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ASSET PURCHASE AGREEMENT
by and among
TIME WARNER TELECOM INC.
and
GST TELECOMMUNICATIONS, INC.,
GST USA, INC.,
and other parties named herein
Dated as of September 11, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.01 Purchase and Sale of Assets
Section 1.02 Excluded Assets
Section 1.03 Assumed Liabilities
Section 1.04 Excluded Liabilities
Section 1.05 Purchase Price
ARTICLE II
THE CLOSING
Section 2.01 Closing
Section 2.02 Consideration
Section 2.03 Acquisition Subsidiaries
Section 2.04 Purchase Price Allocation
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 3.01 Organization
Section 3.02 Authority Relative to this Agreement
Section 3.03 Governmental Consents and Approvals
Section 3.04 No Violations
Section 3.05 Financial Statements
Section 3.06 Absence of Certain Changes
Section 3.07 Litigation
Section 3.08 No Default
Section 3.09 No Violation of Law
Section 3.10 FCC/State PUC Matters
Section 3.11 Environmental Matters
Section 3.12 Employee Benefits; Labor Matters
Section 3.13 Real Property
Section 3.14 Title to and Use of Property
Section 3.15 Non-Competition Agreements
Section 3.16 Brokers
Section 3.17 Contracts
Section 3.18 Intellectual Property
Section 3.19 Network Facilities
Section 3.20 Tangible Property
Section 3.21 Board Approval and Recommendation
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 Organization
Section 4.02 Authority Relative to This Agreement
Section 4.03 No Violations
Section 4.04 Consents and Approvals
Section 4.05 Brokers
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Section 4.06 Financing
Section 4.07 Investment Experience
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business by the Sellers Pending
the Closing
Section 5.02 Access and Information
Section 5.03 Cure of Defaults
Section 5.04 Surveys
Section 5.05 Filings; Other Action
Section 5.06 Communications Licenses
Section 5.07 FCC Applications/State PUC Applications
Section 5.08 Public Announcements
Section 5.09 Bankruptcy Actions
Section 5.10 Tax Returns and Filings; Payment of Taxes
Section 5.11 Sellers' Use of GST's Name
Section 5.12 Tax Matters
Section 5.13 Employment Matters
Section 5.14 Additional Matters
Section 5.15 Hawaii Assets
ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
Section 6.01 Further Assurances
Section 6.02 Books and Records; Personnel
Section 6.03 Third Party Rights
Section 6.04 Employee Withholding
Section 6.05 Continued Cooperation
Section 6.06 Transitional Services
Section 6.07 Undisclosed Contracts
Section 6.08 Maintenance of Cable Sheath
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Conditions Precedent to Obligations of the
Sellers and the Purchaser
Section 7.02 Conditions Precedent to Obligation of the
Sellers
Section 7.03 Conditions Precedent to Obligation of the
Purchaser
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination by Mutual Consent
Section 8.02 Termination by Either the Purchaser or the
Sellers
Section 8.03 Termination by the Sellers
Section 8.04 Termination by the Purchaser
Section 8.05 Effect of Termination and Abandonment
Section 8.06 Termination Fee
ARTICLE IX
DELIVERIES AT CLOSING
Section 9.01 Sellers' Deliveries at Closing
Section 9.02 Purchaser's Deliveries at Closing
Section 9.03 Required Documents
ARTICLE X
INDEMNIFICATION
Section 10.01 Indemnification by Purchaser
Section 10.02 Losses Net of Insurance, Etc.
Section 10.03 Termination of Indemnification
Section 10.04 Indemnification Procedures
Section 10.05 Indemnity Payments
ARTICLE XI
GENERAL PROVISIONS
Section 11.01 Notices
Section 11.02 Descriptive Headings
Section 11.03 Entire Agreement; Assignment
Section 11.04 Governing Law
Section 11.05 Venue and Retention of Jurisdiction
Section 11.06 Expenses
Section 11.07 Amendment
Section 11.08 Waiver
Section 11.09 Counterparts; Effectiveness
Section 11.10 Severability; Validity; Parties in Interest
Section 11.11 Enforcement of Agreement
Section 11.12 Non-survival of Representations, Warranties
and Agreements
Section 11.13 No Other Representations
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ARTICLE XII
DEFINITIONS
Section 12.01 Defined Terms
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of
September 11, 2000 (the "Agreement"), by and among
TIME WARNER TELECOM INC., a Delaware corporation
(the "Purchaser"), GST TELECOMMUNICATIONS, INC., a
Canadian corporation ("GST"), GST USA, INC., a
Delaware corporation ("GST USA"), and the other
parties identified on Exhibit A attached hereto
(together with GST and GST USA, the "Sellers").
Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in
Article XII.
WHEREAS, GST, through GST USA and its subsidiaries, is engaged in
the business of providing telecommunications products and services,
including local dial tone, long distance, Internet data transmission,
private line services, Internet access services and telephone access
services (the "Business");
WHEREAS, each Seller has filed a voluntary petition (the
"Petitions") for relief commencing a case (collectively, the "Chapter 11
Case") under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
sections 101 et seq. (the "Bankruptcy Code") in the United States District
Court for the District of Delaware (the "Bankruptcy Court"); and
WHEREAS, the Purchaser desires to purchase and obtain the
assignment from the Sellers, and the Sellers desire to sell, convey,
assign, and transfer to the Purchaser, substantially all of the assets and
properties of the Sellers relating to the Business, together with certain
obligations and liabilities relating thereto, all in the manner and subject
to the terms and conditions set forth herein and in accordance with
sections 105, 363, and 365 of the Bankruptcy Code (the "Contemplated
Transactions").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, and agreements set forth
herein, the parties hereto agree as follows:
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ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.01. Purchase and Sale of Assets. On the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Sellers shall sell, assign, transfer, convey, and deliver to the Purchaser,
and the Purchaser shall purchase and accept from the Sellers, all of the
Sellers' rights, title, and interests in and to the Business, including,
without limitation, in and to all the assets, properties, rights,
contractual rights of the Sellers, and claims of the Sellers related to the
Business (except as expressly excluded under Section 1.2), wherever
located, whether tangible or intangible, as the same shall exist at the
Closing (such rights, title, and interests in and to all such assets,
properties, rights, contracts, and claims being collectively referred to
herein as the "Assets"), free and clear of all interests in property as set
forth in section 363 of the Bankruptcy Code (collectively, "Encumbrances"),
in each case other than Permitted Encumbrances. The Assets shall include,
without limitation, all of the Sellers' rights, title, and interests in and
to the assets, properties, rights, contracts, and claims described in
clauses (a) through (s) below, but shall specifically exclude those assets,
properties, rights, contracts, and claims set forth in Section 1.2:
(a) all furnishings, furniture, fixtures, office supplies,
vehicles, equipment, computers, and other tangible property,
including, without limitation, the assets identified on the following
lists and other materials that have been provided by Sellers to the
Purchaser (except to the degree that the lists and materials include
Excluded Assets):
(i) assets contained in Sellers' Telecom Business Solutions
(TBS) database, including network equipment and equipment located
at customers' premises;
(ii) routers and ethernet switches that comprise Sellers'
Internet Protocol network;
(iii) access nodes;
(iv) inventory at Sellers' Rialto, California, warehouse and
other locations;
(v) maps of Sellers' network;
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(vi) book entitled "GST Telecom Local Fiber Ring
Utilization;"
(vii) computers and associated hardware;
(viii) ATM switches;
(ix) SS7 network; and
(x) long-haul regeneration sites.
(b) all Network Facilities and Customer Access Rights;
(c) all accounts receivable and related deposits, security, or
collateral therefor, including recoverable customer deposits and
receivables among the Sellers (collectively, the "Trade Receivables");
(d) the Intellectual Property, the rights to sue for, and
remedies against, past, present, and future infringements thereof, and
the rights of priority and protection of interests therein under
applicable laws;
(e) all copies of marketing brochures and materials and other
printed or written materials in any form or medium relating to the
Sellers' ownership or operation of the Business that the Sellers are
not required by law to retain and duplicates of any such materials
that the Sellers are required by law to retain;
(f) all rights under all warranties, representations, and
guarantees made by suppliers, manufacturers, and contractors in
connection with the operation of the Business;
(g) all Permits held by any of the Sellers (or, to the extent any
such Permits are not freely transferable by the holder of such
Permits, all right, title and interest of Sellers in such Permits to
the full extent such right, title and interest may be transferred);
(h) all contracts and contract rights, including leases and
subleases listed in Section 1.1(h) of the Seller Disclosure Letter,
and all Customer Contracts that are not listed on Section 1.2(f) of
the Seller Disclosure Letter (herein the "Assumed Customer
Contracts"), in each case with such modifications as are requested by
Purchaser on or prior to the Closing (all such contracts, including
the Assumed Customer
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Contracts, being referred to as the "Assumed Contracts");
(i) all Communications Licenses (or, to the extent any such
Communication Licenses are not freely transferable by the holder of
such Communication Licenses, all right, title and interest of Sellers
in such Communication Licenses to the full extent such right, title
and interest may be transferred);
(j) all carrier or other codes used or useful in the operation of
the Business, including, but not limited to, all NXXs obtained by the
Sellers, exchange carrier, ACNA, RISD, OCN, NECA, and carrier
identification codes; (or, to the extent any such codes are not freely
transferable by the holder of such codes, all right, title and
interest of Sellers in such codes to the full extent such right, title
and interest may be transferred);
(k) all books and records of the Business, including, without
limitation, data processing records, employment and personnel records,
customer lists, files and records, advertising and marketing data and
records, credit records, records relating to suppliers, and other
data;
(l) all credits, prepaid expenses, deferred charges, advance
payments, security deposits, and prepaid items (and, in each case,
security interests from third parties relating thereto);
(m) all goodwill relating to the Assets and the Business;
(n) all computer software programs and databases used by the
Sellers, whether owned, licensed, leased, or internally developed (in
each case, subject to applicable restrictions);
(o) all telephone numbers and electronic mail addresses used by
the Sellers in the conduct of the Business;
(p) ownership of twelve (12) working dark fibers to be
specifically identified to Purchaser on Sellers' Inter-Island Network
from Kauai, (Wailua Golf Course) to Oahu (Makaha) to Oahu (Keawaula)
and Oahu (Sandy Beach), to Maui (Mokapu), and from Maui to Hawaii
(Spencer Beach), including ownership of the associated cable sheath;
rights to access the GTE manholes and
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splice boxes at Wailua, Sandy Beach, Mokapu and Spencer Beach (which
access may be shared with the Sellers or the Hawaii Owners (as defined
in Section 6.8)), including rights to splice into the fibers at such
manholes; rights to access the AT&T manhole and splice box and
cablehead at Makaha, including one-half of Sellers' rack space
therein, access to at least 150 amps of DC power and access to AC
power; and rights to the AT&T cablehead at Keawaula including at least
one- half of the space in Sellers' collocation cage with access to at
least 150 amps of DC power and access to AC power and the right to
physically partition the cage (all such fibers and rights being
referred to as the "Hawaii Assets");
(q) those items described in Section 1.1(q) of the Seller
Disclosure Letter;
(r) all rights of the Sellers to co-locate with other carriers,
whether or not included in Section 1.1(h) of the Seller Disclosure
Letter; and
(s) all rights of any of the Sellers in respect of investments in
Cleardata.com.
SECTION 1.02. Excluded Assets. The following assets, properties,
and rights (the "Excluded Assets") are not included in the Assets and shall
be retained by the Sellers:
(a)(i) capital stock of the Sellers or any direct or indirect
subsidiary of the Sellers;
(b) any contract (including any lease or sublease) not set forth
in Section 1.1(h) of the Seller Disclosure Letter, as may be modified
in accordance herewith;
(c) all cash and cash equivalents of the Sellers;
(d) any claims, rights or causes of action arising under sections
544 through 553, inclusive, of the Bankruptcy Code;
(e) all assets and properties located outside of the United
States; and
(f) any other asset, property, right, contract or claim
(including, without limitation certain assets located in Hawaii) set
forth in Section 1.2(f) of the
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Seller Disclosure Letter, with such additions as are requested by
Purchaser on or prior to Closing.
SECTION 1.03. Assumed Liabilities. On the terms and subject to
the conditions set forth in this Agreement, at the Closing, the Purchaser
shall assume and/or accept assignment from the Sellers and thereafter pay,
perform, or discharge in accordance with their terms, only the following
obligations of Sellers (the "Assumed Liabilities"):
(a)(i) the obligations of the Sellers under the Assumed Contracts
that, by the terms of such Assumed Contracts, arise after Closing,
relate to periods following the Closing and are to be observed, paid,
discharged, or performed, as the case may be, in each case at any time
after the Closing Date; (ii) all cure amounts payable in order to
effectuate, pursuant to the Bankruptcy Code, the assumption by and
assignment to the Purchaser of Assumed Contracts, including unexpired
leases, assigned to the Purchaser under the Sale Order ("Cure
Amounts"); provided, however, that to the extent that any Cure Amounts
are paid by any person or entity (including any Seller) which is not
the Purchaser or any of its affiliates prior to the Closing ("Pre-
Closing Cure Amounts"), subject to Section 8.4(d), the Purchase Price
payable at Closing shall be increased by the total amount of any such
Pre-Closing Cure Amounts paid; and (iii) obligations under any Assumed
Customer Contracts in respect of any credit, prepayment or refund
balances as of Closing, in each case to the extent such balance is not
included in the calculation of Cure Amounts ("Customer Credit
Amounts");
(b) liabilities under Section 4980B of the Code or similar state
law ("COBRA") as set forth in Section 5.13(e);
(c) the obligation to pay any fees, including, but not limited
to, any Transaction Fee (as defined in the engagement letter between
the Sellers and Houlihan Lokey Howard & Zukin Capital, a true and
complete copy of which has been delivered to Purchaser) that are or
become payable to Houlihan Lokey Howard & Zukin Capital pursuant to
such engagement letter as a result of the consummation of the
Contemplated Transactions, as determined not less than two Business
Days prior to the Closing Date (the "HLHZ Payment Obligation") without
the need for any or further approval by the Bankruptcy Court; and
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(d) all of the unpaid post-Petition administrative expenses
constituting allowed fees and expenses of lawyers, accountants and
other professionals retained by the Sellers up to an aggregate amount
of $3,000,000 (the "Post-Petition Administrative Expenses").
