<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1999
REGISTRATION NO. 333-76007
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WILLIAMS COMMUNICATIONS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4813 73-1462856
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 573-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
WILLIAM G. VON GLAHN, ESQ.
SENIOR VICE PRESIDENT, LAW
WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 573-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
RANDALL H. DOUD, ESQ. MARLENE ALVA, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP DAVIS POLK & WARDWELL
919 THIRD AVENUE 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10017
(212) 735-3000 (212) 450-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT OFFERING PRICE(2) REGISTRATION FEE(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $0.01 per
share(4).................................. 34,040,000 $23.00 $782,920,000 $217,652
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</TABLE>
(1) Includes an aggregate of 4,440,000 shares which the Underwriters have the
option to purchase solely to cover over-allotments.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457 promulgated under the Securities Act
of 1933.
(3) $208,500 previously paid.
(4) This registration statement also pertains to Rights to purchase Series A
Participating Preferred Stock of the registrant. Until the occurrence of
certain prescribed events the Rights are not exercisable, are evidenced by
the certificates for the Common Stock and will be transferred along with and
only with such securities. Thereafter, separate Rights certificates will be
issued representing one Right for each share of Common Stock held subject to
adjustment pursuant to anti-dilution provisions.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT SPECIFICALLY STATING THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 8 to the Registration Statement on Form S-1 (File No.
333-76007) of Williams Communications Group, Inc. (the "Registration
Statement"), initially filed with the Securities and Exchange Commission on
April 9, 1999, is being filed solely to include exhibits, portions of which have
been redacted pursuant to a confidential treatment request.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Registrant estimates that expenses payable by the Registrant in
connection with the equity offering described in this registration statement
(other than the underwriting discount and commissions) will be as follows*:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee............... $ 217,652
NASD filing fee............................................. 30,500
New York Stock Exchange listing fee......................... 252,600
Blue sky fees and expenses.................................. 10,000
Accounting fees and expenses................................ 1,800,000
Legal fees and expenses..................................... 1,800,000
Printing and engraving fees................................. 1,700,000
Miscellaneous............................................... 189,248
----------
Total.................................................. $6,000,000
==========
</TABLE>
- -------------------------
* All fees except the Securities and Exchange Commission and NASD filing fees
are estimates.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated under the laws of the State of Delaware.
Section 145 ("Section 145") of the General Corporation Law of the State of
Delaware ("DGCL") provides that a Delaware corporation may indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding provided such
person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his or
her conduct was illegal. A Delaware corporation may indemnify any persons who
are, or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the corporation's best
interests except that no indemnification is permitted without judicial approval
if the officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him or her against
the expenses which such officer or director has actually and reasonably
incurred.
II-1
<PAGE> 4
Section 145 further provides that the indemnification provisions of Section
145 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office. The Restated Certificate of Incorporation contains a provision
eliminating, to the fullest extent permitted by the DGCL as it exists or may in
the future be amended, the liability of a director to the Company and its
stockholders for monetary damages for breaches of fiduciary or other duty as a
director. However, the DGCL does not currently allow such provision to limit the
liability of a director for: (i) any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of laws; (iii)
payment of dividends, stock purchases or redemptions that violate the DGCL; or
(iv) any transaction from which the director derived an improper personal
benefit. Such limitation of liability also does not affect the availability of
equitable remedies such as injunctive relief or rescission.
The Restated Certificate of Incorporation and the By-Laws also provide
that, to the fullest extent permitted by the DGCL as it exists or may in the
future be amended, the Company will indemnify and hold harmless any director who
is or was made a party or is threatened to be made a party to or is involved in
any manner in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Company or its
subsidiaries, and any person serving at the request of the Company as an
officer, director, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other enterprise and may indemnify any officer, employee or agent of the
Company; provided, however, that the Company will indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors or is a proceeding to enforce such person's
claim to indemnification pursuant to the rights granted by the Restated
Certificate of Incorporation or By-Laws. In addition, the Company will pay the
expenses incurred by directors, and may pay the expenses incurred by other
persons that may be indemnified pursuant to the Restated Certificate and the
By-Laws, in defending any such proceeding in advance of its final disposition
upon receipt (unless the Company upon authorization of the Board of Directors
waives such requirement to the extent permitted by applicable law) of an
undertaking by or on behalf of such person to repay such amount if it is
ultimately determined that such person is not entitled to be indemnified by the
Company as authorized in the Restated Certificate of Incorporation or By-Laws or
otherwise. The Restated Certificate and the By-Laws also state that such
indemnification is not exclusive of any other rights of the indemnified party,
including rights under any indemnification agreements or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
II-2
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.+
3.1 Form of Restated Certificate of Incorporation of the
Company.+
3.2 Form of Restated By-laws of the Company.+
4.1 Specimen certificate of common stock.+
4.2 Specimen certificate of Class B common stock.+
4.3 Form of certificate of designation of Series A Junior
Participating Preferred Stock.+
5.1 Form of opinion of William G. von Glahn, Esq.++
10.1 Securities Purchase Agreement among Williams Communications
Group, Inc., The Williams Companies, Inc. and Telefonos de
Mexico, S.A. de C.V., dated May 25, 1999.+
10.2 Amended and Restated Alliance Agreement Between Telefonos de
Mexico, S.A. de C.V. and Williams Communications, Inc.,
dated May 25, 1999.*
10.3 Securities Purchase Agreement dated as of May 24, 1999 by
and among Williams Communication Group, Inc., The Williams
Companies, Inc. and Intel Corporation.+
10.4 Master Alliance Agreement Between Intel Internet Data
Services and Williams Communications, Inc., dated as of May
24, 1999.*
10.5 Fiber Lease Agreement between Metromedia Fiber Network
Services, Inc. and Williams Communications, Inc., dated
September 16, 1999.*
10.6 Fiber Lease Agreement between Williams Communications, Inc.
and Metromedia Fiber National Network Services, Inc., dated
September 16, 1999.*
10.7 Loan Agreement dated as of April 16, 1999 among Williams
Communications Group, Inc., Bank of America National Trust
and Savings Association, and the other financial
institutions party hereto, Nationsbanc Montgomery Securities
LLC, Chase Securities Inc., Bank of Montreal, and The Bank
of New York.+
10.8 Shareholders Agreement by and among Metrogas S.A., Williams
International Telecom (Chile) Limited, and Metrocom S.A.,
dated March 30, 1999 and Letter Agreement dated March 30,
1999.+*
10.9 Share Purchase Agreement by and Among Lightel, S.A.
Technologia de Informacao, Williams International ATL
Limited, Johi Representacoes Ltda and ATL-Algar Telecom
Leste, S.A., dated as of March 25, 1999.+
10.10 Master Alliance Agreement between SBC Communications Inc.
and Williams Communications, Inc. dated February 8, 1999.+*
10.11 Transport Services Agreement dated February 8, 1999, between
Southwestern Bell Communication Services, Inc. and Williams
Communications, Inc.+*
10.12 Securities Purchase Agreement dated February 8, 1999,
between SBC Communications Inc. and Williams Communications
Group, Inc.+
10.13 Second Amended and Restated Credit Agreement dated as of
July 23, 1997 among The Williams Companies, Inc., Northwest
Pipeline Corporation, Transcontinental Gas Pipeline
Corporation, Texas Gas Transmission Corporation, Williams
Pipeline Company, Williams Holdings of Delaware, Inc.,
WilTel Communications, LLC, and Amendment thereto dated as
of January 26, 1999.+
</TABLE>
II-3
<PAGE> 6
<TABLE>
<C> <S>
10.14 Amended and Restated Lease for Bank of Oklahoma Tower, as of
January 1, 1999, by and between Williams Headquarters
Building Company and The Williams Companies, Inc.+
10.15 Lease as of January 1, 1999, for Williams Technology Center,
by and between Williams Headquarters Building Company and
Williams Communications Group, Inc.+
10.16 Lease as of January 1, 1999, for Williams Resource Center,
by and between Williams Headquarters Building Company and
Williams Communications Group, Inc.+
10.17 Wireless Fiber IRU Agreement by and between WinStar
Wireless, Inc. and Williams Communications, Inc., effective
as of December 17, 1998.+
10.18 IRU Agreement between WinStar Wireless, Inc. and Williams
Communications, Inc., dated December 17, 1998 (long haul),
together with Clarification Agreement effective as of
December 17, 1998 and Side Agreement dated March 31, 1999.+*
10.19 UtiliCom Networks, Inc. Note and Warrant Purchase Agreement
dated December 15, 1998.+
10.20 Consolidated IRU Agreement by and among IXC Carrier, Inc.,
Vyvx, Inc. and The WilTech Group, dated December 9, 1998 and
Amendment No. 4, dated December 22, 1998.+*
10.21 Stock Purchase Agreement for CNG Computer Networking Group
Inc. by and among The Sellers (1310038 Ontario Inc., George
Johnston, Hayden Marcus, The H. Marcus Family Trust and Gary
White), WilTel Communications (Canada), Inc. and Williams
Communications Solutions, LLC, dated October 13, 1998.+
10.22 Preferred Stock Purchase by and among UniDial Holdings, Inc.
and Williams Communications, Inc., dated October 2, 1998.*
10.23 Amended and Restated Lease between State Street Bank & Trust
Co. of Connecticut, National Association, as Lessor, and
Williams Communications, Inc., as Lessee, as of September 2,
1998.+
10.24 Amended and Restated Participation Agreement dated as of
September 2, 1998, among Williams Communications, Inc.;
State Street Bank & Trust Company of Conn., National
Association, as Trustee; Note Holders and Certificate
Holders; APA Purchasers; State Street Bank & Trust Co., as
Collateral Agent; and Citibank, N.A., as agent, with
Citibank, N.A. and Bank of Montreal as Co-Arrangers; Royal
Bank of Canada, as Documentation Agent; and Bank of America,
The Chase Manhattan Bank and Toronto Dominion, as Managing
Agents.
10.25 Capacity Purchase Agreement between Williams Communications,
Inc. and Intermedia Communications, Inc., dated January 5,
1998 and Amendment dated August 5, 1998.*
10.26 Settlement and Release Agreement by and between WorldCom
Network Services, Inc. and Williams Communications, Inc.,
dated July 1, 1998.+*
10.27 Umbrella Agreement by and between DownTown Utilities Pty
Limited, WilTel Communications Pty Limited, Spectrum Network
Systems Limited, CitiPower Pty, Energy Australia, South East
Queensland Electricity Corporation Limited, Williams
Holdings of Delaware Inc. and Williams International
Services Company, dated June 19, 1998.+
10.28 Carrier Services Agreement between Vyvx, Inc. and U S WEST
Communications, Inc., dated January 5, 1998, and Amendment
No. 1, dated June 14, 1999.+*
10.29 Distributorship Agreement by and between Northern Telecom
Limited and WilTel Communications, L.L.C., dated January 1,
1998.+*
</TABLE>
II-4
<PAGE> 7
<TABLE>
<C> <S>
10.30 Common Stock and Warrant Purchase Agreement by and among
Concentric Network Corporation and Williams Communications
Group, Inc., dated July 25, 1997.+
10.31 Note and Warrant Purchase Agreement by and among Concentric
Network Corporation and Williams Communications Group, Inc.,
dated June 19, 1997.+
10.32 Limited Liability Company Agreement of WilTel
Communications, LLC, by and between Williams Communication
Group, Inc. and Northern Telecom, Inc., dated April 30,
1997.+
10.33 Share Purchase Agreement for TTS Meridian Systems Inc. by
and among Northern Telecom Limited, WilTel Communications,
LLC and 1228966 Ontario Inc., dated April 30, 1997.
10.34 Formation Agreement by and between Northern Telecom, Inc.
and Williams Communications Group, Inc., dated April 1,
1997.
10.35 Stock Purchase Agreement among ABC Industria e Comercio
S.A.-ABC INCO, Lightel S.A. Tecnologia da Informacao, Algar
S.A.-Empreendimentos e Participacoes and Williams
International Telecom Limited, dated January 21, 1997.+
10.36 Subscription and Shareholders Agreement among Lightel S.A.
Tecnologia da Informacao, Algar S.A.-Empreendimentos e
Participacoes and Williams International Telecom Limited,
dated January 21, 1997.+
10.37 Sublease Agreement as of June 1, 1996, by and between
Transcontinental Gas Pipeline Company and Williams
Telecommunications Systems, Inc.+
10.38 System Use and Service Agreement between WilTel, Inc. and
Vyvx, Inc. effective as of January 1, 1994.+*
10.39 Form of administrative services agreement.+
10.40 Form of service agreement.+
10.41 Form of tax sharing agreement.+
10.42 Form of indemnification agreement.+
10.43 Form of rights agreement.+
10.44 Form of registration rights agreement.+
10.45 Form of separation agreement.+
10.46 Call option agreement by and among Williams Holdings of
Delaware, Inc., Williams International Company, Williams
International Telecom Limited, and Williams Communications
Group, Inc. dated May 27, 1999.+
10.47 Form of cross-license agreement.+
10.48 Form of technical, management and administrative services
agreement.+
10.49 The Williams Companies, Inc. 1996 Stock Plan.+
10.50 The Williams Companies, Inc. Stock Plan for Nonofficer
Employees.+
10.51 Williams Communications Stock Plan.+
10.52 Williams Communications Group, Inc. 1999 Stock Plan.+
10.53 Williams Pension Plan.+
10.54 Solutions LLC Pension Plan.+
10.55 Williams Communications Change in Control Severance Plan.+
10.56 Stock Purchase Agreement by and between Williams
Communications, Inc. Conferencing Acquisition Corporation
and Genesys, S.A. dated as of June 30, 1999.+
10.57 Loan agreement dated as of September 8, 1999 between
Williams Communications, Inc. and The Williams Companies,
Inc.
</TABLE>
II-5
<PAGE> 8
<TABLE>
<C> <S>
10.58 Williams Communications, Inc. Senior Credit Facilities Commitment Letter, dated June 2,
1999.+
10.59 Form of indenture governing notes.+
10.60 Credit Agreement dated as of September 8, 1999 among Williams Communications, Inc.,
Williams Communications Group, Inc., the Lenders party thereto, Bank of America, N.A. as
Administrative Agent, and The Chase Manhattan Bank as Syndication Agent.
10.61 Intercreditor Agreement dated as of September 8, 1999 among The Williams Companies, Inc.,
Williams Communications Group, Inc., Williams Communications, Inc. and Bank of America,
N.A. as Administrative Agent.
10.62 Subsidiary Guarantee dated as of September 8, 1999 of each of Critical Connections, Inc.,
WCS Communications Systems, Inc., WCS Microwave Services, Inc., WCS, Inc., Williams
Communications of Virginia, Inc., Williams International Ventures Company, Williams
Learning Network, Inc., Williams Local Network, Inc. and Williams Wireless, Inc., in favor
of Bank of America, N.A. as Administrative Agent.
10.63 Loan Agreement dated as of September 8, 1999 among Williams Communications Group, Inc., as
Borrower, Merrill Lynch Capital Corporation, as Administrative Agent, and The Other
Financial Institutions Party Thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as Lead Arranger, Syndication Agent and Book Manager, Lehman Commercial Paper Inc., as
Co-Documentation Agent, and Citicorp North America, Inc. a Co-Documentation Agent.
10.64 Securities Purchase Agreement Amendment and Addendum dated as of September 24, 1999, among
Williams Communications Group, Inc., The Williams Companies, Inc. and SBC Communications,
Inc.
12.1 Statement re: Computation of Ratios.+
21 List of Subsidiaries.+
23.1 Consent of Ernst & Young LLP.+
23.2 Consent of Arthur Andersen S/C.+
23.3 Consent of Deloitte & Touche LLP.+
23.4 Consent of William G. von Glahn, Esq. (contained in opinion filed as Exhibit 5.1).
23.5 Consent of H. Brian Thompson.+
23.6 Consent of Roy A. Wilkens.+
24 Power of Attorney.+
24.1 Power of Attorney of Michael P. Johnson, Sr. and Scott E. Schubert.+
27.1 Financial Data Schedule -- Six Months Ended June 30, 1999.+
27.2 Financial Data Schedule -- Six Months Ended June 30, 1998.+
27.3 Restated Financial Data Schedule -- December 31, 1998.+
27.4 Restated Financial Data Schedule -- December 31, 1997.+
27.5 Restated Financial Data Schedule -- December 31, 1996.+
</TABLE>
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+ Previously filed.
++ To be filed by amendment.
* Portions of this exhibit have been redacted pursuant to a request for
confidential treatment which is currently being reviewed by the Securities
and Exchange Commission.
II-6
<PAGE> 9
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) it will provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as required by the underwriters to permit delivery to each
purchaser.
II-7
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 8 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Tulsa, Oklahoma on the 29th day of September, 1999.
WILLIAMS COMMUNICATIONS GROUP, INC.
By: /s/ REBECCA H. HILBORNE
-------------------------------------
Rebecca H. Hilborne
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 8 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ * Chief Executive Officer and September 29, 1999
------------------------------------------------ President (Principal
Howard E. Janzen Executive Officer)
/s/ * Chief Financial Officer September 29, 1999
------------------------------------------------ (Principal Accounting and
Scott E. Schubert Financial Officer)
/s/ * Director September 29, 1999
------------------------------------------------
Keith E. Bailey
/s/ * Director September 29, 1999
------------------------------------------------
John C. Bumgarner, Jr.
/s/ * Director September 29, 1999
------------------------------------------------
Brian E. O'Neill
/s/ * Director September 29, 1999
------------------------------------------------
James R. Herbster
/s/ * Director September 29, 1999
------------------------------------------------
Michael P. Johnson, Sr.
/s/ * Director September 29, 1999
------------------------------------------------
Steven J. Malcolm
/s/ * Director September 29, 1999
------------------------------------------------
Jack D. McCarthy
</TABLE>
* Pursuant to a power of attorney.
II-8
<PAGE> 11
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Williams Communications Group, Inc.
We have audited the consolidated financial statements of Williams
Communications Group, Inc. as of December 31, 1998 and 1997, and for each of the
three years in the period ended December 31, 1998, and have issued our report
thereon dated April 7, 1999, except for the matters described in the third
paragraph of Note 10 and Note 17, as to which the date is July 27, 1999
(included elsewhere in this Registration Statement). The financial statements of
ATL-Algar Telecom Leste S.A., (an entity in which the Company has a 30%
interest, at December 31, 1998), have been audited by other auditors whose
report has been furnished to us; insofar as our opinion on the consolidated
financial statements relates to data included for ATL-Algar Telecom Leste S.A.,
it is based solely on their report. Our audits also included the financial
statement schedule listed in Item 16(b) of this Registration Statement. This
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Tulsa, Oklahoma
July 27, 1999
S-1
<PAGE> 12
WILLIAMS COMMUNICATIONS GROUP
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS(A)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------
CHARGED TO
BEGINNING COSTS AND ENDING
BALANCE EXPENSES OTHER DEDUCTIONS(B) BALANCE
--------- ---------- ----- ------------- -------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
1998............................. 12,787 21,591 -- 10,802 23,576
1997............................. 4,950 7,837 7,799(c) 7,799 12,787
1996............................. 6,427 2,694 -- 4,171 4,950
</TABLE>
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(a)Deducted from related assets.
(b)Represents balances written off, net of recoveries and reclassifications.
(c)Primarily relates to acquisitions of businesses.
S-2
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.+
3.1 Form of Restated Certificate of Incorporation of the
Company.+
3.2 Form of Restated By-laws of the Company.+
4.1 Specimen certificate of common stock.+
4.2 Specimen certificate of Class B common stock.+
4.3 Form of certificate of designation of Series A Junior
Participating Preferred Stock.+
5.1 Form of opinion of William G. von Glahn, Esq.++
10.1 Securities Purchase Agreement among Williams Communications
Group, Inc., The Williams Companies, Inc. and Telefonos de
Mexico, S.A. de C.V., dated May 25, 1999.+
10.2 Amended and Restated Alliance Agreement Between Telefonos de
Mexico, S.A. de C.V. and Williams Communications, Inc.,
dated May 25, 1999.*
10.3 Securities Purchase Agreement dated as of May 24, 1999 by
and among Williams Communication Group, Inc., The Williams
Companies, Inc. and Intel Corporation.+
10.4 Master Alliance Agreement Between Intel Internet Data
Services and Williams Communications, Inc., dated as of May
24, 1999.*
10.5 Fiber Lease Agreement between Metromedia Fiber Network
Services, Inc. and Williams Communications, Inc., dated
September 16, 1999.*
10.6 Fiber Lease Agreement between Williams Communications, Inc.
and Metromedia Fiber National Network Services, Inc., dated
September 16, 1999.*
10.7 Loan Agreement dated as of April 16, 1999 among Williams
Communications Group, Inc., Bank of America National Trust
and Savings Association, and the other financial
institutions party hereto, Nationsbanc Montgomery Securities
LLC, Chase Securities Inc., Bank of Montreal, and The Bank
of New York.+
10.8 Shareholders Agreement by and among Metrogas S.A., Williams
International Telecom (Chile) Limited, and Metrocom S.A.,
dated March 30, 1999 and Letter Agreement dated March 30,
1999.+*
10.9 Share Purchase Agreement by and Among Lightel, S.A.
Technologia de Informacao, Williams International ATL
Limited, Johi Representacoes Ltda and ATL-Algar Telecom
Leste, S.A., dated as of March 25, 1999.+
10.10 Master Alliance Agreement between SBC Communications Inc.
and Williams Communications, Inc. dated February 8, 1999.+*
10.11 Transport Services Agreement dated February 8, 1999, between
Southwestern Bell Communication Services, Inc. and Williams
Communications, Inc.+*
10.12 Securities Purchase Agreement dated February 8, 1999,
between SBC Communications Inc. and Williams Communications
Group, Inc.+
10.13 Second Amended and Restated Credit Agreement dated as of
July 23, 1997 among The Williams Companies, Inc., Northwest
Pipeline Corporation, Transcontinental Gas Pipeline
Corporation, Texas Gas Transmission Corporation, Williams
Pipeline Company, Williams Holdings of Delaware, Inc.,
WilTel Communications, LLC, and Amendment thereto dated as
of January 26, 1999.+
10.14 Amended and Restated Lease for Bank of Oklahoma Tower, as of
January 1, 1999, by and between Williams Headquarters
Building Company and The Williams Companies, Inc.+
</TABLE>
<PAGE> 14
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10.15 Lease as of January 1, 1999, for Williams Technology Center,
by and between Williams Headquarters Building Company and
Williams Communications Group, Inc.+
10.16 Lease as of January 1, 1999, for Williams Resource Center,
by and between Williams Headquarters Building Company and
Williams Communications Group, Inc.+
10.17 Wireless Fiber IRU Agreement by and between WinStar
Wireless, Inc. and Williams Communications, Inc., effective
as of December 17, 1998.+
10.18 IRU Agreement between WinStar Wireless, Inc. and Williams
Communications, Inc., dated December 17, 1998 (long haul),
together with Clarification Agreement effective as of
December 17, 1998 and Side Agreement dated March 31, 1999.+*
10.19 UtiliCom Networks, Inc. Note and Warrant Purchase Agreement
dated December 15, 1998.+
10.20 Consolidated IRU Agreement by and among IXC Carrier, Inc.,
Vyvx, Inc. and The WilTech Group, dated December 9, 1998 and
Amendment No. 4, dated December 22, 1998.+*
10.21 Stock Purchase Agreement for CNG Computer Networking Group
Inc. by and among The Sellers (1310038 Ontario Inc., George
Johnston, Hayden Marcus, The H. Marcus Family Trust and Gary
White), WilTel Communications (Canada), Inc. and Williams
Communications Solutions, LLC, dated October 13, 1998.+
10.22 Preferred Stock Purchase by and among UniDial Holdings, Inc.
and Williams Communications, Inc., dated October 2, 1998.*
10.23 Amended and Restated Lease between State Street Bank & Trust
Co. of Connecticut, National Association, as Lessor, and
Williams Communications, Inc., as Lessee, as of September 2,
1998.+
10.24 Amended and Restated Participation Agreement dated as of
September 2, 1998, among Williams Communications, Inc.;
State Street Bank & Trust Company of Conn., National
Association, as Trustee; Note Holders and Certificate
Holders; APA Purchasers; State Street Bank & Trust Co., as
Collateral Agent; and Citibank, N.A., as agent, with
Citibank, N.A. and Bank of Montreal as Co-Arrangers; Royal
Bank of Canada, as Documentation Agent; and Bank of America,
The Chase Manhattan Bank and Toronto Dominion, as Managing
Agents.
10.25 Capacity Purchase Agreement between Williams Communications,
Inc. and Intermedia Communications, Inc., dated January 5,
1998 and Amendment dated August 5, 1998.*
10.26 Settlement and Release Agreement by and between WorldCom
Network Services, Inc. and Williams Communications, Inc.,
dated July 1, 1998.+*
10.27 Umbrella Agreement by and between DownTown Utilities Pty
Limited, WilTel Communications Pty Limited, Spectrum Network
Systems Limited, CitiPower Pty, Energy Australia, South East
Queensland Electricity Corporation Limited, Williams
Holdings of Delaware Inc. and Williams International
Services Company, dated June 19, 1998.+
10.28 Carrier Services Agreement between Vyvx, Inc. and U S WEST
Communications, Inc., dated January 5, 1998, and Amendment
No. 1, dated June 14, 1999.+*
10.29 Distributorship Agreement by and between Northern Telecom
Limited and WilTel Communications, L.L.C., dated January 1,
1998.+*
10.30 Common Stock and Warrant Purchase Agreement by and among
Concentric Network Corporation and Williams Communications
Group, Inc., dated July 25, 1997.+
</TABLE>
<PAGE> 15
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10.31 Note and Warrant Purchase Agreement by and among Concentric
Network Corporation and Williams Communications Group, Inc.,
dated June 19, 1997.+
10.32 Limited Liability Company Agreement of WilTel
Communications, LLC, by and between Williams Communication
Group, Inc. and Northern Telecom, Inc., dated April 30,
1997.+
10.33 Share Purchase Agreement for TTS Meridian Systems Inc. by
and among Northern Telecom Limited, WilTel Communications,
LLC and 1228966 Ontario Inc., dated April 30, 1997.
10.34 Formation Agreement by and between Northern Telecom, Inc.
and Williams Communications Group, Inc., dated April 1,
1997.
10.35 Stock Purchase Agreement among ABC Industria e Comercio
S.A.-ABC INCO, Lightel S.A. Tecnologia da Informacao, Algar
S.A.-Empreendimentos e Participacoes and Williams
International Telecom Limited, dated January 21, 1997.+
10.36 Subscription and Shareholders Agreement among Lightel S.A.
Tecnologia da Informacao, Algar S.A.-Empreendimentos e
Participacoes and Williams International Telecom Limited,
dated January 21, 1997.+
10.37 Sublease Agreement as of June 1, 1996, by and between
Transcontinental Gas Pipeline Company and Williams
Telecommunications Systems, Inc.+
10.38 System Use and Service Agreement between WilTel, Inc. and
Vyvx, Inc. effective as of January 1, 1994.+*
10.39 Form of administrative services agreement.+
10.40 Form of service agreement.+
10.41 Form of tax sharing agreement.+
10.42 Form of indemnification agreement.+
10.43 Form of rights agreement.+
10.44 Form of registration rights agreement.+
10.45 Form of separation agreement.+
10.46 Call option agreement by and among Williams Holdings of
Delaware, Inc., Williams International Company, Williams
International Telecom Limited, and Williams Communications
Group, Inc. dated May 27, 1999.+
10.47 Form of cross-license agreement.+
10.48 Form of technical, management and administrative services
agreement.+
10.49 The Williams Companies, Inc. 1996 Stock Plan.+
10.50 The Williams Companies, Inc. Stock Plan for Nonofficer
Employees.+
10.51 Williams Communications Stock Plan.+
10.52 Williams Communications Group, Inc. 1999 Stock Plan.+
10.53 Williams Pension Plan.+
10.54 Solutions LLC Pension Plan.+
10.55 Williams Communications Change in Control Severance Plan.+
10.56 Stock Purchase Agreement by and between Williams
Communications, Inc. Conferencing Acquisition Corporation
and Genesys, S.A. dated as of June 30, 1999.+
10.57 Loan agreement dated as of September 8, 1999 between
Williams Communications, Inc. and The Williams Companies,
Inc.
10.58 Williams Communications, Inc. Senior Credit Facilities
Commitment Letter, dated June 2, 1999.+
10.59 Form of indenture governing notes.+
</TABLE>
<PAGE> 16
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10.60 Credit Agreement dated as of September 8, 1999 among
Williams Communications, Inc., Williams Communications
Group, Inc., the Lenders party thereto, Bank of America,
N.A. as Administrative Agent, and The Chase Manhattan Bank
as Syndication Agent.
10.61 Intercreditor Agreement dated as of September 8, 1999 among
The Williams Companies, Inc., Williams Communications Group,
Inc., Williams Communications, Inc. and Bank of America,
N.A. as Administrative Agent.
10.62 Subsidiary Guarantee dated as of September 8, 1999 of each
of Critical Connections, Inc., WCS Communications Systems,
Inc., WCS Microwave Services, Inc., WCS, Inc., Williams
Communications of Virginia, Inc., Williams International
Ventures Company, Williams Learning Network, Inc., Williams
Local Network, Inc. and Williams Wireless, Inc., in favor of
Bank of America, N.A. as Administrative Agent.
10.63 Loan Agreement dated as of September 8, 1999 among Williams
Communications Group, Inc., as Borrower, Merrill Lynch
Capital Corporation, as Administrative Agent, and The Other
Financial Institutions Party Thereto, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Lead Arranger, Syndication
Agent and Book Manager, Lehman Commercial Paper Inc., as
Co-Documentation Agent, and Citicorp North America, Inc. a
Co-Documentation Agent.
10.64 Securities Purchase Agreement Amendment and Addendum dated
as of September 24, 1999, among Williams Communications
Group, Inc., The Williams Companies, Inc. and SBC
Communications, Inc.
12.1 Statement re: Computation of Ratios.+
21 List of Subsidiaries.+
23.1 Consent of Ernst & Young LLP.+
23.2 Consent of Arthur Andersen S/C.+
23.3 Consent of Deloitte & Touche LLP.+
23.4 Consent of William G. von Glahn, Esq. (contained in opinion
filed as Exhibit 5.1).
23.5 Consent of H. Brian Thompson.+
23.6 Consent of Roy A. Wilkens.+
24 Power of Attorney.+
24.1 Power of Attorney of Michael P. Johnson, Sr. and Scott E.
Schubert.+
27.1 Financial Data Schedule -- Six Months Ended June 30, 1999.+
27.2 Financial Data Schedule -- Six Months Ended June 30, 1998.+
27.3 Restated Financial Data Schedule -- December 31, 1998.+
27.4 Restated Financial Data Schedule -- December 31, 1997.+
27.5 Restated Financial Data Schedule -- December 31, 1996.+
</TABLE>
- -------------------------
+ Previously filed.
++ To be filed by amendment.
* Portions of this exhibit have been redacted pursuant to a request for
confidential treatment which is currently being reviewed by the Securities
and Exchange Commission.
<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
EXHIBIT 10.2
final Proprietary and Confidential
AMENDED AND RESTATED
ALLIANCE AGREEMENT
BETWEEN
TELEFONOS DE MEXICO, S.A. DE C.V.
AND
WILLIAMS COMMUNICATIONS, INC.
THIS ALLIANCE AGREEMENT (this "Agreement") between Williams
Communications, Inc., a Delaware corporation, and its Controlled
subsidiaries (collectively, "Williams") and Telefonos de Mexico, S.A.
de C.V., a Mexican corporation, and its Controlled subsidiaries
(collectively, "Telmex"), is effective May __, 1999 ("Effective Date").
Williams and Telmex are individually referred to as a "Party" and
collectively referred to as the "Parties." "Control or Controlled"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies by one person or
entity or a group of related persons or entities acting in concert;
provided, however, that the legal or beneficial ownership, directly or
indirectly by one person or entity or a group of related persons or
entities acting in concert, of more than fifty percent (50%) of the
voting stock for the election of directors of a party shall always be
deemed Control. Exhibit A lists subsidiaries of each Party that shall
not be classified as Controlled subsidiaries, even though they may meet
the definition thereof. Exhibit A may be amended by either Party to add
or delete a listed subsidiary with the written consent of the other
Party, which consent shall not be unreasonably withheld
RECITALS
WHEREAS, Telmex provides telecommunications, exchange access, information
access, network management, networking services and network analysis in Mexico
and other parts of the world, including the United States;
WHEREAS, Telmex has investments in global telecommunications systems and has
established direct operating agreements and interconnection to foreign
carriers;
WHEREAS, Telmex is a provider of business communications equipment and
integration services for data, voice, video and advanced applications;
WHEREAS, Telmex together with Williams desires to offer its customers global
solutions for their voice, data, video and advanced application communications
needs,
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<PAGE> 2
final Proprietary and Confidential
and to implement a plan to enhance its competitive position in Mexico and the
United States;
WHEREAS, SBC Communications, Inc. owns equity in and has representation on the
board of directors of Telmex and intends to purchase equity in Williams;
WHEREAS, Williams is a nationwide, single source provider of business
communications equipment and integration services for data, voice, video and
advanced applications on a retail basis and a provider of facilities-based
network services for delivery of voice and data on a wholesale basis;
WHEREAS, Williams wishes to achieve additional geographic reach and economies
of scale that will enable Williams to lower its costs, increase its ability to
compete with established networks, and accelerate its construction program in
the wholesale market for voice and data network services in the United States
(the "United States" or the "U.S.") and use its domestic facilities to
interconnect with Telmex's Mexican network thereby providing seamless wholesale
services to its customers;
WHEREAS, the Parties are negotiating an alliance agreement with each other and
with SBC Communications Inc. (the "SBC/Telmex/WCI Alliance Agreement");
WHEREAS, the relationship contemplated by this Alliance will serve to broaden
the base of potential competitive opportunities for network services and other
applications for all market segments and to respond to the market's desire for
seamless product and service offerings throughout the United States and Mexico;
NOW THEREFORE, in consideration of the mutual covenants herein contained, and
subject to Telmex's and Williams' respective affiliates' contractual
obligations with third parties and to any applicable federal or state laws or
regulations, in both cases, either present or future, Telmex and Williams agree
as follows:
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final Proprietary and Confidential
1. PURPOSE OF THE ALLIANCE
The purpose of this Agreement is to define a strategic, non-exclusive alliance
between the Parties in order to offer products and services through the
cooperative deployment of facilities and interconnection of networks that will
be designed to carry voice and data on a seamless nationwide and international
basis (the "Alliance").
The Parties acknowledge that the activities and relationships addressed by the
Alliance are subject to statutes and regulations of Mexico and the United
States. Notwithstanding anything to the contrary contained in any agreement
between the Parties including the prospective SBC/Telmex/WCI Alliance Agreement
and this Agreement, the Parties will not take any action and will not be bound
to act in connection with the Alliance which would constitute a violation of
applicable law or take an action which requires governmental or any third party
approval without first obtaining such approval.
2. RELATIONSHIP OF THE PARTIES
2.1. Preferred Provider
If either Telmex or Williams is designated in this Agreement as the
supplying party (the "Supplying Party") for a product or service as
agreed in writing by each of the Parties ("Alliance Product or
Service"), then whenever the other Party needs such Alliance Product or
Service, such supplied party (the "Supplied Party") will first seek to
obtain the needed Alliance Product or Service from the Supplying Party,
and therefore, the Supplying Party shall be the provider to the
Supplied Party of the Alliance Products or Services, provided, however,
that the Supplied Party shall not be obligated to use the other Party
as the Supplying Party and will be entitled to use the facilities of
any other provider or, if specified by contract or governmental
regulation, a specific third party provider in the following cases:
(i) if any customer of either Telmex or Williams
specifically requests the use of another provider;
(ii) if pursuant to existing contracts with third parties
as described in Exhibit B the Supplied Party is
required to obtain the product or service from any
other source;
(iii) if pursuant to governmental or regulatory
restrictions the Supplied Party is required to obtain
the product or service from any other source;
(iv) if an exception is provided for in any agreements
between the Parties including the proposed
SBC/Telmex/WCI Alliance Agreement; or
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<PAGE> 4
final Proprietary and Confidential
(v) if the Supplying Party is not offering Market Terms
and Conditions (as defined in the last paragraph of
this Section 2.1.), and technical performance or
quality comparable to competitive products and
services in accordance with the process in Section
3.3.
For purposes hereof, "Alliance Products and Services" specifically
shall include international switched voice traffic, international
private line, and international frame relay, as more fully described in
Section 1.1 and 1.2 of Schedule A which also includes current Alliance
pricing for them (including pricing for ancillary services) and the
identification of which Party is the Supplying Party. As contemplated
in Schedule A, the Parties agree to add to the Alliance Products and
Services any products that are developed and offered by either Party
during the term of this Agreement which products and services will be
made available to the other Party in accordance with the Preferred
Provider obligation. The Parties agree to exercise their best
reasonable efforts to develop and include new products, provided that,
no such product will be added without the prior agreement in writing by
both Parties. The product's description, pricing and performance
standards will be provided to the Supplied Party for review and
acceptance, in writing by both Parties, prior to such product being
added to the Alliance Products and Services. The term "Market Terms and
Conditions" shall mean the ****.
3. INTERNATIONAL WHOLESALE MARKET - MEXICAN ORIGINATED TRAFFIC BY TELMEX AND
U.S. ORIGINATED TRAFFIC BY WILLIAMS
3.1. Origin Country
This Section addresses the pricing and other terms and conditions
offered by each Party, as the Supplying Party, to the other for
Alliance Products and Services offered in connection with traffic
originated by a Party in its Origin Country for termination in the
other Party's Origin Country. Telmex's Origin Country is Mexico and
Williams' Origin Country is the United States. Unless otherwise
mutually agreed, traffic shall be designated as originating in the
country where the customer's principal place of business is located,
regardless of the city where the communications traffic is originated.
3.2. Most Favored Customer Treatment
The net settlements rate, inter-carrier pricing, revenue sharing
agreement, commission structure and other terms and conditions offered
by one Party to the other, for the Alliance Products and Services,
shall reflect the strategic and economic value of this relationship
and, in no event, be less favorable than that
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 5
final Proprietary and Confidential
granted to any other like entity in the market ("Most Favored Customer
Treatment"), provided, however, that such obligation will not be
applicable in any of the following cases:
(i) if more favorable terms and conditions are required
to be offered pursuant to existing contracts with
third parties as described in Exhibit B and/or in
accordance with governmental or regulatory
restrictions;
(ii) if an exception is provided for in any agreements
between the Parties including the proposed
SBC/Telmex/WCI Alliance Agreement or prohibited by
any law or regulations; or,
(iii) if the Supplied Party is not requesting technical
performance or quality comparable to competitive
products and services.
In the case of the Most Favored Customer Treatment offered to Williams
by Telmex, the term "like entity in the market" shall mean ****.
In the case of the Most Favored Customer Treatment offered to Telmex by
Williams, the term "like entity in the market" shall mean ****.
Further, Williams recognizes the strategic and economic value of the
Telmex relationship and the Most Favored Customer Treatment offered by
Williams will be commensurate with other large customers providing
similar value. Williams also recognizes that the value of the
relationship is likely to increase with the passage of time and
regulatory liberalization. Accordingly, Williams agrees annually to
revisit the Most Favored Customer Treatment accorded to Telmex in order
to reflect growth of the strategic and economic value to Williams.
3.3. Competitor's Pricing and Terms
If the Supplied Party receives a competing offer from another provider
offering to sell a product or service substantially similar to an
Alliance Product or Service upon terms and conditions that are better
than the Most Favored Customer Treatment offered by the Supplying
Party, the Supplied Party will, to the extent allowed by contract or
law, discuss with the Supplying Party the terms and conditions of
products and services offered by the competing provider and ****,
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 6
then the Supplied Party shall be free to use the competing provider's
product or services in accordance with the terms and conditions of the
competing offer which had been presented to the Supplying Party.
3.4. Cooperative Effort
If either Party is pursuing an strategic opportunity using an Alliance
Product or Service and the Party pursuing the opportunity indicates to
the Supplying Party that capturing the business opportunity with the
customer requires different pricing or other terms, the Supplying Party
agrees to exercise its best reasonable efforts to modify the pricing or
other terms of the Alliance Product or Service in order for the Parties
to provide the most competitive solution for the customer presenting
the strategic opportunity. ****
3.5. Withdrawal of the Most Favored Customer Treatment
Subject to the exception set forth in Section 4, **** Telmex shall
notify Williams by giving Williams thirty (30) days prior written
notice, and the Parties will attempt to negotiate what pricing will be
applicable to the Alliance Products and Services during this thirty
(30) day period. If the Parties can not reach agreement within the
thirty (30) day period, Williams shall, at its own discretion, no
longer be bound to offer the Most Favored Customer Treatment required
by Section 3.2 of this Agreement. Williams must exercise this right
within sixty (60) days of the receipt date of the Telmex notice. No
failure to exercise or no delay in exercising the rights shall operate
as a waiver of such right in the future if a different situation arises
again permitting the exercise of such right.
****. The foregoing is only intended to describe those situations where
Williams has the option to terminate its obligation to offer Telmex
Most Favored Customer Treatment for Alliance Products or Services
purchased by Telmex to be offered in the U.S.
****. Williams shall notify Telmex by giving Telmex thirty (30) days
prior written notice, and the Parties will attempt to negotiate what
pricing will be applicable to the Alliance Products and Services during
this thirty (30) day period.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 7
final Proprietary and Confidential
If the Parties can not reach agreement within the thirty (30) day period, Telmex
shall, at its own discretion, no longer be bound to offer the Most Favored
Customer Treatment required by Section 3.2 of this Agreement. Telmex must
exercise this right within sixty (60) days of the receipt date of the Williams
notice. No failure to exercise or no delay in exercising the rights shall
operate as a waiver of such right in the future if a different situation arises
again permitting the exercise of such right.
****
The foregoing is only intended to describe those situations where Telmex has the
option to terminate its obligation to offer Williams Most Favored Customer
Treatment for Alliance Products or Services purchased by Williams to be offered
in Mexico.
4. WHOLESALE MARKET - TELMEX BRANDED SWITCHED VOICE TRAFFIC U.S. ORIGIN
With respect to Telmex Branded Wholesale U.S. Switched Voice Traffic originating
within the U.S., based upon Williams' voice services as described in Section 1.2
of Schedule A, as further qualified in this paragraph (the "Exempt Wholesale
Service"), the parties agree to collaborate in the development of this product.
Telmex may offer this Telmex branded service by means of a distribution channel
or similar business structure that is established or maintained in the United
States for the purpose of offering this Exempt Wholesale Service and/or other
products to customers whose principal place of business is in the United States
who seek to terminate traffic on the Telmex network in the Mexican and the Latin
American markets, provided that this exception from Section 3.5 for the Exempt
Wholesale Service may be withdrawn by Williams, as the Supplying Party, if any
of the following occurs: (a) ****, and/or (b) ****. If either of provisos (a) or
(b) should occur, Williams shall, at its own discretion, (i) no longer be bound
to offer Exempt Wholesale Service Pricing (as defined in the following
paragraph) with respect to the Exempt Wholesale Service, and/or (ii) shall
terminate offering the Alliance Products and Services used by Telmex in offering
the Exempt Wholesale Service. Williams must exercise its rights in clauses (i)
and (ii) set forth directly above within sixty (60) days of when it learns or is
otherwise informed of the occurrence of an event identified in provisos (a) or
(b). No failure to exercise or no delay in exercising the rights in clauses (i)
or (ii) shall operate as a waiver of such right in the future if a different
situation arises again permitting the exercise of such right.
Pricing for the Alliance Products and Services offered by Williams, as the
Supplying Party, which are used to collaborate in the development of the Exempt
Wholesale Service shall be established through the mutual agreement of the
Parties. Such pricing will be set on an individual case basis with the goal of
aggressively addressing the target market. In this regard, Williams will
exercise its best reasonable efforts to offer pricing to Telmex that captures
the opportunity and yields adequate compensation to both Parties ("Exempt
Wholesale Service Pricing"). In order to achieve the adequate compensation
anticipated by both Parties, **** Telmex recognizes that Williams obligation
under this Section is subject to the exceptions listed in Section 2.1 above and
Williams will be allowed to offer other wholesale products into Mexico for
customers under that provision.
****The term "Incremental Domestic Business" shall mean additional traffic
originating in the United States and terminating on the Williams network in the
U.S. from customers not previously utilizing the Williams network, which
additional traffic is secured in connection with such customer use of the Telmex
Branded Switched Voice Traffic U.S. Origin.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 8
final Proprietary and Confidential
5. RETAIL MARKET - TELMEX U. S. ORIGIN VOICE TRAFFIC
Williams agrees to develop with Telmex the Alliance Products and Services
identified in Section 1.2 of Schedule A so that Telmex can provide retail
service to customers originating traffic in the United States ("U. S. Retail
Voice Products"). The Parties will exercise their best reasonable efforts to
develop and deploy these U. S. Retail Voice Products in the market as soon as
possible.
For the U.S. Retail Voice Products, **** provided that (i) **** provides
Williams its written consent to this classification and (ii) contingent upon the
execution of a ****. This will allow Telmex to utilize the **** made available
to **** under the ****. Telmex shall be deemed a **** only for the purposes of
receiving the **** and shall not be bound by the other obligations under the
****, except as otherwise specifically agreed. Williams will provide the ****.
Until January 1, 2000, the withdrawal of **** is to be determined on a ****. If
on January 1, 2000, ****, then Williams and Telmex will negotiate as to whether
to continue the ****. The classification as an **** may be withdrawn
immediately upon notice by **** no longer desires that **** be classified as an
**** for the purposes of this Agreement.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 9
6. USE OF FACILITIES
Nothing in any agreement between the Parties including the proposed
SBC/Telmex/WCI Alliance Agreement shall be construed to prohibit either Party
from using its own facilities or services owned or leased by itself or its
Controlled subsidiaries as of the Effective Date. Also the Supplying Party may
use its assets to provide services or products to any third parties.
7. OTHER ALLIANCE AGREEMENTS
In addition to this Agreement, the Parties will use their respective reasonable
best efforts to promptly negotiate and execute (i) an Interconnection Agreement,
(ii) a Sales and Marketing Agreement (including gross revenue sharing procedures
as contemplated herein), and (iii) an International Transport Services
Agreement. The Parties intend to exercise reasonable best efforts to complete
these other "Alliance agreements" within thirty (30) days after the "Closing" as
that term is defined in the Securities Purchase Agreement referenced in Section
8 of this Agreement. Further, the Parties agree to discuss the benefits of
negotiating a CPE Installation and Maintenance Agreement and a Managed Services
Agreement. With respect to the Interconnection Agreement, the Parties agree that
the form of the Interconnection Agreement submitted for governmental or
regulatory approval shall include a term of at least five (5) years, subject to
any necessary regulatory limitations, although the Parties agree to negotiate
settlement pricing annually (the "Annual Settlement Price Adjustment"). If the
Parties can not agree on the settlement pricing in any year, the last agreed
upon price shall continue to apply until a new settlement price is agreed upon
(the "Interim Period"). Once the new settlement price is agreed upon, the
Parties shall apply the new settlement price retroactively to the date of the
Annual Settlement Price Adjustment and shall issue any necessary credits for any
overpayments made by a Party during the Interim Period. The Parties also agree
to exercise their reasonable best efforts to renew and/or extend the term of the
Interconnection Agreement so long as this Agreement remains in force and effect.
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<PAGE> 10
final Proprietary and Confidential
8. EQUITY INVESTMENT
Contemporaneously with this Agreement, Telmex and the parent company of
Williams are entering into a Securities Purchase Agreement of even date
herewith (the "Securities Purchase Agreement") whereby Telmex will purchase
equity (i.e., Class A common stock) in Williams Communications Group, Inc.
("WCG"), the parent company of Williams, in connection with the Initial Public
Offering of Williams Communications Group, Inc. stock ("IPO"). In recognition
of the strategic relationship set forth in this Agreement, if following the
IPO, Telmex owns Class A common stock and WCG plans to issue new or additional
common equity securities in a public offering solely for the purpose of raising
additional capital; WCG will negotiate with Telmex a right to purchase, with
respect to the issuance by the WCG of new or additional common equity
securities for cash, a portion of such new or additional equity securities in
order to reflect the development and the strength of the strategic relationship
formed by this Alliance. If the Parties agree that the strategic relationship
formed by this Alliance has been of increasing benefit to both Parties and that
additional equity is warranted by this increase in Alliance value, WCG shall
offer Telmex the right to purchase an agreed upon amount of such equity
securities, in a private transaction, at the price offered to the public in
connection with such issuance less any discounts or commissions per share from
the price offered to the public available to the underwriters.
9. GOVERNANCE
9.1. Alliance Governance
The Alliance shall be managed by an Alliance Council, Committees and
Alliance Managers.
9.2. Alliance Council
The "Alliance Council" shall consist of 3 members appointed by Telmex
and 3 members appointed by Williams. The Alliance shall be managed
under the direction of the Alliance Council, and the Alliance Council
shall have the authority to appoint, oversee, reorganize and direct the
activities of Committees (as defined below) provided that any binding
obligation will result only from the execution of a definitive
agreement by the Parties, if such an agreement is entered into. The
Alliance Council will also endeavor to resolve any disagreements
arising within a Committee. The Alliance Council shall meet every other
month for the first twelve months, and quarterly thereafter unless
otherwise agreed by the Parties. The initial chair of the Alliance
Council shall be appointed by Telmex for a one year term, and
thereafter the Party selecting the chair shall alternate between the
Parties each year.
9.3. Committees
The Alliance Council will form such other Alliance committees as to
which they may agree from time to time (the "Committees"). However, it
is anticipated that
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the Alliance Council will form Committees to address the design,
planning and implementation of network, operational support systems and
local access architectures and infrastructure associated with the
telecommunications facilities and associated services contemplated by
this Alliance. It is also expected that a Committee will be formed to
discuss common interfaces, methods and procedures, design, planning and
implementation of processes for service activation, service assurance,
capacity planning, billing and other operational functions.
The Alliance Council will establish Committee meeting times, Committee
objectives, initial "Projects" to be developed and other Committee
governance procedures when the Alliance Council creates a Committee. A
"Project" is a task pertaining to the telecommunications facilities and
services contemplated by the Alliance that is identified by the
Alliance Council or a Committee. The Project will be defined and
described in individual scope of work documents which shall be
developed by the Committee.
9.4. Regulatory Requirements
All activities of the Alliance Council and Committees shall be
conducted to ensure that both Parties are in full compliance with all
legal and regulatory requirements imposed upon either Party.
9.5. Timing and Notice
The Chairman of the Alliance Council shall determine the time and place
for meetings between the appointed representatives from each Party
("Meetings"). Meetings may also be called upon the agreement of any two
members provided that such two members were not appointed by the same
Party. Except in the event of an emergency, the Chairman or members
calling a Meeting shall provide each Committee or Alliance Council
member with at least fourteen (14) days advance written notice of the
time, place and agenda for such Meeting. No matter shall be finally
determined at any Meeting unless the matter was included in the agenda
distributed with the notice for that Meeting and described with
sufficient particularity to reasonably disclose the nature and
importance of the matter.
9.6. Quorum
At least one member appointed by each Party shall be required to be in
attendance in person or by phone in order to constitute a quorum for
any Meeting.
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9.7. Participation
Members may participate in a Meeting by teleconference or designate an
alternate member to participate in a Meeting on their behalf upon prior
written notice to the Chairman or members who called the Meeting.
9.8. Unanimous Vote
The Alliance Council and Committees shall act only by the unanimous
vote of all members participating in a Meeting upon a resolution
submitted in writing. Prior to the vote, the members will consult with
their respective Alliance Managers.
9.9. No Arbitration
The failure of a Committee or the Alliance Council to achieve a
unanimous vote with respect to a Project shall not be classified as a
Dispute subject to the arbitration procedures set forth in Section 11.4
and, if an unanimous vote cannot be attained, the Parties shall follow
the procedure set forth in Section 11.1 through 11.3 below and if a
unanimous vote still cannot be obtained, a Party's exclusive
alternative will be the ability to pursue the Project outside of the
Alliance pursuant to Section 9.10.
9.10. Further Cooperation
If a proposed Project and/or the scope of work associated with such
Project is not agreed to by both Parties, each Party will be free to
pursue such Project on its own or with third parties, subject only to
applicable restrictions on Confidential Information and use of
intellectual property. However, to the extent that the implementation
of the Project requires the cooperation of the other Party, each Party
will reasonably cooperate with the other in order to integrate the
Project into the Parties' networks.
10. ALLIANCE MANAGERS AND DEDICATED EMPLOYEES
10.1. Alliance Managers
The "Alliance Manager" is an individual appointed by each Party and
dedicated to managing the Alliance relationship. Telmex and Williams
will each designate one Alliance Manager from within their respective
organizations. It shall be the responsibility of the Alliance Manager
to:
10.1.1. Serve as the principal contact person for each Party to the other
concerning Alliance matters;
10.1.2. Expedite the accomplishment of accepted Projects;
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10.1.3. Coordinate the activities of the Parties in furtherance of the
goals of the Alliance;
10.1.4. Supervise dedicated employees that are employed by the Alliance
Manager's employer;
10.1.5. Consult with the members of the Alliance Council and keep them
informed of matters affecting the Alliance;
10.1.6. As agreed by the Parties, serve as spokespersons for the Alliance
in dealings with external constituencies; and
10.1.7. Seek any necessary internal approvals that may be necessary and
desirable to conduct the business of the Alliance.
10.1.8. Each Party will pay all the costs and expenses associated with
its Alliance Manager and dedicated employees, unless otherwise
specifically agreed.
11. DISPUTE RESOLUTION
11.1. Disputes.
The Parties shall attempt in good faith to resolve any controversy,
dispute or claim arising out of or relating to this Agreement or the
breach, termination, enforceability or validity thereof (collectively,
a "Dispute") promptly by negotiation between the Alliance Managers.
Either Party may give the other a written notice (a "Dispute Notice")
setting forth with reasonable specificity the nature of the Dispute and
the identity of any representative in addition to the Alliance Manager
who will attend and participate in the meetings at which the Parties
will attempt to settle the Dispute. Following the receipt of a Dispute
Notice, the representatives of both Parties shall meet as soon as is
practicable, but no later than in seven (7) days at a mutually
acceptable time and place to negotiate in good faith a settlement of
the Dispute, and shall meet thereafter as they reasonably deem
necessary.
11.2. Referral to CEO
If the Dispute has not been resolved within seven (7) days after
receipt of the Dispute Notice, then the Dispute shall be referred to
the Alliance Council to negotiate. If the Dispute can not be resolved
by the Alliance Council within seven (7) days after the referral, then
the Dispute shall be referred to the chief executive officer of the
ultimate parent corporation of each Party to the Dispute (the "CEO").
The CEOs shall promptly undertake good faith negotiations to settle
the Dispute, including meetings in person or by teleconference as the
CEOs may reasonably agree.
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11.3. Confidentiality of Negotiations
All negotiations pursuant to Sections 11.1 and 11.2 shall be
confidential and shall be treated as compromise and settlement
negotiations. Nothing said or disclosed, nor any document produced, in
the course of such negotiations which is not otherwise independently
discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future
arbitration or litigation.
11.4. Arbitration
If the Dispute is not resolved within sixty (60) days of the Dispute
Notice, the Parties agree that any controversies, disputes or claims
arising under or in connection with the scope of this Agreement, or
due to non-performance or breach hereof, shall be settled by
arbitration in accordance with the Rules of Arbitration of UNCITRAL
(United Nations Commission of International Trade Law).
Arbitration shall take place in the City of Toronto, Canada and three
arbitrators shall be designated as follows: One by Williams, another
by Telmex and a third arbitrator shall be appointed by the other two.
The arbitration award shall be issued no later than sixty (60) days
after the date arbitration was initiated and the resolution or award
shall be final and shall be in full force and effect.
The compensation and expenses of the arbitrators shall be borne
equally by the two Parties. Each Party to the dispute shall bear all
other expenses incurred by it, including its own attorney and witness
fees.
11.5. Waiver of Jury Trial
The Parties hereto hereby knowingly, voluntarily and intentionally
waive all right to trial by jury in any action, suit or proceeding
brought to resolve any Dispute whether sounding in contract, tort, or
otherwise, between the Parties here to arising out of, connected with,
related to, or incidental to this Agreement or the transactions
related hereto or any course or conduct, course of dealing, statements
(whether verbal or written) or actions of either Party. This provision
is a material inducement for the Parties hereto entering into this
Agreement.
11.6. Expenses
Except as otherwise expressly provided in this Agreement, each Party
hereto shall pay its own expenses incidental to the preparation of
this Agreement, the carrying out of the provisions hereof and the
consummation of the transactions contemplated hereby.
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11.7. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the state of New York in the United States, without giving
effect to the conflict of law rules thereof.
12. CONFIDENTIAL INFORMATION
12.1. Telmex and Williams recognize and understand that it may be desirable
to exchange information deemed to be proprietary by either Williams or
Telmex ("Confidential Information"). The disclosing Party shall mark
the Confidential Information in a manner to indicate that it is
considered proprietary, confidential, trade secret or otherwise subject
to limited distribution as provided herein. When Confidential
Information is provided orally, the disclosing Party shall, at the time
of disclosure, clearly identify the information as being proprietary or
confidential or otherwise subject to limited distribution as provided
herein. Such Confidential Information will be protected by the
receiving Party in the same manner as the receiving Party protects its
own Confidential Information. The receiving Party shall use any such
Confidential Information only in connection with this Agreement.
Upon the written request of the disclosing Party, the receiving Party
will return to the disclosing Party all writings and copies thereof
containing the Confidential Information of the disclosing Party or
destroy such information.
12.2. Notwithstanding any other provisions of this Agreement, the
obligations specified in Section 12.1 will not apply to any
information that:
12.2.1. Is already in the possession of the receiving Party, its parent,
subsidiaries or affiliates, without any corresponding non-disclosure
obligation,
12.2.2. Is independently developed by the receiving Party, its parent,
subsidiaries or affiliates,
12.2.3. Is or becomes publicly available without breach of this Agreement
12.2.4. Is rightfully received by the receiving Party from a third Party;
12.2.5. Is released for disclosure by the disclosing Party with its prior
written consent; or
12.2.6. Is disclosed in response to a valid order of a court or other
governmental body of Mexico or the United States or any political
subdivisions thereof; provided, however, that the receiving Party shall
first have given notice to the disclosing Party and made a reasonable
effort to
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obtain a protective order requiring that the information and/or
documents so disclosed be used only for the purposes for which the
order was issued.
13. TERM AND TERMINATION
13.1. Term
This Agreement shall remain in force and effect for twenty (20)
years, unless earlier terminated pursuant to the provisions of this
Agreement.
13.2. Termination Events Requiring Prior Notice
This Agreement may be terminated by the Notifying Party (as
hereinafter defined) by providing twenty (20) days prior written
notice to the other Party, if:
(i) Without the written agreement of the Parties as to
the pricing of Alliance Products and Services in
accordance with Section 3.5, Telmex offers in the
wholesale market, long distance voice or data or
local exchange services by means of a distribution
channel or similar business structure that is
established or maintained for the for the purpose
of offering Alliance Products and Services (other
than the Exempt Wholesale Service in accordance with
Section 4) to customers whose principal place of
business in the United States;
(ii) the Parties can not execute the Interconnection
Agreement, the Sales and Marketing Agreement and the
International Transport Services Agreement within
thirty (30) days after the "Closing" as such term is
defined in the Securities Purchase Agreement or such
later time as the Parties may agree;
(iii) there is a "Change of Control" (as hereinafter
defined in Section 13.4) of either of the Parties;
(iv) if any change in law or regulation materially and
adversely affects the terms and conditions of the
Alliance;
(v) in the event that for any reason:
(a) the other Party fails to perform in any material
respect any of the terms of this Agreement or any of
the Alliance agreements, including, without
limitation, if such defaulting Party fails to make
any payment as agreed for any reason, including, but
not limited to, governmental monetary controls or
laws, regulations, decrees or restrictions of any
kind, and such default or breach shall continue
uncured for a period of thirty (30) days after the
non-defaulting Party gives the other written notice
of such default or breach;
(b) the other Party discontinues (after commencing)
the distribution of commercial quantities of any of
the Alliance Products or Services included in the
Alliance for any reason for a period of more than
thirty (30) days without the prior written consent of
the other Party, which consent shall not be
unreasonably withheld; or
(c) any part of this Agreement is not considered to
be, or ceases to be, in conformity with the laws,
regulations, consistent jurisprudence or court or
administrative decisions (relevant to this
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Agreement) of the territory of this Alliance and, as
a result thereof, any provision material to this
Agreement cannot be legally performed or enforced; or
(vi) In the event that Telmex is unable to terminate the
**** "Agreements" (as defined in Exhibit B) by the
time of "Closing" as that term is defined in the
Securities Purchase Agreement referenced in Section
8 of this Alliance Agreement, then either Williams
or Telmex shall have the right immediately to
terminate this Alliance Agreement.
Failure of any Party to terminate this Agreement shall not be deemed
a waiver of the right subsequently to do so under the same or any
other such reason. The Notifying Party shall exercise its termination
right within a reasonable period of time, but in no event more than
sixty (60) days from actual notice of the event or circumstances
permitting termination by such Party.
The "Notifying Party" shall be defined to mean either Party with
respect to the events set forth in Section 13.2 (ii), (iii), (iv),
(v) (c) and (vi). With respect to events in Section 13.2 (v) (a) or
(v) (b), the Notifying Party shall be the Party who has neither
defaulted nor failed to perform. With respect to Section 13.2 (i),
the Notifying Party shall be Williams.
13.3. Automatic Termination
This Agreement shall expire and terminate automatically and without
notice in the event that:
(i) any Party hereto commences a voluntary case or other
proceeding seeking liquidation, reorganization,
suspension of payments or other relief with respect
to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, sindico, custodian or other
similar official of it or any substantial part of its
property, or consents to any such relief or to the
appointment of or taking possession by any such
official in an involuntary case or other proceeding
commenced against it, or makes a general assignment
for the benefit of creditors, or fails to pay a
substantial portion of its debts as they become due,
or takes any corporate action to authorize any of the
foregoing, or
(ii) any Party hereto or its business is nationalized, in
whole or part, or the shares of such Party or control
over such Party or over any substantial portion of
its assets or over its management is seized by any
government or any of its branches, departments or
agencies, including, but not limited to, the
military.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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13.4. Change of Control
A Change of Control means any transaction where one Party is acquired,
merged into or consolidated with or reorganized into another
corporation or legal entity and as a result of such transaction less
than a majority of the combined voting power of the then outstanding
securities of the Party immediately after the transaction are held in
the aggregate by the persons holding such securities immediately prior
to the transaction. A Change of Control shall not include any
transaction where the other party to the transaction is a wholly owned
subsidiary of the ultimate parent corporation of the Party.
13.5 Termination - Equity Investment
If this Agreement is terminated for any reason prior to the closing of
the IPO, then either Party shall have the option to terminate the
Securities Purchase Agreement.
13.6 Regulatory Frustration
In the event of any action or failure to act by any regulatory
authority that has the effect of materially frustrating or hindering
the purpose of one or more of the Alliance agreements or the ability
of the Parties to compete successfully by means of the Alliance, the
Parties will meet:
(i) to reevaluate the benefits of the Alliance,
(ii) to determine whether, and to what extent, the
Alliance may be continued, and
(iii) to negotiate in good faith regarding reasonable terms
and conditions for any termination of any of the
Alliance agreements or revisions to the Alliance
relationship.
If the Parties cannot reach agreement on the terms and conditions under
which the Alliance should continue, either Party shall have the right
to terminate the Alliance agreement which was the subject of such
action or failure to act by such regulatory authority upon twenty (20)
days prior written notice.
14. REPRESENTATIONS AND WARRANTIES OF TELMEX
Telmex hereby represents and warrants to Williams as follows:
14.1. Organization, Standing and Authority.
Telmex is a corporation duly organized, validly existing and in good
standing under the laws of Mexico. Telmex has all requisite corporate
power and authority
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to enter into this Agreement hereby and to consummate the transactions
contemplated herein. All corporate acts and other proceedings required
to be taken by Telmex to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken. This Agreement
has been duly executed and delivered by Telmex and constitutes the
legal, valid and binding obligation of Telmex, enforceable against
Telmex in accordance with its terms.
14.2. No Violation
The execution and delivery by Telmex of this Agreement and the
consummation of the transactions contemplated hereby and compliance
with the terms thereof will not, (i) conflict with or result in any
violation of any provision of the articles of incorporation or
by-laws, or the comparable organizational documents, (ii) conflict
with, result in a violation or breach of, or constitute a default, or
give rise to any right of termination, revocation, cancellation, or
acceleration, under, any material contract, concession or permit
issued to Telmex, except for any such conflict, violation, breach,
default or right which is not reasonably likely to have a material
adverse effect on the ability of Telmex to consummate the material
transactions contemplated by this Agreement or (iii) conflict with or
result in a violation of any judgment, order, decree, writ,
injunction, statute, law, ordinance, concession, permit, rule or
regulation applicable to Telmex or to the property or assets of
Telmex, except for any such conflict or violation which is not
reasonably likely to have such a material adverse effect.
14.3. Consents and Approvals
No consent, approval, license, permit, order or authorization of,
registration, declaration or filing with, or notice to, any domestic
or foreign court, administrative or regulatory agency or commission or
other governmental authority or instrumentality (each, a "Governmental
Entity") is required to be obtained or made by or with respect to
Telmex in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
15. REPRESENTATIONS AND WARRANTIES OF WILLIAMS
Williams hereby represents and warrants to Telmex as follows:
15.1. Organization, Standing and Authority
Williams is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Williams has all
requisite corporate power and authority to enter into this Agreement
and to consummate the transactions
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contemplated hereby. All corporate acts and other proceedings required
to be taken by Williams to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated thereby have been duly and properly taken. This Agreement
has been duly executed and delivered by Williams and constitutes the
legal, valid and binding obligation of Williams, enforceable against it
in accordance with its terms.
15.2. No Violation
The execution and delivery by Williams of this Agreement does not, and
the consummation of the transactions contemplated thereby and
compliance with the thereof will not (i) conflict with or result in
any violation of any provision of the certificate of incorporation or
by-laws of Williams, (ii) conflict with, result in a violation or
breach of, or constitute a default, or give rise to any right of
termination, revocation, cancellation, or acceleration, under, any
material contract, concession or permit issued to Williams, except for
any such conflict, violation, breach, default or right which is not
reasonably likely to have a material adverse effect on the ability of
Williams to consummate the material transactions contemplated by this
Agreement or (iii) conflict with or result in a violation of any
judgment, order, decree, writ, injunction, statute, law, ordinance,
concession, permit, rule or regulation applicable to Williams or to
the property or assets of Williams, except for any such conflict or
violation which is not reasonably likely to have such a material
adverse effect.
15.3. Consents and Approvals
No consent, approval, license, permit, order or authorization of,
registration, declaration or filing with, or notice to, any
Governmental Entity is required to be obtained or made by or with
respect to Williams in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
16. GENERAL PROVISIONS
16.1. Assignment
Neither Party may assign nor delegate any of its rights or obligations
under this Agreement without the consent of the other Party.
16.2. Costs and Expenses
Except as otherwise specifically agreed to by the Parties in writing,
each Party will be responsible for its own expenses arising under this
Agreement.
16.3. Amendment
No amendment of this Agreement shall be valid or binding on the
Parties unless such amendment shall be in writing and duly executed by
an authorized representative of each Party.
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16.4. Headings
Headings contained herein shall in no way limit the subject matter
they introduce and shall not be used in construing this Agreement.
16.5. Publicity
Neither Party shall make a public announcement about this Agreement or
the Parties' discussions related to any aspect of it without the
written consent of the other Party on the exact wording of such public
announcement. Either of the Parties may at anytime make announcements
which are required by applicable law, regulatory bodies, or stock
exchange or stock association rules, so long as the Party so required
to make the announcement, promptly upon learning of such requirement,
notifies the other Party of such requirement and discusses with the
other Party in good faith that exact wording of any such announcement.
16.6. Execution
This Agreement shall be executed in two duplicate copies, one for each
Party, each of which copies shall be deemed an original.
16.7. Limitation of Liability
Except to the extent expressly set forth in one of the Alliance
agreements, neither Party, nor its officers, employees, agents,
partners, affiliates or subcontractors shall be liable to the other
Party, its officers, employees, agents, partners, affiliates or
subcontractors for claims for incidental, indirect, consequential,
exemplary, punitive, or other special damages, including, but not
limited to, damages for a loss of profits or opportunity costs,
connected with or resulting from any performance or lack of
performance under any Alliance agreement regardless of whether a claim
is based on contract, warranty, tort (including negligence), theory of
strict liability, or any other legal or equitable principle.
16.8. Force Majeure
Neither Party shall be liable to the other for any failure to perform
or delay in performance due to causes beyond its reasonable control,
provided however, that the Party whose performance is impeded or
delayed agrees to take reasonable steps to overcome the same and to
promptly notify the other Party of the condition causing such failure
or delay and of the reasonable steps being taken.
16.9. Relationship of Parties
This Agreement and any other agreement between the Parties relating to
this Alliance shall not, individually or in the aggregate, create or
be construed to create a partnership, joint venture or any other form
of legal entity, either in law or in fact. The Parties intend that
their relationship or that their individual and collaborative
activities under this Agreement or any other agreement between the
Parties relating to this Alliance shall not be treated as a partnership
or association taxable as a corporation for United State federal
income tax purposes. Neither Party shall constitute either a partner
or agent of the other, and neither Party shall have authority to bind
the other. Any agreement relating to the Alliance shall be entered
into by either or both of the Parties in their separate and individual
capacities, and no agreement shall be deemed to be entered into solely
in the name of the Alliance. In the event of a conflict between this
Section 16.9 and any other provision of this Agreement, this Section
16.9 shall control.
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16.10. Notices
Any notice, request, instruction or other document to be given
hereunder by any Party to any other Party under any section of this
Agreement shall be in writing and shall be deemed given upon receipt
if delivered personally or by telex or facsimile, the next day if by
express mail or five (5) days after being sent by registered or
certified mail, return receipt requested, postage prepaid to the
following addresses (or at such other address for a Party as shall be
specified by like notice provided that such notice shall be effective
only after receipt thereof):
If to Telmex: Telefonos de Mexico, S.A. de C.V.
Parque Via No. 190, piso 10
Col. Cuauhtemoc
Mexico, 06599, D.F.
ATTN: General Counsel
Fax (525) 2551776
Telephone: (525) 222-57-80
If to Williams: Williams Communications, Inc.
One Williams Center, Suite 26-B
Tulsa, OK 74172
Attn: Contract Administration
Fax: 918-573-6578
Telephone: 918-573-6277
with a copy Williams Communications, Inc.
(which shall One Williams Center, Suite 4100
not constitute Tulsa, OK 74172
notice) to: Attn: General Counsel
Fax: 918-573-3005
Telephone: 918-573-4205
16.11. Severability
In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable
in any respect by a court or other authority of competent
jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein and, in lieu of each such illegal, invalid
or unenforceable provision, there shall be added automatically as a
part of this Agreement a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable, it being the intent of the Parties to
maintain the benefit of the bargain for both Parties.
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16.12. Rules of Construction
Words used in this Agreement, regardless of the gender and number
specifically used, shall be deemed and construed to include any other
gender and any other number, as the context requires. As used in this
Agreement, the word "including" is not limiting, and the word "or" is
not exclusive. Except as specifically otherwise provided in this
Agreement in a particular instance, a reference to a Section, Schedule
or Exhibit is a reference to a Section of this Agreement or a Schedule
or Exhibit hereto, and the terms "this Agreement," "hereof," "herein,"
and other like terms refer to this Agreement as a whole, including the
Schedules to this Agreement, and not solely to any particular part of
this Agreement. The descriptive headings in this Agreement are
inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
The Parties to this Agreement do not intend that any other Person
shall obtain any rights as third party beneficiaries of this
Agreement.
This Agreement is executed in two counterparts this 25th day of May 1999.
TELEFONOS DE MEXICO S.A. de C.V. WILLIAMS COMMUNICATIONS, INC.
/s/ ISIDORO AMISO /s/ FRANK SEMPLE
- --------------------------------------- --------------------------------------
Signature of Authorized Representative Signature of Authorized Representative
ISIDORO AMISO FRANK SEMPLE
- --------------------------------------- --------------------------------------
Printed Name Printed Name
V.P. Sales and Marketing President-Williams Network
- --------------------------------------- --------------------------------------
Title Title
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EXHIBIT A - EXCLUDED SUBSIDIARIES
TELMEX
1. Prodigy
2. Splitrock Communications, Inc.
3. Topp Telecommunications
4. Cellular Communications of Puerto Rico (interest to be acquired)
WILLIAMS
None
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EXHIBIT B - EXISTING CONTRACTS
WILLIAMS COMMUNICATIONS:
Intersys - Williams is using the services of Intersys, a subsidiary,
involved in the network integration business located in Mexico.
SBC Communications Inc. - Master Alliance Agreement Between SBC
Communications Inc. and Williams Communications, Inc. dated as of
February 8, 1998 and the agreements negotiated thereunder such as
Network Development and Operations Agreement, Platform Services
Agreement, Transport Services Agreement, Sales and Marketing Agreement,
International Services Agreement, Consulting Services Agreements and
CPE Installation and Maintenance Agreement.
TELMEX:
Existing Interconnection Agreements between Telmex and AT&T, MCI,
WorldCom, Sprint and SBC.*
Operating Data Service Agreement executed by and between Global One
Communications LLC and Uninet S.A. de C.V.*
*Telmex has no preferred provider, most favored customer or similar
arrangement any of these entities under these agreements or otherwise.
Notwithstanding anything else set forth in this Alliance Agreement,
Telmex and Williams recognize that Telmex previously has entered into a
series of agreements with **** Corporation and its affiliates "****")
relating to the provision of telecommunications products and services,
including, but not limited to, a **** Agreement dated ****, a ****
Agreement dated ****, a **** Agreement, a **** Agreement dated ****, a
**** Agreement dated **** a **** Agreement dated **** and a ****
Agreement dated **** (the "**** Agreements"). Telmex is in the process
of terminating all of the **** Agreements and expects to be able to do
so within the next thirty (30) days. Williams and Telmex recognize that
until the **** Agreements are terminated, their rights under the
Alliance Agreement are subject to the preexisting **** Agreements.
Telmex agrees to provide Williams prompt written notice when it has
terminated the **** Agreements.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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final Proprietary and Confidential
SCHEDULE A--ALLIANCE PRODUCTS AND SERVICES
1. CURRENT ALLIANCE PRODUCTS AND SERVICES
1.1 Mutually Offered Services: Telmex and Williams will be the Supplying
Party to the other party for the following products and services.
1.1.1 Description of Private Line Service. Circuits which are
specifically dedicated to the use of Telmex or its customers and
Williams or its customers between a point on the Telmex network and a
point on the Williams network. Services are offered in DS-1, DS-3, and
optical SONET (OC-N) bandwidths in the US and E1, E3 and SDH (STM - X)
bandwidths in Mexico, with the required network interface being
applied at the network interconnection point to reconcile the
disparate national standards.
1.1.2 Description of Frame Relay Service. Frame Relay Service is a
multi-service technology that allows commercial end-users to use a
network of shared private lines to send and receive data from
geographically distant locations. Frame Relay can be defined as
packet-switched, multiplexed data networking technology supporting
connectivity between user equipment, such as routers, and a carrier's
frame relay network equipment. Description of International Frame
Relay Service. International Frame Relay Service is Frame Relay
Service offered between locations connected to the Telmex network and
locations connected to Williams network.
1.1.3 Description of International Switched Voice Service.
International Switched Voice Service is voice telecommunications
traffic which is transported over a public switched telephone network
in one country to a public switched telephone network in another
country. International Switched Voice Services include:
- International Direct Dial
- Home Country Direct
- International calling card calling
- International sent paid operator assisted calling
- International Toll-Free Service
1.2 Further Description of the Section 1.1.3 International Switched Voice
Service. The following are general descriptions of the individual
International switched voice services in Section 1.2.3 above. Detailed
product/service description will be defined in the International
Transport Services Agreement.
1.2.1. 1+ Voice Service - 1+ Voice Service provides On-Net
interexchange Service via Feature Group D in selected exchanges or
dedicated access lines for origination and transmission on the
Williams Network and termination of communications. Dedicated access
may be provided by Telmex, Williams or a
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final Proprietary and Confidential
Local Access Provider. Feature Group D access is provided by the Local
Exchange Carrier and allows Telmex to use its own CIC to route traffic
to Williams' facilities.
Except where Local Access Service is provided via dedicated access
facilities, Williams' 1+ Voice Service is available only in Feature
Group D local exchanges where the End User's telephone line(s) can be
programmed by the Local Exchange Carrier to automatically route "1+"
interLATA toll calls to the Williams Network.
Assuming CIP is provided by the originating office and each Telmex
Corporation Affiliate provides a separate CIC, PIC verification
(1-700-555-4141) will correctly brand the Services of Telmex and its
Affiliates, and such additional brands as Telmex or its Affiliates may
employ. The parties agree to explore and implement, if mutually
agreeable, a technical solution for such branding where alternative
solutions may be required.
Williams shall have principal responsibility for obtaining Local
Access facilities in the US for traffic originating on the Telmex US
or Mexico systems. Telmex shall have the principal responsibility for
obtaining Local Access facilities for traffic originating on the
Williams systems needing termination in Mexico.
1.2.2 Toll Free Service - offers Customers a toll free number (e.g.,
800, 888 or 877) and allows callers to reach the subscriber without
toll charges. The subscriber pays for all incoming calls made on its
assigned toll free number. Toll Free Service consists of a basic
service (assignment of a toll free telephone number and a toll free
calling area selected by the Customer) and additional features that
Customers can select.
1.2.3 Switched Toll Free Service - is an inbound long distance
service. This service terminates calls over the local telephone line
of Customer or its End Users, and calls are toll-free to the calling
party.
1.2.4 Dedicated Toll Free Service - is an inbound long distance
service. This service terminates calls over dedicated access lines
from Company's POP to the service location(s) of Customer or its End
Users, and calls are toll-free to the calling party.
1.2.5 Directory Assistance Service - offers Customers the ability to
provide their End Users with phone numbers, addresses and NPA/Country
codes and automatic call completion. A per-call charge is assessed
against the Customer for each call made by the Customer's
persubscribed End-Users. This charge applies whether or not the
Directory Assistance operator furnishes the requested telephone
number(s), e.g., the requested number is unlisted, non-published or no
record can be found. Requests for information other than telephone
numbers will be charged for as requests for telephone numbers.
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final Proprietary and Confidential
1.2.6 Directory Assistance Service - gives the option of completing a
call to the called station telephone number received from the
Directory Assistance operator without hanging up and originating a new
call. A call completion charge applies in addition to the Directory
Assistance per-call charge if the caller accepts the offer. The call
completion charge will not apply if the call cannot be completed.
1.2.7 Calling Card Service - is an inbound long distance service. This
service allows customer or its End Users to place long distance call
from locations other than their primary service location through the
use of 800 number network access and an authorization code.
1.2.8 Prepaid Calling Card Service - allows Telmex's End Users to
originate outbound, Direct Dial long distance call on a prepaid basis
via an 800 access number. All calls are rated on a flat-rate basis,
and are rounded for billing purposes to the next higher full minute.
Calls may only be charged against an account that has a sufficient
available balance. Customer shall be given notice two (2) minutes
before the available account balance is depleted, based upon the
applicable rates for the call in progress. When the available balance
is depleted, the call shall be terminated. A prepaid calling account
shall expire on the date specified on the card, unless replenished by
a charge to a commercial credit card as authorized by the Customer
beforehand. The End-User will use the access number on the Pre-Paid
Calling Card to access Williams Network. A flat per-minute rate will
be deducted on a real-time basis as the card is used until the full
amount of the card is exhausted.
1.2.9 Operator Service - consists of all call completion functions
performed either by a live operator or by automated systems. Such
functions include collect calling, third party billing and calling
card services. Access to Williams Operator Services can be obtained by
the following dialing methods: (A) "00" from a telephone subscribed to
Williams Network in a Feature Group D (FGD) area; (B) "0+
(NPA-NXX-XXXX)" from a telephone subscribed to Williams Network in a
FGD area; (C) "101XXXX+0: from any non-pay telephone in FGD area; and
(D) "1-800-XXXX" from an location.
2. PRODUCTS AND SERVICES TO BE CONSIDERED BY TELMEX AND WILLIAMS. The following
products and services are available to Telmex by Williams as the Supplying
Party. Telmex is not positioned to offer these products as a Supplying Party to
Williams at this point but has committed to submit these products and services
to Williams as Alliance Products and Services in accordance with the terms of
this Agreement as they are developed and offered within the Telmex markets.
2.1 Description of On-Net ATM Service. Asynchronous Transfer Mode Service
(the "ATM Service") is multi-service technology on the Williams Network
that provides
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final Proprietary and Confidential
integration of disparate networks onto a single communications
infrastructure and meets the Technical Specifications for ATM Service
set forth in Schedule B. ATM technology encapsulates user data into
53-byte cells and transmits them over an ATM network. Williams' On-Net
ATM Service is designed for two (2) primary applications. These
applications include ATM transport and backbone connectivity. ATM
transport provides multimedia aggregation and video transmission.
Multimedia transmission is suited for transporting voice, data and
video while video transmission is best designed for point-to-point
video services. Backbone connectivity provides for the interconnection
of local area networks ("LAN(s)") as well as interconnection of
existing network access points ("NAP(s)") or private peering backbones.
2.2 Description of Internet Services.
2.2.1 IP Transport - IP Transport service provides the user with the
capability to interconnect an ISP to a point on the provider's
network. This may include connectivity to another ISP for peering, to
a data center, telehousing facility, Network Access Point or Internet
exchange point facility. Typical capacity is in the DS3 to OCN levels.
2.2.2 IP Transit - Dedicated access connectivity at the IP layer to
provide full Internet access to the customer service provider. IP
packets exchanged between the customer network and external networks
traverse the provider network, using Border Gateway Protocol (BGP) or
a similar routing protocol to establish the appropriate routing.
Dedicated Internet access provides connectivity at speeds ranging from
DS1 to OC3. Connectivity is provided into the most available Williams
POP.
2.2.3 Dedicated Access - Dedicated Access connectivity at the IP layer
to connect one or more associated customer end user sites. Dedicated
access provides full Internet connectivity at speeds ranging from DS1
to OC3.
2.2.4 Remote Access - Remote access connectivity to provide
traditional analog and ISDN connectivity to the Williams IP Network.
This service will be available at speeds up to 56kb in most major MSAs
where Williams has a Williams POP.
2.3 Description of Collocation Service. Collocation Service is a service
pursuant to which Telmex and its customers may place equipment in a
facility owned, leased or licensed and operated by Williams for the
purpose of interconnecting that equipment, including switches and
associated equipment, with the Williams network, the network of Telmex
or any Controlled subsidiary, or other third party network ("Collocation
Service"), Telmex shall complete a mutually agreed upon Collocation
Service Order.
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final Proprietary and Confidential
3. ANCILLARY SERVICES. Ancillary Services are those services incidental to
Williams' provision of the Product or Service, as the Supplying Party, as such
Services are identified in Schedule A (e.g. reconfiguration), or services
incidental to service provided by a Third Party for which such party imposes a
fee as established by that party.
4. PRICING FOR ALLIANCE SERVICES AND PRODUCTS. See Exhibits I and II,
respectively, for the Williams and Telmex pricing for the Alliance Products and
Services.
DEFINITIONS
"CIC" means carrier identification code.
"CIP" means carrier identification parameter.
"End User" means a natural person or legal entity which either; (1) orders
service through Telmex or Williams or (2) uses Williams' Casual Calling service
directly as a customer through dialing Williams' designated access code or
other access number.
"Feature Group D" or "FGD" means such feature as defined in the tariff of the
National Exchange Carrier Association.
"InterLATA Service" means long distance telecommunications service between
local access transport areas in the United States.
"ISP" means Internet Service Provider.
"Local Access" means the intraLATA telecommunications facilities connecting an
End User, including a Buyer-designated termination point, to an interexchange
carrier's POP within the same LATA, including, but not limited to Seller's POP.
"Local Exchange Carrier" or "LEC" means the local telephone company that
provides exchange telephone services.
"NAP" means network access point
"Off-Net" means a circuit that is not On-Net.
"On-Net" means a circuit traversing the Seller's network both end points of
which originate or terminate at a Seller designated Seller POP.
"PIC" means primary interexchange carrier.
"POP" or "Point of Presence" means a point of presence as commonly understood in
the industry.
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final Proprietary and Confidential
EXHIBIT I TO SCHEDULE A
WILLIAMS'S NETWORK PRICING SCHEDULE
This Pricing Schedule is made as of this _____ day of ________________, 1999,
and is part of Schedule A to the Alliance Agreement by and between Williams's
Network, a division of Williams's Communications, Inc., a Delaware corporation
("Williams"), and Telefonos de Mexico, S.A. de C.V., a Mexican corporation
("Telmex"). The prices stated herein and any other term or condition of this
Schedule are applicable only to On-Net Services. Third-Party Services are
provided only on an individual case basis.
A. WILLIAMS ON-NET ATM SERVICES
1. Recurring Rates & Charges: ATM service has three basic rate elements;
Local Access, Port Connections, and Bandwidth.
a. Local Access. Pricing for Local Access is determined in
accordance with the terms and conditions set forth in
applicable Alliance Agreements.
b. UNI Port Connections. Pricing for User Network Interface (UNI)
Port Connections is determined on the port speed connections
selected by Telmex. UNI Port Connections are currently
available at DS3, OC3 and OC12 speeds. Monthly recurring
charges for Port Connections are set forth in Table A.1 below.
Table A.1 Monthly Recurring Port Charges
<TABLE>
<CAPTION>
Monthly Recurring Port Charges
- -------------------------------------------------------
Port Speed Monthly Recurring CoS
Port Charge
- -------------------------------------------------------
<S> <C> <C>
DS3 **** VBR(nrt) or
CBR
- -------------------------------------------------------
OC3 **** VBR(nrt) or
CBR
- -------------------------------------------------------
OC12 **** VBR(nrt) or
CBR
- -------------------------------------------------------
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 32
c. Bandwidth.
final Proprietary and Confidential
(i) There are two types of Bandwidth which can be selected,
the Virtual Channel Connection (VCC) or the Virtual Path
Connection (VPC). The type of bandwidth selected by the
Telmex does not determine the price.
(ii) Pricing for Bandwidth is determined based on the Class
of Service (CoS). Two Classes of Service are offered by
Williams: Constant Bit Rate (CBR) and Variable Bit Ratenon
real time (VBRnrt). CoS charges are stated in Committed
Information Rates (CIR) which are stated in Megabit per
second (Mbps) increments for one-way (Simplex) VCCs or VPCs.
CIR increments are available in 1Mbps increments up to 40Mbps
for DS3 ports, 5 Mbps increments up to 150 Mpbs for OC3 ports
and 25 Mbps increments up to 600 Mbps for OC12 ports. Monthly
recurring charges for Bandwidth are set forth in Table A.2
below.
Table A.2 Monthly Recurring Bandwidth Charges
MONTHLY RECURRING CHARGES
<TABLE>
<CAPTION>
PORT CIR PRICE PER
SPEED CoS (Mbps) Mbps
----- --- ------ ---------
UNI PORTS
<S> <C> <C> <C>
DS3 VBRnrt 1-9 ****
VBRnrt 10-19 ****
VBRnrt 20-29 ****
VBRnrt 30-40 ****
OC3 VBRnrt 5-20 ****
VBRnrt 25-35 ****
VBRnrt 40-55 ****
VBRnrt 60-75 ****
VBRnrt 80-95 ****
VBRnrt 100-120 ****
VBRnrt 125-150 ****
OC12 VBRnrt 25-75 ****
VBRnrt 100-175 ****
VBRnrt 200-275 ****
VBRnrt 300-350 ****
VBRnrt 375-475 ****
VBRnrt 500-600 ****
DS3 CBR 1-9 ****
CBR 10-19 ****
CBR 20-29 ****
CBR 30-40 ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 33
final Proprietary and Confidential
<TABLE>
<S> <C> <C> <C>
OC3 CBR 5-20 ****
CBR 25-35 ****
CBR 40-55 ****
CBR 60-75 ****
CBR 80-95 ****
CBR 100-120 ****
CBR 125-150 ****
OC12 CBR 25-75 ****
CBR 100-175 ****
CBR 200-275 ****
CBR 300-350 ****
CBR 375-475 ****
CBR 500-600 ****
</TABLE>
2. Non-Recurring Charges:
Non-recurring charges include installation, configuration
changes, order cancellations, and order changes that may be
incurred for the Port, VCC or VPC. Such non-recurring charges
are set forth in Table A.3 below.
Table A.3
<TABLE>
<CAPTION>
Non-Recurring Charges
Description of Charge Charges
- --------------------- -------
<S> <C>
Installation:
DS3 Port ****
OC3 Port ****
OC12 Port ****
per PVC or VP ****
Expedite Charge ****
Change of Service Order Charges:
Configuration Change Charge ****
Order Cancellation Charge ****
Port Order Change Charge ****
Change of Service Charge:
Configuration Change Charge ****
Port Order Change Charge ****
</TABLE>
Configuration change charges are applied when the bandwidth
sizes of a VCC or VPC are changed.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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final Proprietary and Confidential
Order Cancellation Charges apply when a PVC, VP or Port has
been ordered and needs to be canceled prior to the PVC, VP,
or Port having been installed and accepted.
Port Order Change Charges apply when Telmex requests to
change the port size ordered. If the Port has been installed
and accepted, Telmex will be charged for a new port
installation.
B. WILLIAMS' ON-NET PRIVATE LINE SERVICES
1. Williams On-Net Private Line Service has three basic rate elements;
Interexchange charges, Local Access Charges and non-recurring charges.
a. Interexchange rates are determined in accordance with Table
B.3 below. Pricing for any Service not listed in such Table
is determined on an individual case basis and will be set
forth on Telmex's Service Order.
The minimum monthly charge for any Interexchange Circuit
ordered by Telmex shall be as follows:
Table B.1
<TABLE>
<CAPTION>
Minimum Monthly Charges
------------------------
<S> <C>
DS-3 ****
OC-3 ****
OC-12 ****
OC-48 ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 35
final Proprietary and Confidential
b. Non-Recurring Charges:
Table B.2
<TABLE>
<CAPTION>
- ---------------------------------------------- -------------- ------------- -------------- ------------- --------------
Non-Recurring Charges DS-1 DS-3 OC-3 OC-12 OC-48
- ---------------------------------------------- -------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
New Order Installation **** **** **** **** ****
Order Change (1st change free) **** **** **** **** ****
Order Cancellation
Pre-Engineering **** **** **** **** ****
Post-Engineering **** **** **** **** ****
ASR (new or disconnect) Special Access **** **** **** **** ****
ASR Supplement **** **** **** **** ****
Order Expedite **** **** **** **** ****
Reconfiguration **** **** **** **** ****
Additional Installation/Maintenance/
Engineering **** **** **** **** ****
Additional Installation/Maintenance/
Engineering (After Hours) **** **** **** **** ****
- ---------------------------------------------- -------------- ------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Cross-Connect Charge Monthly Recurring Non-Recurring
- -------------------- ----------------- -------------
<S> <C> <C>
DS-1 **** ****
DS-3 **** ****
OS-3 **** ****
OC-12 **** ****
OC-48 **** ****
</TABLE>
Installation charges shall apply to the normal installation
of equipment necessary to provide the requested Circuit to
the point of demarcation at the Telmex's premises. Additional
installation charges shall apply when Williams is required to
install equipment other than that normally required to
provide the Circuit or when Telmex requests special
equipment.
Non-recurring charges not described above will be considered
special requests and will be handled on an individual case
basis. All of the charges stated above are subject to change
with thirty (30) days' notice.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 36
final Proprietary and Confidential
<TABLE>
<CAPTION>
Table B.3
- -------------------------------------------------------------------------------
Private Line Rates
- -------------------------------------------------------------------------------
Rate Per VGE V+H Mile DS-1 DS-3 OC-3 OC-12 OC-48
- --------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
**** 0 **** 0 **** 5 **** 5 **** 0
</TABLE>
C. WILLIAMS' ON-NET FRAME RELAY SERVICES
1. Rates & Charges: Williams's Network On-Net Frame Relay Service has
four principal rate elements: Local Access, Port Connections,
Permanent Virtual Circuits (PVCs), and Trunking charges.
Port Connections and PVCs can be categorized as being either a
User-to-Network Interface (UNI) type or Network-to-Network Interface
(NNI) type. An NNI port is defined as one end of a connection between
Williams's frame relay network and another carrier's network. The
connecting carrier could be either a customer or Off-Net service
provider. Similarly, an NNI PVC is defined as one which has each end
of the PVC residing in two different carrier's frame relay networks,
rather than the originating and terminating points being in the same
carrier's network.
2. Conventional Frame Relay Services:
a. Local Access: Pricing for Local Access is determined in accordance
with the Terms and Conditions set forth in the applicable Alliance
Agreement.
b. Port Connections: Both UNI and NNI port charges are based solely on
the speed of the port selected by the Telmex. Available port speeds
range from 64 Kilobits per second (Kbps) to 1.536 Megabits per second
(Mbps). Available speeds are set forth in Table C.1 below. Monthly
recurring charges and installation charges for frame relay ports are
set forth in Table C.1 below. Other non-recurring charges are set
forth in Table C.3 below.
c. Permanent Virtual Circuit (PVC) bandwidth charges: UNI and NNI PVC
charges are both based solely on the bandwidth selected by Telmex.
Bandwidth charges are stated in Committed Information Rates (CIR)
which are stated in Kbps increments for one-way (Simplex) PVCs.
Available PVC-CIR speeds range from 4 Kbps to 1.024 Mbps. Available
speeds are set forth in Table C.1 below. Monthly recurring charges and
installation charges for Frame Relay PVCs are set forth in Table C.1
below. Other non-recurring charges are set forth in Table C.3 below.
d. Trunking Charges: The trunking charge is for the communication line
between the Williams's Network switch and Telmex's switch. The
trunking charge is added to the rates set forth in Table C.1 below.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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final Proprietary and Confidential
Table C.1 Monthly Recurring Charges (MRC) and Installation Charges
<TABLE>
<CAPTION>
- --------------------------------------------------- ---------------- ---------------- ----------------
FRAME RELAY SERVICE SPEED/CIR 16.13. MRC 16.14.
COMPONENTS (KBPS) Install
- --------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
NNI Port (Private NNI) 64 $ **** $
(Add: 'NNI Trunking) 128 $ **** $
192 $ **** $
256 $ **** $
320 $ **** $
384 $ **** $
448 $ **** $
512 $ **** $
576 $ **** $
640 $ **** $
704 $ **** $
768 $ **** $
1024 $ **** $
1536 $ **** $
- --------------------------------------------------- ---------------- ---------------- ----------------
NNI PVC 4 $ **** $
(Simplex Pricing) 18 $ **** $
16 $ **** $
32 $ **** $
48 $ **** $
64 $ **** $
128 $ **** $
192 $ **** $
256 $ **** $
320 $ **** $
384 $ **** $
448 $ **** $
512 $ **** $
576 $ **** $
640 $ **** $
704 $ **** $
768 $ **** $
832 $ **** $
896 $ **** $
960 $ **** $
1024 $ **** $
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 38
final Proprietary and Confidential
<TABLE>
<CAPTION>
------------------------------------------- ---------------- ---------------- ----------------
FRAME RELAY SERVICE SPEED/CIR 16.13. MRC 16.14.
COMPONENTS (KBPS) Install
------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
UNI Ports 64 ***** $
128 ***** $
192 ***** $
256 ***** $
320 ***** $
384 ***** $
448 ***** $
512 ***** $
576 ***** $
640 ***** $
704 ***** $
768 ***** $
1,024 ***** $
1,536 ***** $
------------------------------------------- ---------------- ---------------- ----------------
UNI PVCs 4 ***** $
(Simplex Pricing) 8 ***** $
16 ***** $
32 ***** $
48 ***** $
64 ***** $
128 ***** $
192 ***** $
256 ***** $
320 ***** $
384 ***** $
448 ***** $
512 ***** $
576 ***** $
640 ***** $
704 ***** $
768 ***** $
832 ***** $
896 ***** $
960 ***** $
1,024 ***** $
------------------------------------------- ---------------- ---------------- ----------------
Local Access DS-O/DDS ICB ICB
FT-1 ICB ICB
DS-1 ICB ICB
NNI Trunking DS-0/DDS ICB ICB
Charge FT-2 ICB ICB
DS-2 ICB ICB
------------------------------------------- ---------------- ---------------- ----------------
</TABLE>
3. Enhanced On-Net Frame Relay Services:
a. Frame Relay/ATM Service Interworking:
Frame Relay/ATM Service Interworking ("FRASI") gives Telmex the
ability to communicate seamlessly between ATM and Frame Relay
locations. There is no additional charge for locations requiring ATM
beyond the standard ATM charges set forth in Section A of this Pricing
Schedule. Only Frame Relay PVCs can be
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 39
final Proprietary and Confidential
used for FRASI service, as the smaller Frame Relay ports are unable to
handle the higher bandwidth ATM PVCs.
b. Flex-CIR Services: Williams's Flex-CIR Service is designed to help
end-users in two ways:
1. Telmex can reserve the exact amount of bandwidth needed by
the end-user during the hours it is most critical.
2. Telmex can minimize network costs by 'turning off' excess
bandwidth during the hours when it is least required.
Specifically, Telmex will be able to plan adjustments to PVC speeds
(or CIR) at quarter-hour increments (e.g. 8:00, 8:15, 8:30, 8:45,
etc.). Once Telmex has made a speed change, Telmex will not be able to
make another change for at least two (2) hours. Telmex shall have the
option of establishing different speed schedules for the same PVC
depending on the day of the week (e.g. turning a Flex-CIR PVC down
from its `weekday speed' of 256 Kbps CIR to 64 Kbps CIR on the
weekend). Telmex and any end users will experience a momentary network
`hiccup' of one second or less at those predefined times when the
network adjusts the Telmex's CIR, per the Telmex's predefined
schedule, for a PVC which uses a Flex-CIR schedule. The configuration
charges for this Enhanced Frame Relay Service are provided in Table
C.2 below.
Table C.2
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
TIME-OF-DAY/DAY-OF-WEEK FLEX-CIR
PVC CHARGES
-------------------------------------------------------------------------------------
DESCRIPTION NRC (PER PVC) MRC (PER PVC)
-------------------------------------------------------------------------------------
<S> <C> <C>
Basic PVC Charge (Standard NRC charge (Standard MRC charge
(Based on Weighted for average CIR level) For average CIR level)
average of CIRs)
TOD Configuration **** ****
Charge (2 CIR Adjustments
Per Day)
DOW Configuration **** ****
Charge (2 CIR adjustments
per wk)
Each additional CIR **** ****
adjustment per period
(per day or per week)
</TABLE>
Example:
Pricing Step 1: Telmex establishes the necessary CIR and times for the
TOD Flex-CIR Service as follows:
8 a.m. to 5 p.m.:1.024Mbps
5 p.m. to 8 a.m.: 64 Kbps
Once the times and CIR are known, Williams and Telmex may then prorate
the charges, based on the percent of time each CIR speed is scheduled
for use. In this example, assuming the standard Monthly Recurring
Charges are $600 for a 1.024Mbps CIR and $40 for a 64Kbps CIR, the
prorated charge would be calculated as follows:
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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final Proprietary and Confidential
Business Hours: 9/24 hours * $600 (1.024Mbps CIR) = $225
Nonbusiness Hours: 15/24 hours * $40 (64Kbps CIR) = $25
Total Prorated Flex-CIR Charge: = $250.00 per month
Pricing Step 2: Next, Williams adds the speed change configuration
charges. There is a $30 fee every time the CIR is changed during a
Time-of-Day (TOD) schedule. In this example, the CIR speed changes two
times each day (i.e. 8 a.m. to 5 p.m. and 5 p.m. to 8 a.m.). The TOD
configuration charges would be calculated as follows:
TOD Configuration Charge = $30/daily speed change * 2 Changes
= $60 per month
Pricing Step 3: In order to determine the total monthly Flex-CIR cost
for this PVC, the Williams adds the "Prorated Charge" calculated in
Step 1 with the "TOD Configuration Charge" calculated in Step 2.
Monthly Recurring Flex-CIR PVC Cost: $250 + $60 = $310 per
month
Pricing Step 4: In order to determine the non-recurring charges for
this example, you first determine the installation charges. The
Installation charges for PVC's are $25 (you would add to this the
installation charge for the ports chosen by Telmex as well. Since
ports were not part of this example, the Port installation charges and
MRC have not been included). Since there are 2 PVC's (64 & 1.024 Mbps)
the total installation charge for the PVC's is $50. In addition,
Telmex would pay a one time non-recurring charge of $40 for the TOD
configuration. Therefore, in this example, Telmex's non-recurring
charges for the PVC's only would be $90.
4. Additional Non-recurring Charges: In addition to the non-recurring
installation charges set forth in Tables C.1 & C.2 above, Telmex may
incur additional non-recurring charges as set forth in Table C.3
below.
Table C.3
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Additional Non-Recurring Charges
---------------------------------------------------------------------------------
Description of Charge Charge
----------------------------------------- ---------------------------------------
<S> <C>
Configuration Changes ****
Order Cancellation Charge ****
PVC Order Change Charge ****
Port Order Change Charge ****
</TABLE>
Configuration charges are applied when the CIR of PVCs for Basic Frame
Relay Service are changed or when Telmex desires a change to the CIR
of PVCs in an
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
-40-
<PAGE> 41
final Proprietary and Confidential
already established Flex CIR Schedule (i.e. Telmex will not be charged
the $50 fee for changes to the CIR when establishing its initial
Flex-CIR schedule).
Order Cancellation Charges apply when a Telmex cancels an order prior
to its installation.
PVC Order Change Charges apply after design, but prior to installation
on a per PVC basis, when Telmex makes a change to the PVC size
ordered. If the PVC has been installed and accepted, Telmex will be
charged for a new PVC installation.
Port Order Change Charges apply after design, but prior to
installation on a per port basis, when Telmex requests to change the
port size ordered. If the Port has been installed and accepted, Telmex
will be charged for a new port installation.
D. VOICE SERVICES
Williams Network voice services will remain consistent with the
interconnect agreement until such time that the regulatory constraints
allow for a flexible international switched voice interconnect
settlement fee.
E. PRICING GENERAL CONDITIONS
1. All pricing set forth in Sections A, B and C above is Williams's
current pricing. Such pricing and discounts are subject to change upon
thirty (30) days written notice by Williams to Telmex. Price changes
shall only be effective on a going-forward basis and shall not apply
to Service Orders previously placed by Telmex and accepted by
Williams. All pricing is subject to Preferred Provider and other
applicable provisions, including but not limited to Sections 2 through
5 of this Alliance Agreement.
-41-
<PAGE> 42
final Proprietary and Confidential
EXHIBIT II TO SCHEDULE A (TELMEX PRICING)
PRIVATE LINE PRICING
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TARIFFS: "LADA ENLACES" 2 MBPS (E1) INTERNATIONAL CIRCUIT
MONTHLY
INSTALLATION RECURRING
CHARGE: CHARGE: DISTANCE (KM) FIXED CHARGE CHARGE/KM
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2MBPS $18,440 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
TARIFFS: "LADA ENLACES" N X 64 KPBS INTERNATIONAL CIRCUIT
MONTHLY
INSTALLATION RECURRING
CHARGE: CHARGE: DISTANCE (IN KM) FIXED CHARGE CHARGE/KM
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
64KBPS $ 4,865 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
128KBPS $ 6,081 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
192KBPS $ 6,448 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
256KBPS $ 7,522 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
384KBPS $ 8,597 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
512KBPS $ 9,761 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
768KBPS $10,746 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
1024KBPS $11,821 0-81 **** ****
> 81-161 **** ****
>161-805 **** ****
> 805 **** ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
-42-
<PAGE> 43
final Proprietary and Confidential
PRIVATE LINE PRICING:
o Private Line pricing is composed of three separate charges:
o Non-Recurring Installation Charge
o Monthly Recurring Fixed Charge
o Additional charge per kilometer based on distance from Telmex POP to
nearest border crossing point
o Additional local access is required from Telmex POP to customer site
o Additional fees, terms and conditions are provided in the product
commercial policies document
-43-
<PAGE> 44
final Proprietary and Confidential
- --------------------------------------------------------------------------------
FRAME RELAY PRICING
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
FRAME RELAY MONTHLY PVC RECURRING CHARGE
Bandwidth 0-49 KMS 50-99 KMS 100-199 200-399 400-749 750-1199 >1200 KMS
(KBPS) KMS KMS KMS KMS =
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
16 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
20 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
32 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
40 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
64 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
128 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
256 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
384 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
512 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
768 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
1024 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
1792 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
2048 **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Port Monthly
Installation Charge Recurring Charge
- ---------------------------- ----------------------------
Bandwidth Tariff Bandwidth Tariff
(KBPS) (KBPS)
- ---------------------------- ----------------------------
<S> <C> <C> <C>
10 **** 10 ****
- ---------------------------- ----------------------------
16 **** 16 ****
- ---------------------------- ----------------------------
20 **** 20 ****
- ---------------------------- ----------------------------
32 **** 32 ****
- ---------------------------- ----------------------------
40 **** 40 ****
- ---------------------------- ----------------------------
64 **** 64 ****
- ---------------------------- ----------------------------
128 **** 128 ****
- ---------------------------- ----------------------------
256 **** 256 ****
- ---------------------------- ----------------------------
384 **** 384 ****
- ---------------------------- ----------------------------
512 **** 512 ****
- ---------------------------- ----------------------------
768 **** 768 ****
- ---------------------------- ----------------------------
1024 **** 1024 ****
- ---------------------------- ----------------------------
1792 **** 1792 ****
- ---------------------------- ----------------------------
2048 **** 2048 ****
- ---------------------------- ----------------------------
</TABLE>
FRAME RELAY PRICING:
o Frame Relay pricing is composed of three separate charges:
o Non-Recurring Installation Charge
o Port Monthly Recurring Fixed Charge
o Monthly PVC Recurring Charge per kilometer based on distance from
Telmex POP to nearest border crossing point
o Additional local access is required from Telmex POP to customer site
o Additional fees, terms and conditions are provided in the product
commercial policies document
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
-44-
<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
EXHIBIT 10.4
Proprietary and Confidential
MASTER ALLIANCE AGREEMENT
BETWEEN
INTEL INTERNET DATA SERVICES
AND
WILLIAMS COMMUNICATIONS, INC.
THIS MASTER ALLIANCE AGREEMENT (this "Agreement") between Williams
Communications, Inc. ("Williams"), a Delaware corporation, and Intel Corporation
("Intel") on behalf of its Internet Data Services business, ("IDS"), is
effective May 24, 1999 ("Effective Date") contingent upon the Parties completing
their due diligence activities, to be concluded by June 15, 1999, and the
simultaneous execution by the Parties of the Securities Purchase Agreement.
Williams and Intel are individually referred to, together with their respective
Affiliates, as a "Party" and collectively referred to as the "Parties." Persons
or entities that Intel or Williams Controls are referred to as "Affiliates" of
such Controlling Party. Unless otherwise explicitly set forth, the use of
"Intel" or "Williams" shall be deemed to include the respective Affiliates of
such Party. Control means the possession, directly or indirectly, of the legal
power and authority to direct or cause the direction of the management and
policies by one person or entity or a group of related persons or entities
acting in concert; provided, however, that the legal or beneficial ownership of
more than fifty percent (50%) of any such person or entity shall be deemed
"Control".
RECITALS
WHEREAS, Intel directly or through its Affiliates intends to provide mission
critical Internet web-hosting services on a global basis;
WHEREAS, Williams directly or through its Affiliates is a nationwide, single
source provider of business communications equipment and integration services
for data, voice, video and advanced applications on a retail basis and a
provider of network services for delivery of voice and data on a wholesale basis
and intends to expand such business internationally;
WHEREAS, the capabilities of each Party are complementary, and the relationship
contemplated by this Agreement (the "Alliance") will serve to broaden the base
of potential competitive opportunities for network services and other
applications for all market segments;
WHEREAS, the Parties or their Affiliates are entering into additional agreements
to implement the Alliance;
-1-
<PAGE> 2
Proprietary and Confidential
WHEREAS, the Parties are entering into this Master Alliance Agreement to set
forth general provisions concerning the Alliance; and
NOW THEREFORE, in consideration of the mutual covenants herein contained, Intel
and Williams agree as follows:
1. RELATIONSHIP OF THE PARTIES
1.1. Allocation of Responsibilities
1.1.1. Agreements
The Parties or their Affiliates are entering into the
following agreements to implement the Alliance, in addition
to this Agreement: (1) a Services Agreement ("SA") to cover
the following: (i) Williams' provision of domestic transport
services (with possibility of expansion to include
international transport services), (ii) Williams' provision
of professional consulting services, (iii) Williams'
provision of collocation opportunities, and (iv) Intel's
provision of IDS hosting services, and (2) a Co-Marketing
Agreement (the "CMA") to cover the sales and marketing
arrangement between Williams and IDS. Collectively, those two
Agreements, together with this Agreement, are referred to as
the "Alliance Agreements."
The Parties are in the process of negotiating the final terms
and conditions the Alliance Agreements. The Parties shall
complete and execute the Alliance Agreements by June 15,
1999, or such later date as the Parties may agree. In the
event the Parties cannot reach agreement by such date, either
Party may terminate the negotiations, in which event this
Master Alliance Agreement, and the Securities Purchase
Agreement shall terminate. Neither Party shall be liable for
any damages as a result of such termination.
1.1.2. Primary Responsibilities
Pursuant to the Alliance Agreements, Williams will be the
"Supplying Party" for (a) domestic transport services (and,
if applicable, international transport services) in
accordance with the SA, (b) professional consulting services
in accordance with the SA, and (c) collocation opportunities
in accordance with the SA. IDS will be the "Supplying Party"
for hosting services in accordance with the SA. The term
"Supplying Party" means the Party supplying a product or
service to the other Party under any of the Alliance
Agreements and the term "Procuring Party" means the Party
procuring a product or service from the Supplying Party under
any of the Alliance Agreements. The Parties will co-market
and sell each others services, as identified and as specified
in the CMA.
-2-
<PAGE> 3
Proprietary and Confidential
1.2. Strategic Supplier Relationship
Intel and Williams will make commercially reasonable best efforts to
work together to find joint solutions for IDS' telecommunications needs
for US-based backbone, Internet connectivity and International-based
backbone. To facilitate the provision of Williams' products and
services and to further Williams understanding of IDS data transport
needs, Intel will allow Williams' employees, at Williams' instance, to
be situated in IDS' facility(ies), the number and location of such
Williams' personnel to be at Intel's sole discretion. Intel will,
without charge, provide such Williams' personnel with office space,
telephone(s) and access to IDS employees. In addition, pursuant to
appropriate conditions of confidentiality as further set forth in
Section 5, Intel will share anticipated IDS plans and
telecommunications requirements with Williams as well as encourage
Williams to participate in IDS' planning process. Additional teams or
committees will be formed as appropriate pursuant to the process set
forth in Section 10. Intel will assign an IDS Executive Sponsor to
Williams to assist Williams in its supplier relationship with IDS.
Intel would encourage Williams to put POPs into IDS data centers, where
possible and mutually agreeable.
Notwithstanding the foregoing, subject to Williams' compliance with
pricing and quality of service provisions as further set forth in
Section 1.3, Intel will purchase from Williams **** of all IDS domestic
backbone transport requirements ("Domestic Commitment") as measured
annually based on the aggregate bandwidth miles IDS has agreed to
purchase over the preceding 12-month period.
Subject to pricing and quality of service provisions as set forth
herein, Intel will select Williams as one of its IDS IP transport
carriers. There is no minimum purchase commitment to Williams from IDS
for IP transport volume.
1.3. Pricing of Products and Services
1.3.1. Subject to compliance with any minimum purchase commitment(s) as may be
set forth in the Alliance Agreements, a Party shall receive "MFC
Pricing" with respect to any procurement under the Alliance Agreements.
"MFC Pricing" shall mean that the Procuring Party shall receive pricing
from the Supplying Party which is as good or better than that price
provided by the Supplying Party to any third party for the service or
product provided **** Notwithstanding the foregoing, MFC Pricing shall
not include any pricing provided by the Supplying Party to ****. With
regard to pricing provided to ****, the Procuring Party shall receive
pricing which is as good or better than that provided to **** as
measured by the extent of the ****. In either instance, the obligation
to offer MFC Pricing
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
-3-
<PAGE> 4
Proprietary and Confidential
shall not apply to (i) any transaction where a substantial portion of the
consideration received by either Party for the offered product or service is in
the form of equity, products or services from a third party, (ii) rates
provided by Supplying Party to Affiliates of the Supplying Party or
intraWilliams or intraIntel transfer rates (except for such rates for services
that are resold to third parties),; or (iii) rates provided by the Supplying
Party to any department, branch or agency of a federal, state or local
government within the United States. For MFC Pricing exclusions regarding rates
provided by the Supplying Party to any foreign (i.e. Non-U.S.) government
entity, the Parties shall mutually agree on such exclusions on a case by case
basis.
1.3.2. No Investment Obligation
The Supplied Party will not be required to make any initial capital or
ongoing investment beyond the commitment of business pursuant as
further set forth in Section 1.2 and the Alliance Agreements.
1.3.3. Condition Precedent of Procurement via Competitive Pricing
The Procuring Party shall not be obligated to purchase a
product or service from the Supplying Party unless the offered
price is as low as the lowest price for which the Supplied
Party can acquire the product or service from third parties
with similar terms, conditions and product quality and/or
quality of service. The Procuring Party will discuss with the
Supplying Party any issues pertaining to the pricing of
products and services to be provided to the Procuring Party
compared to the market price for comparable products and
services, or third party offers otherwise available to the
Procuring Party to ensure that competitive pricing is
maintained.
1.3.4. Resale Restrictions
If IDS resells the transport capacity acquired from Williams
pursuant to the SA ("SA Capacity") by means of a wholesale
distribution channel or similar business structure that is
established or maintained for the purpose of offering the SA
Capacity to customers doing business in the United States that
are primarily engaged in the business of distributing
transport capacity to other third parties (e.g., carriers),
then Williams shall no longer be bound to offer MFC Pricing
to IDS with respect to such resold SA Capacity. If Williams
resells the hosting services acquired from Intel pursuant to
the SA ("SA Hosting Service") except in accordance with the
provisions of the CMA, then Intel shall no longer be bound to
offer MFC Pricing to Williams with respect to such SA Hosting
Service.
-4-
<PAGE> 5
Proprietary and Confidential
1.4. Future Services
The Parties recognize that the telecommunications industry is
undergoing dramatic transformation due to radical technological
improvements and regulatory developments. Thus, notwithstanding the
alliance pricing system set forth in this Section, subject to
regulatory restraints, each Party will develop a mechanism to ****
to the other the benefits of increased efficiencies (e.g., due to
technology development or regulatory evolution).
1.5. Use of Facilities
Nothing in any Alliance Agreement shall be construed to prohibit either
Party from using its own facilities or services owned or leased as of
the Effective Date.
1.6. Ownership and Control
The Supplying Party will retain ownership and/or control of the assets
used to provide services or products to the Procuring Party and the
Supplying Party can use these assets to provide services or products to
third parties.
2. EFFECTIVE DATE AND TERM
This Agreement shall become effective on the Effective Date and shall
continue for a term of ten (10) years (the "Term"). All other Alliance
Agreements shall have an initial term of three (3) years, with a
rolling renewal provision for additional one (1) year terms, to be
exercised within thirty (30) days of the Effective Date anniversary
each year commencing with the completion of the first year of the
initial term and subject to good faith negotiations between the
Parties.
3. AUDIT RIGHTS
3.1. Audit
Supplying Party will maintain complete and accurate records of the
services performed under this Agreement for a period of three (3) years
after the completion of these services. Records relating to the
performance of this Agreement shall be made available to the Procuring
Party for audit upon reasonable notice. Each Party may, at any time,
but not more than once per calendar year request an audit of the other
Party (the "Audited Party"), with respect to services and other
deliverables provided under the Alliance Agreements (an "Audit"),
including, without limitation, to determine the accuracy and integrity
of any of the following:
3.1.1. The calculation of pricing as set forth in Section 1, including the
duty to provide MFC Pricing.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
-5-
<PAGE> 6
Proprietary and Confidential
3.2. Initiation
At the request of the Party requesting the Audit (the "Initiating
Party"), the Parties shall mutually agree on a nationally recognized
accounting firm as a third party auditor (the "Auditor") to Audit the
Audited Party's books, contracts and records with respect to the
matters specified in Section 3.1 (or any other matter as agreed by the
Parties). The Initiating Party shall request an Audit by giving written
notice of such request to the other Party, whereupon the Parties shall
enter into good faith negotiations to effectuate the Audit provisions
as set forth herein in a timely manner.
3.3. Engagement of Auditor
The Parties will agree on the scope and materiality standards aspects
of the Audit and jointly instruct the Auditor. The terms of the
engagement of the Auditor shall:
3.3.1. Specifically define the scope of the Audit and materiality standards.
3.3.2. Require, in the case of a quantitative evaluation, a valid statistical
sampling of any information reviewed.
3.4. Cooperation
The Audited Party shall cooperate fully with the Auditor and its
representatives in connection with any Audit, providing reasonable
access to any and all relevant books and records and causing its
employees, accountants and other representatives and agents to
cooperate fully with the Auditor.
3.5. Report
The Auditor shall provide a copy of its report to both Parties, and the
report shall specify the conformity or extent of non-conformity with
the Audited Party's obligations under an Alliance Agreement that were
the subject of the Audit. The Auditor must keep confidential the names
and specific pricing applicable to all other purchasers of similar
products and services from the Audited Party. The determination of the
Auditor will be final and binding on both Parties.
3.6. Cost
The Parties will share equally the cost of the Auditor, provided that
(1) if the net dollar amount of any identified errors favors the
Initiating Party and exceeds three percent (3%) of the total dollar
amount of billings covered by the Audit, then the Audited Party shall
pay all of the costs of the Audit, and (2) if the net dollar amount of
any identified errors does not favor the Initiating Party, then the
Initiating Party shall pay all of the costs of the Audit. In the event
that the Auditor determines that the Audited Party is not in compliance
with its obligations relating to pricing that were the subject of the
Audit, the Audited Party will adjust pricing on a retroactive basis in
accordance with the findings of the Auditor.
-6-
<PAGE> 7
Proprietary and Confidential
4. DISPUTE RESOLUTION
4.1. Disputes.
Prior to initiating any litigation, the Parties shall attempt in good
faith to resolve any controversy, dispute or claim arising out of or
relating to any of the Alliance Agreements or the breach, termination,
enforceability or validity thereof (collectively, a "Dispute") as
follows:
The senior management of both Parties shall meet to attempt to resolve
such Disputes. If the Disputes cannot be resolved by the senior
management, either Party may make a written demand for formal Dispute
resolution and specify therein the scope of the Dispute. Within thirty
days after such written notification, the Parties agree to meet for one
day with an impartial mediator and consider Dispute resolution
alternatives other than litigation. If an alternative method of Dispute
resolution is not agreed upon within thirty days after the one day
mediation, either Party may begin litigation proceedings.
Notwithstanding the foregoing, either Party shall have the right,
without the requirement of first seeking a remedy through mediation, to
seek preliminary injunctive or other equitable relief in any proper
court in the event that such Party determines that eventual redress
through mediation will not provide a sufficient remedy for any
violation of an Alliance Agreement by the other Party. The Parties
agree that preliminary injunctive or other equitable relief will be a
necessary and proper remedy in the event of misuse by one Party of the
other Party's intellectual property. Each Party further agrees that in
the event such equitable relief is granted in the United States, it
will not object to Non-U.S. courts granting provisional remedies
enforcing such U.S. judgments.
All negotiations pursuant to this Section 4.1 shall be confidential and
shall be treated as compromise and settlement negotiations. Nothing
said or disclosed, nor any document produced, in the course of such
negotiations which is not otherwise independently discoverable shall be
offered or received as evidence or used for impeachment or for any
other purpose in any current or future alternate dispute resolution
process or litigation.
5. CONFIDENTIAL
5.1. General
The existence, terms, and conditions of this Agreement and of the
Alliance Agreements, together with any information exchanged by the
Parties in performance of their respective obligations hereunder, are
confidential and neither Party may make any
-7-
<PAGE> 8
Proprietary and Confidential
disclosures with respect thereto without the express prior written
consent of the other, with the following exceptions:
a. subject to (c) below, as otherwise may be required by law or legal
process, to legal and financial advisors in their capacity of
advising a Party in such matters; or
b. any disclosure required by federal or state securities laws, or by
requirement of the Securities Exchange Commission or applicable
state blue sky commission; or
c. during the course of litigation so long as the disclosure of such
terms and conditions are restricted in the same manner as is the
confidential information of other litigating Parties and so long
as (i) the restrictions are embodied in a court-entered Protective
Order and (ii) the disclosing Party informs the other Party in
writing in advance of the disclosure; or
d. in confidence to its legal counsel, accountants, banks and
financing sources and their advisors solely in connection with
complying with financial requirements and transactions.
Disclosures of confidential and proprietary information by either Party
to the other Party shall otherwise be governed by the Intel/Williams
Corporate Non-disclosure Agreement ("CNDA") number _______, and related
Confidential Information Transmittal Records ("CITR(s)") or other
non-disclosure agreements as appropriate and executed in writing by the
Parties. Attached as Exhibit A is the above referenced CNDA.
5.2. Nondisclosure Agreements
To the extent that a disclosing Party agrees to allow the receiving
Party to disclose the disclosing Party's confidential information to
any third party person or entity, the receiving Party shall assure that
such third party agrees in writing to be bound to protect and not to
disclose such confidential information on substantially equivalent
conditions as exist between the Parties with respect to such
confidential information.
5.3. Other Agreements Regarding Confidentiality
The personnel of either Party may be required to enter into additional
agreements regarding confidential information as a pre-condition of
gaining access to the other Party's premises. Personnel of one Party
present at the premises of the other Party shall refrain from obtaining
access to information that is proprietary to the customers of the other
Party. Such personnel shall comply with the other Party's reasonable
measures established to restrict such access.
6. ADDITIONAL COVENANTS
6.1. Insurance
At all times during the term of the Alliance, each Party shall carry
and maintain workers' compensation and employers' liability insurance
adequate to insure fully
-8-
<PAGE> 9
Proprietary and Confidential
against losses or damages to Intel's or Williams' personnel, customers,
property or other contractor's personnel or property caused by their
respective activities. If requested, each Party will furnish to the
other certificates of insurance or other appropriate documentation
(including evidence of renewal of insurance) evidencing all coverage
referenced above and naming the other Party as an additional insured.
Each Party will furnish the other notice of the expiration of
cancellation of any insurance policy required pursuant hereto.
6.2. No Solicitation
During the term of the Alliance for a period of twelve months
thereafter, neither Party nor such Party's Affiliates shall, directly
or indirectly, for itself or on behalf of any other person, actively
induce or attempt to induce any employee of the other Party's
Affiliates engaged in Alliance activities to leave his or her
employment. However, general employment advertisements in media of
general or industry specific circulation shall be permissible. Nothing
contained herein shall prevent an employee of one of the Parties from
independently seeking and obtaining employment from the other Party so
long as such employee does not do so in violation of his employment
agreement with the other Party.
7. TERMINATION AND TRANSITION
7.1. General
While the Parties intend to develop a long term relationship, under the
following circumstances, the Alliance may be terminated in whole or in
part by either Party.
If either Party breaches any Alliance Agreement in a manner that has a
material adverse effect on the commercial value of the Alliance to the
other Party; or in the event that the technology used to provide the
Supplying Party's services, in the reasonable opinion of the Procuring
Party, becomes incapable of meeting the requirements set forth in the
SA or by the Procuring Party. In such event, the right to cure set as
set forth in Section 7.2 shall only apply if the condition giving rise
to the right to terminate is capable of being cured, without the
likelihood of its recurrence.
7.1.1. The Party having the right to terminate shall exercise its termination
right within a reasonable period of time, but in no event more than 180
days from actual notice of the event or circumstances permitting
termination by such Party.
7.2. The rights to terminate provided in this Section 7 are contingent upon
the Party seeking to terminate providing written notice of its intent
to terminate, and the passage of a sixty-day (60) period during which
the non-terminating Party, if applicable, may cure the conditions
giving rise to such right to terminate. Provision of such cure
extinguishes the right to terminate on the basis for which the cure has
been provided.
-9-
<PAGE> 10
Proprietary and Confidential
8. REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Intel hereby represents and warrants to Williams as follows:
8.1. Organization, Standing and Authority.
Intel, and each of its Affiliates executing an Alliance Agreement, has
all requisite corporate power and authority to enter into the Alliance
Agreement(s) to which it is a party and to consummate the transactions
contemplated thereby. All corporate acts and other proceedings required
to be taken by Intel and its Affiliates to authorize the execution,
delivery and performance of the Alliance Agreements to which it is a
party and the consummation of the transactions contemplated thereby
have been duly and properly taken. Each of the Alliance Agreements to
which it is a party has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of it, enforceable
against it in accordance with its terms.
8.2. No Violation
The execution and delivery by Intel and its Affiliates of the Alliance
Agreements to which it is a Party and the consummation of the
transactions contemplated thereby and compliance with the terms thereof
will not, (i) conflict with or result in any violation of any provision
of the certificate of incorporation or by-laws of any of them, or the
comparable organizational documents of any of them, (ii) conflict with,
result in a violation or breach of, or constitute a default, or give
rise to any right of termination, revocation, cancellation, or
acceleration, under, any material contract, except for any such
conflict, violation, breach, default or right which is not reasonably
likely to have a material adverse effect on the ability of Intel and
its Affiliates to consummate the material transactions contemplated by
the Alliance Agreements or (iii) conflict with or result in a violation
of any judgment, order, decree, writ, injunction, statute, law,
ordinance, rule or regulation applicable to Intel or any of its
Affiliates or to the property or assets of Intel or any of its
Affiliates, except for any such conflict or violation which is not
reasonably likely to have such a material adverse effect.
8.3. Consents and Approvals
Except as set forth in any Alliance Agreement, no consent, approval,
license, permit, order or authorization of, registration, declaration
or filing with, or notice to, any domestic or foreign court,
administrative or regulatory agency or commission or other governmental
authority or instrumentality (each, a "Governmental Entity") is
required to be obtained or made by or with respect to Intel or any of
Intel' Affiliates in connection with the execution and delivery of the
Alliance Agreements or the consummation of the transactions
contemplated thereby.
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<PAGE> 11
Proprietary and Confidential
9. REPRESENTATIONS AND WARRANTIES OF WILLIAMS
Williams hereby represents and warrants to Intel as follows:
9.1. Organization, Standing and Authority
Williams is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Williams has all
requisite corporate power and authority to enter into the Alliance
Agreements and to consummate the transactions contemplated thereby. All
corporate acts and other proceedings required to be taken by Williams
to authorize the execution, delivery and performance of the Agreement
and the Alliance Agreements to which it is a party and the consummation
of the transactions contemplated thereby have been duly and properly
taken. Each of the Alliance Agreements has been duly executed and
delivered by Williams and constitutes the legal, valid and binding
obligation of it, enforceable against it in accordance with its terms.
9.2. No Violation
The execution and delivery by Williams of the Alliance Agreements to
which it is a party do not, and the consummation of the transactions
contemplated thereby and compliance with the thereof will not (i)
conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws of Williams, (ii) conflict
with, result in a violation or breach of, or constitute a default, or
give rise to any right of termination, revocation, cancellation, or
acceleration, under, any material contract, except for any such
conflict, violation, breach, default or right which is not reasonably
likely to have a material adverse effect on the ability of Williams to
consummate the material transactions contemplated by the Alliance
Agreements or (iii) conflict with or result in a violation of any
judgment, order, decree, writ, injunction, statute, law, ordinance,
rule or regulation applicable to Williams or to the property or assets
of Williams, except for any such conflict or violation which is not
reasonably likely to have such a material adverse effect.
9.3. Consents and Approvals
Except as set forth in any Alliance Agreement, no consent, approval,
license, permit, order or authorization of, registration, declaration
or filing with, or notice to, any Governmental Entity is required to be
obtained or made by or with respect to Williams in connection with the
execution and delivery of the Alliance Agreements or the consummation
of the transactions contemplated thereby.
10. ALLIANCE GOVERNANCE
During the Term, the Parties shall designate and maintain one
individual from each Williams to serve as its representative for the
activities of the Parties under this Master Alliance Agreement or any
of the Alliance Agreements (the "Representative"). Neither
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<PAGE> 12
Proprietary and Confidential
Representative need be dedicated to the Alliance, but needs to be
available as the primary day-to-day interface between the Parties.
Either Party may change their designated Representative upon notice to
the other Party pursuant to Section 12.13.
In addition, the Representative shall be responsible for initiating any
requests to form ad-hoc or permanent committees. If mutually agreed,
the Parties shall form such committees which would be empowered to
discuss and implement specific concepts or to oversee certain activity.
In any such event, the Parties will establish such committee by way of
written amendment to this Agreement (but not for regular meetings of
the Parties' employees in the ordinary course of doing business with
one another) specifying the purpose of the committee, membership,
meeting times, and any authority such committee may have.
11. SPECIAL COVENANT NOT TO SUE
11.1. Definitions
"Assert" means to bring an action of any nature before any legal, judicial,
arbitration, administrative, executive or other type of body or tribunal that
has or claims to have authority to adjudicate such action in whole or in part.
Examples of such body or tribunal include, without limitation, United States
State and Federal Courts, the United States International Trade Commission and
any foreign counterparts of any of the foregoing.
"Chipset" means any integrated circuit designed to be connected directly to an
Intel microprocessor.
"Williams' Products" means all products manufactured by or for Williams other
than those that are either (i) Intel architecture compatible microprocessors or
Chipsets; or (ii) capable of being substituted for a product first manufactured
by or for Intel without a loss of some material functionality.
"Intel's Products" means
all microprocessors manufactured by or for Intel; and
all Chipsets manufactured by or for Intel; and
all software developed by or for Intel;
all Internet service offerings offered by Intel; and
all products manufactured by or for Intel that cannot be substituted for a
product first manufactured by or for Williams without a loss of some material
functionality.
-12-
<PAGE> 13
Proprietary and Confidential
****
11.2. Covenant Not To Sue
Covenant Not to Sue. Williams agrees that for so long as Intel **** as defined
and specified in the Securities Purchase Agreement, Williams shall not Assert
any **** against Intel, its subsidiaries or affiliates, or their customers
(direct or indirect), distributors (direct or indirect), agents (direct or
indirect) and contractors (direct or indirect) for **** Intel does not Assert
**** against Williams, its subsidiaries or affiliates, or their customers
(direct or indirect), distributors (direct or indirect), agents (direct or
indirect) and contractors (direct or indirect) for ****. This covenant not to
sue shall survive any termination or expiration of this Agreement and shall
remain in full force and effect until mutually agreed otherwise by the Parties.
11.3. Assignment.
If Williams assigns or attempts to **** to a third party not bound by this
covenant not to sue (whether directly or by operation of law), then effective
immediately prior to such assignment or attempted assignment, Williams agrees
that Intel shall have ****. This **** shall survive any termination or
expiration of this Agreement and shall remain in full force and effect until
mutually agreed otherwise by the Parties.
12. GENERAL PROVISIONS
12.1. Further Agreements
Further agreements to implement the Alliance may be appropriate.
Therefore, upon reasonable request of a Party, the Parties shall meet
and negotiate in good faith to determine if additional Alliance
Agreements are appropriate and the terms and conditions of any such
agreements.
12.2. Assignment
Except for the assignment of the Agreement by either Party pursuant to
the sale or transfer of all or substantially all of such Party's
assets, neither Party may assign nor delegate any of its rights or
obligations under this Agreement without the written consent of the
other Party, provided that each Party may assign this Agreement to any
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 14
Proprietary and Confidential
Affiliate, so long as such assigning Party guarantees the Affiliate's
performance. Notwithstanding the foregoing, the Parties mutually Agree
that as of the Agreement Effective Date, Intel had not yet determined
the final legal entity status for its IDS business and that Intel
Corporation may assign this Agreement, including any Alliance
Agreements executed pursuant hereto, to such IDS legal entity when
finally determined and established by Intel.
12.3. Force Majeure
If either Party's performance of this Agreement or any obligation
(other than the obligation to make payments for services rendered under
one of the Alliance Agreements) hereunder is prevented, restricted or
interfered with by causes beyond its reasonable control including, but
not limited to, acts of God, fire, explosion, vandalism, power grid
outages (beyond any required battery back-up or generator capacity),
storm or other similar occurrence including rain fade or other
atmospheric conditions, any law, order, regulation, direction, action
or request of the United States Government or national, state or local
governments, or of any department, agency, commission, court, bureau,
corporation or other instrumentality of any one or more of said
governments, or of any civil or military authority, or by national
emergencies, insurrections, riots, wars, acts of terrorism, strikes,
lockouts or work stoppages or other labor difficulties, supplier
failures, shortages, breaches or delays, then the Party affected by
such force majeure event (the "Affected Party") shall be excused from
such performance for a time period commensurate with the duration of
such prevention, restriction or interference. The Affected Party shall
use commercially reasonable efforts under the circumstances to avoid
and remove such causes of non-performance and shall proceed to perform
with reasonable dispatch whenever such causes cease.
12.4. Regulatory Compliance
The Parties acknowledge that the services provided by Williams to Intel
under the Services Agreement are subject to federal and state statutes
and regulations, including without limitation the Communications Act of
1934 (as amended from time to time) (the "Act") and the regulations
promulgated by the Federal Communications Commission ("FCC").
Notwithstanding anything to the contrary contained in any Alliance
Agreement, the Parties will not take any action in connection with the
Alliance which would constitute a violation of applicable law or take an
action which requires FCC or other approval without first obtaining such
approval.
12.5. Third Party Warranties
Each Party shall enforce any rights, warranties, licenses, terms and
conditions and other benefits accruing to it under each of its
agreements with third parties participating in or providing equipment,
software or other services used in connection with the provision of
services under the Alliance Agreements wherever and whenever such
Party's failure to enforce any such rights, warranties, licenses,
terms, conditions and
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<PAGE> 15
Proprietary and Confidential
other benefits could materially impair its ability to provide such
services in accordance with the terms and conditions of the Alliance
Agreements.
12.6. Costs and Expenses
Except as otherwise specifically agreed to by the Parties in writing,
each Party will be responsible for its own expenses arising under this
Agreement.
12.7. Amendment
No amendment of this Agreement shall be valid or binding on the Parties
unless such amendment shall be in writing and duly executed by an
authorized representative of each Party.
12.8. Headings
Headings contained herein shall in no way limit the subject matter they
introduce and shall not be used in construing this Agreement.
12.9. Publicity
Neither Party shall make a public announcement or disclosure about this
Agreement or the Parties' discussions related to any aspect of it
without the written consent of the other Party. Subject to obligations
of confidentiality as set forth in Section __5__, either of the Parties
may at anytime make announcements which are required by applicable law,
regulatory bodies, or stock exchange or stock association rules, so
long as the Party so required to make the announcement, promptly upon
learning of such requirement, notifies the other Party of such
requirement and discusses with the other Party in good faith that exact
wording of any such announcement.
12.10. Execution
This Agreement shall be executed in two duplicate copies, one for each
Party, each of which copies shall be deemed an original.
12.11. Limitation of Liability
Except as may otherwise be expressly set forth in a specific Alliance
Agreements with regard thereto, neither Party, nor its officers,
employees, agents, partners, Affiliates or subcontractors shall be
liable to the other Party, its officers, employees, agents, partners,
Affiliates or subcontractors for claims for incidental, indirect,
consequential, exemplary, punitive, or other special damages,
including, but not limited to, damages for a loss of profits or
opportunity costs, connected with or resulting from any performance or
lack of performance under any Alliance Agreement regardless of whether
a claim is based on contract, warranty, tort (including negligence),
theory of strict liability, or any other legal or equitable principle.
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Proprietary and Confidential
12.12. Relationship of Parties
The Alliance Agreements individually or in the aggregate shall not be
construed to create a partnership, joint venture, or any other form of
legal entity.
12.13. Notices
Any notice, request, instruction or other document to be given
hereunder by any Party to any other Party under any section of this
Agreement shall be in writing and shall be deemed given upon receipt if
delivered personally or by telex or facsimile, the next day if by
express mail or three days after being sent by registered or certified
mail, return receipt requested, postage prepaid to the following
addresses (or at such other address for a Party as shall be specified
by like notice provided that such notice shall be effective only after
receipt thereof):
If to IDS: Intel Internet Data Services
20400 NW Amberwood Drive
Beaverton, OR 97006
Attn: General Manager
(408) 765-4280 - voice
(408)765-6767 - fax
with a copy
(which shall
not constitute
notice) to: Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95052
Attn: General Counsel
(408) 765-1136 - voice
(408) 765-1859 - fax
If to Williams: Williams Communications, Inc.
One Williams Center, Suite 26-B
Tulsa, OK 74172
Attn: Contract Administration
Fax: 918-573-6578
Telephone: 918-573-6277
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<PAGE> 17
Proprietary and Confidential
with a copy Williams Communications, Inc.
(which shall One Williams Center, Suite 4100
not constitute Tulsa, OK 74172
notice) to: Attn: General Counsel
Fax: 918-573-3005
Telephone: 918-573-4205
12.14. Severability
In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in
any respect by a court or other authority of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any
other provision hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein and, in lieu of each such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable, it being the intent of the Parties to maintain the benefit
of the bargain for both Parties.
12.15. Governing Law
Any claims arising under or relating to this Agreement shall be
governed by the internal substantive laws of the State of Delaware or
federal courts located in Delaware, without regard to principles of
conflict of laws. Each Party hereby agrees to jurisdiction and venue in
the courts of the State of Delaware for all disputes and litigation
arising under or relating to this Agreement. This provision is meant to
comply with 6 Del. C. Section 2708(a).
12.16. Rules of Construction
Words used in this Agreement, regardless of the gender specifically
used, shall be deemed and construed to include any other gender as the
context requires. As used in this Agreement, the word "including" is
not limiting, and the word "or" is not exclusive. Except as
specifically otherwise provided in this Agreement in a particular
instance, a reference to a Section, Schedule or Exhibit is a reference
to a Section of this Agreement or a Schedule or Exhibit hereto, and the
terms "this Agreement," "hereof," "herein," and other like terms refer
to this Agreement as a whole, including the Schedules to this
Agreement, and not solely to any particular part of this Agreement. The
descriptive headings in this Agreement are inserted for convenience of
reference only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement. The Parties to this
Agreement do not intend that any other Person shall obtain any rights
as third party beneficiaries of this Agreement.
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Proprietary and Confidential
12.17. Survival and Provisions Applicable to Other Alliance Agreements
Sections 1, 3, 4, 5, 8, 9, and 12 of this Agreement shall apply to and
be deemed incorporated into the other Alliance Agreements and shall
continue to be in force for the duration of such Alliance Agreements,
regardless of the term of this Agreement. Upon any expiration or
termination of this Agreement, Sections hereof which by their nature
ought to survive shall so survive.
INTEL CORPORATION WILLIAMS COMMUNICATIONS, INC.
- ------------------------------- ----------------------------------
Signature Signature
- ------------------------------- ----------------------------------
Printed Name Printed Name
- ------------------------------- ----------------------------------
Title Title
- ------------------------------- ----------------------------------
Date Date
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<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
EXHIBIT 10.5
Fiber Lease Agreement
dated September 16, 1999
between
Metromedia Fiber Network Services, Inc.
and
Williams Communications, Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
1. Definitions............................................................1
2. Construction...........................................................5
2.1 Obligation to Construct..........................................5
2.2 Obligation to Provide Reports....................................5
2.3 Obligation to Provide Completion Notice..........................5
2.4 Obligation to Provide As-Built Drawings..........................5
2.5 Committees.......................................................5
2.6 Type of Fiber Optic Cable........................................5
3. Grant of Lease.........................................................6
3.1 Lease............................................................6
3.2 Lease Limitations................................................7
3.3 Lease Payments...................................................7
3.4 Financing Arrangements...........................................8
4. Intentionally Omitted..................................................8
5. Completion of Systems..................................................8
5.1 Scheduled Acceptance Dates.......................................8
5.2 Remedial Obligations.............................................8
5.3 Branch A Late Completion Fee.....................................8
5.4 Right to Cancel..................................................9
5.5 Use of Partially Completed Selected Segment......................9
5.6 Early Delivery...................................................9
6. Acceptance and Testing of Fibers.......................................9
6.1 Lessor Testing...................................................9
6.2 Objections to Test Results.......................................9
6.3 Response to Objections..........................................10
6.4 Independent Testing.............................................10
6.5 Acceptance......................................................10
6.6 Lessee's Testing................................................11
6.7 Lessee's Testing of Fibers Delivered within Sixty Days
of Effective Date..............................................11
7. Term and Renewal......................................................11
7.1 Lease Term......................................................11
7.2 Maintaining Authorizations......................................11
7.3 Extension of Lease Term.........................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
7.4 Agreement Term..................................................12
7.5 Effect of Termination...........................................12
8. Operation, Maintenance and Repair of the System........................12
8.1 Maintenance.....................................................12
8.2 Self-Help Restoration...........................................12
8.3 Maintenance of Lessee's Equipment Excluded......................13
8.4 No Unauthorized Access to System................................13
8.5 No Other Fees...................................................13
8.6 Maintenance Fees................................................13
9. Relocation.............................................................13
9.1 Relocation Costs................................................13
10. Collocation............................................................14
10.1 Provision of Collocation Services...............................14
10.2 Initial Basic Services..........................................14
10.3 Additional Basic Services.......................................14
10.4 Rack Credits....................................................14
10.5 Additional Services Invoicing...................................15
11. Connection to the System...............................................15
11.1 Permitted Interconnection Points................................15
11.2 Limitations on Interconnection Rights...........................15
11.3 Fiber Drops.....................................................15
11.4 Demarcation Points..............................................15
11.5 Facilities Ownership and Control................................16
11.6 Lessee Responsibility...........................................16
11.7 Third Party Relations...........................................16
11.8 Application of Branch A Interconnection Charges.................17
12. Branch B Interconnections..............................................17
12.1 Application of Branch B Pricing.................................17
12.2 Branch B Pricing................................................17
12.3 Lessee Minimum Branch B Commitment..............................17
12.4 Order Intervals.................................................18
12.6 Specifications..................................................19
12.7 Intrabuilding Extensions........................................19
13. Use of the Systems.....................................................19
13.1 Obligation to Comply with Laws; Exclusive Use...................19
13.2 System Damage...................................................20
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
13.3 Regulatory Cooperation...........................................20
13.4 Liens............................................................20
14. Payment.................................................................20
14.1 Time and Method of Payment.......................................20
14.2 Late Payment Charges.............................................20
15. Indemnification.........................................................20
15.1 Indemnity Obligation.............................................20
15.2 No Limitation on Claims Against Other Parties....................21
16. Insurance...............................................................21
16.1 Obligation to Obtain.............................................21
16.2 Policy Requirements..............................................22
16.3 Waiver of Subrogation............................................22
16.4 Blanket Policies; Self-Insurance.................................22
17. Taxes and Franchise, License and Permit Fees............................22
17.1 Obligations to Pay Right-of-Way Charges and Taxes................22
17.2 Obligation to Timely Pay Taxes Based on Revenues.................23
17.3 Right to Contest Taxes...........................................23
17.4 Prohibition on Agreements Affecting Other Party..................23
18. Notice..................................................................23
18.1 Addresses........................................................23
18.2 Method for Delivering Notices and Invoices.......................24
19. Confidentiality and Publicity...........................................24
19.1 Confidential Information.........................................24
19.2 Publicity........................................................25
20. Default.................................................................25
20.1 Partial Termination upon Default.................................25
20.2 Specific Default Events..........................................25
20.3 Cure Period......................................................26
20.4 Failure to Cure..................................................26
20.5 Waiver of Specific Defaults......................................26
20.6 Disputed Amounts.................................................26
21. Force Majeure...........................................................26
21.1 Excused Performance..............................................26
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
22. Arbitration............................................................27
22.1 Obligation to Arbitrate..........................................27
22.2 Exceptions to Arbitration Obligation.............................27
23. Assignment.............................................................27
23.1 Restrictions on Assignment.......................................27
23.2 Agreement Binds Successors.......................................27
23.3 Restriction on Transfer of Dark Fiber Rights.....................28
24. Rules of Construction..................................................28
24.1 Governing Law....................................................28
24.2 Interpretation...................................................28
24.3 Cumulative Remedies..............................................29
24.4 No Third-Party Rights............................................29
24.5 Agreement Fully Negotiated.......................................29
24.6 Document Precedence..............................................29
24.7 Industry Standards...............................................29
24.8 Cross References.................................................29
24.9 Limited Effect of Waiver.........................................29
24.10 Severability.....................................................29
24.11 Executory Agreement..............................................30
24.12 No Partnership Created...........................................30
24.13 No Reimbursement.................................................30
24.14 Right to Subcontract.............................................30
25. Representations and Warranties.........................................30
25.1 Agreement Validity...............................................30
25.2 Acceptance Date Representations..................................31
25.3 Disclaimer of Warranty...........................................31
25.4 No Third-Party Warranties........................................31
26. Limitations of Liability...............................................32
26.1 Restriction on Types of Liability................................32
26.2 No Recourse Against Released Parties.............................32
26.3 No Personal Liability............................................32
27. Audit Rights...........................................................32
27.1 Retention of Records; Audit; Documentation.......................32
28. Prohibition on Improper Payments.......................................32
28.1 Improper Payments Prohibited.....................................32
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
29. Entire Agreement; Amendment; Execution................................33
29.1 Integration; Incorporation; Modification........................33
29.2 Counterparts; Execution.........................................33
</TABLE>
v
<PAGE> 7
EXHIBITS
Exhibit A Lessor System Route (map with mileage and POPs)
Exhibit B Intentionally Omitted
Exhibit C Collocation Provisions
Exhibit D Selected Segments and Scheduled Acceptance Dates
Exhibit E As-Built Drawing Specifications
Exhibit F Branch A Pricing
Exhibit G Fiber Splicing, Testing, and Acceptance Standards and Procedures
Exhibit H Operations Specifications
Exhibit I Fiber Optic Cable Specifications
Part 1 - Cable and Optical Fiber Specifications
Corning SMF28
Corning LS
Corning Leaf
Lucent True Wave
Lucent Single Mode
Lucent All Wave
Part 2 - Cable Installation Specifications
Exhibit J List of Network Sites and Rack Counts
Part 1 - Lessor System
Part 2 - Eligible Collocation Sites
Exhibit K Committed Buildings
Exhibit L Branch B Pricing
Exhibit M Network Site Specifications
Exhibit N Construction Specifications (See Exh I)
vi
<PAGE> 8
FIBER LEASE AGREEMENT
THIS FIBER LEASE AGREEMENT (this "Agreement") is made as of the 16th
day of September, 1999, (the "Effective Date") by and between Metromedia Fiber
Network Services, Inc., a Delaware corporation ("Lessor") and Williams
Communications, Inc., a Delaware corporation ("Lessee").
BACKGROUND
A. Lessor is establishing metropolitan and intercity fiber optic
communication systems as set forth in Exhibit A (collectively, the "Lessor
System").
B. Lessor desires to grant to Lessee a lease in certain optical fibers
in the Lessor System and Lessee desires to accept a lease of such fibers, all
upon the terms and conditions set forth below.
C. Lessee desires to have Lessor provide certain maintenance and
collocation services with respect to the fibers being leased by Lessee.
TERMS OF AGREEMENT
Accordingly, in consideration of the mutual promises set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS
The following terms shall have the stated definitions in this
Agreement.
"ACCEPTANCE DATE" shall have the meaning set forth in Section 6.5.
"ACCESS POINT" means splice points or fiber slack storage locations
designated as such by Lessor on the as-built drawings provided by Lessor as
provided in Section 2.4.
"ADDITIONAL SERVICES" shall have the meaning set forth in the
Collocation Provisions.
"AFFILIATE" means, with respect to any entity, an entity controlling,
controlled by, or under common control with such entity by means of direct or
indirect equity ownership or otherwise. As used in this Agreement, "control"
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person or entity, whether
through the ownership of voting securities, by contract or otherwise.
"AGREEMENT TERM" shall have the meaning set forth in Section 7.4.
<PAGE> 9
"BASIC SERVICES" shall have the meaning set forth in the Collocation
Provisions.
"BRANCH A" means of or relating to the "backbone" portions of the
Lessor's System, i.e., the portions of the Lessor's System other than Branch B
facilities.
"BRANCH A PRICING" shall have the meaning set forth in Exhibit F.
"BRANCH B" means of or relating to interconnections established by
Lessor, to connect Lessor's System to locations other than Lessor POPs or Lessee
POPs (however, Branch B Pricing shall apply to other interconnections, including
those established by Lessee, as set forth in Section 11.3 and 12.1).
"BRANCH B PRICING" shall have the meaning set forth in Exhibit L.
"BUILDING" means any building, carrier hotel or central office, other
than a Lessor POP or Lessee POP.
"CABLE" means the fiber optic cable and the fibers contained therein
and associated splicing connections, splice boxes and vaults.
"CAPACITY" shall have the meaning set forth in Section 23.3.
"COLLOCATION PROVISIONS" means the provisions set forth in Exhibit C.
"COMMITTED BUILDINGS" means those Buildings set forth on Exhibit K (as
such Exhibit K is modified from time to time by Lessor in accordance with the
terms of this Agreement).
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
19.1.
"COSTS" means actual and directly related costs accumulated in
accordance with the established accounting procedure used by Lessor or Lessee or
their respective contractors or subcontractors, as the case may be, which costs
include the following: (a) labor costs, including wages, salaries, benefits and
overhead allocable to such labor costs (Lessee's or Lessor's overhead allocation
percentage shall not exceed the lesser of (i) the percentage such party
allocates to its internal projects or (ii) one hundred and thirty percent
(130%), and (b) other direct costs and out-of-pocket expenses on a pass-through
basis (e.g., equipment, materials, supplies, contract services, etc.). "DARK
FIBER TRANSACTIONS" shall have the meaning set forth in Section 23.3.
"DEDICATED FIBER TRANSACTIONS" shall have the meaning set forth in
Section 23.3.
"DEMARCATION POINT" shall have the meaning set forth in Section 11.4.
2
<PAGE> 10
"DIVERSITY" means the provision of physically separated optical
facilities that, when equipped with suitable optronics, are capable of providing
an alternate transmission path without human or mechanical intervention. The
alternate facilities shall, except at each Demarcation Point, have at least
thirty (30) feet of separation in any direction and shall not be on the same
poles, towers, river crossings, bridges, viaducts, elevated walkways, or similar
structures.
"EFFECTIVE DATE" shall have the meaning set forth in the preamble.
"EQUIPMENT" means Lessee's electronic, optronic and power equipment
necessary for the operation of the Cable.
"EXPIRATION DATE" shall have the meaning set forth in Section 7.1.
"FACILITY OWNERS/LENDERS" means any entity (other than Lessor): (a)
owning any portion of the System or any property or security interest therein,
(b) leasing to Lessor, or providing an IRU to Lessor in, any portion of the
System, or (c) that is a lender (including any party holding legal title or a
security interest in Lessor's System as a lessor or a creditor) with respect to
Lessor or any Affiliates of Lessor.
"FIBER ACCEPTANCE TESTING" shall have the meaning set forth in Section
6.1.
"IRU" means an indefeasible right of use.
"LESSEE" means Williams Communications, Inc.
"LESSEE FIBERS" shall have the meaning set forth in Section 3.1.
"LESSOR" means Metromedia Fiber Network Services, Inc.
"LESSOR SYSTEM" shall have the meaning set forth in the preamble.
"NETWORK SITE" shall have the meaning set forth in the Collocation
Provisions.
"NEW CITIES" shall have the meaning set forth in Section 3.1.
"NEW CITIES NOTICE" shall have the meaning set forth in Section 3.1.
"POP" means a telecommunications point of presence listed on Exhibit A,
as Exhibit A may be amended from time to time, subject to the consent of Lessor
and Lessee.
"RELEASED PARTY" means each of the following:
(a) any Affiliates of the other party and any Facility
Owners/Lenders;
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<PAGE> 11
(b) any employee, officer, director, stockholder, partner, member,
or trustee of the other party or of its Affiliates or Facility Owners/Lenders;
or
(c) assignees of the entities included in the above subparagraphs
(a) or (b) and any employee, officer, director, stockholder, partner, member, or
trustee of such assignees.
"RIGHT-OF-WAY AUTHORIZATIONS" means any underlying agreements,
easements, permits, or licenses, by which Lessor obtains rights to perform its
obligations hereunder with respect to the Lessor System, Committed Buildings and
Lessee's Fibers from:
(a) underlying owners of real or personal property, or right-of-way
holders,
(b) grantors of IRU or other rights or licenses with respect to all
or a portion of its System,
(c) parties granting duct usage and pole attachment rights, and
(d) any governmental authority (including franchising agencies,
environmental regulation agencies, and public utility commissions).
"SCHEDULED ACCEPTANCE DATE" means the date so designated with respect
to each Selected Segment as set forth in Exhibit D.
"SEGMENT" means a Branch A Segment identified in Exhibit A.
"SELECTED SEGMENT" means a Branch A Segment identified as a Selected
Segment in Exhibit D.
"SPAN" means a discrete portion of a Selected Segment and may refer to
a portion of the Selected Segment or the Lessor System between two Transmission
Sites or between a Transmission Site and a POP or System end point, a portion
between two POPs or a POP and a System end point, or a portion of the System
affected by a relocation or other circumstance.
"SYSTEM" means the Lessor System.
"TERM" shall have the meaning set forth in Section 7.1.
"TRANSMISSION SITE" means an optical amplifier, regeneration or
junction site.
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<PAGE> 12
2. CONSTRUCTION
2.1 OBLIGATION TO CONSTRUCT. To the extent not constructed or acquired
as of the Effective Date, Lessor shall design, engineer, install, and construct
or acquire the Lessor System as described or depicted in Exhibit A. The parties
acknowledge and agree that the Lessor's obligation to construct the Lessor
System, to the extent not constructed as of the Effective Date, is to use
commercially reasonable efforts to construct between the points designated on
Exhibit A, but not necessarily along the specific routes shown on Exhibit A.
2.2 OBLIGATION TO PROVIDE REPORTS. Lessor shall provide to Lessee,
within 10 days prior to each Committee meeting referred to in Section 2.5, until
all Selected Segments have been Accepted, written engineering and construction
progress reports setting forth at least the following information with respect
to the Lessor System: (a) status of Branch A Selected Segments for which the
Acceptance Date has not occurred, (b) status of Branch B interconnections that
have not yet been completed, (c) lists of Branch A Selected Segments for which
the Acceptance Date has occurred since the last such report, (d) lists of Branch
B interconnections completed since the last such report, and (e) changes in the
planned locations or expected completion dates of Branch B interconnections.
2.3 OBLIGATION TO PROVIDE COMPLETION NOTICE. Lessor shall promptly
notify Lessee in writing of the date upon which Lessor has completed connecting
a Branch B interconnection. Within 30 days after the end of each calendar
quarter until the Expiration Date, Lessor shall provide Lessee a copy of its
current list of Branch B interconnection locations on its System (unless the
list has not changed since the date of the last such list provided).
2.4 OBLIGATION TO PROVIDE AS-BUILT DRAWINGS. Lessor shall provide to
Lessee as-built drawings of each Selected Segment conforming to the As-Built
Drawing Specifications set forth in Exhibit E no later than 180 calendar days
after the Acceptance Date with respect to each Selected Segment.
2.5 COMMITTEES. Each party shall appoint at least two persons and an
alternate to the Lessor System Committee. The Lessor System Committee shall
coordinate matters relating to the construction of the Lessor System and
Lessee's use of the Lessee's Fibers therein. Each party may remove or replace
its representatives on the Committee by notice to the other party. The parties
shall seek to establish meetings of the Committee at approximately 60-day
intervals until the completion of the Lessor System. Committees may meet by
telephone. Committees shall have no authority to act on behalf of either or both
parties but may forward recommendations to the parties. Lessor shall prepare
minutes of each Committee meeting, which minutes shall be distributed to all
Committee members.
2.6 TYPE OF FIBER OPTIC CABLE. With respect to any Selected Segment of
the Lessor System (a) that has not been constructed as of the Effective Date,
and (b) for which Lessor has not made a fiber optic Cable purchase commitment,
Lessee may within 30 days after the Effective
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<PAGE> 13
Date give notice to Lessor specifying the type (not the manufacturer) of fibers
(included in the fiber optic Cable) it desires to have in such Selected Segment.
Upon timely receipt of such notice, Lessor shall use commercially reasonable
efforts to comply with Lessee's request. To the extent practicable, Lessor
shall, within 30 days after the Effective Date, advise Lessee of the types of
optical fibers in each Selected Segment. Lessor agrees that the specifications
for the fiber in each Selected Segment will be no less than those set forth in
Exhibit I. Lessor shall have the option, in its discretion, to install fiber of
higher quality based upon improvements made by the manufacturer of such fiber.
3. GRANT OF LEASE
3.1 LEASE.
(a) During the Term, Lessor shall lease to Lessee a total of 86,612
fiber miles of certain Branch A optical fibers (the "Lessee Fibers") in the
Lessor System, which Lessee Fibers are identified in Exhibit D or shall be
identified as herein provided, all subject to the terms and conditions herein.
Lessee may lease no more than 96 fibers, and shall lease no less than six
fibers, in any Selected Segment without Lessor's prior written consent. Except
for six fibers in the New York to Boston Selected Segment, all such Branch A
Lessee Fibers shall provide Diversity. Of such 86,612 fiber miles, **** fiber
miles of Lessee Fibers have been selected by Lessee and are designated as
Selected Segments from among the Segments set forth on Exhibit D. The remaining
**** fiber miles of Lessee Fibers shall be selected by Lessee from time to time
by notice to Lessor by the earlier of (a) June 1, 2001 or (b) nine months after
Lessor gives notice to Lessee ("New City Notice") that Lessor will construct or
extend the Lessor System to each of **** new cities within North America ("New
Cities"). Such New Cities must either be located in the 30 largest (by
population) United States Metropolitan Statistical Areas or Toronto or Montreal,
Canada. To elect to lease any of such **** fiber miles from Lessor in any New
City, Lessee must provide timely notice indicating (x) the number of fiber miles
Lessee desires to lease in such New City and the Selected Segment(s) therefor
and (y) in accordance with Section 10.4 the number of racks required by Lessee.
Lessee shall not be required to select fibers in any New City, but its decision
not to select fibers in any New City shall not relieve it of its obligation to
select a total of 86,612 fiber miles by the earlier of the dates set forth in
subsections (a) or (b) of this Section 3.1(a) and to lease such number of fiber
miles pursuant to the provisions of this Agreement. Each New City Notice shall
contain route maps (subject to the introductory language contained in Exhibit A)
with respect thereto, which route maps shall become part of Exhibit A. Lessor
agrees to give to Lessee all New City Notices for **** New Cities by no later
than June 1, 2000.
(b) Lessee's obligation to lease the remaining **** fiber miles not
set forth in Exhibit D shall be reduced proportionally if the number of
available fiber miles (with the maximum number of available fibers in any
Segments identified in such New City Notices deemed to equal 96 if the actual
number is greater) in the routes with Diversity identified in the New City
Notices is less than ****. For example, if there were **** available fiber
miles with Diversity
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 14
identified in the New City Notices, Lessee would only be obligated to lease ****
total fiber miles (**** fiber miles identified in Exhibit D plus **** other
fiber miles).
(c) Subject to Section 3.1(a), during the period from the Effective
Date until June 1, 2001, Lessee may substitute Branch A Lessee Fibers in any
Selected Segment(s) for Branch A Lessee Fibers in any other Selected Segment(s)
provided (1) only 50% of the Lessee Fibers in each Selected Segment included
within the initial **** fiber miles may be so substituted; (2) that only such
Lessee Fibers that have not been spliced for Lessee in order to establish
interconnections or lit by Lessee may be substituted for any other fibers within
Selected Segments; (3) that existing Lessee Fibers may be substituted for other
fibers only to the extent other fibers are available; (4) that at the time of
any such substitution in a Selected Segment, Lessee will determine and advise
Lessor of the total number of Lessee Fibers that Lessee requires in such
Selected Segment; and (5) that, subject to the foregoing, Lessee may make any
substitutions it desires in each Selected Segment only once. Whether other
fibers are available shall be determined by Lessor in its sole reasonable
discretion; provided that Lessor intends to afford Lessee the opportunity to
evaluate the New Cities and provide Lessee with the flexibility to make such
substitutions.
3.2 LEASE LIMITATIONS. The Lease granted to Lessee hereunder and any
rights granted by Lessee to third party users, shall be subject to all
Right-of-Way Authorizations applicable to the Lessor's System and the Committed
Buildings. Lessee shall respect and adhere to the requirements of all such
Right-of-Way Authorizations. The lease of the Lessee Fibers hereunder does not
convey any legal title to any real or personal property, including the fibers,
cable, or the Lessor System. This lease does not include any Equipment used to
transmit capacity over, or to "light," the Lessee Fibers.
3.3 LEASE PAYMENTS.
(a) Branch A Payments. Lessor represents that the fiber miles set
forth in Exhibit D, are either the actual fiber miles for each Selected Segment
or a bona fide estimate thereof. Lessee shall make monthly payments in advance
during the Term, in an amount calculated pursuant to Exhibit F (Branch A
Pricing) based on the fiber miles set forth in Exhibit D. Lessee shall commence
making such payments with respect to each Selected Segment on the first day of
the month beginning with the month after the Acceptance Date of the relevant
Selected Segment; except that the first payment shall include payment from the
Acceptance Date to the last day of the month during which the Acceptance Date
occurs, as well as payment for the first full month after the Acceptance Date.
Lessee shall continue making such payments through the first day of the month in
which the Expiration Date occurs, unless the Term with respect to such Selected
Segment is terminated prior to the Expiration Date as herein provided. Within 30
days after delivery of the as-built plans for each Selected Segment, as provided
in Section 2.4, Lessor shall advise Lessee of the actual fiber miles (excluding
any slack coils) in such Selected Segment. Lessee shall promptly pay any balance
due if the actual fiber miles exceeded the estimated fiber
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 15
miles in such Selected Segment or Lessor shall issue a credit to Lessee of the
actual fiber miles in such Selected Segment were less than the estimated fiber
miles in the relevant Selected Segment.
(b) Branch B Payments. Subject to the terms of Section 12.1 and
12.3, Lessee shall make monthly payments in advance during the Term, in an
amount calculated pursuant to Exhibit L (Branch B Pricing), which payments shall
commence with respect to each Branch B interconnection on the first day of the
month beginning with the month after the Acceptance Date of the relevant Branch
B interconnection; except that the first payment shall include payment from the
Acceptance Date to the last day of the month during which the Acceptance Date
occurs, as well as payment for the first full month after the Acceptance Date.
Lessee shall continue making such payments through the first day of the month in
which the Expiration Date occurs, unless the Term with respect to such Branch B
interconnection, is terminated prior to the Expiration Date as herein provided.
3.4 FINANCING ARRANGEMENTS. Either party shall have the right, directly
or through an Affiliate, to enter into financing arrangements (including secured
loans, leases, sales with lease-back, or leases with lease-back arrangements,
purchase-money or vendor financing, conditional sales transactions, or other
arrangements) with one or more financial institutions, vendors, suppliers or
other financing sources that, with respect to Lessor, relate to its System and,
with respect to Lessee, relate, to Lessee's lease rights (and not to any
property right in the Lessor System or the Lessee Fibers).
4. INTENTIONALLY OMITTED
5. COMPLETION OF SYSTEMS
5.1 SCHEDULED ACCEPTANCE DATES. The Scheduled Acceptance Date for each
Selected Segment shall be as set forth in Exhibit D. Lessor shall use
commercially reasonable efforts to cause the Acceptance Date to occur by the
Scheduled Acceptance Date.
5.2 REMEDIAL OBLIGATIONS. In the event Lessor fails to complete any
Selected Segment by the Scheduled Acceptance Date thereof, the parties shall
designate representatives to meet and review the status of the Selected Segment.
Lessor shall, within 14 calendar days after the Scheduled Acceptance Date,
provide a plan and schedule whereby it shall use commercially reasonable efforts
to cause the Acceptance Date for such Selected Segment to occur within 60
calendar days after the Scheduled Acceptance Date.
5.3 BRANCH A LATE COMPLETION FEE. If the Acceptance Date for a Selected
Segment does not occur within 90 calendar days of the Scheduled Acceptance Date,
Lessor shall pay to Lessee a late fee payment of $**** per fiber mile, per month
(pro-rated for partial miles or months), per Selected Segment, which late fee
payments shall not exceed $**** with respect to any Selected Segment or $**** in
the aggregate for all Selected Segments.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 16
5.4 RIGHT TO CANCEL. Notwithstanding anything to the contrary contained
in this Agreement, if the Acceptance Date for a Selected Segment does not occur
within 180 calendar days after the Scheduled Acceptance Date for such Selected
Segment, then Lessee shall have the right to terminate this Agreement with
respect to such Selected Segment. If Lessee elects to exercise its right to
terminate the Agreement with respect to such Selected Segment, it may do so at
any time after such 180 day period by giving a termination notice to Lessor;
provided that no such termination notice shall be effective if prior to the
giving of such termination notice, Lessor has given notice of Fiber Acceptance
Testing pursuant to Section 6.1, unless the Lessee Fibers in the Selected
Segment with respect to which Lessor gave such notice do not meet the Acceptance
Standards. If the lease relating to any Selected Segment is terminated as herein
provided (a) any payment obligations with respect to such Selected Segment shall
terminate and be of no further force or effect and the overall commitment of
Lessee to lease Lessee Fibers contained in Section 3.1 shall be reduced by the
number of fiber miles in the Selected Segment so terminated.
5.5 USE OF PARTIALLY COMPLETED SELECTED SEGMENT. If the Acceptance Date
for a Selected Segment has not occurred by the Scheduled Acceptance Date, but
some Spans of the Selected Segment are available for use, Lessor shall, upon
request of Lessee, permit Lessee to use such available Spans and Lessee shall
pay a pro rata share of the lease payment with respect to the Lessee Fibers in
such Selected Segment. In addition, in the event that Lessee elects to accept a
Span prior to the time that a complete Selected Segment is available for use,
the late fee payment set forth in Section 5.3 shall be reduced in proportion to
the Lessee Fibers in the Selected Segment being utilized.
5.6 EARLY DELIVERY. In the event that Lessor has any Lessee Fibers
available prior to the Scheduled Acceptance Date, Lessor may give notice to
Lessee, offering to deliver such Lessee Fibers prior to the Scheduled Acceptance
Date therefor. Lessee shall within 10 business days after receipt of such notice
advise Lessor whether or not Lessee desires to begin using such Lessee Fibers
prior to the Scheduled Acceptance Date. If Lessee elects to begin such use prior
to the Scheduled Acceptance Date, the Term of such Lessee Fibers and payment
obligations shall commence upon the actual Acceptance Date thereof.
6. ACCEPTANCE AND TESTING OF FIBERS
6.1 LESSOR TESTING. Lessor shall give notice to Lessee at least 21 days
prior to the date Lessor intends to begin testing of Lessee Fibers on each
Selected Segment ("Fiber Acceptance Testing"). Lessee shall have the right, but
not the obligation, to have a representative present at such Fiber Acceptance
Testing. Lessor shall perform Fiber Acceptance Testing of the Lessee Fibers and
provide test deliverables to Lessee in accordance with Exhibit G.
6.2 OBJECTIONS TO TEST RESULTS. Lessee shall have 21 calendar days
after receipt of test deliverables for each Selected Segment to provide Lessor
written notice of any bona fide determination by Lessee that the Lessee Fibers
on such Selected Segment do not meet the
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<PAGE> 17
Acceptance Standards. Such notice shall identify the specific data that indicate
a failure or other specific reasons that such Lessee Fibers fail to meet the
Acceptance Standards.
6.3 RESPONSE TO OBJECTIONS. Upon receiving written notice from Lessee
pursuant to Section 6.2, Lessor shall either:
(a) expeditiously take such action as shall be reasonably necessary
to cause such portion of the Lessee Fibers to meet the Acceptance Standards and
then re-test the Lessee Fibers in accordance with the provisions of this
Article; or
(b) provide Lessee written notice that Lessor disputes Lessee's
determination that the Lessee Fibers do not meet the Acceptance Standards.
After taking corrective actions and re-testing the Lessee Fibers, Lessor shall
provide to Lessee a copy of the new test deliverables and Lessee shall again
have all rights provided in this Article with respect to such new test
deliverables. The cycle described above of testing, taking corrective action and
re-testing shall take place until the Lessee Fibers meet the Acceptance
Standards.
6.4 INDEPENDENT TESTING. If Lessor provides notice to Lessee pursuant
to Subsection 6.3(b), Lessee shall within five calendar days of such notice
designate by written notice to Lessor the names and addresses of three reputable
and independent fiber optic testing companies. Lessor shall designate one of
such companies to conduct an independent re-test of the Lessee Fibers for the
relevant Selected Segment. If, after such re-testing, the testing company
determines that the Lessee Fibers so tested:
(a) meet the Acceptance Standards, then Lessee shall pay the
testing company's charges for performing the testing and the Acceptance Date for
the relevant Selected Segment shall be 21 calendar days after the date that
Lessor originally provided its test deliverables; or
(b) do not meet the Acceptance Standards, then Lessor shall pay the
testing company's charges for performing the testing and shall perform the
corrective action and retesting set forth in Subsection 6.3(a).
6.5 ACCEPTANCE. Unless Lessee provides a timely written objection
pursuant to Section 6.2, the Acceptance Date of a Selected Segment or Span shall
occur on the twenty-first calendar day after Lessor provides the test
deliverables for that Selected Segment or Span, or, if earlier, the date Lessee
(a) provides written acceptance of such Selected Segment or Span or (b)
commences use of the Lessee Fibers in such Selected Segment or Span, other than
for the purpose of testing such Fibers. The Acceptance Date (pursuant to this
Section or Section 6.4) for the last Span to be accepted of a Selected Segment
shall be the "Acceptance Date" of Lessee Fibers for such Selected Segment.
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<PAGE> 18
6.6 LESSEE'S TESTING. Lessee shall have the right, but not the
obligation, at its sole expense, to conduct its own Fiber Acceptance Testing of
the Lessee Fibers in accordance with Exhibit G.
6.7 LESSEE'S TESTING OF FIBERS DELIVERED WITHIN SIXTY DAYS OF EFFECTIVE
DATE. Notwithstanding the foregoing, with respect to all Lessee Fibers delivered
to Lessee within 60 days of the Effective Date, Lessee shall have 60 days within
which to test such Fibers in accordance with Exhibit G. Within such 60-day
period, Lessee may either (a) accept such Fibers or (b) provide notice to Lessor
in accordance with Section 6.2 stating the specific data that indicate a failure
of such Fibers or other specific reasons that such Lessee Fibers fail to meet
the Acceptance Standards. The procedures set forth in Sections 6.3, 6.4 and 6.5
shall then be applicable.
7. TERM AND RENEWAL
7.1 LEASE TERM. The lease term for each Selected Segment (the "Term")
shall begin on the Acceptance Date of each Selected Segment and end on the
twentieth anniversary of the Acceptance Date of the first Selected Segment
Accepted hereunder, but in no event later than December 31, 2019 (the
"Expiration Date").
7.2 MAINTAINING AUTHORIZATIONS. Lessor shall use commercially
reasonable efforts to maintain, renew, or replace the Right-of-Way
Authorizations during the Term. If Lessor determines it is not commercially
reasonable to maintain, renew or replace any of its existing Right-of-Way
Authorizations during the Term, then Lessor shall give notice to Lessee and
shall cooperate with Lessee, at Lessee's written request, to attempt to
maintain, renew or replace such Right-of-Way Authorizations, but at Lessee's
sole Cost. During the last three years of the Term, upon written notice from
Lessee requesting such information, Lessor shall promptly provide written notice
of the status (including any potential or pending terminations or expirations)
of Right-of-Way Authorizations relating to the Lessee Fibers, including but not
limited to whether or not Lessor intends to extend or renew any Right-of-Way
Authorizations. In the event that during the Term any Right-of-Way Authorization
expires or is terminated and is not replaced, Lessee shall have the right upon
30 days prior written notice to Lessor, to terminate the Lease with respect to
the Lessee Fibers in the Span directly affected by such expired or terminated
Right-of-Way Authorization. Upon such termination, Lessee's obligation to make
any lease payments with respect to which the Lease has been terminated shall
expire.
7.3 EXTENSION OF LEASE TERM. To the extent Lessor has elected to
maintain or extend or replace Right-of-Way Authorizations with respect to this
Lease beyond the Term, Lessee may request an extension of the Term of such
Lease, and Lessor agrees to negotiate with Lessee with respect to such
extension, but Lessor shall have no obligation to grant any such extension.
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7.4 AGREEMENT TERM. The term of this Agreement shall begin on the
Effective Date and, except to the extent terminated sooner pursuant to Article
20, shall end on the Expiration Date (the "Agreement Term"), unless extended by
mutual agreement of the parties.
