Exhibit 10.1
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (such Agreement, as it
may be amended, supplemented or otherwise modified in accordance with the
terms herein, this "Agreement"), dated as of December 21, 2004 (the "Effective
Date"), is entered into by and between Pepco Communications, L.L.C., a
Delaware limited liability company ("Seller"), and RCN Telecom Services of
Washington, D.C., Inc., a District of Columbia corporation ("Purchaser").
WHEREAS, each of Seller and Purchaser owns 50% of the total
membership interest in Starpower Communications, LLC, a Delaware limited
liability company ("Starpower"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, all of Seller's 50% Membership Interest (as defined
in the Amended and Restated Operating Agreement of Starpower Communications,
LLC, made as of December 18, 1997 by and between Seller and Purchaser, as
amended by First Amendment to Amended and Restated Operating Agreement of
Starpower Communications, LLC, made as of December 18, 1998 by and between
Seller and Purchaser (collectively, the "Operating Agreement")) in Starpower
(the "Pepcom Membership Interest") on the terms and conditions set forth in
this Agreement.
WHEREAS, Purchaser is a subsidiary of RCN Corporation, a Delaware
corporation ("RCN"), which on May 27, 2004, along with certain other
subsidiaries, filed a voluntary petition for reorganization under Chapter 11
of Title 11 of the United States Code ("Chapter 11") in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court").
WHEREAS, on August 19, 2004, RCN, along with certain subsidiaries,
filed its Joint Plan of Reorganization (the "Plan") with the Bankruptcy Court.
WHEREAS, on May 27, 2004 RCN requested and received Bankruptcy Court
approval for the terms of the Deutsche Bank Credit Agreement, its exit
financing package (the "Exit Financing") and on November 19, 2004 requested
and received Bankruptcy Court approval to increase the amount of money
available pursuant to the Exit Financing, with such requested increase
intended to be used to purchase the Pepcom Membership Interest.
WHEREAS, on December 8, 2004, the Bankruptcy Court entered an order
confirming the Plan.
WHEREAS, in connection with the funding of the Exit Financing,
Purchaser will receive from RCN an amount of money equal to the Purchase Price
and simultaneously transfer such amount to Seller in connection with this
Agreement.
WHEREAS, RCN intends to consummate the Plan on or about December 21,
2004, receive the proceeds from the Exit Financing, and simultaneously
therewith, complete the purchase of the Pepcom Membership Interest.
NOW, THEREFORE, in consideration of the premises and of the
agreements, representations, warranties, obligations and covenants in this
Agreement and for other good and valuable consideration the receipt and
sufficiency of which Seller and Purchaser acknowledge, and intending to be
legally bound by this Agreement, and with the understanding that RCN must
consummate its Plan simultaneously with the Closing of the transactions
described in this Agreement, Seller and Purchaser agree as follows:
1. CERTAIN DEFINITIONS
Many defined terms used in this Agreement are defined where first
used in this Agreement. The following terms are not defined elsewhere in this
Agreement, and they shall have the following meanings as used in this
Agreement:
1.1 "Affiliate" means, with respect to any Entity, any other Person
that, either directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such Entity.
1.2 "Control," "Controlled by" and "under common Control with" mean,
with respect to any Entity, the power to direct or cause the direction of the
management or policies of the Entity, whether through the ownership of voting
securities or by any agreement or any other means.
1.3 "Deutsche Bank Credit Agreement" means the First Lien Credit
Agreement among RCN, Various Lenders thereto, Deutsche Bank AG Cayman Islands
Branch, as Administrative Agent, and Deutsche Bank Securities Inc., as Sole
Lead Arranger and Sole Book Manager.
1.4 "Entity" means any corporation, limited liability company,
general partnership, limited partnership, venture, trust, business trust,
estate or other entity.
1.5 "Knowledge" means, with respect to any Person, that Person's
actual knowledge after reasonable review of the relevant books and records,
and inquiry of the personnel, of the Person as to which the applicable
representation or warranty is being made.
1.6 "Person" means any Entity or natural person.
1.7 "Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including (without limitation) income, gross receipts, net
proceeds, ad valorem, real and personal property (tangible and intangible),
sales, use, franchise, excise, value added, license, payroll, unemployment,
environmental, customs duties, capital stock, disability, stamp, leasing,
lease, user, transfer, fuel, excess profits, occupational, and employees'
income withholding and Social Security taxes imposed by the United States or
any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country or by any other
tax authority, and such term shall include any interest, penalties or
additions to tax attributable to such taxes.
2. PURCHASE OF MEMBERSHIP INTEREST
2.1 Interest to be Purchased. At the Closing (as defined in Section
3), Purchaser shall pay Seller, by wire transfer of immediately available
funds, the wire transfer instructions for which are set forth below (the "Wire
Instructions"), the amount of Twenty-nine Million U.S. Dollars ($29,000,000)
(the "Purchase Price") and Seller shall sell and deliver to Purchaser, and
Purchaser shall purchase and receive from Seller, all of the Pepcom Membership
Interest, free and clear of all Liens (as defined in Section 4.2).
Wire Instructions:
2.2 Specific Exclusions. Purchaser agrees, understands and
acknowledges that (a) other than the Pepcom Membership Interest, no asset of
Seller or any of its Affiliates is being sold pursuant to this Agreement; (b)
nothing in this Agreement grants, or shall be construed as a grant of, any
lease, license or use right, access right or any other right to or for the
benefit of Purchaser or any of its Affiliates with respect to any asset,
property or facility owned, leased, used, controlled or operated by any of
Seller's Affiliates, (c) nothing in this Agreement terminates, amends or
modifies, or shall be construed as terminating, amending or modifying any
lease, license or use right, access right or any other right to or for the
benefit of Starpower or any of its Affiliates with respect to any asset,
property or facility owned, leased, used, controlled or operated by any of
Seller's Affiliates, and (d) nothing in this Agreement terminates, amends or
modifies, or shall be construed as terminating, amending or modifying the
Non-Competition Agreement, dated as of December 18, 1997, by and among RCN
Telecom Services, Inc., Potomac Capital Investment Corporation ("PCI") and
Starpower.
3. CLOSING DETAILS
3.1 General. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated in this Agreement (the "Closing)
shall take place on the first business day that occurs after the date on which
all of the conditions set forth in Sections 7.1 and 8.1 (other than those
conditions to be satisfied at the Closing) have been satisfied or waived, or
on such other date as Seller and Purchaser shall agree in writing (the
"Closing Date"). The parties agree to use commercially reasonable efforts to
cause the Closing to occur on or about December 21, 2004 and prior to December
31, 2004. The Closing shall take place through an exchange of consideration
and documents using e-mail and other electronic transmission services,
facsimile machines, and overnight courier services, unless the parties
otherwise agree in writing.
