EXHIBIT 99.2
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is entered into as of the 17th day of
June, 1997, by and between BOSTON EDISON COMPANY, a Massachusetts corporation
("Licensor") and BECOCOM, INC., a Massachusetts corporation ("Licensee").
Recitals:
A. Licensor is the owner in fee of or holder of rights of access to various
parcels of real property ("Equipment Sites") and either owner or holder of
easements and other rights for transmission and distribution line rights of way
("Rights of Way") in various parcels of real property and public ways situated
in cities and towns throughout eastern Massachusetts, which Licensor utilizes in
its business of producing and delivering electricity and related services
("Licensor's Business"). Licensee is a party to that certain "Construction and
Indefeasible Right of Use Agreement" dated of even date herewith ("IRU
Agreement"), by and between Licensee and RCN-BecoCom, LLC, a Massachusetts
limited liability company ("Carrier"). Licensee desires to license from Licensor
the right to use (and to grant to Carrier under the IRU Agreement the right to
use) certain portions of one or more of such Equipment Sites and Rights of Way
for the purpose of constructing and maintaining thereon certain
telecommunications facilities ("Facilities") operated and utilized by Carrier in
its business of providing voice, video, data and other telecommunications
services ("Services") to its customers in the Relevant Market, as defined in the
IRU Agreement ("Business").
B. Licensor is the owner of certain fiber optic cable installed by Licensor
on the Rights of Way and Equipment Sites (the "Existing Facilities"). Licensee
desires to obtain an indefeasible right to use the Existing Facilities
(excluding certain dedicated fibers reserved for Licensor's exclusive use in the
operation of Licensor's Business) for purposes of granting similar rights with
respect to such Existing Facilities to Carrier for use in the Business, pursuant
to the terms of the IRU Agreement.
C. Licensor has the capability of providing certain engineering, design,
construction and maintenance services in connection with the design,
installation and maintenance of Facilities and Licensee desires to obtain such
services from Licensor from time to time with respect to the Facilities to be
provided under the IRU Agreement.
D. Licensor is willing to provide such rights and services to Licensee,
upon and subject to the terms and conditions set forth herein.
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NOW, THEREFORE, in consideration of the foregoing, and the mutual promises
of the parties set forth herein, the parties hereby agree as follows:
All capitalized terms used herein and not otherwise defined shall have the
same meaning assigned to them in the IRU Agreement. Each individual parcel of
real property in which Licensor holds an interest shall be referred to as the
"Premises" and each location within the Premises which the Licensee desires to
license and use, subject to the license hereunder, shall be referred to
individually as an "Equipment Site" or "Site," and collectively as "Equipment
Sites" or "Sites."
1.0 MASTER LICENSE AGREEMENT
1.1 General Intent. It is the general intent of the parties that the
Licensor hereby grant to Licensee such rights and provide to Licensee such
services as may be required, or requested by Licensee from time to time, in
order to permit Licensee to perform its obligations to Carrier under the IRU
Agreement. Notwithstanding anything to the contrary set forth herein, nothing
herein shall obligate Licensor to take any action, or refrain from taking any
action, which would, in Licensor's reasonable opinion, adversely affect the
operation of Licensor's Business.
1.2 License of Existing Facilities. Licensor hereby grants to Licensee an
exclusive, indefeasible and non-cancelable right to use the Existing Facilities
for the conduct of the Business during the Term, with the exception of up to
twelve (12) strands of fiber optic filament reserved for Licensor's exclusive
use (the "Reserved Dedicated Fiber"). Included in the license with respect to
the Existing Facilities is the license to use, at no additional charge, 150
square feet of space and egress to the distribution system at each of
approximately 24 access points along the route of the Existing Facilities, as
identified on Schedule 1.2 attached.
1.3 License of Rights of Way. Licensor hereby grants to Licensee, solely
with respect to the provision of the Services, an exclusive, indefeasible and
non-cancelable right of access to and use of the Rights of Way, now owned or
hereafter acquired, for the installation and maintenance of the Facilities,
subject to the exceptions relative to exclusivity stated in Section 5(c)(ii) of
the IRU Agreement.
1.4 License of Equipment Sites. Licensor hereby agrees to provide
sufficient space to Licensee to accommodate new Facilities at Equipment Sites,
now owned or hereafter acquired, to the extent required under, and subject to
the limitations set forth in, Section 5(b) of the IRU Agreement.
1.5 License to Construct in Power Since. Subject to the terms and
conditions of this Agreement, Licensor hereby grants to Licensee the exclusive
right to install, maintain and operate new Facilities (including any Facilities
necessary to complete Licensor's fiber optic network) in those portions of the
Rights of Way
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normally and primarily utilized for the transmission and distribution of
electric power, which space is (a) in the case of above-ground Rights of Way
located on distribution poles, space from the top of such poles to the
communications space, including the neutral space; (b) in the case of
above-ground Rights of Way located on transmission towers, all space located
thereon, except as designated by Licensor, and (c) in the case of below-ground
Rights of Way, all space located therein (the "Power Space"). Nothing herein
shall affect Licensor's continuing right to use the Equipment Sites and Rights
of Way for Licensor's Business.
2.0 EQUIPMENT SITE LICENSE
2.1 This Agreement contains the general terms and conditions applicable to
all Equipment Sites (other than Sites where Existing Facilities are located)
which may from time to time be licensed by Licensor to Licensee. When the
parties have identified a particular Equipment Site, and agreed on any
site-specific terms applicable to such individual Equipment Site, the parties
will execute a completed Site License Addendum ("SLA") in the form attached as
Schedule 2.1. Each executed SLA shall be an integral part of this Agreement. In
the event of a discrepancy or inconsistency between the terms and conditions of
any SLA and this Agreement, the terms and conditions of the SLA shall control.
2.2 Subject to the terms and conditions contained in this Agreement and the
applicable SLA, Licensor licenses to Licensee that portion of the Premises
described as the Equipment Site on the SLA. The Premises of which the Equipment
Site is a part, and, if any, the structure owned by Licensor located on the
Equipment Site, will be described in the SLA. Each Equipment Site will comprise
the following components, to the extent applicable: (a) ground area (expressed
in terms of square feet) reasonably necessary for placement and operation of the
Facilities to be located thereon, and (b) space on Licensor's structure, if any
(expressed in terms of vertical feet and degrees horizontally) on which all or a
portion of the Facilities may be mounted. The SLA will contain a description of
the equipment comprising all or a part of the Facilities to be located on the
Equipment Site by mutual agreement of the parties.
2.3 Licensee shall, at Licensee's sole cost and expense, comply with all
laws, orders, ordinances, regulations and directives of applicable federal,
state, county, and municipal authorities or regulatory agencies having
jurisdiction over the Facilities, the Equipment Site, or Business, including,
without limitation, the Federal Communications Commission ("FCC"). Licensor
makes no representations or warranties concerning the ability of Licensee to use
the Equipment Site for the Business under applicable law, nor about the physical
suitability of the Equipment Site for the Business, or for any other purposes.
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2.4 Licensor agrees reasonably to cooperate with Licensee, at Licensee's
cost and expense, in executing such documents or applications as may be required
in order for Licensee to obtain such governmental licenses, permits or approvals
as may be necessary for the Business; provided, that nothing herein shall be
construed to require Licensor to act as surety, guarantor or indemnitor on
behalf of Licensee, or to assent to any restrictions, conditions or limitations
which would have an adverse impact on Licensor's continued operations at the
Premises.
2.5 Licensee shall install, operate and maintain the Facilities in a manner
that does not interfere with the Licensor's Business on the Equipment Site.
2.6 Licensee shall not bring to, store, use, transport across, release or
dispose of any oil or hazardous materials or wastes on any Site, except with the
prior approval of Licensor, which approval shall not be unreasonably withheld or
delayed. Licensee's storage, use, transportation, disposal and release of any
hazardous materials shall comply with all applicable laws, ordinances, and
regulations governing such materials. In the event of any spill, leak or other
release or discharge to the environment, Licensee shall, in addition to any
other requirements imposed by relevant law or regulation, follow the
notification and other procedures established by the Licensor and described on
Schedule 2.6 attached hereto.
3.0 TERM
3.1 Term. This Agreement shall become effective on the date of execution
and delivery by both parties, and shall expire on December 31, 2060 (the
"Term"). Each SLA shall become effective on the date of execution thereof (the
"Commencement Date") and shall remain in effect for the balance of the Term.
3.2 Early Entry. Licensee may enter the Premises before the Commencement
Date, to the extent such entry is related to engineering surveys, soil borings
and inspections, or other reasonably necessary tests required prior to
construction and installation of the Facilities. All such inspections and tests
shall be at Licensee's sole risk, cost and expense, and without damage or injury
to Licensor's property, other than unavoidable soil disturbance, which Licensee
shall minimize, restoring the Premises as reasonably as possible to the
preexisting condition. Any such entry by Licensee shall be with prior notice to
Licensor. Licensor reserves the right to require that a representative of
Licensor be present during any such entry on the Site.
3.3 Site "AS IS". Commencement of construction activities with respect to a
Facilities on an Equipment Site by Licensee shall be conclusive evidence that
Licensee (a) accepts such Site as suitable for the purposes for which it is
licensed, (b) accepts such Site and any structure on such Site and every part
and appurtenance thereof "AS IS," with all faults; and (c) waives all claims
against Licensor with
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respect to the condition of the Site, the Premises, or any structure or other
appurtenances and their suitability for any purpose.
4.0 ADDITIONAL AGREEMENTS
4.1 Use of CAD-Image. Licensor hereby grants to Licensee the use of
Licensor's engineering records relative to the Rights of Way and Equipment
Sites, including the use of the CAD-Image GIS database and search engines, and
agrees to provide such additional records support services, all upon terms and
conditions as are described in the document entitled "Proposal to BecoCom, Inc.,
Fibre Optic Information Management System," dated March 21, 1997, a copy of
which is attached hereto as Schedule 4.1, as the same may be modified by mutual
agreement of the parties from time to time.
4.2 Optional Additional Fiber. Licensee hereby grants to Licensor the
right, at its sole election, to acquire the right to use up to twelve (12)
strands of fiber optic filament of any newly constructed Facilities. Licensor
shall exercise its option by notice to Licensee, whereupon the parties shall
execute a separate agreement with respect to such optional additional fiber,
setting forth the terms and conditions, including compensation to be paid by
Licensor to Licensee therefor, which shall consist of a pro-rata share of the
actual costs of construction and maintenance of such newly constructed
Facilities. Such agreement, when executed, shall be filed with the Massachusetts
Department of Public Utilities ("MDPU"), pursuant to the requirements of
Massachusetts General Laws ("M.G.L."), c. 164, s. 85A, as amended, and the
compensation to be paid by Licensor to Licensee thereunder shall be subject to
review and determination by the MDPU, pursuant to M.G.L. c. 164, s. 94B, as
amended.
5.0 RIGHT OF FIRST REFUSAL
5.1 Right of First Refusal. Licensee hereby grants to Licensor the right of
first refusal to perform construction services for Licensee, consisting of (a)
engineering services, (b) fiber optic cable installation services, (c) fiber
optic cable repair and maintenance services, and (d) all safety and supervision
services, associated with the construction and maintenance of the Facilities
("Construction Services"). The terms and conditions for the performance of the
engineering services shall be as set forth in the document entitled "Service
Level Agreement Between the Engineering Services Group and BecoCom, Inc.," dated
April 17, 1997, a copy of which is attached hereto as Schedule 5.1, as the same
may be modified by mutual agreement of the parties from time to time. The terms
and conditions for the performance of Construction Services (other than
engineering services) shall be negotiated between the parties on a
project-by-project basis. If Licensor performs Construction Services, such
performance shall be on a timely and efficient basis.
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6.0 LICENSE FEES
6.1 As consideration for the various licenses under this Agreement,
Licensee shall pay or provide Licensor the following:
6.1.1 [Intentionally Omitted]
6.1.2 In consideration of the license of the Rights of Way, Licensee
shall pay Licensor a Right of Way use fee and other charges and expenses
with respect to such Rights of Way, as described in Schedule 6.1 attached.
6.1.3 In consideration of the license of the Equipment Sites (other
than Sites where Existing Facilities are located), Licensee shall pay
Licensor a Site Use Fee agreed upon in each individual SLA with respect to
such Site.
6.1.4 In consideration of the exclusive right to construct Facilities
in the Power Space, Licensee shall (a) assume and perform all of Licensor's
obligations with respect to the provision of non-discriminatory access to
utility infrastructure, as mandated by the Telecommunications Act of 1996,
by licensing the right to use the Facilities to those parties who pay for
the construction of the same, on nondiscriminatory terms; and (b) pay to
Licensor a Right of Way use fee and other charges and expenses with respect
to such Rights of Way, as described in Schedule 6.1 attached.
6.2 Licensee agrees to pay the fees, charges and expenses described in
Schedule 6.1 (collectively, "Fees") quarterly, in arrears, without any
deduction, offset or counterclaim, at the address specified by Licensor, or at
such other address as Licensor may by notice from time to time specify.
6.3 Any Fees not paid within five (5) business days from the date when due
may, at Licensor's option, bear interest until paid at the lesser of (a) one and
one-half percent (1.5%) per month, or (b) the maximum rate allowed under the law
of the Commonwealth of Massachusetts.
6.4 Any Fees not paid within fifteen (15) days from the date when due shall
be subject to a late charge of $150. The late fee shall be due in addition to
the interest Licensor may assess under Section 6.3, but the combination of the
late fee and interest shall in no event exceed limits imposed by state law.
7.0 CONSTRUCTION
7.1 Approval of Plans. Prior to commencing any work on the Site in
connection with the construction of Facilities (whether initial installation or
a subsequent material alteration), Licensee shall obtain Licensor's approval of
(a)
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Licensee's plans for all site and construction work, including access and
laydown, and any alterations, modifications or impacts on any structure existing
on the Site or the Premises, (b) the precise location of the Facilities at the
Site, (c) the precise location of any utility connections to the Facilities at
the Site and through the Premises. If Licensee proposes to install any portion
of the Facilities on an existing structure, Licensor may require Licensee to
submit a structural engineering analysis, prepared by a registered professional
engineer, for Licensor's review and approval. Licensee may propose solutions to
any structural problems identified in its analysis, which solutions Licensee is
willing to implement at its cost; however, Licensor shall be under no obligation
to accept any such proposed solution. Licensor reserves the right to determine,
through its own analysis and operational requirements, that a particular
structure requires replacement or modification as a condition to use by
Licensee, in case Licensee shall have the option of (a) paying for the cost (in
whole or in part, as may be agreed to by Licensor) of such replacement or
modification, or (b) selecting another Site. Nothing herein shall require
Licensor to make any modifications to its structures to accommodate Licensee,
where such modification would impose additional costs or operational constraints
on Licensee's operations. Licensor in its discretion may require that a
representative of Licensor be present during the construction of the Facility,
or that such representative make periodic inspections of the progress of the
construction work. Licensor shall not unreasonably withhold or delay its consent
to Licensee's plans; however, depending on the Licensor's own operational needs
at the particular Premises and the Site, Licensor may impose reasonable
requirements in order to ensure electrical system reliability and to minimize or
avoid potential adverse effect on Licensor's Business, which Licensee
acknowledges are a matter of public health and safety. Any alterations or
modifications to a structure existing on the Site must be designed to Licensor's
satisfaction by a licensed engineer at Licensee's sole cost and expense.
Licensor, in its discretion, may require independent engineering review of
Licensee's alterations or modifications, and such independent review shall be at
Licensee's cost.
7.2 All of Licensee's installation and alteration work shall be performed
at Licensee's sole cost and expense, in a good and workmanlike manner by
qualified workmen and in accordance with all applicable laws, ordinances and
regulations and any permits or licenses issued by any governmental authority
having jurisdiction. Licensee agrees to implement reasonable measures requested
by Licensor in order to ensure that any contractors working for Licensee work in
harmony with any Licensor personnel or contractors at a particular Site.
7.3 Licensee shall keep the Premises and the Sites free from any liens
arising from any work performed, materials furnished, or obligations incurred by
or at the request of Licensee. If any lien is filed against the Premises or the
Sites as a result of any such matter, Licensee shall discharge the lien or bond
the lien off in a manner reasonably satisfactory to Licensor within thirty (30)
days after Licensee receives written notice from any party that a lien has been
filed. If Licensee fails to
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discharge or bond any lien within such period, then, in addition to any other
right or remedy, Licensor may, at Licensor's election, take such action as
Licensor deems appropriate under the circumstances, and all reasonable
attorneys' fees and other legal expenses of Licensor incurred in obtaining the
discharge of such lien, together with all necessary disbursements in connection
therewith, shall be due and payable by Licensee to Licensor upon demand.
7.4 Licensee shall at all times maintain the Facilities in good, clean,
safe and operable condition and shall not permit the Facilities or the Sites to
deteriorate, become unsightly, unsafe or a nuisance. Licensee shall not permit
stockpiling of materials or accumulation of rubbish or debris on any Site.
Licensee's work shall not adversely affect the structural integrity or
maintenance of any structure on the Sites, nor the physical condition of the
Sites. Licensee shall take proper steps to ensure public safety at all Sites
where Licensee is conducting construction operations. Licensee shall take
reasonable steps to secure the Facilities (and the Site, if Licensor has no
ongoing presence at the Site) in order to avoid damage to the Premises and the
Sites from vandalism, and to prevent claims of attractive nuisance.
7.5 If at any time Licensor reasonably determines that the location of the
Facilities at any Site is disadvantageous to the Licensor in the operation of
Licensor's Business, Licensor shall have the right, by notice to Licensee, to
require Licensee to relocate such Facilities to another comparable location
within the Premises ("Alternate Site"); provided, that Licensor shall reimburse
Licensee for all reasonable costs and expenses of such relocation. In the event
of such relocation of the Facilities to an Alternate Site, the parties shall
execute a new SLA reflecting the Alternate Site, as if the Alternate Site were
the original SLA executed with respect to such Facilities.
7.6 Licensor's obligations under this Article 7 shall be performed on a
timely and efficient basis.
8.0 UTILITIES
8.1 Licensee shall have the right, at Licensee's sole cost and expense, to
obtain electrical and telephone service from any utility company that provides
such service to the Premises. Licensee shall install, at its cost, any necessary
telecommunications isolation equipment required by the provider of any utility
service to the Facilities.
8.2 Licensee shall pay for all of Licensee's utility service costs when
due.
8.3 Licensee shall be solely responsible for providing any utility services
required during construction.
9.0 ACCESS
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9.1 The parties recognize that access to any Site may vary depending on the
nature of the Premises and Licensor's operations thereon, as well as any special
landowner requirements in the case of a Site not owned by Licensor in fee. Any
special access restrictions or requirements imposed by Licensor shall be
specified in the SLA.
9.2 Unless otherwise provided above or in the SLA:
9.2.1 Access for construction, routine maintenance and repair and
other non-emergency visits shall be limited to normal business hours
(defined as Monday through Saturday, 7 AM to 7 PM, excluding holidays).
9.2.2 In the event of an emergency, Licensee is entitled to access to
any Site twenty-four (24) hours per day, seven (7) days per week.
9.2.3 Access to the Premises may be by foot or motor vehicle,
including trucks and equipment.
9.3 Licensee acknowledges that the foregoing access rights are subject to
any limitations or restrictions on access imposed upon Licensor (and therefore
upon Licensee) by the landowner under any underlying deed, easement, lease or
license document relating to a particular Site. Licensee agrees to abide by such
limitations or restrictions, provided that Licensee has been notified by
Licensor of such limitations and restrictions.
10.0 TAXES AND ASSESSMENTS
10.1 Licensor and Licensee shall each be responsible for a portion of the
real property taxes attributable to the Rights of Way and Equipment Sites, as
provided in Schedule 6.1.
10.2 Licensee shall be solely responsible for the payment of all personal
property taxes, assessments and other similar fees or charges attributable to
the Facilities, as well as any increase in real property taxes, to the extent
attributable to the Facilities.
11.0 INSURANCE
11.1 Licensee shall, during the term of this Agreement and at Licensee's
sole expense, obtain and maintain in force (and, to the extent applicable, shall
cause its agents and contractors to obtain and maintain during the term of any
contract), not less than the following insurance:
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11.1.1. Property insurance, including coverage for fire, extended
coverage, vandalism and malicious mischief, upon the Facilities, to the
extent used in the Business, in an amount not less than ninety percent
(90%) of the full replacement cost of the Facilities;
11.1.2. Comprehensive Commercial General Liability and Motor Vehicle
Liability insurance, insuring operations hazard, independent contractor
hazard, contractual liability, and products and completed operations
liability, in limits not less than $5,000,000 combined single limit for
each occurrence for bodily injury, personal injury and property damage
liability, including coverage for liability assumed under the
indemnification provisions of this Agreement, and designating Licensor as
an additional insured; and
11.1.3. Workers' Compensation and Employer's Liability insurance as
required by law.
11.2 All required insurance policies shall be taken out with reputable
national insurers that are licensed to do business in the Commonwealth of
Massachusetts and having a Best rating of not less than A-X. Licensee shall
deliver certificates of insurance to Licensor as soon as practicable after the
placing of the required insurance, but not later than the Commencement Date of a
particular SLA. All policies must contain an undertaking by the insurer to
notify Licensor in writing not less than fifteen (15) days before any material
change, reduction in coverage, cancellation, or termination of the insurance.
11.3 Licensor and Licensee shall each year review the limits for the
insurance policies required by this Agreement. Policy limits will be adjusted to
proper and reasonable limits as circumstances warrant, but policy limits will
not be reduced below those stated above and no increases will be effective
unless Licensor and Licensee mutually agree.
11.4 Licensor shall, upon request, provide Licensee with certificates of
insurance indicating the types and amounts of coverages maintained by Licensor
on the Premises and the facilities of Licensor thereon.
11.5 The provision of insurance required in this Agreement shall not be
construed to limit or otherwise affect the liability of any party to the other
party.
11.6 Licensee shall not do or permit to be done in or about the Premises,
nor bring or keep or permit to be brought to the Premises, anything that (a) is
prohibited by any insurance policy carried by Licensor covering any Site, any
improvements thereon, or the Premises; or (b) will increase the existing
premiums for any such policy beyond that contemplated for the addition of the
Facilities. Licensor acknowledges and agrees that the installation of the
Facilities upon any Site in
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accordance with the terms and conditions of this Agreement will be considered
within the underwriting requirements of any of Licensor's insurers and such
premiums contemplate the addition of the Facilities.
12.0 INDEMNIFICATION
12.1 Licensee shall indemnify, defend and save Licensor, its officers,
directors and employees, harmless for and from and against any and all actions,
charges, claims, damages, expenses, fines, penalties and liabilities whatsoever
arising from, or out of, or in connection with any of the following:
12.1.1 The loss of life, personal injury, or damage to property in,
upon or at the Premises or the Sites caused by the act or omission of
Licensee, Licensee's employees or agents, contractors, or any other person
acting by or through, or with the knowledge or approval of Licensee, except
to the extent caused by the negligence or willful misconduct of Licensor,
Licensor's employees or agents, or any other person acting by or through,
or with the knowledge or approval of Licensor;
12.1.2 The violation of federal, state or local law, regulation or
ordinance applicable to the Sites, the Premises and Licensee's use of, or
presence on, the Premises by Licensee or Licensee's employees or agents,
contractors, or any other person acting by or through, or with the
knowledge or approval of Licensee;
12.1.3 The violation or breach by Licensee of any provision or
obligation of this Agreement or of any SLA; or
12.1.4 Any storage, use, spill, discharge or release to the
environment of any oil or hazardous materials or wastes, as those terms are
defined by applicable federal or state law from time to time, in or upon
any Site or the Premises by Licensee or Licensee's employees or agents,
contractors, or any other person acting by or through, or with the
knowledge or approval of Licensee.
12.2 Licensor shall indemnify, defend and save Licensee, its officers,
directors and employees, harmless for and from and against any and all actions,
charges, claims, damages, expenses, fines, penalties and liabilities whatsoever
arising from, or out of, or in connection with any of the following:
12.2.1 The loss of life, personal injury, or damage to property in,
upon or at the Premises or the Sites caused by the act or omission of
Licensor Licensor's employees or agents, contractors, or any other person
acting by or through, or with the knowledge or approval of Licensor, except
to the extent caused by the negligence or willful misconduct of Licensee,
Licensee's employees or agents,
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or any other person acting by or through, or with the knowledge or approval
of Licensee;
12.2.2 The violation of federal, state or local law, regulation or
ordinance applicable to the Sites, the Premises and Licensor's use of, or
presence on, the Premises by Licensor or Licensor's employees or agents,
contractors, or any other person acting by or through, or with the
knowledge or approval of Licensor;
12.2.3 The violation or breach by Licensor of any provision or
obligation of this Agreement or of any SLA; or
12.2.4 Any storage, use, spill, discharge or release to the
environment of any oil or hazardous materials or wastes, as those terms are
defined by applicable federal or state law from time to time, in or upon
any Site or the Premises by Licensor or Licensor's employees or agents,
contractors, or any ether person acting by or through, or with the
knowledge or approval of Licensor.
12.3 Neither party shall be liable to the other for any consequential or
punitive damages, or losses in the nature of lost profits, loss of use, or loss
of opportunity.
12.4 The indemnity obligation includes reasonable attorneys' fees,
investigation costs, and all ether reasonable costs and expenses incurred by the
indemnified party from the first notice that any claim or demand has been made
or may be made, and is not limited in any way by any limitation on the amount or
type of damages, compensation, or benefits payable under applicable workers'
compensation acts, disability benefit acts, or other employee benefit acts.
12.5 The provisions of this Section shall survive the termination of this
Agreement or any SLA with respect to any cause of action arising before such
termination, or first cognizable after such termination.
13.0 ASSIGNMENT AND TRANSFER
13.1 Licensee, upon prior written notice to Licensor, shall have the right,
without the necessity of obtaining Licensor's consent, to assign or transfer
this agreement, either in whole or in part, or any rights thereunder, to (a) any
Affiliate of Licensee; (b) any person or entity with whom Licensee has an
agreement for construction and use of newly-constructed Facilities; or (c) any
purchaser of substantially all of the assets of Licensee (collectively
"Permitted Transferees"). No such assignment to a Permitted Transferee shall
relieve Licensee from continuing primary liability and obligation to Licensor
under the terms of this Agreement and any SLA, and Licensor shall have no
obligation to look to such Permitted Transferee for the satisfaction of any
obligations of Licensee hereunder or under any SLA, but
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may at all times seek recourse against Licensee. "Affiliate," for purposes of
this Agreement, shall mean any person or entity in which Licensee has an equity
interest, or any entity controlling, controlled by or under common control with
any such person or entity.
13.2 Licensee shall not assign, sublet, or otherwise transfer this
Agreement, any SLA, any Site or any Facilities, or any rights therein or
thereunder, to any party other than Permitted Transferees without in each case
obtaining Licensor's prior written consent, which consent Licensor may withhold
in its discretion, or condition upon payment to Licensor of additional
consideration.
14.0 TRANSFER BY LICENSOR
14.1 Licensor may not make any sale, lease, license or transfer of any
Site, unless such sale, lease, license or transfer is subject to the terms and
conditions of this Agreement and the applicable SLA. Licensee's rights hereunder
are not exclusive, and Licensor may grant to others rights in any Site
coextensive with those of Licensee, so long as such other person or entity does
not unreasonably interfere with the exercise by Licensee of the rights granted
to it under this Agreement and any SLA.
15.0 CASUALTY OR CONDEMNATION
15.1 If there is a casualty to any structure owned by Licensor upon or
within which Facilities are located, Licensor take all reasonable steps to
repair or restore the structure within sixty (60) days. Licensee may immediately
erect on an unused portion of a Site temporary Facilities, including any
supporting structure, while Licensor makes repairs to the damaged structure.
Upon completion of such repair or restoration, Licensee shall be entitled to
reinstall Licensee's Facilities on or within the Site.
15.2 In the event such repair or restoration will reasonably require more
than sixty (60) days to complete, Licensee shall be entitled to terminate the
applicable SLA, effective upon the expiration of thirty (30) days after written
notice to Licensor; provided, that, if after giving such notice, Licensor is
able to complete such repair or restoration within such additional thirty (30)
days, then the notice of termination shall be deemed withdrawn, and the SLA
shall continue.
15.3 If there is a condemnation of any Site, including without limitation a
transfer of such Site by consensual deed in lieu of condemnation, then the SLA
for such condemned Site will terminate upon transfer of tide to the condemning
authority, without further liability to either party under this Agreement. All
awards on account of a Site shall be the property of Licensor, and Licensee
hereby assigns over any
13
claim to such award to Licensor. Licensee shall be entitled to pursue a separate
condemnation award for the Facility from the condemning authority.
16.0 NOTICE
16.1 Any notice or demand required or permitted to be given under this
Agreement or any SLA shall be in writing and shall be made by (a) certified or
registered U.S. mail, return receipt requested, (b) by established overnight
courier providing a receipt, or (c) by facsimile providing a confirmation of
receipt, if followed by hard copy by first class U.S. mail, to the address set
forth below:
To Licensor:
Boston Edison Company
800 Boylston Street
Boston, Massachusetts 02199
Attention: Fred J. Greenberg, General Manager of
Fossil and Electric Delivery
To Licensee:
BecoCom, Inc.
36th Floor
800 Boylston Street
Boston, Massachusetts 02199
Attention: Richard S. Hahn, President
16.2 Any such notice shall be deemed received one (1) business day
following facsimile or deposit with an overnight courier, or five (5) business
days following deposit in the United States mails, addressed as required above.
Each party may from time to time designate any other address for this purpose by
written notice to the other party as provided herein.
17.0 GENERAL PROVISIONS
17.1 The parties agree that Carrier shall be a third-party beneficiary of
this Agreement, with the power to enforce Licensee's rights hereunder upon a
breach of the obligations of either Licensee or Licensor. Licensee and Licensor
shall not voluntarily amend this Agreement without the prior written consent of
Carrier, which consent shall not be unreasonably withheld or delayed.
17.2 This Agreement and each SLA constitutes the entire agreement and
understanding between the parties, and supersedes all offers, negotiations and
other agreements concerning the subject matter contained in this Agreement.
There are no
14
representations or understandings of any kind not set forth in this Agreement.
Any amendments to this Agreement or any SLA must be in writing and executed by
both parties.
17.3 If any provision of this Agreement or any SLA is invalid or
unenforceable with respect to any party, the remainder of this Agreement, the
applicable SLA or the application of such provision to persons other than those
as to whom it is held invalid or unenforceable, shall not be affected and each
provision of this Agreement or the applicable SLA shall be valid and enforceable
to the fullest extent permitted by law.
17.4 This Agreement and each SLA shall be binding on and inure to the
benefit of the respective parties and their respective successors and permitted
assigns.
17.5 The captions of this Agreement are inserted for convenience only and
shall not be construed as part of this Agreement or the applicable SLA or in any
way limiting the scope or intent of its provision.
17.6 No provision of this Agreement or a SLA shall be deemed to have been
waived by either party unless the waiver is in writing and signed by the party
against whom enforcement is attempted. No custom or practice which may develop
between the parties in the administration of the terms of this Agreement or any
SLA shall be construed to waive or lessen any party's right to insist upon
strict performance of the terms of this Agreement or any SLA. The rights granted
in this Agreement and under each SLA are cumulative of every other right or
remedy that the enforcing party may otherwise have at law or in equity, or by
statute and the exercise of one or more rights or remedies will not prejudice or
impair the concurrent or subsequent exercise of other rights or remedies.
17.7 This Agreement and each SLA is governed by the laws of the
Commonwealth of Massachusetts.
15
17.8 This Agreement and any SLA may be executed in one or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument, by and through their respective duly authorized representatives, as
of the date first above written.
BOSTON EDISON COMPANY BECOCOM, INC.
By: /s/ [ILLEGIBLE] By: /s/ Richard S. Hahn
---------------------------- -----------------------------
Title: Vice President Title: President
------------------------- --------------------------
16
SCHEDULE 1.2
ACCESS POINTS
Prudential Center (subject to the termination or expiration of the lease at such
site); Station 150 (Edgar); Station 470 (Canton); Station 447 (West Walpole);
Station 446 (West Medway); Station 240 (Framingham); Station 148 (Needham);
Station 496 (Hyde Park); Station 282 (Waltham); Station 320 (Lexington); Station
391 (Burlington); Station 250 (Mystic & Head House @ Ryan's Plygrd); Station 80
(Mass Ave.); Station 478 (Holbrook); Station 146 (Walpole); Station 65 (Medway);
Station 274 (Sherborn); Station 433 (Speen Street); Station 110 (Baker Street);
Station 342 (Sudbury); Station 450 (Trapelo Road); Station 533 (Hartwell Ave.);
Station 211 (Woburn); and Station 514 (Boston).
17
SCHEDULE 2.1
SiTE LICENSE ADDENDUM
This Site License Addendum is made to the License Agreement between Boston
Edison Company, as Licensor, and BecoCom, lax, as Licensee, dated ______, 1997.
Capitalized terms used in this SLA shall have the same meaning as such terms in
the License Agreement, unless otherwise indicated. In the event of any conflict
or inconsistency, the provisions of this Addendum shall control.
1. Site Identification Number:
2. Site Street Address, if any, or general location:
3. Site Legal Description: See Schedule 1 attached.
4. Description of Facilities: See Schedule 2 attached.
6. Plans and Specifications: See Schedule 3 attached.
7. Site Use Fee:
8. Licensor contact for emergencies:
9. Licensee contact for emergencies:
10. Special access and other provisions:
LICENSEE:
BOSTON EDISON COMPANY
By: __________________________
Title: __________________________
BECOCOM, INC.
By: __________________________
Title: __________________________
18
SCHEDULE 2.6
SPILL NOTIFICATION AND RESPONSE PROCEDURES
All Spills/Releases of oils and/or hazardous materials (hydraulic fluid,
gasoline, etc.) must be reported to the Boston Edison Company Systems
Dispatcher, telephone number 617-541-7888, as soon possible, but within 1 1/2
hours of spill discovery.
NOTIFICATION REQUIREMENTS:
* Your name, Company and association with Boston Edison Company
* Date of release
* Time first observed release
* Location of release
* Source and description of release
* Approximate quantity
* Type of material
* Clean up crew
* Dispatcher will ask additional questions to complete the Spill Notification
Checklist and to determine if release is reportable to the Massachusetts
DEP
* IF SPILL CONDITION CHANGES, NOTIFY SYSTEMS DISPATCHER
INITIAL RESPONSE ACTIONS:
* Survey the area to determine extent of contamination
* Secure the area
* Stop the leak if possible
* Contain the leak (speedi-dri, sand, absorbent materials, etc)
* Report the release
19
AMENDED AND RESTATED OPERATING AGREEMENT
OF
RCN-BECOCOM, LLC
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions ....................................... 2
1.2 Other Definitions ......................................... 12
1.3 Construction .............................................. 12
ARTICLE 2
ORGANIZATION
2.1 Organization .............................................. 12
2.2 Name ...................................................... 12
2.3 Registered Office; Registered Agent; Principal
Office in the United States; Other Offices ............... 12
2.4 Purpose ................................................... 13
2.5 Company Powers ............................................ 13
2.6 Foreign Qualification Governmental Filings ................ 14
2.7 Term ...................................................... 14
2.8 No State-Law Partnership .................................. 14
2.9 Activities of the Members ................................. 14
ARTICLE 3
MEMBERS: DISPOSITIONS OF INTERESTS
3.1 Members ................................................... 14
3.2 Restrictions on the Disposition of an Interest ............ 15
3.3 Change of Control ......................................... 18
3.4 Interests in a Member ..................................... 20
3.5 Liability to Third Parties ................................ 20
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions ............................. 20
4.2 Additional Capital Calls .................................. 21
4.3 Failure to Pay a Capital Call ............................. 21
4.4 Return of Contributions ................................... 22
i
PAGE
ARTICLE 5
INTENTIONALLY DELETED
ARTICLE 6
MEMBER ACCOUNTS; ALLOCATIONS OF PROFIT AND LOSS; DISTRIBUTIONS
6.1 Capital Accounts .......................................... 22
6.2 Allocations for Capital Account and Tax Purposes .......... 23
ARTICLE 7
MANAGEMENT
7.1 Management by the Members ................................. 26
7.2 Representatives ........................................... 27
7.3 Place of Meeting of Representatives ....................... 27
7.4 Regular Meetings of Representatives ....................... 27
7.5 Special Meetings of Representatives ....................... 27
7.6 Representative Compensation Reimbursement ................. 28
7.7 Manner of Acting and Adjournment of Members ............... 28
7.8 Fundamental Business Actions .............................. 28
7.9 Indemnification ........................................... 31
7.10 Business Plan; Budget ..................................... 33
ARTICLE 8
RIGHTS OF MEMBERS
8.1 Access to Information ..................................... 35
8.2 Audits .................................................... 35
ARTICLE 9
9.1 Tax Returns ............................................... 35
9.2 Tax Elections ............................................. 35
9.3 Tax Matters Partner ....................................... 35
ii
PAGE
ARTICLE 10
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
10.1 Accounting ................................................ 36
10.2 Fiscal Year ............................................... 36
10.3 Statements and Reports .................................... 36
10.4 Inspection ................................................ 37
10.5 Bank Accounts ............................................. 37
ARTICLE 11
WITHDRAWAL, EXPULSION, BANKRUPTCY, ETC.
11.1 Withdrawal ................................................ 37
11.2 Bankrupt Members .......................................... 37
ARTICLE 12
TERMINATION, DISSOLUTION AND LIQUIDATION OF THE COMPANY
12.1 Termination and Dissolution ............................... 38
12.2 Liquidation ............................................... 39
ARTICLE 13
GENERAL PROVISIONS
13.1 Representations ........................................... 40
13.2 Additional Representations of RCN-Sub ..................... 41
13.3 Offset .................................................... 42
13.4 Notices ................................................... 42
13.5 Entire Agreement; Supersedure ............................. 43
13.6 Effect of Waiver or Consent ............................... 43
13.7 Amendment or Modification ................................. 43
13.8 Public Announcements ...................................... 44
13.9 Confidentiality ........................................... 44
13.10 Binding Effect ............................................ 44
13.11 Governing Law; Severability ............................... 45
13.12 Specific Performance ...................................... 45
13.13 Further Assurances ........................................ 45
13.14 Counterparts .............................................. 45
13.15 Interpretation ............................................ 45
13.16 Use of Name ............................................... 45
13.17 Continued Support of RCN-Sub .............................. 45
iii
This AMENDED AND RESTATED OPERATING AGREEMENT OF RCN-BecoCom, LLC (this
"Agreement") is made and entered into effective as of June 17, 1997 (the
"Effective Date"), by and among the Members (as defined below).
