ARTICLE V
Covenants
SECTION 5.01
Covenants Relating to Conduct of
Business
. Except as (a) expressly set forth in Section 5.01 of the Seller Disclosure Letter, (b) required by applicable Law, Judgment or any Governmental Entity, (c) consented to by Purchaser (such consent not to be unreasonably
withheld, conditioned or delayed) in writing or (d) otherwise expressly required by the terms of this Agreement (including the Reorganization Plan), from the date of this Agreement to the Closing, Seller shall cause the Companies to conduct the
Business in the ordinary course consistent with past practice and Seller shall use (and shall cause the Companies to use) commercially reasonable efforts to (i) preserve intact the business organizations, operations and goodwill of the
Business, (ii) maintain the present commercial relationships with material customers of the Business, the Significant Suppliers and other key Persons with whom the Companies do business, (iii) keep available the services of the present
officers, consultants, key Employees of the Business, and any Employee of the Business or Service Provider identified on
Exhibit G
and (iv) maintain the properties
and assets owned, operated or used by the Business in the same condition as they were on the date hereof, subject to normal wear and tear. In addition, except as (x) set forth in Section 5.01 of the Seller Disclosure Letter, (y) required by
applicable Law, Judgment or any Governmental Entity or (z) otherwise expressly required by the terms of this Agreement (including the Reorganization Plan), from the date of this Agreement to the Closing, Seller shall not permit any Company to
do any of the following (and Seller shall not, and shall not permit any other member of the Seller Group to, do any of the following as they
relate to the Business) without the prior written consent of Purchaser (such consent not to be unreasonably withheld,
conditioned or delayed):
(i) amend its organizational documents;
(ii) (A) adjust, split, combine or reclassify any shares of capital stock or other Equity
Interests, (B) directly or indirectly redeem, repurchase, retire or otherwise acquire any capital stock or other Equity Interests or (C) effect any recapitalization, reclassification, stock dividend, stock split or like change in the
capitalization;
(iii) issue, deliver, sell or transfer any shares of its capital stock or other Equity Interests
or any Company Stock Rights;
(iv) declare, set aside, issue, make or pay any dividend, distribution or other payment to its
shareholders;
provided
,
however
, that (A) dividends and distributions of cash may be
made by the Companies and other members of the Seller Group to Seller or an Affiliate of Seller and (B) payments in respect of intercompany indebtedness may be made by the Companies and the other members of the Seller Group to Seller or an
Affiliate of Seller;
(v) except (A) as may be required under applicable Law, any employee benefit plans and
agreements, including any Benefit Plan or Benefit Agreement, or any Collective Bargaining Agreement, as in effect as of the date of this Agreement or entered into after the date of this Agreement in compliance with this Agreement, (B) any
increases for which Seller or its Affiliates (other than the Companies) shall be solely obligated, in which case, Seller shall promptly notify Purchaser regarding any such arrangement,
provided
that any such increases that will increase structural wages or rates to be paid by Purchaser following the Closing are not excepted by this clause (B), or (C) in the case of any action that applies uniformly to
Employees of the Business and similarly situated employees of Seller and its Affiliates and is not reasonably expected to result in a material increase in cost to Purchaser or its Affiliates on or after the Closing Date as compared to the costs
in effect as of the date hereof, (1) adopt, amend, modify or terminate any Benefit Plan, Benefit Agreement or Collective Bargaining Agreement if such adoption, amendment, modification or termination would result in an increase in costs to
Purchaser or materially limit operational flexibility on or after the Closing Date, or create or enter into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Benefit Plan, Benefit Agreement or Collective
Bargaining Agreement if it were in existence as of the date of this Agreement, (2) grant to any Employee of the Business any increase in base salary, wages, bonuses or other incentive compensation, other than in the ordinary course of business
in connection with a new hire or promotion based on job performance in each case, that is permitted under
Section 5.01(vi)
, and which, in the case of increases
granted in connection with a promotion based on job performance, will not exceed $50,000 per individual and $1,000,000 in the aggregate, (3) grant to any Employee of the Business any new, or increase any
existing, change in control, retention, severance or termination pay, (4) issue, deliver, sell, pledge,
encumber or grant any equity or equity-based awards to any Service Provider, (5) fund any rabbi trust or similar arrangement or otherwise secure funding for any Benefit Plan or Benefit Agreement, (6) effectuate any plant closing, relocation of
work, or mass layoff that would incur any liability or obligation under the WARN Act, (7) grant or forgive any loans to an Employee of the Business (other than the grant of loans for travel and business expenses, in each case, in the ordinary
course of business consistent with past practice, and which will not exceed $5,000 for any individual) or (8) negotiate or modify the terms of any new or successor Collective Bargaining Agreement;
(vi) (A) make any material change to the management structure of the Companies, (B) hire any
employee who is primarily dedicated to the Business and (i) has a title or the functional equivalent of Vice President or above, who would have an annual salary in excess of $125,000 or (ii) whose primary employment location is not located in
the Territory, (C) terminate any Employee of the Business with the title or the functional equivalent of Vice President or above other than for cause, death or disability or (D) increase or decrease the aggregate headcount of any Specified
Employee Group or the Business from its Scheduled Size by more than the allowable flex set forth in the Min/Max ∆ column for such Specified Employee Group or the Business as set forth in Section 9.06(b)(ix) of the Seller Disclosure Letter;
(vii) create, incur, assume or guarantee any Indebtedness of the types described in any of
clauses (i), (ii), (iv), (vi) or (viii) (as it relates to the foregoing) of the definition of “Indebtedness” in an aggregate amount in excess of $1,000,000, other than such Indebtedness (A) as will be repaid and extinguished at or prior to the
Closing at no cost or liability to Purchaser or, from and after the Closing, any of the Companies or (B) that is owed by any Company to any other Company, as applicable;
(viii) voluntarily subject any of its properties or assets to any Lien (other than any Permitted
Lien) that would have been required to be set forth in Section 3.06, Section 3.07(a) or Section 3.07(b) of the Seller Disclosure Letter if existing on the date of this Agreement, other than such Liens as will be discharged at or prior to the
Closing at no cost or liability to Purchaser or, from and after the Closing, any of the Companies;
(ix) (A) loan or advance any amount to any third party (other than loans or advances to employees
for travel and business expenses in the ordinary course of business consistent with past practice) or (B) enter into any agreement or arrangement with Seller or any of its Affiliates, except for intercompany transactions in the ordinary course
of business and consistent with past practice that (1) are solely among or between the Companies or (2) will be repaid, extinguished or terminated at or prior to Closing at no cost or liability to Purchaser or, from and after the Closing, any
of the Companies;
(x) make any change in any method of financial accounting or financial accounting practice,
policy or procedure other than as may be appropriate to conform to changes in GAAP (or any interpretation thereof) after the date hereof or as may be required by changes in applicable Law after the date hereof;
(xi) acquire, by merging or consolidating with, or by purchasing a substantial portion of the
properties or assets of, or by any other manner, any business or any Person or division thereof, or otherwise acquire any properties, interest in real property or assets, in each case, that is material to the Business;
(xii) sell, lease (as lessor), sublease (as sublessor), license (as licensor) or otherwise
dispose of any real property or tangible asset used in the Business, individually or in the aggregate with other real property or tangible assets then being sold, leased, subleased, licensed or disposed of that is material to the Business;
(xiii) assign, sell, lease, license, dispose, cancel, abandon, grant rights to or fail to renew,
maintain or diligently pursue applications for, or defend, any Intellectual Property rights;
(xiv) adopt or enter into any plan of complete or partial liquidation or dissolution;
(xv) assign, transfer, lease, sub-lease, cancel, fail to renew or fail to extend any Transferred
Communications License or discontinue any service or operations that require prior regulatory approval for discontinuance;
(xvi) compromise, settle or agree to settle any Proceeding related to the Business or any Company
in a manner which imposes on the Business or any Company (A) injunctive relief or other non-monetary relief that would impose any restriction on the operations of the Business following the Closing (excluding any commitments made by Seller or
any of its Affiliates in routine regulatory and/or compliance filings made to any Governmental Entity that result in immaterial process changes such as additional or modified ordinary course disclosure notices being required to be sent to
customers), (B) a criminal violation or (C) monetary liability in excess of $1,000,000 individually or in the aggregate with any related claims;
provided
that Seller
and its Affiliates may settle any such claim if such settlement does not provide for any relief other than the payment of monetary damages, such payment is made by Seller or one of its Affiliates prior to the Closing and the Companies receive a
full and unconditional written release from all liabilities and obligations with respect to such claim;
(xvii) except as permitted by
Section
5.01(a)(v)
, (A) modify, amend or renew in any material respect any Franchise, Material Company Contract or Real Property Lease, (B) enter into (x) a new Contract that would be binding on any Company or by which any of its
properties or assets would be bound that would have been a Material Company Contract if such Contract has been entered into
Notwithstanding the foregoing, Seller shall, and shall cause its Affiliates to, retain all liabilities for
Retiree Medical Benefits and defined benefit pension plan benefits related to any individual who is (or was) covered by a Collective Bargaining Agreement and who, as of the Closing, is no longer employed by Seller or the Companies and Purchaser
and its Affiliates (including, after the Closing, the Companies) shall have no liability for Retiree Medical Benefits and defined benefit pension plan benefits related to such individual and shall indemnify Purchaser for any such liability in
accordance with
Section 5.06(g)(ii)
. For the avoidance of doubt, the retained liabilities described in the immediately preceding sentence shall be Excluded
Liabilities.
(d) For a period of 12 months following the Closing Date, Purchaser shall, or shall cause its
Affiliates (including, after the Closing, the Companies) to, provide to each Transferred Employee who is not covered by a Collective Bargaining Agreement, (i) a base salary or wages no less favorable than, and (ii) other employee benefits
(excluding any equity or equity-based benefits, retiree medical and retiree life insurance benefits and defined benefit pension plans) that are substantially comparable, in the aggregate, to, in the case of each of clauses (i) and (ii), those
provided to such Transferred Employee immediately prior to the Closing Date. In addition, Purchaser shall, or shall cause its Affiliates (including, after the Closing, the Companies) to, provide to each Transferred Employee whose employment is
terminated by Purchaser or any of its Affiliates (including, after the Closing, the Companies) prior to the 12-month anniversary of the Closing Date, severance and termination benefits in an amount equal to the severance and termination
benefits that would have been due to such Transferred Employee in the event of such termination under the applicable Benefit Plans and Benefit Agreements in which such Transferred Employee participated in or was a party to as in effect as of
immediately prior to the Closing Date as set forth on
Section 5.06(d)
of the Seller Disclosure Letter taking into account such Transferred Employee’s service with
Seller and its Affiliates (including the applicable Company) and any of their respective predecessors prior to the Closing Date. For the avoidance of doubt, severance may be conditioned on a release of claims and compliance with
post-employment restrictive covenants. Effective as of the Closing, each Transferred Employee shall cease to be an employee of Seller or the applicable Subsidiary of Seller, without any interruption or cessation of employment or break in
service, and shall cease to participate in any Benefit Plan (other than any Business Employee Benefit Plan) as an active employee.
(e) (i) From and after the Closing Date, Purchaser shall, or shall cause its Affiliates
(including, after the Closing, the Companies) to, (A) honor all obligations accrued under the Business Employee Benefit Plans as of the Closing in accordance with their terms as in effect immediately prior to the Closing with respect to
Transferred Employees and (B) recognize all of each Transferred Employee’s accrued and unused vacation and other paid time-off benefits as in effect immediately prior to the Closing to the extent included in the Closing Working Capital in the
Final Closing Statement.
(ii) Except as set forth in the following sentence, Purchaser shall, or shall cause its Affiliates (including,
after the Closing, the Companies) to, permit each Transferred Employee who is not covered by a Collective Bargaining Agreement and who participates in a quarterly bonus or commission plan as of immediately
prior to the Closing Date to participate in a quarterly bonus plan or commission plan, as applicable,
maintained by Purchaser or its Affiliates, with eligibility to earn a bonus or commission, as applicable, under such plan for the calendar quarter in which the Closing occurs (
i.e.
, including any portion of such quarter elapsed prior to the Closing), without proration. Solely with respect to Transferred Employees who are not covered by a Collective Bargaining Agreement, (A)
Seller shall make a prorated quarterly bonus payment or commission payment, as applicable, to each such Transferred Employee in respect of the calendar quarter in which the Closing occurs equal to the product of (x) the amount of the bonus or
commission, as applicable, that would have been payable to such Transferred Employee under the applicable Seller quarterly bonus plan or commission plan, as applicable, based on actual performance through the end of the applicable performance
period or commission period, as applicable, as determined by Seller in its reasonable discretion pursuant to the terms of such plan, multiplied by (y) a fraction, the numerator of which is the number of days in such calendar quarter that
elapsed prior to the Closing Date, and the denominator of which is the number of days in such calendar quarter and (B) Purchaser and its Affiliates (including, after the Closing, the Companies) shall not be required to provide such Transferred
Employees the opportunity to earn a bonus or commission, as applicable, for the portion of the calendar quarter in which the Closing occurs that elapsed prior to the Closing Date. Seller shall pay such quarterly bonus payment or commission
payment, as applicable, on the earlier of (x) the time quarterly bonuses or commission payments, as applicable, for such calendar quarter are paid to similarly situated employees of Seller and its Affiliates and (y) 75 days after the end of
such calendar quarter. Seller shall not be responsible for making any payments to Transferred Employees who are covered by Collective Bargaining Agreements with respect to the performance period or commission period, as applicable, in which
the Closing occurs under any incentive plan maintained by Seller or its Affiliates.
(f) From and after the Closing Date, subject to the terms and conditions of any Collective
Bargaining Agreements, Purchaser shall, or shall cause its Affiliates (including, after the Closing, the Companies) to, recognize, for eligibility, vesting and accrual purposes (other than benefit accruals under a defined benefit pension plan,
other than the Accrued DB Benefits, or retiree medical plan) under the plans, programs and arrangements established or maintained by Purchaser or any of its Affiliates (including, after the Closing, the Companies), each Transferred Employee’s
service with Seller and its Affiliates (including the Companies) and any of their respective predecessors;
provided
that no such recognition of service shall be
required to the extent that it would result in a duplication of benefits.
(g) (i) Except as otherwise expressly provided in this Agreement, neither Purchaser nor any of
its Affiliates (including, after the Closing, the Companies) shall assume or be obligated to pay, perform or otherwise discharge, and Seller and its Affiliates, as applicable, shall remain liable to pay, perform and discharge when due, all
employment, labor, compensation, severance, redundancy, termination, pension, employee welfare and employee benefits related liabilities, obligations, commitments,
claims and losses relating to each employee or former employee of Seller and its Affiliates (or any
dependent or beneficiary thereof) who is not a Transferred Employee and Seller shall indemnify Purchaser for any such liability.
(ii) Seller and its Affiliates shall indemnify and hold harmless Purchaser and its Affiliates for any Losses
incurred by Purchaser resulting from or arising out of any material change to Seller’s Benefit Plans solely with respect to those Employees of the Business or Former Employees of the Business (excluding Transferred Employees) covered by (or
previously covered by) a Collective Bargaining Agreement for whom Seller has retained liability for post-retirement Retiree Medical Benefits under
Section 5.06(c)
.
Any indemnification under this
Section 5.06(g)
shall be governed by
Section 8.01(a)(ii)
and such indemnification shall not expire until Seller’s retained liability for such post-retirement retiree medical or life insurance benefits has been paid, performed and discharged when due.
(iii) Purchaser or its Affiliates (including, after the Closing, the Companies) shall assume and shall be solely
responsible for all liabilities that may result from claims made by any Employee of the Business for any severance, redundancy or similar termination payments or benefits arising out of, relating to or in connection with the employment or
termination of employment of any Transferred Employee by Purchaser or any of its Affiliates (including, after the Closing, any Company) following the Closing.
(h) (i) No later than the Closing Date, Purchaser shall, or shall cause its Affiliates
(including, after the Closing, the Companies) to, have in effect one or more defined contribution plans that each include a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code (collectively, “
Purchaser’s 401(k) Plan
”) that will provide benefits to Transferred Employees participating in Seller’s 401(k) Savings Plan (“
Seller’s 401(k) Plan
”) as of the Closing Date. Effective as of the Closing, but subject to the asset transfer specified in
Section
5.06(h)(ii)
, Purchaser’s 401(k) Plan shall assume and be solely responsible for all liabilities for or relating to the Transferred Employees’ accounts in the Purchaser’s 401(k) Plan. Purchaser or its Affiliates (including after
the Closing, the Companies) shall be solely responsible for all ongoing rights of or relating to the Transferred Employees for future participation (including, but not limited to, the right to make contributions through payroll deductions) in
Purchaser’s 401(k) Plan.
(ii) Effective as of or as soon as administratively practicable (but no later than ten days)
after the Closing, Seller shall cause the account balances (including, but not limited to, any outstanding loan balances) in Seller’s 401(k) Plan attributable to the Transferred Employees to transfer to Purchaser’s 401(k) Plan in the form of
(x) promissory notes, to the extent of the account balances of the Transferred Employees that represent outstanding loans or (y) cash, to the extent of the account balances of the Transferred Employees that do not represent outstanding loans of
Transferred Employees. Purchaser shall cause Purchaser’s 401(k) Plan to accept such transfer of accounts and underlying assets and, effective as of the date of such transfer, to assume and to fully perform, pay or
discharge, the obligations relating to the accounts of Transferred Employees in accordance with any
applicable legal requirements (including Section 414(l) of the Code). The transfers shall be conducted in accordance with the terms of Seller’s 401(k) Plan, Section 414(l) of the Code, Treasury Regulation 1.414(l)-1 and Section 208 of ERISA.
In the event that any circumstance or any event arises or occurs prior to such transfer that could reasonably be expected to cause Seller’s 401(k) Plan to cease to be “qualified” within the meaning of Section 401(a) of the Code, Seller shall
promptly notify Purchaser of such circumstance or event and in such case, Purchaser shall not be required to accept the transfer of accounts or any liability thereto, if such transfer would adversely affect the tax qualification of Purchaser’s
401(k) Plan and the parties shall cooperate in good faith to enable the transfer without adverse tax consequences. Seller and Purchaser shall cooperate in good faith in implementing appropriate communications, transferring appropriate records
and taking any other actions reasonably required to effectuate the provisions of this
Section 5.06(h)
.
(i) (i) With respect to each defined benefit pension plan, program, agreement or arrangement that
is qualified under Section 401(a) of the Code and that is sponsored or maintained by Seller or its Affiliates and in which any Employee of the Business participates (each, a “
Business
Pension Plan
”), Purchaser shall, or shall cause its Affiliates (including, after the Closing, the Companies) to, have in effect a defined benefit pension plan that is intended to be qualified under Section 401(a) of the Code
(each, a “
Purchaser Pension Plan
”) and a related trust that is exempt from tax under Section 501(a) of the Code (each, a “
Purchaser Pension Plan Trust
”). Each Purchaser Pension Plan shall be established and maintained for the benefit of the Transferred Employees who participated in the corresponding Business Pension Plan as of
immediately prior to the Closing, and each such Transferred Employee shall become a participant in such Purchaser Pension Plan. Purchaser shall be responsible for taking or causing to be taken all necessary, reasonable and appropriate action
to establish, maintain and administer a Purchaser Pension Plan so that it qualifies under Section 401(a) of the Code and a Purchaser Pension Plan Trust that is exempt from Federal income taxation under Section 501(a) of the Code.
(ii) No later than immediately prior to the Closing, Purchaser shall, or shall cause its
Affiliates (including, after the Closing, the Companies) to, provide that each Purchaser Pension Plan shall assume all liabilities and obligations of Seller and its Affiliates for the benefits accrued by the Transferred Employees under the
applicable Business Pension Plan as of immediately prior to the Closing (such benefits, collectively, the “
Accrued DB Benefits
”);
provided
that, for the period between the Closing and the applicable Transfer Date (as defined below), Seller or its Affiliates shall, to the extent permitted by applicable Law, cause the
applicable Business Pension Plan to continue to make benefit payments to such Transferred Employees in respect of the Accrued DB Benefits.
(iii) Each Purchaser Pension Plan and each Purchaser Pension Plan Trust (and any successors to
such plan and/or trust) shall (A) provide that with respect to assets transferred to such Purchaser Pension Plan from the applicable Business
Pension Plan in accordance with this
Section 5.06(i)
, such assets shall be held by the applicable Purchaser Pension Plan Trust for the exclusive benefit of the participants in such Purchaser Pension Plan; (B) provide that the Accrued DB Benefits may
not be decreased by amendment or otherwise, and (C) have terms and features (including employer contribution provisions and elections in respect of form of payment of Accrued DB Benefits) that are substantially identical to the applicable
Business Pension Plan, such that each Business Pension Plan is substantially replaced by a corresponding Purchaser Pension Plan.
(iv) Effective as of the Closing Date and subject to this
Section 5.06(i)(iv)
with respect to each Purchaser Pension Plan, Seller and its Affiliates shall procure that the trustee of the applicable Business Pension Plan shall transfer to the trustee of
such Purchaser Pension Plan assets equal to a reasonable estimate of the amount required to be transferred pursuant to Section 414(l) of the Code and Section 4044 of ERISA (which, for the avoidance of doubt, may be, if applicable, the “
de minimis
” amount pursuant to Treasury Regulation Section 1.414(l)-1(h)) using the actuarial assumptions and methodology deemed reasonable by Seller in its
sole discretion (for the avoidance of doubt, such actuarial assumptions and methodology need not include the safe harbor assumptions specified in Section 414(l) of the Code or Section 4044 of ERISA), subject to any requirements under such
Sections of the Code and ERISA (each such required amount, a “
Section 4044 Amount
” and each such reasonable estimate, an “
Initial Pension Transfer Amount
”). For purposes of this
Section 5.06(i)(iv)
, to the extent permitted by Law or regulation, the
fair market value of the assets of the Business Pension Plans shall be based on actual market values as of the Closing.
(v) As soon as practicable following the Closing, but no later than 180 calendar days after the
Closing Date, Seller shall provide to Purchaser (or an actuary designated by Purchaser) (A) updated calculations of each Section 4044 Amount (each, a “
Final Pension Transfer
Amount
”) determined by an enrolled actuary designated by Seller and (B) all information reasonably necessary to calculate such Final Pension Transfer Amount and to verify that such calculations have been performed in a manner
consistent with Section 414(l) of the Code and Section 4044 of ERISA and in accordance with the Pension Principles. Within 45 calendar days following receipt by Purchaser (or an actuary designated by Purchaser) of Seller’s actuary’s
calculation of a Final Pension Transfer Amount and the information described in clause (B) of the preceding sentence, Purchaser shall notify Seller in writing if there is a good faith dispute as to whether Seller’s actuary’s calculation of such
Final Pension Transfer Amount, as applicable, is in violation of applicable Law or regulation or contains errors of a mathematical nature or is not in accordance with the Pension Principles. If Purchaser does not notify Seller of any such good
faith dispute within such 45 calendar day period, the determination of Seller’s actuary shall become conclusive, final and binding. If any such dispute remains unresolved for 45 calendar days following Seller’s receipt of such written
notification from Purchaser (or within such longer period as Seller and Purchaser shall mutually agree), Seller and Purchaser shall (in writing) select and appoint an actuary (the cost of which shall be borne equally by
Seller and Purchaser), who shall make a final and binding determination of the applicable Final Pension
Transfer Amount in accordance with applicable law or regulation. Each of Seller and Purchaser shall be responsible for the cost of its own actuary. Seller’s actuary shall be responsible for any required actuarial certification under
Section 414(l) of the Code.
(vi) If the differential between an Initial Pension Transfer Amount and the applicable Final
Pension Transfer Amount (each, a “
Differential Amount
”) is positive (
i.e.
, an
Initial Pension Transfer Amount is less than the applicable Final Pension Transfer Amount), then, within five Business Days following the final determination of the applicable Final Pension Transfer Amount, Seller and its Affiliates shall
procure that the trustee of the applicable Business Pension Plan shall transfer to the trustee of the applicable Purchaser Pension Plan assets equal to the applicable Differential Amount,
plus
, for the period between the Closing and the date such assets are transferred (each, a “
Transfer Date
”), an interest increment on the
applicable Differential Amount at the rate equal to the actual rate of return earned by the related trust, as determined by the trustee of the applicable Business Pension Plan, through the end of the calendar month preceding the applicable
Transfer Date. If a Differential Amount is negative (
i.e.
, an Initial Pension Transfer Amount is more than the applicable Final Pension Transfer Amount),
then, within five Business Days following the final determination of the applicable Final Pension Transfer Amount, Purchaser and its Affiliates shall procure that the trustee of the applicable Purchaser Pension Plan shall transfer to the
trustee of the applicable Business Pension Plan assets equal to the applicable Differential Amount,
plus
, for the period between the Closing and applicable Transfer
Date, an interest increment on the applicable Differential Amount at the rate equal to the actual rate of return earned by such Purchaser Pension Plan’s related trust, as determined by the applicable trustee, through the end of the calendar
month preceding the applicable Transfer Date. For purposes of this
Section 5.06(i)(vi)
, to the extent permitted by Law or regulation, the fair market value of the
assets of the Business Pension Plans shall be based on actual market values as of the Closing.
(vii) Seller and Purchaser shall reasonably cooperate to make any and all filings and submissions
to the appropriate Governmental Entities required to be made by Seller or Purchaser in effectuating the provisions of this
Section 5.06(i)(vii)
, with each of Seller
and Purchaser fulfilling the requirements applicable to it, including (A) IRS Forms 5310-A in respect of the transfers of assets and (B) in the event that the Transactions constitute a “reportable event” (within the meaning of Section 4043 of
ERISA) for which the 30-day notice has not been waived, timely notification of the Pension Benefit Guaranty Corporation and filing of all reports required in connection therewith.
(viii) Purchaser shall cause each Purchaser Pension Plan to recognize and maintain all existing
elections, including, but not limited to, beneficiary designations, required minimum distributions, payment forms and other rights of alternate payees under qualified domestic relation orders as were in effect under
the corresponding Business Pension Plan, unless and until changed or modified in accordance with the
terms of the applicable plan or otherwise in accordance with applicable Law. To the extent applicable, the provisions of this
Section 5.06(i)(viii)
shall
apply to the Transferred Employees’ eligible dependents. At or as soon as administratively practicable following the Closing, Seller shall provide to Purchaser copies of all such beneficiary designations, payment forms and all other documents,
files and other information that Purchaser may need to administer each Purchaser Pension Plan in accordance with the terms of this Agreement and Seller shall cooperate in good faith with Purchaser to effectuate the provisions of this
Section 5.06(i)(viii)
.
(j) (i) No later than the Closing Date, Purchaser shall, and shall cause its Affiliates
(including, after the Closing, the Companies) to, have in effect plans that are “employee welfare benefit plans” within the meaning of Section 3(1) of ERISA (“
Purchaser’s Welfare
Plans
”) to provide the benefits described in
Section 5.06(d)
. Purchaser shall, or shall cause its Affiliates (including, after the Closing, the
Companies) to, (A) waive any pre-existing condition exclusion, actively-at-work requirement or waiting period under all Purchaser’s Welfare Plans for the benefit of Transferred Employees, except to the extent such pre-existing condition,
exclusion, requirement or waiting period would have been applicable under a similar Benefit Plan or Benefit Agreement in effect immediately prior to the Closing and (B) provide full credit for any deductibles, out-of-pocket maximums or any
other similar out-of-pocket payments made or incurred by Transferred Employees prior to the Closing Date for the plan year in which the Closing occurs.