3.2 Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement and the obligations of the parties under this
Agreement will or may be terminated on or prior to the Closing as follows:
(a) This Agreement will terminate immediately, at the option
solely of Purchaser, upon Seller or any other Person commencing proceedings to
have Seller adjudicated bankrupt or insolvent or Seller or any Affiliate of
Seller consenting to the institution of bankruptcy or insolvency proceedings
against Seller, or the filing by Seller, any Affiliate of Seller or any other
Person of a petition or answer or consent seeking reorganization or relief
with respect to Seller under Title 11, U.S. Code or any similar United States
federal or state law for the relief of debtors; provided, however, that
Purchaser may waive termination under this clause (a) in its sole discretion.
(b) Seller may terminate this Agreement (i) in the event
that, or if it is reasonably likely that, the transactions contemplated by
this Agreement have been or will be prohibited or enjoined by reason of any
final, unappealable judgment, decree or order entered or issued by a court of
competent jurisdiction in litigation or proceedings involving Seller that was
not entered at the request or with the support of Seller and if Seller shall
have used commercially reasonable efforts to prevent the entry of such order
or, if having been entered, Seller shall have used commercially reasonable
efforts to have such order lifted; or (ii) in the event Purchaser breaches any
of its representations or warranties in this Agreement and the breach has not
been cured and is not cured before the Outside Termination Date (as defined
below).
(c) Purchaser may terminate this Agreement (i) in the event
that, or if it is reasonably likely that, the transactions contemplated by
this Agreement have been or will be prohibited or enjoined by reason of any
final, unappealable judgment, decree or order entered or issued by a court of
competent jurisdiction in litigation or proceedings that was not entered at
the request or with the support of Purchaser and if Purchaser shall have used
commercially reasonable efforts to prevent the entry of such order or, if
having been entered, Purchaser shall have used commercially reasonable efforts
to have such order lifted; or (ii) in the event Seller breaches any of its
representations or warranties in this Agreement and the breach has not been
cured and is not cured before the Outside Termination Date (as defined below).
(d) Either Seller or Purchaser may terminate this Agreement
if the Closing Date shall not have taken place on or before March 15, 2005 or
such other date as may be mutually approved in writing by Seller and Purchaser
(such date shall be referred to herein as the "Outside Termination Date").
3.3 Notice and Effect of Termination. Upon termination of this
Agreement, the transactions contemplated in this Agreement shall immediately
be abandoned and all continuing obligations of the parties under or in
connection with this Agreement shall be terminated and of no further force or
effect; provided, however, that nothing in this Agreement shall relieve any
party from liability for any Fraud (as defined in Section 11.3), breach of
representation or warranty or breach of covenant contained in this Agreement
prior to such termination (together with the provisions of Section 11 which
shall survive in their entirety with respect to such liability).
Notwithstanding the foregoing, the provisions of Sections 10.4 and 12 shall
survive the termination of this Agreement for any reason. If this Agreement
has terminated due to the breach of any party, such party shall remain liable
for any damages arising from such breach.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the date of
this Agreement and as of the Closing Date as follows:
4.1 Organization, Standing and Qualification. Seller (a) is duly
organized, validly existing and in good standing under the laws of the State
of Delaware; (b) has full limited liability company power and authority to
own, operate and lease its assets and properties and to carry on its business
as now conducted; and (c) is not required to be qualified or licensed to
conduct business as a foreign limited liability company in any other
jurisdiction where the failure to be so qualified would have a material
adverse effect on Seller.
4.2 Membership Interests. The Pepcom Membership Interest is owned
entirely by Seller and is free and clear of all liens, security interests,
encumbrances, restrictions, rights of first refusal, pledges and claims of
every kind (each, a "Lien"), other than those set forth or contemplated in the
Operating Agreement. Except as set forth in the Operating Agreement, no
commitment of any kind exists that obligates Seller to transfer any part of
the Pepcom Membership Interest to any Person. Except for the Operating
Agreement, Seller is not a party to, and there exist no, member agreements,
pledge agreements or other agreements relating to or restricting the
transferability of any part of the Pepcom Membership Interest. There is no
outstanding Capital Call (as defined in the Operating Agreement) that has not
been paid, and Seller is not obligated to pay any Capital Call or make any
other contribution to Starpower (other than with respect to Capital Calls in
accordance with the terms of the Operating Agreement that have not yet been
made).
4.3 Authority. Seller has the full right, power and authority to
enter into, execute and deliver this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, and
to perform its obligations under this Agreement. Seller's execution and
delivery of this Agreement and Seller's consummation of the transactions
contemplated in this Agreement has been duly authorized by all required
limited liability company action, including without limitation, approval by
Seller's members. This Agreement and all such other documents and agreements
to which Seller is a party have been or will be, as the case may be, duly and
validly executed and delivered by Seller and, subject to the due
authorization, execution and delivery by Purchaser, will constitute legal,
valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms.
4.4 No Breach or Default. Seller's execution and delivery of, and
consummation of the transactions contemplated in, this Agreement will not (a)
result in the material breach of any of the terms or conditions of, or
constitute a default under, or allow for the acceleration or termination of,
or in any manner release any party from any obligation under, any material
contract, instrument, license or permit to which Seller is a party or by which
it or any of its assets may be bound; (b) conflict with any provision of the
Seller's operating agreement, or any other agreement regarding the operation,
of the Seller; (c) result in any Lien on any part of the Pepcom Membership
Interest or the assets of Starpower; (d) violate in any material respect any
law, rule or regulation, or any order, writ, injunction or decree of any
governmental authority, or require the approval, consent or permission of any
governmental authority other than the regulatory consents required to be
obtained in connection with the transactions contemplated in this Agreement
(the "Regulatory Consents"); or (e) violate the Operating Agreement.
4.5 No Misleading Statements. Seller's representations and warranties
in this Agreement do not include any untrue statement of a material fact or
omit to state any material fact necessary to make any statements made not
misleading.
4.6 Brokers; Finders. Except as listed below, no Person has acted
directly or indirectly as a broker, finder or financial advisor for Seller in
connection with the transactions contemplated by this Agreement.
