EXECUTION COPY
EXCHANGE AGREEMENT
AMONG
RCN CORPORATION,
RCN HOLDINGS, INC.
AND
C-TEC CORPORATION
DATED AS OF DECEMBER 28, 1995
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TABLE OF CONTENTS
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Page
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ARTICLE I. THE EXCHANGE
SECTION 1.1. Authorization..................................................1
SECTION 1.2. Agreement to Exchange..........................................1
SECTION 1.3. Closing........................................................2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF RCN AND HOLDINGS
SECTION 2.1. Corporate Organization.........................................2
SECTION 2.2. Capitalization; Title to the Shares............................2
SECTION 2.3. Subsidiaries and Equity Investments............................3
SECTION 2.4. Authorization; Validity of Agreement...........................3
SECTION 2.5. No Conflict or Violation.......................................3
SECTION 2.6. Consents and Approvals.........................................4
SECTION 2.7. Business of Holdings; Balance Sheet; Absence of Undisclosed
Liabilities....................................................4
SECTION 2.8. Investment Intent and Knowledge................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF C-TEC
SECTION 3.1. Corporate Organization.........................................5
SECTION 3.2. Capitalization.................................................5
SECTION 3.3. Authorization; Validity of Agreement...........................5
SECTION 3.4. No Conflict or Violation.......................................6
SECTION 3.5. Consents and Approvals.........................................6
ARTICLE IV. COVENANTS AND ADDITIONAL AGREEMENTS
SECTION 4.1. Further Assurances.............................................6
SECTION 4.2. Best Efforts...................................................6
SECTION 4.3. Notice of Breach...............................................6
ARTICLE V. CONDITIONS TO OBLIGATIONS OF RCN AND HOLDINGS
SECTION 5.1. Representations and Warranties of C-TEC........................7
SECTION 5.2. Performance of C-TEC's Obligations.............................7
SECTION 5.3. No Violation of Orders.........................................7
SECTION 5.4. Other Closing Documents........................................7
SECTION 5.5. Legal Matters..................................................7
SECTION 5.6. Agreement and Plan of Reorganization...........................8
ARTICLE VI. CONDITIONS TO OBLIGATIONS OF C-TEC
SECTION 6.1. Representations and Warranties of RCN and Holdings.............8
SECTION 6.2. Performance of RCN's and Holdings' Obligations.................8
SECTION 6.3. No Violation of Orders.........................................8
SECTION 6.4. Other Closing Documents........................................8
SECTION 6.5. Legal Matters..................................................9
SECTION 6.6. Resignation of Holdings' Officers and Directors................9
ARTICLE VII. TERMINATION
SECTION 7.1. Termination....................................................9
SECTION 7.2. Procedure; Effect of Termination...............................9
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1. Coverage......................................................10
SECTION 8.2. Procedures....................................................11
SECTION 8.3. Gross-Up......................................................12
ARTICLE IX. MISCELLANEOUS PROVISIONS
SECTION 9.1. Survival of Provisions........................................12
SECTION 9.2. Successors and Assigns; No Third-Party Beneficiaries..........13
SECTION 9.3. Fees and Expenses.............................................13
SECTION 9.4. Notices.......................................................13
SECTION 9.5. Entire Agreement..............................................14
SECTION 9.6. Waivers and Amendments........................................14
SECTION 9.7. Severability..................................................15
SECTION 9.8. Titles and Headings...........................................15
SECTION 9.9. Counterparts..................................................15
SECTION 9.10. Enforcement of the Agreement..................................15
SECTION 9.11. Governing Law.................................................15
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement"), dated as of December 28,
1995, by and among RCN Corporation, a Delaware corporation ("RCN"), RCN
Holdings, Inc., a Pennsylvania corporation ("Holdings"), C-TEC Corporation,
a Pennsylvania corporation ("C-TEC") and, for purposes of Sections 2.1,
2.4, 2.5, 2.6, 8.1 and 8.2 only, Kiewit Diversified Group Inc., a Delaware
corporation ("KDG").
