Exhibit 10.1
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EXECUTION COPY
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ASSET PURCHASE AGREEMENT
by and between
RCN Telecom Services, Inc.
as Seller
and
Susquehanna Cable Co.
as Purchaser
Dated as of July 10, 2003
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TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS........................................................................................1
Section 1.1 Definitions...........................................................................1
Section 1.2 Interpretation.......................................................................12
ARTICLE II SALE AND PURCHASE OF ASSETS..............................................................................13
Section 2.1 Transfer of Assets...................................................................13
Section 2.2 Assumed Liabilities..................................................................15
Section 2.3 Purchase Price. Subject to adjustments set forth in this Section 2.3,
the purchase price is $120,000,000...................................................16
Section 2.4 Post-Closing Adjustment..............................................................17
Section 2.5 Purchase Price Allocation............................................................18
Section 2.6 Closing; Deliveries by the Parties...................................................18
Section 2.7 Nonassignable Assets.................................................................19
Section 2.8 No Licenses..........................................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................................................................20
Section 3.1 Organization.........................................................................20
Section 3.2 Authority............................................................................20
Section 3.3 No Conflict; Required Filings and Consents...........................................21
Section 3.4 Compliance With Law..................................................................21
Section 3.5 Financial Information................................................................22
Section 3.6 Absence of Certain Changes or Events.................................................22
Section 3.7 Title to Assets; Sufficiency of Conveyed Assets......................................23
Section 3.8 Material Assumed Contracts...........................................................23
Section 3.9 Real Property........................................................................24
Section 3.10 Licenses.............................................................................25
Section 3.11 Environmental Matters................................................................26
Section 3.12 Taxes................................................................................27
Section 3.13 Employee Matters.....................................................................27
Section 3.14 Litigation...........................................................................28
Section 3.15 Brokers..............................................................................28
Section 3.16 System Data..........................................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................................................30
Section 4.1 Organization.........................................................................30
Section 4.2 Authority............................................................................30
Section 4.3 No Conflict; Required Filings and Consents...........................................31
Section 4.4 Litigation...........................................................................31
Section 4.5 Financing............................................................................31
Section 4.6 Brokers..............................................................................32
Section 4.7 Investigation by Purchaser...........................................................32
Section 4.8 Purchaser Qualifications.............................................................32
ARTICLE V COVENANTS.................................................................................................32
Section 5.1 Conduct of the Business..............................................................32
Section 5.2 Access to Information; Confidentiality; Cooperation..................................33
Section 5.3 Appropriate Action; Consents; Filings................................................35
Section 5.4 Further Assurances...................................................................38
Section 5.5 Tax Matters..........................................................................38
Section 5.6 Publicity............................................................................39
Section 5.7 Certain Provisions Relating to the Transfer..........................................39
Section 5.8 Transferred Employees................................................................40
Section 5.9 Use of Seller's Trademarks and Logos.................................................41
Section 5.10 Contacts with Employees..............................................................42
Section 5.11 Use of Intellectual Property.........................................................42
Section 5.12 Upgrade..............................................................................42
Section 5.13 1031 Exchange........................................................................43
Section 5.14 Covenant Not to Compete..............................................................43
Section 5.15 Transfer of Voice Subscribers and Related Assets.....................................44
Section 5.16 Certain Environmental Matters........................................................44
ARTICLE VI CONDITIONS...............................................................................................45
Section 6.1 Conditions to Each Party's Obligations...............................................45
Section 6.2 Conditions to Obligations of Purchaser...............................................45
Section 6.3 Conditions to Obligations of Seller..................................................46
ARTICLE VII TERMINATION AND AMENDMENT...............................................................................47
Section 7.1 Termination..........................................................................47
Section 7.2 Effect of Termination................................................................48
Section 7.3 Amendment............................................................................49
Section 7.4 Extension; Waiver....................................................................49
Section 7.5 Termination Payment..................................................................49
ARTICLE VIII SURVIVAL; INDEMNIFICATION..............................................................................49
Section 8.1 Survival Period......................................................................49
Section 8.2 Indemnification......................................................................50
Section 8.3 Indemnification Procedures...........................................................50
Section 8.4 Limitation of Liability..............................................................52
Section 8.5 Other Matters........................................................................53
ARTICLE IX MISCELLANEOUS............................................................................................54
Section 9.1 Notices..............................................................................54
Section 9.2 Descriptive Headings.................................................................56
Section 9.3 Counterparts.........................................................................56
Section 9.4 Entire Agreement.....................................................................56
Section 9.5 Fees and Expenses....................................................................56
Section 9.6 Governing Law........................................................................56
Section 9.7 WAIVER OF JURY TRIAL.................................................................56
Section 9.8 Assignment...........................................................................56
Section 9.9 Parties in Interest..................................................................57
Section 9.10 Interpretation.......................................................................57
Section 9.11 Severability.........................................................................57
Section 9.12 Payments.............................................................................57
Section 9.13 Bulk Sales Laws......................................................................57
Section 9.14 Disclosure...........................................................................57
Section 9.15 Waiver...............................................................................58
Section 9.16 Specific Performance.................................................................58
Section 9.17 Disclosure of Tax Treatment..........................................................58
EXHIBITS
Exhibit A - Form of Xxxx of Sale
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Form of Transition Services Agreement
Exhibit D - [Omitted]
Exhibit E - Purchase Price Escrow Agreement
Exhibit F - Form of Indemnification Escrow Agreement
Exhibit G - [Omitted]
Exhibit H - Form of Assignment and Assumption of Lease
Exhibit I1 - Form of Opinion of Seller's Outside Counsel
Exhibit I2 - Form of Opinion of Seller's In House Counsel
Exhibit J - Form of Regulatory Opinion
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as
of the 10th day of July, 2003, by and between RCN Telecom Services, Inc., a
Pennsylvania corporation ("Seller") and Susquehanna Cable Co., a Pennsylvania
corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing
cable services (including revenue generating activities related to cable
services such as advertising), analog and digital multichannel video
programming, high speed data services, and local and long distance voice
services in the Territory;
WHEREAS, Purchaser has agreed to acquire from Seller, and
Seller has agreed to sell to Purchaser, the Conveyed Assets on the terms and
subject to the conditions set forth herein; and
WHEREAS, Purchaser has agreed to assume the Assumed
Liabilities on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises,
covenants, representations and warranties contained herein, and other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Accounts Receivable" shall mean all accounts receivable and
notes receivable of Seller outstanding as of the Closing Date which represent
amounts owed to Seller (i) by current or former subscribers to any of the
services provided by the Business, including, but not limited to, individual
subscribers (including Video Subscribers and voice and data customers) and
obligors on bulk service accounts, (ii) with respect to advertising sales
(national, regional and local) related to the System, (iii) with respect to
tower rentals related to the System, and (iv) with respect to any other
activities exclusively related to the System.
"Adjustment Certificate" shall have the meaning ascribed to
it in Section 2.3(b).
"Affiliate" of a specified Person shall mean another Person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"Appraisal" shall have the meaning ascribed to it in Section
2.5.
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement in substantially the form of Exhibit B
hereto.
"Assumed Contracts" shall mean all (i) Right of Entry
Agreements, (ii) subscription Contracts with subscribers to any of the
services provided by the Business, (iii) Real Property Leases with respect to
which Seller is a party, (iv) Contracts listed on Section 3.8(a) of the Seller
Disclosure Schedule, (v) other Contracts to which Seller is a party, which
relate exclusively to the conduct of the Business and which in the aggregate
do not require payments by Seller in excess of $250,000 annually (not
including any payments by Seller resulting or arising from Seller's breach or
failure to comply with the terms of any such Contract, indemnification
obligations, early termination penalties or similar payments), and (v)
comparable Contracts entered into by Seller from the date hereof to the
Closing Date in accordance with the terms of this Agreement; provided, that
Assumed Contracts shall not be deemed to include any Excluded Contracts.
"Assumed Liabilities" shall have the meaning ascribed to it
in Section 2.2(a).
"Xxxx of Sale" shall mean the Xxxx of Sale in substantially
the form of Exhibit A hereto.
"Basic Services" shall mean the level of video programming
services that includes those video services identified as limited basic
services on Section 1.1(a) of the Seller Disclosure Schedule.
"Books and Records" shall mean all files, documents,
instruments, papers, books and records of Seller used exclusively in the
conduct of the Business (excluding any personnel records of Employees who do
not consent to the transfer of such records to Purchaser or which Seller is
prohibited from disclosing under applicable Law), including customer lists and
account records, computer files, operating data and plans and system design
prints with respect to the System, in electronic and/or paper form.
"Business" shall mean the business currently operated by
Seller of providing cable services (including revenue generating activities
related to cable services such as advertising), including analog and digital
multichannel video programming and high speed data services, by means of the
System and local voice and long distance voice services, in each case within
the Territory; provided, that "Business" shall not be deemed to include any
Excluded Asset or Excluded Liability.
"Business Day" shall mean any day on which banks are not
required or authorized to close in New York, New York.
"Claim" shall have the meaning ascribed to it in Section
8.3(a).
"Claim Notice" shall have the meaning ascribed to it in
Section 8.3(a).
"Closing" shall have the meaning ascribed to it in Section
2.6(a).
"Closing Date" shall have the meaning ascribed to it in
Section 2.6(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Communications Act" shall mean the Communications Act of
1934, as amended, inter alia, by the Cable Communications Policy Act of 1984,
the Cable Television Consumer Protection and Competition Act of 1992 and the
Telecommunications Act of 1996; the Copyright Act of 1976 and all rules and
regulations of the FCC and the Copyright Office, as such statutes and rules
and regulations may be amended from time to time.
"Contract" means any written agreement, arrangement,
understanding, lease or instrument or other contractual or similar
arrangement.
"control" (including the terms "controlled by" and "under
common control with") means, with respect to a Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
securities or as trustee or executor, by Contract or credit arrangement or
otherwise.
"Conveyed Assets" shall have the meaning ascribed to it in
Section 2.1(a).
"Customer Deposits" means deposits for equipment located on
the premises of subscribers to the Business.
"Designated Employee" shall have the meaning ascribed to it
in Section 5.8(a).
"Dial-Up Network" shall mean the network and related assets
used by Seller to provide dial-up Internet services in the Territory.
"Employees" shall have the meaning ascribed to it in Section
3.13(a).
"Environmental Laws" means any federal, state, local or
foreign statute, Law, ordinance, regulation, rule, code, treaty, writ or order
and any enforceable judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, judgment,
stipulation, injunction, permit, authorization, policy, opinion, or agency
requirement, in each case having the force and effect of Law, relating to the
pollution, protection, investigation, remediation or restoration of the
environment, health and safety as affected by the environment or natural
resources, including, without limitation, those relating to the use, handling,
presence, transportation, treatment, storage, disposal, release, threatened
release or discharge of Hazardous Materials or noise, odor, pollution or
contamination.
"Equipment" means all towers, tower equipment, antennae,
electronic devices, decoders, trunk and distribution coaxial and optical fiber
cable, amplifiers, power supplies, conduit, vaults and pedestals, grounding
and pole hardware, subscriber devices (including outdoor drop lines,
converters, encoders, cable modems, remote control devices, subscriber
equipment transformers behind television sets and fittings), headend and hub
site hardware (including origination, earth stations, transmission and
distribution system), closed circuit devices, telephone equipment, test
equipment, office equipment, vehicles and other tangible personal property
owned, leased, used or held either within the Territory to conduct the
Business, or outside the Territory exclusively to conduct the Business;
provided, that, Equipment shall not include (x) Inventory, (y) any equipment
used by Seller (whether within or outside of the Territory) (i) in connection
with the billing of customers of the Business, other than customer service
terminals located within the Territory, (ii) in connection with the provision
of customer care service to customers of the Business, all of which is
permanently located outside the Territory, (iii) with respect to the Dial-Up
Network, (iv) with respect to the Voice Switching Network or (z) any equipment
or related software used by Seller or any third party in connection with
advertisement insertion or the provision of legal, accounting, human
resources, financial, administrative or other corporate services to the
Business, none of which is located on any parcel of or in any Real Property.
The items described in the foregoing clause (y) shall be deemed "Excluded
Assets" for purposes of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity or trade or business
(whether or not incorporated) other than Seller that together with Seller is
considered under common control and treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
"Escrow Agent" shall have the meaning ascribed to it in
Section 2.3(a).
"Excluded Assets" shall have the meaning ascribed to it in
Section 2.1(b).
"Excluded Contracts" shall mean those Contracts (i)
identified on Section 1.1(b) of the Seller Disclosure Schedule, (ii) between
Seller and any Person who provides programming in connection with the conduct
of the Business, (iii) held or used by Seller with respect to the Dial-Up
Network or the Voice Switching Network, including, without limitation,
Contracts for the provision of interconnection, emergency assistance (e.g.,
911), directory assistance (e.g., 411) and voice feature services, (iv)
between Seller and any Person pursuant to which such Person provides customer
services to customers of the Business, services relating to the billing of
customers of the Business or accounting, legal, accounting, human resources,
financial, administrative or other corporate services with respect to the
Business, (v) between Seller and any Person who supplies materials, goods or
equipment used in the conduct of the Business or provides marketing or other
similar services to the Business, except for such Contracts that relate
exclusively to the conduct of the Business, (vi) that are certification
documents issued by a Governmental Entity relating to Seller's authorization
to operate in the local or long-distance telephone business.
"Excluded Liabilities" shall have the meaning ascribed to it
in Section 2.2(b).
"Expanded Basic Services" shall mean any video programming
provided over a cable television system, regardless of service tier other than
Basic Services, any new product tier and video programming offered on a per
channel or per program basis.
"FCC" shall mean the Federal Communications Commission.
"Financial Information" shall have the meaning ascribed to
it in Section 3.5.
"Governmental Entity" shall mean (i) the United States of
America, (ii) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
municipalities and the like); or (iii) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"Hazardous Materials" means (A) any petroleum, petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (B) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any applicable
Environmental Law.
"High Speed Subscribers" shall mean those subscribers of
internet access services by way of cable modem over the System's hybrid fiber
coaxial cable plant.
"Historical Financial Information" shall have the meaning
ascribed to it in Section 3.5.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
"Indemnification Escrow Agreement" shall have the meaning
ascribed to it in Section 2.3(b).
"Indemnification Escrow Amount" shall have the meaning
ascribed to it in Section 2.3(b) hereof.
"Indemnification Escrow Fund" shall have the meaning
ascribed to it in Section 8.5(d) hereof.
"Indemnified Party" shall have the meaning ascribed to it in
Section 8.3(a).
"Indemnifying Party" shall have the meaning ascribed to it
in Section 8.3(a).
"Intellectual Property" shall mean trademarks, service
marks, trade names, Internet domain names, designs, logos, slogans and general
intangibles of like nature, together with goodwill, registrations and
applications relating to the foregoing; patents, copyrights (including
registrations and applications for any of the foregoing); Software;
confidential information, technology, know-how, inventions, processes,
formulae, algorithms, models and methodologies.
"Inventory" shall mean all of the parts, equipment and
materials inventories maintained by Seller as of the Closing Date located
within the Territory and used or maintained for use in connection with the
Business.
"IRS" shall mean the Internal Revenue Service.
"knowledge" of any Person that is not an individual means,
with respect to any specific matter, the actual knowledge, after due inquiry,
of such Person's executive officers and any other officer having
responsibility for such matter.
"Law" means any foreign or domestic law, statute, code,
regulation, order, judgment, writ, injunction or decree.
"Leased Real Property" shall have the meaning ascribed to it
in Section 3.9(a).
"LFA Consent" shall mean with respect to each local
franchising authority within the Territory any consent to the transfer of
applicable Licenses from Seller to Purchaser which is required by applicable
Law. The LFA Consents are listed in Section 3.3(b)(ii) of the Seller
Disclosure Schedule.
"Licenses" shall mean all franchises, franchise applications
(if any), ordinances, approvals, agreements, authorizations, permits,
licenses, easements, orders, certificates, registrations, qualifications,
variances or other forms of permission, consent or authority issued by a
Governmental Entity and required for use or used by Seller exclusively to
conduct the Business.
"Lien" shall mean any lien, security interest, pledge,
mortgage, encumbrance, or hypothecation.
"Losses" shall have the meaning ascribed to it in Section
8.2(a).
"Material Adverse Effect" means any change, event,
circumstance or occurrence that is materially adverse to the operation or
financial condition of the Business, other than any change, event,
circumstance or occurrence (i) relating to any general national, international
or regional economic or financial conditions, (ii) nationally affecting the
multi channel video programming distribution, high speed data or local or long
distance voice services industries generally, or attributable to the provision
of services in competition with the provision of multi channel video
programming, high speed data services or local or long distance voice
services, (iii) due to, resulting from or otherwise attributable to the public
announcement of the transactions contemplated by this Agreement or the
identity of Purchaser, the pendency of this Agreement or the transactions
contemplated hereby, (iv) due to, resulting from or otherwise attributable to
competition within the multi-channel video programming, high speed data or
local or long distance industries, (v) due to, resulting from or otherwise
attributable to any violation of the terms of this Agreement by Purchaser, or
(vi) relating to the Excluded Liabilities or Excluded Assets.
"Material Contract Consents" shall have the meaning ascribed
to it in Section 6.2(f).
"Nonassignable Assets" shall have the meaning ascribed to it
in Section 2.7.
