EXHIBIT 10.66

 

STOCK PURCHASE AGREEMENT

 

By and Between

 

CONSOLIDATED EDISON, INC.

 

and

 

FIBERNET TELECOM GROUP, INC.

 

Dated as of December 10, 2004

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TABLE OF CONTENTS

 

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ARTICLE I DEFINITIONS

   1     

Section 1.1

   Definitions    1

ARTICLE II PURCHASE OF SHARES

   13     

Section 2.1

   Purchase of Shares    13

ARTICLE III THE CLOSING

   14     

Section 3.1

   Closing    14     

Section 3.2

   Closing Deliveries    14     

Section 3.3

   Purchase Price Adjustments    15     

Section 3.4

   Closing Date Financial Statements    19

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER

   19     

Section 4.1

   Organization and Related Matters    19     

Section 4.2

   Subsidiaries    20     

Section 4.3

   Authority; No Violation    21     

Section 4.4

   Consents and Approvals    22     

Section 4.5

   Stock Ownership    22     

Section 4.6

   Financial Statements    24     

Section 4.7

   No Other Broker    24     

Section 4.8

   Legal Proceedings    25     

Section 4.9

   No Undisclosed Liabilities    25     

Section 4.10

   Compliance with Applicable Law    25     

Section 4.11

   Absence of Certain Changes    26     

Section 4.12

   Technology and Intellectual Property    28     

Section 4.13

   ERISA; Benefit Plans    29     

Section 4.14

   Taxes    32     

Section 4.15

   Contracts    34     

Section 4.16

   Title to Assets    35     

Section 4.17

   Transactions with Certain Persons    35     

Section 4.18

   Environmental Laws    36     

Section 4.19

   Insurance Coverage    36     

Section 4.20

   Real Property    37     

Section 4.21

   Receivables    38     

Section 4.22

   Labor and Employee Relations    38     

Section 4.23

   Certain Employees    39     

Section 4.24

   Tangible Properties    39     

Section 4.25

   Banks, Brokers and Proxies    40

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER

   41     

Section 5.1

   Organization and Related Matters    41     

Section 5.2

   Authority; No Violation    41     

Section 5.3

   Consents and Approvals    42     

Section 5.4

   Legal Proceedings    43     

Section 5.5

   Investment Intent of Buyer    43     

Section 5.6

   No Other Broker    43     

Section 5.7

   Financing    44

 

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Section 5.8

   Securities Purchase Documents    44     

Section 5.9

   Amendment of Credit Facility    44

ARTICLE VI COVENANTS

   45     

Section 6.1

   Conduct of Business    45     

Section 6.2

   Public Announcements    46     

Section 6.3

   Expenses    46     

Section 6.4

   Access; Certain Communications    47     

Section 6.5

   Regulatory Matters; Third Party Consents    48     

Section 6.6

   Further Assurances    51     

Section 6.7

   Notification of Certain Matters    51     

Section 6.8

   Updated Schedules    51     

Section 6.9

   Access To Records After Closing Date    52     

Section 6.10

   Employee Benefits    53     

Section 6.11

   No Solicitations    60     

Section 6.12

   Change In Name of Company and Subsidiaries; No Transfer Of Rights to Names of
Seller, Seller Affiliates Or Predecessors    60     

Section 6.13

   Retained Liability For Certain Litigation    61     

Section 6.14

   Release of Indemnity Obligations    62     

Section 6.15

   Non-Competition; Confidentiality    62     

Section 6.16

   Estoppel Certificates    65     

Section 6.17

   Cooperation    66     

Section 6.18

   Security and Reimbursement Obligations    66     

Section 6.19

   Insurance    67     

Section 6.20

   Notice of Termination of Securities Purchase Agreement    68     

Section 6.21

   Dissolution of CEC VA    68

ARTICLE VII TAX MATTERS

   68     

Section 7.1

   Indemnity    68     

Section 7.2

   Tax Allocation Agreement Payments    70     

Section 7.3

   Returns and Payments    70     

Section 7.4

   Refunds    72     

Section 7.5

   Contests    72     

Section 7.6

   Section 338(h)(10) Election    73     

Section 7.7

   Time of Payment    74     

Section 7.8

   Cooperation and Exchange of Information    75     

Section 7.9

   Conveyance Taxes    75     

Section 7.10

   Miscellaneous    76

ARTICLE VIII CONDITIONS TO CLOSING

   76     

Section 8.1

   Conditions to Buyer’s Obligations    76     

Section 8.2

   Conditions to Seller’s Obligations    79     

Section 8.3

   Mutual Condition    81

ARTICLE IX SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
INDEMNIFICATION

   81     

Section 9.1

   Survival    81     

Section 9.2

   Obligation of Seller to Indemnify    82     

Section 9.3

   Obligation of Buyer to Indemnify    82

 

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Section 9.4

   Notice and Opportunity to Defend Against Third Party Claims    83     

Section 9.5

   Tax Indemnification    84     

Section 9.6

   Limits on Indemnification    85

ARTICLE X TERMINATION

   86     

Section 10.1

   Termination    86     

Section 10.2

   Obligations upon Termination    87

ARTICLE XI MISCELLANEOUS

   87     

Section 11.1

   Amendment    87     

Section 11.2

   Entire Agreement    87     

Section 11.3

   Interpretation    88     

Section 11.4

   Severability    88     

Section 11.5

   Notices    89     

Section 11.6

   Binding Effect; Persons Benefiting; No Assignment    90     

Section 11.7

   Counterparts    90     

Section 11.8

   No Prejudice    90     

Section 11.9

   Governing Law    90     

Section 11.10

   Limited Liability    90     

Section 11.11

   Jurisdiction and Enforcement    90     

Section 11.12

   WAIVER OF TRIAL BY JURY    91

 

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SCHEDULES

 

Schedule 1.1(a)

   Subsidiaries

Schedule 1.1(b)

   Tax Allocation Agreements

Schedule 1.1(c)

   Required Capital Expenditures Amount

Schedule 1.1(d)

   Working Capital

Schedule 1.1(e)

   55 Broad Street Security Agreement

Schedule 1.1(f)

   111 Eighth Avenue Security Agreement

Schedule 1.1(g)

   Rider X Security Agreement

Schedule 1.1(h)

   Excluded Consents

Schedule 4.1(c)

   Minute Books

Schedule 4.2

   Subsidiary Information

Schedule 4.3(b)

   No Violation, Conflicts or Breaches

Schedule 4.4

   Seller’s Consents and Approvals

Schedule 4.5

   Stock Ownership

Schedule 4.6

   Financial Statements

Schedule 4.8

   Legal Proceedings

Schedule 4.9

   Undisclosed Liabilities

Schedule 4.10

   Compliance with Applicable Law

Schedule 4.11

   Absence of Certain Changes

Schedule 4.12

   Intellectual Property

Schedule 4.13(a)

   Seller’s Benefit Plans

Schedule 4.13(b)

   Company Employee Plans

Schedule 4.14

   Taxes

Schedule 4.15(d)

   Seller-Provided Indebtedness

Schedule 4.16

   Title to Assets

Schedule 4.17

   Transactions with Certain Persons

Schedule 4.18

   Environmental Laws

Schedule 4.20(b)

   Leases

Schedule 4.20(c)

   Necessary Leases

Schedule 4.23

   Employees

Schedule 4.24(a)

   Network Facilities

Schedule 4.25

   Banks, Brokers and Proxies

Schedule 5.3

   Buyer’s Consents and Approvals

Schedule 6.14

   Form of Release

Schedule 6.16

   Form of Estoppel Certificate

Schedule 6.18

   Retained Seller-Provided Indebtedness

Schedule 8.1(d)

   Good Standing Certificates

Schedule 8.1(h)

   Form of Opinion of Seller’s Counsel

Schedule 8.2(f)

   Form of Opinion of Buyer’s Counsel

 

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STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of December 10, 2004, by and between
CONSOLIDATED EDISON, INC., a New York corporation (“Seller”), and FIBERNET
TELECOM GROUP, INC., a Delaware corporation (“Buyer”).

 

RECITALS

 

WHEREAS, Seller is the owner of fifty million (50,000,000) shares (the “Shares”)
of the common stock of Consolidated Edison Communications Holding Company, Inc.,
a New York corporation (the “Company”), which shares constitute all of the
issued and outstanding shares of the Company’s capital stock as of the date
hereof; and

 

WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Shares, upon
the terms and subject to the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be bound hereby, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions. For all purposes of this Agreement, the following terms
shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):

 

“1st Layer Excess Policy” has the meaning set forth in Section 6.19.

 

“1st Layer Excess Renewal Policy” has the meaning set forth in Section 6.19.

 

“55 Broad Street Security Agreement” means the Agreement in the form attached
hereto as Schedule 1(e).

 

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“111 Eighth Avenue Security Agreement” means the Agreement in the form attached
hereto as Schedule 1(f).

 

“2004 Plans” has the meaning set forth in Section 6.10(h).

 

“2005 Plans” has the meaning set forth in Section 6.10(h).

 

“Acquisition Proposal” means any inquiry, proposal or offer from any Person
(other than Buyer or any of its Affiliates) relating to any merger,
consolidation, recapitalization, liquidation or other direct or indirect
business combination or reorganization involving the Company or any Subsidiary,
the sale, transfer, lease, exchange, license or other disposition of all or
substantially all of the assets of the Company or any Subsidiary (other than
sales of inventory or licenses of Intellectual Property Rights in the ordinary
course of business), or any other similar transaction, the consummation of which
could reasonably be expected to impede, interfere with, prevent or materially
delay the consummation of the transactions contemplated by this Agreement or
which could reasonably be expected to diminish significantly the benefits to
Buyer or its Affiliates of the transactions contemplated hereby.

 

“Adjustment Indebtedness” means (a) all indebtedness of the Company or any
Subsidiary for borrowed money; (b) to the extent not otherwise included in (a)
above, all obligations of the Company or any Subsidiary evidenced by notes,
bonds, debentures or other similar instruments; and (c) to the extent not
otherwise included in (a) or (b) above, Capital Expenditure Indebtedness; in the
case of any of (a), (b), or (c) above other than (i) any such indebtedness or
obligations approved by the prior written consent of Buyer and (ii) any
Seller-Provided Indebtedness.

 

“Affiliate” means, with respect to any Person, any other Person who directly or
indirectly controls, is controlled by or is under common control with such
Person. The term “control”, for the purposes of this definition, means the power
to direct or cause the direction of the management or policies of the controlled
Person.

 

“Affiliated Group” has the meaning set forth in Section 4.14(a).

 

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“Agreement” means this Stock Purchase Agreement, including the Schedules hereto,
the Company Employee List, the Contracts List, the Insurance and Bond List, the
Performance Statistics Charts and the Stock Options List, as it may hereafter be
amended from time to time.

 

“Allocation” has the meaning set forth in Section 7.6(b).

 

“Amendment to Credit Agreement” has the meaning set forth in Section 5.9.

 

“Applicable Insurance Policies” has the meaning set forth in Section 6.19.

 

“Asserted Liability” has the meaning set forth in Section 9.4(a).

 

“Benefit Plans” has the meaning set forth in Section 4.13(b).

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks in New York, New York are required to be closed for regular banking
business.

 

“Buyer” has the meaning set forth in the first paragraph of this Agreement.

 

“Buyer Objection Notice” has the meaning set forth in Section 3.3(d)(ii).

 

“Buyer Objection Period” has the meaning set forth in Section 3.3(d)(ii)(A).

 

“Buyer’s Benefit Plans” has the meaning set forth in Section 6.10(e).

 

“Buyer’s Lenders” means the financial institutions party to the Credit
Agreement.

 

“Buyer’s Severance Plan” has the meaning set forth in Section 6.10(c).

 

“Buyer Transaction Documents” has the meaning set forth in Section 5.2(a).

 

“Capital Expenditure Commitment” has the meaning set forth in Section 6.1.

 

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“Capital Expenditure Commitment Budget” means (a) with respect to any calendar
month in the Interim Period that falls within the calendar year 2004, (i)
$717,000 plus (ii) the difference (if a positive number) between the Capital
Expenditure Commitment Budget for the preceding calendar month and the aggregate
Capital Expenditure Commitments for the preceding calendar month, and (b) with
respect to any other calendar month in the Interim Period, (i) $650,000 plus
(ii) the difference (if a positive number) between the Capital Expenditure
Commitment Budget for the preceding calendar month and the aggregate Capital
Expenditure Commitments for the preceding calendar month.

 

“Capital Expenditure Indebtedness” means any indebtedness or obligations
incurred by the Company or any Subsidiary for the purpose of financing any
Capital Expenditures.

 

“Capital Expenditures” means expenditures qualifying as capital expenditures
pursuant to generally accepted accounting principles as used in the United
States of America as in effect at the time of the expenditure, regardless of
whether such expenditures are funded by Capital Expenditure Indebtedness, but
excluding any payroll expenses or employee wages and benefits in respect of
Company Employees that are capitalized or otherwise included in capital
expenditures.

 

“CECONY” means Consolidated Edison Company of New York, Inc.

 

“CFO” means the Chief Financial Officer or the successor to such officer’s
responsibilities.

 

“Claims Notice” has the meaning set forth in Section 9.4(a).

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Closing Date Balance Sheet” means the audited balance sheet (including the
related notes and schedules thereto) of the Company and the Subsidiaries as of
the Closing Date, prepared in accordance with GAAP, consistently applied.

 

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“Closing Date Financial Statements” means, collectively, the Closing Date
Balance Sheet, Closing Date Income Statement and Closing Date Statement of Cash
Flows.

 

“Closing Date Income Statement” means an audited income statement of the Company
and the Subsidiaries for the twelve (12) month period ending on the Closing
Date, prepared in accordance with GAAP, consistently applied.

 

“Closing Date Statement of Cash Flows” means an audited statement of cash flows
of the Company and the Subsidiaries for the twelve (12) month period ending on
the Closing Date, prepared in accordance with GAAP, consistently applied.

 

“Closing Purchase Price Payment” has the meaning set forth in Section 3.2(c).

 

“COBRA” means Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985 as codified under Section 4980B of the Code (as amended) and Title I part 6
of ERISA regulations thereunder.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute.

 

“Company” has the meaning set forth in the Recitals of this Agreement.

 

“Company CIC Plan” has the meaning set forth in Section 6.10(d).

 

“Company Employee List” has the meaning set forth in Section 6.10(j).

 

“Company Employees” has the meaning set forth in Section 4.13(a).

 

“Company Employee Plans” has the meaning set forth in Section 4.13(b).

 

“Company GAAP Financial Statements” has the meaning set forth in Section 4.6(a).

 

“Company Option Plan” means the Consolidated Edison Communications, Inc. Long
Term Stock Incentive Plan as

 

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ratified, confirmed and approved by the Company to be amended to express the
application of such plan to the Company and to shares of capital stock of the
Company (including with respect to stock options previously granted under such
plan).

 

“Confidentiality Agreement” means that certain agreement dated February 17,
2004, between Buyer and Seller with respect to the confidentiality of
information relating to Seller, the Company, the Subsidiaries, their respective
Affiliates and/or other Persons that was provided to Buyer or its
representatives by or at the request of Seller, the Company and/or their
respective Affiliates, as such agreement may be amended from time to time.

 

“Consolidated Return” has the meaning set forth in Section 7.3(a).

 

“Contest” has the meaning set forth in Section 7.5(a).

 

“Contracts” has the meaning set forth in Section 4.15(a).

 

“Contracts List” has the meaning set forth in Section 4.15(a).

 

“Credit Agreement” has the meaning set forth in Section 5.9.

 

“CSS” means Competitive Shared Services, Inc.

 

“Downward Capital Expenditure Adjustment” has the meaning set forth in Section
3.3(a)(ii).

 

“Downward Working Capital Adjustment” has the meaning set forth in Section
3.3(c)(ii).

 

“Election” has the meaning set forth in Section 7.6(a).

 

“Encumbrance” means any lien, pledge, security interest, claim, easement or
other encumbrance; provided, however, that this definition of “Encumbrance”
shall not include: (a) with respect to all property other than the Shares, (i)
liens for current Taxes not yet due and payable, including liens for
nondelinquent ad valorem Taxes and nondelinquent statutory liens arising other
than by reason

 

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of any default on the part of Seller, the Company or any Subsidiary for which
appropriate reserves have been established and are reflected on the relevant
financial statements, (ii) such liens, minor imperfections of title or easements
on real property, leasehold estates or personalty as do not detract from the
value thereof in a material respect and do not interfere in a material respect
with the present use of the property subject thereto, and (iii) materialmen’s,
mechanics’, workmen’s, repairmen’s, employees’, carriers’, warehousemen’s and
other like liens arising in the ordinary course of business or relating to any
construction, rebuilding or repair of any property leased pursuant to any lease
agreement, so long as any such lien does not materially impair the value of such
leased property; and (b) with respect to the Shares only, any lien, pledge,
security interest, claim, easement or other encumbrance (i) arising as a result
of any action taken by Buyer or any of its Affiliates, and (ii) imposed upon the
transfer of the Shares by any registration provision of the Securities Act of
1933, as amended, or any applicable state securities or other law regulating the
disposition of the Shares.

 

“Environmental Laws” means any applicable law relating to the control of any
pollutant or hazardous material, the protection of the environment or the effect
of the environment on human health, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended.

 

“Environmental Permits” means all permits, approvals, licenses and other
authorizations required under any Environmental Law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Estimated Adjustment Amount” has the meaning set forth in Section 3.3(d)(i).

 

“Excluded Consents” means the filings, notifications, authorizations, consents
and approvals listed in Schedule 1.1(h).

 

“Final Adjustment Amount” has the meaning set forth in Section 3.3(d)(iv).

 

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“Final Adjustment Certificate” has the meaning set forth in Section 3.3(d)(iv).

 

“Financial Statements Accounting Firm” has the meaning set forth in Section 3.4.

 

“Franchise Fees” has the meaning set forth in Section 7.1(b)(i).

 

“GAAP” means generally accepted accounting principles as used in the United
States of America as in effect at the time any applicable financial statements
were prepared or any act requiring the application of GAAP was performed.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Indebtedness” means, with respect to any Person, (a) all indebtedness of such
Person, whether or not contingent, for borrowed money, (b) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(c) all indebtedness created or arising under any conditional sale agreement
with respect to any property acquired by such Person, (d) all obligations of
such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (e) all obligations, contingent or
otherwise, of such Person under banker’s acceptances, letters of credit or
similar facilities, and (f) all Indebtedness of others referred to in clauses
(a) through (e) above guaranteed directly or indirectly in any manner by such
Person. For the avoidance of doubt, “Indebtedness” with respect to the Company
or any Subsidiary shall include Capital Expenditure Indebtedness and Adjustment
Indebtedness, but shall not include any Seller-Provided Indebtedness.

 

“Indebtedness Adjustment” has the meaning set forth in Section 3.3(b).

 

“Indemnifying Party” has the meaning set forth in Section 9.4(a).

 

“Indemnitee” has the meaning set forth in Section 9.4(a).

 

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“Independent Accounting Firm” means an independent accounting firm of national
reputation that is selected by Seller and Buyer or, if Seller and Buyer cannot
agree within five (5) days after Seller’s receipt of a Buyer Objection Notice,
then by Seller’s and Buyer’s accounting firms; provided, however, that if
Seller’s and Buyer’s accounting firms cannot agree on an independent accounting
firm within five (5) days after such decision is referred to them for
determination, then the independent accounting firm shall be selected by the
American Arbitration Association.

 

“Insurance and Bond List” has the meaning set forth in Section 4.19.

 

“Interim Adjustment Amount” has the meaning set forth in Section 3.3(d)(ii)(A).

 

“Interim Adjustment Date” has the meaning set forth in Section 3.3(d)(ii)(B).

 

“Intellectual Property Right” has the meaning set forth in Section 4.12(a).

 

“Interim Financial Statements” has the meaning set forth in Section 4.6(a).

 

“Interim Period” has the meaning set forth in Section 3.3(a)(i).

 

“IRS” means the Internal Revenue Service.

 

“IRUs” has the meaning set forth in Section 4.11(e).

 

“Leases” has the meaning set forth in Section 4.20(b).

 

“Loss” means any and all claims, losses, liabilities, and damages and reasonable
costs and expenses (including reasonable attorney’s fees and expenses) related
thereto.

 

“Mastec Litigation” has the meaning set forth in Section 6.13.

 

“Material Adverse Effect” means a material adverse effect on the operations or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a

 

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whole; provided, however, to the extent such effect results from any of the
following, such effect shall not be considered a Material Adverse Effect:(i)
general conditions applicable to the economy of the United States or elsewhere,
including changes in interest rates and changes in the stock or other financial
markets; (ii) conditions generally affecting the telecommunications industry; or
(iii) conditions or effects resulting from or relating to the announcement or
the existence or terms of this Agreement or the consummation of the transactions
contemplated hereby.

 

“Necessary Leases” has the meaning set forth in Section 4.20(c).

 

“Net Non-Disputed Adjustment Amount” means the net adjustment made to the
Purchase Price in connection with the Non-Disputed Initial Adjustment Amount and
the Non-Disputed Interim Adjustment Amount.

 

“Network Facilities” has the meaning set forth in Section 4.24.

 

“Non-Disputed Initial Adjustment Amount” has the meaning set forth in Section
3.3(d)(i)(B).