(ii) Seller shall be, or shall cause its Affiliates (other than the Companies) to be, responsible
for all (A) medical, vision, dental and prescription drug claims for expenses incurred by any Transferred Employee or his or her dependents, (B) claims for short-term and long-term disability income benefits incurred by any Transferred Employee
and (C) claims for group life, travel and accident, and accidental death and dismemberment insurance benefits incurred by any Transferred Employee, in each case, prior to the Closing. Purchaser shall be, or shall cause its Affiliates
(including, after the Closing, the Companies) to be, responsible for all (I) medical, vision, dental and prescription drug claims for expenses incurred by any Transferred Employee or his or her dependents, (II) claims for short-term and
long-term disability income benefits incurred by any Transferred Employee and (III) claims for group life, travel and accident, and accidental death and dismemberment insurance benefits incurred by any Transferred Employee, in each case, on or
after the Closing under any Business Employee Benefit Plan. Except in the event of any claim for workers compensation benefits, for purposes of this Agreement, the following claims and liabilities shall be deemed to be incurred, subject to the
terms and conditions of the applicable employee benefit plan, as follows: (1) medical, vision, dental and/or prescription drug benefits (including hospital expenses), upon provision of the services, materials or supplies comprising any such
benefits and (2) short and long-term disability, life, accidental death and dismemberment and business travel accident insurance benefits, upon the death, illness, injury or accident giving rise to such benefits.
(iii) Seller and its Affiliates (other than the Companies) shall be responsible for all claims
for workers compensation benefits or any other liabilities relating to any and all workers compensation claims, events and/or coverage, whether arising under any law of any state or otherwise, including any expenses that would be reimbursable
or subject to a deductible under the applicable workers compensation policy (such liabilities, “
Workers Compensation Liabilities
”) that are incurred prior to the
Closing by any Transferred Employee. Purchaser and its Affiliates (including, after the Closing, the Companies) shall be responsible for all claims for workers compensation benefits that are incurred on or after the Closing by any Transferred
Employee. A claim for workers compensation benefits shall be deemed to be incurred when the event giving rise to the Workers Compensation Liabilities thereunder (the “
Workers
Compensation Event
”) occurs, without regard to when such claim is reported by any Transferred Employee. If the Workers Compensation Event occurs over a period both preceding and following the Closing, the claim and the Workers
Compensation Liabilities thereunder shall be the joint responsibility of Seller and Purchaser and shall be equitably apportioned between Seller and Purchaser based upon the relative periods of time that the Workers Compensation Event transpired
preceding and following the Closing. Seller and Purchaser shall reasonably cooperate in the administration of any workers compensation claim to the extent that Seller or Purchaser, as applicable, is unable to administer a claim for which it
has Workers Compensation Liabilities pursuant to this
Section 5.06(j)(iii)
.
(iv) As of the Closing, Purchaser and its Affiliates (including, after the Closing, the
Companies) shall be responsible for administering compliance with the requirements under Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA, or similar state Law (“
COBRA
”),
and the portability requirements under the Health Insurance Portability and Accountability Act of 1996 with respect to Transferred Employees and their eligible dependents. Seller and its Affiliates (other than the Companies) shall assume or
retain any obligations under the Benefit Plans to provide COBRA coverage to any former employees of the Companies and any of their respective eligible dependents who (A) are enrolled in COBRA continuation coverage as of the Closing Date or
(B) with respect to whom a COBRA qualifying event occurred on or prior to the Closing Date.
writing to the Purchase Price Allocations during the 30 calendar-day period after receipt thereof. If
Seller does not raise any objections within such 30 calendar-day period, Seller shall be deemed to have agreed to Purchaser’s Purchase Price Allocations and such Purchase Price Allocations shall be final, conclusive and binding upon the
parties. If Seller raises an objection in writing within such 30 calendar-day period, the parties shall negotiate in good faith to resolve the dispute. If the parties are unable to resolve the dispute within 30 calendar days after the
commencement of such negotiations, then the Independent Expert shall be engaged to review the Purchase Price Allocations and to finally resolve all disputes. The determination of the Independent Expert regarding the Purchase Price Allocations
shall be delivered as soon as practicable following engagement of the Independent Expert, but in no event more than 60 calendar days thereafter, and shall, absent manifest error, be final, conclusive and binding upon Seller and Purchaser. The
cost of the Independent Expert shall be shared in accordance with the terms of
Section 1.04(f)
. Purchaser and Seller agree to (x) be bound by the Purchase
Price Allocations determined to be final by this
Section 5.07(f)
(the “
Final
Purchase Price Allocations
”), (y) act in accordance with the Final Purchase Price Allocations in the preparation and filing of all Tax Returns and (z) take no position inconsistent with the Final Purchase Price Allocations for
all Tax purposes (unless and to the extent required to do so pursuant to a determination (as defined in Section 1313(a) of the Code or any similar U.S. state or local Tax provision)). The parties shall, in good faith, make adjustments to the
Final Purchase Price Allocations as necessary to account for any subsequent adjustment to the Purchase Price pursuant to this
Section 5.07
or
Article VIII
(
Indemnification
). In the event that any Taxing
Authority disputes the Final Purchase Price Allocations, Seller or Purchaser, as the case may be, shall promptly notify the other parties in writing of the nature of such dispute.
(g)
Tax Treatment of Payments
.
Any payment made under this
Section 5.07
shall be treated as an adjustment to the Purchase Price for Tax purposes.
(h)
Survival
. The
covenants and agreements contained in this
Section 5.07
shall survive the Closing until the expiration of the applicable statute of limitations.
SECTION 5.08
Transfer Taxes
. All
sums payable under this Agreement are exclusive of Transfer Taxes. All Transfer Taxes imposed or levied by reason of, in connection with or attributable to this Agreement and the other Transaction Agreements or the transactions contemplated
hereby or thereby (including, for the avoidance of doubt, the transactions described in paragraph 1(e) of the Reorganization Plan) shall be borne fifty percent (50%) by Purchaser and fifty percent (50%) by Seller to the extent that such
Transfer Taxes in the aggregate equal an amount that is not more than $6,000,000. Transfer Taxes described in the immediately preceding sentence in excess of $6,000,000 shall, to the extent of such excess, be borne one hundred percent (100%)
by Seller. Seller and Purchaser further agree, upon request, to use commercially reasonable efforts to obtain any certificate or other document from any Taxing Authority as may be necessary to mitigate, reduce or eliminate any such Transfer
Taxes. Purchaser and Seller shall reasonably cooperate to prepare and timely file any Tax Returns relating to such Transfer Taxes. If either Seller or Purchaser receives any refund, credit or recovery of any Transfer Tax that was shared by the
parties in accordance with this
Section 5.08
,
such party shall promptly pay to the other party such other party’s share of such refund, credit or recovery, net of any
reasonable third party out-of-pocket costs and expenses.
SECTION 5.09
Publicity
. No press
release or other public announcement concerning the Transactions shall be issued by a party or such party’s Affiliates without the prior consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed),
except as such press release or public announcement may be required by applicable Law, Judgment or any Governmental Entity, in which case the party required to make the press release or public announcement shall allow the other party reasonable
time to comment thereon in advance of such issuance. The parties agree that any press releases to be issued with respect to the execution and delivery of this Agreement or the consummation of the Transactions shall be in the form, of substance
and with timing agreed upon by Seller and Purchaser (the “
Announcements
”). Notwithstanding the foregoing, (a) this
Section 5.09
shall not apply to any press release or other public announcement made by any of the parties hereto which is consistent with the Announcements and the terms of this Agreement and does not contain any
information relating to Seller, Purchaser, the Companies or the Business that has not been previously announced or made public in accordance with the terms of this Agreement and (b) each of Seller and Purchaser may make internal announcements
to their respective employees that are consistent with the parties’ prior public disclosures regarding the Transactions. The provisions of this
Section 5.09
shall
not apply to communications by any party to its counsel, accountants, prospective Lender Related Parties (including communications with respect to communications made in connection with Purchaser’s financing efforts), other professional
advisors, its limited partners and investors or its prospective limited partners and investors, in each case who are subject to customary confidentiality obligations.
SECTION 5.10
Intellectual Property Matters
.
(a) Except as expressly provided in this
Section 5.10
or in any other Transaction Agreement, no right, title or interest to or under the Names or the Seller IP is
being transferred or licensed by this Agreement, either expressly, by implication, estoppel or otherwise.
(b) To the extent Seller has the necessary rights, without violating any law, regulation, or court order, or
the terms of any agreement with another Person, and without obligating Seller to make any payment or provide other consideration to another Person, Seller, on behalf of itself and its Affiliates as of the Closing Date (other than the Companies)
hereby grants to Purchaser and the Companies (the “
Purchaser IP Parties
”) a perpetual, irrevocable, non-terminable, royalty-free, worldwide, non-exclusive,
non-transferable (except as provided in this
Section 5.10(b)
) and non-sublicensable (except as provided in this
Section 5.10(b)
) license under the Seller IP to make, have made, use, offer for sale, sell, have sold, import, export, distribute, reproduce, prepare derivative works, publicly display, publicly perform, lease,
transfer, dispose of, commercialize, service, maintain, repair and otherwise exploit any products or services of the Purchaser IP Parties within the field of the Business. Transfer of any Seller IP by Seller or any of its Affiliates shall be
made subject to the license grant in this
Section 5.10(b)
. Purchaser may transfer the license provided in this
Section 5.10(b)
, in whole or in part, to the acquirer of the part of the Business to which the license relates.The parties hereto intend and agree that, for purposes of Section 365(n) of the U.S. Bankruptcy Code (and
any amendment thereto) and any equivalent Law in any foreign jurisdiction, the license in this
Section 5.10(b)
will be
treated as a license to intellectual property (as defined in Section 101(35A) of the U.S. Bankruptcy Code).
(c) Purchaser, for itself and its Affiliates (including, after the Closing, the Companies),
acknowledges and agrees that as between the parties hereto, Seller or its Subsidiaries have the exclusive right to use and display any and all of the Names and except as otherwise expressly provided in this
Section 5.10
or in any other Transaction Agreement, neither Purchaser nor any of its Affiliates (including, after the Closing, the Companies) shall, as of the Closing, have any rights in or to
the Names, including to use the Names in any manner, or to register or seek to register, or to permit, cause or assist any third party to register or to seek to register, any of the Names or any marks confusingly similar to any of the Names
in any jurisdiction.
(d) With respect to the Names:
(i) Except as expressly provided in this
Section 5.10(d)
, Purchaser shall, and shall cause its Affiliates (including after the Closing, the Companies) to, as soon as reasonably practicable but no later than one hundred twenty (120) calendar days after the
Closing, (A) cease and discontinue any and all uses of the Names, (B) delete or destroy any and all materials under their control that contain the Names and (C) cause each Company to, as applicable, change its corporate or company name, seals
and certificates to remove any references to the Names and file as promptly as practicable in each jurisdiction in which each Company is qualified to do business all documents necessary to reflect such change of name or to terminate its
qualification in such jurisdiction under such name. Subject to this
Section 5.10(d)
, in the event Seller identifies any non-compliance with this
Section 5.10(d)(i)
, Seller will provide written notice of such non-compliance to Purchaser and Purchaser shall have a period of thirty (30) calendar days to cure such
non-compliance. For the avoidance of doubt, the foregoing obligations shall not require Purchaser to cease and discontinue use of or delete or destroy materials to the extent such actions are not reasonably practicable (
e.g.
, manhole covers).
(ii) Notwithstanding the foregoing, the Companies shall, for a period of six (6) months after
the Closing (the “
Transition Period
”), be entitled to use the Names in the same manner as such Names were used in the Business as of the Closing;
provided
, that Purchaser may sell or distribute in the ordinary course of business any inventory that exists as of the Closing until the exhaustion of such inventory;
provided
,
further
, that beginning immediately following the Closing, Purchaser shall ensure
that any use of the Names in connection with the Business displays (A) the New Name together with the applicable Name and appearing in more prominent fashion than such Name, (B) an accompanying statement identifying the New Name as the name
of the business formerly known by the applicable Name and (C) all materials containing the New Name together with any Name are destroyed prior to the end of the Transition Period. Seller shall (and shall cause its Affiliates to) mail,
distribute, display or otherwise provide the co-branded materials described in the foregoing proviso as reasonably directed by
Purchaser for a period of sixty (60) calendar days prior to the Closing. Subject to the name usage
rights provided for in this
Section 5.10
, as of and following the Closing, Purchaser shall, and shall cause its Affiliates (including the Companies) to,
cease to, and not at any time thereafter, hold themselves out as having any affiliation or association with Seller or any of its Affiliates.
(iii) Notwithstanding the foregoing, neither Purchaser nor any of its Affiliates shall be in
breach of this
Section 5.10(d)
if, after the Closing, Purchaser or any of its Affiliates (A) uses the Names in a nominative manner in textual sentences referencing
the historical relationship between Seller and its Affiliates, on the one hand, and the Companies, on the other hand, which references are factually accurate, (B) retains copies of any books, records or other similar internally-focused
materials that, as of the Closing, contain or display the Names and such copies are used solely for internal or archival purposes (and not public display), (C) uses the Names in internal tax, legal, employment or similar records, (D) uses
equipment and other similar articles of the Business as of the Closing, notwithstanding that they may bear one or more of the Names (provided that it is not reasonably practicable to remove or cover the applicable Names after Purchaser’s use
of reasonable efforts to do so), (E) uses tools, drawings, manuals, work sheets, operating procedures, other written or electronic data, materials or assets (including computer source code) for internal purposes only in connection with the
Business, notwithstanding that they may bear one or more of the Names or (F) uses the Names to comply with applicable Laws or for litigation, regulatory or corporate filings and documents filed by Purchaser or any of its Affiliates with any
Governmental Entity. Further, neither Purchaser nor any of its Affiliates shall be in breach of this Section 5.10(d) by reason of (x) the appearance of the Names in or on any publications, marketing materials, brochures, instruction sheets,
equipment or products that were distributed in the ordinary course of business prior to the Closing or (y) the sale by distributors unaffiliated with Purchaser of inventory containing any Name that is held by such distributor as of the date
that is up to six months following the Closing.
(e) Any and all goodwill arising in connection with the use of the Names by Purchaser or its
Affiliates (including, after the Closing, the Companies), shall inure solely to the benefit of Seller.
(f) Neither Purchaser nor any of its Affiliates (including, after the Closing, the Companies)
shall contest the use, ownership or validity of any rights of Seller or its Subsidiaries in or to the Names or (to the extent not a Transferred Asset) the Seller IP that exists as of the Closing.
(g) (i) Seller shall use commercially reasonable efforts to obtain, or to cause to be obtained,
any Consent, approval or amendment required for the assignment, assumption, transfer, conveyance and delivery of the Verizon IP Rights (for the avoidance of doubt, as in effect on the date hereof) to Purchaser or one of its Affiliates as
promptly as practicable following the date hereof and (ii) to the extent Seller seeks an extension of the applicable term of any Verizon IP Agreement for use in connection with the operation of
the Seller Business, Seller will provide written notice of such decision to Purchaser, and at the
request of Purchaser, Seller shall also use commercially reasonable efforts to obtain a corresponding extension of the applicable term related to the applicable Verizon IP Rights (other than the Verizon IP Rights granted pursuant to the
Trademark License Agreement) for use by Purchaser in connection with the operation of the Business;
provided
that Seller shall not be obligated to pay any
consideration or grant any concession to Verizon or any other party in order to obtain any extension of Purchaser’s right to use the applicable Verizon IP Rights in connection with the operation of the Business, and Purchaser shall be
responsible for making any such payment or concession to Verizon.
(h) If Seller is not granted (or elects not to pursue) an extension to the Verizon IP
Agreements as described in
Section 5.10(g)
, and implements any workarounds, modifications or adjustments to its video delivery system to ensure the same features,
functionality and quality for such video delivery system or otherwise without the use of the Verizon IP Rights (other than the Verizon IP Rights granted pursuant to the Trademark License Agreement) (the “
System Workarounds
”), Seller shall cause the System Workarounds to be made available to Purchaser and its Affiliates’ systems, including by granting Purchaser and its Affiliates a
non-exclusive, perpetual, irrevocable, non-terminable, royalty-free, worldwide, transferable and sublicensable license to use any Software (including source code) and other Intellectual Property owned by Seller or any of its Affiliates and
used in the System Workarounds;
provided
that (i) Purchaser has not altered the operation of its Systems in a manner that would materially and adversely affect
Seller’s ability to make the System Workarounds available to Purchaser in accordance with this
Section 5.10(h)
, (ii) to the extent necessary, Purchaser shall
secure, at its own cost, its own licenses to any third party Software used in the System Workarounds, (iii) Purchaser shall pay any third party costs necessary to harmonize any Software developed or used by Seller in the Systems Workaround to
Purchaser’s systems and (iv) Purchaser shall reimburse Seller for any reasonable and documented actual incremental costs and expenses incurred by Seller or any of its Affiliates in connection with making the Systems Workaround available to
Purchaser pursuant to this
Section 5.10(h)
.
SECTION 5.11
Records
. (a)(i)
Purchaser recognizes that certain records of the Companies may contain information relating to Subsidiaries, divisions and businesses of Seller and its Affiliates other than the Companies or the Business, and that Seller and its Affiliates
may, subject to
Section 5.16
(
Confidentiality
), retain copies thereof and
(ii) Seller recognizes that certain records of the Seller Group may contain information relating to the Companies or the Business, and that Purchaser and its Affiliates (including, after the Closing, the Companies) may, subject to
Section 5.03
(
Confidentiality
), retain copies thereof.
(b) From and after the Closing, (i) Purchaser shall, and shall cause the Companies to, retain,
for at least seven years after the Closing Date, all books, records and other documents pertaining to the Business that are retained by the Companies or are obtained by Purchaser hereunder, as the case may be, that relate to the period prior
to the Closing Date, except for Tax Returns and related documentation which shall be governed by
Section 5.07(b)
(
Cooperation
), and to make the same available after the Closing Date for
inspection and copying by Seller and its
Affiliates, and (ii) Seller shall, and shall cause the other members of the Seller Group to, retain, for at least seven years after the Closing Date, all books, records and other documents pertaining to the Business that are retained by the
Seller Group that relate to the period prior to the Closing Date, except for Tax Returns and related documentation which shall be governed by
Section 5.07(b)
(
Cooperation
), and to make the same available after the Closing Date for
inspection and copying by Purchaser and its Affiliates (including the
Companies), in each case of clauses (i) and (ii), during regular business hours, upon reasonable notice and upon reasonable request for (A) concluding Seller’s and its Affiliates’ involvement in the Business, (B) investigating, settling,
preparing for the defense or prosecution of, defending or prosecuting any Proceeding by or before any court or other Governmental Entity (except for any claim made by one party hereto against the other party hereto), (C) preparing reports to
any Governmental Entity or (D) preparing and delivering any accounting or other statement (whether provided for under this Agreement or otherwise).
SECTION 5.12
Non-Solicitation
.
(a) Prior to the Closing, Seller shall not, and shall cause its Affiliates not to, directly or indirectly, (i) solicit, initiate, or knowingly encourage, or take any other action to knowingly facilitate, any Alternative Proposal or any
inquiry or proposal that would reasonably be expected to lead to an Alternative Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person (other than Purchaser or any
of its Affiliates) any information with respect to, or otherwise cooperate in any way with, any Alternative Proposal or any inquiry or proposal that would reasonably be expected to lead to an Alternative Proposal or (iii) approve, endorse,
recommend, execute or enter into any letter of intent, memorandum of understanding, agreement in principle, joint venture agreement, partnership agreement or merger, acquisition or similar agreement constituting or contemplating any
Alternative Proposal.
(b) No later than five Business Days after the date of this Agreement, Seller shall, or shall
cause its representatives to, (i) terminate any access to any data room (real or virtual) established by Seller or its representatives in connection with the Transactions or any other proposed strategic transaction to the extent involving the
Business; (ii) send out notices to any third party (other than Purchaser’s Affiliates or its representatives) that has executed a confidentiality or non-disclosure agreement in connection with any proposed strategic transaction to the extent
involving the Business and received Business Confidential Information to return or destroy such Business Confidential Information in accordance with the terms of such confidentiality or non-disclosure agreement and use its commercially
reasonable efforts to enforce the confidentiality obligations and other rights thereunder.
SECTION 5.13
Indemnification of Directors
and Officers
. (a) Purchaser agrees (i) that all rights to indemnification and/or advancement of expenses now existing in favor of the directors, officers, employees and agents of any Company (each, an “
Indemnitee
” and collectively, the “
Indemnitees
”), as provided in the organizational documents of such Company
in effect as of the date of this Agreement, in each case with respect to any matters occurring prior to the Closing, shall survive the Closing and shall continue in full force and effect and (ii) that Purchaser shall cause the Companies to
perform and discharge their respective obligations to provide such indemnification and/or advancement of expenses following the Closing. Any
indemnification and liability limitation or exculpation provisions contained in the organizational documents of the
Companies shall not be amended, repealed or otherwise modified after the Closing in any manner that would adversely affect the rights thereunder of individuals who, as of the Closing or at any time prior to the Closing, were Indemnitees,
unless such modification is required by applicable Law.
(b) The provisions of this
Section 5.13
shall survive the Closing and are intended to be for the benefit of, and shall be enforceable by, each Indemnitee, their heirs and their personal representatives and shall be binding on all successors and assigns of Purchaser and the
Companies, and may not be terminated or modified in any manner adverse to such Persons without their prior written consent, unless such termination or modification is required by applicable Law.
SECTION 5.14
Insurance
. (a)
Following the Closing, to the extent that (i) any insurance policies owned or controlled by any member of the Seller Group and provided by a Person who is not an Affiliate of Seller (collectively, “
Seller Insurance Policies
”) cover any Loss in respect of any of the Companies, the Transferred Assets or the Assumed Liabilities to the extent arising out of, relating to or resulting from occurrences prior
to the Closing and (ii) the Seller Insurance Policies permit claims to be made thereunder with respect to such Losses arising out of, relating to or resulting from occurrences prior to the Closing (“
Business Claims
”), at Purchaser’s cost and expense (including any increased retrospective premiums, deductible and other retention amounts and any other reasonable out-of-pocket costs and expenses related
to such Business Claims), Seller shall, and shall cause the other members of the Seller Group to, (1) reasonably cooperate with Purchaser (upon Purchaser’s reasonable request) in submitting Business Claims (or pursuing claims previously made)
on behalf of Purchaser or such Subsidiary, as applicable, under any Seller Insurance Policy and (2) not relinquish any of its rights, or take any actions (other than the making of claims under the Seller Insurance Policies) that could
reasonably be expected to reduce or otherwise limit the available coverage for any Business Claims under any of the Seller Insurance Policies;
provided
,
however
, that Purchaser acknowledges and agrees that (A) none of Seller or any other member of the Seller Group shall be responsible for any Losses that are
“self-insured” by Seller or any other member of the Seller Group as of immediately prior to the Closing, that are within any applicable deductible or retention amounts under any Seller Insurance Policy, (B) none of Seller or any other member
of the Seller Group shall be liable to Purchaser or any of its Subsidiaries (including, after the Closing, the Companies) for any Losses or other amounts hereunder if any insurance company that has issued any Seller Insurance Policy fails to
pay such losses or amounts as a result of, or in connection with, the filing or declaration of, or institution of proceeding for, any type of bankruptcy (whether voluntary or involuntary), insolvency or the commencement of any similar action
or proceeding or otherwise, and (C) the Seller Group may, at any time after the Closing, without liability or obligation to Purchaser or its Subsidiaries, including, after the Closing, the Companies, amend, commute, terminate, buy-out,
extinguish liability under or otherwise modify any Seller Insurance Policy, in each case, solely with respect to the period following the Closing. Nothing in this
Section
5.14(a)
shall relieve Purchaser or any of its Subsidiaries (including, after the Closing, the
Companies) from any obligations with respect to the Assumed Liabilities or any other Losses.
(b) The parties agree that, except as set forth in
Section 5.14(a)
, from and after the Closing Date, the coverage under all insurance policies related to the Business and arranged or maintained by Seller or its Affiliates is only for the benefit of Seller
and its Affiliates (other than the Companies), and not for the benefit of Purchaser or the Business, and Purchaser agrees to arrange for its own insurance policies with respect to the Business and, without prejudice to any right of
indemnification pursuant to this Agreement, agrees not to seek, through any means, to benefit from any of Seller’s or its Affiliates’ insurance policies which may provide coverage for claims relating in any way to the Business.
SECTION 5.15
Settlement of Intercompany
Indebtedness
. Prior to the Closing, Seller shall cause all intercompany indebtedness, accounts and balances between and among any Company, on the one hand, and Seller and its Affiliates (other than the Companies), on the other
hand, to be eliminated (which may include the netting of receivables and payables, contributions to equity and dividends) without any liability to Purchaser, or after the Closing, the Companies.
SECTION 5.16
Confidentiality
.
(a) From and after the Closing, Seller shall, and shall cause its Affiliates and its and their respective officers, directors, employees, agents and representatives to, keep strictly confidential and not disclose to any other Person, or use
for their own benefit or the benefit of any other Person, any Business Confidential Information;
provided
,
however
, that Seller may disclose, or may permit disclosure of, Business Confidential Information (i) to its or its Affiliates’ respective officers, directors, employees, agents or representatives who have a need to
know such information for purposes of fulfilling their obligations hereunder or under another Transaction Agreement and are informed of their obligation to hold such information confidential to the same extent as is applicable to Seller and
in respect of whose failure to comply with such obligations, Seller will be responsible, (ii) if Seller, its Affiliates or their respective officers, directors, employees, agents or representatives are requested or compelled to disclose any
such Business Confidential Information by judicial or administrative process or by other requirements of applicable Law or (iii) in connection with any Proceeding to enforce such Party’s rights under this Agreement or any Transaction
Agreement. Notwithstanding the foregoing, in the event that any Business Confidential Information is requested, compelled or required to be disclosed pursuant to clause (ii) above, Seller shall (x) to the extent legally permissible and
reasonably practicable, promptly notify Purchaser of the existence of such request or requirement and the disclosure that is expected to be made in respect thereto in each case with sufficient specificity so that Purchaser may, at its
expense, seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this
Section 5.16
and (y) if requested by Purchaser (at
Purchaser’s sole cost and expense), assist Seller in seeking a protective order or other appropriate remedy with respect to such request or requirement. If such a protective order or other remedy or the receipt of a waiver by Purchaser is
not obtained and Seller or any of its Affiliates or their respective officers, directors, employees, agents or representatives is nonetheless required by such judicial or administrative process or applicable Law to disclose any Business
Confidential Information, Seller (or such Affiliate or officer, director, employee, agent or representative) may, after compliance with the immediately
preceding sentence of this
Section 5.16
,
disclose only that portion of the Business Confidential Information which is required to be disclosed;
provided
,
however
, that Seller and, if appropriate, such Affiliate or such officer, director, employee, agent or representative, exercise its commercially reasonable efforts to preserve the
confidentiality of such Business Confidential Information, including by obtaining reasonable assurances that confidential treatment shall be accorded any Business Confidential Information so disclosed. Notwithstanding any disclosure of
Business Confidential Information pursuant to clause (ii) above, Seller and its Affiliates and their respective officers, directors, employees, agents and representatives will continue to be bound by their obligations of confidentiality
(including with respect to any Business Confidential Information disclosed pursuant to clause (ii) above), non-disclosure, restriction on use and other obligations under this
Section 5.16
.
