the Closing Date;

 

(b)         if written notice is provided as set

forth in Section 6.2;

 

(c)          at the time before the Closing, by the

Purchaser if any of the conditions set forth in ARTICLE IX shall have become

incapable of fulfillment or cure and shall not have been waived by the

Purchaser, provided

that the Purchaser is not then in breach of this Agreement, and provided,

further, that the Purchaser shall not have the right to terminate

this Agreement by reason of any alleged failure of the Seller to comply with

the provisions of Sections 6.1 or 6.3 unless such breach is material and is not

cured within five days after the Purchaser shall have delivered the Seller

notice thereof;

 

(d)         at any time before the Closing, by the

Seller if any of the conditions set forth in ARTICLE X shall have become

incapable of fulfillment or cure and shall not have been waived by the Seller, provided

that the Seller is not then in breach of this Agreement;

 

(e)          at any time after the Termination Date by

either party if the Closing fails to occur on or before such date, unless such

failure is due to the action or inaction of, or breach of this Agreement by,

such party;

 

(f)            at any time before the Closing by the

Seller in the event that there has been a Purchaser Material Adverse Effect; or

 

(g)         at any time following the ninetieth day

from the date hereof, by either party if by such date the Sale Order has not

been entered.

 

11.2.  Effect of

Termination.  If this

Agreement is terminated under Section 11.1, written notice thereof shall

forthwith be given to the other party and this Agreement shall thereafter

become void and have no further force and effect and, except for those

provisions that expressly survive the termination of this Agreement, all

further obligations of the Seller, and the Purchaser, to each other under this

Agreement shall terminate without further obligation or liability of either of

the foregoing to the other, except that:

 

27

 

(a)          each party shall return all documents,

workpapers and other material of any other party relating to the transactions

contemplated by this Agreement, whether so obtained before or after the

execution of this Agreement, to the party furnishing the same;

 

(b)         upon termination of this Agreement, the

Deposit shall be promptly returned to the Purchaser pursuant to the terms of

the Escrow Agreement; unless (i) the Seller shall have terminated this

Agreement pursuant to Section 11.1(d) as a result of a material breach by the

Purchaser of the terms hereof and the failure of the Purchaser to cure such

breach within five days after notice thereof, or (ii) the Purchaser shall have

terminated or purported to terminate this Agreement for any reason not

expressly permitted in Section 11.1 (in any event specified in subsections (i)

or (ii) of this Section 11.2(b), the Deposit shall be forfeited by the

Purchaser and shall be delivered to the Seller pursuant to the terms of the

Escrow Agreement);

 

(c)          the Confidentiality Agreements shall

remain in full force and effect; and

 

(d)         this Section 11.2 will survive any

termination of this Agreement.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1.  Notices.  Any notice, request, demand or other

communication required or permitted under this Agreement shall be in writing

and shall be delivered personally or sent by certified mail, return receipt

requested, postage prepaid, or sent by prepaid overnight courier to the parties

at the addresses set forth below their names below (or at such other addresses

as shall be specified by the parties by like notice).

 

	

  If to the Seller:

  	

   

  	

  With a copy to:

  
	

   

  	

   

  	

   

  
	

  RSL COM U.S.A., Inc.

  	

   

  	

  LeBoeuf, Lamb, Greene & MacRae, L.L.P.

  
	

  1001 Brinton Road

  	

   

  	

  125 West 55th Street 

  
	

  Pittsburgh, Pennsylvania  15221

  	

   

  	

  New York, New York 

  10019

  
	

  Attention: 

  General Counsel

  	

   

  	

  Attention: 

  Angela Somers, Esq.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  And to:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Stroock & Stroock & Lavan LLP

  
	

   

  	

   

  	

  180 Maiden Lane

  
	

   

  	

   

  	

  New York, New York 10038

  
	

   

  	

   

  	

  Attention: 

  Robin Keller, Esq.