7.5 EFFECT OF TERMINATION. No termination of this Agreement, or the
Lease with respect to any Leased Fibers, shall affect the rights or obligations
of any party hereto:
(a) with respect to any payment hereunder for services rendered
prior to the date of termination;
(b) pursuant to Articles 15, 16, 17, 19, 22, 24, 26, and 27
entitled Indemnification; Insurance; Taxes and Franchise, License, and Permit
Fees; Confidentiality and Publicity; Arbitration; Rules of Construction;
Limitation of Liability; and Audit Rights; respectively; or
(c) pursuant to other provisions of this Agreement that, by their
sense and context, are intended to survive termination of this Agreement.
8. OPERATION, MAINTENANCE AND REPAIR OF THE SYSTEM
8.1 MAINTENANCE. During the Term of the Fiber Lease, Lessor shall
provide, or cause to be provided by contractors selected by Lessor, emergency
and non-emergency maintenance and repair of the Lessor System and Lessee's
Fibers all pursuant to the operations specifications set forth in Exhibit H.
Lessor, at Lessee's sole expense and at Lessor's or its subcontractor's then
prevailing rates, shall perform maintenance and repair necessitated by Lessee's
negligence or willful misconduct or Lessee's elective maintenance or repair
requests.
8.2 SELF-HELP RESTORATION. If Lessor does not repair a loss of fiber
continuity of a Lessee Fiber within eight hours after Lessor receives notice of
the need for repair of any Lessee Fibers, Lessee may, through the use of a
subcontractor approved by Lessor, perform maintenance and repair services and
Lessee may access any part of the Lessor System to perform such service;
provided, however, that Lessee performs any such service within the restrictions
set forth in, and subject to, the applicable underlying Right-of-Way
Authorization and provided further that the eight hour period referred to above
shall be tolled for any period during which Lessor or its contractors are
prevented from having access to the Lessee Fibers due to circumstances outside
of Lessor's reasonable control. If Lessee requires Lessor personnel to unlock
any Lessor facility, Lessor shall cooperate fully with Lessee to allow Lessee
access to such facility. Lessee shall provide Lessor oral notification
(confirmed in writing) whenever it enters the Lessor System pursuant to this
Section 8.2 as soon as reasonably possible. Lessee shall only use the preceding
rights to enter the Lessor System to the extent necessary for an emergency
situation. Lessor shall reimburse Lessee its Costs of providing such self-help
restoration maintenance services.
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8.3 MAINTENANCE OF LESSEE'S EQUIPMENT EXCLUDED. Lessor shall have no
obligation under this Agreement to maintain, repair or replace Lessee's
Equipment.
8.4 NO UNAUTHORIZED ACCESS TO SYSTEM. Lessee shall not access any part
of the Lessor System (other than pursuant to Section 8.2 or the Collocation
Provisions) without the prior written consent of Lessor, and then only upon the
terms and conditions specified by Lessor.
8.5 NO OTHER FEES. Except as otherwise set forth herein (including
orders placed pursuant to the Collocation Provisions), neither party shall
charge the other party any maintenance, right-of-way, conduit occupancy, or
other recurring charges.
8.6 MAINTENANCE FEES. For each month during the Term occurring after
the Acceptance Date of each Selected Segment, Lessee shall pay Lessor a
maintenance fee of $**** per fiber mile, per month for the maintenance services
set forth in the first sentence of Section 8.1 of this Agreement associated with
the Lessee Branch A Fibers. Invoices for such maintenance services shall be
issued monthly in advance no earlier than the first day of each calendar month
after the Acceptance Date for each Selected Segment.
9. RELOCATION
9.1 RELOCATION COSTS. If Lessor is required to relocate any portion of
its System (including the fibers therein and the facilities associated
therewith), Lessor shall give Lessee not less than 180 calendar days' prior
written notice (unless Lessor has received less than 180 days' notice, in which
case Lessor shall give notice to Lessee as promptly as reasonably practicable
after Lessor receives such notice or determines that a relocation is necessary)
of such relocation. Lessor shall use commercially reasonable efforts to arrange
for such relocation as promptly as practicable. Lessor shall provide Lessee with
updated as-built drawings with respect to any relocated portion of the relocated
System not later than 180 calendar days following the completion of such
relocation. Lessor shall perform any relocation such that:
(a) the relocated facilities shall be constructed and tested in
accordance with the specifications and requirements set forth in this Agreement,
including the applicable Exhibits;
(b) the relocation shall not result in a materially adverse change
to the operations, performance, or Branch B interconnections of Lessee, or the
end points or meet points of the System;
(c) the relocation maintains Diversity of Branch A Lessee Fibers;
and
(d) the relocation shall not unreasonably interrupt service on the
Lessor System. Lessee shall receive at least twenty-one (21) calendar days
advance notice of any interruption in service of Lessee Fibers which will be
caused by a relocation, and such relocation
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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shall be coordinated such that any interruption shall only occur between the
hours of 12 midnight and 6 A.M. local time on Saturdays and Sundays.
10. COLLOCATION
10.1 PROVISION OF COLLOCATION SERVICES. Lessor shall make available to
Lessee Basic Services in its POPs and Transmission Sites to be used in
connection with the Lessee Fibers for the collocation of Lessee's Equipment in
accordance with the provisions of Exhibit C and the following Sections of this
Article.
10.2 INITIAL BASIC SERVICES. Lessor shall provide to Lessee Basic
Services in the quantities and at the locations set forth in Exhibit J as
amended by Lessor from time to time. If Lessee elects not to use all the racks
to be provided pursuant to this Section, such unused racks shall still be
included in the calculation of Rack Credits pursuant to Section 10.4, beginning
on the Acceptance Date of any Selected Segment associated with such collocation
space, provided that such Rack Credits shall not accrue until Lessor tenders the
Basic Services associated with the unused rack(s) to Lessee by written notice
setting forth the date such space was first available for use by Lessee.
10.3 ADDITIONAL BASIC SERVICES. To the extent Lessor has additional
available and uncommitted collocation space and power at the locations listed in
Exhibit J as amended by Lessor from time to time, at other Lessor Transmission
Sites or Lessor POPs (but only with respect to Lessor POPs which are not located
inside of buildings or central offices and which are listed in Exhibit J),
Lessee may order additional Basic Services. Lessee shall use the standard Lessor
procedures for ordering such additional Basic Services.
10.4 RACK CREDITS. In consideration for the Lease payments paid by
Lessee hereunder, Lessee shall receive **** rack credits ("Rack Credits"). Each
Rack Credit entitles Lessee to the right to the use of one rack per month
together with associated Basic Services (including power up to 30 amps per rack)
in a Lessor Transmission Site or POP included within the Selected Segments
during the Term. At such time as Lessee utilizes all such Rack Credits, Lessee
shall thereafter pay for the use of such racks together with associated Basic
Services (including power up to 30 amps per Rack) at the rate of $**** per
month. Upon selection by Lessee of a Selected Segment, Lessee shall advise
Lessor of the number of racks and location of such racks in Transmission Sites
or POPs that Lessee requires. Lessor shall provide, and Lessee shall pay for
(subject to this Section 10.4) such racks commencing on the Acceptance Date of
the Lessee Fibers to which the racks relate. In the event that subsequent to the
selection of a Selected Segment, Lessee requires additional racks, Lessor may
provide such racks to Lessee subject to the availability thereof which
availability shall be determined by Lessor in its sole reasonable discretion.
Once selected, the use of such racks by Lessee may not be terminated (a) for one
year after use of such rack begins if such rack is located in a Lessor POP, and
(b) for five years after use of such rack begins if such rack is located in a
Lessor Transmission Site. If Lessee elects to terminate use of any racks it
shall do so by giving Lessor 30 days prior written notice. Unused
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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Rack Credits may not be assigned, other than in conjunction with a permitted
assignment of this Agreement, or converted into cash, and shall expire and be of
no further force or effect after the Expiration Date.
10.5 ADDITIONAL SERVICES INVOICING. Lessor shall issue invoices for any
Additional Services after the calendar month during which it provided such
Additional Services, provided that it may issue invoices for nonrecurring
charges (including any Cost reimbursement) at any time after such charges
accrue.
11. CONNECTION TO THE SYSTEM
11.1 PERMITTED INTERCONNECTION POINTS. Except as limited by Section
11.2, Lessee shall have the right, subject to making the payments required, to
interconnect with Lessee's Fibers at:
(a) any designated Access Point on Lessor's System;
(b) any Lessor Network Site where such fibers are located
(pursuant to Exhibit C);
(c) any Branch B interconnection; or
(d) as mutually agreed by the parties.
11.2 LIMITATIONS ON INTERCONNECTION RIGHTS. Lessee's exercise of the
interconnection right set forth in Section 11.1 shall be subject to any
prohibitions or restrictions in Lessor's Right- of-Way Authorizations. Lessee
may not establish an interconnection that Lessor, in its reasonable discretion
(applied without unreasonable discrimination with respect to interconnections
made by Lessor or third parties), determines is likely to materially and
adversely affect the Lessor System.
11.3 FIBER DROPS. In the event Lessee establishes its own
interconnection with the Branch A portion of the Lessee's System, Lessor shall
provide, at Lessee's Cost, fiber drops from interconnection points at Access
Points on Lessor System to the edge of Lessor's right-of-way at points mutually
agreed upon in writing by the parties and Branch B pricing shall be applicable.
Lessor shall use commercially reasonable efforts to provide such drop points at
the locations requested by Lessee subject to the limitations in the Right-of-Way
Authorizations. Subject to the terms of the Right-of-Way Authorizations and
Section 11.5, Lessor shall also provide Lessee reasonable access to any such
fiber drops.
11.4 DEMARCATION POINTS. The demarcation point ("Demarcation Point")
between Lessor's facilities and those of Lessee shall be at:
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(a) Lessor's fiber patch panel or the DSX-N panel (as designated
by Lessor) for interconnections in Network Sites and at other Buildings having
either of such panels; or
(b) the furthest point inside a Building, including a local
exchange carrier's central office, to which Lessor is allowed to take the fiber;
and, to the extent Lessor is later allowed to install or access a fiber patch
panel or DSX-N panel inside of such Building, such point shall become the
Demarcation Point and Lessor agrees to deliver Lessee's Fiber to such point.
Where neither of the Demarcation Points described in (a) or (b) above exist, the
Demarcation Point shall be selected by Lessor consistent with reasonable
industry and Lessor practices.
11.5 FACILITIES OWNERSHIP AND CONTROL. Lessee shall retain ownership of
any portion of facilities on its side of the Demarcation Point during the Term
of this Agreement and Lessor shall have no obligation to maintain, repair,
relocate, or monitor such Lessee facilities (including any fiber drop facilities
established pursuant to Section 11.3). Lessee shall not access a splice, splice
box, splice vault, or similar facility interconnecting with Lessor's System.
Lessor shall perform any work required with respect to such splice facilities
and may invoice Lessee for the Cost of performing such work at the request of
Lessee (except to the extent the work relates to the provision of a Branch B
interconnection).
11.6 LESSEE RESPONSIBILITY. Subject to the provisions herein, Lessee
shall be responsible for obtaining the rights required and for all costs of:
(a) obtaining rights of way within or beyond Lessor's Right-of-Way
Authorizations;
(b) obtaining building access, entry rights, ducts, or riser
cables to interconnect in buildings or any access beyond Lessor's Demarcation
Point with respect to a Branch B interconnection;
(c) providing all Equipment and Lessor-approved materials to
construct and install each interconnection, including cables and conduit and any
labor charges associated therewith; and
(d) bringing facilities to and connecting them with Lessor's
System.
11.7 THIRD PARTY RELATIONS. If necessary, and where applicable, Lessor
shall assist Lessee, at Lessee's Cost, in obtaining from any land or building
owner, lessor, or private or governmental right-of-way owner, any rights
required to access and exit interconnection points. Lessee shall use reasonable
efforts to avoid damaging the relationships between Lessor and such third
parties.
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11.8 APPLICATION OF BRANCH A INTERCONNECTION CHARGES. With respect to
interconnections made pursuant to the Collocation Provisions or made to
interconnect with a POP, no recurring charges shall apply and the nonrecurring
charges shall be limited to Lessor's Costs of providing such interconnection (as
computed, with respect to interconnections in Network Site collocation
facilities, pursuant to the Collocation Provisions). During the Term each party
may modify its list of POPs by adding or eliminating POPs, subject to the
consent of the other party.
12. BRANCH B INTERCONNECTIONS
12.1 APPLICATION OF BRANCH B PRICING. Except as set forth in Section
11.8, all interconnections with Lessor's System shall be considered Branch B
interconnections, regardless of whether the interconnection with backbone or
Branch A facilities is made by Lessor (e.g., a Lessor Branch B interconnection
listed in Exhibit K and not described in Section 11.8) or by Lessee pursuant to
Article 11 or whether the Branch B interconnection is set forth in Exhibit K.
All such Branch B interconnections shall be paid by Lessee in accordance with
Exhibit L. Provided Lessee is paying for a Branch B interconnection with respect
to a particular Building, Lessee shall have the right to route other
interconnections through its connection in that Building without paying for such
additional Branch B interconnections.
12.2 BRANCH B PRICING. No nonrecurring charges shall apply to Branch B
interconnections located on Lessor's network, but the Branch B recurring charges
set forth in Exhibit L shall apply, as adjusted by the following:
(a) the Branch B recurring charges shall be reduced by **** for
the period beginning with the completion of the interconnection and ending on
the first anniversary of such completion; and
(b) if Lessor does not offer Diversity for a Branch B
interconnection, the Branch B recurring charges shall be reduced by **** (or a
total of **** during the period described in Subsection 12.2(a)).
12.3 LESSEE MINIMUM BRANCH B COMMITMENT. Subject to the provisions of
this Section 12.3, Lessee shall commence paying for all Branch B
interconnections as of the Acceptance Date of each such Branch B
interconnection. The provisions of Article 12 shall apply to all Branch B
interconnections. Commencing on June 1, 2000 and continuing through May 31,
2001, Lessee shall obtain and pay for, and Lessor shall make available, at least
**** Branch B interconnections (provided that Lessor has at least **** Buildings
pursuant to Exhibit K available for Branch B interconnection), each of which
interconnections shall consist of at least **** fibers, at the rate per month
per fiber shown on Exhibit L. Commencing on June 1, 2001 and continuing through
May 31, 2002, Lessee shall obtain and pay for, and Lessor shall make available,
at least **** Branch B interconnections (provided that Lessor has at least ****
Buildings pursuant to Exhibit K available for Branch B interconnections), each
of which interconnections shall consist of
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 25
at least **** fibers, at the rate per month per fiber shown on Exhibit L.
Commencing on June 1, 2002 and continuing through the remaining Term of this
Agreement, Lessee shall obtain and pay for, and Lessor shall make available, at
least **** Branch B interconnections (provided that Lessor has at least ****
Buildings pursuant to Exhibit K available for Branch B interconnections), each
of which interconnections shall consist of at least **** fibers, at the rate per
month per fiber shown on Exhibit L. Notwithstanding the above, if Lessee places
bona fide orders for Branch B interconnections at Committed Buildings and Lessor
fails to complete such orders by the dates set forth above (taking into account
the order interval requirements described in Section 12.4), then Lessee shall be
deemed to have obtained (but shall not be obligated to pay for) such Branch B
interconnections as of the later of the requested service date or the end of the
order interval set forth in Section 12.4 until, such time as such Branch B
interconnections shall have been delivered to, and Accepted by, Lessee. Lessee's
obligation to take and/or pay for the minimum number of Branch B
interconnections commencing on the dates set forth above shall be reduced in the
same proportion as Lessor's commitment to have Buildings available as of such
dates has not been fulfilled as of such dates, but shall be reinstated as of the
date such commitments have been fulfilled. Except as herein provided, if Lessee
fails to order or Accept the minimum number of Branch B interconnections as of
the dates indicated above and for the relevant periods thereafter, and provided
that Lessor has the requisite number of Buildings available as of such dates,
Lessee shall nonetheless pay Lessor a minimum of $**** per month for each Branch
B interconnection committed by Lessee as herein provided.
12.4 ORDER INTERVALS. Buildings listed on Exhibit K are either
designated as K-1 or K-2.
(a) Subject to the terms of Exhibit K, Lessee shall have the right
to order Branch B interconnections in accordance with Exhibit H at Lessor
Committed Buildings designated as K-1 on Exhibit K and Lessor shall provide such
interconnections within 45 days after Lessor receives such order.
(b) Lessee shall have the right to request that Lessor make a
Branch B interconnection at any Lessor Committed Buildings designated as K-2 on
Exhibit K, by giving notice (the "K-2 Notice") to Lessor. Within 20 days after
the date of the K-2 Notice, Lessor shall give notice to Lessee (the "K-2
Response"), in which K-2 Response, Lessor shall advise Lessee of the date by
which Lessor commits to making Branch B interconnections at the Buildings listed
on the K-2 Notice (it being the understanding of the parties that Lessor shall
use commercially reasonable efforts to commit to making such Branch B
interconnection as promptly as reasonably practicable). Within 10 days after the
date of the K-2 Response, Lessee shall give notice to Lessor advising Lessor
whether or not Lessee elects to have Lessor make the Branch B interconnections
by the date specified in the K-2 Response. If Lessee gives timely notice of its
election to have such Branch B interconnection made, such notice shall be deemed
a bona fide order for a Branch B interconnection by the date specified in the
K-2 Response and Lessor shall be committed to deliver such Branch B
interconnection in accordance with Section 12.3.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 26
(c) With respect to a Branch B interconnection, any time after the
first anniversary of the date upon which Lessee's payment with respect to such
Branch B interconnection commenced, Lessee may cancel such interconnection upon
at least 30 days prior written notice to Lessor, provided that with respect to a
minimum of **** Buildings, Lessee substitutes another Branch B interconnection
reasonably acceptable to Lessor; and provided further that Lessee has or is
paying for the minimum number of Branch B interconnections set forth in Section
12.3 during the Term.
12.5 REMOVAL OF BUILDINGS FROM COMMITTED BUILDING LIST. Lessor shall
have the right at any time and from time to time to remove from the list of
Committed Buildings currently set forth on Exhibit K or Committed Buildings
added thereto in the future, up to 10% of the total number of such Buildings,
(i.e., 10% of the total Buildings, including both those designated K-1 and K-2),
provided that Lessor may only remove Committed Buildings designated as K-2.)
12.6 SPECIFICATIONS. All Branch B interconnections established by
Lessor within the Lessor System shall be in accordance with the relevant
specifications (including the splice loss and optical fiber specifications) set
forth in Exhibits G and I and with prudent telecommunications industry
practices. Lessor shall use commercially reasonable efforts to provide all
Branch B interconnections with Diversity. In the event that a Branch B
interconnection does not have Diversity, then Lessor shall give notice to Lessee
and Section 12.2(b) shall apply to such Branch B interconnection.
12.7 INTRABUILDING EXTENSIONS. Subject to Section 11.6, Lessee may
elect to obtain either fiber optic or metallic (e.g., coaxial cable or copper
twisted pair) extensions between a Lessor Demarcation Point at a Branch B
interconnection and another point within the same Building. Upon written request
for either such extension setting forth the design and terminating location of
such extension, Lessor shall, at its sole discretion and in accordance with its
then- standard order intervals, either (a) construct such extension for a
nonrecurring charge equal to its Cost plus 10% or (b) designate at least one,
but up to three, reputable Lessor-approved contractors authorized to perform
such work, in which case Lessor shall have no responsibility for such extension
and Lessee shall deal directly with any such contractor. Lessor shall reasonably
cooperate with any such approved contractors selected by Lessee to allow them to
perform such work.
13. USE OF THE SYSTEMS
13.1 OBLIGATION TO COMPLY WITH LAWS; EXCLUSIVE USE. Lessee shall comply
in all material respects with all applicable government codes, ordinances, laws,
rules, regulations, Right-of-Way Authorizations and/or restrictions in its use
of Lessor's System. Subject to the provisions of Section 23.3, Lessee may use
the Lessee Fibers for any lawful telecommunications purpose. Lessor shall have
no right to use Lessee Fibers during the Term of this Agreement.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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13.2 SYSTEM DAMAGE. Lessor and Lessee shall promptly notify each other
of any matters pertaining to any damage or impending damage to or loss of the
Lessor System that are known to such party. Lessee shall take all commercially
reasonable precautions against, and shall assume liability, subject to the terms
herein, for, any damage caused by it to the Lessee Fibers. Lessee shall not use
the Lessee Fibers in a way that interferes in any material way with or
materially adversely affects the use of any fibers of Lessor or the Lessor
System.
13.3 REGULATORY COOPERATION. Each party shall cooperate with and
support the other in complying with any requirements applicable to the Lessor
System imposed by any governmental or regulatory agency or authority.
13.4 LIENS. Lessee shall not cause or permit any part of the Lessor
System to become subject to any mechanic's lien, materialman's lien, vendor's
lien, or any similar lien whether by operation of law or otherwise. If Lessee
breaches its obligations under this Section, it shall immediately notify Lessor
in writing, shall promptly cause such lien to be discharged and released of
record without cost to Lessor, and shall indemnify Lessor against all costs and
expenses (including reasonable attorneys' fees and court costs at trial and on
appeal) incurred in discharging and releasing such lien.
14. PAYMENT
14.1 TIME AND METHOD OF PAYMENT. The invoice delivery date shall be
determined pursuant to Section 18.2. Monthly payments for Lease Fibers shall be
made by wire transfer (or, at Lessor's election, by check or draft), to the
account designated on the invoice of Lessor, within seven business days of the
delivery of such invoice. Except as otherwise set forth in this Agreement, all
other amounts due hereunder shall be paid within 30 calendar days of the invoice
delivery date. Except as otherwise provided, payments may be made by check or
draft of immediately available funds delivered to the address designated in
writing by the other party (e.g., in a statement or invoice) or, failing such
designation, to the address for notice to such other party provided pursuant to
Article 18. Except as set forth herein, a party may issue an invoice after
incurring any costs subject to reimbursement by the other party or after the
time period during which a charge accrues.
14.2 LATE PAYMENT CHARGES. If a party fails to make any payment under
this Agreement when due, such unpaid amounts shall accrue interest, from the
date such payment is due until paid, including accrued interest, at the lower of
eighteen percent (18%) annual interest or the highest percentage allowed by law.
15. INDEMNIFICATION
15.1 INDEMNITY OBLIGATION. Each party shall indemnify, defend, protect
and hold harmless the other party, its employees, officers, directors, agents,
shareholders, affiliates, Facility
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Owners/Lenders, and other parties to Right-of-Way Authorizations that are
entitled to indemnity by such indemnifying party, from and against, and assumes
liability for:
(a) Any injury, loss or damage to any person, tangible property or
facilities of any person or entity (including reasonable attorneys' fees and
costs), to the extent arising out of or resulting from the acts or omissions,
negligent or otherwise, of the indemnifying party, its officers, employees,
servants, affiliates, agents or contractors in connection with its performance
under this Agreement; and
(b) Any claims, liabilities or damages arising out of any
violation by the indemnifying party of regulations, rules, statutes or court
orders of any local, state or federal governmental agency, court or body in
connection with its performance under this Agreement.
15.2 NO LIMITATION ON CLAIMS AGAINST OTHER PARTIES. Except as set forth
herein, and subject to the terms of any underlying agreements between Lessor and
any third person, nothing contained herein shall operate as a limitation on the
right of either party hereto to bring an action for damages against any third
person, including indirect, special or consequential damages, based on any acts
or omissions of such third person as such acts or omissions may affect the
construction, operation or use of the Lessee Fibers; provided, however, that
each party hereto shall assign such rights of claims, execute such documents and
do whatever else may be reasonably necessary to enable the other party to pursue
any such action against such third person.
16. INSURANCE
16.1 OBLIGATION TO OBTAIN. During the Term of this Agreement, the
parties shall each obtain and maintain not less than the following insurance:
(a) Commercial General Liability Insurance, including coverage for
sudden and accidental pollution legal liability, with a combined single limit of
$10,000,000 for bodily injury and property damage per occurrence and in the
aggregate; provided that such coverage may be obtained through a combination of
specific and umbrella or excess liability policies.
(b) Worker's Compensation Insurance in amounts required by
applicable law and Employers Liability Insurance with limits not less than
$1,000,000 each accident. If a party is to perform work in Nevada, North Dakota,
Ohio, Washington, Wyoming, or West Virginia, the party shall participate in the
appropriate state fund(s) to cover all eligible employees and provide a stop gap
endorsement.
(c) Automobile Liability Insurance with a combined single limit of
$2,000,000 for bodily injury and property damage per occurrence, to include
coverage for all owned, non-owned, and hired vehicles; provided that such
coverage may be obtained through a combination of specific and umbrella or
excess liability policies.
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The limits set forth above are minimum limits and shall not be construed to
limit the liability of either party.
16.2 POLICY REQUIREMENTS. Each party shall obtain and maintain the
insurance policies required above with companies rated A- or better by Best's
Key Rating Guide or with a similar rating by another generally recognized rating
agency. The other party, its Affiliates, officers, directors, and employees, and
any other party entitled to indemnification hereunder shall be named as
additional insureds to the extent of such indemnification. Each party shall
provide the other party with an insurance certificate confirming compliance with
the insurance requirements of this Article. The insurance certificate shall
indicate that the other party shall be notified not less than 30 calendar days
prior to any cancellation or material change in coverage. If either party
provides any of the foregoing coverages through a claims made policy basis, that
party shall cause such policy or policies to be maintained for at least three
years beyond the expiration of this Agreement.
16.3 WAIVER OF SUBROGATION. The parties shall each obtain from the
insurance companies providing the coverages required by this Agreement a waiver
of all rights of subrogation or recovery in favor of the other party and, as
applicable, its members, managers, shareholders, Affiliates, assignees,
officers, directors, and employees or any other party entitled to indemnity
under this Agreement to the extent of such indemnity.
16.4 BLANKET POLICIES; SELF-INSURANCE. Nothing in this Agreement shall
be construed to prevent either party from satisfying its insurance obligations
pursuant to this Agreement (a) under a blanket policy or policies of insurance
that meet or exceed the requirements of this Article or (b) with respect to the
insurance required in Sections 16.1(b) and (c), with the consent of the other
party, which consent shall not be unreasonably withheld, self-insurance.
17. TAXES AND FRANCHISE, LICENSE AND PERMIT FEES
17.1 OBLIGATIONS TO PAY RIGHT-OF-WAY CHARGES AND TAXES. The parties
acknowledge that a material premise of this Agreement is that during the Term,
Lessor shall obtain, and use commercially reasonable efforts to maintain, its
Right-of-Way Authorizations at its own cost. Lessor shall timely pay any and all
(a) taxes, franchise, license and permit fees based on the physical location of
its System, and/or the construction thereof in or on public roads, highways or
rights-of-way; and (b) Right-of-Way Authorization payments applicable to the
System. Notwithstanding the foregoing, Lessee shall pay any taxes, franchise,
license and permit fees based upon its lease or use of Lessee Fibers. Failure to
pay such taxes or payments by the party responsible therefor, which continues
after seven calendar days' written notice thereof by the other party, shall
authorize, but not obligate, the other party to make such payments and
responsible party shall reimburse the other party for such payments promptly
upon demand together with interest at the rate set forth in Section 14.2 from
the date that the other party made such payment until reimbursed by the
responsible party.
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17.2 OBLIGATION TO TIMELY PAY TAXES BASED ON REVENUES. Except as set
forth in Section 17.1, Lessee shall pay any and all sales, use, income, gross
receipts or other taxes assessed based upon revenues Lessee receives due to its
use of the Lessee Fibers.
17.3 RIGHT TO CONTEST TAXES. Notwithstanding any provision herein to
the contrary, a party shall have the right by appropriate proceedings brought in
good faith to protest the imposition and/or amount of any taxes or franchise,
license or permit fees imposed on or assessed against it. In such event, the
protesting party shall indemnify and hold the other party harmless from any
expense, legal action or cost, including reasonable attorneys' fees, resulting
from the protesting party's exercise of its rights hereunder.
17.4 PROHIBITION ON AGREEMENTS AFFECTING OTHER PARTY. Without the prior
consent of Lessee, Lessor shall not enter into any agreement that would have the
effect of obligating Lessee to pay additional taxes or franchise, license or
permit fees unless such agreement is required by a government or agency thereof
in connection with the grant of a franchise, license, permit or similar
governmental requirement or required pursuant to a Right-of-Way Authorization.
18. NOTICE
18.1 ADDRESSES. Unless otherwise provided herein, all notices and
communications concerning this Agreement shall be addressed to the other party
as follows:
If to Lessee: Williams Communications, Inc.
Attn: Contract Administration, Suite 2600
One Williams Center
Tulsa, Oklahoma 74172
Facsimile No.: (918) 573-6578
with a copy to: Williams Communications, Inc.
Attn: General Counsel
One Williams Center, Suite 4100
Tulsa, Oklahoma 74172
Facsimile No.: (918) 573-3005
If to Lessor: Metromedia Fiber Network Services, Inc.
One North Lexington Avenue
Fourth Floor
White Plains, New York 10601
Attention: President
Facsimile No: 914-421-7550
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with a copy to: Metromedia Fiber Network Services, Inc.
One North Lexington Avenue
Fourth Floor
White Plains, New York 10601
Attn: Vice President, Legal Affairs
Facsimile No: 914-421-6777
or at such other address as may be designated in writing to the other party (a
party may designate a separate address for delivery of invoices).
18.2 METHOD FOR DELIVERING NOTICES AND INVOICES. Unless otherwise
provided herein, notices and invoices shall be in writing and sent by registered
or certified U.S. Mail, postage prepaid, or by commercial overnight delivery
service, or by facsimile, and shall be deemed served or delivered to the
addressee or its office on the date of receipt acknowledgment, or if by
facsimile, upon confirmation of transmission or if postal claim notices are
given, on the date of its return marked "unclaimed," provided, however, that
upon receipt of a returned notice marked "unclaimed," the sending party shall
make reasonable effort to contact and notify the other party by telephone.
19. CONFIDENTIALITY AND PUBLICITY
19.1 CONFIDENTIAL INFORMATION. The terms and conditions of this
Agreement and all documents referenced herein, communications between the
parties regarding this Agreement, information provided in connection with or
pursuant to this Agreement or the service to be provided hereunder, as well as
any financial or business information of either party are confidential
("Confidential Information"). Such Confidential Information shall be held in
confidence, and the receiving party shall afford such Confidential Information
the same care and protection as it affords generally to its own Confidential
Information (which in any case shall be not less than reasonable care) to avoid
disclosure to or unauthorized use by any third party. All Confidential
Information shall remain the property of the disclosing party, shall be used by
the receiving party only for its intended purpose, and such Confidential
Information, including all copies thereof, shall be returned to the disclosing
party or destroyed after the receiving party's need for it has expired or upon
the request of the disclosing party. Confidential Information shall not be
reproduced except to the extent necessary to accomplish the purposes and intent
of this Agreement, or as otherwise may be permitted in writing by the disclosing
party. Notwithstanding anything contained herein to the contrary, neither party
shall be required to keep confidential any information that (a) becomes publicly
available other than through the actions or omissions of the receiving party;
(b) is required to be disclosed pursuant to a governmental or judicial rule,
order or regulation; (c) the recipient of the Confidential Information
independently develops; (d) becomes available to the receiving party without
restriction from a third party; (e) is required by its lender and is given to
such lender on a confidential basis; or (f) is subject to "due diligence" review
by a potential acquirer of a significant equity interest in it or its ultimate
or intermediate parent company (a significant equity interest shall be an
interest of at least 5% of the voting equity
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of a party or of securities having a market value of at least $100 million) and
is given to such potential acquirer on a confidential basis.
19.2 PUBLICITY. Following the Effective Date, the parties shall
coordinate and cooperate with each other when making public announcements or
disclosures to any governmental entities related to the terms of this Agreement
and each party shall have the right to promptly review, comment upon and approve
(such approval not to be unreasonably withheld or delayed) any publicity
materials, press releases or other public statements or disclosures to
governmental entities by the other party that refer to, or that describe any
aspect of this Agreement; provided, however, that no party shall have an
approval right with respect to any public announcements or disclosures to any
governmental entities which are, in the reasonable judgement of the party making
such public announcement or disclosure, required by law.
20. DEFAULT
20.1 PARTIAL TERMINATION UPON DEFAULT. Either party, upon written
notice to the other party after the other party's default and the other party's
failure to cure any default in the performance of any material obligation
hereunder prior to the end of the applicable cure period, may terminate this
Agreement as herein provided, provided that at the time of termination such
default remains uncured:
(a) Lessor may terminate this Agreement, to the extent that Lessee
is the defaulting party; and/or
(b) Lessee may terminate this Agreement, to the extent that the
default relates to Lessor System (or, at Lessee's election, with respect to any
Lessee Fibers for which the Acceptance Date has not occurred as provided in
Section 5.4), if Lessor is the defaulting party.
20.2 SPECIFIC DEFAULT EVENTS. Events of default shall include but not
be limited to: (a) the making of a general assignment for the benefit of the
defaulting party's creditors; (b) the filing of a voluntary petition in
bankruptcy or the filing of a petition in bankruptcy or other insolvency
protection against the defaulting party which is not dismissed within 90
calendar days thereafter; (c) the filing by the defaulting party of any petition
or answer seeking, consenting to, or acquiescing in reorganization, arrangement,
adjustment, composition, liquidation, dissolution, or similar relief; (d) any
violation by Lessee of the restrictions set forth in Section 23.3, (e) a failure
by Lessor to cause the Acceptance Date for more than 20% of the route miles of
Selected Segments on its System to occur within 180 days of the Scheduled
Acceptance Dates thereof, or (f) a failure by Lessor to complete more than 20%
of the Branch B interconnections at Committed Buildings within 180 days of the
scheduled completion dates.
25
<PAGE> 33
20.3 CURE PERIOD. The cure period applicable to Section 20.1 shall be:
(a) with respect to a default in payment, the period ending ten
business days after a written notice of such default is given;
(b) with respect to the events of default described in Subsection
20.2(e) or 20.2(f), the period ending 30 calendar days after a written notice of
such default is given; or
(c) with respect to any other default, the period ending 30
calendar days after a written notice of such default is given, provided,
however, that if such default cannot with reasonable diligence be cured within
such 30-day period, and such other party has commenced to effect a cure
immediately upon receipt of such notice, and diligently pursues such cure, then
such cure period will be extended for a period reasonably required to cure such
default but in no event more than an additional 30 calendar days.
20.4 FAILURE TO CURE. Upon the failure by the defaulting party to
timely cure any such default after notice thereof from the other party, the
other party may, subject to the provisions of Section 22 (a) take such action as
it determines, in its sole discretion, to be necessary to correct the default,
and (b) pursue any legal remedies it may have under this Agreement, applicable
law, or principles of equity relating to such breach.
20.5 WAIVER OF SPECIFIC DEFAULTS. Any event of default by the
defaulting party may be waived under the terms of this Agreement at the other
party's option. Any such waiver shall be in writing.
20.6 DISPUTED AMOUNTS. Notwithstanding the other provisions of this
Article, failure to pay an amount subject to a bona fide dispute shall not be an
event of default (until such dispute is resolved pursuant to Article 22 or
otherwise) to the extent the disputed amount is (a) less than $100,000 or (b)
paid into an escrow account of a nationally chartered domestic bank with offices
in New York pending resolution of the dispute. The interest rate set forth in
Section 14.2 shall apply to amounts so withheld or paid into escrow by one party
and later awarded to the other party, but the party paying such amounts into
escrow shall, upon closing of an escrow account, be entitled to any interest
received from, and responsible for paying any fees charged by, the bank holding
the escrow funds.
21. FORCE MAJEURE
21.1 EXCUSED PERFORMANCE. Neither party shall be in default under this
Agreement with respect to any delay in such party's performance (other than the
payment of monetary amounts due under this Agreement) caused by any of the
following conditions: act of God, fire, flood, material shortage or
unavailability not resulting from the responsible party's failure to timely
place orders therefor, lack of transportation, government codes, ordinances,
laws, rules, regulations or restrictions, war or civil disorder, or any other
cause beyond the reasonable control
26
<PAGE> 34
of such party, provided that the party claiming relief under this Section shall
promptly notify the other in writing of the existence of the event relied on and
the cessation or termination of said event. The party claiming relief under this
Section shall exercise commercially reasonable efforts to minimize the time for
any such delay.
22. ARBITRATION
22.1 OBLIGATION TO ARBITRATE. Any dispute or disagreement relating to
this Agreement or any matter arising between Lessee and Lessor in connection
with this Agreement which is not settled to the mutual satisfaction of Lessee
and Lessor within 30 calendar days from the date that either party informs the
other in writing that such dispute or disagreement exists, shall be settled by
arbitration by a single arbitrator in Chicago, Illinois, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the date that such notice is given. If the parties are unable to agree on a
single arbitrator within fifteen calendar days, the American Arbitration
Association shall select an arbitrator. The decision of the arbitrator shall be
final and binding upon the parties and shall include written findings of law and
fact, and judgment may be obtained thereon by either party in a court of
competent jurisdiction. Each party shall bear the cost of preparing and
presenting its own case. The cost of the arbitration, including the fees and
expenses of the arbitrator, shall be shared equally by the parties unless the
award otherwise provides.
22.2 EXCEPTIONS TO ARBITRATION OBLIGATION. The obligation herein to
arbitrate shall not be binding upon any party with respect to requests for
preliminary injunctions, temporary restraining orders or other procedures in a
court of competent jurisdiction to obtain interim relief when deemed necessary
by such court to preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute.
23. ASSIGNMENT
23.1 RESTRICTIONS ON ASSIGNMENT. Except as provided in the second
sentence of this Section, neither party shall assign or otherwise transfer this
Agreement or its rights or obligations hereunder to any other party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. Either party shall have the right, without the
other party's consent, to assign or otherwise transfer this Agreement in whole
or in part as collateral to any lender or to any of its Affiliate's or to any
corporation into which it may be merged or consolidated or which purchases all
or substantially all of its assets.
23.2 AGREEMENT BINDS SUCCESSORS. This Agreement and each of the
parties' respective rights and obligations under this Agreement, shall be
binding upon and shall inure to the benefit of the parties hereto and each of
their respective successors and permitted assigns. Any assignment or transfer
shall be subject to the other party's rights under this Agreement and any
assignee or transferee shall continue to perform the assigning party's
obligations under this Agreement.
27
<PAGE> 35
23.3 RESTRICTION ON TRANSFER OF DARK FIBER RIGHTS. Lessee shall not
convey any interest in the rights granted herein in the Lessee Fibers except by
means of the provision of "capacity" or a permitted assignment of this
Agreement. "Capacity" does not include IRU grants, sales, leases, assignments,
or grants of similar rights, regardless of the term, in "dark" fiber. The
parties acknowledge that the above restriction is a material obligation of the
parties, will reduce the parties' costs of performing their obligations
hereunder. Lessee acknowledges and agrees the Lessee Fibers are provided for use
(a) exclusively by (i) Lessee and/or its Affiliates, or (ii) customers of Lessee
and (b) in either case, only in the ordinary course of business of Lessee and/or
its Affiliates, and Lessee will not permit or provide access to, or use of, the
Lessee Fibers, in whole or in part, to any third party (other than a customer of
Lessee in the ordinary course of business of Lessee), pursuant to (by way of
example and not in limitation) sublease, license, sublicense or resale, or any
other right of use. For purposes of this Agreement, the ordinary course of
Lessee's and/or its Affiliates' business shall not include (ii) Dark Fiber
Transactions or (ii) Dedicated Fiber Transactions. "Dark Fiber Transactions"
means the direct or indirect assignment, condo, wholesale, sale, licensing,
leasing, granting of IRUs or any other rights of use or granting of similar
rights, regardless of the term, in "dark fiber," as such term is commonly
understood in the telecommunications industry. "Dedicated Fiber Transactions"
means the dedication, by oral or written agreement or understanding, to a single
party, or to a group of related parties, of one hundred percent (100%) of the
capacity of Lessee Fibers available to non- Lessee Affiliates. Notwithstanding
the above, Lessee may use the Lessee Fibers to provide telecommunications
transmission capacity or the use of optical fiber wavelengths as long as the
provision of such capacity or wavelengths does not constitute either a Dark
Fiber Transaction or a Dedicated Fiber Transaction.
23.4 RESTRICTION ON USE OF OR TRANSFER OF COLLOCATION RIGHTS OR RIGHTS
IN RACKS. Lessee shall not, directly or indirectly, convey any interest in the
Collocation Rights or racks provided to Lessee hereunder, or Lessee's right to
occupy any such collocation space or racks, to any other person, firm or entity,
without the prior written consent of Lessor, which consent Lessor shall not
unreasonably withhold or delay.
24. RULES OF CONSTRUCTION
24.1 GOVERNING LAW. This Agreement shall be deemed a New York agreement
and shall be governed by and construed in accordance with the domestic laws of
the State of New York applicable to New York agreements, without reference to
its choice of law principles.
24.2 INTERPRETATION. The captions or headings in this Agreement are
strictly for convenience and shall not be considered in interpreting this
Agreement or as amplifying or limiting any of its content. Words in this
Agreement that import the singular connotation shall be interpreted as plural,
and words that import the plural connotation shall be interpreted as singular,
as the identity of the parties or objects referred to may require. References to
"person" or "entity" each include natural persons and legal entities, including
corporations, limited liability
28
<PAGE> 36
companies, partnerships, sole proprietorships, business divisions,
unincorporated associations, governmental entities, and any entities entitled to
bring an action in, or that are subject to suit in an action before, any state
or federal court of the United States. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." "Days" refers to calendar days, except that
references to "business days" exclude Saturdays, Sundays and holidays during
which nationally chartered banks in New York, New York are authorized or
required to close. Unless expressly defined herein, words having well-known
technical or trade meanings shall be so construed.
24.3 CUMULATIVE REMEDIES. Except as set forth to the contrary herein,
any right or remedy of either party shall be cumulative and without prejudice to
any other right or remedy, whether contained herein or not.
24.4 NO THIRD-PARTY RIGHTS. Nothing in this Agreement is intended to
provide any legal rights to anyone not an executing party of this Agreement
except under the indemnification and insurance provisions and except (a) as set
forth in Sections 25.4 and 26.2 and (b) that the Facility Owners/Lenders shall
be entitled to rely on and have the benefit of Article 26.
24.5 AGREEMENT FULLY NEGOTIATED. This Agreement has been fully
negotiated between and jointly drafted by the parties.
24.6 DOCUMENT PRECEDENCE. In the event of a conflict between the
provisions of this Agreement and those of any Exhibit, the provisions of this
Agreement shall prevail and such Exhibits shall be corrected accordingly.
24.7 INDUSTRY STANDARDS. Except as otherwise set forth herein, for the
purpose of this Agreement the normal standards of performance within the
telecommunications industry in the relevant market shall be the measure of
whether a party's performance is reasonable and timely.
24.8 CROSS REFERENCES. Except as the context otherwise indicates, all
references to Exhibits, Parts, Schedules, Articles, Sections, Subsections,
Clauses, and Paragraphs refer to provisions of this Agreement.
24.9 LIMITED EFFECT OF WAIVER. The failure of either Lessor or Lessee
to enforce any of the provisions of this Agreement, or the waiver thereof in any
instance, shall not be construed as a general waiver or relinquishment on its
part of any such provision, but the same shall nevertheless be and remain in
full force and effect.
24.10 SEVERABILITY. If any term, covenant or condition in this
Agreement shall, to any extent, be invalid or unenforceable in any respect under
the laws governing this Agreement, the remainder of this Agreement shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
29
<PAGE> 37
24.11 EXECUTORY AGREEMENT. The parties acknowledge that both Lessor and
Lessee shall have material nonmonetary obligations under this Agreement
throughout its Term and that this Agreement, therefore, constitutes an executory
contract for purposes of applicable bankruptcy and insolvency laws.
24.12 NO PARTNERSHIP CREATED. The relationship between Lessor and
Lessee shall not be that of partners, agents, or joint venturers for one
another, and nothing contained in this Agreement shall be deemed to constitute a
partnership or agency agreement between them for any purposes, including federal
income tax purposes. The parties, in performing any of their obligations
hereunder, shall be independent contractors or independent parties and shall
discharge their contractual obligations at their own risk.
24.13 NO REIMBURSEMENT. Unless provided otherwise herein, each party
shall perform its obligations without right of reimbursement or contribution
from the other party.
24.14 RIGHT TO SUBCONTRACT. Lessor or the underlying facility owner may
subcontract for any of its obligations hereunder, including splicing, testing,
maintenance, repair, relocation, and restoration services. Lessor may fulfill
its obligations to provide Leased Fibers in its System by constructing,
acquiring title to, acquiring rights in, leasing, entering into financing
leases, or otherwise obtaining a right to use its System or various portions
thereof. The use of any such subcontractor, underlying IRU provider, financing
arrangement, or other arrangement shall not relieve Lessor of its obligations
hereunder.
25. REPRESENTATIONS AND WARRANTIES
25.1 AGREEMENT VALIDITY. Each party represents and warrants that:
(a) It has the full right and authority to enter into, execute,
deliver and perform its obligations under this Agreement;
(b) It has taken all requisite corporate action to approve the
execution, delivery and performance of this Agreement;
(c) This Agreement constitutes a legal, valid and binding
obligation enforceable against such party in accordance with its terms;
(d) Its execution of and performance under this Agreement shall
not violate any applicable existing regulations, rules, statutes or court orders
of any local, state or federal government agency, court or body; and
(e) It has the right pursuant to such party's Right-of-Way
Authorizations to grant the rights to the other party as set forth in this
Agreement.
30
<PAGE> 38
25.2 ACCEPTANCE DATE REPRESENTATIONS. As of the Acceptance Date for any
Selected Segment, Lessor represents that, with respect to such Segment:
(a) Lessor or the underlying facility owner for any portion of the
Selected Segment shall have obtained all Right-of-Way Authorizations necessary
for the installation and use of the Selected Segment hereunder;
(b) Lessor shall have obtained by IRU agreement, lease, or
otherwise the right to use portions of the Selected Segment it does not own;
(c) Lessor shall have obtained all Right-of-Way Authorizations for
the Selected Segments;
(d) no Right-of-Way Authorizations for such Selected Segment
impose unreasonable limitations or requirements on Lessee's exercise of its
rights under this Agreement; and
(e) the Selected Segments shall be designed, engineered,
installed, and constructed in accordance with the specifications set forth in
Exhibits G, I, and M and in compliance with all applicable building,
construction and safety codes for such construction and installation, as well as
any and all other applicable governmental laws, codes, ordinances, statutes and
regulations.
25.3 DISCLAIMER OF WARRANTY. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, LESSOR MAKES NO WARRANTY TO LESSEE OR ANY OTHER PERSON OR ENTITY,
WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO THE DESCRIPTION, QUALITY,
MERCHANTABILITY, COMPLETENESS OR FITNESS FOR ANY PURPOSE OF ANY FIBERS OR ANY
SERVICE PROVIDED HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL
OF WHICH WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.
25.4 NO THIRD-PARTY WARRANTIES. NO FACILITY OWNERS/LENDERS HAVE MADE
ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, TO LESSEE
CONCERNING LESSOR, LESSEE FIBERS, THE CABLE, OR THE SYSTEM OR AS TO ANY OF THE
MATTERS SET FORTH IN SECTIONS 25.1 OR 25.2. NO LESSEE LENDERS HAVE MADE ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, TO LESSOR CONCERNING
LESSEE, LESSEE FIBERS, THE CABLE, ANY IRUS OR THE LESSOR SYSTEM OR AS TO ANY OF
THE MATTERS SET FORTH IN SECTIONS 25.1 OR 25.2 OR AS TO ANY OTHER MATTER.
31
<PAGE> 39
26. LIMITATIONS OF LIABILITY
26.1 RESTRICTION ON TYPES OF LIABILITY. Notwithstanding any provision
of this Agreement to the contrary, in no event shall either party be liable to
the other party for any special, incidental, indirect, punitive, reliance or
consequential damages, whether foreseeable or not, arising out of, or in
connection with this Agreement, in tort, breach of contract, breach of warranty,
strict liability or any other cause of action, including damage or loss of
property or equipment, loss of profits or revenue, cost of capital, cost of
replacement services, or claims of customers, whether occasioned by any repair
or maintenance performed by, or failed to be performed by, the first party or
any other cause whatsoever.
26.2 NO RECOURSE AGAINST RELEASED PARTIES. Neither party shall have any
recourse of any kind against any Released Party or any assets of a Released
Party under this Agreement, it being expressly agreed and understood that no
liability whatever shall attach to or be incurred by any Released Party under or
by reason of this Agreement or any other instrument, arrangement or
understanding related to Lessee Fibers. Each party waives all such recourse to
the extent set forth in this Section on behalf of its successors, assigns, and
any entity claiming by, through, or under such party.
26.3 NO PERSONAL LIABILITY. Each action or claim against any party
arising under or relating to this Agreement shall be made only against such
party as a corporation, and any liability relating thereto shall be enforceable
only against the corporate assets of such party. No party shall seek to pierce
the corporate veil or otherwise seek to impose any liability relating to, or
arising from, this Agreement against any shareholder, employee, officer,
director or agent of the other party. Each of such persons is an intended
beneficiary of the mutual promises set forth in this Section and shall be
entitled to enforce the obligations or provisions of this Section.
27. AUDIT RIGHTS
27.1 RETENTION OF RECORDS; AUDIT; DOCUMENTATION. Each party shall keep
such books and records (which shall be maintained on a consistent basis and
substantially in accordance with generally accepted accounting principles) as
shall readily disclose the basis for any charges (except charges fixed in
advance by this Agreement or by separate agreement of the parties) or credits,
ordinary or extraordinary, billed or due to the other party under this Agreement
and shall make them available for examination, audit, and reproduction by the
other party and its agents for a period of one year after such charge or credit
is billed or due. To the extent a party seeks reimbursement of out-of-pocket
costs or services provided on a per-hour basis, it shall provide reasonable
supporting documentation to the other party.
28. PROHIBITION ON IMPROPER PAYMENTS
28.1 IMPROPER PAYMENTS PROHIBITED. Neither party shall use any funds
received under this Agreement for illegal or otherwise "improper" purposes.
Neither party shall pay any
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<PAGE> 40
commission, fees or rebates to any employee of the other party. If either party
has reasonable cause to believe that one of the provisions in this Article has
been violated, it, or its representative, may audit the books and records of the
other party for the sole purpose of establishing compliance with such
provisions.
29. ENTIRE AGREEMENT; AMENDMENT; EXECUTION
29.1 INTEGRATION; INCORPORATION; MODIFICATION. This Agreement
constitutes the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes all prior agreements whether
written or oral relating to the subject matter hereof, which are of no further
force or effect. The Exhibits and Schedules referred to herein are integral
parts hereof and are hereby made a part of this Agreement. This Agreement may be
modified or supplemented only by an instrument in writing executed by a duly
authorized representative of each party.
29.2 COUNTERPARTS; EXECUTION. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the same
instrument. A party may duly execute and deliver this Agreement by execution and
facsimile delivery of the signature page of a counterpart to the other party,
provided that, if delivery is made by facsimile, the executing party shall
promptly deliver a complete counterpart that it has executed to the other party.
In confirmation of their consent to the terms and conditions contained
in this Agreement and intending to be legally bound hereby, the parties have
executed this Lease Agreement as of the date first above written.
METROMEDIA FIBER NETWORK SERVICES, INC., a Delaware corporation
Signature: /s/ HOWARD M. FINKELSTEIN
--------------------------------------------
(Print) Name: Howard M. Finkelstein
-----------------------------------------
(Print) Title: President
----------------------------------------
WILLIAMS COMMUNICATIONS, INC., a Delaware corporation
Signature: /s/ GORDON L. MARTIN
--------------------------------------------
(Print) Name: Gordon L. Martin
-----------------------------------------
(Print) Title: Senior Vice President, Network Services
----------------------------------------
33
<PAGE> 41
Exhibit A
Lessor System Routes
Lessor's obligation to construct Lessor's System to the extent
not constructed as of the Effective Date is to use commercially reasonable
efforts to construct its fiber optic cable system between the points designated
on the attached maps, but Lessor does not undertake any obligation to construct
Lessor's System along the specific routes shown on the attached maps.
A-1
<PAGE> 42
Exhibit B
(Intentionally Omitted)
B-1
<PAGE> 43
Exhibit D
This exhibit indicates by Segment, the type of fiber included
in the Segment and the construction method.
D-1
<PAGE> 44
Exhibit F
Branch A Pricing
The price per month per fiber mile in each Selected Segment
within Branch A ("Branch A Pricing") shall be determined by multiplying $**** by
the number of fiber miles in the relevant Selected Segment.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
F-1
<PAGE> 45
Exhibit I
Fiber Optic Cable Specifications
Part 1- Cable and Optical Fiber Specifications
Corning SMF-28
Corning LS
Corning Leaf
Lucent True Wave
Lucent Single Mode
Lucent All Wave
Part 2- Cable Installation Specifications
I-1
<PAGE> 46
Exhibit J
Exhibit J may be amended by Lessor from time to time.
J-1
<PAGE> 47
Exhibit K
Committed Buildings
With respect to all K-1 Buildings designated with an asterisk
(*), even if Lessee orders interconnection to such Buildings at least 45 days
before Acceptance of the Selected Segment in which such Buildings are located,
Lessor shall not be required to deliver the interconnection to such Buildings
until the 30th day after Acceptance of the Selected Segment in which such
Buildings are located.
K-1
<PAGE> 48
Exhibit L
Branch "B" Pricing
<TABLE>
<CAPTION>
Number of fibers per Monthly price per fiber/per
Branch B interconnection/ interconnection
month
------------------------ ---------------------------
<S> <C>
4 ****
6 ****
8 ****
10 ****
12 ****
14 ****
16 ****
18 ****
20 ****
22 ****
24 ****
26 ****
28 ****
30 ****
32 ****
34 ****
36 ****
38 ****
40 ****
42 ****
44 ****
46 ****
48 ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
L-1
<PAGE> 49
Exhibit M
Network Site Specifications
M-1
<PAGE> 50
Exhibit N
Construction Specifications
(See Exhibit I)
N-1
<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
EXHIBIT 10.6
Fiber Lease Agreement
dated September 16, 1999
between
Williams Communications, Inc.
and
Metromedia Fiber National Network, Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions..............................................................................................1
2. Construction.............................................................................................4
2.1 Obligation to Construct....................................................................4
2.2 Obligation to Provide Reports..............................................................5
2.3 Obligation to Provide Completion Notice....................................................5
2.4 Obligation to Provide As-Built Drawings....................................................5
2.5 Committees.................................................................................5
2.6 Type of Fiber Optic Cable..................................................................5
3. Grant of Lease...........................................................................................6
3.1 Lease......................................................................................6
3.2 Lease Limitations..........................................................................7
3.3 Lease Payments.............................................................................7
3.4 Financing Arrangements.....................................................................7
4. Intentionally Omitted....................................................................................8
5. Completion of Systems....................................................................................8
5.1 Scheduled Acceptance Dates.................................................................8
5.2 Remedial Obligations.......................................................................8
5.3 Branch A Late Completion Fee...............................................................8
5.4 Right to Cancel............................................................................8
5.5 Use of Partially Completed Selected Segment................................................8
5.6 Early Delivery.............................................................................9
6. Acceptance and Testing of Fibers.........................................................................9
6.1 Lessor Testing.............................................................................9
6.2 Objections to Test Results.................................................................9
6.3 Response to Objections.....................................................................9
6.4 Independent Testing........................................................................9
6.5 Acceptance................................................................................10
6.6 Lessee's Testing..........................................................................10
6.7 Lessee's Testing of Fibers Delivered within
Sixty Days of Effective Date............................................................10
7. Term and Renewal........................................................................................10
7.1 Lease Term................................................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.2 Maintaining Authorizations................................................................11
7.3 Extension of Lease Term...................................................................11
7.4 Agreement Term............................................................................11
7.5 Effect of Termination.....................................................................11
8. Operation, Maintenance and Repair of the System.........................................................11
8.1 Maintenance...............................................................................11
8.2 Self-Help Restoration.....................................................................12
8.3 Maintenance of Lessee's Equipment Excluded................................................12
8.4 No Unauthorized Access to System..........................................................12
8.5 No Other Fees.............................................................................12
8.6 Maintenance Fees..........................................................................12
9. Relocation..............................................................................................12
9.1 Relocation Costs..........................................................................12
10. Collocation.............................................................................................13
10.1 Provision of Collocation Services........................................................13
10.2 Initial Basic Services...................................................................13
10.3 Additional Basic Services................................................................13
10.4 Rack Credits.............................................................................14
10.5 Additional Services Invoicing............................................................14
11. Connection to the System................................................................................14
11.1 Permitted Interconnection Points.........................................................14
11.2 Limitations on Interconnection Rights....................................................15
11.3 Fiber Drops..............................................................................15
11.4 Demarcation Points.......................................................................15
11.5 Facilities Ownership and Control.........................................................15
11.6 Lessee Responsibility....................................................................15
11.7 Third Party Relations....................................................................16
11.8 Application of Branch A Interconnection Charges..........................................16
12. Branch B Interconnections...............................................................................16
12.1 Application of Branch B Pricing..........................................................16
12.2 Branch B Pricing.........................................................................17
12.3 Branch B Payments........................................................................17
12.4 Order Intervals..........................................................................17
12.5 Specifications...........................................................................17
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
12.6 Intrabuilding Extensions.................................................................17
13. Use of the Systems......................................................................................17
13.1 Obligation to Comply with Laws; Exclusive Use............................................17
13.2 System Damage............................................................................18
13.3 Regulatory Cooperation...................................................................18
13.4 Liens....................................................................................18
14. Payment.................................................................................................18
14.1 Time and Method of Payment...............................................................18
14.2 Late Payment Charges.....................................................................18
15. Indemnification.........................................................................................19
15.1 Indemnity Obligation.....................................................................19
15.2 No Limitation on Claims Against Other Parties............................................19
16. Insurance...............................................................................................19
16.1 Obligation to Obtain.....................................................................19
16.2 Policy Requirements......................................................................20
16.3 Waiver of Subrogation....................................................................20
16.4 Blanket Policies; Self-Insurance.........................................................20
17. Taxes and Franchise, License and Permit Fees............................................................20
17.1 Obligations to Pay Right-of-Way Charges and Taxes........................................20
17.2 Obligation to Timely Pay Taxes Based on Revenues.........................................21
17.3 Right to Contest Taxes...................................................................21
17.4 Prohibition on Agreements Affecting Other Party..........................................21
18. Notice..................................................................................................21
18.1 Addresses................................................................................21
18.2 Method for Delivering Notices and Invoices...............................................22
19. Confidentiality and Publicity...........................................................................22
19.1 Confidential Information.................................................................22
19.2 Publicity................................................................................23
20. Default.................................................................................................23
20.1 Partial Termination upon Default.........................................................23
20.2 Specific Default Events..................................................................23
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
20.3 Cure Period.............................................................................23
20.4 Failure to Cure.........................................................................24
20.5 Waiver of Specific Defaults.............................................................24
20.6 Disputed Amounts........................................................................24
21. Force Majeure...........................................................................................24
21.1 Excused Performance.....................................................................24
22. Arbitration.............................................................................................25
22.1 Obligation to Arbitrate.................................................................25
22.2 Exceptions to Arbitration Obligation....................................................25
23. Assignment..............................................................................................25
23.1 Restrictions on Assignment..............................................................25
23.2 Agreement Binds Successors..............................................................25
23.3 Restriction on Transfer of Dark Fiber Rights............................................26
23.4 Restriction on Use of or Transfer of Collocation Rights or Rights in Racks..............26
24. Rules of Construction...................................................................................26
24.1 Governing Law...........................................................................26
24.2 Interpretation..........................................................................26
24.3 Cumulative Remedies.....................................................................27
24.4 No Third-Party Rights...................................................................27
24.5 Agreement Fully Negotiated..............................................................27
24.6 Document Precedence.....................................................................27
24.7 Industry Standards......................................................................27
24.8 Cross References........................................................................27
24.9 Limited Effect of Waiver................................................................27
24.10 Severability............................................................................27
24.11 Executory Agreement.....................................................................28
24.12 No Partnership Created..................................................................28
24.13 No Reimbursement........................................................................28
24.14 Right to Subcontract....................................................................28
25. Representations and Warranties..........................................................................28
25.1 Agreement Validity......................................................................28
25.2 Acceptance Date Representations.........................................................29
25.3 Disclaimer of Warranty..................................................................29
25.4 No Third-Party Warranties...............................................................29
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
26. Limitations of Liability................................................................................30
26.1 Restriction on Types of Liability........................................................30
26.2 No Recourse Against Released Parties.....................................................30
26.3 No Personal Liability....................................................................30
27. Audit Rights............................................................................................30
27.1 Retention of Records; Audit; Documentation...............................................30
28. Prohibition on Improper Payments........................................................................30
28.1 Improper Payments Prohibited.............................................................30
29. Entire Agreement; Amendment; Execution..................................................................31
29.1 Integration; Incorporation; Modification.................................................31
29.2 Counterparts; Execution..................................................................31
</TABLE>
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<PAGE> 7
EXHIBITS
Exhibit A Lessor System Route (map with mileage and POPs)
Exhibit B Intentionally Omitted
Exhibit C Collocation Provisions
Exhibit D Selected Segments and Scheduled Acceptance Dates
Exhibit E As-Built Drawing Specifications
Exhibit F Branch A Pricing
Exhibit G Fiber Splicing, Testing, and Acceptance Standards and
Procedures
Exhibit H Operations Specifications
Exhibit I Fiber Optic Cable Specifications
Part 1 - Cable and Optical Fiber Specifications
Corning SMF 28
Corning LS
Corning Leaf
Lucent True Wave
Lucent Single Mode
Lucent All Wave
Part 2 - Cable Installation Specifications
Exhibit J List of Network Sites and Rack Counts
Part 1 - Lessor System
Part 2 - Eligible Collocation Sites
Exhibit K Intentionally Omitted
Exhibit L Branch B Pricing
Exhibit M Network Site Specifications
Exhibit N Construction Specifications (See Exh. I)
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<PAGE> 8
FIBER LEASE AGREEMENT
THIS FIBER LEASE AGREEMENT (this "Agreement") is made as of the 16th
day of September, 1999, (the "Effective Date") by and between Williams
Communications, Inc., a Delaware corporation ("Lessor") and Metromedia Fiber
National Network, Inc., a Delaware corporation ("Lessee").
BACKGROUND
A. Lessor is establishing metropolitan and intercity fiber optic
communication systems as set forth in Exhibit A (collectively, the "Lessor
System").
B. Lessor desires to grant to Lessee a lease in certain optical fibers
in the Lessor System and Lessee desires to accept a lease of such fibers, all
upon the terms and conditions set forth below.
C. Lessee desires to have Lessor provide certain maintenance and
collocation services with respect to the fibers being leased by Lessee.
TERMS OF AGREEMENT
Accordingly, in consideration of the mutual promises set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS
The following terms shall have the stated definitions in this
Agreement.
"ACCEPTANCE DATE" shall have the meaning set forth in Section 6.5.
"ACCESS POINT" means splice points or fiber slack storage locations
designated as such by Lessor on the as-built drawings provided by Lessor as
provided in Section 2.4.
"ADDITIONAL SERVICES" shall have the meaning set forth in the
Collocation Provisions.
"AFFILIATE" means, with respect to any entity, an entity controlling,
controlled by, or under common control with such entity by means of direct or
indirect equity ownership or otherwise. As used in this Agreement, "control"
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person or entity, whether
through the ownership of voting securities, by contract or otherwise.
"AGREEMENT TERM" shall have the meaning set forth in Section 7.4.
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<PAGE> 9
"BASIC SERVICES" shall have the meaning set forth in the Collocation
Provisions.
"BRANCH A" means of or relating to the "backbone" portions of the
Lessor's System, i.e., the portions of the Lessor's System other than Branch B
facilities.
"BRANCH A PRICING" shall have the meaning set forth in Exhibit F.
"BRANCH B" means of or relating to interconnections established by
Lessor, to connect Lessor's System to locations other than Lessor POPs or
Lessee POPs (however, Branch B Pricing shall apply to other interconnections,
including those established by Lessee, as set forth in Section 11.3 and 12.1).
"BRANCH B PRICING" shall have the meaning set forth in Exhibit L.
"BUILDING" means any building, carrier hotel or central office, other
than a Lessor POP or Lessee POP.
"CABLE" means the fiber optic cable and the fibers contained therein
and associated splicing connections, splice boxes and vaults.
"CAPACITY" shall have the meaning set forth in Section 23.3.
"COLLOCATION PROVISIONS" means the provisions set forth in Exhibit C.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 19.1.
"COSTS" means actual and directly related costs accumulated in
accordance with the established accounting procedure used by Lessor or Lessee
or their respective contractors or subcontractors, as the case may be, which
costs include the following: (a) labor costs, including wages, salaries,
benefits and overhead allocable to such labor costs (Lessee's or Lessor's
overhead allocation percentage shall not exceed the lesser of (i) the
percentage such party allocates to its internal projects or (ii) one hundred
and thirty percent (130%), and (b) other direct costs and out-of-pocket
expenses on a pass-through basis (e.g., equipment, materials, supplies,
contract services, etc.).
"DARK FIBER TRANSACTIONS" shall have the meaning set forth in
Section 23.3.
"DEDICATED FIBER TRANSACTIONS" shall have the meaning set forth in
Section 23.3.
"DEMARCATION POINT" shall have the meaning set forth in Section 11.4.
"DIVERSITY" means the provision of physically separated optical
facilities that, when equipped with suitable optronics, are capable of
providing an alternate transmission path without
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<PAGE> 10
human or mechanical intervention. The alternate facilities shall, except at
each Demarcation Point, have at least thirty (30) feet of separation in any
direction and shall not be on the same poles, towers, river crossings, bridges,
viaducts, elevated walkways, or similar structures.
"EFFECTIVE DATE" shall have the meaning set forth in the preamble.
"EQUIPMENT" means Lessee's electronic, optronic and power equipment
necessary for the operation of the Cable.
"EXPIRATION DATE" shall have the meaning set forth in Section 7.1.
"FACILITY OWNERS/LENDERS" means any entity (other than Lessor): (a)
owning any portion of the System or any property or security interest therein,
(b) leasing to Lessor, or providing an IRU to Lessor in, any portion of the
System, or (c) that is a lender (including any party holding legal title or a
security interest in Lessor's System as a lessor or a creditor) with respect to
Lessor or any Affiliates of Lessor.
"FIBER ACCEPTANCE TESTING" shall have the meaning set forth in
Section 6.1.
"IRU" means an indefeasible right of use.
"LESSEE" means Metromedia Fiber National Network, Inc.
"LESSEE FIBERS" shall have the meaning set forth in Section 3.1.
"LESSOR" means Williams Communications, Inc.
"LESSOR SYSTEM" shall have the meaning set forth in the preamble.
"NETWORK SITE" shall have the meaning set forth in the Collocation
Provisions.
"NEW ROUTE" shall have the meaning set forth in Section 3.1.
"NEW ROUTE NOTICE" shall have the meaning set forth in Section 3.1.
"POP" means a telecommunications point of presence listed on Exhibit
A, as Exhibit A may be amended from time to time, subject to the consent of
Lessor and Lessee.
"RELEASED PARTY" means each of the following:
(a) any Affiliates of the other party and any Facility
Owners/Lenders;
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<PAGE> 11
(b) any employee, officer, director, stockholder, partner,
member, or trustee of the other party or of its Affiliates or Facility
Owners/Lenders; or
(c) assignees of the entities included in the above
subparagraphs (a) or (b) and any employee, officer, director, stockholder,
partner, member, or trustee of such assignees.
"RIGHT-OF-WAY AUTHORIZATIONS" means any underlying agreements,
easements, permits, or licenses, by which Lessor obtains rights to perform its
obligations hereunder with respect to the Lessor System and Lessee's Fibers
from:
(a) underlying owners of real or personal property, or
right-of-way holders,
(b) grantors of IRU or other rights or licenses with respect
to all or a portion of its System,
(c) parties granting duct usage and pole attachment rights,
and
(d) any governmental authority (including franchising
agencies, environmental regulation agencies, and public utility commissions).
"SCHEDULED ACCEPTANCE DATE" means the date so designated with respect
to each Selected Segment as set forth in Exhibit D.
"SEGMENT" means a Branch A Segment identified in Exhibit A.
"SELECTED SEGMENT" means a Branch A Segment identified as a Selected
Segment in Exhibit D.
"SPAN" means a discrete portion of a Selected Segment and may refer to
a portion of the Selected Segment or the Lessor System between two Transmission
Sites or between a Transmission Site and a POP or System end point, a portion
between two POPs or a POP and a System end point, or a portion of the System
affected by a relocation or other circumstance.
"SYSTEM" means the Lessor System.
"TERM" shall have the meaning set forth in Section 7.1.
"TRANSMISSION SITE" means an optical amplifier, regeneration or
junction site.
2. CONSTRUCTION
2.1 OBLIGATION TO CONSTRUCT. To the extent not constructed or acquired
as of the Effective Date, Lessor shall design, engineer, install, and construct
or acquire the Lessor System
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<PAGE> 12
as described or depicted in Exhibit A. The parties acknowledge and agree that
the Lessor's obligation to construct the Lessor System, to the extent not
constructed as of the Effective Date, is to use commercially reasonable efforts
to construct between the points designated on Exhibit A, but not necessarily
along the specific routes shown on Exhibit A.
2.2 OBLIGATION TO PROVIDE REPORTS. Lessor shall provide to Lessee,
within 10 days prior to each Committee meeting referred to in Section 2.5,
until all Selected Segments have been Accepted, written engineering and
construction progress reports setting forth at least the following information
with respect to the Lessor System: (a) status of Branch A Selected Segments for
which the Acceptance Date has not occurred, (b) status of Branch B
interconnections that have not yet been completed, (c) lists of Branch A
Selected Segments for which the Acceptance Date has occurred since the last
such report, (d) lists of Branch B interconnections completed since the last
such report, and (e) changes in the planned locations or expected completion
dates of Branch B interconnections.
2.3 OBLIGATION TO PROVIDE COMPLETION NOTICE. Lessor shall promptly
notify Lessee in writing of the date upon which Lessor has completed connecting
a Branch B interconnection. Within 30 days after the end of each calendar
quarter until the Expiration Date, Lessor shall provide Lessee a copy of its
current list of Branch B interconnection locations on its System (unless the
list has not changed since the date of the last such list provided).
2.4 OBLIGATION TO PROVIDE AS-BUILT DRAWINGS. Lessor shall provide to
Lessee as-built drawings of each Selected Segment conforming to the As-Built
Drawing Specifications set forth in Exhibit E no later than 180 calendar days
after the Acceptance Date with respect to each Selected Segment.
2.5 COMMITTEES. Each party shall appoint at least two persons and an
alternate to the Lessor System Committee. The Lessor System Committee shall
coordinate matters relating to the construction of the Lessor System and
Lessee's use of the Lessee's Fibers therein. Each party may remove or replace
its representatives on the Committee by notice to the other party. The parties
shall seek to establish meetings of the Committee at approximately 60-day
intervals until the completion of the Lessor System. Committees may meet by
telephone. Committees shall have no authority to act on behalf of either or
both parties but may forward recommendations to the parties. Lessor shall
prepare minutes of each Committee meeting, which minutes shall be distributed
to all Committee members.
2.6 TYPE OF FIBER OPTIC CABLE. With respect to any Selected Segment of
the Lessor System (a) that has not been constructed as of the Effective Date,
and (b) for which Lessor has not made a fiber optic Cable purchase commitment,
Lessee may within 30 days after the Effective Date give notice to Lessor
specifying the type (not the manufacturer) of fibers (included in the fiber
optic Cable) it desires to have in such Selected Segment. Upon timely receipt
of such notice, Lessor shall use commercially reasonable efforts to comply with
Lessee's request. To the extent practicable, Lessor shall, within 30 days after
the Effective Date, advise Lessee of the types of
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<PAGE> 13
optical fibers in each Selected Segment. Lessor agrees that the specifications
for the fiber in each Selected Segment will be no less than those set forth in
Exhibit I. Lessor shall have the option, in its discretion, to install fiber of
higher quality based upon improvements made by the manufacturer of such fiber.
3. GRANT OF LEASE
3.1 LEASE.
(a) During the Term, Lessor shall lease to Lessee a total of
86,612 fiber miles of certain Branch A optical fibers (the "Lessee Fibers") in
the Lessor System, which Lessee Fibers are identified in Exhibit D or shall be
identified as herein provided, all subject to the terms and conditions herein.
All 86,612 fiber miles of Lessee Fibers have been selected by Lessee and are
designated as Selected Segments from among the Segments set forth on Exhibit D.
By the earlier of (a) June 1, 2001 or (b) nine months after Lessor gives notice
to Lessee ("New Route Notice") that Lessor will construct or extend the Lessor
System on new routes within North America ("New Routes"), Lessee may elect to
lease fibers representing up to **** fiber miles on any such New Routes. To
elect to lease any of such **** fiber miles from Lessor on any New Route, Lessee
must provide timely notice indicating (x) the number of fiber miles Lessee
desires to lease in such New Route and (y) in accordance with Section 10.4, the
number of racks required by Lessee. Lessee shall not be required to select
fibers in any New Route, but its decision not to select fibers in any New Route
shall not relieve it of its obligation to lease a total of 86,612 fiber miles
pursuant to the provisions of this Agreement. Each New Route Notice shall
contain route maps (subject to the introductory language contained in Exhibit A)
with respect thereto, which route maps shall become part of Exhibit A. Any New
Route selected by Lessee shall be deemed to be a Selected Segment hereunder and
subject to the terms of this Agreement.
(b) Subject to Section 3.1(a), during the period from the
Effective Date until June 1, 2001, Lessee may substitute Branch A Lessee Fibers
in any Selected Segment(s) for Branch A Lessee Fibers in any other Selected
Segment(s) or on any New Routes provided (1) only **** of the fiber miles of
Lessee Fibers in each Selected Segment (but not in excess of a total of ****
fiber miles) may be so substituted; (2) that only such Lessee Fibers that have
not been spliced for Lessee in order to establish interconnections or lit by
Lessee may be substituted for any other fibers within Selected Segments or New
Routes; (3) that existing Lessee Fibers may be substituted for other fibers
only to the extent other fibers are available; (4) Lessee may lease a maximum
of 12 fibers on any substituted Selected Segment or New Route; (5) that at the
time of any such substitution in a Selected Segment, Lessee will determine and
advise Lessor of the total number of Lessee Fibers that Lessee requires in such
Selected Segment or New Route; and (6) that, subject to the foregoing, Lessee
may make any substitutions it desires in each Selected Segment only once.
Whether other fibers are available shall be determined by Lessor in its sole
reasonable discretion; provided that Lessor intends to afford Lessee the
opportunity to evaluate the New Routes and provide Lessee with the flexibility
to make such substitutions.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 14
3.2 LEASE LIMITATIONS. The Lease granted to Lessee hereunder and any
rights granted by Lessee to third party users, shall be subject to all
Right-of-Way Authorizations applicable to the Lessor's System. Lessee shall
respect and adhere to the requirements of all such Right-of-Way Authorizations.
The lease of the Lessee Fibers hereunder does not convey any legal title to any
real or personal property, including the fibers, cable, or the Lessor System.
This lease does not include any Equipment used to transmit capacity over, or to
"light," the Lessee Fibers.
3.3 LEASE PAYMENTS.
(a) Branch A Payments. Lessor represents that the fiber miles
set forth in Exhibit D, are either the actual fiber miles for each Selected
Segment or a bona fide estimate thereof. Lessee shall make monthly payments in
advance during the Term, in an amount calculated pursuant to Exhibit F (Branch
A Pricing) based on the fiber miles set forth in Exhibit D. Lessee shall
commence making such payments with respect to each Selected Segment on the
first day of the month beginning with the month after the Acceptance Date of
the relevant Selected Segment; except that the first payment shall include
payment from the Acceptance Date to the last day of the month during which the
Acceptance Date occurs, as well as payment for the first full month after the
Acceptance Date. Lessee shall continue making such payments through the first
day of the month in which the Expiration Date occurs, unless the Term with
respect to such Selected Segment is terminated prior to the Expiration Date as
herein provided. Within 30 days after delivery of the as-built plans for each
Selected Segment, as provided in Section 2.4, Lessor shall advise Lessee of the
actual fiber miles (excluding any slack coils) in such Selected Segment. Lessee
shall promptly pay any balance due if the actual fiber miles exceeded the
estimated fiber miles in such Selected Segment or Lessor shall issue a credit
to Lessee of the actual fiber miles in such Selected Segment were less than the
estimated fiber miles in the relevant Selected Segment.
(b) Branch B Payments. In the event that during the Term
Lessee elects to lease any Branch B interconnections, Lessee shall make monthly
payments in advance during the Term, in an amount calculated pursuant to
Exhibit L (Branch B Pricing), which payments shall commence with respect to
each Branch B interconnection on the first day of the month beginning with the
month after the Acceptance Date of the relevant Branch B interconnection;
except that the first payment shall include payment from the Acceptance Date to
the last day of the month during which the Acceptance Date occurs, as well as
payment for the first full month after the Acceptance Date. Lessee shall
continue making such payments through the first day of the month in which the
Expiration Date occurs, unless the Term with respect to such Branch B
interconnection, is terminated prior to the Expiration Date as herein provided.
3.4 FINANCING ARRANGEMENTS. Either party shall have the right,
directly or through an Affiliate, to enter into financing arrangements
(including secured loans, leases, sales with lease-back, or leases with
lease-back arrangements, purchase-money or vendor financing, conditional sales
transactions, or other arrangements) with one or more financial institutions,
vendors, suppliers or other financing sources that, with respect to Lessor,
relate to its System and, with
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<PAGE> 15
respect to Lessee, relate, to Lessee's lease rights (and not to any property
right in the Lessor System or the Lessee Fibers).
4. INTENTIONALLY OMITTED
5. COMPLETION OF SYSTEMS
5.1 SCHEDULED ACCEPTANCE DATES. The Scheduled Acceptance Date for each
Selected Segment shall be as set forth in Exhibit D. Lessor shall use
commercially reasonable efforts to cause the Acceptance Date to occur by the
Scheduled Acceptance Date.
5.2 REMEDIAL OBLIGATIONS. In the event Lessor fails to complete any
Selected Segment by the Scheduled Acceptance Date thereof, the parties shall
designate representatives to meet and review the status of the Selected
Segment. Lessor shall, within 14 calendar days after the Scheduled Acceptance
Date, provide a plan and schedule whereby it shall use commercially reasonable
efforts to cause the Acceptance Date for such Selected Segment to occur within
60 calendar days after the Scheduled Acceptance Date.
5.3 BRANCH A LATE COMPLETION FEE. If the Acceptance Date for a
Selected Segment does not occur within 90 calendar days of the Scheduled
Acceptance Date, Lessor shall pay to Lessee a late fee payment of $**** per
fiber mile, per month (pro-rated for partial miles or months), per Selected
Segment, which late fee payments shall not exceed $**** with respect to any
Selected Segment or $**** in the aggregate for all Selected Segments.
5.4 RIGHT TO CANCEL. Notwithstanding anything to the contrary
contained in this Agreement, if the Acceptance Date for a Selected Segment does
not occur within 180 calendar days after the Scheduled Acceptance Date for such
Selected Segment, then Lessee shall have the right to terminate this Agreement
with respect to such Selected Segment. If Lessee elects to exercise its right
to terminate the Agreement with respect to such Selected Segment, it may do so
at any time after such 180 day period by giving a termination notice to Lessor;
provided that no such termination notice shall be effective if prior to the
giving of such termination notice, Lessor has given notice of Fiber Acceptance
Testing pursuant to Section 6.1, unless the Lessee Fibers in the Selected
Segment with respect to which Lessor gave such notice do not meet the
Acceptance Standards. If the lease relating to any Selected Segment is
terminated as herein provided (a) any payment obligations with respect to such
Selected Segment shall terminate and be of no further force or effect and the
overall commitment of Lessee to lease Lessee Fibers contained in Section 3.1
shall be reduced by the number of fiber miles in the Selected Segment so
terminated.
5.5 USE OF PARTIALLY COMPLETED SELECTED SEGMENT. If the Acceptance
Date for a Selected Segment has not occurred by the Scheduled Acceptance Date,
but some Spans of the Selected Segment are available for use, Lessor shall,
upon request of Lessee, permit Lessee to use such available Spans and Lessee
shall pay a pro rata share of the lease payment with respect to the Lessee
Fibers in such Selected Segment. In addition, in the event that Lessee elects
to accept a
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 16
Span prior to the time that a complete Selected Segment is available for use,
the late fee payment set forth in Section 5.3 shall be reduced in proportion to
the Lessee Fibers in the Selected Segment being utilized.
5.6 EARLY DELIVERY. In the event that Lessor has any Lessee Fibers
available prior to the Scheduled Acceptance Date, Lessor may give notice to
Lessee, offering to deliver such Lessee Fibers prior to the Scheduled
Acceptance Date therefor. Lessee shall within 10 business days after receipt of
such notice advise Lessor whether or not Lessee desires to begin using such
Lessee Fibers prior to the Scheduled Acceptance Date. If Lessee elects to begin
such use prior to the Scheduled Acceptance Date, the Term of such Lessee Fibers
and payment obligations shall commence upon the actual Acceptance Date thereof.
6. ACCEPTANCE AND TESTING OF FIBERS
6.1 LESSOR TESTING. Lessor shall give notice to Lessee at least 21
days prior to the date Lessor intends to begin testing of Lessee Fibers on each
Selected Segment ("Fiber Acceptance Testing"). Lessee shall have the right, but
not the obligation, to have a representative present at such Fiber Acceptance
Testing. Lessor shall perform Fiber Acceptance Testing of the Lessee Fibers and
provide test deliverables to Lessee in accordance with Exhibit G.
6.2 OBJECTIONS TO TEST RESULTS. Lessee shall have 21 calendar days
after receipt of test deliverables for each Selected Segment to provide Lessor
written notice of any bona fide determination by Lessee that the Lessee Fibers
on such Selected Segment do not meet the Acceptance Standards. Such notice
shall identify the specific data that indicate a failure or other specific
reasons that such Lessee Fibers fail to meet the Acceptance Standards.
6.3 RESPONSE TO OBJECTIONS. Upon receiving written notice from Lessee
pursuant to Section 6.2, Lessor shall either:
(a) expeditiously take such action as shall be reasonably
necessary to cause such portion of the Lessee Fibers to meet the Acceptance
Standards and then re-test the Lessee Fibers in accordance with the provisions
of this Article; or
(b) provide Lessee written notice that Lessor disputes
Lessee's determination that the Lessee Fibers do not meet the Acceptance
Standards.
After taking corrective actions and re-testing the Lessee Fibers, Lessor shall
provide to Lessee a copy of the new test deliverables and Lessee shall again
have all rights provided in this Article with respect to such new test
deliverables. The cycle described above of testing, taking corrective action
and re-testing shall take place until the Lessee Fibers meet the Acceptance
Standards.
6.4 INDEPENDENT TESTING. If Lessor provides notice to Lessee pursuant
to Subsection 6.3(b), Lessee shall within five calendar days of such notice
designate by written
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<PAGE> 17
notice to Lessor the names and addresses of three reputable and independent
fiber optic testing companies. Lessor shall designate one of such companies to
conduct an independent re-test of the Lessee Fibers for the relevant Selected
Segment. If, after such re-testing, the testing company determines that the
Lessee Fibers so tested:
(a) meet the Acceptance Standards, then Lessee shall pay the
testing company's charges for performing the testing and the Acceptance Date
for the relevant Selected Segment shall be 21 calendar days after the date that
Lessor originally provided its test deliverables; or
(b) do not meet the Acceptance Standards, then Lessor shall
pay the testing company's charges for performing the testing and shall perform
the corrective action and retesting set forth in Subsection 6.3(a).
6.5 ACCEPTANCE. Unless Lessee provides a timely written objection
pursuant to Section 6.2, the Acceptance Date of a Selected Segment or Span
shall occur on the twenty-first calendar day after Lessor provides the test
deliverables for that Selected Segment or Span, or, if earlier, the date Lessee
(a) provides written acceptance of such Selected Segment or Span or (b)
commences use of the Lessee Fibers in such Selected Segment or Span, other than
for the purpose of testing such Fibers. The Acceptance Date (pursuant to this
Section or Section 6.4) for the last Span to be accepted of a Selected Segment
shall be the "Acceptance Date" of Lessee Fibers for such Selected Segment.
6.6 LESSEE'S TESTING. Lessee shall have the right, but not the
obligation, at its sole expense, to conduct its own Fiber Acceptance Testing of
the Lessee Fibers in accordance with Exhibit G.
6.7 LESSEE'S TESTING OF FIBERS DELIVERED WITHIN SIXTY DAYS OF
EFFECTIVE DATE. Notwithstanding the foregoing, with respect to all Lessee
Fibers delivered to Lessee within 60 days of the Effective Date, Lessee shall
have 60 days within which to test such Fibers in accordance with Exhibit G.
Within such 60-day period, Lessee may either (a) accept such Fibers or (b)
provide notice to Lessor in accordance with Section 6.2 stating the specific
data that indicate a failure of such Fibers or other specific reasons that such
Lessee Fibers fail to meet the Acceptance Standards. The procedures set forth
in Sections 6.3, 6.4 and 6.5 shall then be applicable.
7. TERM AND RENEWAL
7.1 LEASE TERM. The lease term for each Selected Segment (the "Term")
shall begin on the Acceptance Date of each Selected Segment and end on the
twentieth anniversary of the Acceptance Date of the first Selected Segment
Accepted hereunder, but in no event later than December 31, 2019 (the
"Expiration Date").
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7.2 MAINTAINING AUTHORIZATIONS. Lessor shall use commercially
reasonable efforts to maintain, renew, or replace the Right-of-Way
Authorizations during the Term. If Lessor determines it is not commercially
reasonable to maintain, renew or replace any of its existing Right-of-Way
Authorizations during the Term, then Lessor shall give notice to Lessee and
shall cooperate with Lessee, at Lessee's written request, to attempt to
maintain, renew or replace such Right-of-Way Authorizations, but at Lessee's
sole Cost. During the last three years of the Term, upon written notice from
Lessee requesting such information, Lessor shall promptly provide written
notice of the status (including any potential or pending terminations or
expirations) of Right-of-Way Authorizations relating to the Lessee Fibers,
including but not limited to whether or not Lessor intends to extend or renew
any Right-of-Way Authorizations. In the event that during the Term any
Right-of-Way Authorization expires or is terminated and is not replaced, Lessee
shall have the right upon 30 days prior written notice to Lessor, to terminate
the Lease with respect to the Lessee Fibers in the Span directly affected by
such expired or terminated Right-of-Way Authorization. Upon such termination,
Lessee's obligation to make any lease payments with respect to which the Lease
has been terminated shall expire.
7.3 EXTENSION OF LEASE TERM. To the extent Lessor has elected to
maintain or extend or replace Right-of-Way Authorizations with respect to this
Lease beyond the Term, Lessee may request an extension of the Term of such
Lease, and Lessor agrees to negotiate with Lessee with respect to such
extension, but Lessor shall have no obligation to grant any such extension.
7.4 AGREEMENT TERM. The term of this Agreement shall begin on the
Effective Date and, except to the extent terminated sooner pursuant to Article
20, shall end on the Expiration Date (the "Agreement Term"), unless extended by
mutual agreement of the parties.
7.5 EFFECT OF TERMINATION. No termination of this Agreement, or the
Lease with respect to any Leased Fibers, shall affect the rights or obligations
of any party hereto:
(a) with respect to any payment hereunder for services
rendered prior to the date of termination;
(b) pursuant to Articles 15, 16, 17, 19, 22, 24, 26, and 27
entitled Indemnification; Insurance; Taxes and Franchise, License, and Permit
Fees; Confidentiality and Publicity; Arbitration; Rules of Construction;
Limitation of Liability; and Audit Rights; respectively; or
(c) pursuant to other provisions of this Agreement that, by
their sense and context, are intended to survive termination of this Agreement.
8. OPERATION, MAINTENANCE AND REPAIR OF THE SYSTEM
8.1 MAINTENANCE. During the Term of the Fiber Lease, Lessor shall
provide, or cause to be provided by contractors selected by Lessor, emergency
and non-emergency maintenance and
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repair of the Lessor System and Lessee's Fibers all pursuant to the operations
specifications set forth in Exhibit H. Lessor, at Lessee's sole expense and at
Lessor's or its subcontractor's then prevailing rates, shall perform
maintenance and repair necessitated by Lessee's negligence or willful
misconduct or Lessee's elective maintenance or repair requests.
8.2 SELF-HELP RESTORATION. If Lessor does not repair a loss of fiber
continuity of a Lessee Fiber within eight hours after Lessor receives notice of
the need for repair of any Lessee Fibers, Lessee may, through the use of a
subcontractor approved by Lessor, perform maintenance and repair services and
Lessee may access any part of the Lessor System to perform such service;
provided, however, that Lessee performs any such service within the
restrictions set forth in, and subject to, the applicable underlying
Right-of-Way Authorization and provided further that the eight hour period
referred to above shall be tolled for any period during which Lessor or its
contractors are prevented from having access to the Lessee Fibers due to
circumstances outside of Lessor's reasonable control. If Lessee requires Lessor
personnel to unlock any Lessor facility, Lessor shall cooperate fully with
Lessee to allow Lessee access to such facility. Lessee shall provide Lessor
oral notification (confirmed in writing) whenever it enters the Lessor System
pursuant to this Section 8.2 as soon as reasonably possible. Lessee shall only
use the preceding rights to enter the Lessor System to the extent necessary for
an emergency situation. Lessor shall reimburse Lessee its Costs of providing
such self-help restoration maintenance services.
8.3 MAINTENANCE OF LESSEE'S EQUIPMENT EXCLUDED. Lessor shall have no
obligation under this Agreement to maintain, repair or replace Lessee's
Equipment.
8.4 NO UNAUTHORIZED ACCESS TO SYSTEM. Lessee shall not access any part
of the Lessor System (other than pursuant to Section 8.2 or the Collocation
Provisions) without the prior written consent of Lessor, and then only upon the
terms and conditions specified by Lessor.
8.5 NO OTHER FEES. Except as otherwise set forth herein (including
orders placed pursuant to the Collocation Provisions), neither party shall
charge the other party any maintenance, right-of-way, conduit occupancy, or
other recurring charges.
8.6 MAINTENANCE FEES. For each month during the Term occurring after
the Acceptance Date of each Selected Segment, Lessee shall pay Lessor a
maintenance fee of $**** per fiber mile, per month for the maintenance services
set forth in the first sentence of Section 8.1 of this Agreement associated with
the Lessee Branch A Fibers. Invoices for such maintenance services shall be
issued monthly in advance no earlier than the first day of each calendar month
after the Acceptance Date for each Selected Segment.
9. RELOCATION
9.1 RELOCATION COSTS. If Lessor is required to relocate any portion of
its System (including the fibers therein and the facilities associated
therewith), Lessor shall give Lessee not less than 180 calendar days' prior
written notice (unless Lessor has received less than 180 days'
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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notice, in which case Lessor shall give notice to Lessee as promptly as
reasonably practicable after Lessor receives such notice or determines that a
relocation is necessary) of such relocation. Lessor shall use commercially
reasonable efforts to arrange for such relocation as promptly as practicable.
Lessor shall provide Lessee with updated as-built drawings with respect to any
relocated portion of the relocated System not later than 180 calendar days
following the completion of such relocation. Lessor shall perform any
relocation such that:
(a) the relocated facilities shall be constructed and tested
in accordance with the specifications and requirements set forth in this
Agreement, including the applicable Exhibits;
(b) the relocation shall not result in a materially adverse
change to the operations, performance, or Branch B interconnections of Lessee,
or the end points or meet points of the System;
(c) the relocation maintains Diversity of Branch A Lessee
Fibers; and
(d) the relocation shall not unreasonably interrupt service
on the Lessor System. Lessee shall receive at least twenty-one (21) calendar
days advance notice of any interruption in service of Lessee Fibers which will
be caused by a relocation, and such relocation shall be coordinated such that
any interruption shall only occur between the hours of 12 midnight and 6 A.M.
local time on Saturdays and Sundays.
10. COLLOCATION
10.1 PROVISION OF COLLOCATION SERVICES. Lessor shall make available to
Lessee Basic Services in its POPs and Transmission Sites to be used in
connection with the Lessee Fibers for the collocation of Lessee's Equipment in
accordance with the provisions of Exhibit C and the following Sections of this
Article.
10.2 INITIAL BASIC SERVICES. Lessor shall provide to Lessee Basic
Services in the quantities and at the locations set forth in Exhibit J as
amended by Lessor from time to time. If Lessee elects not to use all the racks
to be provided pursuant to this Section, such unused racks shall still be
included in the calculation of Rack Credits pursuant to Section 10.4, beginning
on the Acceptance Date of any Selected Segment associated with such collocation
space, provided that such Rack Credits shall not accrue until Lessor tenders
the Basic Services associated with the unused rack(s) to Lessee by written
notice setting forth the date such space was first available for use by Lessee.
10.3 ADDITIONAL BASIC SERVICES. To the extent Lessor has additional
available and uncommitted collocation space and power at the locations listed
in Exhibit J as amended by Lessor from time to time, at other Lessor
Transmission Sites or Lessor POPs (but only with respect to Lessor POPs which
are not located inside of buildings or central offices and which are
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listed in Exhibit J), Lessee may order additional Basic Services. Lessee shall
use the standard Lessor procedures for ordering such additional Basic Services.
10.4 RACK CREDITS. In consideration for the Lease payments paid by
Lessee hereunder, Lessee shall receive **** rack credits ("Rack Credits"). Each
Rack Credit entitles Lessee to the right to the use of one rack per month
together with associated Basic Services (including power up to 30 amps per rack)
in a Lessor Transmission Site or POP included within the Selected Segments
during the Term. At such time as Lessee utilizes all such Rack Credits, Lessee
shall thereafter pay for the use of such racks together with associated Basic
Services (including power up to 30 amps per Rack) at the rate of $**** per
month. Upon selection by Lessee of a Selected Segment, Lessee shall advise
Lessor of the number of racks and location of such racks in Transmission Sites
or POPs that Lessee requires. Lessor shall provide, and Lessee shall pay for
(subject to this Section 10.4) such racks commencing on the Acceptance Date of
the Lessee Fibers to which the racks relate. In the event that subsequent to the
selection of a Selected Segment, Lessee requires additional racks, Lessor may
provide such racks to Lessee subject to the availability thereof which
availability shall be determined by Lessor in its sole reasonable discretion.
Once selected, the use of such racks by Lessee may not be terminated (a) for one
year after use of such rack begins if such rack is located in a Lessor POP, and
(b) for five years after use of such rack begins if such rack is located in a
Lessor Transmission Site. If Lessee elects to terminate use of any racks it
shall do so by giving Lessor 30 days prior written notice. Unused Rack Credits
may not be assigned, other than in conjunction with a permitted assignment of
this Agreement, or converted into cash, and shall expire and be of no further
force or effect after the Expiration Date.
10.5 ADDITIONAL SERVICES INVOICING. Lessor shall issue invoices for
any Additional Services after the calendar month during which it provided such
Additional Services, provided that it may issue invoices for nonrecurring
charges (including any Cost reimbursement) at any time after such charges
accrue.
11. CONNECTION TO THE SYSTEM
11.1 PERMITTED INTERCONNECTION POINTS. Except as limited by Section
11.2, Lessee shall have the right, subject to making the payments required, to
interconnect with Lessee's Fibers at:
(a) any designated Access Point on Lessor's System;
(b) any Lessor Network Site where such fibers are located
(pursuant to Exhibit C);
(c) any Branch B interconnection; or
(d) as mutually agreed by the parties.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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11.2 LIMITATIONS ON INTERCONNECTION RIGHTS. Lessee's exercise of the
interconnection right set forth in Section 11.1 shall be subject to any
prohibitions or restrictions in Lessor's Right-of-Way Authorizations. Lessee
may not establish an interconnection that Lessor, in its reasonable discretion
(applied without unreasonable discrimination with respect to interconnections
made by Lessor or third parties), determines is likely to materially and
adversely affect the Lessor System.
11.3 FIBER DROPS. In the event Lessee establishes its own
interconnection with the Branch A portion of the Lessee's System, Lessor shall
provide, at Lessee's Cost, fiber drops from interconnection points at Access
Points on Lessor System to the edge of Lessor's right-of-way at points mutually
agreed upon in writing by the parties and Branch B pricing shall be applicable.
Lessor shall use commercially reasonable efforts to provide such drop points at
the locations requested by Lessee subject to the limitations in the
Right-of-Way Authorizations. Subject to the terms of the Right-of-Way
Authorizations and Section 11.5, Lessor shall also provide Lessee reasonable
access to any such fiber drops.
11.4 DEMARCATION POINTS. The demarcation point ("Demarcation Point")
between Lessor's facilities and those of Lessee shall be at:
(a) Lessor's fiber patch panel or the DSX-N panel (as
designated by Lessor) for interconnections in Network Sites and at other
Buildings having either of such panels; or
(b) the furthest point inside a Building, including a local
exchange carrier's central office, to which Lessor is allowed to take the
fiber; and, to the extent Lessor is later allowed to install or access a fiber
patch panel or DSX-N panel inside of such Building, such point shall become the
Demarcation Point and Lessor agrees to deliver Lessee's Fiber to such point.
Where neither of the Demarcation Points described in (a) or (b) above exist,
the Demarcation Point shall be selected by Lessor consistent with reasonable
industry and Lessor practices.
11.5 FACILITIES OWNERSHIP AND CONTROL. Lessee shall retain ownership
of any portion of facilities on its side of the Demarcation Point during the
Term of this Agreement and Lessor shall have no obligation to maintain, repair,
relocate, or monitor such Lessee facilities (including any fiber drop
facilities established pursuant to Section 11.3). Lessee shall not access a
splice, splice box, splice vault, or similar facility interconnecting with
Lessor's System. Lessor shall perform any work required with respect to such
splice facilities and may invoice Lessee for the Cost of performing such work
at the request of Lessee (except to the extent the work relates to the
provision of a Branch B interconnection).
11.6 LESSEE RESPONSIBILITY. Subject to the provisions herein, Lessee
shall be responsible for obtaining the rights required and for all costs of:
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(a) obtaining rights of way within or beyond Lessor's
Right-of-Way Authorizations;
(b) obtaining building access, entry rights, ducts, or riser
cables to interconnect in buildings or any access beyond Lessor's Demarcation
Point with respect to a Branch B interconnection;
(c) providing all Equipment and Lessor-approved materials to
construct and install each interconnection, including cables and conduit and
any labor charges associated therewith; and
(d) bringing facilities to and connecting them with Lessor's
System.
11.7 THIRD PARTY RELATIONS. If necessary, and where applicable, Lessor
shall assist Lessee, at Lessee's Cost, in obtaining from any land or building
owner, lessor, or private or governmental right-of-way owner, any rights
required to access and exit interconnection points. Lessee shall use reasonable
efforts to avoid damaging the relationships between Lessor and such third
parties.
11.8 APPLICATION OF BRANCH A INTERCONNECTION CHARGES. With respect to
interconnections made pursuant to the Collocation Provisions or made to
interconnect with a POP, no recurring charges shall apply and the nonrecurring
charges shall be limited to Lessor's Costs of providing such interconnection
(as computed, with respect to interconnections in Network Site collocation
facilities, pursuant to the Collocation Provisions). During the Term each party
may modify its list of POPs by adding or eliminating POPs, subject to the
consent of the other party.
12. BRANCH B INTERCONNECTIONS
12.1 APPLICATION OF BRANCH B PRICING. Except as set forth in Section
11.8, all interconnections with Lessor's System shall be considered Branch B
interconnections, regardless of whether the interconnection with backbone or
Branch A facilities is made by Lessor or by Lessee pursuant to Article 11. All
such Branch B interconnections shall be paid by Lessee in accordance with
Exhibit L. Provided Lessee is paying for a Branch B interconnection with
respect to a particular Building, Lessee shall have the right to route other
interconnections through its connection in that Building without paying for
such additional Branch B interconnections.
12.2 BRANCH B PRICING. No nonrecurring charges shall apply to Branch B
interconnections located on Lessor's network, but the Branch B recurring
charges set forth in Exhibit L shall apply, as adjusted by the following:
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(a) the Branch B recurring charges shall be reduced by ****
for the period beginning with the completion of the interconnection and ending
on the first anniversary of such completion; and
(b) if Lessor does not offer Diversity for a Branch B
interconnection, the Branch B recurring charges shall be reduced by **** (or a
total of **** during the period described in Subsection 12.2(a)).
12.3 BRANCH B PAYMENTS. Lessee shall commence paying for all Branch B
interconnections as of the Acceptance Date of each such Branch B
interconnection.
12.4 ORDER INTERVALS. Lessee shall have the right to order Branch B
interconnections in accordance with Exhibit H and Lessor shall provide such
interconnections within 45 days after Lessor receives such order. With respect
to a Branch B interconnection, any time after the first anniversary of the date
upon which Lessee's payment with respect to such Branch B interconnection
commenced, Lessee may cancel such interconnection upon at least 30 days prior
written notice to Lessor.
12.5 SPECIFICATIONS. All Branch B interconnections established by
Lessor within the Lessor System shall be in accordance with the relevant
specifications (including the splice loss and optical fiber specifications) set
forth in Exhibits G and I and with prudent telecommunications industry
practices. Lessor shall use commercially reasonable efforts to provide all
Branch B interconnections with Diversity. In the event that a Branch B
interconnection does not have Diversity, then Lessor shall give notice to
Lessee and Section 12.2(b) shall apply to such Branch B interconnection.
12.6 INTRABUILDING EXTENSIONS. Subject to Section 11.6, Lessee may
elect to obtain either fiber optic or metallic (e.g., coaxial cable or copper
twisted pair) extensions between a Lessor Demarcation Point at a Branch B
interconnection and another point within the same Building. Upon written
request for either such extension setting forth the design and terminating
location of such extension, Lessor shall, at its sole discretion and in
accordance with its then standard order intervals, either (a) construct such
extension for a nonrecurring charge equal to its Cost plus 10% or (b) designate
at least one, but up to three, reputable Lessor-approved contractors authorized
to perform such work, in which case Lessor shall have no responsibility for
such extension and Lessee shall deal directly with any such contractor. Lessor
shall reasonably cooperate with any such approved contractors selected by
Lessee to allow them to perform such work.
13. USE OF THE SYSTEMS
13.1 OBLIGATION TO COMPLY WITH LAWS; EXCLUSIVE USE. Lessee shall
comply in all material respects with all applicable government codes,
ordinances, laws, rules, regulations, Right-of-Way Authorizations and/or
restrictions in its use of Lessor's System. Subject to the
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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provisions of Section 23.3, Lessee may use the Lessee Fibers for any lawful
telecommunications purpose. Lessor shall have no right to use Lessee Fibers
during the Term of this Agreement.
13.2 SYSTEM DAMAGE. Lessor and Lessee shall promptly notify each other
of any matters pertaining to any damage or impending damage to or loss of the
Lessor System that are known to such party. Lessee shall take all commercially
reasonable precautions against, and shall assume liability, subject to the
terms herein, for, any damage caused by it to the Lessee Fibers. Lessee shall
not use the Lessee Fibers in a way that interferes in any material way with or
materially adversely affects the use of any fibers of Lessor or the Lessor
System.
13.3 REGULATORY COOPERATION. Each party shall cooperate with and
support the other in complying with any requirements applicable to the Lessor
System imposed by any governmental or regulatory agency or authority.
13.4 LIENS. Lessee shall not cause or permit any part of the Lessor
System to become subject to any mechanic's lien, materialman's lien, vendor's
lien, or any similar lien whether by operation of law or otherwise. If Lessee
breaches its obligations under this Section, it shall immediately notify Lessor
in writing, shall promptly cause such lien to be discharged and released of
record without cost to Lessor, and shall indemnify Lessor against all costs and
expenses (including reasonable attorneys' fees and court costs at trial and on
appeal) incurred in discharging and releasing such lien.
14. PAYMENT
14.1 TIME AND METHOD OF PAYMENT. The invoice delivery date shall be
determined pursuant to Section 18.2. Monthly payments for Lease Fibers shall be
made by wire transfer (or, at Lessor's election, by check or draft), to the
account designated on the invoice of Lessor, within seven business days of the
delivery of such invoice. Except as otherwise set forth in this Agreement, all
other amounts due hereunder shall be paid within 30 calendar days of the
invoice delivery date. Except as otherwise provided, payments may be made by
check or draft of immediately available funds delivered to the address
designated in writing by the other party (e.g., in a statement or invoice) or,
failing such designation, to the address for notice to such other party
provided pursuant to Article 18. Except as set forth herein, a party may issue
an invoice after incurring any costs subject to reimbursement by the other
party or after the time period during which a charge accrues.
14.2 LATE PAYMENT CHARGES. If a party fails to make any payment under
this Agreement when due, such unpaid amounts shall accrue interest, from the
date such payment is due until paid, including accrued interest, at the lower
of eighteen percent (18%) annual interest or the highest percentage allowed by
law.
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15. INDEMNIFICATION
15.1 INDEMNITY OBLIGATION. Each party shall indemnify, defend, protect
and hold harmless the other party, its employees, officers, directors, agents,
shareholders, affiliates, Facility Owners/Lenders, and other parties to
Right-of-Way Authorizations that are entitled to indemnity by such indemnifying
party, from and against, and assumes liability for:
(a) Any injury, loss or damage to any person, tangible
property or facilities of any person or entity (including reasonable attorneys'
fees and costs), to the extent arising out of or resulting from the acts or
omissions, negligent or otherwise, of the indemnifying party, its officers,
employees, servants, affiliates, agents or contractors in connection with its
performance under this Agreement; and
(b) Any claims, liabilities or damages arising out of any
violation by the indemnifying party of regulations, rules, statutes or court
orders of any local, state or federal governmental agency, court or body in
connection with its performance under this Agreement.
15.2 NO LIMITATION ON CLAIMS AGAINST OTHER PARTIES. Except as set
forth herein, and subject to the terms of any underlying agreements between
Lessor and any third person, nothing contained herein shall operate as a
limitation on the right of either party hereto to bring an action for damages
against any third person, including indirect, special or consequential damages,
based on any acts or omissions of such third person as such acts or omissions
may affect the construction, operation or use of the Lessee Fibers; provided,
however, that each party hereto shall assign such rights of claims, execute
such documents and do whatever else may be reasonably necessary to enable the
other party to pursue any such action against such third person.
16. INSURANCE
16.1 OBLIGATION TO OBTAIN. During the Term of this Agreement, the
parties shall each obtain and maintain not less than the following insurance:
(a) Commercial General Liability Insurance, including
coverage for sudden and accidental pollution legal liability, with a combined
single limit of $10,000,000 for bodily injury and property damage per
occurrence and in the aggregate; provided that such coverage may be obtained
through a combination of specific and umbrella or excess liability policies.
(b) Worker's Compensation Insurance in amounts required by
applicable law and Employers Liability Insurance with limits not less than
$1,000,000 each accident. If a party is to perform work in Nevada, North
Dakota, Ohio, Washington, Wyoming, or West Virginia, the party shall
participate in the appropriate state fund(s) to cover all eligible employees
and provide a stop gap endorsement.
(c) Automobile Liability Insurance with a combined single
limit of $2,000,000 for bodily injury and property damage per occurrence, to
include coverage for all owned,
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non-owned, and hired vehicles; provided that such coverage may be obtained
through a combination of specific and umbrella or excess liability policies.
The limits set forth above are minimum limits and shall not be construed to
limit the liability of either party.
16.2 POLICY REQUIREMENTS. Each party shall obtain and maintain the
insurance policies required above with companies rated A- or better by Best's
Key Rating Guide or with a similar rating by another generally recognized
rating agency. The other party, its Affiliates, officers, directors, and
employees, and any other party entitled to indemnification hereunder shall be
named as additional insureds to the extent of such indemnification. Each party
shall provide the other party with an insurance certificate confirming
compliance with the insurance requirements of this Article. The insurance
certificate shall indicate that the other party shall be notified not less than
30 calendar days prior to any cancellation or material change in coverage. If
either party provides any of the foregoing coverages through a claims made
policy basis, that party shall cause such policy or policies to be maintained
for at least three years beyond the expiration of this Agreement.
16.3 WAIVER OF SUBROGATION. The parties shall each obtain from the
insurance companies providing the coverages required by this Agreement a waiver
of all rights of subrogation or recovery in favor of the other party and, as
applicable, its members, managers, shareholders, Affiliates, assignees,
officers, directors, and employees or any other party entitled to indemnity
under this Agreement to the extent of such indemnity.
16.4 BLANKET POLICIES; SELF-INSURANCE. Nothing in this Agreement shall
be construed to prevent either party from satisfying its insurance obligations
pursuant to this Agreement (a) under a blanket policy or policies of insurance
that meet or exceed the requirements of this Article or (b) with respect to the
insurance required in Sections 16.1(b) and (c), with the consent of the other
party, which consent shall not be unreasonably withheld, self-insurance.
17. TAXES AND FRANCHISE, LICENSE AND PERMIT FEES
17.1 OBLIGATIONS TO PAY RIGHT-OF-WAY CHARGES AND TAXES. The parties
acknowledge that a material premise of this Agreement is that during the Term,
Lessor shall obtain, and use commercially reasonable efforts to maintain, its
Right-of-Way Authorizations at its own cost. Lessor shall timely pay any and
all (a) taxes, franchise, license and permit fees based on the physical
location of its System, and/or the construction thereof in or on public roads,
highways or rights-of-way; and (b) Right-of-Way Authorization payments
applicable to the System. Notwithstanding the foregoing, Lessee shall pay any
taxes, franchise, license and permit fees based upon its lease or use of Lessee
Fibers. Failure to pay such taxes or payments by the party responsible
therefor, which continues after seven calendar days' written notice thereof by
the other party, shall authorize, but not obligate, the other party to make
such payments and responsible party shall reimburse the other party for such
payments promptly upon demand
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together with interest at the rate set forth in Section 14.2 from the date that
the other party made such payment until reimbursed by the responsible party.
17.2 OBLIGATION TO TIMELY PAY TAXES BASED ON REVENUES. Except as set
forth in Section 17.1, Lessee shall pay any and all sales, use, income, gross
receipts or other taxes assessed based upon revenues Lessee receives due to its
use of the Lessee Fibers.
17.3 RIGHT TO CONTEST TAXES. Notwithstanding any provision herein to
the contrary, a party shall have the right by appropriate proceedings brought
in good faith to protest the imposition and/or amount of any taxes or
franchise, license or permit fees imposed on or assessed against it. In such
event, the protesting party shall indemnify and hold the other party harmless
from any expense, legal action or cost, including reasonable attorneys' fees,
resulting from the protesting party's exercise of its rights hereunder.
17.4 PROHIBITION ON AGREEMENTS AFFECTING OTHER PARTY. Without the
prior consent of Lessee, Lessor shall not enter into any agreement that would
have the effect of obligating Lessee to pay additional taxes or franchise,
license or permit fees unless such agreement is required by a government or
agency thereof in connection with the grant of a franchise, license, permit or
similar governmental requirement or required pursuant to a Right-of-Way
Authorization.
18. NOTICE
18.1 ADDRESSES. Unless otherwise provided herein, all notices and
communications concerning this Agreement shall be addressed to the other party
as follows:
If to Lessor: Williams Communications, Inc.
Attn: Contract Administration, Suite 2600
One Williams Center
Tulsa, Oklahoma 74172
Facsimile No.: (918) 573-6578
with a copy to: Williams Communications, Inc.
Attn: General Counsel
One Williams Center, Suite 4100
Tulsa, Oklahoma 74172
Facsimile No.: (918) 573-3005
If to Lessee: Metromedia Fiber National Network, Inc.
One North Lexington Avenue
Fourth Floor
White Plains, New York 10601
Attention: President
Facsimile No: 914-421-7550
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with a copy to: Metromedia Fiber National Network, Inc.
One North Lexington Avenue
Fourth Floor
White Plains, New York 10601
Attn: Vice President, Legal Affairs
Facsimile No: 914-421-6777
or at such other address as may be designated in writing to the other party (a
party may designate a separate address for delivery of invoices).
18.2 METHOD FOR DELIVERING NOTICES AND INVOICES. Unless otherwise
provided herein, notices and invoices shall be in writing and sent by
registered or certified U.S. Mail, postage prepaid, or by commercial overnight
delivery service, or by facsimile, and shall be deemed served or delivered to
the addressee or its office on the date of receipt acknowledgment, or if by
facsimile, upon confirmation of transmission or if postal claim notices are
given, on the date of its return marked "unclaimed," provided, however, that
upon receipt of a returned notice marked "unclaimed," the sending party shall
make reasonable effort to contact and notify the other party by telephone.
19. CONFIDENTIALITY AND PUBLICITY
19.1 CONFIDENTIAL INFORMATION. The terms and conditions of this
Agreement and all documents referenced herein, communications between the
parties regarding this Agreement, information provided in connection with or
pursuant to this Agreement or the service to be provided hereunder, as well as
any financial or business information of either party are confidential
("Confidential Information"). Such Confidential Information shall be held in
confidence, and the receiving party shall afford such Confidential Information
the same care and protection as it affords generally to its own Confidential
Information (which in any case shall be not less than reasonable care) to avoid
disclosure to or unauthorized use by any third party. All Confidential
Information shall remain the property of the disclosing party, shall be used by
the receiving party only for its intended purpose, and such Confidential
Information, including all copies thereof, shall be returned to the disclosing
party or destroyed after the receiving party's need for it has expired or upon
the request of the disclosing party. Confidential Information shall not be
reproduced except to the extent necessary to accomplish the purposes and intent
of this Agreement, or as otherwise may be permitted in writing by the
disclosing party. Notwithstanding anything contained herein to the contrary,
neither party shall be required to keep confidential any information that (a)
becomes publicly available other than through the actions or omissions of the
receiving party; (b) is required to be disclosed pursuant to a governmental or
judicial rule, order or regulation; (c) the recipient of the Confidential
Information independently develops; (d) becomes available to the receiving
party without restriction from a third party; (e) is required by its lender and
is given to such lender on a confidential basis; or (f) is subject to "due
diligence"
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review by a potential acquirer of a significant equity interest in it or its
ultimate or intermediate parent company (a significant equity interest shall be
an interest of at least 5% of the voting equity of a party or of securities
having a market value of at least $100 million) and is given to such potential
acquirer on a confidential basis.
19.2 PUBLICITY. Following the Effective Date, the parties shall
coordinate and cooperate with each other when making public announcements or
disclosures to any governmental entities related to the terms of this Agreement
and each party shall have the right to promptly review, comment upon and
approve (such approval not to be unreasonably withheld or delayed) any
publicity materials, press releases or other public statements or disclosures
to governmental entities by the other party that refer to, or that describe any
aspect of this Agreement; provided, however, that no party shall have an
approval right with respect to any public announcements or disclosures to any
governmental entities which are, in the reasonable judgement of the party
making such public announcement or disclosure, required by law.
20. DEFAULT
20.1 PARTIAL TERMINATION UPON DEFAULT. Either party, upon written
notice to the other party after the other party's default and the other party's
failure to cure any default in the performance of any material obligation
hereunder prior to the end of the applicable cure period, may terminate this
Agreement as herein provided, provided that at the time of termination such
default remains uncured:
(a) Lessor may terminate this Agreement, to the extent that
Lessee is the defaulting party; and/or
(b) Lessee may terminate this Agreement, to the extent that
the default relates to Lessor System (or, at Lessee's election, with respect to
any Lessee Fibers for which the Acceptance Date has not occurred as provided in
Section 5.4), if Lessor is the defaulting party.
20.2 SPECIFIC DEFAULT EVENTS. Events of default shall include but not
be limited to: (a) the making of a general assignment for the benefit of the
defaulting party's creditors; (b) the filing of a voluntary petition in
bankruptcy or the filing of a petition in bankruptcy or other insolvency
protection against the defaulting party which is not dismissed within 90
calendar days thereafter; (c) the filing by the defaulting party of any
petition or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution, or similar
relief; (d) any violation by Lessee of the restrictions set forth in Section
23.3, (e) a failure by Lessor to cause the Acceptance Date for more than 20% of
the route miles of Selected Segments on its System to occur within 180 days of
the Scheduled Acceptance Dates thereof, or (f) a failure by Lessor to complete
more than 20% of the Branch B interconnections within 180 days of the scheduled
completion dates.
20.3 CURE PERIOD. The cure period applicable to Section 20.1 shall be:
23
<PAGE> 31
(a) with respect to a default in payment, the period ending
ten business days after a written notice of such default is given;
(b) with respect to the events of default described in
Subsection 20.2(e) or 20.2(f), the period ending 30 calendar days after a
written notice of such default is given; or
(c) with respect to any other default, the period ending 30
calendar days after a written notice of such default is given, provided,
however, that if such default cannot with reasonable diligence be cured within
such 30-day period, and such other party has commenced to effect a cure
immediately upon receipt of such notice, and diligently pursues such cure, then
such cure period will be extended for a period reasonably required to cure such
default but in no event more than an additional 30 calendar days.
20.4 FAILURE TO CURE. Upon the failure by the defaulting party to
timely cure any such default after notice thereof from the other party, the
other party may, subject to the provisions of Section 22 (a) take such action
as it determines, in its sole discretion, to be necessary to correct the
default, and (b) pursue any legal remedies it may have under this Agreement,
applicable law, or principles of equity relating to such breach.
20.5 WAIVER OF SPECIFIC DEFAULTS. Any event of default by the
defaulting party may be waived under the terms of this Agreement at the other
party's option. Any such waiver shall be in writing.
20.6 DISPUTED AMOUNTS. Notwithstanding the other provisions of this
Article, failure to pay an amount subject to a bona fide dispute shall not be
an event of default (until such dispute is resolved pursuant to Article 22 or
otherwise) to the extent the disputed amount is (a) less than $100,000 or (b)
paid into an escrow account of a nationally chartered domestic bank with
offices in New York pending resolution of the dispute. The interest rate set
forth in Section 14.2 shall apply to amounts so withheld or paid into escrow by
one party and later awarded to the other party, but the party paying such
amounts into escrow shall, upon closing of an escrow account, be entitled to
any interest received from, and responsible for paying any fees charged by, the
bank holding the escrow funds.
21. FORCE MAJEURE
21.1 EXCUSED PERFORMANCE. Neither party shall be in default under this
Agreement with respect to any delay in such party's performance (other than the
payment of monetary amounts due under this Agreement) caused by any of the
following conditions: act of God, fire, flood, material shortage or
unavailability not resulting from the responsible party's failure to timely
place orders therefor, lack of transportation, government codes, ordinances,
laws, rules, regulations or restrictions, war or civil disorder, or any other
cause beyond the reasonable control of such party, provided that the party
claiming relief under this Section shall promptly notify the
24
<PAGE> 32
other in writing of the existence of the event relied on and the cessation or
termination of said event. The party claiming relief under this Section shall
exercise commercially reasonable efforts to minimize the time for any such
delay.
22. ARBITRATION
22.1 OBLIGATION TO ARBITRATE. Any dispute or disagreement relating to
this Agreement or any matter arising between Lessee and Lessor in connection
with this Agreement which is not settled to the mutual satisfaction of Lessee
and Lessor within 30 calendar days from the date that either party informs the
other in writing that such dispute or disagreement exists, shall be settled by
arbitration by a single arbitrator in Chicago, Illinois, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the date that such notice is given. If the parties are unable to agree on a
single arbitrator within fifteen calendar days, the American Arbitration
Association shall select an arbitrator. The decision of the arbitrator shall be
final and binding upon the parties and shall include written findings of law
and fact, and judgment may be obtained thereon by either party in a court of
competent jurisdiction. Each party shall bear the cost of preparing and
presenting its own case. The cost of the arbitration, including the fees and
expenses of the arbitrator, shall be shared equally by the parties unless the
award otherwise provides.
22.2 EXCEPTIONS TO ARBITRATION OBLIGATION. The obligation herein to
arbitrate shall not be binding upon any party with respect to requests for
preliminary injunctions, temporary restraining orders or other procedures in a
court of competent jurisdiction to obtain interim relief when deemed necessary
by such court to preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute.
23. ASSIGNMENT
23.1 RESTRICTIONS ON ASSIGNMENT. Except as provided in the second
sentence of this Section, neither party shall assign or otherwise transfer this
Agreement or its rights or obligations hereunder to any other party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. Either party shall have the right, without
the other party's consent, to assign or otherwise transfer this Agreement in
whole or in part as collateral to any lender or to any of its Affiliate's or to
any corporation into which it may be merged or consolidated or which purchases
all or substantially all of its assets.
23.2 AGREEMENT BINDS SUCCESSORS. This Agreement and each of the
parties' respective rights and obligations under this Agreement, shall be
binding upon and shall inure to the benefit of the parties hereto and each of
their respective successors and permitted assigns. Any assignment or transfer
shall be subject to the other party's rights under this Agreement and any
assignee or transferee shall continue to perform the assigning party's
obligations under this Agreement.
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<PAGE> 33
23.3 RESTRICTION ON TRANSFER OF DARK FIBER RIGHTS. Lessee shall not
convey any interest in the rights granted herein in the Lessee Fibers except by
means of the provision of "capacity" or a permitted assignment of this
Agreement. "Capacity" does not include IRU grants, sales, leases, assignments,
or grants of similar rights, regardless of the term, in "dark" fiber. The
parties acknowledge that the above restriction is a material obligation of the
parties, will reduce the parties' costs of performing their obligations
hereunder. Lessee acknowledges and agrees the Lessee Fibers are provided for
use (a) exclusively by (i) Lessee and/or its Affiliates, or (ii) customers of
Lessee and (b) in either case, only in the ordinary course of business of
Lessee and/or its Affiliates, and Lessee will not permit or provide access to,
or use of, the Lessee Fibers, in whole or in part, to any third party (other
than a customer of Lessee in the ordinary course of business of Lessee),
pursuant to (by way of example and not in limitation), sublease, license,
sublicense or resale, or any other right of use. For purposes of this
Agreement, the ordinary course of Lessee's and/or its Affiliates' business
shall not include (ii) Dark Fiber Transactions or (ii) Dedicated Fiber
Transactions. "Dark Fiber Transactions" means the direct or indirect
assignment, condo, wholesale, sale, licensing, leasing, granting of IRUs or any
other rights of use or granting of similar rights, regardless of the term in
"dark fiber", as such term is commonly understood in the telecommunications
industry. "Dedicated Fiber Transactions" means the dedication, by oral or
written agreement or understanding, to a single party, or to a group of related
parties, of one hundred percent (100%) of the capacity of Lessee Fibers
available to non-Lessee Affiliates. Notwithstanding the above, Lessee may use
the Lessee Fibers to provide telecommunications transmission capacity or the
use of optical fiber wavelengths as long as the provision of such capacity or
wavelengths does not constitute either a Dark Fiber Transaction or a Dedicated
Fiber Transaction.
23.4 RESTRICTION ON USE OF OR TRANSFER OF COLLOCATION RIGHTS OR RIGHTS
IN RACKS. Lessee shall not, directly or indirectly, convey any interest in the
Collocation Rights or racks provided to Lessee hereunder, or Lessee's right to
occupy any such collocation space or racks, to any other person, firm or
entity, without the prior written consent of Lessor, which consent Lessor shall
not unreasonably withhold or delay.
24. RULES OF CONSTRUCTION
24.1 GOVERNING LAW. This Agreement shall be deemed a New York
agreement and shall be governed by and construed in accordance with the
domestic laws of the State of New York applicable to New York agreements,
without reference to its choice of law principles.
24.2 INTERPRETATION. The captions or headings in this Agreement are
strictly for convenience and shall not be considered in interpreting this
Agreement or as amplifying or limiting any of its content. Words in this
Agreement that import the singular connotation shall be interpreted as plural,
and words that import the plural connotation shall be interpreted as singular,
as the identity of the parties or objects referred to may require. References
to "person" or "entity" each include natural persons and legal entities,
including corporations, limited liability
26
<PAGE> 34
companies, partnerships, sole proprietorships, business divisions,
unincorporated associations, governmental entities, and any entities entitled
to bring an action in, or that are subject to suit in an action before, any
state or federal court of the United States. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." "Days" refers to calendar days,
except that references to "business days" exclude Saturdays, Sundays and
holidays during which nationally chartered banks in New York, New York are
authorized or required to close. Unless expressly defined herein, words having
well-known technical or trade meanings shall be so construed.
24.3 CUMULATIVE REMEDIES. Except as set forth to the contrary herein,
any right or remedy of either party shall be cumulative and without prejudice
to any other right or remedy, whether contained herein or not.
24.4 NO THIRD-PARTY RIGHTS. Nothing in this Agreement is intended to
provide any legal rights to anyone not an executing party of this Agreement
except under the indemnification and insurance provisions and except (a) as set
forth in Sections 25.4 and 26.2 and (b) that the Facility Owners/Lenders shall
be entitled to rely on and have the benefit of Article 26.
24.5 AGREEMENT FULLY NEGOTIATED. This Agreement has been fully
negotiated between and jointly drafted by the parties.
24.6 DOCUMENT PRECEDENCE. In the event of a conflict between the
provisions of this Agreement and those of any Exhibit, the provisions of this
Agreement shall prevail and such Exhibits shall be corrected accordingly.
24.7 INDUSTRY STANDARDS. Except as otherwise set forth herein, for the
purpose of this Agreement the normal standards of performance within the
telecommunications industry in the relevant market shall be the measure of
whether a party's performance is reasonable and timely.
24.8 CROSS REFERENCES. Except as the context otherwise indicates, all
references to Exhibits, Parts, Schedules, Articles, Sections, Subsections,
Clauses, and Paragraphs refer to provisions of this Agreement.
24.9 LIMITED EFFECT OF WAIVER. The failure of either Lessor or Lessee
to enforce any of the provisions of this Agreement, or the waiver thereof in
any instance, shall not be construed as a general waiver or relinquishment on
its part of any such provision, but the same shall nevertheless be and remain
in full force and effect.
24.10 SEVERABILITY. If any term, covenant or condition in this
Agreement shall, to any extent, be invalid or unenforceable in any respect
under the laws governing this Agreement, the remainder of this Agreement shall
not be affected thereby, and each term, covenant or condition of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
27
<PAGE> 35
24.11 EXECUTORY AGREEMENT. The parties acknowledge that both Lessor
and Lessee shall have material nonmonetary obligations under this Agreement
throughout its Term and that this Agreement, therefore, constitutes an
executory contract for purposes of applicable bankruptcy and insolvency laws.
24.12 NO PARTNERSHIP CREATED. The relationship between Lessor and
Lessee shall not be that of partners, agents, or joint venturers for one
another, and nothing contained in this Agreement shall be deemed to constitute
a partnership or agency agreement between them for any purposes, including
federal income tax purposes. The parties, in performing any of their
obligations hereunder, shall be independent contractors or independent parties
and shall discharge their contractual obligations at their own risk.
24.13 NO REIMBURSEMENT. Unless provided otherwise herein, each party
shall perform its obligations without right of reimbursement or contribution
from the other party.
24.14 RIGHT TO SUBCONTRACT. Lessor or the underlying facility owner
may subcontract for any of its obligations hereunder, including splicing,
testing, maintenance, repair, relocation, and restoration services. Lessor may
fulfill its obligations to provide Leased Fibers in its System by constructing,
acquiring title to, acquiring rights in, leasing, entering into financing
leases, or otherwise obtaining a right to use its System or various portions
thereof. The use of any such subcontractor, underlying IRU provider, financing
arrangement, or other arrangement shall not relieve Lessor of its obligations
hereunder.
25. REPRESENTATIONS AND WARRANTIES
25.1 AGREEMENT VALIDITY. Each party represents and warrants that:
(a) It has the full right and authority to enter into,
execute, deliver and perform its obligations under this Agreement;
(b) It has taken all requisite corporate action to approve
the execution, delivery and performance of this Agreement;
(c) This Agreement constitutes a legal, valid and binding
obligation enforceable against such party in accordance with its terms;
(d) Its execution of and performance under this Agreement
shall not violate any applicable existing regulations, rules, statutes or court
orders of any local, state or federal government agency, court or body; and
(e) It has the right pursuant to such party's Right-of-Way
Authorizations to grant the rights to the other party as set forth in this
Agreement.
28
<PAGE> 36
25.2 ACCEPTANCE DATE REPRESENTATIONS. As of the Acceptance Date for
any Selected Segment, Lessor represents that, with respect to such Segment:
(a) Lessor or the underlying facility owner for any portion
of the Selected Segment shall have obtained all Right-of-Way Authorizations
necessary for the installation and use of the Selected Segment hereunder;
(b) Lessor shall have obtained by IRU agreement, lease, or
otherwise the right to use portions of the Selected Segment it does not own;
(c) Lessor shall have obtained all Right-of-Way Authorizations
for the Selected Segments;
(d) no Right-of-Way Authorizations for such Selected Segment
impose unreasonable limitations or requirements on Lessee's exercise of its
rights under this Agreement; and
(e) the Selected Segments shall be designed, engineered,
installed, and constructed in accordance with the specifications set forth in
Exhibits G, I, and M and in compliance with all applicable building,
construction and safety codes for such construction and installation, as well
as any and all other applicable governmental laws, codes, ordinances, statutes
and regulations.
25.3 DISCLAIMER OF WARRANTY. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, LESSOR MAKES NO WARRANTY TO LESSEE OR ANY OTHER PERSON OR ENTITY,
WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO THE DESCRIPTION, QUALITY,
MERCHANTABILITY, COMPLETENESS OR FITNESS FOR ANY PURPOSE OF ANY FIBERS OR ANY
SERVICE PROVIDED HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL
OF WHICH WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.
25.4 NO THIRD-PARTY WARRANTIES. NO FACILITY OWNERS/LENDERS HAVE MADE
ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, TO LESSEE
CONCERNING LESSOR, LESSEE FIBERS, THE CABLE, OR THE SYSTEM OR AS TO ANY OF THE
MATTERS SET FORTH IN SECTIONS 25.1 OR 25.2. NO LESSEE LENDERS HAVE MADE ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, TO LESSOR
CONCERNING LESSEE, LESSEE FIBERS, THE CABLE, ANY IRUS OR THE LESSOR SYSTEM OR
AS TO ANY OF THE MATTERS SET FORTH IN SECTIONS 25.1 OR 25.2 OR AS TO ANY OTHER
MATTER.
29
<PAGE> 37
26. LIMITATIONS OF LIABILITY
26.1 RESTRICTION ON TYPES OF LIABILITY. Notwithstanding any provision
of this Agreement to the contrary, in no event shall either party be liable to
the other party for any special, incidental, indirect, punitive, reliance or
consequential damages, whether foreseeable or not, arising out of, or in
connection with this Agreement, in tort, breach of contract, breach of
warranty, strict liability or any other cause of action, including damage or
loss of property or equipment, loss of profits or revenue, cost of capital,
cost of replacement services, or claims of customers, whether occasioned by any
repair or maintenance performed by, or failed to be performed by, the first
party or any other cause whatsoever.
26.2 NO RECOURSE AGAINST RELEASED PARTIES. Neither party shall have
any recourse of any kind against any Released Party or any assets of a Released
Party under this Agreement, it being expressly agreed and understood that no
liability whatever shall attach to or be incurred by any Released Party under
or by reason of this Agreement or any other instrument, arrangement or
understanding related to Lessee Fibers. Each party waives all such recourse to
the extent set forth in this Section on behalf of its successors, assigns, and
any entity claiming by, through, or under such party.
26.3 NO PERSONAL LIABILITY. Each action or claim against any party
arising under or relating to this Agreement shall be made only against such
party as a corporation, and any liability relating thereto shall be enforceable
only against the corporate assets of such party. No party shall seek to pierce
the corporate veil or otherwise seek to impose any liability relating to, or
arising from, this Agreement against any shareholder, employee, officer,
director or agent of the other party. Each of such persons is an intended
beneficiary of the mutual promises set forth in this Section and shall be
entitled to enforce the obligations or provisions of this Section.
27. AUDIT RIGHTS
27.1 RETENTION OF RECORDS; AUDIT; DOCUMENTATION. Each party shall keep
such books and records (which shall be maintained on a consistent basis and
substantially in accordance with generally accepted accounting principles) as
shall readily disclose the basis for any charges (except charges fixed in
advance by this Agreement or by separate agreement of the parties) or credits,
ordinary or extraordinary, billed or due to the other party under this
Agreement and shall make them available for examination, audit, and
reproduction by the other party and its agents for a period of one year after
such charge or credit is billed or due. To the extent a party seeks
reimbursement of out-of-pocket costs or services provided on a per-hour basis,
it shall provide reasonable supporting documentation to the other party.
28. PROHIBITION ON IMPROPER PAYMENTS
28.1 IMPROPER PAYMENTS PROHIBITED. Neither party shall use any funds
received under this Agreement for illegal or otherwise "improper" purposes.
Neither party shall pay any commission, fees or rebates to any employee of the
other party. If either party has reasonable cause to believe that one of the
provisions in this Article has been violated, it, or its
30
<PAGE> 38
representative, may audit the books and records of the other party for the sole
purpose of establishing compliance with such provisions.
29. ENTIRE AGREEMENT; AMENDMENT; EXECUTION
29.1 INTEGRATION; INCORPORATION; MODIFICATION. This Agreement
constitutes the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes all prior agreements
whether written or oral relating to the subject matter hereof, which are of no
further force or effect. The Exhibits and Schedules referred to herein are
integral parts hereof and are hereby made a part of this Agreement. This
Agreement may be modified or supplemented only by an instrument in writing
executed by a duly authorized representative of each party.
29.2 COUNTERPARTS; EXECUTION. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the
same instrument. A party may duly execute and deliver this Agreement by
execution and facsimile delivery of the signature page of a counterpart to the
other party, provided that, if delivery is made by facsimile, the executing
party shall promptly deliver a complete counterpart that it has executed to the
other party.
In confirmation of their consent to the terms and conditions contained
in this Agreement and intending to be legally bound hereby, the parties have
executed this Lease Agreement as of the date first above written.
WILLIAMS COMMUNICATIONS, INC., a Delaware corporation
Signature: /s/ GORDON L. MARTIN
--------------------------------------------
(Print) Name: Gordon L. Martin
-----------------------------------------
(Print) Title: Senior Vice President, Network Services
----------------------------------------
METROMEDIA FIBER NATIONAL NETWORK, INC., a Delaware corporation
Signature: /s/ HOWARD M. FINKELSTEIN
--------------------------------------------
(Print) Name: Howard M. Finkelstein
----------------------------------------
(Print) Title: President
---------------------------------------
31
<PAGE> 39
Exhibit A
Lessor System Routes
Lessor's obligation to construct Lessor's System to the
extent not constructed as of the Effective Date is to use commercially
reasonable efforts to construct its fiber optic cable system between the points
designated on the attached maps, but Lessor does not undertake any obligation
to construct Lessor's System along the specific routes shown on the attached
maps.
A-1
<PAGE> 40
Exhibit B
(Intentionally Omitted)
B-1
<PAGE> 41
Exhibit D
This exhibit indicates by Segment, the type of fiber included
in the Segment and the construction method.
D-1
<PAGE> 42
Exhibit F
Branch A Pricing
The price per month per fiber mile in each Selected Segment
within Branch A ("Branch A Pricing") shall be determined by multiplying $****
by the number of fiber miles in the relevant Selected Segment.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
F-1
<PAGE> 43
Exhibit I
Fiber Optic Cable Specifications
Part 1- Cable and Optical Fiber Specifications
Corning SMF - 28
Corning LS
Corning Leaf
Lucent True Wave
Lucent Single Mode
Lucent All Wave
Part 2- Cable Installation Specifications
I-1
<PAGE> 44
Exhibit J
Exhibit J may be amended by Lessor from time to time.
J-1
<PAGE> 45
Exhibit K
Intentionally Omitted
K-1
<PAGE> 46
Exhibit L
Branch "B" Pricing
<TABLE>
<CAPTION>
Number of fibers Monthly price
per Branch B Monthly price
interconnection/ per fiber/per
month interconnection
----------------------- --------------------
<S> <C>
4 ****
6 ****
8 ****
10 ****
12 ****
14 ****
16 ****
18 ****
20 ****
22 ****
24 ****
26 ****
28 ****
30 ****
32 ****
34 ****
36 ****
38 ****
40 ****
42 ****
44 ****
46 ****
48 ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
L-1
<PAGE> 47
Exhibit M
Network Site Specifications
M-1
<PAGE> 48
Exhibit N
Construction Specifications
(See Exhibit I)
N-1
<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
EXHIBIT 10.22
CONFIDENTIAL TREATMENT
UNIDIAL HOLDINGS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of October 2, 1998, by and among UNIDIAL HOLDINGS, INC., a Delaware
corporation (the "Company") and WILLIAMS COMMUNICATIONS, INC., a Delaware
corporation (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of
an aggregate of 27 shares of its Series C Convertible Preferred Stock (the
"Series C Shares");
WHEREAS, the Purchaser desires to purchase the Series C Shares on the
terms and conditions set forth herein and enter into the Collateral Agreements
(as hereinafter defined); and
WHEREAS, the Company desires to issue and sell the Series C
Shares to the Purchaser on the terms and conditions set forth herein and enter
into the Collateral Agreements (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE/COLLATERAL AGREEMENTS.
1.1 AUTHORIZATION OF SHARES. On or before the Closing (as defined
in Article 2 below), the Company shall have authorized the sale and issuance to
the Purchaser of the Series C Shares having the rights, preferences, privileges
and restrictions set forth in the Certificate of Designations to the Certificate
of Incorporation of the Company in the form attached hereto as Exhibit A (the
"Preferred Share Certificate"). The Company has, or prior to the Closing will
have, adopted and filed the Preferred Share Certificate with the Secretary of
State of the State of Delaware.
1.2 SALE AND PURCHASE OF PREFERRED SHARES. Subject to the terms
and conditions hereof, the Company hereby agrees to issue and sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, 27 Series C
Shares at a purchase price of $1,000,000 per share.
1.3 COLLATERAL AGREEMENTS. The Collateral Agreements shall include
the Registration Rights Agreement, the Shareholders' Agreement, and the Services
Agreements (as hereinafter defined).
<PAGE> 2
2. CLOSING, DELIVERY AND PAYMENT.
The closing of the sale and purchase of the Series C Shares
under this Agreement (the "Closing") shall take place at 10:00 a.m., local time,
on October 2, 1998 at the offices of The Williams Companies, Inc., Legal
Department, One Williams Center, Suite 4100, Tulsa, Oklahoma 74172, or at such
other time or place as the Company and the Purchaser may mutually agree. At the
Closing, subject to the terms and conditions hereof, the Company will deliver to
the Purchaser certificates representing 27 Series C Shares, against payment in
cash by the Purchaser of the purchase price therefor.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
For the purposes of all the representations and warranties in
this Article 3, other than Section 3.2, when the term "Company" is used, it will
be deemed to include UniDial Communications, Inc. unless otherwise expressly
stated. Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B or as disclosed in the Financial Statements attached hereto as Exhibit
C, the Company hereby represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized and validly existing under the laws of the State of
Delaware. The Company has full power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted. The
Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in the aggregate in which
the nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions, in the aggregate,
in which failure to do so would not have a material adverse effect on the
Company or its business.
3.2 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the Closing, consists of 2,000 shares of Common Stock, 954
shares of which are issued and outstanding and 32 of which are reserved for
issuance pursuant to the exercise of outstanding stock options; 10 shares of
Series A Convertible Preferred Stock, 60 shares of Series B Convertible
Preferred Stocks, and 430 shares of Preferred Stock, none of which are issued
and outstanding. Immediately prior to the Closing, 246 shares of Common Stock
are reserved for future issuance upon the conversion of the Series C Shares. All
issued and outstanding shares of the Company's Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The rights, preferences, privileges and restrictions of the
Series C Shares are as stated in the Preferred Share Certificate. The shares of
Common Stock issuable upon the conversion of the Series C Shares (the
"Conversion Shares") have been duly and validly reserved for issuance and, when
issued in accordance with the Preferred Share Certificate, will be validly
issued, fully paid and nonassessable. Except for the specific matters identified
on Exhibit B and the shares reserved for issuance pursuant to the exercise of
outstanding stock options, there are no outstanding options, warrants, rights
(including conversion or preemptive rights), proxy or shareholder agreements, or
agreements of any kind for the purchase issue, transfer, delivery, sale or
acquisition from the Company of any of its securities.
2
<PAGE> 3
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on
the part of the Company, its officers, directors and shareholders necessary for
the authorization, execution and delivery of this Agreement, the Collateral
Agreements in the form attached hereto, the Preferred Share Certificate, and the
sale and issuance of the Series C Shares and the Conversion Shares pursuant
hereto, and for the performance of the Company's obligations hereunder and under
the Collateral Agreements has been taken or will be taken prior to the Closing.
The Agreement and the Collateral Agreements when executed and delivered, will be
valid and binding obligations of UniDial Holdings, Inc. or UniDial
Communications, Inc., as appropriate, enforceable in accordance with their
terms.
The sale of the Series C Shares and the subsequent conversion of Series
C Shares into Conversion Shares are not and will not be subject to any
preemptive rights or rights of first refusal that have not been properly waived
or complied with. When issued, the Series C Shares and the Conversion Shares
will be validly issued, fully paid and nonassessable, and will be free of any
liens or encumbrances including, without limitation, call rights, warrants and
conversion rights except as expressly set forth in the Certificate of
Designation; provided, however, that the Series C Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
3.4 OBLIGATIONS TO RELATED PARTIES. No employee, officer, or
director of the Company or member of his or her immediate family is indebted to
the Company, nor is the Company indebted (or committed to make loans or extend
or guarantee credit) to any of them. To the best of the Company's knowledge,
none of such persons has any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation that competes with the
Company, except that employees, officers, or directors of the Company and
members of their immediate families may own stock in publicly traded companies
that may compete with the Company. No member of the immediate family of any
officer or director of the Company is directly or indirectly interested in any
contract with the Company with a value of more than $100,000.
3.5 FINANCIAL STATEMENTS. Attached hereto as Exhibit C are copies
of the unaudited balance sheet and income statement for the seven months ended
July 31, 1998 (the "Unaudited Financial Statements") and of the audited
financial statements for the twelve (12) months ended December 31, 1997 (the
"Financial Statements") of UniDial Communications, Inc., ("UniDial"), the
Company's wholly-owned subsidiary. The Financial Statements fairly present the
financial condition and operating results of UniDial as of the dates, and for
the periods, indicated therein and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the period.
3.6 CHANGES. Except as disclosed in the Unaudited Financial
Statements and subject to the exceptions identified in Exhibit B, since the date
of the Financial Statements there has not been:
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<PAGE> 4
(a) Any change in the assets, liabilities, financial
condition or operations of UniDial as shown on the balance sheet as of the date
of the Financial Statements, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had or is expected
to have a material adverse effect on such assets, liabilities, financial
condition, or operations of the Company;
(b) Any change, except in the ordinary course of
business, in the contingent obligations of UniDial by way of guaranty,
endorsement, indemnity, warranty, or otherwise;
(c) Any damage, destruction, or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
business, financial condition, operations or prospects of UniDial;
(d) Any waiver by UniDial of a material right or of a
material debt owed to it;
(e) Any direct or indirect loans made by UniDial to any
shareholder, employee, officer, or director of UniDial, other than advances made
in the ordinary course of business;
(f) Any declaration or payment of any dividend or other
distribution of the assets of UniDial;
(g) Any labor organization activity;
(h) Any debt, obligation, or liability incurred, assumed
or guaranteed by UniDial, except current liabilities incurred in the ordinary
course of business.
(i) Any adverse change in any material agreement to which
UniDial is a party or by which it or any of its assets are bound or subject,
including compensation agreements with UniDial's employees;
(j) To the best of the Company's knowledge, any other
event or condition of any character that, either individually or cumulatively,
has materially and adversely affected, or, so far as the Company may now
foresee, in the future may materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company;
(k) For the purposes of this Section 3.6, the terms
"material" or "materially" shall mean an affect on value of more than $100,000.
3.7 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, or charge, other than (i) those resulting from taxes which have not
yet become delinquent, (ii) liens and encumbrances which do not exceed $100,000
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<PAGE> 5
on any property or asset or materially impair the operations of the Company,
(iii) liens and encumbrances in favor of Star Bank, and (iv) liens and
encumbrances in favor of WorldCom, Inc.
3.8 PATENTS AND TRADEMARKS. (a) The Company has sufficient title
and ownership of all trade names, copyrights, trade secrets, proprietary
information, patents, trademarks, service marks, rights and processes necessary
for its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere materially with the Company's ability to pursue its
stated business objectives. Neither the execution nor delivery of this
Agreement, or the Collateral Agreements, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed, will, to the Company's knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees or
the Company is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
(b) As part of the consideration for the Company entering this
Agreement, the Company shall license, or shall cause the necessary individuals
to license, the trademark known as "WillCall" on a non-exclusive, perpetual,
world-wide, non-recourse, basis to Purchaser.
3.9 The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his
best efforts to promote the interests of the Company or that would conflict with
the Company's business as proposed to be conducted.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Certificate of Incorporation (as amended
by the Preferred Share Certificate) or Bylaws or in any material respect of any
provision of any mortgage, indenture, agreement, instrument or contract to which
it is a party or by which it or its property is bound or, to the best of its
knowledge, of any federal, state or local judgment, order, writ, decree,
statute, rule or regulation applicable to the Company where such violation or
default would; or could reasonably be expected to, materially and adversely
affect the Company. The execution, delivery, and performance of and compliance
with this Agreement and the Collateral Agreements and the issuance and sale of
the Series C Shares pursuant hereto and of the Conversion Shares pursuant to the
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<PAGE> 6
Preferred Share Certificate, will not result in any such violation, result in a
conflict with or constitute either a default under any such provision or an
event that results in the creation of any lien, charge, or encumbrance of more
than $100,000 upon any assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties.
3.11 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which (i)
questions the validity of this Agreement, the Collateral Agreements, or the
right of the Company to enter into them, or (ii) to consummate the transactions
contemplated hereby, or (iii) which might result, either individually or in the
aggregate, in any material adverse changes in the assets, condition, affairs or
prospects of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. Without limiting the foregoing, there is no action,
suit, proceeding, or investigation with a potential exposure of $1,000,000 or
greater pending or currently threatened against the Company alleging that the
Company's sales agents program violates any federal or state securities laws.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Company) involving the prior employment of any
of the Company's employees, their use in connection with the Company's business
of any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.12 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and all other
taxes due and payable by the Company on or before the Closing have been paid or
will be paid prior to the time they become delinquent, except where the failure
thereof would not have a material and adverse effect on the financial condition,
operations or prospects of the Company. The Company has not elected pursuant to
the Internal Revenue Code of 1986, as amended ("Code"), to be treated as a
collapsible corporation or a Subchapter S corporation pursuant to Section 341(f)
or Section 1362(a) of the Code, nor has it made any other elections pursuant to
the Code (other than elections which relate solely to methods of accounting,
depreciation or amortization) which would have a material effect on the Company,
its financial condition, its business as presently conducted or proposed to be
conducted or on any of its properties or material assets.
3.13 REGISTRATION RIGHTS. Except for the registration rights
granted WorldCom, Inc. by Registration Rights Agreement dated November 30, 1997
and expected to be granted to Metracom, Inc., and the registration rights
granted to Purchaser by the Registration Rights Agreement of even date herewith,
the Company is presently not under any obligation, and has not granted any
rights, to register any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
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<PAGE> 7
3.14 COMPLIANCE WITH LAWS. The Company has complied in all material
respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business and ownership of its
properties including, without limitation, compliance with all applicable federal
and state securities laws with respect to Company's sales agents program. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement, the
Collateral Agreements, and the issuance of the Series C Shares or the Conversion
Shares, except such as have been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, except such as will
be filed in a timely manner.
3.15 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchaser contained in Section 4.3 hereof, the offer, sale
and issuance of the Series C Shares and the Conversion Shares will be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act") and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.
3.16 SECURITIES EXEMPTION. Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Series C Shares to, or otherwise
approach or communicate in respect of all or any part of such Series C Shares
with, any person or persons so as to bring the sale of such Series C Shares by
the Company within the registration provisions of the Securities Act. The
Company shall seek and obtain all necessary permits and other authorizations or
orders of exemption as may be necessary or appropriate under the Kentucky
Securities Act and any other applicable state securities laws, with respect to
the Company's offer and sale of the Series C Shares and the Conversion Shares
3.17 COMPLIANCE WITH ERISA. No employee pension benefit plan
established or maintained by the Company or to which the Company is required to
make contributions (other, than a Multi-employer Plan), which is subject to Part
3 of Subtitle B of Title 1 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")", or Section 412 of' the Internal Revenue Code of
1986 (as amended from time to time, the "Code"), had an accumulated funding
deficiency (as such term is defined in Section 302 of ERISA or Section 412 of
the. Code) as of the last day of the most recent fiscal year of such plan
heretofore ended. No liability to the Pension Benefit Guaranty Corporation
(other than required insurance premiums, all of which, to the extent due and
payable, have been paid) has been incurred with respect to any such plan (other
than a Multi-employer Plan) and there has not been any reportable event within
the meaning of ERISA, or any other event or condition, which presents a material
risk of termination of any such. plan (other than a Multi-employer Plan) by the
Pension Benefit Guaranty Corporation. The Company has not incurred and is not
reasonably expected to incur, any withdrawal liability (as defined in Title IV
of ERISA) to any Multi-employer Plan. The Company not has received any
notification that any Multi-employer Plan is in reorganization (as defined in
Section 4241 of ERISA), is insolvent (as defined in Section 4241 of ERISA) or
has been terminated, within the meaning of Title IV of ERISA, and no
Multi-employer Plan is reasonably expected to be in reorganization, insolvent or
terminated. To
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the knowledge of the Company, neither the Department of Labor, the Internal
Revenue Service nor any other governmental body has determined that any such
plan or any trust created thereunder, or any trustee or administrator thereof,
has engaged in a prohibited transaction with respect to any such plan, as such
term is defined in Section 4975 of the Code, that could subject any such plan,
trust, trustee, administrator, or the Company to any tax or penalty on
prohibited transactions imposed under said Section 4975 or ERISA, and the
Company is not aware of any facts that would constitute such a prohibited
transaction.
Except for COBRA continuation coverage and contingent obligations in
connection with the Company's health insurance program, the Company has no
extraordinary liabilities or other obligations, whether actual or contingent,
with respect to any employee benefit plan, including, without limitation,
liability for post-retirement medical benefits, post-retirement life insurance
benefits, or other similar benefits.
3.18 DISCLOSURE. This Agreement (including the schedules and
exhibits hereto), the Collateral Agreements, and any other documents,
certificates, instruments or other written materials or information furnished to
Purchaser by or on behalf of the Company in connection with the transactions
contemplated by this Agreement and the Collateral Agreements taken as a whole,
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
There is no fact known to the Company which is materially adverse, or in the
future could reasonably be expected to be materially adverse, to the business
operations or financial performance of Company which has not been furnished to
Purchaser or set forth or reflected in this Agreement, the Collateral Agreements
or the other documents, certificates, and instruments referred to herein and
delivered to Purchaser by or on behalf of the Company in connection with the
transactions contemplated by this Agreement.
3.19 COMPLIANCE: GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. The
Company has all material licenses, franchises, permits, certificates and other
authorizations from all federal, state, municipal and other governmental
authorities having jurisdiction over its business. All such licenses,
franchises, permits, certificates and other governmental authorizations held by
the Company, in respect of its business are valid and sufficient to permit the
Company to conduct its operations as currently used or conducted except where
the failure to have such licenses, franchises, permits, certificates or other
governmental authorizations would not have a material adverse effect, and there
are no violations of any such licenses, franchises, permits, certificates and
other governmental authorizations, nor are there any proceedings, to the
knowledge of the Company, pending or threatened against the Company to revoke or
limit any such license, franchise, permit, certificate or other governmental
authorization.
3.20 INFORMATION SYSTEMS. The Company has information systems
capable of providing on a timely basis, current and accurate operating and
financial information, consistent with industry standards, which (a) allows
management of the Company to make reasoned and fully informed business
decisions, (b) allows the preparation of financial statements in a timely
fashion,
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(c) allows the provision of billing and customer service information, and (d) is
capable of reading and processing data within and between the years 1999 and
2000.
3.21 SHAREHOLDERS. The following Shareholders beneficially own the
number of shares of the Company's Common Stock set forth next to its name:
<TABLE>
<S> <C>
J. Sherman Henderson III ****
John S. Henderson IV ****
Kelly H. Duggins ****
N-TEL, LLC ****
WorldCom, Inc. ****
Remaining Shareholders ****
----
Total 954
====
</TABLE>
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. The Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement, the Collateral Agreements and to carry out their
provisions. All action on Purchaser's part required for the lawful execution and
delivery of this Agreement and the Collateral Agreements has been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Collateral Agreements will be valid and binding obligations of
Purchaser, enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies; and
(iii) to the extent that the enforceability of the indemnification provisions of
Section 1.9 of the Collateral Agreements may be limited by applicable laws.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental authority on the part of the Purchaser required in connection with
the consummation of the transactions contemplated in the Agreement and the
Collateral Agreements have been or shall have been obtained prior to and be
effective as of the Closing.
4.3 INVESTMENT REPRESENTATIONS. The Purchaser understands that the
Series C Shares and Conversion Shares have not been registered under the
Securities Act. Purchaser also understands that the Series C Shares are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Purchaser's representations contained in the
Agreement. The Purchaser hereby represents and warrants as follows:
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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(a) PURCHASER BEARS ECONOMIC RISK. The Purchaser must
bear the economic risk of this investment indefinitely unless the Series C
Shares or the Conversion Shares are registered pursuant to the Securities Act,
or an exemption from registration is available. Purchaser understands that the
Company has no present intention of registering the Series C Shares, the
Conversion Shares or any shares of its Common Stock and that certificates
representing capital stock issued to the Purchaser will bear a restrictive
legend. The Purchaser understands that it has no registration rights with
respect to the Series C Shares or the Conversion Shares except as provided in
the Collateral Agreements. The Purchaser also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow the
Purchaser to transfer all or any portion of the Series C Shares or the
Conversion Shares under the circumstances, in the amounts or at the times the
Purchaser might propose.
The Purchaser further represents that the Purchaser is an
Accredited Investor within the meaning of Rule 501(a) of Regulation D under the
Securities Act.
(b) ACQUISITION FOR OWN ACCOUNT. The Purchaser is
acquiring the Series C Shares and the Conversion Shares for the Purchaser's own
account for investment only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. The Purchaser
represents that by reason of its management's business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Collateral Agreements.
Further, the Purchaser is aware of no publication of any advertisement in
connection with the transactions contemplated in this Agreement. The Purchaser
is not a corporation, trust or partnership specifically formed for the purpose
of consummating these transactions.
(d) COMPANY INFORMATION. The Purchaser has had an
opportunity to discuss the Company's business, management and financial affairs
with directors, officers and management of the Company and has had the
opportunity to review the Company's operations and facilities. The Purchaser has
also had the opportunity to ask questions of and receive answers from, the
Company and its management regarding the terms and conditions of this
investment.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.
The Purchaser's obligations to purchase the Series C Shares at
the Closing are subject to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Article 3
hereof shall be true and correct in all material respects as of the Closing with
the same force and effect as if they
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had been made as of the Closing, and the Company shall have performed all
obligations and conditions herein required to be performed or observed by it on
or prior to the Closing.
(b) CORPORATE DOCUMENTS. The Company shall have delivered
to the Purchaser or its counsel, copies of all corporate documents of the
Company as the Purchaser shall reasonably request.
(c) RESERVATION OF CONVERSION SHARES. The Conversion
Shares issuable upon conversion of the Series C Shares shall have been duly
authorized and reserved for issuance upon such exercise or conversion.
(d) FILING OF PREFERRED SHARE CERTIFICATE. The Preferred
Share Certificate shall have been filed with the Secretary of State of the State
of Delaware.
(e) COMPLIANCE CERTIFICATE. The Company shall have
delivered to the Purchaser a Compliance Certificate, executed by the President
and the Chief Financial Officer of the Company, dated the date of the Closing,
to the effect that the conditions specified in subparagraphs (a) through (d) of
this Section 5.1 have been satisfied.
(f) REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been executed and delivered by the parties thereto.
(g) SHAREHOLDER AGREEMENT. The Shareholder Agreement by
and among J. Sherman Henderson III (and members of his immediate family), N-TEL,
LLC and the Purchaser shall have been executed and delivered by the parties
thereto.
(h) SERVICES AGREEMENTS. The Company and the Purchaser
shall have executed and delivered (i) a carrier services agreement and (ii) a
software license agreement, (collectively, the "Services Agreements"). The
Company and Purchaser's affiliate, Williams Communications Solutions, LLC
("Solutions") have begun negotiations on a sales agency reseller and services
agreement, pursuant to which Solutions shall provide, in conjunction with
Purchaser, certain telecommunications services to customers of Solutions, for
which a Term Sheet has been prepared and is attached hereto as Exhibit D. The
parties agree to negotiate in good faith a definitive agreement incorporating
the terms and conditions contained in Exhibit D with a view toward executing one
or more definitive agreements; however, the parties are not obligated to enter
into any such definitive agreements.
(i) WORLDCOM AGREEMENT. The Purchaser and WorldCom, Inc.
shall have executed and delivered a switched services resale agreement upon such
terms and conditions satisfactory to the Purchaser in its sole discretion.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser and its counsel,
and
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the Purchaser and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Series C Shares at the Closing is subject to
the satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by the Purchaser in Article 4 hereof shall
be true and correct in all material respects at the date of the Closing, with
the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. The Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by the Purchaser on or before the Closing.
(c) FILING OF PREFERRED SHARE CERTIFICATE. The Preferred
Share Certificate shall have been filed with the Secretary of State of the State
of Delaware. The Company agrees to use its best efforts to effect such action.
(d) REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been executed and delivered by the parties thereto.
The Company agrees to use its best efforts to effect such action.
(e) SERVICES AGREEMENTS. The Company and the Purchaser
shall have executed and delivered the Services Agreements.
6. COVENANTS OF THE COMPANY.
6.1 Until the earliest to occur of (i) the closing of a firm
commitment underwritten public offering (the "IPO") pursuant to an effective
registration statement under the Securities Act covering the offer and sale of
Common Stock for the account of the Company to the public with an aggregate
offering price to the public of not less than **** (before deduction of
underwriter commissions and offering expenses), (ii) the conversion of all of
the Series C Shares into shares of Common Stock, or (iii) the redemption of all
of the Series C Shares, the Company shall duly perform and observe each and all
of the following covenants and agreements:
(a) ATTENDANCE AT BOARD MEETINGS. The Purchaser shall
have the right to have a Purchaser designee attend and observe the proceedings
of meetings of the board of directors of the Company and the right to receive
any information furnished to said directors in connection with the meetings of
the board, except in cases where such attendance at the meetings or receipt of
information would cause the attorney-client privilege between the Company and
its counsel to be adversely affected or in cases in which the board of directors
is considering a contract or transaction between the Company and the Purchaser
or one of its affiliates or in which the
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 13
Purchaser or one of its affiliates has a financial interest. The Purchaser
designee shall maintain the confidentiality of all financial and other
proprietary information discussed at meetings of the board of directors of the
Company or made known to the designee in connection with such meetings.
(b) RIGHTS OF APPROVAL. Without the Purchaser's prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned, the Company and UniDial will not (i) make material expenditures
even if in the normal and ordinary course of business, except with respect to
payments made to WorldCom, Inc. or its affiliates on account of the purchase of
telecommunications services from WorldCom (ii) enter into an agreement to sell
or otherwise transfer any material part of its assets or ownership interests in
subsidiaries, (iii) enter into an agreement to make or suffer to remain
outstanding any material loan or advance to, or enter into an agreement to
receive a material loan or other extension of material credit, or purchase or
acquire for a material amount or by assumption of a material liability any
stock, bonds, notes or securities of, or any partnership interest or limited
liability company interest in, or make any material capital contribution to, any
other person, partnership, company, or other entity, (iv) appoint a person other
than J. Sherman Henderson III as chief executive officer, (v) materially modify
its agent program as currently in effect, (vi) change the independent
accountants of the Company nor engage any additional independent accountants, it
being understood that the independent accountants of the Company must be an
international firm of recognized prestige, (vii) increase the compensation of
any officer or executive by more than fifteen (15%) percent in any year, or
enter into any employment agreement, any severance agreement, or any material
transaction or series or related transactions with any of the Shareholders (as
defined in the Shareholder's Agreement) or any of their Affiliates (as defined
in the Shareholder's Agreement) except on terms that are at least as favorable
to the Company as could be obtained in an arms-length transaction, or enter into
an employment agreement or severance agreement that involves more than $100,000,
or (viii) initiate any litigation, or consent to the settlement or admit
liability with respect to or fail to diligently contest any litigation against
it, which involves more than $250,000. For purposes of subsections (i) through
(iii) of this Section 6.2, "material" shall mean an amount in excess of
$5,000,000.
(c) USE OF PROCEEDS. The Company will use the proceeds of
the sale of the Series C Shares as follows: (i) up to **** will be used in
satisfaction of certain contingent obligations of the Company to its agents
pursuant to a program approved by the Purchaser or as repayment of indebtedness
incurred by the Company in connection with such a program, (ii) **** to fund
a portion of the Company's acquisition of Metracom Corporation, and (iii) the
remainder for general corporate purposes.
(d) IPO INVESTMENT. The Company shall, at the beginning
of preparation for an IPO, deliver a letter from a nationally recognized
investment banking firm establishing the percentage ownership to be sold to the
public and the market capitalization of the Company ("IMC"). The Purchaser
shall then have the right, but not the obligation, within fifteen (15) days of
receipt of the letter, ****. If Purchaser does not elect to exercise such
right, then the Company may proceed with the IPO but only at a price per share
equal to or greater than the IPO Price and only for the amount of IPO Shares not
less than eighty percent (80%) nor more than one hundred fifteen percent (115%)
of the amount offered to Purchaser; provided, (as defined in the ****
represented by the number of IPO Shares offered to the Purchaser has not
declined since the date of the letter from the nationally recognized investment
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
13
<PAGE> 14
banking firm. The Company will provide the Purchaser with a copy of such
registration statement within two days following its filing with the SEC.
(e) FURTHER INVESTMENT. With respect to shares of the
Company (including securities convertible into shares of the Company) expected
to be issued to a third party, the Company will provide the Purchaser a fair and
reasonable opportunity to acquire all, but not less than all, such shares upon
the same terms and conditions as to be offered to the third party provided that
Purchaser continues to own the Series C Shares or at least 5% of the Company's
issued and outstanding common stock. The rights of the Purchaser pursuant to
this Section 6.1 shall not apply to any shares to be issued in the IPO, to any
shares issued pursuant an acquisition or merger that has been duly approved by
the Company's board of directors, or pursuant to employee or director or
consultant stock-based incentive plans duly adopted by the Company's board of
directors and shall expire upon the consummation of the IPO.
(f) MERGER RIGHT OF FIRST REFUSAL. If, before the
conversion of all shares of Series C Preferred Stock, the Corporation's Board of
Directors receives a bona fide offer from any entity other than the Purchaser
that it desires to accept (the "Offer to Purchase") to enter into a merger,
consolidation, exchange of shares, recapitalization, reorganization, or similar
event (a "Transaction") as a result of which shares of Common Stock of the
Corporation shall be changed into the same or a different number of shares of
the same or another class or classes of stock or securities of the Corporation
or another entity or the right to receive an amount in cash per share, or a
combination thereof, then the Board of Directors shall provide notice of the
proposed Transaction to the Purchaser and grant the Purchaser the exclusive
right to enter into a Transaction on substantially the same terms and conditions
as the Offer to Purchase. If the Purchaser declines to submit an offer within
fifteen (15) days of the date of the Board's notice of the proposed Transaction
to the Purchaser and the Corporation's Board of Directors affirmatively votes to
proceed with the Transaction, Purchaser shall have the right to convert all its
shares of Series C Preferred Stock into shares of Common Stock in accordance
with the terms of the Minimum Valuation formula of paragraph 4(A)(ii)(b) and
shall vote all of its shares of Series C Preferred Stock in favor of the
Transaction at any meeting of the shareholders held to consider the Transaction.
(g) FINANCIAL INFORMATION. So long as Purchaser owns the
Series C Shares, the Company will, and will cause each of its subsidiaries to,
maintain a system of accounting established and administered in accordance with
generally accepted accounting principles, and the Company will furnish to
Purchaser:
(i) Within 120 days after the close of each of its fiscal
years, an audit report certified by independent certified public accountants,
prepared in accordance with generally accepted accounting principles on a
consolidated basis for itself and its Subsidiaries, including balance sheets
14
<PAGE> 15
as of the end of such period, related profit and loss and statements of
stockholders' equity, and a statement of cash flow, accompanied by any
management letter prepared by said accountants and by a certificate of said
accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any unmatured
default or event of default, or if, in the opinion of such accountants, any
unmatured default or event of default shall exist, stating the nature and status
thereof;
(ii) Within 50 days after the close of the first three
quarterly periods of each of its fiscal years, for itself and subsidiaries,
consolidated unaudited balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of surplus statements and a
statement of cash flow for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief financial officer;
(iii) Together with a certificate from the chief financial
officer of Company, and attested by the Company's Secretary the financial
statements required under clauses (a) and (b) of this Section 6.3, and stating
that no unmatured default or event of default exists under any material
agreement, or if any unmatured default or event or default exists, stating the
nature and status thereof;
(iv) Promptly upon the furnishing thereof to the
shareholders of the Company, copies of all financial statements, reports and
proxy statements so furnished;
(v) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly or other periodic reports which
the Company or any its subsidiaries files with the Securities and Exchange
Commission and copies of all material statements and reports which the Company
or any of its subsidiaries files with the Federal Communications Commission or
any other regulating body which are intended to be publicly available;
(vi) Promptly upon receipt of demand therefor, such other
information (including non-financial information) as Purchaser may from time to
time reasonably request; and
(vii) Promptly upon becoming aware of an unmatured default
or an event of default in any material agreement, but in no event later than
five (5) days after becoming aware of such event or condition, the Company will
provide written notice to Purchaser specifying the nature of the unmatured
default or event of default, as the case may be, the period of existence thereof
and what action the Company is taking or proposed to take with respect thereto.
The foregoing obligation shall be limited, once the Company becomes a "reporting
company" under the United States securities laws, to the extent necessary to the
comport with such laws.
(h) OTHER BUSINESS. Neither the Company nor any of its
subsidiaries shall engage in any business unrelated to its current business that
could reasonably be expected to materially and adversely affect its ability to
perform its obligations under this Agreement or the Collateral Agreements.
15
<PAGE> 16
(i) INSPECTION. The Company will, and will cause each of
its subsidiaries to, permit Purchaser, by its respective agents or
representatives, upon reasonable notice, to inspect any of the properties,
corporate books and financial records of the Company and its subsidiaries, to
examine and make copies of the books of accounts and other financial records of
the Company and its subsidiaries, and to discuss the affairs, finances and
accounts of the Company and its subsidiaries with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals during
normal business hours as Purchaser may designate. Each person making such an
inspection agrees to maintain in confidence any information so obtained (except
for disclosures (i) to any prospective or actual assignee of the Series C Shares
who shall agree to maintain such information in confidence and to indemnify the
Company and its subsidiaries, (ii) to its auditors, attorneys and professional
advisers, and (iii) if legally required to be so disclosed, (A) to any
governmental authority having jurisdiction over it, (B) pursuant to any order or
legal process of any court or governmental agency, or (C) in connection with any
legal action arising out of this agreement or the Collateral Agreements) and
indemnify the Company and its subsidiaries against any loss or claim arising
from a failure to maintain such confidence. The foregoing obligation shall be
limited, once the Company becomes a "reporting company" under the United States
securities laws, to the extent necessary to the comport with such laws.
(j) ANTI-DILUTION RIGHTS. Prior to all of the Series C
Shares having been converted or redeemed, the Company agrees not to amend the
anti-dilution rights of or grant any new such rights to WorldCom.
(k) SECURITIES. The Company shall not redeem, repurchase,
or otherwise acquire any shares of the outstanding Common Stock of the Company
including without limitation call rights, warrants, options, and contracts or
other commitments to issue shares or securities convertible into Common Stock
(other than the Series C Shares) except (i) ratably from all holders thereof, or
(ii) from an employee or former employee pursuant to an employee benefit plan
approved by the board of directors of the Company or in connection with the
termination of the employee's employment.
7. EVENTS OF DEFAULT; REMEDIES.
7.1 EVENTS OF DEFAULT. If any of the following conditions or
events ("Events of Default") shall occur (whether voluntary or involuntary or
arising by operation of law or otherwise):
(a) Any representation or warranty made by the Company or
UniDial herein to Purchaser which is untrue or misleading in any material
respect as of the time such statement was made in light of the circumstances
then existing; or
(b) The Company or any subsidiary breaches or causes the
breach of any covenant(s) made by the Company or a subsidiary hereunder or is in
breach of or causes a default to occur in the performance of any material
covenant or obligation in any other agreements with Purchaser or Purchaser's
subsidiaries, which breach or default remains uncured for ten (10) days after
written notice of such breach or default is received by the Company.
16
<PAGE> 17
7.2 REMEDIES ON DEFAULT. If any Event of Default shall have
occurred and be continuing, Purchaser shall have all remedies that may be
available at law or in equity.
7.3 PRESERVATION OF RIGHTS. No delay or omission of Purchaser to
exercise any right under this Agreement shall impair such right to be construed
to be a waiver of any Event of Default or an acquiescence therein. Any single or
partial exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other
variations of the terms, conditions or provisions of this Agreement whatsoever
shall be valid unless in writing signed by Purchaser, and then only to the
extent in such writing specifically set forth. All remedies contained in this
Agreement or by law afforded shall be cumulative and all shall be available to
Purchaser until all obligations hereunder have been satisfied.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the Commonwealth of Kentucky.
8.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Series C Shares from time to time; provided,
however, that prior to the receipt by the Company of adequate written notice of
the transfer of any Series C Shares specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such Series C Shares in its records as the absolute owner and holder of such
Series C Shares for all purposes, the payment of any dividends or any redemption
price. Any sale or transfer of the Series C Shares shall be for not less than
all of such shares. The rights of the Purchaser under this Agreement may not be
assigned except to a purchaser or transferee of all the Series C Shares.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Collateral Agreements, and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants, and
agreements except as specifically set forth herein. Nothing in this Agreement or
the Collateral Agreements express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Agreement or the Collateral Agreements, except as expressly provided
herein.
17
<PAGE> 18
8.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon
the written consent of the holders of not less than a majority in interest of
the Series C Shares (treated as if converted and including any Conversion Shares
into which the Series C Shares have been converted that have not been sold to
the public).
(b) The obligations of the Company and the rights of the
holders of the Series C Shares and the Conversion Shares under the Agreement may
be waived only as provided in the Preferred Share Certificate and in the
Shareholders' Agreement
(c) Except to the extent provided in this Section 8.6(c),
neither this Agreement nor any provision hereof may be changed, waived,
discharged, or terminated, except by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought.
8.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to the Purchaser, upon any breach,
default or noncompliance of the Company under this Agreement, the Collateral
Agreements or the Preferred Share Certificate, shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit, consent, or approval of any kind or character on the
Purchaser's part of any breach, default or noncompliance under this Agreement,
the Collateral Agreements or under the Preferred Share Certificate or any waiver
on the Purchaser's part of any provisions or conditions of the Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, the Collateral
Agreements, the Preferred Share Certificate, by law, or otherwise afforded to
the Purchaser, shall be cumulative and not alternative.
8.8 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made by hand delivery or registered first class
mail:
(a) If to the Purchaser:
Williams Communications, Inc.
One Williams Center, Suite 4100
Tulsa, Oklahoma 74172
Attention: S. Miller Williams, Sr. Vice President
18
<PAGE> 19
(b) If to another Holder of Registrable Shares, at the
most current address or addresses provided to the Company by such Holder;
(c) If to the Company:
UniDial Holdings, Inc.
9931 Corporate Campus Drive, Suite 3000
Louisville, Kentucky 40223
Attention: S. Andrew McKay, Chief Operating Officer
8.9 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement, and the Purchaser shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of the
Agreement.
8.10 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.12 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.12 being untrue.
19
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
UNIDIAL HOLDINGS, INC.
9931 Corporate Campus Drive, Suite 3000
Louisville, Kentucky 40223
By /s/ S. ANDREW MCKAY
----------------------------
S. Andrew McKay
Chief Operating Officer
PURCHASER:
WILLIAMS COMMUNICATIONS, INC.