(b) As used in this Agreement, “
Business
Confidential Information
” means all non-public information included in the Transferred Assets or otherwise used or held for use in or related to the Business, except that “Business Confidential Information” shall not include
information which (1) is or becomes generally available to the public (other than as a result of its disclosure in violation of
Section 5.16(a)
above) or (2) after
the Closing Date, is lawfully made available or known to Seller or its Affiliates by a Person not subject to any duty of confidentiality to Purchaser or its Affiliates or their representatives.
(c) Notwithstanding anything to the contrary set forth herein, Seller shall be deemed to have
satisfied its obligations hereunder with respect to Business Confidential Information if it exercises the same degree of care (but no less than a reasonable degree of care) as it takes to preserve confidentiality for its own similar
information, materials or other documents.
SECTION 5.17
Resignations
.
Seller shall cause to be delivered to Purchaser on the Closing Date resignation letters of such members of the board of directors (or comparable governing body) of each Company and officers of each Company which have been requested in writing
by Purchaser at least three Business Days prior to the Closing Date, such resignation letters to be in form and substance reasonably acceptable to Purchaser and Seller.
SECTION 5.18
Financing
. (a)
Purchaser shall use, and shall cause its Affiliates to use, reasonable best efforts (taking into account the expected timing of the Marketing Period) to take, or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and obtain the Financing on the terms and subject only to the conditions (including the market flex provisions) set forth in the Financing Letters, including using reasonable best efforts to
(i) maintain in effect and comply with the Financing Letters, (ii) negotiate and enter into definitive agreements with respect to the Financing on the terms and subject only to the conditions (including the market flex provisions) set forth
in the Financing Letters (or on terms not materially less favorable to Purchaser than the terms and conditions (including market flex provisions) set forth in the Financing Letters), (iii) satisfy (and cause its Affiliates to satisfy) (or, if
deemed advisable by Purchaser, seek the waiver of) on a timely basis all conditions applicable to Purchaser and its Affiliates in the Financing Letters and the definitive agreements relating to the Financing, (iv) consummate the Financing at
or prior to the Closing, including using its (and causing its Affiliates to use)
reasonable best efforts to cause the Lenders and the other Persons committing to fund the Financing to fund the Financing
at the Closing, (v) enforce its rights and remedies under the Financing Letters and the definitive agreements relating to the Financing and (vi) comply with its covenants and other obligations under the Financing Letters and the definitive
agreements relating to the Financing. Purchaser shall not, without the prior written consent of Seller, agree to or permit any termination of or amendment or modification to be made to, or grant any waiver of any provision under, the
Financing Letters or the definitive agreements relating to the Financing if such termination, amendment, modification or waiver would (A) reduce (or could have the effect of reducing) the aggregate amount of the Financing (including by
increasing the amount of fees to be paid or original issue discount) to an amount below the Required Amount, (B) impose new or additional conditions precedent to the availability of the Financing or otherwise expand, amend or modify any of
the conditions to the Financing, or otherwise expand, amend or modify any other provision of the Financing Letters in a manner that could reasonably be expected to delay or prevent or make less likely to occur the funding of the Financing (or
satisfaction of the conditions to the Financing) on the Closing Date or (C) adversely impact the ability of Purchaser to enforce its rights and remedies against any other party to any Financing Letter or the definitive agreements relating to
the Financing. Purchaser shall promptly deliver to Seller copies of any amendment, modification or waiver to or under any Financing Letter or the definitive agreements relating to the Financing. Purchaser will fully pay, or cause to be
paid, all commitment and other fees under or arising pursuant to the Debt Commitment Letter as and when they become due.
(b) Purchaser shall keep Seller informed on a reasonable basis and in reasonable detail of the
status of its efforts to arrange the Debt Financing. Purchaser shall give Seller prompt written notice of (i) any actual or potential material breach, default, termination or repudiation by any party to any Financing Letter or definitive
documents related to the Financing of which Purchaser becomes aware, (ii) the receipt of any written notice or other written communication from any Financing source with respect to any (A) actual or potential material breach, default,
termination or repudiation by any party to any Financing Letter or any definitive document related to the Financing of any provisions of the Financing Letters or any definitive document related to the Financing or (B) material dispute or
disagreement between or among any parties to any Financing Letter or any definitive document related to the Financing and (iii) the occurrence of an event or development that could reasonably be expected to adversely impact the ability of
Purchaser to obtain all or any portion of the Financing contemplated by the Financing Letters on the terms and conditions, in the manner or from the sources contemplated by any Financing Letter or the definitive documents related to the
Financing (or if at any time for any other reason Purchaser believes that it will not be able to obtain all or any portion of the Financing contemplated by the Financing Letters on the terms and conditions, in the manner or from the sources
contemplated by any Financing Letter or the definitive documents related to the Financing). As soon as reasonably practicable, but in any event within two Business Days of the date Seller delivers to Purchaser a written request, Purchaser
shall provide any information reasonably requested by Seller relating to any circumstance referred to in the immediately preceding sentence. If any portion of the Debt Financing becomes unavailable on the terms and conditions (including any
applicable market flex provisions) contemplated by the Debt Commitment Letter, or if Purchaser becomes aware of any event or circumstance that could reasonably
be expected to make any portion of the Debt Financing unavailable on the terms and conditions (including
any applicable market flex provisions) contemplated by the Debt Commitment Letter, Purchaser shall (x) promptly notify Seller in writing and (y) use reasonable best efforts to arrange and obtain in replacement thereof, and negotiate and enter
into definitive agreements with respect to, alternative financing from alternative sources in an amount sufficient, when taken together with the Equity Financing and the available portion of the Debt Financing, to fund the Required Amount on
terms and conditions (including market flex provisions) not materially less favorable to Purchaser (or its Affiliates) than the terms and conditions set forth in the Debt Commitment Letter, as promptly as practicable following the occurrence
of such event;
provided
that the failure to obtain alternative financing shall not relieve Purchaser of any obligations hereunder. Purchaser shall deliver
to Seller complete copies of all Contracts or other arrangements (including any Redacted Fee Letters) pursuant to which any such alternative source shall have committed to provide any portion of the Debt Financing. For purposes of this
Agreement, (I) references to the “Financing” shall include the financing contemplated by the Financing Letters as permitted to be amended, modified or replaced by this
Section 5.18
,
(II) references to the “Debt Commitment Letter” shall include such documents as permitted to be amended, modified or replaced by this
Section 5.18
and
(III) references to the “Debt Financing” shall include the financing contemplated by the Debt Commitment Letter as permitted to be amended, modified or replaced by this
Section 5.18
.
(c) Prior to the Closing Date, Seller shall use, and shall cause the Companies to use,
reasonable best efforts to provide, and shall use reasonable best efforts to cause any attorney, accountant or other advisor, agent or representative (collectively, the “
Representatives
”)
retained by Seller or any Company to provide, in each case at Purchaser’s sole cost and expense, such reasonable cooperation in connection with the arrangement of the Debt Financing as may be reasonably requested by Purchaser to assist it in
causing the conditions in the Debt Commitment Letter to be satisfied or as is otherwise reasonably requested by Purchaser in connection with the Debt Financing, including:
(i) prior to and during the Marketing Period, use reasonable best efforts to assist in
preparation for and participation (and use reasonable best efforts to cause senior management of Seller and the Business to participate) in marketing efforts (including by participating in a reasonable number of lender meetings and calls),
and a reasonable number of other meetings, calls, drafting sessions, rating agency presentations, road shows, and due diligence sessions (including accounting due diligence sessions) and sessions with prospective lenders, investors and
ratings agencies, in each case upon reasonable advance notice and at mutually agreeable dates, times and locations, and reasonably assisting Purchaser in obtaining ratings as contemplated by the Debt Financing;
(ii) reasonably assisting Purchaser and the Lenders (or their respective appropriate
affiliates) in the preparation of (A) offering documents, private placement memoranda, bank information memoranda, lender presentations, investor presentations, prospectuses and similar marketing documents for the
Debt Financing, including the execution and delivery of customary authorization letters in connection
with bank information memoranda and including customary representations to the lenders contemplated by the Debt Commitment Letter and reviewing and commenting on Purchaser’s draft of a business description and “Management’s Discussion and
Analysis” of the financial statements to be included in offering documents contemplated by the Debt Financing; and (B) materials for rating agency presentations;
(iii) as promptly as practicable (A) furnishing Purchaser with the Required Information that is
Compliant and (B) informing Purchaser if Seller or any Company shall have Knowledge of any facts as a result of which a restatement of any financial statements to comply with GAAP is probable;
(iv) assisting Purchaser in connection with the preparation of
pro forma
financial information and
pro forma
financial statements to the extent required
by SEC rules and regulations or reasonably necessary or appropriate or reasonably required by Purchaser’s financing sources (including the Lenders (or their respective appropriate affiliates)) to be included in any offering documents
(provided that neither Seller nor any Company or their representatives shall be responsible in any manner for information relating to the proposed debt and equity capitalization that is required for such
pro forma
financial information or any cost savings or synergies);
(v) using reasonable best efforts to cause their independent auditors to (A) provide,
consistent with customary practice, (x) customary auditors consents and customary comfort letters (including “negative assurance” comfort and change period comfort) with respect to financial information relating to the Business as reasonably
requested by Purchaser or as necessary or customary for a private placement of non-convertible debt securities pursuant to Rule 144A under the Securities Act and (y) reasonable assistance to Purchaser in connection with Purchaser’s
preparation of pro forma financial statements and information and (B) attend a reasonable number of accounting diligence sessions and drafting sessions;
(vi) executing and delivering as of (but not before) the Closing any pledge and guarantees and
security documents, other definitive financing documents, currency or interest rate hedging arrangements, or other certificates or documents (but excluding, for the avoidance of doubt, any legal opinions) as may be reasonably requested by
Purchaser and otherwise facilitating the pledging of collateral and the granting of guarantees and security interests in respect of the Debt Financing (including cooperation in connection with the pay-off of existing Indebtedness to the
extent contemplated by this Agreement and the release of related Liens and termination of related security interests);
(vii) reasonably assisting Purchaser in obtaining waivers, consents, estoppels and approvals
from other parties to material leases, encumbrances and Contracts relating to the Companies and to arrange discussions among Purchaser,
the Lenders and their respective Representatives with other parties to material leases, encumbrances and
Contracts as of the Closing; and
(viii) providing at least three (3) Business Days prior to the Closing Date all documentation
and other information reasonably requested that is required by applicable “know your customer” and anti-money laundering rules and regulations including the USA PATRIOT Act, to the extent requested at least ten (10) Business Days prior to the
anticipated Closing Date.
Notwithstanding anything to the contrary contained herein, nothing in this
Section 5.18(c)
shall require any such cooperation or assistance to the extent that it could result in Seller or any Company being required to (1) pledge any assets as
collateral other than by any Company at or after Closing, (2) agree to pay any commitment or other similar fee, bear any cost or expense that is not reimbursed by Purchaser, incur any other liability or give any indemnities to any third party
or otherwise commit to take any similar action in connection with the Debt Financing prior to the Closing, (3) take any actions to the extent such actions would, in Seller’s reasonable judgment, (A) unreasonably interfere with the ongoing
business or operations of Seller or the Companies or otherwise interfere with the prompt and timely discharge by Seller’s or any Company’s employees of their normal duties, (B) subject any director, manager, officer or employee of Seller or
any Company or their Affiliates to any actual or potential personal liability, (C) conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, the organizational documents of
Seller or any of its Affiliates, any applicable Law or Judgment or any Contract to which Seller or any Company is a party or by which any of their respective properties or assets is bound, (D) require any such entity to change any fiscal
period or (E) cause (x) any representation or warranty set forth in
Article II
(
Representations
and Warranties Relating to Seller, Intermediate Holdco and the Transferred Equity Interests
) or
Article III
(
Representations and Warranties Relating to the Companies
) of this Agreement to be inaccurate or breached, (y) any closing condition set forth in
Article VI
(
Conditions Precedent
) of this Agreement to fail to be satisfied or (z) any other breach of this
Agreement, (4) waive or amend any terms of this Agreement, (5) take any action under any certificate, document or instrument (other than customary representation letters and authorization letters (including with respect to the presence or
absence of material non-public information and the accuracy of the information contained in the disclosure and marketing materials related to the Debt Financing)) that is not contingent upon the occurrence of the Closing, (6) provide access
to or disclose information that Seller reasonably determines would jeopardize any attorney-client privilege of, or conflict with any confidentiality requirements applicable to, Seller, the Companies or their Affiliates (it being understood
that Seller shall, and shall cause the Companies to, use commercially reasonable efforts to provide such access or disclose such information in a manner that does not jeopardize such attorney-client privilege or conflict with such
confidentiality requirements) or (7) cause any director, manager or equivalent of Seller or any Company to pass resolutions to approve the Debt Financing or authorize the creation of any agreements, documents or actions in connection
therewith (other than any director, manager or equivalent of Seller or any Company who will continue in such a position
following the Closing and the passing of such resolutions), in each case that are not contingent on the
Closing or would be effective prior to the Closing.
(d) Purchaser shall be responsible for all fees and expenses related to the Financing
contemplated hereby. Accordingly, notwithstanding anything to the contrary in
Section 5.05
(
Expenses
), Purchaser shall, either at the Closing or promptly upon request by Seller following termination of this Agreement in accordance with
Section 7.01
(
Termination
), reimburse Seller and each of its Affiliates for all reasonable and documented out-of-pocket costs and expenses (including attorneys’
fees) incurred by Seller or any of its Affiliates in connection with the Financing. Purchaser shall indemnify and hold harmless Seller and each Company and their respective Affiliates and all of their respective directors, officers,
managers, employees and Representatives from and against any and all Losses suffered or incurred by them in connection with the arrangement of the Debt Financing and any information utilized in connection therewith (other than information
provided by Seller, any Company (prior to the Closing) and their respective Affiliates and all of their respective directors, officers, managers, employees and Representatives), except to the extent resulting from the bad faith, gross
negligence, willful misconduct or material breach of this Agreement by Seller, any Company and their respective Affiliates and all of their respective directors, officers, managers, employees and Representatives. Notwithstanding anything to
the contrary in this Agreement, no Company shall have any liability or obligation under any loan agreement or any related document or any other agreement or document related to the Financing or any alternative financing prior to the Closing
Date.
(e) Purchaser acknowledges and agrees that the Closing and the obligations of Purchaser to
consummate the transactions contemplated by this Agreement are not in any way contingent upon or otherwise subject to Purchaser’s consummation of any financing arrangement, Purchaser’s obtaining of any financing (including the Financing or
any alternative financing) or the availability, grant, provision or extension of any financing to Purchaser (including the Financing or any alternative financing).
(f) Each of Seller and the Companies hereby consents to the customary use of its and its
Subsidiaries’ logos in connection with the Financing;
provided
such logos shall be used solely in a manner that is not intended or reasonably likely to harm,
disparage or otherwise adversely affect the Business or the Companies or their reputation or goodwill.
(g) Seller shall, and shall cause the Companies to, use reasonable best efforts to periodically
update any Required Information provided to Purchaser as may be necessary so that such Required Information is (i) Compliant, (ii) meets the applicable requirements set forth in the definition of “Required Information” and (iii) would not,
after giving effect to such update(s), result in the Marketing Period to cease pursuant to the definition of “Marketing Period”. For the avoidance of doubt, Purchaser may, to most effectively access the financing markets, require the
cooperation of Seller and the Companies under
Section 5.18(c)
at any time, and from time to time and on multiple occasions, between the date hereof and the Closing
Date;
provided
that, for the avoidance of doubt, the Marketing Period shall not be applicable as to each attempt to access the markets.
SECTION 5.19
Notification
.
Seller shall give prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller, of (i) the breach or failure to be true and correct of any representation or warranty made by it contained in this Agreement, which breach or
failure to be true and correct would give rise to the failure of a condition in
Section 6.02(a)
(
Representations and Warranties
) or
Section 6.03(a)
(
Representations
and Warranties
), as applicable, or (ii) the failure by it to perform or comply with in any material respect any obligation or covenant to be performed or complied with by it under this Agreement;
provided
,
however
, that no such notification shall affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the parties under this Agreement;
provided
f
urther
,
however
, that any failure by a party to provide such notification shall not be deemed to result in a breach of any covenant or agreement of such party hereunder and
shall not be indemnifiable pursuant to
Section 8.01(a)(ii)
(
General
Indemnification by Seller
) or
Section 8.02(a)(ii)
(
General
Indemnification by Purchaser
), as applicable (it being understood that this proviso shall have no effect on whether the underlying facts, matters or circumstances otherwise result in a breach of a representation or warranty contained
in
Article II
(
Representations and Warranties Relating to Seller, Intermediate
Holdco and the Transferred Equity Interests
),
Article III
(
Representations
and Warranties Relating to the Companies
) or
Article IV
(
Representations
and Warranties of Purchaser
)). Notwithstanding anything in this Agreement to the contrary, Seller shall be deemed not to be in breach of
Section 5.24(a)
and
5.24(b)(i)-(ii)
and
(iv)
unless Seller has not delivered to Purchaser the
applicable Financial Statements on or prior to the date that is thirty (30) calendar days after the date specified for required delivery thereof set forth in
Section 5.24(a)
and
5.24(b)(i)-(ii)
and
(iv)
.
SECTION 5.20
Release
. Effective
as of Closing, each of Seller and Intermediate Holdco, on behalf of itself, its Affiliates and each of their respective successors, assigns, and past and present directors, managers, officers and employees, and their respective heirs,
successors and assigns (collectively, with Seller and Intermediate Holdco, the “
Releasors
”), hereby unconditionally and irrevocably waives, releases, discharges,
remises and acquits Purchaser and each of its Affiliates and each of their respective successors, assigns and past, present and future directors, managers, officers and employees, and each of their respective heirs, successors and assigns, in
each case in their capacity as such (collectively, the “
Releasees
”), jointly and individually, of and from any and all Proceedings and Liabilities arising on or
prior to Closing out of or in any matter related to or in any manner related to (i) the direct or indirect ownership of the capital stock or other Equity Interests of any Company, (ii) the termination of Seller’s and Intermediate Holdco’s
status as an equityholder of the Companies as a result of the consummation of each of the Transactions, (iii) actions taken by the Companies’ officers, directors, employees, agents, attorneys, accountants and representatives in connection
with the negotiation, authorization, approval and recommendation of the terms of the Transactions and (iv) any rights to revenue, stock, options, or warrants of, or dividends or other distributions in respect of capital stock or Equity
Interests of the Companies. Each of Seller and Intermediate Holdco, for itself and the other Releasors, hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, distributing or
causing to be commenced, any Proceeding of any kind against any Releasees, based on any of the foregoing. Each of Seller and Intermediate Holdco, on behalf of itself and its Affiliates, expressly waives, to the full extent that it may
lawfully waive, all rights pertaining to a general release of claims, and affirms that it is releasing all known or unknown claims that it has or may have against any of the Releasees in its capacity as a direct or indirect holder of any
shares of
capital stock or other Equity Interests of any Company. Notwithstanding anything to the contrary contained herein, nothing
in this
Section 5.20
or any other provision of this Agreement shall be deemed to waive, release, discharge or otherwise affect the rights or obligations
of any Person or preclude such Person from exercising, any of its rights under this Agreement or any other Transaction Agreement (including, for the avoidance of doubt, with respect to claims in regards to covenants or agreements contained in
this Agreement or any other Transaction Agreement that by their terms contemplate performance thereof following the Closing or otherwise expressly by their terms survive the Closing).
SECTION 5.21
Replacement of Credit Support
Obligations
. (a) With respect to any Credit Support Obligations set forth on
Section 5.21(a)
of the Seller Disclosure Letter pursuant to which
Seller or any of its Affiliates (other than the Companies) provide credit support to the Business or the Companies, Purchaser agrees to use commercially reasonable efforts to provide replacement guarantees, letters of credit, surety bonds or
other assurances of payment, and Purchaser and Seller shall reasonably cooperate to obtain any necessary release effective as of the Closing in form and substance reasonably satisfactory to Purchaser and Seller with respect to all such Credit
Support Obligations. If Purchaser has not obtained the complete and unconditional release of Seller and its Affiliates from any such Credit Support Obligation as of the Closing Date (each such Credit Support Obligation, until such time as
such Credit Support Obligation is so released, a “
Seller Continuing Credit Support Obligation
”), then (i) Purchaser shall continue to use its commercially reasonable
efforts to obtain promptly the complete and unconditional release of Seller and its Affiliates from each Seller Continuing Credit Support Obligation until the earlier of (A) the date that such release is obtained and (B) the date that is six
months following the date hereof and (ii) any demand or draw upon, or withdrawal from, any Seller Continuing Credit Support Obligation or any cash or other collateral required to be posted in connection with or in the place of any Seller
Continuing Credit Support Obligation and the carrying costs of any cash collateral, the fronting fee costs, and any other out-of-pocket costs and expenses resulting from a Seller Continuing Credit Support Obligation during such period (“
Assumed Credit Support Obligations
”) shall be deemed liabilities of Purchaser.
(b) With respect to any Credit Support Obligations set forth on
Section 5.21(b)
of the Seller Disclosure Letter pursuant to which the Companies provide credit support to the Seller Business, Seller agrees to use commercially reasonable efforts to provide
replacement guarantees, letters of credit, surety bonds or other assurances of payment, and Purchaser and Seller shall reasonably cooperate to obtain any necessary release effective as of the Closing in form and substance reasonably
satisfactory to Purchaser and Seller with respect to all such Credit Support Obligations. If Seller has not obtained the complete and unconditional release of the Companies and their Affiliates from any such Credit Support Obligation as of
the Closing Date (each such Credit Support Obligation, until such time as such Credit Support Obligation is so released, a “
Business Continuing Credit Support Obligation
”),
then (i) Seller shall continue to use its commercially reasonable efforts to obtain promptly the complete and unconditional release of the Companies from each Business Continuing Credit Support Obligation until the earlier of (A) the date
that such release is obtained and (B) the date that is six months following the date hereof and (ii) any demand or draw upon, or withdrawal from, any Business Continuing Credit Support Obligation or any cash or other collateral required to be
posted in connection with or in the place of any Business Continuing Credit Support
Obligation and the carrying costs of any cash collateral, the fronting fee costs, and any other
out-of-pocket costs and expenses resulting from a Business Continuing Credit Support Obligation (“
Retained Credit Support Obligations
”) shall be deemed
liabilities of Seller.
SECTION 5.22
Master Agreements
.
With respect to Master Agreements, Seller, Purchaser and their respective Affiliates will use commercially reasonable efforts to obtain prior to the Closing or, if not obtained by the Closing, will use commercially reasonable efforts to
obtain within six months following the Closing Date, from the counterparty to each Master Agreement any Consent that is required to divide and/or partially assign the respective rights and obligations under and in respect of any such Master
Agreement such that, effective as of the Closing (or such later time such Consent from the applicable counterparty is obtained) (i) Purchaser or an Affiliate of Purchaser (including a Company) is the beneficiary of the rights and is
responsible for the obligations related to the Purchaser Portion of such Master Agreement and (ii) Seller or an Affiliate of Seller (other than a Company) is the beneficiary of the rights and is responsible for the obligations related to the
Seller Portion of such Master Agreement. If Seller and Purchaser or their respective Affiliates are not able to enter into an arrangement to divide and/or partially assign the rights and obligations under and in respect of any Master
Agreement on or prior to the Closing, Seller and Purchaser shall, and shall cause their respective Affiliates to, use their commercially reasonable efforts to cooperate in any lawful, contractually permissible and commercially reasonable
arrangement, including a subcontracting or sublicensing arrangement, under which, following the Closing and until the earlier of (x) the end of the current term of such Master Agreement to the extent relating to the Business and (y) the date
on which the division and/or partial assignment of such Master Agreement as contemplated by this
Section 5.22
is effected, Purchaser or an Affiliate of Purchaser
(including a Company) shall receive the interests in the benefits (including, for the avoidance of doubt, any applicable right to enforce such Contract against the applicable counterparty thereto) and obligations of the Purchaser Portion
under such Master Agreement and Seller or an Affiliate of Seller (other than a Company) shall receive the interests in the benefits and the obligations of the Seller Portion under such Master Agreement.
SECTION 5.23
Pre-Closing Reorganization
.
At or prior to the Closing, Seller shall cause (and, if requested by Seller, Purchaser shall use commercially reasonable efforts to cooperate with Seller in causing) the actions and transactions set forth in the reorganization plan attached
hereto as
Exhibit E
(the “
Reorganization Plan
” and such transactions, the “
Pre-Closing Reorganization
”) to occur. The agreements and instruments to effectuate the Pre-Closing Reorganization shall be in form and substance reasonably acceptable
to Purchaser. Seller shall, and shall cause its Affiliates to, comply with the terms applicable to Seller and its Affiliates set forth in the Reorganization Plan. From and after the Closing, Purchaser shall, and shall cause its Affiliates
to, comply with the terms applicable to Purchaser and its Affiliates set forth in the Reorganization Plan.
SECTION 5.24
Certain Financial Statements
.
Seller shall deliver to Purchaser: (a) (i) the 2016 Audited Financial Statements, the 2017 Audited Financial Statements and the 2018 Audited Financial Statements, along with the relevant independent accountants’ reports, on or prior to the
date that is 90 calendar days after the date of this Agreement and (ii) the Q1 2019 Unaudited Financial Statements on or prior to the later of (x) the date that is 60
calendar days after the date of this Agreement and (y) the date on which Seller actually delivers the audited financial
statements referred to in the foregoing clause (a)(i) (
provided
, that if Seller avails itself of the foregoing clause (y), the cure period set forth in
Section 5.19
shall not apply to this
Section 5.24(a)(ii)
); and (b) if
the Closing has not occurred by (i) August 14, 2019, the Q2 2019 Unaudited Financial Statements on or prior to such date (
provided
that Seller shall not be
required to deliver the Q2 2019 Unaudited Financial Statements prior to the date on which Seller actually delivers the audited financial statements referred to in the foregoing clause (a)(i);
provided
,
further
that if Seller avails itself of the foregoing proviso, the cure period set forth in
Section 5.19
shall not apply to this
Section 5.24(b)(i)
), (ii) November
14, 2019, the Q3 2019 Unaudited Financial Statements on or prior to such date, (iii) March 30, 2020, the 2019 Audited Financial Statements, along with the related independent accountants’ report, on or prior to such date and (iv) May 14,
2020, the Q1 2020 Unaudited Financial Statements on or prior to such date.
SECTION 5.25
Purchaser Expenditure;
Distributions
. Except as would not reasonably be expected to have a Purchaser Material Adverse Effect, from the date of this Agreement until the earlier of the termination of this Agreement and the Closing, Purchaser shall not
expend funds other than in connection with the Transactions and the payment of related expenses and shall not declare or pay any dividend or make any other distribution to its equityholders.
