Exhibit 2.2
EXECUTION COPY
AMENDMENT NO. 1 TO
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
This Amendment No. 1 (this "Amendment") to the Agreement for the
Purchase and Sale of Assets dated as of February 22, 2003 (the "Asset Purchase
Agreement") by and between Broadwing Communications Services Inc., a Delaware
corporation, Broadwing Communications Services of Virginia, Inc., a Virginia
corporation, Broadwing Communications Real Estate Services LLC, a Delaware
limited liability company, Broadwing Services LLC, a Delaware limited liability
company, IXC Business Services LLC, a Delaware limited liability company,
Broadwing Logistics LLC, a Delaware limited liability company, Broadwing
Telecommunications Inc., a Delaware corporation, IXC Internet Services, Inc., a
Delaware corporation, and MSM Associates, Limited Partnership, a Delaware
limited partnership (individually, a "Seller" and collectively, "Sellers"), on
the one side, and C III Communications, LLC, a Delaware limited liability
company, and C III Communications Operations, LLC, a Delaware limited liability
company (individually, a "Buyer" and collectively, "Buyers"), on the other side,
is made as of June 6, 2003 by and among each of the parties referred to above.
WHEREAS, Sellers and Buyers desire to amend the Asset Purchase
Agreement to reflect their agreement with respect to certain modifications to
the Asset Purchase Agreement and certain of the Collateral Agreements as set
forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and warranties contained herein and in the Asset Purchase Agreement,
the parties hereto agree as follows:
SECTION 1. Definitions; References. Each capitalized term used herein
which is not defined herein shall have the meaning assigned to such term in the
Asset Purchase Agreement. Each reference to "hereof", "hereunder", "herein" and
"hereby" and each other similar reference and each reference to "this Agreement"
and each other similar reference contained in the Asset Purchase Agreement shall
from and after the date hereof refer to the Asset Purchase Agreement as amended
hereby.
SECTION 2. Amendment of Asset Purchase Agreement. The Asset Purchase
Agreement shall be amended as follows:
(a) Section 1.1 shall be amended by adding the following definitions in
their alphabetically determined positions:
""BCRES" shall mean Broadwing Communications Real Estate Services
LLC, a Delaware limited liability company."
"BCRES Assets" shall mean (a) BCRES Contracts, (b) all BCRES
fee-owned property, easements, and permits, and (c) those certain
assets of BCRES which are listed in the appropriate schedule to the
BCRES ▇▇▇▇ of Sale, Assignment and Assumption
Agreement as being conveyed from various Affiliates of BCRES to BCRES
prior to, and following (as necessary), the First Stage Closing Date."
""BCRES Assumed Liabilities" shall mean the obligations under BCRES
Contracts, all BCRES fee-owned property, easements, and permits, and
the other Assumed Liabilities listed in the appropriate schedule to the
BCRES ▇▇▇▇ of Sale, Assignment and Assumption Agreement, in each case
to the extent arising out of, or resulting from, facts, events and
circumstances occurring, or which accrue, after the First Stage Closing
Date (other than due to any failure to comply or breach by any Sellers
or any of their Affiliates, whether before, on or after the First Stage
Closing Date)."
"""BCRES ▇▇▇▇ of Sale, Assignment and Assumption Agreement" shall
mean the ▇▇▇▇ of sale, assignment and assumption agreement in
substantially the form of the ▇▇▇▇ of Sale, which shall be entered into
by and between BCRES and the other party(ies) thereto, including the
schedule of any assets to be conveyed in or out of BCRES and the
schedule of any liabilities and obligations to be transferred by a
Seller into BCRES or by BCRES to a Seller (or Seller Affiliate)."
""BCRES Contracts" shall mean the Contracts related to the Business
(including the Network) to which BCRES is a party and which are listed
on Schedule 1.1(g)."
""BCRES Excluded Assets" shall mean all assets of BCRES other than
BCRES Assets."
""BCRES Excluded Liabilities" shall mean, other than BCRES Assumed
Liabilities, all liabilities of BCRES, including any debt (including
long-term debt, debt payable to any member of BCRES, all other interest
bearing liabilities and amounts distributable to members of BCRES),
claim, obligation or other liability (including any litigation or
potential litigation to which BCRES is or may be a party, and any other
liability, undisclosed liability, contingent liability or unknown
liability) of BCRES whatsoever, and those certain liabilities of BCRES
which are listed in the appropriate schedule to the BCRES ▇▇▇▇ of Sale,
Assignment and Assumption Agreement as being assigned from BCRES to
various Affiliates of BCRES prior to the First Stage Closing Date."
""BCRES Units" shall mean all of the limited liability company
interests of BCRES."
"Working Capital Promissory Note" shall mean that certain
promissory note in the form attached hereto as Exhibit U to be issued
by the Buyers to Broadwing Communications Services Inc., or an
Affiliate of Broadwing Communications Services Inc. to be designated by
the Sellers to the Buyers prior to the First Stage Closing, on the
First Stage Closing Date.
(b) Section 1.1 shall be further amended by amending and restating the
following definitions:
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"Business Records" means, collectively, all business books,
records, ledgers and files or other similar business information of
Sellers (in any form or medium) related to the Business, except the
general ledger (other than the Oracle software on which the general
ledger is kept containing a copy of the general ledger), stock ledgers,
corporate minute books, litigation files, Tax Returns and other
corporate level information and all information with respect to the
Excluded Assets, Excluded Liabilities and the Retained Business
(collectively, the "Excluded Business Records"); provided that the
Excluded Business Records shall not include the Business Records of
BCRES.
"Collateral Agreements" means the ▇▇▇▇ of Sale, Assignment and
Assumption Agreement, Help Desk Agreement, APTIS Software Agreement,
Intercompany Agreements, Intellectual Property Rights Assignment
Agreement, C III LLC Agreement, Escrow Agreement (Working
Capital/Indemnity), Escrow Agreement (Closing Adjustment Receivables),
Escrow Agreement (Second Stage Closing), Working Capital Promissory
Note, Transition Services Agreement, Sellers' Parent Guaranty, Buyers'
Parent Guaranty, and the other documents and instruments to be executed
and delivered to effectuate the transfer of the Acquired Assets and the
assumption of the Assumed Liabilities and the other transactions
contemplated hereby, and any other agreement or instrument entered into
at or prior to the First Stage Closing Date and/or the Second Stage
Closing Dates pursuant to the provisions of this Agreement, each as
amended, supplemented or otherwise modified in accordance with the
terms herein and/or therein.
"Escrow Agreement (Second Stage Closing)" has the meaning assigned
to it in Section 5.11(f).
"Escrow Amount (Second Stage Closing)" means an amount equal to
Eighty Two Million Seven Hundred Fifty Thousand U.S. Dollars
($82,750,000) less the First Stage Closing Cash Amount.
"Staged Closing Dates" means, collectively, the First Stage Closing
Date, the Second Stage Closing Date and the Third Stage Closing Date.
"Staged Closings" means, collectively, the First Stage Closing, the
Second Stage Closing and the Third Stage Closing.
"Title and Authorization Warranties" shall mean the representations
and warranties in Sections 3.1, 3.2, 3.4(a), 3.18, 4.1 and 4.2.
