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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-29375
SAVVIS COMMUNICATIONS CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 43-1809960
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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12007 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
(Address of principal executive offices) (Zip Code)
(703-453-7500)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act: Common stock, par
value $.01 per share
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 15, 2000 was approximately $670,465,000.
The number of shares of the registrant's common stock outstanding as of
March 15, 2000 was 92,892,297.
DOCUMENTS INCORPORATED BY REFERENCE
None
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SAVVIS COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
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PART I
Item 1. Business ..................................................................... 3
Item 2. Properties ................................................................... 33
Item 3. Legal Proceedings ............................................................ 34
Item 4. Submission of Matters to a Vote of Security Holders .......................... 34
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ........ 35
Item 6. Selected Financial Data ...................................................... 35
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 38
Operations. ..................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ................... 44
Item 8. Financial Statements and Supplementary Data .................................. 44
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial 44
Disclosure ...................................................................
PART III
Item 10. Directors and Executive Officers of the Registrant ........................... 45
Item 11. Executive Compensation ....................................................... 47
Item 12. Security Ownership of Certain Beneficial Owners and Management ............... 55
Item 13. Certain Relationships and Related Transactions ............................... 56
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .............. 59
Signatures ................................................................... 62
Index to Consolidated Financial Statements ................................... F-1
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PART I
ITEM 1. BUSINESS.
Cautionary Statement
Except for any historical information, the matters we discuss in this
report on Form 10-K concerning our company contain forward-looking statements.
Any statements in this report on Form 10-K that are not statements of historical
fact, are intended to be, and are, "forward-looking statements" under the safe
harbor provided by Section 27(a) of the Securities Act of 1933. Without
limitation, the words "anticipate," "believe," "estimate," "expect," "intend,"
"plan" and similar expressions are intended to identify forward-looking
statements. The important factors we discuss below and under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," as well as other factors identified in our filings with the SEC and
those presented elsewhere by our management from time to time, could cause
actual results to differ materially from those indicated by the forward-looking
statements made in this report. These factors include those set forth in Item I
under the heading "Business -- Risk Factors."
OVERVIEW
The terms "SAVVIS," "we," "us" and "our" as used in this report refer to
SAVVIS Communications Corporation, a Delaware corporation, formerly SAVVIS
Holdings Corporation, and its subsidiaries, except where by the context it is
clear that such terms mean only SAVVIS Communications Corporation. The term
"Bridge" as used in this report refers to Bridge Information Systems, Inc., a
Missouri corporation, which owns approximately 49% of our outstanding common
stock.
We are a rapidly growing provider of high quality, high performance global
data networking and Internet-related services to medium and large businesses,
multinational corporations and Internet service providers. We currently offer
the following services:
o MANAGED DATA NETWORKING SERVICES that provide secure, high quality data
communication links over our network to connect a customer's
geographically dispersed offices, known as intranets, or to connect with
its customers and suppliers, known as extranets.
o HIGH BANDWIDTH INTERNET ACCESS SERVICES including dedicated access and
digital subscriber line, commonly known as DSL, services and Internet
security services which connect our customers to the Internet at high
speeds.
o COLOCATION SERVICES that allow our customers to locate their
mission-critical content and networking hardware in our data centers which
provide a highly secure, fault tolerant environment.
We began commercial operations in 1996, offering Internet access services
to local and regional Internet service providers. In April 1999, we were
acquired by Bridge, a global provider of real-time and historical financial
information and news regarding stocks, bonds, foreign exchange and commodities
to the financial services industry, which it delivered to an estimated 235,000
trading terminals around the globe as of December 31, 1999. Bridge constructed a
highly redundant, fault tolerant network based on Internet protocol and ATM
technologies to service some of the largest financial institutions and
institutional investors in the world. In September 1999, the SAVVIS ProActiveSM
Network was created through the combination of the network of Bridge, which
network was constructed to meet the exacting requirements of the financial
services industry worldwide, and the SAVVIS network, which was constructed to
provide high quality Internet access in the United States. Both of these
networks have been operational since 1996 and we refer to the combined network
as the "SAVVIS ProActiveSM Network."
On February 18, 2000, simultaneously with the completion of our initial
public offering, we acquired the Internet protocol network assets of Bridge for
total consideration of approximately $88 million and the employees of Bridge who
operate that network were transferred to us. This transaction significantly
expanded our managed data networking services, which we began offering in
September 1999.
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Pursuant to a network services agreement between Bridge and us, Bridge pays
us for the use of the SAVVIS ProActiveSM Network to deliver Bridge's content and
applications to over 4,500 financial institutions, including 75 of the top 100
banks in the world and 45 of the top 50 brokerage firms in the United States.
Since January 1996, Bridge has converted a substantial portion of its customers
from less technologically advanced protocols to its Internet protocol network.
As of December 31, 1999, of Bridge's estimated 235,000 terminals, an estimated
135,000 terminals were connected to the SAVVIS ProActiveSM Network. Bridge has
advised us that it intends to convert the remaining 100,000 terminals on its
other networks to the SAVVIS ProActiveSM Network over the next three years. As
Bridge converts terminals, we expect it to order additional connections from us
under the network services agreement. In addition, while over 4,500 financial
services companies are customers of Bridge and we only derive revenue from
Bridge for delivering Bridge content and applications to these companies, we
intend to aggressively market our services to occupants of the 6,000 buildings
connected to the SAVVIS ProActiveSM Network, in particular to Bridge's customer
base. We currently provide Internet access services directly to approximately
1,150 customers.
The SAVVIS ProActiveSM Network architecture, which interconnects over 6,000
buildings in 83 of the world's major commercial cities in 43 countries, is based
on the following technologies:
o asynchronous transfer mode, commonly known as ATM, which supports the
transmission of all kinds of content and allows data to be prioritized;
o frame relay, which is a shared network technology commonly used in
communications networks; and
o Internet protocol, a communications protocol that is a core element of the
Internet and is used on computers, but that cannot currently reliably
deliver real-time data, unless operated over an ATM network, such as the
SAVVIS ProActiveSM Network.
Additionally, our 83 city global system connects to ten private Internet
access points, which we call PrivateNAPsSM, where our network connects to a
number of Internet service providers, including Sprint Corporation, Cable &
Wireless plc and UUNET, an MCI Worldcom company, allowing us to bypass the
congested public Internet access points. This network design enables us to
provide real-time data delivery and guarantee low latency and low data loss. It
also allows us to tailor our service offerings to our customers' needs and to
offer a range of quality of service levels.
We charge each customer an initial installation fee that typically ranges
from $500 to $5,000 and a monthly fixed fee that varies depending on the
services provided, the bandwidth used and the quality of service level chosen.
Our customer agreements are typically for 12 to 36 months. As of December 31,
1999, approximately 6% of our customer agreements, representing approximately 6%
of our revenues for the month of December 1999, were month-to-month and were
able to be terminated on 30 days' notice. We expect the proportion of customers
on month-to-month agreements will continue to decrease as we add new customers
and our sales force continues to pursue longer renewals.
Currently, our revenue is derived primarily from the sale of data
networking, Internet access and colocation services with Bridge representing
approximately 80% of our total revenue. Through December 31, 1998 and 1999, our
revenue was primarily derived from the sale of Internet access services to local
and regional Internet service providers in the United States. Beginning in late
1998, we expanded our service offering to corporate customers as well.
RELATIONSHIP WITH BRIDGE AND WELSH CARSON
Bridge is a privately held company whose principal shareholders are
investment partnerships managed by Welsh, Carson, Anderson & Stowe, or Welsh
Carson, a sponsor of private equity funds with extensive experience in the
communication and information services industries. On September 10, 1999, Bridge
sold in a private placement approximately 25% of its equity ownership in SAVVIS
to existing stockholders of Bridge. In addition, pursuant to an agreement dated
February 7, 2000, Bridge on February 28, 2000 sold 6,250,000 shares for cash of
SAVVIS common stock to an investment partnership sponsored by Welsh Carson at
the initial public offering price of $24 per share, totaling $150 million.
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Bridge currently owns approximately 49% of our outstanding common stock.
Investment partnerships sponsored by Welsh Carson currently own approximately
38% of Bridge's outstanding voting stock and approximately 16% of our
outstanding common stock.
In connection with our acquisition of Bridge's network, we entered into a
10-year network services agreement with Bridge that commits Bridge to purchase a
minimum of $105 million, $132 million and $145 million of network services from
us in 2000, 2001 and 2002, respectively. Thereafter, Bridge will be required to
purchase at least 80% of its network services from us, declining to 60% in 2006
through the end of the agreement in 2010. We will incur losses from the
operation of the network under the network services agreement, and had the
network services agreement been in effect in 1999, Bridge would have represented
approximately 83% of our 1999 revenues. We have instituted a lead referral
program for Bridge's approximately 500 sales representatives worldwide to
generate sales leads for us. We also entered into a number of other agreements
with Bridge, including a master establishment and transition agreement, an
equipment colocation permit, an administrative services agreement, a technical
services agreement, a GECC Sublease and a local network services agreement.
Together these agreements provided for, among other things, the transfer of
Bridge's technical and support personnel to us, and our purchase from Bridge of
support and administrative services, including help-desk services and network
operations center services. These agreements are described in more detail in
Item 13 of this report.
MARKET OVERVIEW
Market opportunity. As the Internet has emerged as a strategic business
component, investment in Internet services has begun to increase dramatically.
According to International Data Corporation, an independent research firm, the
demand for U.S. Internet and e-commerce services was $2.9 billion in 1997 and is
expected to grow to $22 billion by 2002, a 50% compound annual growth rate. In
addition, demand for data transport services is growing rapidly as evidenced by
International Data Corporation's estimate that Internet service providers'
corporate access revenues will grow from $2.9 billion in 1998 to $12 billion by
2003, a 32.5% compound annual growth rate. We believe a significant Internet
market will continue to be Internet infrastructure and usage.
Internet network services. Since the commercialization of the Internet in
the early 1990s, businesses have rapidly established corporate Internet sites
and connectivity as a means to expand customer reach and improve communications
efficiency. Internet access service is now one of the fastest growing segments
of the global telecommunications services market. According to International
Data Corporation, the number of Internet users worldwide reached 38 million in
1996 and is forecasted to grow to over 170 million by the year 2000. Internet
access services represent the means by which Internet service providers
interconnect users to the Internet or to corporate intranets and extranets.
Access services include dial-up access for mobile workers and small businesses
and high-speed dedicated access used primarily by mid-sized and larger
organizations. In addition to Internet access services, Internet services
providers are increasingly providing a range of value-added services, including
shared and dedicated web hosting and server colocation, security services, and
advanced applications such as Internet protocol-based voice, fax and video
services.
Corporate data network services. Other than Internet related services, the
majority of business data communications today take place over private or
managed corporate data and electronic data interchange networks. According to
International Data Corporation, the market for data network services in the
United States grew from approximately $3.0 billion in 1997 to approximately $5.5
billion in 1998. International Data Corporation expects that the market for data
network services in the United States will continue to grow rapidly to reach
approximately $12.8 billion in 2003.
Today, organizations employ local data networks, or local area networks, to
interconnect personal computers and workstations. The highly successful use of
local area networks for information-sharing, messaging and other applications
has led organizations to aggressively deploy wide area networks, which
effectively interconnect local area networks and replicate their functionality
across a much broader geographic area. The demand for wide area networks has
grown as a result of today's competitive business environment. Factors
stimulating higher demand include the need to provide broader and more
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responsive customer service and to operate faster and more effectively between
operating units, suppliers and other business partners. In addition, as
businesses become more global in nature, the ability to access business
information across the enterprise has become a competitive necessity.
Convergence between the Internet and corporate data networking. Today, many
businesses are utilizing Internet-related services as lower-cost alternatives to
several traditional telecommunications services. The near ubiquity and
relatively low cost of the Internet have resulted in its widespread use for
specific applications, most notably web access and e-mail. Internet protocol has
become the communications protocol of choice for the desktop and for local area
networks. As a result, Internet protocol wide area network implementation
requires no protocol conversion, reducing overhead and improving performance.
Many corporations are connecting their remote locations using intranets to
enable more efficient communications with employees, providing remote access for
mobile workers and reducing telecommunications costs by using value-added
services such as Internet protocol-based fax and video-conferencing.
Industry analysts expect the market for both Internet protocol-based data
networking services and Internet access to grow rapidly as companies increase
their use of the Internet, intranets, extranets and privately managed Internet
protocol networks. According to industry analyst Forrester Research, Inc., an
independent research firm, the total market for Internet services is projected
to grow from $6.2 billion in 1997 to approximately $49.7 billion in 2002.
Rapid growth in e-commerce. While most corporations' early use of the
Internet was to establish an Internet marketing presence, businesses today are
using the Internet much more aggressively: to generate new revenues, to increase
efficiency through improved communications with suppliers and other third
parties, and to improve internal communications. The rapid growth of e-commerce
encompasses both business-to-business and business-to-consumer communications
and transactions, and the projected growth of these markets over the next five
years is dramatic. Forrester Research, Inc. projects that the market for
business-to-business e-commerce will grow from $43 billion in 1998 to $1.3
trillion in 2003. In addition, Forrester Research, Inc. projects that the market
for business-to-consumer e-commerce will grow from $8 billion to $108 billion
over the same period.
Outsourcing of Internet related services. In order to capitalize fully on
the new opportunities presented by the Internet and e-commerce, businesses will
require high quality, reliable and flexible data communications and
infrastructure services capable of supporting mission-critical applications. We
believe that an increasing number of businesses will seek to outsource these
services to third-party providers for several reasons. First, the rapid growth
of Internet-related businesses has created a shortage of information technology
personnel skilled in Internet protocol and e-commerce development. Second, many
companies believe that establishing leadership in their industry with respect to
Internet-related services is important to the future of their business. Given
this posture, time to market is critical and turning to a specialized,
third-party provider can often shorten time to market. Finally, many
infrastructure services require significant up-front investment. Many companies
will choose to preserve their capital to invest in activities that are integral
to their business strategy and seek to develop their infrastructure by
purchasing services rather than investing in networks, systems and equipment.
Rapid growth in colocation and web site hosting. While in the past only the
largest companies provisioned their own data networking services, until recently
businesses of all sizes typically housed, maintained and monitored their own web
and content servers. As Internet-enabled applications become mission-critical,
larger and more difficult to develop and maintain and require increasing amounts
of investment, we believe a substantial number of businesses will outsource
their colocation and web site hosting requirements to third parties. Forrester
Research, Inc. projects that the web site hosting business, including
colocation, dedicated and shared hosting, will grow from less than $1 billion in
1998 to almost $15 billion by 2003. We believe that companies seeking Internet
protocol expertise, high levels of security, fault-tolerant infrastructure,
local and remote support and the cost benefits of a shared infrastructure will
be most likely to outsource these services.
Limitations of Internet protocol and the Internet. Despite the remarkable,
rapid success of Internet protocol, the Internet faces limitations that may
serve as a bottleneck between the full potential of Internet protocol and its
use in mission-critical applications. First, in Internet protocol routing,
packet
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data travels through the network without a pre-defined path or guaranteed
delivery. Individual packets may travel separate paths and arrive at the network
destination at different times. Second, Internet protocol packets cannot be
identified as belonging to one class of traffic or another. For example, in a
given flow of Internet protocol packets it is not possible to separate
"real-time" traffic, such as voice over Internet protocol, from lower priority
traffic, such as e-mail. Each of these issues limits the utility of Internet
protocol for mission-critical, real-time enterprise networks. While we believe
that an improved version of Internet protocol will be implemented, the timing
and efficiency of these improvements remain uncertain.
Bottlenecks at network access points. The Internet is a network of
networks. Communication among these networks takes place at access points where
they interconnect. Despite the near ubiquity of the Internet, there are only a
few major public network access points. However, since the introduction of
network access points, the volume of Internet traffic has increased
dramatically, often overwhelming network access points' capacity to handle the
smooth exchange of traffic. The public network access points are now space
constrained, have inadequate power and air conditioning, have poor security,
often employ older, less technologically advanced switching technologies, have
limited or no available maintenance or support staff, and are not centrally
managed. No single entity has the economic incentive or ability to facilitate
problem resolution, to optimize peering of data networks, or to bring about
centralized routing administration. As a consequence of the lack of
coordination, and in order to avoid the increasing congestion at the public
network access points, selected backbone providers have established connections
at private network access points, connecting to other backbone providers for the
exchange of traffic and bypassing public network access points.
BUSINESS STRATEGY
Our objective is to tap the rapidly growing market for reliable, high speed
data communications and Internet services. In pursuit of this objective, we
intend to:
Provide a single source for managed data network services and high quality
Internet services. Data communications and the Internet are mission-critical to
thousands of businesses worldwide and, according to industry studies, the market
for these services continues to grow rapidly. Corporations are continually
expanding and enhancing existing networks and deploying new services in response
to this growth. By providing a wide range of services for both Internet and
managed data networking services, we offer a single source solution to the key
challenges faced by corporate information technology managers implementing
Internet, intranet and extranet applications. Since the requirements and
internal capabilities of customers vary significantly, we offer our services on
a service-only basis and a fully managed basis, with service and equipment
included.
Capitalize on Bridge relationships to penetrate its customer base. We
intend to aggressively market our services to the over 4,500 Bridge customers
already connected to our network through both our sales force and the over 500
Bridge sales representatives around the world. We provide incentives to Bridge
employees to refer Bridge customers to us. Since Bridge customers are already
connected to our network, we believe we enjoy significant time-to-market, cost
and quality advantages and enhanced customer retention when delivering our
services to these customers.
Target potential customers in buildings connected to our network. We intend
to actively market our services to the businesses in the over 6,000 buildings
worldwide that are connected to our network. These buildings are generally
located in central business districts of major cities and are typically occupied
by multiple businesses. Because our network is already in place, we expect to
enjoy time-to-market, cost and quality advantages when delivering services to
current and new customers located in these buildings.
Expand our network and PrivateNAPsSM infrastructure. We intend to leverage
the substantial investments made in our network infrastructure and service and
support capabilities to service new customer segments, including large
corporations in other targeted vertical markets, medium and smallbusinesses and
Internet service providers. We intend to continue to expand our data network
infrastructure to connect new cities and new buildings to our network. Over the
next two years, we expect to establish facilities in 48 additional cities
worldwide. We believe that this expansion will allow us to
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continue to expand our customer base, improve our service offerings and improve
our economies of scale. We also intend to continue the expansion of our
PrivateNAPsSM with the addition of three PrivateNAPsSM by June 30, 2000. Given
the high volume of traffic that is carried on our network, we are also
evaluating the purchase of local and long haul fiber to further reduce network
operating costs.
Grow domestic and international distribution channels. We intend to
aggressively grow our distribution channels. We expect to significantly increase
the size of our sales force for both global data networking services and
Internet access services in 2000 and enter into distribution arrangements with
companies licensed to provide our services in markets where we do not directly
hold such licenses. We will also attempt to establish relationships with our
Internet service provider customers who are interested in cross-selling our
global data networking services to their existing customer base.
Provide enabling infrastructure for e-commerce services. We believe that
many of our target customers, particularly the financial services companies that
receive Bridge content and applications, are aggressively pursuing e-commerce
strategies. We believe that our network architecture of ATM technology and
PrivateNAPsSM, highly available domestic and international dial access platforms
and security services will enable businesses to communicate with customers and
suppliers over the Internet and secure websites. As a result, we believe that we
are well positioned to help our customers capitalize on the substantial
anticipated growth in e-commerce.
Develop and market new services. We intend to continue to develop new
services, such as voice and video, that will enable us to further leverage our
network infrastructure and our customer base. For example, we have deployed ATM
to the edge of our network and intend to aggressively deploy ATM devices at
customer premises allowing for the provision of multiple network applications
with different quality of service levels over the same local access lines and
customer equipment. The deployment of these devices will allow our customers to
combine services that they may currently buy from multiple vendors, each on a
different network, onto our network at a reduced cost. We are also in the
process of upgrading and expanding our data center facilities to over 250,000
square feet of space, and expect to offer complex web hosting services at these
facilities. We intend to further expand our relationship with Bridge to develop
tailored product offerings which bundle news, financial content and trading
applications with our data networking services. We also intend to develop
bundled content or applications and network services with other trading partners
targeted at new vertical markets.
SAVVIS SERVICES
We believe that we are well positioned to solve the major problems
currently facing Internet and data networking customers. We designed the SAVVIS
ProActiveSM Network to offer a guaranteed, superior level of performance for
both Internet and data networking services. We deliver a comprehensive range of
high performance, quality of service differentiated products, including data
networking, Internet access, intranets, extranets, colocation and other
services.
A common feature among all of the services that we provide to our customers
is the substantial flexibility to choose among a range of offerings, including
on a service-only basis and a fully managed basis. On a service-only basis, the
customer is responsible for the design and integration of its network and the
purchase of network hardware, relying on us only for network services. On a
fully managed basis, we are responsible for the design, implementation,
integration and ongoing support of the customer's network.
Global Data Networking Services
The SAVVIS ProActiveSM Network provides a reliable, high quality
environment to transfer private corporate data among offices, employees,
customers and suppliers because our network uses multiple backbones, switches
and local connections to attain a high level of redundancy and is monitored 24
hours a day, 365 days a year. Because all of our global data networking services
are carried over a single network, we are able to offer these services on a
cost-effective basis relative to less technologically advanced private line
networks, while providing comparable quality and security and significant
improvements in redundancy, flexibility and scalability.
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Managed Data Networking. Managed data networking services provide data
communication links over a shared network environment. Because we operate,
manage and monitor our global network end-to-end, we are able to provide our
customers with higher performance and greater reliability than networks that
utilize the public Internet. Customers can connect to our data network using
ATM, frame relay or Internet protocol technologies. Customers contract for
connectivity to our global network and configure software-based permanent
virtual circuits that emulate much of the functionality of private lines, but
with improved scalability and redundancy and the ability to "burst" beyond the
stated capacity of the permanent virtual circuits. Our managed data networking
services are designed for those customers that require a very high level of
quality and security for their networking services.
Virtual Private Network Services. For customers who want to realize the
cost benefits of a shared network but do not require the level of performance
and security of our managed data networking services, we offer our
Internet-based virtual private network services. Virtual private networks
utilize the near-ubiquity of the Internet to provide cost-effective connectivity
for businesses with large numbers of sites, sites that do not have high
bandwidth requirements, sites that are in remote locations or mobile workers. A
typical Internet-based virtual private network supports dial-up access,
resulting in extensive geographic coverage and, together with the implementation
of tunneling, encryption, authentication and access control technologies, can
establish a secure link between the mobile worker and the corporate network
environment. One of our primary competitive advantages is that our
Internet-based virtual private network customers are served by our high
performance network.
Packet Transport Services. We offer point-to-point data connection
services, which are implemented as ATM or frame relay permanent virtual
circuits, for customers requiring high bandwidth point-to-point network
communications.
Dial Access. By the end of 2000, we plan to offer local dial access in over
20 U.S. markets, toll- free dial access for all other U.S. markets as well as
international dial access. By the middle of 2001, we expect to provide local
dial access in approximately 100 U.S. cities, increasing to approximately 300
U.S. cities by the end of 2001. Our dial access service will enable mobile
workers, telecommuters and small-office and home-office users to connect to our
high quality global data network. This service is targeted at those businesses
with extensive extranets designed for e-commerce services and companies with a
significant number of mobile workers who demand reliable, high-quality dial-up
services.
Internet Access Services
We offer our customers in the U.S. a broad range of Internet access
services designed to meet the varied needs of corporate customers and regional
Internet service providers. Our Internet access services range from high-speed
continuous access provided by dedicated telephone circuits to lower-cost dial-up
services. The principal features of our Internet access services are the high
performance, reliability and flexibility provided by the SAVVIS ProActiveSM
Network that is connected to our system of PrivateNAPsSM allowing our customers
to bypass the congested public Internet access points. We plan to make these
services available outside the U.S. beginning in the third quarter of 2000. The
high performance of our Internet access services has been verified by our
analysis of data collected by Keynote Systems, Inc., which showed that we had
the second best mean download time in 1999.
Dedicated Access. We offer customers a range of bandwidth options, from 128
kilobits per second to 155 Mbps on a fully dedicated or burstable basis. We also
provide all required Internet protocol addresses, primary and secondary domain
name service, newsfeed service and network time protocol.
Ethernet Service. For customers that seek a cost-effective 100% fiber optic
network technology for high-speed Internet access, we offer our 10 Mbps Ethernet
service. Our Ethernet service transmits information through a customer's
existing local area network router. This service is an intermediate upgrade
between our 1.5 Mbps service and our fractional 45 Mbps service.
DSL Service. For commercial customers that seek cost-effective continuous
connectivity for high-speed Internet access, we offer symmetric DSL services at
speeds up to 1.5 Mbps. DSL services transmit information through a customer's
existing copper telephone lines by encoding the information in a digital format.
We currently offer DSL services in 16 U.S. cities, and we expect to add service
to approximately 12 additional cities by the end of 2000.
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Wholesale Internet Access. We provide wholesale Internet access to local
and regional Internet service providers who use our network to connect their
customers to the Internet.
Internet Security Services. For companies using the Internet, protection
from internal and external threats to their corporate network is extremely
important. We offer a broad range of security services designed to provide a
customer with the ability to:
o authenticate users attempting to gain access to its network;
o prevent intruders from accessing its network;
o protect the integrity of the content on its network; and
o encrypt secured transmissions of company data through the Internet.
We evaluate and assess a customer's security needs, recommend appropriate
security services, and implement, manage, monitor and maintain these services.
We also perform security audits to find deficiencies in a customer network and
in host computers attached to that network and recommend appropriate services.
Our security services utilize the products and services of Netrex, Inc., a
well-known Internet security provider.
Colocation Services
We offer customers a secure, fault-tolerant environment in which to locate
their mission-critical content and networking hardware. We provide these
services in data center facilities that are currently being upgraded and
expanded to over 250,000 square feet of space. These state-of-the-art facilities
are located directly on our network to provide high quality, cost-effective
Internet access and hosting to the web sites of our colocation customers. We
expect to complete upgrades and expansions during 2000 in Boston, London, New
York, St. Louis, Los Angeles, San Francisco, Dallas, Chicago and Washington,
D.C. By using our colocation facilities, customers enjoy a highly secure,
fault-tolerant environment and direct access to our global data network and
avoid significant capital outlays required to construct such facilities on their
own. Customers have physical and remote access to our colocation facilities 24
hours a day, 365 days a year, to manage, monitor and maintain their equipment,
or they may engage us to provide support services. Our colocation services are
targeted at content providers, Internet-centric businesses and application
service providers.
SALES AND MARKETING
We contact potential new customers through our direct sales force and our
recently implemented lead referral program. Our direct salespeople together with
our sales engineers develop sales proposals for potential new customers. After a
sale is completed and the services are implemented, the client solutions team
assumes the management of the customer relationship, handling support issues and
selling additional services and connectivity as the customer's business grows.
Direct Sales. Our direct sales force consisted of approximately 100 sales
representatives and sales engineers in the U.S. as of December 31, 1999. Our
direct sales force is specialized along product lines, which enables our sales
representatives to develop an expertise in a specific product area, including
customer applications and requirements. This specialization also allows us to
customize our sales compensation arrangements to the sales cycle, revenue and
margin characteristics of each product. All sales representatives take part in
an extensive training program designed to develop in-depth technical expertise
so they can better understand customers' complex networking needs and develop
customized solutions.
Our sales force is divided between our Global Networking Sales Division and
our Internet Access Sales Division. We employ a distributed sales model for
global networking sales to facilitate a consultative sales approach. Our global
data networking sales force currently consists of twenty people based in six
major cities in the U.S. In contrast, we have a centralized sales model for our
Internet Access Sales Division. Our Internet access sales force presently
consists of approximately 114 representatives based in Reston, Virginia. We
intend to locate additional centralized sales teams in Europe, Asia and Latin
America by the end of 2001.
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Bridge Lead Referrals. We expect to capitalize on our relationship with
Bridge, a major content provider to financial services companies, to generate
sales leads in the financial services market. As of December 31, 1999, Bridge
had approximately 500 sales representatives worldwide, located in the world's
key financial centers. These sales representatives support a customer base of
over 4,500 financial services companies already connected to our network. We
expect to be able to provide these businesses with additional services in a
rapid, cost-effective and scaleable manner. In addition to Bridge, we believe
that additional content providers will be interested in establishing lead
referral programs. A relationship with SAVVIS will enable a content provider to
deliver its service in a real-time, high quality manner and provide an
incremental revenue opportunity through a lead referral commission.
Alternate Channels. In addition to relationships with content providers, we
have developed new distribution arrangements with over 500 Internet-related and
communications companies. To help these companies compete in today's changing
market, our alternate channels strategy brings companies network infrastructure,
sales and technical support and value added data services. Through our Web based
access our partners have access to our lead referral program, free marketing
materials and collateral and an exclusive incentive promotion. Our channel
partners will benefit by generating additional revenues, providing a more
complete service bundle and reduce customer churn. We have identified
distribution opportunities with Internet service providers, competitive local
exchange carriers, DSL companies and other communications and Internet-related
companies in the United States, Europe, Asia and Latin America.
Client Solutions Team. Our client solutions team is responsible for
customer relationship management. The team alerts customers when their bandwidth
utilization approaches capacity and advises customers on methods to improve the
performance and security of their network using additional SAVVIS services. This
team is also able to cross-sell to existing customers additional services, such
as advising a managed data networking client on Internet and e-commerce
services.
Marketing. Our marketing programs are designed to build national and global
awareness of the SAVVIS brand name and its association with high performance,
high quality corporate data networking services and Internet services. We use
brand awareness and direct marketing programs to generate leads, accelerate the
sales process, retain existing customers and promote new products to existing
customers. Our print advertisements are placed in trade journals, newspapers and
special-interest publications. We participate in industry trade shows, such as
Networld+InterOP, IT Expo and Internet World. At the 1999 Networld+InterOP show,
our virtual private network services were named the "Best of Show" for wide area
network services. We also use direct mail, e-newsletters, widespread fax
distributions, surveys, telemarketing, Internet marketing, on-line and on-site
seminars, collateral materials, advertising, welcome kits and direct response
programs to communicate with existing customers and to reach potential new
customers. Many of these marketing programs are co-funded by our suppliers. Our
marketing programs are targeted at information technology executives, as well as
senior marketing and finance managers. We closely track the impact and
effectiveness of our primary marketing programs.
Sales Force Automation. We use our proprietary sales force automation
system to manage all pre-sales communications with our prospective customers.
All distribution and tracking of sales leads occur through this system. Sales
leads are imported from data sources such as corporate web sites, telemarketing,
direct mail and national advertising campaigns, and assigned regionally to the
desktops of the appropriate sales representatives. All contact with these
prospects is documented in the sales force automation system through every step
of the sales cycle, from initial contact to contract receipt. In addition, this
system allows sales management to monitor the sales activity of their specific
sales representatives and generate sales forecasts based on that activity.
Further, our sales force automation system tracks all marketing communications
with the prospective customers, allowing us to measure the effectiveness of
various collateral materials and marketing campaigns in an effort to maximize
our marketing dollars. Lastly, our sales people use our sales force automation
system to track and manage their personal sales prospects and to send customized
packages of sales literature, brochures and faxes directly from their computer
desktops, thereby improving sales efficiency.
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CUSTOMERS
We currently provide services to approximately 1,150 customers. On February
18, 2000, Bridge entered into a network services agreement with us and became
our largest customer. Assuming we had received the minimum revenues under the
network services agreement for the first year of the agreement in 1999, Bridge
would have represented approximately 83% of our 1999 revenues. We expect that
Bridge will account for a significant percentage of our revenues during 2000. No
individual customer accounted for more than 5% of our revenues during the year
ended December 31, 1999. We also provide services to many Internet service
providers and Internet-centric businesses.
Our contracts with our customers are typically for one to three years in
length. The Bridge network services agreement is a ten-year contract. Many of
our customer contracts contain service level agreements that provide for service
credits should we fail to maintain specified levels of quality.
CUSTOMER SERVICE
Our goal is to provide the highest level of customer service in the
industry. We believe that high quality customer service is critical to
attracting and retaining customers and to satisfying the rapidly growing data
networking requirements and Internet services needs of these customers. Our
comprehensive approach to customer service and satisfaction includes a focus on:
o providing written guarantees of service quality;
o providing services on a service only basis and a fully managed basis, with
service and equipment included, that are tailored to meet customer needs;
and
o providing effective management, monitoring and support for our
customers' data networks.
We believe our network architecture, proprietary routing policies and
industry leading service level agreements provide our customers with very high
service quality. We are able to offer our customers different levels of service
priority for their different data transmission needs over one high-quality
network. For example, e-commerce and real-time applications, such as voice, can
be assigned the highest level of quality of service, while other applications,
such as e-mail, can be assigned a lower priority of service. By assigning the
highest level of service only to mission-critical or real-time applications,
customers can lower their overall data services costs without compromising their
data networking requirements.
Customer Call Centers. Customer support personnel located in call centers
in St. Louis, Missouri, London, England and Singapore handle service inquiries
from our customers 24 hours a day, 365 days a year, and provide this service in
eight languages. These personnel are organized in client teams and are highly
trained to identify and resolve customer issues rapidly and completely. Our
customer call center support services are supplied to us by Bridge under a
ten-year technical services agreement. Bridge reported to us that in September
1999 its call centers answered an average of 6,000 calls per week, maintained an
average hold time of under 15 seconds and resolved 98% of customer issues with
front-line support personnel. To track trouble tickets and customer information,
Bridge uses a proprietary management platform based on Vantive enterprise
software, a highly scaleable platform for problem tracking and customer record
access and maintenance that is easily accessible by personnel at all of our
network operations centers. We use an integrated client/circuit information
database that allows our customer support personnel to quickly access a
customer's profile from any of our support centers. In our local markets, we or
Bridge have available to us over 270 field technicians who are experts in
Internet protocol, Unix, NT and ISDN technology and who are generally able to
respond to customer requests within two hours.
Management, Monitoring and Maintenance. We provide our customers with
detailed monitoring, reporting and management tools that allow them to review
their usage patterns, network availability, outage events, latency and data
loss. These tools allow our customers to evaluate the performance of our service
against our service level guarantee as well as review utilization and
performance data to facilitate their network planning and design activities.
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Service Level Agreements. The consistent, reliable performance of the
SAVVIS ProActiveSM Network enables us to provide effective service level
agreements to our customers. We believe that companies unable to support a
commensurate level of predictable network performance will not be able to
provide service level agreements with value to the customer or will do so at
substantial risk to their own business.
SAVVIS PROACTIVESM NETWORK INFRASTRUCTURE
OVERVIEW
The SAVVIS ProActiveSM Network reaches 43 countries, with facilities in 83
major cities, including 58 international cities and 25 U.S. cities. Our network
interconnects over 6,000 buildings worldwide and is based on ATM, frame relay
and Internet protocol technologies. In addition, our network incorporates ten
PrivateNAPsSM, which allows our Internet traffic to bypass the congested public
Internet access points.
We have designed our network to enable us to offer our customers high
speed, high quality services, as well as a range of quality of service levels
and multiple levels of redundancy. Our network is designed with:
Open System Architectures. Our network is based on ATM, frame relay and
Internet protocol technologies. These are open systems networking protocols that
are in widespread use in data communications. Internet protocol is the most
commonly used and fastest growing networking protocol in the world. By carrying
Internet protocol on our network, we generally allow our customers to connect to
their customers, suppliers and remote offices using equipment already installed
in their networks and the networks to which they connect. Additionally, by using
ATM and frame relay in our network, we enhance network utilization and quality
of service, and we are able to easily communicate with third party networks for
the delivery of traffic on and off our network without procuring special
interface technologies or devices.
Quality of Service Differentiation. Our network architecture allows us to
offer and guarantee different levels of service priority for customers'
different data transmission needs. For example, e-commerce and real-time
applications, such as voice, can be assigned the highest level of priority,
while other applications, such as e-mail, can be assigned a lower priority of
service. By offering a quality of service differentiated product, we enable
customers to select a price/performance combination that is appropriate for
their needs. As we deploy ATM devices at the customer premises in the first
quarter of 2000, customers will be able to run multiple applications, such as
Internet access, intranet and private voice, over the same equipment and local
access, thereby saving on local network transport and equipment costs.
High Reliability. We utilize multiple, redundant circuits, switches and
physical locations to substantially reduce the effects of a single point of
failure within our network. This redundancy, combined with our switching and
routing equipment, generally enables us to automatically reroute traffic when a
failure occurs, resulting in higher overall network performance and integrity.
Our backbone switches also incorporate high levels of equipment-specific
redundancies, resulting in higher levels of availability than those found in
basic routing platforms. We also employ uninterruptable power supplies and/or
electric generator back-ups at each switching facility, designed to limit the
impact of local power outages on our network.
Global Network Components
The components of our network include the following:
Switching Facilities. There are over 200 Lucent ATM and frame relay
switches, providing a highly redundant switch backbone deployed throughout the
SAVVIS ProActiveSM Network. We have over 300 backbone routers installed and
there are approximately 10,500 Nortel routers located in office buildings and on
Bridge's customers' premises. Our switches are located in secure facilities,
which provide highly
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reliable, direct access to high-speed telecommunications infrastructure. In each
switching facility, we rent space, install networking equipment, including ATM
or frame relay switches, routers and high-speed analog and digital modems.
Backbone Capacity. Our network is designed with a highly redundant backbone
infrastructure, including diversely routed long haul and local access
connections from multiple carriers. We interconnect our switching facilities
through high speed lines leased from a variety of carriers, including Qwest
Communications International, Inc., MCI Worldcom, Inc. and Broadwing, Inc.,
formerly known as IXC Communications, Inc. Our leased line connections range in
capacity from 45 Mbps through 155 Mbps in the U.S. and up to 45 Mbps
internationally. To enhance our redundancy, we lease ATM service from Sprint
Corporation. This service is delivered using the highest quality of service mode
available and our service connections range in capacity from 45 Mbps through 620
Mbps. The combination of our leased lines and Sprint ATM service makes our
transmission backbone highly redundant so that at least two diverse paths exist
between all of our switching facilities. The "fault tolerant" configuration of
our network allows data packets to travel on many alternate paths to connect
points on our network.
PrivateNAPsSM. For our customers' Internet traffic, we have built private
network access points, or PrivateNAPsSM, where we connect to the Internet
backbones operated by Sprint Corporation, Cable & Wireless plc and UUNET, an MCI
Worldcom company. At each of our PrivateNAPsSM, we are connected to these
carriers through transit agreements that allow us to connect to their Internet
networks for a monthly fee. Since we are a paying customer of each of these
Internet backbone providers, we believe we realize better response times,
installation intervals, service levels and routing flexibility than Internet
service providers that rely solely on free public or private peering
arrangements. We currently operate ten PrivateNAPsSM in the U.S. In addition, to
enhance our carrier redundancy, at each of our PrivateNAPsSM, we connect to
other Internet backbones through peering arrangements where each party to the
peering arrangement agrees to carry the other party's traffic for free. We have
peering arrangements in place with AboveNet Communications, Inc., DIGEX,
Incorporated, Exodus Communications, Inc., Frontier GlobalCenter, Level 3
Communications, LLC, PSINet Inc. and Williams Communications Group, Inc. These
peering arrangements allow for settlement-free, direct connections between
networks, where local access charges are generally split evenly between the
applicable parties. Smaller Internet service providers typically connect to our
network through transit agreements that allow them to connect to our network for
a fee.
Our PrivateNAPSM architecture combined with our proprietary routing
policies enables us to route customer traffic directly onto the Internet
backbone of its destination for a substantial portion of global Internet
addresses. This network architecture allows our customers' Internet traffic to
generally bypass congested public Internet network access points, thereby
reducing data loss and latency and improving reliability and performance. In
addition, customers directly connected to the same PrivateNAPSM get one-hop
access, meaning their data pass through only one router, when communicating with
each other, and two customers connected to different PrivateNAPsSM enjoy two-hop
access, meaning their data pass through only two routers, when communicating
with each other, in both cases completely bypassing the public Internet.
Dial Access Platforms. We are currently deploying 25 Nortel dial access
platforms in over 20 cities in the U.S., which we expect to have completed by
the end of 2000. By mid-2001, we plan to deploy dial access in approximately 100
U.S. cities, increasing to approximately 300 U.S. cities by the end of 2001. Our
dial coverage may be supplemented by toll free dial access where we do not have
local dial access, and by the end of 2001 the platforms are expected to contain
over 20,000 ports.
Colocation. We are in the process of upgrading and expanding our Internet
colocation data center facilities to over 250,000 square feet of space. We
expect to complete the upgrade and expansion during 2000 in Boston, London, New
York, St. Louis, Los Angeles, San Francisco, Dallas, Chicago and Washington,
D.C. All of these facilities will be served by multiple 2.5 gigabits per second
connections for local access. Development is underway to elevate these
facilities to state-of-the-art levels with high availability, mission-critical
environments, including uninterruptable power supplies, back-up generators, fire
suppression, separate cooling zones and seismically braced racks. These
facilities will be accessible 24
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hours a day, 365 days a year, both locally and remotely, and will have high
levels of physical security. These facilities include two fully redundant
colocation facilities in St. Louis, Missouri, each of which will contain
approximately 90,000 square feet, approximately 60,000 of which will be
subleased to Bridge.
Network Operations Centers
Our global network operations center, which is owned and managed by Bridge
and located in St. Louis, Missouri, operates 24 hours a day, 365 days a year,
and is staffed by over 20 of our skilled technicians. We also have regional
network operations centers in London and Singapore. These regional centers
operate for ensuring backup for the St. Louis facility. From these network
operations centers, we remotely monitor the components of the SAVVIS ProActiveSM
Network, including our PrivateNAPsSM, and perform network diagnostics and
equipment surveillance. The network operations centers use sophisticated,
proprietary network management platforms based on the Lucent NavisCore, HP
OpenView, and Nortel Optivity programs to monitor and manage our switching
facilities and our routers.
TECHNOLOGY OVERVIEW
Private networks. Private networks typically comprise a number of private,
leased lines that interconnect multiple corporate locations. The advantages of
private lines include quality, since capacity is reserved for the exclusive use
of the network owner, and security, since the owner's data transmissions are not
commingled with those of other customers. Private line networks have been most
popular in the U.S., where capacity prices are lowest. While private lines are
typically secure and reliable, they do not use network capacity efficiently and
are not flexible or scaleable as changes in network topology are implemented.
Shared networks. Until recently, prices for long-haul telecommunications
capacity outside of the U.S., particularly international capacity, were
relatively expensive. Since the advent of data networking, only users with
extremely high capacity requirements invested in private networks in these
locations. Most other users employed shared networking technologies, whereby
multiple corporate locations would be interconnected with the data network of a
major telecommunications carrier or value-added network service provider for
carriage to the appropriate destination.
X.25 was an early open shared network protocol that was designed to support
mission-critical communications over analog networks. X.25 has been extremely
popular outside of the U.S., where until recently private line networks have
remained expensive, and in developing markets where the telecommunications
infrastructure is sometimes unreliable. X.25 contemplates extensive error
detection and data recovery processes, which slows the effective rate of
transmission.
Today, ATM, frame relay and Internet protocol are driving the migration of
traffic from private line networks to shared networks and from older open
protocols such as X.25 to newer architectures.
Frame Relay. Frame relay evolved from X.25 networks and today is widely
used for applications such as local area network-to-local area network
communications. Unlike X.25, frame relay does not perform any complex error
detection or error recovery of data. As a result, it is a simpler and faster
technology. Frame relay circuits are effective to create a network of
interconnected sites because each site needs only one link into the frame relay
network to communicate with all other sites. Frame relay is less costly than
point-to-point private networks, and its software-defined "virtual circuits"
make it easier to alter network topology as connectivity requirements change.
One limitation of the frame relay protocol is its application for real-time
services. Frame relay packets are variable in length, and as large data files
transit the network they can cause delays at key aggregation and switching
points, often causing other traffic to be delayed. These delays can materially
degrade the quality of real-time services such as voice and video.
ATM. The ATM protocol was specifically designed to support the transmission
of all types of content, including data, video and voice, over a single network.
ATM generally has the ability to prioritize cells to ensure that real-time data
takes priority over less time-sensitive material when transiting the network.
This enables service providers to offer service guarantees with a greater degree
of confidence and facilitates the introduction of real-time services that are
difficult under other protocols.
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Additionally, ATM data cells are small and fixed in size, facilitating
high-speed line transport at speeds up to 2.5 billion bits per second. One
limitation of ATM is that the benefits created by the small, fixed nature of ATM
cells also create incremental traffic on the network. Each cell requires its own
identification and addressing information, which is repeated in each of many
individual ATM cells that comprise a given data transmission. The replication of
this "header" information generates additional overhead for the network,
requiring the network operator to provision additional transmission capacity.
Internet Protocol. Internet protocol is a simple, highly scaleable protocol
that is a core element of the architecture of the Internet and can be used
across most network technologies in use today. Internet protocol has also become
the communications protocol of choice for the desktop and the local area
network, thus data networking over Internet protocol requires no protocol
conversion, reducing overhead and improving performance. The protocol does not
distinguish among classes of traffic, which limits its ability to deliver
real-time services.
Our Network. We have built the SAVVIS ProActiveSM Network to take advantage
of the rapid growth of Internet protocol in corporate networks, to offer
customers the ability to run multiple applications on a single network and to
allow customers to choose the quality of service level which best meets their
needs. By building our network to run Internet protocol over ATM, we allow our
customers to overcome the limitations of Internet protocol and designate the
level of priority to be accorded to their traffic.
