Execution Copy
AMENDMENT #1 TO ASSET PURCHASE AGREEMENT
AMENDMENT #1 TO ASSET PURCHASE AGREEMENT (this "Amendment"), dated
as of January 10, 2002, among Exodus Communications, Inc., a Delaware
corporation ("Exodus"), American Information Systems, Inc., an Illinois
corporation, Arca Systems, Inc., a Delaware corporation, Cohesive
Technology Solutions, Inc., a Delaware corporation, GlobalCenter Holding,
Co., a Delaware corporation, GlobalCenter, Inc., a Delaware corporation,
and Service Metrics, Inc., a Delaware corporation (each a "Seller" and,
together with Exodus, the "Sellers"); Digital Island Inc. (the "Buyer");
and Cable and Wireless plc, a public limited company organized under the
laws of England and Wales ("Parent").
W I T N E S S E T H:
WHEREAS, the Sellers, the Buyer and Parent entered into an Asset
Purchase Agreement, dated as of November 29, 2001 (the "Original Agreement"
as modified by that certain Mutual Limited Waiver dated as of January 5,
2002 and as amended hereby, the "Agreement"); and
WHEREAS, the Sellers, the Buyer and Parent desire to make certain
amendments and clarifications to the Original Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
1. Defined Terms. (a) Section 1.1 of the Original Agreement is
hereby amended to add the following defined terms:
"Connector Building Removal" shall have the meaning set forth in
Section 6.25.
"Data Collection Date" shall have the meaning set forth in Section
6.7(c).
"Deposit Escrow Agent" shall mean Xxxxx Fargo Bank, National
Association.
"Deposit Escrow Agreement" shall mean the Initial Deposit Escrow
Agreement, dated December 13, 2001, by and between Parent, the Buyer,
Exodus and Deposit Escrow Agent.
"Germany Notice Date" shall have the meaning set forth in Section
6.20(g)(i).
"January 3 Schedules" shall mean the Schedules 2.1(a)(ii) and
2.1(a)(iii) actually delivered by Exodus to Parent on January 3, 2002.
"Japan Notice Date" shall have the meaning set forth in Section
6.20(g)(i).
"LA1" shall have the meaning set forth in Section 6.25.
"LA1 Fee Parcel" shall have the meaning set forth in Section 6.25.
"LA1 License Agreement" shall have the meaning set forth in
Section 6.25.
"LA2" shall have the meaning set forth in Section 6.25.
"Xxxx" shall have the meaning set forth in Section 6.25.
"Xxxx Agreement" shall have the meaning set forth in Section 6.25.
"Non-Production Equipment" means any equipment subject to a
Scheduled Lease that is not "in production".
"Operating Lease Amount" shall have the meaning set forth in
Section 2.10(b)(ii).
"Production Equipment" means any equipment subject to a Scheduled
Lease that is "in production".
"Scheduled Leases" shall have the meaning set forth in Section
2.1(a)(iii).
"UK Notice Date" shall have the meaning set forth in Section
6.20(g)(i).
(b) Section 1.1 of the Original Agreement is hereby amended to
delete the following defined terms:
"Lease Adjustments"
"Non-Conforming Lease"
"Primary Scheduled Financing Leases"
"Primary Scheduled Operating Leases"
"Primary Selected Operating Leases"
"Pre-Closing Lease Adjustment"
"Secondary Scheduled Financing Leases"
"Secondary Scheduled Operating Leases"
"Secondary Selected Operating Leases"
(c) Section 1.1 of the Original Agreement is hereby amended to
replace the definition of "Secondary Purchased Assets" with the following:
"Secondary Purchased Assets" shall mean the Contracts the
assignment of which is governed by the Secondary 365 Contracts Order and
any accounts receivable generated by such Contracts from the Closing Date
to the Subsequent Transfer Date.
(d) Section 1.1 of the Original Agreement is hereby amended to
replace the definition of "Selected Operating Leases" with the following:
"Selected Operating Leases" shall have the meaning set forth in
Section 2.10(c)(iii).
(e) Section 1.3 of the Original Agreement is hereby amended to add
the following clause (f):
(f) Equipment subject to an equipment lease (whether or not a
Financing Lease) shall be considered "in production" on a particular date
if, on such date, such equipment is installed or otherwise in use to
service customers of the Business or otherwise required to be maintained in
inventory or on reserve pursuant to the terms of a Contract in effect on
such date."
2. Purchased Assets. (a) Section 2.1(a)(i) of the Original
Agreement is hereby deleted and replaced in its entirety with the
following:
Section 1.1. "Section 2.1. Purchased Assets. (a)(i) Upon the terms
and subject to the conditions contained herein, on the Closing Date
(subject to Section 2.8, Section 2.10 and Section 6.25 hereof), the Sellers
will, or will cause their Subsidiaries to, as the case may be, sell,
convey, transfer, assign and deliver to the Buyer and/or one or more of its
Designees, and the Buyer will, or will cause one or more of its Designees
to, as the case may be, purchase and acquire from the Sellers or their
Subsidiaries, as the case may be, all of the legal and beneficial right,
title and interest of the Sellers and their Subsidiaries, as the case may
be, in and to all of their respective properties, assets, Contracts and
rights used in the Business of whatever kind or nature, whether real or
personal, tangible or intangible, wherever located, including those assets
specified on Schedule 2.1(a)(i) (the "Purchased Assets") free and clear of
all Liens except Permitted Liens; provided, that (A) the Purchased Assets
shall not include any properties, assets, Contracts or rights which Parent
notifies Exodus at least five (5) Business Days prior to the Closing Date
or, to the extent not transferred on the Closing Date at least five (5)
Business Days prior to the Subsequent Transfer Date, shall not constitute
Purchased Assets (it being understood that there shall be no adjustment to
the Cash Consideration as a result of any exclusion of properties, assets,
Contracts or rights specified in any such notice), (B) with respect to
equipment subject to Scheduled Financing Leases and Scheduled Operating
Leases, the Purchased Assets shall include that equipment to be transferred
to the Buyer or its Designee from time to time in accordance with Section
2.10(a) or Section 2.10(c)(i) but shall not include the underlying leases,
(C) with respect to Scheduled Operating Leases, the Purchased Assets shall
include only the Selected Operating Leases determined in accordance with
Section 2.10(c)(iii), and (D) with respect to the Scheduled Contracts, the
Purchased Assets shall include only those Contracts selected in accordance
with Section 2.3.