(c) Section 1.1 shall be further amended by deleting in their entirety
the following definitions:
"Buyers' Covenant Failure"
"Buyers' R&W Breach"
"Cranberry Plan Adjustment Amount"
"Cranberry Plan Adjustment Statement"
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"Escrow Agreement (Cranberry Adjustment)"
"Escrow Amount (Cranberry Adjustment)"
"Key Employees"
"Preliminary Adjustment Amount"
"Preliminary Disagreement Notice"
"Preliminary Working Capital"
"Preliminary Working Capital Statement"
"Sellers' Covenant Failure"
"Sellers' R&W Breach"
(d) Section 2.1(a) shall be amended by adding immediately after the
word "including"contained therein the words "and the BCRES Units, and".
(e) Section 2.1 shall be further amended by amending and restating
Section 2.1(b) as follows:
(b) Second Stage and Third Stage Closings. (i) Upon the terms and
subject to the conditions of this Agreement, Sellers shall sell and
transfer, assign, convey and deliver to Buyers, and Buyers shall
purchase, acquire and accept from Sellers, all of Sellers' right, title
and interest in, to and under, each Asset not transferred pursuant to
the First Stage Closing as to which State PUC Consents have been
obtained as of the Second Stage Closing Date, but excluding the
Excluded Assets (the "Second Stage Purchased Assets"), including the
applicable Assets listed on Schedule 2.1, when and as the Second Stage
Closing Date shall occur.
(ii) Upon the terms and subject to the conditions of this
Agreement, Sellers shall sell and transfer, assign, convey and deliver
to Buyers, and Buyers shall purchase, acquire and accept from Sellers,
all of Sellers' right, title and interest in, to and under, all
remaining Assets not transferred pursuant to the First Stage Closing
and the Second Stage Closing, but excluding the Excluded Assets
(collectively the "Third Stage Purchased Assets", and collectively with
the First Stage Purchased Assets and the Second Stage Purchased Assets,
the "Purchased Assets"), including the applicable Assets listed on
Schedule 2.1, when and as the last remaining State PUC Consent(s)
(including customer notices) required to sell, transfer, assign, convey
and deliver such Assets is obtained.
(f) Section 2.1 shall be further amended by adding a new Section 2.1(c)
to read as follows: "(c) BCRES Assets. Notwithstanding the foregoing, no BCRES
Assets shall be conveyed by this Section 2.1 (but the terms "First Stage
Purchased Assets", "Purchased Assets" and "Acquired Assets" shall include BCRES
Assets for all other purposes of this Agreement)."
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(g) Section 2.2 shall be amended by amending and restating Section
2.2(b) as follows:
(b) Second Stage and Third Stage Closings. (i) Upon the terms
and subject to the conditions of this Agreement, when and as the Second
Stage Closing Date shall occur, Sellers shall assign and transfer to
Buyers all of Sellers' right, title and interest in and to, and Buyers
shall take assignment of all of the following: (a) each of the
Contracts related to the Business to which one or more Sellers is a
party and that are related to the State PUC Consents that have been
obtained by the Second Stage Closing, excluding Contracts that comprise
Excluded Assets, but including all of the Contracts with customers of
the Business ("Second Stage Customer Contracts") and each of the other
Contracts listed on Schedule 2.2 related to the State PUC Consents that
have been obtained by the Second Stage Closing (collectively, including
the Second Stage Customer Contracts, the "Second Stage Purchased
Contracts"); (b) each of the Permits of Sellers related to the Business
set forth on Schedule 2.2 which are transferable and that are related
to the State PUC Consents that have been obtained by the Second Stage
Closing, excluding Permits that comprise Excluded Assets, but including
each of the applicable Permits listed on Schedule 2.2 (the "Second
Stage Purchased Permits"; and together with the Second Stage Purchased
Contracts); and (c) each of the Communications Licenses of Sellers
related to the Business that are transferable and that are related to
the State PUC Consents that have been obtained by the Second Stage
Closing, excluding Communications Licenses that comprise Excluded
Assets (the "Second Stage Transferred Communications Licenses").
(ii) Upon the terms and subject to the conditions of this
Agreement, when and as the last remaining State PUC Consent(s)
(including customer notices) required to assign and transfer the
following are obtained, Sellers shall assign and transfer to Buyers all
of Sellers' right, title and interest in and to, and Buyers shall take
assignment of all of the following: (a) each of the remaining Contracts
related to the Business to which one or more Sellers is a party,
excluding Contracts that comprise Excluded Assets, but including all of
the remaining Contracts with customers of the Business (collectively,
the "Third Stage Customer Contracts", and collectively with the First
Stage Customer Contracts and the Second Stage Customer Contracts, the
"Customer Contracts") and each of the other remaining Contracts listed
on Schedule 2.2 (collectively with the Third Stage Customer Contracts,
the "Third Stage Purchased Contracts", and collectively including the
Customer Contracts, the "Purchased Contracts"); (b) each of the
remaining Permits of Sellers related to the Business set forth on
Schedule 2.2 which are transferable, excluding Permits that comprise
Excluded Assets, but including each of the remaining Permits listed on
Schedule 2.2 (collectively, the "Third Stage Purchased Permits", and
collectively with the First Stage Purchased Permits and the Second
Stage Purchased Permits, the "Purchased Permits"; and together with the
Purchased Contracts, the "Purchased Contracts and Permits"); and (c)
each of the remaining Communications Licenses of Sellers related to the
Business that are transferable, excluding Communications Licenses that
comprise Excluded Assets (collectively, the "Third Stage Transferred
Communications Licenses", and collectively with the First Stage
Transferred Communications Licenses and the Second Stage Transferred
Communications Licenses, the "Transferred Communications Licenses").
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(h) Section 2.2 shall be further amended by adding a new Section
2.2(c) to read as follows: "(c) BCRES Contracts. Notwithstanding the foregoing,
no BCRES Contracts shall be conveyed by this Section 2.2 (but the terms "First
Stage Purchased Contracts" and "Purchased Contracts" shall include BCRES
Contracts for all other purposes of this Agreement)."
(i) Section 2.3 shall be amended by adding at the end thereof the
following proviso: "provided, however, that, notwithstanding the foregoing, the
BCRES Units shall not be an Excluded Asset."
(j) Section 2.4 shall be amended by deleting Section 2.4(a) in its
entirety.