SECTION 1.04. Excluded Liabilities. Notwithstanding anything to
the contrary contained herein, the Purchaser shall not assume, or in any
way be liable or responsible for, any liabilities, commitments, or
obligations of the Sellers except for the Assumed Liabilities. Without
limiting the generality of the foregoing, the Purchaser shall not assume,
and the Sellers shall remain responsible for the following (the "Excluded
Liabilities"): (a) subject to Section 1.3(a), any liabilities or
obligations (whether absolute, contingent, or otherwise) which accrue with
respect to, arising out of, or related to, the Assets on or prior to the
Closing Date, including, without limitation, (i) any liability or
obligation of any Seller or any of its employees, directors, officers,
affiliates, or agents arising out of, relating to, or caused by (whether
directly or indirectly), the Sellers' ownership, possession, interest in,
use or control of the Assets and (ii) any liability or obligation described
on Section 1.4 of the Seller Disclosure Letter; (b) any liability or
obligation of the Sellers for any Taxes of any kind accrued for, applicable
to or arising from any period (or portion thereof) ending on or prior to
the Closing Date, including any Transfer Taxes to the extent not exempt
pursuant to section 1146 of the Bankruptcy Code; and (c) except as provided
in Section 5.13(e) with respect to COBRA, any liability or obligation in
respect of any agreement, plan or policy relating to employees or
employment matters, including, without limitation, any Seller Plan,
consulting, severance, change in control or similar agreements.
SECTION 1.05. Purchase Price. The consideration for the Assets
shall be (i) $640,000,000 plus the amount, if any, by which the Cap exceeds
the Actual Assumed Expenses (the "Purchase Price") and (ii) the assumption
of the Assumed Liabilities; provided that the Purchase Price may be
increased pursuant to Section 1.3(a)(ii) and decreased pursuant to Section
8.4(d). Upon execution and delivery of this Agreement, the Purchaser shall
pay to the Sellers by wire transfer of immediately available funds to the
account or accounts designated by the Sellers a deposit in an amount equal
to $10,000,000 (together with any accrued interest thereon, collectively,
the "Deposit"). The parties agree that the Deposit shall be refunded to the
Purchaser if this Agreement is terminated pursuant to Section 8.1, 8.2 or
8.4;
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otherwise the Deposit shall be nonrefundable. At the Closing, the Deposit
shall be applied toward payment of the cash portion of the Purchase Price
and the remaining Purchase Price shall be payable at the Closing in the
manner provided in Section 2.2.
ARTICLE II
THE CLOSING
SECTION 2.01. Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the New
York offices of Paul, Weiss, Rifkind, Wharton & Garrison at 10:00 a.m. on
the second Business Day after the conditions set forth in Article VII shall
have been satisfied or waived or at such other time, date and place as
shall be fixed by agreement among the parties (the date of the Closing
being herein referred to as the "Closing Date").
SECTION 2.02. Consideration. Subject to the terms and conditions
hereof, at the Closing, the Purchaser shall:
(a) pay to the Sellers, by wire transfer of immediately available
funds to an account or accounts specified in writing not less than
three Business Days prior to the Closing by the Sellers, the Purchase
Price less the Deposit; and
(b) assume the Assumed Liabilities pursuant to a duly executed
Assignment and Assumption Agreement, in customary form mutually
agreeable to the parties.
SECTION 2.03. Acquisition Subsidiaries. On or before the Closing
Date, the Purchaser may designate (by written notice to the Sellers) one or
more of its subsidiaries (each an "Acquisition Subsidiary") to receive all
or part of the Assets and to assume the Assumed Liabilities; provided,
however, that such designation shall not obviate the Purchaser's
obligations hereunder.
SECTION 2.04. Purchase Price Allocation. Prior to the Closing,
the Purchaser and the Sellers shall agree as to the allocation of the total
purchase price pursuant to Section 1060 of the Code and the regulations
thereunder. The Purchaser and the Sellers agree to use such allocation in
filing all required forms under Section 1060 of the Code (as defined
herein), and all other Tax Returns (as defined herein), and the Purchaser
and the Sellers further agree
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that they shall not take any position inconsistent with such allocation
upon any examination of any such Tax Return, in any refund claim or in any
tax litigation. The Purchaser and the Sellers further agree that the
payment to Sellers contemplated by Section 2.2(a) may be made to a single
Seller that is designated by GST in writing (delivered to Purchaser on or
before the third Business Day prior to Closing) as being authorized to act
as agent for all of the Sellers, whereupon each Seller shall be deemed to
have received the purchase price allocable to the Assets owned by such
Seller in accordance with the allocation determination under this Section
2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Purchaser specifically acknowledges and agrees to the
following with respect to the representations and warranties of the
Sellers:
A. The Purchaser will not have any recourse to any Seller or to
any of the officers or directors of any Seller in the event any of the
representations and warranties made herein or deemed made are untrue as at
any time of expression thereof. The only remedy for a breach of such
representations and warranties shall be the Purchaser's option, under
certain circumstances, not to close in accordance with and subject to the
limitations in Sections 7.1, 7.3 and 8.4 hereof and, without limiting the
foregoing, the Purchaser shall have no remedy whatsoever for any such
breach after the Closing.
B. The Purchaser has conducted its own due diligence
investigations of the Business or has waived its right to conduct such due
diligence.
C. If information provided in any Section of the schedule
delivered by the Sellers to the Purchaser by separate letter dated as of
the date hereof and made a part hereof (which schedule contains appropriate
references to identify the representations and warranties herein to which
the information in such schedule relates) (the "Seller Disclosure Letter")
is applicable to any other Sections, then such information shall be deemed
to have been provided with respect to all such Sections.
D. Except when the context otherwise requires, Sellers make no
representations or warranties in this Article III with respect to Excluded
Assets.
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Except as otherwise disclosed to the Purchaser in the Seller
Disclosure Letter, each of the Sellers, jointly and severally, represent
and warrant to the Purchaser as follows:
SECTION 3.01. Organization. Except as set forth in Section 3.1 of
the Seller Disclosure Letter, each Seller is a corporation validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, use, and
operate its properties and to carry on its business as it is now being
conducted or presently proposed to be conducted except where the failure to
be so validly existing and in good standing would not reasonably be
expected to, individually or in the aggregate, result in a Seller Material
Adverse Effect. Each Seller is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to
be so qualified would not individually or in the aggregate have a Seller
Material Adverse Effect.
SECTION 3.02. Authority Relative to this Agreement. Except as set
forth in Section 3.2 of the Seller Disclosure Letter, each of the Sellers
has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery, and
performance of this Agreement by each of the Sellers and the consummation
by each of the Sellers of the Contemplated Transactions have been duly
authorized by all requisite corporate actions. Subject to the entry and
effectiveness of the Sale Order, this Agreement has been duly and validly
executed and delivered by each of the Sellers and (assuming this Agreement
constitutes a valid and binding obligation of the Purchaser) constitutes a
valid and binding agreement of each of the Sellers, enforceable against
each of the Sellers in accordance with its terms.
SECTION 3.03. Governmental Consents and Approvals. No material
consent, approval, authorization of, declaration, filing, or registration
with, any United States federal or state government or regulatory
authority, is required to be made or obtained by any of the Sellers in
connection with the execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby, except (a)
for consents, approvals, authorizations of, declarations, or filings with,
the Bankruptcy Court, (b) for the filing of a notification and report form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and
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the expiration or earlier termination of the applicable waiting period
thereunder, (c) for Regulatory Approvals, and (d) for consents, approvals,
authorizations, declarations, or rulings identified in Section 3.3 of the
Seller Disclosure Letter. The items referred to in clauses (a) through (d)
of this Section 3.3 are hereinafter referred to as the "Governmental
Requirements."
SECTION 3.04. No Violations. Assuming that the Governmental
Requirements will be satisfied, made, or obtained and will remain in full
force and effect, and assuming receipt of the consents, approvals and
authorization of the Persons listed in Section 3.4 of the Seller Disclosure
Letter (the "Required Contractual Consents"), neither the execution,
delivery, or performance of this Agreement by any Seller, nor the
consummation by any Seller of the Contemplated Transactions, nor compliance
by any Seller with any of the provisions hereof, will (a) conflict with or
result in any breach of any provisions of the articles of incorporation or
bylaws of any Seller, (b) result in a violation, or breach of, or
constitute (with or without due notice or lapse of time) a default (or give
rise to any right of termination, cancellation, vesting, payment, exercise,
acceleration, suspension, or revocation) under any of the terms,
conditions, or provisions of any note, bond, mortgage, deed of trust,
security interest, indenture, license, contract, agreement, plan, or other
instrument or obligation to which any Seller is a party or by which
Seller's properties or assets may be bound or affected, (c) violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to
any Seller or to any Seller's properties or assets or (d) result in the
creation or imposition of any Encumbrance other than Permitted Encumbrances
on any asset of a Seller, except in each case for violations, breaches,
defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions, or revocations that (i) would not individually or
in the aggregate have a Seller Material Adverse Effect, (ii) are excused by
or unenforceable as a result of the filing of the Petitions or the
applicability of any provision of or any applicable law of the Bankruptcy
Code, or (iii) are set forth in Section 3.4 of the Seller Disclosure
Letter.
SECTION 3.05. Financial Statements. The audited financial
statements of GST included in GST's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 and the unaudited financial statements
of GST included in GST's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2000 have been prepared from, and are in accordance
with, the books and records of GST and its subsidiaries,
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comply in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto), and
fairly present the consolidated financial position and the consolidated
results of operations and cash flows of GST and its subsidiaries at the
dates and for the periods covered thereby.
SECTION 3.06. Absence of Certain Changes. Except (a) as set forth
in Section 3.6 of the Seller Disclosure Letter, (b) for the commencement or
pendency of the Chapter 11 Case and (c) for orders, writs, injunctions,
decrees, statutes, rules, or regulations of general applicability to the
Business, since June 30, 2000, (x) there has been no event or condition
that has had (or is reasonably likely to result in) a Seller Material
Adverse Effect and (y) none of the Sellers has taken any action that, if
taken after the date hereof, would violate Section 5.1.
SECTION 3.07. Litigation. Except for the Chapter 11 Case and
except as set forth in Section 3.7 of the Seller Disclosure Letter, there
is no suit, action, proceeding, or investigation (whether at law or equity,
before or by any federal, state, or foreign commission, court, tribunal,
board, agency, or instrumentality, or before any arbitrator) pending or, to
any of the Sellers' knowledge, threatened against or affecting any Seller,
the outcome of which would be reasonably likely, individually or in the
aggregate, to have a Seller Material Adverse Effect, nor is there any
judgment, decree, injunction, rule, or order of any court, governmental
department, commission, agency, instrumentality, or arbitrator outstanding
against any Seller that would be reasonably likely to have a Seller
Material Adverse Effect.
SECTION 3.08. No Default. Except as set forth in Section 3.8 of
the Seller Disclosure Letter and except to the extent forever excused by or
unenforceable as a result of the commencement or pendency of the Chapter 11
Case or the application of any provision of the Bankruptcy Code (but only
to the extent such excuse, lack of enforceability or application of law
will continue to apply in favor of Purchaser and its successors and assigns
following Closing), no Seller is in violation, breach of, or default under
(and no event has occurred that with notice or the lapse of time would
constitute a violation, breach of, or a default under) any term, condition,
or provision of (a) its articles of
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13
incorporation or bylaws, (b) any note, bond, mortgage, deed of trust,
security interest, indenture, license, agreement, plan, contract, lease,
commitment, or other instrument, or obligation to which such Seller is a
party or by which such Seller's properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule, or
regulation applicable to such Seller or to such Seller's properties or
assets, or (d) any permit, license, governmental authorization, consent, or
approval necessary for such Seller to conduct its business as currently
conducted, except in each case for breaches, defaults, or violations that
result from the filing of the Petitions or non-payment of amounts owed
prior to the filing of the Petitions, but only to the extent cured in all
respects upon payment of the Cure Amounts on or prior to Closing, and
except as would not reasonably be expected to, individually or in the
aggregate, result in a Seller Material Adverse Effect.
SECTION 3.09. No Violation of Law. Except as disclosed in Section
3.9 of the Seller Disclosure Letter and except to the extent excused by or
unenforceable as a result of the commencement or pendency of the Chapter 11
Case or the application of any provision of the Bankruptcy Code (but only
to the extent such excuse, lack of enforceability or application of law
will continue to apply in favor of Purchaser and its successors and assigns
following Closing), no Seller is in violation of, or has been given notice
or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance, or judgment (including, without limitation, any
applicable environmental law, ordinance, or regulation) of any governmental
or regulatory body, any insurance company or fire rating agency, or any
other similar board, organization or authority except for such violations,
notices, or changes that would not reasonably be expected to, individually
or in the aggregate, result in a Seller Material Adverse Effect. Except as
disclosed in Section 3.9 of the Seller Disclosure Letter or except as would
not reasonably be expected to, individually or in the aggregate, result in
a Seller Material Adverse Effect and except for the Chapter 11 Case, no
investigation or review by any governmental or regulatory body or authority
is pending or, to the best knowledge of each Seller, threatened, nor has
any governmental or regulatory body or authority indicated to any Seller an
intention to conduct the same.
SECTION 3.10. FCC/State PUC Matters. (a) Except as set forth on
Section 3.3 of the Seller Disclosure Letter, each Seller has obtained all
licenses, permits, certificates, franchises, consents, waivers,
registrations
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14
or other regulatory authorizations from the appropriate governmental
authority in each applicable jurisdiction including, without limitation,
state and local public service and public utilities commissions ("State
PUCs") (together with any renewals, extensions, or modifications thereof
and any additions thereto made as of the Closing Date, the "State
Licenses") and holds all licenses, permits, certificates, franchises,
registrations, and other authorizations issued by the FCC (together with
any renewals, extensions or modifications thereof and any additions thereto
made as of the Closing Date, the "FCC Licenses") that are required for the
conduct of its businesses as presently conducted, and for the operation and
holding of the Assets, except where failure to hold such State Licenses,
FCC Licenses or Communication Licenses would not reasonably be expected to,
individually or in the aggregate, result in a Seller Material Adverse
Effect. All of the FCC Licenses and the State Licenses (collectively, the
"Communications Licenses") are set forth in Section 3.10(a) of the Seller
Disclosure Letter.
(b) Other than Communications Licenses the loss of which would
not reasonably be expected to, individually or in the aggregate, result in
a Seller Material Adverse Effect and except to the extent excused by or
unenforceable as a result of the commencement or pendency of the Chapter 11
Case or the application of any provision of the Bankruptcy Code (but only
to the extent such excuse, lack of enforceability or application of law
will continue to apply in favor of Purchaser and its successors and assigns
following Closing), each of the Communications Licenses was duly issued, is
valid and in full force and effect, has not been suspended, canceled,
revoked, or modified in any adverse manner other than in a manner which is
immaterial, and is not subject to conditions or requirements that are not
generally imposed on such authorizations.