WHEREAS, on December 23, 1996 RCN Telecom Services, Inc., a Delaware
corporation ("RCN"), and Boston Energy Technology Group, Inc., a Massachusetts
corporation ("BETG"), entered into the RCN-BETG, LLC Operating Agreement; and
WHEREAS, Boston Edison Company, a Massachusetts corporation ("BECO"), and
C-Tec Corporation, a Delaware corporation ("C-Tec"), have each executed
instruments of adherence with respect to certain provisions hereof; and
WHEREAS, RCN-BETG, LLC has changed its name to RCN-BecoCom, LLC; and
WHEREAS, RCN and BETG wish to revise the terms of their participations in
RCN BecoCom, LLC, and to assign their interests therein to their respective
affiliates;
NOW, THEREFORE in consideration of the mutual covenants, rights, and
obligations set forth in this Agreement, the benefits to be derived therefrom,
and other good and valuable consideration, the receipt and the sufficiency of
which each Member acknowledges, the Members agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings:
"AAA" shall have the meaning set forth in Section 3.3(iv).
"Act" means the Massachusetts Limited Liability Company Act, Mass.
Gen. Laws Ann. Ch. 156C,ss.ss. 1, et seq. and any successor statute, as
amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end
of the relevant fiscal year of the Company (i) increased by an amount equal
to the sum of such Member's allocable share of the Company's Minimum Gain
attributable to Company Nonrecourse Liabilities and such Member's allocable
share of the Company's Minimum Gain attributable to Member Nonrecourse
Debt, in each case as computed on the last day of such fiscal year in
accordance with applicable Regulations and (ii) reduced by all reasonably
expected adjustments, allocations and distributions described in
Regulations Sections 1.704 - 1(b)(2)(ii)(d)(4), (5) and (6). This
definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
2
"Affiliate" means, with respect to any Person, any other Person
Controlling, Controlled by, or under common Control with that first Person.
"Agreed Value" of any Contributed Property means the value of such
property or other consideration (a) as agreed by all of the Members and as
listed on Schedule I for that Contributed Property contributed as of the
Closing, and (b) as determined by all of the Members using such reasonable
method of valuation as they may adopt for that Contributed Property
contributed after the Closing; provided, however, that the Agreed Value of
any property deemed contributed to the Company for federal income tax
purposes upon termination and reconstitution thereof pursuant to Section
708 of the Code shall be determined in accordance with Section 6.2(c).
"Agreement" has the meaning given that term in the introductory
paragraph hereof.
"Appraiser" has the meaning given that term in Section 3.3(i).
"Appraiser's Certificate" has the meaning given that term in Section
3.3(11).
"Arbitrator" has the meaning given that term in Section 7.8(e)(i).
"Arbitration Act" has the meaning given that term in Section
7.8(e)(i).
"Award" has the meaning given that term in Section 7.8(e)(i).
"Bankrupt Member" means any Member:
(a) that (i) makes a general assignment for the benefit of
creditors, (ii) files a voluntary bankruptcy petition, (iii) becomes
the subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency proceeding, (iv) files a
petition or answer seeking for such Member a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any law, (v) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against such Member in a proceeding of the type described in
clauses (i)-(iv), (vi) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of the Member or of
all or any substantial part of the Member's properties, or
(b) with respect to which (i) a proceeding is commenced seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any law and 90 days have expired
without the proceeding being dismissed, or (ii) without that Member's
consent or acquiescence, a trustee, receiver, or liquidator is
appointed of that Member or of all or any substantial part of its
properties and 90 days have expired without the appointment being
3
vacated or stayed, or if stayed, 90 days have expired after the date
of expiration of a stay, unless the appointment has been vacated.
"Basic Agreements" has the meaning set forth in the Construction and
Indefeasible Right of Use Agreement, dated as of the date hereof, by and
between BecoCom and the Company (the "IRU Agreement").
"BecoCom" means BecoCom, Inc., a Massachusetts corporation and a
wholly owned subsidiary of BETG.
"BecoCom Contributed Assets" means those certain existing assets
listed in footnote 2 of Schedule 1.
"Budget" has the meaning set forth in Section 7.10.
"Business Day" means any day other than a Saturday, a Sunday or a
holiday on which banks in Massachusetts generally are closed.
"Business Plan" has the meaning set forth in Section 7.10 hereof.
"Capital Account" means the capital accounts maintained with respect
to Membership Interests pursuant to Section 6.1.
"Capital Call" means a request for additional contributions of capital
to the Company.
"Carrying Value" means, with respect to any asset, the asset's
adjusted tax basis for federal income tax purposes except as follows:
(a) The initial Carrying Value of any asset contributed to the
Company by a Member shall be the Agreed Value of such asset;
(b) Consistent with the provisions of Section
1.704-1(b)(2)(iv)(f) of the Regulations, the Carrying Value of all
Company assets shall be adjusted to equal their respective gross fair
market values upon the happening of any of the following events: (i)
issuance of additional Membership Interests to new or existing Members
for more than a de minimis amount of cash or Contributed Property,
(ii) immediately prior to a distribution to a Member of more than a de
minimis amount of Company property (other than a distribution solely
of cash that is not in redemption or retirement of a Membership
Interest) in consideration for an interest in the Company and (iii)
the liquidation of the Company within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g).
4
(c) The Carrying Values of Company assets shall be increased or
decreased to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) or Section 743(b) of the Code, but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), Section 6.2(b)(vii) hereof and paragraph (e) of
the definition of Net Income or Net Loss.
If the Carrying Value of an asset has been determined or adjusted pursuant
to subparagraphs (a), (b) or (c) of the definition for Carrying Value, such
Carrying Value shall be adjusted thereafter by the Depreciation taken into
account with respect to such asset for purposes of computing the amount of Net
Income or Net Loss.
"Cash Capital Contribution" means the amount set forth under the
column "Cash Capital Contribution" on Schedule 1.
"Category A Fundamental Business Actions" has the meaning given that
term in Section 7.8(a).
"Category B Fundamental Business Actions" has the meaning given that
term in Section 7.8(b).
"Certificate" has the meaning given that term in Section 2.1.
"Certificate Date" has the meaning given that term in Section 3.3(11).
"Change of Control" of a Member shall be deemed to have occurred when
(i) an Entity, other than a Member Parent of such Member or a Wholly Owned
Affiliate of such Member Parent (an "Unaffiliated Entity") shall acquire
(whether by merger, consolidation, sale, assignment, lease, transfer or
otherwise, in one transaction or a series of related transactions), or
otherwise beneficially own, directly or indirectly, more than 50% of the
outstanding voting interests in such Member entitled to vote generally in
the election of directors, managers or other members of the management
group of such Member or otherwise control such Member (a "Control Entity"),
(ii) the Member Parent of such Member shall otherwise cease to beneficially
own a majority of such outstanding voting securities in such Member or any
Control Entity of such Member, or (iii) an Unaffiliated Entity shall become
a Control Entity of a Member Parent after the Effective Date.
"Code" means the Internal Revenue Code of 1986 and any successor
Statute, as amended from time to time.
"Company" means RCN-BecoCom, LLC, a Massachusetts limited liability
company.
5
"Company Debt" shall have the meaning set forth in Section 2.5(a)(iv).
"Company Nonrecourse Deductions" means, with respect to Company
Nonrecourse Liabilities, the amount of deductions, losses and expenses
equal to the net increase during the year in Minimum Gain attributable to
Company Nonrecourse Liabilities, reduced (but not below zero) by the
proceeds, if any, of such Company Nonrecourse Liabilities distributed
during the year, as determined in accordance with applicable Regulations.
"Company Nonrecourse Liabilities" means nonrecourse liabilities (or
portions thereof) of the Company for which no Member (or any Person related
to a Member) bears the Economic Risk of Loss.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed to the
Company (or deemed contributed to the Company on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"Control" of an Entity means power to direct or cause the direction of
the management or policies of such Entity, whether through the ownership of
voting securities, by agreement or otherwise.
"Deadlock Event" shall have the meaning set forth in Section
7.8(c)(ii) hereof.
"Default Interest Rate" means three percent above LIBOR.
"Delinquent Member" with respect to a Capital Call means a Member who
fails to pay its portion of such Capital Call at the time and in the amount
required under this Agreement.
"Depreciation" means, for each fiscal year or other relevant period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other
relevant period, except that if the Carrying Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such
year, Depreciation shall be an amount which bears the same ratio to such
beginning Carrying Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year bears to such
beginning adjusted tax basis; provided, however, that if the adjusted basis
for federal income tax purposes of an asset at the beginning of such year
is zero, Depreciation shall be determined with reference to such beginning
Carrying Value using any reasonable method selected by the Tax Matters
Partner.
6
"Dispose," "Disposing," or "Disposition" means a sale, assignment,
transfer, exchange, pledge, grant of a security interest, or other
disposition or encumbrance, or the acts thereof.
"Disputing Member" has the meaning given that term in Section
7.8(d)(i).
"Dispute Notice" has the meaning given that term in Section 7.8(d)(i).
"Dispute Price" has the meaning given that term in Section 7.8(d)(i).
"Economic Risk of Loss" has the meaning ascribed to it in Section
1.752-2 of the Regulations.
"Effective Date" has the meaning given that term in the introductory
paragraph hereof.
"Entity" means any corporation, limited liability company, general
partnership, limited partnership, venture, trust, business trust, estate or
other entity.
"Exchange Agreement" means that certain Exchange Agreement entered
into between BecoCom and C-Tec of even date herewith.
"Exchange Securities" means any securities into which a Membership
Interest (or any part thereof) is exchanged pursuant to the Exchange
Agreement.
"Fair Market Value" has the meaning given that term in Section 3.3.
"First Appraiser" has the meaning given that term in Section 3.3(i).
"Fundamental Business Actions" has the meaning given that term in
Section 7.8.
"GAAP" means the generally accepted accounting principles in the
United States of America in effect from time to time.
"General Interest Rate" means a rate per annum equal to the lesser of
(a) a varying rate per annum that is equal to the interest rate publicly
quoted by Citibank, N.A. from time to time as its prime commercial or
similar reference interest rate, with adjustments in that varying rate to
be made on the same date as any change in that rate, anti (b) the maximum
rate permitted by applicable law.
"Governmental Entity" has the meaning given that term in Section
2.5(c).
"Higher Value" has the meaning given that term in Section 3.3(iii).
7
"Holding Company" means a Holding Company as defined in Section
2(a)(7) of PUHCA.
"Initial Capital Contribution" has the meaning given that term in
Section 4.1.
"Initial LLC Agreement" means that certain operating agreement, dated
as of December 23, 1996, entered into by RCN and BETG.
"Investment Percentage" of a Person means the percentage set forth
opposite such Person's name on Schedule 2, as adjusted on account of
Capital Calls (pursuant to Section 4.3), Dispositions (pursuant to Section
3.2, but not Dispositions in exchange for Exchange Securities pursuant to
the Exchange Agreement) or the disposition of Exchange Securities received
upon an exchange made pursuant to the Exchange Agreement.
"Joint Investment and Non-Competition Agreement" shall mean that
certain Joint Investment and Non-Competition Agreement entered into by
RCN-Sub, BecoCom and NEWCO of even date herewith.
"LIBOR" means the rate of interest equal to the average (rounded
upwards, if necessary, to the nearest 1/16 of 1%) of the rates per annum at
which dollar deposits in immediately available funds are offered in the
London interbank eurodollar market as at or about 2:00 P.M. New York time
on the date the Default Interest Rate becomes effective, adjusted from time
to time as such rate changes.
"Lower Value" has the meaning given that term in Section 3.3(iii).
"Majority Interest" means, in combination, Membership Interests of one
or more Members which, in the aggregate, are entitled to a combined Sharing
Ratio of more than 50%.
"Management Agreement" means that certain Management Agreement entered
into by and among RCN Operating Services, Inc., BecoCom and the Company of
even date herewith.
"Manager" shall have the meaning set forth in Section 7.10(b).
"Member" means any Person executing this Agreement as of the date
hereof as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but does not include any Person who has ceased
to be a member in the Company.
"Membership Interest" means the interest of a Member in the Company,
including, without limitation, such rights to distributions (liquidating or
otherwise),
8
allocations, information and to consent or approve as shall be provided by
law or by this Agreement.
"Member Nonrecourse Debt" means any nonrecourse debt of the Company
for which any Member bears the Economic Risk of Loss.
"Member Nonrecourse Deductions" means, with respect to Member
Nonrecourse Debt, the amount of deductions, losses and expenses equal to
the net increase during the year in Minimum Gain attributable to Member
Nonrecourse Debt, reduced (but not below zero) by the proceeds, if any, of
such Member Nonrecourse Debt distributed during the year to the Members who
bear the Economic Risk of Loss for such debt, as determined in accordance
with applicable Regulations.
"Member Parent" means, with respect to RCN-Sub, RCN (as defined
above), and, with respect to BecoCom, BETG, and their respective successors
and assigns, whether by means of merger, spinoff or otherwise.
"Minimum Gain" means (i) with respect to Company Nonrecourse
Liabilities, the amount of gain that would be realized by the Company if it
disposed of (in a taxable transaction) all Company properties that are
subject to Company Nonrecourse Liabilities in full satisfaction of such
liabilities, computed in accordance with applicable Regulations or (ii)
with respect to each Member Nonrecourse Debt, the amount of gain that would
be realized by the Company if it disposed of (in a taxable transaction) the
Company property that is subject to such Member Nonrecourse Debt in full
satisfaction of such debt, computed in accordance with applicable
Regulations.
"Net Agreed Value" means (i) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed
by the Company upon such contribution or to which such property is subject
when contributed, and (ii) in the case of any property distributed to a
Member by the Company, the Company's Carrying Value of such property (as
adjusted pursuant to Section 6.2(d)(ii)) at the time such property is
distributed, reduced by any liabilities either assumed by such Member upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the Code.
"Net Income" or "Net Loss" means, for each fiscal year or other
period, the taxable income or loss of the Company, as determined in
accordance with Section 703 of the Code, with the following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or
Net Loss shall be added to such taxable income or loss;
9
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1 .704-1(b)(2)(iv)(i) and
not otherwise taken into account in computing Net Income or Net Loss
shall be subtracted from such taxable income or loss;
(c) In the event that the Carrying Value of any Company asset is
adjusted pursuant to paragraph (b) of the definition for Carrying
Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of
computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Carrying Value of the
property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its carrying value;
(e) To the extent that an adjustment to the adjusted tax basis of
any Company asset pursuant to Section 734(b) or Section 743(b) of the
Code is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in complete
liquidation of a Member's Interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of
the asset) from the disposition of the asset and shall be taken into
account for purposes of computing Net Income or Net Loss;
(f) In lieu of depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, Depreciation shall be taken into account.
(g) Any items which are specially allocated pursuant to Section
6.2(b) hereof shall not be taken into account in computing Net Income
or Net Loss.
"Nondelinquent Member" has the meaning given that term in Section
4.3(a).
"Notice" has the meaning given that term in Section 7.8(eXi).
"Other Members" has the meaning given that term in Section 7.8(d)(i).
"Person" means any natural person or Entity.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended from time to time, 15 U.S.C.ss.ss.79-792-6.
10
"Purchasing Members" has the meaning given that term in Section 11.2.
"RCN Contributed Assets" mean those certain existing assets listed in
footnote 1 of Schedule 1.
"RCN-Sub" means RCN Telecom Services of Massachusetts, Inc., a
Massachusetts corporation and wholly-owned subsidiary of RCN.
"Regulations" means the final and temporary Income Tax Regulations
promulgated under the Code, as amended from time to time, and including
corresponding provisions of succeeding regulations.
"Relevant Market" means those certain cities and towns, as set forth
on Exhibit F attached hereto.
"Representative" has the meaning given that term in Section 7.2.
"Respondent" has the meaning given that term in Section 7.8(eXi).
"Rules" has the meaning given that term in Section 7.8(exi).
"Second Appraiser" has the meaning given that term in Section 3.3(i).
"Secretary of State" means the Secretary of State of the Commonwealth
of Massachusetts.
"Selling Member's Interest" has the meaning given that term in Section
3.3.
"Services" means the provision of data, voice, video, other
communications services, and the communications support of energy-related
customer services offered by BECO, to residential and commercial customers
in the Relevant Market or elsewhere.
"Sharing Ratio" with respect to a particular Member means the
percentage set forth opposite such Member's name on Schedule 1, as adjusted
on account of Dispositions (pursuant to Section 3.2 or pursuant to the
Exchange Agreement) or Capital Calls (pursuant to Section 4.3).
"Tax Matters Partner" means such Entity designated by Members holding
Sharing Ratios aggregating more than 50%.
"Third Appraiser" has the meaning given that term in Section 3.3(iv).
"Third Party Sale" has the meaning given that term in Section 3.2(b(v).
11
"Third Value" has the meaning given that term in Section 3.3(iv).
"Unrealized Gain" or "Unrealized Loss" attributable to any item of
Company property means, as of any date of determination, the excess or
shortfall, respectively, of (a) the fair market value of such property as
of such date (as determined under Section 6.1(d)) over (b) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 6.1(d) as of such date).
"Wholly Owned Affiliate" means as to any Entity, (i) an Affiliate all
of the equity interests of which are owned, directly or indirectly, by a
Member or by another Wholly Owned Affiliate of such Member or (ii) an
Affiliate which owns, directly or indirectly, all of the equity interests
of a Member.
1.2 Other Definitions. Other terms defined herein have the meanings so
given them.
1.3 Construction. Whenever the context requires, the gender of all words
used in this Agreement includes the masculine, feminine, and neuter. All
references to Articles and Sections refer to articles and Sections of this
Agreement, and all references to Exhibits are to Exhibits attached hereto, each
of which is made a part hereof for all purposes.
ARTICLE 2
ORGANIZATION
2.1 Organization. The Company was organized on December 24, 1996 pursuant
to a Certificate of Organization filed in the office of the Secretary of State
(the "Certificate") and the Initial LLC Agreement as of December 23, 1996 by and
between RCN and BETO. Concurrently with the execution of this Agreement, RCN is
assigning its Membership Interest to RCN-Sub and BETG is assigning its
Membership Interest to BecoCom, and each of BETO and RCN hereby consents to the
admission of RCN-Sub and BecoCom, as the case may be, as a member, and the
withdrawal of RCN and BETG, as the case may be.
2.2 Name. The name of the Company is "RCN-BecoCom, LLC" and all Company
business must be conducted in that name or such other names that comply with
applicable law as the Managers may select from time to time.
2.3 Registered Office; Registered Agent; Principal Office In the United
States; Other Offices. The registered office of the Company in the Commonwealth
of Massachusetts shall be the initial registered office designated in the
Certificate or such other office (which need not be a place of business of the
Company) as the Members may designate from time to time in the manner provided
by law. The registered agent of the Company in the Commonwealth of Massachusetts
shall be the initial registered agent designated in the Certificate, or such
other Person or Persons as the Members may designate from time to time in the
manner provided by law. The principal office of the Company in the United States
shall be at 419 Boylston Street,
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Boston, Massachusetts 02199, or such other place(s) as the Members may designate
from time to time, which must be in the Commonwealth of Massachusetts. The
Company may have such other offices as the Members may determine appropriate.
2.4 Purpose. Subject to Section 7.8, the business purpose of the Company is
(i) to create, lease and operate a network to provide the Services, (ii) to
market the Services to business and residential customers in the Relevant
Market, and (iii) to engage in and carry on any lawful business, purpose or
activity which is approved pursuant to Section 7.8 hereof not prohibited by the
Act or other applicable law.
2.5 Company Powers.
(a) In furtherance of the business purpose specified in Section 2.4 hereof,
but subject to the limitations and restrictions set forth in this Agreement, the
Company shall be empowered to do or cause to be done, or omit to do or cause to
be done, any and all acts deemed to be necessary or advisable in furtherance of
the business purpose of the Company, including, without limitation, the power
and authority to:
(i) Have, maintain or close one or more offices within or without the
Commonwealth of Massachusetts and in connection therewith to rent or
acquire office space and to engage personnel;
(ii) Open, maintain and close bank and money market accounts,
including the power to draw checks or other orders for the payment of
moneys, and to invest such funds as are temporarily not required for
Company purposes in short-term investments;
(iii) Bring and defend actions and proceedings at law or equity before
any domestic or foreign governmental or regulatory authority, agency or
commission (each, a "Governmental Entity");
(iv) Have outstanding at any time any indebtedness (including any
indebtedness of subsidiaries) for money borrowed, guarantee the obligations
of others or otherwise become contingently liable with respect to any
indebtedness or obligations of others (collectively, "Company Debt"), and,
in connection therewith, to grant security interests, if and only if the
Company Debt was incurred in connection with, or for the purpose of
entering into, the financing of the operations of the business of or for
other business purposes of the Company; provided, that "Company Debt"
shall, for purposes of this Agreement, be deemed to include all interest,
fees (including commitment, guaranty and facility fees), expenses thereon
and all other amounts due in respect thereof;
(v) Enter into, perform and carry out contracts and agreements of
every kind necessary or incidental to the accomplishment of the Company's
purposes,
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and to take or omit to take such other action in connection with the
business of the Company as may be necessary or desirable to further the
purposes of the Company; and
(vi) Carry on any other activities necessary to, in connection with,
or incidental to any of the foregoing or the Company's business.
(b) Notwithstanding anything in Section 2.5(a) to the contrary, the Company
will not take any action, nor will any Member or officer or employee of the
Company take any action, which, in each such case, would cause the Company, any
Member or any Affiliate of a Member to be in violation of any applicable
statute, rule or regulation of any Governmental Entity.
2.6 Foreign Qualification Governmental Filings. Prior to the Company's
conducting business in any jurisdiction other than the Commonwealth of
Massachusetts, the Members shall cause the Company to comply, to the extent
procedures are available, with all requirements necessary to qualify the Company
as a foreign limited liability company in such jurisdiction. Each Member shall
execute, acknowledge, swear to and deliver all certificates and other
instruments conforming to this Agreement that are necessary or appropriate to
qualify, or, as appropriate, to continue or terminate such qualification of, the
Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.
2.7 Term. The Company commenced on the date the Certificate for the Company
was filed with the Secretary of State, and shall continue in existence until
December 31, 2060.
2.8 No State-Law Partnership. The Members intend that the Company not be a
partnership or limited partnership, and that no Member be a partner of any other
Member, for any purposes other than federal, state and local income tax
purposes, and this Agreement shall not be construed to suggest otherwise.
2.9 Activities of the Members. Except as expressly restricted by the Joint
Investment and Non-Competition Agreement, each Member and its Affiliates may
engage in or hold interests in other business ventures and activities of any
nature, including, without limitation, ventures and activities similar to those
of the Company, and neither the Company nor the other Members shall, by virtue
of this Agreement, have any interest or rights in or to such other ventures or
business or any liability or obligation with respect thereto.
ARTICLE 3
MEMBERS; DISPOSITIONS OF INTERESTS
3.1 Members. The Members of the Company are the Persons executing this
Agreement and/or Persons admitted as substitute or additional Members as
permitted by this Article 3.
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3.2 Restrictions on the Disposition of an Interest.
(a) Except as provided in this Section 3.2 and the Exchange Agreement, a
Disposition by a Member of all or any part of a Membership Interest may be
effected only with the prior express written consent of each other Member. Any
attempted Disposition by a Person of a Membership Interest, or any part thereof,
other than in accordance with this Section 3.2 or the terms of the Exchange
Agreement is void and the Company shall not recognize it.
(b) Subject to the provisions of Section 3.2(c), (d), (e), and (f) and the
Exchange Agreement, from and after the date that is three years from the
Effective Date, a Member may Dispose of part or all of its Membership Interest
provided that the Member who wishes to Dispose of its Membership Interest (an
"Offeror") first offers such Membership Interest to the other Members (the
"Offerees") and Disposes of such Membership Interest in accordance with the
following procedures:
(i) The Offeror shall give written notice of the material terms of the
offer, including the price, terms of payment, the Sharing Ratio of such
Offeror's Membership Interest offered and the Sharing Ratios of all
Membership Interests then held by the Offeror (an "Offer Notice") to the
Offerees and the Company.
(ii) Each Offeree shall have 60 days, commencing with the date on
which it has received the Offer Notice, to purchase all or part of its
proportionate share (to be determined by each Offeree's Sharing Ratio or by
such other basis upon which the Offerees agree) of the Membership Interest
offered. Any Membership Interest which an Offeree does not elect to
purchase may be purchased by the other Offerees in a proportion equal to
that which such Offerees' Sharing Ratios bear to each other.
(iii) An Offeree may exercise this election to purchase the Membership
Interest by giving the Offeror and the Company written notice thereof
within 30 days of such Offeree's receipt of the Offer Notice, and the
Company shall then specify the date and time of the closing of the purchase
at the Company's principal office, which shall be reasonably acceptable to
the Offeror and the Offerees, but shall not be later than 60 days following
the Offerees' receipt of the Offer Notice (unless the Offerees and the
Offeror agree upon another time and/or place of closing).
(iv) At the closing, the purchasing Offerees (if any) shall purchase
the Membership Interest at the price and on the terms set forth in the
Offer Notice, and the Offeror shall deliver such usual and customary
documents and instruments of transfer and conveyance.
(v) Should the Offerees fail to purchase all of the offered Membership
Interests specified in the Offer Notice, then the Offeror shall not be
required to Dispose of any of its Membership Interest to the Offerees, but
shall be permitted to Dispose of all (but not less than all) of the offered
Membership Interest specified in the Offer Notice
15
to a third party on terms no more favorable to the third party than the
terms set forth in the Offer Notice (a "Third Party Sale"), provided that
the Third Party Sale is consummated within 120 days of the date of the
Offer Notice.
(vi) In addition to the rights set forth above in this Section 3.2(b),
if an Offeror proposes to sell more than 33% of its Membership Interest in
one or a series of Third Party Sales, whether related or unrelated, the
Offeror shall give notice to the Offerees and the Company, not less than 30
and not more than 60 days prior to the consummation of the Third Party
Sale, of the material terms of the Third Party Sale, including the price,
terms of payment, and the Sharing Ratio of such Offeror's Membership
Interest offered and the Sharing Ratios of all Membership Interests then
held by the Offeror. Each Offeree who so elects by written notice (an
"Electing Member") to the Company and the Offerer within 15 days thereafter
shall be entitled to sell a portion of its Membership Interest in the Third
Party Sale that is equal to the proportion that the Sharing Ratio of the
Membership Interest being sold, together with that previously sold, bears
to the Sharing Ratio of the Membership Interest originally owned by the
Offeror.
(c) The Company may not recognize for any purpose any purported Disposition
of all or part of a Membership Interest unless and until the other applicable
provisions of this Section 3.2 have been satisfied and each non-Disposing Member
has received, on behalf of the Company, a document
(i) executed by both the Member effecting the Disposition and the
Person to which the Membership Interest or part thereof is Disposed,
(ii) including the notice address of any Person to be admitted to the
Company as a Member and its agreement to be bound by this Agreement in
respect of the Membership Interest or part thereof being obtained,
(iii) setting forth the Sharing Ratios after the Disposition of the
Member effecting the Disposition and the Person to which the Membership
Interest or part thereof is Disposed (which together must total the sum of
the Sharing Ratios of such Person and the Member effecting the Disposition
before the Disposition),
(iv) containing representations and warranties by such Person and such
Member that the Disposition was made in accordance with all applicable laws
and regulations (including securities laws) and
(v) containing a coalition to closing requiring a certificate, dated
as of the date of the Disposition, duly executed by such Person, to the
effect that the representations and warranties in Section 3.2 are true and
correct with respect to that Person.
16
Each Disposition complying with the provisions of this Section 3.2(c) is
effective as of the first day of the calendar month immediately succeeding the
month in which all requirements of this Section 3.2 have been met.
(d) Notwithstanding the foregoing, the provisions of this Section 3.2 shall
not apply to any transfer from a Member to its Member Parent, or a Wholly Owned
Affiliate, provided that such transferee shall comply with all of the
requirements of Section 3.2(c) hereof.
(e) For the right of a Member to Dispose of a Membership Interest or any
part thereof and of any Person to be admitted to the Company in connection
therewith to exist or be exercised (if applicable), either (i) the Membership
Interest or part thereof subject to the Disposition or admission must be
registered under the Securities Act of 1933, as amended, and any applicable
state securities laws or (ii) the Company must receive a favorable opinion of
the Company's legal counsel or of other legal counsel reasonably acceptable to
each non-Disposing Member to the effect that the Disposition or admission is
exempt from registration under those laws. Each non-Disposing Member, however,
may waive the requirements of this Section 3.2(e).
(f) The Member effecting a Disposition shall pay, or reimburse the Company
for, all costs incurred by the Company in connection with the Disposition or
admission (including, without limitation, the legal fees reasonably incurred in
connection with the legal opinions referred to in Section 3.2(e)) on or before
the 10th Business Day after the receipt of the Company's invoice for the amount
due by that Person. If payment is not made by the date due, the Person owing
such amount shall pay interest on the unpaid amount from the date due until paid
at a rate per annum equal to the Default Interest Rate, and such amount may be
withheld from any future distributions.
(g) Notwithstanding any other provisions of this Agreement, if the
Investment Percentage of any Member becomes less than 25% (the "Minority
Member"), then for so long as the Minority Member's Investment Percentage
remains below 25%, the other Members (the "Majority Members") shall have the
option to purchase, pro rata based on their respective Investment Percentages,
the Membership Interest (not including any Exchange Securities) of the Minority
Member. The Majority Members (or any one of them) may initiate procedures to
determine the Fair Market Value (as defined in Section 3.3) of the Membership
Interest to be purchased in the manner provided in Section 3.3 below. Within 30
days after such determination of Fair Market Value, the Majority Members shall
purchase, or elect (by notice given to the Minority Member) not to purchase, the
Membership Interest of the Minority Member. Once the Majority Members initiate
procedures to determine Fair Market Value, the option granted herein shall
remain effective for 30 days after such Fair Market Value is finally determined,
regardless of whether, during such time, the Minority Member's Investment
Percentage becomes 25% or greater. If any of the Majority Members elect not to
purchase their pro rata share of the Minority Member's Membership Interest, the
other Majority Members may purchase such additional share, pro rata based on
their respective Investment Percentages.
17
3.3 Change of Control. Upon any Change of Control of either RCN-Sub or
BecoCom, the Member subject to the Change of Control shall promptly give notice
thereof to the other Members and the Members not undergoing the Change of
Control shall be entitled to, at any time within a 90-day period following the
later of such notice or the effective date of such Change of Control, purchase,
on a pro rata basis based upon the respective Investment Percentages (provided
that, if any Member elects not to participate in such purchase, the other
Members may purchase their pro rata share), all but not less than all of the
Membership Interest of the Member undergoing the Change of Control, not
including any Exchange Securities held by such Member or its Affiliates (the
"Selling Member's Interest"), at a purchase price equal to the Fair Market Value
of the Selling Member's Interest determined as described below. The "Fair Market
Value", as of the date of determination, of a Selling Member's Interest shall be
determined (1) by mutual agreement of the Members or (2) if no such agreement is
reached within 10 days of the relevant date of determination, as follows:
(i) Selection of Appraisers. The Member selling the Selling Member's
Interest, on the one hand, and the purchasing Members, on the other hand,
each shall designate by written notice to the Company and each other member
a firm of recognized national standing familiar with appraisal techniques
applicable to assets of the type being evaluated to serve as an appraiser
(an "Appraiser") pursuant to this Section 3.3 (the firms designated by the
Members being referred to herein as "First Appraiser" and the "Second
Appraiser," respectively) within 15 business days after the failure to
reach agreement in accordance with the terms of clause (1) above. In the
event that either Appraiser is not designated within the foregoing time
period, the other Appraiser will serve as the only Appraiser, and its
appraisal will be binding on all Members for purposes of this Section 3.3.
(ii) Evaluation Procedures. Each Appraiser shall be directed to
determine the Fair Market Value of the Selling Member's Interest. Each
Appraiser will also be directed to deliver a certificate (an "Appraiser's
Certificate") setting forth such Appraiser's valuation of the Selling
Member's Interest to each Member on or before the 30th day after their
respective designation (the "Certificate Date"), upon the conclusion of its
evaluation, and each Appraiser Certificate once delivered may not be
retracted or modified in any respect. Each Appraiser will keep confidential
all information disclosed by the Company in the course of conducting its
evaluation, and, to that end, will execute such customary documentation as
the Company may reasonably request with respect to such confidentiality
obligation. The Members will cooperate in causing the Company to provide
each Appraiser with such information within the Company's possession that
may be reasonably requested in writing by the Appraiser for purposes of its
evaluation hereunder. Each Member shall have full access to each
Appraiser's work papers. Each Appraiser will be directed to comply with the
provisions of this Section 3.3, and to that end each party will provide to
its respective Appraiser a complete and correct copy of this Section 3.3
(and the definitions of capitalized terms used in this Section 3.3 that are
defined elsewhere in this Agreement).
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(iii) Fair Market Value Determination. The Fair Market Value of the
Selling Member's Interest shall be determined on the basis of the
Appraiser's Certificates in accordance with the provisions of this
subparagraph (iv), provided, that there shall be no "controlling interest
premium" if the Selling Member's Interest has an Investment Percentage of
less than 66 2/3%. nor any "minority interest discount" if the Selling
Member's Interest has an Investment Percentage of greater than 33 1/3%. The
higher of the values set forth on the Appraisers Certificates is
hereinafter referred to as the "Higher Value," and the lower of such values
is hereinafter referred to as the "Lower Value." If the Higher Value is not
more than 110% of the Lower Value, the Fair Market Value of the Selling
Member's Interest will be the arithmetic average of the Higher Value and
the Lower Value. If the Higher Value is more than 110% of the Lower Value,
a third appraiser shall be selected in accordance with the provisions of
subparagraph (iv) below, and the Fair Market Value of the Selling Member's
Interest will be determined in accordance with the provisions of
subparagraph (v) below.
(iv) Selection of and Procedures for Third Appraiser. If the Higher
Value is more than 110% of the Lower Value, within seven days thereafter
the First Appraiser and the Second Appraiser shall agree upon and jointly
designate a third Appraiser (the "Third Appraiser"), by written notice to
each Member. If the First Appraiser and the Second Appraiser cannot agree
upon a Third Appraiser within seven days, the Third Appraiser shall be
chosen by the American Arbitration Association ("AAA") in Boston,
Massachusetts. The First Appraiser and the Second Appraiser shall direct
the Third Appraiser to determine the Fair Market Value of the Selling
Member's Interest (the "Third Value") in accordance with the provisions of
subparagraph (ii) above, and to deliver to the Members an Appraiser's
Certificate on or before the 30th day after the designation of such
Appraiser hereunder. The Third Appraiser will be directed to comply with
the provisions of this Section 3.3, and to that end each of the parties
will provide to the Third Appraiser a complete and correct copy of this
Section 3.3 (and the definitions of capitalized terms used in this Section
3.3 that are defined elsewhere in this Agreement).
(v) Alternative Determination of Fair Market Value. Upon the delivery
of the Appraiser's Certificate of the Third Appraiser, the Fair Market
Value of the Selling Member's Interest will be determined as provided in
this subparagraph (v). The Fair Market Value of the Selling Member's
Interest will be (w) the Lower Value, if the Third Value is less than the
Lower Value, (x) the Higher Value, if the Third Value is greater than the
Higher Value, (y) the arithmetic average of the Third Value and either the
Higher Value or the Lower Value (whichever is closer to the Third Value) if
the Third Value falls within the range between (and including) the Lower
Value and the Higher Value and (z) the Third Value, if the Lower Value and
the Higher Value are equally close to the Third Value.
(vi) Costs. Each Member will bear the cost of the Appraiser designated
by it or on its behalf. If the Higher Value is not more than 115% of the
Lower Value,
19
or if the Higher Value and the Lower Value are equally close to the Third
Value, each Member shall bear 50% of the cost of the Third Appraiser, if
any; otherwise, the Member (or group of Members, pro rata as per their
Investment Percentages), whose Appraiser's determination of the Fair Market
Value of the Selling Member's Interest is further away from the Third Value
shall bear the entire costs of the Third Appraiser. The Members agree to
pay when due the fees and expenses of the Appraisers in accordance with the
foregoing provisions.
(vii) Conclusive Determination. To the fullest extent provided by law,
the determination of the Fair Market Value of the Selling Member's Interest
made pursuant to this Section 3.3 shall be final and binding on the Company
and the Members hereto, and such determination shall not be appealable to
or reviewable by any court or arbitrator, but judgment on such
determination may be entered in any court having jurisdiction thereof;
provided, however, that the foregoing shall not limit a Member's rights to
seek arbitration of the obligations of the other Members and the Company
hereunder.
3.4 Interests in a Member. Notwithstanding the foregoing, without the prior
express written consent of each other Member, no Member shall Dispose of all or
any part of its Membership Interest in such a manner that, after the
Disposition, (i) the Company would be considered to have terminated within the
meaning of Section 708 of the Code if such termination would result in material
adverse tax consequences to the non-transferring Members or (ii) the Company
would become an association taxable as a corporation for federal income tax
purposes.
3.5 Liability to Third Parties. No Member shall have any personal
obligation for any liabilities of the Company, whether such liabilities arise in
contract, tort or otherwise, except to the extent that any such liabilities are
expressly assumed in writing by such Member; provided, however, that nothing in
this Section 3.5 shall be construed as an agreement by the Company to indemnify
or hold harmless any Member.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Contemporaneously with the execution
hereof, (a) each Member shall make the Cash Capital Contribution set forth
opposite such Member's name on Schedule 1 (the "Initial Capital Contribution")
(to the extent not previously paid to the Company) and (b) each of RCN-Sub and
BecoCom shall contribute the RCN Contributed Assets and the BecoCom Contributed
Assets, respectively, to the Company and shall receive a credit to the amount of
its Initial Capital Contribution in the amount set forth on Schedule 1.
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4.2 Additional Capital Calls.
(a) Each Member shall be required to make payment when due, in proportion
to its respective Investment Percentage, of all of its share of the Capital
Calls set forth in the then annual Budget, as such may be amended from time to
time.
(b) In addition, subject to the limitations set forth in Section 7.8
hereof, upon 30 days prior written notice to the Members the Company may, from
time to time, issue Capital Calls, requiring the Members to make additional
contributions of capital to the Company in proportion to their respective
Investment Percentages. Capital Calls specifically referred to in any annual
Budget may be made by the chief executive officer of the Company.
4.3 Failure to Pay a Capital Call.
(a) If any Member fails to make payment when due of all or any portion of
its share of a Capital Call (a "Delinquent Member"), the secretary of the
Company shall give written notice of the failure to such Delinquent Member, with
a copy to all other Members. If the Delinquent Member fails to pay the amount
due within 10 days following receipt of notice, the secretary shall promptly
give notice of such failure to the other Members. At any time within 15 days
following receipt of such notice, then, unless the Members other than the
Delinquent Member ("Nondelinquent Members") elect to make capital contributions
in accordance with Section 4.3(b) hereof, (i) the amount contributed by each
Nondelinquent Member pursuant to the Capital Call shall be treated as a loan to
the Company for a term to be specified by such Nondelinquent Member, bearing
interest payable quarterly at the Default Interest Rate and (ii) each
Nondelinquent Member may make an additional loan to the Company for a term to be
specified by such Nondelinquent Member, also bearing interest payable quarterly
at the Default Interest Rate, in an amount equal to all or any portion of the
unpaid contribution. If two or more Members desire to provide funds under clause
(ii) of the preceding sentence, the total amount of funds provided shall be
allocated among such Members in the same proportion as such Members' then
current Sharing Ratios bear to each other or in such other manner as they may
agree.