"Non-Disclosure Agreement" shall have the meaning ascribed
to it in Section 5.2(b).
"NYSPSC" shall have the meaning ascribed to it in the
definition of Public Service Commission Consent.
"Outside Date" shall have the meaning ascribed to it in
Section 7.1(b).
"Owned Real Property" shall have the meaning ascribed to it
in Section 3.9(a).
"Permitted Liens" shall mean, collectively: (i) Liens for
Taxes or assessments which are not delinquent or are being contested in good
faith by appropriate proceedings; (ii) mechanics', warehousemens',
materialmens', contractors', workmens', repairmens', carriers' and other
similar Liens incurred in the ordinary course of business, (iii) Liens
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government Contracts, performance and
return of money bonds and similar obligations which in the aggregate are not
material; (iv) Liens identified on Section 3.9(a)(iv) of the Seller Disclosure
Schedule; and (v) easements, rights-of-way, servitudes, permits, licenses,
surface leases and other rights; conditions, covenants or other restrictions;
and easements for streets, alleys, highways, telephone lines, power lines,
railways and other easements and rights-of-way on, over or in respect of any
Real Property which in the case of each of the foregoing does not and will not
materially interfere with the operation or use or impair the marketability or
market value of any of the affected Real Property.
"Person" shall mean any individual, group, corporation,
partnership or other organization or entity.
"Post-Closing Adjustment" shall have the meaning ascribed to
it in Section 2.4(b).
"Post-Closing Tax Period" shall have the meaning ascribed to
it in Section 5.5(a).
"Prepaid Expenses" means all expenses of the Business, other
than Prepaid Rent and XXX Advances, prepaid by Seller on or prior to the
Closing Date that correspond to a period after the Closing Date.
"Prepaid Rent" means any rent prepaid by Seller on or prior
to the Closing Date under any lease or rental agreement which is an Assumed
Contract and which corresponds to a period after the Closing Date.
"Pre-Closing Tax Period" shall have the meaning ascribed to
it in Section 5.5(a).
"Proration Payment Amount" shall mean an amount equal to:
(i) the sum of (x) Prepaid Rent, Prepaid Expenses and XXX Advances and (y)
98.5% of Accounts Receivable that are not more than sixty (60) days past due,
minus (ii) the aggregate amount of cash revenues received by Seller prior to
the Closing Date and attributable to services to be provided to subscribers or
other obligations to be performed by Purchaser following the Closing Date
(other than prepaid launch fees), minus (iii) the aggregate amount of Customer
Deposits, accounts payable and accrued expenses attributable to benefits
received with respect to the Business in the period prior to the Closing Date
and, in each case, which are included in Assumed Liabilities, which amounts
shall be calculated in accordance with generally accepted accounting
principles.
"Public Service Commission Consent" shall mean the approval
of the New York State Public Service Commission ("NYSPSC") with respect to (i)
the transfer from Seller to Purchaser of franchise agreements between Seller
and local franchising authorities within the Territory and (ii) any other
consent, approval, authorization or permit of, or filing with or notification
to, the NYSPSC required to be obtained or made by Seller to transfer Voice
Subscribers to Purchaser.
"Purchase Price" shall have the meaning ascribed to it in
Section 2.3(b).
"Purchase Price Escrow Agreement" shall mean the Purchase
Price Escrow Agreement in substantially the Form of Exhibit E hereto.
"Purchase Price Escrow Amount" shall have the meaning
ascribed to it in Section 2.3(a).
"Purchase Price Escrow Payment" shall have the meaning
ascribed to it in Section 2.3(a).
"Purchaser" shall have the meaning ascribed to it in the
preamble hereto.
"Purchaser Indemnified Parties" shall have the meaning
ascribed to it in Section 8.2(a).
"Rate(s)" shall mean the monthly service charges published
or quoted for video and high-speed internet and published for voice services
related to the Business, as set forth and described on Section 3.16 of the
Seller Disclosure Schedule.
"Real Property" shall have the meaning ascribed to it in
Section 3.9(a).
"Real Property Leases" shall have the meaning ascribed to it
in Section 3.9(a).
"Related Instruments" shall mean the Xxxx of Sale, the
Assignment and Assumption Agreement, the Transition Services Agreement and the
Assignment and Assumption of Lease Agreements.
"Release" shall mean any release, spill, emission, leaking,
pumping, dumping, injection, deposit, disposal, discharge, dispersal or
leaching of Hazardous Materials into the environment.
"Required Consents" shall have the meaning ascribed to it in
Section 3.3(b).
"Retained Information" shall mean any and all books and
records prepared and maintained by Seller in connection with the Business (i)
to the extent that such books and records do not relate exclusively to the
Business, (ii) relating to litigation existing prior to the Closing Date that
is not an Assumed Liability or (iii) relating primarily to Excluded Assets or
Excluded Liabilities.
"Right of Entry Agreements" means those right of entry
agreements relating to the Business between Seller and owners of multiple
dwelling units within the Territory.
"XXX Advances" means all amounts paid by Seller on or prior
to the Closing Date in respect of Right of Entry Agreements that represent
advances or payments of any revenue sharing amounts required under the Right
of Entry Agreements and which correspond to amounts payable with respect to
any period after the Closing Date.
"Seller" shall have the meaning ascribed to it in the
preamble hereto.
"Seller Benefit Plan" shall have the meaning ascribed to it
in Section 3.13(b).
"Seller Disclosure Schedule" shall mean the disclosure
schedule delivered by Seller to Purchaser in connection with the execution of
this Agreement.
"Seller Indemnified Parties" shall have the meaning ascribed
to it in Section 8.2(b).
"Seller's Trademarks and Logos" shall have the meaning
ascribed to it in Section 5.9.
"Sell-Off Period" shall have the meaning ascribed to it in
Section 5.9.
"Software" shall mean computer programs, including any and
all software implementations of algorithms, models and methodologies whether
in source code or object code form, databases and compilations, including any
and all data and collections of data, all documentation, including user
manuals and training materials, related to any of the foregoing and the
content and information contained on any Internet site.
"Subsidiary" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person owns,
directly or indirectly, a majority of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the Board
of Directors or other governing body of such corporation or other legal
entity, or with respect to which such Person has the power to direct the
business and policies.
"Survival Period" shall have the meaning ascribed to it in
Section 8.1.
"System" shall mean the complete cable services and
distribution system operated in the conduct of the Business, consisting of,
among other things, one headend, subscriber drops and associated electronic
and other equipment, and which is, or is capable of being, operated as an
independent system without interconnections to other systems. Any systems
which are interconnected or which are served in whole or in part by a common
headend (not including the Voice Switching Network) will be considered a
single System.
"Target Video Subscriber Number" shall mean (i) 30,396 if
the Video Subscriber Number is greater than 30,396, and (ii) 29,204 if the
Video Subscriber Number is less than 29,204.
"Tax Return" shall mean any report, declaration, statement,
return or other information filed in respect of Taxes, and any claims for
refund of Taxes, including any amendments or supplements to any of the
foregoing, with any taxing authority with respect to Taxes imposed upon or
attributable to the operations of the Business.
"Taxes" shall mean any and all taxes, levies or other like
assessments, including, but not limited to, income, transfer, gains, gross
receipts, excise, inventory, property (real, personal or intangible), custom,
duty, sales, use, license, withholding, payroll, employment, capital stock and
franchise taxes (including any fee, assessment or other charge in the nature
of or in lieu of any tax), imposed by the United States, or any state, local
or foreign government or subdivision or agency thereof, any interest,
penalties, additions to tax or additional amounts in respect of the foregoing
(whether disputed or not), any transferee or secondary liability in respect of
tax (whether imposed by Law, Contractual agreement or otherwise) and any
liability in respect of any tax as a result of being a member of any
affiliated, consolidated, combined, unitary or similar group.
"Territory" shall mean the geographic areas indicated by the
franchised communities and corresponding community unit identification numbers
set forth on Section 1.1(c) of the Seller Disclosure Schedule.
"Transferred Employees" shall have the meaning ascribed to
it in Section 5.8(a).
"Transfer Taxes" shall have the meaning ascribed to it in
Section 5.5(c).
"Transition Services Agreement" shall mean the Transition
Services Agreement in substantially the form of Exhibit C hereto.
"2003 Financial Information" shall have the meaning ascribed
to it in Section 3.5.
"Upgrade Adjustment" shall mean the sum of (A) the product
of (i) $9,975, times (ii) the total number of aerial miles required to be
upgraded under the Upgrade Commitment, minus the actual number of aerial miles
upgraded as of the Closing Date and (B) the product of (i) $18,750, times (ii)
the number of underground miles required to be upgraded under the Upgrade
Commitment, minus the actual number of underground miles upgraded as of the
Closing Date.
"Upgrade Commitment" shall mean Seller's obligation to
upgrade the System materially in accordance with the specifications and time
frames set forth on Section 2.2(a)(v) of the Seller Disclosure Schedule.
"Video Subscriber" means an active customer of the Business
for at least Basic Services either in a single household, a commercial
establishment or in a multi-unit dwelling (including a hotel unit); provided,
however, that the number of Video Subscribers in a multi-unit dwelling or
commercial establishment that obtains service on a "bulk-rate" basis shall be
determined by dividing (a) the gross bulk rate xxxxxxxx for both (i) Basic
Services and (ii) Expanded Basic Services (but not xxxxxxxx from a la carte
tiers or premium services, installation or other non-recurring charges,
converter rental, new product tier or from any outlet or connection other than
such customer's first or from any pass-through charges for sales taxes,
line-itemized franchise fees, fees charged by the FCC and the like)
attributable to such multi-unit dwelling or commercial establishment during
the most recent billing period ended prior to the date of calculation (but
excluding xxxxxxxx in excess of a single month's charge) by (b) the retail
rate charged in that franchise area during that billing period to individual
households receiving the same level of services as such "bulk-rate"
subscribers (excluding a la carte tiers or premium services, installation or
other non-recurring charges, converter rental, new product tier or from any
outlet or connection other than the first or from any pass-through charges for
sales taxes, line-itemized franchise fees, fees charged by the FCC and the
like). For purposes of this definition, an "active customer" shall mean any
person, commercial establishment or multi-unit dwelling at any given time that
is obligated to pay for and is receiving Basic Services from the System and
who has an account that is not more than 60 days past due (except for past due
amounts for Basic Services of $10 or less, provided such account is otherwise
current). For purposes of this definition, the number of Video Subscribers
shall not include ten (10) percent of "active customers" that as of the date
of calculation have never paid in full the System's regular basic monthly
subscription rate for Basic Services (excluding installation or other
non-recurring charges) without discount (other than discounts offered pursuant
to selling or marketing campaigns or promotional activities or senior
citizens' discounts engaged in by the System in the ordinary course of
business, consistent with past practices, and other than bulk accounts paying
the contract rate) for at least one month. For purposes of this definition,
the number of days past due of a customer account shall be determined from the
first day of the period of which the applicable billing relates.
"Video Subscriber Adjustment" shall mean the product of (i)
the Video Subscriber Value and (ii) (a) if the Video Subscriber Number is
greater than 30,396 or less than 29,204, the Target Video Subscriber Number
minus the Video Subscriber Number, and (b) in all other cases, zero.
"Video Subscriber Number" shall have the meaning ascribed to
it in Section 2.3(c).
"Video Subscriber Value" shall mean $4,026.85.
"Voice Switching Network" means all assets located (i)
outside the Territory and used to provide local and long distance voice
services of the Business (including without limitation the voice switching
center located in Queens, New York and the related distribution network
between the voice switching center and the System headend) and (ii) within the
Territory as set forth on Section 1.1(d) of the Seller Disclosure Schedule.
"Voice Subscribers" shall have the meaning ascribed to it in
Section 5.15.
"Voice Transfer Date" shall have the meaning ascribed to it
in Section 5.15.
Section 1.2 Interpretation. Unless otherwise indicated to
the contrary in this Agreement by the context or use thereof: (a) the words,
"herein," "hereto," "hereof" and words of similar import refer to this
Agreement as a whole and not to any particular Section or paragraph hereof;
(b) words importing the masculine gender shall also include the feminine and
neutral genders, and vice versa; (c) words importing the singular shall also
include the plural, and vice versa; and (d) the word "including" means
"including without limitation."
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section 2.1 Transfer of Assets. (a) On the terms and subject
to the conditions set forth in this Agreement, at the Closing, Seller shall
sell to Purchaser, and Purchaser shall purchase from Seller, all of Seller's
rights, title and interest in and to those assets set forth below, free and
clear of all Liens except Permitted Liens, but excluding the Excluded Assets
(collectively, the "Conveyed Assets"):
(i) the Assumed Contracts;
(ii) the Licenses with respect to which Seller is a
licensee thereunder and all applications therefor, but only to the
extent Seller is permitted to transfer such Licenses and
applications;
(iii) the Real Property owned, leased or otherwise
held by Seller;
(iv) the Accounts Receivable;
(v) the Inventory;
(vi) the Equipment owned or leased by Seller;
(vii) the XXX Advances;
(viii) Prepaid Rent and Prepaid Expenses;
(ix) the Books and Records; and
(x) any assets (other than those set forth in the
foregoing clauses (i) through (ix)) used or held for use within the
Territory in the operation or conduct of the Business or used or held
for use outside the Territory exclusively in the conduct of the
Business.
(b) Notwithstanding anything to the contrary contained
in this Agreement, the term "Conveyed Assets" shall not include:
(i) any receivables (other than Accounts
Receivable) cash, cash equivalents, bank deposits or similar cash
items of Seller (other than the XXX Advances, Prepaid Rent and
Prepaid Expenses), in each case, as of the Closing Date (whether or
not reflected on Seller's books and records on such date);
(ii) with respect to Assumed Contracts, rights
under such Assumed Contracts relating to the performance or
non-performance of such Assumed Contracts prior to the Closing Date
(other than rights with respect to Accounts Receivable);
(iii) Intellectual Property;
(iv) any interests in any real estate (other than
the Real Property owned or leased by Seller and Assumed Contracts);
(v) any rights (including indemnification),
interests, claims, recoveries and settlements in connection with
litigation involving Seller or its Affiliates against third parties
relating to events occurring prior to the Closing Date;
(vi) any rights to refunds, credits, rebates,
abatements or other refunds of any Taxes with respect to the Conveyed
Assets or the Business which relate to any period ending on or prior
to the Closing Date or to a Pre-Closing Period;
(vii) any insurance policies of Seller or its
Affiliates or rights thereunder or proceeds thereof;
(viii) any Excluded Contracts;
(ix) Customer Deposits;
(x) any assets of Seller located outside the
Territory that are not used by Seller exclusively in connection with
the Business;
(xi) all rights of Seller in and to any and all
names, trade names, logos, trademarks and services marks used in
connection with the Business, including, without limitation, "RCN"
and "Resilink", except as provided herein, or in the Transition
Services Agreement;
(xii) all assets of Seller held or used to operate
the Dial-Up Network or the Voice Switching Network; or
(xiii) IP addresses issued to Seller by the
American Registry for Internet Numbers and used in connection with
the conduct of the Business (the rights, properties and assets
expressly excluded from "Conveyed Assets" by this Section 2.1(b) are
referred to collectively as the "Excluded Assets").
(c) Seller shall have the right to retain one copy of
all books, records, literature, lists, and any other written or recorded
information constituting Conveyed Assets or which otherwise relate to the
Business or the Assumed Liabilities (including, without limitation, the Books
and Records), in each case for (i) the administration by Seller or its
Affiliates of any suit, claim, action, proceeding or investigation relating to
the Business, (ii) the administration by Seller or its Affiliates of any
regulatory filing or matter or (iii) any other valid legal or business purpose
of Seller or its Affiliates.
Section 2.2 Assumed Liabilities. (a) In partial
consideration of the sale of the Conveyed Assets to Purchaser, Purchaser shall
assume from Seller at the Closing only the following liabilities and
obligations, and excluding the Excluded Liabilities (collectively, the
"Assumed Liabilities"):
(i) all obligations and liabilities resulting from
the ownership, use, operation or maintenance of the Conveyed Assets,
from and after the Closing, or the conduct of the Business arising
from and after the Closing;
(ii) all liabilities and obligations under the
Assumed Contracts related to the period from and after the Closing,
plus such liabilities and obligations related to the period prior to
the Closing to the extent included in the calculation of the
Proration Payment Amount;
(iii) the obligations and liabilities being
expressly assumed by Purchaser pursuant to this Agreement;
(iv) all claims by, and obligations and liabilities
relating to, any Transferred Employee relating to services performed
from and after the Closing, including any such claims, obligations or
liabilities relating to wages, severance payments, bonuses, medical
and workers' compensation claims, vacation pay and any other employee
benefit plans or arrangements and payroll practices;
(v) all liabilities and obligations with respect to
the Licenses to the extent such Licenses are Conveyed Assets
(including without limitation the Upgrade Commitment);
(vi) Seller's defense of the litigation matters set
forth on Section 2.2(a)(vi) of the Seller Disclosure Schedule;
(vii) any accounts payable incurred as of the
Closing (whether or not reflected on Seller's books and records on
such date) by Seller in the conduct of the Business prior to the
Closing to the extent included in the calculation of the Proration
Payment Amount; and
(viii) all liabilities and obligations with respect
to Customer Deposits.