  

 

28

 

	

  If to the Purchaser:

  	

   

  	

  With a copy to:

  
	

   

  	

   

  	

   

  
	

  Counsel Springwell Communications LLC

  	

   

  	

  Robinson Silverman Pearce Aronsohn & Berman LLP

  
	

  One Landmark Square

  	

   

  	

  1290 Avenue of the Americas

  
	

  Stamford, Connecticut  06901

  	

   

  	

  New York, New York 

  10104

  
	

  Attention: Samuel Shimer

  	

   

  	

  Attention: Mark S. Lichtenstein

  

 

Such notices, requests, demands, and other communications shall be

deemed given:

 

(a)          in the case of personal delivery, when

actually received,

 

(b)         in the case of delivery by overnight

service with guaranteed next day delivery, the next day or the day designated

for delivery, or

 

(c)          in the case of certified mail, five days

after deposit in the mails.

 

12.2  Survival.  The statements, certifications,

representations and warranties made hereby by the parties to this Agreement,

and their respective covenants, agreements and obligations to be performed

pursuant to the terms hereof, shall survive for a period of 90 days from the

Closing Date (the “Survival Period”), except to the extent a party in

good faith gives written notice to the other party specifying the precise

nature of any breach thereof on or before the end of the Survival Period; provided,

however, that nothing herein contained shall modify or be construed

to modify in any respect whatsoever or limit in duration any covenant,

agreement or obligation to be performed by any party hereto after the date

hereof pursuant to the provisions of this Agreement.

 

12.3.  Entire Agreement.  This Agreement, the exhibits and schedules

hereto, and the Confidentiality Agreements contain every obligation and

understanding among the parties relating to the subject matter hereof and merge

all prior discussions, negotiations and agreements, if any, between them, and

none of the parties shall be bound by any representations, warranties,

covenants, or other understandings, other than as expressly provided or

referred to herein.  The Confidentiality

Agreements shall continue to remain in full force and effect in accordance with

their terms.

 

12.4.  Assignment.  This Agreement may not be assigned by any

party without the written consent of the other party, such consent not to be

unreasonably withheld, provided that (a) the Purchaser may assign

its rights under this Agreement, without the consent of the Seller, to

WorldxChange, (b) the assigning party shall remain jointly and severally liable

with such assignee for its obligations hereunder and (c) that the Purchaser may

not assign this Agreement either to an affiliate of the Purchaser unable to

make the representations in Section 5.4 or if such assignment would cause delay

in securing the Regulatory Requirements. 

Any assignee of the Purchaser shall be deemed to be the Purchaser

hereunder.  Subject to the preceding

sentences, this Agreement shall be binding upon and inure to the benefit of the

parties hereto and their respective successors and permitted assigns.

 

29

 

12.5.  Waiver and Amendment.  Any representation, warranty, covenant, term

or condition of this Agreement which may legally be waived, may be waived, or

the time of performance hereof extended, at any time by the party hereto

entitled to the benefit hereof, and any term, condition or covenant hereof may

be amended by the parties hereto at any time. 

Any such waiver, extension or amendment shall be evidenced by an

instrument in writing executed on behalf of the appropriate party by a person

who has been authorized by such party to execute waivers, extensions or

amendments on its behalf.  No waiver by

any party hereto, whether express or implied, of its rights under any provision

of this Agreement shall constitute a waiver of such party’s rights under such

provisions at any other time or a waiver of such party’s rights under any other

provision of this Agreement.  No failure

by any party hereto to take any action against any breach of this Agreement or

default by another party shall constitute a waiver of the former party’s right

to enforce any provision of this Agreement or to take action against such

breach or default or any subsequent breach or default by such other party.

 

12.6.  Books and Records.  From and after the Closing Date, the

Purchaser shall provide the Seller with such information as may be reasonably

requested for all periods prior to the Closing Date to enable the Seller to

prepare Tax returns and financial and other reports and the Seller shall, on

reasonable notice to the Purchaser, have access during normal business hours to

the books and records included in the Assets for all periods prior to the

Closing Date and may make copies and extracts from such books and records, for

all reasonable business and Tax purposes.

 

12.7.  No Third Party

Beneficiary.  Except as

provided in ARTICLE VIII, nothing expressed or implied in this Agreement is

intended, or shall be construed, to confer upon or give any Person other than

the parties hereto and their respective successors and permitted assigns, any

rights or remedies under or by reason of this Agreement.

 

12.8.  Severability.  In the event that any one or more of the

provisions contained in this Agreement shall be declared invalid, void or unenforceable,

the remainder of the provisions of this Agreement shall remain in full force

and effect, and such invalid, void or unenforceable provision shall be

interpreted as closely as possible to the manner in which it was written.