Seller's Financial Advisor: Claris Advisors LLC, formerly known
as Claris Capital LLC
4.7 PCI Guaranties. Exhibit A attached hereto lists all of the
agreements and guaranties PCI has provided to or for the benefit of third
parties with respect to Starpower or its operations (each, a "PCI Guaranty").
4.8 Litigation. No lawsuits, actions or arbitrations, governmental
investigations, claims, inquiries or proceedings are pending or, to Seller's
Knowledge, threatened involving Seller, any part of the Pepcom Membership
Interest, or any of the transactions contemplated by this Agreement. Seller is
not subject to any order, judgment, decree, stipulation or consent of or with
any court, governmental body or agency that has, or may have, a material
adverse effect on the assets or the financial condition or the results or
operation of Seller.
4.9 No Other Agreement. Except for the Membership Interest Purchase
Agreement between Seller and United Cable Holdings, LLC, dated July 28, 2004
(the "United Cable Agreement"), a copy of which has been provided to
Purchaser, neither Seller nor any of its Affiliates has any contract,
agreement, arrangement or understanding with respect to the sale or other
disposition of any part of the Pepcom Membership Interest (except as set forth
in the Operating Agreement and this Agreement) or any of Starpower's assets
(except as set forth in the Operating Agreement and in the Internet
Contribution Agreement dated as of December 18, 1998). The United Cable
Agreement does not restrict the ability of Seller to enter into this Agreement
and this Agreement and consummation of the transactions contemplated hereby do
not and will not result in a breach under, or conflict with, the United Cable
Agreement.
4.10 No Approvals Required. Other than the Regulatory Consents, no
notice to, filing with, authorization of, exemption by, approval, consent or
permission of any other Person or of any governmental authority, including
without limitation, any court or bankruptcy court, is required for Seller to
enter into this Agreement and consummate the transactions contemplated in this
Agreement.
4.11 No Basis for Denying Consent. Seller is not aware of any reason
why Seller and Starpower would not be able to satisfy any reasonable and
lawful conditions that may be imposed in connection with the granting of any
Regulatory Consent.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of
this Agreement and as of the Closing Date as follows:
5.1 Organization, Standing and Qualification. Purchaser (a) is duly
organized, validly existing and in good standing under the laws of the State
of Delaware; (b) has full corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted; and (c) is
not required to be qualified or licensed to conduct business as a foreign
limited liability company in any other jurisdiction where the failure to be so
qualified would have a material adverse effect on Purchaser.
5.2 Authority. Purchaser has the full right, power and authority to
enter into this Agreement and all documents and agreements necessary to give
effect to the provisions of this Agreement and to perform its obligations
under this Agreement. Purchaser's execution and delivery of this Agreement,
and Purchaser's consummation of the transactions contemplated in this
Agreement, have been duly authorized by Purchaser's board of directors. This
Agreement and all such other documents and agreements to which Purchaser is a
party have been or will be, as the case may be, duly and validly executed and
delivered by Purchaser and, subject to the due authorization, execution and
delivery by Seller, will constitute legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with their respective
terms.
5.3 No Breach or Default. Purchaser's execution and delivery of, and
consummation of the transactions contemplated in, this Agreement will not (a)
result in the material breach of any of the terms or conditions of, or
constitute a default under, or allow for the acceleration or termination of,
or in any manner release any party from any obligation under, any material
contract, instrument, license or permit to which Purchaser is a party or by
which it or any of its assets may be bound; or (b) conflict with any of the
provisions of the articles of incorporation or bylaws of Purchaser; or (c)
violate in any material respect any law, rule or regulation, or any order,
writ, injunction or decree of any governmental authority, or require the
approval, consent or permission of any governmental authority other than the
Regulatory Consents; or (d) violate the Operating Agreement.
5.4 No Approvals Required. Other than the Regulatory Consents, the
consents and approvals, if any, related to the transactions described in
Sections 7.1(g) and 8.1(e), and the filings, permits authorizations, consents
and approvals as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no approval, consent or
permission of any third party or of any governmental authority, including
without limitation any court or bankruptcy court, is required for Purchaser to
enter into this Agreement and consummate the transactions contemplated in this
Agreement.
5.5 No Basis for Denying Consent. To Purchaser's actual knowledge,
(a) no Regulatory Consents will be withheld solely or primarily because of the
fact that Purchaser is the proposed transferee of the Pepcom Membership
Interest and (b) Purchaser will be able to satisfy any reasonable conditions
that may be imposed in connection with the granting of any Regulatory Consent.
5.6 No Misleading Statements. Purchaser's representations and
warranties in this Agreement do not include any untrue statement of a material
fact or omit to state any material fact necessary to make any statements made
not misleading.
5.7 Brokers; Finders. Except as listed below, no Person has acted
directly or indirectly as a broker, finder or financial advisor for Purchaser
in connection with the transactions contemplated by this Agreement.
6. COVENANTS FROM EFFECTIVE DATE TO CLOSING DATE
6.1 Operations. The parties agree that, unless otherwise agreed in
writing by both parties, Starpower shall, between the Effective Date and the
Closing Date, continue to exist, operate, carry out its business, and function
in every other manner substantially as it has up to the Effective Date,
subject at all times to the Operating Agreement, applicable Starpower business
plans to which the parties have agreed, and other material contracts that
govern the operations of Starpower.
6.2 Obtain Consents. Promptly upon the execution of this Agreement,
each of the parties will use commercially reasonable efforts and cooperation
to make all filings and take all steps reasonably necessary to obtain the
Regulatory Consents, including without limitation satisfying any reasonable
and lawful condition that may be imposed in connection with the granting of
any Regulatory Consent, and all other approvals and consents required to be
obtained for the consummation of the transactions contemplated by this
Agreement and otherwise to satisfy the conditions of Sections 7.1(f).
7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
7.1 Conditions to Close. Purchaser's obligations under this Agreement
are subject to the satisfaction, at or before the Closing Date, of all of the
following conditions precedent, unless waived in writing by Purchaser:
(a) Representations and Warranties. All of Seller's
representations and warranties in this Agreement and in any notice,
certificate or document delivered by Seller under this Agreement shall be
true, correct and complete as of the Closing Date.
(b) Conditions. Seller shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date.
(c) Certificate. Seller shall have delivered to Purchaser a
certificate, dated as of the Closing Date, in form and substance satisfactory
to Purchaser, certifying to the fulfillment of the conditions set forth in
Sections 7.1(a) and 7.1(b).
(d) No Litigation. None of the transactions contemplated in
this Agreement shall have been enjoined by any court or by any governmental
authority, no suit or other proceeding challenging the transactions
contemplated by this Agreement shall have been threatened or instituted, and
no investigative or other demand shall have been made by any governmental
authority.
