Exhibit 10.3
ASSET PURCHASE AGREEMENT
by and between
ACC OPERATIONS, INC.
and
ADELPHIA BUSINESS SOLUTIONS OPERATIONS, INC.
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS........................................1
1.1 Transfer of Assets....................................1
1.2 Assumption of Liabilities.............................1
1.3 Transfer Taxes........................................2
ARTICLE II PURCHASE PRICE AND PAYMENT........................................2
2.1 Date and Location.....................................2
2.2 Purchase Price........................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO
THE SELLER.......................................................2
3.1 Organization..........................................2
3.2 Authorization of Agreement............................3
3.3 Title to Assets to be Acquired........................3
3.4 Litigation............................................3
3.5 Approvals and Consents................................3
3.6 Financial Statements..................................3
3.7 Conduct Since the Dates of the Financial
Statements............................................4
3.8 Compliance with Law...................................4
3.9 Condition of Assets to be Acquired....................4
3.10 Franchises, Authorizations and Agreements.............4
3.11 Disclosure............................................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................5
4.1 Organization..........................................5
4.2 Authorization of Agreement............................5
4.3 Litigation............................................5
ARTICLE V CLOSING............................................................6
5.1 Actions to be Taken by Seller at Closing..............6
5.2 Actions to be Taken by Buyer at Closing...............6
ARTICLE VI INDEMNIFICATION...................................................6
6.1 Seller's Indemnity....................................6
6.2 Buyer's Indemnity.....................................8
ARTICLE VII NOTICE...........................................................8
ARTICLE VIII ARBITRATION.....................................................9
ARTICLE IX LAWS GOVERNING...................................................10
ARTICLE X MISCELLANEOUS.....................................................10
10.1 Survival of Representations and Warranties...........10
10.2 Counterparts.........................................10
10.3 Assignment...........................................10
10.4 Entire Agreement.....................................11
10.5 Captions.............................................11
10.6 Expenses.............................................11
THIS AGREEMENT is made as of this 29th day of December, 2000, by
and between ACC OPERATIONS, INC., a Delaware corporation, ("Buyer"), and
ADELPHIA BUSINESS SOLUTIONS OPERATIONS, INC., a Delaware corporation
("Seller").
WITNESSETH:
WHEREAS, Seller owns and operates local telecommunications
transmission systems in Colorado Springs, Colorado and Denver, Colorado (the
"Acquired Systems");
WHEREAS, on the date hereof, Seller desires to sell and transfer to
Buyer, and Buyer desires to purchase and acquire from Seller all of the assets
and properties of Seller associated with the operation of the Acquired Systems,
except for the Colorado CPCN License, on the terms and conditions as hereinafter
provided.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants and promises contained herein, and
intending to be legally bound hereby, the parties hereto represent, warrant,
covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Transfer of Assets.
On the date hereof , Seller shall sell, convey, transfer and assign
to Buyer and Buyer shall purchase and acquire from Seller all of the assets and
properties of Seller of every kind and character, real, personal, tangible,
intangible or mixed, used by, or useful to, Seller in connection with, or
associated with the operation of, the Acquired Systems in existence on the date
hereof(the "Assets to be Acquired"), such sale, conveyance, transfer and
assignment to be effective as of December 31, 2000. The Assets to be Acquired
shall not include the Colorado CPCN License, but shall include such franchises
and other authorizations as Buyer and Seller shall mutually agree to be legally
required.
1.2 Assumption of Liabilities.
At the Closing (as defined in Section 2.1), Buyer shall assume, by
instruments of assumption reasonably satisfactory to Seller, and discharge as
they become due and payable, the following liabilities and obligations of Seller
and no others: (i) all liabilities and obligations which are in existence at the
time of Closing, including without limitation working capital requirements and
capital lease obligations, as more specifically set forth on Schedule 1.2
annexed hereto and made a part hereof, and (ii) all obligations of the Seller
arising after the Closing under agreements, licenses, permits and other
instruments relating to the Acquired Systems which are included in the Assets to
be Acquired (the "Assumed Liabilities").
1.3 Transfer Taxes.
Seller and Buyer shall share equally any sales or transfer taxes,
recording fees or other similar costs or fees payable in connection with the
transfer of the Assets to be Acquired.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Date and Location.
Unless otherwise mutually agreed to by the parties, the closing
shall take place on the date hereof, at such location as Buyer and Seller shall
mutually agree (the "Closing"). The effective date of the sale of the Assets to
be Acquired shall be December 31, 2000.
