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EXECUTION COPY
AMENDMENT NO. 3
TO
RECAPITALIZATION AGREEMENT
AND PLAN OF MERGER, ORIGINALLY EXECUTED ON
MARCH 9, 2000 AND AMENDED ON APRIL 10, 2000 AND ON JULY 10, 2000
BY AND AMONG
ATX TELECOMMUNICATIONS SERVICES, INC.
XXXXXX XXXXXXX, XXXXX XXXXXXXXX
XXXXXXX XXXX, THE XXXXXXXX XXXX TRUST,
CORECOMM LIMITED,
ATX MERGER SUB, INC.
AND
CORECOMM MERGER SUB, INC.
DATED JULY 31, 2000
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AMENDMENT NO. 3
TO
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER
This Amendment No. 3 to the Recapitalization Agreement and
Plan of Merger (this "Amendment") is made and entered into July 31, 2000, by and
between ATX Telecommunications Services, Inc., Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxx Xxxx, The Xxxxxxxx Xxxx Trust, CoreComm Limited, ATX Merger Sub, Inc.
and CoreComm Merger Sub, Inc. All capitalized terms which are used but not
otherwise defined herein shall have meanings specified in the Agreement (as
defined below), and all amendments thereto.
WHEREAS, CoreComm, CoreComm Merger Sub, ATX, ATX Merger Sub
and the ATX Stockholders are parties to that certain Recapitalization Agreement
and Plan of Merger, dated March 9, 2000, as amended by Amendment No. 1 to the
Recapitalization Agreement and Plan of Merger, dated April 10, 2000, and by
Amendment No. 2 to the Recapitalization Agreement and Plan of Merger, dated July
10, 2000 (the "Agreement"), pursuant to which ATX and CoreComm have agreed to
combine in order to advance the long-term business interests of ATX and
CoreComm; and
WHEREAS, the parties hereto desire to revise the Agreement to
provide for certain changes to the terms of the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
1. Amendment to Section 1.2(a)(iii). Section 1.2(a)(iii) of the
Agreement is hereby amended in its entirety to read as follows:
(iii) $150 million in cash (subject to certain
adjustments set forth herein); provided, however, that CoreComm may, at
its sole discretion, reduce the aggregate amount of cash to be paid by
CoreComm to the ATX Stockholders to not less than $40 million (subject
to certain adjustments set forth herein, the "Cash Consideration") and
the balance of the $150 million payable under this subsection shall be
paid through the issuance of notes with such terms and conditions as
set forth in the term sheet attached hereto as Exhibit B (the "Senior
Notes;" the combination of the Cash Consideration and Senior Notes
payable hereunder being referred to as the "Notes and Cash
Consideration;" the Notes and Cash Consideration, together with the ATX
Common Stock and the ATX Convertible Preferred Stock, are collectively
referred to as the "Exchange
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Consideration")(1). The adjustments set forth below to the contrary
notwithstanding, if the result of the adjustments set forth below would
be the payment to the ATX Stockholders of less than $40 million of the
Notes and Cash Consideration in the form of cash (including adjustments
pursuant to Section 1.2(j)), such adjustments shall, instead of
reducing the Cash Consideration, reduce, on a dollar-for-dollar basis,
the principal amount of Senior Notes to the extent that (but only to
the extent that) the ATX Stockholders would be entitled to an increase
in the Notes and Cash Consideration as a result of the Capital
Expenditure Amount as of July 31, 2000 having been greater than
$5,877,817. If such adjustment based on the Capital Expenditure Amount
is greater than the reduction in cash, the excess of such adjustment
shall be made by an increase in the principal amount of the Senior
Notes. For avoidance of doubt, the intention of the parties is that any
upward adjustment in the purchase price resulting from capital
expenditures shall first be by way of a setoff against reductions of
the cash consideration otherwise due in accordance with the adjustments
below, and any excess over such reduction shall be by way of an
increase in the principal amount of the Senior Notes.