(e) Other Deliveries. Seller shall have delivered the items
it is required to deliver under Section 9.
(f) Regulatory Approvals; Other Consents. All material
consents and approvals of regulatory authorities, including, without
limitation, those required pursuant to or in connection with the HSR Act,
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received, provided that Purchaser may waive this
condition with respect to any or all consents otherwise required by this
Section 7.1(f).
(g) Plan of Reorganization. The Plan filed with and
confirmed by the Bankruptcy Court shall have been consummated and an amount of
money sufficient to consummate the Plan and acquire the Pepcom Membership
Interest shall have been provided under the Exit Financing.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
8.1 Conditions to Close. Seller's obligations under this Agreement
are subject to the satisfaction, at or before the Closing Date, of all of the
following conditions precedent, unless waived in writing by Seller:
(a) Representations and Warranties. All of Purchaser's
representations and warranties in this Agreement and in any notice,
certificate or document delivered by Purchaser under this Agreement shall be
true, correct and complete as of the Closing Date.
(b) Conditions. Purchaser shall have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date.
(c) Certificate. Purchaser shall have delivered to Seller a
certificate, dated as of the Closing Date, in form and substance satisfactory
to Seller, certifying to the fulfillment of the conditions set forth in
Sections 8.1(a) and 8.1(b).
(d) No Litigation. None of the transactions contemplated in
this Agreement shall have been enjoined by any governmental authority, no suit
or other proceeding challenging the transactions contemplated in this
Agreement shall have been threatened or instituted, and no investigative or
other demand shall have been made by any governmental authority.
(e) Release of PCI Guaranties. For each PCI Guaranty listed
on Exhibit B attached hereto (each a "Released Guaranty"), PCI shall have
received a written release of PCI from each Released Guaranty, in a form that
is reasonably satisfactory to PCI and its counsel in their sole discretion, a
form of which is attached hereto as Exhibit C (the "Indemnity, Guaranty and
Release Agreement"). Purchaser acknowledges and agrees that it or one or more
of its Affiliates may be required to provide a replacement guaranty to achieve
such release, and that Seller may condition any waiver of this condition on
the receipt by Seller from Purchaser and/or one or more of its Affiliates, in
Seller's sole discretion, of a written agreement, duly executed by Purchaser
and/or such Affiliates and in a form that is reasonably satisfactory to PCI
and its counsel in their sole discretion, to indemnify and hold PCI harmless
against any and all losses, costs and expenses PCI may incur under any
Released Guaranty from which PCI is not released as contemplated in the
immediately preceding sentence; provided, however, that each and any such
required replacement guaranty or indemnity shall (i) be conditioned on the
delivery by PCI to Purchaser of an instrument pursuant to which PCI will
indemnify, defend and hold harmless Purchaser Indemnitees (as defined in
Section 11.1), to the extent of any obligations that are covered by the
replaced Released Guaranty that arise out of, or result from, facts, events or
circumstances occurring, or which accrue, before the Closing Date; and (ii)
not relieve either Seller or its Affiliates of any of its or their obligations
under any material contracts relating to Starpower to which Seller or its
Affiliates remain a party after the Closing.
(f) Other Deliveries. Purchaser shall have delivered the
items it is required to deliver under Section 9.
9. CLOSING DELIVERIES
The parties shall make their respective deliveries indicated below:
9.1 Purchaser's Closing Deliveries. At the Closing, Purchaser shall
deliver to Seller (a) the amount of the Purchase Price pursuant to Section 2
above in the form and manner described in Section 2.1; (b) the certificate
described in Section 8.1(c) above; (c) evidence of the release of the PCI
Guaranties as contemplated in Section 8.1(e) above; and (d) such other
documents or instruments, duly executed by Purchaser, as the parties may agree
are necessary and desirable to effect the transactions contemplated by this
Agreement.
9.2 Seller's Closing Deliveries. At the Closing, Seller shall deliver
to Purchaser (a) such instruments of assignment, transfer, conveyance and
endorsement as will be sufficient in the reasonable opinion of Purchaser and
its counsel in their sole discretion to transfer, assign, convey and deliver
to Purchaser the Pepcom Membership Interest, free and clear of all Liens; (b)
the certificate described in Section 7.1(c); (c) a copy of the written
resignations of each Manager appointed by Seller that, as of the Closing Date,
was serving on the Starpower Members Committee; (d) a duly executed
certificate, in the form set forth in Treasury Regulation
ss.1.1445-2(b)(2)(iv)(B) and (e) such other documents or instruments, duly
executed by Seller, as the parties may agree are necessary and desirable to
effect the transactions contemplated by this Agreement.
10. ADDITIONAL COVENANTS
10.1 Agreement to Cooperate. Subject to the terms and conditions of
this Agreement, each party shall use reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all necessary consents
and all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. In the event any litigation is commenced by any Person
relating to the transactions contemplated by this Agreement, Purchaser shall
have the right, at its own expense, to participate in such litigation, and
Seller will not settle any such litigation without the consent of Purchaser,
which consent will not be unreasonably withheld. Following the Closing, each
party shall deliver or cause to be delivered at such times and places as shall
be reasonably agreed upon such additional instruments as the other party may
reasonably request for the purpose of carrying out this Agreement.
10.2 Broker's and Finder's Fees. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee incurred by
it in connection with the transactions contemplated by this Agreement.
10.3 Taxes.
(a) Purchaser and Seller shall reasonably cooperate with
each other, at the expense of the party requesting such cooperation, with
respect to any tax-related matters arising out of either party's ownership of
the Pepcom Membership Interest. In connection therewith, each party shall make
available to the other such files, documents, books and records for inspection
and copying as may be reasonably requested by such other party and shall
cooperate with respect to retaining information and documents relating to such
matters. Each party shall have the sole right and authority, at its option, to
pay, settle, contest and otherwise address all Tax matters affecting any Tax
Returns filed by such party or its direct or indirect members arising out of
or relating to ownership of the Pepcom Membership Interest.