 

12.9.  Expenses.  Each party agrees to pay, without right of

reimbursement from the other party, the costs incurred by it incident to the

performance of its obligations under this Agreement and the consummation of the

transactions contemplated hereby, including costs incident to the preparation

of this Agreement, and the fees and disbursements of counsel, accountants and

consultants employed by such party in connection herewith.  Any payments for sales, transfer or other

taxes or fees applicable to the conveyance and transfer to the Purchaser of the

Assets arising as a result of the transactions contemplated by this Agreement

shall be borne by the Purchaser.  The

provisions of this Section 12.9 shall survive any termination of this Agreement.

 

12.10.  Announcements.  Except with respect to the notice of the

Sale required in connection with the obtaining of Bankruptcy Court approval of

the transaction contemplated hereunder and the entry of the Sale Order related

thereto, all press releases, notices to customers and suppliers and other

announcements prior to the Closing Date with respect to this Agreement

 

30

 

and the transactions contemplated by this Agreement

shall be approved in writing by Purchaser and Seller prior to the issuance

thereof; provided that any party may make any public disclosure it believes in

good faith is required by law or regulation (in which case the disclosing party

shall advise the other party in writing prior to making such disclosure and

provide such other party an opportunity to review and comment on the proposed

disclosure).

 

12.11.  Headings.  Article titles and headings to sections

herein are inserted for convenience of reference only and are not intended to

be a part of or to affect the meaning or interpretation of this Agreement.  The schedules referred to herein shall be

construed with and as an integral part of this Agreement to the same extent as

if they were set forth verbatim herein. 

Any matter disclosed pursuant to any section of the schedules hereto

shall not be deemed an admission or representation of the Seller as to the

materiality of the item so disclosed. 

Any matter disclosed in any section of the schedules hereto shall be

deemed disclosed with respect to all sections of the schedules hereto.  The specification of any dollar amount in

the representations or warranties contained in this Agreement or the inclusion

of any specific item in any schedules hereto is not intended to imply that such

amounts, or higher or lower amounts, or the items so included or other items,

are or are not material, and neither party shall use the fact of the setting of

such amounts or the inclusion of any such item in any dispute or controversy

between the parties as to whether any obligation, item or matter not described

herein or included in a schedule is or is not material for purposes of this

Agreement.

 

12.12.  Remedies Cumulative;

Specific Performance.  The rights

and remedies of the parties hereto shall be cumulative (and not

alternative).  The parties to this

Agreement agree that, in the event of any breach or threatened breach by any

party to this Agreement of any covenant, obligation or other provision set

forth herein for the benefit of any other party to this Agreement, such other

party shall be entitled (in addition to any other remedy that may be available

to it) to seek (a) a decree or order of specific performance or mandamus

to enforce the observance and performance of such covenant, obligation or other

provision, and (b) an injunction restraining such breach or threatened

breach.

 

12.13.  Governing Law;

Jurisdiction.  This Agreement has

been entered into and shall be construed and enforced in accordance with the

laws of the State of New York without reference to the choice of law or

conflicts of law principles thereof that would require the application of the

law of a jurisdiction other than of such State.  The parties agree that any action, proceeding or claim it

commences against any other party pursuant to this Agreement shall be brought

exclusively in the Bankruptcy Court; provided, that if the Bankruptcy Court is

unwilling or unable to hear any such action, proceeding or claim, then the

courts of the State of New York, sitting in New York County, and the federal

courts of the United States sitting in the City, County and State of New York

shall have exclusive jurisdiction over such action, proceeding or claim.

 

12.14.  Counterparts.  This Agreement may be executed in any number

of counterparts, each of which shall be deemed an original but all of which

together shall constitute one and the same instrument.

 

12.15.  Disclosures.  Any disclosure on a schedule shall be deemed

disclosure under all schedules. 

Disclosure of any matter on a schedule shall not constitute an

expression of

 

31

 

a view that such matter is material or is required to be disclosed

pursuant to this Agreement.  To the

extent that any representation or warranty set forth herein is qualified by the

materiality of the matters to which the representation or warranty relates, the

inclusion of any matter on a schedule does not constitute a determination by

the Seller that any such matter is material.