2. Amendment to Section 1.2(b) through (i). Sections 1.2(b) through (i)
of the Agreement are hereby amended in their entirety to read as follows:
(b) ATX shall prepare as of the earlier of (x) the
Closing Date and (y) August 31, 2000, an unaudited consolidated balance
sheet (estimated as of the Closing Date or August 31, 2000, as the case
may be) (the date as of which such balance sheet is dated being the
"Target Date") and unaudited estimated statements of income and cash
flows of ATX for the period from the ATX Balance Sheet Date to the
Target Date (the "Estimated Target Date Financial Statements") from the
GAAP Audited Financials and the books and records of ATX in accordance
with GAAP (applied on a consistent basis using the same accounting
methods, policies, practices, principles and procedures with consistent
classifications, judgments and estimation methodologies used in
preparation of the GAAP Audited Financials) and shall set forth the
Working Capital as of the Target Date ("Estimated Target Date Working
Capital"), the ATX Debt as of the Target Date (the "Estimated Target
Date ATX Debt") and the estimated capital expenditures made by ATX and
the ATX Partnerships during the period from the ATX Balance Sheet Date
to July 31, 2000 (the "Estimated 7/31 Capital Expenditures Amount").
ATX shall prepare the Estimated Target Date Financial Statements as
promptly as practicable, but in no event later than the earlier of (A)
five (5) business days prior to the scheduled Closing Date, and (B)
September 15, 2000. ATX shall provide a copy of the Estimated Target
Date Financial Statements to CoreComm not later than three (3) days
after its completion, and in any event at least two (2) business days
prior to the scheduled Closing Date. If the Target Date is the Closing
Date, ATX shall also deliver to CoreComm,
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(1) As described on Exhibit B, if Senior Notes are issued the principal
amount thereof shall be increased by up to $9,000,000.
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together with the delivery of the Estimated Target Date Financial
Statements, a detailed schedule of the distributions permitted by
Section 1.2(j) hereof, if any, that it estimates will be made on or
prior to the Closing Date (the "Estimated Closing Date
Distributions"). If the Target Date is August 31, 2000 (and August 31,
2000 is not the Closing Date), not later than five (5) business days
prior to the scheduled Closing Date, ATX shall deliver to CoreComm a
detailed schedule of the distributions permitted by Section 1.2(j)
which (i) have actually been made subsequent to August 31, 2000 and
prior to (but not including) the date of such schedule (the "Actual
Distributions"), and (ii) ATX estimates will be made from the date of
such schedule through the Closing Date (the "Estimated Additional
Distributions;" the Actual Distributions together with the Estimated
Additional Distributions are together referred to as the "Estimated
Distributions."
In the event that the Estimated Target Date Financial Statements
reflect that the Estimated Target Date Working Capital is less than
zero (such deficiency, the "Estimated Working Capital Shortfall"), then
the Notes and Cash Consideration shall be reduced (subject to the
calculation of the final Target Date Financial Statements) by an amount
equal to the Estimated Working Capital Shortfall. Any such reduction
shall be made as follows: the aggregate amount of Senior Notes to be
issued as part of the Notes and Cash Consideration shall be reduced on
a dollar-for-dollar basis by an amount equal to the lesser of $5
million and the amount of Estimated Working Capital Shortfall, and, if
the Estimated Working Capital Shortfall exceeds $5 million, the Cash
Consideration portion of the Notes and Cash Consideration shall be
reduced by an amount equal to the amount by which the Estimated Working
Capital Shortfall exceeds $5 million. If the Estimated Target Date
Financial Statements reflect that the Estimated Target Date Working
Capital is greater than zero (such excess, the "Estimated Working
Capital Excess") then the Notes and Cash Consideration shall be
increased (subject to the calculation of the final Target Date
Financial Statements) by increasing the aggregate principal amount of
Senior Notes to be issued at the Closing by an amount equal to the
amount of the Estimated Working Capital Excess. The Estimated Working
Capital Shortfall or Estimated Working Capital Excess, as applicable,
shall be the "Estimated Target Date Working Capital Adjustment."