W I T N E S S E T H:
WHEREAS, RCN owns all of the issued and outstanding shares of
common stock (the "Holdings Shares") of Holdings and Holdings owns shares of
the issued and outstanding shares of common stock, par value $1.00 per share,
of C-TEC ("C-TEC Common Shares") and shares of the issued and outstanding
shares of Class B common stock, par value $1.00 per share, of C-TEC ("C-TEC
Class B Shares" and together with C-TEC Common Shares, "C-TEC Shares"); and
WHEREAS, each of the parties desires that RCN transfer to C-TEC the Holdings
Shares in exchange for newly issued C-TEC Shares consisting of 128,198 C-TEC
Common Shares and 3,582,406 C-TEC Class B Shares (such C-TEC Common Shares and
C-TEC Class B Shares, the "Exchange Shares"), such that immediately after
giving effect to such exchange Holdings will be a wholly owned subsidiary of
C-TEC and RCN will own the Exchange Shares;
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I.
THE EXCHANGE
SECTION 1.1. Authorization. C-TEC is authorized to issue (i) 128,198
C-TEC Common Shares and 3,582,406 C-TEC Class B Shares (such C-TEC Class B
Shares, the "Class B Exchange Shares") for the purpose of consummating the
transactions contemplated by this Agreement and (ii) upon conversion of the
Class B Exchange Shares in accordance with the Amended and Restated
Articles of Incorporation (the "Articles of Incorporation") of C-TEC,
3,582,406 C-TEC Common Shares (the "Class B Conversion Shares"). The
terms, limitations and relative rights and preferences of the C-TEC Common
Shares and the C-TEC Class B Shares are set forth in the Articles of
Incorporation of C-TEC.
SECTION 1.2. Agreement to Exchange. On the Closing Date (as defined below) and
upon the terms and subject to the conditions set forth in this Agreement, RCN
shall assign, transfer, convey and deliver the Holdings Shares to C-TEC, and
C-TEC shall accept the Holdings Shares, in exchange for the issuance by C-TEC
to RCN of the Exchange Shares (the "Exchange").
SECTION 1.3. Closing. The closing of the Exchange (the "Closing") shall take
place at 10:00 A.M., New York City time, on December 28, 1995, or at such
other time and date as the parties hereto shall agree in writing (the "Closing
Date"), at the offices of C-TEC, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx,
or at such other place as the parties hereto shall agree in writing. At the
Closing, RCN shall deliver to C-TEC or its designees stock certificates
representing the Holdings Shares, duly endorsed in blank for transfer or
accompanied by appropriate stock powers duly executed in blank, and any other
documents that are necessary to transfer to C-TEC good title to the Holdings
Shares with all taxes, direct or indirect, attributable to the transfer of
such Holdings Shares paid or provided for. At the Closing, RCN shall cause
Holdings to deliver to C-TEC or its designees, on behalf of Holdings, stock
certificates representing the C-TEC Shares owned by Holdings. In exchange for
the Holdings Shares, C-TEC shall deliver to RCN, duly registered in its name,
duly executed stock certificates evidencing the Exchange Shares. RCN
acknowledges that the Exchange Shares and the Class B Conversion Shares will
be "restricted securities" within the meaning of Rule 144 under the Securities
Act of 1933, as amended, and that the certificates in respect of the Exchange
Shares and the Class B Conversion Shares will bear an appropriate legend.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF RCN AND HOLDINGS
As of the date hereof and the Closing Date, RCN and Holdings, jointly and
severally, hereby represent, warrant and agree as follows, and KDG hereby
represents and warrants with respect to Sections 2.1, 2.4, 2.5 and 2.6 as
follows :
SECTION 2.1. Corporate Organization. RCN, Holdings and KDG are
corporations duly organized, validly existing and in good standing under
the laws of the State of Delaware and the Commonwealth of Pennsylvania, as
applicable, and have all requisite corporate power and authority to own
their properties and assets and to conduct their businesses as now
conducted. Copies of the certificate or articles of incorporation and by-
laws of RCN and Holdings, with all amendments thereto to the date hereof,
have been furnished to C-TEC or its representatives, and such copies are
accurate and complete as of the date hereof. Holdings has paid all
franchise taxes due to or assessable by the State of Delaware.