 

IN

WITNESS WHEREOF,

the parties hereto have each executed and delivered this Agreement as of the

day and year first above written.

 

	

  COUNSEL SPRINGWELL

  COMMUNICATIONS LLC

  	

   

  	

  RSL COM U.S.A., INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

  Mufit Cinali, Managing

  Director

  	

   

  	

   

  	

  Michael Marino,

  President

  

 

32Exhibit 10.2

 

AMENDMENT NO. 1 TO

ASSET PURCHASE AGREEMENT

 

AMENDMENT

NO. 1 (this “Amendment”) to Asset Purchase

Agreement (as defined below), dated as of November 27, 2002, by and among

COUNSEL SPRINGWELL COMMUNICATIONS LLC, a Delaware limited liability company (“Counsel

LLC”), WORLDXCHANGE CORP., a Delaware corporation (“WorldxChange”),

COUNSEL CORPORATION, an Ontario corporation (“Counsel Corp.”), and RSL

COM U.S.A., INC., a Delaware corporation (“Seller”).

 

RECITALS

 

WHEREAS,

Counsel LLC and Seller are parties to that certain Asset Purchase Agreement,

dated March 25, 2002 (the “Asset Purchase Agreement”), whereby Seller

agreed to sell, and Counsel LLC agreed to purchase and assume from Seller, the

Assets and Assumed Liabilities relating to the Business (“Asset Purchase”),

in accordance with sections 105(a), 363(b) and 365 and other applicable

provisions of the Bankruptcy Code and pursuant to an order of the Bankruptcy

Court dated May 23, 2003 (the “Sale Order”);

 

WHEREAS,

pursuant to Section 12.4 (Assignment) of the Asset Purchase

Agreement, Counsel LLC assigned (the “Assignment”) its rights and

obligations under the Asset Purchase Agreement to WorldxChange with effect as

of the date the motion for the Sale Order was filed (the “Assignment Date”),

and WorldxChange has accepted such Assignment; provided, that,

notwithstanding the Assignment, Counsel LLC remains jointly and severally

liable with such WorldxChange for Counsel LLC’s obligations under the Asset

Purchase Agreement;

 

WHEREAS,

the Counsel Entities have agreed to certain undertakings with respect to

payment of the Purchase Price;

 

WHEREAS,

the parties to the Asset Purchase Agreement have agreed to certain amendments

thereto, such agreement to be evidenced by this Amendment;

 

WHEREAS,

this Amendment is “Amendment No. 1” to the Asset Purchase Agreement; and

 

WHEREAS,

this Amendment shall be subject to an order of the Bankruptcy Court, in

accordance with Sections 105(a), 363(b) and 365 and other applicable provisions

of the Bankruptcy Code, as provided in an order substantially in the form

attached hereto as Exhibit

E, authorizing the

Seller to enter into this Amendment and to consummate the transactions

contemplated hereby (the “Restructured Sale Approval Order”);

 

NOW,

THEREFORE, for good and valuable consideration, the

receipt and sufficiency of which are hereby mutually acknowledged, the parties

hereto agree as follows:

 

1.             Definitions;

Interpretation.  Capitalized terms

used herein and not otherwise defined herein shall have the meanings ascribed

to such terms in the Asset Purchase Agreement. 

The term “Amendment,” as used herein, shall include the Exhibits

attached hereto.  Terms herein

 

 

which are capitalized and italicized shall be understood to refer to

Sections and Exhibits, as the case may be, of the Asset Purchase Agreement.

 

2.             Exhibits

and Schedules.  The form of

Management Agreement, form of Note, Side Letter Agreement and form of

Subordination Agreement attached hereto as Exhibits  A, B, C  and D, shall be added to the Asset Purchase Agreement as Exhibits E, F, G and H, respectively.

 

3.             Amendments

to Certain Sections of the Asset Purchase Agreement.  The Asset Purchase Agreement shall be

amended as follows, such amendments to take effect, unless otherwise specified

in this Amendment,  on the date hereof:

 

(a)           Defined

Terms.

 

(i)            The terms “Purchaser” and

“WorldxChange” shall be deleted from existing Section 1.1 (Defined Terms) in their

entirety and the following inserted in lieu thereof:

 

““Purchaser”

shall have the meaning set forth in the first paragraph of this Agreement; provided,

however, that on and after the Assignment Date  such term shall include,

jointly and severally, WorldxChange, as assignee pursuant to Section 12.4.”