SECTION 5.26
Other Investors
.
Except as would not reasonably be expected to have a Purchaser Material Adverse Effect, prior to the earlier of the termination of this Agreement and the Closing, without the prior written consent of Seller, Purchaser shall not permit or
agree to permit any Person to obtain any shares of capital stock or other Equity Interests (or rights to obtain any Equity Interests) in Purchaser.
SECTION 5.27
Connect America Fund
.
(a) Purchaser and Seller acknowledge and agree that notwithstanding anything in this Agreement to the contrary, (i) effective as of the Closing, Purchaser shall assume all remaining buildout benchmarks and obligations, existing service
obligations and other commitments of Seller and its Subsidiaries in respect of the Territory (the “
CAF II Obligations
”) that are associated with the model-based
Phase II Connect America support in respect of the Territory referenced in the Public Notice and accepted by Seller in the letter dated as of June 15, 2015, from Seller to the FCC, and (ii) from and after the Closing, Purchaser shall be
entitled to receive any associated support payments from the FCC (any such payments, “
CAF II Support Payments
”);
provided
that if the Closing occurs in 2020, the monthly CAF II Support Payment in respect of the calendar month in which the Closing occurs shall be allocated such that (A) Seller shall receive an amount equal to
the total CAF II Support Payment due for such month, multiplied by a fraction, the numerator of which is the number of calendar days elapsed from and including the first day of such month through and including the day prior to the Closing
Date, and the denominator of which is the total number of calendar days in such month, and (B) Purchaser shall receive an amount equal to the total CAF II Support Payment due for such month, multiplied by a fraction, the numerator of which is
the number of calendar days elapsed from and including the Closing Date through and including the last day of such month, and the denominator of which is the total number of calendar days in such month.
(b) From and after the Closing, Purchaser shall, and shall cause its Affiliates to (including, after the
Closing, the Companies), use reasonable best efforts to satisfy all CAF II Obligations in accordance with the Communications Act. Purchaser acknowledges that any failure to so satisfy any CAF II Obligations may result in penalties (including
an obligation to repay amounts previously received as CAF II Support Payments) and/or enforcement actions (“
CAF II Penalties
”) against Seller, Intermediate Holdco or
their respective Affiliates or a Company or its Affiliates by the FCC or another Governmental Entity and any Losses suffered by Seller, Intermediate Holdco or any of their respective Affiliates or Purchaser or any of its Affiliates (including,
after the Closing, any Company) to the extent arising or resulting from CAF II Penalties shall be Assumed Liabilities (as defined in the Reorganization Plan).
SECTION 5.28
Pre-Closing Transitional
Activities
.
(a) From the date of this Agreement to the Closing, each of Seller and Purchaser shall (and
shall cause their respective Affiliates to) take the actions set forth on
Section 5.28(a)
of the Seller Disclosure Letter.
(b) From the date of this Agreement to the Closing, Seller shall (and shall cause its
Affiliates, including the Companies to) take such actions as are necessary to effect the transactions set forth on
Section 5.28(b)
of the Seller Disclosure Letter
(the “
Systems Standup
”) as promptly as reasonably practicable after the date of this Agreement and prior to the Closing.
(c) The costs and expenses incurred in connection with the actions contemplated by this
Section 5.28
shall be borne by the parties in the manner set forth on
Section 5.28(c)
of
the Seller Disclosure Letter.
(d) Promptly, and in any event within ten (10) Business Days after the date hereof, Seller
shall deliver to Purchaser, substantially in the form of the template set forth in
Section 5.28(d)
of the Seller Disclosure Letter, to the best of its ability as of such time, an initial draft (the “
Initial Draft
”) of (i) a list of licenses and other Contracts required in connection with the Systems Standup and an indication of which such licenses or Contracts may be assigned by Seller to
a Company and which such licenses or Contracts require the consent of the applicable counterparty in connection with such assignment and (ii) a list of licenses and other Contracts required in connection with the provision by Seller of the
services contemplated by the Transition Services Agreement and an indication of which such licenses or Contracts may be assigned by Seller to a Company and which such licenses or Contracts require the consent of the applicable counterparty in
connection with such assignment (clauses (i) and (ii), the “
Required Technical Information
”). Following delivery of the Initial Draft, Seller shall (x) until
delivery of the final version of the Required Technical Information contemplated by the following clause (y), provide updates it determines are necessary to the Required Technical Information contained in the Initial Draft at reasonable
intervals, and (y) no later than ninety (90) calendar days following the date hereof, Seller shall deliver to Purchaser, substantially in the form of the template set forth in
Section 5.28(d)
of the Seller Disclosure Letter, the final
version of the Required Technical Information.
(e) From the date of this Agreement to the Closing, to the extent it would not unreasonably
interfere with the ongoing business or operations of Seller and its Affiliates and to the extent permitted by applicable Law, Seller shall permit Purchaser, at Purchaser’s sole cost and expense and solely for integration, transition planning
and knowledge-transfer purposes, (i) to embed reasonably agreed upon employees, consultants or other service providers of Purchaser (including management-level and technical employees) with the employees, consultants or other service
providers of Seller and its Affiliates who are contemplated to provide services pursuant to the Transition Services Agreement or are otherwise assisting with the Systems Standup and other transition work streams (collectively, the “
Transition Team Members
”), it being understood that such embedding shall not be limited to mere observation and such embedding will include access to, and participation
with, the applicable Transition Team Members and the ongoing processes that such Transition Team Members are working on and (ii) to reasonably consult with Seller’s OSP team with respect to Purchaser’s design of, and plan for, Purchaser’s
fiber build-out plan.
(f) From the date of this Agreement to the Closing, to the extent permitted by applicable Law
and to the extent reasonably practicable, Seller will consult with Purchaser regarding, and permit Purchaser to reasonably participate in, staffing decisions with respect to the Business, including with respect to filling open positions.
SECTION 5.29
Restrictive Covenants
.
(a) Seller shall not (and shall cause its Affiliates to not), for a period of three years after
the Closing (the “
Restricted Period
”), own, manage, participate or engage, directly or indirectly (whether as principal, agent, distributor, representative,
stockholder or otherwise), in, any facilities-based operations that directly compete with the Business in the Territory (any such business, a “
Competitive Business
”).
Notwithstanding the foregoing, the restrictions contained in this
Section 5.29(a)
shall not prohibit or restrict Seller or any of its Affiliates from (i) engaging
in any transaction or series of related transactions with any Person or business that results in Seller acquiring, or being acquired by, such other Person or business, or any other combination of Seller with such other Person or business (in
each case, whether by way of merger, consolidation or otherwise);
provided
that, at the time of entering such transaction, no more than fifty percent (50%) of the
gross revenues of such other Person (and its Affiliates) or business are derived from a Competitive Business; (ii) selling all or substantially all of the assets of Seller and its Subsidiaries (taken as a whole); (iii) acquiring or investing
in any equity interest in any Person by any bona fide employee benefit plan of Seller or its Affiliates; or (iv) performing any of its obligations under any of the Transaction Agreements.
(b) During the Restricted Period, Seller shall not (and shall cause its Affiliates not to),
whether directly or indirectly, whether for itself or for or on behalf of any of its Affiliates, solicit (or permit to be directly or indirectly solicited) or employ or otherwise seek to employ any Transferred Employee, in each case, whether
as an employee or consultant;
provided
,
however
, that the foregoing restrictions on
solicitation shall not preclude (i) any generalized searches by use of advertising or recruiting efforts (including the use of search firms) which are not specifically targeted at Purchaser or any of its
Affiliates or a Transferred Employee (including any Company after the Closing) and that are not
specifically targeted at employees in the Territory (it being understood that a solicitation that targets states both within the Territory and outside of the Territory shall not be prohibited by this
Section 5.29(b))
or (ii) the hiring of any Transferred Employee who (A) was terminated without cause by Purchaser or any of its Affiliates (including the Companies) at least six (6)
months prior to commencement of employment discussions between Seller or its Affiliates and such Person or (B) responds to any generalized search or recruiting efforts described in clause (i) above.
(c) During the Restricted Period, Purchaser shall not (and shall cause its Affiliates not to),
whether directly or indirectly, whether for itself or for or on behalf of any of its Affiliates, solicit (or permit to be directly or indirectly solicited) or employ or otherwise seek to employ any Transition Team Member or other Retained
Employee, in each case, whether as an employee or consultant;
provided
,
however
, that
the foregoing restrictions on solicitation shall not preclude (i) any generalized searches by use of advertising or recruiting efforts (including the use of search firms) which are not specifically targeted at Seller or any of its Affiliates
(including, prior to the Closing, the Companies) or (ii) the hiring of any Transition Team Member or other Retained Employee who (A) was terminated without cause by Seller or any of its Affiliates (including, prior to the Closing, the
Companies) at least six (6) months prior to commencement of employment discussions between Purchaser or its Affiliates and such Person or (B) responds to any generalized search or recruiting efforts described in clause (i) above.
(d) The parties hereto acknowledge that the restrictions contained in this
Section 5.29
are reasonable in scope and duration, and it is the desire and intent of the parties hereto that the provisions of this
Section 5.29
be enforced to the fullest extent permissible under applicable Law. If any provision of this
Section 5.29
is held to be excessively broad as to duration, scope, activity or subject, such provision will be construed by limiting and reducing it so as to be enforceable to the maximum extent permissible under applicable Law.
SECTION 5.30
Wrong Pocket
. If
and to the extent that it is determined at any time after Closing that (x) legal title to or beneficial or other interest in all or part of any of the Excluded Assets (as defined in the Reorganization Plan) has been transferred to Purchaser
or its Subsidiaries (including the Companies), or (y) legal title to or beneficial or other interest in and all or part of any Transferred Asset has not been transferred to Purchaser or its Subsidiaries (including the Companies), including
any Restricted Asset (as defined in the Reorganization Plan) (each of (x) and (y), a “
Misplaced Asset
”), Purchaser or Seller, as applicable, shall (and shall cause
their respective Affiliates, as applicable, to) promptly upon the request of the other party: (a) execute all such agreements, deeds or other documents as may be necessary for the purposes of transferring, assigning and conveying such
Misplaced Assets (or part thereof) or the relevant interests in them to the other party of nominal consideration, (b) obtain all Consents from Persons necessary or appropriate for the purposes of transferring, assigning, and conveying such
Misplaced Assets (or part thereof) or the relevant interests in them to the other party, (c) complete all such further acts or things as the other party may reasonably direct in order to transfer, assign, and convey such Misplaced Assets (or
parts thereof) or the relevant interests in them to the other party and (d) hold such Misplaced Assets (or part thereof), or relevant interest
in such Misplaced Assets, in trust for the other party (to the extent permitted by applicable Law) until such time as the
transfer is validly effected to vest the asset (or part thereof) or relevant interest in the Misplaced Asset to the other party. Seller shall retain and continue to fully satisfy in the ordinary course of business consistent with past
practice all Excluded Liabilities. Pending the earlier of the transfer pursuant to this
Section 5.30
and three years from the Closing Date, Seller and
Purchaser shall, and shall cause their respective Affiliates to, use their reasonable best efforts to cooperate (each at its own expense) in any lawful, contractually permissible and commercially reasonable arrangement designed to (i) provide
to Purchaser all economic benefits and burdens of any Misplaced Assets (whether tangible or intangible) constituting Transferred Assets that have not been transferred to Purchaser or its Subsidiaries (including the Companies) and (ii) provide
to Seller all economic benefits and burdens of any of the Misplaced Assets (whether tangible or intangible) constituting Excluded Assets that have been transferred to Purchaser or its Subsidiaries (including the Companies). During such time
period, each party and its Affiliates shall comply with all applicable covenants and obligations with respect to any such Misplaced Assets held by it, including the payment of any costs and expenses in connection therewith, which shall be
performed by such party or its applicable Affiliate for the other party’s account and such other party shall promptly reimburse such party for any such out-of-pocket costs, expenses or payments. In addition and without limiting the
foregoing, if following the Closing, Purchaser and its Affiliates (including the Companies), on the one hand, and the Seller Group, on the other hand, shall receive or otherwise possess any asset or be liable for any Liability that is
allocated to the other group of Persons pursuant to the Reorganization Plan, Purchaser and its Affiliates and the Seller Group, as applicable, shall promptly transfer or assign, or cause to be transferred or assigned, for no additional
consideration, such asset or Liability to the group of Persons so entitled thereto or responsible therefor, and such group shall accept such asset or assume such Liability. Prior to any such transfer, the group of Persons possessing any such
asset shall hold such asset in trust for such other group of Persons.
SECTION 5.31
Pre-Closing Capital
Expenditure Requests
. Following the date hereof and prior to the Closing, and solely to the extent permitted by applicable Law, as soon as reasonably practicable following any reasonable written request from Purchaser, Seller
shall (or shall cause one of its Affiliates to) make such capital expenditures within the Territory that are reasonably requested by Purchaser to the extent not unreasonably disruptive of the business of Seller and its Affiliates;
provided
that Seller shall not be required to make any such capital expenditures unless such capital expenditures have been fully funded by Purchaser at or prior to the
time of such expenditure. For the avoidance of doubt, under no circumstances will Seller have any obligation to reimburse Purchaser for any amounts paid by Purchaser pursuant to this
Section 5.31
, regardless of whether the Closing occurs.
SECTION 5.32
Pre-Closing Reports
.
Following the date hereof and prior to the Closing, Seller shall deliver to Purchaser (a) in each case solely to the extent such reports, memoranda or other materials are otherwise prepared by Seller or any of its Affiliates in the ordinary
course of business, copies of any material management reports, memoranda or similar materials regarding the Business promptly following the preparation of any such report, memorandum or similar material, (b) promptly following the end of each
fiscal quarter of Seller, a report setting forth the subscribers of the Business as of the end of such quarter (each, a “
Quarterly Subscriber Report
”) and (c)
promptly following the end of each calendar month that
is not a fiscal quarter end, a report setting forth the subscribers of the Business as of the end of such month.
SECTION 5.33
Transition Services Agreement
.
From and after the date hereof, each of Seller and Purchaser shall (and shall cause their respective Affiliates to) comply with the provisions applicable to such parties set forth in
Exhibit B
attached hereto (the “
Transition Services Agreement
”).
SECTION 5.34
Privileged Matters
.
(a) Each party hereto acknowledges that: (i) each party and its Affiliates has or may obtain
Privileged Information; (ii) there are or may be a number of Shared Proceedings affecting both of Purchaser and Seller; (iii) both Purchaser and Seller have a common legal interest in Shared Proceedings, in the Privileged Information and in
the preservation of the confidential status of the Privileged Information, in each case relating to the Business; and (iv) both Purchaser and Seller intend that the transactions contemplated hereby and by the other Transaction Agreements and
any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.
(b) Following the Closing, each of Purchaser and Seller agrees, on behalf of itself and each of
its Subsidiaries, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the Business without providing prompt written notice to and obtaining the prior written consent of the other, which consent
shall not be unreasonably withheld, conditioned or delayed and shall not be withheld, conditioned or delayed if the other party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar
action;
provided
,
however
, that Purchaser shall not be required to give any such
notice or obtain any such consent and may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates solely to the Business (unless such information relates to matters for which Seller may
have indemnification obligations under this Agreement or any other Transaction Agreement). In the event of a disagreement concerning the reasonableness of withholding such consent, no disclosure shall be made prior to a resolution of such
disagreement by a court of competent jurisdiction, provided that the limitations in this sentence shall not apply in the case of disclosure required by Law and so certified as provided in the first sentence of this paragraph.
(c) After the Closing, upon receipt of any subpoena or other compulsory disclosure notice from
a Governmental Entity or otherwise which requests disclosure of Privileged Information relating to the Business, to the extent not prohibited by Law, Seller or Purchaser (in the case of information relating to matters for which Seller may
have indemnification obligations under this Agreement or any other Transaction Agreement, or in the case of Privileged Information not solely related to the Business and in which Seller may have an interest), as applicable, shall as promptly
as practicable provide to the other party (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information that might be disclosed and the proposed date of disclosure. In the
event of a disagreement as to the intended
response or disclosure, unless and until the disagreement is resolved as provided in
Section 5.33(b)
, the disclosing party shall, at the other party’s expense, cooperate to the extent such other party seeks to limit such disclosure and take all
reasonable steps to resist or avoid such disclosure, except as otherwise required by a court order requiring such disclosure.
(d) Nothing in this
Section
5.33
shall limit a party’s ability to assert its rights under the Transaction Agreements in the event of any dispute between the parties.
(e) Without limiting the foregoing, within 30 days following the date hereof, Seller and
Purchaser shall negotiate in good faith the terms of, and enter into, a joint defense agreement regarding certain matters of common interest (including with respect any Shared Proceedings) arising from the transactions contemplated by the
Transaction Agreements;
provided
, that such joint defense agreement shall not supersede the allocation of liabilities relating to such Proceedings set forth in this
Agreement.
SECTION 5.35
Inventory
. Seller
shall cause the Companies to have, as of the Closing, an amount of transactional inventory, including set-top boxes, optical network terminals, modems and cabling necessary for installations, equal to at least a thirty (30) day supply of such
transactional inventory used in the operation of the Business in the ordinary course of business consistent with past practice.
ARTICLE VI
Conditions Precedent
SECTION 6.01
Conditions to Each Party’s
Obligation
. The obligation of each of Purchaser and Seller to consummate the Closing is subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by both Purchaser and Seller) on or prior to the
Closing Date of the following conditions:
(a)
No Restraints
.
No applicable Law, Judgment or injunction (whether temporary, preliminary or permanent) enacted, entered, promulgated, enforced or issued by any Governmental Entity in the United States (collectively, “
Restraints
”) enjoining, restraining, prohibiting or otherwise making illegal the consummation of the Transactions shall be in effect.
(b)
Regulatory Approvals
.
The Required Regulatory Approvals shall have been obtained and shall be in full force and effect, in each case without the imposition of any Burdensome Condition (whether temporary, preliminary or permanent).
SECTION 6.02
Conditions to Obligation of
Purchaser
. The obligation of Purchaser to consummate the Closing is subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by Purchaser) on or prior to the Closing Date of the following conditions:
(a)
Representations and
Warranties
. The representations and warranties of Seller in this Agreement (other than the Seller Fundamental Representations), without giving effect to any materiality, Seller Material Adverse Effect or Material Adverse
Effect qualifications set forth therein, shall be true and correct, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to a specified date (in which case such
representations and warranties shall be true and correct on and as of such specified date), in each case except for breaches as to matters that, individually or in the aggregate, would not reasonably be expected to have a Seller Material
Adverse Effect or a Material Adverse Effect. The Seller Fundamental Representations (other than the representation and warranty set forth in the first sentence of
Section 2.04
(
The Transferred Equity Interests
)), without giving effect to any materiality, Seller Material Adverse Effect or Material Adverse Effect qualifications
set forth therein, shall be true and correct in all material respects as of the Closing Date as though made on the Closing Date, except to the extent such Seller Fundamental Representations expressly relate to a specified date (in which case
such Seller Fundamental Representations shall be true and correct in all material respects on and as of such specified date). The representation and warranty set forth in the first sentence of
Section 2.04
(
The Transferred Equity Interests
) shall be true and correct in all respects, other than
de minimis
inaccuracies, as of the date of this Agreement and as of the Closing Date as though made on the Closing Date.
(b)
Performance of
Obligations of Seller
. Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing.
(c)
Seller Certificate
.
Purchaser shall have received a certificate, dated as of the Closing Date and signed on behalf of Seller by an executive officer of Seller, stating that the conditions set forth in
Section 6.02(a)
(
Representations and Warranties
),
Section 6.02(b)
(
Performance of Obligations of Seller
) and
Section 6.02(e)
(
Material Adverse Effect
) have been satisfied.
(d)
Pre-Closing
Reorganization
. The Pre-Closing Reorganization shall have been consummated.
(e)
Material Adverse Effect
.
Since the date of this Agreement, there shall not have occurred any event, change, development, circumstance or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(f)
Closing Deliveries by
Seller
. Purchaser shall have received each of the items specified to be delivered by Seller and Intermediate Holdco in
Section 1.03
(
Transactions to be Effected at the Closing
).
(g)
Systems Standup
.
The Systems Standup shall have been effected, and the Companies shall have operated the Business on the underlying systems for at least sixty (60) calendar days prior to the Closing Date without any material deficiencies or interruptions,
subject to reasonable inspection and verification by Purchaser.
(h)
Outside Date
.
The Closing shall have occurred on or prior to the Outside Date;
provided
,
however
,
that Purchaser shall not be entitled to assert the condition set forth in this
Section 6.02(h)
if Purchaser’s failure (or its Affiliate’s failure) to perform any
material covenant or obligation under this Agreement has been the primary cause of or has resulted in the failure of the Closing to occur on or prior to the Outside Date.
SECTION 6.03
Conditions to Obligation of
Seller
. The obligation of Seller to consummate the Closing is subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by Seller) on or prior to the Closing Date of the following conditions:
(a)
Representations and
Warranties
. The representations and warranties of Purchaser in this Agreement (other than the Purchaser Fundamental Representations), without giving effect to any materiality or Purchaser Material Adverse Effect qualifications
set forth therein, shall be true and correct, as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to a specified date (in which case such representations and
warranties shall be true and correct on and as of such specified date), in each case except for breaches as to matters that, in the aggregate, would not reasonably be expected to have a Purchaser Material Adverse Effect. The Purchaser
Fundamental Representations, without giving effect to any materiality or Purchaser Material Adverse Effect qualifications set forth therein, shall be true and correct in all material respects as of the Closing Date as though made on the
Closing Date, except to the extent such Purchaser Fundamental Representations expressly relate to a specified date (in which case such Purchaser Fundamental Representations shall be true and correct in all material respects on and as of such
specified date).
(b)
Performance of
Obligations of Purchaser
. Purchaser shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser by the time of the
Closing.
(c)
Purchaser Certificate
.
Seller shall have received a certificate, dated as of the Closing Date and signed on behalf of Purchaser by an authorized representative of Purchaser, stating that the conditions set forth in
Section 6.03(a)
(
Representations and Warranties
) and
Section 6.03(b)
(
Performance of Obligations of Purchaser
) have been satisfied.
(d)
Closing Deliveries by
Purchaser
. Seller shall have received each of the items specified to be delivered by Purchaser in
Section 1.03
(
Transactions to be Effected at the Closing
).
(e)
Outside Date
.
The Closing shall have occurred on or prior to the Outside Date;
provided
,
however
,
that Seller shall not be entitled to assert the condition set forth in this
Section 6.03(e)
if Seller’s failure (or its Affiliate’s failure) to perform any material
covenant or obligation under this Agreement has been the primary cause of or has resulted in the failure of the Closing to occur on or prior to the Outside Date.
ARTICLE VII
Termination
SECTION 7.01
Termination
. (a)
Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Transactions abandoned at any time prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller, upon written notice to Purchaser, if there shall have been a breach by
Purchaser of any of its representations, warranties, covenants or obligations contained herein, which breach (A) would result in the failure to satisfy any condition set forth in
Section 6.03(a)
(
Representations and Warranties
) or
Section 6.03(b)
(
Performance of Obligations of Purchaser
) and (B) shall be incapable of being cured by the Outside Date, or if capable of being cured by the Outside Date,
Purchaser shall not have cured such breach within the earlier of the Outside Date and 30 calendar days following receipt by Purchaser of written notice of such breach from Seller stating Seller’s intention to terminate this Agreement pursuant
to this
Section 7.01(a)(ii)
and the basis for such termination;
provided
,
however
, that Seller shall not have the right to terminate this Agreement pursuant to this
Section 7.01(a)(ii)
if Seller is in breach of any of its representations, warranties, covenants or agreements set forth herein, which breach would result in the failure to satisfy any condition set forth in
Section 6.02(a)
(
Representations and Warranties
) or
Section 6.02(b)
(
Performance of Obligations of Seller
);
(iii) by Purchaser, upon written notice to Seller, if there shall have been a breach by Seller
of any of its representations, warranties, covenants or obligations contained herein, which breach (A) would result in the failure to satisfy any condition set forth in
Section 6.02(a)
(
Representations and Warranties
) or
Section 6.02(b)
(
Performance of Obligations of Seller
) and (B) shall be incapable of being cured by the Outside Date, or if capable of being cured by the Outside Date,
Seller shall not have cured such breach within the earlier of the Outside Date and 30 calendar days following receipt by Seller of written notice of such breach from Purchaser stating Purchaser’s intention to terminate this Agreement pursuant
to this
Section 7.01(a)(iii)
and the basis for such termination;
provided
,
however
, that Purchaser shall not have the right to terminate this Agreement pursuant to this
Section 7.01(a)(iii)
if Purchaser is in breach of any of its representations, warranties, covenants or agreements set forth herein, which breach would result in the failure to satisfy any condition set forth in
Section 6.03(a)
(
Representations and Warranties
) or
Section 6.03(b)
(
Performance of Obligations of Purchaser
); or
(iv) by Seller or Purchaser, by written notice to the other, if:
(A) the Closing shall not have occurred on or prior to May 28, 2020 (the “
Outside Date
”);
provided
,
however
,
that the right to terminate this Agreement pursuant to this
Section 7.01(a)(iv)(A)
shall not be available to any party whose failure (or whose Affiliate’s failure)
to perform any material covenant or obligation under this Agreement has been the primary cause of or has resulted in the failure of the Closing to occur on or prior to the Outside Date; or
(B) any Restraint having the effect set forth in
Section 6.01(a)
(
No Restraints
) shall be in effect and shall have become final and nonappealable;
provided
,
however
, that the party seeking to terminate this Agreement pursuant to this
Section 7.01(a)(iv)(B)
shall have used the required efforts to prevent the entry of and remove such Restraint in accordance with its obligations hereunder.
(v) by Seller, if (A) the conditions set forth in
Section 6.01
(
Conditions to Each Party’s Obligation
) and
Section 6.02
(
Conditions to Obligation of Purchaser
) have been satisfied or waived (other than those conditions which by their
terms are to be satisfied at the Closing, but each of which is capable of being satisfied in full on such date), (B) Seller has irrevocably confirmed by notice to Purchaser that all conditions set forth in
Section 6.03
(
Conditions to Obligation of Seller
) have been satisfied (other than those conditions
which by their terms are to be satisfied at the Closing) or that it is willing to waive any unsatisfied conditions in
Section 6.03
(
Conditions to Obligation of Seller
) and (C) the Closing shall not have been consummated by Purchaser in accordance with
Section 1.02
(
Closing Date
).