SECTION 2.2. Capitalization; Title to the Shares. The authorized capital
stock of Holdings consists of 3000 shares of common stock, par value $.50
per share, of which 1810.10 shares are issued and outstanding. The
Holdings Shares have been duly authorized and validly issued, and are fully
paid and nonassessable and no personal liability attaches to the ownership
thereof. The Holdings Shares represent all of the issued and outstanding
shares of capital stock of Holdings, and except as specifically provided in
this Agreement, there are no outstanding options, warrants, agreements,
conversion rights, preemptive rights or other rights to subscribe for,
purchase or otherwise acquire the Holdings Shares or any unissued or
treasury shares of capital stock of Holdings. RCN has valid and marketable
title to the 1810.10 Holdings Shares owned by it, free and clear of any
liens, claims, charges, security interests or other legal or equitable
encumbrances, limitations or restrictions. There are no outstanding
options, warrants, agreements, conversion rights, preemptive rights or
other rights to subscribe for, purchase or otherwise acquire the 128,198 C-
TEC Common Shares or the 3,582,406 C-TEC Class B Shares owned by Holdings.
Holdings has valid and marketable title to the C-TEC Shares owned by it,
free and clear of any liens, claims, charges, security interests or other
legal or equitable encumbrances, limitations or restrictions.
SECTION 2.3. Subsidiaries and Equity Investments. Except for the 128,198 C-TEC
Common Shares and the 3,582,406 C-TEC Class B Shares held by Holdings,
Holdings has no subsidiaries and no interests or investments in any
partnership, trust or other entity or organization.
SECTION 2.4. Authorization; Validity of Agreement. Each of RCN, Holdings
and KDG 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 have been duly authorized and approved by all
necessary corporate action by the Board of Directors and stockholders of
each of RCN, Holdings and KDG, and no other corporate proceedings on the
part of any of RCN, Holdings or KDG are necessary to authorize and approve
such execution, delivery and performance. This Agreement has been duly
executed by each of RCN, Holdings and KDG and constitutes the valid and
binding obligation of each of RCN, Holdings and KDG, enforceable against
each in accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity.
SECTION 2.5. No Conflict or Violation. (a) The execution, delivery and
performance by Holdings of this Agreement does not and will not violate or
conflict with any provision of the charter documents or by-laws of Holdings
and does not and will not violate any provision of law, or any order, judgment
or decree of any court or other governmental or regulatory authority, nor
violate any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Holdings is a party
or by which Holdings is bound or to which its properties or assets is subject,
nor will result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of
Holdings.
(b) The execution, delivery and performance by RCN and KDG of this Agreement
does not and will not violate or conflict with any provision of the charter
documents or by-laws of RCN or KDG, and does not and will not violate any
provision of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which RCN or KDG is a party or by which any of them is bound or
to which any of their properties or assets is subject.
SECTION 2.6. Consents and Approvals. The execution and delivery by each
of RCN, Holdings and KDG of this Agreement, the performance of each of RCN,
Holdings and KDG of their respective obligations hereunder and the
consummation by each of RCN, Holdings and KDG of the transactions
contemplated hereby do not require any of RCN, Holdings and KDG to obtain
any consent, approval or action of, or make any filing with or give any
notice to, any corporation, person or firm or any public, governmental or
judicial authority, except for filings as may be required to comply with
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 2.7. Business of Holdings; Balance Sheet; Absence of Undisclosed
Liabilities. Since October 29, 1993, Holdings has not operated or conducted
any business. RCN has furnished to C-TEC the balance sheet of Holdings (the
"Holdings Balance Sheet") at September 30, 1995 and the balance sheet of KDG
at September 30, 1995 (the "KDG Balance Sheet"). The Holdings Balance Sheet
was prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis and presents fairly the financial
condition of Holdings as of September 30, 1995 and the KDG Balance Sheet was
prepared in accordance with GAAP applied on a consistent basis and presents
fairly the financial condition of KDG as of September 30, 1995. Holdings has
no liabilities (absolute or contingent) other than liabilities which are
reflected or reserved against on the Holdings Balance Sheet or which are not
required to be reflected or reserved against on the Holdings Balance Sheet
in accordance with GAAP.