 

“Non-Disputed Interim Adjustment Amount” has the meaning set forth in Section
3.3(d)(ii)(B).

 

“Performance Statistic Charts” has the meaning set forth in Section 4.24.

 

“Permits” has the meaning set forth in Section 4.10(a).

 

“Person” means any individual, corporation, company, partnership (limited or
general), joint venture, limited liability company, association, trust or other
entity.

 

“Post-Closing Adjustment Certificate” has the meaning set forth in Section
3.3(d)(ii).

 

“Pre-Closing Adjustment Certificate” has the meaning set forth in Section
3.3(d)(i).

 

“Purchase Price” has the meaning set forth in Section 2.1.

 

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“Release” has the meaning set forth in Section 6.14.

 

“Replaced Seller-Provided Indebtedness” has the meaning set forth in Section
6.18.

 

“Required Capital Expenditures Amount” means the amount of Capital Expenditures
determined in accordance with Schedule 1.1(c) hereto.

 

“Restricted Area” means the following geographic areas: the City of New York,
Westchester County in the State of New York, Hudson County in the State of New
Jersey Fairfield County in the State of Connecticut and any other county in the
State of New York, New Jersey, Connecticut or any other State in which (a)
customer premises receiving Restricted Business services from the Company or any
Subsidiary as of the Closing Date are located and (b) either (i) Network
Facilities owned by the Company or any Subsidiary are located as of the Closing
Date or (ii) Network Facilities used by the Company or any Subsidiary pursuant
to an agreement for IRUs entered into by the Company or any Subsidiary are
located as of the Closing Date.

 

“Restricted Business” means the telecommunications services business of the
Company and the Subsidiaries as conducted on the Closing Date.

 

“Restricted Parties” has the meaning set forth in Section 6.15(a).

 

“Restricted Period” has the meaning set forth in Section 6.15(a).

 

“Retained Seller-Provided Indebtedness” has the meaning set forth in Section
6.18.

 

“Rider X Security Agreement” means the Agreement in the form attached hereto as
Schedule 1.1(g).

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Purchase Agreement” has the meaning set forth in Section 5.8.

 

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“Securities Purchase Documents” has the meaning set forth in Section 5.8.

 

“Security Agreements” means, collectively, the 55 Broad Street Security
Agreement, the 111 Eighth Avenue Security Agreement and the Rider X Security
Agreement.

 

“Seller” has the meaning set forth in the first paragraph of this Agreement.

 

“Seller-Provided Indebtedness” means all guarantees, letters of credit or other
security issued, granted, furnished or obtained by Seller or any of its
Affiliates (other than the Company or any Subsidiary) on behalf of or for the
benefit of the Company or any of the Subsidiaries.

 

“Seller’s Benefit Plans” has the meaning set forth in Section 4.13(a).

 

“Seller Transaction Documents” has the meaning set forth in Section 4.3(a).

 

“Shares” has the meaning set forth in the Recitals of this Agreement.

 

“Stock Options List” has the meaning set forth in Section 4.5.

 

“Subsidiaries” or “Subsidiary” means (a) as of the date hereof, the Persons or a
Person, as the case may be, listed in Section I of Schedule 1.1(a) and (b) as of
the Closing Date, the Persons or a Person, as the case may be, listed in Section
II of Schedule 1.1(a).

 

“Tax” means all taxes, charges, fees, surcharges (including the federal
Universal Service Fund charges and surcharges, the New York State Targeted
Accessibility Fund charges and surcharges and any other regulatory charge or
surcharge that may be imposed by any Governmental Authority) and levies based
upon gross or net income, gross receipts, franchises, premiums, profits, sales,
use, value added, transfer, employment or payroll, including any ad valorem,
environmental, excise, license, occupation, property, severance, stamp,
withholding, or windfall profit tax, any custom duty or other tax, together with
any interest credit or charge, penalty, addition to tax or

 

12

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additional amount imposed by or payable to any Taxing Authority.

 

“Tax Allocation Agreements” means the tax allocation agreements to which the
Company or the Subsidiaries are parties, which are noted on Schedule 1.1(b).

 

“Tax Return” means, with respect to any corporation or group of corporations,
all reports, estimates, extension requests, information statements and returns
relating to, or required to be filed in connection with, any payment of any Tax.

 

“Taxing Authority” means the IRS and any other domestic or foreign Governmental
Authority responsible for the administration of any Tax.

 

“Treasury Regulations” has the meaning set forth in Section 7.6(a).

 

“Updated Schedules” has the meaning set forth in Section 6.8.

 

“Upward Capital Expenditure Adjustment” has the meaning set forth in Section
3.3(a)(i).

 

“Upward Working Capital Adjustment” has the meaning set forth in Section
3.3(c)(i).

 

“Wire Transfer” means a payment in immediately available funds by wire transfer
in lawful money of the United States of America to such account or accounts as
shall have been designated by notice to the paying party.

 

“WTC Site Cases” has the meaning set forth in Schedule 4.8 to this Agreement.

 

“Working Capital” means the working capital of the Company and the Subsidiaries
as calculated in accordance with Schedule 1.1(d) hereto.

 

ARTICLE II

PURCHASE OF SHARES

 

Section 2.1 Purchase of Shares. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing Seller shall sell to Buyer, and Buyer
shall

 

13

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purchase from Seller, subject to Section 3.3 below, the Shares for an aggregate
amount equal to Thirty Seven Million Dollars ($37,000,000) (the “Purchase
Price”).

 

ARTICLE III

THE CLOSING

 

Section 3.1 Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the purchase and sale of the Shares (the “Closing”)
shall be at 10:00 A.M. local time at the offices of Seller located at 4 Irving
Place, New York, New York 10003, on the third Business Day following the date on
which all of the conditions set forth in Article VIII (other than those
conditions designating instruments, certificates or other documents to be
delivered at the Closing) shall have been satisfied or waived, or such other
location, date and time as Buyer and Seller shall agree upon in writing. The
date upon which Closing actually occurs is hereinafter referred to as the
“Closing Date” and the Closing shall be effective for all purposes herein as of
12:00 noon New York City time on the Closing Date (or such other time as Buyer
and Seller shall agree upon in writing).

 

Section 3.2 Closing Deliveries. At the Closing, the parties hereto shall take
the following actions:

 

(a) Seller shall deliver to Buyer (or Buyer’s designee as provided in Section
11.6 hereof) one or more certificates representing all of the Shares, duly
executed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer, with all appropriate stock transfer tax stamps
affixed;

 

(b) Seller shall deliver to Buyer the minute books, stock ledgers, corporate
seal and all other corporate books and records of the Company and the
Subsidiaries, which delivery may be effected by leaving the foregoing books,
ledgers, seal and records in the offices of the Company and the Subsidiaries as
of the Closing Date;

 

(c) Buyer shall deliver to Seller the Purchase Price as due and payable at the
Closing (taking into account the Non-Disputed Initial Adjustment Amount) (the
“Closing Purchase Price Payment”), by Wire Transfer. Any disputed

 

14

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adjustments to the Purchase Price shall be resolved and paid in accordance with
Section 3.3 below.

 

(d) Each party hereto shall deliver to the other the opinions, certificates and
other documents, as applicable, required to be delivered by such party pursuant
to Article VIII hereof; and

 

(e) Upon receipt of the Shares, Buyer shall deliver to Seller a receipt
evidencing receipt of the Shares and, upon receipt of the Closing Purchase Price
Payment, Seller shall deliver to Buyer a receipt evidencing receipt of the
Closing Purchase Price Payment.

 

Section 3.3 Purchase Price Adjustments.

 

(a) Capital Expenditure Adjustment.

 

(i) If, during the period from the date hereof to and including the Closing Date
(the “Interim Period”), the Company and the Subsidiaries, on a combined basis,
have made and paid for Capital Expenditures in excess of the Required Capital
Expenditures Amount, then the Purchase Price shall be increased by an amount
equal to such excess (the “Upward Capital Expenditure Adjustment”).

 

(ii) If, during the Interim Period, the Company and the Subsidiaries, on a
combined basis, have made and paid for Capital Expenditures in an amount that is
less than the Required Capital Expenditures Amount, then the Purchase Price
shall be decreased by an amount equal to the difference between the Required
Capital Expenditures Amount and the amount of Capital Expenditures made and paid
for by the Company and the Subsidiaries during the Interim Period (the “Downward
Capital Expenditure Adjustment”).

 

(b) Indebtedness Adjustment. The Purchase Price shall be reduced, dollar for
dollar, by the outstanding principal amount of any Adjustment Indebtedness on
the Closing Date (the “Indebtedness Adjustment”).

 

(c) Working Capital Adjustment.

 

(i) If the Working Capital of the Company and the Subsidiaries, on a combined
basis, as of the Closing Date exceeds $0, then the Purchase Price shall be
increased, dollar for dollar, in an amount equal to such excess (the “Upward
Working Capital Adjustment”).

 

15

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(ii) If the Working Capital of the Company and the Subsidiaries, on a combined
basis, as of the Closing Date is less than $0, then the Purchase Price shall be
decreased, dollar for dollar, in an amount equal to such negative amount (the
“Downward Working Capital Adjustment”).

 

(d) Determination and Payment of Adjustments.

 

(i) (A) At least fifteen (15) days prior to the Closing Date, Seller shall
prepare and deliver to Buyer a certificate of the CFO of CSS (the “Pre-Closing
Adjustment Certificate”), setting forth Seller’s good faith estimate, as of the
Closing Date, of the Upward Capital Expenditure Adjustment or Downward Capital
Expenditure Adjustment (if any), the Indebtedness Adjustment (if any), the
Upward Working Capital Adjustment or Downward Working Capital Adjustment (if
any) and the cumulative net adjustment amount as a result of the foregoing
adjustments (the “Estimated Adjustment Amount”). Within ten (10) days following
Buyer’s receipt of the Pre-Closing Adjustment Certificate, Buyer may object in
good faith to the Estimated Adjustment Amount in writing, in which case Buyer
shall set forth the reason(s) for its good faith dispute. For purposes of
Buyer’s review of the Pre-Closing Adjustment Certificate, Seller agrees to
permit Buyer and its accountants to examine all working papers, schedules and
other documentation used or prepared in producing the Pre-Closing Adjustment
Certificate.

 

(B) If Buyer objects to the Estimated Adjustment Amount within such ten (10) day
period, Seller and Buyer shall attempt to resolve such dispute through good
faith negotiation. If Seller and Buyer are unable to resolve such dispute by the
date that is one (1) day prior to the Closing Date (or if Buyer fails to object
to the Estimated Adjustment Amount within the time period specified above), the
amount of the Estimated Adjustment Amount not disputed in good faith by Buyer
(or if Buyer fails to object to the Estimated Adjustment Amount within the time
period specified above, the Estimated Adjustment Amount) (the “Non-Disputed
Initial Adjustment Amount”) shall be paid by Buyer or deducted from the Purchase
Price, as the case may be, on the Closing Date, and any good faith dispute with
respect to the Estimated Adjustment Amount

 

16

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shall be resolved in connection with the adjustments provided in Sections
3.3(d)(ii) and/or (iii) below.

 

(ii) (A) Within twenty (20) days after the Closing Date, Seller shall prepare
and deliver to Buyer a certificate of the CFO of CSS (the “Post-Closing
Adjustment Certificate”), setting forth Seller’s calculation, as of the Closing
Date, of the Upward Capital Expenditure Adjustment or Downward Capital
Expenditure Adjustment (if any), the Indebtedness Adjustment (if any), the
Upward Working Capital Adjustment or Downward Working Capital Adjustment (if
any) and the cumulative net adjustment amount as a result of the foregoing
adjustments (the “Interim Adjustment Amount”). Within ten (10) days following
Buyer’s receipt of the Post-Closing Adjustment Certificate (the “Buyer Objection
Period”), Buyer may object in good faith to the Interim Adjustment Amount in
writing, in which case it shall set forth the reason(s) for its good faith
dispute (any such written objection, a “Buyer Objection Notice”). For purposes
of Buyer’s review of the Post-Closing Adjustment Certificate, Seller agrees to
permit Buyer and its accountants to examine all working papers, schedules and
other documentation used or prepared in producing the Post-Closing Adjustment
Certificate.

 

(B) If Buyer objects to the Interim Adjustment Amount within the Buyer Objection
Period, Seller and Buyer shall attempt to resolve such dispute through good
faith negotiation. If Seller and Buyer are unable to resolve such dispute within
five (5) days after the end of the Buyer Objection Period (or if Buyer fails to
object to the Interim Adjustment Amount within the Buyer Objection Period),
then, if the Interim Adjustment Amount not disputed in good faith by Buyer (or,
if Buyer fails to object to the Interim Adjustment Amount within the time period
specified above, the Interim Adjustment Amount) (the “Non-Disputed Interim
Adjustment Amount”) is greater or less than the Non-Disputed Initial Adjustment
Amount, then on the Interim Adjustment Date (as defined below), (1) to the
extent that the Non-Disputed Interim Adjustment Amount exceeds the Non-Disputed
Initial Adjustment Amount, Buyer shall pay to Seller the amount of such excess,
and (2) to the extent that the Non-Disputed Interim Adjustment Amount is less
than the Non-Disputed Initial Adjustment Amount, Seller shall pay to Buyer the
amount of such deficiency. Any amount paid pursuant to this Section
3.3(d)(ii)(B) shall be paid with interest calculated at the prime rate of

 

17

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the JP Morgan Chase Bank in effect on the Closing Date and applicable to the
period from the Closing Date to the date of payment, and shall be paid by Wire
Transfer. The “Interim Adjustment Date” as used herein means (x) to the extent
that Buyer does not dispute the Interim Adjustment Amount contained in the
Post-Closing Adjustment Certificate pursuant to Section 3.3(d)(ii)(A), the
twentieth (20th) day after Buyer’s receipt of the Post-Closing Adjustment
Certificate, or (y) to the extent that Buyer disputes the Interim Adjustment
Amount contained in the Post-Closing Adjustment Certificate pursuant to Section
3.3(d)(ii)(A), the tenth (10th) day following the expiration of the Buyer
Objection Period. Any good faith dispute with respect to the Interim Adjustment
Amount shall be resolved in connection with the adjustment provided in Section
3.3(d)(iii) below.

 

(iii) Within ten (10) days of Buyer’s delivery to Seller of the Closing Date
Financial Statements pursuant to Section 3.4 below, together with the working
papers, schedules and other documentation which were used or prepared in
producing the Closing Date Financial Statements and which are reasonably
necessary for Seller to prepare the Final Adjustment Certificate (as defined
below), Seller shall deliver to Buyer the final calculation (the “Final
Adjustment Certificate”), as of the Closing Date, of the Upward Capital
Expenditure Adjustment or Downward Capital Expenditure Adjustment (if any), the
Indebtedness Adjustment (if any), the Upward Working Capital Adjustment or
Downward Working Capital Adjustment (if any) and the cumulative net adjustment
amount as a result of the foregoing adjustments, all as determined based on the
Closing Date Financial Statements (the “Final Adjustment Amount”). If the Final
Adjustment Amount is greater or less than the Net Non-Disputed Adjustment
Amount, then, within five (5) Business Days after the date of the Final
Adjustment Certificate, (1) to the extent that the Final Adjustment Amount
exceeds the Net Non-Disputed Adjustment Amount, Buyer shall pay to Seller the
amount of such excess, and (2) to the extent that the Final Adjustment Amount is
less than the Net Non-Disputed Adjustment Amount, Seller shall pay to Buyer the
amount of such deficiency. Any amount paid pursuant to this Section 3.3(d)(iii)
shall be paid with interest calculated at the prime rate of the JP Morgan Chase
Bank in effect on the Closing Date and applicable to the period from the Closing
Date to the date of payment, and shall be paid by Wire

 

18

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Transfer. The Final Adjustment Amount, as determined in accordance with this
Section 3.3(d)(iii) based on the Closing Financial Statements, shall be final,
binding and conclusive on Buyer and Seller, including with respect to any
remaining disputed adjustment amounts.

 

Section 3.4 Closing Date Financial Statements. Promptly after the date hereof,
Seller shall cause the Company to retain an independent accounting firm (the
“Financial Statements Accounting Firm”) to commence the work that will be
necessary to prepare and deliver the Closing Date Financial Statements. After
the Closing Date, Buyer shall cause the Company to cause the Financial
Statements Accounting Firm to prepare and deliver to Seller the Closing Date
Financial Statements within forty-five (45) days after Closing. Seller shall
cooperate with Buyer, to the extent reasonably requested by Buyer, in connection
with Buyer’s performance of its obligations under this Section 3.4. All amounts
payable to the Financial Statements Accounting Firm shall be paid by Buyer and,
to the extent that any such amounts are required to be paid by the Company prior
to the Closing or by Seller at any time, Buyer shall promptly reimburse the
Company or Seller, as applicable, for such payments.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as otherwise set forth in a Schedule or an Updated Schedule hereto or in
the Stock Options List, the Contracts List or the Insurance and Bond List,
Seller hereby represents and warrants to Buyer as of the date hereof:

 

Section 4.1 Organization and Related Matters.

 

(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York and has the corporate power and
authority to carry on its business as it is now being conducted and to own,
lease or operate all of its properties and assets, and is duly licensed or
qualified to do business and is in good standing in each state in which the
nature of the business there conducted by it or the character of the assets
there owned by it makes such qualification or licensing necessary, except where
the failure to be so

 

19

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qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(b) Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York and has the corporate power and
authority to own the Shares.

 

(c) Except as set forth on Schedule 4.1(c), the minute books of the Company and
the Subsidiaries contain accurate records of all meetings and accurately reflect
all other actions taken by the stockholders, Boards of Directors and all
committees of the Boards of Directors of the Company and the Subsidiaries,
except where the failure to keep such records or accurately reflect all actions
taken would not, individually or in the aggregate, have a material effect on the
Company and the Subsidiaries, taken as a whole. Except as set forth on Schedule
4.1(c), Seller has made complete and accurate copies of all such minute books
and the stock register of the Company and each Subsidiary available for review
by Buyer.

 

Section 4.2 Subsidiaries.

 

(a) Except as set forth on Schedule 4.2, all of the outstanding shares of
capital stock of, and limited liability member interests in, the Subsidiaries,
as applicable, are owned beneficially and of record, directly or indirectly, by
the Company, free and clear of any Encumbrances. Except as set forth on Schedule
4.2, each Subsidiary is duly organized, validly existing and in good standing
under the laws of the state of its organization, and, as applicable, has the
corporate or limited liability company power and authority to carry on its
business as now being conducted and to own, lease and operate all of its
properties and assets. Each Subsidiary is duly licensed or qualified to do
business and is in good standing in each state in which the nature of the
business there conducted by it or the character of the assets there owned by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(b) Except as set forth on Schedule 4.2, and except for the Subsidiaries, there
are no corporations, limited liability companies, partnerships, or other
entities in

 

20

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which the Company owns, of record or beneficially, any direct or indirect equity
interest or any right (contingent or otherwise) to acquire the same.

 

Section 4.3 Authority; No Violation.

 

(a) Seller has full corporate power and authority to execute and deliver this
Agreement, the Security Agreements and the other documents required to be
executed and delivered by Seller in connection herewith and therewith
(collectively, the “Seller Transaction Documents”) and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Seller Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by all requisite corporate action on the part of Seller, and no other corporate
proceedings on the part of Seller are necessary to approve this Agreement and
the other Seller Transaction Documents and to consummate the transactions
contemplated hereby or thereby. This Agreement and each other Seller Transaction
Document has been duly and validly executed and delivered by Seller and
(assuming the due authorization, execution and delivery of this Agreement and
each other Seller Transaction Document by the other party or parties thereto)
constitute the valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms.

 

(b) Except as set forth on Schedule 4.3(b) and assuming that the filings,
notifications, authorizations, consents, orders and/or approvals referred to in
Section 4.4 are, as applicable, duly made and/or obtained, neither the execution
and delivery of this Agreement or any other Seller Transaction Document by
Seller, nor the consummation by Seller of the transactions contemplated hereby
or thereby to be performed by it, nor compliance by Seller with any of the terms
or provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Seller, the Company, or any
Subsidiary, or (ii) (A) violate any applicable law with respect to Seller, the
Company, any Subsidiary, or any of their respective properties or assets, (B)
result in the creation of any Encumbrance upon any of the Shares or upon any of
the assets or properties of the Company or any Subsidiary, or (C) violate,
conflict with, result in a breach of any provision of, or constitute a default
under,

 

21

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any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Seller, the Company, or any Subsidiary
is a party, or by which Seller, the Company, or any Subsidiary or any of their
respective properties or assets may be bound or affected, except for such
violations, Encumbrances, conflicts, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.

 

Section 4.4 Consents and Approvals. Except for (i) the filings, notifications,
authorizations, consents, orders or approvals listed in Schedule 4.4, and (ii)
such other filings, notifications, authorizations, consents, orders or
approvals, the failure of which to make or obtain would not, individually or in
the aggregate, have a Material Adverse Effect, no authorizations, consents,
orders or approvals of or filings or notifications to any Governmental Authority
or third party are necessary in connection with the execution and delivery by
Seller of this Agreement or any other Seller Transaction Document, and the
consummation by Seller of the transactions contemplated hereby or thereby. For
the avoidance of doubt, Seller and Buyer specifically acknowledge and agree that
Section 6.5, rather than this Section 4.4, governs their respective obligations
with respect to making, obtaining and rendering cooperation in connection with
the filings, notifications, authorizations, consents, orders and/or approvals
listed in Schedules 4.4 and 5.3.