(k) Section 2.4 shall be further amended by amending and restating
Section 2.4(b) as follows:
(b) In consideration of the sale, transfer, assignment,
conveyance and delivery by Sellers of the Business and the Acquired
Assets, Buyers shall (i) (A) pay an aggregate amount equal to (1)
Fifty-Six Million Two Hundred Seventy Thousand U.S. Dollars
($56,270,000) (which the Sellers and Buyers agree represents 68% of the
revenues of the Business (as set forth in the Revenues Statement) as to
which State PUC Consents have been obtained on June 6, 2003 and 68% of
$82,750,000) plus (2) an amount equal to the product of $82,750,000
multiplied by the percentage of revenues of the Business (as set forth
in the Revenues Statement) represented by any additional State PUC
Consent(s) received between June 5, 2003 and the First Stage Closing
Date (such aggregate amount collectively, the "First Stage Closing Cash
Amount") in cash to Sellers at the First Stage Closing Date, which
amount shall be increased by the product of (x) Two Hundred Five
Thousand Eight Hundred Eighty-Two and 35/100 U.S. Dollars ($205,882.35)
multiplied by (y) the number of calendar days that the First Stage
Closing Date occurs after June 13, 2003 up to and including June 30,
2003 (such amount, the "Delayed Closing Amount") provided that the
conditions in Section 7.1(a)(ii) have been satisfied and the failure of
the First Stage Closing to occur on or before such date did not result
from the failure of the Sellers to fulfill any undertaking or agreement
or satisfy any condition provided for herein that is required to be
fulfilled or satisfied by the Sellers prior to First Stage Closing, (B)
place the Escrow Amount (Second Stage Closing) in an interest bearing
escrow account in which it will be held pursuant to the terms of the
Escrow Agreement (Second Stage Closing) to support Buyers' obligation
to pay the amount Buyers' are obligated to pay at the Second Stage
Closing, (C) place the Escrow Amount (Working Capital/Indemnity) in an
interest bearing escrow account in which it will be held pursuant to
the terms of the Escrow Agreement (Working Capital/Indemnity) to
support Sellers' obligations to pay any amount required to be paid by
Sellers under Section 2.4(g) regarding the difference between Closing
Working Capital and the estimate of the Closing Working Capital
described in the last sentence of this Section 2.4(b) and Sellers'
indemnification obligations in accordance with Article 8, and (D) place
the Escrow Amount (Closing Adjustment Receivables) in an interest
bearing account in which it will be held pursuant to the terms of the
Escrow Agreement (Closing Adjustment Receivables) to support Sellers'
obligation to pay amounts, if any, required to be paid by Sellers under
Section 2.4(h) and (ii) assume the First Stage Assumed Liabilities. The
First Stage Closing Cash Amount, as adjusted by the Delayed Closing
Amount, if any,
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plus the Escrow Amount (Working Capital/Indemnity) and the Escrow
Amount (Closing Adjustment Receivables) (the two such escrow amounts in
the preceding clauses (C) and (D) referred to herein collectively as
the "Total Escrow Amount") constitutes the "Initial Purchase Price".
Buyers and Sellers agree that they shall, prior to the First Stage
Closing Date, in good faith estimate and mutually agree upon the amount
that Buyers may owe Sellers, if any, as a result of the adjustments for
Closing Working Capital in Section 2.4 (the "Closing Working Capital
Estimate") and that Buyers will deliver, at the First Stage Closing
Date, a Working Capital Promissory Note in a principal amount equal to
the Closing Working Capital Estimate. The amount of the Working Capital
Promissory Note delivered pursuant to hereto shall increase the Initial
Purchase Price.
(l) Section 2.4 shall be further amended by amending and restating
Section 2.4(c) as follows:
(c) All payments of the Purchase Price, except for the Total
Escrow Amount, the Escrow Amount (Second Stage Closing) and the Working
Capital Promissory Note, shall be made by wire transfer in immediately
available funds to an account designated by Sellers in written
instructions to be delivered to Buyers on or prior to the payment date.
(m) Section 2.4 shall be further amended by amending and restating
Section 2.4(d) as follows:
(d) (i) Within thirty (30) days after the First Stage Closing
Date, Sellers shall deliver to Buyers a statement (the "Closing Working
Capital Statement"), setting forth the Working Capital as of the close
of business on the First Stage Closing Date (the "Closing Working
Capital"). The Closing Working Capital Statement shall be prepared by
the Sellers, and the Sellers' independent accountants shall provide an
attestation thereof, in accordance with the terms of this Agreement.
(ii) Within sixty (60) days following the First Stage Closing
Date, the Sellers shall provide the Buyers with a copy of the unaudited
consolidated financial results for BCI, which shall set explicitly
forth, among other things, the aggregate amount of capital expenditures
made by the Sellers, solely in respect of the Business and the portion
of the first two quarters of 2003 prior to the First Stage Closing Date
(the "Cap Ex Statement"; the amount of such capital expenditures shown
on such statement, "Actual Capital Expenditures"). Such unaudited
consolidated financial results shall be prepared by Sellers, and the
Sellers' independent accountants shall provide an attestation thereof,
in accordance with the terms of this Agreement. During the thirty (30)
day period following Buyers' receipt of the Cap Ex Statement, Sellers
shall cause Sellers' independent accountants to provide Buyers'
independent accountants with such access, upon reasonable prior notice
and during normal business hours, to the work papers of Sellers'
independent accountants as is reasonably necessary to verify the
calculation of the Cap Ex Statement. The Cap Ex Statement shall be
final and shall be accepted by and be binding on the parties on the
thirtieth (30th) day following delivery thereof unless Buyers give
written notice to Sellers of their disagreement with the Cap Ex
Statement (such notice, a "Cap Ex Statement Disagreement Notice") prior
to such date. Any Cap Ex
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Statement Disagreement Notice shall specify in reasonable detail the
nature of any disagreement so asserted. If a Cap Ex Statement
Disagreement Notice is received by Sellers on or prior to such date,
then the Cap Ex Statement (as revised in accordance with Section
2.4(d)(iii)) shall become final and binding upon each Seller and each
Buyer, on the earlier of (1) the date Sellers and Buyers resolve in
writing any differences they have with respect to the matters specified
in such Cap Ex Statement Disagreement Notice, and (2) the date that an
Accounting Firm (as defined below) delivers to the Sellers and Buyers
its written determination of all disputed matters submitted to it
pursuant to Section 2.4(d) (the "Accounting Firm Cap Ex
Determination").
(iii) During the thirty (30) day period following delivery of
a Cap Ex Statement Disagreement Notice, Sellers and Buyers shall seek
in good faith to resolve in writing any differences which they may have
with respect to the matters set forth in such Cap Ex Statement
Disagreement Notice. If any disagreement included in the Cap Ex
Statement Disagreement Notice is not resolved in writing within such
thirty (30) day period, Sellers and Buyers shall submit to the
Accounting Firm for review and determination of any and all matters
which remain in dispute. The scope of the Accounting Firm's review
shall be limited to only those matters which have not been resolved in
writing within such thirty (30) day period. Sellers and Buyers shall
use all reasonable efforts to cause the Accounting Firm to deliver the
Accounting Firm Cap Ex Determination within thirty (30) days of the
receipt of such submission. Sellers and Buyers agree that the
Accounting Firm Cap Ex Determination shall be final and binding on the
parties and that judgment may be entered upon the Accounting Firm Cap
Ex Determination in any court having jurisdiction over the party
against which such determination is to be enforced. The Accounting Firm
Cap Ex Determination shall be accompanied by a certificate of the
Accounting Firm that it reached the Accounting Firm Cap Ex
Determination in accordance with the provisions of this Section 2.4.
The cost incurred in connection with the Accounting Firm Cap Ex
Determination (including the fees and expenses of the Accounting Firm
and of any enforcement of the Accounting Firm Cap Ex Determination)
pursuant to this Section 2.4 shall be borne by Buyers and Sellers in
inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocation shall be calculated on
an aggregate basis based on the relative dollar values of the amounts
in dispute and shall be determined by the Accounting Firm at the time
the Accounting Firm Cap Ex Determination is rendered on the merits of
the matter submitted.