(b) Section 2.1(a)(ii) and Section 2.1(a)(iii) of the Original
Agreement are hereby amended as follows:
(A) the sixth, seventh, eighth and final sentences of Section
2.1(a)(ii) are hereby deleted and the sixth and final sentences of Section
2.1(a)(iii) are hereby deleted and,
(B) The 3rd sentence of Section 2.1(a)(ii) of the Original
Agreement is hereby deleted in its entirety and replaced with the
following:
"Appropriate notice of the Sale and Motions, along with a
copy of the Bidding Procedures Order and this Agreement, and a
notice substantially in the form of Exhibit C attached to the
Primary Sale Motion (including information necessary for each
counterparty to each Financing Lease listed on Part I and Part II
of Schedule 2.1(a)(ii) to identify their respective Financing
Leases) shall be served by Exodus on each counterparty to each
Financing Lease listed in each such Part within the time period
specified in the Bidding Procedures Order."
The 3rd sentence of the Section 2.1(a)(iii) of the Original
Agreement is hereby deleted in its entirety and replaced with the
following:
"Appropriate notice of the Sale and Motions, along with a
copy of the Bidding Procedures Order and this Agreement, a notice
of assumption and assignment substantially in the form of Exhibit
C attached to the Primary Sale Motion (including information
necessary for each counterparty to each Contract listed on Part I
and Part II of Schedule 2.1(a)(iii) to identify their respective
Operating Leases and the respective cure amounts, if any, with
respect to each such Operating Lease) shall be served by Exodus on
each counterparty to each Operating Lease listed in each such Part
within the time period specified in the Bidding Procedures Order."
3. Excluded Assets. The "and" following clause 2.1(b)(ix) of the
Original Agreement is hereby deleted. The "." following clause 2.1(b)(x) of
the Original Agreement is hereby deleted and replaced with the following:
";
(xi) all right, title and interest in any Non-Production Equipment
acquired by the Sellers pursuant to Section 2.10(a) (other than
Non-Production Equipment that is substituted for Production Equipment
pursuant to Section 2.10), provided that the Buyer shall have the option to
buy any such equipment from the Sellers for the fair market value of such
equipment (which, in cases where there has been a settlement agreement,
shall be deemed to be the cost to the Sellers of reaching settlement with
the applicable lease counterparty with respect to the relevant equipment to
the extent readily capable of being determined under such settlement
agreement and, in other cases shall be mutually agreed by Exodus and the
Buyer; provided, that if Exodus and the Buyer cannot agree to a fair market
value within 20 days, they shall refer such determination to a mutually
agreed third party (or if agreement cannot be reached in selection of a
third party, the Independent Accountant)); and
(i) (xii) equipment constituting Excluded Assets pursuant to
Section 2.10(c)(ii)."
4. Consideration for the Purchased Assets. (a) Section 2.2(a) of
the Original Agreement is hereby deleted and replaced with the following:
Section 1.2. "(a) Subject to the terms and conditions of this
Agreement, in consideration of the sale, transfer, assignment, conveyance
and delivery of the Purchased Assets (including the assignment of the
Assigned Contracts (to the extent actually assumed and assigned)), the
Buyer shall (i) assume the Assumed Liabilities; (ii) pay to Exodus at
Closing by wire transfer, in immediately available funds, an amount equal
to the Cash Consideration (subject to adjustment as provided herein) minus
(x) the Initial Deposit, together with any interest or other income earned
thereon (less any fees payable to the Deposit Escrow Agent under the
Deposit Escrow Agreement) minus (y) the Escrowed Amount minus (z) the
Scheduled Lease Amount; (iii) deposit with the Escrow Agent, as escrow
agent, $56,000,000 in cash (the "Escrowed Amount"), to be held in escrow
and released by the Escrow Agent in accordance with the terms of the Escrow
Agreement and (iv) deposit with the Escrow Agent, to be held in escrow and
released by the Escrow Agent in accordance with the terms of the Escrow
Agreement, an amount in cash (the "Scheduled Lease Amount") equal to
$50,000,000. The "Cash Consideration" shall, prior to adjustment as
provided herein, equal (A) $560,000,000 plus (B) the Security Deposit
Amount minus (C) the Excluded Lease Amount. Following the Closing, the
Buyer shall also pay the Agreed Operating Lease Cure Amounts, and make
available the Operating Lease Amount, to the extent required by Section
2.10. The Cash Consideration shall be adjusted in accordance with this
Section 2.2, Section 6.12(c) and Section 6.20(g)(ii)."
(b) Section 2.2(g) of the Original Agreement is hereby deleted in
its entirety.
5. Contract Assumption and Assignment.
(a) The fifth sentence of Section 2.3(a) of the Original Agreement
is hereby deleted in its entirety and replaced with the following:
"A copy of this Agreement shall be served by Exodus, together with
the Bidding Procedures Order and a notice of assumption and assignment
substantially in the form of Exhibit C attached to the Primary Sale Motion,
which notice shall be accompanied by information sufficient for each
counterparty to each Contract listed on Part I of Schedule 2.3(a) to
identify their respective Contracts and the cure amounts, if any, with
respect to each such Contract, on each counterparty to each customer
Contract set forth thereon within the time period specified in the Bidding
Procedures Order."
(b) The second sentence of Section 2.3(a) of the Original
Agreement is hereby deleted in its entirety and replaced with the
following:
"Part I of Schedule 2.3(a), when delivered, shall list all such
customer Contracts relating to the top 50 customers of the Business (based
on monthly recurring revenue for the month of September 2001) and at least
90% (in number) of all customer Contracts."
(c) The eighth sentence of Section 2.3(a) of the Original
Agreement is hereby deleted in its entirety and replaced with the
following:
"To the extent not already included in Part I of Schedule 2.3(a),
Part II of Schedule 2.3(a), when delivered by Exodus, shall list at least
95% (by number) of the customer Contracts relating to the top 400 customers
of the Business (based on monthly recurring revenue for the month of
September 2001)."