COMPETITION
The markets that we serve are intensely competitive. In addition, we expect
to face significant additional competition in the future from existing
competitors and new market entrants. Many of our competitors have greater
financial, technical and marketing resources, larger customer bases, greater
name recognition and more established relationships in the industries that we
operate in than we do.
We believe that a highly reliable network infrastructure, a broad range of
quality products and services, a knowledgeable sales force and the quality of
customer support are the primary competitive factors in our targeted markets and
that price is generally secondary to these factors. We believe that we presently
are well positioned to compete favorably with respect to most of these factors.
Our current and potential competitors in our targeted markets include:
Data Networking Companies. Several data networking companies such as Equant
N.V., Infonet Services Corporation, Concert Management Services Inc. and Global
One offer data networking services to business customers worldwide. These
services include ATM and frame relay, private line, Internet access and network
outsourcing. These companies have significant experience in offering tailored
services and market their expertise in providing these services and related
technology. For example, Reuters Group plc and Equant N.V. recently announced
that they intend to form a joint venture for the purposes of offering IP network
services to the financial services industry. There are also a number of new
entrants, such as Digital Island Inc., that are targeting specific niches to
deliver customers' data traffic worldwide.
Internet Service Providers. Our current and potential competitors in the
market include Internet service providers with a significant regional, national
or global presence targeting business customers, such as Apex Global Information
Services, Inc., AT&T Corp., Cable & Wireless plc, GTE Internetworking, ICG
Communications, Inc., Intermedia Communications Inc., PSINet Inc., Sprint
Corporation, UUNET, an MCI Worldcom company, Concentric Network Corporation and
Verio Inc. Many of these companies are developing Internet-based virtual private
network services that attempt to replicate some or all of the functionality of
our managed data networking services.
Telecommunications Carriers. Many large carriers, including AT&T Corp.,
British Telecommunications plc, Cable & Wireless plc, MCI Worldcom, Inc.,
Deutsche Telekom AG and Sprint Corporation, offer data networking and Internet
access services. They compete with us by bundling various services such as local
and long distance voice, data transmission and video services to their business
customers. We believe that there is a move toward horizontal integration by
telecommunications
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companies through acquisitions of or joint ventures with Internet service
providers to meet the Internet access and data networking requirements of
business customers. Accordingly, we expect to experience increased competition
from these telecommunications carriers.
Other Competitors. Because we offer a broad range of services, we
encounter competition from numerous businesses which provide one or more
similar services. For example, we compete with companies such as Exodus
Communications, Inc., Qwest Communications International Inc., Global Crossing
Ltd., DIGEX, Incorporated and Level 3 Communications, Inc. in the colocation
facilities market.
REGULATORY MATTERS
As with any provider of global data networking and Internet access
services, we face regulatory and market access barriers in various countries
resulting from restrictive laws, policies and licensing requirements. Our six
major markets consist of the United States, the United Kingdom, Germany, France,
Italy and Japan. Data networking and Internet access services are now open to
competition in all of these foreign markets, but a license is required, except
for France where no license is required. We believe that we are licensed to
provide data networking and Internet access services as an independent operator
under the applicable telecommunications regulations in the United Kingdom and
Italy, that in France we are authorized to provide such services without any
license and that in Germany we have notified the necessary authorities to allow
us to provide such services. In Japan, we are currently authorized to provide
data networking services only to Bridge and are in the process of making
application for the appropriate license to offer services to third parties.
In most other countries that we believe represent significant revenue
potential, our data networking and Internet access services are now open to
competition, although in most cases a license is required. In some of these
countries, including Australia, Austria, Belgium, Denmark, Finland, Hong Kong,
Luxembourg, The Netherlands, New Zealand, Norway, Puerto Rico, Spain, Sweden and
Switzerland, we are authorized to provide data networking and Internet access
services to Bridge and third parties. However, in the remainder of these
countries, including Brazil, Canada, Chile, India, Indonesia and the
Philippines, we are authorized to offer data networking services only to Bridge,
although with respect to Canada, we have already applied to provide services to
third parties. Our business plan does not contemplate selling significant
services outside of the U.S., except to Bridge, in the near term. Therefore, we
do not believe that our inability to offer services to third parties in these
countries is significant.
In addition, we face regulatory and market access barriers in countries in
which we do not operate but in which we have an obligation to purchase the
Bridge Internet protocol network assets that we have not already acquired in the
Bridge asset transfer. These Bridge network assets generally will not be
transferred to us as part of the Bridge asset transfer because of
telecommunications licensing or other regulatory requirements.
We are in the process of seeking regulatory approvals in some countries to
offer services to Bridge and third parties, including Greece, Ireland, Hungary,
Taiwan, and Venezuela and with respect to Mexico, Bridge only. Although we
expect the asset transfer to occur in these countries within one year after the
completion of our initial public offering we cannot assure you that we will
obtain any of these approvals. We do not believe that the failure to obtain
these licenses will have a material impact on our revenues as we do not expect
revenues from non-U.S. customers to be substantial in the near term.
World Trade Organization Agreement and its Implications
On February 15, 1997, 69 countries at the World Trade Organization reached
an agreement to liberalize market access and introduce national treatment in
basic telecommunications services. Since then, two of the 69 participants have
submitted improved basic telecommunications schedules and three World Trade
Organization members who did not participate in the negotiations have submitted
commitments, bringing the total number of governments with basic
telecommunications schedules to 72. In February 1998, the results of the World
Trade Organization negotiations on market access for basic telecommunications
services formally entered into force and became binding on the signatory
countries.
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Despite the World Trade Organization agreement, regulatory obstacles
continue to exist in a number of signatory countries. First, some signatory
countries made only limited commitments in terms of the services that they were
willing to liberalize and the timeframe in which they were willing to do so.
Second, some less developed signatory countries are not well prepared for
competition or for effectively regulating a liberalized market; gaining the
requisite experience and expertise is likely to be a long and difficult process.
Finally, even in liberalized countries, there remains considerable
"post-liberalization red tape," such as complicated licensing rules, foreign
ownership limits, high fees and undeveloped competition and interconnection
safeguards.
Corporate Presence. In a number of jurisdictions, we are permitted to
provide data networking or Internet access services to local customers only
after first establishing a corporate presence, by way of either the
incorporation of a subsidiary or the registration of a branch or representative
office. We have established or will establish such a local presence in each of
the jurisdictions where such a presence is legally required.
Regulatory Analysis by Service Type
Data Networking Services. The core of our data networking services business
is providing managed data networking services to corporate customers. The
managed data networking services that we provide are generally characterized as
data transmission services or value added services for licensing purposes. We
are authorized by law or by individual license or a general authorization
obtainable by simple notification or declaration by an automatic "class" license
to provide these services in the foreign countries in which we expect to
generate significant revenue from data networking services. In the European
Union member countries, such services may be provided upon the satisfaction of a
simple registration, notification or authorization procedure, in some cases,
without the need for any formality.
Internet Access Services. The Internet access services that we provide in
the U.S. do not require any authorization. The Internet access services that we
offer outside of the U.S. generally do not require any authorization beyond
those required for managed data networking services and value added services.
However, because the regulation of Internet access is ill-defined or in flux in
some countries, there is a risk that customers are using our network to access
the Internet in countries that may prohibit, or wish to prohibit, such access.
We may limit this risk by discontinuing such access if measures are taken or
threatened by the pertinent authorities to restrict the use of our network for
Internet access.
Substantive Regulation in Key Markets
The regulatory regimes applicable to the United States, the United Kingdom,
Germany, France, Italy and Japan, which will be our six major markets following
the Bridge asset transfer, as well as that of the European Union, are summarized
below.
United States. We believe that the regulatory framework governing the
provision of telecommunications services in the United States permits us to
offer all of our planned data networking services without significant legal
constraints. We provide these services on a resale basis or a facilities basis.
To the extent that any of these planned or future services require prior
authorization, either by the Federal Communications Commission, or FCC, or by a
state public utility commission, we believe there is no significant risk that
such an application would be denied or would face processing delays that would
have a material adverse effect on us.
Nevertheless, services offered over the Internet or using Internet protocol
may present distinct regulatory issues, as is also the case in the European
Union. The regulatory classification and treatment of some of these services has
not been resolved authoritatively in the United States, and it is possible that
various Internet-related services will be subject to prior authorization and to
as yet undefined terms and conditions under which such authorizations may be
granted.
The provision of basic telecommunications services on a common carrier
basis is subject to regulation in the United States. An entity that provides
such services on a common carrier basis is classified as a telecommunications
carrier. Interstate and international common carrier services provided
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by a telecommunications carrier are subject to the FCC's jurisdiction under
Title II of the Communications Act. Intrastate telecommunications services are
subject to regulation by the relevant state Public Utility Commission.
We believe that the products and services we offer are not subject to
regulation, but there is some risk that the FCC or a state commission could
determine that our products and services should require specific authorization
or be subject to other regulations. If that were to be the case, these
regulatory requirements could include prior authorization requirements,
tariffing requirements and the payment of contributions to federal and
state-created subsidy mechanisms applicable to providers of telecommunications
services. Some of these contributions would be required whether or not we would
be subject to authorization or tariff requirements.
There also is some uncertainty about the regulatory status of voice
services provided on data networks. If we were to offer voice services in the
future, there is some risk that those services could be subject to regulation
and that those services could be treated similarly to voice services provided
over conventional circuit-switched network facilities for purposes of making
payments to local telephone companies for origination and termination of calls
and for other purposes.
European Union. In the last ten years, the European Union has established a
comprehensive and flexible regulatory system, culminating in the full
liberalization of telecommunication networks and services effective on January
1, 1998. By that date, ten European Union member countries were required to
adopt a fully liberalized telecommunications regime. These countries are
Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands,
Sweden and the United Kingdom. The five remaining European Union countries,
Luxembourg, Ireland, Spain, Portugal and Greece, were allowed a derogation
allowing them to delay the full liberalization of their telecommunications
regime until a later date. As a result, Luxembourg liberalized its
telecommunications regime on July 1, 1998; Spain and Ireland liberalized on
December 1, 1998; and Portugal liberalized on January 1, 2000. Currently, only
Greece is not required to have a fully liberalized telecommunications regime.
Greece is required to liberalize by December 31, 2000.
The process of opening up the telecommunications markets in the European
Union was achieved through European Union legislation called directives.
Directives are addressed to and binding on European Union member countries and
require implementation into national law. There are two types of European Union
directives relating to telecommunications: first, directives adopted by the
European Commission aimed at liberalizing European Union markets and, second,
directives adopted by the European Council aimed at ensuring that a minimum set
of harmonized rules, to ensure fair competition, applies throughout the European
Union. All 15 European Union member countries were obligated to incorporate the
principles contained in these directives into their respective domestic legal
frameworks. However, the impact of the European Union directives has been
affected in some cases by late or inadequate implementation, as well as the
irregular enforcement by the domestic regulatory authorities of some European
Union member states.
United Kingdom. The Telecommunications Act of 1984 provides the regulatory
framework for the provision of telecommunications services in the United
Kingdom. The authorization regime established by this act is largely
infrastructure based, meaning that "systems" are licensed, with licenses for the
provision of specific services being the exception. This authorization regime
also is based on licenses, rather than regulations or other generally applicable
instruments. There are two broad types of licenses, individual and class.
Finally, with minor exceptions, regulatory treatment under this act does not
hinge on whether the license applies to data or voice.
We provide our managed data networking services and value added services on
an international basis under the Telecommunications Services License, which is a
class license. This license authorizes the provision of fixed telecommunications
services of any description, other than international voice services,
broadcasting and conditional access services. This license allows the connection
of the licensee's telecommunications system to essentially any other licensed
system, and allows the commercial supply of services to third parties from up to
20 premises. Internet access services are not subject to additional
service-specific regulation.
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Germany. The legal framework for the deregulation in the telecommunications
sector in Germany was transformed by the Telecommunications Act of 1996, which
became effective on August 1, 1996, and its implementing ordinances adopted
since then. This act has liberalized most telecommunications services, subject
to a licensing regime that is in conformity with European Community law in all
material respects. However, some telecommunications services, such as
asynchronous DSL, are not liberalized. Nevertheless, the managed data networking
services and value added services that we offer can be provided in Germany upon
notifying the regulatory authorities, which we have done.
France. The legal framework for regulation in the telecommunications sector
in France was transformed by the Telecommunications Act of 1996, which became
effective on July 28, 1996, and subsequent decrees on interconnection, universal
service, numbering, licensing and rights-of-way. This act has liberalized most
telecommunications services, subject to a licensing regime that is in conformity
with European Community law. The data networking services we provide, whether
managed data networking services or Internet access services, currently do not
require any form of authorization.
Italy. Pursuant to law No. 103/1995 and subsequent decrees, the provision
of telecommunications services in Italy to the general public is subject to the
granting of two specific authorizations from the Ministry of Communications. One
authorization relates to provision of telecommunications services through direct
access to the public network, including Internet access services, and one
authorization relates to provision of packet- and circuit-switched data services
or simple resale of capacity, including data transmission. For the provision of
telecommunications services through switched access to the public network, a
notice must be filed with the Ministry of Communication. Savvis has received
both of the above referenced authorizations and provided the requisite notice.
Japan. The legal framework for regulation in the telecommunications sector
in Japan is the Telecommunications Business Law. This law requires a Special
Type 2 License if a company makes its international communication facility,
including privately leased international lines, available to any third party for
the purpose of telecommunication by that third party. In this context, the term
"telecommunication" encompasses the act of data transmission. Accordingly, if a
company provides its customers access to an overseas database through its leased
lines, it will be required to obtain a Special Type 2 License. However, if a
company were to replicate the database in Japan and permit access to the
database from within the country, the Telecommunications Business Law would not
apply, even if all the information were transmitted directly to the database
from an overseas parent company or subsidiary. Under the Telecommunications
Business Law, information transfers exclusively between a parent company and its
subsidiary are exempt from licensing. Moreover, if a company provides Internet
access services directly or indirectly through the local Internet access
providers that hold a Type 1 License or a Special Type 2 License, it will only
be required to obtain a General Type 2 License, in general. We are in the
process of applying for a Special Type 2 License.
Regulatory Assessment of Other Markets
Europe, excluding European Union member countries. Telecommunications
services are liberalized in varying degrees in European countries that are not
European Union member countries. As a matter of practice, Switzerland and Norway
conform their regulatory frameworks to the European Union model and we are
authorized to provide services to Bridge and third parties in both countries. By
contrast, in Hungary, upon filing the necessary notification, a foreign owned
subsidiary may provide limited data networking services to a defined group and,
upon receipt of necessary licenses, may provide Internet access services. In
Poland, however, minimum local ownership requirements limit greatly the extent
to which data networking or Internet access services may be provided.
Asia, excluding Japan. Regulatory regimes vary greatly in character
throughout Asia. At the liberalized end of the range, countries such as
Australia and New Zealand have liberalized policies that require no licenses to
provide data networking and Internet access services and we are authorized to
provide services to Bridge and third parties in both countries. Other countries,
such as Taiwan, are open to competition, but require service providers to comply
with extensive licensing procedures, which we are in the process of processing.
At the more restrictive end, countries such as Indonesia and India require some
minimum level of domestic ownership in order to provide data networking and
Internet access services to persons other than Bridge.
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INTELLECTUAL PROPERTY
We do not own any or registered trademarks, except for our business name
and several product names for which we are in the process of applying, nor do we
hold any material licenses, franchises or concessions. We enter into
confidentiality and invention assignment agreements with our employees and
consultants and control access to and distribution of our proprietary
information.
EMPLOYEES
As of December 31, 1999, we employed 214 full-time persons, 67 of whom were
engaged in engineering, operations and customer service, 117 in sales and
marketing, and 30 in finance and administration. Approximately 100 personnel
were transferred from Bridge to SAVVIS upon the transfer of the Bridge network
on February 18, 2000. None of our employees is represented by a labor union, and
we have not experienced any work stoppages to date. We consider our employee
relations to be good.
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RISK FACTORS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, set forth below are cautionary statements
identifying important factors that could cause our actual results to differ
materially from those projected in any forward-looking statements made by or on
behalf of us, whether oral or written. We wish to ensure that any
forward-looking statements are accompanied by meaningful cautionary statements
in order to maximize to the fullest extent possible the projections of the safe
harbor established in the Private Securities Litigation Reform Act of 1995.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the following important factors that could cause our
actual results to differ materially from those projected in our forward-looking
statements.
RISKS RELATED TO OUR BUSINESS
A SIGNIFICANT PORTION OF OUR REVENUES IS EXPECTED TO COME FROM BRIDGE, AND THE
LOSS OF BRIDGE AS A CUSTOMER OR REDUCED DEMAND FROM BRIDGE WOULD MATERIALLY
ADVERSELY AFFECT OUR BUSINESS.
We have entered into a network services agreement with Bridge whereby
Bridge became our largest customer. Under the network services agreement, Bridge
committed to purchase at least of $105 million of network services from us in
2000. Assuming we had received these minimum revenues for the first year of the
agreement in 1999, Bridge would have represented approximately 83% of our 1999
revenues. The network services agreement with Bridge could be terminated prior
to its term if we default in our performance under this agreement, including if
we fail to meet our service level commitments, or Bridge is unable to perform
its obligations under the agreement. The loss of Bridge as a customer, or
reduced demand from Bridge, would materially reduce our expected revenues and,
consequently, would have a material adverse effect on our business.
BRIDGE IS HIGHLY LEVERAGED, HAS HAD SIGNIFICANT NET LOSSES AND NEGATIVE CASH
FLOW TO DATE AND IS REQUIRED TO MAKE AN $88 MILLION DEBT REPAYMENT BY JUNE 30,
2000. IF BRIDGE IS UNABLE TO MEET ITS FINANCIAL COMMITMENTS TO US, WE MAY BE
ADVERSELY AFFECTED.
We will rely on Bridge to meet its financial commitments to us. For the
fiscal years ended December 31, 1996, 1997 and 1998, Bridge has informed us that
it had net losses of approximately $61 million, $69 million and $143 million,
respectively. For the nine months ended September 30, 1999, Bridge had net
losses of approximately $134 million and had negative cash flows from operating
activities of approximately $76 million. Bridge has informed us that it
continued to use cash in its operating activities for the three months ended
December 31, 1999 and March 31, 2000.
As of September 30, 1999, Bridge had $1,240 million of indebtedness and
$470 million of redeemable preferred stock. Under the terms of its debt
agreements, Bridge is required to repay approximately $360 million of its total
indebtedness on or before June 30, 2000. To date, $272 million has been repaid.
Bridge received aggregate proceeds from our initial public offering of
approximately $177 million from its sale of our shares, our purchase of the
network assets, the payment of a preferential distribution and the repayment of
a portion of our indebtedness to them. In addition, pursuant to a stock purchase
agreement dated February 7, 2000, Bridge on February 28, 2000, sold for $150
million in cash to Welsh Carson 6,250,000 shares of our common stock held by
Bridge. The purchase price per share was equal to the initial public offering
price per share. Bridge has informed us that it has used all of these proceeds
to reduce its indebtedness. Of the amounts paid down, Bridge has subsequently
reborrowed $25 million under a revolving credit agreement.
We cannot assure you that Bridge will have sufficient sources of capital
to:
o meet its capital expenditure, debt service and working capital
requirements, including its obligations to us under the network services
agreement; or
o satisfy the requirement under its credit agreement to repay $88 million of
its indebtedness by June 30, 2000.
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The failure by Bridge to meet these requirements could have a material
adverse effect on our operations and the price of our common stock.
THE AUDIT REPORT ACCOMPANYING BRIDGE'S 1998 FINANCIAL STATEMENTS CONTAINS AN
EXPLANATORY PARAGRAPH REGARDING BRIDGE'S ABILITY TO CONTINUE AS A GOING CONCERN.
As a result of losses, working capital deficiencies and other liquidity
issues Bridge's independent auditors' report on its 1998 financial statements
includes an explanatory paragraph regarding its ability to continue as a going
concern.
IF THE AMORTIZATION PERIODS FOR BRIDGE'S INTANGIBLES HAD BEEN SHORTER, BRIDGE'S
LOSSES WOULD HAVE INCREASED.
At September 30, 1999, Bridge's unamortized goodwill and intangibles
resulting from acquisitions was approximately $863.9 million or approximately
54% of total assets. Goodwill is the excess of cost over the fair value of the
net assets of businesses acquired. We cannot assure you that Bridge will ever
realize the value of such goodwill. This goodwill is being amortized on a
straight-line basis over 3 to 40 years. Bridge will continue to evaluate on a
regular basis whether events or circumstances have occurred that indicate all or
a portion of the carrying amount of goodwill may no longer be recoverable, in
which case an additional charge to earnings would become necessary. Any such
future determination requiring the write-off of a significant portion of
unamortized goodwill could have a material adverse effect on Bridge's financial
condition or results of operations. If Bridge had used amortization periods of
no longer than ten years, the net loss would have been $68.7 million, $86
million, $180.7 million and $180 million for the periods ended December 31,
1996, 1997, 1998 and September 30, 1999, respectively.
BRIDGE MAY BE ENTITLED TO TERMINATE THE NETWORK SERVICES AGREEMENT OR COLLECT
LIQUIDATED DAMAGES IF WE ARE NOT ABLE TO MEET QUALITY OF SERVICE LEVELS.
Pursuant to the network services agreement with Bridge, we have agreed that
the network will perform in accordance with specific quality of service
standards within 12 months from the date we acquire the network. In the event we
do not meet the required quality of service levels, Bridge will be entitled to
credits and, in the event of a material breach of such quality of services
levels, Bridge will be entitled to terminate the network services agreement and,
whether or not the network service agreement is terminated, collect up to $50
million as liquidated damages once during any 36-month period.
OUR LIMITED HISTORY, AND THE FACT THAT WE ONLY RECENTLY BEGAN OFFERING DATA
NETWORKING AND COLOCATION SERVICES, MAKES IT DIFFICULT FOR YOU TO EVALUATE OUR
PERFORMANCE.
Although we began commercial operations in 1996, we only recently began
offering data networking and colocation services. We expect to generate a
substantial portion of our revenues from these services in the future. In
addition, many of our executive officers and key technical employees joined us
recently, and we have adopted our business strategies recently. Because of our
limited operating history, you have very limited operating and financial data
about us upon which to base an evaluation of our performance and prospects and
an investment in our common stock. Therefore, you should consider and evaluate
our prospects in light of the risks and difficulties frequently encountered by
rapidly growing companies, particularly companies in the rapidly evolving data
networking, Internet access and colocation markets.
OUR HISTORICAL FINANCIAL INFORMATION WILL NOT BE COMPARABLE TO OUR FUTURE
FINANCIAL PERFORMANCE.
In February 2000, we acquired Bridge's Internet protocol network assets and
entered into an agreement to provide data networking services to Bridge. As a
result, our historical financial information included in this report will not
necessarily be comparable to our results of operations, financial position and
cash flows in the future.
WE EXPECT TO CONTINUE TO INCUR SUBSTANTIAL LOSSES AND HAVE NEGATIVE OPERATING
CASH FLOW.
We incurred losses of approximately $14.0 million, $20.0 million and $46.7
million in 1997, 1998 and 1999 and had negative cash flows from operating
activities of $10.5 million, $20.6 million and $24.5 million in these years. We
expect to incur significant net losses, negative cash flow from operating
activities and negative EBITDA at least through 2002.
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WE EXPECT OUR OPERATING EXPENSES TO INCREASE SIGNIFICANTLY.
From the acquisition by Bridge of our company on April 7, 1999 through
December 31, 1999, we had a loss of approximately $38.6 million and net cash
used in operating activities of approximately $18.3 million. As of December 31,
1999, our accumulated deficit was approximately $38.6 million, which reflects
only our losses since Bridge acquired our company on April 7, 1999. We expect
our operating expenses to increase significantly, especially in the areas of
data communications and operations, as a result of the acquisition of Bridge's
network assets, and sales and marketing, as we continue to develop and expand
our business. As a result, we will need to increase our revenues significantly
to generate cash flow from our operations.
WE WILL INCUR LOSSES FROM THE OPERATION OF THE NETWORK TO PROVIDE SERVICES TO
BRIDGE UNDER THE NETWORK SERVICES AGREEMENT UNTIL WE USE THE NETWORK EITHER TO
PROVIDE ADDITIONAL SERVICES TO BRIDGE OR NEW CUSTOMERS.
Under the network services agreement with Bridge, the amount we charge
Bridge for the use of the network as configured on the date of the transfer is
based on the cash costs of operating that network. As a result, we will incur
losses from the operation of the network to provide services to Bridge until we
use the network either to provide additional services to Bridge not currently
covered by the network services agreement, such as connecting new customers of
Bridge or adding additional connections to existing customers, or to provide
services to new customers. We cannot guarantee that we will sell enough
additional services to become profitable.
WE ARE OBLIGATED TO PROVIDE NETWORK SERVICES TO BRIDGE FOR A PERIOD OF UP TO
FIVE YEARS AFTER THE TERMINATION OF THE NETWORK SERVICES AGREEMENT AT THE RATES
IN EFFECT AT THE DATE OF THE AGREEMENT'S TERMINATION.
We are required to provide network services to Bridge under the network
services agreement for a period of up to five years subsequent to the
termination of the agreement. These services must be provided to Bridge at the
rates in effect for our third party customers at the date of the agreement's
termination. If the price to be paid by Bridge is less than the cost incurred by
us to provide the service, such services will be provided at a loss to us.
THE PURCHASE OF THE NETWORK ASSETS FROM BRIDGE RESULTED IN A PREFERENTIAL
DISTRIBUTION TO BRIDGE.
Because we recorded the network assets purchased from Bridge at Bridge's
historical net book value, the excess of the payments to Bridge over the net
book value, approximately $58 million, was treated for accounting purposes as a
preferential distribution to Bridge. As a result our stockholders' equity has
been reduced and purchasers of our common stock in our initial public offering
experienced a dilution in tangible book value per share.
IF WE ARE NOT ABLE TO RAISE ADDITIONAL CAPITAL, WE MAY HAVE TO DELAY SOME OR ALL
OF OUR EXPANSION PLANS.
As we develop and expand our business, we will require significant capital
to fund our capital expenditures, operating deficits and working capital needs
as well as our debt service requirements. We believe that our existing cash,
cash equivalents, short-term investments and anticipated vendor financing,
including the net proceeds from the initial public offering, will be sufficient
to meet our capital requirements through the end of 2000. We currently estimate
that we will make approximately $149 million of capital expenditures in 2000,
exclusive of our purchase of the network assets from Bridge, and we expect to
make significant capital expenditures in the following years. In addition, we
expect to incur significant net losses, negative cash flow from operating
activities and negative EBITDA at least through 2002. The actual amounts and
timing of our future capital requirements may vary significantly from our
estimates. Our capital needs may exceed our current expectations because of
factors such as acquisitions that we may make, changes in the demand for our
services, regulatory developments, the competitive environment in our markets or
failure to expand our business as expected. In that case, we may need to
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seek additional capital sooner than we expect, and such additional financing may
not be available on acceptable terms or at all. If we are unable to raise
additional capital when needed, we may have to delay or abandon some or all of
our expansion plans or otherwise forego market opportunities. We do not
currently have a credit facility from which we could access additional capital.
IF WE ARE NOT RELEASED FROM REGULATION UNDER THE BANK HOLDING COMPANY ACT, WE
WOULD NOT BE ABLE TO EXPAND OUR BUSINESS AS WE EXPECT.
State Street Corporation, a bank holding company, currently owns
approximately 7.7% of the outstanding voting capital stock of Bridge on a fully
diluted basis and approximately 2% of our outstanding common stock. State Street
also has the right to elect one member of Bridge's board of directors. At the
time State Street made its investment in Bridge in 1996, State Street agreed
with the Federal Reserve Board to regard Bridge as a subsidiary of State Street
for purposes of the Bank Holding Company Act, and Bridge agreed to restrict its
activities and its investments to those permitted for bank holding company
subsidiaries under Regulation Y of the Federal Reserve Board. At the time Bridge
acquired us in April 1999, State Street and Bridge agreed that we also would be
regarded as a bank holding company subsidiary and subject to the applicable
restrictions on our activities. Permitted activities for a bank holding company
subsidiary include the transmission of data, provided that no more than 30% of
the revenue generated by a bank holding company subsidiary from that activity is
derived from the transmission of data that is not financial, banking or economic
in nature. Accordingly, in connection with Bridge's acquisition of our company
in April 1999, Bridge undertook to ensure that at least 70% of our revenue would
be derived from the transmission of qualifying data. We believe that the
services we will provide to Bridge under the network services agreement will
satisfy this requirement initially.
In the event State Street does not comply with its agreement to cooperate
with us to ensure that, by the close of business on April 30, 2000, we will no
longer be subject to the activity and investment restrictions of Regulation Y,
our revenues from Bridge and/or revenues from the transmission of other
qualifying data will need to represent at least 70% of our total revenue. As a
result, we may not be able to expand our business as currently contemplated.
OUR FAILURE TO MANAGE OUR GROWTH EFFECTIVELY COULD IMPAIR OUR BUSINESS.
We expect our business to continue to grow rapidly, which may significantly
strain our management, financial, customer support, sales, marketing and
administrative resources, as well as our network operations and our management
and billing systems. Such a strain on our managerial, operational and
administrative capabilities could adversely affect the quality of our services
and our ability to generate revenues. To manage our growth effectively, we will
have to further enhance the efficiency of our operational support and other back
office systems, and of our financial systems and controls. We will also have to
expand, train and manage our employees and third-party providers to handle the
increased volume and complexities of our business. In addition, if we fail to
project traffic volume and routing preferences correctly, or fail to determine
the appropriate means of expanding our network, we could lose customers, make
inefficient use of our network, and have higher costs and lower profit margins.
OUR SUBSTANTIAL ONGOING RELATIONSHIPS WITH BRIDGE WILL BE CRITICAL TO OUR
SUCCESS. IF BRIDGE TERMINATES ANY OF THESE RELATIONSHIPS, OUR BUSINESS
PROSPECTS WILL BE IMPAIRED.
Bridge provides to us many technical, administrative and operational
services and related support functions, including technical and customer support
service and project management in the procurement and installation of equipment.
Bridge also provides to us additional administrative and operational services,
such as payroll and accounting functions, benefit management and office space.
If Bridge unexpectedly stops providing these services for any reason, we could
face significant challenges and costs in assuming these services or finding an
alternative to Bridge. This could impair our operations, adversely affect our
reputation and harm our financial results.
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In addition, we sublease from Bridge some of the network assets that Bridge
currently leases from General Electric Capital Corporation, or GECC. The
aggregate amount of our capitalized lease obligations to Bridge is approximately
$22 million. We do not have a direct relationship with GECC. If Bridge fails to
perform its obligations under its agreement with GECC, our rights to such
network assets may be impaired.
WE ARE CONTROLLED BY PARTIES WHOSE INTERESTS MAY NOT BE ALIGNED WITH YOURS.
Bridge and investment partnerships sponsored by Welsh Carson own
approximately 49% and 16% of our outstanding common stock, respectively. In
addition, Welsh Carson partnerships own approximately 38% of Bridge's
outstanding voting stock. Consequently, Bridge and Welsh Carson control us and
are in a position to elect our entire board of directors and control all matters
affecting us. In addition, Welsh Carson may be deemed to be a controlling person
of Bridge.
Some decisions concerning our operations or financial structure may present
conflicts of interest between Bridge and Welsh Carson and our other
stockholders. For example, Bridge or Welsh Carson may make investments in other
entities engaged in the telecommunications business, some of which may compete
with us. Also, Bridge and Welsh Carson are under no obligation to bring to us
any investment or business opportunities of which they are aware, even if these
opportunities are within our scope and objectives.
We entered into a number of agreements with Bridge relating to the
acquisition of Bridge's global Internet protocol network and to our provision of
global data networking services to Bridge and Bridge provides various support
services to us. Because we were controlled by Bridge during the negotiation of
the agreements, we cannot assure you that these agreements are comparable to
those that would have been reached had the terms been negotiated on an
arm's-length basis.
WE DEPEND ON KEY PERSONNEL. IF WE ARE UNABLE TO HIRE AND RETAIN QUALIFIED
PERSONNEL, WE MAY BE UNABLE TO IMPLEMENT OUR BUSINESS STRATEGY EFFECTIVELY.
Our future performance depends to a significant degree on the continued
contributions of our management team, sales force and key technical personnel.
In particular, we depend on Robert McCormick, our Chairman of the Board and
Chief Executive Officer. Mr. McCormick was appointed Chief Executive Officer in
November 1999. In addition, our business plan contemplates the significant
expansion of our sales and marketing staff. The industries in which we compete
are characterized by a high level of employee mobility and aggressive recruiting
of skilled personnel. As a result, we may have difficulty in hiring and
retaining highly skilled employees. Our future performance depends on our
ability to attract, retain and motivate highly skilled employees.
FAILURES IN OUR NETWORK OR WITH THE NETWORK OPERATIONS CENTER COULD DISRUPT OUR
ABILITY TO PROVIDE OUR DATA NETWORKING, INTERNET ACCESS AND COLOCATION SERVICES,
WHICH COULD HARM OUR BUSINESS AND INCREASE OUR CAPITAL COSTS.
Our ability to successfully implement our business plan depends upon our
ability to provide high quality, reliable services. Interruptions in our ability
to provide our data networking, Internet access and colocation services to our
customers could adversely affect our business and reputation. Our operations
depend upon our ability to protect our equipment and network infrastructure,
including connections to our communications transmission, or backbone,
providers, and our customers' data and equipment, against damage from natural
disasters, as well as power loss, telecommunications failure and similar events.
The occurrence of a natural disaster or other unanticipated problem could result
in interruptions in the services we provide to our customers and could seriously
harm our business and business prospects.
WE ARE HIGHLY DEPENDENT ON OUR SUPPLIERS, AND ANY INTERRUPTIONS COULD IMPAIR OUR
SERVICE TO OUR CUSTOMERS.
If we are unable to obtain required products or services from third-party
suppliers on a timely basis and at an acceptable cost, we may be unable to
provide our data networking, internet access and colocation services on a
competitive and timely basis. We are dependent on other companies to supply
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various key components of our infrastructure, including network equipment,
backbone connectivity, the connections from our customers to our network, which
we call local access, and connection to other Internet network providers. If our
suppliers fail to provide products or services on a timely basis and at an
acceptable cost, we may be unable to meet our customer service commitments and,
as a result, we may experience increased costs or loss of revenue.
IF WE ARE UNABLE TO EXPAND OUR NETWORK AS EXPECTED, OUR RESULTS OF OPERATIONS
WOULD BE ADVERSELY AFFECTED.
Our success will depend on our ability to continue to expand our network on
a timely, cost-effective basis. A number of factors could hinder the expansion
of our network. These factors include cost overruns, the unavailability of
appropriate facilities, communications capacity or additional capital, strikes,
shortages, delays in obtaining governmental or other third-party approvals,
natural disasters and other casualties, and other events that we cannot foresee.
In addition, expanding or enhancing our network, including through hardware or
software upgrades, could result in unexpected interruptions of services to our
customers.
IF OUR ESTIMATES REGARDING OUR TRAFFIC LEVELS ARE NOT CORRECT, WE MAY HAVE TOO
MUCH OR TOO LITTLE CAPACITY.
We rely on other carriers to provide several data transmission services. We
generally lease data transmission capacity before we have secured customers and
our leased capacity costs are typically fixed monthly payments based on the
capacity made available to us. Our failure to correctly estimate transmission
capacity could increase the cost or reduce the quality of our services.
Underestimation of traffic levels could lead to a shortage of capacity,
requiring us to lease more capacity, which may be at unfavorable rates, or could
lead to a lower quality of service because of increased data loss and latency.
Overestimation of traffic levels, because our traffic volumes decrease or do not
grow as expected, would result in idle capacity, thereby increasing our per-unit
costs.
WE HAVE EXPERIENCED CUSTOMER TURNOVER IN THE PAST AND MAY CONTINUE TO DO SO IN
THE FUTURE. IF WE CONTINUE TO EXPERIENCE CUSTOMER TURNOVER WITHOUT A
CORRESPONDING GROWTH IN NEW CUSTOMERS, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
Customer turnover in the Internet access business is high. Customer loss
results in loss of future revenue from subscribers who discontinue or reduce
their services. Customer loss occurs for several reasons, such as voluntary
disconnection by subscribers who choose to switch to a competing service and
termination by Internet access providers for nonpayment of bills or abuse of the
network. We have experienced customer turnover in the past and as our subscriber
base grows and the industry matures, our customer loss may continue or even
increase. If, in the future, we were to lose a large number of customers without
signing contracts with new customers, there could be an adverse impact on our
business.
OUR BRAND IS NOT AS WELL KNOWN AS SOME OF OUR COMPETITORS'. FAILURE TO DEVELOP
BRAND RECOGNITION COULD HURT OUR ABILITY TO COMPETE EFFECTIVELY.
We need to strengthen our brand awareness to realize our strategic and
financial objectives. Many of our competitors have well-established brands
associated with the provision of data networking, Internet access and colocation
services. The promotion and enhancement of our brand also will depend in part on
our success in continuing to provide high quality Internet access services and
in providing high quality data networking and colocation services. We cannot
assure you that we will be able to maintain or achieve these levels of quality.
ANY BREACH OF SECURITY OF OUR NETWORK COULD NEGATIVELY IMPACT OUR BUSINESS.
Our network may be vulnerable to unauthorized access, computer viruses and
other disruptive problems caused by customers, employees or others. Computer
viruses, unauthorized access or other disruptive problems could lead to
interruptions, delays or cessation of service to our customers and these
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<PAGE>
customers' end users. Unauthorized access also could potentially jeopardize the
security of confidential information stored in the computer systems of our
customers, which might result in our liability to our customers, and also might
deter potential customers. We may be unable to implement security measures in a
timely manner or, if and when implemented, these measures could be circumvented
as a result of accidental or intentional actions. In the past, security measures
employed by others have been circumvented by third parties. Eliminating computer
viruses and alleviating other security problems may require interruptions,
delays or cessation of service to our customers and these customers' end users.
Any breach of security on our network may result in a loss of customers and
damage to our reputation.
WE MAY NOT BE ABLE TO MEET THE OBLIGATIONS UNDER OUR SERVICE LEVEL AGREEMENTS.
We have service level agreements with many of our Internet access customers
in which we provide various guarantees regarding our levels of service. In
addition, the network services agreement with Bridge requires levels of service
and we offer service level agreements to other data networking customers. If we
fail to provide the levels of service required by these agreements, our
customers may be entitled to terminate their relationship with us or receive
service credits for their accounts. If Bridge or a significant number of other
customers become entitled to exercise, and do exercise, these rights, our
revenues could be materially reduced.
WE MAY MAKE ACQUISITIONS OR ENTER INTO JOINT VENTURES OR STRATEGIC ALLIANCES,
EACH OF WHICH IS ACCOMPANIED BY INHERENT RISKS.
If appropriate opportunities present themselves, we may make acquisitions
or investments or enter into joint ventures or strategic alliances with other
companies. Risks commonly encountered in such transactions include:
o the difficulty of assimilating the operations and personnel of the
combined companies;
o the risk that we may not be able to integrate the acquired services,
products or technologies with our current services, products and
technologies;
o the potential disruption of our ongoing business;
o the inability to retain key technical and managerial personnel;
o the inability of management to maximize our financial and strategic
position through the successful integration of acquired businesses;
o increases in reported losses as a result of charges for in-process
research and development and amortization of goodwill and other intangible
assets;
o adverse impact on our annual effective tax rate;
o difficulty in maintaining controls, procedures and policies; and
o the impairment of relationships with employees, suppliers and customers
as a result of any integration.
WE FACE REGULATORY RESTRICTIONS IN SIGNIFICANT NUMBER OF COUNTRIES THAT HAVE
DELAYED AND MAY PREVENT US FROM ACQUIRING OR OPERATING BRIDGE ASSETS LOCATED IN
THESE COUNTRIES. THESE ASSETS REPRESENT APPROXIMATELY 4% OF THE NET BOOK VALUE
OF THE ASSETS ACQUIRED FROM BRIDGE.
Regulatory restrictions in the following ten countries currently prevent us
from acquiring the Bridge network assets located in these countries. These
countries are:
o Europe--Poland;
o Africa--South Africa;
o Middle East--Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates;
o Asia Pacific--China, India, Macau and Thailand; and
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<PAGE>
o The Americas/Caribbean--none.
Regulations in the following eight countries permit us to acquire the
Bridge network assets located in these countries upon obtaining proper
regulatory authorization, which we are in the process of pursuing. These
countries are:
o Europe--Greece, Ireland and Hungary;
o Africa--none;
o Middle East--none;
o Asia Pacific--Malaysia and Taiwan; and
o The Americas/Caribbean--Bahamas, Mexico and Venezuela.
We will be obligated to acquire the network assets from Bridge in each of
these 17 countries at book value once we have received the required approvals.
We cannot assure you, however, that we will be able to comply with the
regulatory and other requirements necessary to allow us to acquire these assets.
In all countries where we have received regulatory approval to acquire and
operate the Bridge assets, we will be permitted to deliver network services to
Bridge, but not necessarily data networking services to third parties. Providing
services to third parties in these countries may require a separate
authorization or may not be permitted under current regulations.
NUMEROUS FACTORS MAY CAUSE FLUCTUATIONS IN OUR QUARTERLY REVENUES AND OPERATING
RESULTS, AS WELL AS IMPACT OUR LONG-TERM VIABILITY.
Our quarterly revenues and operating results have fluctuated in the past
and are likely to fluctuate significantly from quarter to quarter in the future
due to a number of factors. These factors include the following:
o demand for and market acceptance of our data networking, Internet access
and colocation services;
o the fixed nature of approximately 75% of our costs;
o the timing and magnitude of capital expenditures, including costs
relating to the expansion of operations;
o increasing sales, marketing and other operating expenses;
o the compensation of our sales personnel based on achievement of periodic
sales quotas;
o our ability to generate revenues for our services;
o changes in our revenue mix between usage-based and fixed rate pricing
plans; and
o fluctuations in the duration of the sales cycle for our services.
Other factors, which are beyond our control, may also affect us, including:
o conditions specific to the data networking, Internet access and colocation
services industries, as well as general economic factors;
o the announcement or introduction of new or enhanced services by our
competitors;
o our ability to obtain, and the pricing for, local access connections;
and,
o changes in the prices we pay Internet backbone providers.
Accordingly, we believe that period-to-period comparisons of our results of
operations are not meaningful and should not be relied upon as indications of
future performance. In addition, these factors may impact our long-term
viability.
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It is possible that in some future periods our results of operations may
fall below the expectations of investors. In this event, the price of our common
stock may fall. You should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of future performance.
WE MAY BE LIABLE FOR THE MATERIAL THAT CONTENT PROVIDERS DISTRIBUTE OVER OUR
NETWORK.
The law relating to the liability of private network operators for
information carried on or disseminated through their networks is currently
unsettled. We may become subject to legal claims relating to the content
disseminated on our network. For example, lawsuits may be brought against us
claiming that material on our network on which one of our customers relied was
inaccurate. Claims could also involve matters such as defamation, invasion of
privacy and copyright infringement. Content providers operating private networks
have been sued in the past, sometimes successfully, based on the content of
material. If we need to take costly measures to reduce our exposure to these
risks, or are required to defend ourselves against such claims, our business
could be adversely affected.
RISKS RELATED TO OUR INDUSTRY
DATA NETWORKING, INTERNET ACCESS AND COLOCATION SERVICES ARE NEW AND RAPIDLY
GROWING MARKETS, BUT THIS GROWTH MAY NOT CONTINUE.
According to International Data Corporation, an independent research firm,
the market for data networking services has been growing rapidly. If the data
networking services market does not grow as expected, or our anticipated share
of that market does not grow as expected, our revenues could be less than
expected.
In addition, the market for Internet access and related services, such as
colocation services, is in an early stage of growth. As a consequence, current
and future competitors are likely to introduce competing services, and it is
difficult to predict the rate at which the market will grow or at which new or
increased competition will result in market saturation. We face the risk that
the market for high performance Internet access and related services may fail to
develop or may develop more slowly than we expect, or that our services may not
achieve widespread market acceptance. Furthermore, we may be unable to market
and sell our services successfully and cost-effectively to a sufficiently large
number of customers.
WIDESPREAD COMMERCIAL USE OF THE INTERNET MAY BE HAMPERED BY POOR PERFORMANCE.
Despite growing interest in the varied commercial uses of the Internet,
many businesses have been deterred from purchasing Internet access services for
a number of reasons, including inconsistent or unreliable quality of service,
lack of availability of cost-effective, high-speed options, a limited number of
local access points for corporate users, inability to integrate business
applications on the Internet, the need to deal with multiple and frequently
incompatible vendors and a lack of tools to simplify Internet access and use.
Capacity constraints caused by growth in the use of the Internet may, if left
unresolved, impede further development of the Internet to the extent that users
experience delays, transmission errors and other difficulties.
GROWTH IN INTERNET ACCESS BUSINESS MAY BE HAMPERED BY SOME COMPANIES' RELUCTANCE
TO ADOPT INTERNET STRATEGIES FOR COMMERCE AND COMMUNICATION.
The adoption of Internet strategies for commerce and communications,
particularly by those individuals and enterprises that have historically relied
upon alternative means of commerce and communication, generally requires an
understanding and acceptance of a new way of conducting business and exchanging
information. In particular, enterprises that have already invested substantial
resources in other means of conducting commerce and exchanging information may
be particularly reluctant or slow to adopt a new strategy that may make their
existing personnel and infrastructure obsolete. The failure of the market for
business-related Internet services to further develop could cause our revenues
to grow more slowly than anticipated and reduce the demand for our Internet
access and colocation services.