One Williams Center
Suite 2600
Tulsa, Oklahoma 74172
By /s/ S. MILLER WILLIAMS
----------------------------
S. Miller Williams
Senior Vice President
20
<PAGE> 21
UNIDIAL HOLDINGS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
LIST OF EXHIBITS
Exhibit A PREFERRED SHARE CERTIFICATE OF DESIGNATIONS
Exhibit B SCHEDULE OF EXCEPTIONS
Exhibit C FINANCIAL STATEMENTS OF THE COMPANY
Exhibit D TERMS SHEET FOR WCS SERVICES AGREEMENT
21
<PAGE> 1
EXHIBIT 10.24
EXECUTION COPY
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
dated as of September 2, 1998
among
WILLIAMS COMMUNICATIONS, INC.,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual
capacity except as expressly set forth herein,
but solely as Trustee,
THE PERSONS NAMED HEREIN,
as Note Holders and Certificate Holders,
THE PERSONS NAMED HEREIN,
as APA Purchasers,
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity, but solely
as Collateral Agent,
and
CITIBANK, N.A.,
as Agent,
with
CITIBANK, N.A. and BANK OF MONTREAL,
as Co-Arrangers,
ROYAL BANK OF CANADA,
as Documentation Agent,
and
BANK OF AMERICA,
THE CHASE MANHATTAN BANK
and
TORONTO DOMINION,
as Managing Agents
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. FINANCING................................................................................1
SECTION 1.01. Note Advance Commitments.......................................................1
SECTION 1.02. Certificate Investment Commitments.............................................4
SECTION 1.03. Procedures for Advances and Investments........................................4
SECTION 1.04. Use of Proceeds................................................................6
SECTION 1.05. Optional Reduction of the Commitments..........................................7
SECTION 1.06. Extension of APA Purchase Commitments..........................................8
SECTION 1.07. Cash Secured Advance...........................................................9
SECTION 1.08. Release of Funds from Collateral Purchase Accounts............................11
SECTION 1.09. Completion and Conversion of Interim Notes....................................12
SECTION 1.10. Excess Certificate Amount.....................................................13
ARTICLE II. CONDITIONS PRECEDENT....................................................................14
SECTION 2.01. Conditions Precedent to the Initial Funding...................................14
SECTION 2.02. Conditions Precedent to Fundings Subsequent to the Initial Funding Date.......20
ARTICLE III. REPRESENTATIONS AND WARRANTIES..........................................................23
SECTION 3.01. Representations and Warranties of the Company.................................23
SECTION 3.02. SSBTC Representations and Warranties..........................................32
SECTION 3.03. Collateral Agent Representations and Warranties...............................33
ARTICLE IV. COVENANTS...............................................................................35
SECTION 4.01. Covenants of the Company......................................................35
SECTION 4.02. Covenants of the Parties......................................................39
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. THE NOTES AND THE EQUITY INVESTMENT.....................................................40
SECTION 5.01. Applicable Rate...............................................................40
SECTION 5.02. Increased Costs, Illegality, Etc..............................................43
SECTION 5.03. Assignments and Participations................................................47
SECTION 5.04. Taxes ........................................................................52
SECTION 5.05. Tax Treatment ................................................................54
SECTION 5.06. Compensation .................................................................55
SECTION 5.07. Change of Applicable Lending Office...........................................56
SECTION 5.08. Sharing of Payments, Etc......................................................56
SECTION 5.09. Proceeds of Asset Sales.......................................................57
SECTION 5.10. Proceeds of Optional Purchase by Lessee of Items of Property..................58
SECTION 5.11. Prepayment of Notes and Cancellation of Certificates..........................60
ARTICLE VI. EVENTS OF DEFAULT; UNWIND EVENT.........................................................60
SECTION 6.01. Events of Default.............................................................60
SECTION 6.02. Remedies upon an Event of Default.............................................64
SECTION 6.03. Unwind Event .................................................................66
ARTICLE VII. THE AGENT...............................................................................66
SECTION 7.01. Authorization and Action......................................................66
SECTION 7.02. Agent's Reliance, Etc.........................................................67
SECTION 7.03. Citibank, N.A. and Affiliates.................................................68
SECTION 7.04. Note Holder and Certificate Holder Credit Decision............................68
SECTION 7.05. Indemnification...............................................................68
SECTION 7.06. Successor Agent...............................................................69
ARTICLE VIII. MISCELLANEOUS ..........................................................................70
SECTION 8.01. Survival .....................................................................70
SECTION 8.02. Notices ......................................................................71
SECTION 8.03. Severability .................................................................71
SECTION 8.04. Amendments, Etc...............................................................71
SECTION 8.05. Headings .....................................................................72
SECTION 8.06. Compliance Responsibility.....................................................72
SECTION 8.07. Definitions ..................................................................72
SECTION 8.08. Benefit ......................................................................73
SECTION 8.09. Place of Payment..............................................................73
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 8.10. Counterparts .................................................................73
SECTION 8.11. Governing Law and Jurisdiction................................................73
SECTION 8.12. Time; Business Day............................................................74
SECTION 8.13. Transaction Costs; Fees.......................................................74
SECTION 8.14. Indemnification...............................................................75
SECTION 8.15. Operative Documents; Further Assurances.......................................81
SECTION 8.16. Confidentiality...............................................................81
SECTION 8.17. Interest .....................................................................82
SECTION 8.18. Financial Advisor.............................................................84
SECTION 8.19. Securities Representation.....................................................84
SECTION 8.20. The Collateral Agent..........................................................84
SECTION 8.21. Agreements with Respect to the Property.......................................85
SECTION 8.22. Ratings ......................................................................85
SECTION 8.23. Waiver of Trial by Jury.......................................................86
SECTION 8.24. Other Matters ................................................................86
SECTION 8.25. Protective Expenditures; Payment for Services.................................86
SECTION 8.26. Recording and Filing Documents................................................87
SECTION 8.27. Exculpation of Trustee........................................................87
SECTION 8.28. No Petition ..................................................................88
SECTION 8.29. No Recourse to the SPV........................................................88
SECTION 8.30. May Participation Agreement...................................................88
SECTION 8.31. EITF 97-10....................................................................89
SECTION 8.32. Managing Agent................................................................91
</TABLE>
Appendix A - Definitions
Schedule I - Manner of Payment and Communications to the Parties
Schedule II - Applicable Margin Chart; Commitment Fees
Schedule III - APA Purchasers
Exhibit A - Form of Requisition
Exhibit B - Form of Officer's Certificate of Completion
Exhibit C - Completion Date Conditions
Schedule 3.01 - Subsidiaries and Relevant Subsidiaries
iii
<PAGE> 5
AMENDED AND RESTATED PARTICIPATION AGREEMENT (as it may be amended from
time to time, this "Agreement"), dated as of September 2, 1998 among Williams
Communications, Inc., a Delaware corporation (the "Company"); State Street Bank
and Trust Company of Connecticut, National Association ("SSBTC"), not in its
individual capacity except as expressly set forth herein, but solely as Trustee
(the "Trustee"); the Persons named from time to time on Schedule I hereto as
note purchasers and their permitted successors and assigns (collectively, the
"Note Holders"); the Persons named from time to time on Schedule I hereto as
certificate purchasers and their permitted successors and assigns (collectively,
the "Certificate Holders"); the Persons named from time to time on Schedule III
hereto as APA Purchasers and their permitted successors and assigns
(collectively, the "APA Purchasers"); State Street Bank and Trust Company
("State Street"), not in its individual capacity, but solely as Collateral Agent
(the "Collateral Agent"); and Citibank, N.A., in its capacity as agent for the
Note Holders and the Certificate Holders hereunder (the "Agent"). Capitalized
terms used herein but not otherwise defined in this Agreement shall have the
meanings set forth in Appendix A hereto.
PRELIMINARY STATEMENT
On May 6, 1998, the Company, SSBTC, as Trustee, the Persons named
therein as Note Holders and Certificate Holders, Citibank, N.A., as Collateral
Agent and Agent, executed and delivered a Participation Agreement (as amended,
the "May Participation Agreement"), pursuant to which the Original Note Holder
and the Original Certificate Holder made commitments to make Advances and
Investments to fund the acquisition of certain Property. The parties wish to
amend and restate the May Participation Agreement and the other May Operative
Documents as provided in this Agreement and the Operative Documents.
In consideration of the agreements herein and in the other Operative
Documents and in reliance upon the representations and warranties set forth
herein and therein, the parties agree as follows:
ARTICLE I.
FINANCING
SECTION 1.01. Note Advance Commitments.
(a) Interim Advances. Subject to the terms and conditions in this
Agreement, each Note Holder hereby agrees, severally and not jointly and
severally, to make an advance (each, an "Advance"), from time to time but not
more frequently
<PAGE> 6
than twice per month, on each Funding Date prior to the Commitment Termination
Date, in the manner provided in Section 1.03, in amounts equal to its Percentage
of Acquisition Costs (exclusive of Certificate Yield) specified in any
Requisition issued for such Funding Date.
(b) Certain Advances. Subject to the provisions of Section 4 of the
APA, each APA Purchaser agrees for the benefit of the Company to make each
Funding Purchase (as defined in the APA) requested by the SPV in the event that
CXC is unable or unwilling to make CXC Advances to the SPV to fund the portion
of any Advance to be funded by the SPV under Section 1.01(a).
(c) Limitations on Advance Commitment. The obligation of each Note
Holder to make Advances pursuant to Section 1.01(a) and 1.01(b) is subject to
the following:
(i) Each of the conditions precedent applicable to each such
Advance as set forth in Article II must be satisfied or waived in
accordance with such Article.
(ii) No Note Holder shall have any obligation to make any
Advance for any amount in excess of the lesser of (A) its aggregate
Note Commitment and (B) its Percentage of the aggregate amount of
Acquisition Costs (exclusive of Certificate Yield), less the aggregate
amount of all prior Advances made by such Note Holder.
(iii) The obligation of each Note Holder to make Advances will
automatically terminate and any remaining unused Interim Note
Commitment will be canceled on the first to occur of (A) the Commitment
Termination Date and (B) the Interim Note Maturity Date.
(d) Cash Secured Advances.
(i) The SPV agrees to make advances and the Trustee agrees to
borrow, in each case on the terms and conditions set forth in Section
1.07 (each a "Cash Secured Advance") on each Cash Secured Advance Date,
in an amount equal to the respective amounts deemed to have been
received by the SPV from the APA Purchasers pursuant to Section 1.07.
(ii) Until repaid in accordance with the terms of this
Agreement, each Cash Secured Advance shall bear interest at a rate
equal to the rate earned by the applicable APA Purchaser on the
investment of the credit balance of its Collateral Purchase Account
pursuant to Section 1.07(b). Such interest shall be payable only to the
extent of funds received as interest, yield, gain, or other amounts
realized by the applicable APA Purchaser on the investment of the
credit balance of its Collateral Purchase Account payable as and when
such funds are received by the
2
<PAGE> 7
applicable APA Purchaser in respect of the investment of the credit
balance of its Collateral Purchase Account. In addition, the Company
shall pay to the Agent, for the account of each APA Purchaser, a fee on
the average daily credit balance (excluding investment earnings) of its
Collateral Purchase Account equal to 1.2 times the then applicable
Commitment Fee, which fee shall be paid at the times and in the manner
of payment of Commitment Fees.
(iii) To the extent not previously prepaid pursuant to Section
1.01(d)(iv) or Section 1.08, all Cash Secured Advances shall mature and
become due and payable in full on the earliest to occur of (A) an
Unwind Event, (B) the occurrence of an Event of Default and the
acceleration of the Interim Notes pursuant to Section 7.01(b) of the
Declaration and (C) the Commitment Termination Date. On such maturity,
each APA Purchaser shall release from its Collateral Purchase Account
the remaining credit balance in its Collateral Purchase Account, which
balance shall be retained by such APA Purchaser, shall constitute a
repayment by the Trustee of a Cash Secured Advance to the extent of
such amount (whether or not actually released by such APA Purchaser) on
account of the interest owned by such APA Purchaser in such Cash
Secured Advance, and shall constitute a payment by the SPV to such APA
Purchaser on account of the undivided interest owned by such APA
Purchaser in such Cash Secured Advance (whether or not such amount is
actually released by such APA Purchaser).
(iv) If the Company delivers a notice of optional reduction of
Commitments pursuant to Section 1.05 at any time when Cash Secured
Advances are outstanding (A) the Cash Secured Advances shall be prepaid
by the Trustee on the effective date of such Commitment reduction in an
aggregate principal amount equal to the amount of the resulting
reduction in the SPV's Note Commitment, and (B) on the effective date
of such Commitment reduction, each APA Purchaser shall release from its
Collateral Purchase Account an amount equal to the lesser of its
Percentage (as defined in the APA) of the amount described in clause
(A) of this Section 1.01(d) or the remaining credit balance in its
Collateral Purchase Account, which amount shall be retained by such APA
Purchaser, shall constitute a prepayment by the Trustee of a Cash
Secured Advance to the extent of such amount (whether or not actually
released by such APA Purchaser) on account of the interest owned by
such APA Purchaser in such Cash Secured Advance, and shall constitute a
payment by the SPV to such APA Purchaser on account of the undivided
interest owned by such APA Purchaser in such Cash Secured Advance
(whether or not such amount is actually released by such APA
Purchaser).
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SECTION 1.02. Certificate Investment Commitments.
(a) Interim Investments. Subject to the terms and conditions in this
Agreement, each Certificate Holder hereby agrees, severally and not jointly and
severally, to make an investment (each, an "Investment"), from time to time but
not more frequently than twice per month, on each Funding Date prior to the
Commitment Termination Date, in the manner provided in Section 1.03, in amounts
equal to its Percentage of Acquisition Costs (exclusive of Certificate Yield)
specified in any Requisition issued for such Funding Date.
(b) Limitations on Investment Commitment. The obligation of each
Certificate Holder to make Investments pursuant to Section 1.02(a) is subject to
the following:
(i) Each of the conditions precedent applicable to each such
Investment as set forth in Article II must be satisfied or waived in
accordance with such Article.
(ii) No Certificate Holder shall have any obligation to make
any Investment for any amount in excess of the lesser of (A) its
aggregate Certificate Commitment and (B) its Percentage of the
aggregate amount of Acquisition Costs (exclusive of Certificate Yield),
less the aggregate amount of all prior Investments made by such
Certificate Holder.
(iii) The obligation of each Certificate Holder to make
Investments will automatically terminate and any remaining unused
Certificate Commitment will be canceled on the Commitment Termination
Date.
SECTION 1.03. Procedures for Advances and Investments.
(a) Requisitions. Not less than five (5) Business Days prior to each
Funding Date on which a Funding is desired, the Company must submit to the Agent
an irrevocable requisition for Acquisition Costs (the "Requisition")
substantially in the form attached as Exhibit A hereto. The Agent will give
notice of such Requisition to the Note Holders and the Certificate Holders not
less than three (3) Business Days (or two (2) Business Days in the case of the
Initial Funding) prior to the applicable Funding Date. Such notice by the Agent
shall specify the amount of the Advances to be made by each Note Holder and the
amount of the Investments to be made by each Certificate Holder.
Each Requisition (i) shall be irrevocable and executed by an authorized
Officer of the Company, (ii) must request a Funding of an amount at least equal
to $2,000,000 or such lesser amount as shall be equal to the aggregate amount of
the unused Total Commitment available at such time, and (iii) shall request that
the Note Holders make Advances and that the Certificate Holders make Investments
for Acquisition Costs incurred or to be
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<PAGE> 9
incurred as specified in the Requisition. No more than two Requisitions may be
submitted during any calendar month. Each Requisition shall constitute a
representation and warranty by the Company that all the conditions precedent to
such Funding have been satisfied.
The Agent shall have no duty to verify any Requisition or the
authenticity of any signature appearing on any Requisition other than to compare
such signature with incumbency certificates provided by the Company listing
Officers of the Company authorized to execute Requisitions.
(b) Advances and Investments Without Requisition. No Requisition shall
be necessary to permit the Agent to request the Note Holders to make Advances
for the account of any or all Note Holders, to pay amounts for interest on the
Interim Notes or Commitment Fees and other fees and expenses of the Note Holders
due hereunder on or prior to the Completion Date, or to request the Certificate
Holders to make Investments to pay Commitment Fees and other fees and expenses
of the Certificate Holders due hereunder on or prior to the Completion Date;
provided, however, that the Note Holders and Certificate Holders shall make such
Advances or Investments, as the case may be, only (A) after the Agent has
notified the Note Holders, the Certificate Holders and the Company of the date
and the Applicable Rate set for such Funding and the amounts thereof due and
owing and unpaid to be made by each such Note Holder and Certificate Holder and
(B) on a Payment Date.
(c) Funding Advances and Investments. On the date specified for any
Funding, each Note Holder and Certificate Holder shall, before 10:00 A.M. (New
York City time) make available, or cause to be made available, to the Agent, on
behalf of the Trustee, an amount equal to the Advance or the Investment, as the
case may be, to be made by it on such date, at the Agent's address referred to
in Schedule I hereto, in immediately available funds.
Unless the Agent shall have received notice from a Note Holder or
Certificate Holder prior to the date of any Funding that such Note Holder or
Certificate Holder will not make available to the Agent an Advance or
Investment, as the case may be, the Agent may assume that such Note Holder or
Certificate Holder has made its funds available to the Agent on such date in
accordance with this Section 1.03(c) and the Agent may (but shall not be
required to), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent that such Note Holder or
Certificate Holder shall not have so made such Advance available to the Agent on
such date, such Note Holder or Certificate Holder agrees to repay the Agent
forthwith on demand by the Agent such corresponding amount, together with
interest thereon, for each day from the date such amount is made available to
the Company, until the date
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such amount is repaid to the Agent, at the Federal Funds Rate. If such Note
Holder or Certificate Holder shall repay to the Agent such corresponding amount,
such amount so repaid (excluding any amounts for interest paid to the Agent)
shall constitute such Note Holder's funding of its Advance or such Certificate
Holder's Investment, as the case may be, for purposes of this Agreement. The
failure of any Note Holder or Certificate Holder to make an Advance or
Investment, as the case may be, shall not relieve any other Note Holder or
Certificate Holder of its obligations, if any, hereunder to make an Advance or
Investment, as the case may be, but no Note Holder or Certificate Holder shall
be responsible for the failure of any other Note Holder or Certificate Holder to
make an Advance or Investment, as the case may be.
SECTION 1.04. Use of Proceeds. Upon the Agent's receipt of funds from
the Certificate Holders and the Note Holders for the applicable Funding and upon
fulfillment of the applicable conditions set forth in Article II, the Agent will
apply the funds as set forth in this Section 1.04 and pay the balance, if any,
of the funds representing such Funding to the Company in immediately available
funds.
(a) Initial Funding Date. The proceeds of Advances and Investments
made on the Initial Funding Date shall be applied by the Agent, on behalf of the
Trustee, as follows:
(i) Refinancing. First, to pay in full all obligations due and
owing as of the Initial Funding Date to the Original Note Holder, the
Original Certificate Holder, and to the Agent, the Trustee and the
Collateral Agent under the May Participation Agreement, including:
(A) The entire principal amount of, and accrued
and unpaid interest to the Initial Funding
Date on, and any Break Costs in respect of,
the Original Notes.
(B) The entire stated amount of, and accrued and
unpaid yield to the Initial Funding Date on,
and any Break Costs in respect of, the
Original Certificates.
(C) All other amounts, including, fees,
expenses, indemnification payments and taxes
due and unpaid as of the Initial Funding
Date.
(ii) Transaction Costs. Second, to pay all costs and expenses
required to be paid by the Company on the Initial Funding Date,
including:
(A) to Special Counsel, counsel for CXC's Credit
Enhancer and each other counsel delivering an opinion under
Section 2.01(c), the reasonable
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fees, expenses and disbursements of such counsel that are set
forth in invoices submitted by such counsel to the Company at
least two days prior to the Initial Funding Date;
(B) the Commitment Fees and other fees and expenses
payable on the Initial Funding Date; and
(C) any other fees and expenses payable by the
Company on the Initial Funding Date in accordance with the
terms of the Operative Documents and the Securitization
Documents.
(iii) Acquisition Costs. The balance as directed by the
Company in accordance with the Requisition and such other funding
instructions as may be given in writing by the Company to the Agent,
consistent with Section 4.01(e).
(b) Intentionally omitted.
(c) Interest and Expenses. The proceeds of Advances and Investments
made to pay interest on the Interim Notes, Commitment Fees on the Interim Notes
or the Certificates and other fees and expenses of the Note Holders or
Certificate Holders pursuant to Section 1.03(b)(i) shall be applied by the
Agent, on behalf of the Trustee, to pay the amounts for which the Advance or
Investment is made.
(d) Requisition Advances. The proceeds of Advances and Investments made
pursuant to any Requisition shall be applied by the Agent, on behalf of the
Trustee, in accordance with the Requisition and such other funding instructions
as may be given in writing by the Company to the Agent, consistent with Section
4.01(e).
(e) Payments by Agent. All such payments to be made by the Agent
pursuant to this Section 1.04 shall be made (i) solely to the extent of funds
received by the Agent from Advances and Investments and (ii) by transfer of
immediately available funds.
SECTION 1.05. Optional Reduction of the Commitments. The Company may,
upon at least ten Business Days' notice to the Agent, terminate in whole or
reduce in part the unused portions of the Commitments of the Holders; provided,
however, that each partial reduction of the Commitments of the Holders (i) shall
be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) shall be made ratably among the Holders in accordance with
their Commitments and (iii) the Agent and the Majority Holders shall be
satisfied that the remaining Commitments are in the aggregate sufficient to pay
for all remaining Acquisition Costs incurred or to be incurred.
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SECTION 1.06. Extension of APA Purchase Commitments. (a) The initial
term of the APA Purchaser's Purchase Commitment (as defined in the APA) shall
expire on the Stated Purchase Termination Date (as defined in the APA), which
shall be the date 364 days after the Initial Funding Date. No earlier than the
60th day and no later than the 30th day before the expiration of the Stated
Purchase Termination Date, as the same may be extended from time to time, and
provided that the SPV is then the Note Holder of the Interim A-Notes and the
Interim B-Notes, or the A-Notes and the B-Notes, as the case may be, at the
written direction of the Company, the SPV shall, by written notice to each APA
Purchaser, request each APA Purchaser to renew its Purchase Commitment for at
least the 364 days immediately following the then Stated Purchase Termination
Date.
(b) If on or before the 15th Business Day prior to any then Stated Purchase
Termination Date occurring prior to the first to occur of (x) the Commitment
Termination Date and (y) the Interim Note Maturity Date, any APA Purchaser
declines to extend its Purchase Commitment for at least the 364 days immediately
following such Stated Purchase Termination Date, unless on or before the tenth
Business Day prior to such Stated Purchase Termination Date any other APA
Purchaser or APA Purchasers (including any Person who may thereby become an APA
Purchaser) shall have assumed or otherwise become obligated for the Purchase
Commitment of such declining APA Purchaser for a term of at least 364 days
immediately following such Stated Purchase Termination Date, the SPV shall, at
the direction of the Company and upon at least three Business Days' written
notice to the Trustee, the Agent, the Certificate Holders and the APA Agent,
simultaneously reduce (x) the Facility Amount (as defined in the Finance
Facility) and (y) the Maximum Purchase (as defined in the APA) amount pursuant
to Section 15(e) of the APA by (in each case) an amount equal to such declining
APA Purchaser's Purchase Commitment. Notwithstanding the foregoing, no such
reductions shall be permitted unless:
(i) on or before the effective date of such reduction CXC shall have
received payment in full in cash of (A) the amount by which the aggregate
principal amount of all CXC Advances owing by the SPV under the Finance
Facility would exceed the Facility Amount (as defined therein) immediately
after giving effect to such reduction plus (B) the aggregate unpaid
interest payable on the amount of such excess CXC Advances through the
maturity dates thereof; and
(ii) if the effective date of such reduction occurs (A) prior to the
Commitment Termination Date, either (1) the Company shall have caused the
Interim A-Note Commitment and the Interim B-Note Commitment to be reduced
by the amount of such Purchase Commitment and the Certificate Commitment is
reduced pro rata provided,
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however, that the Agent and the Majority Holders shall be satisfied
that the remaining Commitments are in the aggregate sufficient to pay
for all remaining Acquisition Costs incurred or to be incurred, and, to
the extent the amount of such Purchase Commitment exceeds the Interim
A-Note Commitment and the Interim B-Note Commitment, the Lessee shall
have effected a Partial Termination in accordance with the provisions
of Section 5.02 of the Lease, or (2) the Lessee shall have effected a
Partial Termination in accordance with the provisions of Section 5.02
of the Lease with respect to such Property that has aggregate
Termination Value of an amount equal to or greater than such Purchase
Commitment, or (B) on or after the Commitment Termination Date, the
Lessee shall have effected a Partial Termination in accordance with the
provisions of Section 5.02 of the Lease with respect to such Property
that has aggregate Termination Value of an amount equal to or greater
than such Purchase Commitment; and
(iii) the Facility Amount immediately after giving effect to
such reduction is at least $100,000,000.
(c) If any APA Purchaser does not agree to renew its Purchase
Commitment on or before the 15th Business Day prior to its Stated Purchase
Termination Date, such APA Purchaser will be deemed to have declined to renew
its Purchase Commitment.
(d) The Company and the Trustee acknowledge that if (i) any APA
Purchaser declines or is deemed to have declined to renew its Purchase
Commitment as set forth above in this Section 1.06, (ii) no other APA Purchaser
or APA Purchasers (including any Person who may thereby become an APA Purchaser)
shall have assumed or otherwise become obligated for such Purchase Commitment in
accordance with Section 1.06(b), and (iii) the Company has not caused
the Facility Amount and the Maximum Purchase to be reduced by an amount equal to
such Purchase Commitment in accordance with Section 1.06(b), then, subject to
Section 1.07(a), the APA Purchasers (including each APA Purchaser that does not
extend its Purchase Commitment) will be required to purchase Percentage
Interests to the full extent of their respective Purchase Commitments on the
Business Day immediately preceding the then Stated Purchase Termination Date in
accordance with the terms and provisions of the APA.
SECTION 1.07. Cash Secured Advance. (a) If (i) any APA Purchaser
declines or is deemed to have declined to renew its Purchase Commitment as set
forth above in Section 1.06 prior to the first to occur of (x) the Commitment
Termination Date and (y) the Interim Note Maturity Date (ii) no other APA
Purchaser or APA Purchasers (including any Person who may thereby become an APA
Purchaser) shall have assumed or otherwise become obligated for such Purchase
Commitment in accordance with Section 1.06 (b), and (iii) the Company has not
caused the Facility Amount and the
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Maximum Purchase to be reduced by an amount equal to such Purchase Commitment in
accordance with Section 1.06(b), then on or before the fifth Business Day before
such Stated Purchase Termination Date the SPV shall, if and only if instructed
by the Agent or the Company, deliver to each APA Purchaser (including each APA
Purchaser which does not extend its Purchase Commitment) a notice containing a
request that such APA Purchaser purchase on the Business Day immediately
preceding such Stated Purchase Termination Date (such Business Day being the
"Cash Secured Advance Date") undivided interests in (i) all outstanding advances
under the Finance Facility and all interest payable on such advances through the
maturity dates thereof and all outstanding Notes and (ii) any Cash Secured
Advances being made on the Cash Secured Advance Date pursuant to Section 1.01(d)
for an aggregate purchase price (the "APA Purchaser's Price") for such APA
Purchaser equal to the sum of (A) the amounts payable under Sections 2 and 4 of
the APA as if it were obligated under such Sections to acquire on the Cash
Secured Advance Date its maximum share of interests described therein plus (B)
the lesser of (1) the excess of its Percentage (as defined in the APA) of the
full amount of such APA Purchaser's unused Purchase Commitment (as defined in
the APA) in effect on the Cash Secured Advance Date minus all principal amounts
of CXC Advances included in clause (A) of this sentence, or (2) or such lesser
amount as may be specified in such request for Cash Secured Advances.
(b) Each APA Purchaser agrees that, upon receipt of a request pursuant to
Section 1.07(a) and so long as the Purchase Termination Date (as defined in the
APA) shall not have occurred before the Cash Secured Advance Date, such APA
Purchaser shall, by 11:00 a.m. (New York City time) on the Cash Secured Advance
Date, establish its account (a "Collateral Purchase Account") and make available
the full purchase price payable by it under Section 1.07(a) by:
(i) paying to the Agent in the same day funds the amount payable by
such APA Purchaser as described in clause (A) of Section 1.07(a) in
consideration of its purchase of the interests contemplated by Sections 2
and 4 of the APA; and
(ii) depositing the balance of the APA Purchaser's Price in same day
funds in such APA Purchaser's Collateral Purchase Account.
Each such deposit by an APA Purchaser under clause (ii) of this Section 1.07(b)
shall constitute (A) a payment to the SPV by such APA Purchaser of the purchase
price payable by it under Section 1.07(a) in respect of its undivided interest
in Cash Secured Advances, (B) an advance by the SPV to the Trustee of a Cash
Secured Advance in the amount of such deposit pursuant to Section 1.06(d) and
(C) a pledge and deposit by the Trustee of cash in
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the amount of such deposit to secure the obligations of the Trustee to repay
such Cash Secured Advance. Each APA Purchaser in its discretion may invest the
credit balance in such APA Purchaser's Collateral Purchase Account, and the
proceeds and earnings thereof, for the account of the Trustee in Permitted
Investments and even if not then a Permitted Investment interest bearing
deposit accounts of such APA Purchaser (which may be represented by short-term
certificates of deposit, time deposit, open account agreements or other short
term deposit instruments), provided, however, that such APA Purchaser shall
bear the full risk of loss with respect to any such investment of the credit
balance.
(c) Upon receipt by the Agent from any APA Purchaser of the funds
referred to in Section 1.07(b)(i), the Agent will cause such funds to be
immediately applied in accordance with the applicable provisions of the APA.
Upon receipt by CXC of payment in full from each APA Purchaser of the payments
called for pursuant to Section 2 of the APA (whether as a result of purchase of
interests contemplated by Section 2 or Section 4 of the APA), CXC shall
thereafter cease to make any further advances to the SPV under the Finance
Facility.
SECTION 1.08. Release of Funds from Collateral Purchase Accounts: (a)
Each APA Purchaser agrees, on the terms and conditions set forth in the
Operative Documents and so long as the Commitment Termination Date shall not
have occurred, to release from its Collateral Purchase Account on each Funding
Date during the period from the Cash Secured Advance Date until the Interim
Note Maturity Date (such period being the "Collateral Purchase Account
Period"), an amount (its "Release Amount") equal to the lesser of its
Percentage (as defined in the APA) of any Advance to be made by the SPV on such
Funding Date or the remaining credit balance in its Collateral Purchase Account
by depositing its Release Amount in an account designated by the Agent at
Citibank, N.A., 399 Park Avenue, New York, New York 10043. The paries hereto
agree that each such deposit by an APA Purchaser under this Section 1.08 shall
constitute (A) a prepayment by the Trustee to the extent of such deposit on
account of the interest owned by such APA Purchaser in a Cash Secured Advance
and (B) the making by the SPV and the receipt by the Trustee, to the extent of
such deposit, of an Advance by the SPV (or portion thereof) pursuant to Section
1.03 on such Funding Date.
(b) Unless the Agent shall have received notice from an APA Purchaser
prior to the date of any scheduled release of funds from the Collateral Purchase
Accounts that such APA Purchaser will not make available the amount required to
be released by such APA Purchaser, the Agent may assume that such APA Purchaser
has made the deposit in accordance with Section 1.08(a) on the date on which
such deposit is to be made, and the Agent may, in reliance upon such
assumption, make available to
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the Trustee on such date a corresponding amount. If and to the extent that an
APA Purchaser shall not have so made the required deposit, such APA Purchaser
agrees to repay to the Agent forthwith on demand the principal amount of such
required deposit together with interest thereon, for each day from the date such
amount is made available to the Trustee until the date such amount is repaid to
the Agent at the Federal Funds Rate. If such APA Purchaser shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute the
release by the APA Purchaser of the amount required to be released by it for
purposes of this Agreement. So long as such APA Purchaser fails to repay to the
Agent such corresponding amount, the Agent shall have all rights of the APA
Purchaser to receive payments otherwise due to the APA Purchaser under the
Operative Documents and the Securitization Documents until the Agent shall have
received payment in full of such corresponding amount.
(c) The failure of any APA Purchaser to release any amount required to
be released from its Collateral Purchase Account shall not relieve any other APA
Purchaser of its obligation, if any, hereunder to release an amount from its
Collateral Purchase Account in accordance with this Agreement, but no APA
Purchaser shall be responsible for the failure of any other APA Purchaser to
release any amount from a Collateral Purchase Account of such other APA
Purchaser.
SECTION 1.09. Completion and Conversion of Interim Notes. On the
Completion Date:
(a) Commitment Termination. The obligations of the Note Holders to make
Advances shall terminate, and the obligations of the Certificate Holders to make
Investments shall terminate, in each case, automatically and without notice or
other action of any kind on the part of any Person.
(b) Interim Notes Exchanged.
(i) Each Note Holder shall deliver to the Agent, acting on
behalf of the Trustee, (a) all original Interim Notes registered in the
name of such Note Holder duly endorsed, or accompanied by bond powers
or other instruments of transfer duly endorsed, by or on behalf of such
Note Holder, satisfactory to the Agent, to transfer such Interim Notes
to the Trustee and (b) such other agreements, instruments or documents
as the Agent may reasonably request to evidence the exchange and
transfer to the Trustee of such Interim Notes; provided, however, that
such exchange shall be made without recourse and without representation
or warranty of any kind by or on behalf of the Note Holders, except for
the warranties on presentment and transfer set forth in Section 3-417
of the UCC.
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(ii) The Trustee shall issue and deliver, upon receipt by the
Agent of the instruments referred to in Section 1.09(b)(i), (A) to each
Holder of an Interim A-Note, one or more Series A Notes, each dated the
Interim Note Maturity Date, in an aggregate principal amount equal to
the then outstanding aggregate principal amount of the Interim A-Notes
held by such Note Holder and (B) to each Holder of an Interim B-Note,
one or more Series B Notes, each dated the Interim Note Maturity Date,
in an aggregate principal amount equal to the then outstanding
aggregate principal amount of the Interim B-Notes held by such Note
Holder; provided that if after giving effect to the issuance of Series
A Notes as described above, the aggregate principal amount of the
Series A Notes is less than 85% of the Acquisition Costs as of the
Interim Note Maturity Date (such deficiency, the "A-Note Deficiency"),
then Interim B-Notes shall be exchanged on the Interim Note Maturity
Date for additional Series A Notes in an amount equal to the A-Note
Deficiency.
(iii) The Note Holders shall accept the Series A Notes and
Series B Notes referred to in Section 1.09(b)(ii) in exchange for and
in full satisfaction of the Interim Notes surrendered pursuant to
Section 1.09(b)(i), and upon such exchange, the Trustee shall be fully
discharged from all obligations to pay principal, interest or other
amounts under the Interim Notes.
(iv) The Agent shall deliver to the Trustee the Interim Notes
(together with the transfer documentation referred to in Section
1.09(b)(i)), for cancellation by the Trustee.
SECTION 1.10. Excess Certificate Amount. On the first Payment Date
immediately following the Completion Date:
(a) Additional Rent. The Company shall pay to the Agent, on behalf of
the Trustee in accordance with Schedule I of the Lease, Additional Rent in an
amount equal to the Excess Certificate Amount and such other amounts (including
Fixed Rent) as shall be payable as provided for in the other Operative Documents
and the Securitization Documents.
(b) Certificate Repurchase. (i) The Agent, on behalf of the Trustee,
shall deliver to each Certificate Holder (A) a written statement setting forth
the Excess Certificate Amount, showing in reasonable detail the computation
thereof (which amount and computation shall, absent manifest error, be final and
binding on all parties), and (B) an amount, equal to each Certificate Holder's
pro rata portion of the Excess Certificate Amount by wire transfer of
immediately available funds to such account as may be designated from time to
time by such Certificate Holders.
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<PAGE> 18
(ii) The stated amount of the Certificates held by each
Certificate Holder shall, upon the making of the payment referred to in
Section 1.10(b)(i), be reduced, automatically and without notice or
further action of any kind by any Person, by an amount equal to the
payment made, and without any prepayment penalty or premium of any
kind.
ARTICLE II.
CONDITIONS PRECEDENT
SECTION 2.01. Conditions Precedent to the Initial Funding. The several
(and not joint and several) obligations of each of the Note Holders to make an
Advance and each of the Certificate Holders to make an Investment on the Initial
Funding Date as set forth in Article I shall be subject to the fulfillment, to
the satisfaction of the Agent, the Note Holders and the Certificate Holders, as
applicable, on or as of the Initial Funding Date, of the following conditions
precedent, and the Company and the Guarantor shall each have delivered an
Officer's Certificate dated as of the Initial Funding Date certifying that such
conditions precedent have been fulfilled:
(a) Due Authorization, Execution and Delivery. (i) The Operative
Documents shall have been duly authorized, executed and delivered by all parties
thereto, shall be in full force and effect and no condition or event shall exist
or have occurred (or would exist after giving effect to the transactions
contemplated thereby) which would constitute a Default or an Event of Default
under any of the Operative Documents by any party thereto. Each of the Company,
the Guarantor, the Collateral Agent and SSBTC shall have delivered an Officer's
Certificate dated as of the Initial Funding Date as to its respective compliance
with the Operative Documents to which it is a party.
(ii) The Securitization Documents shall have been duly
authorized, executed and delivered by all parties thereto, shall be in
full force and effect, no condition or event shall exist or have
occurred which would constitute a Default or Event of Default under any
of the Securitization Documents by any party thereto; and sufficient
funds shall have been made available to the SPV under the Finance
Facility to fund the Advances to be made by the SPV on the Initial
Funding Date.
(iii) Each of SSBTC, the Company, the Guarantor and State
Street shall have delivered a Secretary's Certificate dated as of the
Initial Funding Date certifying as to the following:
(A) the certificate of incorporation, certificate of
limited partnership, by-laws,
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partnership agreement or other equivalent organizational
documents of each such Person;
(B) resolutions of the board of directors (or other
equivalent body) of each such Person authorizing (x) the
execution, delivery and performance of the Operative Documents
to which such Person is a party and (y) the consummation by
such Person of the transactions contemplated by the Operative
Documents; and
(C) the name, incumbency and signature of each
individual authorized to sign the Operative Documents to which
such Person is a party and the other documents or certificates
to be delivered pursuant thereto by such Person, which may be
conclusively relied upon until a revised certificate is
similarly so delivered;
(iv) good standing certificates and certificates of authority
to transact business as a foreign corporation with respect to the
Company and the Guarantor dated as of a recent date prior to the
Initial Funding Date;
(v) SSBTC shall have delivered a certificate of authority from
the Comptroller of the Currency dated as of a recent date prior to the
Initial Funding Date; and
(vi) State Street shall have delivered a certificate of
authority from the Office of the Commissioner of Banks of the
Commonwealth of Massachusetts dated as of recent date prior to the
Initial Funding Date.
(b) Representations and Warranties. The representations and warranties
of each of the Company, the Guarantor, SSBTC and the Collateral Agent,
respectively, set forth in the Operative Documents shall be true and correct as
if made on and as of the Initial Funding Date or, as applicable, on and as of
the date specified in such representation or warranty, and the Company, the
Guarantor, SSBTC and the Collateral Agent shall each have delivered an Officer's
Certificate dated as of the Initial Funding Date to such effect as to its
respective representations and warranties.
(c) Opinions. The following opinions dated as of the Initial Funding
Date addressed to the parties indicated below, shall have been delivered:
(i) an opinion of the General Counsel of the Company,
addressed to the Collateral Agent, the Agent, the Note Holders, the
Certificate Holders, the APA Purchasers, CXC's Credit Enhancer and the
Trustee, in form and substance reasonably satisfactory to the Agent,
the Trustee and Special Counsel;
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(ii) an opinion of the General Counsel of the Guarantor,
addressed to the Collateral Agent, the Agent, the Note Holders, the
Certificate Holders, the APA Purchasers, CXC's Credit Enhancer and the
Trustee, in form and substance reasonably satisfactory to the Agent,
the Trustee and Special Counsel;
(iii) an opinion of Trustee's Counsel, addressed to the
Collateral Agent, the Agent, the Note Holders, the Certificate Holders,
CXC's Credit Enhancer and the Company, in form and substance reasonably
satisfactory to the Agent and Special Counsel;
(iv) an opinion of Chadbourne & Parke LLP, Special Counsel,
addressed to the APA Purchasers, CXC, CXC's Credit Enhancer, S&P and
Moody's, which opinion shall address the non-consolidation of SPV and
the Trustee and certain other matters, shall be in form and substance
reasonably satisfactory to S&P and Moody's;
(v) opinions of Loeb & Loeb, special counsel to the SPV, the
Member, and Lord Securities Corporation, addressed to CXC, the APA
Purchasers, CXC's Credit Enhancer, Moody's and S&P, which opinions
shall address (i) the non-consolidation of Lord Securities Corporation,
Broad Street Contract Services, Inc., the SPV and the Member; and (ii)
the due authorization, execution, delivery and enforceability of the
relevant Operative Documents and Securitization Documents with respect
to the SPV, the Member and Lord Securities Corporation;
(vi) an opinion of corporate counsel to the Credit Enhancer,
addressed to the APA Agent, the APA Purchasers, Citicorp North America,
Inc., as agent for CXC and the APA Purchasers, CXC, CXC's Credit
Enhancer, Moody's and S&P, which opinion shall be in form and substance
reasonably satisfactory to the APA Agent;
(vii) an opinion of corporate counsel to CXC's Credit
Enhancer, addressed to Citicorp North America, Inc., as agent CXC,
Moody's and S&P, which opinion shall be in form and substance
reasonably satisfactory to the APA Agent; and
(viii) such other opinions of counsel as the Agent, the
Trustee and Special Counsel may reasonably request, addressed to the
Collateral Agent, the Agent, the Note Holders, the APA Purchasers, the
Certificate Holders and the Trustee, and in form and substance
reasonably satisfactory to the Agent, the Trustee and Special Counsel.
(d) Proceedings Satisfactory and Other Evidence. All corporate,
partnership and other proceedings taken or to be taken in connection with the
transactions contemplated by the Operative Documents and the Securitization
Documents and all documents, papers and authorizations relating thereto shall be
satisfactory
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to the Agent, the Trustee, the Company and their respective counsel. The Agent
and Special Counsel shall have received an Officer's Certificate from each of
the Company, the Guarantor and the Trustee with respect to the due
authorization, execution and delivery of the Operative Documents executed and
delivered by the Company, the Guarantor, the Trustee and the Collateral Agent,
respectively, dated as of the Initial Funding Date. The Agent and the Company
and their respective counsel shall receive copies of such documents and papers
as they have reasonably requested, in form and substance reasonably satisfactory
to them.
(e) Legality. (i) The execution, delivery and issuance of the Notes and
Certificates by the Trustee and the purchase of the Notes and the funding of
Advances thereunder by the Note Holders and the purchase of the Certificates and
the funding and maintenance of Investments thereunder by the Certificate Holders
shall not be subject to the registration requirements of the Act or any state
securities or blue sky Law, and shall not be prohibited by any applicable Law
(including Regulation T, Regulation U or Regulation X and any applicable usury
Laws) and shall not subject any Note Holder or Certificate Holder to any Tax
(other than Excluded Charges or a Tax paid by the Company pursuant to Sections
5.04 and 8.13), penalty, liability or other onerous condition under or pursuant
to any applicable Law and the Agent and the Note Holders and Certificate Holders
shall receive such evidence as the Agent and the Note Holders and Certificate
Holders (through the Agent) may reasonably request to establish compliance with
this condition.
(ii) The execution and delivery of the Operative Documents and
the consummation of any of the transactions contemplated thereby shall
subject none of the Trustee, the Collateral Agent, the Note Holders,
the Certificate Holders or the Agent to (A) regulation by the FCC or
any other Governmental Authority as a common carrier,
telecommunications concern or public utility, or (B) any Laws
applicable to common carriers, telecommunications concerns or public
utilities.
(f) Closing Fees. The Company or the Guarantor shall have paid or
caused to be paid all fees, expenses and other amounts as the Company may be
required to pay on or before the Initial Funding Date in accordance with the
terms of the Operative Documents and the Securitization Documents.
(g) Compliance with Law. The Property shall be in material compliance
with all Laws.
(h) Permits and Certain Property Matters. (i) All Permits with respect
to the Property that are or will become Applicable Permits shall have been
obtained, except Applicable Permits customarily obtained or which are permitted
by Law to be obtained after the Initial Funding Date (in which case the Company,
having completed all appropriate diligence in connection
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therewith, shall have no reason to believe that such Permits will not be granted
in the usual course of business prior to the date that such Permits are required
by Law). All such obtained Permits shall be in proper form, shall be in full
force and effect and not subject to any further appeal, consent or further
contest or to any unsatisfied condition that may allow modification or
revocation.
(ii) No portion of the Property shall have suffered a
Condemnation and the Property shall not have suffered any Casualty or
any other damage or destruction which renders it unusable in whole or
in part and, under applicable Law, the Property may be used for the
purposes contemplated by the Company in accordance with the Lease, and
the Company shall certify the same in each Requisition.
(i) Documents Relating to the Property. The Company shall have
delivered, or caused to be delivered, to the Trustee, the Agent, the Collateral
Agent, the Note Holders and the Certificate Holders documentation with respect
to the acquisition, condition, installation, operation and use of the Property,
or any portion thereof, or the Taxes applicable to the Property, or any portion
thereof, as the Agent, the Trustee, the Collateral Agent, the Note Holders or
the Certificate Holders may reasonably request, in form and substance reasonably
acceptable to the Agent, the Trustee, the Collateral Agent, the Note Holders and
the Certificate Holders.
(j) Insurance. The Company shall (i) maintain insurance in accordance
with the provisions of the Lease and (ii) be in compliance with all Insurance
Requirements. The Company shall deliver, or cause to be delivered, to the
Trustee, the Collateral Agent and the Agent (i) certificates of insurance or
other satisfactory assurances evidencing the coverage of such policies in
compliance with the Insurance Requirements and (ii) copies of any exceptions to
coverage of such policies.
(k) Taxes. All Taxes (other than Excluded Charges), fees and other
charges which have become due and payable in connection with the execution,
delivery, recording, publishing, registering and filing of the Operative
Documents and the Securitization Documents or any memoranda thereof and any
financing statements shall have been paid by the Company. All Taxes (other than
Excluded Charges) which have become due and payable and that are payable by the
Company and related to the Property shall have been paid by the Company, subject
to the Company's rights of contest pursuant to the Lease.
(l) No Material Adverse Event. There shall exist no action, suit,
investigation, litigation or proceeding affecting the Company or the Guarantor
pending or, to the Company's or the Guarantor's knowledge, threatened, before
any court, governmental agency or arbitrator that (A) is reasonably likely to
have a
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Material Adverse Effect or create any Trust Liability or (B) purports to affect
in any material respect the legality, validity or enforceability of this
Agreement, any other Operative Document or the Securitization Documents or the
consummation of the transactions contemplated hereby or thereby.
(m) Recording and Filing. The appropriate Operative Documents (or
memoranda thereof) and all Central Filings with respect to the Property shall
have been delivered in proper form to be duly recorded, published, registered
and filed by the Company (on behalf of the Trustee and the Collateral Agent)
with the Secretary of State of each State where it is anticipated that the
Projects and the Property shall be located, warehoused, stored, assembled,
constructed or installed by the Company and in such manner and in such places as
the Company, the Agent and Special Counsel shall determine to be necessary or
appropriate to establish, create, perfect, preserve, protect and publish notice
of a valid and effective first priority security interest and Lien on the
Property in such States in favor of the Trustee and the Collateral Agent
superior and prior to the rights of all third Persons and subject to no other
Liens except in each case for Permitted Encumbrances and Trust Encumbrances; and
all Taxes, fees and other charges payable in connection with such recording,
publishing, registration and filing shall have been paid, or caused to be paid,
by the Company (or provisions made to do so).
(n) Satisfaction with Contemplated Transactions. The Agent, the Note
Holders and the Certificate Holders shall be satisfied, each in its sole
reasonable discretion, with its review of the Property and all material matters
in connection therewith, including the leasing thereof by the Trustee.
(o) Additional Documents. The Agent shall have received such other
approvals, certificates or documents as the Agent may reasonably request to
evidence satisfaction of the conditions set forth in this Section 2.01.
(p) Appraisal. An Appraisal of each Project for which Acquisition Costs
are to be funded (as described in the Requisition provided by the Company to the
Agent) shall have been conducted by an Appraiser, at the sole cost and expense
of the Company, demonstrating that both the current Appraised Value of the
Project and the expected fair market value of such Project at the Expiration
Date or, to the extent possible, the sum of the values of the Items of Property
with respect to such Project, are at least equal to the estimated Acquisition
Costs of the Project or Items of Property, as applicable.
(q) POPs. Prior to the funding of any Acquisition Costs for the
acquisition of or leasing of real property in connection with the construction
or installation of a POP, a Phase I environmental audit (an "Environmental
Audit") of the real estate shall have been conducted by an Environmental
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Consultant, at the sole cost and expense of the Company, which shall (i)
conclude that no environmental hazards exist on the Property that are
unacceptable to the Holders and the Agent and based upon anticipated and
permitted practices and procedures, there is not likely to exist on or in
respect of the POP any environmental hazards which are unacceptable to the
Holders or the Agent and (ii) otherwise be in form and substance satisfactory to
the Agent.
SECTION 2.02. Conditions Precedent to Fundings Subsequent to the
Initial Funding Date. The several (and not joint and several) obligations of
each of the Note Holders to make Advances and of each of the Certificate Holders
to make Investments subsequent to the Initial Funding Date as set forth in
Article I shall be subject to the fulfillment, to the satisfaction of the Agent,
the Note Holders and the Certificate Holders, as applicable, by, on or as of the
date of such Funding of the following conditions precedent:
(a) Compliance; No Default, etc. (i) Each of the Company, the Guarantor
and the Relevant Subsidiaries shall be in compliance with its obligations under
the Operative Documents on such date, (ii) the Operative Documents and the
Securitization Documents shall be in full force and effect on such date and
(iii) no condition or event shall exist or have occurred which would constitute
a Default, Event of Default or Environmental Trigger under any of the Operative
Documents.
(b) Representations and Warranties. The representations and warranties
of each of the Company, the Guarantor and SSBTC, respectively, set forth in the
Operative Documents shall be true and correct as if made on and as of the date
of such Funding or, as applicable, on and as of the date specified in such
representation or warranty.
(c) Requisition; Use of Investment Proceeds. The Agent shall have
received a timely and complete Requisition pursuant to and in compliance with
the terms of this Agreement. All proceeds of the Fundings expended, and all
proceeds of the Fundings to be expended, by or on behalf of the Company shall
have been or shall be (as the case may be) applied solely to Acquisition Costs,
and the Company shall certify the same in each Requisition and provide such
other evidence, with respect to the use of such proceeds (including but not
limited to, invoices for Acquisition Costs) as may be reasonably requested by
the Agent.
(d) Compliance with Law. The acquisition, installation, construction,
ownership and use of the Property by the Company shall be in material compliance
with all Laws.
(e) No Material Adverse Event. The Company shall certify in each
Requisition that (i) no action, suit, investigation, litigation or proceeding
affecting the Company or
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the Guarantor exists or is pending or, to the Company's knowledge, threatened
before any court, governmental agency or arbitrator that (A) is reasonably
likely to have a Material Adverse Effect or create any Trust Liability or (B)
purports to affect in any material respect the legality, validity or
enforceability of this Agreement, any other Operative Document or the
Securitization Documents or the consummation of the transactions contemplated
hereby or thereby and (ii) since the Initial Funding Date, there has been no
change with respect to the Company or the Guarantor that could be reasonably
likely to have a Material Adverse Effect.
(f) Legality. The making of any Advance or Investment, and the
maintenance thereof, by any Note Holder or Certificate Holder shall not (i) be
prohibited by any applicable Law (including Regulation T, Regulation U or
Regulation X and any applicable usury Laws) and shall not subject any Note
Holder or Certificate Holder to any Tax (other than Excluded Charges and any Tax
paid by the Company pursuant to Sections 5.04 and 8.13), penalty, liability or
other onerous condition under or pursuant to any applicable Law and (ii) subject
any of the Trustee, the Collateral Agent, the Note Holders, the Certificate
Holders or the Agent to (A) regulation by the FCC or any other Governmental
Authority as a common carrier, telecommunications concern or public utility or
(B) any Laws applicable to common carriers, telecommunications concerns or
public utilities.
(g) Permits and Certain Property Matters. (i) All Permits that are or
will become Applicable Permits shall have been obtained, except Applicable
Permits customarily obtained or which are permitted by Law to be obtained after
the applicable Funding Date (in which case the Company, having completed all
appropriate diligence in connection therewith, shall have no reason to believe
that such Permits will not be granted in the usual course of business prior to
the date that such Permits are required by Law). Each Permit shall be in proper
form, in full force and effect and not subject to any appeal, consent or contest
or to any condition that, if unsatisfied, is likely to result, in the Agent's
reasonable judgment, in the forfeiture or revocation of such Permit.
(ii) No portion of the Property shall have suffered a
Condemnation and the Property shall not have suffered any Casualty or
any other damage or destruction which renders it unusable in whole or
in part and, under applicable Law, the Property may be used for the
purposes contemplated by the Company in accordance with the Lease, and
the Company shall certify the same in each Requisition.
(h) Taxes. All Taxes (other than Excluded Charges), fees and other
charges which have become due and payable in connection with the execution,
delivery, recording, publishing, registering and filing of the Operative
Documents and the
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Securitization Documents or any memoranda thereof and any financing statements
shall have been paid by the Company. All Taxes (other than Excluded Charges)
which have become due and payable and that are payable by the Company and
related to the Property shall have been paid by the Company, subject to the
Company's rights of contest pursuant to the Lease.
(i) Insurance. The Company shall be in compliance with all Insurance
Requirements. The Company shall deliver, or cause to be delivered, to the
Trustee, the Collateral Agent and the Agent (to the extent not previously
delivered) (i) certificates of insurance or other satisfactory assurances
evidencing the coverage of such policies in compliance with the Insurance
Requirements and (ii) copies of any exceptions to coverage of such policies.
(j) Recording and Filing. The Company shall have executed and delivered
to the Agent with respect to the Property or any portion thereof all Central
Filings or continuation statements or amendments thereto under the UCC and any
Fixture Filings (in accordance with Section 4.01(h)), in each case, (i) in
proper form to be duly recorded, published, registered and filed by the Company
(on behalf of the Trustee and the Collateral Agent) and (ii) as are necessary or
appropriate to establish, create, perfect, preserve, protect and publish notice
of a valid and effective first priority security interest and Lien on all the
Property in favor of the Trustee and the Collateral Agent superior and prior to
the rights of all third Persons and subject to no other Liens except in each
case for Permitted Encumbrances and Trust Encumbrances. In addition, all Taxes
fees and other charges payable in connection with such recording, publishing,
registration and filing shall have been paid or caused to be paid by the Company
(or provisions have been made to do so).
(k) Appraisal. An Appraisal of each Project for which Acquisition Costs
are to be funded (as described in the Requisition provided by the Company to the
Agent) shall have been conducted by an Appraiser, at the sole cost and expense
of the Company, demonstrating that both the current Appraised Value of the
Project and the expected fair market value of such Project at the Expiration
Date or, to the extent possible, the sum of the values of the Item of Property
with respect to such Project, are at least equal to the estimated Acquisition
Costs of the Project or Items of Property, as applicable.
(l) POPs. Prior to the funding of any Acquisition Costs for the
acquisition of or leasing of real property in connection with the construction
or installation of a POP, an Environmental Audit of the real estate shall have
been conducted by an Environmental Consultant, at the sole cost and expense of
the Company, which shall (i) conclude that no environmental hazards exist on the
Property that are unacceptable to the Holders and the Agent and based upon
anticipated and permitted
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practices and procedures, there is not likely to exist on or in respect of the
POP any environmental hazards where are unacceptable to the Holders or the Agent
and (ii) otherwise be in form and substance satisfactory to the Agent.
(m) Additional Documents. The Agent shall have received such other
approvals, certificates or documents as the Agent may reasonably request to
evidence satisfaction of the conditions set forth in this Section 2.02.
SECTION 2.03. Obligation Subsequent. The Company shall deliver to the
Agent, no later than September 22, 1998, validly executed Assignments of
Purchase Agreements together with consents to the Assignments of Purchase
Agreements validly executed by the respective contract vendors thereunder and in
form satisfactory to the Agent.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Trustee, the Collateral Agent, the
Agent, the Note Holders, the Certificate Holders and the APA Purchasers that the
following shall be true and correct on and as of the Initial Funding Date and on
and as of each Funding Date on which a Funding shall occur:
(a) Existence. Each of the Company and the Relevant Subsidiaries: (i)
is a corporation, partnership or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization;
(ii) has all requisite corporate or other power and authority, and has all
material governmental licenses, authorizations and Consents necessary to own its
assets and carry on its business as now being or as proposed to be conducted;
and (iii) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could (either
individually or in the aggregate) have a Material Adverse Effect.
(b) Action; Enforceability. Each of the Company and the Relevant
Subsidiaries has all necessary corporate power, authority and legal right to
execute, deliver and perform its obligations under each of the Operative
Documents to which it is a party; the execution, delivery and performance by the
Company and each Relevant Subsidiary of the Operative Documents to which it is a
party has been duly authorized by all necessary corporate
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action on its part (including, without limitation, any required shareholder
approvals); and this Agreement and each of the other Operative Documents have
been duly and validly executed and delivered by the Company and each Relevant
Subsidiary party thereto and constitute, its legal, valid and binding
obligation, enforceable against the Company and each Relevant Subsidiary, as
appropriate, in accordance with its terms, except as enforceability thereof may
be limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights generally
and by general principles of equity.
(c) Approvals. No Consents of, and no filings or registrations with,
any Governmental Authority, any securities exchange or any third party, are
necessary for the execution and delivery by the Company and the Relevant
Subsidiaries of the Operative Documents or the performance by the Company and
the Relevant Subsidiaries of the transactions contemplated to be performed by
the Company and the Relevant Subsidiaries by the Operative Documents or for the
legality, validity or enforceability hereof or thereof, except for such as have
been made or obtained and are in full force and effect.
(d) Litigation. Except as disclosed in the Guarantor's Public Filings,
there are no actions, suits, arbitrations, investigations or proceedings pending
or, to its knowledge, threatened against any of the Company or any of its
Subsidiaries or Relevant Subsidiaries or affecting any of their property or
assets before any Governmental Authority, (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would
have, individually or in the aggregate, a Material Adverse Effect or (ii) which
involves this Agreement, any of the other Operative Documents or the
Securitization Documents or the consummation of the transactions contemplated
hereby or thereby.
(e) No Breach. None of the execution and delivery of this Agreement,
the other Operative Documents, the consummation of the transactions herein and
therein contemplated or compliance with the terms and provisions hereof and
thereof will conflict with or result in a breach of, or require any consent
under, the charter or by-laws of the Company or any Relevant Subsidiary, or any
applicable Law, or any order, writ, injunction or decree of any Governmental
Authority, or any agreement or instrument to which any of the Company, its
Subsidiaries or any of the Relevant Subsidiaries is a party or by which any of
them or any of their property or assets are bound or to which any of them is
subject, or constitute a default under any such agreement or instrument, or
(except for any Lien created pursuant to the Operative Documents) result in the
creation or imposition of any Lien upon any of the properties or assets of any
of the Company, its Subsidiaries or the Relevant Subsidiaries pursuant to the
terms of any such agreement or instrument.
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(f) Margin Regulations. No part of the proceeds of any Advance or
Investment will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (A) to purchase or carry Margin Stock
or to extend credit to others for the purpose of purchasing or carrying Margin
Stock or to refund indebtedness originally incurred for such purpose, or (B) for
any purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Federal Reserve Board, including Regulation
T, U or X. None of the Advances or the Investments will be used to finance a
hostile transaction.
(g) ERISA. Each Plan of the Company and, to the knowledge of the
Company, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Law.
(h) Taxes. The Company and its Subsidiaries have filed or caused to be
filed all federal income Tax returns and all other material Tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any of its
Subsidiaries, except for any such Taxes, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided. All Taxes, fees and other
charges which have become due and payable in connection with the execution and
delivery of the Operative Documents (or any memorandum thereof) have been paid.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Company, adequate.
(i) Investment Company Act. None of the Company or its Subsidiaries is
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended, and none
of the Company or its Subsidiaries is subject to any statute or regulation which
prohibits or restricts the incurrence of the obligations under the Operative
Documents. None of the Company or its Subsidiaries is a "holding company", a
"subsidiary company" of a "holding company", an "affiliate" of a "holding
company", or an "affiliate" of a "subsidiary company" of a "holding company", in
each case as such term is defined in the Public Utility Holdings Company Act of
1935.
(j) Compliance with Laws and Other Agreements.
(i) None of the Company, its Subsidiaries and the Relevant
Subsidiaries is in default with respect to any order, writ, injunction
or decree of any Governmental Authority, to the knowledge of the
Company, in violation of any Law to which the
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Company, any of its Subsidiaries or any Relevant Subsidiary or any of
their property or assets is or are subject, which default or violation
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or create any Trust Liability.
(ii) Neither the Company nor any of its Subsidiaries is in
default in any manner under any provision of any indenture or other
agreement or instrument evidencing Indebtedness, or any other material
agreement, lease or instrument to which it is a party or by which it or
any of its properties or assets are or may be bound, where such default
could result, individually or in the aggregate, in a Material Adverse
Effect.
(k) Subsidiaries, Etc. Set forth in Schedule 3.01 hereto is a complete
and correct list, as of the Initial Funding Date, of all of the Subsidiaries and
the Relevant Subsidiaries of the Company and the Guarantor, together with, for
each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary
and Relevant Subsidiary, (ii) each Person holding ownership interests in such
Subsidiary and (iii) the percentage of ownership of such Subsidiary and Relevant
Subsidiary represented by such ownership interests. The capital stock of each
such Subsidiary is duly authorized, validly issued and fully paid and
nonassessable.
(l) True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Company to the Agent, the Collateral Agent, the Trustee, the Appraiser, any Note
Holder, any Certificate Holder, any APA Purchaser or Special Counsel in
connection with the negotiation, preparation or delivery of this Agreement, the
other Operative Documents, the Securitization Documents or any transaction
contemplated hereby or thereby or included herein or therein or delivered
pursuant hereto or thereto, when taken as a whole do not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date
hereof by the Company, its Subsidiaries or Relevant Subsidiaries to the Agent,
the Collateral Agent, the Trustee, the Appraiser, any Note Holder, any
Certificate Holder or Special Counsel in connection with this Agreement, the
other Operative Documents, the Securitization Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable estimates,
on the date as of which such information is stated or certified. There is no
fact known to the Company that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect that has not been
disclosed herein, in the other Operative Documents, in the Guarantor's Public
Filings
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or in a report, financial statement, exhibit, schedule, disclosure letter or
other writing furnished to the Agent, the Collateral Agent, the Trustee, the
Appraiser, any Note Holder or any Certificate Holder for use in connection with
the transactions contemplated hereby or thereby.
(m) Use of Proceeds. All proceeds with respect to the Advances and
Investments have been or shall be applied solely toward Acquisition Costs in
accordance with Article I.
(n) No Default. No event or condition exists which would constitute a
Default or an Event of Default.
(o) Compliance with Laws With Respect to the Property. The Company is
not in violation of any Law with respect to the Property or any part thereof, or
with respect to the acquisition, leasing, installation, construction, ownership
or operation of the Property or any part thereof, or with respect to the conduct
of its business relating to the Property or any part thereof or with respect to
its assets. The Company has not received any notice of, or citation for, any
violation of any Law which has not been resolved, which notice or citation
relates to the acquisition, ownership, leasing, installation, construction or
operation of the Property or any part thereof. The acquisition, ownership,
leasing, installation, construction or operation of the Property or any part
thereof by the Trustee, in accordance with the terms of the Operative Documents,
will not violate any Law or create any Trust Liability. The Property is in
material compliance with all existing applicable Laws.
(p) Recording and Filing. The appropriate Operative Documents (or
memoranda thereof) mortgages, deeds of trust and all financing and continuance
statements under the UCC or amendments thereto recorded or filed, or caused to
be recorded or filed, or to be recorded or filed, by the Company hereunder or
pursuant to the transactions contemplated by the Operative Documents (i) have
been or shall have been duly recorded, published, registered and filed and (ii)
when recorded or filed (and when any prior Liens are released pursuant to
Section 4.01(h)(ii)), establish, create, perfect, preserve, protect and publish
notice of a valid and effective first priority security interest and Lien on all
the Property in favor of the Trustee and the Collateral Agent superior and prior
to the rights of all third Persons and subject to no other Liens except in each
case for Permitted Encumbrances and Trust Encumbrances and (iii) all Taxes, fees
and other charges payable in connection with the recording, publishing,
registration and filing thereof, have been or shall have been paid, or caused to
be paid, in full by the Company.
(q) Rights to Property, Etc. (i) The Trustee has, or, upon the
acquisition, installation or construction thereof, will
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have, good and marketable title to the Property free and clear of all Liens,
except for Permitted Encumbrances.
(ii) Each Assignment of Purchase Agreement, transfers, assigns
and sets over, or shall transfer, assign and set over, to the Trustee
all of the Company's right, title and interest in and to the
acquisition of the Property under the applicable Equipment Purchase
Agreement, free and clear of all liens, encumbrances and restrictions,
other than Permitted Encumbrances and no authorizations, approvals or
consents of any third party are, or shall be, required thereby, except
for such as have been or shall have been obtained and are in full force
and effect.
(iii) (A) The Equipment Purchase Agreements are in full force
and effect and have not been amended, modified or changed in any
manner, (B) the Company has not received any notice, and to the
Company's knowledge no action has been threatened, for the purposes of
terminating any Equipment Purchase Agreement and (C) there are no
offsets, counterclaims or defenses to the obligations of the Company,
or to the Company's knowledge, the vendor under any Equipment Purchase
Agreement. The Company has furnished or caused to be furnished, true,
complete and correct copies of the Equipment Purchase Agreements to the
Agent. The representations and warranties made by each of the parties
to the Equipment Purchase Agreements contained in such Equipment
Purchase Agreements are or will be, to the Company's knowledge, true
and correct and are hereby incorporated by reference and made by the
Company, to its knowledge, to the Trustee, the Collateral Agent, the
Agent, the Note Holders and the Certificate Holders.
(iv) To the Company's knowledge, each vendor or seller of
Property to the Trustee under the Equipment Purchase Agreements has
good and marketable title to such Items of Property and the right to
transfer the same to the Trustee free and clear of all Liens.
(v) None of the Permitted Encumbrances will interfere with the
use or possession of the Property or any part thereof or any other
asset used in connection therewith or the use of or the exercise by the
Trustee or the Collateral Agent of its rights either under any
Operative Document or to the Property.
(vi) There are no material agreements, consents, instruments,
easements, leases, right-of-way, Permits, consents, licenses or other
rights necessary to acquire, own, lease, install, construct, operate or
use the Property which the Company does not have or will not be able to
obtain prior to the Completion Date.
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(vii) On or prior to the Completion Date, each Project and the
Property, as applicable, shall be designed, engineered, installed, and
constructed in a good and workmanlike manner, in accordance with
prudent industry practice and in material compliance with any and all
applicable building, construction, and safety codes for such
construction and installation, as well as any and all other applicable
Laws. On or prior to the Completion Date, each Project and the
Property, as applicable, shall perform in accordance with the testing
and performance standards contained in Exhibit C and any other
specifications provided by the Company to the Trustee from time to
time.
(viii) The Company is not in default under any of the existing
Underlying Rights that would permit the grantor of such Underlying
Right to terminate such Underlying Right prior to its stated expiration
date, or would otherwise materially, adversely impair or affect the
Company's ability to use, lease or own any of the Property, or exercise
its rights with respect thereto, and, to the best of its knowledge,
none of the grantors are in default under the existing Underlying
Rights. The Company is not aware of any circumstance that would
materially, adversely impair or affect the Trustee's ability to use,
lease or own any of the Property, or exercise its rights with respect
thereto.
(ix) The Company has no knowledge of any proposed, pending or
threatened change in any Law or standard applicable to any of the
Property that is likely to adversely affect the use of the Property.
(r) Trade Secrets and Patents. (i) The ownership and leasing of the
Property by the Trustee and the leasing of the Property by the Company do not
and will not conflict with, infringe on, or otherwise violate any copyright,
trademark, trade name, trade secret or patent rights of any other Person.
(ii) The Company has all rights to all patents, patent
applications, trademarks (whether registered or not), trademark
applications, trade names, proprietary computer software, "know-how"
and copyrights used or to be used in the ordinary course of the
operation of the Property (the "Intellectual Property Rights") that are
necessary for the operation thereof, including the right to assign the
Intellectual Property Rights. There is no judicial proceeding pending
or, to the knowledge of the Company, threatened, involving any claim of
any infringement, misuse or misappropriation by the Company or any
Affiliate thereof of any patent, trademark, trade name, copyright,
license or similar intellectual property right owned by any third party
related to the Intellectual Property Rights.
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(s) Environmental Compliance.
(i) The Property complies in all material respects with all
Environmental Laws and all necessary Environmental Permits have been
obtained and are in effect with respect to the Property and no
circumstances exist that could be reasonably likely to (A) form the
basis of an Environmental Action against the Property or (B) cause the
Property to be subject to any restrictions on ownership, occupancy, use
or transferability under any Environmental Law.
(ii) No portion of the Property is listed or proposed for
listing on the NPL or on CERCLIS or any analogous state list of sites
requiring investigation or cleanup.
(iii) No Hazardous Materials that have been generated at or
transported from any portion of the Property have been disposed at any
location that is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous state list, and all Hazardous Materials
generated, used, treated, handled or stored at or transported to or
from the Property and any property currently or formerly owned or
operated by the Company have been disposed of in compliance with all
Environmental Laws and Environmental Permits.
(iv) The Company has not received any written or other notice,
mandate, order, Lien or request which remains pending under an
Environmental Law concerning the Property or any part thereof or
relating to an alleged violation of an Environmental Law concerning the
Property or any part thereof or relating to any potential adverse
action in any way involving environmental, health or safety matters
affecting the Property or any part thereof.
(v) There is no proceeding pending or, to the knowledge of the
Company, threatened against the Company by any federal, state, or local
court, tribunal, administrative agency, department, commission, board
or other authority or instrumentality with respect to the presence or
release of any Hazardous Material from the Property or any part
thereof.
(vi) No Hazardous Materials have been released from or on the
Property or any part thereof for which remedial action could be
required under any Environmental Law or may be necessary to prevent or
eliminate a significant risk to human health or the environment.
(t) No Condemnation, Casualty or Force Majeure. No portion of the
Property has suffered a Condemnation nor has the Property suffered a Casualty or
any other damage or destruction which renders it unusable in whole or in
material part, and, under applicable Law, the Property may be used for the
purposes contemplated by the Company in accordance with the Lease. No
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event of Force Majeure has occurred and is continuing which would adversely
affect the operation of the Property or any part thereof.
(u) Permits. All Permits (including Environmental Permits) that are or
will become Applicable Permits have been obtained, except Applicable Permits
customarily obtained or which are permitted by Law to be obtained after the
Initial Funding Date or such Funding Date, as the case may be (in which case the
Company having completed all appropriate diligence in connection therewith, has
no reason to believe that such Permits will not be granted in the usual course
of business prior to the date that such Permits are required by Law). All such
obtained Permits are in proper form, in full force and effect and not subject to
any further appeal or further contest or to any unsatisfied condition that may
allow modification or revocation.
(v) Insurance. The Company is in compliance with all Insurance
Requirements, and all insurance policies required the Lease are in full force
and effect.
(w) No Material Adverse Event. No applicable Law prohibits, and no
litigation, governmental investigation or other proceeding is pending or overtly
threatened in which there is a reasonable possibility of an unfavorable
judgment, decree, order or other determination which could prevent or make
unlawful, or impose any material adverse condition upon the acquisition, use,
ownership, operation or leasing of, including the Lessor's ownership and leasing
of, the Property.
(x) Ownership. The Guarantor beneficially owns all of the authorized,
issued and outstanding shares of capital stock of the Company.
(y) Year 2000 Compliance. The Company has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Company or any of its Subsidiaries (or
suppliers, vendors and customers thereof) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, the Company believes
that all computer applications (including those of its and any of its
Subsidiaries' suppliers, vendors and customers) that are material to its or any
of its Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform date-sensitive functions for all dates before and
after January 1, 2000, except to the extent
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that a failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. SSBTC Representations and Warranties. SSBTC, in its
individual capacity and not as Trustee (with the exception of subsection (f),
which representation and warranty is made by SSBTC solely in its trust capacity)
represents and warrants to the Company, the Guarantor, the Note Holders, the APA
Purchasers, the Certificate Holders, the Agent and the Collateral Agent that the
following statements are and shall be true and correct on and as of the Initial
Funding Date and on and as of each Funding Date:
(a) Organization and Authority. (i) SSBTC is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America.
(ii) SSBTC has all requisite corporate power and authority to
execute and deliver each Operative Document to which it is a party and
to comply with the terms thereof and perform its obligations
thereunder.
(b) Pending Litigation. There is no pending or, to SSBTC's knowledge,
threatened, action, suit, investigation, litigation or proceeding, including,
without limitation, any Environmental Action, affecting SSBTC before any court,
governmental agency or arbitrator that (i) could be reasonably likely to have a
material adverse effect on SSBTC or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any of the other Operative
Documents, the Securitization Documents or the consummation of the transactions
contemplated hereby or thereby.
(c) Authorization; No Conflict. The execution and delivery by SSBTC of,
and compliance by SSBTC with all of the provisions of, each Operative Document
to which it is a party and any other agreement entered into by SSBTC in
connection with any transaction contemplated by the Operative Documents are
within the powers of SSBTC and are authorized by all proper and necessary
corporate action and will not conflict with, result in any breach of any of the
provisions of, or constitute a default under, any organization document of SSBTC
or any judgment, injunction, order or decree to which SSBTC may be bound or
which is applicable to any of SSBTC's property or result in a violation of any
applicable Connecticut or federal Law governing the banking or trust powers of
SSBTC or in the creation of any Lien on any asset of SSBTC (except as
contemplated by the Operative Documents).
(d) Enforceability. Each Operative Document to which SSBTC is a party
and any other agreement entered into by SSBTC in connection with any transaction
contemplated by the Operative Documents is the legal, valid and binding
obligation of SSBTC
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enforceable against SSBTC in accordance with its terms, except as enforceability
thereof may be limited by the effect of any applicable bankruptcy, insolvency
reorganization, moratorium or similar Laws affecting creditors' rights generally
and by general principles of equity.
(e) Consents. The nature of SSBTC, its execution, delivery and
performance of each Operative Document to which it is a party, its consummation
of the transactions contemplated thereby, its compliance with the terms thereof
or any circumstance in connection with the transactions contemplated thereby
does not require the consent of any Person or the approval or authorization of,
or filing, registration or qualification with, any Federal or state governmental
authority governing the banking or trust powers of SSBTC (other than such as
have been obtained) as a condition to such execution, delivery, performance and
compliance.
(f) Enforceability Against Trustee. As of the Initial Funding Date, the
Instruments have been duly authorized by all necessary corporate action on the
part of the Trustee and the Instruments constitute the legal, valid and binding
obligations of the Trustee (acting solely as Trustee under the Declaration, and
not in its individual capacity).
(g) No Default. No event has occurred and no condition exists which,
upon consummation of the transactions contemplated by any Operative Document,
would constitute a default by the Trustee. SSBTC is not in violation in any
respect of any agreement or any other instrument, nor is SSBTC in violation of
its articles of association or any other instrument to which it is a party or by
which it or any of its property may be bound or affected which would have a
material adverse effect on either the business, financial position or results of
operations of SSBTC or SSBTC's ability to perform its obligations as Trustee
under the Operative Documents.
SECTION 3.03. Collateral Agent Representations and Warranties. The
Collateral Agent represents and warrants to the Company, the Guarantor, the
Agent, the Trustee, the Note Holders and the Certificate Holders that the
following statements are and shall be true and correct on and as of the Initial
Funding Date and on and as of each Funding Date:
(a) Organization and Authority. (i) State Street is a state chartered
trust company duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts.
(ii) The Collateral Agent has all requisite power and
authority to execute and deliver each Operative Document to which it is
a party and to comply with the terms thereof and perform its
obligations thereunder.
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(b) Pending Litigation. There is no pending or, to the Collateral
Agent's knowledge, threatened, action, suit, investigation, litigation or
proceeding, affecting the Collateral Agent before any court, governmental body
or arbitrator tribunal that could be reasonably likely to have a material
adverse effect on the Collateral Agent or the Collateral Agent's ability to
perform its obligations under the Operative Documents or any other agreement
which it has entered into in connection with any transaction contemplated hereby
or thereby.
(c) Authorization; No Conflict. The execution, delivery and performance
by the Collateral Agent of, and compliance by the Collateral Agent with, all of
the provisions of each Operative Document to which it is a party or any other
agreement which it has entered into in connection with any transaction
contemplated thereby are within the corporate powers of the Collateral Agent,
have been duly authorized by all necessary corporate action by the Collateral
Agent and do not contravene, or constitute a default under, any material
provision of applicable Federal or Massachusetts Law governing its banking or
trust powers or any organization documents of the Collateral Agent or any
material agreement, judgment, injunction, order or decree binding upon the
Collateral Agent or result in the creation or imposition of any Lien on any
asset of the Collateral Agent (except as contemplated by the Operative
Documents).
(d) Enforceability. Each of the Operative Documents to which the
Collateral Agent is a party is the legal, valid and binding obligation of the
Collateral Agent enforceable against the Collateral Agent in accordance with its
terms.
(e) Consents. The Collateral Agent's execution, delivery and
performance of each Operative Document to which it is a party, does not require
the consent of any Person or the approval or authorization of, or filing,
registration or qualification with, any Federal or Massachusetts state
governmental authority governing the banking or trust powers of the Collateral
Agent on the part of the Collateral Agent (other than such as have been
obtained) as a condition to such execution, delivery, performance and
compliance.
(f) No Default. No event has occurred and no condition exists which,
upon consummation of the transactions contemplated by any Operative Document,
would constitute a default by the Collateral Agent. The Collateral Agent is not
in violation in any respect of any agreement, its organizational documents or
any other instrument to which it is a party or by which it or any of its
property may be bound or affected which would have a material adverse effect on
either the business, financial position or results of operations of the
Collateral Agent or the Collateral Agent's ability to perform its obligations as
Collateral Agent under the Operative Documents.
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ARTICLE IV.
COVENANTS
SECTION 4.01. Covenants of the Company. The Company covenants and
agrees as follows so long as this Agreement shall remain in effect or the
principal of or interest on any Note, the stated amount of or any Distributions
on any Certificate, any fees or any other expenses or amounts payable under any
Operative Document shall be unpaid, unless the Majority Holders shall otherwise
consent in writing:
(a) Existence, Etc. The Company will, and will cause each of the
Relevant Subsidiaries to:
(i) preserve and maintain its legal existence and all of its
rights, privileges, licenses and franchises which are material or are
required to lease, use and operate the Property and carry on its
business in substantially the same manner and in substantially the same
fields as such business is now carried on; provided that nothing in
this Section 4.01(a) shall prohibit any transaction expressly permitted
under Section 4.01(c) hereof;
(ii) comply with and cause the Property to comply with the
requirements of all applicable Laws and orders of governmental or
regulatory authorities if failure to comply with such requirements
could (either individually or in the aggregate) have a Material Adverse
Effect or create a Trust Liability;
(iii) pay and discharge all Taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its property or assets prior to the date on which
penalties attach thereto, except for any such Tax, assessment, charge
or levy the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being
maintained;
(iv) maintain all of its properties and assets used or useful
in its business in good working order and condition, ordinary wear and
tear excepted;
(v) do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
licenses, rights-of-way, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of its
business or are required to lease, use and operate the Property;
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(vi) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied; and
(vii) permit representatives of any Note Holder, Certificate
Holder, the Trustee, the Collateral Agent or the Agent, during normal
business hours, to examine, copy and make extracts from its books and
records, to inspect any of its properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested
by such Note Holder, Certificate Holder, Trustee, Collateral Agent or
Agent (as the case may be), and permit any representatives of any Note
Holder or Certificate Holder to discuss the affairs, finances and
condition of such the Company and its Material Subsidiaries with the
independent accountants thereof.
(b) Litigation. The Company will, and will cause the Relevant
Subsidiaries promptly to, and in any event within fifteen (15) days, give to the
Agent, the Collateral Agent, the Trustee, the Certificate Holders and the Note
Holders notice of all legal or arbitral proceedings (including any proceeding or
investigation by or before any Governmental Authority) affecting the Company or
any of the Relevant Subsidiaries (i) that could (either individually or in the
aggregate) be reasonably expected to have a Material Adverse Effect or (ii) that
questions or challenges the validity or enforceability of any of the Operative
Documents and, to the extent permitted by Law, the Company shall include with
such notice a copy of all documents served on the Company or the Relevant
Subsidiaries relating to any such legal or arbitral proceeding.
(c) Prohibition of Fundamental Changes. The Company will not, nor will
it permit any of its Relevant Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution) or sell all or substantially
all of its assets. Notwithstanding the foregoing provisions of this Section
4.01(c):
(i) the Company may be merged or consolidated with or into the
Guarantor;
(ii) any Relevant Subsidiary of the Company may be merged or
consolidated with or into: (A) the Company if the Company shall be the
continuing or surviving corporation or (B) any other Subsidiary of the
Company; provided that (x) if any such transaction shall be between a
Relevant Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving corporation and (y) no
Default or Event of Default shall have occurred and be continuing or
would result therefrom; and
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(iii) the Company or any Relevant Subsidiary of the Company
may merge or consolidate with any other Person (other than the
Guarantor) if (A) in the case of a merger or consolidation of the
Company, the Company is the surviving corporation and, in the case of a
Relevant Subsidiary of the Company, the surviving corporation is a
Wholly-Owned Subsidiary of the Company, (B) in transactions involving
the Company, written notice thereof is provided to the Agent, the
Collateral Agent, the Trustee, the Note Holders and the Certificate
Holders at least 15 days in advance and (C) after giving effect thereto
no Default, Event of Default or Environmental Trigger shall have
occurred and be continuing or would result therefrom.
(d) Event of Default. As soon as possible and in any event within five
(5) days after the occurrence of, or within five (5) days of the date the
Company or the Guarantor becomes aware of the occurrence of, an Event of Default
or an event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default, continuing on the date of such statement, a
statement of an Executive Officer of the Company setting forth the details of
such Event of Default or event and the actions, if any, which the Company has
taken and proposes to take with respect thereto.
(e) Use of Proceeds; Application of Proceeds to Acquisition Costs. The
Company shall use proceeds of the Advances and Investments received by it solely
to pay Acquisition Costs in accordance with Article I hereof. The Company shall
provide such evidence with respect to the use of such proceeds as may be
reasonably requested by the Agent. None of the Advances or the Investments will
be used in violation of any applicable Law, including Regulation D, Regulation
T, Regulation U and Regulation X.
(f) Liens. The Company shall not, directly or indirectly, sublease,
sell, assign, transfer or otherwise dispose of, or create or suffer to exist any
Lien encumbering the Lease or the Property or any interest therein or portion
thereof (except as otherwise permitted under the Operative Documents).
(g) Status. The Company shall not:
(i) Be or become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; or
(ii) Be or become a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", or a
"public utility"
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within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(h) Recording and Filing. (i) Within thirty (30) days of commencement
of installation in any county with respect to a Project, the Company shall cause
to be filed all Fixture Filings, continuance statements or amendments thereto
under the UCC as are necessary or appropriate to establish, create, perfect,
preserve, protect and publish notice of a valid and effective first priority
security interest and Lien on the Property constructed, installed or otherwise
located, or to be constructed, installed or otherwise located, in such county in
favor of the Trustee and the Collateral Agent superior and prior to the rights
of all third Persons and subject to no other Liens except, in each case, for
Permitted Encumbrances and Trust Encumbrances;
(ii) To the extent that any third Person shall have acquired a
security interest or Lien on any Property with respect to any such
Property, the Company shall cause such third Person's security interest
with respect to such Property to be released, removed or otherwise
canceled; and
(iii) Subject to the terms of the Lease, the Company at all
times shall maintain or shall cause to be maintained the Trustee's and
the Collateral Agent's first priority security interest in the Property
created under any Central Filing, Fixture Filing or otherwise pursuant
to the Operative Documents.
(i) Performance. The Company shall observe and perform, and cause each
of the Relevant Subsidiaries to observe and perform, all provisions to be
observed or performed by it contained in each Operative Document to which it is
a party, in accordance with the terms thereof and within the times permitted
thereby (including any grace or cure periods provided thereby) and will
maintain, or cause to be maintained, the validity and effectiveness of each such
Operative Document to which it is a party.
(j) Obligations and Taxes. The Company shall, and shall cause its
Subsidiaries to, pay its Indebtedness and other obligations promptly and in
accordance with their terms and pay and discharge promptly when due all Taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
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contested in good faith by appropriate proceedings and the Company or such
Subsidiary shall have set aside on its respective books adequate reserves with
respect thereto.
(k) Pari Passu Ranking. The Company shall take, or cause to be taken,
all action that may be or become necessary or appropriate to ensure that its
obligations under the Operative Documents will continue to constitute its direct
and unconditional obligation, ranking at least pari passu in right of payment
with all other present and future unsecured Indebtedness of the Company.
(l) Action With Respect to the Property. The Company (i) shall use its
best efforts to cause the Equipment Purchase Agreements to remain in full force
and effect and (ii) shall not, without the prior written consent of the Trustee,
consent to, cause or allow any change order, change directive, amendment,
modification or other change in (or waiver or release of) the Equipment Purchase
Agreements which would (A) materially reduce the fair market value of the
Property; (B) materially reduce the capacity, efficiency or projected useful
life of the Property; (C) materially change the use of the Property; or (D)
result in the failure to complete the acquisition, installation, construction
and start-up of the Projects on or prior to the Date Certain free and clear of
any Liens for labor, services or materials or otherwise in compliance with the
requirements of the Operative Documents and all applicable Legal Requirements
and Insurance Requirements.
(m) Payment of Fees. The Company shall pay all Commitment Fees,
structuring fees, Trustee fees and other fees set forth in Schedule II, at the
times and in the manner set forth therein.
(n) Year 2000 Compliance. The Company shall promptly notify the Agent,
the Collateral Agent, the Trustee, the Certificate Holders and the Note Holders
if the Company discovers or determines that any computer application (including
those of its or any of its Subsidiaries' suppliers, vendors and customers) that
is material to its or any of its Subsidiaries' business and operations will not
be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Covenants of the Parties. The Company, the Trustee, the
Note Holders, the Certificate Holders, the Collateral Agent and the Agent,
covenant and agree as follows so long as this Agreement or the Lease shall
remain in effect or the principal of or interest of any Note, the stated amount
of or any Distributions on any Certificate, any fees or any other expenses or
amounts payable under any Operative Document shall be unpaid, unless the
Majority Holders shall otherwise consent in writing:
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(a) Restructuring Covenant. At the written request of the Agent, if the
conditions precedent contained in Sections 2.01(e)(ii) and 2.02(f)(ii) hereof
cannot be fulfilled to the satisfaction of the Agent for any reason, the parties
will take such reasonable steps to (i) modify the structure of the transactions
contemplated by this Agreement and the other Operative Documents and (ii) amend,
restate or enter into such additional agreements as may be reasonably necessary
or appropriate (in the opinion of the Agent and Special Counsel) to ensure
fulfillment of the conditions precedent contained in Sections 2.01(e)(ii) and
2.02(f)(ii) hereof and will use their reasonable best efforts to maintain both
the respective economic interests of the parties hereto and the desired tax and
accounting treatments with respect to the Lease. The Company will be responsible
for all reasonable fees (including reasonable attorney's fees) and out-of-pocket
expenses of the Trustee, the Agent, the Collateral Agent, the Note Holders and
the Certificate Holders in connection therewith.
ARTICLE V.
THE NOTES AND THE EQUITY INVESTMENT
SECTION 5.01. Applicable Rate.
(a) Notes. (i) The outstanding principal amount of the Notes shall bear
interest at a rate per annum equal to the Applicable Rate.
The Applicable Rate on the Notes shall be:
(A) The Quoted Rate, except as provided in clause (B)
or (C) below;
(B) The APA Rate for (x) the Principal Portion of all
Percentage Interests acquired by the APA Purchasers and not
repurchased under the APA or repaid, and (y) the principal
amount of Notes attributable to CXC Advances or portion
thereof that has been assigned to CXC's Credit Enhancer or in
respect of which a draw has been made under the insurance
policy or surety bond issued under the Insurance Agreement; or
(C) The Default Rate, to the extent provided in
5.01(c).
(ii) CNAI shall deliver an APA Purchase Notice to the Agent
(and the Agent shall promptly deliver such notice to the Trustee and
the Company) on the date of each purchase (or as soon thereafter as
practicable) of a Percentage Interest pursuant to the APA. If an APA
Purchase Notice is delivered to an APA Purchaser not later than 12:00
Noon (New York time) on the third
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LIBO Business Day prior to the purchase date designated in such APA
Purchase Notice, the first Interest Period after the purchase of a
Percentage Interest shall be one month commencing on the date of such
purchase, and the APA Rate for such Interest Period with respect to the
Principal Portion of Percentage Interests purchased pursuant to such
APA Purchase Notice shall be the LIBO Rate for such Interest Period. If
an APA Purchase Notice is delivered to an APA Purchaser later than
12:00 Noon (New York time) on the third LIBO Business Day prior to the
purchase date designated in such APA Purchase Notice, the APA Rate for
the Principal Portion of the Percentage Interest purchased pursuant to
such APA Purchase Notice shall be determined by reference to the Base
Rate until such time as the Applicable Rate is determined by reference
to a LIBO Rate or the Quoted Rate pursuant to this Section 5.01.
(iii) In the event any Borrower Percentage Interests acquired
by the APA Purchasers are repurchased by the SPV pursuant to the APA
from proceeds of CXC Advances, the Applicable Rate with respect to the
principal portion of the Notes equal to the Principal Portion of the
Borrower Percentage Interests so repurchased shall be converted from
the APA Rate to the Quoted Rate effective as of the date of such
repurchase. CNAI shall deliver a copy of any notice of such repurchase
given by the SPV under the APA to the Agent (and the Agent shall
promptly deliver such notice to the Trustee and the Company) on the
date of each such repurchase of a Borrower Percentage Interest (or as
soon thereafter as practicable).
(iv) In the event CXC Advances (or any portion thereof) are
assigned to CXC's Credit Enhancer or a draw is made with respect
thereto under the insurance policy or surety bond issued under the
Insurance Agreement, CNAI shall deliver notice of such event to the
Agent (and the Agent shall promptly deliver such notice to the Trustee
and the Company) as soon as practicable. The APA Rate with respect to
the principal amount of Notes applicable thereto shall be determined by
reference to the Base Rate until such time as the Applicable Rate is
determined by reference to a LIBO Rate pursuant to this Section 5.01.
(b) Certificates. The stated amount of the Certificates shall earn
current yield at a rate per annum equal to the Applicable Rate.
The Applicable Rate on the Certificates, for any Interest Period, shall
be:
(i) The sum of (x) either the LIBO Rate or Base Rate, as
selected pursuant to Section 5.01(d), plus (y) the Applicable Margin,
except as provided in clause (ii) below; or
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(ii) The Default Rate, to the extent provided in Section
5.01(c).
(c) Default Rate. The Notes shall bear interest on the unpaid principal
amount thereof, and the Certificates shall bear yield on the unpaid stated
amount thereof, at a rate per annum equal to the Default Rate during any period
from and after the date any Event of Default has occurred until the earlier of
(x) the date such Event of Default has been waived or cured and (y) the date the
Notes or Certificates, as the case may be, (and other amounts due and owing
under the Operative Documents) have been paid in full. The Notes shall bear
interest on any amount of principal, premium or interest, and the Certificates
shall bear yield on any stated amount, premium or yield, which is not paid as
and when due, from the date such payment was due until such payment (together
with such interest or yield, as the case may be) is paid, at the Default Rate.
In no event shall the interest on the Notes or the yield on the Certificates
exceed the Maximum Rate.
(d) Determination of Rates. The Company shall select whether the
Applicable Rate for the Certificates and the APA Rate for the Notes will be
determined by reference to the LIBO Rate or the Base Rate by giving notice (by
telephone, promptly confirmed in writing) of that determination to the Trustee
and the Agent. Such notice shall be given no later than 12:00 Noon (New York
time) (i) in the case of the LIBO Rate designation on the third LIBO Business
Day before, and (ii) in the case of the Base Rate designation on, each Interest
Setting Date. If the Applicable Rate is to be determined by reference to the
LIBO Rate, the notice shall also specify the Interest Period selected by the
Company for which the LIBO Rate should be determined. If the Company fails to
timely give notice of such selection, the Company shall be deemed to have
selected for the Applicable Rate to be determined by reference to the LIBO Rate
for a one month Interest Period.
(e) Conversion of Applicable Rates. With respect to all Instruments
(other than the portion of the Notes bearing interest at the Quoted Rate) and
subject to the notice requirement set forth in Section 5.01(d) and to the
payment of all Break Costs required pursuant to Section 5.06, the Company may
elect to convert the reference for the Applicable Rate from the LIBO Rate to the
Base Rate, or elect a different Interest Period, on any Business Day with notice
to the Agent. Subject to the notice requirement set forth in Section 5.01(d),
the Company may elect to convert the reference for the Applicable Rate from the
Base Rate to the LIBO Rate on three Business Days prior notice to the Agent.
(f) Number of Elections. All elections by the Company hereunder shall
be subject to the limitations set forth in the definitions of Interest Period,
Interest Setting Date and Payment
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Date. Except as provided in Section 5.01(a)(ii), any Applicable Rate and
Interest Period selected by the Company shall apply to all outstanding Notes.
(g) Computations. All computations of interest and of any fee payable
hereunder and under any other Operative Document (other than computations made
for purposes of determining the Maximum Rate) shall be made by the Agent on the
basis of a year of 360 days (365 or 366 days, in the case of the computation of
interest if the Applicable Rate is determined by reference to the Base Rate),
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fee is payable.
(h) Rate Determination by Agent. On each Interest Setting Date
(applicable to an election of the Company to have the Applicable Rate determined
by reference to the LIBO Rate), the Agent shall calculate the LIBO Rate. Upon
determination of the LIBO Rate on the Interest Setting Date, the Agent shall
promptly notify the Holders and the Trustee and, (i) to the extent the Agent has
received an APA Purchase Notice (and has not received a notice of repurchase of
Borrower Percentage Interests as described in Section 5.01(a)(iii), with respect
thereto, the Agent shall also notify the applicable APA Purchasers and (ii) to
the extent the Agent has received a notice from CNAI as described in Section
5.01(a)(iv), the Agent shall also notify CXC's Credit Enhancer. Each
determination by the Agent of an interest rate hereunder or under any other
Operative Document shall be conclusive and binding for all purposes, absent
manifest error.
(i) Applicable Rate Not To Exceed Maximum Rate. The Applicable Rate
shall not exceed the Maximum Rate provided for in Section 8.17.
(j) Interest Payment. Interest and Certificate Yield accrued and unpaid
on the Notes and Certificates, respectively, shall be payable on each Payment
Date; provided, however, that Certificate Yield which accrues during the
Certificate Yield Capitalization Period shall not be paid in cash on any Payment
Date occurring during the Certificate Yield Capitalization Period and on each
Payment Date occurring during the Certificate Yield Capitalization Period, such
Certificate Yield shall be capitalized and added to the stated amount of such
Certificate Holder's Certificate on which such capitalized Certificate Yield
shall have accrued.
SECTION 5.02. Increased Costs, Illegality, Etc.
(a) LIBO Rate Unavailable. In the event any Note Holder or Certificate
Holder shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties but, with respect to the
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<PAGE> 48
following clause (i), shall be made only after consultation with the Company and
the Agent):
(i) On any Interest Setting Date, that by reason of any
changes arising after the Initial Funding Date, adequate and fair means
do not exist for ascertaining the Applicable Rate by reference to the
LIBO Rate; or
(ii) At any time, that the relevant LIBO Rate shall not
represent the effective pricing for funding or maintaining any of the
Instruments held by such Holder because of (A) any change since the
Initial Funding Date in any applicable Law, including the introduction
of any new Law or governmental rule, regulation, guideline, order,
directive or policy (whether or not having the force of Law) (such as,
for example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent covered by Section 5.02(c) and changes in
United States federal income Tax Laws), or (B) other circumstances
affecting such Holder or the London interbank market or the position of
such Holder in such market (excluding, however, increased Funding Costs
of a specific Holder as a result of the credit standing of such
Holder); or
(iii) At any time, that the determination of the Applicable
Rate by reference to the LIBO Rate has become unlawful (as determined
by such Holder in good faith) or has become impracticable as a result
of a contingency occurring after the Initial Funding Date which
materially and adversely affects the London interbank market;
then, and in any such event, such Holder shall give notice (by telephone,
promptly confirmed in writing) to the Trustee, the Agent and the Company of such
determination. Thereafter (x) in the case of clauses (i) and (ii) above, the
Company shall pay to such Holder, upon written demand therefor, such additional
amounts (in the form of Additional Rent established as an increased rate of, or
a different method of calculating, interest or yield on such Holder's
Instruments or otherwise as such Holder in its sole discretion shall determine)
as shall be required to cause such Holder to receive interest or yield with
respect to its affected Instruments at a rate per annum which shall be equal to
the Applicable Margin in excess of the effective pricing to such Holder to
maintain such Instruments (a written notice as to the additional amounts owed
such Holder, showing the basis for the calculation thereof, submitted to the
Agent, the Trustee and the Company by such Holder shall, absent manifest error,
be final and conclusive and binding upon all of the parties) and (y) in the case
of clause (iii) above, the Company and such Holder shall convert the Applicable
Rate to an APA Rate (in the case of the Notes) or an Applicable Rate (in the
case of the Certificates) to be determined by reference to the Base Rate (as
specified in
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Section 5.02(b)) as promptly as possible and, in any event, within the time
period required by Law.
(b) Base Rate Conversion. At any time that any Holder is affected by
the circumstances described in Section 5.02(a), the Company may (and in the case
of a Holder affected pursuant to Section 5.02(a)(iii) the Company shall) have
the Applicable Rate on the Notes subject to the APA Rate or the Applicable Rate
on the Certificates held by such Holder redetermined by reference to the Base
Rate (rather than the LIBO Rate). If the Applicable Rate with respect to such
Instruments is redetermined, then the Fixed Rent under the Lease shall be
adjusted in a manner designated by the Agent to take such redetermination into
account.
(c) Reserves for Eurocurrency Liabilities. In the event that any Holder
shall determine (which determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto) at any time that by reason of
Regulation D such Holder is required to maintain reserves in respect of
Eurocurrency Liabilities during any period that the Applicable Rate is
determined by reference to the LIBO Rate, then such Holder shall promptly notify
the Trustee, the Agent and the Company (by telephone, promptly confirmed in
writing) specifying the additional amounts required to indemnify such Holder
against the costs of maintaining such reserves (such written notice to provide
in sufficient detail a computation of such additional amounts) and the Company
shall pay such specified amounts as Additional Rent at the time that it is
otherwise required to pay Fixed Rent (or, if later, on demand).
(d) Capital Adequacy. If after the Initial Funding Date, any Holder
shall determine (which determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto) that the introduction of any
applicable Law regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Holder (or its lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority affects or would affect the amount of capital required or expected to
be maintained by such Holder or any Person controlling such Holder and that the
amount of such capital is increased by or based upon the Instruments held by
such Holder or the existence of such Holder's Note Commitment and Certificate
Commitment and other commitments of this type, then from time to time after
demand for reimbursement by such Holder (with a copy to the Trustee and the
Agent), the Company shall pay to such Holder (as Additional Rent) such
additional amount or amounts as will compensate such Holder or such Person in
the light of such circumstances, to the extent that such Holder reasonably
determines such increase in capital to be allocable to
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the Instruments held by such Holder or the existence of such Holder's commitment
hereunder (for purposes of this Section 5.02(d), any increase in capital
allocable to, or compensation attributable to, a period prior to the publication
or effective date of such introduction, change, request, or directive shall be
deemed to be incurred on the later of such publication or effective date). Each
Holder, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 5.02(d), will give prompt written notice
thereof to the Company with a copy to the Trustee and the Agent, which notice
shall show a reasonable basis for calculation of such additional amounts and
shall document that such amounts are generally being charged by such Holder to
other similarly situated Persons under similar credit facilities; provided that
the failure to give any such notice shall not, unless such notice fails to set
forth the information required above or except as otherwise expressly provided
in this Section 5.02(d), release or diminish any of the Company's obligations to
pay additional amounts pursuant to this Section 5.02(d) or the Lease. To the
extent the notice required by this Section 5.02(d) is given by any Holder more
than 90 days after the occurrence of the event giving rise to the additional
costs of the type described in this Section 5.02(d), such Holder shall not be
entitled to compensation under this Section 5.02(d) for any amounts incurred or
accruing for a period longer than 90 days prior to the giving of such notice to
the Company.
(e) Replacement Holder. If any Holder is owed Additional Costs under
Sections 5.02(a) or (d), the Company shall have the right (unless such Holder
withdraws its request for such Additional Costs), if no Default, Event of
Default or Environmental Trigger then exists, to replace such Holder with
another commercial bank reasonably acceptable to the Agent; provided that (i)
all amounts owed to the Holder being replaced under the Operative Documents
(including the principal, stated amount and accrued interest or yield under its
Instruments and all unpaid Additional Costs) shall be paid in full to such
Holder concurrently with such replacement, (ii) the replacement commercial bank
shall execute a document satisfactory to the Agent pursuant to which it becomes
a party hereto with a Note Commitment, a Certificate Commitment and Instruments
in a principal or stated amount equal to that of the Holder being replaced and
(iii) upon such execution of such documents referred to in clause (ii) and the
payment of amounts referred to in clause (i), the replacement commercial bank
shall constitute a "Holder" hereunder with commitments and Instruments as so
specified and the Holder being so replaced shall no longer constitute a "Holder"
hereunder. The provisions of this Section 5.02(e) shall not apply to APA
Purchasers holding Percentage Interests.
(f) Securitization Parties. For purposes of this Section 5.02, (i) each
APA Purchaser holding a Percentage Interest shall, to the extent and for so long
as it holds such
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Percentage Interest, be deemed a Note Holder with respect to the Principal
Portion of such Percentage Interest, and (ii) CXC's Credit Enhancer shall be
deemed a Note Holder to the extent of the principal amount of Notes attributable
to CXC Advances or portion thereof that has been assigned to CXC's Credit
Enhancer or in respect of which a draw has been made under the insurance policy
or surety bond issued under the Insurance Agreement, for so long as it holds any
such interest.
SECTION 5.03. Assignments and Participations.
(a) No Assignment by Company. The Company may not assign its rights or
delegate its obligations under this Agreement without the prior written consent
of the Agent, the Trustee and all of the Note Holders and the Certificate
Holders. Upon an assignment to and assumption by a Person of the rights and
obligations of the Company under and in compliance with this Agreement, the
representations, warranties and covenants of the Company and the conditions
applicable to the Company hereunder shall thereafter apply to such Person and
not to the Company.
(b) Assignment of Instruments and Commitments. In addition to the
assignments permitted under Section 5.03(h), each of the Note Holders and
Certificate Holders may assign to one or more Eligible Assignees all or a
portion of the Instruments then held by it and its rights and obligations
thereunder and under this Agreement (including, without limitation, all or a
portion of its Note Commitment and Certificate Commitment and/or the Advances
under its Notes and/or its Investment under its Certificates) and the other
Operative Documents; provided, however, that (i) each assignment of Certificates
shall be of a constant, and not a varying, percentage of all such rights and
obligations; (ii) each assignment of Notes shall be of a pro rata share of each
series of Notes then held by such Note Holder (it being understood that the
Certificates may be assigned independently of the Notes); (iii) at any time
following the termination of the APA in the case of an assignment of Notes, the
aggregate principal amount of the Notes being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance
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with respect to such assignment) shall in no event be less than $5 million (or
$1 million, with respect to the Certificates) in original principal amount or
stated amount (as the case may be) and in integral multiples of $1 million in
excess thereof; (iv) at any time following the termination of the APA in the
case of an assignment of Notes, no such assignment shall be made if as a result
thereof after giving effect to such assignment, any assigning Note Holder's
aggregate Note Commitment or, after the Completion Date, aggregate principal
amounts of its Outstanding Notes is less than $5 million or any assigning
Certificate Holder's Certificate Commitment or, after the Completion Date,
aggregate stated amount of its Outstanding Certificates is less than $1 million
(in each case determined as of the date of the Assignment and Acceptance with
respect to such assignment); provided, however, that the required denominations
for portions of the Instruments being assigned under this Section 5.03(b) shall
not be construed to prevent an assignment of the entire principal and stated
amount of the Notes then held by a Note Holder or an assignment of all of the
Certificates then held by Certificate Holders; and (v) except in the case of an
assignment pursuant to the APA, the parties to each such assignment shall
execute and deliver to the Agent for its acceptance and recording in the Record
an amendment to this Agreement or a supplemental agreement with the assigning
Note Holder or Certificate Holders in form and substance satisfactory to the
Agent (the "Assignment and Acceptance"), with an administrative fee of $3,000 to
be paid by the Assignor (as defined below) to the Agent and (vi) in the case of
an assignment pursuant to the APA, if the parties to such assignment shall
execute and deliver a Purchaser Assignment (as defined in the APA), a
counterpart original of such Purchaser Assignment shall be delivered to the
Agent for its Recording in the Record and, upon receipt by the Agent, shall be
deemed to be an Assignment and Acceptance for the purposes of this Agreement.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder (the "Assignee") shall be a party hereto and to the other Operative
Documents to which the Note Holders or the Certificate Holders (as the case may
be) are parties and, to the extent that rights and obligations hereunder have
been assigned to and assumed by it, have the rights and obligations of a Note
Holder or Certificate Holders (as the case may be) hereunder and under the
Operative Documents and (y) the assignor thereunder (the "Assignor") shall, to
the extent that rights and obligations hereunder have been assigned by it,
relinquish its rights (other than any rights to indemnification it may have
hereunder or under the Operative Documents) and be released from its obligations
under this Agreement (other than the confidentiality obligations set forth in
Section 8.16 hereof) and the other Operative Documents with respect to all or
such portion, as the case may be, of its Note Commitments or Certificate
Commitments (as the case may be) (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of Assignor's rights and
obligations under the Agreement and the other Operative Documents, such Assignor
shall, except as set forth above, cease to be a party hereto).
(c) Assignment and Acceptance. By executing and delivering an
Assignment and Acceptance, the Assignor thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement and the other Operative Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the other
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Operative Documents or any other instrument or document furnished pursuant
hereto or thereto; (ii) such Assignor makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or the Guarantor or the performance or observance by the Company or the
Guarantor of any of their respective obligations under this Agreement or any
other Operative Document, or any other instrument or document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision with respect to entering into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon the Agent, the Guarantor, the Company, the Trustee, the Collateral
Agent, such Assignor or any other Note Holder or Certificate Holders (as the
case may be) and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee confirms that it is an
Eligible Assignee; (vi) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Operative Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vii) such Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Note Holder or Certificate Holders (as the
case may be).
(d) Record. The Agent shall maintain at its address listed on Schedule
I hereto a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recordation of the names and addresses of the Note
Holders and the Certificate Holders and the Note Commitment and the Certificate
Commitment of, and principal amount of the Advances and stated amount of the
Investment, as applicable, owing to, each Note Holder and Certificate Holder
from time to time (the "Record"). The entries in the Record shall be conclusive
and binding for all purposes, absent manifest error, and the Company, the
Guarantor, the Agent, the Trustee, the Collateral Agent, the Certificate Holder
and the Note Holders may treat each Person whose name is recorded in the Record
as a Note Holder or Certificate Holder (as the case may be) hereunder for all
purposes of this Agreement. The Record shall be available for inspection by the
Company or any Note Holder or Certificate Holders at any reasonable time and
from time to time upon reasonable prior notice.
(e) Assignment Procedures. Upon its receipt of an Assignment and
Acceptance executed by an Assignor and an Assignee representing that it is an
Eligible Assignee, the Agent shall, if such Assignment and Acceptance has been
completed, give prompt
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oral or written notice to the Company and the Trustee and (i) accept such
Assignment and Acceptance, and (ii) record the information contained therein in
the Record. The Agent shall provide the Company with a current list of all Note
Holders and Certificate Holders at the Company's reasonable request but no more
frequently than quarterly.
(f) Participations. Each Note Holder and Certificate Holder may sell
participations to one or more banks or other entities in or to all or a portion
of the Instruments then held by it and its rights and obligations thereunder and
under this Agreement and the other Operative Documents including, without
limitation, participations and other rights assigned or granted by the SPV
pursuant to the APA; provided, however, that (i) the obligations of such Note
Holder or Certificate Holder (as the case may be) under this Agreement
(including all or a portion of its Note Commitment or Certificate Commitment (as
the case may be)) and the other Operative Documents shall remain unchanged; (ii)
such Note Holder shall remain the Holder of such Note, and such Certificate
Holder shall remain the holder of such Certificate, for all purposes under this
Agreement and the other Operative Documents and the Company, the Guarantor, the
Agent, the Collateral Agent, the Trustee and the other Note Holders and
Certificate Holders shall continue to deal solely and directly with such Note
Holder or Certificate Holder (as the case may be) in connection with the rights
and obligations of such Note Holder or Certificate Holder (as the case may be)
under this Agreement; (iii) no such participant (other than an APA Purchaser and
CXC's Credit Enhancer) shall be entitled to receive any greater payment than
such Note Holder or Certificate Holder (as the case may be) would have been
entitled to receive with respect to the rights participated (including, without
limitation, payments for Taxes, Other Charges or Increased Costs) except as a
result of circumstances arising after the date of such participation to the
extent that such circumstances affect other Note Holders or Certificate Holders
(as the case may be) and participants generally; and (iv) no Certificate Holder
and, following the termination of the APA, no Note Holder, shall assign or grant
a participation that conveys to the participant the right to vote or consent
under this Agreement, other than the right to vote upon or consent to any
reduction of the principal or stated amount of or the interest or yield to be
paid on such Person's Instruments or any postponement of any date for the
payment of any amount payable in respect of such Person's Instruments. Any
participations and other rights assigned or granted by the SPV pursuant to the
APA may convey the right to direct the SPV to vote, approve, consent or
otherwise take any action under this Agreement as contemplated by the APA.
(g) Permitted Disclosure; Confidentiality. Any Note Holder or
Certificate Holder may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 5.03, disclose to
the
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assignee or participant or proposed assignee or participant any information
relating to the Company and the Guarantor furnished to such Note Holder or
Certificate Holder (as the case may be) by or on behalf of the Company or the
Guarantor; provided, that prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree in writing with the
Company and the Agent to preserve the confidentiality of any confidential
information relating to the Company or the Guarantor or the transactions
contemplated by this Agreement (including, without limitation, the general
structure of this transaction) received by it from such Note Holder or
Certificate Holder (as the case may be) in a manner consistent with that set
forth in Section 8.16 hereof.
(h) Other Permitted Assignments. Anything in this Section 5.03 to the
contrary notwithstanding (except that at all times the requirements of Section
5.03(g) shall be satisfied), any Note Holder or Certificate Holder may assign
and pledge, as collateral or otherwise, without notice to or consent of the
Company, all or any of the Instruments held by it and any of its rights
(including, without limitation, rights to payment of the principal or stated
amount of and interest or yield on the Instruments) under this Agreement to (i)
in the case of a Note Holder at any time after the termination of the APA, or in
the case of a Certificate Holder at any time, any of its Affiliates and (ii) any
Federal Reserve Bank, the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of the Federal
Reserve Board and any operating circular issued by the Federal Reserve System
and/or the Federal Reserve Bank or otherwise; and (iii) in the case of a Note
Holder, at any time prior to the termination of the APA, (A) the APA Agent for
its benefit and the benefit of the SPV, the APA Purchasers and CXC as provided
in the APA, and (B) following the occurrence of a Finance Facility Default (as
defined in the APA), any other Person; provided, that any payment made by the
Company or the Guarantor to the Trustee or the Trustee for the benefit of such
assigning and/or pledging Note Holder or Certificate Holder (as the case may be)
in accordance with the terms of the Operative Documents shall satisfy the
Company's or the Guarantor's obligations under the Operative Documents in
respect thereof to the extent of such payment. No such assignment and/or pledge
set forth in (ii) above shall release the assigning and/or pledging Note Holder
or Certificate Holder (as the case may be) from its obligations hereunder.
(i) No Assignment by Trustee. The Trustee may not assign its rights or
delegate its obligations under this Agreement and the other Operative Documents
without the consent of the Company and the Agent (which consent shall not be
unreasonably withheld by the Company or the Agent), except to another Trustee in
accordance with the provisions of Section 8.02 of the Declaration.
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(j) Expenses. Except as otherwise expressly provided herein, the
Company shall not be responsible for any fees and expenses incurred in
connection with an assignment or participation pursuant to this Section 5.03 (it
being understood that this Section 5.03(j) will in no way affect the Company's
responsibility to pay for any fees and expenses incurred in connection with an
assignment pursuant to Section 5.02(e) hereof).
SECTION 5.04. Taxes.
(a) Payments Free and Clear. All payments to or for the benefit of the
Trustee, the SPV, CXC, the Agent, the Collateral Agent or the Holders under the
Operative Documents or the Securitization Documents (including payments of Fixed
Rent and Additional Rent under the Lease, payments of principal and interest
under the Notes and payments of the stated amount and yield under the
Certificates) shall be made free and clear of and without deduction for any and
all present or future Charges. If the Company, the Guarantor, the Trustee, the
Agent, the Collateral Agent, the SPV, the Member, CXC, CXC's Credit Enhancer or
any other Person ("Applicable Payor") shall be required by Law to deduct any
Charges from or in respect of any amounts payable under any Operative Document
or Securitization Document to or for the benefit of a Holder, the Trustee, the
Agent, the Collateral Agent, the SPV or CXC ("Applicable Payee"), (A) the
amounts payable by the Company under the Operative Documents (as rent, interest
or otherwise) shall be increased by the amount necessary so that after making
all required deductions for (i) Charges, (including deductions applicable to
additional sums payable under this Section 5.04), and (ii) Excluded Charges
imposed with respect to the increase in amount payable pursuant to this
sentence, each Applicable Payee shall receive an amount equal to the sum it
would have received had no such deductions been made, (B) the Applicable Payor
shall make such deductions and (C) the Applicable Payor shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with all applicable Laws. The Company will indemnify each
Indemnified Party on demand for the full amount of any sums paid by them
pursuant to the second sentence of this Section 5.04(a).
(b) Other Charges. In addition, the Company shall pay any present or
future transfer, stamp or documentary Taxes, excise Taxes or any other property,
transfer, transfer gains or recording, publication or filing Taxes, charges or
similar levies imposed by any Governmental Authority, which arise from (i) the
acquisition, ownership, operation, occupancy, possession, use, non-use,
financing, leasing, subleasing, or disposition or condition of the Property, or
any other property or rights conveyed to the Trustee; (ii) any payment made
under the Operative Documents or the Securitization Documents; (iii) the
execution, delivery or registration of, or otherwise with respect
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to the Operative Documents or the Securitization Documents; (iv) the conveyance
or transfer of the Property (or any portion thereof) in compliance with any
requirement of the Operative Documents or the Securitization Documents; (v) the
recording of any mortgage, deed of trust, financing statement or other
collateral security document in any jurisdiction; or (vi) the transactions
contemplated by any of the Operative Documents or the Securitization Documents
(collectively, the "Other Taxes").
(c) Indemnification. The Company shall pay and indemnify, defend and
hold harmless each Indemnified Party from and against the full amount of all
Charges (including Other Taxes and any Charges imposed by any jurisdiction with
respect to amounts payable under this Section 5.04) required to be paid by such
Indemnified Party on its behalf or on behalf of any other Person, and any
liability (including penalties, interest and expenses, except those arising from
the gross negligence or willful misconduct of such Indemnified Party), arising
therefrom or with respect thereto (including from any obligation to file any Tax
return, report or statement with respect to any such Charges or Other Taxes and
any liability the Trustee may incur or be required to pay pursuant to Section
5.14 of the Interparty Agreement), whether or not such Charges (including Other
Taxes) were correctly or legally asserted (subject to the Lessee's contest
rights under Section 6.01(b) of the Lease). Any payment pursuant to such
indemnification shall be made upon demand by the Indemnified Party.
(d) Receipt. Within thirty (30) days after the date of any deduction of
any Charges pursuant to Section 5.04(a), the Company shall furnish to the
affected Holder, the Agent and the Trustee the original or a certified copy of a
receipt or other documentation evidencing payment thereof.
(e) Withholdings Tax Exemption. Notwithstanding the provisions of
Sections 5.04(a) and (c) to the contrary, the Company shall not be required to
pay to any Holder or APA Purchaser any additional amount pursuant to Section
5.04(a) or indemnify any Holder pursuant to Section 5.04(c) on account of any
Taxes required to be withheld or that are imposed by the United States to the
extent that such Holder or APA Purchaser (i) is not a domestic corporation (as
such term is defined in Section 7701 of the Code) for federal income Tax
purposes and (ii) is not entitled to submit a Prescribed Form to the Company on
the Initial Funding Date (or if such Holder or APA Purchaser is not a Holder or
APA Purchaser hereunder on the Initial Funding Date, on the date such Holder or
APA Purchaser becomes a Holder or APA Purchaser). Each Holder or APA Purchaser
that is not a domestic corporation (as described in clause (i) above) and that
is entitled to a total exemption from withholding evidenced by a Prescribed
Form, shall deliver to the Company, the Trustee and the Agent the Prescribed
Form in compliance with the Code.
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Each Holder or APA Purchaser organized under the laws of a jurisdiction
outside the United States, on or prior to the date of the assignment pursuant to
which it becomes a Holder or APA Purchaser and from time to time thereafter (not
more frequently than once in any 12 month period) if requested by the Company or
the Agent, shall provide the Agent and the Company with the Prescribed Forms or
other documents satisfactory to the Company and the Agent indicating that all
payments to be made to such Holder or APA Purchaser hereunder and under the
Instruments are subject to such Taxes at a rate reduced by an applicable Tax
treaty.
(f) Determinations. The determination of all Charges to be paid or
indemnified against by the Company under this Section 5.04 (including Excluded
Charges to be paid by the Company under the penultimate sentence of Section
5.04(a)) shall be made (in good faith) by the affected Applicable Payor. Such
determination shall, absent manifest error, be final and conclusive and binding
on the Company. In no event shall the Company, in connection with this Section
5.04 or for any other purpose whatsoever under any Operative Document or
Securitization Document have any right to examine any Tax return or related
books and records of any Applicable Payor.
(g) Survival. Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the Company
contained in this Section 5.04 shall survive the payment in full of the
principal and interest on the Notes and Certificates.
SECTION 5.05. Tax Treatment.
(a) Financing. For purposes of federal, foreign, state and local income
Taxes, the parties hereto intend that (i) the Lease be treated as the repayment
and security provisions of a loan to the Company in the amount of the aggregate
principal and stated amount of the Notes and Certificates, and (ii) all payments
of Fixed Rent, Additional Rent and (if applicable) the Termination Value be
treated as payments of principal, interest and other amounts owing with respect
to such loan, respectively.
(b) Tax Reporting by Company. The Company agrees that (i) unless
compelled, in its reasonable opinion, by action of a Governmental Authority,
neither it nor any Affiliate (whether or not consolidated or combined returns
are filed with such Affiliate for federal, state or local income Tax purposes)
will at any time take any action, directly or indirectly, or file any return or
other document inconsistent with the intended income Tax treatment described in
Section 5.05(a), and (ii) it and its Affiliates will file such returns, maintain
such records, take such actions and execute such documents (as reasonably
requested by the Trustee, the Agent or the Holders from time to time) as
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may be appropriate to facilitate the realization of such intended income Tax
treatment.
(c) Tax Reporting by Trustee, Agent and Holders. Each of the Trustee,
the Agent and the Holders agrees that (i) unless compelled, in its reasonable
opinion, by action of a Governmental Authority, neither it nor any Affiliate
(whether or not consolidated or combined returns are filed with such Affiliate
for federal, state or local income Tax purposes) will at any time take any
action, directly or indirectly, or file any return or other document claiming,
or asserting that it is entitled to, the Tax benefits, deductions or credits
which, pursuant to the intended income Tax treatment described in Section
5.05(a), would otherwise be claimed or claimable by the Company, and (ii) it and
its Affiliates will file such returns, maintain such records, take such actions,
and execute such documents (as reasonably requested by the Company from time to
time) as may be appropriate (in the judgment of the Trustee, the Agent or the
applicable Holder) to facilitate the realization of, and as shall be consistent
with, such intended income Tax treatment; provided that neither the Trustee, the
Agent, any Holder nor any of its Affiliates shall be required to (A) take any
action which it believes would be disadvantageous to it, (B) disclose any
portion of any Tax return, or (C) engage or participate in any contest of such
Tax treatment. If any such filing, maintenance, action or execution requested by
the Company would result in any additional Tax liability payable by the
Indemnified Party, or could reasonably be expected to result in liability
payable by it, other than liability ordinarily related to the intended Tax
treatment described in Section 5.05(a), then the Company will provide an
indemnity against such unrelated Tax liability and any liability the Indemnified
Party may incur or be required to pay pursuant to Section 5.14(b) of the
Interparty Agreement satisfactory to the Indemnified Party, in its sole opinion,
exercised reasonably and in good faith.
SECTION 5.06. Compensation. The Company shall compensate each Holder,
upon its written request (which request shall also be sent to the Trustee and
the Agent and shall set forth the basis for requesting such amounts), for all
reasonable Losses and costs (including any interest paid by such Holder to
lenders of funds borrowed by it to purchase or carry its Instruments to the
extent not recovered by the Holder in connection with the re-employment of such
funds), which the Holder may sustain: (a) if, for any reason (other than a
default by such Holder or the Agent), a Funding or a selection affecting the
Applicable Rate does not occur on the date specified therefor in a Requisition
or in a notice delivered pursuant to Section 5.01(d) (as applicable, and whether
or not withdrawn), (b) if any Payment Date, payment under the Operative
Documents or change in the Applicable Rate with respect to such Holder's
Instruments occurs on a date which is not the last day of an Interest Period,
(c) if any payment of the Residual Value Amount or Termination
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Value occurs on a date that is not the last day of an Interest Period or on a
date different from the date required therefor under the Operative Documents or
(d) as a consequence of (i) any other Default, Event of Default or Environmental
Trigger or (ii) an election made by the Company pursuant to Section 5.02(b) or
5.02(e) or (iii) Section 5.09. Any determination by a Holder of Additional Costs
owed under this Section 5.06 shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
SECTION 5.07. Change of Applicable Lending Office. Each Holder agrees
that, upon the occurrence of any event giving rise to the operation of Sections
5.02(a)(ii), 5.02(a)(iii), 5.02(c), 5.02(d) or 5.04 with respect to such Holder,
it will, if requested by the Company, use reasonable efforts (subject to overall
policy considerations of such Holder) to designate another lending office for
its Instruments; provided that no Certificate Holder may be replaced by the SPV;
and provided further that such designation is made on such terms that such
Holder and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Sections. Nothing in this Section 5.07 shall
affect or postpone any of the obligations of the Company or the rights of any
Holder (or apply to any payment claimed by an APA Purchaser or CXC's Credit
Enhancer) provided in Section 5.02 or Section 5.04 or any inability by an APA
Purchaser or CXC's Credit Enhancer to maintain a LIBO Rate with respect to any
Percentage Interest pursuant to Section 5.02(a)(iii).
SECTION 5.08. Sharing of Payments, Etc. If any Note Holder or
Certificate Holder shall obtain any payment (whether voluntary or involuntary),
on account of the Instruments held by it (other than on account of Additional
Costs and other than pursuant to Section 5.05 or any indemnification provision
of the Operative Documents) in excess of its ratable share of payments on
account of the Instruments obtained by all the Note Holders and Certificate
Holders, such Note Holder or Certificate Holder (as the case may be) shall
forthwith purchase from the other Note Holders or Certificate Holders (as the
case may be) such participations in the Instruments held by them as shall be
necessary to cause such purchasing Note Holder or Certificate Holder (as the
case may be) to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Note Holder or Certificate Holder (as the case
may be), such purchase from each Note Holder or Certificate Holder (as the case
may be) shall be rescinded and each Note Holder or Certificate Holder (as the
case may be) shall repay to the purchasing Note Holder or Certificate Holder (as
the case may be) the purchase price to the extent of such Note Holder's or
Certificate Holder's (as the case may be) ratable share (according to the
proportion of (i) the amount of the
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participation purchased from such Note Holder or Certificate Holder (as the case
may be) as a result of such excess payment to (ii) the total amount of the
participations purchased in respect of such excess payment) of such recovery
together with an amount equal to such Note Holder's or Certificate Holder's (as
the case may be) ratable share (according to the proportion of (i) the amount of
such Note Holder's or Certificate Holder's (as the case may be) required
repayment to (ii) the total amount so recovered from the purchasing Note Holder
or Certificate Holder (as the case may be)) of any interest or other amounts
paid or payable by the purchasing Note Holders or Certificate Holders (as the
case may be) in respect of the total amount so recovered. Notwithstanding that
such Note Holders or Certificate Holders (as the case may be) shall have
purchased a participation in such Instruments, the purchasing Note Holder or
Certificate Holder (as the case may be) shall be deemed to have acquired the
voting rights under such Instruments to the extent of, and for the duration of,
such participation, as if such Note Holder or Certificate Holder (as the case
may be) shall have been an Assignee thereof.
SECTION 5.09. Proceeds of Asset Sales. To the extent that there are
Excess Proceeds, the Instruments shall be prepaid and redeemed as follows:
(a) 85% of Excess Proceeds (the "A-Note Prepayment Amount") shall be
applied to prepay, without penalty or premium, the principal of the A-Notes,
together with (x) accrued and unpaid interest on the principal amount prepaid to
the date of prepayment and (y) all other amounts then due and owing in respect
of the A-Notes (including Break Costs, if any), and the A-Note Prepayment Amount
shall be distributed pro rata among all Holders of A-Notes, based on the
principal amount of A-Notes outstanding prior to giving effect to such
prepayment;
(b) 12% of Excess Proceeds (the "B-Note Prepayment Amount") shall be
applied to prepay, without penalty or premium, the principal of the B-Notes,
together with (x) accrued and unpaid interest on the principal amount prepaid to
the date of prepayment and (y) all other amounts then due and owing in respect
of the B-Notes (including Break Costs, if any), and the B-Note Prepayment Amount
shall be distributed pro rata among all Holders of B-Notes, based on the
principal amount of B-Notes outstanding prior to giving effect to such
prepayment;
(c) 3% of Excess Proceeds (the "Certificate Redemption Amount") shall
be applied to redeem, without penalty or premium, the stated amount of the
Certificates, together with (x) accrued and unpaid yield on the stated amount
redeemed to the date of redemption and (y) all other amounts then due and owing
in respect of the Certificates (including Break Costs, if any), and the
Certificate Redemption Amount shall be distributed pro rata among all Holders of
Certificates based on the stated amount of
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Certificates outstanding prior to giving effect to such redemption;
(d) The date for such prepayment and redemption shall be the first
Payment Date immediately after the 270-day period referred to in Section 5.08 of
the Lease (the "Retirement Date");
(e) The Agent, on behalf of the Trustee, shall give notice of such
mandatory prepayment and redemption to the Holders at their addresses shown in
the Record as soon as practicable prior to the Retirement Date. The notice shall
specify the Retirement Date, the aggregate amount of Excess Proceeds to be
applied to the prepayment and redemption of the Instruments and that the
prepayment and redemption is being done pursuant to this Section 5.09;
(f) Interest or yield on the Instruments subject to prepayment or
redemption shall cease to accrue or become due to the extent prepaid or redeemed
on the Retirement Date to the extent of such prepayment or redemption;
(g) On the Retirement Date, the Agent, on behalf of the Trustee, shall
(i) prepay and redeem the Instruments, on a pro rata basis as described above
and (ii) deliver to the Holders of the Instruments payment in an amount, in
Dollars, equal to the A-Note Prepayment Amount, B-Note Prepayment Amount and
Certificate Redemption Amount, as appropriate, by transferring immediately
available funds, to the account of the Instrument Holder in accordance with such
written instructions as the Holder may give to the Agent not later than two
Business Days prior to the due date for such payment.
(h) To the extent that the aggregate principal amount of the
Instruments is less than the Excess Proceeds, such amounts shall first go
towards payment of any outstanding fees or expenses owed by the Company under
the Operative Documents and the Securitization Documents, any unpaid amounts in
respect of Unreimbursed Losses and then to the Company which may use such funds
for general corporate purposes.
(i) Upon completion of such prepayment and redemption, the amount of
Excess Proceeds shall be reset to zero.
SECTION 5.10. Proceeds of Optional Purchase by Lessee of Items of
Property. To the extent that the Company or its designee shall deliver to the
Agent, on behalf of the Trustee, an amount equal to the Termination Value with
respect to any Item of Property ("Optional Purchase Proceeds") pursuant to the
terms and conditions of Section 5.02 of the Lease, the Instruments shall be
prepaid and redeemed as follows:
(a) 85% of the Optional Purchase Proceeds (the "A-Note Proceeds
Amount") shall be applied to prepay, without penalty or
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premium, the principal of the A-Notes, together with (x) accrued and unpaid
interest on the principal amount prepaid to the date of prepayment and (y) all
other amounts then due and owing in respect of the A-Notes (including Break
Costs, if any), and the A-Note Proceeds Amount shall be distributed pro rata
among all Holders of A-Notes, based on the principal amount of A-Notes
outstanding prior to giving effect to such prepayment;
(b) 12% of Optional Purchase Proceeds (the "B-Note Proceeds Amount")
shall be applied to prepay, without penalty or premium, the principal of the
B-Notes, together with (x) accrued and unpaid interest on the principal amount
prepaid to the date of prepayment and (y) all other amounts then due and owing
in respect of the B-Notes (including Break Costs, if any), and the B-Note
Proceeds Amount shall be distributed pro rata among all Holders of B-Notes,
based on the principal amount of B-Notes outstanding prior to giving effect to
such prepayment;
(c) 3% of the Optional Purchase Proceeds (the "Certificate Proceeds
Amount") shall be applied to redeem, without penalty or premium, the stated
amount of the Certificates, together with (x) accrued and unpaid yield on the
stated amount redeemed to the date of redemption and (y) all other amounts then
due and owing in respect of the Certificates (including Break Costs, if any),
and the Certificate Proceeds Amount shall be distributed pro rata among all
Holders of Certificates based on the stated amount of Certificates outstanding
prior to giving effect to such redemption;
(d) The date for such prepayment and redemption shall be on the first
Business Day following the next scheduled Payment Date following the date of the
Trustee's acceptance or deemed acceptance of such Offer to Purchase under the
Lease (the "Prepayment Date");
(e) The Agent, on behalf of the Trustee, shall give notice of such
prepayment and redemption to the Holders at their addresses shown in the Record
as soon as practicable prior to the Prepayment Date. The notice shall specify
the Prepayment Date, the aggregate amount of Optional Sales Proceeds to be
applied to the prepayment and redemption of the Instruments and that the
prepayment and redemption is being done pursuant to this Section 5.10;
(f) Interest or yield on the Instruments subject to prepayment or
redemption shall cease to accrue or become due to the extent prepaid or redeemed
on the Prepayment Date;
(g) On the Prepayment Date, the Agent, on behalf of the Trustee, shall
(i) prepay and redeem the Instruments, on a pro rata basis as described above
and (ii) deliver to the Holders of the Instruments payment in an amount, in
Dollars, equal to the A-Note Proceeds Amount, B-Note Proceeds Amount and
Certificate
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Proceeds Amount, as appropriate, by transferring immediately available funds, to
the account of the Instrument Holder in accordance with such written
instructions as the Holder may give to the Agent not later than two Business
Days prior to the due date for such payment.
(h) To the extent that the aggregate principal amount of the
Instruments is less than the Optional Purchase Proceeds, such amounts shall
first go towards payment of any outstanding fees or expenses owed by the Company
under the Operative Documents and the Securitization Documents, any unpaid
amounts in respect of Unreimbursed Losses and then to the Company which may use
such funds for general corporate purposes.
(i) Upon completion of such prepayment and redemption, the amount of
Optional Purchase Proceeds shall be reset to zero.
SECTION 5.11. Prepayment of Notes and Cancellation of Certificates.
Upon receipt by the Agent, on behalf of the Trustee, of the Termination Value
with respect to all of the Property in accordance with Section 5.01 or 5.03 of
the Lease, the Company may require the Trustee to give notice of prepayment of
the Notes or cancellation of the Certificates in accordance with Section 6.01(c)
of the Declaration.
ARTICLE VI.
EVENTS OF DEFAULT; UNWIND EVENT
SECTION 6.01. Events of Default. If any of the following events shall
occur and be continuing, it shall constitute an "Event of Default" hereunder:
(a) the Company shall fail to pay (i) any Fixed Rent within ten (10)
Business Days after the date on which such payment is due, (ii) the Termination
Value or the Residual Value Amount on the date on which payment is due, (iii)
any Additional Rent or any other sum required to be paid under the Lease within
ten (10) Business Days after the date on which such payment is due, (iv) any
Charges when such payment shall become due or within any grace period provided
for payment of such Charges, subject to the terms of the Lease relating to
permitted contests;
(b) the Company or the Guarantor shall fail to pay any amount required
to be paid by the Company or the Guarantor under any Operative Document, other
than amounts set forth in Section 6.01(a), when the same becomes due and
payable, and any such failure continues for a period of five (5) Business Days;
(c) any representation or warranty made or deemed made by the Guarantor
or the Company in or in connection with any Operative Document to which the
Guarantor or the Company is a
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party, or any representation, warranty, statement or information contained in
any report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any such Operative Document, shall prove to have
been false in any material respect when so made, deemed made or furnished;
(d) default shall be made in the due observance or performance by the
Company or its Subsidiaries of any covenant, condition or agreement contained in
Sections 4.01(a)(i), 4.01(c), 4.01(d), 4.01(e), 4.01(f), 4.01(k), 4.01(l),
4.01(m) and 8.26;
(e) default shall be made in the due observance or performance by the
Company, any of its Subsidiaries or any Relevant Subsidiary of any covenant,
condition or agreement contained in Section 4.01 applicable to it (other than
those specified in Section 6.01(d) above) and such default shall continue
unremedied until the earlier or (i) the date occurring thirty (30) days after
notice thereof to the Company, such Subsidiary or Relevant Subsidiary by the
Agent or the Trustee and (ii) actual knowledge thereof by the Company, such
Subsidiary or Relevant Subsidiary;
(f) the Company or any of its Subsidiaries shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
(other than Indebtedness evidenced by the Operative Documents) in a principal
amount of $60,000,000 or more, when and as the same shall become due and
payable, or (ii) fail to observe or perform any other term, covenant, condition
or agreement contained in any agreement or instrument evidencing or governing
any such Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice, the lapse
of time or both) to cause, such Indebtedness to become due prior to its stated
maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Material Subsidiary of the Company, or of a
substantial part of the property or assets of the Company or any Material
Subsidiary of the Company, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other federal or state bankruptcy,
insolvency, receivership or similar Law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Material Subsidiary of the Company or for a substantial part of
the property or assets of the Company or any Material Subsidiary of the Company
or (iii) the winding-up or liquidation of the Company or any Material Subsidiary
of the Company; and such proceeding or petition shall continue undismissed for
thirty (30) consecutive days or an order or decree approving or ordering any of
the foregoing shall be entered;
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(h) the Company or any Material Subsidiary of the Company shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other federal or state bankruptcy, insolvency, receivership or similar Law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Material Subsidiary of the Company or for a substantial part of the property or
assets of the Company or any Material Subsidiary of the Company, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $60,000,000 shall be rendered against the Company, any of
its Subsidiaries or any combination thereof and the same shall remain
undischarged for a period of thirty (30) consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Company or any of its
Subsidiaries to enforce any such judgment;
(j) any order, judgment or decree shall be entered against the Company
decreeing the dissolution or split up of the Company and such order shall remain
undischarged or unstayed for a period in excess of thirty (30) consecutive days;
(k) any Termination Event with respect to a Plan shall have occurred
and, thirty (30) days after notice thereof shall have been given to the Company
by the Agent, (i) such Termination Event shall still exist and (ii) the sum
(determined as of the date of occurrence of such Termination Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect to which a Termination Event shall have occurred and then exist (or in
the case of a Plan with respect to which a Termination Event described in clause
(ii) of the definition of Termination Event shall have occurred and then exist,
the liability related thereto) is equal to or greater than $5,000,000;
(l) the Company or any ERISA Affiliate of the Company shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date of such
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notification), exceeds $15,000,000 in the aggregate or requires payments
exceeding $10,000,000 per annum;
(m) the Company or any ERISA Affiliate of the Company shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of title IV of
ERISA, if as a result of such reorganization or termination the aggregate annual
contributions of the Company and their respective ERISA Affiliates to all
Multiemployer Plans which are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the respective plan years which include the date hereof by an amount
exceeding $5,000,000;
(n) the Company shall fail to comply with any Insurance Requirement;
(o) the Company shall fail to comply with the Return Conditions within
the time periods provided in the Lease;
(p) the Company shall fail to observe or perform any covenant,
condition or provision under the Lease other than those referred to in Sections
6.01(a), (b), (d), (e), (n) and (o), and such failure shall continue for thirty
(30) days after the earlier of (i) the date on which the Company becomes aware
of such failure or (ii) notice by the Trustee or the Agent to the Company of
such failure and such failure could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;
(q) (i) the Company shall fail to observe or perform any covenant,
condition or provision in any Operative Document other than those referred to in
Sections 6.01(a), (b), (d), (e), (n), (o) and (p), and such failure shall
continue for thirty (30) days after the earlier of (A) the date on which the
Company becomes aware of such failure or (B) notice by the Trustee or the Agent
to the Company or the Guarantor of such failure and such failure could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; or (ii) the Guarantor shall fail to observe or perform any
covenant, condition or other provision in the Guaranty or in any other Operative
Document other than those referred to in Sections 6.01(a), (b), (d), (e), (n),
(o) and (p), and such failure shall continue for thirty (30) days after the
earlier of (A) the date on which either the Company or the Guarantor becomes
aware of such failure or (B) notice by the Trustee or the Agent to the Company
or the Guarantor of such failure;
(r) any Operative Document shall for any reason no longer be in full
force and effect in accordance with its terms, by operation of Law or by any
other means (except if such is the
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result of a purchase of the Property by the Company or its designee pursuant to
the Lease);
(s) the Company shall have abandoned the Property or any part thereof
at any time prior to the Expiration Date;
(t) an "Event of Default" (as defined in any other Operative Document)
under any other Operative Document or a Guaranty Default (as defined in the
Guaranty) shall have occurred;
(u) a Change in Control of the Company shall have occurred;
(v) the Trustee or the Collateral Agent shall cease, for any reason
(other than directly through their own actions or omissions), to have a
perfected security interest in and Lien on all of the Property (other than an
immaterial portion of the Property), superior and prior to the rights of all
third Persons and subject to no other Liens, except in each case for Permitted
Encumbrances and Trust Encumbrances;
(w) any Operative Document or any obligation of the Company thereunder
shall be revoked or repudiated or attempted to be revoked or repudiated by the
Company or the Guarantor;
(x) the Company or the Guarantor shall be prevented or relieved by a
Governmental Authority from performing or observing any monetary payment or
repayment obligation evidenced by the Operative Documents;
(y) the failure or inability to restructure the transactions
contemplated by this Agreement and the other Operative Documents in accordance
with the provisions of Section 4.02(a) hereof; or
(z) the Company shall not have delivered (except to the extent that the
requirements of this Section 6.01(z) shall have been waived by the Majority
Holders with respect to any portion of a Project) to the Agent and the Trustee,
on or prior to the Date Certain, an Officer's Certificate of Completion
substantially in the form of Exhibit B hereto, certifying as to the matters set
forth in Exhibit C hereto (including that the final acquisition, construction,
installation and lighting of the Projects as discussed therein, have been
satisfactorily performed) and the total Acquisition Costs incurred.
SECTION 6.02. Remedies upon an Event of Default. (a) Subject to Section
6.02(e), if an Event of Default has occurred and is continuing, each of the
Trustee and the Collateral Agent may, and if directed in writing by the Majority
Holders shall, exercise any of the rights or remedies granted to it under the
Lease or any of the other Operative Documents, in
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addition to any rights or remedies of such parties set forth in this Agreement.
(b) Subject to Sections 6.02(e) and 6.03, if an Event of Default has
occurred and is continuing, then each of the Trustee, the Collateral Agent, the
Agent and the Note Holders and Certificate Holders may, and if directed in
writing by the Majority Holders shall, take all steps necessary or advisable to
protect and enforce its rights hereunder, whether by action, suit or proceeding
at Law or in equity, for the specific performance of any covenant, condition or
agreement contained herein, or in aid of the execution of any power herein
granted, or for the enforcement of any other appropriate legal or equitable
remedy or otherwise as such party shall deem necessary or advisable.
(c) If the Company shall fail to make any payment or perform any act
required to be made or performed under any Operative Document, the Trustee
(unless a Default, Event of Default or Environmental Trigger has occurred) upon
five (5) Business Days' notice and upon the failure of the Company to commence
and thereafter diligently prosecute the cure of such failure within such period,
without waiving any default or releasing the Company from any obligation may
(but shall be under no obligation to unless directed in writing by the Majority
Holders) make such payment and perform such act for the account and at the
expense of the Company, and may enter upon the Property for such purpose and
take all such action thereon as, at the Trustee's sole discretion, may be
necessary or appropriate therefor. All sums so paid by the Trustee and all costs
and expenses (including reasonable attorneys' fees and expenses so incurred,
together with interest thereon to the extent permitted by Law) shall be paid by
the Company to the Trustee on demand.
(d) No right or remedy hereunder or under any other Operative Document
shall be exclusive of any other right, power or remedy, but shall be cumulative
and in addition to any other right or remedy hereunder or now or hereafter
existing by Law or in equity, and the exercise by a party hereto of any one or
more of such rights, power or remedies shall not preclude the simultaneous
exercise of any or all of such other rights, powers or remedies. Any failure to
insist upon the strict performance of any provision hereof or to exercise any
option, right, power or remedy contained herein shall not constitute a waiver or
relinquishment thereof for the future. The Trustee, the Note Holders, the
Collateral Agent and the Agent shall be entitled to injunctive relief in case of
the violation or attempted or threatened violation of any of the provisions
hereof by any other party hereto, a decree compelling performance of any of the
provisions hereof or any other remedy allowed by Law or in equity.
(e) The Company may at any time prior to exercise of any remedies by
the Trustee, the Collateral Agent, the Agent and
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the Majority Holders elect to cure any Default, Event of Default or
Environmental Trigger by purchasing the Property or Item of Property to the
extent that such purchase would cure (to the Agent's sole satisfaction) such
Default or Event of Default or Environmental Trigger and for an amount equal to
such Property's Termination Value.
SECTION 6.03. Unwind Event. (a) Notwithstanding anything to the
contrary contained herein or in any other Operative Document, any Event of
Default arising under the provisions of Sections 6.01(y) or 6.01(z) to the
extent such Event of Default is the result of an act, circumstance or event
outside the control of the Company shall be deemed an "Unwind Event" and the
provisions of this Section 6.03 shall control.
(b) If an Unwind Event shall have occurred, the Company shall (i)
arrange to sell the Property on behalf of the Trustee to one or more third
parties in arms length transactions, such sale to close on or before ninety (90)
days after the occurrence of such Unwind Event, and pay to the Trustee within
five (5) days of the occurrence of such sale an amount equal to the Residual
Value Amount and shall also pay all Fixed Rent and Additional Rent due and
payable and all costs and expenses incidental to the sale of the Property,
including, without limitation, reasonable fees of Special Counsel and Trustee's
Counsel, provided, that such amount shall not exceed the Residual Value Amount
calculated to include all Rent due and payable and all costs and expenses
incidental to the sale of the Property as if paid by the Company prior thereto;
provided, further that to the extent the Property is not sold on behalf of the
Trustee to a third party, the Company shall, along with paying the Residual
Value Amount, satisfy each of the Return Conditions; or (ii) on or after the
Completion Date, deliver an Offer to Purchase the Property and purchase the
Property upon payment of the Termination Value.
ARTICLE VII.
THE AGENT
SECTION 7.01. Authorization and Action. Each Note Holder and
Certificate Holder hereby appoints and authorizes the Agent to take such action
as the Agent on such Note Holder's and Certificate Holder's behalf (including,
without limitation, the execution of the Interparty Agreement) and to exercise
such powers under this Agreement, the other Operative Documents and the
Securitization Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto
(including any delegation by the Trustee and the Collateral Agent of their
collection and disbursement functions). The Collateral Agent and the Trustee
hereby appoint and authorize the Agent to collect, disburse, invest and
otherwise administer on the Collateral Agent's and the
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Trustee's behalf all funds paid or payable to the Collateral Agent and the
Trustee hereunder or under any of the Operative Documents or the Securitization
Documents, in each case in accordance with the terms thereof, and the Collateral
Agent and the Trustee, in their individual capacities, and in their capacities
as Collateral Agent and Trustee, as applicable, shall not be liable for the
actions or inactions of the Agent in connection with the Agent's collection,
disbursement, investment and administration of such funds and shall have no duty
to supervise the actions of the Agent. As to any matters not expressly provided
for by this Agreement, the other Operative Documents and the Securitization
Documents, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Holders (except actions requiring the consent of all Note Holders
and Certificate Holders, in which case the Agent shall act or refrain from
acting upon instructions consented to by all Note Holders and Certificate
Holders), and such instructions shall be binding upon all Note Holders and
Certificate Holders; provided, however, that the Agent may rely upon the
instructions of the Majority Holders or all Note Holders and Certificate
Holders, as the case may be, shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable Law. The Agent agrees to give to each Note Holder and Certificate
Holder prompt notice of each notice given to it by the Company, the Guarantor,
the Trustee and the Collateral Agent pursuant to the terms of the Operative
Documents and any notice delivered pursuant to the terms of the Securitization
Documents.
SECTION 7.02. Agent's Reliance, Etc. NEITHER THE AGENT NOR ANY OF ITS
AFFILIATES OR SUBSIDIARIES, NOR ANY OF THE DIRECTORS, OFFICERS, AGENTS OR
EMPLOYEES OF ANY OF THEM, SHALL BE LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY IT OR THEM UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
OPERATIVE DOCUMENTS OR THE SECURITIZATION DOCUMENTS, EXCEPT FOR ITS OR THEIR OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE INTENT THAT SUCH PERSONS
SHALL NOT BE LIABLE FOR ANY SUCH ACTION OR INACTION THAT CONSTITUTES ORDINARY
NEGLIGENCE. Without limiting the generality of the foregoing, the Agent: (i) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Note
Holder or Certificate Holder and shall not be responsible to any Note Holder or
Certificate Holder for any statements, warranties or representations made in or
in connection with this Agreement or the other Operative Documents or the
Securitization Documents; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Operative Documents on
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the part of the Company or the Guarantor (other than to monitor payments made by
the Company or the Guarantor to the Agent's account) or to inspect the property
(including the books and records) of the Company or the Guarantor; (iv) shall
not be responsible to any Note Holder or Certificate Holder for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Operative Documents or the Securitization
Documents or any other instrument or document furnished pursuant hereto or
thereto; and (v) shall incur no liability under or in respect of this Agreement
or the other Operative Documents or the Securitization Documents by acting upon
any notice, consent, certificate or other instrument or writing in accordance
with the terms hereof or thereof believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 7.03. Citibank, N.A. and Affiliates. Citibank, N.A. and any of
its Affiliates shall have the same rights and powers under any Instrument, this
Agreement the other Operative Documents as any other Note Holder or Certificate
Holder and may exercise the same as though Citibank, N.A. or such Affiliate were
not the Agent; and the terms "Note Holder" or "Note Holders" shall, unless
otherwise expressly indicated, include Citibank, N.A. in its individual capacity
or any such Affiliate, and Citibank, N.A. and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Company, the Guarantor and any subsidiary thereof
and any Person who may do business with or own securities of the Company,
Guarantor or any subsidiary, all as if Citibank, N.A. were not the Agent and
without any duty to account therefor to the Note Holders and Certificate
Holders.
SECTION 7.04. Note Holder and Certificate Holder Credit Decision. Each
Note Holder and Certificate Holder acknowledges that it has, independently and
without reliance upon the Agent, the Trustee, the Collateral Agent or any other
Note Holder or Certificate Holder and based on the financial statements referred
to in Section 4.01(h) hereof and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Note Holder and Certificate Holder also acknowledges that it
will, independently and without reliance upon the Agent, the Trustee, the
Collateral Agent or any other Note Holder or Certificate Holder and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions with respect to this Agreement or any
of the other Operative Documents or the Securitization Documents.
SECTION 7.05. Indemnification. The Note Holders and the Certificate
Holders agree to indemnify the Agent, ratably according to the respective
aggregate principal and stated amounts of the Instruments then held by each Note
Holder or
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Certificate Holder, as the case may be (or if the Notes and the Certificates
have been fully repaid and retired or if any Instruments are held by Persons
which are not Note Holders or Certificate Holders, ratably according to either
(i) the respective aggregate amounts of their Interim Note Commitments and Note
Commitments or Certificate Commitments, as the case may be, (ii) if all such
Interim Note Commitments and Note Commitments have terminated, the respective
amount of the Note Commitments or Certificate Commitments immediately prior to
the time the Interim Note Commitments and Note Commitments or Certificate
Commitments were terminated or (iii) if all such Certificate Commitments have
terminated, the Certificate Commitment immediately prior to the time the
Certificate Commitments were terminated), from and against any and all Losses of
any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement, any
other Operative Document or the Securitization Documents or any action taken or
omitted by the Agent under this Agreement, any other Operative Document or the
Securitization Documents; provided, that neither any Note Holder nor any
Certificate Holder shall be liable to the Agent for any portion of such Losses
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Note Holder and Certificate Holder agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Operative Document or the
Securitization Documents to the extent that the Agent is not reimbursed for such
expenses by the Company or the Guarantor.
SECTION 7.06. Successor Agent. The Agent may resign at any time as
Agent under this Agreement by giving written notice thereof to the Note Holders,
the Certificate Holders, the Trustee, the Collateral Agent and the Company and
may be removed at any time with or without cause by the Majority Holders. Upon
any such resignation or removal, the Majority Holders, subject to the consent of
the Company (which consent shall not be unreasonably withheld), shall have the
right to appoint a successor Agent which shall be a commercial bank or trust
company organized under the laws of the United States of America or any state
thereof (or otherwise authorized by law to conduct a banking business in the
United States or any State thereof) reasonably acceptable to the Company. If no
successor Agent shall have been so appointed by the Majority Holders, and shall
have accepted such appointment, or any successor Agent appointed shall not have
accepted such appointment, in either case, within 30 days after the retiring
Agent's giving of notice of resignation or the Majority Holders' removal of the
retiring
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Agent, then the retiring Agent may, on behalf of the Note Holders and
Certificate Holders, appoint a successor Agent, which shall be a Note Holder
which is a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $250,000,000. The appointment of any successor Agent shall comply with
Section 16(d) of the APA. Upon the acceptance of any appointment as Agent under
this Agreement by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and shall function as the Agent under this Agreement, and
the retiring Agent shall be discharged from its duties and obligations as Agent
(other than those which arise prior to such Agent's removal or resignation)
under this Agreement. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01. Survival. Except as otherwise expressly provided, the
parties' obligations under this Agreement and in any certificate or other
instrument delivered by any party or on such party's behalf pursuant to this
Agreement shall terminate upon the payment in full of all amounts then and
thereafter due on the Notes and the Certificates and under any of the Operative
Documents and the Securitization Documents . The confidentiality and all
indemnification provisions contained in this Agreement, including the provisions
of Sections 5.04, 5.05, 8.06, 8.13, 8.14 and 8.16 hereof, shall each survive the
payment in full of all amounts then and thereafter due on the Notes and the
Certificates and due under any of the Operative Documents or Securitization
Documents. Such rights and obligations shall survive the execution and delivery
of any Operative Document, Securitization Document, any issuance or disposition
of any of the Notes, the Certificates or distribution relating thereto, any
disposition of any interest in the Property or the termination of any Operative
Document or Securitization Document and shall continue in effect regardless of
any investigation made by or on behalf of any party hereto and notwithstanding
that any party may waive compliance with any other provision of any Operative
Document or Securitization Document. To the extent that any payments made under
the Operative Documents or Securitization Documents are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver or other Person under any
Bankruptcy Law, common law or equitable cause, then to such extent, the
obligation so satisfied shall be revived and continue as if such payment had not
been received and the rights, powers
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and remedies under this Agreement and each Operative Document and Securitization
Document shall continue in full force and effect. In such event, the Operative
Documents and Securitization Documents shall be automatically reinstated and the
Company and the Guarantor shall take such action as may be reasonably requested
by the Agent and the Holders to effect such reinstatement.
SECTION 8.02. Notices. Unless otherwise specifically provided in any
Operative Document or Securitization Document, all notices, consents,
directions, approvals, instructions, requests and other communications given to
any party hereto under any Operative Document or Securitization Document shall
be in writing to such party at the address set forth in Schedule I hereto or at
such other address as such party shall designate by notice to each of the other
parties hereto and may be personally delivered (including delivery by private
courier services) or by telecopy (with a copy of such notice sent by private
courier service for overnight delivery or by registered or certified mail), to
the party entitled thereto, and shall be deemed to be duly given or made when
delivered by hand unless such day is not a Business Day, in which case such
delivery shall be deemed to be made as of the next succeeding Business Day or in
the case of telecopy (with a copy of such notice sent by private courier service
for overnight delivery or by registered or certified mail), when sent, so long
as it was received during normal business hours of the receiving party on a
Business Day and otherwise such delivery shall be deemed to be made as of the
next succeeding Business Day.
SECTION 8.03. Severability. If any provision hereof or the application
thereof to any Person or circumstance shall be invalid, illegal or
unenforceable, the remaining provisions or the application of such provision to
Persons or circumstances other than those as to which it is invalid or
enforceable, shall continue to be valid, legal and enforceable.
SECTION 8.04. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or of any other Operative Document, nor consent to any
departure by the Company or the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority Holders
(unless the Agent is authorized hereunder or under any Operative Document to act
without joinder of the Majority Holders, in which case the Agent may take such
action), the Company, the Guarantor, the Trustee and the Collateral Agent and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that, in addition
to the requirements above, no amendment, waiver or consent shall, unless in
writing and signed by all of the Note Holders and the Certificate Holders, do
any of the following: (a) increase the Interim Note Commitment of the Note
Holders or the Certificate Commitment or subject the Note Holders or the
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Certificate Holders to any additional obligations, (b) reduce the Applicable
Rate or any fees or other amounts payable hereunder or under any other Operative
Document or Securitization Document, (c) take action which requires the signing
by all the Note Holders or the Certificate Holders pursuant to the terms of this
Agreement, (d) postpone any date fixed for any payment of principal or stated
amount of, or interest or Distributions on the Notes or the Certificates or any
fees or other amounts payable under the Declaration, (e) release, postpone or
reduce the payment obligations of the Guarantor under the Guaranty, (f) release
any of the Liens created pursuant to the Operative Documents, or as a result of
the purchase of the Property or any portion thereof by the Company in compliance
with the Operative Documents, (g) amend this Section 8.04, (h) amend the
definition of Majority Holder or (i) amend the definition of Eligible Assignee
or any of the provisions of Section 5.03, provided, further, that in addition to
the requirements above, (A) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Trustee, the Note Holders and
the Certificate Holders required above to take such action, affect the rights or
duties of the Agent under this Agreement or any of the Operative Documents or
Securitization Documents and (B) no amendment, waiver or consent shall, unless
in writing and signed by the Collateral Agent in addition to the Trustee and the
Note Holders required above to take such action, affect the rights or duties of
the Collateral Agent under this Agreement or any of the Operative Documents. Any
action to be taken or consent to be given by the SPV pursuant to this Section
8.04 is subject to the terms and provisions of Section 11 of the APA.
SECTION 8.05. Headings. The table of contents and headings of the
Articles, Sections and subsections of this Agreement are for convenience only
and shall not affect the meaning of this Agreement.
SECTION 8.06. Compliance Responsibility. None of the Trustee
(notwithstanding the representations and warranties of SSBTC in Section 3.02
hereof), the Collateral Agent (notwithstanding the representations and
warranties of State Street in Section 3.03 hereof), the Agent, or any Note
Holder, any APA Purchaser or any Certificate Holder shall have any
responsibility for compliance by the Property or by the Company or the Guarantor
with any Law (including any FCC regulations), engineering standards or practices
or other matters. The Company expressly assumes such responsibilities and shall
indemnify and hold harmless the Trustee, the Collateral Agent, the Agent, the
Note Holders, the APA Purchasers and the Certificate Holders with respect
thereto in the manner provided in Section 8.14 hereof.
SECTION 8.07. Definitions. Except as otherwise expressly provided
herein, capitalized terms used in this Agreement and all schedules and exhibits
hereto shall have the respective meanings given in Appendix A hereto.
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SECTION 8.08. Benefit. The parties hereto and their permitted
successors and assigns, but no others (except as expressly set forth in this
Section 8.08), shall be bound hereby and entitled to the benefit hereof. The APA
Purchasers, CXC and CXC's Credit Enhancer shall be entitled to the benefit of
all provisions of this Agreement that specifically (whether directly or by
reference) include the APA Purchasers, CXC or CXC's Credit Enhancer, as the case
may be.
SECTION 8.09. Place of Payment. So long as a Note Holder, Certificate
Holder or an Affiliate of a Note Holder or Certificate Holder or a bank or
institutional investor is the owner of any beneficial interest in the
Instruments, the Agent will cause all amounts to be paid by the Trustee which
become due and payable or owing on such beneficial interest in the Notes to be
paid by bank wire transfer of immediately available funds or, at the option of
such Note Holder or Certificate Holder, such Affiliate, bank or institutional
investor, by check of the Agent (for the account of the Trustee) duly mailed,
delivered or made at the address or account referenced in Schedule I hereto or
provided in writing by such Person to the Agent, in all cases without
presentation of the underlying Instrument, provided, that upon receipt of
payment in full the underlying Instruments shall be returned by the respective
Holders thereof to the Trustee marked "canceled".
SECTION 8.10. Counterparts. The parties may sign this Agreement in any
number of counterparts and on separate counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
SECTION 8.11. Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL
BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the non-exclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Operative
Document or Securitization Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or
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proceeding relating to this Agreement, the Notes or the Certificates in the
courts of any jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Operative
Document or Securitization Document in any New York State or federal court
located in New York City. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.12. Time; Business Day. (a) TIME IS OF THE ESSENCE IN THIS
AGREEMENT, AND THE TERMS HEREOF SHALL BE SO CONSTRUED.
(b) If the date scheduled for any payment or action under any Operative
Document or Securitization Document shall not be a Business Day, then (unless
such Operative Document or Securitization Document provides otherwise) such
payment shall be made or such action shall be taken on the next succeeding
Business Day.
SECTION 8.13. Transaction Costs; Fees. Whether or not the transactions
contemplated by this Agreement are consummated, the Company shall pay on demand
and hold the Trustee, the Collateral Agent, the Agent, CXC, CXC's Credit
Enhancer, the Note Holders, the APA Purchasers and the Certificate Holders
harmless against any liability for the payment of all indemnity obligations,
charges, fees, expenses, disbursements and out-of-pocket costs incurred before,
on or after the date hereof in connection with the preparation, execution,
delivery, administration, performance and enforcement of any Operative Document,
Securitization Document, or any other agreement, arrangement, document or paper
relating to the transactions contemplated hereby or any modification, amendment
or supplement thereto or any waivers or enforcement thereof, including, but not
limited to:
(i) the reasonable fees, expenses and disbursements of each of
the Collateral Agent, the Agent, the Trustee, Special Counsel,
Trustee's Counsel, Collateral Agent's special counsel, CXC's Credit
Enhancer's special counsel, the SPV's special counsel, CXC's special
counsel, the Appraiser, the Independent Engineer and the Environmental
Consultant for services rendered to such parties in connection with
such transactions;
(ii) the reasonable expenses of the Collateral Agent, the
Trustee and the Agent incurred in connection with such transactions;
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(iii) the reasonable fees and expenses of the Collateral
Agent's special counsel, Special Counsel (and any local or regulatory
counsel), and Trustee's Counsel with respect to advising the Collateral
Agent, the Note Holders, Certificate Holders and the Trustee,
respectively, as to their rights and responsibilities under the
Operative Documents, and all reasonable costs and expenses, if any
(including reasonable attorneys' fees and expenses), in connection with
the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Operative Documents;
(iv) all fees and expenses of the Agent or the Collateral
Agent in connection with any printing and other document reproduction
and distribution expenses, stamp or other similar Taxes, fees or
excises, including interest and penalties, and all filing fees, Taxes,
and expenses in connection with (i) the recording or filing of
instruments and financing statements in connection with the
transactions described in this Agreement and (ii) the creation,
perfection, and maintenance of the security interests created by the
Operative Documents;
(v) the reasonable fees and expenses of the Collateral Agent
and the Agent in connection with the initial placement of the Notes and
Certificates;
(vi) the reasonable fees, expenses and disbursements of any
local or regulatory counsel of the Agent or Special Counsel, if any,
for services rendered during the term of the Operative Documents in
connection with the decision to file or not to file and the filing,
continuation or perfection of any mortgages, deeds of trust, the
Security Agreement and any UCC-1 financing statements or any other
document or instrument relating to the creation, perfection,
preservation protection, validity, effectiveness or enforcement
thereof; and
(vii) the fees and expenses as set forth in Schedule II hereto
and in the Securitization Fee Letter.
SECTION 8.14. INDEMNIFICATION. (a) THE COMPANY SHALL PAY, PROTECT,
INDEMNIFY AND HOLD HARMLESS EACH INDEMNIFIED PARTY FROM AND AGAINST, AND SHALL
DEFEND ALL ACTIONS AGAINST ANY INDEMNIFIED PARTY WITH RESPECT TO, ANY AND ALL
LIABILITIES (INCLUDING BUT NOT LIMITED TO LIABILITY FOR PATENT OR TRADEMARK
INFRINGEMENT OR MISUSE OR MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY RIGHTS,
LIABILITY IN TORT (STRICT OR OTHERWISE)), LOSSES, DAMAGES, COSTS, EXPENSES
(INCLUDING BUT NOT LIMITED TO ATTORNEYS' FEES AND EXPENSES OF COUNSEL), CAUSES
OF ACTION, SUITS, CLAIMS, DEMANDS OR JUDGMENTS OF ANY NATURE WHATSOEVER (WHETHER
OR NOT THE INDEMNIFIED PARTY IS NAMED AS OR OTHERWISE IS A PARTY THERETO)
(COLLECTIVELY, "LOSSES") WITH RESPECT TO THE
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TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OPERATIVE DOCUMENTS BASED
UPON, ARISING OUT OF OR OTHERWISE RELATING TO OR IN RESPECT OF:
(i) ANY INJURY TO, OR DEATH OF, ANY NATURAL PERSON, OR DAMAGE
TO OR LOSS OF PROPERTY, OR ANY MATTERS OCCURRING ON OR RESULTING FROM
ACTIVITIES USING, ON OR RELATING TO THE PROPERTY OR ANY PART THEREOF;
(ii) THE ACQUISITION, OWNERSHIP, LEASING, SUBLEASING,
CONSTRUCTION, OPERATION, MANAGEMENT, MAINTENANCE, OCCUPANCY,
POSSESSION, USE, NON-USE OR CONDITION OF THE PROPERTY OR ANY PART
THEREOF;
(iii) ANY VIOLATION BY THE COMPANY OF ANY OF THE TERMS OR
CONDITIONS OF THIS AGREEMENT, THE LEASE, THE SERVICES AGREEMENT OR ANY
OF THE OTHER OPERATIVE DOCUMENTS OR THE SECURITIZATION DOCUMENTS;
(iv) ANY DEFAULT, EVENT OF DEFAULT OR ENVIRONMENTAL TRIGGER;
(v) ANY ACT OR OMISSION OF THE COMPANY OR THE GUARANTOR OR ANY
OF THEIR AGENTS, CONTRACTORS, LICENSEES, SUBLESSEES, INVITEES,
REPRESENTATIVES OR ANY PERSON FOR WHOSE CONDUCT THE COMPANY OR THE
GUARANTOR IS LEGALLY RESPONSIBLE OR OF THE OWNER IN SO FAR AS IT IS
ACTING ON BEHALF OF OR PURSUANT TO DIRECTIONS GIVEN BY OR ON BEHALF OF
ANY OF THE FOREGOING PERSONS OR SUCH ACT OR OMISSION IS CONTEMPLATED BY
THE TERMS OF THE OPERATIVE DOCUMENTS ON OR RELATING TO OR IN CONNECTION
WITH THE ACQUISITION, OWNERSHIP, LEASING, SUBLEASING, CONSTRUCTION,
OPERATION, MANAGEMENT, MAINTENANCE, OCCUPANCY, POSSESSION, USE, NON-USE
OR CONDITION OF THE PROPERTY OR ANY PART THEREOF;
(vi) THE PERFORMANCE OF ANY LABOR OR SERVICES OR FURNISHING OF
ANY MATERIALS OR OTHER PROPERTY IN RESPECT OF THE PROPERTY OR ANY PART
THEREOF;
(vii) ANY LIENS (INCLUDING, WITHOUT LIMITATION, ANY PERMITTED
ENCUMBRANCES) ON OR WITH RESPECT OF AND TO THE PROPERTY OR ANY PART
THEREOF;
(viii) ANY PERMITTED CONTEST REFERRED TO IN THE LEASE;
(ix) ANY BREACH, VIOLATION OR DEFAULT BY THE COMPANY OR ANY
RELEVANT SUBSIDIARIES OF ANY CONTRACT OR AGREEMENT DIRECTLY OR
INDIRECTLY RELATING TO THE PROPERTY OR THE TRANSACTIONS TO BE
CONSUMMATED PURSUANT TO THE OPERATIVE DOCUMENTS OR THE SECURITIZATION
DOCUMENTS TO WHICH THE COMPANY OR ANY RELEVANT SUBSIDIARY IS A PARTY
(OR ANY TRANSACTIONS IN WHICH ANY PROCEEDS OF ALL OR ANY PART OF
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THE PROCEEDS OF THE INSTRUMENTS ARE APPLIED) OR OF ANY LEGAL
REQUIREMENT OR INSURANCE REQUIREMENT;
(x) ANY TERMINATION OR INVALIDITY OF THE TRUSTEE'S INTEREST IN
THE PROPERTY OR ANY PART THEREOF (OTHER THAN AS A RESULT OF THE
PURCHASE OF THE PROPERTY BY THE COMPANY OR ITS DESIGNEE IN ACCORDANCE
WITH THE LEASE);
(xi) THE NON-OCCURRENCE OF ANY FUNDING AND BREAK COSTS
ASSOCIATED WITH ANY FUNDING BY THE NOTE HOLDERS OR THE CERTIFICATE
HOLDERS (OR ON THE NOTE HOLDERS' OR CERTIFICATE HOLDERS' BEHALF BY THE
SPV OR THE APA PURCHASERS) OF ADVANCES OR THE INVESTMENT ANTICIPATED TO
BE MADE ON ANY FUNDING DATE IN EACH CASE AFFECTING ANY INDEMNIFIED
PARTY, THE PROPERTY OR ANY PART THEREOF OR THE OWNERSHIP, MANAGEMENT,
MAINTENANCE, OCCUPANCY, POSSESSION, USE, NON-USE OR CONDITION THEREOF;
(xii) ANY ACTUAL OR PROPOSED USE BY THE COMPANY OR ANY OTHER
PERSON OF THE PROCEEDS OF ANY ADVANCE OR INVESTMENT;
(xiii) THE EXECUTION, DELIVERY, AND PERFORMANCE OF (OR IN ANY
OTHER WAY RELATED TO OR ARISING OUT OF) THE OPERATIVE DOCUMENTS OR
FACILITY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY
VIOLATION OR BREACH OF SUCH DOCUMENTS AND AGREEMENTS;
(xiv) THE OPERATIONS OF THE BUSINESS OF THE COMPANY, THE
RELEVANT SUBSIDIARIES AND THEIR AFFILIATES;
(xv) THE IMPAIRMENT OF ALL ACCESS TO AND FROM THE PROPERTY OR
ANY PART THEREOF AS REQUIRED FOR THE EFFICIENT AND PROPER OPERATION OF
THE PROPERTY;
(xvi) NOT FILING AND RECORDING, OR NOT CAUSING THE FILING AND
RECORDING OF, THE LEASE (OR A MEMORANDUM THEREOF), ANY MORTGAGE, THE
SECURITY AGREEMENT, ANY UCC-1 FINANCING STATEMENT RELATING TO THE
FOREGOING, OR ANY OTHER DOCUMENT OR INSTRUMENT THAT MAY BE REQUIRED IN
ORDER TO PROTECT THE VALIDITY AND EFFECTIVENESS THEREOF OR TO
ESTABLISH, CREATE, PERFECT, PRESERVE, PROTECT OR ENFORCE THE RIGHTS OF
THE PARTIES THERETO OR THE INTERESTS OF THE TRUSTEE AND THE COLLATERAL
AGENT IN THE PROPERTY (INCLUDING, BUT NOT LIMITED TO, LOSSES RESULTING
FROM THE FAILURE OF THE COLLATERAL AGENT TO HAVE A FIRST PRIORITY
SECURITY INTEREST IN THE COLLATERAL UNDER THE SECURITY AGREEMENT);
(xvii) ANY DEFECT OR DEFICIENCY IN OR ANY LACK OF TITLE TO OR
RIGHT OF OCCUPANCY, ACCESS, POSSESSION OR USE OF ANY REAL PROPERTY OR
OTHER PROPERTY WHICH DEFECT, DEFICIENCY OR ABSENCE ADVERSELY AFFECTS
(A) THE VALUE, MARKETABILITY, CONDITION, USE, OWNERSHIP, LEASING,
SUBLEASING,
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CONSTRUCTION, OPERATION, MANAGEMENT, MAINTENANCE, OCCUPANCY,
POSSESSION, SALE OR DISPOSITION OF SUCH REAL PROPERTY OR OTHER PROPERTY
AS PART OF OR IN CONNECTION WITH THE OPERATION OF THE
TELECOMMUNICATIONS BUSINESS OR OTHER TRANSACTIONS CONTEMPLATED BY THE
OPERATIVE DOCUMENTS OR (B) THE PROPER AND EFFICIENT OPERATION OF THE
NETWORK ASSETS (OR ANY PORTION THEREOF), IN EITHER CASE, UPON ELECTION
OF THE COMPANY TO TERMINATE THE LEASE PURSUANT TO SECTION 3.03(a)(II)
OF THE LEASE, OR UPON OTHER TERMINATION OF THE LEASE, PROVIDED THAT THE
COMPANY OF ITS DESIGNEE DOES NOT PURCHASE THE PROPERTY;
(xviii) ANY BREACH, VIOLATION OR DEFAULT BY THE COMPANY OR ANY
RELEVANT SUBSIDIARIES OF ANY CAPACITY LEASES OF THE COMPANY OR ANY
RELEVANT SUBSIDIARIES, UPON ELECTION OF THE COMPANY TO TERMINATE THE
LEASE PURSUANT TO SECTION 3.03(a)(II) OF THE LEASE, OR UPON OTHER
TERMINATION OF THE LEASE, PROVIDED THAT THE COMPANY OF ITS DESIGNEE
DOES NOT PURCHASE THE PROPERTY; OR
(xix) ANY LOSS THE TRUSTEE MAY INCUR OR BE REQUIRED TO PAY
UNDER SECTION 5.13 OF THE INTERPARTY AGREEMENT, INCLUDING IN RESPECT OF
ITS INDEMNIFICATION OF THE INDEMNIFIED PARTIES (AS DEFINED THEREIN) FOR
THEIR LOSSES (AS DEFINED THEREIN) IN RESPECT OF MATTERS OF THE TYPE
REFERRED TO IN THE PRECEDING CLAUSES OF THIS SECTION 8.14(a) (INCLUDING
WITHOUT LIMITATION THE FEES AND EXPENSES OF SEPARATE COUNSEL FOR THE
INDEMNIFIED PARTIES (AS DEFINED THEREIN)), PLUS AN AMOUNT SUFFICIENT TO
REIMBURSE THE TRUSTEE FOR ANY TAX OF ANY KIND INCURRED OR REQUIRED TO
BE PAID BY THE TRUSTEE IN CONNECTION WITH THE RECEIPT OF
INDEMNIFICATION AMOUNTS (OR TAX GROSS-UP AMOUNTS) HEREUNDER.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR THE
OTHER OPERATIVE DOCUMENTS, THE COMPANY SHALL NOT BE REQUIRED TO INDEMNIFY OR
HOLD HARMLESS ANY INDEMNIFIED PARTY AGAINST ANY CLAIMS (X) TO THE EXTENT ARISING
SOLELY AS A RESULT OF THE FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PARTY OR (Y) TO THE EXTENT OF COSTS ARISING FROM THIRD-PARTY DAMAGE
CLAIMS OTHER THAN THOSE THIRD-PARTY CLAIMS CAUSED BY OR RESULTING FROM THE
ACTIONS OR FAILURES TO ACT OF THE COMPANY OR ANY OF ITS SUBCONTRACTORS WHILE IN
POSSESSION OR CONTROL OF THE PROPERTY (OR ANY PART THEREOF); PROVIDED THAT (1)
THIS CLAUSE (Y) SHALL CEASE TO HAVE ANY FORCE OR EFFECT ON AND AFTER THE
COMPLETION DATE AND (2) THIRD-PARTY CLAIMS CAUSED BY OR RESULTING FROM THE
COMPANY'S ACTIONS OR FAILURES TO ACT PURSUANT TO (OR ANY VIOLATION OR BREACH OF)
SECTION 1 OF THE SERVICES AGREEMENT SHALL BE DEEMED ACTIONS OR FAILURES TO ACT
OF THE COMPANY OR ITS SUBCONTRACTORS WHILE IN POSSESSION OR CONTROL OF THE
PROPERTY (OR ANY PART THEREOF) AND SHALL NOT BE EXCLUDED FROM THE COMPANY'S
INDEMNIFICATION OBLIGATIONS HEREUNDER. FOR PURPOSES OF THIS SECTION 8.14,
"INDEMNIFIED PARTY" MEANS EACH OF
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THE TRUSTEE (SOLELY IN ITS CAPACITY AS TRUSTEE) AND ITS SUCCESSORS AND ASSIGNS.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE COMPANY SHALL NOT
BE REQUIRED TO INDEMNIFY OR HOLD HARMLESS ANY INDEMNIFIED PARTY FOR AMOUNTS IN
EXCESS OF THE RESIDUAL VALUE AMOUNT IN RESPECT OF A CLAIM FOR INDEMNIFICATION
FOR AN EVENT OF DEFAULT UNDER SECTION 6.01(z) OF THIS AGREEMENT.