 

Section 4.5 Stock Ownership. Seller owns beneficially and of record all of the
Shares, free and clear of all Encumbrances. Except to the extent that any of the
options set forth on the Stock Options List are exercised during the Interim
Period and, subject to the last sentence of Section 6.10(g), the Company is
required to issue stock of the Company in connection therewith, upon
consummation of the transactions contemplated hereby, Buyer will own all of the
issued and outstanding capital stock of the Company free and clear of all
Encumbrances. Seller has the full and unrestricted power to sell, assign,
transfer and deliver the Shares to Buyer upon the terms and subject to the
conditions of this Agreement free and clear of Encumbrances. Except to the
extent that any of the options set forth on the Stock Options List are exercised
during the Interim Period and, subject to the last sentence of Section 6.10(g),
the Company is required to issue stock of

 

22

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the Company in connection therewith, there are no shares of capital stock of the
Company issued or outstanding other than the Shares. All of the Shares are duly
authorized, validly issued, fully paid, nonassessable and free of any preemptive
rights. By letter of even date herewith, Seller provided to Buyer a list (the
“Stock Options List”) setting forth, as of the date hereof, (i) the names of all
Persons who have been granted options to purchase capital stock of the Company
pursuant to the Company Option Plan (other than those options which have
terminated, expired or been forfeited), (ii) the maximum number of shares of
capital stock of the Company subject to such options, (iii) the duration of such
options, (iv) the minimum strike price of such options and (v) certain
information pertaining to the vesting of options issued under the Company Option
Plan. None of the options set forth on the Stock Options List have been
exercised as of the date hereof. Except as set forth on the Stock Options List,
there is no outstanding option, warrant, right, subscription, call, unsatisfied
preemptive right, convertible or exchangeable security, or other agreement or
right of any kind to purchase or otherwise acquire any capital stock of the
Company. Except as set forth on Schedule 4.5, all of the issued and outstanding
shares of capital stock of, and limited liability member interests in, the
Subsidiaries, as applicable, are duly authorized, validly issued, fully paid,
nonassessable and free of any preemptive rights, and are owned beneficially and
of record by the Company or another of the Subsidiaries, free and clear of all
Encumbrances. Except as set forth on Schedule 4.5, there is no outstanding
option, warrant, right, subscription, call, unsatisfied preemptive right,
convertible or exchangeable security, or other agreement or right of any kind to
purchase or otherwise acquire, in each case from the Company or any Subsidiary,
any capital stock of, or limited liability member interests in any Subsidiary,
as applicable. Except as set forth on Schedule 4.5, there is no outstanding
security of any kind convertible into or exchangeable for the capital stock of,
or limited liability member interests in, any Subsidiary, as applicable, and
there is no outstanding contract or other agreement of Seller, the Company, or
any Subsidiary to purchase, redeem or otherwise acquire any outstanding shares
of capital stock of, or limited liability member interests in, the Company or
any Subsidiary, as applicable.

 

23

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Section 4.6 Financial Statements.

 

(a) Seller has previously furnished Buyer with true and correct copies of
audited consolidated financial statements for the Company and the Subsidiaries
as of and for the years ended December 31, 2003, 2002 and 2001 (collectively,
the “Company GAAP Financial Statements”) and interim unaudited consolidated
financial statements for the Company and the Subsidiaries as of and for the
quarterly period ended June 30, 2004 (the “Interim Financial Statements”). Each
of the balance sheets included in the Company GAAP Financial Statements fairly
presents in all material respects the financial position of the Company and the
Subsidiaries as of its date and each of the statements of operations and cash
flow statements included in the Company GAAP Financial Statements fairly
presents in all material respects the results of operations and cash flows of
the Company and the Subsidiaries for the period therein set forth, in each case
in accordance with GAAP applied on a consistent basis (except as may be
disclosed in the notes thereto and except as set forth on Schedule 4.6). Except
as set forth on Schedule 4.6, the Interim Financial Statements were prepared in
a manner consistent with that employed in the Company GAAP Financial Statements.
The Interim Financial Statements do not contain footnote disclosures and are
subject to normal recurring year-end adjustments, but otherwise fairly present
in all material respects the financial position and results of operations of the
Company and the Subsidiaries for the periods and as of the dates therein set
forth.

 

(b) Except as set forth on Schedule 4.6, the books of account and other
financial records of the Company and each Subsidiary: (i) reflect all material
items of income and expense and all material assets and liabilities required to
be reflected therein in accordance with GAAP applied on a basis consistent with
the past practices of the Company and the Subsidiaries or statutory accounting
principles, as applicable, (ii) are in all material respects complete and
correct and do not contain or reflect any material inaccuracies or
discrepancies, and (iii) have been maintained in accordance with good business,
accounting and actuarial practices, as applicable.

 

Section 4.7 No Other Broker. Other than Morgan Stanley & Co. Incorporated, the
fees and expenses of which will be paid by Seller, no broker, finder or similar

 

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intermediary has acted for or on behalf of Seller or the Company or the
Subsidiaries, or is entitled to any broker’s, finder’s or similar fee or other
commission from Seller, the Company or the Subsidiaries, in connection with this
Agreement or the transactions contemplated hereby.

 

Section 4.8 Legal Proceedings. Except as set forth on Schedule 4.8, there are no
pending, and no officer of the Company has received any written notice
threatening any, actions, investigations or proceedings against or otherwise
affecting the Company or any Subsidiary or any of their respective properties or
assets, or challenging the validity or propriety of the transactions
contemplated by this Agreement, and there is no injunction, order, judgment or
decree imposed upon the Company or any Subsidiary, or any of their respective
properties or assets.

 

Section 4.9 No Undisclosed Liabilities. Except for (i) those liabilities or
items set forth on Schedule 4.9, (ii) those liabilities that are reflected or
reserved against on the Company GAAP Financial Statements or the Interim
Financial Statements, and (iii) liabilities incurred since June 30, 2004 in the
ordinary course of business consistent with past practice, no liabilities have
been incurred by the Company or the Subsidiaries other than those that would
not, individually or in the aggregate, require payments in excess of $120,000.

 

Section 4.10 Compliance with Applicable Law.

 

(a) Except as set forth on Schedule 4.10, each of the Company and the
Subsidiaries holds in full force and effect all material licenses, franchises,
permits and authorizations, other than Environmental Permits (which are
addressed solely in Section 4.18), (“Permits”) necessary for the lawful
ownership and use of their respective properties and assets and the conduct of
their respective businesses (as currently conducted) under applicable laws
relating to the Company and the Subsidiaries, and there has been no material
violation of any Permit nor has Seller, the Company or any Subsidiary received
written notice asserting any such violation.

 

(b) Except as set forth on Schedule 4.10, each of the Company and the
Subsidiaries is in compliance in all material respects with each applicable law
relating to it or any of its assets, properties or operations.

 

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Section 4.11 Absence of Certain Changes. Except (i) as set forth on Schedule
4.11, (ii) as reflected on the Company GAAP Financial Statements or the Interim
Financial Statements, (iii) as otherwise contemplated or permitted by this
Agreement, including Section 6.1 hereof, or (iv) as otherwise approved by the
prior written consent of Buyer, since December 31, 2003, the Company and the
Subsidiaries, taken as a whole, (x) have conducted their business in the
ordinary course of business consistent with past practice and (y) have not:

 

  (a) taken any action, or failed to take any action, that has caused the assets
or properties (whether tangible or intangible) of the Company or any Subsidiary
to be subjected to any Encumbrance;

 

  (b) made any change in its fiscal year, except as required by law, GAAP or
statutory accounting practices of its state of domicile or made any change in
its accounting methods, principles or practices or any change in depreciation or
amortization policies or rates therefor adopted by it;

 

  (c) issued, sold, pledged, encumbered or disposed of, any of its capital
stock, notes, bonds or other securities, or any option, warrant or other right
to acquire the same;

 

  (d) split, combined or reclassified any shares of capital stock, or redeemed,
repurchased or otherwise acquired any of its capital stock;

 

  (e)

merged with, entered into a consolidation with or acquired or sold an interest
of 5% or more in any Person or acquired or sold, in one transaction or a series
of related transactions, a substantial portion of the assets or business of any
Person or any division or line of business thereof, or otherwise acquired or
sold any assets or securities (other than fixed maturity

 

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securities, cash and short-term investments) with an aggregate value in excess
of $150,000 other than in the ordinary course of the Company’s business
consistent with past practice and other than the granting of any indefeasible
rights to use (“IRUs”), any IRU calls or any calls on equipment;

 

  (f) except as required by law, rule or regulation or any collective bargaining
agreement and except for increases in the ordinary course of business consistent
with past practice, granted or committed to any increase, or announced any
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable to any of its senior officers who in the preceding twelve
(12) months received compensation in excess of $200,000, or any director,
including any increase or change pursuant to any Benefit Plans;

 

  (g) amended its charter or Bylaws (or other organizational documents), except
as permitted under Section 6.12 hereof;

 

  (h) paid, discharged, settled or satisfied any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) except (i)
where the amount that remains to be paid after the Closing Date is $150,000 or
less, (ii) for repayment of Indebtedness or (iii) for payment of contractual
obligations (other than Indebtedness) when due in the ordinary course of
business;

 

  (i)

renewed, amended, modified or terminated any of its contracts or arrangements,
or assigned any of its rights, thereunder except (i) for such renewals,
amendments, modifications, terminations, or assignments, as well as the
expiration of contracts or agreements, as may be effectuated by the terms of
such contracts or arrangements without affirmative act by the Company or any of
the Subsidiaries, or (ii) as may have

 

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been made in the ordinary course of business, or (iii) as would not materially
alter any rights under such contract or arrangement in a manner unfavorable to
the Company or the Subsidiaries;

 

  (j) declared, set aside or paid any dividend or other distribution on or in
respect of any shares of capital stock, other than dividends or distributions of
available cash; or

 

  (k) agreed, whether in writing or otherwise, to take any of the actions that
Seller represents in this Section 4.11 have not been taken, except as expressly
contemplated by this Agreement.

 

Section 4.12 Technology and Intellectual Property.

 

(a) Except as set forth on Schedule 4.12 and subject to the changes in the names
of the Company and the Subsidiaries and to the reservation to Seller of the
rights, title and interests described in Section 6.12, the Company or a
Subsidiary owns or possesses, or has rights or licenses to use, the patents,
trademarks (including common law trademarks), service marks, copyrights
(including any registrations, applications or continuations relating to any of
the foregoing), trade names, technology, trade secrets, inventions, know-how and
computer programs which are necessary to carry on its business as currently
conducted (each, an “Intellectual Property Right”), and, to the knowledge of
Seller, neither the Company nor any Subsidiary has engaged in any infringement
of the intellectual property rights of others with respect to any such
Intellectual Property Right other than any infringements that, in the aggregate,
would not have a material effect on the conduct of the business of the Company
and the Subsidiaries, taken as a whole. Except as set forth on Schedule 4.12,
subject to the changes in the names of the Company and the Subsidiaries and to
the reservation to Seller of the rights, title and interests described in
Section 6.12, and subject to the receipt of any required consents or the
delivery of any required notifications (as set forth on Schedule 4.4), the
execution and delivery of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, will

 

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neither cause the Company or any Subsidiary to be in violation or default under
any licenses, sublicenses or other agreements to which the Company or any
Subsidiary is a party and pursuant to which the Company or any Subsidiary is
authorized to use any Intellectual Property Right, nor entitle any other party
to any such license, sublicense or agreement to terminate such license,
sublicense or agreement. Schedule 4.12 sets forth a complete and correct list,
as of the date hereof, of the trademarks that are used in the business as
currently conducted by the Company or any Subsidiary and all registrations and
applications for registration of any Intellectual Property Rights. Except as set
forth on Schedule 4.12, Seller has no knowledge of any infringement by third
parties of the Intellectual Property Rights.

 

(b) Except as set forth on Schedule 4.12 and subject to the changes in the names
of the Company and the Subsidiaries and to the reservation to Seller of the
rights, title and interests described in Section 6.12, to the knowledge of
Seller, the use of any Intellectual Property Right in the business as currently
conducted by the Company or any Subsidiary does not breach, violate or infringe
any intellectual property rights of any third party and (except for the payment
of computer software or other licensing fees) does not require any payment for
the use of any patent, trade name, service mark, trade secret, trademark,
copyright or other intellectual property right or technology owned by any third
party, other than any such breaches, violations, infringements or payments that,
in the aggregate, would not have a material effect on the conduct of the
business of the Company and the Subsidiaries, taken as a whole.

 

Section 4.13 ERISA; Benefit Plans.

 

(a) Schedule 4.13(a) sets forth a list, as of the date of this Agreement, of all
material deferred compensation, retirement and pension plans and all material
bonus plans, plans providing for stock options, severance, change in control,
section 125 cafeteria, dependent care, medical care, insurance, employee
assistance, education assistance or tuition assistance plans or programs,
employee welfare benefit plans (as defined in Section 3(1) of ERISA) and any
currently effective executive compensation or severance agreements, written or
otherwise, of Seller or Seller’s ERISA Affiliates as defined in

 

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section 414 of the Code (“ERISA Affiliates”) that are not maintained or
sponsored by the Company or any of the Subsidiaries but (i) in which employees
of the Company or any of the Subsidiaries (collectively, “Company Employees”)
participate or (ii) to which the Company or any of the Subsidiaries makes
contributions with respect to certain Company Employees, or in which the Company
or any of the Subsidiaries is a participating employer (collectively, the
“Seller’s Benefit Plans”). Although the rights of Company Employees to
participate further in Seller’s Benefit Plans may be terminated in the manner
specified under Section 6.10, none of the Seller’s Benefit Plans will be
terminated as a result of this Agreement.

 

(b) Schedule 4.13(b) sets forth a list, as of the date of this Agreement, of all
material deferred compensation, retirement and pension plans and all material
bonus plans, plans providing for stock options, severance, change in control,
section 125 cafeteria, dependent care, medical care, insurance, employee
assistance, education assistance or tuition assistance plans or programs and
employee welfare benefit plans (as defined in Section 3(1) of ERISA) maintained
or sponsored by the Company or any of the Subsidiaries with respect to Company
Employees, as well as the written vacation/sick policy of the Company and the
Subsidiaries, and any executive employment, compensation or severance agreement,
written or otherwise, that was sponsored, entered into, or maintained by the
Company or any of the Subsidiaries during the six year period ending on the date
of this Agreement and for which the Company or any Subsidiary will incur any
liability after the Closing Date (the “Company Employee Plans” and, together
with the Seller’s Benefit Plans, the “Benefit Plans”).

 

(c) Copies of all Benefit Plans concerning which Buyer or Buyer’s Affiliates
will incur any liability after the Closing Date have been made available to
Buyer. To the knowledge of Seller, each Benefit Plan is in compliance in all
material respects with the presently applicable provisions of ERISA, the Code
and other applicable laws, except for such failures to fulfill such obligations
or comply with such provisions which would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect.

 

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(d) None of the Company Employee Plans are employee pension benefit plans within
the meaning of Section 3(2) of ERISA.

 

(e) As of the date of this Agreement, no more than three Company Employees, each
of whom formerly was employed by CECONY, participate in the Consolidated Edison
Retirement Plan. Company Employees participate in the Consolidated Edison Thrift
Savings Plan (401(k)Plan). Company Employees will no longer be eligible to
receive benefit accruals or contributions under the Consolidated Edison
Retirement Plan or the Consolidated Edison Thrift Savings Plan after the Closing
Date.

 

(f) Neither the Company, the Subsidiaries, the Seller, nor any ERISA Affiliate
participates or has participated in a Multiemployer Plan (as such term is
defined in Section 3(37) of ERISA), nor has the Seller or any ERISA Affiliate
ever made a complete or partial withdrawal from a Multiemployer Plan (as such
term is defined in Section 3(37) of ERISA) resulting in “withdrawal liability”
(as such term is defined in Section 4201 of ERISA), without regard to any
subsequent waiver or reduction under Section 4207 or 4208 of ERISA.

 

(g) Contributions that are required to be made by the Seller, the Company, the
Subsidiaries or any ERISA Affiliate pursuant to either any Seller Benefits Plan
or any Company Employee Plan pursuant to Section 412 of the Code, or pursuant to
a collective bargaining agreement, if applicable, have been made on or before
their respective due dates and a reasonable amount has been accrued for any such
contributions for the current plan year.

 

(h) Seller’s Affiliate, CECONY, currently maintains a retiree health program for
individuals who are participants in the Consolidated Edison Retirement Plan and
who meet certain other eligibility requirements. As of the date of this
Agreement, there are no more than three Company Employees who are participants
in the Consolidated Edison Retirement Plan due to their prior employment with
CECONY and who would be eligible to receive retiree health benefits if the other
eligibility requirements for such benefits were satisfied, but for whom such
other eligibility requirements will not be satisfied if the Closing occurs
before the date on which either Buyer or Seller may terminate this Agreement
pursuant to Section 10.1(a)(iii).

 

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In any event, neither the Company nor the Subsidiaries will be obligated to make
any payments to this retiree health plan with respect to Company Employees after
the Closing Date. Other than (i) the potential retiree medical benefits
described in the first sentence of this paragraph (h), (ii) the right to obtain
continued health coverage under applicable COBRA provisions, and (iii) the right
of certain employees pursuant to the Company CIC Plan for a limited period of
time after the Closing Date as described in such Company CIC Plan in the medical
plan maintained by the Company or the Subsidiaries after the Closing Date,
neither the Company nor the Subsidiaries have any plans or arrangements that
provide for medical coverage after termination of employment with the Company.

 

(i) Other than routine claims for benefits, there are no claims pending or, to
the knowledge of Seller, threatened, against any Company Employee Plan or
against the assets of any Company Employee Plan or of the Company with respect
to any Company Employee Plan, nor are there any current or, to the knowledge of
Seller, threatened, liens on the assets of any Company Employee Plan or of the
Company with respect to any Company Employee Plan. To the knowledge of Seller,
the Company and the Subsidiaries have performed all material obligations
required to be performed by them under the Company Employee Plans.

 

Section 4.14 Taxes. Except as set forth on Schedule 4.14:

 

(a) The Company (and any affiliated group of which the Company is a member (the
“Affiliated Group”)) and the Subsidiaries have timely filed with the appropriate
taxing authorities all Tax Returns required to be filed (taking into account all
valid extensions) and all such Tax Returns are complete and accurate. The
Company and the Subsidiaries have paid on a timely basis all Taxes that were due
and payable and each member of the Affiliated Group has paid all Taxes for which
the Company or any Subsidiary may be liable that were due and payable with
respect to all affiliated periods. The unpaid Taxes of the Company and the
Subsidiaries for tax periods through June 30, 2004 do not exceed the accruals
and reserves for Taxes (excluding accruals and reserves for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the Interim Financial Statements;

 

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(b) All Taxes shown in the Tax Returns referred to in Section 4.14(a) that are
due and payable by the Company and the Subsidiaries before the date hereof have
been timely paid, except such Taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in the relevant
financial statements;

 

(c) There are no Encumbrances on any of the assets of the Company or any
Subsidiary that arose in connection with any failure to pay any Taxes (other
than Taxes that are not due as of the date hereof);

 

(d) The Company and the Subsidiaries have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party;

 

(e) No audit or other administrative or court proceeding exists or has been
initiated with regard to any Tax Returns of the Company or any Subsidiary, and
neither the Company nor any Subsidiary has received any notice that any such
material audit or other administrative or court proceeding is pending or
threatened with respect to any Tax Return filed by or with respect to the
Company or any Subsidiary;

 

(f) Neither the Company nor any Subsidiary has requested an extension of time
within which to file any Tax Return in respect of any taxable year which has
subsequently not been filed and no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns has been given by or on behalf of the Company or any
Subsidiary;

 

(g) For purposes of determining whether Seller has satisfied the conditions to
Closing set forth in Section 8.1(a), but not for purposes of determining
Seller’s indemnity obligations under Section 7.1(a), any representation or
warranty with respect to Taxes contained in this Section 4.14 shall be deemed to
be accurate unless an inaccuracy contained therein would have, individually or
in the aggregate, a Material Adverse Effect;

 

(h) Neither the Company nor any Subsidiary: (i) is a “consenting corporation”
within the meaning of Section 341(f) of the Code, and none of the assets of the
Company

 

33

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or the Subsidiaries are subject to an election under Section 341(f) of the Code;
(ii) has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(l)(A)(ii) of the Code; or (iii) has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that would be treated as an “excess parachute
payment” under Section 280G of the Code (without regard to Section 280G(b)(4) of
the Code); and

 

(i) There is no limitation on the utilization by either the Company or any
Subsidiary of its net operating losses, built-in losses, Tax credits, or similar
items under Sections 382, 383, or 384 of the Code or comparable provisions of
state law (other than any such limitation arising as a result of the
consummation of the transactions contemplated by this Agreement).

 

Section 4.15 Contracts.