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OUR ABILITY TO COMPETE FOR INTERNET ACCESS BUSINESS MAY BE WEAKENED IF THE
PROBLEMS OF INTERNET CONGESTION, TRANSMISSION DELAYS AND DATA LOSS IS RESOLVED.
If the Internet becomes subject to a form of central management, or if
Internet backbone providers establish an economic settlement arrangement
regarding the exchange of traffic between data networks, the problems of
congestion, latency and data loss addressed by our Internet access services
could be largely resolved and our ability to compete for business in this market
could be adversely affected.
THE MARKETS FOR DATA NETWORKING, INTERNET ACCESS AND COLOCATION ARE HIGHLY
COMPETITIVE, AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The markets for data networking, Internet access and colocation services
are extremely competitive, and there are few significant barriers to entry. We
expect that competition will intensify in the future, and we may not have the
financial resources, technical expertise, sales and marketing abilities or
support capabilities to compete successfully in these markets. Many of our
existing Internet access data networking and colocation competitors have greater
market presence, engineering and marketing capabilities and financial,
technological and personnel resources than we do. As a result, as compared to
us, our competitors may:
o develop and expand their networking infrastructures and service offerings
more efficiently or more quickly;
o adapt more rapidly to new or emerging technologies and changes in
customer requirements;
o take advantage of acquisitions and other opportunities more effectively;
o develop products and services that are superior to ours or have greater
market acceptance;
o adopt more aggressive pricing policies and devote greater resources to the
promotion, marketing, sale, research and development of their products and
services;
o make more attractive offers to our existing and potential employees;
o establish cooperative relationships with each other or with third
parties; and
o more effectively take advantage of existing relationships with customers
or exploit a more widely recognized brand name to market and sell their
services.
Our competitors include:
o backbone providers that may provide us connectivity services, including
AT&T, Cable & Wireless plc, GTE Internetworking, ICG Communications, Inc.,
Sprint Corporation and UUNET, an MCI Worldcom company;
o global, national and regional telecommunications companies, including
regional Bell operating companies and providers of satellite bandwidth
capacity; and
o global, national and regional Internet service providers.
We expect that new competitors will enter the data networking, Internet
access and colocation markets. Such new competitors could include computer
hardware, software, media and other technology and telecommunications companies,
as well as satellite and cable companies. A number of telecommunications
companies and online service providers currently offer, or have announced plans
to offer or expand, their data networking services. Further, the ability of some
of these potential competitors to bundle other services and products with their
data networking services could place us at a competitive disadvantage. For
example, Reuters Group plc, a news and financial information distributor, and
Equant N.V., an international telecommunications provider, recently announced
that they intend to form a joint venture for the purposes of offering IP network
services access to the financial services industry. Various companies are also
exploring the possibility of providing, or are currently providing, high-speed
data services using alternative delivery methods, including the cable television
infrastructure, direct broadcast
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satellites, all optical networks, wireless cable and wireless local access. In
addition, Internet backbone providers may benefit from technological
developments, such as improved router technology, that will enhance the quality
of their services.
OUR FAILURE TO ACHIEVE DESIRED PRICE LEVELS COULD IMPACT OUR ABILITY TO ACHIEVE
PROFITABILITY OR POSITIVE CASH FLOW.
We expect competition and other factors to continue to cause pricing
pressure in the markets we serve. Prices for data networking, Internet access
and colocation services have decreased significantly in recent years, and we
expect significant price declines in the future. In addition, by bundling their
services and reducing the overall cost of their services, telecommunications
companies that compete with us may be able to provide customers with reduced
communications costs in connection with their data networking, Internet access
or colocation services, thereby significantly increasing pricing pressure on us.
We may not be able to offset the effects of any such price reductions even with
an increase in the number of our customers, higher revenues from enhanced
services, cost reductions or otherwise. In addition, we believe that the data
networking, Internet access and colocation industries are likely to continue to
encounter consolidation in the future. Increased price competition or
consolidation in these markets could result in erosion of our revenues and
operating margins and could prevent us from becoming profitable.
NEW TECHNOLOGIES COULD DISPLACE OUR SERVICES OR RENDER THEM OBSOLETE.
New technologies or industry standards have the potential to replace or
provide lower cost alternatives to our Internet access services, data networking
and colocation services. The adoption of such new technologies or industry
standards could render these services obsolete or unmarketable. For example,
these services rely on the continued widespread commercial use of the set of
protocols, services and applications for linking computers known as Internet
protocol. Alternative sets of protocols, services and applications for linking
computers could emerge and become widely adopted. Improvements in Internet
protocol could emerge that would allow for the assignment of priorities to data
packets in order to ensure their delivery in the manner customers prefer, as
well as other improvements, which could eliminate one advantage of the ATM
architecture of our network. We cannot guarantee that we will be able to
identify new service opportunities successfully and develop and bring new
products and services to market in a timely and cost-effective manner, or that
products, software and services or technologies developed by others will not
render our current and future services non-competitive or obsolete. In addition,
we cannot assure you that our current and future services will achieve or
sustain market acceptance or be able to address effectively the compatibility
and interoperability issues raised by technological changes or new industry
standards. If we fail to anticipate the emergence of, or obtain access to, a new
technology or industry standard, we may incur increased costs if we seek to use
those technologies and standards or our competitors that use such technologies
and standards may use them more cost-effectively than we do.
THE DATA NETWORKING AND INTERNET ACCESS INDUSTRIES ARE HIGHLY REGULATED IN MANY
OF THE COUNTRIES IN WHICH WE PLAN TO PROVIDE SERVICES, WHICH COULD RESTRICT OUR
ABILITY TO CONDUCT BUSINESS INTERNATIONALLY.
We are subject to varying degrees of regulation in each of the
jurisdictions in which we provide services. Local laws and regulations, and
their interpretation and enforcement, differ significantly among those
jurisdictions. Future regulatory, judicial and legislative changes may have a
material adverse effect on our ability to deliver services within various
jurisdictions.
National regulatory frameworks that are consistent with the policies and
requirements of the World Trade Organization have only recently been, or are
still being, put in place in many countries outside the U.S. and European Union.
These nations are in the early stages of providing for and adapting to a
liberalized telecommunications market. As a result, in these markets, we may
encounter more protracted and difficult procedures to obtain licenses and
negotiate interconnection agreements.
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Our operations are dependent on licenses and authorizations from
governmental authorities in each foreign jurisdiction in which we plan to
operate. These licenses and authorizations generally will contain clauses
pursuant to which we may be fined or our license may be revoked. Such revocation
may be on short notice, at times as short as 30 days' written notice to us. We
may not be able to obtain or retain the licenses necessary for our operations.
ADOPTION OR MODIFICATION OF GOVERNMENT REGULATIONS RELATING TO THE INTERNET
COULD HARM OUR BUSINESS.
There is currently only a small body of laws and regulations directly
applicable to access to or commerce on the Internet. However, existing laws have
been applied to Internet transactions in a number of cases. Moreover, due to the
increasing popularity and use of the Internet, international, national, federal,
state and local governments may adopt laws and regulations that affect the
Internet. The nature of any new laws and regulations and the manner in which
existing and new laws and regulations may be interpreted and enforced cannot be
predicted accurately. The adoption of any future laws or regulations might
decrease the growth of the Internet, decrease demand for our services, impose
taxes or other costly technical requirements or otherwise increase the cost of
doing business on the Internet or in some other manner have a significantly
harmful effect on us or our customers. The U.S. government also may seek to
regulate some segments of our activities as it has with basic telecommunications
services. Moreover, the applicability to the Internet of existing laws governing
intellectual property ownership and infringement, copyright, trademark, trade
secret, obscenity, libel, employment, personal privacy and other issues is
uncertain and developing. We cannot predict accurately the impact, if any, that
future laws and regulations or changes in laws and regulations may have on our
business.
RISKS RELATED TO OUR COMMON STOCK
A SIGNIFICANT NUMBER OF OUR SHARES ARE ELIGIBLE FOR RESALE AND BRIDGE INTENDS TO
SELL ADDITIONAL SHARES OF OUR COMMON STOCK IN THE FUTURE. THIS COULD REDUCE OUR
STOCK PRICE AND IMPAIR OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
Immediately after the completion of our initial public offering, we had
92,883,340 shares of common stock outstanding and available for resale beginning
at various points of time in the future. Sales of substantial amounts of shares
of our common stock in the public market after this offering, or the perception
that those sales will occur, could cause the market price of our common stock to
decline. Those sales also might make it more difficult for us to sell equity and
equity-related securities in the future at a time and at a price that we
consider appropriate. In particular, Bridge has indicated to us that it intends
in the future to sell a portion of its shares of our common stock which may
include sales in the open market or in private placements or sales to strategic
investors.
OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER.
Our certificate of incorporation and Delaware law contain provisions which
may make it more difficult for a third party to acquire us, including provisions
that give the board of directors the power to issue shares of preferred stock.
We have also chosen to be subject to Section 203 of the Delaware General
Corporation Law, which prevents a stockholder of more than 15% of a company's
voting stock from entering into business combinations set forth under Section
203 with that company.
ITEM 2. PROPERTIES.
Our executive offices are located in Reston, Virginia and consist of
approximately 10,500 square feet that are leased under an agreement that expires
in 2004. We have recently entered into a ten and a half-year lease for an 80,000
square foot facility in Herndon, Virginia to house our executive management,
sales and marketing personnel and our Washington, D.C. data center. We lease
facilities for our sales offices and network equipment in a number of
metropolitan areas and specific cities. We also
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lease approximately 10,000 square feet from Bridge in St. Louis, Missouri. We
believe that our existing facilities, including the additional space, are
adequate for our current needs and that suitable additional or alternative space
will be available in the future on commercially reasonable terms as needed.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims
arising out of our ordinary course of business. We are not currently involved in
any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On December 7, 1999, stockholders holding at least a majority of our common
stock consented in writing to an amendment of our 1999 stock option plan
providing for an increase in the number of shares of common stock available for
issuance under the plan.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A)(1) MARKET PRICE OF COMMON STOCK.
Our common stock, $.01 par value per share, has been quoted on the Nasdaq
National Market under the symbol "SVVS" since our initial public offering on
February 15, 2000. During the preceding two years there was no established
trading market for our shares of common stock. There are currently 411 record
holders of our common stock.
We have not declared or paid any cash dividends on our common stock since
our inception. We do not intend to pay cash dividends on our common stock in the
foreseeable future. We anticipate we will retain any earnings for use in our
operations and the expansion of our business.
(A)(2) RECENT SALES OF UNREGISTERED SECURITIES
Between January 1, 1999 and December 31, 1999, we granted options to
purchase 3,937,868 shares of our common stock to a total of 200 of our
employees, each at an exercise price of $.50 per share. In that same period, we
granted options to purchase 4,139,000 shares of our common stock to a total of
185 employees of Bridge, each at an exercise price of $.50 per share. All of
these options were granted pursuant to our stock option plan. In October 1999,
we granted to our employees the right to convert options to purchase 236,882
shares of common stock of Bridge into options to purchase 236,882 shares of our
common stock at an exercise price of $0.50 per share. During fiscal 1999, we
issued 5,232,289 shares pursuant to the exercise of stock options by our
employees and employees of Bridge for an aggregate exercise price of $2,616,145.
These issuances were effected in reliance on the exemption from registration
provided by Rule 701 promulgated under Section 3(b) of the Securities Act of
1933 and were effected without the use of an underwriter.
(B) USE OF PROCEEDS
The Registration Statement on Form S-1 (the "Registration Statement")
relating to the initial public offering of our common stock (File No. 333-90881)
was declared effective by the SEC on February 14, 2000. The offering commenced
on February 15, 2000 and terminated when all of the shares were sold on February
18, 2000. The managing underwriters for the initial public offering were Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Bear Stearns & Co. Inc., Banc of America Securities LLC and CIBC World Markets
Corp. In the initial public offering, a total of 17,000,000 shares of common
stock were registered. We sold an aggregate of 14,875,000 shares of common stock
pursuant to the Registration Statement. Bridge Information Systems, Inc., the
selling stockholder, sold an aggregate of 2,125,000 shares of common stock
pursuant to the Registration Statement. The initial public offering price of the
shares was $24.00 per share. Underwriting discounts and commissions for the
shares sold in the initial public offering by us and the selling stockholder
totaled $21.4 million and $3.1 million, respectively. After deducting
underwriting discounts and commissions and other expenses, we and the selling
stockholder received approximately $333 million and $48 million, respectively,
in net proceeds from the initial public offering. Of the $333 million we
received, we used approximately $121 million to purchase assets from Bridge.
There has been no material change to the information previously provided in
the Registration Statement relating to expenses incurred in connection with the
offering and the use of proceeds from the offering. None of our expenses in
connection with the offering were paid directly or indirectly to our directors
or officers or their associates, or to persons owning 10% or more of our common
stock or other affiliates of our company.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATIONAL DATA (DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA).
The following information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Business", and our consolidated financial statements and related notes included
elsewhere in this report. We derived the selected historical
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consolidated financial data presented below from our audited consolidated
financial statements. Our consolidated financial statements as of and for the
years ended December 31, 1996, and 1997 have been audited by Ernst & Young LLP,
independent auditors. Our consolidated financial statements as of and for the
periods since then have been audited by Deloitte & Touche LLP, independent
auditors. We began commercial operations in 1996.
On April 7, 1999, Bridge acquired all our equity securities and accounted
for this acquisition as a purchase transaction. Since the purchase transaction
resulted in our company becoming a wholly owned subsidiary of Bridge, SEC rules
required us to establish a new basis of accounting for the purchased assets and
liabilities. The accounting for the purchase transaction has been "pushed down"
to the financial statements of SAVVIS. Therefore, the purchase price has been
allocated to the underlying assets purchased and liabilities assumed based on
the estimated fair market values of these assets and liabilities at the
acquisition date. As a result of the application of fair value accounting,
intangibles, goodwill, other liabilities and stockholders' equity were increased
in the SAVVIS consolidated balance sheet. The consolidated balance sheet data as
of December 31, 1999 and consolidated statement of operations data for the
period from April 7, 1999 through December 31, 1999 reflect our acquisition by
Bridge and are labeled "Successor." The financial data for the periods prior to
the acquisition are labeled "Predecessor."
On September 10, 1999, Bridge sold in a private placement approximately 25%
of its equity ownership in SAVVIS to existing shareholders of Bridge, at which
time Welsh Carson purchased from Bridge a 12% interest in SAVVIS. On February
28, 2000, Bridge completed the sale of an additional 6,250,000 shares of SAVVIS
common stock to Welsh Carson at $24 per share, for a total cash consideration of
$150 million. Bridge and Welsh Carson now own approximately 49% and 16% of
SAVVIS common stock, respectively.
We calculate EBITDA as earnings (loss) before depreciation and
amortization, interest income and expense and income tax expense (benefit). We
have included information concerning EBITDA because our management believes that
in our industry such information is a relevant measurement of a company's
financial performance and liquidity. EBITDA is not determined in accordance with
generally accepted accounting principles, is not indicative of cash used by
operating activities and should not be considered in isolation or as an
alternative to, or more meaningful than, measures of operating performance
determined in accordance with generally accepted accounting principles.
Additionally, our calculation of EBITDA may not be comparable to similarly
titled measures of other companies, as other companies may not calculate it in a
similar manner.
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<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------------------ ------------------
YEAR ENDED DECEMBER 31, PERIOD FROM PERIOD FROM
-------------------------------------------- JANUARY 1 TO APRIL 7 TO
1996 1997 1998 APRIL 6, 1999 DECEMBER 31, 1999
-------------- -------------- -------------- --------------- ------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ...................................... $ 290 $ 2,758 $ 13,674 $ 5,440 $ 18,549
Direct costs and operating expenses:
Data communications and
operations ................................. 1,044 11,072 20,889 6,429 21,353
Selling, general and administrative .......... 1,204 5,130 12,245 4,751 20,160
Depreciation and amortization ................ 153 631 2,288 817 14,351
Impairment of assets ......................... -- -- -- 1,383 --
----------- ----------- ----------- ----------- -----------
Total direct costs and operating
expenses .................................. 2,401 16,833 35,422 13,380 55,864
----------- ----------- ----------- ----------- -----------
Loss from operations .......................... (2,111) (14,075) (21,748) (7,940) (37,315)
Interest expense, net ......................... (60) (482) (100) (135) (1,302)
----------- ----------- ----------- ----------- -----------
Loss before minority interest and
extraordinary item ........................... (2,171) (14,557) (21,848) (8,075) (1,302)
Minority interest in losses, net of
accretion .................................... -- 547 (147) -- --
Extraordinary gain on debt
extinguishment, net of tax ................... -- -- 1,954 -- --
----------- ----------- ----------- ----------- -----------
Net loss ...................................... $ (2,171) $ (14,010) $ (20,041) $ (8,075) $ (38,617)
=========== =========== =========== =========== ===========
Net loss attributable to common
stockholders ................................. $ (2,171) $ (14,161) $ (22,666) $ (9,025) $ (38,617)
=========== =========== =========== =========== ===========
Basic and diluted net loss per share
before extraordinary item .................... $ (.06) $ (.38) $ (.42) $ (.14) $ (.54)
Extraordinary gain on debt
extinguishment, net of tax ................... -- -- .03 -- --
----------- ----------- ----------- ----------- -----------
Basic and diluted loss per common
share ........................................ $ (.06) $ (.38) $ (.39) $ (.14) $ (.54)
=========== =========== =========== =========== ===========
Weighted average shares outstanding ........... 35,396,287 36,904,108 58,567,482 66,018,388 72,075,287
=========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA ........................................ $ (1,958) $ (12,897) $ (17,653) $ (7,123) $ (22,964)
Capital expenditures .......................... 884 697 1,688 275 837
Cash used in operating activities ............. (1,293) (10,502) (20,560) (6,185) (18,273)
Cash used in investing activities ............. (884) (697) (2,438) (274) (837)
Cash provided by financing activities ......... 2,740 12,024 24,121 4,533 21,383
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------- -------------
AS OF DECEMBER 31, AS OF
-------------------------------------- DECEMBER 31,
1996 1997 1998 1999
-------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .................. $ 573 $ 1,398 $ 2,521 $ 2,867
Goodwill and intangibles, net .............. -- -- 1,406 26,250
Total assets ............................... 1,888 4,313 11,663 39,296
Debt and capital lease obligations ......... 1,126 8,814 2,759 29,958
Redeemable stock, net of discount and
deferred financing costs .................. 500 5,261 36,186 --
Stockholders' deficit ...................... (693) (14,903) (33,197) (2,766)
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
You should read the following discussion together with our consolidated
financial statements and the related notes to those financial statements that
are included in Part II, Item 8 of this Form 10-K, beginning on page F-1 of this
report.
OVERVIEW
We are a rapidly growing provider of high quality, high performance global
data networking and Internet-related services to medium and large businesses,
multinational corporations and Internet service providers. To provide our
Internet access services, we use the SAVVIS ProActiveSM Network, a data
communications network that uses our eight PrivateNAPsSM and our proprietary
routing policies to reduce data loss and enhance performance by avoiding the
congested public access points on the Internet.
We began commercial operations in 1996, offering Internet access services
to local and regional Internet service providers. Our customer base has grown
from 15 customers at the end of 1996 to approximately 1,150 presently.
On March 4, 1998, we acquired Interconnected Associates, Inc., a regional
Internet service provider serving approximately 170 customers in Seattle,
Washington and Portland, Oregon, for $750,000 in cash and shares of our common
stock with an estimated fair value of $583,000. We accounted for the acquisition
using the purchase method of accounting.
On April 7, 1999, we were acquired by Bridge in a stock-for-stock
transaction that was accounted for as a "purchase transaction" under Accounting
Principles Board Opinion No. 16. Under the terms of the transaction, Bridge
issued approximately 3,011,000 shares of its common stock together with
approximately 239,000 options and warrants on its common stock in exchange for
all of our outstanding equity securities. Since the purchase transaction
resulted in our company becoming a wholly owned subsidiary of Bridge, SEC rules
required us to establish a new basis of accounting for the assets purchased and
liabilities assumed. As a result, the purchase price has been allocated to the
underlying assets purchased and liabilities assumed based on estimated fair
market value of these assets and liabilities on the acquisition date, and the
difference between the purchase price and the fair market value was recorded as
goodwill. The accounting for the purchase transaction has been "pushed down" to
our financial statements. The impact of the acquisition on our balance sheet, as
a result of the application of fair value accounting, was to increase
intangibles, goodwill, other liabilities and stockholders' equity. As a result
of the acquisition and the "push down" accounting, our results of operations
following the acquisition, particularly our depreciation and amortization, are
not comparable to our results of operations prior to the acquisition.
On September 10, 1999, Bridge sold in a private placement approximately 25%
of its equity ownership in SAVVIS to the existing stockholders of Bridge, at
which time Welsh Carson purchased from Bridge a 12% interest in SAVVIS at that
time. On February 28, 2000, Bridge completed the sale of an additional 6,250,000
shares of SAVVIS common stock to Welsh Carson at $24 per share, for a total cash
consideration of $150 million. Bridge and Welsh Carson now own approximately 49%
and 16% of SAVVIS common stock, respectively.
Simultaneously with the completion of the initial public offering of our
common stock in February 2000, we acquired Bridge's global Internet protocol
network, which has been integrated with our network since September 1999, for
total consideration of approximately $88 million and we paid a preferential
distribution to Bridge of approximately $58 million. At that time, we entered
into a 10-year network services agreement with Bridge under which we will
provide managed data networking services to Bridge. The purchase will
substantially increase our depreciation and amortization. Our initial fees will
be based upon the cash cost to Bridge of operating the network as configured on
October 31, 1999, as adjusted for changes to the network and associated
personnel related to Bridge's network requirements through February 17, 2000.
Our fees for additional services provided following February 17, 2000 will be
set for a three-year term based on an agreed price schedule. The price schedule
for additional services will be
38
<PAGE>
subject to annual review and negotiation between Bridge and SAVVIS and will be
mutually agreed upon by Bridge and SAVVIS or determined by binding arbitration.
Bridge has agreed to pay us a minimum of $105 million, $132 million and $145
million for network services in 2000, 2001 and 2002, respectively.
In addition, Bridge has agreed that the amount paid to us under the
agreement for the fourth, fifth and sixth years will not be less than 80% of the
total amount paid by Bridge and its subsidiaries for Internet protocol data
transport services in each of those years; and the amount paid to us under the
agreement for the seventh through tenth years will not be less than 60% of the
total amount paid by Bridge and its subsidiaries for Internet protocol data
transport services in each of those years.
Because under the network services agreement the amounts paid to us for the
services to be provided over the original network acquired from Bridge are based
upon the cash cost to operate the original network, the purchase of the network
and provision of services under the network services agreement will result in
losses and negative cash flow from operations until we can sell additional
services over that network to Bridge or other customers. However, because Bridge
is paying us the cash cost to operate the original network and the estimated
total cost for additional network facilities, we expect any additional revenues
generated from the use of the network to generate higher incremental operating
margins.
Bridge has agreed to provide to us various services, including technical
support, customer support and project management in the areas of installation,
provisioning, help desk, and repair and maintenance. In addition, Bridge will
agree to provide to us additional administrative and operational services, such
as payroll and accounting functions, benefit management and office space, until
we develop the capabilities to perform these services ourselves. We expect to
generally develop many of these capabilities by the end of 2000.
Revenue. Our revenue will be derived primarily from the sale of data
networking, Internet access and colocation services. Through December 31, 1998,
our revenue was primarily derived from the sale of Internet access services to
local and regional Internet service providers in the United States. Beginning in
late 1998, we also began to offer Internet security and colocation services to
corporate customers. Beginning in September 1999, we began to offer managed data
networking services.
We charge each customer an initial installation fee that typically ranges
from $500 to $5,000 and a fixed monthly fee that varies depending on the
services provided, the bandwidth used and the quality of service level chosen.
Our customer agreements are typically for 12 to 36 months. As of December 31,
1999, approximately 6% of our customer agreements, representing approximately 6%
of our revenues for the month of December 1999, were month-to-month and were
able to be terminated on 30 days' notice. We expect the proportion of customers
on month-to-month agreements will continue to decrease as we add new customers
and our sales force continues to pursue longer renewals.
Prices for telecommunication services, including the services we offer,
have decreased significantly over the past several years and we expect this
trend to continue for the foreseeable future.
We expect that a substantial portion of our revenues will be generated by
our network services agreement with Bridge. Assuming we had received the minimum
revenues under the network services agreement for the first year of the
agreement in 1999, Bridge would have represented approximately 83% of our 1999
revenues. As of December 31, 1999, Bridge had an estimated 135,000 trading
terminals connected to the SAVVIS ProActiveSM Network and an estimated 100,000
trading terminals connected over networks using older protocols. Bridge has
informed us that it expects to convert its remaining customers to the Internet
protocol network over the next three years. We expect that, to the extent these
customers are converted, Bridge will order additional services from us under the
network services agreement. We cannot assure you that any of these customers
will be converted or as to what schedule any conversions will be completed.
While we expect our revenues from Bridge to increase, we expect them to
decrease as a percentage of our total revenues as we expand our data networking,
Internet access and colocation customer base. We believe data networking and
colocation services will increase as a percentage of our non-Bridge recurring
revenues as we expand these service offerings.
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<PAGE>
DIRECT COSTS AND EXPENSES. Direct costs and expenses are comprised of the
following items:
Data communications and operations. Data communications and operations
expenses include the cost of:
o connections to other Internet service providers;
o leasing local access lines;
o transmission connections;
o engineering salaries and related benefits;
o other related repairs and maintenance items;
o leasing routers and switches;
o leasing colocation space; and
o installing local access lines at customer sites.
These costs will also include the cost of the network operations center, as
well as the customer help desk and other services that will be provided by
Bridge under the technical services agreement. Data communications and
operations expenses will increase significantly with the inclusion of the Bridge
network. In addition, we expect that these costs will increase in total dollars
as we expand our network and increase our customer base, but we expect that they
will decrease as a percentage of revenues.
Selling, general and administrative. Selling, general and administrative
expenses include the cost of:
o sales and marketing salaries and related benefits;
o advertising and direct marketing;
o sales commissions and referral payments;
o office rental;
o administrative support personnel;
o bad debt expense; and
o travel.
We anticipate that these expenses will increase significantly in total
dollars as we add more sales personnel and administrative support personnel and
increase our marketing initiatives to support the acquisition of the Bridge
network and for the expansion of our customer base. Annual facility expenses are
expected to increase significantly beginning in the year 2000 as a result of
newly leased headquarters facility in Herndon, Virginia. Our incremental cost
will approximate $2 million per year. We expect noncash compensation expense
will materially increase as a result of stock options granted to employees of
SAVVIS and Bridge. During the period from October through December 1999, we
granted 2,843,258 stock options with an exercise price of $.50 per share.
Noncash compensation cost based upon the difference between the exercise price
and the imputed fair value of our common stock as of the respective option grant
dates totaling approximately $51 million will be recorded over the vesting
periods of such options, which periods range from immediate up to four years.
Approximately $1.5 million of noncash compensation expense was recorded in the
fourth quarter of 1999.
Depreciation and amortization. Depreciation and amortization expense
consists primarily of the depreciation and amortization of communications
equipment, capital leases, goodwill and intangibles. We expect these expenses to
increase as we make significant investments in the network as we expand our
business. Generally, depreciation is calculated using the straight-line method
over the useful life of the associated asset, which ranges from three to five
years. Goodwill resulting from our acquisition by Bridge is being amortized over
three years and other intangibles are being amortized over one to three years.
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<PAGE>
Interest expense. Historical interest expense is related to indebtedness to
banks, convertible notes, loans from Bridge and capitalized leases. In
connection with our purchase of Bridge's Internet protocol network assets, we
will enter into capitalized leases with Bridge relating to their capitalized
leases for network equipment that Bridge could not directly assign to us. As a
result, our interest expense will increase.
Income tax expense. We incurred operating losses from inception through
December 31, 1999 and, therefore, have not recorded a provision for income taxes
in our historical financial statements. We have recorded a valuation allowance
for the full amount of our net deferred tax assets because the future
realization of the tax benefit is uncertain. As of December 31, 1999, we had net
operating loss carry forwards of approximately $48 million. Section 382 of the
Internal Revenue Code restricts the utilization of net operating losses and
other carryover tax attributes upon the occurrence of an ownership change, as
defined. Such an ownership change occurred during 1999 as a result of the
acquisition of our company by Bridge. Management believes that this limitation
may restrict our ability to utilize the net operating losses over the
carryforward periods ranging from 15 to 20 years.
As we expand our network, increase our employee base to support our
expanded operations and invest in our marketing and sales operations, we expect
our losses, net cash used in operating activities and negative EBITDA to
increase substantially for the foreseeable future.
RESULTS OF OPERATIONS
The historical financial information included in this Form 10-K will not
reflect our future results of operations, financial position and cash flows. Our
results of operations, financial position and cash flows subsequent to the
purchase of Bridge's network and the commencement of the related agreements will
not be comparable to prior periods.
Period from January 1, 1999 to April 6, 1999 (Predecessor)
For the period from January 1, 1999 to April 6, 1999, which is the day
before the acquisition by Bridge of our company, revenue was approximately $5.4
million. Data communications and operations expenses for the period were
approximately $6.4 million, and selling, general and administrative expenses
were approximately $4.8 million. Depreciation and amortization expenses for the
period January 1, 1999 to April 6, 1999 were approximately $.8 million. An asset
impairment charge of approximately $1.4 million was also recorded during this
period. Interest expense, net, was $.1 million and the net loss for the period
was approximately $8.1 million.
Period from April 7, 1999 to December 31, 1999 (Successor)
For the period from April 7, 1999, which is the date of the acquisition by
Bridge of our company, to December 31, 1999, revenue increased to approximately
$18.5 million. Data communications and operations expenses for the period were
approximately $21.4 million, and selling, general and administrative expenses
increased to approximately $20.2 million. Depreciation and amortization expenses
for the period increased to approximately $14.4 million, due to the amortization
of goodwill and other intangible assets associated with the acquisition by
Bridge. Interest expense, net, was $1.3 million and the net loss for the period
was approximately $38.6 million.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
The following discussion compares combined information of SAVVIS and our
predecessor for the year ended December 31, 1999, with those of our predecessor
for the year ended December 31, 1998. The combined information consists of the
sum of the financial data from January 1, 1999 through April 6, 1999 for the
predecessor and from April 7, 1999 through December 31, 1999 for SAVVIS. The
acquisition by Bridge resulted in a new basis of accounting, which impacted
depreciation and amortization in the period subsequent to April 7, 1999.
Revenue. Revenue was $24.0 million in 1999 compared to $13.7 million in
1998, an increase of 74%. This $10.3 million increase was primarily due to
increased marketing and sales efforts and the resulting increase in the number
of customers from 476 to 872.
41
<PAGE>
Data Communications and Operations. Data communications and operations
expenses were $27.8 million in 1999, compared to $20.9 million in 1998, an
increase of 33%. This $6.9 million increase was due to costs associated with the
expansion of our network and the increase in the customer base.
Selling, General and Administrative. Selling, general and administrative
expenses were $24.9 million in 1999, compared to $12.2 million in 1998, an
increase of 104%. The principal increase in these expenses resulted from the
increased size of our sales force in 1999. Marketing and administrative costs
also increased in 1999 to support the increased number of customers.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Revenue. Revenue was $13.7 million in 1998 compared to $2.8 million in
1997, an increase of 389%. This $10.9 million increase was primarily due to
increased marketing and sales efforts and the resulting increase in the number
of customers from 102 to 476.
Data Communications and Operations. Data communications and operations
expenses were $20.9 million in 1998, compared to $11.1 million in 1997, an
increase of 88%. This $9.8 million increase was due to costs associated with the
expansion of our network and the increase in the customer base.
Selling, General and Administrative. Selling, general and administrative
expenses were $12.2 million in 1998, compared to $5.1 million in 1997, an
increase of 139%. The principal increase in these expenses resulted from the
increased size of our sales force in the second half of 1998. Marketing and
administrative costs also increased in 1998 to support the increased number of
customers.
Depreciation and Amortization. Depreciation and amortization expenses were
$2.3 million in 1998, compared to $.6 million in 1997, an increase of 283%.
Depreciation and amortization expense increased due to the purchase of
communications equipment for the expansion of our network and the acquisition of
Interconnected Associates.
Interest Expense, Net. Interest expense, net was $.1 million in 1998,
compared to $.5 million in 1997, a decrease of 80%. This $.4 million decrease
was directly attributed to the conversion of a portion of our convertible notes
into equity securities in connection with our corporate reorganization in March
1998 and interest income earned on proceeds received in the transaction.
Net Loss. Net loss was $20.0 million in 1998, which included a $2.0 million
extraordinary gain on debt extinguishment, compared to $14.0 million in 1997, a
43% increase.
LIQUIDITY AND CAPITAL RESOURCES
We have historically generated negative cash flows from operations. We
generated negative cash flows from operations of $10.5 million, $20.6 million
and $24.5 million for 1997, 1998 and 1999, respectively.
From January 1, 1996 through December 31, 1999, we expended approximately
$110 million for operating purposes and for the construction, maintenance and
expansion of our network. Net cash used in investing activities was
approximately $.7 million, $2.4 million and $1.1 million for 1997, 1998 and
1999, respectively. Net cash used in investing activities in each period
primarily reflects purchases of property and equipment not financed with capital
leases. In March 1998, we used approximately $.8 million in cash and stock with
a fair value of approximately $.6 million to acquire Interconnected Associates.
See note 4 to our audited financial statements that are in the back of this
filing. Net cash provided by financing activities was $12.0 million, $24.1
million and $25.9 million for 1997, 1998 and 1999, respectively. We obtained
funds through issuances of equity securities and convertible notes, bank
financing, capital lease obligations and advances from Bridge. As of December
31, 1999, we had outstanding advances from Bridge of approximately $24.1
million.
Our capital expenditures totaled approximately $1.1 million for 1999. We
expect to have capital expenditures, excluding the purchase of the Bridge
network assets, of approximately $149 million in 2000 as we build out colocation
facilities, deploy ATM devices and expand our network to 24 new cities.
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<PAGE>
On February 18, 2000, we acquired Bridge's Internet protocol network assets
for total consideration of approximately $88 million. Of this amount, $25
million was paid by entering into a capital lease obligation with Bridge. The
remaining purchase price of $63 million was paid with a portion of the net
proceeds from the initial public offering of common stock. We also paid to
Bridge, out of the offering proceeds, an approximate $58 million preferential
distribution. At the request of a lender, approximately $ 2.5 million of the
capitalized principal obligation was paid in March 2000.
In connection with our purchase of the network assets, we also entered into
a network services agreement with Bridge under which we provide Bridge with
managed data networking services. Because the amounts paid to us under the
network services agreement for the services provided over the original network
acquired from Bridge are based upon the cash cost to operate the original
network, the provision of such services will not have an impact on our cash
flows from operations. However, due to amortization and depreciation relating to
the network, the provision of services under the network services agreement will
result in our incurring losses from operations until we can sell additional
services over the network to Bridge or to other customers. The effects of such
operating losses will include continued increases in our accumulated deficit and
reductions in stockholders' equity.
In connection with our acquisition of Bridge's network assets, Bridge is
assigning to us numerous agreements for the purchase of communications services.
We are currently discussing with several of these suppliers the placement of
deposits or stand-by letters of credit by us in return for their consent to the
assignment.
We have arrangements with various suppliers of communications services that
require us to maintain minimum spending levels some of which increase over time.
Our aggregate minimum spending level is approximately $28 million in 2000. In
specific instances, we are able to choose among a variety of communications
services offered to meet these spending minimums. We are currently exceeding all
of our spending minimums and expect to continue to do so as our network
requirements expand. However, if our network requirements were to decrease, we
could be obligated to make payments to these suppliers for services we do not
need.
Although we plan to invest significantly in equipment and in network
expansion, except as described in the preceding paragraph, we have no material
commitments for such items at this time. As we expand our network, increase our
employee base to support our expanded operations and invest in our marketing and
sales organizations, we expect to have significant cash requirements for the
foreseeable future.
We believe that the net proceeds of the initial public offering, together
with our existing cash and cash equivalents, will allow us to continue in
business as a going concern and will be sufficient to fund our operating and
capital needs through 2000. We are currently in discussions with two separate
vendors to obtain vendor financing for network equipment purchases, and a number
of institutions for the financing of two data centers currently under
construction. We will need to raise a significant amount of capital to fund our
capital expenditures, operating deficits, working capital needs and debt service
requirements after 2000. We intend to seek equity or debt financing from
external sources to meet our cash needs after 2000. We cannot assure you that
such additional funding will be available on terms satisfactory to us or at all.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards
for derivative instruments and hedging activities. As amended by Statement of
Financial Accounting Standards No. 137, this standard will be effective for us
for the fiscal years and quarters beginning after June 15, 2000, and requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. We
are currently evaluating the impact of this standard.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities." This standard required companies to expense the costs of start-up
activities and organization costs as incurred and was effective for fiscal years
beginning after December 15, 1998. The adoption of the statement did not have a
material impact on our results of operations.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our primary market risk exposures relate to changes in interest rates.
Following the purchase of Bridge's global Internet protocol network assets in
February 2000, we have begun to expand our business internationally, and as a
result, we will be exposed to changes in foreign currency exchange rates.
Our financial instruments that are sensitive to changes in interest rates
are our borrowings from Bridge, all of which were entered into for other than
trading purposes, and bear interest at a fixed rate of 8%. Because the interest
rate on these advances is fixed, changes in interest rates will not directly
impact our cash flows. As of December 31, 1999 and 1998, the aggregate fair
value of our borrowings approximated their carrying value.
Prior to our purchase of the network assets from Bridge in February 2000,
changes in foreign exchange rates did not impact our results of operations. We
expect approximately 18% of our revenue from Bridge to be derived from
operations outside the United States, and approximately 17% of our direct costs
to be incurred outside the United States. Because our foreign revenue will
closely match our foreign costs, we do not anticipate that changes in foreign
exchange rates will have a material impact on our results of operations. We may
engage in hedging transactions to mitigate foreign exchange risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The 1999 consolidated financial statements and related notes thereto are
included in Part II, Item 8 of this Form 10-K, beginning on page F-1 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURES.
None.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- ----- ------------------------------------------------------
<S> <C> <C>
Robert A. McCormick ........... 35 Chief Executive Officer and Chairman of the Board
Jack M. Finlayson ............. 45 President, Chief Operating Officer and Director
Richard Bubenik ............... 39 Executive Vice President and Chief Technical Officer
David J. Frear ................ 43 Executive Vice President, Chief Financial Officer and
Director
James D. Mori ................. 44 Executive Vice President and General Manager --
Americas
Clyde A. Heintzelman .......... 61 Director
Thomas E. McInerney ........... 58 Director
Patrick J. Welsh .............. 56 Director
Thomas M. Wendel .............. 63 Director
Steven M. Gallant ............. 40 Vice President, General Counsel and Secretary
</TABLE>
ROBERT A. MCCORMICK has served as the Chairman of our board of directors
since April 1999 and as our Chief Executive Officer since November 1999. Mr.
McCormick served as Executive Vice President and Chief Technical Officer of
Bridge from January 1997 to December 1999, and held various engineering, design
and development positions at Bridge from 1988 to January 1997. Mr. McCormick
attended the University of Colorado at Boulder.
JACK M. FINLAYSON has served as our President and Chief Operating Officer
since December 1999 and as a director of our company since January 2000. From
June 1998 to December 1999, Mr. Finlayson served as Senior Vice President of
Global Crossing Holdings, Ltd. and President of Global Crossing International,
Ltd., a provider of Internet and long distance communications facilities and
services. Prior to joining Global Crossing, Mr. Finlayson was employed by
Motorola, Inc., a provider of integrated communications solutions and embedded
electronic solutions, as Corporate Vice President and General Manager of the
Americas Cellular Infrastructure Group from March 1994 to February 1998, and as
Corporate Vice President and General Manager of the Asia Pacific Cellular
Infrastructure Group from March 1998 to May 1998. Prior to joining Motorola,
Mr. Finlayson was employed by AT&T as Sales Vice President of Business Network
Sales for the Southeastern United States. Mr. Finlayson received a B.S. degree
in Marketing from LaSalle University, an M.B.A. degree in Marketing from St.
Joseph University and a post M.B.A. certification in Information Management
from St. Joseph's University.
RICHARD BUBENIK joined us in December 1996 and has served as our Executive
Vice President and Chief Technical Officer since July 1999. Dr. Bubenik served
as our Assistant Vice President -- Engineering from December 1996 to September
1997, Vice President -- Engineering from October 1997 to April 1999 and Senior
Vice President Network Engineering from April 1999 to July 1999. From May 1993
to December 1996, Dr. Bubenik was a Software Development Manager for Ascom
Nexion, a network switch/router equipment supplier. Dr. Bubenik holds a Ph.D.
in Computer Science from Rice University, M.S. and B.S. degrees in Computer
Science from Washington University and a B.S. degree in Electrical Engineering
from Washington University.
DAVID J. FREAR has served as our Executive Vice President and Chief
Financial Officer since July 1999, and as a director of our company since
October 1999. Mr. Frear was an independent consultant in the telecommunications
industry from August 1998 until June 1999. From October 1993 to July 1998, Mr.
Frear was Senior Vice President and Chief Financial Officer of Orion Network
Systems Inc., a Nasdaq listed international satellite communications company
that was acquired by Loral Space & Communications in March 1998. Mr. Frear was
Chief Financial Officer of Millicom Incorporated, a Nasdaq listed international
cellular paging and cable television company, from 1990 to 1993. He previously
was an investment banker at Bear, Stearns & Co., Inc. and Credit Suisse. Mr.
Frear received his C.P.A. in 1979 and received an M.B.A. degree from the
University of Michigan.
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JAMES D. MORI has served as our Executive Vice President and General
Manager--Americas since October 1999. Prior to joining us, Mr. Mori was
employed by Sprint Corporation as National Account Manager from April 1987 to
December 1989, as Branch Manager from January 1990 to December 1991, as
Regional Sales Director from January 1992 to March 1996, as Vice President --
Sales from March 1996 to February 1997 and as Area Director from February 1997
to October 1999. From January 1980 to March 1987, Mr. Mori served as National
Account Manager of Digital Equipment Corporation, Southwestern Bell and AT&T
Information Systems. Mr. Mori received a B.S. in Business Administration from
the University of Missouri.
CLYDE A. HEINTZELMAN has served as a director of our company since
December 1998. Mr. Heintzelman has served as the President of Net2000
Communications, Inc., a provider of broadband business telecommunications
services, since November 1999. From December 1998 to November 1999, Mr.
Heintzelman served as our President and Chief Executive Officer and from May
1995 to December 1998, he served as Chief Operating Officer and President of
DIGEX Incorporated, a national Internet services provider that was acquired by
Intermedia Communications, Inc. in July 1997. From January 1995 to April 1995,
he was an independent consultant and provided services primarily to Hekimian
Laboratories, Inc., a developer of data network testing capabilities. Mr.
Heintzelman serves as a director of Optelecom, Inc., a Nasdaq listed company
that develops, manufactures and sells fiber optic communications products and
laser systems, and Net2000 Communications. Mr. Heintzelman received a B.A. in
Marketing from the University of Delaware.
THOMAS E. MCINERNEY has served as a director of our company since October
1999. Mr. McInerney has served as a general partner of Welsh Carson, a
principal stockholder of our company, and other associated partnerships, since
1987. Prior to joining Welsh Carson, Mr. McInerney was President and Chief
Executive Officer of Dama Telecommunications Corporation, a voice and data
communications services company which he co-founded in 1982. Mr. McInerney has
also been President of the Brokerage Services Division and later Group Vice
President -- Financial Services of ADP, with responsibility for the ADP
divisions that serve the securities, commodities, bank, thrift and electronic
funds transfer industries. He has also held positions with the American Stock
Exchange, Citibank and American Airlines. Mr. McInerney serves as a director of
The BISYS Group, Inc., Centennial Communications Corp., The Cerplex Group, Inc.
and SpectraSite Holdings, Inc. He is also a director of Bridge and several
other private companies. Mr. McInerney received a B.A. from St. Johns
University, and attended New York University Graduate School of Business
Administration.
PATRICK J. WELSH has served as a director of our company since October
1999. Mr. Welsh was a co-founder of Welsh Carson, a principal stockholder of
our company, and has served as a general partner of Welsh Carson and affiliated
entities since 1979. Prior to 1979, Mr. Welsh was President and a director of
Citicorp Venture Capital, Ltd., an affiliate of Citicorp engaged in venture
capital investing. Mr. Welsh serves as a director of Accredo Health,
Incorporated. He also serves as a director of Bridge and several other private
companies. Mr. Welsh received a B.A. from Rutgers University and an M.B.A. from
the University of California at Los Angeles.
THOMAS M. WENDEL has served as a director of our company since April 1999.
He has been Chairman of the Board of Bridge since January 1996, and President
and Chief Executive Officer of Bridge since September 1995. From 1986 to
September 1995, Mr. Wendel served as founding President and Chief Executive
Officer of Liberty Brokerage, Inc., a United States government securities
brokerage firm. From 1982 to 1986, Mr. Wendel was with Paine Webber Inc., where
he held several senior management positions, including Chief Financial Officer
and head of Operations and Systems. Mr. Wendel also served as Executive Vice
President and Managing Director of Paine Webber, where he was responsible for
investment banking involving thrifts and commercial banks, mortgage sales and
trading, and mortgage banking. Prior to 1982, Mr. Wendel was Senior Vice
President and Chief Financial Officer of Pan American World Airways. While at
Pan American, he also held several senior management positions including
overall responsibility for Data Systems and Communications, Airline Planning,
Property and Facilities, Corporate Budgets, Treasury, Accounting, Aircraft
Sales, and Office Services. Mr. Wendel holds a B.S. in Mathematics, an M.A. in
Economics, an M.B.A., and several academic honors including Phi Kappa Phi and a
National Defense Graduate Fellowship in Mathematics. He was the co-author of
Introduction to Data Processing and COBOL published by McGraw-Hill in 1969.