(iv) If the aggregate amount of capital expenditures set
forth in the Cranberry Capital Expenditure budget for the first two
quarters of 2003 as set forth on Schedule 2.4(d)(ii) exceeds the Actual
Capital Expenditures (as adjusted, if necessary pursuant to this
Section 2.4(d)) by more than $10,000,000, then the Sellers shall
promptly, but in no event later than five (5) Business Days after the
final determination of the Actual Capital Expenditures, pay such amount
in excess of $10,000,000 to the Buyers in cash. If the aggregate amount
of capital expenditures set forth in the Cranberry Capital Expenditure
budget for the first two quarters of 2003 as set forth on Schedule
2.4(d)(ii) does not exceed the Actual Capital Expenditures (as
adjusted, if necessary pursuant to this Section 2.4(d)) by more than
$10,000,000, then the Buyers shall promptly, but in no event later than
five (5) Business Days after the final determination of the Actual
Capital
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Expenditures, pay such amount less than $10,000,000 to the Sellers in
cash. The Actual Capital Expenditures amount shall be calculated in
accordance with Generally Accepted Accounting Principles as
consistently applied with historical methods, provided that the Actual
Capital Expenditures amount shall include the $500,000 of actual
expenditures relating to the purchase of Corvis equipment or services
to create a route in Florida.
(n) Section 2.4 shall be further amended by replacing each use of the
term "Adjustment Statements" in Section 2.4(e) with the term "Closing Working
Capital Statement", and by deleting each use of the term "Cranberry Plan
Adjustment Amount".
(o) Section 2.4 shall be further amended by amending and restating
Section 2.4(g) as follows:
(g) The Initial Purchase Price shall be (i) increased by the
amount, if any, by which the Closing Working Capital, as finally
determined pursuant to this Section 2.4, exceeds $0 (or the principal
amount, if any, of any Working Capital Promissory Note delivered at the
First Stage Closing), and (ii) decreased by the amount, if any, by
which the Closing Working Capital, as finally determined pursuant to
this Section 2.4, is less than $0 (or the principal amount, if any, of
any Working Capital Promissory Note delivered at the First Stage
Closing) (the Initial Purchase Price as so increased or decreased shall
hereinafter be referred to as the "Adjusted CWC Purchase Price").
Within five (5) Business Days after the Closing Working Capital has
been finally determined in accordance with this Section 2.4, (I) if the
Closing Working Capital is in excess of $0 (or the principal amount, if
any, of any Working Capital Promissory Note delivered at the First
Stage Closing), Buyers shall deliver the Working Capital Promissory
Note to the Sellers (or increase the principal amount of such Note if
it was already delivered at the First Stage Closing) in an amount equal
to such excess, and (II) if the Closing Working Capital is less than $0
(or the principal amount, if any, of any Working Capital Promissory
Note delivered at the First Stage Closing), Buyers shall receive from
the Escrow Amount (Working Capital/Indemnity) pursuant to the Escrow
Agreement (Working Capital/Indemnity) (and/or decrease the principal
amount of any Working Capital Promissory Note delivered at the First
Stage Closing), and from Sellers to the extent such Escrow Amount
(Working Capital/Indemnity) is insufficient, an amount equal to such
deficit, together with interest thereon at a rate per annum equal to
the rate of interest from time to time publicly announced by Citibank,
N.A., in its New York office as its prime or base rate (the "Prime
Rate"), calculated on the basis of the actual number of days elapsed
over 365 from the date of delivery of the Closing Working Capital
Statement pursuant to Section 2.4(d)(i) to the date of payment.
Payments in respect of this Section 2.4, other than payments by an
increase or decrease in the Working Capital Promissory Note, shall be
made by wire transfer in immediately available funds to an account that
is designated by the party entitled to payment at least two (2)
Business Days prior to the date of payment.
(p) Section 2.4 shall be further amended by deleting the last
sentence of Section 2.4(i) thereof and replacing it in its entirety with the
following sentence: "Notwithstanding anything in this Agreement to the contrary,
Working Capital shall not include any Excluded Assets, BCRES Excluded Assets,
Excluded Liabilities or BCRES Excluded Liabilities."
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(q) Section 2.4 shall be further amended by amending and restating
Section 2.4(j) as follows:
(j) Upon the receipt of additional State PUC Consents following
the First Stage Closing Date (each, an "Additional State PUC Consent")
that represent in the aggregate one-half or more of the percentage of
revenues of the Business (as set forth in the Revenues Statement) that
were not the basis for the First Stage Cash Amount (the "Second Stage
Closing", and the date that the Second Stage Closing shall occur, the
"Second Stage Closing Date"), the Buyers shall release from the Escrow
Agreement (Second Stage Closing) to the Sellers an amount equal to one
half of the Escrow Amount (Second Stage Closing). Upon the receipt of
the last remaining State PUC Consent necessary to effectuate the
transfer of the Acquired Assets, the Buyers shall release the remaining
amount of the Escrow Amount (Second Stage Closing) to the Sellers (the
"Third Stage Closing", and the date that the Third Stage Closing shall
occur, the "Third Stage Closing Date").
(q) Section 2.4 shall be further amended by inserting a new Section
2.4(k) as follows:
(k) (i) For each month ending after the First Stage Closing Date
and prior to the twelve (12) month anniversary of the First Stage
Closing Date, as soon as available but in any event within twenty (20)
days after the end of each such month, Buyers shall deliver to Sellers
a written statement of the monthly Cash EBITDA Minus Capital
Expenditures of the Business (each a "Monthly Cash EBITDA Statement").
The Sellers shall have ten (10) days to review each Monthly Cash EBITDA
Statement. Upon the Sellers' request, the Buyers shall meet with the
Sellers on any Business Day within the five Business Days following
such review to discuss such Monthly Cash EBITDA Statement; provided,
however, that the Buyers' shall not be required to meet with the
Sellers for more than one-half (1/2) of one Business Day at any such
meeting.
(ii) On or before thirty (30) days following July 1, 2004, the
Buyers shall provide the Sellers with a written statement of Cash
EBITDA Minus Capital Expenditures of the Business for the period
between July 1, 2003 through and including June 30, 2004 (the "Annual
Cash EBITDA Statement"). During the thirty (30) day period following
Sellers' receipt of the Annual Cash EBITDA Statement, Buyers shall
provide access to the Business Records and Business Employees and shall
cause Buyers' independent accountants to provide Sellers' independent
accountants with such access, upon reasonable prior notice and during
normal business hours, to the work papers of Buyers' independent
accountants as is reasonably necessary to verify the calculation of the
Annual Cash EBITDA Statement. The Annual Cash EBITDA Statement shall be
final and shall be accepted by and be binding on the parties on the
thirtieth (30th) day following delivery thereof unless Sellers give
written notice to Buyers of their disagreement with the Annual Cash
EBITDA Statement (such notice, a "Cash EBITDA Statement Disagreement
Notice") prior to such date. Any Cash EBITDA Statement Disagreement
Notice shall specify in reasonable detail the nature of any
disagreement so asserted. If a Cash EBITDA Statement Disagreement
Notice is received by Buyers on or prior to such date, then the Annual
Cash EBITDA Statement (as revised in accordance with Section
2.4(k)(iii)) shall become final and binding upon each Seller and each
Buyer,
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on the earlier of (1) the date Sellers and Buyers resolve in writing
any differences they have with respect to the matters specified in such
Cash EBITDA Statement Disagreement Notice, and (2) the date that an
Accounting Firm delivers to the Sellers and Buyers its written
determination of all disputed matters submitted to it pursuant to
Section 2.4(k) (the "Accounting Firm Cash EBITDA Determination").