 

(a) By letter of even date herewith, Seller provided to Buyer a complete and
accurate list (the “Contracts List”) setting forth, as of the date hereof, (i)
all contracts pursuant to which (A) the Company or any Subsidiary is a party and
(B) the Company or any Subsidiary has non-contingent obligations to the contract
counterparty in excess of $100,000 per calendar year, (ii) all contracts
pursuant to which (A) the Company or any Subsidiary is a party and (B) the
contract counterparty has non-contingent obligations to the Company or any
Subsidiary in excess of $100,000 per calendar year, (iii) all contracts that
limit or purport to limit the Company or any Subsidiary in any line of business
or with any Person or in any geographic area and (iv) all contracts and
agreements relating to Indebtedness of the Company or any Subsidiary, in each
case other than Leases and Necessary Leases (the contracts set forth on the
Contracts List are referred to herein collectively as the “Contracts”). Except
as set forth on the Contracts List, neither Seller, the Company, nor any
Subsidiary has received written notice of a cancellation of or an intent to
cancel any Contract.

 

(b) Except as set forth on the Contracts List, assuming the due authorization,
execution and delivery by the other parties thereto, each Contract is legal,
valid, binding, and enforceable against the other parties thereto,

 

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is in full force and effect, and will not cease to be in full force and effect
as a result of the consummation of the transactions contemplated by this
Agreement, nor will the consummation of the transactions contemplated by this
Agreement constitute a breach or default under such Contract.

 

(c) Except as set forth on the Contracts List, (i) no officer of the Company has
received any notice of any breach under any Contract, other than such breaches
or defaults by the Company or any Subsidiary which would cost less than $120,000
in the aggregate for the Company or any Subsidiary to cure, and (ii) to the
knowledge of Seller, no other party to any Contract is in breach thereof or
default thereunder.

 

(d) Schedule 4.15(d) sets forth a complete and accurate list of all
Seller-Provided Indebtedness.

 

Section 4.16 Title to Assets. Except as set forth in Schedule 4.16 and except
for Encumbrances reflected in the financial statements of the Company as of
December 31, 2003 or June 30, 2004, the Company and the Subsidiaries have, as
applicable, good title to, or valid and subsisting leasehold interests in, all
real and personal property and other assets on their books and reflected on the
Company’s balance sheet at December 31, 2003 and June 30, 2004 included as part
of the Company GAAP Financial Statements and the Interim Financial Statements,
respectively, or acquired in the ordinary course of business consistent with
past practice since December 31, 2003 or June 30, 2004, as appropriate, which
would have been required to be reflected on such balance sheet if acquired on or
prior to such date, other than assets which have been disposed of in the
ordinary course of business consistent with past practice. None of the
properties and assets of the Company or any Subsidiary is subject to any
Encumbrance, except for Encumbrances set forth on Schedule 4.16 or reflected in
the financial statements of the Company as of December 31, 2003 or June 30,
2004.

 

Section 4.17 Transactions with Certain Persons. Except as set forth on Schedule
4.17, neither any officer, director or employee of Seller, the Company or any
Subsidiary, nor, to the knowledge of Seller, any officer, director or employee
of any Affiliate of Seller, the Company or any Subsidiary, nor any member of any
such

 

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Person’s immediate family, is now a party to any transaction with the Company or
any Subsidiary, including any contract or other binding arrangement (i)
providing for the furnishing of services by such Person (except in such Person’s
capacity as an officer, director, employee or consultant), (ii) providing for
the rental of real or personal property from such Person, or (iii) otherwise
requiring payments (whether pursuant to indebtedness or otherwise) to such
Person (other than for services as an officer, director, employee or consultant
of Seller, the Company, any Subsidiary or any of their respective Affiliates).

 

Section 4.18 Environmental Laws. To the knowledge of Seller, except as set forth
on Schedule 4.18: (i) the Company and each Subsidiary is in material compliance
with all applicable Environmental Laws, and, possess and is in material
compliance with all Environmental Permits required under such laws for the
conduct of its business operations, (ii) there are no past events or conditions
that would give rise to any material liability of the Company or any Subsidiary
under any Environmental Law, (iii) there has been no release of hazardous
materials at any property owned, or operated by the Company or any Subsidiary
now or in the past that would give rise to liability of the Company or any
Subsidiary under any Environmental Law and (iv) no written notice, demand,
request for information, citation or complaint has been received by the Company
or any Subsidiary from, and no action or proceeding is pending or threatened by,
any Governmental Authority against the Company or any Subsidiary, with respect
to any Environmental Law.

 

Section 4.19 Insurance Coverage. Seller shall provide to Buyer, by letter of
even date herewith and by a subsequent letter delivered on or prior to the
Closing Date, a list (the “Insurance and Bond List”) setting forth, as of the
date hereof and as of the Closing Date, respectively, (i) the insurance carrier,
policy number, limits, expiration date and determinant of coverage (claims made
or occurrence) of the insurance covering the assets, business, equipment,
properties, operations, employees, officers or directors of the Company or any
Subsidiary, which insurance, subject to expiration of the insurance policies in
accordance with their terms and the actions contemplated by Section 6.19, is in
full force and effect, and (ii) the bond number, bond amount and term of the

 

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surety bonds under which the Company or any Subsidiary is the principal.

 

Section 4.20 Real Property.

 

(a) Neither the Company nor any Subsidiary owns any real property.

 

(b) Schedule 4.20(b) lists all leases of, and licenses for, real property to
which the Company or any Subsidiary is a party (collectively, the “Leases”).

 

(c) Except as set forth on Schedule 4.20(c), with respect to any Lease set forth
on Schedule 4.20(b) that is necessary for the Company and the Subsidiaries to
perform their respective obligations under the Contracts (collectively, the
“Necessary Leases”): (i) such Necessary Lease is legal, valid, binding,
enforceable and in full force and effect and represents the entire agreement
between the respective landlord and tenant with respect to such property; (ii)
subject to the receipt of any consent or the delivery of any notification
required under such Necessary Lease (all of which are set forth on Schedule
4.4), such Necessary Lease will not cease to be legal, valid, binding,
enforceable and in full force and effect on terms identical to those currently
in effect (except to the extent any such Necessary Lease is amended in
connection with the transactions contemplated by this Agreement) as a result of
the consummation of the transactions contemplated by this Agreement; (iii)
subject to the receipt of any consent or the delivery of any notification
required under such Necessary Lease (all of which are set forth on Schedule
4.4), the consummation of the transactions contemplated by this Agreement will
not constitute a breach or default under such Necessary Lease or otherwise give
the landlord a right to terminate such Necessary Lease; (iv) neither Seller, the
Company nor any Subsidiary has received any notice of cancellation or
termination under such Necessary Lease and no lessor has any right of
termination or cancellation under such Necessary Lease except in connection with
the default of Seller, the Company or a Subsidiary, as applicable, thereunder;
(v) neither Seller, the Company nor any Subsidiary has any notice of a breach or
default under such Necessary Lease, which breach or default has not been cured;
(vi) neither Seller, the Company nor any Subsidiary has granted to any other
Person any rights, adverse or

 

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otherwise, under such Necessary Lease; (vii) neither Seller, the Company nor any
Subsidiary, nor, to the knowledge of Seller, any other party to such Necessary
Lease, is in breach or default in any material respect, and, to the knowledge of
Seller, no event has occurred that, with notice or lapse of time would
constitute such a breach or default or permit termination, modification or
acceleration under such Necessary Lease; and (viii) the rental set forth in such
Necessary Lease is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same.

 

(d) To the knowledge of Seller, there are no condemnation proceedings or eminent
domain proceedings of any kind pending or threatened against any real property
leased by the Company or any Subsidiary.

 

Section 4.21 Receivables. All receivables (whether notes, accounts or otherwise)
of the Company and the Subsidiaries have been recorded in accordance with GAAP.
No discount from any receivable has been made or agreed to (other than
contingency payment discounts or discounts based on early payment, in each case
in the ordinary course of business consistent with past practice), and none
represents billings prior to actual sale of goods or provision of services,
except to the extent that the contract or arrangement underlying a receivable
contemplates billings or payment prior to actual sale of goods or provision of
services.

 

Section 4.22 Labor and Employee Relations. The Company is not and no Subsidiary
is a party to or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, and, to the
knowledge of Seller, there is no attempt to organize any employees of the
Company or any Subsidiary by any person, unit or group seeking to act as their
bargaining agent. No union representation elections relating to Company
Employees have been scheduled by any governmental agency or authority, no
organizational effort is being made with respect to any Company Employees, and
there is no investigation of the Company or any Subsidiary employment policies
or practices by any governmental agency or authority pending or threatened.
Neither the Company nor any Subsidiary is currently, and neither the Company nor
any Subsidiary has been within the last three years, involved in labor
negotiations with any unit or group

 

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seeking to become the bargaining unit for any Company Employees. Neither the
Company nor any Subsidiary has experienced any work stoppages during the last
three years, and, to the knowledge of Seller, no work stoppage is planned.

 

Section 4.23 Certain Employees. Except as described on Schedule 4.23 and except
for the Benefit Plans set forth on Schedule 4.13, no Company Employee has an
employment agreement or understanding, whether oral or written, with the Company
or any Subsidiary which is not terminable on notice by the Company or any
Subsidiary without cost or other liability to the Company or any Subsidiary.
Except as otherwise set forth on Schedule 4.23, neither the Company nor any
Subsidiary has received any written notice from any person listed on Schedule
4.23 pursuant to which such person has indicated that he or she intends to
terminate his or her employment or seek a material change in his or her duties
or status. Except as otherwise set forth on Schedule 4.23, no officer of the
Company or of any of the Subsidiaries at the level of Vice President or above
has notified the President of the Company that such officer intends to terminate
his or her employment.

 

Section 4.24 Tangible Properties. Seller has made available for review by Buyer
maps of the network which is owned or leased by the Company or the Subsidiaries
and each segment thereof, which maps (“Network Maps”) are described in Schedule
4.24(a). Schedule 4.24(a) describes the approximate number of route miles, fiber
strand miles and manholes owned by the Company and the Subsidiaries on a
combined basis and the approximate number of fiber strand miles and manholes
that the Company and the Subsidiaries on a combined basis lease, license or,
pursuant to IRUs, use (collectively, the “Network Facilities”). The Network
Facilities owned by the Company and the Subsidiaries are structurally sound and
are in such operating condition and repair (given due account to the age and
length of use of the same, ordinary wear and tear excepted) as is reasonably
required to conduct the business as it is currently conducted by the Company and
the Subsidiaries and provide the services currently provided by the Company and
the Subsidiaries. The Network Facilities are sufficient to conduct the business
as it is currently conducted by the Company and the Subsidiaries and provide the
services currently provided by the Company and the Subsidiaries. Except as shown
on Schedule 4.24(a), the Company and each

 

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Subsidiary has good and marketable title free and clear of all Encumbrances to
the Network Facilities owned by it. With respect to Network Facilities leased by
the Company and each Subsidiary as lessee, all leases, conditional sale
contracts, franchises or licenses pursuant to which the Company and each
Subsidiary may hold or use (or permit others to hold or use) such Network
Facilities are valid and in full force and effect, and there is not under any of
such instruments any existing default or event of default or event which with
notice or lapse of time or both would constitute such a default. By letter of
even date herewith, Seller provided to Buyer certain charts (the “Performance
Statistic Charts”) reflecting certain performance criteria of the circuits over
Network Facilities. Assuming there are no flaws or inaccuracies in the systems
used to produce the information depicted in the Performance Statistic Charts,
the information depicted in the Performance Statistic Charts reflects the
performance of the circuits over Network Facilities in the areas, during the
time periods and subject to the fidelity limitations indicated in such
Performance Statistic Charts. To the knowledge of Seller, there are no flaws or
inaccuracies in the systems used to produce the information depicted in the
Performance Statistic Charts.

 

Section 4.25 Banks, Brokers and Proxies. Schedule 4.25 sets forth:

 

(a) the name of each bank, investment manager, trust company and stock or other
broker with which the Company and each Subsidiary maintains an account or from
which it borrows money;

 

(b) the names of all persons authorized by the Company and each Subsidiary to
effect transactions therewith, or to have access to any safe deposit box or
vault; and

 

(c) all proxies and powers of attorney of the Company and each Subsidiary or
Seller in matters concerning the business or affairs of the Company and each
Subsidiary and all agreements with third parties granting such third parties the
authority to bind the Company or any Subsidiary.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller as follows:

 

Section 5.1 Organization and Related Matters. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

 

Section 5.2 Authority; No Violation.

 

(a) Buyer has full power and authority to execute and deliver this Agreement,
the Security Agreements, the Securities Purchase Documents, the Amendment to
Credit Agreement and the other documents required to be executed and delivered
by Buyer in connection herewith and therewith (collectively, the “Buyer
Transaction Documents”) and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other Buyer
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by all requisite action
on the part of Buyer, and no other proceedings on the part of Buyer are
necessary to approve this Agreement and the other Buyer Transaction Documents
and to consummate the transactions contemplated hereby and thereby. This
Agreement and each other Buyer Transaction Document has been duly and validly
executed and delivered by Buyer and (assuming the due authorization, execution
and delivery of this Agreement by Seller and each other Buyer Transaction
Document by the other party or parties thereto) constitute the valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms.

 

(b) Assuming that the filings, notifications, authorizations, consents, orders
and/or approvals referred to in Section 5.3 are, as applicable, duly made and/or
obtained, neither the execution and delivery of this Agreement or any other
Buyer Transaction Document by Buyer, nor the consummation by Buyer of the
transactions contemplated hereby or thereby to be performed by it (including, to
the extent that the filings, notifications, authorizations, consents, orders
and/or approvals referred to in the Securities Purchase

 

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Agreement as being necessary for the execution, delivery and consummation by
Buyer of the transactions contemplated by the Securities Purchase Agreement are,
as applicable, duly made or obtained, the amendment and restatement of the SDS
Warrants (as defined in the Securities Purchase Agreement), the issuance of the
Units (as defined in the Securities Purchase Agreement), and the issuance and
reservation for issuance of the Conversion Shares (as defined in the Securities
Purchase Agreement) and the Warrant Shares (as defined in the Securities
Purchase Agreement)), nor compliance by Buyer with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the Certificate
of Incorporation or Bylaws or other organizational documents of Buyer, or (ii)
(A) violate any applicable law with respect to Buyer or any of its properties or
assets (including U.S. federal and state securities laws, rules and regulations
and rules and regulations of any exchange, over-the-counter, and any other
securities self-regulatory organizations to which either Buyer or its
subsidiaries are subject), or (B) violate, conflict with, result in a breach of
any provision of, or constitute a default under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Buyer is a party, or by which Buyer or any of its properties
or assets, may be bound or affected, except for such violations, conflicts,
breaches or defaults which would not, individually or in the aggregate, prevent
or materially delay the consummation of the transactions contemplated by this
Agreement or the other Buyer Transaction Documents or the performance by Buyer
of any of its obligations hereunder or thereunder.

 

Section 5.3 Consents and Approvals. Except for (i) the filings, notifications,
authorizations, consents, orders or approvals listed in Schedule 5.3, and (ii)
such other filings, notifications, authorizations, consents, orders or
approvals, the failure of which to make or obtain would not, individually or in
the aggregate, prevent or materially delay the consummation of the transactions
contemplated by this Agreement or the performance by Buyer of any of its
obligations pursuant to this Agreement, no authorizations, consents, orders or
approvals of or filings or notifications to any Governmental Authority or third
party are necessary in connection with the execution and delivery by Buyer of
this Agreement or any other Buyer Transaction Document, and the consummation by
Buyer of the transactions contemplated hereby or thereby. For the avoidance of
doubt, Seller and Buyer specifically acknowledge and agree that Section 6.5,
rather than this

 

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Section 5.3, governs their respective obligations with respect to making,
obtaining and rendering cooperation in connection with the filings,
notifications, authorizations, consents, orders and/or approvals listed in
Schedules 4.4 and 5.3.

 

Section 5.4 Legal Proceedings. Buyer is not a party to any, and there are no
pending or, to Buyer’s knowledge, threatened, actions or proceedings against or
otherwise affecting Buyer or its properties or assets or challenging the
validity or propriety of the transactions contemplated by this Agreement or any
other Buyer Transaction Document which, if adversely determined, would,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated by this Agreement or the performance by Buyer
of any of its obligations pursuant to this Agreement, and there is no
injunction, order, judgment, decree or regulatory restriction imposed upon Buyer
or its properties or assets which would, individually or in the aggregate,
prevent or materially delay the performance by Buyer of any of its obligations
pursuant to this Agreement.

 

Section 5.5 Investment Intent of Buyer. The Shares to be acquired under this
Agreement will be acquired by Buyer for its own account and not for the purpose
of a distribution. Buyer confirms that it has been afforded the opportunity to
ask questions and receive answers regarding the Company and the Subsidiaries and
has reviewed the data and information it requested from Seller and the Company
in connection with this Agreement. Buyer will refrain from transferring or
otherwise disposing of any of the Shares acquired by it, or any interest
therein, in such manner as to violate any registration provision of the
Securities Act of 1933, as amended, or any applicable state securities law
regulating the disposition thereof. Buyer agrees that the certificates
representing the Shares may bear legends to the effect that the Shares have not
been registered under the Securities Act of 1933, as amended, or such other
state securities laws, and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.

 

Section 5.6 No Other Broker. Other than Burnham Hill Partners, the fees and
expenses of which will be paid by Buyer, no broker, finder or similar
intermediary has acted for or on behalf of Buyer or any Affiliate of Buyer,

 

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or is entitled to any broker’s, finder’s or similar fee or other commission from
Buyer, or any Affiliate of Buyer, in connection with this Agreement or the
transactions contemplated hereby.

 

Section 5.7 Financing. At the Closing, Buyer will have sufficient cash to
consummate the transactions contemplated by this Agreement and the other Buyer
Transaction Documents and to pay all related fees and expenses. Buyer
acknowledges and agrees that Buyer’s obligations hereunder are not contingent on
Buyer obtaining any financing.

 

Section 5.8 Securities Purchase Documents. By letter of even date herewith,
Buyer forwarded to Seller a true and complete copy of the final, executed
Securities Purchase Agreement, dated as of December 10, 2004, by and among Buyer
and each of the purchasers set forth on the execution pages thereof (the
“Securities Purchase Agreement”), and all other documents executed and/or
delivered in connection therewith (together with the Securities Purchase
Agreement, collectively, the “Securities Purchase Documents”). The Securities
Purchase Agreement and all other Securities Purchase Documents are in full force
and effect and constitute the entire agreement relating to the subject matter of
the Securities Purchase Agreement and each other Security Purchase Document. No
provision of the Securities Purchase Agreement or any other Securities Purchase
Document has been amended, supplemented or waived. The aggregate purchase price
payable to Buyer by the Purchasers (as defined in the Securities Purchase
Agreement) under the Securities Purchase Agreement, including through any
Subsequent Offering (as defined in the Securities Purchase Agreement), is at
least equal to $37,000,000.

 

Section 5.9 Amendment of Credit Facility. On or before the date hereof, Buyer
and the Buyer’s Lenders have entered into an amendment (the “Amendment to Credit
Agreement”) to the Amended and Restated Credit Agreement, dated as of February
9, 2001, among Buyer and the Buyer’s Lenders (the “Credit Agreement”), which
amendment amended the Credit Agreement to the full extent necessary to permit
Buyer to execute and deliver this Agreement and the Securities Purchase
Documents and to consummate the transactions contemplated hereby and thereby.
The Amendment to Credit Agreement is in full force and effect

 

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and no provision thereof has been amended, supplemented or waived.

 

ARTICLE VI

COVENANTS

 

Section 6.1 Conduct of Business. From the date hereof until the earlier of the
Closing Date or the termination of this Agreement pursuant to the terms hereof,
(a) except for the events or circumstances described in clauses (ii) and (iii)
of Section 4.11, and (b) except to the extent that Buyer otherwise consents in
writing, Seller shall cause each of the Company and the Subsidiaries to use
commercially reasonable efforts to (i) conduct its business in the ordinary
course of business, including (A) not declaring any dividends or making
distributions with respect to the Company other than any dividends or
distributions of available cash prior to or at Closing and (B) entering into
commitments with third parties with respect to Capital Expenditures to be made
by the Company or any of the Subsidiaries at any time after the date hereof (a
“Capital Expenditure Commitment”) in a manner consistent with past practices
(subject to the last sentence of this Section 6.1); (ii) preserve intact its
present organization; (iii) maintain in effect all material licenses, approvals,
qualifications, registrations and authorizations necessary to carry on its
business as currently conducted; and (iv) preserve existing relationships with
its employees, customers, suppliers and others having material business
relationships with it; provided, however, that, notwithstanding anything to the
contrary in this Agreement, Seller shall not be obligated (nor shall Seller be
obligated to cause or permit the Company or any Subsidiary to be obligated) to
pay or provide any compensation or service to or at the direction of a
Governmental Authority or other Person or otherwise incur any obligation to a
Governmental Authority or other Person in order to satisfy clauses (ii), (iii)
or (iv) above (other than (x) as may be specifically set forth in the licenses,
approvals, qualifications, registrations and authorizations at issue, (y) the
payment of routine filing fees and (z) the payment of compensation and provision
of services to employees, customer, suppliers and others having material
business relationships with the Company and the Subsidiaries pursuant to the
terms of such employees’ employment and the contractual relationship between the
Company or any Subsidiary and such customers, suppliers and

 

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others); provided, further, however, that notwithstanding anything to the
contrary in this Agreement, without the consent of Buyer, Seller may, prior to
Closing, cause Con Edison Communications, Inc. and/ or CEC Holding Member, Inc.
to be merged into the Company or into the other and no breach of this Agreement,
including any representation or warranty of Seller set forth herein, shall occur
as a result thereof. During the Interim Period, the Company and the Subsidiaries
shall obtain Buyer’s prior written consent(which consent shall not be
unreasonably withheld or delayed) before entering into any Capital Expenditure
Commitments in any calendar month, which, in the aggregate, exceed the Capital
Expenditure Commitment Budget for such calendar month.