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STEVEN M. GALLANT has served as our Vice President, General Counsel and
Secretary since December 1996. From July 1991 to December 1996, Mr. Gallant was
a partner with The Stolar Partnership where he specialized in the areas of
corporate finance, mergers and acquisitions and general corporate law. Mr.
Gallant received a B.A. from the University of Denver, a J.D. from Washington
University and an L.L.M. in Taxation from New York University.
Members of our board of directors are elected each year at our annual
meeting of stockholders, and serve until the next annual meeting of stockholders
and until their respective successors have been elected and qualified. We intend
to comply with the requirements of the Nasdaq National Market regarding
independent directors. Our officers are elected annually by our board of
directors and serve at the board's discretion.
In November 1999, we entered into an agreement with Mr. Heintzelman in
connection with his resignation as our President and Chief Executive Officer.
Pursuant to the agreement, Mr. Heintzelman has agreed to serve on our board of
directors for a one-year term that will expire in November 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our common stock, to file initial reports of ownership and reports of changes
in ownership with the SEC. However, during fiscal 1999 we were not subject to
the reporting requirements of the Securities Exchange Act and, accordingly, no
such reports were filed during 1999.
ITEM 11. EXECUTIVE COMPENSATION
The following table provides you with information about compensation earned
during fiscal 1999 by our Chief Executive Officers and the other two most highly
compensated executive officers employed by us, whose salaries and bonuses for
such year were in excess of $100,000. We use the term "named executive officers"
to refer to these officers in this report.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------
ANNUAL
COMPENSATION SECURITIES ALL
------------- UNDERLYING STOCK OTHER
NAME AND PRINCIPAL POSITION SALARY OPTIONS COMPENSATION
- ---------------------------------------- ------------- ------------------ ------------------
<S> <C> <C> <C>
Robert A. McCormick(2) ................. $ 45,139 750,000 --
Chief Executive Officer and Chairman of
the Board
Clyde A. Heintzelman(3) ................ 218,146 218,224 $ 330,400(6)
David J. Frear(4) ...................... 122,276 400,000 2,400(7)
Executive Vice President and Chief
Financial Officer
Richard Bubenik(5) ..................... 159,258 306,732 2,400(7)
Executive Vice President and Chief
Technical Officer
</TABLE>
- ----------
(1) In accordance with the rules of the SEC, the compensation described in this
table does not include medical, group life insurance or other benefits
received by the named executive officers that are available generally to all
salaried employees and various perquisites and other personal benefits
received by the named executive officers, which do not exceed the lesser of
$50,000 or 10% of any officer's salary and bonus disclosed in this table.
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(2) Mr. McCormick became our Chief Executive Officer in November 1999, but
continued serving as the Executive Vice President and Chief Technology
Officer of Bridge through December 1999. He was compensated for all of his
services by Bridge.
(3) Mr. Heintzelman became our President and Chief Executive Officer in December
1998 and resigned from these positions in November 1999.
(4) Mr. Frear became our Executive Vice President and Chief Financial Officer
in July 1999.
(5) Mr. Bubenik joined us in December 1996 and became our Executive Vice
President and Chief Technical Officer in July 1999.
(6) Consists of $328,000 payable to Mr. Heintzelman in connection with his
resignation and $2,400 of matching contributions made under our 401(k) plan.
(7) Consists of matching contributions made under our 401(K) plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows grants of stock options to each of the named
executive officers during 1999. The percentages in the table below are based on
options to purchase a total of 5,159,508 shares of our common stock granted to
our employees and directors in 1999. The exercise price per share of each option
was equal to the fair market value of the common stock on the date of grant as
determined by the compensation committee of our board of directors. Potential
realizable values are net of exercise price before taxes and are based on the
assumption that our common stock appreciates at the annual rate shown,
compounded annually, from the date of grant until the expiration of the ten-year
term. The numbers are calculated based on the requirements of the SEC and do not
reflect our estimate of future stock price growth.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
--------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES PRICE PER EXPIRATION ----------------------------
NAME GRANTED IN 1999 SHARE DATE 5% 10%
- ---------------------------------- ------------ -------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. McCormick (1) .......... 750,000 14.5% $ 0.50 7/22/09 $610,836 $972,653
Clyde A. Heintzelman (2) ......... 218,224 4.2% 0.50 7/22/09 177,732 283,008
David J. Frear (3) ............... 400,000 7.8% 0.50 7/22/09 325,779 518,749
Richard Bubenik (4) .............. 306,732 5.9% 0.50 7/22/09 249,817 397,792
</TABLE>
(1) All these options vested on the date of grant. If Mr. McCormick were to
resign, we would have the right to repurchase up to 704,500 of the shares
that have been purchased by Mr. McCormick upon exercise of these options at
the lower of $0.50 per share or the fair market value of the shares. This
right will be terminated with respect to (i) 79,500 shares on July 22, 2000,
(ii) 125,000 shares on each of July 22, 2001, 2002, and 2003 and (iii)
62,500 shares on December 30 of the years 2000 to 2003.
(2) All these options vested on the date of Mr. Heintzelman's resignation.
(3) All these options vested on the date of grant. If Mr. Frear were to resign,
we would have the right to repurchase the shares that have been purchased by
Mr. Frear upon exercise of these options at the lower of $.50 per share or
the fair market value of the shares. This right terminated with respect to
100,000 shares upon completion of our public offering and with respect to
the balance of the shares at the rate of 8,333 shares per month beginning on
the first anniversary of the date of the option grant through the fourth
anniversary of the date of grant. Our right to repurchase these shares will
be terminated in the event of a change in control of our company.
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<PAGE>
(4) Currently, these options are excercisable at the rate of 4,167 each month.
On June 30, 2000, a total of 12,500 options will become excercisable, and
beginning on June 30, 2000, 6,250 options will become excercisable each
month.
AGGREGATE OPTION EXERCISES IN 1999 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth as of December 31, 1999, for each of the
named executive officers listed the total number of shares received upon
exercise of options during 1999, the value realized upon that exercise, the
total number of unexercised options to purchase our common stock and the value
of such options which were in-the-money at December 31, 1999.
There was no public trading market for our common stock as of December 31,
1999. Accordingly, in order to present the values realized upon exercise of
options and the values of unexercised in-the-money options shown below we
subtracted the applicable exercise price from a price of $24.00 per share, which
was the initial public offering price of our common stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
SHARES
ACQUIRED DECEMBER 31, 1999 AT DECEMBER 31, 1999
ON VALUE ------------------------------- ---------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ---------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. McCormick .......... 750,000 $17,625,000 -- -- -- --
Clyde A. Heintzelman ......... 218,224 5,128,264 -- -- -- --
David J. Frear ............... 400,000 9,400,000 -- -- -- --
Richard Bubenik .............. 40,065 941,528 0 266,667 0 $6,266,675
</TABLE>
ARRANGEMENTS WITH EXECUTIVE OFFICERS
Arrangement with Mr. Heintzelman. Mr. Heintzelman became our President and
Chief Executive Officer under an employment agreement dated December 4, 1998. On
November 12, 1999, we entered into an additional agreement with Mr. Heintzelman
in connection with his resignation, entitling him to continue to receive his
base salary of approximately $20,800 per month through December 3, 2000. In
addition, under these agreements, Mr. Heintzelman is entitled to a prorated
portion of his bonus for 1999 in an amount to be established by our board of
directors, but in no event less than 25% of his annual base salary. Under the
agreement dated November 12, 1999, Mr. Heintzelman agreed to serve on our board
of directors for a one-year term that will expire in November of 2000. While Mr.
Heintzelman will not separately be compensated for his services on the board of
directors during this one-year term, he will continue to be eligible to
participate in benefit plans as though he had remained employed by us. All of
Mr. Heintzelman's stock options vested fully on the date of his resignation and
Mr. Heintzelman has exercised all of his options since that date.
In his employment agreement of December 4, 1998, Mr. Heintzelman agreed to
preserve the confidentiality and the proprietary nature of all information
relating to us and our business for three years after the term of his agreements
ends. In addition, Mr. Heintzelman is obligated under this agreement not to
compete with us and not to solicit the business of our customers for one year
following the term of his employment agreement. He will assist in the transition
of his position and help to ensure our ability to retain our key employees. Mr.
Heintzelman has also released our company, Bridge and Bridge's employees and
directors from all claims arising from his employment.
Arrangement with Mr. Finlayson. On December 28, 1999, we entered into an
agreement with Mr. Finlayson pursuant to which he agreed to serve as our
President and Chief Operating Officer effective December 31, 1999. Under his
agreement, Mr. Finlayson is entitled to a base salary of $400,000 per year. In
addition, he will be eligible to receive an annual incentive bonus of up to
$600,000 based on the achievement of mutually agreed to objectives. Mr.
Finlayson will be entitled to a minimum annual incentive bonus of $400,000 for
the year ended 2000. Mr. Finlayson will be entitled to benefits commensurate
with those available to other senior executives.
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<PAGE>
In connection with his employment, Mr. Finlayson received options to
purchase 650,000 shares of our common stock at an exercise price of $.50 per
share, 200,000 of which vested on December 31, 1999. Mr. Finlayson had the right
to sell 50,000 shares underlying these options immediately, and the remaining
150,000 shares on a monthly pro rata basis over the calendar year 2000. The
remaining 450,000 shares vested on January 3, 2000, and become salable on a
monthly pro rata basis over calendar years 2001, 2002 and 2003. Mr. Finlayson
may sell all of his shares in the event of a change in control of our company,
the sale of substantially all of our assets, if we terminate his employment
without cause, or if he resigns for good reason. However, if we terminate Mr.
Finlayson's employment for good cause, we will have the right to buy all shares
not yet salable at the price he paid for the shares. Mr. Finlayson will have the
right to exercise all vested options for one year after the termination of his
employment unless his employment was terminated for cause.
In the event we terminate Mr. Finlayson's employment without cause or if he
terminates his employment for good reason, he will be entitled to receive a lump
sum severance payment equal to his then current base annual salary, which shall
not be less than his highest annual salary paid by us. In the event of a change
in control of our company, Mr. Finlayson has agreed to remain with our company
for a period of up to twelve months if the new management requests him to do so.
We will reimburse Mr. Finlayson for any parachute taxes he would incur under the
Internal Revenue Code as a result of such a change in control. We may terminate
Mr. Finlayson's employment for cause at any time without notice, in which case
he will not be entitled to any severance benefits.
Arrangement with Mr.Frear. On June 14, 1999, we entered into an arrangement
with Mr. Frear pursuant to which he agreed to serve as our Chief Financial
Officer. As part of this arrangement, Mr. Frear is entitled to an annual base
salary of $250,000, subject to periodic review and adjustment, and a
discretionary annual bonus of approximately 50% of his base salary, based on his
personal and overall corporate performance. Mr. Frear is entitled to medical,
disability, 401(k), life insurance and other benefits in accordance with our
general policies.
In connection with his employment, Mr. Frear received 400,000 options to
purchase shares of our common stock at an exercise price of $.50 per share. All
of Mr. Frear's options have vested. In the event Mr. Frear were to resign, we
would have the right to repurchase the shares that have been purchased by Mr.
Frear upon exercise of the options at fair market value or $.50 per share,
whichever is lower. This repurchase right was terminated with respect to a total
of 100,000 shares at the completion of our initial public offering and with
respect to the balance of the shares at the rate of 8,333 shares per month
beginning on the first anniversary of the date of the option grant through the
fourth anniversary of the date of grant. Our right to repurchase these shares
will be terminated in the event of a change in control of our company. In
addition, upon completion of the initial public offering, Mr. Frear received
options at an exercise price per share equal to the in initial public offering
price of $24.00 per share. The options have a term of ten years.
If we were to terminate Mr. Frear's employment without cause, or if Mr.
Frear were to terminate his employment for good reason, Mr. Frear would be
entitled to salary continuation and continuation of all benefits for one year
following the termination of his employment and a pro rata payment of his bonus
through the date of termination. In addition, our right to repurchase his shares
would be terminated.
Arrangement with Mr. Mori. On September 30, 1999, we entered into an
agreement with Mr. Mori pursuant to which he became our Executive Vice President
and General Manager -- Americas effective October 1, 1999. Under his agreement,
Mr. Mori is entitled to an annual base salary of $200,000, as well as a
discretionary bonus of 50% to 100% of his base salary based on his personal and
overall corporate performance. We also granted Mr. Mori options to purchase
225,000 shares of our common stock at an exercise price of $.50 per share. All
of Mr. Mori's options have vested. In the event Mr. Mori were to resign, we
would have the right to repurchase any shares that have been purchased by Mr.
Mori upon exercise of the options at fair market value or $.50 per share,
whichever is lower. This repurchase right is terminated at a rate of 4,687
shares per month and will terminate on the fourth anniversary of the date of
grant. Under his agreement, Mr. Mori is entitled to benefits commensurate with
those available to Bridge executives of comparable rank.
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If we were to terminate Mr. Mori's employment without cause prior to the
second anniversary of his employment, Mr. Mori would be entitled to receive a
severance payment of $450,000. In the event we terminate Mr. Mori's employment
without cause after the second anniversary of his employment, and either we are
not a public company or we are a public company and our shares on the date of
termination trade at a price less than $15 per share, Mr. Mori would also
receive a payment of $450,000. Mr. Mori will receive a similar payment if he
were to resign as a result of an acquisition of more than 30% of our voting
shares by an entity other than Bridge, if he were to be instructed to relocate
from the St. Louis metropolitan area, or if he were to be reassigned to a
position entailing materially reduced responsibilities or opportunities for
compensation.
DIRECTOR COMPENSATION
Directors who are also employees of our company will not receive additional
compensation for serving as a director. Each director who is not an employee of
our company will receive an annual retainer of $15,000, together with a grant of
options to purchase shares of our common stock under our stock option plan at an
exercise price equal to fair market value on the date of grant. On January 3,
2000, Messrs. Welsh, Wendel and McInerney each received 15,000 options to
purchase shares of our common stock under our stock option plan at an exercise
price of $.50 per share. The options will vest immediately on the date of grant,
but if a director ceases to serve on our board of directors, we will have the
right to repurchase these shares at the lower of the exercise price or the fair
market value of the shares. Our right to repurchase these shares will be
terminated with respect to one fourth of the shares on each of the first,
second, third and fourth anniversaries of the date of the option grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Wendel, a director of our company, is also President, Chief Executive
Officer and Chairman of the Board of Bridge. Messrs. McInerney and Welsh serve
as directors of our company, as well as directors of Bridge. In addition,
Messrs. McInerney and Welsh are general partners of Welsh Carson, which
sponsors investment partnerships, three of which are among our principal
stockholders and two of which are also principal stockholders of Bridge.
In 1999, none of our executive officers served as a director or member of
the compensation committee of another entity whose executive officers had served
on our board of directors or on our compensation committee.
STOCK OPTION PLAN
Background. On July 22, 1999, our board of directors approved the adoption
of our 1999 SAVVIS stock option plan, and our stockholders approved the stock
option plan on the same date. On December 7, 1999, the board adopted an
amendment to the stock option plan approving an increase in the number of shares
of common stock available for issuance under the plan, and our stockholders
approved the amendment on that same date. The purpose of our 1999 stock option
plan is to enhance our ability to attract, retain and compensate highly
qualified employees and other individuals providing us with services. The option
plan permits the granting of options to purchase shares of common stock intended
to qualify as incentive stock options under the Internal Revenue Code of 1986,
or the Internal Revenue Code, and options that do not qualify as incentive stock
options, or non-qualified options. Grants may be made under our stock option
plan to employees and directors of our company or any related company and to any
other individual whose participation in the stock option plan is determined by
our board of directors to be in our best interests. As of March 15, 2000,
options to purchase 2,957,897 shares of common stock were outstanding under the
stock option plan. No options may be granted under the stock option plan after
July 22, 2009.
The number of shares of common stock available for issuance under the
option plan is 12,000,000 subject to adjustment for stock dividends, splits and
other similar events. If any shares of common stock covered by a grant are not
purchased or are forfeited, or if a grant otherwise terminates without delivery
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<PAGE>
of any shares of common stock subject to the option, then the number of shares
of common stock counted against the total number of shares available under the
stock option plan with respect to such grant will, to the extent of any such
forfeiture or termination, again be available for making grants under the stock
option plan.
The stock option plan is administered by our compensation committee. The
compensation committee has the full power and authority to take all actions and
to make all determinations required or provided for under the plan, any option,
or option agreement, to the extent such actions are consistent with the terms of
the plan. The board of directors may take any action the compensation committee
is authorized to take. To the extent permitted by law, the compensation
committee or board may delegate its authority under the plan to a member of the
board or one of our executive officers.
Option Terms. The option price of each option will be determined by the
compensation committee. However, the option price may not be less than either
100% of the fair market value of our common stock on the date of grant or less
than par value in the case of incentive stock options and less than par value
only in the case of non-qualified stock options. To qualify as incentive stock
options, options must meet various federal tax requirements, including limits on
the value of shares subject to incentive stock options which first become
excercisable in any one calendar year, and a shorter term and higher minimum
exercise price in the case of any grants to 10% stockholders.
The term of each option will be fixed by the compensation committee. The
compensation committee will determine at what time or times each option may be
exercised and the period of time, if any, after retirement, death, disability or
termination of employment during which options may be exercised. However, all
options shall automatically vest upon a termination of employment caused by the
optionee's death, disability, or retirement. Options may be made excercisable in
installments, and the compensation committee may accelerate the exercisability
of options, as well as remove any restrictions on such options. Except to the
extent otherwise expressly set forth in an option agreement relating to a
non-qualified option, options are not transferable other than by will or the
laws of descent and distribution. The compensation committee may include in any
option agreement any provisions relating to forfeitures of options that it deems
appropriate, including prohibitions on competing with our company and other
detrimental conduct.
If an optionee elects to exercise his or her option, he or she must pay the
option exercise price in full either in cash or cash equivalents. To the extent
permitted by the option agreement or the compensation committee, the optionee
may also pay the option exercise price by the delivery of common stock, to the
extent that the common stock is publicly traded, or other property. The
compensation committee may also allow the optionee to defer payment of the
option price, or may cause us to loan the option price to the optionee or to
guarantee that any shares to be issued will be delivered to a broker or lender
in order to allow the optionee to borrow the option price. If the compensation
committee so permits, the exercise price may also be delivered to us by a broker
pursuant to irrevocable instructions to the broker from the participant.
Corporate Transactions. Options granted under the stock option plan will
terminate in connection with corporate transactions involving our company as
listed below, except to the extent the options are continued or substituted for
in connection with the transaction. In the event of a termination of the options
in connection with a corporate transaction and subject to any limitations
imposed in an applicable option agreement, the options will be fully vested and
exercisable for a period to be determined by the board of directors immediately
before the completion of the corporate transaction. A corporate transaction
occurs in the event of:
o a dissolution or liquidation of our company;
o a merger, consolidation or reorganization of our company with one or
more other entities in which our company is not the surviving entity;
o a sale of substantially all of our assets to another person or entity;
or
o any transaction, including, without limitation, a merger or reorganization
in which our company is the surviving entity, approved by the board that
results in any person or entity, other than
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persons who are holders of stock of our company at the time the plan was
approved by the stockholders and other than an affiliate, owning 80
percent or more of the combined voting power of all classes of our stock.
The board of directors may also in its discretion and only to the extent
provided in an option agreement cancel outstanding options in connection with a
corporate transaction. Holders of canceled options will receive a payment for
each canceled option.
Amendments and Termination. The board of directors may at any time amend or
discontinue the stock option plan, except that the maximum number of shares
available for grant as incentive stock options and the class of persons eligible
to receive grants under the plan may not be changed without stockholder
approval.
Adjustments for Stock Dividends and Similar Events. The compensation
committee will make appropriate adjustments in outstanding awards to reflect
common stock dividends, splits and other similar events.
Federal Income Tax Consequences
Incentive Stock Options. The grant of an option will not be a taxable event
for the optionee or us. An optionee will not recognize taxable income upon
exercise of an incentive stock option, except that the alternative minimum tax
may apply. Any gain realized upon a disposition of common stock received
pursuant to the exercise of an incentive stock option will be taxed as long-term
capital gain the optionee holds the shares for at least two years after the date
of grant and for one year after the date of exercise, known as the holding
period requirement. if We will not be entitled to any business expense deduction
with respect to the exercise of an incentive stock option, except as discussed
below.
For the exercise of an option to qualify for the foregoing tax treatment,
must be an employee of our company or a subsidiary from the date the option is
granted through a date within three months before the date of exercise the
optionee generally of the option. In the case of an optionee who is disabled,
the three-month period for exercise following termination of employment is
extended to one year. In the case of an employee who dies, both the time for
exercising incentive stock options after termination of employment and the
holding period for common stock received pursuant to the exercise of the option
are waived.
If all of the foregoing requirements are met except the holding period
requirement mentioned above, the optionee will recognize ordinary income upon
the disposition of the common stock in an amount generally equal to the excess
of the fair market value of the common stock at the time the option was
exercised over the option exercise price, but not in excess of the gain realized
on the sale. The balance of the realized gain, if any, will be capital gain. We
will be allowed a business expense deduction to the extent the optionee
recognizes ordinary income subject to Section 162(m) of the Internal Revenue
Code, as summarized below.
If an optionee exercises an incentive stock option by tendering common
stock with a fair market value equal to part or all of the option exercise
price, the exchange of shares will be treated as a nontaxable exchange. This
nontaxable treatment would not apply, however, if the optionee had acquired the
shares being transferred pursuant to the exercise of an incentive stock option
and had not satisfied the holding period requirement summarized above. If the
exercise is treated as a nontaxable exchange, the optionee would have no taxable
income from the exchange and exercise, other than minimum taxable income as
discussed above, and the tax basis of the shares exchanged would be treated as
the substituted basis for the shares received. If the optionee used shares
received pursuant to the exercise of an incentive stock option, or another
statutory option, as to which the optionee had not satisfied the applicable
holding period requirement, the exchange would be treated as a taxable
disqualifying disposition of the exchanged shares.
If, pursuant to an option agreement, we withhold shares in payment of the
option price for incentive stock options, the transaction should generally be
treated as if the withheld shares had been sold in a disqualifying disposition
after exercise of the option, so that the optionee will realize ordinary income
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with respect to such shares. The shares paid for by the withheld shares should
be treated as having been received upon exercise of an incentive stock option,
with the tax consequences described above. However, the Internal Revenue Service
has not ruled on the tax treatment of shares received on exercise of an
incentive stock option where the option exercise price is paid with withheld
shares.
Non-Qualified Options. The grant of an option will not be a taxable event
for the optionee or us. Upon exercising a non-qualified option, an optionee will
recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the common stock on the date of
exercise. However, if the optionee is subject to restrictions, the measurement
date will be deferred, unless the optionee makes a special tax election within
30 days after exercise. Upon a subsequent sale or exchange of shares acquired
pursuant to the exercise of a non-qualified option, the optionee will have
taxable gain or loss, measured by the difference between the amount realized on
the disposition and the tax basis of the shares. This difference generally is
the amount paid for the shares plus the amount treated as ordinary income at the
time the option was exercised.
If we comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled
to a business expense deduction in the same amount and generally at the same
time as the optionee recognizes ordinary income. Under Section 162(m) of the
Internal Revenue Code, if the optionee is one of specified executive officers,
then, unless a number of exceptions apply, we are not entitled to deduct
compensation with respect to the optionee, including compensation related to the
exercise of shares options, to the extent such compensation in the aggregate
exceeds $1.0 million for the taxable year. Options issuable under the stock
incentive plan are intended to comply with the exception to Section 162(m) for
"performance-based" compensation.
If the optionee surrenders common stock in payment of part or all of the
exercise price for non-qualified options, the optionee will not recognize gain
or loss with respect to the shares surrendered, regardless of whether the shares
were acquired pursuant to the exercise of an incentive stock option, and the
optionee will be treated as receiving an equivalent number of shares pursuant to
the exercise of the option in a nontaxable exchange. The basis of the shares
surrendered will be treated as the substituted tax basis for an equivalent
number of option shares received and the new shares will be treated as having
been held for the same holding period as had expired with respect to the
transferred shares. The difference between the total option exercise price and
the total fair market value of the shares received pursuant to the exercise of
the option will be taxed as ordinary income. The optionee's basis in the
additional shares will be equal to the amount included in the optionee's income.
If, pursuant to an option agreement, we withhold shares in payment of the
option price for non-qualified options or in payment of tax withholding, the
transaction should generally be treated as if the withheld shares had been sold
for an amount equal to the exercise price after exercise of the option.
401(K) PLAN
In January, 1998, we adopted a tax-qualified employee savings and
retirement plan covering all of our employees. Under this 401(k) plan, employees
may elect to reduce their current compensation by a maximum pre-tax amount equal
to the lesser of 15% of eligible compensation or the statutorily prescribed
annual limit, which was $10,000 in 1998, and have the amount of this reduction
contributed to the 401(k) plan. The trustee under the 401(k) plan, at the
direction of each participant, invests the assets of the 401(k) plan in any of
four investment options. The 401(k) plan is intended to qualify under Section
401 of the Internal Revenue Code so that contributions by employees to the
401(k) plan, and income earned on plan contributions, are not taxable to
employees until withdrawn, and so that the contributions by employees will be
deductible by us when made. We may make matching or additional contributions to
the 401(k) plan, in amounts to be determined annually by the board of directors.
Employees are immediately 100% vested in their individual contributions and vest
25% per year in our contributions beginning with their second year of service,
becoming 100% vested in their fifth year of service. Vesting in our
contributions also occurs upon attainment of retirement age, death or
disability. The 401(k) plan provides for hardship withdrawals and employee
loans.
54
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF OUR COMMON STOCK
The following table provides you with information about the beneficial
ownership of shares of our common stock as of March 15, 2000 by:
o each person who, to our knowledge, beneficially owns more than 5% of our
common stock;
o each of our directors and named executive officers; and
o all our directors and executive officers as a group.
Beneficial ownership is determined under the rules of the SEC and includes
voting or investment power with respect to the common stock.
Unless indicated otherwise below, the address for each listed director and
officer is SAVVIS Communications Corporation, 12007 Sunrise Valley Drive,
Reston, Virginia 20191. The persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where applicable,
and the information contained in this table and the notes that follow. The total
number of shares of common stock outstanding used in calculating the percentage
for each person named in the table includes the shares of common stock
underlying options held by that person that are excercisable within 60 days of
March 15, 2000, but excludes shares of common stock underlying options held by
all other persons. Percentage of beneficial ownership is based on 92,892,297
shares of common stock outstanding as of March 15, 2000.
<TABLE>
<CAPTION>
SHARES
BENIFICIALLY PERCENTAGE
NAME OWNED OF CLASS
- --------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
Bridge Information Systems, Inc. (1) ................................ 45,483,702 49.0%
Welsh, Carson, Anderson & Stowe (2) ................................. 15,094,642 16.3%
Clyde A. Heintzelman (3) ............................................ 218,224 *
Robert A. McCormick ................................................. 750,000 *
David J. Frear ...................................................... 400,000 *
Richard Bubenik (4) ................................................. 60,889 *
Thomas M. Wendel (5) ................................................ 501,098 *
Patrick J. Welsh (6) ................................................ 15,093,413 16.3%
Thomas E. McInerney (7) ............................................. 15,133,118 16.3%
All executive officers and directors as a group (9 persons) ......... 11,582,202 15.2%
</TABLE>
- ----------
* Less than one percent.
(1) Does not include shares held by Welsh, Carson, Anderson & Stowe, as
described in note 2 below. The address of Bridge Information Systems, Inc.
is 3 World Financial Center, New York, New York 10281.
(2) Includes 4,635,958 shares of common stock held by Welsh, Carson, Anderson &
Stowe VI, L.P., or WCAS VI, 3,475,566 shares held by Welsh, Carson,
Anderson & Stowe VII, L.P., or WCAS VII, 6,250,000 shares of common stock
held by Welsh, Carson, Anderson & Stowe VIII, or WCAS VIII, L.P.65,357
shares held by WCAS Information Partners, L.P., or WCAS IP and 667,761
shares held by WCAS Capital Partners II, L.P., or WCAS CP II. The
respective sole general partners of WCAS VI, WCAS VII, WCAS VIII, WCAS IP
and WCAS CP II are WCAS VI Partners, L.P., WCAS VII Partners, L.P., WCAS
VIII Associates, WCAS INFO Partners and WCAS CP II Partners. The
individual general partners of each of these partnerships include some or
all of Bruce K. Anderson, Russell L. Carson, Anthony J. de Nicola, James
B. Hoover, Thomas E. McInerney, Robert A. Minicucci, Charles G. Moore,
III, Andrew M. Paul, Paul B. Queally, Rudolph E. Rupert, Jonathan M.
Rather, Lawrence B. Sorrel, Richard H. Stowe, Laura M. VanBuren and
Patrick J. Welsh. The
55
<PAGE>
individual general partners who are also directors of SAVVIS are Patrick J.
Welsh and Thomas E. McInerney. Each of the foregoing persons may be deemed to
be the beneficial owner of the common stock owned by the limited partnerships
of whose general partner he or she is a general partner. WCAS VI, WCAS VII,
WCAS VIII, WCAS IP and WCAS CP II, in the aggregate, own approximately 16% of
the outstanding equity securities of SAVVIS. The address of Welsh, Carson,
Anderson & Stowe is 320 Park Avenue, New York, NY 10022.
(3) Shares beneficially owned by Mr. Heintzelman are owned by Mr. Heintzelman's
family members.
(4) Includes 8,333 shares of common stock subject to options that are
excercisable within 60 days of the date of this filing and 1,200 shares held
by his spouse.
(5) Includes 1,098 shares that are owned by a trust that is established for the
benefit of Mr. Wendel's grandchildren of which Mr. Wendel is a trustee.
(6) Includes 15,029,285 shares held by Welsh, Carson, Anderson & Stowe, as
described in note 2 above.
(7) Includes 15,094,642 shares held by Welsh, Carson, Anderson & Stowe, as
described in note 2 above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Wendel, a director of our company, is also President, Chief Executive
Officer and Chairman of the Board of Bridge. Mr. McCormick, our Chief Executive
Officer and the Chairman of our Board, served as the Executive Vice President
and Chief Technical Officer of Bridge through December 1999. Messrs. McInerney
and Welsh serve as directors of our company, as well as directors of Bridge. In
addition, Messrs. McInerney and Welsh are general partners of Welsh Carson,
which sponsors investment partnerships, three of which are among our principal
stockholders and two of which are also principal stockholders of Bridge.
As of December 31, 1999, we had amounts payable to Bridge of approximately
$24 million. These advances bear interest at a rate of 8% per year. We used the
proceeds of these loans to fund our working capital requirements.
In February 2000, we entered into several agreements with Bridge, including
a master establishment and transition agreement, an equipment colocation permit,
a network services agreement, an administrative services agreement, a technical
services agreement, the GECC Sublease and a local network services agreement.
Summaries of these agreements are set forth below.
Master Establishment and Transition Agreement. The master establishment and
transition agreement transferred Bridge's global Internet protocol network to us
for $88 million. Under this agreement, a Bridge subsidiary that owned all of
Bridge's U.S. network assets transferred them to one of our subsidiaries. The
transfers of non-U.S. assets were effected under local transfer agreements
between the appropriate Bridge and SAVVIS subsidiaries.
The transfer of several portions of the Bridge network requires contractual
consents from some of Bridge's counterparties or regulatory approvals in several
jurisdictions which have not yet been obtained. Bridge will continue to own and
operate those portions of the network while we continue to seek the appropriate
consents. Under the master establishment and transition agreement, once the
requisite consents and approvals have been acquired in each jurisdiction, we
will have an obligation to purchase the assets from Bridge in that jurisdiction.
In jurisdictions where we expect the purchase to occur within one year of the
closing date of the Bridge asset transfer, Bridge will operate the facilities on
our behalf and we will reimburse Bridge for all costs directly associated with
the use, maintenance and operation of those assets and we will be paid for the
use of those assets by Bridge under the network services agreement. We expect
the asset transfer to occur in Greece, Ireland, Hungary, Poland, Taiwan, Mexico
and Venezuela within one year from the closing date of the Bridge transfer. Our
obligation to acquire these assets expires upon the later of ten years from the
closing date or expiration of the network services agreement.
56
<PAGE>
Under the master establishment and transition agreement, Bridge is
responsible for all liabilities associated with its Internet protocol network
prior to the transfer to us, and we are responsible for liabilities after the
transfer. The agreement provides that we will indemnify Bridge for breaches of
our representations and warranties and with respect to our responsibility for
our assumed liabilities.
Network Services Agreement. Under the network services agreement, we have
agreed to provide Bridge with networks for the collection and distribution of
the financial information provided by Bridge to its customers and for Bridge's
internal managed data network needs for ten years from the closing date. The
agreement may be extended by Bridge for an additional five-year period by giving
us notice one year before the expiration of the initial ten-year term. Upon
termination of the agreement, we will be required to continue to provide network
services to Bridge for an additional five years, at rates in effect for our
third party customers at the termination date.
Bridge has agreed to pay us a minimum of $105 million, $132 million and
$145 million for network services in 2000, 2001 and 2002, respectively. In
addition, Bridge has agreed that the amount paid to us under the agreement for
the fourth, fifth and sixth years will not be less than 80% of the total amount
paid by Bridge and its subsidiaries for Internet protocol data transport
services; and the amount paid to us under the agreement for the seventh through
tenth years will not be less than 60% of the total amount paid by Bridge and its
subsidiaries for Internet protocol data transport services.
In addition we charge Bridge for additional bandwidth and additional
connections at a rate established on an annual basis. In those instances where
the addition is outside of the existing network, we will negotiate the terms of
the expansion with Bridge on a case-by-case basis, including any additional
charges to be paid to us by Bridge to defray the cost of such expansion. If we
cannot reach agreement with Bridge on the annual rate or on the additional
charges, and Bridge still desires for us to provide such service, then we will
submit prices to an independent arbitrator who will assign the price quoted by
the party that in the arbitrator's opinion came closest to quoting a fair market
price.
We have also agreed that, beginning twelve months after the date of the
transfer of the network, the network will perform in accordance with specific
quality of service standards. If those standards are not met with respect to a
customer site in any month, Bridge will be entitled to receive, upon request, a
credit for one month's charges for that site. The Bridge network services
agreement contains quality of service levels and provides for credits if the
levels are not maintained. In addition, a material breach of the service levels
allows Bridge to terminate the agreement and/or collect up to $50 million as
liquidated damages not more than once in any 36-month period.
The agreement provides for the creation of a strategic advisory committee
comprised of three of our senior executives and three from Bridge, with an
additional outside consultant to be appointed by both parties. The mission of
the committee will be to review the performance of the network, to serve as a
forum for the consideration and discussion of issues related to the network, and
to discuss issues related to the future development of the SAVVIS ProActiveSM
Network in the context of the relationship of SAVVIS and Bridge. We have agreed
to use our commercially reasonable best efforts to comply with the
recommendations of the committee.
Bridge has agreed that during the term of the network services agreement
and for the next five years after the termination of this agreement, Bridge will
not compete with us anywhere in the world in providing packet-data transport
network services, other than investments in a competitor not to exceed 10% of
the outstanding capital stock of that competitor.
So long as Bridge is the beneficial owner of 20% of our outstanding voting
securities, we have agreed not to provide any of our stockholders with voting or
registration rights superior to the voting or registration rights of Bridge
other than as required by law.
Local Network Services Agreement. In most jurisdictions outside the United
States, the charges that we pay for the local circuit between our distribution
frame, which usually is located in a central office of the local
telecommunications provider, and the Bridge customer premises are charged back
to Bridge at a rate intended to recover our costs.
57
<PAGE>
Equipment Colocation Permits. Some of the purchased network assets are
located in premises currently leased by Bridge. The permits provide us, subject
to the receipt of required landlord consents, with the ability to keep the
equipment that is being purchased from Bridge in the facilities in which they
are currently located. We have no interest in or rights to the real estate other
than the right to enter the facilities for the purpose of maintaining the
equipment and to place a rack with equipment in the premises. According to this
arrangement, we occupy a minimal amount of space, generally less than 100 square
feet, in each of the premises. The permits, approximately thirty in total, are
for a term that is coterminous with the underlying rights which Bridge has to
such facilities, which range from one to ten years. Our costs for these
colocation permits, which are fixed costs, are estimated to be less than $75,000
per year.
Technical Services Agreement. Pursuant to the technical services agreement,
Bridge provides us with services, including help desk support, installation,
maintenance and repair of equipment, customer related services such as
processing service orders and provisioning interconnection. In addition, Bridge
manages the colocation of third-party equipment in our facilities, which
includes facilities management, such as power, heating, air conditioning,
lighting and other utilities and installation, monitoring and maintenance of
equipment. Bridge manages our network operation centers. This agreement will
remain in effect so long as the network services agreement is in effect. Rates
for the services provided under this agreement are fixed for the first year. We
expect the aggregate amount of payments to Bridge under the technical services,
agreement in 2000 will be approximately $1.1 million. After the first year, we
will negotiate new rates, and if we and Bridge cannot agree on new rates, then
we will submit prices to an independent arbitrator who will assign the price
quoted by the party that in the arbitrator's opinion comes closest to quoting a
fair market price. Bridge is required to meet quality of service standards set
forth in the agreement, and, if Bridge fails to meet the standards, we will be
entitled to a refund of all amounts paid for the non-complying service plus the
costs we incurred to have that service provided by a third party.
Administrative Services Agreement. Until February 2003, and from then on
from year to year until Bridge or we terminate the agreement, Bridge will
provide us with various administrative services, including payroll and
accounting functions, benefit management and the provision of office space. We
have the right to take over one or more of these functions before the
termination of the agreement. Bridge charges us for these services in a manner
that is intended to permit Bridge to recover the costs of providing the
services.
GECC Sublease. We have subleased from Bridge some of the network assets
that Bridge leases from GECC. The aggregate amount of these capital leases is
$25 million. The terms of the GECC sublease mirror the GECC master lease. At the
end of the lease term, Bridge will have the right to acquire these assets from
GECC for $1, and we will have the right to acquire these assets from Bridge for
$1.
On February 7, 2000, we entered into a registration rights agreement with
Welsh Carson and Bridge, pursuant to which we have granted to Welsh Carson
customary registration rights with respect to the shares of our common stock
which were purchased by Welsh Carson from Bridge following the initial public
offering, including demand registration rights and piggy-back registration
rights.
58
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) and (2) Financial Statements and Financial Statement Schedules
The following consolidated financial statements are filed pursuant to Item
8 of this report:
Report of Independent Auditors.
Consolidated Balance Sheets as of December 31, 1998 and 1999.
Consolidated Statements of Operations for the years ended December 31,
1997, 1998 and 1999.
Consolidated Statements of Changes in Stockholders' Deficit for the years
ended December 31, 1997, 1998, and 1999.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1998 and 1999.
Notes to Consolidated Financial Statements.
All other financial statement schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission
either have been included in the financial statements, or notes thereto, are not
required under the related instructions or are inapplicable and therefore have
been omitted.
14(a)(3) Exhibits. The following exhibits are either provided with this Form
10-K or are incorporated herein by reference.
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
- ---------- --------------------------------------------------------------------------------------
<S> <C>
3.1* Amended and Restated Certificate of Incorporation of the Registrant
3.2* Certificate of Amendment to Amended and Restated Certificate of Incorporation of the
Registrant
3.3* Amended and Restated Bylaws of the Registrant
4.1* Form of Common Stock Certificate
10.1* 1999 Stock Option Plan
10.2* Form of Incentive Stock Option Agreement under the 1999 Stock Option Plan
10.3* Form of Incentive Stock Option Agreement under the 1999 Stock Option Plan
10.4* Form of Non-Qualified Stock Option Agreement under the 1999 Stock Option Plan
10.5* Amended and Restated Agreement and Plan of Merger, dated February 19, 1999, among the
Registrant, SAVVIS Acquisition Corp. and Bridge Information Systems, Inc.
10.6* Employment Agreement, dated December 4, 1998, between the Registrant and Clyde A.
Heintzelman
10.7* Letter Agreement, dated November 12, 1999, between the Registrant and Clyde A.
Heintzelman
10.8* Employment Agreement, dated December 20, 1999, between the Registrant and Jack M.
Finlayson
10.9* Letter Agreement, dated June 14, 1999, between the Registrant and David J. Frear
10.10* Letter Agreement, dated September 30, 1999, between the Registrant and James D. Mori
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
10.11 Master Establishment and Transition Agreement, dated February 9,
2000, between the Registrant and Bridge Information Systems, Inc.,
including as Exhibit B a Form of Administrative Services
Agreement, as Exhibit E a Form of Local Contract of Assignment and
Assumption, as Exhibit F a Form of Local Asset Transfer Agreement,
as Exhibit H a Form of Equipment Colocation Permit, as Exhibit I a
Form of Promissory Note, as Exhibit J a Form of
Call Asset Transfer Agreement and as Exhibit K the sublease Agreement
<S> <C>
10.12 + Network Services Agreement, dated February 18, 2000, between SAVVIS Communications
Corporation and Bridge Information Systems, Inc.
10.13 + Technical Services Agreement, dated February 18, 2000, between SAVVIS Communications
Corporation and Bridge Information Systems, Inc.
10.14* Managed Network Agreement, dated January 31, 1995, between Sprint Communications
Company L.P. and Bridge Data Company
10.15* Amendment One to the Managed Network Agreement, dated August 23, 1995, between
Sprint Communications Company L.P. and Bridge Data Company
10.16* Amendment Two to the Managed Network Agreement, dated August 16, 1995, between
Sprint Communications Company L.P. and Bridge Data Company
10.17 +* Amendment Three to the Managed Network Agreement, dated March 1, 1996, between Sprint
Communications Company L.P. and Bridge Data Company
10.18 +* Amendment Four to the Managed Network Agreement, dated July 29, 1996, between Sprint
Communications Company L.P. and Bridge Data Company
10.19 +* Amendment Five to the Managed Network Agreement, dated December 5, 1996, between
Sprint Communications Company L.P. and Bridge Data Company
10.20 +* Amendment Six to the Managed Network Agreement, dated May 23, 1997, between Sprint
Communications Company L.P. and Bridge Data Company
10.21 +* Amendment Seven to the Managed Network Agreement, dated August 28, 1998, between
Sprint Communications Company L.P. and Bridge Data Company
10.22 +* Service Agreement, dated August 15, 1996, between the Registrant and IXC Carrier, Inc.
10.23 +* Amendment No. 1 to the Service Agreement, dated October 22, 1996, between the Registrant
and IXC Carrier, Inc.
10.24 +* Master Internet Services Agreement, effective June 4, 1999,
between the Registrant and UUNET Technologies, Inc.
10.25 +* InternetMCI Dedicated Access Agreement, dated April 16, 1998,
between the Registrant and networkMCI, Inc.
10.26* Registration Rights Agreement, dated February 7, 2000, among the Registrant, Welsh Carson
Anderson & Stowe VIII, L.P. and Bridge Information Systems, Inc.
10.27 Office Lease between WGP Associates, LLC and SAVVIS Communications 16.1
Letter Re Change in Certifying Accountants 21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule for the year ended December 31, 1999
</TABLE>
- ----------
* Incorporated by reference to the same numbered exhibit to SAVVIS' Registration
Statement on Form S-1, as amended (File No. 333-90881).
+ Confidential treatment has been granted for this exhibit. The copy filed as an
exhibit omits the information subject to the request for confidential treatment.
(b) Reports on Form 8-K.
None.
(c) Exhibits.
60
<PAGE>
The list of exhibits filed with this report is set forth in response to
Item 14(a)(3). SAVVIS hereby files as part of this report the exhibits listed in
the index to the exhibits.
(d) Financial Statements Schedules.
None.
61
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 30, 2000.