(c)(i) Each holder of a Communications License has operated in
all material respects in compliance with all terms thereof; and (ii) each
holder of a Communications License is in all material respects in
compliance with, and the conduct of its businesses have been and are in
compliance with, the Communications Act and any applicable state or local
regulations, and each such holder has filed all registrations and reports
and paid all required fees, including any renewal applications, required by
the Communications Act or any applicable state or local regulations. Except
as would not reasonably be expected to, individually or in the aggregate,
result in a Seller Material Adverse Effect and except to the extent excused
by or unenforceable as a result of the commencement or pendency
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15
of the Chapter 11 Case or the application of any provision of the
Bankruptcy Code (but only to the extent such excuse, lack of enforceability
or application of law will continue to apply in favor of Purchaser and its
successors and assigns following Closing), (x) there is no pending or, to
the knowledge of the Sellers after due inquiry, threatened action by or
before the FCC or any State PUC to revoke, cancel, suspend, modify, or
refuse to renew any of the Communications Licenses, and (y) except as set
forth in Section 3.10(c)(ii) of the Seller Disclosure Letter, there is not
now issued, outstanding or, to the knowledge of the Sellers after due
inquiry, threatened any notice by the FCC or any State PUC of violation or
complaint, or any application, complaint, or proceeding (other than
applications, proceedings, or complaints that generally affect the Sellers'
industry as a whole) relating to the business or operations of any Seller.
(d) Except as set forth in Section 3.10(d) of the Seller
Disclosure Letter or as would not reasonably be expected to, individually
or in the aggregate, result in a Seller Material Adverse Effect and except
to the extent excused by or unenforceable as a result of the commencement
or pendency of the Chapter 11 Case or the application of any provision of
the Bankruptcy Code (but only to the extent such excuse, lack of
enforceability or application of law will continue to apply in favor of
Purchaser and its successors and assigns following Closing), no event has
occurred which permits the revocation or termination of any of the
Communications Licenses or the imposition of any restriction thereon, or
that would prevent any of the Communications Licenses from being renewed on
a routine basis or in the ordinary course. There are no facts that would
disqualify any of the Sellers, under either the Communications Act or any
applicable state or local regulations, as an assignor in connection with
any Regulatory Approvals.
SECTION 3.11. Environmental Matters. Except as set forth in
Section 3.11 of the Seller Disclosure Letter and except as would not
reasonably be expected to, individually or in the aggregate, result in a
Seller Material Adverse Effect, (a) each Seller has all permits required by
or under all federal, state, and local laws governing the pollution or
protection of the environment ("Environmental Laws") and is, and for the
past 12 months has been, in compliance with such permits and is otherwise
in compliance with all applicable Environmental Laws, (b) neither GST nor
any Seller has received any written notice not subsequently resolved with
respect to the business of, or any property owned or leased by the Sellers
from any
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16
governmental entity or third party alleging that any the Sellers or any
aspect of the Business is not in compliance with any Environmental Law and
no such condition of non- compliance exists, (c) there has been no release
of a hazardous substance, as these terms are defined under Environmental
Laws, in excess of a reportable quantity on any real property that is used
in the Business and (d) there is no obligation under Environmental Laws to
perform remedial action relating to any release of a hazardous substance,
waste, pollutant or contaminant.
SECTION 3.12. Employee Benefits; Labor Matters. (a) Section
3.12(a) of the Seller Disclosure Letter contains a true and complete list
of each "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), that is
sponsored, maintained, or contributed to or required to be contributed to
by any Seller or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with any Seller would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA, or to which
Seller or an ERISA Affiliate is party, for the benefit of any employee of
Sellers engaged in the Business (individually, a "Seller Plan," and
collectively, the "Seller Plans"). The Purchaser is not assuming and shall
have no liability in connection with any Seller Plan.
(b) No Seller Plan is (i) subject to Title IV of ERISA; (ii) a
multiemployer plan within the meaning of Section 3(37) of ERISA, (iii)
maintained in connection with any trust described in Section 501(c)(9) of
the Code or (iv) subject to the minimum funding standards of ERISA Section
302 or Code Section 412. Further, neither Sellers nor any ERISA Affiliate
have ever contributed to or been obligated to contribute to a multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA.
(c) Except as set forth in Section 3.12(c) of the Seller
Disclosure Letter, Seller and each ERISA Affiliate are in material
compliance with, and each Seller Plan has been operated in accordance with,
the provisions of such Seller Plan, and Seller and each ERISA Affiliate are
in material compliance with ERISA, the Code and all legal requirements
governing each such Seller Plan, including but not limited to rules and
regulations promulgated by the Department of Labor, the Pension Benefit
Guaranty Corporation and the Department of the Treasury pursuant to the
provisions of ERISA and the Code.
(d) None of the Sellers nor any ERISA Affiliate is a party to any
collective bargaining agreements and there
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17
are no labor unions or other organizations representing, purporting to
represent, or attempting to represent, any employee of the Sellers.
(e) Except as set forth in Section 3.12(e) of Seller Disclosure
Letter, no Seller has, with respect to employees engaged in the Business,
violated any provision of federal or state law or any governmental rule or
regulation, or any order, decree, judgment 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, without limitation, 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 person rights of employees, former
employees or prospective employees.
(f) There are no pending claims or lawsuits by, against, or
relating to any Seller Plan that would, if successful, result in liability
of Sellers, any ERISA Affiliate or the Purchaser, and no claims or lawsuits
have been asserted, instituted or, to the knowledge of Sellers, threatened
in writing by, against, or relating to any Seller Plan, against the assets
of any trust or other funding arrangement under any such Seller Plan, by or
against any Seller with respect to any Seller Plan, or by or against the
plan administrator or any fiduciary of any Seller Plan, and the Seller does
not have knowledge of any fact that could form the basis for any such claim
or lawsuit. The Seller Plans are not presently under audit or examination
(nor has notice been received of a potential audit or examination) by the
IRS, the Department of Labor, or any other governmental agency or entity,
and no matters are pending with respect to any Seller Plan under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or
other similar programs.
(g) Except as disclosed in Section 3.12(g) of the Seller
Disclosure Letter, the Sellers do not have any current liability in respect
of post-employment or post- retirement health or medical or life insurance
benefits for any former employees or their qualified beneficiaries.
SECTION 3.13. Real Property. (a) Section 3.13(a) of the Seller
Disclosure Letter lists and describes briefly all real property owned by
any of the Sellers. With respect to each such parcel of owned real
property:
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18
(i) the identified owner has good and marketable title to the
parcel of real property, free and clear of any Encumbrance except for
Permitted Encumbrances;
(ii) there are no pending or, to the knowledge of any of the
Sellers, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters
affecting adversely the current use, occupancy, or value thereof;
(iii) Sellers have delivered to the Purchaser prior to the
execution of this Agreement true and complete copies of all deeds,
leases, mortgages, deeds of trust, certificates of occupancy, title
insurance policies, title reports, surveys and similar documents, and
all amendments thereof, in the Sellers' possession, with respect to
the parcel of real property;
(iv) except as disclosed in Section 3.13(a)(iv) of the Seller
Disclosure Letter, there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of the
parcel of real property;
(v) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or
interest therein; and
(vi) there are no parties (other than the Sellers) in possession
of the parcel of real property, other than tenants under any leases
disclosed in Section 3.13(a)(iv) of the Seller Disclosure Letter who
are in possession of space to which they are entitled.
(b) Section 3.13(b) of the Seller Disclosure Letter lists and
describes briefly all real property leased or subleased to any of the
Sellers, including the date of and parties to each real property lease, the
date of and parties to each amendment, modification and supplement thereto,
the term and renewal terms (whether or not exercised) thereof and a brief
description of the leased real property covered thereby. The Sellers have
delivered to the Purchaser true, correct, and complete copies of the leases
and subleases listed in Section 3.13(b) of the Seller Disclosure Letter (as
amended to date). With respect to each lease and sublease listed in Section
3.13(b) of the Seller Disclosure Letter, other than those that expire by
their terms prior to Closing or are not Assumed Contracts being assumed by
Purchaser and except to the extent excused by or unenforceable as a result
of the commencement or
<PAGE>
19
pendency of the Chapter 11 Case or the application of any provision of the
Bankruptcy Code (but only to the extent such excuse, lack of enforceability
or application of law will continue to apply in favor of Purchaser and its
successors and assigns following Closing), the lease or sublease is in full
force and effect, and no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination, modification or
acceleration thereunder.
(c) Sellers shall file, and provide Purchaser with copies of, any
and all real property transfer tax returns and other similar filings
required by law in connection with the Contemplated Transactions and
relating to the real property, any part thereof or ownership interest
therein, all duly and properly executed and acknowledged by Sellers.
(d) Each Seller other than GST shall provide Purchaser with an
affidavit of an officer of each Seller, sworn to under penalty of perjury,
setting forth each Seller's name, address and Federal tax identification
number and stating that the Seller is not a "foreign person" within the
meaning of Section 1445 of the Code. If, on or before the Closing Date,
Purchaser shall not have received such affidavit, Purchaser may withhold
from the cash payments to Sellers at Closing such sums as are required to
be withheld therefrom under Section 1445 of the Code.
SECTION 3.14. Title to and Use of Property. (a) At the Closing,
the Purchaser will acquire all of each Seller's right, title and interest
in, to and under all of the Assets, in each case free and clear of any and
all Encumbrances (including, without limitation, any and all claims that
may arise by reason of the execution, delivery or performance by the
Sellers of this Agreement) other than Permitted Encumbrances and with
respect to Assumed Contracts, subject to the Purchaser's obligations under
Section 1.3(a)(ii);
(b) Except for any assets that are Excluded Assets, the Assets
include, without limitation, all real property interests and related rights
and interests and all personal property of the Sellers, both tangible and
intangible, materially necessary to conduct the Business as it is currently
conducted by the Sellers and/or any of their subsidiaries, to provide all
services currently provided by the Sellers and/or any of their
subsidiaries, and none of such Assets are owned by any subsidiaries of GST
other than the Sellers. All of the Excluded Assets located outside of
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20
the United States are of de minimus value and are not material to the
conduct of the Business.
(c) Except as disclosed in Section 3.3 of the Seller Disclosure
Letter, the Sellers have all Permits that are material to the conduct of
the Business. All such Permits are listed on Section 3.14(c) of the Seller
Disclosure Letter and are in full force and effect. Except as set forth on
Section 3.14(c) of the Seller Disclosure Letter, no material violations are
or have been committed in respect of any material Permit and no proceeding
is pending or, to the best knowledge of any of the Sellers, threatened to
revoke or limit any material Permit.
SECTION 3.15. Non-Competition Agreements. Except as set forth in
Section 3.15 of the Seller Disclosure Letter, no Seller, nor any officer,
director, or key employee of any Seller, is a party to any agreement that
purports to restrict or prohibit such Person, directly or indirectly, from
engaging in the Business or any business involving telecommunications or
any other business currently engaged in by the Sellers, or to the knowledge
of the Sellers, by the Purchaser or any corporations affiliated with the
Purchaser. Except as set forth in Section 3.15 of the Seller Disclosure
Letter, no officer, director, or key employee of a Seller is a party to any
agreement, which, by virtue of such person's relationship with such Seller,
restricts such Seller from, directly or indirectly, engaging in any of the
business described above.
SECTION 3.16. Brokers. Except as contemplated by Section 3.16 of
the Seller Disclosure Letter and other than the HLHZ Payment Obligation, no
person is entitled to any brokerage, financial advisory, finder's, or
similar fee or commission payable by any Seller in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of such Seller.
SECTION 3.17. Contracts. Section 3.17 of the Seller Disclosure
Letter contains a complete and accurate list of all contracts or series of
contracts ("Covered Contracts") with a common third party that involve
payments by the Sellers in excess of (i) $1,000,000 in the past 12 months
or (ii) $3,000,000 to date. True and complete copies of each such written
Covered Contract (or written summaries of the terms of any such oral
Covered Contract or any oral modification of a written Covered Contract),
including any stipulations relating to such Covered Contract, have been
heretofore made available to the Purchaser. As of the date of this
Agreement, no Seller has received written notice, nor does it otherwise
have knowledge, that any party to any
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21
contracts, arrangements or understanding (or series of related contracts,
arrangements or understandings) of any of the Sellers ("Contracts"), other
than Contracts that are Excluded Assets, involving payments or other
consideration in excess of (i) $1,000,000 in any 12 month period or (ii)
$3,000,000 over the life of the Contract intends to cancel, terminate or
refuse to renew such Contract or to exercise or decline to exercise any
option or right thereunder and each such Contract is valid and binding upon
such parties in accordance with its terms, except (x) as set forth in
Section 3.17 of the Seller Disclosure Letter, (y) to the extent excused by
or unenforceable as a result of the commencement or pendency of the Chapter
11 Case or the application of any provision of the Bankruptcy Code (but
only to the extent such excuse, lack of enforceability or application of
law will continue to apply in favor of Purchaser and its successors and
assigns following Closing) and (z) to the extent that the failure of such
Contracts to be valid and binding would not have a Seller Material Adverse
Effect.
SECTION 3.18. Intellectual Property. (a) "Intellectual Property"
shall mean all of the following as they exist in all jurisdictions
throughout the world, in each case, to the extent used in the conduct of
the Business and owned by, licensed to, or otherwise used by the Sellers:
(i) patents, patent applications, and other patent rights
(including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued
on any such applications and whether or not any such applications are
modified, withdrawn, or resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration
thereof;
(iii) copyright registrations and applications for registration
thereof and non-registered copyrights;
(iv) trade secrets, designs, research, processes, procedures,
techniques, methods, know-how, data, mask works, inventions, and other
proprietary rights (whether or not patentable or subject to copyright,
mask work, or trade secret protection); and
(v) computer software programs, including, without limitation,
all source codes, object codes, and
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22
material documentation related thereto (the "Software").
(b) Intellectual Property Disclosure. Section 3.18(b) of the
Seller Disclosure Letter sets forth all United States and foreign patents
and patent applications, trademark and service mark registrations and
applications, and copyright registrations and applications owned or
licensed by any Seller, specifying as to each owned item, as applicable:
(i) the nature of the item, including the title; (ii) the owner of the
item; (iii) the jurisdictions in which the item is issued or registered or
in which an application for issuance or registration has been filed; and
(iv) the issuance, registration, or application numbers and dates.