(b) If a Nondelinquent Member so elects, then in lieu of making loans to
the Company in accordance with Section 4.3(a) hereof, (A) the amount contributed
by such Nondelinquent Member pursuant to the Capital Call shall be treated as a
contribution to the capital of the Company in exchange for an additional
interest in the Company and (B) each Nondelinquent Member may make an additional
contribution of capital to the Company in exchange for an additional interest in
the Company in an amount equal to all or any portion of the unpaid contribution.
If two or more Members desire to make capital contributions under clause (B) of
the preceding sentence, the total amount of capital to be contributed shall be
allocated among such Members in the same proportion as such Members' then
current Investment Percentages bear to each other or in such other manner as
they may agree.
21
(c) The amounts contributed pursuant to Section 4.3(b) hereof shall
increase the Capital Accounts of the contributing Members in accordance with the
terms of this Agreement. In addition, the Sharing Ratios and Investment
Percentages shall be recalculated (and such recalculated Sharing Ratios and
Investment Percentages shall thereafter apply for all purposes of this
Agreement) such that the Sharing Ratios and Investment Percentages of each
Member shall equal the ratio of its specified Capital Account to the aggregate
specified Capital Account of all of the Members, adjusted, in the case of
Sharing Ratios, to reflect any conversion pursuant to the Exchange Agreement.
(d) Notwithstanding any other provision of this Agreement, if a Person's
Capital Account ever equals $1 and such Person fails to make payment to the
Company of its entire share of the Company's next Capital Call, then such
Person's Investment Percentage and Sharing Ratio shall each equal zero %; upon
the payment of $1 to such Person, such Person's Membership Interest and all
rights hereunder shall be extinguished.
4.4 Return of Contributions. A Member is not entitled to the return of any
part of its Capital Contributions or to be paid interest in respect of either
its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of the other Members. A Member
is not required to contribute or to lend any cash or property to the Company to
enable the Company to return the other Members' Capital Contributions.
ARTICLE 5
INTENTIONALLY DELETED
ARTICLE 6
MEMBER ACCOUNTS; ALLOCATIONS OF PROFIT AND LOSS; DISTRIBUTlONS
6.1 Capital Accounts.
(a) A Capital Account shall be established and maintained for each Member
in accordance with the rules of Section 1.704-1(b)(2)(iv) of the Regulations.
Such Capital Account shall be increased by (i) the amount of cash and the Net
Agreed Value of all property transferred to the Company as Capital Contributions
with respect to such Member's Interest pursuant to this Agreement and (ii) the
amount of Net Income allocated to the Member pursuant to Article 6 hereof, and
decreased by (iii) the amount of cash and the Net Agreed Value of all actual and
deemed distributions of cash or property made with respect to such Interest
pursuant to this Agreement and (iv) the amount of Net Loss allocated to the
Member pursuant to Article 6 hereof.
(b) A transferee of a Membership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Membership
Interest so transferred;
22
provided, however, that, if the transfer causes a termination of the Company
under Section 708(6)(1)(8) of the Code, the rules under the Regulations
promulgated under Section 708 of the Code shall govern the treatment of the
Company and the Members upon a termination of the Company pursuant to Section
708 of the Code.
(c) Capital Accounts shall be adjusted, in a manner consistent with this
Section 6.1, to reflect any adjustments in items of the Company's income, gain,
loss or deduction that result from amended returns filed by the Company or
pursuant to an agreement by the Company with the Internal Revenue Service or a
final court decision.
6.2 Allocations for Capital Account and Tax Purposes.
(a) Net Income and Net Loses. After giving effect to the special
allocations set forth in Section 6.2(b), Net Income and Net Loss for each
taxable period shall be allocated as set forth below.
(i) Net Income shall be allocated between the Members in the following
manner:
(A) First, to each Member having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the
total deficit balances in the Capital Accounts of all Members, until
each such Member has been allocated Net Income equal to any such
deficit balance in its Capital Account;
(B) Second, to the Members previously allocated Net Loss under
Section 6.2(a)(ii)(A) pro rata to the extent of such Net Loss
previously allocated and not otherwise previously recouped under
Section 6.2(a)(i)(A) or this Section 6.2(a)(i)(B);
(C) Third, to the Members in accordance with their respective
Sharing Ratios.
(ii) Net Loss shall be allocated to the Members in the following
manner:
(A) First, to the Members in proportion to, and to the extent of,
the positive balances in their respective Capital Accounts; and
(B) Second, the balance, if any, to the Members in accordance
with their respective Sharing Ratios.
(b) Special Allocations. Notwithstanding any other provision of this
Section 6.2, the following special allocations shall be made in the following
order:
23
(i) Company's Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.2, if there is a net decrease in Minimum Gain
attributable to Company's Nonrecourse Liabilities during any Company
taxable period, each Member shall be allocated items of Company income and
gain for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Sections 1.704-2(f)(1) and (6), 1.704-2(g)(2) and
1.704-1(j)(2)(i) of the Regulations, or any successor provisions. For
purposes of this Section 6.2(b), each Member's Capital Account balance
shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.2(b) with respect to such taxable
period (other than allocations pursuant to Sections 6.2(b)(v) and
6.2(b)(vi)). This Section 6.2(b)(i) is intended to comply with the
"partnership minimum gain chargeback" requirement in Section 1.704-2(0 of
the Regulations and shall be interpreted consistently therewith.
(ii) Chargeback of Member Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.2 (other than
Section 6.2(b)(i)), except as provided in Section 1.704-2(i)(4) of the
Regulations, if there is a net decrease in Minimum Gain attributable to
Member Nonrecourse Debt during any Company taxable period, any Member with
a share of Minimum Gain attributable to such Member Nonrecourse Debt at the
beginning of such taxable period shall be allocated items of Company income
and gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii)
of the Regulations, or any successor provisions. For purposes of this
Section 6.2(b)(ii), each Member's Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.2(b), other than Sections 6.2(b)(i), 6.2(b)(v) and
6.2(b)(vi), with respect to such taxable period. This Section 6.2(b)(ii) is
intended to comply with the chargeback of items of income and gain
requirement in Section 1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income and
gain shall be specially allocated to such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations
promulgated under Section 704(b) of the Code, its Adjusted Capital Account
Deficit created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise eliminated
pursuant to Section 6.2(b)(i) or (ii).
(iv) Gross Income Allocations. In the event any Member has a deficit
balance in its Capital Account at the end of any Company taxable period in
excess of the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Section l.704-2(g)(1)
and Section 1.704-2(i)(5), such Member shall be specially allocated items
of Company gross income and gain in the amount of
24
such excess as quickly as possible; provided, that an allocation pursuant
to this Section 6.2(b)(iv) shall be made only if and to the extent that
such Member would have a deficit balance in its Capital Account after all
other allocations provided for in this Section 6.2(b) have been
tentatively made as if this Section 6.2(b)(iv) were not in this Agreement.
(v) Company Nonrecourse Deductions. Company Nonrecourse Deductions for
any taxable period shall be allocated to the Members in accordance with
their respective Sharing Ratios. If the Members determine in their good
faith discretion that the Company's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of
the Regulations promulgated under Section 704(b) of the Code, the Members
are authorized to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vi) Member Nonrecourse Deductions.. Member Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Member that bears the
Economic Risk of Loss with respect to the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable in accordance with
Section 1.704-2(i) of the Regulations. If more than one Member bears the
Economic Risk of Loss with respect to a Member Nonrecourse Debt, such
Member Nonrecourse Deductions attributable thereto shall be allocated
between or among such Members in accordance with the ratios in which they
share such Economic Risk of Loss.
(vii) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Section 1.704-1(b)(2))(iv)(m)
of the Regulations, to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset), or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Members in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Regulations.
(viii) Any special allocations of items of income or gain pursuant to
Section 6.2(b)(iii) or (iv) shall be taken into account in computing
subsequent allocations pursuant to Section 6.2(a) so that, for each Member,
the net amount of any such special allocations and all allocations pursuant
to Section 6.2(a) shall, to the extent possible, be equal to the net amount
that would have been allocated to such Member pursuant to the provisions of
Section 6.2(a) without application of Section 6.2(b)(iii) or (iv).
(c) Special Rules.
(i) It is intended that (a) the Capital Accounts be maintained at all
times in accordance with Section 704 of the Code and applicable
Regulations, (b) the
25
Capital Accounts be increased or decreased by any items required by the
Regulations under Section 704(b) of the Code to increase or decrease,
respectively, a Member's Capital Account, and (c) the provisions hereof
relating to the Capital Accounts be interpreted in a manner consistent
therewith. The Members shall be authorized to make appropriate amendments
to the allocations of items pursuant to this Section 6.2 if necessary in
order to comply with Section 704 of the Code or applicable Regulations
thereunder.
(ii) All items of income, gain, loss, depreciation, amortization and
cost recovery deductible in respect of Contributed Property for federal
income tax purposes shall be allocated among the Members in the manner
provided under Section 704(c) of the Code that takes into account the
variation between the Agreed Value of such property and its adjusted tax
basis at the time of contribution. In the event that the Carrying Value of
any Company asset is adjusted pursuant to paragraph (b) of the definition
of Carrying Value hereof, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account any variation
between the adjusted tax basis of such asset and its Carrying Value in the
same manner as under Section 704(c) of the Code and the Regulations
thereunder.
(iii) Company Nonrecourse Liabilities. For purposes of Section
l.752-3(a)(3) of the Regulations, the Members agree that Company
Nonrecourse Liabilities in excess of the sum of (A) the amount of Minimum
Gain attributable to Company Nonrecourse Liabilities and (B) the total
amount of taxable gain, if any, that would be allocated to the Members
under Section 704(c) of the Code if the Company were to dispose of all
Company assets (in a taxable transaction) subject to one or more Company
Nonrecourse Liabilities in full satisfaction thereof shall be allocated
among the Members in accordance with their respective Sharing Ratios.
ARTICLE 7
MANAGEMENT
7.1 Management by the Members. The business and affairs of the Company
shall be managed by the Members, subject to the binding effect of the Management
Agreement. The Members shall delegate authority to such officers, employees,
agents and/or representatives of the Company as they may from time to time deem
appropriate; provided, however, that for as long as the Investment Percentage of
BecoCom is at least 33 1/3%, BecoCom shall be entitled to (i) appoint a
qualified individual to serve as the Company's chief financial officer; and (ii)
appoint one full-time staff member serving the Company in an operational
capacity. Notwithstanding the immediately preceding sentence, in the event
RCN-Sub or an Affiliate of RCN-Sub is not the manager under the Management
Agreement, and for so long as the Sharing Ratio of RCN-Sub is at least 33 1/3%,
RCN-Sub shall be entitled to (A) appoint a qualified individual to serve as a
senior executive officer of the Company; and (B) appoint one full-time staff
member serving the Company in an operational capacity. Any delegation of
authority to
26
take any action must be approved in the same manner as would be required for the
Members to directly approve such action. No Member shall take any action in the
name of or on behalf of the Company, including without limitation assuming any
obligation or responsibility on behalf of the Company, unless such action, and
the taking thereof by such Member, shall have been expressly authorized by the
Members or shall be expressly and specifically authorized by this Agreement.
7.2 Representatives. The Members shall designate an aggregate of five
representatives (each, a "Representative"), pro rata in accordance with their
respective Investment Percentages rounded to the nearest whole number (initially
three Representatives appointed by RCN-Sub and two Representatives appointed by
BecoCom), to take any action required to be taken by Members hereunder and to
serve as an operating committee. Such appointment shall be effected by written
notice given to the Company and to each of the other Members. In the event any
Member appoints more than one Representative, each other Member may rely on the
action of any Representative as constituting the actions of its Member. Each
such representative shall be an officer or employee or former employee of a
Member or an Affiliate thereof.
7.3 Place of Meeting of Representatives. The Representatives may hold their
meetings at such place or places within or outside the Commonwealth of
Massachusetts as the Members holding Investment Percentages aggregating at least
66 2/3% may from time to time determine or as may be designated in the notice
calling the meeting. If a meeting place is not so designated, the meeting shall
be held at the Company's principal office. Representatives may participate by
means of a conference telephone or similar communications equipment by means of
which all persons participating can hear each other, and such participation
shall constitute presence in person at the meeting.
7.4 Regular Meetings of Representatives. Regular meetings of the
Representatives may be held without notice at such time and place as shall be
designated from time to time by resolution of Members holding Investment
Percentages aggregating at least 66 2/3%, but such meetings shall be held at
least monthly through December 1998 unless otherwise specified by the Members.
If the date fixed for any such regular meeting is a Saturday, Sunday or legal
holiday under the laws of the state where such meeting is to be held, then the
meeting shall be held on the next succeeding business day or at such other time
as may be determined by resolution of Members holding Investment Percentages
aggregating at least 66 2/3%. At such meetings the Representatives shall
transact such business as may properly be brought before the meeting.
7.5 Special Meetings of Representatives. Special meetings of the
Representatives may be called by any Member or by the chief executive officer of
the Company. Notice of each such meeting shall be given to each Representative
by telephone, telecopy, telegram or similar method (in which case notice shall
be given at least three days before the time of the meeting) or sent by
first-class mail (in which case notice shall be given at least three days before
the meeting), unless otherwise specified by the Representatives. Each such
notice shall state the time, place and purpose of the meeting to be so held.
27
7.6 Representative Compensation; Reimbursement. Representatives shall
receive no compensation for performing their duties under this Agreement;
provided, however, that one Representative of each of the Members shall be
entitled to receive, out of Company funds available therefor, reimbursement of
all amounts expended by such Representative in payment of reasonable expenses
incurred by such Representative in attending meetings of the Representatives.
7.7 Manner of Acting and Adjournment of Members. Any action of the Members
shall require the affirmative vote (in person, by proxy or by written consent)
by the Representatives of Members holding a majority of the Investment
Percentages of all Members, unless otherwise required in this Agreement.
7.8 Fundamental Business Actions. Notwithstanding anything to the contrary
set forth in this Agreement, for as long as BecoCom's Investment Percentage is
at least 33 1/4% the actions set forth below ("Fundamental Business Actions")
may not .be taken by the Company without the affirmative vote or consent of
Members holding Investment Percentages aggregating at least 66 2/3%; Fundamental
Business Actions shall be categorized as follows:
(a) Category A Fundamental Business Actions ("Category A Fundamental
Business Actions") shall mean:
(i) a merger, consolidation or reorganization of the Company or a
disposition of substantially all of its assets;
(ii) the issuance by the Company of any equity or equity-like
instruments including effecting an initial public offering of equity
securities;
(iii) voluntary liquidation, dissolution or winding-up of the Company,
except as specifically provided in Section 12.1, or voluntary initiation by
and with respect to the Company of bankruptcy or similar proceedings;
(iv) amendments to the Company's Certificate of Organization, this
Agreement, or any of the Basic Agreements,
(v) expansion of the operations of the Company beyond the Services; or
(vi) any acquisition of any other business which has a purchase price
of $1,000,000 or more.
(b) Category B Fundamental Business Actions ("Category B Fundamental
Business Actions") shall mean:
28
(i) individual capital expenditures in excess of 25% of the amount set
forth for such capital expenditures in the Budget during any fiscal year;
(ii) capital commitments in aggregate in excess of 25% of the amount
set forth in the Budget during any fiscal year;
(iii) transactions with Affiliates in excess of $50,000 singularly or
$500,000 in the aggregate in any fiscal year (except as set forth in the
Basic Agreements);
(iv) incurrence of Company Debt in excess of $5,000,000 in the
aggregate;
(v) guarantees made by the Company involving matters in excess
$5,000,000 of in the aggregate;
(vi) annual expenditures that exceed the amount set forth in the
Budget by more than 33% during any fiscal year;
(vii) appointment of and any change in the auditors of the Company;
(viii) the granting of any lien to secure any debt to any Member or
any Affiliate of a Member; or
(ix) except as otherwise provided in Section 12.2, any distribution of
cash or other assets to the Members.
(c) Upon the occurrence of a dispute of any matter under this Section 7.8,
the Members shall first use their good faith efforts to resolve such matter in a
mutually satisfactory manner. If, after seven days from the date on which any
Member notifies the other Members that a dispute exists, the Members cannot
reach a mutually satisfactory solution, the Members shall resolve such matter as
provided herein:
(i) Each Member shall immediately refer the matter to its chief
executive officer for resolution of the matter.
(ii) Should the chief executive officers of the respective Members
fail to resolve the matter within 20 days from such referral, the matter
shall be considered a deadlock event (a "Deadlock Event"), and shall be
resolved in accordance with the provisions of paragraphs (d) or (e) below,
as the case may be.
(d) In the event of any Deadlock Event arising from a Category A
Fundamental Business Action, the parties agree that such Deadlock Event will not
be referred to any court but that one or more Members shall purchase the entire
Membership Interest of the
29
other Member (not including Exchange Securities held by such Member or its
Affiliates) in accordance with the provisions of this Section 7.8(d).
(i) Any Member (the "Disputing Member") may submit a notice (a
"Dispute Notice") to the other Members (the "Other Members") within 60 days
of the date the matter becomes a Deadlock Event. The Dispute Notice shall
set forth, in reasonable detail, the nature of the dispute and the price
(the "Dispute Price") at which the Disputing Member is willing to either
sell its Membership Interest to the Other Members or purchase all
Membership Interests from the Other Members.
(ii) The Dispute Price shall be determined by selecting a price for
the entire Company, and pro-rating such price by the Sharing Ratio of the
Membership Interest to be purchased or sold.
(iii) Within 30 days after the Other Members' receipt of the Dispute
Notice, the Other Members will signify in writing their election, whether
to buy the Disputing Member's Membership Interest at the Dispute Price or
to sell their Membership Interest at the Dispute Price, if the Other
Members fail to make such election within such 30 day period, the Disputing
Member may, within 15 days thereafter, elect to buy the Other Members'
Membership Interests.
(iv) Each Member agrees to execute and deliver all deeds, assignments,
releases, agreements, receipts or other documents necessary to consummate
the transfer of the Membership Interests being sold and delivered upon
payment by the purchasing Member of the consideration provided for in the
Dispute Notice.
(v) The closing of the purchase and sale pursuant to this Section
7.8(d) shall occur no later than 30 days following the receipt of the
election by the Disputing Member or the Other Members, as the case may be.
(e) In the event of any Deadlock Event arising from a Category B
Fundamental Business Action or pursuant to Section 7.10(d), the parties agree
that such Deadlock Event will not be referred to any court but will be referred
to binding arbitration, and the provisions of this Section 7.8(e) shall apply.
(i) The arbitration shall be governed by the AAA Commercial
Arbitration Rules (the "Rules"), as modified by this Section 7.8(e), and by
the United States Arbitration Act, 9 U.S.C. ss.ss. 1 et seq. (the
"Arbitration Act"). Any conflict between the Rules and the Arbitration Act
shall be decided in favor of the Rules. The Member wishing to submit such
matter to arbitration shall, within seven days of the date the matter in
dispute becomes a Deadlock Event, give written notice (the "Notice") to the
other Member (the "Respondent") of its intention to arbitrate. The place of
the arbitration shall be Boston, Massachusetts. The arbitration shall be
conducted, and the final resolution of the Deadlock Event (the "Award")
shall be rendered by one arbitrator (the
30
"Arbitrator") to be mutually selected by the Members. If the Members cannot
agree to a mutually acceptable Arbitrator within seven days of Respondent's
receipt of the Notice, the Arbitrator shall be selected in accordance with
rule 13 of the Rules.
(ii) All hearings shall be held within 30 days following the
appointment of the Arbitrator. At a time designated by the Arbitrator, each
party shall simultaneously submit to the Arbitrator and exchange with each
other its final proposed Award, and in rendering the final Award, the
Arbitrator shall be limited to choosing the Award proposed by either of the
parties without modification. The Arbitrator shall issue the final Award no
later than 15 days from the completion of the hearings. The Award of the
Arbitrator shall be final and binding. Judgment on any Award may be entered
in any court having jurisdiction thereof.
(iii) To the extent that the parties are permitted under this Section
7.8(e) to pursue judicial remedy in aid of arbitration, each party consents
and submits to the non-exclusive jurisdiction of and venue in the federal
courts located in Boston, Massachusetts (or, in case such a federal court
does not have jurisdiction, the state courts located in Boston,
Massachusetts). Each party consents to service of the notice of
arbitration, and any other paper in the arbitration, by registered mail or
personal delivery at its address specified in Section 13.3 hereof. Nothing
in this subsection (iii) shall limit the jurisdiction of other courts for
purposes of enforcement of a final arbitral Award.
(iv) The fact that any party has invoked the provisions of this
Section 7.8(e) shall be considered to be confidential information under
Section 13.9 of this Agreement and shall not relieve either party of any
obligations it may otherwise have to continue performance in accordance
with the provisions of this Agreement.
(v) This agreement to arbitrate a Deadlock Event in accordance with
this Section 7.8(e) and any Award made hereunder shall be binding upon the
successors and assigns and any trustee or receiver of each Member.
7.9 Indemnification.
(a) Subject to paragraph (c) below, the Company shall indemnify, defend and
hold harmless any Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or on behalf of a Member), by reason of the fact that he is or was a
Representative or officer of the Company, or is or was an officer of the Company
serving at the request of the Company as a manager, director, officer, employee
or agent of another Entity against expenses (includiing reasonable attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
31
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Subject to paragraph (c) below, the Company shall indemnify any Person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding by or on behalf of a Member to
procure a judgment in its favor by reason of the fact that he is or was a
Representative or officer of the Company, or is or was an officer of the Company
serving at the request of the Company as a manager, director, officer, employee
or agent of another Entity against expenses (including reasonable attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
(c) Any indemnification under this Section 7.9 (unless ordered by a court)
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of the Representative or officer is proper in
the circumstances because he has met the applicable standard of conduct set
forth in paragraphs (a) or (b) above. Such determination shall be made (i) by a
majority vote of the disinterested Members, or (ii) if the Members so direct, by
independent legal counsel in a written opinion. Notwithstanding the foregoing,
to the extent, however, that a Representative or officer of the Company has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including reasonable attorneys' fees)
actually and reasonably incurred by him in connection therewith, without the
necessity of authorization in the specific case.
(d) For purposes of any determination under this Section 7.9, a person
shall be deemed to have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, or, with
respect to any criminal action or proceeding, to have had no reasonable cause to
believe his conduct was unlawful, if his action is based on the records or books
of account of the Company or another enterprise, or on information supplied to
him by the officers of the Company or another enterprise in the course of their
duties, or on the advice of legal counsel for the Company or another enterprise
or on information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this
32
paragraph (d) shall mean any Entity which such person is or was serving at the
request of the Company.
(e) Notwithstanding the foregoing, any Representative or officer may apply
to any court of competent jurisdiction in the Commonwealth of Massachusetts for
indemnification to the extent otherwise permissible under paragraphs (a) and (b)
above by reason of the fact that he has met the applicable standard of conduct.
If successful, in whole or in part, the Representative or officer seeking
indemnification shall also be entitled to be paid the expense of prosecuting
such application.
(f) Expenses incurred by a Representative or officer in defending or
investigating a threatened or pending action, suit or proceeding shall be paid
by the Company in advance of the final disposition thereof upon receipt of an
undertaking to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Company as authorized in this Section 7.9.
(g) The indemnification and advancement of expenses in this Section 7.9
shall not be deemed exclusive of any other rights which may apply, it being the
policy of the Company that indemnification of the persons specified in
paragraphs (a) and (b) above shall be made to the fullest extent permitted by
law. The provisions of this Section 7.9 shall not preclude the indemnification
of any person who is not specified herein but whom the Company has the power or
obligation to indemnify under the Act, or otherwise.
(h) The Company may purchase and maintain insurance on behalf of the
persons specified in Section 7.9(a) against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power or the obligation to indemnify
him under this Section 7.9.
(i) The indemnification and advancement of expenses provided by this
Section 7.9 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Representative or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
(j) Except for proceedings to enforce rights to indemnification (which
shall be governed by paragraph (e) above). the Company shall not be obligated to
indemnify any Representative or officer in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Members.
7.10 Business Plan; Budget. (a) All of the Members have adopted an initial
one-year business plan for the Company and shall cause to be prepared annual
business plan for each succeeding year. Each business plan shall include (i) an
operating budget, (ii) a budget for capital expenditures, (iii) a budget for
capital contributions required from the Members (collectively, the "Budget"),
(iv) sales and marketing plan, (v) financial pro forma balance sheet, income
statement and statement of cash flows, and (vi) performance milestones
(collectively, a
33
"Business Plan"). Once approved as provided in this Section 7.10, the Budget may
not be revised without the approval of Members with Investment Percentages
aggregating at least 66 2/3%. The methodology for allocation of overhead in each
Business Plan shall be that utilized in the initial one-year Business Plan,
unless an alternative allocation method shall be agreed to by the Members with
Investment Percentages aggregating at least 66 2/3%.
(b) Each Budget shall set forth the operations of the Company (including
provision for employee incentive compensation, employee benefits and
compensation pursuant to the Management Agreement) between January 1 to December
31 of the applicable year and shall be prepared by the manager (the "Manager")
of the Company (pursuant to the terms of the Management Agreement). A
preliminary budget shall be delivered to the Members by the Manager no later
than October 15 of the previous year. The Manager shall consult with Members, as
it deems appropriate, in the process of preparing such preliminary budget. Each
Member shall thereafter have 30 days to review the preliminary budget and to
propose revisions. The Manager and each Member shall then have an additional 30
days to resolve any differences in and to finalize the Budget. If, after such
additional 30 day period, any Member continues to object to any line item of
such preliminary budget, such Member may deliver written notice (the "Budget
Dispute Notice") to the Manager, specifying in reasonable detail its objections.
Any Member who does not submit a Budget Dispute Notice within the given time
shall be deemed to have accepted the preliminary budget in its entirety, which
then shall become the Budget.
(c) If a Member submits a Budget Dispute Notice, the matter shall be
referred to the chief executive officers of the respective Members for
resolution.
(d) Should the chief executive officers of the respective Members fail to
resolve the matter within 20 days after such referral, the matter shall be
considered a Deadlock Event, to be resolved in accordance with the provisions
set forth in Section 7.8(e). Pending the resolution of such Deadlock Event, (i)
all line items not in dispute in the preliminary budget shall take effect and
(ii) (a) with respect to the 1998 and 1999 Budgets, the amount budgeted in the
previous year will be in effect, as if restated in the new Budget, for those
line items in dispute and (b) thereafter, the actual amounts spent on the
disputed line items in the previous year will be in effect, as if restated in
the new Budget, for those line items in dispute.
(e) At such time as all disputes on the preliminary budget have been
resolved, the preliminary budget as so resolved shall become the Budget.
34
ARTICLE 8
RIGHTS OF MEMBERS
8.1 Access to Information. In addition to the other rights specifically set
forth in this Agreement, each Member shall have access to all information to
which a Member is entitled to have access pursuant to the Act and such other
information regarding the Company and its business and affairs, as it may
reasonably request from time to time.
8.2 Audits. Each Member shall have the right to conduct, or cause to be
conducted, from time to time, but in any case no more than once in any calendar
year, an audit of the books and records of the Company. Such audit shall be
conducted during normal business hours in a manner so as not to disrupt the
normal business operations of the Company. The Member conducting, or causing to
be conducted, the audit shall bear the entire expense of the audit.
ARTICLE 9
TAXES
9.1 Tax Returns. The Tax Matters Partner shall cause to be prepared and
filed all necessary federal and state income tax returns for the Company,
including making the elections described in Section 9.2. Each other Member shall
furnish to the Tax Matters Partner all pertinent information in its possession
relating to Company operations that is necessary to enable the Company's income
tax returns to be prepared and filed. The Tax Matters Partner shall prepare all
federal and state tax returns on a timely basis and shall furnish to each other
Member copies of returns that are actually filed promptly after their filing.
9.2 Tax Elections. The Company shall make such elections on tax returns as
are deemed appropriate by the Tax Matters Partner. It is the intent of the
Members that the Company be treated as a partnership for federal income tax
purposes and, to the extent permitted by applicable law, for state and local
franchise and income tax purposes, and the Company will make any election to
achieve that status. Neither the Company nor any Member may make an election for
the Company to be excluded from the application of the provisions of subchapter
K of chapter 1 of subtitle A of the Code or any similar provisions of applicable
state or local law, and no provision of this Agreement (including, without
limitation, Section 2.8) shall be construed to sanction or approve such an
election.
9.3 Tax Matters Partner. The Tax Matters Partner shall take such action as
may be necessary to cause each other Member to become a "notice partner" within
the meaning of Section 6223 of the Code. The Tax Matters Partner shall inform
each other Member of all significant matters that may come to its attention in
its capacity as tax matters partner by giving notice thereof on or before the
fifth Business Day after becoming aware thereof and, within that time, shall
forward to each other Member copies of all significant written communications it
may receive in that capacity. The Tax Matters Partner may take any action
contemplated by Sections 6222 through 6232 of the Code without the consent of
each other Member, but this sentence
35
does not authorize the Tax Matters Partner to take any action left to the
determination of an individual Member under Sections 6222 through 6232 of the
Code.
ARTICLE 10
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
10.1 Accounting. Except as may be otherwise agreed to by Members holding
Investment Percentages aggregating at least 66 2/3%, the Company will maintain
books and records for tax purposes in accordance with federal income tax
accounting principles utilizing the accrual method of accounting, and for
accounting purposes in accordance with GAAP. In addition, the Company shall
cause to be prepared with respect to each fiscal year of the Company financial
statements based on GAAP. Appropriate records will be kept so that upon each
closing of the Company books it is possible to determine, among other items
defined in this Agreement, (i) the amount of capital (whether in cash or as a
Contributed Asset) actually contributed by each Member; (ii) the amount of cash
or other property distributed to each Member; (iii) the effect of all Company
items of profit, loss, income, gain, loss, deduction or credit on each Member's
Capital Account; and (iv) all pertinent expenses and cash disbursement accounts.
10.2 FIscal Year. Except as may be otherwise determined by Members holding
Investment Percentages aggregating at least 66 2/3%, the fiscal year of the
Company shall be the twelve months ending December 31 of each year.
Notwithstanding the foregoing, the taxable year of the Company shall be
determined in accordance with Code Section 706(b).
10.3 Statements and Reports. Except as may be otherwise determined by
Members holding Investment Percentages aggregating at least 66 2/3%, as soon as
practicable, but in no event later than 90 days after the close of each fiscal
year of the Company, the Company will cause to be prepared and will have
furnished to each of the Members, with respect to such period, (i) a profit and
loss statement, (ii) a statement of cash flows, (iii) a Company balance sheet as
of the close of such period, and (iv) such other statements showing in
reasonable detail each Member's interest in each of the items described in
Section 10.1. The foregoing statements will be prepared in accordance with GAAP,
consistently applied, and audited by an independent certified public accounting
firm of national reputation which shall be designated by Members holding
Investment Percentages aggregating at least 66 2/3%, and the cost of preparing
the statements and of each such audit will be paid for by the Company. In
addition, (i) unaudited quarterly financial reports and updates with respect to
the Company's business shall be prepared and furnished to each Member as soon as
practicable after the end of each fiscal quarter, but in no event later than 45
days following the close of each fiscal quarter and (ii) unaudited monthly
internal reports and updates with respect to the Company's business shall be
prepared and furnished to each Member as soon as practicable after the end of
each calendar month, but in no event later than 20 days following the last day
of each month.
36
10.4 Inspection. The Company shall maintain or cause to be maintained
complete and accurate books and records with respect to its business. All books
of account and all other records of the Company including an executed
counterpart of this Agreement and all amendments hereto will at all times be
kept at the Company's principal place of business. Any Member and its
representatives may inspect the books and records of the Company. The Company
shall provide, during regular business hours, access to the facilities, systems
and books and records of the Company to the extent reasonably necessary for such
inspection. Whenever any such inspection is conducted by any Member and its
representatives, such Member shall advise the other Members and permit the other
Members and their representatives to be present during such audit.
10.5 Bank Accounts. The Company shall maintain appropriate accounts at one
or more financial institutions for all funds of the Company. Such accounts shall
be used solely on the business of the Company. Withdrawal from such accounts
shall be made only upon the signature of those persons authorized by the
Members.
ARTICLE 11
WITHDRAWAL, EXPULSION, BANKRUPTCY, ETC.
11.1 Withdrawal. Each Member agrees that it will not resign or withdraw
from the Company without the consent of each other Member. If a Member attempts
or purports to resign or withdraw from the Company in breach of this Section
11.1, the other Members may (i) recover damages from such breaching Member,
including, without limitation, the reasonable cost of obtaining replacement of
the services that such breaching Member is obligated to perform (if any), (ii)
seek specific performance of such breaching Member's obligations to the Company
(and each Member hereby waives any defense that money damages would be a
satisfactory remedy for such breach), (iii) pursue any other remedies available
under applicable law, if any, and (iv) effect recovery of damages by offsetting
those damages against the amount otherwise distributable to such Member.
11.2 Bankrupt Members. This Section 11.2 shall apply if any Member becomes
a Bankrupt Member. In such event, the other Members (the "Purchasing Members"),
shall have the option (but not the obligation), exercisable by notice to the
Bankrupt Member (or its representative) at any time prior to the 90th day after
receipt of notice or obtaining actual knowledge of the occurrence of the event
causing such Member to become a Bankrupt Member, to buy or cause their designee
to buy, and on the exercise of this option the Bankrupt Member (or its
representative) shall sell, its Membership Interest (not including any Exchange
Securities held by the Bankrupt Member or its Affiliates). The purchase shall be
made by the Purchasing Members in proportion to their respective Percentage
Interests at the relevant time. The purchase price shall be an amount equal to
the fair market value of the Membership Interest determined by agreement by the
Bankrupt Member (or its representative) and the Purchasing Members; however, if
those Persons do not agree on the fair market value on or before the 30th day
following the exercise of the option, such fair market value shall be determined
by an
37
independent appraiser mutually satisfactory to the Bankrupt Member and the
Purchasing Members (without any "controlling interest premium" if the Bankrupt
Member's Membership Interest has a Sharing Ratio of less than 66 2/3%, nor any
"minority interest discount" if the Bankrupt Member's Membership Interest has a
Sharing Ratio of greater than 33 1/3%. The Purchasing Members shall pay the fair
market value as so determined in four equal cash installments, the first due on
closing and the remainder (together with accumulated interest on the amount
unpaid at the General Interest Rate) due on each of the first three
anniversaries of the closing. The payment to be made to the Bankrupt Member or
its representative under this Section 11.2 is in complete liquidation and
satisfaction of all the rights and interest of the Bankrupt Member and its
representative (and of all Persons claiming by, through, or under the Bankrupt
Member and its representative) in and in respect of the Company, including,
without limitation, any Membership Interest, any rights in specific Company
property, any rights with respect to the management, control or operation of the
Company and any rights against the Company and (insofar as the affairs of the
Company are concerned) against the Members.
ARTICLE 12
TERMINATION, DISSOLUTION AND LIQUIDATION OF THE COMPANY
12.1 Termination and Dissolution.
Except as provided below in this Section 12.1, the Company shall terminate
and dissolve upon the earliest to happen of any of the following events:
(a) The expiration of its term;
(b) The Company shall have only one Member;
(c) A decision approved by Members holding Investment Percentages
aggregating at least 80% to dissolve the Company;
(d) The death, insanity, retirement, resignation, expulsion, bankruptcy or
dissolution of a Member;
(e) A sale of all or substantially all of the assets of the Company; or
(f) The happening of any other event, act or omission causing the
dissolution of the Company under the Act or any other laws of the
Commonwealth of Massachusetts.
The dissolution of the Company shall be effective on the day on which the
event occurs giving rise to the dissolution, unless (and only if and to the
extent permitted by the Act), Members holding Investment Percentages aggregating
at least 66 2/3% of the remaining Sharing Ratios elect to continue the Company
in the manner provided by the Act. Any necessary
38
certificate of dissolution shall be filed under the Act upon the dissolution and
the commencement of winding up of the Company; provided, however, that the
Company shall not terminate until the assets of the Company have been
distributed as provided in Section 12.2.
12.2 Liquidation.
(a) As soon as practicable after the dissolution of the Company, the
Liquidator (as defined in Section 12.2(e)) shall notify Members of such fact and
shall prepare a plan as to whether and in what manner the assets of the Company
shall be liquidated.
(b) The Liquidator shall take full account of the Company's assets and
liabilities. The Company's assets shall be liquidated as promptly as is
consistent with obtaining the fair market value thereof and after the allocation
of Net Income or Net Loss in accordance with Article 6 above, the proceeds of
liquidation shall be applied and distributed in the following order and
priority:
(i) First, to secured creditors (including Members and their
Affiliates) in accordance with the priority of their security interests;
(ii) Next, to the payment of debts and liabilities of the Company to
general unsecured creditors;
(iii) Next, to the establishment of any reserves which are reasonably
necessary for contingent, unmatured, unliquidated, disputed, or unforeseen
liabilities and obligations of the Company;
(iv) Last, to the Members in proportion to the positive balances in
their respective Capital Accounts.
(c) The amount of any reserves established pursuant to Section 12.2(b)(iii)
above shall be determined with the approval of the Members who are, or may be,
liable for any liabilities or obligations of the Company for which such reserves
are being established. If any or all of the amount of the reserves are no longer
required by the Company and become available for distribution to the Members,
such amounts shall be distributed to the Members in accordance with Section
12.2(b)(iv) above.
(d) Distributions to Members pursuant to this Section 12.2 may be made
pursuant to a trust established for the benefit of the Members for the purpose
of liquidating the assets of the Company, collecting amounts owed to the
Company, and paying any contingent or unforeseen liabilities or obligations of
the Company. The assets of any such trust shall be distributed to the Members
from time to time, in the reasonable discretion of the Liquidator, in the same
proportions as would have applied pursuant to this Agreement to liquidating
distributions by the Company to the Members.
39
(e) For the purposes of this Agreement, the "Liquidator" shall be appointed
by the Members from among their number; provided, however that if upon the
dissolution of the Company there is no Member willing or permitted to serve as
Liquidator, the trustee, receiver or other fiduciary who is appointed or is
otherwise authorized by consent of Members holding Investment Percentages
aggregating at least 66 2/3% to act on behalf of the Company in its dissolution,
winding up and liquidation, shall act as liquidator.
ARTICLE 13
GENERAL PROVISIONS
13.1 Representations. Each Member hereby represents and warrants to the
Company and each other Member that:
(a) If such Member is not a natural person, it is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and is duly qualified to conduct business in all jurisdictions where such
qualification is required.