SAVVIS COMMUNICATIONS CORPORATION
By: /s/ Robert McCormick
-------------------------
Robert McCormick
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
OF THE BOARD
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant, in the
capacities indicated below and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- ---------------------------------------- ---------------
<S> <C> <C>
/s/ ROBERT MCCORMICK Chief Executive Officer and Chairman March 30, 2000
- ---------------------------
of the Board (principal executive
Robert McCormick
officer)
/s/ DAVID J. FREAR Executive Vice President, Chief March 30, 2000
- ---------------------------
Financial Officer and Director
David J. Frear
(principal financial officer and
principal accounting officer)
/s/ JACK M. FINLAYSON President, Chief Operating Officer and March 30, 2000
- ---------------------------
Jack M. Finlayson Director
/s/ CLYDE A. HEINTZELMAN Director March 30, 2000
- ---------------------------
Clyde A. Heintzelman
/s/ THOMAS E. MCINERNEY Director March 30, 2000
- ---------------------------
Thomas E. McInerney
/s/ PATRICK J. WELSH Director March 30, 2000
- ---------------------------
Patrick J. Welsh
/s/ THOMAS M. WENDEL Director March 30, 2000
- ---------------------------
Thomas M. Wendel
</TABLE>
62
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SAVVIS COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report - Deloitte & Touche LLP .................. F-2
Independent Auditors' Report - Ernst & Young LLP ...................... F-3
Consolidated Balance Sheets as of December 31, 1998 and 1999 .......... F-4
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999 ..................................... F-5
Consolidated Statements of Changes in Stockholders' Deficit
For the years ended December 31, 1997, 1998 and 1999 ................. F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999 ..................................... F-7
Notes to Consolidated Financial Statements ............................ F-8
</TABLE>
F- 1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
SAVVIS Communications Corporation:
We have audited the accompanying consolidated balance sheet of SAVVIS
Communications Corporation and subsidiaries (the "Company" or the "Successor
Company"), a majority-owned consolidated subsidiary of Bridge Information
Systems, Inc. ("Bridge"), as of December 31, 1999, and the related consolidated
statements of operations, changes in stockholders' deficit and cash flows for
the period from April 7, 1999 (the date of the Company's acquisition by Bridge)
through December 31, 1999. We have also audited the consolidated balance sheet
of the Company's predecessor (the "Predecessor Company") as of December 31, 1998
and the related consolidated statements of operations, changes in stockholders'
deficit and cash flows for the year then ended and for the period from January
1, 1999 through April 6, 1999. These financial statements are the responsibility
of the Successor and Predecessor Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SAVVIS
Communications Corporation and subsidiaries as of December 31, 1999 and the
results of their operations and their cash flows for the period from April 7,
1999 through December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America. Further, in our opinion, the
Predecessor Company's consolidated financial statements referred to above
present fairly, in all material respects, their consolidated financial position
as of December 31, 1998 and the results of their operations and their cash flows
for the year ended December 31, 1998 and for the period from January 1, 1999
through April 6, 1999, in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Successor
Company adopted a new accounting basis effective April 7, 1999 in connection
with a change in ownership and recorded net assets as of that date at the new
owner's acquisition cost. Accordingly, the book value of assets and liabilities
and related depreciation and amortization charges reflected in the accompanying
consolidated balance sheet as of December 31, 1999 and the consolidated
statement of operations for the period from April 7, 1999 through December 31,
1999 are not comparable to those of earlier periods presented.
/s/ Deloitte & Touche LLP
McLean, Virginia
February 18, 2000
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors of
SAVVIS Communications Corporation:
We have audited the accompanying consolidated statements of operations, changes
in stockholders' deficit and cash flows of SAVVIS Communications Corporation and
subsidiaries (the "Company"), for the year ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of SAVVIS
Communications Corporation and subsidiaries for the year ended December 31, 1997
in conformity with accounting principles generally accepted in the United
States.
The accompanying financial statements referred to above have been prepared
assuming the Company will continue as a going concern. The Company has incurred
operating losses and has a working capital deficiency. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.
/S/ ERNST & YOUNG, LLP
St. Louis, Missouri
April 23, 1998
F-3
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1999
--------------- ------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................................................... $ 2,521 $ 2,867
Accounts receivable, less allowance for doubtful accounts of $149 in 1998 and
$375 in 1999 ..................................................................... 2,649 2,271
Prepaid expenses ................................................................... 120 503
Other current assets ............................................................... 21 88
--------- ---------
Total current assets ................................................................ 5,311 5,729
PROPERTY AND EQUIPMENT -- Net (Note 5) .............................................. 4,753 5,560
GOODWILL AND INTANGIBLE ASSETS -- Net of accumulated amortization of $503 in
1998 and $12,217 in 1999 ........................................................... 1,406 26,250
OTHER LONG-TERM ASSETS .............................................................. 193 1,757
--------- ---------
TOTAL ............................................................................... $ 11,663 $ 39,296
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ................................................................... $ 4,498 $ 5,093
Accrued compensation payable ....................................................... 1,140 1,928
Due to Bridge Information Systems, Inc. (Note 12) .................................. -- 24,065
Deferred revenue ................................................................... 71 --
Notes payable to bank -- current portion (Note 6) .................................. 13 --
Current portion of capital lease obligations (Note 6) .............................. 1,097 2,462
Other accrued liabilities .......................................................... 206 5,083
--------- ---------
Total current liabilities ........................................................... 7,025 38,631
--------- ---------
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION (NOTE 6) ............................ 1,649 3,431
COMMITMENTS AND CONTINGENCIES (NOTE 10)
REDEEMABLE PREFERRED STOCK (NOTE 3):
Series A, $.001 par value, 517,410 shares authorized, 502,410 issued and
outstanding, liquidation preference of $5,345 .................................... 5,345 --
Series B, $.001 par value, 5,649,241 shares authorized, 5,649,241 issued and
outstanding, liquidation preference of $5,649 .................................... 3,898 --
Series C, $.001 par value, 30,000,000 shares authorized, 30,000,000 issued and
outstanding, liquidation preference of $30,000 -- net of unamortized discount 26,943 --
STOCKHOLDERS' DEFICIT:
Common stock; $.01 par value, 125,000,000 authorized, 69,299,809 issued and
outstanding in 1998, 77,210,286 issued and outstanding in 1999 ................... 693 772
Additional paid-in capital ......................................................... 5,263 84,973
Accumulated deficit ................................................................ (39,011) (38,617)
Deferred compensation .............................................................. (78) (49,894)
Treasury stock ..................................................................... (64) --
--------- ---------
Total stockholders' deficit ......................................................... (33,197) (2,766)
--------- ---------
TOTAL ............................................................................... $ 11,663 $ 39,296
========= =========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1 PERIOD FROM
TO APRIL 7 TO
APRIL 6, DECEMBER 31,
1997 1998 1999 1999
--------------- --------------- --------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
REVENUES:
Service ....................................................... $ 2,395 $ 12,827 $ 5,303 $ 17,501
Installation and other ........................................ 363 847 137 1,048
----------- ----------- ----------- -----------
Total revenue ................................................ 2,758 13,674 5,440 18,549
----------- ----------- ----------- -----------
DIRECT COSTS AND OPERATING EXPENSES:
Data communications and operations ............................ 11,072 20,889 6,429 21,353
Selling, general and administrative ........................... 5,130 12,245 4,751 20,160
Depreciation and amortization ................................. 631 2,288 817 14,351
Impairment of assets .......................................... -- -- 1,383 --
----------- ----------- ----------- -----------
Total direct costs and operating expenses .................... 16,833 35,422 13,380 55,864
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS .......................................... (14,075) (21,748) (7,940) (37,315)
NONOPERATING INCOME (EXPENSE):
Interest income ............................................... -- 383 23 48
Interest expense .............................................. (482) (483) (158) (1,350)
----------- ----------- ----------- -----------
Total nonoperating income (expense) .......................... (482) (100) (135) (1,302)
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND
EXTRAORDINARY ITEM ........................................... (14,557) (21,848) (8,075) (38,617)
INCOME TAXES (NOTE 9) ......................................... -- -- -- --
Minority Interest in Losses, net of accretion ................. 547 (147) -- --
----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM ................................ (14,010) (21,995) (8,075) (38,617)
Extraordinary gain on debt extinguishment, net of tax ......... -- 1,954 -- --
----------- ----------- ----------- -----------
NET LOSS ...................................................... (14,010) (20,041) (8,075) (38,617)
PREFERRED STOCK DIVIDENDS ..................................... (151) (2,054) (706) --
AMORTIZATION OF DEFERRED FINANCING COSTS AND DISCOUNT ON
SERIES B AND C PREFERRED STOCK ............................... -- (571) (244) --
----------- ----------- ----------- -----------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS .................. $ (14,161) $ (22,666) $ (9,025) $ (38,617)
=========== =========== =========== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM ........................................... $ (.38) $ (.42) $ (.14) $ (.54)
EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT ..................... -- .03 -- --
----------- ----------- ----------- -----------
BASIC AND DILUTED LOSS PER COMMON SHARE ....................... $ (.38) $ (.39) $ (.14) $ (.54)
----------- ----------- ----------- -----------
WEIGHTED AVERAGE SHARES OUTSTANDING ........................... 36,904,108 58,567,482 66,018,388 72,075,287
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31 1997 AND 1998 (PREDECESSOR),
PERIOD FROM JANUARY 1, 1999
THROUGH APRIL 6, 1999 (PREDECESSOR)
AND PERIOD FROM APRIL 7, 1999 THROUGH DECEMBER 31, 1999 (SUCCESSOR)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------------------
COMMON TREASURY
STOCK STOCK
------------ ---------------
<S> <C> <C>
BALANCE, DECEMBER 31, 1996
(Predecessor) .................... 39,550,519 --
Purchase of shares for treasury ... -- 4,853,967
Dividends declared on Series A
Preferred Stock .................. -- --
Net loss .......................... -- --
---------- ---------
BALANCE, DECEMBER 31, 1997
(Predecessor) .................... 39,550,519 4,853,967
Issuance of common stock .......... 1,976 --
Issuance of stock options ......... -- --
Issuance of common stock for
acquisition of IXA ............... 28,789,781 --
Issuance of common stock upon
exercise of stock options ........ 957,533 --
Dividends declared on Series C
preferred Stock .................. -- --
Amortization of deferred
financing costs and discount on
Series B and C Preferred Stock -- --
Purchase of shares for treasury ... -- 197,576
Issuance of Series C warrants
(Note 3) ......................... -- --
Net loss .......................... -- --
---------- ---------
BALANCE, DECEMBER 31, 1998
(Predecessor) .................... 69,299,809 5,051,543
Issuance of common stock upon
exercise of stock options ........ 2,700,191 --
Dividends declared on Series C
Preferred Stock .................. -- --
Amortization of deferred
financing costs and discount on
Series B and C Preferred Stock -- --
Recognition of deferred
compensation cost ................ -- --
Net loss .......................... -- --
---------- ---------
BALANCE, APRIL 6, 1999
(Predecessor) .................... 72,000,000 5,051,543
Recapitalization related to
acquisition of the Company by
Bridge Information Systems ....... -- (5,051,543)
Issuance of common stock upon
exercise of stock options ........ 5,210,286 --
Issuance of stock options and
restricted stock ................. -- --
Recognition of deferred
compensation cost ................ -- --
Net loss .......................... -- --
---------- ----------
BALANCE, DECEMBER 31 1999
(Successor) ...................... 77,210,286 --
========== ==========
<CAPTION>
AMOUNTS
------------------------------------------------------------------------
ADDITIONAL
COMMON PAID--IN DEFERRED ACCUMULATED TREASURY
STOCK CAPITAL COMPENSATION DEFICIT STOCK TOTAL
-------- ----------- -------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996
(Predecessor) .................... $396 $ 1,095 $ -- $ (2,184) $ -- $ (693)
Purchase of shares for treasury ... -- -- -- -- (49) (49)
Dividends declared on Series A
Preferred Stock .................. -- -- -- (151) -- (151)
Net loss .......................... -- -- -- (14,010) -- (14,010)
---- ------- --------- --------- ------ ---------
BALANCE, DECEMBER 31, 1997
(Predecessor) .................... 396 1,095 -- (16,345) (49) (14,903)
Issuance of common stock .......... -- 1 -- -- -- 1
Issuance of stock options ......... -- 171 (78) -- -- 93
Issuance of common stock for
acquisition of IXA ............... 287 296 -- -- -- 583
Issuance of common stock upon
exercise of stock options ........ 10 -- -- -- -- 10
Dividends declared on Series C
preferred Stock .................. -- -- -- (2,054) -- (2,054)
Amortization of deferred
financing costs and discount on
Series B and C Preferred Stock -- -- -- (571) -- (571)
Purchase of shares for treasury ... -- -- -- -- (15) (15)
Issuance of Series C warrants
(Note 3) ......................... -- 3,700 -- -- -- 3,700
Net loss .......................... -- -- -- (20,041) -- (20,041)
---- ------- --------- --------- ------ ---------
BALANCE, DECEMBER 31, 1998
(Predecessor) .................... 693 5,263 (78) (39,011) (64) (33,197)
Issuance of common stock upon
exercise of stock options ........ 27 1 -- -- -- 28
Dividends declared on Series C
Preferred Stock .................. -- -- -- (706) -- (706)
Amortization of deferred
financing costs and discount on
Series B and C Preferred Stock -- -- -- (244) -- (244)
Recognition of deferred
compensation cost ................ -- -- 78 -- -- 78
Net loss .......................... -- -- -- (8,075) -- (8,075)
---- ------- --------- --------- ------ ---------
BALANCE, APRIL 6, 1999
(Predecessor) .................... 720 5,264 -- (48,036) (64) (42,116)
Recapitalization related to
acquisition of the Company by
Bridge Information Systems ....... -- 25,762 -- 48,036 64 73,862
Issuance of common stock upon
exercise of stock options ........ 52 2,553 -- -- -- 2,605
Issuance of stock options and
restricted stock ................. -- 51,394 (51,394) -- -- --
Recognition of deferred
compensation cost ................ -- -- 1,500 -- -- 1,500
Net loss .......................... -- -- -- (38,617) -- (38,617)
---- ------- --------- --------- ------ ---------
BALANCE, DECEMBER 31 1999
(Successor) ...................... $772 $84,973 $ (49,894) $ (38,617) $ -- $ (2,766)
==== ======= ========= ========= ====== =========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997 1998
--------------- ---------------
(PREDECESSOR) (PREDECESSOR)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ................................................................... $ (14,010) $ (20,041)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization ............................................. 631 2,288
Impairment of fixed assets ................................................ -- --
Extraordinary gain on early extinguishment of debt, net of tax ............ -- (1,954)
Minority interest in losses, net of accretion ............................. (547) 147
Discount accretion ........................................................ 55 25
Compensation expense relating to the issuance of options and restricted
stock .................................................................... -- 93
Net changes in operating assets and liabilities -- net of effect of
acquisition:
Accounts receivable ...................................................... (527) (1,885)
Other current assets ..................................................... 4 63
Other assets ............................................................. (53) (141)
Prepaid expenses ......................................................... (250) 183
Accounts payable ......................................................... 3,316 61
Deferred revenue ......................................................... 294 (288)
Other accrued liabilities ................................................ 585 889
--------- ---------
Net cash used in operating activities ................................... (10,502) (20,560)
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures ....................................................... (697) (1,688)
Acquisition of IXA ......................................................... -- (750)
--------- ---------
Net cash used in investing activities ................................... (697) (2,438)
--------- ---------
FINANCING ACTIVITIES:
Purchase of treasury stock ................................................. (49) (15)
Exercise of stock options .................................................. -- 11
Issuance of preferred stock and warrants ................................... 250 26,200
Payment of deferred financing costs ........................................ -- (1,747)
Principal payments under capital lease obligations ......................... (218) (793)
Issuance of senior convertible notes ....................................... 4,483 --
Issuance of Class A shares of subsidiary ................................... 917 --
Issuance of senior convertible bridge notes ................................ 3,053 1,800
Principal payments of senior convertible bridge notes ...................... -- (1,053)
Issuance of notes payable .................................................. 3,725 --
Proceeds from borrowings from Bridge Information Systems, Inc. ............. -- --
Principal payments on borrowings from bank ................................. (137) (282)
--------- ---------
Net cash provided by financing activities ............................... 12,024 24,121
--------- ---------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS ........................ 825 1,123
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............................. 573 1,398
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................... $ 1,398 $ 2,521
========= =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt incurred under capital lease obligations ............................. $ 718 $ 2,835
Forgiveness of capital lease obligations in exchange for property ......... -- 279
Preferred stock dividends ................................................. 151 2,054
Amortization of deferred financing costs .................................. -- 234
Accretion of preferred stock discount ..................................... -- 569
Senior convertible notes exchanged for preferred stock .................... -- 7,617
Issuance of common stock in acquisition of IXA ............................ -- 583
Recapitalization related to acquisition of the company by Bridge
Information Systems, Inc. ................................................ -- --
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: .........................
Cash paid for interest ..................................................... 227 262
<PAGE>
<CAPTION>
PERIOD FROM PERIOD FROM
JANUARY 1 TO APRIL 7 TO
APRIL 6, DECEMBER 31,
1999 1999
--------------- -------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ................................................................... $ (8,075) $ (38,617)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization ............................................. 817 14,351
Impairment of fixed assets ................................................ 1,383 --
Extraordinary gain on early extinguishment of debt, net of tax ............ -- --
Minority interest in losses, net of accretion ............................. --
Discount accretion ........................................................ --
Compensation expense relating to the issuance of options and restricted
stock .................................................................... 78 1,500
Net changes in operating assets and liabilities -- net of effect of
acquisition:
Accounts receivable ...................................................... (17) 395
Other current assets ..................................................... (18) (49)
Other assets ............................................................. (156) (1,407)
Prepaid expenses ......................................................... (51) (331)
Accounts payable ......................................................... (127) 721
Deferred revenue ......................................................... 52 (123)
Other accrued liabilities ................................................ (71) 5,287
-------- ---------
Net cash used in operating activities ................................... (6,185) (18,273)
-------- ---------
INVESTING ACTIVITIES:
Capital expenditures ....................................................... (275) (837)
Acquisition of IXA ......................................................... -- --
-------- ---------
Net cash used in investing activities ................................... (275) (837)
-------- ---------
FINANCING ACTIVITIES:
Purchase of treasury stock ................................................. -- --
Exercise of stock options .................................................. 28 2,605
Issuance of preferred stock and warrants ................................... -- --
Payment of deferred financing costs ........................................ -- --
Principal payments under capital lease obligations ......................... (182) (587)
Issuance of senior convertible notes ....................................... -- --
Issuance of Class A shares of subsidiary ................................... -- --
Issuance of senior convertible bridge notes ................................ -- --
Principal payments of senior convertible bridge notes ...................... -- --
Issuance of notes payable .................................................. -- --
Proceeds from borrowings from Bridge Information Systems, Inc. ............. 4,700 19,365
Principal payments on borrowings from bank ................................. (13) --
-------- ---------
Net cash provided by financing activities ............................... 4,533 21,383
-------- ---------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS ........................ (1,927) 2,273
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............................. 2,521 594
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................... $ 594 $ 2,867
======== =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt incurred under capital lease obligations ............................. $ 2,634 $ 1,281
Forgiveness of capital lease obligations in exchange for property ......... -- --
Preferred stock dividends ................................................. 706 --
Amortization of deferred financing costs .................................. 76 --
Accretion of preferred stock discount ..................................... 168 --
Senior convertible notes exchanged for preferred stock .................... -- --
Issuance of common stock in acquisition of IXA ............................ -- --
Recapitalization related to acquisition of the company by Bridge
Information Systems, Inc. ................................................ -- 31,746
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: .........................
Cash paid for interest ..................................................... 99 429
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1998 (PREDECESSOR),
PERIOD FROM JANUARY 1, 1999 THROUGH APRIL 6, 1999 (PREDECESSOR)
AND PERIOD FROM APRIL 7, 1999 THROUGH DECEMBER 31, 1999 (SUCCESSOR)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS -- SAVVIS Communications Corporation, a Delaware
corporation, formerly SAVVIS Holdings Corporation ("Holdings"), together with
its wholly owned subsidiary, SAVVIS Communications Corporation, a Missouri
corporation ("SCC"), and its predecessor company, SAVVIS Communications
Enterprises L.L.C. ("LLC"), are referred to herein collectively as the
"Company". The Company was formed in November 1995, commenced commercial
operations in 1996 and provides high-speed Internet access and high-end private
Intranet services to corporations throughout the United States. The Company also
offers colocation services, network operations, and related engineering
services.
On April 7, 1999 (the "acquisition date"), the Company was acquired by a
wholly-owned subsidiary of Bridge Information Systems, Inc. ("Bridge") in an all
stock transaction that was accounted for as a "purchase transaction" under
Accounting Principles Board Opinion No. 16. Pursuant to the terms of the
transaction, Bridge issued approximately 3,011,000 shares of its common stock
together with 239,000 options and warrants to purchase its common stock, in
exchange for all the outstanding equity interests of SAVVIS. To effect the
transaction, the Series A, B and C Preferred Shareholders received their
respective liquidation preferences (see Note 3) in the form of Bridge common
stock. The Company's Series C warrant holders also exercised their warrants and
participated with the other common shareholders and employee option holders in
exchanging their common shares for remaining Bridge common shares. Series A
warrant holders and those holding common warrants with a strike price per
warrant of $4.13 exchanged their warrants for warrants to purchase Bridge common
stock. Company stock options outstanding at the date of the transaction were
converted into options to purchase Bridge common stock.
The value of the Bridge shares and options issued and the costs incurred by
Bridge in connection with the acquisition aggregated $31,746. In accordance with
the accounting requirements of the Securities and Exchange Commission, purchase
transactions that result in one entity becoming substantially wholly-owned by
the acquirer establish a new basis of accounting in the acquired entity's
records for the purchased assets and liabilities. Thus, the purchase price has
been allocated to the underlying assets purchased and liabilities assumed based
on their estimated fair values at the acquisition date. As a result of the
application of fair value accounting, intangibles, goodwill, other liabilities
and additional paid-in capital were increased in the Company's consolidated
financial statements.
The following is a summary of unaudited pro forma results of operations assuming
the acquisition had occurred at the beginning of the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Revenues ................................... $ 13,674 $ 23,989
Net loss before extraordinary item ......... (38,250) (54,872)
Net loss ................................... (36,296) (54,872)
Net loss per common share .................. $ (0.62) $ (0.76)
</TABLE>
On September 10, 1999, Bridge sold 18,129,721 shares of SAVVIS common stock in a
private placement to Bridge shareholders.
F-8
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All intercompany
balances and transactions have been eliminated in consolidation
CASH AND CASH EQUIVALENTS -- All highly liquid investments with a maturity of
three months or less are considered to be cash equivalents.
PROPERTY AND EQUIPMENT -- Property and equipment are recorded at cost and
depreciated using the straight-line method over estimated useful lives of three
to five years. Leasehold improvements are amortized over the shorter of their
estimated useful lives or the term of the related lease.
OTHER ASSETS -- Other current assets consists primarily amounts due from vendors
and employees. Other long-term assets consists primarily of deferred costs
associated with the Company's initial public offering and the transfer of
network assets from Bridge, along with deposits for network services.
EQUIPMENT UNDER CAPITAL LEASES -- The Company leases certain of its data
communications equipment and other fixed assets under capital lease agreements.
The assets and liabilities under capital leases are recorded at the lesser of
the present value of aggregate future minimum lease payments, including
estimated bargain purchase options, or the fair value of the assets under lease.
Assets under these capital leases are amortized over the terms of the leases,
which are generally three years.
GOODWILL AND INTANGIBLE ASSETS -- Goodwill is being amortized over three years
and intangible assets over one to three years, all using the straight-line
method. The goodwill life was determined at the acquisition date based on market
and industry factors.
LONG-LIVED ASSETS -- The Company periodically evaluates the net realizable value
of long--lived assets, including intangible assets, goodwill and property and
equipment, relying on a number of factors including operating results, business
plans, economic projections and anticipated future cash flows. An impairment in
the carrying value of an asset is recognized when the expected future operating
cash flows to be derived from the asset are less than its carrying value. In
addition, the Company's evaluation considers nonfinancial data such as market
trends, product and development cycles, and changes in management's market
emphasis. As a result of such an evaluation of fixed assets, during the period
from January 1, 1999 through April 6, 1999, the Company recognized an impairment
loss related to property and equipment of $1,383.
FAIR VALUE OF FINANCIAL INSTRUMENTS -- The fair value of borrowings are
estimated by discounting the future cash flows using borrowing rates for similar
arrangements with similar maturities. As of December 31, 1998 and 1999, the fair
value of all borrowings approximates their carrying value. The carrying values
of cash, accounts receivable and accounts payable approximate their fair values.
STOCK SPLIT -- On July 22, 1999, the Board of Directors of the Company declared
a 72,000-for-1 stock split on the Company's shares of common stock. As a result,
the Company had 125 million shares authorized, 72 million shares issued and
outstanding with a $.01 par value for each share of common stock. All references
to shares, options and warrants outstanding have been adjusted retroactively for
this stock split.
REVENUE RECOGNITION AND DEFERRED REVENUE -- Service revenues consist primarily
of Internet access service fees, which are fixed monthly amounts. Services were
billed one month in advance during 1997. For all periods, any services billed
and payments received in advance of providing services are deferred until the
period such services are earned. Equipment sales and installation charges are
recognized when equipment is delivered and installation is completed.
ADVERTISING COSTS -- Advertising costs are expensed as incurred.
INCOME TAXES -- Income taxes are accounted for under the asset and liability
method, which provides for the establishment of deferred tax assets and
liabilities for the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
for income tax
F-9
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
purposes. The net operating losses generated by the Company during the period
between April 7, 1999 and September 10, 1999 may be utilized by Bridge in its
consolidated tax return. The income tax accounts are stated as if the company
filed a separate income tax return, which is consistent with the tax sharing
agreement between the Company and Bridge.
EMPLOYEE STOCK OPTIONS -- The Company accounts for employee stock options in
accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees. Under APB No. 25, the Company recognizes compensation
cost based on the intrinsic value of the equity instrument awarded as determined
at grant date. The Company is also subject to disclosure requirements under
Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation which requires pro forma information as if the fair
value method prescribed by SFAS No. 123 had been applied (see Note 7).
COMPREHENSIVE INCOME -- The Company has reported no items of other comprehensive
income under the provisions of SFAS No. 130, Reporting Comprehensive Income,
during the years ended December 31, 1997 and 1998, the period from January 1,
1999 through April 6, 1999 and the period from April 7, 1999 through December
31, 1999.
EARNINGS (LOSS) PER SHARE -- All loss per share amounts for all periods have
been presented to conform to the provisions of SFAS No. 128. All stock options
and warrants outstanding have been excluded from the computations of diluted
loss per share, as their effect would be antidilutive, and accordingly, there is
no reconciliation between basic and diluted loss per share for the periods
presented. Also excluded from the computations are shares of restricted stock
subject to repurchase.
CONCENTRATIONS OF CREDIT RISK -- Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of accounts
receivable. The Company periodically reviews the credit quality of its customers
and generally does not require collateral.
START-UP COSTS -- In accordance with the American Institute of Certified Public
Accountants Statement of Position 98-5, Reporting on the Costs of Start-Up
Activities, the Company expenses start-up activities and organization costs as
incurred.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS -- In June 1998, FASB issued SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, which established accounting
and reporting standards for derivative instruments and hedging activities. SFAS
No. 133 was amended by SFAS No. 137, which delayed the effective date of SFAS
No. 133 to fiscal years and quarters beginning after June 15, 2000. SFAS No. 133
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and that it measure those
instruments at fair value. The Company is assessing the requirements of SFAS No.
133 and the effects, if any, on the Company's financial position, results of
operations and cash flows.
RECLASSIFICATIONS -- Certain 1997 and 1998 information has been reclassified to
conform to the 1999 presentation.
2. CORPORATE REORGANIZATION AND FINANCIAL TRANSACTIONS
The Company was originally organized in November 1995 and operated as SCC. In
1996, SCC issued 46,996 shares of Series A convertible preferred stock at a
price of $10.64 per share. In conjunction with the issuance, 175,047 warrants to
purchase Series A preferred stock were issued. The warrants had an exercise
period of five years from the date of issue at an exercise price of $10.64,
which approximated the market value of the stock at the date of issuance.
F-10
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
Between February 7 and July 31, 1997, SCC issued convertible notes to investors
with principal amounts totaling $3,700. These notes, along with a $500
convertible note issued in 1996, plus accrued interest, were converted into
409,736 shares of Series A convertible preferred stock at a price of $10.64 per
share on July 31, 1997. The 175,047 warrants to purchase Series A preferred
stock were canceled upon conversion of the notes.
On July 31, 1997, SCC formed the LLC, which then functioned as SCC's primary
operating entity until it was merged back into the Company on April 30, 1998.
Ownership of the LLC was split between Class B shares, of which SCC owned all
8,750,000 shares, and Class A shares, of which the LLC's senior convertible
promissory noteholders owned all 5,400,000 shares. Both classes of stock had
equal voting rights and liquidation preferences.
On July 31, 1997, the LLC issued senior convertible notes (senior notes) in an
aggregate principal amount of $5,400. The senior noteholders also received 5.4
million Class A shares of the LLC for an aggregate nominal fee of $1. The senior
notes were unsecured, accrued interest at a rate of 8% per annum, and had a term
of five years.
Between October 31 and December 31, 1997, LLC entered into the following
transactions:
o Issued $3,100 in senior convertible bridge notes ("senior bridge notes").
o Issued 13,799,812 five-year detachable warrants in conjunction with the
issuance of the senior bridge notes. (See discussion below regarding
subsequent exchange.)
oIssued 23,496 shares of Series A convertible preferred stock at a price of
$10.64 per share.
During 1998 an additional $1,800 of LLC senior bridge notes were issued. On
March 3, 1998, the Company's owners formed Holdings. Holdings then entered into
the following transactions:
o Issued 502,410 shares of Series A Preferred Stock in Holdings in exchange for
all outstanding Series A Preferred Stock of SCC (480,228 shares) plus accrued
dividends.
o Issued 15,000 warrants to purchase Series A Preferred Stock of Holdings at
$10.64 per share in exchange for an equal amount of Series A Preferred Stock
Warrants of SCC with the same strike price.
o Converted $5,400 in senior notes and accrued interest of $249 to 5,649,241
Class B shares of the LLC. These Class B shares were then immediately
exchanged for an equal number of shares of Series B Preferred Stock in
Holdings. In conjunction with the transaction, the 5.4 million Class A shares
of the LLC were cancelled.
o Issued 63,488,349 shares of $.001 par common stock of Holdings in exchange for
all of the $.01 par common stock of SCC.
o Issued 22 million shares of Class C Preferred Stock and 299,466,125 detachable
Series C common stock warrants of Holdings in exchange for $18,200 in cash and
$3,800 of LLC senior bridge notes. The remaining senior bridge notes were
repaid from the proceeds of the financing.
o Issued 13,799,812 warrants to purchase common stock at a strike price of $.10
in exchange for an equal amount of warrants to purchase common stock of SCC
with the same strike price.
On July 1, 1998, Holdings issued additional 8 million shares of Series C
Preferred Stock and 108,896,798 detachable common stock warrants for $8,000 in
cash.
The Company, based on an independent valuation, assigned $3,700 to the value of
the detachable Series C common stock warrants issued in the March 1998 and July
1998 transactions. The $3,700 was recorded as a discount on the preferred stock
and an increase in additional paid-in capital. Financing costs of $1,800 were
recorded as a discount against the preferred stock. This resulted in $24,600 of
value being assigned
F-11
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
to the Series C Preferred Stock, with the difference between such value and the
$30,000 redemption value being amortized through the mandatory redemption date.
Amortization was charged to accumulated deficit until the April 7, 1999
acquisition by Bridge.
The conversion of the $5,400 in senior notes and the related exchange of Class B
shares and cancellation of Class A shares in March 1998 resulted in the
recognition of an extraordinary gain on debt extinguishment and the recording of
the purchase of the minority interest.
3. REDEEMABLE PREFERRED STOCK AND STOCK WARRANTS
HOLDINGS SERIES A PREFERRED STOCK -- The Series A Preferred ranked junior to the
Series C Preferred and the Series B Preferred, but senior to all other classes
of stock as to liquidation, dividends, redemption, and any other payment or
distribution with respect to capital stock. The Series A Preferred was to be
redeemed on December 31, 2003, after (i) all shares of Series C Preferred had
been redeemed by payment in full of the aggregate Series C liquidation
preference and (ii) all shares of Series B Preferred had been redeemed by
payment in full of the aggregate Series B redemption price. The mandatory
redemption price for each share of the Series A Preferred was to be the greater
of the Series A liquidation preference or the fair market value per share of the
Series A Preferred. Holders of the Series A Preferred were entitled to convert
each share of Series A Preferred into 142.0413 shares of common stock, subject
to certain adjustments. Each holder of Series A Preferred was required to
convert all of its shares of Series A Preferred, at the then-effective Series A
conversion ratio, upon (i) the vote of 66 2/3 percent of the then-outstanding
shares of Series A Preferred or (ii) upon the demand of the Company in
connection with a public offering. Holders of Series A Preferred were entitled
to vote on all matters on which the common stockholders were entitled to vote.
Each share of Series A Preferred was entitled to 142.0413 votes. The Series A
Preferred holders were not entitled to dividends.
HOLDINGS SERIES B PREFERRED STOCK -- The Series B Preferred ranked junior to the
Series C Preferred, but senior to all other classes of the Company's stock as to
liquidation, dividends, redemption, and any other payment or distribution with
respect to capital stock. The Series B Preferred was to be redeemed on December
31, 2003 after all shares of Series C Preferred had been redeemed by payment in
full of the aggregate Series C liquidation preference. The mandatory redemption
price for each share of the Series B Preferred was to be the greater of the
Series B liquidation preference or the then-applicable fair market value per
share of the Series B Preferred. At any time, holders of the Series B Preferred
were entitled to convert each share of Series B Preferred into 13.3497 share of
common stock, subject to certain adjustments. Each holder of Series B Preferred
was required to convert all of its shares of Series B Preferred, at the
then--effective Series B conversion ratio, upon (i) the vote of 66 2/3 percent
of the then--outstanding shares of Series B Preferred and the Series A Preferred
(voting together as a class) or (ii) upon the demand of the Company in
connection with a public offering. Holders of Series B Preferred were entitled
to vote on all matters on which the common stockholders were entitled to vote.
Each share of Series B Preferred was entitled to approximately 13.3497 votes.
The Series B Preferred holders were not entitled to dividends.
HOLDINGS SERIES C PREFERRED STOCK -- The Series C Preferred ranked senior to all
other classes of stock of the Company as to liquidation, dividends, redemption,
and any other payments and had a liquidation preference equal to the Series C
price per share of $1 plus accrued and unpaid dividends. Dividends accrued
quarterly at 8 percent , and to the extent not paid in cash, such dividends were
added to the liquidation preference of the Series C Preferred. The Series C
Preferred was to be redeemed on December 31, 2003 at a mandatory price equal to
the liquidation preference. The Company was required, upon the demand of holders
of at least 25 percent of the outstanding Series C Preferred, to redeem all of
the Series C Preferred upon a change of control, failure to make any required
dividend payments, or certain other conditions. The Company had the option to
redeem the Series C Preferred in whole or in part upon ten business days' notice
for an amount equal to the liquidation preference. Holders of Series C
F-12
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
Preferred were entitled to vote on all matters on which the common stockholders
were entitled to vote and were entitled to 13.6122 vote per share. In addition,
the holders of 66 2/3 percent of the Series C Preferred were entitled to elect
four of the Company's seven directors.
See Note 1 for discussion of the redemption of all of the above Preferred Stock
in connection with the acquisition of the Company by Bridge in April 1999.
SCC SERIES A PREFERRED STOCK -- SCC Series A Preferred, which was exchanged on
March 4, 1998 for Holdings Series A Preferred plus accrued dividends, ranked
senior to all other then outstanding classes of stock as to liquidation,
dividends, redemption, and any other payment or distribution with respect to
capital stock. The Series A Preferred was to be redeemable beginning February
2002 and continuing through 2004 at the mandatory redemption price. The
mandatory redemption price for each share of the Series A Preferred was equal to
the greater of the Series A original issuance price or the fair market value per
share of the Series A Preferred, plus accrued and unpaid dividends. Effective
August 1, 1997, the terms of the Series A Preferred were amended to entitle the
holders to a dividend rate of 8 percent per annum on the Original Series A
Issuance Price. Holders of the Series A Preferred were entitled to convert each
share of Series A Preferred into such number of fully paid and nonassessable
shares of common stock as determined by dividing the Original Series A Issuance
Price ($10.64) by the conversion price of such series (Series A Conversion
Price) in effect at the time of conversion. The initial Series A Conversion
Price per share was the Original Series A Issuance Price, subject to certain
adjustments. Each holder of Series A Preferred was required to convert all of
its shares of Series A Preferred, at the then-effective Series A conversion
ratio, upon (i) written consent of 70 percent of the then-outstanding shares of
Series A Preferred or (ii) upon the demand of the Company in connection with a
public offering. Holders of Series A Preferred were entitled to vote on all
matters on which the common stockholders were entitled to vote. Each share of
Series A Preferred was entitled to the number of votes equal to the number of
shares of Common Stock into which such shares of Series A Preferred were
convertible.
COMMON STOCK WARRANTS -- SCC issued 13,799,812 warrants to purchase common stock
at a strike price of $.10 per warrant in October 1997 in conjunction with the
issuance of the senior bridge notes (Note 2). These warrants were subsequently
exchanged for an equal amount of warrants to purchase common stock of Holdings
with the same strike price. The warrants were to expire on the earlier of 10
years from the date of issuance or five years from the date of an initial public
offering. These warrants were cancelled in connection with the acquisition of
the Company by Bridge in April 1999.
SERIES C WARRANTS -- In connection with the issuance of Series C Preferred Stock
in March and July of 1998, the Company issued 408,362,922 of detachable warrants
to purchase common stock of the Company for a price below $.01 per share. The
warrants were assigned a value of $3,700. The warrants were exercisable at any
time except that no more than 75 percent of the warrants were exercisable prior
to March 3, 2000. The warrants were to expire 10 years from date of issuance.
The warrants provided, subject to certain clawback provisions in the event of a
qualified public offering, the Series C Preferred holders with 44.88 percent of
the common stock of the Company on a fully diluted basis. These warrants were
cancelled in connection with the acquisition of the Company by Bridge in April
1999.
SERIES A WARRANTS -- SCC issued 15,000 warrants to purchase Series A Preferred
shares of the Company for $10.64 per share to certain investors and consultants
for the performance of services on May 28, 1997. These warrants vested
immediately. Compensation expense recorded with respect to these warrants was
$160 in 1997. These warrants were subsequently exchanged for an identical number
of warrants to purchase Series A Preferred shares of Holdings on March 4, 1998.
These warrants were then cancelled in connection with the acquisition of the
Company by Bridge in April 1999.
4. BUSINESS COMBINATION
On March 4, 1998, the Company acquired all of the outstanding shares of
Interconnected Associates, Inc. ("IXA") for $750 in cash and 28,789,781 shares
of the Company's common stock. IXA, which
F-13
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
commenced operations in 1994, was a regional Internet service provider serving
approximately 200 customers from facilities in Seattle and Portland. The
acquisition was accounted for using the purchase method of accounting.
<TABLE>
<S> <C>
Fair value of intangible assets acquired, including goodwill . $1,620
Fair value of property acquired .............................. 369
Net liabilities assumed ...................................... (656)
------
Total purchase price ....................................... 1,333
Fair value of common stock issued ............................ (583)
------
Total cash paid ............................................ $ 750
======
</TABLE>
The following is a summary of unaudited pro forma results of operations assuming
that the acquisition had occurred at the beginning of the periods presented:
<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
Revenues ................................ $ 4,474 $ 13,903
Loss before extraordinary item .......... (14,002) (22,272)
Net loss ................................ (14,002) (20,318)
Net loss per common share ............... $ (0.38) $ (0.35)
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Computer equipment ........................ $ 837 $ 801
Communications equipment .................. 1,771 1,057
Purchased software ........................ 182 107
Furniture and fixtures .................... 383 322
Leasehold improvements .................... 217 382
Equipment under capital lease obligations . 3,553 5,089
-------- --------
6,943 7,758
Less accumulated depreciation and
amortization ............................ (2,190) (2,198)
-------- --------
$ 4,753 $ 5,560
======== ========
</TABLE>
Effective January 1, 1998, the Company decreased the estimated remaining useful
lives of its computer equipment, communications equipment and software from five
years to three years to more closely reflect the actual service lives of such
equipment. The effect of the change was to increase depreciation expense and net
loss by approximately $486 for the year ended December 31, 1998.
Accumulated amortization for equipment under capital leases for 1998 and 1999
was $831 and $1,361, respectively. Amortization expense for 1997, 1998, the
period from January 1, 1999 to April 6, 1999 and the period from April 7, 1999
to December 31, 1999 was $186, $814, $387 and $1,361, respectively.
F-14
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
6. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
Notes payable as of December 31, 1998 consisted of the following:
<TABLE>
<S> <C>
Note payable to bank, interest at 9.375%, monthly principal
and interest payments of $6, matured February 14, 1999 . $ 13
Less current portion ...................................... (13)
-----
Long-term portion ......................................... $ --
=====
</TABLE>
The carrying value of the note approximates fair value at December 31, 1998. The
note payable to the bank was secured by property and equipment purchased with
the proceeds and a general lien on the assets of the Company.
The Company leases various equipment under capital leases. Future minimum lease
payments under capital leases as of December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000 ................................................... $ 3,000
2001 ................................................... 3,011
2002 ................................................... 670
--------
Total capital lease obligations ........................ 6,681
Less amount representing interest ...................... (788)
Less current portion ................................... (2,462)
--------
Long-term portion of capital lease obligations ......... $ 3,431
========
</TABLE>
7. EMPLOYEE STOCK OPTIONS
In January 1997, the Company established the 1997 stock option plan, under which
it was authorized to grant up to 19,757,596 of either incentive stock options or
non-qualified stock options to it employees. Options under this plan became
exercisable over a three-year vesting period from the date of grant and were to
expire ten years after the date of grant. The Company issued 8,087,100 options
under this plan during 1997.
Additionally, on July 8, 1997, the Company granted an employee 790,304 options
to purchase the Company's common stock at $.07 per share. These options vested
immediately and had a ten-year life.
Effective October 15, 1997, the Company's Board of Directors amended and
restated the 1997 stock option plan and authorized an additional 15,072,319
options to be granted under the plan. As part of this amendment, the Board of
Directors authorized the existing option holders to exchange their options for
incentive stock options priced at $.01 per share. These incentive options vested
6/48 six months from the employee's start date and then 1/48 monthly thereafter.
Accordingly, options with respect to 9,228,655 shares of the Company's common
stock were canceled, and new options with respect to the same number of shares
were granted with an exercise price of $.01 per share, the estimated fair market
value of the Company's common stock at the time. An additional 21,389,890
options were also granted during 1997 under the same terms as the incentive
options. Two option holders, representing 238,356 options, elected not to
exchange, and accordingly, these options remained outstanding under their
original terms at the end of 1997. Of these options, 214,647 were forfeited
during 1998.
In 1998, the Company's Board of Directors established the 1998 stock option
plan, under which it authorized 111,149,677 and granted 91,926,998 options.
These options vested on varying bases over four years beginning at the later
date of six months after the employee's start date or the grant date, and were
to expire 10 years from the grant date.
F-15
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
In connection with the Company's acquisition on April 7, 1999, all outstanding
options under the plans were converted into 239,000 options to purchase common
stock of Bridge.
On July 22, 1999, the Company's Board of Directors adopted a new stock option
plan ("the 1999 Stock Option Plan") and authorized 8 million stock options to be
granted under the plan. On December 7, 1999, an additional 4 million stock
options were authorized by the Board of Directors to be granted under this plan.
During the period from April 7, 1999 through December 31, 1999, the Company
granted options to purchase 4,139,000 shares of its common stock to selected
employees of Bridge. Also during the period, the Company granted options to
purchase up to 4,409,508 shares of its common stock to its employees. Some of
these options contain accelerated or immediate vesting provisions, and shares
issued upon exercise of these options are restricted as to future sale or
subject to repurchase. During the period from April 7, 1999 to December 31,
1999, the Company issued 4,477,287 shares of restricted stock subject to
repurchase in connection with the exercise of these options.
The Company has elected to follow APB Opinion No. 25, Accounting for Stock
Issued to Employees ("APB 25") and related interpretations in accounting for its
employee stock compensation plans. Under the provisions of APB 25, compensation
expense is recognized to the extent the value of the Company's stock exceeds the
exercise price of options or restricted stock at the date of grant. During 1998
and the period from January 1, 1999 to April 6, 1999, the Company recognized $93
and $78, respectively, of compensation expense for option grants with strike
prices that were below the value of the Company's stock. Similarly, for the
period April 7, 1999 to December 31, 1999, compensation expense in the amount of
$1.5 million was recognized related to option grants within the period.
Pro forma information regarding net income is required by SFAS No. 123 and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of SFAS No. 123. The fair value of the options was
estimated at the date of grant using the minimum value method. Under this
method, the expected volatility of the Company's common stock was not estimated,
as there was no market for the Company's common stock in which to monitor such
stock price volatility. The calculation of the fair value of the options granted
in 1997, 1998 and 1999 assumes a risk-free interest rate of 6.2 percent, 5.0
percent and 6.3 percent, respectively, an assumed dividend yield of zero, and an
expected life of the options of four years. The weighted average fair value of
options granted was below $.01 per share in 1997, 1998 and for the period
January 1 to April 6,1999. For the period April 7, 1999 to December 31, 1999,
the weighted average fair value of options granted was $6.51 per share. For
purposes of pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options' vesting periods.
Had compensation cost for the Company's stock option plans above been determined
consistent with the provisions of SFAS No. 123 based on the fair value at the
grant date, the Company's pro forma net loss would have been as follows:
<TABLE>
<CAPTION>
JANUARY 1 APRIL 7 TO
TO APRIL 6, DECEMBER 31,
1997 1998 1999 1999
--------------- --------------- --------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
Net loss:
As reported ........................ $ (14,161) $ (22,666) $ (8,075) $ (38,617)
Pro forma .......................... (14,175) (22,696) (8,104) (38,683)
Basic and diluted net loss per share:
As reported ........................ $ (.38) $ (.39) (.14) $ (.54)
Pro forma .......................... (.38) (.39) (.14) (.54)
</TABLE>
F-16
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF WEIGHTED
COMMON AVERAGE
STOCK PRICE PER EXERCISE
OPTIONS SHARE PRICE
--------------- --------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance, December 31, 1996
(predecessor) ..................................... 1,625 $ .01 $ .01
Granted .......................................... 39,496 .01 - .07 .02
Forfeited ........................................ (245) .03 .03
Canceled ......................................... (9,229) .01 - .04 .03
------
Balance, December 31, 1997
(predecessor) ..................................... 31,647 .01 - .07 .01
Granted .......................................... 91,927 .01 - .02 .02
Exercised ........................................ (958) .01 .01
Forfeited ........................................ (7,416) .01 - .02 .01
------
Balance, December 31, 1998
(predecessor) ..................................... 115,200 .01 - .07 .02
Granted .......................................... 7,409 .03 .03
Exercised ........................................ (2,700) .01 .01
Forfeited ........................................ (3,789) .01 - .07 .02
-------
Balance, April 6, 1999
(predecessor) ..................................... 116,120 .01 - .07 .02
Cancelled upon acquisition by Bridge ............. (116,120) .01 - .07 .02
Granted .......................................... 8,549 .50 .50
Exercised ........................................ (5,210) .50 .50
Forfeited ........................................ (373) .50 .50
--------
Balance, December 31, 1999 (successor) ............ 2,966 $ .50 $ .50
========
Options excercisable at December 31, 1997 ......... 7,271 $.01 - $.07 $ 0.02
========
Options excercisable at December 31, 1998 ......... 28,051 $.01 - $.07 $ 0.01
========
Options excercisable at December 31, 1999 ......... 1,094 $ .50 $ .50
========
</TABLE>
The weighted average remaining life of options outstanding at December 31, 1999
was 9.74 years.