(b) In the event of termination by Seller or Purchaser pursuant to this
Section 7.01
, written notice thereof shall promptly be given to the other party and this Agreement shall be terminated and the Transactions shall be abandoned, without
further action by any party. If this Agreement and the Transactions are terminated and abandoned as provided herein:
(i) Purchaser shall return to Seller or destroy (with confirmation to Purchaser in writing of
such destruction) all documents and other materials received by it or any of its Affiliates or any of their respective officers, directors, employees, stockholders, agents or representatives from Seller or any of its Affiliates or any of
their respective officers, directors, employees, shareholders, agents or representatives relating to the Transactions, whether obtained before or after the execution of this Agreement, in accordance with the Confidentiality Agreement;
(ii) all confidential information received by Purchaser or any of its Affiliates or any of
their respective officers, directors, employees, shareholders, agents or representatives with respect to the Business and the Companies shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and
effect notwithstanding the termination of this Agreement; and
(iii) Seller shall return to Purchaser or destroy all documents and other materials received by
it or any of its Affiliates or any of their respective officers, directors, employees, stockholders, agents or representatives from Purchaser or any of its Affiliates or any of their respective officers, directors, employees, shareholders,
agents or representatives relating to the Transactions, whether obtained before or after the execution of this Agreement, and Seller shall keep, and cause its Affiliates to keep, all information received by Seller or any of its Affiliates
from Purchaser or any of its Affiliates or any of their respective officers, directors, employees, shareholders, agents or representatives relating to the Transactions, whether obtained before or after the execution of this Agreement,
strictly confidential in accordance with the rules set forth in
Section 5.16
(
Confidentiality
),
applied
mutatis mutandis
.
SECTION 7.02
Effect of Termination
.
(a) If this Agreement is terminated and the Transactions are abandoned as described in
Section 7.01
(
Termination
), this Agreement shall become null and void and of no further force and effect, except for the following provisions which shall survive such termination:
(i)
Section 5.03
(
Confidentiality
) (relating to the obligation of Purchaser to keep confidential certain information obtained by it);
(ii)
Section 5.05
(
Expenses
) (relating to certain expenses);
(iii)
Section 5.09
(
Publicity
) (relating to publicity);
(iv)
Section 5.18(d)
(
Financing
) (relating to expense reimbursement and indemnification);
(v)
Article VII
(
Termination
) (relating to termination); and
(vi)
Article IX
(
General Provisions
) (relating to general matters).
(b) Subject to
Section 7.03
(
Termination Fee
), which Termination Fee (to the extent such fee is payable hereunder) shall be the sole and exclusive remedy to Seller in the case of
the termination of this Agreement, nothing in this
Section 7.02
shall be deemed to release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement in accordance with (and subject to the limitations set forth in)
Section 9.05
(
Right to Specific Performance
).
SECTION 7.03
Termination Fee
.
(a) In the event that Seller shall terminate this Agreement pursuant to
Section 7.01(a)(v)
(
Termination
), or Purchaser shall terminate this Agreement pursuant to
Section 7.01(a)(iv)(A)
(
Termination
) and at such time Seller could have terminated this Agreement pursuant to
Section 7.01(a)(v)
(
Termination
), then Purchaser shall pay or cause to be paid to Seller a termination fee of $86,125,000 in cash (the “
Termination Fee
”) by wire transfer of immediately available funds within three Business Days of such termination so long as Seller has provided Purchaser with wire instructions for such
payment (or, otherwise, within one Business Day following receipt of such wire instructions), it being understood that in
no event shall Purchaser be required to pay or cause to be paid the Termination Fee on more than one occasion.
(b) Each party hereto acknowledges that the agreements contained in this
Section 7.03
are an integral part of the Transactions, and that without these agreements, the other party hereto would not enter into this Agreement. Accordingly, if
Purchaser fails to timely pay or cause to be paid any amount due pursuant to this
Section 7.03
, and, in order to obtain the payment, Seller commences a Proceeding
which results in a Judgment against Purchaser for the payment set forth in this
Section 7.03
, Purchaser shall pay or cause to be paid to Seller interest on the
Termination Fee, from the date such payment was required to be made until the date of payment, at the prime rate as published in
The Wall Street Journal
in effect on the date such payment was required to be made.
(c) Notwithstanding anything in this Agreement to the contrary, but subject in all respects to
Seller’s injunction, specific performance and equitable relief rights and related rights set forth in
Section 9.05
(
Right to Specific Performance
) and the reimbursement and indemnification obligations of Purchaser under
Section 5.18
(
Financing
) and
Section 7.03(b)
hereof, in the event that this Agreement
is terminated, payment of the Termination Fee (to the extent such fee is payable pursuant to
Section 7.03(a)
) shall be the sole and exclusive remedy of Seller and
its Affiliates against Purchaser, Guarantor or any of their respective former, current or future general or limited partners, shareholders, managers, members, directors, officers or Affiliates (collectively, the “
Purchaser Related Parties
”) or the Lender Related Parties for any loss, cost, expense or other Liability suffered or incurred as a result of the failure of the Transactions to be consummated or
for any breach or failure to perform hereunder or otherwise relating to or arising out of this Agreement or the Transactions, and upon payment of such amount none of the Purchaser Related Parties or the Lender Related Parties shall have any
further liability or obligation relating to or arising out of this Agreement or the Transactions. While Seller may pursue both a grant of specific performance in accordance with (and subject to the limitations set forth in)
Section 9.05
(
Right to Specific Performance
) and the payment of the Termination
Fee under this
Section 7.03
, under no circumstances shall Seller be permitted or entitled to receive both a grant of specific performance that results in a Closing
and any monetary damages, including all or any portion of the Termination Fee. Notwithstanding anything in this Agreement to the contrary, the parties hereto further acknowledge and agree that, prior to the Closing (and excluding, for the
avoidance of doubt, any amounts payable at the Closing in accordance herewith), the aggregate liability of Purchaser and its Affiliates under, or related to, this Agreement whether or not this Agreement is terminated, and regardless of the
reason for any such termination, shall not exceed an amount equal to the amount of the Termination Fee plus $2,500,000.
ARTICLE VIII
Indemnification
SECTION 8.01
General Indemnification by
Seller
. (a) Subject to the terms (including the limitations) set forth in this
Article VIII
, from and after the Closing, Seller and Intermediate
Holdco shall (without duplication with respect to any other payment made pursuant to this Agreement), jointly and severally, indemnify Purchaser against, and hold it harmless from, any loss, liability, claim, damage, Tax or expense, including
reasonable and documented third-party legal fees and expenses (collectively, “
Losses
”) suffered or incurred by Purchaser, its Affiliates (including the Companies)
and each of their respective officers, directors, employees, stockholders, partners, members, agents and representatives (collectively, the “
Purchaser Indemnitees
”)
(other than any Loss relating to Taxes, for which indemnification is provided under
Section 8.03
(
Tax Indemnification
)) to the extent arising out of, relating to or resulting from:
(i) any breach of any representation or warranty made by Seller or Intermediate Holdco in this
Agreement;
(ii) any breach of any covenant or agreement contained in this Agreement made or to be
performed by Seller, Intermediate Holdco or any of their respective Affiliates (including the Companies solely with respect to periods prior to the Closing);
(iii) any Closing Indebtedness that should have been reflected in the Final Closing Statement
but was not so reflected;
(iv) the Retained Credit Support Obligations;
(v) the Excluded Liabilities (as defined in the Reorganization Plan); and
(vi) any Refunded Required Payment or Unpaid Contingent Payment that has not been paid to
Purchaser and any amount reflected as part of the Closing Required Payment Amount in the Final Closing Statement that should not have been so reflected.
(b) Seller and Intermediate Holdco shall not be required to indemnify any Purchaser Indemnitee
and shall not have any liability:
(i) under
Section 8.01(a)(i)
unless the aggregate amount of all Losses for which Seller and Intermediate Holdco would, but for this clause (i), be liable thereunder exceeds on a cumulative basis $13,250,000 (the “
Deductible
”), and then only to the extent of any such excess;
(ii) under
Section 8.01(a)(i)
for any individual items, or series of related items, where the Loss relating thereto is less than $500,000 (the “
Per Claim Threshold
”), and such items shall not be
aggregated for purposes of
Section 8.01(b)(i)
;
(iii) under
Section 8.01(a)(i)
in excess of the Indemnity Escrow Amount (the “
Cap
”);
provided
,
however
, that none of the Cap, the Deductible or the Per Claim Threshold shall apply with respect to any claim for indemnification arising out of, relating to or
resulting from a breach or alleged breach of a Seller Fundamental Representation;
provided
further
,
however
, that the cumulative indemnification obligations of Seller and Intermediate Holdco with respect to claims under this Agreement (including with respect to any
claim for indemnification arising out of, relating to or resulting from a breach or alleged breach of a Seller Fundamental Representation, but excluding with respect to any claim under
Section 8.01(a)(iii)
,
Section 8.01(a)(iv)
,
Section 8.01(a)(v)
or
Section 8.01(a)(vi)
, which shall not be capped) shall not exceed the
Purchase
Price; and
(iv) under
Section 8.01(a)
to the extent the Loss arose in connection with any breach of a representation and warranty or covenant made or to be performed by Purchaser in this Agreement.
(c) Except for (i) any specific enforcement remedy to which a party is entitled pursuant to
Section 9.05
(
Right to Specific Performance
) and (ii) claims of, or causes of
action arising from, Actual Fraud, Purchaser, on behalf of itself and each other Purchaser Indemnitee, agrees that its sole and exclusive remedy after the Closing with respect to any and all claims relating to this Agreement shall be pursuant
to the indemnification provisions set forth in this
Article VIII
. In furtherance of the foregoing, Purchaser, on behalf of itself and each other Purchaser
Indemnitee, hereby waives, from and after the Closing, any and all rights, claims and causes of action (other than those expressly contemplated by clauses (i) and (ii) of the immediately preceding sentence) it or any Purchaser Indemnitee may
have against Seller, Intermediate Holdco or any of their respective Affiliates arising under or based upon this Agreement, any document or certificate delivered in connection herewith or any applicable Law, in each case except pursuant to the
indemnification provisions set forth in this
Article VIII
. Notwithstanding the foregoing, nothing contained in this
Section 8.01(c)
shall in any way impair the rights and obligations of Purchaser and Seller to resolve disputes with respect to the Closing Statement and the Closing Unfunded Employee Liability Statement and
the calculation of the Final Closing Date Amount and the Final Unfunded Employee Liability Amount pursuant to
Section 1.04
(
Purchase Price Adjustment
), and the fact that Purchaser may have the right to pursue a claim for indemnification under
Article VIII
with respect to any facts or circumstances shall not operate to impair the application of
Section 1.04
(
Purchase Price Adjustment
) in accordance with its terms;
provided
,
however
, that in no event shall Purchaser be entitled to receive indemnification for Losses (or Taxes) to the extent that any item is specifically reflected in the
calculation of the Final Closing Date Amount or the Final Unfunded Employee Liability Amount, as applicable.
(d) For purposes of calculating Losses hereunder and for purposes of establishing whether a
breach has occurred, any materiality, Seller Material Adverse Effect or Material Adverse Effect qualifications (including any phrases qualifying any matter by materiality) in the representations and warranties in
Article II
(
Representations and Warranties Relating to Seller, Intermediate Holdco and the Transferred
Equity Interests
),
Article III
(
Representations and Warranties Relating
to the Companies
) or in any
certificate delivered pursuant hereto shall be disregarded (other than in
Section 3.09(a)
and in
Section 3.15
(
Absence of Changes or Events
), each of which shall retain such qualifications for such purposes).
SECTION 8.02
General Indemnification by
Purchaser
. (a) Subject to the terms (including the limitations) set forth in this
Article VIII
, from and after the Closing, Purchaser shall (without
duplication with respect to any other payment made pursuant to this Agreement) indemnify Seller and Intermediate Holdco against, and hold them harmless from, any Loss suffered or incurred by Seller, Intermediate Holdco and their respective
Affiliates and each of their respective officers, directors, employees, stockholders, partners, members, agents and representatives (collectively, the “
Seller Indemnitees
”)
(other than any Loss relating to Taxes, for which indemnification is provided under
Section 8.03
(
Tax Indemnification
)) to the extent arising out of, relating to or resulting from:
(i) any breach of any representation or warranty made by Purchaser in this Agreement;
(ii) any breach of any covenant or agreement contained in this Agreement made or to be
performed by Purchaser or any of its Affiliates (including the Companies solely with respect to periods following the Closing);
(iii) any Closing Required Payment Amount that should have been reflected in the Final Closing
Statement but was not so reflected or any amount that subsequent to the Closing becomes a Required Payment Amount;
(iv) the Assumed Credit Support Obligations; and
(v) the Assumed Liabilities (as defined in the Reorganization Plan).
(b) Purchaser shall not be required to indemnify any Seller Indemnitee and shall not have any
liability:
(i) under
Section 8.02(a)(i)
unless the aggregate amount of all Losses for which Purchaser would, but for this clause (i), be liable thereunder exceeds on a cumulative basis the Deductible, and then only to the extent of any such excess;
(ii) under
Section 8.02(a)(i)
for any individual items where the Loss relating thereto is less than the Per Claim Threshold, and such items shall not be aggregated for purposes of
Section 8.02(b)(i)
;
(iii) under
Section 8.02(a)(i)
in excess of the Cap;
provided
,
however
, that none of the Cap, the Deductible nor the
Per Claim Threshold shall apply with respect to any claim for indemnification arising out of, relating to or resulting from a breach or alleged breach of a Purchaser Fundamental Representation;
provided
further
,
however
, that the cumulative
indemnification obligations of Purchaser with respect to claims under this Agreement (including with respect to any claim for indemnification arising out of, relating to or resulting from a breach or alleged breach of a Purchaser Fundamental
Representation, but excluding with
respect to any claim under
Section
8.02(a)(iii)
,
Section 8.02(a)(iv)
or
Section 8.02(a)(v)
,
which shall not be capped) shall not exceed the
Purchase Price; and
(iv) under
Section 8.02(a)
to the extent the Loss arose in connection with any breach of a representation and warranty or covenant made or to be performed by Seller or Intermediate Holdco in this Agreement.
(c) Except for (i) any specific enforcement remedy to which a party is entitled pursuant to
Section 9.05
(
Right to Specific Performance
), (ii)
Section 1.04
(
Purchase Price Adjustment
) and (iii) claims of, or causes of action arising from,
Actual Fraud, each of Seller and Intermediate Holdco, on behalf of itself and each other Seller Indemnitee, agrees that its sole and exclusive remedy after the Closing with respect to any and all claims relating to this Agreement shall be
pursuant to the indemnification provisions set forth in this
Article VIII
. In furtherance of the foregoing, each of Seller and Intermediate Holdco, on behalf of
itself and each other Seller Indemnitee, hereby waives, from and after the Closing, any and all rights, claims and causes of action (other than those expressly contemplated by clauses (i) and (ii) of the immediately preceding sentence) it or
any Seller Indemnitee may have against Purchaser or any of Purchaser’s Affiliates arising under or based upon this Agreement, any document or certificate delivered in connection herewith or any applicable Law, in each case except pursuant to
the indemnification provisions set forth in this
Article VIII
. Notwithstanding the foregoing, nothing contained in this
Section 8.02(c)
shall in any way impair the rights and obligations of Purchaser and Seller to resolve disputes with respect to the Closing Statement and the Closing Unfunded Employee Liability Statement and
the calculation of the Final Closing Date Amount and the Final Unfunded Employee Liability Amount pursuant to
Section 1.04
, and the fact that Seller and
Intermediate Holdco may have the right to pursue a claim for indemnification under
Article VIII
with respect to any facts or circumstances shall not operate to
impair the application of
Section 1.04
in accordance with its terms;
provided
,
however
, that in no event shall Seller or Intermediate Holdco be entitled to receive indemnification for Losses (or Taxes) to the extent that any item is specifically
reflected in the calculation of the Final Closing Date Amount or the Final Unfunded Employee Liability Amount, as applicable.
(d) For purposes of calculating Losses hereunder and for purposes of establishing whether a
breach has occurred, any materiality or Purchaser Material Adverse Effect qualifications (including any phrases qualifying any matter by materiality) in the representations and warranties in
Article IV
(
Representations and Warranties of Purchaser
) or in any certificate delivered pursuant hereto shall be
disregarded.
SECTION 8.03
Tax Indemnification
.
(a) Subject to the terms (including the limitations) set forth in this
Article VIII
, from and after the Closing, Seller and Intermediate Holdco shall (without
duplication with respect to any other payment made pursuant to this Agreement), jointly and severally, indemnify Purchaser and its Affiliates against, and hold them harmless from:
(i) all Taxes of any Company, or imposed with respect to any of the Transferred Assets, for any
Pre-Closing Tax Period;
(ii) all Taxes of any Company, or imposed with respect to any of the Transferred Assets,
resulting from any breach of any covenant or agreement relating to Taxes made or to be performed by Seller, Intermediate Holdco or any of their respective Affiliates (including the Companies solely with respect to periods prior to the
Closing);
(iii) all Taxes of any Person other than any Company for which any Company becomes liable as a
result of being or having been at any time before Closing, part of any consolidated, combined, affiliated, aggregated, unitary or similar group;
(iv) any Taxes of any Person other than any Company for which any Company becomes liable as a
transferee or successor, by contract or by operation of law, to the extent relating to a contract or other transaction entered into prior to the Closing;
(v) all Transfer Taxes borne by Seller in accordance with
Section 5.08
;
(vi) all Taxes of any Company, or imposed with respect to any of the Transferred Assets,
resulting from the Pre-Closing Reorganization, other than Transfer Taxes described in Section 5.08; and
(vii) any reasonable and documented third-party fees, costs and expenses resulting from the
items described in clauses (i) through (vi) above;
provided
that notwithstanding anything to the contrary
in this Agreement, Seller and Intermediate Holdco shall not be liable under this
Section 8.03
for any Taxes (or third-party fees, costs and expenses resulting from
such Taxes) to the extent any such Taxes (or fees, costs and expenses) (1) are described in
Section 8.03(b)(ii)-(iv)
or (2) result from any action taken or omitted
to be taken by Purchaser or any of its Affiliates (including, after the Closing Date, the Companies) other than in accordance with the terms of this Agreement;
provided
further
, that Seller’s and Intermediate Holdco’s indemnity obligation pursuant to this
Section 8.03
shall be reduced by the amount of any refunds or credits of Taxes with respect to Pre-Closing Tax Periods (net of any costs or expenses, including Tax costs, incurred by Purchaser with respect thereto) to the extent received after the Closing
Date by Purchaser or any of its Affiliates (including any Company) required to be, and not, remitted to Seller in accordance with
Section 5.07(c)
(
Refunds and Credits
) prior to the date on which Seller and Intermediate Holdco is required to make the applicable indemnity payment hereunder;
provided
further that Purchaser shall thereafter have no obligation to make the payment set forth in
Section 5.07(c)
(
Refunds and Credits
) in respect of such set-off amount.
(b) Subject to the terms (including the limitations) set forth in this
Article VIII
, from and after the Closing, Purchaser shall indemnify Seller, Intermediate Holdco and their respective Affiliates against, and hold them harmless from:
(i) all Taxes of any Company, or imposed with respect to any of the Transferred Assets, for any
Post-Closing Tax Period;
(ii) all Taxes of any Company, or imposed with respect to any of the Transferred Assets,
resulting from any breach of any covenant or agreement relating to Taxes made or to be performed by Purchaser or any of its Affiliates (including the Companies solely with respect to periods following the Closing);
(iii) all Transfer Taxes borne by Purchaser in accordance with
Section 5.08
; and
(iv) any reasonable and documented third-party fees, costs and expenses resulting from the
items described in clauses (i) and (iii) above;
provided
that notwithstanding anything to the contrary
in this Agreement, Purchaser shall not be liable under this
Section 8.03
for any Taxes (or third-party fees, costs and expenses resulting from such Taxes) to the
extent any such Taxes (or fees, costs and expenses) are described in
Section 8.03(a)
.
(c) In the case of any Straddle Period:
(i) Taxes imposed on a periodic basis (such as, solely by way of example, real, personal and
intangible property taxes) for any Pre-Closing Tax Period shall be equal to the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period
that are in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the Straddle Period;
(ii) Taxes (other than Taxes described in clause (i) above) for any Pre-Closing Tax Period
shall be computed (x) as if such taxable period ended as of the close of business on the Closing Date and (y) in the case of any such Taxes attributable to the ownership of any Equity Interest in a partnership, other “flowthrough” entity or
“controlled foreign corporation” (within the meaning of Section 957(a) of the Code or any comparable applicable Law), as if the taxable period of that entity ended as of the close of business on the Closing Date; and
(iii) Overpayments of estimated Taxes of a Company by Seller, Intermediate Holdco or their
respective Affiliates with respect to the pre-closing portion of any Straddle Period and Taxes paid by Seller, Intermediate Holdco or their respective Affiliates with respect to a Company before the Closing Date that relate to a post-closing
portion of a Straddle Period shall, to the extent they actually offset Taxes that Purchaser would otherwise be liable for under this
Section 8.03
, be promptly
refunded by Purchaser to Seller or Intermediate Holdco and in any case, within five Business Days from the filing of any Straddle Period Tax Return.
Section 5.07(c)
(
Refunds and Credits
), rather than this
Section 8.03(c)(iii)
, shall
control in respect of any Tax refunds or credits arising from payments of Taxes by Seller or Intermediate Holdco for any Straddle Period.
(d) Any indemnity obligation for Taxes pursuant to this
Section 8.03
shall be paid within 30 Business Days after Purchaser, Seller or Intermediate Holdco, as applicable, makes written demand upon the other party claiming it is entitled to
indemnification
under this
Section 8.03
and the indemnifying party shall make commercially reasonable efforts to pay such amounts prior to the date on which the relevant Taxes are required to be paid to the relevant Taxing Authority.
SECTION 8.04
Calculation of Losses;
Mitigation
. (a) The amount of any Loss (including a Tax) for which indemnification is provided under this
Article VIII
shall be net of any amounts
recovered or recoverable by the indemnified party under insurance policies with respect to such Loss. The amount of the Loss (including a Tax) arising out of any item included as a liability in calculating Closing Working Capital, if any,
shall be calculated net of the amount so included.
(b) Notwithstanding anything to the contrary herein or provided under applicable Law, Losses
exclude (x) incidental, consequential and lost profits damages (except, in each case, to the extent any such Losses were reasonably foreseeable) and (y) punitive, special or treble damages (except, in each case, to the extent any such Losses
are awarded and paid by an indemnified party with respect to a Third Party Claim).
(c) Purchaser, Seller and Intermediate Holdco shall, and shall cause their respective
Affiliates to, cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify the other party or a Seller Indemnitee or Purchaser Indemnitee hereunder, including by using
commercially reasonable efforts to (i) resolve any such claim or liability and (ii) mitigate any Loss for which indemnification is sought under this Agreement;
provided
,
however
, that the reasonable out-of-pocket costs of such mitigation shall constitute Losses for purposes of this Agreement. In the event that Purchaser, Seller or
Intermediate Holdco shall fail to use such commercially reasonable efforts to mitigate or resolve any claim or liability, then notwithstanding anything else to the contrary contained herein, the other party shall not be required to indemnify
any Person for any loss, liability, claim, damage or expense that would reasonably be expected to have been avoided if Purchaser, Seller or Intermediate Holdco, as the case may be, had made such efforts.
SECTION 8.05
Tax Treatment of
Indemnification
. Any indemnity payment under this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes.
SECTION 8.06
Termination of Indemnification
.
The obligations to indemnify and hold harmless any party (a) pursuant to
Section 8.01(a)(i)
(
General Indemnification by Seller
) or
Section 8.02(a)(i)
(
General Indemnification by Purchaser
) shall terminate when the applicable representation or warranty terminates pursuant to
Section 8.09
(
Survival of Representations and Covenants
), (b) pursuant to
Section 8.01(a)(ii)
(
General Indemnification by Seller
) or
Section 8.02(a)(ii)
(
General Indemnification by Purchaser
) shall terminate when the applicable covenant or agreement terminates pursuant to
Section 8.09
(
Survival of Representations and Covenants
) and (c) pursuant to
Section 8.03
(
Tax Indemnification
) shall terminate 30 calendar days following the expiration of
the applicable statute of limitations;
provided
,
however
, that such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to which the Person to be indemnified shall have, before the expiration of the applicable period, previously made a good faith claim by delivering a
notice of such claim in writing (stating in reasonable detail the basis of such claim) pursuant to
Section 8.07
(
Indemnification Procedures for Other Than Tax Claims
) or
Section 8.08
(
Indemnification Procedures for Tax Claims
) to
the party to be providing the indemnification.
SECTION 8.07
Indemnification Procedures for
Other Than Tax Claims
.
(a)
Third Party Claims
.
In order for a Person (the “
indemnified party
”) to be entitled to any indemnification provided for under
Section 8.01
(
General Indemnification by Seller
) or
Section 8.02
(
General Indemnification by Purchaser
) in respect of, arising out of or involving a claim made by any third Person against the indemnified party (a “
Third Party Claim
”), such indemnified party must notify the party required to provide indemnification therefor (the “
indemnifying party
”) in writing (and in reasonable detail) of the Third Party Claim within 30 Business Days after receipt by such indemnified party of notice of the Third Party Claim;
provided
,
however
, that failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been materially prejudiced as a result of such failure. Thereafter, the indemnified party shall deliver to the indemnifying party, within 10 Business Days after the indemnified
party’s receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim;
provided
,
however
, that the failure to deliver any such notices or documents shall not affect the indemnification provided hereunder except to the extent the indemnifying
party shall have been materially prejudiced as a result of such failure.
(b)
Assumption
.
If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, to assume (within 30 Business Days after receipt of notice of such Third Party
Claim) the defense thereof with counsel selected by the indemnifying party and reasonably acceptable to the indemnified party;
provided
,
however
, that the indemnifying party shall not have the right to assume the defense of any Third Party Claim and the indemnified party shall have the right to conduct and control the
defense of such Third Party Claim and any litigation resulting therefrom and in connection therewith to employ, at the indemnifying party’s expense, one counsel of its choice in each applicable jurisdiction (if more than one jurisdiction is
involved) to represent the indemnified party if (i) the indemnifying party elects not to defend, compromise or settle a Third Party Claim, (ii) if the indemnifying party fails to notify the indemnified party within the required time period of
its election as provided in this
Section 8.07(b)
, (iii) the Third Party Claim has or would reasonably be expected to result in Losses in excess of the amounts
available for indemnification pursuant to this
Article VIII
, (iv) the Third Party Claim seeks injunctive or other equitable relief against an indemnified party,
(v) the Third Party Claim involves or may involve criminal conduct or (vi) the indemnifying party, having timely elected to defend a Third Party Claim, fails to adequately prosecute or pursue such defense. Should the indemnifying party
assume, and so elect in writing to assume, the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for any legal expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim as provided above). If the indemnifying party is entitled and chooses to defend or prosecute a Third Party Claim, all the indemnified parties shall reasonably
cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party’s request) the provision to the indemnifying party of records and information that are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient basis to testify and provide additional information and explanation of any material provided hereunder. Whether or not the indemnifying party assumes the defense of a
Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party’s prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed). If the indemnifying party assumes the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying party may
recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Claim and which releases the indemnified party completely in connection with such Third Party Claim;
provided
,
however
, that the indemnifying party shall not, without
prior written consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), settle, compromise or offer to settle or compromise any Third Party Claim on a basis that would result in
(x) injunctive or other nonmonetary relief against the indemnified party, including the imposition of a consent order, injunction or decree that would restrict the future activity or conduct of the indemnified party or (y) a finding or
admission of fault or misconduct by the indemnified party.
(c)
Other Claims
.