 

Section 6.2 Public Announcements. Buyer and Seller shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation and without
the prior written consent of the other party, except as may be required by
applicable law or court process or by obligations pursuant to any listing
agreement with any national securities exchange (provided, however, that the
initial press release of each of Buyer and Seller with respect to the
announcement of this Agreement and transactions contemplated thereby shall be in
the form mutually agreed upon in advance by Buyer and Seller).

 

Section 6.3 Expenses. Regardless of whether any or all of the transactions
contemplated by this Agreement are consummated, and except as otherwise
expressly provided herein, Buyer and Seller shall each bear its respective
direct and indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby, and Seller shall be responsible for all out-of-pocket
expenses owed to third parties incurred by the Company or the Subsidiaries prior
to the Closing Date in connection with the negotiation and preparation of this
Agreement and the consummation of the transactions contemplated hereby. For the
avoidance of doubt, such out-of-pocket expenses of the Company and the
Subsidiaries shall not include any payroll or other internal expenses of the
Company or the Subsidiaries, which expenses will be paid by the Company or the
Subsidiaries in the ordinary course of their business.

 

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Section 6.4 Access; Certain Communications. Between the date of this Agreement
and the Closing Date, subject to applicable laws relating to the exchange of
information and subject to the provisions of contracts entered into by Seller,
the Company, and any Subsidiary with third parties prior to the date of this
Agreement:

 

(a) Seller shall (and shall cause the Company and each Subsidiary to) afford to
Buyer and its authorized agents and representatives access, upon reasonable
advance notice and during normal business hours, to all books, records,
documents and other information of the Company and the Subsidiaries; provided,
however, that Buyer’s investigation shall be conducted in a manner which does
not materially interfere with the normal operations, customers and employee
relations of the Company or the Subsidiaries. Notwithstanding the foregoing,
Buyer shall not have access to personnel records of the Company or the
Subsidiaries relating to individual performance or evaluation records, medical
histories or other books, records, documents or information that, in the opinion
of Seller’s counsel (whether Seller’s in-house or outside counsel), is sensitive
or the disclosure of which could subject Seller, the Company or the Subsidiaries
(or the trustees, directors, employees or agents of such entities) to risk of
liability. Without limiting any of the terms thereof, the terms of the
Confidentiality Agreement shall govern Buyer’s and its agents’ and
representatives’ obligations with respect to all confidential information with
respect to Seller, the Company and/or the Subsidiaries which has been or is
provided or made available to them at any time, including during the period
between the date of this Agreement and the Closing Date;

 

(b) Except as otherwise required pursuant to applicable law, each party hereto
shall give prompt notice to the other party of (i) any material communication
received from or given to any Governmental Authority in connection with any of
the transactions contemplated hereby, (ii) any notice or other communication
from or on behalf of any Person alleging that the consent of such Person is or
may be required in connection with the transactions contemplated by this
Agreement; and (iii) any actions, suits, claims or investigations commenced or,
to such party’s knowledge, threatened against Buyer, Seller, the Company or the
Subsidiaries, as applicable, that seek

 

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to restrain or enjoin the consummation of the transactions contemplated by this
Agreement.

 

Section 6.5 Regulatory Matters; Third Party Consents.

 

(a) (i) Buyer (A) shall use commercially reasonable efforts promptly to cause to
be prepared and filed all necessary documentation, and to effect all
applications, notices, petitions and filings, with each Governmental Authority
which (x) are necessary to consummate the transactions contemplated by this
Agreement and (y) applicable law provides that Buyer or one of Buyer’s
Affiliates is responsible or required to prepare, file and/or effect, and (B)
shall use commercially reasonable efforts to obtain as promptly as practicable
any consent, approval, order or authorization of such Governmental Authority
which (x) is necessary to consummate the transactions contemplated by this
Agreement and (y) applicable law provides that Buyer or one of Buyer’s
Affiliates is responsible or required to obtain. Seller shall cooperate with
Buyer in connection with Buyer’s performance of its obligations under this
Section 6.5(a)(i).

 

(ii) Seller (A) shall use commercially reasonable efforts promptly to cause to
be prepared and filed all necessary documentation, and to effect all
applications, notices, petitions and filings, with each Governmental Authority
which (x) are necessary to consummate the transactions contemplated by this
Agreement and (y) either (1) applicable law provides that Seller or one of
Seller’s Affiliates is responsible or required to prepare, file and/or effect or
(2) applicable law does not specify the party responsible or required to
prepare, file or effect such applications, notices, petitions and filings, and
(B) shall use commercially reasonable efforts to obtain as promptly as
practicable any consent, approval, order or authorization of such Governmental
Authority which (x) is necessary to consummate the transactions contemplated by
this Agreement and (y) either (1) applicable law provides that Seller or one of
Seller’s Affiliates is responsible or required to prepare, file and/or effect or
(2) applicable law does not specify the party responsible or required to
prepare, file or effect such applications, notices, petitions and filings, in
any case including the Excluded Consents. Buyer shall cooperate with Seller in
connection

 

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with Seller’s performance of its obligations under this Section 6.5(a)(ii).

 

(iii) Notwithstanding anything to the contrary in this Agreement, neither Seller
nor Buyer shall be obligated (nor shall they be obligated to cause or permit any
of their respective Affiliates to be obligated) to pay or provide any
compensation or service to or at the direction of a Governmental Authority or
otherwise incur any obligation to a Governmental Authority or its designee
(other than as may be specifically set forth in the Permit, Lease, or contract
at issue and except for the payment of routine filing fees) in order to obtain
any consent, approval, order or authorization of such Governmental Authority.

 

(b) Buyer and Seller shall cooperate with each other and (i) shall use their
commercially reasonable efforts promptly to prepare and to file all necessary
documentation, and to effect all applications, notices, petitions and filings,
with each third party other than a Governmental Authority which are necessary to
consummate the transactions contemplated by this Agreement, and (ii) shall use
their commercially reasonable efforts to obtain as promptly as practicable any
consent, approval, order or authorization of such third party which is necessary
to consummate the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary in this Agreement, neither Seller nor Buyer shall be
obligated (nor shall they be obligated to cause or permit any of their
respective Affiliates to be obligated) to pay or provide any compensation or
service to or at the direction of such a third party or otherwise incur any
obligation to such a third party or its designee (other than as may be
specifically set forth in the Permit, Lease, or contract at issue and except for
the payment of routine filing fees) in order to obtain any such consent,
approval, order or authorization of such a third party.

 

(c) Subject to applicable law relating to the exchange of information, Buyer and
Seller shall have the right to review in advance, and shall consult with the
other party on, all the information relating to Seller, the Company and the
Subsidiaries or Buyer, as the case may be, and any of their respective
Affiliates, which appears in any filing made with, or written materials
submitted to, any Governmental Authority or any other third party in

 

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connection with the transactions contemplated by this Agreement. The parties
hereto agree that they will consult with each other with respect to the
obtaining of any consent, approval, order or authorization of a Governmental
Authority or other third party necessary to consummate the transactions
contemplated by this Agreement and each party shall keep the other apprised of
the status of obtaining any such consent, approval, order or authorization. The
party responsible for a filing shall promptly deliver to the other party
evidence of the filing of all applications, notices, petitions and filings
relating thereto, and any supplement, amendment or item of additional
information in connection therewith. The party responsible for a filing shall
also promptly deliver to the other party a copy of each notice, order, opinion
and other item of correspondence received from or sent to any Governmental
Authority by such filing party in respect of any such application, notice,
petition or filing. In exercising the foregoing rights and obligations, Buyer
and Seller shall act reasonably and promptly.

 

(d) Buyer and Seller shall, upon request, furnish each other with all
information concerning themselves, their respective subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
in connection with any application, notice, petition or filing made by or on
behalf of Buyer, the Company or any of their respective Affiliates to any
Governmental Authority in connection with the transactions contemplated by this
Agreement (except to the extent that such information would be, or relates to
information that would be, filed under a claim of confidentiality).

 

(e) Buyer and Seller shall promptly advise each other upon receiving any
communication from any Governmental Authority whose consent, approval, order or
authorization is required for consummation of the transactions contemplated by
this Agreement which causes such party to believe that there is a reasonable
likelihood that any requisite consent, approval, order or authorization will not
be obtained or will be materially delayed.

 

(f) Notwithstanding anything to the contrary contained in this Section 6.5 or
elsewhere in this Agreement, if any Excluded Consents have not been obtained
prior to the earlier of (i) the date by which all other authorizations, filings,
notifications, consents, orders

 

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and approvals set forth on Schedules 4.4 and 5.3 have been obtained or made, as
applicable, and (ii) the date that is sixty (60) days after the date hereof,
then pursuant to Seller’s written instructions that are provided from time to
time thereafter with respect to the Excluded Consents, Buyer and Seller shall
(and Buyer and Seller shall cause their respective Affiliates to) cease their
efforts to obtain such Excluded Consents and take such actions as Seller deems
necessary to cause (and Seller shall use commercially reasonable efforts to
cause to be prepared and filed all necessary documentation to cause) any or all
of the certificates of public convenience and necessity (or comparable
authority) to which such Excluded Consents relate to be terminated on or prior
to the Closing Date. The provisions of Section 6.5(a)(iii) shall apply as well
to any consent, approval, order or authorization that may be required to so
terminate any and all such certificates of public necessity and convenience (or
comparable authority).

 

Section 6.6 Further Assurances. Each of the parties hereto shall execute such
documents and other papers and perform such further acts as may be reasonably
required to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall, on or prior to the Closing Date, use its
commercially reasonable efforts to fulfill the conditions precedent on its part
to be fulfilled for the consummation of the transactions contemplated hereby,
including the execution and delivery of any documents, certificates, instruments
or other papers that are required pursuant to this Agreement.

 

Section 6.7 Notification of Certain Matters. During the period between the date
hereof and the Closing Date, each party shall give prompt notice to the other
party of (i) the occurrence, or failure to occur, of any event or the existence
of any condition that has caused any of its representations or warranties
contained in this Agreement to be materially breached and (ii) any failure on
its part to comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement.

 

Section 6.8 Updated Schedules. Prior to Closing, Seller shall supplement and/or
otherwise amend its disclosure schedules, the Contract List and/or the Insurance
and Bond List, including by the addition of new

 

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schedules with respect to any representations and warranties of Seller in this
Agreement for which no schedule was provided as of the date hereof (the
disclosure schedules, Contract List and Insurance and Bond List as supplemented
and/or otherwise amended and any such new schedules, the “Updated Schedules”),
with respect to matters arising after the date of this Agreement which matters,
if existing as of the date of this Agreement, would have been set forth in such
Schedules, provided that the foregoing shall not apply with respect to any
schedules, the Contract List or the Insurance and Bond List, or any portion
thereof, that relates solely to the date of this Agreement. Upon furnishing them
to Buyer, and subject to Section 8.1(g), the Updated Schedules shall become part
of this Agreement in lieu of their respective predecessor Schedules (if any) or
Contract List or Insurance and Bond List for all purposes of this Agreement.
Notwithstanding the foregoing, no Updated Schedule shall be deemed to have cured
any breach of any representation or warranty made by Seller as of the date of
this Agreement, unless Buyer otherwise consents in writing. Seller and Buyer
acknowledge and agree that the inclusion of any item or statement in any
schedule or Updated Schedule, which item or statement was not required to be
included in such schedule or Updated Schedule (because it does not meet a
threshold amount for inclusion or for any other reason), shall not be construed
to create any obligation to include any item or statement in the same or any
different schedule or Updated Schedule, which item or statement is not required
to be so included (because it does not meet a threshold amount for inclusion or
for any other reason); provided that, if Seller includes any item in a schedule
as of the date of this Agreement and a change occurs with respect to such item
prior to Closing that would be required to be reflected in an Updated Schedule,
Seller shall be required to reflect such change in the applicable Updated
Schedule.

 

Section 6.9 Access To Records After Closing Date. From and after the Closing
Date, each of the parties shall permit the other party reasonable access to any
records or other documents with respect to the Company or the Subsidiaries in
its possession, and the right to duplicate such records or other documents, to
the extent that the requesting party has a reasonable business purpose for
requesting such access or duplication. Notwithstanding any other provision of
this Section, access to any records or

 

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other documents may be denied to the requesting party if the other party is
required under applicable law or by agreement to deny such access. Section 6.13,
rather than this Section, governs access to records and documents in connection
with the WTC Site Cases and the Mastec Litigation.

 

Section 6.10 Employee Benefits.

 

(a) Except in the case of the Con Edison Non-Regulated Subsidiaries Severance
Pay Plan (which is governed exclusively by Section 6.10(c)) and except as noted
in the third sentence of this Section 6.10(a), for purposes of Seller’s Benefit
Plans, the employment of the Company Employees shall be deemed to be terminated
as of the Closing Date and the rights of and benefits available to Company
Employees under Seller’s Benefit Plans shall be determined and calculated
accordingly. The Seller’s Benefit Plans shall not be transferred to or assumed
by Buyer or Buyer’s Affiliates, they shall not be benefit plans or arrangements
of the Company or the Subsidiaries on or after the Closing Date, they shall not
follow the sale of the Shares to Buyer or Buyer’s Affiliates, and Buyer and
Buyer’s Affiliates shall have no responsibility under the Seller’s Benefit
Plans. Notwithstanding the deemed termination described in the first sentence of
this paragraph(a), a “qualifying event” entitling Company employees to continued
health care coverage under COBRA shall not be deemed to occur if the regulations
under COBRA provide that the sale of the Shares pursuant to this Agreement does
not constitute a “qualifying event.”

 

(b) Except as specified in the last sentence of this Section 6.10(b) with regard
to COBRA continuation coverage, Company Employees shall not be permitted to
continue to participate in Seller’s Benefit Plans after the Closing Date. Except
as set forth in Section 6.10(c), Seller shall retain responsibility for, and on
and after the Closing Date shall indemnify and hold Buyer and the Company
harmless from, any and all obligations of the Company or any of the Subsidiaries
to Company Employees (including those relating to expenses incurred by Company
Employees or their eligible dependents prior to the Closing Date) arising under
Seller’s Benefit Plans and based either on (i) participation by Company
Employees in Seller’s Benefit Plans prior to the Closing Date or (ii) employment
of Company Employees by the Company or any of the Subsidiaries

 

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prior to the Closing Date as such employment pertains to Seller’s Benefit Plans.
To the extent required by COBRA, Seller agrees to retain responsibility for
making COBRA continuation coverage available to Company Employees.

 

(c) Effective as of the Closing Date, Buyer shall cause the employer of each
Company Employee who is employed on or after the Closing Date by Buyer, any of
its Affiliates, the Company or any of the Subsidiaries, or any related entity
that the foregoing may cause to so employ any Company Employee, to have in
effect a severance plan (collectively, the “Buyer’s Severance Plan”) that
contains terms identical in all material respects to the Con Edison
Non-Regulated Subsidiaries Severance Pay Plan, as in effect as of the Closing
Date, including crediting Company Employees for their service prior to the
Closing Date with the Company or any of the Subsidiaries or any of its or their
Affiliates. Buyer shall cause the Buyer’s Severance Plan to remain in effect for
such period as will permit any Company Employee who is employed as aforesaid on
or after the Closing Date to be entitled to benefits under the Buyer’s Severance
Plan if such Company Employee’s employment is terminated during the period
between the Closing Date and the date that is six (6) months after the Closing
Date and the nature of such termination qualifies the Company Employee for
benefits under the Buyer’s Severance Plan. Buyer shall cause the Buyer’s
Severance Plan to remain free of any amendments, suspensions or terminations
which would serve to reduce the benefits available thereunder to Company
Employees or frustrate the intention of the foregoing provisions, provided that
Buyer, in its discretion and subject to the terms of the Buyer’s Severance Plan,
applicable law, and the other provisions of this Agreement, may at any time
after the date that is six (6) months after the Closing Date terminate or amend
the Buyer’s Severance Plan so long as such termination or amendment does not
serve to reduce the benefits available under the Buyer’s Severance Plan to
Company Employees whose employment is terminated during the period between the
Closing Date and the date that is six (6) months after the Closing Date or
otherwise frustrate the intention of the foregoing provisions. Buyer shall cause
the Company and the Subsidiaries on and after the Closing Date to assume
responsibility for, and Buyer shall indemnify and hold Seller and its Affiliates
harmless from and against, all rights and claims, if any, of Company Employees
against Seller and/or Seller’s Affiliates and all obligations, if

 

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any, of Seller and/or Seller’s Affiliates to Company Employees under the Con
Edison Non-Regulated Subsidiaries Severance Pay Plan based on any action,
including termination of employment of the Company Employees, that may be taken
by the Buyer, any of its Affiliates, the Company or any of the Subsidiaries (or
any related entity that the foregoing may cause to so employ any Company
Employee) on or after the Closing Date.

 

(d) Buyer shall cause the Con Edison Communications, Inc. Change In Control
Benefit Plan (the “Company CIC Plan”) to be retained and assumed by the Company
and the Subsidiaries on and after the Closing Date. Notwithstanding the
foregoing, and subject to the other terms and conditions of the Company CIC
Plan, Seller shall retain responsibility for, and on and after the Closing Date
shall indemnify and hold Buyer, the Company and the Subsidiaries harmless from
and against, any and all obligations of the Company and any Subsidiary under the
Company CIC Plan to any “Participant” as defined in the Company CIC Plan for (i)
any payment pursuant to Section 3.1(a)(i) of the Company CIC Plan to which such
a Participant may become entitled based upon the transaction contemplated by
this Agreement being a “Change in Control” as defined in the Company CIC Plan,
and (ii) any “Transaction Bonus” as defined in the Company CIC Plan to which
such a Participant may become entitled pursuant to Section 3.3 of the Company
CIC Plan based upon the transaction contemplated by this Agreement being a
“Change in Control” as defined in the Company CIC Plan. Subject to Seller’s
obligations under the immediately preceding sentence, Buyer shall cause the
Company and the Subsidiaries on and after the Closing Date to retain and assume
the Company CIC Plan on and after the Closing Date and to retain and assume
responsibility for, and Buyer shall indemnify and hold Seller and Seller’s
Affiliates harmless from and against, any and all other obligations of the
Company and any Subsidiary under the Company CIC Plan, including any and all
obligations to any “Participant” as defined in the Company CIC Plan for any
payment to which such a Participant may become entitled pursuant to Section
3.1(a)(ii) and/or Section 3.2 of the Company CIC Plan based upon the
transactions contemplated by this Agreement being a “Change in Control” as
defined in the Company CIC Plan. Buyer shall cause the Company and the
Subsidiaries, to the extent necessary to satisfy Buyer’s obligations under this
Section 6.10(d), to maintain the Company CIC Plan free of

 

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any amendments, suspensions or terminations which would serve to reduce the
benefits available thereunder to Company Employees or frustrate the intention of
the foregoing provisions. Seller shall make any payments pursuant to Section
3.1(a)(i) and Section 3.3 of the Company CIC Plan directly to such Participant
if Seller receives, in its discretion, adequate assurances that Seller, the
Company and the Subsidiaries would be discharged of their obligation to such
Participant under Sections 3.1(a)(i) and 3.3 of the Company CIC Plan if such
payment were made directly by Seller to such Participant rather than by the
Company or any Subsidiary to such Participant.

 

(e) Buyer shall cause any and all Company Employees who are employed on or after
the Closing Date by Buyer, one of its Affiliates, the Company or any of the
Subsidiaries, or any related entity that the foregoing may cause to so employ
any Company Employee, and who participate in any existing or future employee
benefit plan (other than any retirement benefit plan) of Buyer, any of its
Affiliates, the Company, any of the Subsidiaries, or any related entity that the
foregoing may cause to so employ the Company Employees (collectively, “Buyer’s
Benefit Plans”), to be (i) credited under Buyer’s Benefit Plans for their
service prior to the Closing Date with the Company or any of the Subsidiaries or
any of its or their Affiliates for purposes of eligibility, pre-existing
condition limitations, vesting employer contributions, matching contributions,
severance allowance and service-related level of benefits under Buyer’s Benefit
Plans (provided that service with the Company, the Subsidiaries or its or their
Affiliates prior to the Closing Date will not be required to be counted for
purposes of benefit accruals after the Closing Date under any Buyer’s Benefit
Plan maintaining accrued benefits that may be established or amended after the
Closing Date to provide for benefits based on accrued service); and (ii)
credited for any co-payments and deductibles paid in connection with Seller’s
Benefit Plans prior to the Closing Date in satisfying any applicable deductible
or out-of-pocket requirements under any applicable Buyer’s Benefit Plans. Buyer
shall (A) cause the applicable entity under the Buyer’s Benefit Plans to (1)
waive all limitations as to preexisting conditions and waiting periods with
respect to participation and coverage requirements applicable to all Company
Employees who reside, as of the Closing, in the State of New York, New Jersey or
Connecticut and (2) waive

 

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all limitations as to preexisting conditions and waiting periods with respect to
participation and coverage requirements applicable to each Company Employee who
resides, as of the Closing, in any state other than the State of New York, New
Jersey or Connecticut if a certificate of coverage with respect to such Company
Employee, as required under the Health Insurance Portability and Accountability
Act of 1996, is provided to Buyer, and (B) use commercially reasonable efforts
to cause the applicable entity under the Buyer’s Benefit Plans to waive all
exclusions with respect to participation and coverage requirements applicable to
the Company Employees, other than, in the case of both (A) and (B) above,
limitations, exclusions or waiting periods under Seller’s Benefit Plans that, as
of the Closing Date, are in effect with respect to such Company Employees and
have not been satisfied or waived.