 

““WorldxChange”

shall mean WorldxChange Corp., a Delaware corporation and subsidiary of Counsel

LLC.”

 

(ii)           The following additional terms shall

be added to existing Section 1.1 (Defined Terms):

 

““Counsel

Corp.” shall mean Counsel Corporation, an Ontario corporation.”

 

““Counsel

Entities” shall mean, collectively, Counsel LLC, WorldxChange and Counsel

Corp.”

 

““Counsel

LLC” shall mean Counsel Springwell Communications LLC, a Delaware limited

liability company.

 

““Management

Agreement” shall mean the Management Agreement in the form of Exhibit E, among the

Seller, WorldxChange and Counsel LLC.”

 

““Note”

shall mean the Promissory Note in the principal amount of $3,000,000 in the

form of Exhibit F,

by Counsel LLC and WorldxChange in favor of Seller.”

 

““Side

Letter Agreement” shall mean the Letter Agreement attached hereto as Exhibit G, between

the Seller and WorldxChange.”

 

2

 

““Subordination

Agreement” shall mean the Subordination Agreement attached hereto as Exhibit H, among the

Counsel Entities and Seller.”

 

(iii)          The term Assets, as defined in

existing Section 1.1 (Defined Terms) shall be hereby amended to

include the Carrier Identification Code “1010946”.

 

(b)           Purchase

and Sale.

 

(i)            Existing Section 2.2 (Purchase

Price) shall be deleted in its entirety and the following inserted

in lieu thereof:

 

“2.2.        Purchase Price.  In payment for the Assets, the Purchaser

shall pay, or cause to be paid, to the Seller, $13,000,000 (the “Purchase

Price”), comprised of $10,000,000 in cash, plus the Note; provided,

that the parties hereto mutually agree that the application of Section 2.3 has

resulted in a $2,500,000 downward adjustment of the cash portion of the

Purchase Price (e.g., to $7,500,000) to be paid at the Closing, as provided

in Section 10.8.”

 

(ii)           Existing Section

2.3(d) (Post-Closing

Adjustments to Purchase Price) shall be deleted in its entirety and

the following inserted in lieu thereof:

 

“(d) If the

application of Section 2.3(c) shall result in a computed downward adjustment to

the Purchase Price of more than $2,650,000, the Seller shall pay to the

Purchaser by wire transfer of immediately available funds within three (3)

Business Days of such determination, an amount equal to the difference between

(x) the Purchase Price less (y) the sum of the Final Purchase Price and

$150,000.  If the application of Section

2.3(c) shall result in a computed downward adjustment to the Purchase Price of

less than $2,350,000, the Purchaser shall pay to Seller by wire transfer of

immediately available funds within three (3) Business Days of such

determination, an amount equal to the difference between (x) the Final Purchase

Price less (y) the sum of the Purchase Price and $150,000.  For example, and without limiting the

generality of the foregoing, if the downward adjustment to the Purchase Price

based on the application of Section 2.3(c) shall result in a computed downward

adjustment (x) of $2,750,000 (e.g., the Final Purchase Price is equal to

$10,250,000), Seller shall pay $100,000 to Purchaser in accordance with the

provisions of this Section 2.3(d), (y) of $2,250,000 (e.g., the Final Purchase

Price is equal to $10,750,000), Purchaser shall pay $100,000 to Seller in

accordance with the provisions of this Section 2.3(d), or (z) falling between

$2,350,000 (e.g., the Final Purchase Price is equal to $10,650,000) and

$2,650,000 (e.g., the Final Purchase Price is equal to $10,350,000)

(inclusive), no additional payments shall be made between Seller and Buyer in

connection with a Purchase Price adjustment.”