(d) The tenth sentence of Section 2.3(a) of the Original Agreement
is hereby deleted in its entirety and replaced with the following:
"A copy of this Agreement shall be served by Exodus,
together with the Bidding Procedures Order and a notice of
assumption and assignment substantially in the form of Exhibit C
attached to the Primary Sale Motion, which notice shall be
accompanied by information sufficient for each counterparty to
each Contract listed on Part II of Schedule 2.3(a) to identify
their respective Contracts and the cure amounts, if any, with
respect to each such Contract, on each counterparty to each
customer Contract set forth thereon within the time period
specified in the Bidding Procedures Order."
(e) The reference to "Schedule 2.3(a)" in the second sentence of
Section 2.3(b) shall be deemed to refer to "Schedule 2.3(b)". The fourth
sentence of Section 2.3(b) of the Original Agreement is hereby deleted in
its entirety and replaced with the following:
"A copy of this Agreement shall be served by Exodus,
together with the Bidding Procedures Order and a notice of
assumption and assignment substantially in the form of Exhibit C
attached to the Primary Sale Motion, which notice shall be
accompanied by information sufficient for each counterparty to
each Contract listed on Schedule 2.3(b) to identify their
respective Contracts and the cure amounts, if any, with respect to
each such Contract, on each counterparty to each network Contract
set forth thereon within the time period specified in the Bidding
Procedures Order."
(f) The 3rd sentence of Section 2.3(b) of the Original Agreement
is hereby deleted in its entirety and replaced with the following:
"Schedule 2.3(b) shall be organized according to network provider.
With respect to any network provider whose Contract consists of a master
agreement and separate supplements, schedules or amendments, it shall set
forth in reasonable detail such supplements, schedules or amendments and
the portions of the Internet backbone, the tail circuits or peering
relationships covered thereby but separate purchase orders associated with
such master agreements, to the extent such purchase orders exist, are not
required to be scheduled. With respect to network providers for whom there
is no master agreement, the relevant purchase orders or statements of work
shall be scheduled and the portions of the Internet backbone, the tail
circuits or peering relationships covered thereby."
(g) The third sentence of Section 2.3(c) of the Original Agreement
is hereby deleted in its entirety and replaced with the following:
"A copy of this Agreement shall be served by Exodus, together with
the Bidding Procedures Order and a notice of assumption and assignment
substantially in the form of Exhibit C attached to the Primary Sale Motion,
which notice shall be accompanied by information sufficient for each
counterparty to each Contract listed on Schedule 2.3(c) to identify their
respective Contracts and the cure amounts, if any, with respect to each
such Contract, on each counterparty to each customer Contract set forth
thereon within the time period specified in the Bidding Procedures Order."
(h) The words "and the Primary Selected Operating Leases" in the
definition of "Primary 365 Contract" in the second sentence of Section
2.3(d) are hereby deleted from the Original Agreement.
(i) The phrase ", together with the Secondary Selected Operating
Leases," in the definition of "Secondary 365 Contract" in the third
sentence of Section 2.3(d) is hereby deleted from the Original Agreement.
(j) the 8th sentence of Section 2.3(a) of the Original Agreement
is hereby deleted in its entirety and replaced with the following:
"Part II of Schedule 2.3(a) shall be organized according to
customer. With respect to customers whose Contracts consist of a master
agreement and separate supplements, schedules or amendments, Part II shall
describe in reasonable detail each such supplement, schedule or amendment
but separate purchase orders associated with such master agreements, to the
extent such purchase orders exist, are not required to be scheduled. With
respect to customers for whom there is no master agreement, the relevant
purchase orders or statements of work shall be scheduled."
6. Contract Obligations. Section 2.4(a) of the Original Agreement
is hereby deleted and replaced with the following:
"(a) Except as set forth in Section 2.10(d)(v), the Sellers, and
not Parent or the Buyer, shall be liable for, and shall satisfy, any and
all amounts necessary to "cure" (within the meaning of Section 365(b)(1) of
the Bankruptcy Code) any "defaults" (within the meaning of Section 365(b)
of the Bankruptcy Code) relating to any Primary or Secondary 365 Contract
(the full amount thereof being the "Actual Cure Amounts") and Parent and
the Buyer shall have no responsibility to any third party therefor. All
other liabilities, obligations and indebtedness relating to the Assigned
Contracts shall be retained obligations and liabilities of the Sellers."
7. Deliveries at Closing. (a) The "and" following clause
2.7(a)(vi) of the Original Agreement is hereby deleted. The "." following
clause 2.7(a)(vii) of the Original Agreement is hereby deleted and replaced
with the following:
"; and
(viii) if the separation of LA1 from LA2 has not been completed by
the Closing Date, a duly executed LA1 License Agreement, in form and
substance reasonably satisfactory to Exodus."
(b) The "and" following clause 2.7(b)(iii) of the Original
Agreement is hereby deleted. The "." following clause 2.7(b)(iv) of the
Original Agreement is hereby deleted and replaced with the following:
"; and
(v) if the separation of LA1 from LA2 has not been completed by
the Closing Date, a duly executed LA1 License Agreement, in form and
substance satisfactory to Parent and the Buyer."
8. Transfer of Leased Equipment. The following Section 2.10 is
hereby added to the Original Agreement:
Section 1.3. "Section 2.10. Transfer of Leased Equipment.