(c) Ownership. Except as would not reasonably be expected to,
individually or in the aggregate, result in a Seller Material Adverse
Effect, each Seller will own or have the right to use as of the Closing
Date and transfer to the Purchaser, free and clear of any and all
Encumbrances, and as of the Closing Date will have the unrestricted right
to use, sell, or license, all Intellectual Property used in the conduct of
the Business.
(d) Claims. Except as would not reasonably be expected to,
individually or in the aggregate, result in a Seller Material Adverse
Effect, no Seller has been, during the three (3) years preceding the date
hereof, a party to any claim or action, nor, to the knowledge of any
Seller, is any claim or action threatened that challenges the validity,
enforceability, ownership, or right to use, sell, or license any
Intellectual Property. Except as would not reasonably be expected to,
individually or in the aggregate, result in a Seller Material Adverse
Effect, to the knowledge of any Seller, no third party is infringing upon
any Intellectual Property.
(e) Administration and Enforcement. Except as would not
reasonably be expected to, individually or in the aggregate, result in a
Seller Material Adverse Effect, the Sellers have taken all necessary and
desirable action to maintain and protect each item of Intellectual Property
owned by the Sellers.
(f) Software. All Software used in the Business is described in
Section 3.18(f) of the Seller Disclosure Letter. Such Software is held by
the Sellers legitimately, is fully and freely transferable to the Purchaser
without any third party consent (except as set forth in Section 3.18(f) of
the Seller Disclosure Letter), and to the
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23
knowledge of any Seller is free from any significant software defect,
performs in conformance with its documentation, and does not contain any
bugs or viruses or any code or mechanism that may be reasonably likely to
materially interfere with the operation of such Software.
SECTION 3.19. Network Facilities. (a) Section 3.19(a) of the
Seller Disclosure Letter describes Sellers' longhaul fiber network and each
longhaul segment therein, setting forth, for each longhaul segment, the
number of route miles in the segment and the number of fibers and fiber
miles available to Sellers; the number of fibers on each route provided by
Sellers to third parties through indefeasible right to use ("IRU") or lease
agreements; and the number of fibers on each route provided by third
parties to Sellers through IRU or lease agreements. Fibers that are
"available" to Sellers on Section 3.19(a) of the Seller Disclosure Letter
encompasses both fibers that are currently equipped for the transmission of
telecommunications services and those that are not yet so equipped (i.e.,
both "lit" and "dark" fiber).
(b) Section 3.19(b) of the Seller Disclosure Letter describes
accurately Sellers' metropolitan area fiber networks, organized by each
metropolitan area, and setting forth, for each metropolitan area, the
number of lit and dark fibers owned by Sellers or used by Sellers pursuant
to lease or IRU agreements; the number of associated route and fiber miles
and number of lit and dark fibers owned by Sellers; and the number of lit
and dark fibers in each metropolitan area provided by Sellers to third
parties pursuant to lease or IRU agreements.
(c) Section 3.19(c) of the Seller Disclosure Letter describes the
conduit (both completed and under construction) that is either available to
Sellers (meaning that it is available for Sellers' own use or provision by
Sellers to third parties) or is being provided by Sellers to third parties
(or will be provided upon completion) pursuant to IRU agreements, plus the
minimum conduit size and the approximate route miles, with such conduits
organized by route segment.
(d) Except to the extent that they can access the Sellers'
Customer Base directly through the facilities scheduled in Sections 3.19(a)
and 3.19(b) of the Seller Disclosure Letter, the Sellers have all rights
necessary to offer telecommunication services to the Sellers' Customer Base
on a resale or other basis ("Customer Access Rights") from each incumbent
local exchange carrier. Section 3.19(d)
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24
of the Seller Disclosure Letter sets forth all of the Customer Access
Rights, organized by state.
(e) All of the facilities listed in Sections 3.19(a) through (c)
of the Seller Disclosure Letter that the Sellers represent are owned, or
subject to an IRU or other agreement in favor of Sellers as of or after the
date of this Agreement or other agreement transferring to each such Seller
such facility, shall be known as the "Network Facilities."
(f) The Sellers have good and marketable title to all of the
material Network Facilities that they own pursuant to Sections 3.19(a)
through (c) of the Seller Disclosure Letter. Each of the Network Facilities
owned by the Sellers: (i) is located on property having good and marketable
title or is operating with valid rights of way; (ii) is free and clear of
any Encumbrance except for Permitted Encumbrances; (iii) is not subject to
any pending lawsuits or administrative actions relating to any such
property or right of way; (iv) except as described in Section 3.3 of the
Seller Disclosure Letter, has received all approvals of governmental
authorities (including franchises, licenses and permits) required in
connection with the ownership or operation thereof and has been operated
and maintained in accordance with applicable laws, rules and regulations;
and (v) is not subject to any lease, sublease, license, concession, or
other agreement, written or oral, granting to any party or parties the
right of use or occupancy of any portion of any property or right of way.
(g) Except to the extent excused by or unenforceable as a result
of the commencement or pendency of the Chapter 11 Case or the application
of any provision of the Bankruptcy Code (but only to the extent such
excuse, lack of enforceability or application of law will continue to apply
in favor of Purchaser and its successors and assigns following Closing),
each IRU or other agreement permitting a Seller to use Network Facilities
is legal, valid and binding on the parties thereto, permits (or, as
applicable, will permit) each Seller to use the applicable Network
Facilities listed in Sections 3.19(a) through (c) of the Seller Disclosure
Letter, and is enforceable in accordance with its terms. Each Seller has an
IRU or other agreement permitting it to use all of the Network Facilities
that it does not own. Any third party from whom Seller has purchased or
acquired possession of, Network Facilities, has been and is in material
compliance with, and the conduct of its businesses have been and are in
material compliance with, any applicable state or local regulations, and
any such third party has filed all material registrations and
<PAGE>
25
reports and paid all required fees, including any renewal applications,
required by any applicable state or local regulations.
SECTION 3.20. Tangible Property. The furnishings, furniture,
fixtures, office supplies, vehicles, equipment, computers, real property,
and other tangible property material to the Business (the "Tangible
Property") are in good operating condition and repair, subject to continued
repair and replacement in accordance with past practice, and are suitable
for their intended use. During the past 12 months there has not been any
significant interruption of the operations of the Business due to
inadequate maintenance of the Tangible Property.
SECTION 3.21. Board Approval and Recommendation. The Boards of
Directors of the Sellers have determined that an immediate sale and
assignment of the Assets pursuant to this Agreement under sections 105, 363
and 365 of the Bankruptcy Code is in the best interests of the Sellers
("Sellers' Boards Determination").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as otherwise disclosed to the Sellers in a schedule
annexed hereto (which schedule contains appropriate references to identify
the representations and warranties herein to which the information in such
schedule relates) (the "Purchaser Disclosure Letter"), the Purchaser
represents and warrants to the Sellers as follows:
SECTION 4.01. Organization. The Purchaser is a corporation
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
SECTION 4.02. Authority Relative to This Agreement. The Purchaser
has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery, and
performance of this Agreement by the Purchaser and the consummation by the
Purchaser of the transactions contemplated hereby have been duly authorized
by all requisite corporate actions. This Agreement has been duly and
validly executed and delivered by the Purchaser and (assuming this
Agreement constitutes a valid and binding obligation of the Sellers)
constitutes a valid and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to
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applicable bankruptcy, reorganization, insolvency, moratorium, and other
laws affecting creditors' rights generally from time to time in effect and
to general equitable principles.
SECTION 4.03. No Violations. Neither the execution, delivery, or
performance of this Agreement by the Purchaser, nor the consummation by the
Purchaser of the transactions contemplated hereby, nor compliance by the
Purchaser with any of the provisions hereof, will (a) except for the
Governmental Requirements, require the Purchaser to obtain any consent,
approval or action of, or make any filing with or give notice to, any
governmental or regulatory body or any other Person, (b) conflict with or
result in any breach of any provisions of the certificate of incorporation
or bylaws of the Purchaser, (c) result in a violation or breach of, or
constitute (with or without due notice or lapse of time) a default (or give
rise to any right of termination, cancellation, acceleration, vesting,
payment, exercise, suspension, or revocation) under any of the terms,
conditions, or provisions of any note, bond, mortgage, deed of trust,
security interest, indenture, license, contract agreement, plan, or other
instrument or obligation to which the Purchaser is a party or by which the
Purchaser or the Purchaser's properties or assets may be bound or affected,
(d) violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to the Purchaser or the Purchaser's properties or
assets, or (e) result in the creation or imposition of any Encumbrance on
any asset of the Purchaser, except in the case of clauses (c), (d), and
(e), for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions, or revocations that
would individually or in the aggregate not have a material adverse effect
on the assets, condition (financial or otherwise) or operations of the
Purchaser (a "Purchaser Material Adverse Effect") and except as set forth
in Section 4.3 of the Purchaser Disclosure Letter.
SECTION 4.04. Consents and Approvals. Except for Governmental
Requirements, no consent, approval, or authorization of, or declaration,
filing, or registration with, any United States federal or state government
or regulatory authority is required to be made or obtained by the Purchaser
in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 4.05. Brokers. Other than Donaldson, Lufkin & Jenrette
and the HLHZ Payment Obligation, no Person is entitled to any brokerage,
financial advisory, finder's
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27
or similar fee or commission payable by the Purchaser in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
SECTION 4.06. Financing. The Purchaser represents that as of the
date hereof it has, and on the Closing Date it will have, access to
sufficient funds to deliver the Purchase Price to the Sellers.
SECTION 4.07. Investment Experience. The Purchaser acknowledges
that it is able to fend for itself, can bear the risks associated with the
Assets and Assumed Liabilities hereunder and is a sophisticated investor
capable of evaluating the merits and risks of the Contemplated
Transactions.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business by the Sellers Pending the
Closing. Subject to any obligations as a debtor in possession under the
Bankruptcy Code, prior to the Closing Date, each of the Sellers shall use
all commercially reasonable efforts to conduct its businesses in the
ordinary course consistent with past practice taking into account the
filing of the Petitions, including, without limitation, meeting its
post-Petition obligations as they become due. Prior to the Closing Date,
each of the Sellers shall also use all commercially reasonable efforts to
preserve intact its business organizations and relationships with third
parties (other than in respect of contracts that expire by their terms
prior to Closing) and to keep available the services of its present
officers and key employees, subject to the terms of this Agreement;
provided, that the foregoing shall not prevent Sellers from rejecting
contracts that are not Assumed Contracts being assumed by Purchaser
hereunder, so long as such rejection will not interrupt any significant
functions of the Business prior to Closing or otherwise prevent an orderly
transfer of the Business to Purchaser. Without limiting the generality of
the foregoing, and except with respect to immaterial delays, each Seller
shall pay when due its obligations to vendors as permitted by the
Bankruptcy Code. Except as otherwise contemplated under this Agreement or
ordered by the Bankruptcy Court, from the date hereof until the Closing
Date, without the prior written consent of the Purchaser, which consent
will not be unreasonably withheld or delayed:
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(a) no Seller shall adopt or propose any change in its
certificate of incorporation or bylaws, except a change that would not
have any adverse effect on the Contemplated Transactions;
(b) no Seller shall declare, set aside, or pay any dividend or
other distribution with respect to any shares of its capital stock, or
split, combine, or reclassify any of its capital stock, or repurchase,
redeem, or otherwise acquire any shares of its capital stock;
(c) other than as a result of asset transfers solely among or
between the Sellers, no Seller shall merge or consolidate with any
other Person or acquire a material amount of assets of any other
Person;
(d) no Seller shall lease, license, or otherwise surrender,
relinquish, encumber, or dispose of any Assets other than the
disposition of obsolete or damaged immaterial Assets in the ordinary
course of its business (it being expressly understood that, without
limiting the foregoing, except as described in Section 5.1(d) of the
Seller Disclosure Letter, no Seller shall grant any IRU, sell fiber or
conduit or change the terms of any existing IRU, swap or joint
construction agreement, absent Purchaser's prior written consent);
(e) no Seller shall change any method of accounting or accounting
practice used by it, except for any change required by GAAP;
(f) no Seller shall establish or increase the benefits under, or
promise to establish, modify or increase the benefits under, any
agreement, plan or policy relating to employees or employment matters,
including but not limited to any Seller Plan or any consulting,
severance, change in control or similar agreements, or otherwise
increase the compensation payable to any directors, officers, or
employees of such Seller, or establish, adopt or enter into any
collective bargaining agreement, except (i) in accordance with
existing plans and agreements or consistent with past practice, (ii)
for benefits and compensation payable to any directors, officers, or
employees of such Seller established, modified or increased after
commencement of the Chapter 11 Case in order to retain such directors,
officers, or employees through the pendency of the Chapter 11 Case and
(iii) as set forth in Section 5.1(f) of the Seller Disclosure Letter;
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29
(g) with respect to Contracts which are Assets, no Seller shall
abandon its rights or fail to timely perform its obligations in
respect of its existing IRU, swap or joint construction
agreements or any other arrangements relating to its network
builds;
(h) no Seller shall make a Material Decision except as set forth in
Section 5.1(h) of the Seller Disclosure Letter;
(i) no Seller shall agree or commit to do any of the foregoing; and
(j) except to the extent necessary to comply with the requirements of
applicable laws, regulations or Bankruptcy Court orders, no
Seller shall (i) take, agree, or commit to take, any action that
would make any representation or warranty of the Sellers
hereunder materially inaccurate in any respect at, or as of any
time prior to, the Closing Date, (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such
representation or warranty from being materially inaccurate in
any respect on the Closing Date, or (iii) take, agree, or commit
to take, any action that would result in, or is reasonably likely
to result in, any of the conditions set forth in Article VII not
being satisfied.