(b) THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 8.14 SHALL
SURVIVE THE EXPIRATION OR ANY TERMINATION OF THIS AGREEMENT, THE LEASE OR ANY
OTHER OPERATIVE DOCUMENT (WHETHER BY OPERATION OF LAW OR OTHERWISE) FOR ALL
MATTERS DESCRIBED IN THIS SECTION 8.14 WHICH OCCUR OR ARISE PRIOR TO SUCH
EXPIRATION OR TERMINATION OR ARISE OUT OF OR RESULT FROM FACTS, EVENTS, CLAIMS,
LIABILITIES, ACTIONS OR CONDITIONS OCCURRING, ARISING OR EXISTING ON OR BEFORE
SUCH EXPIRATION OR TERMINATION. IN CASE ANY ACTION SHALL BE BROUGHT AGAINST ANY
INDEMNIFIED PARTY IN RESPECT OF WHICH INDEMNITY MAY BE SOUGHT AGAINST THE
COMPANY, SUCH INDEMNIFIED PARTY SHALL PROMPTLY NOTIFY THE COMPANY IN WRITING,
BUT FAILURE TO GIVE SUCH PROMPT NOTICE SHALL NOT RELIEVE THE COMPANY FROM ANY
LIABILITY HEREUNDER. IF NO DEFAULT OR EVENT OF DEFAULT OR ENVIRONMENTAL TRIGGER
HAS OCCURRED AND IS CONTINUING HEREUNDER, THE COMPANY, AT ITS OWN EXPENSE, MAY
ELECT TO ASSUME THE DEFENSE OF ANY ACTION BROUGHT AGAINST AN INDEMNIFIED PARTY,
INCLUDING THE EMPLOYMENT OF COUNSEL REASONABLY SATISFACTORY TO SUCH INDEMNIFIED
PARTY AND THE PAYMENT BY THE COMPANY OF ALL EXPENSES THEREOF. ANY INDEMNIFIED
PARTY SHALL HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL AT ITS EXPENSE IN ANY SUCH
ACTION AND TO CONSULT WITH THE COMPANY REGARDING THE DEFENSE THEREOF; PROVIDED,
HOWEVER, THAT, EXCEPT AS OTHERWISE PROVIDED BELOW, THE COMPANY SHALL AT ALL
TIMES CONTROL SUCH DEFENSE. IF THE COMPANY SHALL HAVE FAILED TO EMPLOY COUNSEL
REASONABLY SATISFACTORY TO SUCH INDEMNIFIED PARTY, THE FEES AND EXPENSES OF
COUNSEL TO EACH INDEMNIFIED PARTY SHALL BE PAID BY THE COMPANY. IF THE COMPANY
SHALL ELECT IN WRITING NOT TO ASSUME THE DEFENSE OR SHALL FAIL TO PROSECUTE
DILIGENTLY SUCH DEFENSE THEREOF, AN INDEMNIFIED PARTY MAY, AFTER WRITTEN NOTICE
TO THE COMPANY AND THE COMPANY'S FAILURE TO REMEDY PROMPTLY THE SAME, ASSUME THE
DEFENSE THEREOF, INCLUDING THE EMPLOYMENT OF COUNSEL, IN WHICH CASE THE COMPANY
SHALL PAY ALL OF THE LOSSES OF SUCH INDEMNIFIED PARTY INCURRED IN RESPECT OF
SUCH DEFENSE. IF ANY INDEMNIFIED PARTY SHALL HAVE BEEN ADVISED BY COUNSEL CHOSEN
BY IT THAT THERE MAY BE ONE OR MORE LEGAL DEFENSES AVAILABLE TO SUCH INDEMNIFIED
PARTY THAT ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE TO THE COMPANY OR
IT WOULD BE INAPPROPRIATE FOR SUCH COUNSEL TO CONTINUE TO REPRESENT SUCH
INDEMNIFIED PARTY IN RESPECT OF A PARTICULAR LEGAL OR FACTUAL ISSUE OR
OTHERWISE, EACH OF THE INDEMNIFIED PARTY AND THE COMPANY MAY RETAIN ADDITIONAL
AND SEPARATE COUNSEL TO REPRESENT IT OR, AT ITS OPTION, ASSUME THE DEFENSE OF
SUCH ACTION AND THE COMPANY WILL REIMBURSE SUCH INDEMNIFIED PARTY FOR THE
REASONABLE FEES AND EXPENSES OF ANY COUNSEL RETAINED BY THE INDEMNIFIED PARTY.
THE COMPANY SHALL NOT BE LIABLE FOR ANY SETTLEMENT OF ANY ACTION WITHOUT ITS
WRITTEN CONSENT. NO
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SETTLEMENT OF ANY SUCH ACTION MAY BE MADE BY THE COMPANY WITHOUT THE INDEMNIFIED
PARTY'S WRITTEN CONSENT; PROVIDED, HOWEVER, SUCH CONSENT SHALL NOT BE NECESSARY
IF THE SETTLEMENT RESULTS IN AN IRREVOCABLE AND UNCONDITIONAL RELEASE OF THE
INDEMNIFIED PARTY WITHOUT (I) THE ADMISSION BY THE INDEMNIFIED PARTY OF GUILT,
COMPLICITY OR CULPABILITY OR (II) THE INCURRENCE OF ANY PAYMENT OBLIGATION OR
OTHER CIVIL OR ANY CRIMINAL LIABILITY ON THE PART OF SUCH INDEMNIFIED PARTY
(UNLESS, WITH RESPECT TO PAYMENT OBLIGATIONS, THE SAME IS PAID BY THE COMPANY
HEREUNDER). IT IS UNDERSTOOD THAT THE COMPANY SHALL NOT, IN CONNECTION WITH ANY
ACTION OR RELATED ACTIONS IN THE SAME JURISDICTION, BE LIABLE FOR THE FEES AND
EXPENSES OF MORE THAN ONE SEPARATE FIRM FOR ALL INDEMNIFIED PARTIES, UNLESS THE
INDEMNIFIED PARTIES SHALL HAVE REASONABLY CONCLUDED THAT REPRESENTATION OF ALL
THE INDEMNIFIED PARTIES BY THE SAME COUNSEL WOULD BE INAPPROPRIATE DUE TO ACTUAL
OR POTENTIAL DIFFERING INTERESTS BETWEEN THEM.
(c) AN INDEMNIFIED PARTY MAY DEMAND PAYMENT FOR ANY LOSSES INCURRED BY
SUCH INDEMNIFIED PARTY, AS AND WHEN INCURRED, AND SUCH DEMAND FOR
INDEMNIFICATION SHALL BE ACCOMPANIED BY A BRIEF DESCRIPTION OF THE NATURE AND
EXTENT OF THE LOSSES AS WELL AS THE CIRCUMSTANCES UNDER WHICH INDEMNIFICATION IS
SOUGHT. THE COMPANY SHALL PAY WHEN DUE AND PAYABLE THE FULL AMOUNT OF SUCH
LOSSES TO THE APPROPRIATE PARTY. THE COMPANY SHALL NOT BE OBLIGATED TO PAY SUCH
LOSSES (OTHER THAN ATTORNEY'S FEES AND EXPENSES, TO THE EXTENT SUCH FEES AND
EXPENSES ARE INDEMNIFIED HEREUNDER) SO LONG AS (I) THE COMPANY SHALL HAVE
ASSUMED THE DEFENSE OF THE ACTION OR IS CONTESTING SUCH LOSSES FOR WHICH
INDEMNITY IS SOUGHT HEREUNDER AND (II) IS DILIGENTLY PROSECUTING THE SAME AND
THE COMPANY HAS TAKEN ALL ACTION AS MAY BE NECESSARY TO PREVENT (A) THE
COLLECTION OF SUCH LOSSES FROM THE INDEMNIFIED PARTY; (B) THE SALE, FORFEITURE
OR LOSS OF THE PROPERTY OR ANY PART THEREOF DURING SUCH DEFENSE OF THE SAME
ACTION; AND (C) THE IMPOSITION OF ANY CIVIL OR CRIMINAL LIABILITY FOR FAILURE TO
PAY SUCH LOSSES WHEN DUE AND PAYABLE.
(d) THE COMPANY ACKNOWLEDGES AND AGREES THAT (I) ITS OBLIGATIONS UNDER
THIS SECTION 8.14 ARE INTENDED TO INCLUDE AND EXTEND TO ANY AND ALL LIABILITIES,
SUMS PAID IN SETTLEMENT OF CLAIMS, OBLIGATIONS, CHARGES, ACTIONS, CLAIMS, LIENS,
TAXES AND DAMAGES (INCLUDING, WITHOUT LIMITATION, PUNITIVE DAMAGES, PENALTIES,
FINES, COURT COSTS, ADMINISTRATIVE SERVICE FEES, RESPONSE AND REMEDIATION COSTS,
STABILIZATION COSTS, ENCAPSULATION COSTS, TREATMENT, STORAGE OR DISPOSAL COSTS)
IMPOSED UPON OR INCURRED BY OR ASSERTED AT ANY TIME AGAINST ANY INDEMNIFIED
PARTY (WHETHER OR NOT INDEMNIFIED AGAINST BY ANY OTHER PARTY) ARISING DIRECTLY
OR INDIRECTLY OUT OF: (A) THE TREATMENT, STORAGE, DISPOSAL, GENERATION, USE,
TRANSPORT, MOVEMENT, PRESENCE, RELEASE, THREATENED RELEASE, SPILL, INSTALLATION,
SALE, EMISSION, INJECTION, LEACHING, DUMPING, ESCAPING OR SEEPING OF ANY
HAZARDOUS MATERIALS OR MATERIAL CONTAINING OR ALLEGED TO CONTAIN HAZARDOUS
MATERIALS AT, ON, UNDER, ONTO, THROUGH OR FROM ANY OF THE PROPERTY; (B) THE
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VIOLATION OR ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAWS RELATING TO OR IN
CONNECTION WITH THE PROPERTY OR ANY PART THEREOF OR ANY ACTS OR OMISSIONS
THEREON OR RELATING THERETO; (C) ALL OTHER FEDERAL, STATE AND LOCAL LAWS
DESIGNED TO PROTECT THE ENVIRONMENT OR PERSONS OR PROPERTY THEREIN, WHETHER NOW
EXISTING OR HEREINAFTER ENACTED, PROMULGATED OR ISSUED BY ANY FEDERAL, STATE,
COUNTY, MUNICIPAL OR OTHER GOVERNMENTAL AUTHORITY; AND (D) THE COMPANY'S FAILURE
TO COMPLY WITH ITS OBLIGATIONS UNDER ARTICLE VIII OF THE LEASE AND (II) THE
INDEMNIFICATION PROVIDED FOR UNDER THIS SECTION 8.14(d) SHALL BE GOVERNED BY THE
PROCEDURES SET FORTH IN SECTIONS 8.14(b)-(c) HEREOF IN EACH CASE FROM AND AFTER
THE DATE HEREOF.
SECTION 8.15. Operative Documents; Further Assurances. Each of the
parties hereto does hereby covenant and agree to perform and be governed and
restricted by the Operative Documents to which it is a party and, subject to the
terms and conditions thereof, to take or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable in connection
therewith. Each of the parties hereto shall have the rights and obligations set
forth in the Interparty Agreement and the Declaration with respect to such party
notwithstanding that not all of such parties are signatories thereto. The
Company, the Trustee, the Collateral Agent, the Agent, the Guarantor, the Note
Holders and the Certificate Holders will, at the expense of the Company, execute
and deliver such further instruments and do such further acts as may be
reasonably necessary to carry out more effectively the purposes of the Operative
Documents and the transactions contemplated thereby. The Company, the Trustee,
the Agent, the Collateral Agent, the Guarantor, the Note Holders and the
Certificate Holders may at any time, subject to the conditions and restrictions
contained in the Operative Documents, enter into supplements which shall form a
part hereof, when required or permitted by any of the provisions of the
Operative Documents or to cure any ambiguity, or to cure, correct or supplement
any defective or inconsistent provision contained herein or in any other
Operative Document.
SECTION 8.16. Confidentiality. (a) Each of the parties hereto, other
than the Agent and, as applicable, its Affiliates, agrees that, subject to
Section 5.03, it will maintain the confidentiality of the structure of this
transaction developed exclusively by CSI.
(b) Each of the parties hereto agrees that unless otherwise required by
Law, by any governmental authority or body or by S&P or Moody's or any other
rating agency in connection with the APA or the Finance Facility or consented to
in writing by the Company and the Agent, it will maintain the confidentiality of
all non-public information (i) regarding the financial terms of this transaction
or (ii) regarding the Company, the Guarantor or the Property which shall be
furnished to it by or on behalf of the Company or the Guarantor in
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connection with the transactions contemplated by the Operative Documents and the
Securitization Documents, in accordance with the procedures it generally applies
to confidential material; provided, however, that if the Lease has been
terminated and the Company has not purchased the Property, then neither the Note
Holders, the Certificate Purchasers, the Agent, the Collateral Agent nor the
Trustee shall be bound by the confidentiality provisions of this Section
8.16(b).
(c) The parties hereto agree not to publish tombstones or other public
announcements in connection with the transactions contemplated hereby without
the consent of the Company, the Agent and the Note Holders.
SECTION 8.17. Interest. It is the intention of the parties hereto to
conform strictly to all usury Laws that are applicable to each such party, Note
or to the transactions contemplated by the Operative Documents and the
Securitization Documents (collectively, the "Transactions"). Accordingly,
notwithstanding anything to the contrary in the Instruments, this Agreement or
any other Operative Document or Securitization Document or agreement entered
into in connection with the Transactions (collectively, the "Transaction
Documents"), it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under Applicable Law (hereinafter defined) that is
contracted for, taken, reserved, charged or received by any party under the
Transaction Documents or otherwise in connection with the Transactions shall
under no circumstances exceed the maximum amount of interest that could lawfully
be charged by such party under Applicable Law, (ii) in the event that the
maturity of any indebtedness evidenced by or payable pursuant to the Transaction
Documents is accelerated for any reason, or in the event of any required or
permitted payment or prepayment of all or any part of such indebtedness
(including, without limitation and if applicable, any required or permitted
purchase of the Property, or any required or permitted payment of the Residual
Value Amount or Termination Value), then such consideration that constitutes
interest as to any such indebtedness under Applicable Law may never include more
than the maximum amount allowed by such Applicable Law, and (iii) if under any
circumstances the aggregate amounts paid on any Instrument prior to or incident
to the final payment thereof include any amounts which by Applicable Law would
be deemed interest in excess of the maximum amount of interest permitted by
Applicable Law, such excess amounts, if theretofore paid, shall be credited by
the recipient on the principal or stated amount of the affected indebtedness
(or, to the extent that the principal or stated amount of such indebtedness
shall have been or would thereby be paid in full, refunded by such recipient to
the party entitled thereto). If at any time the rate of interest or
Distributions contractually called for in any Transaction Document (as the same
may vary from time to time pursuant to the terms of such Transaction Document,
the "Stated Rate"), exceeds
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the maximum non-usurious rate of interest permitted by Applicable Law (the
"Maximum Rate") in respect of the indebtedness evidenced by such Transaction
Document, taking into account all other amounts paid or payable pursuant to the
Transaction Documents which constitute interest with respect to such
indebtedness under Applicable Law regardless of whether denominated as interest
or Distributions (collectively, the "Other Charges"), then the rate of interest
to accrue or Distributions owing on such indebtedness shall be limited to such
Maximum Rate (taking into account the Other Charges), but any subsequent
reduction in the Stated Rate applicable to such indebtedness shall not reduce
the rate of interest or Distributions to accrue on such indebtedness below such
Maximum Rate (taking into account the Other Charges) until such time as the
total amount of interest or Distributions on such indebtedness equals the amount
of interest or Distributions which would have accrued if the Stated Rate
applicable to such indebtedness had at all times been in effect. If at the
maturity or final payment of any indebtedness the total amount of interest or
Distributions paid or accrued on such indebtedness under the preceding sentence
is less than the total amount of interest or Distributions which would have
accrued if the Stated Rate applicable to such indebtedness had at all times been
in effect, then to the fullest extent permitted by Applicable Law there shall be
due and payable or owing with respect to such indebtedness an amount equal to
the excess, if any, of (a) the amount of interest or Distributions which would
have accrued on such indebtedness if the Stated Rate applicable to such
indebtedness had at all times been in effect, above (b) the amount of interest
or Distributions accrued in accordance with the provisions of the Transaction
Document evidencing such indebtedness after giving effect to the preceding
sentence. All amounts paid or agreed to be paid for the use, forbearance or
detention of sums pursuant to or in connection with the Transaction Documents
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated and spread throughout the full term thereof so that the rate or amount
of interest paid or payable with respect to any amount of indebtedness evidenced
by or payable pursuant to the Transaction Documents does not exceed the
applicable usury ceiling, if any. As used herein, the term "Applicable Law"
means that law, if any, that is applicable to any particular Transaction and
that limits the maximum non-usurious rate of interest that may be taken,
contracted for, charged, reserved or received with respect to such Transaction,
including the law of the State of New York, the law of any other jurisdiction
that may be mandatorily applicable to such Transaction notwithstanding other
provisions of this Agreement and the other Transaction Documents, and the
federal Law of the United States. As used herein, the term "interest" means
interest as determined under Applicable Law, regardless of whether denominated
as interest in the Transaction Documents (except to the extent that this Section
8.17 specifically refers to interest denominated as interest). The right to
accelerate maturity of any indebtedness evidenced by any Instrument or other
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Transaction Document, and the right to demand payment of the Residual Value
Amount or Termination Value does not include the right to accelerate any
interest, or to receive any other amounts, which would cause the Transactions to
be usurious under Applicable Law. All computations of the maximum amount allowed
under Applicable Law, as well as all computations of interest at the Maximum
Rate, will be made on the basis of the actual number of days elapsed over a 365
or 366 day year, whichever is applicable pursuant to such Applicable Law. The
provisions of this Section 8.17 shall prevail over any contrary provisions in
this Agreement, the Instruments or any of the other Transaction Documents.
SECTION 8.18. Financial Advisor. The parties hereto (including, without
limitation, the Trustee and the Collateral Agent at the direction of the Note
Holders and the Certificate Holders) acknowledge and agree that neither CSI, the
Company's exclusive financial advisor for the transactions contemplated by the
Operative Documents, nor any of CSI's Affiliates, is making any representation
or warranty, or is required to make any disclosure, now or in the future, with
respect to the parties' tax or accounting treatment of the transactions
contemplated by the Operative Documents or the Securitization Documents. Each of
the parties hereto further acknowledges and agrees that neither CSI nor any of
its Affiliates is responsible, or will be responsible in the future, for tax and
accounting advice with respect to the transactions contemplated by the Operative
Documents or the Securitization Documents, and that it (i) has, independently
and without reliance on CSI or its Affiliates, made its own analysis and
decisions with respect to such matters and has had the benefit of the advice of
its own independent tax and accounting advisers with respect to such matters to
the extent it has deemed appropriate and (ii) will, independently and without
reliance on CSI or its Affiliates, continue to make its own analyses and
decisions with respect to such matters based on such information and advice as
it deems appropriate for such purposes.
SECTION 8.19. Securities Representation. Each Note Holder and
Certificate Holder hereby represents that it is acquiring its Instruments for
investment for its own account, and not with a view to or for sale in connection
with a distribution of any Note, except in compliance with all applicable
securities laws; provided, however, that, subject to Section 5.03, the
disposition of any Instrument held by that Note Holder or Certificate Holder
shall at all times be within its exclusive control.
SECTION 8.20. The Collateral Agent. Except for its own gross negligence
and willful misconduct and as otherwise provided in the Operative Documents, it
is expressly understood and agreed by the parties hereto that (a) this Agreement
is executed and delivered by the Collateral Agent, not in its individual
capacity but solely as Collateral Agent, under the
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Interparty Agreement, in the exercise of the powers and authority conferred and
vested in it as the Collateral Agent, (b) nothing herein contained shall be
construed as creating any liability on the Collateral Agent, individually or
personally, to perform any obligation of the Collateral Agent either expressed
or implied contained herein or in the Operative Documents, all such liability,
if any, being expressly waived by the parties to this Agreement and by any
Person claiming by, through or under the parties to this Agreement and (c) under
no circumstances shall the Collateral Agent be personally liable for the payment
of any indebtedness or expenses of the Collateral Agent or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Collateral Agent under this Agreement or the other
Operative Documents except where such breach or failure is the result of the
Collateral Agent's willful misconduct or gross negligence.
SECTION 8.21. Agreements with Respect to the Property.
(a) Upon payment by the Company of the Termination Value and upon the
request of the Company, the Trustee will convey the Property to the Company in
the manner provided in the Lease without recourse, representation, or warranty
of any kind, except that such Property is free and clear of any Lien or other
adverse interest of any kind created by the Trustee or the Collateral Agent in
its individual capacity (except for Permitted Encumbrances or as consented to or
created by the Company and except as to any interest created by the Trustee upon
the exercise of any right under the Operative Documents upon any Default, Event
of Default or Environmental Trigger).
(b) Upon the consummation of the purchase of the Property by the
Company in compliance with the Operative Documents, at the request of the
Company or the Collateral Agent, as applicable, the Trustee and the Collateral
Agent shall execute all releases and termination statements required to release
or terminate the Liens granted under the Operative Documents with respect to
such Property. The Trustee shall execute the releases and termination statements
under the direction of the Collateral Agent (and the Agent is authorized
hereunder to so direct the Collateral Agent without joinder or approval of any
of the Note Holders). The Company shall pay all out-of-pocket costs required for
the preparation, execution, filing, and recording of such releases and
termination statements.
SECTION 8.22. Ratings. A rating, whether public or private, by S&P or
Moody's shall be deemed to be in effect on the date of announcement or
publication by S&P or Moody's, as the case may be, of such rating or, in the
absence of such announcement or publication, on the effective date of such
rating and will remain in effect until the date when any change in such rating
is deemed to be in effect. In the event any of the rating categories used by
Moody's or S&P is revised or designated
85
<PAGE> 90
differently (such as by changing letter designations to different letter
designations or to numerical designations), then the references herein to such
rating shall be changed to the revised or redesignated rating for which the
standards are closest to, but not lower than, the standards at the date hereof
for the rating which has been revised or redesignated. Long-term debt supported
by a letter of credit, guaranty, insurance or other similar credit enhancement
mechanism shall not be considered as senior unsecured long-term debt.
SECTION 8.23. Waiver of Trial by Jury. IN ANY ACTION OR PROCEEDING
UNDER OR RELATED TO THIS AGREEMENT, THE OPERATIVE DOCUMENTS OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, THE COMPANY, THE GUARANTOR, THE
AGENT, THE COLLATERAL AGENT, THE TRUSTEE AND EACH NOTE HOLDER, APA PURCHASER AND
CERTIFICATE HOLDER HEREBY AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY, IRRESPECTIVE OF WHICH PARTY
COMMENCES SUCH ACTION OR PROCEEDING.
SECTION 8.24. Other Matters. Each of the Company and the Guarantor
acknowledges that neither any Note Holder, any APA Purchaser, any Certificate
Holder, the Trustee, the Collateral Agent, the Agent, or any Affiliate of any
thereof is making any representation, nor is it required to make any disclosure,
now or in the future, with respect to the parties' tax or accounting treatment
of the Property or the financing thereof, nor is any Note Holder, any APA
Purchaser, any Certificate Holder, the Trustee, the Collateral Agent, the Agent,
or any Affiliate of any thereof responsible, nor will it be responsible in the
future, for tax and accounting advice with respect to the Property or the
financing thereof, and the Company and the Guarantor have had or will have the
benefit of the advice of their own independent tax and accounting advisors with
respect to such matters.
SECTION 8.25. Protective Expenditures; Payment for Services. (a) At any
time after the expiration or other termination of the Lease, if the Lessee has
not purchased the Properties pursuant to the terms of the Lease, any Note
Holder, Certificate Holder or the Trustee shall have the right, but not the
obligation, to pay, or to fund the Collateral Agent's payment of, (i) real
estate Taxes due and owing with respect to the Properties or (ii) insurance
premiums required to maintain the coverage required during the term of the Lease
(each a "Protective Expenditure"). Reimbursement of Protective Expenditures made
by any Note Holder, any Certificate Holder or the Trustee in accordance with
this Section 8.25 shall be made upon a sale of the Property pursuant to the
provisions set forth in the Declaration.
(b) At any time after the expiration or other termination of the Lease,
the Majority Holders may (and shall if they have caused the Trustee to request
the Company to provide
86
<PAGE> 91
such services) fund the Trustee's payment of amounts due to the Company pursuant
to the Services Agreement. All amounts paid by the Majority Holders under this
section shall be deemed to be Protective Expenditures for purposes of
reimbursement pursuant to the Declaration.
SECTION 8.26. Recording and Filing Documents. In order to avoid
documentary Taxes in any State, the Agent, Note Holders, Certificate Holders,
Trustee and Collateral Agent have agreed that any document, including the Lease
(excepting, however UCC-1 financing statements) which may be required in order
to establish, create, perfect, preserve, protect or enforce the Liens, interests
and rights thereunder, shall not be recorded or filed, as the case may be, if
such recording or filing would require payment of any documentary recording Tax
in such State. However, at the request of the Agent such documents shall be
executed and delivered to the Agent on or prior to a Funding Date in form
suitable for recording or filing, as the case may be. If the rating of the
senior unsecured long-term debt securities of the Guarantor is less than BBB- by
S&P or less than Baa3 by Moody's, the Agent may, and upon written direction of
the Majority Holders shall, record and/or file the aforementioned documents. All
documentary stamp and intangible Taxes and all other fees, expenses, Taxes and
other costs relating to such recording and/or filing (the "Recording Charges")
shall be paid by the Company to the Agent immediately prior to such recording
and/or filing or at any time thereafter on demand by the Agent. Upon failure of
the Company to pay any Recording Charges under this Section 8.26, such Recording
Charges may be paid by the Note Holders and the Certificate Holders pro rata to
the Agent and if so paid to the Agent shall constitute Additional Rent
immediately payable by the Company as Lessee under the Lease. The Agent shall
not be obligated to record and/or file any of the aforementioned documents
unless all Recording Charges have been paid to the Agent.
SECTION 8.27. Exculpation of Trustee. Except for liability for its
representations and warranties in Section 3.02, and for its own gross negligence
and willful misconduct and as otherwise expressly provided in the Operative
Documents, it is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by SSBTC, not in its individual
capacity but solely as Trustee under the Declaration of Trust, in the exercise
of the powers and authority conferred and vested in it as the Trustee, (b) each
of the undertakings and agreements herein made on the part of the Trustee is
made and intended not as a personal representation, undertaking and agreement by
SSBTC but is made and intended for the purpose for binding only the Trust Estate
created by the Declaration of Trust, (c) nothing herein contained shall be
construed as creating any liability on SSBTC, individually or personally, to
perform any obligation of the Trustee either expressed or implied contained
herein or in the Operative Documents, all such
87
<PAGE> 92
liability, if any, being expressly waived by the parties to this Agreement and
by any Person lawfully claiming by, through or under the parties to this
Agreement and (d) under no circumstances shall SSBTC be personally liable for
the payment of any indebtedness or expenses of the Trustee or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trustee under the Operative Documents.
SECTION 8.28. No Petition. Each of the Company and the Trustee agrees
that it shall not institute against, or join any other Person in instituting
against, the SPV or CXC any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law, for one year and a day after the latest maturing (i)
commercial paper note issued by CXC under the Finance Facility and (ii) CXC
Advance is paid in full.
SECTION 8.29. No Recourse to the SPV. The obligations of the SPV under
this Agreement are solely the obligations of the SPV. No recourse to or against
any employee, officer, manager, Affiliate, member or agent of the SPV shall be
had for the payment of any amount owing by the SPV under this Agreement, or for
the payment by the SPV of any fee in respect hereof or any other obligation or
claim of or against the SPV arising out of or based upon this Agreement.
Notwithstanding any other provision of this Agreement or any other Operative
Document to the contrary, the SPV shall be required to pay any and all amounts
owing to the Agent or the Collateral Agent in respect of CXC Advances (or
interests therein) and interest thereon, and any other amounts owed to any
Person by the SPV under the Operative Documents, only to the extent the SPV has
received funds from the proceeds of CXC Advances or sales of Borrower Percentage
Interests, which funds are in excess of the amounts necessary to pay all amounts
owing to CXC and the APA Purchasers in respect of outstanding CXC Advances (or
interests therein) and interest thereon (such excess being referred to as "Extra
Funds"). In the event the SPV does not have Extra Funds in an amount sufficient
to pay in full such amounts due under this Agreement or any other Operative
Document, the excess of the amounts payable by the SPV over the amount of Extra
Funds shall not constitute a claim (as defined in Section 101(4) of the Federal
Bankruptcy Code) against the SPV until the earlier of such time, if any, as the
SPV has Extra Funds in an amount equal to such excess and such time as the SPV
is the subject of a bankruptcy or other similar proceeding.
SECTION 8.30. May Participation Agreement. This Participation Agreement
amends, restates, supplements and replaces, in its entirety, the May
Participation Agreement; all Property subject to the May Participation Agreement
and the other May Operative Documents shall be Property subject to this
Participation Agreement and the other Operative Documents as of
88
<PAGE> 93
the date hereof, without further action of any kind on the part of any of the
parties hereto; all amounts owing under the May Operative Documents (whether now
due or to become due) shall, to the extent unpaid on the date hereof, become
Fixed Rent, Additional Rent, indemnity payments or other amounts owing under
this Participation Agreement and the other Operative Documents; all Property
subject to the May Participation Agreement and the other May Operative Documents
shall from and after the date hereof, be governed by the provisions of this
Participation Agreement and the other Operative Documents; as of the date
hereof, the May Participation Agreement and the other May Operative Documents
shall cease to have any further force or effect, except that any references to
the May Participation Agreement or any other May Operative Document in any
mortgage, deed of trust, financing statement or other document filed or recorded
in any jurisdiction shall be deemed a reference to this Participation Agreement
or other Operative Document, as applicable, until such time, if any, as a new
mortgage, deed of trust, financing statement, amendment or other document is
executed, delivered, recorded and filed expressly referring to this
Participation Agreement or other Operative Document, as applicable, and except
as otherwise expressly provided in this Section 8.30 and any other Operative
Document (including the Guaranty).
SECTION 8.31. EITF 97-10. (a) The Operative Documents have been
negotiated by the parties thereto with a view to assuring that the Company, as
Lessee, is not considered the owner of a project, for accounting purposes, in
respect of any Project prior to the Completion Date, and, accordingly, include
certain limitations on indemnities and guarantees by the Company which the
Company and the Company's Independent Accountants (as defined below) have
advised are or may be required by EITF 97-10.
(b) If there is an Adverse Accounting Determination (as defined
below), however, the parties hereto agree to negotiate in good faith changes in
the Operative Documents that both (i) cure the Adverse Accounting Determination
and (ii) preserve and maintain the respective economic interests, rights,
remedies, liabilities and obligations of the parties under the Operative
Documents, including the credit, payment, return and security terms thereof,
subject in each case to the provisions in paragraphs (c) and (d) of this
Section; provided, however, that within a reasonable time period prior to
commencement of such negotiations, the Company shall give all of the parties
hereto written notice of the Adverse Accounting Determination, which notice
shall specify in reasonable detail the basis for such Adverse Accounting
Determination and the changes in the Operative Documents which the Company and
the Company's Independent Accountants consider are required to cure such Adverse
Accounting Determination. If requested by the Majority Holders, the Purchasers'
Accountants may review such Adverse Accounting Determination, the basis therefor
and the changes in the
89
<PAGE> 94
Operative Documents which the Company and the Company's Independent Accountants
consider are required to cure such Adverse Accounting Determination.
(c) The Company will be responsible for all costs and expenses
incurred in connection with any changes requested by the Company pursuant to
this Section including reasonable fees and expenses of counsel for the Trustee,
the Agent, the Collateral Agent, the Note Holders and the Certificate Holders,
reasonable fees and expenses of the Purchaser's Accountants, and all fees and
expenses of the Company's Independent Accountants.
(d) This Section does not, and should not be construed as, creating
any binding obligation or commitment on the part of any party hereto to agree to
any amendment, modification or supplement of any kind in or to any of the
Operative Documents. Without limiting the generality of the foregoing, any party
hereto may determine not to agree to a proposed change in the Operative
Documents notwithstanding that such change is the only cure for an Adverse
Accounting Determination, provided that (i) such party shall have negotiated in
good faith as provided in paragraph (b) of this Section and (ii) this sentence
shall not give any party any greater (or lesser) rights in respect of required
approvals or consents or otherwise change the requirements for amendments,
modifications or waivers of the Operative Documents set forth in Section 8.04 of
this Agreement or any other Operative Document.
(e) For purposes of this Section, the following terms shall have the
meanings set forth below:
The term "Adverse Accounting Determination" means a determination by
the Company or the Company's Independent Accountants that, based on
interpretations or amendments of EITF 97-10 as proscribed by GAAP for companies
reporting to the Securities and Exchange Commission after the date hereof, the
Company should be considered the owner of a project for accounting purposes, in
respect of any Project prior to the Completion Date as a direct result of the
failure of the Operative Documents to comply with EITF 97-10.
The term "Company's Independent Accountants" means Ernst & Young L.L.P.
(or such other firm of independent certified public accountants as may be
regularly engaged by the Company or its Affiliates to audit the financial
statements of the Company or such Affiliates).
The term "Purchasers' Accountants" means any firm of certified public
accountants of international standing selected by the Majority Holders, other
than the Company's Independent Accountants.
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<PAGE> 95
SECTION 8.32. Managing Agent. The Managing Agents shall have no duties
or responsibilities hereunder solely in their capacities as Managing Agents.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their officers thereunto duly authorized as of the day and year
first above written.
91
<PAGE> 96
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
WILLIAMS COMMUNICATIONS, INC.
By: /s/ G. L. BEST
------------------------------------
Name: G. L. Best
Title: Vice President
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
not in its individual capacity except as
expressly stated herein, but solely as
Trustee
By: /s/ EARL W. DENNISON, JR.
------------------------------------
Name: Earl W. Dennison, Jr.
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity, but solely
as Collateral Agent
By: /s/ EARL W. DENNISON, JR.
------------------------------------
Name: Earl W. Dennison, Jr.
Title: Vice President
<PAGE> 97
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CITIBANK, N.A., as Agent
By: /s/ J. LYONS
------------------------------------
Name: J. Lyons
Title: Attorney-in-fact
WC NETWORK FUNDING LLC, as Note Holder
By: WC Network Holdings, Inc.
its sole member
By: /s/ DWIGHT JENKINS
------------------------------------
Name: Dwight Jenkins
Title: Vice President
CITIBANK, N.A., as an APA Purchaser
By: /s/ J. LYONS
------------------------------------
Name: J. Lyons
Title: Attorney-in-fact
<PAGE> 98
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
BANK OF MONTREAL, as an APA Purchaser
By: /s/ MARY LEE LATTA
------------------------------------
Name: Mary Lee Latta
Title: Director
ROYAL BANK OF CANADA, as an APA Purchaser
By: /s/ JOHN P. PAGE
------------------------------------
Name: John P. Page
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as an APA Purchaser
By:
------------------------------------
Name:
Title:
<PAGE> 99
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
THE CHASE MANHATTAN BANK, as an APA
Purchaser
By:
------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC., as an
APA Purchaser
By:
------------------------------------
Name:
Title:
ABN AMRO BANK N.V., as an APA Purchaser
By: /s/ MICHAEL W. NEPVEUX
------------------------------------
Name: Michael W. Nepveux
Title: Vice President
By: /s/ KEVIN P. COSTELLO
------------------------------------
Name: Kevin P. Costello
Title: Vice President
<PAGE> 100
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
THE BANK OF NOVA SCOTIA, as an APA
Purchaser
By:
------------------------------------
Name:
Title:
BANKBOSTON, N.A., as an APA Purchaser
By: /s/ R. STEVE SCHAUER
------------------------------------
Name: R. STEVE SCHAUER
Title: Director
BARCLAYS BANK PLC, as an APA Purchaser
By: /s/ GINA CLEMENTE
------------------------------------
Name: GINA CLEMENTE
Title: Associate Director
<PAGE> 101
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CIBC INC., as an APA Purchaser
By: /s/ JOHN T. MECKLEY
------------------------------------
Name: John T. Meckley
Title: Agent
THE BANK OF NEW YORK, as an APA Purchaser
By:
------------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY, as an APA Purchaser
By: /s/ LLOYD G. COX
------------------------------------
Name: Lloyd G. Cox
Title: Vice President
<PAGE> 102
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
COMMERZBANK, as an APA Purchaser
By: /s/ HARRY P. YERGEY
------------------------------------
Name: Harry P. Yergey
Title: SVP and Manager
By: /s/ BRIAN J. CAMPBELL
------------------------------------
Name: Brian J. Campbell
Title: Vice President
CREDIT AGRICOLE INDOSUEZ, as an APA
Purchaser
By: /s/ KATHERINE L. ABBOTT
------------------------------------
Name: Katherine L. Abbott
Title: First Vice President
KBC BANK, N.V., as an APA Purchaser
By: /s/ ROBERT SNAUFFER
------------------------------------
Name: Robert Snauffer
Title: First Vice President
By: /s/ MARCEL CLAES
------------------------------------
Name: Marcel Claes
Title: Deputy General Manager
<PAGE> 103
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
NATIONSBANK, as an APA Purchaser
By: /s/ LINDA PARISH
------------------------------------
Name: Linda Parish
Title: Vice President
FBTC LEASING CORP., as a Certificate
Holder
By:
------------------------------------
Name:
Title:
SCOTIABANC INC., as a Certificate Holder
By: /s/ M. D. SMITH
------------------------------------
Name: M. D. Smith
Title: Treasurer
<PAGE> 104
SCHEDULE I
MANNER OF PAYMENT
AND COMMUNICATIONS TO PARTIES
This Schedule I shows the names and addresses of the parties to the
foregoing Participation Agreement and the principal amounts of the Notes to be
purchased by the Note Holders.
Company:
(1) Address for all notices:
Williams Communications, Inc.
One Williams Center, 26th Floor
Tulsa, Oklahoma 74172
Attn.: G.L. Best, Vice President, Finance and
Administration
Fax No.: (918) 573-6024
(2) All payments to the Company with respect to the Operative Documents
shall be made by wire transfer of immediately available funds to
Account No. 0-106-4944-3 at Bank of Oklahoma, N.A., Tulsa, Oklahoma,
ABA# 1039-0003-6, with a reference to "WC Network Funding LLC" and with
sufficient information to identify the source and application of such
funds.
Guarantor:
(1) Address for all notices:
Williams Holdings of Delaware, Inc.
Treasury Department, 48th Floor
One Williams Center
Tulsa, Oklahoma 74172
Attn.: James G. Ivey, Treasurer
Fax No.: (918) 573-2065
(2) All payments to the Guarantor with respect to the Operative Documents
shall be made by wire transfer of immediately available funds to
Account No. 55-32167 at The First National Bank of Chicago, Chicago,
Illinois, ABA# 0710-0001-3, with a reference to "WC Network Funding
LLC" and with sufficient information to identify the source and
application of such funds.
<PAGE> 105
Trustee:
(1) Address for all notices:
State Street Bank and Trust Company of Connecticut, National
Association
c/o State Street Bank and Trust Company
Corporate Trust Department
Two International Place, 4th Floor
Boston, Massachusetts 02110
Fax. No.: (617) 664-5371
Tel. No.: (617) 664-5670
Attn.: Earl Dennison
(2) All payments to the Trustee with respect to the Operative Documents
shall be made by wire transfer of immediately available funds to
Account No. 9903-990-1 at State Street Bank and Trust Company, Boston,
MA, ABA# 011-000-028, with a reference to "Williams Synthetic" and
with sufficient information to identify the source and application of
such funds.
Collateral Agent:
(1) Address for all notices:
State Street Bank and Trust Company
Corporate Trust Department
Two International Place, 4th Floor
Boston, Massachusetts 02110
Fax No.: (617) 664-5371
Tel. No.: (617) 664-5670
Attn.: Earl Dennison
(2) All payments and transfers of funds to the Collateral Agent with
respect to the Operative Documents shall be made by wire transfer of
immediately available funds to Account No. 9903-990-1 at State Street
Bank and Trust Company, Boston, MA, ABA# 011-000-028, with a reference
to "Williams Synthetic" and with sufficient information to identify the
source and application of such funds.
2
<PAGE> 106
Agent:
(1) Address for all notices:
Citibank, N.A., as Agent
Two Penns Way, Suite 200
New Castle, Delaware 19720
Fax No.: (302) 894-6120
Tel. No.: (302) 894-6023
Attn: Brian Maxwell
With a copy to:
Fax No.: (713) 654-2849
Attn: Christopher Lyons
(2) All payments and transfers of funds to the Agent with respect to the
Operative Documents shall be made by wire transfer of immediately
available funds to Account No. 3614-3716 at Citibank, N.A., New York,
ABA# 021000089, Account Name: 1998 WCI Trust with a reference to
Williams SADP and with sufficient information to identify the source
and application of such funds.
3
<PAGE> 107
Note Holder:
WC NETWORK FUNDING LLC
<TABLE>
<CAPTION>
Amount
------
<S> <C>
Interim A-Note Commitment: $637,500,000
Interim B-note Commitment: 90,000,000
</TABLE>
(1) All payments with respect to the Operative Documents shall be made by
wire transfer of immediately available funds to Credit Account No.
36852248 at Citibank, N.A., ABA# 021000089, with a reference to
"Williams SADP" and with sufficient information to identify the source
and application of such funds.
(2) Address for all notices:
WC Network Funding LLC
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Attn.: Dwight Jenkins
4
<PAGE> 108
Certificate Holder:
FBTC LEASING CORP.
<TABLE>
<S> <C>
Certificate Commitment $19,500,000
</TABLE>
(1) All payments with respect to the Operative Documents shall be made by
wire transfer of immediately available funds to Account No. 001-900269
at Fuji Bank and Trust Company, Account Name: FBTC Leasing Corp.,
Attention: Gail Hall, ABA# 02600-8905 and with sufficient information
to identify the source and application of such funds.
(2) Address for all notices:
FBTC Leasing Corp.
Two World Trade Center, 79th Floor
New York, New York 10048
Fax No.: (212) 775-7276
Tel. No.: (212) 898-2532
Attn.: Paula Kamuda and Gail Hall
5
<PAGE> 109
Certificate Holder:
SCOTIABANC INC.
<TABLE>
<S> <C>
Certificate Commitment $3,000,000
</TABLE>
(1) All payments with respect to the Operative Documents shall be made by
wire transfer of immediately available funds to Account No. 0735639 at
The Bank of Nova Scotia, NY, Attention: Scotiabanc Inc. Loan Admin.,
ABA# 026002532, with a reference to "1998 WCI Trust-Equity
Certificates" and with sufficient information to identify the source
and application of such funds.
(2) Address for all notices:
The Bank of Nova Scotia
1100 Louisiana Street
Suite 3000
Houston, TX 77002
Fax No.: (713) 752-2425
Tel. No.: (713) 752-0900
Attn.: Greg Smith
6
<PAGE> 110
SCHEDULE II
FEES AND MARGIN CHART
I. Fees Payable by Company on Initial Funding Date
A. The Company shall pay to the Agent on the Initial Funding Date
the fees payable to Citicorp and Bank of Montreal on such date
pursuant to the letter agreement dated May 20, 1998 between
The Williams Companies, Inc. and Citicorp Securities Inc.
B. Syndication and Letter of Credit Fees
The Company shall pay the Agent on the Initial Funding Date
$1,190,350 on account for syndication fees and letter of
credit fees payable to the APA Purchasers, Certificate
Purchasers and the issuer of the Letter of Credit,
respectively.
II. Fees Payable by the Company During the Term
A. Commitment Fee
From and after the Initial Funding Date, the Company shall pay
to the Agent for the account of each Note Holder (other than
the SPV), Certificate Holder and APA Purchaser, on the last
Business Day of each April, July, October and January in each
year commencing on October 31, 1998, and, in the case of the
Note Holders and the Certificate Holders, on the Commitment
Termination Date, and, in the case of the APA Purchasers, on
the Purchasers' Purchase Termination Date (as defined in the
APA) commitment fees ("Commitment Fees"), on the unused
portion of such Note Holder's respective Interim Note
Commitment, such Certificate Holder's Certificate Commitment
and such APA Purchaser's Maximum Purchase (as defined in the
APA), at the following rates:
<PAGE> 111
<TABLE>
<CAPTION>
------------- --------------
Commitment
Fee(2)
Ratings Level(1) (bps per annum)
------------- --------------
<S> <C>
A/A2 or Better 18.0
A-/A3 18.5
BBB+/Baal 19.5
BBB/Baa2 20.0
BBB-/Baa3 23.0
Lower than BBB-/Baa3 33.0
</TABLE>
B. Agency Fee
As invoiced to the Company from time to time.
C. Trustee Fee
As invoiced to the Company from time to time.
- ----------------------
(1) If WHD is split-rated, the higher rating level will apply.
(2) The Collateral Purchase Amount fee shall equal the Commitment/Liquidity
Backstop Fee multiplied by 1.2.
2
<PAGE> 112
III. Applicable Margin
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PRICING
(bps per annum)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Interim Notes/
A-Notes B-Notes Certificates
Ratings Level(1) LIBOR+ LIBOR+ LIBOR+
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
A/A2 or Better 45.0 55.0 250.0
A-/A3 47.5 57.5 250.0
BBB+/Baal 50.0 60.0 250.0
BBB/Baa2 55.0 65.0 250.0
BBB-/Baa3 62.5 72.5 250.0
Lower than BBB-/Baa3 87.5 97.5 250.0
</TABLE>
(1) If WHD is split-rated, the higher rating level will apply.
3
<PAGE> 113
SCHEDULE III
APA PURCHASERS
1. Citibank, N.A.
2. Bank of Montreal
3. Royal Bank of Canada
4. Bank of America National Trust and Savings
Association
5. The Chase Manhattan Bank
6. Toronto Dominion (Texas), Inc.
7. ABN AMRO Bank N.V.
8. The Bank of Nova Scotia
9. BankBoston N.A.
10. Barclays Bank PLC
11. CIBC Inc.
12. The Bank of New York
13. Banque Nationale de Paris, Houston Agency
14. Commerzbank
15. Credit Agricole Indosuez
16. KBC Bank, N.V.
17. NationsBank
<PAGE> 114
EXHIBIT C to the
Participation Agreement
COMPLETION DATE CONDITIONS
Projects
Acquisition Costs have been used to design, engineer, install and
construct each Project in a good and workmanlike manner in accordance with
prudent United States telecommunications industry practice with at least such
number of Fibers, Signal Equipment and POPs as specified in Chart A below. In
addition, each Project contains approximately the number of route miles between
the cities as specified in Chart A and the Projects, in the aggregate, contain
at least 10,460 route miles.
Fiber
The majority of the Fiber miles in each Project (which is the product
of the number of strands of Fiber in such Project multiplied by the number of
route miles in such Project) (a) consist of Corning SMF-LS (Lambda Shifted) or
SMF-LEAF or such other types of Fiber that, based on United States
telecommunications industry standards, provide the same or superior quality and
transmission volume capabilities as Corning SMF-LS or SMF-LEAF Fiber and (b)
are capable of transporting 768 DS-3s (e.g., four OC-192 systems or one OC-768
system). This Fiber meets emerging 1550nm network design requirements that use
high output power erbium-doped fiber amplifiers and multi-channel dense
wavelength division multiplexing technology.
Fiber that is not lit may be standard single mode Fiber (rather than
SMF-LS or SMF-LEAF) or such other types of Fiber that, based on United States
telecommunications industry standards, provide the same or superior quality and
transmission volume capabilities as standard single mode Fiber.
At least two Fibers in each Project are lit and provide end-to-end and
point-to-point signal transmission capacity as specified in Chart B below or
greater between the cities as specified. The remaining Fibers (excluding any
Fibers in excess of the number of strands of Fiber set forth with respect to
each Project in Chart A) provide continuous end-to-end and point-to-point
connectivity between the cities specified on Chart A, except to the extent that
splices are left open (a) at (i) sites designed to support Signal Equipment,
(ii) points where the Company may connect the Fiber to other fiber optic
networks (including the Projects), (iii) points where a grantee of an Approved
IRU has requested the ability to connect to
<PAGE> 115
transmission equipment or other facilities and (iv) the end points of the
portion of the Fiber subject to an Approved IRU and (b) to facilitate testing or
for other prudent operational or engineering purposes in accordance with United
States telecommunications industry practice. All Fiber specified in Chart A has
met the appropriate Fiber testing standards set forth in Exhibit B to the Lease.
Signal Equipment and POPs
Installed on the lit Fibers at approximately 40-mile intervals are
regenerator and optronic amplifier equipment manufactured by Northern Telecom
Inc. ("Nortel") or other substantially equivalent equipment. The chart below
indicates the number of Nortel OC-192s, OC-48s, regenerators, optical
amplifiers and POPs that have been acquired, installed and tested with
Acquisition Costs with respect to each Project.
Also installed to use the capacity on the lit Fibers are Ascend GX 550
Smart Core Switches capable of operating at bit rates of 155.52 and 622.08
million bits per second with a continuous cell stream without gaps.
2
<PAGE> 116
CHART A
<TABLE>
<CAPTION>
SIGNAL EQUIPMENT (PROJECTED NUMBER OF)
--------------------------------------
TOTAL
PROJECTED NUMBER OF NUMBER
ROUTE STRANDS NORTEL NORTEL RE- OPTRONIC OF
PROJECT MILES OF FIBER OC-192 OC-48 GENERATOR AMPLIFIER POPS
------- --------- --------- ------ ------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta-
Jacksonville 350 144 2 2 1 6 1
Daytona-
Orlando-
Tampa 160 96 4 4 0 3 2
Jacksonville-
Miami 350 180 10 10 0 4 6
Portland-
Salt Lake City
("SLC")-
Los Angeles 1,300 0 8 5 7 26 0
Minneapolis-
Kansas City-
Denver-
SLC 1,450 96 10 10 8 28 4
Los Angeles-
New York City 4,150 0 46 26 1 25 0
Washington,
D.C.-New
York City 300 144 10 10 0 4 4
Miami-Tampa-
Tallahassee 580 96 6 6 2 9 2
Houston-
Atlanta-
Washington,
D.C. 1,820 0 18 10 21 66 0
</TABLE>
CHART B
<TABLE>
<CAPTION>
PROJECT CAPACITY
------- --------
<S> <C>
Atlanta - Jacksonville 384 DS-3s
Daytona - Orlando - Tampa 384 DS-3s
Jacksonville - Miami 384 DS-3s
Portland - Salt Lake City (a) Portland- Las Vegas: 384 DS-3s
("SLC") - Los Angeles (b) Los Angeles - Las Vegas:
768 DS-3s*
Minneapolis - Kansas City - (a) Denver-SLC: 576 DS-3s
Denver - SLC (b) Minneapolis - Kansas City:
384 DS-3s
(c) Kansas City - Denver: 576 DS-3s
Los Angeles - New York City (a) Los Angeles - Las Vegas:
768 DS-3s*
(b) New York City - Los Vegas:
576 DS-3s
Washington, D.C. - New 768 DS-3s
York City
Miami-Tampa - Tallahassee 384 DS-3s
Houston - Atlanta - Washington, D.C. (a) Houston - Atlanta: 576 DS-3s
(b) Washington, D.C. - Atlanta:
768 DS-3s
</TABLE>
*these are the same equipment
3
<PAGE> 117
APPENDIX A TO THE PARTICIPATION AGREEMENT
This Appendix A to the Participation Agreement is a glossary of all or
substantially all of the defined terms used in the Operative Documents. Not all
of the terms defined in this Appendix A are used in the Participation
Agreement.
For purposes of the Operative Documents (i) all defined terms in the
Operative Documents referenced in the singular shall include the plural and
vice versa and words of one gender shall be held to include the other gender as
the context requires, (ii) the word "including" and words of similar import
when used in the Operative Documents shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iii) the word "or" will not be exclusive and (iv) a reference to
any Operative Document or Securitization Document shall be deemed a reference
to that Operative Document or Securitization Document as it may be amended,
modified or supplemented from time to time.
"A-Note Deficiency" has the meaning set forth in Section 1.09(b) of
the Participation Agreement.
"A-Note Prepayment Amount" has the meaning set forth in Section
5.09(a) of the Participation Agreement.
"A-Note Proceeds Amount" has the meaning set forth in Section 5.10(a)
of the Participation Agreement.
"A-Notes" has the meaning set forth in Article I of the Declaration.
"Acceptance Date" means, with respect to any Item of Property, the
date title to or other ownership interest in such Item of Property vests in the
Lessor.
"Acquisition Costs" means (a) all amounts paid or payable to finance
the designing, engineering, acquisition, installation, construction,
maintenance, testing and lighting of the Property from the Initial Funding Date
through the Completion Date; (b) interest, fees and expenses paid or payable on
or with respect to the Notes from the Initial Funding Date through the
Completion Date; (c) Distributions, fees and expenses paid or payable on or
with respect to the Certificates from the Initial Funding Date through the
Completion Date; and (d) all fees and expenses incurred with respect to the
Appraisals; and (e) fees and expenses paid or payable on or with respect to the
Notes or
<PAGE> 118
the Certificates or otherwise related to the transactions contemplated by
the Participation Agreement.
"Act" means the Securities Act of 1933, as amended, and the Laws
promulgated or issued from time to time thereunder.
"Additional Costs" shall mean all Break Costs, Funding Costs, Reserve
Costs, Increased Costs, Unwind Fees, Charges, Other Charges, Other Taxes,
Illegality Costs, Contingent Rent, Variable Securitization Fees, and other
amounts required to be paid (or indemnified against) by the Lessee pursuant to
the Participation Agreement, the other Operative Documents or the
Securitization Documents.
"Additional Rent" means all amounts other than Fixed Rent which the
Lessee is required to pay to the Lessor pursuant to the Lease, including (i)
unpaid Charges and all amounts set forth in Section 4.05 of the Lease, (ii) all
sums, costs and expenses pursuant to Sections 10.01 and 12.08 of the Lease,
(iii) all taxes, costs and expenses relating to the Property or the Lessee's
use or the Lessor's leasehold interest or ownership thereof, (iv) any and all
amounts payable upon any purchase, sale, exchange, substitution, alteration,
redeployment or other transfer (or otherwise relating to) the Property,
together with every fine, penalty, interest and cost that may be added for
non-payment or late payment thereof, (v) all fees and expenses payable pursuant
to Sections 1.10 and 8.14 of the Participation Agreement, and (vi) all
Additional Costs.
"Adjusted Capitalized Cost" means, with respect to any Item of
Property, the sum of the Series A Portion, Series B Portion and Series C
Portion of the Adjusted Capitalized Cost of such Item of Property, and:
The "Series A Portion" of the Adjusted Capitalized
Cost of any Item of Property at any time shall be equal to the then
outstanding aggregate principal amount of the A-Notes issued to
finance the Acquisition Cost of such Item of Property (as set forth in
"Cost of Property" in Schedule I of the Certificate of Acceptance for
such Item of Property), together with interest accrued and unpaid and
all other amounts due thereon or with respect thereto;
The "Series B Portion" of the Adjusted Capitalized Cost of
any Item of Property at any time shall be equal to the then
outstanding aggregate principal amount of the B-Notes issued to
finance the Acquisition Cost of such Item of Property (as set forth
2
<PAGE> 119
in "Cost of Property" in Schedule I of the Certificate of Acceptance
for such Item of Property), together with interest accrued and unpaid
and all other amounts due thereon or with respect thereto; and
The "Series C Portion" of the Adjusted Capitalized Cost of
any Item of Property at any time shall be equal to the then
outstanding aggregate stated amount of the Certificates issued to
finance the Acquisition Cost of such Item of Property (as set forth in
"Cost of Property" in Schedule I of the Certificate of Acceptance for
such Item of Property), together with Distributions and all other
amounts due thereon or with respect thereto.
"Advance" has the meaning set forth in Section 1.01(a) of the
Participation Agreement.
"Advance Payment Fee" has the meaning assigned to such term in Section
7(c) of the APA.
"Affiliate" when used with respect to a Person, means any other Person
(a) which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such Person, (b) which
beneficially owns or holds 5% or more of any class of the Voting Stock (or, in
the case of a Person that is not a corporation, 5% or more of the equity
interest) of such Person, or (c) 5% or more of the Voting Stock (or in the case
of a Person which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by such Person or any of its subsidiaries.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting stock, by contract and otherwise;
provided, however, that under no circumstances shall the Note Holders or the
Certificate Holders be deemed to be Affiliates of the Trustee or vice versa.
"Agent" means Citibank, N.A., or any successor selected pursuant to
the Participation Agreement, acting in its capacity as administrative agent for
the Note Holders and the Certificate Holders.
"Alterations" means any and all additions to, alterations of or
replacements for the Property or any part thereof made by or for the Lessee, at
the sole cost and expense of the Lessee, excluding any replacements installed
as part of scheduled maintenance procedures.
3
<PAGE> 120
"APA" means the Asset Purchase Agreement dated September 2, 1998 among
CXC, the SPV, the APA Agent, the financial institutions named therein as APA
Purchasers, and Citicorp North America, Inc., as administrative agent for CXC
and as agent for the APA Purchasers and CXC with respect to the Residual Credit
Enhancement (as defined therein).
"APA Agent" means Citibank, N.A. or any successor agent selected
pursuant to the APA, acting as agent for the APA Purchasers.
"APA Purchase Notice" means a written notice to be delivered by CNAI
no later than 12:00 noon (New York City time), or as soon thereafter as is
practicable, on the effective date of each purchase of a Securitization
Percentage Interest or Borrower Percentage Interest pursuant to the APA.
"APA Purchasers" has the meaning set forth for the term "Purchasers"
in the APA.
"APA Purchaser's Price" has the meaning set forth in Section 1.07(a)
of the Participation Agreement.
"APA Rate" means, for each Interest Period, an interest rate per annum
equal to the sum of (i) (A) in respect of any Interest Period during which the
Applicable Rate is determined by reference to the LIBO Rate, the LIBO Rate in
effect for such Interest Period or (B) in respect of any Interest Period during
which the Applicable Rate is determined by reference to the Base Rate, the Base
Rate in effect from time to time during such Interest Period; plus (ii) the
Applicable Margin; plus (iii) the Securitization Percentage Interest Margin.
"Applicable Law" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"Applicable Margin" means the percentage per annum applicable to the
relevant Instrument as shown on Schedule II to the Participation Agreement.
"Applicable Payee" has the meaning set forth in Section 5.04(a) of the
Participation Agreement.
"Applicable Payor" has the meaning set forth in Section 5.04(a) of the
Participation Agreement.
"Applicable Permit" means any Permit that is necessary to own,
construct, start up, test, maintain, operate, lease or use the Property or any
portion thereof or interest therein in accordance with any of the Operative
Documents.
4
<PAGE> 121
"Applicable Rate" means the rate applied pursuant to Section 5.01 of
the Participation Agreement.
"Appraisal" means a valuation of the Property, which shall satisfy all
bank regulatory requirements (including, but not limited to, FIRREA) and shall
otherwise be satisfactory in scope and content to the Majority Holders;
provided, however, that any appraisal of a POP shall satisfy FIRREA.
"Appraised Value" means, with respect to any Item of Property, either
(i) the valuation thereof, if any, set forth in the Appraisal referred to in
Sections 2.01(p) and 2.02(k) of the Participation Agreement or (ii) the
valuation thereof in any Appraisal conducted by the Appraiser at any time for
purposes of the Lease or any other Operative Document.
"Appraiser" means an independent MAI appraiser selected by the Agent
and reasonably satisfactory to the Company.
"Approved IRU" means any IRU which (a) in the case of any IRU held as
Network Assets by the Trustee, is approved by the Lessor, the Agent and the
Majority Holders (which approval may be conditioned on such IRU containing
provisions (including provisions for a perfected, first priority security
interest in the Fiber and related assets involved in such IRU and other terms)
satisfactory to the Lessor, the Agent and the Majority Holders in their
discretion and (b) in the case of any IRU granted in respect of any Network
Assets owned by the Trustee, is (i) approved by the Lessor, the Agent and the
Majority Holders or (ii) has terms and conditions that (x) are commercially
reasonable, (y) are normal and customary in the United States
telecommunications market for the location and Fiber involved and (z) contain
the provisions no less favorable with respect to the protections (including
indemnification and limitations on recourse) afforded to the Trustee, the Note
Holders, the Certificate Holders and the other persons referred to as "Facility
Owners/Lenders", "Released Parties" and "Affiliates" than those set forth in
the form of IRU Agreement annexed as Schedule 5 of the Lease.
"Assignee" has the meaning set forth in Section 5.03(b) of the
Participation Agreement.
"Assignment and Acceptance" has the meaning set forth in Section
5.03(b) of the Participation Agreement.
"Assignment of Purchase Agreement" means the Assignment of Purchase
Agreements between the Company, as assignor, and the Trustee, as assignee, with
respect to the
5
<PAGE> 122
Equipment Purchase Agreements, individually and collectively.
"Assignor" has the meaning set forth in Section 5.03(b) of the
Participation Agreement.
"B-Note Prepayment Amount" has the meaning set forth in Section
5.09(b) of the Participation Agreement.
"B-Note Proceeds Amount" has the meaning set forth in Section 5.10(b)
of the Participation Agreement.
"B-Notes" has the meaning set forth in Article I of the Declaration.
"Bankruptcy Law" means Title 11 of the United States Code, and any
applicable Federal, state or local insolvency, reorganization, moratorium,
fraudulent conveyance or similar Law now or hereafter in effect for the relief
of debtors.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time which rate per annum shall at all
times be equal to the greater of:
(i) the rate of interest announced publicly by Citibank in
New York, New York, from time to time as Citibank's base rate (or
comparable rate, if Citibank does not so designate a base rate); or
(ii) l/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average being
determined weekly on each Monday (or, if any such day is not a
Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three New York certificate of deposit
dealers of recognized standing selected by Citibank in either case
adjusted to the nearest 1/16 of one percent or, if there is no nearest
1/16 of one percent, to the next higher 1/16 of one percent; or
(iii) 1/2 of 1% per annum above the Federal Funds Rate.
6
<PAGE> 123
Changes in the Base Rate shall become effective on the date such
change is publicly announced by Citibank.
"Base Rate Period" means any Interest Period during which the
Applicable Rate is determined based upon the Base Rate pursuant to Section 5.01
of the Participation Agreement.
"Base Term" means the period commencing on the Completion Date and
ending on the Base Term Expiration Date, or any earlier Expiration Date.
"Base Term Expiration Date" means the date which is 1,810 days after
the date of the Lease.
"Best's" means Best's Insurance Reports published by A.M. Best
Company, Inc. or any successor thereto which is a nationally recognized
statistical rating organization.
"Borrower Percentage Interest" has the meaning set forth for such term
in the APA.
"Break Costs" means any loss, cost or expense (including, interest
payable on CXC Advances, including Capitalized Interest (as defined in the
Finance Facility), through the maturity dates thereof, and any loss, cost or
expense incurred by reason of the liquidation or redeployment of deposits or
funds acquired by any Note Holder or Certificate Holder (from third parties or
Affiliates) to fund or maintain the Notes or the Investments, as the case may
be) incurred by a Note Holder or a Certificate Holder as a result of (a) the
payment of the Residual Value Amount or the Termination Value on a date other
than on a Payment Date or in the case of the SPV, in a principal amount in
excess of the principal amount of CXC Advances maturing on the date of such
payment; (b) any conversion from a LIBO Rate Period pursuant to Section 5.01(e)
of the Participation Agreement on a date other than on the last day of a LIBO
Rate Period; (c) any purchase of an Instrument pursuant to Section 5.02(e) of
the Participation Agreement other than on a Payment Date; (d) any failure to
convert the amount set forth in a notice of conversion pursuant to Section
5.01(e) to a LIBO Rate Period on the date specified in such notice; (e) any
failure of a Funding to occur on the date specified in the Requisition
submitted in connection with such Funding; or (f) any acceleration of the
maturity of the Notes or the Certificates (regardless of whether such maturity,
as accelerated, constitutes a Payment Date).
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions in New York, New York are required or
authorized by Law to suspend operations.
7
<PAGE> 124
"Cable" has the meaning set forth in the definition of Network Assets
set forth in this Appendix A.
"Cable Facilities" has the meaning set forth in the definition of
Network Assets set forth in this Appendix A.
"Capacity Lease" means an agreement to purchase a specified capacity
of telecommunications services, which is not associated with an interest in any
particular fiber optic network, Fiber, Signal Equipment or other Network Asset.
To the extent that such rights are associated with an IRU, such an agreement
will be deemed an IRU hereunder.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) property or assets to the extent
such obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of the
Participation Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Cash Equivalents" means, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (ii) marketable direct obligations issued
by any state of the United States or any political subdivision or public
instrumentality of such state, in each case having maturities of not more than
six months from the date of acquisition and, at the time of acquisition
thereof, having one of the two highest ratings obtainable from either Standard
& Poor's or Moody's, (iii) Dollar denominated time deposits and certificates of
deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company having, a long-term unsecured debt rating
of at least "A" or the equivalent thereof from Standard & Poor's or "A2" or the
equivalent thereof from Moody's with maturities of not more than six months
from the date of acquisition by such Person, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iii) above, (v) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's or at least P-1 or the equivalent
thereof by Moody's and in each case maturing not more than six months after the
date of acquisition by such Person and (vi) investments in money market funds
substantially all of whose assets are comprised
8
<PAGE> 125
of securities of the types described in clauses (i) through (v) above.
"Cash Secured Advance" has the meaning set forth in Section 1.01(d) of
the Participation Agreement.
"Cash Secured Advance Date" has the meaning set forth in Section
1.07(a) of the Participation Agreement.
"Casualty" has the meaning set forth in Section 7.01 of the Lease.
"Central Filing" means, with respect to any State, a financing
statement filed under the UCC with the Department of State, in the office of
the Secretary of State, in order to perfect a State-wide security interest in
Property.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended by the Superfund Amendments and Reauthorization
Act, 42 U.S.C. Section 9601 et seq. and as further amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Information System, which is a list maintained by the United
States Environmental Protection Agency of sites where there is a known or
suspected release or potential release of hazardous substances which may
require remediation.
"Certificate" has the meaning set forth in Section 1.01 of the
Declaration.
"Certificate Commitment" of any Certificate Holder means the
commitment of such Person to make Investments pursuant to Section 1.02(a) of
the Participation Agreement up to the aggregate stated amount set forth below
the name of such Person on Schedule I to the Participation Agreement under the
heading "Certificate Commitment", as the same may be adjusted from time to time
pursuant to any Assignment(s) and Acceptance(s) executed by such Certificate
Holder, which commitment shall expire on the Commitment Termination Date;
provided, however, that in no event shall any Certificate Holder be obligated
to make an Investment pursuant to Article I of the Participation Agreement if
after giving effect thereto, the sum of the stated amounts of such Certificate
Holder's Certificates would exceed the amount set forth below the name of such
Person on Schedule I to the Participation Agreement under the heading
"Certificate Commitment".
"Certificate Holder" means any Holder of the Certificates.
9
<PAGE> 126
"Certificate Liquidation Amount" has the meaning set forth in Article
I of the Declaration.
"Certificate of Acceptance" means any certificate of acceptance
substantially in the form annexed as Exhibit A of the Lease which is
appropriately completed, executed and delivered in accordance with the
provisions of the Lease.
"Certificate Purchasers" means any Purchaser that has a Certificate
Commitment or otherwise holds a Certificate.
"Certificate Proceeds Amount" has the meaning set forth in Section
5.10(c) of the Participation Agreement.
"Certificate Redemption Amount" has the meaning set forth in Section
5.09(c) of the Participation Agreement.
"Certificates" has the meaning set forth in Article I of the
Declaration.
"Certificate Yield" means Distributions and Commitment Fees payable in
respect of the Certificates.
"Certificate Yield Capitalization Period" means the period beginning
on the Initial Funding Date and ending on the Commitment Termination Date
during which time Certificate Yield accrues on the Certificates.
"Change of Control" means, with respect to the Company, any event or
circumstance whereby Williams no longer beneficially owns at least 50% of all
of the authorized, issued and outstanding shares of capital stock of the
Company.
"Charges" means all Taxes, assessments, levies, fees, inspection fees
and other authorization fees and all other governmental charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of every
character (including all penalties, additions to tax, fines or interest
thereon) arising directly or indirectly out of the transactions contemplated by
the Participation Agreement and the other Operative Documents or Securitization
Documents, including (a) those which, at any time prior to or during the Term,
may accrue with respect to, be imposed or levied upon or assessed against or be
a Lien upon (i) the Property or any part thereof, or the Operative Documents,
including the Notes and the Certificates, or the Securitization Documents, (ii)
the Trustee or the Collateral Trustee in connection with the transactions
contemplated by the Operative Documents or the Securitization Documents, or
(iii) the Lease, or the leasehold estates thereby created, or which arise in
respect of the acquisition, ownership, renovation, construction, operation,
occupancy, possession,
10
<PAGE> 127
disposition, use, non-use, financing, leasing, sub-leasing or condition of the
Property or any part thereof or of the execution, delivery, expiration or
termination of the Lease, the Notes, the Certificates or any other Operative
Document or Securitization Document; (b) those which may be imposed or levied
upon, assessed against or measured by any Fixed Rent, Additional Rent or other
sum payable under the Lease, the Notes, the Certificates, the Participation
Agreement or any other Operative Document or Securitization Document; (c) all
sales, value added, use and similar Taxes at any time levied, assessed or
payable on account of the ownership, operation, occupancy, use, leasing, or
subleasing of the Property or any part thereof; (d) all charges, levies, fees,
rents or assessments for or in respect of utilities, communications and other
services rendered or used on or about, the Property or any part thereof; and
(e) payments in lieu of each of the foregoing; and all liabilities with respect
to the foregoing other than Excluded Charges.
"Citibank" means Citibank, N.A.
"Closing Costs" means all charges incident to any sale, lease,
exchange, redeployment or other disposition of any Item of Property, including
reasonable attorneys' fees of Special Counsel and Trustee's Counsel and escrow
fees, recording fees, broker's fees, any out-of-pocket fees, costs (including,
without limitation, Break Costs) or expenses incurred by the Trustee in
connection with the same and with the release of any Operative Document, and
all applicable transfer taxes which may be imposed by reason of such sale and
conveyance and the delivery of any and all instruments in connection therewith.
"Closing Date" has the meaning set forth in Section 5.04(d) of the
Lease.
"CNAI" means Citicorp North America, Inc. as administrative agent for
CXC under the APA or any successor acting in such capacity.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Laws promulgated or issued from time to time thereunder.
"Collateral" has the meaning set forth in Article I of the Interparty
Agreement.
"Collateral Agent" means State Street, or any successor selected
pursuant to the Interparty Agreement, not in its individual capacity, but
solely as collateral agent.
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"Collateral Purchase Account" has the meaning set forth in Section
1.07(b) of the Participation Agreement.
"Collateral Purchase Account Period" has the meaning set forth in
Section 1.08(a) of the Participation Agreement.
"Commission" shall mean the Securities and Exchange Commission, or any
regulatory body that succeeds to the functions thereof.
"Commitment Fees" has the meaning set forth in Schedule II to the
Participation Agreement.
"Commitments" means, collectively the Interim Note Commitments and the
Certificate Commitments.
"Commitment Termination Date" means the earliest of (i) the Completion
Date, (ii) the Date Certain, (iii) full utilization of the Commitments and (iv)
any other termination of the Commitments, including upon an Event of Default.
"Company" means Williams Communications, Inc., a Delaware corporation
formerly named Vyvx, Inc., and any permitted successor or assignee pursuant to
the terms of the Participation Agreement.
"Completion Date" means the date on and as of which the Company has
delivered to the Agent and the Trustee a fully executed Officer's Certificate
of Completion substantially in the form of Exhibit B to the Participation
Agreement, which date shall be no later than the Date Certain.
"Condemnation" has the meaning set forth in Section 7.01 of the Lease.
"Conduit" has the meaning set forth in the definition of Network
Assets set forth in this Appendix A.
"Consent" means any consent, approval, waiver, exemption, order, other
action by, and any notice to or filing with, any Governmental Authority or
other Person.
"Contingent Rent" has the meaning set forth in Section 3.03(b) of the
Lease.
"Conversion Date" means any date on which the basis for the
determination of the Applicable Rate is converted pursuant to Article V of the
Participation Agreement or for any other reason pursuant to the terms of the
Operative Documents from the Quoted Rate, the LIBO Rate or the Base Rate to
another of such rates.
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"Conveyance Documents" means, with respect to the Property, the
Assignments of Purchase Agreements, all financing and continuance statements
under the UCC or amendments thereto, the Security Agreement and any easement or
license agreement delivered in connection with the acquisition of the Property,
in each case individually and collectively.
"Credit Enhancer" means The Chase Manhattan Bank in its capacity as
the "Bank" as defined in the Residual Credit Enhancement Agreement.
"CSI" means Citicorp Securities, Inc.
"CXC" means CXC Incorporated, a Delaware corporation, together with
its successors and permitted assigns.
"CXC Advances" means advances made by CXC to the SPV pursuant to the
provisions of the Finance Facility.
"CXC's Credit Enhancer" means MBIA Insurance Corporation, a New York
stock insurance company, or another similar Person, who will provide credit
enhancement to CXC under the Insurance Agreement or under a similar agreement.
"Date Certain" means December 31, 1999.
"Declaration" or "Declaration of Trust" means the Amended and Restated
Declaration of Trust 1998 WCI Trust dated as of September 2, 1998 by the
Trustee, as trustee.
"Default" means an event which with the lapse of time, the giving of
notice or both would become an Event of Default.
"Default Rate" means the lesser of (i) the Maximum Rate and (ii) the
Applicable Margin plus 2 percent in excess of the Base Rate in effect from time
to time.
"Discount Rate" means 6.20% or such other percentage to which the
Lessee and the Co-Arrangers may agree.
"Distributions" means the distributions of current yield payable to
the Certificate Holders on each Payment Date, except that such amounts shall
accrue but not be payable during the Certificate Yield Capitalization Period.
"EITF-97-10" means FASB Emerging Issues Task Force Issue Number 97-10,
effective May 21, 1998.
"Eligible Assignee" means (a) with respect to any assignment by a
Certificate Holder, any Person approved by the Agent and the Company (such
approval not to be
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unreasonably withheld or delayed), (b) with respect to any assignment by a Note
Holder pursuant to the APA (i) any APA Purchaser, (ii) in connection with
repurchases of Borrower Percentage Interests under the APA, the SPV and (iii)
CXC's Credit Enhancer, and (c) with respect to any assignment by a Note Holder
other than pursuant to the APA (i) CXC's Credit Enhancer, (ii) Citibank, N.A.
or any of its Affiliates, or any Person managed by Citibank, N.A. or any of its
Affiliates, (iii) any APA Purchaser or (iv) with the consent of the Company and
the Agent, which will not be unreasonably withheld, any financial or other
institution which, prior to the termination of the APA, is acceptable to the
APA Agent, and which, in the case of any of (i)-(iv), is approved, prior to the
termination of the APA, by CXC, and (v) CXC's Credit Enhancer; provided,
however, that, prior to termination of the APA unless the APA Agent shall
otherwise consent in writing and shall have received written confirmation from
each Rating Agency (as such term is defined in the Finance Facility) that the
rating then applicable to any promissory notes issued to fund or maintain CXC
Advances will not be withdrawn or downgraded as a result of the applicable
Eligible Assignee not having the following ratings or not being rated by either
S&P or Moody's, each Eligible Assignee shall have, on the date of assignment
hereunder to such Eligible Assignee, ratings with respect to its unsecured
short-term debt securities of not lower than A-1 by S&P and P-1 by Moody's and
shall not, on the date of assignment hereunder to such Eligible Assignee, be
mentioned with negative or developing implications in "Credit Watch" by S&P or
a similar publication list by S&P or any other Rating Agency, while rated A-1
by S&P and P-1 by Moody's, as the case may be, or be unrated by either S&P or
Moody's.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance
or violation, notice of liability or potential liability, investigation,
proceeding, consent order or consent agreement arising under any Environmental
Law or Environmental Permit or relating to Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment,
including, without limitation, (a) by any governmental or regulatory authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or any third party
for damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.
"Environmental Audit" has the meaning set forth in Section 2.01(q) of
the Participation Agreement.
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"Environmental Consultant" means any environmental consulting firm
reasonably satisfactory to the Agent, the Collateral Agent, the Majority
Holders and the Company.
"Environmental Event" has the meaning set forth in Section 8.01 of the
Lease.
"Environmental Laws" means any and all Federal, state and local Laws
(as well as obligations, duties and requirements relating thereto under common
law) relating to: (a) emissions, discharges, spills, releases or threatened
releases of pollutants, contaminants, Hazardous Materials, materials containing
Hazardous Materials, or hazardous or toxic materials or wastes into ambient
air, surface water, groundwater, watercourses, publicly or privately-owned
treatment works, drains, sewer systems, wetlands, septic systems or onto land;
(b) the use, treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Materials, materials containing
Hazardous Materials or hazardous and/or toxic wastes, material, products or
by-products (or of equipment or apparatus containing Hazardous Materials); (c)
pollution or the protection of human health or the environment; or (d) land use
laws.
"Environmental Permit" means any Permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Environmental Trigger" has the meaning set forth in Section 8.02 of
the Lease.
"Equipment Purchase Agreements" means (i) the Agreement for the Sale
and Purchase of Assets between MediaOne Florida Telecommunications, Inc. and
the Company dated as of March 3, 1998, as amended (the "MediaOne Agreement"),
(ii) The Williams Contract Agreement dated as of May 21, 1998 between Siecor
Operations, LLC and the Company, (iii) The Company Purchase and License
Agreement dated as of March 5, 1998 between Ascend Communications, Inc. and the
Company, together with Service Agreement dated as of March 5, 1998, (iv) Basic
Supply Agreement dated as of September 23, 1993 between Northern Telecom Inc.
and the Company, together with Attachments No. 2 and No. 3 thereto, and each of
the agreements for the purchase of Property or services related thereto to be
assigned to the Trustee or entered into by the Trustee subsequent to the
Initial Funding Date and prior to the Commitment Termination Date with respect
to the transactions contemplated by the Operative Documents, individually and
collectively.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, any
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regulations and the Laws promulgated or issued from time to time thereunder and
any successor legislation.
"ERISA Affiliate" means any corporation or trade or business that is a
member of any group of organizations (a) described in Section 414(b) or (c) of
the Code of which any Williams Entity is a member and (b) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
such Williams Entity is a member.
"Eurocurrency Liabilities" has the meaning assigned to the term
"Eurocurrency liabilities" in Regulation D of the Federal Reserve Board, as in
effect from time to time.
"Event of Default" has the meaning set forth in Section 6.01 of the
Participation Agreement.
"Excess Certificate Amount" means the amount by which the aggregate
stated amount of the Certificates exceeds three percent (3%) of the Acquisition
Costs on the Completion Date, plus yield to the date of payment of such excess
amount.
"Excess Funds" has the meaning set forth in Section 7.03 of the Lease.
"Excess Proceeds" means all of the proceeds from the sale, exchange or
other disposition of Network Assets which have not been used to acquire other
Network Assets in accordance with the provisions of Section 5.08(c)(iv) of the
Lease within the 270-day period referred to in Section 5.08 of the Lease.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Charges" means (a) Taxes imposed on the Agent's, the
Trustee's, CXC's or the Collateral Agent's net income, and franchise Taxes
imposed on such Person, to the extent such Tax is determined solely by
reference to the fees received by the Agent, the Trustee, CXC, CXC's Credit
Enhancer or the Collateral Agent under the Operative Documents or the
Securitization Documents; (b) United States federal income Taxes (other than
Taxes withheld at the source) imposed on a Note Holder (other than the SPV),
Certificate Holder or APA Purchaser to the extent that such Tax is determined
solely on the basis that such Note Holder, Certificate Holder or APA Purchaser,
as the case may be, is a creditor entitled to receive only payments of
interest, stated original issue discount, if any, and principal for
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such Tax purposes; (c) Taxes imposed on a Note Holder's, Certificate Holder's
(other than the SPV's) or APA Purchaser's net income and franchise Taxes
imposed on a Note Holder, Certificate Holder or APA Purchaser by the
jurisdiction under the Laws of which such Note Holder, Certificate Holder or
APA Purchaser, as the case may be, is organized or by any jurisdiction in which
such Note Holder, Certificate Holder or APA Purchaser, as the case may be, is
doing business or by any political subdivision of the foregoing, to the extent
that such Tax is determined solely on the basis that such Note Holder,
Certificate Holder or APA Purchaser, as the case may be, is a creditor entitled
to receive only payments of interest, stated original issue discount, if any,
and principal for such Tax purposes; and (d) any Taxes imposed by the United
States of America by means of withholding at the source if and to the extent
that (i) such Taxes are not attributable to a change in applicable Law after
the date hereof or the effective date of the Assignment and Acceptance pursuant
to which such Person became a Note Holder, Certificate Holder or APA Purchaser,
as the case may be, and (ii) such Taxes are determined solely on the basis that
a Note Holder, Certificate Holder or APA Purchaser is a creditor entitled to
receive only payments of interest, stated original issue discount, if any, and
principal for such Tax purposes; provided, however, that any such Taxes are not
incurred or increased directly or indirectly by actions of the Company on or
after the date of the Participation Agreement (other than actions specifically
required of the Company thereunder or under another Operative Document).
"Executive Officer" means, with respect to the Company and the
Guarantor, the chief executive officer, the chief operating officer, the chief
financial officer, the treasurer, the general counsel or the controller of such
entity.
"Expiration Date" means (i) the Base Term Expiration Date, (ii) any
Renewal Term Expiration Date and (iii) any other date on which the Lease is
terminated in accordance with its terms, individually and collectively.
"Facility Agreements" means the Services Agreement and any replacement
thereof or substitute therefor, individually and collectively.
"FASB" means the Financial Accounting Standards Board or any successor
thereto.
"FCC" means the Federal Communications Commission.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on
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overnight Federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fiber" has the meaning set forth in the definition of Network Assets
set forth in this Appendix A.
"Finance Facility" means the uncommitted finance facility dated as of
the Initial Funding Date, among the SPV, CNAI and CXC.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such
corporation.
"FIRREA" means the Financial Institutions Reform and Recovery Act of
1989, 12 U.S.C. Section 1821 et seq., as amended from time to time.
"First Amendment" means the First Amendment dated as of July 31, 1998
among Williams, the Company, SSBTC, as trustee, the Original Note Holder, the
Original Certificate Holder and Citibank, as collateral agent and
administrative agent.
"Fixed Rent" has the meaning set forth in Section I of Schedule 1 to
the Lease.
"Fixed Securitization Costs" means certain fees and other fixed costs
related to the SPV, the APA or the Finance Facility, as set forth in the
Securitization Fee Letter, to the extent not included in the calculation of the
Quoted Rate.
"Fixture Filing" means a financing statement filed under the UCC in
order to perfect a security interest in Property, which is deemed to be so
related to particular real estate that an interest in such Property arises
under real estate Law.
"Force Majeure" means strikes, acts of God, acts of any governmental
authority, natural disaster, war, insurrection, riot, terrorist acts or civil
disobedience.
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"Funding" means a funding of Acquisition Costs specified in an
approved Requisition, which Funding shall consist of Advances made by the Note
Holders and Investments made by the Certificate Holders pursuant to Section
1.03 of the Participation Agreement and shall occur on a Funding Date.
"Funding Costs" means any actual loss, cost or expense incurred by any
Note Holder or Certificate Holder as a result of any failure to fulfill on or
before the date specified in any Requisition the applicable conditions set
forth in Article II of the Participation Agreement, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by such Note Holder or
Certificate Holder (from third parties or Affiliates) to fund the Advance to be
made by such Note Holder or the Investment to be made by the Certificate Holder
when such Funding, as a result of such failure, is not made on such date.
"Funding Dates" means (a) the Initial Funding Date and (b) any other
dates on which a Funding occurs under Article I of the Participation Agreement.
"GAAP" means generally accepted accounting principles (including
principles of consolidation), in effect from time to time in the United States,
consistently applied.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or
otherwise), provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business. The amount of any
Guarantee of a Person shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
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"Guarantor" means Williams Holdings of Delaware, Inc., a Delaware
corporation.
"Guaranty" means the Amended and Restated Guaranty Agreement dated as
of September 2, 1998, by and between Williams, as the Guarantor, and the
Trustee, Citibank, N.A., as Agent, and State Street, as Collateral Agent.
"Hazardous Materials" means (a) hazardous materials, hazardous wastes,
and hazardous substances as those or similar terms are defined under any
Environmental Laws, including, but not limited to, the following: the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., as amended from
time to time, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., as amended from time to time, CERCLA, the Clean Water Act, 33
U.S.C. Section 1251 et seq., as amended from time to time, the Clean Air Act,
42 U.S.C. Section 7401 et seq., as amended from time to time and/or the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., as amended from time to
time; (b) petroleum and petroleum products including crude oil and any
fractions thereof; (c) natural gas, synthetic gas, and any mixtures thereof;
(d) asbestos and/or any material which contains any hydrated mineral silicate,
including, but not limited to, chrysolite, amosite, crocidolite, tremolite,
anthophylite and/or actinolite, whether friable or non-friable; (e)
polychlorinated biphenyls ("PCB's"), or PCB-containing materials, or fluids;
(f) radon; (g) any other hazardous radioactive, toxic or noxious substance,
material, pollutant, or solid, liquid or gaseous waste; and (h) any hazardous
substance that, whether by its nature or its use, is subject to regulation
under any Environmental Law or with respect to which any Federal, state or
local Environmental Law or governmental agency requires environmental
investigation, monitoring or remediation.
"Holder" has meaning set forth in Article I of the Declaration.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all rules and regulations promulgated thereunder.
"Illegality Costs" means any additional amounts as may be necessary to
compensate any Note Holder or Certificate Holder for any losses, costs or
expenses actually incurred by it in making any conversion of the Applicable
Rate in accordance with Section 5.02(b) of the Participation Agreement.
"Increased Costs" means any additional amounts, as set forth in a
reasonably detailed certificate submitted to the Company as to the amounts and
basis for such amounts,
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sufficient to compensate any Note Holder or Certificate Holder for any
increased costs or reduced return on capital as a result of funding or
maintaining its Notes or Certificate as the case may be (including, without
limitation, any such increased costs that are a result of the imposition of any
reserve, special deposit, capital adequacy or similar requirement against
assets of, or deposits with or for the account of, or credit extended by such
Note Holder or Certificate Holder) as a result of (a) the introduction or
implementation after the Initial Funding Date of any applicable Law or any
change therein, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or (b) the compliance by any Note
Holder or Certificate Holder (or its purchasing office) with any guideline or
request (whether or not having the force of Law) of any such authority, central
bank or comparable agency, which becomes effective after the date hereof, and
has the effect of increasing the cost or reducing the rate of return on capital
to any Note Holder or Certificate Holder in respect of its agreeing to make,
making, funding or maintaining its Notes or the Certificates, as the case may
be. For purposes of this provision, (i) each APA Purchaser holding a Percentage
Interest shall, to the extent and for so long as it holds such Percentage
Interest, be deemed a Note Holder with respect to the Principal Portion of such
Percentage Interest, and (ii) CXC's Credit Enhancer shall be deemed a Note
Holder to the extent of the principal amount of Notes attributable to CXC
Advances or portion thereof that has been assigned to CXC's Credit Enhancer or
in respect of which a draw has been made under the insurance policy or surety
bond issued under the Insurance Agreement, for so long as it holds any such
interest.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of property or assets to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price of
property or services, other than trade accounts payable (other than for
borrowed money) arising, and accrued expenses incurred, in the ordinary course
of business so long as such trade accounts payable are payable within 90 days
of the date the respective goods are delivered or the respective services are
rendered; (c) Indebtedness of others secured by a Lien on the property or
assets of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person; (d) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for account of such Person;
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(e) Capital Lease Obligations of such Person; (f) Indebtedness of others
Guaranteed by such Person; and (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person.
"Indemnified Party" has the meaning set forth in Section 8.14(a) of
the Participation Agreement.
"Independent Engineer" means any construction engineering firm
reasonably satisfactory to the Agent, the Collateral Agent, the Majority
Holders and the Company.
"Initial Funding Date" means September 2, 1998 or such other date as
the Company and Agent may agree as the date for issuance of the Interim Notes
and the Certificates.
"Instruments" means, collectively, the Notes and the Certificates.
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Insurance Agreement" means the Insurance Agreement dated as of the
Initial Funding Date, among CXC's Credit Enhancer, CXC, Citibank, and Citicorp
North America, Inc., as agent.
"Insurance Requirements" has the meaning set forth in Section 6.05 of
the Lease.
"Intellectual Property Rights" has the meaning set forth in Section
3.01(r)(ii) of the Participation Agreement.
"Interest" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"Interest Period" means with respect to all Instruments (but excluding
the portion of the Notes to the extent that the Applicable Rate is determined
by reference to the Quoted Rate) the period commencing on the Initial Funding
Date or Conversion Date, as applicable, and (a) at any time that the Applicable
Rate is determined by reference to the LIBO Rate, ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter (except as otherwise, set forth in the last sentence of Section
5.01(a)(ii) with respect to the Notes) and each successive period commencing on
the last day of the preceding Interest Period and ending on the numerically
corresponding day of the calendar month that is one, two, three or six months
thereafter, in each case as the Company may select, and (b) at any time that
the
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Applicable Rate is determined by reference to the Base Rate, continuing
indefinitely until such time as the Applicable Rate is determined by reference
to a LIBO Rate or the Quoted Rate pursuant to Section 5.01 of the Participation
Agreement;
provided, however, that:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day (and, in the case of a LIBO Rate Period, a
LIBO Business Day), that Interest Period shall be extended to the next
succeeding Business Day (or LIBO Business Day, as the case may be)
unless, in the case of a LIBO Rate Period, the result of such
extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the
immediately preceding LIBO Business Day;
(ii) any LIBO Rate Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of the then
commencing Interest Period) shall end on the last LIBO Business Day of
the calendar month at the end of such LIBO Rate Period;
(iii) no Interest Period shall extend beyond the Interim
Note Maturity Date (with respect to the Interim Notes only) or the
Expiration Date, as applicable;
(iv) for purposes of calculating interest for any Interest
Period, such calculations shall include the first day but exclude the
last day of any such Interest Period; and
(v) there shall not be more than four different Interest
Periods at any one time.
"Interest Setting Date" means, (i) with respect to the first Interest
Period after the Initial Funding Date, the date which is the first day of such
Interest Period, (ii) with respect to any LIBO Rate Period, the date which is
two LIBO Business Days before the first day of such LIBO Rate Period or (iii)
with respect to any Base Rate Period, the date specified by the Company in the
written notice delivered by the Company pursuant to Section 5.01 of the
Participation Agreement as the first day that such Applicable Rate is to apply.
"Interim A Notes" has the meaning set forth in Article I of the
Declaration.
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"Interim A-Note Commitment" of any Interim A-Note Holder means the
commitment of such Person to make Advances under such Person's Interim A-Note
to fund Actual Project Costs, up to the aggregate principal amount set forth
below the name of such Person on Schedule I to the Participation Agreement
under the heading "Interim A-Note Commitment", as the same may be adjusted from
time to time pursuant to any Assignment(s) and Acceptance(s) executed by such
A-Note Holder pursuant to the terms of the Participation Agreement, which
commitment shall expire on the Commitment Termination Date; provided, however,
that in no event shall any A-Note Holder be obligated to make an Advance under
such A-Note Holder's Interim A-Note if after giving effect thereto, the sum of
principal amounts outstanding under such Interim A-Note would exceed the amount
set forth below the name of such Person on Schedule I to the Participation
Agreement under the heading "Interim A-Note Commitment".
"Interim A-Notes" has the meaning set forth in Article I of the
Declaration.
"Interim A Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Interim B Notes" has the meaning set forth in Article I of the
Declaration.
"Interim B-Note Commitment" of any Interim B-Note Holder means the
commitment of such Person to make Advances under such Person's Interim B-Note
to fund Actual Project Costs, up to the aggregate principal amount set forth
below the name of such Person on Schedule I to the Participation Agreement
under the heading "Interim B-Note Commitment", as the same may be adjusted from
time to time pursuant to any Assignment(s) and Acceptance(s) executed by such
B-Note Holder and pursuant to the terms of the Participation Agreement, which
commitment shall expire on the Commitment Termination Date; provided, however,
that in no event shall any B-Note Holder be obligated to make an Advance under
such B-Note Holder's Interim B-Note if after giving effect thereto, the sum of
principal amounts outstanding under such Interim B-Note would exceed the amount
set forth below the name of such Person on Schedule I to the Participation
Agreement under the heading "Interim B-Note Commitment".
"Interim B-Notes" has the meaning set forth in Article I of the
Declaration.
"Interim B Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Interim Note Commitment" of any Note Holder means the aggregate of
the Interim A-Note Commitment and the Interim B-Note Commitment of such Note
Holder.
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"Interim Note Maturity Date" has the meaning set forth in Article I of
the Declaration.
"Interim Notes" has the meaning set forth in Article I of the
Declaration.
"Interim Term" means, with respect to any Item of Property, the period
commencing on the Acceptance Date for such Item of Property and ending on the
Completion Date, or any earlier Expiration Date.
"Interparty Agreement" means the Amended and Restated Collateral
Agency and Interparty Agreement dated as of September 2, 1998 among the
Trustee, the Note Holders, the Certificate Holders, the APA Purchasers, the
Agent, the Collateral Agent, CXC and CXC's Credit Enhancer.
"Investments" has the meaning set forth in Section 1.02(a) of the
Participation Agreement.
"IRU" means an exclusive, indefeasible right of use of a specified
Fiber or group of Fibers owned by another party, including, the Cable
Facilities directly associated with the use of such Fiber or group of Fibers
and any rights, licenses, Permits, rights-of-way and other agreements necessary
for the installation and continuance of use of the IRU (including access to the
Fiber at any splice point).
"Item of Property" means any Network Asset set forth on any
Certificate of Acceptance.
"Law" means any law (including, without limitation, any zoning law or
ordinance, ERISA, any Environmental Law, or Legal Requirements), treaty,
directive, statute, rule, regulation, ordinance, order, directive, code,
interpretation, judgment, decree, injunction, writ, determination, award,
Permit, license, authorization, direction, requirement or decision of or
agreement with or by any government or governmental department, commission,
board, court, authority, agency, official or officer having jurisdiction of the
matter in question.
"Lease" means the Amended and Restated Lease dated as of September 2,
1998 between the Trustee, as Lessor, and the Company, as Lessee.
"Legal Requirements" means (i) all Laws, foreseen or unforeseen,
ordinary or extraordinary, or arising from any restriction of record or
otherwise, which now or at any time hereafter may be applicable to (A) the
Lessor as the owner of the Property; (B) the Lessee, as lessee hereunder; or
(C) the Property or any part thereof, or the ownership,
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<PAGE> 142
demolition, construction, operation, mortgaging, occupancy, possession, use,
non-use or condition of the Property or any part thereof and any other
governmental rules, orders and determinations now or hereafter enacted, made or
issued, and applicable to the Lessor, as owner of the Property, the Lessee, as
lessee hereunder, or the Property or any part thereof or the ownership,
demolition, construction, operation, mortgaging, occupancy, possession, use,
non-use or condition thereof whether or not presently contemplated; and (ii)
all agreements (including the Declaration), Permits, covenants and restrictions
applicable to the Property or any part thereof or the ownership, demolition,
construction, operation, mortgaging, occupancy, possession, use, non-use or
condition thereof.
"Lessee" means the Company, as Lessee under the Lease.
"Lessor" means the Trustee, as Lessor under the Lease.
"Lessor Group" means the Lessor, the Agent, the Collateral Agent, the
Independent Engineer, the Environmental Consultant, the Proceeds Trustee, the
Appraiser and their respective successors, assigns, representatives and agents,
individually and collectively.
"Letter of Credit" has the meaning set forth in Section 1.01 of the
Residual Credit Enhancement Agreement.
"LIBO Business Day" means a day of the year on which dealings are
carried on in the London interbank market and banks are open for business in
London and not required or authorized to close in New York City.
"LIBO Rate" for each LIBO Rate Period means an interest rate per annum
equal to the rate of interest per annum at which deposits in United States
dollars are offered to leading banks in the London interbank market at 11:00
a.m. (London time) on the Interest Setting Date in an amount approximately
equal to the applicable Instruments (or a portion thereof) and for a period
equal to such LIBO Rate Period, determined on the basis of the provisions set
forth below:
(a) On the Interest Setting Date the Agent will determine
the interest rate for deposits in U.S. Dollars for a period equal to
that of the LIBO Rate Period(s) to which such Interest Setting Date
relates which appears on the Telerate Page 3750 as of 11:00 a.m.
(London time) on such date or if such page on such service ceases to
display such information, such other page as may replace it on that
service for the purpose of display of such information (the
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<PAGE> 143
"Telerate Rate"). If such rate does not appear on the Telerate, then
the rate will be determined in accordance with clause (b) below.
(b) If the Agent is unable to determine the Telerate Rate,
then on the Interest Setting Date, the Agent will determine the
arithmetic mean (rounded if necessary to the nearest one-hundredth
percent (1/100%)) of the interest rate for a period equal to that of
the LIBO Rate Period to which such Interest Setting Date relates
quoted on Reuters Screen page "LIBO" or (i) if such page on such
service ceases to display such information, such other page as may
replace it on that service for the purpose of displaying such
information or (ii) if that service ceases to display such
information, such page as displays such information on such service
(or, if more than one, that one approved by the Agent as may replace
the Reuters Screen) as at or about 11:00 a.m. (London time) on that
Interest Setting Date (the rate quoted as aforesaid being the "LIBOR
Screen Rate").
If the Agent is to make a determination pursuant to this paragraph and
one or more of the LIBO Screen Rates required for such determination shall be
unavailable, the determination shall be made on the basis of those rates which
are available and if no LIBO Screen Rate is then available, the LIBO Rate shall
be determined on the basis of the rate of interest per annum at which deposits
in United States dollars are offered by the Agent to leading banks in the
London interbank market at 11:00 a.m. (London time) on the Interest Setting
Date for a period equal to that of the LIBO Rate Period(s) to which such
Interest Setting Date applies.
"LIBO Rate Period" means any Interest Period during which the
Applicable Rate is determined based upon the LIBO Rate pursuant to Section 5.01
of the Participation Agreement.
"LIBO Rate Reserve Percentage" of any Note or Certificate for any LIBO
Rate Period means the reserve percentage applicable during such assessment
period under the regulations issued from time to time by the Federal Reserve
Board (or if more than one such percentage is so applicable, the daily average
for such percentages for those days in such LIBO Rate Period during which any
such percentage shall be so applicable) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for such Note or Certificate in respect of liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
LIBO Rate Period.
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<PAGE> 144
"LIBOR Screen Rate" has the meaning set forth in the definition of
LIBO Rate.
"Lien" means any deed to secure debt, mortgage, deed of trust, pledge,
security interest, security title, encumbrance, lien, judgment lien, writ of
execution, attachment or charge of any kind, including without limitation any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give, any security interest or financing statements under the UCC
or under any applicable personal property security act or any comparable Law of
any jurisdiction.
"Liquidation Event" has the meaning set forth in Article I of the
Declaration.
"lit" or "lighting" means, with respect to a Cable, the installation
of Signal Equipment on the Cable to effect the transmission of signals via such
Cable.
"Losses" has the meaning set forth in Section 8.14(a) of the
Participation Agreement.
"Loss Event" means any Casualty or Condemnation, individually and
collectively.
"Majority Holders" means, at any time prior to the Commitment
Termination Date, the Note Holders and the Certificate Holders holding at least
66-2/3% of the Interim Note Commitment and the Certificate Commitment, and at
any time on or after the Commitment Termination Date, the Note Holders and
Certificate Holders holding at least 66-2/3% of the aggregate unpaid principal
amount of the Notes and the unpaid stated amount of the Certificates.
"Management Agreement" means the Management Agreement dated as of the
Initial Funding Date, among the SPV, the Member and Lord Securities Corporation
and the related side letter regarding fees.
"Margin Stock" shall have the meaning provided in Regulations T, U and
X.
"Material Adverse Effect" shall mean a material adverse effect on any
of (a) the business, assets, operation or condition, financial or otherwise, of
the Guarantor and its Subsidiaries taken as a whole, (b) the ability of the
Guarantor or the Company to perform any of its obligations under any Operative
Document to which it is or will be a party, (c) the rights of or benefits
available to the Note Holders and Certificate Holders under any Operative
Document, (d) the value, condition, marketability or operation of the Property
or the Lessor's ownership or lease
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<PAGE> 145
thereof, or (e) the validity or enforceability of any of the Operative
Documents.
"Material Subsidiary" shall mean, with respect to any Person, each
Subsidiary of such Person that, as at any time, (a) contributed more than 10%
of such Person's net income during the period of four full consecutive fiscal
quarters of such Person immediately preceding such time, (b) has at such time
capital equal to more than 10% of the Consolidated Stockholder's Equity of such
Person at any time, (c) has at such time consolidated liabilities equal to more
than 10% of the consolidated liabilities of such Person or (d) has at such time
consolidated assets with a book value of more than 10% of the book value of the
consolidated assets of such Person and its Subsidiaries.
"Maturity Date" means the date 1,810 days after the Initial Funding
Date, subject to extension as provided in the Lease.
"Maximum Rate" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"May Operative Documents" means (a) the May Participation Agreement,
(b) the Prior Lease, (c) the Notes and Certificates issued to Citicorp USA,
Inc. as Note Holder and Certificate Holder under the May Participation
Agreement, (d) the Guaranty Agreement dated as of May 6, 1998 between Williams,
SSBTC, as trustee, and Citibank, as collateral agent and administrative agent,
as amended by the First Amendment, (e) the Declaration of Trust of the 1998 WCI
Trust dated as of May 6, 1998, (f) the Interparty Agreement dated as of May 6,
1998 among SSBTC, as trustee, Citicorp USA, Inc., as Holders, and Citibank, as
collateral agent and administrative agent, as amended by the First Amendment,
(g) the Security Agreement dated as of May 6, 1998 between SSBTC, as trustee,
and Citibank, as collateral agent and (h) the Services Agreement dated as of
May 6, 1998 between the Company and SSBTC, as trustee, (i) the Conveyance
Documents (as defined in the May Participation Agreement).
"May Participation Agreement" means the Participation Agreement dated
as of May 6, 1998 among the Company, SSBTC, not in its individual capacity
except as expressly set forth therein, but solely as trustee, the Persons named
therein as Note Holders and Certificate Holders, Citibank, not in its
individual capacity, but solely as collateral agent, and Citibank, as
administrative agent, as amended by the First Amendment.
"MediaOne Agreement" has the meaning set forth in the definition of
Equipment Purchase Agreements.
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<PAGE> 146
"Member" means WC Network Holdings, Inc., a Delaware corporation,
which is the sole member of the SPV.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized statistical rating organization.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by any Williams
Entity or any ERISA Affiliate of such Williams Entity and that is covered by
Title IV of ERISA.
"Net Proceeds" has the meaning set forth in Section 7.01(c) of the
Lease.
"Network Assets" means, (i) fiber optic cable (including the optic
fibers ("Fibers") and sheathing) ("Cable"), (ii) conduit in which fiber optic
cable may be installed ("Conduit"), (iii) regenerator, terminal, splice and
junction facilities for fiber optic cable ("Cable Facilities"), (iv) switching,
electronic and optronic equipment and software to process signals and light the
optic fibers ("Signal Equipment"), (v) racks, power, alarm, HVAC and other
equipment and systems used to operate the Signal Equipment ("Racks"), (vi)
Approved IRUs and (vii) POPs. Network Assets do not include, for purposes of
the Operative Documents (unless otherwise expressly provided) (x) any Real
Property, (y) any underground or underwater ductwork, tunnels, vaults, landing
points or other structures in, to, through or under which fiber may be
installed, except in each case to the extent that any Approved IRU or POP may
include rights in respect of any of the foregoing.
"Note Holders" has the meaning set forth in Article I of the
Declaration.
"Note Purchaser" means any Person that has an Interim Note Commitment
or otherwise holds a Note.
"Notes" has the meaning set forth in Article I of the Declaration.
"NPL" means the National Priorities List.
"Offer to Purchase" means an irrevocable, written offer to purchase
the Property in its entirety or any Item of Property, as the case may be,
pursuant to Article III of the Lease.
"Officer" of any Person means the president, any vice president,
manager, in the case of a limited liability
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<PAGE> 147
company, or any other duly authorized and responsible officer of such Person.
"Officer's Certificate" or "Officers' Certificate" of a Person means a
certificate signed by an Officer or Officers of such Person.
"Operative Documents" means the Participation Agreement, the Lease,
the Notes, the Certificates, the Guaranty, the Declaration, the Conveyance
Documents, the Interparty Agreement, the Security Agreement and the Services
Agreement, in each case individually and collectively.
"Optional Purchase Proceeds" has the meaning set forth in Section 5.10
of the Participation Agreement.
"Original Certificate Holder" means Citicorp USA, Inc., the holder of
the Original Certificates.
"Original Certificates" means the Certificates issued by the Trustee
to Citicorp USA, Inc. on the Original Initial Funding Date pursuant to the
terms of the May Operative Documents.
"Original Initial Funding Date" means June 5, 1998.
"Original Note Holder" means Citicorp USA, Inc., the holder of the
Original Notes.
"Original Notes" means the A-Notes and B-Notes issued by the Trustee
to Citicorp USA, Inc. on the Original Initial Funding Date pursuant to the
terms of the May Operative Documents.
"Original Total Commitment" means the aggregate Note and Certificate
commitment of the Original Note Holder and Original Certificate Holder, not to
exceed $38,000,000.
"OTDR Test" means an optical time domain reflectometer test, which is
a test to determine the functionality of installed Fiber from end-to-end or
other basis such as splice point to splice point.
"Other Charges" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"Other Taxes" has the meaning set forth in Section 5.04(b) of the
Participation Agreement.
"Outstanding", with respect to any Instrument, has the meaning set
forth in Article I of the Declaration.
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<PAGE> 148
"Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, by and among the Company, the Trustee,
the Persons named therein as Note Holders, Certificate Holders and APA
Purchasers, the Collateral Agent and the Agent.
"Payment Date" means with respect to the Notes and the Certificates
and with respect to Fixed Rent, (a) if the Applicable Rate is determined by
reference to the LIBO Rate, the Payment Date shall be each Conversion Date and
the last day of each Interest Period, but in no event less than quarterly; and
(b) if the Applicable Rate is determined by reference to the Base Rate, the
Payment Date shall be each Conversion Date and the last Business Day of each
March, June, September and December; and (c) if the Applicable Rate is
determined by reference to the Quoted Rate, the Payment Date shall be the
second Business Day of each month; and (d) in any case, the Expiration Date or,
if earlier, the termination of the Lease or the maturity of the Instruments. If
the Applicable Rate is determined by reference to the LIBO Rate and if a
Payment Date is not a LIBO Business Day, such Payment Date shall be the next
preceding LIBO Business Day. Otherwise, if a Payment Date is not a Business
Day, such Payment Date shall be the next succeeding Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage" means, with respect to any Note Holder, the percentage
equal to its Note Commitment divided by the aggregate Total Commitment, as such
Percentage may be adjusted from time to time pursuant to any Assignment(s) and
Acceptance(s) executed by any such Note Holder, and with respect to any
Certificate Holder, the percentage equal to its Certificate Commitment divided
by the aggregate Total Commitment as such Percentage may be adjusted from time
to time pursuant to any Assignment(s) and Acceptance(s) executed by any such
Certificate Holder.
"Percentage Interests" means Borrower Percentage Interests and
Securitization Percentage Interests, individually and collectively.
"Permissible Investments" means (i) Cash Equivalents and (ii) senior,
unsecured demand notes issued by the Lessee and fully guaranteed as to payment
of principal, interest and all other amounts due thereunder by Williams, which
provide for current payments of interest at rates and times sufficient to pay
(as and when due) current interest and yield on the Instruments in an aggregate
amount equal to the principal amount of the Notes and Certificates (assuming
for this purpose that 85% of the Instruments are A-Notes, 12% of the
Instruments are B-Notes and 3% of the
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<PAGE> 149
Instruments are Certificates); provided, that such senior, unsecured demand
notes will be Permissible Investments only during any period that Williams has
credit ratings by (x) Moody's at least equal to Baa3 and (y) Standard & Poor's
at least equal to BBB-.
"Permit" means any approval, certificate of occupancy, consent,
waiver, exemption, variance, franchise, order, permit, authorization, right or
license of or from any Federal, state or local government or agency or
subdivision thereof, including the FCC and any equivalent state agency.
"Permitted Encumbrances" means, with respect to the Property, but only
to the extent applicable from time to time thereto, any of the following: (a)
rights reserved to or vested in any municipality or public authority, by the
terms of any franchise, grant, license, Permit or provision of Law, to
purchase, condemn, appropriate or recapture, or designate a purchaser of the
Property; (b) any liens thereon for Charges and any liens of mechanics,
materialmen and laborers for work or services performed or materials furnished
in connection with the Property, in each instance, which are not due and
payable, or which are being contested in good faith by the Lessee pursuant to
paragraphs 11 and 18 of the Lease; (c) rights reserved to or vested in any
municipality or public authority to control or regulate the use of the Property
or to use the Property in any manner; (d) easements, rights-of-way, servitudes,
restrictions and other minor defects, encumbrances and irregularities in title
to the Property which could not, individually or in the aggregate, materially
and adversely affect the value, condition, marketability or operation of the
Property or the Lessor's ownership or lease thereof and (e) the Operative
Documents.
"Permitted Investments" has the meaning set forth in Article I of the
Declaration.
"Person" means any individual, corporation, limited liability
partnership, limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government.
"Plan" means an employee benefit or other plan established or
maintained by the Guarantor or the Company or any ERISA Affiliate of either and
that is covered by Title IV of ERISA, other than a Multiemployer Plan.
"POPs" means points of presence for Network Assets. Such points of
presence may include buildings, shelters and other structures housing equipment
racks, Signal Equipment and utility connections and other property used in the
operation of Signal Equipment.
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<PAGE> 150
"Prepayment Date" has the meaning set forth in Section 5.10(d) of the
Participation Agreement.
"Prescribed Forms" means such duly executed form(s) or statement(s),
and in such number of copies, which may, from time to time, be prescribed by
Law and which, pursuant to applicable provisions of (a) an income tax treaty
between the United States and the country of residence of the Note Holder or
Certificate Holder (as the case may be) providing the form(s) or statement(s),
(b) the Code, or (c) any applicable rule or regulation under the Code, permit
the Company and/or the Lessor to make payments under the Operative Documents
for the account of the Lessor and/or such Note Holder or Certificate Holder (as
the case may be) free of deduction or withholding of income or similar Taxes.
"Principal Portion" of a Securitization Percentage Interest or of a
Borrower Percentage Interest means the portion of such Percentage Interest that
is attributable to the principal amount of CXC Advances or Notes (or undivided
interests therein), as applicable, in respect of which the APA Purchasers have
purchased such Percentage Interest.
"Prior Lease" has the meaning set forth in Section 12.15 of the Lease.
"Proceeding" has the meaning set forth in Article I of the
Declaration.
"Proceeds" has the meaning set forth in Section 7.01(c) of the Lease.
"Proceeds Trustee" means the Collateral Agent or such other
independent bank or trust company as may be designated by the Lessor.
"Projects" means, individually and collectively, the
telecommunications networks providing point-to-point connectivity between the
cities specified in the chart below and the Property located thereon, that will
be designed, engineered, acquired, constructed, installed and lit (as
appropriate) in accordance with the terms and conditions set forth in the
Operative Documents:
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<TABLE>
<CAPTION>
SIGNAL EQUIPMENT (PROJECTED NUMBER OF)
--------------------------------------
TOTAL
PROJECTED NUMBER OF NUMBER
ROUTE STRANDS NORTEL NORTEL RE- OPTRONIC OF
PROJECT MILES OF FIBER OC-192 OC-48 GENERATOR AMPLIFIPOPS POPS
------- --------- --------- ------ ------ --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta-
Jacksonville 350 144 2 2 1 6 1
Daytona-
Orlando-
Tampa 160 96 4 4 0 3 2
Jacksonville-
Miami 350 180 10 10 0 4 6
Portland-
Salt Lake City
("SLC")-
Los Angeles 1,300 0 8 5 7 26 0
Minneapolis-
Kansas City-
Denver-
SLC 1,450 96 10 10 8 28 4
Los Angeles-
New York City 4,150 0 46 26 1 25 0
Washington,
D.C.-New
York City 300 144 10 10 0 4 4
Miami-Tampa-
Tallahassee 580 96 6 6 2 9 2
Houston-
Atlanta-
Washington,
D.C. 1,820 0 18 10 21 66 0
</TABLE>
"Property" means (i) each of the Equipment Purchase Agreements and the
rights thereunder, (ii) each Item of Property that is acquired pursuant to the
Equipment Purchase Agreements and set forth on any Certificate of Acceptance,
(iii) any Item of Property that is acquired in exchange or substitution for, or
redeployment or replacement of, other Network Assets in accordance with, and
subject to the limitations set forth in, the Lease, (iv) any cash proceeds
received by the Trustee in connection with any sale, lease, exchange,
substitution or redeployment of any Item of Property and (v) Permissible
Investments.
"Property Charges" means all Charges and any income, gross receipts,
franchise or similar Taxes.
"Protective Expenditure" has the meaning set forth in Section 8.25 of
the Participation Agreement.
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<PAGE> 152
"Public Filings" means Guarantor's Annual Report on Form 10-K for its
fiscal year ended December 31, 1997, Guarantor's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998 and June 30, 1998 and Guarantor's Current
Reports on Form 8-K dated April 29, 1998, May 18, 1998 and July 22, 1998.
"Purchaser" means, when used with respect to any Instruments, the Note
Purchasers and Certificate Purchasers.
"Qualified Sale" has the meaning set forth in Section 3.03(b) of the
Lease.
"Quoted Rate" means, for any period, the rate per annum which will
result in the interest on the Notes for such period being equal to the interest
borne for such period by CXC Advances and "Capitalized Interest" (as such term
is defined in the Finance Facility) made (in the case of CXC Advances) or
selected (in the case of Capitalized Interest) from time to time by CXC under
the Finance Facility and funded by promissory notes issued by CXC from time to
time, as notified in writing by the Agent for such period, which notification
shall be conclusive and binding, absent manifest error.
"Real Property" means any land or interest in land, including any
ground lease, easement, right-of-way, license, use or possessory interest in,
to or under land or water, that is either (x) part of the Property or (y)
property on, in or under which any portion of the Property is located.
"Real Property Instrument" means any deed, mortgage, deed of trust,
easement, lease, franchise, license, right-of-way, covenant or any other
document, instrument or agreement affecting or relating to the Real Property.
"Record" has the meaning set forth in Section 5.03(d) of the
Participation Agreement.
"Recording Charges" has the meaning set forth in Section 8.26 of the
Participation Agreement.
"Regulated Property" means any Property the ownership, operation, use,
lease or possession of which is subject to regulation by any Governmental
Authority, including regulation as a common carrier, telecommunications
provider, or utility, but excluding regulations applicable to all business
operations generally.
"Regulation A, D, T, U, or X" means such Regulations of the Federal
Reserve Board, as in effect from time to time.
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<PAGE> 153
"Release Amount" has the meaning set forth in Section 1.08(a) of the
Participation Agreement.
"Relevant Subsidiaries" means collectively the Lessee and those
Affiliates performing services under the Services Agreement, each of which are
direct or indirect wholly-owned Subsidiaries of Williams.
"Remarketing Period" has the meaning set forth in Section 3.03(b) of
the Lease.
"Removed Property" has the meaning set forth in Section 5.05(a) of the
Lease.
"Renewal Term Expiration Date" means the date which is 364 days after
the Base Term Expiration Date or the last day of any preceding Renewal Term;
provided, that, no Renewal Term shall begin or end on any date after the date
which is 728 days following the Base Term Expiration Date.
"Rent" means all Fixed Rent and Additional Rent payable pursuant to
the Lease, individually and collectively.
"Replacement Property" has the meaning set forth in Section 5.05(a) of
the Lease.
"Requisition" has the meaning set forth in Section 1.03(a) of the
Participation Agreement.
"Reserve Costs" means, so long as a Note Holder or Certificate Holder
shall be required under regulations of the Federal Reserve Board to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional amounts equal to the product of (i) such
Note Holder's or Certificate Holder's portion of the Adjusted Capitalized Cost
of the Property, multiplied by (ii) an interest rate per annum (at all times
during the portion of the LIBO Rate Period during which such reserves were
assessed) equal to the amount obtained by subtracting (a) the LIBO Rate for
such LIBO Rate Period from (b) the rate obtained by dividing such LIBO Rate for
such LIBO Rate Period by a percentage equal to 100% minus the LIBO Rate Reserve
Percentage applicable to such Note Holder or Certificate Holder (as the case
may be). For purposes of this provision, (i) each APA Purchaser holding a
Percentage Interest shall, to the extent and for so long as it holds such
Percentage Interest, be deemed a Note Holder with respect to the Principal
Portion of such Percentage Interest, and (ii) CXC's Credit Enhancer shall be
deemed a Note Holder to the extent of the principal amount of Notes
attributable to CXC Advances or portion thereof that has been assigned to CXC's
Credit Enhancer or in respect of which a draw has been made under the insurance
policy or
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<PAGE> 154
surety bond issued under the Insurance Agreement, for so long as it holds any
such interest.
"Residual Credit Enhancement Agreement" means the Residual Credit
Enhancement Agreement, dated as of the Initial Funding Date, between the SPV
and the Credit Enhancer.
"Residual Value Amount" means, at any date, that amount the present
value of which on such date, when added to the present value of all Rent paid by
the Company prior to such date other than Additional Rent paid in respect of
indemnification under Section 8.14, 5.04(c) or 5.05(c) of the Participation
Agreement (except in respect of an Event of Default under Section 6.01(z) of the
Participation Agreement) and such other amounts that are excluded from "maximum
guarantee" under ETTF 97-10 or "minimum lease payments" under FASB Statement No.
13) equals 89.9% of the adjusted Capitalized Costs, where the present value is
determined using the Discount Rate and discounting for the period from (x) the
date any such Rent payment is made to the Initial Funding Date or (y) the date
the Residual Value Amount is to be determined to the Initial Funding Date, as
the case may be.
"Responsible Officer" means, with respect to the Company, any of the
chief executive officer, the chief operating officer, the chief financial
officer or the treasurer of the Lessee.
"Retirement Date" has the meaning set forth in Section 5.09(d) of the
Participation Agreement.
"Return Conditions" has the meaning set forth in Section 10.05 of the
Lease.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., and any successor thereto which is a nationally
recognized statistical rating organization.
"Sales Proceeds" has the meaning set forth in Article I of the
Declaration.
"Securitization Company" means CXC.
"Securitization Documents" means the APA, the Finance Facility, the
Note (as defined in the Finance Facility), the Residual Credit Enhancement
Agreement and any letter of credit issued thereunder, the Management Agreement,
the Insurance Agreement and the insurance policy or surety bond issued
thereunder, the Servicing Agreement and the Securitization Fee Letter.
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<PAGE> 155
"Securitization Fee Letter" means the letter agreement dated as of the
Initial Funding Date, between the SPV and the APA Agent with respect to certain
fees payable in connection with CXC Advances and the Securitization Documents.
"Securitization Percentage Interest" has the meaning set forth for
such term in the APA.
"Securitization Percentage Interest Margin" means, (i) with respect to
any Percentage Interests in respect of CXC Advances or the Notes (or undivided
interests therein) acquired by the APA Purchasers, an interest rate per annum
calculated by the Agent for any applicable period such that, when multiplied by
the Principal Portion, and when pro rated for such applicable period, the
result equals the amount by which (A) the sum of (1) interest, accrued at the
applicable APA Rate, on the portion of the purchase price paid by the APA
Purchasers for such Percentage Interests that represents interest from the date
of such purchase to maturity on CXC Advances constituting a portion of such
Percentage Interests, plus (2) any Capitalized Interest (as defined in the
Finance Facility) on CXC Advances constituting a portion of such Percentage
Interests, exceeds (B) any Advance Payment Fees received by the APA Purchasers
pursuant to Section 7(c) of the APA, and (ii) with respect to any CXC Advance
or portion thereof that has been assigned to CXC's Credit Enhancer or in
respect of which a draw has been made under the insurance policy or surety bond
issued under the Insurance Agreement, an interest rate per annum calculated by
the Agent such that, when multiplied by the principal amount of such CXC
Advance (or such portion), and when pro rated for such applicable period, the
result equals the sum of (1) interest, accrued at the applicable APA Rate, on
the portion of the amount paid by CXC's Credit Enhancer in respect of such
assignment or such draw that represents interest from the date of such payment
to maturity on such CXC Advance (or such portion), plus (2) any Capitalized
Interest (as defined in the Finance Facility) on such CXC Advance (or such
portion).
"Security Agreement" means the Amended and Restated Security Agreement
dated as of September 2, 1998 between the Trustee, as debtor, and the
Collateral Agent, as secured party, for the ratable benefit of the Note Holders
and other beneficiaries named therein.
"Security Priority Trigger" has the meaning set forth in Article I of
the Declaration.
"Series A Note Holders" has the meaning set forth in Article I of the
Declaration.
39
<PAGE> 156
"Series A Notes" has the meaning set forth in Article I of the
Declaration.
"Series A Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Series B Note Holders" has the meaning set forth in Article I of the
Declaration.
"Series B Notes" has the meaning set forth in Article I of the
Declaration.
"Series B Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Series C Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Services Agreement" means the Amended and Restated Services Agreement
dated as of September 2, 1998 between the Company and the Trustee.
"Servicing Agreement" means the Servicing Agreement, dated as of the
Initial Funding Date, among the SPV, CNAI and Lord Securities.
"Signal Equipment" has the meaning set forth in the definition of
Network Assets set forth in this Appendix A.
"Special Counsel" means Chadbourne & Parke LLP or such other counsel
as shall be reasonably satisfactory to the Agent and the Note Holders, the APA
Purchasers and the Certificate Holders.
"SPV" means WC Network Funding LLC, a Delaware limited liability
company.
"SSBTC" means State Street Bank and Trust Company of Connecticut,
National Association.
"Stated Rate" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"State Street" means State Street Bank and Trust Company, a
Massachusetts chartered trust company.
"State Street Guaranty" means the Amended and Restated Guaranty dated
as of September 2, 1998 by State Street of the obligations of the Trustee under
the Operative Documents.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business
40
<PAGE> 157
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held, or (b) which is, at the
time any determination is made, otherwise Controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person. "Controlled", for purposes of this definition, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Tax" or "Taxes" means, without limitation, any fee (including
license, filing, recording, transfer and registration fees), foreign, Federal,
state or local tax (including any income, gross receipts, withholding,
franchise, excise, sales, use, value added, real, personal, tangible or
intangible property tax or any tax similar to any of the foregoing taxes),
interest equalization, recording, transfer or stamp tax, assessment (including
any maintenance charge, owner association dues or charges), levy, impost, duty,
charge or withholding of any kind or nature whatsoever, imposed or assessed by
any foreign, Federal, state or local government or agency, or governmental
authority, together with any addition to tax, penalty, fine or interest
thereon.
"Telerate Rate" has the meaning set forth in the definition of LIBO
Rate set forth in this Appendix A.
"Term" means the Interim Term, Base Term and any Renewal Term,
collectively.
"Termination Event" means (i) a "reportable event", as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to the PBGC), or an event described in
Section 4062(f) of ERISA, or (ii) the withdrawal of any Borrower or any ERISA
Affiliate of any Borrower from a Multiple Employer Plan during a plan year in
which it was a "substantial employer", as such term is defined in Section
4001(a)(2) of ERISA, or the incurrence of liability by any Borrower or any
ERISA Affiliate of any Borrower under Section 4064 of ERISA upon the
termination of a Plan or Multiple Employer Plan, or (iii) the distribution of a
notice of intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA or
the treatment of a Plan amendment as a termination under Section 4041(a)(2) of
ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA, or (v) any other event or condition which might
constitute grounds
41
<PAGE> 158
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Termination Notice" means any written notice of an intention to
terminate the Lease that may be issued by the Lessee or the Lessor pursuant to
Sections 7.02, 8.02 or 9.02(a) of the Lease.
"Termination Value" means (i) with respect to the Property in its
entirety, the sum of:
(a) the unpaid principal balance of the Notes and the unpaid
stated amounts of the Certificates, plus
(b) the interest accrued and unpaid on the Notes (including
any non-duplicative interest to maturity on Advances (as defined in
the APA) corresponding to the A-Notes and the B-Notes), plus
(c) the Certificate Yield accrued and unpaid on the
Certificates, plus
(d) all Closing Costs, plus
(e) all Break Costs, plus
(f) all other amounts owed by the Company and the Guarantor
under the Operative Documents and the Securitization Documents; and
(ii) with respect to any Item of Property, an amount equal to the
sum of:
(a) the product of (x) an amount equal to (1) the unpaid
principal amount of the Notes, plus (2) the unpaid stated amount of
the Certificates, plus (3) interest accrued and unpaid on the Notes to
the Closing Date, plus (4) the Certificate Yield accrued and unpaid on
the Certificates to the Closing Date, multiplied by (y) the fraction
the numerator of which is the Appraised Value of the Item of Property
and the denominator of which is the Appraised Value of the Property in
its entirety, plus
(b) all Closing Costs related to the sale of such Item of
Property, plus
(c) all Break Costs related to the sale of such Item of
Property, plus
(d) all other amounts owed by the Company and the Guarantor
under the Operative Documents and the Securitization Documents
attributable to such Item of Property.
42
<PAGE> 159
"Total Certificate Commitment" means the aggregate Certificate
Commitment of each Certificate Holder up to the aggregate amount of
$22,500,000.
"Total Commitment" means the aggregate Interim Note Commitment of each
Note Holder and the aggregate Certificate Commitment of each Certificate
Holder, not to exceed $750,000,000 in the aggregate.
"Total Note Commitment" means the aggregate Interim Note Commitment of
each Note Holder, not to exceed $727,500,000.
"Transaction Documents" has the meaning set forth in Section 8.17 of
the Participation Agreement.
"Transactions" has the meaning set forth in Section 8.17 of the
Participation Agreement.
"Trustee" means SSBTC, not it its individual capacity, but solely as
Trustee.
"Trustee's Counsel" means Bingham Dana LLP.
"Trust Encumbrances" means, with respect to the Operative Documents or
the Property, but only to the extent applicable from time to time thereto, any
of the following:
(a) the Permitted Encumbrances;
(b) the Security Agreement;
(c) any Lien or adverse interest or other right (including
any IRU) consented to or created, caused or permitted to exist by the
Company, any Relevant Subsidiary or any of their Affiliates; or
(d) any Lien or adverse interest created, caused or
permitted to exist by the Trustee (or Lessor) upon the exercise of any
right under the Operative Documents upon an Event of Default, an
Environmental Trigger, a Casualty or a Condemnation.
"Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Trust Liability" means any material Losses incurred by (or any
material action, suit, proceeding or claim made, taken or asserted against) the
Trustee, the Agent or any Purchaser. For purposes of this definition,
materiality shall be determined in context of the transactions under the
Operative Documents, and any Losses or actions, suits or claims that could
create criminal or
43
<PAGE> 160
regulatory or administrative liability shall be deemed material.
"UCC" means the Uniform Commercial Code as in effect from time to time
in any jurisdiction whose Law governs the document in which such term is used
and/or rights thereunder.
"Underlying Rights" means, with respect to any portion of the
Property, all authorizations, rights, licenses, including all Permits,
rights-of-way, easements and other agreements necessary for the installation,
construction, use, maintenance and ownership of such Property.
"Unreimbursed Losses" means any and all Losses, Charges or other Tax
liability with respect to the transactions contemplated by the Operative
Documents incurred by an Indemnified Party referred to in Section 8.14(a) of
the Participation Agreement or Section 5.13(b) of the Interparty Agreement,
which Losses are not reimbursed by the Company pursuant to the provisions of
the Operative Documents.
"Unwind Event" has the meaning set forth in Section 6.03(a) of the
Participation Agreement.
"Variable Securitization Fees" means all costs, fees and expenses, to
the extent not included in the calculation of Fixed Securitization Costs,
incurred or payable by the SPV, CXC, any APA Purchasers or CXC's Credit
Enhancer, or any successor to, or assignee of, any such Person pursuant to the
Securitization Documents, including but not limited to, indemnity payments, tax
gross-up obligations, reasonable legal fees and expenses (to the extent such
legal fees and expenses are required to be paid by, and not otherwise
reimbursed to, any such Person in connection with the exercise of rights under,
or the waiver, amendment or other modification of, the Securitization Documents
or the Operative Documents) and the costs of additional credit enhancement for
CXC (except to the extent such credit enhancement is provided by CNAI or any of
its Affiliates).
"Voting Stock" means outstanding shares of stock having voting power
for the election of directors, whether at all times or only so long as no
senior class of stock has such voting power because of default in dividends or
some other default.
"WCG" means Williams Communications Group, Inc., a Delaware
corporation.
44
<PAGE> 161
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly-Owned Subsidiaries of such Person or by such
Person and one or more Wholly-Owned Subsidiaries of such Person.
"Williams" means Williams Holdings of Delaware, Inc., a Delaware
corporation.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
45
<PAGE> 1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
EXHIBIT 10.25
EXECUTION COPY
CAPACITY PURCHASE AGREEMENT
THIS CAPACITY PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), is entered into as of January 5,
1998, between WILLIAMS COMMUNICATIONS, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Grantor") and INTERMEDIA
COMMUNICATIONS INC. a corporation organized and existing under the laws of the
State of Delaware (the "Purchaser").
WITNESSETH:
WHEREAS, the Grantor owns the System (as defined herein);
WHEREAS, additional construction of the System by the Grantor is planned
and will be completed pursuant to the Network Deployment Plan (as defined
herein and as agreed to by the Purchaser and the Grantor in accordance with the
terms hereof); and
WHEREAS, the Purchaser desires to acquire rights with respect to the
Adjusted Purchased Capacity (as defined herein) on a non-cancelable
indefeasible right of use basis in fiber ("IRU") on the System;
NOW, THEREFORE, the parties hereto, in consideration of the mutual
convenants contained herein, covenant and agree with each other as follows:
Section 1. Attachments and Definitions
1.1 Attachments. (a) The following schedules are attached hereto and are
incorporated herein:
Schedule 1 Purchased Capacity, Associated Pricing, Service Intervals
and System Performance Standards;
Schedule 2 Network Deployment Plan;
Schedule 5 Management Fee.
(b) The parties hereto agree that, subject to each party's reasonable
agreement with the terms and contents of each of the following schedules and
exhibits, such schedules and exhibits shall, within thirty (30) days of the
Execution Date, be attached hereto and incorporated herein:
Schedule 3 Grantor Cities and Location of Grantor POPs;
Schedule 4 Collection Agreement and Collection Service Order;
Exhibit A Backbone Agreements (including each associated Assignment
and Assumption Agreements and Assigned Circuits;
Exhibit B Form of Service Order;
Exhibit C Form of Letter of Agency.
<PAGE> 2
2
1.2 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.2 shall have the respective meanings set forth in this Section 1.2.
"Acknowledgment": as defined in Section 6.1(a) hereof.
"Actual Start Date": as defined in Section 6.1(b) hereof.
"Adjusted Purchased Capacity": the sum of Purchased Capacity and additional
Capacity purchased as Required Capacity on the System pursuant to the terms of
this Agreement.
"Affiliate": of any Person means any other Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. With respect to the Grantor, "Affiliate" means any Person
which may be consolidated with the Grantor for financial reporting purposes.
"Agreement": as defined in the preamble hereof.
"Ancillary Services": as defined in Section 7.1(c) hereof.
"Annual Commitment": as defined in Section 2.3(b) hereof.
"Annual Period": as defined in Section 2.3(b) hereof.
"Appraisal Procedure": means a procedure, initiated at the election of the
Purchaser, whereby an independent appraiser is selected by the Purchaser (the
"Purchaser Appraiser") to determine the market rate for Material Capacity. Upon
the Purchaser Appraiser's determination of the market rate for Material
Capacity, the Purchaser shall give the Grantor written notice of the rate so
determined by the Purchaser Appraiser. In the event that the Grantor declines to
accept the Purchaser Appraiser's determination of the market rate for Material
Capacity and to recalculate the Rates in accordance with Section 3.3(b) on the
basis of such rate, the Grantor shall, within ten (10) days of its receipt of
the foregoing notes from the Purchaser, select its own independent appraiser
(the "Grantor Appraiser") to determine the market rate for Material Capacity.
The Grantor Appraiser shall have thirty (30) days to make its determination of
the market rate for Material Capacity. Upon the Grantor's receipt of the Grantor
Appraiser's determination of the market rate for Material Capacity, the Grantor
shall forward such determination to the Purchaser. In the event that there is a
discrepancy between the rates determined by each appraiser, the Purchaser and
the Grantor shall select a mutually agreeable licensed arbitrator with knowledge
of the telecommunications industry (the "Arbitrator") to make a third
determination of the market rate for Material Capacity. The Arbitrator shall
then, within thirty (30) days of his or her selection and without reference
<PAGE> 3
3
to the rates determined by the Purchaser Appraiser or the Grantor Appraiser,
independently determine the market rate for Material Capacity. Upon the
Arbitrator's determination of the market rate for Material Capacity, the
Arbitrator shall compare the rate that he or she determined with that of the
rates determined by each of the Purchaser Appraiser and the Grantor Appraiser.
The new market rate shall then be deemed to be the rate of either the Purchaser
Appraiser or the Grantor Appraiser depending on which such rate is closest to
that determined by the Arbitrator. The party whose appraiser's determination is
ultimately rejected by the Arbitrator shall be responsible for all of the cost
and expense of the Arbitrator and for up to $75,000 of the cost and expense of
the other party's appraiser.
"Assignment Agreement Effective Date": as defined in Section 8.1(c) hereof.
"Assignment Agreement Execution Date": as defined in Section 8.2 hereof.
"Assignment and Assumption Agreement": these certain Assignment and
Assumption Agreements, which agreements shall be on terms and conditions
satisfactory to the Purchaser and the Grantor, providing for the assignment and
assumption of the Backbone Agreements and which such agreements shall be
included in Exhibit A.
"Backbone Agreement": (i) the Purchaser's backbone agreements with the
Backbone Agreement Service Providers, which such agreements are, or shall be,
the subject of the Assignment and Assumption Agreement and (ii) the MCI
Backbone Agreement (which may be the subject of an Assignment and Assumption
Agreement), all of which agreements described in clauses (i) and (ii) shall be
identified in Exhibit A.
"Backbone Agreement Service Provider": each provider of telecommunications
services, other than the Purchaser, party to a Backbone Agreement (i.e. MCI,
WorldCom, IPN, IXC, Cable & Wireless, Sprint and IPN/TPL).
"Backbone Payments": the Non-Recurring and Monthly Recurring Charges and
the Management Fee.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in Tulsa, Oklahoma or Tampa, Florida are authorized or
required by law to close.
"Capacity": capacity on the System, which may be provided, On-Net or
Off-Net, for telecommunications in DS-3, OC-3, OC-12, OC-48 and OC-192
interexchange carrier services but excluding Other Services and Sub-D8-3
Capacity.
"Catch-Up Period": the sixth (6th) year of the Term.
"Circuit": a dedicated communications path with a specified bandwidth.
<PAGE> 4
4
"Collocation Agreement": a collocation agreement, a form of which shall be
attached hereto as part of Schedule 4.
"Collocation Service Order": a collocation service order, a form of which
shall be attached hereto as part of Schedule 4.
"Collocation Services": as defined in Section 7.2 hereof.
"Communications Act": the Communications Act of 1934, as amended.
"Confidential Information": as defined in Section 17.4 hereof.
"Connecting Facilities Assignment": the particular assignment per Circuit
on facilities where one carrier meets another carrier.
"Cross-Connect": a physical connection between two pieces of equipment
located in the same facility.
"Designated Capacity": Capacity which is indicated in the Initial Network
Deployment Plan under the columns headed "On-Net PLs Now" and "On-Net ATM Now"
and which the Granter shall be required as of the Execution Date, to provision
at the Rates provided for pursuant to the terms of this Agreement.
"Designated Capacity Exceptions": Grantor POPs (identified as "Williams
City Plan" in the Initial Network Deployment Plan) which first become available
in accordance with the scheduled availability set forth in the Initial Network
Deployment Plan and for which Off-Net Rates apply until the date of such
scheduled availability.
"Designated Off-Net Capacity": Capacity which is indicated in the Initial
Network Deployment Plan under the column headed "On-Net PLs 12 Mo." and with
respect to which for up to twelve (12) months from the Execution Date the
Grantor shall be entitled to provision to the Purchaser Off-Net and at rates
which pass through to the Purchaser the rates charged by the Third-Party
Service Provider for such Capacity (the "Off-Net Rate"); provided that, after
the expiration of such twelve (12) month period, or, in the event that the
Grantor can provision such Capacity On-Net prior to the expiration of such
twelve (12) month period, such Capacity shall become subject to the Rates
provided for pursuant to the terms of this Agreement.
"Design Layout Record": a record containing the technical information that
describes the telecommunication facilities and termination points provided by a
telecommunications customer to a carrier in order to enable the carrier to
design the overall service to be provided by the carrier to that customer.
"Due Date": the fifteenth of the month following the month in which an
invoice is issued; provided that the Purchaser's payments of the Non-Recurring
and Monthly Recurring Charges shall be received by the Grantor in immediately
available funds and
<PAGE> 5
5
at least one billing cycle prior to the date that payment is due from the
Grantor to the Backbone Agreement Service Provider.
"Effective Date": as defined in Section 4.1 hereof.
"Excess": as defined in Section 3.2 hereof.
"Execution Date": March 31, 1998.
"Extension Period": as defined in Section 4.1 hereof.
"FCC": the Federal Communications Commission.
"Force Majeure Event": circumstances which give rise to a party hereto
being unable to perform its obligations with respect to any provision of this
Agreement (other than the obligations to make payments with respect to
liabilities which accrued prior to a Force Majeure Event) due to such party
being prevented, restricted, or interfered with by causes beyond its reasonable
control, such causes shall be deemed to include (i) acts of God, (ii) fire,
(iii) explosions, (iv) vandalism, (v) cuts in telecommunications cable (which
such cuts could not have been prevented by the exercise of reasonable care),
(vi) power outages, (vii) storms or other similar occurrences or other
atmospheric conditions, (viii) any change in law, order, regulation, directive,
action or request of the United States government or of a state or local
government or any instrumentality of any one or more of said governments, or of
any civil or military authority, (ix) national emergencies, (x) insurrections,
(xi) riots, (xii) wars, (xiii) acts of terrorism, (xiv) strikes, lockouts, work
stoppages or other labor difficulties, (xv) Third Party Service Provider or
supplier failures, breaches or delays (so long as any such Third-Party Service
Provider or supplier was selected with reasonable care) and (xvi) Third-Party
Service Provider or supplier shortages of materials provided, however, that the
Grantor's dispute with WorldCom (as reflected in the Grantor's filed lawsuit
against WorldCom) shall not be considered a force majeure event.
"Grantor": as defined in the preamble hereof.
"Grantor City": a city which shall be listed as a "Grantor City" on
Schedule 3.
"Grantor POP" or "Grantor Point of Presence": a facility on the System in
a Grantor City designated by the Grantor for the origination or termination of
Capacity, as shall be set forth on Schedule 3.
<PAGE> 6
6
"Grantor's Account": the bank account of the Grantor maintained with
**** of ****, at Tulsa, Oklahoma, (account number ****) or such other account
as the Grantor may designate to the Purchaser in writing. Wire instructions for
the above-referenced account are as follows:
Account Name: ****
Account Number: ****
Bank Name: ****
ABA No.: ****
Reference: ****
"Initial Network Deployment Plan": the Purchaser's initial Network
Deployment Plan which is attached hereto as Schedule 2.
"Initial Payment": $1,050,000.
"Initial Payment Date": the tenth (10th) Business Day after the Execution
Date.
"Interconnection Services": as defined in Section 7.1 hereof.
"Interconnection Cost": as defined in Section 7.1 hereof.
"Interexchange Service": long-distance telecommunications service between
local access transport areas.
"IRU": as defined in the recitals hereof.
"Link": as defined in Section 7.1 hereof.
"Local Access": as defined in Section 7.1 hereof.
"Management Fee": as defined in Section 8.4 hereof.
"Market Rate": the rate determined pursuant to the Appraisal Procedure.
"Material Capacity": (i) when used in connection with Most Favored Rate,
capacity provided by the Grantor to a customer other than capacity provided to a
customer which is being provided for (a) a longer period of time than the Term
and (b) the volume of which is greater than the Capacity being purchased by the
Purchaser hereunder and (ii) when used in connection with an Appraisal
Procedure, capacity with substantially similar technical and operational
specifications as the Capacity being purchased by the Purchaser hereunder
provided by a telecommunications service provider to a customer for a
comprehensive interexchange telecommunications network for a material length of
time and a material volume associated with the Capacity (it being understood
that a material length of time is for a term of (1) one year or more).
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 7
7
"MCI Backbone Agreement": as defined in Section 8.1(d) hereof.
"Minimum": as defined in Section 8.2 hereof.
****
"Network Deployment Plan": the Purchaser's use of Capacity plan attached
hereto as Schedule 2 (which such plan as of the Execution Date is the Initial
Network Deployment Plan), which may, pursuant to the provisions of Section
2.5, be amended as of each Plan Adjustment Date.
"Non-Recurring and Monthly Recurring Charges": as defined in Section 8.4
hereof.
"Off-Net": a Circuit which is not On-Net.
"Off-Net Rate": as defined in the definition of "Designated Off-Net
Capacity".
"On-Net": (i) a Circuit traversing the System both end points of which
originate or terminate at a Grantor POP in a Grantor City or (ii) a Circuit
which the Grantor has use of as result of a swap of a Circuit of the type
described in the preceding clause (i) for a Circuit on another capacity
provider's network to the extent such capacity is available.
"Other Services": Local Access, Interconnection Services, Ancillary
Services and Collocation Services.
"Person": any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Plan Adjustment Date": during the Term, each six (6) month anniversary of
the Execution Date, or such other date as the parties may mutually agree.
"Pricing Adjustment Date(s)": the fifth (5th), tenth (10th) and fifteenth
(15th) anniversaries of the Execution Date.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 8
8
"POP": a facility for the origination or termination of telecommunications
services.
"Purchase Price Payment": with respect to the IRU granted in respect of
the Capacity, each monthly amount payable on a Due Date by the Purchaser to the
Grantor in respect of the Capacity acquired.
"Purchased Capacity": the minimum Capacity (which shall include Capacity
provided pursuant to the Backbone Agreements in accordance with the provisions
of Section 8) in dollars to be acquired by the Purchaser on the Systems as set
forth on Schedule 1 hereto.
"Purchased Capacity Shortfall": as defined in Section 2.3.
"Purchaser": as defined in the preamble hereof.
"Purchaser Facilities": as defined in Section 17.2 hereof.
"Purchaser POP" or "Purchaser Point of Presence": a facility designated by
the Purchaser for the origination or termination of Capacity.
"Rates": the rates from which the Purchase Price Payments are derived
which rates, at the Execution Date and prior to any permitted or required
adjustments as provided for in this Agreement, are set forth in Schedule I
hereto.
"Renewal Term": as defined in Section 4.1 hereof.
"Representatives" as defined in Section 17.4 hereof.
"Requested Start Date": as defined in Section 6.1 hereof.
"Required Capacity": Capacity which the Grantor is required to provision
upon request by the Purchaser in accordance with the Network Deployment Plan
(and, if applicable, as reflected in specific Service Orders) at the Rates or,
in the case of that portion of Required Capacity which is also Designated
Off-Net Capacity, at the Off-Net Rate.
"Required Capacity Shortfall": as defined in Section 2.2 hereof.
"Second-in Party": as defined in Section 7.1 hereof.
"Service Affecting": a condition in the System which results in a loss or
degradation of service except for a loss or degradation of fifty (50)
milliseconds or less.
<PAGE> 9
9
"Service Intervals": the Grantor's time periods for responding to the
Purchaser's requests for Capacity as defined in Section 6.1 hereof.
"Service Intervals and System Performance Standards": the System
technical performance levels, specifications and service intervals as set
forth on Schedule 1.
"Service Orders": as defined in Section 6.1 hereof.
"Shortfall Carrier": as defined in Section 2.2 hereof.
"Sub-DS-3 Backbone Agreement": as defined in Section 9.1 hereof.
"Sub-DS-3 Capacity": as defined in Section 9.1 hereof.
"Sub-DS-3 Carrier": as defined in Section 9.1 hereof.
"System": the Grantor's existing multimedia backbone network and to
be constructed additional general use network facilities, including
optronics, digital encoders/decoders, telephone lines and microwave
facilities, and as described in Schedule 1. Except as expressly set forth
otherwise, the System shall be bounded in all cases at a Grantor POP. The
term "System" shall not be construed to include any Local Access.
"Taxes": as defined in Section 11.1 hereof.
"Term": as defined in Section 4.1 hereof.
"Third-Party Service Provider": a third-party provider of
telecommunications services which shall include all Backbone Agreement
Service Providers.
"Total Purchase Price": the sum of the Initial Payment and each
Purchase Price Payment payable by the Purchaser to the Grantor for the IRU
of the Capacity.
1.3 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any schedule, exhibit or annex or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
include, includes and including shall be deemed to be followed by the phrase
"without limitation."
<PAGE> 10
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SECTION 2. IRU FOR CAPACITY
2.1 GRANT OF IRU. Effective on the Initial Payment Date, the Grantor
grants to the Purchaser, for the term of this Agreement, an IRU in the Adjusted
Purchased Capacity for which payment has been made and shall be made in
accordance with Sections 3.1 and 3.2 of this Agreement.
2.2 GRANTOR SHORTFALL IN CAPACITY. (a) In the event that the Grantor
gives notice (which such notice must be received by the Purchaser within ten
(10) Business Days of the relevant Service Order) to the Purchaser that it
cannot provide any portion of the Required Capacity (including Designated
Off-Net Capacity) either On-Net or Off-Net after exercising reasonable
commercial efforts to provision such Capacity (a "Required Capacity
Shortfall"), the Purchaser shall be entitled to attempt to locate a carrier
able to provision the Required Capacity Shortfall. In the event that (i) the
Purchaser is able to locate a carrier willing to provision the Required
Capacity Shortfall at commercially reasonable rates (the "Shortfall Carrier"),
the Purchaser shall notify the Grantor of the identity of such carrier and the
Grantor shall then be required to issue orders with respect of the Required
Capacity Shortfall at the Rates (or, in the case of Designated Off-Net
Capacity, at the Off-Net Rate), within two (2) days of the Purchaser's notice
to the Grantor; however, if, after notice from the Purchaser, the Grantor then
continues to fail to provision the Required Capacity Shortfall, the Purchaser
shall be entitled to provision the Required Capacity Shortfall with the
Shortfall Carrier **** or (ii) the Purchaser is unable to locate a carrier
willing to provision the Required Capacity Shortfall at commercially reasonable
rates, the Grantor shall not be obligated to provision the Required Capacity
Shortfall and the Purchaser shall not have any remedy for the Grantor's
failure to provision the Required Capacity Shortfall: provided that the Grantor
shall be obligated to continue to use commercially reasonable efforts to
provision the Required Capacity Shortfall (either On-Net or Off-Net) at the
earliest reasonable date that Capacity (either On-Net or Off-Net) becomes
available.
(b) Any Capacity that the Grantor provides Off-Net must at least meet
the minimum technical performance standards and service intervals that the
relevant Third-Party Service Provider regularly offers to its customers.
(c) Notwithstanding anything in this Agreement to the contrary, the
parties hereto agree that the Grantor shall only be obligated to provide
Capacity at the Rates at the times indicated by the Network Deployment Plan.
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**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 11
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2.3 PURCHASER FAILURE TO USE PURCHASED CAPACITY. (a) Within ninety
(90) days after each of the first five (5) anniversaries of the Execution Date,
the Purchaser's actual use of Purchased Capacity shall be determined for each
such year by the Grantor and sent to the Purchaser for review and approval. In
the event that the Purchaser's use of Capacity in any such year is less than the
scheduled Purchased Capacity for such year (any such shortfall in use of
Purchased Capacity, a "Purchased Capacity Shortfall"), **** at the Rates
associated with the monthly period in which each portion of a Purchased Capacity
Shortfall occurred, **** the Purchaser shall be required to pay to the Grantor
**** an amount equal to the difference between the aggregate Purchase Price
Payments for such total Purchased Capacity Shortfall and the aggregate amount of
the Purchase Price Payments **** for the portion of the total Purchased Capacity
Shortfall.****
(b) As of and from the fifth (5th) anniversary of the Execution Date,
the Purchaser's Purchase Price Payments for each succeeding twelve (12) month
period (each, an "Annual Period") shall be at least equal to fifty-four million
dollars ($54,000,000) (the "Annual Commitment"). In the event that the Purchaser
fails to satisfy the Annual Commitment in any Annual Period on the date which is
forty-five (45) days after the expiration of any such Annual Period, the
Purchaser shall be required to pay to the Grantor an amount equal to the
difference between the Annual Commitment and the aggregate Purchase Price
Payments made during such Annual Period.
2.4 EARLY INCREASES IN USE OF CAPACITY. In any month that the
Purchaser's use of Capacity on the System reaches a month's Purchased Capacity
associated with a succeeding year, at the Purchaser's sole option and upon at
least five (5) days written notice to the Grantor, the Purchaser, commencing
with the next succeeding month, shall be subject to such future month's (and
each succeeding month's) Purchased Capacity and shall be entitled to the Rates
associated with such future time periods with respect to all subsequent
Purchased Capacity (including, if applicable, any Required Capacity that
exceeds the Purchased Capacity).
2.5 NETWORK DEPLOYMENT PLAN AMENDMENTS. (a) Generally. In conjunction
with each Plan Adjustment Date, the Purchaser shall have the right to propose
amendments to the Network Deployment Plan and the Grantor agrees to use
reasonable efforts to accommodate any amendments proposed by the Purchaser.
Proposed amendments to the Network Deployment Plan may relate to any of the
items described in the definition of Network Deployment Plan or included in the
Network Deployment Plan.
(b) Procedures for Amendments and Effectiveness. If the Purchaser
desires to amend the Network Deployment Plan, it shall, within ninety (90) days
prior to each Plan Adjustment Date, commence consultations with the Grantor
with respect to any proposed amendments to the Network Deployment Plan. If the
Grantor agrees to the proposed amendments, such amendments shall become
effective as of the Plan Adjustment Date and Schedule 2 shall be amended to
reflect the new Network Deployment Plan. Failure to agree to
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**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 12
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any amendment to the Network Deployment Plan shall not in any way reduce the
Purchaser's obligations with respect to Purchased Capacity. Notwithstanding
anything in this Agreement to the contrary, the Purchaser may place a Service
Order with respect to a Circuit which is not associated with Designated
Capacity or Designated Off-Net Capacity subject to availability and such
Service Order shall not be deemed to be an amendment of the Network Deployment
Plan as it relates to Designated Capacity and Designated Off-Net Capacity.
(c) Initial Network Deployment Plan. Notwithstanding anything in this
Agreement to the contrary, the Initial Network Deployment Plan shall include
Designated Capacity, Designated Off-Net Capacity and Designated Capacity
Exceptions.
2.6 PREFERRED CAPACITY PROVIDER. Provided that neither the Grantor nor the
Purchaser is in default with respect to any provision of this Agreement and the
Purchaser has fulfilled its obligations with respect to the Purchased Capacity,
the parties agree as follows: with respect to Capacity associated with city
pairs indicated in the Initial Network Deployment Plan under the columns headed
"On-Net PLs Now" and "On-Net PLs 12 Mo." and any additional Capacity added to
the Network Deployment Plan in accordance with the provisions of Section 2.5,
the Purchaser shall have the right to solicit bids relating to such Capacity
from Third-Party Service Providers and, in the event that the Purchaser shall
receive a bona fide written offer from such Third-Party Service Provider
relating to the provisioning of such Capacity, the Purchaser shall be obligated
to take such bona fide written offer to the Grantor and the Grantor shall have
a right of first refusal to match the price and terms of such bona fide written
offer. In the event that the Grantor elects to match the price and terms of
such bona fide written offer, the Purchaser shall be obligated to provision
such Capacity with the Grantor. Except as set forth in this Section and as
otherwise provided for pursuant to this Agreement, the Purchaser shall not be
obligated to provision capacity with the Grantor.
SECTION 3. PAYMENT FOR CAPACITY
3.1 INITIAL PAYMENT. Upon the execution and delivery of this Agreement,
the Purchaser shall make the Initial Payment to the Grantor's Account, in
immediately available funds.
3.2 PURCHASE PRICE PAYMENTS. In exchange for the IRU interest in the
Capacity granted pursuant to this Agreement, the Purchaser shall, on or before
each Due Date, pay to the Grantor's Account, in immediately available funds,
the applicable Purchase Price Payment. Except as set forth in Section 2.3 and
as otherwise specifically set forth in this Agreement, the Purchaser shall not
be relieved of its obligation to make the Purchase Price Payments to the
Grantor. Notwithstanding anything contained in this Agreement to the contrary,
upon the payment to the Grantor's Account of the Initial Payment with respect
to the Capacity, the Purchaser shall be permitted to use such Capacity in
accordance with the terms of this Agreement, including the procedures for
ordering services set forth in Section 6.
3.3 ADJUSTMENTS TO RATES AND PURCHASE PRICE PAYMENTS. (a) **** In addition
to the adjustments to the Rates that may be made pursuant to Section 2.4, the
Grantor agrees that at all times during the Term for so long as the Purchaser's
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**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 13
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total payments for Capacity to the Grantor hereunder equal or exceed the
Purchased Capacity (it being understood that the Purchaser's use of the
provisions contained in Section 2.3(a) to adjust the timing of Purchase Price
Payments shall not be understood to be a failure on the Purchaser's part to make
payments at least equal to the Purchased Capacity), **** and the Grantor and the
Purchaser shall agree to adjust the Rates **** provided however, if the
Purchaser is in default with respect to any of its payment obligations hereunder
(including with respect to any Backbone Payment), the Grantor shall be relieved
of its obligations under this Section 3.3(a) for the duration of any such breach
of the Purchaser's payment obligations.
(b) **** Upon each Pricing Adjustment Date at the election of the
Purchaser, the **** shall be determined. In the event that the **** as of such
date is **** hereunder, the Rates shall be recalculated **** such adjusted
Rates shall be set forth on an amended Schedule 1 and such adjusted Rates shall
apply **** to the Pricing Adjustment Date in question. Nothing contained in
this paragraph (b) shall limit the agreements with respect to adjustments
contained or referred to in the preceding paragraph (a).
3.4 PAYMENTS FOR OTHER SERVICES. The Purchaser shall be required to
make, at the request of the Grantor, additional payments for Other Services
requested by the Purchaser in accordance with the terms of this Agreement.
3.5 PAYMENTS GENERALLY. All payments under this Agreement shall be
made in accordance with the provision of Section 11.
3.6 FILINGS. The Purchaser shall, at its expense, take all such
actions and make all such filings and recordings as are reasonably requested
by the Grantor to establish, perfect and protect the Grantor's interest in the
IRU and the Adjusted Purchased Capacity. The Purchaser hereby represents and
warrants that its chief executive office is located at the address indicated in
Section 17.5. The Purchaser agrees to promptly notify the Grantor of any change
in such location.
SECTION 4. DURATION OF AGREEMENT
4.1 TERM. This Agreement shall become effective on the day and year
set forth in the preamble hereof (the "Effective Date") and shall continue in
operation, unless suspended or terminated by either party in accordance with
Section 15, until the twentieth (20th) anniversary of the Execution Date (the
"Term") and shall, thereafter, be deemed to be renewed for successive one (1)
year periods (each, a "Renewal Term"), unless either party provides written
notice to the other party of its intent to terminate this Agreement not more
than ninety (90) or less than sixty (60) days prior to the beginning of any
Renewal Term. The suspension or termination of this Agreement (whether pursuant
to this Section or otherwise) shall not relieve the Purchaser or the Grantor
from any liabilities arising prior to such suspension or termination.
Notwithstanding the expiration of the Term pursuant to this Section 4.1, any
Circuit or Other Service being provided to the Purchaser pursuant to this
Agreement shall continue to be provided pursuant to the terms
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**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 14
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of this Agreement until the expiration date indicated in the relevant Service
Order (or service order relating to any Other Service) applicable to such
Circuit or Other Service (any such period, and "Extension Period"). The
Purchaser shall not be entitled to order any new Circuit or Other Service
during any such Extension Period.
SECTION 5. SYSTEM
OPERATION AND MAINTENANCE
5.1 SYSTEM OPERATION AND MAINTENANCE. (a) The Grantor shall use
commercially reasonable efforts to cause the System to be maintained in
efficient working order and in accordance with industry standards and the
standards set forth in Schedule 1 hereto; provided that the parties hereto
agree that the specifications set forth in Schedule 1 shall not apply to Local
Access or any service provided Off-Net. The Grantor represents that it will
provide routine, preventive and corrective maintenance for the System in a
manner at least in accordance with prudent industry standards.
(b) The Grantor shall have sole responsibility for negotiating, executing
and administering contracts and all other aspects related to the construction,
operation, maintenance and repair of the System.
(c) The Grantor shall initiate and coordinate planned maintenance (or
shall cause such action to occur), on the System (which may include the
deactivation of the affected part of the System). The Grantor shall advise the
Purchaser in writing at least twenty (20) days (or such shorter period as may be
agreed) prior to initiating a planned maintenance operation via E-Mail (or via
the Grantor's electronic trouble ticket system when implemented), of the timing
and scope of such planned maintenance operation. Within five (5) days of such
notice, the Purchaser shall respond to the Grantor with regard to such planned
maintenance operation and, in the event the Purchaser has objections to such
planned maintenance operation, within five (5) days of the Purchaser's response,
the parties shall mutually agree to a satisfactory approach to address the
Purchaser's concerns and to permit the planned maintenance operation to be
accomplished. The Grantor shall not be obligated to give notice of any planned
or unplanned service outage that is not Service Affecting.
(d) In the event of an emergency condition, as defined by the Grantor's
internal fiber maintenance procedures, the Grantor shall be entitled to take
whatever action it deems necessary to repair the cause of any such emergency
condition with or without advance notice to the Purchaser; provided, however,
that the Grantor (i) shall share, on a confidential basis, its definition of an
emergency condition under its internal fiber maintenance procedures (as such
definition may be amended from time to time), (ii) shall provide notice to the
Purchaser of such emergency condition as soon as possible and (iii) shall keep
the Purchaser apprised of the status of such emergency condition.
(e) In the event of disruption of service due to a Force Majeure Event or
other emergency, the Grantor shall use commercially reasonable efforts to cause
service to be restored as quickly as reasonably possible, and the Grantor shall
take such measures as are reasonably necessary to obtain such objective.
<PAGE> 15
(f) In no event shall the Grantor be liable to the Purchaser for any
credits or damages resulting from outage or degradation of service during a
planned maintenance operation.
SECTION 6. NOTIFICATION
OF USE OF CAPACITY
6.1 REQUESTS FOR CAPACITY AND SERVICE INTERVALS. (a) Orders for any
Circuits to be provided hereunder or increases in the Purchaser's use of
Capacity in accordance with Required Capacity (or otherwise) shall be requested
by the Purchaser hereunder on the Grantor's form of Service Order in effect from
time to time (the current form of which is attached hereto as Exhibit B) or on
the Purchaser's forms, in either case accepted in writing by the Grantor
("Service Orders"). Each Service Order shall reference this Agreement and will
indicate a requested start date (the "Requested Start Date") for the Circuit,
the desired term of the Circuit specific city pairs, applicable bandwidth,
whether the Circuit(s) are to be expedited or provided in normal intervals and
any other parameters required to be included in the Service Order. The Grantor
shall acknowledge receipt of the Service Order within twenty-four (24) hours (an
"Acknowledgement"). Within forty-eight (48) hours of Acknowledgement, the
Grantor shall advise the Purchaser as to availability of the Circuit and the
associated Capacity and if the Circuit and the associated Capacity and if the
Circuit and the associated Capacity is not to be provided On-Net, the carrier
providing the Circuit and the associated Capacity. Within three (3) days of
Acknowledgment, the Grantor shall advise as to the need for any Letter of Agency
or Connecting Facilities Assignment. Within seven (7) days of Acknowledgement,
the Grantor will provide a Design Layout Record. The Grantor shall be obligated
to meet the foregoing time frames and any additional time frames provided for in
Schedule 1 or be subject to the Purchaser's remedies as set forth in Schedule 1.
The parties agree that the inclusion of any Circuit on the Initial Network
Deployment Plan or subsequent Network Deployment Plans shall be deemed to be a
Service Order; provided that the preceding clause shall not (i) relieve the
Purchaser and the Grantor of their obligations to act in accordance with the
other agreements of this Section and (ii) limit the Purchaser's ability to order
Capacity in excess of that indicated in a Network Deployment Plan (orders for
Capacity in excess of that indicated in a Network Deployment Plan are subject to
availability).
(b) The Grantor shall make reasonable efforts to provide the requested
Circuit and the associated Capacity on the System on the Requested Start Date.
Service with respect to such Circuit and the associated Capacity shall be
deemed to begin on the date that (i) the Grantor provides the Purchaser with
written confirmation that the Grantor has tested the Circuit and that the
Circuit meets the Systems technical performance levels and specifications as
set forth in Schedule 1 and (ii) the Purchaser accepts the Circuit, such
acceptance not to be unreasonably withheld (the "Actual Start Date").
(c) The Purchaser may request one (1) or more delays in the Actual Start
Date of an individual Circuit provided that (i) it provides the Grantor a
written delay request no later than five (5) Business Days prior to the
Requested Start Date or the delayed Requested Start Date, as the case may be,
and (ii) the aggregate number of the days requested by such delay request or
requests do not exceed thirty (30) days from the Service Order's original
Requested Start Date. At the expiration of such thirty (30) day period, if the
Grantor has complied with the provisions of the preceding paragraph, the
Purchaser may no longer delay the Actual Start Date
<PAGE> 16
16
of such individual Curcuit and Purchase Price Payments with respect to such
Circuit shall commence accruing.
(d) Any conflicting, different or additional terms and conditions
contained in the Purchaser's acknowledgment or Service Order or elsewhere and
not contemplated by the terms of this Agreement are objected to by the Grantor
and shall not constitute a part of this Agreement. No action by the Grantor
(including provision of Capacity or Other Services to the Purchaser pursuant to
such Service Order) shall be construed as binding or estopping the Grantor with
respect to such term or condition, unless the Service Order containing said
specific term or condition has been signed by an authorized headquarters
representative of the Grantor.
SECTION 7. ADDITIONAL
SERVICES AND RELATED FEES
7.1 INTERCONNECTION, LOCAL ACCESS AND ANCILLARY SERVICES. (a)
Interconnection. (i) The Grantor shall, on behalf of and upon the request of the
Purchaser, obtain telecommunications facilities in a particular city to which
Capacity is to be provided pursuant to the Network Deployment Plan connecting a
Purchaser POP to a Grantor POP in a different location in the same city or
metropolitan area ("Interconnection") which interconnection shall be
substantially dedicated to origination or termination of Capacity provided to
the Purchaser pursuant to this Agreement. As applicable, the Purchaser will
execute a Letter of Agency (as shall be set forth in Exhibit C hereto)
authorizing the Grantor to interact directly with the provider or providers of
such Interconnection. **** Nothing herein shall prevent the Purchaser from
arranging for its own Interconnection at its sole cost and expense; provided
that the Grantor shall have the right to test such Interconnection for
conformance to its interconnection specifications and the Grantor shall not be
obligated to accept independently arranged Interconnection unless it meets the
Grantor's interconnection specifications.
(ii) If the Purchaser requests Interconnection to be provided by the
Grantor, the Grantor shall be responsible for the provisioning and the initial
testing of any such Interconnection, and any provisioning and initial testing
shall be reasonably coordinated with the applicable Requested Start Date.
(b) Local Access. (i) The Grantor shall, on behalf of and upon the
request of the Purchaser, obtain telecommunications facilities connecting a
Grantor POP to a designated customer of the Purchaser or other third-party
("Local Access"). As applicable, the Purchaser will execute a Letter of Agency
authorizing the Grantor to interact directly with the provider or providers of
such Local Access. The Purchaser shall be responsible for all fees and costs
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**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 17
incurred by the Grantor for any such Local Access. Nothing herein shall prevent
the Purchaser from arranging for its own Local Access at its sole cost and
expense.
(ii) If the Purchaser requests Local Access to be provided by the
Grantor, the Grantor shall be responsible for the provisioning and the initial
testing of any such Local Access, and any provisioning and the initial testing
shall be reasonably coordinated with the applicable Requested Start Date.
(iii) The Grantor agrees that nay and all charges associated with
Local Access shall not exceed the sum of the costs that the Purchaser would
otherwise pay the same Third-Party Service Provider for the relevant Local
Access.
(c) Interconnection and Local Access Delays. In connection with
the provision of Interconnection and Local Access, the Purchaser acknowledges
that the timely provisioning of such services may be dependent on the
performance of a Third-Party Service Provider. The Grantor agrees that it shall
have a duty to exercise reasonable judgement in (i) the selection of all
Third-Party Service Providers and (ii) the monitoring and oversight of the
performance of any service provided by a Third-Party Provider. The Purchaser
agrees that, other than as set forth in the preceding sentence, the Grantor
shall have no liability whatsoever for delays occasioned by Third-Party Service
Providers.
(d) Ancillary Services and Fees. The parties acknowledge that the
Purchaser may also request certain other ancillary services ("Ancillary
Services") from the Grantor and the Grantor shall make reasonable efforts to
provide such service, which such Ancillary Services may consist of (i) requests
by the Purchaser to the Grantor to expedite the availability of Capacity to a
date earlier than in accordance with the Network Development Plan, (ii) a
request for a redesign of Capacity occasioned by the receipt of inaccurate
information from the Purchaser and (iii) a request by the Purchaser for the
Grantor to use routes or facilities other than those indicated by the Network
Development Plan.
(e) Establishment of Costs and Adjustments. Any recurring and
non-recurring charges related to either Interconnection, Local Access or
Ancillary Services shall be established as of the Grantor's acceptance of the
Service Order related thereto; provided that, in the case of Interconnection,
such charges shall also be subject to the provisions of Section 7.1(a). The
Grantor shall be entitled to pass through to the Purchaser fifty percent (50%)
of any increase in recurring costs related to Interconnection, and/or one
hundred percent (100%) of any increase in recurring costs related to Local
Access and/or Ancillary Services to the extent of any increases in such costs.
7.2 COLLOCATION SERVICES. In the event the parties should desire
to collocate facilities with one another ("Collocation Services"), the parties
will execute a Collocation Agreement and a Collocation Service Order
substantially in the form of the Collocation Agreement and Collocation Service
Order to be included in Schedule 4, upon the terms and at the prices set forth
in such Collocation Agreement and Collocation Service Order.
<PAGE> 18
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SECTION 8. THE BACKBONE AGREEMENTS
8.1 THE BACKBONE AGREEMENTS. (a) Generally. In accordance with the terms
of this Section 8, the Grantor may provision Capacity to the Purchaser pursuant
the Backbone Agreements. Capacity provided to the Purchaser pursuant to the
Backbone Agreements shall be on the terms and conditions of each respective
Backbone Agreement and on the terms and conditions of this Agreement. In the
event of any conflict between the terms and conditions of a Backbone Agreement
and this Agreement, the terms and conditions of such Backbone Agreement shall
prevail (it being understood that this includes all technical standards and
service provisioning intervals included in each Backbone Agreement).
(b) Assignment and Assumption. Pursuant to the Assignment and Assumption
Agreements, the Purchaser shall assign to the Grantor, and the Grantor shall
assume, such of the Purchaser's right, title and interest in the Backbone
Agreements as is set forth in each Assignment and Assumption Agreement.
Notwithstanding the Assignment Agreement Execution Date, the Purchaser
covenants that each assignment and assumption of a Backbone Agreement shall
result in an assignment by the Purchaser and an assumption by the Grantor of a
Backbone Agreement which contains terms at least as favorable to the Grantor
on such date as the terms that the Purchaser was subject to as of December 31,
1997. The Grantor agrees that, upon the request of the Purchaser, it shall use
commercially reasonable efforts to assist the Purchaser in causing the
Third-Party Service Providers party to the Backbone Agreements to enter into
and execute the Assignment and Assumption Agreements.
(c) Liabilities Pre-Dating the Effectiveness of Assignment and
Assumption. The Purchaser shall retain any and all claims and/or liabilities
under each of the Backbone Agreements which accrued prior to the effective date
(an "Assignment Agreement Effective Date") of the relevant Assignment and
Assumption Agreement (regardless of the date on which such liability is
discovered). The Purchaser agrees that such liabilities may include, in each
case as of the Assignment Agreement Effective Date of the relevant Assignment
and Assumption Agreement, currently due and unpaid balances, any and all
delinquent payments and associated penalties and any and all back-billing
disputes. Without in any way limiting the effect of the preceding sentence, the
Grantor agrees to endeavor to resolve, on behalf of the Purchaser and at
Purchaser's expense, any back-billing dispute which accrued prior to any
relevant Assignment Agreement Effective Date relating to an affected Backbone
Agreement (provided that notice of any such dispute is received after any such
Assignment Agreement Effective Date) and the Purchaser agrees that it will
cooperate fully in any such effort.
(d) Arrangement with MCI. The parties hereto agree that with respect to
the Purchaser's existing contract with MCI (the "MCI Backbone Agreement"), the
Grantor and the Purchaser shall work together in good faith to enable either
(i) the Purchaser, the Grantor and MCI to enter into an Assignment and
Assumption Agreement with respect to the "private lines" portion of the MCI
Backbone Agreement or (ii) the Grantor and MCI to enter into a "private lines"
backbone service agreement upon terms and conditions satisfactory to the
Grantor and the Purchaser and such agreement shall be deemed to replace the MCI
Backbone Agreement.
<PAGE> 19
(e) Exhibit A. With respect to each Backbone Agreement, the parties
hereto agree to identify on Exhibit A and periodically update such exhibit in
order to ensure that it at all times reflects (i) all Circuits being provisioned
pursuant to each Backbone Agreement and (ii) the Minimum, if any, pursuant to
each Backbone Agreement. The Purchaser agrees that it shall, as of any
Assignment Agreement Execution Date, represent and warrant to the Grantor that
Exhibit A is materially accurate and complete; provided, however, that no
failure on the part of the Purchaser to identify a Circuit shall in any way
relieve the Purchaser of its responsibility to make payments with respect to
such Circuit.
(f) Access to Information and Continuing Cooperation. After the Initial
Payment Date, the Purchaser agrees to (i) provide the Grantor reasonable access
to its all of its records, books and all other documents and data associated
with each Backbone Agreement and (ii) cooperate, to the extent reasonably
requested by and at no cost to the Grantor, with the Grantor in the
administration of the Backbone Agreements, it being understood and agreed that
such cooperation may include the generation of certain information relating to
the Backbone Agreements required by the Grantor.