(a) Initial Negotiation Period. From January 10, 2002 until the
60th day following the Closing Date, Exodus shall use commercially
reasonable efforts to obtain all legal and beneficial right, title and
interest, free and clear of all Liens and Claims, in all Production
Equipment (including any embedded intellectual property rights) under the
Scheduled Leases, including, without limitation, by entering into
settlement agreements with Scheduled Lease counterparties, by obtaining
judicial determinations that equipment leases constitute Financing Leases
or otherwise. Any settlement agreement entered into with a lease
counterparty shall be subject to the written consent of the Buyer and such
consent shall not be unreasonably withheld or delayed so long as (A) the
settlement agreement will convey rights (including rights to any embedded
intellectual property) with respect to all Production Equipment held under
all Scheduled Leases with such counterparty, (B) the terms of such
settlement agreement are commercially reasonable (including taking into
account comparable settlements with respect to comparable equipment in
other restructuring situations ) and (C) if the settlement agreement
relates to both Production Equipment and Non-Production Equipment, such
settlement is, in the Buyer's reasonable opinion, reasonable having regard
to the amount to be paid to such counterparty and the proportion of
Production Equipment to be conveyed by such settlement agreement in
relation to the aggregate amount of equipment to be conveyed under such
settlement agreement (it being understood that the Buyer may not withhold
or delay consent to one settlement for the purpose of learning the results
of other settlement negotiations). The Sellers shall have the right, in
lieu of obtaining all legal and beneficial right, title and interest in any
item of Production Equipment under a Scheduled Lease, to substitute
comparable equipment in accordance with the following sentence. During the
period from January 10, 2002 until the 60th day following the Closing Date,
Exodus and the other Sellers may return to the appropriate Scheduled Lease
counterparty any equipment with respect to which it does not obtain legal
and beneficial right, title and interest, provided that (x) Exodus has
replaced any such returned equipment that constitutes Production Equipment
(and taken all steps necessary to place the replacement equipment "in
production") with (1) comparable equipment that is not "in production" but
is included in the Purchased Assets or (2) comparable Non-Production
Equipment with respect to which Exodus has all legal and beneficial right,
title and interest (including rights to any embedded intellectual
property), free and clear of all Liens and Claims, and (y) the Buyer has
consented to any such return and replacement of Production Equipment (which
consent shall not to be unreasonably withheld or delayed). For purposes of
this Agreement, replacement equipment shall be deemed comparable to the
Production Equipment it is to replace if it is "like for like" or better in
terms of functionality. Exodus and each other Seller shall promptly
transfer to the Buyer all Production Equipment with respect to which it
obtains legal and beneficial right, title and interest as contemplated by
this Section 2.10(a) and all such Production Equipment shall be deemed to
be Purchased Assets. The parties shall execute such additional bills of
sale or other documents as are reasonably necessary to effect such
transfer.
(b) Reimbursements. (i) Exodus shall be entitled to withdraw from
the Scheduled Lease Amount deposited pursuant to the Escrow Agreement, (A)
any amount paid to a Scheduled Financing Lease counterparty under a
settlement to which the Buyer has consented (and, to the extent any such
settlement with a Financing Lease counterparty contemplates the future
payment of unsecured claims upon confirmation of a plan of reorganization
or liquidation, Exodus may withdraw from the Scheduled Lease Amount an
amount equal to $0.20 for each $1.00 of such unsecured claims regardless of
the actual amount to be paid (or the timing of such payment) to such Lease
counterparty in respect of such unsecured claims), (B) the cost of any
equipment purchased by Exodus or the other Sellers to replace Production
Equipment under Scheduled Financing Leases, (C) other out-of-pocket
expenditures reasonably incurred by Exodus and the Sellers in connection
with the transfer of Production Equipment formerly subject to a Scheduled
Financing Lease to the Buyer pursuant to Section 2.10(a) and (D) with
respect to any Scheduled Financing Lease rejected by the Sellers as to
which the Sellers have replaced all Production Equipment under such
Scheduled Financing Lease in the manner contemplated by Section 2.10(a), an
amount equal to $0.20 for each $1.00 of unsecured claims relating to such
Scheduled Financing Lease (regardless of the actual amount to be paid (or
the timing of such payment) to such Lease counterparty in respect of such
unsecured claims). In no event shall the Sellers be entitled to
reimbursement of, or be obligated to expend or incur, more than
$50,000,000, in the aggregate, as a result of the operation of this Section
2.10(b)(i). To the extent that, during the 60-day period from and after the
Closing Date the Sellers make payments with respect to Scheduled Financing
Leases subject to a reservation of rights for the return of such payments
and such payments have not been reimbursed by the Buyer under the
Transition Services Agreement S/B, then, for purposes of clause (A) of this
paragraph (b), Exodus shall be entitled to reimbursement from the Scheduled
Lease Amount of such payments to the extent a settlement with a
counterparty to a Scheduled Financing Lease acknowledges receipt of such
amounts (or statements to similar effect). For the avoidance of doubt, if a
charge has been taken against the $40,000,000 credit under the Transition
Services Agreement S/B, then such amount shall be deemed to have been
reimbursed by the Buyer for the purposes of the preceding sentence.
(ii) The Buyer shall make available to Exodus an amount in
cash equal to $12,000,000 (the "Operating Lease Amount") for the
purpose of obtaining all legal and beneficial right, title and
interest, free and clear of all Liens and Claims, in all
Production Equipment (including any embedded intellectual property
rights) under the Scheduled Operating Leases as contemplated by
Section 2.10(a). Subject to the limits in the final sentence of
this clause (ii), Exodus shall be entitled to make a claim against
the Buyer, and the Buyer shall reimburse Exodus for, (A) any
amount paid to a Scheduled Operating Lease counterparty under a
settlement to which the Buyer has consented (and, to the extent
any such settlement with a Scheduled Operating Lease counterparty
contemplates the future payment of unsecured claims upon
confirmation of a plan of reorganization or liquidation, Exodus
shall be entitled to reimbursement from the Operating Lease Amount
of an amount equal to $0.20 for each dollar of such unsecured
claims regardless of the actual amount to be paid (or the timing
of such payment) to such Lease counterparty in respect of such
unsecured claims), (B) the cost of any equipment purchased by
Exodus or the other Sellers to replace Production Equipment under
Scheduled Operating Leases returned to any counterparty, (C) other
out-of-pocket expenditures reasonably incurred by Exodus and the
Sellers in connection with the transfer of Production Equipment
formerly subject to a Scheduled Operating Lease to the Buyer
pursuant to Section 2.10(a) and (D) with respect to any Scheduled
Operating Lease rejected by the Sellers as to which the Sellers
have replaced all Production Equipment under such Scheduled
Operating Lease in the manner contemplated by Section 2.10(a), an
amount equal to $0.20 for each $1.00 of unsecured claims relating
to such Scheduled Operating Lease (regardless of the actual amount
to be paid (or the timing of such payment) to such Lease
counterparty in respect of such unsecured claims). In no event
shall the Sellers be entitled to reimbursement of, or be obligated
to expend or incur, more than $12,000,000, in the aggregate, as a
result of the operation of this Section 2.10(b)(ii).