Included in the option grants discussed above, during the period from October
through December 1999, the Company granted 2,843,258 stock options to employees
of SAVVIS and Bridge with an exercise price of $.50 per share. Noncash
compensation cost based upon the difference between the exercise price and the
imputed fair value of the Company's stock as of the respective option grant
dates totaling approximately $51,000 will be recorded over the vesting periods
of such options, which periods range from immediate up to four years.
Approximately $1,500 of noncash compensation expense was recorded in December,
1999.
8. EMPLOYEE SAVINGS PROGRAM
The predecessor Company sponsored an employee savings plan that qualified as a
defined contribution arrangement under Section 401(k) of the Internal Revenue
Code. All employees were allowed to contribute a percentage of their base
salary, subject to limitations. The Company made no contributions to the plan
during 1997, 1998 or 1999. Effective with the acquisition of the Company by
Bridge, the plan
F-17
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
administrator and investment options were changed, and the plan was amended to
incorporate an employer matching contribution The Company matches 50% of
employee contributions up to a maximum of 6% of total compensation or $2.4,
whichever is less. Company contributions under this plan vest ratably over five
years, and totaled $154 for the period from April 7, 1999 to December 31, 1999.
9. INCOME TAXES
No income taxes were provided for the years ended December 31, 1997 and 1998,
for the period from January 1, 1999 to April 6, 1999 or for the period from
April 7, 1999 to December 31, 1999, as the potential deferred tax benefit,
resulting primarily from the net operating losses, was fully offset by a
valuation allowance against such deferred tax benefit.
The components of deferred income tax assets and liabilities are as follows at
December 31:
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ......... $ 11,417 $ 18,046
Other .................................... 97 829
--------- ---------
Gross deferred tax assets .......................... 11,514 18,875
Deferred tax liabilities:
Intangible assets ........................ (122) (2,658)
Other .................................... (98) --
--------- ---------
Net ................................................ 11,294 16,217
Valuation allowances ....................... (11,294) (16,217)
--------- ---------
Net deferred tax assets ............................ $ -- $ --
========= =========
</TABLE>
At December 31, 1998 and 1999, the Company recorded a valuation allowance of
$11,294 and $16,217, respectively, against the net deferred tax asset due to the
uncertainty of its ultimate realization. The valuation allowance increased by
$3,044 from December 31, 1996 to December 31, 1997, by $8,042 from December 31,
1997 to December 31, 1998, by $3,737 for the period from January 1, 1999 to
April 6, 1999, and by $1,186 for the period from April 7, 1999 to December 31,
1999.
Section 382 of the Internal Revenue Code restricts the utilization of net
operating losses and other carryover tax attributes upon the occurrence of an
ownership change, as defined. Such an ownership change occurred during 1998 as a
result of the corporate reorganization and financing transactions (see Note 2),
and again in 1999 as a result of the acquisition by Bridge. Management believes
such limitation may restrict the Company's ability to utilize the resulting net
operating losses over the 20-year carryforward period.
At December 31, 1999, the Company has approximately $48 million in U.S. Federal
net operating loss carryforwards expiring between 2011 and 2017. The net
operating losses generated by the Company during the period between April 7,
1999 and September 10, 1999 may be utilized by Bridge in its consolidated tax
return.
F-18
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
The effective income tax rate differed from the statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1 APRIL 7 TO
DECEMBER 31, TO APRIL 6, DECEMBER 31,
1997 1998 1999 1999
--------------- --------------- --------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
Federal statutory rate .............................. 34% 34% 34% 34%
State taxes, net of Federal benefit ................. -- 4 4 4
Change in valuation allowance ....................... (16) (36) (38) (3)
Attribution of net operating loss to Bridge ......... -- -- -- (23)
Non-deductible goodwill amortization ................ -- -- -- (12)
Minority interest in net operating losses ........... (18) (1) -- --
Other -- net ........................................ -- (1) -- --
--- ------ --- -----
Effective income tax rate ........................... 0% 0% 0% 0%
=== ===== === =====
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
The Company leases communications equipment and office space under various
operating leases. Future minimum lease payments at December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
NETWORK OTHER OFFICE
EQUIPMENT EQUIPMENT SPACE TOTAL
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
2000 ................... $1,581 $ 99 $1,145 $2,825
2001 ................... -- 81 905 986
2002 ................... -- 38 918 956
2003 ................... -- 13 932 945
2004 ................... -- -- 901 901
Thereafter ............. -- -- -- --
------ ---- ------ ------
Total .................. $1,581 $231 $4,801 $6,613
====== ==== ====== ======
</TABLE>
Rental expense under operating leases for the years ended December 31, 1997 and
1998, was $1,924 and $1,905, respectively, and for the periods from January 1,
1999 through April 6, 1999 and from April 7, 1999 through December 31, 1999 was
$630 and $1,922, respectively.
In February 2000, the Company entered into a ten and one-half year lease for a
new headquarters facility. The rental cost associated with this new facility
will increase the above payments and expense by an average of approximately
$2,600 in 2000 and thereafter.
EMPLOYMENT AGREEMENTS -- The Company has employment agreements with several key
executive officers. These agreements contain provisions with regard to base
salary, bonus, stock options and other employee benefits. These agreements also
provide for severance benefits in the event of employment termination or a
change in control of the Company.
In connection with the resignation of the Company's President in November 1999,
the Company agreed to provide severance benefits, including approximately one
year's base salary, a 1999 performance bonus of not less than 25 percent of base
salary, and other miscellaneous benefits. Approximately $360 was accrued in 1999
related to this severance arrangement.
LITIGATION -- The Company is subject to various legal proceedings and other
actions arising in the normal course of its business. While the results of such
proceedings and actions cannot be predicted, management believes, based on the
advice of legal counsel, that the ultimate outcome of such proceedings and
actions will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.
F-19
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
SUPPLIER COMMITMENTS -- We have arrangements with various suppliers of
communications services that require us to maintain minimum spending levels some
of which increase over time. Our aggregate minimum spending level is
approximately $28 million in 2000.
11. VALUATION AND QUALIFYING ACCOUNTS
Activity in the Company's allowance for doubtful accounts was as follows for the
periods presented:
<TABLE>
<CAPTION>
BALANCE ADDITIONS
AT CHARGED
BEGINNING TO COSTS BALANCE
OF AND AT END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
December 31, 1997 ......... $ 16 $254 $ (142) $128
December 31, 1998 ......... 128 278 (257) 149
April 6, 1999 ............. 149 61 (35) 175
December 31, 1999 ......... 175 781 (581) 375
</TABLE>
12. RELATED PARTY TRANSACTIONS
In connection with Bridge's acquisition of the Company, as discussed in Note 1,
Bridge funded the Company's operations during 1999. At December 31, 1999, the
Company had amounts payable to Bridge of $24,065. See Note 14 for a discussion
of other relationships between the Company and Bridge arising from the execution
of the Master Establishment and Transition Agreement and other related
agreements.
13. SEGMENT INFORMATION
The Company has one reportable operating segment. All of the company's revenues
are derived within the United States, and no revenue arising from a single
customer exceeded 10 percent of revenues in any period.
14. SUBSEQUENT EVENTS
PUBLIC OFFERING -- An initial public offering of the Company's common stock was
completed in February 2000. A total of 17 million shares were sold in the
offering, 14,875,000 shares sold by the Company and 2,125,000 shares sold by
Bridge, all at $24 per share. The Company received net proceeds from this
offering of approximately $333,000, of which approximately $127,000 was paid to
Bridge. In connection with the offering, Bridge also sold certain of its
holdings of the Company's stock to certain of Bridge's stockholders. After the
offering, Bridge owned approximately 49 percent of the Company's outstanding
stock, and shareholders of Bridge owned approximately 26 percent of the
Company's outstanding stock.
ASSET PURCHASE AND PREFERENTIAL DISTRIBUTION -- Simultaneous with the completion
of the public offering, the Company purchased or subleased Bridge's global
Internet protocol network assets. The purchase price of the assets was
approximately $88,000, of which approximately $63,000 was paid from the offering
proceeds. The Company also paid a $58,000 preferential distribution to Bridge.
Additionally, the Company assumed capital lease obligations of approximately
$25,000 related to these network assets.
Concurrent with the asset purchase, the Company also entered into a 10-year
network services agreement with Bridge under which the Company will provide
managed data networking services to Bridge. For the first year of the agreement,
the Company's fees will be based upon the cash cost to Bridge of operating the
network as configured on the date the Company acquired it, and fees for
additional services provided following the closing of the transfer will be set
for a three-year term based on an agreed pricing schedule. Bridge has agreed to
pay a minimum of approximately $105,000, $132,000 and $145,000 for network
services in 2000, 2001 and 2002, respectively.
F-20
<PAGE>
SAVVIS COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED )
In addition, Bridge has agreed that the amount to be paid under the agreement
for the fourth, fifth and sixth years will not be less than 80 percent of the
total amount paid by Bridge and its subsidiaries for Internet protocol data
transport services; and the amount to be paid under the agreement for the
seventh through tenth years will not be less than 60 percent of the total amount
paid by Bridge and its subsidiaries for Internet protocol data transport
services.
Pursuant to a 10-year technical services agreement, Bridge is providing various
services, including technical support, customer support and project management
in the areas of installation, provisioning, help desk, and repair and
maintenance. In addition, Bridge is providing, under a 3-year agreement
additional administrative and operational services, such as payroll and
accounting functions, benefit management and office space, until the Company
develops the capabilities to perform these services.
Some network assets to be purchased are located in premises currently leased by
Bridge and are subject to an equipment colocation permit between SAVVIS and
Bridge. The permits provide the Company, subject to the receipt of required
landlord consents, with the right to keep the equipment that is being purchased
from Bridge in the facilities in which they are currently located. According to
this arrangement, the Company will occupy a minimal amount of space, generally
less than 100 square feet, in each of the premises. The permits are for a term
that is coterminous with the underlying rights, which Bridge has to such
facilities, which range from one to ten years. Costs for this space are
estimated to be approximately $75 per year
* * * * *
F-21
Exhibit 10.11
MASTER ESTABLISHMENT AND TRANSITION AGREEMENT
BETWEEN
SAVVIS COMMUNICATIONS CORPORATION
AND
BRIDGE INFORMATION SYSTEMS, INC.
FEBRUARY 9, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I.........................................................................................................1
1.1 "Acquired Network Facilities".............................................................................2
1.2 "Adverse Consequences"....................................................................................2
1.3 "Assumed Liabilities".....................................................................................2
1.4 "Buyer Subsidiaries"......................................................................................2
1.5 "Code"....................................................................................................2
1.6 "Contracts"...............................................................................................2
1.7 "Employee Benefit Plan"...................................................................................2
1.8 "ERISA"...................................................................................................2
1.9 "Impermissible Security Interest".........................................................................3
1.10 "International Network Assets"............................................................................3
1.11 "IP Network"..............................................................................................3
1.12 "Lien"....................................................................................................3
1.13 "Local Transfer Agreements"...............................................................................3
1.14 "Retained Liabilities"....................................................................................3
1.15 "Seller Subsidiaries".....................................................................................3
1.16 "US Network Assets".......................................................................................4
1.17 "WARN Act"................................................................................................4
1.18 "Terms"...................................................................................................4
ARTICLE II........................................................................................................6
2.1 Purchase and Sale of Purchased Assets; Effective Time.....................................................6
2.2 Assumption of Liabilities.................................................................................6
2.3 Purchase Price............................................................................................6
2.4 The Closing...............................................................................................7
2.5 Deliveries at the Closing.................................................................................7
2.6 Purchase Price Allocation and Adjustment..................................................................8
ARTICLE III.......................................................................................................8
3.1 Organization of Seller....................................................................................8
3.2 Authorization of Transaction..............................................................................9
3.3 Noncontravention..........................................................................................9
3.4 Brokers'Fees..............................................................................................9
3.5 Purchased Assets; Assumed Liabilities....................................................................10
3.6 Contracts................................................................................................10
3.7 Employees................................................................................................10
3.8 Disclaimer of Other Representations and Warranties.......................................................10
ARTICLE IV.......................................................................................................11
4.1 Organization of the Buyer................................................................................11
4.2 Authorization of Transaction.............................................................................11
4.3 Noncontravention.........................................................................................11
4.4 Brokers'Fees.............................................................................................12
ARTICLE V........................................................................................................12
5.1 Notices and Consents.....................................................................................12
5.2 Call Right...............................................................................................12
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5.3 Exercise of Call Right...................................................................................13
5.4 Seller's Obligation with Respect to Call Assets..........................................................13
5.5 Buyer's Obligations with Respect to Call Assets..........................................................14
5.6 Termination of Call Right................................................................................15
5.7 Employee Services........................................................................................15
5.8 Offers of Employment.....................................................................................15
5.9 Employee Benefits........................................................................................15
5.10 Access to Employee Information...........................................................................16
5.11 WARN Act Indemnification.................................................................................16
5.12 Workers'Compensation Claims..............................................................................16
5.13 Employee Benefit Plans...................................................................................16
5.14 Further Assurances.......................................................................................17
ARTICLE VI.......................................................................................................17
6.1 Survival of Representations and Warranties...............................................................17
6.2 Indemnification Provisions for Benefit of the Buyer......................................................17
6.3 Indemnification Provisions for Benefit of Seller.........................................................18
6.4 Matters Involving Third Parties..........................................................................18
6.5 Call Right Remedies......................................................................................19
6.6 Exclusive Remedy.........................................................................................19
ARTICLE VII......................................................................................................19
7.1 No Third-party Beneficiaries.............................................................................19
7.2 Entire Agreement.........................................................................................19
7.3 Succession and Assignment................................................................................19
7.4 Counterparts.............................................................................................20
7.5 Headings.................................................................................................20
7.6 Notices..................................................................................................20
7.6 Governing Law............................................................................................20
7.7 Arbitration..............................................................................................20
7.8 Amendments and Waivers...................................................................................22
7.9 Severability.............................................................................................22
7.10 Expenses.................................................................................................22
7.11 Construction.............................................................................................22
7.12 Incorporation of Exhibits and Schedules..................................................................22
7.13 Bulk Transfer Laws.......................................................................................22
EXHIBIT A........................................................................................................24
EXHIBIT B........................................................................................................25
EXHIBIT C........................................................................................................52
EXHIBIT D........................................................................................................53
EXHIBIT E........................................................................................................54
EXHIBIT F........................................................................................................57
EXHIBIT G........................................................................................................70
EXHIBIT H........................................................................................................71
EXHIBIT J........................................................................................................79
EXHIBIT K........................................................................................................81
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT L.......................................................................................................111
SCHEDULE 1.3....................................................................................................116
SCHEDULE 1.10...................................................................................................117
SCHEDULE 1.16...................................................................................................118
SCHEDULE 2.3....................................................................................................119
SCHEDULE 3.3....................................................................................................120
SCHEDULE 3.5(a).................................................................................................121
SCHEDULE 3.6....................................................................................................122
SCHEDULE 3.7....................................................................................................123
SCHEDULE 5.1....................................................................................................124
SCHEDULE 5.2(a).................................................................................................125
SCHEDULE 5.2(b).................................................................................................126
SCHEDULE 5.5....................................................................................................127
</TABLE>
iii
<PAGE>
MASTER ESTABLISHMENT AND TRANSITION AGREEMENT
This Master Establishment and Transition Agreement ("Agreement"), made
this 9th day of February, 2000, by and between SAVVIS Communications
Corporation, a Delaware corporation ("Buyer"), and Bridge Information Systems,
Inc., a Missouri corporation ("Seller"). Buyer and Seller are referred to
collectively herein as the "parties."
RECITALS
WHEREAS, Seller is engaged in the business of collecting and
distributing various financial, news and other data;
WHEREAS, Buyer is engaged in the business of providing Internet
protocol backbone and other data transport services;
WHEREAS, Seller and its subsidiaries own certain assets relating to the
provision of Internet protocol backbone and other data transport services, such
assets consisting of (i) all of the equity interest (the "Interest") in Seller's
wholly-owned subsidiary, Global Network Assets, LLC, a Delaware limited
liability company (the "LLC"), and (ii) the International Network Assets
(defined below);
WHEREAS, Seller does not own outright but instead leases a substantial
portion of the US based assets comprising its Internet protocol backbone
("Leased Assets"); and
WHEREAS, Seller and certain of its subsidiaries desire to sell, and
Buyer and certain of its subsidiaries desire to purchase, (i) the Interest, (ii)
the International Network Assets and (iii) the Call Assets (collectively, such
acquired assets are referred to herein as the "Purchased Assets"; provided,
however, that Call Assets first shall be added to the Purchased Assets as they
are acquired by Buyer and certain of its subsidiaries under a Call Asset
Transfer Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the parties agree as follows.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the words and phrases listed below
shall have the meanings given below, and all defined terms shall include the
plural as well as the singular. Unless otherwise stated, the words "herein",
"hereunder" and other similar words refer to this Agreement as a whole and not
to a particular Section or other subdivision. The words "included" and
"including" shall not be construed as terms of limitation. The following terms
shall have the meanings set forth below:
i
<PAGE>
1.1 "Acquired Network Facilities" means the US Network Assets, the
International Network Assets and the Call Assets; provided, however that the
Call Assets are included only to the extent acquired by Buyer and Buyer's
subsidiaries pursuant to this Agreement and the Call Asset Transfer Agreements.
1.2 "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys' fees
and expenses.
1.3 "Assumed Liabilities" means all liabilities and obligations of
Seller and the Seller Subsidiaries (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) fulfilling
both of the following requirements:
(a) which are directly associated with (i) the Purchased Assets, (ii)
the use of the IP Network, (iii) the Contracts, or (iv) those matters set forth
on Schedule 1.3 attached hereto; and
(b) which are not Retained Liabilities.
1.4 "Buyer Subsidiaries" means the direct and indirect subsidiaries of
the Buyer which will be involved in the operation or ownership of the Acquired
Network Facilities, including those subsidiaries purchasing (i) certain of the
International Network Assets pursuant to the Local Transfer Agreements and (ii)
certain of the Call Assets pursuant to the Call Asset Transfer Agreements.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Contracts" means any and all contracts, agreements, arrangements,
leases, understandings, purchase orders, and offers, written or oral, of the
Seller and the Seller Subsidiaries relating to the provision of the IP Network
and related data transport services, together with certain agreements being
entered into by Buyer or Buyer Subsidiaries on or around the Closing Date in
substitution for certain contracts of Seller or Seller Subsidiaries, including
without limitation the agreements set forth on Schedule 3.6 attached hereto;
provided, however, such obligations and other agreements concerning Call
Jurisdictions or with respect to the Satellite Rights shall first become
"Contracts" upon exercise of the respective Call Right.
1.7 "Employee Benefit Plan" means all "employee benefit plans" as such
term is defined in Section 3(3) of ERISA and all stock option, restricted stock,
stock appreciation or other equity plans and all bonus, severance, change in
control, retention, deferred compensation or other compensatory plans maintained
or contributed to by the Seller in which any Employee participates, in addition
to all documents describing Seller's employment policies and procedures.
2
<PAGE>
1.8 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.9 "Impermissible Security Interest" means any Lien, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
ordinary course of business and not incurred in connection with the borrowing of
money.
1.10 "International Network Assets" means the IP Network assets, with
the exception of the Call Assets, that are located outside the United States as
set forth on Schedule 1.10 attached hereto and all rights of the Seller and the
Seller Subsidiaries under Contracts relating thereto.
1.11 "IP Network" means the switches, routers, circuit contracts and
satellite facilities to the extent used by the Seller and its subsidiaries
primarily in providing telecommunications utilizing the Internet protocol
between Seller and its subsidiaries, and their suppliers and customers.
1.12 "Lien" means any lien, security interest, mortgage, option, lease,
tenancy, occupancy, covenant, condition, easement, agreement, pledge,
hypothecation, charge, claim, restriction, or other encumbrance of every kind
and nature.
1.13 "Local Transfer Agreements" means the various transfer agreements,
including local contracts of assignment and assumption ("Local Contracts of
Assignment"), local asset transfer agreements ("Local Asset Transfer
Agreements") and the stock purchase agreement in Japan ("Japanese Stock Purchase
Agreement") executed by the direct and indirect subsidiaries of the Seller and
of the Buyer involved in this transaction to effectuate the transfer of the
International Network Assets. Each such agreement shall be substantially in the
form of Exhibit E, Exhibit F, Exhibit A to the foregoing Exhibit F, or Exhibit L
attached hereto and incorporated herein by reference.
1.14 "Retained Liabilities" means liabilities which result from or
arise out of the ownership or operation of the IP Network prior to the Effective
Time, including liabilities which exist with respect to (i) obligations under
the Contracts, other than an obligation to make payment, which are required to
be fulfilled by Seller wholly prior to Closing, or (ii) obligations to make
payment, to the extent such payment is for services rendered under the Contracts
prior to Closing. Provided, further, that the liabilities resulting from or
arising out of the ownership or operation of the IP Network in the Call
Jurisdictions shall be included in the definition of the Retained Liabilities
until the Call Right is exercised, and such liabilities shall remain the
responsibility of the Seller and/or the appropriate Seller Subsidiaries to the
extent they result from or arise out of the ownership or operation of the IP
Network in such countries prior to the effective date under each respective Call
Asset Transfer Agreement.
3
<PAGE>
1.15 "Seller Subsidiaries" means the LLC, until the Interest is
acquired hereunder by Buyer, and all other direct and indirect subsidiaries of
the Seller involved in the operation or ownership of the IP Network, including
those subsidiaries selling the International Network Assets pursuant to the
Local Transfer Agreements and those subsidiaries selling certain of the Call
Assets at the time of any subsequent Call Right exercise and related transfers
effected by the "Call Asset Transfer Agreements" in the form attached as Exhibit
J, as well as certain other subsidiaries entering into other Local Operative
Agreements, but does not include Buyer or any entity directly or indirectly
owned by Buyer.
1.16 "US Network Assets" means the assets owned by the LLC and the
Leased Assets, all as set forth on Schedule 1.16 attached hereto and all rights
of the Seller and the Seller Subsidiaries under Contracts relating thereto.
1.17 "WARN Act" means the Workers Adjustment and Retraining
Notification Act of 1988, as amended.
1.18 "Terms". The following terms shall have the meanings set forth in
the below referenced sections of this Agreement:
"Arbitration Costs" Section 7.7(f)
"Arbitration Demand" Section 7.7(b)
"Arbitrators" Section 7.7(c)
"Bridge Plan" Section 5.9(a)
"Buyer" Preface
"Call Asset Transfer Agreements" Section 1.15
"Call Assets" Section 5.2
"Call Jurisdictions" Section 5.2(a)
"Call Right" Section 5.2
"Closing" Section 2.4
"Closing Date" Section 2.4
"Dispute Notice" Section 7.7(b)
"Employees" Section 3.7
4
<PAGE>
"Employment Date" Section 5.8(a)
"Expiration Date" Section 5.2
"Effective Time" Section 2.1
"Global Operative Agreements" Section 2.5(a)
"Indemnified Party" Section 6.4
"Indemnifying Party" Section 6.4
"Interest" Recitals
"Japanese Stock Purchase Agreement" Section 1.13
"Leased Assets" Recitals
"LLC" Recitals
"Local Asset Transfer Agreements" Section 1.13
"Local Network Services Agreement" Section 2.5(b)
"Local Contracts of Assignment" Section 1.13
"Local Operative Agreements" Section 2.5(b)
"Note" Section 2.3
"Original Asset Value" Section 2.6(a)
"Public Offering Proceeds" Section 2.3
"Purchase Price" Section 2.3
"Purchased Assets" Recitals
"Revised Asset Value" Section 2.6(b)
"Rules" Section 7.7(a)
"Satellite Rights" Section 5.2(b)
"Savvis Plan" Section 5.9(a)
5
<PAGE>
"Seller" Preface
"Short-Term Call Assets" Section 5.5
"Sublease" Section 2.5
"Third Party Claim" Section 6.4
6
<PAGE>
ARTICLE II
PURCHASE & SALE
2.1 Purchase and Sale of Purchased Assets; Effective Time. On and
subject to the terms and conditions of this Agreement, the Buyer hereby
purchases from Seller (or shall cause the Buyer Subsidiaries to purchase from
the appropriate Seller Subsidiaries), and Seller hereby sells, transfers,
conveys, and delivers to the Buyer (or shall cause the Seller Subsidiaries to
sell, transfer, convey and deliver to the appropriate Buyer Subsidiaries), all
of the Purchased Assets at the Closing for the consideration specified in
Section 2.3 hereof. The Closing shall be effective as of the close of business
on the day immediately preceding the Closing Date ("Effective Time"); provided,
however, that the "Effective Time" with respect to any Call Assets shall be as
provided in the respective Call Asset Transfer Agreement.
2.2 Assumption of Liabilities.
(a) On and subject to the terms and conditions of this Agreement, the
Buyer hereby assumes and becomes responsible for (or shall cause the Buyer
Subsidiaries to assume and become responsible for) all of the Assumed
Liabilities.
(b) To the extent that Seller or any of the Seller Subsidiaries makes
payment on any Assumed Liabilities which are comprised of undisputed liabilities
for payment of services received under the Contracts, then Buyer or a Buyer
Subsidiary shall reimburse Seller for such payment promptly upon receipt of an
appropriate invoice from Seller. Likewise, to the extent that Buyer or any of
the Buyer Subsidiaries makes payment on any Retained Liabilities which are
comprised of undisputed liabilities under the Contracts for payment of services
received under the Contracts, then Seller or a Seller Subsidiary shall reimburse
Buyer for such payment promptly upon receipt of an appropriate invoice from
Buyer.
2.3 Purchase Price. The Buyer agrees to pay to the Seller $119,863,759,
which shall be an amount equal to $150,000,000, less the net book value of all
the Call Assets as of October 31, 1999, except for Call Assets located in
Europe, South Africa and the Middle East which shall be as of December 31, 1999,
less the repayment of the Japanese subsidiary loan described in the next
sentence of this Section 2.3, and less the net present value of the sublease
payments to be made by Buyer related to the Leased Assets, all of which amounts
are hereby agreed by the parties (the "Purchase Price"). Simultaneous with, in
addition to, and in the same manner as the foregoing Purchase Price payment,
Buyer shall repay to Seller the intercompany loans less cash balances of Bridge
Information Systems (Japan) KK, as of closing, hereby agreed to be in the net
amount of $975,297. The Purchase Price allocable to the Interest shall be paid
partially with cash and partially with a promissory note (the "Note")
substantially in the form attached hereto as Exhibit I. The cash portion of the
Purchase Price is intended to be paid from the net proceeds of the
initial public offering by Buyer of its shares, after payment of all costs and
expenses of such offering including fees and expenses of legal counsel,
investment bankers, accountants and other professionals directly engaged in
connection with such public offering, which public offering is being made
simultaneously with the Closing ("Public Offering Proceeds"). The cash portion
of the Purchase Price shall be equal to an amount determined
7
<PAGE>
according to the following formula: One Hundred Million Dollars ($100,000,000)
of the first Three Hundred Million Dollars ($300,000,000) of Public Offering
Proceeds and 50% of the remaining Public Offering Proceeds in excess of Three
Hundred Million ($300,000,000), up to the full payment of the Purchase Price in
cash. The principal amount of the Note shall be the Purchase Price less this
cash payment. The Purchase Price allocable to the International Network Assets
shall be allocated first from this cash amount. The cash portion of the Purchase
Price shall be paid in the manner and by the legal entities set forth on
Schedule 2.3, or as otherwise agreed by the parties.
2.4 The Closing. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Bryan Cave
LLP, 245 Park Avenue, New York, New York, or at such other place as the parties
may agree, occurring simultaneous with the consummation of the transactions
contemplated by the Purchase Agreement among Buyer, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and certain other underwriters,
relating to the initial public offering of shares of common stock of Buyer, such
Closing being deemed to have occurred immediately prior to the "Closing Time" as
defined in such Purchase Agreement ("Closing Date").
2.5 Deliveries at the Closing. The Parties shall make the following
deliveries at Closing:
(a) The Seller shall execute and deliver to Buyer and the Buyer shall
cause Savvis Communications Corporation, a Missouri corporation and Buyer's
wholly-owned subsidiary, to execute and deliver to Seller each of the following
agreements: (i) the Network Services Agreement substantially in the form of
Exhibit A attached hereto, (ii) the Administrative Services Agreement
substantially in the form of Exhibit B attached hereto, (iii) the Technical
Services Agreement substantially in the form of Exhibit C attached hereto and
(iv) the Bill of Sale substantially in the form of Exhibit D attached hereto
(collectively, the agreements listed in (a)(i) through (a)(iv) are sometimes
referred to herein as the "Global Operative Agreements").
(b) The Seller shall cause the appropriate Seller Subsidiaries to
execute and deliver, and Buyer shall cause the appropriate Buyer Subsidiaries to
execute and deliver each of the following agreements: (i) the Local Contracts of
Assignment substantially in the form of Exhibit E attached hereto, (ii) the
Local Asset Transfer Agreements substantially in the form of Exhibit F attached
hereto, (iii) the Local Network Services Agreements substantially in the form of
Exhibit G attached hereto ("Local Network Services Agreement"), (iv) the
Equipment Collocation Permits substantially in the form of Exhibit H attached
hereto, (v) the Local Administrative Services Agreements attached as Exhibit A
to the Administrative Services Agreement, which is Exhibit B to this Agreement,
(vi) the two subleases for the Leased Assets (the "Sublease") substantially in
the form of Exhibit K attached hereto, (vii) the Japanese Stock Purchase
Agreement substantially in the form of Exhibit L attached hereto, and (viii) the
Telerate Network Services Agreement substantially in the form of Exhibit B to
the Network Services Agreement, which is Exhibit A to this Agreement
(collectively, the agreements listed in (b)(i) through (b)(viii) are sometimes
referred to herein as the "Local Operative Agreements").
8
<PAGE>
(c) Seller and the Seller Subsidiaries shall have delivered to the
Buyer satisfactory evidence of consent of Goldman Sachs and the participants in
Seller's lenders group, consent to sublease of the Leased Assets, and such other
consents to assignment of the Contracts (as described in Section 5.1 hereof) and
attainment of governmental approvals as Seller and the Seller Subsidiaries shall
have received as of the date hereof. To the extent Seller and the Seller
Subsidiaries shall not have received such consents or governmental approvals,
the rights and obligations of the parties with respect thereto shall be governed
by Section 5.1 hereof.
(d) The Buyer will deliver to the Seller, or Buyer will cause the Buyer
Subsidiaries to deliver to the Seller Subsidiaries, the Purchase Price as
specified in Section 2.3 above.
2.6 Purchase Price Allocation and Adjustment.
(a) Subject to adjustment as provided in Section 2.6(b), the Purchase
Price shall be allocated among the Purchased Assets as follows: The Purchase
Price allocable to the International Network Assets shall be equal to the sum of
the agreed upon US Dollar value of such assets, as set forth on Schedule 1.10
("Original Asset Value"). The Purchase Price allocable to the Interest shall be
equal to the difference between the Purchase Price and the Original Value. The
Parties believe that the allocations in this Section 2.6(a) reflect that most of
the fair value of the Purchased Assets is contained in the assets of the LLC
because of the positive cash flows generated by the US Network Assets.
(b) Within fifteen days after the Closing, Seller shall update Schedule
1.10 and Schedule 1.16 attached hereto to include all US Network Assets and all
International Network Assets owned by Seller and the Seller Subsidiaries as of
the Effective Time. If the sum of the agreed upon value of the International
Network Assets shown on such revised Schedule 1.10 (the "Revised Asset Value")
exceeds the Original Asset Value, then the amount of the Purchase Price
allocable to the International Network Assets pursuant to Section 2.6(a) above
shall be increased, dollar for dollar, by such excess and the amount of the
Purchase Price allocable to the Interest shall be decreased by such excess.
Likewise, if the Revised Asset Value is less than the Original Asset Value, then
the amount of the Purchase Price allocable to the International Network Assets
pursuant to Section 2.6(a) above shall be decreased, dollar for dollar, by such
amount and the amount of the Purchase Price allocable to the Interest shall be
increased by such amount. In either event, Seller shall redistribute the cash
portion of the Purchase Price paid by the Buyer hereunder such that the Seller
Subsidiaries are compensated for the sale of International Network Assets
entirely in cash. In the event sufficient cash is not available in the Purchase
Price for this purpose, then the deficit shall be funded by means of an early
prepayment under the Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and as of the Closing.
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3.1 Organization of Seller. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Missouri.
Each of the Seller Subsidiaries is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction in which such entity was
organized.
3.2 Authorization of Transaction. Seller has full corporate power and
authority to execute and deliver this Agreement and the Global Operative
Agreements and to perform its obligations hereunder and thereunder. Each of this
Agreement and, first as of the Closing, Global Operative Agreements constitutes
the valid and legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions. Each of the Seller Subsidiaries has
full corporate power and authority to execute and deliver the respective Local
Operative Agreements and to perform its obligations thereunder. First as of the
Closing, the respective Local Operative Agreements constitute the valid and
legally binding obligation of each of the Seller Subsidiaries, enforceable in
accordance with their terms and conditions.
3.3 Noncontravention. Neither the execution and the delivery of this
Agreement and the consummation of the transactions contemplated hereby by the
Seller, nor the execution and delivery of the Global and Local Operative
Agreements and the consummation of the transactions contemplated thereby by the
Seller and by each of the Seller Subsidiaries will:
(a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller or the Seller Subsidiaries, as
the case may be, is subject or any provision of the charter or bylaws of the
Seller or the Seller Subsidiaries, as the case may be,
(b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the Seller
or the Seller Subsidiaries, as the case may be, is a party or by which they are
bound or to which any of the Purchased Assets or US Network Assets are subject;
or
(c) require Seller to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any third party, government or
governmental agency.
Provided, however, that the foregoing representation and warranty in this
Section 3.3 shall not apply to the extent:
(y) as set forth on Schedule 3.3, or
(z) as would not result in the imposition of any Impermissible Security
Interest upon any of the International Network Assets or the US Network Assets,
and where any violation, conflict, breach, default, acceleration, termination,
modification, cancellation or failure to give notice would not have a material
adverse effect on the value or use of the International Network Assets or the US
Network Assets, or on the amount of the Assumed Liabilities, or on the ability
of the parties to consummate the transactions contemplated by this
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Agreement or the Global Operative Agreements, or the ability of the parties'
affiliates to consummate the transactions contemplated by the Local Operative
Agreements to the extent these are executed and delivered at Closing.
3.4 Brokers' Fees. Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
3.5 Purchased Assets; Assumed Liabilities.
(a) Except as set forth on Schedule 3.5(a), the International Network
Assets, the US Network Assets and the Call Assets constitute all of the material
assets of the Seller and the Seller Subsidiaries used in the IP Network.
(b) Each of the respective Seller and Seller Subsidiaries has good
title to, or a valid leasehold interest in, the Purchased Assets and the US
Network Assets, free and clear of all Impermissible Security Interests, and
there exists no restriction on the transfer of such property, other than
Impermissible Security Interests or restrictions which would not, in the
aggregate, have a material adverse affect on the ability of the parties to
consummate the transactions contemplated by this Agreement, the Global Operative
Agreements or the Local Operative Agreements or on the value or use of the
International Network Assets or the US Network Assets.
(c) Other than (i) the Assumed Liabilities incurred by Seller and
Seller Subsidiaries in the ordinary course of business after December 31, 1999,
(ii) the Contracts, and (iii) the Assumed Liabilities listed on Schedule 1.3,
there are no Assumed Liabilities which are material to the business comprised of
the Acquired Network Facilities, taken as a whole.
3.6 Contracts. Each of the Contracts material to the operation and use
of the US Network Assets and the International Network Assets, taken as a whole,
is set forth on Schedule 3.6 and is a valid and binding obligation of the
parties thereto, enforceable in accordance with their terms and is in full force
and effect. No party to any such contract is in material breach or violation
thereof or material default thereunder. Except for matters which would not, in
the aggregate, have a material adverse effect on the value or use of the
International Network Assets or the US Network Assets, or on the amount of the
Assumed Liabilities, taken as a whole, no event has occurred which, through the
passage of time or the giving of notice, or both, would constitute, and neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby do or will constitute or result in, a breach or violation of
or default under any contract, or would cause the acceleration of any obligation
of any party thereto or the creation of any Impermissible Security Interest upon
any US Network Assets or International Network Assets.
3.7 Employees. Schedule 3.7 sets forth the names of all employees of
the Seller who have been released by Seller or Seller Subsidiaries for transfer
to the Buyer as of January 1, 2000 (the "Employees").
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3.8 Disclaimer of Other Representations and Warranties EXCEPT AS
EXPRESSLY SET FORTH IN THIS ARTICLE III, NEITHER THE SELLER NOR ANY OF THE
SELLER SUBSIDIARIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT
LAW OR IN EQUITY, IN RESPECT OF ANY OF ITS ASSETS (INCLUDING, WITHOUT
LIMITATION, THE PURCHASED ASSETS), LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY SET FORTH IN THIS ARTICLE III, THE BUYER AND EACH BUYER SUBSIDIARY
IS PURCHASING THE PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, NEITHER THE SELLER NOR THE SELLER
SUBSIDIARIES MAKES ANY REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER
THAN THE ACQUIRED NETWORK FACILITIES AND THE INTEREST AND SELLER AND SELLER
SUBSIDIARIES EXPRESSLY HEREBY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES
REGARDING THE CALL ASSETS PRIOR TO SUCH ASSETS BEING ACQUIRED BY BUYER OR BUYER
SUBSIDIARIES HEREUNDER OR REGARDING ANY LIABILITIES OTHER THAN THE ASSUMED
LIABILITIES, AND NONE SHALL BE IMPLIED AT LAW OR IN EQUITY.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and as of the Closing.
4.1 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Each of the Buyer Subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which such
entity was organized.
4.2 Authorization of Transaction. The Buyer has full corporate power
and authority to execute and deliver this Agreement and the Global Operative
Agreements and to perform its obligations hereunder and thereunder. Each of this
Agreement and, first as of the Closing, the Global Operative Agreements
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. Each of the Buyer Subsidiaries has
full corporate power and authority to execute and deliver the respective Local
Operative Agreements and to perform its obligations thereunder. First as of the
Closing, the respective Local Operative Agreements constitute the valid and
legally binding obligation of each of the Buyer Subsidiaries, enforceable in
accordance with their terms and conditions.
4.3 Noncontravention. Except as would not have a material adverse
effect on ability of the parties to consummate the transactions contemplated by
this Agreement or the Global Operative Agreements or the ability of the parties'
affiliates to consummate the transactions contemplated by the Local Operative
Agreements, neither the execution and the delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Buyer, nor the
execution and delivery of the Global and Local Operative Agreements and the
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consummation of the transactions contemplated thereby by the Buyer and by each
of the Buyer Subsidiaries will:
(a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer or the Buyer Subsidiaries, as
the case may be, is subject or any provision of the charter or bylaws of the
Buyer of the Buyer Subsidiaries, as the case may be;
(b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the Buyer or
the Buyer Subsidiaries, as the case may be, is a party or by which they are
bound; or
(c) require Buyer to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency.
4.4 Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS OF THE PARTIES
5.1 Notices and Consents. Except as set forth on Schedule 5.1 attached
hereto, the Seller has given and obtained (or caused the Seller Subsidiaries to
give or obtain) all third-party notices and consents and governmental approvals
necessary to effect the purchase of the Purchased Assets and the assignment, to
the extent a replacement contract has not been executed, of the Contracts and
the assumption of the Assumed Liabilities hereunder. With respect to any third
party notices or consents or governmental approvals that have not been given or
obtained as of the date hereof, Seller covenants and agrees to use its
reasonable best efforts to give or obtain (or cause the Seller Subsidiaries to
give or obtain) the same. The Buyer agrees to fully cooperate with (and cause
the Buyer Subsidiaries to fully cooperate with) the Seller and the Seller
Subsidiaries in such efforts. Until such time as Seller or the Seller
Subsidiaries shall have obtained all necessary third party consents to
assignment by Buyer or the Buyer Subsidiaries of the Contracts and the
assumption by the Buyer or the Buyer Subsidiaries of the Assumed Liabilities,
Seller shall continue (or shall cause the Seller Subsidiaries to continue) to
discharge and perform when due all obligations associated therewith, and Buyer
shall reimburse Seller for any expenses directly attributable thereto.
5.2 Call Right. Seller, for itself and the Seller Subsidiaries, hereby
grants to Buyer and the Buyer Subsidiaries the right to purchase (the "Call
Right") the following assets ("Call Assets"):
(a) in each of the jurisdictions set forth on Schedule 5.2(a) hereof
and such other jurisdictions as Buyer and Seller may, from time to time,
mutually agree (the "Call
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Jurisdictions"), all of the IP Network assets owned by the Seller and/or the
Seller Subsidiaries in each Call Jurisdiction, including those assets set forth
in Schedule 5.2(a), subject to additions and deletions subsequent to the Closing
permitted under the terms of this Agreement, and all contract rights associated
therewith; provided, for the purpose of clarification, that telecommunications
circuits to destinations in any Call Jurisdiction, but originating outside of
such Call Jurisdiction, shall not be Call Assets and instead shall be included
in the Acquired Network Facilities transferred hereunder at the initial Closing;
and
(b) all the rights and obligations with respect to the satellite
communications agreements and all rights and obligations in specific countries
with respect thereto, as described in Schedule 5.2(b), subject to additions and
deletions subsequent to the Closing permitted under the terms of this Agreement,
(the "Satellite Rights").
Unless earlier terminated pursuant to Section 5.6 hereunder, the Call Right
granted hereunder shall expire on the tenth anniversary of the date hereof
("Expiration Date"); provided, however, that if the term of the Network Services
Agreement is extended beyond the Expiration Date, then the Expiration Date shall
be the date upon which the Network Services Agreement, attached as Exhibit A
hereto, is terminated. Upon the exercise of the Call Right in any Call
Jurisdiction or with respect to the Satellite Rights, Buyer shall assume all
liabilities and obligations of the Seller and/or the Seller Subsidiaries related
to the respective Call Assets to the extent that such liabilities arise on or
after the date of exercise.
5.3 Exercise of Call Right. Buyer shall use its reasonable best
efforts, from and after the Closing, to secure the consents, licenses, and other
authorizations, whether from governments or private parties, and to establish
such foreign legal presence and to fulfill such other conditions, as are
necessary in order to permit Buyer to acquire the Call Assets; provided,
however, that this obligation shall not require that Buyer permit third parties
to own a portion of any subsidiaries of Buyer unless Buyer otherwise agrees to
such ownership. Prior to the receipt of all such material consents, licenses,
and authorizations and the establishment of any necessary foreign presence,
Buyer shall not be obligated to exercise the Call Right with respect to any or
all of the Call Jurisdictions or with respect to the Satellite Rights, nor shall
Buyer be obligated to exercise all the Call Rights at one time; rather, Buyer
may exercise the Call Right in each Call Jurisdiction and with respect to the
Satellite Rights separately, from time to time, and at any time prior to the
Expiration Date subject to the immediately following provision. Upon the receipt
of all material consents, licenses and authorizations and the establishment of
any necessary foreign presence in any Call Jurisdiction or with respect to all
the Satellite Rights connected with a particular third-party satellite contract,
Buyer shall be obligated to proceed expeditiously with the exercise of the Call
Right with respect to such Call Jurisdiction or Satellite Rights. The exercise
price of the Call Right, other than with respect to Satellite Rights, in each
Call Jurisdiction shall be $1.00 plus the net book value of the Call Assets in
the applicable Call Jurisdiction(s) on the effective date of the exercise of the
Call Right for such Call Jurisdiction. The exercise of the Call Right with
respect to the Satellite Rights shall only be permitted if made with respect to
all Satellite Rights under a particular global satellite contract as set forth
on Schedule 5.2(b), and the exercise price shall be $1 plus the assumption of
all obligations of Seller with respect to such contract. The exercise of a Call
right shall be effected by Buyer through the delivery of ten days written notice
to Seller. The Call Assets shall be
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transferred via a Call Asset Transfer Agreement in substantially the form
attached as Exhibit J hereto. Upon the exercise of a Call Right, a Local Network
Services Agreement for the respective Call Jurisdiction substantially in the
form of Exhibit G attached hereto, or a comparable agreement containing
substantially the same terms as a Local Network Services Agreement with respect
to Satellite Rights as agreed by the Parties, will be executed by the
appropriate Seller Subsidiaries and Buyer Subsidiaries.