(b) It has the power and authority (corporate or otherwise) to execute,
deliver and perform its obligations under this Agreement. Such execution,
delivery and performance have been duly authorized by all necessary action on
the part of such Member and do not and will not contravene the organizational
documents of such Member or conflict with, result in a breach of, or entitle any
party (with due notice or lapse of time or both) to terminate, accelerate or
call a default with respect to, any agreement or instrument to which such Member
is a party or by which such Member is bound. The execution, delivery and
performance by such Member of this Agreement will not result in any violation by
such Member of any law, rule or regulation applicable to such Member. Such
Member is not a party to, nor subject to or bound by, any judgment, injunction
or decree of any court or other Governmental Entity which may restrict or
interfere with the performance of this Agreement by such Member. This Agreement
is a valid and binding obligation of such Member enforceable against such Member
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) Except as set forth on Schedule 13.1(c), no consent, waiver, approval,
authorization or order of, or registration, qualification or filing with, any
court or other Governmental Entity is required for the execution, delivery and
performance by such Member of this Agreement and the consummation by such Member
of the transactions contemplated hereby. No consent or waiver of any party to
any contract to which such Member is a party or by which it is bound is required
for the execution, delivery and performance by such Member of this Agreement.
40
(d) Such Member is acquiring the Membership Interest hereunder for its own
account for investment and not with a view to the distribution thereof, and such
Member shall not offer to sell or otherwise dispose of any of the Membership
Interests so acquired by it in violation of the registration requirements of the
Securities Act or applicable state securities laws. Such Member has such
knowledge and experience in financial, business and tax matters that such Member
is capable of evaluating the merits and risks relating to such Member's
Membership Interest and is capable of bearing the risk of loss of its entire
investment in the Company.
(e) There is no action, suit, grievance, arbitration or proceeding pending
or, to the knowledge of such Member, threatened against or affecting such Member
at law or in equity, before any federal, state, municipal or other governmental
court, department, commission, board, arbitrator, bureau, agency or
instrumentality which prohibits or impairs its ability to execute and deliver
this Agreement or the other Basic Agreements or to consummate any of the
transactions contemplated hereby or thereby. To the knowledge of such Member, it
has not received written notice of any pending or threatened investigation,
inquiry or review by any Governmental Entity.
(f) No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission, or to the reimbursement of any of its
expenses, in connection with the transactions contemplated by this Agreement
based upon arrangements made by it or on its behalf.
(g) Such Member has no obligation or agreement, either actual or
contingent, to share any portion of its interest in the Company with any Person.
(h) Such Member is not a Holding Company or otherwise subject to regulation
under PUHCA and the execution and delivery of the Basic Agreements do not cause
such Member to become a Holding Company or otherwise subject to PUHCA.
13.2 Additional Representations of RCN-Sub. RCN-Sub hereby represents and
warrants to the Company and BecoCom that:
(a) RCN-Sub has the full and unrestricted right and authority to contribute
the RCN Contributed Assets to the Company.
(b) RCN-Sub has marketable title to all of the RCN Contributed Assets, free
and clear of all liens and encumbrances of any nature. Notwithstanding the
foregoing, with respect to the RCN-Sub's interest as a lessee under any of the
premises and locations included in the RCN Contributed Assets, RCN-Sub has the
unrestricted right to assign such interests to the Company (or if the consent of
any lessor of any such premises is required to permit such assignment, such
consent has been obtained in writing on or prior to the date hereof).
(c) All items of equipment included in the RCN Contributed Assets,
including without limitation, the "Cable TV Headend" and the "Telephone Switch"
referenced on Schedule
41
1 hereto, are (i) in good operating condition and order, reasonable wear and
tear excepted, (ii) are suitable to provide their intended functions and (iii)
comply in all material respects with all applicable laws, rules and regulations.
(d) All specifications and other technical information relating to all
items of equipment included in the RCN Contributed Assets, including, without
limitation, the "Cable TV Headend" and the "Telephone Switch" referenced on
Schedule 1 hereto, have been provided by RCN-Sub to BecoCom.
13.3 Offset. Whenever the Company is to pay any sum to any Member, any
amounts such Member owes the Company may be deducted from that sum before
payment.
13.4 Notices. All notices, request and other communication hereunder shall
be deemed to have been duly delivered, given or made to or upon any party hereto
if in writing and delivered by hand against receipt, or by certified or
registered mail, postage prepaid, return receipt requested, or to a courier who
guarantees next Business Day delivery or sent by telecopy (with confirmation) to
such party at its address set forth below or to such other address as such party
may at any time, or from time to time, direct by notice given in accordance
with this Section 13.4.
if to RCN-Sub:
RCN Telecom Services of Massachusetts, Inc.
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
and
C-TEC Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax: (609) 734-0974 and (609) 734-3830
Attention: Michael J. Mahoney and Raymond B. Ostroski, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attention: Stephen M Banker, Esq.
42
if to BecoCom:
c/o Boston Edison Company
800 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 424-2733
Attention: Richard S. Hahn, Vice President
Neven Rabadjija, Esq., Legal Counsel
with a copy to:
Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Fax: (617) 227-3732
Attention: Andrew B. White, Esq.
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt or (ii) three Business Days after
such notice, request or other communication is sent if sent by certified or
registered mail, (iii) if sent by courier who guarantees next Business Day
delivery, the Business Day next following the day such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied.
13.5 Entire Agreement; Supersedure. This Agreement constitutes the entire
agreement of the Members relating to the Company and supersedes all prior
contracts or agreements with respect to the Company, whether oral or written
except the Basic Agreements.
13.6 Effect of Waiver or Consent. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable limitations period has expired.
13.7 Amendment or Modification. This Agreement may be amended or modified
from time to time only by a written instrument executed by Members holding
Investment Percentages aggregating at least 66 2/3%, provided, however, that so
long as BecoCom's Investment Percentage is greater than 33 1/3%, amendments to
Section 7.8 also will require the written consent of BecoCom.
43
13.8 Public Announcements. Except as required by law, any governmental
agency or any securities exchange, the parties hereto agree to obtain the prior
approval of each other before issuing (or allowing their Affiliates to issue)
any press release, public disclosure or other announcement with respect to this
Agreement or any of the transactions contemplated by this Agreement. In the
event either party hereto is so required by law, any governmental agency or any
securities exchange to make a public disclosure or other announcement as
aforesaid, it shall use its best efforts to afford the other a reasonable
opportunity to review the form and content of the announcement or disclosure
prior to making same. In addition, the Members will consult on a regular basis
with regard to joint marketing and positioning efforts for the Company. Each
Member shall also use its reasonable efforts to prohibit its employees, agents,
consultants and representatives from utilizing the corporate names "Boston
Edison Company" as to BecoCom, and "RCN Telecom Services, Inc." and "RCN
Corporation" as to RCN-Sub, with respect to any matters involving public
officials or media activities, without having first consulted with the other.
13.9 Confidentiality. Each of the parties hereto will hold, and will use
its reasonable, good faith efforts to cause its respective shareholders,
partners, members, directors, officers, employees, accountants, counsel,
consultants, agents and financial or other advisors (collectively "Agents") to
hold, in confidence, all information (whether oral or written), including this
Agreement and the documents contemplated herein, concerning the transactions
contemplated by this Agreement furnished to such party by or on behalf of any
other party in connection with such transactions, unless legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process, or by order of a court or tribunal of competent
jurisdiction, or in order to comply with applicable rules or requirements of any
stock exchange, government department or agency or other regulatory authority,
or by requirements of any securities law or regulation or other legal
requirement) to disclose any such information or documents, and except to the
extent that such information or documents can be shown to have been (a)
previously known on a nonconfidential basis by such party, (b) in the public
domain through no fault of such party or (c) acquired by such party on a
nonconfidential basis from sources not known by such party to be bound by any
obligation of confidentiality in relation thereto. Notwithstanding the foregoing
provisions of this Section 13.9, each party may disclose such information to its
Agents in connection with the transactions contemplated by this Agreement or any
of the other Basic Agreements and to its lenders in connection with obtaining
the financing for the transactions contemplated by this Agreement so long as
such Agents and lenders are informed by such party of the confidential nature of
such information and are directed by such party to treat such information
confidentially and to certain governmental agencies in connection with the
procurement of the governmental authorizations contemplated by this Agreement.
The obligation of each party to hold any such information in confidence shall be
satisfied if such party exercises the same care with respect to such information
as it would take to preserve the confidentiality of its own similar information.
If this Agreement is terminated, each party will, and will use its reasonable,
good faith efforts to cause its respective Agents and lenders to destroy or
deliver to the other party, upon request, all documents and other materials, and
all copies thereof, obtained by such party or on its behalf from the other party
hereto in connection with this Agreement that are subject to such confidence.
44
13.10 Binding Effect. Subject to the restrictions on Dispositions set forth
in this Agreement this Agreement is binding on and inures to the benefit of the
Members and their respective heirs, legal representatives, successors, and
assigns.
13.11 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other Persons or circumstances is not
affected and such provision shall be enforced to the greatest extent permitted
by law.
13.12 Specific Performance. The Members agree that irreparable damage will
result if this Agreement is not performed in accordance with its terms, and the
Members agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the Members hereunder shall be enforceable in a court of equity,
or other tribunal with jurisdiction, by a decree of specific performance in aid
of arbitration, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies and all other remedies provided for in
this Agreement shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies that a Member may have under this Agreement, at
law or in equity.
13.13 Further Assurances. In connection with this Agreement and the
transactions contemplated by it, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and such transactions.
13.14 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
13.15 Interpretation. In the event of any dispute concerning the
construction or interpretation of any provision of this Agreement or any
ambiguity thereof, there shall be no presumption that this Agreement or any
provision hereof be construed against the party who drafted this Agreement.
13.16 Use of Name. Promptly after the expiration date of the Term (as
defined in the Management Agreement), including any extensions thereof, the
Members shall cause the Company to change its name so as not to include "RCN",
"Residential Communications Network" or any other term which could cause
confusion with RCN and its Affiliates, and to not use any such name from and
after such date; provided, that RCN shall grant an exclusive
45
license to the Company to use any such name in the Relevant Market for a period
not to exceed one year, in the discretion of the Company.
13.17 Continued Support of RCN-Sub. For a period of two years after RCN-Sub
is no longer a Member of the Company, RCN-Sub or its Affiliates shall continue
to provide to the Company (or its successor) such assets and services necessary
to operate the Company and which were theretofore provided by RCN-Sub or its
Affiliates at cost. Notwithstanding the preceding sentence, RCN-Sub's obligation
to continue providing the Company with such assets and services is conditioned
upon RCN-Sub or any of its Affiliates not being subject to any prohibition by an
outside third party, whether financial or otherwise, to provide such assets and
services.
46
EXECUTED effective as of the date first set forth above.
MEMBERS:
RCN TELECOM SERVICES
OF MASSACHUSETTS, INC.
By: /s/ Michael J. Mahoney
------------------------------
Name: Michael J. Mahoney
----------------------------
Title: President
---------------------------
BECOCOM, INC.
By: /s/ Richard S. Hahn
------------------------------
Name: RICHARD S. HAHN
----------------------------
Title: PRESIDENT
---------------------------
WITHDRAWING MEMBERS:
RCN TELECOM SERVICES, INC.
By: /s/ Michael J. Mahoney
------------------------------
Name: Michael J. Mahoney
----------------------------
Title: President
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BOSTON ENERGY TECHNOLOGY
GROUP, INC.
By: /s/ Philippe Frangules
------------------------------
Name: PHILIPPE FRANGULES
----------------------------
Title: VICE PRESIDENT
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47
SCHEDULE 1
Capitalization
- --------------------------------------------------------------------------------
Sharing Cash Capital Non-Cash Capital
Member Ratio Contribution Contribution Accounts
- --------------------------------------------------------------------------------
RCN-Sub 51% $1,060,911 $13,445,527(1) $14,506,438
- --------------------------------------------------------------------------------
BecoCom 49% $2,343,162 $l1,594,396(2) $13,937,558
- --------------------------------------------------------------------------------
TOTAL 100% $3,404,073 $25,039,923 $28,443,996
- --------------------------------------------------------------------------------
- ----------
(1) Represents the Agreed Value of the business developed by RCN and its
Affiliates prior to the Closing to provide Services in the Relevant Market,
including access to space, equipment (which includes, without limitation,
the "Cable TV Headend" and the "Telephone Switch") and customers. Includes,
without limitation, the rights granted pursuant to the Dark Fiber IRU
Agreement, dated May 8,1997, by and between RCN and Affiliates of
Metropolitan Fiber Systems/WorldCom ("WorldCom") and the services to be
received pursuant to the Telephone Service to Reseller Agreement, dated May
8, 1997, by and between RCN and WorldCom.
(2) Represents (i) the Agreed Value as of May 31, 1997 of access to and the use
of the "Existing BecoCom Facilities" pursuant to (and as such term is used
in) the IRU Agreement, and (ii) in the future, if the Company requests that
BecoCom expand the fiber optic network using transmission rights of ways
that connect to other transmission stations, BecoCom will provide up to 150
square feet at these transmission stations as a part of its initial
contributed assets. The Company will pay to BecoCom a ROW use fee, property
taxes, O&M, and other fees associated with this expansion as described in
the IRU Agreement.
48
SCHEDULE 2
Impact of Various Transactions on Investment Percentage*
(1) Total Exchange - No Disposition
Member exchanges its entire 49% Membership Interest to securities
- Sharing Ratio = 0
- Investment Percentage = 49%
(2) Total Exchange - Total Disposition
- Upon disposition of securities
- Sharing Ratio = 0
- Investment Percentage = 0
(3) Total Exchange - Partial Disposition
a) Upon disposition of 50% of the securities received
- Sharing Ratio = 0
- Investment Percentage = 24.5% (50% of 49%)
b) Upon disposition of 25% of the securities received
- Sharing Ratio = O
- Investment Percentage = 36.75% (49%-25% of 49%)
(4) Partial Exchange - No Disposition
a) Upon exchange of 25% of Membership Interest
- Sharing Ratio = 36.75%
- Investment Percentage = 49%
b) Upon exchange of 50% of Membership Interest
- Sharing Ratio = 24.5%
- Investment Percentage = 49%
- ----------
* The calculations in cases 1-6 assume a 49% Sharing Ratio as a starting
point. If the Sharing Ratio is altered due to capital calls or
dispositions, the calculations set forth herein would be similarly altered.
49
(5) Partial Exchange - Total Disposition
a) Upon exchange of 25% of Membership Interest and disposition of all the
securities received
- Sharing Ratio = 36.75%
- Investment Percentage = 36.75%
b) Upon exchange of 50% of Membership Interest and disposition of all the
securities received
- Sharing Ratio = 24.5%
- Investment Percentage = 24.5%
(6) Partial Exchange - Partial Disposition
a) Upon exchange of 25% of Membership Interest and disposition of 33 1/3%
of the Securities received
- Sharing Ratio = 36.75%
- Investment Percentage = 45% (36.75 + (100-33 1/3)% of (49-36.75))
b) Upon exchange of 60% of Membership Interest and disposition of 75% of
the Securities received
- Sharing Ratio = 19.6%
- Investment Percentage = 26.95% (19.6 + (100-75)% of (49-19.6))
(7) Subsequent Transactions
a) If, following the transactions in case 6(a) above, the Member
exchanges an additional 10% Membership Interest and disposes of 30% of
the securities then held as a result of such exchange and the earlier
exchange
- Sharing Ratio = 26.75%
- Investment Percentage = 39.53% (45-30% of (45-26.75))
b) If, following the transactions in case 6(b) above, the Member disposes
of 40% of the securities then held as a result of the earlier exchange
- Sharing Ratio = 19.6%
- Investment Percentage = 24.01% (26.95-40% of (26.95-19.6))
Note that the value at time of exchange or time of disposition is irrelevant.
These calculations are purely percentage-based.
50
CONSTRUCTION AND INDEFEASIBLE RIGHT OF USE AGREEMENT
THIS CONSTRUCTION AND INDEFEASIBLE RIGHT OF USE AGREEMENT (the "Agreement")
is made as of this 17th day of June, 1997 (the "Effective Date"), by and between
BecoCom, Inc., a Massachusetts corporation ("BecoCom"), and RCN-BecoCom, LLC, a
Massachusetts limited liability company ("Carrier").
WHEREAS, RCN Telecom Services, Inc. ("RCN") and Boston Energy Technology
Group, Inc., a Massachusetts corporation ("BETG"), have entered into that
certain Joint Venture Agreement (the "JV Agreement") dated as of December 23,
1996, as amended, setting forth the terms and conditions upon which RCN, through
one of its affiliates, and BETG, acting through BecoCom, its indirect
wholly-owned subsidiary, have organized Carrier to: (i) create, own and operate
a telecommunications network, and (ii) provide voice, video, data, other
communications services, and the communications support component of
energy-related customer services offered by Boston Edison Company, a
Massachusetts company and the direct parent of BETG ("BECO"), to residential and
commercial customers in the Relevant Market (as defined below) (collectively,
the "Services");
WHEREAS, BECO and C-Tec Corporation, a Delaware corporation ("C-Tec"), have
each executed instruments of adherence with respect to certain provisions
hereof; and
WHEREAS, BecoCom currently operates the BecoCom System (as hereinafter
defined);
WHEREAS, BECO has licensed to BecoCom the right to use the portions of the
Rights of Way and the Equipment Sites (each as hereinafter defined) necessary to
BecoCom to perform its obligations hereunder;
WHEREAS, BecoCom is engaged in the business of communications network
planning, design, procurement, construction and testing and desires to provide
certain services to Carrier in connection with the planning, design,
procurement, construction and testing of the Network (as defined below) as
directed by Carrier and upon the terms and conditions of this Agreement;
WHEREAS, Carrier and BecoCom desire to enter into this Agreement to set
forth the terms and conditions under which (i) BecoCom will perform, from time
to time, certain Work (as hereinafter defined) as is necessary or as requested
by Carrier to engineer, procure and construct the Network, and (ii) Carrier will
have the right to use the BecoCom System, for use in the Business (as
hereinafter defined), all upon the terms and subject to the conditions of this
Agreement;
WHEREAS, the parties hereto acknowledge that providing the use of the
BecoCom System as hereinafter provided is vital to the Business in the Relevant
Market; and
WHEREAS, the parties hereto also acknowledge that the primary purpose of
the Existing BecoCom Facilities and the BecoCom Rights-of-Way (as such terms are
defined below) is to serve the electric transmission and distribution business
of BECO and its Affiliates;
NOW, THEREFORE, for and in consideration of the foregoing, the covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Certain Definitions.
(a) The following terms shall have the following meanings:
"Acceptance Test Plan" means the product acceptance test plan
recommended by the manufacturer of such products, and shall incorporate the
specifications of such manufacturer.
"Affiliate" means, with respect to any Person, any other Person
Controlling, Controlled by, or under common Control with, that first
person.
"Affiliate Right-of-Way Owners" means Right-of-Way Owners which are
Affiliates of BecoCom.
"Basic Agreements" means (i) this Agreement, the JV Agreement and the
Operating Agreement; (ii) the Exchange Agreement, dated as of the date
herewith, between BecoCom and C-Tec; (iii) the Joint Investment and
Non-Competition Agreement, dated as of the date herewith, among RCN Telecom
Services of Massachusetts, Inc., BecoCom and the Carrier; (iv) the
Management Agreement, dated as of the date herewith, among RCN Operating
Services, Inc., BecoCom and the Carrier; and (v) the Initial LLC Agreement
(as defined in the JV Agreement).
"BECO Dedicated Fibers" means such number of Fibers not to exceed
twelve (12) desired by BECO and its Affiliates for use by such parties in
the electric transmission and distribution business, which fibers are (a)
identified in Exhibit A hereto, (b) specified in any Scope of Work or (c)
constructed by Carrier at the request and expense of BecoCom.
"BECO License" means the document pursuant to which BECO and its
Affiliates have made available to BecoCom such BecoCom Facilities, Rights
of Way and Equipment Sites as shall be necessary for BecoCom to satisfy its
obligations under this Agreement.
2
"BecoCom Facilities" means (a) the Existing BecoCom Facilities, and
(b) all (i) Interim Constructed Facilities, and (ii) New BecoCom
Constructed Facilities, which are Power Space Facilities.
"BecoCom Rights-of-Way" means Rights of Way which BecoCom has acquired
the right to use through the BECO License.
"BecoCom System" means the BecoCom Rights of Way and the BecoCom
Facilities.
"Business" means the provision by Carrier of Services in the Relevant
Market, and all ancillary activities reasonably necessary for the provision
of same, provided such Services and ancillary activities do not violate any
law, rule or regulation.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with generally accepted accounting principles, be
required to be classified and accounted for as a capital lease on a balance
sheet of such Person.
"Carrier Facilities" means all (a) Interim Constructed Facilities, (b)
New BecoCom Constructed Facilities, and (c) New Carrier Constructed
Facilities, which are Non-Power Space Facilities.
"Construction Materials" has the meaning set forth in Section
3(b)(iii) hereof.
"Control" means the power to direct or cause the direction of the
management or policies of an entity, whether through the ownership of
voting securities, by agreement or otherwise.
"DPU" means the Commonwealth of Massachusetts Department of Public
Utilities, or any successor thereto.
"Entity" means any corporation, limited liability company, general
partnership, limited partnership, venture, trust, business trust, estate or
other entity.
"Equipment Sites" means ground space, floor space, vault space, wall
space or rooftop space, whether now owned or hereafter acquired, in, on,
upon or within (a) electric distribution substations owned by BECO which
are enclosed within an existing building or structure; (b) electric
distribution stations owned by BECO which are not enclosed within a
building or structure; (c) service centers or field stations (excluding
generating facilities) operated by BECO, which are located on land owned by
BECO, or leased from a third party; (d) parcels of land comprising the
above-ground electric transmission line rights of way; or (e) vacant land
owned by BECO.
3
"Existing BecoCom Facilities" means any Facilities (other than Interim
Constructed Facilities) in place or existing as of the date hereof as set
forth in Exhibit A-1, including any upgrades, improvements, or additions
thereto, which BecoCom has the right to use pursuant to the BECO License.
"Facilities" means all installed Fiber (excluding the BECO Dedicated
Fibers), coaxial cable, twisted pair wires, connection cable, splice
closures, splice cases, associated suspension hardware and other pole or
power attachments, electronics, equipment and other items of personal
property, used or usable in the Carrier's conduct of the Business.
"FCC" means the Federal Communications Commission, or any successor
thereto.
"FERC" means the Federal Energy Regulatory Commission, or any
successor thereto.
"Fiber" means fiber optic cable, including optical ground wire, all
dielectric cable, and all dielectric self supporting cable.
"Force Majeure" shall mean the following: acts of God; orders of any
kind of the government of the United States of America or of the
Commonwealth of Massachusetts or of any of their departments, agencies,
political subdivisions, or officials, or any civil or military authority;
civil insurrections; riots; epidemics; landslides; lightning; earthquakes;
fires; hurricanes; or any cause beyond the reasonable control of the party
whose duty or obligation has not been met.
"Interim Constructed Facilities" means all Facilities (both completed
and in progress) constructed by BECO (or BecoCom as assignee of BECO) prior
to the date hereof pursuant to the Interim Construction Agreement, which
Facilities (both completed and in progress) are set forth on Exhibit A-2.
"Interim Construction Agreement" means that certain Interim
Construction Agreement, dated February 6, 1997, between BECO and RCN of
Massachusetts, Inc.
"Liens" means, as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset owned or
held by such Person, or the signing or filing of a financing statement
which names such Person as debtor, or the signing of any security agreement
authorizing any other party as the secured party thereunder to file any
financing statement.
4
"Network" means the BecoCom Facilities and the Carrier Facilities.
"New BecoCom Constructed Facilities" means all New Facilities
constructed by BecoCom.
"New Carrier Constructed Facilities" means all New Facilities
constructed by Carrier.
"New Facilities" means all Facilities constructed after the date
hereof.
"Non-Power Space Facilities" means all Facilities located or to be
located outside the Power Space.
"Operating Agreement" means the Amended and Restated Operating
Agreement of Carrier of even date herewith as it may be amended from time
to time.
"Person" means a corporation, an association, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
"Plans" means all engineering drawings or construction plans relating
to a Project.
"Power Space" means space within the Rights-of-Way normally and
primarily utilized for the transmission and distribution of electric power,
which space is (a) in the case of above-ground Rights-of-Way located on
distribution poles, space from the top of such poles to the communications
space, including the neutral space, (b) in the case of above-ground
Rights-of-Way located on transmission towers, all space located thereon
except as designated by BecoCom, and (c) in the case of below-ground Rights
of Way, all space located therein.
"Power Space Facilities" means all Facilities located or to be located
within the Power Space.
"Project" shall mean the engineering, construction, testing or
buildout, or any combination thereof, of any New Facilities.
"Relevant Market" means those certain cities and towns as set forth on
Exhibit B attached hereto.
"Request for Proposal" has the meaning set forth in Section 3(b)
below.
"Right-of-Way Owner" means the party or parties with whom BecoCom or
its Affiliates shall have contracted for the Rights-of-Way.
5
"Rights-of-Way" means, whether now owned or hereafter acquired, all
(a) electric distribution system poles located in public ways and owned by
BECO or owned jointly by BECO and NYNEX Corporation ("NYNEX"); (b) electric
distribution system conduits, manholes and vaults located in public ways
and owned by BECO; (c) electric transmission system poles and towers
located on transmission line rights of way, which consist of strips of land
of varying width, which BECO owns in fee, or in which BECO holds permanent
easements, and in some cases licenses or other lesser interests; and (d)
electric transmission system conduits, manholes and vaults owned by BECO
and located primarily in public ways, and in some cases on private or
public property pursuant to easements or licenses. This includes, but is
not limited to, those areas upon, above, along, across, under and over
those public or private properties, streets, roads, lanes, courts, ways,
alleys, boulevards, water crossings and other places necessary for the
provision of BECO's business.
"Scope of Work" has the meaning set forth in Section 3(c) below.
"Specifications" means the manufacturer's specifications.
"Subcontractor" means any contractor engaged by BecoCom or Carrier, as
the case may be, to perform such party's obligations under any Scope of
Work.
"System Records" means the map which identifies locations of Equipment
Sites at substations or other locations in the Network, along with surveys,
mechanical and structural plans, and other records or documents necessary
or desirable for the purpose of operating or maintaining the Facilities.
"Term" has the meaning set forth in Section 9 hereof.
"Work" means the work necessary to implement any Project pursuant to
this Agreement.
(b) Words importing the singular also include the plural and, vice-versa,
where the context so requires.
(c) All terms used herein which are defined in any one of the attached
Exhibits shall have the meaning ascribed to them in such exhibit unless provided
to the contrary herein.
2. Interim Constructed Facilities. BecoCom and Carrier hereby agree and
confirm that (a) all Interim Constructed Facilities shall be deemed incorporated
into this Agreement for all purposes hereof, (b) from and after the date of this
Agreement, the rights and obligations of the parties with respect to the Interim
Constructed Facilities shall be as provided herein, and (c) the Interim
Construction Agreement shall be deemed terminated
6
effective as of the date of this Agreement. To the extent any Interim
Constructed Facilities have not been paid for, such payment shall be an
obligation of the Company to BecoCom.
3. Construction of New Facilities. BecoCom and Carrier agree to the
following provisions with respect to the construction and installation of New
Facilities for the purpose of expanding the Network:
(a) Power Space and Non-Power Space Facilities. BecoCom shall have the sole
and exclusive right and obligation to construct (either directly or through a
Subcontractor) on a timely and efficient basis, at the request of Carrier, all
New Facilities which are Power Space Facilities, upon the terms and conditions
set forth in this Section 3. At Carrier's election, BecoCom shall have the right
and obligation on a timely and efficient basis, or Carrier shall have the right,
to construct (either directly or through a Subcontractor) any New Facilities
which are Non-Power Space Facilities, upon the terms and conditions set forth in
this Section 3 to the extent this Section 3 is specifically applicable to New
Carrier Constructed Facilities. All New Facilities constructed by BecoCom
pursuant to this Section 3 are "New BecoCom Constructed Facilities" for all
purposes of this Agreement, and all New Facilities constructed by Carrier
pursuant to this Section 3 are "New Carrier Constructed Facilities" for all
purposes of this Agreement.
(b) Request for Proposal. At any time Carrier desires BecoCom to perform
Work on any Project hereunder, Carrier shall deliver to BecoCom a notice (a
"Request for Proposal") which includes the following:
(i) a description of the routes to be constructed,
(ii) specification of the amount and type of New Facilities to be
installed;
(iii) a description of any materials, construction equipment, tools,
consumables, temporary services and facilities, transportation,
storage and all other facilities and services (collectively,
"Construction Materials") required for the satisfactory
construction of the New Facilities and performance of the Work and
which Carrier intends to procure and supply;
(iv) a description of all engineering responsibilities to be undertaken
by BecoCom;
(v) any other Plans for the Project, including a plan for splicing;
and
(vi) any other material information as may be necessary or appropriate
for the construction of such New Facilities.
7
BecoCom shall, upon request of Carrier, promptly provide to Carrier any
information regarding the BecoCom System as may be necessary or appropriate for
preparing the Request for Proposal.
(c) Scope of Work. Promptly upon receipt of the Request for Proposal, and
in any event not later than three business days thereafter, BecoCom shall
commence discussions with Carrier for the purpose of permitting it to determine
the Work required to complete the Project, and to determine the cost for the
completion of such Project. As part of such process, Carrier and BecoCom may
agree on modifications to the Request for Proposal. As soon as practicable, and
in any event not more than 10 days after receipt of the Request for Proposal,
BecoCom shall deliver to Carrier a proposal for the Project, which shall include
(i) all of the terms of the Request for Proposal, as may be modified pursuant to
discussions between Carrier and BecoCom or otherwise modified as deemed
necessary by BecoCom; (ii) the cost for the completion of the Project (including
the calculation thereof); (iii) the route details for the Project; and (iv) a
schedule for all Work to be performed on the Project. Promptly following receipt
of such proposal, and in any event not more than three business days thereafter,
Carrier shall either reject such proposal, accept such proposal or accept such
proposal as may be modified with the consent of BecoCom (such accepted proposal
being referred to as a "Scope of Work"). If Carrier shall reject BecoCom's
proposal, and the Project relates in whole or in part to any Power Space
Facilities, then BecoCom and Carrier shall immediately thereafter negotiate in
good faith to agree upon a Scope of Work with respect thereto; it being agreed,
however, that such portion of the Project which relates to the construction of
Power Space Facilities may not commence until such Scope of Work is so agreed
upon. With respect to any portion of a Project proposed by BecoCom which relates
to the construction of Non-Power Space Facilities and which has been rejected by
Carrier, BecoCom and Carrier shall immediately thereafter negotiate in good
faith to agree upon a Scope of Work with respect thereto; it being agreed,
however, that if no such agreement is reached within 21 days after the Request
for Proposal, then Carrier shall have the right to perform (either by itself or
through the use of Subcontractors) such portion of the Project which relates to
the construction of such Non-Power Space Facilities.
(d) Construction. BecoCom shall complete, or shall cause the completion by
Subcontractors of, all Projects and all Work relating thereto set forth and in
accordance with any Scope of Work.
(i) BecoCom shall provide all supervision, labor and Construction
Materials required for the satisfactory performance of such Work, except as
provided in the Scope of Work.
(ii) BecoCom, or its Affiliates or agents, shall use its or their best
efforts to secure all necessary agreements from Right-of-Way Owners (other
than Affiliate Right-of-Way Owners), including the Commonwealth of
Massachusetts, its counties or municipalities, any other governmental
entity and any quasi-governmental entity, for use of any poles, conduits or
other rights-of-way (unless specified otherwise
8
in any Scope of Work), and Carrier shall reimburse BecoCom for reasonable
and supportable expenses incurred in securing such agreements.
(iii) The New BecoCom Constructed Facilities and all components
thereof shall, when installed, (A) be structurally sound, in good operating
condition and repair, (B) not be in need of maintenance or repairs except
for conditions that will not have a material impact on Carrier's ability to
conduct the Business and (C) meet all specifications provided in the Scope
of Work.
(iv) The System Records delivered to Carrier upon completion of the
New BecoCom Constructed Facilities shall be true, complete and correct
copies. Carrier and BecoCom shall agree on a mutually compatible computer
software system on which such System Records shall be recorded and
delivered to Carrier.
(v) Upon completion of any New BecoCom Constructed Facilities, all
electric facilities required by law or by the normal use and operation of
such New BecoCom Constructed Facilities shall be installed to the property
lines of the properties owned by BecoCom or its Affiliates in fee simple,
shall be connected pursuant to valid permits, and shall be adequate to
service such New BecoCom Constructed Facilities and to permit full
compliance with all requirements of law and normal usage of such New
BecoCom Constructed Facilities. BecoCom shall cooperate with Carrier in
obtaining any telephone facilities required by the normal use and operation
of such New BecoCom Constructed Facilities.
(vi) Construction Materials provided by BecoCom for use in the
construction or installation of the New BecoCom Constructed Facilities
shall be without physical or mechanical defects. BecoCom shall not be
responsible for physical or mechanical defects in Construction Materials
provided by Carrier for such construction or installation; provided,
however, that nothing in this paragraph (vi) shall relieve BecoCom of its
obligation to build New BecoCom Constructed Facilities to meet the
Specifications and the Scope of Work.
(e) Inspection. Carrier and its representatives or agents, and others as
may be required by applicable laws, ordinances and regulations, shall have the
right at all reasonable times to inspect the Work relating to any New BecoCom
Constructed Facilities and all Construction Materials provided by BecoCom for
said Work. BecoCom shall provide or cause to be provided access and sufficient,
safe and proper facilities for such inspections. Except as set forth in the
second sentence of Section 3(d)(vi)above, Carrier's failure to inspect
Construction Materials provided by BecoCom or the Work relating to any New
BecoCom Constructed Facilities shall not relieve BecoCom or any of its
Subcontractors and suppliers of their responsibilities for any such Construction
Materials or Work which prove to be defective or omitted, nor be deemed to be a
waiver of Carrier's rights subsequently to reject any such Work which proves to
be defective. Carrier shall have the right to reject any or all parts of such
Work that do not meet all specifications in any Scope of Work and
9
commonly accepted industry standards; such standards shall include, but shall
not be limited to, compliance with state and local construction and permitting
requirements. The method used in making such determination must be based on
commonly accepted industry standards for measuring quality of the same or
similar work. Such rejected Work shall be promptly corrected or replaced, but in
any event commencing within three business days, by BecoCom at BecoCom's expense
(except for Work rejected due to failure to meet the specifications of any Scope
of Work due to physical or mechanical defects in Construction Materials provided
by Carrier, which shall then bear such expense) so that such Work complies with
requirements of this Agreement.
(f) Acceptance and Testing of the New BecoCom Constructed Facilities.
(i) Prior to accepting any New BecoCom Constructed Facilities, Carrier
shall have the right to conduct its own test in accordance with the Test
Acceptance Plan to verify that such New BecoCom Constructed Facilities are
operating in accordance with the Specifications and the Scope of Work
relating thereto. Carrier shall provide BecoCom with five business days'
notice prior to beginning such test procedures. BecoCom shall have the
right to have a person or persons present to observe such test procedures.
(ii) Within 14 days after the conclusion of such test procedures,
Carrier shall provide BecoCom with a copy of the Carrier test results (the
"Carrier Test Results"). If the Carrier Test Results are within the
parameters of the Specifications and the Scope of Work relating to such New
BecoCom Constructed Facilities, Carrier shall provide BecoCom with a
written notice accepting such New BecoCom Constructed Facilities. If such
test procedures are not completed within 60 days after such New BecoCom
Constructed Facilities are installed and capable of being tested, Carrier
shall be deemed to have accepted such New BecoCom Constructed Facilities.
(iii) In the event the Carrier Test Results are not within the
parameters of the Specifications and the Scope of Work relating to such New
BecoCom Constructed Facilities, Carrier may notify BecoCom in writing that
the Carrier Test Results are unacceptable with respect to all or any
portion of such New BecoCom Constructed Facilities. BecoCom shall take such
action, consistent with industry standards, as shall be necessary with
respect to such portion of such New BecoCom Constructed Facilities as do
not operate within the parameters of the Specifications and the Scope of
Work relating thereto, to bring the operating standards of such portion of
such New BecoCom Constructed Facilities within the parameters of the
Specifications and the Scope of Work relating thereto, at its sole cost and
expense. Following such action, Carrier shall retest such New BecoCom
Constructed Facilities to ensure compliance with the Specifications and the
Scope of Work relating thereto.
10
(iv) Notwithstanding anything to the contrary in Section 3(f)(iii)
above, Carrier's use of any New BecoCom Constructed Facilities to carry
revenue-bearing traffic shall constitute acceptance of such New BecoCom
Constructed Facilities; provided that, notwithstanding the foregoing,
Carrier shall have the right to notify BecoCom, prior to carrying any
revenue-bearing traffic over such New BecoCom Constructed Facilities, that
it is provisionally or conditionally accepting such New BecoCom Constructed
Facilities, or any part thereof, and specifying the reasons for such
provisional or conditional acceptance, which reasons must be reasonably
related to such New BecoCom Constructed Facilities' not being within the
parameters of the Specifications and the Scope of Work relating thereto as
determined by such test procedures. In such event, the parties may
determine a mutually acceptable method and deadline for resolving Carrier's
objections to unconditional acceptance of such New BecoCom Constructed
Facilities and BecoCom shall thereupon take such action at its sole cost
and expense. Notwithstanding the foregoing, if BecoCom does not resolve
Carrier's objections to such unconditional acceptance as expeditiously as
commercially practicable under the circumstances, Carrier may bring the
operating standards of such portion of such New BecoCom Constructed
Facilities within the parameters of the Specifications and the Scope of
Work relating thereto, at BecoCom's sole cost and expense. In the event
that Carrier takes such action necessary to bring such New BecoCom
Constructed Facilities within such parameters, BecoCom shall, or shall
cause its Affiliates to, provide any accompanying personnel required in
order to comply with any law, rule or regulation pertaining to the access
to such New BecoCom Constructed Facilities or the supervision of the
actions to be taken to resolve Carrier's objections. Until Carrier's
objections to unconditional acceptance have been resolved by BecoCom to
Carrier's satisfaction, the use of such New BecoCom Constructed Facilities,
or any part thereof; by Carrier shall not constitute acceptance of such New
BecoCom Constructed Facilities.
(g) Liens.