(iii) To the extent that a settlement agreement with a
Scheduled Lease counterparty covers equipment under both Scheduled
Financing Leases and Scheduled Operating Leases, Exodus shall be
entitled to make claims against the Scheduled Lease Amount and the
Operating Lease Amount in proportion to the remaining lease
obligations as of September 30, 2001 set forth on the January 3
Schedules with respect to the Scheduled Financing Leases and
Scheduled Operating Leases covered by such settlement agreement.
(iv) The Buyer shall be entitled to withdraw from the
Scheduled Lease Amount deposited pursuant to the Escrow Agreement,
(A) the fair market value of any Purchased Asset not "in
production" used by Exodus or the other Sellers to replace any
Production Equipment pursuant to Section 2.10(a) and (B) any
direct costs reasonably incurred by the Buyer (either directly or
through reimbursement of its customers) in connection with the
replacement of any Production Equipment by Exodus or the other
Sellers pursuant to Section 2.10(a), including the costs of
transferring customers to other equipment, maintaining service to
customers during such transition (including mirroring customers if
required by customers to obtain their consent) and similar
expenses. For the avoidance of doubt, the costs described in
clause (B) above shall not include any indirect, consequential,
punitive or incidental damages. For purposes of this clause (iv),
the fair market value of an item of equipment shall be as mutually
agreed by Exodus and the Buyer and if Exodus and the Buyer cannot
agree to a fair market value within 20 days, then they shall refer
such determination to a mutually agreed third party (or if
agreement cannot be reached in selection of a third party, the
Independent Accountant).
(v) Exodus shall be entitled to withdraw the balance of the
Scheduled Lease Amount if it has transferred to the Buyer (or has
in place binding obligations to replace at no cost to the Buyer)
on or before the 60th day after the Closing substantially all the
Production Equipment subject to Scheduled Financing Leases;
provided, that such equipment must constitute at least 50% of all
equipment under the Scheduled Financing Leases as set forth on the
January 3 Schedules; and provided, further, that the obligation to
replace equipment must require completion of such replacement on
or before the 120th day after the Closing Date (and if
substitution is not actually completed on or before such date the
Buyer shall retain the relevant equipment until substitution is
completed). If Exodus is not entitled to withdraw the balance of
the Scheduled Lease Amount pursuant to the preceding sentence,
such balance will be returned to the Buyer.
(c) Subsequent Negotiation Period. (i) With respect to any
Scheduled Lease for which the Sellers have not either obtained all legal
and beneficial right, title and interest, free and clear of all Liens and
Claims (including any embedded intellectual property rights) of, or
provided replacement equipment (in the manner described above) for, all
Production Equipment covered thereby on or prior to the 60th day following
the Closing Date (including, for the avoidance of doubt, circumstances
where the Buyer has not consented to a proposed settlement between the
Sellers and a lease counterparty) (A) the Buyer shall have the right
through the 120th day following the Closing Date to negotiate directly with
the counterparty to enter into a settlement agreement to obtain all legal
and beneficial right, title and interest to the equipment under any such
Scheduled Lease and (B) Exodus and the other Sellers shall make all
equipment under any such Scheduled Lease and any network services related
to such equipment available to the Buyer under the terms of the Transition
Services Agreement S/B until the earlier of (I) in the case of any
equipment (but not the related network services), the date title to such
equipment is transferred to the Buyer and (II) the 120th day following the
Closing Date; provided, that such period shall be extended up to an
additional 60 days to the extent reasonably necessary to properly manage
the transition by the Buyer away from such equipment and the rejection of
the relevant lease by the Sellers and return of the equipment thereunder.
The Sellers shall consent to each such settlement agreement (and shall
transfer any related equipment to the Buyer (and relinquish rights therein)
without payment of any additional consideration) so long as such settlement
agreement includes either (x) a complete waiver of the counterparty's
rights and claims (including both secured and unsecured claims) against the
relevant Sellers in the case of a settlement agreement governing an entire
master lease and all related schedules or (y) a complete waiver of the
counterparty's rights and claims (including both secured and unsecured
claims) against the relevant Sellers with respect to the relevant schedules
in the case of a settlement governing only certain schedules under a master
lease; provided, that in the case of clause (y) such consent may be
withheld if (1) all equipment under the remaining lease schedules is not
returned to the Sellers to permit the Sellers to properly reject such lease
schedules (or appropriate arrangements have been made for such return) or
(2) the counterparty does not (A) consent to the effectiveness of such
rejection and (B) agree not to seek additional lease payments from and
after the date of such rejection, or (3) in the reasonable opinion of
Exodus, the Sellers are disadvantaged with respect to their ability to
settle such remaining lease schedules. The Buyer shall pay all costs and
settlement amounts under any settlement agreement reached by the Buyer
following the 60th day following the Closing Date and all equipment
(whether or not "in production") conveyed pursuant to any such settlement
agreement in compliance with this Section 2.10(c) shall be retained by the
Buyer and shall constitute "Purchase Assets".
(ii) If the Buyer does not reach settlement with respect to
a particular Scheduled Lease on or before the 120th day following
the Closing Date, then the equipment covered thereby will remain
with the Sellers (subject to the Sellers' obligation to provide
transition services with respect to such equipment through the end
of the relevant transition period after which such equipment will
be returned to Sellers or the relevant lessor, as the case may be)
and shall constitute Excluded Assets (and any liability under such
Scheduled Lease shall constitute Excluded Liabilities), and the
Buyer shall have no further rights to obtain such equipment (or
any replacement) from the Sellers.