(iii) During the thirty (30) day period following delivery of
a Cash EBITDA Statement Disagreement Notice, Sellers and Buyers shall
seek in good faith to resolve in writing any differences which they may
have with respect to the matters set forth in such Cash EBITDA
Statement Disagreement Notice. If any disagreement included in the Cash
EBITDA Statement Disagreement Notice `is not resolved in writing within
such thirty (30) day period, Sellers and Buyers shall submit to the
Accounting Firm for review and determination of any and all matters
which remain in dispute. The scope of the Accounting Firm's review
shall be limited to only those matters which have not been resolved in
writing within such thirty (30) day period. Sellers and Buyers shall
use all reasonable efforts to cause the Accounting Firm to deliver the
Accounting Firm Cash EBITDA Determination within thirty (30) days of
the receipt of such submission. Sellers and Buyers agree that the
Accounting Firm Cash EBITDA Determination shall be final and binding on
the parties and that judgment may be entered upon the Accounting Firm
Cash EBITDA Determination in any court having jurisdiction over the
party against which such determination is to be enforced. The
Accounting Firm Cash EBITDA Determination shall be accompanied by a
certificate of the Accounting Firm that it reached the Accounting Firm
Cash EBITDA Determination in accordance with the provisions of this
Section 2.4. The cost incurred in connection with the Accounting Firm
Cash EBITDA Determination (including the fees and expenses of the
Accounting Firm and of any enforcement of the Accounting Firm Cash
EBITDA Determination) pursuant to this Section 2.4 shall be borne by
Buyers and Sellers in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocation shall
be calculated on an aggregate basis based on the relative dollar values
of the amounts in dispute and shall be determined by the Accounting
Firm at the time the Accounting Firm Cash EBITDA Determination is
rendered on the merits of the matter submitted. The Cash EBITDA Minus
Capital Expenditures of the Business for the period between July 1,
2003 through and including June 30, 2004, as set forth in the Annual
Cash EBITDA Statement and adjusted, if necessary pursuant to this
Section 2.4(k), shall be referred to herein as the "Annual Cash
EBITDA".
(iv) If the Annual Cash EBITDA as finally determined by this
Section 2.4(k) is less than $0 by a margin of $48,000,000 (the "Annual
Cash EBITDA Threshold") or more, then the Sellers shall pay to the
Buyers an amount in cash equal to the product of (x) 0.35, multiplied
by (y) the difference between negative $48,000,000 and the Annual Cash
EBITDA, provided, however, that under no circumstances shall the
Sellers be required to pay to the Buyers more than $10,000,000 in
connection with this Section 2.4(k) (such amount, the "Annual Cash
EBITDA Payment"). The Sellers shall make the Annual Cash EBITDA Payment
promptly, but in no event later than five (5) Business Days of the
final determination of the Annual Cash EBITDA as set forth in this
Section 2.4(k). An illustration of the operation of this Section 2.4(k)
is set forth on Exhibit V attached hereto.
11
(v) Notwithstanding anything else to the contrary contained
in this Section 2.4(k), the Sellers shall have no obligation to make
the Annual Cash EBITDA Payment if, after the First Stage Closing, the
Buyers consummate a "sale transaction", which shall be defined as a
sale of fifty-one percent (51%) or more of the equity, voting control
or the assets acquired by the Buyers hereunder. If the ratio of
selling, general and administrative expenses ("SG&A") to revenues
(calculated in accordance past practice) of the Business acquired by
the Buyers exceeds fifty-two percent (52%) for the period between July
1, 2003 and June 30, 2004, Sellers are not responsible for any negative
Cash EBITDA Minus Capital Expenditures attributable to such ratio being
in excess of fifty-two percent (52%).
(vi) The term "Cash EBITDA Minus Capital Expenditures" shall
mean EBITDA plus any allocated management fee, less Non-Cash Revenues,
less capital expenditures, and plus non-cash expenses; provided,
however, that capital expenditures for purposes of this calculation (x)
shall not exceed the lesser of the amount of actual capital
expenditures for the period between July 1, 2003 through and including
June 30, 2004 or $36,960,000 for such period, and (y) shall not include
any capital expenditures arising from transactions between Buyers'
Parent or any of its Affiliates, on the one hand, and any of the
Buyers, on the other, that include financial terms that are more
favorable to Buyers' Parent or any of its Affiliates than financial
terms that would be available to an unaffiliated third-party in an
arms-length transaction on fair-market value terms. The term "EBITDA"
means net income (loss) from continuing operations before interest,
income tax expense (benefit), depreciation, amortization, restructuring
and asset impairments, minority interest expense (income), equity loss
in unconsolidated entities, loss (gain) on investments, other expense
(income), extraordinary items and the effect of changes in accounting
principles. The term "Non-Cash Revenues" means revenue included in
Buyers' consolidated income statement related to the amortization of
IRU contracts where the Buyers have previously received cash or revenue
included in Buyers' consolidated income statement related to barter
agreements.
(r) Section 2.5(b) shall be amended and restated as follows:
(b) (i) Upon the terms and subject to the conditions in this
Agreement, at and as of (a) the Second Stage Closing Date, Sellers
shall assign, and Buyers shall assume and agree to honor, pay and
discharge when due, all of the following liabilities and obligations of
Sellers: the obligations under the Second Stage Purchased Contracts,
Second Stage Purchased Permits and the Second Stage Transferred
Communications Licenses, to the extent arising out of, or resulting
from, facts, events and circumstances occurring, or which accrue, after
the Second Stage Closing Date (other than due to any failure to comply
or breach of any of Sellers or any of their Affiliates, whether before,
on or after the Second Stage Closing Date), in each case except any
Excluded Liabilities (collectively, the "Second Stage Assumed
Liabilities").
(ii) Upon the terms and subject to the conditions in this
Agreement, at and as of (a) the Third Stage Closing Date, Sellers shall
assign, and Buyers shall assume and agree to honor, pay and discharge
when due, all of the following liabilities and obligations of Sellers:
the obligations under the Third Stage Purchased Contracts, Third Stage
12
Purchased Permits and the Third Stage Transferred Communications
Licenses, to the extent arising out of, or resulting from, facts,
events and circumstances occurring, or which accrue, after the Third
Stage Closing Date (other than due to any failure to comply or breach
of any of Sellers or any of their Affiliates, whether before, on or
after the Second Stage Closing Date), in each case except any Excluded
Liabilities (collectively, the "Third Stage Assumed Liabilities", and
collectively with the First Stage Assumed Liabilities and the Second
Stage Assumed Liabilities, the "Assumed Liabilities").
(s) Section 2.5 shall be amended by adding to the end of Section 2.5(c)
thereof the following: "Notwithstanding the foregoing, BCRES Assumed Liabilities
shall not be assigned or assumed pursuant to this Section 2.5 (but the term
"Assumed Liabilities" shall include BCRES Assumed Liabilities for all other
purposes of this Agreement), and BCRES Assumed Liabilities shall not constitute
Excluded Liabilities."
(t) Section 2.7 shall be amended by adding a new Section 2.7(c) to read
as follows: "(c) Notwithstanding anything contained herein to the contrary,
Sellers shall sell, convey, transfer and deliver to Buyers by instruments of
sale, conveyance, transfer and assignment effective to vest in Buyers, and
Buyers shall have good and marketable title to, all of the BCRES Units, free and
clear of all Encumbrances."