 

(f) To the extent that Company Employees participate in or are eligible to
participate in the Consolidated Edison Communications, Inc. Long Term Incentive
Plan effective January 1, 2000, the employment of such Company Employees, for
purposes of such plan, will be deemed to have been terminated as of the Closing
Date and the rights of such Company Employees under such plan shall be
determined and calculated accordingly, and such plan shall not be retained or
assumed by the Company or the Subsidiaries on or after the Closing Date nor be
transferred to, or follow the sale of the Shares to, Buyer or Buyer’s
Affiliates. Prior to or as of the Closing Date, Seller shall cause the Company
or a Subsidiary, as applicable, to terminate the Consolidated Edison
Communications Long Term Incentive Plan effective January 1, 2000 in a manner
consistent with that plan and this Agreement.

 

(g) Buyer shall cause the Company Option Plan to be retained and assumed by the
Company and the Subsidiaries on and after the Closing Date and shall cause the
Company and the Subsidiaries on and after the Closing Date to retain and assume
the responsibility under such plan in respect of any and all awards issued under
such plan that were not terminated or forfeited, subject in each case to any
permitted termination or modification of such plan and awards pursuant to the
terms of such plan and awards and applicable law after the Closing Date. Seller
shall cause the Company and the Subsidiaries to not issue any awards

 

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under such plan during the Interim Period. In the event that any of the options
set forth on the Stock Options List are exercised during the Interim Period and
the outstanding stock of the Company and the Subsidiaries is then not listed on
any stock exchange or the Nasdaq National Market, then Seller shall cause the
Company and the Subsidiaries, pursuant to Section 14(f)(c) of the Company Option
Plan, to decline to issue stock of the Company or the Subsidiaries in connection
with the exercise of such option, unless a court of competent jurisdiction
renders an order or judgment requiring that stock of the Company or the
Subsidiaries be so issued. Seller shall cause Buyer to be provided with written
notice of the exercise of any such option during the Interim Period promptly
after receipt by the Company or any Subsidiary of written documentation so
exercising such option.

 

(h) Buyer shall cause the Con Edison Communications, Inc. Sales
Engineering-Director Compensation Plan for 2004, the Con Edison Communications,
Inc. Sales Engineering Compensation Plan for 2004, the Con Edison
Communications, Inc. Compensation Plan for Carrier/Enterprise Sales Director for
2004, and the Con Edison Communications, Inc. Compensation Plan for Account
Managers for 2004 (collectively, the “2004 Plans”) to be retained and assumed by
the Company and the Subsidiaries on and after the Closing Date and shall cause
the Company and the Subsidiaries on and after the Closing Date to retain and
assume all responsibility under such plans, subject in each case to any
permitted termination or modification of the 2004 Plans pursuant to the terms of
such plans and applicable law after the Closing Date. Seller agrees to consult
with Buyer in connection with Seller’s development of plans that replace the
2004 Plans and apply to sales made after the periods covered by the 2004 Plans
(collectively, the “2005 Plans”); provided, however, that, in any event, each of
the 2005 Plans shall provide that it can be terminated at any time.

 

(i) Buyer, in its discretion, after conducting a diligence review satisfactory
to Buyer, of the Consolidated Edison Thrift Savings Plan (a 401(k)Plan) in which
Company Employees participate, and subject to reaching mutual agreement with
Seller regarding the matter, may cause a transfer of assets from such plan to be
accepted into a 401(k) plan maintained on and after the Closing Date by Buyer,
any of its Affiliates, the Company, any of the

 

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Subsidiaries, or any related entity that the foregoing may cause to so employ
any Company Employee, which transfer shall consist of the account balances under
the Consolidated Edison Thrift Savings Plan of Company Employees who are
employed by Buyer, any of its Affiliates, the Company, any of the Subsidiaries,
or any related entity on and after the Closing Date. In addition, in the event
that a mutual agreement with Seller regarding the matter is reached, Buyer, in
accordance with the principles and methods set forth in Revenue Ruling 2002-32,
may cause a transfer of assets from a Code Section 132(f) fringe benefit plan or
a Code Section 125 cafeteria plan in which Company Employees participate prior
to the Closing Date to be accepted into a Code Section 132(f) or Code Section
125 plan maintained on and after the Closing Date by Buyer, any of its
Affiliates, the Company, any of the Subsidiaries, or any related entity that the
foregoing may cause to so employ any Company Employee, which transfer shall
consist of the account balances under the first-mentioned Code Section 132(f)
fringe benefit plan and/or Code Section 125 cafeteria plan of Company Employees
who are employed by Buyer, any of its Affiliates, the Company, any of the
Subsidiaries, or any related entity on and after the Closing Date. Further, in
the event that a mutual agreement with Seller regarding the matter is reached,
Buyer may continue, or may cause any of its Affiliates, the Company, any of the
Subsidiaries, or any related entity that the foregoing may cause to so employ
any Company Employee to continue, on and after the Closing Date, appropriate
payroll deductions to permit continued participation by Company Employees in the
AFLAC plans (Personal Lifestyle Protector Cancer Plan, Personal Sickness
Indemnity Plan, New York Dental Insurance Level 1) that are made available to
Company Employees as of the Closing Date. Buyer, Company and Seller shall
cooperate in good faith to effectuate the provisions of this Section 6.10(i).

 

(j) Seller shall provide to Buyer, by letter of even date herewith and by a
subsequent letter delivered on or prior to the Closing Date, a list (the
“Company Employee List”) setting forth, as of the date hereof and as of the
Closing Date, respectively, (i) for each Company Employee, the Company
Employee’s base salary, the Company Employee’s initial date of hire by the
Company, a Subsidiary or an Affiliate of Seller, whichever is the earliest date,
and the Company Employee’s job title and level, (ii) the names

 

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of the Company Employees participating in the Company CIC Plan, and (iii) with
respect to each Company Employee participating in the Company CIC Plan, the
“Applicable Percentage” (as defined in the Company CIC Plan), in each case
except as otherwise specifically provided in the Company Employee List.

 

Section 6.11 No Solicitations. From the date hereof until the earlier of the
Closing or the termination of this Agreement in accordance with its terms,
Seller shall not, nor shall it authorize or permit the Company or any Subsidiary
or any of their respective officers or directors (collectively, the “Seller
Representatives”), directly or indirectly, to (a) solicit, facilitate, initiate,
entertain, encourage or take any action to solicit, facilitate, initiate,
entertain or encourage, any inquiries or communications or the making of any
proposal or offer that constitutes an Acquisition Proposal, or (b) participate
or engage in any discussions or negotiations with, or provide any information to
or take any other action with the intent to facilitate the efforts of, any
Person concerning any possible Acquisition Proposal or any inquiry or
communication which might reasonably be expected to result in an Acquisition
Proposal. Seller shall immediately cease and cause to be terminated, and shall
cause all Seller Representatives to immediately cease and cause to be
terminated, all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could reasonably be expected to lead to, an
Acquisition Proposal. Seller shall promptly notify each Seller Representative of
its obligations under this Section 6.11. Without limiting the foregoing, it is
agreed that any violation of the restrictions set forth above by the Company,
any Subsidiary or any other Seller Representative, whether or not such Person is
purporting to act on behalf of Seller, shall be deemed to be a breach of this
Section 6.11 by Seller.

 

Section 6.12 Change In Name of Company and Subsidiaries; No Transfer Of Rights
to Names of Seller, Seller Affiliates Or Predecessors.

 

(a) On or prior to the Closing Date, Seller, at its option, may (and/or may
cause the Company and the Subsidiaries to) prepare and file all applications,
notices, petitions and filings with each Governmental Authority and otherwise
which are necessary or advisable to

 

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change the name of the Company and the Subsidiaries so as to remove therefrom
the names “Consolidated Edison”, “Con Edison” and “CEC”. In connection with
preparing and filing such applications, notices, petitions and filings, Seller
shall consult with Buyer with regard to the new names that Buyer wishes to
utilize for the Company and the Subsidiaries. On the Closing Date, Buyer shall
mail to each Person with whom the Company or any Subsidiary has entered into a
Contract or Lease (the “Company Contract Parties”) a notice specifying the
change in the names of the Company and the Subsidiaries and that the Company and
the Subsidiaries are no longer affiliated with Seller. If, during the thirty
(30) day period commencing on the Closing Date, Seller delivers written notice
to any Company Contract Parties for the purpose of informing them of the change
in the names of the Company and the Subsidiaries or the fact that the Company
and the Subsidiaries are no longer affiliated with Seller, then Seller agrees to
provide Buyer with a copy of such notice.

 

(b) Notwithstanding anything to the contrary in this Agreement, it is understood
and agreed that Seller hereby retains, and does not transfer to Buyer, the
Company, any Subsidiary or any other Person, any and all right, title and
interest in and to (including the right to use) the names “Consolidated Edison”,
“Con Edison”, “Con Ed”, Consolidated Edison Company”, “Consolidated Edison
Company of New York, Inc.”, “Consolidated Edison, Inc.”, “Consolidated Edison
Communications Holding Company, Inc.”, “CEC Holding Member, Inc.,” “Con Edison
Communications, Inc.,” “Con EdisonCommunications, LLC”, “Con Ed Communications”,
“Con Edison Communications”, “Consolidated Edison Communications”, “CEC”, “New
York Edison”, “Brooklyn Edison”, “Staten Island Edison”, and “Edison” and any
related or similar trade names, trademarks, service marks or logos.

 

Section 6.13 Retained Liability For Certain Litigation. Seller shall retain
responsibility for, and on and after the Closing Date shall defend the interests
of the Company and the Subsidiaries in, and indemnify and hold Buyer, the
Company and the Subsidiaries harmless from and against any and all liability of
the Company or any Subsidiary in the WTC Site Cases and the action entitled
Mastec North America, Inc. against Consolidated Edison, Inc., Consolidated
Edison Company of New York, Inc., Con Edison Communications, Inc., and Con
Edison Communications,

 

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LLC, bearing Index Number 601831/2002, and pending in the Supreme Court of the
State of New York for the County of New York (the “Mastec Litigation”) and from
and against any and all liability of the Company or any Subsidiary in the WTC
Site Cases and the Mastec Litigation that may be imputed to Buyer. At all times
on and after the Closing Date, Buyer shall make available, and shall cause
Buyer’s Affiliates, including the Company and the Subsidiaries, to make
available, to Seller, Seller’s Affiliates and their respective counsel (at no
cost to Seller, Seller’s Affiliates or their respective counsel, other than
Seller’s reimbursement of the reasonable out-of-pocket expenses incurred by
Buyer or Buyer’s Affiliates, including the Company or any of the Subsidiaries,
and paid to third parties in connection with their compliance with this
sentence): (a) the officers, directors, employees and agents of Buyer and/or
Buyer’s Affiliates, including the Company and/or the Subsidiaries, as witnesses
to the extent that such persons may reasonably be required in connection with
the WTC Site Cases, the Mastec Litigation and/or defending the same, and (b)
records and other documentation in the possession or control of Buyer and/or
Buyer’s Affiliates, including the Company and/or any of the Subsidiaries, to the
extent that the same may be reasonably required in connection with the WTC Site
Cases, the Mastec Litigation and/or defending the same. Without limiting the
foregoing, Seller shall have the right to retain copies of or originals of (in
which case Seller shall provide Buyer with copies of) any books, records and
other documentation and information relating to the Company or any of the
Subsidiaries or their respective businesses to the extent that Seller reasonably
believes that such books, records and other documentation and information may be
reasonably required in connection with the WTC Site Cases, the Mastec Litigation
and/or defending the same.

 

Section 6.14 Release of Indemnity Obligations. Seller covenants and agrees, on
or prior to Closing, to execute and deliver to the Company, for the benefit of
the Company and each Subsidiary, a release in the form attached hereto as
Schedule 6.14 (the “Release”).

 

Section 6.15 Non-Competition; Confidentiality.

 

(a) Non-Compete. During the period from the Closing Date until the third
anniversary thereof (the “Restricted Period”), Seller shall not, and Seller
shall cause its

 

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Affiliates to not, without the prior written consent of Buyer, (i) engage in the
Restricted Business in the Restricted Area or (ii) engage in any business under
the name of the Company or any Subsidiary; provided, however, that,
notwithstanding anything to the contrary in this Section 6.15(a), Seller and/or
its Affiliates (collectively, the “Restricted Parties”) may (A) engage in the
business of providing communications services over power lines (“Power Line
Communications”) so long as the Restricted Parties do not directly market or
sell Power Line Communications to end use customers of such Power Line
Communications (provided that the foregoing shall not prohibit or preclude any
Restricted Party from (x) marketing or selling Power Line Communications to
third parties who are not end use customers of Power Line Communications, (y)
permitting third parties to market or sell Power Line Communications to end use
customers of Power Line Communications, or (z) using Power Line Communications
for, or marketing or selling Power Line Communications to third parties,
including end use customers of Power Line Communications, for use in connection
with, electric, gas, steam or water generation, transmission, distribution or
metering systems and their performance and state of maintenance and repair,
management of load or consumption or usage relating to electric, gas, steam or
water utility service, meter reading and other meter applications, and
monitoring and communication concerning electric, gas, steam and water utility
service pricing) and (B) acquire an interest in, merge, consolidate or combine
with, be acquired by or engage in any similar transaction with any Person that
is, directly or indirectly, engaged in the Restricted Business in the Restricted
Area so long as (1) such Person has not derived more than 50% of its revenue, on
a consolidated basis, during the twelve month period preceding the date of such
acquisition, merger, consolidation or combination, from the operation of the
Restricted Business in the Restricted Area (excluding, for such purpose, any
revenues from Power Line Communications) and (2) after such acquisition, merger,
consolidation, combination or similar transaction and until the expiration of
the Restricted Period, (x) no Restricted Party (or any surviving corporation of
such acquisition, merger, consolidation, combination or similar transaction)
increases the funding of the operations of such Restricted Business in the
Restricted Area during any twelve (12) month period above the funding of such
operations during the twelve (12) month period immediately preceding such

 

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acquisition, merger, consolidation, combination or similar transaction and (y)
the Restricted Business in the Restricted Area is not conducted under any name
set forth in Section 6.12(b) hereof. During the Restricted Period, Seller shall
not, and shall not permit its Affiliates to, engage in any activity through an
agent if (i) such activity would be prohibited pursuant to this Section 6.15(a)
if undertaken directly by Seller or one of its Affiliates and (ii) such agent is
directed or controlled by Seller or one of its Affiliates with respect to such
activity. As used in this Section 6.15(a), the term “controlled” means the power
to cause the agent to act or fail to act. During the Restricted Period, Seller
shall not induce or attempt to induce any employee of the Company or any
Subsidiary to leave the employ of such organization.

 

(b) Confidential Information. During the Restricted Period, Seller shall keep
confidential and retain in strictest confidence, and shall not use for the
benefit of itself or others in any way that may be competitive with, or could be
detrimental to, the Company or any Subsidiary, all confidential matters of the
Company or any Subsidiary, including confidential matters consisting of
“know-how,” trade secrets, customer lists, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
product or service development techniques or plans, business acquisition plans,
new personnel acquisition plans, methods of manufacture, technical processes,
designs and design projects, inventions and research projects of the Company or
any Subsidiary learned by Seller heretofore or hereafter. The obligations and
restrictions imposed on Seller pursuant to this Section 6.15(b) shall not apply
to information that (i) is or becomes generally available to the public other
than as a result of a disclosure by Seller, (ii) becomes available to Seller on
a nonconfidential basis from a source other than the Company or any Subsidiary,
but only if such source is not bound by a confidentiality agreement with the
Company or any Subsidiary and is not otherwise prohibited from transmitting the
information to Seller by a contractual, legal, fiduciary or other obligation,
(iii) is independently developed by Seller without reference to any confidential
matters of the Company or any Subsidiary, or (iv) is requested or required to be
disclosed by law (including by oral question or written request for information
or documents in any legal proceeding,

 

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interrogatory, subpoena, civil investigative demand or similar legal
proceeding).

 

(c) Specific Performance. Seller acknowledges and agrees that Buyer would be
irreparably harmed in the event any of the provisions of this Section 6.15 are
breached. Accordingly, Seller agrees that Buyer shall be entitled to an
injunction to prevent breaches of the provisions of this Section 6.15 and to
enforce specifically this Section 6.15, in addition to any other remedy to which
Buyer may be entitled, at law or in equity or pursuant to this Agreement.

 

(d) Termination of Application of Section 6.15(a). In the event that, after the
Closing Date, Buyer or any of Buyer’s Affiliates (including the Company and any
Subsidiary) who are party to the 55 Broad Street Security Agreement, the 111
Eighth Avenue Security Agreement or the Rider X Security Agreement breach any of
their obligations under the 55 Broad Street Security Agreement, the 111 Eighth
Avenue Security Agreement or the Rider X Security Agreement, then, unless Buyer
shall cause such breach to be cured within thirty (30) days after receipt of
written notice from Seller, Section 6.15(a) shall be null and void and without
further force and effect and Seller shall have no obligations and Buyer shall
have no rights pursuant to Section 6.15(a). The foregoing shall be in addition
to, and not in lieu of, any other remedies available to Seller for any such
breach and the provision immediately above providing for notice and an
opportunity to cure shall not be deemed to condition or otherwise affect any
other remedies available to Seller for any such breach.

 

(e) Reasonableness of Covenants. Seller and Buyer acknowledge and agree that
this Section 6.15 is reasonable and valid in all respects.

 

Section 6.16 Estoppel Certificates. Within 30 days after the date hereof, Seller
agrees to request, or to cause the Company to request, each of the top five
customers of the Company, measured by revenue received from such customer for
the three (3) month period ending on the last day of the month prior to the date
hereof, to execute an estoppel certificate, in substantially the form attached
hereto as Schedule 6.16.

 

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Section 6.17 Cooperation.

 

(a) During the period from the date hereof until the Closing Date, at the
reasonable request of Buyer from time to time, Seller agrees to cause such
Company Employees, as may be agreed upon by Buyer and Seller, to visit customers
of the Company and the Subsidiaries with sales representatives of Buyer to
reasonably cooperate with and assist Buyer in encouraging such customers to
continue to use the services of the Company after Closing.

 

(b) After the Closing Date, Seller shall make available to Buyer, the Company
and the Subsidiaries and their respective counsel (at no cost to Buyer, the
Company, the Subsidiaries or their respective counsel, other than Buyer’s
reimbursement of the reasonable out-of-pocket expenses incurred by Seller and
paid to third parties in connection with its compliance with this sentence): (i)
the officers and employees of Seller as witnesses to the extent that such
persons may reasonably be required in connection with the litigation matters set
forth on Schedule 4.8 and/or defending the same, and (ii) records and other
documentation in the possession or control of Seller to the extent that the same
may be reasonably required in connection with the litigation matters set forth
on Schedule 4.8 and/or defending the same.

 

Section 6.18 Security and Reimbursement Obligations. Seller and Buyer shall
execute and deliver the Security Agreements as of the Closing Date and Buyer
shall cause the other signatories thereto to execute and deliver the Security
Agreements as of the Closing Date. Seller shall cause each guaranty that any of
the Security Agreements requires to be furnished by Seller to a third party on
behalf of or for the benefit of the Company or any of the Subsidiaries on the
Closing Date (the “Retained Seller-Provided Indebtedness,” which is set forth on
Schedule 6.18) to be furnished to such third party on the Closing Date and Buyer
shall cause each letter of credit that any of the Security Agreements requires
to be furnished to Seller to be so furnished to Seller on the Closing Date. On
or prior to the Closing Date, Buyer shall cause security replacing all
Seller-Provided Indebtedness except the Retained Seller-Provided Indebtedness
(the “Replaced Seller-Provided Indebtedness”) to be furnished to the third party
possessing or secured by the Replaced Seller-Provided Indebtedness and the
Replaced Seller-Provided Indebtedness to be released and returned to Seller.