(i) BecoCom shall at all times (A) promptly pay for all services,
Construction Materials, and labor used or furnished by BecoCom (except if
provided by Carrier pursuant to Section 3(b)(iii) hereof) in the
performance of the Work under this Agreement in order to keep the BecoCom
Facilities and the New BecoCom Constructed Facilities which are Non-Power
Space Facilities, the premises of the Affiliate Right-of-Way Owners and all
property or rights belonging to Carrier or Affiliate Right-of-Way Owners,
free and clear of any and all Liens and (B) keep the premises of
Right-of-Way Owners who are not Affiliates of BecoCom free and clear of any
and all Liens arising as a result of any activities of BecoCom. If BecoCom
fails to release and discharge any such Lien against the BecoCom Facilities
and premises of Right-of-Way Owners within 30 days after receipt of written
notice from Carrier to remove such Lien, Carrier may, at its option,
discharge or release the Lien or otherwise deal with the Lien claimant, and
BecoCom shall pay Carrier any costs and expenses incurred by Carrier,
including reasonable attorneys' fees, or alternatively
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Carrier may, at its choosing, deduct such costs and fees from amounts due
to BecoCom hereunder.
(ii) Carrier acknowledges that the primary source of revenue of
BecoCom is the payments that Carrier is or becomes obligated to pay BecoCom
pursuant to this Agreement and the other Basic Agreements. Therefore, the
obligations of BecoCom under the provisions of this Section 3(g) may be
enforced by Carrier only so long as Carrier is in material compliance with
its obligations to pay BecoCom pursuant to this Agreement and the other
Basic Agreements.
(h) Duration of Construction Obligation. Notwithstanding anything to the
contrary in Section 9 hereof, BecoCom shall be obligated to fulfill its
obligations under this Section 3 for 10 years from the date of this Agreement.
No later than one year prior to the end of such 10 year period, Carrier and
BecoCom shall commence good-faith negotiations to reach a new agreement
concerning the construction of the Network for an additional 10 year term.
4. Ownership of Facilities. BecoCom and Carrier agree that the various
types of Facilities provided for under this Agreement shall be owned as follows:
(a) BecoCom Facilities. All BecoCom Facilities (including any
Construction Materials supplied by Carrier for inclusion therein) shall be
owned by BecoCom or BECO, as the case may be; provided that all Interim
Constructed Facilities and New Facilities which are Power Space Facilities
shall be owned by BecoCom.
(b) Carrier Facilities. All Carrier Facilities shall be owned by
Carrier.
5. Indefeasible Right-of-Use of the BecoCom System.
(a) Rights of Access and Use.
(i) Upon the terms and conditions set forth in this Section 5,
BecoCom hereby grants to Carrier the exclusive, indefeasible and
non-cancellable right of access to and use of the BecoCom Facilities
for the conduct of the Business during the Term (as defined in Section
9 hereof);
(ii) Upon the terms and conditions set forth in this Section 5,
BecoCom hereby grants to Carrier, with respect solely to the provision
of Services, the exclusive, indefeasible and non-cancellable right of
access to and use of the BecoCom Rights-of-Way, subject to the
provisions of Sections 3(a), 5(c)(ii) and 6 hereof.
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(iii) Carrier may not resell, lease, license, transfer or
otherwise provide the right to use dark Fibers included in the BecoCom
Facilities without BecoCom's consent, which shall not be unreasonably
withheld or delayed; and
(iv) BecoCom may not resell, lease, license, transfer or
otherwise provide the right to use dark Fibers included in the BecoCom
Facilities, without providing Carrier an opportunity to purchase or
lease such dark Fibers on the same terms offered, in writing, by a
party who is not an Affiliate of BecoCom.
The rights granted to Carrier under this Section 5(a) (herein called the
"Indefeasible Rights") include the right of access to and use of the BecoCom
System as if Carrier were the holder of such rights of access to and use of the
BecoCom System as BecoCom holds, including the right to solely use the BecoCom
System in the conduct of the Business.
(b) Equipment Sites. BecoCom will, or will cause its Affiliates to,
provide sufficient space to Carrier to accommodate New Facilities at Equipment
Sites in accordance with any Project; provided, however, that in no event shall
BecoCom or its Affiliates be required to reconfigure, in any way, its electric
transmission or distribution equipment. BecoCom hereby grants to Carrier
reasonable access to the Equipment Sites for such purpose. BecoCom will provide
(i) heating at Equipment Sites at the incremental cost thereof, (ii) to the
extent practicable, air conditioning at Equipment Sites at the incremental cost
thereof and (iii) 24 hours per day, 7 days per week access to the Equipment
Sites. Other than with respect to the Contributed Assets (as defined in the
Operating Agreement), compensation shall be paid by Carrier to BecoCom for the
use of Equipment Sites which are distribution facilities or transmission
Right-of-Way sites on a case-by-case basis at a price to be agreed upon by the
parties; no payment shall be required for the use of 150 square feet of space in
Equipment Sites which are transmission stations.
(c) Exclusivity; Right of First Refusal; Etc.
(i) During the Term, BecoCom shall not grant any right of access to or
use of the BecoCom Facilities to any Entity. BecoCom shall not sell,
assign, mortgage, encumber or pledge or otherwise dispose of (by operation
of law or otherwise) any portion of the BecoCom Facilities, and shall not
permit any of the foregoing to occur.
(ii) Except as may be required (A) by applicable law or regulatory
authority, (B) pursuant to those existing agreements described on Exhibit E
hereto, (C) in connection with BECO's leasing or licensing of locations on
Rights-of-Way or Equipment Sites for use by third parties in providing
wireless telecommunications services, or (D) in connection with the use by
abutters for purposes other than providing telecommunications services
(including video) and which do not adversely affect Carrier's use thereof,
during the Term BecoCom and its Affiliates shall not grant, with respect
solely to the provision of Services, any right of access to or use of
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any other part of the BecoCom System to any Entity (other than BECO or its
Affiliates) without 30 days prior written notice to Carrier, which notice
shall include the material terms and conditions under which such right to
access or use is to be granted. Subject to all requirements of applicable
law or regulatory authority, Carrier shall have 10 days from the date such
notice is given to inform BecoCom of its intention to acquire such right of
access or use. Such acquisition shall include terms and conditions
substantially similar to the terms and conditions contained in the notice.
(iii) In the event that BECO or any of its Affiliates seeks to sell,
assign or otherwise dispose of all or any portion of the BecoCom System in
place on the date hereof (which sale, assignment or disposition shall, in
any event, be subject to the rights and obligations in this Agreement),
BecoCom shall give Carrier written notice of the material terms of the
proposed sale, assignment or other disposition, including the price and
terms of payment. Carrier shall then have 30 days, commencing with the date
on which it received such written notice, to purchase such portion of the
BecoCom System upon comparable terms and conditions, and BecoCom shall
cause BECO and its Affiliates to effect such sale to Carrier.
(d) Continued Use Beyond Term. Not later than one year prior to the end of
the Term, Carrier and BecoCom shall commence good faith negotiations with a goal
of providing to Carrier continued access to the BecoCom System after expiration
of the Term; such negotiations shall take into account Carrier's contribution to
the cost of constructing and maintaining the New BecoCom Constructed Facilities
including, without limitation, payments under this Agreement.
6. Maintenance of the Network.
(a) BecoCom shall repair, maintain, reinforce and otherwise preserve on a
timely and efficient basis (to Carrier's reasonable satisfaction consistent with
the Plans and Specifications) (i) the BecoCom Facilities, which shall be
BecoCom's exclusive right, and (ii), if agreed to by Carrier and BecoCom, any
Carrier Facilities, all in accordance with accepted industry standards and Plans
or, if applicable, with any plan mutually agreed upon by the parties, and with
all applicable federal, state and municipal laws, orders, rules and regulations.
(b) Prior to completion of construction of any BecoCom Facilities, BecoCom
and Carrier shall agree on a plan for regular maintenance and repair thereof, in
sufficient detail to meet Carrier's operational needs. BecoCom will deliver to
Carrier any amendments to any such plan throughout the Term, and such amendments
shall be subject to approval by Carrier, which approval shall not be
unreasonably withheld or delayed. Carrier, in conjunction with BecoCom, will
implement procedures for reviewing and approving or rejecting, within reasonable
time periods, submissions to Carrier for maintenance and repair.
(c) Prior to completion of construction of any Carrier Facilities, BecoCom
and Carrier shall negotiate to agree on a plan for regular maintenance and
repair thereof, in
14
sufficient detail to meet Carrier's operational needs. If BecoCom and Carrier
are unable to agree on any such plan, Carrier shall have the right to perform
such regular maintenance and repair itself, or to procure such regular
maintenance and repair from any other Person. If BecoCom and Carrier are able to
agree on any such plan, BecoCom will deliver to Carrier any amendments to any
such plan throughout the Term, and such amendments shall be subject to approval
by Carrier, which approval shall not be unreasonably withheld or delayed.
7. Relocation.
(a) Voluntary Relocation.
(i) If BecoCom, for its own business purposes other than an
involuntary relocation, elects to relocate any Facilities, then BecoCom
shall pay all costs relating to such relocation, including all costs
reasonably incurred by Carrier to connect or reconnect any such Facilities.
BecoCom shall use its best efforts (including coordination with Carrier) to
minimize all relocations and, in the event of a voluntary relocation, shall
ensure Carrier is able to provide the same level and quality of Services
throughout and after such voluntary relocation.
(ii) BecoCom shall provide Carrier notice of any voluntary relocation
no later than 30 days prior to its commencement of such voluntary
relocation. Such notice to Carrier shall provide a description of the
relocation plan.
(b) Involuntary Relocation.
(i) If BecoCom is required to relocate any Facilities as a result of
requirements under a right-of-way agreement, a mandate from any
governmental authority having jurisdiction, or condemnation, BecoCom shall
make a reasonable good faith effort to identify an alternative site for
replacement of such Facilities that, once constructed, will enable the
Carrier to provide the same level and quality of Services. BecoCom shall,
as the circumstances warrant, seek to recover on behalf of Carrier and/or
cooperate with Carrier's efforts to recover from the governmental authority
or other entity requiring such relocation, on behalf of Carrier, any
available reimbursement of any expenses incurred by Carrier as a result of
such involuntary relocation. BecoCom shall use its best efforts to ensure
Carrier is able to provide the same level and quality of Services
throughout and after such involuntary relocation.
(ii) BecoCom shall provide Carrier notice of any requirement of such
involuntary relocation not later than 10 days after its receipt of notice
of the requirement to make such involuntary relocation, and in any event
not later than 10 days prior to the date such relocation will commence.
Such notice to Carrier shall provide a description of the agreement,
mandate or condemnation requiring such relocation and BecoCom's relocation
plan (including the anticipated cost thereof).
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Carrier may, at its option and expense, provide an alternative relocation
plan with respect to such Facilities which are Carrier Facilities.
8. Governmental Authorizations.
(a) Each party shall be responsible for and shall undertake, in good faith,
all actions which may be necessary for it to take in furtherance of the intended
use of the Network by Carrier hereunder, and each party shall be responsible to
undertake, in good faith, to procure and to maintain in full force and effect
all regulatory and other consents, authorizations, or approvals that are
necessary for it to perform its obligations under this Agreement including, but
not limited to, the issuance of all necessary consents, authorizations or
approvals of the DPU, the FCC and the FERC. Each party shall have the right to
review and participate in the preparation of all filings and other documentation
in support of such consents, authorizations and approvals.
(b) BecoCom shall obtain all licenses, permits, easements, approvals and
rights of way required from all governmental authorities necessary for
completion of the New BecoCom Constructed Facilities and to ensure Carrier's
vehicular and pedestrian ingress to and egress from such Facilities where
required for maintenance and repair thereof. Carrier shall reimburse BecoCom for
all reasonable and supportable construction, permit and traffic control fees and
other items expressly set forth in any Scope of Work relating to New BecoCom
Constructed Facilities.
9. Term.
This Agreement shall commence on the date first written above, and shall
expire on December 31, 2060 (the "Term").
10. Compensation. Carrier shall pay to BecoCom the following compensation
with respect to the Facilities:
(a) Existing BecoCom Facilities. The Indefeasible Rights with respect to
the Existing BecoCom Facilities have been contributed by BecoCom to Carrier, as
a "BecoCom Contributed Asset" under the Operating Agreement contemporaneously
with the execution and delivery of this Agreement Notwithstanding such
contribution, Carrier shall pay to BecoCom, for the use of the Existing BecoCom
Facilities, the charges set forth on Exhibit C-1 hereto.
(b) New BecoCom Constructed Facilities. Carrier shall pay to BecoCom (i)
the charges set forth on Exhibit C-1 hereto for the use of the New BecoCom
Constructed Facilities in the Power Space and (ii) the charges set forth on
Exhibit D hereto for BecoCom's construction of the New BecoCom Constructed
Facilities. With respect to each Project as to which BecoCom constructs New
BecoCom Constructed Facilities, payment of such compensation shall commence upon
acceptance by Carrier or deemed acceptance (pursuant to
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Section 3(d) above) of such New BecoCom Constructed Facilities constructed
pursuant to such Project. Not later than October 1, 1998, Carrier and BecoCom
will enter into discussions in order to reach an agreement on performance-based
incentive compensation to be effective starting January 1, 1999 through the end
of the Term and to be paid to BecoCom as earned in addition to the amounts set
forth in Exhibit D. Such performance-based incentive compensation shall be based
on such factors as the parties shall agree.
(c) Maintenance of Power Space Facilities and Carrier Facilities. Carrier
shall pay to BecoCom with respect to the Power Space Facilities and any Carrier
Facilities which BecoCom maintains pursuant to Section 6 hereof (i) the charges
set forth on Exhibit C-2 hereto, and (ii) reasonable charges for general and
administrative costs incurred by BecoCom with respect to such maintenance.
BecoCom and its Affiliates shall use their best efforts to minimize the amounts
provided for in clauses (i) and (ii) above.
(d) Involuntary Relocations. Carrier shall reimburse BecoCom for the cost
of any involuntary relocation of Facilities contemplated by Section 7(b) above,
unless Carrier elects, pursuant to Section 7(b)(ii) above, to undertake such
relocation using contractors other than BecoCom (in which case Carrier shall
reimburse BecoCom for any costs reasonably incurred due to its need to address
safety concerns and to protect BECO's electric transmission and distribution
business). To the extent that any such involuntary relocation also involves
relocation of electric distribution or transmission facilities and Carrier does
not elect to undertake such relocation using contractors other than BecoCom,
Carrier shall only be required to reimburse BecoCom for those costs of
relocation that are incremental to the costs otherwise required for the
relocation of such electric distribution or transmission facilities.
(e) Engineering Costs. Carrier shall reimburse BecoCom for all reasonable
and supportable engineering costs incurred in the preparation of Scopes of Work,
and for all other engineering costs incurred pursuant to Scopes of Work, at
competitive rates.
11. Indemnification; Limitation on Liability.
(a) Indemnification by Carrier. Carrier shall indemnify, defend and hold
harmless BecoCom, its Affiliates, and all officers, directors, employees,
shareholders, partners, members and agents of BecoCom and its Affiliates, from
and against any and all claims, demands, liabilities (including reasonable
attorneys' fees), and judgments, fines, settlements and other amounts
("Damages") arising from any and all civil, criminal, administrative or
investigative proceedings ("Claims") relating to or arising out of:
(i) Any failure of Carrier to materially observe or perform any term
or provision of this Agreement
(ii) Any failure of any representation or warranty made by Carrier
herein to be true in any material respect as of the date made or deemed
made;
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(iii) Any Claim of any third party resulting solely from and to the
extent caused by the gross negligence or willful misconduct of Carrier or
any of its agents or employees;
(iv) The construction, installation, maintenance or operation of any
Carrier Facilities by Carrier, or the conduct or management of the
Business, except to the extent such Damages are caused or contributed to by
BecoCom or its Affiliates; and
(v) Any Claim by any customer of Carrier relating to the provision by
Carrier of Services to such customer over the Network.
(b) Indemnification by BecoCom. BecoCom shall indemnify, defend and hold
harmless Carrier, its Affiliates, and all officers, directors, employees,
stockholders, partners, members and agents of Carrier and its Affiliates from
and against any and all Damages arising from any and all Claims relating to or
arising out of:
(i) Any failure of BecoCom to materially observe or perform any term
or provision of this Agreement;
(ii) Any failure of any representation or warranty made by BecoCom
herein to be true in any material respect as of the date made or deemed
made;
(iii) Any Claim of any third party resulting from the gross negligence
or willful misconduct of BecoCom or any of its agents or employees;
(iv) The construction, installation, maintenance or operation of (A)
any BecoCom Facilities and (B) any Carrier Facilities which BecoCom has
constructed or maintained, or the conduct or actions of BecoCom with regard
to the Business, except to the extent such Damages are caused or
contributed to by Carrier or its Affiliates;
(v) Any Claim by any customer of BecoCom relating to the provision by
BecoCom of any services to such customer over the Network, and
(vi) Any failure of BecoCom or its Subcontractors to be in substantial
compliance with all Environmental Laws (as defined below) applicable to the
Carrier Facilities constructed by BecoCom, which compliance includes, but
is not limited to, the possession by BecoCom or BECO, as the case may be,
of all permits and other governmental authorizations required under the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Resources Compensation and Liability Act, wetlands laws, the Clean Water
Act, the regulations issued pursuant thereto by the Environmental
Protection Agency and/or superlien statutes, if any, in
18
the Commonwealth of Massachusetts ("Environmental Laws"), and compliance
with the terms and conditions thereof.
12. Insurance.
(a) Liability Insurance - BecoCom. BecoCom shall maintain (i) such
insurance or (ii) a self-insurance plan as will fully protect both Carrier and
BecoCom from any and all claims by employees of BecoCom under the workers'
compensation act or employees' liability laws, including any employers'
disability insurance laws, and from any and all other claims of whatsoever kind
or nature for any and all damage to personal property or for personal injury,
including death to anyone whomsoever that may arise from operations in
connection with the performance of its duties under this Agreement. BecoCom
shall provide Carrier with certificates evidencing the required coverage.
(b) Liability Insurance - Carrier. Carrier shall maintain (1) such
insurance or (ii) a self-insurance plan as will fully protect both Carrier and
BecoCom from any and all claims by employees of Carrier under the workers'
compensation act or employees' liability laws, including any employers'
disability insurance laws, and from any and all other claims of whatsoever kind
or nature for any and all damage to personal property or for personal injury,
including death to anyone whomsoever that may arise from operations in
connection with the performance of its duties under this Agreement. Carrier
shall provide BecoCom with certificates evidencing the required coverage.
(c) Property Insurance - BecoCom Facilities. BecoCom currently maintains
and will continue to maintain throughout the Term (1) insurance with a reputable
insurance company covering loss or damage to any part of the BecoCom Facilities
by fire and standard extended coverage perils in amounts in no event less than
90% of the full replacement value of such BecoCom Facilities, and (2) such
comprehensive general liability insurance covering personal injury or property
damage occurring in or about such BecoCom Facilities in commercially reasonable
amounts; or (B) a plan of self-insurance sufficient to provide the coverage set
forth in clause (A) above. In the event of any covered loss to any BecoCom
Facilities, BecoCom shall, at the option of Carrier, use the insurance proceeds
therefrom to repair or replace the Facilities, or to reimburse Carrier for
payments made by it for the construction, operation and maintenance of such
Facilities.
(d) Property Insurance - Carrier Facilities. Carrier shall maintain, with a
reputable insurance company throughout the Term (A) (1) insurance covering loss
or damage to any part of the Carrier Facilities by fire and standard extended
coverage perils in amounts in no event less than 90% of the full replacement
value of such Carrier Facilities, and (2) comprehensive general liability
insurance covering personal injury or property damage occurring in or about the
Carrier Facilities in commercially reasonable amounts; or (B) a plan of
self-insurance sufficient to provide the coverage set forth in clause (A) above.
13. Representations and Warranties.
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(a) General Representations and Warranties. Each party hereby represents
and warrants to the other that:
(i) It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and is duly qualified to
conduct business in all jurisdictions where such qualification is required.
(ii) It has the power and authority (corporate or otherwise) to
execute, deliver and perform its obligations under this Agreement Such
execution, delivery and performance have been duly authorized by all
necessary action on its part and do not and will not contravene its
organizational documents or conflict with, result in a breach of, or
entitle any party (with due notice or lapse of time or both) to terminate,
accelerate or call a default with respect to, any agreement or instrument
to which it is a party or by which it is bound. The execution, delivery and
performance by it of this Agreement will not result in any violation by it
of any law, rule or regulation applicable to it. It is not a party to, nor
subject to or bound by, any judgment, injunction or decree of any court or
other governmental entity which may restrict or interfere with the
performance of this Agreement by it. This Agreement is its valid and
binding obligation, enforceable against it in accordance with the terms of
this Agreement, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) No consent, waiver, order, approval, authorization or order of,
or registration, qualification or filing with, any court or other
governmental entity is required for the execution, delivery and performance
by such party of this Agreement and the consummation by such party of the
transactions contemplated hereby. No consent or waiver of any party to any
contract to which such party is a party or by which it is bound is required
for the execution, delivery and performance by such party of this
Agreement.
(iv) There is no action, suit, grievance, arbitration or proceeding
pending or, to the knowledge of such party, threatened against or affecting
such party at law or in equity, before any federal, state, municipal or
other governmental court, department, commission, board, arbitrator,
bureau, agency or instrumentality which prohibits or impairs its ability to
execute and deliver this Agreement or to consummate any of the transactions
contemplated hereby. Such party has not received written notice of any such
pending or threatened investigation, inquiry or review by any governmental
entity.
(b) Representations and Warranties of BecoCom Regarding the Facilities.
BecoCom represents and warrants to Carrier that:
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(i) The Existing BecoCom Facilities and the Interim Constructed
Facilities installed by BecoCom and its Affiliates prior to the date hereof
have been installed in accordance with the System Records and the
Specifications. All such Facilities are fusion spliced with no unnecessary
mid-span splicing, and satisfy the Acceptance Test Plan.
(ii) BecoCom has the indefeasible right to use the Existing BecoCom
Facilities, sufficient to permit BecoCom to perform its obligations to
Carrier under this Agreement, and such ownership or indefeasible right of
BecoCom are free and clear of any and all Liens, except for (A) Liens on
account of real or personal property taxes not yet due and payable; and (B)
Liens which will not materially impair the use of the Existing BecoCom
Facilities by Carrier for the conduct of the Business, and which are
otherwise not material.
(iii) The Interim Constructed Facilities installed by BecoCom or its
Affiliates prior to the date hereof are free and clear of any and all Liens
arising from any action or omission by BecoCom, except for (A) Liens on
account of real or personal property taxes not yet due and payable; and (B)
Liens which will not materially impair the use of such Interim Constructed
Facilities by Carrier for the conduct of the Business, and which are not
otherwise material.
(iv) The Existing BecoCom Facilities, the Interim Constructed
Facilities installed by BecoCom or its Affiliates prior to the date hereof
and all components thereof are structurally sound, are in good operating
condition and repair and none of the Existing BecoCom Facilities, such
Interim Constructed Facilities or any component thereof, is in need of
maintenance or repairs except for conditions that do not and will not have
a material impact on Carrier's ability to conduct its Business.
(v) The System Records and all records relating to the Existing
BecoCom Facilities and Interim Constructed Facilities installed by BecoCom
or its Affiliates prior to the date hereof and all other contracts or
documents delivered to Carrier pursuant to this Agreement or in connection
with the execution hereof are true, complete and correct copies.
(vi) Carrier has been named as a third party beneficiary of the BECO
License, with power to enforce BecoCom's rights thereunder upon a breach of
the obligations of either BecoCom or BECO. BecoCom has delivered to Carrier
a true and complete copy of the BECO License, and will not permit the BECO
License to be amended without the prior written consent of Carrier, which
consent shall not be unreasonably withheld.
(c) Representations and Warranties of BecoCom Regarding the Rights-of-Way.
BecoCom represents and warrants to Carrier that:
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(i) With respect to those portions of the Rights-of-Way that are
distribution system poles located within public ways, BECO holds, jointly
with NYNEX, licenses permitting the location of such poles within the
public ways. Such licenses are obtained from municipal or state authorities
who, in granting the same, are acting as agents of the state, pursuant to
statutes creating a right to such licenses on the part of public utilities.
These licenses are unlimited in time, but the rights obtained are not
vested, and are subject to the action of the legislature. The use of such
poles is subject to the terms of the Joint Ownership Agreement dated
October 28, 1979, between BECO and New England Telephone and Telegraph
Company, and the corresponding Intercompany Operating Procedures, last
revised effective February 1, 1995, in both cases as amended from time to
time, and Carrier shall be required to execute a separate Aerial License
Agreement with NYNEX and BECO for the use of the communications space on
such poles. Subject to the foregoing, (A) such licenses and the BECO
License are sufficient to permit BecoCom to perform its obligations to
Carrier under this Agreement in all material respects, except for any
limitations which may be imposed by any new and adverse interpretation of
current law, contracts or granting instruments and (B) neither BecoCom nor
any of its Affiliates has any reason to believe or anticipates that the
licenses for use of such portions of the Rights-of-Way shall, during the
Term, expire, be revoked or be modified in such a way as to make such
licenses not sufficient to permit BecoCom to perform its obligations to
Carrier under this Agreement in all material respects.
(ii) With respect to those portions of the Rights-of-Way that are
distribution or transmission system conduits, manholes and vaults located
within public ways, BECO holds licenses permitting the location of such
conduits, manholes and vaults within the public ways. Such licenses are
obtained from municipal or state authorities who, in granting the same, are
acting as agents of the state, pursuant to statutes creating a right to
such licenses on the part of public utilities. These licenses are unlimited
in time, but the rights obtained are not vested, and are subject to the
action of the legislature. Within the City of Boston, the use of such
facilities for telecommunications purposes is subject to the policies
adopted from time to time by the Public Improvements Commission of the City
of Boston. Subject to the foregoing, (A) such licenses and policies and the
BECO License are sufficient to permit BecoCom to perform its obligations to
Carrier under this Agreement in all material respects, except for any
limitations which may be imposed by any new and adverse interpretation of
current law, contracts or granting instruments and (B) neither BecoCom nor
any of its Affiliates has any reason to believe or anticipates that such
licenses or policies for use of such portions of the Rights-of-Way shall,
during the Term, expire, be revoked or be modified in such a way as to make
such licenses not sufficient to permit BecoCom to perform its obligations
to Carrier under this Agreement in all material respects.
(iii) With respect to those portions of the Rights-of-Way that are
electric transmission system poles and towers located on transmission line
rights of
22
way, or conduits, manholes and vaults located on private property, BECO
generally either owns in fee or holds permanent easements in the land on
which such structures are located. In some cases, BECO holds licenses or
lesser interests, where such rights of way cross public ways, tidewaters or
water courses, railroad rights of way, state highways, public domain lands,
or lands owned by state or federal agencies or authorities. In some cases,
BECO's rights were obtained by the exercise of eminent domain powers, with
the permission of the Massachusetts Department of Public Utilities. In all
cases where BECO holds less than a fee simple interest, the Rights-of-Way
are subject to the terms, conditions, reservations, restrictions and other
limitations imposed by the grantor and contained in the granting
instrument, generally recorded in the public land records, and in some
cases the paramount authority of the grantor which is a state or federal
agency or authority. In all cases, subject to the foregoing, (A) the rights
held by BecoCom in such portions of the Rights-of-Way are sufficient to
permit BecoCom to perform its obligations to Carrier under this Agreement
in all material respects, except for any limitations which may be imposed
by any new and adverse interpretation of current law, contracts or granting
instruments and (B) neither BecoCom nor any of its Affiliates has any
reason to believe or anticipates that such rights for use of such portions
of the Rights-of-Way shall, during the Term, expire, be revoked or be
modified in such a way as to make such rights not sufficient to permit
BecoCom to perform its obligations to Carrier under this Agreement in all
material respects.
(iv) There are no condemnation, environmental, zoning or other
land-use regulation proceedings, either instituted or, to BecoCom's
knowledge, planned to be instituted, or contractual obligations or third
party actions or claims, nor are there are special assessment proceedings
pending or, to BecoCom's knowledge, threatened, which would affect, in any
material respect, the use and operation of the BecoCom Rights-of-Way for
the Business.
(v) BecoCom has received the BECO License, which license pertains to
the Rights-of-Way.
(d) Representations and Warranties of BecoCom Regarding the Equipment
Sites. BecoCom represents and warrants to Carrier that, as of the time
individual Equipment Sites are identified for purposes of performing the Scope
of Work for any Project:
(i) With respect to those Equipment Sites that are electric
distribution substations owned by BECO, or service centers or field
stations which are located on land owned by BECO, or parcels of land
comprising the above-ground electric transmission line rights of way owned
by BECO in fee, or vacant land owned by BECO in fee, BECO is the sole legal
and equitable owner of record and in fact of good and marketable fee simple
tide, with no imperfections or irregularities therein which materially
impair the use of such property for the purposes for which it is held, and
subject only to (A) Liens on account of real and personal property taxes
and
23
assessments not yet due and payable (including any lien in favor of the
Commonwealth of Massachusetts pursuant to Chapter 21E of the General Laws
for costs, if any, incurred by the Commonwealth to clean up hazardous
materials), or which are being contested in good faith, (B) public and
private easements, (C) leases and licenses to third parties for occupancy
purposes, all of which, with respect to (A), (B) and (C) above,
individually or in the aggregate do not and will not materially impair the
use of such property by Carrier in the conduct of its Business, and (D)
zoning and building laws or other restrictions. Subject to the foregoing,
the rights held by BecoCom with respect to such Equipment Sites are
sufficient to permit BecoCom to perform its obligations to Carrier under
this Agreement in all material respects.
(ii) With respect to those Equipment Sites that are service centers or
field stations which are located on land leased by BECO from third parties,
all such leases are valid and subsisting and in full force and effect in
accordance with their terms, and BECO holds a valid leasehold interest in
such Equipment Sites, subject only to the terms and conditions of the
specific leases applicable to such Equipment Sites. Subject to the
foregoing, the rights held by BecoCom with respect to such Equipment Sites
are sufficient to permit BecoCom to perform its obligations to Carrier
under this Agreement in all material respects, subject to any landlord
consents.
(iii) The System Records are true, complete and correct copies.
(iv) The Equipment Sites and all components thereof are structurally
sound, are in good operating condition and repair, and are adequate for the
uses to which they will be put, and none of the Equipment Sites is in need
of maintenance or repairs except for conditions that do not have a material
adverse impact on Carrier's ability to conduct the Business. Subject to the
foregoing, the Equipment Sites have no physical condition that would have a
material impact on Carrier's ability to conduct the Business.
(v) There are no condemnation, environmental, zoning or other land-use
regulation proceedings, either instituted or, to BecoCom's knowledge,
planned to be instituted, or contractual obligation or third party actions
or claims, nor are there any special assessment proceedings pending or, to
BecoCom's knowledge, threatened, which would affect in any material respect
the use of the Equipment Sites for the Business.
(vi) BecoCom has received the BECO License, which license pertains to
the Equipment Sites.
24
14. Covenant of BecoCom with respect to Rights-of-Way and Equipment Sites.
BecoCom hereby represents, warrants and covenants with Carrier that, at the
time that specific Rights-of-Way and Equipment Sites are identified in any Scope
of Work, BecoCom shall hold, pursuant to the BECO License and any consents
required from landlords, subject to such qualifications set forth in Sections
13(c) and (d) hereof, sufficient rights in the Rights-of-Way and Equipment Sites
described in such Scope of Work, necessary to implement such Scope of Work and
to permit Carrier to utilize the portion of the BecoCom Facilities installed
within such Rights-of-Way and Equipment Sites for the Business, and further
subject only to
(a) Liens on account of taxes not yet due and payable;
(b) minor imperfections in title or other rights, occupancy leases or
licenses, encroachments and similar matters, none of which individually or
in the aggregate will materially impair the ability of BecoCom to implement
such Scope of Work or the ability of Carrier to conduct the Business;
(c) zoning laws, ordinances or regulations;
(d) environmental laws, ordinances or regulations, none of which
individually or in the aggregate will materially impair the ability of
BecoCom to implement the such Scope of Work or the ability of Carrier to
conduct the Business; and
(e) such matters as are specifically identified in such Scope of Work
as required consents, licenses, permits, approvals, grants, modifications
or other actions necessary to allow the use of particular Rights-of-Way or
Equipment Sites for the Business, none of which will be material relative
to (i) BecoCom's ability to implement such Scope of Work, or (ii) Carrier's
ability to conduct the Business.
15. Right to Cure.
(a) In the event that Carrier shall fail to observe or perform any of its
obligations under this Agreement, BecoCom may (but shall not be obligated to),
at any time after delivery of written notice from BecoCom to Carrier of such
failure (but not later than 30 days after delivery of such notice), undertake
such actions (except such actions as are prohibited by law) as may be related to
curing such default on behalf of Carrier, whereupon Carrier shall reimburse
BecoCom for the full costs reasonably expended therefor by BecoCom, but Carrier
shall not be relieved of any obligation, liability, duty or undertaking
whatsoever relating thereto. Carrier hereby agrees to reasonably cooperate with
BecoCom to facilitate BecoCom's undertaking (including allowing BecoCom's access
as may be necessary to effect such undertaking).
25
(b) In the event that BecoCom shall fail to observe or perform any of its
obligations under this Agreement, Carrier may (but shall not be obligated to),
at any time after delivery of written notice from Carrier to BecoCom of such
failure (but not later than 30 days after delivery of such notice), undertake
such actions (except such actions as are prohibited by law) as may be related to
curing such failure on behalf of BecoCom, whereupon BecoCom shall reimburse
Carrier for the full costs reasonably expended therefor by Carrier, but BecoCom
shall not be relieved of any obligation, liability, duty or undertaking
whatsoever relating hereto. BecoCom hereby agrees to reasonably cooperate with
Carrier to facilitate Carrier's undertaking (including allowing Carrier's access
as may be necessary to effect such undertaking, subject to limitations on such
access reasonably imposed, consistent with past practice, for reasons of safety
or the protection of BECO's electric transmission and distribution business).
16. Arbitration.
(a) In the event of any dispute between the parties hereto as to a matter
referred to herein or as to the interpretation of any part of this Agreement,
including but not limited to this Section 16 or as to the determination of any
rights or obligations or entitlements arising from or related to this Agreement
or as to the calculation of any amounts payable under this Agreement, the
parties shall refer the matter to their respective chief executive officers for
resolution.
(b) Should the chief executive officers of the respective parties fail to
resolve the dispute within 20 days from such referral, the parties agree that
such dispute will not be referred to any court but will be referred to binding
arbitration, and the provisions of this Section 16 shall apply.
(c) The arbitration shall be governed by the AAA Commercial Arbitration
Rules or, in the case of Section 2 hereof the AAA Construction Industry
Arbitration Rules (in each case, the "Rules") as modified by this Section 16 and
by the United States Arbitration Act, 9 U.S.C. ss.ss. 1 et seq. (the
"Arbitration Act"). Any conflict between the Rules and the Arbitration Act shall
be decided in favor of the Rules. The party wishing to submit such matter to
arbitration shall give written notice (the "Arbitration Notice") to the other
party (the "Respondent") of its intention to arbitrate. The place of the
arbitration shall be Boston, Massachusetts. The arbitration shall be conducted,
and the final resolution of the dispute (the "Award") shall be rendered by one
arbitrator (the "Arbitrator") to be mutually selected by the parties. If the
parties cannot agree to a mutually acceptable Arbitrator within seven days of
Respondent's receipt of the Arbitration Notice, the Arbitrator shall be selected
in accordance with rule 13 oft. Rules.
(d) All hearings shall be held within 30 days following the appointment of
the Arbitrator. At a time designated by the Arbitrator, each party shall
simultaneously submit to the Arbitrator and exchange with each other its final
proposed Award, and in rendering the final Award, the Arbitrator shall be
limited to choosing the Award proposed by either of the
26
parties without modification. The Arbitrator shall issue the final Award no
later than 15 days from the completion of the hearings. The Award of the
Arbitrator shall be final and binding. Judgment on any Award may be entered in
any court having jurisdiction thereof.
(e) To the extent that the parties pursue a judicial remedy in aid of
arbitration, each party consents and submits to the non-exclusive jurisdiction
of and venue in the federal courts located in Boston, Massachusetts (or, in case
such a federal court does not have jurisdiction, the state courts located in
Boston, Massachusetts). Each party consents to service of the notice of
arbitration, and any other paper in the arbitration, by registered mail or
personal delivery at its address specified in Section 17(b) hereof. Nothing in
this subsection (e) shall limit the jurisdiction of other courts for purposes of
enforcement of a final arbitral Award.
(f) The fact that any party has invoked the provisions of this Section 16
shall be considered to be confidential information under Section 17(d) of this
Agreement and shall not relieve either party of any obligations it may otherwise
have to continue performance in accordance with the provisions of this
Agreement.
(g) This agreement to arbitrate a dispute in accordance with this Section
16 and any Award made hereunder shall be binding upon the successors and assigns
and any trustee or receiver of each of the parties hereto.
17. Miscellaneous.
(a) Assignment. This Agreement and the rights and obligations of the
parties hereto may not be assigned by any of the parties hereto without the
prior written consent of the other party which may be withheld by such party in
its sole discretion. This Section 17(a) shall not be interpreted to prohibit the
use of Subcontractors by either party to fulfill its construction, maintenance
or repair obligations hereunder. Notwithstanding the foregoing, either party may
assign its rights and obligations under this Agreement to any of its Affiliates,
provided that the assigning party will continue to be responsible for its
liabilities and obligations hereunder.
(b) Notices. All notices, requests and other communications hereunder
(herein collectively a "notice" or "notices") shall be deemed to have been duly
delivered, given or made to or upon any party hereto if in writing and delivered
by hand against receipt, or by certified or registered mail. postage pre-paid,
return receipt requested, or to a courier who guarantees next business day
delivery or sent by telecopy (with confirmation) to such party at its address
set forth below or to such other address as such party may at any time, or from
time to time, direct by notice given in accordance with this Section 17(b).
27
If to Carrier: RCN-BecoCom, LLC
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
and C-TEC Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax:(609) 734-0974 and (609) 734-3830
Attention: Michael A. Adams and
Raymond B. Ostroski, Esq.
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York. New York. 10022
Fax: (212) 735-2000
Attention: Stephen M Banker, Esq.
If to BecoCom: BecoCom, Inc.
c/o Boston Edison Company
800 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 424-2733
Attention: Richard S. Hahn, Vice President
Neven Rabadjija, Esq.,
Assistant General Counsel
with a copy to: Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Fax: (617) 227-3732
Attention: Andrew B. White, Esq.
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt or (ii) three business days after
such notice, request or other communication is sent by certified or registered
mail, (iii) if sent by courier who guarantees next business day delivery, the
business day next following the day of such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied (with confirmation received).
(c) Governing Law. The rights and obligations of the parties hereto shall
be construed and interpreted in accordance with the substantive law of the
Commonwealth of Massachusetts without giving effect to its principles for choice
of law.