(b) Notwithstanding anything to the contrary contained
in this Agreement, the term "Assumed Liabilities" shall not include
liabilities and obligations relating to: (i) the Excluded Assets, (ii) with
respect to Assumed Contracts, liabilities and obligations under such Assumed
Contracts relating to the performance or non-performance of such Assumed
Contracts prior to the Closing, (iii) any Seller Benefit Plans, or with
respect to the employment, severance or termination of any Employee prior to
the Closing Date including severance benefits to any employee who is not hired
by the Purchaser; or (iv) any other liability related to the period prior to
Closing, other than those included in the calculation of Proration Payment
Amount (the liabilities and obligations expressly excluded from "Assumed
Liabilities" by this Section 2.2(b) are referred to collectively as the
"Excluded Liabilities").
(c) From and after the Closing, (i) Purchaser shall be
solely and exclusively liable with respect to the Assumed Liabilities and
shall pay, honor, perform and discharge promptly when due the Assumed
Liabilities, and (ii) Seller shall be solely and exclusively liable with
respect to the Excluded Liabilities and shall pay, honor, perform and
discharge promptly when due the Excluded Liabilities.
Section 2.3 Purchase Price. Subject to adjustments set forth
in this Section 2.3, the purchase price is $120,000,000. (a) Upon execution
and delivery of this Agreement, Purchaser shall deposit a payment of
$10,000,000 (the "Purchase Price Escrow Payment") by wire transfer of
immediately available funds in escrow with The Bank of New York (the "Escrow
Agent"), to be held by the Escrow Agent in accordance with the terms and
conditions of the Purchase Price Escrow Agreement and applied, together with
all interest earned thereon from the date of deposit with the Escrow Agent
until the Closing Date subject to Section 7.5 (the "Purchase Price Escrow
Amount"), as described below.
(b) In consideration for the sale of the Conveyed
Assets, at the Closing Purchaser shall (i) assume the Assumed Liabilities,
(ii) deliver or cause to be delivered to the Escrow Agent an amount in cash
equal to $5,000,000 (the "Indemnification Escrow Amount") to be held by the
Escrow Agent in accordance with the terms and conditions of an Escrow
Agreement substantially in the form attached as Exhibit F hereto (the
"Indemnification Escrow Agreement") and (iii) pay or cause to be paid to
Seller $115,000,000 including the Purchase Price Escrow Amount (such amount,
as adjusted pursuant to clauses (A), (B) and (C) and together with the
Indemnification Escrow Amount, the "Purchase Price") (A) minus the Video
Subscriber Adjustment, (B) plus the Proration Payment Amount, and (C) minus
the Upgrade Adjustment. The Purchase Price net of each of the Purchase Price
Escrow Amount and the Indemnification Escrow Amount shall be payable by
Purchaser by wire transfer of immediately available funds to an account
designated by Seller. At the Closing, the parties shall cause the Escrow Agent
to deliver to Seller the Purchase Price Escrow Amount in accordance with the
terms of the Purchase Price Escrow Agreement.
(c) At least five (5), but not more than fifteen (15),
days prior to the Closing Date, Seller and Purchaser shall use their best
efforts to jointly prepare and complete in good faith a certificate (the
"Adjustment Certificate") signed by an officer of each of Seller and Purchaser
and setting forth their good faith estimate of each of the actual numbers of
Video Subscribers as of the close of business on the day preceding the Closing
Date (such number, the "Video Subscriber Number"), the Video Subscriber
Adjustment derived from the Video Subscriber Number, the Upgrade Adjustment
and the Proration Payment Amount. Purchaser (and its independent accountants)
shall be afforded access to the books and records and calculations used in or
applicable to the preparation of the Adjustment Certificate (including,
without limitation, applicable bills and invoices). In the event that
Purchaser and Seller are unable to agree on the determination of any of the
Video Subscriber Adjustment, Upgrade Adjustment or Proration Payment Amount
for purposes of preparing the Adjustment Certificate, then with respect to
each such disputed amount (i) the Adjustment Certificate shall set forth each
of Seller's and Purchaser's determination thereof and shall be accompanied by
applicable calculations and documentation with respect thereto and (ii) for
purposes of any purchase price adjustment pursuant to Section 2.3(b) hereof,
such amount shall be the average of the two amounts described in clause (i) of
this sentence.
Section 2.4 Post-Closing Adjustment. (a) During the period
not less than forty-five (45) nor more than ninety (90) days following the
Closing Date, Purchaser and Seller shall use their best efforts to jointly
determine in good faith the actual amount, as of the Closing Date, of each of
the Video Subscriber Number and the Video Subscriber Adjustment derived
therefrom, the Upgrade Adjustment and the Proration Payment Amount and resolve
any discrepancies from the amounts used to calculate adjustments to the
purchase price pursuant to Section 2.3(b), but if they are unable to reach
agreement with respect thereto within such period, Seller and Purchaser shall
appoint an independent accounting firm of recognized national standing on
which Seller and Purchaser shall agree, and shall submit final resolution of
each such disputed amount to such firm. Any undisputed amounts shall be paid
promptly following determination thereof. To the extent permitted by Law,
Seller and Purchaser shall submit all information deemed relevant by such firm
and shall make any records relating to or bearing upon such dispute available
to the other party and to such firm. Each party shall further instruct such
firm to render its decision within fifteen (15) Business Days after such firm
is selected and retained pursuant to this Section 2.4(a) and shall reasonably
cooperate with such firm and each other to enable such firm to render its
decision within such period. The decision of such firm shall be the final
determination of such dispute and shall be final and binding on both Seller
and Purchaser. Seller and Purchaser shall bear the fees and expenses of such
firm as such firm shall determine after considering the positions asserted by
the parties in light of its decision. Nothing in this Agreement shall require
that any matter other than disputes under this Section 2.4(a) be resolved by
the procedure described above.
(b) The "Post-Closing Adjustment" shall be equal to
the sum of:
(A) the difference determined by subtracting (1)
the estimated value of the Video Subscriber Adjustment set forth on
the Adjustment Certificate, from (2) the Video Subscriber Adjustment
as finally determined under Section 2.4(a), plus
(B) the difference determined by subtracting (1)
the estimated value of the Upgrade Adjustment set forth on the
Adjustment Certificate, from (2) the Upgrade Adjustment as finally
determined under Section 2.4(a), plus
(C) the difference determined by subtracting (1)
the Proration Payment Amount as finally determined under Section
2.4(a) from (2) the estimated Proration Payment Amount set forth on
the Adjustment Certificate.
If the Post-Closing Adjustment is a positive number,
(x) Seller and Purchaser shall cause the Escrow Agent to promptly pay
Purchaser up to $1,000,000 of the amount thereof from the Indemnification
Escrow Fund in accordance with the Indemnification Escrow Agreement by wire
transfer of immediately available funds to an account indicated by Purchaser
and (y) Seller shall promptly pay the amount of such Post-Closing Adjustment
in excess of $1,000,000, if any, by wire transfer of immediately available
funds to an account indicated by Purchaser. If the Post-Closing Adjustment is
a negative number, Purchaser shall promptly pay to Seller the full amount of
the Post-Closing Adjustment by wire transfer of immediately available funds to
the account previously indicated by Seller for payment of the Purchase Price.
Section 2.5 Purchase Price Allocation. Seller and Purchaser
shall allocate the Purchase Price and the Assumed Liabilities in the manner
required by Section 1060 of the Code. In making such allocation, the fair
market values of the Conveyed Assets will be determined in good faith by
Seller and Purchaser no later than ten (10) days prior to the anticipated
Closing Date based on an appraisal (the "Appraisal") to be performed by an
independent appraisal firm mutually acceptable to Purchaser and Buyer. The
Appraisal shall value the Conveyed Assets in such a manner that New York State
and Local Sales and Use Tax can be calculated at Closing. In addition, the
Appraisal shall subdivide the Conveyed Assets into categories including,
without limitation, telephone, internet, digital cable, analog cable, and
capital improvements as defined by New York Law Sec. 1101 (9)(i) and other
tangible personal Conveyed Assets. The Appraisal shall individually value any
Conveyed Assets that are subject to New York State and Local Sales and Use Tax
and shall determine the local jurisdiction in which such Conveyed Assets are
located for New York State and Local Sales and Use Tax purposes. The first
$30,000 of the fees, costs and expenses of the Appraisal shall be borne
one-half by Seller and one-half by Purchaser, and Purchaser shall be solely
responsible for all such fees, costs and expenses in excess of that amount.
Purchaser (and its independent accountants) shall be afforded access to the
books and records used in or applicable to the determination of the
allocation; provided, that (i) Seller shall not be required to disclose the
contents of any income tax returns and (ii) Seller may redact such portions of
any books and records that it deems confidential. Seller will provide to
Purchaser copies of Form 8594 and any required exhibits thereto, consistent
with the allocations of this Section 2.5. The parties agree that, to the
extent required, all Tax Returns or other Tax information they may file or
cause to be filed with any governmental entity shall be prepared and filed
consistently with such allocation.
Section 2.6 Closing; Deliveries by the Parties. (a) The
consummation of the transactions contemplated by this Agreement (the
"Closing") will take place on the third Business Day following the date on
which the satisfaction or waiver of the conditions set forth in Article VI
hereof occurs (other than those conditions which, by their nature, can only be
satisfied at Closing), at 10:00 a.m. (New York time), at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 4 Times Square, New York, New York,
or at such other time and place as shall be mutually agreed upon by the
parties. The date on which the Closing occurs is referred to herein as the
"Closing Date."
(b) At the Closing, Seller shall deliver or cause to
be delivered to Purchaser the following: (i) a duly executed Xxxx of Sale;
(ii) a duly executed Assignment and Assumption Agreement; (iii) a duly
executed Transition Services Agreement; (iv) titles to all vehicles included
within the Equipment, duly endorsed for transfer by Seller, (v) assignments
and assumptions of all Easements, if any, in recordable form, (vi) the
certificate of the Seller signed by an officer of the Seller referred to in
Section 6.2(c) hereof; (vii) the evidence referred to in Section 6.2(d) hereof
that the Required Consents have been obtained or given and are in full force
and effect, as applicable; (viii) certified resolutions of Seller's Board of
Directors authorizing the execution, delivery and performance of this
Agreement; (ix) the Indemnification Escrow Agreement, duly executed by Seller;
(x) a duly executed Assignment and Assumption of Lease, substantially in the
form of Exhibit H hereto, with respect to each Real Property Lease to which
Seller is a party; and (xi) the opinions of counsel referred to in Section
6.2(g) and (h), and (xii) all other documents, instruments and writings
required to be delivered by the Seller at or prior to the Closing pursuant to
this Agreement or otherwise required by Purchaser in connection herewith.
(c) At the Closing, Purchaser shall deliver or cause
to be delivered (A) to Seller the following: (i) cash in the amount of the
Purchase Price (minus the sum of the Purchase Price Escrow Amount and the
Indemnification Escrow Amount) by wire transfer of immediately available funds
to an account designated by Seller; (ii) a duly executed Assignment and
Assumption Agreement; (iii) assignments and assumptions of all Easements, if
any, in recordable form; (iv) a duly executed Transition Services Agreement;
(v) the certificate of the Purchaser signed by an officer of the Purchaser
referred to in Section 6.3(c) hereof; (vi) certified resolutions of
Purchaser's board of directors authorizing the execution, delivery and
performance of this Agreement; (vii) the Indemnification Escrow Agreement;
(viii) a duly executed Assignment and Assumption of Lease, substantially in
the form of Exhibit H hereto, with respect to each Real Property Lease to
which Seller is a party; and (ix) all other documents, instruments and
writings required to be delivered by the Purchaser at or prior to the Closing
pursuant to this Agreement or otherwise required by Seller in connection
herewith and (B) to the Escrow Agent, cash in the amount of the
Indemnification Escrow Amount.
Section 2.7 Nonassignable Assets. Nothing in this Agreement,
or the consummation of the transactions contemplated hereby, shall be
construed as an attempt or agreement to assign or transfer any Conveyed Asset
(including any Assumed Contract) to Purchaser which by its terms or by Law is
not assignable without the consent of a third party or a Governmental Entity
or is cancelable by a third party in the event of an assignment or transfer
without such consent (a "Nonassignable Asset"), unless and until such consent
shall have been obtained. Seller and Purchaser shall each use its reasonable
good faith efforts to obtain as expeditiously as possible any such consent to
the assignment of a Nonassignable Asset to Purchaser; provided, however that
Seller shall not be required to remain secondarily liable or make any payment
(except for payments which are then due and owing and other normal
out-of-pocket expenses incurred in seeking or requesting such consent) to
obtain any such consent with respect to any Nonassignable Asset. Unless and
until any such consent is obtained, and subject to the Closing having
occurred, to the extent permitted by applicable Law and by the terms of the
applicable Nonassignable Asset, Seller and Purchaser will cooperate to
establish an arrangement reasonably satisfactory to Purchaser and Seller,
effective as of the Closing, under which Purchaser would obtain the claims,
rights and benefits and assume the corresponding liabilities and obligations
under such Nonassignable Asset (including by means of any subcontracting,
sublicensing or subleasing arrangement) or under which Seller would enforce
for the benefit of Purchaser, with Purchaser assuming and agreeing to pay
Seller's obligations, any and all claims, rights and benefits of Seller
against a third party thereto; provided, that, in no event shall Purchaser and
Seller be required to enter into any such arrangement with respect to any
Nonassignable Asset for which any such consent is a Required Consent. Seller
or the applicable Affiliate of Seller shall promptly pay over to Purchaser the
net amount (after costs and taxes) of all payments received by it in respect
of all Nonassignable Assets, and Purchaser shall promptly pay, perform or
discharge, when due, any and all obligations and liabilities arising
thereunder. Each of Purchaser and Seller shall indemnify and hold harmless the
other and, in the case of Purchaser, the Seller Indemnified Parties, and, in
the case of Seller, the Purchaser Indemnified Parties, for any and all Losses
incurred by it or them in respect of claims arising out of obligations that
the respective indemnifying party agreed to perform in connection with the
arrangements contemplated by this Section 2.7.
Section 2.8 No Licenses. Unless expressly provided for under
this Agreement or any Related Instrument, no title, right or license of any
kind is granted to Purchaser pursuant to this Agreement with respect to any
Intellectual Property of Seller, either directly or indirectly, by
implication, by estoppel or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
Section 3.1 Organization. Seller is a corporation duly
organized and validly existing under the Laws of the Commonwealth of
Pennsylvania. Seller has the requisite power and authority to own, lease and
operate the Conveyed Assets and to conduct the Business as it is now being
conducted, except where the failure to have such power and authority would
not, individually or in the aggregate, have a Material Adverse Effect. Seller
is duly qualified to do business as a foreign corporation and is in good
standing in the state of New York.
Section 3.2 Authority. Subject to receipt of the Required
Consents, Seller has the requisite power and authority to execute and deliver
this Agreement and the Related Instruments, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Related Instruments and the consummation by Seller of such transactions have
been authorized by all requisite corporate action on the part of Seller and no
other authorization of Seller or its shareholders is required to authorize the
execution and delivery of this Agreement or the Related Instruments or the
consummation of the transactions contemplated hereby or thereby. This
Agreement has been validly executed and delivered by Seller and constitutes,
and each Related Instrument that is to be executed and delivered by Seller
will constitute when executed and delivered by Seller, a legal, valid and
binding obligation of Seller enforceable against Seller in accordance with its
terms.
Section 3.3 No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 3.3(a) of the Seller Disclosure Schedule, the
execution and delivery of this Agreement and the Related Instruments by Seller
do not, and the performance by Seller of its obligations under this Agreement
and the Related Instruments will not, (i) conflict with or violate any
provision of Seller's articles of incorporation or Seller's bylaws, (ii)
assuming that all consents, approvals, authorizations and permits described in
Sections 3.3(b)(i) and 3.3(b)(ii) have been obtained and that all filings and
notifications described in Sections 3.3(b)(i) and 3.3(b)(ii) have been made
and any waiting periods thereunder have terminated or expired, conflict with
or violate any Law applicable to Seller or by which any of the Conveyed Assets
is bound, or (iii) assuming that all consents, approvals, authorizations and
permits described in Section 3.3(b)(iii) have been obtained and that all
filings and notifications described in Section 3.3(b)(iii) have been made and
any waiting periods thereunder have terminated or expired, require any consent
or approval under, result in any breach of, any loss of any benefit under or
constitute a change of control or default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
right of termination, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any Conveyed Asset, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
consents, approvals, breaches, losses, changes in control, defaults or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement by
Seller do not, and the performance of this Agreement by Seller will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Person except (i) under the HSR Act, to the extent
necessary, (ii) to any Governmental Entity (including, without limitation, the
LFA Consents and the Public Service Commission Consent), as set forth on
Section 3.3(b)(ii) of the Seller Disclosure Schedule (the "Required
Consents"), (iii) consents and approvals with respect to any Nonassignable
Asset (other than Required Consents), as set forth on Section 3.3(b)(iii) of
the Seller Disclosure Schedule and (iv) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 3.4 Compliance With Law. Except as set forth on
Section 3.4 of the Seller Disclosure Schedule and except with respect to
Environmental Laws covered by Section 3.11 hereof, Seller's conduct of the
Business as of the date of this Agreement and the Closing Date does not
conflict with or violate (i) any Law applicable to the Business or by which
any Conveyed Asset is bound or affected (including without limitation the
Communications Act) or (ii) any Licenses except, with respect to clauses (i)
and (ii), for any such conflicts or violations that would not, individually or
in the aggregate, have a Material Adverse Effect. As of the date hereof,
subject to receipt of the Required Consents, there are no outstanding orders,
injunctions or decrees of any Governmental Entity that apply to the Conveyed
Assets that restrict the ownership, disposition or use of any material
Conveyed Asset.