In the event any indemnified party determines that it has a claim against any indemnifying party under
Section 8.01
(
General Indemnification by Seller
) or
Section 8.02
(
General Indemnification by Purchaser
) that does not involve a Third Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall promptly deliver written
notice of such claim (describing such claim in reasonable detail) to the indemnifying party. Subject to
Section 8.06
(
Termination of Indemnification
) and
Section 8.09
(
Survival of Representations and Covenants
), the failure by any indemnified party to so notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to such
indemnified party under
Section 8.01
(
General Indemnification by Seller
)
or
Section 8.02
(
General Indemnification by Purchaser
), except to the
extent that the indemnifying party shall have been materially prejudiced as a result of such failure. If the indemnifying party does not notify the indemnified party within 45 calendar days following its receipt of such notice that the
indemnifying party disputes its liability to the indemnified party under
Section 8.01
(
General Indemnification by Seller
) or
Section 8.02
(
General
Indemnification by Purchaser
), such claim specified by the indemnified party in such notice shall be conclusively deemed a liability of the indemnifying party under
Section 8.01
(
General Indemnification by Seller
) or
Section 8.02
(
General
Indemnification
by Purchaser
) and the indemnifying party shall pay the amount of such liability to the indemnified party on demand or, in the case of any
notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of such claim (or such portion thereof) becomes finally determined.
(d)
Tax Claims
.
Tax Claims shall be governed by
Section 8.08
(
Indemnification Procedures for Tax
Claims
) and not by this
Section 8.07
.
SECTION 8.08
Indemnification Procedures for
Tax Claims
. (a) The indemnified party shall promptly (and in any event within 30 Business Days of receipt of written notice from the relevant Taxing Authority) notify the indemnifying party in writing of the commencement of
any audit, investigation, litigation, claim or other judicial or administrative proceeding with respect to Taxes that, if successful, might result in an indemnity payment pursuant to
Section 8.03
(
Tax Indemnification
), such claim (a “
Tax Claim
”);
provided
,
however
, that a failure to give such notice will not relieve the indemnifying
party of its indemnification obligation under
Section 8.03
(
Tax Indemnification
),
except to the extent that such indemnifying party is actually prejudiced thereby. Such notice shall contain factual information (to the extent known) in reasonable detail to apprise the indemnifying party of the nature of the Tax Claim, in
each case taking into account the facts and circumstances with respect to such Tax Claim.
(b) Subject to
Section 8.08(c)
and
8.08(d)
, Seller shall have control of all Proceedings taken in connection with any Tax Claim that relates solely to Taxes for which Seller and Intermediate
Holdco have an indemnification obligation under
Section 8.03
(
Tax Indemnification
)
(such Taxes, “
Indemnified Taxes
”); but Purchaser shall have the right to participate in such Proceedings at its own expense, and Seller shall not be able to settle,
compromise or concede any portion of such Proceedings that is reasonably likely to affect the Tax liability of a Company for any Post-Closing Tax Period without the consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed;
provided
that if Seller fails to assume control of the conduct of any such Proceeding within a reasonable period following the receipt by
Seller of notice of such Proceeding, Purchaser shall have the right to assume control of such Proceeding, in which case Purchaser shall not settle, compromise or concede such Proceeding without the consent of Seller, not to be unreasonably
withheld, conditioned or delayed. Seller shall have sole control of all Proceedings taken in connection with any Tax Claim relating to a Seller Consolidated Group or a Seller Consolidated Return.
(c) Seller and Purchaser shall jointly control (at each party’s sole expense) all Proceedings
taken in connection with any Tax Claim relating to Taxes of any Company for a Straddle Period (other than any Tax Claim relating to a Seller Consolidated Group or a Seller Consolidated Return) and neither party shall settle such a Proceeding
without the other party’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
(d) In the case of a Proceeding that relates both to Indemnified Taxes and Taxes for which Purchaser is not
indemnified under
Section 8.03
(
Tax Indemnification
), Purchaser shall
control the conduct of such Proceeding, but Seller shall have the right to participate in such Proceeding at its own expense, and Purchaser shall not settle,
compromise or concede such Proceeding without the Seller’s prior written consent (such consent not to be unreasonably
withheld, conditioned or delayed). This
Section 8.08(d)
shall not apply to Tax Claims relating to Taxes for a Straddle Period, which is the subject of
Section 8.08(c)
.
(e) Purchaser shall have exclusive control of all other Proceedings relating to Taxes with
respect to the Companies or the Transferred Assets not otherwise governed by
Sections 8.08(b)
,
8.08(c)
or
8.08(d)
.
(f) Purchaser shall (and shall cause each Company to) cooperate with Seller, and Seller shall
cooperate with Purchaser, in contesting any Tax Claim, which cooperation shall include the retention of records and information that are reasonably relevant to such Tax Claim (and provision of such records to the other party upon such other
party’s reasonable request) and the making of employees available on a mutually convenient basis to provide additional information or explanation of any material relating to such Tax Claim.
SECTION 8.09
Survival of Representations
and Covenants
. The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing as follows: (a) the Seller Fundamental Representations and the Purchaser Fundamental
Representations shall survive the Closing until 30 calendar days after the expiration of the applicable statute of limitations; (b) the representations and warranties in
Article II
(
Representations and Warranties Relating to Seller, Intermediate Holdco and the Transferred Equity Interests
),
Article III
(
Representations and Warranties Relating to the Companies
) and
Article IV
(
Representations and Warranties of Purchaser
) (other than the Seller Fundamental
Representations, the Purchaser Fundamental Representations and the representations and warranties of Seller and Intermediate Holdco in
Section 3.11
(
Taxes
)) shall survive the Closing until the Indemnity Escrow Release Date; (c) the representations and warranties of Seller and Intermediate Holdco in
Section 3.11
(
Taxes
) shall not survive the Closing; and (d) the covenants and
agreements of the parties contained in this Agreement shall survive the Closing until the Indemnity Escrow Release Date, except for those covenants and agreements that by their terms are to be performed in whole or in part at or after the
Closing, which covenants shall survive in accordance with their terms.
SECTION 8.10
Release of Indemnity Escrow to
Seller
. (a) In the event that any Purchaser Indemnitee shall have, prior to the Indemnity Escrow Release Date, validly delivered a notice of a claim (a “
Pending
Claim
”) in respect of indemnification hereunder and made against the Indemnity Escrow Account, the amount of Indemnity Escrow Funds that should be reserved (the “
Reserve
Amount
”) in respect of such Pending Claim shall be the amount of Losses asserted in good faith by such Purchaser Indemnitee in respect of such Pending Claim, prior to resolution of such Purchaser Indemnitee’s rights to
indemnification hereunder and the amount of such Purchaser Indemnitee’s Losses. Any Reserve Amounts held in the Indemnity Escrow Account related to Pending Claims brought prior to the Indemnity Escrow Release Date shall continue to be held
in the Indemnity Escrow Account until such Pending Claim has been resolved or otherwise released in accordance with the Escrow Agreement and this Agreement.
(b) Upon the resolution in accordance with the terms of this Agreement of the amount of such
Purchaser Indemnitee’s Losses in respect of any Pending Claim, if any, Seller and Purchaser shall jointly instruct the Escrow Agent in writing pursuant to the Escrow Agreement to release to the pertinent Purchaser Indemnitee the lesser of (i)
the amount of such Losses and (ii) the balance of the Indemnity Escrow Funds remaining at such time.
(c) Promptly following the Indemnity Escrow Release Date, and thereafter, promptly following
the resolution of any Pending Claim with respect to any Reserve Amount still held in the Indemnity Escrow Account, Seller and Purchaser shall jointly instruct the Escrow Agent in writing pursuant to the Escrow Agreement to distribute to
Seller the Indemnity Escrow Funds remaining at such time minus the sum of all Reserve Amounts outstanding against such account at such time, if any.
ARTICLE IX
General Provisions
SECTION 9.01
Amendments and Waivers
.
This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by the party against whom such amendment or waiver shall be enforced. The failure of any party to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect hereof at Law or in equity, or to insist upon compliance by any other party with its obligations hereunder, shall not constitute a waiver by such party of its right to
exercise any such other right, power or remedy or to demand such compliance. Notwithstanding the foregoing, no amendments or waivers to the provisions of
Section 9.03
(
No Third-Party Beneficiaries
),
Section 9.11
(
Consent to Jurisdiction
),
Section 9.12
(
WAIVER OF JURY TRIAL
),
Section 9.13
(
Governing
Law
),
Section 9.14
(
No Recourse
),
Section 7.03(c)
(
Termination Fee
) or this
Section 9.01
, or to any definition or provision of this Agreement to the extent any amendment or waiver of such definition or provision would modify the substance of the aforementioned provision (including, in
each case, the defined terms used therein to extent applicable thereto) shall be permitted in any manner adverse in any material respect to any Lender Related Party without the prior written consent of such Lender Related Party.
SECTION 9.02
Assignment
. This
Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party (including by operation of Law in connection with a merger or consolidation of such party) without the prior written consent of the
other party, except that Purchaser will have the right to assign all or any portion of its rights and obligations pursuant to this Agreement (a) to any of its Affiliates unless such assignment would reasonably be expected to result in a
Purchaser Material Adverse Effect; or (b) to any Lender Related Party pursuant to the terms of the Debt Financing for purposes of creating a security interest herein or otherwise assigning as collateral in respect of the Debt Financing. No
assignment by any party hereto will relieve such party of any of its obligations hereunder. Any attempted assignment in violation of this
Section 9.02
shall be
void.
SECTION 9.03
No Third-Party Beneficiaries
.
This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and their permitted assigns,
any legal or equitable rights or remedies hereunder;
provided
,
however
, that each of
this
Section 9.03
and
Article VIII
(
Indemnification
) is intended to be for the benefit of, and be enforceable by, the Purchaser Indemnitees and the Seller Indemnitees, as applicable;
provided
further
,
however
, that each of this
Section 9.03
and
Section 5.13
(
Indemnification of Directors and Officers
) is intended to be for the benefit of, and be enforceable by, the Indemnitees;
provided
further
,
however
, that each of this
Section 9.03
,
Section 5.18(d)
(
Financing
),
Section 7.03(c)
(
Termination Fee
) and
Section 9.14
(
No Recourse
) is intended to be for the benefit of each Person specified therein;
provided
further
,
however
, that each of this
Section 9.03
,
Section 7.03(c)
(
Termination Fee
),
Section 9.01
(
Amendments and Waivers
),
Section 9.05
,
Section 9.11
(
Consent to Jurisdiction
),
Section 9.12
(
WAIVER OF JURY TRIAL
),
Section 9.13
(
Governing Law
) and
Section
9.14
(
No Recourse
) (and any definition or provision of this Agreement to the extent any amendment or waiver of such definition or
provision would modify the substance of this
Section 9.03
,
Section 7.03(c)
(
Termination Fee
), the last sentence of
Section 9.01
(
Amendments and Waivers
), the last sentence of
Section 9.05
,
Section 9.11
(
Consent to Jurisdiction
),
Section 9.12
(
WAIVER OF JURY TRIAL
),
Section 9.13
(
Governing Law
) or Section 9.14(b) (
No Recourse
)) is
intended to be for the benefit of, and be enforceable by, each Lender Related Party.
SECTION 9.04
Notices
. All
notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand, sent by email or sent, postage prepaid, by registered, certified or express mail or overnight courier service
and shall be deemed given when so delivered by hand or email, or if mailed, three calendar days after mailing (or one Business Day in the case of express mail or overnight courier service), as follows:
(i) if to Purchaser,
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c/o Searchlight Capital Partners, L.P.
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745 5
th
Avenue, 27
th
Floor
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New York, NY 10151
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Attn:
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Nadir Nurmohamed
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Eric Zinterhofer
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Email:
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nnurmohamed@searchlightcap.com
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ezinterhofer@searchlightcap.com
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with a copy to (which copy alone shall not constitute notice):
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Paul, Weiss, Rifkind, Wharton & Garrison LLP
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1285 Avenue of the Americas
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New York, New York 10019-6064
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Attn:
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Taurie Zeitzer
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Brian Lavin
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Email:
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tzeitzer@paulweiss.com
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blavin@paulweiss.com
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(ii) if to Seller,
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Legal Department, Frontier Communications Corp.
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401 Merritt 7
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Norwalk, Connecticut 06851
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Attn:
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Kevin Saville, Sr. Vice President & General Counsel
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Email:
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kevin.saville@ftr.com
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with copies to (which copies alone shall not constitute notice):
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Cravath, Swaine & Moore LLP
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Worldwide Plaza
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825 Eighth Avenue
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New York, New York 10019
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Attn:
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Robert I. Townsend, III, Esq.
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O. Keith Hallam, III, Esq.
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Email:
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rtownsend@cravath.com
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khallam@cravath.com
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SECTION 9.05
Right to Specific Performance
.
The parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to equitable relief, including in the form of an injunction or injunctions, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in an appropriate court of competent
jurisdiction as set forth in
Section 9.11
(
Consent to Jurisdiction
),
this being in addition to any other remedy to which any party is entitled at Law or in equity. The right to specific enforcement shall include the right of a party hereto to cause the other party hereto to cause the Transactions to be
consummated on the terms and subject to the conditions set forth in this Agreement. The parties hereto further agree (a) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy, (b) not
to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to applicable Law or inequitable for any reason, or to assert that a remedy of monetary damages would provide an adequate remedy;
provided
that nothing contained in this clause (b) shall prohibit a party from opposing a grant of specific performance or other equitable relief on the basis that the party is not in
breach of this Agreement or that such remedy is not permitted pursuant to the terms of this Agreement and (c) that the provisions set forth in
Section 7.03
(
Termination Fee
) are not intended to and shall not be construed to diminish or otherwise impair in any respect Seller’s right to specific enforcement in
accordance with (and subject to the terms of) this
Section 9.05
. The parties acknowledge and agree that the right of specific enforcement is an integral part of
the transactions contemplated by this Agreement and without that right, the parties hereto would not have entered into this Agreement. Notwithstanding the foregoing, it is explicitly agreed that the right of Seller to seek an injunction,
specific performance or other equitable remedies in connection with enforcing Purchaser’s obligation to cause the Equity Financing to be funded to fund a portion of the Purchase Price and Purchaser’s obligations to effect the Closing shall
be subject to the
requirements that all of the following have been satisfied: (i) all conditions in
Section 6.01
(
Conditions to Each Party’s Obligation
) and
Section 6.02
(
Conditions to Obligation of Purchaser
) and all conditions in the
Equity Commitment Letters were satisfied in full or waived in writing (other than those conditions which by their terms can only be satisfied by actions taken at the Closing, but such conditions are capable of being satisfied on such date
as if it were the Closing Date and the Closing would occur) at the time when the Closing would have been required to occur pursuant to
Section 1.02
(
Closing Date
), but for the failure of the Equity Financing to be funded; (ii) the Debt Financing has been funded in accordance with the terms
thereof or will be funded in accordance with the terms thereof at the Closing if the Equity Financing is funded at the Closing; and (iii) Seller has irrevocably confirmed in writing that if specific performance is granted and the Equity
Financing and Debt Financing are funded, then it would take such actions required of it by this Agreement to cause the Closing to occur. In no event shall Seller be entitled to, or permitted to seek, specific performance directly against
any Lender Related Party or to enforce specifically the terms of the Debt Commitment Letter or any other agreements with respect to the Debt Financing;
provided
that this sentence shall not limit Seller’s rights to enforce Purchaser’s obligations under this Agreement (including
Section 5.18
(
Financing
) in accordance with the terms hereof.
SECTION 9.06
Interpretation; Exhibits
and Schedules; Certain Definitions
. (a) The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used
in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. If any time period for giving notice or taking action hereunder expires on a day which is not a Business Day, the time period shall automatically be extended to
the Business Day immediately following such non-Business Day. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or otherwise modified;
provided
that the foregoing shall not apply to the
Seller Disclosure Letter, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) any reference to “material to the Business” shall be construed to mean “material to the Business,
taken as a whole”, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (v) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (vi) the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, (vii) all accounting terms not specifically defined herein shall be construed in accordance with the Accounting Principles, (viii) this Agreement shall be
deemed to have been drafted by Purchaser and Seller, and this Agreement shall not be construed against any party as the principal draftsperson hereof, (ix) all references or citations in this Agreement to
Laws shall, when the context requires, be considered references or citations to any successor Laws, and shall be deemed
to also refer to all rules and regulations promulgated thereunder, (x) the word “or” shall not be exclusive, (xi) the phrase “to the extent” shall mean the degree to which a subject or other item extends and shall not simply mean “if” and
(xii) the phrases “provided”, “delivered”, or “made available”, when used in this Agreement, shall mean that the information referred to has been physically or electronically delivered to the relevant parties, including in the case of
“made available” to Purchaser prior to Closing, material that has been posted in the “data room” (virtual) hosted by Intralinks and established by Seller or its representatives and to which, and to the extent to which, Purchaser and its
representatives had received such information or had access to such information, as applicable, prior to 11:59 p.m. on May 27, 2019, and such information and such access has been continuously available since the date it was provided or
access was granted.
(b) For all purposes hereof:
“
2016 Audited Financial Statements
”
means, collectively, (a) the balance sheet for the Business as of December 31, 2016, and (b) the income statement and statement of cash flows for the Business for the fiscal year ended December 31, 2016, together with footnote disclosure,
in each case prepared in accordance with GAAP and audited by the independent accountants of the Companies.
“
2017 Audited Financial Statements
”
means, collectively, (a) the balance sheet for the Business as of December 31, 2017 (with comparative information as of December 31, 2016), and (b) the income statement and statement of cash flows for the Business for the fiscal year
ended December 31, 2017 (with comparative information for the fiscal year ended December 31, 2016), together with footnote disclosure, in each case prepared in accordance with GAAP and audited by the independent accountants of the
Companies.
“
2018 Audited Financial Statements
”
means, collectively, (a) the balance sheet for the Business as of December 31, 2018 (with comparative information as of December 31, 2017), and (b) the income statement and statement of cash flows for the Business for the fiscal year
ended December 31, 2018 (with comparative information for the fiscal year ended December 31, 2017), together with footnote disclosure, in each case prepared in accordance with GAAP and audited by the independent accountants of the
Companies.
“
2019 Audited Financial Statements
”
means, collectively, (a) the balance sheet for the Business as of December 31, 2019 (with comparative information as of December 31, 2018), and (b) the income statement and statement of cash flows for the Business for the fiscal year
ended December 31, 2019 (with comparative information for the fiscal year ended December 31, 2018), together with footnote disclosure, in each case prepared in accordance with GAAP and audited by the independent accountants of the
Companies.
“
Accounting Principles
” means the
accounting practices, principles, policies, procedures and methodologies used in the preparation of the Unaudited Historical Financial Statements, applied on a consistent basis, and the rules set forth on
Exhibit F
;
provided
that in the event of any conflict between such accounting principles, methods and practices
and the rules set forth on
Exhibit F
, the rules set forth on
Exhibit F
shall
apply;
provided
,
further
, that, in the
case of the Unfunded Defined Benefit Pension Liabilities and the Transferred Retiree Medical Liabilities, Accounting
Principles means the Pension Principles and the Retiree Medical Principles, respectively.
“
Actual Fraud
” means actual and
intentional fraud with respect to the representations and warranties expressly set forth in this Agreement that is committed by the party making such representations and warranties.
“
Adjustment Escrow Account
” means
the escrow account maintained by the Escrow Agent to hold and disburse the Adjustment Escrow Funds pursuant to the Escrow Agreement and the terms of this Agreement.
“
Adjustment Escrow Amount
” means
an amount equal to the amount set forth opposite such name in Section 9.06(b)(x) of the Seller Disclosure Letter.
“
Adjustment Escrow Funds
” means
the amount of funds in the Adjustment Escrow Account from time to time.
“
Affiliate
” of any Person means
another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person;
provided
that (other than for purposes of
Section 5.20
(
Release
),
Section 8.01
(
Termination Fee
),
Section 8.01
(
General Indemnification by Seller
) or
Section 9.03
(
No Third-Party Beneficiaries
)) in no event shall Purchaser be considered an Affiliate of any of the
Guarantors or any direct or indirect equityholder of Purchaser (including the Guarantors) (or any of such equityholder’s Affiliates) or any portfolio company or investment fund affiliated with any Guarantor, nor shall any Guarantor or any
direct or indirect equityholder of Purchaser (including the Guarantors) (or any of such equityholder’s Affiliates) or any portfolio company or investment fund affiliated with any Guarantor, be considered to be an Affiliate of Purchaser.
For purposes of this definition, “
control
” when used with respect to any specified Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “
controlling
” and “
controlled
” have meanings correlative to the foregoing.
“
Alternative Proposal
” means any
inquiry, proposal or offer from any Person (other than Purchaser or any of its Affiliates) relating to any direct or indirect acquisition, in one transaction or a series of transactions, of (i) assets or businesses that constitute or
represent 5% or more of the total revenue, net income or assets of the Business or (ii) 5% or more of the outstanding Equity Interests in the Companies, in each case other than the transactions contemplated hereby.
“
Assumed Benefit Agreement
” means
any Benefit Agreement or any portion thereof, (i) that is contributed to, maintained or sponsored by any of the Companies, or (ii) any assets or liabilities of which (A) Purchaser has explicitly agreed to assume pursuant to this Agreement
or (B) transfer to Purchaser or its Affiliates under applicable Law as a result of the Transactions.
“
Assumed Benefit Plan
” means any
Benefit Plan or any portion thereof, (i) that is contributed to, maintained or sponsored by any of the Companies, or (ii) any assets or liabilities
of which (A) Purchaser has explicitly agreed to assume pursuant to this Agreement or (B) transfer to Purchaser or its
Affiliates under applicable Law as a result of the Transactions.
“
Balance Sheet Date
” means
December 31, 2018.
“
Benefit Agreement
” means any
employment, consulting, incentive compensation, bonus, deferred compensation, severance, change of control, retention, stock purchase, equity or equity-based compensation or similar agreement between Seller or any of its Affiliates, on
the one hand, and any Service Provider, on the other hand.
“
Benefit Plan
” means any
“employee benefit plan” (as defined in Section 3(3) of ERISA (whether or not subject to ERISA)) and each other benefit or compensation, bonus, savings, pension, profit-sharing, retirement, deferred compensation, incentive compensation,
stock ownership, equity or equity-based compensation, paid time off, perquisite, fringe benefit, vacation, change of control, severance, retention, salary continuation, disability, death benefit, hospitalization, medical, life insurance,
welfare benefit or other plan, program, policy, arrangement or agreement sponsored, maintained or contributed to or required to be maintained or contributed to by Seller or any of its Affiliates, in each case, providing benefits to any
Service Provider or any of their respective dependents or with respect to which Seller or any of its Affiliates has any liability, contingent or otherwise, but not including any Benefit Agreement.
“
Business
” means the business,
activities and operations of Seller and its Subsidiaries (including the Companies) in the States of Washington, Oregon, Idaho and Montana (the “
Territory
”).
“
Business Day
” means any day
other than a Saturday, Sunday or a day on which banks in New York City are authorized or obligated by applicable Law or executive order to close.
“
Business Employee Benefit Plan
”
means any Assumed Benefit Plan or Assumed Benefit Agreement.
“
Business Vendor Contract
” means
any Contract between Seller or any Affiliate of Seller (other than a Company) and any third party pursuant to which such third party provides products or services exclusively to the Business.
“
Cash
” means, with respect to the
Companies, all cash or cash equivalents, including (i) cash in hand, bank balances, term deposits and cash on deposit (including uncleared checks or drafts received or deposited for the account of any Company), (ii) short-term investments
that are readily convertible to cash, including short-term deposits with original maturities of three months or less, demand deposits, savings accounts, certificates of deposit, money market funds, U.S. treasury bills and other highly
liquid marketable securities and (iii) credit card collections in hand, but excluding (x) any amounts required to cover uncleared checks or drafts issued by any Company (to the extent a corresponding amount has been released from accounts
payable) and (y) any amounts held in escrow or trust for any other Person.
“
CFIUS
” means the interagency
Committee on Foreign Investment in the United States, including any successor or replacement thereof.
“
CFIUS Approval
” means that any
review or investigation by CFIUS of the Transactions shall have been concluded, and either (a) Seller and Purchaser shall have received written notice from CFIUS that all action under DPA is concluded with respect to the Transactions, and
there are no unresolved issues of national security, or (b) CFIUS shall have sent a report to the President of the United States requesting the President’s decision and the President shall have announced a decision not to take any action
to suspend, prohibit or place any limitations on the Transactions, or the time permitted by Law for such action shall have lapsed.
“
CFIUS Notice
” means a joint
voluntary notice with respect to the Transactions prepared by the parties hereto and submitted to CFIUS in accordance with the requirements of DPA.
“
Change of Control Payments
” means the
aggregate amount of all change of control, bonus, retention, termination, severance or other payments that are payable by any Company to any Service Provider as a result of or in connection with the consummation of the Closing, together
with any employer-paid portion of any employment and payroll taxes related thereto;
provided
,
however
,
that in no event shall any bonus, termination, severance or other similar payments to any Service Provider pursuant to any agreement or arrangement adopted or entered into by Purchaser (or by the Companies at the written direction of
Purchaser) after the date hereof or any so-called double trigger arrangement that is triggered by the termination of any Transferred Employee following the consummation of the Closing be considered Change of Control Payments.
“
Code
” means the Internal
Revenue Code of 1986, as amended.
“
Collective Bargaining Agreement
”
means each collective bargaining or other labor union Contract or labor arrangement or similar agreement covering any Employee of the Business, in each case, which is listed on
Section 3.14(b)
of the Seller Disclosure Letter.
“
Communications Act
” means the
Communications Act of 1934, as amended, and the rules, regulations, written policies and orders of the FCC thereunder.
“
Compliant
” means, with respect
to the Required Information, that (i) such Required Information does not contain any untrue statement of a material fact regarding the Business, or omit to state any material fact regarding the Business necessary in order to make such
Required Information not misleading under the circumstances, (ii) such Required Information complies in all material respects with all applicable requirements of Regulation S-K and Regulation S-X under the Securities Act for a
registered public offering of non-convertible debt securities on Form S-1 (other than such provisions for which compliance is not customary in a Rule 144A offering of non-convertible debt securities and other than any such information
not required to be included pursuant to paragraph 5 of the Debt Commitment Letter), (iii) with respect to any interim financial statements, such interim financial statements have been reviewed by the Companies’ independent accountants
as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105 and (iv) the financial statements and other financial information included in such Required Information would not be deemed stale or
otherwise be unusable under customary practices for offerings and private placements of non-
convertible debt securities under Rule 144A of the Securities Act and are sufficient to permit the applicable
independent accountants of the Companies to issue customary comfort letters to the financing sources providing the Debt Financing, including as to customary negative assurances and change period, in order to consummate any offering of
debt securities on any day during the Marketing Period, which such accountants have confirmed they are prepared to issue subject to their completion of customary procedures.
“
Credit Support Obligations
”
shall mean letters of credit, guarantees, surety bonds, trust agreements and other credit support instruments issued by Seller or any of its Affiliates (including the Companies) or third parties on behalf of the Business or any Company.
“
Current Assets
” means, as
determined in accordance with the Accounting Principles, the consolidated total current assets of the Companies (consisting only of the asset account line items specified as “Current Assets” on Exhibit F), but excluding (x) Cash and (y)
income Tax assets and deferred Tax assets (but shall include current non-income Tax assets).