5.4 Seller's Obligation with Respect to Call Assets. Until the earliest
of (a) the Expiration Date, (b) the date upon which no Call Assets remain
subject to the Call Right, or (c) the Call Right is terminated pursuant to
Section 5.6, and subject at all times to the rights and obligations set forth in
the Network Services Agreement executed between the parties as of the same date
as the date of this Agreement:
(a) Seller shall maintain and operate (or cause the Seller Subsidiaries
to maintain and operate) the Call Assets in the same manner and to the same
extent as Seller and the Seller Subsidiaries, as the case may be, have
maintained such assets to date. Seller shall take (and shall cause the Seller
Subsidiaries to take) any and all actions reasonably necessary to fulfill its
obligations hereunder;
(b) Seller shall not (nor shall it permit the Seller Subsidiaries to)
dispose of, encumber or otherwise transfer any interest in, or amend, waive or
modify any provision of or terminate any Contract relating to, the Call Assets
without the prior written consent of Buyer which consent shall not be
unreasonably withheld; provided, "unreasonable" shall be determined from the
perspective of Buyer and shall include all actions which may have a material
adverse effect if Buyer were to exercise the related Call Right;
(c) Seller shall provide (and shall cause the Seller Subsidiaries to
provide) Buyer with notice of any events that have, or may have, a material
adverse effect on the Call Assets or on Buyer's right or ability to exercise the
Call Right with respect to any of the Call Assets;
(d) If Buyer chooses to exercise any Call Right prior to the receipt of
all consents, licenses and other authorizations or establishment of the
appropriate foreign legal presence, it does so with the assumption of all risk
or other liability arising from such absence of necessary consents, license or
other authorizations or legal presence. Upon exercise of any Call Right, Seller
shall use its reasonable best efforts to obtain any required consent of any
other contracting parties to the assignment or novation of any agreement
pertaining to the applicable Call Assets, and Buyer shall use its reasonable
best efforts to assist Seller in all such endeavors. Unless and until such
consent shall be forthcoming and any relevant agreements shall have been
assigned or novated, Buyer shall at its own cost and expense assume Seller's
obligations under such agreements and Seller shall account to Buyer for all sums
received therefrom. Seller will at Buyer's request and expense give to Buyer all
assistance in the power of Seller to enable Buyer to enforce any of the
agreements so assigned against the other contracting party or parties and,
without prejudice to the generality of the foregoing, will provide all such
relevant books, documents and other information as Buyer may require in relation
thereto; and
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(e) Buyer shall have no rights to use the Call Assets prior to exercise
of the Call Rights, except as otherwise consented to by Seller, such consent not
to be unreasonably withheld.
5.5 Buyer's Obligations with Respect to Call Assets. With respect to
those Call Assets in the Call Jurisdictions set forth on Schedule 5.5
("Short-Term Call Assets"), Buyer and Seller expect the exercise of the Call
Right to occur within the calendar year 2000. Regardless if such exercise
actually occurs in 2000, with respect to the Short-Term Call Assets, Buyer or
the Buyer Subsidiaries shall reimburse the Seller or the Seller Subsidiaries for
all costs requiring an expenditure of cash which are directly associated with
the use, maintenance and operation of the Short-Term Call Assets, including, but
not limited to, maintenance of leased lines. Seller shall invoice Buyer monthly
for such costs. Likewise, Seller shall compensate Buyer for the use of the
Short-Term Call Assets pursuant to such Network Services Agreement executed
between the parties as of the same date as the date of this Agreement. Such
obligations of Buyer and Seller shall run concurrently and shall continue until
the Expiration Date, unless earlier terminated by mutual agreement of Buyer and
Seller. No similar obligations will exist for Buyer or Seller with respect to
the remaining Call Assets prior to the exercise of the Call Rights with respect
thereto.
5.6 Termination of Call Right. The Call Right shall terminate
automatically on the earlier of the Expiration Date or the date upon which Buyer
has exercised the Call Right in each of the Call Jurisdictions. Prior to the
Expiration Date, at any time and from time to time, the Call Right may be
terminated with respect to any or all of the Call Jurisdictions upon the mutual
agreement of the parties.
5.7 Employee Services. From and after the Closing until such time as
the Employees are transferred to the Buyer pursuant to Section 5.8, Seller shall
make all of the Employees available to Buyer on a full-time basis. Buyer shall
reimburse Seller, on a monthly basis, for all payroll costs directly associated
with such Employees.
5.8 Offers of Employment.
(a) As of December 31, 1999, Buyer has offered employment with the
Buyer to the Employees, and Seller has released from their employment those
Employees who accepted employment with the Buyer to enable them to commence
their employment with the Buyer. Such Employees commenced employment with the
Buyer on January 1, 2000 (the "Employment Date").
(b) Seller shall furnish Buyer with all employee data files related to
the Employees. The Seller makes no representations or warranties concerning such
files, or the contents or sufficiency thereof.
5.9 Employee Benefits.
(a) Employees shall continue to participate in each Employee Benefit
Plan maintained by Seller until such time as Buyer establishes and maintains a
substantially similar
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Employee Benefit Plan; provided that, as of the Employment Date, an Employee
shall cease to be eligible to participate in the Bridge Information Systems,
Inc. 401(k) Salary Savings Plan ("Bridge Plan") and shall be eligible to
participate in the Savvis Communications Co. 401(k) Plan ("Savvis Plan"), in
accordance with the terms of Section 5.9(b) and subject to the terms of the
Savvis Plan. During the period in which Employees are participating in Seller's
Employee Benefit Plans, Buyer shall reimburse Seller for any employer-paid
amounts under such Employee Benefit Plans.
(b) As soon as practicable after the Employment Date, Seller shall
cause to be transferred from the Bridge Plan to the Savvis Plan all Bridge Plan
assets representing account balances of Employees under the Bridge Plan. Buyer
and Seller shall take all such actions as are necessary to ensure that such
transfer complies with all relevant provisions of Section 411(d)(6) of the Code
and the regulations thereunder. Buyer shall amend the Savvis Plan, to the extent
necessary, to provide that each Employee is credited, for all purposes under the
Savvis Plan and subject to the other provisions of such plan, with all service
completed prior to the Employment Date with Seller.
(c) Buyer shall assume the obligations in connection with accrued but
unused vacation and shall be responsible for vacation pay at and after the
Employment Date with respect to service (whether prior to or after the
Employment Date) of all Employees. Buyer shall afford Employees credit for their
period of employment with Seller for purposes of determining the amount of
vacation to which the Employees are entitled each year and for purposes of
determining all other seniority based benefits.
(d) Buyer and Seller acknowledge and agree that the transactions
contemplated by this Agreement shall not constitute a termination of employment
of any Employee.
(e) No provision of this Agreement, including without limitation this
Section 5.9, shall create any third-party beneficiary rights in any person or
organization, including without limitation employees or former employees
(including any beneficiary or dependent thereof) of Seller, unions or other
representatives of such employees or former employees, or trustees,
administrators, participants, or beneficiaries of any Employee Benefit Plan, and
no provision of this Agreement, including this Section 5.9, shall create such
third-party beneficiary rights in any such person or organization in respect of
any benefits that may be provided, directly or indirectly, under any Employee
Benefit Plan.
(f) Seller and Buyer shall cooperate as may reasonably be required with
respect to each of the filings, calculations, and other actions necessary to
effect the transactions contemplated by this Section 5.9 and in obtaining any
government approvals as may be required hereunder.
5.10 Access to Employee Information. From and after the Closing, the
parties hereto will cooperate with each other in the administration of any
applicable Employee Benefit Plans and programs. To the extent permitted by law,
at the Employment Date or within a reasonable time thereafter, the Seller will
provide the Buyer the necessary employee data or copies thereof, including
personnel and benefit information, maintained with respect to the
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Employees by the Seller or by its independent contractors, such as insurance
companies and actuaries.
5.11 WARN Act Indemnification. The Buyer agrees to indemnify the Seller
and its directors, officers, employees, consultants and agents for, and to hold
the Seller and its directors, officers, employees, consultants and agents
harmless from and against, any and all losses arising or resulting, or alleged
to arise or result from the notification or other requirements of the WARN Act.
5.12 Workers' Compensation Claims. The Seller will be responsible for
any workers' compensation claims by any Employee for injuries incurred prior to
such Employee's Employment Date. The Buyer will be responsible for any workers'
compensation claims for injuries incurred by any Employee on or after such
Employee's Employment Date.
5.13 Employee Benefit Plans. Except as expressly provided in this
Article V, the Buyer will not adopt, assume or otherwise become responsible for,
either primarily or as a successor employer, any assets or liabilities of any
Employee Benefit Plans, arrangements, commitments or policies currently provided
by the Seller or by any member of its controlled group of corporations. In
addition, the Buyer will not assume Seller's obligations under Code Section
4980B and ERISA Section 606 relating to individuals who are neither Employees
nor dependents of Employees. Buyer shall be responsible for satisfying
obligations under ERISA Section 606 and Code Section 4980 to provide
continuation coverage to or with respect to any Employees with respect to any
"qualifying event" which occurs on or following the Employment Date.
5.14 Further Assurances. From and after Closing, the parties shall do
such acts and execute such documents and instruments as may be reasonably
required to make effective the transactions contemplated hereby. In the event
that consents, approvals, other authorizations or other acts contemplated by
this Agreement have not been fully effected as of Closing, the parties will
continue after Closing, without further consideration, to use their reasonable
best efforts to carry out such transactions; provided, however, in the event
that certain approvals, consents or other necessary documentation cannot be
secured, then the party having legal responsibility, ownership or control shall
act on behalf of the other party, without further consideration, to effect the
essential intention of the parties with respect to the transactions contemplated
by this Agreement.
ARTICLE VI
REMEDIES FOR BREACHES OF THIS AGREEMENT
6.1 Survival of Representations and Warranties. The representations and
warranties of the Seller contained in Article III of this Agreement and of the
Buyer contained in Article IV of this Agreement shall survive for a period of
one year following the Effective Time.
6.2 Indemnification Provisions for Benefit of the Buyer.
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(a) Subject to the limitations set forth in Section 6.2(c) below, in
the event the Seller or any Seller Subsidiary breaches any of its
representations, warranties, and covenants contained in this Agreement, provided
that the Buyer makes a written claim for indemnification against the Seller with
respect to its representations and warranties within the survival period set
forth in Section 6.1, then the Seller agrees to indemnify the Buyer and the
Buyer Subsidiaries from and against the entirety of any Adverse Consequences the
Buyer and the Buyer Subsidiaries shall suffer through and after the date of the
claim for indemnification (but excluding any Adverse Consequences the Buyer or
the Buyer Subsidiaries shall suffer after the end of any applicable survival
period) caused proximately by the breach.
(b) Subject to the limitations set forth in Section 6.2(c) below,
Seller agrees to indemnify the Buyer and the Buyer Subsidiaries from and against
the entirety of any Adverse Consequences the Buyer and the Buyer Subsidiaries
shall suffer caused proximately by any liability of the Seller or any Seller
Subsidiary which is a Retained Liability (including any liability of the Seller
or any Seller Subsidiary that becomes a liability of the Buyer or any Buyer
Subsidiary under any bulk transfer law of any jurisdiction, under any common law
doctrine of de facto merger or successor liability, or otherwise by operation of
law).
(c) Notwithstanding anything to the contrary, (i) Seller shall not have
any liability under this Article VI in respect of any individual claim (or group
of related claims) unless such claim or group of related claims exceeds $25,000,
(ii) Seller shall not have any liability under this Article VI except and only
to the extent the aggregate of permitted claims exceeds a deductible amount of
$1,500,000, and (iii) Seller's aggregate liability under this Article VI shall
not exceed $150,000,000; provided, however, that the foregoing limitations shall
not apply to Seller's obligations under Section 2.2(b) and Section 6.2(d).
(d) Without limitation, Seller agrees to indemnify the Buyer and the
Buyer Subsidiaries from and against the entirety of any Adverse Consequences the
Buyer and the Buyer Subsidiaries shall suffer caused proximately by any
liability or obligation of the Seller or any Seller Subsidiary which relates to
data, information, or other content which has been, or should have been,
delivered by the Seller or any Seller Subsidiaries to Buyer or any Buyer
Subsidiaries for transmission over the IP Network.
6.3 Indemnification Provisions for Benefit of Seller.
(a) In the event the Buyer or any Buyer Subsidiary breaches any of its
representations, warranties, and covenants contained in this Agreement, provided
that the Seller makes a written claim for indemnification against the Buyer
within the survival period with respect to its representations and warranties,
then the Buyer agrees to indemnify the Seller and the Seller Subsidiaries from
and against the entirety of any Adverse Consequences the Seller and the Seller
Subsidiaries shall suffer through and after the date of the claim for
indemnification (but excluding any Adverse Consequences the Seller and the
Seller Subsidiaries shall suffer after the end of any applicable survival
period) caused proximately by the breach.
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(b) Buyer agrees to indemnify the Seller and the Seller Subsidiaries
from and against the entirety of any Adverse Consequences the Seller and the
Seller Subsidiaries shall suffer caused proximately by any liability of the
Buyer or any Buyer Subsidiary which is an Assumed Liability.
6.4 Matters Involving Third Parties.
(a) If any third party shall notify any party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against the other party (the "Indemnifying Party")
under this Article VI, then the Indemnified Party shall promptly (and in any
event, if the matter concerns a legal proceeding, within 15 business days after
receiving notice of the Third Party Claim, and with respect to any other matter,
within 30 business days) notify the Indemnifying Party thereof in writing.
(b) The Indemnifying Party will have the right at any time to assume
and thereafter conduct the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party; provided, however, that
(i) if the Third Party Claim falls within the scope of the
indemnification set forth in Section 6.2(d), then the Indemnified Party
shall have the right to refuse to accept such assumption of defense by
Indemnifying Party unless and until such time as the Indemnifying Party
shall provide to the Indemnified Party such assurances of payment and
performance of such indemnification obligation as shall be reasonably
satisfactory to the Indemnified Party; and
(ii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably) unless the judgment or proposed settlement
involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party.
(c) Unless and until the Indemnifying Party assumes the defense of the
Third Party Claim as provided in Section 6.4(b) above, however, the Indemnified
Party may defend against the Third Party Claim in any manner it reasonably may
deem appropriate, including, without limitation, consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim.
6.5 Call Right Remedies. The parties agree that the Call Assets and the
Call Right are unique interests and that, in the event of Seller's breach of its
obligations with respect to the Call Assets, monetary damages will not fully
compensate Buyer. Therefore, the parties agree that Buyer shall have the
remedies which are available to it for Seller's breach or violation of any of
the provisions of this Agreement relating to the Call Assets, including, but not
limited to, the equitable remedies for specific performance and injunctive
relief.
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6.6 Exclusive Remedy. The Buyer and the Seller acknowledge and agree
that, subject to the other remedies granted to the Buyer in Section 6.5 hereof,
the foregoing indemnification provisions in this Article VI shall be the
exclusive remedy of the Buyer and the Seller with respect to the transactions
contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 No Third-party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
7.2 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral, to the extent they related in any way to the subject
matter hereof. To the extent any provisions of the documents referred to in this
Agreement, or executed in connection with the transactions contemplated by this
Agreement, are inconsistent with the provisions of this Agreement, then the
provisions of this Agreement shall prevail, both as to the parties and as to
their respective affiliates, and the parties shall take such steps as are
appropriate to recognize such supremacy of this Agreement.
7.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other party, which consent shall not be unreasonably withheld; provided,
however, Seller and Seller Subsidiaries shall have the right to grant a security
interest or mortgage with respect to, or make any assignment for security
purposes or pledge of, Seller's and Seller Subsidiaries' rights under this
Agreement and any of the Global Operative Agreements and the Local Operative
Agreements, to the extent required by the senior lending group of Seller as a
condition to granting the consent to the transaction contemplated hereby.
7.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.5 Headings. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.6 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is
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sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
<TABLE>
<CAPTION>
<S> <C>
If to the Seller: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General Counsel
If to the Buyer: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
</TABLE>
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
7.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Missouri without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Missouri or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Missouri.
7.7 Arbitration.
(a) The parties hereby agree to submit all disputes to rules of
arbitration of the American Arbitration Association and the Missouri Uniform
Arbitration Act (the "Rules") under the following provisions, which shall be
final and binding upon the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause under applicable
law. Either party may serve process or notice on the other in any arbitration or
litigation in accordance with the notice provisions hereof. The parties agree
not to disclose any information regarding any dispute or the conduct of any
arbitration hereunder, including the existence of such dispute or such
arbitration, to any person or entity other than such employees or
representatives of such party as have a need to know.
(b) Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the dispute to the other,
including a reference to this provision (the "Dispute Notice"). Either party may
initiate arbitration of a dispute by delivery of a demand therefor (the
"Arbitration Demand") to the other party not sooner than 60 calendar days
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after the date of delivery of the Dispute Notice but at any time thereafter. The
arbitration shall be conducted in St. Louis, Missouri.
(c) The arbitration shall be conducted by three arbitrators (the
"Arbitrators"), one of whom shall be selected by Seller, one by Buyer, and the
third by agreement of the other two not later than 10 days after appointment of
the first two, or, failing such agreement, appointed pursuant to the Rules. If
an Arbitrator becomes unable to serve, a successor shall be selected or
appointed in the same manner in which the predecessor Arbitrator was appointed.
(d) The arbitration shall be conducted pursuant to such procedures as
the parties may agree or, in the absence of or failing such agreement, pursuant
to the Rules. Notwithstanding the foregoing, each party shall have the right to
inspect the books and records of the other party that are reasonably related to
the Dispute, and each party shall provide to the other, reasonably in advance of
any hearing, copies of all documents which such party intends to present in such
hearing and the names and addresses of all witnesses whose testimony such party
intends to present in such hearing.
(e) All hearings shall be conducted on an expedited schedule, and all
proceedings shall be confidential. Either party may at its expense make a
stenographic record thereof.
(f) The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment, and shall make a
final award not later than 30 calendar days thereafter. The Arbitrators shall
apportion all costs and expenses of the Arbitration, including the Arbitrators'
fees and expenses of experts ("Arbitration Costs") between the prevailing and
non-prevailing parties as the Arbitrators deem fair and reasonable. In
circumstances where a Dispute has been asserted or defended against on grounds
that the Arbitrators deem manifestly unreasonable, the Arbitrators may assess
all Arbitration Costs against the non-prevailing party and may include in the
award the prevailing party's attorneys' fees and expenses in connection with any
and all proceedings under this Section 7.7.
(g) Either party may assert appropriate statutes of limitation as a
defense in arbitration; provided, that upon delivery of a Dispute Notice any
such statute shall be tolled pending resolution hereunder.
7.8 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
7.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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7.10 Expenses. Each of the Seller and the Buyer will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
7.11 Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
7.12 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
7.13 Bulk Transfer Laws. The Buyer acknowledges that the Seller does
not believe that the provisions of any bulk transfer laws of any jurisdiction
are applicable to this transaction and will not comply with any such laws in
connection with the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
SAVVIS COMMUNICATIONS
CORPORATION
By: /s/ Steven M. Gallant
-------------------------------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
BRIDGE INFORMATION SYSTEMS, INC.
By: /s/ Daryl A. Rhodes
-------------------------------------
Name: Daryl A. Rhodes
Title: Executive Vice President
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<PAGE>
EXHIBIT A
NETWORK SERVICES AGREEMENT
[This Exhibit A has been filed as a separate document]
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<PAGE>
EXHIBIT B
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "AGREEMENT") is effective
as of ______________, 2000 (the "EFFECTIVE DATE"), between SAVVIS Communications
Corporation, a Missouri corporation ("SAVVIS"), and Bridge Information Systems,
Inc., a Missouri corporation ("BRIDGE").
RECITALS
A. Bridge is engaged in the business of collecting and distributing
various financial, news and other data.
B. SAVVIS is engaged in the business of providing Internet backbone and
other data transport services.
C. SAVVIS and certain of its subsidiaries have acquired from Bridge and
certain of its subsidiaries certain assets relating to the provision of Internet
backbone and other data transport services, and may in the future acquire
additional such assets from Bridge and certain of its subsidiaries, all pursuant
to a Master Establishment and Transition Agreement between SAVVIS' corporate
parent, SAVVIS Communications Corporation, a Delaware Corporation, and Bridge,
of even date herewith (the "MASTER ESTABLISHMENT AND TRANSITION AGREEMENT").
D. It is an obligation of the parties under the Master Establishment
and Transition Agreement to cause this Administrative Services Agreement to be
entered into between SAVVIS and Bridge, pursuant to which Bridge shall provide
administrative services to SAVVIS relating to the assets acquired by SAVVIS
pursuant to the Master Establishment and Transition Agreement.
E. Together with this Agreement, the parties hereto are entering into a
Network Services Agreement of even date herewith (the "NETWORK SERVICES
AGREEMENT") providing for the provision of certain services to Bridge by SAVVIS
and a Technical Services Agreement of even date herewith (the "TECHNICAL
SERVICES AGREEMENT"), providing for the provision of certain services to SAVVIS
by Bridge. Certain SAVVIS Subsidiaries and certain Bridge Subsidiaries are
entering into, and may in the future enter into, Local Transfer Agreements (the
"LOCAL TRANSFER AGREEMENTS"), Local Network Services Agreements (the "LOCAL
NETWORK SERVICES AGREEMENTS"), Equipment Collocation Permits (the "EQUIPMENT
COLLOCATION PERMITS"), and Local Administrative Services Agreements (the "LOCAL
ADMINISTRATIVE SERVICES AGREEMENTS").
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<PAGE>
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Administrative Services
Agreement by and between SAVVIS and Bridge, including all addenda
to this Agreement entered into in the manner set forth herein
(each an "ADDENDUM" and collectively the "ADDENDA"). This
Agreement shall be interpreted wherever possible to avoid
conflicts between the Sections hereof and the Attachments,
provided that if such a conflict shall arise, the Attachments
shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an Addendum
to this Agreement, either party may initiate the process of
determining such matter by submitting a proposed outline or
contents of such Addendum to the other party. Each party shall
appoint a primary contact and a secondary contact for the
completion of such Addendum, who shall be the contact points for
every issue concerning such Addendum and who shall be informed of
the progress of the project. The names of the contacts will be
exchanged in writing by the parties. Using the contacts, the
parties shall work together in good faith with such diligence as
shall be commercially reasonable under the circumstances to
complete such Addendum, provided, however, that neither party
shall be obligated to enter into such an Addendum. Upon the
completion of such Addendum, it shall be set forth in a written
document and executed by the parties and shall become a part of
this Agreement and shall be deemed to be incorporated herein by
reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined terms
shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included" and
"including" shall not be construed as terms of limitation.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" shall mean a period of 12 months beginning on
the Effective Date and each subsequent anniversary thereof.
"BRIDGE" means Bridge Information Systems, Inc., a Missouri
corporation.
"BRIDGE SUBSIDIARIES" has the meaning assigned to the term
"Seller Subsidiaries" in the Master Establishment and Transfer
Agreement.
"CONFIDENTIAL INFORMATION" means all information concerning the
business of Bridge, SAVVIS or any third party doing business with
either of them that may
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<PAGE>
be obtained from any source (i) by Bridge by virtue of its
performance under this Agreement or (ii) by SAVVIS by virtue of
its use of the Services. Such information shall also include the
terms of this Agreement (and negotiations and proposals from one
party to the other related directly thereto), network designs and
design recommendations, tools and programs, pricing, methods,
processes, financial data, software, research, development,
strategic plans or related information. All such information
disclosed prior to the execution of this Agreement shall also be
considered Confidential Information for purposes of this
Agreement. Confidential Information shall not include information
that:
(a) is already rightfully known to the receiving party at
the time it is obtained by such party, free from any
obligation to keep such information confidential; or
(b) is or becomes publicly known through no wrongful act
of the receiving party; or
(c) is rightfully received by the receiving party from a
third party without restriction and without breach of
this Agreement.
"EFFECTIVE DATE" means the date set forth in the Preamble of this
Agreement.
"INITIAL TERM" shall mean a period of three consecutive Agreement
Years beginning on the Effective Date.
"SAVVIS" means SAVVIS Communications Corporation, a Missouri
corporation.
"SAVVIS SUBSIDIARIES" has the meaning assigned to the term "Buyer
Subsidiaries" in the Master Establishment and Transfer Agreement.
"SERVICES" means the services provided by Bridge to SAVVIS
hereunder.
2. THE SERVICES
2.1. Bridge agrees to provide to SAVVIS some or all of the
administrative services listed on Schedule 2.1 hereto which shall
be referred to in this Agreement collectively as the "SERVICES"
and individually as a "SERVICE."
2.2. From time to time during the term of this Agreement, SAVVIS may
terminate one or more Services being provided by Bridge hereunder
by giving Bridge written notice at least 30 days prior to the
effective date of such termination, with no liability to Bridge
other than for charges (less any applicable credits) for such
Service provided prior to the effective date of such termination.
Any other changes to the Services shall be provided for in an
Addendum mutually agreed upon by the parties in the manner set
forth in Section 1.2 hereof.
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2.3 SAVVIS shall grant to Bridge such special powers of attorney as
are requested by Bridge and as are necessary for Bridge to act on
behalf of SAVVIS in matters relating to performance of the
Services.
2.4 In addition to the Services provided under this Agreement, it is
expected that additional administrative services will be provided
under the separate Local Administrative Services Agreements
between certain SAVVIS Subsidiaries and certain Bridge
Subsidiaries, substantially in the form of Exhibit A attached
hereto. Services provided under each such Local Administrative
Services Agreement shall be billed locally, in local currency.
3. RATES AND CHARGES
SAVVIS shall pay Bridge for the Services at rates to be mutually agreed
by the parties; provided, however, that such rates shall be based on
the cost to Bridge of providing the Services to SAVVIS, except to the
extent contrary to local law. The mutually agreed rates shall be
addressed by the parties in the manner set forth in Section 1.2. If the
parties are not able to agree, such matter shall be submissable to
arbitration pursuant to the procedures in Section 13.
4. INVOICES
4.1. The amounts due to Bridge from SAVVIS for the Services shall be
billed monthly in arrears. All items on invoices not the subject
of a bona fide dispute shall be payable by SAVVIS in United
States currency within 30 days from the date of receipt of the
invoice. All amounts not in dispute are subject to interest
charges of 1-1/2 percent that will accrue daily on all amounts
not paid within 30 days of the date of receipt of the invoice.
4.2. SAVVIS shall pay any sales, use, value added, federal excise,
utility, gross receipts, state and local surcharges, and similar
taxes, charges or levies lawfully levied by a duly constituted
taxing authority against or upon the Services. In the
alternative, SAVVIS shall provide Bridge with a certificate
evidencing SAVVIS' exemption from payment of or liability for
such taxes. As part of the Services, Bridge will administer the
payment of SAVVIS' payroll taxes. SAVVIS will reimburse Bridge
for such payroll taxes as invoiced under this Agreement. All
other taxes, charges or levies related to the Services, including
any income, franchise, privilege, or occupation taxes of Bridge
shall be paid by Bridge. Except as otherwise specifically
addressed in this Agreement or Addenda hereto, each party shall
pay its own taxes.
4.3. Bona fide disputes concerning invoices shall be referred to the
parties' respective Contract Managers for resolution. Any amount
to which SAVVIS is entitled as a result of the resolution of a
billing dispute shall be credited promptly to SAVVIS' account.
Any amount to which Bridge is entitled as a result of the
resolution of a billing dispute shall be paid promptly to Bridge.
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5. TERM AND EXTENSIONS
5.1. The initial term of this Agreement shall be three years,
commencing on the Effective Date, and shall continue in full
force and effect unless terminated in accord with the
provisions hereof.
5.2. The term of this Agreement shall automatically extend for
consecutive one-year periods unless either party gives the
other party advance written notice of such party's intent not
to extend not less than 60 days before the scheduled expiration
of the then current term.
6. TERMINATION BY BRIDGE
Bridge shall have the right to terminate this Agreement if:
(a) SAVVIS has failed to pay any invoice that is not the
subject of a bona fide dispute within 30 days of the date
on which such payment is due and Bridge has provided SAVVIS
with written notice thereof, provided that SAVVIS shall
have 10 days from the time it receives such notice from
Bridge of nonpayment to cure any such default;
(b) Bridge provides 10 days written notice of its intent to
terminate in the event that SAVVIS has failed to perform or
comply with or has violated any material representation,
warranty, term, condition or obligation of SAVVIS under
this Agreement, and SAVVIS has failed to cure such failure
or violation within 60 days after receiving notice thereof
from Bridge; or
(c) SAVVIS becomes the subject of a voluntary or involuntary
bankruptcy, insolvency, reorganization or liquidation
proceeding, makes an assignment for the benefit of
creditors, admits in writing its inability to pay debts
when due.
7. CONTRACT MANAGERS
7.1. CONTRACT MANAGER. SAVVIS shall assign a representative to serve
as Bridge's point-of-contact for all matters concerning its
performance under this Agreement.
7.2. CONTRACT MANAGER. Bridge shall assign a representative to serve
as SAVVIS' point-of-contact for all matters concerning its
performance under this Agreement.
8. RIGHTS AND OBLIGATIONS OF BRIDGE
8.1. PROVISION OF THE SERVICES. Bridge shall provide the Services at
Bridge facilities.
8.2. INSURANCE.
8.2.1. At all times during the term of this Agreement, Bridge shall
maintain for itself, its officers, employees, agents and
representatives insurance as shall be mutually agreed upon by
the parties and set forth in an Addendum to this Agreement in
the manner set forth herein.
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8.2.2. Bridge shall furnish to SAVVIS, upon written request,
certificates of insurance or other appropriate documentation
(including evidence of renewal of insurance) evidencing the
insurance coverage referenced above, naming SAVVIS as an
additional insured. Such certificates or other documentation
shall include a proviso whereby 15 days prior written notice
shall be provided to SAVVIS prior to coverage cancellation or
other material alteration by either Bridge or the applicable
insurer. Such cancellation or material alteration shall not
relieve Bridge of its continuing obligation to maintain
insurance coverage in accordance with this Section.
8.2.3. In lieu of all or part of the insurance coverage specified in
this Section, Bridge may self-insure with respect to any
insurance coverage, except where expressly prohibited by law.
8.3. REPRESENTATIONS AND WARRANTIES.
8.3.1. Bridge hereby warrants that the Services will be provided in
accordance with good business management practices and that it
will use the same care in rendering the Services to SAVVIS as
Bridge uses in rendering such services to itself.
8.3.2. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITH RESPECT TO ANY GOODS
PROVIDED INCIDENT TO THE SERVICES, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. LIMITATIONS OF LIABILITY
9.1. Neither party shall be liable to the other for indirect,
incidental, consequential, exemplary, reliance or special
damages, including damages for lost profits, regardless of the
form of action whether in contract, indemnity, warranty, strict
liability or tort, including negligence of any kind with
respect to the Services or other conduct under this Agreement.
9.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, or (b) injury or death, or damage to tangible real
or tangible personal property or the environment, when
proximately caused by SAVVIS' or Bridge's negligence or that of
their respective agents, subcontractors or employees.
10. PROPRIETARY RIGHTS; LICENSE
10.1. Bridge hereby grants to SAVVIS a non-exclusive and
non-transferable license to use all programming and software
necessary for SAVVIS to use the Services. Such license is
granted for the term of this Agreement for the sole purpose of
enabling SAVVIS to use the Services.
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10.2. All title and property rights (including intellectual property
rights) to Services (including associated programming and
software) are and shall remain with Bridge. SAVVIS shall not
attempt to examine, copy, alter, reverse engineer, decompile,
disassemble, tamper with or otherwise misuse such Services,
programming and software.
11. CONFIDENTIALITY
11.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination (including
all extensions thereof), each party agrees to maintain in
strict confidence all Confidential Information. Neither party
shall, without prior written consent of the other party, use
the other party's Confidential Information for any purpose
other than for the performance of its duties and obligations,
and the exercise of its rights, under this Agreement. Each
party shall use, and shall cause all authorized recipients of
the other party's Confidential Information to use, the same
degree of care to protect the other party's Confidential
Information as it uses to protect its own Confidential
Information, but in any event not less than a reasonable degree
of care.
11.2. Notwithstanding Section 11.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or (c)
other persons (including counsel, consultants, lessors or
managers of facilities or equipment used by such party) in need
of access to such information for purposes specifically related
to either party's responsibilities under this Agreement,
provided that any disclosure of Confidential Information under
clause (c) shall be made only upon prior written approval of
the other party and subject to the appropriate assurances that
the recipient of such information shall hold it in strict
confidence.
11.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
11.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines,
in its sole discretion, to grant the requested waiver, it will
do so in writing over the signature of an employee authorized
to grant such request.
11.5. Bridge and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable
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harm, the amount of which may be difficult to determine, thus
potentially making any remedy at law or in damages inadequate.
Each party, therefore, agrees that the other party shall have
the right to apply to any court of competent jurisdiction for
an order restraining any breach or threatened breach of this
Section and for any other appropriate relief. This right shall
be in addition to any other remedy available in law or equity.
11.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another party's
Confidential Information shall notify the other party in
advance of any such disclosure and, absent the other party's
consent to such disclosure, use its reasonable best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its reasonable best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
11.7. The provisions of Section 11.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or competent
jurisdiction, or disclosures that may be reasonably necessary
in connection with the performance or enforcement of this
Agreement or any of the obligations hereof; provided, however,
that if the receiving party would otherwise be required to
refer to or describe any aspect of this Agreement in any of the
preceding circumstances, the receiving party shall use its
reasonable efforts to take such steps as are available under
such circumstances (such as by providing a summary or synopsis)
to avoid disclosure of the financial terms and conditions of
this Agreement. Notwithstanding any provisions of this
Agreement to the contrary, either party may disclose the terms
and conditions of this Agreement in the course of a due
diligence review performed in connection with prospective debt
financing or equity investment by, or a sale to, a third party,
so long as the persons conducting such due diligence review
have agreed to maintain the confidentiality of such disclosure
and not to use such disclosure for any purpose other such due
diligence review.
12. INDEMNIFICATIONS
12.1. SAVVIS shall indemnify, defend, and hold Bridge (including any
of its directors, officers, employees, agents or assigns)
harmless from any claims, actions or suits to the extent that
such claim or action arises from Bridge's provision to SAVVIS
of the Services and to the extent that such claim, action or
suit does not arise from the gross negligence or intentional
misconduct of Bridge. SAVVIS may settle, or otherwise manage at
its own cost and expense any such claims, actions or suits.
Bridge shall notify SAVVIS promptly in writing of any such
claim, action or suit and shall cooperate with SAVVIS in a
reasonable way to facilitate the settlement or defense thereof.
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12.2. Bridge shall indemnify, defend, and hold SAVVIS (including any
of its directors, officers, employees, agents or assigns)
harmless from any claims, actions or suits to the extent that
such claim or action arises from Bridge's gross negligence or
intentional misconduct in the provision to SAVVIS of the
Services, unless such claim, action or suit also arises from
the gross negligence or intentional misconduct of SAVVIS.
Bridge may settle, or otherwise manage at its own cost and
expense any such claims, actions or suits. SAVVIS shall notify
Bridge promptly in writing of any such claim, action or suit
and shall cooperate with Bridge in a reasonable way to
facilitate the settlement or defense thereof.
13. DISPUTES
13.1. Resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract,
tort, statute or otherwise, including disputes over
arbitrability and disputes in connection with claims by third
persons ("DISPUTES") shall be exclusively governed by and
settled in accordance with the provisions of this Section 13.
The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are required
to be resolved in determining whether to grant such relief.
Resolution of Disputes with respect to claims by third persons
shall be deferred until any judicial proceedings with respect
thereto are concluded.
13.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon the
parties, their successors and assigns, and that the following
provisions constitute a binding arbitration clause under
applicable law. Either party may serve process or notice on the
other in any arbitration or litigation in accordance with the
notice provisions hereof. The parties agree not to disclose any
information regarding any Dispute or the conduct of any
arbitration hereunder, including the existence of such Dispute
or such arbitration, to any person or entity other than such
employees or representatives of such party as have a need to
know.
13.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the "ARBITRATION
DEMAND") to the other party not sooner than 60 calendar days
after the date of delivery of the Dispute Notice but at any
time thereafter. The arbitration shall be conducted in St.
Louis, Missouri.
13.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Bridge, one by
SAVVIS, and the third by agreement of the other two not later
than 10 days after appointment of the first two, or, failing
such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
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13.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the
foregoing, each party shall have the right to inspect the books
and records of the other party that are reasonably related to
the Dispute, and each party shall provide to the other,
reasonably in advance of any hearing, copies of all documents
which such party intends to present in such hearing and the
names and addresses of all witnesses whose testimony such party
intends to present in such hearing.
13.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
13.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees and
expenses in connection with any and all proceedings under this
Section 13.
13.8. Either party may assert appropriate statutes of limitation as a
defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
13.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and Bridge shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Services to
SAVVIS unless otherwise directed by SAVVIS. This Section shall
not apply where SAVVIS is in default under this Agreement.
14. FORCE MAJEURE
14.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or other
causes to the extent that such failure and the consequences
thereof are reasonably beyond the control and without the fault
or negligence of the party claiming excuse. Each party shall,
with the cooperation of the other party, use reasonable efforts
to mitigate the extent of any failure to perform and the
adverse consequences thereof.
14.2. If Bridge cannot promptly provide a suitable temporary Bridge
alternative to a Service subject to an interruption in
connection with the existence or a force majeure condition,
SAVVIS may, at its option and at its own cost, contract with
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one or more third parties for any or all affected Services for
the shortest commercially available period likely to cover the
reasonably expected duration of the Interruption, and may
suspend Bridge's provision of such Services for such period.
Bridge shall not charge SAVVIS for any Services thus suspended
during the period of suspension. Bridge shall resume provision
of the suspended Services upon the later of the termination or
expiration of SAVVIS' legally binding commitments under
contracts with third parties for alternative services or the
cessation or remedy of the force majeure condition.
14.3. In the event that a force majeure condition shall continue for
more than 60 days, SAVVIS may cancel the affected Services with
no further liability to Bridge other than for Services received
by SAVVIS prior to the occurrence of the force majeure
condition.
15. GENERAL PROVISIONS
15.1. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than the
parties and their respective successors and permitted assigns.
15.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior understandings,
agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
15.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may
assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other party, which consent shall not be unreasonably
withheld.
15.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
15.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
15.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
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If to Bridge: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set
forth.
15.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri without giving effect to any choice or conflict of law
provision or rule (whether of the State of Missouri or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Missouri.
15.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Bridge. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent
such occurrence.
15.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
15.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
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15.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
15.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Administrative
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
SAVVIS COMMUNICATIONS CORPORATION
By
--------------------------------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
BRIDGE INFORMATION SYSTEMS, INC.
By
--------------------------------------
Name: Daryl A. Rhodes
Title: Executive Vice President
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SCHEDULE 2.1 TO ADMINISTRATIVE SERVICE AGREEMENT
ADMINISTRATIVE SERVICES TO BE
PROVIDED BY BRIDGE TO SAVVIS
Service to be provided
Facility rental & operation
Equipment maintenance
Risk management services
Tax planning administration
Tax compliance
Treasury management
Financial planning
Human resource services
Payroll administration
Accounting, bookkeeping,
financial statement preparation
Procurement
PC support
LAN and WAN support
IT planning, installation and
support
Travel expenses (directly on behalf of
SAVVIS)
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EXHIBIT A TO ADMINISTRATIVE SERVICES AGREEMENT
FORM OF LOCAL ADMINISTRATIVE SERVICES AGREEMENT
This LOCAL ADMINISTRATIVE SERVICES AGREEMENT (the "AGREEMENT") is
effective as of ______________, 2000 (the "EFFECTIVE DATE"), between [local
SAVVIS entity], a company organized under the laws of [country] ("SAVVIS"), and
[local Bridge/Telerate entity], a company organized under the laws of [country]
("PROVIDER").
RECITALS
A. Provider is engaged in the business of collecting and distributing
various financial, news and other data in [country] (the "JURISDICTION").
B. SAVVIS is engaged in the business of providing Internet backbone and
other data transport services in the Jurisdiction.
C. SAVVIS Parent and Bridge Parent have entered into an Administrative
Services Agreement, of even date herewith (the "ADMINISTRATIVE
SERVICES AGREEMENT") for the provision and receipt of similar services on a
world-wide basis at the parent level as are being provided and received by the
parties to this Agreement within the Jurisdiction.
D. Together with this Agreement, the SAVVIS is entering into certain
other agreements with Provider, or Affiliates of Provider, related to their
operations in the Jurisdiction, including Local Transfer Agreements, Equipment
Collocation Permits, and Local Network Services Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Local Administrative
Services Agreement by and between SAVVIS and Provider, including
all addenda to this Agreement entered into in the manner set
forth herein (each an "ADDENDUM" and collectively the
"ADDENDA"). This Agreement shall be interpreted wherever
possible to avoid conflicts between the Sections hereof and the
Attachments, provided that if such a conflict shall arise, the
Attachments shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an Addendum
to this Agreement, either party may initiate the process of
determining such matter by submitting a proposed outline or
contents of such Addendum to the other party. Each party shall
appoint a primary contact and a secondary contact for the
completion of such Addendum, who shall be the contact points for
every issue concerning such Addendum and
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who shall be informed of the progress of the project. The names
of the contacts will be exchanged in writing by the parties.
Using the contacts, the parties shall work together in good
faith with such diligence as shall be commercially reasonable
under the circumstances to complete such Addendum, provided,
however, that neither party shall be obligated to enter into
such an Addendum. Upon the completion of such Addendum, it shall
be set forth in a written document and executed by the parties
and shall become a part of this Agreement and shall be deemed to
be incorporated herein by reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined terms
shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included"
and "including" shall not be construed as terms of limitation.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" shall mean a period of 12 months beginning on
the Effective Date and each subsequent anniversary thereof.
"BRIDGE PARENT" means Bridge Information Systems, Inc., a
Missouri corporation.
"CONFIDENTIAL INFORMATION" means all information concerning the
business of Provider, SAVVIS or any third party doing business
with either of them that may be obtained from any source (i) by
Provider by virtue of its performance under this Agreement or
(ii) by SAVVIS by virtue of its use of the Services. Such
information shall also include the terms of this Agreement (and
negotiations and proposals from one party to the other related
directly thereto), network designs and design recommendations,
tools and programs, pricing, methods, processes, financial data,
software, research, development, strategic plans or related
information. All such information disclosed prior to the
execution of this Agreement shall also be considered
Confidential Information for purposes of this Agreement.
Confidential Information shall not include information that:
(a) is already rightfully known to the receiving party at
the time it is obtained by such party, free from any
obligation to keep such information confidential; or
(b) is or becomes publicly known through no wrongful act
of the receiving party; or
(c) is rightfully received by the receiving party from a
third party without restriction and without breach of
this Agreement.
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"EFFECTIVE DATE" means the date set forth in the Preamble of
this Agreement.
"INITIAL TERM" has the meaning set forth in Section 5.1 below.
"PROVIDER" means [local Bridge/Telerate entity], a company
organized under the laws of [country].
"SAVVIS" means [local SAVVIS entity], a company organized under
the laws of [country].
"SAVVIS PARENT" means SAVVIS Communications Corporation, a
Missouri corporation.
"SERVICES" has the meaning set forth in Section 2.1 below.
2. THE SERVICES
2.1. Provider agrees to provide to SAVVIS some or all of the
administrative services listed on Schedule 2.1 hereto which
shall be referred to in this Agreement collectively as the
"SERVICES" and individually as a "SERVICE."
2.2. From time to time during the term of this Agreement, SAVVIS may
terminate one or more Services being provided by Provider
hereunder by giving Provider written notice at least 30 days
prior to the effective date of such termination, with no
liability to Provider other than for charges (less any
applicable credits) for such Service provided prior to the
effective date of such termination. Any other changes to the
Services shall be provided for in an Addendum mutually agreed
upon by the parties in the manner set forth in Section 1.2
hereof.
2.3. SAVVIS shall grant to Bridge such special powers of attorney as
are requested by Bridge and as are necessary for Bridge to act
on behalf of SAVVIS in matters relating to performance of the
Services.
3. RATES AND CHARGES
SAVVIS shall pay Provider for the Services at rates to be mutually
agreed by the parties; provided, however, that such rates shall be
based on the cost to Provider of providing the Services to SAVVIS,
except to the extent contrary to local law. The mutually agreed rates
shall be addressed by the parties in the manner set forth in Section
1.2. If the parties are not able to agree, such matter shall be
submissable to arbitration pursuant to the procedures in Section 13.
4. INVOICES
4.1. The amounts due to Provider from SAVVIS for the Services shall
be billed monthly in arrears. All items on invoices not the
subject of a bona fide dispute shall be payable by SAVVIS in the
legal currency of [country] within 30 days from the date of
receipt of the invoice. All amounts not in dispute are subject
to interest charges of 1-1/2 percent that will accrue daily on
all amounts not paid within 30 days of the date of receipt of
the invoice.
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4.2. SAVVIS shall pay any sales, use, value added, federal excise,
utility, gross receipts, state and local surcharges, and similar
taxes, charges or levies lawfully levied by a duly constituted
taxing authority against or upon the Services. In the
alternative, SAVVIS shall provide Provider with a certificate
evidencing SAVVIS' exemption from payment of or liability for
such taxes. As part of the Services, Provider will administer
the payment of SAVVIS' payroll taxes. SAVVIS will reimburse
Provider for such payroll taxes as invoiced under this
Agreement. All other taxes, charges or levies related to the
Services, including any income, franchise, privilege, or
occupation taxes of Provider shall be paid by Provider. Except
as otherwise specifically addressed in this Agreement or Addenda
hereto, each party shall pay its own taxes.
4.3. Bona fide disputes concerning invoices shall be referred to the
parties' respective Contract Managers for resolution. Any amount
to which SAVVIS is entitled as a result of the resolution of a
billing dispute shall be credited promptly to SAVVIS' account.