Section 3.5 Financial Information. Section 3.5 of the Seller
Disclosure Schedule contains true and complete copies (collectively, the
"Financial Information") of (i) selected items from the unaudited balance
sheets as of December 31, 2002 and March 31, 2003 relating to the Business and
(ii) related statements of earnings for the fiscal year ended December 31,
2002 (the "Historical Financial Information") and for the period beginning on
January 1, 2003 and ending on March 31, 2003 (the "2003 Financial
Information"). The Historical Financial Information and the 2003 Financial
Information was derived from the books and records of Seller and was
calculated in accordance with Seller's historical accounting practices. Except
as set forth on Section 3.5 of the Seller Disclosure Schedule, the Financial
Information fairly presents in all material respects the financial condition
and results of operations as at the respective dates of, and for the periods
referred to in, such Financial Information, all in accordance with generally
accepted accounting principles applied on a consistent basis.
Section 3.6 Absence of Certain Changes or Events. Except as
set forth on Section 3.6 of the Seller Disclosure Schedule or in the Financial
Information or as contemplated by this Agreement, from December 31, 2002
through the date of this Agreement there has not been any Material Adverse
Effect, and Seller has conducted the Business in the ordinary course and has
not, with respect to the Business:
(a) subjected any of the Conveyed Assets to any
material Liens, other than Permitted Liens;
(b) sold, transferred, leased, subleased, mortgaged,
pledged, had any liens imposed (other than Permitted Liens), licensed or
otherwise disposed of, to any third party or Affiliates, any material
properties or assets used in the conduct of the Business;
(c) entered into any Assumed Contract which is
material to the Business or modified or terminated any existing Assumed
Contract which is material to the Business;
(d) increased benefits payable to Employees under
existing severance or termination pay policies or employment agreements, or
otherwise made any changes in the terms of any employment agreement,
compensation, bonus or other benefits payable to Employees, other than
increased compensation, bonus or other benefits in the ordinary course of
business consistent with past practice;
(e) surrendered, revoked or otherwise terminated any
material License;
(f) incurred material Assumed Liabilities;
(g) waived, released or assigned any rights of
material value in connection with the Business;
(h) suffered any damage, destruction or other casualty
loss (whether or not covered by insurance) materially affecting the System or
any Conveyed Assets;
(i) made any material increase or decrease in the
monthly basic rates or any material reduction of the services provided to
subscribers by the System; or
(j) agreed, whether in writing or otherwise, to do any
of the foregoing, except as expressly contemplated by this Agreement.
Section 3.7 Title to Assets; Sufficiency of Conveyed Assets.
(a) Seller has, and at the Closing Seller will deliver to Purchaser, good and
valid title to (or, where applicable, a valid and binding leasehold interest
in or license to) and rights under all of the Conveyed Assets free and clear
of all Liens, other than Permitted Liens.
(b) The Conveyed Assets include all material tangible
assets that are necessary for the conduct of the Business immediately
following the Closing in substantially the same manner as currently conducted
by Seller, except for (i) the assets that will be used in connection with
providing services under the Transition Services Agreement, (ii) employees of
Seller that are not Transferred Employees, and (iii) the Excluded Assets.
(c) The Equipment is in reasonable operating condition
for the purposes for which it is currently being used, subject to ordinary
wear and tear, but is otherwise being transferred on a "where is" and, as to
condition, "as is" basis, including with respect to the Software used in
connection with such Equipment.
(d) Except for the Intellectual Property identified on
Section 3.7(d) of the Seller Disclosure Schedule, and except for Intellectual
Property relating to the Excluded Assets, there is no Intellectual Property
owned by or licensed to Seller that is used by Seller in the Business.
Section 3.8 Material Assumed Contracts. (a) Section 3.8(a)
of the Seller Disclosure Schedule sets forth a list of each Assumed Contract
that exists as of the date hereof and falls within any of the following
categories: (i) Contracts pursuant to which payments were made to Seller in
excess of $150,000 in connection with the Business during the year ended
December 31, 2002 or pursuant to which Seller is required to be paid in excess
of $150,000 in connection with the Business for the year ending December 31,
2003, (ii) indefeasible right of use Contracts, (iii) Contracts establishing
joint ventures or partnerships constituting a portion of the Business, (iv)
Contracts containing covenants which materially limit the freedom of Seller or
(from and after the Closing) Purchaser to operate the Business in any
geographic area, (v) employment agreements, (vi) Contracts between Seller and
any of its Affiliates providing for annual payments in excess of $150,000 and
relating exclusively to the conduct of the Business, and (vii) all utility
attachment or conduit agreements. Section 3.8(a) of the Seller Disclosure
Schedule sets forth a list of each Contract, agreement or arrangement pursuant
to which Seller is obligated or has agreed to make capital expenditures in
excess of $150,000 with respect to the Business. Seller has provided Purchaser
with access and opportunity to review true and correct copies of all Contracts
set forth on Section 3.8(a) of the Seller Disclosure Schedule.
(b) Except as set forth on Section 3.8(b) of the
Seller Disclosure Schedules, Seller has not in the twelve months preceding the
date hereof received any advance promotional payments or other prepayment in
excess of $50,000 under any material Assumed Contract set forth on Section
3.8(a) of the Seller Disclosure Schedule. To the knowledge of Seller, as of
the date of this Agreement, each of the Assumed Contracts set forth on Section
3.8(a) of the Seller Disclosure Schedule is in full force and effect as of the
date hereof. Except as set forth on Section 3.8(b) of the Seller Disclosure
Schedule, Seller and, to the knowledge of Seller, any other party thereunder,
is not in material default under any Assumed Contract that is set forth on
Section 3.8(a) of the Seller Disclosure Schedule, and, to the knowledge of
Seller, no event has occurred or circumstance exists that (with or without
notice or the lapse of time) would give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Assumed Contract set
forth on Section 3.8(a) of the Seller Disclosure Schedule, in either case
except as would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.9 Real Property. (a) Except as otherwise disclosed
on Section 3.9(a)(i) of the Seller Disclosure Schedule, Seller holds good and
marketable fee simple title to those parcels of real property (the "Owned Real
Property") shown as being owned by Seller on Section 3.9(a)(i) of the Seller
Disclosure Schedule, free and clear of any Liens except for Permitted Liens.
Except as otherwise disclosed on Section 3.9(a)(ii) of the Seller Disclosure
Schedule, Seller has valid and enforceable leasehold interests in the real
property (the "Leased Real Property") leased to Seller pursuant to the leases
described on Section 3.9(a)(ii) of the Seller Disclosure Schedule (the "Real
Property Leases"), subject only to the Permitted Liens. Except as otherwise
disclosed on Section 3.9(a)(iii) of the Seller Disclosure Schedule and except
for easements or rights-of-way granted pursuant to Licenses, Seller holds fee
simple title to those material easements and rights of way appurtenant to the
Leased Real Property or Owned Real Property necessary to conduct the Business
on the date hereof (collectively, "Easements" and, together with the Leased
Real Property and the Owned Real Property, the "Real Property"), subject only
to Permitted Liens. The Real Property includes all the real property interests
(other than easements and rights of way granted pursuant to Licenses or
applicable Law) necessary to permit Purchaser to conduct the Business as it is
being conducted on the date hereof.
(b) Each Real Property Lease constitutes the entire
agreement with the landlord in question and, except as set forth on Section
3.9(a)(ii) of the Seller Disclosure Schedule, is in full force and effect.
Seller has not given any notice, nor, to the best of Seller's knowledge has
any notice been given to Seller, with respect to any violation, breach,
default or termination of any rights or obligations of Seller under any Real
Property Lease, the result of which would have a Material Adverse Effect.
(c) The Real Property, to the extent owned, leased or
otherwise held by Seller, shall be transferred to Purchaser in its "AS IS"
condition on the Closing Date, subject to all latent and patent defects, based
solely on Purchaser's own inspection, analysis and evaluation of the Real
Property.
(d) To Seller's knowledge, the premises constituting
the Owned Real Property and Leased Real Property are in satisfactory repair
and condition (normal wear and tear excepted), free from material structural
defects.
(e) Seller will provide a copy of all surveys in its
possession relating to the Real Property.
(f) As of the date hereof, no written notice of any
proceedings has been received or, to the knowledge of Seller, threatened by an
authority having the power of eminent domain to condemn any part of any of the
Real Property, including any improvements thereon.
Section 3.10 Licenses. (a) Section 3.10(a) of the Seller
Disclosure Schedule sets forth all Licenses and applications therefor used by
Seller to conduct the Business. For each outstanding License, Section 3.10(a)
of the Seller Disclosure Schedule includes all information necessary to
identify the License including where applicable, but not limited to: the
entity holding the License, the issuing authority, call sign, expiration date,
FCC community unit identification number, and geographic area covered.
(b) Aside from the Licenses specified on Section
3.10(a) of the Seller Disclosure Schedule or as set forth on Section 3.10(b)
of the Seller Disclosure Schedule, there are no other licenses,
authorizations, permits, approvals, variances, exemptions, orders,
certificates, agreements, easements, rights-of-way or other form of
permission, consent or authority of or with a Government Entity necessary for
Seller to operate the Business other than those which are immaterial to the
Business.
(c) Except as set forth in Section 3.10(c) of the
Seller Disclosure Schedule, each License set forth on Section 3.10(a) of the
Seller Disclosure Schedule is valid and in full force and effect either
pursuant to its terms or by operation of law.
(d) Except as set forth in Section 3.10(d) of the
Seller Disclosure Schedule:
(i) There is no pending or, to the knowledge of
Seller, threatened action by the FCC, any Governmental Entity or any
other Person to suspend, revoke, terminate, challenge or modify the
Licenses set forth on Section 3.10(a) of the Seller Disclosure
Schedule.
(ii) There is no judicial, administrative or other
type of action, suit, complaint, petition, proceeding or challenge
pending or, to the knowledge of Seller, threatened against or
relating to the Licenses set forth on Section 3.10(a) of the Seller
Disclosure Schedule before the FCC, any federal, state or municipal
court, any arbitration tribunal or any other Governmental Entity.
(iii) Seller has not received any notice or other
communication from the FCC or any other Governmental Entity
specifying a material default, violation or other problem or issue
with respect to a License set forth on Section 3.10(a) of the Seller
Disclosure Schedule except where such default, violation or other
problem has already been cured.
(iv) No Governmental Entity has notified Seller of
its application to be certified to regulate rates with respect to the
System as provided in 47 C.F.R. Section 76.910.
(v) To Seller's Knowledge, no reduction of rates or
refunds to subscribers is required as of the date hereof.
(vi) Except where any non-compliance or failure to
make any filing or submission would not have a Material Adverse
Effect, (a) Seller is and has been in compliance with the
Communications Act, and (b) Seller is and has been in compliance with
the rules and regulations of the Federal Aviation Administration with
respect to any antenna structures used in the operation of the
System.
(vii) Seller knows of no facts that would establish
a reasonable basis for any action described in subsections (i), (ii),
(iii), (iv), (v) or (vi) hereof.
Section 3.11 Environmental Matters. Except as set forth on
Section 3.11 of the Seller Disclosure Schedule and except as would not have a
Material Adverse Effect:
(a) Seller, to the extent related to the Real
Property, has obtained all material environmental permits, licenses or
approvals required by Law and necessary for the conduct of the Business, and
Seller is in its operation of the Business and its ownership or use of the
Real Property in compliance with such permits and all other requirements of
applicable Environmental Laws;
(b) Seller, to the extent related to the Real
Property, has not received any written notice from any Governmental Entity or
any other Person alleging a violation of any Environmental Laws with respect
to its operation of the Business or its ownership or use of the Real Property;
(c) To the knowledge of Seller, there has been no
Release of any Hazardous Materials at, on or under any of the Real Property in
amounts or under circumstances that would require remediation pursuant to
Environmental Laws.
(d) There are no pending or, to the knowledge of
Seller, threatened claims, actions, suits, inquiries, proceedings or
investigations by any Governmental Entities concerning compliance by Seller
with any Environmental Laws;
(e) To Seller's knowledge, there have not been in the
past, and are not now, any underground tanks in violation of any applicable
Environmental Laws at, on or under any Real Estate.
Section 3.12 Taxes. Except as set forth in Section 3.12 of
the Seller Disclosure Schedule:
(a) (i) Seller has duly and timely filed, or will so
file when due, with the appropriate governmental authorities (or there have
been or will be duly and timely filed on its behalf) all material Tax Returns
required to be filed by it with respect to the Conveyed Assets or the
Business, and all such Tax Returns are true, correct and complete in all
material respects, and (ii) all material Taxes with respect to the Conveyed
Assets or the Business shown as due on such Tax Returns have been or will be
timely paid or are being contested in good faith;
(b) there are no material Tax liens (other than
Permitted Liens) on any of the Conveyed Assets; and
(c) Seller is not a "foreign person" within the
meaning of Section 1445(b) of the Code.
Section 3.13 Employee Matters. (a) Section 3.13(a)(i) of the
Seller Disclosure Schedule contains a complete and accurate list of the
employees of Seller employed primarily in the Business (the "Employees") as of
the date specified on such list, showing for each Employee the position held,
department and work location. None of the Employees is covered by any union,
collective bargaining agreement or other similar labor agreement.
(b) Section 3.13(b) of the Seller Disclosure Schedule
sets forth a true and complete list of each "employee benefit plan" as defined
in Section 3(3) of ERISA and any other plan, policy, program, practice,
agreement, understanding or arrangement, in each case, providing compensation
or other benefits to any Employee, maintained, sponsored or contributed to by
Seller or any ERISA Affiliate with respect to any current or former Employee
(each, a "Seller Benefit Plan").
(c) The Seller has supplied to the Purchaser a true
and correct copy of: (1) each Seller Benefit Plan (or if no written plan
document exists, a written description of the nature of the Plan, including,
the provisions relating to participation, eligibility, benefits, funding
arrangements including cost to Employee, if any, and assets); and (2) the
summary plan description and any material employee communication which
describes the terms or operation of each Seller Benefit Plan.
(d) Neither Seller nor any of its ERISA Affiliates
sponsors, maintains or contributes to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA or
Section 412 of the Code, or any "multiemployer plan" as defined in Section
3(37) of ERISA.
(e) To Seller's knowledge, no event has occurred, or
condition exists, which could subject any of the Conveyed Assets or Purchaser
to any future liability, obligation or lien with respect to any Employee
Benefit Plan currently or previously, sponsored, maintained or contributed to
by the Seller or any ERISA Affiliate.
(f) Except as required by Law or as set forth on
Section 3.13(b) of the Seller Disclosure Schedule, no Seller Benefit Plan
provides any medical, disability or life insurance benefits to any Employees
or their beneficiaries.
(g) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
give rise to any obligation to notify employees of the Business (or any
similar obligation) pursuant to the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq., or under any similar
provision of any federal or state Law, rule, or regulation.
Section 3.14 Litigation. (a) As of the date hereof, except
as set forth on Section 3.14(a) of the Seller Disclosure Schedule, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of Seller, threatened against Seller in respect of the Conveyed Assets or the
conduct of the Business except for routine claims in the ordinary course of
business that, individually or in the aggregate, would not result in a
Material Adverse Effect. As of the date hereof, there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of Seller,
threatened against Seller, which challenges the transactions contemplated by
this Agreement and would be reasonably expected to prevent or materially
interfere with or delay the performance or consummation of the transactions
contemplated hereby.
(b) As of the date hereof, except as set forth on
Section 3.14(b) of the Seller Disclosure Schedule and subject to receipt of
the Required Consents, there are no outstanding orders, injunctions or decrees
of any Governmental Entity that apply to the Conveyed Assets that materially
restrict the ownership, disposition or use of the Conveyed Assets or the
conduct of the Business.
Section 3.15 Brokers. No broker, finder or investment banker
(other than Xxxxx & Company LLC, all fees of which shall be paid by Seller in
connection with the transactions contemplated hereby) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.
Section 3.16 System Data. (a) As of May 31, 2003 the System
consisted of at least 29,000 Video Subscribers and at least 9,250 High Speed
Subscribers and at least 7,250 telephone lines. The System is in good repair
and structurally sound, with no material defects. There are not less than
36,500 "homes passed" by the System within the Territory. At least 70% of the
"homes passed" by the System are passed by a two-way plant that is operational
at a forward design band pass of 50 to 750 MHz and a reverse design band pass
of 5 to 40 MHz, and the balance of such plant is operational at a forward
design band pass of 50 MHz to at least 450 MHz. Section 3.16(a) of the Seller
Disclosure Schedule sets forth a description of the following applicable
information with respect to the System, as of May 31, 2003 (unless otherwise
indicated thereon):
(i) the channel and bandwidth capacity of the
System, the stations and signals carried by the System and the
channel position of each such signal and station;
(ii) the Rates for all services provided by the
System;
(iii) the type of services provided for each
franchised community to which the System's services currently are
provided;
(iv) the number of total miles in the System and
the number of miles that have been upgraded to the specifications set
forth in Section 3.16(a)(iv) of the Seller Disclosure Schedule, as
estimated in accordance with Seller's books and records;
(v) the number of aerial and underground miles in
the System, as estimated in accordance with Seller's books and
records;
(vi) the number of homes passed by the System, as
estimated in accordance with Seller's books and records;
(vii) the number of bulk subscribers, as estimated
in accordance with Seller's books and records; and
(viii) any promotions, pricing discounts, or other
sales or marketing incentives for subscribers or prospective
subscribers for the services offered by the Business that are
currently in effect or that have been terminated or have expired
within the thirty (30) days preceding the date hereof.