SECTION 5.02. Access and Information. Each of the Sellers shall
afford to the Purchaser and to the Purchaser's financial advisors, legal
counsel, accountants, consultants, financing sources, and other authorized
representatives access during normal business hours and without material
disruption to the Business throughout the period prior to the Closing Date
to all its books, documents, records, properties, plants, and personnel
that relate to the Business and, during such period, shall furnish as
promptly as practicable to the Purchaser (a) a copy of each report,
schedule, and other document filed or received by them pursuant to the
requirements of federal or state securities laws and (b) all other
information as the Purchaser reasonably may request in furtherance of the
Contemplated Transactions; no investigation pursuant to this Section 5.2
shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Contemplated Transactions. Without limiting the foregoing, (i) Purchaser
and its representatives shall be given such access in order to conduct
interviews, assessments, studies and procedures (including, without
limitation, sampling) which Purchaser determines is reasonably necessary to
confirm that it will
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30
not incur any liabilities, costs or expenses under Environmental Laws as a
result of its ownership of the Assets or operation of the Business; and
(ii) Purchaser shall have a right to designate any of Purchaser's employees
and representatives as a transition team which may work from Sellers'
premises in order to facilitate the orderly transfer of the Business to
Purchaser in accordance with the terms of this Agreement. Such transition
team shall be given full access to Sellers' management and other employees,
including through attendance by such management and employees at meetings
with the transition team at Purchaser's headquarters (provided that such
attendance does not require more than reasonable travel expenses and does
not unreasonably interfere with the operation of the Business). Sellers
shall, and shall cause their auditors to, provide all information regarding
the Business being purchased hereunder that is required to be included in
Purchaser's filings with the SEC in connection with the Contemplated
Transactions, including by providing relevant financial statements and work
papers.
SECTION 5.03. Cure of Defaults. Subject to the prior approval of
the Bankruptcy Court and to the reduction in Purchase Price contemplated by
Section 8.4(d), the Purchaser shall, on or prior to the Closing, cure or
provide the Sellers with the means necessary to cure any and all monetary
defaults and breaches under and satisfy (or, with respect to any Assumed
Liability or obligation that cannot be rendered non-contingent and
liquidated prior to the Closing Date, make effective provision reasonably
satisfactory to the Bankruptcy Court for satisfaction from funds of the
Purchaser) any Assumed Liability or obligation that must be so satisfied so
that such Assumed Contracts may be assumed by the Sellers and assigned to
the Purchaser in accordance with the provisions of Section 365 of the
Bankruptcy Code and this Agreement (including, without limitation, Section
1.3). Purchaser and each Seller agree that each of them will promptly take
such actions as are reasonably necessary to obtain the Sale Order.
SECTION 5.04. Surveys. The Sellers will provide Purchaser full
and adequate legal descriptions of each parcel of real property listed on
Section 3.13(a) of the Seller Disclosure Letter within thirty (30) days
following the date hereof. The Purchaser shall have the right to conduct
title searches and obtain title insurance policies on each parcel of
Sellers' owned real property and, at Purchaser's request and expense,
Sellers shall fully cooperate with the Purchaser in those efforts.
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31
SECTION 5.05. Filings; Other Action. Subject to the terms and
conditions herein provided, as promptly as practicable, the Sellers and the
Purchaser shall (a) promptly make all filings and submissions under the HSR
Act, (b) use all commercially reasonable efforts to cooperate with each
other in (i) determining which filings are required to be made prior to the
Closing Date with, and which material consents, approvals, permits, or
authorizations are required to be obtained prior to the Closing Date from,
governmental or regulatory authorities of the United States and the several
states or the District of Columbia, and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions, and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits, or authorizations,
and (c) use all commercially reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things
reasonably necessary or appropriate to consummate the Contemplated
Transactions, as soon as practicable. In connection with the foregoing, the
Sellers will promptly provide the Purchaser, and the Purchaser will
promptly provide the Sellers, with copies of all correspondence, filings,
or communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives, on the one hand, and any
governmental agency or authority or members of their respective staffs, on
the other hand, with respect to all filings and submissions required
hereunder. The parties acknowledge that certain actions may be necessary
with respect to the foregoing in making notifications and obtaining
clearances, consents, approvals, waivers, or similar third party actions
that are material to the consummation of the Contemplated Transactions, and
each party agrees to take all commercially reasonable actions as are
necessary, to complete such notifications and obtain such clearances,
approvals, waivers, or third party actions, except if such consequence,
event, or occurrence would have a Purchaser Material Adverse Effect or a
Seller Material Adverse Effect, as the case may be.
SECTION 5.06. Communications Licenses. Each Seller shall use its
commercially reasonable efforts not, by any act or omission, to surrender,
or to permit an adverse modification of, forfeiture of, or failure to renew
under regular terms, any of the Communications Licenses, cause the FCC or
any other governmental authority to institute any proceeding for the
revocation, suspension, or modification of any such authorization, or to
fail to prosecute with due diligence any pending applications with respect
to Communications Licenses, including any renewals thereof.
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Each Seller shall make all filings and reports and pay all fees necessary
or reasonably appropriate for the continued operation of the Business, as
and when such approvals, consents, permits, licenses, filings, or reports
or other authorizations are necessary or appropriate.
SECTION 5.07. FCC Applications/State PUC Applications. (a) As
promptly as practicable, and in any event within 20 Business Days, after
the execution and delivery of this Agreement, the parties shall prepare all
appropriate applications for FCC approval, and such other documents as may
be required, with respect to the assignment of each of the Seller's FCC
Licenses set forth in Section 3.10(a) of the Seller Disclosure Letter to
the Purchaser (collectively, the "FCC Applications"). As soon as
practicable after the execution and delivery of this Agreement, the parties
shall file, or cause to be filed, the FCC Applications. If the Closing
shall not have occurred for any reason within any applicable initial
consummation period relating to the FCC's grant of the FCC Applications,
and neither the Sellers nor the Purchaser shall have terminated this
Agreement pursuant to Sections 8.1, 8.2, 8.3 or 8.4, the Purchaser and the
Sellers shall jointly request one or more extensions of the consummation
period of such grant.
(b) The Purchaser and the Sellers shall cooperate to determine a
plan to expeditiously obtain applicable governmental approvals, clearances,
consents and authorizations necessary to effectuate the Contemplated
Transactions. Subject to the determination of such plan, as promptly as
practicable, and in any event within 20 Business Days, after the execution
and delivery of this Agreement, the parties shall prepare all required
applications for approval by State PUCs, and such other documents as may be
required, with respect to the assignment of such Seller's State PUC
Licenses and Customer Base (as defined herein) set forth in Section 3.10(a)
of the Seller Disclosure Letter (collectively, the "State PUC
Applications"). As soon as practicable after the execution and delivery of
this Agreement, the parties shall file, or cause to be filed, the State PUC
Applications. If the Closing shall not have occurred for any reason within
any applicable consummation period relating to any State PUC's grant of any
State PUC Application, and neither the Purchaser nor any of the Sellers
shall have terminated this Agreement pursuant to Sections 8.1, 8.2, 8.3 or
8.4, the Purchaser and the Sellers shall jointly request one or more
extensions of the consummation period of such grant.
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33
(c) Each of the Purchaser and the Sellers shall bear its own
expenses in connection with the preparation and prosecution of the FCC
Applications and the State PUC Applications. The Purchaser and the Sellers
shall each use their commercially reasonable efforts to prosecute the FCC
Applications and the State PUC Applications in good faith and with due
diligence before the FCC and the State PUCs and in connection therewith
shall take such action or actions as may be necessary or reasonably
required in connection with the FCC Applications and the State PUC
Applications, including furnishing to the FCC and the State PUCs any
documents, materials, or other information requested by the FCC and the
State PUCs in order to obtain such approvals as expeditiously as
practicable and, in the case of the Sellers, notifying the Purchaser of any
material adverse events with respect to any of the Communications Licenses,
any of the Sellers' Customer Base, or any of the FCC Applications or State
PUC Applications. No party hereto shall knowingly take, or fail to take,
any action if the intent or reasonably anticipated consequence of such
action or failure to act is, or would be, to cause the FCC, any State PUC,
or other regulatory authority not to grant approval of any FCC Application
or of any State PUC Application or materially delay either such approval or
the consummation of the assignment of Communications Licenses and Customer
Base of the Sellers.
SECTION 5.08. Public Announcements. The Purchaser, on the one
hand, and the Sellers, on the other hand, agree that they will not issue
any press release or respond in writing to any press inquiry with respect
to this Agreement or the transactions contemplated hereby without the prior
approval of the other parties (which approval will not be unreasonably
withheld), except as may be required by applicable law, the Bankruptcy
Court or any requirement of any stock exchange or inter-dealer quotation
system on which the stock of either party is listed or quoted.
SECTION 5.09. Bankruptcy Actions. Within three (3) Business Days
following the date of this Agreement, the Sellers will file with the
Bankruptcy Court a copy of this Agreement and a form of Sale Order, in form
and substance reasonably satisfactory to the Purchaser, seeking the
Bankruptcy Court's approval of this Agreement, the Sellers' performance
under this Agreement, and the assumption and assignment of the Assumed
Contracts. The Sellers and the Purchaser shall use their commercially
reasonable efforts to obtain entry of the Sale Order.
SECTION 5.10. Tax Returns and Filings; Payment of Taxes. Each
Seller (or GST on its behalf) shall prepare all
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34
of its Tax Returns for all periods and shall be responsible for paying all
of its Taxes for all periods (or portions thereof) ending on or prior to
the Closing Date. At Closing, the Sellers shall provide Purchaser with tax
clearance certificates (to the extent available) or other reasonable
assurances of Sellers' payment of any and all accrued but unpaid sales,
use, value-added, property or other similar state or local taxes relating
to any such period, all in a form satisfactory to Purchaser, all as of the
latest practicable date prior to Closing (all such amounts, the "Unpaid Tax
Amounts"). Sellers' agreement to reduce the Purchase Price otherwise
payable hereunder by an amount equal to such Unpaid Tax Amounts shall be
considered reasonable assurance of payment for purposes of the foregoing.
SECTION 5.11. Sellers' Use of GST's Name. Each Seller covenants
that at the Closing, or as soon thereafter as is practicable (but in no
event later than the ninetieth day after the Closing Date), it will not use
any name, mark, logo, trade name, or trademark incorporating "GST
Telecommunications, Inc." or "GST" in any business activity except as is
necessary for the administration of the Chapter 11 Case and except in the
conduct or operation of any Excluded Assets.
SECTION 5.12. Tax Matters. The parties acknowledge that all
personal property transfer, documentary, sales, use, registration,
value-added and other similar Taxes (including interest, penalties and
additions to Tax) incurred in connection with the Contemplated Transactions
("Transfer Taxes") assessable in the United States are exempt pursuant to
Section 1146 of the Bankruptcy Code.
SECTION 5.13. Employment Matters. (a) Each of the Sellers shall
use their commercially reasonable efforts to retain all of the employees
engaged in the Business, and to maintain in good standing through the
Closing all relationships and agreements with employees, independent
contractors, or consultants necessary to the Business, in each case from
the date hereof through the Closing Date and to cooperate with the
Purchaser in hiring employees engaged in the Business who are offered
employment by the Purchaser; provided, that the foregoing shall not require
that any Seller offer any compensation or other incentives in addition to
the compensation and benefits being provided or required to be provided as
of the date of this Agreement.
(b) The Sellers will terminate all Purchaser Hires as of the
Closing Date. It is the intention of the
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35
Purchaser to hire some, and perhaps all, of the persons employed by Sellers
in the Business as of the Closing Date. Sellers agree that the Purchaser
retains sole and complete discretion with respect to which employees of
Sellers the Purchaser shall offer employment. From the date hereof through
the Closing, the Sellers shall permit the Purchaser to communicate in
writing with the Sellers' employees and consultants, at reasonable times
and upon reasonable notice, concerning the Purchaser's plans, operations,
business, customer relations, and general personnel matters and to
interview the Sellers' employees and consultants and review the personnel
records and such other information concerning the Sellers' employees and
consultants as the Purchaser may reasonably request (subject to obtaining
any legally required written permission of any affected employee or
consultant and to other applicable law). The Sellers shall be solely
responsible for any notification and liability under WARN relating to any
termination of any of Seller's employees occurring on or after the date of
this Agreement. Employees hired by the Purchaser effective on or after the
Closing Date shall be referred to herein as a "Purchaser Hire." The Sellers
shall indemnify and hold Purchaser harmless from any and all damages,
liabilities, claims or expenses incurred by the Purchaser as a result of
the failure of the Sellers to comply with any of the requirements of WARN,
including applicable notice requirements. Sellers will provide Purchaser
with copies of all notices to be given to employees regarding the
Contemplated Transactions as promptly as practicable (and in the case of
notices required by WARN or other statutes, at least five (5) Business
Days) in advance of giving such notice to employees.
(c) Sellers will be responsible for all liabilities for employee
or agent compensation and benefits accrued or otherwise arising out of
services rendered prior to Closing or arising by reason of actual,
constructive or deemed termination at Closing. Without limitation of the
preceding sentence, on the Closing Date Sellers shall pay all of the
Purchaser Hires engaged in the Business the full amount, if any, to which
they may be entitled for any compensation or accrued benefits, including
but not limited to vacation, sick leave or other leave, accrued bonuses and
commissions, and for severance benefits. No accrued vacation, sick leave or
other leave shall carry over to any employment of such employees by
Purchaser.
(d) The Purchaser will recognize all years of service of the
Purchaser Hires with the Sellers for purposes of eligibility to participate
in and to vest under those employee benefit plans, within the meaning of
Section 3(3)
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36
of ERISA, of the Purchaser in which the Purchaser Hires are eligible to
participate in after the Closing Date. The Purchaser shall recognize all
years of service of the Purchaser Hires with the Seller for purposes of
vacation accrual under the Purchaser's vacation policies, subject to the
pro-rating schedules applicable to new employees of Purchaser as described
in Purchaser's "Paid Time Off" policy. The Purchaser shall cause all
pre-existing condition exclusions under any medical and dental plans made
available by the Purchaser to Purchaser Hires to be waived in respect of
such employees and dependents, but only to the extent Seller's medical and
dental plans recognize such Purchaser Hires and their dependents as having
satisfied any pre-existing conditions exclusion under Seller's medical and
dental plans. The Purchaser shall take commercially reasonable efforts to
ensure that the medical and dental plans made available by Purchaser to
Purchaser Hires credit such Purchaser Hires' and their dependents with the
amount of deductibles satisfied under the Sellers' medical and dental plans
in the same plan year.
(e) The Purchaser shall be responsible for providing continuation
coverage as required by COBRA, under a group health plan maintained by the
Purchaser, to those employees of the Sellers engaged in the Business and
other qualified beneficiaries under COBRA with respect to such employees,
who have a COBRA qualifying event (due to termination of employment with
the Sellers or otherwise) prior to or in connection with the transactions
contemplated by this Agreement (the "Continuees"). The Purchaser shall
indemnify and hold Seller harmless from any and all damages, liabilities,
claims or expenses incurred by the Seller as a result of the failure of the
Purchaser to comply with any of the requirements of COBRA, including
applicable notice requirements.