“
Current Liabilities
” means, as
determined in accordance with the Accounting Principles, the consolidated total current liabilities of the Companies (consisting only of the liability account line items specified as “Current Liabilities” on Exhibit F), but excluding
(x) Indebtedness and (y) income Tax liabilities and deferred Tax liabilities (but shall include current non-income Tax liabilities).
“
Customer Contract
” means any
customer Contract (other than Master Agreements) entered into by Seller or any other member of the Seller Group that exclusively provides for the delivery of goods and services of the Business as of the Closing to customers of the
Business as of the Closing (including customer equipment leases, customer equipment warranties, pay phone service arrangements and Contracts with customers with originating switched long distance traffic initiating from the local
exchanges).
“
Customer Database
” means all
customer databases, customer lists, historical records of customers and any other information collected with respect to residential and commercial customers of the Business, including, as applicable, current address, service address,
customer contact history, service history, payment history, information relating to services purchased and billing information.
“
DPA
” means Section 721 of the
Defense Production Act of 1950, as amended, and all regulations issued and effective thereunder.
“
Employee Liability Adjustment Escrow
Account
” means the escrow account maintained by the Escrow Agent to hold and disburse the Employee Liability Adjustment Escrow Funds pursuant to the Escrow Agreement and the terms of this Agreement.
“
Employee Liability Adjustment Escrow
Amount
” means an amount equal to the amount set forth opposite such name in Section 9.06(b)(x) of the Seller Disclosure Letter.
“
Employee Liability Adjustment Escrow
Funds
” means the amount of funds in the Employee Liability Adjustment Escrow Account from time to time.
“
Employee of the Business
”
means each employee of Seller or its Affiliates listed on
Section 9.06(b)(iii)
of the Seller Disclosure Letter, identified by identification number and job
title, as it may be amended from time to time in accordance with this Agreement, which represents those employees whose primary duties (i) immediately prior to the date of this Agreement have been dedicated to the Business, (ii) as of
their last date actively at work prior to commencing (A) maternity or paternity leave, educational leave, short-term disability leave, military leave with veterans’ reemployment rights under federal law, leave under the Family and
Medical Leave Act of 1993, or any other approved leave of absence (other than long-term disability leave) or (B) long-term disability leave solely in the case of union represented employees who are receiving benefits under a long-term
disability plan maintained by the Seller or its Affiliates and whose reinstatement rights with Seller or Affiliates have not expired as of the Closing, in either case, were dedicated to the Business or (iii) as of their last date
actively at work in the case of individuals who were union represented employees and who have been laid off and have a right to recall by Seller or its Affiliates that has not expired as of the Closing, were dedicated to the Business.
For the avoidance of doubt, (A) any individual set forth on
Section 9.06(b)(iv)
of the Seller Disclosure Letter shall not be an “Employee of the Business”
(each such individual, a “
Retained Employee
”), (B) no individual set forth on
Section
9.06(b)(iii)
of the Seller Disclosure Letter shall be a Retained Employee and (C) no individual that works in any state outside the Territory shall be an Employee of the Business without the prior written consent of
Purchaser.
“
Environmental Laws
” means any
and all applicable Laws and Judgments issued, promulgated or entered into by or with any Governmental Entity relating to pollution, protection of human health and safety (as such relates to exposure to hazardous or toxic substances) or
the environment, or preservation or reclamation of natural resources or the storage, treatment, transportation, release or disposal of hazardous or toxic substances.
“
Equity Interest
” means any
share capital, membership interest, partnership interest or other equity interest in a Person.
“
ERISA
” means the Employee
Retirement Income Act of 1974, as amended.
“
Escrow Agent
” means Citibank,
N.A.
“
Escrow Agent Fee
” means the
fee to be charged by the Escrow Agent for its services under the Escrow Agreement.
“
FCC
” means the U.S. Federal
Communications Commission or any successor Governmental Entity.
“
Final Closing Date Amount
”
means an amount equal to:
(i) the Purchase Price;
plus
(ii) Closing Cash;
plus
(iii) Closing Working Capital;
minus
(iv) Target Working Capital;
minus
(v) Closing Indebtedness;
plus
(vi) the Closing Required Payment Amount;
minus
(vii) the Closing Change of Control Payments;
minus
(viii) the Indemnity Escrow Amount;
minus
(ix) the Adjustment Escrow Amount;
minus
(x) fifty percent (50%) of the Escrow Agent Fee.
“
Final Unfunded Employee Liability
Amount
” means an amount equal to the sum of (i) the Closing Unfunded Defined Benefit Plan Liability Amount, (ii) the Closing Retiree Medical Liability Amount and (iii) the Employee Liability Adjustment Escrow Amount.
“
Financial Statements
” means
the Unaudited Historical Financial Statements, the 2016 Audited Financial Statements, the 2017 Audited Financial Statements, the 2018 Audited Financial Statements, and, to the extent required to be delivered to Purchaser pursuant to
Section 5.24
(
Certain Financial Statements
), the Q1 2019 Unaudited
Financial Statements, the Q2 2019 Unaudited Financial Statements, the Q3 2019 Unaudited Financial Statements, the 2019 Audited Financial Statements and the Q1 2020 Unaudited Financial Statements, collectively.
“
Former Employee of the Business
”
means any Employee of the Business who is not employed by one of the Companies as of the Closing or any individual who is set forth on
Section 9.06(b)(viii)
of the Seller Disclosure Letter, as it may be amended from time to time in accordance with this Agreement.
“
Franchise
” means each
franchise, as such term is defined in the 47 U.S.C. § 522, granted by a Governmental Entity authorizing the construction, upgrade, maintenance and operation of any part of any System.
“
GAAP
” means generally
accepted accounting principles in the United States.
“
Hazardous Substances
” means
any petroleum or petroleum distillate or by-product, any radioactive material, or any other chemical, material or substance defined, classified or regulated under Environmental Law as “hazardous” or “toxic”, or as an environmental
“contaminant” or “pollutant”, or words of similar meaning and regulatory effect.
“
Indebtedness
” means, as
determined in accordance with the Accounting Principles (to the extent applicable), without duplication, the outstanding principal amount of, accrued and unpaid interest on, and other payment obligations (including any prepayment
premiums, fees, expenses, make-whole payments, termination or breakages costs or penalties payable as a result of the consummation of the Transactions) arising under, any obligations of the Companies consisting of (i) indebtedness for
borrowed money or in respect of loans or advances; (ii) obligations evidenced by bonds, notes, debentures, mortgages, debt securities or other similar
instruments or by letters of credit or other Credit Support Obligations (but only to the extent drawn);
(iii) purchase money obligations, conditional sale obligations, obligations under any title retention agreement and all other obligations relating to the deferred purchase price of property or services, including all notes and
“earn-out” payments (other than trade payables incurred in the ordinary course of business consistent with past practice); (iv) obligations in respect of amounts outstanding under overdraft or similar lines; (v) capital lease
obligations; (vi) obligations in respect of commodity or other derivative agreements, interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangement; (vii) any Taxes
for current or future Tax periods that have arisen or may arise under Section 965 of the Code, assuming all such Taxes were due and payable in a Pre-Closing Tax Period and without taking into account any election under Section 965(h)
of the Code; (viii) guarantees of obligations of the type described in the foregoing clauses of any other Person; and (ix) in the event the Closing occurs on or prior to January 1, 2020, an amount, if any, equal to the sum of (A) the
remaining dollar expenditures required to be made in order to satisfy any CAF II Obligations required to be completed by December 31, 2019, that have not been so satisfied by Seller or one or more of its Affiliates as of the Closing,
plus
(B) any CAF II Penalties related to the Territory arising prior to (and which remained unpaid as of) the Closing.
“
Indemnity Escrow Account
”
means the escrow account maintained by the Escrow Agent to hold and disburse the Indemnity Escrow Funds pursuant to the Escrow Agreement and the terms of this Agreement.
“
Indemnity Escrow Amount
”
means an amount equal to the amount set forth opposite such name in Section 9.06(b)(x) of the Seller Disclosure Letter.
“
Indemnity Escrow Funds
”
means the amount of funds in the Indemnity Escrow Account from time to time.
“
Indemnity Escrow Release Date
”
means the date that is 12 months after the Closing Date.
“
Independent Expert
” means
Ernst & Young, or if such Person is unable or unwilling to serve, another internationally recognized independent public accounting firm agreed upon by Purchaser and Seller in writing (such agreement not to be unreasonably
withheld, conditioned or delayed);
provided
that in the case of a dispute concerning the Unfunded Defined Benefit Pension Liabilities and the Transferred
Retiree Medical Liabilities, the Independent Expert means the actuary mutually appointed by Seller and Purchaser as contemplated by
Section 5.06(i)(v)
.
“
Information Privacy Laws
”
means all Laws concerning the receipt, collection, use, storage, processing, sharing, security, privacy, disclosure, sale, license or transfer of any Personal Information.
“
Initial Closing Date Amount
”
means an amount equal to:
(i)
the Purchase Price;
plus
(ii)
Estimated Cash;
plus
(iii)
Estimated Working Capital;
minus
(iv)
Target Working Capital;
minus
(v)
Estimated Indebtedness;
plus
(vi)
the Estimated Required Payment Amount;
minus
(vii)
the Estimated Change of Control Payments;
minus
(viii)
the Indemnity Escrow Amount;
minus
(ix)
the Adjustment Escrow Amount;
minus
(x)
fifty percent (50%) of the Escrow Agent Fee.
“
Initial Unfunded Employee Liability
Amount
” means an amount equal to the sum of (i) the Estimated Unfunded Defined Benefit Plan Liability Amount, (ii) the Estimated Retiree Medical Liability Amount and (iii) the Employee Liability Adjustment Escrow
Amount.
“
Intellectual Property
” means
the following, in any and all countries: (i) patents and patent applications, inventions, utility models and industrial designs, and all applications and issuances therefor, together with all reissuances, divisions, renewals,
revisions, extensions, reexaminations, provisionals, continuations and continuations-in-part with respect thereto; (ii) trademarks, trade names, service marks, trade dress, taglines, social media identifiers and related accounts,
brand names, logos and corporate names, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals therefor; (iii) internet domain names and other computer identifiers;
(iv) copyrights, applications and registrations therefor; (v) Software; (vi) trade secrets, know-how, inventions, processes, procedures, databases, confidential business information and other proprietary information and rights; and
(vii) all other intellectual property rights of any kind or nature.
“
IT Assets
” means all
computer systems, including Software, hardware, firmware, middleware and platforms, interfaces, systems, networks, information technology equipment, facilities, websites, infrastructure, workstations, switches, data communications
lines and associated documentation used or held for use by the Companies in connection with the conduct of the Business, including the systems underlying the Systems Standup.
“
Knowledge
” means, (i) with
respect to Seller, the actual knowledge of the individuals listed in
Section 9.06(b)(vi)
of the Seller Disclosure Letter after having made reasonable
inquiry of those employees of members of the Seller Group or of a Company primarily responsible for the relevant matters and (ii) with respect to Purchaser, the actual knowledge of Steven B. Weed, Harold Zeitz, Wayne Schattenkerk and
Timothy Austin, after having made reasonable inquiry of those employees or members of Purchaser or its Affiliates primarily responsible for the relevant matters.
“
Labor Laws
” means all
federal, state, local and foreign Laws regarding labor, employment and employment practices, including but not limited to all Laws relating to: (i) the
hiring, promotion, assignment and termination of employees (including, but not limited to, timing and usage of
employment applications, drug testing and pre-employment testing); (ii) discrimination; (iii) harassment; (iv) retaliation; (v) equal employment opportunities; (vi) disability; (vii) labor relations; (viii) wages and hours; (ix) the
Fair Labor Standards Act of 1938 and applicable state and local wage and hour Laws; (x) hours of work; (xi) payment of wages (including, but not limited to, the timing of payments, recordkeeping and reporting of wages to employees);
(xii) immigration; (xiii) workers’ compensation; (xiv) employee benefits; (xv) background and credit checks; (xvi) working conditions; (xvii) occupational safety and health; (xviii) family and medical leave; (xix) sick, family or
personal leaves, paid or unpaid; (xx) classification of employees; (xxi) unfair competition/noncompetition; and (xxii) any bargaining or other obligations under the National Labor Relations Act, in each case, including, but not
limited to, the Labor Management Relations Act, the Fair Credit Reporting Act, the Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in
Employment Act, the Family and Medical Leave Act, the Equal Pay Act, the Rehabilitation Act, ERISA, the Health Insurance Portability and Accountability Act of 1996, the Uniform Services Employment and Reemployment Rights Act, the
Genetic Information Nondiscrimination Act, 42 U.S.C. §§ 1981, 1983, 1985, and 1986, the Sarbanes-Oxley Act, the Immigration Reform and Control Act, the Dodd-Frank Act, the WARN Act and the Patient Protection and Affordable Care Act.
“
Lender Related Parties
”
means the entities, including the Lenders, that have, directly or indirectly, committed to provide or arrange (or in the future commit to provide or arrange) or otherwise entered into agreements in connection with any Debt Financing,
including the parties named in any joinder agreements or credit agreements entered into pursuant or relating thereto, their Affiliates, and their and their Affiliates’ respective former, current and future directors, officers,
managers, members, stockholders, managers, members, general or limited partners, employees, agents, advisors and representatives, attorneys and representatives of the foregoing, and successors and permitted assigns of any of the
foregoing.
“
Liens
” means any mortgages,
deeds of trust, liens, security interests, charges, pledges, options, restrictions on transfer, easements, rights-of-way, title defects or similar encumbrances of any kind.
“
Local Franchising Authority
”
means any local franchising authority having regulatory authority over cable television services and related Systems.
“
Marketing Period
” means the
first period of 15 consecutive business days after the date of this Agreement throughout which, and at the end of which, (i) Purchaser has the Required Information and the Required Information is Compliant (it being understood that if
Seller shall in good faith reasonably believe that it has provided the Required Information and the Required Information is Compliant, it may deliver to Purchaser a written notice to that effect (stating when it believes the Required
Information was delivered), in which case Seller shall be deemed to have delivered the Required Information to Purchaser on the date of delivery of such notice unless Purchaser in good faith reasonably believes that Seller has not
completed delivery of the Required Information or the Required Information is not Compliant and, within three (3) Business Days after its receipt of such notice from Seller, Purchaser delivers a written notice to Seller to that effect
(stating with specificity which Required Information Purchaser reasonably
believes Seller has not delivered or the reason for which Purchaser reasonably believes the Required Information is
not Compliant);
provided
that it is understood that delivery of such written notice from Purchaser to Seller will not prejudice Seller’s right to
assert that the Required Information has in fact been delivered and is Compliant); (ii) the conditions set forth in
Sections 6.01
(
Conditions to Each Party’s Obligation
) and
6.02
(
Conditions to Obligation of Purchaser
) are satisfied (other than those conditions that by their nature can only be satisfied at the
Closing, but subject to the satisfaction or, to the extent permitted by applicable Law, waiver of such conditions); and (iii) nothing has occurred and no condition exists that would cause any of the conditions set forth in
Sections 6.01
(
Conditions to Each Party’s Obligation
)
or
6.02
(
Conditions to Obligation of Purchaser
)
to fail to be satisfied (other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted by applicable Law, waiver of such conditions), assuming that
such conditions were applicable at any time during such 15 consecutive business day period;
provided
that (A) July 3, 2019, July 5, 2019 and
November 29, 2019 shall not be considered business days for purposes of such 15 consecutive business day period, (B) if such 15 consecutive business day period shall not have fully elapsed on or prior to August 16, 2019, then such 15
consecutive business day period shall commence no earlier than September 3, 2019 and (C) if such 15 consecutive business day period shall not have fully elapsed on or prior to December 20, 2019, then such 15 consecutive business day
period shall commence no earlier than January 6, 2020. Notwithstanding the foregoing, the Marketing Period will end on any earlier date on which the Debt Financing is funded (including funding into escrow) and the Marketing Period
will not commence or be deemed to have commenced if, after the date of this Agreement and prior to the completion of the consecutive business day period referenced herein, (1) Seller’s independent accountant has withdrawn its audit
opinion with respect to the 2016 Audited Financial Statements, 2017 Audited Financial Statements, 2018 Audited Financial Statements or 2019 Audited Financial Statements (as applicable), in which case the Marketing Period will not be
deemed to commence unless and until a new unqualified audit opinion is issued with respect to the consolidated financial statements of the Business for the applicable periods by the independent accountant or another “Big Four” or
other nationally recognized independent public accounting firm or other public accounting firm reasonably acceptable to Purchaser, (2) Seller issues a public statement indicating its intent to restate any historical financial
statements of the Business, in which case the Marketing Period will not be deemed to commence unless and until such restatement has been completed and the relevant Required Information has been amended or Seller has announced that it
has concluded that no restatement will be required in accordance with GAAP or (3) any Required Information would not be Compliant at any time during such business consecutive business day period (it being understood and agreed that if
any Required Information provided at the commencement of the Marketing Period ceases to be Compliant during such consecutive business day period, then the Marketing Period will be deemed not to have occurred) or otherwise does not
include the “Required Information” as defined.
“
Master Agreement
” means any
Contract with a customer of Seller or any of its Affiliates, in each case to which Seller or any of its Affiliates is a party, and in each case which provides for such customers to receive one or more products or services that are
provided by the Business as well as one or more products or services that are provided by the Seller Business, excluding, for the avoidance of doubt, any Retained Contracts (as defined in the Reorganization Plan).
“
Material Adverse Effect
”
means any event, change, development, circumstance or effect that, individually or in the aggregate, (a) has had or would reasonably be expected to have a material adverse effect on the business, operations, condition (financial or
otherwise), results of operations, assets or liabilities of the Business, taken as a whole or (b) would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Transactions by
Seller;
provided
,
however
, that, for purposes of clause (a), no such event,
change, development, circumstance or effect to the extent resulting from or arising out of any of the following shall, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been,
any such material adverse effect: (i) any change in applicable Law, GAAP or any applicable accounting standards or any change in the enforcement of any of the foregoing, in each case after the date of this Agreement; (ii) general
economic, political, social, regulatory or business conditions or changes therein (including the commencement, continuation or escalation of war, terrorism, armed hostilities or national or international calamity) or the conditions of
any credit, financial or capital markets; (iii) financial, credit and capital markets conditions, including interest rates, and any changes therein; (iv) currency exchange rates, and any changes therein; (v) any change generally
affecting the industry in which the Business operates; (vi) the announcement of the entry into this Agreement, the identity of Purchaser, including the impact thereof on relationships, contractual or otherwise, with customers,
suppliers, distributors, partners, employees or Governmental Entities (
provided
that this clause (vi) shall not apply to the representations and warranties
set forth in
Section 3.04
(
No Conflicts; Consents
)); (vii) the
compliance with the express terms of this Agreement or the taking of any action required by, or in accordance with, this Agreement (
provided
that this
clause (vii) shall not apply to Seller’s compliance with
Section 5.01
(
Covenants
Relating to Conduct of Business
) (or any action taken by Seller in connection therewith)), (viii) any act of God, weather-related event, natural disaster, pandemic, force majeure event or other similar event; (ix) any act of
terrorism or change in geopolitical conditions; (x) any failure of the Business, as the case may be, to meet any projections, forecasts, estimates, budgets, milestones or financial or operational predictions (
provided
that this clause (x) shall not prevent a determination that any event, change, development, circumstance or effect underlying such failure to meet projections or
forecasts has resulted in a Material Adverse Effect (to the extent such event, change, development, circumstance or effect is not otherwise excluded from this definition of Material Adverse Effect)); (xi) changes or prospective
changes in credit ratings of any of the Companies (
provided
that this clause (xi) shall not prevent a determination that any event, change, development,
circumstance or effect underlying such change or prospective changes in such credit ratings has resulted in a Material Adverse Effect (to the extent such event, change, development, circumstance or effect is not otherwise excluded
from this definition of Material Adverse Effect)); or (xii) any action taken after the date of this Agreement at the written request of Purchaser (other than compliance with the terms hereof);
provided
that the exceptions in clauses (i), (ii), (iii), (iv), (v), (viii) and (ix) above shall not apply to the extent such circumstance, development, effect, change, event,
occurrence or state of facts has a disproportionate impact on the Business relative to other participants in the industry in which the Business operates (in which case the incremental disproportionate impact or impacts may be taken
into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect).
“
Names
” means the names,
words and logos set forth on
Section 9.06(b)(vii)
of the Seller Disclosure Letter, any other names, phrases or logos including any such word or logo,
and any trademarks, service marks, internet domain names, trade names, trade dress, social media identifiers,
handles and tags, or other identifiers of source or goodwill confusingly similar to, or dilutive of any of the foregoing, in any jurisdiction in the world.
“
New Names
” means the names,
words, logos and other trademarks selected and confirmed by Purchaser in writing prior to Closing (including by the filing of applications for registration, as applicable) for use in connection with the Business following the Closing,
including in conjunction with the Names during the Transition Period as set forth herein, that, in each case, do not contain and are not confusingly similar to or a derivative of any Names.
“
Pension Principles
” means
the accounting practices, principles, policies, procedures and methodologies set forth on
Exhibit H
.
“
Permitted Liens
” means any
(i) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business for amounts not yet due or payable or that are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained on the Financial Statements in accordance with the Accounting Principles; (ii) Liens of lessors over assets owned by them and leased to a third party; (iii) solely with respect to
personal property, Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business; (iv) Liens for Taxes, assessments or other
governmental charges that are not due and payable, or that are being contested in good faith by appropriate Proceedings and for which adequate reserves have been maintained on the Financial Statements in accordance with the Accounting
Principles; (v) easements, covenants, conditions, rights-of-way, imperfections of title, restrictions and other similar encumbrances or other minor title defects that, in each case, do not require payment of a sum of money to
discharge and that, individually or in the aggregate, would not reasonably be expected to materially interfere with or impair the present use or occupancy of the applicable property; (vi) zoning, building, land use and other similar
restrictions; (vii) Liens that have been placed by any developer, landlord or other third party on the fee interest in any Leased Real Property or on property over which the Companies have easement rights, or any subordination or
similar agreements relating thereto; (viii) non-exclusive licenses of Intellectual Property granted in the ordinary course of business; (ix) leases listed in
Section 3.07(b)
of the Seller Disclosure Letter or leases entered into in the ordinary course of business; and (x) other non-monetary imperfections of title or encumbrances that, individually or in the aggregate, do not materially impair the
continued use and operation of the properties and assets to which they relate in the conduct of the Business as conducted as of the date of this Agreement.
“
Person
” means any natural
person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Entity or other entity.
“
Personal Information
” means
any information that identifies an individual, and any other personal information that is protected by any applicable Laws.
“
Personal Property
” means all
of the machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, spare parts and other tangible
personal property which is owned, used or leased by the Company and used in the conduct of the Business or the
operations of the Business.
“
Post-Closing Tax Period
”
shall mean any taxable period (or the portion of any Straddle Period) that begins after the Closing Date.
“
Pre-Closing Tax Period
”
shall mean any taxable period (or the portion of any Straddle Period) that ends on or before the Closing Date.
“
Pre-Closing Tax Return
”
shall mean any Tax Return required to be filed by or with respect to any Company with respect to any Pre-Closing Tax Period.
“
Privileged Information
”
means, with respect to each party, information regarding such party or its Subsidiaries, or any of its operations, assets or liabilities (whether in documents or stored in any other form or known to its employees or agents) that is
protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or another applicable legal privilege, in each case that the other party or its Subsidiaries may come into possession of or obtain access
in connection with the Transactions.
“
Proceeding
” shall mean any
claim, suit, action, hearing, litigation, administrative charge, investigation, arbitration or other material proceeding (whether civil, criminal, administrative, or investigative).
“
Public Notice
” means that
certain notice referred to as
Wireline Competition Bureau Announces Connect America Phase II Support Amounts Offered to Price Cap Carriers to Expand
Rural Broadband
, WC Docket No. 10-90, Public Notice, 30 FCC Rcd 3905 (Apr. 29, 2015).
“
Purchaser Fundamental Representations
”
means the representations and warranties set forth in
Section 4.01
(
Organization
and Standing; Power
),
Section 4.02
(
Authority; Execution and
Delivery; Enforceability
),
Section 4.09
(Brokers or Finders)
and
Section 4.10
(
Guarantee
).
“
Purchaser Portion
” means the
portion of any Master Agreement to the extent related to the Business.
“
Q1 2019 Unaudited Financial Statements
”
means, collectively, (a) the unaudited balance sheet for the Business as of March 31, 2019 (with comparative information as of December 31, 2018), and (b) the unaudited income statement and statement of cash flows for the Business for
the three-month period ended March 31, 2019 (with comparative information for the three-month period ended March 31, 2018), together with condensed footnote disclosure, in each case prepared in accordance with GAAP and reviewed by the
independent accountants of the Companies as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105.
“
Q1 2020 Unaudited Financial Statements
”
means, collectively, (a) the unaudited balance sheet for the Business as of March 31, 2020 (with comparative information as of December 31, 2019), and (b) the unaudited income statement and statement of cash flows for the
Business for the three-month period ended March 31, 2020 (with comparative information for the three-month period
ended March 31, 2019), together with condensed footnote disclosure, in each case prepared in accordance with GAAP and reviewed by the independent accountants of the Companies as provided in the procedures specified by the Public
Company Accounting Oversight Board in AS 4105.
“
Q2 2019 Unaudited Financial Statements
”
means, collectively, (a) the unaudited balance sheet for the Business as of June 30, 2019 (with comparative information as of March 31, 2019), and (b) the unaudited income statement and statement of cash flows for the Business for the
six-month period ended June 30, 2019 (with comparative information for the six-month period ended June 30, 2018), together with condensed footnote disclosure, in each case prepared in accordance with GAAP and reviewed by the
independent accountants of the Companies as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105.
“
Q3 2019 Unaudited Financial Statements
”
means, collectively, (a) the unaudited balance sheet for the Business as of September 30, 2019 (with comparative information as of June 30, 2018), and (b) the unaudited income statement and statement of cash flows for the Business for
the nine-month period ended September 30, 2019 (with comparative information for the nine-month period ended September 30, 2018), together with condensed footnote disclosure, in each case prepared in accordance with GAAP and reviewed
by the independent accountants of the Companies as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105.
“
Redacted Fee Letter
” means a
fee letter from a Lender Related Party in which the only redactions are fee amounts, pricing caps and other economic terms that are customarily redacted in connection with agreements of this type;
provided
,
however
, that in each case, such redactions do not relate to any terms that could adversely
affect the conditionality, enforceability, availability, termination or aggregate principal amount of the Debt Financing or other funding being made available by such Lender Related Party.
“
Reference Time
” means 11:59
p.m. (New York City time) on the day immediately preceding the Closing Date.
“
Release
” means any disposal,
discharge, emission, injection, spill, leaking, leaching, pumping, dumping, emptying, or disposal on, into or under any land, soil, surface water, groundwater or ambient air.
“
Required Information
” means
all financial statements, financial data and other information regarding the Business of the type and form customarily included in marketing documents used to consummate transactions of the type contemplated by the Debt Commitment
Letter, and reasonably requested by Purchaser to consummate the Debt Financing, including all information required by paragraphs 4 and 5 of Exhibit D to the Debt Commitment Letter (it being understood that nothing herein shall
obligate Seller to prepare pro forma financial statements or any offering document referred to in paragraphs 3 and 5 of Exhibit D to the Debt Commitment Letter).