(b) Except as set forth in any applicable License,
Seller has not made a commitment to any franchising authority to maintain a
local office in any location.
(c) With respect to franchised cable operations, and
except as set forth in Section 3.16(c) of the Seller Disclosure Schedule,
there is no overbuild of the System at present, nor any franchise proposal
pending.
(d) Except as set forth in Section 3.16(d) of the
Seller Disclosure Schedule, there is no assertion or claim against Seller that
operations pursuant to any pole attachment agreement have been improperly
conducted or maintained. Section 3.16(d) of the Seller Disclosure Schedule
lists and describes the results of any audits conducted by any of the parties
to the pole attachment agreements of Seller during the previous two (2) years.
(e) As of the date hereof, Seller has no knowledge of
any circumstance, event, or occurrence which, individually or in the
aggregate, would prevent or materially interfere with Seller's ability to
complete at least ninety (90) percent of the Upgrade Commitment prior to
August 31, 2003.
Section 3.17 No Undisclosed Liabilities. Except as set forth
in the Seller Disclosure Schedule, Seller has no material liabilities or
obligations of any kind or nature, whether known or unknown, absolute or
contingent, accrued or unaccrued, which are Assumed Liabilities and which
would be required to be disclosed on a balance sheet, except for Assumed
Liabilities which are reflected or reserved for in the Financial Information,
which are included in the calculation of Proration Payment Amount or which are
current liabilities incurred in the ordinary course of business since March
31, 2003.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 4.1 Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the state
of Pennsylvania. Purchaser has the requisite power and authority to own, lease
and operate its properties and to conduct its business as it is now being
conducted.
Section 4.2 Authority. Subject to receipt of the Required
Consents, Purchaser has the requisite power and authority to execute and
deliver this Agreement and the Related Instruments, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Related Instruments and the consummation by Purchaser of such transactions
have been authorized by all requisite corporate action on the part of
Purchaser and no other authorization of Purchaser or its stockholders is
required to authorize the execution and delivery of this Agreement or the
Related Instruments or the consummation of the transactions contemplated
hereby or thereby. This Agreement has been validly executed and delivered by
Purchaser and constitutes, and each Related Instrument that is to be executed
and delivered by Purchaser will constitute when executed and delivered by
Purchaser, a legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms.
Section 4.3 No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Purchaser do not, and the
performance by Purchaser of its obligations under this Agreement will not, (i)
conflict with or violate any provision of the certificate or articles of
incorporation or by-laws of Purchaser, (ii) assuming that all consents,
approvals, authorizations and permits described in Section 4.3(b) have been
obtained and that all filings and notifications described in Section 4.3(b)
have been made and any waiting periods thereunder have terminated or expired,
conflict with or violate any Law applicable to Purchaser or by which any
property or asset of Purchaser is bound or (iii) assuming that all consents,
approvals, authorizations and permits described in Section 4.3(b) have been
obtained and that all filings and notifications described in Section 4.3(b)
have been made and any waiting periods thereunder have terminated or expired,
require any consent or approval under, result in any breach of, any loss of
any benefit under or constitute a change of control or default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, acceleration or cancellation of, or
result in the creation of a Lien or other encumbrance on any property or asset
of Purchaser, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, consents, approvals, breaches, losses, changes in
control, defaults or other occurrences which would not, individually or in the
aggregate, reasonably be expected to prevent or materially delay the
performance of this Agreement by Purchaser.
(b) The execution and delivery of this Agreement by
Purchaser do not, and the performance of this Agreement by Purchaser will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) under the HSR Act, to the
extent necessary, (ii) Required Consents and (iii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance or consummation of
this Agreement by Purchaser.
Section 4.4 Litigation. As of the date hereof, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of Purchaser, threatened against or related to Purchaser which could affect
Purchaser's ability to consummate the transactions contemplated by this
Agreement and each Related Instrument. As of the date hereof, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of Purchaser, threatened against Purchaser, which challenges the transactions
contemplated by this Agreement and would be reasonably expected to prevent or
materially interfere with or delay the performance or consummation of the
transactions contemplated hereby.
Section 4.5 Financing. Purchaser has as of the date hereof
(through cash on hand or available borrowings under an existing credit
facility), and will have at Closing (through cash on hand), sufficient funds
available in cash to pay the Purchase Price and all other amounts payable by
Purchaser at the Closing and to perform its obligations hereunder following
the Closing.
Section 4.6 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser.
Section 4.7 Investigation by Purchaser. Purchaser has
conducted its own independent review and analysis of the Conveyed Assets, the
Assumed Liabilities and the Business and acknowledges that Purchaser has been
provided access to the personnel, properties, premises and records of Seller
relating to the Conveyed Assets, the Assumed Liabilities and the Business for
such purpose. In entering into this Agreement, Purchaser has relied solely
upon the express representations, warranties and covenants of Seller set forth
in Article III of this Agreement and set forth in the Related Instruments and
Purchaser's own investigation and analysis. Purchaser acknowledges that,
except as expressly set forth in the representations and warranties in Article
III of this Agreement and in the Related Instruments, there are no
representations or warranties by Seller of any kind, express or implied, with
respect to the Business, the Conveyed Assets or the Assumed Liabilities, and
that Purchaser is purchasing the Conveyed Assets "where is" and "as is" and
"with all faults". Without limiting the generality of the foregoing, except as
expressly set forth in the representations and warranties in Article III of
this Agreement and the Related Instruments, THERE ARE NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 4.8 Purchaser Qualifications. Purchaser is qualified
and able to acquire and hold or control each License under applicable Law,
including but not limited to the Communications Act and rules and regulations
of the Government Entity that issued such License.
ARTICLE V
COVENANTS
Section 5.1 Conduct of the Business. During the period from
the date hereof to the Closing, except as set forth in Section 5.1 of the
Seller Disclosure Schedule or as otherwise contemplated by this Agreement or
unless Purchaser shall otherwise consent (which consent shall not be
unreasonably withheld), Seller shall (x) operate the Business in all material
respects in the ordinary course of business consistent with past practice;
provided, that, in connection with its upgrade of the System under the Upgrade
Commitment Seller may revise existing, and implement and provide new,
services, products, promotions and pricing consistent with industry practice
or its past practice in upgraded markets outside the Territory and (y) use its
commercially reasonable efforts to preserve substantially intact the Conveyed
Assets and the Business. Without limiting the generality of the foregoing,
from the date of this Agreement to the Closing, except as set forth on Section
5.1 of the Seller Disclosure Schedule or as otherwise contemplated by this
Agreement, without the prior written consent of Purchaser (which consent shall
not be unreasonably withheld or delayed), Seller shall not:
(i) subject the Conveyed Assets to any Lien, other
than Permitted Liens;
(ii) sell, transfer, lease, sublease, license or
otherwise dispose of material Conveyed Assets, except for the sale,
transfer, lease, sublease, license or other disposition of inventory
and obsolete equipment in the ordinary course of business;
(iii) enter into, terminate or materially amend any
material Assumed Contract or fail to perform any material obligations
under any Assumed Contract;
(iv) materially increase the compensation or
benefits provided to any Transferred Employee, except for increases
in the ordinary course of business or change the terms of any
employment agreement or compensation agreement or any bonus, pension,
insurance or other employee benefit plan applicable to any
Transferred Employee, except in the ordinary course of business;
(v) surrender, revoke or otherwise terminate any
material License, except in accordance with Section 5.3 hereof;
(vi) engage in any promotions, pricing discounts or
other sales or marketing incentives for subscribers or prospective
subscribers for the services offered by the Business except for those
set forth on Section 5.1 of the Seller Disclosure Schedule and
promotions, pricing discounts or other sales or marketing incentives
similar thereto;
(vii) except as reasonably required by applicable
local franchising authorities, launch any new channels (not including
any introduction of channels existing in upgraded areas on the date
hereof to areas which are subject to the Upgrade Commitment); or
(viii) agree, whether in writing or otherwise, to
do any of the foregoing set forth in clauses (i) through (vii) above.
Section 5.2 Access to Information; Confidentiality;
Cooperation. (a) After the date hereof and prior to the Closing, Seller shall
permit Purchaser and its authorized representatives to have reasonable access
during normal business hours, upon reasonable prior notice to Seller, to
Seller's books and records to the extent directly relating to the Conveyed
Assets, the Assumed Liabilities and the Business (excluding confidential
personnel and medical records), and Seller shall furnish promptly to Purchaser
such information in Seller's possession concerning the Conveyed Assets, the
Assumed Liabilities and the Business as Purchaser may reasonably request;
provided, however, that any such access shall be conducted in such a manner as
not to interfere with the operation of the Business. Notwithstanding the
foregoing, (i) Seller need not disclose to Purchaser any information which
would violate applicable Law, result in a breach of attorney-client privilege
or similar privilege, or violate any confidentiality or nondisclosure
agreement or similar agreement or arrangement to which Seller is a party and
(ii) Seller may redact such portions of its books and records that do not
directly relate to the Conveyed Assets, the Assumed Liabilities and the
Business.
(b) Information disclosed to Purchaser pursuant to
this Agreement (including in the Seller Disclosure Schedule) shall be held as
Evaluation Material (as defined in the Non-Disclosure Agreement, dated as of
March 12, 2003, by and between Seller and Purchaser (as amended, the
"Non-Disclosure Agreement")) and shall be subject to the Non-Disclosure
Agreement; and Purchaser, in accordance therewith, shall cause its
Representatives (as defined in the Non-Disclosure Agreement) to treat as
Evaluation Material all of the information provided by Seller pursuant to this
Agreement and not to use such information except in connection with the
transactions contemplated hereby and otherwise in accordance with the
Non-Disclosure Agreement. The Non-Disclosure Agreement shall survive the
Closing and continue in full force and effect thereafter.
(c) Following the Closing, for so long as such
information is retained by Purchaser (which shall be for a period of at least
six years), Purchaser shall permit Seller and its authorized representatives
to have reasonable access and duplicating rights during normal business hours,
upon reasonable prior notice to Purchaser, to the books, records and personnel
relating to the Conveyed Assets, Assumed Liabilities and the Business with
respect to the period prior to Closing, to the extent that such access may be
reasonably required (i) in connection with the preparation of Seller's
accounting records or with any audits, (ii) in connection with any suit,
claim, action, proceeding or investigation relating to the Business, (iii) in
connection with any regulatory filing or matter, or (iv) in connection with
any other valid legal or business purpose of Seller; provided, that Seller
shall reimburse Purchaser promptly for all reasonable and necessary
out-of-pocket costs and expenses incurred by Purchaser in connection with any
such request, so long as Purchaser shall have obtained Seller's written
consent prior to incurring any such cost or expense for which it seeks
reimbursement
(d) Purchaser shall maintain such books and records in
an easily accessible format and at accessible locations. Notwithstanding the
foregoing, (i) Purchaser need not disclose to Seller any information which
would violate applicable Law, result in a breach of attorney-client privilege
or similar privilege, violate any confidentiality or nondisclosure agreement
or similar agreement or arrangement to which Purchaser is a party and (ii)
Purchaser may redact such books and records that do not directly relate to the
Conveyed Assets, Assumed Liabilities or the Business.
(e) Following the Closing, for so long as such
information is retained by Seller (which shall be for a period of at least six
years), Seller shall permit Purchaser and its authorized representatives to
have reasonable access during normal business hours, upon reasonable prior
notice to Seller, to the Retained Information to the extent such access may be
reasonably required (i) in connection with the preparation of Purchaser's
accounting records or with any audits, (ii) in connection with any suit,
claim, action, proceeding or investigation relating to the Business, (iii) in
connection with any regulatory filing or matter, or (iv) in connection with
any other valid legal or business purpose of Purchaser; provided, that
Purchaser shall reimburse Seller promptly for all reasonable and necessary
out-of-pocket costs and expenses incurred by Seller in connection with any
such request. Seller shall maintain such books and records in an easily
accessible format and at accessible locations. Notwithstanding the foregoing,
(i) Seller need not disclose to Purchaser any information which would violate
applicable Law, result in a breach of attorney-client privilege or similar
privilege, violate any confidentiality or nondisclosure agreement or similar
agreement or arrangement to which Seller is a party and (ii) Seller may redact
such portions of the Retained Information that do not directly relate to the
Conveyed Assets, the Assumed Liabilities or the Business.
(f) Purchaser shall, and shall instruct its employees
to, at Seller's request, cooperate with Seller as may be reasonably required
in connection with the investigation and defense of any suit, claim, action,
proceeding or investigation relating to the Business in existence as of the
date of this Agreement or that is brought against Seller or any of its
Affiliates at any time after the date of this Agreement; provided, however,
that Seller shall reimburse Purchaser promptly for all reasonable and
necessary out-of-pocket costs and expenses incurred by Purchaser in connection
with any such request.
(g) Following the Closing, Seller shall, and shall
instruct its employees to, at Purchaser's request, cooperate with Purchaser as
may be reasonably required (i) in connection with the investigation and
defense of any suit, claim, action, proceeding or investigation set forth on
Section 2.2 (a)(vi) of the Seller Disclosure Schedule, (ii) in order to
respond to inquiries or requests from Governmental Entities with respect to
the conduct of the Business during the period prior to Closing; provided,
however, that Purchaser shall reimburse Seller promptly for all reasonable and
necessary out-of-pocket costs and expenses incurred by Seller in connection
with any such request; and provided, further, that such cooperation shall not
materially interfere with Seller's conduct of its business or with Seller's
employees' performance of their duties to Seller.
(h) Prior to the Closing and in anticipation thereof,
Purchaser and Seller shall use their best efforts to resolve all open issues
(e.g. scope of services, pricing and other terms) in the Transition Services
Agreement (including without limitation the Annexes thereto), and to execute a
Transition Services Agreement in form and substance substantially similar to
Exhibit C hereto, and Purchaser and Seller shall each coordinate and consult
with the other with respect to the delivery of services contemplated by the
Transition Services Agreement to facilitate the delivery thereof from and
after the Closing Date in accordance with the terms set forth therein. Pricing
of the services set forth on the Annexes to the Transition Services Agreement
shall be based upon Seller's reasonable, good faith estimate of the actual
cost to Seller of providing such services at the levels of service anticipated
to be required by Seller.
Section 5.3 Appropriate Action; Consents; Filings. (a)
Subject to Section 5.3(d) hereof, Seller and Purchaser shall each use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable, including to: (i)
obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required (A) to be obtained or made by
Seller or Purchaser or any of their Affiliates to consummate the transactions
contemplated by this Agreement, (B) to avoid any action or proceeding by any
Governmental Entity (including, without limitation, those in connection with
the HSR Act and antitrust and competition Laws of any other applicable
jurisdiction) in connection with the authorization, execution and delivery of
this Agreement and to permit the consummation of the transactions contemplated
hereby to occur as soon as reasonably possible, or (C) renew or extend, as
applicable, each expired License which is not in full force and effect and
(ii) promptly make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement required under (A) the
HSR Act and antitrust and competition Laws of any other applicable
jurisdiction, in each case, to the extent required by applicable Law, (B) the
Communications Act or (C) any other applicable Law. Seller and Purchaser shall
cooperate with each other in connection with the making of all filings
referenced in the preceding sentence, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. Seller and Purchaser shall have the right to review
in advance, and, to the extent practicable, each shall consult the other on,
all the information relating to Seller or Purchaser, as the case may be, that
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. Seller and Purchaser may, as each deems
reasonably advisable and necessary, designate any competitively sensitive
information provided to the other under this Section 5.3(a) as "outside
counsel only." Such information shall be given only to outside counsel of the
recipient. In addition, Purchaser and Seller may redact any information from
such documents shared with the other party or its counsel that is not
pertinent to the subject matter of the filing or submission. Each of Seller
and Purchaser shall bear its own costs and expenses in connection with its
performance under this Section 5.3; except that (i) the first $125,000 of
filing fees in connection with any required filings or submissions under the
HSR Act shall be borne one-half by Seller and one-half by Purchaser, and
Purchaser shall be solely responsible for all such fees in excess of that
amount and (ii) Purchaser shall reimburse Seller promptly for the amount of
any fees imposed by the FCC for filing of applications necessary to obtain any
of the Required Consents.