In the event that the Estimated Target Date Financial Statements
reflect that Estimated Target Date ATX Debt is greater than zero, then
the Notes and Cash Consideration shall be reduced (subject to the
calculation of the final Target Financial Statements) by reducing the
amount of the Cash Consideration portion of the Notes and Cash
Consideration by an amount equal to the Estimated Target Date ATX Debt.
In the event that the Estimated Target Date Financial Statements
reflect that the Estimated 7/31 Capital Expenditure Amount is less than
$5,877,817 (the "Capital Expenditure Target Amount,") the Notes and
Cash Consideration shall be reduced (subject to the calculation thereof
based on the
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final Target Date Financial Statements) by reducing the aggregate
principal amount of Senior Notes to be issued at the Closing by an
amount equal to the difference between the Capital Expenditure Target
Amount and the 7/31 Capital Expenditure Amount. In the event that the
Estimated Target Date Financial Statements reflect that the 7/31
Capital Expenditure Amount is greater than the Capital Expenditure
Target Amount, the Notes and Cash Consideration shall be increased
(subject to the calculation thereof based on the final Target Date
Financial Statements) by increasing the aggregate principal amount of
Senior Notes to be issued at the Closing by an amount equal to the
lesser of (i) $1,500,000, and (ii) the difference between the Capital
Expenditure Target Amount and the 7/31 Capital Expenditure Amount (the
adjustments contemplated by this paragraph being the "Capital
Expenditure Adjustment").
(c) Within ninety (90) days after the Closing Date
(the "Financial Statements Delivery Date"), ATX shall cause to be
prepared and delivered to the Stockholder Representative (as defined
below) a proposed unaudited balance sheet and proposed unaudited
statements of income and cash flows (the "Proposed Target Date
Financial Statements") prepared in accordance with GAAP (applied on a
consistent basis using the same accounting methods, policies,
practices, principles and procedures with consistent classifications,
judgments and estimation methodologies that were used in preparation of
the GAAP Audited Financials) setting forth the Working Capital of ATX
and ATX Debt as of the Target Date, and the Capital Expenditures of ATX
and the ATX Partnerships for the period from (and excluding) the ATX
Balance Sheet Date through (and including) July 31, 2000. For purposes
of this Section 1.2, the Stockholder Representative shall mean BDO
Xxxxxxx, LLP. ATX shall also prepare and deliver to the Stockholder
Representative at the same time as it delivers the Proposed Target Date
Financial Statements, its calculation of the amount of the
distributions made pursuant to Section 1.2(j) subsequent to the Target
Date (the "ATX Distribution Calculation").
(d) The Stockholder Representative shall have a
period of thirty (30) days (the "Review Period") from the date on which
ATX delivers the Proposed Target Date Financial Statements and the ATX
Distribution Calculation to the Stockholder Representative pursuant to
Section 1.2(c), to review the Proposed Target Date Financial Statements
and the ATX Distribution Calculation. If, prior to the expiration of
the Review Period, the Stockholder Representative does not deliver a
Dispute Notice (as defined below) to ATX, the unaudited balance sheet
and unaudited statements of income and cash flows included in the
Proposed Target Date Financial Statements and the ATX Distribution
Calculation shall be deemed to be final and binding upon ATX and the
ATX Stockholders for purposes of determining the Working Capital of
ATX, the ATX Debt as of the Target Date, the Capital Expenditures of
ATX for the period from the ATX Balance Sheet Date through July 31,
2000 and the amount of the distributions made pursuant to Section
1.2(j) subsequent to the Target Date (the "Post-Target Date
Distributions"). The unaudited balance sheet and
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unaudited statements of income and cash flows included in the Proposed
Target Date Financial Statements shall not become final and binding at
the end of the Review Period, nor shall the ATX Distribution
Calculation become final and binding if, prior to the expiration of the
Review Period, the Stockholder Representative delivers a written notice
to ATX (the "Dispute Notice") setting forth in reasonable detail the
disagreements that the Stockholder Representative has with the
unaudited balance sheet and/or either of the unaudited statements of
income and cash flows included in the Proposed Target Date Financial
Statements and/or with the ATX Distribution Calculation and the effect
which such disagreements would have on the calculation of any of the
Working Capital of ATX, the ATX Debt as of the Target Date, the Capital
Expenditures of ATX for the period from the ATX Balance Sheet Date