(u) Section 2 shall be further amended by adding a new Section 2.9 as
follows:
2.9 Agreement Regarding Certain Receivables of the Business
(a) All accounts receivable and the accounts payable owing from or
owing to, respectively, MCI Worldcom Network Services, Inc., and its
various affiliates and subsidiaries (collectively, "MCI") that arose
prior to and including March 31, 2003, whether or not reflected on the
Sellers Financial Statements, are Excluded Assets and Excluded
Liabilities, respectively. Upon the receipt by Sellers of any proceeds
from the MCI global settlement, the Sellers shall promptly, but in no
event later than five (5) Business Days after Sellers receipt thereof,
deliver fifty percent (50%) of such proceeds to the Buyers.
(b) Upon the receipt by Sellers of any payments from the Texas DOT
claim (meaning the claim for reimbursement of expenses related to the
I-10 relocation), the Sellers shall promptly, but in no event later
than five (5) Business Days after Sellers receipt thereof, deliver
fifty percent (50%) of such proceeds to the Buyers. If the Sellers
shall prevail in the Sellers' arbitration with El Paso Global Networks,
or settle and receive a twenty (20) year IRU agreement on the
Houston-to-Austin-to-San Antonio route (the "EPGN Route"), without cost
to Buyers (other than maintenance costs at market rates and otherwise
consistent with industry practices) thereunder, entitling Sellers to
use twelve (12) fibers, then the Sellers shall provide to the Buyers,
without cost to Buyers, a twenty (20) year IRU agreement to use twelve
(12) fibers on such Route. If the Sellers do not prevail in the
Sellers' arbitration with El Paso Global Networks or so settle, the
Buyers and the Sellers shall each bear fifty percent (50%) of the costs
of Buyers obtaining a twenty (20) year IRU agreement to receive,
without cost to Buyers (other than
13
maintenance costs at market rates and otherwise consistent with
industry practices), for up to, at the Buyers' election, twelve (12)
fibers on the EPGN Route.
(v) Section 2 shall be further amended by adding a new Section 2.10 as
follows:
2.10 Agreement Regarding Newark Data Center
The Buyers and Sellers agree that to the extent that the Newark
data center owned by BCRES (the "BCRES Data Center"), which is an
Excluded Asset and an Excluded Liability hereunder, is not permitted to
be transferred from BCRES to an Affiliate of BCRES on or prior to the
First Stage Closing Date, the Sellers shall continue to receive the
benefits of and be subject to the obligations of the BCRES Data Center,
until the necessary Consent(s) is obtained to permit such transfer and
such transferee shall thereafter receive the benefits of the BCRES Data
Center (to the extent set forth in the Consent(s)) and be subject to
the obligations of the BCRES Data Center.
(w) Section 3 shall be amended by amending and restating the first
clause of Section 3.8 as follows:
Schedule 3.8 contains a complete and accurate list of all Contracts
to which one or more of the Sellers are a party and that are related to
the Business as follows (which list shall be updated as of the
applicable Staged Closing Date and no such update is deemed to be an
inaccuracy if in compliance with Section 5.2).
(x) Section 3 shall be amended by adding a new Section 3.18 thereto as
follows:
"3.18 BCRES
BCRES was formed on May 20, 2002. Other than holding BCRES
Contracts and BCRES Assets, and operations associated with holding the
BCRES Contracts and BCRES Assets, BCRES has conducted no operations
since its formation, and, except for any assets being conveyed out of
BCRES pursuant to the BCRES ▇▇▇▇ of Sale, Assignment and Assumption
Agreement, holds and has held no assets other than BCRES Contracts and
BCRES Assets. BCRES does not have and never has had, any employees or
any Benefit Plans. Other than BCRES Assumed Liabilities, and except for
any liabilities or obligations to be transferred to a Seller (or Seller
Affiliate) pursuant to the BCRES ▇▇▇▇ of Sale, Assignment and
Assumption Agreement, BCRES has no liabilities, debts, claims or
obligations, whether accrued, absolute, contingent or otherwise,
whether due or to become due. Notwithstanding anything to the contrary
contained in this Agreement, all of the BCRES Units are owned by
Broadwing Communications Services, Inc. free and clear of any
Encumbrance except for Encumbrances arising pursuant to the Credit
Agreement (which Sellers shall cause to be released on or prior to the
First Stage Closing), and all of the BCRES Units are validly issued
pursuant to the BCRES' certificate of formation and limited liability
company agreement. The transfer of the BCRES Units to Buyers by Sellers
is not subject to any restriction or condition other than such
restrictions and conditions as will have been satisfied, waived,
released or terminated prior to the First Stage Closing. Except for the
right of the Buyers' to purchase the BCRES Units as provided herein,
neither Sellers nor Broadwing
14
Communications Services, Inc. has granted any option, warrant or
similar right to any Person to purchase or acquire any rights with
respect to any BCRES Units. BCRES has made no election to be treated as
other than a disregarded entity for tax purposes and is not treated as
other than a disregarded entity for tax purposes by any state, local or
other taxing authority."
(y) Section 5.4(a) shall be amended and restated as follows:
(a) Sellers shall provide Buyers with an update to Schedule 3.7(a)
immediately prior to the First Stage Closing Date. Unless otherwise
agreed in writing prior to the First Stage Closing Date, Buyers shall
make offers of employment to all of the Business Employees of Sellers
as of the First Stage Closing Date. Notwithstanding the foregoing
sentence, the Buyers shall not be required to make offers of employment
to the Business Employees denoted as "A" and "B" on Schedule 5.4(a),
and Buyers may request Sellers to terminate on or prior to the First
Stage Closing Date or Buyers may terminate, within ninety (90) after
the First Stage Closing Date (provided that Buyers shall provide
Sellers with at least five (5) Business Days advance notice prior to
the termination of any Business Employee that has an Employment
Agreement set forth on Schedule 3.8(a)), the employment of, up to ten
(10) Business Employees to be identified in writing by the Buyers to
the Sellers (the "Non-Transferred Employees"), two of whom shall be
deemed to be the Business Employees denoted as "A" and "B" on Schedule
5.4(a); provided that under no circumstances shall the Buyers or any of
the Buyers' Affiliates extend an offer of employment or hire in any
capacity employee "A" set forth on Schedule 5.4(a), whether as an
employee, consultant, independent contractor or otherwise. Business
Employees who accept such offer of employment, as of the effective date
of their employment with Buyers or one of its Affiliates (the "Transfer
Date"), shall be referred to as "Transferred Employees." All
liabilities, costs and Actions related to Business Employees who do not
accept such offers of employment shall be Excluded Liabilities
hereunder. The Buyers may not employ any vice-president or higher of
Sellers, as set forth on Part II of Schedule 5.4(a) (each, a "Seller
Vice-President"), to whom they extend an offer, but which such Seller
Vice President declines such offer, for two (2) years after the First
Stage Closing Date, unless the Buyers agree to compensate Sellers for
the severance costs associated with such Seller Vice President. The
Sellers shall be responsible for all liabilities, costs and Actions
related to the Non-Transferred Employees; provided, however, that if
the amount of severance paid to the Non-Transferred Employees exceeds
in the aggregate $2,000,000, then the Buyers shall pay to the Sellers
the amount of severance in excess of $2,000,000 that is paid by the
Sellers to the Non-Transferred Employees. Each offer of employment
shall provide for a base salary no less than their base salary as an
employee of Sellers as of the First Stage Closing Date and health,
welfare, retirement and severance benefits as shall be applicable to
comparable Buyers' employees generally.