(f) No provision of this Section 5.13 shall create any third
party beneficiary or other rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Seller or of any of
its subsidiaries in respect of continued employment (or resumed employment)
with either the Business, the Purchaser any of its Affiliates and no
provision of this Section 5.13 shall create any such rights in any such
Persons in respect of any benefits that may be provided, directly or
indirectly, under any of Seller's Plans or any plan or arrangement which
may be established by the Purchaser or any of its Affiliates. No provision
of this Agreement shall constitute a limitation on rights to amend, modify
or terminate after the Closing Date any such plans or arrangements of the
Purchaser or any of its Affiliates.
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(g) Purchaser shall assume all responsibilities and take all
action necessary to obtain any required H-1 Visas for any Purchaser Hires.
SECTION 5.14. Additional Matters. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper, or advisable
under applicable laws and regulations to consummate and make effective the
Contemplated Transactions, including using all commercially reasonable
efforts to obtain all necessary waivers, consents, and approvals in
connection with the Governmental Requirements and to effect all necessary
registrations and filings and to obtain all Required Contractual Consents.
SECTION 5.15. Hawaii Assets. Sellers shall use commercially
reasonable efforts to obtain all third party consents, if any, that may be
required from AT&T, GTE or any other party in order to convey the Hawaii
Assets to the Purchaser. At Sellers' request, the Purchaser shall use
commercially reasonable efforts to assist Sellers in these efforts.
Sellers' ability to convey the Hawaii Assets to the Purchaser shall not be
a condition precedent to the obligation of Purchaser under Section 7.3 to
effect the Contemplated Transactions, but if Sellers are unable to convey
all Hawaii Assets to the Purchaser at Closing in accordance herewith,
either by obtaining any necessary consents or pursuant to an order of the
Bankruptcy Court, the Purchase Price otherwise payable hereunder shall be
reduced by $30,000,000
ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
SECTION 6.01. Further Assurances. In addition to the provisions
of this Agreement, from time to time after the Closing Date, the Sellers
and the Purchaser will use all commercially reasonable efforts to execute
and deliver such other instruments of conveyance, transfer, or assumption,
as the case may be, and take such other action as may be reasonably
requested to implement more effectively the conveyance and transfer of the
Assets to the Purchaser and the assumption of the Assumed Liabilities by
the Purchaser.
SECTION 6.02. Books and Records; Personnel. For a period ending
upon the earlier of (i) the seventh (7th) anniversary of the Closing Date
(or such later date as may
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38
be required by any governmental or regulatory body or authority or ongoing
Legal Proceeding) and (ii) the closure of the Chapter 11 Case:
(a) Unless the Purchaser shall first give 60 days prior written
notice to Sellers, the Purchaser shall not dispose of or destroy any of the
business records and files of the Business other than in connection with a
sale or other disposition of the Business or any portion thereof. If the
Purchaser wishes to dispose of or destroy such records and files after that
time, it shall first give sixty (60) days prior written notice to the
Sellers and the Sellers shall have the right, at their option and expense,
upon prior written notice to the Purchaser within such sixty-day period, to
take possession of the records and files within ninety (90) days after the
date of the notice from the Sellers. After that time, Purchaser may dispose
of or destroy any such records at its discretion.
(b) The Purchaser shall allow the Sellers and any of their
directors, officers, employees, legal counsel, financial advisors,
representatives, accountants, and auditors (collectively, "Sellers
Representatives") access to all business records and files of the Sellers
or the Businesses that are transferred to the Purchaser in connection
herewith, that are reasonably required by such Seller Representative in the
administration of the Chapter 11 Case anticipation of, or preparation for,
any existing or future Legal Proceeding involving a Seller, Tax Return
preparation, litigation, or Excluded Liability, during regular business
hours and upon reasonable notice at the Purchaser's principal place of
business or at any location where such records are stored, and the Sellers
Representatives shall have the right to make copies of any such records and
files; provided, however, that any such access or copying shall be had or
done in such a manner so as not to interfere with the normal conduct of the
Purchaser's business or operations.
(c) For a period not to exceed eighteen months, the Purchaser
shall provide the Sellers Representatives with office space at the place of
business where the business records relating to the Assets are retained
from which to conduct and conclude the Chapter 11 Case, together with
access to telephone, telefax, copy and similar office equipment; provided,
that the provision of such space and equipment shall not interfere with the
normal conduct of the Purchaser's business or operations and that the cost
of such provisions are de minimus, as determined by Purchaser in good
faith.
<PAGE>
39
SECTION 6.03. Third Party Rights. No provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of a Seller or any other persons or entities (including any
beneficiary or dependent thereof), in respect of continued employment (or
resumed employment) for any specified period of any nature or kind
whatsoever, and no provision of this Agreement shall create such third
party beneficiary rights in any such persons or entities in respect of any
benefits that may be provided, directly or indirectly, under any Seller
Plan.
SECTION 6.04. Employee Withholding. The Sellers agree that,
pursuant to the "Alternative Procedure" provided in Section 5 of Revenue
Procedure 96-60, 1996-2 C.B. 399, with respect to filing and furnishing IRS
Forms W-2, W-3, W- 4, W-5, and 941, (a) the Sellers shall report on a
"predecessor-successor" basis, as set forth therein, (b) the Sellers shall
be relieved from furnishing Forms W-2 to any of the Purchaser Hires, and
(c) the Purchaser shall assume the obligations of the Sellers to furnish
such Forms W-2 to any such Purchaser Hires for the year in which the
Closing occurs; provided, that, in each case Sellers shall fully cooperate
with Purchaser in such transition procedures by supplying Purchaser with
all relevant wage and withholding information in respect of periods prior
to Closing on a timely basis.
SECTION 6.05. Continued Cooperation. If the Closing occurs at a
time when not all Regulatory Approvals have been obtained, the parties
shall (i) continue to abide by their obligations hereunder to obtain all
Regulatory Approvals, and (ii) cooperate in continuing to operate the
Business, to the extent commercially practicable, in the ordinary course in
those states with respect to which Regulatory Approvals have not been
obtained, with the Purchaser receiving the economic benefits of such
operation.
SECTION 6.06. Transitional Services. The parties (including
Sellers' successors) shall negotiate in good faith transitional services
agreements providing the Sellers (including Sellers' successors) with
access to certain services and facilities of the Business following Closing
(for a period not exceeding 180 days except as provided below) in support
of the Excluded Assets in return for which the Purchaser shall receive fair
compensation (which is expected to include a mark-up above actual costs).
The parties expect that such agreement(s) will cover services such as
billing (training and system support), network alarm monitoring, CARE
account record exchange support, customer service, various types of
technical training, application and database support, switch
<PAGE>
40
translation, sharing of network access (with respect to Hawaii,
facilitating access by the Hawaii Owners to the landing sites for the
Hawaii inter-island fiber network in the event that they cannot obtain that
access directly through AT&T or GTE), network capacity to service the
portion of Sellers' long distance resale business constituting Excluded
Assets and leased space and maintenance . Sellers or their successors may
extend the transitional services to they extent they support the
hospitality/operator services businesses and the services with respect to
access to the Hawaii landing sites for an additional 180 days at their
option, subject only to Purchaser's right to discontinue providing any
network or switch capacity after the initial 180-day period if Purchaser's
continued provision of those services to Sellers or their successors would
result in capacity constraints that would adversely affect Purchaser's
sales of services to its customers.
SECTION 6.07. Undisclosed Contracts. Notwithstanding anything
Section 1.2(b) hereof, if after Closing, the Purchaser discovers any
executory contract of any of the Sellers that was not included in the list
of executory contracts disclosed to Purchaser and filed with the Bankruptcy
Court prior to Closing then, at the Purchaser's request, Sellers shall take
such steps as are necessary to cause such contract to be assumed by, and
assigned to, the Purchaser, with any cure costs associated therewith to be
borne by Sellers.
SECTION 6.08. Maintenance of Cable Sheath. Purchaser will assume
GST's maintenance contract with Tyco (or enter into a new contract with
Tyco or other qualified party) for maintenance of the cables included in
the cable sheath described in Section 1.1(p). The Purchaser's obligation to
provide such maintenance for cables it does not own is subject to Sellers
(and each of successors or assigns of the cables included in such sheath
that constitute Excluded Assets, referred to herein as "Hawaii Owners")
sharing the cost of such maintenance contract with Purchaser on a per-fiber
basis.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions Precedent to Obligations of the Sellers
and the Purchaser. The respective obligations of each party to effect the
transactions contemplated by this Agreement shall be subject to the
<PAGE>
41
satisfaction at or prior to the Closing Date of the following conditions:
(a) any waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall
have expired or been terminated, and no action shall have been
instituted by the Department of Justice or the Federal Trade
Commission challenging or seeking to enjoin the consummation of the
transactions contemplated by this Agreement, which action shall not
have been withdrawn or terminated without requiring the Purchaser to
dispose of or divest any of its assets or businesses (including,
without limitation, any material Asset or Business following the
Closing), or discontinue or refrain from conducting any of its
operations or those acquired hereunder;
(b) no statute, rule, regulation, executive order, decree,
ruling, or preliminary or permanent injunction shall have been
enacted, entered, promulgated, or enforced by any federal or state
court or governmental authority that prohibits, restrains, enjoins, or
restricts the consummation of the transactions contemplated by this
Agreement that has not been withdrawn or terminated;
(c) no claim, action, suit, arbitration, inquiry, proceeding or
investigation (each, an "Action") shall have been commenced by or
before any United States federal, state, or local or any foreign
government, governmental, regulatory, or administrative authority,
agency, or commission or any court, tribunal or judicial or arbitral
body against the Purchaser or any Seller, seeking to restrain or
materially and adversely alter the transactions contemplated by this
Agreement; provided, however, that the provisions of this Section
7.1(c) shall not apply to any party that has directly or indirectly
solicited or encouraged any such Action; and
(d) all consents (including consents to assignments of permits
and rights of way), waivers, approvals, certificates, and other
authorizations required to be obtained from the FCC, including the FCC
Applications, or from any other governmental authority asserting
jurisdiction over the Purchaser, the Sellers or one of their
subsidiaries, including the State PUC Applications (collectively, the
"Regulatory Approvals") that are required in order to consummate the
Contemplated Transactions or to permit Purchaser to
<PAGE>
42
operate the Business as currently conducted or planned to be
conducted, shall have been obtained by a Final Order (or either (i)
waived in whole or in part in a writing executed by the parties
hereto, unless such a waiver is prohibited by law, or (ii) if
applicable, the Purchaser shall have received adequate assurances
satisfactory to it that all such approvals, clearances, consents, and
authorizations will be given) and all parties shall have complied with
the conditions, if any, imposed in connection with the grant of the
Regulatory Approvals (provided that the Purchaser shall not be
required to accept or comply with any condition that would be
unreasonably burdensome or that would have an adverse effect on it or
on the value of the relevant Asset(s) and shall not be obligated to
effect the Contemplated Transactions if such conditions are imposed).
Other than those which in the aggregate do not result in a Seller
Material Adverse Effect, all filings and notices required to be made
by the Sellers prior to the consummation of the Contemplated
Transactions shall have been made.
SECTION 7.02. Conditions Precedent to Obligation of the Sellers.
The obligation of the Sellers to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the
Closing Date of the following additional conditions:
(a) the Purchaser shall have performed in all material respects
its obligations under this Agreement required to be performed by it at
or prior to the Closing Date, the representations and warranties of
the Purchaser contained in this Agreement that are qualified with
respect to materiality (i.e., with respect to the occurrence or likely
occurrence of a Purchaser Material Adverse Effect or materiality)
shall be true and correct in all respects, and such representations
and warranties that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement
and as of the Closing Date as if made at and as of such dates, except
with respect to representations and warranties which speak as to an
earlier date, which shall be at and as of such dates, and the Sellers
shall have received a certificate signed by an officer of the
Purchaser as to the satisfaction of this condition; and
(b) the Sale Order shall have been entered by the Bankruptcy
Court in substantially the form contemplated by this Agreement (unless
the Sellers shall have agreed to modify such form) and shall not have
been reversed,
<PAGE>
43
stayed, modified, or amended in any manner materially adverse to the
Sellers and shall have become a Final Order.
SECTION 7.03. Conditions Precedent to Obligation of the
Purchaser. The obligation of the Purchaser to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or
prior to the Closing Date of the following additional conditions
(compliance with which or the occurrence of which may be waived in whole or
in part in a writing executed by the Purchaser, unless such a waiver is
prohibited by law):
(a) each Seller shall have performed in all material respects
their obligations under this Agreement required to be performed by
them at or prior to the Closing Date, the representations and
warranties of the Sellers contained in this Agreement that are
qualified with respect to materiality shall be true and correct in all
respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as if
made at and as of such dates, except with respect to representations
and warranties which speak as to an earlier date, which shall be at
and as of such date; and the Purchaser shall have received a
certificate signed by an officer of each of the Sellers as to the
satisfaction of this condition;
(b) the Sale Order shall have been entered by the Bankruptcy
Court in substantially the form contemplated by this Agreement and
shall not have been reversed, stayed, modified, or amended in any
manner materially adverse to the Purchaser;
(c) the Sellers shall have obtained the Required Contractual
Consents material to the Business;.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Closing Date by mutual written
agreement of the Purchaser and the Sellers.
SECTION 8.02. Termination by Either the Purchaser or the Sellers.
This Agreement may be terminated at any
<PAGE>
44
time prior to the Closing Date by either the Purchaser or the Sellers if
(a) a United States federal or state court of competent jurisdiction or
United States federal or state governmental regulatory or administrative
agency or commission shall have issued an order, decree, or ruling or taken
any other action permanently restraining, enjoining, or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement and either (i) thirty (30) days shall have elapsed from the
issuance of such order, decree, or ruling or other action and such order,
decree, or ruling or other action has not been removed or (ii) such order,
decree, ruling, or other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement pursuant to
this clause (ii) shall have used all reasonable efforts to remove such
injunction, order, or decree, or (b) the Closing Date shall not have
occurred on or before December 1, 2000; provided, however, that neither
party may terminate this Agreement pursuant to this Section 8.2(b) on or
before February 1, 2001 if the conditions to the Purchaser's obligations to
consummate the transactions contemplated hereunder have not been satisfied
on or prior to December 1, 2000 solely on account of the failure to receive
the Regulatory Approvals; and provided, however, that the right to
terminate this Agreement pursuant to this Section 8.2(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of the failure of the Closing Date to
have occurred on or prior to such date.