(b) Without limiting Sections 5.3(a) or 5.3(c), but
subject to Section 5.3(d), Purchaser and Seller shall:
(i) promptly provide to the Federal Trade
Commission or Department of Justice, as the case may be, such
information as may be requested by the Federal Trade Commission or
Department of Justice, as the case may be, and shall cause their
respective officers and employees to respond to any information or
other requests from the Federal Trade Commission or Department of
Justice, as the case may be (including complying with requests for
in-person meetings), in connection with the review by the Federal
Trade Commission or Department of Justice, as the case may be, of
this Agreement and the transactions contemplated hereby; and
(ii) promptly submit to the FCC and all applicable
Governmental Entities (including the NYSPSC) all applications,
notices and other filings and shall obtain any other approvals or
consents necessary to consummate the transactions contemplated hereby
and consummate the transfer from Seller to Purchaser of any Licenses
used by Seller to conduct the Business; provided, that, Seller shall
not be required to submit applications, notices and other filings to
or obtain any other approvals or consents from Governmental Entities
necessary to transfer local and long distance voice subscribers of
the Business to Purchaser until such time that Purchaser has received
all approvals from Governmental Entities required for Purchaser to
operate as a telephone corporation (as defined by the New York Public
Service Law) in the Territory and as a domestic and international
common carrier in the Territory pursuant to the Telecommunications
Act of 1996 (as amended) and the rules and regulations of the FCC,
including, without limitation, a Certificate of Public Convenience
and Necessity from the NYSPSC, and all required approvals by the
NYSPSC and FCC for the transfer to Purchaser of the
telecommunications facilities used in the Business; provided,
further, that Seller shall not deliver notice to local and long
distance voice subscribers of the Business of the transfer of such
subscribers to Purchaser until such time as Seller and Purchaser
reasonably agree that, prior to the anticipated expiration of all
applicable waiting periods expected to be imposed by the NYSPSC or
FCC relating to the transfer of such subscribers, Purchaser will have
the capacity to transfer the billing of video and high speed data
subscribers to the Business to its systems.
(c) Without limiting Sections 5.3(a) or 5.3(b), but
subject to Section 5.3(d), Purchaser and Seller shall each use its respective
reasonable best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to assign or transfer any
Conveyed Asset to Purchaser or to novate all obligations and liabilities that
constitute Assumed Liabilities or to obtain in writing the unconditional
release of Seller and its Affiliates with respect to Assumed Liabilities so
that, in any such case, Purchaser shall be solely responsible for the Assumed
Liabilities.
(d) Notwithstanding anything in this Agreement to the
contrary (including paragraphs (a), (b) and (c) of this Section 5.3), (i)
neither Seller nor its Affiliates shall be required to remain liable or
secondarily liable or to pay any consideration to any Person or to reimburse
Purchaser for any costs or expenses of Purchaser incurred in connection with
Section 2.7 or paragraphs (a), (b) and (c) of this Section 5.3 and (ii)
neither Purchaser nor its Affiliates nor Seller nor its Affiliates shall be
required to commit to any divestitures, licenses or hold separate or similar
arrangements with respect to its assets or conduct of business arrangements,
whether as a condition to obtaining any approval from a Governmental Entity or
any other Person or for any other reason.
Section 5.4 Further Assurances. From time to time following
the Closing, Seller and Purchaser shall, and shall cause their respective
Affiliates to, execute, acknowledge and deliver all such further conveyances,
notices, assumptions, releases and acquaintances and such other instruments,
and shall take such further actions, as may be necessary or appropriate to
assure fully to Purchaser and its respective successors or assigns, all of the
properties, rights, titles, interests, estates, remedies, powers and
privileges intended to be conveyed to Purchaser under this Agreement and to
assure fully to Seller and its Affiliates and their successors and assigns,
the assumption of the liabilities and obligations intended to be assumed by
Purchaser under this Agreement, and to otherwise make effective the
transactions contemplated hereby.
Section 5.5 Tax Matters. (a) Periodic Taxes. All personal
property and Real Property Taxes and similar ad valorem obligations levied
with respect to the Conveyed Assets for a taxable period that includes (but
does not end on) the Closing Date shall be apportioned between Seller and
Purchaser as of the Closing Date based on the number of days of such taxable
period included in the period ending with and including the Closing Date (with
respect to any such taxable period, the "Pre-Closing Tax Period"), and the
number of days of such taxable period beginning after the Closing Date (with
respect to any such taxable period, the "Post-Closing Tax Period"). Seller
shall be liable for the proportionate amount of such Taxes that is
attributable to the Pre-Closing Tax Period, and Purchaser shall be liable for
the proportionate amount of such Taxes that is attributable to the
Post-Closing Tax Period.
(b) Tax Cooperation. Without duplication of Section
5.2, Purchaser and Seller agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information and
assistance relating to the Business and the Conveyed Assets (including access
to books and records) as is reasonably necessary for the filing of all Tax
Returns, the making of any election relating to Taxes, the preparation for any
audit by any taxing authority, and the prosecution or defense of any claims,
suit or proceeding relating to any Tax. Any expenses incurred in furnishing
such information or assistance shall be borne by the party requesting it.
(c) Transfer Taxes. Any transfer, documentary, sales,
use, value-added, gain, excise or other similar tax, and any interest,
penalties or additions to tax with respect to any of the foregoing and any
costs of contesting any such amounts ("Transfer Taxes") shall be shared
equally by Purchaser and Seller; provided, however, that Seller's liability
with respect to Transfer Taxes shall not exceed $200,000, and Purchaser shall
indemnify and hold Seller harmless for all Transfer Taxes in excess of such
amount. Promptly following the Closing, Purchaser shall prepare in good faith,
and Seller shall accept from Purchaser, a New York State and Local Exempt Use
Certificate and a New York State and Local Sales and Use Tax Certificate of
Capital Improvement in connection with the exemption of the applicable
Conveyed Assets from the New York State and Local Sales and Use Tax; provided,
that Seller shall have a reasonable opportunity to participate in the
preparation of and comment on such certificates. Seller's acceptance of such
certificates shall not be unreasonably withheld.
Section 5.6 Publicity. Except as otherwise required by
applicable Law or applicable stock exchange requirements, prior to the
Closing, Purchaser and Seller shall, and each of them shall cause their
respective Affiliates, representatives and agents to, use reasonable
commercial efforts to cooperate in the preparation of and agree with respect
to the content of any press release or public announcement with respect to the
transactions contemplated by this Agreement; provided, that each of Seller and
Purchaser may make any public statement in response to questions by the press,
analysts, investors or those attending industry conferences or financial
analyst calls, or issue press releases, so long as any such public statement
or press release is not inconsistent with prior public disclosures, press
releases or public statements issued pursuant to this Section 5.6 and which do
not reveal non-public information about the other party. The parties hereto
agree to issue a joint press release in the form which has previously been
agreed to by both parties, to announce the execution of this Agreement. The
parties shall use reasonable commercial efforts to issue a joint press
release, reasonably acceptable to both parties, to announce the Closing and
not to issue any press release or make any other public statement inconsistent
with such press release.
Section 5.7 Certain Provisions Relating to the Transfer. (a)
In the event that record or beneficial ownership or possession of any Excluded
Asset or Excluded Liability has been transferred to Purchaser on or after the
Closing Date, Purchaser shall use its reasonable best efforts to transfer, or
cause to be transferred, to Seller such Excluded Asset or Excluded Liability;
and, pending such transfer to Seller, Purchaser shall hold such Excluded Asset
or Excluded Liability and provide to Seller all of the benefits and
liabilities associated with the ownership and operation of such Excluded Asset
or Excluded Liability and, accordingly, Purchaser shall cause such Excluded
Asset or Excluded Liability to be operated or retained as may reasonably be
instructed by Seller. Seller shall indemnify and hold harmless the Purchaser
Indemnified Parties for any Losses resulting from the operation or retention
of such Excluded Assets or Excluded Liabilities so long as such operation or
retention is in accordance with Seller's instructions.
(b) Except in respect of Nonassignable Assets (which
are the subject of Section 2.7 hereof), in the event that record or beneficial
ownership or possession of any Conveyed Asset or any Assumed Liability has not
been transferred to Purchaser on the Closing Date, Seller and Purchaser shall
cooperate and shall use their reasonable best efforts to transfer, or cause to
be transferred, from Seller to Purchaser, such Conveyed Asset or Assumed
Liability, and pending such transfer to Purchaser, Seller shall hold such
Conveyed Asset or Assumed Liability and provide to Purchaser all of the
benefits and liabilities associated with the ownership and operation of such
Conveyed Asset or Assumed Liability and, accordingly, Seller shall cause such
Conveyed Asset or Assumed Liability to be operated or retained as may
reasonably be instructed by Purchaser. Purchaser shall indemnify and hold
harmless the Seller Indemnified Parties for any Losses resulting from the
operation or retention of such Conveyed Assets or Assumed Liabilities so long
as such operation or retention is in accordance with Purchaser's instructions.
Section 5.8 Transferred Employees. (a) Prior to the Closing,
Purchaser shall offer, or cause to be offered, employment, effective as of the
Closing, to no fewer than eighty-five percent (85%) of the Employees and any
new hires to the Business (each, a "Designated Employee"). Such offers of
employment shall be on terms and conditions consistent with Purchaser's
customary employment policies. Designated Employees who accept such offers of
employment with Purchaser as of the Closing are referred to herein as the
"Transferred Employees."
(b) The compensation and benefits offered to the
Transferred Employees shall be no less favorable in the aggregate than the
compensation and benefits provided to similarly situated employees of
Purchaser. Seller shall cooperate as may reasonably be requested by Purchaser
with respect to the offer of employment to any Employee and to Purchaser's
effecting the transition of the Transferred Employees to Purchaser. Seller
will permit Purchaser to interview any Employee within a reasonable period of
time prior to the Closing and, subject to the consent of each such Employee,
will provide Purchaser with reasonable access to such Employee's personnel
records (including, without limitation, performance appraisals, disciplinary
actions, and grievances) in connection with such employment interviews.
(c) Nothing herein shall be deemed to affect or to
limit in any way the prerogative of Purchaser to terminate the employment of
any Transferred Employee or to change, modify, suspend or terminate any term
of employment (including, any compensation or benefit plan, policy, program or
arrangement offered or provided by Purchaser to any Transferred Employee) or
to create in, or grant to, any Transferred Employee any third party
beneficiary rights or claims, or any cause of action of any kind or nature. It
is expressly understood that any offer of employment by Purchaser to an
Employee shall not constitute any obligation, contract, commitment or
understanding (express or implied) to a post-Closing employment relationship
for any specific term or duration or upon any terms or conditions other than
those contained in the individual offers of employment. All offers of
employment shall be on an "at will" basis and the employment of any
Transferred Employee may be terminated at any time for any reason (subject to
any specific commitment made by Purchaser in the individual offers of
employment). Nothing in this Agreement shall be deemed to prevent or restrict,
in any way, the right of Purchaser to change the title, powers, duties,
responsibilities, functions, locations, compensation or benefits or other
terms and conditions of employment of any Transferred Employee.
(d) Seller shall remain responsible for any claims
made or incurred (or benefits accrued) by Transferred Employees under any
Seller Benefit Plan through the Closing Date. For this purpose, a claim will
be deemed to have been incurred, in the case of hospital, medical, dental,
vision or similar benefits, when the service has been performed, and in the
case of other benefits (such as disability) when a claim is made by the
Employee for a benefit under a Seller Benefit Plan.
(e) For purposes of determining eligibility, vesting
and vacation entitlement (but not for any other purpose, including without
limitation benefit determination or accruals ), service with Seller (and
predecessor employers to the extent Seller provides past service credit) shall
be treated as service with Purchaser; provided, that such service shall not be
recognized to the extent that such recognition would result in a duplication
of benefits or to the extent that such service was not recognized under the
applicable Seller Benefit Plan. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any pre-existing condition limitations. Transferred Employees
shall be given credit for amounts paid under a corresponding benefit plan
during the same period for purposes of applying deductibles, co-payments and
out of pocket maximums as though such amounts had been paid in accordance with
the terms and conditions of the Seller Benefit Plan for the plan year in which
the Closing occurs. It is the Seller's responsibility to cause such
information on amounts so paid under Seller Benefit Plans, including FSA
balances, to be provided to Purchaser so that it may provide such credit to
the Transferred Employees.
(f) Effective as of the Closing, Purchaser shall be
responsible for providing severance benefits to any Transferred Employee who
is terminated on or after the Closing. Such severance benefits shall in the
aggregate be provided subject to the same terms, conditions and eligibility
requirements applicable to similarly situated employees of Purchaser.
(g) Purchaser and Seller shall, to the extent
possible, (i) treat Purchaser as a "successor employer" and Seller as a
"predecessor," within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the
Code, with respect to Transferred Employees to be employed by Purchaser for
purposes of Taxes imposed under the United States Federal Unemployment Tax Act
or the United States Federal Insurance Contributions Act and (ii) cooperate
with each other to avoid the filing of more than one IRS Form W-2 with respect
to each such Transferred Employee for the calendar year in which the Closing
occurs.
(h) Purchaser shall indemnify and hold Seller
Indemnified Parties harmless against all liabilities or obligations, if any,
which may arise under the Worker Adjustment Retraining Notification Act, 29
U.S.C. Section 2101 et seq., or under any similar provision of any federal,
state, regional or local Law, rule, or regulation arising as a result of any
employment losses occurring upon or after the Closing.
(i) Purchaser and Seller shall take or cause to be
taken any and all actions necessary, including the adoption of any benefit
plans, programs or policies, to satisfy Seller's and Purchaser's obligations
under this Section 5.8.
Section 5.9 Use of Seller's Trademarks and Logos. The
parties agree that during the period from the Closing Date until ninety (90)
days after the Closing Date (the "Sell-off Period"), Purchaser shall be
entitled to continue to use the name "RCN" or any trade names, trademarks,
identifying logos or service marks related thereto or employing the word "RCN"
or any part or variation of any of the foregoing or any confusingly similar
trade names, trademarks or logos (collectively, the "Seller's Trademarks and
Logos") solely to the extent that such Seller's Trademarks and Logos are
contained, as of the Closing Date, on any Inventory, packaging, business
cards, schedules, stationery, displays, signs, promotional materials, manuals,
forms, and other material used in the Business, without any obligation on the
part of Purchaser to pay royalties or similar fees to Seller during the
Sell-off Period. Purchaser agrees that: (i) immediately upon termination of
the Sell-off Period, Purchaser shall cease and desist from all further use of
the Seller's Trademarks and Logos and will adopt new trade names, trademarks,
identifying logos and service marks related thereto which are not confusingly
similar to the Seller's Trademarks and Logos; and (ii) except as set forth in
this Section 5.9, neither Purchaser nor any of its Affiliates shall make any
use of the Seller's Trademarks and Logos. Purchaser shall not use the Seller's
Trademarks and Logos in any manner that might dilute, tarnish, disparage or
reflect adversely on Seller or the Seller's Trademarks and Logos.
Notwithstanding anything to the contrary contained herein, Purchaser shall not
be required to remove or change any Seller Trademark or Logo on equipment
located on Customers' premises.
Section 5.10 Contacts with Employees. Without the prior
written consent of Seller, prior to the Closing, Purchaser shall not, and
shall cause its Representatives (as defined in the Non-Disclosure Agreement)
not to, contact any suppliers to, or customers of, the Business, any employees
of Seller or its Affiliates, counterparties (other than Seller) to any
Contracts, or any Governmental Entity (other than in connection with any
filings made under the HSR Act or in connection with other consents, approvals
or waivers required to be obtained by Purchaser from Governmental Entities in
connection with the transactions contemplated hereby or as required by
applicable Law) in connection with or pertaining to the transactions
contemplated by this Agreement; provided, that this Section 5.10 shall not be
construed to prohibit Purchaser from contacting, on an ongoing basis, Xxxx
Xxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxxxxx or Xxxxxx Xxxx in
connection with the consummation of the transactions contemplated by this
Agreement.
Section 5.11 Use of Intellectual Property. Purchaser and its
Affiliates shall not, directly or indirectly, disclose to any Person or use
any trade secrets or other Intellectual Property of Seller (including
information regarding customers, vendors, suppliers, training programs,
manuals or materials, technical information, Contracts, systems, procedures,
mailing lists, improvements, price lists, financial or other data (including
the revenues, costs or profits associated with any of Seller's products or
services), business plans, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and
printouts, customer and industry lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers, names,
addresses or any other compilation of information, written or unwritten, or
rights to Intellectual Property which Seller licenses from third parties), in
any form, whether acquired prior to or after the Closing, that is not a
Conveyed Asset, except as provided in Section 5.9 or as contemplated by
Section 5.7(a).
Section 5.12 Upgrade. Seller shall use its reasonable
commercial efforts to satisfy its obligations under the Upgrade Commitment
prior to Closing in accordance with the specifications and time frames
therefor set forth on Section 2.2(a)(v) of the Seller Disclosure Schedule.
Section 5.13 1031 Exchange. Purchaser may, without the
consent of Seller prior to any filing with a Governmental Entity with respect
to any Required Consent, and, with the consent of Seller (which consent shall
not be unreasonably withheld) following any filing with a Governmental Entity
with respect to any Required Consent, assign its rights under this Agreement
to acquire any Conveyed Asset to a qualified intermediary (as defined in
Treasury regulation section 1.1031(k)-1(g)(4)) or similar entity or
arrangement (a "Qualified Intermediary"); provided, that Seller and Purchaser
agree that it would be reasonable for Seller to withhold its consent to any
such assignment following any filing with a Governmental Entity with respect
to any Required Consent if Seller reasonably determines that such assignment
could reasonably be expected to delay, obstruct or otherwise impede Seller's
ability to obtain any Required Consent; and provided, further, that no less
that five (5) days prior to any such proposed assignment, Purchaser shall
provide written notice thereof to Seller, which notice shall specifically set
forth each Conveyed Asset to be subject to such proposed assignment and the
assignee thereof. Upon the giving of notice to Seller of any such proposed
assignment, and subject to Seller's good faith determination that such
cooperation will not result in any unindemnified costs, Taxes, adverse
consequences or risks, Seller shall cooperate with the reasonable requests of
Purchaser and any Qualified Intermediary in connection with such assignment
and with satisfying the requirements of Revenue Proc. 2000-37 to the extent
applicable. Without limiting the generality of the foregoing, if Purchaser
gives notice of such assignment, Seller shall (i) promptly provide Purchaser
with written acknowledgment of such notice and (ii) at Closing, transfer the
Conveyed Assets to or on behalf of the Qualified Intermediary (which transfer
shall, to the extent thereof, satisfy the obligations of Seller under this
Agreement). Purchaser's assignment to a Qualified Intermediary will not
relieve Purchaser of any of its duties or obligations herein. Seller shall not
have any liability or obligation to Purchaser for the failure of the
contemplated exchange to qualify as a like-kind exchange under Section 1031 of
the Internal Revenue Code.