SECTION 2.8. Investment Intent and Knowledge. RCN is acquiring the Exchange
Shares for its own account for investment and not with a view towards the
distribution thereof, nor with any present intention of distributing the
Exchange Shares (or the Class B Conversion Shares). RCN has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in C-TEC as contemplated by
this Agreement, and is able to bear the economic risk of such investment for
an indefinite period of time. RCN acknowledges that it is an affiliate of
C-TEC and is fully familiar with the business, operations, financial condition
and prospects of C-TEC.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF C-TEC
As of the date hereof and the Closing Date, C-TEC hereby represents, warrants
and agrees as follows:
SECTION 3.1. Corporate Organization. C-TEC is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted. Copies of
the Articles of Incorporation and the by-laws of C-TEC, with all amendments
thereto to the date hereof, have been furnished to RCN or its representatives,
and such copies are accurate and complete as of the date hereof.
SECTION 3.2. Capitalization. The authorized capital stock of C-TEC
consists of 85,000,000 C-TEC Common Shares, 15,000,000 C-TEC Class B Shares
and 25,000,000 shares of preferred stock, no par value per share ("C-TEC
Preferred Shares"), of which 19,085,364 C-TEC Common Shares, 8,359,803
C-TEC Class B Shares and 5,200,000 C-TEC Preferred Shares are issued and
outstanding at November 30, 1995. All of the outstanding shares of capital
stock of C-TEC have been duly and validly issued and are fully paid and
non-assessable. Upon issuance, exchange and delivery as contemplated by
this Agreement, the Exchange Shares will be duly authorized, validly
issued, fully paid and non-assessable shares of C-TEC, free of all
preemptive or similar rights. Upon their issuance in accordance with the
terms of the C-TEC Class B Shares, the Class B Conversion Shares will be
duly authorized, validly issued, fully paid and non-assessable C-TEC Common
Shares, free of all preemptive or similar rights.
SECTION 3.3. Authorization; Validity of Agreement. C-TEC 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 and the issuance of the Exchange Shares (and the Class B
Conversion Shares) have been duly authorized and approved by all necessary
corporate action by the Board of Directors and stockholders of C-TEC, and
no other corporate proceedings on the part of C-TEC are necessary to
authorize such execution, delivery and performance. This Agreement has
been duly executed by C-TEC and constitutes the valid and binding
obligation of C-TEC enforceable against C-TEC in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and general principles of equity.
SECTION 3.4. No Conflict or Violation. The execution, delivery and
performance by C-TEC of this Agreement and the issuance of the Exchange
Shares (and the Class B Conversion Shares) does not and will not violate or
conflict with any provision of its Articles of Incorporation or by-laws and
does not and will not violate any provision of law, or any order, judgment
or decree of any court or other governmental or regulatory authority, nor
violate any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which C-TEC is a party
or by which it is bound or to which any of its properties or assets is
subject, where such violations, breaches or defaults in the aggregate would
have a material adverse effect on the transactions contemplated hereby.
SECTION 3.5. Consents and Approvals. The execution and delivery by C-TEC
of this Agreement, the performance of C-TEC of its obligations hereunder
and the consummation by C-TEC of the transactions contemplated hereby do
not require C-TEC to obtain any consent, approval or action of, or make any
filing with or give any notice to, any corporation, person or firm or any
public, governmental or judicial authority, except for filings as may be
required to comply with the Exchange Act and with The Nasdaq Stock Market,
Inc.
ARTICLE IV.
COVENANTS AND ADDITIONAL AGREEMENTS
SECTION 4.1. Further Assurances. Upon the request of either C-TEC or RCN
at any time after the Closing Date, RCN, Holdings or C-TEC, as applicable,
will forthwith execute and deliver such further instruments of assignment,
transfer, conveyance, endorsement, direction or authorization and other
documents as the requesting party or its counsel may reasonably request in
order to effectuate the purposes of this Agreement.
SECTION 4.2. Best Efforts. Upon the terms and subject to the conditions
of this Agreement, each of the parties hereto will use its best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent with applicable law to
consummate and make effective in the most expeditious manner practicable
the transactions contemplated hereby.