(iii) To the extent that the Buyer has not obtained all
legal and beneficial right, title and interest to equipment
subject to Scheduled Operating Leases by the 120th day following
the Closing Date, then with respect to any remaining Scheduled
Operating Leases, the Buyer may select particular Scheduled
Operating Leases (the "Selected Operating Leases") which it elects
(A) to have the Sellers assume and assign to the Buyer or its
Designee pursuant to Section 365 of the Bankruptcy Code or (B) if
not capable of being assumed and assigned pursuant to clause (A)
for any reason, to have the Sellers assign to the Buyer or its
Designee as required by, and in the manner set forth in, Section
7.3(f). To the extent any remaining Scheduled Operating Leases are
not Selected Operating Leases after the end of the relevant
transition period, the Sellers shall have the right to reject at
their cost such Scheduled Operating Leases and the Buyer shall
have no further rights to obtain such equipment (or any
replacement) from the Sellers.
(iv) In the event the Buyer designates any Scheduled
Operating Lease as a Selected Operating Lease, the Sellers shall
promptly file with the Bankruptcy Court such motions as are
reasonably necessary to effect the assumption by the relevant
Seller and assignment to the Buyer or its Designee of such
Selected Operating Lease in form and substance reasonably
satisfactory to the Buyer and the parties shall use commercially
reasonable efforts to cause the Bankruptcy Court to issue an order
approving such assumption and assignment on or before end of the
relevant transition period.
(v) The Buyer shall pay to Exodus (A) the first $2,000,000
in Agreed Operating Lease Cure Amounts with respect to the
Selected Operating Leases validly assigned to the Buyer pursuant
to an order of the Bankruptcy Court relating to equipment with
remaining lease obligations of up to $12,000,000 as of September
30, 2001 as set forth on the January 3 Schedules and (B) all
Agreed Operating Lease Cure Amounts with respect to the Selected
Operating Leases validly assigned to the Buyer pursuant to an
order of the Bankruptcy Court relating to equipment with remaining
lease obligations in excess of $12,000,000 as of September 30,
2001 as set forth on the January 3 Schedules. To the extent that
the Actual Cure Amount with respect to any particular Selected
Operating Lease exceeds the Agreed Operating Lease Cure Amount
specified in the January 3 Schedules, the Sellers shall be
responsible for the difference, in each case on a lease by lease
basis.
(d) Access. (i) The Buyer shall permit the Sellers and their
representatives to have reasonable access, during regular business hours
and upon reasonable advance notice, to the properties of the Buyer and
cooperate (including in attempting to obtain any required consent of the
Buyer's customers) to enable the Sellers to effect the return and
substitution of any equipment pursuant to Section 2.10(a)(i) or the removal
of any Equipment that constitutes an Excluded Asset.
(ii) The Buyer shall permit the Scheduled Lease
counterparties and their representatives to have reasonable
access, during regular business hours and upon reasonable advance
notice, to the properties of the Buyer, and shall cooperate to
enable such counterparties to remove leased equipment subject to
any Scheduled Leases rejected by the Sellers, and shall otherwise
comply with the terms of any lease rejection procedures order
issued by the Bankruptcy Court.
(e) Transition Services. (i) Until a piece of equipment subject to
a Scheduled Lease is either rejected by the Sellers or transferred to the
Buyer, the Sellers shall make all lease payments required for Sellers to
continue to provide use of such equipment pursuant to the terms of the
Transition Services Agreement S/B (including under any interim agreement
with a counterparty that may be subject to disgorgement). In accordance
with the terms of the Transition Services Agreement S/B, the Buyer will
reimburse the Sellers for (A) any capital lease payments relating to
Scheduled Financing Leases maintained pursuant to the Transition Services
Agreement S/B as to which the aggregate lease obligations as of September
30, 2001 as set forth on the January 3 Schedules exceeded $50,000,000 and
(B) operating lease payments relating to Scheduled Operating Leases
maintained pursuant to the Transition Services Agreement S/B. The amount to
be paid by the Buyer pursuant to Clause (A) of the preceding sentence shall
be determined by multiplying the aggregate monthly lease payments related
to all Scheduled Financing Leases maintained pursuant to the Transition
Services Agreement S/B on a given date by the quotient of (x) the aggregate
remaining capital lease obligations (as of September 30, 2001 as set forth
on the January 3 Schedules) related to such Scheduled Financing Leases
minus $50,000,000 divided by (y) the aggregate remaining capital lease
obligations (as of September 30, 2001 as set forth on the January 3
Schedules) related to such Scheduled Financing Leases. The Buyer's
obligation to pay the amounts set forth in this clause (e) shall be treated
like all other reimbursement obligations of the Buyer under the Transition
Services Agreement S.B for purposes of the $40,000,000 credit thereunder.
(ii) All of the Scheduled Financing Leases and Scheduled
Operating Leases will be included in the Transition Services
Agreement S/B except to the extent Parent or the Buyer has
notified Exodus that particular leases or lease schedules should
not to be included under the Transition Services Agreement S/B.
The parties shall negotiate in good faith such changes to the form
of the Transition Services Agreement S/B as may be necessary to
effect the provisions of this Section 2.10.
(f) Procedures. The Sellers shall promptly file with the
Bankruptcy Court any motions or other pleadings, in form and substance
reasonably satisfactory to the Buyer, as are reasonably necessary to effect
the transfer(s) by the relevant Sellers to the Buyer or its Designee of the
equipment to be included within the Purchased Assets pursuant to the
operation of this Section 2.10 and the parties shall use commercially
reasonable efforts to cause the Bankruptcy Court to issue an order
approving such transfer(s) as promptly as practicable (it being understood
that, to the extent any order is required to effect the transfer of
equipment, the Buyer shall continue to be able to use such equipment
pursuant to the Transition Services Agreement S/B and the transition period
applicable to the relevant items of equipment (and associated network
services) shall, notwithstanding any shorter period specified in this
Agreement, be extended until the relevant order becomes a Final Order).
Amounts to be paid to the Sellers out of the Scheduled Lease Amount or the
Operating Lease Amount pursuant to this Section 2.10 shall be paid on the
later of (a) the fifth Business Day following execution of the relevant
settlement agreement or the fifth Business Day following agreement between
Exodus and the Buyer regarding substitution of equipment as contemplated
hereby, or (b) to the extent any order of the Bankruptcy Court is required
to properly effect the settlement and transfer of the relevant equipment,
the date the relevant order becomes a Final Order.