28
(d) Confidentiality. Design criteria, Plans and other information obtained
by BecoCom from Carrier and working drawings and specifications prepared by
BecoCom shall be held in confidence by BecoCom, and shall not be used by BecoCom
for any purposes other than for the performance of the Work, the operation of
BECO's electric transmission and distribution business or as authorized in
writing by Carrier to BecoCom or its Affiliates. Documents prepared by or on
behalf of either party with respect to the New Facilities shall be or, upon
preparation, become the joint property of Carrier and BecoCom. Each of Carrier
and BecoCom shall keep confidential, and shall not disseminate to any third
party (other than their respective Affiliates) or use for any other purpose
(except with the written authorization of the other party), all information
relating to the System Records, and any information received from the other
party that is confidential or proprietary unless legally compelled (by
deposition, inquiry, request for documents, subpoena, civil investigative demand
or similar process, or by order of a court, regulatory authority or tribunal of
competent jurisdiction, or in order to comply with applicable rules or
requirements of any stock exchange, government department or agency or other
regulatory authority, or by requirements of any securities law or regulation or
other legal requirement). Each party shall promptly notify the other of any such
requirement or dissemination prior to such event.
(e) No Partnership. Nothing contained in this Agreement shall be construed
to create a partnership or other relationship that may invoke fiduciary
obligations between the parties hereto.
(f) Compliance With Laws. At all times during the term of this Agreement,
the parties shall comply in all material respects with all laws, rules,
regulations, and codes of all governmental authorities having jurisdiction over
each of their respective businesses which are now applicable, or may be
applicable hereafter, including without limitation, all special laws, policies,
ordinances, or regulations now in force, as amended or hereafter enacted.
Nothing herein shall be deemed a waiver of the parties' right to challenge the
validity of any such law, rule or regulation.
(g) Time is of the Essence. Time is of the essence in the performance of
the obligations set forth herein by the parties. Each party acknowledges and
agrees that providing the use of the Network, as set forth herein, is vital to
the Business in the Relevant Market. Therefore, subject to the provisions of
paragraph (h) below, and taking into account the requirements regarding safety
and reliability of the electric transmission and distribution system of BecoCom
and its Affiliates, any consent, authorization or approval that must be obtained
by a party, or any construction, maintenance or other obligation shall be given
or performed within the time specified, or if no time for performance is
specified, shall be given or performed promptly, with no unreasonable delay or
condition. Any extension of the time requested by either of the parties hereto
to meet any of the obligations of the parties pursuant to this Agreement shall
not be unreasonably withheld by the other party, provided that such extension
will not have a material adverse effect on the Business. No party shall be
deemed in violation of this paragraph (g) to the extent that such failure to
comply is caused by a default of the other party.
29
(h) Force Majeure. If by reason of Force Majeure either party is unable in
whole or in part to carry out its obligations hereunder (other than the payment
of money), said party shall not be deemed in violation or default during the
continuance of such inability.
(i) Fees and Expenses. Except as otherwise provided herein, each of BecoCom
and Carrier shall pay all fees and expenses incurred by, or on behalf of, such
party in connection with, or in anticipation of, this Agreement and the
consummation of the transactions contemplated hereby.
(j) Specific Performance. Each party hereby acknowledges and agrees that
there would be no adequate remedy at law for the other party's breach,
threatened breach or default of its covenants, agreements or undertakings in
this Agreement. As a result, and in addition to and without prejudice to or
waiver in whole or in part of each party's other remedies under this Agreement
and at law and in equity, each party shall have the right to equitable relief
and to specifically enforce its rights and the other party's obligations as set
forth in this Agreement and the breach or threatened breach of such obligations
may be enjoined by each without bond, and accordingly each party consents and
submits to the nonexclusive jurisdiction of and venue in the federal courts
located in Boston, Massachusetts (or in case such a federal court does not have
jurisdiction, the state courts located in Boston, Massachusetts) in aid of
arbitration pursuant to Section 16 hereof.
(k) Condemnation. In the event and to the extent of any condemnation or
other taking by eminent domain of all or any part of the BecoCom Facilities
(other than existing Equipment Sites), or any property or rights relating
thereto, then the proceeds thereof shall by apportioned fairly between BecoCom
and Carrier as their interests may warrant.
(1) Captions. The captions to sections throughout this Agreement are
intended solely to facilitate reading and reference to the sections and
provisions of this Agreement. Such captions shall not affect the meaning or
interpretation of this Agreement.
(m) Entire Agreement. This Agreement sets forth the entire agreement of the
parties, and takes precedence over all prior understandings, with respect to the
subject matter herein. This Agreement may not be amended except by a writing
signed by the parbes.
(n) Binding Effect. Subject to the provisions of Section 17(a) of this
Agreement, this Agreement is binding on and inures to the benefit of the parties
hereto and their respective heirs, legal representatives, successors, and
assigns.
(o) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the other provisions hereof. If any provision of
this Agreement is held to be invalid, such provision shall not be severed from
this Agreement; instead, the scope of the rights and duties created thereby
shall be reduced by the smallest extent necessary to conform such provision to
the applicable law, preserving to the greatest extent
30
the intent of the parties to create such rights and duties as set out herein. If
necessary to preserve the intent of the parties hereto, the parties shall
negotiate in good faith to amend this Agreement, adopting a substitute provision
for the one deemed invalid or unenforceable that is legally binding and
enforceable.
(p) Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each party shall execute, deliver and file or
record any additional documents and instruments and perform any additional acts
that may be necessary or appropriate to evidence or safeguard the rights herein
granted and to effectuate and perform the provisions of this Agreement and such
transactions and the intention of the parties hereto. Each party agrees to
reimburse the other party for its actual out of pocket expenses incurred in
connection therewith.
(q) Waiver of Subrogation. Carrier and BecoCom shall each cause all
policies of fire, extended coverage, and other physical damage insurance
covering the Network to contain a clause or endorsement denying the insurer any
rights of subrogation against the other party provided, that no additional
premium is payable as a result of such request unless the party requesting such
waiver agrees to pay such additional premium. Notwithstanding any provisions of
this Agreement to the contrary, Carrier and BecoCom respectively waive all
claims and rights to recover against the other for injury or loss due to hazards
covered by insurance, so long as waiver does not invalidate such insurance.
(r) Changes in Law. If and to the extent that, during the Term, any laws or
regulations shall change which govern any transaction contemplated herein or
either party's business operations so as to make either unlawful, then Carrier
and BecoCom hereby agree to effect such modifications to this Agreement as shall
be reasonably necessary for the Agreement to accommodate any such legal or
regulatory changes.
(s) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
(t) Interpretation. In the event of any dispute concerning the construction
or interpretation of this Agreement or any ambiguity hereof, there shall be no
presumption that this Agreement or any provision hereof be construed against the
party who drafted this Agreement.
(u) Independent Contractor. Nothing in this Agreement shall be construed or
interpreted to make either party, any Subcontractor, or the employees or agents
of either party, to be the agent, representative or employee of the other party
or the Right-of-Way Owners. Each party shall at all times be an independent
contractor and shall have sole responsibility for and control over the details
and means for performance of its obligations hereunder, so long as such party is
in compliance with the terms of this Agreement.
31
(v) No Other Business. BecoCom shall not engage in any substantial business
other than pursuant to this Agreement and the other Basic Agreements.
(w) No Third Party Beneficiaries. Nothing in this Agreement shall be
construed to create any rights or obligations except between the parties hereto,
and no person or entity shall be or be deemed a third-party beneficiary of this
Agreement.
(x) BECO's Core Business. Notwithstanding anything to the contrary set
forth herein, nothing herein shall obligate BecoCom or its Affiliates to take
any action, or refrain from taking any action, which would, in BecoCom's
reasonable opinion, adversely affect the operation of BECO's electric
transmission and distribution business.
(y) Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET
FORTH IN THIS AGREEMENT, NEITHER BECOCOM NOR CARRIER SHALL BE LIABLE TO THE
OTHER FOR OR IN RESPECT OF ANY CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES,
INCLUDING, WITHOUT LIMITATION, DAMAGES BASED UPON BUSINESS INTERRUPTION OR LOSS
OF EXPECTED OR ANTICIPATED BUSINESS PROFITS, WHICH MAY ARISE OUT OF OR RESULT
FROM ANY BREACH OF BECOCOM'S OR CARRIER'S OBLIGATIONS UNDER THIS AGREEMENT;
PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT MITIGATE THE LIABILITY OF ANY
PARTY WITH RESPECT TO SUCH PARTY'S GROSS NEGLIGENCE AND/OR WILLFUL MISCONDUCT.
32
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an instrument under seal as of the date first set forth above.
BECOCOM, INC.
a Massachusetts corporation
By: /s/RICHARD S. HAHN
---------------------------------
Name: RICHARD S. HAHN
---------------------------------
Title: PRESIDENT
---------------------------------
RCN-BECOCOM, LLC,
a Massachusetts limited liability company
By: /s/MICHAEL A. ADAMS
---------------------------------
Name: MICHAEL A. ADAMS
---------------------------------
Title: President of Technology
& Strategic Development
---------------------------------
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 17th day of June, 1997, before me, a notary public in and for said
county and state, personally came Richard S. Hahn, President of BecoCom, Inc., a
Massachusetts corporation, known to be the identical person who signed the
foregoing Agreement and acknowledged the execution thereof to be his voluntary
act and deed and the voluntary act and deed of said company.
WITNESS, my hand and notarial seal at 919 Third Avenue, New York, New
York 10022 in said county and state, the day and year last above written.
[SEAL] /s/STEPHEN M. BANKER
-----------------------------
NOTARY PUBLIC
My Commission Expires:
STEPHEN M. BANKER
Notary Public, State of New York
No. 31 4710679
Qualified in New York County
Commission Expires Dec. 31,1998
- ---------------------------------
33
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 17th day of June, 1997, before me, a notary public in and for said
county and state, personally came Michael A. Adams, President of Technology &
Strategic Development of RCN-BecoCom, LLC, a Massachusetts limited liability
company, known to be the identical person who signed the foregoing Agreement and
acknowledged the execution thereof to be his voluntary act and deed and the
voluntary act and deed of said company.
WITNESS, my hand and notarial seal at 919 Third Avenue, New York, New
York 10022 in said county and state, the day and year last above written.
[SEAL] /s/STEPHEN M. BANKER
-----------------------------
NOTARY PUBLIC
My Commission Expires:
STEPHEN M. BANKER
Notary Public, State of New York
No. 31 4710679
Qualified in New York County
Commission Expires Dec. 31,1998
- ---------------------------------
34
Exhibit A-1
EXISTING BECOCOM FACILITIES
The following is a description of the Existing BecoCom Facilities and
associated properties and rights-of-way. BecoCom will provide to the Company the
ability to use all of the Existing BecoCom Facilities except for any BECO
Dedicated Fibers. BecoCom is providing only those routes where fiber capacity is
available, or where there is commercial potential. The form of this contribution
will be an Indefeasible Right to Use. The Fibers being provided to the Company
include the upgrade to be constructed by BECO in 1997.
Summary by Construction Type
==========================================================================
Type ROW miles Available Fiber-miles
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
OPGW 84.5 3,654
- --------------------------------------------------------------------------
OH Distrib. ADSS 3.0 36
- --------------------------------------------------------------------------
UG ADSS 38.5 3,282
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
total 126.0 6,972
==========================================================================
Summary by Geography
==========================================================================
Type ROW miles Available
Fiber-miles
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
very dense urban 29.0 2,484
- --------------------------------------------------------------------------
dense urban 9.5 798
- --------------------------------------------------------------------------
suburban 84.5 3,654
- --------------------------------------------------------------------------
distribution 3.0 36
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
total 126.0 6,972
==========================================================================
The BecoCom Contributed Assets shall also consist of the right to locate Carrier
Facilities on 150 square feet of each of the following sites: Prudential Center
(subject to the termination
or expiration of the lease at such site); Station 150 (Edgar); Station 470
(Canton); Station 447 (West Walpole); Station 446 (West Medway); Station 240
(Framingham); Station 148 (Needham); Station 496 (Hyde Park); Station 282
(Waltham); Station 320 (Lexington); Station 391 (Burlington); Station 250
(Mystic & Head House @ Ryan's Plygrd); Station 80 (Mass Ave.); Station 478
(Holbrook); Station 146 (Walpole); Station 65 (Medway); Station 274 (Sherborn);
Station 433 (Speen Street); Station 110 (Baker Street); Station 342 (Sudbury);
Station 450 (Trapelo Road); Station 533 (Hartwell Ave.); Station 211 (Woburn);
and Station 514 (Boston).
2
Exhibit A-1
BECO Fiber Optic Network
JV Contribution
[GRAPHIC OMITTED]
[CHART OF NETWORK IN APPROXIMATE ROUTE MILES]
Exhibit A-1
BECO Fiber Optic Network
JV Contribution
[GRAPHIC OMITTED]
[CHART OF NETWORK IN APPROXIMATE FIBER MILES]
Exhibit A-1
BECO Fiber Optic Network
JV Contribution
[GRAPHIC OMITTED]
[CHART OF NETWORK IN APPROXIMATE FIBER MILES BY DENSITY]
Exhibit A-2
Project Status Project Status
------- ------ ------- ------
Jobs Completed Jobs in Estimation
Kenmore Hojo to Fenway Hojo Approved 640 Huntington Ave to 621 Huntington Requested
Station 514 to RCN Headend Approved 621 Huntington to Backbone Requested
RCN Headend to Mass Ave Approved 640 Huntington to Backbone Requested
400 Summer Street Approved Somerville Franchise Build / Backbone To Cerntral Hub - Requested
249 'A' Street Approved 1110 Commonwealth Ave Requested
3 Hawkins Street Approved 118 Beacon St, Fischer College Requested
RCN HQ to 200/300 Summer Street Approved 400 Brookline Ave Requested
16 Marlborough St Approved 99 Kent St, Village @ Brookline Requested
Boston University Approved Bear Hill Condos Requested
70 Longwood Ave Approved 150 South Huntington Ave Requested
079-1089 Commonwealth Ave Approved Simmons College Requested
3 Pond St, Brook House Approved Green Loop (Boston) Requested
27-335 Huntington Ave Approved 630 Tremenot, Castle Square Requested
Bentley College Approved
144-1160 Commonwealth Ave HUB Approved Jobs in Engineering
Construction Quarters Requested
Jobs in Construction The Anchorage Requested
Red Loop (Boston) Approved Shipway Condominiums Requested
Magenta Loop (Boston Approved The Basilica Requested
Flagship Wharf Approved The Row Houses Requested
Emerson Place Approved 111 Alantic Ave, Mercantile Wharf Requested
Whittier Place Approved Lewis Wharf Requested
Hawthorne Place Approved Rowes Wharf Requested
Longfellow Place Approved 65 & 85 E. India Row, Harbor Towers Requested
01 Merimac St Requested 296 State St., Marriott Long Wharf Requested
Gray/Bigelow Bldg Requested The Mariner, Atlantic Ave Requested
35 Huntington, Mission Park Approved 131-185 State Street Verbal Approval
30 Tremont, Mass Pike Tower Approved Custom House Verbal Approval
Oak, Quincy Towers Approved Swissotel Requested
32 Harrison, Tai Tung Village Approved Cronin's Landing Requested
30 Stuart, South Cove Plaza Approved 1131-1137 Commonwealth Ave Requested
Bradford Towers Approved 1114-1132 Commonwealth Ave Requested
35 & 536 Beacon St Approved Seaport Hotel Requested
Channel 56, Dorchester Approved
37 'D' Street Verbal Approval Future Jobs
Channel 25, Dedham Requested
Jobs Awaiting Construction Channel 5, Needham Requested
None at this time 75-83 Cambridge Prkwy, Esplanade Condo's Requested
2 Cambridge CO's Requested
Jobs Awaiting Approval from RCN AT&T POP Requested
Blue Loop (Boston) Requested Cable & Wireless POP Requested
Amy Lowell House Verbal Approved Admiral Hill, Chelsea Requested
Spaulding Rehab Requested Channel 4, Brighton Requested
Channel 2, Brighton Requested
Channel 68, Brighton Requested
Exhibit B
RELEVANT MARKET
Areas Included in Relevant Market
The following cities, towns or local municipalities (See Attached Map).
Acton Lexington Walpole
Arlington Lincoln Waltham
Ashland Maynard Watertown
Bedford Medfield Wayland
Bellingham Medway Weston
Boston Millis Westwood
Brookline Milton Winchester
Burlington Natick Woburn
Canton Needham
Carlisle Newton
Chelsea Norfolk
Dedham Sharon
Dover Sherborn
Framingham Somerville
Holliston Stoneham
Hopkinton Sudbury
Note: Boston shall be defined to include Allston, Brighton, Charleston,
Dorchester, East Boston, Hyde Park, Jamaica Plain, Mattapan, Roslindale,
South Boston and West Roxbury.
Note: The parties, by mutual agreement, may expand the Relevant Market to
include the municipalities of Cambridge, Belmont, Concord, Wellesley,
Norwood, Braintree, Quincy and Weymouth.
Exhibit C-1
PAYMENT FOR USE OF BECOCOM FACILITIES
Carrier shall pay to BecoCom, each quarter during the Term, the following
amounts:
1. A Right-of-Way (ROW) use fee calculated as follows:
a. Distribution Poles:
o $10.37 per attachment per year.
o rate subject to change per the then applicable Aerial License
Agreement.
b. Overhead Transmission ROWs:
o $0.58 per ROW foot per year through 12/31/98, escalating at 2%
per year thereafter.
o 10 year minimum term.
o no rate changes for duration of minimum term. Thereafter, rates
shall be recalculated with the same methodology in which the
initial rates were calculated, subject to any applicable change
in law or regulation.
c. Underground Conduits:
o $0.86 per conduit foot per year through 12/31/98, escalating at
2% per year thereafter.
o applicable to BECO conduits not constructed at the request and
expense of Carrier.
o 10 year minimum term.
o no rate changes for duration of minimum term. Thereafter, rates
shall be recalculated with the same methodology in which the
initial rates were calculated, subject to any applicable change
in law or regulation.
2. The amount of all property taxes directly attributable to the Facilities
described in Sections 10(a) and 10(c).
3. Any other fees, charges, costs or expenses directly related to the BecoCom
Facilities.
4. Reasonable charges for general and administrative costs incurred by BecoCom
with respect to the BecoCom Facilities.
BecoCom and its Affiliates shall use their best efforts to minimize the
amounts provided for in clauses (3) and (4) above.
2
Exhibit C-2
PAYMENT FOR OPERATION AND MAINTENANCE
1. (a) For so long as BecoCom or one of its Affiliates is a member of
Carrier or a stockholder of Carrier or its Affiliates (or, if longer, 3 years
after the Effective Date), Carrier shall pay to BecoCom the actual cost of
operating and maintaining the Facilities described in Section 10(c) (all of
which shall be documented and reasonably efficient and justified); and
(b) After the later of (A) the 3rd anniversary of the Effective Date and
(B) the date on which one of BecoCom or its Affiliates is no longer a member of
Carrier or a stockholder of Carrier or its Affiliates, Carrier shall pay to
BecoCom the actual cost of operating and maintaining the Facilities described in
Section 10(c) plus 25% of such actual cost.
2. The charge for operations and maintenance shall be proportionately
reduced to reflect the use thereof by parties other than Carrier (including
BecoCom and its Affiliates).
Exhibit D
COMPENSATION FOR CONSTRUCTION OF
NEW BECOCOM CONSTRUCTED FACILITIES
For each Project, Carrier shall pay to BecoCom (a) a one-time, lump-sum
payment for Cost of Construction as follows:
Upon the initiation of Work on each Project, there shall be established a
Cost of Construction for such Project. The Cost of Construction shall equal the
actual cost of the Work as set forth in the Scope of Work, provided that if, at
any time any Project commences after July 1, 1998, Carrier has committed to
fewer than 10,000 miles to be subject to this Agreement (including such Project
and Existing BecoCom Facilities), the Cost of Construction for such Project
shall be multiplied by a factor determined as follows:
Miles Subject to this Agreement Multiplier
------------------------------- ----------
8,500 to 10,000 1.25
6,500 to 8,499 1.50
4,500 to 6,499 2.00
2,500 to 4,499 2.50
500 to 2,499 3.00
below 500 4.00
The Cost of Construction shall include any costs incurred beyond the Scope of
Work with the consent of Carrier. The amount determined pursuant to this Exhibit
D will be proportionately reduced if BecoCom or its Affiliates construct, in
connection with the Project, any Facilities for use by any party other than
Carrier.
Exhibit E
EXISTING OBLIGATIONS
1. Agreement between BECO and Teleport Communications Group ("TCG"),
dated 11/29/95.
2. Agreement between BECO and TCG, dated 4/30/96.
3. Agreement between BECO and TCG, dated 8/21/96.
4. Agreement between BECO and TCG, dated 9/1/96.
5. Agreement between BECO and Metropolitan Fiber System, dated 11/30/93.
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of this 17th day of
June, 1997 by and among RCN Operating Services, Inc., a New Jersey corporation
("RCN Operating"), BecoCom, Inc., a Massachusetts corporation ("BecoCom"), and
RCN-BecoCom, LLC, a Massachusetts limited liability company (the "Company").
WHEREAS, RCN Telecom Services of Massachusetts, Inc., a Massachusetts
corporation ("RCN-Sub"), and BecoCom have entered into that certain Amended and
Restated Operating Agreement of the Company of even date herewith (the
"Operating Agreement"), setting forth the terms and conditions that will govern
the operation of the Company; and
WHEREAS, Boston Edison Company, a Massachusetts corporation, and C-Tec
Corporation, a Delaware corporation, have each executed instruments of adherence
with respect to certain provisions hereof; and
WHEREAS, the Company desires to retain RCN Operating to perform certain
management services for the Company, upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Retention. The Company hereby retains RCN Operating, and RCN Operating
hereby agrees, to perform management services for the Company, upon the terms
and subject to the conditions set forth in this Agreement. RCN Operating shall,
at all times, use its best efforts in performing its obligations under this
Agreement.
2. Term. (a) The term of this Agreement (the "Term") shall commence on the
date hereof and unless extended or sooner terminated in accordance with this
Section 2 or Section 11 hereof, continue until December 31, 2001.
(b) The Term shall automatically be extended for successive three year
periods unless, no later than 90 days prior to the end of the initial five-year
Term or any three-year extension thereof, BecoCom, on behalf of the Company,
gives written notice of its objection (the "Objection Notice") to RCN
Operating's continued service as manager (the "Manager"). Such Objection Notice
shall include a proposal for a new manager of the Company's business (the "New
Manager") and a description of the terms and conditions under which such New
Manager would be retained.
(c) Upon RCN Operating's receipt of the Objection Notice, RCN Operating
shall have 30 days to either (i) accept the New Manager proposed by BecoCom,
(ii) propose its own New Manager by written notice to BecoCom, which shall
include a description of the terms and conditions under which such New Manager
would be retained, or (iii) insist on remaining as Manager. If RCN Operating
elects to take either of the actions set forth in clauses (ii) or (iii) above,
RCN Operating and BecoCom shall have 30 days to resolve the dispute. If RCN
Operating and BecoCom cannot resolve the dispute within such 30 days, the party
which, together with its respective Affiliates (as defined in the Operating
Agreement), has the lower Investment Percentage (as defined in the Operating
Agreement) (the "Minority Member") shall have the right to sell to the party
with the higher Investment Percentage (the "Majority Member"), and the Majority
Member shall have the obligation to purchase, the Minority Member's membership
interest ("Interest") in the Company at a price to be determined as follows
(provided that RCN Operating and its Affiliates shall not have such right to
sell if they become a Minority Member because of a failure to satisfy an
obligation to make capital contributions in accordance with the Operating
Agreement):
(i) Selection of Appraisers. Each of RCN-Sub and BecoCom shall
designate by written notice to the Company and each other a firm
of recognized national standing familiar with appraisal techniques
applicable to assets of the type being evaluated to serve as an
appraiser (an "Appraiser") pursuant to this Section 2 (the firms
designated by RCN-Sub and BecoCom being referred to herein as
"RCN-Sub Appraiser" and the "BecoCom Appraiser," respectively)
within five business days after the failure to reach agreement in
accordance with the terms of this paragraph (c). In the event that
either Appraiser is not designated within the foregoing time
period, the other Appraiser will serve as the only Appraiser, and
its appraisal will be binding on both RCN-Sub and BecoCom for
purposes of this paragraph (c).
(ii) Evaluation Procedures. Each Appraiser shall be directed to
determine the fair market value (the "Fair Market Value") of the
Minority Member's Interest Each Appraiser will also be directed to
deliver a certificate (an "Appraiser's Certificate") setting
forth such Appraiser's valuation of the Minority Member's Interest
to both RCN-Sub and BecoCom on or before the 30th day after their
respective designation (the "Certificate Date"), upon the
conclusion of its evaluation, and each Appraiser's Certificate
once delivered may not be retracted or modified in any respect
Each Appraiser will keep confidential all information disclosed by
the Company in the course of conducting its evaluation, and, to
that end, will execute such customary documentation as the Company
may reasonably request with respect to such confidentiality
obligation. Each of RCN-Sub and BecoCom will cooperate in causing
the
- 2 -
Company to provide each Appraiser with such information within the
Company's possession that may be reasonably requested in writing
by the Appraiser for purposes of its evaluation hereunder. Each of
RCN-Sub and BecoCom shall have full access to each Appraiser's
work papers. Each Appraiser will be directed to comply with the
provisions of this Section 2, and to that end each party will
provide to its respective Appraiser a complete and correct copy of
this Section 2 (and the definitions of capitalized terms used in
this Section 2 that are defined elsewhere in this Agreement).
(iii) Fair Market Value Determination. The Fair Market Value of the
Minority Member's Interest shall be determined on the basis of the
Appraisers' Certificates in accordance with the provisions of this
subparagraph (iii), provided, that there shall be no "controlling
interest premium" if the Majority Member's Interest has a Sharing
Ratio of less than 66 2/3% nor any "minority interest discount" if
the Minority Member's Interest has a Sharing Ratio of greater than
33 1/3%. The higher of the values set forth on the Appraisers'
Certificates is hereinafter referred to as the "Higher Value," and
the lower of such values is hereinafter referred to as the "Lower
Value." If the Higher Value is not more than 110% of the Lower
Value, the Fair Market Value of the Minority Member's Interest
will be the arithmetic average of the Higher Value and the Lower
Value. If the Higher Value is more than 110% of the Lower Value, a
third appraiser shall be selected in accordance with the
provisions of subparagraph (iv) below, and the Fair Market Value
of the Minority Member's Interest will be determined in accordance
with the provisions of subparagraph (v) below.
(iv) Selection of and Procedures for Third Appraiser. If the Higher
Value is more than 110% of the Lower Value, within seven days
thereafter the RCN-Sub Appraiser and the BecoCom Appraiser shall
agree upon and jointly designate a third Appraiser (the "Third
Appraiser"). If the RCN-Sub Appraiser and the BecoCom Appraiser
cannot agree upon a Third Appraiser within seven days, the Third
Appraiser shall be chosen by the American Arbitration Association
in Boston, Massachusetts. The RCN-Sub Appraiser and BecoCom
Appraiser shall direct the Third Appraiser to determine the Fair
Market Value of the Minority Member's Interest (the "Third Value")
in accordance with the provisions of subparagraph (ii) above, and
to deliver to both RCN-Sub and BecoCom an Appraiser's Certificate
on or before the 30th day after the designation of such Appraiser
hereunder. The Third Appraiser
- 3 -
will be directed to comply with the provisions of this Section 2,
and to that end of the parties will provide to the Third Appraiser
a complete and correct copy of this Section 2 (and the definitions
of capitalized terms used in this Section 2 that are defined
elsewhere in this Agreement).
(v) Alternative Determination of Fair Market Value. Upon the delivery
of the Appraiser's Certificate of the Third Appraiser, the Fair
Market Value of the Minority Member's Interest will be determined
as provided in this subparagraph (v). The Fair Market Value of the
Minority Member's Interest will be (w) the Lower Value, if the
Third Value is less than the Lower Value, (x) the Higher Value, if
the Third Value is greater than the Higher Value, or (y) the
arithmetic average of the Third Value and either the Higher Value
or the Lower Value (whichever is closer to the Third Value) if the
Third Value fails within the range between (and including) the
Lower Value and the Higher Value.
(vi) Costs. Each of RCN-Sub and BecoCom will bear the cost of the
Appraiser designated by it or on its behalf. If the Higher Value
is not more than 115% of the Lower Value, or if the Higher Value
and the Lower Value are equally close to the Third Value, each of
RCN-Sub and BecoCom shall bear 50% of the cost of the Third
Appraiser, if any; otherwise, the party whose Appraiser's
determination of Fair Market Value of the Minority Member's
Interest is further away from the Third Value shall bear the
entire costs of the Third Appraiser. Each of RCN-Sub and BecoCom
agree to pay when due the fees and expenses of the Appraisers in
accordance with the foregoing provisions.
(vii) Conclusive Determination. To the fullest extent provided by law,
the determination of the Fair Market Value of the Minority
Member's Interest made pursuant to this Section 2 shall be final
and binding on the Company, RCN-Sub and BecoCom, and such
determination shall not be appealable to or reviewable by any
court or arbitrator.
(d) RCN Operating shall continue to manage the Company, on the terms set
forth herein, until such time as BecoCom, on behalf of the Company, furnishes an
Objection Notice to RCN Operating, pursuant to this Section 2, and any dispute
in connection therewith is resolved.
(e) In the event that RCN-Sub and its Affiliates which own an Interest in
the Company sell, assign, transfer or otherwise dispose of such Interest (a
"Sale") other than to a
- 4 -
Wholly-Owned Affiliate (as defined in the Operating Agreement) prior to the
expiration of the Term, the Term shall terminate upon the effective date of such
Sale (the "Effective Date"), unless BecoCom elects, on behalf of the Company, to
extend the Term, in which case the Term shall continue for an additional two
years after the Effective Date.
3. Services.
(a) Scope of Services. Subject to the terms and conditions of this
Agreement and the Operating Agreement including, without limitation, Sections
7.1, 7.8 and 7.10 thereof, RCN Operating shall, on a timely and efficient basis,
manage, and shall have sole power to manage, all aspects of the Company's day to
day operations consistent with the provisions of the Operating Agreement RCN
Operating shall have the power and authority to do those things necessary or, in
RCN Operating's judgment appropriate to conduct operate and manage the business
of the Company, including, but not limited to, the power and authority to:
(i) direct, endorse and deposit all checks and other funds, collect
revenues, and take such other actions (including the establishment
of the Company bank accounts with signatories designated by RCN
Operating) regarding the collection and handling of checks and
other funds owed, owned or held by or on behalf of the Company;
(ii) produce checks and pay all obligations of the Company (by check or
otherwise), including without limitation, normal operating
expenses, extraordinary expenses, required interest and principal
payments on debt and obligations owed to RCN Operating hereunder;
(iii) negotiate or renegotiate and execute business contracts for the
conduct of the Company's business operations and construction and
maintenance activities connected therewith except for this
Agreement and the other Basic Agreements (as defined in the
Operating Agreement);
(iv) subject to the last sentence of this Subsection 3(a), resolve
contractual and other disputes which may arise in the ordinary
course of the Company's business, except for any dispute relating
to the Basic Agreements;
(v) retain attorneys, engineers, consultants and other professionals;
(vi) establish and maintain books and records to enable financial
statements to be prepared, as and when required, in accordance
with generally accepted accounting principles;
- 5 -
(vii) under the direction of the Tax Matters Partner (as defined in the
Operating Agreement) prepare, or cause to be prepared, and file
all periodical and other required reports of governmental and
regulatory agencies, including tax returns, and perform all
related administrative functions;
(viii) perform all aspects of managing the daily operation of the
Company's business, including, without limitation, engaging,
instructing and supervising all personnel necessary in the
judgment of RCN Operating, and establishing and maintaining all
records relative to the operation thereof;
(ix) select and price all services provided or to be provided to
customers of the Company;
(x) oversee all advertising, marketing and sales and public relations
programs, engage and appoint advertising, marketing and public
relations agencies and consultants;
(xi) execute all instruments of any kind or character which, in RCN
Operating's discretion, shall be deemed necessary or appropriate
in connection with the conduct, operation and management of the
Company's business, including the procurement of insurance of such
types and in such amounts as RCN Operating shall deem appropriate;
(xii) maintain continuing contact with federal, state and local
governmental officials regarding any rights and licenses of the
Company which require periodic review and renegotiation; and
(xiii) perform any and all other acts as may reasonably be necessary or
appropriate to carry out the duties and responsibilities of RCN
Operating contemplated hereunder, whether or not specifically
enumerated herein.
Notwithstanding anything to the contrary in this Subsection 3(a), RCN
Operating's powers and authority shall not extend to any company action which,
pursuant to applicable law or the Operating Agreement, requires the approval or
authorization of the Company's Members (as defined in the Operating Agreement),
including, without limitation, any "Fundamental Business Actions" delineated in
Section 7.8 of the Operating Agreement.
(b) Access. RCN Operating and BecoCom shall have full and unrestricted
access to all books and records of the Company and its subsidiaries, if any,
including without limitation:
- 6 -
(i) All contracts, agreements, governmental and regulatory filings;
(ii) All accounting documentation including financial statements, books
and records, audit reports and other documents;
(iii) All tax returns, both federal and state, and related schedules;
(iv) All debt agreements or instruments, including pledge and security
agreements and related documents;
(v) All customer lists, billing records and histories, accounts
receivable records and other reports used in connection with the
Company's business;
(vi) All minute books;
(vii) All personnel records;
(viii) All files relative to both pending and threatened litigation
proceedings, including management's assessment of liability;
(ix) All franchise documents and other governmental authorizations
relative to the Company's business;
(x) A complete list of all real property owned or leased and a
detailed schedule of fixed assets; and
(xi) Any other contracts, documents, statements, returns, lists, books,
files or documentation deemed necessary by RCN Operating in order
to fulfill its obligations under this Agreement.
(c) RCN Operating Personnel. RCN Operating, at its option, may furnish the
services of any RCN Operating personnel or Affiliates as RCN Operating may from
time to time deem necessary or appropriate to perform its obligations hereunder
and such personnel or Affiliates shall have the duties assigned to them by RCN
Operating.
(d) Employees of RCN Operating; No Benefits. The parties acknowledge and
agree that: (i) by furnishing the services of RCN Operating personnel to the
Company, RCN Operating is functioning as an independent contractor to the
Company; (ii) the personnel provided by RCN Operating shall remain employees of
RCN Operating, and RCN Operating retains the right (subject to the terms hereof)
to direct and control the performance of all RCN Operating employees; (iii) RCN
Operating is solely responsible for the payment of salary, employee benefits and
all other compensation due to RCN Operating personnel rendering services to the
Company, and for all applicable federal, state and local tax withholding with
respect to compensation and
- 7 -
benefits payable to them under this Agreement or otherwise; and (iv) the
compensation to RCN Operating set forth in Section 4 shall be exclusive and RCN
Operating personnel shall not participate in or be eligible to participate in
any compensation or benefit plan or perquisite of the Company.
(e) Notwithstanding anything to the contrary, if BecoCom believes that it
is capable of providing to the Company certain support and administrative
services in a more efficient and economical manner than RCN Operating or any
third party provider chosen by RCN Operating, then RCN Operating and BecoCom
shall consider in good faith the use of BecoCom or its Affiliates as a provider
of such services.
(f) Any contract between RCN Operating and any of its Affiliates for the
provision of services to the Company shall be on terms no less favorable to the
Company than could be obtained from an unaffiliated third party.
4. Fees. Fees, including incentive compensation, for RCN Operating's
services hereunder shall be determined as part of the annual budgeting process
for the Company.
(a) From the date hereof until December 31, 1998, RCN Operating shall be
reimbursed by the Company only for all of its reasonable direct and indirect
costs allocable in good faith to the Company in connection with its provision of
management services hereunder provided, however, that RCN Operating and its
Affiliates shall use their best efforts to minimize such indirect allocable
costs; the Company and BecoCom shall have reasonable access to the books and
records of RCN Operating to verify such costs.
(b) Not later than October 1,1998, RCN Operating and the Company will enter
into discussions in order to reach an agreement on performance-based incentive
compensation to be effective starting January 1, 1999 through the end of the
Term and to be paid to RCN Operating as earned in addition to the reimbursement
of RCN Operating's reasonable direct and indirect costs. Such performance-based
incentive compensation shall be based on such factors as number of subscribers,
operating cash flow, and other or different factors as the parties shall agree.
The amounts payable pursuant to this Section 4 shall constitute the exclusive
compensation payable to RCN Operating for its services provided under this
Agreement and for the services provided by the RCN Operating personnel
hereunder, and no other compensation or consideration shall be payable to RCN
Operating or any other individual provided by RCN Operating in connection with
the services provided hereunder, except as otherwise expressly provided in this
Agreement.
5. Expense Reimbursement. To the extent not otherwise reimbursed pursuant
to Section 4 hereof, RCN Operating shall be entitled to be reimbursed by the
Company from time to time (but not more frequently than monthly) for reasonable
out-of-pocket business expenses incurred by its employees and others working on
its behalf including expenses in connection
- 8 -
with bona fide business travel on behalf of the Company, upon presentation from
time to time of an itemized written account of such expenses.
6. Representations and Warranties. Each of the parties hereto represents
and warrants to the other that, as of the date hereof:
(a) it is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is formed;
(b) it has the power and authority to execute, deliver and perform its
obligations under this Agreement; and such execution, delivery, performance and
consummation have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by it and constitutes a valid and
legally binding obligation of it, enforceable against it in accordance with its
terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or other laws affecting creditors'
rights generally or by the availability of equitable remedies;
(c) the execution, delivery and performance by it of this Agreement (i) do
not contravene any provision of its organizational documents; (ii) do not
violate or conflict with any law, regulation or contractual restriction to which
it is subject, and (iii) shall not result in the creation of, or violate or
conflict with, any lien, mortgage, pledge, security interest or any other
encumbrance upon or with respect to any of its properties;
(d) no consent, order, approval or authorization or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by it of this Agreement
and the consummation of the transactions contemplated hereby; and
(e) there is no action, suit, proceeding or investigation pending, or, to
its knowledge, threatened, against or affecting it or its properties, assets or
business, in any court or before or by any governmental department, board,
agency or instrumentality, or any arbitrator, that materially affects or impairs
its ability to enter into this Agreement, or to consummate the transactions
contemplated hereby.
7. Representation and Warranty of RCN Operating. RCN Operating represents
and warrants to the Company that it has the requisite knowledge, experience and
resources to fulfill its obligations under this Agreement.
8. Covenants of the Company. The Company hereby covenants that it will, and
will cause its officers, managers, agents and representatives to, cooperate
fully with RCN Operating in its performance of its obligations under this
Agreement and to otherwise act at all times in a manner consistent with this
Agreement.