SECTION 4.3. Notice of Breach. Through the Closing Date, each of the parties
hereto shall promptly give to the other parties written notice with
particularity upon having knowledge of any matter that may constitute a breach
of any representation, warranty, agreement or covenant contained in this
Agreement.
ARTICLE V.
CONDITIONS TO OBLIGATIONS OF RCN AND HOLDINGS
The obligations of RCN and Holdings to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before
the Closing Date, of the following conditions, any one or more of which may be
waived by RCN in its sole discretion:
SECTION 5.1. Representations and Warranties of C-TEC. All representations and
warranties made by C-TEC in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if again made by C-TEC on
and as of such date, and, if the Closing Date is other than the date hereof,
RCN shall have received a certificate dated the Closing Date and signed by
C-TEC to that effect.
SECTION 5.2. Performance of C-TEC's Obligations. C-TEC shall have
performed in all material respects all obligations required under this
Agreement to be performed by it on or before the Closing Date, and, if the
Closing Date is other than the date hereof, RCN shall have received a
certificate dated the Closing Date and signed by C-TEC to that effect.
SECTION 5.3. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree
or executive order promulgated or enacted by any government or governmental
or regulatory authority, which declares this Agreement invalid or
unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby, shall be in effect; and no action or
proceeding before any court or governmental or regulatory authority,
domestic or foreign, shall have been instituted or threatened by any
government or governmental or regulatory authority, domestic or foreign, or
by any other person or entity, which seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement.
SECTION 5.4. Other Closing Documents. RCN shall have received such other duly
executed certificates, instruments and documents in confirmation of the
representations and warranties of C-TEC or in furtherance of the transactions
contemplated by this Agreement as RCN or its counsel may reasonably request.
SECTION 5.5. Legal Matters. All certificates, instruments and other documents
required to be executed or delivered by or on behalf of C-TEC under the
provisions of this Agreement, and all other actions and proceedings required
to be taken by or on behalf of C-TEC in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to
counsel for RCN.
SECTION 5.6. Agreement and Plan of Reorganization. C-TEC shall have
executed and delivered to RCN the Agreement and Plan of Reorganization,
substantially in the form of Exhibit A hereto.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF C-TEC
The obligations of C-TEC to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by C-TEC in
its sole discretion:
SECTION 6.1. Representations and Warranties of RCN and Holdings. All
representations and warranties made by RCN and Holdings in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date as if again made by RCN and Holdings on and as of such date, and, if the
Closing Date is other than the date hereof, C-TEC shall have received a
certificate dated the Closing Date and signed by the Chairman of the Board,
the President or any Vice President of RCN and Holdings to that effect.
SECTION 6.2. Performance of RCN's and Holdings' Obligations. Each of RCN and
Holdings shall have performed in all material respects all obligations
required under this Agreement to be performed by it on or before the Closing
Date, and, if the Closing Date is other than the date hereof, C-TEC shall have
received a certificate dated the Closing Date and signed by the Chairman of
the Board, the President or any Vice President of RCN and Holdings to that
effect.
SECTION 6.3. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree
or executive order promulgated or enacted by any government or governmental
or regulatory authority, domestic or foreign, that declares this Agreement
invalid or unenforceable in any respect or which prevents the consummation
of the transactions contemplated hereby shall be in effect; and no action
or proceeding before any court or governmental or regulatory authority,
domestic or foreign, shall have been instituted or threatened by any
government or governmental or regulatory authority, domestic or foreign, or
by any other person or entity, which seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement.
SECTION 6.4. Other Closing Documents. C-TEC shall have received such
other duly executed certificates, instruments and documents in confirmation
of the representations and warranties of RCN and Holdings or in furtherance
of the transactions contemplated by this Agreement as C-TEC or its counsel
may reasonably request.
SECTION 6.5. Legal Matters. All certificates, instruments and other documents
required to be executed or delivered by or on behalf of RCN and Holdings under
the provisions of this Agreement, and all other actions and proceedings
required to be taken by or on behalf of RCN and Holdings in furtherance of the
transactions contemplated hereby, shall be reasonably satisfactory in form and
substance to counsel for C-TEC.