through July 31, 2000, the ATX Distribution Calculation or the amount
(or form) of Notes and Cash Consideration payable to the ATX
Stockholders. If the Stockholder Representative delivers a Dispute
Notice prior to the end of the Review Period, the representatives of
ATX and the Stockholder Representative shall have a ten (10) day period
(the "Settlement Period") from the date of the delivery of the Dispute
Notice to attempt to resolve any dispute set forth in the Dispute
Notice and to agree upon an unaudited balance sheet and unaudited
statements of income and cash flows and/or upon the amount of the
Post-Target Date Distributions, which shall be binding on ATX and the
ATX Stockholders for purposes of this Agreement and to agree upon the
Working Capital of ATX , the ATX Debt as of the Target Date, the
Capital Expenditures of ATX for the period from the ATX Balance Sheet
Date through July 31, 2000 and the Post-Target Date Distributions. If
the Stockholder Representative and ATX have not arrived at an agreement
during the Settlement Period, then, at any time following the
termination of the Settlement Period, either the Stockholder
Representative or ATX may submit the issue in dispute to the
Philadelphia, Pennsylvania office of PricewaterhouseCoopers LLP (the
"Accountant") for resolution in accordance with this Section. In
resolving any disputed item, the Accountant (i) shall be bound by the
provisions of this Section 1.2, (ii) may not assign a value to any item
greater than the greatest value for such item claimed by either party
or less than the smallest value for such item claimed by either party,
(iii) shall make its determination based solely on information
submitted by the parties and not by independent review and (iv) shall
be instructed to issue a report containing its resolution of the
disputed issue or issues (the "Accountant's Report") within thirty (30)
days following submission of the dispute. The Accountant's Report shall
be delivered by the Accountant to ATX and the Stockholder
Representative, and shall be final and binding on ATX and the ATX
Stockholders for purposes of this Agreement. The fees charged by the
Accountant shall be paid by ATX.
(e) During the period of any dispute within the
contemplation of this Section 1.2, the ATX Stockholders, the
Stockholder Representative and their representatives (including counsel
and accountants) shall have reasonable access during normal business
hours to all books, records, employees, offices and other facilities
and properties of the Surviving Corporation to the extent required
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to complete their review of the Target Date Financial Statements and
their examination of the calculations with respect to the ATX
Distribution Calculation and shall be permitted to review the working
papers (subject to the execution of customary waivers, releases and
indemnifications), if any, of ATX or its auditor relating to the Target
Date Financial Statements or the ATX Distribution Calculation; provided
that any such access shall not unreasonably interfere with the
day-to-day operations of ATX and shall be limited to those items
related to the assessment of the Target Date Financial Statements or
the ATX Distribution Calculation, as the case may be, and matters
related thereto. ATX and CoreComm or their auditors shall cooperate
with the ATX Stockholders and other representatives of the ATX
Stockholders in facilitating such review.
(f) In the event that the final Target Date Financial
Statements reflect that the Working Capital of ATX as of the Target
Date is less than zero (such deficiency, the "Final Working Capital
Shortfall"), then the Notes and Cash Consideration shall be reduced by
an amount equal to the excess of zero over the Final Working Capital
Shortfall (the "Final Shortfall"); provided, however, that the Final
Shortfall shall be adjusted to reflect any adjustments to the Notes and
Cash Consideration previously made due to an Estimated Target Date
Working Capital Adjustment. Any such reduction shall be made to by
reducing the Cash Consideration and/or the Notes to the same extent as
they would have been reduced had the Final Shortfall been used at the
Closing rather than the Estimated Working Capital Adjustment. If the
Final Target Date Balance Sheet reflects that the Working Capital of
ATX as of the Target Date is greater than zero (a "Final Working
Capital Excess") then the Notes and Cash Consideration shall be
increased by issuing additional Senior Notes to the ATX Stockholders in
an aggregate amount equal to the excess of the Final Working Capital
Excess over the amount of Working Capital generated subsequent to July
31, 2000; provided, however, that the Final Working Capital Excess (and
any related amounts to be paid) shall be adjusted to reflect any
adjustments to the Notes and Cash Consideration previously made due to
an Estimated Target Date Working Capital Adjustment.