8.2 OTHER AGREEMENTS RELATING TO THE BACKBONE AGREEMENTS. Until such
time as the term of each of the Backbone Agreements (as of the date hereof)
shall expire, notwithstanding anything in this Agreement to the contrary, (i)
the Grantor shall be entitled to provide Capacity to the Purchaser pursuant to
this Agreement via the Backbone Agreements and the Purchaser shall pay for such
capacity at the rates stated in each relevant Backbone Agreement and shall use
(or pay for) at least the Minimum, if any, associated with each Backbone
Agreement, (ii) provided that the Purchaser is not in breach of any of its
payment obligations under this Agreement, the Grantor shall not be permitted to
disconnect any Capacity provided to the Purchaser pursuant to the Backbone
Agreements unless and until the Grantor can and does provision such Capacity
onto the System and will, in any event, ensure that all Purchased Capacity (and,
if necessary, Required Capacity) shall at least make use of the Minimums, (iii)
the Grantor shall be required to migrate any Capacity currently being provided
pursuant to each Backbone Agreement above the minimum commitment (the "Excess")
provided for therein onto the System prior to or upon the one (1) year
anniversary of the date on which the Assignment and Assumption Agreement
relating to each such Backbone Agreement is executed (an "Assignment Agreement
Execution Date") and, whether or not such migration is accomplished, as of such
date the Management Fee shall no longer apply to such Excess, and the Rates
shall apply to such Excess, (iv) subject to the provisions of the preceding
clause (ii) of this paragraph, the Grantor shall be required to migrate any
Capacity currently being provided pursuant to the Backbone Agreements
constituting the minimum commitments (the "Minimum") provided for therein onto
the System upon the two (2) year anniversary of each Assignment Agreement
Execution Date and, whether or not such migration is accomplished, as of such
date the Management Fee shall terminate, and the Rates shall apply to such
Minimum. In the event that the Grantor migrates Circuits which constitute the
Excess onto the System prior to the date referred to in the receding clause
(iii), the Capacity used in connection with such Circuit shall no longer be
subject to the Non-Recurring and Monthly Recurring Charges and shall be subject
to the Rates.
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8.3 EXPIRATION OF BACKBONE AGREEMENTS. Upon expiration of each of the
Backbone Agreements, the Capacity governed thereby shall be provisioned onto
the System or be provided Off-Net as provided for under this Agreement.
8.4 PAYMENTS RELATING TO THE BACKBONE AGREEMENTS. Subject to the
provisions of Section 8.2, the Purchaser agrees to pay to the Grantor (i) the
monthly recurring charges, non-recurring and other related charges, relating to
the use of Circuits and the associated capacity pursuant to each Backbone
Agreement (the "Non-Recurring and Monthly Recurring Charges") and (ii) a
management fee (the "Management Fee"). The Management Fee is set forth on
Schedule 5.
8.5 CHANGES IN THE GRANTOR'S CONTRACTUAL RELATIONS WITH BACKBONE AGREEMENT
SERVICE PROVIDERS. In the event that the Grantor (i) enters into any amendment
with a Backbone Agreement Service Provider to amend the terms of any Backbone
Agreement and such amendment results in more competitive pricing of the capacity
provided for pursuant to such Backbone Agreement or (ii) enters into an
additional contract or contracts with any Backbone Agreement Service Provider
for the provisioning of capacity and the effect of any such new agreement is to
lower the Grantor's overall cost of the total amount of capacity provided by
such Backbone Agreement Service Provider to the Grantor, the Grantor agrees that
it shall inform the Purchaser of any such circumstance described in either of
the preceding clauses (i) or (ii) and shall enter into discussions with the
Purchaser in order to renegotiate the Backbone Payments to a level that will
pass through to the Purchaser the benefit of such cost savings; provided,
however, that the Grantor shall not be obligated, as a result of one of the
circumstances described in the preceding clause (i) or (ii), to offer to the
Purchaser any cost savings that would result in rates lower than the Rates.
SECTION 9. SUB-DS-3 CAPACITY
9.1 CAPACITY BELOW DS-3 LEVEL. Notwithstanding anything in this Agreement
to the contrary, for at least as long as the current term of each Backbone
Agreement which provides for the provisioning of capacity below the DS-3 Level
(each such Backbone Agreement, a "Sub-DS-3 Backbone Agreement") is still in
effect, the Purchaser shall have the right to request the Grantor to order from
and negotiate with the carriers party to such Sub-DS-3 Backbone Agreements (each
such carrier, a "Sub-DS-3 Capacity"). Circuits and the associated capacity at a
level below DS-3 ("Sub-DS-3 Capacity"). Notwithstanding anything in this
Agreement to the contrary, (i) the Grantor shall not be permitted to disconnect
any Sub-DS-3 Capacity except in accordance with the provisions of the relevant
Sub-DS-3 Backbone Agreement, (ii) Sub-DS-3 Capacity shall not be subject to the
provisions of Section 8.2(iii) and (iv), (iii) the Purchaser's use of Sub-DS-3
Capacity shall be included when determining whether the Purchaser has (A) used
the Minimums provided for in a Sub-DS-3 Backbone Agreement and (B) fulfilled its
obligations to use the Purchased Capacity and (iv) Sub-DS-3 Capacity used by the
Purchaser shall not be considered Capacity and shall not be accorded the Rates
provided for pursuant to this Agreement and, accordingly, all pricing and rates
with respect to any such Sub-DS-3 Capacity shall consist solely of the charges
made to the Sub-DS-3 Carrier by the Grantor pursuant to the terms of the
relevant Sub-DS-3 Backbone Agreement plus the Management Fee. After the
expiration of the Sub-DS-3 Backbone Agreements, the Purchaser may provision
Sub-DS-3
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Capacity in any manner that it may choose and the capacity used under any such
arrangements shall no longer be included in the Purchaser's use of Capacity
when determining whether the Purchaser has used the Purchased Capacity.
SECTION 10. SERVICE
ORDER CANCELLATION
10.1 SERVICE ORDER CANCELLATION AND DISCONNECTION OF SERVICE. (a)
Service Order Cancellation. The Purchaser may cancel any Service Order for which
service has not yet been established by providing written notification to the
Grantor thereof five (5) days prior to the applicable Requested Start Date. In
the event of such cancellation, (i) if the Service Order relates to a Circuit
and associated Capacity to be provided On-Net, the Purchaser shall pay to the
Grantor a cancellation charge in an amount equal to the previously waived
installation fees as set forth in Schedule 1 and (ii) if the Service Order
relates to a Circuit and associated Capacity to be provided Off-Net, the
Purchaser shall pay any amounts due to any Third-Party Service Provider that
are contractually provided for in the Grantor's contracts with any such
Third-Party Service Provider relating to the Service Order so cancelled.
(b) Service Disconnection. Once service has been established pursuant
to any Service Order, the Purchaser may, with respect to any Off-Net service or
Other Services provided by a Third-Party Service Provider, disconnect any such
service by providing the notice described in the preceding paragraph (a) and
paying any and all amounts due to any affected Third-Party Service Provider that
are contractually provided for in the Grantor's contracts with any such
Third-Party Service Provider relating to the affected Service Order. Following
an Actual Start Date, the Purchaser may, with respect to any On-Net service,
disconnect or reconfigure any such Circuit or service by providing sixty (60)
days' prior written notice to the Grantor. If any such disconnected or
reconfigured Circuit is a DS-3, OC-3 or OC-12 Circuit, the Purchaser shall have
no liability with respect to such disconnection or reconfiguration. If any such
disconnected or reconfigured Circuit is an OC-48 or OC-192 Circuit, the Grantor
shall be obligated to use reasonable efforts to redeploy such disconnected or
reconfigured Circuit in such a manner that will enable it not to recognize any
loss due to the Purchaser's disconnection or reconfiguration: provided that,
after the expiration of sixty (60) days from the date on which the Purchaser
gave notice to the Grantor of its intent to disconnect or reconfigure such
Circuit, if the Grantor has been unable to mitigate its loss in manner described
in the preceding clause, the Purchaser shall reimburse the Grantor for its costs
associated with the disconnection or reconfiguration of any such Circuit.
(c) Excusable Cancellation. Notwithstanding the foregoing, and upon
thirty (30) day's prior written notice to the other party, either the Purchaser
or the Grantor shall have the right, without cancellation charge or other
liability to the other party, to cancel the affected Service Order, if the
Grantor is prohibited by governmental authority from furnishing or the Purchaser
is prohibited from using such portion, or if any material rate or term contained
herein and relevant to the affected portion of any Service Order is
substantially changed by order of a court of competent jurisdiction to
adjudicate the matter so long as all appeals have been exhausted, the FCC, or
other local, state or federal government authority. Nothing contained in
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this Section 10.1(c) shall in any way be construed to reduce or limit the
Purchaser's obligations pursuant to Sections 2.3 and 3.2 hereof.
SECTION 11. PAYMENT TERMS
11.1 DUE DATE, INVOICES AND TAXES. All amounts stated on each monthly
invoice are due on the Due Date and the Purchaser agrees to remit payment to
the Grantor's Account by the applicable Due Date, except with respect to any
amounts disputed in good faith pursuant to Section 11.2 hereof. In the event
the Purchaser fails to make full payment to the Grantor's Account by the Due
Date, the Purchaser shall also pay a late fee in the amount of the lesser of
one and one half percent (1 1/2%) of the unpaid balance per month or the
maximum lawful rate under applicable state law which shall accrue from the Due
Date, except with respect to any amounts disputed in good faith pursuant to
Section 11.2 hereof. The Purchaser acknowledges and understands that all
charges are computed exclusive of any applicable federal (if any), state or
local sales, use, excise, value added, gross receipts, or privilege taxes,
duties, fees or similar liabilities (other than general income, real or
personal property taxes or duties imposed on the Grantor)("Taxes"). Any taxes
shall be paid by the Purchaser in addition to all other charges provided for
herein. Payment for all prorated monthly recurring charges (charges for
Capacity or Other Services provided for less than a calendar month), shall be
billed following the receipt of any such Capacity or Other Service unless
and/or until a tax exemption certificate is provided to the Grantor by the
Purchaser. Monthly recurring charges for full months of service will be
invoiced in advance.
11.2 INVOICE ADJUSTMENTS. Either party hereto may, in good faith,
request a billing adjustment for a period of two (2) years after the Due Date of
an invoice, or two (2) years after the date a service is rendered, whichever is
later. Any notice of a billing dispute by a party hereto must be in writing and
must include documentation substantiating the dispute. The parties will make a
good faith effort to resolve billing disputes as expeditiously as possible. The
successful party in any billing dispute shall be entitled to interest at a rate
of 1.5% per month from the date the relevant dispute is raised on any amounts
withheld by the other party during the pendency of any dispute.
11.3 AFTER IMPOSED TAXES OR CHARGES. If any sales taxes, valued added
taxes or charges or impositions are asserted against the Grantor after, or as a
result of, the Purchaser's use of services or any Other Service by any local,
state, national, international, public or quasi-public governmental entity or
foreign government or its political subdivision, including, any tax or charge
levied to support the Universal Service Fund contemplated by the
Telecommunications Act of 1996, the Purchaser shall be solely responsible for
such taxes, charges or impositions and the Purchaser agrees to pay any such
taxes, charges or impositions and hold the Grantor harmless from any liability
or expense associated with such taxes, charges or impositions unless and/or
until a tax exemption certificate is provided to the Grantor by the Purchaser.
SECTION 12.
12.1 [this section has intentionally been left blank]
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SECTION 13. REPRESENTATIONS AND INDEMNITY
13.1 REPRESENTATIONS. (a) Representations of the Grantor. To induce
the Purchaser to enter into this Agreement, the Grantor hereby represents and
warrants to the Purchaser that:
(i) it is a corporation duly organized, validly existing and in good
standing under the laws of Delaware;
(ii) it has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged;
(iii) it has the corporate power and authority, and the legal right,
to make, deliver and perform this Agreement and the Assignment and
Assumption Agreements and has taken all necessary corporate action to
authorize the transactions contemplated hereunder and under the Assignment
and Assumption Agreements on the terms and conditions of this Agreement
and the Assignment and Assumption Agreements and to authorize the
execution, delivery and performance of this Agreement and the Assignment
and Assumption Agreements;
(iv) no consent or authorization of, filing with, notice to or other
act by or in respect of, any governmental authority or any other Person is
required in connection with the transactions contemplated by this
Agreement or the Assignment and Assumption Agreements or with the
execution, delivery, performance, validity or enforceability of this
Agreement and the Assignment and Assumption Agreements;
(v) it is in compliance with all requirements of law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a material adverse effect on the Grantor's
ability to perform its obligations hereunder and under the Assignment and
Assumption Agreements;
(vi) this Agreement and any Assignment and Assumption Agreement
entered into prior to or on the Execution Date has been duly executed and
delivered on behalf of the Grantor;
(vii) this Agreement and any Assignment and Assumption Agreement
entered into prior to or on the Execution Date constitute the legal, valid
and binding obligations of the Grantor enforceable against the Grantor in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in proceeding in equity or at
law) and an implied covenant of good faith and fair dealing;
(viii) the execution, delivery and performance of this Agreement and
any Assignment and Assumption Agreement entered into prior to or on the
Execution Date
<PAGE> 24
and the transactions contemplated hereunder and under the Assignment and
Assumption Agreements will not violate any requirement of law or
contractual obligation of the Grantor:
(ix) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Grantor, threatened by or against the Grantor or against any of its
respective properties or revenue (a) with respect to this Agreement or the
Assignment and Assumption Agreements or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected
to have a material adverse effect on the Grantor's ability to perform its
obligations hereunder and under the Assignment and Assumption Agreements;
(x) the Grantor is not in default and, to the best of its knowledge
after reasonable inquiry, knows of no existing circumstances that with the
passage of time or with notice would create a default under or with respect
to any of its contractual obligations in any respect which could reasonably
be expected to have a material adverse effect on the Grantor's ability to
perform its obligations hereunder and under the Assignment and Assumption
Agreements;
(xi) no requirement of law or contractual obligation of the Grantor
could reasonably be expected to have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Grantor; and
(xii) the Grantor or, pursuant to Section 16, its permitted assignee,
(A) is and, to the best of the Grantor's knowledge (or the knowledge of its
permitted assignee), shall remain the Person through which The Williams
Companies, Inc. engages in the telecommunications business, (B) owns all or
substantially all (whether directly or indirectly) of The Williams
Companies, Inc. telecommunications assets and (C) will inform the Purchaser
within a reasonable period of time of its knowledge of any proposed change
in The Williams Companies, Inc.'s corporate plans or strategy that would
impact the Grantor's ability (or its permitted assignee's ability, as the
case may be) to make the representations contained in the preceding clauses
(A) and/or (B).
(b) Representatives of the Purchaser. To induce the Grantor to enter
into this Agreement, the Purchaser hereby represents and warrants to the
Grantor that:
(i) it is a corporation duly organized, validly existing and in good
standing under the laws of Delaware;
(ii) it has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged;
(iii) it has the corporate power and authority, and the legal right,
to make, deliver and perform this Agreement and the Assignment and
Assumption Agreements and has taken all necessary corporate action to
authorize the transactions contemplated hereunder
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and under the Assignment and Assumption Agreements on the terms and
conditions of this Agreement and the Assignment and Assumption Agreements
and to authorize the execution, delivery and performance of this Agreement
and the Assignment and Assumption Agreements;
(iv) no consent or authorization of, filing with, notice to or other
act by or in respect of, any governmental authority or any other Person is
required in connection with the transactions contemplated by this Agreement
or the Assignment and Assumption Agreements or with the execution,
delivery, performance, validity or enforceability of this Agreement and
the Assignment and Assumption Agreements;
(v) it is in compliance with all requirements of law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a material adverse effect on the
Purchaser's ability to perform its obligations hereunder and under the
Assignment and Assumption Agreements;
(vi) this Agreement and any Assignment and Assumption Agreement
entered into prior to or on the Execution Date has been duly executed and
delivered on behalf of the Purchaser;
(vii) this Agreement and any Assignment and Assumption Agreement
entered into prior to or on the Execution Date constitute the legal, valid
and binding obligations of the Purchaser enforceable against the Purchaser
in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing;
(viii) the execution, delivery and performance of this Agreement and
any Assignment and Assumption Agreement entered into prior to or on the
Execution Date and the transactions contemplated hereunder and under the
Assignment and Assumption Agreements will not violate any requirement of
law or contractual obligation of the Purchaser;
(ix) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Purchaser, threatened by or against the Purchaser or against any of
its respective properties or revenue (a) with respect to this Agreement or
the Assignment and Assumption Agreements or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected
to have a material adverse effect on the Purchaser's ability to perform
its obligations hereunder and under the Assignment and Assumption
Agreements;
(x) the Purchaser is not in default and, to the best of its knowledge
after reasonable inquiry, knows of no existing circumstances that with the
passage of time or with notice would create a default under or with
respect to any of its contractual obligations in any respect which could
reasonably be expected to have a material adverse
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effect on the Purchaser's ability to perform its obligations hereunder and
under the Assignment and Assumption Agreements;
(xi) no requirement of law or contractual obligation of the Purchaser
could reasonably be expected to have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of
the Purchaser;
(xii) to the extent that the Purchaser is subject to regulation by
the FCC, this Agreement is an inter-carrier agreement not subject to the
filing requirements of Section 211(a) of the Communications Act; and
(xiii) the Purchaser, to its knowledge after reasonable inquiry, knows
of no event or basis which would prevent the Purchaser from meeting the
Minimums under the Backbone Agreements and, to its knowledge after
reasonable inquiry, knows of no dispute, claim or threatened action in
connection with the Backbone Agreements.
(c) Survival of Representations. The foregoing representations and
warranties shall survive the execution and delivery of this Agreement.
(d) Representations as of Each Plan Adjustment Date. As of each Plan
Adjustment Date, (i) the representations of the Grantor contained in clauses
(i), (ii), (v), (ix), (x), (xi) and (xii) of Section 13.1(a) shall be true and
correct in all material respects on and as of such date as if made on and as of
such date and (ii) the representations of the Purchaser contained in clauses
(i), (ii), (v), (ix), (x), (xi) and (xii) of Section 13.1(b) shall be true and
correct in all material respects on and as of such date as if made on and as of
such date.
13.2 INDEMNITIES. (a) Indemnification of the Grantor by the
Purchaser. Subject to Section 14, the Purchaser agrees to indemnify and hold
harmless the Grantor and its respective officers, directors, employees, agents
and representatives from and against any loss, damage, expense or cost arising
out of or in connection with: (i) any breach or violation by the Purchaser of
applicable law or governmental regulation, (ii) any claims of whatever nature
by third parties (including the Purchaser's customers) with respect to the
services provided by the Purchaser to such third parties, even if such services
incorporate the services of the Grantor and (iii) any breach or violation by
the Purchaser of its representations contained herein.
(b) Indemnification of the Purchaser by the Grantor. Subject to
Section 14, the Grantor agrees to indemnify and hold harmless the Purchaser and
its officers, directors, employees, agents and representatives from and
against any loss, damage, expense or cost arising out of or in connection with:
(i) any breach or violation by the Grantor of applicable law or governmental
regulation, (ii) any claims of whatever nature by third parties (including the
Grantor's customers) with respect to the services provided by the Grantors to
such third parties even if such service incorporate the services of the
Purchaser and (iii) any breach or violation by the Grantor of its
representations contained herein.
(c) Notification of Claim. In the event an indemnified party under
paragraph (a) or (b) above is notified of any action as to which it may seek to
be indemnified under such
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paragraph, it will promptly notify the party from which indemnification will be
sought and seek to consult with such party prior to taking any material action
with respect thereto.
SECTION 14. LIMITATIONS OF LIABILITY
14.1 LIMITATIONS OF LIABILITY. (a) Except as specifically provided for
otherwise in this Agreement, in no event shall the Purchaser or the Grantor be
liable to or through the other for consequential, incidental, indirect or
special damages, including loss of revenue, loss of business opportunity or the
costs associated with the use of external (outside the System) restoration
facilities including for any loss or damage sustained by reason of any failure
in or breakdown of the System or the facilities associated with the System or
for any interruption of service, whatever the cause and however long it shall
last.
(b) The Grantor shall not be liable to the Purchaser for any loss or
damage which may be suffered by the Purchaser as a result of, related to, or in
connection with, the Purchaser's compliance or non-compliance with any
applicable state or federal or other law related to the transfer of the IRU in,
or the use of, the Capacity.
(c) The Purchaser shall not be liable to the Grantor for any loss or
damage which may be suffered by the Grantor as a result of, related to, or in
connection with, the Grantor's non-compliance with any applicable state or
federal or other law related to the transfer by the Grantor of the IRU to the
Purchaser in, or the Grantor's operation, ownership or use of, the System.
(d) Neither the Purchaser nor the Grantor shall be liable to the other
for any loss or damage which may be suffered by such party by reason of any
Force Majeure Event. In the event of an occurrence of a Force Majeure Event, the
party claiming to be affected by a Force Majeure Event shall give prompt written
notice thereof to the other party, which such notice shall include a brief
description of the Force Majeure Event and shall, if possible, estimate the
duration of said Force Majeure Event. If the party affected by a Force Majeure
Event has complied with the provisions of the preceding sentence, such party
shall be excused from the performance of its obligations hereunder on a
day-to-day basis to the extent that the Force Majeure Event prevents, restricts
or interferes with such party's performance hereunder. The party affected by a
Force Majeure Event shall use commercially reasonable efforts under the
circumstances to avoid, rectify or remove the cause of such Force Majeure Event
and shall re-commence any prevented performance hereunder at the soonest
possible date.
(e) In no event shall the Grantor be liable to the Purchaser for any
credits or damages resulting from outage or degradation of service during a
planned maintenance operation.
SECTION 15. DEFAULT
15.1 PURCHASER DEFAULT. If the Purchaser fails to make any payment
(including any Backbone Payment) required by this Agreement on the applicable
Due Date, or if the Purchaser is otherwise in material breach of this Agreement,
and such payment default continues unremedied for a period of at least fifteen
(15) days or such other breach continues for a period
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of at least thirty (30) days, the Grantor may notify the Purchaser in writing of
such payment default or other breach and if full payment is not received or such
other breach is not fully remedied within ten (10) days of such notification,
the Grantor: (i) may suspend or terminate all or any portion of the Capacity or
Other Services provided to Purchaser hereunder, until such payment default or
other breach has been cured (including payment of default interest, if any) and
(ii) shall be entitled to pursue any and all rights and legal and equitable
remedies (including its rights and remedies to enforce the Purchaser's
obligations under this Agreement). The suspension or termination of this
Agreement shall not relieve the Purchaser of its obligation to make full payment
of all amounts incurred under this Agreement up to and including the date of
suspension. Following a suspension of service unless this Agreement has been
terminated, upon the Purchaser's payment in full of all amounts due hereunder in
accordance with the terms hereof, the Grantor shall be required to reinstitute
the Capacity or Other Services.
15.2 GRANTOR DEFAULT. (a) If the Grantor is in material breach of
this Agreement and such breach continues for a period of at least (30) days,
the Purchaser may notify the Grantor in writing of such breach and if such
breach is not fully remedied with fifteen (15) days of such notification, the
Purchaser shall, for so long as such breach continues, be entitled to pursue
any and all rights and legal and equitable remedies, including its rights and
remedies to enforce Grantor's obligations under this Agreement.
(b) Without in any way limiting the effect of the preceding
paragraph (a), the Grantor agrees that any breach of its representation or
change in circumstance which makes it impossible for its representations
contained in clause (xii) of Section 13.1(a) to be true and correct in all
material respects shall be deemed to be a default by the Grantor under this
Agreement.
SECTION 16. ASSIGNMENT AND
MERGER OR CONSOLIDATION
16.1 ASSIGNMENT. (a) This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; provided that, except for the
assignment of the Purchaser's or the Grantor's rights under this Agreement to
one or more of the Purchaser's or the Grantor's lenders as security and except
as provided in paragraph (b) of this Section, neither this Agreement nor any of
the rights or interests hereunder shall be assigned, transferred or otherwise
disposed of or the obligations hereunder delegated by either party hereto
without the prior written consent of the other party, which consent shall not be
unreasonably withheld, conditioned or delayed. The filing of a bankruptcy
proceeding, voluntary or involuntary, shall constitute a notice of intent to
transfer under this Section.
(b) Each party hereto shall be permitted to assign, transfer or
otherwise dispose of any or all of their rights hereunder and delegate any or
all of their obligations hereunder to any entity controlled by, under the same
control as, or controlling, such party: provided, that any such assignment,
transfer or other disposition shall not release such party from its obligations
hereunder, unless the other party consents otherwise in writing, which consent
shall not be unreasonably withheld, conditioned or delayed (it being understood
that it is not unreasonable to
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withhold consent if the assignee or transferee is not as creditworthy as the
assignor). Each party shall give the party notice of any such assignment,
transfer or other disposition or any such delegation.
(c) Any transfer by a party to this Agreement of such party's
obligations or its rights hereunder which is in violation of this Section shall
be void and of no force and effect.
16.2 MERGER OR CONSOLIDATION. (a) Each of the Grantor and the
Purchaser covenants that it shall not consolidate or merge with or into any
Person, nor sell, transfer, convey or lease all or substantially all its
properties or assets as an entirety to any Person (any party the subject of such
a transaction, an "Affected Party"), unless: (i) the successor entity (the
"Successor Entity") formed by such consolidation or with or into which the
Affected Party is merged, or the Successor Entity that acquires by conveyance,
transfer or lease all or substantially all the Affected Party's assets as an
entirety, (A) shall be authorized under all applicable laws to perform the
obligations of the Affected Party under this Agreement to the same extent as the
Affected Party prior to such transaction, (B) shall not be financially insolvent
immediately after giving effect to such transaction, and (C) shall execute and
deliver to the other party hereto an agreement in form and substance reasonably
satisfactory to the other party hereto, containing an assumption by such
Successor Entity of the due and punctual performance of each provision of this
Agreement to be performed or observed by the Affected Party (which agreement
shall be deemed to be reasonably satisfactory to the other party hereto if such
party has not notified the Affected Party to the contrary within (30) days of
receipt thereof); and (ii) immediately prior to and immediately after giving
effect to such transaction, no default under this Agreement shall have occurred
and be continuing.
(b) Upon any such consolidation or merger, or any sale,
conveyance, transfer or lease of substantially all the assets of the Affected
Party in accordance with this Section 16.2, the Successor Entity formed by such
consolidation or with or into which the Affected Party shall be merged, or to
which such sale, conveyance, transfer or lease shall be made, shall succeed
to, and be substituted for, and may exercise every right and power and shall be
subject to each and every obligation of, the Affected Party under this
Agreement with same effect as if such Successor Entity had been a party to this
Agreement. No such sale, conveyance, transfer or lease of all or substantially
all the assets of the Affected Party shall have the effect of releasing the
Affected Party or any Successor Entity that shall theretofore have become such
in the manner prescribed in this Section 16.2 from its liability under this
Agreement.
SECTION 17. MISCELLANEOUS
17.1 CONTENT AND CERTAIN PARAMETERS REGARDING USE OF CAPACITY. The
Purchaser agrees (i) not to use the Capacity (or any Other Service) for any
unlawful purpose, including any use which constitutes or may constitute a
violation of any local, state or federal obscenity law and (ii) that, during
the Term, at least ten percent (10%) of its total use of Capacity shall
constitute interstate transmissions. The parties hereto acknowledge that from
time to time a portion or portions of the Purchaser's use of Capacity may be
intended for transmission upon a portion of the System that is a multimedia
fiber with respect to which the Grantor is contractually limited to use for
multimedia transmissions (i.e. video and radio transmission
<PAGE> 30
30
services and/or related applications, including, graphic, visual, imaging,
interactive and multimedia transmissions). In such event, the Purchaser agrees,
upon request from the Grantor , to identify the nature of its proposed use of
Capacity. Nothing in the preceding two sentences shall be construed in such a
manner as would relieve the Grantor of its obligation to provision Capacity on
the System pursuant to the terms of this Agreement.
17.2 PURCHASER FACILITIES. The Purchaser has sole responsibility
for installation, testing and operation of facilities, services and equipment
("Purchaser Facilities") other than those specifically provided by the Grantor
as part of the Capacity or Other Services as described in this Agreement or in
a Service Order. In no event will the untimely installation or non-operation of
the Purchaser Facilities relieve the Purchaser of its obligation to pay charges
for the Capacity or Other Services after the Actual Start Date.
17.3 TITLE TO EQUIPMENT. This Agreement shall not, and shall not
be deemed to, convey to the Purchaser title of any kind to any of the
transmission facilities, including all optronics, digital encoder/decoders,
telephone lines, microwave facilities or other facilities utilized in
connection with the Capacity; provided however that the Grantor acknowledges
that the Purchaser's IRU in the Capacity on the System entails the use of such
transmission facilities. Any equipment provided by the Purchaser must be
itemized on a schedule listing all such the Purchaser-provided equipment and
appended to the Service Order to which use of that equipment relates and the
Grantor shall not be obligated to provide any Ancillary Service for the
Purchaser if the Purchaser will be providing any of its own equipment unless
and until such equipment is itemized in accordance with this sentence.
17.4 PUBLICITY AND CONFIDENTIALITY. (a) Confidentiality. The
provisions of this Agreement and any non-public information, written or oral,
with respect to this Agreement ("Confidential Information") will be kept
confidential and shall not be disclosed, in whole or in part, to any Person
other than Affiliates, officers, directors, employees, agents or
representatives of a party (collectively, "Representatives") who need to know
such Confidential Information for the purpose of negotiating, executing and
implementing this Agreement. Each party agrees to inform each of its
Representatives of the non-public nature of the Confidential Information and to
direct such Persons to treat such Confidential Information in accordance with
the terms of this Section 17.4. Nothing herein shall prevent a party from
disclosing Confidential Information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of, or pursuant to
any law, regulation of any regulatory agency or authority (including any filing
that a party hereto may have to make with the Securities and Exchange
Commission of the United States), (iii) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (iv) to a party's legal
counsel or independent auditors, (v) to prospective lenders to the Grantor or
the Purchaser, and (vi) to any actual or proposed assignee, transferee or
lessee of all or part of its rights hereunder provided that such actual or
proposed assignee agrees in writing to be bound by the provisions of this
Section 17.4; provided, however, that if a receiving party is ordered or
required to disclose Confidential Information pursuant to either of the
preceding clauses (i) or (ii), such party shall promptly notify the other party
of the order or request and permit the disclosing party (at its expense) to
seek an appropriate protective order. Notwithstanding anything herein to the
contrary, each of the following shall be deemed to be excluded from provisions
hereof: any Confidential Information that is (A) already in the
<PAGE> 31
31
possession of, is known to, or is independently developed by the receiving
party, (B) or becomes publicly available through no fault of the receiving
party, (C) obtained by the receiving party from a third-party without breach by
such third-party of an obligation of confidence with respect to the
Confidential Information disclosed. The parties acknowledge that the Purchaser
will need to and will be permitted to disclose Confidential Information
(including, specifically, the System's performance standards) to potential
customers of the Purchaser subject to the prior written consent of the Grantor.
The Purchaser may seek such consent, including consent to disclose a redacted
version of this Agreement to multiple customers, which consent shall not be
unreasonably withheld, conditioned or delayed by the Grantor.
(b) Effect of Termination. Upon termination or expiration of this
Agreement for any reason, or upon request of the disclosing party, all
Confidential Information, together with any copies thereof, shall be returned
to the disclosing party or certified destroyed by the receiving party.
(c) Equitable Relief. The parties acknowledge that in the event
of a breach or threatened breach of the provisions of this Section 17.4,
remedies at law will be inadequate and that either party shall be entitled to
an injunction or other specific performance to enforce this provision,
provided, however, that nothing herein shall be construed as precluding the
injured party from pursuing further remedies.
(d) Publicity. The foregoing shall not restrict either party from
publicly announcing that it has entered into this Agreement with the parties
hereto, but without including any details contained in this Agreement.
Notwithstanding the foregoing, however, neither party shall issue a press
release concerning the execution of this Agreement without the prior written
consent of the other party.
17.5 NOTICE. Each notice, demand, certification or other
communication given or made under this Agreement shall be in writing and shall
be delivered by hand or by a recognized overnight delivery service or sent by
registered mail or by facsimile transmission to the address of the respective
party as shown below (or such other address as may be designated in writing to
the other party hereto in accordance with the terms of this Section):
If to the Purchaser: 3625 Queen Palm Drive
Sabal VII Building
Tampa, Florida 33619
Attn: Divisional Vice President, Network Planning
Fax No.:
Telephone:
With a copy to: 3625 Queen Palm Drive
Sabal VII Building
Tampa, Florida 33619
Attn: General Counsel
<PAGE> 32
32
If to the Grantor: One Williams Center, 26th Floor
Tulsa, Oklahoma 74172
Attn: Contract Administration
Fax No.: (918) 561-6578
Telephone: (918) 588-5760
With a copy to: One Williams Center, Suite 4100
Tulsa, Oklahoma 74172
Attn: General Counsel
Any change to the name, address and facsimile numbers may be made at any time
by giving fifteen (15) days prior written notice in accordance with this
Section. Any such notice, demand or other communication shall be deemed to have
been received, if delivered by hand, at the time of delivery or, if sent by
overnight delivery service the date when delivered or, if posted, at the
expiration of seven (7) days after the envelope containing the same shall have
been deposited in the post maintained for such purpose, postage prepaid, or, if
sent by facsimile, at the date of transmission with written or telephone
confirmation of receipt.
17.6 INTEGRATION. This Agreement (including the attachments
hereto) represents the agreement of the parties hereto with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the parties hereto relative to the subject matter hereof not
expressly set forth or referred to herein or in the attachments hereto.
17.7 WRITTEN AMENDMENT. This Agreement shall not be modified or
amended except by a writing signed by authorized representatives of the parties
hereto.
17.8 RELATIONSHIP OF PARTIES. This Agreement shall not form a
joint venture or partnership or similar business arrangement among the Grantor
and the Purchaser and nothing contained herein shall be deemed to constitute a
partnership or joint venture or similar business arrangement nor shall any party
be deemed to be the agent or partner of any other party. No party shall have the
right to bind any other party.
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA.
17.10 NO THIRD PARTY BENEFICIARIES. This Agreement does not
provide and is not intended to provide third parties (including customers of the
Purchaser, any permitted transferee of the Capacity (other than a permitted
transferee of all the Purchaser's rights and obligations under this Agreement)
or any other permitted user of the Capacity) with any remedy, claim, liability,
reimbursement, cause of action, or any other right. Furthermore, the Purchaser
acknowledges that, except as set forth in any Service Order, it is not a third
party beneficiary of any agreement entered into by the Grantor.
17.11 ATTORNEYS' FEES. If a proceeding is brought for the
enforcement of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and other
<PAGE> 33
33
costs and expenses incurred in such action or proceeding in addition to any
other relief to which such party may be entitled.
17.12 SEVERABILITY. If any provision of this Agreement is found by an
arbitral, judicial or regulatory authority having jurisdiction to be void or
unenforceable, such provision shall be deemed to be deleted from this Agreement
and the remaining provisions shall continue in full force and effect.
17.13 NO WAIVER. The failure of either party to enforce any provision
hereof shall not constitute the permanent waiver of such provision.
17.14 SETTLEMENT OF DISPUTES. The parties hereto shall endeavor to settle
amicably by mutual discussions any disputes, differences, or claims whatsoever
related to this Agreement within sixty (60) days. The disputing party shall
give the other party written notice of the dispute in accordance with the
notice provision of this Agreement. The other party shall submit a response
within twenty (20) days after receiving said notice. The notice and response
shall include (a) a summary of the party's position and a summary of the
evidence and arguments supporting its position, and (b) the name of the
executive who will represent the party. The executives shall meet at a mutually
acceptable time and place within thirty (30) days of the disputing party's
notice and thereafter as often as they deem reasonably necessary to resolve the
dispute. If the matter has not been resolved within sixty (60) days of the
disputing party's notice, either party may pursue its rights and remedies
within a court of competent jurisdiction. All negotiations conducted pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
17.15 RIGHT TO AUDIT. No more than two (2) times in any twelve (12) month
period, the Purchaser shall have the right, at its sole expense, to appoint a
third-party consultant to audit the books and records of the Grantor to ensure
the Grantor's compliance with Section 3.3 hereof and the accuracy of any pass
through pricing. Any consultant appointed pursuant to the preceding sentence
must agree to treat the Grantor's records and books as confidential pursuant to
the Grantor's standard confidentiality agreement and may only disclose to the
Purchaser the fact that the applicable costs charged to the Purchaser do not
correspond to the Grantor's records (such permissible disclosure shall include
the precise amount of any such variance).
17.16 INTRASTATE INTEREXCHANGE SERVICE. Notwithstanding anything in this
Agreement to the contrary, the Purchaser may use any Interexchange Service
provided under this Agreement only if such Interexchange Service is used for
carrying interstate telecommunications traffic subject to the jurisdiction of
the FCC. The Grantor and its Affiliates shall not be obligated to make
available Interexchange Service on a Circuit with end points within a single
state unless the Purchaser represents in writing to the Grantor that such
Interexchange Service shall be used to carry interstate telecommunications
traffic. If it is determined at any time that any Interexchange Service is
subject to applicable state laws, regulations and/or tariffs, the Grantor or
its Affiliates may (i) provide such Interexchange Service pursuant to such
applicable state laws, regulations and/or tariffs or (ii) discontinue provision
of the affected Interexchange Service.
<PAGE> 34
34
17.17 Conflict of Law. Notwithstanding anything in this Agreement to the
contrary, the Grantor may immediately suspend the provision of Capacity or any
Other Service to the Purchaser, in whole or in part, if (i) the Grantor
determines that the provision of such Capacity or Other Service violates the
Communications Act (including the Telecommunications Act of 1996) in any
material manner or (ii) a change in federal or state law or promulgation of any
rule, regulation or order of the FCC or other governmental instrumentality
makes the Grantor's performance hereunder commercially impracticable in any
material manner.
17.18 No Conflicting Tariffs. The Grantor does not intend to file any
tariff in any jurisdiction that would materially change the Rates and the terms
and conditions of this Agreement. If such tariff is filed, and if such tariff
has the effect of increasing the rates and charges that the Purchaser pays
under this Agreement, the Grantor will remit to the Purchaser the difference
between the Rates and charges in this Agreement, and any increased rates and
charges that the Purchaser pays as a result of the tariff filing, on a
month-to-month basis, thirty (30) days after the Purchaser pays the higher
rates or charges.
17.19 Compliance with Law. Each party hereto shall use reasonable efforts
to comply with all laws, orders, regulations, directories, actions or requests
of the United States government or of a state or local government or any
instrumentality thereof in order to enable it to comply with its obligations
hereunder.
[rest of page intentionally left blank]
<PAGE> 35
35
IN WITNESS WHEREOF, the parties have executed this Agreement
effective on the date first written above.
WILLIAMS COMMUNICATIONS, INC., as
Grantor
By: /s/
------------------------------
Name:
Title:
INTERMEDIA COMMUNICATIONS INC.,
as Purchaser
By: /s/ BOB ROUSE
------------------------------
Name: Bob Rouse
Title: EVP
<PAGE> 36
SCHEDULE 1
TO THE
CAPACITY PURCHASE AGREEMENT
DATED JANUARY 5, 1998
Grantor's Private Line and ATM Service
SERVICES & PRICING
This Private Line Service and ATM Services Schedule ("PLSS") is made as of this
5th day of January ___, 1998, and is subject to that Capacity Purchase
Agreement No. __________ (the "Capacity Agreement") by and between Williams
Communications, Inc. d/b/a Williams Network, a Delaware corporation
("Grantor"), and Intermedia Communications, Inc. a Delaware corporation
("Purchaser").
1. DESCRIPTION OF PRIVATE LINE SERVICE: With respect to On-Net Service,
Grantor's Private Line Service (in this Schedule, the "Private Line
Service" or "Service") provides domestic DS-3 and optical SONET (OC-N)
circuits which are specifically dedicated to Purchaser's use between two
(2) points specified by the Parties in a Service Order, accepted by
Grantor in accordance with the Capacity Agreement, and meeting the
technical requirements defined in the "Technical Specifications for
Private Line Service" attached hereto.
DESCRIPTION OF ATM SERVICE: Williams Network Asynchronous Transfer Mode
(ATM) is multi-service technology that provides integration of disparate
networks onto a single communications infrastructure provided in
accordance with the attached "Technical Specifications for Private Line
Service". ATM technology takes voice, data and video packets and divides
them into equally sized, 53-byte cells and transmits them over the
Williams Network ATM network.
2 RATES & CHARGES: Private Line Service has three basic rate elements; IXC
Charges, Local Access Charges, and Non-recurring Charges. Williams Network
ATM service has three basic rate elements; Access, Port Connections, and
either Committed Bit Rate (CBR), or Variable Bit Rate (VBR) Permanent
Virtual Circuits (PVCs) and Virtual Paths (VPs).
2.1 IXC. Monthly recurring IXC Charges for Private Line Service are determined
by multiplying the unit price, representing the charge for one Voice Grade
Equivalent Circuit over one vertical and horizontal mile or route mile, by
the number of Voice Grade Equivalent Circuits constituting the Circuit
ordered, as such appear in the pricing matrix attached to this Schedule 1.
ATM. Permanent virtual circuit (PVC) and Virtual Path (VP) bandwidth
charges. PVC and VP charges are based on the class of service (CoS) and
bandwidth selected. Bandwidth charges are stated in Committed Information
Rates (CIR) or Megabit per second (Mbps) increments for one-way, or
Simplex PVCs. CIR increments are available in 1Meg increments up to 40Mbps
for DS3 ports, 5 Meg increments up to 150 Mpbs for OC3 ports and 25 Meg
increments up to 600 Mbps for OC12 ports. Two Classes of Service are
offered; Constant Bit Rate (CBR) and Variable Bit Rate (non real time)
(VBRnrt). Monthly recurring charges for port, PVCs and VPs are as reflected
on the Attached pricing matrix.
2.2 Local Access Charges. Local Access Charges are based on the cost of
transmission capacity provided by Purchaser or a third party supplier to
extend the Services provided by Grantor from a Grantor Point of Presence to
any other location and are provided as set forth in the Capacity Agreement.
2.4 Non-Recurring Charges: Non-recurring charges for On-Net Service are as set
forth in the attached pricing matrix. Non-recurring charges for any
Service provided by a third-party, whether Off-Net Service, Local Access,
or other, are as established by the third-party providing such Service.
Installation charges shall apply to the normal installation of equipment
necessary to provide the requested service to the point of demarcation at
the Purchaser's premises. Additional Installation charges shall apply when
Grantor is required to install equipment other than that normally required
to provide the service or when Purchaser requests special equipment. The
non-recurring charges are subject to change, upon thirty (30) days prior
written notice from Grantor to Purchaser.
3. TERMS OF SERVICES:
<PAGE> 37
3.1 Upon acceptance of a Service Order, Grantor shall confirm Purchaser's
requested Start Date, or inform Purchaser of the estimated date for the
delivery of each service. Grantor shall use commercially reasonable efforts
to install each such service on or before the Start Date, but the inability
of Grantor to deliver a facility by such date shall not be a Default under
this Agreement provided that Grantor has coordinated closely with Purchaser
regarding the inability to deliver a facility or requested service. If
Grantor fails to make any facility available within thirty (30) days after
the Start Date, Purchaser's remedy shall include, but not be limited to,
cancellation of the Service Order which pertains to such Service by ten
(10) calendar days prior written notice to Grantor.
3.2 The effective date of each service (the "Service Effective Date") shall
begin as indicated in the Capacity Agreement.
4. CHANGE OF SERVICES:
4.1 Change of Service Date. If Purchaser desires to change the date on which
Purchaser has requested that Service be available, Purchaser will
coordinate such changes during the normal Network Deployment Plan update
process described in the Capacity Purchase Agreement. Purchaser may be
charged a Change of Service Date Charge only in the event that such prior
coordination has not occurred. Purchaser will also be charged for any
charges incurred by Grantor from third party providers as a result of
Purchaser's request for Change of Service Date.
4.2 Change of Service Order. If Purchaser requests a modification to the
information contained in a Service Order (other than a Change of Service
Date) prior to completion of installation of the Service, Purchaser will
incur a Change of Service Order Charge. No charge will be incurred if the
change is to the IXC part of the Service Order and is administrative in
nature (i.e. billing address, contact information, etc.). A charge will be
incurred if the administrative change relates to Local Access for which
Grantor is acting as agent.
Change of Service Order charges will be lower if the Purchaser requests
such change within five (5) business days after a Service Order has been
accepted by Grantor ("pre-engineering") and will be higher if such change
is received after that time ("post-engineering"). Any expedited order will
be considered to be in the post-engineering stage two (2) business days
after the Service Order is accepted by Grantor.
4.3 Change of Service Charges. If Purchaser requests a change to Services after
such Services have been installed, Purchaser will incur a Change of Service
Charge. If such Change of Service is administrative in nature, Purchaser
will not incur a charge, unless such administrative change applies to Local
Access services which have been ordered by Grantor as agent for Purchaser.
In addition to the Change of Service Charge, Purchaser will be responsible
for any charges due to re-engineering which is required as a result of
Purchaser's request for Change of Service.
5. OUTAGE CREDITS:
5.1 Purchaser acknowledges the possibility of an unscheduled, continuous and/or
interrupted period of time when a Service or Services are "UNAVAILABLE" (as
defined in the Specifications) for a continuous period of two (2) hours
(hereafter an "OUTAGE"). An Outage shall begin upon recognition by Grantor
or notice from Purchaser that the Service is interrupted. In the event of
an Outage, Purchaser shall be entitled to a credit (the "OUTAGE CREDIT") at
the rate of 1/720 of the monthly recurring charge for the IXC portion of
the circuit for each hour in excess of the first two (2) consecutive hours
that the affected service fails to conform to the Specifications.
5.2 Purchaser shall not receive an Outage Credit if the interruptions are (a)
of a duration of less than two (2) consecutive hours, (b) caused by the
negligence or willful misconduct of Purchaser or others authorized by
Purchaser to use the services under this Agreement, (c) due to the failure
of power, facilities, equipment, systems or connection not provided by
Seller, (d) caused by the failure of access to Seller's fiber optic
network, (e) resultant from scheduled maintenance where Purchaser has been
notified of scheduled maintenance in advance, (f) due to a Force Majeure
event as defined in Section 8.4 of the CAPACITY AGREEMENT.
5.3 All Outage Credits shall be credited on the next monthly invoice for the
affected Service.
5.4 The Outage Credit described in this Section 5 of this PLSS shall be the
sole and exclusive remedy of Purchaser in the event of any Outage, and
under no circumstance shall an outage be deemed a Default under this
Agreement.
6.0 Service Parameters
6.1 General: The service intervals and system performance standards
defined in this schedule apply to both existing circuits transferred
to the Grantor under terms of the IRU and to all new circuits ordered
from the
<PAGE> 38
Grantor subsequent to the execution of the IRU.
6.2 Service Intervals
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Ordering Timelines
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Order Acknowledgment 24 hours
- ------------------------------------------------------------------------------------------------------------
Advanced Scheduled Maintenance Notification 20 calendar days
- ------------------------------------------------------------------------------------------------------------
Advanced Emergency Maintenance ASAP
Notification
- ------------------------------------------------------------------------------------------------------------
FOC, including carrier selection and containing 10 business days after submission to Grantor
due date confirmation
- ------------------------------------------------------------------------------------------------------------
LOA 3 business days
- ------------------------------------------------------------------------------------------------------------
Pop-to-Pop DLR (See paragraph 6, below) 5-7 after initial request
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Installation Timelines From Date Order Accepted
- ------------------------------------------------------------------------------------------------------------
<S> <C>
DS-0 To be negotiated
- ------------------------------------------------------------------------------------------------------------
DS-1 To be negotiated
- ------------------------------------------------------------------------------------------------------------
DS-3 21 Business Days
- ------------------------------------------------------------------------------------------------------------
OC-3 (but not OC-3c) 90 Business Days
- ------------------------------------------------------------------------------------------------------------
OC-12 (but not OC-12c) 90 Business Days
- ------------------------------------------------------------------------------------------------------------
OC-48 90 Business Days
- ------------------------------------------------------------------------------------------------------------
OC-192 To be negotiated
- ------------------------------------------------------------------------------------------------------------
</TABLE>
6.3 Technical Specifications:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Transmission Rates
- -------------------------------------------------------------------------
Device Private Line (On-net)
- -------------------------------------------------------------------------
<S> <C>
DS-3 44.736 Mbps
- -------------------------------------------------------------------------
OC-3/3c 155.520 Mbps
- -------------------------------------------------------------------------
OC-12/12c 622.080 Mbps
- -------------------------------------------------------------------------
OC-48 9953.280 Mbps
- -------------------------------------------------------------------------
</TABLE>
6.4 Network Availability: 99.95% in calendar year 1998, and 99.995% thereafter.
Both percentages may be identified as "Network Availability". All Network
Availability is measured on a calendar year basis from POP to POP. The
Network Availability applies only to On-Net Service. Availability of
Off-Net Service, Local Access, or Interconnection is only as provided by
the applicable third-party carrier. Force Majeure Events will not be
included in the calculation of Network Availability.
6.5 Mean Time to Repair
a. Equipment - 2 hours.
b. Cable - 4 hours on site, 6 hours repairing first fiber.
6.6 Performance (% Error Free Seconds): 99.5% from POP to POP measured over a
calendar year (the "EFS"). The EFS will only apply to On-net Service. The
EFS of Off-Net Service, Local Access, or Interconnection is only as
provided by the applicable third-party carrier. Force Majeure Events will
not be included in the calculation of the EFS.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Systems Availability Threshold Bit Error Rate Error Free Seconds
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Structurally Diverse Route 99.995% 10 * 99.95% 99.50%
- -------------------------------------------------------------------------------------------------------------
Non-Structurally Diverse Route 99.95% 10 * 99.95% 99.50%
- -------------------------------------------------------------------------------------------------------------
Structurally Diverse Spur 99.995% 10 * 99.95% 99.50%
- -------------------------------------------------------------------------------------------------------------
Non-Structurally Diverse Spur 99.95% 10 * 99.95% 99.50%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 39
6.7 Moves/Adds/Changes.
a. In addition to new service orders, Williams Communications shall issue a
POP-to-POP circuit design layout record when circuits are moved, added,
changed, rehomed, regroomed, 5-7 business days after initial request for
move, add, change, rehome, regroom, etc. is submitted Williams will submit
copies of LEC-issued circuit design layout records immediately upon
receipt from the LEC.
b. Grantor will provide a monthly DLR report summarizing all
moves/adds/changes to DLRs occurring in the previous month.
6.8 Grantor agrees to provide the following:
a. Priority Restoral Status for On-Net Service when electronic restoration
becomes available and structurally diverse paths and OSS restoration
applications are implemented.
a. An electronic view into that portion of the Grantor's Network utilized by
the purchaser under this agreement - including but not limited to trouble
tickets, alerts, and alarms, when such functionality is implemented by
the Grantor.
b. Proactive notice on all outages and expedited escalation thereof and
escalation pursuant to the Grantor's escalation procedures executed
through an assigned contact person for Purchaser.
c. Identification of underlying carriers as requested on circuit.
e. Circuit diversity, including proof of diversity, when ordered, by circuit,
and including verification of diversity following any moves, adds,
changes, regrooming, rehoming, etc. Purchaser will provide DLR for
circuits for which diversity is requested at the rates indicated in the
relevant Service Order set in accordance with the terms of the Capacity
Agreement. A diverse circuit is subject to On-Net or Off-Net Rates
additional to the original circuit.
d. Escalation lists up to and including the Vice-President of Operations and
Engineering of Grantor.
e. Regularly scheduled service review meetings with the Purchaser.
f. 30 minute callbacks with status notices or a similarly agreed upon update
mechanism during outages as required by the Purchaser.
g. Hotline call-in number to monitor restoral status.
g. Fully functional and tested disaster recovery NOC site in Tulsa and in
Houston backup center when implemented (Houston's planned implementation
in 1999).
j. Assigned service manager.
h. Regular performance reports on MTTR, % availability, distribution of
resolution codes, failure rates on particular equipment components
specific to Purchaser's network.
m. Assigned circuit provisioner.
n. Coordination of restoral procedures.
6.9 Failures and Response Times. Purchaser defines the classes of service
failures and response times as follows:
Type Failure Definition Response Time
MAJOR A major failure is defined as a service 4 Hours on site
affecting outage (e.g., a cut cable or major
equipment breakdown) or the loss of an entire
site, i.e., any failure affecting one or more
circuits.
<PAGE> 40
MINOR Any failure which has no effect on existing service. 24 hours
Such a failure includes a failed or loose termination.
Redundant system equipment or alternate path cabling
maintains service.
6.10 Remedies of Purchaser for Grantor Failure to Comply with Applicable
Standards. In the event that the Grantor fails to comply with applicable
Service Intervals, System Performance Standards and in any thirty (30) day
period with respect to On-Net Service, only, as stated in this schedule,
the following remedies shall apply:
a) Failure to Comply. Failure to comply is defined as the inability to
meet the agreed upon standards for Service Intervals and System
Performance Standards in any thirty (30) day period.
b) Remedy. In the event of a Failure to Comply, Grantor shall be
obligated to Purchaser as follows:
1) Failure to Comply with Service Intervals - Grantor shall waive
Williams installation fees and provide one month free service charged
by Williams on the affected customer order(s). Any fees charged to
Grantor by third party providers will not be waived.
2) Failure to Comply with System Performance Standards - Grantor
shall provide a credit of 15% of the monthly recurring charge
exclusive of local access to Purchaser's next bill on the affected
customer order(s).
<PAGE> 41
TECHNICAL SPECIFICATIONS FOR PRIVATE LINE SERVICE
-------------------------------------------------
1.0 Interconnection Specifications
1.1 DS-3. DS-3 service is provided in accordance with ANSI Standard T1.102
(formerly AT&T Compatibility Bullentin 119) and Technical Reference
54014'4. DS-3 Service operates at 44.736 Mbps.
1.2 Optical SONET Services (OC-N). Optical SONET Services are provided in
accordance with ANSI Standard T1.105. OC-3 Service operates at 155.520 Mbps
and is configured with 3 separate STS-1 signaling paths. OC-12 Service
operates at 622.080 Mbps with 12 separate STS-1 signaling paths. OC-12C
Service operates at 622.080 Mbps with 1 STS-12C signaling path (or 4
separate STS-3C signaling paths). OC-48 Service operates at 9953.280 Mbps
and is configured with 48 separate STS-1 signaling paths.
2.0 Quality Standards
2.1 General. DS-3 and Optical SONET Service standards apply on a one-way basis
between the Purchaser Premises Network Interface Points ("CPNIP") which are
connected to Local Access between which DS-3 and Optical SONET
Interexchange Service is provided (CPNIP to CPNIP or End-to-End) and
exclude nonperformance due to force majeure or planned interruptions for
necessary maintenance purposes. The actual end-to-end availability and
performance of DS-3 and Optical SONET Service may be affected by the
Purchaser provided equipment, dependent upon the type and quality of
Purchaser equipment used. (Purchaser provided Local Access may not meet
these specifications.)
2.2 Availability. Availability is a measurement of the percent of total time
that service is operative when measured over a calendar year period. DS-3
and Optical SONET Service is considered inoperative when there has been a
loss of signal or when two consecutive 15 second loop-back tests confirm
the observation of any severely errored seconds or a bit error rate equal
to or worse than 1 x (10 raised to -3). The Local Access availability
standards for DS-3 and Optical SONET Services or any Off-Net Service are
established by the Local Access Provider or Off-Net Service provider.
2.3 Performance (% Error Free Seconds, while Available). Performance is noted
in Error Free Seconds (EFS) which are a measure of the percentage of total
seconds when measured over a consecutive 24 hour period that do not contain
bit errors. Performance shall be measured on a one-way basis using a Pseudo
Random Bit Sequence test pattern as defined in CCITT Recommendation 0.151.
The Error Free Seconds standards for the Local Access for DS-3 and Optical
SONET Service or for Off-Net Service is established by the Local Access
Provider or Off-Net Service provider.
<PAGE> 42
- ------------------------------------------------------------------------------
Williams Network Asynchronous Transfer Mode Service
TECHNICAL SPECIFICATIONS
1.0 Definition. Williams Network technical specifications are stated as an
objective that the ATM network will perform in accordance with prevailing
telecommunications industry standards. Williams Network will use reasonable
efforts to remedy delays, interruptions, omissions or mistakes within the
ATM network.
1.1 Performance Objectives. All service provided under the Williams Network
Asynchronous Transfer Mode Service are measured using two variables:
Network availability and Mean-time-to-repair.
1.2 Network Availability is a measurement of actual service time to stated
service time. Network Availability objective: -99.99%
1.3 MTTR is the average time required to restore service and resume
availability and is stated in terms of equipment and cable outages. The
time is measured from the moment the outage is reported until the service
is available and applies specifically to equipment outages or failures.
MTTR objective: - 2 Hours (Equipment)
- 4 Hours (Cable)
1.4 Calculation. Williams Network calculates network availability on customer
action requests. The customer must notify Williams Network and initiate an
action request to determine if service level variables 1.2 & 1.3 were met.
Page 8 of 8
<PAGE> 43
Rates
<TABLE>
<CAPTION>
Private Line Pricing ($/VGE V&H mi) unless otherwise specified
- --------------------------------------------------------------------------------------------------------
New Commitment DS3 OC3 OC12 OC48 OC192*
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
- --------------------------------------------------------------------------------------------------------
</TABLE>
*OC192 pricing is $/VGE route mile
<TABLE>
<CAPTION>
OS-3 Non-Recurring/Ancillary
- --------------------------------------------------------------------------------------------------------
IXC Cross-Connect Local Loop Admin
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Installation $ 2,000.00 N/C $ 100.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date-Initial N/C N/C $ 100.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date-Subsequent $ 500.00 $ 250.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Administration N/C N/C $ 100.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Pre-Engineering $ 500.00 $ 250.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Post-Engineering $ 2,000.00 $ 500.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Pre-Engineering $ 500.00 $ 250.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Post-Engineering $ 2,000.00 $ 500.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Admin N/C N/C $ 100.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Re-Engineering $ 2,000.00 $ 500.00 $ 100.00
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Non-Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Contract Termination 100% of remain contract life
- --------------------------------------------------------------------------------------------------------
Additional Install/Maint/Eng/Tech Chngs $100.00/Hr, $125.00/Hr After hours
- --------------------------------------------------------------------------------------------------------
Local Loop Billing Admin $ 150.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OC-3 Non-Recurring/Ancillary
- --------------------------------------------------------------------------------------------------------
IXC Cross-Connect Local Loop Admin
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Installation $ 5,000.00 N/C $ 300.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date-Initial N/C N/C $ 300.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date-Subsequent $ 1,250.00 $ 500.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Administration N/C N/C $ 300.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Pre-Engineering $ 1,250.00 $ 500.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Post-Engineering $ 5,000.00 $ 1,250.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Pre-Engineering $ 1,250.00 $ 500.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Post-Engineering $ 5,000.00 $ 1,250.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Admin N/C N/C $ 300.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Re-Engineering $ 5,000.00 $ 1,250.00 $ 300.00
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Non-Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Contract Termination 100% of remain contract life
- --------------------------------------------------------------------------------------------------------
Additional Install/Maint/Eng/Tech Chngs $100.00/Hr, $125.00/Hr After hours
- --------------------------------------------------------------------------------------------------------
Local Loop Billing Admin $ 150.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 44
Rates
<TABLE>
<CAPTION>
OC-12 Non-recurring/Ancillary
- --------------------------------------------------------------------------------------------------------
IXC CROSS-CONNECT LOCAL LONG ADMIN
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Installation $ 18,000.00 N/C $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date - Initial N/C N/C $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date - Subsequent $ 3,500.00 $ 1,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Administration N/C N/C $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Pre-Engineering $ 3,500.00 $ 1,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Post-Engineering $ 18,000.00 $ 3,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Pre-Engineering $ 3,500.00 $ 1,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Post-Engineering $ 18,000.00 $ 3,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Admin N/C N/C $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Re-Engineering $ 18,000.00 $ 3,500.00 $ 1,000.00
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Non-Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Contract Termination 100% of remain contract life
- --------------------------------------------------------------------------------------------------------
Additional Install/Maint/Eng/Tech Chgs $100.00/Hr, $125.00/Hr After hours
- --------------------------------------------------------------------------------------------------------
Local Loop Billing Admin $ 150.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OC-42 Non-recurring/Ancillary
- --------------------------------------------------------------------------------------------------------
IXC CROSS-CONNECT LOCAL LONG ADMIN
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Installation $ 48,000.00 N/C $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date - Initial N/C N/C $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Chng of Req. Svc Date - Subsequent $ 12,000.00 $ 5,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Administration N/C N/C $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Pre-Engineering $ 12,000.00 $ 5,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Chng of Order - Post-Engineering $ 48,000.00 $ 12,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Pre-Engineering $ 12,000.00 $ 5,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Order Cancellation - Post-Engineering $ 48,000.00 $ 12,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Admin N/C N/C $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Change of Service - Re-Engineering $ 48,000.00 $ 12,000.00 $ 3,500.00
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Off-Net Ancillary - Non-Recurring Passthrough
- --------------------------------------------------------------------------------------------------------
Contract Termination 100% of remain contract life
- --------------------------------------------------------------------------------------------------------
Additional Install/Maint/Eng/Tech Chgs $100.00/Hr, $125.00/Hr After hours
- --------------------------------------------------------------------------------------------------------
Local Loop Billing Admin $ 150.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 45
ATM PRICING
ATM VBR PRICING MONTHLY RECURRING CHARGES
<TABLE>
<CAPTION>
Port CIR(Mbps CIR HIGH Port CoS Price Per Meg
<S> <C> <C> <C> <C> <C>
DS3 1 9 $ 6,000 VBRnrt $325
10 19 $ 6,000 VBRnrt $312
20 29 $ 6,000 VBRnrt $306
30 40 $ 6,000 VBRnrt $299
OC3 5 25 $15,000 VBRnrt $312
25 35 $15,000 VBRnrt $306
40 55 $15,000 VBRnrt $299
60 75 $15,000 VBRnrt $293
80 95 $15,000 VBRnrt $286
100 120 $15,000 VBRnrt $280
125 150 $15,000 VBRnrt $273
OC12 ICB
</TABLE>
NON RECURRING CHARGES
Non-recurring charges include installation, configuration changes,
cancellation, order change that may be incurred for the Port or PVC.
Non Recurring Charges
Description of Charge Charges
Installation
<TABLE>
<S> <C>
45Mb Port $ 1,500
155Mb Port $ 4,000
622Mb Port $15,000
per VC $ 40
Ancillary
Configuration Change $ 50
Cancellation $ 250
PVC Order Change $ 50
Port Order Change $ 100
DS3 Cross Connect $ 500
OC3 Cross Connect $ 1,250
</TABLE>
DISCOUNT STRUCTURE
Contributing Williams network ATM Service charges include recurring port and
PVC charges. The discount structure is based on the monthly revenue commitment
(contributing charges) and the stated length of the contract established.
****
Term 2: ATM Service is limited to 18 months from execution date or otherwise
extended by mutual agreement by Intermedia and Williams
Term 3: CBR Pricing is subject to availability at the Rates
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 46
SCHEDULE 2
TO THE CAPACITY PURCHASE AGREEMENT DATED JANUARY 5, 1998
- --------------------------------------------------------------------------------
INITIAL NETWORK DEPLOYMENT PLAN
Capacity requested by Purchaser shall be provided by Grantor to Purchaser at
either On-Net or Off-Net rates as indicated below. Column C ("On-Net Private
Lines Now") and Column D ("On-Net ATM Now") city pairs shall be available
immediately at the Rates provided for pursuant to the terms of this Agreement.
Column E ("On-Net Private Lines 12 Mo.") city pairs shall be available
immediately at a pass-through of Off-Net rates, and shall be subject to the
Rates provided for pursuant to the terms of this Agreement upon the earlier of
twelve (12) months or the date the city pairs become available On-Net. Column F
("Off-Net New Schedule in 30 Days") city pairs shall be immediately available at
pass-through of Off-Net rates. City pairs available under the Backbone
Agreements are by this reference deemed a part of Column F/the "Off-Net New
Schedule in 30 Days," subject to payment of the Management Fee and other
requirements of Section 8 of the Agreement.
City Pairs specifically identified in Schedule F will be included in a schedule
of SUSA overbuilds for On-Net rates within 30 days of execution of this
Agreement.
SUSA capacity is subject to availability.
<TABLE>
<CAPTION>
=======================================================================================================================
A B C D E F G H
On-Net On-Net On-Net Off-Net Minimum SUSA Availibity
Line PLs ATM PLs (New Schedule Facility ---------------
No. A Location Z Location Now Now 12 Mo. in 30 Days) Size Date Date Cap.
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Atlanta Birmingham 1 DS3 Nov
- -----------------------------------------------------------------------------------------------------------------------
2 Atlanta Chicago 1 OC3C Mar-99
- -----------------------------------------------------------------------------------------------------------------------
3 Atlanta Dallas 1 OC3C Sep
- -----------------------------------------------------------------------------------------------------------------------
4 Atlanta Los Angeles 1 DS3 Oct
- -----------------------------------------------------------------------------------------------------------------------
5 Atlanta Miami 1 x OC3C Dec Mar-98 3-DS3
- -----------------------------------------------------------------------------------------------------------------------
6 Atlanta New Orleans 1 x DS3 Oct Mar-98 1-DS3
- -----------------------------------------------------------------------------------------------------------------------
7 Atlanta New York 1 DS3 Dec
- -----------------------------------------------------------------------------------------------------------------------
8 Atlanta Orlando 1 OC12C Apr-99
- -----------------------------------------------------------------------------------------------------------------------
9 Atlanta Raleigh 1 OC12C Sep
- -----------------------------------------------------------------------------------------------------------------------
10 Atlanta Tallahassee x a OC3C Aug-99
- -----------------------------------------------------------------------------------------------------------------------
11 Atlanta Washington DC 1 x OC3C Dec Mar-98 2-OC3C
- -----------------------------------------------------------------------------------------------------------------------
12 Baltimore Washington DC 1 DS3 May-99 Mar-98 1-DS3
- -----------------------------------------------------------------------------------------------------------------------
13 Birmingham Dallas 1 DS3 Dec-98
- -----------------------------------------------------------------------------------------------------------------------
14 Boston Albany a DS3 Aug-99
- -----------------------------------------------------------------------------------------------------------------------
15 Boston Chicago a DS3 Aug-99
- -----------------------------------------------------------------------------------------------------------------------
16 Boston New York a 2-DS3 Aug-99
- -----------------------------------------------------------------------------------------------------------------------
17 Buffalo Cleveland a OC3C Oct
- -----------------------------------------------------------------------------------------------------------------------
18 Chicago Cincinnati 1 OC3C May-99
- -----------------------------------------------------------------------------------------------------------------------
19 Chicago Cleveland 1 x OC3C Oct Mar-98 2-DS3a
- -----------------------------------------------------------------------------------------------------------------------
20 Chicago Dallas 1 x OC3C Sep Mar-98 1-OC3C
- -----------------------------------------------------------------------------------------------------------------------
21 Chicago Detroit 1 DS3 Aug-99 Mar-98 1-DS3a
- -----------------------------------------------------------------------------------------------------------------------
22 Chicago Indianapolis 1 DS3 Sep
- -----------------------------------------------------------------------------------------------------------------------
23 Chicago Los Angeles 1 x DS3 Nov Mar-98 1-DS3
- -----------------------------------------------------------------------------------------------------------------------
24 Chicago Milwaukee a DS3 Aug-99
- -----------------------------------------------------------------------------------------------------------------------
25 Chicago Minneapolis 1 DS3 Apr-99
- -----------------------------------------------------------------------------------------------------------------------
26 Chicago New York 1 x a OC3C Sep Mar-98 13OCBR
- -----------------------------------------------------------------------------------------------------------------------
27 Chicago Pittsburgh 1 DS3 yr2000
- -----------------------------------------------------------------------------------------------------------------------
28 Chicago San Francisco 1 OC3C yr2000 Mar-98 1-OC3
- -----------------------------------------------------------------------------------------------------------------------
29 Chicago St Louis 1 OC3C Oct
- -----------------------------------------------------------------------------------------------------------------------
30 Chicago Washington DC 1 x a OC3C Apr-99
- -----------------------------------------------------------------------------------------------------------------------
31 Cincinnati Indianapolis 1 DS3 Apr-99
- -----------------------------------------------------------------------------------------------------------------------
32 Cincinnati Washington DC 1 OC3C Apr-99
- -----------------------------------------------------------------------------------------------------------------------
33 Cleveland New York 1 x DS3 Nov
- -----------------------------------------------------------------------------------------------------------------------
34 Cleveland Pittsburgh a DS3 yr2000
- -----------------------------------------------------------------------------------------------------------------------
35 Dallas Houston 1 OC3C Dec
- -----------------------------------------------------------------------------------------------------------------------
36 Dallas Los Angeles 1 DS3 Nov
- -----------------------------------------------------------------------------------------------------------------------
37 Dallas Minneapolis 1 DS3 Apr-99
- -----------------------------------------------------------------------------------------------------------------------
38 Dallas New Orleans 1 DS3 Dec
- -----------------------------------------------------------------------------------------------------------------------
39 Dallas New York 1 DS3 Dec
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE> 47
SCHEDULE 2
TO THE CAPACITY PURCHASE AGREEMENT DATED JANUARY 5, 1998
<TABLE>
<CAPTION>
A B C D E F G H
On-Net On-Net On-Net Off-Net Minimum SUSA Availability
Line PLs ATM PLs (New Schedule Facility -----------------
No. A Location Z Location Now Now 12 Mo. in 30 Days) Size Date Date Cap.
- --- ---------- ------------- ------ ------ ------- ------------- -------- --------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 Dallas Oklahoma City 1 x 2-DS3 Dec Mar-98 2-DS3
41 Dallas Phoenix 1 DS3 Apr-99
42 Dallas San Francisco 1 a OC3C yr2000 Mar-98 LA/SF
43 Dallas Shreveport x a 1-DS3 Not Sched
44 Dallas Tulsa 1 x DS3 Aug Mar-98 1-DS3
45 Dallas Washington DC 1 0C3C Dec
46 Dayton Detroit 1 DS3 Mar-99
47 Denver Kansas City a OC3C Aug-99
48 Denver Minneapolis a DS3 Aug-99
49 Denver Salt Lake City 1 DS3 Aug-99 Mar-98 2-DS3
50 Hartford New York a DS3 Aug-99
51 Hartford Providence a DS3 Aug-99
52 Hayward Sacramento a DS3 yr2000
53 Houston New Orleans 1 DS3 Nov
54 Houston Tallahassee a OC3C Aug-99
55 Kansas City St Louis 1 OC3C Dec
56 Las Vegas Los Angeles 1 x DS3 Nov Mar-98 1-DS3
57 Las Vegas Salt Lake City 1 x OC3C Apr-99 Mar-98 1-DS3
58 Las Vegas San Francisco a OC3C yr2000
59 Los Angeles New York 1 DS3 Dec
60 Los Angeles Phoenix 1 DS3 Apr-99
61 Los Angeles San Francisco 1 OC3C Not Sched Mar-98 1-OC3C
62 Memphis Nashville a DS3 Not Sched
63 Memphis New Orleans a DS3 Not Sched
64 Miami Orlando 1 OC12C Apr-99
65 Miami Tampa 1 OC12C Apr-99
66 Milwaukee Minneapolis a DS3 Not Sched
67 New York Pittsburgh a DS3 Not Sched
68 New York Washington DC 1 x OC3C Apr-99
69 Orlando Tampa 1 OC12C Apr-99
70 Philadelphia New York 1 DS3 Apr-99
71 Philadelphia Washington DC 1 DS3 Apr-99
72 Pittsburgh Dayton/Waynsville a DS3 Not Sched
73 Pittsburgh Washington DC a DS3 yr2000
74 Portland San Francisco a DS3 Not Sched
75 Portland Seattle a DS3 Not Sched
76 Raleigh Washington DC 1 OC12C Dec
77 Sacramento Salt Lake City a DS3 Not Sched
78 Salt Lake City Seattle a DS3 Not Sched
79 San Francisco Washington DC 1 a OC3C Not Sched
80 Tallahassee Tampa 1 OC3C Aug-99
81 Sacramento San Francisco a DS3 Not Sched
TOTAL 17 5 33 0
</TABLE>
1 - Orders for capacity available now or within 12 months from execution.
x - Capacity available in 12 months or sooner; does not represent an order.
a - Subject to review for availability; not circuit orders.
Intermedia will issue ASR's in 3 weeks for all circuit orders
<PAGE> 48
SCHEDULE 2
WILLIAMS CITY PLAN
<TABLE>
<CAPTION>
No. City Locations Firm
In Service Dates
----------------------------------------------------------
<S> <C> <C>
1 Akron 10/01/99
------- ------------------------- -----------------
2 Albany, NY 12/20/98
------- ------------------------- -----------------
3 Atlanta 09/03/98
------- ------------------------- -----------------
4 Baltimore 05/22/99
------- ------------------------- -----------------
5 Baton Rouge 11/03/98
------- ------------------------- -----------------
6 Birmingham 11/10/98
------- ------------------------- -----------------
7 Boise 05/22/99
------- ------------------------- -----------------
8 Boston 08/01/99
------- ------------------------- -----------------
9 Buffalo 12/20/98
------- ------------------------- -----------------
10 Charlotte 10/20/98
------- ------------------------- -----------------
11 Chicago 08/17/98
------- ------------------------- -----------------
12 Cincinnati 04/22/99
------- ------------------------- -----------------
13 Cleveland 10/04/98
------- ------------------------- -----------------
14 Colorado Springs 08/01/99
------- ------------------------- -----------------
15 Columbus 03/22/99
------- ------------------------- -----------------
16 Dallas 08/17/98
------- ------------------------- -----------------
17 Dayton 02/20/99
------- ------------------------- -----------------
18 Daytona Beach 05/22/99
------- ------------------------- -----------------
19 Denver 08/01/99
------- ------------------------- -----------------
20 Des Moines 05/22/99
------- ------------------------- -----------------
21 Ft Meyers 05/06/99
------- ------------------------- -----------------
22 Ft. Lauderdale 05/23/99
------- ------------------------- -----------------
23 Greensboro 09/20/98
------- ------------------------- -----------------
24 Houston 11/05/98
------- ------------------------- -----------------
25 Indianapolis 08/17/98
------- ------------------------- -----------------
26 Jackson, MS 10/20/98
------- ------------------------- -----------------
27 Jacksonville 04/22/99
------- ------------------------- -----------------
28 Kansas City 11/03/98
------- ------------------------- -----------------
29 Las Vegas 10/01/98
------- ------------------------- -----------------
30 Los Angeles 11/03/98
------- ------------------------- -----------------
31 Melbourne 04/22/99
------- ------------------------- -----------------
32 Miami 05/22/99
------- ------------------------- -----------------
33 Minneapolis 07/01/99
------- ------------------------- -----------------
34 Mobile 05/22/99
------- ------------------------- -----------------
35 New Orleans 10/20/98
------- ------------------------- -----------------
36 New York 11/05/98
------- ------------------------- -----------------
37 Newark 05/22/99
------- ------------------------- -----------------
38 Oklahoma City 11/10/98
------- ------------------------- -----------------
39 Orlando 05/22/99
------- ------------------------- -----------------
40 Pensacola 05/06/99
----------------------------------------------------------
</TABLE>
Page 1 of 3
<PAGE> 49
SCHEDULE 2
WILLIAMS CITY PLAN
<TABLE>
<CAPTION>
Firm
NO. City Locations In Service Dates
----- --------------- ----------------
<S> <C> <C>
41 Philadelphia 05/23/98
----- --------------- ----------------
42 Phoenix 01/20/99
----- --------------- ----------------
43 Portland 04/01/99
----- --------------- ----------------
44 Raleigh 09/18/98
----- --------------- ----------------
45 Richmond 10/20/98
----- --------------- ----------------
46 Rochester 12/20/98
----- --------------- ----------------
47 Salt Lake City 08/01/99
----- --------------- ----------------
48 San Diego 12/01/00
----- --------------- ----------------
49 San Francisco 04/01/00
----- --------------- ----------------
50 San Jose 04/01/00
----- --------------- ----------------
51 Seattle 07/01/00
----- --------------- ----------------
52 Spartanburg 08/29/98
----- --------------- ----------------
53 St Louis 09/15/98
----- --------------- ----------------
54 Syracuse 02/20/99
----- --------------- ----------------
55 Tallahassee 05/22/99
----- --------------- ----------------
56 Tampa 05/22/99
----- --------------- ----------------
57 Tucson 03/22/99
----- --------------- ----------------
58 Tulsa 1 Oak 08/17/98
----- --------------- ----------------
59 Washington, DC 07/28/98
----- --------------- ----------------
60 West Palm Beach 04/22/99
----- --------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
Estimated
In Service Dates
---- ----------------- ----------------
<S> <C> <C>
61 Albuquerque, NM 3Q01
---- ----------------- ----------------
62 Austin, TX 3Q01
---- ----------------- ----------------
63 Bakersfield, CA 1Q00
---- ----------------- ----------------
64 Detroit, MI 2Q00
---- ----------------- ----------------
65 El Paso, TX 2Q99
---- ----------------- ----------------
66 Fresno, CA 1Q00
---- ----------------- ----------------
67 Grand Rapids, MI 2Q00
---- ----------------- ----------------
68 Harrisburg, PA 3Q01
---- ----------------- ----------------
69 Hartford, CT 2Q99
---- ----------------- ----------------
70 Johnson City, TN 3Q01
---- ----------------- ----------------
71 Knoxville, TN 3Q01
---- ----------------- ----------------
72 Lansing, MI 2Q00
---- ----------------- ----------------
73 Little Rock, AR 3Q01
---- ----------------- ----------------
74 Louisville, KY 3Q01
---- ----------------- ----------------
75 Macon, GA 1Q99
---- ----------------- ----------------
76 Memphis, TN 3Q01
---- ----------------- ----------------
</TABLE>
Page 2 of 3
<PAGE> 50
SCHEDULE 2
WILLIAMS CITY PLAN
<TABLE>
<CAPTION>
NO. City Locations Firm
In Service Dates
<S> <C> <C>
--------------------------------------------------
77 Milwaukee, WI 3Q99
--------------------------------------------------
78 Montreal, Can 3Q00
--------------------------------------------------
79 Nashville, TN 3Q01
--------------------------------------------------
80 Norfolk, VA 3Q01
--------------------------------------------------
81 Oakland,CA 2Q00
--------------------------------------------------
82 Omaha, NE 3Q01
--------------------------------------------------
83 Ottawa, Can 3Q00
--------------------------------------------------
84 Pittsburg, PA 3Q01
--------------------------------------------------
85 Providence, RI 2Q99
--------------------------------------------------
86 Reno, NV 3Q00
--------------------------------------------------
87 Sacramento, CA 1Q00
--------------------------------------------------
88 San Antonio 3Q01
--------------------------------------------------
89 Sante Fe, NM 3Q01
--------------------------------------------------
90 Southbend, IN 3Q01
--------------------------------------------------
91 Springfield, MA 2Q01
--------------------------------------------------
92 Stockton, CA 1Q00
--------------------------------------------------
93 Toledo, OH 2Q01
--------------------------------------------------
94 Topeka, KS 2Q99
--------------------------------------------------
95 Toronto, Can 3Q00
--------------------------------------------------
96 Youngstown, OH 3Q01
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Other Estimated
Potential Cities In Service Dates
<S> <C> <C>
--------------------------------------------------
97 Asheville, NC 3Q01
--------------------------------------------------
98 Billings, MT 3Q01
--------------------------------------------------
99 Biloxi, MS 2Q99
--------------------------------------------------
100 Chattanooga, TN 3Q01
--------------------------------------------------
101 Chico, CA 3Q00
--------------------------------------------------
102 Coeur D'Alene 3Q01
--------------------------------------------------
103 Eau Claire, WI 3Q99
--------------------------------------------------
104 Eugene, OR 3Q00
--------------------------------------------------
105 Gainsville, FL 2Q99
--------------------------------------------------
106 Great Falls, MT 3Q01
--------------------------------------------------
107 Madison, WI 3Q99
--------------------------------------------------
108 Panama City, FL 2Q99
--------------------------------------------------
109 Sioux Falls, SD 3Q01
--------------------------------------------------
110 Spokane, WA 3Q01
--------------------------------------------------
111 St. Cloud, MI 3Q01
--------------------------------------------------
112 Waco, TX 3Q01
--------------------------------------------------
</TABLE>
Page 3 of 3
<PAGE> 51
Schedule 5
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHLY
EQUIVALENT
POSITION SALARY RANGE MIDPOINT RATE MULTIPLIER YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
PJT MGR/SR. NET PLANNER **** **** **** 1.7 **** **** **** **** ****
SR. NETWORK PLANNER **** **** **** 1.7 **** **** **** **** ****
NETWORK CIRCUIT DESIGNE **** **** **** 1.7 **** **** **** **** ****
NETWORK PROVIS **** **** **** 1.7 **** **** **** **** ****
SYSTEM ENGINEER **** **** **** 1.7 **** **** **** **** ****
ACCOUNTING MANAGER **** **** **** 1.7 **** **** **** **** ****
ACCOUNTING CLERK **** **** **** 1.7 **** **** **** **** ****
ACCOUNTING CLERK **** **** **** 1.7 **** **** **** **** ****
ACCOUNTING CLERK **** **** **** 1.7 **** **** **** **** ****
AVERAGE MULTIPLIER RATE 1.7 $58,817 $52,708 $58,548 $50,270 $50,118
</TABLE>
Note 1 Table reflects budgetary model only. Resources will be billed at
Actual Salary rate multiplied by multiplier rate.
Note 2 Multiplier rate includes benefits, payroll taxes, administrative costs
and profit margin.
Note 3 Resources listed represent minimum staffing levels and may be adjusted
upward upon consent of Grantor and purchaser.
Note 4 Relocation Costs will be invoiced as ACTUAL plus a 10 percent
administrative fee and will be capped at 25% of the leaded annual
employee cost.
Note 5 Relocation expenses will fall in accordance with Williams
Communication, INC. employee relocation policy.
Note 6 Expenses (travel & capital) will invoiced as ACTUAL.
Note 7 In years 2 through 5 merit increases are calculated at a rate equal
to 5%.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 52
[INTERMEDIA COMMUNICATIONS LETTERHEAD]
March 31, 1999
Mr. Frank Semple
President, Williams Network
Williams Communications, Inc.
One Williams Center
Tulsa, OK 74172
Re: Capacity Purchase Agreement
Binding Interim Letter Amendment
Dear Frank:
This letter amendment ("Amendment"), effective March 31, 1999, shall constitute
a legally binding agreement between Intermedia Communications Inc.
("Intermedia") and Williams Communications, Inc. ("Williams") amending the
Capacity Purchase Agreement (the "CPA") between Intermedia and Williams entered
into as of January 5, 1998. It is the intent of the parties to negotiate and
execute a more comprehensive formal amendment to the CPA which, if and when it
is executed, shall thereafter supersede this Amendment and render this Amendment
of no legal force or effect.
Therefore, in consideration of the mutual terms and covenants set forth herein,
and for other good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, Intermedia and Williams agreeing to be legally bound
thereby, hereby amend the CPA as follows:
1. Any terms used in this Amendment which are defined terms in the CPA shall
have the same meaning herein as in the CPA.
2. To the extent of any conflict between any provisions of this Amendment and
the CPA, the provisions of this Amendment shall govern and control. Without
limiting the foregoing, the parties specifically agree that the following
provisions of the CPA are no longer in effect because they have been superseded
by this Amendment:
The following definitions in Section 1.2 of the CPA: "Adjusted Purchased
Capacity," "Capacity," "Most Favored Rate," "Network Deployment Plan,"
"On-Net," "Plan Adjustment Date," "Pricing Adjustment Date(s)," "Purchased
Capacity," "Purchased Capacity Shortfall," "Rates," "Required Capacity,"
"Shortfall Carrier," "Sub-DS-3 Backbone Agreement," "Sub-DS-3 Capacity" and
"Sub-DS-3 Carrier."
Sections 2.2, 2.3, 2.4, 2.5, 2.6, 3.3, 8 and 9.
<PAGE> 53
Letter Amendment
Page 2
3. Except as otherwise provided herein, all words used in this Amendment shall
have the meanings commonly understood and ascribed to them within the
telecommunications industry.
Nature of Capacity Purchase Agreement
4. The CPA shall remain a purchase by Intermedia of an indefeasible right to
use specified levels of capacity on the Williams network.
Parties' Ordering Rights and Obligations
5. Williams' rights as Preferred Capacity Provider pursuant to the CPA are
hereby deleted and replaced with the preferred provider rights set forth in
paragraph 6, below.
6. Williams and Intermedia shall retain a strategic relationship throughout
the term of the CPA. As described in paragraph 19, below, Intermedia will share
with Williams, on a quarterly basis, its forward plans for the leased Intermedia
backbone network (i.e., excluding fiber purchases and/or other Intermedia-owned
network). Williams will thereby have an opportunity to offer Intermedia the
required capacity to meet all such plans on the Williams network (Tier A cities
as described in paragraphs 9 and 10, below). Therefore, on a prospective
basis, beginning May 1, 1999, Intermedia will place at least **** of its new
orders for leased backbone network Tier A city capacity with Williams ****. The
**** will be measured in terms of DS-0 equivalent miles for orders placed each
calendar year (with calendar year 1999 being assessed from May 1st to December
31st). At the quarterly planning reviews, Intermedia and Williams will review
Intermedia's "new orders" to determine the status of Intermedia's progress
toward satisfaction of the ****, and Intermedia will provide Williams with
sufficient information regarding Intermedia's new orders to allow a meaningful
review. Notwithstanding the foregoing, the **** shall automatically be deemed
satisfied in any calendar year in which Intermedia achieves **** of its Minimum
Commitment (as described in paragraph 14, below). Intermedia's achievement of
**** of its Minimum Commitment shall in no way constitute a limitation on the
nature or volume of the business that may be transacted between Williams and
Intermedia, nor shall it limit the scope of the parties' strategic relationship.
7. As a result of Williams **** and Williams and the **** assigned by
Intermedia to Williams, Williams hereby agrees to hold Intermedia harmless from
and against any and all liability resulting from: (a) the amount of Eight
Hundred Thousand Dollars ($800,000) per month **** under
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 54
Letter Amendment
Page 3
**** (b) **** in the amount of Seven Hundred Fifty Thousand Dollars ($750,000)
per month from **** through June 9, 2000, and (c) any and all minimum revenue
commitment shortfall obligations incurred by Intermedia under its Switched
Services Agreement with **** which directly result from shortfalls in subpart
(b) above through June 9, 2000. In the event **** and/or **** demand(s) payment
from Intermedia for charges, with respect to which Williams is obligated to hold
Intermedia harmless against pursuant to this paragraph 7, Intermedia agrees to
provide Williams with notice of such demand prior to remitting any such payment
and demanding reimbursement from Williams.
In the event Williams has specifically identified for Intermedia all of the ****
procured by, through and/or on behalf of Williams for Intermedia's use,
including all circuits assigned to Williams pursuant to assignment ****, then
this indemnity and hold harmless shall be contingent upon Intermedia not
terminating or replacing any such specifically identified circuits where such
termination or replacement would cause such intercity billing for the
specifically identified circuits to Williams to fall below Seven Hundred Fifty
Thousand Dollars ($750,000) per month.
Rates and Commitments
8. The Most Favored Rate obligations of Williams pursuant to the CPA are
hereby deleted.
9. Attached and hereby made a part hereof as Annexes 1 and 2 are the rate
tables for on-net capacity (On-Net Rate Tables) and off-net capacity (Off-Net
Rate Tables), respectively. The On-Net Rate Tables are effective retroactively
to January 1, 1999. The Off-Net Rate Tables are effective April 1, 1999. Once
effective, these rates shall supersede those in the CPA, the rates shall apply
to all circuits in the relevant category, and all circuits shall be re-rated
each time the rates are reduced.
10. For pricing purposes, the new rate tables define three tiers of cities as
follows: Tier A cities are those cities on the Williams network; Tier B cities
are those cities not on the Williams network which are set forth in Annex 2,
Table 2 (the "Tier B City List"); and all other cities are Tier C cities. All
circuits assigned to Williams pursuant to the Backbone Agreements shall be
deemed within Tier B cities and subject to the rates in Annex 2, Table 1 until
such time as they are groomed onto the Williams network regardless of whether or
not they are listed in the Tier B City List. Any Tier B or Tier C city circuits
shall be subject to the Tier A city On-Net Rate Tables effective immediately
upon the grooming of such circuits onto the Williams network.
11. The On-Net Rate Tables have rates that are determined by the monthly volume
of on-net capacity used by Intermedia, as measured in DS-0 equivalent miles.
Intermedia's rates for on-net capacity each year will be "**** DSO Equivalent
On-net Mileage per month" rates. ****
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 55
Letter Amendment
Page 4
**** Williams shall be entitled to invoice Intermedia for an additional charge.
To calculate such additional charge, Williams will compute **** entire calendar
year by month and then divide by twelve (12) months to determine **** throughout
the applicable calendar year. The **** so calculated will determine the **** .
Williams will create an invoice listing, by circuit, a credit for all of the
charges **** and a debit amount for all of the charges ****. Intermedia will be
responsible for paying the incremental difference between these amounts. The
additional charge invoice will have a single credit/debit entry for each circuit
for the entire **** for all affected months. For example, if a circuit was
turned up on **** and billed through **** for that circuit the invoice would
list a credit for all services billed **** . This backbill will not be separated
by individual months. Williams shall invoice Intermedia for this additional
charge, if applicable, and Intermedia shall pay the invoice within thirty (30)
days after receipt.
****
12. The rates set forth in Annexes 1 and 2 are fixed for the calendar years
1999, 2000 and 2001, and will only be revisited during those years if Intermedia
has a good faith basis to assert that the overall market price for
telecommunications capacity in the United States has fallen by more than ****
below these rates. The parties will attempt to resolve any disagreement
regarding the overall market price and any adjustments to be made to the rates.
If the parties are unable to resolve any disagreement, determination of such a
change in the overall market prices will be initiated by Intermedia using an
independent, third-party consultant (the "Appraiser") reasonably acceptable to
both parties. Once the Appraiser is accepted by both parties, the Appraiser
shall determine whether overall market prices have declined by **** or more. If
the Appraiser determines that such a reduction has not occurred, the rates will
remain unchanged, and Intermedia shall bear the entire cost of the Appraiser. If
the Appraiser determines that such a reduction has occurred, the rates will
decreased in a percentage equal to the percentage amount of the reduction,
effective on a prospective basis, but in no event more than three (3) months
from the date Intermedia initiated retention of the Appraiser, and Williams
shall bear the entire cost of the appraiser. This process of using an Appraiser
shall be used no more than once in any calendar year. For purposes of this
paragraph 12, "overall market price" shall be determined with reference to
pricing that is available on a nationwide basis, disregarding segment-specific
pricing and promotional pricing.
13. Further reductions of the rates set forth in Annexes 1 and 2 for calendar
year 2002 and subsequent years under the CPA will be established by mutual
agreement during the 3rd Quarter of calendar year 2001. The objective of any
reduction in rates will be to ensure that Intermedia continues to receive
favorable pricing relative to the prevailing market. If no agreement can be
reached to reduce the rates, Intermedia shall have the right to either accept
the then-current rates or initiate the retention of an Appraiser, reasonably
acceptable to both parties, to resolve the parties' differences. Once the
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 56
Letter Amendment
Page 5
Appraiser is accepted by both parties, the Appraiser shall determine whether
overall market prices have declined below the current rates being charged to
Intermedia. If the Appraiser determines that such a reduction has not occurred,
the rates will remain unchanged, and Intermedia shall bear the entire cost of
the Appraiser. If the Appraiser determines that such a reduction has occurred,
the rates will be decreased in a percentage equal to the percentage amount of
the reduction, effective from the first day of the applicable calendar year, and
Williams shall bear the entire cost of the Appraiser. This process of using an
Appraiser shall be used no more than once in any calendar year. For purposes of
this paragraph 13, "overall market price" and "prevailing market" shall be
determined with reference to pricing that is available on a nationwide basis,
disregarding segment-specific pricing and promotional pricing.
14. Intermedia agrees to maintain minimum revenue commitments (the "Minimum
Commitments") to Williams on a calendar year basis as follows: **** from January
1, 1999 to December 31, 1999; **** from January 1, 2000 to December 31, 2000;
**** from January 1, 2001 to December 31, 2001; **** from January 1, 2002 to
December 31, 2002; **** for each of the succeeding five (5) calendar years
beginning January 1, 2003 and ending December 31, 2007; **** for each of the
next succeeding five (5) calendar years beginning January 1, 2008 and ending
December 31, 2012; **** for each of the next succeeding five (5) calendar years
beginning January 1, 2013 and ending December 31, 2017. Payments by Intermedia
to Williams for the period January 1, 2018 to March 31, 2018, shall be applied
to the Minimum Commitment for the 2017 calendar year. **** If Intermedia fails
to achieve the Minimum Commitment in any calendar year, upon the later of
forty-five (45) days after the due date for any re-rate payment under paragraph
11, above, if applicable, or forty-five (45) days after the end of the calendar
year, Intermedia shall pay to Williams an amount equal to the difference between
the Minimum Commitment and the payments made by Intermedia for that year (the
"Shortfall Payment"). **** The Minimum Commitments shall supersede the Purchased
Capacity requirements set forth in the CPA,
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 57
Letter Amendment
Page 6
and the right of Intermedia to apply the Excess to immediately succeeding
calendar years and Intermedia's Shortfall Payment obligations shall supersede
the Purchased Capacity Shortfall provisions set forth in the CPA.
Dark and Dim Fiber
15. Williams shall offer to Intermedia the opportunity to purchase dark or dim
fiber capacity from Williams. Such purchases, if any, shall be subject to
separate contracts; provided, however that:
****
Portability
16. Any on-net circuit purchased by Intermedia from Williams under the CPA may
be terminated and/or replaced by Intermedia with other circuits after six (6)
months with no termination charges. Termination or replacement of on-net
circuits within six (6) months of provision will be addressed on an individual
case basis. Any new off-net circuit of DS-3 level or lesser capacity purchased
by Intermedia as of March 1, 1999 shall have a minimum term commitment of one
(1) year unless otherwise ordered by Intermedia or agreed to by the parties on
an individual case basis. Termination of any such DS-3 level or lesser capacity
off-net circuit after one (1) year shall not result in any termination charges.
Any Local Access circuit purchased by Intermedia from Williams under the CPA may
be terminated and/or replaced by Intermedia with other circuits with no
termination charges provided that Williams would not be subject to termination
charges as set forth in Annex 6 (Portability) which is attached hereto and
hereby made a part hereof.
Performance Obligations and Credits
17. Performance credits due Intermedia, to the extent applicable, for Williams'
failure to meet On Time Delivery and Mean Time To Repair requirements will be
calculated on a quarterly basis as part of quarterly formal operational reviews.
Williams performance obligations and remedies for Williams' failure to meet such
obligations, to the extent applicable, are set forth in Annex 3 (Service
Ordering and Provisioning Metrics and Remedies) which is attached hereto and
hereby made a part hereof.
Operational Procedures
18. Intermedia and Williams will jointly develop an Operations Manual by May
15, 1999 or as soon as possible thereafter. The Operations Manual, which will be
jointly maintained, will contain all procedures to be used for circuit ordering,
provisioning, testing, acceptance, billing, customer care, fault reporting and
repair. The Operations
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 58
Letter Amendment
Page 7
Manual also will include standard provisioning intervals, which the parties
intend to continually improve and periodically adjust accordingly.
Intermedia shall have the right to place orders with alternative providers
pursuant to Annex 2 (Off-Net Rate Tables), by either: (a) instructing Williams
to directly place the orders; or (b) on Williams' behalf under a Letter of
Agency from Williams, placing the orders through a third party provider mutually
agreeable to Williams and Intermedia, with all orders having a minimum term of
one (1) year unless otherwise agreed to by the parties on an individual case
basis.
Quarterly Planning Reviews
19. Formal quarterly planning reviews will be established. At these reviews,
Intermedia will provide Williams with its latest capacity forecast, and Williams
will provide Intermedia with its latest build program forecast.
Grooming Procedures
20. Intermedia and Williams will jointly develop and implement a grooming
program for calendar year 1999 with the objective of moving off-net circuits
onto the Williams network as quickly as possible. The requirements and timing of
the grooming program will be based on availability of on-net capacity and
interconnects between Intermedia's Points of Presence ("POP's") and Williams'
POP's. Under the grooming program, Intermedia will be responsible for placing
firm orders for on-net capacity, migrating the traffic and placing cease orders
for the associated off-net circuits. The existing management fee (Professional
Services) structure will be used to meet additional resource requirements.
Interconnect Program
21. Intermedia and Williams shall establish permanent interconnects between
their POP's as set forth in Annex 4 (Interconnect Cities Programmed for 1999)
which is attached hereto and hereby made a part hereof. The parties will agree
on a method of establishing the permanent interconnects and their approximate
cost before substantial work begins on establishing the permanent interconnects.
**** Intermedia will assume the cost of interim local loops used in lieu of
completed interconnects on a cost pass-through basis. Where an interconnect is
delayed for any reason beyond the applicable schedule set forth in Annex 4,
Williams shall pay for **** of the associated local access costs commencing on
the first day of the fifth month following the scheduled date until such time as
the permanent interconnect is available for use. However, if Intermedia cancels
an interconnect build in progress, Intermedia shall thereafter pay **** of the
associated local access costs. Additional interconnects will be determined
during the formal quarterly planning reviews (as described in paragraph 19,
above) and will be subject to the process outlined above.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 59
Letter Amendment
Page 8
22. Intermedia will be permitted to resell capacity under the CPA to ACCA
**** except as provided herein. Intermedia and Williams will enter into
a Letter of Agency or other authorization necessary for Williams to serve
as sole point of contact for ACCA with respect to installation, provisioning
and maintenance for any Williams network capacity resold by Intermedia
to ACCA **** and this Amendment shall in no way be construed to ****.
Other Opportunities
23. Intermedia and Williams will in good faith explore other opportunities of
potential mutual benefit, including establishing a common ILEC collocation
program, the sharing of lab facilities for vendor equipment assessment, switched
voice services between the parties, and modifications to the parties' Master
Services Agreement for IXC Enhanced Data Transport Services.
If this Amendment accurately reflects our agreement to modify the CPA, please
countersign this letter below. Facsimile copies of this Amendment executed in
counterparts shall be deemed legally binding between the parties.
Sincerely,
INTERMEDIA COMMUNICATIONS INC.
By: /s/ RICHARD W. MARCHANT
-----------------------
Richard W. Marchant
Senior Vice President
Engineering
ACCEPTED AND AGREED TO:
WILLIAMS COMMUNICATIONS, INC.
By: /s/ FRANK SEMPLE
-----------------------
Frank Semple
President, Williams Network
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 60
Letter Amendment
Page 9
ANNEXES
ANNEX 1 On-Net Rate Tables
ANNEX 2 Off-Net Rate Tables
ANNEX 3 Service Ordering and Provisioning Metrics and Remedies
ANNEX 4 Interconnect Cities Programmed for 1999
ANNEX 5 Ancillary Charges
ANNEX 6 Portability
<PAGE> 61
IN CONFIDENCE TO INTERMEDIA AND WILLIAMS ANNEX 1
ON-NET RATE TABLES
TABLE 1 - 1999 On-net Capacity Price Table
<TABLE>
<CAPTION>
DS0 Equivalent On-net Mileage
per month at December 31 DS3 OC3 OC12 OC48 OC192
<S> <C> <C> <C> <C> <C>
<100,000,000 **** **** **** **** ****
100,000,001 - 200,000,000 **** **** **** **** ****
200,000,001 - 300,000,000 **** **** **** **** ****
> 300,000,000 **** **** **** **** ****
</TABLE>
TABLE 2 - 2000 On-net Capacity Price Table
<TABLE>
<CAPTION>
DS0 Equivalent On-net Mileage
per month at December 31 DS3 OC3 OC12 OC48 OC192
<S> <C> <C> <C> <C> <C>
<100,000,000 **** **** **** **** ****
100,000,001 - 200,000,000 **** **** **** **** ****
200,000,001 - 300,000,000 **** **** **** **** ****
> 300,000,000 **** **** **** **** ****
</TABLE>
TABLE 3 - 2001 On-net Capacity Price Table
<TABLE>
<CAPTION>
DS0 Equivalent On-net Mileage
per month at December 31 DS3 OC3 OC12 OC48 OC192
<S> <C> <C> <C> <C> <C>
<100,000,000 **** **** **** **** ****
100,000,001 - 200,000,000 **** **** **** **** ****
200,000,001 - 300,000,000 **** **** **** **** ****
> 300,000,000 **** **** **** **** ****
</TABLE>
Further Rate reductions for year 2002 and beyond will be established as
described in Paragraph 13 of the Amendment.
Notes
1. Mileage is determined by V&H coordinates, except for OC192 capacity which is
based on route miles.
2. DS0 equivalent miles are calculated using the following table multiplied by
the mileage:
<TABLE>
<CAPTION>
Circuit Type DSO Equivalents
<S> <C>
DS0 1
DS1 24
DS3 672
OC3 2016
OC12 8064
OC48 32256
OC192 129024
</TABLE>
3. On-net is defined as any circuit that is physically provisioned on the
Williams network (Tier A cities).
4. The following circuits qualify as on-net mileage:
a) on-net circuits as defined in note 3 above;
b) circuits in Annex 2 Note 7
c) dark or dim fiber purchases
5. The 1999 rate table will be applied to all circuits for the whole of 1999
6. For all years, the **** DS0 Equivalent mileage row will be assumed
from the beginning of the year
7. Ancillary Charges and Monthly Minimums of $50 DS-O, $250 DS-1, $1,340 DS-3,
$3,830 OC-3, $13,789 OC-12, $49,029 OC-48 apply to all circuits
8. If Intermedia orders a circuit with a request that it be diverse from an
existing circuit, the diverse circuit provisioned on-net for that order will
be charged by ROUTE miles multiplied by the applicable contract rate.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
Page 1
<PAGE> 62
IN CONFIDENCE TO INTERMEDIA AND WILLIAMS ANNEX 1
Table 2 Tier A City List
<TABLE>
<S> <C> <C> <C>
Baltimore, MD. Denver, CO. New York, NY. Sacramento, CA.
Baton Rouge, LA. Detroit, MI. Miami, FL. Raleigh, NC.
Birmingham, AL. Greensboro, NC. Minneapolis, MN. San Diego, CA.
Boston, MA. Hartford, CT. Nashville, TN. San Francisco, CA.
Atlanta, GA Houston, TX. Newark, NJ. South Bend, IN.
Charlotte, NC. Jackson, MI. Oklahoma City, OK. Spartanburg, SC.
Chicago, IL. Kansas City, MO. Omaha, NE. St. Louis, MO.
Cleveland, OH. Indianapolis, IN. Orlando, FL. Tampa, FL.
Colorado Springs, CO. Las Vegas, NV. Philadelphia, PA. Toledo, OH.
Columbia, SC. Los Angeles, CA. Pittsburgh, PA. Tulsa, OK.
Dallas, TX. New Orleans, LA. Richmond, VA. Washington, D.C.
</TABLE>
4/23/99 Page 2
<PAGE> 63
IN CONFIDENCE TO INTERMEDIA AND WILLIAMS ANNEX 2
OFF-NET RATE TABLES
TABLE 1 - Off-net DS0 Equivalent Capacity Price Table for Tier B cities
<TABLE>
<CAPTION>
From 4/1/1999 2000 2001
<S> <C> <C> <C>
DS0 **** **** ****
DS1 **** **** ****
DS3 **** **** ****
OC3 **** **** ****
</TABLE>
Further Rate reductions for year 2002 and beyond will be established as
described in Paragraph 13 of the Amendment.
TABLE 2 - Tier B City List
<TABLE>
<CAPTION>
CITY STATE CITY STATE CITY STATE CITY STATE CITY STATE CITY STATE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABILENE TX CHICAGO IL FT PIERCE FL LODI CA PEORIA IL SHREVEPORT LA
AKRON OH CINCINNATI OH FTN BEACH FL LONG BEACH CA PERRYMAN MD SIOUX FALLS SD
ALBANY GA CIRCLE CITY AZ FT WAYNE IN LONGVIEW TX PHOENIX AZ SMYRNA GA
ALBANY NY CLEARWATER FL FT WORTH TX LOS ANGELES CA PHILADELPHIA PA SOUTH BEND IN
ALBUQUERQUE NM CLEVELAND OH GAINESVILLE FL LOUISVILLE KY PITTSBURGH PA SOUTHFIELD MI
ANARBOR MI CLIMAX MI GAITHERSBURG MD LYNCHBURG VA PLANO TX SPARTANBURG SC
ARLINGTON VA COCKEYSVILLE MD GALION OH LYNN HAVEN FL PLEASANTON CA SPRINGFIELD IL
ASHEVILLE NC COCO FL GARDEN CITY NY MACON GA PORTLAND ME SPRINGFIELD MO
ATLANTA GA COLLEGE PARK MD GARY IN MAPLEWOOD MN POTTSTOWN PA ST AUGUSTINE FL
AUBURN CA COLORADO SPRINGS CO GIBSONIA PA MARTINSBURG WV POUGHKEEPSIE NY ST JOSEPH MO
AUGUSTA GA COLUMBIA MO GLENDALE CA MC CLEAN VA PROVIDENCE RI ST PAUL MN
AUSTIN TX COLUMBIA SC GRAND JUNCTION CO MC COMB OH PROVO UT ST PETERSBURG FL
AVON PARK FL COLUMBUS IN GREENSBORO NC MC MINNVILLE TN PUEBLO CO ST LOUIS MO
BAKERSFIELD CA COLUMBUS OH GREEN BAY WI MELBOURNE FL RALEIGH NC STAMFORD CT
BALTIMORE MD COMPTON CA GREENVILLE SC MEMPHIS TN RAMSEY NJ STEVENS POINT WI
BARTLESVILLE OK CONCORD NC GULFPORT MS MERCERVILLE NJ REDDING CA STOCKTON CA
BATON ROUGE LA CONOGA PARK CA HACKENSACK NJ MIDLAND TX REDMOND VA STORM LAKE IA
BEAUFORT SC CORPUS CHRISTI TX HAMPTON VA MILWAUKEE WI REDWOOD CITY CA STUART FL
BEAUMONT TX CULPEPPER VA HARLINGEN TX MOBILE AL RENO NV SUMMIT IL
BEAVERTON OR DALLAS TX HARTFORD CT MONTGOMERY AL RESTON VA SUNNYVALE CA
</TABLE>
4/23/99 PAGE 1
<PAGE> 64
ANNEX 2
IN CONFIDENCE TO INTERMEDIA AND WILLIAMS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BELLEFONTAINE OH DANVILLE VA HARTWELL GA MORRISTOWN NJ RIALTO CA SYRACUSE NY
BELLEVUE WA DAVENPORT IA HAYWARD CA MOUNTAIN VIEW CA RICHMOND CA TACOMA WA
BELLINGHAM WA DAVIS CA HICKSVILLE NY NAPERVILLE IL RICHMOND VA THOUSAND OAKS CA
BELPRE OH DAYTON OH HIGHPOINT NC NASHUA NH RIVERDALE IL TOLEDO OH
BENSENVILLE IL DAYTONA BEACH FL HILBURN NY NASHVILLE TN ROANOKE AL TOPEKA KS
BEVERLY HILLS CA DEARBORN MI HOLLYWOOD CA NATICK MA ROCHESTER NY TRENTON NJ
BILLERICA MA DENVER CO HOUSTON TX NEW BRIGHTON MN ROCKVILLE MD TROUTVILLE VA
BINGHAMPTON NY DES MOINES IA HOPEWELL VA NEW BRUNSWICK NJ ROSEMAYNE OH TROY MI
BIRMINGHAM AL DETROIT MI INDIANAPOLIS IN NEW ORLEANS LA ROSEMADE CA TULSA OK
BIRMINGHAM MI DOWNER'S GROVE IL IOWA CITY IA NEW PALESTINE IN ROSEVILLE CA UTICA NY
BLOUNTSTOWN FL DOUGLASVILLE GA IRVING TX NEW YORK NY RUTHERFORD NJ VAN NUYS CA
BOCA RATON FL DUNWOODY GA JACKSON MI NEWARK NJ RYNEX NY VENTURA CA
BOISE ID DURHAM NC JOHNSON CITY TN NORFOLK VA SACRAMENTO CA VERO BEACH FL
BOSTON MA EDISON NJ JOPLIN MO NORTH DADE FL SALINAS CA WACO TX
BOULDER CO EL PASO TX KANSAS CITY MO NORTH ROYALTON OH SALISBURY CT WALNUT CREEK CA
BOUND BROOK NJ EL SEGUNDO CA KING OF PRUSSIA PA NORTH SACRAMENTO CA SAN ANTONIO TX WALTHAN MA
BROOK PARK OH EL TORO CA KIRKLAND WA OAK RIDGE TN SAN BRUNO CA WARREN MI
BUFFALO NY ELK GROVE IL KNOXVILLE TN OAKBROOK IL SAN CARLOS CA WARWICK NY
BURBANK CA EUCLID WI LACEY WA OCEANSIDE CA SAN DEIGO CA WASHINGTON DC
BURLINGTON NC EVANSVILLE IN LAKE CHARLES LA OKLAHOMA CITY OK SAN JOSE CA WATERLOO IA
BURLINGTON VT EVERETT WA LAKELAND FL OMAHA NE SANFORD NC WAYNE PA
CAMBRIDGE MA FAIR OAKS CA LANCASTER PA ONTARIO CA SANTA ANA CA WAYENSBORO VA
CARMEL IN FAIRFIELD CA LAS CRUCES NM ORANGEBURG SC SANTA BARBARA CA WEST ORANGE NJ
CARVALLIS OR FARMINGDALE BY LAS VEGAS NV OREGON IL SANTA CLARA CA WHEELING IL
CEDAR RAPIDS IA FLINT MI LAUREL SPRINGS NJ ORLANDO FL SANTA FE NM WHIPPANY NJ
CENTERVILLE VA FLORENCE SC LEBANON OH PALMDALE CA SANTA MARIA CA WHITE PLAINS NY
CHAMPAIGN IL FOLSOM CA LEMARS IA PALO ALTO CA SANTA MONICA CA WICHITA KS
CHAPEL HILL NC FOSTORIA OH LEXINGTON KY PAOLI PA SANTA ROSA CA WILLIAMSBURG VA
CHARLOTTE NC FRAMINGHAM MA LINCOLN NE PARK RIDGE IL SARASOTA FL WILMINGTON DE
CHARLOTTESVILLE VA FREDERICKSBURG VA LITTLE ROCK AR PAWTUCKET RI SAVANNAH GA WINCHESTER VA
CHARLTON MA FREMONT CA LITTLETON CO PEMBOKE NC SCHAUMBURG IL WINTER HAVEN FL
CHATTANOOGA TN FT LAUDERDALE FL LIVINGSTON NJ PENSACOLA FL SHERMAN OAKS CA WOODBRIDGE VA
WORCESTER MA
YORK PA
</TABLE>
4/23/99
Page 2
<PAGE> 65
IN CONFIDENCE TO INTERMEDIA AND WILLIAMS ANNEX 2
TABLE 3 - Off-net Capacity Price Table for Tier C cities
<TABLE>
<CAPTION>
All Years
<S> <C>
Circuits ordered and provisioned by Williams **** billed as routed
Circuits ordered and provisioned by Intermedia Cost (passed through), billed as routed
</TABLE>
Notes:
1. The rates in Table 1 are applied to all capacity between:
a) Tier B cities listed in Table 2 above
b) Tier A cities (on-net) and Tier B cities
c) All assigned circuits provided through the Backbone Agreements (except
for the IFN FPL and MCI Sonet circuits), until migrated on-net
2. The rates in Table 3 are applied to all capacity between:
a) Tier C cities
b) Tier C cities and Tier B cities
c) Tier C cities and Tier A cities
3. All capacity will be provisioned on-net as far as geographically possible in
order to minimize off-net mileage.
4. Tier B cities may be duplicative of Tier A cities. In the event that
Williams is unable to provision an order from Intermedia for a circuit
between Tier A cities, for example, due to lack of capacity, Intermedia may
re-order the circuit with the request it be provisioned off-net, in which
case it will be treated as a Tier B or Tier C circuit, as applicable.
5. Further Tier B cities may be added to the Net in Table 2 by mutual agreement.
6. Rates for year 2002 and beyond will be established as described in Paragraph
13 of the Amendment.
7. The following circuits are subject to cost (pass-through) pricing until
migrated on-net: MCI SONET circuits and IFN FPL circuits
8. Ancillary Charges and Monthly Minimums of $50 DS-0, $250 DS-1, and $2,000
DS-3 Apply. The minimums for all OC services are ICB
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
4/23/99 Page 3
<PAGE> 66
SERVICE ORDERING AND PROVISIONING METRICS AND REMEDIES
ANNEX 3 TO LETTER AMENDMENT
The schedule of Service Ordering and Provisioning Metrics and Remedies is
included in Annex 3. Any applicable credits will be calculated on a quarterly
basis as part of the quarterly planning reviews addressed by Paragraph 19 of
the Letter Amendment. This document is intended to explain how the metrics and
remedies set forth in Annex 3 will be applied by the parties.
PROVISIONING CATEGORY NO. 1: ON-NET WITH INTERCONNECT CAPACITY AVAILABLE ON
BOTH ENDS
This category of provisioning metrics and remedies applies to new circuit orders
from Intermedia in each calendar quarter, when the circuit should be On-net,
and there is capacity available on an established interconnect between Williams
and Intermedia POPs at both ends of the requested circuit.
The first metric is whether an individual circuit ordered by Intermedia is
provisioned within **** days from Receipt and Acceptance of a valid order. For
purposes of Annex 3, "provisioned" shall mean Intermedia has been notified by
Williams that the circuit is ready to be tested. If Williams fails to provision
a circuit within **** days of Receipt and Acceptance of a valid order, then
Intermedia will receive a remedy in the form of a credit as follows: (i) If the
circuit is provisioned within **** days after Receipt and Acceptance of a valid
order, then the credit Intermedia will receive shall be ****. (ii) If the
circuit is provisioned within **** days after Receipt and Acceptance, then
Intermedia will receive a credit of ****. (iii) If the circuit is provisioned
more than **** days after Receipt and Acceptance, then Intermedia will receive
a credit of ****. These remedies are issued on a quarterly basis for individual
circuits. The Remedy for each Circuit can not exceed a maximum cap of ****.
The second metric within this category is whether on a calendar quarter basis
Williams has met the goal of provisioning the circuit within **** days of
Receipt and Acceptance of valid order at least **** percent of the time. This
standard is calculated using all orders provisioned within the given calendar
quarter falling within this category, placed by Intermedia.
Example: Assume Williams provisioned only **** percent of the circuits,
within **** days of Receipt and Acceptance of a valid order from January 1
to March 31 of a given year, which Intermedia ordered. Intermedia would
receive a credit in an amount equal to ****
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
04/23/99 Page 1
<PAGE> 67
****This credit amount cannot exceed the cap of ****.
If Williams misses the goal of **** percent of circuits provisioned within
**** days of Receipt and Acceptance of a valid order for a second consecutive
calendar quarter, then for all provisioned circuits ordered by Intermedia that
fall within this category for that second quarter, Intermedia would receive a
credit of ****.
Example: Assume Williams provisioned only **** percent of the circuits,
within **** days of Receipt and Acceptance of a valid order from January 1
to March 31 of a given year, which Intermedia ordered. Intermedia would
receive a credit in an amount equal to ****. Additionally, assume Williams
provisioned only **** percent of the circuits, within **** days of Receipt
and Acceptance of a valid order from April 1 to June 30 of that same year,
which Intermedia ordered. Intermedia would receive a credit in an amount
equal to ****. This credit amount cannot exceed the cap of ****.
The third metric within this category is whether on a calendar quarter basis
Williams has met the goal of issuing the FOC **** after Receipt and Acceptance
of a valid order from Intermedia at least **** percent of the time. Again,
this standard is calculated using all provisioned orders, placed by Intermedia
falling within this category within the given calendar quarter.
Example: Assume Williams met this goal on only **** percent of provisioned
circuits from January 1 to March 31 of a given year ordered by Intermedia.
Intermedia would receive a credit in an amount equal to ****. This amount
cannot exceed the cap of ****.
The "second consecutive" and "third consecutive" quarters for this performance
metric are handled as described above in the example for the second metric.
PROVISIONING CATEGORY NO. 2: ON-NET WITH LEC PROVIDING INTERCONNECT
The provisioning metrics are stated differently for the second category of
On-Net capacity, when one or both ends of the circuit rely on a Local Exchange
Carrier (LEC) or other third party for interconnection or local access. In this
circumstance, Williams' provisioning is dependent upon the actions of the LEC,
and the metrics and remedies reflect that.
The first metric is whether an individual circuit ordered by Intermedia is
provisioned within **** days from the FOC due date issued by the LEC. If
Williams fails to provision a circuit falling within this category within ****
days of the LEC's FOC due date, then
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
Page 2
<PAGE> 68
Intermedia will receive a credit in the amount of ****. If the circuit is
provisioned within **** after the LEC's FOC due date, then Intermedia will
receive a credit of ****. If the circuit is provisioned more than **** days
after the LEC's FOC due date, then Intermedia will receive a credit of ****.
These remedies are issued on a quarterly basis for individual circuits. The
Remedy for each circuit cannot exceed a maximum cap of ****.
The second metric within this category is whether on a calendar quarter basis
Williams has met the goal of provisioning the circuit within **** days of the
LEC's FOC due date at least **** percent of the time. Again, this standard is
calculated using all provisioned orders falling within this category within the
given calendar quarter placed by Intermedia.
Example: Assume Williams provisioned only **** percent of the circuits
falling within this category from January 1 to March 31 of a given year,
within **** days of the LEC's FOC due date, which Intermedia ordered.
Intermedia would receive a credit in an amount equal to ****. This amount
cannot exceed the cap of ****.
If Williams misses the goal of **** percent of circuits provisioned within
**** days of the LEC's FOC due date for a second consecutive calendar quarter,
for all provisioned circuits that fall within this category for that second
quarter, then, Intermedia would receive a credit of ****.
Example: Assume Williams provisioned only **** percent of the circuits
falling within this category from January 1 to March 31 of a given year
within **** days of the LEC's FOC due date that Intermedia ordered.
Intermedia would receive a credit in an amount equal to ****. Additionally,
assume Williams provisioned only **** percent of the circuits falling
within this category within **** days of the LEC's FOC due date from April
1 to June 30 of that same year which Intermedia ordered. Intermedia would
receive a credit ****. This amount cannot exceed the cap of ****.
The third metric within this category is whether on a calendar quarter basis
Williams has met the goal of issuing the FOC within **** days after Williams
has received the LEC's FOC at least **** percent of the time. Again, this
standard is calculated using all orders falling within this category within the
given calendar quarter, placed by Intermedia.
Example: Assume Williams met this goal on only **** percent of circuits
falling within this category from January 1 to March 31 of a given year
ordered by
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
4/23/99 Page 3
<PAGE> 69
Intermedia. Intermedia would receive a credit in an amount equal to ****.
This amount cannot exceed the cap of ****.
The "second consecutive" and "third consecutive" quarters for this performance
metric are handled as described above in the example for the second metric.
PROVISIONING CATEGORY NO. 3: OFF-NET SERVICES
This category of provisioning metrics and remedies applies to new circuits
provisioned in each calendar quarter, when the circuit is Off-Net. The metrics
and remedies are applied in the same way as for Category No. 1 and No. 2.
GENERAL NOTES FOR ALL PROVISIONING METRICS AND REMEDIES
All metrics and remedies will be calculated using the calendar quarter in which
Williams provisions the circuits. A valid circuit order must contain all
necessary information for Williams to provision the requested circuit. Williams
may not accept the order and will notify Intermedia via email, or similar
communication within a timely manner which shall not exceed such order
confirmation interval listed within the Operation Guideline Manual. In that
event, the performance metrics and remedies shall not apply. Remedies do not
apply in the event that Williams' non-compliance with the metrics is caused by a
force majeure event, regulatory event, acts or failure to act by Intermedia, or
by Intermedia's equipment or facilities. Remedies do not apply in cases where
Intermedia makes any material change to a circuit order.
OUTAGE CREDITS FOR ON-NET SERVICES
Outage Credits for On-Net Services are calculated based on the **** chart in
Annex 3. ****.
Example: Assume a circuit is out of service a total of **** hours. Credits
would accumulate as follows:
****
****
****
****
The total credits for a circuit out of service for **** hours would be
****.
Outage credits do not apply in the event that the outage is directly or
indirectly caused by a force majeure event, regulatory event, acts or failure
to act by Intermedia, or by Intermedia's equipment or facilities.
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
4/23/99 Page 4
<PAGE> 70
SERVICE ORDERING AND PROVISIONING METRICS AND REMEDIES
ANNEX 3
<TABLE>
<CAPTION>
ON-NET WITH INTERCONNECT CAPACITY AVAILABLE ON BOTH ENDS REMEDY
- -------------------------------------------------------- ------
<S> <C>
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
****% measured on Quarterly Basis(1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
Firm Order Commitment issued within **** after confirmed order receipt(3)
Compliance of ****% Measured on Quarterly Basis(1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
ON-NET SERVICES WITH LEC PROVIDING INTERCONNECT(2)
- --------------------------------------------------
Provisioned Greater than **** Calendar Days from LEC FOC Due Date after Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from LEC FOC Due Date after Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from LEC FOC Due Date after Receipt & Acceptance of Valid Order ****
Compliance of ****% Measured on Quarterly Basis(1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
Firm Order Commitment issued within **** days after FOC is received from LEC
Compliance of ****% Measured on Quarterly Basis(1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
OFF-NET SERVICES(2)
- -------------------
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
Provisioned Greater than **** Calendar Days from Receipt & Acceptance of Valid Order ****
</TABLE>
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
4/23/99 Page 5
<PAGE> 71
<TABLE>
<S> <C>
Compliance Of ****% Measured On Quarterly Basis (1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
Firm Order Commitment issued within **** days after FOC is received from Off-net Provider
Compliance of ****% Measured on Quarterly Basis (1)
Less than ****% First Quarter ****
Less than ****% Second Consecutive Quarter ****
Less than ****% Third Consecutive Quarter ****
</TABLE>
Notes:
(1) Percentage of Circuits Provisioned in the Time Period Specified within the
Calendar Quarter
(2) DS-n Service Only, Oc-n Service is Individual Case Basis. As the industry
establishes standard intervals for Ocn services, Williams and Intermedia
will review the applicable service interval.
(3) Firm Order Commitment issued **** after confirmed order receipt.
All Remedies Apply to orders placed within the applicable quarter
Exclusions are:
Occurrence of Force Majeure Event or Regulatory Event
Orders Incomplete
ICIX Requests Changes in Order
Delays due to Intermedia personnel, equipment or facilities
<TABLE>
<CAPTION>
CIRCUIT PERFORMANCE OUTAGE CREDITS FOR ON-NET SERVICE CREDITS ALLOWED EACH HOUR
<S> <C>
**** ****
**** ****
**** ****
**** ****
</TABLE>
Credit = 1/720 of the monthly recurring IXC charge
Credits are Cumulative
****
After an outage exceeding 24 continuous hours, Circuit may be cancelled without
penalty
Exclusions are:
Occurrence of Force Majeure Event or Regulatory Event
Delays due to Intermedia personnel, equipment, or facilities
- ------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 72
ANNEX 4
INTERCONNECT CITIES PROGRAMMED FOR 1999
<TABLE>
<CAPTION>
CITY STATE TARGET DATE Note
<S> <C> <C> <C>
Albany New York TBD *
Atlanta Georgia Jun-99
Boston Massachusetts TBD *
Chicago Illinois Mar-99
Cincinatti Ohio TBD *
Cleveland Ohio TBD *
Dallas/Fort Worth Texas Apr-99
Denver Colorado TBD *
Houston Texas TBD *
Jacksonville Florida Apr-99
Kansas City Missouri Jul-99
Los Angeles California Apr-99
Miami Florida Sep-99
Minneapolis Minnesota TBD *
Nashville Tennessee TBD *
New York New York May-99
Orlando Florida Aug-99
Philadelphia Pennsylvania TBD *
Phoenix Arizona TBD *
Pittsburgh Pennsylvania TBD *
Raleigh North Carolina Apr-99
Richmond Virginia TBD *
Salt Lake City Utah TBD *
San Francisco California Aug-99
St. Louis Missouri Jun-99
Tallahassee Florida TBD *
Tampa Florida Aug-99
Washington DC Apr-99
</TABLE>
Note: * These interconnects and dates are under review
Based on our discussions the following cities have been removed from the
interconnect list
Birmingham Alabama
Indianapolis Indiana
Memphis Tennessee
New Orleans Louisiana
<PAGE> 73
<TABLE>
<CAPTION>
DS-3 RECURRING/NON-RECURRING/ANCILLARY CHARGES SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------------
LONG HAUL (IXC) CROSS CONNECTS L/L ADMIN (PER LOOP) ENTRANCE FACILITY CHARGES*1
--------------- -------------- -------------------- -----------------------------
RECURRING NRC RECURRING NRC RECURRING NRC RECURRING NRC
--------------- -------------- -------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Installation $ 0 $2,000 $ 0 $ 750 $ 0 $ 100 $ 0 *1
Chng of Req. Svc Date--Initial $ 0 $ 0 $ 0 $ 0 $ 0 $ 100 $ 0 *1
Chng of Req. Svc Date--Subsequent $ 0 $ 500 $ 0 $ 250 $ 0 $ 100 $ 0 *1
Chng of Order--Administration $ 0 $ 0 $ 0 $ 0 $ 0 $ 100 $ 0 *1
Chng of Order--Pre-Engineering $ 0 $ 500 $ 0 $ 250 $ 0 $ 100 $ 0 *1
Chng of Order--Post-Engineering $ 0 $2,000 $ 0 $ 250 $ 0 $ 100 $ 0 *1
Order Cancellation--Pre-Engineering $ 0 $ 500 $ 0 $ 250 $ 0 $ 100 $ 0 *1
Order Cancellation--Post-Engineering $ 0 $2,000 $ 0 $ 250 $ 0 $ 100 $ 0 *1
Billing Administration $ 0 $ 0 $ 0 $ 0 $ 100 $ 150 *1 *1
Minimum Recurring Charge $2,000 $ 0 $ 250 $ 0 Pass-thru Pass-thru *1 $ 0
Expedite Charges $ 0 $ 300 $ 0 $ 250 Pass-thru Pass-thru $ 0 *1
Off-Net Ancillary Pass-Through Pass-Through Pass-Through Pass-Through
Contract Termination 100% of Remaining Contract Life
Additional Install/Maint/Eng/Tech Chgs $100/Hour, $125/Hour After Hours
</TABLE>
*1 -- Entrance Facility Charges are based on pass-through DS-3 applicable
Tariff Rates
Note: All third party charges are passed on to the customer.
04/23/99 Page 1
<PAGE> 74
<TABLE>
<CAPTION>
OC-48 RECURRING/NON-RECURRING/ANCILLARY CHARGES SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------------
LONG HAUL (IXC) CROSS CONNECTS L/L ADMIN (PER LOOP) ENTRANCE FACILITY CHARGES *1
--------------- -------------- -------------------- -----------------------------
RECURRING NRC RECURRING NRC RECURRING NRC RECURRING NRC
--------------- -------------- -------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Installation $ 0 $5,000 $ 0 $1,000 $ 0 $ 300 $ 0 *1
Chng of Req. Svc Date--Initial $ 0 $ 0 $ 0 $ 0 $ 0 $ 300 $ 0 *1
Chng of Req. Svc Date--Subsequent $ 0 $1,250 $ 0 $ 600 $ 0 $ 300 $ 0 *1
Chng of Order--Administration $ 0 $ 0 $ 0 $ 0 $ 0 $ 300 $ 0 *1
Chng of Order--Pre-Engineering $ 0 $1,250 $ 0 $ 600 $ 0 $ 300 $ 0 *1
Chng of Order--Post-Engineering $ 0 $5,000 $ 0 $1,000 $ 0 $ 300 $ 0 *1
Order Cancellation--Pre-Engineering $ 0 $1,250 $ 0 $ 600 $ 0 $ 300 $ 0 *1
Order Cancellation--Post-Engineering $ 0 $5,000 $ 0 $1,000 $ 0 $ 300 $ 0 *1
Billing Administration $ 0 $ 0 $ 0 $ 0 $ 100 $ 150 *1 *1
Minimum Recurring Charge $3,830 $ 0 $ 600 $ 0 Pass-thru Pass-thru *1 $ 0
Expedite Charges $ 0 $ 900 $ 0 $ 600 Pass-thru Pass-thru $ 0 *1
Off-Net Ancillary Pass-Through Pass-Through Pass-Through Pass-Through
Contract Termination 100% of Remaining Contract Life
Additional Install/Maint/Eng/Tech Chgs $100/Hour, $125/Hour After Hours
</TABLE>
*1 -- Entrance Facility Charges are based on pass-through OC-48 applicable
Tariff Rates
Note: All third party charges are passed on to the customer.
Services not described above will be considered exceptions and handled on an
individual case basis.
<TABLE>
<CAPTION>
OC-12 RECURRING/NON-RECURRING/ANCILLARY CHARGES SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------------
LONG HAUL (IXC) CROSS CONNECTS L/L ADMIN (PER LOOP) ENTRANCE FACILITY CHARGES *1
---------------- -------------- -------------------- -----------------------------
RECURRING NRC RECURRING NRC RECURRING NRC RECURRING NRC
---------------- -------------- -------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Installation $ 0 $18,000 $ 0 $1,500 $ 0 $1,000 $ 0 *1
Chng of Req. Svc Date--Initial $ 0 $ 0 $ 0 $ 0 $ 0 $1,000 $ 0 *1
Chng of Req. Svc Date--Subsequent $ 0 $ 3,500 $ 0 $1,200 $ 0 $1,000 $ 0 *1
Chng of Order--Administration $ 0 $ 0 $ 0 $ 0 $ 0 $1,000 $ 0 *1
Chng of Order--Pre-Engineering $ 0 $ 3,500 $ 0 $1,200 $ 0 $1,000 $ 0 *1
Chng of Order--Post-Engineering $ 0 $18,000 $ 0 $1,500 $ 0 $1,000 $ 0 *1
Order Cancellation--Pre-Engineering $ 0 $ 3,500 $ 0 $1,200 $ 0 $1,000 $ 0 *1
Order Cancellation--Post-Engineering $ 0 $18,000 $ 0 $1,500 $ 0 $1,000 $ 0 *1
Billing Administration $ 0 $ 0 $ 0 $ 0 $ 100 $ 150 *1 *1
Minimum Recurring Charge $13,790 $ 0 $1,200 $ 0 Pass-thru Pass-thru *1 $ 0
Expedite Charges $ 0 $ 1,200 $ 0 $1,200 Pass-thru Pass-thru $ 0 *1
Off-Net Ancillary Pass-Through Pass-Through Pass-Through Pass-Through
Contract Termination 100% of Remaining Contract Life
Additional Install/Maint/Eng/Tech Chgs $100/Hour, $125/Hour After Hours
</TABLE>
*1 -- Entrance Facility Charges are based on pass-through OC-12 applicable
Tariff Rates
Note: All third party charges are passed on to the customer.
<PAGE> 75
<TABLE>
<CAPTION>
OC-48 RECURRING/NON-RECURRING/ANCILLARY CHARGES SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------------
LONG HAUL (IXC) CROSS CONNECTS L/L ADMIN (PER LOOP) ENTRANCE FACILITY CHARGES *1
---------------- -------------- -------------------- -----------------------------
RECURRING NRC RECURRING NRC RECURRING NRC RECURRING NRC
---------------- -------------- -------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Installation $ 0 $48,000 $ 0 $3,000 $ 0 $3,500 $ 0 *1
Chng of Req. Svc Date--Initial $ 0 $ 0 $ 0 $ 0 $ 0 $3,500 $ 0 *1
Chng of Req. Svc Date--Subsequent $ 0 $12,000 $ 0 $3,500 $ 0 $3,500 $ 0 *1
Chng of Order--Administration $ 0 $ 0 $ 0 $ 0 $ 0 $3,500 $ 0 *1
Chng of Order--Pre-Engineering $ 0 $12,000 $ 0 $3,000 $ 0 $3,500 $ 0 *1
Chng of Order--Post-Engineering $ 0 $48,000 $ 0 $3,500 $ 0 $3,500 $ 0 *1
Order Cancellation--Pre-Engineering $ 0 $12,000 $ 0 $3,000 $ 0 $3,500 $ 0 *1
Order Cancellation--Post-Engineering $ 0 $48,000 $ 0 $3,500 $ 0 $3,500 $ 0 *1
Billing Administration $ 0 $ 0 $ 0 $ 0 $ 100 $ 150 *1 *1
Minimum Recurring Charge ICB $ 0 $3,500 $ 0 Pass-thru Pass-thru *1 $ 0
Expedite Charges $ 0 $ 4,800 $ 0 $3,000 Pass-thru Pass-thru $ 0 *1
Off-Net Ancillary Pass-Through Pass-Through Pass-Through Pass-Through
Contract Termination 100% of Remaining Contract Life
Additional Install/Maint/Eng/Tech Chgs $100/Hour, $125/Hour After Hours
</TABLE>
*1 -- Entrance Facility Charges are based on pass-through OC-3 applicable
Tariff Rates
Note: All third party charges are passed on to the customer.
Services not described above will be considered exceptions and handled on an
individual basis.
04/23/99 Page 3
<PAGE> 76
ANNEX 6
PORTABILITY
[To be provided by Williams]
<PAGE> 77
AMENDMENT NO. 1
THIS AMENDMENT ("Amendment") is made and entered into effective this 1st day of
August, 1998, by and between WILLIAMS COMMUNICATIONS, INC. ("Grantor")
and INTERMEDIA COMMUNICATIONS INC. ("Purchaser").
WHEREAS, Grantor and Purchaser are parties to that certain Capacity Purchase
Agreement entered into as of January 5, 1998, (the "Agreement"); and
WHEREAS, Grantor and Purchaser desire to amend the Agreement; and
NOW, THEREFORE in consideration of the foregoing premises and mutual promises
and covenants of the parties hereto, the receipt and sufficiency of which is
hereby acknowledged, Grantor and Purchaser agree to amend the Agreement as
follows:
1. The definition of "Due Date" in Section 1.2, "Defined Terms" shall be
amended to read as follows:
"Due Date": the twenty-third (23rd) of the month following the month in
which an invoice is issued for Circuits under the Backbone Agreements, or the
last day of the month following the month in which an invoice is issued for
On-Net Circuits; provided that the Purchaser's payments of the Non-Recurring and
Monthly Recurring Charges shall be received by the Grantor in immediately
available funds.
2. Except as specifically amended herein, all terms and conditions and
provisions contained in the Agreement shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day and year
first above set forth.
WILLIAMS COMMUNICATIONS, INC. INTERMEDIA COMMUNICATIONS INC.
/s/ David K. Parrack /s/ Richard Marchant
- ----------------------------------- -----------------------------------
(SIGNATURE) (SIGNATURE)
David K. Parrack Richard Marchant
- ----------------------------------- -----------------------------------
(PRINT) (PRINT)
Director, Accounting Services Vice President, Engineering
- ----------------------------------- -----------------------------------
(TITLE) (TITLE)
<PAGE> 1
EXHIBIT 10.33
================================================================================
SHARE PURCHASE AGREEMENT
FOR TTS MERIDIAN SYSTEMS INC.
BY AND AMONG
NORTHERN TELECOM LIMITED,
WILTEL COMMUNICATIONS, LLC
AND
1228966 ONTARIO INC.
DATED APRIL 30, 1997
================================================================================
<PAGE> 2
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") dated April 30, 1997,
by and among Northern Telecom Limited, a Canadian corporation ("NTL"), WilTel
Communications, LLC, a Delaware limited liability company, and 1228966 Ontario
Inc., an Ontario corporation, its designee approved by NTL (the two latter
entities are referred to herein collectively as "Newco").
W I T N E S S E T H:
WHEREAS, (A) Northern Telecom Inc. ("NTI") and Williams Communications
Group, Inc. ("WCG") have entered into a Formation Agreement (the "Formation
Agreement") dated as of April 1, 1997, whereby Williams Telecommunications
Systems, Inc. ("WilTel") and Nortel Communications Systems Inc. ("NCS") will be
merged into Newco, which will be jointly owned by NTI and WCG, or a subsidiary
of each; and
(B) The Formation Agreement requires that Newco will purchase
the stock of TTS Meridian Systems, Inc., a Canadian corporation and wholly-owned
subsidiary of NTL ("TTS"), from NTL immediately after the merger of WilTel and
NCS into Newco, all as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and obligations contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, NTL
and Newco agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 DEFINED TERMS. The capitalized terms used in this Agreement shall
have the meanings ascribed to them as follows:
"Affiliates" means, when used with respect to a specified
Person, such specified Person's Subsidiaries or other Persons which are
or which could be included on such Person's consolidated income
statement for financial reporting purposes pursuant to United States
generally accepted accounting principles, and/or any third Person which
does or which could include such specified Person in such third
Person's consolidated income statement for financial reporting purposes
pursuant to United States generally accepted accounting principles;
provided that Newco shall not be deemed to be an Affiliate of NTL, WCG
or any of their respective Subsidiaries or Affiliates;
1
<PAGE> 3
"Authority" means any governmental, regulatory or
administrative body, agency or authority, any court or judicial
authority, any arbitrator or any public, private or industry regulatory
authority, whether foreign, federal, state or local;
"Benefit Programs or Agreements" shall have the meaning given
that term in Section 3.12(f);
"Business Day" means any day on which federal commercial banks
are open for business for the purpose of sending and receiving wire
transfers in Tulsa, Oklahoma, Houston, Texas and Toronto, Ontario;
"Claim" means any demand, demand letter, claim or notice of
noncompliance or violation, in each case made in writing, or any
Proceeding;
"Claim Notice" shall have the meaning given that term in
Section 11.2(a);
"Closing" shall have the meaning given that term in Article
VII;
"Closing Date" means the date of Closing;
"Designee" shall have the meaning given that term in Section
2.1;
"Effective Date" shall mean April 1, 1997;
"Employment and Tax Representations and Covenants" shall have
the meaning given that term in Section 11.4;
"Environmental Law" shall have the meaning given that term in
Section 3.10(a)(i);
"Environmental Representations" shall have the meaning given
that term in Section 11.4;
"Formation Agreement" shall have the meaning given that term
in the preamble;
"Former TTS Real Property" shall have the meaning given that
term in Section 3.10(b);
"GAAP" means generally accepted accounting principles in
Canada;
2
<PAGE> 4
"General Deductible" shall have the meaning given that term in
Section 11.1(e);
"Hazardous Substance" shall have the meaning given that term
in each of Section 3.10(a)(ii);
"Indemnified Party" and "Indemnifying Party" shall have the
respective meanings given those terms in Section 11.1(d);
"Intellectual Property" means Canadian and foreign patents,
patent applications, patent rights, trademarks, trademark applications,
trademark rights, service marks, service mark applications, service
mark rights, registered or common law copyrights, service names and
trade names;
"Intellectual Property License Agreement" shall have the
meaning given that term in the Formation Agreement;
"Income Tax Act" means the Income Tax Act of Canada, as
amended;
"Leases" shall have the meaning given that term in Section
3.9;
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature of any of the
foregoing, and the filing of or agreement to give any financing
statement under the personal property security legislation of any
jurisdiction;
"Litigation Claim" shall have the meaning given in Section
2.4(ii);
"Litigation Deductible" shall have the meaning given that term
in Section 11.1(f);
"LLC Agreement" means the Limited Liability Company Agreement
of Newco;
"Loss" or "Losses" means any and all damages, losses,
liabilities, judgments, payments, obligations, penalties, assessments,
costs, disbursements or expenses (including reasonable fees,
disbursements and expenses of attorneys, accountants and other
professional advisors and of expert witnesses and costs of
investigation and preparation of any kind or nature whatsoever) but
excluding indirect and consequential damages;
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"Material Adverse Change" means an event, circumstance,
condition or change that has a material adverse impact on the business
prospects, operations or financial condition of the affected Person, it
being understood that such event, circumstance, condition or change
shall be considered material only if (i) it has an impact on assets or
liabilities of Ten Million Dollars ($10,000,000) or more, before tax
effect; or (ii) it has a net negative impact on the profit and loss
statement of such Person for a fiscal year of Four Million Dollars
($4,000,000) or more and is the result of a single event, circumstance
or condition specific to such Person (excluding results from such
person's general economic environment).
"Material Adverse Effect" means, an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing an
adverse impact in the business, assets, results of operations (before
tax effect) or financial condition of such Person and its Subsidiaries,
taken as a whole, in an amount, individually equal to or greater than
$1,000,000;
"NCS" shall have the meaning given that term in the preamble.
"NCS Adjusted Effective Date Balance Sheet" shall have the
meaning given that term in the Formation Agreement;
"Newco" shall have the meaning given that term in the
preamble;
"NTI" shall have the meaning given that term in the preamble
and any successor or assign permitted by the Formation Agreement;
"NTL Retained Assets" shall have the meaning given that term
in Section 2.3;
"NTL Retained Liabilities" shall have the meaning given that
term in Section 2.4;
"NTL/TTS Distributor Agreement" shall have the meaning given
that term in Section 8.1;
"Order" means any decree, order, judgment, writ, award,
injunction, stipulation or consent of or by an Authority;
"Party" means NTL or Newco, as the case may be, and "Parties"
means NTL and Newco;
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"Party Indemnitees" means a Party's Affiliates and the
officers, directors, shareholders, agents, employees, representatives,
successors and assigns of each of them;
"Permit" means any license, permit, concession, warrant,
franchise or other governmental authorization or approval of any
Authority;
"Permitted Encumbrances" means (a) Liens for current taxes and
assessments not yet due, (b) inchoate mechanics and materialmen liens
for construction in progress, (c) inchoate workmen, repairmen,
warehousemen, customer, employee and carrier liens arising in the
ordinary course of business, (d) sellers' liens (on condition that the
payable involved is not overdue), or (e) other minor imperfections in
title that do not affect marketability or use;
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company,
trust, unincorporated organization, Authority or government (or agency
or political subdivision thereof);
"Pre-Effective Period" shall have the meaning given that term
in Section 10.5(a).
"Proceeding" means any action, suit, claim, investigation,
review or other judicial or administrative proceeding, at law or in
equity, before any Authority;
"Purchase Price" shall have the meaning given that term in
Section 2.2;
"Purchased Shares" means all of the issued and outstanding
shares of TTS;
"Records" means all material agreements, documents, books,
records and files relating to TTS, TTS Assets, TTS Business or the TTS
Contracts;
"Release" shall have the meaning given that term in Section
3.10(a)(iii);
"Relevant Adverse Effect" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, an
adverse impact in the business, assets, results of operations (before
tax effect) or financial condition of such Person and its subsidiaries,
taken as
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a whole, in an amount, individually or in the aggregate, equal to or
greater than $150,000;
"Revenue Canada" means the Canadian government income tax
department;
"Software" means computer programs, including, object code and
source code (except in the case of software licensed to TTS, WilTel or
Newco with respect to which the source code is not included in the
applicable license), input and output formats, control programs,
program listings, general application and special application, system
and communications programs, routines, sub-routines, translations,
diagnostic activities, narrative descriptions, flow charts and
operating instructions, as well as any modifications relating thereto;
"Subsidiary" means, with respect to any Person, a corporation
more than 50% of the combined voting power of the outstanding stock of
which is owned, directly or indirectly, by such Person;
"Tax" or "Taxes" means any Canadian, U.S. or other foreign
federal, state, provincial or local income tax, ad valorem tax, excise
tax, sales tax, use tax, value added tax, franchise tax, real or
personal property tax, transfer tax, gross receipts tax, wage tax,
payroll tax, employer health tax, capital tax, stamp duty, withholding
tax, or other tax, social security and unemployment insurance charges,
assessment, duty, fee, levy or other governmental charge, together with
and including, any and all interest, fines, penalties, assessments,
reassessments, and additions to tax resulting from, relating to, or
incurred in connection with any of those or any contest or dispute
thereof;
"Tax Return" means any report, statement, form, return or
other document or information required to be supplied to a taxing
authority in connection with Taxes;
"Title Representations" shall have the meaning given that term
in Section 11.4;
"TTS" shall have the meaning given that term in the preamble;
"TTS Accounts Receivable Note" shall have the meaning given
that term in Section 2.2;
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"TTS Active Employees" shall have the meaning given that term
in Section 3.12(a);
"TTS Assets" means the rights, properties, assets, claims,
contracts and businesses of TTS of every kind, character or
description, whether tangible or intangible, wherever located,
excluding the NTL Retained Assets;
"TTS Business" means the business currently and heretofore
carried on by TTS, consisting of the sale, installation, servicing and
maintenance of business communications systems;
"TTS Contracts" means all agreements, contracts, licenses,
indentures, notes, including any instrument relating to the borrowing
of money, guarantee or commitment to which TTS is a party or by which
it or any of TTS Assets are bound, whether in writing or oral, but
excluding Benefit Programs or Agreements;
"TTS Employees" shall have the meaning given that term in
Section 3.12(a);
"TTS Licensed Intellectual Property and Software" shall have
the meaning given that term in Section 3.4(c);
"TTS Owned Intellectual Property and Software" shall have the
meaning given that term in Section 3.4(b);
"TTS Real Property" shall have the meaning given that term in
Section 3.10(b);
"WCG" shall have the meaning given that term in the preamble
and any successor or assign permitted by the Formation Agreement;
"WCG Retained Assets" shall have the meaning given that term
in Section 2.4(b) of the Formation Agreement;
"Williams" means The Williams Companies, Inc., a Delaware
corporation;
"WilTel" shall have the meaning given that term in the
preamble and any successor or assign permitted by the Formation
Agreement;
"WilTel Assets" means the rights, properties, assets, Claims,
contracts and businesses of WilTel and the WilTel Subsidiaries of every
kind, character
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or description, whether tangible or intangible, wherever located, but
excluding the WCG Retained Assets;
"WilTel Business" shall have the meaning given that term in
the Formation Agreement; and
"WilTel Subsidiaries" means WCS Microwave Services, Inc., a
Delaware corporation, and WCS, Inc., a Delaware corporation.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement that
are not specifically defined herein shall have the meanings customarily given to
them in accordance with GAAP as of the date of this Agreement.
1.3 REFERENCES. As used in this Agreement, unless expressly stated
otherwise, references to (a) "including" mean "including, without limitation",
and the words "hereof", "herein", and "hereunder", and similar words, refer to
this Agreement as a whole and not to any particular Article, provision, section
or paragraph of this Agreement, (b) "or" means "either or both", and (c)
"Dollar" or "$" means U.S. Dollars. Unless otherwise specified, all references
in this Agreement to Articles, Sections, paragraphs, Exhibits or Schedules are
deemed references to the corresponding Articles, Sections, paragraphs, Exhibits
or Schedules in this Agreement.
1.4 HEADINGS. The headings of the Articles and Sections of this
Agreement and of the Schedules and Exhibits are included for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction or interpretation hereof or thereof.
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES
2.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms and
conditions of this Agreement, NTL shall sell, assign and transfer to 1228966
Ontario Inc., Newco's designee approved by NTL (Newco's "Designee"), and Newco's
Designee shall purchase from NTL, the Purchased Shares on the Closing Date, but
effective on the Effective Date.
2.2 PURCHASE PRICE. The purchase price payable to NTL at Closing for
the Purchased Shares (the "Purchase Price") shall consist of $22,887,000 by wire
transfer and $21,908,000 by promissory note payable ninety (90) days after
Closing substantially in the form attached to the Formation Agreement as Exhibit
G thereto (the "TTS Accounts Receivable Note").
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2.3 RETAINED ASSETS. On or prior to the Closing, NTL shall cause TTS
to execute such documents as are necessary to assign, transfer or convey to NTL
or an Affiliate of NTL the following assets in order to exclude such assets from
the merger: (i) any rights in, to and under the trademarks, servicemarks and
tradenames Nortel, Nortel and Design(TM), Meridian, Meridian 1 and Meridian SL
(subject to Section 8.3) or any other trademark, servicemark or tradenames,
whether registered or otherwise, of NTL or their Affiliates, excluding, however,
the TTS trademarks listed in Schedule 2.3(i) and (ii) any intercompany notes
payable to, or to the order of, TTS listed on Schedule 2.3(ii) hereto
(collectively, the "NTL Retained Assets").
2.4 RETAINED LIABILITIES. Newco shall not assume, and on or prior to
the Closing Date NTL (or an Affiliate of NTL reasonably satisfactory to Newco)
shall assume and agree to pay, perform and discharge, the following liabilities
of TTS (the "NTL Retained Liabilities"):
(i) any liability, Claim or obligation (whether actual,
contingent, known or unknown) of TTS arising out of any Claim in
connection with facts, events or circumstances occurring on or
before the Effective Date or relating to periods ending on or
before such date (a "Litigation Claim") to the extent the Losses
(after deducting any specific liability amounts reflected on the
NCS Adjusted Effective Date Balance Sheet, as it pertains to TTS)
in the aggregate resulting therefrom exceed the amount of the
Litigation Deductible excluding, for the avoidance of all doubt,
TTS' performance obligations from and after the Effective Date
under TTS Contracts disclosed under Article III of this Agreement
or not required to be disclosed under express terms of Article III
of this Agreement;
(ii) any liability, Claim or obligation (whether actual,
contingent, known or unknown), arising out of or relating to the
NTL Retained Assets; and
(iii) any liability, Claim or obligation (whether actual,
contingent, known or unknown) arising out of any occurrence or
incident happening on or before the Closing Date and arising from
any: (x) bodily injury, including death therefrom, personal injury,
or property damage (other than claims covered by warranty or
maintenance provisions of TTS Contracts with customers), including
loss of use thereof, to third parties; and (y) any injuries,
including death therefrom, to any current or prior employees of
TTS.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NTL
NTL hereby makes the following representations and warranties to Newco,
each and all of which are true and correct on the Closing Date, except as set
forth in the disclosure schedule attached pertaining to such representation and
warranty:
3.1 CORPORATE MATTERS.
(a) Each of NTL and TTS is a corporation duly organized,
validly existing and in good standing under the laws of Canada having all
requisite corporate power and authority to own, operate and lease its properties
and assets and to carry on its business in the places and in the manner
currently conducted. Newco has been provided with a true and correct copy of the
Certificate of Incorporation and Bylaws, or other charter documents, of TTS as
currently in effect. NTL has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.
(b) All of the outstanding shares of capital stock of TTS have
been legally and validly authorized and issued, and are fully paid and
nonassessable. NTL is the sole stockholder of TTS holding the number and type of
shares set forth on Schedule 3.1(b). None of the capital stock of TTS is subject
to any option, warrant, right of conversion, exchange or purchase, or any
similar right.
(c) Except where the failure would not affect the validity of
this Agreement or have a Relevant Adverse Effect on the TTS Business or TTS
Assets, TTS is qualified to transact business as an extra-provincial corporation
and is in good standing in the jurisdictions, if any, specified in Schedule
3.1(c) attached hereto, and, to NTL's knowledge, there is no other jurisdiction
in which the nature or extent of the TTS Business or the character of the TTS
Assets makes such qualification necessary.
3.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement has been duly authorized, executed and
delivered by NTL and is a legal, valid and binding obligation of NTL enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies.
(b) The execution, delivery and performance of this Agreement
by NTL or TTS, as the case may be, and the other agreements and documents to be
delivered by NTL or TTS to Newco or WCG hereunder, the consummation of the
transactions
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contemplated hereby or thereby, and the compliance with the provisions hereof or
thereof, by NTL or TTS will not, with or without the passage of time or the
giving of notice or both:
(i) except in the absence of required consents as set
forth on Schedules 3.3(a) or 3.5(d), conflict with, constitute a breach,
violation or termination of any provision of, or give rise to any right of
termination, cancellation or acceleration, or loss of any right or benefit or
both, under, any of the TTS Contracts listed in Schedule 3.5(a) or Schedule
3.5(b), TTS Permits, the TTS Owned Intellectual Property and Software or the TTS
Licensed Intellectual Property and Software;
(ii) conflict with or violate the Certificate of
Incorporation or Bylaws of NTL or TTS;
(iii) result in the creation or imposition of any
Lien or Claim on any of the TTS Assets; or
(iv) except as provided in Schedules 3.3(a), 3.4(b),
3.4(c) or 3.4(d), violate any law, statute, ordinance, regulation, judgment,
writ, injunction, rule, decree, order or any other restriction of any kind or
character applicable to NTL, TTS or the TTS Assets.
3.3 GOVERNMENTAL AND OTHER CONSENTS, APPROVALS AND AUTHORIZATIONS.
(a) Except as set forth in Schedule 3.3(a) or Schedule 3.5(d)
attached hereto or as would not significantly adversely impact Newco, the
transactions contemplated hereby, or any other agreement contemplated hereby, no
order, license to conduct or operate its business, consent, waiver,
authorization or approval of, or exemption by, or the giving of notice to, or
the registration with, or the taking of any other action in respect of, any
Person not a Party, including any Authority, and no filing, recording,
publication or registration in any public office or any other place is necessary
on behalf of TTS (i) to authorize the execution, delivery and performance of
this Agreement, or any other agreement contemplated hereby to be executed and
delivered by it, and the consummation of the transactions contemplated hereby or
thereby (including assignment of the NTL Retained Assets), or (ii) to effect the
legality, validity, binding effect or enforceability thereof.
(b) Except as set forth in Schedule 3.3(b), all Permits
required or necessary for TTS to own the TTS Assets or carry on the TTS Business
in the places and in the manner currently conducted have been duly obtained,
except where a failure to obtain any such Permit (considered individually) would
not have a Relevant Adverse Effect on the TTS Assets or the TTS Business, and
such Permits are in full force and effect. Except as set forth in Schedule
3.3(b), no violations are in existence or have been recorded with respect to
those Permits and no proceeding is pending or,
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to the knowledge of NTL, threatened with respect to the revocation or limitation
of any of such Permits, except where such violations, revocations or limitations
considered per permit would not result in a Relevant Adverse Effect on the TTS
Assets or the TTS Business. Except as set forth in Schedule 3.3(b) or as
otherwise described in the Schedules to this Agreement, TTS has complied in all
respects with all laws, rules, regulations and orders applicable to the TTS
Business, except where a failure to comply with such laws, rules, regulations
and orders would not result in a Relevant Adverse Effect on the TTS Assets or
the TTS Business.
3.4 TITLE TO AND CONDITION OF TTS ASSETS.
(a) A listing of substantially all of the items of equipment,
furniture or fixture, with an initial purchase price of One Thousand Dollars
($1,000) or more and a remaining useful life of more than one year, owned by TTS
as of March 31, 1997, constituting a part of the TTS Assets, is set forth in
Schedule 3.4(a) attached hereto. Substantially all of the assets are located at
the locations set forth in Schedule 3.4(a) or are in TTS' possession and
control. TTS has title to all such assets, free and clear of all Liens and
Claims, except for Permitted Encumbrances.
(b) Schedule 3.4(b) sets forth all Intellectual Property and
Software owned by TTS (the "TTS Owned Intellectual Property and Software").
Except as set forth on Schedule 3.4(b), TTS owns, free and clear from any claims
or rights of others, all TTS Owned Intellectual Property and Software. Except as
set forth on Schedule 3.4(b), none of the TTS Owned Intellectual Property and
Software has been declared invalid, or been limited in any respect by order of
any court or by agreement, or, to the best knowledge of NTL, is the subject of
any infringement, interference or similar proceeding or challenge. Except as set
forth on Schedule 3.4(b), neither TTS nor NTL has received any notice of
infringement, misappropriation or conflict from any other Person with respect to
the TTS Owned Intellectual Property and Software, and, to the best knowledge of
NTL, the conduct of the TTS Business has not infringed, misappropriated or
otherwise conflicted with any Intellectual Property or Software of any other
Person. To the best knowledge of NTL, each of the registrations for the patents,
trademarks and registered copyrights included in the TTS Owned Intellectual
Property and Software has been validly issued. All TTS Owned Intellectual
Property and Software that is licensed to a third party by TTS or in which TTS
has otherwise transferred an interest to a third party has been licensed or
transferred on a non-exclusive basis pursuant to valid and existing license
agreements. Except as set forth on Schedule 3.4(b), the transactions
contemplated by this Agreement will not result in any loss of any TTS Owned
Intellectual Property and Software or the loss of any right residing in TTS to
use, exploit or receive benefits with respect to such TTS Owned Intellectual
Property and Software.
(c) Schedule 3.4(c) sets forth all material Intellectual
Property and Software licensed to TTS (the "TTS Licensed Intellectual Property
and Software").
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Except as set forth on Schedule 3.4(c), TTS has the right to use, free and clear
from any claims or rights of others, except as reflected in the applicable
license, all TTS Licensed Intellectual Property and Software. Except as set
forth on Schedule 3.4(c), to the best knowledge of NTL, none of the TTS Licensed
Intellectual Property and Software has been declared invalid, or been limited in
any respect by order of any court or by agreement, or, is the subject of any
infringement, interference or similar proceeding or challenge. Except as set
forth on Schedule 3.4(c), neither TTS nor NTL has received any notice of
infringement, misappropriation or conflict from any other Person with respect to
the TTS Licensed Intellectual Property and Software. Except as set forth on
Schedule 3.4(c), the transactions contemplated by this Agreement will not result
in any loss of any TTS Licensed Intellectual Property and Software or the loss
of any right residing in TTS to use, exploit or receive benefits with respect to
such TTS Licensed Intellectual Property and Software, except to the extent that
any such loss would not have a Relevant Adverse Effect on the TTS Assets or the
TTS Business
(d) Except as set forth on Schedule 3.4(d), the TTS Assets
constitute substantially all of the assets (i) necessary for the conduct of the
TTS Business in the ordinary course consistent with past practices or (ii)
currently used by TTS in connection with the TTS Business. Except as set forth
on Schedule 3.4(d), the conduct of the TTS Business in the ordinary course is
not dependent upon the right to use the property of Persons other than TTS,
except such property as is leased or licensed to TTS pursuant to any of the TTS
Contracts or the absence of which would not have a Relevant Adverse Effect on
TTS. Except as set forth on Schedule 3.4(d), neither NTL nor any Affiliate of
NTL (other than TTS) owns or has any interest in any TTS Asset or any asset
currently used by TTS in the TTS Business, except the NTL Retained Assets, or
such assets as are leased or licensed to TTS pursuant to any of the TTS
Contracts or the loss of which would not have a Relevant Adverse Effect on TTS
or Newco.
(e) Except as set forth on Schedule 3.4 (e), the TTS Owned
Intellectual Property and Software, the TTS Licensed Intellectual Property and
Software, and the Intellectual Property and Software licensed pursuant to the
Intellectual Property License Agreement constitute all of the material
intellectual property rights used in the conduct of the TTS Business as
currently conducted.
3.5 CONTRACTS, COMMITMENTS AND CUSTOMERS.
(a) Set forth in Schedule 3.5(a) attached hereto is a list of
each of the following agreements between TTS and its customers: (i) service or
maintenance contracts with an annual revenue commitment of $500,000 or greater,
and (ii) purchase, lease or rental agreements for the installation or upgrade of
a PBX for which the customer has not been sent the final invoice with a total
purchase price of $1,000,000 or greater.
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(b) Set forth in Schedule 3.5(b) attached hereto is a list of
each TTS Contract, other than agreements with customers, which would create a
monetary obligation of TTS, or a right to receive funds by TTS, of greater than
$300,000 in the aggregate. Also set forth on Schedule 3.5(b) is a list of all
guarantees of the obligations of TTS by NTL or any NTL Affiliate.
(c) To the best knowledge of NTL and TTS, except as provided
in Schedule 3.5(c), TTS is not in breach of any provision of, or in default (or
knows of any event or circumstance that with notice or lapse of time or both
would constitute an event of default) under the terms of, any TTS Contract
except to the extent the loss of such TTS Contract would not have a Relevant
Adverse Effect on TTS. Except as set forth in Schedule 3.5(c), all of the TTS
Contracts listed in Schedule 3.5(a) and Schedule 3.5(b) are in full force and
effect, and neither NTL nor TTS is aware of any pending or overtly threatened
Claims or disputes with respect thereto. None of the customers or counterparties
under the TTS Contracts listed in Schedule 3.5(a) and Schedule 3.5(b) has
notified NTL or TTS in writing that it intends to discontinue its relationship
with TTS.
(d) Except as set forth on Schedule 3.5(d), or except where
the failure to obtain a consent or waiver would not have a Relevant Adverse
Effect on the TTS Business, the TTS Contracts listed in Schedule 3.5(a) and
Schedule 3.5(b) do not require the consent or waiver of any Person or Authority
prior to the consummation of the transactions contemplated by this Agreement.
(e) Except as set forth on Schedule 3.5(e), true and complete
copies of the TTS Contracts listed in Section 3.5(a) and Section 3.5(b) have
been made available to Newco prior to the date of this Agreement.
3.6 [This Section Intentionally Left Blank].
3.7 TAXES. Except as set forth in Schedule 3.7, TTS has timely
filed all Tax Returns with the appropriate federal, provincial or municipal
government agencies or instrumentalities required to be filed by it and has
timely paid, has caused to be timely paid, or has had timely paid on its behalf,
all Taxes which are due (whether or not shown on a Tax Return). Each of the Tax
Returns filed or as amended by TTS is accurate and complete in all material
respects. Except as described on Schedule 3.7, no material deficiencies
exceeding $1,000,000 for a single Tax or any Taxes have been proposed, asserted,
assessed or reassessed against TTS, and no requests for waivers of the time to
assess any such Taxes have been granted or are pending. Except as set forth in
Schedule 3.7, there are no current examinations of any Tax Return of TTS being
conducted, and there are no settlements or other agreements with any federal,
provincial or municipal taxing Authority or any prior examinations which could
reasonably be expected to have a Material Adverse Effect on TTS.
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3.8 NO VIOLATIONS OR LITIGATION.
(a) To the best knowledge of NTL, TTS has not violated, and,
except as provided in Schedule 3.3(a), the consummation of the transactions
contemplated hereby will not cause any violation of, any Permit, any order of
any Authority or any law, ordinance, regulation, order, requirement, statute,
rule, permit, concession, grant, franchise, license or other governmental
authorization relating or applicable to the TTS Business or any of TTS Assets or
that could have a Relevant Adverse Effect on the TTS Assets or the TTS Business.
(b) Except as set forth in Schedule 3.8(b) and except for
Claims and examinations relating to Taxes, to the best knowledge of NTL, there
is no Claim, or examination (including, without limitation, any change in any
zoning or building ordinance) pending or, to the best knowledge of NTL,
threatened against or affecting TTS, the TTS Business or any of the TTS Assets,
at law or in equity, before or by any Authority or any third party that could
have a Relevant Adverse Effect on TTS, the TTS Assets or the TTS Business.
(c) This Section 3.8 does not address environmental matters
within the scope of 3.10.
3.9 PROPERTY LEASES. Schedule 3.9 is a complete list of all real
property leases and those personal property leases with annual rental payments
equal to or greater than Three Hundred Thousand Dollars ($300,000) per annum to
which TTS is a party (the "Leases"). Each of the Leases is a valid and existing
lease, enforceable in accordance with its terms, and, to the best knowledge of
NTL, there are no existing defaults, events of default or events, occurrence or
acts that, with the giving of notice or lapse of time or both, would constitute
defaults, in each case by TTS and, to the best knowledge of NTL, by any other
party thereto, under any of the Leases.
3.10 ENVIRONMENTAL.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) The term "Environmental Law(s)" means each and
every law, Order, Permit, or similar requirement of each and every Authority,
pertaining to (A) the protection of human health, safety, the environment,
natural resources and wildlife, (B) the protection or use of surface water,
groundwater, rivers, and other bodies of water, (C) the management, manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation or
handling of, or exposure to, any Hazardous Substance or (D) pollution.
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(ii) The term "Hazardous Substance" means any
substance which is (A) defined as a hazardous substance, hazardous material,
hazardous waste, pollutant or contaminant under any Environmental Laws, (B) a
petroleum hydrocarbon, including crude oil or any fraction thereof, (C)
hazardous, toxic, corrosive, flammable, explosive, infectious, radioactive or
carcinogenic or (D) regulated pursuant to any Environmental Laws.
(iii) The term "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including without
limitation the abandonment or discarding of barrels, containers, and other
receptacles containing any Hazardous Substance).
(b) compliance with Environmental Laws. Except as disclosed on
Schedule 3.10(b), with respect to both (i) the operations conducted at and
conditions present at the real property currently used or occupied by TTS in
connection with the TTS Business (the "TTS Real Property"), and (ii) the
operations conducted at and the conditions present at any real property formerly
used or occupied by TTS in connection with the TTS Business (the "Former TTS
Real Property"), during the period of such use or occupancy by TTS, TTS was and
is in compliance with applicable Environmental Laws, except for such failures to
comply that, individually and in the aggregate, have not had and could not
reasonably be expected to have, a Material Adverse Effect on TTS.
(c) Environmental Liabilities. Except as disclosed on Schedule
3.10(c), there are no past or present conditions, circumstances, events,
activities, practices, or agreements arising out of, or related either to the
TTS Real Property or to the Former TTS Real Property, including but not limited
to any on-site or off-site Release of any Hazardous Substances, which have given
rise to or could reasonably be expected to give rise to: (i) liabilities or
obligations of TTS, NTL or its Affiliates for any clean-up, corrective action or
remedial activity under any Environmental Law; (ii) any Claim against TTS, NTL
or its Affiliates under any Environmental Law for personal injury, property
damage, or damage to natural resources, or (iii) the imposition of fines or
penalties on TTS, NTL or its Affiliates under any Environmental Law, where such
liabilities, obligations, Claims, fines or penalties, either individually or in
the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect on TTS.
(d) Permits. Schedule 3.10(d) sets forth an accurate and
complete list of all material Permits issued to TTS, NTL or its Affiliates under
any Environmental Law for the operation of the TTS Business. Except as disclosed
on Schedule 3.10(d), TTS, NTL or its Affiliates have made all filings necessary
to request the timely renewal or issuance of all Permits necessary under
Environmental Laws for the continued use and operation of the TTS Real Property
and to conduct the TTS Business as it is presently being conducted.
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(e) Proceedings. Except as disclosed in Schedule 3.10(e),
there is no Claim or Proceeding pending or threatened against TTS, NTL or its
Affiliates, under or in connection with any Environmental Law, which could
reasonably be expected to result in a fine, penalty or other obligation, cost or
expense, except for such obligations, costs, or expenses that, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect on TTS.
(f) Transfer Restrictions and Liens. Except as disclosed in
Schedule 3.10(f), neither the TTS Real Property nor the TTS Business (i) is
subject to, or would as a result of this transaction be subject to, applicable
Environmental Laws which would impose restrictions, such as notice, disclosure
or obtaining approval prior to this transaction, or (ii) is subject to, or could
reasonably be expected to become subject to, any Liens under any applicable
Environmental Laws.
(g) Documents. TTS, NTL or its Affiliates will have made
available by Closing to WCG any and all pleadings, reports, assessments,
analytical results, permits, and other material documents, correspondence and
records in their possession concerning Environmental Laws, Hazardous Substances,
or other environmental subjects in each case relating to the operation of the
TTS Business.
3.11 INSURANCE. Schedule 3.11 sets forth a complete and accurate
list of all policies (including their respective expiration dates) of property,
general liability, automobile liability, and other forms of insurance presently
in effect with respect to TTS, the TTS Business or any of the TTS Assets, its
operations, and its employees, excluding those policies relating to Benefit
Programs or Agreements. Such insurance will be terminated with respect to TTS,
the TTS Business and the TTS Assets as of Closing.
3.12 EMPLOYMENT AND LABOR MATTERS.
(a) Attached hereto as Schedule 3.12(a)(i) is a true and
complete list of the employees of the TTS Business as of December 31, 1996
(including regular full and part-time employees and employees seconded or
otherwise provided to TTS by NTL or any of its Affiliates) (the "TTS Active
Employees"), identified by name and employee number, together with job titles,
compensation and service information concerning such employees. Except as set
forth on Schedule 3.12(a)(ii), TTS is not a party to any employment contract
with and will not have any liability (other than accrued salary, commissions,
bonuses, draws, allowances, overtime, vacation pay and other statutory amounts,
or as described in Schedule 3.8(b)) to any TTS Active Employees or any other
employees, any former employees, or any independent and dependent contractors of
the TTS Business (collectively, "TTS Employees"). Attached hereto as Schedule
3.12(a)(iii) is a true and complete list of the independent and dependent
contractors of the TTS Business.
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(b) Except as set forth on Schedule 3.12(b), TTS is not a
party to any collective bargaining agreement or union contract with respect to
TTS Employees and no collective bargaining agreements are being negotiated by
TTS with respect to any of the TTS Employees; and no notice of a proposed union
certification or recognition election has been received by TTS.
(c) No trade union, council of trade unions, employee
bargaining agency or Affiliated bargaining agent:
(i) holds bargaining rights with respect to any
TTS Employees by way of certification,
interim certification, voluntary
recognition, designation or successor
rights;
(ii) has applied to be certified as the
bargaining agent of any TTS Employees; or
(iii) has applied to have TTS declared a related
employer or successor employer pursuant to
applicable labor legislation.
(d) Except as otherwise set forth on Schedule 3.12(d), no TTS
Employees are currently on a leave of absence for any reason, including without
limitation sickness or disability, maternity/paternity and workers'
compensation, and no Claim is pending and, to the best knowledge of NTL, no
Claim is expected to be made by any TTS Employees for workers? compensation
benefits.
(e) TTS has complied in all material respects with all laws
relating to the employment of TTS Employees.
(f) Attached hereto as Schedule 3.12(f) is a true and complete
list of each of the following which is, or has been, sponsored, maintained or
contributed to by TTS, NTL or any of its Affiliates in respect of TTS Employees:
each personnel policy, stock option plan, bonus plan or arrangement, incentive
award plan or arrangement, vacation policy, severance pay plan and/or golden
parachute agreement, policy, program or agreement, pension, retirement,
supplementary retirement, deferred compensation agreement or arrangement,
retiree benefit plan or arrangement, fringe benefit program or practice (whether
or not taxable), employee loan, consulting agreement, employment agreement and
each other employee benefit plan, agreement, arrangement, program, practice or
understanding ("Benefit Programs or Agreements").
(g) True, correct and complete copies or descriptions of all
Benefit Programs or Agreements and all amendments thereto along with the related
funding agreements, as amended, have been furnished or made available to WCG by
TTS.
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(h) TTS has no knowledge of any fact, condition or
circumstance since the date of the documents provided in accordance with Section
3.12(f) which would materially affect the information contained therein and, in
particular, and without limiting the generality of the foregoing, no promises or
commitments have been made by TTS to amend any Benefit Program or Agreement or
to provide increased benefits thereunder to any employee, dependant or
independent contractor, except as required by law.
(i) All Benefit Programs or Agreements have been maintained in
compliance with their respective terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations. Notice has not
been received of any pending investigations by any Authority involving or
relating to any Benefit Program or Agreement, there are no threatened or pending
Claims (except for Claims for benefits payable in the normal operation of the
Benefit Programs or Agreements), suits or proceedings against any Benefit
Program or Agreement or asserting any rights or claims to benefits under any
Benefit Program or Agreement that could give rise to a liability nor, to the
best knowledge of NTL, are there any facts that could give rise to any liability
in the event of such investigation, claim, suit or proceeding. No notice has
been received by TTS, NTL or its Affiliates of any complaints or other
proceedings of any kind involving TTS or, to the best knowledge of NTL, any TTS
Employees before any Authority relating to any Benefit Program or Agreement.
(j) Each investment held in respect of a Benefit Program or
Agreement is a qualified or eligible investment, no investment held in respect
of a Benefit Program or Agreement is a prohibited investment under the terms of
the Benefit Program or Agreement and all supporting documents or any applicable
legislation, and each Benefit Program or Agreement has or had the power and
authority to make each investment and is permitted under all applicable
legislation and the terms of the Benefit Programs or Agreements and all
supporting documents to continue to hold such investments.
(k) Except as permitted by the Benefit Program or Agreement
and applicable legislation, there has been no withdrawal of assets or any other
amounts from any of the Benefit Programs or Agreements other than proper
payments of benefits to eligible beneficiaries, refunds of over-contributions to
plan members and permitted payments of reasonable expenses incurred by or in
respect of such Benefit Program or Agreement.
(l) All employer and, if applicable, employee contributions
under the Benefit Programs or Agreements have been remitted in a timely manner
(other than current contributions not in arrears), and the Benefit Programs or
Agreements have been funded in accordance with their respective terms.
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(m) All returns, filings, reports and disclosures relating to
the Benefit Programs or Agreements required pursuant to the terms of the Benefit
Programs or Agreements, applicable legislation or any Authority, have been filed
or distributed in accordance with all requirements, all filing fees and levies
imposed on the Benefit Programs or Agreements by the applicable Authorities or
applicable legislation have been made on a timely basis and the funds of the
Benefit Programs or Agreements are not exposed to any late filing fees that have
not been remitted.
(n) No event has occurred and there has been no failure to act
on the part of TTS, any funding agent or any administrator of any of the Benefit
Programs or Agreements that could subject TTS or the fund of any Benefit Program
or Agreement to the imposition of any tax, penalty or other disability with
respect to any Benefit Programs or Agreements, whether by way of indemnity or
otherwise.
(o) No insurance contract or any other contract or agreement
affecting a Benefit Program or Agreement requires or permits a retroactive
increase in premiums or payments, loss sharing arrangement or other actual or
contingent liability due thereunder. The level of insurance reserves under each
insured Benefit Program or Agreement is reasonable and sufficient to provide for
all incurred but unreported claims.
(p) None of the Benefit Programs or Agreements provides
benefit increases or payments of any kind that are contingent upon or that will
become effective upon entering into this Agreement or the completion of the
transactions contemplated hereby.