(g) Survival. The provisions of this Section 2.10 shall survive
the Closing. Without limiting the foregoing, the terms of Section 2.10(d)
shall survive any transition service period under the Transition Services
Agreement S/B."
(h) No claim. For the avoidance of doubt, the Sellers shall have
no liability to Parent or the Buyer as a result of the failure of the
Sellers to deliver title to any equipment under Scheduled Leases provided
that the Sellers have complied with the provisions of this Section 2.10
(including the penultimate sentence of Section 2.10(a)).
9. LA1/LA2. The following Section 6.25 is hereby added to the
Original Agreement:
"Section 6.25. LA1/LA2. The Sellers shall use commercially
reasonable efforts, at their expense, to cause the real property relating
to the Acquired Site referred to as LA1 on Schedule 2.1(a)(i) ("LA1") to be
separately transferable on or as soon as practicable following the Closing
Date and to transfer LA1 to the Buyer or its Designee. Notwithstanding
anything to the contrary contained in this Agreement, in the event that LA1
and the real property relating to the adjoining building ("LA2") are not
separately transferable as of the Closing Date, then the transfer of title
to LA1 to the Buyer or its Designee contemplated by this Agreement shall be
delayed until such time as (i) title to LA1 is separately transferable or
(ii) Xxxx (as defined below) and Exodus shall have entered into the
Encroachment Easement (as defined in the Xxxx Agreement (as defined below))
for the benefit of the separate parcel (the "LA1 Fee Parcel") of real
property constituting a portion of LA1, thereby permitting transfer of
title to the LA1 Fee Parcel to the Buyer or its Designee, together with
appurtenant easement granted under the Encroachment Easement, which
together will vest in the Buyer or its Designee LA1; provided, that from
the Closing Date until such time the transfer of LA1 to Buyer or its
Designee as contemplated by this Agreement has occurred, Seller will enter
into an agreement (the "LA1 License Agreement") with the Buyer or its
Designee providing for (a) an exclusive license granted to the Buyer or its
Designee to use, operate and access LA1 on terms satisfactory to Exodus and
the Buyer, (b) a term ending not earlier than the date on which LA1 is
transferred to the Buyer or its Designee, (c) the interim use and
separation of LA1 and LA2 during the term of the LA1 License Agreement, and
(d) the payment by the Buyer or its Designee of the pro-rata share of real
estate taxes and other costs, expenses and liabilities incident to
ownership of LA1, which pro-rata share shall only be payable after delivery
by Exodus to the Buyer of tax bills, invoices or other written evidence of
such amounts and the allocation thereof between LA1 and LA2. The Buyer
acknowledges that Exodus has entered into an Amended and Restated Purchase
and Sale Agreement (the "Xxxx Agreement"), dated December 12, 2001, with
200 North Xxxx Associates, LLC ("Xxxx") relating to the purchase by Xxxx of
LA2. The Sellers hereby confirm and agree that, no later than one Business
Day following execution of this Amendment, the notice provided for in
Section 1.1(b) of the Xxxx Agreement shall be delivered to Xxxx, pursuant
to which Exodus shall elect to sell only LA2 to Xxxx. In accordance with
the Xxxx Agreement, Xxxx has agreed to apply for a lot line adjustment with
the City of El Segundo and has agreed to be responsible for the removal of
the connector building between LA1 and LA2 (the "Connector Building
Removal"). Since the lot line adjustment and Connector Building Removal
contemplated by the Xxxx Agreement will affect the real property and
improvements that comprise LA1 and XX0, XX0 and LA2 shall have the same
meanings in this Agreement as set forth in the Xxxx Agreement. Without the
prior written consent of the Buyer or its Designee, such consent not to be
unreasonably withheld, from and after the Closing Date, Sellers shall not
grant any consent, waiver or approval under the Xxxx Agreement or agree to
enter into any of the Encroachment Easement (as described in Section 1.1(c)
of the Xxxx Agreement) or the Easements (as described in Section 1.1(d) of
the Xxxx Agreement) or take any other material action arising under or
relating to the Xxxx Agreement to the extent any of the foregoing affect
LA1. In addition, Sellers hereby covenant and agree to consult with the
Buyer or its Designee on any material matters arising under or relating to
the Xxxx Agreement and to provide the Buyer or its Designee with any and
all notices received by Sellers under the Xxxx Agreement. The Sellers and
the Buyer hereby confirm and agree that the Buyer shall have no liability
for any cost or expense relating to the separation of LA1 from LA2 or the
transfer of LA1 to the Buyer or its Designee, such costs and expenses to be
solely borne by the Sellers. The provisions of this Section 6.25 shall
survive the Closing."
10. Initial Deposit. The final sentence of Section 6.1(a)(i) of
the Original Agreement is hereby amended to read as follows:
"Promptly following entry of the Bidding Procedures Order, the
Buyer will make a deposit on the Cash Consideration of $16,800,000 (the
"Initial Deposit") with the Deposit Escrow Agent, to be held by the Deposit
Escrow Agent pursuant to the Deposit Escrow Agreement until the earlier of
the Closing Date or the termination of this Agreement, at which time the
Initial Deposit shall, if the Closing shall occur, be applied (together
with any interest or other income earned thereon, but less any fees payable
to the Deposit Escrow Agent under the Deposit Escrow Agreement) to the
payment of the Cash Consideration, or if this Agreement shall terminate, be
returned to the Buyer."