SECTION 6.6. Resignation of Holdings' Officers and Directors. All members
of the Board of Directors and all officers of Holdings shall have resigned
effective as of the Closing.
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination . This Agreement may be terminated at any time
prior to Closing:
(a) By the mutual written consent of C-TEC and RCN;
(b) By RCN immediately upon written notice to C-TEC if the Closing has not
occurred on or prior to January 31, 1996;
(c) By C-TEC immediately upon written notice to RCN if the Closing has not
occurred on or prior to January 31, 1996;
(d) By RCN if any of the conditions specified in Article V hereof have not
been met or waived at such time as such condition is no longer capable of
satisfaction;
(e) By C-TEC if any of the conditions specified in Article VI hereof have not
been met or waived at such time as such condition is no longer capable of
satisfaction; or
(f) By C-TEC or RCN if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling the
parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits the transactions contemplated by
this Agreement.
SECTION 7.2. Procedure; Effect of Termination. In the event of termination of
this Agreement pursuant to Section 7.1, written notice thereof shall forthwith
be given to the other parties and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
C-TEC, RCN or Holdings. If this Agreement is terminated as provided herein,
no party to this Agreement shall have any liability or further obligation to
any other party to this Agreement except as provided in Section 9.3 hereof;
provided, however, that no termination of this Agreement pursuant to this
Article VII shall relieve any party of liability for a breach of any provision
of this Agreement occurring before such termination.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1. Coverage. (a) Notwithstanding the Closing or the delivery
of the Exchange Shares and the Holdings Shares and regardless of any
investigation at any time made by or on behalf of C-TEC or any of its
representatives or of any knowledge or information that C-TEC or any of its
representatives may have, RCN and KDG, jointly and severally, indemnify and
agree to fully defend, save and hold C-TEC and any of its officers,
directors, employees, stockholders, advisors, representatives, agents and
affiliates (including Holdings but excluding RCN and KDG) harmless if: (i)
any indemnified party shall at any time or from time to time suffer any
damage, liability (absolute or contingent, including liabilities for taxes
of any kind, and interest, fines and penalties thereon, whether direct or
indirect as a successor-in-interest, transferee or member of a
consolidated, combined or unitary group), obligation, loss, cost, expense
(including all reasonable attorneys' fees), claim or cause of action
(collectively "Losses") arising out of or resulting from, or shall pay or
become obligated to pay any sum in connection with, any and all Events of
Breach (as defined below) of either RCN or Holdings; or (ii) any
indemnified party shall be subject to (x) any Losses arising at any time
from or in connection with the acts or omissions of, or states of facts
relating to, Holdings and its employees and agents, which acts or omissions
occurred, or states of facts existed, on or before the Closing Date,
including, without limitation, any business activities, operations,
agreements or arrangements conducted or entered into by Holdings or to
which Holdings was a party or by which Holdings was bound on or before the
Closing Date (including liabilities set forth on the Holdings Balance
Sheet); (y) any Losses relating to taxes and arising out of or resulting
from the Exchange or the consummation of the transactions contemplated by
the Agreement and Plan of Reorganization; or (z) any Losses arising out of
or resulting from the Exchange or the consummation of the transactions
contemplated by the Agreement and the Plan of Reorganization, except to the
extent there is a final determination by a court of competent jurisdiction
that such Losses resulted from (A) a breach of this Agreement by C-TEC, (B)
the gross negligence, bad faith or wilful misconduct of an indemnified
party, (C) a breach of fiduciary duty of an indemnified party, or (D)
violations of any obligations under the Securities Act of 1933, as amended,
or the Exchange Act by C-TEC or an indemnified party.
(b) Notwithstanding the Closing or the delivery of the Exchange Shares and
the Holdings Shares and regardless of any investigation at any time made by or
on behalf of RCN or Holdings or any of their representatives or of any
knowledge or information that RCN, Holdings or any of their representatives
may have, C-TEC indemnifies and agrees to fully defend, save and hold RCN
and Holdings and any of their respective officers, directors, employees,
stockholders, advisors, representatives, agents and affiliates harmless if any
such party shall at any time or from time to time suffer any damage,
liability, loss, cost, expense (including all reasonable attorneys' fees),
claim or cause of action arising out of or resulting from, or shall pay or
become obligated to pay any sum in connection with, any and all Events of
Breach of C-TEC.