(g) In the event that the final Target Date Financial
Statements reflect that the ATX Debt is greater than zero (such amount
the "Final ATX Debt"), then the Notes and Cash Consideration shall be
decreased by reducing the Cash Consideration portion of the Notes and
Cash Consideration as provided in Section 1.2(i); provided, however,
that the Final ATX Debt shall be adjusted to reflect any adjustments to
the Closing Exchange Consideration previously made due to any Estimated
Target Date ATX Debt.
(h) In the event that the final Target Date Financial
Statements reflect that the capital expenditures made by ATX during the
period from the ATX Balance Sheet Date to July 31, 2000 (the "7/31
Capital Expenditure Amount") is less than the Estimated 7/31 Capital
Expenditure Amount, then the Notes and Cash Consideration shall be
decreased by decreasing the aggregate
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principal amount of Senior Notes by an amount equal to the excess of
the Estimated 7/31 Capital Expenditure Amount over the 7/31 Capital
Expenditure Amount; provided, however, if the Estimated 7/31 Capital
Expenditure Amount was an amount in excess of $1,500,000 over the
Capital Expenditure Target Amount, then, for purposes of the
calculation required by this subsection (h), the Estimated 7/31 Capital
Expenditure Amount shall be deemed to have been an amount equal to
$1,500,000 over the Capital Expenditure Target Amount. For purposes of
Section 1.2, the 7/31 Capital Expenditure Amount shall include only
amounts paid or payable by ATX prior to the Target Date which have been
purchased and installed by ATX on or prior to July 31, 2000.
(i) In the event of any reduction to the Notes and
Cash Consideration occurring after the Closing by operation of
Subsections (f) through (h) above which involves a reduction in the
Cash Consideration, the ATX Stockholders shall be jointly and severally
liable to pay to ATX in cash the amount in question. In the event of
any reduction of the Notes and Cash Consideration occurring after the
Closing by operation of Subsections (f) through (h) above which
involves a reduction in the aggregate principal amount of the Senior
Notes, ATX shall be entitled to cause each of the Senior Notes to be
reduced by its pro-rata portion of such amount; provided, however, that
in lieu of having the principal amount of any Senior Note reduced, the
ATX Stockholder who originally received the indebtedness evidenced by
such Senior Note may deliver to ATX a personal note having the same
interest rate, payment and maturity dates as the Senior Notes in an
amount equal to the amount which such ATX Stockholder's Senior Note
would have been reduced; provided further, however, that such personal
notes may only be delivered in respect of such ATX Stockholder's
ratable share of $5,000,000. For purposes hereof, an ATX Stockholder's
ratable share shall mean a fraction, the numerator of which is the
aggregate principal amount of Senior Notes actually issued to such ATX
Stockholder at the Closing (without giving effect to any post-Closing
adjustment thereof pursuant to Sections 1.2(f) through (h) hereof) and
the denominator of which is the aggregate amount of all Senior Notes
actually issued to the ATX Stockholders at the Closing (without giving
effect to any post-Closing adjustment thereof pursuant to Sections
1.2(f) through (h) hereof).
3. Amendments to Section 1.2(j). Section 1.2(j) of the Agreement is
amended as follows:
(a) The period at the end of clause (ii) of Section 1.2(j) is
deleted and a semicolon is inserted in lieu thereof followed by the word "or."
(b) A new clause (iii) is added following clause (ii) and
reading as follows:
(iii) pay fees and expenses of ATX in connection with
the transactions contemplated by this Agreement (such fees and expenses
include any
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and all investment banking, legal, accounting and similar fees and
expenses payable by ATX in connection with the transactions
contemplated hereby).