“
Required Payment Amount
”
means the aggregate amount, if any, of all amounts (excluding, for the avoidance of doubt, any income Taxes imposed on Seller or its Affiliates as a result of the transfer of the Transferred Equity Interest as contemplated by this
Agreement and any payments in respect of Proceedings set forth in Section 3.12 of the Seller Disclosure Letter) required to be paid, refunded, credited, discounted, deferred, escrowed or foregone pursuant to any Judgment enforced or
entered by a Governmental Entity, settlement agreement with any Governmental Entity or otherwise (including in the form of any contribution or transfer of assets or assumption or retention of liabilities, measured at fair market value
and assuming the maximum amount of any contingent or deferred amount that would be payable on or prior to the first anniversary of the Closing is paid or foregone and the full amount of any deferred, contingent or escrowed amount is
not received and including any contingent or deferred amounts payable following the first anniversary of the Closing only as and when actually paid, refunded, credited, discounted, escrowed or foregone) by Seller or any of its
Subsidiaries, other than post-Closing obligations of any Company, in each case, as a condition to obtaining any Consent of any Governmental Entity required to consummate the Transactions or to comply with any Judgment of any
Governmental Entity approving the Transactions, excluding, in each case, any amounts that the parties have otherwise allocated responsibility for pursuant to this Agreement or any other Transaction Agreement; it being understood that
any amount (i) required to be so paid, refunded, credited, discounted, deferred, escrowed or foregone shall not be considered a Required Payment Amount to the extent not related to the Business, (ii) that was included as a Required
Payment Amount that is subsequently paid to any member of the Seller Group or any of their Affiliates after the Closing (each a “
Refunded Required Payment
”)
shall, to the extent of such subsequent payment, be promptly (but in no event later than five Business Days after receipt of such payment) refunded to Purchaser, (iii) that is contingent or deferred and therefore the maximum amount
for a period until the first anniversary of the Closing was assumed in the determination of the Required Payment Amount and such amount subsequently is actually less than such assumed maximum amount, then to the extent such amount is
actually less (the amount by which any such amount is actually less, an “
Unpaid Contingent Amount
”) it shall be promptly (but in no event later than five
Business Days after final determination that such amount is actually less) refunded to Purchaser and (iv) any amount that is part of the Required Payment Amount shall be supported by reasonable documentation provided by Seller to
Purchaser.
“
Required Regulatory Approvals
”
means those orders, decisions, approvals, sanctions, rulings, Consents, exemptions, clearances, written confirmations of no intention to initiate legal Proceedings and other approvals (including the lapse, without objection, of a
prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of, or registrations, declarations, notices or
filings required to be made to or with, Governmental Entities set forth in
Section 9.06(b)(v)
of the Seller Disclosure Letter.
“
Retiree Medical Principles
”
means the accounting practices, principles, policies, procedures and methodologies set forth on
Exhibit I
.
“
Scheduled Size
” means, with
respect to any Specified Employee Group or the Business, the total number (comprised of current, required and staffing collectively) of Employees of the Business associated with such Specified Employee Group or the Business, as
applicable, as set forth in
Section 9.06(b)(ix)
of the Seller Disclosure Letter.
“
Securities Act
” means the
U.S. Securities Act of 1933, as amended.
“
Seller Business
” means the
business and operations of Seller and its Affiliates other than the Business.
“
Seller Consolidated Group
”
means an affiliated, consolidated, combined or unitary group of which Seller and its Affiliates (including any Company) are part.
“
Seller Consolidated Return
”
means any Tax Return of a Seller Consolidated Group or solely of or with respect to Seller.
“
Seller Disclosure Letter
”
means the disclosure letter dated as of the date of this Agreement and delivered by Seller to Purchaser prior to the execution hereof.
“
Seller Fundamental Representations
”
means the representations and warranties set forth in
Section 2.01
(
Organization
and Standing; Power
),
Section 2.02
(
Authority; Execution and
Delivery; Enforceability
),
Section 2.04
(
The Transferred Equity
Interests
),
Section 2.05
(
Brokers or Finders
),
Section 2.06
(
Opinion of Duff & Phelps, LLC
),
Section 3.01(a)
(
Organization and Standing; Power
) and
Section 3.02
(
Capitalization
).
“
Seller Group
” means Seller
and its Affiliates, other than the Companies.
“
Seller IP
” means the
Intellectual Property (other than the Names and any Intellectual Property licensed to a Company pursuant to a Transferred IP License) that is (i) owned or controlled by Seller or any of its Affiliates (other than the Companies) as of
immediately following the Closing and (ii) used or held for use in connection with the operation of the Business as currently conducted by Seller or any of its Affiliates as of the Closing Date.
“
Seller Portion
” means the
portion of any Master Agreement to the extent related to the Seller Business.
“
Service Provider
” means any
employee, officer, director or consultant of any Company or any individual who is otherwise an Employee of the Business.
“
Shared Proceedings
” means
all pending or threatened Proceedings that have been or may be asserted by a third party against, or otherwise adversely affect, Seller or its Subsidiaries (other than the Companies), on the one hand, and the Business, on the other
hand.
“
Software
” means all:
(i) computer programs, whether in source code, object code or human readable form; (ii) databases and compilations, including all data and collections of data, whether machine readable or otherwise; and (iii) all documentation
including user manuals and other training documentation relating to any of the foregoing.
“
Solvent
” when used with
respect to any Person, means that, as of any date of determination, (a) the fair value of the assets of such Person and its subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct,
subordinated, contingent or otherwise, of such Person and its subsidiaries on a consolidated basis, (b) the present fair saleable value of the property of such Person and its subsidiaries on a consolidated
basis will be greater than the amount that will be required to pay the probable liability of such Person and its
subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such Person and its subsidiaries on a
consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, and (d) such Person and its subsidiaries on a consolidated
basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.
“
Specified Employee Group
”
means any of the following groups of Employees of the Business: (i) field operations; (ii) network; and (iii) sales.
“
State Regulator
” means any
state public service or state public utility commission.
“
Straddle Period
” shall mean
any taxable period that begins on or before the Closing Date and ends after the Closing Date.
“
Straddle Period Tax Returns
”
means any Tax Return required to be filed by or with respect to any Company with respect to any Straddle Period.
“
Subsidiary
” of any Person
means any other Person of which (either alone and/or through and/or together with any other Subsidiary) an amount of the securities or interests having by the terms thereof the rights to a majority of the economic interests of such
other Person or the voting power to elect at least a majority of the board of directors or other analogous governing body of such other Person (or, if there are no such voting securities or voting interests, of which at least a
majority of the equity interests), is directly or indirectly owned or controlled by such first Person, or the general partner of which is such first Person.
“
Systems
” shall mean all of
the assets, property and business constituting each of the information technology systems in the Territory used or useful in the Business, including the software, hardware, networks, hubs, nodes, poles and interfaces, used or
currently planned to be used in the conduct of such business, and all activities and operations related thereto.
“
Target Working Capital
”
means an amount equal to $7,116,309, which amount shall be updated following the date of this Agreement in accordance with Exhibit F attached hereto.
“
Tax
” means all taxes,
customs, levies, duties, imposts, and all charges, fees, required deposits or other assessments of any kind in the nature of a tax, including all federal, state, local or non-U.S. net income, capital gains, gross income, gross
receipt, property, franchise, sales, use, excise, withholding, payroll, employment, social security, worker’s compensation, unemployment, occupation, capital stock, transfer, gains, windfall profits, net worth, escheat, asset,
telecommunications, transaction and other taxes, and any interest, penalties or additions to tax with respect thereto, imposed upon any Person by any Taxing
Authority under applicable Law;
provided
,
however
, for the avoidance of doubt, this definition shall not include any universal service fund surcharges, 911 fees and surcharges, utility
licensing and privilege fees, Public Utility Commission fees and assessments, or telecom service fund fees and surcharges.
“
Tax Return
” means any
return, declaration, report, claim for refund, information return or statement relating to Taxes, including any schedule or attachment thereto, filed or maintained or required to be filed or maintained, in connection with the
calculation, documentation, determination, assessment or collection of any Tax.
“
Taxing Authority
” means any
Governmental Entity exercising authority under Law with respect to Taxes.
“
Telecommunications Fees and Surcharges
”
means all fees and surcharges relating to, or arising in respect of, the business of providing telecommunications and other similar services, including universal service fund surcharges, 911 fees and surcharges, utility licensing and
privilege fees, Public Utility Commission fees and assessments, telecom service fund fees and surcharges, and all other similar taxes, fees and surcharges imposed by any Governmental Entity.
“
Transaction Agreements
”
means this Agreement, the Transition Services Agreement, the Escrow Agreement, the Reorganization Plan and any other agreements and instruments to be executed and delivered in connection with the transactions contemplated by this
Agreement.
“
Transfer Taxes
” means all
transfer, documentary, sales, value added, use, stamp, registration, business and occupation and other similar Taxes.
“
Transferred Employee
” means
each Employee of the Business whose employment transfers automatically to Purchaser or its Affiliates upon the Closing Date pursuant to the transfer of the Transferred Equity Interests to Purchaser. For the avoidance of doubt, (i)
each Employee of the Business who is receiving benefits under a long-term disability plan maintained by the Seller or its Affiliates and whose reinstatement rights with Seller or its Affiliates under a Collective Bargaining Agreement
have not expired as of the Closing is a Transferred Employee and (ii) no individual that works in any state other than the Territory shall be a Transferred Employee unless consented to by Purchaser in writing.
“
Transferred IP Licenses
”
means any Contract between a Company and a third party (other than a member of the Seller Group) pursuant to which a Company is licensed directly Intellectual Property;
provided
,
however
, that if (x) such Contract licensing such Intellectual Property is governed by a master or enterprise license agreement between Seller or any of its
Affiliates (other than the Companies) and a third party, then such Contract and such Intellectual Property shall be an Excluded Asset unless the applicable master or enterprise agreement does not prevent a transfer or assignment of
the underlying Contract licensing such Intellectual Property, and (y) if such Contract licensing such Intellectual Property is a Contract to which one or more Affiliates of Seller (other than the Companies) is also a party, then such
Contract and such Intellectual Property shall be an Excluded Asset unless such Contract allows
for the assignment of solely the portion of such Contract that is solely applicable to the Business, in which case
solely such portion of such Contract shall be a Transferred IP License. For the avoidance of doubt, the “Transferred IP Licenses” do not include any Business Vendor Contracts or the Verizon IP Agreements.
“
Transferred Retiree Medical Liabilities
”
means the aggregate Accumulated Projected Benefit Obligation (as defined under GAAP) with respect to the Retiree Medical Benefits accrued under the Benefit Plans by the Transferred Employees who are covered by the Collective
Bargaining Agreements determined, as of the Closing Date, in accordance with GAAP and the Retiree Medical Principles.
“
Unaudited Historical Financial
Statements
” means (a) the unaudited balance sheet for the Business as of December 31, 2016, December 31, 2017, December 31, 2018 and March 31, 2019 and (b) the statement of operations and statement of cash flows for the
Business for the fiscal years ended December 31, 2016, December 31, 2017, December 31, 2018 and the three-month period ended March 31, 2019.
“
Unfunded Defined Benefit Plan Liability
Amount
” means the excess of (a) the aggregate Projected Benefit Obligation (as defined under GAAP) with respect to the Accrued DB Benefits determined, as of the Closing Date, in accordance with GAAP and the Pension
Principles over (b) the aggregate fair market value of the assets of the Business Pension Plans determined, as of the Closing Date, to be transferred with respect to the Section 4044 Amounts.
“
USD
” or “
$
” means the lawful currency of the United States.
“
Verizon
” means, as
applicable, Verizon Patent and Licensing Inc., Verizon Information Technologies LLC or Verizon Licensing Company.
“
Verizon IP Rights
” means the
Intellectual Property rights used by the Business in the Territory and licensed to Seller from Verizon under (i) the FS Trademark License Agreement, between Verizon Licensing Company and Seller, dated as of July 1, 2010, and amended
on April 1, 2016 (the “
Trademark License Agreement
”), (ii) the Amended and Restated Software License Agreement, between Verizon Information Technologies LLC
and Seller, dated as of February 5, 2015 and (iii) the Intellectual Property Agreement, among Verizon Patent and Licensing Inc., Seller and Newco West Holdings LLC, dated as of April 1, 2016, in each case as in effect on the date
hereof (collectively, the “
Verizon IP Agreements
”).
“
Working Capital
” means
Current Assets
minus
Current Liabilities.
SECTION 9.07
Legal Representation; Privilege
.
(a) Purchaser agrees, on its own behalf and on behalf of its Affiliates (including, after the Closing, any Company) and its and their respective managers, directors, members, partners, officers and employees, and each of their successors
and assigns (all such parties, the “
Waiving Parties
”), that Cravath, Swaine & Moore LLP (“
Cravath
”)
may serve as counsel to Seller, on the one hand, and the Companies, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the Transactions (the “
Current Representation
”), and that, following consummation of the Transactions, Cravath may serve as counsel to Seller or any of its Affiliates (for the avoidance of
doubt, not including the Companies) or any of their respective
managers, directors, members, partners, officers or employees, in each case, in connection with any dispute, litigation, claim,
Proceeding or obligation arising out of or relating to this Agreement or the Transactions (any such representation, the “
Post-Closing Representation
”),
notwithstanding such current representation of the Companies, and Purchaser on behalf of itself and the Waiving Parties hereby consents thereto and irrevocably waives (and will not assert) any conflict of interest or any objection arising
therefrom or relating thereto.
(b) Purchaser, on behalf of itself and the Waiving Parties, hereby irrevocably
acknowledges and agrees that all communications between or among the Companies prior to the Closing, Seller and their counsel (including Cravath) made in connection with the negotiation, preparation, execution, delivery and performance
under, or any dispute or Proceeding arising out of or relating to, this Agreement or the Transactions, or any matter relating to the foregoing, are privileged communications between Seller and such counsel (notwithstanding that any
Company participated in, was party to or was furnished such communications nor that any Company is also a client of such counsel), and from and after the Closing, neither Purchaser nor any Company nor any Person purporting to act on
behalf of or through Purchaser or any Company, will seek to obtain the same by any process. From and after the Closing, Purchaser, on behalf of itself and the Waiving Parties, waives and will not assert any attorney-client privilege
with respect to any communication between Cravath, any Company or Seller occurring prior to the Closing in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Proceeding arising out
of or relating to, this Agreement or the Transactions, or any matter relating to the foregoing, and the expectation of client confidence belongs to Seller and shall be controlled by Seller and shall not pass to or be claimed by
Purchaser, any Company or any of their respective Affiliates. In connection with any dispute that may arise between Seller, on the one hand, and Purchaser or any Company, on the other hand, Seller (and not Purchaser or any Company)
will have the right to decide whether or not to waive any attorney client privilege that may apply to any communications between Cravath and any Company that occurred before the Closing. Notwithstanding the foregoing, in the event a
dispute arises between Purchaser or the Companies, on the one hand, and a Person other than Seller (or any Affiliate thereof), on the other hand, after the Closing, the Companies may assert the attorney-client privilege to prevent
disclosure of confidential communications by Cravath to such Person;
provided
,
however
,
that no Company may waive such privilege without the prior written consent of Seller.
(c) In the event that any third party commences Proceedings seeking to obtain from
Purchaser or its Affiliates (including, after the Closing, the Companies) attorney-client communications involving Cravath in connection with the Current Representation, Purchaser shall promptly notify Seller so as to permit Seller to
participate in any such Proceedings, at Seller’s sole cost and expense.
SECTION 9.08
Counterparts
.
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each party and delivered to the
other party. Delivery of an executed counterpart of a signature page of this
Agreement by facsimile or other electronic image scan transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.09
Entire Agreement
.
This Agreement, the other Transaction Agreements, the Financing Letters, the Guarantees and the Confidentiality Agreement, and the schedules and the documents attached as exhibits or annexes hereto or thereto, including, the Transition
Services Agreement and any other documents related to the implementation of the Transactions (collectively, the “
Transaction Documents
”), combined with the
other documents referred to therein together constitute the entire agreement by and between the parties with respect to the subject matter hereto, supersede all prior agreements, understandings, representations, warranties, requests for
proposal and/or negotiations, if any. Each of the parties hereto acknowledges and agrees that in executing this Agreement, (i) the intent of the parties is this Agreement and the Transaction Documents shall constitute an unseverable
and single agreement of the parties with respect to the transactions contemplated hereby and thereby, (ii) it waives, on behalf of itself and each of its Affiliates, any claim or defense based upon the characterization that this
Agreement and the other Transaction Documents are anything other than a true single agreement relating to such matters and (iii) the matters set forth in this
Section
9.09
constitute a material inducement to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. Notwithstanding anything to the contrary in any
Transaction Document, each of the parties hereto stipulates and agrees (x) not to challenge the validity, enforceability or characterization of this Agreement and the other Transaction Documents as a single, unseverable instrument
pertaining to the matters that are the subject of such agreements, (y) this Agreement and the other Transaction Documents shall be treated as a single integrated and indivisible agreement for all purposes and (z) not to assert or take
or omit to take any action inconsistent with the agreements and understandings set forth in this
Section 9.09
. None of the parties shall be liable or bound
to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein or in the other Transaction Agreements or the Confidentiality Agreement. In the
event of any conflict between the provisions of this Agreement, on the one hand, and the provisions of any of the other Transaction Agreements or the Confidentiality Agreement, on the other hand, the provisions of this Agreement shall
control.
SECTION 9.10
Severability
.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or
the application thereof to any Person or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid
or enforceable, such provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction;
provided
that the economic
and legal substance of the Transactions is not affected in a manner materially adverse to either of the parties hereto (which, for the avoidance of doubt, shall be deemed to have occurred if
Section 7.03
(
Termination Fee
) or
Section 9.14
(
No Recourse
) is found to be invalid or unenforceable in accordance with its express terms).
SECTION 9.11
Consent to Jurisdiction
.
(a) Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over any suit,
action or other Proceeding, any state or federal court within the State of Delaware), for the purposes of any suit, action or other Proceeding related to or arising out of this Agreement or the Transactions, and irrevocably and
unconditionally waives any objection to the laying of venue of any such suit, action or Proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such
suit, action or Proceeding has been brought in an inconvenient forum. Each party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address set forth in
Section 9.04
(
Notices
) shall be effective service of process for any such
suit, action or Proceeding.
(b) Each of the parties hereto agrees that it will not bring, or permit any of its
Affiliates to bring, any suit, action or other Proceeding of any kind or description, whether in Law or in equity, whether in Contract or in tort or otherwise, against any Lender Related Party arising out of or relating to the Debt
Financing, the Debt Commitment Letter, the definitive agreements relating to the Debt Financing or the performance thereof in any forum other than the Supreme Court of the State of New York, New York County, or the United States
District Court for the Southern District of New York and agrees that any such suit, action or other Proceeding (except to the extent relating to the interpretation of any provisions in this Agreement (including any provision in the Debt
Commitment Letters or in any definitive documentation related to the Debt Financing that expressly specifies that the interpretation of such provisions shall be governed by and construed in accordance with the law of the State of the
Delaware)) shall be governed by the laws of the State of New York (without giving effect to any conflicts of law principles that would result in the application of the laws of another jurisdiction).
SECTION 9.12
WAIVER OF JURY TRIAL
.
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY SUIT, ACTION OR OTHER PROCEEDING RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS (INCLUDING ANY SUIT, ACTION OR
OTHER PROCEEDING RELATED TO OR ARISING OUT OF THE FINANCING OR INVOLVING ANY LENDER RELATED PARTY, THE FINANCING LETTERS, THE DEFINITIVE AGREEMENTS WITH RESPECT TO THE FINANCING OR THE PERFORMANCE THEREOF OR WITH RESPECT TO ANY LENDER
RELATED PARTY).
SECTION 9.13
Governing Law
.
(a) This Agreement, and all matters, claims or causes of action (whether in contract or tort) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by,
and construed in accordance with, the laws of the State of Delaware.
(b) Seller hereby (i) agrees, on behalf of itself and its Affiliates, that no Lender Related Party shall
have any liability or obligation to Seller or any of its Affiliates arising out of or relating to the Debt Financing, the Debt Commitment Letter, the definitive agreements
relating to the Debt Financing or the performance thereof (whether in Law or in equity, whether in Contract or in
tort or otherwise) and (ii) waives any rights or claims against any Lender Related Party in connection with the Debt Financing, the Debt Commitment Letter, the definitive agreements relating to the Debt Financing or the performance
thereof (whether in Contract, tort, equity or otherwise).
SECTION 9.14
No Recourse
.
Notwithstanding anything to the contrary in this Agreement or any document or instrument delivered in connection herewith, by its acceptance of the benefits of this Agreement, each of Seller and Intermediate Holdco covenants, agrees and
acknowledges that (x) no Person other than Purchaser has any Liability (whether known or unknown or whether contingent or otherwise) hereunder or in connection with the Transactions and (y) that this Agreement may only be enforced
against, and any Proceeding for breach of this Agreement may only be made against, Purchaser, and that Seller and Intermediate Holdco have no right of recovery under this Agreement or in respect of the Transactions, or any claim based
on such Liability against, and no personal Liability shall attach to, any Person other than Purchaser, through Purchaser or otherwise, whether by or through attempted piercing of the corporate veil, by or through a claim by or on behalf
of Purchaser against any such Person, by the enforcement of any assessment or by any Proceeding, by virtue of any Law,
or otherwise (except, in the
case of each of clauses (x) and (y) above, solely with respect to the Purchaser Related Parties, to the extent named as a party to any other Transaction Agreement, any Equity Commitment Letter, the Guarantees or the Confidentiality
Agreement, and then only to the extent of the specific obligations of such parties subject to the terms and limitations as set forth therein, as applicable).
SECTION 9.15
Seller and Intermediate
Holdco Obligations
. In the event that Seller or Intermediate Holdco or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or conveys (by merger, consolidation or otherwise) all or majority of its properties or assets to any Person or (iii) engages in another extraordinary corporate
transaction involving another Person which would reasonably be expected to have a material adverse impact on the performance by Seller or Intermediate Holdco of their respective obligations under this Agreement and the other Transaction
Agreements, then, and in each such case, Seller or Intermediate Holdco, as applicable, shall take all necessary action so that the successors or assigns of Seller, Intermediate Holdco or the Seller Group, as the case may be, shall
succeed to the obligations of Seller or Intermediate Holdco, as applicable, set forth in this Agreement and the other Transaction Agreements.
[Remainder of page intentionally blank; signature pages follow]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.
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FRONTIER COMMUNICATIONS CORPORATION,
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By:
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/s/ Daniel McCarthy
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Name: Daniel McCarthy
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Title: President and Chief Executive Officer
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[Signature Pages to Purchase Agreement]
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FRONTIER COMMUNICATIONS ILEC HOLDINGS LLC,
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By:
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/s/ Daniel McCarthy
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Name: Daniel McCarthy
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Title: President and Chief Executive Officer
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NORTHWEST FIBER, LLC, as Purchaser
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By:
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/s/ Eric Zinterhofer
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Name: Eric Zinterhofer
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Title: President
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Exhibit A
List of Companies
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Company
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Jurisdiction of Organization
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Citizens Telecommunications Company of Idaho
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Delaware
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Citizens Telecommunications Company of Montana
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Delaware
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Citizens Telecommunications Company of Oregon
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Delaware
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Frontier Communications Northwest Inc.
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Washington
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Exhibit B
Transition Services Agreement
[See attached.]
Exhibit C
Illustrative Estimated Closing Statement
[See attached.]
Exhibit D
Form of Escrow Agreement
[See attached.]
Exhibit E
Reorganization Plan
[See attached.]
Exhibit F
Working Capital Principles
[See attached.]
Exhibit G
Available Service Providers Under Section
5.01
[See attached.]
Exhibit H
Pension Principles
[See attached.]
Exhibit I
Retiree Medical Principles
[See attached.]
SCHEDULE 9.06(B)(V)
Required Regulatory Approvals
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1.
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HSR Act Approval
. Expiration or
termination of the statutory waiting period, or any extension thereof, under the HSR Act.
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2.
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FCC Approval
. All approvals, waivers
and authorizations required to be obtained from the FCC pertaining to the Transactions shall have been obtained.
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3.
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State Regulatory Authority Approval
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All approvals, waivers and authorizations required to be obtained from, and notices required to be provided to, the Washington Utilities and Transportation Commission, the Public Utility Commission of Oregon, the Idaho Public
Utilities Commission and the Montana Public Service Commission pertaining to the Transactions shall have been obtained (or, in the case of any required notices only, have been provided).
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4.
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CFIUS Approval
. The CFIUS Approval
shall have been obtained.
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5.
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Local Franchising Authority Approval
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All approvals, waivers and authorizations required to be obtained from the Local Franchising Authorities shall be deemed to have been obtained upon the following calculation yielding a quotient greater than or equal to 0.85:
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(A) a numerator equal to the sum of the aggregate number of active subscribers (as of December 31, 2018) of any video
service of the Business attributable to service areas other than the City of Kenmore and the City of Woodinville for which:
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(i)
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no Franchise is required;
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(ii)
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the Franchise is not listed below under “Franchises With Consent Requirements” (
provided
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however
, that subscribers associated with Franchises requiring notice prior to the Closing
shall be included in the aggregate number of the subscribers only to the extent such notice has been delivered); or
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(iii)
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with respect to the Franchises listed below under “Franchises With Consent Requirements,” if an application or other
request for Consent is to be made to the applicable Local Franchising Authority in accordance with Section 5.04(b) of the Agreement, a Consent with regard to such Franchise has been obtained or deemed to have been obtained (it
being understood that for this purpose a Consent shall be deemed obtained if it shall be deemed to have been received in accordance with Section 617 of the Communications Act),
provided
,
however
, that a Consent shall be deemed not obtained if the relevant Local Franchising Authority has
revoked or threatened in writing to revoke such Franchise consistent with applicable Law and such revocation is final and nonappealable in any forum;
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Divided by
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(B) a denominator equal to 36,196 (the total number of active subscribers of any video service of the Business (other
than subscribers in the City of Kenmore or the City of Woodinville) of the Business as of December 31, 2018).
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Franchises with Consent Requirements
:
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The following Local Franchise Authorities in the state of Oregon (listed by city, unless stated otherwise):
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Beaverton
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Clackamas County
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Cornelius
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Dundee
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Durham
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Fairview
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Forest Grove
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Gresham
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Happy Valley
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Hillsboro
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King City
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Lake Oswego
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McMinnville
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Newberg
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Rivergrove
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Sherwood
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Tigard
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Troutdale
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Tualatin
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Washington County
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Wilsonville
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Wood Village
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The following Local Franchise Authorities in the state of Washington (listed by city, unless stated otherwise):
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Bothell
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Brier
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Camas
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Edmonds
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Everett
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Kenmore
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Kirkland
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Lynnwood
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Marysville
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Mill Creek
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Mountlake Terrace
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Mukilteo
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Redmond
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Shoreline
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Snohomish County
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Washougal
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Woodinville
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Woodway (Township)
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