(c) As used herein, "Event of Breach" means any one or more of the following:
(i) any untruth or inaccuracy in any representation by the indemnitor or the
breach of any warranty by the indemnitor, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement or in
connection with the Closing;
(ii) any failure by the indemnitor duly to perform or observe any term,
provision, covenant, agreement or condition on the part of such indemnitor to
be performed or observed under this Agreement; and
(iii) any act performed, transaction entered into, or statement of facts
suffered to exist by any party hereto before the Closing Date and in
connection herewith or relating hereto, otherwise than in good faith and
pursuant to the exercise of reasonable care.
SECTION 8.2. Procedures. If the party or parties entitled to receive the
benefits of the indemnification provisions hereunder (the "Indemnified Party")
asserts that the party from whom indemnification has been sought (the
"Indemnifying Party") has become obligated to the Indemnified Party pursuant
to Section 8.1 hereof, or if any suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which the Indemnifying
Party may become obligated to the Indemnified Party hereunder, the Indemnified
Party shall give written notice to the Indemnifying Party, provided that any
failure to so notify shall not relieve the Indemnifying Party of its
indemnification obligations hereunder except to the extent that the omission
results in a failure of actual notice to the Indemnifying Party and to the
extent such Indemnifying Party is damaged as a result of such lack of notice.
The Indemnifying Party agrees to defend, contest or otherwise protect the
Indemnified Party against any such suit, action, investigation, claim or
proceeding by counsel of the Indemnifying Party's choice at its sole cost and
expense, provided that such counsel shall be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall have the right, but not the
obligation, to participate at its own expense in the defense thereof by
counsel of the Indemnified Party's choice and shall in any event cooperate
with and assist the Indemnifying Party to the extent reasonably possible. The
Indemnifying Party, in the defense of any such claim, shall not, except with
the consent of the Indemnified Party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant to the Indemnified Party of a release from
all liability with respect to such claim. If the Indemnifying Party fails
timely to defend, contest or otherwise protect against such suit, action,
investigation, claim or proceeding, the Indemnified Party shall have the right
to do so, including, without limitation, the right to make any compromise or
settlement thereof, and the Indemnified Party shall be entitled to recover the
entire cost thereof from the Indemnifying Party, including, without
limitation, reasonable attorneys' fees, disbursements and amounts paid as the
result of such suit, action, investigation, claim or proceeding.
SECTION 8.3. Gross-Up. If any indemnification payment under Article VIII
(including, without limitation, this Section 8.3) is determined to be taxable
to the party receiving such payment by any taxing authority, the paying party
shall also indemnify the party receiving such payment for any taxes incurred
by reason of the receipt of such payment (taking into account any actual
reduction in tax liability to the receiving party) and any related costs
incurred by the party receiving such payment in connection with such taxes (or
any asserted deficiency, claim, demand, action, suit, proceeding, judgment or
assessment, including the defense or settlement thereof, relating to such
taxes).
ARTICLE IX.
MISCELLANEOUS PROVISIONS
SECTION 9.1. Survival of Provisions. The respective representations,
warranties, covenants and agreements of each of the parties to this
Agreement (except covenants and agreements which are expressly required to
be performed and are performed in full on or before the Closing Date) shall
survive the Closing Date and the consummation of the transactions
contemplated by this Agreement. In the event of a breach of any of such
representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all
rights and remedies for such breach available to it under the provisions of
this Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of, such party on or
before the Closing Date.
SECTION 9.2. Successors and Assigns; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective successors and assigns; provided, however, that
neither party shall assign or delegate any of the obligations created under
this Agreement prior to the Closing without the prior written consent of the
other party, and no such assignment or delegation shall relieve the assignor
from liabilities hereunder. Nothing in this Agreement shall confer upon any
person or entity not a party to this Agreement, or the legal representatives
of such person or entity, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.