(q) Attached hereto as Schedule 3.12(q) is a list of all
employee terminations and transfers out of the TTS Business since September 1,
1996.
3.13 FINDER'S FEE. Other than Smith Barney, Inc., no investment
banker, broker, finder or other Person is entitled to any brokerage or finder's
fee or similar commission from NTL or TTS in respect of the transactions
contemplated by this Agreement. NTL shall indemnify and hold Newco harmless from
and against any and all Claims, liabilities and obligations with respect to any
such fees, commissions or expenses asserted by any such Person on the basis of
any act, statement, agreement or commitment alleged to have been made by TTS,
NTL or any of its Affiliates with respect thereto.
3.14 MINUTE BOOKS. The minute books of TTS, copies of which have
heretofore been made available to Newco, contain true and complete minutes and
records of all meetings, proceedings and other actions of shareholders and the
Board of Directors of TTS, none of which have been amended to the best knowledge
of NTL (except as set forth in such copies) and are in full force and effect as
of the date hereof.
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3.15 ABSENCE OF CERTAIN CHANGES. Except as described in Schedule
3.15 and except for the consummation of the transactions contemplated by Article
II, since December 31, 1996, there has not been:
(a) Any mortgage, encumbrance or Lien placed on any of the TTS
Assets by or as a result of any act or omission of TTS which remains in
existence on the date hereof and remains in existence on the Closing Date,
except for Permitted Encumbrances;
(b) Any obligation or liability in excess of Two Hundred Fifty
Thousand Dollars ($250,000) incurred by TTS other than obligations and
liabilities incurred in accordance with past practice in the ordinary course of
business;
(c) Any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition of any of the
TTS Assets for an amount in excess of One Hundred Thousand Dollars ($100,000),
other than in accordance with past practice in the ordinary course of business;
(d) Any damage, destruction or Loss in excess of One Hundred
Thousand Dollars ($100,000) per single event, whether or not covered by
insurance, affecting the TTS Assets or the TTS Business;
(e) Any strike, work stoppage, concerted work slow down,
grievance or arbitration proceeding, unfair labor practice charge or complaint
involving the TTS Business;
(f) Any material change in the Benefit Programs or Agreements
listed (or required to be listed) on Schedule 3.12(f) or any change in the
compensation payable or to become payable with respect to the TTS Business to
any present or former director, officer, employee, dependent or independent
contractor listed on Schedule 3.12(a)(iii) or agent of NTL or TTS, except
changes in compensation which occurred in the ordinary course of business and
which did not involve, in any case, an increase in compensation in excess of
Twenty Thousand Dollars ($20,000) per annum for any one employee.
(g) A cancellation of any debt in excess of One Hundred
Thousand Dollars ($100,000) owed to or a claim of TTS, or waiver of any right of
TTS, other than in accordance with past practice in the ordinary course of
business;
(h) Any extraordinary Losses of Fifty Thousand Dollars
($50,000) or more individually aggregating in excess of Seven Hundred Fifty
Thousand Dollars ($750,000) or more suffered by the TTS Business;
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(i) Any change in any method of accounting or accounting
practice by the TTS Business, except as may be required by GAAP; or
(j) Any other change in the financial condition, properties,
assets, liabilities, business or operations of the TTS Business which change, by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has been or is reasonably likely to have a
Material Adverse Effect with respect to the TTS Business or Newco.
3.16 NO UNTRUE STATEMENTS. This Agreement, the Exhibits and
Schedules hereto, and any certificate delivered to Newco or its representatives
in connection with this Agreement or the transactions contemplated hereby, do
not and will not contain when delivered any untrue statement of any material
fact and do not and will not omit to state a material fact necessary to make the
statements contained herein and therein taken as a whole not misleading. To the
best knowledge of NTL, there is no material fact that has not been disclosed in
writing to Newco by NTL or TTS that has or is expected to have a Material
Adverse Effect on TTS or Newco.
3.17 DISTRIBUTORSHIP TERMS. To the best knowledge of NTL, all of the
terms of the current distributorship agreements between NTL and TTS have been
substantially complied with by the parties.
3.18 RESIDENT STATUS. NTL is not a non-resident person within the
meaning of Section 116 of the Income Tax Act (Canada).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco hereby makes the following representations and warranties to NTL,
each and all of which are true and correct on the signing date hereof and on the
Closing Date, except as set forth in the disclosure schedule attached pertaining
to such representation and warranty:
4.1 CORPORATE MATTERS. WilTel Communications LLC and its Designee
each is duly organized, validly existing and in good standing under the laws of
the State of Delaware and of the Province of Ontario, respectively, having all
requisite power and authority to own, operate and lease its properties and
assets and to carry on its business in the places and in the manner currently
conducted. NTL has been provided with a true and correct copy of the charter
documents of Newco and its Designee as currently in effect. Newco and its
Designee each has all requisite power and authority to enter into this Agreement
and to perform its obligations hereunder.
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4.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement has been duly authorized, executed and
delivered by Newco and is a legal, valid and binding obligation of Newco
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of specific
remedies.
(b) The execution, delivery and performance of this Agreement
by Newco and the other agreements and documents to be delivered by Newco to NTL
hereunder, the consummation of the transactions contemplated hereby or thereby,
and the compliance with the provisions hereof or thereof by Newco, will not,
with or without the passage of time or the giving of notice or both:
(i) except in the absence of required consents as set
forth on Schedule 4.3(a), conflict with, constitute a breach, violation or
termination of any provision of, or give rise to any right of termination,
cancellation or acceleration, or loss of any right or benefit or both, under any
contract to which Newco is a party;
(ii) conflict with or violate the charter documents
of Newco;
(iii) result in the creation or imposition of any
Lien or Claim on any assets of Newco, except as contemplated herein; or
(iv) violate any law, statute, ordinance, regulation,
judgment, writ, injunction, rule, decree, order or any other restriction of any
kind or character applicable to Newco.
4.3 GOVERNMENTAL AND OTHER CONSENTS, APPROVALS AND AUTHORIZATIONS.
Except as set forth in Schedule 4.3 attached hereto or as would not
significantly adversely impact Newco, the transactions contemplated hereby or by
any other agreement contemplated hereby, no order, license to conduct or operate
its business, consent, waiver, authorization or approval of, or exemption by, or
the giving of notice to, or the registration with, or the taking of any other
action in respect of, any Person not a Party, including any Authority, and no
filing, recording, publication or registration in any public office or any other
place is necessary on behalf of Newco (i) to authorize the execution, delivery
and performance of this Agreement or any other agreement contemplated hereby to
be executed and delivered by it and the consummation of the transactions
contemplated hereby or thereby, or (ii) to effect the legality, validity,
binding effect or enforceability thereof.
4.4 ACQUISITION OF PURCHASED SHARES. The Purchased Shares are being
acquired by Newco or its Designee for its own account and not with a view to or
in
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connection with any disposition thereof in violation of the Securities Act of
1933, as amended, or the relevant regulations thereunder, or any state
securities or "blue sky" laws.
4.5 FINDER'S FEE. No investment banker, broker, finder or other Person
is entitled to any brokerage or finder's fee or similar commission from Newco in
respect of the transactions contemplated by this Agreement. Newco shall
indemnify and hold NTL and its Affiliates harmless from and against any and all
Claims, liabilities and obligations with respect to any such fees, commissions
or expenses asserted by any such Person on the basis of any act, statement,
agreement or commitment alleged to have been made by Newco or any of its
Affiliates with respect thereto.
4.6 NO UNTRUE STATEMENTS. This Agreement, the Exhibits and Schedules
hereto, and any certificate delivered to NTL and its representatives in
connection with this Agreement or the transactions contemplated hereby, do not
and will not contain when delivered any untrue statement of any material fact
and do not and will not omit to state a material fact necessary to make the
statements contained herein and therein taken as a whole not misleading. To the
best knowledge of Newco, there is no material fact that has not been disclosed
in writing to NTI or NTL by Newco that has or is expected to have a Material
Adverse Effect on Newco.
ARTICLE V
MATTERS PENDING CLOSING
[THIS ARTICLE INTENTIONALLY LEFT BLANK.]
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATION OF THE PARTIES The obligations of the
Parties to effect the Closing shall be subject to the following conditions
unless waived in writing by all Parties:
(a) Formation Agreement. The transactions contemplated by
Sections 2.2 and 2.3 of the Formation Agreement shall have been consummated.
(b) Approvals and Consents. Any required consents, approvals
or authorizations of any Authority to the transfer or change in control
contemplated by this Agreement shall have been obtained or required statutory
waiting periods therefor shall have expired.
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(c) No Litigation. No Proceeding shall have been initiated by
any Authority or third party seeking to enjoin or otherwise restrain the
consummation of the transactions contemplated by this Agreement.
6.2 CONDITIONS TO OBLIGATION OF NEWCO. The obligation of Newco to
consummate the transactions contemplated hereby is subject to the satisfaction
on or prior to the date of the Closing of the following conditions, any one or
more of which may be waived in writing, in whole or in part, by Newco:
(a) Representations, Warranties and Covenants. NTL shall have
performed, satisfied, and complied with, in all material respects, all covenants
and agreements required by this Agreement to be performed, satisfied, or
complied with by it on or before the date of the Closing. All representations
and warranties of NTL contained in this Agreement or in any certificate,
document, instrument or writing delivered to Newco by or on behalf of NTL under
this Agreement shall be true and correct, in all material respects, on the date
of this Agreement and as of the date of the Closing with the same force and
effect as though they had been made on such date.
(b) No Material Adverse Change. From the date of this
Agreement to and including the Closing Date, there shall not have occurred any
Material Adverse Change in or with respect to the prospects of the TTS Business
or the TTS Assets, whether or not disclosed in any supplement or amendment to
the schedules to this Agreement.
(c) Good Standing. NTL shall have delivered to Newco
certificates issued by appropriate Authorities evidencing the good standing and
existence of each of NTL and TTS, as of a date not more than ten calendar days
prior to the date of Closing, in the jurisdictions in which it was organized.
(d) Consents of Third Persons. All consents from Persons that
are listed and identified in Schedule 3.3(a) attached hereto shall have been
obtained by TTS including by lapse of a contractual or statutory waiting period
and copies thereof shall have been delivered to Newco.
(e) Delivery of Other Agreements. NTL shall have executed and
delivered to Newco or its Designee the other agreements contemplated by this
Agreement.
(f) Review of Certain Contracts. NTL shall have made available
for review by Newco the contracts identified on Schedule 3.5(a).
(g) Secretary's Certificate. NTL shall have delivered to Newco
a certificate dated the Closing Date executed by the secretary or assistant
secretary of
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TTS certifying that attached thereto is: (1) a true, correct and complete
certified copy of the certificate of incorporation of TTS and all amendments
thereto; and (2) a true, correct and complete copy of the by-laws of TTS, and
all amendments thereto.
(h) Resolutions. NTL shall have delivered to Newco certified
resolutions of the Board of Directors of NTL approving the consummation of the
transactions contemplated hereby.
(i) NTL Retained Liabilities. NTL (or an Affiliate of NTL
reasonably acceptable to Newco) shall have assumed and agreed to pay, perform
and discharge the NTL Retained Liabilities pursuant to an assumption agreement
in form and substance satisfactory to Newco.
(j) Transfer of Purchased Shares. NTL shall have delivered to
Newco or its Designee all necessary transfers, assignments and other
documentation reasonably required to transfer the Purchased Shares to Newco or
its Designee with a good title, free and clear of all encumbrances.
(k) Officers and Directors Resignations. All directors and
officers of TTS shall have resigned in favor of nominees of Newco effective as
of the Closing.
6.3 CONDITIONS TO OBLIGATION OF NTL. The obligation of NTL to
consummate the transactions contemplated hereby is subject to the satisfaction
on or prior to the date of the Closing of the following conditions, any one or
more of which may be waived in writing, in whole or in part, by NTL:
(a) Representations, Warranties and Covenants. Newco shall
have performed, satisfied, and complied with, in all material respects, all
covenants and agreements required by this Agreement to be performed, satisfied,
or complied with by it on or before the date of the Closing. All representations
and warranties of Newco contained in this Agreement or in any certificate,
document, instrument or writing delivered to NTL by or on behalf of Newco under
this Agreement shall be true and correct, in all material respects, on the date
of this Agreement and as of the date of the Closing with the same force and
effect as though they had been made on such date.
(b) No Material Adverse Change. From the date of this
Agreement to and including the Closing Date, there shall not have occurred any
Material Adverse Change in or with respect to the prospects of the WilTel
Business or the WilTel Assets, whether or not disclosed in any supplement or
amendment to the schedules to this Agreement.
(c) Purchase Price. Newco shall have paid to NTL the Purchase
Price.
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(d) Officer's Certificate. Newco shall have delivered to NTL a
certificate dated the Closing Date executed by an officer of Newco certifying
that attached thereto is: (1) a true, correct and complete copy of the
certificate of formation of Newco certified by the Secretary of State of
Delaware and all amendments thereto; and (2) a true, correct and complete copy
of the LLC Agreement.
(e) Resolutions. Newco shall have delivered to NTL certified
resolutions of the management committee of Newco approving the consummation of
the transactions contemplated hereby.
(f) Insurance. Newco shall have provided evidence to NTL that
the insurance policies set forth on Schedule 4.11 of the Formation Agreement
have been amended to include Newco and TTS.
(g) Competition Bureau. WCG, WilTel or Newco shall have
proposed the transactions contemplated by this Agreement to the Canadian
Competition Bureau for its approval or advice that it will not oppose such
transactions.
ARTICLE VII
CLOSING
7.1 The consummation of the transactions provided for in Article II
(the "Closing") shall take place at the offices of The Williams Companies, Inc.,
One Williams Center, Suite 4100, Tulsa, Oklahoma 74172 on April 30, 1997, or at
such other time as the parties mutually agree.
ARTICLE VIII
DISTRIBUTORSHIP AGREEMENT
8.1 TTS RIGHT OF RENEWAL. At the time of Closing, NTL and TTS shall
enter into a new distributorship agreement with TTS to replace the current
distributorship agreements between NTL and TTS, substantially on the terms and
conditions attached hereto as Schedule 8.1 (the "NTL/TTS Distributor
Agreement").
8.2 TTS RIGHT OF RENEWAL AFTER TRANSFER. In the event of a Transfer of
a Member's Membership Interest (as defined in the LLC Agreement) pursuant to
Sections 8.6(b), 19.3, 19.4 or 19.5 of the LLC Agreement, NTL shall not
terminate the NTL/TTS Distributor Agreement for a period of three (3) years
after such Transfer unless (i) TTS is in material breach of the NTL/TTS
Distributor Agreement, (ii) Newco is in material breach of its distributorship
agreement with NTL, or (iii) control of TTS or a substantial interest in TTS is
sold, transferred or assigned by Newco to a competitor of NTL.
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8.3 USE OF MARKS. Newco acknowledges that NTL is the registered owner
of the following trademarks:
Meridian reg. no. 319540
Meridian 1 reg. no. 387807
Meridian SL reg. no. 383716
In addition to any trademark licenses granted pursuant to the terms of
the NTL/TTS Distributor Agreement, Nortel agrees that it will permit TTS to
continue using "Meridian" (the "Trademark") as part of its corporate name and as
otherwise used in the TTS Business in Canada prior to the date hereof but not
otherwise, until December 31, 1997.
Newco shall cause TTS to comply with NTL's instructions as to the form
and manner in which the Trademark shall be used and agrees that its use of the
Trademark shall conform in all respects to NTL's policies and guidelines in
place from time to time respecting the use of the Trademark.
Newco shall cause TTS to ensure that products sold by TTS in respect of
which the Trademark is used comply with all specifications and standards set
forth by NTL. NTL shall have the right to monitor and inspect products sold by
TTS at reasonable times for the purpose of enabling NTL to ensure such
compliance exists.
Newco shall cause TTS to cease using "Meridian" as part of its
corporate name and on signs, logos, telephone listings, business cards, customer
and supplier information or otherwise (except as permitted pursuant to the
NTL/TTS Distributor Agreement) as soon after Closing as reasonably possible, but
in no event later than December 31, 1997.
Newco acknowledges that the Trademark and all goodwill associated
therewith are, and shall remain, the sole property of NTL and no rights are
conferred upon TTS or Newco with respect to the Trademark except as specifically
set forth herein.
ARTICLE IX
EMPLOYEE MATTERS
9.1 EMPLOYMENT RELATED CLAIMS. On or prior to the Closing Date, NTL (or
an Affiliate of NTL reasonably satisfactory to Newco) shall assume and agree to
pay, perform and discharge, the following liabilities of TTS caused by actions
or omissions of TTS or NTL, or arising from facts occurring, on or prior to the
Closing Date:
(i) Any liability, Claim or obligation (whether
actual, contingent, known or unknown) in respect of employment
of the TTS Employees on
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or before the Closing Date, including without limitation
wages, costs of benefits or termination of employment; and
(ii) Any liability, Claim or obligation (whether
actual, contingent, known or unknown) in respect of the
persons listed on Schedule 9.1.
9.2 EMPLOYMENT TERMINATION NOTICES. Each Party acknowledges that it is
solely responsible for issuing, serving and delivering all orders and notices
required pursuant to applicable employment standards or labour legislation in
connection with the termination of its employees, if any, and for any financial
obligations and liabilities in connection therewith or otherwise required in
connection with the termination of its employees.
9.3 HIRING RESTRICTIONS. NTL and its Affiliates will not hire Newco
employees for a period of one (1) year from Closing.
9.4 SERVICES AGREEMENT. NTL shall continue to provide to TTS the
services of the persons listed on Schedule 9.1 pursuant to the terms of a
Services Agreement to be negotiated between NTL and TTS within thirty (30) days
after Closing.
ARTICLE X
ADDITIONAL AGREEMENTS
10.1 DELIVERY OF CORPORATE DOCUMENTS. NTL shall deliver to Newco or
TTS, on or before the Closing Date, all Records, including computer disks
reflecting any books or records, documents or other papers, or other information
or data relating to the operation of the TTS Business or the TTS Assets stored
on any electronic media, including computers. NTL shall be entitled to retain
the historical books and records relating to the TTS Business to the extent the
books and records are not necessary for the ongoing operations of the TTS
Business. NTL agrees that Newco and its authorized representatives shall have
the right to inspect and, at Newco's expense, copy, at any time during regular
business hours for any proper purpose, the corporate, accounting, auditing and
tax books, records (including work papers) and other books and records, but only
so far as they relate to TTS or the TTS Business, in the possession of NTL or
its Affiliates. For a period of seven years following the Effective Date, NTL
agrees that it will not dispose of or destroy any such books and records without
having first offered to deliver the same to Newco or TTS.
10.2 ACCESS TO INFORMATION. Newco covenants and agrees to cause TTS to
provide full and complete cooperation and assistance to NTL and its Affiliates
following the Closing and to provide full and complete access to the corporate,
accounting, auditing and tax books, records (including work papers) and other
books and records relating to TTS, and to TTS' premises and employees, to the
extent that
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NTL reasonably requires such information to complete tax returns, to verify and
honor the NTL Retained Liabilities and obtain the benefit of the NTL Retained
Assets, to investigate, enforce or defend against Claims for indemnification
pursuant to Article XI or third party Claims against any such Party or Parties,
or for similar purposes. For a period of seven years following the Effective
Date, Newco agrees that it will cause TTS not to dispose of or destroy any such
books and records without having first offered to deliver the same to NTL.
10.3 NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Each of NTL and Newco agrees that, for a period beginning
on the Closing Date and ending on the second anniversary date of the Closing
Date, it and its Affiliates will apply the same standards and treat (i) TTS's
confidential or proprietary information and (ii) the terms and conditions of
this Agreement and the other agreements required pursuant hereto, as it does its
Affiliates' confidential or proprietary information with respect to maintaining
the confidentiality thereof. Notwithstanding the foregoing, each Party and its
Affiliates may disclose information that (A) is required to be disclosed by
applicable provincial, state, or federal tax or securities laws to the extent,
and only to the extent, the laws require the disclosure and such Party provides
TTS prior written notice of its intent to provide the disclosure and the general
text of the disclosure, and the disclosure is consented to by TTS, which consent
shall not be unreasonably withheld, or (B) is required to be disclosed by a
court or administrative body of competent jurisdiction; provided that, if a
Party or its Affiliates are served or threatened with litigation that would
require such Party or its Affiliate to disclose the information, such Party or
the Affiliate shall tender to TTS the opportunity to defend, at its cost,
against the disclosure.
(b) Each Party acknowledges that all documents and objects
containing or reflecting any TTS Owned Intellectual Property and Software,
whether developed by such Party or by someone else for it or any of its
Affiliates, will remain the exclusive property of TTS after the Effective Date
and will be delivered to TTS. TTS will not share such TTS Owned Intellectual
Property and Software with NTL or any of its Affiliates unless sold or licensed
in an arms length transaction, provided that any software effectively available
to NTL or its Affiliates as of February 28, 1997, will continue to be available
at the existing terms and conditions.
10.4 THIRD PARTY CONSENTS. Each of NTL and Newco shall use its
reasonable efforts to obtain the consents of third parties as are necessary for
the completion of the transactions contemplated by this Agreement.
10.5 TAX MATTERS.
(a) Tax Returns, Payment of Taxes, and Refunds. NTL will
prepare and file, or cause to be prepared and filed, on a timely basis, all Tax
Returns (including
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<PAGE> 32
any amendments thereto), if any, for TTS for any taxable period ending on or
prior to the Effective Date, (any such period being referred to herein as a
"Pre-Effective Period"). TTS shall be responsible for and shall pay all Taxes
for such Pre-Effective Periods up to the amount accrued for such Taxes on the
NCS Adjusted Effective Date Balance Sheet. Any amount paid for Taxes with
respect to Pre-Effective Periods which exceeds the total amount of Taxes accrued
on the NCS Adjusted Effective Date Balance Sheet shall be reimbursed by NTL
promptly upon demand therefor. Newco shall, at its expense, cause TTS to
reasonably cooperate and execute such instruments as are required or desirable
in connection with the performance by NTL of its obligations under the
immediately preceding sentence. Newco will prepare and file, or will cause to be
prepared and filed, all Tax Returns relating to TTS for all subsequent periods,
and TTS will pay all Taxes for TTS for all taxable periods which do not
constitute Pre-Effective Periods.
(b) Control of Contest. Each of NTL and Newco will have the
right, at its own expense, to control any audit or determination by any taxing
authority, to initiate any claim for refund or file any amended Tax Return, and
to contest, resolve and defend against any assessment, notice of deficiency, or
other adjustment or proposed adjustment of Taxes for any taxable period for
which such party (or any of its Affiliates) is charged with responsibility for
filing a Tax Return under this Agreement. Newco will promptly forward or cause
TTS to forward to NTL all written notifications and other written communications
from any Taxing authority received by Newco or TTS relating to any liability for
Taxes for any Pre-Effective Periods. Newco will cause TTS to assist NTL, at TTS'
expense to take any and all actions with respect to any proceedings for any such
Pre-Effective Periods. The failure by Newco to provide any such notice to NTL
within twenty (20) Business Days of receipt by Newco or TTS of such notice will
relieve NTL from any obligations with respect to the subject matter of any
notification not so forwarded, but only to the extent that such late notice
materially prejudices NTL's ability to contest such assessment or Tax.
(c) (i) Access to Information. Newco will cause TTS to provide
NTL, and NTL will provide to TTS, the right, at reasonable times and upon
reasonable notice, to have access to and to copy and use any records or
information and personnel which may be relevant for the taxable period for which
the requesting party is charged with payment responsibility for Taxes under this
Agreement in connection with the preparation of any Tax Returns, any audit or
other examination by any taxing authority, the filing of any claim for a refund
of Tax or for the allowance of any Tax credit, or any judicial or administrative
proceedings relating to liability for Taxes. The party requesting assistance
hereunder will reimburse the other party for reasonable expenses incurred in
providing such assistance. Any information obtained pursuant to this Section
10.5(c)(i) will be treated as proprietary information and will be used solely in
connection with the matter for which it was requested.
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<PAGE> 33
(ii) Retention of Records. For a period of seven (7) years
from the Closing Date, Newco will cause TTS not to dispose of or destroy any of
the business records or files of TTS in existence on the Closing Date directly
relating to Taxes without first offering to turn over possession thereof to NTL
by written notice to NTL at least thirty (30) days prior to the proposed date of
such disposition or destruction.
10.6 INSURANCE MATTERS. To the extent that insurance coverage
maintained by NTL is available, in excess of any deductible, retention or full
indemnity program, with respect to any Loss suffered by TTS in respect of an
event occurring on or before the Closing or relating to periods ending on or
before such date, at the request of TTS and subject to reimbursement of costs by
TTS, NTL shall make a claim against such insurance and any insurance proceeds
from such insurance will be for the benefit of TTS for any relevant Loss of TTS,
up to the amount of such Loss. NTL shall have the right to control, at its
expense, subject to consultation with TTS, the defense of third-party Claims in
respect of which NTL expects that insurance coverage under its policies may be
available in respect of all or a portion of such Claims (subject to any
applicable deductible under such insurance coverage).
ARTICLE XI
INDEMNIFICATION
XI.1 INDEMNITY OBLIGATION.
(a) NTL Indemnification. Subject to the provisions of this
Article XI, NTL shall indemnify and hold harmless Newco and its Party
Indemnitees against any and all Losses resulting from or arising out of:
(i) any breach of a representation or warranty
made by NTL in this Agreement or any Schedule or Exhibit
attached hereto;
(ii) the breach of any covenant, agreement or
obligation of NTL contained in this Agreement or any Schedule
or Exhibit hereto; and
(iii) the NTL Retained Liabilities.
The total obligation of NTL and/or any of its Affiliates to indemnify under this
Section and under Section 11.1(a) of the Formation Agreement shall not exceed
$200,000,000 in the aggregate under any circumstances.
(b) Newco Indemnification. Subject to the provisions of this
Article XI, Newco shall indemnify and hold harmless NTL and its Party
Indemnitees against any and all Losses resulting from or arising out of:
32
<PAGE> 34
(i) any breach of a representation or warranty
made by Newco in this Agreement or any Schedule or Exhibit
attached hereto; or
(ii) the breach of any covenant, agreement or
obligation of Newco contained in this Agreement or any
Schedule or Exhibit hereto.
The total obligation of Newco and/or any of its Affiliates to indemnify
under subparagraph 11.1(b)(i) shall not exceed $200,000,000 in the aggregate
under any circumstances.
(c) The breach of a specific representation, warranty or
agreement by a Party shall be determined whether or not, apart from such
specific representation, warranty or agreement, the transactions provided for in
this Agreement prove to be more favorable to the other Party, and whether or not
the facts and circumstances covered by one or more of the other representations,
warranties or agreements made by such Party prove to be more favorable than so
represented and warranted.
(d) All Claims for indemnification under this Section 11.1
(the party claiming indemnification and the party against whom such Claim for
indemnification is being made are hereinafter referred to as "Indemnified Party"
and the "Indemnifying Party", respectively) shall be reduced by the amount of
any insurance proceeds effectively received by or benefiting the Indemnified
Party with respect to the relevant Loss or liability subject, as the case may
be, to the application of Section 10.6.
(e) Except with respect to Claims under subparagraph (a)(iii)
of this Section 11.1, (i) no Claims shall be capable of assertion under Section
11.1 unless it pertains to a Loss with a monetary value of $50,000 or more, on a
matter by matter basis (whereby a series of connected Losses that are
substantially identical in nature and that have arisen out of substantially
identical events, circumstances or conditions shall be deemed to constitute one
Loss); and (ii) a Party (including its Party Indemnitees) shall only be entitled
to indemnification under this Section 11.1 to the extent that the aggregate
amount of Losses suffered by it or its Party Indemnitees under both this
Agreement and the Formation Agreement as a result of misrepresentation or breach
by the other Party, exceed a deductible of $1,000,000 (such deductible being
hereinafter referred to as the "General Deductible").
(f) Newco shall be entitled to indemnification under this
Section 11.1 with respect to Litigation Claims against a Party only to the
extent that the aggregate amount of Losses suffered by Newco arising out of
Litigation Claims (as defined in this Agreement and the Formation Agreement)
under both this Agreement and the Formation Agreement against such Party exceed
a deductible of $2,000,000 (such deductible being hereinafter referred to as
such Party's "Litigation Deductible").
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<PAGE> 35
11.2 PROCEDURE. All Claims for indemnification by a Person under this
Article XI shall be asserted and resolved as follows:
(a) Whenever any Claim, Litigation Claim or oral demand for
which an Indemnifying Party would be liable to an Indemnified Party hereunder
(which shall be deemed to include any Claim or Litigation Claim which falls
within, and exhausts any part of such Party's Deductible) is asserted against or
sought to be collected from such Indemnified Party by a third party, such
Indemnified Party shall, within 30 days of the receipt thereof, give notice (a
"Claim Notice") to the Indemnifying Party of such Claim, Litigation Claim or
oral demand, specifying the nature of and specific basis for such Claim,
Litigation Claim or oral demand and the amount or the estimated amount thereof
to the extent then feasible, which estimate shall not be binding upon the
Indemnified Party in its effort to collect indemnification hereunder in respect
such Claim, Litigation Claim or oral demand. To the extent the Indemnifying
Party is prejudiced thereby, the failure to so notify the Indemnifying Party of
any such Claims or oral demand shall relieve the Indemnifying Party from
liability that it may have to the Indemnified Party under the indemnification
provisions contained in this Article XI, but only to the extent of the Loss
directly attributable to such failure to notify, and shall not relieve the
Indemnifying Party from any liability that it may have to the Indemnified Party
otherwise than under this Article XI. The Indemnifying Party shall, within 20
days of the receipt of a Claim Notice, notify the Indemnified Party as to
whether it accepts, in whole or in part, its indemnity obligation under Section
11.1(a) or (b) (subject as the case may be, to the Indemnified Party's General
or Litigation Deductible), in which case, the Indemnifying Party shall assume
and thereafter conduct the defense thereof; provided that the Indemnified Party
shall be entitled to participate in the defense thereof at its own expense. If
the Indemnifying Party disputes liability under this Section 11.1(a) or (b), as
the case may be, or otherwise fails to defend within a reasonable time after
notice, the Indemnified Party will have the right to undertake the defense, at
the risk of the Indemnifying Party and subject, as the case may be, to the
Indemnified Party's right to claim indemnification from the Indemnifying Party
for the cost of defense. The consent to the entry of any judgment or settlement
of any claim hereunder by the Indemnifying Party may only be made upon the prior
approval by the Indemnified Party, which approval shall not be unreasonably
withheld, unless the judgment or proposed settlement involves only the payment
of money damages (which would be paid by the Indemnifying Party) with a full
release of the Indemnified Party, and does not impose any injunction,
conditions, or other equitable relief on the Indemnified Party in which case
consent is not required.
(b) If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel in
contesting any Claim, Litigation Claim or oral demand that the Indemnifying
Party elects to contest, or, if appropriate and related to the Claim, Litigation
Claim or oral demand in question, in making any counterclaim against the Person
asserting the third party Claim or Litigation Claim or oral demand, or any
cross-complaint against any Person other than
34
<PAGE> 36
an Affiliate of the Indemnified Party. The Indemnifying Party shall reimburse
such Indemnified Party for reasonable out-of-pocket expenses incurred by the
Indemnified Party in such cooperation.
(c) If any Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a Claim, Litigation Claim or
oral demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party. Subject always to application of the relevant
General or Litigation Deductible, reimbursement of any Losses incurred by the
Indemnified Party pursuant to this Article XI shall be made within 30 days after
documentation is sent to the Indemnifying Party by the Indemnified Party. If the
Indemnifying Party disputes such claim, such dispute shall be resolved in the
manner set forth in Article XIV hereof.
11.3 FAILURE TO PAY INDEMNIFICATION. If and to the extent the
Indemnified Party shall make written demand upon the Indemnifying Party for
indemnification pursuant to this Article XI, and the Indemnifying Party shall
refuse to accept its indemnity obligations under Section 11.1 (subject always to
applicable General or Litigation Deductibles) or otherwise fail to pay in full
within the period specified herein the amounts demanded pursuant hereto and in
accordance herewith, then the Indemnified Party may utilize any legal or
equitable remedy to collect from the Indemnifying Party the amount of its
damages plus all costs, including reasonable attorneys' fees incurred in
connection with such collection efforts. Nothing contained herein is intended to
limit or constrain the Indemnified Party's rights against the Indemnifying Party
for indemnity, the remedies herein being cumulative and in addition to all other
rights and remedies of the Indemnified Party.
11.4 SURVIVAL OF OBLIGATIONS. Except as otherwise expressly provided
for in the following sentence, the representations, warranties, covenants,
agreements and undertakings of NTL and Newco contained in this Agreement shall
be deemed remade at and shall survive the Closing until the expiration of
eighteen months (18) following the Closing. The representation and warranties,
covenants, agreements and undertakings of NTL (i) contained in Section 3.4
hereof (the "Title Representations") shall survive the Closing until the fourth
(4th) anniversary thereof and will thereupon expire together with any right of
indemnification with respect to breaches of the Title Representations, (ii)
contained in Section 3.10 hereof (the "Environmental Representations") shall
survive the Closing until the Second (2nd) anniversary thereof and will
thereupon expire together with any right of indemnification with respect to
breaches of the Environmental Representations, (iii) contained in Sections 3.7
and 3.12 and Article IX hereof (the "Employment and Tax Representations and
Covenants") shall survive the Closing for a period ending ninety (90) days
after the expiration of the applicable statute of limitation, as the same may
be extended from time to time, and thereupon expire together with any right of
indemnification with respect to Employment and Tax Representations and
Covenants, and (iv) contained
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in Sections 2.4 and 10.6 shall survive the Closing until the third (3rd)
anniversary thereof and will thereupon expire together with any right of
indemnification with respect thereto; provided that, if a Claim or oral demand
for indemnification (including, without limitation, any notice of any Litigation
Claim) has been made or given within the applicable survival period and has not
been resolved as of the expiration of such period, such Claim (and, if the Claim
results from a breach of a representation, warranty, covenant, agreement or
undertaking, such representation, warranty, covenant, agreement or undertaking)
shall survive until the final resolution of such Claim.
11.5 EXCLUSIVE REMEDY. With respect to all Losses indemnified under
this Article XI, the indemnities provided herein shall be deemed the sole and
exclusive remedies available to the Parties and their respective parents and
Affiliates, and to TTS.
ARTICLE XII
TERMINATION
[THIS ARTICLE INTENTIONALLY LEFT BLANK.]
ARTICLE XIII
EXPENSES
Except as otherwise set forth herein, and whether or not the
transactions contemplated by this Agreement shall be consummated, each Party
agrees to pay, without right of reimbursement from any other Party, the costs
incurred by the Party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including the fees and
disbursements of legal counsel, accountants and consultants employed by the
Party in connection with the transactions contemplated by this Agreement.
ARTICLE XIV
RESOLUTION OF DISPUTES
The Parties agree that, except as otherwise specifically provided
herein, all disputes under this Agreement shall be resolved in accordance with
the procedures set forth in Exhibit N to the Formation Agreement.
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ARTICLE 15
GENERAL PROVISIONS
15.1 NOTICES. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing and delivered personally or sent vi) first-class,
postage prepaid, registered or certified mail (return receipt requested), or by
overnight delivery service or facsimile transmission with confirmation by
certified mail or overnight delivery service addressed as follows:
If to NTL:
Northern Telecom Limited
8200 Dixie Road, Suite 100
Brampton, Ontario, Canada L6T5P6
Attention: Corporate Secretary
Facsimile: (905) 863-8386
and copy to:
Northern Telecom Inc.
2221 Lakeside Boulevard
Richardson, Texas 75082
(Attention: Richard R. Standel, Vice President,
Secretary and General-Counsel)
Facsimile: (972) 685-3011
If to Newco or its Designee:
111 E. 1st Street
Tulsa, Oklahoma 74103
Attention: Howard E. Janzen
Facsimile Number: (918) 561-6024
and copy to:
One Williams Center, 41-3
Tulsa, Oklahoma 74172
Attention: David P. Batow, General Counsel
Facsimile Number: (918) 588-3005
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Any Party may change the address to which the communications are to be
directed to it by giving notice to the other in the manner provided in this
Section 15.1. Notice by mail shall be deemed to have been given and received on
the third calendar day after posting. Notice by overnight delivery service,
facsimile transmission or personal delivery shall be deemed given on the date of
actual delivery.
15.2 GOVERNING LAW. This Agreement and the performance of the
transactions contemplated hereby shall be governed by and construed and enforced
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein, without regard to any conflict-of-laws provision thereof
that would otherwise require the application of the law of any other
jurisdiction.
15.3 ENTIRE AGREEMENT. Except for the Formation Agreement and the
agreements and documents contemplated thereby, (a) this Agreement and the
Exhibits hereto, together with the certificates, documents, instruments,
writings and any other agreements contemplated hereby that are delivered
pursuant hereto, set forth the entire agreement and understanding of the Parties
with respect to the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings relating to the subject matter
hereof; (b) no representation, promise, inducement or statement of intention
with respect to the subject matter of this Agreement has been made by any Party
that is not embodied in this Agreement and Exhibits hereto and the certificates,
documents, instruments, writings and any other agreements contemplated hereby
that are delivered pursuant hereto, and; (c) none of the Parties shall be bound
by or liable for any alleged representation, promise, inducement or statement of
intention not so set forth.
15.4 ASSIGNMENT. No Party to this Agreement may sell, transfer, assign,
pledge or hypothecate its or his rights, interests or obligations under this
Agreement without the prior written consent of the other Party, which may not be
unreasonably withheld.
15.5 SUCCESSORS. This Agreement shall inure to the benefit of, be
binding upon, and be enforceable by the parties hereto and their respective
successors and permitted assigns.
15.6 AMENDMENTS; WAIVER. This Agreement may be amended, superseded or
canceled, and any of the terms hereof may be waived, only by a written
instrument specifically stating that it amends, supersedes or cancels this
Agreement or waives any of the terms herein, executed by all Parties intended to
be bound thereby or, in the case of a waiver, by the Party waiving compliance.
The failure of any Party at any time to require performance of any provision
herein shall in no manner affect the right at a later time to enforce the same.
No waiver by any Party of any condition, or of any breach of any term, covenant,
representation or warranty, shall be deemed or constitute a waiver of any other
condition, or breach of any other term, covenant,
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representation or warranty, nor shall the waiver constitute a continuing waiver
unless otherwise expressly provided.
15.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
15.8 SEVERABILITY. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
15.9 NO THIRD PARTY BENEFICIARIES. Except to the extent an Affiliate is
expressly given rights herein, any agreement contained, expressed or implied in
this Agreement shall be only for the benefit of the Parties hereto and their
respective successors and assigns, and such agreements shall not inure to the
benefit of the obligees of any indebtedness of any Party hereto, it being the
intention of the Parties hereto that no Person or entity shall be deemed a third
party beneficiary of this Agreement, except to the extent a third party is
expressly given rights herein.
15.10 NEGOTIATED TRANSACTION. The provisions of this Agreement were
negotiated by the Parties hereto, and this Agreement shall be deemed to have
been drafted by all of the Parties hereto.
15.11 FURTHER ASSURANCES. Each Party shall, from time to time
subsequent to the Closing, at the request and expense of the requesting party,
execute and deliver all such documents, including without limitation, all such
additional conveyances, transfers, consents and other assurances and do all such
other acts and things as any other Party hereto, acting reasonably, may from
time to time request be executed or done in order to better evidence, perfect or
effectuate any provision of this Agreement
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or of any agreement or other document executed pursuant to this Agreement or any
of the respective obligations intended to be created hereby or thereby.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first set forth above.
"NTL"
NORTHERN TELECOM LIMITED
By: /s/ FRED WEBBER
-------------------------------------
Name: Fred Webber
-----------------------------------
Title: Attorney in Fact
----------------------------------
"NEWCO"
WILTEL COMMUNICATIONS, L.L.C.
By: /s/ S. MILLER WILLIAMS
-------------------------------------
[STAMP] Name: S. Miller Williams
-----------------------------------
Title: Senior Vice President
----------------------------------
"DESIGNEE"
1228966 ONTARIO INC.
By: /s/ S. MILLER WILLIAMS
-------------------------------------
[STAMP] Name: S. Miller Williams
-----------------------------------
Title: President
----------------------------------
40
<PAGE> 1
EXHIBIT 10.34
EXECUTION COPY
================================================================================
FORMATION AGREEMENT
BY AND BETWEEN
NORTHERN TELECOM INC.
AND
WILLIAMS COMMUNICATIONS GROUP, INC.
DATED AS OF APRIL 1, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I
Definitions and Construction............................................................................. 1
1.1 Defined Terms................................................................................... 1
1.2 Accounting Terms................................................................................ 11
1.3 References...................................................................................... 11
1.4 Headings........................................................................................ 11
Article II
Formation of Newco....................................................................................... 11
2.1 Initial Formation............................................................................... 11
2.2 Merger of NCS Into Newco and Cash Payment....................................................... 11
2.3 Merger of WilTel Into Newco..................................................................... 12
2.4 Retained Assets................................................................................. 12
2.5 Retained Liabilities............................................................................ 13
2.6 Purchase of TTS Shares.......................................................................... 14
2.7 Transfer of Certain NCS Assets.................................................................. 15
2.8 Net Asset Adjustments........................................................................... 16
Article III
Representations and Warranties of NTI.................................................................... 16
3.1 Corporate Matters............................................................................... 16
3.2 Validity of Agreement; No Conflict.............................................................. 17
3.3 Governmental and Other Consents, Approvals and Authorizations................................... 18
3.4 Title to and Condition of NCS Assets............................................................ 18
3.5 Contracts, Commitments and Customers............................................................ 20
3.6 Financial Statements............................................................................ 21
3.7 Taxes........................................................................................... 23
3.8 No Violations or Litigation..................................................................... 23
3.9 Property Leases................................................................................. 23
3.10 Environmental................................................................................... 24
3.11 Insurance....................................................................................... 26
3.12 Employment and Labor Matters.................................................................... 26
3.13 Finder's Fee.................................................................................... 28
3.14 Minute Books.................................................................................... 28
3.15 Absence of Certain Changes...................................................................... 29
3.16 No Untrue Statements............................................................................ 30
3.17 Distributorship Terms........................................................................... 30
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Article IV
Representations and Warranties of WCG.................................................................... 30
4.1 Corporate Matters................................................................................. 30
4.2 Validity of Agreement; No Conflict.............................................................. 31
4.3 Governmental and Other Consents, Approvals and Authorizations................................... 32
4.4 Title to and Condition of WilTel Assets......................................................... 33
4.5 Contracts, Commitments and Customers............................................................ 34
4.6 Financial Statements............................................................................ 35
4.7 Taxes........................................................................................... 37
4.8 No Violations or Litigation..................................................................... 37
4.9 Property Leases................................................................................. 38
4.10 Environmental................................................................................... 38
4.11 Insurance....................................................................................... 40
4.12 Employment and Labor Matters.................................................................... 40
4.13 Finder's Fee.................................................................................... 42
4.14 Minute Books.................................................................................... 43
4.15 Absence of Certain Changes...................................................................... 43
4.16 No Untrue Statements............................................................................ 44
Article V
Matters Pending Closing.................................................................................. 44
5.1 NTI Actions Pending Closing..................................................................... 44
5.2 WCG Actions Pending Closing..................................................................... 48
Article VI
Conditions To Closing........................................................................................... 52
6.1 Conditions to Obligation of the Parties......................................................... 52
6.2 Conditions to Obligation of WCG................................................................. 52
6.3 Conditions to Obligation of NTI................................................................. 54
6.4 Closing Memorandum.............................................................................. 56
Article VII
Closing.................................................................................................. 56
Article VIII
Post-Closing Adjustment.................................................................................. 56
8.1 True-Up of Section 2.7 Transactions............................................................. 56
8.2 Tax Benefit Payment............................................................................. 57
8.3 Tax Equalization Payment for Interim Period Earnings............................................ 57
8.4 Netting of Post-Closing Adjustments............................................................. 58
Article IX
Employee Matters......................................................................................... 58
9.1 Employee Transfers and Plan Liabilities......................................................... 58
</TABLE>
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<TABLE>
<S> <C>
9.2 Employee Services Agreement..................................................................... 59
9.3 Reporting of Data............................................................................... 60
9.4 Employment Related Claims....................................................................... 60
9.5 Bonus Payments.................................................................................. 60
9.6 Hiring Restrictions............................................................................. 60
9.7 WARN Notices.................................................................................... 61
9.8 Benefit Issues.................................................................................. 61
9.9 Compensation.................................................................................... 63
9.10 Relocation...................................................................................... 63
Article X
Additional Agreements.................................................................................... 63
10.1 Line of Credit.................................................................................. 63
10.2 Network Services Agreement...................................................................... 63
10.3 Delivery of Corporate Documents................................................................. 64
10.4 Access to Information........................................................................... 64
10.5 Nondisclosure of Proprietary Information........................................................ 64
10.6 Administrative Services......................................................................... 65
10.7 Further Assurances by the Parties............................................................... 66
10.8 Third Party Consents............................................................................ 66
10.9 Intellectual Property License Agreement......................................................... 66
10.10 Tax Matters..................................................................................... 67
10.11 Insurance Matters............................................................................... 68
Article XI
Indemnification.......................................................................................... 68
11.1 Indemnity Obligation............................................................................ 68
11.2 Procedure....................................................................................... 70
11.3 Failure to Pay Indemnification.................................................................. 71
11.4 Survival of Obligations......................................................................... 72
11.5 Exclusive Remedy................................................................................ 72
Article XII
Termination.............................................................................................. 72
12.1 Efforts to Satisfy Conditions................................................................... 72
12.2 Termination..................................................................................... 73
12.3 Liability Upon Termination...................................................................... 73
Article XIII
Expenses................................................................................................. 73
Article XIV
Resolution of Disputes................................................................................... 74
</TABLE>
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<TABLE>
<S> <C>
Article XV
General Provisions....................................................................................... 74
15.1 Notices......................................................................................... 74
15.2 Governing Law................................................................................... 75
15.3 Entire Agreement................................................................................ 75
15.4 Assignment...................................................................................... 75
15.5 Successors...................................................................................... 76
15.6 Amendments; Waiver.............................................................................. 76
15.7 Counterparts.................................................................................... 76
15.8 Severability.................................................................................... 76
15.9 No Third Party Beneficiaries.................................................................... 76
15.10 Negotiated Transaction.......................................................................... 76
</TABLE>
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<PAGE> 6
EXHIBITS
Exhibit A Certificate of Formation (Section 1.1)
Exhibit B Certificate of Merger of WilTel (Section 1.1)
Exhibit C Certificate of Merger of NCS (Section 1.1)
Exhibit D LLC Agreement (Section 1.1)
Exhibit E Non-Competition Agreement (Section 1.1)
Exhibit F TTS Agreement (Section 2.6)
Exhibit G Accounts Receivable Note (Section 2.7(a))
Exhibit H Bill of Sale (Section 2.7(b))
Exhibit I Parent Guaranty (Section 6.3(o))
Exhibit J Employee Services Agreement (Section 9.2)
Exhibit K NTL Administrative Services Agreement (Section 10.6)
Exhibit L Williams Administrative Services Agreement
(Section 10.6)
Exhibit M Intellectual Property License Agreement
(Section 10.9)
Exhibit N Dispute Resolution Procedures (Article XIV)
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<PAGE> 7
SCHEDULES
ARTICLE II: FORMATION OF NEWCO
Schedule
Number Description
- -----------------------------
2.2 Calculation of cash payment
2.4(a)(iii) NCS Intercompany Notes
2.4(a)(v) NTI Retained Assets
2.4(b)(iii) WilTel Intercompany Notes and Accounts Receivable
2.4(b)(v) WCG Retained Assets
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF NTI
3.1(b) NCS stock ownership schedule
3.1(c) Jurisdictions in which NCS is qualified to do business and in
good standing
3.3(a) NCS Consents
3.3(b) NCS Permits
3.4(a) NCS Assets
3.4(b) NCS Owned Intellectual Property and Software
3.4(c) NCS Licensed Intellectual Property and Software
3.4(d) Essential Property of NCS not included in NCS Assets
3.4(e) Additional NCS Intellectual Property Rights
3.5(a) NCS Customer Agreements
3.5(b) NCS Contracts and Guarantees
3.5(c) NCS Customer Agreements and contracts not in full force and
effect
3.5(d) Consents/Waivers necessary for NCS Contracts
3.5(e) NCS Contracts not made available to WCG
3.6(a) NCS Year End Balance Sheet and NCS Financial Statements
3.6(b) NCS Adjusted Year End Balance Sheet
3.6(d) NCS Gross Revenue Schedule
3.6(e) NCS First Quarter Statements
3.6(f) NCS Adjusted Effective Date Balance Sheet
3.7(a) NCS Tax Schedule
3.8(b) NCS Claims
3.9 NCS Property Leases
3.10(b) NCS Environment Compliance
3.10(c) NCS Environmental Liabilities
3.10(d) NCS Environmental Permits
3.10(e) NCS Environmental claims and proceedings
3.10(f) NCS Transfer Restrictions and Liens
3.11 NCS Insurance
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<PAGE> 8
3.12(a)
3.12(a)(i) NCS Active Employees
3.12(a)(ii) NCS Employees
3.12(b) NCS Collective Bargaining Agreements
3.12(c) NCS Employee Leave Schedule
3.12(e) NCS ERISA Schedule
3.12(g) NCS ERISA Obligations
3.12(h) Transfer out of NCS Business since September 1, 1996
3.15 Certain changes by NCS
3.17 Distributorship Agreement and Systems Integrator Agreement
by and between NTI and NCS
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF WCG
4.1(b) WilTel stock ownership schedule
4.1(c) Jurisdictions in which WilTel is qualified to do business and
is in good standing
4.3(a) WilTel Consents
4.3(b) WilTel Permits
4.4(a) WilTel Assets
4.4(b) WilTel Intellectual Property and Software
4.4(c) WilTel Licensed Intellectual Property and Software
4.4(d) Essential Property of WilTel not included in WilTel Assets
4.4(e) Additional WilTel Intellectual Property Rights
4.5(a) WilTel Customer Agreements
4.5(b) WilTel Contracts and Guarantees
4.5(c) WilTel Customer Agreements and not in full force and effect
4.5(d) Consents/Waivers necessary for WilTel Contracts
4.5(e) WilTel Contracts not made available to NTI
4.6(a) WilTel Year End Balance Sheet and WilTel Financial Statements
4.6(b) WilTel Adjusted Year End Balance Sheet
4.6(d) WilTel Gross Revenue Schedule
4.6(e) WilTel First Quarter Statement
4.6(f) WilTel Adjusted Effective Date Balance Sheet
4.7(a) WilTel Tax Schedule
4.8(b) WilTel Claims
4.9 WilTel Property Leases
4.10(b) WilTel Environmental Law Compliance
4.10(c) WilTel Environmental Liabilities
4.10(d) WilTel Environmental Permit
4.10(e) WilTel Environmental claims and proceedings
4.10(f) WilTel Transfer Restrictions and Liens
4.11 WilTel Insurance
4.12(a)
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<PAGE> 9
4.12(a)(i) WilTel Active Employees
4.12(a)(ii) WilTel Employees
4.12(b) WilTel Collective Bargaining Agreements
4.12(c) WilTel Employee Leave Schedule
4.12(e) WilTel ERISA Schedule
4.12(g) WilTel ERISA Obligations
4.12(h) Transfers out of WiTel Business since September 1, 1996
4.15 Certain changes by WilTel
ARTICLE V: MATTERS PENDING CLOSING
5.1(b) Permitted Transactions of NTI and NCS
5.2(b) Permitted Transactions of WCG and WilTel
ARTICLE IX:
9.1(a)
9.1(b) WilTel Employees
9.2 Fringe Benefits
9.6(b) Current NCS Employees
9.6(c) Newco officers and director-level employees that may be hired
by WCG and its affiliates
9.8(g) WilTel Union 401(k) Savings Plan
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<PAGE> 10
FORMATION AGREEMENT
THIS FORMATION AGREEMENT (this "Agreement") dated as of April 1, 1997,
by and between Northern Telecom Inc., a Delaware corporation ("NTI"), and
Williams Communications Group, Inc., a Delaware corporation ("WCG")
W I T N E S S E T H:
WHEREAS, (A) NTI desires to contribute its direct sales subsidiary,
NCS (including Bell Atlantic Meridian Systems, a partnership in which NCS is a
general partner and in which NCS will purchase the interest of the remaining
general partner prior to closing), but excluding the NTI Retained Assets and the
NTI Retained Liabilities (the "NCS Business");
(B) WCG desires to contribute WilTel, but excluding WilTel's
investment in Intersys and its Internet service provider line of business
(including WilTel's ownership of Digital Frontiers, LLC) and further excluding
the WCG Retained Assets and the WCG Retained Liabilities (the "WilTel
Business");
(C) NTI and WCG desire to combine the NCS Business and the
WilTel Business by forming a Delaware limited liability company ("Newco")
jointly owned by NTI and WCG, or a subsidiary of each, and to merge the WilTel
Business and the NCS Business into Newco; and
(D) Newco will purchase the stock of TTS from NTL immediately
after the merger of the WilTel Business and the NCS Business into Newco with
cash consideration provided by WCG, all as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and obligations contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, NTI
and WCG agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 DEFINED TERMS. The capitalized terms used in this Agreement shall
have the meanings ascribed to them as follows:
"Accounts Receivable Note" shall have the meaning given that
term in Section 2.7(a) hereof;
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<PAGE> 11
"Affiliates" means, when used with respect to a specified
Person, such specified Person's Subsidiaries or other Persons which are
or which could be included on such Person's consolidated income
statement for financial reporting purposes pursuant to GAAP, and/or any
third Person which does or which could include such specified Person in
such third Person's consolidated income statement for financial
reporting purposes pursuant to GAAP; provided that Newco shall not be
deemed to be an Affiliate of NTI, WCG or any of their respective
Subsidiaries or Affiliates;
"Authority" means any governmental, regulatory or
administrative body, agency or authority, any court or judicial
authority, any arbitrator or any public, private or industry regulatory
authority, whether foreign, federal, state or local;
"BA Meridian" means Bell Atlantic Meridian Systems, a
partnership in which NCS is a general partner;
"Benefit Program or Agreement" shall have the meaning given
that term in each of Section 3.12(e) and Section 4.12(e) hereof;
"Bill of Sale" shall have the meaning given that term in
Section 2.7 hereof;
"Business Day" means any day on which federal commercial banks
are open for business for the purpose of sending and receiving wire
transfers in Tulsa, Oklahoma and Houston, Texas.
"Cash Payment" shall have the meaning given that term in
Section 2.2 hereof;
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq.;
"Certificate of Formation" means the certificate of formation
of Newco to be filed with the Secretary of State of Delaware in
accordance with the DLLCA in the form attached hereto as Exhibit A;
"Certificate of Merger" means the certificate of merger of
WilTel or NCS, as the case may be, and Newco to be filed with the
Delaware Secretary of State in accordance with the DLLCA in the forms
attached hereto as Exhibit B and Exhibit C, respectively;
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<PAGE> 12
"Claim" means any demand, demand letter, claim or notice of
noncompliance or violation, in each case made in writing, or any
Proceeding;
"Claim Notice" shall have the meaning given that term in
Section 11.2(a) hereof;
"Closing" shall have the meaning given that term in Article
VII;
"Closing Date" means the date of Closing;
"Code" means the Internal Revenue Code of 1986, as amended;
"DLLCA" shall have the meaning given that term in Section 2.1
hereof;
"Effective Date" means April 1, 1997;
"Employee Benefit Plans" shall have the meaning given that
term in each of Section 3.12(e) and Section 4.12(e) hereof;
"Employee Services Agreement" shall have the meaning given
that term in Section 9.2 hereof;
"Employee Transfer Date" means the last day of the third month
following the Closing Date;
"Employment and Tax Representations and Covenants" shall have
the meaning given that term in Section 11.4 hereof;
"Environmental Law" shall have the meaning given that term in
each of Section 3.10(a)(i) and Section 4.10(a)(i) hereof;
"Environmental Representations" shall have the meaning given
that term in Section 11.4 hereof;
"ERISA" shall have the meaning given that term in Section
3.12(d) hereof;
"ERISA Affiliate" shall have the meaning given that term in
each of Section 3.12(e) and Section 4.12(e) hereof;
"GAAP" means generally accepted accounting principles in the
United States;
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<PAGE> 13
"General Deductible" shall have the meaning given that term in
Section 11.1(e);
"Hazardous Substance" shall have the meaning given that term
in each of Section 3.10(a)(ii) and Section 4.10(a)(ii) hereof;
"Indemnified Party" shall have the meaning given that term in
Section 11.1(d);
"Indemnifying Party" shall have the meaning given that term in
Section 11.1(d);
"Intellectual Property" means U.S. and foreign patents, patent
applications, patent rights, trademarks, trademark applications,
trademark rights, service marks, service mark applications, service
mark rights, registered or common law copyrights, service names and
trade names;
"Intellectual Property License Agreement" shall have the
meaning set forth in Section 10.9;
"Intersys" means Intersys, S.A. de C.V., a Mexican
Corporation;
"IRS" means the Internal Revenue Service of the United States
of America;
"LLC Agreement" means the Limited Liability Company Agreement
of Newco, in the form attached as Exhibit D hereto;
"Leases" shall have the meaning given that term in each of
Section 3.9 and Section 4.9 hereof;
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature of any of the
foregoing, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction;
"Litigation Claim" shall have the meaning given in each of
Section 2.5(a)(ii) and Section 2.5(b)(ii);
"Litigation Deductible" shall have the meaning given that term
in Section 11.1(f);
4
<PAGE> 14
"Loss" or "Losses" means any and all damages, losses,
liabilities, judgments, payments, obligations, penalties, assessments,
costs, disbursements or expenses (including reasonable fees,
disbursements and expenses of attorneys, accountants and other
professional advisors and of expert witnesses and costs of
investigation and preparation of any kind or nature whatsoever) but
excluding indirect and consequential damages;
"Material Adverse Change" means an event, circumstance, condition or
change that has a material adverse impact on the business prospects,
operations or financial condition of the affected Person, it being
understood that such event, circumstance, condition or change shall be
considered material only if (x) it has, or would have a reasonable
likelihood of resulting in, an impact on assets or liabilities of Ten
Million Dollars ($10,000,000) or more, before tax effect; or (y) it
has, or would have a reasonable likelihood of resulting in, a net
negative pre-tax impact on the profit and loss statement of such Person
of Four Million Dollars ($4,000,000) or more and is the result of a
single event, circumstance or condition specific to such Person
(excluding results from such person's general economic environment);
"Material Adverse Effect" means, an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing an
adverse impact in the business, assets, results of operations (before
tax effect) or financial condition of such Person and its subsidiaries,
taken as a whole, in an amount, individually equal to or greater than
$1,000,000;
"NCS" means Nortel Communications Systems Inc., a Delaware
corporation and a wholly owned subsidiary of NTI inclusive of BA
Meridian;
"NCS Active Employees" shall have the meaning given that term
in Section 3.12(a) hereof;
"NCS Adjusted Effective Date Balance Sheet" shall have the
meaning given that term in Section 3.6(f) hereof;
"NCS Adjusted Year End Balance Sheet" shall have the meaning
given that term in Section 3.6(b) hereof;
"NCS Adjustment" shall have the meaning given that term in
Section 2.8(a) hereof;
5
<PAGE> 15
"NCS Assets" means the rights, properties, assets, claims,
contracts and businesses of NCS of every kind, character or
description, whether tangible or intangible, wherever located, but
excluding the NTI Retained Assets;
"NCS Business" shall have the meaning given that term in the
recitals;
"NCS Contracts" means all agreements, contracts, licenses,
indentures, notes, including any instrument relating to the borrowing
of money, guarantee or commitment to which NCS is a party or by which
it or any of NCS Assets are bound, whether in writing or oral, but
excluding Employee Benefit Plans;
"NCS Employees" shall have the meaning given that term in
Sections 3.12(a) hereof;
"NCS Financial Statements" shall have the meaning given that
term in Section 3.6(a) hereof;
"NCS First Quarter Statements" shall have the meaning given
that term in Section 3.6(e) hereof;
"NCS Licensed Intellectual Property and Software" shall have
the meaning given that term in Section 3.4(c) hereof;
"NCS Owned Intellectual Property and Software" shall have the
meaning given that term in Section 3.4(b) hereof;
"NCS Real Property" shall have the meaning given that term in
Section 3.10(b) hereof;
"NCS Transferring Employees" shall have the meaning given that
term in Section 9.1;
"NCS Year End Balance Sheet" shall have the meaning given that
term in Section 3.6(a);
"Net Transferred Receivables" shall have the meaning given
that term in Section 2.7(a);
"Newco" shall have the meaning given that term in Section 2.1
hereof;
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<PAGE> 16
"Non-Competition Agreement" means the Non-Competition
Agreement between Williams and NTL, in the form attached hereto as
Exhibit E;
"NTI" shall have the meaning given that term in the preamble
and any successor or assign permitted by this Agreement;
"NTI Retained Assets" shall have the meaning given that term
in Section 2.4(a) hereof;
"NTI Retained Liabilities" shall have the meaning given that
term in Section 2.5(a) hereof;
"NTL" means Northern Telecom Limited, a Canadian corporation;
"Order" means any decree, order, judgment, writ, award,
injunction, stipulation or consent of or by an Authority;
"Organizational Agreement" means the LLC Agreement or any
agreement contemplated thereby, and "Organizational Agreements" means
all of the foregoing agreements;
"Parent" means NTL or Williams, as the case may be;
"Party" means NTI or WCG, as the case may be, and "Parties"
means NTI and WCG;
"Party Indemnitees" means a Party's Affiliates and the
officers, directors, shareholders, agents, employees, representatives,
successors and assigns of each of them;
"PBGC" shall have the meaning given that term in Section
3.12(g) hereof;
"Permit" means any license, permit, concession, warrant,
franchise or other governmental authorization or approval of any
Authority;
"Permitted Encumbrances" means (a) Liens for current taxes and
assessments not yet due, (b) inchoate mechanics and materialmen liens
for construction in progress, (c) inchoate workmen, repairmen,
warehousemen, customer, employee and carrier liens arising in the
ordinary course of business, (d) sellers' liens (on condition that the
payable involved is not overdue), or (e) other minor imperfections in
title that do not affect marketability or use;
7
<PAGE> 17
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company,
trust, unincorporated organization, Authority or government (or agency
or political subdivision thereof);
"Plan" shall have the meaning given that term in each of
Section 3.12(e) and Section 4.12(e) hereof;
"Pre-Closing Period" shall have the meaning given that term in
Section 10.10(a);
"Proceeding" means any action, suit, claim, investigation,
review or other judicial or administrative proceeding, at law or in
equity, before any Authority;
"Records" means all material agreements, documents, books,
records and files relating to (i) with respect to NCS, NCS Assets, NCS
Business or the NCS Contracts, and (ii) with respect to WilTel, the
WilTel Assets, the WilTel Business or the WilTel Contracts;
"Release" shall have the meaning given that term in each of
Section 3.10(a)(iii) and Section 4.10(a)(iii) hereof;
"Relevant Adverse Effect" means, an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, an
adverse impact in the business, assets, results of operations (before
tax effect) or financial condition of such Person and its subsidiaries,
taken as a whole, in an amount, individually equal to or greater than
$150,000;
"Software" means computer programs, including, object code and
source code (except in the case of software licensed to NCS or WilTel
with respect to which the source code is not included in the applicable
license), input and output formats, control programs, program listings,
general application and special application, system and communications
programs, routines, sub-routines, translations, diagnostic activities,
narrative descriptions, flow charts and operating instructions, as well
as any modifications relating thereto;
"Subsidiary" means, with respect to any Person, a corporation
more than 50% of the combined voting power of the outstanding stock of
which is owned, directly or indirectly, by such Person;
"Tax" or "Taxes" means any United States or foreign federal,
state, provincial, or local income tax, ad valorem tax, excise tax,
sales
8
<PAGE> 18
tax, use tax, value added tax, franchise tax, real or personal property
tax, transfer tax, gross receipts tax or other tax, assessment, duty,
fee, levy or other governmental charge, together with and including,
any and all interest, fines, penalties, assessments, and additions to
tax resulting from, relating to, or incurred in connection with any of
those or any contest or dispute thereof;
"Tax Return" means any report, statement, form, return or
other document or information required to be supplied to a taxing
authority in connection with Taxes;
"Title Representations" shall have the meaning given that term
in Section 11.4 hereof;
"Transferred Hard Assets" shall have the meaning given that
term in Section 2.4(a);
"Transferred Receivables" shall have the meaning given that
term in Section 2.7(a);
"Transferring Employees" means both NCS Transferring Employees
and WilTel Transferring Employees;
"TTS" means TTS Meridian Systems, Inc., a Canadian corporation
and wholly owned subsidiary of NTL;
"TTS Agreement" shall have the meaning given that term in
Section 2.6 hereof;
"WCG" shall have the meaning given that term in the preamble
and any successor or assign permitted by this Agreement;
"WCG Retained Assets" shall have the meaning given that term
in Section 2.4(b) hereof;
"WCG Retained Liabilities" shall have the meaning given that
term in Section 2.5(b) hereof;
"Williams" means The Williams Companies, Inc., a Delaware
corporation;
"WilTel" means Williams Telecommunications Systems, Inc., a
Delaware corporation and wholly owned subsidiary of WCG;
9
<PAGE> 19
"WilTel Active Employees" shall have the meaning given that
term in Section 4.12(a) hereof;
"WilTel Adjusted Effective Date Balance Sheet" shall have the
meaning given that term in Section 4.6(f) hereof;
"WilTel Adjusted Year End Balance Sheet" shall have the
meaning given that term in Section 4.6(b) hereof;
"WilTel Adjustment" shall have the meaning given that term in
Section 2.8(b) hereof;
"WilTel Assets" means the rights, properties, assets, Claims,
contracts and businesses of WilTel and the WilTel Subsidiaries of every
kind, character or description, whether tangible or intangible,
wherever located, but excluding the WCG Retained Assets;
"WilTel Business" shall have the meaning given that term in
the recitals;
"WilTel Contracts" means all agreements, contracts, licenses,
indentures, notes, including any instrument relating to the borrowing
of money, guarantee or commitment to which WilTel is a party or by
which it or any of WilTel Assets are bound, whether in writing or oral
but excluding Employee Benefit Plans;
"WilTel Employees" shall have the meaning given that term in
Sections 4.12(a) hereof;
"WilTel Financial Statements" shall have the meaning given
that term in Section 4.6(a) hereof;
"WilTel First Quarter Statements" shall have the meaning given
that term in Section 4.6(e) hereof;
"WilTel Licensed Intellectual Property and Software" shall
have the meaning given that term in Section 4.4(c) hereof;
"WilTel Owned Intellectual Property and Software" shall have
the meaning given that term in Section 4.4(b) hereof;
"WilTel Real Property" shall have the meaning given that term
in Section 4.10(b) hereof;
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<PAGE> 20
"WilTel Subsidiaries" means WCS Microwave Services, Inc., a
Delaware corporation, and WCS, Inc., a Delaware corporation;
"WilTel Transferring Employees" shall have the meaning given
that term in Section 9.1 hereof.
"WilTel Year End Balance Sheet" shall have the meaning given
that term in Section 4.6(a);
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement that
are not specifically defined herein shall have the meanings customarily given to
them in accordance with GAAP as of the date of this Agreement.
1.3 REFERENCES. As used in this Agreement, unless expressly stated
otherwise, references to (a) "including" mean "including, without limitation",
and the words "hereof", "herein", and "hereunder", and similar words, refer to
this Agreement as a whole and not to any particular Article, provision, section
or paragraph of this Agreement, (b) "or" mean "either or both", and (c) "Dollar"
or "$" means U.S. Dollars. Unless otherwise specified, all references in this
Agreement to Articles, Sections, paragraphs, Exhibits or Schedules are deemed
references to the corresponding Articles, Sections, paragraphs, Exhibits or
Schedules in this Agreement.
1.4 HEADINGS. The headings of the Articles and Sections of this
Agreement and of the Schedules and Exhibits are included for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction or interpretation hereof or thereof.
ARTICLE II
FORMATION OF NEWCO
2.1 INITIAL FORMATION. At or prior to the Closing, NTI and WCG shall
form a limited liability company under the Delaware Limited Liability Company
Act (the "DLLCA"), to be called WilTel Communications, LLC (hereinafter referred
to as "Newco"). Newco shall elect to be treated as a partnership under the Code.
Each of NTI and WCG shall cause Newco to take all action, and execute and
deliver, record and file all instruments, documents and agreements, as may be
reasonably necessary to form Newco under the DLLCA, including, filing the
Certificate of Formation with the Secretary of State of Delaware.
2.2 MERGER OF NCS INTO NEWCO AND CASH PAYMENT. At the Closing, subject
to the terms and conditions of this Agreement, NTI shall cause NCS to merge with
and into Newco, with effect at the Effective Date, in exchange for a 30%
membership
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<PAGE> 21
interest in Newco and the payment by WCG to NTI of cash (the "Cash Payment") in
an amount equal to the following:
.7($810,000,000 - A) - $365,000,000 - B - C - D + E
where: A = the principle amount of the Accounts Receivable Note:
B = the cash amount paid by Newco to NTL under the TTS
Agreement;
C = the cash amount paid by Newco to NTI pursuant to Section
2.7(b) hereof;
D = the amount of the WilTel Adjustment;
E = the amount of the NCS Adjustment.
An illustration of the calculation is attached as Schedule 2.2. If the above
calculation would result in a Cash Payment of a negative number, the principle
amount of the Accounts Receivable Note shall be reduced to an amount such that
the Cash Payment shall be equal to zero. The Parties shall, no later than the
third Business Day prior to the Closing Date, establish by mutual agreement
estimates of A and B for use at the Closing, with these amounts to be trued-up
for the actual balances thereof as of the Closing Date as provided in Section
8.1.
2.3 MERGER OF WILTEL INTO NEWCO. At the Closing, subject to the terms
and conditions of this Agreement, WCG shall cause WilTel to merge with and into
Newco, with effect at the Effective Date, in exchange for a 70% membership
interest in Newco, and shall pay to NTI the Cash Payment.
2.4 RETAINED ASSETS.
(a) NTI Retained Assets. Prior to the Closing, NTI shall cause
NCS to execute such documents as are necessary to assign, transfer or convey to
NTI or an Affiliate of NTI the following assets in order to exclude such assets
from the merger: (i) the Accounts Receivable Note and the proceeds from the
transfer of inventory and fixed assets pursuant to Section 2.7(b), (ii) any
rights in, to and under the trademarks, servicemarks and tradenames Nortel,
Nortel and Design(TM) or any other trademark, servicemark or tradenames, whether
registered or otherwise, of NTL or NTI or their Affiliates, (iii) any
intercompany notes payable to, or to the order of, NCS listed on Schedule
2.4(a)(iii) hereto, (iv) any prepaid Taxes or deferred Tax benefits relating to
the NCS Business for any periods ending on or prior to the Closing Date, and (v)
rights in and to the items listed on Schedule 2.4(a)(v) (collectively, the "NTI
Retained Assets").
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(b) WCG Retained Assets. Prior to the Closing, WCG shall cause
WilTel to execute such documents as are necessary to assign, transfer or convey
to WCG or an Affiliate of WCG the following assets in order to exclude such
assets from the merger: (i) any tangible or intangible asset to the extent, but
only to the extent, it relates to or is used in connection with the development,
marketing, licensing, sale or use of internet services, (ii) any capital stock
or note of Intersys, (iii) any intercompany note or account receivable of WilTel
or any WilTel Subsidiary from any of their respective Affiliates that may be
receivable on the Effective Date in the accounts set forth on Schedule
2.4(b)(iii) hereto, (but excluding any amounts receivable for goods and services
rendered in the ordinary course of the WilTel Business), (iv) any prepaid Taxes
or deferred Tax benefits relating to the WilTel Business for any periods ending
on or prior to the Closing Date, and (v) rights in and to the items listed on
Schedule 2.4(b)(v) (collectively, the "WCG Retained Assets").
2.5 RETAINED LIABILITIES.
(a) NTI Retained Liabilities. Newco shall not assume, and on
or prior to the Closing Date NTI (or an Affiliate of NTI reasonably satisfactory
to WCG) shall assume and agree to pay, perform and discharge, the following
liabilities of NCS (the "NTI Retained Liabilities"):
(i) any liability, Claim or obligation (whether actual,
contingent, known or unknown) for any Taxes relating to the
NCS Business for any periods ending on or prior to the Closing
Date;
(ii) any liability or obligation (whether actual,
contingent, known or unknown) of NCS arising out of any Claim
or oral demand which a third party has expressly indicated its
intention to pursue in connection with facts, events or
circumstances occurring on or before the Effective Date or
relating to periods ending on or before such date (a
"Litigation Claim") to the extent the Losses (after deducting
any specific liability amounts reflected on the NCS Adjusted
Effective Date Balance Sheet) in the aggregate resulting
therefrom exceed the amount of the Litigation Deductible,
excluding, for the avoidance of all doubt, the performance
obligations from and after the Effective Date under NCS
Contracts disclosed under Article III of this Agreement or not
required to be disclosed under the express terms of Article
III of this Agreement;
(iii) any liability, Claim or obligation (whether actual,
contingent, known or unknown), arising out of or relating to
the NTI Retained Assets; and
(iv) any liability, Claim, or obligation (whether actual,
contingent, known or unknown) arising out of any occurrence or
incident happening
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on or before the Closing Date and arising from any: (x) bodily
injury, including death therefrom, personal injury, or
property damage (other than Claims covered by warranty or
maintenance provisions of NCS Contracts with customers),
including loss of use thereof, to third parties; and (y) any
injuries, including death therefrom to any current or prior
employee of NCS.
(b) WCG Retained Liabilities. Newco shall not assume, and on
or prior to the Closing Date WCG (or an Affiliate of WCG reasonably
satisfactory to NTI) shall assume and agree to pay, perform and
discharge, the following liabilities of WilTel (the "WCG Retained
Liabilities"):
(i) any liability, Claim or obligation (whether
actual, contingent, known or unknown) for any Taxes relating
to the WilTel Business for any periods ending on or prior to
the Closing Date;
(ii) any liability or obligation (whether actual,
contingent, known or unknown) of WilTel arising out of any
Claim or oral demand which a third party has expressly
indicated its intention to pursue in connection with facts,
events or circumstances occurring on or before the Effective
Date or relating to periods ending on or before such date (a
"Litigation Claim") to the extent the Losses (after deducting
any specific liability amounts reflected on the WilTel
Adjusted Effective Date Balance Sheet) in the aggregate
resulting therefrom exceed the amount of the Litigation
Deductible, excluding, for the avoidance of all doubt, the
performance obligations from and after the Effective Date
under WilTel Contracts disclosed under Article IV of this
Agreement or not required to be disclosed under the express
terms of Article IV of this Agreement;
(iii) any liability, Claim or obligation, (whether
actual, contingent, known or unknown) arising out of or
relating to the WCG Retained Assets; and
(iv) any liability, Claim or obligation (whether
actual, contingent, known or unknown) arising out of any
occurrence or incident happening on or before the Closing Date
and arising from any: (x) bodily injury, including death
therefrom, personal injury, or property damage (other than
Claims covered by warranty or maintenance provisions of WilTel
Contracts with customers), including loss of use thereof, to
third parties; any (y) any injuries, including death therefrom
to any current or prior employee of WilTel.
2.6 PURCHASE OF TTS SHARES. As of the Closing Date immediately after
the transactions contemplated by Sections 2.2 and 2.3 are consummated, the
Parties shall
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cause Newco to purchase for cash consideration to be contributed by WCG into
Newco the shares of TTS from NTL pursuant to an agreement substantially in the
form of Exhibit F hereto (the "TTS Agreement").
2.7 TRANSFER OF CERTAIN NCS ASSETS.
(a) Transfer of NCS Receivables. In consideration for the
delivery by Newco of a note, in substantially the form attached as Exhibit G
hereto (the "Accounts Receivable Note"), on the Closing Date immediately prior
to the consummation of the transactions contemplated by Sections 2.2 and 2.3,
NCS shall transfer to Newco, pursuant to an assignment in form and substance
acceptable to the Parties, all accounts receivables, work-in-progress and
deposits related thereto of NCS (the "Transferred Receivables").
A - (60% x A x B x 90 - 360)
where: A = the balance of the Transferred Receivables minus the
reserves for bad debt as of the Closing Date determined in
a manner consistent with those categories of items set
forth on the NCS Adjusted Year End Balance Sheet (the "Net
Transferred Receivables"); and
B = the rate per annum at which three-month deposits in U.S.
dollars are offered by the principal office of Citibank in
London England to prime banks in the London interbank
market at 11:00 A.M. (London time) as reported by
Citibank's telephone recorded rating announcement on the
second Business Day prior to the Closing Date, obtained by
calling (212) 291-6644, plus thirty-five basis points.
The interest rate on the Accounts Receivable Note will be at the rate provided
for in B above. Any sales, use or other transfer taxes incurred on account of
the transfer pursuant to this Section 2.7(a) of the Transferred Receivables are
to be paid by NTI.
(b) Transfer of NCS Inventory and Fixed Assets. On the Closing
Date immediately prior to the consummation of the transactions contemplated by
Sections 2.2 and 2.3; pursuant to a bill of sale substantially in the form of
Exhibit H hereto (the "Bill of Sale"), NCS shall sell and the Parties shall
cause Newco to purchase for cash consideration to be contributed by WCG into
Newco all inventory and fixed assets of NCS on the Closing Date at the net book
value for such categories of items as of the Closing Date determined in a
manner consistent with such categories of items set forth on the NCS Adjusted
Year End Balance Sheet. Any sales, use or other transfer
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taxes incurred on account of the transfer pursuant to this Section 2.7(b) of the
NCS inventory and fixed assets are to be paid by NTI.
2.8 NET ASSET ADJUSTMENTS.
(a) Calculation of NCS Adjustment. As soon as possible
following execution of this Agreement, and in no event less than five Business
Days prior to the Closing Date, NTI shall deliver to WCG a worksheet calculating
the sum of (x) the sum of the Assets minus the Liabilities as contained in the
NCS Adjusted Effective Date Balance Sheet minus (y) $139,596,000.00, (such
amount shall be referred to as the "NCS Adjustment").
(b) Calculation of WilTel Adjustment. As soon as possible
following execution of this Agreement, and in no event less than five Business
Days prior to the Closing Date, WCG shall deliver to NTI a worksheet calculating
the (x) the sum of the Assets minus the Liabilities as contained in the WilTel
Adjusted Effective Date Balance Sheet minus (y) $204,148,000.00, (such amount
shall be referred to as the "WilTel Adjustment").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NTI
NTI hereby makes the following representations and warranties to WCG,
each and all of which are true and correct on the signing date hereof and on the
Closing Date, except as set forth in the disclosure schedule attached pertaining
to such representation and warranty:
3.1 CORPORATE MATTERS.
(a) Each of NTI and NCS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
having all requisite corporate power and authority to own, operate and lease its
properties and assets and to carry on its business in the places and in the
manner currently conducted. WCG has been provided with a true and correct copy
of the Certificate of Incorporation and Bylaws, or other charter documents, of
NCS as currently in effect. NTI has all requisite corporate power and authority
to enter into this Agreement and the Organizational Agreements and to perform
its obligations hereunder and thereunder.
(b) All of the outstanding shares of capital stock of NCS have
been legally and validly authorized and issued, and are fully paid and
nonassessable. NTI is the sole stockholder of NCS holding the number and type of
shares set forth on
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Schedule 3.1(b). None of the capital stock of NCS is subject to any option,
warrant, right of conversion, exchange or purchase, or any similar right.
(c) Except where the failure would not affect the validity of
this Agreement or have a Relevant Adverse Effect on the NCS Business or NCS
Assets, NCS is qualified to transact business as a foreign corporation and is in
good standing in the jurisdictions, if any, specified in Schedule 3.1(c)
attached hereto, and there is no other jurisdiction in which the nature or
extent of the NCS Business or the character of the NCS Assets makes such
qualification necessary.
3.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement has been duly authorized, executed and
delivered by NTI and is a legal, valid and binding obligation of NTI enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies.
(b) The Organizational Agreements have been duly authorized by
NTI or NCS, as the case may be, and upon execution and delivery thereof at or
prior to the Closing will be legal, valid and binding obligations of NTI or NCS
enforceable against it in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of specific
remedies.
(c) The execution, delivery and performance of this Agreement
and the Organizational Agreements by NTI or NCS, as the case may be, and the
other agreements and documents to be delivered by NTI or NCS to Newco or WCG
hereunder, the consummation of the transactions contemplated hereby or thereby,
and the compliance with the provisions hereof or thereof, by NTI or NCS will
not, with or without the passage of time or the giving of notice or both:
(i) except in the absence of required consents as set
forth on Schedules 3.3(a), 3.4(b), 3.4(c), or 3.5(d), conflict with, constitute
a breach, violation or termination of any provision of, or give rise to any
right of termination, cancellation or acceleration, or loss of any right or
benefit or both, under any of the NCS Contracts listed in Schedule 3.5(a) or
Schedule 3.5(b), NCS Permits, the NCS Owned Intellectual Property and Software
or the NCS Licensed Intellectual Property and Software;
(ii) conflict with or violate the Certificate of
Incorporation or Bylaws of NTI or NCS;
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(iii) result in the creation or imposition of any
Lien or Claim on any of the NCS Assets; or
(iv) violate any law, statute, ordinance, regulation,
judgment, writ, injunction, rule, decree, order or any other restriction of any
kind or character applicable to NTI, NCS or the NCS Assets.
3.3 GOVERNMENTAL AND OTHER CONSENTS, APPROVALS AND AUTHORIZATIONS.
(a) Except as set forth in Schedule 3.3(a) or Schedule 3.5(d)
attached hereto or as would not significantly adversely impact Newco, the
transactions contemplated hereby, the Organizational Agreements or any other
agreement contemplated hereby or thereby, no order, license to conduct or
operate its business, consent, waiver, authorization or approval of, or
exemption by, or the giving of notice to, or the registration with, or the
taking of any other action in respect of, any Person not a Party, including any
Authority, and no filing, recording, publication or registration in any public
office or any other place is necessary on behalf of NCS (i) to authorize the
execution, delivery and performance of this Agreement, the Organizational
Agreements or any other agreement contemplated hereby or thereby to be executed
and delivered by it and the consummation of the transactions contemplated hereby
or thereby (including assignment of the NCS Assets), or (ii) to effect the
legality, validity, binding effect or enforceability thereof.
(b) Except as set forth in Schedule 3.3(b), all Permits
required or necessary for NCS to own the NCS Assets or carry on the NCS Business
in the places and in the manner currently conducted have been duly obtained,
except where a failure to obtain any such Permit (considered individually) would
not have a Relevant Adverse Effect on the NCS Assets or the NCS Business, and
such Permits are in full force and effect. Except as set forth in Schedule
3.3(b), no violations are in existence or have been recorded with respect to
those Permits and no proceeding is pending or, to the best knowledge of NTI,
threatened with respect to the revocation or limitation of any of such Permits,
except where such violations, revocations or limitations considered per Permit
would not result in a Relevant Adverse Effect on the NCS Assets or the NCS
Business. Except as set forth in Schedule 3.3(b) or as otherwise disclosed in
the Schedules to this Agreement, NCS has complied in all respects with all laws,
rules, regulations and orders applicable to the NCS Business, except where a
failure to comply with such laws, rules, regulations and orders would not result
in a Relevant Adverse Effect on the NCS Assets or the NCS Business.
3.4 TITLE TO AND CONDITION OF NCS ASSETS.
(a) A listing of substantially all of the items of equipment,
furniture or fixture, with an initial purchase price of One Thousand Dollars
($1,000) or more with a remaining useful life of more than one year owned by NCS
as of March 31, 1997,
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constituting a part of the NCS Assets, is set forth in Schedule 3.4(a) attached
hereto. Substantially all of the assets are located at the locations set forth
therein and are in NCS's possession and control. NCS has title to all such
assets, free and clear of all Liens and Claims, except for Permitted
Encumbrances.
(b) Schedule 3.4(b) sets forth all Intellectual Property and
Software owned by NCS (the "NCS Owned Intellectual Property and Software").
Except as set forth on Schedule 3.4(b), NCS owns, free and clear from any claims
or rights of others, all NCS Owned Intellectual Property and Software. Except as
set forth on Schedule 3.4(b), none of the NCS Owned Intellectual Property and
Software has been declared invalid, or been limited in any respect by order of
any court or by agreement, or, to the best knowledge of NTI, is the subject of
any infringement, interference or similar proceeding or challenge. Except as set
forth on Schedule 3.4(b), neither NCS nor NTI has received any notice of
infringement, misappropriation or conflict from any other Person with respect to
the NCS Owned Intellectual Property and Software, and, to the best knowledge of
NTI, the conduct of the NCS Business has not infringed, misappropriated or
otherwise conflicted with any Intellectual Property or Software of any other
Person. Each of the patents, trademarks and registered copyrights included in
the NCS Owned Intellectual Property and Software has been validly issued. All
NCS Owned Intellectual Property and Software that is licensed to a third party
by NCS or in which NCS has otherwise transferred an interest to a third party
has been licensed or transferred on a non-exclusive basis pursuant to valid and
existing license agreements. Except as set forth on Schedule 3.4(b), none of the
NCS Owned Intellectual Property and Software requires the consent or waiver of
any Person or Authority prior to the sale, assignment, transfer, conveyance or
delivery thereof to Newco pursuant to this Agreement and such sale, assignment,
transfer, conveyance and delivery to Newco and any of the other transactions
contemplated by this Agreement will not result in any loss of any NCS Owned
Intellectual Property and Software or any right to use, exploit or receive
benefits with respect to such NCS Owned Intellectual Property and Software.
(c) Schedule 3.4(c) sets forth all material Intellectual
Property and Software licensed to NCS (the "NCS Licensed Intellectual Property
and Software"). Except as set forth on Schedule 3.4(c), NCS has the right to
use, free and clear from any claims or rights of others, except as reflected in
the applicable license, all NCS Licensed Intellectual Property and Software.
Except as set forth on Schedule 3.4(c), none of the NCS Licensed Intellectual
Property and Software has been declared invalid, or been limited in any respect
by order of any court or by agreement, or, to the best knowledge of NTI, is the
subject of any infringement, interference or similar proceeding or challenge.
Except as set forth on Schedule 3.4(c), neither NCS nor NTI has received any
notice of infringement, misappropriation or conflict from any other Person with
respect to the NCS Licensed Intellectual Property and Software, and, to the best
knowledge of NTI, the conduct of the NCS Business has not infringed,
misappropriated or otherwise conflicted with any Intellectual Property or
Software of
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any other Person. Except as set forth on Schedule 3.4(c), none of the NCS
Licensed Intellectual Property and Software requires the consent or waiver of
any Person or Authority prior to the sale, assignment, transfer, conveyance or
delivery thereof to Newco pursuant to this Agreement and such sale, assignment,
transfer, conveyance and delivery to Newco will not result in any loss of any
NCS Licensed Intellectual Property and Software or any right to use, exploit or
receive benefits with respect to such NCS Licensed Intellectual Property and
Software, except where the failure to obtain such consent or waiver would not
have a Relevant Adverse Effect on the NCS Assets or the NCS Business.
(d) Except as set forth on Schedule 3.4(d), the NCS Assets
constitute substantially all of the assets (i) necessary for the conduct of the
NCS Business in the ordinary course consistent with past practices or (ii)
currently used by NCS in connection with the NCS Business. Except as set forth
on Schedule 3.4(d), the conduct of the NCS Business in the ordinary course is
not dependent upon the right to use the property of Persons other than NCS,
except such property as is leased or licensed to NCS pursuant to any of the NCS
Contracts or the absence of which would not have a Relevant Adverse Effect on
Newco. Except as set forth on Schedule 3.4(d), neither NTI nor any Affiliate of
NTI (other than NCS) owns or has any interest in any NCS Asset or any asset
currently used by NCS in the NCS Business, except the NTI Retained Assets, or
such assets as are leased or licensed to NCS pursuant to any of the NCS
Contracts or the loss of which would not have a Relevant Adverse Effect on NCS
or Newco.
(e) Except as set forth on Schedule 3.4 (e), the NCS Owned
Intellectual Property and Software, the NCS Licensed Intellectual Property and
Software, and the Intellectual Property and Software licensed pursuant to the
Intellectual Property License Agreement constitute all of the material
intellectual property rights used by NCS in the conduct of the NCS Business as
currently conducted.
3.5 CONTRACTS, COMMITMENTS AND CUSTOMERS.
(a) Set forth in Schedule 3.5(a) attached hereto is a list of
each of the following agreements between NCS and its customers: (i) service or
maintenance contracts with an annual revenue commitment of $500,000 or greater,
and (ii) purchase, lease or rental agreements for the installation or upgrade of
a PBX with a purchase price of $1,000,000 or greater for which the customer has
not been sent the final invoice.
(b) Set forth in Schedule 3.5(b) attached hereto is a list of
each NCS Contract, other than agreements with customers, which would create a
monetary obligation of NCS, or a right to receive funds by NCS, of greater than
$300,000 in the
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aggregate. Also set forth on Schedule 3.5(b) is a list of all guarantees of the
obligations of NCS by NTI or any NTI Affiliate.
(c) To the best knowledge of either NTI or NCS, neither NTI
nor NCS is in breach of any provision of, or in default (or knows of any event
or circumstance that with notice or lapse of time or both would constitute an
event of default) under the terms of, any NCS Contract except to the extent the
loss of such NCS Contract would not have a Relevant Adverse Effect on Newco.
Except as set forth in Schedule 3.5(c), all of the NCS Contracts listed in
Schedule 3.5(a) and Schedule 3.5(b) are in full force and effect, and neither
NTI nor NCS is aware of any pending or overtly threatened Claims or disputes
with respect thereto. None of the customers or counter parties under the NCS
Contracts listed in Schedule 3.5(a) and Schedule 3.5(b) has notified NTI or NCS
in writing that it intends to discontinue its relationship with the NCS
Business.
(d) Except as set forth on Schedule 3.5(d), and except to the
extent that failure to obtain consent or waiver can be remedied by means of the
mechanism set forth in Section 10.8 hereto without a Relevant Adverse Effect
upon Newco, the NCS Contracts listed in Schedule 3.5(a) and Schedule 3.5(b) do
not require the consent or waiver of any Person or Authority prior to the sale,
assignment, transfer, conveyance or delivery thereof pursuant to this Agreement.
(e) Except as set forth on Schedule 3.5(e), true and complete
copies of the NCS Contracts listed in Section 3.5(a) and Section 3.5(b) have
been made available to WCG prior to the date of this Agreement.
3.6 FINANCIAL STATEMENTS.
(a) Attached as Schedule 3.6(a) hereto is a copy of the
unaudited combined balance sheet of NCS, inclusive of TTS, as of December 31,
1996 (the "NCS Year End Balance Sheet") and the unaudited combined income
statement of NCS, inclusive of TTS, for the year ended on December 31, 1996 (the
"NCS Financial Statements"), which (except as noted therein):
(i) have been prepared in accordance with GAAP
applied on a basis consistent with the unconsolidated balance sheets of the NCS
Business and TTS as of December 31, 1995 and the unconsolidated income
statements of the NCS Business and TTS for the year ended December 31, 1995
(without change in the application of principles or the selection of methods of
calculation permitted by GAAP unless based solely upon changes in facts and
circumstances, required by changes in GAAP, or by the combination of such
financial statements) and fairly present the combined financial condition of NCS
and TTS as of the date thereof, the results of operations and the cash flows for
the period set forth therein, subject to normal year-end adjustments, footnotes
and other presentation items; and
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(ii) except with respect to Canadian, United States
federal and state income taxes, reflect all liabilities or obligations, whether
accrued, absolute, contingent or otherwise, of NCS as required under GAAP
consistently applied other than those liabilities incurred since the date
thereof, in the ordinary course of business consistent with past practice.
(b) Attached as Schedule 3.6(b) hereto is a copy of an audited
balance sheet of NCS as of December 31, 1996, which represents the audited
combined balance sheet of NCS, inclusive of TTS, as of December 31, 1996,
adjusted to exclude the net book values which those categories of items included
in the NTI Retained Assets and the NTI Retained Liabilities had as of December
31, 1996 (the "NCS Adjusted Year End Balance Sheet").
(c) The schedules provided to WCG detailing capitalized costs
with respect to Software owned or leased by NCS are true, correct and complete
in all material respects.
(d) Attached as Schedule 3.6(d) hereto are schedules
reflecting: (i) the gross revenues of the NCS Business for each of the years
ended December 31, 1995 and 1996, showing the portions thereof arising out of
each of (1) new systems and enhancements, (2) maintenance, and (3)
moves/adds/changes; and the portions of each such category of revenue arising
out of the geographic regions shown on such schedules; (ii) the cost of goods
sold for each of such years and each of such categories of revenue, and (iii)
actual product purchases from NTI for 1995 and 1996, and the forecast for
product purchases from NTI for 1997 as prepared by NTI. Except as otherwise
disclosed on Schedule 3.6(d), such schedules have been prepared on a basis
consistent with the NCS Financial Statements for the periods covered thereby and
fairly present the information contained therein.
(e) As soon as possible following execution of this Agreement,
and in no event less than five Business Days prior to the Closing Date, NTI
shall deliver to WCG the unaudited combined balance sheet of NCS, inclusive of
TTS, as of March 31, 1997, and the unaudited combined income statement of NCS,
inclusive of TTS, for the quarter then ended, prepared on a basis consistent in
all respects with the NCS Financial Statements (the "NCS First Quarter
Statements"). The NCS First Quarter Statements shall be attached hereto as
Schedule 3.6(e).
(f) As soon as possible following execution of this Agreement,
and in no event less than five Business Days prior to the Closing Date, NTI
shall deliver to WCG the unaudited combined balance sheet of NCS, inclusive of
TTS, as of March 31, 1997, adjusted to exclude the net book values which those
categories of items included in the NTI Retained Assets (taking into account bad
debt reserves) and the NTI Retained Liabilities had as of March 31, 1997,
prepared on a basis consistent in
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all respects with the NCS Adjusted Year End Balance Sheet (the "NCS Adjusted
Effective Date Balance Sheet"). The NCS Adjusted Effective Date Balance Sheet
shall be attached hereto as Schedule 3.6(f).
3.7 TAXES. Except as set forth in Schedule 3.7(a), NTI, NCS, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which NTI
or NCS is or has been a member, have timely filed all Tax Returns required to be
filed by them with respect to the NCS Business and have timely paid, have caused
to be timely paid, or have had timely paid on their behalf all Taxes which are
due (whether or not shown on a Tax Return) with respect to the NCS Business.
Each of the Tax Returns filed by NTI or NCS is accurate and complete in all
material respects with respect to the NCS Business. Except as described on
Schedule 3.7(a), no material deficiencies exceeding $1,000,000 for a single Tax
for any Taxes have been proposed, asserted or assessed against NTI (with respect
to the income or operations of NCS), or NCS, and no requests for waivers of the
time to assess any such Taxes have been granted or are pending. Except as set
forth in Schedule 3.7(a), there are no current examinations of any Tax Return of
NTI (with respect to the income or operations of NCS) or NCS being conducted and
there are no settlements or any prior examinations which could reasonably be
expected to have a Material Adverse Effect on NTI (with respect to the income or
operation of NCS), or NCS.
3.8 NO VIOLATIONS OR LITIGATION.
(a) To the best knowledge of NTI, NCS has not violated, and
the consummation of the transactions contemplated hereby will not cause any
violation of, any Permit, any order of any Authority or any law, ordinance,
regulation, order, requirement, statute, rule, permit, concession, grant,
franchise, license or other governmental authorization relating or applicable to
the NCS Business or any of NCS Assets or that could have a Relevant Adverse
Effect on the NCS Assets or the NCS Business.
(b) Except as set forth in Schedule 3.8(b) hereto and except
for Claims and examinations relating to Taxes, to the best knowledge of NTI,
there is no Claim, or examination (including, without limitation, any change in
any zoning or building ordinance) pending or, to the best knowledge of NTI,
threatened against or affecting NCS, the NCS Business or any of the NCS Assets,
at law or in equity, before or by any Authority or any third party that could
have a Relevant Adverse Effect on NCS, the NCS Assets or the NCS Business.
(c) This Section 3.8 does not address environmental matters
within the scope of Section 3.10.
3.9 PROPERTY LEASES. Schedule 3.9 is a complete list of all real
property leases and those personal property leases with annual rental payments
equal to or
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greater than Three Hundred Thousand Dollars ($300,000) per annum to which NCS is
a party (the "Leases"). Each of the Leases is a valid and existing lease,
enforceable in accordance with its terms, and, to the best knowledge of NTI,
there are no existing defaults, events of default or events, occurrence or acts
that, with the giving of notice or lapse of time or both, would constitute
defaults, in each case by NCS and, to the best knowledge of NTI, by any other
party thereto, under any of the Leases.
3.10 ENVIRONMENTAL.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) The term "Environmental Law(s)" means each and
every law, Order, Permit, or similar requirement of each and every Authority,
pertaining to (A) the protection of human health, safety, the environment,
natural resources and wildlife, (B) the protection or use of surface water,
groundwater, rivers, and other bodies of water, (C) the management, manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation or
handling of, or exposure to, any Hazardous Substance or (D) pollution, including
without limitation, as amended, CERCLA, the Solid Waste Disposal Act, 42 U.S.C.
Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq. and the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq.
(ii) The term "Hazardous Substance" means any
substance which is (A) defined as a hazardous substance, hazardous material,
hazardous waste, pollutant or contaminant under any Environmental Laws, (B) a
petroleum hydrocarbon, including crude oil or any fraction thereof, (C)
hazardous, toxic, corrosive, flammable, explosive, infectious, radioactive or
carcinogenic or (D) regulated pursuant to any Environmental Laws.
(iii) The term "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including without
limitation the abandonment or discarding of barrels, containers, and other
receptacles containing any Hazardous Substance).
(b) Compliance with Environmental Laws. Except as disclosed on
Schedule 3.10(b), with respect to both (i) the operations conducted at and
conditions present at the real property currently used or occupied in connection
with the NCS Business (the "NCS Real Property"), and (ii) the operations
conducted at and the conditions present at any real property formerly used or
occupied in connection with the NCS Business (the "Former NCS Real Property"),
during the period of such use or occupancy by NTI or its Affiliates, NTI or its
Affiliates were and are in compliance with applicable Environmental Laws, except
for such failures to comply that, individually
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and in the aggregate, have not had and could not reasonably be expected to have,
a Material Adverse Effect on NCS.
(c) Environmental Liabilities. Except as disclosed on Schedule
3.10(c), there are no past or present conditions, circumstances, events,
activities, practices, or agreements arising out of, or related either to the
NCS Real Property or to the Former NCS Real Property, including but not limited
to any on-site or off-site Release of any Hazardous Substances, which have given
rise to or could reasonably be expected to give rise to: (i) liabilities or
obligations of NTI or its Affiliates for any clean-up, corrective action or
remedial activity under any Environmental Law; (ii) any Claim against NTI or its
Affiliates under any Environmental Law for personal injury, property damage, or
damage to natural resources, or (iii) the imposition of fines or penalties on
NTI or its Affiliates under any Environmental Law, where such liabilities,
obligations, Claims, fines or penalties, either individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect on NCS.
(d) Permits. Schedule 3.10(d) sets forth an accurate and
complete list of all material Permits issued to NTI and its Affiliates under any
Environmental Law for the operation of the NCS Business. Except as disclosed on
Schedule 3.10(d), NTI or its Affiliates have made all filings necessary to
request the timely renewal or issuance of all Permits necessary under
Environmental Laws for the continued use and operation of the NCS Real Property
to conduct the NCS Business as it is presently being conducted.
(e) Proceedings. Except as disclosed in Schedule 3.10(e),
there is no Claim or Proceeding pending or threatened against NTI or its
Affiliates, under or in connection with any Environmental Law, which could
reasonably be expected to result in a fine, penalty or other obligation, cost or
expense, except for such obligations, costs, or expenses that, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect on NCS.
(f) Transfer Restrictions and Liens. Except as disclosed in
Schedule 3.10(f), neither the NCS Real Property nor the NCS Business (i) is
subject to, or would as a result of this transaction be subject to, the New
Jersey Industrial Site Recovery Act, or any other state or local Environmental
Law which would impose restrictions, such as notice, disclosure or obtaining
approval prior to this transaction, or (ii) is subject to, or could reasonably
be expected to become subject to, any Liens under any Environmental Laws.
(g) Documents. NTI and its Affiliates will have made available
by Closing to WCG any and all pleadings, reports, assessments, analytical
results, permits, and other material documents, correspondence and records
concerning Environmental Laws, Hazardous Substances, or other environmental
subjects in each case relating to the operation of the NCS Business.
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3.11 INSURANCE. Schedule 3.11 sets forth a complete and accurate list
of all policies (including their respective expiration dates) of property,
general liability, automobile liability, worker's compensation, and other forms
of insurance presently in effect with respect to NCS, the NCS Business or any of
the NCS Assets, its operations, and its employees excluding those policies
relating to Employee Benefit Plans. Such insurance will be terminated as of the
Closing Date.
3.12 EMPLOYMENT AND LABOR MATTERS.
(a) Attached hereto as Schedule 3.12(a) (i) is a true and
complete list of the employees of the NCS Business (the "NCS Active Employees")
as of December 31, 1996, (including regular full and part-time employees)
identified by name and employee number, together with job titles, compensation
and service information concerning such employees. Except as set forth on
Schedule 3.12(a)(ii), NCS is not a party to any employment contract with and
will not have any liability (other than accrued salary, vacation pay,
commissions or as described in Schedule 3.8(b)) to any employees, any former
employees, or any independent contractors of the NCS Business (collectively ?NCS
Employees?).
(b) Except as set forth on Schedule 3.12(b), NCS is not a
party to any collective bargaining agreement or union contract with respect to
the employees and no collective bargaining agreements are being negotiated by
NCS with respect to any of the NCS Employees; and no notice of a proposed union
certification or recognition election has been received by NCS.
(c) Except as otherwise set forth on Schedule 3.12(c), no NCS
Employees are currently on a leave of absence due to sickness or disability and
no claim is pending and, to the best knowledge of NTI, no Claim is expected to
be made by any NCS Employees for workers? compensation benefits.
(d) NCS has complied in all material respects with all laws
relating to the employment of labor, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and those laws
relating to wages, hours, collective bargaining, unemployment insurance,
worker's compensation, equal employment opportunity, payment and withholding of
taxes, the Immigration Reform and Control Act, the Workers Adjustment and
Retraining Act, the Occupational Safety and Health Act, the Drug Free Workplace
Act, and the National Labor Relations Act, as amended.
(e) Attached hereto as Schedule 3.12(e) is a true and complete
list of each of the following which is, or has been, sponsored, maintained or
contributed to by NCS or any trade or business, whether or not incorporated (an
"ERISA Affiliate") that together with NCS would be considered affiliated with
NCS under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of
ERISA for the benefit of any
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person who, as of the Closing, is a NCS Employee: (i) each "employee benefit
plan," as such term is defined in Section 3(3) of ERISA, ("Plan"); and (ii) each
personnel policy, stock option plan, bonus plan or arrangement, incentive award
plan or arrangement, vacation policy, severance pay plan, policy, program or
agreement, deferred compensation agreement or arrangement, retiree benefit plan
or arrangement, fringe benefit program or practice (whether or not taxable),
employee loan, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or
understanding which is not described in Section 3.12(e)(i) ("Benefit Program or
Agreement") (such Plans and Benefit Programs or Agreement are sometimes
collectively referred to in this Agreement as the "Employee Benefit Plans").
(f) True, correct and complete copies of each of the current
Plans, and related trusts, if applicable, including all amendments thereto, have
been furnished or made available to WCG by NCS. There have also been furnished
to WCG by NCS, with respect to each Plan required to file such report and
description, the report on Form 5500 for the past two years and the most recent
summary plan description. True, correct and complete copies or descriptions of
all Benefit Programs or Agreements have also been furnished or made available to
WCG by NCS.
(g) Except as otherwise set forth on Schedule 3.12(g): (i)
none of NCS or any ERISA Affiliate contributes to or has an obligation to
contribute to, nor has at any time contributed to or had an obligation to
contribute to, a multi-employer plan within the meaning of Section 3(37) of
ERISA or any other plan subject to Title IV or ERISA; (ii) each of NCS and its
ERISA Affiliates has performed all obligations, whether arising by operation of
law or by contract, including, but not limited to, ERISA and the Code, required
to be performed by it in connection with the Employee Benefit Plans, and there
have been no defaults or violations by any other party to the Employee Benefit
Plans; (iii) all reports, returns, notices, disclosures and other documents
relating to the Plans required to be filed with or furnished to governmental
entities, plan participants or plan beneficiaries have been timely filed or
furnished in accordance with applicable law and each Employee Benefit Plan has
been administered in compliance with its governing written documents; (iv) each
of the Plans intended to be qualified under Section 401 of the Code satisfies
the requirements of such Section and has received a favorable determination
letter from the IRS regarding such qualified status and has not been amended,
operated or administered in a way which would adversely affect such qualified
status; (v) there are no actions, suits or claims pending (other than routine
claims for benefits) or, to the best knowledge of NTI, contemplated or
threatened against, or with respect to, any of the Employee Benefit Plans or
their assets; (vi) each trust maintained in connection with each Plan, which is
qualified under Section 401 of the Code, is tax exempt under Section 501 of the
Code; (vii) all contributions required to be made to the Employee Benefit Plans
have been made timely; (viii) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of the Code
has been incurred, and
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there has been no termination or partial termination of any Plan within the
meaning of Section 411(d)(3) of the Code; (ix) no act, omission or transaction
has occurred which could result in imposition on the Sellers, NCS or its ERISA
Affiliates of (A) breach of fiduciary duty liability damages under Section 409
of ERISA, (B) a civil penalty assessed pursuant to subsections (c), (i) or (1)
of Section 502 of ERISA or (C) a tax imposed pursuant to Chapter 43 of Subtitle
D of the Code; (x) to the best knowledge of NTI, there is no matter pending with
respect to any of the Plans before the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation (the "PBGC"); (xi) each of the Employee
Benefit Plans complies in form and operation with the applicable provisions of
the Code and ERISA; (xii) each Employee Benefit Plan provides that it may be
unilaterally amended or terminated in its entirety without any liability or
other obligation except the liability set forth for benefits as described in the
plan upon such amendment or termination; (xiii) neither NTI nor NCS has made any
written or oral representations or promises to any present or former director,
officer, employee or other agent concerning his or her terms, conditions or
benefits of employment (other than communicating that which appears on Schedule
3.12(a)), including without limitation the tenure of any such employment or the
conditions under which such employment may be terminated by NCS or Newco which
will be binding upon or enforceable against Newco after the Closing; (xiv) the
actuarial present values of all accrued deferred compensation entitlement of all
NCS Employees and their respective beneficiaries, other than entitlement accrued
pursuant to funded retirement plans subject to the provisions of Section 412 of
the Code, have been fully reflected on the financial statements and balance
sheets attached as Schedule 3.6(a). Such entitlement includes, without
limitation, any entitlement under any executive compensation, supplemental
retirement or any employment continuity agreement; and (xv) all liabilities for
post-retirement benefits required to be booked under Statement of Financial
Standards No. 106 have been fully reflected on the financial statements and
balance sheets attached as Schedule 3.6(a).
(h) Attached hereto as Schedule 3.12 (h) is a list of all
transfers out of the NCS Business since September 1, 1996.
3.13 FINDER'S FEE. Other than Smith Barney Inc., no investment banker,
broker, finder or other Person is entitled to any brokerage or finder's fee or
similar commission from NTI or NCS in respect of the transactions contemplated
by this Agreement. NTI shall indemnify and hold WCG and its Affiliates harmless
from and against any and all Claims, liabilities and obligations with respect to
any such fees, commissions or expenses asserted by any such Person on the basis
of any act, statement, agreement or commitment alleged to have been made by NTI
or any of its Affiliates with respect thereto.
3.14 MINUTE BOOKS. The minute books of NCS, copies of which, certified
by NCS' secretary or assistant secretary, have heretofore been made available to
WCG, contain true and complete minutes and records of all meetings, proceedings
and other
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actions of shareholders and the Board of Directors of NCS, none of which have
been amended to the best knowledge of NTI (except as set forth in such copies)
and are in full force and effect as of the date hereof.
3.15 ABSENCE OF CERTAIN CHANGES. Except as described in Schedule 3.15
and except for the consummation of the transactions contemplated by Article II,
since December 31, 1996, there has not been:
(a) Any mortgage, encumbrance or Lien placed on any of the NCS
Assets by or as a result of any act or omission of NCS which remains in
existence on the date hereof or on the Closing Date, except for Permitted
Encumbrances;
(b) Any obligation or liability in excess of Two Hundred Fifty
Thousand Dollars ($250,000) incurred by NCS other than obligations and
liabilities incurred in accordance with past practice in the ordinary course of
business;
(c) Any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
NCS Assets, for an amount in excess of One Hundred Thousand Dollars ($100,000),
other than in accordance with past practice in the ordinary course of business;
(d) Any damage, destruction or Loss in excess of One Hundred
Thousand Dollars ($100,000) per single event, whether or not covered by
insurance, affecting the NCS Assets;
(e) Any strike, work stoppage, concerted work slow down,
grievance or arbitration proceeding, unfair labor practice charge or complaint
involving the NCS Business;
(f) Any material change in the Employee Benefit Plans listed
(or required to be listed) on Schedule 3.12(e) or any change in the compensation
payable or to become payable with respect to the NCS Business to any officer,
employee or agent of NTI or NCS, except changes in compensation which occurred
in the ordinary course of business and which did not involve, in any case, an
increase in compensation in excess of Twenty Thousand Dollars ($20,000) per
annum for any one employee.
(g) A cancellation of any debt in excess of One Hundred
Thousand Dollars ($100,000) owed to or claim of NCS, or waiver of any right of
NCS, other than in accordance with past practice in the ordinary course
business;
(h) Any extraordinary Losses of Fifty Thousand Dollars
($50,000) or more individually aggregating in excess of Seven Hundred Fifty
Thousand Dollars ($750,000) or more suffered by the NCS Business;
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(i) Any change in any method of accounting or accounting
practice by the NCS Business, except as may be required by GAAP; or
(j) Any other change in the financial condition, properties,
assets, liabilities, business or operations of the NCS Business which change, by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has been or is reasonably likely to have a
Material Adverse Effect with respect to the NCS Business or Newco.
3.16 NO UNTRUE STATEMENTS. This Agreement, the Exhibits and Schedules
hereto, and any certificate delivered to WCG and its representatives in
connection with this Agreement or the transactions contemplated hereby, do not
and will not contain when delivered any untrue statement of any material fact
and do not and will not omit to state a material fact necessary to make the
statements contained herein and therein taken as a whole not misleading. To the
best knowledge of NTI, there is no material fact that has not been disclosed in
writing to WCG by NTI or NCS that has or is expected to have a Material Adverse
Effect on NCS or Newco.
3.17 DISTRIBUTORSHIP TERMS. Attached hereto as Schedule 3.17 are copies
of the current Distributorship Agreement and the current Systems Integrator
Agreement in place between NTI and NCS, all of the terms of which have been
substantially complied with by the parties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WCG
WCG hereby makes the following representations and warranties to NTI,
each and all of which are true and correct on the signing date hereof and on the
Closing Date, except as set forth in the disclosure schedule attached pertaining
to such representation and warranty:
4.1 CORPORATE MATTERS.
(a) Each of WCG and WilTel is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
having all requisite corporate power and authority to own, operate and lease its
properties and assets and to carry on its business in the places and in the
manner currently conducted. NTI has been provided with a true and correct copy
of the Certificate of Incorporation and Bylaws, or other charter documents, of
WilTel as currently in effect. WCG has all requisite corporate power and
authority to enter into this Agreement and the Organizational Agreements and to
perform its obligations hereunder and thereunder.
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(b) All of the outstanding shares of capital stock of WilTel
have been legally and validly authorized and issued, and are fully paid and
nonassessable. WCG is the sole stockholder of WilTel, holding the number and
type of shares set forth on Schedule 4.1(b). None of the capital stock of WilTel
is subject to any option, warrant, right of conversion, exchange or purchase or
any similar right.
(c) Except where the failure would not affect the validity of
this Agreement or have a Relevant Adverse Effect on the WilTel Business or the
WilTel Assets, WilTel is qualified to transact business as a foreign corporation
and is in good standing in the jurisdictions, if any, specified in Schedule
4.1(c) attached hereto, and there is no other jurisdiction in which the nature
or extent of the WilTel Business or the character of the WilTel Assets makes
such qualification necessary.
4.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement has been duly authorized, executed and
delivered by WCG and is a legal, valid and binding obligation of WCG enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies.
(b) The Organizational Agreements have been duly authorized by
WCG or WilTel, as the case may be, and upon execution and delivery thereof at or
prior to the Closing will be legal, valid and binding obligations of WCG or
WilTel enforceable against it in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
(c) The execution, delivery and performance of this Agreement
and the Organizational Agreements by WCG or WilTel, as the case may be, and the
other agreements and documents to be delivered by WCG or WilTel to Newco or NTI
hereunder, the consummation of the transactions contemplated hereby or thereby,
and the compliance with the provisions hereof or thereof, by WCG or WilTel will
not, with or without the passage of time or the giving of notice or both:
(i) except in the absence of required consents as set
forth on Schedules 4.3(a), 4,4(b), 4.4(c) or 4.5(d), conflict with, constitute a
breach, violation or termination of any provision of, or give rise to any right
of termination, cancellation or acceleration, or loss of any right or benefit or
both, under, any of the WilTel Contracts listed in Schedule 4.5(a) or Schedule
4.5(b), WilTel's Permits, the WilTel Owned Intellectual Property and Software or
the WilTel Licensed Intellectual Property and Software;
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(ii) conflict with or violate the Certificate of
Incorporation or Bylaws of WCG or WilTel;
(iii) result in the creation or imposition of any
Lien or Claim on any of the WilTel Assets; or
(iv) violate any law, statute, ordinance, regulation,
judgment, writ, injunction, rule, decree, order or any other restriction of any
kind or character applicable to WCG, WilTel or the WilTel Assets.
4.3 GOVERNMENTAL AND OTHER CONSENTS, APPROVALS AND AUTHORIZATIONS.
(a) Except as set forth in Schedule 4.3(a) or Schedule 4.5(d)
attached hereto or as would not significantly adversely impact Newco, the
transactions contemplated hereby, the Organizational Agreements or any other
agreement contemplated hereby or thereby, no order, license to conduct or
operate its business, consent, waiver, authorization or approval of, or
exemption by, or the giving of notice to, or the registration with, or the
taking of any other action in respect of, any Person not a Party, including any
Authority, and no filing, recording, publication or registration in any public
office or any other place is necessary on behalf of WilTel (i) to authorize the
execution, delivery and performance of this Agreement, the Organizational
Agreements or any other agreement contemplated hereby or thereby to be executed
and delivered by it and the consummation of the transactions contemplated hereby
or thereby (including assignment of the WilTel Assets), or (ii) to effect the
legality, validity, binding effect or enforceability thereof.
(b) Except as set forth in Schedule 4.3(b), all Permits
required or necessary for WilTel to own the WilTel Assets or carry on WilTel
Business in the places and in the manner currently conducted have been duly
obtained, except where a failure to obtain any such Permit (considered
individually) would not have a Relevant Adverse Effect on the WilTel Assets or
the WilTel Business, and such Permits are in full force and effect. Except as
set forth in Schedule 4.3(b), no violations are in existence or have been
recorded with respect to those Permits and no proceeding is pending or, to the
best knowledge of WCG, threatened with respect to the revocation or limitation
of any of such Permits, except where such violations, revocations or limitations
considered per Permit would not result in a Relevant Adverse Effect on the
WilTel Assets or the WilTel Business. Except as set forth in Schedule 4.3(b) or
as otherwise disclosed in the Schedules to this Agreement, WilTel has complied
in all respects with all laws, rules, regulations and orders applicable the
WilTel Business, except where the failure to comply with such laws, rules,
regulations and orders would not result in a Relevant Adverse Effect on the
WilTel Assets or the WilTel Business.
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4.4 TITLE TO AND CONDITION OF WILTEL ASSETS.
(a) A listing of substantially all of the items of equipment,
furniture or fixture, with an initial purchase price of One Thousand Dollars
($1,000) or more with a remaining useful life of more than one year owned by
WilTel as of March 31, 1997, constituting a part of the WilTel Assets is set
forth in Schedule 4.4(a) attached hereto. Substantially all of the assets are
located at the locations set forth therein and are in WilTel's possession and
control. WilTel has title to all such assets, free and clear of all Liens and
Claims, except for Permitted Encumbrances.
(b) Schedule 4.4(b) sets forth all Intellectual Property and
Software owned by WilTel (the "WilTel Owned Intellectual Property and
Software"). Except as set forth on Schedule 4.4(b), WilTel owns, free and clear
from any claims or rights of others, all WilTel Owned Intellectual Property and
Software. Except as set forth on Schedule 4.4(b), none of the WilTel Owned
Intellectual Property and Software has been declared invalid, or been limited in
any respect by order of any court or by agreement, or, to the best knowledge of
WCG, is the subject of any infringement, interference or similar proceeding or
challenge. Except as set forth on Schedule 4.4(b), neither WilTel nor WCG has
received any notice of infringement, misappropriation or conflict from any other
Person with respect to the WilTel Owned Intellectual Property and Software, and,
to the best knowledge of WCG, the conduct of the WilTel Business has not
infringed, misappropriated or otherwise conflicted with any Intellectual
Property or Software of any other Person. Each of the patents, trademarks and
registered copyrights included in the WilTel Owned Intellectual Property and
Software has been validly issued. All WilTel Owned Intellectual Property and
Software that is licensed to a third party by WilTel or in which WilTel has
otherwise transferred an interest to a third party has been licensed or
transferred on a non-exclusive basis pursuant to valid and existing license
agreements. Except as set forth on Schedule 4.4(b), none of the WilTel Owned
Intellectual Property and Software requires the consent or waiver of any Person
or Authority prior to the sale, assignment, transfer, conveyance or delivery
thereof to Newco pursuant to this Agreement and such sale, assignment, transfer,
conveyance and delivery to Newco and any of the other transactions contemplated
by this Agreement will not result in any loss of any WilTel Owned Intellectual
Property and Software or any right to use, exploit or receive benefits with
respect to such WilTel Owned Intellectual Property and Software.
(c) Schedule 4.4(c) sets forth all material Intellectual
Property and Software licensed to WilTel (the "WilTel Licensed Intellectual
Property and Software"). Except as set forth on Schedule 4.4(c), WilTel has the
right to use, free and clear from any claims or rights of others, except as
reflected in the applicable license, all WilTel Licensed Intellectual Property
and Software. Except as set forth on Schedule 4.4(c), none of the WilTel
Licensed Intellectual Property and Software has been declared invalid, or been
limited in any respect by order of any court or by agreement, or, to
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the best knowledge of WCG, is the subject of any infringement, interference or
similar proceeding or challenge. Except as set forth on Schedule 4.4(c), neither
WilTel nor WCG has received any notice of infringement, misappropriation or
conflict from any other Person with respect to the WilTel Licensed Intellectual
Property and Software, and, to the best knowledge of WCG, the conduct of the
WilTel Business has not infringed, misappropriated or otherwise conflicted with
any Intellectual Property or Software of any other Person. Except as set forth
on Schedule 4.4(c), none of the WilTel Licensed Intellectual Property and
Software requires the consent or waiver of any Person or Authority prior to the
sale, assignment, transfer, conveyance or delivery thereof to Newco pursuant to
this Agreement and such sale, assignment, transfer, conveyance and delivery to
Newco will not result in any loss of any WilTel Licensed Intellectual Property
and Software or any right to use, exploit or receive benefits with respect to
such WilTel Licensed Intellectual Property and Software, except where the
failure to obtain such consent or waiver would not have a Relevant Adverse
Effect on the WilTel Assets or WilTel Business.
(d) Except as set forth on Schedule 4.4(d), the WilTel Assets
constitute substantially all of the assets (i) necessary for the conduct of the
WilTel Business in the ordinary course consistent with past practices or (ii)
currently used by WilTel in connection with the WilTel Business. Except as set
forth on Schedule 4.4(d), the conduct of the WilTel Business in the ordinary
course is not dependent upon the right to use the property of Persons other than
WilTel, except such property as is leased or licensed to WilTel pursuant to any
of the WilTel Contracts or the absence of which would not have a Relevant
Adverse Effect on Newco. Except as set forth on Schedule 4.4(d), neither WCG nor
any Affiliate of WCG (other than WilTel) owns or has any interest in any WilTel
Asset or any asset currently used by WilTel in the WilTel Business, except the
WCG Retained Assets, or such assets as are leased or licensed to WilTel pursuant
to any of the WilTel Contracts or the loss of which would not have a Relevant
Adverse Effect on WilTel or Newco.
(e) Except as set forth on Schedule 4.4 (e), the WilTel Owned
Intellectual Property and Software, the WilTel Licensed Intellectual Property
and Software, constitute all of the material intellectual property rights used
by WilTel in the conduct of the WilTel Business as currently conducted.
4.5 CONTRACTS, COMMITMENTS AND CUSTOMERS.
(a) Set forth in Schedule 4.5(a) attached hereto is a list of
each of the following agreements between WilTel and its customers: (i) service
or maintenance contracts with an annual revenue commitment of $500,000 or
greater, and (ii) purchase, lease or rental agreements for the installation or
upgrade of a PBX with a purchase price of $1,000,000 or greater for which the
customer has not been sent the final invoice.
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<PAGE> 44
(b) Set forth in Schedule 4.5(b) attached hereto is a list of
each WilTel Contract, other than agreements with customers, which would create a
monetary obligation of WilTel, or a right to receive funds by WilTel, of greater
than $300,000 in the aggregate. Also set forth on Schedule 4.5(b) is a list of
all guarantees of the obligations of WilTel by WCG or any WCG Affiliate.
(c) To the best knowledge of either WCG or WilTel, neither WCG
nor WilTel is in breach of any provision of, or in default (or knows of any
event or circumstance that with notice or lapse of time or both would constitute
an event of default) under the terms of, any WilTel Contract except to the
extent the loss of such WilTel Contract would not have a Relevant Adverse Effect
on Newco. Except as set forth in Schedule 4.5(c), all of the WilTel Contracts
listed in Schedule 4.5(a) and Schedule 4.5(b) are in full force and effect, and
neither WCG nor WilTel is aware of any pending or overtly threatened Claims or
disputes with respect thereto. None of the customers or counter parties under
the WilTel Contracts listed in Schedule 4.5(a) and Schedule 4.5(b) has notified
WCG or WilTel in writing that it intends to discontinue its relationship with
the WilTel Business.
(d) Except as set forth on Schedule 4.5(d), and except to the
extent that failure to obtain consent or waiver can be remedied by means of the
mechanism set forth in Section 10.8 hereto without a Relevant Adverse Effect
upon Newco, the WilTel Contracts listed in Schedule 4.5(a) and Schedule 4.5(b)
do not require the consent or waiver of any Person or Authority prior to the
sale, assignment, transfer, conveyance or delivery thereof pursuant to this
Agreement.
(e) Except as set forth in Schedule 4.5(e), true and complete
copies of the WilTel Contracts listed in Schedule 4.5(a) and Schedule 4.5(b)
have been made available to NTI prior to the date of this Agreement.
4.6 FINANCIAL STATEMENTS.
(a) Attached as Schedule 4.6(a) hereto is a copy of the
unaudited consolidated balance sheet of WilTel as of December 31, 1996 (the
"WilTel Year End Balance Sheet") and the unaudited consolidated income statement
of WilTel for the year ended on December 31, 1996 (the "WilTel Financial
Statements"), which (except as noted therein):
(i) have been prepared in accordance with GAAP
applied on a basis consistent with the consolidated balance sheet of the WilTel
Business as of December 31, 1995 and the consolidated income statement of WilTel
for the year ended December 31, 1995 (without change in the application of
principles or the selection of methods of calculation permitted by GAAP unless
based solely upon changes in facts and circumstances or required by changes in
GAAP) and fairly present the consolidated financial condition of WilTel as of
the date thereof, the
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results of operations and the cash flows for the period set forth therein,
subject to normal year-end adjustments, footnotes and other presentation items;
and
(ii) except with respect to United States federal and
state income taxes, reflect all liabilities or obligations, whether accrued,
absolute, contingent or otherwise, of WilTel as required under GAAP consistently
applied other than those liabilities incurred since the date thereof, in the
ordinary course of business consistent with past practice.
(b) Attached as Schedule 4.6(b) hereto is a copy of an audited
balance sheet of WilTel as of December 31, 1996, which represents the audited
consolidated balance sheet of WilTel as of December 31, 1996, adjusted to
exclude the net book values which those categories of items included in the WCG
Retained Assets and WCG Retained Liabilities had as of December 31, 1996 (the
"WilTel Adjusted Year End Balance Sheet").
(c) The schedules provided to NTI detailing capitalized costs
with respect to Software owned or leased by WilTel are true, correct and
complete in all material respects and accurately reflect the information
purported to be set forth therein in accordance with GAAP.
(d) Attached as Schedule 4.6(d) hereto are schedules
reflecting: (i) the gross revenues of the WilTel Business for each of the years
ended December 31, 1995 and 1996, showing the portions thereof arising out of
each of (1) new systems and enhancements, (2) maintenance, and (3)
moves/adds/changes; and the portions of each such category of revenue arising
out of the geographic regions shown on such schedules; (ii) the cost of goods
sold for each of such years and each of such categories of revenue, and (iii)
actual product purchases from NTI for 1995 and 1996, and the forecast for
product purchases from NTI for 1997 as prepared by WilTel. Except as otherwise
disclosed on Schedule 4.6(d), such schedules have been prepared on a basis
consistent with the WilTel Financial Statements for the periods covered thereby
and fairly present the information contained therein.
(e) As soon as possible following execution of this Agreement,
and in no event less than five Business Days prior to the Closing Date, WCG
shall deliver to NTI the unaudited consolidated balance sheet of WilTel as of
March 31, 1997, and the unaudited consolidated income statement of WilTel for
the quarter then ended, prepared on a basis consistent in all respects with the
WilTel Financial Statements (the "WilTel First Quarter Statements"). The WilTel
First Quarter Statements shall be attached hereto as Schedule 4.6(e).
(f) As soon as possible following execution of this Agreement,
and in no event less than five Business Days prior to the Closing Date, WCG
shall deliver to NTI the unaudited consolidated balance sheet of WilTel as of
March 31, 1997,
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adjusted to exclude the net book values which those categories of items included
in the WCG Retained Assets and the WCG Retained Liabilities had as of March 31,
1997, prepared on a basis consistent in all respects with the WilTel Adjusted
Year End Balance Sheet (the "WilTel Adjusted Effective Date Balance Sheet"). The
WilTel Adjusted Effective Date Balance Sheet shall be attached hereto as
Schedule 4.6(f).
4.7 TAXES. Except as set forth in Schedule 4.7 (a), WCG, WilTel, and
any consolidated, combined, unitary or aggregate group for Tax purposes of which
WCG or WilTel is or has been a member, have timely filed all Tax Returns
required to be filed by them with respect to the WilTel Business and have timely
paid, have caused to be timely paid, or have had timely paid on their behalf all
Taxes which are due (whether or not shown on a Tax Return with respect to the
WilTel Business). Each of the Tax Returns filed by WCG or WilTel is accurate and
complete in all material respects with respect to the WilTel Business. Except as
described on Schedule 4.7(a), no material deficiencies exceeding $1,000,000 for
a single Tax for any Taxes have been proposed, asserted or assessed against
Williams (with respect to the income or operations of WilTel), or WilTel, and no
requests for waivers of the time to assess any such Taxes have been granted or
are pending. Except as set forth in Schedule 4.7(a), there are no current
examinations of any Tax Return of Williams (with respect to the income or
operations of WilTel), or WilTel being conducted and there are no settlements or
any prior examinations which could reasonably be expected to have a Material
Adverse Effect on WCG (with respect to the income or operation of WilTel) or
WilTel.
4.8 NO VIOLATIONS OR LITIGATION.
(a) To the best knowledge of WCG, WilTel has not violated, and
the consummation of the transactions contemplated hereby will not cause any
violation of, any Permit, any order of any Authority or any law, ordinance,
regulation, order, requirement, statute, rule, permit, concession, grant,
franchise, license or other governmental authorization relating or applicable to
the WilTel Business or any of the WilTel Assets or that could have a Relevant
Adverse Effect on the WilTel Assets or the WilTel Business.
(b) Except as set forth in Schedule 4.8(b) hereto and except
for Claims and examinations relating to Taxes, to the best knowledge of WCG,
there is no Claim, or examination (including, without limitation, any change in
any zoning or building ordinance) pending or, to the best knowledge of WCG,
threatened against or affecting WilTel, the WilTel Business, or any of the
WilTel Assets, at law or in equity, before or by any Authority or any third
party that could have a Relevant Adverse Effect on WilTel, the WilTel Assets or
the WilTel Business.
(c) This Section 4.8 does not address environmental matters
within the scope of Section 4.10.
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4.9 PROPERTY LEASES. Schedule 4.9 is a complete list of all real
property leases and those personal property leases with annual rental payments
equal to or greater than Three Hundred Thousand Dollars ($300,000) per annum to
which WilTel is a party (the "Leases"). Each of the Leases is a valid and
existing lease, enforceable in accordance with its terms, and, to the best
knowledge of WCG, there are no existing defaults, events of default or events,
occurrence or acts that, with the giving of notice or lapse of time or both,
would constitute defaults, in each case by WilTel and, to the best knowledge of
WCG, by any other party thereto, under any of the Leases.
4.10 ENVIRONMENTAL.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) The term "Environmental Law(s)" means each and
every law, Order, Permit, or similar requirement of each and every Authority,
pertaining to (A) the protection of human health, safety, the environment,
natural resources and wildlife, (B) the protection or use of surface water,
groundwater, rivers, and other bodies of water, (C) the management, manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation or
handling of, or exposure to, any Hazardous Substance or (D) pollution, including
without limitation, as amended, CERCLA, the Solid Waste Disposal Act, 42 U.S.C.
S. 6901 et seq., the Clean Air Act, 42 U.S.C. S. 7401 et seq. and the Federal
Water Pollution Control Act, 33 U.S.C. S. 1251, et seq.
(ii) The term "Hazardous Substance" means any
substance which is (A) defined as a hazardous substance, hazardous material,
hazardous waste, pollutant or contaminant under any Environmental Laws, (B) a
petroleum hydrocarbon, including crude oil or any fraction thereof, (C)
hazardous, toxic, corrosive, flammable, explosive, infectious, radioactive or
carcinogenic or (D) regulated pursuant to any Environmental Laws.
(iii) The term "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including without
limitation the abandonment or discarding of barrels, containers, and other
receptacles containing any Hazardous Substance).
(b) Compliance with Environmental Laws. Except as disclosed on
Schedule 4.10(b), with respect to both (i) the operations conducted at and
conditions present at the real property currently used or occupied in connection
with the WilTel Business (the "WilTel Real Property"), and (ii) the operations
conducted at and the
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conditions present at any real property formerly used or occupied in connection
with the WilTel Business (the "Former WilTel Real Property"), during the period
of such use or occupancy by WCG or its Affiliates, WCG or its Affiliates were
and are in compliance with applicable Environmental Laws, except for such
failures to comply that, individually and in the aggregate, have not had and
could not reasonably be expected to have, a Material Adverse Effect on WilTel.
(c) Environmental Liabilities. Except as disclosed on Schedule
4.10(c), there are no past or present conditions, circumstances, events,
activities, practices, or agreements arising out of, or related either to the
WilTel Real Property or to the Former WilTel Real Property, including but not
limited to any on-site or off-site Release of any Hazardous Substances, which
have given rise to or could reasonably be expected to give rise to: (i)
liabilities or obligations of WCG or its Affiliates for any clean-up, corrective
action or remedial activity under any Environmental Law; (ii) any Claim against
WCG or its Affiliates under any Environmental Law for personal injury, property
damage, or damage to natural resources, or (iii) the imposition of fines or
penalties on WCG or its Affiliates under any Environmental Law, where such
liabilities, obligations, Claims, fines or penalties, either individually or in
the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect on WilTel.
(d) Permits. Schedule 4.10(d) sets forth an accurate and
complete list of all material Permits issued to WCG and its Affiliates under any
Environmental Law for the operation of the WilTel Business with respect to the
operations conducted at and conditions present at the WilTel Real Property.
Except as disclosed on Schedule 4.10(d), WCG or its Affiliates have made all
filings necessary to request the timely renewal or issuance of all Permits
necessary under Environmental Laws for the continued use and operation of the
WilTel Real Property to conduct the WilTel Business as it is presently being
conducted.
(e) Proceedings. Except as disclosed in Schedule 4.10(e),
there is no Claim or Proceeding pending or threatened against WCG or its
Affiliates, under or in connection with any Environmental Law, which could
reasonably be expected to result in a fine, penalty or other obligation, cost or
expense, except for such obligations, costs, or expenses that, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect on WilTel.
(f) Transfer Restrictions and Liens. Except as disclosed in
Schedule 4.10(f), neither the WilTel Real Property nor the WilTel Business (i)
is subject to, or would as a result of this transaction be subject to, the New
Jersey Industrial Site Recovery Act, or any other state or local Environmental
Law which would impose restrictions, such as notice, disclosure or obtaining
approval prior to this transaction, or (ii) is subject to, or could reasonably
be expected to become subject to, any Liens under any Environmental Laws.
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(g) Documents. WCG and its Affiliates will have made available
by Closing to NTI any and all pleadings, reports, assessments, analytical
results, permits, and other material documents, correspondence and records
concerning Environmental Laws, Hazardous Substances, or other environmental
subjects in each case relating to the operation of the WilTel Business.
4.11 INSURANCE. Schedule 4.11 sets forth a complete and accurate list
of all policies (including their respective expiration dates) of property,
general liability, automobile liability, worker's compensation, and other forms
of insurance presently in effect with respect to WilTel, the WilTel Business or
any of the WilTel Assets, its operations, and its employees excluding those
policies relating to Employee Benefit Plans. To the best knowledge of WCG, there
are no facts or circumstances which would prevent the extension of such
insurance policies for the benefit of Newco after the Closing.
4.12 EMPLOYMENT AND LABOR MATTERS.
(a) Attached hereto as Schedule 4.12(a)(i) is a true and
complete list of the employees of the WilTel Business (the "WilTel Active
Employees") as of December 31, 1996, (including regular full time and part-time
employees), identified by name and employee number, together with job titles,
compensation and service information concerning such employees. Except as set
forth on Schedule 4.12(a)(ii), WilTel is not a party to any employment contract
with and will not have any liability (other than accrued salary, vacation pay,
commissions or as described in Schedule 4.8(b)) to any employees, any former
employees, or any independent contractors of the WilTel Business (collectively
?WilTel Employees?).
(b) Except as set forth on Schedule 4.12(b), WilTel is not a
party to any collective bargaining agreement or union contract with respect to
the employees and no collective bargaining agreements are being negotiated by
WilTel with respect to any of the WilTel Employees; and no notice of a proposed
union certification or recognition election has been received by WilTel.
(c) Except as otherwise set forth on Schedule 4.12(c), no
WilTel Employees are currently on a leave of absence due to sickness or
disability and no claim is pending and to the best knowledge of WCG, no Claim is
expected to be made by any WilTel Employees for workers? compensation benefits.
(d) WilTel has complied in all material respects with all laws
relating to the employment of labor, including, without limitation, ERISA and
those laws relating to wages, hours, collective bargaining, unemployment
insurance, worker's compensation, equal employment opportunity, payment and
withholding of taxes, the Immigration Reform and Control Act, the Workers
Adjustment and Retraining Act, the
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Occupational Safety and Health Act, the Drug Free Workplace Act, and the
National Labor Relations Act, as amended.
(e) Attached hereto as Schedule 4.12(e) is a true and complete
list of each of the following which is, or has been, sponsored, maintained or
contributed to by WilTel or any trade or business, whether or not incorporated
(an "ERISA Affiliate") that together with WilTel would be considered affiliated
with WilTel under Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA for the benefit of any person who, as of the Closing, is a
WilTel Employee: (i) each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA, ("Plan"); and (ii) each personnel policy, stock option
plan, bonus plan or arrangement, incentive award plan or arrangement, vacation
policy, severance pay plan, policy, program or agreement, deferred compensation
agreement or arrangement, retiree benefit plan or arrangement, fringe benefit
program or practice (whether or not taxable), employee loan, consulting
agreement, employment agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described in
Section 4.12(e)(i) ("Benefit Program or Agreement") (such Plans and Benefit
Programs or Agreement are sometimes collectively referred to in this Agreement
as the "Employee Benefit Plans").
(f) True, correct and complete copies of each of the current
Plans, and related trusts, if applicable, including all amendments thereto, have
been furnished or made available to NCS by WCG. There have also been furnished
to NCS by WCG, with respect to each Plan required to file such report and
description, the report on Form 5500 for the past two years and the most recent
summary plan description. True, correct and complete copies or descriptions of
all Benefit Programs or Agreements have also been furnished or made available to
NCS by WCG.
(g) Except as otherwise set forth on Schedule 4.12(g): (i)
none of WilTel or any ERISA Affiliate contributes to or has an obligation to
contribute to, nor has at any time contributed to or had an obligation to
contribute to, a multi-employer plan within the meaning of Section 3(37) of
ERISA or any other plan subject to Title IV or ERISA; (ii) each of WilTel and
its ERISA Affiliates has performed all obligations, whether arising by operation
of law or by contract, including, but not limited to, ERISA and the Code,
required to be performed by it in connection with the Employee Benefit Plans,
and there have been no defaults or violations by any other party to the Employee
Benefit Plans; (iii) all reports, returns, notices, disclosures and other
documents relating to the Plans required to be filed with or furnished to
governmental entities, plan participants or plan beneficiaries have been timely
filed or furnished in accordance with applicable law and each Employee Benefit
Plan has been administered in compliance with its governing written documents;
(iv) each of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a favorable
determination letter from the IRS regarding such qualified status and has not
been amended, operated or administered in a way which
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would adversely affect such qualified status; (v) there are no actions, suits or
claims pending (other than routine claims for benefits) or, to the best
knowledge of WCG, contemplated or threatened against, or with respect to, any of
the Employee Benefit Plans or their assets; (vi) each trust maintained in
connection with each Plan, which is qualified under Section 401 of the Code, is
tax exempt under Section 501 of the Code; (vii) all contributions required to be
made to the Employee Benefit Plans have been made timely; (viii) no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, and there has been no
termination or partial termination of any Plan within the meaning of Section
411(d)(3) of the Code; (ix) no act, omission or transaction has occurred which
could result in imposition on the Sellers, WilTel or its ERISA Affiliates of (A)
breach of fiduciary duty liability damages under Section 409 of ERISA, (B) a
civil penalty assessed pursuant to subsections (c), (i) or (1) of Section 502 of
ERISA or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code; (x)
to the best knowledge of WCG, there is no matter pending with respect to any of
the Plans before the IRS, the Department of Labor or the PBGC; (xi) each of the
Employee Benefit Plans complies in form and operation with the applicable
provisions of the Code and ERISA; (xii) each Employee Benefit Plan provides that
it may be unilaterally amended or terminated in its entirety without any
liability or other obligation except the liability set forth for benefits as
described in the plan upon such amendment or termination; (xiii) neither WCG nor
WilTel has made any written or oral representations or promises to any present
or former director, officer, employee or other agent concerning his or her
terms, conditions or benefits of employment (other than communicating that which
appears on Schedule 4.12(a)), including without limitation the tenure of any
such employment or the conditions under which such employment may be terminated
by WilTel or Newco which will be binding upon or enforceable against Newco after
the Closing; (xiv) the actuarial present values of all accrued deferred
compensation entitlement of all WilTel Employees and their respective
beneficiaries, other than entitlement accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Code, have been fully
reflected on the financial statements and balance sheets attached as Schedule
4.6(a). Such entitlement includes, without limitation, any entitlement under any
executive compensation, supplemental retirement or any employment continuity
agreement; and (xv) all liabilities for post-retirement benefits required to be
booked under Statement of Financial Standards No. 106 have been fully reflected
on the financial statements and balance sheets attached as Schedule 4.6(a).
(h) Attached as hereto as Schedule 4.12(h) is a list of all
transfers out of the WilTel Business since September 1, 1996.
4.13 FINDER'S FEE. Other than Salomon Brothers Inc, no investment
banker, broker, finder or other Person is entitled to any brokerage or finder's
fee or similar commission from WCG or WilTel in respect of the transactions
contemplated by this Agreement. WCG shall indemnify and hold NTI and its
Affiliates harmless from and
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against any and all Claims, liabilities and obligations with respect to any such
fees, commissions or expenses asserted by any such Person on the basis of any
act, statement, agreement or commitment alleged to have been made by WCG or any
of its Affiliates with respect thereto.
4.14 MINUTE BOOKS. The minute books of WilTel, copies of which,
certified by WilTel's secretary or assistant secretary, have heretofore been
made available to NTI, contain true and complete minutes and records of all
meetings, proceedings and other actions of shareholders and the Board of
Directors of WilTel, none of which have been amended to the best knowledge of
WCG (except as set forth in such copies) and are in full force and effect as of
the date hereof.
4.15 ABSENCE OF CERTAIN CHANGES. Except as described in Schedule 4.15
and except for the consummation of the transactions contemplated by Article II,
since December 31, 1996, there has not been:
(a) Any mortgage, encumbrance or Lien placed on any of the
WilTel Assets by or as a result of any act or omission of WilTel which remains
in existence on the date hereof or on the Closing Date, except for Permitted
Encumbrances;
(b) Any obligation or liability in excess of Two Hundred Fifty
Thousand Dollars ($250,000) incurred by WilTel other than obligations and
liabilities incurred in accordance with past practice in the ordinary course of
business;
(c) Any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
WilTel Assets, for an amount in excess of One Hundred Thousand Dollars
($100,000), other than in accordance with past practice in the ordinary course
of business;
(d) Any damage, destruction or Loss in excess of One Hundred
Thousand Dollars ($100,000) per single event, whether or not covered by
insurance, affecting the WilTel Assets;
(e) Any strike, work stoppage, concerted work slow down,
grievance or arbitration proceeding, unfair labor practice charge or complaint
involving the WilTel Business;
(f) Any material change in the Employee Benefit Plans listed
(or required to be listed) on Schedule 4.12(e) or any change in the compensation
payable or to become payable with respect to the WilTel Business to any officer,
employee or agent of WilTel or WCG; except changes in compensation which
occurred in the ordinary course of business and which did not involve, in any
case, an increase in compensation in excess of Twenty Thousand Dollars ($20,000)
per annum for any one employee.
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(g) A cancellation of any debt in excess of One Hundred
Thousand Dollars ($100,000) owed to or claim of WilTel, or waiver of any right
of WilTel, other than in accordance with past practice in the ordinary course
business;
(h) Any extraordinary Losses in excess of Fifty Thousand
Dollars ($50,000) or more individually aggregating in excess of Seven Hundred
Fifty Thousand Dollars ($750,000) or more suffered by the WilTel Business;
(i) Any change in any method of accounting or accounting
practice by the WilTel Business, except as may be required by GAAP; or
(j) Any other change in the financial condition, properties,
assets, liabilities, business or operations of the WilTel Business which change,
by itself or in conjunction with all other such changes, whether or not arising
in the ordinary course of business, has been or is reasonably likely to have a
Material Adverse Effect with respect to the WilTel Business or Newco.
4.16 NO UNTRUE STATEMENTS. This Agreement, the Exhibits and Schedules
hereto, and any certificate delivered to NTI and its representatives in
connection with this Agreement or the transactions contemplated hereby, do not
and will not contain when delivered any untrue statement of any material fact
and do not and will not omit to state a material fact necessary to make the
statements contained herein and therein taken as a whole not misleading. To the
best knowledge of WCG, there is no material fact that has not been disclosed in
writing to NTI by WCG that has or is expected to have a Material Adverse Effect
on WilTel or Newco.
ARTICLE V
MATTERS PENDING CLOSING
5.1 NTI ACTIONS PENDING CLOSING. From the date hereof until the later
of Closing and the Effective Time, except as expressly contemplated by this
Agreement or to the extent WCG shall otherwise consent in writing:
(a) NTI shall and shall cause its appropriate Affiliates to,
in a timely, accurate and complete manner (i) make such filings and secure any
consents, approvals or authorizations of any Authority required to be obtained
by it or such Affiliates or which may be necessary for the consummation of the
transactions contemplated by this Agreement; and (ii) provide to WCG such
information as WCG may require to assist NTI and NCS to make such filings as may
be required for the consummation of the transactions contemplated by this
Agreement.
(b) Except as set forth in Schedule 5.1(b) attached hereto or
with the other party's consent not to be unreasonably withheld, NTI, NCS and
their respective
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Affiliates from and after the date of this Agreement shall not and shall not
permit NCS or an Affiliate of NTI or NCS to do or agree to do, any of the
following in respect of the NCS Business:
(i) Transfer, sell, assign or otherwise dispose of
any material assets other than in the ordinary course of its
business;
(ii) Create, incur, assume or suffer to exist upon
any assets of the NCS Business any Liens arising through any
act or omission of NTI, NCS or any Affiliate of NCS except
Liens securing indebtedness disclosed herein or Permitted
Encumbrances;
(iii) Create, incur, assume or suffer to exist any
indebtedness, liability or obligation in excess of One Hundred
Thousand Dollars ($100,000) except current liabilities (other
than for borrowed money) incurred in the ordinary course of
business;
(iv) Assume, guarantee, endorse or become liable on,
or agree to repurchase the obligation of any Person, firm or
corporation, except for the endorsement of negotiable
instruments for deposit or collection in the ordinary course
of business;
(v) Merge or consolidate with or into any Person
(other than Newco);
(vi) Declare or pay any dividend of any kind (except
as otherwise specifically contemplated hereby), or make any
other distribution in respect of, or purchase, redeem or
otherwise acquire, any of its shares;
(vii) Make any loan or advance to, or make any
investment in any Person, whether by acquisition of stock or
indebtedness, by loan, guarantee or otherwise, except for
advances in the ordinary course of business;
(viii) Make any capital expenditure in an amount in
excess of One Hundred Thousand Dollars ($100,000) per item or
One Million Dollars ($1,000,000) in the aggregate with respect
to all capital expenditures;
(ix) Materially change the Employee Benefit Plans
listed (or required to be listed) on Schedule 3.12(e) or
change the compensation payable or to become payable with
respect to the NCS Business to any officer, employee or agent
of NTI or NCS except changes in compensation which occur in
the ordinary course of business and which
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do not involve, in any case, an increase in compensation in
excess of twenty thousand dollars ($20,000) per annum for any
one employee.
(x) Amend its certificate of incorporation or
by-laws;
(xi) Waive any of its rights or Claims having a value
in the aggregate in excess of One Million Dollars
($1,000,000);
(xii) Enter into any transaction having a Relevant
Adverse Effect other than in the ordinary course of business;
(xiii) Except as provided for in Section 3.11, permit
to be canceled or terminated any insurance policy covering the
business, assets, operations or employees of NCS, or permit
any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse replacement
policies providing substantially the same coverage are in full
force and effect;
(xiv) Change in any respect any of its accounting
principles, policies or procedures, except as may be required
by GAAP, in respect of the NCS Business;
(xv) Settle or compromise any suit or Claim or
threatened suit or Claim in each case involving Two Hundred
Thousand Dollars ($200,000) or more not covered by insurance
relating to the NCS Business;
(xvi) Modify, amend or terminate any material
contract or agreement relating to the NCS Business; or waive,
release, relinquish or assign any material contract or
agreement or other right or claim related to the NCS Business;
or cancel or forgive any indebtedness of One Hundred Thousand
Dollars ($100,000) or more owed to NTI or NCS which would be
included in the NCS Assets; or
(xvii) Take any action that could reasonably be
expected to result in any of the conditions to the obligations
of WCG set forth in Article VI not being satisfied or that
would materially impact the ability of NTI to consummate the
transactions contemplated herein in accordance with the terms
hereof or that would materially delay such consummation.
(c) From and after the date of this Agreement until the
Closing, NTI shall and shall cause each of NCS and NTI's or NCS' Affiliates to
do all of the following in respect of the NCS Business:
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(i) Carry on the NCS Business in substantially the
same manner as heretofore conducted and not make any purchase
or sale, or introduce any method of management or operation in
respect of its business or properties, except in a manner
consistent with its prior practice;
(ii) (A) Maintain and preserve its business
organization intact, including, without limiting the
generality of the foregoing, preserving any confidential
information and trade secrets; (B) substantially maintain its
relationships with its suppliers and customers and others
having business relations with it so that they will be
preserved for Newco on and after the Closing; and (C) use its
best reasonable efforts to retain its present employees so
that they will be available to Newco on and after the Closing;
(iii) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and all franchises, rights and privileges necessary
for the conduct of its business, including, without limiting
the generality of the foregoing, all licenses and permits, and
comply with the requirements of all applicable laws and all
rules, regulations and orders of all Authorities having
jurisdiction over it or its properties;
(iv) Pay and discharge, or cause to be paid and
discharged, all lawful taxes, assessments and governmental
charges or levies imposed upon it or upon its income or
property, prior to the date upon which penalties attach
thereto, except any of the foregoing being contested by NTI,
NCS or such Affiliate in good faith;
(v) Promptly notify WCG in writing of any
investigation, action, suit or proceeding commenced against it
before any court or any Authority;
(vi) Maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with
prior years;
(vii) Maintain its inventory levels at levels
consistent with the normal and ordinary course of operation as
the NCS Business has been operated prior to the date hereof;
(viii) Promptly notify WCG of the operating results
of the NCS Business and of any extraordinary loss suffered by
the NCS Business; and
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(ix) Refrain from doing any act or omitting to do any
act, or permitting any act or omission to act, which will
cause a material breach of any of NCS' material contracts,
commitments or obligations.
(d) Between the date of this Agreement and the Closing, NTI,
NCS and their Affiliates during ordinary business hours shall (i) give WCG and
its authorized representatives and agents reasonable access to all books,
records, offices and other facilities and properties of NCS relating to the NCS
Business, (ii) permit WCG and its employees and agents to make such inspections
thereof as WCG may reasonably request, and (iii) cause its officers and
authorize NCS' accountants to furnish WCG and its employees and agents with such
financial and operating data and other information with respect to the financial
statements, business and properties of NCS relating to the NCS Business as WCG
may from time to time reasonably request.
V.2 WCG ACTIONS PENDING CLOSING. From the date hereof until the later
of Closing and Effective Time, except as expressly contemplated by this
Agreement or to the extent NTI shall otherwise consent in writing:
(a) WCG shall and shall cause its appropriate Affiliates to,
in a timely, accurate and complete manner (i) make such filings and secure any
consents, approvals or authorizations of any Authority required to be obtained
by it or such Affiliates or which may be necessary for the consummation of the
transactions contemplated by this Agreement; and (ii) provide to NTI such
information as NTI may require to assist WCG to make such filings as may be
required for the consummation of the transactions contemplated by this
Agreement.
(b) Except as set forth in Schedule 5.2(b) attached hereto or
with the other party's consent not to be unreasonably withheld, WCG, WilTel and
their respective Affiliates from and after the date of this Agreement shall not
and shall not permit WilTel or an Affiliate of WCG or WilTel to do or agree to
do, any of the following in respect of the WilTel Business:
(i) Transfer, sell, assign or otherwise dispose of
any material assets other than in the ordinary course of its
business;
(ii) Create, incur, assume or suffer to exist upon
any assets of the WilTel Business any Liens arising through
any act or omission of WilTel or any Affiliate of WilTel
except Liens securing indebtedness disclosed herein or
Permitted Encumbrances;
(iii) Create, incur, assume or suffer to exist any
indebtedness, liability or obligation in excess of One Hundred
Thousand Dollars ($100,000) except current liabilities (other
than for borrowed money) incurred in the ordinary course of
business;
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(iv) Assume, guarantee, endorse or become liable on,
or agree to repurchase the obligation of any Person, firm or
corporation, except for the endorsement of negotiable
instruments for deposit or collection in the ordinary course
of business;
(v) Merge or consolidate with or into any Person
(other than Newco);
(vi) Declare or pay any dividend of any kind (except
as otherwise specifically contemplated hereby), or make any
other distribution in respect of, or purchase, redeem or
otherwise acquire, any of its shares;
(vii) Make any loan or advance to, or make any
investment in any Person, whether by acquisition of stock or
indebtedness, by loan, guarantee or otherwise, except for
advances in the ordinary course of business;
(viii) Make any capital expenditure in an amount in
excess of One Hundred Thousand Dollars ($100,000) per item or
One Million Dollars ($1,000,000) in the aggregate with respect
to all capital expenditures;
(ix) Materially change the Employee Benefit Plans
listed (or required to be listed) on Schedule 4.12(e) or
change the compensation payable or to become payable with
respect to the WilTel Business to any officer, employee or
agent of WilTel or WCG except changes in compensation which
occur in the ordinary course of business and which do not
involve, in any case, an increase in compensation in excess of
twenty thousand dollars ($20,000) per annum for any one
employee.
(x) Amend its certificate of incorporation or
by-laws;
(xi) Waive any of its rights or Claims having a value
in the aggregate in excess of One Million Dollars
($1,000,000);
(xii) Enter into any transaction having a Relevant
Adverse Effect, other than in the ordinary course of business;
(xiii) Permit to be canceled or terminated any
insurance policy covering the business, assets, operations or
employees of WilTel, or permit any of the coverage thereunder
to lapse, unless simultaneously with such termination,
cancellation or lapse replacement policies providing
substantially the same coverage are in full force and effect;
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(xiv) Change in any respect any of its accounting
principles, policies or procedures, except as may be required
by GAAP, in respect of the WilTel Business;
(xv) Settle or compromise any suit or Claim or
threatened suit or Claim in each case involving Two Hundred
Thousand Dollars ($200,000) or more not covered by insurance
relating to the WilTel Business;
(xvi) Modify, amend or terminate any material
contract or agreement relating to the WilTel Business; or
waive, release, relinquish or assign any material contract or
agreement or other right or claim related to the WilTel
Business; or cancel or forgive any indebtedness of One Hundred
Thousand Dollars ($100,000) or more owed to WilTel which would
be included in the WilTel Assets; or
(xvii) Take any action that could reasonably be
expected to result in any of the conditions to the obligations
of NTI set forth in Article VI not being satisfied or that
would materially impact the ability of WCG to consummate the
transactions contemplated herein in accordance with the terms
hereof or that would materially delay such consummation.
(c) From and after the date of this Agreement until the
Closing, WCG shall and shall cause each of WilTel and WCG's and WilTel's
Affiliates to do all of the following in respect of the WilTel Business:
(i) Carry on the WilTel Business in substantially the
same manner as heretofore conducted and not make any purchase
or sale, or introduce any method of management or operation in
respect of its business or properties, except in a manner
consistent with its prior practice;
(ii) (A) Maintain and preserve its business
organization intact, including, without limiting the
generality of the foregoing, preserving any confidential
information and trade secrets; (B) substantially maintain its
relationships with its suppliers and customers and others
having business relations with it so that they will be
preserved for Newco on and after the Closing; and (C) use its
best reasonable efforts to retain its present employees so
that they will be available to Newco on and after the Closing;
(iii) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and all franchises, rights and privileges necessary
for the conduct of its business, including, without limiting
the generality of the foregoing, all licenses and permits,
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and comply with the requirements of all applicable laws and
all rules, regulations and orders of all Authorities having
jurisdiction over it or its properties;
(iv) Pay and discharge, or cause to be paid and
discharged, all lawful taxes, assessments and governmental
charges or levies imposed upon it or upon its income or
property, prior to the date upon which penalties attach
thereto, except any of the foregoing being contested by WilTel
in good faith;
(v) Promptly notify NTI in writing of any
investigation, action, suit or proceeding commenced against it
before any court or any Authority;
(vi) Maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with
prior years;
(vii) Maintain its inventory levels at levels
consistent with the normal and ordinary course of operation as
the WilTel Business has been operated prior to the date
hereof;
(viii) Promptly notify NTI of the operating results
of the WilTel Business and of any extraordinary loss suffered
by WilTel; and
(ix) Refrain from doing any act or omitting to do any
act, or permitting any act or omission to act, which will
cause a material breach of any of WilTel's material contracts,
commitments or obligations.
(d) Between the date of this Agreement and the Closing, WCG
and WilTel during ordinary business hours shall (i) give NTI and its authorized
representatives and the agents reasonable access to all books, records, offices
and other facilities and properties of WilTel relating to the WilTel Business,
(ii) permit NTI and its employees and agents to make such inspections thereof as
NTI may reasonably request, and (iii) cause its officers and authorize WilTel's
accountants to furnish NTI and its employees and agents with such financial and
operating data and other information with respect to the financial statements,
business and properties of WilTel relating to the WilTel Business as NTI may
from time to time reasonably request.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATION OF THE PARTIES The obligations of the
Parties to effect the Closing shall be subject to the following conditions
unless waived in writing by all Parties:
(a) Formation of LLC. The Certificate of Formation shall have
been filed with the Secretary of State of Delaware and all other acts necessary
to form Newco shall have been taken.
(b) Approvals and Consents. Any required consents, approvals
or authorizations of any Authority to the transfer or change in control
contemplated by this Agreement shall have been obtained.
(c) No Litigation. No Proceeding shall have been initiated by
any Authority or third party seeking to enjoin or otherwise restrain the
consummation of the transactions contemplated by this Agreement.
(d) TTS Agreement. The Parties shall have caused Newco to
execute and deliver the TTS Agreement, and the transactions contemplated thereby
shall have been consummated.
(e) Section 2.7 Transactions. NCS shall have executed and
delivered the Bill of Sale and the assignment covering the Transferred
Receivables; Newco shall have made and delivered the Accounts Receivable Note to
NCS and paid to NCS the cash (contributed by WilTel) provided for in Section
2.7; and NCS shall have delivered the Accounts Receivable Note and cash to NTI.
6.2 CONDITIONS TO OBLIGATION OF WCG. The obligation of WCG to
consummate the transactions contemplated hereby is subject to the satisfaction
on or prior to the date of the Closing of the following conditions, any one or
more of which may be waived in writing, in whole or in part, by WCG:
(a) Representations, Warranties and Covenants. NTI shall have
performed, satisfied, and complied with, in all material respects, all covenants
and agreements required by this Agreement to be performed, satisfied, or
complied with by it on or before the date of the Closing. All representations
and warranties of NTI contained in this Agreement or in any certificate,
document, instrument or writing delivered to WCG by or on behalf of NTI under
this Agreement shall be true and correct, in all material respects, on the date
of this Agreement and (except with respect to Section 3.15(h) and the second
sentence of Section 3.16) as of the date of the Closing with the same force and
effect as though they had been made on such date and NTI shall have delivered a
certificate to the foregoing effect.
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(b) No Material Adverse Change. From the date of this
Agreement to and including the Closing Date, there shall not have occurred any
Material Adverse Change in or with respect to the NCS Business or the NCS
Assets, whether or not disclosed in any supplement or amendment to the schedules
to this Agreement.
(c) Good Standing. NTI shall have delivered to WCG
certificates issued by appropriate Authorities evidencing the good standing and
existence of each of NTI and NCS, as of a date not more than ten calendar days
prior to the date of Closing, in the states in which it was organized or
qualified to do business as a foreign corporation.
(d) Consents of Third Persons. All consents from Persons that
are listed and identified in Schedule 3.3(a) attached hereto shall have been
obtained by NCS including by lapse of a contractual or statutory waiting period
and copies thereof shall have been delivered to WCG.
(e) Delivery of Other Agreements. NTI shall have executed and
delivered to Newco the other agreements contemplated by this Agreement.
(f) Review of Certain Contracts. NTI shall have made available
for review by WCG the contracts identified on Schedule 3.5(a) and Schedule
3.5(b).
(g) Merger of NCS into Newco. NCS shall have signed and
delivered to WCG the Certificate of Merger which upon filing with the Secretary
of State of Delaware will cause NCS to merge with and into Newco.
(h) LLC Agreement. NTI shall have executed and delivered to
WCG the LLC Agreement.
(i) TTS Agreement. NTL and TTS shall have executed and
delivered the TTS Agreement.
(j) BA Meridian. NTI shall have delivered evidence
satisfactory to WCG of the completion of the acquisition by NCS of the interest
of Bell Atlanticom Systems, Inc. in BA Meridian and a copy of the definitive
agreements related thereto.
(k) Secretary's Certificate. NCS shall have delivered to WCG a
certificate dated the Effective Date executed by the secretary or assistant
secretary of NCS certifying that attached thereto is: (1) a true, correct and
complete copy of the certificate of incorporation of NCS certified by the
Secretary of State of Delaware and all amendments thereto; and (2) a true,
correct and complete copy of the by-laws of NCS, and all amendments thereto. NTI
shall have delivered to WCG a certificate dated the Effective Date executed by
the secretary or assistant secretary of NTI certifying the name and title of,
and bearing the signature of, each officer of NTI individually
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authorized to execute and deliver this Agreement and the other agreements,
documents and instruments contemplated hereby.
(l) Resolutions. NTI shall have delivered to WCG certified
resolutions of the respective Boards of Directors of NTI and NCS approving the
consummation of the transactions contemplated hereby.
(m) NTI Retained Liabilities. NTI (or an Affiliate of NTI
reasonably acceptable to WCG) shall have assumed and agreed to pay, perform and
discharge the NTI Retained Liabilities pursuant to an assumption agreement in
form and substance satisfactory to WCG.
(n) Non-Competition Agreement. NTL shall have executed and
delivered the Non-Competition Agreement.
6.3 CONDITIONS TO OBLIGATION OF NTI. The obligation of NTI to
consummate the transactions contemplated hereby is subject to the satisfaction
on or prior to the date of the Closing of the following conditions, any one or
more of which may be waived in writing, in whole or in part, by NTI:
(a) Representations, Warranties and Covenants. WCG shall have
performed, satisfied, and complied with, in all material respects, all covenants
and agreements required by this Agreement to be performed, satisfied, or
complied with by it on or before the date of the Closing. All representations
and warranties of WCG contained in this Agreement or in any certificate,
document, instrument or writing delivered to NTI by or on behalf of WCG under
this Agreement shall be true and correct, in all material respects, on the date
of this Agreement and (except with respect to Section 4.15(h) and the second
sentence of Section 4.16) as of the date of the Closing with the same force and
effect as though they had been made on such date and NTI shall have delivered a
certificate to the foregoing effect.
(b) No Material Adverse Change. From the date of this
Agreement to and including the Closing Date, there shall not have occurred any
Material Adverse Change in or with respect to the WilTel Business or the WilTel
Assets, whether or not disclosed in any supplement or amendment to the schedules
to this Agreement.
(c) Good Standing. WCG shall have delivered to NTI
certificates issued by appropriate Authorities evidencing the good standing and
existence of each of WCG and WilTel, as of a date not more than ten calendar
days prior to the date of Closing, in the states in which it was organized or
qualified to do business as a foreign corporation.
(d) Consents of Third Persons. All consents from Persons that
are listed and identified in Schedule 4.3(a) attached hereto shall have been
obtained by
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WCG including by lapse of a contractual or statutory waiting period and copies
thereof shall have been delivered to NTI.
(e) Delivery of Other Agreements. WCG shall have executed and
delivered to Newco the other agreements contemplated by this Agreement.
(f) Review of Certain Contracts. WCG shall have made available
for review by NTI the contracts identified on Schedule 4.5(a) and Schedule
4.5(b).
(g) Merger of WilTel into Newco. WilTel shall have signed and
delivered to NTI the Certificate of Merger which upon filing with the Secretary
of State of Delaware will cause WilTel to merge with and into Newco.
(h) LLC Agreement. WCG shall have executed and delivered to
NTI the LLC Agreement.
(i) Cash Payment. WCG shall have paid to NTI the Cash Payment.
(j) Secretary's Certificate. WCG shall have delivered to NTI a
certificate dated the Effective Date executed by the secretary or assistant
secretary of WilTel certifying that attached thereto is: (1) a true, correct and
complete copy of the certificate of incorporation of WilTel certified by the
Secretary of State of Delaware and all amendments thereto; and (2) a true,
correct and complete copy of the by-laws of WilTel, and all amendments thereto.
WCG shall have delivered to NTI a certificate dated the Effective Date executed
by the secretary or assistant secretary of WCG certifying the name and title of,
and bearing the signature of, each officer of WCG individually authorized to
execute and deliver this Agreement and the other agreements, documents and
instruments contemplated hereby.
(k) Resolutions. WCG shall have delivered to NTI certified
resolutions of the respective Boards of Directors of WCG and WilTel approving
the consummation of the transactions contemplated hereby.
(l) WCG Retained Liabilities. WCG (or an Affiliate of WCG
reasonably acceptable to NTI) shall have assumed and agreed to pay, perform and
discharge the WCG Retained Liabilities pursuant to an assumption agreement in
form and substance satisfactory to NTI.
(m) Non-Competition Agreement. Williams shall have executed
and delivered the Non-Competition Agreement.
(n) Insurance. WCG shall have provided evidence that the
insurance policies set forth on Schedule 4.11 have been amended to include
Newco.
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(o) Parent Guaranty. WCG shall have delivered a guaranty by
Williams Holdings of Delaware, Inc., of WCG's performance of all financial
obligations under this Agreement and the LLC Agreement and 70% of Newco's
obligations under the Accounts Receivable Note, substantially in the form of
Exhibit I hereof.
6.4 CLOSING MEMORANDUM. Promptly following execution and delivery
hereof, the parties shall draw up a mutually agreed upon closing memorandum
setting forth the mechanism for completion of the transactions contemplated
hereby.
ARTICLE VII
CLOSING
Unless this Agreement shall have been terminated pursuant to the
provisions of Article XII, the consummation of the transactions provided for in
Article II (other than the formation of Newco) (the "Closing") shall take place
at the offices of The Williams Companies, Inc., One Williams Center, Suite 4100,
Tulsa, Oklahoma 74172 on April 30, 1997 or at such other time as the parties
mutually agree; provided that NCS shall have been able to close its acquisition
of the interest of Bell Atlanticom Systems, Inc. in BA Meridian prior to the
Closing, failing which the Closing shall be rescheduled for a Business Day to be
mutually agreed as soon as possible following the satisfaction of the conditions
set forth in this proviso.
ARTICLE VIII
POST-CLOSING ADJUSTMENT
8.1 TRUE-UP OF SECTION 2.7 TRANSACTIONS. The actual amount of Net
Transferred Receivables and the actual amount due under Section 2.7(b) will be
mutually determined by the Parties within 60 days after the Closing Date. The
principal amount owing under the Accounts Receivable Note will be recomputed
pursuant to the formula in Section 2.7(a), and the Parties shall cause Newco to
issue a replacement Accounts Receivable Note (for the same due date) and NTI
shall cause the original Accounts Receivable Note issued at Closing to be
cancelled. The Cash Payment will also be recomputed based on the formula
provided in Section 2.2 using the principal amount of the replacement Accounts
Receivable Note and the actual amount due under Section 2.7(b) rather than the
estimated amounts (the "Recomputed Cash Payment"). If the Recomputed Cash
Payment is greater than the Cash Payment made at Closing, WCG shall pay NTI the
difference within 90 days from the Closing Date. If the Recomputed Cash Payment
is less than the Cash Payment made at Closing, NTI shall pay WCG the difference
within 90 days from the Closing Date.
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8.2 TAX BENEFIT PAYMENT. Within 90 days after the Closing Date, NTI
shall pay to WCG an amount equal to the present value (discounted at 10%) of the
difference in the tax effect of the deductions allocable for federal income tax
purposes to WCG (the "Tax Effect") under the following two alternative sets of
conditions:
(1) A hypothetical scenario assuming that the Transferred Receivables, and
inventory and fixed assets of NCS went into Newco by operation of law
as a result of the merger of NCS with and into Newco and WCG had paid
an amount of cash to NTI to adjust NTI's ownership percentage to 30%;
and,
(2) The actual transactions as agreed to by the parties.
All amounts used in the calculation of the Tax Benefit Payment shall be based on
net book values or tax basis, as appropriate, at the Closing Date and shall be
made in accordance with the Code and Tax Regulations, including, but not limited
to, section 707 and the regulations thereunder. If any alternatives are allowed
by the Code and regulations, the alternative which will produce the smallest
possible Tax Benefit Payment will be selected.
The tax rate to be applied to the difference in allocable deductions in the
determination of the Tax Effect will be 25% for the first four taxable years (a
"Taxable Year") beginning with the year in which the closing occurs. In the
fifth Taxable Year, the Tax Effect will be the sum of the difference in
allocable deductions for that year multiplied by 40% plus the sum of differences
in allocable deductions for the first four Taxable Years multiplied by 15%. For
the sixth Taxable Year and all subsequent Taxable Years, the Tax Effect will be
the difference in allocable deductions for such year multiplied by forty percent
(40%).
In the event that WCG is able to claim any tax benefits for which it has
received a Tax Benefit Payment from NTI pursuant to this Section 8.2, WCG shall
refund all or a portion of such payment to NTI, including interest at the
federal rate for tax deficiencies. The national public accounting firm which
prepares Newco's federal income tax return shall calculate the payment to be
made by WCG to NTI pursuant to this paragraph, subject to the review of WCG and
NTI.
8.3 TAX EQUALIZATION PAYMENT FOR INTERIM PERIOD EARNINGS. Within 90
days after the Closing Date, WCG will pay to NTI an amount equal to the (i) the
Interim Period Taxable Income of NCS multiplied by 28% minus (ii) the Interim
Period Taxable Income of WilTel multiplied by 10.5%. The "Interim Period Taxable
Income" is the taxable income of NCS or WilTel, as applicable, during the period
between the Effective Date and the Closing Date without giving effect to any
gain or loss relating to the transactions arising from this Agreement. The
purpose of this payment is to true-up the federal and state income taxes each of
the Parties will be required to pay on the Interim Period Taxable Income of NCS
or WilTel, as appropriate, to its allocable
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share of the federal and state income taxes on the combined Interim Period
Taxable Income of NCS and WilTel. The cash payment will be adjusted as necessary
to yield such amount net of any income tax effect it may cause.
8.4 NETTING OF POST-CLOSING ADJUSTMENTS. The Recomputed Cash Payment
under Section 8.1 and the amounts to be paid pursuant to Sections 8.2 and 8.3
will be netted against each other to result in one payment by either NTI or WCG,
as the case may be, to the other Party.
ARTICLE IX
EMPLOYEE MATTERS
9.1 EMPLOYEE TRANSFERS AND PLAN LIABILITIES. Immediately prior to the
Closing: (i) all NCS Employees, and all NTI Employees who support the NCS
Business and are identified on Schedule 9.1(a) (hereinafter referred to as the
"NCS Transferring Employees), all labor contracts of NCS and all of NCS's
liabilities and other obligations (whether actual, contingent, known or unknown)
of any nature whatsoever under or relating to the NCS Employees and such labor
contracts shall be transferred from NCS to Nortel Communications Personnel
Services Inc., a new subsidiary to be created by NTI; (ii) all WilTel Employees
other than those identified on Schedule 9.1(b), all labor contracts of WilTel
and all of WilTel 's liabilities and other obligations (whether actual,
contingent, known or unknown) of any nature whatsoever under or relating to the
WilTel Employees and such labor contracts shall be transferred from WilTel to
WilTel Services, Inc., a new subsidiary to be created by WCG; (iii) NCS shall
transfer its interest in and all of its liabilities and other obligations
(whether actual, contingent, known or unknown) of any nature whatsoever under or
relating to the Employee Benefit Plans listed (or required to be listed) on
Schedule 3.12(e) to Nortel Communications Personnel Services Inc.; (iv) WilTel
shall transfer its interest in and all of its liabilities and other obligations
(whether actual, contingent, known or unknown) of any nature whatsoever under or
relating to the Employee Benefit Plans listed (or required to be listed) on
Schedule 4.12(e) to WilTel Services, Inc. For a period ending on the Employee
Transfer Date, Nortel Communications Personnel Services Inc. and WilTel
Services, Inc. shall provide employee services to Newco pursuant to the terms of
the Employee Services Agreement. Subject to the rights of Nortel Communications
Personnel Services Inc. and WilTel Services, Inc. under the Employee Services
Agreement and the provisions of Section 9.8(c) with respect to individuals
qualifying for long-term disability benefits, upon the expiration of such
contract; (i) all NCS Active Employees still employed by Nortel Communications
Personnel Services Inc., all WilTel Active Employees still employed by WilTel,
Services Inc., and all employees hired by Nortel Communications Personnel
Services Inc. or WilTel Services, Inc. under the service contract who are still
employed, shall be transferred to Newco; (ii) all labor contracts and
multi-employer plan obligations of Nortel Communications Personnel Services Inc.
and all labor contracts and multi-employer plan obligations of WilTel Services,
Inc. shall be transferred to Newco, and
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(iii) Newco shall establish employee benefit plans and programs for the benefit
of its employees provided that the transfer of employees and labor contracts
shall not transfer any NTI Retained Liabilities or any WCG Retained Liabilities
to Newco.