2.2 Purchase Price.
On the date hereof, as consideration for the purchase of the Assets
to be Acquired, Buyer shall pay Twenty-One Million Two Hundred Thousand Dollars
($21,200,000) (the "Purchase Price"), which Purchase Price shall be paid by
Buyer to Seller's lenders for amounts owing by Seller pursuant to that joint
bank credit facility with certain subsidiaries of Adelphia Communications
Corporation in which Seller is an unrestricted borrower. Seller and Buyer agree
to obtain a fairness opinion as to the Purchase Price hereunder from a
nationally recognized banking firm ("Investment Bank") and agree to cooperate
reasonably to facilitate the completion of the fairness opinion. Upon delivery
of the fairness opinion, the Purchase Price shall be adjusted in accordance with
the fairness opinion and Seller or Buyer, as the case may be, shall promptly pay
to the other the adjustment, if any, to the Purchase Price under the fairness
opinion. All fees and costs of Investment Bank for delivery of the fairness
opinion shall be the responsibility of Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER WITH RESPECT TO THE SELLER
As of the date hereof, Seller represents and warrants as follows:
3.1 Organization.
Seller is a corporation, duly incorporated and validly existing
under the laws of the State of Delaware with full power and authority to engage
in its business and operations, to continue such business and operations as
conducted at present, to enter into this Agreement and perform the terms of this
Agreement. Seller is duly qualified to conduct business and is in good standing
in those jurisdictions where the conduct of its business or the nature of its
assets makes such qualification necessary.
3.2 Authorization of Agreement.
Seller has taken all necessary action to authorize and approve this
Agreement, the consummation of the transactions contemplated hereby and the
performance by Seller of all of the terms and conditions hereof on its part to
be performed. The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the fulfillment and compliance with the
terms and conditions hereof do not and will not: (a) violate any provisions of
any judicial or administrative order, award, judgment or decree applicable to
Seller; (b) conflict with, result in a breach of or constitute a default under
the Certificate of Incorporation or Bylaws of Seller or any other agreement or
instrument to which Seller is a party or by which Seller is bound; (c) create or
impose any lien, charge, encumbrance, or restriction upon any of the Assets to
be Acquired in contravention of any agreement or instrument to which Seller is a
party or by which Seller is bound; and (d) create a right in any person to
accelerate payment of the principal of any indebtedness due from Seller nor
increase the amount of any interest over that theretofore payable in respect
thereof. This Agreement has been duly authorized, executed and delivered by
Seller and constitutes a legal, valid and binding obligation of Seller. All of
the approvals and consents required for Seller to consummate the transaction
have been obtained.
3.3 Title to Assets to be Acquired.
Seller has good and marketable title to the Assets to be Acquired,
and Seller has full power, authority and the absolute right to transfer the
Assets to be Acquired free and clear of any and all liens, charges, pledges,
encumbrances or restrictions of any nature.
3.4 Litigation.
There is no litigation, at law or in equity, nor any proceedings
before any commission or other governmental authority, pending, or to the best
of Seller's knowledge, after due inquiry, threatened against Seller which would
prevent or restrict Seller's right or ability to consummate the transfer of the
Assets to be Acquired as contemplated herein.
3.5 Approvals and Consents.
Seller is not a party to or subject to any agreement, license,
permit or other document which, in order to consummate the transactions
contemplated herein, legally or contractually requires the express approval or
written consent of any persons. All of the approvals and consents required for
Buyer to consummate the transactions contemplated hereunder have been obtained.
3.6 Financial Statements.
The unaudited balance sheet and the income statement for the
Acquired Systems (collectively, the "Financial Statements"), true, complete and
correct copies of which have been previously delivered by Seller to Buyer,
present fairly the financial position of the Acquired Systems as of the dates
thereof, and the results, of the Acquired Systems' operations and changes in
financial position for the periods then ended.
3.7 Conduct Since the Dates of the Financial Statements.
Since the dates of the Financial Statements, the Acquired Systems
have not, except in the ordinary and usual course of business as conducted in
accordance with past practice or as contemplated to be conducted by this
Agreement: (a) sold, constructed or otherwise disposed of any of its assets; (b)
purchased, constructed or otherwise acquired any property or assets; (c)
consensually incurred any liabilities; or (d) entered into any transaction which
materially and adversely affected its assets.