(c) The following additional language is inserted following
(but not as part of) clause (iii):
The Notes and Cash Consideration shall be reduced by reducing the Notes
and Cash Consideration by an amount equal to any distribution made in
accordance with this Section 1.2(j), such reductions being made as
follows: the amount of Notes and Cash Consideration, and the portion
thereof constituting the Cash Consideration, shall be reduced on a
dollar for dollar basis by an amount equal to the Estimated
Distributions permitted to be made pursuant to clauses (i) and (ii) of
this Section 1.2(j); and the amount of Notes and Cash Consideration,
and the portion thereof payable in Senior Notes, shall be reduced on a
dollar for dollar basis by an amount equal to the Estimated
Distributions that constitute distributions permitted to be made
pursuant to clause (iii) of this Section 1.2(j). If the distributions
permitted to be made pursuant to clauses (i) and (ii) of this Section
1.2(j) exceeds the amount of the Estimated Distributions in respect
thereof, ATX shall be entitled to be paid, and the ATX Stockholders
shall be jointly and severally liable to pay to ATX, an amount in cash
equal to the amount by which the actual amount of the distributions
permitted to be made pursuant to such clauses (i) and (ii) exceeds the
amount of the Estimated Distributions in respect thereof. If the
distributions permitted to be made pursuant to clause (iii) of this
Section 1.2(j) exceeds the amount of the Estimated Distributions in
respect thereof, ATX shall be entitled to cause each of the Senior
Notes to be reduced by its pro-rata portion of the actual amount of the
distributions permitted to be made pursuant to such clause (iii) to the
extent that such amount exceeds the amount of the Estimated
Distributions in respect thereof. The foregoing notwithstanding, any
payment made subsequent to August 31, 2000 by ATX to any ATX
Stockholder to the extent that such payment constitutes the repayment
of funds advanced in cash by such ATX Stockholder to ATX subsequent to
August 31, 2000 in order to fund ATX's working capital requirements for
the period following August 31, 2000 through the Closing Date shall not
be reflected in any purchase price adjustment and ATX shall make such
reimbursements, if not already made, at or prior to the Closing Date.
Anything in this Section 1.2(j) to the contrary notwithstanding, under
no circumstances may the aggregate amount of all distributions
permitted by this Section 1.2(j) exceed $25,000,000.
4. Amendments to Section 1.2(k). Section 1.2(k) of the Agreement is
amended as follows:
(a) The definition of the term "ATX Capital Expenditure
Obligation" is amended to read in its entirety as follows:
"ATX Capital Expenditure Obligation" means the
obligation of ATX and the ATX Partnerships to make Capital Expenditures
from the period commencing January 1, 2000 through July 31, 2000 in the
amount and
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for those categories of items set forth on Section 1.2 of the ATX
Disclosure Schedule.
(b) The definition of the term "ATX Debt" is amended to read
in its entirety as follows:
"ATX Debt" means all liabilities of ATX, other than
current liabilities, as set forth on the Estimated Target Date
Financial Statements, the Proposed Target Date Financial Statements and
the final Target Date Financial Statements, as applicable.
(c) The definition of the term "Capital Expenditure
Adjustment" is deleted in its entirety.
5. Amendment to Section 5.19. The following text in Section 5.19 of the
Agreement is deleted in its entirety:
"the Escrow Agreement, the Indemnification Escrow Agreement"
6. Amendment to Section 5.20. Section 5.20 of the Agreement is deleted
in its entirety.
7. Amendment to Section 5.34. Section 5.34 of the Agreement is amended
to read in its entirety as follows:
5.34 Capital Expenditure Loans. From August 1, 2000 until the
earlier of the Closing or the termination of this Agreement in
accordance with Article VIII hereof, CoreComm shall provide to ATX the
amount required to fund capital expenditures scheduled to be made
subsequent to August 1, 2000 in accordance with the ATX business plan
heretofore provided by ATX to CoreComm. Any such loan shall be at
reasonable commercial terms. If this Agreement shall be terminated
prior to the consummation of the Merger as a result of a breach thereof
by ATX or an ATX Stockholder or a failure to satisfy any of the
conditions set forth in Sections 6.1, 6.2, 6.5, 6.13 through 6.15,
6.19(c), 6.20 and 6.22 of the Agreement, all amounts provided by
CoreComm to ATX shall be repaid, together with accrued unpaid interest
to the date of repayment and without set-off, not later than thirty
days following such termination. If this Agreement is terminated prior
to the consummation of the Merger for any reason other than as set
forth in the preceding sentence, no repayment of such funds shall be
required, and ATX shall have no repayment or other obligations in
respect thereof.