- 9 -
9. Indemnification.
(a) Subject to paragraph (c) below, the Company shall indemnify RCN
Operating and all of its Affiliates and their respective officers, directors,
shareholders, employees, representatives, agents or consultants performing
services for or on behalf of the Company (collectively, the "Indemnified
Parties") who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or on behalf
of RCN Operating or BecoCom) caused by, relating to, based upon or arising out
of such Indemnified Party's acceptance of or the performance or non-performance
of obligations under this Agreement against expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or it in connection with such action, suit or
proceeding if he or it acted in good faith and in a manner he or it reasonably
believed to be in or not opposed to the best interest of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or its conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnified Party did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful, provided, however, that such
indemnification shall not be applicable to any action, suit or proceeding in
which it is finally adjudicated that any damages awarded in, or liability
incurred as a result of the facts and circumstances underlying, such action,
suit or proceeding were directly and primarily caused by the gross negligence of
the Indemnified Party.
(b) Subject to paragraph (c) below, the Company shall indemnify any
Indemnified Party who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or on behalf of RCN
Operating or BecoCom to procure a judgment in its favor by reason of such
Indemnified Party's acceptance of or the performance or non-performance of
obligations under this Agreement against expenses (including reasonable
attorneys' fees) actually and reasonably incurred by him or it in connection
with the defense or settlement of such action or suit if he or it acted in good
faith and in a manner he or it reasonably believed to be in or not opposed to
the best interests of the Company; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
(c) Any indemnification under this Section 9 (unless ordered by a court)
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of the Indemnified Party is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraph (a) above. Such determination shall be made by independent legal
counsel in a written opinion. To the extent, however, that an
- 10 -
Indemnified Party has been successful on the merits or otherwise in defense of
any action, suit or proceeding described above, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
reasonable attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
(d) For purposes of any determination under this Section 9, a person shall
be deemed to have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, or, with respect to
any criminal action or proceeding, to have had no reasonable cause to believe
his conduct was unlawful, if his action is based on the records or books of
account of the Company or another enterprise, or on information supplied to him
by the officers of the Company or another enterprise in the course of their
duties, or on the advice of legal counsel for the Company or another enterprise
or on information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this paragraph (d) shall mean any
entity which such person is or was serving at the request of the Company.
(e) Notwithstanding the foregoing, any Indemnified Party may apply to any
court of competent jurisdiction in the Commonwealth of Massachusetts for
indemnification to the extent otherwise permissible under paragraph (a) above by
reason of the fact that he has met the applicable standard of conduct. If
successful, in whole or in part, the Indemnified Party seeking indemnification
shall also be entitled to be paid the expense of prosecuting such application.
(f) Expenses incurred by an Indemnified Party in defending or investigating
a threatened or pending action, suit or proceeding shall be paid by the Company
in advance of the final disposition thereof upon receipt of an undertaking to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Company as authorized in this Section 9.
(g) The indemnification and advancement of expenses in this Section 9 shall
not be deemed exclusive of any other rights which may apply, it being the policy
of the Company that indemnification of the persons specified in paragraph (a)
above shall be made to the fullest extent permitted by law. The provisions of
this Section 9 shall not preclude the indemnification of any person who is not
specified herein but whom the Company has the power or obligation to indemnify
under the Act, or otherwise.
(h) The indemnification and advancement of expenses provided by this
Section 9 shall, unless otherwise provided when authorized or ratified, inure to
the benefit of the heirs, executors and administrators of an Indemnified Party.
10. Confidentiality. Each of the parties hereto will hold, and will use its
reasonable, good faith efforts to cause its respective shareholders, partners,
members, directors, officers, employees, accountants, counsel, consultants,
agents and financial or other advisors (collectively
- 11 -
"Agents") to hold, in confidence, all information (whether oral or written),
including this Agreement and the documents contemplated herein, concerning the
transactions contemplated by this Agreement furnished to such party by or on
behalf of any other party in connection with such transactions, unless legally
compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process, or by order of a court or tribunal of
competent jurisdiction, or in order to comply with applicable rules or
requirements of any stock exchange, government department or agency or other
regulatory authority, or by requirements of any securities law or regulation or
other legal requirement) to disclose any such information or documents, and
except to the extent that such information or documents can be shown to have
been (a) previously known on a nonconfidential basis by such party, (b) in the
public domain through no fault of such party or (c) acquired by such party on a
nonconfidential basis from sources not known by such party to be bound by any
obligation of confidentiality in relation thereto. Notwithstanding the foregoing
provisions of this Section 10, each party may disclose such information to its
Agents in connection with the transactions contemplated by this Agreement so
long as such Agents are informed by such party of the confidential nature of
such information and are directed by such party to treat such information
confidentially and to certain governmental agencies in connection with the
procurement of the governmental authorizations contemplated by this Agreement.
The obligation of each party to hold any such information in confidence shall be
satisfied if such party exercises the same care with respect to such information
as it would take to preserve the confidentiality of its own similar information.
If this Agreement is terminated, each party will, and will use its reasonable,
good faith efforts to cause its respective Agents and lenders to destroy or
deliver to the other party, upon request, all documents and other materials, and
all copies thereof, obtained by such party or on its behalf from the other party
hereto in connection with this Agreement that are subject to such confidence.
11. Termination.
(a) Either party may terminate this Agreement in the event of a Default (as
hereinafter defined) by the other (unless such default is caused by the party
seeking to terminate this Agreement), provided that the non-defaulting party so
advises the defaulting party in writing of the event of Default and the
defaulting party has not cured, nor commenced the diligent pursuit of the cure
of, the Default within 60 days after written notice thereof is received. Except
as otherwise provided by this Agreement, such termination shall be effective
upon the expiration of the 60 day period immediately following receipt of notice
of Default by the defaulting party.
(b) Termination regardless of cause or nature shall be without prejudice to
any other rights or remedies of the parties and shall be without liability for
any loss or damage occasioned thereby. Termination of this Agreement for any
cause shall not release either party hereto from any liability which at the time
of termination has already accrued to the other party hereto or which thereafter
may accrue in respect of any act or omission prior to termination, or from any
obligation which is expressly stated herein to survive termination.
(c) The term "Default" is defined to include: (i) the initiation of
bankruptcy or receivership proceedings with respect to a party (which are not
dismissed within 60 days),
- 12 -
execution of a general assignment for the benefit of creditors or any other
transfer or assignment of a similar nature or otherwise seeking relief under any
applicable bankruptcy reorganization, moratorium or similar debtor relief laws
(it being understood that the execution of any third-party financing agreements
shall not constitute a Default hereunder) or (ii) a material breach of any of
the other terms or conditions hereof.
12. General
(a) Amendment. No modification or amendment of, or waiver under, this
Agreement shall be valid unless in writing and signed by each of the parties
hereto.
(b) Binding Agreement; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement may be assigned by RCN Operating to any
of its Affiliates so long as RCN Operating remains bound by for the obligations
hereunder. This Agreement may not be assigned by the Company.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
conflicts-of-laws principles.
(d) Severability. If any term, provision, covenant or restriction herein is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
(e) Notices. All notices, requests and other communications hereunder shall
be deemed to have been duly delivered, given or made to or upon any party hereto
if in writing and delivered by hand against receipt, or by certified or
registered mail, postage prepaid, return receipt requested, or to a courier who
guarantees next business day delivery or sent by telecopy (with confirmation),
to such party at its address set forth below or to such other address as such
party may at any time, or from time to time, direct by notice given in
accordance with this Section 12(e).
If to RCN Operating:
c/o RCN Telecom Services, Inc.
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
and
- 13 -
C-TEC Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax: (609) 734-0974 and (609) 734-3830
Attention: Michael J. Mahoney and Raymond B. Ostroski, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attention: Stephen M Banker, Esq.
If to BecoCom:
800 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 424-2733
Attention: Richard S. Hahn, Vice President
Neven Rabadjija, Esq., Assistant General Counsel
with a copy to:
Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Fax: (617) 227-3732
Attention: Andrew B. White, Esq.
If to the Company:
RCN-BecoCom, LLC
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt, (ii) three business days after
such notice, request or other communication is sent if sent by certified or
registered mail, (iii) if sent by courier who guarantees next business day
delivery the business day next following the day such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied.
- 14 -
(f) Entire Agreement. This Agreement contains the entire understanding of
the parties hereto respecting the subject matter hereof and supersedes all prior
discussions and understandings.
(g) Specific Performance. The parties agree that irreparable damage will
result if this Agreement is not performed in accordance with its terms, and the
parties agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal with jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies that a party may have under this Agreement, at law or in equity.
(h) Interpretation. In the event of any dispute concerning the construction
or interpretation of this Agreement or any ambiguity hereof, there shall be no
presumption that this Agreement or any provision hereof be construed against the
party who drafted this Agreement.
(i) Enforcement. In the event of any material breach of this Agreement by
RCN Operating, BecoCom shall have the authority, acting as agent for the
Company, to enforce this Agreement against RCN Operating.
- 15 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RCN OPERATING SERVICES, INC.
By /s/ Michael J. Mahoney
----------------------------------
Name: Michael J. Mahoney
Title: President
RCN-BECOCOM, LLC
By /s/ Michael A. Adams
----------------------------------
Name: Michael A. Adams
Title: President of Technology &
Strategic Development
BECOCOM, INC.
By /s/ Richard A. Hahn
----------------------------------
Name: Richard A. Hahn
Title: President
- 16 -
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated as of the 17th day of June, 1997, by and between
C-TEC CORPORATION, a Delaware corporation ("C-TEC"), and BECOCOM, INC., a
Massachusetts corporation ("BecoCom").
WITNESSETH:
WHEREAS, RCN Telecom Services of Massachusetts, Inc., a Massachusetts
corporation and indirect wholly-owned subsidiary of C-Tec ("RCN-MA"), and
BecoCom have on the date hereof entered into that certain Amended and Restated
Operating Agreement (the "Operating Agreement") of RCN-BETG, LLC, a
Massachusetts limited liability company (the "Company"), which Operating
Agreement sets forth the terms and conditions that will govern the operation of
the Company and the relationship of RCN-MA and BecoCom as the members thereof;
WHEREAS, C-Tec intends to consummate a tax-free corporate reorganization
under Section 355 of the Code (the "C-Tec Reorganization"), pursuant to which,
among other things, all of the issued and outstanding shares of capital stock of
RCN Corporation, a Delaware corporation ("New RCN"), shall be distributed on a
pro rata basis to the then existing C-Tec stockholders (the "C-Tec
Stockholders"); and
WHEREAS, the parties have agreed that BecoCom shall have the right to
exchange all or a portion of its investment in the Company into equity of RCN or
C-Tec, and shall have certain other rights in connection therewith, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
(a) As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with, such Person.
"BecoCom Total Investment" means, as of any date of determination, the
aggregate dollar amount of all cash capital contributions, and the Agreed Value
of all non-cash capital contributions, made by BecoCom to the Company at any
time.
"BecoCom 1997 Appraised Value" means, as of the date of determination, the
product obtained by multiplying (i) the BecoCom 1997 Percentage, by (ii) the
then Company Appraised Value.
"BecoCom 1997 Cash Investment" means the aggregate dollar amount of cash
capital contributions made by BecoCom to the Company through December 31, 1997.
"BecoCom 1997 Exchange Amount" means an amount determined by BecoCom, up to
the amount of the BecoCom 1997 Cash Investment which, pursuant to the terms of
this Agreement, BecoCom elects, as the case may be, either to (i) exchange for
Registrable Securities, or (ii) require New RCN or C-Tec to purchase.
"BecoCom 1997 Non-Cash Investment" means the Agreed Value, of all non-cash
contributions made by BecoCom to the Company through December 31, 1997.
"BecoCom 1997 Percentage" means, as of the date of determination, a
percentage of to Membership Interest of BecoCom determined by dividing (i) the
BecoCom 1997 Exchange Amount, by (ii) the aggregate of (A) the BecoCom 1997
Total Investment, and (B) the RCN-MA 1997 Total Investment.
"BecoCom 1997 Total Investment" means to aggregate of (i) to BecoCom 1997
Cash Investment, and (ii) the BecoCom 1997 Non-Cash Investment.
"BecoCom Post-1997 Appraised Value" means, as of any date of determination,
the product obtained by multiplying (i) the BecoCom Post-1997 Percentage, by
(ii) the then Company Appraised Value.
"BecoCom Post-1997 Exchange Amount" means an amount determined by BecoCom,
up to the BecoCom Post-1997 Total Investment which, pursuant to the terms of
this Agreement, BecoCom elects as the case may be, either to (i) exchange for
Registrable Securities, or (ii) require New RCN or C-Tec to purchase.
"BecoCom Post-1997 Percentage" means, as of any date of determination, a
percentage of the Membership Interest of BecoCom determined by dividing (i) the
applicable BecoCom Post-1997 Exchange Amount, by (ii) the aggregate of (A) the
BecoCom Post-1997 Total Investment and (B) the RCN-MA Total Investment.
"BecoCom Post-1997 Total Investment" means, as of any date of
determination, the aggregate dollar amount of all cash capital contributions,
and the Agreed Value of all non-cash capital contributions, made by BecoCom to
the Company at any time, determined after deducting therefrom (i) the BecoCom
1997 Exchange Amount, to the extent actually exchanged, (ii) any prior BecoCom
Post-1997 Exchange Amount, to the extent actually exchanged, and (iii) the
dollar amount or Agreed Value of any capital contributions attributable to
portions of a Membership Interest previously disposed of by BecoCom (other than
the BecoCom 1997 Exchange Amount and any prior BecoCom Post-1997 Exchange
Amount).
2
"C-Tec Registrable Securities" means (i) the shares of C-Tec Stock issued
or issuable to BecoCom upon exchange by BecoCom of all or a portion of the
BecoCom 1997 Percentage or any BecoCom Post-1997 Percentage pursuant to Sections
2(c) or 2(d) hereof, and (ii) any securities issued or issuable with respect to
the securities referred to in the foregoing clause (i) by way of replacement,
stock dividend or stock split, or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation or other similar
corporate event
"C-Tec Stock" means the class or series of publicly-traded C-Tec capital
stock owned by the C-Tec Stockholders as of the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and to rules
and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission or any other
successor Federal agency then administering the Securities Act and the Exchange
Act.
"Company Appraised Value" means, as of the date of any Notice furnished by
BecoCom under Sections 2 or 3 hereof, the value of the Company determined in
accordance with the provisions of Section 4 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute then in force, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"IRS" means the Internal Revenue Service.
"IRS Restrictions" means any restrictions under Section 355 of the Code, or
the regulations, rulings, revenue procedures or other pronouncements relating
thereto, and any representations or other statements made to the IRS in
connection with obtaining a private letter ruling (the "Ruling") with respect to
the C-Tec Reorganization which may restrict the amount of New RCN Registrable
Securities which may be issued, without giving rise to the possibility of a
revocation of any aspect of the Ruling, to BecoCom pursuant to Sections 2(a) and
2(b) hereof.
"New RCN Registrable Securities" means (i) the shares of New RCN Stock
issued or issuable to BecoCom upon exchange by BecoCom of all or a portion of
the BecoCom 1997 Percentage or any BecoCom Post-1997 Percentage pursuant to
Sections 2(a) or 2(b) hereto which securities shall be of the same class of
securities of New RCN issued to the C-Tec Stockholders, including Kiewit Telecom
Holdings, Inc., and (ii) any securities issued or issuable with respect to the
securities referred to in the foregoing clause (i) by way of replacement, stock
dividend or stock split, or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation or other similar
corporate event.
3
"New RCN Stock" means the securities of New RCN issued to the C-Tec
Stockholders pursuant to the C-Tec Reorganization.
"Notice" means any of the following, as applicable: (i) the 1997 New RCN
Exchange Notice under Section 2(a) hereof (in the case of BecoCom electing to
determine the number of New RCN Registrable Securities to be issued to it under
said Section 2(a) in accordance with clause (ii) thereof), (ii) any Post-1997
New RCN Exchange Notice under Section 2(b) hereof, (iii) the 1997 C-Tec Exchange
Notice under Section 2(c) hereof (in the case of BecoCom electing to determine
the number of C-Tec Registrable Securities to be issued to it under said Section
2(c) in accordance with clause (ii) thereof, (iv) my Post-1997 C-Tec Exchange
Notice under Section 2(d) hereof, (v) a New RCN Put Notice under Section 3(a)
hereof, or (vi) the C-Tec Put Notice under Section 3(b) hereof.
"Person" means any natural person, corporation, limited liability company,
general partnership, limited partnership, joint venture, trust, business trust,
estate or other entity.
"RCN-MA Total Investment" means, as of any date of the aggregate dollar
amount of all cash contributions, and the Agreed Value of all non-cash
contributions made by RCN-MA to the Company at any time.
"RCN-MA 1997 Total Investment" means the aggregate dollar amount of all
cash contributions, and the Agreed Value of all non-cash contributions, made by
RCN-MA to the Company through December 31, 1997.
"Registrable Securities" means the C-Tec Registrable Securities or the New
RCN Registrable Securities, as the case may be.
"Registrant" means either of C-Tec or, after the consummation of the C-Tec
reorganization, New RCN, as the case may be, effecting the registration of such
Registrable Securities designated by BecoCom pursuant to Section 5 hereof.
"Related Securities" means any securities similar or identical to any of
the Registrable Securities, including, without limitation, all options,
warrants, rights and other securities convertible into, or exchangeable or
convertible for, Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute then in force and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Securities Holders" means the holders of securities of New RCN or C-Tec,
other than BecoCom.
(b) All capitalized terms otherwise used herein without definition shall
have the meanings ascribed to such terms in the Operating Agreement.
4
2. Exchange Rights.
(a) Exchange of BecoCom 1997 Percentage to New RCN Registrable Securities.
In the event that the C-Tec Reorganization is consummated, BecoCom shall have
the right to sell to New RCN, at the time hereinafter provided, all or any
portion of the BecoCom 1997 Percentage, in exchange for such number of New RCN
Registrable Securities determined as hereinafter provided (such sale being
referred to herein as the "1997 New RCN Exchange"). Subject to any limitations
on account of the IRS Restrictions, the number of New RCN Registrable Securities
to be issued to BecoCom in exchange for the BecoCom 1997 Percentage being
exchanged pursuant to this Section 2(a) shall be determined, at BecoCom's option
(which option shall be selected by BecoCom in the 1997 New RCN Exchange Notice
(as hereinafter defined)), by dividing either (i)(A) the BecoCom 1997 Exchange
Amount, by (B) ninety-five percent (95%) of the average closing trading price of
the New RCN Stock during the initial ninety (90) day trading period (the
"Initial Trading Period") of such stock, or (ii)(A) the BecoCom 1997 Appraised
Value, by (B) the closing trading price of the New RCN Stock on the date of the
1997 New RCN Exchange Notice. If BecoCom elects to consummate the 1997 New RCN
Exchange, it shall furnish written notice thereof (the "1997 New RCN Exchange
Notice") to New RCN at any time within the thirty (30) day period immediately
following the end of the Initial Trading Period, and the closing of the 1997 New
RCN Exchange shall occur at the principal offices of the Company, (x) in the
case of BecoCom electing to determine the number of New RCN Registrable
Securities to be issued to it in accordance with clause (i) of this Section
2(a), within ten (10) days after the date of the 1997 New RCN Exchange Notice
and (y) in the case of BecoCom electing to determine the number of New RCN
Registrable Securities to be issued to it in accordance with clause (ii) of this
Section 2(a), within ten (10) days after the determination of the Company
Appraised Value to be utilized in the determination of the BecoCom 1997
Appraised Value; provided, however, that notwithstanding the foregoing, in no
event shall such closing occur prior to December 31, 1997. At the closing of the
1997 New RCN Exchange, New RCN shall issue BecoCom one or more stock
certificates representing the New RCN Registrable Securities to be issued to
BecoCom pursuant to this Section 2(a), and BecoCom shall execute and deliver to
New RCN all such documents necessary to evidence the exchange of the BecoCom
1997 Percentage pursuant to this Section 2(a).
(b) Exchange of BecoCom Post-1997 Percentage to New RCN Registrable
Securities. In the event that the C-Tec Reorganization is consummated, BecoCom
shall have the right to sell to New RCN from time to time, at the times
hereinafter provided, any BecoCom Post-1997 Percentage, in exchange for such
number of New RCN Registrable Securities determined as hereinafter provided (any
such sale being referred to herein as a "Post-1997 New RCN Exchange"); provided,
however, that any BecoCom Post-1997 Percentage to be exchanged pursuant to this
Section 2(b) must utilize, in the determination thereof, a minimum BecoCom
Post-1997 Exchange Amount of the lesser of (i) $50,000,000, or (ii) the then
BecoCom Post-1997 Total Investment; provided, however, that notwithstanding the
foregoing, in all instances BecoCom shall be permitted to retain in the
5
Company and not exchange $1 of the BecoCom Post-1997 Total Investment. Subject
to any limitations on account of the IRS Restrictions, the number of New RCN
Registrable Securities to be issued to BecoCom in exchange for any BecoCom
Post-1997 Percentage being exchanged pursuant to this Section 2(b) shall be
determined by dividing (A) the BecoCom Post-1997 Appraised Value, by (B) the
average closing trading price of the New RCN Stock during the ninety (90) day
period immediately following the date of the applicable Post-1997 New RCN
Exchange Notice (as hereinafter defined) furnished by BecoCom to New RCN in
connection therewith. If BecoCom elects to consummate a Post-1997 New RCN
Exchange, it shall only be permitted to do so once during the twenty-four (24)
month period immediately following the date of the consummation of the C-Tec
Reorganization, and once during each successive twenty-four (24) month period
thereafter (each such twenty-four (24) month period being referred to herein as
a "Post-1997 New RCN Exchange Period"). BecoCom shall furnish written notice of
any such election (a "Post-1997 New RCN Exchange Notice") to New RCN at any time
within a Post-1997 New RCN Exchange Period, and the closing of the Post-1997 New
RCN Exchange relating thereto shall occur at the principal offices of the
Company within ten (10) days after the determination of the Company Appraised
Value to be utilized in the determination of the BecoCom Post-1997 Appraised
Value. At the closing of any Post-1997 New RCN Exchange, New RCN shall issue
BecoCom one or more stock certificates representing the New RCN Registrable
Securities to be issued to BecoCom pursuant this Section 2(b), and BecoCom shall
execute and deliver to New RCN all such documents necessary to evidence the
exchange of such BecoCom Post-1997 Percentage pursuant to this Section 2(b).
(c) Exchange of BecoCom 1997 Percentage to C-Tec Registrable Securities. In
the event that the C-Tec Reorganization is not consummated by June 30, 1998 (the
"C-Tec Reorganization Termination Date"), BecoCom shall have the right to sell
to C-Tec, at the time hereinafter provided, all or any portion of the BecoCom
1997 Percentage, in exchange for such number of C-Tec Registrable Securities
determined as hereinafter provided (such sale being referred to herein as the
"1997 C-Tec Exchange). The number of C-Tec Registrable Securities to be issued
to BecoCom in exchange for the portion of the BecoCom 1997 Percentage being
exchanged pursuant to this Section 2(c) shall be determined, at BecoCom's option
(which option shall be selected by BecoCom in the 1997 C-Tec Exchange Notice (as
hereinafter defined)), by dividing either (i)(A) the BecoCom 1997 Exchange
Amount, by (B) ninety-five percent (95%) of the average closing trading price of
the C-Tec Stock during the ninety (90) day trading period immediately following
the C-Tec Reorganization Termination Date, or (ii)(A) the BecoCom 1997 Appraised
Value, by (B) the closing trading price of the C-Tec stock on the date of the
1997 C-Tec Exchange Notice. If BecoCom elects to consummate to 1997 C-Tec
Exchange, it shall furnish written notice thereof (the "1997 C-Tec Exchange
Notice") to C-Tec at any time within the thirty (30) day period immediately
following the C-Tec Reorganization Termination Date and the closing of the 1997
C-Tec Exchange shall occur at to principal offices of the Company (x) in the
case of BecoCom electing to determine the number of C-Tec Registrable Securities
to be issued to it in accordance with clause (i) of this Section 2(c), within
ten (10) days after the
6
date of the 1997 C-Tec Exchange Notice, and (y) in the case of BecoCom electing
to determine the number of C-Tec Registrable Securities to be issued to it in
accordance with clause (ii) of this Section 2(c), within ten (10) days after the
determination of the Company Appraised Value to be utilized in the determination
of the BecoCom 1997 Appraised Value. At the closing of the 1997 C-Tec Exchange,
C-Tec shall issue BecoCom one or more stock certificates representing the C-Tec
Registrable Securities to be issued to BecoCom pursuant to this Section 2(c),
and BecoCom shall execute and deliver to C-Tec all such documents necessary to
evidence the exchange of the BecoCom 1997 Percentage pursuant to this Section
2(c).
(d) Exchange of BecoCom Post-1997 Percentage to C-Tec Registrable
Securities. In the event that the C-Tec Reorganization is not consummated by the
C-Tec Reorganization Termination Date, BecoCom shall have the right to sell to
C-Tec from time to time, at the times hereinafter provided, any BecoCom
Post-1997 Percentage, in exchange for such number of C-Tec Registrable
Securities determined as hereinafter provided (any such sale being referred
herein as a "Post-1997 C-Tec Exchange"); provided, however, that any BecoCom
Post-1997 Percentage to be exchanged pursuant to this Section 2(d) must utilize,
in the determination thereof, a minimum BecoCom Post-1997 Exchange Amount of the
lesser of (i) $50,000,000, or (ii) the then BECOCOM Post-1997 Total Investment;
provided, however, that notwithstanding the foregoing, in all instances BecoCom
shall be permitted to retain in the Company and not exchange $1 of the BecoCom
Post-1997 Total Investment. The number of C-Tec Registrable Securities to be
issued to BecoCom in exchange for any BecoCom Post-1997 Percentage being
exchanged pursuant to this Section 2(d) shall be determined by dividing (A) the
BecoCom Post-1997 Appraised Value, by (B) the average closing trading price of
the C-Tec Stock during the ninety (90) day period immediately following the date
of the applicable Post-1997 C-Tec Exchange Notice (as hereinafter defined)
furnished by BecoCom to C-Tec in connection therewith. If BecoCom elects to
consummate a Post-1997 C-Tec Exchange, it shall only be permitted to do so once
during the twenty-four (24) month period immediately following the C-Tec
Reorganization Termination Date, and once during each successive twenty-four
(24) month period thereafter (each such twenty-four (24) month period being
referred to herein as a "Post-1997 C-Tec Exchange Period"), BecoCom shall
furnish written notice of any such election (a "Post-1997 C-Tec Exchange
Notice") to C-Tec at any time within a Post-1997 C-Tec Exchange Period, and the
closing of the Post-1997 C-Tec Exchange relating thereto shall occur at the
principal offices of the Company within the (10) days after to date of the
determination of the Company Appraised Value to be utilized in the determination
of the BecoCom Post-1997 Appraised Value. At the closing of any Post-1997 C-Tec
Exchange, C-Tec shall issue BecoCom one or more stock certificates representing
the C-Tec Registrable Securities to be issued to BecoCom pursuant to this
Section 2(d), and BecoCom shall execute and deliver to C-Tec all such documents
necessary to evidence the exchange of the BecoCom Post-1997 pursuant to this
Section 2(d).
7
(e) Securities Act Issues:
(i) Prior to the issuance to BecoCom of any Registrable Securities,
BecoCom shall deliver to the issuer of such securities a certificate,
in which BecoCom represents and warrants to the issuer as follows:
(A) In evaluating the suitability of an investment in New RCN or
C-Tec, as the case may be, BecoCom has not relied upon any oral or
written representations or other information from New RCN or C-Tec, as
the case may be, or any agent or representative of New RCN or C-Tec,
as the case may be, except as set forth herein.
(B) BecoCom or its advisors have had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting
on behalf of New RCN or C-Tec, as the case may be, except as set forth
herein.
(C) BecoCom acknowledges that it has had access to the same kind
of information that would be available in a registration statement
filed by New RCN or C-Tec, as the case may be, under the Securities
Act.
(D) BecoCom or its advisors, as the case may be, have such
knowledge and experience in financial, tax and business matters so as
to enable BecoCom to utilize the information made available to BecoCom
in connection with the Registrable Securities to evaluate the merits
and risks of an investment in the Registration Securities and to make
an informed investment decision with respect thereto. BecoCom
recognizes that investment in the Registrable Securities involves
substantial risks, including loss of the entire amount of such
investment.
(E) BecoCom represents that it is purchasing the Registrable
Securities for its own account for investment and not with a view to
resale or distribute except in compliance with the Securities Act.
BecoCom will not sell or otherwise transfer the Registrable Securities
without registration under the Securities Act or the applicable state
securities laws or an exemption therefrom. BecoCom acknowledges that
Registrable Securities have not been registered under the Securities
Act or securities laws of any state, and that its purchase of
Registrable Securities is being made in reliance upon an exemption
from registration under the Securities Act
8
for an offer and sale of securities that does not involve a public
offering.
(F) BecoCom is qualified a an accredited investor within the
meaning of Rule 501 of Regulation D promulgated under the Securities
An ("Accredited Investor").
(ii) Each certificate representing shares of Registrable Securities
shall bear substantially the following legend:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE
WITH, THE PROVISIONS OF THE AMENDED AND RESTATED OPERATING AGREEMENT, DATED
AS OF JUNE 17, 1997, BY AND BETWEEN BECOCOM, INC., AND RCN TELECOM SERVICES
OF MASSACHUSETTS, INC., AND THE EXCHANGE AGREEMENT, DATED AS OF JUNE 17,
1997, BY AND BETWEEN C-TEC CORPORATION AND BECOCOM, INC. COPIES OF THE
ABOVE REFERENCED AGREEMENTS ARE ON FILE AT THE OFFICE OF THE ISSUER.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION, UNDER SAID ACT.
(f) Reservation of Registrable Securities. Each of C-Tec and, after the
consummation of the C-Tec Reorganization, New RCN, shall at all times reserve
and keep available out of its authorized but unissued shares of capital stock,
solely for the purpose of effecting the exchange of the BecoCom 1997 Percentage
and any BecoCom Post-1997 Percentage, such number of Registrable Securities as
shall from time to time be sufficient to effect the exchange of the BecoCom 1997
Percentage and any BecoCom Post-1997 Percentage, and if at any time the number
of authorized but unissued shares of capital stock of the same class as the
Registrable Securities shall not be sufficient to effect the exchanges as
aforesaid, C-Tec or New RCN, as the case may be, shall take such corporate
action, as may be necessary to increase such authorized but unissued shares of
capital stock to such number of shares, as shall be sufficient for such purpose.
C-Tec hereby represents, warrants and confirms to BecoCom that in the event that
the C-Tec Reorganization is consummated, C-Tec estimates in good faith that
after giving effect to the IRS Restrictions, New RCN shall be permitted to issue
to BecoCom, in connection with the exchanges hereinabove described, no less than
3,500,000 New RCN Registrable Securities, or approximately ten percent (10%) of
the shares of New RCN Stock to be issued and outstanding based upon the capital
9
structure of New RCN which on the date hereof is contemplated as of the
consummation of the C-Tec Reorganization, and determined after giving further
effect to (i) the shares of New RCN Stock issuable upon the exercise of all
employee stock options issued or issuable pursuant to all New RCN employee stock
option or similar plans, and (ii) the shares of New RCN Stock which may be
issued to a New RCN employee stock ownership plan formed in connection with the
C-Tec Reorganization (which number of New RCN Registrable Securities to be
issued to BecoCom as aforesaid may be equitably adjusted for any stock dividend,
stock split, combination, reorganization, recapitalization or other similar
event affecting the New RCN Stock).
(g) Effect of Exchange. Any exchange by BecoCom of the BecoCom 1997
Percentage or any BecoCom Post-1997 Percentage pursuant to this Section 2 shall
affect the Sharing Ratios and Investment Percentages as provided in the
Operating Agreement.
3. Put Rights.
(a) To New RCN. In the event that BecoCom is unable to exchange for New RCN
Registrable Securities any portion of the BecoCom 1997 Percentage or any BecoCom
Post-1997 Percentage pursuant to Sections 2(a) or 2(b) hereof on account of the
IRS Restrictions, BecoCom shall have the right to require New RCN to purchase
any such portion which BecoCom is unable to so exchange (herein, an "IRS
Restricted BecoCom Percentage"), for a purchase price determined as hereinafter
provided. The purchase price to be paid by New RCN to BecoCom for any IRS
Restricted BecoCom Percentage shall equal, (i) as to such portion of such IRS
Restricted BecoCom Percentage being comprised of a portion of the BecoCom 1997
Percentage, the BecoCom 1997 Appraised Value, and (ii) as to such portion of
such IRS Restricted BecoCom Percentage being comprised of a portion of any
BecoCom Post-1997 Percentage, the BecoCom Post-1997 Appraised Value. If BecoCom
elects to require New RCN to purchase any IRS Restricted BecoCom Percentage, it
shall furnish written notice thereof (a "New RCN Put Notice") to New RCN within
fifteen (15) days after BecoCom is notified in writing by New RCN that it will
be unable to exchange for New RCN Registrable Securities such IRS Restricted
BecoCom Percentage (which notification shall be accompanied by a detailed
calculation by New RCN showing the number of New RCN Registrable Securities to
which BecoCom is then entitled), and the closing of the purchase and sale of
such IRS Restricted BecoCom Percentage shall occur at the principal offices of
the Company on a date specified by New RCN within the one hundred eighty (180)
day period immediately following the date of the applicable New RCN Put Notice
(but in no event later than the last day of such one hundred eighty (180) day
period). New RCN shall also furnish to BecoCom such additional material and
information as BecoCom shall reasonably request in order for BecoCom to
verify New RCN's calculation as to the number of New RCN Registrable Securities
to which BecoCom is then entitled. At the closing of the purchase and sale of
any IRS Restricted BecoCom Percentage, New RCN shall pay the purchase price
therefor in full by certified or bank check or wire transfer pursuant to wire
instructions furnished by BecoCom to New RCN, and BecoCom shall
10
execute and deliver to New RCN all such documents necessary to evidence the
transfer of such IRS Restricted BecoCom Percentage.
(b) To C-Tec. In the event that the C-Tec Reorganization is not consummated
by the C-Tec Reorganization Termination Date, BecoCom shall have the one (1)
time right, exercisable as hereinafter provided, in lieu of exchanging all or
any portion of the BecoCom 1997 Percentage or any BecoCom Post-1997 Percentage
to C-Tec Registrable Securities pursuant to Sections 2(c) or 2(d) hereof, to
require C-Tec to purchase the aggregate of all of such portions which BecoCom
has elected not to so exchange as of the furnishing of the C-Tec Put Notice (as
hereinafter defined) (herein, the "Reorg Restricted BecoCom Percentage"), for a
purchase price determined as hereinafter provided. The purchase price to be paid
by C-Tec for the Reorg Restricted BecoCom Percentage shall equal in the
aggregate, (i) as to such portion of the Reorg Restricted BecoCom Percentage
being comprised of a portion of the BecoCom 1997 Percentage, the BecoCom 1997
Appraised Value, and (ii) as to such portion of the Reorg Restricted BecoCom
Investment being comprised of the portion of any BecoCom Post-1997 Percentage,
the BecoCom Post-1997 Appraised Value. If BecoCom elects to require C-Tec to
purchase the Reorg Restricted BecoCom Percentage it shall furnished written
notice thereof (the "C-Tec Put Notice") to C-Tec at any time within thirty (30)
days following the C-Tec Reorganization Termination Date, and the closing of the
purchase and sale of the Reorg Restricted BecoCom Percentage shall occur at the
principal offices of the Company on a date specified by C-Tec within the one
hundred eighty (180) day period immediately following the date of the C-Tec Put
Notice (but in no event later than the last day of such one hundred eighty (180)
day period). At the closing of the purchase and sale of the Reorg Restricted
BecoCom Percentage, C-Tec shall pay the purchase price therefor in full by
certified or bank check or wire transfer pursuant to wire instructions furnished
by BecoCom to C-Tec, and BecoCom shall execute and deliver to C-Tec all such
documents necessary to evidence the transfer of the Reorg Restricted BecoCom
Percentage.
4. Determination of Company Appraised Value. For purposes of Sections 2 and
3 hereof, the "Company Appraised Value" shall be determined in accordance with
the following provisions of this Section 4:
(a) Contemporaneously with the delivery by BecoCom of any Notice,
BecoCom and New RCN or C-Tec, as the case may be, shall commence
negotiations to attempt to agree on the fair market value of the Company as
of the date of such Notice, which shall then be the "Company Appraised
Value" for all purposes of this Agreement. If no such agreement is reached
within ten (10) days, then the fair market value of the Company shall be
determined as follows:
(b) BecoCom, on the one hand, and C-Tec or New RCN, as the case may
be, on the other hand (for purposes of this Section 4, to "Exchange
Entity"), shall each designate by written notice to the other a firm of
recognized national standing familiar with appraisal
11
techniques applicable to the Company and assets of the type being evaluated to
serve as an appraiser (an "Appraiser") pursuant this Section 4 (the firm
designated by BecoCom being referred to herein as the "First Appraiser," and the
firm designated by the Exchange Entity being referred to herein as the "Second
Appraiser"), within fifteen (15) business days after the failure to reach
agreement in accordance with the terms of Section 4(a) above. In the event that
either Appraiser is not designated within the foregoing time period, the other
Appraiser will serve as the only Appraiser, and its appraisal will be binding on
BecoCom and the Exchange Entity for purposes of this Section 4.
(c) Each Appraiser shall be directed to determine the fair market value of
the Company as of the date of the applicable Notice. Each Appraiser shall also
be directed to deliver a certificate (an "Appraiser's Certificate") setting
forth such Appraiser's determination to the party who has not engaged such
Appraiser on or before the thirtieth (30th) day after its respective
designation, upon the conclusion of its evaluation, and each Appraiser
Certificate once delivered may not be retracted or modified in any respect. In
determining the fair market value of the Company, the Appraisers (i) shall
include as assets of the Company all tangible and intangible assets owned by the
Company, together with all such other assets utilized by the Company in the
operation of its business, whether by lease, license or other arrangement with
unrelated third parties or Affiliates of the Company, BecoCom or RCN-MA, (ii)
shall value the Company as if it were a publicly-traded company, without any
premium for control or discount for a minority interest, using the
fully-distributed public market value, (iii) in the case of (A) an exchange by
BecoCom pursuant to Sections 2(a) or 2(b) hereof, or (B) a put by BecoCom
pursuant to Section 3(a) hereof, shall utilize the same valuation multiples
which are used by financial analysts to value New RCN as of the date of the
applicable Notice, so long as the businesses of New RCN and the Company are
predominantly the same; provided, however, that in the event such businesses are
not predominantly the same, (x) said valuation multiples shall be adjusted to
reflect valuation multiples derived from publicly-traded companies in
predominantly the same business as the Company, and (y) a discounted cash flow
analysis may be utilized,* and (iv) in the case of (A) an exchange by BecoCom
pursuant to Section 2 hereof, or (B) a put by BecoCom pursuant to Section 3
hereof, shall consult with the investment bankers of New RCN or C-Tec, as the
case may be, to take into account the value of the Company as compared with the
value of New RCN or C-Tec, as then case may be. The parties agree that, so long
as New RCN is engaged predominantly in the provision to customers of the same
services that the Company provides, together with maintaining its proportionate
investment in Megacable S. A. de C. V., the business of New RCN shall be deemed
to be predominantly the same as the business of the Company. Each Appraiser will
keep confidential all information disclosed by the Company and BecoCom or the
Exchange Entity, as the case may be, in the course of conducting its evaluation,
and, to that end, will execute such customary documentation as either BecoCom or
the Exchange Entity may reasonably request with respect to such confidentiality
obligation. Each of BecoCom and the Exchange Entity shall cooperate in causing
the Company to provide each Appraiser with such information within the Company's
possession that may be reasonably requested in writing by such
* (but only in such event)
12
Appraiser for purposes of its evaluation hereunder. Each of BecoCom and the
Exchange Entity shall have full access to each Appraiser's work papers.