 

3

 

(c)           Mutual

Release.  On the Closing Date,

existing Article VIII (Indemnification) shall be deleted in its

entirety and replaced by the following:

 

“ARTICLE VIII

 

MUTUAL RELEASE

 

8.1.          Release by Seller.  Seller forever and irrevocably releases and

discharges the Counsel Entities and their respective directors, officers,

shareholders, partners, principals, affiliates, agents, successors and assigns

(all the foregoing being referred to herein as the “Counsel Releasees”)

from any and all actions, causes of action, suits, proceedings, indemnities,

liabilities, losses, bills, covenants, contracts, agreements, promises,

damages, judgments, obligations, awards, penalties, fines, claims and/or

demands whatsoever of every kind and character, whether arising in equity, at

common law or by statute, that the Seller ever had, now has or hereafter can,

shall or may have against the Counsel Releasees, or any one or more of them,

related to, arising out of, based upon, resulting from or in any way connected

with, directly or indirectly, this Agreement or the transactions contemplated

hereby, except for the transactions contemplated by Section 2.3, and each of

the Note, the Side Letter Agreement, the Management Agreement and the

Subordination Agreement.  The Seller

will not, directly or indirectly, in its own name or through another, commence

any action, litigation, suit, arbitration or other proceeding, or assert any

claim or demand, against any one or more of the Counsel Releasees in any manner

arising out of or in connection with any subject matter for which the release

and discharge set forth in this Section 8.1 is given.

 

8.2.          Release by Counsel Entities.  Each of the Counsel Entities forever and

irrevocably releases and discharges the Seller and its directors, officers,

shareholders, partners, principals, affiliates, agents, successors and assigns

(all the foregoing being referred to herein as the “Seller Releasees”)

from any and all actions, causes of action, suits, proceedings, indemnities,

liabilities, losses, bills, covenants, contracts, agreements, promises,

damages, judgments, obligations, awards, penalties, fines, claims and/or

demands whatsoever of every kind and character, whether arising in equity, at

common law or by statute, that any of the Counsel Entities ever had, now has or

hereafter can, shall or may have against the Seller Releasees, or any one or

more of them, related to, arising out of, based upon, resulting from or in any

way connected with, directly or indirectly, this Agreement or the transactions

contemplated hereby, except for the transactions contemplated by Section 2.3,

and each of the Note, the Side Letter Agreement, the Management Agreement and

the Subordination Agreement. The Counsel Entities will not, directly or

indirectly, in its own respective names or through another, commence any

action, litigation, suit, arbitration or other proceeding, or assert any claim

 

4

 

or demand,

against any one or more of the Seller Releasees in any manner arising out of or

in connection with any subject matter for which the release and discharge set

forth in this Section 8.2 is given.

 

8.3.          Survival.  The provisions of this Article VIII shall

survive the Closing.”

 

(d)           Conditions

to the Purchaser’s Obligations.

 

(i)            Existing

Section 9.3 (No Injunction) shall be deleted in its entirety and the

following shall be inserted in lieu thereof:

 

“9.3.        No Injunction.  There shall not be any statute, rule or

regulation, enjoining or prohibiting the consummation of the Closing and no

court of competent jurisdiction shall have issued, and there shall have not

been commenced and be continuing any action by any Governmental Entity seeking,

any order, decree or ruling enjoining or prohibiting the consummation of the

Closing.  Notwithstanding the foregoing,

in no event shall the failure to obtain any of the Regulatory Requirements

constitute a condition to the Purchaser’s obligations under this Agreement to

consummate the Closing.”

 

(ii)           The following additional Sections

shall be added to existing Article IX (Conditions to the Purchaser’s Obligations):

 

“9.8.        No Casualty.  Since November 27, 2002, there shall not

have occurred any significant casualty, damage or destruction (“Casualty”)

to any of the fixed assets included in the Assets which has resulted in an

inability of the Seller to materially service its customers. “

 

9.9.          Execution of Other Agreements.

Each of the Note, the Side Letter Agreement, the Management Agreement and the

Subordination Agreement shall have been duly executed and delivered by each of

the respective parties thereto.”

 

(e)           Conditions

to the Seller’s Obligations.

 

(i)            Existing Section 10.3 (No

Injunction) shall be deleted in its entirety and the following shall

be inserted in lieu thereof:

 

“10.3.      No Injunction. There shall not be

any statute, rule or regulation, enjoining or prohibiting the consummation of

the Closing and no court of competent jurisdiction shall have issued, and there

shall have not been commenced and be continuing any action by any Governmental

Entity seeking, any order, decree or ruling enjoining or prohibiting the

consummation of the Closing. 

Notwithstanding the foregoing, in no event shall the failure to obtain

any of the Regulatory Requirements constitute a

 

5

 

condition to

the Seller’s obligations under this Agreement to consummate the Closing.”