(b) The parties acknowledge that the transfer of the Pepcom
Membership Interest as contemplated in this Agreement will result in the
deemed termination of the Starpower partnership for federal income tax
purposes as of the Closing Date. Accordingly, Seller shall cooperate with
Purchaser in seeking to cause a closing of the books of Starpower as of the
Closing Date and the preparation of, and timely filing of, appropriate Tax
returns for the taxable period then ending. Starpower's income and expenses
for such taxable period shall be divided and allocated pursuant to a
reasonable accounting for such income and expenses that is acceptable to both
Seller and Purchaser and shall be determined in accordance with Section 706 of
the Code. Seller shall act as tax matters partner for Starpower for tax
returns with respect to periods prior to and including the Closing Date and
shall cease to be tax matters partner with respect to any subsequent returns
and periods. Purchaser shall prepare and file, and Seller shall sign,
Starpower's final income tax return, with respect to periods during which
Seller was a partner, in accordance with the parties' past practice.
(c) Seller and Purchaser shall mutually agree on a proposed
allocation of the total amount received by Seller in exchange for the Pepcom
Membership Interest to the various assets and liabilities of Starpower
pursuant to Sections 751 and 1060 of the Code. Such allocation shall be based
on appraised values provided by third parties recognized as professionals in
such matters. Each party shall use commercially reasonable efforts to cause
Starpower to use the allocation agreed to by the parties as contemplated in
the immediately preceding sentence. Seller and Purchaser agree that neither of
them shall take a position on any Tax return that is inconsistent with such
allocation.
10.4 Publicity. Except as required by law, any governmental agency or
any securities exchange, the parties hereto agree to obtain the prior approval
of each other before issuing (or allowing their Affiliates to issue) any press
release, public disclosure or other announcement with respect to this
Agreement or any of the transactions contemplated by this Agreement. In the
event either party hereto is so required by law, any governmental agency or
any securities exchange to make a public disclosure or other announcement as
aforesaid, it shall use its commercially reasonable efforts to afford the
other a reasonable opportunity to review the form and content of the
announcement or disclosure prior to making same.
11. INDEMNIFICATION; LIQUIDATED DAMAGES
11.1 By Seller. Seller, subject to the limitations set forth in
Section 11.3, covenants and agrees that it will indemnify, defend and hold
harmless Purchaser, its Affiliates and their directors, officers, members,
managers, agents, successors and assigns (collectively, the "Purchaser
Indemnitees"), from and after the Closing Date, against any and all losses,
damages, assessments, Taxes, fines, penalties, liabilities, claims,
deficiencies, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
(collectively, "Losses"), suffered or incurred by a Purchaser Indemnitee as a
result of, or suffered or incurred by a Purchaser Indemnitee in litigation
commenced with respect to, any or all of the following contingencies
(collectively, the "Seller Indemnification Events"): (a) any
misrepresentation, breach of warranty, or nonfulfillment of any agreement or
covenant on the part of Seller pursuant to the terms of this Agreement; (b)
any liability or obligation of Seller with respect to the conduct of the
business of Starpower or arising out of, or resulting from the ownership of
the Pepcom Membership Interest, to the extent arising out of, or resulting
from, facts, events or circumstances occurring, or which accrue, prior to the
Closing Date, including specifically franchise fees and any liability or
obligation resulting from a finding that Seller or Starpower failed to comply
with the rules, regulations, policies, procedures or requirements of the FCC
or of any local franchise authority; and (c) all actions, suits, proceedings,
demands, assessments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation) incident
to any of the foregoing.
11.2 By Purchaser. Purchaser, subject to the limitations set forth in
Section 11.3, covenants and agrees that Purchaser will indemnify, defend and
hold harmless Seller, its Affiliates, and their directors, officers, members,
managers, agents, successors and assigns (the "Seller Indemnitees"), from and
after the Closing Date, against any and all Losses suffered or incurred by a
Seller Indemnitee in litigation commenced with respect to, any of the
following contingencies (all, the "Purchaser Indemnification Events"): (a) any
misrepresentation, breach of warranty, or nonfulfillment of any agreement or
covenant on the part of Purchaser pursuant to the terms of this Agreement; (b)
any liability or obligation with respect to the conduct of the business of
Starpower or arising or resulting from ownership of Starpower to the extent
arising out of, or resulting from, facts, events or circumstances occurring,
or which accrue, after the Closing Date, including specifically franchise fees
and any liability or obligation resulting from a finding that Purchaser or
Starpower failed to comply with the rules, regulations, policies, procedures
or requirements of the FCC or of any local franchise authority; and (c) all
actions, suits, proceedings, demands, assessments, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees
and expenses of investigation) incident to any of the foregoing.
11.3 Limitations on Liability. The obligations of Seller to indemnify
the Purchaser Indemnitees as provided in Section 11.1, or otherwise to be
liable to Purchaser under this Agreement, and the obligations of Purchaser to
indemnify the Seller Indemnitees as provided in Section 11.2, or otherwise to
be liable to the Seller under this Agreement, shall not apply until the amount
by which the cumulative amount of all liabilities, claims, damages,
deficiencies, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses and expenditures with respect to the Seller Indemnification
Events or the Purchaser Indemnification Events, as the case may be, net of
insurance coverage and tax benefits to the Indemnitee (as defined below)
exceeds Five Hundred Thousand Dollars ($500,000) (the "General Deductible
Amount"); provided, that the amount of any obligation of indemnity or any
other liability under this Agreement arising with respect to fraud, fraudulent
inducement, intentional misrepresentation or concealment (collectively,
"Fraud"), or in connection with any covenants contained herein (including
those in Section 10.3), shall not be subject to the General Deductible Amount.
Except for Fraud or a breach of the covenant contained in Section 10.4, the
aggregate maximum amount of indemnification or other liability for which
either party shall be liable under this Agreement with respect to any
misrepresentation, breach of warranty, or nonfulfillment of any agreement or
covenant pursuant to the terms of this Agreement is the Purchase Price.
11.4 Expiration. Except as provided in Section 11.6, with respect to
the representations and warranties contained in this Agreement, the
obligations of the parties under Section 11.1 and 11.2 shall expire on the
second anniversary of the Closing Date, unless a Claims Notice is given or
litigation is commenced on or prior to such second anniversary; provided, that
obligations of the Seller under Section 11.1 arising as a result of a breach
of the covenants contained in Section 10.3 shall survive until the expiration
of the applicable statute of limitations.