Section 5.14 Covenant Not to Compete. (a) Seller covenants
and agrees that for a period of three years following Closing, Seller shall
not directly or indirectly acquire, manage, operate or control any cable
system providing analog or digital video or high speed data services or local
or long distance voice services within the Territory. Notwithstanding the
foregoing, nothing contained herein shall prohibit (i) any acquiror of or
successor to Seller from engaging in the activities described in this Section
5.14, (ii) Seller from owning securities of any company that is "publicly
held" which do not constitute more than 10% of the voting rights or equity
interests of such company, (iii) Seller from providing domestic or
international long distance voice services to Persons residing within the
Territory (x) who select to subscribe to Seller's voice services or (y) who
respond to any Seller national or regional voice service promotion which is
not specifically targeted to Persons residing within the Territory, or (iv)
effective as of the twelve month anniversary of the termination of the
Transition Service Agreement, Seller from providing local voice services to
Persons residing within the Territory (x) who select to subscribe to Seller's
voice services or (y) who respond to any Seller national or regional voice
service promotion which is not specifically targeted to Persons residing
within the Territory
(b) If any provision of this Section 5.14, or the
application thereof, is construed to be invalid, illegal or unenforceable,
then the other provisions of this Section 5.14, or the application thereof,
shall not be affected thereby and shall be enforceable without regard thereto.
If any provision of this Section 5.14, or the application thereof, is
determined to be unenforceable because of its scope, duration, geographical
area or other factor, then the court making such determination shall have the
power to reduce or limit such scope, duration, area or other factor, and such
provision shall then be enforceable in its reduced or limited form.
Section 5.15 Transfer of Voice Subscribers and Related
Assets. Notwithstanding anything in this Agreement to the contrary, in the
event that (x) Purchaser has not obtained all approvals from Governmental
Entities required for Purchaser to operate as a telephone corporation (as
defined by the New York Public Service Law) in the Territory and as a domestic
and international common carrier in the Territory pursuant to the
Telecommunications Act of 1996 (as amended) and the rules and regulations of
the FCC, including, without limitation, a Certificate of Public Convenience
and Necessity from the NYSPSC, and all required approvals by the NYSPSC and
FCC for the transfer to Purchaser of the telecommunications facilities used in
the Business or (y) all applicable waiting periods imposed or expected to be
imposed by the NYSPSC or the FCC relating to the approval and authorization of
the transfer to Purchaser of Seller's local and long distance voice
subscribers to the Business have not expired (the date on which all such
waiting periods have expired, the "Voice Transfer Date"), and (z) all
conditions to closing set forth in Article VI hereof have been satisfied or
waived (other than conditions which by their terms can only be satisfied at
Closing), then:
(i) If and to the extent permitted by applicable
Law, Purchaser and Seller shall consummate the transactions
contemplated by this Agreement as soon as practicable thereafter,
except that Seller shall retain all right, title and interest in and
to its local and long distance voice subscribers to the Business and
related Conveyed Assets which are not transferable to Purchaser in
compliance with applicable Law (the "Voice Subscribers"); and
(ii) As soon as practicable following the Voice
Transfer Date, Seller and Purchaser shall take all action necessary
to transfer to Purchaser all of Seller's right, title and interest in
and to the Voice Assets.
Section 5.16 Certain Environmental Matters.
(a) Seller agrees to remove the underground heating
oil storage tank located adjacent to the northeast corner of the premises
located at 00 Xxx Xxxxx 0, Xxxxxx, Xxx Xxxx (the "UST") within 15 business
days of obtaining all the documents and approvals necessary for it to conduct
such removal.
(b) To the extent required by Law or any Governmental
Entity, Seller agrees that at the time of the removal it will test the soil
and the groundwater in the vicinity of the Tank to determine if there has been
a Release of Hazardous Materials from the Tank and that it will provide notice
of any such Release to the appropriate Governmental Entity.
(c) To the extent required by Law or any Governmental
Entity, Seller agrees that it will cleanup any such Release. Seller will use
commercially reasonable efforts to clean up the Release prior to the Closing
Date, but if it is unable to do so, it will retain responsibility for such
cleanup following the Closing Date and will complete the cleanup on a schedule
agreed to by Seller and the appropriate Governmental Entities.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligations. The
respective obligations of each party to effect the transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior to the
Closing of the following conditions, any or all of which may be waived, in
whole or in part, to the extent permitted by applicable Law:
(a) The waiting period (including any extensions
thereof) applicable to the consummation of the transactions contemplated by
this Agreement required pursuant to the HSR Act, to the extent necessary,
shall have expired or been terminated; and
(b) There shall not be in effect any statute,
regulation, order, decree or judgment of any Governmental Entity which makes
illegal or enjoins or prevents the consummation of the transactions
contemplated by this Agreement.
Section 6.2 Conditions to Obligations of Purchaser. The
obligation of Purchaser to effect the transactions contemplated by this
Agreement shall be further subject to the satisfaction at or prior to the
Closing of each of the following conditions, any or all of which may be
waived, in whole or in part, by Purchaser:
(a) Each of the representations and warranties of
Seller contained in Article III of this Agreement shall be true and correct
(without giving effect to any "materiality" or "Material Adverse Effect"
qualifiers set forth therein) at and as of the Closing Date as if made at and
as of such time (except to the extent expressly agreed to be made as of an
earlier date, in which case as of such earlier date), except where the failure
of such representations and warranties to be true and correct would not,
individually or in the aggregate, result in a Material Adverse Effect;
provided, that, for purposes of determining Seller's satisfaction of this
Section 6.2(a), no effect shall be given to any supplement, update or
amendment to the Seller Disclosure Schedule from and after the date of this
Agreement;
(b) Seller shall have performed and complied in all
material respects with all agreements and covenants required to be performed
or complied with by Seller under this Agreement at or prior to the Closing;
(c) Purchaser shall have received from Seller a
certificate, dated the Closing Date, duly executed by an officer of Seller, to
the effect of Section 6.2(a) and Section 6.2(b) above;
(d) Seller shall have delivered to Purchaser, in form
and substance reasonably satisfactory to Purchaser, evidence that the Required
Consents (other than (i) Required Consents relating to the transfer of Voice
Subscribers to Purchaser or (ii) the expiration of any waiting periods
referred to in Section 5.15(y) hereof) have been obtained or given, as
applicable, and are in full force and effect;
(e) Seller shall have delivered or caused to be
delivered to Purchaser each of the material documents specified in Section
2.6(b) hereof;
(f) Purchaser shall have received the consents to the
assignment of the Contracts indicated with an "asterisk" on Section
3.3(b)(iii) of the Seller Disclosure Schedule (the "Material Contract
Consents"), and no such consent, authorization or approval shall have been
revoked;
(g) Purchaser shall have received an opinion of
Seller's outside corporate counsel regarding certain corporate matters
substantially in the form of Exhibit I1 hereto and an opinion of Seller's in
house counsel regarding certain corporate matters substantially in the form of
Exhibit I2 hereto; and
(h) Purchaser shall have received an opinion of
Seller's outside regulatory counsel regarding certain regulatory matters
substantially in the form of Exhibit J hereto.
Section 6.3 Conditions to Obligations of Seller. The
obligation of Seller to effect the transactions contemplated by this Agreement
shall be further subject to the satisfaction at or prior to the Closing of the
following conditions, any or all of which may be waived, in whole or in part,
by Seller:
(a) Each of the representations and warranties of
Purchaser contained in Article IV of this Agreement shall be true and correct
(without giving effect to any "materiality" or "Material Adverse Effect"
qualifiers set forth therein) at and as of the Closing Date as if made at and
as of such time (except to the extent expressly made as of an earlier date, in
which case as of such earlier date), except where the failure of such
representations and warranties to be true and correct would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay the
performance or consummation of the transactions contemplated by this
Agreement;
(b) Purchaser shall have performed and complied in all
material respects with all agreements and covenants required to be performed
or complied with by Purchaser under this Agreement at or prior to the Closing;
(c) Seller shall have received from Purchaser a
certificate dated the Closing Date, duly executed by an officer of Purchaser,
to the effect of Section 6.3(a) and Section 6.3(b) above;
(d) Purchaser shall have delivered or caused to be
delivered to Seller each of the material documents specified in Section 2.6(c)
hereof; and
(e) Purchaser shall have paid to Seller the Purchase
Price in immediately available funds.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Closing by:
(a) mutual written consent of Seller and Purchaser;
(b) either Seller or Purchaser, at any time if such
party itself is not then in material breach of any of its covenants,
agreements or other obligations contained in this Agreement, if the other is
in material breach or default of any of its covenants, agreements or other
obligations herein, which breach has not been waived by the terminating party
and remains uncured for a period of thirty (30) days after such other party's
receipt of written notice of such breach; provided, however, that if such
breach cannot reasonably be cured within 30 days and the breaching party is
diligently proceeding to cure such breach, this Agreement may not be
terminated pursuant to this Section 7.1(b);
(c) either Seller or Purchaser, if the Closing shall
not have occurred on or before May 15, 2004;
(d) either Seller or Purchaser, if a competent
Governmental Entity shall have denied a Required Consent that must be issued
by it in order to consummate the transactions contemplated hereby or issued a
ruling, order or injunction, or taken any other action which, in any such
case, permanently restrains, enjoins, prohibits or prevents consummation of
the transactions contemplated hereby and such denial, ruling, order,
injunction or other action shall have become final and non-appealable;
provided, however, that (i) the right to terminate this Agreement under this
Section 7.1(d) shall not be available to a terminating party if the
terminating party has failed to perform in all material respects its
obligations under Section 5.3 hereof and such failure has been the cause of,
materially contributes to or results in, the issuance by the Governmental
Entity of such denial, ruling, order, injunction or other action; and (ii) the
party seeking to terminate this Agreement pursuant to this Section 7.1(d)
shall have used its reasonable commercial efforts to remove such denial,
ruling, order, injunction or other action in all material respects in
accordance with Section 5.3 hereof;
(e) Seller, if the Federal Trade Commission or
Department of Justice, as the case may be, expresses material reservations
regarding the approval of Purchaser in connection with the consummation of the
transactions contemplated hereby; provided, however, that Seller shall have
used reasonable commercial best efforts in all material respects in accordance
with Section 5.3 hereof to obtain approval by the Federal Trade Commission or
Department of Justice, as the case may be, in connection with the consummation
of the transactions contemplated hereby;
(f) either Seller or Purchaser (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant, or other agreement contained herein), if there shall have
been a material breach of any of the representations, warranties, agreements
or covenants set forth in this Agreement on the part of the other party which
has rendered the satisfaction of any conditions contained in Article VI hereof
impossible, such violation or breach has not been waived by the terminating
party, and the breach has not been cured within 30 days following the
terminating party's written notice of such breach; provided, however, that if
such breach cannot reasonably be cured within 30 days and the breaching party
is diligently proceeding to cure such breach, this Agreement may not be
terminated pursuant to this Section 7.1(f); or
(g) Seller, if Purchaser shall not have within three
Business Days following the date on which the satisfaction or waiver of the
conditions set forth in Sections 6.1 and 6.2 hereof occur (other than those
conditions which, by their nature, can only be satisfied at Closing)
sufficient cash in immediately available funds to pay the Purchase Price and
all other amounts payable by Purchaser at the Closing or otherwise refuses or
fails to close the transactions contemplated hereby.
Section 7.2 Effect of Termination. Each party's right of
termination under Section 7.1 is in addition to any other rights it may have
under this Agreement or otherwise under applicable Law, and the exercise of
such right of termination will not be an exclusive election of remedies. In
the event of the termination of this Agreement pursuant to Section 7.1 hereof,
this Agreement shall forthwith become null and void and have no effect,
without any liability on the part of any party hereto or its Affiliates,
directors, officers or stockholders, other than the provisions of Article IX
and Sections 5.2(b), 7.2, 7.5 and 7.6 hereof; provided, however, that nothing
contained in this Section 7.2 shall relieve either party to this Agreement
from liability to the other party for any breach of this Agreement. In the
event this Agreement is terminated pursuant to Section 7.1, Purchaser will
redeliver all documents, work papers and other materials of Seller relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, in accordance with the terms of the Non-Disclosure
Agreement. In addition, Purchaser will take any and all steps reasonably
required to return, if necessary, any Licenses to the name of Seller and
correct the records of any Governmental Entity accordingly.
Section 7.3 Amendment. This Agreement may be amended or
modified at any time by Seller and Purchaser, but only by an instrument in
writing signed by or on behalf of each of Seller and Purchaser.
Section 7.4 Extension; Waiver. At any time prior to the
Closing, either party hereto may (i) extend the time for the performance of
any of the obligations or acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or
in any document delivered pursuant hereto, (iii) waive compliance with any of
the agreements of the other party contained herein or (iv) waive any condition
to its obligations hereunder. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed by or on behalf of such party. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right,
power or remedy.
Section 7.5 Termination Payment. (a) In the event that this
Agreement is terminated by Seller pursuant to Sections 7.1(b), 7.1(f) or
7.1(g), the parties shall cause the Purchase Price Escrow Agent to release the
Purchase Price Escrow Amount to Seller.
(b) In the event that this Agreement is terminated or
the transaction fails to close for any other reason, the parties shall,
promptly following the termination of this Agreement, cause the Purchase Price
Escrow Agent to release the Purchase Price Escrow Amount to Purchaser. In no
event shall any party be liable for any punitive or consequential damages that
may be imposed on or otherwise incurred or suffered by the specified person.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
Section 8.1 Survival Period. The representations and
warranties of the parties contained in Articles III and IV hereof shall
survive the Closing until the first anniversary of the Closing Date except
that Seller's representations and warranties contained in Sections 3.1, 3.2,
3.11, 3.12 and 3.14 and Purchaser's representations and warranties contained
in Sections 4.1 and 4.2 shall survive for ninety (90) days following the
expiration of the applicable statue of limitations, and the representations
and warranties set forth in Section 3.7(a) shall survive indefinitely. The
period of time a representation or warranty survives the Closing pursuant to
the preceding sentence shall be the "Survival Period" with respect to such
representation or warranty. The parties intend to shorten the statute of
limitations (except with respect to the specific representations and
warranties enumerated in the first sentence of this Section 8.1) and agree
that no claims may be brought based upon, directly or indirectly, any of the
representations and warranties contained in this Agreement after the Survival
Period with respect to such representation and warranty. The covenants and
agreements of the parties hereto contained herein shall survive in accordance
with their respective terms.
Section 8.2 Indemnification. Subject to the terms,
conditions and limitations set forth in this Article VIII, from and after the
Closing:
(a) Seller shall defend, indemnify and hold harmless
Purchaser and its Affiliates and, if applicable, each of their respective
directors, officers, equity holders, partners and employees and their heirs,
successors and assigns (collectively, the "Purchaser Indemnified Parties") on
a net, after Tax basis, from and against loss, liability judgments, fines,
claims, damages, assessments and any actual, out-of-pocket costs or expenses
(including, without limitation, reasonable attorneys' fees) (collectively,
"Losses") that are imposed on or suffered by Purchaser Indemnified Parties
arising out of (i) any breach of, or inaccuracy in, any representation or
warranty set forth in Article III hereof or any representation or warranty in
any of the Related Instruments, provided, that in the case of a breach or
inaccuracy of Sections 3.7(a) or 3.7(b) hereof, such breach or inaccuracy
shall be deemed cured if Seller thereafter promptly transfers to Purchaser
assets, rights or other interests which would cure such breach or inaccuracy
in all material respects, (ii) a breach by Seller of any covenant or agreement
of Seller set forth in this Agreement or any of the Related Instruments, (iii)
the Excluded Assets, (iv) the Excluded Liabilities, (v) Purchaser's successful
enforcement of any of its rights under this Agreement, (vi) except with
respect to liabilities included in the calculation of the Proration Payment
Amount, the ownership and use of the Conveyed Assets prior to the Closing
Date, and (vii) any fire, act of God or natural disaster affecting the
Conveyed Assets or the taking of any of the Conveyed Assets by a Governmental
Entity by exercise of the power of eminent domain between the date hereof and
the Closing Date.
(b) Purchaser shall defend, indemnify and hold
harmless Seller and its Affiliates and, if applicable, each of their
respective directors, officers, equity holders, partners and employees and
their heirs, successors and assigns (collectively, the "Seller Indemnified
Parties"), on a net, after-Tax basis, from and against any Losses that are
imposed on the Seller Indemnified Parties arising out of (i) any breach of, or
inaccuracy in, any representation or warranty set forth in Article IV hereof
or any representation or warranty in any of the Related Instruments (if any),
(ii) a breach by Purchaser of any covenant or agreement of Purchaser set forth
in this Agreement or any of the Related Instruments, (iii) the Conveyed Assets
from and after the Closing Date, (iv) the Assumed Liabilities and (v) Seller's
successful enforcement of any of its rights under this Agreement.