8. Amendment to Section 6.10. Section 6.10 of the Agreement is amended
to read in its entirety as follows:
6.10 FCC/State PUC Consents. The FCC and State PUCs (other
than the Connecticut PUC) shall have granted by Final Order the
FCC/State XXX
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Consent Applications, without conditions, qualifications or other
restrictions that are likely to have a Material Adverse Effect whether
imposed by the FCC or any other Governmental Entity.
9. Amendment to Section 6.18. Section 6.18 of the Agreement is deleted
in its entirety.
10. Amendment to Section 9.7. Section 9.7 is deleted in its entirety.
11. Defined Terms. Each reference in the Agreement to the "short term
senior notes" or the "Short Term Senior Notes" is hereby amended to refer to the
"Senior Notes".
12. Amendment to Section 12.1. (a) Section 12.1 is hereby amended to
delete the following cross-referenced defined terms: "Applicable Amount,"
"Closing Financial Statements Delivery Date," "Estimated Closing ATX Debt,"
"Estimated Closing Capital Expenditures," "Estimated Closing Working Capital,"
"Pre-Closing Financial Statements," "Pre-Closing Working Capital Adjustment" and
"Working Capital Shortfall."
(b) Section 12.1 is hereby further amended to include the
following additional defined term cross-references:
Term Section
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Actual Distributions 1.2
ATX Distribution Calculation 1.2
ATX Pre-Target Date Distribution 1.2
Capital Expenditure Adjustment 1.2
Capital Expenditure Target Amount 1.2
Estimated Additional Distributions 1.2
Estimated Distributions 1.2
Estimated Target Date ATX Debt 1.2
Estimated Target Date Financial Statements 1.2
Estimated Target Date 7/31 Capital Expenditure Amount 1.2
Estimated Target Date Working Capital 1.2
Estimated Target Date Working Capital Adjustment 1.2
Estimated Working Capital Excess 1.2
Estimated Working Capital Shortfall 1.2
Notes and Cash Consideration 1.2
Post-Target Date Distributions 1.2
Proposed Target Date Financial Statements 1.2
Senior Notes 1.2
7/31 Capital Expenditure Amount 1.2
Target Date 1.2
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13. Amendment to Exhibits. Exhibits A, B, C and G to the Agreement are
hereby superseded and replaced in their entirety with Exhibits A, B, C and G
attached hereto, respectively.
14. Proxy Statement. Subject to obtaining the approval thereof of all
parties in interest, CoreComm shall use its reasonable best efforts to cause an
amended Schedule 14A relating to the transactions contemplated by the Agreement
to be filed with the Securities and Exchange Commission within three (3)
business days following the execution and delivery of this Amendment by all
parties hereto. As soon as practicable following the filing of a definitive
proxy statement with the Securities and Exchange Commission, having due regard
for the rules and policies of the Securities and Exchange Commission, CoreComm
will mail definitive proxy materials to its stockholders and will convene a
meeting of its shareholders to consider the transactions contemplated by the
Agreement not later than 30 days following the date of mailing of the definitive
proxy materials to the CoreComm stockholders.
15. Conduct in the Ordinary Course. ATX acknowledges that
notwithstanding the fact that the working capital adjustment provided for in
Section 1.2 of the Agreement shall be based on working capital of ATX as of
August 31, 2000 (if the Closing Date is subsequent to August 31, 2000), ATX
shall continue to be obligated to conduct its business as required by Section
5.3 of the Agreement until the Closing Date; provided, however that the ATX
Stockholders and their Affiliates may make advances to ATX to fund ATX's working
capital requirements in the ordinary course consistent with past practices,
which advances shall not be deemed to constitute a breach of Section 5.3 of the
Agreement.