11.5 Notice of Indemnity Claim. In the event that any claim ("Claim")
is hereafter asserted against or arises with respect to any Purchaser
Indemnitee or Seller Indemnitee (each, an "Indemnitee") as to which such
Indemnitee may be entitled to indemnification hereunder, the Indemnitee shall
notify the party from which indemnification is sought (the "Indemnifying
Party") in writing thereof (each, a "Claims Notice") within 60 days after (a)
receipt of written notice of commencement of any third party litigation
against or involving such Indemnitee (a "Third Party Claim"); or (b) receipt
by such Indemnitee of written notice of any Third Party Claim pursuant to an
invoice, notice of claim or assessment against such Indemnitee; provided, that
the failure to give the Claim Notice with respect to Third Party Claims within
such time period shall not affect the indemnification obligation of the
Indemnifying Party under this Agreement or otherwise except to the extent that
such failure or delay shall have materially affected the ability of the
Indemnifying Party to defend such Third Party Claim. The Claims Notice shall
describe the Claim and the specific facts and circumstances in reasonable
detail, and shall indicate the amount, if known, or an estimate, if possible,
of the losses that have been or may be incurred or suffered by the Indemnitee.
The Indemnifying Party may elect to defend by the Indemnifying
Party's own counsel (which counsel shall be subject to the reasonable approval
of the Indemnitee) any Third Party Claim for money damages where the
cumulative total of all Claims (including such Claim) does not exceed the
limit set forth in the last sentence of Section 11.3 prior to the time the
Claim is made; provided, however, the Indemnifying Party may assume and
undertake the defense of such a Third Party Claim only upon written agreement
by the Indemnifying Party that the Indemnifying Party is obligated to
indemnify fully the Indemnitee. The Indemnitee may participate, at the
Indemnitee's own expense, in the defense of any Claim assumed by the
Indemnifying Party. Without the written approval of the Indemnitee, the
Indemnifying Party shall not agree to any compromise of a Claim defended by
the Indemnifying Party.
If, within 10 days of the Indemnifying Party's receipt of a Claims
Notice, the Indemnifying Party shall not have provided the written agreement
described in the immediately preceding paragraph and elected to defend the
Third Party Claim, or if in the reasonable judgment of the Indemnitee the
Indemnifying Party fails to adequately defend the Third Party Claim, the
Indemnitee shall have the right to assume control of the defense and/or
compromise of such Claim, and the costs and expenses of such defense,
including reasonable attorneys' fees, shall be added to the Claim. The
Indemnifying Party shall promptly, and in any event within 10 days after
demand therefor, reimburse the Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
The party assuming the defense of any Claim shall keep the other
party reasonably informed at all times of the progress and development of its
or their defense of and compromise efforts with respect to such Claim and
shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties shall cooperate with
each other and make available to each other and their representatives all
available relevant records or other materials required by them for their use
in defending, compromising or contesting any Claim. The failure to timely
deliver a Claims Notice or otherwise notify the Indemnifying Party of the
commencement of such actions in accordance with this Section 11.5 shall not
relieve the Indemnifying Party from the obligation to indemnify hereunder
except to the extent that the Indemnifying Party establishes by competent
evidence that it has been prejudiced thereby.
In the event both the Indemnitee and the Indemnifying Party are named
as defendants in an action or proceeding initiated by a third party, they
shall both be represented by the same counsel (on whom they shall agree),
unless such counsel, the Indemnitee, or the Indemnifying Party shall determine
that such counsel may have a conflict of interest in representing both the
Indemnitee and the Indemnifying Party in the same action or proceeding and the
Indemnitee and the Indemnifying Party do not waive such conflict to the
satisfaction of such counsel, in which case, the Indemnifying Party shall pay
attorneys' fees to the same extent as provided above for separate counsel for
the Indemnitee.
11.6 Liability for Breaches of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement and
in any certificate or other document or instrument delivered pursuant to this
Agreement, and the liability of the party making such representations and
warranties for breaches thereof, shall survive the consummation of the
transactions contemplated hereby until the later of the expiration of the
period set forth in Section 11.4, or the final resolution of all Claims filed
prior to such time, but only as to the representations and warranties relevant
to such Claims, provided that the representations and warranties shall survive
until expiration of the applicable statute of limitations with respect to any
Claim based in whole or in part on Fraud solely as to the portion of such
Claim found to be Fraud, provided further that the representations and
warranties set forth in Sections 4.1 through 4.3, and Sections 5.1 and 5.2,
and all covenants contained herein, shall survive until the later of
expiration of the applicable statute of limitations or the resolution of all
Claims to the extent the representations and warranties or covenants are
relevant to such Claims. The parties, in executing and delivering and
performing under this Agreement are relying solely on the representations,
warranties, agreements and covenants contained in this Agreement, or in any
writing or document delivered pursuant to the provisions of this Agreement,
and not upon any representation, warranty, agreement, promise or information,
written or oral, made by any Person other than as specifically set forth
herein or therein.
11.7 Exclusivity of Remedies; Limitation of Liability. Except for
injunctive relief as provided in Section 12, from and after the Closing, the
sole remedy for any claim, suit or other legal proceeding by any Indemnitee
arising out of, resulting from or relating to any breach or inaccuracy of any
warranty or representation by a party to this Agreement, or the failure of a
party to perform under this Agreement in the manner required or contemplated
in this Agreement, shall be the indemnification provided for, and as limited
by, this Section 11. In furtherance of the foregoing, each party hereby
waives, to the fullest extent permitted under applicable law, any and all
other rights, claims and causes of action it may have, from and after the
Closing against the other, its Affiliates, and their officers, directors,
managers, members, employees, agents and representatives relating to the
subject matter of this Agreement. An Indemnitee may, but shall not be
obligated to, set off against any and all payments due an Indemnifying Party
any amount to which any Indemnitee is entitled to be indemnified under this
Section 11.
12. OTHER POST-CLOSING COVENANTS
12.1 Confidential Information. Each party shall cause all information
obtained from the other party in connection with the negotiation, execution
and performance of this Agreement (the "Confidential Information") to be
treated as confidential; provided that after the Closing Date, all information
about Starpower possessed by the Purchaser will not be deemed Confidential
Information with respect to the Purchaser and will be deemed Confidential
Information with respect to Seller and its Affiliates; provided, however, all
information Starpower or Purchaser or its Affiliates received from Seller or
its Affiliates on a confidential basis shall be treated as Confidential
Information. In addition, Seller shall treat as confidential all information,
knowledge or data related to the business of Starpower which are or were
treated as confidential information of Starpower's business (the "Starpower
Confidential Information"). Neither party shall use any Confidential
Information, and Seller shall not use any Starpower Confidential Information,
before the Closing in violation of any of its obligations under this Agreement
or after the Closing for any purpose other than the performance of its
obligations under, and the consummation of the transactions contemplated in,
this Agreement. Neither party shall disclose any Confidential Information, and
Seller shall not disclose any Starpower Confidential Information, before the
Closing in violation of any of its obligations under this Agreement or after
the Closing, to any third party, except as required by applicable law,
regulation or legal process, without the prior express written consent of the
other party. All or any part of the Confidential Information (or Starpower
Confidential Information with respect to Seller after the Closing) may be
disclosed only to a party's directors, officers and employees who agree to
keep the Confidential Information confidential and who need to know the
Confidential Information for the purpose of the party's performance of its
obligations under this Agreement and the consummation of the transactions
contemplated in this Agreement. Notwithstanding anything to the contrary in
this Agreement, the term "Confidential Information" or "Starpower Confidential
Information" as used in this Agreement shall not include any information that
(a) at the time of disclosure or thereafter is generally available or publicly
known, (b) is available to a party from a source other than the other party or
Starpower, provided that such source is not bound by this or another
confidentiality agreement with respect to such information, or (c) has been
independently developed or acquired by the party receiving the information
without violating any of its obligations under this or any other
confidentiality agreement.