9.2 EMPLOYEE SERVICES AGREEMENT. The Employee Services Agreement,
substantially in the form attached as Exhibit J, among Newco, Nortel
Communications Personnel Services Inc., and WilTel Services, Inc. shall be
executed prior to Closing and shall permit Newco to obtain the services of all
employees of Nortel Communications Personnel Services Inc., of all employees of
WilTel Services, Inc., and of various individuals employed by WCG (or its
Affiliates) or NTI (or its Affiliates). The Employee Services Agreement shall
require Newco to pay Nortel Communications Personnel Services Inc. and WilTel
Services, Inc. for all costs associated with their respective employees during
the period of such contract, including, but not limited to compensation,
employment taxes, employee benefits, workers compensation, employment litigation
and any other litigation related to the services provided under the services
contract; provided that Newco shall not be required to pay either (i) for any
costs associated with the retirement of any employees of Nortel Communications
Personnel Services Inc., WilTel Services, Inc., WCG (or its Affiliates) or NTI
(or its Affiliates) (including, but not limited to, retiree medical, life,
long-term care or pension costs), or (ii) for any costs associated with the
fringe benefits described on Schedule 9.2 to the extent such costs exceed the
fringe benefit reimbursement rates set forth on such Schedule 9.2. Newco shall
be required to pay WCG and NTI for the services of any of their employees under
the terms of the Employee Services Agreement. Newco shall also be required to
indemnify Nortel Communications Personnel Services Inc., WilTel Services, Inc.,
WCG (or its Affiliates) and NTI (or its Affiliates) for any and all Claims and
liabilities (including any legal fees and costs incurred by them) arising out of
the employment of the employees of Nortel Communications Personnel Services Inc.
and WilTel Services, Inc. during the period following the Closing to the
Employee Transfer Date and arising out of the services agreement described in
this Section 9.2; provided that Newco shall not be required to provide
indemnification for any Claims or liabilities associated either (i) with the
retirement of any employees of Nortel Communications Personnel Services Inc.,
WilTel Services, Inc., WCG or NTI, or (ii) with the fringe benefits described on
Schedule 9.2. Subject to the limitations set forth in the preceding sentence,
such Claims and liabilities shall include, but not be limited to, all costs
associated with the employment of such employees during the period
(compensation, incentives, benefits, perquisites), the termination of employment
of any such employees (including severance benefits), and claims by such
employees for employment-related liabilities (including worker's compensation,
wrongful terminations, discrimination, etc.). Such Claims and liabilities for
which Newco shall provide indemnification shall also include Claims by Newco or
by third parties related to the services provided by the employees to Newco or
its clients pursuant to the Employee Services Agreement described in this
Section 9.2.
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During the term of the Employee Services Agreement, Nortel Communications
Personnel Services Inc. and WilTel Services, Inc. shall permit all of their
respective employees to participate in employee benefit plans, compensation
programs, and personnel policies which are substantially similar to those in
effect for their respective employees at the Closing.
9.3 REPORTING OF DATA. Each of NTI, WCG and Newco shall complete and
furnish to each other such employee and employee related data as shall be
reasonably required from time to time for each Party to perform and fulfill its
obligations under this Agreement, under the Employee Services Agreement, and
under applicable law.
9.4 EMPLOYMENT RELATED CLAIMS. Subject to Section 9.3, Newco shall be
solely responsible for all liability, costs and expenses (including attorneys'
fees) for all employment Claims relating to arbitrations, unfair labor practices
and Claims, employment discrimination charges, wrongful termination Claims,
workers' compensation Claims, any employment-related tort Claim or other Claims
or charges of or by any employee of Newco arising out of acts, conditions or
omissions occurring on or after such employee's date of employment by Newco.
9.5 BONUS PAYMENTS. The Parties acknowledge that the incentive bonus
programs utilized by each involves the determination and payment of cash bonuses
in the early part of each year, which rewards services rendered in the preceding
calendar year. Each of NTI and WCG agree and acknowledge that, all employees of
NTI, NCS and WilTel who are transferred to Nortel Communications Personnel
Services Inc., or WilTel Services, Inc. ("Transferred Employees") and who are
eligible to receive a bonus should continue to be eligible to receive a bonus
relative to services rendered to NTI, NCS or WilTel as the case may be, on or
prior to the Closing Date in accordance with the terms and conditions of a bonus
plan to be adopted by Newco. On and after the Employee Transfer Date, Nortel
Communications Personnel Services Inc. and WilTel Services, Inc. will have no
continuing obligation or responsibility for the payment of any compensation to
employees transferring to Newco, (including any annual management bonuses
payable in 1998 for performance at any time during 1997.) Newco shall be solely
responsible for such payment in accordance with the terms and conditions of a
bonus plan to be adopted by Newco.
9.6 HIRING RESTRICTIONS.
(a) Subject to subsection 9.6(b), NTI and its Affiliates
will not hire Newco employees for a period of one (1) year from Closing.
(b) Attached as Schedule 9.6(b) is a list of current NCS
employees, who at such employee's option, will have the right to rejoin NTI or
an NTI Affiliate within two (2) years from Closing without loss of seniority and
with compensation for lost benefits credit to be paid by NTI; provided, however
that such employees will remain
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with Newco for a minimum 18-month transition period or until released by Newco,
if earlier.
(c) For a period of two (2) years from Closing, WCG and its
Affiliates will not hire any of Newco's officers and director-level employees,
except for those employees listed on the attached Schedule 9.6(c).
9.7 WARN NOTICES. Each Party acknowledges that it is solely responsible
for issuing, serving and delivering all orders and notices required pursuant to
the Worker Adjustment and Retraining Notification Act ("WARN") in connection
with the termination of its employees, if any, and for any financial obligations
and liabilities in connection therewith or otherwise required in connection with
the termination of its employees.
9.8 BENEFIT ISSUES. Each of Nortel Communications Personnel Services
Inc. and WilTel Services, Inc. will be responsible for the provision of benefits
to NCS Transferring Employees and WilTel Transferring Employees (as identified
in Section 9.1 hereof), as the case may be, in respect of periods prior to the
Closing Date. Benefits will be provided to such Transferring Employees and to
other employees of Nortel Communications Personnel Services Inc. and WilTel
Services, Inc. after the Closing Date in accordance with the provision of
Section 9.1 and this Section 9.8.
(a) General. The participation of such employees in
employee benefit plans maintained by NTI and WCG will
terminate no later than the Employee Transfer Date.
(b) Qualified Retirement Plans. The benefits such
employees earn pursuant to the Code Section 401(a) qualified
retirement Plans maintained by Nortel Communications Personnel
Services Inc. and WilTel Services, Inc. (including
union-negotiated plans) will be paid in accordance with the
terms of such plans.
Distribution of benefits from such plans shall be made in the
form and at the time determined under the provisions of such
plans.
(c) Leaves of Absence. Employees on short-term
disability, long-term disability or any other leave of absence
status, who are able to return to work after the Employee
Transfer Date, will have their reemployment rights determined
by Newco. Any person who qualifies for long-term disability
benefits on or before the Employee Transfer Date under either
the employee benefit plans of NTI or WCG shall not be
transferred to Newco and shall be entitled to receive the
disability and other benefits, if any, provided by the
employee benefit plans covering such person prior to the
Employee Transfer Date. All employees of
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Nortel Communications Personnel Services Inc., and all
employees of WilTel Services, Inc. who are on short-term
disability or other leave of absence status (other than
long-term disability) shall be transferred to Newco on the
Employee Transfer Date and Nortel Communications Personnel
Services Inc., and WilTel Services, Inc. shall cease providing
benefits to all such employees on the Employee Transfer Date.
If Newco decides to provide any benefits to employees on
short-term disability or other leave of absence status (other
than long-term disability) after the Employee Transfer Date,
such benefits shall be the responsibility and liability of
Newco.
(d) Time Off. The liability for accrued vacations for
such employees will be transferred to Newco as of the Employee
Transfer Date. At that time, all Newco employees will become
subject to the Newco vacation schedule and the Newco holiday
schedule.
(e) Ancillary. Educational Assistance commenced by
such employees before the Transfer Date will become the
liability of Newco on the Employee Transfer Date.
(f) NCS Negotiated Plans. Effective as of the
Employee Transfer Date, Newco shall have the option to assume
all liability for the Pension Plan for Bargaining Employees of
Northern Telecom Inc. and/or to assume all liability for The
Savings Plan for Bargaining Unit Employees of Northern Telecom
Inc. on such terms as are agreed to by Newco and NTI. If Newco
assumes either plan, it shall continue such plan with respect
to individuals covered thereby on the Employee Transfer Date
as the sponsoring employer pursuant to the terms of such plans
and the collective bargaining agreements pursuant to which
they were established.
(g) WilTel Negotiated Plans. Effective as of the
Employee Transfer Date, Newco shall have the option to assume
all liability for the WilTel Union 401(k) savings plans listed
on Schedule 9.8(g) on such terms as are agreed to by Newco and
WCG. If Newco assumes a plan listed on Schedule 9.8(g), Newco
shall continue such plan with respect to individuals covered
thereby on the Employee Transfer Date as the sponsoring
employer pursuant to the terms of such plans and the
collective bargaining agreements pursuant to which they were
established. Effective as of the Employee Transfer Date, Newco
shall assume all liability for the WilTel multi-employer Plans
which are listed on Schedule 4.12(g) (except for any
withdrawal liabilities that were incurred prior to the
Closing), and Newco shall continue such plans in accordance
with applicable collective bargaining agreements.
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(h) Newco Benefits. The employee benefit plans
maintained by Newco on and after the Employee Transfer Date
with respect to such employees, will recognize the service of
such employees with NTI/NCS/Nortel Communications Personnel
Services Inc. and WCG/WilTel/WilTel Services, Inc. for all
purposes under such plans, with the exception of (i) service
for benefit accrual under any defined benefit plan, or (ii)
eligibility for retiree medical, if any.
Newco benefit plans which contain deductible benefit limits
will provide credit for eligible amounts previously paid
during 1997 as deductibles by employees who were covered by
the Nortel Communications Personnel Services Inc. or WilTel
Services, Inc. benefit plans as of the Employee Transfer Date.
9.9 COMPENSATION. Salary increase programs for Transferring Employees
originally scheduled to occur in 1997 after the Employee Transfer Date will be
implemented as previously scheduled.
9.10 RELOCATION. Nortel Communications Personnel Services Inc. and
WilTel Services, Inc. will complete the relocation of NCS Transferring Employees
and WilTel Transferring Employees whose relocations have commenced prior to the
Closing Date, in accordance with the policies and procedures of the respective
company which initiated the relocation. Nortel Communications Personnel Services
Inc. and WilTel Services, Inc. will consult with Newco during the period between
the Closing Date and the Employee Transfer Date concerning the relocation of any
employees whose relocation has not commenced prior to the Closing Date. The
expense of any such relocation, whether commenced before or after the Closing
Date, shall be reimbursed by Newco.
ARTICLE X
ADDITIONAL AGREEMENTS
10.1 LINE OF CREDIT. NTI and WCG agree to use reasonable efforts to
negotiate mutually acceptable credit agreements in an appropriate amount (or
other standby credit arrangements), which will provide Newco financing for a
period up to twelve months following the Effective Date. Nothing herein shall be
construed as to require NTI or any of its Affiliates, or WCG or any of its
Affiliates, to provide credit support of any kind to Newco.
10.2 NETWORK SERVICES AGREEMENT. For so long as an Affiliate of
Williams is a member of Newco, Newco will use WCG, or a WCG Affiliate, as
Newco's vendor-of-choice for telecommunications network services (subject,
however, to Newco's reasonable requirements for network and vendor diversity),
provided that WCG offers
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such services necessary or desirable to the operation by Newco of its network
(i) that are substantially equivalent, in quality, performance and scope, to
those offered by other providers of such services, and (ii) at prices and on
terms at least as favorable as those offered by other providers of such
services.
10.3 DELIVERY OF CORPORATE DOCUMENTS. Each of NTI and WCG shall deliver
to Newco, on or before the Closing Date, all Records, including computer disks
reflecting any books or records, documents or other papers, or other information
or data relating to the operation of the NCS Business or the NCS Assets or the
WilTel Business or the WilTel Assets, respectively, stored on any electronic
media, including computers. NTI and WCG shall be entitled to retain the
historical books and records relating to the NCS Business and WilTel Business,
respectively, to the extent the books and records are not necessary for the
ongoing operations of the NCS Business and WilTel Business by Newco. NTI and WCG
shall provide to Newco copies of all personnel and employee benefit files with
respect to any Transferred Employees of such companies. Each of NTI and WCG
agrees that Newco and its authorized representatives shall have the right to
inspect and, at Newco's expense, copy, at any time during regular business hours
for any proper purpose, the corporate, accounting, auditing and tax books,
records (including work papers) and other books and records but only so far as
they relate to NCS, the NCS Business, the NCS Assets or the NCS Transferred
Employees in the possession of NTI or its Affiliates, and as they relate to
WilTel, the WilTel Business, the WilTel Assets or the WilTel Transferred
Employees in the possession of WCG or its Affiliates. For a period of seven
years following the Effective Date, NTI and WCG agree that they will not dispose
of or destroy any such books and records without having first offered to deliver
the same to Newco.
10.4 ACCESS TO INFORMATION. Each Party covenants and agrees to cause
Newco to provide full and complete cooperation and assistance to each of the
Parties and its Affiliates following the Closing and to provide full and
complete access to the corporate, accounting, auditing and tax books, records
(including work papers) and other books and records relating to Newco, and to
Newco's premises and employees, to the extent that such Party or Parties
reasonably require such information to complete tax returns, to verify the
Product Mix as defined in the LLC Agreement, to investigate, enforce or defend
against Claims for indemnification pursuant to Article XI or third party Claims
against any such Party or Parties, or for similar purposes. For a period of
seven years following the Effective Date, each of NTI and WCG agree to cooperate
to cause Newco not to dispose of or destroy any such books and records without
having first offered to deliver the same to NTI and WCG, respectively.
10.5 NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Each of NTI and WCG agrees that, for a period beginning on
the Closing Date and ending on the second anniversary date of the disposition by
NTI or WCG, respectively (or, to the extent such interest has been transferred
to an Affiliate
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of such Party as permitted by the LLC Agreement, by such Affiliate), of its
interest in Newco to a Person that is not a wholly owned subsidiary of such
Party's Parent, it and its Affiliates will apply the same standards and treat
(i) Newco's confidential or proprietary information and (ii) the terms and
conditions of this Agreement and the other agreements required pursuant hereto
as it does its Affiliates' confidential or proprietary information with respect
to maintaining the confidentiality thereof. Notwithstanding the foregoing, each
Party and its Affiliates may disclose information that (A) is required to be
disclosed by applicable state or federal tax or securities laws to the extent,
and only to the extent, the laws require the disclosure and such Party provides
Newco prior written notice of its intent to provide the disclosure and the
general text of the disclosure, and the disclosure is consented to by Newco,
which consent shall not be unreasonably withheld, or (B) is required to be
disclosed by a court or administrative body of competent jurisdiction; provided
that, if a Party or its Affiliates are served or threatened with litigation that
would require such Party or its Affiliate to disclose the information, such
Party or the Affiliate shall tender to Newco the opportunity to defend, at its
cost, against the disclosure.
(b) Each Party acknowledges that all documents and objects
containing or reflecting any NCS Owned Intellectual Property and Software or
WilTel Owned Intellectual Property and Software, whether developed by such Party
or by someone else for it or any of its Affiliates, will become the exclusive
property of Newco after the Effective Time and will be delivered to Newco. Newco
will not share such NCS Owned Intellectual Property and Software or WilTel Owned
Intellectual Property and Software with NTI, WCG or any of their Affiliates
unless sold or licensed in an arms length transaction, provided, however, that
any software effectively available to any Affiliate as of February 28, 1997,
will continue to be available at the existing terms and conditions.
10.6 ADMINISTRATIVE SERVICES. Each of NTI and WCG agrees that it, or
its respective Affiliates, will make available to Newco, for a period of twelve
months following the Effective Date, certain administrative services including,
advertising, public relations, and accounting, at such Party's cost (including a
reasonable overhead allocation), not to exceed the amounts charged to NCS or
WilTel, respectively, during 1996 as reflected in the NCS Financial Statements
or the WilTel Financial Statements, as the case may be, and subject to the
provision that such administrative services, as a whole, shall be generally
rendered on a basis not less favorable to Newco than on a competitive basis and
on arm's-length conditions for services of the same or better quality. The terms
and conditions under which such services shall be made available and provided to
Newco will be set forth in Administrative Services Agreements, in substantially
the forms attached hereto as Exhibits K and L. In no event will either Party be
obligated to provide any services to Newco that are not currently being provided
to such Party by its Parent or its Affiliates.
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10.7 FURTHER ASSURANCES BY THE PARTIES. Each of the Parties to this
Agreement, at any time or times, on and after the Closing Date, shall, without
further consideration, execute, acknowledge and deliver any further bills of
sales, assignments, conveyances and other assurances, documents and instruments
of transfer reasonably requested by Newco, and shall take any other action
consistent with the terms of this Agreement that may be reasonably requested by
Newco, (i) for the purpose of assigning, transferring, granting, conveying,
vesting, confirming to and merging with Newco, as the case may be, or reducing
to its possession, any or all of the NCS Assets, the WilTel Assets and (ii) for
effectuating the transfer of operational control of the NCS Business and the
WilTel Business, and (iii) for the purpose of enabling Newco to comply with,
defend against, or contest any claim of violation of any contract, federal,
state or municipal law, ordinance, directive, order, regulation or requirement.
Each of the Parties shall, after the Closing, also furnish Newco with such
information and documents in such Party's possession or under such Party's
control or which any of the Parties can execute or cause to be executed, as will
enable Newco to prosecute any and all pending Claims, applications and the like
which may be assigned hereunder.
10.8 THIRD PARTY CONSENTS. Each of NTI and WCG shall use its reasonable
efforts to obtain the consents of third parties as are necessary for the
assignment and/or merger of NCS Assets and the merger of WilTel, respectively.
To the extent that any of NCS Assets are not assignable by the terms thereof or
consents to the assignment thereof cannot be obtained and the respective
condition to Closing has been waived by WCG, such assets shall be held by NTI in
trust for Newco and shall be performed by Newco in the name of NTI and all
benefits and obligations derived thereunder shall be for the account of Newco,
and, to the extent that any of the WilTel Assets are not assignable by merger by
the terms thereof or consents to the merger cannot be obtained and the
respective condition to closing has been waived by NTI, such assets shall be
held by WCG or the respective WCG Subsidiary, as the case may be, in trust for
Newco and shall be performed by Newco in the name of WCG, or such WCG
Subsidiary, and all benefits and obligations derived thereunder shall be for the
account of Newco; provided that where entitlement of Newco to those NCS Assets
or WilTel Assets is not recognized by any third party, NTI or WCG, or the WCG
Subsidiaries, as the case may be, shall, at the request of Newco, enforce in a
reasonable manner, for the account of Newco, any and all rights of NTI or WCG,
or the WCG Subsidiaries, as the case may be, against the third party. All
reasonable costs and expenses incurred by NTI or WCG, or the WCG Subsidiaries
or, with respect to the performance or enforcement of the above-described NCS
Assets and WilTel Assets, respectively, shall be paid or reimbursed by Newco.
10.9 INTELLECTUAL PROPERTY LICENSE AGREEMENT. NTI or its Affiliates
shall allow Newco to use the tradenames Nortel and Nortel Design? and related
logos and designs to facilitate the orderly change of signs, stationery and
promotional material used in connection with the NCS Business to those of Newco,
until December 31, 1997, and
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certain other Intellectual Property and Software as provided in the Intellectual
Property License Agreement substantially in the form attached hereto as Exhibit
M.
10.10 TAX MATTERS.
(a) Tax Returns and Payment of Taxes. NTI and WCG will prepare
and file, or cause to be prepared and filed, on a timely basis, all Tax Returns
(including any amendments thereto) for their respective Affiliates for any
taxable period ending on or prior to the Closing Date, (any such period being
referred to herein as a "Pre-Closing Period") and will pay all Taxes for their
respective Affiliates for Pre-Closing Periods. As provided in and subject to the
terms of the LLC Agreement, Newco will prepare and file, or will cause to be
prepared and filed, all Tax Returns relating to Newco for all subsequent
periods, and Newco will pay all Taxes for all taxable periods which do not
constitute Pre-Closing Periods. Real property taxes will be allocated among NTI,
WCG and Newco in accordance with Section 164(d) of the Code.
(b) Control of Contest. Each of NTI, WCG and Newco will have
the right, at its own expense, to control any audit or determination by any
taxing authority, to initiate any claim for refund or file any amended Tax
Return, and to contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment of Taxes for any taxable
period for which such party (or any of its affiliates) is charged with
responsibility for filing a Tax Return under this Agreement. Newco will promptly
forward to NTI and WCG all written notifications and other written
communications from any Taxing authority received by Newco relating to any
liability for Taxes for any taxable period for which NTI or WCG is charged with
payment responsibility under this Agreement. Newco will assist NTI and WCG to
take any and all actions with respect to any proceedings for any such taxable
period. The failure by Newco to provide any such notice to NTI or WCG within
twenty (20) Business Days of receipt by Newco of such notice will relieve NTI
and WCG from any obligations with respect to the subject matter of any
notification not so forwarded, but only to the extent that such late notice
materially prejudices NTI's or WCG's ability to contest such assessment or Tax.
(c) (i) Access to Information. Newco will provide NTI and WCG,
and NTI and WCG will provide to Newco, with the right, at reasonable times and
upon reasonable notice, to have access to and to copy and use any records or
information and personnel which may be relevant for the taxable period for which
the requesting party is charged with payment responsibility for Taxes under this
Agreement in connection with the preparation of any Tax Returns, any audit or
other examination by any taxing authority, the filing of any claim for a refund
of Tax or for the allowance of any Tax credit, or any judicial or administrative
proceedings relating to liability for Taxes. The party requesting assistance
hereunder will reimburse the other party for reasonable expenses incurred in
providing such assistance. Any information obtained
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pursuant to this Section 10.10 (c)(i) will be treated as confidential
information and will be used solely in connection with the matter for which it
was requested.
(ii) Retention of Records. For a period of seven (7)
years from the Closing Date, Newco will not dispose of or destroy any of the
business records or files of NTI and WCG in existence on the Closing Date
directly relating to Taxes without first offering to turn over possession
thereof to NTI and WCG by written notice to NTI and WCG at least thirty (30)
days prior to the proposed date of such disposition or destruction.
10.11 INSURANCE MATTERS. To the extent that insurance coverage
maintained by either WCG or NTI is available, in excess of any deductible,
retention or full indemnity program, with respect to any Loss suffered by Newco
in respect of an event occurring on or before the Closing or relating to periods
ending on or before such date, at the request of Newco and subject to
reimbursement of costs by Newco, NTI or WCG, as appropriate, shall make a claim
against such insurance and any insurance proceeds from such insurance will be
for the benefit of Newco for any relevant Loss of Newco, up to the amount of
such Loss. Each of the Parties shall have the right to control, at its expense,
subject to consultation with Newco, the defense of third-party Claims in respect
of which such Party expects that insurance coverage under its policies may be
available in respect of all or a portion of such claims (subject to any
applicable deductible under such insurance coverage).
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNITY OBLIGATION.
(a) NTI Indemnification. Subject to the provisions of this
Article XI, NTI shall indemnify and hold harmless WCG, its Party Indemnitees and
Newco against any and all Losses resulting from or arising out of:
(i) any breach of a representation or warranty made
by NTI in this Agreement or any Schedule or Exhibit hereto;
(ii) the breach of any covenant, agreement or
obligation of NTI contained in this Agreement or any Schedule
or Exhibit hereto; and
(iii) the NTI Retained Liabilities.
NTI shall compensate directly WCG for 70% of any Losses resulting from or
arising out of any matter described in subparagraphs (a)(i) of this Section 11.1
and Newco shall be deemed to be compensated thereby and shall have no right of
recovery with respect to any such matters.
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NTI shall compensate directly Newco for any Losses resulting from or arising out
of any matter described in subparagraph (a)(iii) of this Section 11.1 and WCG
shall be deemed to be compensated thereby and shall have no right of recovery
with respect to any such matter.
The total obligation of NTI and NTL taken together to indemnify under this
Section and under Section 11.1(a) of the TTS Agreement, shall in no event
exceed $200,000,000.
(b) WCG Indemnification. Subject to the provisions of this
Article XI, WCG shall indemnify and hold harmless NTI, its Party Indemnitees and
Newco against any and all Losses resulting from or arising out of:
(i) any breach of a representation or warranty made
by WCG in this Agreement or any Schedule or Exhibit hereto;
(ii) the breach of any covenant, agreement or
obligation of WCG contained in this Agreement or any Schedule
or Exhibit hereto; and
(iii) the WCG Retained Liabilities.
WCG shall compensate directly NTI for 30% of any Losses resulting from or
arising out of any matter described in subparagraph (b)(i) of this Section 11.1
and Newco shall be deemed to be compensated thereby and shall have no right of
recovery with respect to any such matters.
WCG shall compensate directly Newco for any Losses resulting from or arising out
of any matter described in subparagraph (b)(iii) of this Section 11.1 and NTI
shall be deemed to be compensated thereby and shall have no right of recovery
with respect to any such matter.
The total obligation of WCG to indemnify under subparagraph 11.1(b)(i) shall in
no event exceed $200,000,000.
(c) The breach of a specific representation, warranty or
agreement by a Party shall be determined whether or not, apart from such
specific representation, warranty or agreement, the transactions provided for in
this Agreement prove to be more favorable to the other Party, and whether or not
the facts and circumstances covered by one or more of the other representations,
warranties or agreements made by such Party prove to be more favorable than so
represented and warranted.
(d) All Claims for indemnification under this Section 11.1
(the party claiming indemnification and the party against whom such Claim for
indemnification is being made are hereinafter referred to as "Indemnified Party"
and the "Indemnifying Party", respectively) shall be reduced by the amount of
any insurance proceeds
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effectively received by or benefiting the Indemnified Party with respect to the
relevant Loss or liability subject, as the case may be, to the application of
Section 10.11.
(e) Except with respect to Claims under subparagraphs (a)(iii)
and (b)(iii) of this Section 11.1, (i) no Claim shall be capable of assertion
under Section 11.1 unless it pertains to a Loss with a monetary value of $50,000
or more, on a matter by matter basis (whereby a series of connected Losses that
are substantially identical in nature and that have arisen out of substantially
identical events, circumstances or conditions shall be deemed to constitute one
Loss); and (ii) a Party (including its Party Indemnitees) shall only be entitled
to indemnification under this Section 11.1 to the extent that the total amount
of Losses suffered by it, its Party Indemnitees or Newco as a result of
misrepresentation or breach by the other Party, exceed a deductible of
$1,000,000 (such deductible being hereinafter referred to as the " General
Deductible").
(f) Newco shall be entitled to indemnification under this
Section 11.1 with respect to Litigation Claims against a Party only to the
extent that the total amount of Losses suffered by Newco arising out of
Litigation Claims against such Party exceed a deductible of 2,000,000 (such
deductible being hereinafter referred to as such Party's "Litigation
Deductible").
11.2 PROCEDURE. All Claims for indemnification by a Person under this
Article XI shall be asserted and resolved as follows:
(a) Whenever any Claim, Litigation Claim or oral demand for
which an Indemnifying Party would be liable to an Indemnified Party hereunder
(which shall be deemed to include any Claim or Litigation Claim which falls
within, and exhausts any part of such Party's Deductible) is asserted against or
sought to be collected from such Indemnified Party by a third party, such
Indemnified Party shall, within 30 days of the receipt thereof, give notice (a
"Claim Notice") to the Indemnifying Party of such Claim, Litigation Claim or
oral demand, specifying the nature of and specific basis for such Claim,
Litigation Claim or oral demand and the amount or the estimated amount thereof
to the extent then feasible, which estimate shall not be binding upon the
Indemnified Party in its effort to collect indemnification hereunder in respect
of such Claim, Litigation Claim or oral demand. To the extent the Indemnifying
Party is prejudiced thereby, the failure to so notify the Indemnifying Party of
any such Claims or oral demands shall relieve the Indemnifying Party from
liability that it may have to the Indemnified Party under the indemnification
provisions contained in this Article XI, but only to the extent of the Loss
directly attributable to such failure to notify, and shall not relieve the
Indemnifying Party from any liability that it may have to the Indemnified Party
otherwise than under this Article XI. The Indemnifying Party shall, within 20
days of the receipt of a Claim Notice, notify the Indemnified Party as to
whether it accepts, in whole or in part, its indemnity obligation under Section
11.1(a) or (b) (subject, as the case may be, to the Indemnified Party's General
or Litigation
70
<PAGE> 80
Deductible), in which case, the Indemnifying Party shall assume and thereafter
conduct the defense thereof; provided that the Indemnified Party shall be
entitled to participate in the defense thereof at its own expense. If the
Indemnifying Party disputes liability under this Section 11.1(a) or (b), as the
case may be, or otherwise fails to defend within a reasonable time after notice,
the Indemnified Party will have the right to undertake the defense, at the risk
of the Indemnifying Party and subject, as the case may be, to the Indemnified
Party's right to claim indemnification from the Indemnifying Party for the cost
of defense. The consent to the entry of any judgment or settlement of any claim
hereunder by the Indemnifying Party may only be made upon the prior approval by
the Indemnified Party, which approval shall not be unreasonably withheld, unless
the judgment or proposed settlement involves only the payment of money damages
(which would be paid by the Indemnifying Party) with a full release of the
Indemnified Party, and does not impose any injunction, conditions, or other
equitable relief on the Indemnified Party in which case consent is not required.
(b) If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel in
contesting any Claim, Litigation Claim or oral demand that the Indemnifying
Party elects to contest, or, if appropriate and related to the Claim, Litigation
Claim or oral demand in question, in making any counterclaim against the Person
asserting the third party Claim, Litigation Claim or oral demand, or any
cross-complaint against any Person other than an Affiliate of the Indemnified
Party. The Indemnifying Party shall reimburse such Indemnified Party for
reasonable out-of-pocket expenses incurred by the Indemnified Party in such
cooperation.
(c) If any Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a Claim, Litigation Claim or
oral demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party. Subject always to application of the relevant
General or Litigation Deductible, reimbursement of any Losses incurred by the
Indemnified Party pursuant to this Article XI shall be made within 30 days after
documentation is sent to the Indemnifying Party by the Indemnified Party. If the
Indemnifying Party disputes such claim, such dispute shall be resolved in the
manner set forth in Article XIV hereof.
11.3 FAILURE TO PAY INDEMNIFICATION. If and to the extent the
Indemnified Party shall make written demand upon the Indemnifying Party for
indemnification pursuant to this Article XI, and the Indemnifying Party shall
refuse to accept its indemnity obligations under Section 11.1 (subject always to
applicable General or Litigation Deductibles) or otherwise fail to pay in full
within the period specified herein the amounts demanded pursuant hereto and in
accordance herewith, then the Indemnified Party may utilize any legal or
equitable remedy to collect from the Indemnifying Party the amount of its
damages to the extent covered by such indemnities plus all costs, including
reasonable attorneys' fees incurred in connection with such collection
71
<PAGE> 81
efforts. Nothing contained herein is intended to limit or constrain the
Indemnified Party's rights against the Indemnifying Party for indemnity, the
remedies herein being cumulative and in addition to all other rights and
remedies of the Indemnified Party.
11.4 SURVIVAL OF OBLIGATIONS. Except as otherwise expressly provided
for in the following sentence, the representations, warranties, covenants,
agreements and undertakings of NTI and WCG contained in this Agreement shall be
deemed remade at and shall survive the Closing until the expiration of
eighteen (18) months following the Closing. The representation and warranties,
convenants, agreements and undertakings of NTI and WCG: (i) contained in
Sections 3.4 and 4.4 hereof (the "Title Representations") shall survive the
Closing until the fourth (4th) anniversary thereof and will thereupon expire
together with any right of indemnification with respect to breaches of the Title
Representations, (ii) contained in Sections 3.10 and 4.10 hereof (the
"Environmental Representations") shall survive the Closing until the Second
(2nd) anniversary thereof and will thereupon expire together with any right of
indemnification with respect to breaches of the Environmental Representations,
(iii) contained in Sections 3.7, 3.12, 4.7, 4.12, the last paragraph of 8.2, and
Article IX hereof (the "Employment and Tax Representations and Covenants") shall
survive the Closing for a period ending ninety (90) days after the expiration of
the applicable statute of limitation, as the same may be extended from time to
time, and thereupon expire together with any right of indemnification with
respect to Employment and Tax Representations and Covenants; and (iv) contained
in Sections 2.5 and 10.11 shall survive the Closing until the third (3rd)
anniversary thereof and will thereupon expire together with any right of
indemnification with respect thereto; provided that, if a Claim or oral demand
for indemnification (including, without limitation, any notice of any Litigation
Claim) has been made or given within the applicable survival period and has not
been resolved as of the expiration of such period, such Claim (and, if the claim
results from a breach of a representation, warranty, covenant, agreement or
undertaking, such representation, warranty, covenant, agreement or undertaking)
shall survive until the final resolution of such Claim.
11.5 EXCLUSIVE REMEDY. With respect to all Losses indemnified under
this Article XI, the indemnities provided herein shall be deemed the sole and
exclusive remedies available to the Members, their respective parents and
Affiliates, and to Newco.
ARTICLE XII
TERMINATION
12.1 EFFORTS TO SATISFY CONDITIONS. WCG and NTI shall agree to use
their reasonable efforts to bring about the satisfaction of the conditions
specified in Article VI hereof.
72
<PAGE> 82
12.2 TERMINATION. The obligations to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of WCG and NTI;
(b) WCG, if a default shall be made by NTI in the observance
or performance by it of any agreements and covenants of NTI herein contained, or
if there shall have been a misrepresentation made in Article III by NTI,
provided that with respects to any such default or misrepresentation WCG shall
have provided five (5) Business Days notice with an opportunity for NTI to cure
within such period if capable of cure;
(c) NTI, if a default shall be made by WCG in the observance
or performance by it of any agreements and covenants of WCG herein contained, or
if there shall have been a misrepresentation made in Article IV by WCG provided
that with respect to any such default or misrepresentation NTI shall have
provided five (5) Business Days notice with an opportunity for WCG to cure
within such period if capable of cure; or
(d) By either WCG or NTI if the Closing shall not have
occurred by July 1, 1997.
XII.3 LIABILITY UPON TERMINATION. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 12.2(a) and (d), then neither party shall be under any
liability to the other party hereto; provided, however, that nothing herein
shall relieve any party from liability for any breach of or default under this
Agreement occurring prior to such termination. Except as set forth in this
Section 12.3, the rights of the parties shall not terminate upon the failure to
close the transactions contemplated hereby.
ARTICLE XIII
EXPENSES
Except as otherwise set forth herein, and whether or not the
transactions contemplated by this Agreement shall be consummated, each Party
agrees to pay, without right of reimbursement from any other Party, the costs
incurred by the Party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including the fees and
disbursements of legal counsel, accountants and consultants employed by the
Party in connection with the transactions contemplated by this Agreement. The
pre-formation and pre-organization costs of Newco shall be shared equally by NTI
and WCG; provided that the incurrence of any such costs shall be pre-approved in
writing by NTI and WCG.
73
<PAGE> 83
ARTICLE XIV
RESOLUTION OF DISPUTES
The Parties agree that, except as otherwise specifically provided
herein, all disputes under this Agreement shall be resolved in accordance with
the procedures set forth in Exhibit N hereto.
ARTICLE XV
GENERAL PROVISIONS
15.1 NOTICES. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing and delivered personally or sent via first-class,
postage prepaid, registered or certified mail (return receipt requested), or by
overnight delivery service or facsimile transmission with confirmation by
certified mail or overnight delivery service addressed as follows:
If to NTI:
Northern Telecom Inc.
2221 Lakeside Boulevard
Richardson, Texas 75082
(Attention: Richard T. Faletti, Vice President)
Facsimile: (972) 684-3999
and copy to:
Northern Telecom Inc.
2221 Lakeside Boulevard
Richardson, Texas 75082
(Attention: Richard R. Standel, Vice President,
Secretary and General-Counsel)
Facsimile: (972) 685-3011
74
<PAGE> 84
If to WCG:
One Williams Center
Tulsa, Oklahoma 74172
Attention: Henry C. Hirsch, CEO
Facsimile Number: (918) 561-6024
and copy to:
One Williams Center, 41-3
Tulsa, Oklahoma 74172
Attention: David P. Batow, General Counsel
Facsimile Number: (918) 588-3005
Any Party may change the address to which the communications are to be
directed to it by giving notice to the other in the manner provided in this
Section 15.1. Notice by mail shall be deemed to have been given and received on
the third calendar day after posting. Notice by overnight delivery service,
facsimile transmission or personal delivery shall be deemed given on the date of
actual delivery.
15.2 GOVERNING LAW. This Agreement and the performance of the
transactions contemplated hereby shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without regard to any
conflict-of-laws provision thereof that would otherwise require the application
of the law of any other jurisdiction.
15.3 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, together
with the certificates, documents, instruments, writings and any other agreements
contemplated hereby that are delivered pursuant hereto, set forth the entire
agreement and understanding of the Parties with respect to the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention with respect to the subject matter
of this Agreement has been made by any Party that is not embodied in this
Agreement and Exhibits hereto and the Organizational Agreements, the
certificates, documents, instruments, writings and any other agreements
contemplated hereby that are delivered pursuant hereto, and none of the Parties
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth.
15.4 ASSIGNMENT. No Party to this Agreement may sell, transfer, assign,
pledge or hypothecate its or his rights, interests or obligations under this
Agreement. Nothing herein is intended to restrict the transferability of the
Membership Interests (as defined in the LLC Agreement), which is governed by the
LLC Agreement.
75
<PAGE> 85
15.5 SUCCESSORS. This Agreement shall inure to the benefit of, be
binding upon, and be enforceable by the parties hereto and their respective
successors and permitted assigns.
15.6 AMENDMENTS; WAIVER. This Agreement may be amended, superseded or
canceled, and any of the terms hereof may be waived, only by a written
instrument specifically stating that it amends, supersedes or cancels this
Agreement or waives any of the terms herein, executed by all Parties intended to
be bound thereby or, in the case of a waiver, by the Party waiving compliance.
The failure of any Party at any time to require performance of any provision
herein shall in no manner affect the right at a later time to enforce the same.
No waiver by any Party of any condition, or of any breach of any term, covenant,
representation or warranty, shall be deemed or constitute a waiver of any other
condition, or breach of any other term, covenant, representation or warranty,
nor shall the waiver constitute a continuing waiver unless otherwise expressly
provided.
15.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
15.8 SEVERABILITY. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
15.9 NO THIRD PARTY BENEFICIARIES. Except for Newco, or to the extent
an Affiliate of either Party is expressly given rights herein, any agreement
contained, expressed or implied in this Agreement shall be only for the benefit
of the Parties hereto and their respective successors and assigns, and such
agreements shall not inure to the benefit of the obligees of any indebtedness of
any Party hereto, it being the intention of the Parties hereto that no Person or
entity shall be deemed a third party beneficiary of this Agreement, except to
the extent a third party is expressly given rights herein.
15.10 NEGOTIATED TRANSACTION. The provisions of this Agreement were
negotiated by the Parties hereto, and this Agreement shall be deemed to have
been drafted by all of the Parties hereto.
76
<PAGE> 86
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first set forth above.
NORTHERN TELECOM INC.
By: /s/
---------------------------------------
Its: Vice President
--------------------------------------
WILLIAMS COMMUNICATIONS GROUP, INC.
By: /s/ [S. MILLER WILLIAMS]
---------------------------------------
Its: Senior Vice President
--------------------------------------
77
<PAGE> 87
CERTIFICATE OF FORMATION
OF
WILTEL COMMUNICATIONS, LLC
This Certificate of Formation of WilTel Communications, LLC (the
"LLC"), dated April 1, 1997, is being duly executed and filed by Howard E.
Janzen, as an authorized person, to form a limited liability company under the
Delaware Limited Liability Company Act (6 Del. C. 18-101, et seq.).
FIRST. The name of the limited liability company formed hereby is
WilTel Communications, LLC.
SECOND. The address of the registered office of the LLC in the State of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for service of
process on the LLC in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
/s/ HOWARD E. JANZEN
------------------------------
Howard E. Janzen
Authorized Person
1
<PAGE> 88
EXHIBIT UPDATES TO FORMATION AGREEMENT
EXHIBIT B
CERTIFICATE OF MERGER OF WILTEL
This Exhibit has been updated pursuant to the Amendment Agreement to Formation
Agreement.
2
<PAGE> 89
CERTIFICATE OF MERGER
OF
WILLIAMS TELECOMMUNICATIONS SYSTEMS, INC.
INTO
WILTEL COMMUNICATIONS, LLC
Pursuant to Title 8, Section 264(c) of the General Corporation Law of
the State of Delaware (the "General Corporation Law") and Title 6, Section
18-209 of the Delaware Limited Liability Company Act (the "Act"), the
undersigned limited liability company does hereby certify:
FIRST: The name of the jurisdiction of formation or organization and
domicile of each of the constituent entities which is to merge are as follows:
WilTel Communications, LLC, a Delaware limited liability company, and Williams
Tele communications Systems, Inc., a Delaware corporation.
SECOND: An Agreement of Merger has been approved, adopted, certified,
executed and acknowledged in accordance with Section 264(c) of the General
Corporation Law and in accordance with Section 18-209 of the Act by: (i)
Williams Telecommunications Systems, Inc. and (ii) WilTel Communications, LLC.
THIRD: The name of the surviving limited liability company is WilTel
Communications, LLC.
FOURTH: The merger of Williams Telecommunications Systems, Inc. into
WilTel Communications, LLC shall be effective upon the filing of this
Certificate of Merger with the Secretary of State of the State of Delaware.
FIFTH: The executed Agreement of Merger is on file at the principal
place of business and an office of the surviving limited liability company. The
address of the principal place of business and an office of the surviving
limited liability company is One Williams Center, Tulsa, OK 74172.
SIXTH: A copy of the Agreement of Merger will be furnished by the
surviving limited liability company, on request and without cost, to any member
of WilTel Communications, LLC and to any person holding an interest in Williams
Telecommunications Systems, Inc.
IN WITNESS WHEREOF, said Limited Liability Company has caused this certificate
to be signed by an authorized person, the 30th day of April, 1997.
WILTEL COMMUNICATIONS, LLC
BY: /s/ S. MILLER WILLIAMS
-------------------------------
as Authorized Person
3
<PAGE> 90
CERTIFICATE OF MERGER
OF
NORTEL COMMUNICATIONS SYSTEMS INC.
INTO
WILTEL COMMUNICATIONS, LLC
------------------------------------------------------
Pursuant to Section 18-209(c) of the
Limited Liability Company Act of the State of Delaware
and Section 264(c) of the
General Corporation Law of the State of Delaware
------------------------------------------------------
WilTel Communications, LLC, a limited liability company
organized under the Delaware Limited Liability Company Act with its principal
office at One Williams Center, Tulsa, Oklahoma 74172, does hereby certify as
follows:
FIRST: The name and jurisdiction of organization of each of
the constituent entities to the merger are as follows:
<TABLE>
Name State of Organization
---- ---------------------
<S> <C>
NORTEL Communications Systems Inc. Delaware
WilTel Communications, LLC Delaware
</TABLE>
SECOND: An Agreement of Merger between the constituent
entities to the merger (the "Agreement of Merger") has been approved and
executed by each
4
<PAGE> 91
of the constituent entities in accordance with Section 18-209(b) of the Limited
Liability Company Act of the State of Delaware and Section 264(c) of the
Delaware General Corporation Law, as applicable.
THIRD: The name of the surviving domestic limited liability company in
the merger is WilTel Communications, LLC (the "Surviving Limited Liability
Company").
FOURTH: The Agreement of Merger is on file at the principal place of
business of the Surviving Limited Liability Company. The address of the
principal place of business of the Surviving Limited Liability Company is One
Williams Center, Tulsa, Oklahoma 74172.
FIFTH: A copy of the Agreement of Merger will be furnished by the
Surviving Limited Liability Company, on request and without cost, to any stock
holder of NORTEL Communications Systems Inc. and any member of WilTel
Communications, LLC.
SIXTH: The merger of the constituent entities shall become effective
upon the filing hereof.
5
<PAGE> 92
IN WITNESS WHEREOF, this Certificate of Merger has been duly executed
as of the 30th day of April 1997, and is being filed in accordance with Section
18-209(c) of the Limited Liability Company Act of the State of Delaware and
Section 264(c) of the General Corporation Law of the State of Delaware.
WilTel Communications, LLC
By: /s/ S. MILLER WILLIAMS
-----------------------------------
Name: S. Miller Williams
Title: Senior Vice President
6
<PAGE> 1
EXHIBIT 10.57
===============================================================================
LOAN AGREEMENT
dated as of
SEPTEMBER 8, 1999
between
WILLIAMS COMMUNICATIONS, INC.,
as Borrower
AND
THE WILLIAMS COMPANIES, INC.,
as Lender
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01 Defined Terms............................................................1
SECTION 1.02 Classification of Loans and Borrowings..................................24
SECTION 1.03 Terms Generally.........................................................24
SECTION 1.04 Accounting Terms; GAAP..................................................24
ARTICLE 2
THE CREDITS
SECTION 2.01 Term Loan...............................................................25
SECTION 2.02 Loans and Borrowings....................................................25
SECTION 2.03 [Intentionally Omitted].................................................25
SECTION 2.04 [Intentionally omitted].................................................25
SECTION 2.05 [Intentionally omitted].................................................25
SECTION 2.06 [Intentionally omitted].................................................25
SECTION 2.07 Interest Elections......................................................25
SECTION 2.08 [Intentionally omitted].................................................27
SECTION 2.09 Repayment of Loans; Evidence of Debt....................................27
SECTION 2.10 Amortization of Term Loan...............................................27
SECTION 2.11 Prepayment of Loans.....................................................28
SECTION 2.12 [Intentionally omitted].................................................29
SECTION 2.13 Interest................................................................29
SECTION 2.14 Alternate Rate of Interest..............................................30
SECTION 2.15 [Intentionally omitted].................................................30
SECTION 2.16 Break Funding Payments..................................................30
SECTION 2.17 [Intentionally omitted].................................................31
SECTION 2.18 Payments Generally......................................................31
SECTION 2.19 [Intentionally omitted].................................................31
SECTION 2.20 [Intentionally omitted].................................................31
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Organization; Powers....................................................31
SECTION 3.02 Authorization; Enforceability...........................................31
SECTION 3.03 Governmental Approvals; No Conflicts....................................32
SECTION 3.04 Financial Condition; No Material Adverse Change.........................32
SECTION 3.05 Properties..............................................................33
SECTION 3.06 Litigation and Environmental Matters....................................33
SECTION 3.07 Compliance with Laws and Agreements.....................................34
SECTION 3.08 Investment and Holding Company Status...................................34
SECTION 3.09 Taxes...................................................................34
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 3.10 ERISA...................................................................35
SECTION 3.11 Disclosure..............................................................35
SECTION 3.12 Subsidiaries............................................................35
SECTION 3.13 Insurance...............................................................35
SECTION 3.14 Labor Matters...........................................................35
SECTION 3.15 Solvency................................................................36
SECTION 3.16 Year 2000 Issue.........................................................36
SECTION 3.17 No Burdensome Restrictions..............................................36
SECTION 3.18 [Intentionally omitted].................................................37
ARTICLE 4
[INTENTIONALLY OMITTED]
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01 Financial Statements and Other Information..............................37
SECTION 5.02 Notices of Material Events..............................................40
SECTION 5.03 Existence; Conduct of Business..........................................40
SECTION 5.04 Payment of Obligations..................................................40
SECTION 5.05 Maintenance of Properties...............................................41
SECTION 5.06 Insurance...............................................................41
SECTION 5.07 Casualty and Condemnation...............................................41
SECTION 5.08 Books and Records; Inspection and Audit Rights..........................41
SECTION 5.09 Compliance with Laws....................................................41
SECTION 5.10 Use of Proceeds.........................................................42
SECTION 5.11 [Intentionally omitted].................................................42
SECTION 5.12 [Intentionally omitted].................................................42
SECTION 5.13 [Intentionally omitted].................................................42
SECTION 5.14 [Intentionally omitted].................................................42
SECTION 5.15 [Intentionally omitted].................................................42
SECTION 5.16 [Intentionally omitted].................................................42
SECTION 5.17 [Intentionally omitted].................................................42
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01 Indebtedness; Certain Equity Securities.................................42
SECTION 6.02 Liens...................................................................44
SECTION 6.03 Fundamental Changes.....................................................46
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions...............47
SECTION 6.05 Asset Sales.............................................................49
SECTION 6.06 Sale and Leaseback Transactions.........................................50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness...................51
SECTION 6.08 Limitation on Capital Expenditures......................................51
SECTION 6.09 Transactions with Affiliates............................................52
SECTION 6.10 Restrictive Agreements..................................................53
SECTION 6.11 Fiscal Year.............................................................53
SECTION 6.12 Change in Business......................................................53
SECTION 6.13 [Intentionally omitted].................................................53
SECTION 6.14 Designation of Unrestricted Subsidiaries................................53
SECTION 6.15 Total Debt to Contributed Capital Ratio.................................54
SECTION 6.16 Minimum EBITDA..........................................................55
SECTION 6.17 Total Leverage Ratio....................................................55
SECTION 6.18 Senior Leverage Ratio...................................................56
SECTION 6.19 Interest Coverage Ratio.................................................56
SECTION 6.20 Financial Covenant Non-Compliance Cure..................................57
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01 Events of Default.......................................................58
ARTICLE 8
[INTENTIONALLY OMITTED]
ARTICLE 9
[INTENTIONALLY OMITTED]
ARTICLE 10
MISCELLANEOUS
SECTION 10.01 Notices................................................................60
SECTION 10.02 Waivers; Amendments....................................................61
SECTION 10.03 Expenses; Indemnity; Damage Waiver.....................................61
SECTION 10.04 [Intentionally omitted]................................................62
SECTION 10.05 Survival...............................................................62
SECTION 10.06 Counterparts; Integration; Effectiveness...............................62
SECTION 10.07 Severability...........................................................63
SECTION 10.08 Right of Setoff........................................................63
SECTION 10.09 Governing Law; Jurisdiction; Consent to Service of Process.............63
SECTION 10.10 WAIVER OF JURY TRIAL...................................................64
SECTION 10.11 Headings...............................................................64
SECTION 10.12 [Intentionally omitted]................................................64
SECTION 10.13 Interest Rate Limitation...............................................64
</TABLE>
iii
<PAGE> 5
SCHEDULE 3.05 - REAL PROPERTY
SCHEDULE 3.06 - DISCLOSED MATTERS
SCHEDULE 3.12 - SUBSIDIARIES
SCHEDULE 3.13 - INSURANCE
SCHEDULE 6.01 - EXISTING INDEBTEDNESS
SCHEDULE 6.02 - EXISTING LIENS
SCHEDULE 6.04 - EXISTING INVESTMENTS
SCHEDULE 6.09 - EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10 - EXISTING RESTRICTIVE AGREEMENTS
iv
<PAGE> 6
LOAN AGREEMENT dated as of September 8, 1999 between Williams
Communications, Inc., a Delaware corporation, and The Williams Companies, Inc.,
a Delaware corporation
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01 Defined Terms. As used in this Loan Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or Loans comprising such Borrowing, are bearing interest at
a rate determined by reference to the Alternate Base Rate.
"Additional Capital" means (i) the aggregate amount (exclusive of
amounts used to repay or refinance debt securities or Qualifying Holdings Debt
the proceeds of which are included in this clause (i)) of (a) proceeds received
by Holdings after June 30, 1999 from contributions to the capital, or purchases
of common equity securities, of Holdings (including proceeds of the Equity
Issuance but excluding Qualifying Equity Interests issued as consideration for
an Investment permitted under Section 6.04(p)), (b) proceeds received by
Holdings after June 30, 1999 from issuances of debt securities by Holdings
(including proceeds of the Notes Offering), (c) proceeds of Qualifying Holdings
Debt issued after the Effective Date and (d) Excess Cash Flow for each fiscal
year commencing with fiscal year 2001,
minus
(ii) the sum of (x) $2,775,000,000 and (y) (unless Holdings and the
Restricted Subsidiaries shall (without regard to any exercise by the Parent of
its financial covenant cure right under Section 6.20) have been in compliance
with Sections 6.15 through 6.19, inclusive, for a period of four consecutive
fiscal quarters following any exercise by the Parent of its financial covenant
cure right under Section 6.20), the aggregate amount of proceeds received by
Holdings in respect of any financial covenant default cure pursuant to Section
6.20.
"Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:
(i) if such period is a period ending on or after June 30,
1999 and on or before September 30, 2001,
<PAGE> 7
(A) an amount equal to (x)(1) EBITDA for the last
fiscal quarter in such period plus (2) ADP Interest
Expense for such fiscal quarter minus (3) revenues
for such fiscal quarter attributable to Dark Fiber
Dispositions multiplied by (y) four, plus
(B) Dark Fiber Proceeds for such period; and
(ii) if such period is any other period,
(A) EBITDA for such period plus (y) ADP Interest
Expense for such period minus (z) revenues for such
period attributable to Dark Fiber Dispositions plus
(B) Dark Fiber Proceeds for such period.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the LIBO Rate for such Interest
Period.
"ADP" means the program set forth in the Operative Documents.
"ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.
"ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.
"ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.
"ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.
"ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.
"Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries,
Controls (a "controlling Person"), is Controlled by or is under common Control
with the specified Person, (ii) any Person that holds, directly or indirectly,
10% or more of
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<PAGE> 8
the Equity Interests of the specified Person and (iii) any Person 10% or more
of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, (i) the applicable rate per
annum set forth below under the caption "Eurodollar Spread" or "ABR Spread", as
the case may be, based upon the ratings by S&P and Moody's, respectively,
applicable on such date to the Credit Agreement plus (ii) the applicable rate
per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Lender in respect of the most recently ended fiscal quarter of
the Borrower, is less than 6:00 to 1:00:
3
<PAGE> 9
<TABLE>
<CAPTION>
====================================================================================================
FACILITIES RATING EURODOLLAR SPREAD ABR SPREAD LEVERAGE PREMIUM
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEVEL I BBB- and Baa3 or 1.00% 0.00% 0.25%
higher
- ----------------------------------------------------------------------------------------------------
LEVEL II BB+ and Ba1 1.375% 0.375% 0.25%
- ----------------------------------------------------------------------------------------------------
LEVEL III BB and Ba2 1.75% 0.75% 0.25%
- ----------------------------------------------------------------------------------------------------
LEVEL IV BB- and Ba3 2.00% 1.00% 0.25%
- ----------------------------------------------------------------------------------------------------
LEVEL V Lower than BB-
or lower than Ba3 2.25% 1.25% 0.25%
====================================================================================================
</TABLE>
For purposes of the foregoing clause (b), (i) if neither S&P nor
Moody's shall have in effect a rating for the Credit Agreement (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Credit Agreement, then the Applicable Margin shall be
based on such rating, (iii) if the ratings established by S&P and Moody's for
the Credit Agreement shall fall within different Levels, then the Applicable
Margin shall be based on the lower of the two ratings, (iv) if the ratings
established by S&P and Moody's for the Credit Agreement shall fall within the
same Level, then the Applicable Margin shall be based on that Level and (v) if
the ratings established by S&P and Moody's for the Credit Agreement shall be
changed (other than as a result of a change in the rating system of S&P or
Moody's), such change shall be effective as of the date on which it is first
announced by the applicable rating agency. Each change in the Applicable Margin
shall apply (other than with respect to the Leverage Premium or as described in
the immediately succeeding sentence) during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of S&P or Moody's
shall change, or if either such rating agency shall cease to be in the business
of rating corporate debt obligations, the Borrower and the Lender shall
negotiate in good faith to amend this definition to reflect such changed rating
system or the unavailability of ratings from such rating agency and, pending
the effectiveness of any such amendment, the Applicable Margin shall be
determined by reference to the rating most recently in effect prior to such
change or cessation.
"Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized
amount of the remaining lease payments under such lease that would appear on a
balance sheet of such
4
<PAGE> 10
Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a Capital Lease Obligation.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Williams Communications, Inc., a Delaware
corporation.
"Borrowing" means Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Bridge Facility" means a loan facility to be provided to Holdings in
an aggregate principal amount not to exceed $750,000,000, none of the
obligations of Holdings under which are Guaranteed by the Borrower or any other
Restricted Subsidiary.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Tulsa, Oklahoma are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and
the Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless such use shall, itself, constitute an Investment
permitted under Section 6.04 (other than Section 6.04(i)) constitute "Capital
Expenditures".
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
5
<PAGE> 11
"Cash Equivalent Investments" means:
(1) Government Securities maturing, or subject to tender at the
option of the holder thereof, within two years after the date of
acquisition thereof;
(2) time deposits and certificates of deposit of (a) any commercial
bank organized in the United States having capital and surplus in
excess of $500,000,000 or (b) any branch located in the United States
of any commercial bank organized under the law of any other country
that is a member of the Organization for Economic Cooperation and
Development having total assets in excess of $500,000,000, or its
foreign currency equivalent at the time, in either case with a
maturity date not more than one year from the date of acquisition;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with (a) any bank meeting the qualifications specified in
clause (2) above or (b) any primary government securities dealer
reporting to the Market Reports Division of the Federal Reserve Bank
of New York;
(4) direct obligations issued by any state of the United States or
any political subdivision of any such state or any public
instrumentality thereof maturing, or subject to tender at the option
of the holder of such obligation, within one year after the date of
acquisition thereof; provided that, at the time of acquisition, the
long-term debt of such state, political subdivision or public
instrumentality has a rating of A, or higher, from S&P or A-2 or
higher from Moody's or, if at any time neither S&P nor Moody's shaft
be rating such obligations, then an equivalent rating from such other
nationally recognized rating service as is acceptable to the Lender;
(5) commercial paper issued by the parent corporation of (a) any
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000, or its foreign currency equivalent at the time, and
money market instruments and commercial paper issued by others having
one of the three highest ratings obtainable from either S&P or
Moody's, or, if at any time neither S&P nor Moody's shall be rating
such obligations, then from such other nationally recognized rating
service as is acceptable to the Lender and in each case maturing
within one year after the date of acquisition;
6
<PAGE> 12
(6) overnight bank deposits and bankers' acceptances at (a) any
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000 or its foreign currency equivalent at the time;
(7) deposits available for withdrawal on demand with (a) a
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000 or its foreign currency equivalent at the time; and
(8) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (1)
through (7).
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Loan Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Loan Agreement or (c) compliance by the Lender
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this Loan
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commission" means the United States Securities and Exchange
Commission.
"Consolidated Net Income" means, for any period, the net income or
loss of Holdings and the Restricted Subsidiaries (exclusive of the portion of
net income allocable to Persons that are not Restricted Subsidiaries, except to
the extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.
"Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.
"Contributed Capital" means, at any date, (i) Total Debt at such date
plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and
7
<PAGE> 13
all other capital contributions made by the Lender and its subsidiaries (other
than Holdings and its Subsidiaries) to Holdings, but only to the extent that
proceeds of any of the foregoing are contributed by Holdings to the Borrower.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.
"Credit Agreement" means the Credit Agreement, dated as of September
8, 1999, among the Borrower, Holdings, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as
Syndication Agent, and Bank of Montreal and The Bank of New York, as
Co-Documentation Agents.
"Dark Fiber Proceeds" means, for any period, cash proceeds received by
Holdings and the Restricted Subsidiaries in respect of Dark Fiber Dispositions
during such period.
"Dark Fiber Disposition" means a lease, sale, conveyance or other
disposition of fiber optic cable or the use thereof for a period constituting
all or substantially all of the expected useful life thereof in a transaction
in which none of Holdings or the Restricted Subsidiaries has any obligation to
"light" such fiber optic cable.
"Deemed Subsidiary Investment" has the meaning assigned to such term
in Section 6.14.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the first anniversary of the Term Maturity
Date.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBITDA" means, for any period,
8
<PAGE> 14
(i) Consolidated Net Income for such period,
plus,
(ii) to the extent deducted in determining Consolidated Net
Income, the sum, without duplication, of (w) interest expense, (x)
income tax expense, (y) depreciation and amortization expense and (z)
non-cash extraordinary or non-recurring charges (if any), in each case
recognized in such period;
minus,
(iii) to the extent included in Consolidated Net Income for
such period, extraordinary or non-recurring gains (if any), in each
case recognized in such period.
"Effective Date" means September 8, 1999.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of Holdings or any Restricted Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
"Equity Issuance" means the issuance and sale by Holdings of its
common stock (x) in an initial public offering or (y) to certain strategic
investors other than the Lender or any of its subsidiaries or Affiliates.
9
<PAGE> 15
"Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 7.
"Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:
(a) the Consolidated Net Income (or loss) of Holdings and the
Restricted Subsidiaries for such period, adjusted to exclude any gains
or losses attributable to Prepayment Events; plus
10
<PAGE> 16
(b) depreciation, amortization, non-cash interest expense and
other non-cash charges or losses deducted in determining Consolidated
Net Income (or loss) for such period; plus
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such period plus (ii) the amount, if any, by
which the consolidated deferred revenues of Holdings and the
Restricted Subsidiaries increased during such period plus (iii) the
aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred during such period to finance Capital
Expenditures, to the extent that mandatory principal payments in
respect of such Indebtedness would not be excluded from clause (f)
below when made; minus
(d) the sum of (i) any non-cash gains included in determining
Consolidated Net Income (or loss) for such period plus (ii) the
amount, if any, by which Net Working Capital increased during such
period plus (iii) the amount, if any, by which the consolidated
deferred revenues of Holdings and the Restricted Subsidiaries
decreased during such period; minus
(e) Capital Expenditures for such period; minus
(f) the aggregate principal amount of long-term Indebtedness
(including pursuant to Capital Lease Obligations) repaid or prepaid by
Holdings and the Restricted Subsidiaries during such period, excluding
(i) Indebtedness in respect of Revolving Loans, Incremental Revolving
Loans and Letters of Credit under the Credit Agreement, (ii) Term
Loans and Incremental Term Loans under the Credit Agreement prepaid
pursuant to Section 2.11(b) or (c) of the Credit Agreement, (iii)
repayments or prepayments of Indebtedness financed by incurring other
Indebtedness, to the extent that mandatory principal payments in
respect of such other Indebtedness would not be excluded from this
clause (f) when made and (iv) Indebtedness referred to in Sections
6.01(d), 6.01(f), 6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o) of
the Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing International Joint Ventures" means ATL-Algar Telecom Leste
S.A., PowerTel Limited and MetroCom S.A.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the
11
<PAGE> 17
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent under the Credit Agreement from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.
"Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether
as a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary that is not a Foreign
Subsidiary is a partner or as a branch of any Subsidiary that is not a Foreign
Subsidiary for United States income tax purposes.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of
America or any agency or instrumentality thereof for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which are not callable or redeemable at the issuer's option;
provided that, for purposes of the definition of "Cash Equivalents Investments"
only, such obligations shall not constitute Government Securities if they are
redeemable or callable at a price less than the purchase price paid by the
Borrower or the applicable other Restricted Subsidiary, together with all
accrued and unpaid interest, if any, on such Government Securities.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities
12
<PAGE> 18
or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.
"Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange
rate or commodity price hedging arrangement.
"High Yield Notes" means the notes issued by Holdings the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks pursuant to the Credit Agreement.
"Holdings" means Williams Communications Group, Inc., a Delaware
corporation.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment
obligations of such Person to the owner of assets used in a Telecommunications
Business for the use thereof pursuant to a lease or other similar arrangement
with respect to such assets or a portion thereof entered into in the ordinary
course of business), (e) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person,
whether or not the Indebtedness secured thereby has been assumed, (f) all
Guarantees by such Person of Indebtedness of others, (g) all (x) Capital Lease
Obligations of such Person
13
<PAGE> 19
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (j) any Disqualified Stock and (k) all obligations under any
Hedging Agreements. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor. Indebtedness of the Borrower and the other
Subsidiaries shall exclude any Indebtedness of Holdings that would otherwise
constitute Indebtedness of the Borrower or any such Subsidiary only under
clause (e) above and solely by virtue of a Lien created under the Loan
Documents in accordance with Section 5.11(d) of the Credit Agreement, and
Indebtedness of Holdings and the Subsidiaries shall exclude any Indebtedness of
the Lender that would otherwise constitute Indebtedness of Holdings or any
Subsidiary only under clause (e) above and solely by virtue of a Lien created
under the Loan Documents in accordance with Section 5.11(d) of the Credit
Agreement.
"Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Lender, Holdings, the Borrower and the
Transactions.
"Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) revenues
attributable to Dark Fiber Dispositions plus (D) Dark Fiber Proceeds to (ii)
Interest Expense, in each case for the period of four consecutive fiscal
quarters most recently ended on or prior to such date.
"Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.07.
"Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an
14
<PAGE> 20
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to the Lender, twelve months)
thereafter, as the Borrower may elect; provided, that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest
Period that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Investment" has the meaning assigned to such term in Section 6.04.
"Lender" means The Williams Companies, Inc.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upward to the nearest
whole multiple of 1/16 of 1% per annum, if such rate is not such a multiple)
equal to the rate per annum at which deposits in U.S. dollars are offered by
the principal office of Citibank, N.A. ("Citibank") in London, England, to
prime banks in the London interbank market at 11:00 A.M. (London time) as
reported by Citibank's telephone recorded rate announcement ("TRRA") on the
first day of each month, obtained by calling (212) 291-6644. If the first day
of the month is not a business day, the previous business day's rate will
prevail.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lender to the Borrower pursuant to
this Loan Agreement.
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<PAGE> 21
"Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement, all net obligations under such Hedging Agreement in an
amount equal to (i) if such Hedging Agreement has been closed out, the
termination value thereof or (ii) if such Hedging Agreement has not been closed
out, the mark-to-market value thereof determined on the basis of readily
available quotations provided by any recognized dealer in Hedging Agreements
similar to such Hedging Agreement.
"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise,
of Holdings and its Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Loan Agreement or (c) the
rights of or benefits available to the Lender under this Loan Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans) of
any one or more of Holdings and the Restricted Subsidiaries in an aggregate
principal amount exceeding $25,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of Holdings or any
Restricted Subsidiary in respect of any Hedging Agreement at any time shall be
the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.
"Notes Offering" means the public offering and sale of the High Yield
Notes.
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<PAGE> 22
"Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.
"Obligations" means obligations under the Loan Agreement, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to the Credit
Agreement and (y) all other amounts payable under the Loan Agreement.
"Operative Documents" has the meaning set forth in the Participation
Agreement.
"Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998 among the Borrower, State Street Bank
and Trust Company of Connecticut, National Association, as trustee, the
Noteholders and Certificate Holders named therein, State Street Bank and Trust
Company, as collateral agent, and Citibank, N.A., as agent, and the other
agents, arrangers and managing agents party thereto.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are
not overdue by more than 45 days or are being contested in
compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance
and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Section 7.01; and
17
<PAGE> 23
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of
business of Holdings or any Restricted Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Telecommunications Asset Disposition" means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
optical fiber and/or conduit and any related equipment, technology or software
used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:
(i) with respect to any Segment constructed by, for or on behalf of
the Borrower or any Subsidiary or Affiliate, (x) 24 optical
fibers per route mile on such Segment as deployed at the time of
such Permitted Telecommunications Asset Disposition or (y) 12
optical fibers and one empty conduit per route mile on such
Segment as deployed at the time of such Permitted
Telecommunications Asset Disposition; and
(ii) with respect to any Segment purchased or leased from third
parties, the lesser of (x) 50% of the optical fibers per route
mile originally purchased or leased on such Segment, (y) 24
optical fibers per route mile on such Segment as deployed at the
time of such Permitted Telecommunications Asset Disposition or
(z) 12 optical fibers and one empty conduit per route mile on
such Segment as deployed at the time of such Permitted
Telecommunications Asset Disposition.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
18
<PAGE> 24
"Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent under the Credit Agreement as its
prime rate in effect at its principal office in Dallas, Texas; each change in
the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
"Projections" has the meaning set forth in Section 3.04(d).
"Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be,
that (i) are not mandatorily redeemable or redeemable at the option of the
holder thereof, (ii) are not convertible into or exchangeable for debt
securities of Holdings or any Restricted Subsidiary, Equity Interests in any
Restricted Subsidiary or Equity Interests that are not Qualifying Equity
Interests of Holdings, (iii) are not required to be repurchased or redeemed by
Holdings or any Restricted Subsidiary and (iv) do not require the payment of
cash dividends, in each of the foregoing cases, prior to the date that is one
year after the Term Maturity Date.
"Qualifying Holdings Debt" means unsecured debt of Holdings (other
than the High Yield Notes) (i) no part of the principal of which is required to
be paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest
(including Post-Petition Interest) on the Loans and all other obligations under
the Loan Agreement and (iii) the terms and conditions of which are reasonably
satisfactory to the Lender.
"Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.
"Reorganization" means the contribution to the Borrower by the Lender
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects
(other than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings
of all of its material subsidiaries (other than the Borrower and its
subsidiaries), in each case not previously held, directly or indirectly, by the
Borrower.
19
<PAGE> 25
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of Holdings, the Borrower or any Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.
"Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) CSI Incorporated, a
Delaware corporation and its successors and assigns and (ii) any Foreign
Subsidiary) of Holdings are Restricted Subsidiaries.
"Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.
"S&P" means Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies.
"Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.
"Senior Debt" means, at any date, without duplication, all
Indebtedness of the Borrower and the other Restricted Subsidiaries that are
subsidiaries of the Borrower, determined on a consolidated basis at such date
and the ADP Outstandings at such date; provided that, for purposes of this
definition, Indebtedness in respect of Hedging Agreements shall be equal to (i)
the aggregate net Mark-to-Market Valuation of all Hedging Agreements of the
Borrower and the Restricted Subsidiaries that are subsidiaries of the Borrower
then outstanding, to the extent that such aggregate net Mark-to-Market
Valuation constitutes a net obligation of the Borrower and such Restricted
Subsidiaries and (ii) zero, if such aggregate net Mark-to-Market Valuation does
not constitute such a net obligation.
"Senior Leverage Ratio" means, at any date, the ratio of (i) Senior
Net Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.
"Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the
Borrower
20
<PAGE> 26
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.
"Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.
"Specified Indebtedness" has the meaning set forth in Section 6.07(b).
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership, association or
other entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.
"Subsidiary Designation" has the meaning set forth in Section 6.14.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Telecommunications Assets" means:
(a) any property (other than cash or Cash Equivalent Investments)
to be owned or used by the Borrower or any other Restricted
Subsidiary and used in the Telecommunications Business; and
(b) Equity Interests of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Equity
Interests by the Borrower or any other Restricted Subsidiary
from any Person other than an Affiliate of Holdings or the
Borrower; provided that such Person is primarily engaged in the
Telecommunications Business.
21
<PAGE> 27
"Telecommunications Business" means the business of:
(a) transmitting, or providing services relating to the
transmission of, voice, video or data through owned or leased
transmission facilities or the right to use such facilities;
(b) constructing, creating, developing, operating, managing or
marketing communications networks, related network transmission
equipment, software and other devices for use in a
communications business;
(c) computer outsourcing, data center management, computer systems
integration, reengineering of computer software for any
purpose, including, without limitation, for the purposes of
porting computer software from one operating environment or
computer platform to another or to address issues commonly
referred to as "Year 2000 issues";
(d) constructing, managing or operating fiber optic
telecommunications networks and leasing capacity on those
networks to third parties;
(e) the sale, resale, installation or maintenance of communications
systems or equipment; or
(f) evaluating, participating in or pursuing any other activity or
opportunity that is primarily related to those identified in
(a), (b), (c), (d) or (e) above;
provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.
"Term Amortization Date" means September 30, 2002.
"Term Facility" means the Term Loans hereunder.
"Term Loan" shall have the meaning set forth in Section 2.01.
"Term Maturity Date" means the seventh anniversary of the Effective
Date.
"Total Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Debt at such date to (ii) Contributed Capital at such date.
"Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such date, and the ADP Outstandings at such date,
provided that, for purposes of this definition, Indebtedness in respect of
Hedging
22
<PAGE> 28
Agreements shall be equal to (i) the aggregate net Mark-to-Market Valuation of
all Hedging Agreements of Holdings and the Restricted Subsidiaries then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (ii) zero, if such aggregate net Mark-to-Market Valuation does not
constitute such a net obligation.
"Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal
quarters most recently ended on or prior to such date.
"Total Net Debt" means, at any date, Total Debt at such date, minus
the aggregate amount of all cash and Cash Equivalent Investments of Holdings
and the Restricted Subsidiaries (excluding any cash and Cash Equivalent
Investments that are blocked or restricted so that they may not be used for
general corporate purposes at such date) in excess of $10,000,000 at such date.
"Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).
"Transactions" means the execution, delivery and performance by the
Borrower of this Loan Agreement.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14 and (ii) CSI
Incorporated, a Delaware corporation and its successors and assigns.
"Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.
"Weighted Average Life to Maturity" means, on any date, an amount
equal to (i) the sum of the scheduled repayment of Indebtedness, or scheduled
reduction in commitment to provide financing, to be made after such date
multiplied by the number of days from such date to the date of such scheduled
prepayment or reduction divided by (ii) the aggregate principal amount of such
Indebtedness or commitments to provide financing, as the case may be.
23
<PAGE> 29
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Terms capitalized herein but not defined herein are used as defined in
the Credit Agreement.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of
this Loan Agreement, Loans may be classified and referred to by Type (e.g., a
"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Loan Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Loan Agreement and (e) the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Lender that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Lender requests an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
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ARTICLE 2
THE CREDITS
SECTION 2.01 Term Loan. Subject to the terms and conditions set forth
herein, the Lender agrees to make a Term Loan to the Borrower in an initial
principal amount equal to $794,000,000. In addition, the Lender may make the
following additional Term Loans to the Borrower: (i) up to $200,000,000 of
Equity Interests of the Borrower held by the Lender may be converted into
Indebtedness and added to the principal amount under this Loan Agreement; (ii)
any accrued and unpaid interest due under this Loan Agreement may, at the sole
option of the Lender, be capitalized and added to the principal amount under
this Loan Agreement; and (iii) up to $25,000,000 per fiscal year of the
Borrower of amounts owed to the Lender by the Borrower or any other Restricted
Subsidiary under contractual agreements with the Lender may, at the sole option
of the Lender, be added to the principal amount under this Loan Agreement. All
of the Term Loans referred to above are collectively referred to herein as the
"Term Loan." Amounts repaid in respect of the Term Loan may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
Subject to Section 2.14, the Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Notwithstanding any other provision of this Loan Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Term Maturity Date.
SECTION 2.03 [Intentionally Omitted]
SECTION 2.04 [Intentionally omitted]
SECTION 2.05 [Intentionally omitted]
SECTION 2.06 [Intentionally omitted]
SECTION 2.07 Interest Elections. (a) The Borrowing initially shall be
of the Type agreed to by the parties, and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period agreed to by the parties.
Thereafter, the Borrower may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section. The
Borrower may elect different options with respect to different portions of the
Borrowing.
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<PAGE> 31
(b) To make an election pursuant to this Section, the Borrower shall
notify the Lender of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 of the Credit Agreement if the
Borrower were requesting a Revolving Borrowing under the Credit Agreement of
the Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Lender of a
written Interest Election Request in a form approved by the Lender and signed
by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing,
the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the definition
of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) [Intentionally omitted]
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
26
<PAGE> 32
SECTION 2.08 [Intentionally omitted]
SECTION 2.09 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Lender the then unpaid principal
amount of each Term Loan of the Lender as provided in Section 2.10.
(b) [Intentionally omitted]
(c) The Lender shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to the Lender hereunder
and (iii) the amount of any sum received by the Lender hereunder.
(d) The entries made in the accounts maintained pursuant to Section
2.09(c) shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of the Lender to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Loan Agreement.
(e) The amounts due under this Loan Agreement shall represented by a
note executed on the Effective Date.
SECTION 2.10 Amortization of Term Loan. (a) The Borrower shall repay
Borrowings outstanding on the Term Amortization Date in 24 consecutive
installments of principal, each of which will be due and payable on the last
day of each fiscal quarter (except with respect to the first installment, which
shall be due the first business day following July 1, 2000, and the final
installment, which shall be on the Term Maturity Date) set forth below in the
dollar amounts set forth opposite such quarterly installment date (or the Term
Maturity Date) below; provided that the final installment shall equal the sum
of (x) the then aggregate unpaid principal amount of all Term Loans plus (y)
all other unpaid amounts owing in respect of Term Loans, and shall be due and
payable not later than the Term Maturity Date; provided also that if any
amortization payment shall not be permitted under the Intercreditor Agreement,
such amortization payment shall not be due until the earliest date on which
such payment is permitted under the Intercreditor Agreement:
27
<PAGE> 33
<TABLE>
<CAPTION>
Payment Date Amount
---------------- ----------
<S> <C>
3rd Quarter 2000 $6,250,000
4th Quarter 2000 $6,250,000
1st Quarter 2001 $6,250,000
2nd Quarter 2001 $6,250,000
3rd Quarter 2001 $6,250,000
4th Quarter 2001 $6,250,000
1st Quarter 2002 $6,250,000
2nd Quarter 2002 $6,250,000
3rd Quarter 2002 $6,250,000
4th Quarter 2002 $6,250,000
1st Quarter 2003 $6,250,000
2nd Quarter 2003 $6,250,000
3rd Quarter 2003 $6,250,000
4th Quarter 2003 $6,250,000
1st Quarter 2004 $6,250,000
2nd Quarter 2004 $6,250,000
3rd Quarter 2004 $6,250,000
4th Quarter 2004 $6,250,000
1st Quarter 2005 $6,250,000
2nd Quarter 2005 $6,250,000
3rd Quarter 2005 $6,250,000
4th Quarter 2005 $6,250,000
1st Quarter 2006 $6,250,000
2nd Quarter 2006 $6,250,000
</TABLE>
(b) [Intentionally omitted]
(c) [Intentionally omitted]
(d) [Intentionally omitted]
(e) Prior to any repayment of any Borrowings hereunder, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the
Lender by telephone (confirmed by telecopy) of such selection not later than
11:00 a.m., Tulsa, Oklahoma time, three Business Days before the scheduled date
of such repayment; provided that each repayment of Borrowings shall be applied
to repay any outstanding ABR Borrowings before any other Borrowings. Each
repayment of a Borrowing shall be applied ratably to the Loans included in the
repaid Borrowing. Repayments of Borrowings shall be accompanied by accrued
interest on the amount repaid.
SECTION 2.11 Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
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<PAGE> 34
part, subject to the requirements of this Section. All prepayments shall be
made without premium or penalty other than, to the extent applicable, amounts
payable under Section 2.16.
(b) Prior to any optional prepayment of Borrowings hereunder, the
Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to Section
2.11(c).
(c) The Borrower shall notify the Lender by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 11:00 a.m., Tulsa, Oklahoma time, three
Business Days before the date of prepayment and (ii) in the case of prepayment
of an ABR Borrowing, not later than 11:00 a.m., Tulsa, Oklahoma time, one
Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.
SECTION 2.12 [Intentionally omitted].
SECTION 2.13 Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the ABR Spread and, if
applicable, the Leverage Premium (each as set forth in "Applicable Margin").
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Eurodollar Spread and, if applicable, the Leverage Premium (each as
set forth in "Applicable Margin").
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any ABR Loan, 2%
plus the highest Applicable Margin for ABR Loans plus the ABR and (ii) in the
case of overdue principal of any Eurodollar Loan, the higher of (x) 2% plus the
highest Applicable Margin for Eurodollar Loans plus the Adjusted LIBO Rate
applicable to such Eurodollar Loan on the day before payment was due and (y)
the sum of 2% plus the highest Applicable Margin for ABR Loans plus the ABR.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in
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<PAGE> 35
the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate
or Adjusted LIBO Rate shall be determined by the Lender, and such determination
shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing, the Lender determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period, then the Lender shall give notice thereof to the Borrower,
and, until the Lender notifies the Borrower that the circumstances giving rise
to such notice no longer exist, any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective.
SECTION 2.15 [Intentionally omitted]
SECTION 2.16 Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to convert, continue
or prepay any Loan on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice may be revoked under Section 2.11(c)
and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19,
then, in any such event, the Borrower shall compensate the Lender for the loss,
cost and expense attributable to such event. In the case of a Eurodollar Loan,
such loss, cost or expense to the Lender shall be deemed to include an amount
determined by the Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which the Lender would bid were it
to bid, at the
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<PAGE> 36
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of the Lender
setting forth any amount or amounts that the Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay the Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.17 [Intentionally omitted]
SECTION 2.18 Payments Generally. The Borrower shall make each payment
required to be made by it hereunder prior to 1:00 p.m., Tulsa, Oklahoma time,
on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Lender at its offices. If any payment under this
Loan Agreement shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day (unless, in the
case of payments in respect of Eurodollar Loans, such next succeeding Business
Day would fall in the next calendar month, in which case such payment shall be
due on the next preceding Business Day), and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under this Loan Agreement shall be made in dollars.
SECTION 2.19 [Intentionally omitted]
SECTION 2.20 [Intentionally omitted]
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that:
SECTION 3.01 Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02 Authorization; Enforceability. The Transactions to be
entered into by the Borrower are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate and, if required,
stockholder
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<PAGE> 37
action. This Loan Agreement has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any
Restricted Subsidiary or any of their respective assets, or give rise to a
right thereunder to require any payment to be made by Holdings or any
Restricted Subsidiary, and (d) will not result in the creation or imposition of
any Lien on any asset of Holdings or any Restricted Subsidiary, except Liens
created under the Loan Documents (if any).
SECTION 3.04 Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lender (i) Holdings' consolidated
balance sheet and statements of operations, stockholders equity and cash flows
as of and for the fiscal years ended December 31, 1997 and December 31, 1998,
reported on by Ernst & Young LLP, independent public accountants, and (ii)
Holdings' consolidated balance sheets and statements of operations,
stockholders equity and cash flows as of and for the fiscal quarter and the
portion of the fiscal year ended June 30, 1999, certified by the chief
financial officer of Holdings. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of Holdings and the Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) Holdings has heretofore furnished to the Lender its pro forma
consolidated balance sheet as of June 30, 1999 and pro forma statements of
operations and cash flows for the fiscal year ended December 31, 1998 and the
six months ended June 30, 1999, prepared giving effect to the Transactions, the
Reorganization, the Equity Issuance and the Notes Offering, as if such events
had occurred on such date or on the first day of such period, as the case may
be. Such pro forma consolidated balance sheets and statements of operations and
cash flows (i) have been prepared in good faith based on the same assumptions
used to prepare the pro forma financial statements included in the Information
Memorandum (which assumptions are believed by Holdings and the Borrower to be
reasonable), (ii) are based on the best information available to Holdings and
the
32
<PAGE> 38
Borrower after due inquiry, (iii) accurately reflect all adjustments necessary
to give effect to the Transactions, the Reorganization, the Equity Issuance and
the Notes Offering and (iv) present fairly, in all material respects, the pro
forma financial position of Holdings and the Subsidiaries as of such date and
for such periods as if the Transactions, the Reorganization, the Equity
Issuance and the Notes Offering had occurred on such date or at the beginning
of such period, as the case may be.
(c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material
contingent liabilities, unusual material long-term commitments or unrealized
material losses.
(d) The projections delivered to the Lenders under the Credit
Agreement pursuant to Section 4.01(q)(iii) of the Credit Agreement (the
"Projections") were based on assumptions believed by the Borrower and Holdings
in good faith to be reasonable when made and as of their date represented the
Borrower's and Holdings' good faith estimate of future performance of Holdings
and the Subsidiaries and of the Borrower and its consolidated subsidiaries.
(e) Since December 31, 1998, there has been no Material Adverse
Change.
SECTION 3.05 Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
None of the properties and assets of Holdings or any Restricted Subsidiary is
subject to any Lien other than Permitted Encumbrances, Liens created by the
Collateral Documents (if any) related to the Credit Agreement and other Liens
permitted under Section 6.02.
(b) Each of Holdings and the Subsidiaries owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by Holdings and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property that
is owned or leased by Holdings, the Borrower or any other Loan Party (other
than the Lender) as of the Effective Date after giving effect to the
Transactions.
SECTION 3.06 Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
33
<PAGE> 39
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Loan Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under
any Environmental Law, (ii) has become subject to any Environmental Liability,
(iii) has received written notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any violations of any
Environmental Law or any release, threatened release or exposure to any
Hazardous Materials that is likely to form the basis of any Environmental
Liability.
(c) Since the date of this Loan Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07 Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08 Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09 Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (unless the Lender shall have been responsible for
filing) all Tax returns and reports required to have been filed and has paid or
caused to be paid (unless the Lender shall have been responsible for paying)
all Taxes required to have been paid by or with respect to it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
Holdings or such Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
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<PAGE> 40
SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $25,000,000 the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$25,000,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.11 Disclosure. Holdings and the Borrower have disclosed to
the Lender all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Restricted Subsidiary to the
Lender in connection with the negotiation of this Loan Agreement or delivered
hereunder or thereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, Holdings and the Borrower represent
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.
SECTION 3.12 Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party under
the Credit Agreement, in each case as of the Effective Date.
SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums
in respect of such insurance have been paid.
SECTION 3.14 Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
35
<PAGE> 41
other applicable Federal, state, local or foreign law dealing with such
matters. All payments due from Holdings or any Restricted Subsidiary, or for
which any claim may be made against Holdings or any Restricted Subsidiary, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or accrued as a liability on the books of Holdings or such
Restricted Subsidiary. The consummation of the Transactions and the
Reorganization has not and will not give rise to any right of termination or
right of renegotiation on the part of any union under any collective bargaining
agreement by which Holdings or any Restricted Subsidiary is bound.
SECTION 3.15 Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the
making of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.
SECTION 3.16 Year 2000 Issue. The cost to Holdings and the Restricted
Subsidiaries of any reprogramming required to permit the proper functioning of
(i) the computer systems of Holdings and the Restricted Subsidiaries and (ii)
equipment containing embedded microchips (including systems and equipment
supplied by others or with which Holdings' or any Restricted Subsidiary's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, and of the reasonably foreseeable consequences of year 2000 to
Holdings and the Restricted Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) would not
reasonably be expected to result in a Default or a Material Adverse Effect. To
the knowledge of Holdings and the Borrower, except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of Holdings and the Restricted
Subsidiaries are and, with ordinary course upgrading and maintenance and
planned systems conversions and/or upgrades, will continue to be, sufficient to
permit Holdings and the Restricted Subsidiaries to conduct their respective
businesses without the occurrence of a Material Adverse Effect.
SECTION 3.17 No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a
36
<PAGE> 42
party or by which any of their property is bound or affected, no charge,
corporate restriction, judgment, decree or order and no provision of applicable
law or governmental regulation could reasonably be expected to have Material
Adverse Effect.
SECTION 3.18 [Intentionally omitted]
ARTICLE 4
[INTENTIONALLY OMITTED]
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full, the Borrower covenants and agrees with
the Lender that:
SECTION 5.01 Financial Statements and Other Information. The
Borrower will furnish to the Lender
(a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement), setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Ernst & Young LLP or other independent public accountants of recognized
national standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of Holdings
and the Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, (ii) within 90 days after the end of each fiscal year of
the Borrower, its audited consolidated balance sheets and related audited
consolidated statements of operations, stockholders' equity and cash flows as
of the end of and for such fiscal year (including segment reporting with
respect to each of the Borrower's and its consolidated subsidiaries' business
segments consistent with that provided with respect to the Borrower's and its
consolidated subsidiaries' business segments in the Notes Offering Registration
Statement), setting forth in each case in comparative form the figures for the
37
<PAGE> 43
previous fiscal year, all reported on by Ernst & Young LLP or other independent
public accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied and (iii)
within 90 days after the end of each fiscal year of Holdings and the Borrower,
(x) supplemental unaudited balance sheets and related unaudited statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal year, setting forth in tabular form in each case the figures for the
previous year, for the Borrower and Holdings and the consolidating adjustments
with respect thereto and (y) segment reporting of EBITDA and Adjusted EBITDA
with respect to each business segment of Holdings and the Subsidiaries and the
Borrower and its consolidated subsidiaries consistent with the business
segments reported on in the Notes Offering Registration Statement;
(b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows of the Borrower and its consolidated
subsidiaries as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of the previous fiscal year (or,
in the case of the balance sheet, as of the end of the previous fiscal year)
(including segment reporting with respect to each of the Borrower's and its
consolidated subsidiaries' business segments consistent with that provided with
respect to the Borrower's and its consolidated subsidiaries' business segments
in the Notes Offering Registration Statement and also including segment
reporting of EBITDA and Adjusted EBITDA), all certified by a Financial Officer
of the Borrower as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
38
<PAGE> 44
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15
through 6.19 and (y) Additional Capital at such date, including detail as to
the sources and uses of Additional Capital since June 30, 1999 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of Holdings' audited financial statements referred to in Section
3.04 and, if any such change has occurred, specifying the effect of such change
on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause 5.01(a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) not later than 120 days after the commencement of each fiscal
year of the Borrower, a consolidated and consolidating budget of Holdings for
such fiscal year and a consolidated budget of the Borrower for such fiscal year
(including projected consolidated (and, in the case of Holdings, consolidating)
balance sheets, related consolidated (and, in the case of Holdings,
consolidating) statements of projected operations and cash flow as of the end
of and for such fiscal year and segment information with respect to each of
Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments in
the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any
significant revisions of such budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its
shareholders generally, as the case may be; and
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(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan
Document, as the Lender may reasonably request.
SECTION 5.02 Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Lender prompt written notice of
the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result
in a Material Adverse Effect;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.04 Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity
or amount thereof is being contested in good faith by appropriate proceedings,
(b) Holdings, the Borrower or such other Restricted Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP, (c)
such contest effectively suspends collection of the contested obligation and
the enforcement of
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<PAGE> 46
any Lien securing such obligation and (d) the failure to make payment pending
such contest could not reasonably be expected to result in a Material Adverse
Effect and (ii) shall not breach, or permit any other Restricted Subsidiary to
breach, in any material respect, or permit to exist any material default under,
the terms of any material lease, commitment, contract, instrument or obligation
to which it is a party, or by which its properties or assets are bound, except
where the failure to do the foregoing would not in the aggregate have a
Material Adverse Effect.
SECTION 5.05 Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.
SECTION 5.06 Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.
SECTION 5.07 Casualty and Condemnation. The Borrower will furnish to
the Lender prompt written notice of any casualty or other insured damage to any
portion of any of Holdings' and the Restricted Subsidiaries' property or assets
or the commencement of any action or proceeding for the taking of any of
Holdings' and the Restricted Subsidiaries' property or assets or any part
thereof or interest therein under power of eminent domain or by condemnation or
similar proceeding (in each case with a value in excess of $10,000,000).
SECTION 5.08 Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper books of record and account in which materially full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. Each of Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, permit any representatives designated by
the Lender at the expense of the Lender, or, if an Event of Default shall have
occurred and be continuing, at the expense of the Borrower, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested, subject to Section 10.12.
SECTION 5.09 Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
41
<PAGE> 47
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.10 Use of Proceeds. (a) The proceeds of Loans will be used
for working capital requirements and general corporate purposes of the Borrower
and the other Restricted Subsidiaries and to pay the fees and expenses
associated with this Loan Agreement.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
SECTION 5.11 [Intentionally omitted]
SECTION 5.12 [Intentionally omitted]
SECTION 5.13 [Intentionally omitted]
SECTION 5.14 [Intentionally omitted]
SECTION 5.15 [Intentionally omitted]
SECTION 5.16 [Intentionally omitted]
SECTION 5.17 [Intentionally omitted]
ARTICLE 6
NEGATIVE COVENANTS
Until the principal of and interest on each Loan and all fees payable
hereunder have been paid in full, the Borrower covenants and agrees with the
Lender that (provided that the provisions of Section 6.15 through 6.19,
inclusive, shall not apply on any day on which the Parent Guarantee is in full
force and effect and has not been released in accordance with Section 5.16):
SECTION 6.01 Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
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<PAGE> 48
(b) Indebtedness of Holdings under Qualifying Holdings Debt;
(c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require
any payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;
(d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;
(e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;
(f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any
Subsidiary that is not a Loan Party to any Loan Party shall be subject to
Section 6.04;
(g) Guarantees by Holdings of Indebtedness of any Subsidiary and by
any Subsidiary of Indebtedness of the Borrower or any other Subsidiary;
provided that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party
of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;
(h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that
such Indebtedness exists at the time such Person becomes a Restricted
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Restricted Subsidiary) and extensions, renewals or
replacements of any such Indebtedness that do not increase the principal amount
thereof or result in an earlier maturity date or decreased Weighted Average
Life to Maturity thereof;
(i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;
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<PAGE> 49
(j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar
obligations in connection with the disposition of any assets (other than
Guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such assets for the purpose of financing such acquisition); provided that
(i) any such disposition is permitted by Section 6.05 and (ii) the aggregate
principal amount of such Indebtedness does not exceed the gross proceeds
actually received by Holdings or any Restricted Subsidiary in connection with
such disposition;
(k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into in the ordinary course of business and not
for speculative purposes;
(l) Indebtedness of Holdings under the Bridge Facility in an aggregate
principal amount not exceeding $750,000,000 at any time outstanding; provided
that the aggregate principal amount of Indebtedness permitted to be outstanding
from time to time under this clause (l) shall be reduced by the net proceeds
received by Holdings from the Equity Issuance and the Notes Offering;
(m) Indebtedness from time to time outstanding under this Loan
Agreement;
(n) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;
provided that, notwithstanding anything in this Loan Agreement to the contrary,
the Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes, (ii) the Bridge
Facility or (iii) any Qualifying Holdings Debt.
SECTION 6.02 Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist
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any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues or rights in respect of any thereof,
except:
(i) Liens created under the Loan Documents (including,
without limitation, Liens securing Indebtedness of Holdings and the
Lender created thereunder in accordance with Section 5.11(d) of the
Credit Agreement);
(ii) Permitted Encumbrances;
(iii) Liens on any ADP Property securing only ADP
Obligations;
(iv) any Lien on any property or asset of Holdings or any
Restricted Subsidiary existing on the date hereof and set forth in
Schedule 6.02; provided that (A) such Lien shall not apply to any
other property or asset of Holdings or any Restricted Subsidiary and
(B) such Lien shall secure only those obligations which it secures on
the date hereof and extensions, renewals and replacements thereof that
do not increase the outstanding principal amount thereof or decrease
the Weighted Average Life to Maturity thereof;
(v) any Lien existing on any property or asset prior to the
acquisition thereof by Holdings or any Restricted Subsidiary or
existing on any property or asset of any Person that becomes a
Restricted Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (A) such Lien is not
created in contemplation of or in connection with such acquisition or
such Person becoming a Restricted Subsidiary, as the case may be, (B)
such Lien shall not apply to any other property or assets of Holdings
or any Restricted Subsidiary and (C) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the
date such Person becomes a Restricted Subsidiary, as the case may be,
and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof or decrease the Weighted
Average Life to Maturity thereof;
(vi) Liens in favor of the Borrower or any Subsidiary Loan
Party;
(vii) Liens on property of Holdings or any Restricted
Subsidiary consisting of, or securing licenses of such property; and
(viii) other Liens securing Indebtedness at any time
outstanding that, together with the aggregate amount of Attributable
Debt in respect of all Sale and Leaseback Transactions then
outstanding, does not exceed 5% of the consolidated net property,
plant and equipment of Holdings and the Restricted Subsidiaries at
such time.
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(b) Notwithstanding anything to the contrary contained herein,
Holdings and the Borrower will not, and will not permit any other Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
assets to secure (i) except in accordance with Section 5.11(d) of the Credit
Agreement, any obligations in respect of the High Yield Notes or any
refinancing thereof, permitted under Section 6.01(c), (ii) except in accordance
with Section 5.11(d) of the Credit Agreement, any Qualifying Holdings Debt or
(iii) any obligations under the Bridge Facility.
SECTION 6.03 Fundamental Changes. (a) Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the
surviving entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary
may liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lender; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.
(b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Loan Agreement and businesses reasonably related
thereto.
(c) Holdings will not engage in any business or activity other than
(i) the ownership of all of the outstanding Equity Interests in the Borrower,
(ii) the issuance of the High Yield Notes, (iii) issuances of Qualifying
Holdings Debt, (iv) issuances of its Equity Interests, (v) the holding of 100%
of the Equity Interests of any Unrestricted Subsidiary which is engaged
exclusively in the buying, selling and trading of telecommunications services
as a commodity on an established market (a "Trading Subsidiary") and, with
respect to each of the foregoing, activities incidental thereto. Holdings will
not own or acquire any assets (other than Qualifying Equity Interests in the
Borrower, Equity Interests in any Trading Subsidiary, cash and Cash Equivalent
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, liabilities in respect of the High Yield Notes, liabilities in
respect of Qualified Holdings Debt permitted hereunder, liabilities imposed by
law, including tax liabilities, and other liabilities incidental to its
existence and permitted business and activities).
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SECTION 6.04 Investments, Loans, Advances, Guarantees and
Acquisitions. Holdings will not, and will not permit any Restricted Subsidiary
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Restricted Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person,
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit
(collectively, "Investments"), except:
(a) Cash Equivalent Investments;
(b) Investments existing on the date hereof and set forth on Schedule
6.04;
(c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;
(d) loans or advances made by Holdings to any Restricted Subsidiary
and made by any Restricted Subsidiary to any other Restricted Subsidiary;
provided that the amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the proviso to this
Section 6.04;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield
Notes, Qualifying Holdings Debt or Indebtedness under the Bridge Facility and
(ii) the aggregate principal amount of Indebtedness of Subsidiaries that are
not Loan Parties that is Guaranteed by any Loan Party shall be subject to the
proviso to this Section 6.04;
(f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) acquisitions by the Borrower of ADP Property for consideration
paid on and prior to any date not exceeding Additional Capital as of such date;
minus (i) payments of principal under this Loan Agreement made pursuant to
Section ?(x) of the Credit Agreement on or prior to such date, (ii) Investments
permitted
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under clause (ii) of the proviso to this Section 6.04 made on or prior to such
date and (iii) Capital Expenditures permitted under Section 6.08(b) made on or
prior to such date;
(h) Hedging Agreements permitted under Section 6.01(k);
(i) Capital Expenditures made in accordance with Section 6.08;
(j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;
(k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by
Holdings or any Restricted Subsidiary of any equity interest in Algar Telecom
S.A. (formerly known as Lightel S.A.) owned by the Lender or its subsidiaries
(other than Holdings and the Subsidiaries) shall not be permitted under this
clause (k) but shall only be permitted under clause (p) of this Section 6.04;
(l) exchanges and substitutions of ADP Property for like property
which take place prior to the occurrence of the Completion Date, the Expiration
Date, the Termination Date, or an ADP Event of Default, Environmental Trigger
or Unwind Event under the Operative Documents;
(m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time
outstanding pursuant to this paragraph (m) (valued at the cost of acquisition
thereof, without regard to any increase or decrease in the value thereof based
on subsequent performance of such Person, but net of any distributions received
by the Borrower or any Subsidiary Loan Party in respect of such Investment)
shall not exceed 15% of Consolidated Assets at such time and (ii) the aggregate
amount of such Investments made in all such Persons with cash or Cash
Equivalent Investments that are at any time outstanding pursuant to this
paragraph (m) shall not exceed 5% of Consolidated Assets;
(n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to
purchase Equity Interests in Holdings pursuant to and in accordance with stock
option plans or other benefit plans for directors, officers and employees of
Holdings and its Restricted Subsidiaries, provided that, in the case of any of
the Loans referred to in this subclause (B), any proceeds to Holdings of any
such purchases of Equity Interests shall be contributed to the Borrower and
(ii) other loans to directors,
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officers and employees of Holdings and its Restricted Subsidiaries made in the
ordinary course of business in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding;
(o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);
(p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings; and
(q) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the
transmission of voice, video or data through or over owned or leased fiber
optic cable and/or the holding, developing or constructing of assets or
technology used therein;
provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net of any distributions received by the Borrower or any
Subsidiary Loan Party in respect of such Investment made pursuant to Sections
6.04(j) and 6.04(k) on or prior to any date, or referred to in Section
6.04(c)(i), the proviso to Section 6.04(d) and Section 6.04(e)(ii) and made on
or prior to such date, shall not exceed the sum of (i) $275,000,000 plus (ii)
an amount (which amount, for purposes of this proviso only, shall not be less
than zero) equal to (x) the amount of Additional Capital as of such date minus
(y) (A) payments of principal under this Loan Agreement made pursuant to
Section ?(x) of the Credit Agreement on or prior to such date, (B) acquisitions
of ADP Property permitted under Section 6.04(g) made on or prior to such date
and (C) Capital Expenditures permitted under Section 6.08(b) made on or prior
to such date.
SECTION 6.05 Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any asset, including any Equity Interests owned by it, nor
will Holdings permit any of its Restricted Subsidiaries to issue any additional
Equity Interests, except:
(a) sales, transfers, leases or other dispositions of fiber optic
cable capacity, and sales of used or surplus equipment and Cash Equivalent
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;
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(c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;
(d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;
(e) Permitted Telecommunications Asset Dispositions;
(f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;
(g) Restricted Payments permitted under Section 6.07(a) and payments
of principal and interest permitted under Section 6.07(b);
(h) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(h)
shall not exceed $25,000,000 during any fiscal year of the Borrower;
provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(h) shall be made (x) for fair value and (y)
only if at least 75% of the consideration paid therefor is cash or Cash
Equivalent Investments (or, if less than 75%, the remainder of such
consideration consists of Telecommunications Assets).
SECTION 6.06 Sale and Leaseback Transactions. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
enter into any arrangement, directly or indirectly, whereby it shall (a) sell
or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred or (b) lease any
property, real or personal, from any entity substantially all of whose
activities consist of acquiring, constructing or developing property to be
leased to Holdings and the Restricted Subsidiaries pursuant to leases intended
to cover, and measured by the cost of or the financing incurred by such entity
to finance, such property (the transactions referred to in clause (a) and (b)
being collectively referred to as "Sale and Leaseback Transactions"), except
for (i) sales and leases of ADP Property pursuant to the ADP in respect of ADP
Outstandings not to exceed $750,000,000 at any time outstanding and (ii) (x)
any such sale referred to in clause (a) above of any fixed or capital assets
that is made for cash consideration in an amount not less than the cost of such
fixed or capital asset and is consummated within 270 days after the Borrower or
such other Restricted Subsidiary acquires or completes the construction of such
fixed or
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capital asset and (y) any such lease referred to in clause (b) above providing
for rental payments measured by the cost of the property leased or the
financing incurred by the lessor thereof to acquire, construct or develop the
property so leased; provided that the sum of the aggregate amount of
Attributable Debt in respect of all such Sale and Leaseback Transactions
permitted under this clause (ii) at any time outstanding and the aggregate
amount of Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at
such time outstanding shall not exceed 5% of consolidated net property, plant
and equipment of Holdings and the Restricted Subsidiaries at such time.
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.
(a) Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans
for management or employees of Holdings and the Restricted Subsidiaries; and
(iv) so long as no Default shall have occurred and be continuing or result from
the making of such payment, the Borrower may pay dividends to Holdings at such
times and in such amounts as shall be necessary to permit Holdings to
discharge, to the extent permitted hereunder, its permitted liabilities.
(b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment
or other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes or any Qualifying
Holdings Debt (collectively "Specified Indebtedness"), or any voluntary payment
or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any
Specified Indebtedness (or enter into any transaction the economic effect of
which is substantially similar to any of the foregoing), except, provided no
Default has occurred and is continuing or would result therefrom, payments of
regularly scheduled interest as and when due in respect of any Specified
Indebtedness.
SECTION 6.08 Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set
forth below opposite such fiscal year:
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<TABLE>
<CAPTION>
Fiscal Year Amount
----------- --------------
<S> <C>
1999 $2,500,000,000
2000 $2,000,000,000
2001 $ 825,000,000
2002 $ 600,000,000
2003 $ 600,000,000
2004 $ 600,000,000
2005 $ 600,000,000
2006 $ 600,000,000
</TABLE>
provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in
any such period or fiscal year shall be less than the limit with respect
thereto set forth above (before giving effect to any increase therein pursuant
to this proviso) (the "Base Amount"), then an amount equal to (i) in the case
of 1999 and 2000, 100% and (ii) in the case of any other fiscal year, 50% of
such shortfall may be added to the amount of such Capital Expenditures
permitted for the immediately succeeding fiscal year (such amount to be added
for any fiscal year, the "Rollover Amount"); provided further that any Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) made during any fiscal year for which any Rollover Amount shall have
been so added shall be applied, first, to the Rollover Amount added for such
fiscal year and, second, to the Base Amount for such fiscal year.
(b) In addition to Capital Expenditures permitted under Section
6.08(a) above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the
Effective Date in an aggregate amount not to exceed Additional Capital as of
such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date, (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date and (C) payments
of principal under this Loan Agreement permitted under Section ?(x) of the
Credit Agreement made on or prior to such date.
SECTION 6.09 Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected
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<PAGE> 58
pursuant to, and on terms provided for in, existing agreements (as in effect on
the date hereof) listed in Schedule 6.09 hereto.
SECTION 6.10 Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by this Loan
Agreement, any Loan Document, the High Yield Notes or, to the extent that any
such restrictions therein, taken as a whole, are no more restrictive than those
contained in the High Yield Notes, any Qualifying Holdings Debt, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.10 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) Section 6.10(a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Loan Agreement if such restrictions or conditions apply only to the
property or assets securing such Indebtedness and (v) Section 6.10(a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof.
SECTION 6.11 Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.
SECTION 6.12 Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.
SECTION 6.13 [Intentionally omitted]
SECTION 6.14 Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:
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<PAGE> 59
(i) no Default shall have occurred and be continuing at the time of
or after giving effect to such Subsidiary Designation;
(ii) after giving effect to such Subsidiary Designation, Holdings
would be in compliance with the covenants contained in Section
6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
such Subsidiary Designation had been made on the first day of
the period of four fiscal quarters most recently ended in
respect of which financial statements have been delivered by
the Company pursuant to Section 5.01(a) or 5.01(b);
(iii) Holdings has delivered to the Administrative Agent (x) written
notice of such Subsidiary Designation and (y) a certificate of
a Financial Officer setting forth in reasonable detail
calculations demonstrating pro forma compliance with the
financial covenants contained in Section 6.08 and Sections 6.15
through 6.19, as required by clause (ii) above; and
(iv) on the date of such Subsidiary Designation, Holdings and the
Borrower would not be prohibited by Section 6.04(c) and the
proviso to Section 6.04 from making an Investment (a "Deemed
Subsidiary Investment") in an aggregate amount equal to the
fair market value (valued at the date of such Subsidiary
Designation) of (x) the net assets of such Restricted
Subsidiary or (y) if less than 100% of the Equity Interests in
such Restricted Subsidiary are held by Holdings and its
Restricted Subsidiaries, in an aggregate amount equal to the
percentage interest of Holdings and the Restricted Subsidiaries
in such net assets.
Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to
its final scheduled maturity) upon the occurrence of a default with respect to
any other Indebtedness that is Indebtedness of an Unrestricted Subsidiary,
except in the case of clause (x) or (y) to the extent permitted under Section
6.01 and Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.
SECTION 6.15 Total Debt to Contributed Capital Ratio. The Total Debt
to Contributed Capital Ratio shall at no time prior to March 30, 2001 exceed
.65 to 1.00.
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SECTION 6.16 Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) revenues for such period
attributable to Dark Fiber Dispositions plus (iv) Dark Fiber Proceeds for such
period shall not be less than the amount set forth below opposite such period:
<TABLE>
<CAPTION>
Period Amount
------------------ ------------
<S> <C>
October 1, 1999 -
December 31, 1999 $150,000,000
January 1, 2000 -
March 31, 2000 $170,000,000
April 1, 2000 -
June 30, 2000 $250,000,000
July 1, 2000 -
September 30, 2000 $285,000,000
October 1, 2000 -
December 31, 2000 $300,000,000
</TABLE>
SECTION 6.17 Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:
<TABLE>
<CAPTION>
Period Total Leverage Ratio
------------------- --------------------
<S> <C>
December 31, 2000 -
June 29, 2001 11.00:1.00
June 30, 2001 -
December 30, 2001 10.00:1.00
December 31, 2001-
December 30, 2002 8.75:1.00
December 31, 2002 -
December 30, 2003 5.25:1.00
December 31, 2003
and thereafter 4.00:1.00
</TABLE>
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(b) If the Borrower shall have made Other Principal Payments under
this Loan Agreement in an aggregate amount in excess of $25,000,000 in any
fiscal year (the date of the first such Other Principal Payment in excess of
$25,000,000 being the "Leverage Ratio Reduction Date"), the Total Leverage
Ratio shall at no time from and after such Leverage Ratio Reduction Date exceed
the lesser of (i) 5.0 to 1.00 and (ii) the applicable ratio set forth above for
the relevant period.
SECTION 6.18 Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:
<TABLE>
<CAPTION>
Period Senior Leverage Ratio
------------------- ---------------------
<S> <C>
December 31, 2000 -
June 29, 2001 7.25:1.00
June 30, 2001 -
December 30, 2001 6.25:1.00
December 31, 2001 -
December 30, 2002 5.25:1.00
December 31, 2002 -
December 30, 2003 3.25:1.00
December 31, 2003 -
and thereafter 2.50:1.00
</TABLE>
SECTION 6.19 Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Interest Coverage Ratio
------------------- -----------------------
<S> <C>
October 1, 2000 -
December 31, 2000 1.00:1.00
January 1, 2001 -
December 30, 2001 1.25:1.00
December 31, 2001 -
December 30, 2002 1.50:1.00
December 31, 2002 -
December 30, 2003 2.50:1.00
December 31, 2003 -
and thereafter 3.00:1.00
</TABLE>
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<PAGE> 62
SECTION 6.20 Financial Covenant Non-Compliance Cure. (a) In the event
that Holdings and the Restricted Subsidiaries fail to comply with any of
Sections 6.15 through 6.19, inclusive, for any period or on any date set forth
therein, the Lender shall have the right, but not the obligation, to make,
within three Business Days of the date upon which financial statements as of
the last day of such period are delivered or required to be delivered pursuant
to Section 5.01(a) or (b), a cash equity contribution to Holdings in exchange
for Qualifying Equity Interests of Holdings (which Holdings shall thereupon
contribute to the Borrower, in exchange for Qualifying Equity Interests of the
Borrower) to cure such failure.
(b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of
compliance with Section 6.16 thereafter.
(c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.
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<PAGE> 63
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01 Events of Default. If any of the following events
("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Loan Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower in or in connection with this Loan Agreement or any amendment
or modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Loan Agreement or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when
made or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower) or 5.10 or in Article 6 (subject
to the right to cure found in Section 6.20);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in this Loan Agreement (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the Lender to
the Borrower;
(f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled
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<PAGE> 64
maturity; provided that this Section 7.01(g) shall not apply to secured
Indebtedness permitted hereunder that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering
any of the foregoing shall be entered;
(i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or petition described in Section 7.01(h), (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Holdings or any Restricted
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) Holdings or any Restricted Subsidiary shall become unable, admit
in writing its inability or fail generally, to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment; and
(l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of Holdings and the
Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods
then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Lender may, by notice to
the Borrower,
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<PAGE> 65
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all other obligations of the Borrower accrued hereunder, shall
become due and payable immediately, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Holdings and the
Borrower; and in the case of any event with respect to Holdings or the Borrower
described in Section 7.01(h) or 7.01(i), the principal of the Loans then
outstanding, together with accrued interest thereon and all other obligations
of the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Holdings and the Borrower.
ARTICLE 8
[INTENTIONALLY OMITTED]
ARTICLE 9
[INTENTIONALLY OMITTED]
ARTICLE 10
MISCELLANEOUS
SECTION 10.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at Williams Communications Group, Inc.,
One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention of (other
than administrative notices) Scott E. Schubert (Telecopy No. 918-573-6024) or
(for administrative notices) Attention of Kerri Lyle (Telecopy No.
918-573-6558); and
(b) if to the Lender to it at The Williams Companies, Inc., One
Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention: Treasurer
(Telecopy No. 918-573-2065).
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
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<PAGE> 66
notices and other communications given to any party hereto in accordance with
the provisions of this Loan Agreement shall be deemed to have been given on the
date of receipt.
SECTION 10.02 Waivers; Amendments. (a) No failure or delay by the
Lender in exercising any right or power under this Loan Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Lender hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Loan Agreement or consent to
any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by Section 10.02(b), and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making
of a Loan shall not be construed as a waiver of any Default, regardless of
whether the Lender may have had notice or knowledge of such Default at the
time.
(b) Neither this Loan Agreement nor any provision hereof may be
waived, amended or modified except (i) pursuant to an agreement or agreements
in writing entered into by the Borrower and the Lender or (ii) pursuant to
Section 10.02(c).
(c) Amendments, waivers and/or consents under the Credit Agreement are
automatically deemed to be amendments, waivers and/or consents to the
corresponding provisions of this Loan Agreement, mutatis mutandis.
SECTION 10.03 Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay all reasonable out-of-pocket expenses incurred by the Lender,
including the reasonable fees, charges and disbursements of counsel for the
Lender, in connection with the preparation and administration of this Loan
Agreement or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated).
(b) The Borrower shall indemnify the Lender (the "Indemnitee")
against, and hold the Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for the Indemnitee, incurred by or asserted
against the Indemnitee arising out of, in connection with, or as a result of
(i) the execution or delivery of this Loan Agreement or any other agreement or
instrument contemplated hereby, the performance by the parties to this Loan
Agreement of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or
the use of the proceeds
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<PAGE> 67
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by Holdings or any
Subsidiary, or any Environmental Liability related in any way to Holdings or
any Subsidiary, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is
a party thereto; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) [Intentionally omitted].
(d) To the extent permitted by applicable law, the Borrower will not
assert, and the Borrower hereby waives any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Loan Agreement or any agreement or instrument contemplated
hereby, the Transactions or any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 10.04 [Intentionally omitted]
SECTION 10.05 Survival. All covenants, agreements, representations and
warranties made by the Borrower in this Loan Agreement and in the certificates
or other instruments delivered in connection with or pursuant to this Loan
Agreement shall be considered to have been relied upon by the Lender and shall
survive the execution and delivery of this Loan Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Loan Agreement is outstanding and unpaid. The provisions of
Sections 2.16 and 10.03 and Article 8 shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans or the termination of this Loan Agreement or
any provision hereof.
SECTION 10.06 Counterparts; Integration; Effectiveness. This Loan
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Loan
Agreement
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<PAGE> 68
constitutes the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. This Loan Agreement
shall become effective when it shall have been executed by the Lender and the
Borrower, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Loan Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this Loan
Agreement.
SECTION 10.07 Severability. Any provision of this Loan Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08 Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other obligations at any time owing by the Lender to or
for the credit or the account of the Borrower or Holdings against any and all
of the obligations of the Borrower or Holdings, as the case may be, now or
hereafter existing under this Loan Agreement held by the Lender, irrespective
of whether or not the Lender shall have made any demand under this Loan
Agreement and although such obligations may be unmatured. The rights of the
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which the Lender may have.
SECTION 10.09 Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Loan Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Loan
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<PAGE> 69
Agreement shall affect any right that the Lender may otherwise have to bring
any action or proceeding relating to this Loan Agreement against the Borrower
or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Loan Agreement in any court referred to in
Section 10.09(b). Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Loan Agreement irrevocably consents to service
of process in the manner provided for notices in Section 10.01. Nothing in this
Loan Agreement will affect the right of any party to this Loan Agreement to
serve process in any other manner permitted by law.
SECTION 10.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LOAN
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 10.11 Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Loan Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Loan Agreement.
SECTION 10.12 [Intentionally omitted].
SECTION 10.13 Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken,
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<PAGE> 70
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges
payable to the Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by the Lender.
65
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
WILLIAMS COMMUNICATIONS, INC.
By: /s/ James G. Ivey
-----------------------------------
Name: James G. Ivey
Title: Treasurer
THE WILLIAMS COMPANIES, INC.
By: /s/ Scott E. Schubert
-----------------------------------
Name: Scott E. Schubert
Title: Senior Vice President
66
<PAGE> 1
EXHIBIT 10.60
[EXECUTION COPY]
================================================================================
$1,050,000,000
CREDIT AGREEMENT
dated as of
SEPTEMBER 8, 1999
among
WILLIAMS COMMUNICATIONS, INC.,
as Borrower
WILLIAMS COMMUNICATIONS GROUP, INC.,
as Guarantor
THE LENDERS PARTY HERETO,
BANK OF AMERICA, N.A.,
as Administrative Agent,
and
THE CHASE MANHATTAN BANK,
as Syndication Agent
---------------------------
CHASE SECURITIES INC.
and
BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arrangers and Joint Book Managers
BANK OF MONTREAL
and
THE BANK OF NEW YORK,
as Co-Documentation Agents
================================================================================
<PAGE> 2
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms...................................................1
SECTION 1.02. Classification of Loans and Borrowings.........................35
SECTION 1.03. Terms Generally................................................35
SECTION 1.04. Accounting Terms; GAAP.........................................36
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments....................................................36
SECTION 2.02. Loans and Borrowings...........................................37
SECTION 2.03. Requests for Borrowings........................................38
SECTION 2.04. Swingline Loans................................................39
SECTION 2.05. Letters of Credit..............................................41
SECTION 2.06. Funding of Borrowings..........................................46
SECTION 2.07. Interest Elections.............................................46
SECTION 2.08. Termination and Reduction of Commitments.......................48
SECTION 2.09. Repayment of Loans; Evidence of Debt...........................51
SECTION 2.10. Amortization of Term Loans and Incremental Term Loans..........52
SECTION 2.11. Prepayment of Loans............................................54
SECTION 2.12. Fees...........................................................56
SECTION 2.13. Interest.......................................................57
SECTION 2.14. Alternate Rate of Interest.....................................58
SECTION 2.15. Increased Costs................................................59
SECTION 2.16. Break Funding Payments.........................................60
SECTION 2.17. Taxes..........................................................61
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs....63
SECTION 2.19. Mitigation Obligations; Replacement of Lenders.................65
SECTION 2.20. Incremental Facilities and Commitments.........................66
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers...........................................68
SECTION 3.02. Authorization; Enforceability..................................68
SECTION 3.03. Governmental Approvals; No Conflicts...........................68
SECTION 3.04. Financial Condition; No Material Adverse Change................69
SECTION 3.05. Properties.....................................................70
SECTION 3.06. Litigation and Environmental Matters...........................70
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 3.07. Compliance with Laws and Agreements..........................71
SECTION 3.08. Investment and Holding Company Status........................71
SECTION 3.09. Taxes........................................................71
SECTION 3.10. ERISA........................................................71
SECTION 3.11. Disclosure...................................................72
SECTION 3.12. Subsidiaries.................................................72
SECTION 3.13. Insurance....................................................72
SECTION 3.14. Labor Matters................................................72
SECTION 3.15. Solvency.....................................................72
SECTION 3.16. Year 2000 Issue..............................................73
SECTION 3.17. No Burdensome Restrictions...................................73
SECTION 3.18. Representations in Loan Documents True and Correct...........73
ARTICLE 4
CONDITIONS
SECTION 4.01. Effective Date...............................................74
SECTION 4.02. Each Credit Event............................................77
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information...................78
SECTION 5.02. Notices of Material Events...................................81
SECTION 5.03. Existence; Conduct of Business...............................81
SECTION 5.04. Payment of Obligations.......................................81
SECTION 5.05. Maintenance of Properties....................................82
SECTION 5.06. Insurance....................................................82
SECTION 5.07. Casualty and Condemnation....................................82
SECTION 5.08. Books and Records; Inspection and Audit Rights...............82
SECTION 5.09. Compliance with Laws.........................................83
SECTION 5.10. Use of Proceeds and Letters of Credit........................83
SECTION 5.11. Collateral Event.............................................83
SECTION 5.12. Information Regarding Collateral.............................85
SECTION 5.13. Additional Subsidiaries......................................86
SECTION 5.14. Further Assurances...........................................87
SECTION 5.15. Concentration Accounts.......................................87
SECTION 5.16. Parent Guarantee.............................................88
SECTION 5.17. Bridge Facility..............................................88
SECTION 5.18. Dissolution of CNG...........................................88
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness; Certain Equity Securities................................89
SECTION 6.02. Liens..................................................................91
SECTION 6.03. Fundamental Changes....................................................92
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions.........................................................93
SECTION 6.05. Asset Sales............................................................96
SECTION 6.06. Sale and Leaseback Transactions........................................97
SECTION 6.07. Restricted Payments; Certain Payments of Indebtedness..................98
SECTION 6.08. Limitation on Capital Expenditures.....................................99
SECTION 6.09. Transactions with Affiliates..........................................100
SECTION 6.10. Restrictive Agreements................................................100
SECTION 6.11. Fiscal Year...........................................................101
SECTION 6.12. Change in Business....................................................101
SECTION 6.13. Amendment of Material Documents.......................................101
SECTION 6.14. Designation of Unrestricted Subsidiaries..............................101
SECTION 6.15. Total Debt to Contributed Capital Ratio...............................102
SECTION 6.16. Minimum EBITDA........................................................103
SECTION 6.17. Total Leverage Ratio..................................................103
SECTION 6.18. Senior Leverage Ratio.................................................104
SECTION 6.19. Interest Coverage Ratio...............................................104
SECTION 6.20. Financial Covenant Non-Compliance Cure................................105
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default.....................................................106
ARTICLE 8
THE AGENTS
SECTION 8.01. Appointment, Powers, Immunities.......................................109
SECTION 8.02. Reliance by Agents....................................................110
SECTION 8.03. Delegation to Sub-Agents..............................................110
SECTION 8.04. Resignation of Agents.................................................111
SECTION 8.05. Non-reliance on Agents or other Lenders...............................111
SECTION 8.06. Syndication Agent and Co-Documentation Agents.........................111
ARTICLE 9
HOLDINGS GUARANTEE
SECTION 9.01. The Guarantee.........................................................112
SECTION 9.02. Guarantee Unconditional...............................................112
SECTION 9.03. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances...............................................113
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 9.04. Waiver....................................................................113
SECTION 9.05. Subrogation...............................................................113
SECTION 9.06. Stay of Acceleration......................................................114
SECTION 9.07. Successors and Assigns....................................................114
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices..................................................................114
SECTION 10.02. Waivers; Amendments......................................................115
SECTION 10.03. Expenses; Indemnity; Damage Waiver.......................................117
SECTION 10.04. Successors and Assigns...................................................118
SECTION 10.05. Survival.................................................................122
SECTION 10.06. Counterparts; Integration; Effectiveness.................................123
SECTION 10.07. Severability.............................................................123
SECTION 10.08. Right of Setoff..........................................................123
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process................................................................124
SECTION 10.10. WAIVER OF JURY TRIAL.....................................................124
SECTION 10.11. Headings.................................................................125
SECTION 10.12. Confidentiality..........................................................125
SECTION 10.13. Interest Rate Limitation.................................................126
</TABLE>
SCHEDULE 2.01 - COMMITMENTS
SCHEDULE 3.05 - REAL PROPERTY
SCHEDULE 3.06 - DISCLOSED MATTERS
SCHEDULE 3.12 - SUBSIDIARIES
SCHEDULE 3.13 - INSURANCE
SCHEDULE 6.01 - EXISTING INDEBTEDNESS
SCHEDULE 6.02 - EXISTING LIENS
SCHEDULE 6.04 - EXISTING INVESTMENTS
SCHEDULE 6.09 - EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10 - EXISTING RESTRICTIVE AGREEMENTS
EXHIBIT A - FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B - FORM OF BORROWING REQUEST
EXHIBIT C-1 - FORM OF OPINION OF SPECIAL COUNSEL TO
HOLDINGS, THE BORROWER AND THE
SUBSIDIARY LOAN PARTIES
EXHIBIT C-2 - FORM OF OPINION OF THE GENERAL COUNSEL OF
HOLDINGS
EXHIBIT D - FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E - FORM OF REVOLVING NOTE
iv
<PAGE> 6
EXHIBIT F - FORM OF TERM NOTE
EXHIBIT G - FORM OF INTERCOMPANY NOTE
EXHIBIT H - FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I - FORM OF PARENT GUARANTEE
v
<PAGE> 7
CREDIT AGREEMENT dated as of September 8, 1999 among Williams
Communications, Inc., a Delaware corporation, Williams Communications Group,
Inc., a Delaware corporation, the LENDERS party hereto, BANK OF AMERICA, N.A.,
as Administrative Agent, THE CHASE MANHATTAN BANK, as Syndication Agent, and
BANK OF MONTREAL and THE BANK OF NEW YORK, as Co-Documentation Agents.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Additional Capital" means (i) the aggregate amount (exclusive of
amounts used to repay or refinance debt securities or Qualifying Holdings Debt
the proceeds of which are included in this clause (i)) of (a) proceeds received
by Holdings after June 30, 1999 from contributions to the capital, or purchases
of common equity securities, of Holdings (including proceeds of the Equity
Issuance but excluding Qualifying Equity Interests issued as consideration for
an Investment permitted under Section 6.04(p)), (b) proceeds received by
Holdings after June 30, 1999 from issuances of debt securities by Holdings
(including proceeds of the Notes Offering), (c) proceeds of Qualifying Holdings
Debt issued after the Effective Date and (d) Excess Cash Flow for each fiscal
year commencing with fiscal year 2001 (but only to the extent not required to be
applied to the prepayment of Loans pursuant to Section 2.11(c) or the reduction
of Commitments pursuant to Section 2.08(g)),
minus
(ii) the sum of (x) $2,775,000,000 and (y) (unless Holdings and the
Restricted Subsidiaries shall (without regard to any exercise by the Parent of
its financial covenant cure right under Section 6.20) have been in compliance
with Sections 6.15 through 6.19, inclusive, for a period of four consecutive
fiscal quarters following any exercise by the Parent of its financial covenant
cure right
<PAGE> 8
under Section 6.20), the aggregate amount of proceeds received by Holdings in
respect of any financial covenant default cure pursuant to Section 6.20.
"Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:
(i) if such period is a period ending on or after June 30, 1999
and on or before September 30, 2001,
(A) an amount equal to (x)(1) EBITDA for the last fiscal
quarter in such period plus (2) ADP Interest Expense for
such fiscal quarter minus (3) revenues for such fiscal
quarter attributable to Dark Fiber Dispositions multiplied
by (y) four, plus
(B) Dark Fiber Proceeds for such period; and
(ii) if such period is any other period,
(A) EBITDA for such period plus (y) ADP Interest Expense for
such period minus (z) revenues for such period attributable
to Dark Fiber Dispositions plus
(B) Dark Fiber Proceeds for such period.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"ADP" means the program set forth in the Operative Documents.
"ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.
2
<PAGE> 9
"ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.
"ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.
"ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.
"ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.
"Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.
"Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, (a) with respect to any
Incremental Loan, the Applicable Margin in respect thereof set forth in the
applicable Incremental Facility Agreement and (b) with respect to any Term Loan
or Revolving Loan, (i) the applicable rate per annum set forth below under the
caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon the
ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:
3
<PAGE> 10
<TABLE>
<CAPTION>
FACILITIES RATING EURODOLLAR SPREAD ABR SPREAD LEVERAGE PREMIUM
----------------- ----------------- ---------- ----------------
<S> <C> <C> <C> <C>
LEVEL I BBB- and Baa3 or 1.00% 0.00% 0.25%
higher
LEVEL II BB+ and Ba1 1.375% 0.375% 0.25%
LEVEL III BB and Ba2 1.75% 0.75% 0.25%
LEVEL IV BB- and Ba3 2.00% 1.00% 0.25%
LEVEL V Lower than BB-
or lower than Ba3 2.25% 1.25% 0.25%
</TABLE>
For purposes of the foregoing clause (b), (i) if neither S&P nor
Moody's shall have in effect a rating for the Facilities (other than by reason
of the circumstances referred to in the last sentence of this definition), then
the Applicable Margin shall be the rate set forth in Level V, (ii) if either S&P
or Moody's, but not both S&P and Moody's, shall have in effect a rating for the
Facilities, then the Applicable Margin shall be based on such rating, (iii) if
the ratings established by S&P and Moody's for the Facilities shall fall within
different Levels, then the Applicable Margin shall be based on the lower of the
two ratings, (iv) if the ratings established by S&P and Moody's for the
Facilities shall fall within the same Level, then the Applicable Margin shall be
based on that Level and (v) if the ratings established by S&P and Moody's for
the Facilities shall be changed (other than as a result of a change in the
rating system of S&P or Moody's), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Margin shall apply (other than with respect to the Leverage
Premium or as described in the immediately succeeding sentence) during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of S&P or Moody's shall change, or if either such rating agency shall
cease to be in the business of rating corporate debt obligations, the Borrower
and the Lenders shall negotiate in good faith to amend this definition to
reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation.
"Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
4
<PAGE> 11
"Arranger" means each of Chase Securities Inc. and Banc of America
Securities LLC, in each case in its capacity as a joint lead arranger and joint
book manager hereunder.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized amount
of the remaining lease payments under such lease that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capital Lease Obligation.
"Bank of America" means Bank of America, N.A.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Williams Communications, Inc., a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Bridge Facility" means a loan facility to be provided to Holdings in
an aggregate principal amount not to exceed $750,000,000, none of the
obligations of Holdings under which are Guaranteed by the Borrower or any other
Restricted Subsidiary.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any
5
<PAGE> 12
day on which banks are not open for dealings in dollar deposits in the London
interbank market.
"Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless such use shall, itself, constitute an Investment
permitted under Section 6.04 (other than Section 6.04(i)) constitute "Capital
Expenditures".
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Equivalent Investments" means:
(1) Government Securities maturing, or subject to tender at the
option of the holder thereof, within two years after the date of
acquisition thereof;
(2) time deposits and certificates of deposit of (a) any
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the law of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000, or its foreign currency equivalent at the time, in
either case with a maturity date not more than one year from the date
of acquisition;
(3) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (1) above
entered into with (a) any bank meeting the qualifications specified in
clause (2) above or (b) any primary government securities dealer
reporting to the Market Reports Division of the Federal Reserve Bank
of New York;
6
<PAGE> 13
(4) direct obligations issued by any state of the United States
or any political subdivision of any such state or any public
instrumentality thereof maturing, or subject to tender at the option
of the holder of such obligation, within one year after the date of
acquisition thereof; provided that, at the time of acquisition, the
long-term debt of such state, political subdivision or public
instrumentality has a rating of A, or higher, from S&P or A-2 or
higher from Moody's or, if at any time neither S&P nor Moody's shaft
be rating such obligations, then an equivalent rating from such other
nationally recognized rating service as is acceptable to the
Administrative Agent;
(5) commercial paper issued by the parent corporation of (a) any
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000, or its foreign currency equivalent at the time, and
money market instruments and commercial paper issued by others having
one of the three highest ratings obtainable from either S&P or
Moody's, or, if at any time neither S&P nor Moody's shall be rating
such obligations, then from such other nationally recognized rating
service as is acceptable to the Administrative Agent and in each case
maturing within one year after the date of acquisition;
(6) overnight bank deposits and bankers' acceptances at (a) any
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000 or its foreign currency equivalent at the time;
(7) deposits available for withdrawal on demand with (a) a
commercial bank organized in the United States having capital and
surplus in excess of $500,000,000 or (b) any branch located in the
United States of any commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development having total assets in excess of
$500,000,000 or its foreign currency equivalent at the time; and
(8) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (1)
through (7).
7
<PAGE> 14
"Change in Control" means:
(a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;
(b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;
(c) the failure of the Parent and its subsidiaries to own, directly or
indirectly, (i) more than 75% (or, if (x) the Facilities are rated at least
BBB- by S&P and Baa3 by Moody's and (y) the Parent shall have been released from
its obligations under the Parent Guarantee, 35%) of the aggregate ordinary
voting power represented by the issued and outstanding Voting Stock of Holdings
or (ii) more than 65% (or, if (x) the Facilities are rated at least BBB- by S&P
and Baa3 by Moody's and (y) the Parent shall have been released from its
obligations under the Parent Guarantee, 35%) of the issued and outstanding
capital stock of Holdings;
(d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or
(e) the acquisition of direct or indirect Control of Holdings by any
Person or group other than the Parent.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Chase" means The Chase Manhattan Bank.
8
<PAGE> 15
"Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans or Incremental Loans and, when used in reference to
any Commitment or Facility, refers to whether such Commitment or Facility is a
Revolving Commitment or Facility, a Term Commitment or Facility or an
Incremental Commitment or Facility. The Incremental Loans, Borrowings thereof
and Incremental Commitments under each Incremental Facility shall constitute a
separate Class from the Incremental Loans, Borrowings thereof and Incremental
Commitments under each other Incremental Facility, and if an Incremental
Facility includes Incremental Revolving Commitments and Incremental Term
Commitments, such Incremental Revolving Commitments and Incremental Term
Commitments and the Incremental Revolving Loans and Borrowings thereof and the
Incremental Term Loans and Borrowings thereof, respectively, thereunder shall
constitute separate Classes.
"CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.
"Co-Documentation Agent" means each of Bank of Montreal and The Bank of
New York, in each case in its capacity as a co-documentation agent hereunder.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.
"Collateral Documents" means all security agreements, pledge
agreements, mortgages and other security agreements or instruments or documents
executed and delivered pursuant to Section 5.11, 5.13 or 5.14.
"Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11.
"Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.
"Collateral Notice has the meaning assigned to such term in Section
5.11.
"Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration
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or termination of all Letters of Credit and (ii) the rating of the Facilities by
S&P of BB+ or greater and by Moody's of Ba1 or greater, in each case after
giving effect to the release of all Collateral.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment or any combination thereof (as the context requires).
"Commitment Fee Rate" means, with respect to the Revolving Commitments
and the Term Commitments, a rate per annum equal to (x) 1.00% for each day on
which Usage is less than 33.3%, (y) 0.75% for each day on which Usage is equal
to or greater than 33.3% but less than 66.6% and (z) 0.50% for each day on which
Usage is equal to or greater than 66.6%. For purposes of the foregoing, "Usage"
means, on any date, the percentage obtained by dividing (i) in the case of
Revolving Commitments, (a) the aggregate Revolving Exposure on such date less
the aggregate principal amount of all Swingline Loans outstanding on such date
by (b) the aggregate outstanding Revolving Commitments on such date and (ii) in
the case of Term Commitments, (a) the aggregate principal amount of all Term
Loans outstanding on such date by (b) the sum of the aggregate principal amount
of all Term Loans outstanding on such date and the aggregate unused Term
Commitments on such date.
"Commitment Fees" has the meaning assigned to such term in Section
2.12.
"Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.
"Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.
"Contributed Capital" means, at any date, (i) Total Debt at such date
plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.
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"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.
"Dark Fiber Proceeds" means, for any period, cash proceeds received by
Holdings and the Restricted Subsidiaries in respect of Dark Fiber Dispositions
during such period.
"Dark Fiber Disposition" means a lease, sale, conveyance or other
disposition of fiber optic cable or the use thereof for a period constituting
all or substantially all of the expected useful life thereof in a transaction in
which none of Holdings or the Restricted Subsidiaries has any obligation to
"light" such fiber optic cable.
"Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Term Maturity Date.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBITDA" means, for any period,
(i) Consolidated Net Income for such period,
plus,
(ii) to the extent deducted in determining Consolidated Net
Income, the sum, without duplication, of (w) interest expense, (x)
income tax expense, (y) depreciation and amortization expense and (z)
non-cash
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<PAGE> 18
extraordinary or non-recurring charges (if any), in each case
recognized in such period;
minus,
(iii) to the extent included in Consolidated Net Income for such
period, extraordinary or non-recurring gains (if any), in each case
recognized in such period.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
"Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.
"Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 7.
"Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:
(a) the Consolidated Net Income (or loss) of Holdings and the
Restricted Subsidiaries for such period, adjusted to exclude any gains
or losses attributable to Prepayment Events; plus
(b) depreciation, amortization, non-cash interest expense and
other non-cash charges or losses deducted in determining Consolidated
Net Income (or loss) for such period; plus
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<PAGE> 20
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such period plus (ii) the amount, if any, by
which the consolidated deferred revenues of Holdings and the
Restricted Subsidiaries increased during such period plus (iii) the
aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred during such period to finance Capital
Expenditures, to the extent that mandatory principal payments in
respect of such Indebtedness would not be excluded from clause (f)
below when made; minus
(d) the sum of (i) any non-cash gains included in determining
Consolidated Net Income (or loss) for such period plus (ii) the
amount, if any, by which Net Working Capital increased during such
period plus (iii) the amount, if any, by which the consolidated
deferred revenues of Holdings and the Restricted Subsidiaries
decreased during such period; minus
(e) Capital Expenditures for such period; minus
(f) the aggregate principal amount of long-term Indebtedness
(including pursuant to Capital Lease Obligations) repaid or prepaid by
Holdings and the Restricted Subsidiaries during such period, excluding
(i) Indebtedness in respect of Revolving Loans, Incremental Revolving
Loans and Letters of Credit, (ii) Term Loans and Incremental Term
Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
prepayments of Indebtedness financed by incurring other Indebtedness,
to the extent that mandatory principal payments in respect of such
other Indebtedness would not be excluded from this clause (f) when
made and (iv) Indebtedness referred to in Sections 6.01(d), 6.01(f),
6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction described in clause (a) above and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)) or any Participant that would be a Foreign
Lender if it were a Lender, any
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<PAGE> 21
withholding tax that (i) is imposed on or with respect to amounts
payable to such Foreign Lender or Participant at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending
office) or such Participant become a Participant, except to the extent
that such Foreign Lender (or its assignor, if any) or Participant was
entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 2.17(a) or (ii) is
attributable to such Foreign Lender or Participant's failure to comply
with Section 2.17(e).
"Existing Revolver" has the meaning set forth in Section 4.01(s).
"Existing International Joint Ventures" means ATL-Algar Telecom Leste
S.A., PowerTel Limited and MetroCom S.A.
"Facilities" means the Term Facility, the Revolving Facility and each
Incremental Facility.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary that is not a Foreign
Subsidiary is a partner or as a branch of any Subsidiary that is not a Foreign
Subsidiary for United States income tax purposes.
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<PAGE> 22
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.
"Granting Lender" has the meaning set forth in Section 10.04(b)(2).
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other
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<PAGE> 23
substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.
"Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.
"Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.
"High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.
"Holdings" means Williams Communications Group, Inc., a Delaware
corporation.
"Incremental Commitment" has the meaning assigned to such term in
Section 2.20.
"Incremental Facility" has the meaning assigned to such term in Section
2.20.
"Incremental Facility Agreement" has the meaning assigned to such term
in Section 2.20.
"Incremental Lender" has the meaning assigned to such term in Section
2.20.
"Incremental Loan" means an Incremental Revolving Loan or an
Incremental Term Loan.
"Incremental Revolving Commitment" has the meaning assigned to such
term in Section 2.20.
"Incremental Revolving Loan" has the meaning assigned to such term in
Section 2.20.
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<PAGE> 24
"Incremental Term Commitment" has the meaning assigned to such term
in Section 2.20.
"Incremental Term Loan" has the meaning assigned to such term in
Section 2.20.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (j) any Disqualified Stock and (k) all obligations under any
Hedging Agreements. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Indebtedness of the Borrower and the other Subsidiaries
shall exclude any Indebtedness of Holdings that would otherwise constitute
Indebtedness of the Borrower or any such Subsidiary only under clause (e) above
and solely by virtue of a Lien created under the Loan Documents in accordance
with Section 5.11(d), and Indebtedness of Holdings and the Subsidiaries shall
exclude any Indebtedness of the Parent that would otherwise constitute
Indebtedness of Holdings or any Subsidiary only under clause (e) above
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<PAGE> 25
and solely by virtue of a Lien created under the Loan Documents in
accordance with Section 5.11(d).
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.
"Intercompany Note" means the Loan Agreement dated as of September 8,
1999 between the Borrower and the Parent, substantially in the form of Exhibit G
hereto.
"Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.
"Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) revenues
attributable to Dark Fiber Dispositions plus (D) Dark Fiber Proceeds to (ii)
Interest Expense, in each case for the period of four consecutive fiscal
quarters most recently ended on or prior to such date.
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.
"Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
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<PAGE> 26
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.
"Investment" has the meaning assigned to such term in Section 6.04.
"LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01, any Incremental
Lender that shall become a Lender pursuant to Section 2.20 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Incremental Lenders.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
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"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Incremental Facility
Agreement, the Collateral Documents (if any).
"Loan Parties" means the Parent, Holdings, the Borrower and the
Subsidiary Loan Parties.
"Loan Party Guarantees" means the Parent Guarantee and the Subsidiary
Guarantee.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Managing Agents" means the financial institutions identified as such
on the signature pages hereof.
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"Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement, all net obligations under such Hedging Agreement in an amount
equal to (i) if such Hedging Agreement has been closed out, the termination
value thereof or (ii) if such Hedging Agreement has not been closed out, the
mark-to-market value thereof determined on the basis of readily available
quotations provided by any recognized dealer in Hedging Agreements similar to
such Hedging Agreement.
"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that Holdings or such Restricted Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.
"Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11(b).
"Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11(b).
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
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"Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings and the
Restricted Subsidiaries, and the amount of any reserves established by Holdings
and the Restricted Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of
Holdings).
"Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.
"Notes Offering" means the public offering and sale of the High Yield
Notes.
"Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.
"Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.
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"Operative Documents" has the meaning set forth in the Participation
Agreement.
"Other Financing Documents" has the meaning assigned to such term in
Section 5.16.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Parent" means The Williams Companies, Inc., a Delaware corporation.
"Parent Event of Default" has the meaning set forth in the Parent
Guarantee.
"Parent Guarantee" means the Parent Guarantee, substantially in the
form of Exhibit K, made by the Parent in favor of the Administrative Agent for
the benefit of the Lenders.
"Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.
"Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998 among the Borrower, State Street Bank
and Trust Company of Connecticut, National Association, as trustee, the
Noteholders and Certificate Holders named therein, State Street Bank and Trust
Company, as collateral agent, and Citibank, N.A., as agent, and the other
agents, arrangers and managing agents party thereto.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue
by more than 45 days or are being contested in compliance with
Section 5.04;
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(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each
case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Section 7.01; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of
business of Holdings or any Restricted Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Telecommunications Asset Disposition" means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
optical fiber and/or conduit and any related equipment, technology or software
used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:
(i) with respect to any Segment constructed by, for or on behalf of the
Borrower or any Subsidiary or Affiliate, (x) 24 optical fibers per
route mile on such Segment as deployed at the time of such
Permitted Telecommunications Asset Disposition or (y) 12 optical
fibers and one empty conduit per route mile on such Segment as
deployed at the time of such Permitted Telecommunications Asset
Disposition; and
(ii) with respect to any Segment purchased or leased from third parties,
the lesser of (x) 50% of the optical fibers per route mile
originally purchased or leased on such Segment, (y) 24 optical
fibers per route mile on such Segment as deployed at the time of
such Permitted Telecommunications Asset Disposition or (z) 12
optical fibers and one
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empty conduit per route mile on such Segment as deployed at the
time of such Permitted Telecommunications Asset Disposition.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of
Holdings or any Restricted Subsidiary, other than Dark Fiber
Dispositions and dispositions permitted under clauses (a) through
(d), (f), (g) and (h) of Section 6.05; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any
property or asset of Holdings or any Subsidiary, but only to the
extent that the Net Proceeds therefrom have not been applied to
repair, restore or replace such property or asset or purchase
similar property or assets within 360 days after such event; or
(c) the incurrence by Holdings, the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted under Section 6.01.
"Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans and Incremental Term Loans of any
Class subject to prepayment under such Section on account of Excess Cash Flow
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<PAGE> 33
or the applicable type of Prepayment Event, as the case may be (whether or not
such Loans are actually to be prepaid on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
principal amount and the aggregate Revolving Commitments and Incremental
Revolving Commitments of any Class subject to reduction pursuant to Section
2.08(f) or (g) on account of Excess Cash Flow or the applicable type of
Prepayment Event, as the case may be (whether or not such Commitments are
actually to be reduced on account of such Prepayment Event or Excess Cash Flow).
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Projections" has the meaning set forth in Section 3.04(d).
"Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.
"Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.
"Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Incremental Revolving Commitments to be made pursuant to Section
2.08(f) or (g), a fraction, the numerator of which is the aggregate Revolving
Commitments and Incremental Revolving Commitments of any Class subject to
reduction under such Section on account of Excess Cash Flow or the applicable
type of Prepayment Event, as the case may be (whether or not such
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<PAGE> 34
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans and Incremental
Term Loans of any Class subject to prepayment under Section 2.11(b) or 2.11(c)
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow).
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.
"Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.
"Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Incremental Revolving Loans, Term Loans, Incremental Term
Loans and unused Commitments representing more than 50% of the sum of the total
outstanding Revolving Exposures, Incremental Revolving Loans, Term Loans,
Incremental Term Loans and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.
"Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) CSI Incorporated, a
Delaware corporation and its successors and assigns, and (ii) any Foreign
Subsidiary) of Holdings are Restricted Subsidiaries.
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"Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Revolving Commitment is set forth on Schedule 2.01, or
in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Revolving Commitment, as applicable. The initial aggregate amount of
the Lenders' Revolving Commitments is $525,000,000.
"Revolving Commitment Reduction Date" means September 30, 2002.
"Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.
"Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.
"Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.
"Revolving Maturity Date" means the sixth anniversary of the Effective
Date.
"Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.
"S&P" means Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies.
"Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
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between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.
"Senior Debt" means, at any date, without duplication, all Indebtedness
of the Borrower and the other Restricted Subsidiaries that are subsidiaries of
the Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition,
Indebtedness in respect of Hedging Agreements shall be equal to (i) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (ii) zero, if such aggregate net Mark-to-Market Valuation does not
constitute such a net obligation.
"Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.
"Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.
"Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.
"SPC" has the meaning set forth in Section 10.04(b)(2).
"Specified Hedging Agreement" has the meaning set forth in Section
9.01.
"Specified Indebtedness" has the meaning set forth in Section 6.07(b).
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
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Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.
"Subsidiary Designation" has the meaning set forth in Section 6.14.
"Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.
"Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that prior to the date that
is 60 days after the Effective Date, CNG shall not be a Subsidiary Loan Party
for any purpose under the Loan Documents.
"Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.
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"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Telecommunications Assets" means:
(a) any property (other than cash or Cash Equivalent Investments) to
be owned or used by the Borrower or any other Restricted
Subsidiary and used in the Telecommunications Business; and
(b) Equity Interests of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Equity Interests by the
Borrower or any other Restricted Subsidiary from any Person other
than an Affiliate of Holdings or the Borrower; provided that such
Person is primarily engaged in the Telecommunications Business.
"Telecommunications Business" means the business of:
(a) transmitting, or providing services relating to the transmission
of, voice, video or data through owned or leased transmission
facilities or the right to use such facilities;
(b) constructing, creating, developing, operating, managing or
marketing communications networks, related network transmission
equipment, software and other devices for use in a communications
business;
(c) computer outsourcing, data center management, computer systems
integration, reengineering of computer software for any purpose,
including, without limitation, for the purposes of porting
computer software from one operating environment or computer
platform to another or to address issues commonly referred to as
"Year 2000 issues";
(d) constructing, managing or operating fiber optic telecommunications
networks and leasing capacity on those networks to third parties;
(e) the sale, resale, installation or maintenance of communications
systems or equipment; or
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(f) evaluating, participating in or pursuing any other activity or
opportunity that is primarily related to those identified in (a),
(b), (c), (d) or (e) above;
provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.
"Term Amortization Date" means September 30, 2002.
"Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The initial amount of each Lender's Term Commitment
is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Term Commitment, as applicable. The
initial aggregate amount of the Lenders' Term Commitments is $525,000,000.
"Term Commitment Termination Date" means the date that is one year
after the Effective Date.
"Term Facility" means the Term Commitments and the Term Loans
hereunder.
"Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.
"Term Loan" means a Loan made pursuant to Section 2.01(a).
"Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.
"Term Maturity Date" means the seventh anniversary of the Effective
Date.
"Total Debt to Contributed Capital Ratio" means, at any date, the ratio
of (i) Total Debt at such date to (ii) Contributed Capital at such date.
"Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
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consolidated basis at such date, and the ADP Outstandings at such date, provided
that, for purposes of this definition, Indebtedness in respect of Hedging
Agreements shall be equal to (i) the aggregate net Mark-to-Market Valuation of
all Hedging Agreements of Holdings and the Restricted Subsidiaries then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (ii) zero, if such aggregate net Mark-to-Market Valuation does not
constitute such a net obligation.
"Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.
"Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.
"Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).
"Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14 and (ii) CSI
Incorporated, a Delaware corporation and its successors and assigns.
"Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.
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"Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Incremental Revolving
Commitments of any Class, any Incremental Term Loans of any Class or any other
Indebtedness or commitments to provide financing, an amount equal to (i) the
sum, for each scheduled repayment of Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Incremental
Revolving Commitments of such Class or other commitments to provide financing,
as the case may be, to be made after such date, of the amount of such scheduled
repayment or reduction multiplied by the number of days from such date to the
date of such scheduled prepayment or reduction divided by (ii) the aggregate
principal amount of such Term Loans or Incremental Term Loans or of such
Indebtedness, as the case may be, or such Revolving Commitments or Incremental
Revolving Commitments or other commitments to provide financing, as the case may
be.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits
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and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees (a) to make Term Loans to the Borrower from
time to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (b) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (c) to make
Incremental Term Loans to the Borrower under any Incremental Facility during the
period or on the date set forth in the applicable Incremental Facility Agreement
in a principal amount not exceeding its Incremental Commitment in respect of
such Incremental Facility, if any, and (d) to make Incremental Revolving Loans
to the Borrower under any Incremental Facility during the period set forth in
the applicable Incremental Facility Agreement in a principal amount not
exceeding its Incremental Revolving Commitment in respect of such Incremental
Facility, if any. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans and Incremental Revolving Loans. Amounts repaid in respect of
Term Loans or Incremental Term Loans may not be reborrowed.
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SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Incremental Revolving Borrowing and Incremental Term Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (x) if a Revolving Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000,
(y) if a Term Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $50,000,000 or (z) if an Incremental
Term Borrowing or Incremental Revolving Borrowing shall be in such aggregate
amounts are permitted under the applicable Incremental Facility Agreement. At
the time that each ABR Borrowing is made, such Borrowing (x) if a Revolving
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000, (y) if a Term Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$50,000,000 or (z) if an Incremental Term Borrowing or Incremental Revolving
Borrowing shall be in such aggregate amounts are permitted under the applicable
Incremental Facility Agreement; provided that (i) an ABR Revolving Borrowing or
ABR Incremental Revolving Borrowing may be in an aggregate amount that is equal
to the entire unused balance of the total Revolving Commitments or Incremental
Revolving Commitments of the applicable Class, as the case may be, (ii) an ABR
Revolving Borrowing may be in an aggregate amount that is required to finance
the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) and
(iii) an ABR Term Borrowing or ABR Incremental Term Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the total Term
Commitments or Incremental Term Commitments of the applicable Class, as the case
may be. Each Swingline Loan shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000. Borrowings of more than one Type and
Class may be outstanding at the same time; provided that there
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shall not at any time be more than a total of 10 Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, the Term Maturity Date or the maturity date set
forth in the applicable Incremental Facility Agreement, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request substantially in the form of
Exhibit B hereto and signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing, Term Borrowing, Incremental Revolving Borrowing or
Incremental Term Borrowing and, in the case of Incremental Revolving
Borrowings and Incremental Term Borrowings, the Incremental Facility
under which such Borrowing is to be made;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
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(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Dallas, Texas time, on the day of a proposed Swingline
Loan and shall advise the Administrative Agent as to which Swingline Lender the
Borrower desires to provide such Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender indicated by the Borrower in such notice of
any such notice received from the Borrower. The applicable Swingline Lender
shall make such Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with such Swingline Lender (or, in
the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the applicable
Issuing Bank) by 3:00 p.m., Dallas, Texas time, on the requested date of such
Swingline Loan.
(c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
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Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the applicable Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the applicable Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the applicable Swingline Lender. Any amounts received by a Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan made by such Swingline Lender after receipt by such Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the applicable Swingline Lender, as their interests may appear.
The purchase of participations in a Swingline Loan pursuant to this paragraph
shall not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.05(c)), the amount of such Letter of Credit,
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $100,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants to each Revolving Lender, and each
Revolving Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender's Applicable Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
such Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement
made by such Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph Section 2.05(e), or of any reimbursement payment required
to be refunded to the Borrower for any reason. Each Lender acknowledges and
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agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Dallas, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 9:30
a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above)
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shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
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(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. An Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid
fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.
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(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in Section 7.01(h) or 7.01(i). Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the applicable
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
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Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing,
Incremental Revolving Borrowing, Term Borrowing and Incremental Term Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of a Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing. This Section shall not apply to Swingline
Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
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(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and Section 2.07(f):
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
(f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal
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<PAGE> 54
amount of outstanding Eurodollar Borrowings of such Class with Interest Periods
ending on or prior to such scheduled repayment date plus the aggregate principal
amount of outstanding ABR Borrowings of such Class would be less than the
aggregate principal amount of Loans of such Class required to be repaid on such
scheduled repayment date.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date and (iii) the Incremental Commitments of any Class
shall terminate on the date set forth in the applicable Incremental Facility
Agreement.
(b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be
automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:
<TABLE>
<CAPTION>
Scheduled Reduction Date Commitment Reduction
- ------------------------ --------------------
<S> <C>
4th Quarter 2002 5.00%
1st Quarter 2003 5.00%
2nd Quarter 2003 5.00%
3rd Quarter 2003 5.00%
4th Quarter 2003 7.50%
1st Quarter 2004 7.50%
2nd Quarter 2004 7.50%
3rd Quarter 2004 7.50%
</TABLE>
48
<PAGE> 55
<TABLE>
<CAPTION>
Scheduled Reduction Date Commitment Reduction
- ------------------------ --------------------
<S> <C>
4th Quarter 2004 12.50%
1st Quarter 2005 12.50%
2nd Quarter 2005 12.50%
Revolving Maturity Date 12.50%
</TABLE>
(c) Subject to adjustment pursuant to Section 2.08(h), the Incremental
Revolving Commitments of any Class shall be automatically and permanently
reduced on the scheduled dates, and in the scheduled amounts, if any, set forth
in the applicable Incremental Facility Agreement.
(d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower shall not terminate or reduce the Incremental Revolving Commitments
of any Class if, after giving effect to any concurrent prepayment of Incremental
Revolving Loans of such Class in accordance with Section 2.11, the aggregate
principal amount of outstanding Incremental Revolving Loans of such Class would
exceed the total Incremental Revolving Commitments of such Class.
(e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Incremental Revolving Commitments of any Class delivered by
the Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments of any Class shall be permanent. Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.
(f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect
49
<PAGE> 56
of any Prepayment Event, there shall be a pro rata reduction of Revolving
Commitments and Term Borrowings, and if provided for in the applicable
Incremental Facility Agreement, Incremental Revolving Commitments and
Incremental Term Borrowings as provided in this Section 2.08(f) and in Section
2.11(b). In such event, the Revolving Commitments and, if provided for in the
applicable Incremental Facility Agreement, Incremental Revolving Commitments
shall, on the third Business Day after such Net Proceeds are received, be
automatically and permanently reduced in an aggregate amount equal to the
product of 100% (or, in the case of any Prepayment Event referred to in clause
(c) of the definition of Prepayment Event, if, on the date on which any
reduction would otherwise be made in respect of such Prepayment Event either (i)
the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's or
(ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%) of
such Net Proceeds and the Reduction Portion in respect of such Prepayment Event;
provided that, in the case of any event described in clause (a) or (c) of the
definition of Prepayment Event, if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that the
Borrower intends to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate) to invest in the Telecommunications Business of
the Borrower and the other Restricted Subsidiaries within 360 days of the
receipt thereof and certifying that no Default has occurred and is continuing,
then no reduction shall be required pursuant to this paragraph in respect of the
Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such period,
at which time a reduction shall be required in accordance with this paragraph
(f).
(g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2001, the Revolving Commitments and, if
provided for in the applicable Incremental Facility Agreement, Incremental
Revolving Commitments shall be automatically and permanently reduced in an
aggregate amount equal to the product of 50% of Excess Cash Flow for such fiscal
year and the Reduction Portion in respect of such Excess Cash Flow; provided
that if, on the date on which any reduction would otherwise be made pursuant to
this Section 2.08(g), either (i) the Facilities shall be rated not lower than
BBB- by S&P and Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date
is less than 3.5 to 1.0, no such reduction shall be required pursuant to this
Section 2.08(g). Each reduction pursuant to this paragraph shall be made on the
date on which financial statements are delivered pursuant to Section 5.01 with
respect to the fiscal year for which Excess Cash Flow is being calculated (and
in any event within 90 days after the end of such fiscal year).
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<PAGE> 57
(h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Incremental Revolving Commitments of any Class, other than a reduction
pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to reduce the
subsequent scheduled reductions of Incremental Revolving Commitments of such
Class to be made pursuant to Section 2.08(a) or 2.08(c) as set forth in the
applicable Incremental Facility Agreement.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Lender the
then unpaid principal amount of each Incremental Loan of any Class of such
Lender as set forth in the applicable Incremental Facility Agreement and (iv) to
each Swingline Lender the then unpaid principal amount of each Swingline Loan
made by it on the earlier of the Revolving Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
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<PAGE> 58
(e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(d), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate amount of Term Loans outstanding on
the Term Commitment Termination Date) set forth opposite such quarterly
installment date (or the Term Maturity Date) below; provided that the final
installment shall equal the sum of (x) the then aggregate unpaid principal
amount of all Term Loans plus (y) all other unpaid amounts owing in respect of
Term Loans, and shall be due and payable not later than the Term Maturity Date:
<TABLE>
<CAPTION>
Payment Date Amount
------------ ------
<S> <C>
4th Quarter 2002 3.75%
1st Quarter 2003 3.75%
2nd Quarter 2003 3.75%
3rd Quarter 2003 3.75%
4th Quarter 2003 6.25%
1st Quarter 2004 6.25%
2nd Quarter 2004 6.25%
3rd Quarter 2004 6.25%
4th Quarter 2004 7.50%
1st Quarter 2005 7.50%
2nd Quarter 2005 7.50%
3rd Quarter 2005 7.50%
</TABLE>
52
<PAGE> 59
<TABLE>
<CAPTION>
Payment Date Amount
------------ ------
<S> <C>
4th Quarter 2005 7.50%
1st Quarter 2006 7.50%
2nd Quarter 2006 7.50%
Term Maturity Date 7.50%
</TABLE>
(b) Subject to adjustment pursuant to Section 2.10(d), the Borrower
shall repay Incremental Term Borrowings of any Class on the scheduled dates, and
in the scheduled amounts, if any, set forth in the applicable Incremental
Facility Agreement.
(c) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date and all Incremental Loans of any Class shall be
due and payable on the final maturity date set forth in the applicable
Incremental Facility Agreement.
(d) Any prepayment of a Term Borrowing shall be applied to reduce the
subsequent scheduled repayments of Term Borrowings to be made pursuant to this
Section in reverse chronological order. Any prepayment of an Incremental Term
Borrowing of any Class shall be applied to reduce the subsequent scheduled
repayment of Incremental Term Borrowings of such Class to be made pursuant to
this Section as set forth in the applicable Incremental Facility Agreement.
(e) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings of any Class hereunder, the Borrower shall select the Borrowing or
Borrowings of such Class to be repaid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than 11:00
a.m., Dallas, Texas time, three Business Days before the scheduled date of such
repayment; provided that each repayment of Term Borrowings or Incremental Term
Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR Incremental Term Borrowings of such Class before any other
Borrowings of such Class. Each repayment of a Borrowing shall be applied ratably
to the Loans included in the repaid Borrowing. Repayments of Term Borrowings and
Incremental Term Borrowings shall be accompanied by accrued interest on the
amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All prepayments shall be made
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<PAGE> 60
without premium or penalty other than, to the extent applicable, amounts payable
under Section 2.16.
(b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments and Term Borrowings, and if provided for in the applicable
Incremental Facility Agreement, Incremental Revolving Commitments and
Incremental Term Borrowings as provided in this Section 2.11(b) and in Section
2.08(f). In such event, the Borrower shall, within three Business Days after
such Net Proceeds are received, prepay Term Borrowings and, if provided for in
the applicable Incremental Facility Agreement, Incremental Term Borrowings in an
aggregate amount equal to the product of 100% (or, in the case of any Prepayment
Event referred to in clause (c) of the definition of Prepayment Event, if, on
the date on which any prepayment would otherwise be made in respect of such
Prepayment Event either (i) the Facilities shall be rated not lower than BBB- by
S&P and Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date is less
than 3.5 to 1.0, 50%) of such Net Proceeds and the Prepayment Portion in respect
of such Prepayment Event; provided that, in the case of any event described in
clause (a) or (c) of the definition of Prepayment Event, if the Borrower shall
deliver to the Administrative Agent a certificate of a Financial Officer to the
effect that the Borrower intends to apply the Net Proceeds from such event (or a
portion thereof specified in such certificate) to invest in the
Telecommunications Business of the Borrower and the other Restricted
Subsidiaries within 360 days of the receipt thereof and certifying that no
Default has occurred and is continuing, then no prepayment shall be required
pursuant to this paragraph in respect of the Net Proceeds in respect of such
event (or the portion of such Net Proceeds specified in such certificate, if
applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).
(c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2001, the Borrower shall prepay Term
Borrowings and, if provided for in the applicable Incremental Facility
Agreement, Incremental Term Borrowings in an aggregate amount equal to the
product of (i) 50% of Excess Cash Flow for such fiscal year and (ii) the
Reduction Portion in respect of such Excess Cash Flow; provided that if, on the
date on which any prepayment would otherwise be made pursuant to this Section
2.11(c), either (i) the Facilities shall be rated not lower than BBB- by S&P and
Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date is less than
3.5 to 1.0, no such prepayment shall be required pursuant to this Section
2.11(c). Each prepayment pursuant to this paragraph shall be made on or before
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year
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<PAGE> 61
for which Excess Cash Flow is being calculated (and in any event within 90 days
after the end of such fiscal year).
(d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Incremental Revolving Loans of any Class of all Lenders
exceeds the aggregate Incremental Revolving Commitments of such Class of all
Lenders, the Borrower shall immediately prepay Revolving Loans or Incremental
Revolving Loans of such Class, as the case may be (and, to the extent that any
such excess remains after all Revolving Loans have been prepaid, deposit cash
collateral with the Administrative Agent to secure outstanding LC Exposure), in
an amount equal to such excess.
(e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.
(f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Incremental Revolving
Commitments as contemplated by Section 2.08, then such notice of prepayment may
be revoked if such notice of termination is revoked in accordance with Section
2.08. Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.02, except as necessary to apply fully
the required amount of a mandatory prepayment. Each prepayment of a Borrowing
shall be applied ratably to the Loans included in the prepaid
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<PAGE> 62
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender fees ("Commitment Fees") for
each day during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates at a rate equal to (i) in
the case of Revolving Commitments and Term Commitments, the Commitment Fee Rate
for such day and (ii) in the case of any Incremental Facility Commitment, the
rate set forth in the applicable Incremental Facility Agreement for such day, in
each case on the unused amount of each Commitment of such Lender on such day.
Accrued Commitment Fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the
applicable Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall
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<PAGE> 63
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Revolving Commitments terminate and
any such fees accruing after the date on which the Revolving Commitments
terminate shall be payable on demand. Any other fees payable to an Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility or the Term Facility (including each
Swingline Loan), the ABR Spread and, if applicable, the Leverage Premium (each
as set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Incremental Facility, the Applicable Margin for ABR Borrowings set
forth in the applicable Incremental Facility Agreement.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility or
the Term Facility, the Eurodollar Spread and, if applicable, the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Incremental Facility, the Applicable Margin for
Eurodollar Borrowings set forth in the applicable Incremental Facility
Agreement.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any ABR Loan under
the Revolving Facility or the Term Facility, 2% plus the highest Applicable
Margin for ABR Loans plus the ABR, (ii) in the case of overdue principal of any
Eurodollar
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Loan under the Revolving Facility or the Term Facility, the higher of (x) 2%
plus the highest Applicable Margin for Eurodollar Loans plus the Adjusted LIBO
Rate applicable to such Eurodollar Loan on the day before payment was due and
(y) the sum of 2% plus the highest Applicable Margin for ABR Loans plus the ABR,
(iii) in the case of overdue principal of or overdue interest on any Incremental
Loan of any Class, the rate set forth in the applicable Incremental Facility
Agreement and (iv) in the case of any other amount, 2% plus the rate applicable
to ABR Revolving Loans as provided in Section 2.13(a).
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until
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the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate), Swingline
Lender or Issuing Bank; or
(ii) impose on any Lender, Swingline Lender or Issuing Bank or
the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any Letter of
Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or
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Issuing Bank's policies and the policies of such Lender's, Swingline Lender's or
Issuing Bank's holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender, Swingline Lender or Issuing Bank,
as the case may be, such additional amount or amounts as will compensate such
Lender, Swingline Lender or Issuing Bank or such Lender's, Swingline Lender's or
Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such
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Loan had such event not occurred, at the rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.
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(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by the Borrower as will permit such payments to be made without withholding or
at a reduced rate.
(f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall require any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
(g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).
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SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments under
each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so
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that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans (other than Swingline Loans) and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the applicable
Issuing Bank or Banks, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or Issuing
Banks, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
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SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, (i) as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply or (ii) such Lender elects to withdraw its request.
SECTION 2.20. Incremental Facilities and Commitments. (a) At any time
prior to the second anniversary of the Effective Date, and so long as no Default
or Event of Default shall have occurred and be continuing or would result
therefrom,
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the Borrower may request, on one or more occasions, by notice to the
Administrative Agent and the Syndication Agent, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Incremental
Facility"), each of which shall provide for commitments ("Incremental
Commitments") in an aggregate amount of not less than $100,000,000 and all of
which Incremental Facilities shall provide for Incremental Commitments in an
aggregate amount not in excess of $500,000,000; provided that (i) no Lender
shall have any obligation to provide any Incremental Commitment and (ii) any
Lender (or any other Person which becomes a Lender pursuant to Section 2.20(d)
below) may provide Incremental Commitments without the consent of any other
Lender.
(b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Incremental Facility, and certain agent determinations, shall be
as set forth in an agreement (an "Incremental Facility Agreement") among the
Loan Parties, the Administrative Agent, the Syndication Agent and the Lenders
and other Persons agreeing to provide Incremental Commitments thereunder;
provided that any term Incremental Loans ("Incremental Term Loans") shall have a
Weighted Average Life to Maturity of no less than the Weighted Average Life to
Maturity of the Term Loans then outstanding and any revolving Incremental
Commitment ("Incremental Revolving Commitments" and any loans made pursuant
thereto "Incremental Revolving Loans") shall have a Weighted Average Life to
Maturity of not less than the Weighted Average Life to Maturity of the Revolving
Commitments then outstanding.
(c) Any Incremental Facility requested by the Borrower shall be offered
first, on a pro rata basis, to the existing Lenders (other than any defaulting
Lenders). If, after the Borrower has requested the then existing Lenders (other
than defaulting Lenders) to provide an Incremental Facility, the Borrower has
not received Incremental Commitments in an aggregate amount equal to the
Incremental Commitments sought in respect of such Incremental Facility (as set
forth in the Borrower's notice to the Administrative Agent and Syndication
Agent), then the Borrower may, with the consent of the Administrative Agent and
the Syndication Agent (which consents shall not be unreasonably withheld)
request Incremental Commitments from other Persons in an aggregate amount equal
to such deficiency on terms which are no more favorable to such Persons in any
respect than the terms offered to the existing Lenders; provided that all
actions taken by the Borrower pursuant to this Section 2.20 shall be taken in
coordination with the Administrative Agent and the Syndication Agent.
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(d) The effectiveness of any Incremental Facility to be created under
this Section 2.20, and the obligation of any Lender or other Person providing
any Incremental Commitment thereunder to make any Incremental Loans pursuant
thereto, is subject to, in addition to the conditions set forth in Article 4,
the satisfaction of each of the following conditions: (i) each Loan Party, the
Administrative Agent, the Syndication Agent and each Lender or other Person
providing Incremental Commitments thereunder (each, an "Incremental Lender")
shall have executed and delivered to the Administrative Agent an Incremental
Facility Agreement with respect to such Incremental Facility, (ii) (x) the
Administrative Agent and the Syndication Agent shall have received, and (y) the
Administrative Agent shall have received for the respective accounts of any
other agents and the Incremental Lenders, all fees and other amounts payable by
the Borrower in respect of such Incremental Facility on or prior to such date of
effectiveness and (iii) the Administrative Agent (or its counsel) shall have
received such documents and certificates, and such legal opinions, as the
Administration Agent and the Syndication Agent or their counsel shall reasonably
request, including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Incremental Facility and other legal matters relating to the Loan
Parties or the Loan Documents (including the applicable Incremental Facility
Agreement). The Administrative Agent shall notify each Lender as to the
effectiveness of each Incremental Facility hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants to the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
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of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Holdings, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents (if any), (b) will not violate
any applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any Restricted
Subsidiary or any of their respective assets, or give rise to a right thereunder
to require any payment to be made by Holdings or any Restricted Subsidiary, and
(d) will not result in the creation or imposition of any Lien on any asset of
Holdings or any Restricted Subsidiary, except Liens created under the Loan
Documents (if any).
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders (i) Holdings' consolidated
balance sheet and statements of operations, stockholders equity and cash flows
as of and for the fiscal years ended December 31, 1997 and December 31, 1998,
reported on by Ernst & Young LLP, independent public accountants, and (ii)
Holdings' consolidated balance sheets and statements of operations, stockholders
equity and cash flows as of and for the fiscal quarter and the portion of the
fiscal year ended June 30, 1999, certified by the chief financial officer of
Holdings. Such financial statements present fairly, in all material respects,
the financial position and results of operations and cash flows of Holdings and
the Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
(b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of June 30, 1999 and pro forma statements of
operations and cash flows for the fiscal year ended December 31, 1998 and the
six months ended June 30, 1999, prepared giving effect to the Transactions, the
Reorganization, the Equity Issuance and the Notes Offering, as if such events
had occurred on such date or on the first day of such period, as the case may
be. Such
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pro forma consolidated balance sheets and statements of operations and cash
flows (i) have been prepared in good faith based on the same assumptions used to
prepare the pro forma financial statements included in the Information
Memorandum (which assumptions are believed by Holdings and the Borrower to be
reasonable), (ii) are based on the best information available to Holdings and
the Borrower after due inquiry, (iii) accurately reflect all adjustments
necessary to give effect to the Transactions, the Reorganization, the Equity
Issuance and the Notes Offering and (iv) present fairly, in all material
respects, the pro forma financial position of Holdings and the Subsidiaries as
of such date and for such periods as if the Transactions, the Reorganization,
the Equity Issuance and the Notes Offering had occurred on such date or at the
beginning of such period, as the case may be.
(c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.
(d) The projections delivered to the Lenders pursuant to Section
4.01(q)(iii) hereof (the "Projections") were based on assumptions believed by
the Borrower and Holdings in good faith to be reasonable when made and as of
their date represented the Borrower's and Holdings' good faith estimate of
future performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.
(e) Since December 31, 1998, there has been no Material Adverse Change.
SECTION 3.05. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.
(b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements
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that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received written notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any violations of any Environmental Law
or any release, threatened release or exposure to any Hazardous Materials that
is likely to form the basis of any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
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SECTION 3.09. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $25,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.
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SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.
SECTION 3.16. Year 2000 Issue. The cost to Holdings and the Restricted
Subsidiaries of any reprogramming required to permit the proper functioning of
(i) the computer systems of Holdings and the Restricted Subsidiaries and (ii)
equipment containing embedded microchips (including systems and equipment
supplied by others or with which Holdings' or any Restricted Subsidiary's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, and of the reasonably foreseeable consequences of year 2000 to
Holdings and the Restricted Subsidiaries (including, without limitation,
reprogramming errors and
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the failure of others' systems or equipment) would not reasonably be expected to
result in a Default or a Material Adverse Effect. To the knowledge of Holdings
and the Borrower, except for such of the reprogramming referred to in the
preceding sentence as may be necessary, the computer and management information
systems of Holdings and the Restricted Subsidiaries are and, with ordinary
course upgrading and maintenance and planned systems conversions and/or
upgrades, will continue to be, sufficient to permit Holdings and the Restricted
Subsidiaries to conduct their respective businesses without the occurrence of a
Material Adverse Effect.
SECTION 3.17. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.
SECTION 3.18. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.
ARTICLE 4
CONDITIONS
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 10.02) (provided that upon the
making of the initial Loans hereunder by a Lender, such Lender shall be deemed
to be satisfied as to those aspects of Sections 4.01(b), 4.01(h), 4.01(l),
4.01(n), 4.01(o), 4.01(p) and 4.01(q) below that require its satisfaction):
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Agents, the Issuing Banks, the Swingline Lenders and
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the Lenders and dated the Effective Date) of each of (i) Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for Holdings, the Borrower and each Subsidiary Loan
Party, substantially in the form of Exhibit C-1 and (ii) the Senior Vice
President of Law of Holdings, substantially in the form of Exhibit C-2 and, in
the case of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the Transactions as
the Required Lenders shall reasonably request. Holdings and the Borrower hereby
request such counsel to deliver such opinions.
(c) The Administrative Agent (or its counsel) shall have received from
each Subsidiary Loan Party (other than Solutions) a counterpart of the
Subsidiary Guarantee signed by such Subsidiary Loan Party.
(d) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(e) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
Sections 4.02(a) and 4.02(b).