 

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Section 6.19 Insurance. Buyer acknowledges and agrees that no insurance policy
or fidelity bond which is maintained by, or on behalf of, the Company or any of
the Subsidiaries prior to the Closing Date or which provides any insurance
coverage or other financial protection with respect to the assets, business,
equipment, properties, operations, employees, officers or directors of the
Company or any Subsidiary prior to the Closing Date (collectively, the
“Applicable Insurance Policies”) shall be transferred to Buyer or Buyer’s
Affiliates, be retained or assumed by the Company or any of the Subsidiaries on
or after the Closing Date or, subject to the proviso in the next succeeding
sentence, otherwise be required to be continued in force and effect on and after
the Closing Date. Seller, in its sole discretion, may from time to time on or
after the Closing Date cause any and all of the Applicable Insurance Policies to
be canceled, terminated, modified or supplemented, including with regard to
coverage relating to the Company or the Subsidiaries, provided that, Seller
shall cause (a) the first $35,000,000 layer of its claims made, excess liability
insurance program that is provided through AEGIS policy X0007A1A4 (the “1st
Layer Excess Policy”) to remain in effect until April 28, 2005 (the expiration
date of the 1st Layer Excess Policy), and (b) the Company and the Subsidiaries
to be insured parties under such 1st Layer Excess Policy (subject to its terms)
with respect to occurrences prior to the Closing Date for which claims are made
relating to the Company or the Subsidiaries prior to April 28, 2005. If Seller,
from time to time and in its sole discretion, decides to renew the 1st Layer
Excess Policy with AEGIS after its expiration on April 28, 2005 so that the
coverage through such a renewal policy with AEGIS is available for claims made
during any period between April 28, 2005 and the third annual anniversary of the
Closing Date (each, a “1st Layer Excess Renewal Policy”), Seller agrees to
notify Buyer of such decision and provide Buyer with the opportunity to have the
Company and the Subsidiaries be insured parties under any such 1st Layer Excess
Renewal Policy (subject to its terms) for occurrences prior to the Closing Date
for which claims are made relating to the Company or the Subsidiaries prior to
the expiration date of such 1st Layer Excess Renewal Policy, in each case
subject to Buyer paying Seller in advance for the cost that is reasonably
allocable to the

 

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provision of such insurance coverage to the Company and the Subsidiaries. For
the avoidance of doubt, it is acknowledged and agreed that Seller shall have no
obligations and Buyer shall have no rights hereunder with respect to any 1st
Layer Excess Renewal Policy when the policy it replaces or renews expires after
the third annual anniversary of the Closing Date. Seller shall have any and all
rights to any and all credits, premium refunds and premium returns under the
Applicable Insurance Policies and as they may be canceled, terminated, modified
or supplemented.

 

Section 6.20 Notice of Termination of Securities Purchase Agreement. Buyer shall
immediately notify Seller if (a) the Securities Purchase Agreement is terminated
or (b) if any party to the Securities Purchase Agreement notifies Buyer (whether
in writing, orally or otherwise) that such party does not intend to consummate
the transactions contemplated by the Securities Purchase Agreement.

 

Section 6.21 Dissolution of CEC VA. Prior to the Closing Date, Seller agrees to
use commercially reasonable efforts to cause Consolidated Edison Communications
of Virginia, Inc. (“CEC VA”) to be dissolved in the Commonwealth of Virginia;
provided, however, that the failure of Seller to cause CEC VA to be dissolved
prior to the Closing Date shall not constitute a breach of this Agreement or a
basis for Buyer to claim that a condition to closing has not been satisfied.

 

ARTICLE VII

TAX MATTERS

 

Section 7.1 Indemnity.

 

(a) (i) Subject to the terms of Section 7.1(c), (ii) excluding payments to
Seller pursuant to Section 7.2, (iii) except to the extent of the amount
reserved for Taxes (not including any deferred Tax amounts) on the Interim
Financial Statements, (iv) except to the extent that any Tax with respect to
taxable periods ending on or before the Closing Date is attributable to an audit
adjustment that results in an increase in the taxable income of the Company or
its Subsidiaries for any such period and a correlative decrease in such taxable
income in a later taxable period beginning on or after the Closing Date (in
which case the

 

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amount of the indemnity shall be reduced by the discounted present value of the
resulting reasonably estimated future benefit), and (v) except as otherwise
provided in Section 7.9, Seller agrees to indemnify and hold harmless Buyer, the
Company and each Subsidiary against the following Taxes and against any loss,
damage, liability or expense, including reasonable fees for attorneys and other
outside consultants, incurred in contesting or otherwise in connection with any
such Taxes: (x) Taxes imposed on the Company or any Subsidiary with respect to
taxable periods ending on or before the Closing Date; (y) Taxes imposed on any
member of any consolidated, combined or unitary group with which any of the
Company and the Subsidiaries file or have filed a Tax Return on a consolidated,
combined or unitary basis for a taxable period ending on or before the Closing
date; and (z) with respect to taxable periods beginning before the Closing Date
and ending after the Closing Date, Taxes imposed on the Company or any
Subsidiary which are allocable, pursuant to Section 7.1(b), to the portion of
such Tax period ending on the Closing Date. Seller’s indemnity obligations under
this Section 7.1(a) shall exist regardless of the accuracy of the
representations and warranties set forth in Section 4.14 and regardless of any
disclosure made on Schedule 4.14, and the representations and warranties of
Seller set forth in Section 4.14 of this Agreement shall terminate as of the
Closing Date.

 

(b) In the case of Taxes that are payable with respect to a taxable period that
begins before the Closing Date and ends after the Closing Date the portion of
any such Tax that is allocable to the portion of the period ending on the
Closing Date shall be:

 

(i) in the case of Taxes that are either (A) based upon or related to income or
receipts (including franchise fees under any franchise agreements between the
Company or any Subsidiary and any franchisor (“Franchise Fees”) to the extent
based upon or related to income or receipts), or (B) imposed in connection with
any sale or other transfer or assignment of property (real or personal, tangible
or intangible) (other than conveyances pursuant to this Agreement, as provided
under Section 7.9), deemed equal to the amount which would be payable if the
taxable period ended with the Closing Date; and

 

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(ii) in the case of Taxes (including Franchise Fees) imposed on a periodic basis
with respect to the assets of the Company or any Subsidiary, or otherwise
measured by the level of any item, deemed to be the amount of such Taxes for the
entire period (or, in the case of such Taxes determined on an arrears basis, the
amount of such Taxes for the immediately preceding period), multiplied by a
fraction the numerator of which is the number of calendar days in the period
ending on the Closing Date and the denominator of which is the number of
calendar days in the entire period.

 

(c) Notwithstanding any provision in this Agreement to the contrary, Seller
shall only be obligated to Buyer pursuant to the provisions of Section 7.1(a)
for Taxes for which (i) Buyer, the Company or any Subsidiary, as the case may
be, has received a notice of proposed adjustment (or similar written notice) in
writing from a Taxing Authority (or has paid or borne the economic effect of
such Taxes upon written request of a Taxing Authority), and (ii) Seller has
received written notice of claim thereof from Buyer on or prior to sixty (60)
days after the expiration of the applicable statute of limitations relating to
the proposed Tax (without regard to any tolling or other extension of such
statute of limitations, unless otherwise agreed by Seller). Seller shall not
have any liability under this Section 7.1(c) after the date that is sixty (60)
days after the expiration of the applicable statute of limitations relating to
the proposed Tax (without regard to any tolling or other extension of such
statute of limitations, unless otherwise agreed by Seller) unless and to the
extent that proper notice of claim under this Section 7.1(c) shall be given to
Seller on or before such date.

 

Section 7.2 Tax Allocation Agreement Payments. The Tax Allocation Agreements are
hereby terminated respecting the Company and the Subsidiaries, and no payments
shall be owing to or from Seller, Buyer, the Company or any Subsidiary under the
Tax Allocation Agreements except to the extent reflected in the Interim
Financial Statements.

 

Section 7.3 Returns and Payments.

 

(a) Seller shall prepare and file or otherwise furnish in proper form to the
appropriate Taxing Authority (or cause to be prepared and filed or so furnished)
in a

 

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timely manner all (i) consolidated, combined and unitary Tax Returns (each a
“Consolidated Return”) that include Seller and (ii) Tax Returns relating to the
Company and the Subsidiaries that are attributable to periods ending on or
before the Closing Date (and Buyer shall do the same with respect to any
non-Consolidated Return for the Company and the Subsidiaries attributable to
periods ending after the Closing Date). Tax Returns of the Company and the
Subsidiaries not yet filed for any taxable period that begins before the Closing
Date shall be prepared in a manner consistent with past practices employed with
respect to the Company and the Subsidiaries (except to the extent counsel for
Seller or the Company renders a legal opinion that a Tax Return cannot be so
prepared and filed without being subject to penalties). With respect to any
non-Consolidated Return required to be filed by Buyer or Seller with respect to
the Company and the Subsidiaries and as to which an amount of Tax is allocable
to the other party under Section 7.1(b), the filing party shall provide the
other party and its authorized representatives with a copy of such completed Tax
Return and a statement certifying the amount of Tax shown on such Tax Return
that is allocable to such other party pursuant to Section 7.1(b), together with
appropriate supporting information and schedules at least forty-five (45) days
prior to the due date (including any extension thereof) for the filing of such
Tax Return, and such other party and its authorized representatives shall have
the right to review and comment on such Tax Return and statement prior to the
filing of such Tax Return.

 

(b) After the Closing Date, Seller shall pay when due and payable all Taxes with
respect to the Company and the Subsidiaries that are unpaid as of the Closing
Date and are allocable to Seller pursuant to Sections 7.1(a) and 7.1(b) (either
directly to the appropriate Taxing Authority or as appropriate to Buyer, the
Company or any Subsidiary as the case may be).

 

(c) All Taxes with respect to the Company and the Subsidiaries not allocated to
Seller pursuant to Section 7.1(a) and 7.1(b) shall be allocated to Buyer. Buyer
shall indemnify and hold harmless Seller against, and shall or shall cause the
Company or the Subsidiaries to pay, all Taxes that are allocable to Buyer
pursuant to the preceding sentence (either directly to the appropriate Taxing
Authority or, as appropriate, to Seller). Buyer shall indemnify and hold
harmless Seller against any and all

 

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Taxes allocated to Buyer pursuant to the first sentence of this Section 7.3(c)
and against any loss, damage, liability or expense, including reasonable fees
for attorneys and other outside consultants, in connection with such Taxes.

 

Section 7.4 Refunds. Any Tax refund (including any interest with respect
thereto) relating to the Company or any Subsidiary for Taxes paid for any
taxable period or portion thereof ending on or prior to the Closing Date shall
be the property of Seller, and if received by Buyer or the Company or any
Subsidiary shall be paid over promptly to Seller. To the extent any such tax
refund is the result of a decrease in items of income previously reported for a
period ending on or prior to the Closing Date and a correlative increase in
items of income for a period subsequent to the Closing Date, then the payment to
Seller shall be reduced by the discounted present value of the resulting
reasonably estimated tax burden to Buyer.

 

Section 7.5 Contests.

 

(a) After the Closing, each of Buyer and Seller shall promptly notify the other
party in writing of any written notice of a proposed assessment, audit, contest,
proceeding or litigation (a “Contest”) of Buyer or Seller or of any of the
Company and the Subsidiaries which could reasonably be expected to result in
grounds for payment by such other party under this Article VII.

 

(b) For all Contests for which either party alone bears the economic burden
under Article VII, such party shall control all such Contests in connection
therewith. In other cases, prior to the Closing Date, Seller shall control all
Contests relating to the Company and the Subsidiaries and, after the Closing
Date, in the case of a Contest that relates to a non-Consolidated Return (or any
item relating thereto or reported thereon) for a taxable period ending on or
before, or that includes, the Closing Date, Seller shall have the right at its
expense to participate in the conduct of such Contest, and for all taxable
periods thereafter, Buyer shall control such Contests; provided, however, that
Seller shall control any contest that relates to a Consolidated Return of
Seller. If Seller does not assume the defense of any such Contest for a taxable
period ending on or before the Closing Date, Buyer may defend the same in such
manner as it may deem appropriate, including settling such Contest after giving

 

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30 days’ prior written notice to Seller setting forth the terms and conditions
of settlement. Notwithstanding the foregoing, Buyer shall control any Contests
relating to, and shall be under no obligation to dispute or otherwise litigate,
any Franchise Fees with respect to which Buyer receives a bona fide request for
payment from the applicable franchisor and such Franchise Fees shall be paid by
Seller to the extent such Franchise Fees relate to the period prior to the
Closing Date, as determined in accordance with Section 7.1 above; provided that
Buyer shall not (and shall cause its Affiliates not to) solicit or enter into
any arrangement with any franchisor under which payment of Franchise Fees
relating to the period prior to the Closing Date is made in return for a
reduction in Franchise Fees relating to the period on or after the Closing Date
or other benefit to Buyer or its Affiliates.

 

(c) Buyer and Seller agree to cooperate, and Buyer agrees to cause the Company
and the Subsidiaries to cooperate, in the defense against or compromise of any
claim in any Contest.

 

Section 7.6 Section 338(h) (10) Election.

 

(a) Seller and Buyer shall make a joint election pursuant to Section 338(h)(10)
of the Code and similar provisions of state and local laws, to the extent
permitted (the “Election”) to treat Buyer’s acquisition of the Shares as a
deemed acquisition of the Company’s and the Subsidiaries’ assets. Buyer and
Seller shall cooperate in timely making such Election and in filing all returns,
documents, statements, and other forms that are required to be submitted to any
federal, state or local taxing authority in connection with the Election,
including any “statement of Section 338 election” and IRS Form 8023 or any
successor form (together with any schedules or attachments thereto) pursuant to
regulations (collectively, the “Treasury Regulations”) promulgated by the United
States Department of the Treasury (or its successor).

 

(b) For purposes of making such Election, Seller shall determine the value of
the tangible and intangible assets of the affected entities and shall timely
provide Buyer with an allocation of Buyer’s “adjusted grossed-up basis” in the
Shares (within the meaning of the Treasury Regulations under Section 338 of the
Code) to such assets (the “Allocation”) and Buyer shall have reasonable

 

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opportunity to comment thereon. After consideration of Buyer’s comments,
Seller’s Allocation shall be binding, the Allocation shall be binding upon Buyer
and Seller for purposes of allocating the “deemed selling price” (within the
meaning of the Treasury Regulations) among the assets of the affected entities;
provided, however, that if, upon the advice of tax counsel reasonably acceptable
to Seller, Buyer believes that the Allocation is materially incorrect, the
Independent Accounting Firm shall determine whether the Allocation is materially
incorrect and the determination of such Independent Accounting Firm shall be
final. If the Independent Accounting Firm determines that the Allocation is not
materially incorrect, Seller and Buyer shall be bound by the Allocation. If the
Independent Accounting Firm determines that the Allocation (or any portion
thereof) is materially incorrect, Seller and Buyer shall be bound by the
Allocation as adjusted by such Independent Accounting Firm.

 

(c) Neither Buyer nor Seller shall agree to any proposed adjustment to the
Allocation by any Taxing Authority without first giving the other prior written
notice and the opportunity to challenge such proposed adjustment.

 

(d) Buyer shall not, without the prior written consent of Seller, make any
election under Section 338(g) of the Code or take any other action which may
cause Buyer’s acquisition of the Shares to fail to qualify as a deemed
acquisition of the Company’s assets pursuant to Section 338(h)(10) of the Code
and similar provisions of state and local laws.

 

Section 7.7 Time of Payment. Except as provided in Section 7.2 hereof, payment
of any amounts due under this Article VII in respect of Taxes shall be made (i)
at least three Business Days before the due date of the applicable Tax Return
required to be filed by either Buyer or Seller, as the case may be, that shows
Taxes due for which the other party is responsible under this Agreement, or (ii)
within three Business Days following an agreement between Seller and Buyer that
an indemnity amount is payable, an assessment of a Tax by a Taxing Authority, or
a “determination” having been made as such term is defined in Section 1313(a) of
the Code. If liability under this Article VII is in respect of costs or expenses
other than Taxes, payment of any amounts due under this Article VII

 

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shall be made within five Business Days after the date when the relevant entity
has been notified that such entity has a liability for a determinable amount
under this Article VII and is provided with calculations or other materials
supporting such liability.

 

Section 7.8 Cooperation and Exchange of Information. Upon the terms set forth in
Section 6.4 of this Agreement, Seller and Buyer will provide each other with
such cooperation and information as either of them reasonably may request of the
other in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes, participating
in or conducting any Contest in respect of Taxes or making representations to or
furnishing information to parties subsequently desiring to purchase any of the
Company or the Subsidiaries or any part of the business from Buyer. Such
cooperation and information shall include providing copies of relevant Tax
Returns or portions thereof, together with accompanying schedules, related work
papers and documents relating to rulings or other determinations by Taxing
Authorities. Seller shall make its employees available on a basis mutually
convenient to both parties to provide explanations of any documents or
information provided hereunder as is reasonably practicable. Each of Seller and
Buyer shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company and the
Subsidiaries for each taxable period first ending after the Closing Date and for
all prior taxable periods until the later of (i) the expiration of the statute
of limitations of the taxable periods to which such Tax Returns, schedules and
work papers, records and other documents relate, without regard to extensions
except to the extent notified in writing of such extensions for the respective
Tax periods, or (ii) three years following the due date (without extension) for
such Tax Returns, provided, however, that Seller may satisfy its obligations
hereunder by delivering all such Tax Returns, schedules and work papers, records
and other documents to Buyer. Any information obtained under this Section 7.8
shall be kept confidential in accordance with Section 6.4 except as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting a Contest.

 

Section 7.9 Conveyance Taxes. Buyer and Seller shall each be liable for one-half
of any real property

 

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transfer or gains, sales, use, transfer, value added, stock transfer, and stamp
taxes, any transfer, recording, registration, and other fees, and any similar
Taxes which become payable in connection with the transactions contemplated by
this Agreement, and shall file such applications and documents as shall permit
any such Tax to be assessed and paid on or prior to the Closing Date in
accordance with any available pre-sale filing procedure. Buyer or Seller, as
appropriate, shall execute and deliver all instruments and certificates
necessary to enable the other to comply with any filing requirements relating to
any such Taxes.

 

Section 7.10 Miscellaneous. Seller and Buyer agree to treat all payments made by
either of them to or for the benefit of the other (including any payments to the
Company or any Subsidiary) under this Article VII and under other indemnity
provisions of this Agreement as adjustments to the Purchase Price solely for
federal and applicable state and local income tax purposes.

 

ARTICLE VIII

CONDITIONS TO CLOSING

 

Section 8.1 Conditions to Buyer’s Obligations. In addition to the conditions set
forth in Section 8.3, the obligations of Buyer to effect the Closing shall be
subject to the following conditions, any one or more of which may be waived in
writing by Buyer:

 

(a) The representations and warranties of Seller set forth in this Agreement
shall be true and correct in all material respects (i) as of the date of this
Agreement and (ii) as of the Closing Date as though made as of the Closing Date
(giving effect to the Updated Schedules), except that any such representation
and warranty that is given as of a particular date or period and relates solely
to such particular date or period shall be true and correct in all material
respects only as of such date or period; provided, however, that with respect to
any representation or warranty or portion thereof that is qualified by Material
Adverse Effect, materiality or similar qualifier, such representation or
warranty or portion thereof shall be true and correct in all respects;

 

(b) Seller shall have performed and complied with in all material respects all
agreements, covenants,

 

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obligations and conditions required by this Agreement to be performed or
complied with by Seller on or prior to the Closing Date;

 

(c) Seller shall have caused to be delivered to Buyer a certificate executed by
a duly authorized officer of Seller certifying that the conditions set forth in
Sections 8.1(a) and (b) have been satisfied;

 

(d) Except as set forth on Schedule 8.1(d), Seller shall deliver to Buyer
certificates as to the good standing of the Company and the Subsidiaries in the
respective jurisdictions of their organization, together with a copy of the
Certificate of Incorporation of the Company certified by the Secretary of State
of the State of New York;

 

(e) Seller shall deliver to Buyer resolutions of the board of directors of
Seller and the finance committee of the board of directors of Seller, certified
by the Secretary or Assistant Secretary of Seller, approving and authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby;

 

(f) Seller shall deliver a certificate of the Secretary or Assistant Secretary
of Seller as to the incumbency of the officer executing this Agreement on behalf
of Seller and the genuineness of such officer’s signature;

 

(g) No events or conditions shall have occurred since the date hereof which,
individually or in the aggregate, have had any Material Adverse Effect;

 

(h) Buyer shall have received an opinion from counsel to Seller, with respect to
the matters set forth on Schedule 8.1(h) hereto;

 

(i) Buyer shall have received the Release from Seller; and

 

(j) Seller shall have provided Buyer with the resignations of the members of the
boards of directors of the Company and the Subsidiaries resigning their
respective positions as such directors.

 

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(k) All authorizations, filings, notifications, consents, orders and approvals
set forth on Schedule 5.3 other than the Excluded Consents shall, as applicable,
have been made or obtained, and shall be in full force and effect; provided,
however, that any such authorization, filing, notification, consent, order or
approval which requires, as a condition to its effectiveness or continued
effectiveness, that Buyer (or any of its Affiliates) pay or provide any
compensation or service to or at the direction of a Governmental Authority or to
or at the direction of a third party other than a Governmental Authority or
otherwise incur any obligation to such a Governmental Authority or its designee
or to a third party other than a Governmental Authority or such third party’s
designee (other than as may be specifically set forth in the Permit, Lease, or
contract at issue and except for the payment of routine filing fees), shall not
be considered an authorization, filing, notification, consent, order or approval
satisfying this Section 8.1(k) unless Buyer agrees in its sole and unfettered
discretion to pay or provide such compensation or service or incur such
obligation (or to cause or permit any of its Affiliates to pay or provide such
compensation or service or incur such obligation).