11. Non-US Transactions. Section 6.20(g)(i) of the Original
Agreement is hereby amended by deleting the "." at the end of the final
sentence and adding the following:
"; provided, however, that (1) if the parties have not entered
into definitive agreements with respect to the German Transaction, then on
and after the earlier of the date Parent notifies the Sellers that it is no
longer interested in pursuing the German Transaction and the 90th day
following the Closing Date (such earlier date, the "Germany Notice Date"),
the Sellers and Exodus Germany may provide information concerning Exodus
Germany and the German Transaction to one or more third parties and may
take any of the other actions described in clauses (x), (y) and, subject to
Section 6.20(g)(ii), (z) above with respect to an Alternative Non-US
Transaction relating to Exodus Germany, (2) if the parties have not entered
into definitive agreements with respect to the Japanese Transaction, then
on and after the earlier of the date Parent notifies the Sellers that it is
no longer interested in pursuing the Japanese Transaction and the 90th day
following the Closing Date (such earlier date, the "Japan Notice Date"),
the Sellers and Exodus Japan may provide information concerning Exodus
Japan and the Japanese Transaction to one or more third parties and may
take any of the other actions described in clauses (x), (y) and, subject to
Section 6.20(g)(ii), (z) above with respect to an Alternative Non-US
Transaction relating to Exodus Japan and (3) if the parties have not
entered into definitive agreements with respect to the UK Transaction, then
on and after the earlier of the date Parent notifies the Sellers that it is
no longer interested in pursuing the UK Transaction and the 90th day
following the Closing Date (such earlier date, the "UK Notice Date"), the
Sellers and Exodus UK may provide information concerning Exodus UK and the
UK Transaction to one or more third parties and may take any of the other
actions described in clauses (x), (y) and, subject to Section 6.20(g)(ii),
(z) above with respect to an Alternative Non-US Transaction relating to
Exodus UK. The parties agree that the Non-Embedded Technology License Term
(as defined in the License Agreement) with respect to Exodus Germany shall
be extended until the 120th day following the Germany Notice Date should
such Date occur, with respect to Exodus Japan shall be extended until the
120th day following the Japan Notice Date should such Date occur and with
respect to Exodus UK shall be extended until the 120th day following the UK
Notice Date should such Date occur. The parties shall negotiate in good
faith such changes to the form of the License Agreement as may be necessary
to effect the provisions of the preceding sentence."
12. Reporting. Section 6.7(c) of the Original Agreement is hereby
deleted in its entirety and replaced with the following:
"Exodus shall provide Parent with reports regarding (i) customer
cancellation notification by data center, (ii) cashflow (in the format
previously submitted to Parent), (iii) new customer bookings, (iv) credit
issuance and (v) employee turnover. Exodus shall issue these reports based
on data collected and confirmed as of the fifteenth day and the last day,
as the case may be, of each calendar month (the "Data Collection Date") and
shall provide such reports to Parent within 4 Business Days from each Data
Collection Date. Notwithstanding the foregoing, for data collected and
confirmed as of December 15, 2001 and as of December 31, 2001 reports will
be provided no later than December 20, 2001 and January 7, 2002,
respectively. Exodus shall also provide Parent with (x) monthly profit and
loss reports as soon as practicable following each month-end close (but not
later than the 18th day of the following month), (y) a monthly accounts
receivable analysis in the form described in Schedule 2.2(b)(i) hereto on
the 15th day of the following month and (viii) a monthly pre-paid accounts
analysis in the form described in Schedule 2.2(b)(ii) hereto on the 15th
day of the following month. Exodus shall promptly, and in no event more
than five (5) Business Days following the occurrence thereof, notify Parent
of any Material Adverse Effect with respect to the Purchased Assets, which
notice shall include a detailed description of such Material Adverse
Effect."
13. Access and Information. Section 6.7(b) of the Original
Agreement is hereby amended by deleting "Exodus" at the beginning of the
first sentence and replacing it with the following:
"Exodus shall add Parent and its counsel to the list of parties
that have requested service of documents pursuant to Bankruptcy Rule 2002,
as may be amended for purposes of the Bankruptcy Cases with respect to
matters of notice and service by the Bankruptcy Court. To the extent not
provided in accordance with the preceding sentence, Exodus".
14. Expense Reimbursement and Break-Up Fee. The last sentence of
Section 6.4(a) shall be deleted and replaced with the following:
"The Break-Up Fee shall constitute an administrative priority
claim against the Sellers' estates under Sections 503(b) and 507(a)(1) of
the Bankruptcy Code and shall be paid immediately, without further order of
the Bankruptcy Court, upon the consummation of the first Alternative
Transaction to occur following the date hereof."
15. SPE Dividends. Section 6.9(b)(viii) of the Original Agreement
is hereby amended by deleting the ";" at the end thereof and inserting the
following:
"(for the avoidance of doubt, the SPEs may declare a record date
for any such dividend before the Closing Date and a payment date therefor
after the Closing Date and the Buyer shall cause the SPE to pay any such
dividend to the extent permitted by applicable law);"
16. Miscellaneous.
(a) The reference to "Section 6.20(b)" in Section 6.20(e) of the
Original Agreement is hereby deleted and replaced with "Section 6.9(b)".
(b) Any reference in the Original Agreement to the word "Alpha" is
hereby deleted and replaced with the word "Exodus".
(c) The reference to the date "November 20, 2001" in the row
entitled "Sellers:" of Schedule 6.20(b) of the Original Agreement is hereby
deleted and replaced with the date "November 20, 1999".
(d) Any reference in the Original Agreement to the phrase "Primary
Non-365 Contracts" is hereby deleted and replaced with the phrase "Primary
Non 365 Contracts".
(e) Exodus shall provide promptly notice of this Amendment to the
Bankruptcy Court and interested parties to the extent required by the
Bankruptcy Code and the Bankruptcy Rules.
[Remainder of this page intentionally left blank. Signature page
follows.]
IN WITNESS WHEREOF, this Agreement has been signed on behalf of
each of the parties hereto as of the date first written above.
GLOBALCENTER, INC. EXODUS COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Executive Vice President,
Finance, Chief
Administrative Officer
and Chief Financial
Officer
SERVICE METRICS, INC. AMERICAN INFORMATION SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
CABLE AND WIRELESS PLC ARCA SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------- -----------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Deputy Group Finance Director Title: Chief Financial Officer
DIGITAL ISLAND INC. COHESIVE TECHNOLOGY SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------- ------------------------------
Name: Xxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Strategy Officer Title: Chief Financial Officer
GLOBAL CENTER HOLDING, CO.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
[SIGNATURE PAGE TO AMENDMENT #1 TO ASSET PURCHASE AGREEMENT]