3.8 Compliance with Law.
(a) The Acquired Systems are in compliance in all material respects
with, all applicable Federal, state and local laws, statutes, licensing
requirements, rules and regulations, and judicial or administrative decisions
pertaining to the operation of its business where failure to comply would have
a material adverse effect on its business.
(b) No material claims are pending or, to the best of Seller's
knowledge, after due inquiry, threatened against the Acquired Systems with
respect to the operation of its business.
3.9 Condition of Assets to be Acquired.
The Assets to be Acquired are in good operating condition,
reasonable wear and tear excepted. The Assets to be Acquired are operated and
maintained in a proper manner and are free from any material defects of
workmanship or material in light of its age and the use to which it has been
put.
3.10 Franchises, Authorizations and Agreements.
The franchises, authorizations and agreements included in the Assets
to be Acquired are validly existing, legally enforceable obligations of the
parties thereto in accordance with their terms. Seller is not in default in the
performance of any of its material obligations under such franchises,
authorizations and agreements.
3.11 Disclosure.
No representation, warranty or covenant by Seller in this Agreement
or in any written statement or certificate furnished by Seller to Buyer pursuant
hereto contains or will contain any untrue statement of a material fact.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer represents and
warrants, as of the date hereof, as follows:
4.1 Organization.
Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware and is duly qualified and in good standing in
those jurisdictions where the conduct of its business or the nature of its
assets makes such qualification necessary. Buyer has full corporate power and
authority to own and lease its properties and to conduct its business as and
where such properties are now owned or leased and such business is now being
conducted. Buyer has full corporate power and authority to acquire and own the
Assets to be Acquired.
4.2 Authorization of Agreement.
The Board of Directors of Buyer have taken all necessary action to
authorize and approve this Agreement, the consummation of the transactions
contemplated hereby and the performance by Buyer of all of the terms and
conditions hereof on its part to be performed. The execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby and the
fulfillment and compliance with the terms and conditions hereof do not and will
not: (a) violate any provisions of any judicial or administrative order, award,
judgment or decree applicable to Buyer, or (b) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of Buyer, or (c)
conflict with, result in a breach of or constitute a default under any agreement
or instrument to which Buyer is a party or by which it is bound.
This Agreement has been duly authorized, executed and delivered by
Buyer and constitutes a legal, valid and binding obligation of Buyer.
4.3 Litigation.
There is no litigation, at law or in equity, or any proceedings
before any commission or other governmental authority, pending or, to the best
knowledge of Buyer, threatened against Buyer which would impair materially the
ability of Buyer to consummate the transactions contemplated by this Agreement.
There is no suit or action or other proceeding pending before any court or other
governmental agency against Buyer to enjoin the consummation of the transaction
contemplated hereby.
ARTICLE V
CLOSING
5.1 Actions to be Taken by Seller at Closing.
At Closing, Seller shall take all actions required to be taken
hereunder and Seller shall deliver to Buyer:
(a) a ▇▇▇▇ of Sale and Assignment and Assumption Agreement, duly
executed by Seller;
(b) a Management Agreement between Seller and Buyer, duly executed
by Seller; and
(c) such other documents and certificates as required to be
delivered hereunder or reasonably requested by Buyer.
5.2 Actions to be Taken by Buyer at Closing.
At Closing, Buyer shall take all actions required to be taken
hereunder and shall deliver, or cause to be delivered, to Seller:
(a) The Purchase Price described in Section 2.2 hereof;
(b) The Assignment Agreement, duly executed by Buyer;
(c) The Management Agreement, duly executed by Buyer; and
(d) Such other documents and certificates required to be delivered
hereunder or reasonably requested by Seller.
ARTICLE VI
INDEMNIFICATION
6.1 Seller's Indemnity.
(a) Seller shall indemnify Buyer and hold Buyer harmless from and
against:
(i) the aggregate dollar amount of any and all debts,
liabilities, damages, losses, costs, expenses or claims owing by, suffered,
incurred or accrued against Buyer as of the close of business on the date hereof
arising out of the business activities of Seller prior to the date hereof;
(ii) any and all damages, expenses and losses suffered, paid
or incurred, or to be suffered, paid or incurred in the future, by Buyer arising
out of any and all inaccurate representations or breaches of covenant and
warranty on the part of Seller herein contained; and
(iii) any and all reasonable costs and expenses of Buyer
related to the foregoing including reasonable attorney's fees in connection with
the prosecution, defense or appeal of any suit or action in connection herewith.