 

(ii)           The following additional Section

shall be added to existing Article X (Conditions to the Seller’s Obligations):

 

“10.8.      Payment of Purchase Price; Execution of

Other Agreements.  The cash portion

of the Purchase Price shall have been paid to the Seller, and each of the Note,

the Side Letter Agreement, the Management Agreement and the Subordination

Agreement shall have been duly executed and delivered by each of the respective

parties thereto.”

 

(f)            Method

of Termination.  Existing Section

11.1 (Methods

of Termination) deleted in its entirety and the following shall be

inserted in lieu thereof:

 

“11.1       Method of Termination.  This Agreement may be terminated by mutual

written agreement of the Seller and the Purchaser prior to the Closing Date”

 

(g)           Survival.  Existing Section 12.2 (Survival) shall be deleted

in its entirety and the following shall be inserted in lieu thereof:

 

“12.2       Survival.  Except for (a) the provisions set forth in

Articles II (Purchase and Sale), VIII (Mutual Release) and XII (Miscellaneous),

which shall survive the Closing; and (b) Sections 6.4 (Essential Services), 6.9 (Allocation

of Purchase Price) and 6.13 (Further Assurances), which shall survive

for ninety (90) days following the Closing, 

the statements, certifications, representations and warranties made

hereby by the parties to this Agreement, and their respective covenants, agreements

and obligations to be performed pursuant to the terms hereof, shall not

survive, and shall terminate and be of no further effect following the Closing

Date; provided,

however, that nothing herein contained shall modify or be construed

to modify in any respect whatsoever or limit the duration of any covenant,

agreement or obligation to be performed by any party hereto after the Closing

Date pursuant to the provisions of this Agreement.”

 

4.             Certain

Undertakings Regarding Payment of Purchase Price.  The Counsel Entities hereby irrevocably and unconditionally

undertake and agree to be jointly and severally liable to the Seller for the

due and punctual payment in full of the cash portion of the Purchase Price

(including, but not limited to, any adjustments pursuant to Section 2.3(c) and

2.3(d) of the Asset Purchase Agreement (Post-Closing Adjustments to Purchase Price))

when the same shall become due and payable in accordance with the appropriate

provisions of the Asset Purchase Agreement. 

In addition, each of the Counsel Entities hereby unconditionally and

irrevocably waives any defenses it may now or hereafter have in any way

relating to its obligations under this Section 4, except for the provisions of

Section 2.3(c) and 2.3(d) of the Asset Purchase Agreement (Post-Closing Adjustments to Purchase

Price) and the conditions to Closing specified in Sections 9.3 (No

Injunction), 9.6 (Bankruptcy Court Approval), 9.8 (No Casualty)

 

6

 

and 9.9 (Execution of Other Agreements) of the Asset Purchase

Agreement.  Except with respect to the

undertakings and agreements as to payment of the cash portion of the Purchase

Price as provided for in this Section 4, nothing in this Section 4 shall affect

any other statement, certification, representation, warranty, covenant or

agreement of, or obligation to be performed by, any of the Counsel Entities,

whether individually or collectively, pursuant to the terms of the Asset

Purchase Agreement, as amended by this Amendment.  The provisions of this Section 4 shall survive the Closing.

 

5.             Conduct

of Business.

 

(a)           The

Purchaser shall perform the management of the Business related to the

Non-transferred Assets in a professional manner and in accordance with

applicable professional or industry standards throughout the Term (as defined

in the Management Agreement) of the Management Agreement and with at least the

same level of service provided by Seller immediately prior to the Closing Date.

 

(b)           The

Purchaser shall conduct the Business in a professional manner and in accordance

with applicable professional or industry standards throughout the Measurement

Period, as defined in the Note, and with at least the same level of service

provided by Seller immediately prior to the Closing Date.

 

(c)           This

provisions of this Section 5 shall survive Closing.

 

6.             Limited

Covenant Waiver.  The parties hereto

agree to waive and give no effect any breach by Seller of any of the covenants

set forth in Article VI (Covenants) as any such breach may exist as

of the date hereof, including, but not limited to any breaches by the Seller of

those covenants set forth in Sections 6.1 (Access) and 6.3 (Conduct of Business) of the

Asset Purchase Agreement.