SECTION 8.03. Termination by the Sellers. This Agreement may be
terminated at any time prior to the Closing Date by action of the Boards of
Directors of the Sellers if (a) there has been a breach by the Purchaser of
any representation or warranty contained in this Agreement that is
qualified as to materiality or a material breach of any representation and
warranty that is not so qualified, which breach is not curable, or if
curable, is not cured within thirty (30) days after written notice of such
breach is given by any Seller to the Purchaser; or (b) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the Purchaser, which breach is not curable or, if
curable, is not cured within thirty (30) days after written notice of such
breach is given by any Seller to the Purchaser.
SECTION 8.04. Termination by the Purchaser. This Agreement may be
terminated at any time prior to the Closing Date by the Purchaser if (a)
there has been a breach by any Seller of any representation or warranty
contained in this Agreement that is qualified as to materiality or a
material
<PAGE>
45
breach of any representation and warranty that is not so qualified, which
breach is not curable, or if curable, is not cured within thirty (30) days
after notice of such breach is given by the Purchaser to the Sellers; (b)
there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of any Seller, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Purchaser to the Sellers; (c) the
Sale Order shall not have been entered by the Bankruptcy Court on or before
September 15, 2000 in substantially the form contemplated by this
Agreement; (d) the aggregate sum of the Cure Amounts (including any
Pre-Closing Cure Amounts required to be paid to Sellers as an increase in
purchase price pursuant to Section 1.3(a)(ii)), the Customer Credit
Amounts, the HLHZ Payment Obligations, plus the Post- Petition
Administrative Expenses (such aggregate sum, the "Actual Assumed Expenses")
exceeds $50,000,000 (collectively, the "Cap") and the Sellers shall not
have agreed to amend this Agreement to reduce the Purchase Price by such
excess; (e) the Sellers shall not have executed and delivered a completed
and amended Seller Disclosure Letter to Purchaser by the close of business
September 11, 2000, together with a notice indicating that such letter is
being delivered pursuant to this Section 8.4(e); or (f) by the open of
business on September 14, 2000, Purchaser shall notify GST in writing that
it is not satisfied with such completed Seller Disclosure Letter and is
terminating this Agreement pursuant to this Section 8.4(f).
SECTION 8.05. Effect of Termination and Abandonment. In the event
of termination of this Agreement pursuant to this Article VIII, written
notice thereof shall as promptly as practicable be given to the other party
to this Agreement and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of
the parties hereto. If this Agreement is terminated as provided herein (a)
there shall be no liability or obligation on the part of the Sellers, the
Purchaser, or their respective officers, directors, and affiliates, and all
obligations of the parties shall terminate, except for the obligations of
the parties pursuant to Sections 5.8, 8.5, 8.6, 11.4, 11.5 and 11.6,
Article X and the Confidentiality Agreement and except, in the case of the
Purchaser, the forfeiture of the Deposit, as applicable, in accordance with
Section 1.5 and (b) all filings, applications, and other submissions made
pursuant to the transactions contemplated by this Agreement shall, to the
extent practicable, be withdrawn from the agency or Person to which made.
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46
SECTION 8.06. Termination Fee. The Sellers acknowledge and agree
that Purchaser may be entitled to a "Termination Fee" in accordance with
the form of order that was agreed by the parties and that was submitted to
the Bankruptcy Court by the Sellers' on September 11, 2000, and Sellers and
Purchaser expressly agree to abide by such the terms therein and the
Sellers acknowledge and agree that such agreement by Sellers is a material
inducement to Purchaser's execution of this Agreement.
ARTICLE IX
DELIVERIES AT CLOSING
Sellers' Deliveries at Closing. In addition to the other things
required to be done hereby, at the Closing, the Sellers shall deliver, or
cause to be delivered, to the Purchaser the following:
(a) all documents, certificates, and agreements reasonably
necessary to transfer to the Purchaser all of each Seller's right,
title and interest in, to and under all of the Assets, free and clear
of any and all Encumbrances thereon, including:
(b) a duly executed Assignment and Assumption Agreement, in
customary form mutually agreeable to the parties; and
(c) an assignment of lease, dated as of the Closing Date, with
respect to each Assumed Contract that is a lease, in form reasonably
acceptable to the Purchaser, together with any necessary transfer
declarations or other filings (and in recordable form if required by
the Purchaser); and
(d) certified copies of all orders of the Bankruptcy Court
pertaining to the Contemplated Transactions, including the Sale Order.
SECTION 9.02. Purchaser's Deliveries at Closing. In addition to
the other things required to be done hereby, at the Closing, the Purchaser
shall deliver, or cause to be delivered, to the Sellers the following:
(a) a certificate dated the Closing Date and validly executed on
behalf of the Purchaser to the effect that the conditions set forth in
Section 7.2(a) have been satisfied;
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47
(b) a copy of the resolutions of the Board of Directors of the
Purchaser, or similar enabling document, authorizing the execution,
delivery, and performance hereof by the Purchaser, and a certificate
of its secretary or assistant secretary, dated as of the Closing Date,
that such resolutions were duly adopted and are in full force and
effect; and
(c) a duly executed Assignment and Assumption Agreement, in
customary form mutually agreeable to the parties.
SECTION 9.03. Required Documents. All documents to be delivered
by the Sellers or to be entered into by the Sellers and the Purchaser
necessary to carry out the transactions contemplated by this Agreement or
contemplated by the terms of this Agreement shall be reasonably
satisfactory in form and substance to the Purchaser and counsel to the
Purchaser and all documents to be delivered by the Purchaser necessary to
carry out the transactions contemplated by this Agreement or to be entered
into by the Sellers and the Purchaser necessary to carry out the
transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Sellers and counsel to the
Sellers.
ARTICLE X
INDEMNIFICATION
Indemnification by Purchaser. Purchaser covenants and agrees to
indemnify and hold harmless each Seller, its officers, directors,
employees, agents, legal counsel, advisers, representatives and Affiliates
(collectively, the "Seller Indemnitees") from and against, and pay or
reimburse the Seller Indemnitees for, any and all Losses resulting from or
arising out of:
(a) any inaccuracy in any representation or warranty by Purchaser
made or contained in this Agreement;
(b) any failure of Purchaser to perform any covenant or agreement
made or contained in this Agreement or fulfill any other obligation in
respect thereof;
(c) the Assumed Liabilities;
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48
(d) the operation of the Business by Purchaser or Purchaser's
ownership, operation or use of the Assets on or after the Closing
Date;
except, in the case of clauses (c) and (d), to the extent such Losses
result from or arise out of the Excluded Assets or Excluded
Liabilities.
SECTION 10.02. Losses Net of Insurance, Etc. The amount of any
Loss for which indemnification is provided under this Article X shall be
net of any amounts actually recovered or recoverable by any Seller
Indemnitees under insurance policies with respect to such Loss, but shall
not be net of any tax benefit or cost with respect thereto.
SECTION 10.03. Termination of Indemnification. The obligations to
indemnify and hold harmless any party (a) pursuant to clause (a) of Section
10.1, shall terminate upon the Closing and (b) pursuant to the other
clauses of Section 10.1, shall terminate at the expiration of the
applicable statute of limitations.
SECTION 10.04. Indemnification Procedures. (a) Any Seller
Indemnitee entitled to indemnification under this Agreement shall notify
promptly the indemnifying party in writing of the commencement of any
action or proceeding by any third party (a "Third Party Claim") with
respect to which a claim for indemnification may be made pursuant to this
Article X, but the failure of any indemnified party to provide such notice
shall not relieve the indemnifying party of its obligations under the
preceding paragraphs of this Article X, except to the extent the
indemnifying party is actually materially prejudiced thereby, and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Article X. In case any Third
Party Claim is brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, unless in the reasonable
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of
such claim, to assume the defense thereof jointly with any other
indemnifying party similarly notified, to the extent that it chooses, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party that it so chooses,
the indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation;
<PAGE>
49
provided, however, that (i) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the action or proceeding
within twenty (20) days after receiving notice from such indemnified party
that the indemnified party believes it has failed to do so; or (ii) if such
indemnified party who is a defendant in any Third Party Claim which is also
brought against the indemnifying party reasonably shall have concluded that
there may be one or more legal defenses available to such indemnified party
which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct, then, in
any such case, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm
of counsel for all indemnified parties in each jurisdiction) and the
indemnifying party shall be liable for any expenses therefor. No
indemnifying party shall, without the written consent of the indemnified
party, which consent shall not be unreasonably withheld, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim. Anything in the foregoing to the contrary notwithstanding,
(1) notice given by Purchaser to GST shall constitute valid notice to all
Seller Indemnitees, and (2) with respect to any Third Party Claim with
respect to which more than one Seller Indemnitee is an indemnified party or
potential indemnified party, all such Seller Indemnitees shall select a
single Seller Indemnitee to act as representative for all such Seller
Indemnitees with respect to such Third Party Claim, and (x) such
representative shall be authorized to make authorizations and consents on
behalf of each such Seller Indemnitee, and (y) Purchaser shall, with
respect to all matters relating to such Third Party Claim, be entitled to
rely on the statements, authorizations and consents of such representative
as being the statement, authorization or consent of each such Seller
Indemnitee.
(b) Anything to the contrary in this Section 10.4
notwithstanding: (i) Purchaser shall be entitled to assume and control the
defense in all respects, including with respect to settlement, with counsel
selected by Purchaser and (ii) Sellers shall facilitate such assumption and
control by Purchaser, which facilitation shall include the prompt delivery,
and in any event the delivery within five
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50
Business Days after receipt by any Seller or Affiliate thereof of a request
therefor, copies of all notices and documents (including court papers)
received by any Seller or Affiliate thereof to the extent relating to the
Third Party Claim and any power of attorney reasonably requested by
Purchaser Indemnitee with respect to such Third Party Claim.
(c) In the event any indemnified party should have an
indemnification claim against any indemnifying party under the Agreement
that does not involve a Third Party Claim being asserted against or sought
to be collected from such indemnified party, the indemnified party shall
deliver notice of such claim with reasonable promptness to the indemnifying
party. The failure by any indemnified party so to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it
may have to such indemnified party, except to the extent that the
indemnifying party has been actually prejudiced by such failure. If the
indemnifying party disputes its liability with respect to such claim, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in the
Bankruptcy Court or, if the Bankruptcy Court declines to resolve or take
jurisdiction over such dispute in an appropriate court of competent
jurisdiction.
SECTION 10.05. Indemnity Payments. In the event Purchaser agrees
to or is determined to have any obligation to indemnify any Seller
Indemnitee pursuant to this Article X, Purchaser shall promptly pay to the
Sellers by wire transfer of immediately available funds to the account or
accounts designated by the Sellers.
ARTICLE XI
GENERAL PROVISIONS
Notices. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand, or (c) the
expiration of three (3) Business Days after the day when mailed by
registered or certified mail (postage prepaid, return receipt requested),
addressed to the respective parties at the following addresses (or such
other address for a party as shall he specified by like notice):
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51
(a) If to the Purchaser, to:
Time Warner Telecom Inc.
10475 Park Meadows Drive
Littleton, CO 80124
Telecopy: (303) 566-1010
Attention: Paul Jones, Esq. and
Tina Davis, Esq.
with copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopy: (212) 373-2077
Attention: Judith R. Thoyer, Esq. and
Douglas R. Davis, Esq.
(b) If to any Seller prior to Closing, to it:
c/o GST Telecom, Inc.
4001 Main Street
Vancouver, Washington 98663
Telephone: (360) 356-2831
Telecopy: (360) 883-8653
Attention: Bruce D. Becker and
Rennie Hicks
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, IL 60606
Telephone: (312) 876-7700
Telecopy: (312) 993-9767
Attention: David S. Heller, Esq. and
Richard S. Meller, Esq.
and
Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Telephone: (213) 892-4000
Telecopy: (213) 629-5063
Attention: Paul S. Aronzon, Esq.
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52
(c) If to any Seller following Closing, to it at such address(es)
as shall be specified in writing delivered to the Purchaser, in each case
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, IL 60606
Telephone: (312) 876-7700
Telecopy: (312) 993-9767
Attention: David S. Heller, Esq. and
Richard S. Meller, Esq.
and
Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Telephone: (213) 892-4000
Telecopy: (213) 629-5063
Attention: Paul S. Aronzon, Esq.
SECTION 11.02. Descriptive Headings. The headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 11.03. Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits, the Seller Disclosure Letter, the
Purchaser Disclosure Letter, the Confidentiality Agreement, and the other
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, between the parties, with respect to the subject
matter hereof, including, without limitation, any transaction between the
parties hereto, and (b) shall not be assigned by operation of law or
otherwise; provided, however, that the Purchaser may assign its rights and
obligations hereunder to any Subsidiary, but: (a) the Purchaser shall not
be relieved of its obligations hereunder as a result of such assignment;
and (b) to the extent any such assignment by the Purchaser relates to the
assignment by any Seller of an executory contract or unexpired lease
hereunder and occurs prior to Closing such that, at Closing, this Agreement
will provide for Sellers' assignment of such executory contract or
unexpired lease to a party other than the Purchaser, such assignment by the
Seller shall be subject to all applicable provisions of the Bankruptcy
Code. Notwithstanding anything to the contrary contained herein, Purchaser
may assign its rights and
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53
obligations hereunder in respect of Assets to one or more third parties;
provided, that, (x) such assignment does not, in the aggregate with all
other such assignments, constitute an assignment of the right to purchase
all or substantially all of the Assets; (y) such assignment does not
relieve Purchaser of its obligations hereunder and does not delay the
Closing or reduce the purchase price paid to Sellers hereunder; and (z) to
the extent any such assignment by the Purchaser relates to the assignment
by any Seller of an executory contract or unexpired lease hereunder and
occurs prior to Closing such that, at Closing, this Agreement will provide
that Sellers' assignment of such executory contract or unexpired lease to a
party other than the Purchaser, such assignment by the Seller shall be
subject to all applicable provisions of the Bankruptcy Code.
SECTION 11.04. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware without
regard to the rules of conflict of laws of the State of Delaware or any
other jurisdiction.
SECTION 11.05. Venue and Retention of Jurisdiction. All actions
brought, arising out of, or related to the Contemplated Transactions shall
be brought in the Bankruptcy Court, and the Bankruptcy Court shall retain
jurisdiction to determine any and all such actions.
SECTION 11.06. Expenses. Except as otherwise provided herein,
whether or not the actions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses.
SECTION 11.07. Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of the parties hereto.
SECTION 11.08. Waiver. At any time prior to the Closing Date, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (c) waive compliance with any
of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
<PAGE>
54
SECTION 11.09. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be
an original but all of which shall constitute one and the same agreement.