All of such items described in paragraphs (i), (ii) and (iii) above
are collectively referred to hereinafter as the "Aggregate Net Loss."
(b) Whenever it shall come to the attention of Buyer that it has
suffered or incurred, or may suffer or incur, any Aggregate Net Loss, Buyer
shall give prompt written notice to Seller of such anticipated or actual loss,
damage, cost or expense. Seller shall then have the right to defend against any
claims or actions by third parties giving rise to the Aggregate Net Loss to the
fullest extent permitted by law. After Seller has made its defense against such
claims or actions and is unsuccessful in such defense or after Seller elects not
to, or fails to, defend against such claims or actions, Buyer and Seller shall
then attempt to mutually agree upon the amount of Aggregate Net Loss for which
Buyer is to be indemnified.
Buyer shall not be entitled to be indemnified by Seller under
this Agreement for the Aggregate Net Loss arising out of any single claim or
aggregate of claims until the amount of such Aggregate Net Loss exceeds Fifty
Thousand Dollars ($50,000). Buyer shall then be entitled to be indemnified by
Seller for any and all Aggregate Net Loss including the initial Fifty Thousand
Dollars ($50,000) in Aggregate Net Loss arising out of any single claim or
aggregate of claims.
(c) Should Buyer and Seller be unable to agree as to the amount of
the Aggregate Net Loss for which Buyer is to be indemnified, either Buyer or
Seller may apply to the American Arbitration Association under its Commercial
Arbitration Rules for the appointment of an Arbitrator for an arbitration to
take place in Pittsburgh, Pennsylvania. Buyer and Seller will share equally the
total expense of such arbitration. Such arbitrator shall proceed in accordance
with the Commercial Arbitration Rules of the American Arbitration Association to
determine the Aggregate Net Loss and certify such loss to Buyer and Seller. Such
arbitration and determination shall be final and binding on Buyer and Seller,
judgment may be entered upon such determination and award in any court having
jurisdiction thereof and Buyer and Seller agree that no appeals shall be taken
therefrom. Upon entry of a judgment in favor of Buyer against Seller, Seller
shall make full payment within ten (10) days thereafter. Upon failure of Seller
to make such payment within such ten (10) day period, the amount of the judgment
shall bear interest at the rate of ten percent (10%) per annum simple interest
until paid.
(d) Buyer agrees that it will not settle or permit the settlement
of any matter giving rise to any Aggregate Net Loss without the prior written
consent of Seller. Buyer agrees that it will give prompt written notice to
Seller of any claim or action which may give rise to any Aggregate Net Loss and
will permit Seller, at Seller's option and expense, to conduct the defense
against any such claims or actions, and will cooperate with Seller in such
defense in such manner as Seller may reasonably request. Buyer's failure to
comply with the provisions of this paragraph shall terminate Seller's liability
to indemnify and hold Buyer harmless under this Agreement solely with respect to
the matter for which notice should have been given notwithstanding any other
provision hereof.
(e) Buyer's right to assert a claim against Seller for
indemnification pursuant to this Article VI shall survive the Closing and shall
expire:
(i) with respect to all claims other than claims related to
title to the Assets to be Acquired made in Section 3.3 hereof and the nonpayment
of taxes or similar claims pursuant to the Internal Revenue Code or any state,
county, municipal or other local taxing statutes, one hundred eighty (180) days
after the date hereof; and
(ii) with respect to claims relating to the nonpayment of
taxes or other similar claims under the Internal Revenue Code or any state,
county, municipal or other local taxing statutes, upon the expiration of ninety
(90) days following the date on which the running of the statute of limitations
with respect to any such tax shall bar the assessment and collection of such
tax.
(f) The provisions of the foregoing Section 6.01(e)(ii) shall not
be construed so as to deprive Buyer of the right to be indemnified and held
harmless with respect to any tax liability assessed within the period provided
pursuant to the appropriate statute of limitations or any extension thereof.
6.2 Buyer's Indemnity.
Buyer shall indemnify Seller and hold Seller harmless from and
against:
(a) the aggregate dollar amount of any and all debts, liabilities,
damages, losses, costs, expenses or claims owing by, suffered, incurred or
accrued against Seller subsequent to the close of business on the date hereof
arising out of the business activities of Buyer prior to the date hereof;
(b) any and all damages, expenses and losses suffered, paid or
incurred, or to be suffered, paid or incurred in the future, by Seller arising
out of any and all inaccurate representations or breaches of covenant and
warranty on the part of Buyer herein contained; and
(c) any and all reasonable costs and expenses of Seller related to
the foregoing including reasonable attorney's fees in connection with the
prosecution, defense or appeal of any suit or action in connection herewith.