 

7.             Limited

Waiver of Closing Conditions.

 

(a)           Purchaser

expressly waives application of all conditions to Closing set forth in Article

IX (Conditions

to the Purchaser’s Obligations) except for those conditions set

forth in Sections 9.3 (No Injunction), 9.6 (Bankruptcy Court Approval),

9.8 (No

Casualty) and 9.9 (Execution of Other Agreements) of the

Asset Purchase Agreement.

 

(b)           Seller

expressly waives application of all conditions to Closing set forth in Article

X (Conditions

to the Seller’s Obligations) except for payment of the Purchase

Price in accordance with Section 2.2 (Purchase Price) of the Asset Purchase

Agreement (including issuance of the Note) and those conditions set forth in

Sections 10.3 (No Injunction), 10.7 (Bankruptcy Court Approval) and 10.8 (Payment of

Purchase Price; Execution of Other Agreements) of the Asset Purchase

Agreement.

 

8.             Obligation

to Satisfy Certain Payroll Obligations. 

Except with respect to any Assumed PTO (as defined in the Side Letter

Agreement), which shall be treated as an Assumed Liability for purposes of the

Closing Statement, the Sellers shall, up to and including the Closing Date,

satisfy all accrued payroll obligations owing to the Accepting Employees in

accordance with the Seller’s standard payroll procedures and policies in effect

as of the date of this

 

7

 

Amendment, and the parties agree that such accrued payroll obligations

shall not be treated as Assumed Liabilities for purposes of the Closing

Statement.

 

9.             Bankruptcy

Court Approval. This Amendment shall only become effective if (a) the Restructured

Sale Approval Order shall have been entered by the Bankruptcy Court and such

Restructured Sale Approval Order shall have not been stayed, modified, reversed

or amended in any manner adverse to the parties hereto and (b) each of the

parties hereto shall have received from the Bankruptcy Court all other orders,

approvals and consents required to transfer the Assets and the Assumed

Liabilities and to consummate the transactions contemplated by this Amendment,

and each of the parties hereto shall have received evidence thereof

satisfactory to it and its counsel.

 

10.           Closing.  The parties hereto shall use their

commercially reasonable best efforts to effectuate the Closing as soon as

practicable after the execution of this Amendment; provided, however, that

unless otherwise agreed in writing by the parties to this Amendment, if the

Closing shall not have occurred by December 12, 2002, this Amendment shall

automatically terminate, become void and have no further force and effect, and

the rights and obligations of the Purchaser and the Seller with respect to the

Asset Purchase shall be governed by the original terms of the Asset Purchase

Agreement with such effect as if the parties shall have never entered into this

Amendment.

 

11.           Continued

Existence.  Counsel Corp. represents

and warrants that it currently has no intention to commence, or cause either

Counsel LLC or WorldxChange to commence, a voluntary case under the federal

bankruptcy laws or any other applicable federal or state bankruptcy, insolvency

or similar law, as now hereinafter in effect. The provisions of this Section 11

shall survive the Closing.

 

12.           Continued

Effect.  Except for the amendments

to the Asset Purchase Agreement provided for in this Amendment, all terms,

provisions, covenants, representations, warranties, agreements and conditions

set forth in the Asset Purchase Agreement remain in full force and effect and

shall not be deemed to be waived, modified or amended hereby.

 

13.           Governing

Law.  Section 12.13 (Governing

Law; Jurisdiction) of the Asset Purchase Agreement is hereby

incorporated by reference into, and shall apply with equal force to, this

Amendment.  The provisions of this

Section 13 shall survive the Closing.

 

14.           Counterparts.  This Amendment may be executed in

counterparts, which together shall constitute one and the same Amendment.  The parties may execute more than one copy

of the Amendment, each of which shall constitute an original.

 

8

 

IN WITNESS WHEREOF, the parties hereto have

signed this Amendment as of the date first above written.

 

	

   

  	

  COUNSEL SPRINGWELL

  COMMUNICATIONS LLC

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Allan Silber, Chairman

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  WORLDXCHANGE CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  David Boillot, Secretary

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  COUNSEL CORPORATION

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Allan Silber, Chairman and Chief Executive

  Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  RSL COM U.S.A.,

  INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Michael Marino, President and Chief

  Executive Officer

  
					

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}]]