12.2 Rights and Remedies Upon Breach. If either party or any of its
Affiliates breaches, or threatens to commit a breach of, any of the provisions
of Section 12.1, the other party shall have the right and remedy to have
Section 12.1 specifically enforced by any court of competent jurisdiction, it
being agreed that any breach or threatened breach of Section 12.1 would cause
irreparable injury and that money damages would not provide an adequate remedy
for the breach. Accordingly, in addition to any other rights or remedies, the
non-breaching party shall be entitled to injunctive relief to enforce the
terms of Section 12.1 and to restrain the breaching party or its Affiliate
from any violation thereof.
13. GENERAL
13.1 Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their successors or assigns. Neither
party to this Agreement may assign this Agreement or any of its rights or
obligations herein without the prior written consent of the other party;
provided, however, that either party may assign certain rights and obligations
under this Agreement to an Affiliate of the party provided the party and such
assignee become jointly and severally liable hereunder. Any assignment of this
Agreement shall be subject to the terms of this Agreement and shall not
relieve the assignor of its responsibilities under this Agreement.
13.2 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 constitute one and the same instrument.
13.3 Notices. All notices, requests, demands and other communications
required or contemplated under this Agreement shall be deemed to have been
duly given if in writing and either delivered personally, sent by facsimile
transmission or by air courier service, or mailed by postage prepaid
registered or certified U.S. mail, return receipt requested, to the addresses
designated below or such other addresses as may be designated in writing by
notice given hereunder, and shall be effective upon personal delivery or
facsimile transmission thereof or upon delivery by registered or certified
U.S. mail or 1 business day following deposit with an air courier service:
If to Seller: Pepco Communications, L.L.C.
000 Xxxxx Xxxxxx, XX
Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, President
Fax: (000) 000-0000
With a copy to (which shall not Xxxxx X. Xxxxxxx
constitute notice): Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Purchaser: RCN Telecom Services of Washington,
D.C., Inc.
c/o RCN Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
With a copy to (which shall not Xxxxxx X. Xxxxx
constitute notice): Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
13.4 Applicable Law. Except as otherwise stated, this Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to its conflict of laws provisions.
13.5 Payment of Fees and Expenses. Whether or not the transactions
contemplated in this Agreement are consummated, except as provided in Section
11.1, each party will pay its own fees, expenses and disbursements incurred in
connection with the preparation and execution of this Agreement and all other
costs and expenses incurred in the performance of and compliance with all
conditions to be performed under this Agreement, including, without
limitation, the expenses of any of its financial or legal advisors; for the
avoidance of doubt, this Section 13.5 shall not alter, modify, amend or revise
the terms of Section 3.2(f) of the Operating Agreement and any obligations
described therein.
13.6 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
13.7 Number and Gender of Words. Whenever the singular number is used
in this Agreement, the same shall include the plural where appropriate, and
shall apply to all of such number, and to each of them, jointly and severally,
and words of any gender shall include each other gender where appropriate.
13.8 Entire Agreement. This Agreement, the Indemnity, Guaranty and
Release Agreement, the Operating Agreement and the other documents and
agreements delivered pursuant to this Agreement or the Operating Agreement,
constitute the entire Agreement and understanding between Seller and Purchaser
regarding the subject matter of this Agreement and supersede any prior
agreement and understanding relating to the subject matter of this Agreement.
13.9 Amendments and Waivers. The parties may mutually amend or waive
any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the parties. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.
13.10 Construction. The language in all parts of this Agreement must
be in all cases construed simply according to its fair meaning and not
strictly for or against any party. The word "including" or any variation
thereof means "including without limitation" and shall not be construed to
limit any general statement that it follows to the specific or similar items
or matters immediately following it.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Membership
Interest Purchase Agreement by Persons thereunto duly authorized as of the
date first above written.
SELLER: PEPCO COMMUNICATIONS, L.L.C.
By: PEPCO COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
PURCHASER: RCN TELECOM SERVICES OF WASHINGTON, D.C., INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President,
General Counsel and Corporate
Secretary
EXHIBIT A
PCI GUARANTIES
1. Guaranty of Lease, made as of August 26, 2000, by RCN Corporation and
Potomac Capital Investment Corporation to Boston Properties Limited
Partnership regarding Starpower's lease of 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, XX
2. Guaranty, dated January 20, 1998, made by Potomac Capital Investment
Corporation in favor of 000 0xx Xxxxxx Limited Partnership regarding
Starpower's lease of 00000 Xxxxxxxxx Xxxx, Xxxxxx, XX
3. Cross-Guaranty/Indemnity Agreement, dated as of November 30, 1999,
made by and between RCN Corporation and Potomac Capital Investment
Corporation
4. Guarantee, dated as of December 18, 1997, by Potomac Capital
Investment Corporation on behalf of Pepco Communications LLC in favor
of Starpower
EXHIBIT B
RELEASED GUARANTIES
1. Guaranty of Lease, made as of August 26, 2000, by RCN Corporation and
Potomac Capital Investment Corporation to Boston Properties Limited
Partnership regarding Starpower's lease of 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, XX
2. Guaranty, dated January 20, 1998, made by Potomac Capital Investment
Corporation in favor of 000 0xx Xxxxxx Limited Partnership regarding
Starpower's lease of 00000 Xxxxxxxxx Xxxx, Xxxxxx, XX
3. Cross-Guaranty/Indemnity Agreement, dated as of November 30, 1999,
made by and between RCN Corporation and Potomac Capital Investment
Corporation
EXHIBIT C
FORM OF INDEMNITY, GUARANTY AND RELEASE AGREEMENT
THIS INDEMNITY, GUARANTY AND RELEASE AGREEMENT (this "Agreement") is
made as of this ____ day of December, 2004, by and between RCN Corporation, a
Delaware corporation ("RCN"), and Potomac Capital Investment Corporation, a
Delaware corporation ("PCI").