ARTICLE VII
NOTICE
All notices and other communications hereunder shall be in writing
and deemed to have been duly given if: (a) mailed, first class, registered or
certified mail, return receipt requested, postage prepaid; (b) delivered by
courier or overnight courier providing written evidence of receipt for hand
delivery; or (c) transmitted via telecopy:
To Seller:
Adelphia Business Solutions Operations, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice President & General Counsel
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ Ingersoll Professional Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To Buyer:
ACC Operations, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Adelphia Communications Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party to this Agreement may change the address of the party to
which all communications and notices may be sent hereunder by addressing notices
of such change in the manner provided.
ARTICLE VIII
ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in the
Commonwealth of Pennsylvania, in accordance with articles of the American
Arbitration Association for Commercial Arbitration, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
therefor.
ARTICLE IX
LAWS GOVERNING
The construction and interpretation of this Agreement and the rights
of the parties shall be governed by the laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws provisions.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties.
Seller and Buyer acknowledge that the representations, warranties,
covenants and agreements of Seller and Buyer contained in this Agreement form an
integral part of the consideration given to Buyer in exchange for the Purchase
Price and to Seller in exchange for the Assets to be Acquired, without which
Buyer would be unwilling to purchase, and Seller would be unwilling to sell, the
Assets to be Acquired. Except as set forth in Article VI hereof regarding
indemnification and notwithstanding any investigation and review made by Buyer
pursuant to this Agreement, Seller and Buyer agree that all of the
representations, warranties, covenants and agreements of Seller and Buyer
contained in this Agreement or in any exhibit, statement, report, certificate or
other document or instrument required to be delivered pursuant to this Agreement
shall survive the making of this Agreement, any investigation or review made by
or on behalf of the parties hereto and the Closing hereunder.
10.2 Counterparts.
This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one instrument.
10.3 Assignment.
This Agreement may not be assigned by any party hereto without the
prior written consent of the other parties; provided, however, that Buyer is
entering into this Agreement on behalf of a Delaware limited liability company
to be formed at a later date and to be named "ACC Telecommunications, LLC",
which limited liability company will be indirectly wholly owned and controlled
by Buyer and to which limited liability company Buyer shall assign this
Agreement.
10.4 Entire Agreement.
This Agreement is an integrated document, contains the entire
agreement between the parties, wholly cancels, terminates and supersedes any and
all previous and/or contemporaneous oral agreements, negotiations, commitments
and writings between the parties hereto with respect to such subject matter. No
change, modification, extension, termination, notice of termination, discharge,
abandonment or waiver of this Agreement or any of the provisions hereof, nor any
representation, promise or condition relating to this Agreement, shall be
binding upon the parties hereto unless made in writing and signed by the parties
hereto.
10.5 Captions.
The captions of Sections hereof are for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
10.6 Expenses.
Except as otherwise expressly provided herein, Seller and Buyer each
will pay all costs and expenses, including any and all legal and accounting
fees, of its performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized corporate officers on the day and year
first above written.
SELLER:
ADELPHIA BUSINESS SOLUTIONS
OPERATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
BUYER:
ACC OPERATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
SCHEDULE 1.2
ASSUMED LIABILITIES
Liability Assumed Amount
Accounts payable $2,845,640
Accrued liabilities 232,763
Schedule of Similar Agreements
In accordance with Instruction 2 to Regulation SK 601(a), following is a list of
similar agreements to Exhibit 10.3:
Asset Purchase Agreement by and between ACC OPERATIONS, INC. and ADELPHIA
BUSINESS SOLUTIONS OPERATIONS, INC. for the purchase and sale of assets
located in California for a purchase price of $13,000,000
Asset Purchase Agreement by and between ACC OPERATIONS, INC. and ADELPHIA
BUSINESS SOLUTIONS OPERATIONS, INC. for the purchase and sale of assets
located in Ohio for a purchase price of $7,500,000
Asset Purchase Agreement by and between ACC OPERATIONS, INC. and ADELPHIA
BUSINESS SOLUTIONS OF VIRGINIA, LLC for the purchase and sale of assets located
in Virginia for a purchase price of $46,800,000