(z) Section 5.4 shall be further amended by inserting in Section
5.4(d)(i) the words "(excluding the Non-Transferred Employees, to the extent set
forth in Section 5.4(a))" following the word "Employees" and inserting in
Section 5.4(d)(ii) the words "(excluding the Non-Transferred Employees, to the
extent set forth in Section 5.4(a))" following the words "as required under
Section 5.4(a)" and before the words "and whose employment".
15
(aa) Sections 5.7(a), 5.7(b), 5.7(c) and 5.7(d) shall be deleted in
their entirety.
(bb) Section 5.11(e) shall be amended and restated as follows:
(e) C III and Broadwing Communications Services Inc. ("BCSI")
shall have entered into a limited liability agreement prior to or on
the First Stage Closing Date, substantially on the terms and conditions
contained in Exhibit H hereto relating to Broadwing Communications
Services Inc. becoming a member of C III (the "C III LLC Agreement");
provided, however, that any transfer restrictions that apply to the
equity interests of C III that are held by BCSI, as set forth in the C
III LLC Agreement, shall also apply to a transfer of the equity
interests of BCSI; provided further, however, that such transfer
restrictions shall not apply to a transfer of the equity interests of
BCSI to any of its Affiliates.
(cc) Section 5.11(f) shall be amended by amending and restating clause
(x) thereof as follows:
(x) intentionally omitted
(dd) Section 5.11(i) shall be amended and restated as follows:
(i) Buyers and Sellers and Sellers' Parent shall have entered
into an agreement prior to or on the First Stage Closing Date,
substantially on the terms and conditions contained in Exhibit L hereto
relating to the management services to be provided by Buyers to Sellers
during the period subsequent to the First Stage Closing (the
"Management Services Agreement").
(ee) Section 5.15 shall be amended by deleting in their entirety
Sections 5.15(a), 5.15(b) and 5.15(c).
(ff) Section 5.16(c) shall be amended by deleting the last sentence
thereof.
(gg) Section 5.23 shall be amended and restated as follows:
5.23 Commitment Letters
Prior to the First Stage Closing Date, Buyers shall meet with each
Business Employee who has an Employment Agreement set forth on Schedule
3.8(a) (other than those set forth on Schedule 5.4(a)), explain to such
Business Employee his or her contemplated position within Buyers and
make a corresponding offer of employment. Buyers shall assume the
Employment Agreement of each such Business Employee (other than those
set forth on Schedule 5.4(a)) who agrees to accept such offer
(including such position) and executes a letter agreeing to the
assumption of such Employment Contract and that such assumption (and
the position to be held by such Business Employee, other than those set
forth on Schedule 5.4(a)) is not a constructive termination under such
Employment Contract (a "Commitment Letter").
(hh) Section 6.1 shall be amended and restated as follows:
16
6.1 Closing
The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place in three (3) stages at the offices of
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in New York City. The first closing stage
(the "First Stage Closing"), at which the Initial Purchase Price shall
be paid in full, shall commence at 9:00 a.m. local time on June 13,
2003 (the "First Stage Closing Date"), or such later date as the
parties shall mutually agree upon; provided that any such adjournment
of the First Stage Closing Date that is not due to the failure to
satisfy the conditions in Section 7.1(a)(ii) and that results from the
failure of Sellers to fulfill any undertaking or agreement or to
satisfy any condition provided for herein that is required to be
fulfilled or satisfied by Sellers prior to the First Stage Closing Date
shall result in the payment by the Buyers to the Sellers of the Delayed
Closing Amount as set forth and in accordance with Section 2.4(b). The
Second Stage Closing and the Third Stage Closing shall occur as set
forth in Section 2.4(j).
(ii) Section 6.2 shall be amended by deleting the period at the end of
Section 6.2(g) thereof, inserting a semi-colon in its place and inserting new
Sections 6.2(h) and 6.2(i) as follows:
"(h) a counterpart of the BCRES ▇▇▇▇ of Sale, Assignment and
Assumption Agreement, duly executed by BCRES and the other
party(ies) thereto."
(jj) Section 6.3 shall be amended by inserting a new Section 6.3(f) as
follows:
(f) the Working Capital Promissory Note.
(kk) Section 7.1(a) shall be amended by amending and restating clause
(i) thereof as follows:
(i) intentionally omitted;
(ll) Section 7.2(a) shall be deleted in its entirety, provided that
such deletion of Section 7.2(a) shall not affect the Sellers indemnification
obligations set forth in Article 8 of this Agreement.
(mm) Section 7.2(c) shall be amended and restated as follows:
(c) Intentionally omitted.
(nn) Section 7.2(d) shall be amended and restated as follows:
(d) Intentionally omitted.
(oo) Section 7.2(e) shall be amended and restated as follows:
(e) (i) The Sellers' Consents set forth on Schedule 3.3(b)
received as of the First Stage Closing Date (as so indicated on the
Schedule 3.3(b) on the date hereof) shall be in full force and effect.
17
(ii) The Sellers shall have received an Amendment to the Credit
Agreement, or Consent under the Credit Agreement, that permits the
consummation of the transactions contemplated by this Agreement and the
Collateral Agreements.
(pp) Section 7.3(a) shall be shall be deleted in its entirety, provided
that such deletion of Section 7.3(a) shall not affect the Buyers indemnification
obligations set forth in Article 8 of this Agreement.
(qq) Section 7.4 shall be amended and restated as follows:
7.4 Second Stage and Third Stage General Conditions
The respective obligations of Buyers and Sellers to effect the
Second Stage Closing and the Third Stage Closing of the transactions
contemplated hereby are subject to (i) there not being an injunction or
other court order prohibiting the consummation of the transactions
contemplated by this Agreement to occur on the Second Stage Closing
Date or on the Third Stage Closing Date and (ii) Sellers shall have
changed their corporate or company name to a name that does not include
the word "Broadwing" or any name intended or likely to be confused or
associated with any Broadwing Name and have caused the registration of
the new name with the appropriate Governmental Body.
(rr) Section 8.2 shall be amended by inserting in a the following
sentence after the last sentence of Section 8.2(a):
Notwithstanding anything else to the contrary contained in this
Article 8 or elsewhere in this Agreement or in the Collateral
Agreements, or elsewhere, none of the Sellers or any of their
Affiliates shall be obligated to indemnify, defend and/or hold harmless
the Buyers, the Buyers' Affiliates, or any of their employees,
representatives, agents, directors, officers, partners, members,
principals or assigns relating to or arising out of or resulting from
any of the matters set forth on Schedule 8.2(a).
(ss) Section 8.2 shall be further amended by inserting into Section
8.2(b) thereof the words "and BCRES Excluded Assets" after the words "Excluded
Assets (including the Retained Business)" and the words "and BCRES Excluded
Liabilities" after the words "Excluded Liabilities (including those related to
the Retained Business)".