(f) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by any Loan Party hereunder or under any other Loan
Document.
(g) The Administrative Agent shall have received evidence satisfactory
to it that the insurance required by Section 5.06 is in effect.
(h) The Lenders shall have received a copy of the Parent Indemnity,
certified by an officer of Holdings to be a true and complete copy, and shall be
satisfied with all of the terms and conditions thereof.
(i) the Administrative Agent shall have received from the Parent a
signed counterpart of the Parent Guarantee.
(j) All consents and approvals required to be obtained from any
Governmental Authority or other Person necessary, or in the discretion of the
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Administrative Agent, advisable in connection with the Transactions, the
continuing operations of the Borrower and its Subsidiaries and, if the Equity
Issuance and the Notes Offering are consummated on or prior to the Effective
Date, the Equity Issuance and the Notes Offering, shall have been obtained and
shall be in full force and effect.
(k) If the Equity Issuance and the Notes Offerings are consummated on
or prior to the Effective Date, the Administrative Agent shall have received
copies of the Other Financing Documents and all certificates, opinions and other
documents delivered thereunder, certified by a Financial Officer of Holdings as
complete and correct.
(l) The Lenders shall have reviewed and be satisfied in their sole
discretion with the terms of the Intercompany Note.
(m) The Administrative Agent shall have received from the parties
thereto signed counterparts of the Intercreditor Agreement.
(n) The Lenders shall be satisfied in their sole discretion with the
proposed capital structure of Holdings and the Borrower.
(o) The Lenders shall have received copies, certified by an officer of
the Borrower as being true, complete and correct copies, and be satisfied in
their sole discretion with, all waivers obtained under and all the amendments
effected to the ADP.
(p) There shall be no litigation or administrative proceedings or other
legal or regulatory developments, actual or threatened, that, in the judgment of
the Lenders, (i) could reasonably be expected to have a Material Adverse Effect
or (ii) would be materially inconsistent with the assumptions underlying the
Projections.
(q) (i) the Lenders shall have received, and be satisfied with, the
financial statements of Holdings and the Borrower referred to in Section
3.04(a);
(ii) the Lenders shall have received, and be satisfied with,
the pro forma financial statements of Holdings and the Borrower
referred to in Section 3.04(b); and
(iii) the Lenders shall have received, and be satisfied with,
projected annual (for fiscal years 1999 through 2007) and quarterly
(for fiscal years 1999 and 2000) consolidated balance sheets and
statements of operations and cash flows of Holdings and the
Subsidiaries and the Borrower and its consolidated subsidiaries in each
of the foregoing cases
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having given effect to the Reorganization, the Transactions and the
Equity Issuance and the Notes Offering, which projections shall (A) be
prepared by Holdings and the Borrower in good faith on the basis of
information and assumptions that Holdings and the Borrower believe to
be reasonable as of the date of such projections, (B) be reasonably
satisfactory to the Lenders and (C) demonstrate that the financial
covenants set forth in Section 6.08 and Sections 6.15 through 6.19
shall be satisfied.
(r) there shall not have occurred any Material Adverse Change or any
material adverse change in the business, assets, prospects or condition,
financial or otherwise, of the Parent and its subsidiaries, considered as a
whole, in each case since December 31, 1998.
(s) the Borrower shall have made arrangements satisfactory to the
Administrative Agent for the commitments under the Borrower's existing senior
revolving credit facility (the "Existing Revolver") to be terminated on or
before the Effective Date, for all amounts outstanding thereunder to be paid in
full and for all letters of credit issued thereunder to be canceled or
arrangements satisfactory to the issuer thereof and the lenders thereunder to be
made for the reimbursement of amounts drawn or to be drawn thereunder and for
all guarantees of amounts outstanding under the Existing Revolver to be
released.
(t) After giving effect to the Transactions, neither Holdings nor any
Restricted Subsidiary shall have outstanding any shares of preferred stock or
any Indebtedness, other than (i) Indebtedness incurred under the Loan Documents,
(ii) the Intercompany Note, (iii) the High Yield Notes (if the Notes Offering
shall have been consummated on or prior to the Effective Date), (iv) ADP
Outstandings, (v) unless the Notes Offering or the Equity Issuance shall have
been consummated on or prior to the Effective Date, Indebtedness under the
Bridge Facility and (vi) other Indebtedness in an aggregate amount not in excess
of $35,000,000.
The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Banks to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 1:00 p.m., New York City time, on
September 30, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing, and of each Issuing Bank to issue,
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amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a) and 4.02(b).
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:
(a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement), setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Ernst & Young LLP or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of Holdings
and the Subsidiaries on a consolidated basis in
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accordance with GAAP consistently applied, (ii) within 90 days after the end of
each fiscal year of the Borrower, its audited consolidated balance sheets and
related audited consolidated statements of operations, stockholders' equity and
cash flows as of the end of and for such fiscal year (including segment
reporting with respect to each of the Borrower's and its consolidated
subsidiaries' business segments consistent with that provided with respect to
the Borrower's and its consolidated subsidiaries' business segments in the Notes
Offering Registration Statement), setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young LLP
or other independent public accountants of recognized national standing (without
a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (iii) within 90 days after the end of each fiscal year
of Holdings and the Borrower, (x) supplemental unaudited balance sheets and
related unaudited statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal year, setting forth in tabular form in each
case the figures for the previous year, for the Borrower and Holdings and the
consolidating adjustments with respect thereto and (y) segment reporting of
EBITDA and Adjusted EBITDA with respect to each business segment of Holdings and
the Subsidiaries and the Borrower and its consolidated subsidiaries consistent
with the business segments reported on in the Notes Offering Registration
Statement;
(b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows of the Borrower and its consolidated
subsidiaries as of the end of and for
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such fiscal quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of the previous fiscal year (or, in the case of the balance sheet, as
of the end of the previous fiscal year) (including segment reporting with
respect to each of the Borrower's and its consolidated subsidiaries' business
segments consistent with that provided with respect to the Borrower's and its
consolidated subsidiaries' business segments in the Notes Offering Registration
Statement and also including segment reporting of EBITDA and Adjusted EBITDA),
all certified by a Financial Officer of the Borrower as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under clause
5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business
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segments consistent with the categories of information provided with respect to
Holdings' and the Subsidiaries' business segments in the Notes Offering
Registration Statement, together with projected EBITDA and Adjusted EBITDA for
such segments) and, promptly when available, any significant revisions of such
budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to
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engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by which its properties or
assets are bound, except where the failure to do the foregoing would not in the
aggregate have a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.
SECTION 5.06. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.
SECTION 5.07. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise)
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are applied, to the extent such Net Proceeds have not been utilized to repair,
restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.
SECTION 5.08. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper books of record and account in which materially full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. Each of Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, permit any representatives designated by
the Administrative Agent or any Lender at the expense of the Administrative
Agent or Lender, as the case may be, or, if an Event of Default shall have
occurred and be continuing, at the expense of the Borrower, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested, subject to Section 10.12.
SECTION 5.09. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) to refinance the Existing Revolver, (ii) for working
capital requirements and general corporate purposes of the Borrower and the
other Restricted Subsidiaries, (iii) to repay Indebtedness under the
Intercompany Note, to the extent permitted herein and under the Intercreditor
Agreement and (iv) to pay the fees and expenses associated with the Facilities.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
SECTION 5.11. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent or the Required Lenders may
by written notice to the Borrower (a "Collateral Notice"), request, and Holdings
and the Borrower hereby agree that they will, and will cause each other
Restricted
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Subsidiary to, within 30 days of the Borrowers' receipt of such Collateral
Notice (such thirtieth day, a "Collateral Establishment Date"):
(a) Deliver to the Administrative Agent counterparts of each security
agreement and each other Collateral Document reasonably requested by the
Administrative Agent or the Required Lenders, in form and substance satisfactory
to the Administrative Agent or the Required Lenders, signed on behalf of
Holdings, the Borrower and each Subsidiary Loan Party requested by the
Administrative Agent or the Required Lenders, together with such of the
following as shall have been so requested:
(i) stock certificates representing any or all of the
outstanding shares of capital stock of the Borrower and each other
Subsidiary of Holdings owned by or on behalf of any Loan Party as of
such Collateral Establishment Date (except that stock certificates
representing shares of common stock of a Foreign Subsidiary may be
limited to 66% of the outstanding shares of common stock of such
Foreign Subsidiary) and stock powers and instruments of transfer,
endorsed in blank, with respect to such stock certificates;
(ii) any or all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under
the Collateral Documents; and
(iii) a completed perfection certificate dated such Collateral
Establishment Date, in form and substance reasonably satisfactory to
the Administrative Agent and signed by an executive officer or
Financial Officer of Holdings, together with all attachments
contemplated thereby, including the results of a search of the Uniform
Commercial Code (or equivalent) filings made with respect to the Loan
Parties in the jurisdictions contemplated by such perfection
certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(b) If requested by the Administrative Agent or the Required Lenders,
on or before the thirtieth day following any Collateral Establishment Date or
such later day as shall be acceptable to the Administrative Agent or the
Required Lenders (a "Mortgage Establishment Date"), Holdings and the Borrower
shall, and shall cause each other Restricted Subsidiary to, deliver to the
Administrative Agent (i) counterparts of a Mortgage with respect to each
Mortgaged Property as to
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which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent or the
Required Lenders may reasonably request, and (iii) such surveys, abstracts and
appraisals as may be required pursuant to such Mortgages or as the
Administrative Agent or the Required Lenders may reasonably request.
(c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Issuing Banks, the Swingline Lenders and
the Lenders and dated on or prior to such Collateral Establishment Date or
Mortgage Establishment Date) of each of (i) counsel for Holdings, the Borrower
and each Subsidiary Loan Party reasonably acceptable to the Administrative
Agent, (ii) the general counsel of Holdings and (iii) local counsel in each
jurisdiction where any Collateral or Mortgaged Property is located and, in the
case of each such opinion required by this paragraph, covering such matters
relating to the Loan Parties, the Loan Documents, the Collateral and the
Transactions as the Administrative Agent (or its counsel) or the Required
Lenders shall reasonably request.
(d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.
SECTION 5.12. Information Regarding Collateral. (a) After the
occurrence of a Collateral Establishment Date and for so long as a Collateral
Event shall continue thereafter, (i) the Borrower will furnish to the
Administrative Agent prompt written notice of any change (A) in any Loan Party's
corporate name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties, (B) in the location of any Loan
Party's chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (C) in any Loan Party's
identity or corporate structure or (D) in any Loan Party's Federal Taxpayer
Identification Number; (ii) Holdings and the Borrower will not, and will not
permit any other Restricted Subsidiary to, effect or permit
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any change referred to in the preceding sentence unless all filings have been
made under the Uniform Commercial Code or otherwise that are required in order
for the Administrative Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral; and
(iii) Holdings and the Borrower will, and will cause each other Restricted
Subsidiary to, promptly notify the Administrative Agent if any material portion
of the Collateral owned by it is damaged or destroyed.
(b) After the occurrence of a Collateral Establishment Date and for so
long as a Collateral Event shall continue thereafter, at the time of the
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.01(a), the Borrower shall also deliver to the
Administrative Agent a certificate of a Financial Officer or the chief legal
officer of the Borrower (i) setting forth the information required pursuant to
the perfection certificate or confirming that there has been no change in such
information since the date of the perfection certificate most recently delivered
or the date of the most recent certificate delivered pursuant to this Section
and (ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to Section 5.12 to the extent necessary to
protect and perfect the security interests under the Collateral Documents for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).
SECTION 5.13. Additional Subsidiaries. If CNG shall become a Subsidiary
Loan Party, if Solutions shall determine to become a guarantor under the
Subsidiary Guarantee or if any additional Subsidiary is formed or acquired after
the Effective Date, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and (a) in the case of Solutions or CNG, shall
cause Solutions or CNG, as the case may be, to become a party to the Subsidiary
Guarantee as an additional guarantor thereunder, (b) if such Subsidiary (other
than Solutions or CNG) is a Subsidiary Loan Party, cause such Subsidiary, within
five Business Days after such Subsidiary Loan Party is formed or acquired, to
become a party to the Subsidiary Guarantee as an additional guarantor
thereunder, (c) if a Collateral Establishment Date has occurred and any
Collateral Event is then continuing, such Subsidiary is a Subsidiary Loan Party
and the Administrative Agent or the Required Lenders so request in writing, (i)
within 30 days after such Subsidiary is formed or acquired, cause such
Subsidiary to become a party to such Collateral Documents as the Administrative
Agent or the Required Lenders shall request and promptly take such actions as
the Administrative Agent or the Required Lenders shall reasonably request to
create and perfect Liens on such of such Subsidiary's assets as the
Administrative Agent or the Required Lenders
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shall so request to secure its obligations under the Subsidiary Guarantee and
(ii) within 60 days after such Subsidiary is formed or acquired, cause such
Subsidiary to enter into such Mortgage or Mortgages as the Administrative Agent
or the Required Lenders shall so request with respect to any or all material
real property owned by such Subsidiary to secure some or all of its obligations
under the Subsidiary Guarantee and to take such actions (including, without
limitation, actions of the type referred to in Section 5.11(b)) with respect
thereto as the Administrative Agent or the Required Lenders shall reasonably
request and (d) if a Collateral Establishment Date has occurred and any
Collateral Event is continuing, if any shares of capital stock or Indebtedness
of such Subsidiary are owned by or on behalf of any Loan Party (including any
Subsidiary that becomes a Subsidiary Loan Party pursuant to this Section 5.13)
and if requested by the Administrative Agent or the Required Lenders, cause such
of such shares and promissory notes evidencing such Indebtedness as the
Administrative Agent or the Required Lenders shall so request to be pledged
within five Business Days after such Subsidiary is formed or acquired (except
that, if such Subsidiary is a Foreign Subsidiary, shares of common stock of such
Subsidiary to be pledged pursuant to the Security Agreement may be limited to
66% of the outstanding shares of common stock of such Subsidiary).
SECTION 5.14. Further Assurances. (a) After the occurrence of a
Collateral Establishment Date and for so long as a Collateral Event shall
continue thereafter, each of Holdings and the Borrower will, and will cause each
Subsidiary Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), which may be required under any
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Collateral Documents or the validity or priority
of any such Lien, all at the expense of the Loan Parties. Holdings and the
Borrower also agree to provide to the Administrative Agent, from time to time
upon request, evidence reasonably satisfactory to the Administrative Agent as to
the perfection and priority of the Liens created or intended to be created by
the Collateral Documents.
(b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party after any Collateral Establishment Date and prior to the
date of a Collateral Release Event (other than assets constituting Collateral
under any Collateral Document that become subject to the Lien of such Collateral
Document automatically upon the acquisition thereof), the Borrower will notify
the Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent or the Required Lenders, Holdings and the Borrower will, or
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will cause the applicable Restricted Subsidiary to, cause such assets to be
subjected to a Lien securing some or all of the Obligations, as requested by the
Administrative Agent or the Required Lenders, and will take, and cause such
Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent or the Required Lenders to
grant and perfect such Liens, including actions described in Section 5.11, all
at the expense of the Loan Parties.
SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.
SECTION 5.16. Parent Guarantee. The Parent shall be released from its
obligations under the Parent Guarantee if (i) Holdings shall have received gross
cash proceeds of not less than $1,000,000,000 from the Equity Issuance and
$1,300,000,000 from the Notes Offering, (ii) the terms and conditions of, and
all agreements, instruments, and other documents entered into or relating to the
Equity Issuance and the Notes Offering (collectively, the "Other Financing
Documents") (x) are (1) substantially consistent with, respectively, the Equity
Issuance Registration Statement and the Notes Offering Registration Statement or
(2) otherwise in form and substance satisfactory to the Agents after
consultation with the Required Lenders and (y) in the case of the Notes
Offering, do not require any part of the principal of the notes issued
thereunder to be paid (upon maturity or by mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to the date that is one
year after the Term Maturity Date, (iii) the Equity Issuance and the Notes
Offering shall have been consummated in accordance with the Other Financing
Documents, without any amendment, modification or waiver thereof, unless such
amendment, modification or waiver has been consented to in writing by the
Required Lenders, (iv) Holdings shall have contributed all such cash proceeds to
the Borrower as a capital contribution, (v) no Default shall have occurred and
be continuing and, after giving effect to such release, the Borrower shall be in
compliance with all covenants hereunder, including, without limitation (and
without regard to the proviso to Article 6), the covenants set forth in Sections
6.15 through 6.19, inclusive and (vi) Solutions shall have become a party to the
Subsidiary Guarantee as an additional guarantor thereunder.
SECTION 5.17. Bridge Facility. Holdings will repay the loans
outstanding under the Bridge Facility with all net proceeds of (i) the Notes
Offering and (ii) the Equity Issuance, until all such loans are repaid in full.
SECTION 5.18. Dissolution of CNG. Not more than 60 days after the
Effective Date, the Borrower will (i) take, and cause its Subsidiaries to take,
such
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actions as may be necessary or desirable to wind up and dissolve CNG and deliver
to the Administrative Agent a certificate of a Financial Officer certifying to
the dissolution of CNG or (ii) cause CNG to become a party to the Subsidiary
Guarantee as an additional guarantor thereunder.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that (provided that the provisions of Section 6.15
through 6.19, inclusive, shall not apply on any day on which the Parent
Guarantee is in full force and effect and has not been released in accordance
with Section 5.16):
SECTION 6.01. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness of Holdings under Qualifying Holdings Debt;
(c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;
(d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;
(e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;
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(f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;
(g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;
(h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;
(i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;
(j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);
(k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;
(l) Indebtedness incurred in lieu of payments under the Intercompany
Note, any accrual of interest that is capitalized under, or added to the
principal amount of, the Intercompany Note and up to $25,000,000 per fiscal year
of unpaid amounts owing by the Borrower or any other Restricted Subsidiary under
contractual agreements with the Parent which are added to the principal amount
of the Intercompany Note;
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(m) Indebtedness of Holdings under the Bridge Facility in an aggregate
principal amount not exceeding $750,000,000 at any time outstanding; provided
that the aggregate principal amount of Indebtedness permitted to be outstanding
from time to time under this clause (m) shall be reduced by the net proceeds
received by Holdings from the Equity Issuance and the Notes Offering;
(n) Indebtedness from time to time outstanding under the Intercompany
Note in an aggregate principal amount not to exceed $1,000,000,000 at any time
outstanding (provided that the portion of Indebtedness thereunder attributable
to the conversion of Equity Interests of the Borrower held by the Parent into
Indebtedness under the Intercompany Note shall not exceed $200,000,000 at any
time outstanding) and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof or
result in an earlier maturity date or decrease the Weighted Average Life to
Maturity thereof;
(o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;
provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes, (ii) the Bridge
Facility or (iii) any Qualifying Holdings Debt.
SECTION 6.02. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:
(i) Liens created under the Loan Documents (including, without
limitation, Liens securing Indebtedness of Holdings and the Parent
created thereunder in accordance with Section 5.11(d));
(ii) Permitted Encumbrances;
(iii) Liens on any ADP Property securing only ADP Obligations;
(iv) any Lien on any property or asset of Holdings or any
Restricted Subsidiary existing on the date hereof and set forth in
Schedule 6.02; provided that (A) such Lien shall not apply to any other
property or asset of Holdings or any Restricted Subsidiary and (B) such
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Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof or decrease the
Weighted Average Life to Maturity thereof;
(v) any Lien existing on any property or asset prior to the
acquisition thereof by Holdings or any Restricted Subsidiary or
existing on any property or asset of any Person that becomes a
Restricted Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (A) such Lien is not created
in contemplation of or in connection with such acquisition or such
Person becoming a Restricted Subsidiary, as the case may be, (B) such
Lien shall not apply to any other property or assets of Holdings or any
Restricted Subsidiary and (C) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the
date such Person becomes a Restricted Subsidiary, as the case may be,
and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof or decrease the Weighted
Average Life to Maturity thereof;
(vi) Liens in favor of the Borrower or any Subsidiary Loan
Party;
(vii) Liens on property of Holdings or any Restricted
Subsidiary consisting of, or securing. licenses of such property; and
(viii) other Liens securing Indebtedness at any time
outstanding that, together with the aggregate amount of Attributable
Debt in respect of all Sale and Leaseback Transactions then
outstanding, does not exceed 5% of the consolidated net property, plant
and equipment of Holdings and the Restricted Subsidiaries at such time.
(b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its assets to
secure (i) any obligations under the Intercompany Note, (ii) except in
accordance with Section 5.11(d), any obligations in respect of the High Yield
Notes or any refinancing thereof, permitted under Section 6.01(c), (iii) except
in accordance with Section 5.11(d), any Qualifying Holdings Debt or (iv) any
obligations under the Bridge Facility.
SECTION 6.03. Fundamental Changes. (a) Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be
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continuing (i) any Person may merge into the Borrower in a transaction in which
the Borrower is the surviving corporation, (ii) any Person may merge into any
Restricted Subsidiary in a transaction in which the surviving entity is a
Restricted Subsidiary and (iii) any Restricted Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders; provided that any such merger involving a Person
that is not a wholly owned Restricted Subsidiary immediately prior to such
merger shall not be permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
(c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
an established market (a "Trading Subsidiary") and, with respect to each of the
foregoing, activities incidental thereto. Holdings will not own or acquire any
assets (other than Qualifying Equity Interests in the Borrower, Equity Interests
in any Trading Subsidiary, cash and Cash Equivalent Investments) or incur any
liabilities (other than liabilities under the Loan Documents, liabilities in
respect of the High Yield Notes, liabilities in respect of Qualified Holdings
Debt permitted hereunder, liabilities imposed by law, including tax liabilities,
and other liabilities incidental to its existence and permitted business and
activities).
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. Holdings will not, and will not permit any Restricted Subsidiary
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Restricted Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit (collectively,
"Investments"), except:
(a) Cash Equivalent Investments;
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(b) Investments existing on the date hereof and set forth on Schedule
6.04;
(c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;
(d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
Qualifying Holdings Debt or Indebtedness under the Bridge Facility and (ii) the
aggregate principal amount of Indebtedness of Subsidiaries that are not Loan
Parties that is Guaranteed by any Loan Party shall be subject to the proviso to
this Section 6.04;
(f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) payments of principal of the Intercompany Note made pursuant to Section
6.07(b)(ii)(x) on or prior to such date, (ii) Investments permitted under clause
(ii) of the proviso to this Section 6.04 made on or prior to such date and (iii)
Capital Expenditures permitted under Section 6.08(b) made on or prior to such
date;
(h) Hedging Agreements permitted under Section 6.01(k);
(i) Capital Expenditures made in accordance with Section 6.08;
(j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;
(k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any
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Restricted Subsidiary of any equity interest in Algar Telecom S.A. (formerly
known as Lightel S.A.) owned by the Parent or its subsidiaries (other than
Holdings and the Subsidiaries) shall not be permitted under this clause (k) but
shall only be permitted under clause (p) of this Section 6.04;
(l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the Termination Date, or an ADP Event of Default, Environmental Trigger or
Unwind Event under the Operative Documents;
(m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;
(n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;
(o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);
(p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings; and
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(q) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or data through or over owned or leased fiber optic cable and/or
the holding, developing or constructing of assets or technology used therein;
provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net of any distributions received by the Borrower or any
Subsidiary Loan Party in respect of such Investment made pursuant to Sections
6.04(j) and 6.04(k) on or prior to any date, or referred to in Section
6.04(c)(i), the proviso to Section 6.04(d) and Section 6.04(e)(ii) and made on
or prior to such date, shall not exceed the sum of (i) $275,000,000 plus (ii) an
amount (which amount, for purposes of this proviso only, shall not be less than
zero) equal to (x) the amount of Additional Capital as of such date minus (y)
(A) payments of principal of the Intercompany Note made pursuant to Section
6.07(b)(ii)(x) on or prior to such date, (B) acquisitions of ADP Property
permitted under Section 6.04(g) made on or prior to such date and (C) Capital
Expenditures permitted under Section 6.08(b) made on or prior to such date.
SECTION 6.05. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any asset, including any Equity Interests owned by it, nor
will Holdings permit any of its Restricted Subsidiaries to issue any additional
Equity Interests, except:
(a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, and sales of used or surplus equipment and Cash Equivalent Investments
in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;
(c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;
(d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;
(e) Permitted Telecommunications Asset Dispositions;
(f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;
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<PAGE> 102
(g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);
(h) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(h) shall
not exceed $25,000,000 during any fiscal year of the Borrower;
provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(h) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).
SECTION 6.06. Sale and Leaseback Transactions. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to, enter
into any arrangement, directly or indirectly, whereby it shall (a) sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property that it intends to use for substantially the same purpose or
purposes as the property sold or transferred or (b) lease any property, real or
personal, from any entity substantially all of whose activities consist of
acquiring, constructing or developing property to be leased to Holdings and the
Restricted Subsidiaries pursuant to leases intended to cover, and measured by
the cost of or the financing incurred by such entity to finance, such property
(the transactions referred to in clause (a) and (b) being collectively referred
to as "Sale and Leaseback Transactions"), except for (i) sales and leases of ADP
Property pursuant to the ADP in respect of ADP Outstandings not to exceed
$750,000,000 at any time outstanding and (ii) (x) any such sale referred to in
clause (a) above of any fixed or capital assets that is made for cash
consideration in an amount not less than the cost of such fixed or capital asset
and is consummated within 270 days after the Borrower or such other Restricted
Subsidiary acquires or completes the construction of such fixed or capital asset
and (y) any such lease referred to in clause (b) above providing for rental
payments measured by the cost of the property leased or the financing incurred
by the lessor thereof to acquire, construct or develop the property so leased;
provided that the sum of the aggregate amount of Attributable Debt in respect of
all such Sale and Leaseback Transactions permitted under this clause (ii) at any
time outstanding and the aggregate amount of Indebtedness secured by Liens
permitted by Section 6.02(a)(viii) at such time outstanding shall not exceed 5%
of consolidated net property, plant and equipment of Holdings and the Restricted
Subsidiaries at such time.
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SECTION 6.07. Restricted Payments; Certain Payments of Indebtedness.
(a) Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Holdings and the Restricted Subsidiaries; and (iv) so
long as no Default shall have occurred and be continuing or result from the
making of such payment, the Borrower may pay dividends to Holdings at such times
and in such amounts as shall be necessary to permit Holdings to discharge, to
the extent permitted hereunder, its permitted liabilities.
(b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, the Intercompany
Note or any Qualifying Holdings Debt (collectively "Specified Indebtedness"), or
any voluntary payment or other distribution (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any Specified Indebtedness (or enter into any transaction the economic effect
of which is substantially similar to any of the foregoing), except:
(i) provided no Default has occurred and is continuing or
would result therefrom, payments of regularly scheduled interest as and
when due in respect of any Specified Indebtedness, subject, in the case
of payments of interest in respect of the Intercompany Note, to the
limitations set forth in Section 6.07(b)(ii) below and in the
Intercreditor Agreement; and
(ii) provided that no Default (other than a Default under
Section 7.01(e)) has occurred and is continuing or would result
therefrom, payments after June 30, 2000 of principal in respect of the
Intercompany Note that are either:
(x) payments in an aggregate amount on or prior to
any date not exceeding Additional Capital as of such date
minus (A) Investments permitted pursuant to clause (ii) of the
proviso to Section 6.04 made on or prior to such date, (B)
acquisitions of ADP Property permitted under Section 6.04(g)
made on or prior to
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such date and (C) Capital Expenditures permitted under Section
6.08(b) made on or prior to such date; or
(y) payments not described in clause (x) above
("Other Principal Payments") in an aggregate amount not in
excess of $25,000,000 in an fiscal year, provided that the
aggregate amount of Other Principal Payments shall not be
restricted under this clause (y) so long as if, prior to, and
after giving effect to, any such Other Principal Payment, the
Total Leverage Ratio is less than 5.0 to 1.0.
SECTION 6.08. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- --------------
<S> <C>
1999 $2,500,000,000
2000 $2,000,000,000
2001 $ 825,000,000
2002 $ 600,000,000
2003 $ 600,000,000
2004 $ 600,000,000
2005 $ 600,000,000
2006 $ 600,000,000
</TABLE>
provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to (i) in the case of 1999
and 2000, 100% and (ii) in the case of any other fiscal year, 50% of such
shortfall may be added to the amount of such Capital Expenditures permitted for
the immediately succeeding fiscal year (such amount to be added for any fiscal
year, the "Rollover Amount"); provided further that any Capital Expenditures
(other than Capital Expenditures permitted under Section 6.08(b) below) made
during any fiscal year for which any Rollover Amount shall have been so added
shall be applied, first, to the Rollover Amount added for such fiscal year and,
second, to the Base Amount for such fiscal year.
(b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Effective
Date in an aggregate amount not to exceed Additional Capital as of such date
minus (A)
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Investments permitted under clause (ii) of the proviso to Section 6.04 made on
or prior to such date, (B) purchases of ADP Property permitted under Section
6.04(g) made on or prior to such date and (C) payments of principal of the
Intercompany Note permitted under Section 6.07(b)(ii)(x) made on or prior to
such date.
SECTION 6.09. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.
SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, the Intercompany Note, the High Yield Notes or, to the extent that any
such restrictions therein, taken as a whole, are no more restrictive than those
contained in the High Yield Notes, any Qualifying Holdings Debt, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.10 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) Section 6.10(a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (v) Section 6.10(a) of the foregoing
shall not apply
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<PAGE> 106
to customary provisions in leases and other contracts restricting the assignment
thereof.
SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.
SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.
SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents, (b) the Other Financing Documents,
(c) the Intercompany Note, (d) any agreements governing any Qualifying Holdings
Debt, (d) the Parent Indemnity or (e) except pursuant to the waivers and
amendments referred to in Section 4.01(o), the Operative Documents, in each of
the foregoing cases if such amendment, modification of waiver could reasonably
be expected to have (i) an adverse effect on the ability of any Loan Party to
perform any of its obligations under any Loan Document or the rights of, or
benefits available to, the Lenders under any Loan Document or (ii) a Material
Adverse Effect.
SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:
(i) no Default shall have occurred and be continuing at the time
of or after giving effect to such Subsidiary Designation;
(ii) after giving effect to such Subsidiary Designation, Holdings
would be in compliance with the covenants contained in Section
6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
such Subsidiary Designation had been made on the first day of
the period of four fiscal quarters most recently ended in
respect of which financial statements have been delivered by
the Company pursuant to Section 5.01(a) or 5.01(b);
(iii) Holdings has delivered to the Administrative Agent (x) written
notice of such Subsidiary Designation and (y) a certificate of
a Financial Officer setting forth in reasonable detail
calculations demonstrating pro forma compliance with the
financial covenants contained in
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Section 6.08 and Sections 6.15 through 6.19, as required by
clause (ii) above; and
(iv) on the date of such Subsidiary Designation, Holdings and the
Borrower would not be prohibited by Section 6.04(c) and the
proviso to Section 6.04 from making an Investment (a "Deemed
Subsidiary Investment") in an aggregate amount equal to the
fair market value (valued at the date of such Subsidiary
Designation) of (x) the net assets of such Restricted
Subsidiary or (y) if less than 100% of the Equity Interests in
such Restricted Subsidiary are held by Holdings and its
Restricted Subsidiaries, in an aggregate amount equal to the
percentage interest of Holdings and the Restricted
Subsidiaries in such net assets.
Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.
SECTION 6.15. Total Debt to Contributed Capital Ratio. The Total Debt
to Contributed Capital Ratio shall at no time prior to March 30, 2001 exceed .65
to 1.00.
SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) revenues for such period
attributable to Dark Fiber Dispositions plus (iv) Dark Fiber Proceeds for such
period shall not be less than the amount set forth below opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------------
<S> <C>
October 1, 1999 -
December 31, 1999 $150,000,000
January 1, 2000 -
March 31, 2000 $170,000,000
April 1, 2000 -
June 30, 2000 $250,000,000
July 1, 2000 -
September 30, 2000 $285,000,000
October 1, 2000 -
December 31, 2000 $300,000,000
</TABLE>
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SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:
<TABLE>
<CAPTION>
Period Total Leverage Ratio
------ -------------------
<S> <C>
December 31, 2000 -
June 29, 2001 11.00:1.00
June 30, 2001 -
December 30, 2001 10.00:1.00
December 31, 2001-
December 30, 2002 8.75:1.00
December 31, 2002 -
December 30, 2003 5.25:1.00
December 31, 2003
and thereafter 4.00:1.00
</TABLE>
(b) If the Borrower shall have made Other Principal Payments in respect
of the Intercompany Note in an aggregate amount in excess of $25,000,000 in any
fiscal year (the date of the first such Other Principal Payment in excess of
$25,000,000 being the "Leverage Ratio Reduction Date"), the Total Leverage Ratio
shall at no time from and after such Leverage Ratio Reduction Date exceed the
lesser of (i) 5.0 to 1.00 and (ii) the applicable ratio set forth above for the
relevant period.
SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:
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<TABLE>
<CAPTION>
Period Senior Leverage Ratio
------ ---------------------
<S> <C>
December 31, 2000 -
June 29, 2001 7.25:1.00
June 30, 2001 -
December 30, 2001 6.25:1.00
December 31, 2001 -
December 30, 2002 5.25:1.00
December 31, 2002 -
December 30, 2003 3.25:1.00
December 31, 2003 -
and thereafter 2.50:1.00
</TABLE>
SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Interest Coverage Ratio
------ -----------------------
<S> <C>
October 1, 2000 -
December 31, 2000 1.00:1.00
January 1, 2001 -
December 30, 2001 1.25:1.00
December 31, 2001 -
December 30, 2002 1.50:1.00
December 31, 2002 -
December 30, 2003 2.50:1.00
December 31, 2003 -
and thereafter 3.00:1.00
</TABLE>
SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) In the event
that Holdings and the Restricted Subsidiaries fail to comply with any of
Sections 6.15 through 6.19, inclusive, for any period or on any date set forth
therein, the Parent shall have the right, but not the obligation, to make,
within three Business Days of the date upon which financial statements as of the
last day of such period are delivered or required to be delivered pursuant to
Section 5.01(a) or (b), a cash equity contribution to Holdings in exchange for
Qualifying
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Equity Interests of Holdings (which Holdings shall thereupon contribute to the
Borrower, in exchange for Qualifying Equity Interests of the Borrower) to cure
such failure.
(b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.
(c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.
(d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events
("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall
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become due and payable, and such failure shall continue unremedied for a period
of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) (i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11, 5.13, 5.17 or 5.18 or
in Article 6 (subject to the right to cure found in Section 6.20) or (ii) the
Borrower, Holdings or the Parent shall fail to observe or perform any covenant,
condition or agreement contained in the Intercreditor Agreement or any related
Loan Document and, in the case of this clause (ii), such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (x) knowledge
thereof by any Loan Party or (y) notice thereof from the Administrative Agent to
the Borrower (which notice will be given at the request of any Lender);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this Section 7.01(g) shall not apply to secured
Indebtedness permitted hereunder that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;
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(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of Holdings and
the Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods;
(m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a
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transaction permitted under the Loan Documents or (ii) pursuant to a Collateral
Release Event;
(n) any Guarantee by the Parent, Holdings or any Subsidiary Loan Party
under any Loan Document shall cease for any reason (other than the merger out of
existence of such Guarantor pursuant to a transaction permitted hereunder or
pursuant to the express terms of such Guarantee) to be in full force and effect,
or the Parent, Holdings or any Subsidiary Loan Party shall so assert in writing;
(o) a Change in Control shall occur;
(p) the senior unsecured long-term debt of the Parent shall be rated
less than BBB- by S&P or less than Baa3 by Moody's; and
(q) unless the Parent Guarantee shall have theretofore been released
pursuant to Section 5.16, any Parent Event of Default (as defined in the Parent
Guarantee) shall occur;
then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Holdings and the Borrower; and in the case of any event with respect to Holdings
or the Borrower described in Section 7.01(h) or 7.01(i), the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Holdings and the Borrower.
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ARTICLE 8
THE AGENTS
SECTION 8.01. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.
(b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case may be, as any other Lenders, Swingline Lenders or Issuing
Banks and may exercise the same as though they were not Agents, and each such
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.
(c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that an Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (iii) except as expressly set forth in the Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Holdings or any Subsidiary that
is communicated to or obtained by any institution serving as an Agent or any of
its affiliates in any capacity.
(d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.
(e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other
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document delivered thereunder or in connection therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of any Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article 4 or
elsewhere in any Loan Document, other than, in the case of the Administrative
Agent, to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
SECTION 8.02. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
SECTION 8.03. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
subagents may perform any and all of their duties and exercise rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
SECTION 8.04. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent which shall be a bank organized under
the laws of the United States or any State thereof, having (x) an office in any
State of the United States and (y) capital, surplus and undivided profits
aggregating at least $200,000,000, or an affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring
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Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Agent's resignation
hereunder, the provisions of this Article and Section 10.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
SECTION 8.05. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.
SECTION 8.06. Syndication Agent and Co-Documentation Agents.
Notwithstanding anything in this Agreement or any Loan Document to the contrary,
the Syndication Agent and the Co-Documentation Agents shall have no obligation
or responsibility as such hereunder other than, in the case of the Syndication
Agent, as expressly set forth herein.
ARTICLE 9
HOLDINGS GUARANTEE
SECTION 9.01. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable,
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whether at maturity or by declaration or otherwise, and as if such payment were
made by the Borrower or such other Restricted Subsidiary.
SECTION 9.02. Guarantee Unconditional. The obligations of Holdings
under this Article 9 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other Loan
Party under any Loan Document or Specified Hedging Agreement, by
operation of law or otherwise;
(b) any modification, amendment or waiver of or supplement to
any Loan Document or Specified Hedging Agreement;
(c) any release, impairment, non-perfection or invalidity of
any direct or indirect security, or of any guarantee or other liability
of any third party, for any obligation of the Borrower or any Loan
Party under any Loan Document or Specified Hedging Agreement;
(d) any change in the corporate existence, structure or
ownership of the Borrower or any other Loan Party or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Borrower or any other Loan Party or its assets, or any resulting
release or discharge of any obligation of the Borrower or any other
Loan Party contained in any Loan Document or Specified Hedging
Agreement;
(e) the existence of any claim, set-off or other rights which
Holdings may have at any time against the Borrower or any other Loan
Party, any Agent, any Issuing Bank, any Lender or any other Person,
whether or not arising in connection herewith or any unrelated
transaction; provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Borrower or any other Loan Party for any reason of any Loan
Document or Specified Hedging Agreement, or any provision of applicable
law or regulation purporting to prohibit the payment by any other Loan
Party of any amount payable by it under any Loan Document or Specified
Hedging Agreement; or
(g) any other act or omission to act or delay of any kind by
any other Loan Party, any Lender or any other Person or any other
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circumstance that might, but for the provisions of this Section,
constitute a legal or equitable discharge of Holdings' obligations
under this Article 9.
SECTION 9.03. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified Hedging Agreements shall have been terminated
and all amounts payable under the Loan Documents and the Specified Hedging
Agreements shall have been indefeasibly paid in full. If at any time any amount
payable by the Borrower under any Loan Document or by the Borrower or any other
Restricted Subsidiary under any Specified Hedging Agreement is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise, Holdings' obligations under this
Article 9 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.
SECTION 9.04. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.
SECTION 9.05. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.
SECTION 9.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.
SECTION 9.07. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
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assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);
(b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);
(c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);
(d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);
(e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);
(f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and
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(g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
Section 10.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender, any Issuing Bank or any Swingline Lender
may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of
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each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c) in a manner
that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release the
Parent, Holdings or substantially all of the Subsidiary Loan Parties from their
respective Guarantees hereunder, under the Parent Guarantee, or under the
Subsidiary Guarantee (except as expressly provided herein or therein), or limit
its liability in respect of such Guarantee, without the written consent of each
Lender, or (vii) change any provisions of any Loan Document in a manner that by
its terms adversely affects the rights in respect of payments due to, or
requirements to make loans by, Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class; provided further that (A) no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any Issuing Bank or any Swingline Lender without the prior
written consent of the Administrative Agent, the affected Issuing Bank or the
affected Swingline Lender, as the case may be, and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Lenders with Commitments or Loans of any Class or
Classes (but not Lenders with Commitments or Loans of any other Class or
Classes) may be effected by an agreement or agreements in writing entered into
by Holdings, the Borrower and the requisite percentage in interest of the
Lenders with Commitments or Loans of the affected Class or Classes.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent the Syndication Agent and their respective affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and the Syndication Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent and the Syndication Agent, any Issuing Bank, any Swingline
Lender or any Lender, in connection with
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the enforcement or protection of its rights in connection with the Loan
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent the
Syndication Agent, the Issuing Banks, the Swingline Lenders and each Lender, and
each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by Holdings or any Subsidiary, or any Environmental Liability
related in any way to Holdings or any Subsidiary, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, any Issuing Bank or any Swingline
Lender under Sections 10.03(a) or 10.03(b), each Lender severally agrees to pay
to the Administrative Agent, the Syndication Agent, any Issuing Bank or any
Swingline Lender, as the case may be, such Lender's pro rata share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent the Syndication
Agent, any Issuing Bank or any Swingline Lender in its capacity as such. For
purposes hereof, a Lender's "pro rata share" shall be determined based upon its
share of the sum of the total Revolving Exposures, outstanding Loans (other than
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Revolving Loans) and unused Commitments (other than Revolving Commitments) at
the time.
(d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Banks, the Swingline
Lenders and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
(b) (1) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans at the time owing to it); provided that (i)
each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, the
amount of the Commitments or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative
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Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement, except that this Section
10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (including any assignment by a Lender to an affiliate) shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500, and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and provided further that any consent of the
Borrower otherwise required under this paragraph shall not be required if an
Event of Default has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to Section 10.04(d), from and after the effective
date specified in each Assignment and Acceptance the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.04(e).
(2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior
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indebtedness of any SPC, it will not institute against, or join any other person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section 10.04, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
the Borrower and Administrative Agent) providing liquidity and/or credit support
to or for the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This section
may not be amended without the written consent of each SPC that, at the time of
such proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and Holdings, the Borrower, the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, any Issuing Bank, any Swingline Lender and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for
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purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
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SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
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SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank, any Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or their respective properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the
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defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are
direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any
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assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement (other than a direct
competitor of any material business of Holdings and the Restricted
Subsidiaries), (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender on a nonconfidential basis from a
source other than Holdings or the Borrower. For the purposes of this Section,
"Information" means all information received from Holdings or the Borrower
relating to Holdings or the Borrower or its business, other than any such
information that is available to the Administrative Agent, any Issuing Bank, any
Swingline Lender or any Lender on a nonconfidential basis prior to disclosure by
Holdings or the Borrower; provided that, in the case of information received
from Holdings or the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WILLIAMS COMMUNICATIONS, INC.
By: /s/ SCOTT E. SCHUBERT
------------------------------------
Name: Scott E. Schubert
Title: Senior Vice President & Chief
Financial Officer
WILLIAMS COMMUNICATIONS GROUP,
INC.
By: /s/ SCOTT E. SCHUBERT
------------------------------------
Name: Scott E. Schubert
Title: Senior Vice President & Chief
Financial Officer
BANK OF AMERICA, N.A.,
as Administrative Agent, Issuing Bank,
Swingline Lender and Lender
By: /s/ PAMELA S. KURTZMAN
------------------------------------
Name: Pamela S. Kurtzman
Title: Vice President
THE CHASE MANHATTAN BANK,
as Syndication Agent, Issuing Bank,
Swingline Lender and Lender
By: /s/ CONSTANCE M. COLEMAN
------------------------------------
Name: Constance M. Coleman
Title: Vice President
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<PAGE> 132
BANK OF MONTREAL, as Co-Documentation
Agent and Lender
By: /s/ W. T. CALDER
------------------------------------
Name: W. T. Calder
Title: Managing Director
THE BANK OF NEW YORK, as
Co-Documentation Agent and Lender
By: /s/ DEBRA L. MCGARRY
------------------------------------
Name: Debra L. McGarry
Title: Assisted Vice President
126
<PAGE> 133
ABN AMRO BANK N.V.
By: /s/ DAVID C. CARRINGTON
----------------------------
Name: David C. Carrington
Title: Vice President
By: /s/ RAVNEET MUMICK
----------------------------
Name: Ravneet Mumick
Title: Vice President
BANKBOSTON, N.A.
By: /s/ MICHAEL A. ASHTON
----------------------------
Name: Michael A. Ashton
Title: Vice President
<PAGE> 134
CIBC INC.
By: /s/ TEFTA GHILAGA
----------------------------
Name: Tefta Ghilaga
Title: Executive Director
CIBC World Markets Corp.
As Agent
CREDIT SUISSE FIRST BOSTON
By: /s/ TODD C. MORGAN
----------------------------
Name: Todd C. Morgan
Title: Director
By: /s/ KRISTINN R. KRISTINSSON
----------------------------
Name: Kristinn R. Kristinsson
Title: Assistant Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLAND BRANCH
By: /s/ JON D. STORCK
----------------------------
Name: Jon D. Storck
Title: Vice President
By: /s/ ALEXANDER RICHARZ
----------------------------
Name: Alexander Richarz
Title: Associate
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ MARK D. THORSHEIM
----------------------------
Name: Mark D. Thorsheim
Title: Vice President
<PAGE> 135
SCOTIABANC INC.
By: /s/ W.J. BROWN
----------------------------
Name: W.J. Brown
Title: Managing Director
BANK AUSTRIA
CREDITANSTALT
CREDIT FINANCE, INC.
By: /s/ CARL G. DRAKE
----------------------------
Name: Carl G. Drake
Title: Vice President
By: /s/ ROBERT M. BIRINGER
----------------------------
Name: Robert M. Biringer
Title: Executive Vice
President
FIRST UNION NATIONAL BANK
By: /s/ C. MARK HEDRICK
----------------------------
Name: C. Mark Hedrick
Title: Vice President
IBM CREDIT CORPORATION
By: /s/ RONALD J. BACHNER
----------------------------
Name: Ronald J. Bachner
Title: Manager, Commercial
Financing Solutions
America
THE INDUSTRIAL BANK OF
JAPAN, LIMITED,
NEW YORK BRANCH
By: /s/ MIKE OAKES
----------------------------
Name: Mike Oakes
Title: Senior Vice
President, Houston
Office
BANK OF OKLAHOMA N.A.
By: /s/ ROBERT D. MATTAX
----------------------------
Name: Robert D. Mattax
Title: Senior Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ LYNNE M. SANDERS
----------------------------
Name: Lynne M. Sanders
Title: Assistant Vice
President
KBC BANK, N.V.
By: /s/ ROBERT SNAVFFER
----------------------------
Name: Robert Snavffer
Title: First Vice President
By: /s/ KATHERIN S. McCARTHY
----------------------------
Name: Katherin S. McCarthy
Title: Vice President
<PAGE> 1
EXHIBIT 10.61
EXECUTION COPY
INTERCREDITOR AGREEMENT
Intercreditor Agreement dated as of September 8, 1999 among The
Williams Companies, Inc., a Delaware corporation (the "Parent"), Williams
Communications Group, Inc., a Delaware corporation and a direct subsidiary of
the Parent ("Holdings"), Williams Communications, Inc., a Delaware corporation
and wholly owned direct subsidiary of Holdings (the "Borrower") and Bank of
America, N.A., as Administrative Agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Holdings and the Borrower are parties to a Credit Agreement
(the "Credit Agreement") dated as of September 8, 1999 among themselves, the
Lenders party thereto, Bank of America, N.A., as Administrative Agent, and The
Chase Manhattan Bank, as Syndication Agent (the "Syndication Agent" and,
together with the Administrative Agent, the "Agents");
WHEREAS, Holdings and the Borrower may become parties to one or more
Incremental Credit Facilities (each, an "Incremental Facility" and,
collectively, the "Incremental Facilities") as permitted by Section 2.20 of the
Credit Agreement;
WHEREAS, the Borrower is the obligor on an intercompany promissory note
in favor of the Parent in an outstanding principal amount not to exceed at any
time $1,000,000,000 plus (i) accrued interest thereon added to the principal
amount thereof, if any, and (ii) unpaid amounts owing by the Borrower under
certain contracts with the Parent added to the principal amount thereof, if any,
in an aggregate amount not to exceed $25,000,000 in any year (the "Intercompany
Note");
WHEREAS, the Borrower is a party to the Participation Agreement and the
other Operative Documents governing the ADP and the ADP Obligations;
WHEREAS, the Parent, as successor to its wholly owned direct
subsidiary, Williams Holdings of Delaware, Inc. ("Delaware Holdings"), is a
party to the Amended and Restated Guaranty Agreement (the "ADP Guaranty") dated
as of September 2, 1998 between Delaware Holdings and State Street Bank and
Trust Company of Connecticut, National Association, as Trustee and Collateral
Agent, and Citibank, N.A., as Agent and APA Agent, pursuant to which Delaware
Holdings has guaranteed all of the ADP Obligations under the ADP; and
<PAGE> 2
WHEREAS, in order to induce the Agents, the Lenders, the Swingline
Lenders, the Issuing Banks and the successors and assigns of any of them
(collectively, the "Benefitted Persons") to enter into the Credit Agreement and
any Incremental Credit Facilities, the Parent has agreed to enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms; References. Unless otherwise specifically
defined herein, each term defined in the Credit Agreement is used herein
(including the preamble and the recitals hereto) as therein defined. The
following additional terms, as used herein, have the meanings assigned to such
terms in Appendix A to the Participation Agreement:
"Completion Date"
"Environmental Trigger"
"Expiration Date"
"Item"
"Lease"
"Offer to Purchase"
"Property"
"Renewal Term"
"Termination Date"
"Termination Value"
"Unwind Event"
2
<PAGE> 3
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Parent represents and warrants as follows:
SECTION 2.01. Organization; Powers. The Parent is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to carry on its business
as now conducted, and except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a material adverse
effect on the business, assets, prospects or condition, financial or otherwise,
of the Parent and its subsidiaries, considered as a whole, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 2.02. Authorization; Enforceability. The execution, delivery
and performance by the Parent of this Agreement are within the Parent's
corporate powers and have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by the Parent and
constitutes a legal, valid and binding obligation of the Parent, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 2.03. Governmental Approvals; No Conflicts. The execution,
delivery and performance by the Parent of this Agreement (i) do not require any
consent or approval of, registration or filing with, or any other action by or
in respect of, any Governmental Authority, except such as have been obtained or
made and are in full force and effect, (ii) will not violate any applicable law
or regulation or the charter, by-laws or other organizational documents of the
Parent or any subsidiary of the Parent or any order or decree of any
Governmental Authority, (iii) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Parent or any
subsidiary of the Parent or any of their respective assets, or give rise to a
right thereunder to require any payment to be made by the Parent or any
subsidiary of the Parent and (iv) will not result in the creation or imposition
of any Lien on any asset of the Parent or any subsidiary of the Parent.
3
<PAGE> 4
ARTICLE 3
COVENANTS IN RESPECT OF ADP
Until the Commitments shall have expired or been terminated, all
Obligations shall have been paid in full and all Letters of Credit shall have
expired or been terminated, the Parent unconditionally covenants and agrees with
the Administrative Agent, for the benefit of the Benefitted Persons, that:
SECTION 3.01. Payment of ADP Guaranteed Obligations. If the Borrower
elects, or is required, to make any payment (other than Fixed Rent) under the
Operative Documents (whether such payment is in respect of the Termination Value
or otherwise), the Parent, for the benefit of the Borrower and the Benefitted
Persons, will make such payment punctually in cash as and when the same shall
become due and payable, whether at maturity or by declaration or otherwise;
provided that this section shall not prevent the Borrower from making any such
payment or any portion thereof, in lieu of payment thereof by the Parent, if, on
the date of such payment, (x) the Borrower is permitted to make such payment
under Section 6.04(g) of the Credit Agreement and (y) no Default has occurred
and is continuing or would result therefrom.
SECTION 3.02. Default under Operative Documents. Upon the occurrence of
a Default (as defined in the Participation Agreement) (an "ADP Default"), an
Event of Default (as defined in the Participation Agreement) (an "ADP Event of
Default"), an Environmental Trigger or an Unwind Event under the Operative
Documents (or any other event under the Operative Documents which, with the
giving of notice or lapse of time or both, would permit any party to the
Operative Documents to exercise any remedy thereunder), the Parent will, unless
such ADP Default, ADP Event of Default, Environmental Trigger or Unwind Event
has been cured or waived by the Borrower, prior to any exercise of remedies by
any party to the Operative Documents, (i) pay the Termination Value of the
Property and any other amounts due under the Operative Documents punctually in
full in cash (or if such event is susceptible to cure, the Termination Value of
the Item or Items of Property necessary to cure such event) and (ii) take all
other actions as may be necessary, desirable or requested by the Administrative
Agent or the Required Lenders in order to prevent any retention by, or sale,
transfer or other disposition of the Property or any Item thereof to, any Person
other than the Borrower or the Parent; provided that this section shall not
prevent the Borrower from making any such payment or portion thereof in respect
of the Termination Value or any other such amount, in lieu of payment thereof by
the Parent, if, on the date of such payment, (x) the Borrower is permitted to
make such payment under Section 6.04(g) of the Credit Agreement and (y) no
Default has occurred and is continuing or would result therefrom.
4
<PAGE> 5
SECTION 3.03. Election to Purchase the Property and Pay Termination
Value. (a) If the Borrower elects to exercise its option to purchase the
Property or any Item thereof at any time for any reason, the Parent will pay the
Termination Value of such Property and any other amounts due under the Operative
Documents punctually in full in cash; provided that this section shall not
prevent the Borrower from making any such payment or any portion thereof in
respect of the Termination Value or any such other amount, in lieu of payment
thereof by the Parent, if, on the date of such payment by the Borrower, (x) the
Borrower is permitted to make such payment under Section 6.04(g) of the Credit
Agreement and (y) no Default has occurred and is continuing or would result
therefrom.
(b) If, immediately prior to the occurrence of the Completion Date,
the Termination Date, the Expiration Date or any other date upon which the ADP
terminates, the Property would be included on the consolidated balance sheet of
the Borrower and its consolidated subsidiaries in accordance with GAAP, the
Borrower agrees to exercise its option to purchase the Property by delivering an
Offer to Purchase the Property in accordance with the Operative Documents. Upon
the exercise of such option, the Parent will pay the Termination Value of such
Property and any other amounts due under the Operative Documents punctually in
full in cash; provided that this section shall not prevent the Borrower from
making any such payment or any portion thereof in respect of the Termination
Value or any such other amount, in lieu of payment thereof by the Parent, if, on
the date of such payment by the Borrower, (x) the Borrower is permitted to make
such payment under Section 6.04(g) of the Credit Agreement and (y) no Default
has occurred and is continuing or would result therefrom.
SECTION 3.04. Contribution of Property. At any time when the Parent has
a right to acquire and acts to exercise such right, or otherwise acquires, any
of the Property (whether by payment of all, or a portion of, the Termination
Value or otherwise), the Parent will immediately contribute such Property (and
any right to acquire such Property) to Holdings and Holdings will immediately
contribute all such Property (and any such right) to the Borrower, in each case
as a capital contribution to Holdings or the Borrower, as the case may be.
SECTION 3.05. No Subrogation; Contributions to Holdings's Capital. The
Parent and Holdings, for the benefit of the Benefitted Persons, hereby waive any
right to be subrogated to the rights of any obligee under the Operative
Documents or any other Person against the Borrower with respect to any payment
made under Section 3.01, 3.02 or 3.03 above or any contribution of Property to
Holdings or the Borrower pursuant to Section 3.04 above, whether such right
arises by operation of law or otherwise. The Parent and Holdings acknowledge and
agree that their only right in respect of any such payment or contribution of
Property shall be the right to treat such payment or contribution of Property as
(i)
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in the case of the Parent, (A) a contribution to the capital of Holdings, in
return for which the Parent may acquire Qualifying Equity Interests of Holdings
in an aggregate amount equal to such payment or the Termination Value of the
contributed Property, as the case may be, or (B) a contribution to Holdings in
return for which the Parent may acquire Qualifying Holdings Debt in an aggregate
principal amount equal to such payment or the Termination Value of the
contributed Property, as the case may be, or (ii) in the case of Holdings, a
contribution to the capital of the Borrower, in return for which Holdings may
acquire Qualifying Equity Interests of the Borrower in an aggregate amount equal
to such payment or the Termination Value of the contributed Property, as the
case may be.
SECTION 3.06. Further Assurances. Each of the Parent, Holdings and the
Borrower will, and will cause each subsidiary of the Parent to, execute any and
all documents, agreements and instruments, and take all such further actions
which may be necessary, desirable or requested by the Administrative Agent or
the Required Lenders to (i) effectuate the foregoing provisions relating to the
Property and the acquisition by, or contribution to, the Borrower of all such
Property and (ii) prevent any retention by, or sale, transfer or other
disposition of the Property or any Item thereof to, any Person other than the
Borrower or the Parent.
ARTICLE 4
INTERCREDITOR ARRANGEMENTS IN RESPECT OF INTERCOMPANY NOTE
Until the Commitments shall have expired or been terminated, the
Obligations shall have been paid in full and all Letters of Credit shall have
expired or been terminated, the Parent, Holdings and the Borrower
unconditionally covenant and agree with the Administrative Agent, for the
benefit of the Benefitted Persons, as follows:
SECTION 4.01. Intercompany Note. The Parent, Holdings and the Borrower
agree that the Intercompany Note shall be subject to the provisions of this
Article 4. The Parent accepts and agrees that all payments of principal of, and
interest on, and all other obligations in respect of, the Intercompany Note,
shall, to the extent and in the manner set forth in this Article 4, be
subordinated in right of payment to the prior payment in full in cash of all
Obligations.
SECTION 4.02. Borrower Not to Make Payments under the Intercompany
Note in Certain Circumstances. Upon the occurrence and during the continuation
of any Default or Event of Default (other than any Default or Event of Default
referred to in Section 7.01(e) of the Credit Agreement) (each such non-excluded
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Default or Event of Default being referred to in this Agreement as a "Facility
Default"):
(a) no payment shall be made by Holdings, the Borrower or any other
Subsidiary on or with respect to the principal of, or interest on, or other
obligations in respect of, the Intercompany Note or to acquire the Intercompany
Note or any portion thereof unless and until such Facility Default shall have
been cured or waived, nor shall any such payment be made if after giving effect,
as if paid, to such payment, any Facility Default would exist;
(b) the Parent shall not demand, accept or receive, or attempt to
collect or commence any legal proceedings to collect, any direct or indirect
payment (in cash or property or by setoff, exercise of contractual or statutory
rights or otherwise) of or on account of any amount payable on or with respect
to the Intercompany Note; and
(c) the Parent will not commence or maintain any action, suit or any
other legal or equitable proceeding against Holdings, the Borrower or any other
Subsidiary, or join with any creditor in any such proceeding, under any
insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar law, unless the Benefitted Persons shall also join in bringing such
proceeding, provided that this Section 4.02 shall not prohibit the Parent from
filing a proof of claim or otherwise participating in any such proceeding not
commenced by it.
SECTION 4.03. Intercompany Note Subordinated to Prior Payment of all
Obligations on Dissolution, Liquidation or Reorganization of the Borrower. In
the event of any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings in connection
therewith, relative to the Borrower or to its creditors, in their capacity as
creditors of the Borrower, or to substantially all of the Borrower's property,
and in the event of any proceedings for voluntary liquidation, dissolution or
other winding up of the Borrower, whether or not involving insolvency or
bankruptcy:
(a) the Benefitted Persons shall first be entitled to receive payment
in full of the principal of, all interest (including Post-Petition Interest) on,
and all other amounts payable that constitute or relate to the Obligations
before the Parent shall be entitled to receive any payment on account of the
principal of, or interest on, or other obligations in respect of, the
Intercompany Note;
(b) the Intercompany Note shall forthwith (notwithstanding any other
provision contained in this Article 4) become due and payable and any payment or
distribution of assets of the Borrower of any kind or character, whether in
cash, property or securities, to which the Parent would be entitled, but for the
provisions
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of this Article 4, shall be paid or distributed by the liquidating trustee or
agent or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the Administrative Agent or any other representative on behalf of
the Benefitted Persons, to the extent necessary to make payment in full of all
Obligations remaining unpaid, after giving effect to any concurrent payment or
distribution to the Befitted Persons;
(c) the Parent irrevocably authorizes and empowers (without imposing
any obligation on) each Benefitted Person, the Administrative Agent and any
other representative on behalf of the Benefitted Persons to demand, sue for,
collect and receive such Benefitted Person's ratable share of all such payments
and distributions in respect of the Intercompany Note and to receipt therefor,
and to file and prove all claims therefor and take all such other action not
inconsistent with the foregoing (including the right to vote such Benefitted
Person's ratable share of the Intercompany Note) in the name of the Parent, as
such Benefitted Person, the Administrative Agent or any other representative on
behalf of the Benefitted Persons may determine to be necessary or appropriate
for the enforcement of the provisions of this Article 4; and
(d) the Parent shall execute and deliver to the Administrative Agent
all such further instruments confirming the above authorization, and all such
powers of attorney, proofs of claim, assignments of claim and other instruments,
and shall take all such other action as may be requested by any Benefitted
Person, in order to enable the Administrative Agent or such other Benefitted
Person to enforce all claims upon or in respect of each Benefitted Person's
ratable share of the Intercompany Note.
SECTION 4.04. Rights of Holders of Obligations; Subrogation. (a) Should
any payment or distribution or security or the proceeds of any distribution
thereof be collected or received by the Parent in respect of the Intercompany
Note, and such collection or receipt is prohibited hereunder prior to the
payment in full of the Obligations, the Parent will forthwith deliver the same
to the Administrative Agent for the equal and ratable benefit of the Benefitted
Persons in precisely the form received (except for the endorsement or the
assignment of or by the Parent where necessary) for application to payment of
all Obligations in full, after giving effect to any concurrent payment or
distribution to the Benefitted Persons and, until so delivered, the same shall
be held in trust by the Parent as the property of the Benefitted Persons.
(b) All payments and distributions received by the Administrative
Agent in respect of the Intercompany Note, to the extent received in or
converted into cash, may be applied by the Administrative Agent first to the
payment of any and
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all reasonable out-of-pocket expenses (including attorney's fees and legal
expenses) paid or incurred by the Administrative Agent or such representative in
enforcing the provisions hereof or in endeavoring to collect or realize upon the
Intercompany Note, and any balance thereof shall, solely as between the Parent,
on the one hand, and the Benefitted Persons, on the other hand, be applied by
the Administrative Agent in such order of application as the Administrative
Agent may from time to time select, toward the payment of the Obligations
remaining unpaid.
(c) The Parent shall not be subrogated to the rights of the Benefitted
Persons to receive payments or distributions of assets of the Borrower until all
amounts payable with respect to the Obligations shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the Parent of
any cash, property or securities to which the Parent would be entitled except
for these provisions shall, as between the Borrower, its creditors, other than
the Benefitted Persons, and the Parent, be deemed to be a payment by the
Borrower to or on account of the Obligations. The provisions of this Agreement
are and are intended solely for the purpose of defining the relative rights of
the Parent, on the one hand, and the holders of the Obligations, on the other
hand.
(d) Subject to the payment in full of all Obligations, the termination
of the Commitments and the expiration or termination of all Letters of Credit,
the Parent shall be subrogated to the rights of the holders of the Obligations
to receive payments or distributions of cash, property or securities of the
Borrower applicable to the Obligations until all amounts owing on the
Intercompany Note shall be paid in full. For purposes of such subrogation, no
payments or distributions to the Parent of cash, property, securities or other
assets by virtue of the subrogation herein provided which otherwise would have
been made to the Benefitted Persons shall, as between the Borrower, its
creditors other than the Benefitted Persons and the Parent, be deemed to be a
payment to or on account of the Intercompany Note. The Parent agrees that, in
the event that all or any part of any payment made on account of the Obligations
is recovered from the Benefitted Persons as a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law, any payment or
distribution received by the Parent on account of the Intercompany Note at any
time after the date of the payment so recovered, whether pursuant to the right
of subrogation provided for in this Section 4.04(d) or otherwise, shall be
deemed to have been received by the Parent in trust as the property of the
Benefitted Persons and the Parent shall forthwith deliver the same to the
Administrative Agent for the equal and ratable benefit of the Benefitted
Persons for application to payment of all Obligations in full.
SECTION 4.05. Renewals, Extensions and Increases of the Obligations.
The Parent hereby waives any and all notice of renewal, extension, accrual or
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increase in the amount of any of the Obligations, present or future, and agrees
and consents that without notice to or assent by the Parent:
(a) the obligation and liabilities of the Borrower, Holdings, any Loan
Party or any other party or parties for or upon the Obligations (or any Loan
Document or any other document evidencing, securing, or relating to the same)
may, from time to time, in whole or in part, be renewed, extended, increased,
modified, amended, accelerated, compromised, supplemented, terminated, sold,
exchanged, waived or released;
(b) the Administrative Agent or any other representative acting on
behalf of the Benefitted Persons, and the Benefitted Persons themselves, may
exercise or refrain from exercising any right, remedy or power granted by or in
connection with any agreements relating to the Obligations;
(c) any balance or balances of funds with any Benefitted Persons at
any time standing to the credit of the Borrower may, from time to time, in whole
or in part, be surrendered or released;
all as the Administrative Agent or any other representative or representatives
acting on behalf of the Benefitted Persons, and the Benefitted Persons
themselves, may deem advisable and all without impairing, abridging,
diminishing, releasing or affecting the subordination of the Intercompany Note
to the Obligations provided for herein.
SECTION 4.06. Obligation of Borrower Unconditional. Nothing contained
in this Article 4 or in the Intercompany Note is intended to or shall impair, as
between the Borrower, its creditors other than Benefitted Persons, and the
Parent, the obligation of the Borrower, which is absolute and unconditional, to
pay to the Parent the principal of, and interest on, the Intercompany Note, as
and when the same shall become due and payable (except as provided in this
Article 4), by lapse of time, acceleration or otherwise, in accordance with its
terms, or is intended to or shall affect the relative rights of the Parent and
other creditors of the Borrower other than the Benefitted Persons, nor shall
anything herein or therein prevent the Parent (i) from taking all appropriate
actions to preserve its rights under the Intercompany Note not inconsistent with
the rights of the Benefitted Persons under this Article 4, or (ii) from
exercising all remedies otherwise permitted by applicable law upon default under
the Intercompany Note, subject to the rights, if any, under this Article 4 of
the Benefitted Persons in respect of cash, property or securities of the
Borrower otherwise payable or delivered to such holders upon the exercise of
any such remedy.
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SECTION 4.07. Intercompany Note Not to be Transferred. Unless and until
all Obligations shall have been paid in full, the Commitments shall have been
terminated and all Letters of Credit shall have expired or been terminated, the
Parent will not sell, transfer, assign, pledge, hypothecate or otherwise dispose
of the Intercompany Note, or enter into any transaction having the economic
effect of any of the foregoing, and any such attempted sale, transfer,
assignment, pledge, hypothecation or other disposition or transaction shall be
null and void.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to Holdings, the Borrower, either Agent or any Benefitted
Person, as provided in the Credit Agreement; and
(b) if to the Parent, to it at One Williams Center, Tulsa, Oklahoma,
74172, Attention of Treasurer (Telecopy No. 918-573-2065).
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 5.02. Reliance. The Parent hereby acknowledges and agrees that
the Benefitted Persons have relied upon and will continue to rely upon the
provisions hereof in entering into the Credit Agreement and any Incremental
Facility relating to the Obligations and in extending credit to the Borrower
pursuant thereto.
SECTION 5.03. Waiver; Amendment. (a) No failure or delay by the
Administrative Agent, any representative or representatives of the Benefitted
Persons or any Benefitted Person in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, any representative or representatives of the Benefitted
Persons and the Benefitted
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Persons hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No present
or future Benefitted Person shall be prejudiced in its right to enforce the
provisions contained herein in accordance with the terms hereof by any act or
failure to act on the part of the Parent, Holdings, the Borrower or any
Subsidiary.
(b) The provisions contained herein are for the benefit of the
Benefitted Persons from time to time and, so long as any Commitment, Obligation
or Letter of Credit is outstanding, may not be waived, rescinded, canceled or
modified in any way without the prior written consent thereto of the
Administrative Agent and the Required Lenders.
SECTION 5.04. Loan Document. Each of the parties hereto agrees that
this Agreement is a Loan Document for all purposes under the Facilities,
including without limitation, Article 7 of the Credit Agreement.
SECTION 5.05. Termination. The obligations of the Parent, Holdings and
the Borrower under this Agreement shall remain in full force and effect until
the date upon which all outstanding Obligations shall have been paid in full,
all Commitments shall have terminated and all Letters of Credit and Specified
Hedging Agreements shall have expired or been terminated. If at any time any
amount paid or payable under any Loan Document or Specified Hedging Agreement is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of any Loan Party or otherwise, the obligations of
the Parent, Holdings and the Borrower under this Agreement shall be reinstated
at such time.
SECTION 5.06. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, the Benefitted Persons and their respective successors and
assigns) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
SECTION 5.07. Survival. All covenants, agreements, representations and
warranties made by the Parent, Holdings and the Borrower in or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the other parties hereto and shall survive the execution and delivery of
this Agreement.
SECTION 5.08. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be
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ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 5.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Parent, Holdings and the Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent or any Benefitted
Person may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Parent, Holdings, the Borrower
or their respective properties in the courts of any jurisdiction.
(c) Each of the Parent, Holdings and the Borrower hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any other Loan Document in any court referred to in Section 5.08(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 5.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY
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APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 5.11. Headings. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
SECTION 5.12. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE WILLIAMS COMPANIES, INC.
By: /s/ JAMES G. IVEY
--------------------------------
Name: James G. Ivey
Title: Treasurer
WILLIAMS COMMUNICATIONS
GROUP, INC.
By: /s/ SCOTT E. SCHUBERT
--------------------------------
Name: Scott E. Schubert
Title: Senior Vice President &
Chief Financial Officer
WILLIAMS COMMUNICATIONS, INC.
By: /s/ SCOTT E. SCHUBERT
--------------------------------
Name: Scott E. Schubert
Title: Senior Vice President &
Chief Financial Officer
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ PAMELA S. KURTZMAN
--------------------------------
Name: Pamela S. Kurtzman
Title: Vice President
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EXHIBIT 10.62
EXECUTION COPY
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE dated as of September 8, 1999 of each of the
parties listed on the signature pages hereof and each of the other parties that
shall become parties hereto pursuant to Section 12 (hereinafter collectively
referred to as the "Guarantors"), in favor of the Administrative Agent for the
benefit of the holders from time to time of the Guaranteed Obligations (as
defined below).
W I T N E S S E T H :
WHEREAS, Williams Communications, Inc., a Delaware corporation (the
"Borrower"), Williams Communications Group, Inc., a Delaware corporation
("Holdings"), certain lenders (the "Lenders"), Bank of America, N.A., as
Administrative Agent (the "Administrative Agent"), and The Chase Manhattan Bank,
as Syndication Agent (the "Syndication Agent"), have entered into a Credit
Agreement dated as of September 8, 1999 (as the same may be amended and in
effect from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit (by making loans and
issuing letters of credit) to be made by the Lenders to the Borrower;
WHEREAS, the Borrower or any other Restricted Subsidiary may, after
the date hereof, become obligated to one or more Lenders under one or more
Specified Hedging Agreements as contemplated by Section 6.01(k) of the Credit
Agreement;
WHEREAS, it is a condition to the borrowing of the initial loans and
issuances of letters of credit under the Credit Agreement that each of the
Guarantors execute and deliver a Subsidiary Guarantee whereby such Guarantor
shall guarantee the payment when due of all principal, interest and other
amounts that shall be at any time payable by the Borrower under the Credit
Agreement and by the Borrower or any other Restricted Subsidiary under any
Specified Hedging Agreements; and
WHEREAS, in order to induce the Lenders and the Administrative Agent
to enter into the Credit Agreement and in order to induce the Lenders to enter
into any Specified Hedging Agreements, the Guarantors are willing to guarantee
the obligations of the Borrower under the Credit Agreement and of the Borrower
or any other Restricted Subsidiary under any Specified Hedging Agreements;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. The Guarantee. The Guarantors jointly and severally hereby
unconditionally and irrevocably guarantee the full and punctual payment of all
present and future indebtedness and other obligations of the Borrower evidenced
by or arising under any Loan Document and all present and future indebtedness
and other obligations of the Borrower or any other Restricted Subsidiary under
any Specified Hedging Agreement as and when the same shall become due and
payable, whether at maturity or by declaration or otherwise, according to the
terms hereof and thereof (including, without limitation, any Post-Petition
Interest) (collectively, the "Guaranteed Obligations"). If the Borrower or any
other Restricted Subsidiary fails punctually to pay any Guaranteed Obligation
which is due and payable, each Guarantor unconditionally agrees jointly and
severally that it shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in the relevant Loan Document or Specified
Hedging Agreement, as the case may be.
SECTION 3. Guarantee Unconditional. The obligations of each Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other Loan
Party under any Loan Document or Specified Hedging Agreement, by
operation of law or otherwise;
(ii) any modification, amendment or waiver of or supplement to any
Loan Document or Specified Hedging Agreement;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security, or of any guarantee or other liability of
any third party, for any obligation of the Borrower or any Loan Party
under any Loan Document or Specified Hedging Agreement;
(iv) any change in the corporate existence, structure or ownership
of the Borrower or any other Loan Party, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
any
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other Loan Party or its assets, or any resulting release or discharge
of any obligation of the Borrower or any other Loan Party contained in
any Loan Document or Specified Hedging Agreement;
(v) the existence of any claim, set-off or other rights which such
Guarantor may have at any time against the Borrower or any other Loan
Party, any Agent, any Issuing Bank, any Lender or any other Person,
whether or not arising in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower or any other Loan Party for any reason of any Loan Document or
Specified Hedging Agreement, or any provision of applicable law or
regulation purporting to prohibit the payment by the Borrower or any
other Loan Party of any amount payable by it under any Loan Document or
Specified Hedging Agreement; or
(vii) any other act or omission to act or delay of any kind by the
Borrower or any other Loan Party, any Lender or any other Person or any
other circumstance that might, but for the provisions of this Section,
constitute a legal or equitable discharge of such Guarantor's
obligations hereunder.
SECTION 4. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. Each Guarantor's obligations hereunder constitutes a
continuing guarantee and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified Hedging Agreements shall have been terminated
and all amounts payable under the Loan Documents and the Specified Hedging
Agreements shall have been indefeasibly paid in full. If at any time any amount
payable by the Borrower under any Loan Document or by the Borrower or any other
Restricted Subsidiary under any Specified Hedging Agreement is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise, the Guarantors' obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.
SECTION 5. Waiver by the Guarantors. Each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower, any Guarantor hereunder, any other Restricted
Subsidiary or any other Person.
3
<PAGE> 4
SECTION 6. Subrogation. When any Guarantor makes any payment hereunder
with respect to the obligations of the Borrower or any other Restricted
Subsidiary, such Guarantor shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by such Guarantor; provided that such Guarantor
shall not enforce any payment by way of subrogation or contribution against
Holdings or any Subsidiary so long as any amount payable under any Loan Document
or Specified Hedging Agreement remains unpaid.
SECTION 7. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by the Guarantors hereunder forthwith on
demand by the Administrative Agent made, in the case of any Loans or other
obligations under the Loan Documents, at the request of the requisite number of
Lenders specified in Section 7.01 of the Credit Agreement or, in the case of
obligations under a Specified Hedging Agreement, at the request of the relevant
Lender or Lenders or affiliate or affiliates of such Lender or Lenders.
SECTION 8. Limit of Liability. The Guarantors and the beneficiaries of
this Subsidiary Guarantee Agreement intend that this Subsidiary Guarantee shall
be enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If and to the
extent that the obligations of any Guarantor under this Subsidiary Guarantee
would, in the absence of this sentence, be adjudicated to be invalid or
unenforceable because of any applicable state or federal law relating to
fraudulent conveyances or transfers, then the amount of such Guarantor's
liability hereunder in respect of the Guaranteed Obligations shall be deemed to
be reduced ab initio to the maximum amount which would be permitted without
causing such Guarantor's obligations hereunder to be so invalidated.
SECTION 9. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telex, telegraph, telecopy, cable
or other writing and telexed, telecopied, telegraphed, cabled, mailed or
delivered to the intended recipient at its address or telex or facsimile
transmission number set forth on the signature pages hereof, or of the
Subsidiary Guarantee Supplement (as defined below) pursuant to which such
Guarantor has become a Guarantor hereunder, or such other address or telex or
telecopy number as such party may hereafter specify for the purpose by notice to
the Administrative Agent. Except as otherwise provided in this Subsidiary
Guarantee, all such communications shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered
4
<PAGE> 5
to the telegraph or cable office or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the Administrative
Agent, any Issuing Bank, any Lender or any other holder of any Guaranteed
Obligation in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Subsidiary Guarantee, the
Loan Documents and any Specified Hedging Agreements shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 11. Release of Guarantee. So long as no Default shall have
occurred and then be continuing, upon any sale or other transfer by Holdings,
the Borrower and the other Restricted Subsidiaries of all of the capital stock
of any Guarantor (other than any such sale or transfer to Holdings or any
Subsidiary), which sale or transfer is permitted under the Credit Agreement,
such Guarantor shall be automatically released from its obligations hereunder
and shall thereupon cease to be a Guarantor hereunder.
SECTION 12. Additional Guarantors. Any Person that becomes a
Subsidiary Loan Party or, in the case of Solutions, determines to become a
Guarantor hereunder, may become a party hereto by executing and delivering to
the Administrative Agent a Subsidiary Guarantee Supplement in the form of
Exhibit A hereto (each a "Subsidiary Guarantee Supplement"), whereupon such
Person shall become a "Guarantor" and a party hereto without any further action
by any other Guarantor, the Administrative Agent or any other holder of any
Guaranteed Obligation.
SECTION 13. Successors and Assigns. This Subsidiary Guarantee is for
the benefit of the Administrative Agent, the Issuing Banks, the Lenders, the
Hedging Counterparties and their respective successors and assigns. If any
Loans, participations in Letters of Credit or Swingline Loans or other amounts
payable under the Loan Documents are assigned pursuant to Section 10.04 of the
Credit Agreement, or any rights under any Specified Hedging Agreement are
assigned pursuant thereto, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Subsidiary Guarantee shall be binding upon the Guarantors and their successors
and assigns.
SECTION 14. Changes in Writing. Neither this Subsidiary Guarantee nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by the Guarantors and the Administrative Agent with
the consent of the Required Lenders.
5
<PAGE> 6
SECTION 15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH OF THE GUARANTORS HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE
GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
GUARANTORS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Subsidiary
Guarantee to be duly executed by their respective authorized officers as of the
day and year first above written.
CRITICAL CONNECTIONS, INC.
WCS COMMUNICATIONS SYSTEMS,
INC.
WCS MICROWAVE SERVICES, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF
VIRGINIA, INC.
WILLIAMS INTERNATIONAL
VENTURES COMPANY
WILLIAMS LEARNING NETWORK,
INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
All By: /s/ SCOTT E. SCHUBERT
----------------------------
Name: Scott E. Schubert
Title: Senior Vice President & Chief
Financial Officer
Address for Notice:
One Williams Center, Suite 2600
Tulsa, Oklahoma 74172
Attention: Scott E. Schubert
Telecopy Number: (918) 573-6024
<PAGE> 8
EXHIBIT A
TO
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE SUPPLEMENT
SUBSIDIARY GUARANTEE SUPPLEMENT dated as of ___________ __, ____ of
___________________________ (hereinafter collectively referred to as the "New
Guarantor"), in favor of the Administrative Agent for the benefit of the holders
from time to time of the Guaranteed Obligations (as defined in the Subsidiary
Guarantee):
W I T N E S S E T H :
WHEREAS, Williams Communications, Inc., a Delaware corporation (the
"Borrower"), Williams Communications Group, Inc., a Delaware corporation
("Holdings"), certain lenders (the "Lenders"), Bank of America, N.A., as
Administrative Agent (the "Administrative Agent"), and The Chase Manhattan Bank,
as Syndication Agent (the "Syndication Agent"), have entered into a Credit
Agreement dated as of September 8, 1999 (as the same may be amended and in
effect from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit (by making loans and
issuing letters of credit) to be made by the Lenders to the Borrower;
WHEREAS, the Borrower or any other Restricted Subsidiary may become
obligated to one or more Lenders under one or more Specified Hedging Agreements
as contemplated by Section 6.01(k) of the Credit Agreement;
WHEREAS, it is a condition to the borrowing of the initial loans and
issuances of letters of credit under the Credit Agreement that each then
existing Subsidiary Loan Party entered into a Subsidiary Guarantee pursuant to
which such Subsidiary Loan Party agreed to guarantee the payment when due of all
principal, interest and other amounts that shall be at any time payable by the
Borrower under the Credit Agreement and by the Borrower or any other Restricted
Subsidiary under any Specified Hedging Agreements;
WHEREAS, pursuant to Section 5.13 of the Credit Agreement, each
Subsidiary Loan Party that is formed or acquired after the Effective Date is
required to become a Guarantor under the Subsidiary Guarantee; and pursuant to
Section 12 of the Subsidiary Guarantee, a Subsidiary Loan Party may become a
Guarantor thereunder by executing and delivering to the Administrative Agent a
Subsidiary Guarantee Supplement in the form of this Supplement; and
<PAGE> 9
WHEREAS, the undersigned is willing to execute this Supplement in
accordance with the requirements of the Credit Agreement to become a Guarantor
under the Subsidiary Guarantee;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agrees as follows:
SECTION 1. Definitions. Terms defined in, or by reference in, the
Subsidiary Guarantee and not otherwise defined herein have, as used herein, the
respective meanings provided for therein.
SECTION 2. The Guarantee. In accordance with Section 12 of the
Subsidiary Guarantee, the New Guarantor by its signature below hereby agrees to
become a Guarantor under the Subsidiary Guarantee with the same force and effect
as if originally named therein as a Guarantor, and the New Guarantor hereby (a)
agrees to be and assumes all of the obligations of a Guarantor under the
Subsidiary Guarantee and (b) agrees to all the terms and provisions of the
Subsidiary Guarantee applicable to it as a Guarantor thereunder. Each reference
to a "Guarantor" in the Subsidiary Guarantee shall be deemed to include the New
Guarantor.
SECTION 3. Notices. The New Guarantor's address and telecopy number
for purposes of Section 9 of the Subsidiary Guarantee are set forth on the
signature page hereof.
SECTION 4. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
A-2
<PAGE> 10
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed by an authorized officer as of the day and year first above
written.
[NEW GUARANTOR]
By:
--------------------------------
Name:
Title:
Address for Notice:
[Address]
Attention:
Telecopy Number:
<PAGE> 1
EXHIBIT 10.63
================================================================================
LOAN AGREEMENT
Dated as of September 8, 1999
among
WILLIAMS COMMUNICATIONS GROUP, INC.,
as Borrower,
MERRILL LYNCH CAPITAL CORPORATION,
as Administrative Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Lead Arranger, Syndication Agent and Book Manager,
LEHMAN COMMERCIAL PAPER INC.,
as Co-Documentation Agent,
and
CITICORP NORTH AMERICA, INC.,
as Co-Documentation Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEFINITIONS..............................................................................................1
2. LOAN AMOUNT AND TERMS....................................................................................1
2.1 The Revolving Credit............................................................................1
2.2 Interest Rate...................................................................................1
2.3 Procedure for Borrowing.........................................................................1
2.4 Conversion and Continuation Elections...........................................................2
2.5 Limitation on Availability of Offshore Rate.....................................................2
2.6 Interest Payments...............................................................................3
2.7 Maturity........................................................................................3
2.8 Commitment Fee..................................................................................3
2.9 [Reserved]......................................................................................3
2.10 Arrangement, Agency Fees........................................................................3
3. PAYMENTS, COSTS AND COMMITMENT REDUCTIONS................................................................3
3.1 Notes...........................................................................................3
3.2 Optional Prepayments............................................................................3
3.3 Taxes...........................................................................................4
3.4 Additional Costs................................................................................4
3.5 Computation of Fees and Interest................................................................4
3.6 Default Rate....................................................................................4
3.7 Funding Losses..................................................................................5
3.8 Payments by the Borrower........................................................................5
3.9 Payments by the Lenders to the Administrative Agent.............................................6
3.10 Mandatory Prepayments; Mandatory Commitment Reductions..........................................6
3.11 Sharing of Payments, Etc........................................................................7
4. CONDITIONS...............................................................................................8
4.1 Conditions to Initial Loans.....................................................................8
4.2 Conditions to All Borrowings....................................................................9
5. REPRESENTATIONS AND WARRANTIES..........................................................................10
5.1 Existence and Power; Compliance with Laws......................................................10
5.2 Authorization; No Contravention................................................................10
5.3 Governmental Authorization.....................................................................10
5.4 Binding Effect.................................................................................10
5.5 No Default.....................................................................................10
5.6 Litigation.....................................................................................11
5.7 Margin Stock...................................................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
5.8 Investment Company.............................................................................11
5.9 Year 2000 Compliance...........................................................................11
6. COVENANTS...............................................................................................11
6.1 Use of Proceeds................................................................................11
6.2 Consolidations and Mergers; Disposition of Assets..............................................12
6.3 Compliance with Laws, Etc......................................................................12
6.4 New Credit Facility and Existing Borrower Credit Facility......................................12
7. DEFAULT.................................................................................................12
8. ENFORCING THIS AGREEMENT; MISCELLANEOUS.................................................................14
8.1 GAAP...........................................................................................14
8.2 GOVERNING LAW AND JURISDICTION AND WAIVER OF JURY TRIAL........................................14
8.3 Successors and Assigns.........................................................................15
8.5 One Agreement..................................................................................16
8.6 Costs and Expenses.............................................................................16
8.7 Indemnification................................................................................16
8.8 Notices........................................................................................17
8.9 Headings; Counterparts.........................................................................17
8.10 Interest.......................................................................................17
8.11 Amendments and Waivers.........................................................................17
8.12 No Waiver; Cumulative Remedies.................................................................18
8.13 Assignments, Participations, Etc...............................................................18
8.14 Set-off........................................................................................20
8.15 Foreign Lenders and Participants...............................................................20
9. THE ADMINISTRATIVE AGENT................................................................................21
9.1 Appointment and Authorization; Administrative Agent............................................21
9.2 Delegation of Duties...........................................................................21
9.3 Liability of Agent.............................................................................21
9.4 Reliance by Agent..............................................................................22
9.5 Notice of Default..............................................................................22
9.6 Credit Decision................................................................................22
9.7 Indemnification of Agent.......................................................................23
9.8 Agent in Individual Capacity...................................................................23
9.9 Successor Agent................................................................................24
9.10 Co-Agents; Lead Managers.......................................................................24
</TABLE>
ii
<PAGE> 4
SCHEDULE 1 - DEFINITIONS
SCHEDULE 2 - COMMITMENTS AND PRO RATA SHARES
EXHIBIT A - FORM OF NOTICE OF BORROWING
EXHIBIT B - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT C - FORM OF PROMISSORY NOTE
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
ANNEX A - DRAFT APPLICABLE MARGIN DEFINITION FOR NEW
CREDIT FACILITY
iii
<PAGE> 5
LOAN AGREEMENT
This Agreement (the "Agreement") dated as of September 8, 1999, is
entered into among Williams Communications Group, Inc., a Delaware corporation
(the "Borrower"), the financial institutions from time to time party hereto (the
"Lenders"), Merrill Lynch Capital Corporation, as administrative agent for the
Lenders (together with any successor administrative agent hereunder, the
"Administrative Agent"), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as lead arranger ("Lead Arranger"), syndication agent
("Syndication Agent") and book manager ("Book Manager"), Lehman Commercial
Paper Inc., as co-documentation agent, and Citicorp North America, Inc., as
co-documentation agent (together with Lehman Commercial Paper Inc., the
"Co-Documentation Agents").
1. DEFINITIONS
All capitalized terms used but not defined herein shall have the
meanings set forth in Schedule 1 attached hereto.
2. LOAN AMOUNT AND TERMS
2.1 The Revolving Credit. Subject to the terms and conditions
herein set forth, each Lender severally agrees to make loans to the Borrower
(each such loan, a "Loan") from time to time on any Business Day prior to the
Final Maturity Date in an aggregate amount not to exceed at any time outstanding
the amount set forth on Schedule 2 attached hereto (such amount, as the same may
reduce pursuant to Section 3.10 or vary as a result of one or more assignments
under Section 8.13, such Lender's "Commitment"); provided, however, that the
aggregate principal amount of all outstanding Loans shall not at any time exceed
the combined Commitments of all of the Lenders. Within the limits of each
Lender's Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.1, prepay under Section 3.2 and
reborrow under this Section 2.1.
2.2 Interest Rate. Subject to Section 3.6 hereof, the Loans shall
bear interest on the outstanding principal amount thereof at a rate per annum
equal to the Offshore Rate or the Base Rate, plus the Applicable Margin.
2.3 Procedure for Borrowing. Each request for borrowing shall be
made by the Borrower's irrevocable written notice delivered to the
Administrative Agent in the form attached hereto as Exhibit A (a "Notice of
Borrowing") which Notice of Borrowing must be received by the Administrative
Agent prior to 11:00 a.m., New York time (i) three (3) Business Days prior to
the requested Borrowing Date, in the case of an Offshore Rate Loan, and (ii) on
the Borrowing Date by 11:00 a.m., New York time, in the case of a Base Rate
Loan. Such a Notice of Borrowing shall specify the amount of the borrowing
(which shall be in an aggregate minimum amount of $10,000,000, in the case of an
Offshore Rate Loan, and $5,000,000, in the case of a Base Rate Loan, or, in each
case, a multiple of $1,000,000 in excess thereof), the requested Borrowing Date
and whether the Loan shall constitute an Offshore Rate Loan or Base Rate Loan,
<PAGE> 6
and, to the extent that such Loan shall constitute an Offshore Rate Loan, the
initial Interest Period therefor. The Administrative Agent will promptly notify
each Lender of its receipt of any Notice of Borrowing and of the amount of such
Lender's Pro Rata Share of that borrowing. Each Lender will make the amount of
its Pro Rata Share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Administrative Agent's payment office by
2:00 p.m., New York time on the specified Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent.
2.4 Conversion and Continuation Elections. The Borrower may, upon
irrevocable written notice to the Administrative Agent in the form attached
hereto as Exhibit B (a "Notice of Conversion/Continuation"), elect as of any
Business Day, in the case of Base Rate Loans, or as of the last day of the
applicable Interest Period, in the case of Offshore Rate Loans, to convert any
Loan to a Base Rate Loan or, if there is no Default or Event of Default at the
time of such notice and at the Borrowing Date, to convert any Loan into, or
continue any Loan as an Offshore Rate Loan. The Borrower shall deliver a Notice
of Conversion/Continuation to be received by the Administrative Agent not later
than 11:00 a.m., New York time at least (i) three (3) Business Days in advance
of the conversion/continuation date, if the Loan is to be converted into or
continued as an Offshore Rate Loan, or (ii) at least one (1) Business Day prior
to the conversion/continuation date, if the Loan is to be converted to a Base
Rate Loan. If upon the expiration of any Interest Period during which interest
on any Loan is based on the Offshore Rate, the Borrower has failed to timely
select a new Interest Period to be applicable to such Offshore Rate Loan, the
Borrower shall be deemed to have elected to continue the Loan as an Offshore
Rate Loan with an Interest Period of one month effective as of the expiration of
such Interest Period; provided, however, that if any Default or Event of Default
then exists, the Borrower shall be deemed to have elected to convert any
Offshore Rate Loan to a Base Rate Loan effective as of the expiration date of
such Interest Period. The Administrative Agent will promptly notify each Lender
of its receipt of a Notice of Conversion/Continuation, or, if no timely notice
is provided by the Borrower, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
2.5 Limitation on Availability of Offshore Rate. No Lender shall
have an obligation to accept an election for an Offshore Rate Loan if any of the
following described events has occurred and is continuing: (a) U.S. Dollar
deposits in the principal amount, and for periods equal to the interest period,
of the Loan are not available in the London interbank market; (b) the Offshore
Rate does not accurately reflect the cost of an Offshore Rate Loan; or (c) any
Lender determines that it is unlawful for such Lender to make or to maintain
Offshore Rate Loans. If the obligation of any Lender to make an Offshore Rate
Loan has been suspended under this Section, the Administrative Agent shall so
notify the Borrower and the Borrower may elect, by giving notice to the Lender
through the Administrative Agent, that all Loans which would otherwise be made
by that Lender as Offshore Rate Loans shall be instead Base Rate Loans.
2
<PAGE> 7
2.6 Interest Payments. Interest on each Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of any Loan for the portion of the Loan so prepaid and upon
payment (including prepayment) in full thereof, and, during the existence of any
Event of Default, interest shall be paid on demand of the Administrative Agent
at the request or with the consent of the Majority Lenders.
2.7 Maturity. The Borrower will repay to the Lenders on the Final
Maturity Date the aggregate principal amount of Loans outstanding on such date.
No Interest Period for any Loan shall extend beyond the Final Maturity Date.
2.8 Commitment Fee. The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the average daily
unused portion of such Lender's Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the average
of the daily unutilized amounts during that quarter as calculated by the
Administrative Agent, equal to 0.50% per annum. Such commitment fee shall accrue
from the date hereof to the Final Maturity Date and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter, with the
final payment to be made on the Final Maturity Date. The commitment fee shall
accrue at all times from the date hereof, including at any time during which one
or more conditions in Section 4 are not met.
2.9 [Reserved]
2.10 Arrangement, Agency Fees. The Borrower also shall pay the
arrangement fees and the administrative fee as required by the Fee Letter and
other fees referenced in Section 4.1(i) of this Agreement.
3. PAYMENTS, COSTS AND COMMITMENT REDUCTIONS
3.1 Notes. The Loans made by each Lender shall be evidenced by one
or more promissory notes (the "Notes"), each in the form attached hereto as
Exhibit C. Each such Lender shall endorse on the schedule annexed to its Note(s)
the date, amount and maturity of each Loan made by such Lender and the amount of
each payment of principal made by the Borrower with respect thereto. Each such
Lender is irrevocably authorized by the Borrower to endorse its Note(s) and each
Lender's record shall be conclusive absent manifest error; provided, however,
that the failure of a Lender to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Borrower hereunder or under any such Note to such Lender.
3.2 Optional Prepayments. The Borrower may, at any time and from
time to time, upon not less than three (3) Business Days' irrevocable prior
notice to the Administrative Agent in the case of an Offshore Rate Loan, or one
(1) Business Day's irrevocable prior notice in the case of a Base Rate Loan,
prepay any Loan in minimum amounts of $10,000,000 in the case of an Offshore
Rate Loan, or $5,000,000 in the case of a Base Rate Loan, or, in each case, in
3
<PAGE> 8
multiples of $1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the type of Loan to be
prepaid. The Administrative Agent will promptly notify each Lender of its
receipt of any such notice, and of such Lender's Pro Rata Share of such
prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid and any amounts due as described in Section 3.7.
3.3 Taxes. The Borrower will not deduct any foreign taxes from any
payments it makes to the Administrative Agent for the account of any Lender. If
any such taxes are imposed on any payments made by the Borrower (including
payments under this paragraph), the Borrower will pay the taxes and will also
pay to the Administrative Agent for the account of such Lender, at the time
interest is paid, any additional amount necessary to preserve the after-tax
yield the Lender would have received if such taxes had not been imposed. The
Borrower will confirm that it has paid the taxes by giving the Lender official
tax receipts (or notarized copies) within 30 days after the Borrower's receipt
thereof.
(a) Payments made by the Borrower to the Administrative Agent for
the account of any Lender will be made without deduction of United States
withholding or similar taxes. If the Borrower is required to pay U.S.
withholding taxes, the Borrower will pay such taxes in addition to the amounts
due to the Administrative Agent for the account of such Lender under this
Agreement. If the Borrower fails to make such tax payments when due, the
Borrower agrees to indemnify each Lender and the Administrative Agent against
any liability for such taxes, as well as for any related interest, expenses,
additions to tax, or penalties asserted against or suffered by the
Administrative Agent or any Lender with respect to such taxes.
3.4 Additional Costs. The Borrower will pay the Administrative
Agent for the account of any Lender, on demand, an amount sufficient to
compensate such Lender for any increase in cost to such Lender of agreeing to
make or making, funding or maintaining Offshore Rate Loans, to the extent such
increase is due to any new, or change to any existing, statute, regulation or
policy or the application or interpretation thereof, or any request or
requirement of a government, central bank or regulatory agency which is
applicable to banks or to companies that control banks. Such costs will be
allocated to a Lender's Loans in a manner determined by the Lender, using any
reasonable method.
3.5 Computation of Fees and Interest. All computations of interest
determined by reference to the Base Rate shall be made on the basis of a year of
365 or 366 days, as the case may be, if based on the reference rate and actual
days elapsed. Except as otherwise stated in this Agreement, all other interest
and fees, if any, will be computed on the basis of a 360-day year and the actual
number of days elapsed.
3.6 Default Rate. Upon the occurrence and during the continuation
of any Event of Default under this Agreement, all amounts outstanding under this
Agreement will bear
4
<PAGE> 9
interest at a rate per annum which is determined by adding 2.0% per annum to the
Applicable Margin then in effect. This will not constitute a waiver of any Event
of Default.
3.7 Funding Losses. The Borrower shall reimburse each Lender for
any amounts required to compensate such Lender for any additional losses, costs
or expenses ("Funding Losses") which it may reasonably incur as a consequence
of: the failure of the Borrower to make on a timely basis any payment of
principal of any Offshore Rate Loan; the failure of the Borrower to borrow,
continue or convert a Loan after the Borrower has given a Notice of Borrowing or
a Notice of Conversion/Continuation; the failure of the Borrower to make any
prepayment in accordance with any notice delivered pursuant to Section 3.2; or
the prepayment or other payment (including after acceleration thereof) of an
Offshore Rate Loan on any day that is not the last day of the relevant Interest
Period. Funding Losses shall include, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds obtained by the Lender to fund or maintain its Offshore Rate Loans.
In addition, the Borrower shall reimburse each of the Lender named on the
original Commitment schedule attached hereto and hold each such Lender harmless
from Funding Losses which such Lender may sustain or incur as a consequence of
the assignment of any portion of its Loans and Commitment hereunder to one or
more Eligible Assignees at any time or times during the sixty (60) day period
immediately following the date hereof.
3.8 Payments by the Borrower. All payments by the Borrower
hereunder shall be in U.S. Dollars and in immediately available funds, and shall
be made by no later than 3:00 p.m., New York time on the date of payment
specified herein. All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Administrative Agent
for the account of the Lenders at the Administrative Agent's payment office. The
Administrative Agent will promptly distribute to each Lender its Pro Rata Share
(or other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Administrative Agent later than
3:00 p.m., New York time shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
Subject to the provisions set forth in the definition of "Interest Period"
herein, whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
(a) Unless the Administrative Agent receives notice from the
Borrower prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such
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amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
3.9 Payments by the Lenders to the Administrative Agent. Unless
the Administrative Agent receives notice from a Lender on or prior to the
initial Borrowing Date or, with respect to any borrowing after the initial
Borrowing Date, at least one Business Day prior to the date of such borrowing,
that such Lender will not make available as and when required hereunder to the
Administrative Agent for the account of the Borrower the amount of that Lender's
Pro Rata Share of the borrowing, the Administrative Agent may assume that each
Lender has made such amount available to the Administrative Agent in immediately
available funds on the Borrowing Date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to the Administrative Agent
in immediately available funds and the Administrative Agent in such
circumstances has made available to the Borrower such amount, that Lender shall
on the Business Day following such Borrowing Date make such amount available to
the Administrative Agent, together with interest at the Federal Funds Rate for
each day from the date of advance ment by the Administrative Agent to the
Borrower until the date the Lender makes such amount available to the
Administrative Agent. A notice of the Administrative Agent submitted to any
Lender with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Administrative Agent shall constitute such Lender's Loan on the
Borrowing Date for all purposes of this Agreement. If such amount is not made
available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Borrower of such
failure to fund and, upon demand by the Administrative Agent, the Borrower shall
pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the Borrowing
Date, at a rate per annum equal to the interest rate applicable at the time to
the Loans comprising such borrowing.
(a) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
3.10 Mandatory Prepayments; Mandatory Commitment Reductions. If
the Borrower or any of its Subsidiaries shall issue or sell any equity
securities or any bonds, notes or other evidence of indebtedness for borrowed
money, including, without limitation pursuant to the Public Debt Offering, the
New Strategic Equity or the IPO (other than the Notes and other than pursuant to
the Existing Borrower Credit Facility or the New Credit Facility), or enter into
any agreement pursuant to which credit is extended to the Borrower or any of its
Subsidiaries by any bank or other financial institution or institutions (other
than short-term borrowings pursuant to uncommitted lines of credit and other
than pursuant to the Existing Borrower Credit Facility or the New Credit
Facility), the Borrower shall promptly notify the Administrative Agent of the
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estimated net cash proceeds to be received by the Borrower or such Subsidiary in
respect thereof. Promptly upon, and in no event later than five (5) days after,
receipt by the Borrower or such Subsidiary of such proceeds, the Borrower shall
prepay the Loans, and permanently reduce the Commitments hereunder in an
aggregate amount equal to the amount of such proceeds (or such lesser amount as
may be required to prepay all Loans then outstanding, accrued interest thereon,
any amounts owed pursuant to Section 3.7, and all accrued commitment fees);
provided, however, that in the event the Borrower shall issue or sell securities
or incur indebtedness other than pursuant to the IPO, the New Strategic Equity
or the Public Debt Offering, the Borrower may, prior to complying with the
immediately preceding clause, apply such net cash proceeds to satisfy any
mandatory prepayment or mandatory commitment reduction required to be made
pursuant to the Existing Borrower Credit Facility or the New Credit Facility.
Any prepayment pursuant to this Section 3.10 shall be applied first to any Base
Rate Loans then outstanding and then to Offshore Rate Loans with the shortest
Interest Periods remaining. The Borrower shall pay, together with each
prepayment under this Section 3.10, accrued interest on the amount prepaid and
any amounts required pursuant to Section 3.7. The Commitment of each Lender
shall automatically be reduced by an amount equal to such Lender's ratable share
of the proceeds received by the Borrower or such Subsidiary, effective as of the
earlier of the date that prepay ment is made or the date by which such
prepayment is due and payable hereunder. All accrued commitment fees to, but not
including, the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination.
3.11 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off or otherwise) in excess of its ratable share, such Lender shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Lenders such participations in the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Lender, such purchase shall
to that extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to such
paying Lender's ratable share (according to the proportion of (i) the amount of
such paying Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders following
any such purchase or repayment.
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4. CONDITIONS
4.1 Conditions to Initial Loans. The obligation of each Lender to
make its initial Loan hereunder is subject to the conditions that the
Administrative Agent shall have received on or before the initial Borrowing Date
all of the following, in form and substance satisfactory to the Administrative
Agent and each Lender, and in sufficient copies or originals for each Lender:
(a) This Agreement, duly executed by each party hereto;
(b) Notes duly executed by the Borrower and payable to the order
of each of the Lenders in the amount of such Lender's initial Commitment
hereunder;
(c) The Guarantee (the "Guarantee") in form and substance
satisfactory to the Lenders signed by The Williams Companies, Inc., a Delaware
corporation (the "Guarantor"), guarantying all obligations of the Borrower
hereunder;
(d) A copy of the Borrower's certificate of incorporation and
bylaws and copies of resolutions of the Board of Directors of the Borrower
approving and authorizing the execution, delivery and performance of this
Agreement and the Notes, each certified as of the date hereof by the Borrower's
Secretary or Assistant Secretary, and a signature and incumbency certificate of
the persons duly authorized by the Borrower to execute and deliver this
Agreement and the Notes;
(e) Copies of the certificate of incorporation and bylaws and
resolutions of the Board of Directors of the Guarantor approving and authorizing
the execution, delivery and performance of the Guarantee, and a signature and
incumbency certificate of the officer of the Guarantor executing and delivering
the Guarantee, certified as of the date hereof by the Secretary or an Assistant
Secretary of the Guarantor;
(f) A certificate of good standing dated as of a recent date for
each of the Borrower and the Guarantor, issued by its respective jurisdiction of
incorporation;
(g) A certificate of a responsible officer of the Guarantor dated
as of the date hereof certifying that, since December 31, 1998 there has not
occurred a material adverse change in the business, assets, liabilities (actual
or contingent), operations, condition (financial or otherwise) or prospects of
the Borrower or the Guarantor and its Subsidiaries taken as a whole or in the
facts and information regarding such entities as represented to date;
(h) An opinion of counsel for the Borrower and the Guarantor;
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(i) Payment of fees required to be paid at closing pursuant to the
Fee Letter or pursuant to other agreements made prior to the date hereof
pertaining to the Commitments of the Lenders hereunder; and
(j) Such other documents as the Administrative Agent or any Lender
may reasonably require.
4.2 Conditions to All Borrowings. The obligation of each Lender to
make any Loan to be made by it (including its initial Loan) or to continue or
convert any Loan under Section 2.4 is subject to the satisfaction of the
following conditions precedent on the Borrowing Date or date of
conversion/continuation:
(a) The Administrative Agent shall have received a Notice of
Borrowing as required under Section 2.3;
(b) The representations and warranties of the Borrower contained
in Section 5 hereof, and the representations and warranties of the Guarantor
contained in the Guarantee, shall be true and correct on and as of such date
with the same effect as if made on and as of such date;
(c) If in effect, the Existing Borrower Credit Facility shall have
been amended to provide that (i) the maturity of the loans thereunder is not
prior to December 31, 1999 and (ii) notwithstanding anything therein to the
contrary, the proceeds from any transaction or event requiring repayment of the
Loans pursuant to Section 3.10 (including, without limitation, from the Public
Debt Offering, the New Strategic Equity or the IPO) shall not be required to be
applied to the payment of any amount outstanding thereunder so long as any Loan
is outstanding, any Commitment is in effect or any other amount is owing under
this Agreement, the Notes or the Guarantee, and the Administrative Agent shall
have received a copy of all documentation effecting such amendment, certified by
Borrower as a true, complete and correct copy thereof, and such amendment shall
be in full force and effect;
(d) The Borrower shall have borrowed and there shall be
outstanding not less than $1.4 billion pursuant to the Existing Borrower Credit
Facility or the Borrower or WCI shall have borrowed and there shall be
outstanding not less than the full amount of the revolving credit portion of the
New Credit Facility;
(e) If in effect, the documentation for the New Credit Facility
shall not require, directly or indirectly, the prepayment or repayment of any
loans or other extensions of credit thereunder or the depositing of any amount
in trust to effect the same or the reduction of commitments thereunder from the
proceeds of any transaction or event requiring prepayment of the Loans pursuant
to Section 3.10 (including, without limitation, from the Public Debt Offering,
the New Strategic Equity or the IPO) so long as any Loan is outstanding, any
Commitment is in effect or any other amount is owing under this Agreement, the
Notes or the Guarantee;
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(f) No Default or Event of Default shall exist or shall result
from such borrowing or conversion or continuation; and
(g) The Administrative Agent shall have received such other
documents as any Lender or the Administrative Agent may reasonably require.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the
Administrative Agent and the Lenders are repaid in full, the Borrower makes the
following representations and warranties. Each Notice of Borrowing hereunder and
each Notice of Conversion/Continuation constitutes a renewed representation:
5.1 Existence and Power; Compliance with Laws. The Borrower: is a
company duly formed, validly existing and in good standing under the laws of the
State of Delaware; is duly qualified and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and is in compliance in
all material respects with all requirements of law, except, to the extent that
the failure to do so does not have a Material Adverse Effect.
5.2 Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement and the Notes has been duly
authorized by all necessary organizational action, and do not and will not
conflict with or result in any breach or contravention of, or the creation of
any lien under, any document evidencing any contractual obligation to which the
Borrower is a party or any order, injunction, writ or decree of any court or
other governmental authority to which the Borrower or its property is subject,
or violate any requirement of law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
governmental authority is necessary or required for the validity of the
execution, delivery or performance by, or enforcement against, the Borrower of
this Agreement and the Notes.
5.4 Binding Effect. Each of this Agreement and the Notes
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability, and by judicial discretion regarding the
enforcement of any applicable laws affecting remedies (whether considered in a
court of law or a proceeding in equity).
5.5 No Default. No Default or Event of Default exists or would
result from the incurring of any obligations hereunder by the Borrower.
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5.6 Litigation. Except as set forth in the Guarantor's Form 10-Q
for the quarter ended June 30, 1999 or as otherwise disclosed in writing by the
Borrower to the Lenders and the Administrative Agent after the date hereof and
approved by the Majority Lenders, there is no pending or, to the knowledge of
the Borrower, threatened action or proceeding affecting the Borrower or any
Subsidiary of the Borrower before any court, governmental agency or arbitrator,
which could reasonably be expected to materially and adversely affect the
financial condition or operations of the Borrower and its Subsidiaries taken as
a whole or which purports to affect the legality, validity, binding effect or
enforceability of this Agreement or any Note.
5.7 Margin Stock. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System). Following the application of the proceeds of each Loan, not
more than 25% of the value of the assets of the Borrower will be represented by
such margin stock and not more than 25% of the value of the assets of the
Borrower and its Subsidiaries will be represented by such margin stock.
5.8 Investment Company. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary of the Borrower, is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
5.9 Year 2000 Compliance. The Borrower has (i) reviewed the areas
within its business and operations and those of its Subsidiaries which could be
adversely affected by failure to become "Year 2000 Compliant" (that is, that
computer applications, imbedded microchips and other systems used by the
Borrower or its Subsidiaries or their material vendors, will be able properly to
recognize and perform date-sensitive functions involving certain dates prior to
and any date after December 31, 1999); (ii) developed a detailed plan and
timetable to become Year 2000 Compliant in a timely manner; and (iii) committed
adequate resources to support its plan to become Year 2000 Compliant in a timely
manner. Based on such review and plan the Borrower reasonably believes that it
and its Subsidiaries will become Year 2000 Compliant on a timely basis except to
the extent that a failure to do so would not reasonably be expected to have a
material adverse effect on the business, assets or financial condition of the
Borrower and its Subsidiaries, taken as a whole, or on the ability of the
Borrower to perform its obligations hereunder.
6. COVENANTS
So long as any Lender shall have any Commitment hereunder, or any
Loan or other obligation shall remain unpaid or unsatisfied, unless the Majority
Lenders waive compliance in writing:
6.1 Use of Proceeds. The Borrower will use the proceeds of the
Loan (a) for working capital, capital expenditures and other lawful corporate
purposes (other than dividends or other distributions on its equity interests or
purchases or redemptions or the like thereof) and
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(b) to refinance existing indebtedness of the Borrower (other than pursuant to
the New Credit Facility).
6.2 Consolidations and Mergers; Disposition of Assets. The
Borrower shall not merge, consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person.
6.3 Compliance with Laws, Etc. The Borrower shall comply, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders (except where failure to comply
could not reasonably be expected to have a material adverse effect on the
business, assets, condition or operations of the Borrower and its Subsidiaries
taken as a whole), such compliance to include, without limitation, the payment
and discharge before the same become delinquent of all taxes, assessments and
governmental charges or levies imposed upon it or any of its Subsidiaries or
upon any of its property or any property of any of its Subsidiaries; provided,
that neither Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings and with respect to which reserves in conformity
with generally accepted accounting principles, if required by such principles,
have been provided on the books of the Borrower or such Subsidiary, as the case
may be.
6.4 New Credit Facility and Existing Borrower Credit Facility. The
Borrower shall not and shall not cause or permit any of its Subsidiaries to,
directly or indirectly (i) enter into the New Credit Facility or any amendment
or modification of the Existing Borrower Credit Facility if it contains any
provision directly or indirectly requiring, prior to the repayment in full of
any and all Loans outstanding hereunder and the termination of all Commitments,
any payment, prepayment or reduction of commitments or loans pursuant to the New
Credit Facility or the Existing Borrower Credit Facility out of the proceeds of
the IPO, the New Strategic Equity or the Public Debt Offering, or (ii)
voluntarily pay, prepay or reduce any commitment or loan pursuant to the New
Credit Facility or the Existing Borrower Credit Facility without the prior
written consent of the Lenders.
7. DEFAULT
If any of the following events occurs (an "Event of Default"), the
Administrative Agent shall, at the request of, or may, with the consent of, the
Majority Lenders do one or more of the following: declare the Commitment of each
Lender to make Loans hereunder to be terminated, whereupon such Commitments
shall be terminated, declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder to be immediately due and payable, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or
notice of any kind, all of which are hereby expressly waived by the Borrower,
and exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders hereunder and under applicable law. If an
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Event of Default occurs under subparagraphs (e), (f) or (h) below then the
commitment of each Lender to make Loans hereunder shall automatically terminate
and the entire debt outstanding under this Agreement and all other amounts owed
under this Agreement and the Notes will automatically be due and payable
immediately without presentment, demand, protest, notice of dishonor, notice of
intention to accelerate, notice of acceleration or otherwise, all of which is
expressly waived by the Borrower.
(a) Failure to Pay. The Borrower fails to pay (i) when the same
becomes due, any amount of principal of any Loan, or (ii) within ten (10) days
after the same becomes due, any interest or other amount payable hereunder or
under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Borrower or the Guarantor made or deemed made herein, or which is contained
in any certificate, document or financial or other written statement furnished
at any time under this Agreement or any other Loan Document, is incorrect in any
material respect on or as of the date made or deemed made or reaffirmed, as the
case may be; or
(c) Other Defaults. The Borrower fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document
(and not constituting an Event of Default under any other clause of this Section
7), and such default shall continue unremedied for a period of 30 days after the
date upon which written notice thereof is given to the Borrower by the
Administrative Agent or any Lender; or
(d) Cross-Default - Borrower. Borrower or any Subsidiary of
Borrower shall fail to pay any principal of or premium or interest on any
Indebtedness which is outstanding in a principal amount of at least $60,000,000
in the aggregate when the same become due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or other wise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness; or any other event
shall occur or condition shall exist under any agreement or instrument relating
to any such Indebtedness and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or permit the acceleration of, the maturity of
such Indebtedness, or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; provided, however, that the
provisions of this Section 7(d) shall not apply to any non-recourse Indebtedness
of any Subsidiary of the Borrower; or
(e) Insolvency; Voluntary Proceedings. The Borrower or the
Guarantor (i) generally fails to pay, or admits in writing its inability to pay,
its debts as they become due, whether at stated maturity or otherwise; (ii)
commences any Insolvency Proceeding with respect to itself; or (iii) takes any
action to effectuate or authorize any of the foregoing; or
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(f) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or the Guarantor and any
such proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded within 30 days after commencement, filing or levy; (ii)
the Borrower or the Guarantor admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or the Guarantor acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar person or entity for itself or a substantial portion of its
property or business; or
(g) Monetary Judgments - Borrower. One or more non-interlocutory
judgments (including judgments entered on arbitration awards) is entered against
Borrower involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage or effective indemnification) as to any single or related series of
transactions, incidents or conditions, of $60,000,000 or more, and the same
shall remain unsatisfied, unvacated or unstayed pending appeal for a period of
30 days after the entry thereof; or
(h) Dissolution. There occurs a dissolution or liquidation of the
Borrower; or
(i) Guarantor Defaults. A "Guarantor Event of Default" (as defined
in the Guarantee) shall exist or occur which does not also constitute an Event
of Default under either of subsections (e) of (f) of this Section 7, or the
Guarantee is for any reason partially or wholly revoked or invalidated, or
otherwise ceases to be in full force and effect, or Guarantor denies that it has
any further liability or obligation thereunder; or
(j) Change of Control. There occurs any Change of Control.
(k) Minimum Rating. The Guarantor's senior unsecured long-term
non-credit enhanced debt is rated less than Baa3 by Moody's or less than BBB- by
S&P.
8. ENFORCING THIS AGREEMENT; MISCELLANEOUS
8.1 GAAP. Except as otherwise stated in this Agreement, all
financial information provided to the Administrative Agent and/or the Lenders
will be made under generally accepted accounting principles, consistently
applied.
8.2 GOVERNING LAW AND JURISDICTION AND WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK; PROVIDED THAT THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
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(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON-CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS
SET FORTH BELOW ITS SIGNATURE TO THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR THE LENDERS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.
8.3 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and each Lender.
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<PAGE> 20
8.4 Severability. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced.
8.5 One Agreement. This Agreement, the other Loan Documents and
any related security or other agreements required by this Agreement,
collectively: (a) represent the sum of the understandings and agreements among
the Administrative Agent, the Lenders and the Borrower concerning this credit;
(b) replace any prior oral or written agreements among the Administrative Agent,
the Lenders and the Borrower concerning this credit (except the Engage ment
Letter, the Financing Transaction Fee Letter and the provisions of Sections 2,
5, 6, 7, 8, 11 and 13 of the Commitment Letter, which survive unmodified); and
(c) are intended by the Administrative Agent, the Lenders and the Borrower as
the final, complete and exclusive statement of the terms agreed to by them. In
the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
8.6 Costs and Expenses. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall reimburse the
Administrative Agent and the Lead Arranger within five (5) Business Days after
demand for all reasonable costs and expenses incurred by the Administrative
Agent and the Lead Arranger in connection with the preparation, due diligence,
administration, syndication and execution of, and any amendment, supplement,
waiver or modification to, this Agreement, including reasonable attorney's fees
and disbursements. The Borrower shall reimburse the Administrative Agent and
each Lender upon demand for all costs and expenses (including reasonable counsel
fees and expenses) incurred by the Administrative Agent and any Lender in
connection with the enforcement, renegotiation or rescheduling of any rights or
remedies under this Agreement or any other Loan Document.
8.7 Indemnification. The Borrower will indemnify and hold the
Administrative Agent, the Lead Arranger, each Co-Documentation Agent and each
Lender harmless from and against any and all claims, damages, liabilities and
out-of-pocket expenses of any kind relating to or arising directly or indirectly
out of (a) this Agreement or any document required hereunder, (b) any credit
extended or committed to the Borrower hereunder, (c) any transaction in which
all or any part of the proceeds of the Loans are applied, and (d) any
investigation or pending or threatened litigation or proceeding (whether or not
the Person to be so indemnified is a party to any such investigation, litigation
or proceeding) related to or arising out of this Agreement, any such document,
or any such credit (together, "Indemnified Liabilities"). This indemnity
includes but is not limited to reasonable attorneys' fees and disbursements and
any damages arising from the use by others of information or other materials
obtained through electronic, telecommunications or other information
transmission systems. This indemnity extends to the Administrative Agent, the
Lead Arranger, each Co-Documentation Agent and each Lender, and to their
affiliates, directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the Borrower's obligations.
All sums due hereunder shall be obligations of the Borrower, due and payable
immediately without demand.
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8.8 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Administrative Agent, any Lender or the Borrower may specify from time to
time in writing.
8.9 Headings; Counterparts. Article and paragraph headings are for
reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
8.10 Interest. It is the intention of the parties hereto to comply
with applicable usury laws, if any. If any interest is called for, contracted
for, charged, taken, reserved, or received in connection with the Loan, or in
the event all or part of the principal or interest under this Agreement, shall
be prepaid or accelerated, so that under any of such circumstances or under any
other circumstance the amount of interest contracted for, charged, taken,
reserved, or received on the amount of principal actually outstanding from time
to time shall exceed the maximum amount of interest permitted by applicable
usury laws, if any, then in any such event it is agreed as follows: (i) the
provisions of this paragraph shall govern and control, (ii) neither the Borrower
nor any other person shall be obligated to pay the amount of such interest to
the extent such interest is in excess of the maximum amount of interest
permitted by applicable usury laws, (iii) any such excess which is or has been
received notwithstanding this paragraph shall be credited against the then
unpaid principal balance of the Loans, or if the Loans have been or would be
paid in full, refunded to the Borrower, and (iv) the provisions of this
Agreement shall immediately be deemed reformed and such excess interest reduced,
without the necessity of executing any other document, to the maximum lawful
rate allowed. Without limiting the foregoing, all calculations of the rate of
interest for the purpose of determining whether such rate exceeds the maximum
lawful rate shall be made to the extent permitted by applicable laws by
amortizing, prorating, allocating and spreading during the period of the full
term of the Loan, all interest at any time contracted for, charged, taken,
reserved, or received.
8.11 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the
Administrative Agent at the written request of the Majority Lenders) and the
Borrower and acknowledged by the Administrative Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrower
and acknowledged by the Administrative Agent, do any of the following: (a)
increase or extend the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 7) or otherwise subject the Lenders to additional
obligations; (b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment or prepayment of principal, interest, fees or
other amounts due to the Lenders (or
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<PAGE> 22
any of them) hereunder or under any other Loan Document; (c) reduce the
principal of, or the rate of interest specified herein on any Loan, or (subject
to clause (ii) below) any fees or other amounts payable hereunder or under any
other Loan Document; (d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder; or (e) amend this Section 8.11, or
Section 3.10, or any provision herein providing for consent or other action by
all Lenders; or (f) discharge any Guarantor; and, provided further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Majority Lenders or all the Lenders, as
the case may be, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document, and (ii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed by the
parties thereto.
8.12 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
8.13 Assignments, Participations, Etc. Any Lender may, with the
written consent of the Borrower at all times other than during the existence of
an Event of Default and in all cases, with the written consent of the
Administrative Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Borrower or the Administrative Agent shall be required in
connection with any assignment and delegation by a Lender to an Eligible
Assignee that is an affiliate of such Lender) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of $10,000,000;
provided, however, that the Borrower and the Administrative Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (A) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Administrative Agent by
such Lender and the Assignee; (B) such Lender and its Assignee shall have
delivered to the Borrower and the Administrative Agent an assignment and
acceptance in the form of Exhibit D ("Assignment and Acceptance") together with
any Note or Notes subject to such assignment and (C) the assignor Lender or
Assignee has paid to the Administrative Agent a processing fee in the amount of
$3,500.
(a) From and after the date that the Administrative Agent notifies
the assignor Lender that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such
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<PAGE> 23
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents; and (iii) this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(c) Within five Business Days after receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee (and provided that it consents to such
assignment in accordance with Subsection 8.13(a)), the Borrower shall execute
and deliver to the Administrative Agent, new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Lender has retained a portion
of its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Lender (such Notes to be in exchange for, but
not in payment of, the Notes held by such Lender).
(d) Any Lender may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the "originating Lender") hereunder and under
the other Loan Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Borrower and the Administrative Agent shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment, consent or waiver would require unanimous
consent of the Lenders as described in the first proviso to Section 8.11. In the
case of any such participation, the Participant shall be entitled to the benefit
of Sections 3.3, 3.4 and 8.7 as though it were also a Lender hereunder, and if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System or U.S. Treasury Regulation 31
CFR ss.203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
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8.14 Set-off. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness and obligations at any time owing by, such
Lender to or for the credit or the account of the Borrower against any and all
indebtedness and obligations owing to such Lender hereunder, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such Lender
shall have made demand under this Agreement or any Loan Document and although
such indebtedness and obligations may be contingent or unmatured. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 8.14 are cumulative
with and in addition to other rights and remedies which the Lender may have.
8.15 Foreign Lenders and Participants. Each Lender, and each
holder of a participation interest herein, that is a "foreign corporation,
partnership or trust" within the meaning of the Code shall deliver to the
Administrative Agent, within 20 days after the closing date (or after accepting
an assignment or receiving a participation interest herein) two duly signed
completed copies of either Form 1001 (relating to such Person and entitling it
to a complete exemption from withholding on all payments to be made to such
Person by Borrower pursuant to this Agreement) or Form 4224 (relating to all
payments to be made to such Person by Borrower pursuant to this Agreement) of
the IRS or such other evidence (including, if reasonably necessary, Form W-9)
satisfactory to Borrower and the Administrative Agent that no withholding under
the federal income tax laws is required with respect to such Person. Thereafter
and from time to time, each such Person shall (a) promptly submit to the
Administrative Agent such additional duly completed and signed copies of one of
such forms (or such successor forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may then be available under then
current United States laws and regulations to avoid, or such evidence as is
satisfactory to Borrower and the Administrative Agent of any available exemption
from, United States withholding taxes in respect of all payments to be made to
such Person by Borrower pursuant to this Agreement and (b) take such steps as
shall not be materially disadvantageous to it, in the reasonable judgment of
such Lender, and as may be reasonably necessary (including the re-designation of
its lending office, if any) to avoid any requirement of applicable laws that
Borrower make any deduction or withholding for taxes from amounts payable to
such Person. If such Persons fails to deliver the above forms or other
documentation, then the Administrative Agent may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction. If any
governmental authority asserts that the Administrative Agent did not properly
withhold any tax or other amount from payments made in respect of such Person,
such Person shall indemnify the Administrative Agent therefor, including all
penalties and interest and costs and expenses (including reasonable counsel fees
and expenses) of the Administrative Agent. The obligation of
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<PAGE> 25
the Lenders under this subsection shall survive the payment of all indebtedness
and obligations hereunder and the resignation or replacement of the
Administrative Agent.
9. THE ADMINISTRATIVE AGENT
9.1 Appointment and Authorization; Administrative Agent. Each
Lender hereby irrevocably (subject to Section 9.9) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the Borrower or any
Subsidiary or affiliate of the Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or for the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower or any of the Borrower's Subsidiaries or affiliates.
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9.4 Reliance by Agent. The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Borrower), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
(a) For purposes of determining compliance with the conditions
specified in Section 4, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice from
a Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Lenders in accordance with
Section 7; provided, however, that unless and until the Administrative Agent has
received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Lenders.
9.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Administrative Agent hereinafter taken, including any review of
the affairs of the Borrower and its Subsidiaries, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the
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Borrower and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Administrative Agent, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
9.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities (as defined in Section 8.7)
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
attorney costs) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Borrower. The undertaking in this Section shall survive
the payment of all obligations hereunder and the resignation or replacement of
the Administrative Agent.
9.8 Agent in Individual Capacity. The Administrative Agent and its
affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrower and its Subsidiaries and affiliates as though the Administrative Agent
were not the Administrative Agent hereunder and without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such activities, the
Administrative Agent or its affiliates may receive information regarding the
Borrower or its affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Subsidiary) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, the Administrative
Agent shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were
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not the Administrative Agent, and the terms "Lender" and "Lenders" include the
Administrative Agent in its individual capacity.
9.9 Successor Agent. The Administrative Agent may, and at the
request of the Majority Lenders shall, resign as Administrative Agent upon 30
days' notice to the Lenders. If the Administrative Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders which successor agent shall be approved by the Borrower.
If no successor agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Borrower, a successor agent from among
the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Sections 8.6 and 8.7
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement. If no successor agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Majority Lenders appoint a successor
agent as provided for above. The Borrower agrees to pay fees to any successor
administrative agent in amounts equal to no less than the fees being paid to the
Administrative Agent then being replaced.
9.10 Co-Agents; Lead Managers. None of the Persons identified on
the facing page or signature pages of this Agreement as a "co-agent," an
"arranger," a "syndication agent," a "book manager" or a "co-documentation
agent" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders so identified as a
"co-agent," an "arranger," a "syndication agent," a "book manager" or a
"co-documentation agent" shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
{SIGNATURES BEGIN ON THE FOLLOWING PAGE}
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NO ORAL AGREEMENTS. THIS LOAN AGREEMENT TOGETHER WITH THE OTHER
LOAN DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
This Agreement is executed effective as of the date stated at the
top of the first page.
WILLIAMS COMMUNICATIONS GROUP, INC.
By: /s/ SCOTT E. SCHUBERT
------------------------------------
Name: Scott E. Schubert
Title: Chief Financial Officer
Address where notices to the Borrower
are to be sent:
The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74172
Attn: Treasurer
Chief Executive Office of the Borrower:
The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74172
{THIS IS A SIGNATURE PAGE TO THE LOAN AGREEMENT}
<PAGE> 30
MERRILL LYNCH CAPITAL CORPORATION,
as Administrative Agent
By: /s/ JACK LUCIA
---------------------------------
Name: Jack Lucia
Title: Vice President
Address where notices to the
Administrative Agent are to be sent:
Merrill Lynch & Co.
250 Vesey St., 16th Floor
New York, NY 10281
Attn: Tom Glover and Jack Lucia
Tel: (212) 449-5233
Fax: (212) 449-1885
Administrative Agent's Payment Office:
Merrill Lynch & Co.
250 Vesey St., 16th Floor
New York, NY 10281
Attn: Mark Campbell
Tel: (212) 449-6996
Fax: (212) 738-1719
{THIS IS A SIGNATURE PAGE TO THE LOAN AGREEMENT}
<PAGE> 31
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender
By: /s/ JACK LUCIA
------------------------------------
Name: Jack Lucia
Title: Vice President
Address where notices to the Lender
are to be sent:
Merrill Lynch & Co.
250 Vesey St.
New York, NY 10281
Attn: Tom Glover and Jack Lucia
Tel: (212) 449-5233
Fax: (212) 449-1885
{THIS IS A SIGNATURE PAGE TO THE LOAN AGREEMENT}
<PAGE> 32
LEHMAN COMMERCIAL PAPER INC.,
as a Lender
By: /s/ WILLIAM J. GALLAGHER
----------------------------------------
Name: William J. Gallagher
Title: Authorized Signatory
Address where notices to the Lender
are to be sent:
8 World Financial Center
200 Vesey St., 11th Fl.
New York, NY 10285
Attn: Michele Swanson
Tel: (212) 526-0330
Fax: (212) 526-0242
{THIS IS A SIGNATURE PAGE TO THE LOAN AGREEMENT}
<PAGE> 33
CITICORP NORTH AMERICA, INC.,
as a Lender
By: /s/ STEVEN R. VICTORIN
-------------------------------------
Name: Steven R. Victorin
Title: Attorney-in-Fact
Address where notices to the Lender
are to be sent:
Citicorp North America, Inc.
399 Park Avenue, 11th Floor
Loan Syndication Group
New York, NY 10043
Attn: Steven R. Victorin
Tel: (212) 559-7212
Fax: (212) 583-7185
{THIS IS A SIGNATURE PAGE TO THE LOAN AGREEMENT}
<PAGE> 34
SCHEDULE 1
DEFINITIONS
"Administrative Agent" see the introduction hereto.
"Agent-Related Person" means the Administrative Agent, together
with their respective affiliates, officers, directors, employees, agents,
successors, attorneys and assigns.
"Agreement" see the introduction hereto.
"Applicable Margin" means (a) as to Offshore Rate Loans, initially
2.25% per annum, such per annum rate changing from time to time to be equal to
the then applicable Applicable Margin per annum rate for Revolving Loans which
have the Eurodollar Spread (as each such term is defined in the New Credit
Facility) pursuant to the New Credit Facility as set forth in the New Credit
Facility under the definition "Applicable Margin" therein (so long as the terms
thereof are not materially different from the draft version thereof provided to
the Lenders on the date hereof and set forth in Annex A to this Agreement), and
(b) as to Base Rate Loans, a rate per annum equal to the Applicable Margin for
Offshore Rate Loans minus 100 basis points (but not less than zero).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate and (b) the rate per annum of interest in
effect for such day as publicly announced from time to time by the
administrative agent under the Guarantor Credit Agreement (as defined in Section
6 of the Guarantee) at its lead office, as its "reference rate." (The reference
rate is a per annum rate set by such administrative agent based upon various
factors including such administrative agent's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by such administrative agent
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a loan that bears interest based on the
Base Rate.
"Book Manager" see the introduction hereto.
"Borrower" see the introduction hereto.
"Borrowing Date" means the date a Loan is made.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or San Francisco,
California are authorized or required by law to close and, if the applicable
Business Day relates to an Offshore Rate Loan, means such a day on which
dealings are carried on in the London interbank market.
<PAGE> 35
"Change of Control" means the existence of any circumstance under
which the Guarantor ceases to own, directly or indirectly, with respect to each
class of securities of the Borrower, at least seventy percent (70%) of such
class of securities.
"Co-Documentation Agent" see the introduction hereto.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment" see Section 2.1.
"Commitment Letter" means the Interim Loan Commitment Letter among
the Borrower, Merrill Lynch Capital Corporation, Lehman Commercial Paper Inc.
and Citicorp North America, Inc. dated September 1, 1999.
"Default" means an event or condition that, with the giving of
notice or the passage of time or both, would constitute an Event of Default.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located in the United States; and (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary.
"Engagement Letter" means the Engagement Letter among the
Borrower, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers
Inc. and Salomon Smith Barney Inc. dated September 1, 1999.
"Eurodollar Reserve Percentage" see the definition of "Offshore
Rate" in this Schedule 1.
"Event of Default" see Section 7.
"Existing Borrower Credit Facility" means the loan agreement dated
as of April 16, 1999 among Borrower, Bank of America National Trust and Savings
Association, as administrative agent, the other financial institutions party
thereto, NationsBanc Montgomery Securities LLC, as joint lead arranger and book
manager, Chase Securities Inc., as joint lead arranger and book manager and
syndication agent; Bank of Montreal, as co-documentation agent, and The Bank of
New York, as co-documentation agent, consisting of revolving credit facility
2
<PAGE> 36
commitments in the amount of $1.4 billion, maturing on or before September 30,
1999 (which date will be extended to not earlier than December 31, 1999 as a
condition to lending under this Agreement).
"Federal Funds Rate" means, for any day, the per annum rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for any relevant day
such rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Administrative Agent
of the rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by the Administrative
Agent.
"Fee Letter" means the Interim Loan Fee Letter among the Borrower,
Merrill Lynch Capital Corporation, Lehman Commercial Paper Inc. and Citicorp
North America, Inc. dated September 1, 1999.
"Financing Transaction Fee Letter" means the Financing Transaction
Fee Letter among the Borrower, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Lehman Brothers Inc. and Salomon Smith Barney Inc. dated September
1, 1999.
"Final Maturity Date" means December 31, 1999 or such earlier date
as the Loans may become due and payable pursuant to Section 7.
"Funding Losses" see Section 3.7.
"Guarantee" see Section 4.1(c).
"Guarantor" see Section 4.1(c).
"Indebtedness," as applied to any person or entity, means without
duplication (a) all indebtedness for borrowed money of such person or entity;
(b) all obligations for the deferred purchase price of property or services
(other than trade payables entered into in the ordinary course of business on
ordinary terms); (c) all reimbursement or payment obligations of such person or
entity with respect to letters of credit (whether drawn or undrawn), bonds and
other surety instruments; (d) all obligations of such person or entity evidenced
by notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional sale
or other title retention agreement entered into by such person or entity, or
incurred as financing, with respect to property acquired (even though the rights
and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property); (f) all obligations with
respect to capital leases; (g) all obligations in respect of
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<PAGE> 37
swap contracts or other derivative instruments; (h) all indebtedness referred to
in clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien upon or in property (including accounts and contracts rights) even
though the owner of the property has not assumed or become liable for the
payment of such Indebtedness; and (i) all guaranty obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (h) above. For purposes of this Agreement, the Indebtedness of any
person or entity shall include all recourse Indebtedness of any partnership or
joint venture or limited liability company in which such person or entity is a
general partner or a joint venturer or a member.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law.
"Interest Payment Date" means at such times as the Loan is an
Offshore Rate Loan, the last day of each Interest Period applicable to the Loan
and, at such times as the Loan is a Base Rate Loan, the last Business Day of
each calendar quarter and each date the Loan is converted into an Offshore Rate
Loan, provided, however, that if any Interest Period for the Loan during which
the Loan is an Offshore Rate Loan exceeds three months, the date that falls
three months (as the case may be) after the beginning of such Interest Period
and after each Interest Payment Date thereafter is also an Interest Payment
Date.
"Interest Period" means at such times as the Loan is an Offshore
Rate Loan, the period commencing on the Borrowing Date or on the date on which
the Loan is converted into or continued as an Offshore Rate Loan, and ending on
the date one, two or three months thereafter as selected by the Borrower in its
notice of borrowing or its notice of conversion/continuation. If any Interest
Period would otherwise end on a day that is not a Business Day, that Interest
Period shall be extended to the following Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business Day. Any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period.
"IPO" means the proposed initial public offering of the common
stock of the Borrower, filed with the SEC on Form S-1 (SEC Registration No. 333-
76007).
"IRS" means the Internal Revenue Service, and any governmental
authority succeeding to any of its principal functions under the Code.
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<PAGE> 38
"Lead Arranger" see the introduction hereto.
"Lenders" see the introduction hereto.
"LIBOR" see the definition of "Offshore Rate" in this Schedule 1.
"Loan" see Section 2.1.
"Loan Documents" means this Agreement, the Guarantee, the Fee
Letter and the Notes.
"Majority Lenders" means at any time Lenders then holding in
excess of 50% of the then aggregate unpaid principal amount of the Loans, or, if
no such principal amount is then outstanding, Lenders then having in excess of
50% of the Commitments.
"Material Adverse Effect" means any material adverse effect on (a)
the business, operations, condition (financial or otherwise) or property of the
Borrower, (b) the ability of the Borrower or Guarantor to perform in a timely
manner its material obligations under any of the Loan Documents, (c) the
validity or enforceability of any material provision of any Loan Document, or
(d) the rights or remedies of the Administrative Agent or any Lender under any
of the Loan Documents.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Note" see Section 3.1.
"Notice of Borrowing" see Section 2.3.
"Notice of Conversion/Continuation" see Section 2.4.
"Offshore Rate" means, for any Interest Period, the rate of
interest per annum (rounded upward to the next 1/100th of 1%) determined by the
Administrative Agent as follows:
Offshore Rate = LIBOR
--------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day under regulations issued from time
to time by the Board of Governors of the Federal Reserve System for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency
5
<PAGE> 39
funding (currently referred to as "Eurocurrency liabilities"); and "LIBOR"
means, for each day during any Interest Period, the rate of interest per annum
that is the offered rate per annum (rounded upwards to the next higher 1/100th
of 1% per annum) at which deposits in U.S. Dollars appears on the Telerate page
3750 (or any successor page) as of 11:00 a.m. (London time), two (2) Business
Days prior to (and for value on) the commencement of such Interest Period in an
amount approximately equal to the amount of the Offshore Rate Loans during such
Interest Period and for a period of time comparable to such Interest Period, or
in the event such offered rate is not available from the Telerate Page, then
LIBOR shall be equal to the rate per annum determined by the Administrative
Agent to be the average (rounded upwards to the next higher 1/100 of 1%) of the
respective rates per annum shown on Reuter's Monitor Money Rates Service "LIBO"
page at which deposits in dollars are offered in the London Interbank
Eurocurrency Market at or about 11:00 a.m. (London time) two (2) Business Days
prior to (and for value on) the commencement of an Interest Period in an amount
approximately equal to the amount of the Offshore Rate Loan during such Interest
Period and for a period of time comparable to such Interest Period, and in the
event neither such Telerate nor such Reuter's rate is available from such
Telerate Page or such Reuter's Service, then LIBOR shall be equal to the rate of
interest per annum determined by the Administrative Agent to be the arithmetic
mean (rounded upward to the next 1/100th of 1%) of the rates of interest per
annum at which dollar deposits for such Interest Period and in an amount
approximately equal to the amount of the Offshore Rate Loan during such Interest
Period would be offered by the Administrative Agent to major banks in the London
eurodollar market at or about 11:00 a.m. (London time) two (2) Business Days
prior to the commencement of such Interest Period.
"New Credit Facility" means the proposed senior unsecured credit
facility in an amount of $1,000.0 million to be entered into on or before
September 30, 1999, comprising (a) a seven-year senior multi-draw amortizing
term loan facility in an amount of $500.0 million and (b) a six-year senior
reducing revolving credit facility in an amount of $500.0 million, to be entered
into by WCI and to be agented by Bank of America, N.A. and The Chase Manhattan
Bank.
"New Strategic Equity" means the proposed strategic equity
investments in the Borrower by SBC Communications Inc., Intel Corporation and
Telefonos de Mexico, S.A., which are expected to result in gross proceeds to the
Borrower of not less than $725.0 million.
"Offshore Rate Loan" means a loan that bears interest based on the
Offshore Rate.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or governmental authority.
"Pro Rata Share" means, as to any Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Lender's Commitment divided by the combined
Commitments of all Lenders. If the Commitments have
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<PAGE> 40
terminated or expired, the Pro Rata Share shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.
"Public Debt Offering" means the proposed public offering of the
senior unsecured debt securities of the Borrower, which is expected to result
in gross proceeds to the Borrower of $1.3 billion, filed with the SEC on Form
S-1 (SEC Registration No. 333-76877).
"S&P" means Standard & Poor's Rating Service, a division of The
McGraw-Hill Companies, Inc., and its successors.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" of a Person or entity means any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, or membership
interests or other equity interests, is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Syndication Agent" see the introduction hereto.
"WCI" means Williams Communications, Inc., a Delaware corporation.
"Year 2000 Compliant" see Section 5.9.
7
<PAGE> 1
EXHIBIT 10.64
SECURITIES PURCHASE AGREEMENT
AMENDMENT AND ADDENDUM
SECURITIES PURCHASE AGREEMENT AMENDMENT AND ADDENDUM (this "Addendum")
dated as of September 24, 1999, among Williams Communications Group, Inc., a
Delaware corporation (the "Company"), The Williams Companies, Inc., a Delaware
corporation ("TWC"), and SBC Communications Inc., a Delaware corporation ( "SBC"
and together with any assignee pursuant to Section 15.13 of the Securities
Purchase Agreement, as defined below, the "Investor").
PREAMBLE
WHEREAS, SBC, TWC and the Company have entered into a Securities
Purchase Agreement dated February 8, 1999 (the "Securities Purchase Agreement")
pursuant to which the Investor will purchase a specified amount of shares of the
Company's Class A common stock (the "Common Stock"); and
WHEREAS, SBC, TWC and the Company have agreed to amend the Securities
Purchase Agreement to alter the number of shares of Common Stock to be purchased
by the Investor and to provide for SBC's agreement to assign to Telefonos de
Mexico, S.A. de C.V., a Mexican corporation ("TelMex"), SBC's right to purchase
a portion of the shares of Common Stock; and
WHEREAS, as an inducement for the Investor to purchase the Common
Stock, Section 3.5 of the Securities Purchase Agreement provides that, following
the Company's delivery to the Investor of a Revised Underwriting Agreement (as
described in the Securities Purchase Agreement and attached hereto as Exhibit
A), the Company shall make additional representations and warranties, and
provide for such terms and conditions concerning such representations and
warranties, as the Investor shall reasonably request and as the Company and the
Investor shall agree upon;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants contained herein and intending to be
legally bound hereby, the parties hereby agree as follows:
<PAGE> 2
ARTICLE I
DEFINED TERMS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Article I. Additional defined terms are found in the
body of the following text. All capitalized terms not defined herein shall have
the meanings assigned to them in the Securities Purchase Agreement or the
Revised Underwriting Agreement, unless otherwise noted or the context otherwise
indicates:
1.1 "Closing" and "Closing Date" shall have the meaning set forth in
Article I of the Securities Purchase Agreement.
1.2 "Communications Act" shall mean the Communications Act of 1934, as
amended; the rules and regulations of the FCC; and the written orders, policies
and decisions of the FCC and the courts interpreting such orders, policies and
decisions.
1.3 "Debt Underwriting Agreement" shall have the meaning set forth in
the preamble to the Revised Underwriting Agreement.
1.4 "Delivery Date" shall have the meaning set forth in Section 4 of
the Revised Underwriting Agreement.
1.5 "Effective Date" shall have the meaning set forth in Section 1(a)
of the Revised Underwriting Agreement.
1.6 "FCC" shall mean the Federal Communications Commission.
1.7 "FCC Licenses" shall mean all FCC licenses, permits and
authorizations validly held by the Company that are in full force and effect and
not subject to any conditions outside the ordinary course.
1.8 "Final Underwriting Agreement" means the underwriting agreement
among the Company, Lehman Brothers Inc., Salomon Smith Barney Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and certain other Underwriters to be
named therein entered into in connection with the Initial Public Offering of the
Company and executed by all such parties in final form, together with any and
all amendments, supplements and revisions thereto.
2
<PAGE> 3
1.9 "First Delivery Date" shall have the meaning set forth in Section 4
of the Revised Underwriting Agreement.
1.10 "Indenture" shall have the meaning set forth in the Debt
Underwriting Agreement.
1.11 "Initial Public Offering" shall have the meaning set forth for
"IPO" in Article I of the Securities Purchase Agreement.
1.12 "Notes" shall have the meaning set forth in the preamble to the
Revised Underwriting Agreement.
1.13 "Person" shall have the meaning set forth in Article I of the
Securities Purchase Agreement.
1.14 "Prospectus" shall have the meaning set forth in Section 1(a) of
the Revised Underwriting Agreement.
1.15 "Registration Statement" shall have the meaning set forth in
Section 1(a) of the Revised Underwriting Agreement.
1.16 "Shares" shall mean the shares of the Company's common stock that
are to be purchased and distributed by the Underwriters pursuant to the Final
Underwriting Agreement.
1.17 "Significant Subsidiaries" shall have the meaning set forth in
Section 1(c) of the Revised Underwriting Agreement.
1.18 "State Licenses" shall mean all State Regulatory Agency licenses,
permits and authorizations validly held by the Company and in full force and
effect and not subject to any conditions outside the ordinary course.
1.19 "State Regulatory Agency" shall mean any state public utility
commission, public service commission or other state regulatory authority with
jurisdiction over telecommunications matters.
1.20 "State Telecommunications Law" shall mean any state
telecommunications law; the rules and regulations thereunder; and the written
orders, policies
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<PAGE> 4
and decisions of any State Regulatory Agency and the courts interpreting each of
the above.
1.21 "SUSA System" means the portion of the Company's and its
subsidiaries' telecommunications network that is provided by means of the single
strand of fiber and related rights provided pursuant to that certain System Use
and Service Agreement dated as of January 1, 1994, between Williams
Communications, Inc. (formerly Vyvx, Inc.) and WilTel, Inc., as amended.
1.22 "Transactions" shall have the meaning set forth in the preamble to
the Revised Underwriting Agreement.
1.23 "Underwriters" shall have the meaning set forth in the preamble to
the Revised Underwriting Agreement.
The masculine form of words includes the feminine and the neuter and
vise versa, and, unless the context otherwise requires, the singular form of
words includes the plural and vise versa. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Addendum refer
to this Addendum as a whole, and not to any particular section or subsection.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 In addition to the representations and warranties deemed to have
been made in the Securities Purchase Agreement, the Company represents, warrants
and agrees that, unless previously disclosed in the Prospectus, the following
representations and warranties are true and correct (it being agreed for such
purposes that the obligations of the Investor pursuant to Section 3.6 of the
Securities Purchase Agreement shall apply to such representations and
warranties), except that no breach of the following representations and
warranties shall be deemed to occur unless such breach individually or in the
aggregate with other such breaches of the representations and warranties
contained in this Section 2.1 would have a material adverse effect on the
consolidated financial condition, results of operations, business or prospects
of the Company and its subsidiaries, taken as a whole:
(a) The Company and its subsidiaries possess all certificates, orders,
permits, licenses (including without limitation, the FCC Licenses and the State
4
<PAGE> 5
Licenses), authorizations, consents and approvals of and from, and have made all
filings and registrations with, the appropriate federal, state or foreign
regulatory authorities necessary for the conduct of the business of the Company
as it is conducted on the date of this Addendum and at the Closing Date, and,
except as listed in Schedule 2.1(a) hereto, the Company and its subsidiaries are
not in violation of or have not received any notice of proceedings relating to
the revocation or modification of any such certificates, orders, permits,
licenses (including without limitation, the FCC Licenses and the State
Licenses), authorizations, consents or approvals, or the qualification or
rejection of any such filing or registration, provided however, that the Company
has not filed for and obtained a certificate of public convenience and necessity
for its domestic interstate services pursuant to Section 214 of the
Communications Act but is providing domestic interstate services pursuant to the
blanket certificate of convenience and necessity granted nondominant interstate
common carriers under Section 63.01(a) (formerly, Section 63.07(a)) of the FCC's
rules and regulations;
(b) (i) With the exception of (A) the effect on easements, licenses,
rights of way and similar rights and interests of senior mortgages or other
senior encumbrances, and (B) except as otherwise disclosed in writing to the
Investor in Schedule 2.1(b)(i), and subject to the materiality standard set
forth in the first paragraph of this Section 2.1, the Company and its
subsidiaries have, and have no reason to believe they will not continue to have,
rights consisting of easements, licenses, rights of way and similar rights and
interests to operate and maintain their telecommunications network in its
present locations without material interruption to any customers or to the
network as a whole through at least January 1, 2017. (ii) The Company further
represents and warrants, that, with respect to such easements, licenses, rights
of way and similar rights (except easements, licenses, rights of way and similar
rights and interests that underlie the SUSA System): (A) since 1995, all
privately acquired easements, licenses and rights of way (except easements
licenses and rights of way acquired for non-telecommunications purposes)
obtained by the Company or its subsidiaries specifically permit the use of such
easements, licenses, or rights of way for telecommunication purposes (from the
time acquired or as amended or supplemented subsequent to such acquisition);
(B) all lawsuits (other than those (i) that are currently pending and listed on
Exhibit 2.1(b) hereto, and (ii) lawsuits involving actions in eminent domain or
condemnation by or for the Company or its subsidiaries) that have been brought
against the Company or its subsidiaries or their predecessors in interest
alleging the improper use of pipeline easements or rights of way for
telecommunication purposes have been dismissed or have been settled or resolved
with such settlement or resolution
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<PAGE> 6
resulting in the confirmation or conveyance of rights of way for
telecommunication purposes; (C) except as set forth on Schedule 2.1(b)(ii)(C),
rights of way, permits and franchises issued by state and local governments for
the operation of the telecommunications system have terms of 20 years or more or
are extendable to terms of 20 years or more and were issued during or after 1997
and are not subject to any complaint, notice of violation or revocation
proceeding by any such government agency; (D) no less than 99% of all easements
on private land granted by nongovernmental landowners other than railroad or
utility licensors are perpetual; (E) of all longitudinal easements or licenses
granted by railroad or utility licensors, not less than 50% are for a time
period of not less than twenty (20) years from January 1, 1997 and not less than
an additional 40% are for a time period of not less than 15 years from January
1, 1997; (F) all shared-use agreements and joint-use agreements with third
parties that permit the Company and/or its subsidiaries to share easements,
poles, lines or conduit for the placement of telecommunications facilities are
for a time period of not less than twenty (20) years from January 1, 1997 and
are in full force and effect and the Company is not in default thereunder, nor
do any facts or circumstances exist that with notice or passage of time would
constitute a default thereunder, nor are any such agreements subject to any
claim or demand (other than ordinary invoices) threatened termination or
litigation; (G) all microwave towers and beam paths utilized by the Company in
connection with its business are installed and operated pursuant to properly and
validly issued permits from the FCC and each such permit is in full force and
effect; and (H) as of August 31, 1999, (i) no more than 18% of the total miles
used in the Company and its subsidiaries' telecommunications systems (excluding
any telecommunications systems in which the Company or its subsidiaries have
indefeasible rights of use, rather than ownership, and except for easements,
licenses, rights of way and similar rights and interests that underlie the SUSA
System) relied upon railroad rights of way and (ii) no more than 10% of the
total miles used in the Company and its subsidiaries' telecommunications systems
(excluding any telecommunications systems in which the Company or its
subsidiaries have indefeasible rights of use, rather than ownership, and except
for easements, licenses, rights of way and similar rights and interests that
underlie the SUSA System) relied upon rights of way or easements held by other
utility companies without any direct contractual relation ships between the
Company or its subsidiaries and the underlying landowners.
(c) The execution and delivery of the Securities Purchase Agreement and
this Addendum, in each case by the Company, and the consummation by the
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<PAGE> 7
Company of the transactions contemplated therein and herein, will not violate
the Communications Act or any State Telecommunications Law;
(d) Except for any required approval by, or notification to, the FCC in
connection with the Investor's right to representation on the Company's Board of
Directors pursuant to Section 8.7 of the Securities Purchase Agreement, no
consent, approval or authorization of, or filing with the FCC or any State
Regulatory Agency by the Company is necessary for the execution and delivery of
the Securities Purchase Agreement and this Addendum, in each case by the
Company, and the consummation of the transactions by the Company contemplated
therein and herein;
(e) Except as set forth on Schedule 2.1(e) hereto, there is no
unsatisfied adverse FCC or State Regulatory Agency order, decree or ruling
outstanding against the Company or in respect of any of the FCC Licenses or
State Licenses, and there is no proceeding (including any rulemaking
proceeding), complaint or investigation against the Company or in respect of any
of the FCC Licenses or State Licenses pending or threatened before the FCC or
any State Regulatory Agency (including any pending judicial review of such an
action by the FCC or any State Regulatory Agency), except for proceedings
affecting the industry generally to which the Company is not a specific party;
(f) Each of the Company's facilities subject to regulation by the FCC
complies with the FCC's environmental rules, including, but not limited to, FCC
regulations concerning RF radiation hazards;
(g) The Company does not control Concentric Network Corporation within
the meaning of the Communications Act; and
(h) The provision of services by the Company and its affiliates to the
Investor and its affiliates in connection with the strategic alliance described
in the Prospectus will not violate any agreement of the Company between the
Company and its affiliates, on the one hand, and MCI WorldCom, Inc. and its
affiliates, on the other hand.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
3.1 Except for any required approval by, or notification to, the FCC in
connection with the Investor's right to representation on the Company's Board of
Directors pursuant to Section 8.7 of the Securities Purchase Agreement, no
consent, approval or authorization of, or filing with the FCC or any State
Regulatory Agency by the Investor is necessary for the execution and delivery of
the Securities Purchase Agreement and this Addendum, in each case by the
Investor, and the consummation of the transactions by the Investor contemplated
therein and herein.
ARTICLE IV
COVENANTS OF THE COMPANY
4.1 From the date of this Addendum until the Effective Date, the
Company shall notify the Investor if any events have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, and as a
result of which event the Company has deter mined that it is necessary to amend
or supplement the Prospectus.
4.2 The Company shall apply for the listing of the Common Stock on the
New York Stock Exchange, and shall use its reasonable best efforts to complete
that listing, subject only to official notice of issuance, prior to the First
Delivery Date.
ARTICLE V
ADDITIONAL CONDITIONS TO THE INVESTOR'S OBLIGATIONS
The consummation of the transactions contemplated by Article II of the
Securities Purchase Agreement are further subject to satisfaction or waiver by
the Investor of the following additional terms and conditions:
5.1 The representations and warranties of the Company contained in
Section 2.1 of this Addendum (as qualified in such Section 2.1) and those deemed
to have been made pursuant to Section 3.3 of the Securities Purchase Agreement
shall be true and correct on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing;
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provided, however, that if the Company, with the consent of the Investor, enters
into any agreement as a result of which a representation or warranty shall not
be correct, such an agreement shall be deemed not to be a violation of this
provision.
5.2 All corporate proceedings and other legal matters incident to the
authorization of this Addendum, the Securities Purchase Agreement, the
Underwriting Agreement, the Common Stock, the Shares, the Registration Statement
and the Prospectus, the Transactions, the transactions contemplated herein and
therein and all other legal matters relating to this Addendum shall be
reasonably satisfactory in all material respects to counsel for the Investor,
and the Company shall have furnished to such counsel all documents and
information that it may reasonably request to enable it to pass upon such
matters.
5.3 Skadden, Arps, Slate, Meagher & Flom LLP shall have furnished to
the Investor their written opinion, as counsel to the Company, addressed to the
Investor and dated such Delivery Date, in form and substance reasonably
satisfactory to the Investor, to the effect that:
(a) The Company's obligations under Section 8.7 of the Securities
Purchase Agreement are legal, valid and binding obligations of the Company,
fully enforceable against the Company in accordance with the terms of such
Section 8.7 except to the extent that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditor's rights
generally and (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity);
(b) The Shares being delivered on such Delivery Date to the
Underwriters as contemplated by the Final Underwriting Agreement and the shares
of the Common Stock being delivered on such Delivery Date to the Investor in
connection with the Securities Purchase Agreement have been duly authorized and,
when issued and delivered against payment therefor, will be validly issued,
fully paid and non-assessable;
(c) Except as described in the Prospectus, to the knowledge of counsel,
there are no preemptive or other rights to subscribe for or to purchase, nor are
there any restrictions upon the voting or transfer of, any of the Shares or any
of the shares of the Common Stock pursuant to the Company's charter or by-laws
or any Applicable Contract (as defined below);
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(d) The statements contained in the Prospectus under the caption
"Description of Capital Stock, " insofar as they constitute summaries of matters
of law or summaries of provisions of the Common Stock, fairly summarize such
laws or such provisions in all material respects;
(e) To the best of such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the rules and
regulations promulgated thereunder which have not been described or filed as
exhibits to the Registration Statement. In rendering the opinion set forth in
this paragraph (e), counsel may state that it has relied solely on a review of
the Applicable Contracts;
(f) This Addendum and the Securities Purchase Agreement have been duly
authorized, executed and delivered by the Company to the Investor; and each of
the Transport Services Agreement and the Master Alliance Agreement has been duly
authorized, executed and delivered by the Company;
(g) To the best knowledge of counsel, the issuance and sale of the
Shares being delivered on such Delivery Date by the Company pursuant to the
Final Underwriting Agreement and the issuance and sale of the Common Stock being
delivered on such Delivery Date to the Investor in connection with the
Securities Purchase Agreement, and the execution, delivery and compliance by the
Company with all of the provisions of the Final Underwriting Agreement, this
Addendum and the Securities Purchase Agreement and Transport Services Agreement
and the Master Alliance Agreement and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a breach or
violation of any Applicable Contract, except to the extent such conflict,
breach, violation or default has not had or would not reasonably be expected to
have, a material adverse change in the consolidated financial condition, results
of operations, business or prospects of the Company and its subsidiaries, taken
as a whole, nor will such actions result in any violation of the provisions of
the charter or by-laws of the Company or any of its Significant Subsidiaries or
any Applicable Law or Applicable Order; and, except for the registration of the
Shares and the Notes under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws (as to which state securities
laws counsel need express no opinion) in connection with the purchase and
distribution of the Shares by the Underwriters, the purchase and distribution of
the Notes by the underwriters
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named in the Debt Underwriting Agreement and the purchase of the Common Stock by
the Investor, no Government Approval is required for the execution, delivery and
performance of the Final Underwriting Agreement, the Securities Purchase
Agreement or this Addendum or any of the other documents to be entered into by
the Company in connection with the other transactions contemplated by the
Securities Purchase Agreement and the consummation of the transactions
contemplated hereby and thereby, except for such Government Approvals as have
been obtained or made. In rendering the opinion set forth in this paragraph with
respect to conflicts with, or defaults under, or the imposition of liens,
charges or encumbrances pursuant to, Applicable Contracts, counsel may rely
solely on a certificate of the company regarding compliance with any covenant,
restriction or provision of any Applicable Contract that requires satisfaction
of a financial ratio or test or any aspect of the financial condition or results
of operations of the Company or any of its subsidiaries.
The term "Applicable Contracts" means those agreements of the Company
and its Significant Subsidiaries which are specifically identified to counsel by
the Company and listed on a schedule to counsel's opinion. The term "Applicable
Laws" means the Delaware General Corporation Law and those laws, rules and
regulations of the State of New York and the federal laws of the United States
of America which, in counsel's experience, are normally applicable to
transactions of the type contemplated by this Agreement but without counsel's
having made any special investigation concerning any other laws, rules or
regulations; provided that the term "Applicable Laws" does not include the
securities or antifraud laws of any jurisdiction or the rules and regulations of
the National Association of Securities Dealers, Inc. or any laws, rules and
regulations under the Communications Act or any laws, rules and regulations
under the public utility or telecommunications laws of any state or other
jurisdiction. The term "Applicable Orders" means any order of any governmental
agency or body or any administrative or court decree which is specifically
identified to counsel by the Company and listed on a schedule to counsel's
opinion, but shall not include any orders under the Communications Act or under
the public utility or telecommunications laws of any state or other
jurisdiction. The term "Governmental Approvals" means any consent, approval,
license, authorization or validation of, or notice to, or filing, recording or
registration with, any New York or federal executive, legislative, judicial,
administrative or regulatory body pursuant to Applicable Laws.
In rendering the opinion set forth in paragraph (g) with respect to
conflicts with, defaults under, and breaches or violations of, Applicable
Contracts, counsel
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need not express any opinion with respect to compliance with any covenant,
restriction or provision of any Applicable Contract that requires satisfaction
of a financial ratio or test or any aspect of the financial condition or results
of operations of the Company or any of its subsidiaries.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
to the extent specifically referred therein, the laws of the State of New York
and the General Corporation Law of the State of Delaware.
5.4 William Von Glahn, Senior Vice President of Law of the Company,
shall have furnished to the Investor his written opinion, addressed to the
Investor and dated such Delivery Date in form and substance reasonably
satisfactory to the Investor, to the effect that:
(a) The Company and each of its Significant Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective business requires such qualification, except to the
extent such failure to be qualified or in good standing would not have a
material adverse effect on the consolidated financial position, results of
operations, business or prospects of the Company and its subsidiaries taken as
a whole, and have all corporate power and authority necessary to own or hold
their respective properties and conduct the businesses in which they are
currently engaged, as described in the Registration Statement;
(b) To the best of such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its Significant Subsidiaries is a party or of which
any property or assets of the Company or any of its Significant Subsidiaries is
the subject which, if determined adversely to the Company or any of its
Significant Subsidiaries, could reasonably be expected to have a material
adverse effect on the consolidated financial position, results of operations,
business or prospects of the Company and its subsidiaries, taken as a whole; and
to the best of such counsel's knowledge, no such proceedings are threatened or
pending by governmental authorities or threatened by others;
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(c) Except as described in the Prospectus, to the best of such
counsel's knowledge, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities registered
pursuant to the Registration Statement;
(d) Except as set forth in a Schedule thereto, to the best knowledge of
such counsel, after reasonable inquiry, there is no unsatisfied adverse FCC
order, decree, or ruling outstanding against the Company or in respect of any of
the FCC Licenses, and there is no proceeding (including any rulemaking
proceeding), complaint or investigation against the Company or in respect of any
of the FCC Licenses pending or threatened before the FCC (including any pending
judicial review of such an action by the FCC), except for proceedings affecting
the industry generally to which the Company is not a specific party.
(e) The statements contained in the Prospectus under the captions "Risk
Factors - Our business is subject to regulation that could change in an adverse
manner," "Regulation" and "Description of Indebtedness and Other Financing
Arrangements," to the extent that they constitute matters of law, are summaries
of legal matters or legal proceedings or summaries of the provisions of the
Indenture, the Notes, or any other documents relating to the financing
arrangements described therein, have been reviewed by counsel and are correct in
all material respects, and the opinion of such counsel filed as Exhibit 5.1 to
the Registration Statement is confirmed and the Investor may rely upon such
opinion as if it were addressed to the Investor;
(f) The Company is in compliance in all material respects with all
presently applicable provisions of ERISA: no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has
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occurred, whether by action or by failure to act, which would cause the loss of
such qualification; and
(g) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
Significant Subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or previously
owned or leased (but not including property on which the Company had or has
easements or similar rights) by the Company or its Significant Subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the consolidated
financial position, results of operations, business or prospects of the Company
and its subsidiaries, taken as a whole; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its Significant
Subsidiaries or with respect to which the Company or any of its Significant
Subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the consolidated financial position,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole.
In rendering such opinion, such counsel may state that his opinion is
limited to matters governed by the Federal laws of the United States of America,
to the extent specifically referred to therein, the laws of the State of New
York and the General Corporation Law of the State of Delaware.
5.5 The Company shall have furnished to the Investor a certificate,
dated such Delivery Date, of its Chairman of the Board, its President, a Vice
President or its chief financial officer stating that:
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(a) Subject to the proviso in Section 5.1 of this Addendum, the
representations, warranties and agreements of the Company in Article II hereof
and Article III of the Securities Purchase Agreement are true and correct as of
such Delivery Date; the Company has complied with all its agreements contained
herein and therein; and the conditions to the obligations of the Company set
forth in Article VI of the Securities Purchase Agreement and Article IV hereof
have been fulfilled; and
(b) He has carefully examined the Registration Statement and the
Prospectus and, in his opinion (A) as of the Effective Date, the Registration
Statement and Prospectus did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B) as of the
Delivery Date, since the Effective Date no event has occurred which should have
been set forth in a supplement or amendment to the Registration Statement or the
Prospectus.
5.6 Since the date of the latest audited financial statements included
in the Prospectus (A) neither the Company nor any of the Significant
Subsidiaries shall have sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus or (B)
there shall not have been any material change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (A) or
(B), is, in the judgment of the Investor, so material and adverse as to make it
impracticable or inadvisable to proceed with the purchase of the Common Stock by
the Investor on such Delivery Date on the terms and in the manner contemplated
in the Securities Purchase Agreement.
5.7 The New York Stock Exchange, Inc. shall have approved the Common
Stock for listing, subject only to official notice of issuance.
5.8 The Investor shall have received evidence satisfactory to it that
each of the Transactions (other than the sale of the Common Stock under the
Securities Purchase Agreement and the offering of the Notes) shall have occurred
or will occur simultaneously with the sale of the Common Stock under the
Securities
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Purchase Agreement on the Closing Date, including the issuance of the
intercompany note to The Williams Companies, Inc. and the concurrent initial
public offering of the Shares, in each case as described in the Prospectus
without modification, change or waiver, except for such modifications, changes
or waivers as have been specifically identified to the Investor and which in the
judgment of the Investor do not make it impracticable or inadvisable to proceed
with the purchase of the Common Stock on the Closing Date on the terms and in
the manner contemplated in the Securities Purchase Agreement.
5.9 Counsel to the Company shall have notified counsel to the Investor
of any material change to Section 1, Section 5 and Section 7 of the Revised
Underwriting Agreement made prior to and until the complete and proper
execution of the Final Underwriting Agreement by the parties thereto and, upon
the Investor's timely request, the Company shall have consented to any
reasonable amendment of this Addendum, in accordance with Section 15.7 of the
Securities Purchase Agreement and Section 5.1 of this Addendum, that provides
the Investor with the same benefit provided to the Underwriters in any such
material change.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Addendum shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Investor.
ARTICLE VI
TELMEX AND INTEL
6.1 The parties agree that Section 2.1(b)(i) of the Securities Purchase
Agreement is hereby amended to read in its entirety as follows:
"(i) $500,000,000 (unless TelMex (as defined in Section 2.2)
makes the purchase contemplated by Section 2.2. herein, in which case
$425,000,000) divided by the Net IPO Price or".
6.2 The Securities Purchase Agreement is hereby amended to add the
following Section 2.2 and to renumber the current Sections 2.2 and 2.3
accordingly:
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"2.2 TelMex Assignment. The provisions of Section 15.13 hereto
notwithstanding, SBC hereby consents to the purchase by Telefonos de Mexico,
S.A. de C.V., a Mexican corporation ("TelMex"), at the Closing, the number of
shares of Common Stock equal to $75 million divided by the Net IPO Price that
SBC has agreed to purchase as set forth in Section 2.1 hereof, as amended. In
the event of such purchase, there shall be a direct sale by the Company to
TelMex of the number of shares contemplated by this paragraph and pursuant to
the Securities Purchase Agreement between the Company and TelMex, dated May 25,
1999 (the "WCGI/TelMex Agreement"), without any representation, warranty or
other covenant made relating thereto by SBC, and the Company shall hold SBC
harmless from any and all claims arising out of or with respect to the purchase
of such shares by TelMex. No other right or interest is assigned hereby,
including without limitation, the rights under Article VIII hereof, or the
rights under the Alliance Agreement between SBC and TelMex dated as of May 25,
1999. If the Company learns that TelMex does not intend to purchase such shares
from the Company at the Closing, then the Company shall provide SBC written
notice no later than the latter of (x) one business day after learning of such
intention, or (y) three business days before the Closing. If TelMex does not
purchase such shares from the Company at the Closing, then SBC shall purchase
such shares at the Closing.
Without limiting the foregoing, TelMex shall not be considered an
Investor under Section 15.13 hereto for the purposes of this Agreement or the
Purchase Agreement Addendum (as hereinafter defined)."
6.3 The parties agree that, the provisions of Section 6.2 of this
Addendum notwithstanding, the Company may issue up to $25,000,000 of Common
Stock to TelMex pursuant to the WCGI/TelMex Agreement without SBC's consent and
whether or not SBC makes the assignment described in Section 6.2 above. SBC
hereby waives any preemptive rights it may have under Section 8.2 of the
Securities Purchase Agreement with respect to the issuance of Common Stock to
TelMex pursuant to the WCGI/TelMex Agreement.
6.4 (a) The parties agree that, in the event that the Company sells
$200 million of Common Stock to Intel Corporation ("Intel") pursuant to the
Securities Purchase Agreement (the "Intel Agreement") dated as of May 24, 1999,
by and among the Company, The Williams Companies, Inc. and Intel, the Investor
shall be entitled to purchase at the Net IPO Price that number of additional
shares of Common Stock determined as set forth in this Section 6.4(a) (the
"Intel Gross-up Amount"). The "Base Percentage" shall be determined by dividing
the
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number of shares of Common Stock purchased by the Investor pursuant to Section
2.1(b)(i) of the Securities Purchase Agreement by the aggregate number of shares
of Common Stock and Class B Common Stock outstanding immediately prior to the
issuance of shares of Common Stock pursuant to the Intel Agreement plus (without
duplication) the number of shares of Common Stock being issued pursuant to the
WCGI/TelMex Agreement, but excluding any shares of Common Stock that shall have
theretofore been issued pursuant to the over-allotment option granted to the
Underwriters under the Final Underwriting Agreement. The "Gross-up Percentage"
shall be equal to one minus the Base Percentage. The "Intel Share Amount" shall
be the number of shares of Common Stock issued pursuant to the Intel Agreement
at the Net IPO Price. The Intel Gross-up Amount shall be determined by dividing
the Intel Share Amount by the Gross-up Percentage and then subtracting the Intel
Share Amount. Such right shall be in satisfaction of any and all preemptive
rights the Investor may have under Section 8.2 of the Securities Purchase
Agreement with respect to the issuance of shares pursuant to the Intel Agreement
and such right can only be exercised at the time of the closing of the sale to
Intel and upon prior notice by SBC to the Company. The Investor hereby agrees
and acknowledges that its right to purchase shares pursuant to this subsection
6.4(a) is subject to the provisions of Section 8.5 of the Securities Purchase
Agreement and to the consummation of the sale to the Investor of the shares that
it is required to purchase pursuant to Sections 2.1 and 2.2 of the Securities
Purchase Agreement.
(b) The parties agree that, in the event there is an exercise by the
Under writers of the overallotment option provided for in Section 2 of the Final
Underwriting Agreement, the Investor shall be entitled to purchase at the Net
IPO Price that number of shares of additional shares of Common Stock determined
as set forth in this Section 6.4(b) (the "Overallotment Gross-up Amount"). The
"Overallotment Share Amount" shall be the number of shares of Common Stock
issued pursuant to the overallotment option granted to the Underwriters under
the Final Underwriting Agreement. The Overallotment Gross-up Amount shall be
determined by dividing the Overallotment Share Amount by the Gross-up Percentage
and then subtracting the Overallotment Share Amount. Such right shall be in
satisfaction of any and all preemptive rights the Investor may have under
Section 8.2 of the Securities Purchase Agreement with respect to the issuance of
shares pursuant to such overallotment option and such right can only be
exercised at the time of the closing of the sale to Intel or, if later, the
closing of the issuance of shares pursuant to such overallotment option and upon
prior notice by SBC to the Company. The Investor hereby agrees and acknowledges
that its right to purchase
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shares pursuant to this subsection 6.4(b) is subject to the provisions of
Section 8.5 of the Securities Purchase Agreement and to the consummation of the
purchase by the Investor of the shares that the Investor has agreed to purchase
pursuant to Sections 2.1 and 2.2 of the Securities Purchase Agreement.
6.5 The parties hereby agree and acknowledge that, except as otherwise
expressly provided in this Addendum, the Investor shall continue to have those
preemptive rights set forth in Section 8.2 of the Securities Purchase Agreement
with respect to future issuances of common equity securities by the Company and
that any waiver of such rights by the Investor must be in writing.
ARTICLE VII
WAIVER
7.1 Pursuant to Sections 15.7 and 15.8 of the Securities Purchase
Agreement: (i) the Investor hereby waives the obligation of the Company to
deliver the Underwriting Agreement on March 15, 1999; (ii) the Company hereby
waives the obligation of the Investor to request any additional representations
and warranties five days after the Revised Underwriting Agreement Delivery Date;
and (iii) the Investor hereby waives the obligation of the Company to deliver
this Addendum 15 days after the Revised Underwriting Agreement Delivery Date.
7.2 The parties hereby agree that Sections 3.1 and 3.5 of the
Securities Purchase Agreement have been satisfied.
7.3 The waivers set forth in this Article VII are limited as specified
and shall not constitute a modification, acceptance or waiver of any other
provision of the Securities Purchase Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 All provisions of Article XV of the Securities Purchase Agreement
are fully incorporated as though repeated verbatim in this Addendum in their
entirety and shall apply to this Addendum with full force and effect.
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IN WITNESS HEREOF, the parties hereto have executed this
Securities Purchase Agreement Amendment and Addendum as of the date first above
written.
WILLIAMS COMMUNICATIONS GROUP, INC.
By: /s/ Lawrence C. Littlefield, Jr.
--------------------------------
THE WILLIAMS COMPANIES, INC.
By: /s/ Keith E. Bailey
-------------------
SBC COMMUNICATIONS INC.
By: James A. Kahan
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