SECTION 9.3. Fees and Expenses. Except as otherwise expressly provided in
this Agreement, all legal, accounting and other fees, costs and expenses
incurred by RCN and Holdings in connection with this Agreement and the
transactions contemplated hereby shall be paid by RCN and all reasonable
legal, accounting and other fees, costs and expenses incurred by C-TEC
properly allocable to this Agreement and to the transactions contemplated
hereby (including those of the Special Committee of the Board of Directors
of C-TEC) shall be paid by RCN. Otherwise, any fees, costs and expenses
shall be paid by the party incurring such fees, costs and expenses.
SECTION 9.4. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be delivered personally or be
mailed by overnight courier or be sent by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses:
(a) If to RCN, to: RCN Corporation
c/o Xxxxx Xxxxxx Sons', Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
with a copy to: Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. X'Xxxxxxxx, Esq.
(b) If to C-TEC, to: C-TEC Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxxxx, Esq.
with a copy to: Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(c) If to the Special Committee
of C-TEC, to: Xxxxxx Xxxx, Esq.
Rosenn, Xxxxxxx & Xxxxxxxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
with a copy to: Xxxx Xxxxxxx & Xxxxxx
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, P.C.
and to C-TEC as set forth above,
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other. Any notice so addressed shall be
deemed to be given: if delivered by hand, on the date of such delivery; if
sent by overnight delivery, on the first business day following the date of
such mailing; and if mailed by registered or certified mail, on the third
business day after the date of such mailing. No change in any of such
addresses shall be effective insofar as notices under this Section 9.4 are
concerned unless such changed address is located in the United States of
America and notice of such change shall have been given to such other party
hereto as provided in this Section 9.4.
SECTION 9.5. Entire Agreement. This Agreement, together with the exhibit
hereto, represents the entire agreement and understanding of the parties
with reference to the transactions set forth herein and no representations
or warranties have been made in connection with this Agreement other than
those expressly set forth herein or in the exhibit, certificates and other
documents delivered in accordance herewith. This Agreement supersedes all
prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating to the subject
matter of this Agreement and all prior drafts of this Agreement, all of
which are merged into this Agreement. No prior drafts of this Agreement
and no words or phrases from any such prior drafts shall be admissible into
evidence in any action or suit involving this Agreement.
SECTION 9.6. Waivers and Amendments. C-TEC or RCN may by written notice
to the other (a) extend the time for the performance of any of the
obligations or other actions of the other; (b) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement;
(c) waive compliance with any of the covenants of the other contained in
this Agreement; (d) waive performance of any of the obligations of the
other created under this Agreement; or (e) waive fulfillment of any of the
conditions to its own obligations under this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach, whether or
not similar, unless such waiver specifically states that it is to be
construed as a continuing waiver. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties
hereto. Any such amendment or waiver shall require the consent of the
Special Committee of the Board of Directors of C-TEC if then existing.
SECTION 9.7. Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term
or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 9.8. Titles and Headings. The Article and Section headings and
the Table of Contents contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation
of this Agreement or of any term or provision hereof.
SECTION 9.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
SECTION 9.10. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their 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 hereto, this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 9.11. Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of New
York without giving effect to the choice-of-law provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
RCN CORPORATION
By:_________________________
Name:
Title:
C-TEC CORPORATION
By:_________________________
Name:
Title:
RCN HOLDINGS, INC.
By:_________________________
Name:
Title:
FOR PURPOSES OF SECTIONS 2.1, 2.4, 2.5, 2.6, 8.1 AND 8.2 ONLY
KIEWIT DIVERSIFIED GROUP INC.
By:__________________________
Name:
Title:
INDEX OF DEFINED TERMS
Page
----
Agreement....................................................................1
Closing......................................................................2
Closing Date.................................................................2
C-TEC........................................................................1
C-TEC Class B Shares.........................................................1
C-TEC Common Shares..........................................................1
C-TEC Preferred Shares.......................................................5
C-TEC Shares.................................................................1
Event of Breach.............................................................11
Exchange.....................................................................2
Exchange Act.................................................................4
Exchange Shares..............................................................1
Holdings.....................................................................1
Holdings Shares..............................................................1
Indemnified Party...........................................................11
Indemnifying Party..........................................................11
KDG..........................................................................1
Losses......................................................................10
RCN..........................................................................1