(tt) Section 8.2(c) shall be amended and restated as follows:
(c) Buyers further agree to jointly and severally indemnify,
defend and hold harmless Sellers and any other Indemnified Party of
Sellers from and against any Losses incurred by such party arising out
of, resulting from, or relating to: (1) any of the First Stage Assumed
Liabilities after the First Stage Closing, the Second Stage Assumed
Liabilities after the Second Stage Closing and the Third Stage Assumed
Liabilities after the Third Stage Closing; (2) any claim, demand or
liability for the Taxes for which Buyers are responsible pursuant to
Section 5.3; (3) any other liability or obligation with respect to the
conduct of the Business transferred on the First Stage Closing Date
after such Closing Date and with respect to the conduct of the Business
transferred after the First Stage Closing, to the extent arising out
of, or resulting from, facts, events or
18
circumstances occurring, or which accrue, after the applicable Staged
Closing Date (other than due to any failure to comply or breach of any
of Sellers or any of their Affiliates, whether before, on or after the
applicable Staged Closing Date); and (iv) any Third Party Claims
arising out of the Two Stage Waiver Notice (if any).
(uu) Section 8.2 shall be further amended by amending and restating
the first clause of Section 8.2(f) as follows:
Sellers' and Buyers' respective liability for all Claims under
Section 8.2(a)(i) and all Claims under Section 8.2(b)(ii) with respect
to the indemnification for Consents identified in Schedule 8.2(b) (the
"Consents Indemnity") only shall be subject to the following
limitations:
(vv) Section 8.2 shall be further amended by adding a new Section
8.2(j) as follows:
(j) The Consents Indemnity shall not be effective for any periods
for which the Management Services Agreement is effective, or a lease of
use or other means of providing the Buyers the benefit of the Contract
subject to such Consent is provided by Sellers, without cost to Buyers,
is effective to avoid the necessity of a Consent to assignment with
respect to a Contract. Furthermore, such Consents Indemnity is not
payable to the extent that Losses are mitigated by Seller's provision
of an alternative means to provide to Buyers, without cost to Buyers,
the benefits of the related Contracts or Buyer's commercially
reasonable efforts to mitigate Losses in respect of such Contract(s).
The Consents Indemnity is not subject to the Threshold, but shall be
subject to the General Cap, notwithstanding anything to the contrary
contained in Section 8.2(f).
(ww) Section 9.1(c) shall be amended and restated as follows:
(c) Buyers or Sellers, if the First Stage Closing Date shall not
have occurred by June 30, 2003; provided that the failure of the First
Stage Closing to occur on or before such date did not result from the
failure by the party seeking termination of this Agreement to fulfill
any undertaking or agreement or satisfy any condition provided for
herein that is required to be fulfilled or satisfied by it prior to
First Stage Closing.
(xx) Sections 9.1(d) and 9.1(e) shall be deleted in their entirety.
(yy) Exhibit A to the Asset Purchase Agreement shall be deleted in its
entirety.
(zz) A new Exhibit S shall be added to the Asset Purchase Agreement in
the form attached hereto as Exhibit A.
(aaa) A new Schedule 1.1(g) shall be added to the Asset Purchase
Agreement as attached hereto as Exhibit B.
(bbb) A new Exhibit U shall be added to the Asset Purchase Agreement in
the form attached hereto as Exhibit C.
19
(ccc) The Asset Purchase Agreement shall be further amended by adding a
new item 8 to Schedule 2.1 as follows:
8. The Business Records of BCRES.
(ddd) An amended and restated Schedule 2.3 shall be added to the Asset
Purchase Agreement in the form attached hereto as Exhibit D.
(eee) The Asset Purchase Agreement shall be further amended by adding a
new item 13 to Schedule 2.5(c) as follows:
13. MCI accounts payable, in accordance with Section 2.9(a).
(fff) A new Schedule 2.4(d)(ii) shall be added to the Asset Purchase
Agreement in the form attached hereto as Exhibit E.
(ggg) A new Exhibit V shall be added to the Asset Purchase Agreement in
the form attached hereto as Exhibit F.
(hhh) An amended and restated Schedule 3.3(b) shall be added to the
Asset Purchase Agreement in the form attached hereto as Exhibit G.
(iii) A new Schedule 5.4(a) shall be added to the Asset Purchase
Agreement in the form attached hereto as Exhibit H.
(jjj) A new Schedule 8.2(a) shall be added to the Asset Purchase
Agreement in the form attached hereto as Exhibit I.
(kkk) The Asset Purchase Agreement shall be further amended by
inserting a new Item in Schedule 8.2(b), which amendment to Schedule 8.2(b) is
set forth in Exhibit J attached hereto.
(lll) The Asset Purchase Agreement shall be amended by replacing the
term "Second Stage Closing Date" with the term "Third Stage Closing Date" in
Sections 5.1(c), 5.2(d), 5.8, 5.9, 5.11(j), 5.17, 5.20 and 7.2(i).
(mmm) The Asset Purchase Agreement is hereby amended by deleting
Section 9 of the Management Agreement and by amending and restating Section 1 of
the Management Agreement as follows:
Section 1 of the Management Agreement shall take effect on the
First Stage Closing. This Management Agreement shall have a term
("Management Term") which ends upon the receipt of the last Consent
required the Purchase Agreement, unless Managers elect to terminate the
Management Agreement for convenience by written notice to Licensees.
(nnn) The Asset Purchase Agreement shall be further amended by removing
BCRES as a party thereto, provided that the representations, warranties and
covenants made by BCRES contained in the Asset Purchase Agreement shall be
deemed made by the other Sellers under the
20
Asset Purchase Agreement. The parties acknowledge and agree that BCRES is
executing and delivering this Amendment solely to reflect its agreement with
respect to this Section.
SECTION 3. Representations and Warranties of the Sellers. Each Seller,
as of the date hereof, hereby makes the representations and warranties in
Section 3.2 of the Asset Purchase Agreement as if set forth herein with respect
to this Amendment. For purposes of clarity, all references in such section to
"this Agreement" shall mean the Asset Purchase Agreement, as amended by this
Amendment.
SECTION 4. Representations and Warranties of the Buyers. Each Buyer, as
of the date hereof, hereby makes the representations and warranties in Section
4.2 of the Asset Purchase Agreement as if set forth herein with respect to this
Amendment. For purposes of clarity, all references in such section to "this
Agreement" shall mean the Asset Purchase Agreement, as amended by this
Amendment.
SECTION 5. Applicable Law. This Amendment shall be construed in
accordance with and governed by the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State
without regard to conflicts of laws principles thereof.
SECTION 6. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, each of which will be deemed to be an original copy
of this Amendment and all of which together will be deemed, respectively, to
constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, each party has caused this Amendment to be
duly executed on its behalf by its duly authorized officers as of the date first
written above.
BROADWING COMMUNICATIONS
SERVICES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
BROADWING COMMUNICATIONS SERVICES
OF VIRGINIA INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
BROADWING COMMUNICATIONS REAL
ESTATE SERVICES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Manager
BROADWING SERVICES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
IXC BUSINESS SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Manager
22
BROADWING TELECOMMUNICATIONS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
IXC INTERNET SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
BROADWING LOGISTICS LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
MSM ASSOCIATES, LIMITED PARTNERSHIP
By: MUTUAL SIGNAL CORPORATION OF
MICHIGAN, its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
23
C III COMMUNICATIONS, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name:
Title:
C III COMMUNICATIONS OPERATIONS, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name:
Title:
24
