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<br />Comments on key provisions of the Asset Purchase Agreement are as <br />follows: <br /> <br />· The definitions in Section 1.1 (page 16) include target <br />numbers for video, voice and high speed subscriber <br />numbers (page 16). If the targets are not met, the sale price <br />may be adjusted. It is noted that not all subscribers take all <br />services, so the total number of subscribers may be larger <br />than that for any single service. <br /> <br />· Section 2.3 (page 22) indicates that the purchase price is <br />$45,000,000. With press reports of 18,000 subscribers, this <br />would be $2.500 per subscriber. The purchase price is <br />subject to adjustment for changes in working capital items, <br />changes in the number of subscribers, and pre-closing <br />capital costs. <br /> <br />· Section 2.9 (page 28) indicates that the seller will fonn a <br />limited liability company that will receive the sale assets <br />which will then be transferred to Astound. Technically, this is <br />an additional transfer step not listed in the Form 394. <br />However, such a "flow through" type entity that <br />simultaneously receives and transfers assets is not <br />uncommon in these types of transactions. <br /> <br />· Section 5.4(f) (page 51) requires the purchaser to make <br />available to the local franchising authorities (LFA) accurate <br />and complete information regarding the purchaser as the <br />LF A may require. <br /> <br />· If the sale is cancelled due to receipt of a superior competing <br />proposal, the seller will pay a $2,000,000 termination fee to <br />the purchaser (Section 7.4(b), page 63). <br /> <br />· Section 3.5 of the Seller Disclosure Schedule provides profit <br />and loss statements for the RCN San Francisco area <br />operations for calendar 2005 and the first six months of <br />2006. The statements are ma~ed "confidential and <br />proprietary." The EBITDA (Earnings before Interest, Taxes. <br />Depreciation and Amortization) for both periods are positive. <br /> <br />Also included in the statements (but not provided here due to <br />the stated confidential nature) are gross margins for each of <br />the three categories of service. This information may be of <br />interest to the local franchising authorities. <br /> <br />8 <br /> <br />6.30 <br />Page 12 <br />