 

(l) To the extent that an Excluded Consent has not been obtained, any
authorization, filing, notification, consent, order or approval required to be
made to or obtained from a Governmental Authority or a third party other than a
Governmental Authority in order to terminate, on or prior to the Closing Date,
the certificate of public convenience and necessity (or comparable authority) to
which such Excluded Consent relates shall, as applicable, have been made or
obtained and shall be in full force and effect; provided, however, that any such
authorization, filing, notification, consent, order or approval which requires,
as a condition to its effectiveness or continued effectiveness, that Buyer (or
any of its Affiliates) pay or provide any compensation or service to or at the
direction of a Governmental Authority or to or at the direction of a third party
other than a Governmental Authority or otherwise incur any obligation to such a
Governmental Authority or its designee or to a third party other than a
Governmental Authority or such third party’s designee (other than as may be
specifically set forth in the Permit, Lease, or contract at issue and except for
the payment of routine filing fees), shall not be considered an authorization,
filing, notification, consent, order or

 

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approval satisfying this Section 8.1(l) unless Buyer agrees in its sole and
unfettered discretion to pay or provide such compensation or service or incur
such obligation (or to cause or permit any of its Affiliates to pay or provide
such compensation or service or incur such obligation).

 

Section 8.2 Conditions to Seller’s Obligations. In addition to the conditions
set forth in Section 8.3, the obligations of Seller to effect the Closing shall
be subject to the following conditions, any one or more of which may be waived
in writing by Seller:

 

(a) The representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except that any such representation and warranty that is given as of a
particular date or period and relates solely to such particular date or period
shall be true and correct only as of such date or period; provided, however,
that with respect to any representation or warranty or portion thereof that is
qualified by Material Adverse Effect, materiality or similar qualifier, such
representation or warranty or portion thereof shall be true and correct in all
respects;

 

(b) Buyer shall have performed and complied with in all material respects all
agreements, covenants, obligations and conditions required by this Agreement to
be performed or complied with by Buyer on or prior to the Closing Date;

 

(c) Buyer shall have caused to be delivered to Seller a certificate executed by
a duly authorized officer of Buyer certifying that the conditions set forth in
Sections 8.2 (a) and (b) have been satisfied;

 

(d) Buyer shall deliver to Seller resolutions of the board of directors of
Buyer, certified by the Secretary or Assistant Secretary of Buyer, approving and
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby;

 

(e) Buyer shall deliver a certificate of the Secretary or Assistant Secretary of
Buyer as to the incumbency of the officer executing this Agreement on

 

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behalf of Buyer and the genuineness of such officer’s signature;

 

(f) Seller shall have received an opinion from counsel to Buyer, with respect to
the matters set forth on Schedule 8.2(f) hereto; and

 

(g) Buyer shall deliver to Seller a duly executed copy of each Security
Agreement, together with any letters of credit and other documents required to
be furnished by Buyer thereunder.

 

(h) All authorizations, filings, notifications, consents, orders and approvals
set forth on Schedule 4.4 other than the Excluded Consents shall have been
obtained and shall remain in full force and effect; provided, however, that any
such authorization, filing, notification, consent, order or approval which
requires, as a condition to its effectiveness or continued effectiveness, that
Seller (or any of its Affiliates) pay or provide any compensation or service to
or at the direction of a Governmental Authority or to or at the direction of a
third party other than a Governmental Authority or otherwise incur any
obligation to such a Governmental Authority or its designee or to a third party
other than a Governmental Authority or such third party’s designee (other than
as may be specifically set forth in the Permit, Lease, or contract at issue and
except for the payment of routine filing fees), shall not be considered an
authorization, consent, order or approval satisfying this Section 8.2(h) unless
Seller agrees in its sole and unfettered discretion to pay or provide such
compensation or service or incur such obligation (or to cause or permit any of
its Affiliates to pay or provide such compensation or service or incur such
obligation).

 

(i) To the extent that an Excluded Consent has not been obtained, any
authorization, filing, notification, consent, order and approval required to be
made to or obtained from a Governmental Authority or a third party other than a
Governmental Authority in order to terminate, on or prior to the Closing Date,
the certificate of public convenience and necessity (or comparable authority) to
which such Excluded Consent relates shall, as applicable, have been made or
obtained and shall be in full force and effect; provided, however, that any such
authorization, filing, notification, consent, order or approval which

 

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requires, as a condition to its effectiveness or continued effectiveness, that
Seller (or any of its Affiliates) pay or provide any compensation or service to
or at the direction of a Governmental Authority or to or at the direction of a
third party other than a Governmental Authority or otherwise incur any
obligation to such a Governmental Authority or its designee or to a third party
other than a Governmental Authority or such third party’s designee (other than
as may be specifically set forth in the Permit, Lease, or contract at issue and
except for the payment of routine filing fees), shall not be considered an
authorization, filing, notification, consent, order or approval satisfying this
Section 8.2(i) unless Seller agrees in its sole and unfettered discretion to pay
or provide such compensation or service or incur such obligation (or to cause or
permit any of its Affiliates to pay or provide such compensation or service or
incur such obligation).

 

Section 8.3 Mutual Condition. The obligations of each of Buyer and Seller to
effect the Closing shall be subject to no temporary restraining order,
preliminary or permanent injunction or other order issued by a court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement being in effect.

 

ARTICLE IX

SURVIVAL OF REPRESENTATIONS, WARRANTIES,

COVENANTS AND AGREEMENTS; INDEMNIFICATION

 

Section 9.1 Survival.

 

(a) Except as may be otherwise specified in this Agreement with regard to any
specific representation and warranty (including Article VII hereof), the
representations and warranties of the parties set forth in this Agreement shall
terminate on the date that is twelve (12) months after the Closing Date;
provided, however, that (i) the representations and warranties set forth in
Section 4.3(a), 4.5 and 5.2(a) shall survive indefinitely, (ii) the
representations and warranties set forth in Section 4.13 shall terminate on the
date that is three (3) years after the Closing Date, and (iii) the
representations and warranties set forth in Section 4.18 shall terminate on the
date that is four (4) years after the Closing Date. Notice with respect to any
claim in respect of any inaccuracy in

 

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or breach of any representation or warranty shall be in writing and shall be
given to the party against which such claim is asserted on or before the date on
which such representation or warranty terminates. Neither Seller nor Buyer shall
have any liability whatsoever with respect to any representation or warranty
after the date on which such representation or warranty terminates unless and to
the extent that proper notice with respect to a claim in respect of an
inaccuracy in or breach of any representation or warranty shall be given to the
party against which such claim is asserted on or before the date on which such
representation or warranty expires.

 

(b) All covenants and agreements made by the parties to this Agreement which
contemplate performance following the Closing Date shall survive the Closing
Date in accordance with their respective terms. All other covenants and
agreements shall not survive the Closing Date and shall terminate as of the
Closing Date.

 

Section 9.2 Obligation of Seller to Indemnify. Subject to the limitations set
forth in Sections 9.1 and 9.6, Seller shall indemnify, defend and hold harmless
Buyer and its directors, officers, employees, Affiliates, and their respective
successors and assigns, from and against any Loss incurred by any of them based
upon or arising out of (i) any breach of any representation or warranty made by
Seller in this Agreement; (ii) any breach of any representation or warranty made
by Seller in this Agreement as if such representation or warranty were made as
of the Closing Date (giving effect to the Updated Schedules); and (iii) the
failure by Seller to perform any unwaived covenant or agreement in this
Agreement on its part to be performed; provided that such covenant or agreement
survives the Closing Date in accordance with Section 9.1.

 

Section 9.3 Obligation of Buyer to Indemnify. Subject to the limitations set
forth in Sections 9.1 and 9.6, Buyer shall indemnify, defend and hold harmless
Seller and its directors, officers, employees, Affiliates, and their respective
successors and assigns, from and against any Loss incurred by any of them based
upon or arising out of (i) any breach of any representation or warranty made by
Buyer in this Agreement; (ii) any breach of any representation or warranty made
by Buyer in this Agreement as if such representation or warranty were made as of
the Closing Date; (iii) the failure by Buyer to perform any

 

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unwaived covenant or agreement in this Agreement on its part to be performed;
and (iv) any and all claims, actions or proceedings by any party to the
Securities Purchase Agreement or any other Securities Purchase Documents, such
party’s successors or assigns, or the shareholders, partners, members,
directors, officers or employees of any such party or successor or assign, which
are based upon or arise out of the execution, delivery and/or performance of the
Security Purchase Agreement or any other Securities Purchase Documents and/or
the consummation of any other financing transactions, the proceeds of which are
used to finance Buyer’s payment obligations under this Agreement or any other
Buyer Transaction Document; provided that such covenant or agreement survives
the Closing Date in accordance with Section 9.1. Notwithstanding anything to the
contrary in the preceding clause (iv) of this Section, such clause (iv) shall
not be deemed to preclude or prohibit Buyer from asserting any claim, action or
proceeding or to require Buyer to indemnify, defend and hold harmless Seller and
its directors, officers, employees, Affiliates, and their respective successors
and assigns, from and against any claim, action or proceeding, which (i) is
asserted or commenced by Buyer against Seller, (ii) is based upon or arises out
of the execution, delivery and/or performance of the Security Purchase Agreement
or any other Securities Purchase Documents and/or the consummation of any other
financing transactions, the proceeds of which are used to finance Buyer’s
payment obligations under this Agreement or any other Buyer Transaction
Document, (iii) is not a shareholders derivative claim, action or proceeding or
a claim, action, or proceeding wherein Buyer is a nominal party or is not the
real party in interest, and (iv) is not a cross claim, action or proceeding or
an impleader claim, action or proceeding or any other claim, action or
proceeding whereby Buyer seeks to hold Seller responsible for any liability that
has been imposed or is sought to be imposed upon Buyer by one or more third
parties.

 

Section 9.4 Notice and Opportunity to Defend Against Third Party Claims.

 

(a) Promptly after receipt from any third party by either party hereto (the
“Indemnitee”) of a notice of any demand, claim or circumstance that, immediately
or with the lapse of time, would give rise to a claim or the commencement (or
threatened commencement) of any action,

 

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proceeding or investigation (an “Asserted Liability”) that may result in a Loss
for which indemnification may be sought hereunder, the Indemnitee shall give
written notice thereof (the “Claims Notice”) to the party obligated to provide
indemnification pursuant to Section 9.2 or 9.3 (the “Indemnifying Party”);
provided, however, that a failure to give such notice shall not prejudice the
Indemnitee’s right to indemnification hereunder except to the extent that the
Indemnifying Party is prejudiced or forfeits substantive rights or defenses as a
result of such failure. The Claims Notice shall describe the Asserted Liability
in reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee. For the avoidance
of doubt, nothing in this Section 9.4 with regard to Claims Notices shall be
deemed to affect the limitations set forth in Section 9.1.

 

(b) The Indemnifying Party may elect to compromise or defend, at its own expense
and by its own counsel, any Asserted Liability. If the Indemnifying Party elects
to compromise or defend such Asserted Liability, it shall, within twenty (20)
Business Days following its receipt of the Claims Notice notify the Indemnitee
of its intent to do so, and the Indemnitee shall cooperate, at the expense of
the Indemnifying Party, in the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to provide indemnification under this
Agreement, the Indemnitee may pay, compromise or defend such Asserted Liability.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any Asserted Liability without the consent of the other
party; provided, however, that such consent to settlement or compromise shall
not be unreasonably delayed or withheld. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of such
Asserted Liability. If the Indemnifying Party chooses to compromise or defend
any Asserted Liability, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
necessary or appropriate for such defense.

 

Section 9.5 Tax Indemnification. Notwithstanding any provision of this Article
IX or any other provision of this Agreement, any issue or matter relating to
Taxes shall

 

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be governed solely by Article VII, including the termination of the
representations and warranties contained in Section 4.14.

 

Section 9.6 Limits on Indemnification. (a) No party shall have any right to seek
indemnification under this Agreement (i) with respect to Losses contemplated by
Section 9.2(i) or (ii) which would otherwise be indemnifiable hereunder
(including Losses incurred by all other Indemnitees affiliated with or related
to such party) until such Losses exceed $250,000 in the aggregate (provided that
for the sole purpose of determining whether this $250,000 amount has been
satisfied no effect shall be given to any Material Adverse Effect, materiality
or similar qualifier or any threshold dollar amounts in any representation or
warranty), in which case such party (including such affiliated or related
Persons) shall only be entitled to be indemnified for Losses in excess of such
aggregate amount, or (ii) for punitive, special, indirect or consequential
damages, including lost profits, lost revenues, lost savings and increased costs
of operations; provided, however, that the provisions of clause (i) immediately
above shall not apply to any breach by Seller of the representations and
warranties contained in Section 4.3(a) and 4.5 or of any unwaived covenant or
agreement set forth in Section 6.10 or 6.15(a). After the Closing, the remedies
provided by this Article IX shall be the sole and exclusive remedy for the
parties to this Agreement with respect to any dispute arising from, or related
to, this Agreement, except in the case of fraud and except that injunctive
relief (including specific performance) shall continue to be available to the
extent such remedy is in respect of a then surviving representation, warranty,
covenant or agreement.

 

(b) Notwithstanding any provision of this Agreement, the liability of Seller
under this Article IX shall be limited to an amount equal to $9,000,000;
provided, however, that the limitation set forth in this Section 9.6(b) shall
not apply to: (i) any breach by Seller of the representations, warranties and
covenants contained in Sections 4.3(a), 4.5, 6.10 and 6.15(a); (ii) to any
breach by Seller of the representation and warranty contained in Section
4.15(a)(iv) relating to the identification on Schedule 4.15(a) (or any update
thereto) of any contract or agreement relating to Indebtedness, provided,
however, that Seller shall have no liability whatsoever for any failure

 

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to identify on Schedule 4.15(a) (or any update thereto) any contract or
agreement relating to Indebtedness to the extent that the Indebtedness under
such unidentified contract or agreement was taken into account for purposes of
any adjustment to the Purchase Price pursuant to Section 3.3 hereof; or (iii) to
any breach by Seller of the representation and warranty contained in Section
4.15(d) relating to the identification on Schedule 4.15(d) (or any update
thereto) of any contract or agreement relating to Seller-Provided Indebtedness.

 

ARTICLE X

TERMINATION

 

Section 10.1 Termination. (a) This Agreement may be terminated on or prior to
the Closing Date only as follows:

 

(i) by mutual written consent of Buyer and Seller;

 

(ii) by either Buyer or Seller if a condition to its obligation to perform set
forth in Article VIII hereof becomes incapable of fulfillment, which termination
may be effective at any time after such condition becomes incapable of
fulfillment (including termination by Buyer if any events or conditions shall
have occurred between the date of this Agreement and the Closing Date which,
individually or in the aggregate, have had any Material Adverse Effect),
provided, however, that the right to terminate this Agreement pursuant to this
Section 10.1(a)(ii) shall not be available to any party if its condition to
perform became incapable of fulfillment due to its failure to fulfill any
obligation under this Agreement;

 

(iii) by either Buyer or Seller upon written notice to the other if the Closing
shall not have occurred by the date that is eighteen (18) months after the date
of this Agreement; provided, however, that the right to terminate this Agreement
pursuant to this clause (iii) shall not be available to any party whose breach
of any provision of this Agreement resulted in the Closing not occurring by such
date; or

 

(iv) by Seller upon written notice to Buyer if (i) the Securities Purchase
Agreement is terminated or

 

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(ii) if any party to the Securities Purchase Agreement notifies Buyer (whether
in writing, orally or otherwise) that such party does not intend to consummate
the transactions contemplated by the Securities Purchase Agreement.

 

(b) The termination of this Agreement shall be effectuated by the delivery of a
written notice of such termination from the party terminating this Agreement to
the other party.

 

Section 10.2 Obligations upon Termination. In the event that this Agreement
shall be terminated pursuant to Section 10.1, all obligations of the parties
hereto under this Agreement shall terminate and there shall be no liability of
either party hereto to the other party hereto, except (i) as set forth in
Section 6.2 and Section 6.3, and (ii) that nothing herein will relieve any party
from liability for any breach of this Agreement and the non-breaching party
shall have the right to pursue all available legal and equitable remedies.

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.1 Amendment. This Agreement may not be amended, altered or modified
except by written instrument executed by Buyer and Seller.

 

Section 11.2 Entire Agreement.

 

(a) This Agreement, the Confidentiality Agreement and the other Seller
Transaction Documents and Buyer Transaction Documents constitute the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersede all prior agreements and understandings,
written and oral, among the parties with respect to the subject matter hereof.

 

(b) THE REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS AGREEMENT ARE IN
LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE
AND ANY OTHER EXPRESS OR IMPLIED WARRANTIES OF SELLER. SELLER HEREBY DISCLAIMS,
AND NEITHER SELLER, ITS AFFILIATES, NOR ANY OF ITS OR THEIR RESPECTIVE
DIRECTORS, TRUSTEES, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES

 

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SHALL HAVE ANY RESPONSIBILITY OR LIABILITY PURSUANT TO, ANY SUCH OTHER EXPRESS
OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE BY SELLER OR ANY OTHER PERSON TO BUYER OR ANY OF ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER
INFORMATION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.

 

Section 11.3 Interpretation. When reference is made in this Agreement to any
Section, Exhibit or Schedule, such reference is to a Section, Exhibit or
Schedule of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” The phrases
“the date of this Agreement,” “the date hereof” and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the first paragraph of this Agreement. The words “hereof”, “herein”,
“hereby” and other words of similar import refer to this Agreement as a whole
unless otherwise indicated. The phrase “to the knowledge of Seller” or any
similar phrase shall be deemed to refer to the actual knowledge of any of the
executive officers of Seller, the President or General Counsel of the Company or
the Subsidiaries or the CFO of CSS, after due inquiry with regard to the subject
matter to which the phrase “to the knowledge of Seller” or any similar phrase
applies. Whenever the singular is used herein, the same shall include the
plural, and whenever the plural is used herein, the same shall include the
singular, where appropriate.

 

Section 11.4 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, that provision shall be
interpreted to be only so broad as is enforceable.

 

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Section 11.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given and delivered if they are: (a) delivered in
person, (b) transmitted by facsimile (followed by delivery by mail or courier),
(c) delivered by certified or registered mail (return receipt requested), or (d)
delivered by a nationally recognized express courier (with confirmation) to a
party at its address listed below (or at such other address as such party shall
deliver to the other party by like notice):

 

If to Seller, to:

 

Consolidated Edison, Inc.

4 Irving Place, Room 1810-S

New York, NY 10003

Facsimile: (212) 677-5850

Attention: General Counsel

 

With a concurrent copy to:

 

Steptoe & Johnson LLP

1330 Connecticut Avenue, NW

Washington, DC 20036

Facsimile: (202) 429-3902

Attention: Alfred M. Mamlet, Esq.

 

If to Buyer, to:

 

Fibernet Telecom Group, Inc.

570 Lexington Avenue

New York, NY 10022

Facsimile: (212) 421-8920

Attention:  President

 

With a concurrent copy to:

 

Mintz Levin Cohn Ferris Glovsky & Popeo PC

One Financial Center

Boston, MA 02111

Facsimile: (617) 542-2241

Attention:  John Pomerance, Esq.

 

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Section 11.6 Binding Effect; Persons Benefiting; No Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement is
intended or shall be construed to confer upon any Person other than the parties
hereto and their respective successors and permitted assigns any right, remedy
or claim under or by reason of this Agreement or any part hereof. This Agreement
may not be assigned by either party hereto without the prior written consent of
the other party; provided, however, that Buyer may designate that, at Closing,
the Shares be delivered to one or more of its Affiliates (in any such case,
Buyer shall remain responsible for the performance of its obligations
hereunder).

 

Section 11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.

 

Section 11.8 No Prejudice. This Agreement has been jointly prepared by the
parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.

 

Section 11.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT
RECOURSE TO SUCH STATE’S CHOICE OF LAW PRINCIPLES.

 

Section 11.10 Limited Liability. Notwithstanding anything to the contrary set
forth in this Agreement, no party to this Agreement shall be liable for any
punitive, special, indirect or consequential damages, including lost profits,
lost revenues, lost savings and increased costs of operations.

 

Section 11.11 Jurisdiction and Enforcement.

 

(a) Each of Seller and Buyer irrevocably submits to the exclusive jurisdiction
of (i) the Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York,

 

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for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of Seller and Buyer
agrees to commence any action, suit or proceeding arising out of this Agreement
or any transaction contemplated hereby either in the United States District
Court for the Southern District of New York or, if such suit, action or
proceeding may not be brought in such court due to subject matter jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the parties further agrees that service of process, summons, notice or document
by hand delivery or U.S. certified mail at the address specified for such party
in Section 11.5 (or such other address specified by such party from time to time
pursuant to Section 11.5) shall be effective service of process for any action,
suit or proceeding brought against such party in any such court. Each of the
parties irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or any
transaction contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right to effect service of process in any other
manner permitted by law.

 

Section 11.12 WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT AGREES THAT
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY ANY PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF ANY PARTY, WHICH
ARISES FROM THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL
BE TRIED ONLY BY A COURT AND NOT BY A JURY. EACH PARTY HEREBY EXPRESSLY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. EACH PARTY
HAS ENTERED INTO THIS AGREEMENT IN RELIANCE UPON THIS WAIVER OF JURY TRIAL.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.

 

CONSOLIDATED EDISON, INC. By:    

Name:

  Stephen B. Bram

Title:

  Group President Energy and Communications FIBERNET TELECOM GROUP, INC. By:    

Name:

  Michael S. Liss

Title:

  President and Chief Executive Officer

 

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