16. Financing Terms. If CoreComm undertakes its proposed bank and its
proposed Rule 144A financing prior to Closing, such financing shall be completed
on terms which are not materially different from, in a manner materially adverse
to CoreComm, the terms heretofore described to the ATX Stockholders. If either
such financing is completed on terms materially different from those described
to the ATX Stockholders, and such differences are materially adverse to
CoreComm, CoreComm shall immediately notify the ATX Stockholders of such event,
and absent a waiver by the ATX Stockholders of such noncompliance, CoreComm
shall not be permitted to borrow under the Senior Notes described herein, and
the remainder of this amendment shall remain in full force and effect.
"Materially different" shall be considered to be any adverse modification to any
term of such financings by at least 15% (other than the amount of each type of
financing), which may not be increased. The foregoing bank financing must be one
comprehensive financing, including the syndication thereof. The intent is that
CoreComm will enter the market to obtain one bank financing arrangement to be
completed at one time in an amount between $100 million and $200 million. It is
not contemplated that CoreComm will do two or more separate bank financings that
do not close simultaneously. However, nothing herein is intended to limit
CoreComm's ability to structure such bank financing in a customary manner,
including, but not limited to, multiple tranches, staggered drawing and other
standard provisions. In addition, upon delivery to the ATX Stockholders of a
term sheet reasonably acceptable to the ATX Stockholders, the foregoing
provisions (and their counterparts in Exhibit B) shall be
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deemed to apply to a bridge financing in addition to the bank and 144a
financings. Such bridge financing will be subject to the same constraints
described herein (and in Exhibit B) that apply to the bank and 144a financings.
17. Stock Option Plan; etc. Not later than seven (7) business days
following the date of this Amendment, CoreComm shall deliver to ATX a proposal
outlining employee stock option arrangements for ATX as well as term sheets
outlining employment and/or consulting services to be provided to CoreComm by
Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxxx subsequent to the Closing.
18. Letter of Credit. CoreComm shall cause to be posted a letter of
credit, not to exceed $900,000, which shall be absolute and unconditional
supporting ATX's leasehold obligations in respect of the rental of approximately
25,000 square feet of office space located in Bala Cynwyd, Pennsylvania. If this
Agreement shall be terminated under conditions which would result in ATX being
obligated to repay any capital expenditure advances made by CoreComm pursuant to
Section 5.34 of the Agreement, without regard to any changes made herein, then
ATX shall be obligated to take all actions necessary in order to promptly and
effectively relieve CoreComm of any liability which it may have in respect of
such letter of credit. In the event that the Agreement is terminated and ATX
occupies the office space under such lease for at least 30 days following such
termination, then ATX shall be required to replace CoreComm on the letter of
credit.
19. Other Provisions Unchanged. Except as specifically amended hereby,
all other terms and conditions of the Agreement shall remain in full force and
effect. To the extent that the Agreement includes such terms as "herein,"
"hereto," "in this Agreement" and the like, such terms shall be interpreted to
refer to the Agreement, as modified by this Amendment.
20. Counterparts. This Amendment may be executed in separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first above written.
CORECOMM LIMITED
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Senior Vice President - General
Counsel
ATX TELECOMMUNICATIONS
SERVICES, INC.
By: /S/ XXXXXXX XXXX
Xxxxxxx Xxxx
Chief Executive Officer
CORECOMM MERGER SUB, INC.
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
President
ATX MERGER SUB, INC.
By: /S/ XXXXXXX XXXX
Xxxxxxx Xxxx
Chief Executive Officer
Solely with respect to Articles 9, 11, 12
and 13 of the Recapitalization Agreement
and Plan of Merger, as amended hereby
/S/ XXXXXX XXXXXXX
Xxxxxx Xxxxxxx
/S/ XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx
/S/ XXXXXXX XXXX
Xxxxxxx Xxxx
00
00
XXX XXXXXXXX XXXX TRUST
By: /S/ XXXX X. XXXXXXXX
Xxxx X. Xxxxxxxx, Trustee