(c) All indemnity payments made pursuant to this
Agreement shall be treated for all Tax purposes as adjustments to the Purchase
Price.
Section 8.3 Indemnification Procedures. (a) All claims for
indemnification by any party entitled to indemnification under this Article
VIII (an "Indemnified Party") based on or arising from a third party claim
shall be asserted and resolved as set forth in this Section 8.3. In the event
that any claim or demand by a third party for which a party hereto (the
"Indemnifying Party") may be required to indemnify the Indemnified Party
hereunder (a "Claim") is asserted against or sought to be collected from any
Indemnified Party by a third party, such Indemnified Party shall as promptly
as practicable, but in no event more than 10 days following such Indemnified
Party's receipt of notice of such Claim, notify the Indemnifying Party in
writing of such Claim, and such notice shall specify (to the extent known) in
reasonable detail the amount of such claim and any relevant facts and
circumstances relating thereto (the "Claim Notice"); provided, however, that
any failure to give such prompt notice or to provide any such facts and
circumstances shall not constitute a waiver of any rights of the Indemnified
Party, except to the extent that the rights of the Indemnifying Party are
actually prejudiced thereby.
(b) The Indemnifying Party shall have thirty (30) days
from delivery of the Claim Notice to notify the Indemnified Party whether or
not the Indemnifying Party elects to defend the Indemnified Party against such
Claim; provided, however, that an election by the Indemnifying Party during
such thirty-day period not to defend the Indemnified Party against such Claim
shall not preclude the Indemnifying Party from electing to defend, or
participate in the defense of, the Indemnified Party from such Claim at a
later time; and provided, further, that any election by the Indemnifying Party
to defend a Claim shall not be construed to be an admission as to liability
for indemnification hereunder.
(c) In the event that the Indemnifying Party notifies
the Indemnified Party that it desires to defend the Indemnified Party against
such Claim, the Indemnifying Party shall have the right to defend the
Indemnified Party by appropriate proceedings and shall have the sole power to
direct and control such defense. All costs and expenses incurred by the
Indemnifying Party in defending against such Claim shall be borne by the
Indemnifying Party. If any Indemnified Party desires to participate in any
such defense it may do so at its sole cost and expense. The Indemnified Party
shall not settle, admit or in any other way materially prejudice a Claim which
is indemnifiable hereunder by the Indemnifying Party without the written
consent of the Indemnifying Party. The Indemnifying Party may not without the
written consent of the Indemnified Party settle or compromise any action or
consent to the entry of any judgment; provided, however, that the Indemnifying
Party may settle or compromise any action if such settlement or compromise
provides for an unconditional release of the Indemnified Party and the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party.
(d) If the Indemnifying Party either does not respond
to the Claim Notice within the required ten day period or elects not to defend
the Indemnified Party against such Claim, then the Indemnified Party may
defend such Claim by appropriate proceedings and in such case shall control
the defense of such Claim and the Indemnifying Party will be bound by any
determination made by a court or arbitrator with respect to such Claim or the
terms and conditions of any compromise or settlement effected by the
Indemnified Party; provided, however, that the Indemnifying Party shall have
the right to consent to the counsel chosen to represent the Indemnified Party
in such defense, which consent shall not be unreasonably withheld. In such
case, the Indemnified Party may not without the written consent of the
Indemnifying Party settle or compromise such action or consent to the entry of
any judgment. The Indemnified Party shall cooperate with the Indemnifying
Party, including giving the Indemnifying Party and its counsel reasonable
access to the personnel, business records and other documents relating to the
defense of such Claim and permitting consultations with the counsel and other
advisors of the Indemnified Party.
(e) Notwithstanding anything to the contrary contained
in this Agreement, in the event that any fact, event or circumstance which
results in an adjustment to the Purchase Price (including in calculating the
Post-Closing Adjustment) would also constitute a breach or inaccuracy of any
of Seller's representations, warranties, covenants or agreements under this
Agreement, Seller shall have no obligation to indemnify any Purchaser
Indemnified Party with respect to such breach or inaccuracy.
Section 8.4 Limitation of Liability. (a) Notwithstanding
anything in this Agreement to the contrary, the liability of the Indemnifying
Party to indemnify any Indemnified Party against any Losses with respect to a
Claim shall be limited to claims for indemnification with respect to which the
Indemnified Party has given to the Indemnifying Party a Claim Notice within
the applicable Survival Period as set forth in Section 8.1.
(b) (1) In no event shall Seller be liable for
indemnification pursuant to clauses (i) through (vi) of Section 8.2(a) unless
and until the aggregate of all Losses set forth in clauses (i) through (vi) of
Section 8.2(a) (except for Taxes, which shall not be subject to any
limitation) which are incurred or suffered by the Purchaser Indemnified
Parties exceeds $500,000, in which case the Purchaser Indemnified Parties
shall only be entitled to indemnification for such Losses in excess of such
amount; and (2) in no event shall Seller be liable for indemnification
pursuant to clause (vii) of Section 8.2(a) unless and until the aggregate of
all Losses set forth in clause (vii) of Section 8.2(a) which are incurred or
suffered by the Purchaser Indemnified Parties exceeds $100,000, in which case
the Purchaser Indemnified Parties shall only be entitled to indemnification
for such Losses in excess of such amount; provided, that Seller shall not be
required to make payments for indemnification pursuant to Section 8.2(a) in an
aggregate amount in excess of $20,000,000, except in the case of fraud.
(c) Notwithstanding anything to the contrary in this
Agreement, no party to this Agreement shall be liable for any Losses to the
extent that the Losses suffered by the Indemnified Party result from any
improper or tortious act or omission by the Indemnified Party or its
Subsidiaries, directors, officers, equity holders, partners, employees and
their heirs, successors or assigns or to the extent that the Indemnified Party
or its Subsidiaries, directors, officers, equity holders, partners, employees
and their heirs, successors or assigns fail to take reasonable and prudent
action to mitigate any Losses.
(d) In calculating amounts payable to an Indemnified
Party, the amount of the indemnified Losses shall not be duplicative of any
other Loss for which an indemnification claim has been made and shall be
computed net of (i) payments actually or reasonably expected to be recovered
by the Indemnified Party under any insurance policy with respect to such
Losses, (ii) any prior or subsequent recovery by the Indemnified Party from
any Person with respect to such Losses and (iii) any Tax benefit receivable by
the Indemnified Party with respect to such Losses.
(e) For purposes of this Article VIII, an event or
occurrence shall be deemed "material" or a "Material Adverse Effect" (as such
terms are used in any representation or warranty contained in Articles III or
IV) shall be deemed to have occurred, if the aggregate of all Losses related
to any such representation or warranty shall exceed $100,000.
Section 8.5 Other Matters. (a) From and after the Closing,
Seller and Purchaser (and, by accepting the benefits under this Agreement,
each Purchaser Indemnified Party and Seller Indemnified Party) agree, to the
fullest extent permitted by applicable Law, that, with respect to this
Agreement, the Related Instruments, the Conveyed Assets, the Business and the
Assumed Liabilities: (i) none of Seller or its Affiliates, or any of their
respective directors, officers, employees, equity holders, partners,
successors, assigns, Affiliates, agents, advisors or representatives or their
heirs, shall have any liability or responsibility whatsoever to Purchaser or
any of its Affiliates, or any of their respective directors, officers, equity
holders (except to the extent of distributions from Seller), partners,
employees, Affiliates, successors, assigns, agents, advisors or
representatives or their heirs, except that the foregoing limitation shall not
apply with respect to Seller to the extent Seller has liability to Purchaser
for fraud or for indemnification to Purchaser Indemnified Parties pursuant to
the terms and conditions of this Article VIII or to the extent Purchaser has
obtained a decree of specific performance to enforce its right pursuant to
Section 9.16 hereof and, provided further, that such limitations shall not
relieve equity holders or partners to the extent they receive a distribution
from Seller; and (ii) none of Purchaser or its Affiliates, or any of their
respective directors, officers, employees, equity holders, partners,
successors, assigns, Affiliates, agents, advisors or representatives or their
heirs, shall have any liability or responsibility whatsoever to Seller or any
of its Affiliates, or any of their respective directors, officers, equity
holders, partners, employees, Affiliates, successors, assigns, agents,
advisors or representatives or their heirs, except that the foregoing
limitation shall not apply with respect to Purchaser to the extent Purchaser
has liability for indemnification to Seller Indemnified Parties pursuant to
the terms and condition of this Article VIII; provided, however, that the
foregoing shall not apply with respect to information which is deemed by this
Agreement to be "Evaluation Material" under the Non-Disclosure Agreement, such
information being subject to all of the rights and remedies available to
Seller thereunder. Each party hereto (and, by accepting the benefits under
this Agreement, each Purchaser Indemnified Party and Seller Indemnified Party)
hereby waives all statutory, common law and other claims with respect thereto.
Without limiting the generality of the foregoing, Purchaser (and, by accepting
the benefits under this Agreement, each Purchaser Indemnified Party) agrees
that with respect to any Losses or other losses and damages under any
Environmental Law that may be incurred by any Purchaser Indemnified Party, the
indemnification provisions of this Article VIII shall be the sole and
exclusive remedy of the Purchaser Indemnified Parties, and Purchaser (and, by
accepting the benefits under this Agreement, each Purchaser Indemnified Party)
hereby waives and relinquishes, on behalf of itself and the other Purchaser
Indemnified Parties and their respective Affiliates, and each of their
respective directors, officers, employees, equity holders, partners,
successors, assigns, Affiliates, agents, advisors or representatives and
heirs, any and all rights, claims, or remedies such Person may have under any
Environmental Laws, as presently in force or hereafter enacted, promulgated,
or amended (including, without limitation, under the Comprehensive
Environmental Response Compensation and Liability Act, or any similar state or
local Law) or at common law.
(b) Notwithstanding anything to the contrary contained
in this Agreement or otherwise, there shall be no indemnification pursuant to
this Agreement by Seller or Purchaser for any special, incidental, punitive,
consequential or similar damages (including damages for lost profits).
(c) Upon making any payment to an Indemnified Party
for any indemnification claim pursuant to this Article VIII, the Indemnifying
Party shall be subrogated, to the extent of such payment, to any rights which
the Indemnified Party or its Affiliates may have against any other Persons
with respect to the subject matter underlying such claim and the Indemnified
Party shall take such actions as the Indemnifying Party may reasonably require
to perfect such subrogation or to pursue such rights against such other
Persons as the Indemnified Party or its Affiliates may have.
(d) At the Closing, the Purchaser shall deliver the
Indemnification Escrow Amount to the Escrow Agent in accordance with Section
2.3(b) hereof (the "Indemnification Escrow Fund"), to be managed pursuant to
the Indemnification Escrow Agreement. The Indemnification Escrow Fund shall be
disbursed as follows, subject to certain set aside rights: (i) to the
Purchaser to pay for any Post-Closing Adjustment owed to the Purchaser
pursuant to Section 2.4, (ii) to the Purchaser to pay for Losses any Purchaser
Indemnified Party is entitled to be indemnified for pursuant to this Article
VIII, (iii) upon payment of any Post-Closing Adjustment, the amount in the
Indemnification Escrow Fund in excess of $4,000,000 shall be disbursed to
Seller, (iv) upon expiration of the six month anniversary of the Closing Date,
the amount in the Indemnification Escrow Fund in excess of $2,000,000 shall be
disbursed to the Seller and (v) upon expiration of the one-year anniversary of
the Closing Date, the remaining amount in the Indemnification Escrow Fund
shall be disbursed to the Seller.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Any notices or other communications
required or permitted under, or otherwise in connection with this Agreement or
the Related Instruments shall be in writing and shall be deemed to have been
duly given when delivered in person or upon confirmation of receipt when
transmitted by facsimile transmission (but only if followed by transmittal by
national overnight courier or hand for delivery on the next Business Day) or
on receipt after dispatch by registered or certified mail, postage prepaid,
addressed, or on the next Business Day if transmitted by national overnight
courier, in each case as follows (or to such other address which has been
delivered in accordance with this Section 9.1):
(a) if to Seller, to each of:
RCN Telecom Services, Inc.
c/o RCN Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, Xx.
and
RCN Telecom Services, Inc.
c/o RCN Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
(b) if to Purchaser, to:
Susquehanna Cable Co.
Attn: Xxxxx X. Xxxxxxx
000 X. Xxxxxx Xx.
Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Susquehanna Cable Co.
Attn: Xxxxx X. Xxxxxx
000 X. Xxxxxx Xx.
Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000)000-0000
Section 9.2 Descriptive Headings. The descriptive headings
herein are inserted for convenience only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same agreement.
Section 9.4 Entire Agreement. This Agreement, the exhibits
and schedules hereto, the Seller Disclosure Schedule, the Related Instruments
and the Non-Disclosure Agreement constitute the entire agreement of the
parties hereto, and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
Section 9.5 Fees and Expenses. Regardless of whether or not
the transactions contemplated by this Agreement are consummated, except as
otherwise provided herein, each party shall bear its own fees and expenses
incurred in connection with the negotiation and execution of this Agreement
and the Related Instruments.
Section 9.6 Governing Law. This Agreement shall be governed
by the Laws of the State of New York (regardless of the Laws that might
otherwise govern under applicable principles of conflicts of law) as to all
matters, including matters of validity, construction, effect, performance and
remedies. Each party to this Agreement hereby irrevocably agrees that any
legal action or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby shall be brought exclusively in
the United States District Court for the Southern District of New York and
hereby expressly submits to the personal jurisdiction and venue of such courts
for the purposes thereof and expressly waives any claim of improper venue and
any claim that such courts are an inconvenient forum. Each party hereby
irrevocably consents to the service of process of any of the aforementioned
courts in any such suit, action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the address set forth or
referred to in Section 9.1, such service to become effective ten (10) days
after such mailing.
Section 9.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATED
INSTRUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.8 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be transferred, assigned
or delegated by either of the parties hereto, in whole or in part, without the
prior written consent of the other party, and any attempt to make any such
transfer, assignment or delegation without such consent shall be null and
void; provided, however, that, without the consent of Purchaser, Seller may
(in whole or in part) transfer, assign and delegate its rights, interests and
obligations hereunder to one or more Affiliates of Seller, provided that
Seller remains liable for its obligations hereunder; and provided, further,
that, without the consent of Seller, Purchaser may (in whole or in part),
either prior to any filing with a Governmental Entity with respect to a
Required Consent or following the Closing Date, transfer, assign and delegate
its rights, interests and obligations hereunder to one or more Affiliates of
Purchaser, provided that Purchaser remains liable for its obligations
hereunder.
Section 9.9 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
respective successors and permitted assigns, and, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, interests, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 9.10 Interpretation. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
Section 9.11 Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the parties shall negotiate in good faith with a view to the
substitution therefor of a suitable and equitable solution in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid provision; provided, however, that the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by Law.
Section 9.12 Payments. Unless otherwise provided herein, all
payments required to be made pursuant to this Agreement shall be made in U.S.
dollars in the form of cash or by wire transfer of immediately available funds
to an account designated by the party receiving such payment.
Section 9.13 Bulk Sales Laws. Purchaser waives compliance by
Seller with any bulk sales or similar Laws applicable to the transactions
contemplated hereby. If any creditor of Seller is entitled to the benefit of
any bulk sales Laws as against Purchaser or any of the Conveyed Assets
transferred by Seller to Purchaser pursuant to this Agreement, Seller shall
immediately satisfy such claim in full or undertake its defense at Seller's
expense.
Section 9.14 Disclosure. Any matter disclosed in any section
of the Seller Disclosure Schedule shall be considered disclosed with respect
to each other section of the Seller Disclosure Schedule and with respect to
each of the representations and warranties contained in Article III hereof.
Section 9.15 Waiver. At any time prior to the Closing Date,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
only be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any such rights. The waiver
by any party of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent or similar breach.
Section 9.16 Specific Performance. The parties acknowledge
the unique nature of the transactions contemplated by this Agreement, and
that, in the event of a breach hereof by Seller, monetary damages will be an
inadequate remedy, and that in addition to any other remedies available
pursuant hereto, or at law or equity, Purchaser shall have the right to seek a
decree of specific performance to enforce its rights under this Agreement.
Section 9.17 Disclosure of Tax Treatment. Notwithstanding
anything to the contrary in this Agreement or any Related Instrument, the
parties (and each employee, representative, or other agent of the parties) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
transaction beginning on the earlier of (i) the date of the public
announcement of discussions relating to the transaction, (ii) the date of
public announcement of the transaction, or (iii) the date of the execution of
an agreement (with or without conditions) to enter into the transaction,
provided, however, that neither party (nor any employee, representative or
other agent thereof) may disclose any other information that is not relevant
to understanding the tax treatment and tax structure of the transaction
(including the identity of any party or any information that could lead
another to determine the identity of any party) or any other information to
the extent that such disclosure could result in a violation of any federal or
state securities Law.
IN WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement as of the date first written above.
RCN TELECOM SERVICES, INC.
By: /s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Strategy Officer
SUSQUEHANNA CABLE CO.
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