Each Appraiser will be directed to comply with the provisions of this
Section 4, and to that end each party will provide to its respective
Appraiser a complete and correct copy of this Section 4 (and the
definitions of capitalized terms used in this Section 4 that are defined
elsewhere in this Agreement).
(d) The Company Appraised Value shall be determined on the basis of
the Appraiser's Certificates in accordance with the provisions of this
Section 4(d). The higher of fair values set forth in the Appraiser's
Certificates is hereinafter referred to as the "Higher Value," and the
lower of such values is hereinafter referred to as the "Lower Value." If
the Higher Value is more than 110% of the Lower Value, the Company
Appraised Value of the Company will be the arithmetic average of the Higher
Value and the Lower Value. If the Higher Value is more than 110% of the
Lower Value, a third appraiser shall be selected in accordance with the
provisions of Section 4(e) hereof and to Company Appraised Value of the
Company will be determined in accordance with the provision of Section 4(f)
hereof.
(e) If the Higher Value is more than 110% of the Lower Value, within
seven (7) days thereafter the First Appraiser and the Second Appraiser
shall agree upon and jointly designate a third Appraiser (the "Third
Appraiser"), by written notice to each of BecoCom and the Exchange Entity.
If the First Appraiser and the Second Appraiser cannot agree upon a Third
Appraiser within seven days, the Third Appraiser shall be chosen by the
American Arbitration Association ("AAA") in Boston, Massachusetts in
accordance with Rule 13 of the Commercial Arbitration Rules of the AAA. The
First Appraiser and the Second Appraiser shall direct the Third Appraiser
to determine the fair market value of the Company (the "Third Value") in
accordance with the provisions of this Section 4, and to deliver to each of
BecoCom and the Exchange Entity an Appraiser's Certificate on or before the
thirtieth (30th) day after the designation of such Third Appraiser
hereunder. The Third Appraiser will be directed so comply with the
provisions of this Section 4, and to that end the parties will provide to
the Third Appraiser a complete and correct copy of this Section 4 (and the
definitions of capitalized terms used in this Section 4 that are defined
elsewhere in this Agreement).
(f) Upon the delivery of the Appraiser's Certificate of the Third
Appraiser, the Company Appraised Value of the Company will be determined as
provided in this Section 4(f). The Company Appraised Value of the Company
will be (i) the Lower Value, if the Third Value is less than the Lower
Value, (ii) the Higher Value; if the Third Value is greater than the Higher
Value, (iii) the arithmetic average of the Third Value and either the
Higher Value or the Lower Value, (whichever is closer to the Third Value)
if the Third Value falls within the range between (and including) the Lower
Value and the Higher Value and (iv) the Third Value, if the Lower Value and
the Higher Value are equally close to the Third Value.
13
(g) Each of BecoCom and the Exchange Entity will bear the cost of the
Appraiser designated by it or on its behalf. If the Higher Value is not
more than 115% of the Lower Value, or if the Higher Value and the Lower
Value are equally close to the Third Value, each of BecoCom and the
Exchange Entity shall bear fifty percent (50%) of the cost of the Third
Appraiser, if any; otherwise, the particular party whose Appraiser's
determination of the fair market value of the Company is further away from
the Third Value shall bear the entire costs of the Third Appraiser. Each of
BecoCom and the Exchange Entity agree to pay when due the fees and expenses
of the Appraisers in accordance with the foregoing provisions.
(h) To the fullest extent provided by law, the determination of the
Company Appraised Value made pursuant to this Section 4 shall be final and
binding on BecoCom and the Exchange Entity, and such determination shall
not be appealable to or reviewable by any court or arbitrator; but judgment
on such determination may be entered in any court having jurisdiction
thereof.
5. Registration Rights.
(a) Demand Registration.
(i) Upon the written request or BecoCom requesting that a
Registrant effect the registration under the Securities Act of all or
any portion of BecoCom's Registrable Securities and specifying the
intended method of disposition thereof (a "Demand Registration"), but
in no event more than twice throughout the effectiveness of this
Agreement, the Registrant, subject to the provisions of this Section
5(a), shall use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Registrant has
been so requested to register by BecoCom for disposition in accordance
with the intended method of disposition stated in such request;
provided, that the Registrant shall not be required to effect any
registration of Registrable Securities pursuant to this Section 5(a)
unless the number of shares of Registrable Securities requested to be
registered by BecoCom is at least fifty percent (50%) of the
Registrable Securities then held by BecoCom
(ii) Any Demand Registration under this Section 5(a) shall be on
such appropriate registration form of the Commission (A) as shall be
selected by the Registrant, and (B) as shall permit the disposition
of such Registrable Securities in accordance with the intended method
of disposition specified in the request by BecoCom for such Demand
Registration.
(iii) A Demand Registration requested pursuant to this Section
5(a) shall not be deemed to have been effected (A) unless a
registration statement with respect thereto has become effective;
provided, that a registration which does not become effective after
the Registrant has filed a registration statement with respect thereto
14
solely by reason of BecoCom's refusal to proceed, shall be deemed to
have been effected by the Registrant at the request of BecoCom unless
BecoCom shall pay all expenses in connection with such registrant, (B)
if, after it has become effective, such Demand Registration becomes
subject to any stop order; injunction or other order or requirement of
the Commission or other governmental agency or court for any reason,
or (C) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with
such registration are not satisfied, other than by reason of some act
or omission by BecoCom.
(iv) The Registrant shall be entitled to (A) postpone the filing
of any registration statement otherwise required to be prepared and
filed by it pursuant to this Section 5(a), or (B) elect that the
registration statement not be useable, in either case for a reasonable
period of time, but not in excess of one hundred twenty (120) days in
any twelve (12) month period (each such period, a "Blackout Period"),
if the Registrant determines in good faith that the registration and
distribution of Registrable Securities (or the use of the
registration statement or related prospectus with respect thereto)
would interfere with any pending financing, acquisition, corporate
reorganization or any other corporate development involving the
Registrant or any of its Affiliates, or would require premature
disclosure thereof, and the Registrant promptly gives BecoCom written
notice of such determination, containing a general statement of the
reasons for such postponement or restriction on use and an
approximation of the anticipated delay.
(v) If any offering pursuant to a registration statement is an
underwritten offering, the Registrant will select a managing
underwriter or underwriters to administer the offering, which managing
underwriter or underwriters shall be reasonably satisfactory to
BecoCom; provided, that BecoCom shall be entitled to select one
underwriter, which underwriter shall be reasonably satisfactory to the
Registrant. The managing underwriter or underwriters selected by the
registrant shall be deemed to be reasonably satisfactory to BecoCom
unless BecoCom sends a written notice of objection to the Registrant
within ten (10) days after receipt of written notice form the
Registrant of the appointment of a managing underwriter or
underwriters.
(vi) If (A) during the effectiveness of this Agreement, the
Registrant shall file a registration statement (other than in
connection with the registration of securities issuable pursuant to an
employee stock option, stock purchase or similar plan, or pursuant to
a merger, exchange offer or transaction of the type specified in Rule
145(a) under the Securities Act) with respect to the Registrable
Securities or Related Securities, and (B) with reasonable prior
notice, the Registrant (in the case of a non-underwritten offering by
the Registrant pursuant to such registration statement) advises
BecoCom in writing that a public sale or distribution of Registrable
Securities would adversely affect such offering, or the managing.
15
underwriter or underwriters (in the case of an underwritten offering
by the Registrant pursuant to such registration statement) advises the
Registrant in writing (in which case the Registrant shall notify
BecoCom in writing) that a public sale or distribution of Registrable
Securities would adversely impact such offering BecoCom shall, to the
extent not inconsistent with applicable law, refrain from effecting
any public sale or distribution of Registrable Securities during the
ten (10) day period prior to, and during the one hundred twenty (120)
day period beginning on, the effective date of such registration
statement.
(b) Piggyback Registration.
(i) Whenever the Registrant proposes to register any securities
under the Securities Act (other than pursuant to (A) a registration on
Form 5-4 or any successor form, or (B) an offering of securities in
connection with a employee benefit, share dividend, share ownership or
dividend reinvestment plan), and the registration form to be used may
be used for the registration of Registrable Securities (a "Piggyback
Registration"), the Registrant will give prompt written notice to
BecoCom of its intention to effect such a registration (a "Piggyback
Notice") and, subject to the provisions of this Section 5(b), the
Registrant will include in such registration all Registrable
Securities to the extent BecoCom has provided written notice within
ten (10) days after the date of receipt of the Piggyback Notice.
(ii) If a Piggyback Registration is with respect to an
underwritten primary registration on behalf of the Registrant (whether
or not also on behalf of Securities Holders), and the managing
underwriters advise the Registrant that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner within a price range
acceptable to the Registrant, the Registrant will include in such
registration (A) first, the securities the Registrant proposes to
sell, and (B) second, to the extent that the managing underwriters
determine, the Registrable Securities and any other securities
requested to be included in such registration, pro rata among BecoCom
and the holders of such other securities on the basis of the number of
shares requested for inclusion in such registration by each of them.
(iii) If a Piggyback Registration is with respect to an
underwritten secondary registration on behalf of Securities Holders
other than BecoCom, and the managing underwriters advise the
Registrant that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold
in an orderly manner in such offering within a price range acceptable
to such Securities Holders initially requesting such registration, the
Registrant will include in such registration (A) first, the securities
requested to be included in such registration by the Securities
Holders with the right to demand such registration, if any, and (B)
second, to the extent that the managing underwriters determine, the
16
Registrable Securities and any other securities requested to be
included in such Piggyback Registration, pro rata among BecoCom and
the holders of such other securities on the basis of the number or
shares requested for inclusion in such registration by each of them.
(iv) The right of BecoCom to request registration or inclusion in
any registration pursuant to this Section 5(b) shall terminate if all
of the Registrable Securities may be sold by BecoCom under Rule 144
under the Securities Act during any ninety (90) day period.
(v) In the case of an underwritten Piggyback Registration, the
Registrant will have the exclusive right to select the managing
underwriter or underwriters to administer the offering.
(vi) BecoCom agrees not to seek an injunction restraining or
otherwise delaying any registration pursuant to this Agreement as the
result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
(c) Conditions of Obligations to Register Registrable Securities. The
obligations of the Registrant to register Registrable Securities hereunder
are subject to the following conditions:
(i) The Registrant shall not be required to include any
Registrable Securities in any registration pursuant to Sections 5(a)
and 5(b) hereof unless BecoCom accepts the terms of the underwriting
as agreed upon between the Registrant and the underwriters selected by
the Registrant.
(ii) BecoCom shall cooperate with the Registrant in connection
with the preparation of the registration statement relating to a
Demand Registration or a Piggyback Registration (a "Registration
Statement"), and for so long as the Registrant is obligated to file
and keep effective the Registration Statement, shall provide to the
Registrant, in writing, for use in the Registration Statement, all
such information regarding BecoCom as the Registrant from time to time
may reasonably request to prepare the Registration Statement and
prospectus covering the Registrable Securities, to maintain the
currency and effectiveness thereof, and otherwise to comply with all
applicable requirements of law in connection therewith.
(iii) During such time as BecoCom may be engaged in a
distribution of the Registrable Securities, BecoCom shall comply with
Rules lOb-6 and lOb-7 promulgated under the Exchange Act. In addition,
in a Demand Registration or a Piggyback Registration, to the extent
required by the Securities Act, BecoCom shall cause to be finished to
each broker through whom the Registrable Securities may be offered, or
to the offeree if an offer is not made through a broker, such copies
of
17
to prospectus covering the Registrable Securities and any amendment or
supplement thereto, and documents incorporated by reference therein,
as may be required by law, and shall not bid for or purchase any
securities of the Registrant or attempt to induce any other Person to
purchase any securities of the Registrant other than as permitted
under the Exchange Act.
(iv) BecoCom shall not, to the extent requested by the Registrant
and an underwriter of an offering of common stock of the Registrant
("Common Shares") or Registrable Securities, sell or otherwise
transfer or dispose of any Common Shares or Registrable Securities for
the Stipulated Lock-Up Period (as hereinafter defined) following the
effective date of a registration of Common Shares or Registrable
Securities in which BecoCom was entitled to participate pursuant to
Sections 5(a) or 5(b) hereof. In order to enforce the foregoing
covenant, the Registrant may impose stop transfer instructions with
respect to the Common Shares or Registrable Securities until the end
of such period. As used herein, the term "Stipulated Lock-Up Period"
means the shortest of (A) the minimum period of time any other
Securities Holder participating in the registration is subject to such
restrictions on the sale, transfer or disposition of Common Shares,
(B) one hundred eighty (180) days or (C) such other time as the
managing underwriter may reasonably specify.
(d) Registration Procedures. Whenever BecoCom requests that any
Registrable Securities be registered pursuant to this Agreement (a
"Registration Request"), the Registrant will use its commercially
reasonable efforts to effect the registration and facilitate the sale and
distribution of all such Registrable Securities specified in such
Registration Request in accordance with the intended method of disposition
thereof; provided, that with respect to a Piggyback Registration, nothing
in this Agreement shall prohibit the Registrant from determining in its
sole discretion, at any time, not to file a Registration Statement or, if
filed, to withdraw such registration or terminate the registration related
thereto. Without limiting the foregoing, the Registrant will:
(i) prepare and file with the Commission such amendments,
post-effective amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective
for a period of forty-five (45) days from the date of effectiveness
(unless otherwise required by the Securities Act), or until the
Registrable Securities covered thereunder have been sold, whichever is
earlier;
(ii) furnish to BecoCom such number of copies of the Registration
Statement, each amendment, post-effective amendment and supplement
thereto, the prospectus included in the Registration Statement
(including each preliminary prospectus), and such other documents as
BecoCom may reasonably request, in order to facilitate the disposition
of the Registrable Securities owned by BecoCom;
18
(iii) use its commercially reasonable efforts to register or
quality such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as BecoCom reasonably requests, to
keep such registrations or qualifications in effect for so long as the
Registration Statement remains in effect and do any and all other acts
and things which may be reasonably necessary or advisable to enable
BecoCom to consummate the disposition in such jurisdictions of the
Registrable Securities owned by BecoCom (provided that the Registrant
will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 5(d)(iii), (B) subject itself to taxation in any such
jurisdiction, (C) consent to general service of process in any such
jurisdiction (unless the Registrant is subject to service in such
jurisdiction and except as may be required by the Securities Act), or
(D) qualify such Registrable Securities in a given jurisdiction where
expressions of investment interest are not sufficient in such
jurisdiction to reasonably justify the expense of qualification in
that jurisdiction, or where such qualification would require the
Registrant to register as a broker or dealer in such jurisdiction);
(iv) promptly notify BecoCom, at any time when a prospectus
relating to a Registration Statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which
such prospectus contains an untrue statement of a material fact or
omits any material fact necessary to make the statements therein, in
light of the circumstances in which made, not misleading, and, at the
request of BecoCom, the Registrant will promptly prepare and furnish
BecoCom a supplement or amendment to such prospectus so that as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which made, not
misleading;
(v) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of the
Registration Statement and thereafter maintain such a transfer agent
and registrar; and
(vi) in the event of the issuance of any stop order suspending
the effectiveness of a Registration Statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any Registrable Securities included in
the Registration Statement for sale in any jurisdiction, the
Registrant will use its reasonable best efforts promptly to obtain the
withdrawal of such order
BecoCom agrees that, upon receipt of any notice from the Registrant of the
happening of any event of the kind described in Sections 5(d)(iv)) hereof or
5(d)(vi) hereof, BecoCom will forthwith discontinue disposition of the
Registrable Securities pursuant to a Demand Registration
19
or a Piggyback Registration, as the case may be, until receipt of the copies of
an appropriate supplement or amendment to the prospectus under Section 5(d)(iv)
hereof, or until the withdrawal of the stop order under Section 5(d)(vi) hereof.
(e) Registration Expenses. The Registrant will pay all of its expenses
an connection with the registration of Registrable Securities (including
registration and filing fees, printing costs, listing fees and the fees and
expenses of its counsel), and BecoCom shall pay all of its expenses in
connection with the registration of Registrable Securities (including
underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities pursuant to any
Registration Statement, and the fees and expenses of its counsel).
(f) Indemnification; Contribution
(i) The Registrant will, to the extent permitted by law,
indemnify, defend and hold harmless BecoCom, its officers, directors,
stockholders, agents, employees and each Person who "controls" (within
the meaning of the Securities Act) BecoCom, from and against any and
all losses, claims, damages, liabilities and expenses whatsoever, as
incurred, including any of the foregoing and reasonable fees and
expenses of counsel incurred in investigating, preparing or defending
against, or aggregate amounts paid in settlement of, any litigation,
action, investigation or proceeding by any governmental agency or
body, commenced or threatened, in each case whether or not a party, or
any claim whatsoever based upon, caused by or arising out of, any
violation of the Securities Act, including, without limitation, any
untrue or alleged untrue statement of material fact by the Registrant
contained in any Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any
information furnished in writing to the Registrant by BecoCom, or by
BecoCom's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the
Registrant has furnished BecoCom with a sufficient number of copies of
the same.
(ii) In connection with any Registration Statement in which
BecoCom is participating, BecoCom will furnish to the Registrant in
writing such information relating to BecoCom as the Registrant
reasonably requests for use in connection with any such Registration
Statement or prospectus relating thereto, and will, to the extent
permitted by applicable law, indemnify, defend and hold harmless the
Registrant its officers, directors, stockholders, agents, employees
and each Person who "controls" (within the meaning of the Securities
Act) the Registrant, from and against any losses, claims, damages,
liabilities and expenses whatsoever, as incurred, including any of the
foregoing, and reasonable fees and expenses of counsel incurred in
20
investigating, preparing or defending against, or aggregate amounts
paid in settlement of, any litigation, action, investigation or
proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or any claim
whatsoever based upon, caused by or arising out of, any violation of
the Securities Act, including, without limitation, any untrue or
alleged untrue statement of material fact by BecoCom contained in such
Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information
so furnished in writing by BecoCom expressly for such purpose.
(iii) Any Person entitled to indemnification hereunder will (A)
give reasonably prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification, and (B) unless
in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with
respect to such claim; permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding sections of this Section
5(f) except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. Such indemnifying party
shall promptly give written notice of its intention to assume such
defense to such indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such
consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of such
indemnified party a conflict of interest exists between such
indemnified party and any other of such indemnified parties with
respect to such claim.
(iv) The indemnification provided for in this Section 5(f) will
remain in full force and effect regardless of any investigation made
by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party, and will survive the
transfer of Registrable Securities. The Registrant also agrees to make
such provisions, as are reasonably requested by any indemnified party,
for contribution to such party in the event the Registrant's
indemnification is unavailable for any reason. Such right to
contribution shall be in such proportion as is appropriate to reflect
the relative fault of and benefits to the Registrant on the one hand,
and BecoCom on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities
or expenses, as well as any
21
other relevant equitable considerations. The relative benefits to the
indemnifying party and indemnified parties shall be determined by
reference to, among other things, the total proceeds received by the
indemnifying party and indemnified parties in connection with the
offering to which such losses, claims, damages, liabilities or
expenses relate. The relative fault of the indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether the action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified
parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant hereto were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to in the immediate preceding
section. No Person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not found guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 5(f)(iv)), BecoCom shall not be required to contribute
any amount in excess of the amount of the total price at which the
Registrable Securities of BecoCom were offered to the public.
(g) Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such arrangements, and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements; provided, that no holder of Registrable
Securities included in any underwritten registration shall be required to
make any representations or warranties to the Registrant or the
underwriters other than representations and warranties regarding such
holder of Registrable Securities and such holder of Registrable Securities'
intended method of distribution.
6. Pre-emptive Rights. A Registrant shall, prior to any issuance by such
Registrant, after the exchange by BecoCom of the BecoCom 1997 Percentage and/or
any BecoCom Post 1997 Percentage into Registrable Securities of such
Registrant, of any of such Registrant's shares of capital stock of any class or
series, or of any of its other securities (other than debt securities with no
equity feature), offer to BecoCom by written notice (a "Pre-emptive Rights
Notice") the right, for a period of thirty (30) days, to purchase BecoCom's pro
rata share (based upon BecoCom's respective percentage of ownership of the
issued and outstanding shares of capital stock of such Registrant, determined on
a fully-diluted basis) of such securities proposed to be issued (the "Offered
Securities"), for the equivalent cash purchase price or other consideration for
which such Offered
22
Securities are to be issued; provided, however, that the pre-emptive rights of
BecoCom set forth in this Section 6 shall not apply to shares of capital stock
of such Registrant of any class or series, or any of such Registrant's other
securities, issued:
(a) as a stock dividend on shares of such Registrant's capital
stock, or upon any subdivision of shares of such Registrant's capital
stock, provided that the securities issued pursuant to such stock
dividend or subdivision are limited to additional shares of such
capital stock;
(b) solely in consideration for the acquisition (whether by
merger, consolidation or otherwise) by such Registrant of all or
substantially all of the stock or assets of any other Person;
(c) pursuant to the closing of a firmly underwritten public
offering of such Registrant pursuant to an effective Registration
Statement; and
(d) to such Registrant's directors, officers or employees
pursuant to any qualified or non-qualified stock option plan or
agreement, or stock purchase plan or agreement.
Each Pre-emptive Right Notice to BecoCom shall describe the Offered Securities
proposed to be issued by the Registrant, and shall also specify price and
payment terms, and any other material terms related thereto. BecoCom (or any
Affiliate of BecoCom) may accept such Registrant's offer as to the full number
of Offered Securities offered to BecoCom or any lesser number, by written notice
thereof given by BecoCom to such Registrant prior to the expiration of the
aforesaid thirty (30) day period, in which event such Registrant shall promptly
sell and BecoCom shall promptly buy, upon the terms specified in such
Pre-emptive Rights Notice, the number of Offered Securities agreed to be
purchased by BecoCom. Such Registrant shall have the right, at any time during
the ninety (90) days following the date of such Pre-emptive Rights Notice to
BecoCom, to offer and sell, to any third party or parties, the Offered
Securities not agreed by BecoCom to be purchased by it, at a price and on
payment terms no less favorable to such Registrant than those specified in the
Pre-emptive Rights Notice to BecoCom; provided, however, that if such third
party sale or sales are not consummated within such ninety (90) day period, such
Registrant shall not sell such Offered Securities as shall not have been so
purchased without again complying with the provisions of this Section 6.
Notwithstanding anything to the contrary set forth in this Section 6, the
provisions of this Section 6 Shall apply only if, and to the extent that, the
Registrant 6 grants similar rights to any of its other stockholders.
7. Board of Directors. On the date of the consummation of the C-Tec
Reorganization, C-Tec shall cause Thomas J. May, the current Chief Executive
Officer of Boston Edison Company, the indirect corporate parent of BecoCom, to
be elected to the initial Board of Directors of New RCN, provided he continues
to hold such office at such date.
23
8. Miscellaneous.
(a) Adherence of New RCN to this Agreement. Contemporaneous with the
consummation of the C-Tec Reorganization, C-Tec shall cause New RCN to
become a party to this Agreement pursuant to a an instrument of adherence
in form and substance satisfactory to BecoCom.
(b) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of C-Tec and New RCN (as to New RCN, from and after the
adherence of New RCN to this Agreement as provided in Section 8(a)
hereof), on the one hand, and BecoCom, on the other hand.
(c) Successors and Assigns. This Agreement awl the rights and
obligations of the parties hereto may not be assigned by any of the parties
hereto without the prior written consent of the other parties, except that
the provisions of this Agreement may be assigned by BecoCom to any of its
Affiliates in connection with any assignment by BecoCom of its membership
interest in the Company pursuant to the Operating Agreement. Subject to the
foregoing, all covenants and agreements in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether
so expressed or not.
(d) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of
more than one party, but all of which counterparts taken together shall
constitute one and the same Agreement.
(e) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts
without regard to conflicts of law principles.
(g) Notices. All notices, requests or other communications hereunder
shall be deemed duly delivered, given or made to or upon any party hereto
if in writing and delivered by hand against receipt, or by certified or
registered mail, postage prepaid, return receipt requested, or to a courier
who guarantees next business day delivery or sent by telecopy (with
confirmation), to such party at its address set forth below or to such
other addresses as such party may at any time, or from time to time, direct
by notice given in accordance with this Section 8(g):
24
If to C-Tec or New RCN:
C-TEC Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax: (609) 734-0974 and (609) 734-3830
Attention: Michael J. Mahoney and Raymond B. Ostroski, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Float LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attention: Stephen M. Banker, Esq.
If to BecoCom:
c/o Boston Edison Company
800 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 424-2733
Attention: Richard S. Hahn, Vice President
Neven Rabadjija, Esq., Assistant General Counsel
with a copy to:
Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Fax: (617)227-3732
Attention: Andrew B. White, Esq.
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt, (ii) three (3) business days
after such notice, request or other communication is sent if sent by certified
or registered mail, (iii) if sent by courier who Guarantees next business day
delivery the business day next following the day such notice, request or other
communication is actually delivered to courier or (iv) the day actually
telecopied.
25
(h) Not Construed Against Drafter. This Agreement has been negotiated and
prepared by each of C-Tec and BecoCom, and if my provision of this Agreement
requires judicial interpretation, to court interpreting or construing the
provision shall not apply the rule of construction that a document is to be
construed more strictly against the party who prepared the document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal as of the date first above written.
C-TEC CORPORATION
By: /s/ Michael J. Mahoney
---------------------------
Name: Michael J. Mahoney
-------------------------
Title: President
------------------------
BECOCOM, INC.
By: /s/ Richard S. Hahn
---------------------------
Name: Richard S. Hahn
-------------------------
Title: President
------------------------
26
JOINT INVESTMENT AND NON-COMPETITION AGREEMENT
THIS JOINT INVESTMENT AND NON-COMPETITION AGREEMENT (this "Agreement") is
made as of this 17th day of June, 1997 by and among RCN Telecom Services of
Massachusetts, Inc., a Massachusetts corporation ("RCN-Sub"), BecoCom, Inc., a
Massachusetts corporation ("BecoCom"), and RCN-BecoCom, LLC, a Massachusetts
limited liability company (the "Company").
WHEREAS, RCN-Sub and BecoCom have entered into that certain Amended and
Restated Operating Agreement of the Company of even date herewith (the
"Operating Agreement"), setting forth the terms and conditions that will govern
the operation of the Company; and
WHEREAS, Boston Edison Company, a Massachusetts corporation ("BECO"), and
CTec Corporation, a Delaware corporation and indirect corporate parent of
RCN-Sub ("C-Tec"), have each executed instruments of adherence with respect to
certain provisions hereof; and
WHEREAS, RCN-Sub and BecoCom wish to establish the relationship to exist
between them with respect to any markets in New England (but outside the
Relevant Market) in which the Company develops a business which would (i)
create, own and operate a communications network and (ii) provide voice, video,
data, other communications services and the communications support component of
energy-related customer services (collectively, the "Services"); and
WHEREAS, RCN-Sub, BecoCom and the Company wish to establish the exclusivity
of the Company for the provision of Services in the Relevant Market; and
WHEREAS, terms not defined herein shall have the meaning given to them in
the Operating Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Additional Markets Entered by RCN-Sub.
(a) If RCN-Sub or any Affiliate of RCN-Sub (each, an "RCN Entity")
provides, or proposes to provide, Services in any market in Maine, New
Hampshire, Vermont, Massachusetts (but outside the Relevant Market), Rhode
Island or Connecticut through an Entity in which an electric utility
company (an "Electric Utility Company") or any Affiliate of an Electric
Utility Company is a joint venturer or participant with an RCN Entity (the
"New
Business"), the RCN Entity shall use its best efforts to offer BecoCom, or
to cause BecoCom to be offered, the opportunity to acquire an equity
interest in the New Business. Such offer shall be set forth in writing
delivered by the RCN Entity to BecoCom, describing the New Business, and
the economic basis on which the New Business will be developed. Within 30
days following receipt of such offer, BecoCom may notify the RCN Entity of
its election to acquire an equity interest in the New Business, and
specifying a percentage (but not greater than 20%) that it wishes to
acquire in the New Business. Failure to deliver such notice shall be deemed
an election not to acquire an interest in the New Business.
(b) Upon the RCN Entity's receipt of BecoCom's notice as aforesaid,
the RCN Entity and BecoCom shall commence good faith negotiations to
establish the terms of BecoCom's investment in the particular New Business
on the same economic terms as those of the RCN Entity, taking into account
non-cash contributions by the RCN Entity, and BecoCom's investment shall be
conditioned on the execution of a definitive agreement setting forth such
terms, subject to the following:
(i) BecoCom will execute a voting agreement with the RCN Entity
in which BecoCom will agree to vote its equity interest in the New
Business on all operational or governance matters as directed by the
RCN Entity, except for any matter which materially adversely affects
BecoCom (it being agreed that a material adverse effect on the New
Business does not of itself constitute a material adverse effect on
BecoCom);
(ii) unless otherwise agreed, the New Business shall be
established through a legal entity separate from the Company and shall
operate independently from the Company, provided that the RCN Entity
and BecoCom and personnel of the RCN Entity and BecoCom may provide
services to both the Company and the New Business, so long as the
provision of such services does not impair the ability of the RCN
Entity or BecoCom and their respective personnel to fulfill their
obligations to the Company under the Operating Agreement and the other
Basic Agreements; and
(iii) BecoCom's opportunity to acquire an interest in the New
Business shall be subject to the Electric Utility Company involved in
the New Business not objecting to BecoCom's involvement in the New
Business provided, however, that the RCN Entity shall (A) act in good
faith and use its best efforts to overcome any such objection, (B)
consult with BecoCom with respect to strategy as to how to overcome
any such objection and (C) keep BecoCom advised as to the progress of
such negotiations.
(c) This Section 1 shall terminate upon (i) the latest to occur of (A)
5 years from the date hereof or, (B) 2 years after the Investment
Percentage of RCN-Sub or any Affiliate of RCN-Sub in the Company becoming
less than 33 1/3% or (ii) the Investment
-2-
Percentage of BecoCom or any Affiliate of BecoCom in the Company becoming
less than 33 1/3%.
2. Non-Competition and Non-Solicitation.
(a) Neither (i) BecoCom or any of its Affiliates nor (ii) RCN-Sub or
any of its Affiliates shall, without the prior written consent of the
other, directly or indirectly own, operate, manage, be employed by, be an
agent of, act as a consultant for, financially support, or have a
proprietary interest in, any enterprise or business which provides Services
in the Relevant Market except for activities currently engaged in by
BecoCom or its Affiliates, as set forth in Schedule 2A hereto.
(b) Each of BecoCom and RCN-Sub shall cause their respective
Affiliates to comply with the provisions of this Section 2.
(c) The provisions of this Section 2 shall terminate (i) as to
RCN-Sub, two years after RCN-Sub no longer has any ownership interest in
the Company or its successors, and (ii) as to BecoCom, two years after
BecoCom no longer has any ownership interest in the Company or its
successors.
3. Representations and Warranties. Each of the parties hereto represents
and warrants to the other that, as of the date hereof:
(a) it is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is formed;
(b) it has the power and authority to execute, deliver and perform its
obligations under this Agreement and such execution, delivery, performance
and consummation have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by it and
constitutes a valid and legally binding obligation of it, enforceable
against it in accordance with its terms except as such enforceability may
be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights generally or by
the availability of equitable remedies;
(c) the execution, delivery and performance by it of this Agreement
(i) do not contravene any provision of its organizational documents; (ii)
do not violate or conflict with any law, regulation or contractual
restriction to which it is subject and (iii) shall not result in the
creation of, or violate or conflict with, any lien, mortgage, pledge or
security interest or any other encumbrance upon or with respect to any of
its properties;
(d) no consent, order, approval or authorization or other action by,
and no notice to or filing with, any governmental authority or regulatory
body is required for the due
-3-
execution, delivery and performance by it of this Agreement and the
consummation of the transactions contemplated hereby; and
(e) there is no action, suit, proceeding or investigation pending, or,
to its knowledge, threatened, against or affecting it or its properties,
assets or business, in any court or before or by any governmental
department, board, agency or instrumentality, or any arbitrator, that
materially affects or impairs its ability to enter into this Agreement, or
to consummate the transactions contemplated hereby.
4. General.
(a) Adherence of RCN Corporation. Contemporaneously with the
consummation by C-Tec, of its intended tax-free corporate reorganization
(the "Spin-Off") under Section 355 of the Internal Revenue Code of 1986, as
amended, C-Tec shall cause RCN Corporation, a Delaware corporation and the
entity which shall become the indirect corporate parent of RCN-Sub by
virtue of the Spin-Off (or any entity which shall become such corporate
parent), to become a party to this Agreement pursuant to an instrument of
adherence in form and substance satisfactory to BecoCom.
(b) Amendment. No modification or amendment of, or waiver under, this
Agreement shall be valid unless in writing and signed by each of the
parties hereto.
(c) Binding Agreement; Assignment. This Agreement shall inure to the
benefit of and be binding upon each of the parties hereto and their
respective successors and assigns. This Agreement may not be assigned by
any party hereto without the prior written consent of the other parties
except to a Wholly Owned Affiliate of such party, provided, however, that
each of the parties hereto shall remain obligated to each other party under
the terms and conditions of this Agreement.
(d) Governing Law; Severability. This Agreement is governed by and
shall be construed in accordance with the laws of the Commonwealth of
Massachusetts, excluding any conflict-of-laws rule or principle that might
refer the governance or the construction of this Agreement to the laws of
another jurisdiction. If any provision of this Agreement or its application
to any Person or circumstance is held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances is not affected and such
provision shall be enforced to the greatest extent permitted by law.
(e) Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document All counterparts shall be construed together and constitute the
same instrument.
(f) Notices. All notices, requests and other communications hereunder
shall be deemed to have been duly delivered, given or made to or upon any
party hereto if in
-4-
writing and delivered by hand against receipt, or by certified or
registered mail, postage prepaid, return receipt requested, or to a courier
who guarantees next business day delivery or sent by telecopy (with
confirmation), to such party at its address set forth below or to such
other address as such party may at any time, or from time to time, direct
by notice given in accordance with this Section 4(f).
If to RCN-Sub:
c/o RCN Telecom Services, Inc.
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
and
C-TEC Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax: (609) 734-0974 and (609) 734-3830
Attention: Michael J. Mahoney and Raymond B. Ostroski, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attention: Stephen M Banker, Esq.
If to BecoCom:
c/o Boston Edison Company
800 Boylston Sweet
Boston, Massachusetts 02199
Fax: (617) 424-2733
Attention: Richard S. Hahn, Vice President
Neven Rabadjija, Esq., Assistant General Counsel
with a copy to:
Davis, Maim & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
-5-
Fax: (617) 227-3732
Attention: Andrew B. White, Esq.
If to the Company:
RCN-BecoCom, LLC
419 Boylston Street
Boston, Massachusetts 02199
Fax: (617) 267-3499
Attention: General Manager
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt, (ii) three business days after
such notice, request or other communication is sent if sent by certified or
registered mail, (iii) if sent by courier who guarantees next business day
delivery the business day next following the day such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied.
(g) Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter hereof and
supersedes all prior contracts or agreements with respect to such matters,
whether oral or written.
(h) Specific Performance. The parties agree that irreparable damage
will result if this Agreement is not performed in accordance with its
terms, and the parties agree that any damages available at law for a breach
of this Agreement would not be an adequate remedy. Therefore, the
provisions hereof and the obligations of the parties hereunder shall be
enforceable in a court of equity, or other tribunal with jurisdiction, by a
decree of specific performance, and appropriate injunctive relief may be
applied for and granted in connection therewith without the requirement of
the aggrieved party showing the inadequacy of the available remedies at
law. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to
any other remedies that a party may have under this Agreement, at law or in
equity.
(i) Effect of Waiver or Consent. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by
that Person of its obligations hereunder is not a consent or waiver to or
of any other breach or default in the performance by that Person of the
same or any other obligations of that Person hereunder. Failure on the part
of a Person to complain of any act of any Person or to declare any Person
in default hereunder, irrespective of how long that failure continues, does
not constitute a waiver by that Person of its rights with respect to that
default until the applicable limitations period has expired.
(j) Interpretation. In any dispute concerning the construction or
interpretation of any provision of this Agreement or any ambiguity hereof,
there shall be no
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presumption that this Agreement or any provision hereof be construed
against the party who drafted this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RCN TELECOM SERVICES OF
MASSACHUSETTS, INC.
By /s/ Michael J. Mahoney
-------------------------------------
Name: Michael J. Mahoney
Title: President
BECOCOM, INC.
By /s/ Richard S. Hahn
-------------------------------------
Name: Richard S. Hahn
Title: President
RCN-BECOCOM, LLC
By /s/ Michael A. Adams
-------------------------------------
Name: Michael A. Adams
Title: President of Technology &
Strategic Development
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SCHEDULE 2A
Activities Excluded from Scope of Non-Competition Provision
Existing agreement between BECO and Teleport Communications Group ("TCG"),
dated 11/29/95, concerning certain point-to-point fiber capacity, but not any
expansions or renewals thereof.
Existing agreement between BECO and TCG, dated 4/30/96, concerning certain
point-to-point fiber capacity, but not any expansions or renewals thereof.
Existing agreement between BECO and TCG, dated 8/21/96, concerning certain
point-to-point fiber capacity, but not any expansions or renewals thereof.
Existing agreement between BECO and TCG, dated 9/1/96, concerning certain
point-to-point fiber capacity, but not any expansions or renewals thereof.
Existing agreement between BECO and Metropolitan Fiber System, dated
11/30/93, concerning certain point-to-point fiber capacity, but not any
expansions or renewals thereof.
Nothing in this Agreement shall prevent BecoCom or its Affiliates (or any
successor thereto as owner of its electric transmission and distribution
facilities) from (i) acting solely as a builder, lessor or licensor of sites for
the location of wired or wireless communications facilities by third-party
telecommunications services providers on a non-discriminatory basis, in the case
of wired communications facilities to the extent required by law or regulation,
or (ii) acting solely as a builder, lessor or licensor of facilities for the
transmission of wired communications by third-party telecommunications services
providers on a non-discriminatory basis, to the extent required by law or
regulation.
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