WHEREAS, pursuant to the Membership Interest Purchase Agreement of
even date herewith (the "Purchase Agreement") by and between Pepco
Communications, L.L.C. ("Pepcom") and RCN Telecom Services of Washington,
D.C., Inc. ("RCN-Sub"), Pepcom is selling its 50% Membership Interest in
Starpower to RCN-Sub. All defined terms not otherwise defined herein shall
have the meaning ascribed to them in the Purchase Agreement;
WHEREAS, RCN and PCI made that certain Guaranty of Lease (the "BPLP
Guaranty," a copy of which is attached to this Agreement as Exhibit A), dated
as of August 26, 2000, to Boston Properties Limited Partnership ("BPLP") with
respect to the lease by and between BPLP and Starpower Communications, LLC
("Starpower");
WHEREAS, PCI made that certain Guaranty (a copy of which is attached
to this Agreement as Exhibit B, and together with the BPLP Guaranty, the
"Lease Guaranties"), dated as of January 20, 1998, in favor of 000 0xx Xxxxxx
Limited Partnership ("300 0xx Xxxxxx LP," and, together with BPLP and their
respective successors and assigns, the "Guarantee Entities") with respect to
the Ground and Building Lease Agreement by and between Starpower and 000 0xx
Xxxxxx LP;
WHEREAS, RCN and PCI entered into that certain
Cross-Guaranty/Indemnity Agreement, dated as of the 30th day of November 1999
(the "Cross Guaranty," a copy of which is attached to this Agreement as
Exhibit C, and together with the Lease Guaranties, the "Released
Guaranties,");
WHEREAS, in order to satisfy the condition precedent set forth in
Section 8.1(e) of the Purchase Agreement (the "Condition"), RCN shall provide
PCI a written release from the Released Guaranties; provided however that PCI
shall cause Pepcom to waive such Condition with respect to the Lease
Guaranties upon the execution and delivery of this Agreement by RCN to PCI;
and
WHEREAS, PCI shall guarantee the obligations of Pepcom under the
Purchase Agreement and RCN shall guarantee the obligations of RCN-Sub under
the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual premises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, and intending to be
legally bound by this Agreement, the parties hereby agree as follows:
1. Indemnification with Respect to the Lease Guaranties. RCN shall
indemnify and hold harmless PCI and its Affiliates from and against any and
all costs, expenses, losses, damages and claims, including reasonable
attorneys' fees and disbursements, that PCI and/or its Affiliates may incur or
sustain at any time in fulfilling or performing PCI's obligations under any
Lease Guaranty in connection with or as a result or consequence of any actual
or alleged breach, failure to perform, or other default of any kind by
Starpower and/or any of its Affiliates after the Closing Date under either or
both of the leases that are described in the Lease Guaranties.
2. Advancement of Expenses. RCN shall pay all reasonable costs and
expenses (including attorneys' fees), in accordance with Section 11.5 of the
Purchase Agreement, incurred by PCI and/or any of its Affiliates in defending
any action, suit or proceeding to enforce either or both of the Lease
Guaranties, except for costs and expenses that arise out of, or result from,
facts, events or circumstances occurring, or which accrue, on or before the
Closing Date.
3. Replacing and Releasing the Lease Guaranties. RCN, with the
reasonable assistance of PCI, shall, and shall cause its Affiliates to, use
commercially reasonable efforts to cause, as soon as is practicable following
the Closing, the Guarantee Entities (a) to accept from RCN (and/or one or more
of its Affiliates) guaranties and/or other documents or instruments in lieu of
the Lease Guaranties and (b) upon such acceptance, to release PCI from the
Lease Guaranties.
4. RCN Release of Cross Guaranty. RCN irrevocably releases PCI from
the Cross Guaranty and from any and all obligations PCI or any of its
Affiliates has or may have under the Cross Guaranty, except for claims that
arise out of, or result from, facts, events or circumstances occurring, or
which accrue, on or before the Closing Date.
5. PCI Release of Cross Guaranty. PCI irrevocably releases RCN from
the Cross Guaranty and from any and all obligations RCN or any of its
Affiliates has or may have under the Cross Guaranty, except for claims that
arise out of, or result from, facts, events or circumstances occurring, or
which accrue, on or before the Closing Date.
6. Guaranty of Pepcom by PCI. Notwithstanding the foregoing, (a) PCI
irrevocably and unconditionally guarantees the obligations of Pepcom under the
Purchase Agreement to and for the benefit of RCN and/or its Affiliates and
their respective successors and assigns and (b) RCN irrevocably and
unconditionally guarantees the obligations of RCN-Sub under the Purchase
Agreement to and for the benefit of PCI and/or its Affiliates and their
respective successors and assigns.
7. Waiver of Condition. PCI hereby agrees that the execution and
delivery of this Agreement satisfies the Condition and agrees to cause Pepcom
to waive such Condition; provided that this Section 7 does not alter the
obligation of RCN and/or its Affiliates under Section 3 of this Agreement.
8. Non-Exclusivity of Provisions. The provisions of this Agreement
shall not be deemed exclusive of any other rights to which PCI and/or its
Affiliates and RCN and/or its Affiliates may be entitled at law, in equity, or
under any agreement.
9. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of the parties, their respective Affiliates and all of
their respective successors and assigns, including but not limited to any
party to which any of them sells all or substantially all its assets or with
which any of them merges.
10. Amendment; Waiver. This Agreement may not be amended except by an
instrument in writing duly executed and delivered by both PCI and RCN. No
provision of or obligation under this Agreement may be waived except in
writing by PCI and RCN, except for Sections 1, 2, 3 and 4 which may only be
waived in writing by PCI and Section 5 which may only be waived in writing by
RCN.
11. Notices. All notices, request, demands and other communications
required or contemplated under this Agreement shall be provided by each party
in accordance with Section 13.3 of the Purchase Agreement.
12. Headings. The headings in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
its conflict of laws provisions.
14. 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 constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, RCN and PCI have duly executed this Agreement as
of the date first above written.
RCN CORPORATION
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President, General
Counsel and Corporate Secretary
POTOMAC CAPITAL INVESTMENT CORPORATION
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and General
Counsel