This Agreement shall become effective when each party hereto shall have
received counterparts thereof signed by all the other parties hereto.
SECTION 11.10. Severability; Validity; Parties in Interest. If
any provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this
Agreement, and the application of such provision to other persons or
circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable. Nothing in this
Agreement, express or implied, is intended to confer upon any person not a
party to this Agreement any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 11.11. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to all other remedies available at law or in equity.
SECTION 11.12. Non-survival of Representations, Warranties and
Agreements. All representations, warranties and (except as set forth in the
following sentence) covenants set forth in this Agreement or in any
certificate, document or other instrument delivered in connection herewith
other than those covenants and agreements set forth in Article X hereof,
which shall terminate in accordance with Section 10.3, shall terminate at
the earlier of (i) the Closing and (ii) termination of this Agreement in
accordance with Article VIII hereof. Only those covenants that contemplate
actions to be taken or obligations in effect after the Closing or
termination of this Agreement, as the case may be, shall survive in
accordance with their terms and to the extent so contemplated.
SECTION 11.13. No Other Representations. Notwithstanding anything
to the contrary contained in this Agreement, it is the explicit intent of
each party hereto that the Sellers are making no representation or warranty
whatsoever, express or implied, except those representations
<PAGE>
55
and warranties contained in Article III above. It is understood that,
except to the extent otherwise expressly provided herein, the Purchaser
takes the Assets "as is" and "where is."
ARTICLE XII
DEFINITIONS
Defined Terms. As used herein, the terms below shall have the
following meanings.
"Acquisition Subsidiary" has the meaning set forth in Section
2.03.
"Actual Assumed Expenses" has the meaning set forth in Section
8.04.
"Action" has the meaning set forth in Section 7.01(c).
"Agreement" has the meaning set forth in the Preamble.
"Assets" has the meaning set forth in Section 1.01.
"Assignment and Assumption Agreement" means a Bill of Sale,
Assignment and Assumption Agreement in such form as may be agreed to by the
Purchaser and the Sellers.
"Assumed Contracts" has the meaning set forth in Section 1.01(h).
"Assumed Liabilities" has the meaning set forth in Section 1.03.
"Bankruptcy Code" has the meaning set forth in the Recitals.
"Bankruptcy Court" has the meaning set forth in the Recitals.
"Bid" has the meaning set forth in the Order Approving Bidding
Procedures with Respect to the Proposed Sale of Substantially All of the
Debtors' Assets entered by the Bankruptcy Court on June 12, 2000.
"Business" has the meaning set forth in the Recitals.
<PAGE>
56
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banking institutions in New York, New York are
authorized or required by law or executive order to close.
"Cap" has the meaning set forth in Section 8.04.
"Chapter 11 Case" has the meaning set forth in the Recitals.
"Closing" has the meaning set forth in Section 2.01.
"Closing Date" has the meaning set forth in Section 2.01.
"COBRA" has the meaning set forth in Section 1.03(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as
amended, and the rules and regulations (including those issued by the FCC)
promulgated thereunder.
"Communications License" or "Communications Licenses" have the
meaning set forth in Section 3.10(a).
"Confidentiality Agreement" means the Confidentiality Agreement,
dated as of December 15, 1999 by and between Salomon Smith Barney Inc. on
behalf of GST and the Purchaser.
"Contemplated Transactions" has the meaning set forth in the
Recitals.
"Continuees" has the meaning set forth in Section 5.13(e).
"Contracts" has the meaning set forth in Section 3.17.
"Cure Amounts" has the meaning set forth in Section 1.03(a).
"Customer Access Rights" has the meaning set forth in Section
3.19(d).
"Customer Base" means those Persons to which Sellers provides
telecommunication services.
<PAGE>
57
"Customer Contracts" means all customer contracts related to the
Business including, without limitation, all customer contracts made
available by Sellers for Purchaser's review prior to the date hereof, which
includes all contracts with carrier customers, all co-location contracts
and all contracts with the top 20 (by build revenue) non- carrier
customers.
"Deposit" has the meaning set forth in Section 1.05.
"Encumbrances" has the meaning set forth in Section 1.01.
"Environmental Laws" has the meaning set forth in Section 3.11.
"ERISA" has the meaning set forth in Section 3.12(a).
"ERISA Affiliate" has the meaning set forth in Section 3.12(a).
"Excluded Assets" has the meaning set forth in Section 1.02.
"Excluded Liabilities" has the meaning set forth in Section 1.04.
"FCC" means the Federal Communications Commission.
"FCC Applications" has the meaning set forth in Section 5.07(a).
"FCC Licenses" has the meaning set forth in Section 3.10(a).
"Final Order" shall mean an order or determination by the
Bankruptcy Court, the FCC, or other regulatory authority (including State
PUCs) (x) that is not reversed, stayed, enjoined, set aside, annulled, or
suspended within the deadline, if any, provided by applicable statute or
regulation, (y) with respect to which no request for stay, motion or
petition for reconsideration, application or request for review, or notice
of appeal or other judicial petition for review that is filed within such
period is pending, and (z) as to which the deadlines, if any, for filing
any such request, motion, petition, application, appeal or notice, and for
the entry by the FCC or other
<PAGE>
58
regulatory authority of orders staying, reconsidering, or reviewing on its
own motion have expired.
"GAAP" has the meaning set forth in Section 3.05.
"Governmental Requirements" has the meaning set forth in Section
3.03.
"GST" has the meaning set forth in the Preamble.
"GST USA" has the meaning set forth in the Preamble.
"Hawaii Assets" has the meaning set forth in Section 1.01(p).
"Hawaii Owners" has the meaning set forth in Section 6.08.
"HLHZ Payment Obligation" has the meaning set forth in Section
1.03(d).
"HSR Act" has the meaning set forth in Section 3.03.
"Intellectual Property" has the meaning set forth in Section
3.18(a).
"IRS" means the Internal Revenue Service.
"IRU" has the meaning set forth in Section 3.19(a).
"Knowledge" means the actual knowledge of the persons named in
Section 12.01 of the Seller Disclosure Letter.
"Legal Proceeding" means any judicial, administrative, regulatory
or arbitral proceeding, investigation or inquiry or administrative charge
or complaint pending at law or in equity before any governmental or
regulatory body or authority.
"Loss" or "Losses" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation interest,
court costs, reasonable fees of attorneys, accountants and other experts or
other reasonable expenses of litigation or other proceedings or of any
claim, default or assessment).
<PAGE>
59
"Material Decision" shall mean any of the following to the extent
the same may affect the Assets, the Assumed Liabilities, or the Business
following the Closing: (i) any entering into any material contract,
including purchase orders the payment of which shall become due after the
Closing, involving in excess of $250,000; (ii) any termination of any
Assumed Contract that involves future payments in excess of $250,000; (iii)
any material amendment or waiver of any of any Seller's rights in respect
of any Assumed Contract (for purposes of this clause (iii), "material"
shall mean a value in excess of $250,000); (iv) the acceptance of any
material customer Assumed Contract that deviates in any material respect
from the terms and conditions of current pricing policies; (v) any action
to respond to any material customer or regulatory complaint outside of the
normal course of business; (vi) any general communication with customers
related to (A) the Business not made in the ordinary course of the Business
or (B) the Contemplated Transactions; (vii) any material change of any
Seller's methods of collecting Trade Receivables or any making or agreeing
to make any settlement concerning a Trade Receivable in excess of $100,000;
or (viii) a material change in pricing, promotional, marketing, or any
other decision that would reduce in any material respect a Seller's
customary profit margins; provided that for purposes of the application of
this definition in Section 3.06, but only with respect to the period
beginning June 30, 2000 and ending on the date hereof, all of the foregoing
references to $250,000 shall be deemed to mean $500,000.
"Network Facilities" has the meaning set forth in Section
3.19(e).
"Permitted Encumbrances" means with respect to or upon any of the
property or assets of the Sellers, whether owned as of the date hereof or
thereafter, any (1) easement, encroachment or similar reservation which
does not impair the current use, occupancy, or value, or the marketability
of title, of such Asset and which would not individually (or in the
aggregate with others) be reasonably expected to have a material adverse
effect on the Business or the use or enjoyment of such Asset; (2) liens
securing the performance of bids, tenders, leases, contracts (other than
for the repayment of debt), statutory obligations, surety, customs and
appeal bonds and other obligations of like nature, incurred as an incident
to and in the ordinary course of the Business; (3) liens imposed by law,
such as carriers', warehouseman's, mechanics', materialmen's, landlords',
laborers', suppliers' and vendors' liens, incurred in good faith in the
ordinary course of the Business and securing
<PAGE>
60
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings as to which the Sellers shall, to the
extent required by GAAP, have set aside on its books appropriate provision
for liability; and (4) extensions, renewals and replacements of liens
referred to in (1) through (3) of this sentence; provided, that any such
extension, renewal or replacement lien shall be limited to the property or
assets covered by the lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or replacement lien
shall be in an amount not greater than the amount of the obligations
secured by the original lien extended, renewed or replaced, none of which,
individually or in the aggregate, have a Seller Material Adverse Effect
upon the value of the property subject thereto or the use to which such
property is presently put.
"Permits" means all permits, licenses, franchises, certificates
of occupancy, variances, exemptions, orders and other governmental
authorizations, consents, waivers, registrations and approvals necessary to
conduct the Business as presently conducted other than the Communications
Licenses.
"Person" means any natural person, firm, partnership, limited
liability company, association, corporation, Seller, trust, business trust
or other entity.
"Petitions" has the meaning set forth in the Recitals.
"Post-Petition Administrative Expenses" has the meaning set forth
in Section 1.03(d).
"Pre-Closing Cure Amounts" has the meaning set forth in Section
1.03(a).
"Purchase Price" has the meaning set forth in Section 1.05.
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Disclosure Letter" has the meaning set forth in
Article IV.
"Purchaser Hire" has the meaning set forth in Section 5.13(b).
"Purchaser Material Adverse Effect" has the meaning set forth in
Section 4.03.
<PAGE>
61
"Regulatory Approvals" has the meaning set forth in Section
7.01(d).
"Required Contractual Consents" has the meaning set forth in
Section 3.04.
"Sale Order" means an order or orders of the Bankruptcy Court in
substantially the form of Exhibit B, with such modifications as are
acceptable to Purchaser.
"SEC" means the Securities and Exchange Commission.
"Seller" or "Sellers" have the meaning set forth in the Preamble.
"Sellers' Boards Determination" has the meaning set forth in
Section 3.20.
"Seller Disclosure Letter" has the meaning set forth in Article
III.
"Seller Indemnitees" has the meaning set forth in Section 10.01.
"Seller Material Adverse Effect" means any events, conditions or
matters in respect of the Business (other than the filing of the Petitions
and the pendency of the Chapter 11 Case and any proceedings with respect
thereto) which would result in or would reasonably be expected to result in
(i) a material adverse effect on the properties, results of operations or
condition (financial or otherwise) of the Business taken as a whole or (ii)
a material adverse effect on the ability of the Sellers to perform their
obligations hereunder.
Without limiting the generality of the foregoing, any of the
following shall be considered a Seller Material Adverse Effect: (x) the
discovery of any damage, title defect or routing gap, or the termination or
other loss of contractual rights, in or to the Network Facilities and
Customer Access Rights which is not reasonably capable of cure or would
reasonably be expected to cost more than $10,000,000, individually or in
the aggregate, to repair, purchase, or construct in order to operate such
Network Facilities and Customer Access Rights as intended or (y) any
material interruption in significant functions of the Business, including,
but limited to, customer service, billing or ordering functions, that has a
continuing effect.
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62
"Seller Plan" or "Seller Plans" have the meaning set forth in
Section 3.12(a).
"Sellers' Representatives" has the meaning set forth in Section
6.02(b).
"Software" has the meaning set forth in Section 3.18(a)(v).
"State Licenses" has the meaning set forth in Section 3.10(a).
"State PUCs" shall have the meaning set forth in Section 3.10(a).
"State PUC Applications" has the meaning set forth in Section
5.07(b).
"Subsidiary" shall mean any subsidiary of the Purchaser.
"Taxes" means all federal, state, local, and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
"Tax Returns" means all federal, state, local, and foreign tax
returns, declarations, statements, reports, schedules, forms, and
information returns and any amended Tax Returns relating to Taxes.
"Termination Fee" has the meaning set forth in Section 8.06.
"Third Party Claim" has the meaning set forth in Section
10.04(a).
"Trade Receivables" has the meaning set forth in Section 1.01(c).
"Transfer Taxes" has the meaning set forth in Section 5.12.
"WARN" has the meaning set forth in Section 1.03(b).
<PAGE>
63
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
SELLERS
GST TELECOMMUNICATIONS, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST USA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST PACIFIC LIGHTWAVE, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM CALIFORNIA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
64
GST TUCSON LIGHTWAVE, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM HAWAII, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM NEW MEXICO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM TEXAS, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM NEVADA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM IDAHO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM WASHINGTON, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
66
GST REALCO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST NET, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST NET (AZ), INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM MICRONESIA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Blodworth
Title: Senior Vice President
and Chief Financial
Officer
GST HUI KELEKA`A'KE, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST INTERNET, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
66
GST TELECOM UTAH, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
HOL DEVELOPMENT, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM OREGON, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST INTERNATIONAL, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
WASATCH INTERNATIONAL NETWORK
SERVICES, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
INTERNATIONAL TELEMANAGEMENT GROUP,
INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
67
GST SWITCHCO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST EQUIPCO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST HOME, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM COLORADO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST CONSTRUCTION, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST GOVERNMENT SYSTEMS, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
68
GST EQUIPMENT FUNDING, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
VIETELCO, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST CALL AMERICA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
TRISTAR RESIDENTIAL COMMUNICATIONS
CORP.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
TOTALNET COMMUNICATIONS, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM ARIZONA, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
69
GST ACTION TELECOM, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST UNIVERSAL, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TELECOM PACIFIC, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST WHOLE EARTH NETWORKS, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST NETWORK FUNDING, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
ICON COMMUNICATIONS CORP.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
70
GST FIBERNET LLC
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
KLP, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
GST TRANSFER, INC.
By: /s/ Donald A. Bloodworth
----------------------------
Name: Donald A. Bloodworth
Title: Senior Vice President
and Chief Financial
Officer
PURCHASER
TIME WARNER TELECOM INC.
By: /s/ Larissa L. Herda
----------------------------
Name: Larissa L. Herda
Title: President and Chief
Financial Officer