Any amount to which Provider is entitled as a result of the
resolution of a billing dispute shall be paid promptly to
Provider.
5. TERM AND EXTENSIONS
5.1. The Initial Term of this Agreement shall be three years,
commencing on the Effective Date, and shall continue in full
force and effect unless terminated in accord with the provisions
hereof.
5.2. The term of this Agreement shall automatically extend for
consecutive one-year periods unless either party gives the other
party advance written notice of such party's intent not to
extend not less than 60 days before the scheduled expiration of
the then current term.
5.3. The above provisions of this Section 5 notwithstanding, the term
of this Agreement, including the Initial Term and any extension
provided under Section 5.2 shall not extend beyond the term of
the Administrative Services Agreement.
6. TERMINATION BY PROVIDER
6.1. Provider shall have the right to terminate this Agreement if:
(a) SAVVIS has failed to pay any invoice that is not the
subject of a bona fide dispute within 30 days of the date
on which such payment is due and Provider has provided
SAVVIS with written notice thereof, provided that SAVVIS
shall have 10 days from the time it receives such notice
from Provider of nonpayment to cure any such default;
(b) Provider provides 10 days written notice of its intent to
terminate in the event that SAVVIS has failed to perform or
comply with or has violated any material representation,
warranty, term, condition or obligation of SAVVIS under
this Agreement, and SAVVIS has failed to cure such failure
or violation within 60 days after receiving notice thereof
from Provider;
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(c) SAVVIS becomes the subject of a voluntary or involuntary
bankruptcy, insolvency, reorganization or liquidation
proceeding, makes an assignment for the benefit of
creditors, admits in writing its inability to pay debts
when due; or
(d) SAVVIS Parent defaults under the terms of the
Administrative Service Agreement.
7. CONTRACT MANAGERS
7.1. SAVVIS CONTRACT MANAGER. SAVVIS shall assign a representative to
serve as Provider's point-of-contact for all matters concerning
its performance under this Agreement.
7.2. BRIDGE CONTRACT MANAGER. Provider shall assign a representative
to serve as SAVVIS' point-of-contact for all matters concerning
its performance under this Agreement.
8. RIGHTS AND OBLIGATIONS OF PROVIDER
8.1. PROVISION OF THE SERVICES. Provider shall provide the Services
at its facilities.
8.2. INSURANCE.
8.2.1. At all times during the term of this Agreement, Provider shall
maintain for itself, its officers, employees, agents and
representatives insurance as shall be mutually agreed upon by
the parties and set forth in an Addendum to this Agreement in
the manner set forth herein.
8.2.2. Provider shall furnish to SAVVIS, upon written request,
certificates of insurance or other appropriate documentation
(including evidence of renewal of insurance) evidencing the
insurance coverage referenced above, naming SAVVIS as an
additional insured. Such certificates or other documentation
shall include a proviso whereby 15 days prior written notice
shall be provided to SAVVIS prior to coverage cancellation or
other material alteration by either Provider or the applicable
insurer. Such cancellation or material alteration shall not
relieve Provider of its continuing obligation to maintain
insurance coverage in accordance with this Section.
8.2.3. In lieu of all or part of the insurance coverage specified in
this Section, Provider may self-insure with respect to any
insurance coverage, except where expressly prohibited by law.
8.3. REPRESENTATIONS AND WARRANTIES.
8.3.1. Provider hereby warrants that the Services will be provided in
accordance with good business management practices and that it
will use the same care in rendering the Services to SAVVIS as
Provider uses in rendering such services to itself.
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8.3.2. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITH RESPECT TO ANY GOODS PROVIDED
INCIDENT TO THE SERVICES, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. LIMITATIONS OF LIABILITY
9.1. Neither party shall be liable to the other for indirect,
incidental, consequential, exemplary, reliance or special
damages, including damages for lost profits, regardless of the
form of action whether in contract, indemnity, warranty, strict
liability or tort, including negligence of any kind with respect
to the Services or other conduct under this Agreement.
9.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, or (b) injury or death, or damage to tangible real
or tangible personal property or the environment, when
proximately caused by SAVVIS' or Provider's negligence or that
of their respective agents, subcontractors or employees.
10. PROPRIETARY RIGHTS; LICENSE
10.1. Provider hereby grants to SAVVIS a non-exclusive and
non-transferable license to use all programming and software
necessary for SAVVIS to use the Services. Such license is
granted for the term of this Agreement for the sole purpose of
enabling SAVVIS to use the Services.
10.2. All title and property rights (including intellectual property
rights) to Services (including associated programming and
software) are and shall remain with Provider. SAVVIS shall not
attempt (except as permitted by applicable law) to examine,
copy, alter, reverse engineer, decompile, disassemble, tamper
with or otherwise misuse such Services, programming and
software.
11. CONFIDENTIALITY
11.1. During the term of this Agreement and for a period of five years
from the date of its expiration or termination (including all
extensions thereof), each party agrees to maintain in strict
confidence all Confidential Information. Neither party shall,
without prior written consent of the other party, use the other
party's Confidential Information for any purpose other than for
the performance of its duties and obligations, and the exercise
of its rights, under this Agreement. Each party shall use, and
shall cause all authorized recipients of the other party's
Confidential Information to use, the same degree of care to
protect the other party's Confidential Information as it uses to
protect its own Confidential Information, but in any event not
less than a reasonable degree of care.
11.2. Notwithstanding Section 11.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or (c)
other persons
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(including counsel, consultants, lessors or managers of
facilities or equipment used by such party) in need of access to
such information for purposes specifically related to either
party's responsibilities under this Agreement, provided that any
disclosure of Confidential Information under clause (c) shall be
made only upon prior written approval of the other party and
subject to the appropriate assurances that the recipient of such
information shall hold it in strict confidence.
11.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the other
party with written certification of such destruction.
11.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines, in
its sole discretion, to grant the requested waiver, it will do
so in writing over the signature of an employee authorized to
grant such request.
11.5. Provider and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of which
may be difficult to determine, thus potentially making any
remedy at law or in damages inadequate. Each party, therefore,
agrees that the other party shall have the right to apply to any
court of competent jurisdiction for an order restraining any
breach or threatened breach of this Section and for any other
appropriate relief. This right shall be in addition to any other
remedy available in law or equity.
11.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another party's
Confidential Information shall notify the other party in advance
of any such disclosure and, absent the other party's consent to
such disclosure, use its reasonable best efforts to resist, and
to assist the other party in resisting, such disclosure. A party
providing another party's Confidential Information to a court or
other governmental authority shall use its reasonable best
efforts to obtain a protective order or comparable assurance
that the Confidential Information so provided will be held in
confidence and not further disclosed to any other person, absent
the owner's prior consent.
11.7. The provisions of Section 11.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or
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competent jurisdiction, or disclosures that may be reasonably
necessary in connection with the performance or enforcement of
this Agreement or any of the obligations hereof; provided,
however, that if the receiving party would otherwise be required
to refer to or describe any aspect of this Agreement in any of
the preceding circumstances, the receiving party shall use its
reasonable efforts to take such steps as are available under
such circumstances (such as by providing a summary or synopsis)
to avoid disclosure of the financial terms and conditions of
this Agreement. Notwithstanding any provisions of this Agreement
to the contrary, either party may disclose the terms and
conditions of this Agreement in the course of a due diligence
review performed in connection with prospective debt financing
or equity investment by, or a sale to, a third party, so long as
the persons conducting such due diligence review have agreed to
maintain the confidentiality of such disclosure and not to use
such disclosure for any purpose other such due diligence review.
12. INDEMNIFICATIONS
12.1. SAVVIS shall indemnify, defend, and hold Provider (including any
of its directors, officers, employees, agents or assigns)
harmless from any claims, actions or suits to the extent that
such claim or action arises from Provider's provision to SAVVIS
of the Services and to the extent that such claim, action or
suit does not arise from the gross negligence or intentional
misconduct of Provider. SAVVIS may settle, or otherwise manage
at its own cost and expense any such claims, actions or suits.
Provider shall notify SAVVIS promptly in writing of any such
claim, action or suit and shall cooperate with SAVVIS in a
reasonable way to facilitate the settlement or defense thereof.
12.2. Provider shall indemnify, defend, and hold SAVVIS (including any
of its directors, officers, employees, agents or assigns)
harmless from any claims, actions or suits to the extent that
such claim or action arises from Provider's gross negligence or
intentional misconduct in the provision to SAVVIS of the
Services, unless such claim, action or suit also arises from the
gross negligence or intentional misconduct of SAVVIS. Provider
may settle, or otherwise manage at its own cost and expense any
such claims, actions or suits. SAVVIS shall notify Provider
promptly in writing of any such claim, action or suit and shall
cooperate with Provider in a reasonable way to facilitate the
settlement or defense thereof.
13. DISPUTES
13.1. Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or
otherwise, including disputes over arbitrability and disputes in
connection with claims by third persons ("DISPUTES") shall be
exclusively governed by and settled in accordance with the
provisions of this Section 13. The foregoing shall not preclude
recourse to judicial proceedings to obtain injunctive, emergency
or other equitable relief to enforce the provisions of this
Agreement, including specific performance, and to decide such
issues as are required to be resolved in determining whether to
grant such relief. Resolution of Disputes with respect to claims
by third persons shall be deferred until any judicial
proceedings with respect thereto are concluded.
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<PAGE>
13.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon the
parties, their successors and assigns, and that the following
provisions constitute a binding arbitration clause under
applicable law. Either party may serve process or notice on the
other in any arbitration or litigation in accordance with the
notice provisions hereof. The parties agree not to disclose any
information regarding any Dispute or the conduct of any
arbitration hereunder, including the existence of such Dispute
or such arbitration, to any person or entity other than such
employees or representatives of such party as have a need to
know.
13.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the Dispute
to the other, including a reference to this provision (the
"DISPUTE NOTICE"). Either party may initiate arbitration of a
Dispute by delivery of a demand therefor (the "ARBITRATION
DEMAND") to the other party not sooner than 60 calendar days
after the date of delivery of the Dispute Notice but at any time
thereafter. The arbitration shall be conducted in St. Louis,
Missouri.
13.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Provider, one
by SAVVIS, and the third by agreement of the other two not later
than 10 days after appointment of the first two, or, failing
such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
13.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the foregoing,
each party shall have the right to inspect the books and records
of the other party that are reasonably related to the Dispute,
and each party shall provide to the other, reasonably in advance
of any hearing, copies of all documents which such party intends
to present in such hearing and the names and addresses of all
witnesses whose testimony such party intends to present in such
hearing.
13.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
13.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees and
expenses of experts ("ARBITRATION COSTS") between the prevailing
and non-prevailing parties as the Arbitrators deem fair and
reasonable. In circumstances where a Dispute has been asserted
or defended against on grounds that the Arbitrators deem
manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-
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prevailing party and may include in the award the prevailing
party's attorneys' fees and expenses in connection with any and
all proceedings under this Section 13.
13.8. Either party may assert appropriate statutes of limitation as a
defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
13.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and Provider shall not
discontinue, disconnect or in any other fashion cease to provide
all or any substantial portion of the Services to SAVVIS unless
otherwise directed by SAVVIS. This Section shall not apply where
SAVVIS is in default under this Agreement.
14. FORCE MAJEURE
14.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or other
causes to the extent that such failure and the consequences
thereof are reasonably beyond the control and without the fault
or negligence of the party claiming excuse. Each party shall,
with the cooperation of the other party, use reasonable efforts
to mitigate the extent of any failure to perform and the adverse
consequences thereof.
14.2. If Provider cannot promptly provide a suitable temporary
Provider alternative to a Service subject to an interruption in
connection with the existence or a force majeure condition,
SAVVIS may, at its option and at its own cost, contract with one
or more third parties for any or all affected Services for the
shortest commercially available period likely to cover the
reasonably expected duration of the Interruption, and may
suspend Provider's provision of such Services for such period.
Provider shall not charge SAVVIS for any Services thus suspended
during the period of suspension. Provider shall resume provision
of the suspended Services upon the later of the termination or
expiration of SAVVIS' legally binding commitments under
contracts with third parties for alternative services or the
cessation or remedy of the force majeure condition.
14.3. In the event that a force majeure condition shall continue for
more than 60 days, SAVVIS may cancel the affected Services with
no further liability to Provider other than for Services
received by SAVVIS prior to the occurrence of the force majeure
condition.
15. GENERAL PROVISIONS
15.1. NO THIRD-PARTY BENEFICIARIES. [This Agreement shall not confer
any rights or remedies upon any person or entity other than the
parties and their respective successors and permitted assigns.]
[Except as expressly provided in this Agreement, nothing in this
Agreement will create or confer any rights or other
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benefits on or in favor of any person who is not a party to this
Agreement whether pursuant to the Contracts (Rights of Third
Parties) Act, 1999 or otherwise.]
15.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the
parties and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, to
the extent they related in any way to the subject matter hereof.
15.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign
either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the
other party, which consent shall not be unreasonably withheld.
15.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
15.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
15.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
<TABLE>
<CAPTION>
<S> <C>
If to Provider: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
</TABLE>
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
been duly given
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<PAGE>
unless and until it actually is received by the intended
recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder
are to be delivered by giving the other party notice in the
manner herein set forth.
15.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of [England] [the State of
Missouri] without giving effect to any choice or conflict of law
provision or rule (whether of [England] [the State of Missouri]
or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than [England] [the State of
Missouri].
15.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by SAVVIS and Provider. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence.
15.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any
other jurisdiction.
15.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
15.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including
without limitation.
15.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
SAVVIS [local entity]
By
------------------------------------------
Name: Steven M. Gallant
[local Bridge/Telerate entity]
By
------------------------------------------
Name:
--------------------------------------
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<PAGE>
SCHEDULE 2.1 TO EXHIBIT A OF ADMINISTRATIVE SERVICE AGREEMENT
ADMINISTRATIVE SERVICES TO BE
PROVIDED BY PROVIDER TO SAVVIS
Service to be provided
Facility rental & operation
Equipment maintenance
Risk management services
Tax planning administration
Tax compliance
Treasury management
Financial planning
Human resource services
Payroll administration
Accounting, bookkeeping,
financial statement preparation
Procurement
PC support
LAN and WAN support
IT planning, installation and
support
Travel expenses (directly on behalf of
SAVVIS)
53
<PAGE>
EXHIBIT C
TECHNICAL SERVICES AGREEMENT
[This Exhibit C has been filed as a separate document]
54
<PAGE>
EXHIBIT E
FORM OF LOCAL CONTRACT OF ASSIGNMENT AND ASSUMPTION
CONTRACT OF ASSIGNMENT AND ASSUMPTION
This Contract is entered into as of this ____ day of
_________, 2000 by and between SAVVIS [______________], a [private limited
liability] company organized under the laws of [______________] ("SAVVIS"),
[having a non-registered __________ branch], and [______________], a
[______________] company organized under the laws of [______________]
("Assignor").
WHEREAS, SAVVIS is acquiring certain assets and liabilities
from various companies affiliated with Assignor, such assets and liabilities
comprising and relating to the IP Network that Assignor and its affiliated
companies currently own and operate; and
WHEREAS, Assignor desires to assign to SAVVIS and SAVVIS
desires to assume from Assignor certain contracts and liabilities as more
particularly set forth at Schedule 1 to this Contract (the "Contracts and
Liabilities").
NOW, THEREFORE, for good and valuable consideration, including
the provisions and covenants herein, the receipt and sufficiency of which is
hereby acknowledged, SAVVIS and Assignor agree as follows:
1. Assignor hereby assigns, transfers and delivers to SAVVIS the
Contracts and Liabilities and all of its right, title and interest therein and
delegates all of Assignor's duties and obligations attached to the Contract and
Liabilities.
2. SAVVIS hereby accepts the foregoing assignment and assumes and
agrees to keep, observe, perform, pay and discharge when due the terms,
covenants, conditions and obligations of Assignor related to the Contracts and
Liabilities, and hereby releases Assignor from its obligations thereunder.
3. Notwithstanding the foregoing, if the assignment and transfer
of any of the Contracts and Liabilities would cause a breach thereof and if no
required consent to such assignment and transfer has been obtained from the
third parties involved, then such Contracts and Liabilities shall not be
assigned and transferred, but, instead, Assignor shall continue to hold its
interests in such Contracts and Liabilities in trust for the benefit of SAVVIS,
shall receive in trust and remit as promptly as possible to SAVVIS any money
paid thereunder to Assignor and shall cooperate in any reasonable arrangement
or action requested by SAVVIS to secure for SAVVIS all benefits under such
Contracts and Liabilities.
4. From and after the date of this Contract, Assignor and SAVVIS
shall do such acts and execute such documents and instruments as may be
reasonably required to make effective the transactions contemplated thereby. In
the event acts contemplated by this Agreement have not been fully effected as of
the date of this Contract, SAVVIS and Assignor will continue after
55
<PAGE>
the date of this Contract, without further consideration, to use their best
efforts to carry out such transactions.
5. Assignor and SAVVIS hereby agree that to the extent any of the
Contracts and Liabilities are actually assigned to SAVVIS prior to the date of
this Contract, Assignor shall indemnify SAVVIS for any losses due to obligations
that arose under such Contracts and Liabilities prior to the date of this
Contract and to the extent any of the Contracts and Liabilities are not assigned
to SAVVIS until after the date of this Contract, SAVVIS shall indemnify Assignor
for any losses due to obligations that arise under such Contracts and
Liabilities following the date of this Contract.
6. Assignor hereby agrees, from time to time, at the reasonable
request of SAVVIS, to execute and deliver such other instruments of conveyance
and transfer and take such other actions as SAVVIS may reasonably request in
order to more effectively consummate the transactions contemplated by this
Contract.
7. This agreement shall be governed by, and construed in accordance
with the laws of [England] [the State of Missouri] without regard to its
conflict of laws principles.
[8. Except as expressly provided in this Agreement, nothing in this
Agreement will create or confer any rights or other benefits on or in favor of
any person who is not a party to this Agreement whether pursuant to the
Contracts (Rights of Third Parties) Act, 1999 or otherwise.]
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the date first above written.
SAVVIS [ ]
------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[ ]
------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
56
<PAGE>
SCHEDULE 1 TO LOCAL CONTRACT OF ASSIGNMENT AND ASSUMPTION
CONTRACTS AND LIABILITIES TO BE
ASSIGNED AND ASSUMED
[To be used only where the contracts to be assigned are circuit leases:
The attached contracts and circuits as well as any contracts or
circuits not listed on the attached by for which Assignor has entered
into prior to the date of this Contract which relate to the IP Network
of Bridge Information Systems, the IP Network being those assets that
are used by the Bridge Information Systems group which consists of
providing telecommunications facilities utilizing internet protocols
between the Bridge Information Systems group and the customers of such
group.]
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<PAGE>
EXHIBIT F
FORM OF LOCAL ASSET TRANSFER AGREEMENT
TRANSFER AGREEMENT
This Transfer Agreement ("Agreement") made this __ day of
_______, 2000, by and between Bridge _________________________________, a
corporation organized under the laws of __________________, having its principal
place of business at _________________ ("Seller"), and SAVVIS
____________________ [a ______________ company organized under the laws
of_________________][_____________ branch, the ____________ branch of a
______________ company organized under the laws of _______________] having its
[registered][principal] office at ______________________________ ("SAVVIS")
(Seller and SAVVIS each a "Party" and collectively the "Parties").
WITNESSETH
WHEREAS, pursuant to an agreement of even date herewith
between Bridge Information Systems, Inc. and SAVVIS Communications Corporation
(the "Master Establishment and Transition Agreement") the direct or indirect
parent entity of Seller, Bridge Information Systems Inc. ("BISI"), has agreed to
cause the transfer of certain assets, liabilities, rights and obligations
world-wide to its subsidiary SAVVIS Communications Corporation ("SCC"), which is
the direct or indirect parent of SAVVIS;
WHEREAS, pursuant to the Master Establishment and Transition
Agreement, transfers of assets, liabilities, rights and obligations will be
effected by subsidiaries of BISI and SCC pursuant to individual transfer
services agreements between such entities; and
WHEREAS, SAVVIS and Seller desire to effect a transfer of
certain assets, liabilities, rights and obligations on the terms and conditions
set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein set forth and of other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties agree as
follows:
1. DEFINITIONS
1.1 In this Agreement and the Schedules the following expressions
shall have the following meanings namely:
"Agreement" means the agreement between the Parties the terms of
which are set out herein;
"Assets" means the assets of the IP Network set forth in Clause 2.1
as amended pursuant to Clause 2.2;
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<PAGE>
"Closing" has the meaning set forth in Clause 4.1;
"Effective Date" means ______________, 2000;
["Employees" means those employees of Seller listed on the attached
Schedule 4;]
"IP Network" means those assets that are used by Seller which
consists of telecommunications facilities utilizing internet
protocols between Seller, suppliers and group companies of Seller and
Seller's customers;
"Liabilities" means all liabilities and obligations of Seller
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due)
fulfilling both of the following requirements:
(a) which are directly associated with (i) the Assets, (ii)
the Contracts, (iii) the use of the IP Network or (iv)
those matters set forth on Schedule [5] attached hereto;
and
(b) which result from or arise out of the ownership or
operation of the IP Network prior to the Effective Date,
including liabilities which exist with respect to (i)
obligations under the Contracts, other than an obligation
to make payment, which are required to be fulfilled by
Seller wholly prior to Closing, or (ii) obligations to
make payment, to the extent such payment is for services
rendered under the Contracts prior to Closing.
"Software" means any and all software and software applications,
including operating software and embedded software, owned or used by
Seller in relation to the maintenance, ownership or operations of the
Assets listed in Clause 2.1.1.
1.2 In this Agreement words importing the singular include the plural
and vice versa and words importing gender include any other gender.
1.3 The headings of Clauses are for ease of reference and shall not
affect the construction of this Agreement.
1.4 References in this Agreement to Clauses or Schedules are
references to clauses of or schedules to this Agreement.
1.5 Any undertaking hereunder not to do any act or thing shall be
deemed to include an undertaking not to permit or suffer the doing of
that act or thing.
1.6 The expression "person" used in this Agreement shall include
(without limitation) any individual, partnership, local authority,
company or unincorporated association.
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<PAGE>
2. SALE & PURCHASE
2.1 Seller shall sell and SAVVIS shall purchase with effect from the
Effective Date the Assets subject in all cases to the Liabilities,
which are the following:
2.1.1 the computer equipment listed in Schedule 1, including
but not limited to the Ascend Cascade Switch 9000s and the
Baynet Routers;
2.1.2 the full benefit of all agreements between Seller and
any other person, firm or corporation (other than SAVVIS) to
which Seller is entitled in connection with the operations
of the IP Network which are in force at the Effective Date
including, without limitation, the contracts listed in
Schedule 2 as well as any maintenance, support, supply or
licensing agreements, if any, relating to the Software;
2.1.3 the right of SAVVIS to represent itself as operating
the IP Network in succession to Seller;
2.1.4 all technical and contractual information relating to
the IP Network;
2.1.5 the Software.
2.2 SAVVIS and Seller shall take all reasonable efforts to jointly
prepare, within fifteen days after the Effective Date, or as soon as
practical thereafter, a revised list of the Assets as set forth in
Schedules 1 and 2. This revised list shall supersede the attached
Schedules 1 and 2 and shall include any assets purchased or acquired
by Seller after October 31, 1999 but before the Effective Date which
comprise part of the IP Network. The parties shall negotiate in good
faith to finalize such revised Schedules and shall provide to each
other any information or records reasonably necessary to finalize
such revised Schedules.
3. CONSIDERATION
3.1 The purchase price for the Assets exclusive of any VAT, stamp
duty, and transfer taxes (the "Consideration") shall be the sum
specified in Schedule 3. To the extent the Assets are revised
pursuant to Clause 2.2, the Consideration set forth in Schedule 3
shall be adjusted based on the net book value on the date of transfer
(in the books of Seller) of the Assets which are added to or removed
from the revised list. The Parties shall take all reasonable efforts
to jointly prepare any such revisions to Schedule 3 within fifteen
days after the Effective Date, or as soon as practical thereafter.
The parties shall negotiate in good faith to finalize such revised
Schedule and shall provide to each other any information or records
reasonably necessary to finalize such Schedule.
3.2 The Consideration shall be due and payable as set forth in
Schedule 3.
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3.3 The amount set forth in Schedule 3 is exclusive of VAT, and any
and all transfer or other taxes or duties applicable to the
transaction provided for in this Agreement, which SAVVIS hereby
agrees to pay.
4. CLOSING
4.1 Closing of the sale shall take place on the Effective Date when
Seller shall deliver to SAVVIS all physical Assets hereby agreed to
be sold, other than the Assets referred to in Clause 2.2 above. All
physical Assets referred to in Clause 2.2 above shall be delivered to
SAVVIS as soon as practicable following the finalization of any
adjustment to the Assets as set forth in Clause 2.2.
4.2 Property in and title to the Assets referred to in Clause 2.1
shall pass to SAVVIS on the Effective Date. Property in and title to
the Assets referred to in Clause 2.2 shall pass to SAVVIS on the date
that the revised schedules are finalized in accordance with on Clause
2.2 but such transfer shall be effective as of the Effective Date.
4.3 Subject to Clause 6 below, Seller shall on or as soon as
practicable after the Effective Date deliver to SAVVIS all transfers,
assignments and novations relating to the Assets (including the
property) together with the documents of title thereto, necessary to
give effect to this Agreement; provided, however, that any such
transfers shall as between the Parties be deemed to be effective as
of the Effective Date.
5. THE LIABILITIES
5.1 Subject to the consent where necessary of other contracting
parties (which the Parties hereto shall use their reasonable best
efforts to obtain) SAVVIS shall as from the Effective Date assume,
perform and discharge all Liabilities. If it proves impossible to
obtain any such consent in relation to any of the Liabilities, SAVVIS
will assume, perform and discharge such Liability as agent for and on
behalf of Seller and will indemnify Seller accordingly. Seller will
indemnify SAVVIS for contractual liabilities for goods or services
delivered prior to the Effective Date.
5.2 For purposes of effecting the transfer by Seller to SAVVIS of
certain contractual obligations and the assumption of such
obligations by SAVVIS, the parties have executed as of even date
herewith an Assignment and Assumption Agreement substantially in the
form of Exhibit A to this Agreement.
6. THIRD PARTY CONSENTS
6.1 Seller and SAVVIS shall use all reasonable endeavours to obtain
any required consent of any other contracting parties to the
assignment or novation of any agreement referred to in Clause 2.1.2.
Unless and until such consent shall be forthcoming and the relevant
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agreement shall have been assigned or novated SAVVIS shall at its own
cost and expense assume Seller's obligations under such agreements
and Seller shall account to SAVVIS for all sums paid or received
therefrom.
6.2 Seller will at SAVVIS' request and expense give to SAVVIS all
assistance in the power of Seller to enable SAVVIS to enforce the
agreements referred to in Clause 2.1.2 against the other contracting
party or parties and, without prejudice to the generality of the
foregoing, will provide all such relevant books, documents and other
information as SAVVIS may require in relation thereto.
[7. PERSONNEL
SAVVIS and Seller hereby agree and acknowledge that the Transfer of
Undertakings (Protection of Employment) Regulations applies to this
transaction and, therefore, that the contracts of employment of all
of the Employees of Seller, as set forth at Schedule 4 to this
Agreement, shall not be terminated at Closing but shall continue to
have effect as if originally made between such Employee and SAVVIS in
accordance such Regulations.]
[8. INDEMNIFICATION
Seller will indemnify, defend and hold SAVVIS and its shareholders,
directors, officers, successors, assigns, and agents of each of them,
harmless from and against any and all claims, losses, damages,
liabilities, expenses or costs, plus reasonable attorneys' fees and
expenses, incurred by SAVVIS to the extent resulting from or arising
out of any claim or suit by any Employee of Seller, or by any other
employee of Seller that is not being transferred to SAVVIS, asserting
rights under the Transfer of Undertakings (Protection of Employment)
Regulations 1981 or any other similar law or regulation.]
9. FURTHER ASSURANCE
From and after Closing, the Parties shall do such acts and execute
such documents and instruments as may be reasonably required to make
effective the transactions contemplated hereby. In the event that
consents, approvals, other authorizations or other acts contemplated
by this Agreement have not been fully effected as of Closing, the
parties will continue after Closing, without further consideration,
to use their reasonable best efforts to carry out such transactions;
provided, however, in the event that certain approvals, consents or
other necessary documentation cannot be secured, then the Party
having legal responsibility, ownership or control shall act on behalf
of the other Party, without further consideration, to effect the
essential intention of the Parties with respect to the transactions
contemplated by this Agreement.
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10. SURVIVAL OF CERTAIN PROVISIONS
To the extent that any provision of this Agreement shall not have
been performed at Closing it shall survive and remain in full force
and effect notwithstanding Closing.
11. GOVERNING LAW AND CHOICE OF FORUM
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of [England][the state of Missouri, United
States of America] and the parties to this Agreement hereby agree
that all matters arising out of or in connection with this Agreement
shall be subject to the exclusive jurisdiction of the courts of
[England][the state of Missouri].
[12. THIRD PARTY BENEFICIARIES
Except as expressly provided in this Agreement, nothing in this
Agreement will create or confer any rights or other benefits on or in
favor of any person who is not a party to this Agreement whether
pursuant to the Contracts (Rights of Third Parties) Act, 1999 or
otherwise.]
AS WITNESS the hands of duly authorized representatives of the parties the day
and year first above written
SIGNED by )
for and on behalf of )
- ------------------------ )
- ------------------------ )
SIGNED by )
for and on behalf of )
SAVVIS _____________ )
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EXHIBIT A TO LOCAL ASSET TRANSFER AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is entered into as of this
____ day of _________, 1999 by and between SAVVIS _________, a ________________
corporation ("SAVVIS") and _______________ , a corporation ("Assignor").
WHEREAS, SAVVIS and Assignor are parties to that certain Local Asset
Transfer Agreement even date herewith (the "Transfer Agreement"), pursuant to
which SAVVIS has agreed to purchase from Assignor the Assets and Liabilities;
and
WHEREAS, pursuant to Sections 2 and 5 of the Transfer Agreement,
Assignor agreed to assign to SAVVIS, on or prior to the Closing Date, the Assets
and Liabilities;
NOW, THEREFORE, pursuant to the terms and conditions of the Transfer
Agreement, and for good and valuable consideration, including the provisions and
covenants herein, the receipt and sufficiency of which is hereby acknowledged,
SAVVIS and Assignor agree as follows:
1. Assignor hereby assigns, transfers and delivers to SAVVIS the Assets
and the Liabilities and of its right, title and interest therein and delegates
all of Assignor's duties and obligations attached to the Assets and the
Liabilities;
2. SAVVIS hereby accepts the foregoing assignment and assumes and
agrees to keep, observe, perform, pay and discharge when due the terms,
covenants, conditions and obligations of Assignor related to the Liabilities,
and hereby releases Assignor from its obligations thereunder;
3. Notwithstanding the foregoing, if the assignment and transfer of any
of the Assets or Liabilities would cause a breach thereof and if no required
consent to such assignment and transfer has been obtained from the third parties
involved, then such Assets or Liabilities shall not be assigned and transferred,
but, instead, Assignor shall continue to hold its interests in such Assets or
Liabilities in trust for the benefit of SAVVIS, shall receive in trust and remit
as promptly as possible to SAVVIS any money paid thereunder to Assignor and
shall cooperate in any reasonable arrangement or action requested by SAVVIS to
secure for SAVVIS all benefits under such Assets or Liabilities.
4. Assignor hereby agrees, from time to time, at the reasonable request
of SAVVIS, to execute and deliver such other instruments of conveyance and
transfer and take such other actions as SAVVIS may reasonably request in order
to more effectively consummate the transactions contemplated by this Assignment
and Assumption Agreement.
5. Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Transfer Agreement.
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6. This agreement shall be governed by, and construed in accordance
with, the laws of the state of without regard to its conflict of laws
principles.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the date first above written.
SAVVIS
--------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE 3 TO LOCAL ASSET TRANSFER AGREEMENT
THE CONSIDERATION
ALLOCATION OF CONSIDERATION
Consideration to be allocated as set forth in Schedule 1.
PAYMENT OF CONSIDERATION
Payment has been made pursuant to the Master Establishment and
Transition Agreement, according to the terms of Section 2.3 thereof,
provided that such amount does not include VAT and other charges and
taxes related to the transfer which SAVVIS shall pay separately at
the time and in such manner as the parties shall reasonably agree.
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EXHIBIT G
FORM OF LOCAL NETWORK SERVICES AGREEMENT
[This Exhibit G is filed as an Exhibit to the
Network Services Agreement which has been filed as a separate document]
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<PAGE>
EXHIBIT H
FORM OF EQUIPMENT COLLOCATION PERMIT
EQUIPMENT COLLOCATION PERMIT
This EQUIPMENT COLLOCATION PERMIT (the "Agreement") is made as
of the ____ day of _________, 2000, by and between [Bridge Subsidiary] (the
"Company") and [Savvis Subsidiary] (the "Customer").
WHEREAS, the Company occupies the premises identified on
Exhibit A attached hereto and incorporated herein by reference (the "Premises"),
which are leased by the Company under the lease described on Exhibit B attached
hereto, including the lease term and renewal options specified therein, and
incorporated herein by reference (the "Lease"); and
WHEREAS, the Customer and the Company desire to enter into an
arrangement permitting the Customer to locate certain of its equipment in
certain portions of the Premises, on and subject to the terms and conditions set
forth herein related to the Customer's collocation of the equipment;
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements herein, the parties hereby agree as follows:
1. SPACE.
(a) To the extent permitted by this Agreement, the Customer may place certain
telecommunications equipment (the "Equipment") within the Premises during the
Term (hereinafter defined) of this Agreement and may use the Equipment in
accordance with the terms and conditions of this Agreement and in accordance
with applicable laws and code. The precise locations (the "Space") within the
Premises where the Equipment may be placed and used by the Customer shall be as
designated by the Company in written notice(s) to the Customer. The Company
shall maintain exclusive control over the manner and method of the placement and
use of the Equipment within the Space. In connection with the permission
established under this Agreement, the Customer shall have no possessory or
occupancy rights with respect to the Space or control over the Space, but shall
have only permission to place and use the Equipment within the Space, together
with unrestricted access to the Equipment twenty-four hours a day, seven days a
week.
(b) The Customer shall use its reasonable best efforts to abide by applicable
terms and conditions of the Lease and any other agreements or indentures binding
on the Company with respect to the Premises, upon notice from the Company of
such terms and conditions from time to time throughout the Term; and this
Agreement and the rights of the Customer hereunder shall be subject and
subordinate to the terms and conditions of the Lease and other agreements and
indentures in all respects. The Company shall promptly give written notice to
the Customer of any notice of default they may receive pursuant to the Lease. If
the Customer shall not abide by any such terms or conditions, upon 15 days'
written notice to the Customer, the Company may
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revoke the permission established under this Agreement with respect to the
applicable Space and Premises and the Company may terminate the rights of the
Customer under this Agreement with respect to such Space and Premises.
(c) The Equipment and its method of installation within the Space shall, in each
instance, be approved in writing by the Company in advance. The Customer shall
not place any additional equipment in the Space and shall not move or alter the
location of the Equipment within the Space without having received prior
approval in writing from the Company. Additional Space within the Premises for
the location of additional Equipment may be obtained upon the prior written
consent of the Company which consent shall not be unreasonably withheld;
provided, "unreasonable" shall be determined from the perspective of the
Company, including considerations regarding the availability of space to meet
the Company's needs and the needs of any present or potential customers to which
the Company rents space at the Premises.
(d) Upon 30 days' prior written notice or, in the event of an emergency, within
such shorter time as may be reasonably determined appropriate by the Company,
the Company may require the Customer to relocate the Equipment within the
Premises and may redesignate the Space for the relocated Equipment; provided,
however, the site of relocation shall be prepared for installation prior to any
required relocation and shall afford substantially comparable environmental
conditions for the Equipment and substantially comparable accessibility to the
Equipment. All costs of relocating the Equipment shall be borne by the Customer,
excluding, however, the cost, if any, of improving the redesignated Space.
(e) Upon written request of the Customer and at the Customer's expense, the
Customer may require that fencing, caging, cabinets or other similar protective
covering for the Equipment be installed if (i) there is sufficient room in the
applicable Space and Premises for such installations, (ii) such installations
will not unreasonably interfere with the Company's use, occupancy or planning,
and will not unreasonably interfere with the Company's equipment or the
equipment of other collocators, and (iii) with respect to any Premises subject
to the Lease or other agreements or indentures, such installations are permitted
under the terms and conditions of the Lease or other agreements or indentures.
(f) If the placement or use of the Equipment in the Space results in any
violation or claim of violation of any of the Lease or other agreements or
indentures, then in the event the Company shall be unable, at a cost acceptable
to the Company, to cure such violation or secure a waiver of such claim of
violation, the Company may undertake to find other suitable space for the
Equipment within the applicable Space and Premises and relocate such Equipment
to other suitable location for the balance of the Term of this Agreement.
2. TERM.
(a) The initial term (the "Initial Term") of the permission established under
this Agreement pertaining to the placement and use of the Equipment within the
Space shall commence on the date hereof and shall continue thereafter until such
time as the applicable Lease expires. If the term of the applicable Lease is
extended, then the Customer shall have the option, upon prior written notice to
the Company, to renew this Agreement for an additional term (the "Renewal
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Term"), which Renewal Term shall be conterminous with the term of the applicable
extended term under the Lease, on the terms and conditions otherwise set forth
in this Agreement. The Initial Term and the Renewal Term are sometimes
collectively referred to as the "Term." Notwithstanding anything herein or
elsewhere to the contrary, however, the Term shall be subject to earlier
termination as may be provided herein.
(b) The option to renew this Agreement with respect to the Premises shall be
contingent on the Company's continued occupation and ownership or leasing of the
Premises and shall be contingent upon the Customer's compliance with the terms
and conditions of this Agreement. In the event the Company shall cease to occupy
any of the Premises or shall default under this Agreement, the option to renew
this Agreement shall expire with respect to the applicable Premises or the
entirety of the Premises, as the case may be.
(c) Following the expiration of the Term, this Agreement shall continue in
effect on a month-to-month basis upon the same terms and conditions otherwise
set forth herein, unless and until terminated by either the Customer or the
Company upon at least 30 days' prior written notice to the other.
(d) Notwithstanding anything herein or elsewhere to the contrary, the Company
reserves the right, in its discretion, to revoke the permission established
under this Agreement with respect to the applicable Space within any Premises
and to terminate the rights of Customer under this Agreement with respect to
such Space and Premises immediately upon written notice in the event that, for
whatever reason, the Company loses its right to occupy the applicable Premises
or its right to permit the collocation of Equipment within such Premises. In the
event the Company elects to exercise its right to terminate the Lease, the
Company shall give the Customer 6 months written notice of its termination of
the Lease and the intended resulting termination of this Agreement.
3. CONSIDERATION. The Customer agrees to pay the Company such amounts as may be
set forth on the Collocate Schedule for the permission established under this
Agreement with respect to the scheduled Space and Premises. Such amounts shall
be payable in equal monthly installments in advance on the first day of each
calendar month during the Term.
4. CONDITION OF THE PREMISES. The Customer approves the Premises in "as is"
condition as of the date of this Agreement, and acknowledges that the Company
has no obligation to make alterations, improvements or additions, decorations or
changes within the Premises or the Space. The Company acknowledges that the
Equipment is personal property of the Customer and not a fixture, and that the
Company shall not have any lienable interest in the Equipment.
5. ASSIGNMENT. The Agreement is personal to the parties, and may not be assigned
by either party without the prior written consent of the other.
6. TERMINATION OR EXPIRATION. At the expiration of the Term (or earlier
termination of this Agreement), the Customer shall remove the Equipment from the
Premises at the Customer's
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expense, and the Space shall be restored by the Company, at the Customer's
expense (such expense to be defrayed by reimbursing the Company for the same
upon demand) to substantially the same as the condition as of the date of this
Agreement.
7. DEFAULT. If the Customer breaches any term or condition of this Agreement,
the Company, after providing the Customer with notice of such breach, may elect
by written notice to the Customer to terminate this Agreement; provided, however
that the Customer shall have 30 days from the time it receives such notice from
the Company of a breach to cure any such default. In addition to such right of
termination, the Company shall have any and all other rights and remedies
afforded to the Company at law or in equity.
8. INDEMNIFICATION.
(a) The Customer covenants and agrees to indemnify and hold the Company harmless
from and against any and all suits, actions, claims, damages, charges and
expenses, including reasonable attorney fees, for damages or injuries to the
Space or the Premises occurring or claimed to have occurred in, upon, or about
the Space or the Premises as a result of the Customer's conduct or omission in
placing, operating or removing the Equipment or using the Equipment within the
Space, unless arising from the negligence or willful misconduct of the Company.
(b) The Company covenants and agrees to indemnify and hold the Customer harmless
from and against any and all suits, actions, claims, damages, charges and
expenses, including reasonable attorney fees, for damages or injuries to the
Equipment occurring or claimed to have occurred in, upon, or about the Space or
the Premises as a result of the negligence or willful misconduct of the Company
in handling the Equipment or using the Space or the Premises, unless arising
from the negligence or willful misconduct of the Customer.
9. LIMITATION OF LIABILITY.
(a) Liability for Damages to Property. The Company shall not be liable for any
damages whatsoever to the Customer's property resulting from the installation,
maintenance, repair or removal of Equipment and associated wiring unless the
damage is caused by the Company's negligence or willful misconduct.
(b) Liability for Equipment not Provided by the Company. The Company shall not
be liable for any damages whatsoever associated with facilities or Equipment not
furnished by the Company or for any act or omission of the Customer or any other
entity furnishing facilities or Equipment.
(c) Liability for Force Majeure Events. The Company shall not be liable for any
failure of performance due to causes beyond its control, including but not
limited to acts of God, fire, flood or other catastrophes; any law, order
regulation, direction, action or request of the United States Government, or of
any other government, including state and local governments having or claiming
jurisdiction or of any department, agency, commission, bureau, corporation, or
other instrumentality of any federal, state, or local government, or of any
civil or military authority; national emergencies; unavailability of materials
or rights-of-way; insurrections; riots; wars; or strikes, lock-outs, work
stoppages, labor difficulties, or utilities/power outages.
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(d) No Special Damages. In no event shall the Company or the Customer be liable
for special, consequential, lost profit, exemplary, or punitive damages as a
result of its performance or nonperformance of this Agreement or as a result of
any default under or breach of this Agreement.
(e) No Claims against the Company's Landlords. The Customer acknowledges the
owners of any Premises subject to the Lease have no responsibilities or duties,
direct or indirect, to the Customer, and the Customer disclaims any rights
against or recourse to (i) the owners of any Premises subject to the Lease or
(ii) such Premises. In furtherance of this acknowledgment and disclaimer, the
Customer releases and waives any claim against such owners (such release and
waiver being for the benefit of, and enforceable by such owners as intended
third party beneficiaries).
10. CASUALTY OR EMINENT DOMAIN. In the event of any taking by eminent domain or
damage by fire or other casualty to the Premises and/or Space, the Customer
shall acquiesce and be bound by any action taken by or agreement entered into by
the Company with respect thereto, and in any event the Customer shall not have
(and hereby waives and releases) any claim with respect to any award, damages or
proceeds associated with any such taking or damage.
11. ENTIRE AGREEMENT. All prior agreements and understandings of the parties are
merged within this Agreement, which alone fully and completely sets forth the
understanding of the parties with respect to the subject matter of this
Agreement. This Agreement shall not be modified without the prior written
agreement of all the parties. Any handwritten modifications to this Agreement
shall be void ab initio.
12. NOTICES. Any and all notices or communications which either party may desire
or be required to give to the other shall be in writing and shall be sent to the
other party by certified or registered mail at the address designated below:
If to Company: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General Counsel
If to Customer: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
13. GOVERNING LAW. This Agreement shall be governed by the laws of [England]
[the State of Missouri].
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14. INSURANCE. The Customer agrees to provide the Company evidence (in the form
of certificates of insurance), on or before the date of the commencement of the
Term, and to keep in force and effect during the Term, with respect to the
Equipment, a policy of comprehensive liability insurance, naming the Company as
an additional insured, and a policy of property insurance containing waivers of
subrogation against the Company and against the owners and other parties in
interest of any Premises subject to the Lease. Such insurance shall otherwise be
in a form conforming to the requirements of the applicable provisions of the
Lease.
15. INTERPRETATION. In the event of any conflict between the terms of this
Agreement and the terms contained in any Exhibit hereto, the terms of the
Exhibit shall govern.
[16. THIRD PARTY BENEFICIARIES. Except as expressly provided in this Agreement,
nothing in this Agreement will create or confer any rights or other benefits on
or in favor of any person who is not a party to this Agreement whether pursuant
to the Contracts (Rights of Third Parties) Act, 1999 or otherwise.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BRIDGE SAVVIS
------------------------------- -----------------------------------
By: By:
------------------------------- -----------------------------------
Title: Title:
------------------------------- -----------------------------------
Date: Date:
------------------------------- -----------------------------------
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EXHIBIT I
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
[amount] St. Louis, Missouri
____________, 2000
The undersigned, SAVVIS Communications Corporation, a Delaware
corporation, (hereinafter referred to as "Maker"), for value received, promises
to pay to the order of Bridge Information Systems, Inc. (the "Payee"), at its
office located at 717 Office Parkway, St. Louis, Missouri 63141, or at such
other place as may be designated in writing by the holder hereof, in lawful
money of the United States of America in immediately available funds, the
principal sum of _______________________________ United States Dollars
(US$_________________), together with interest thereon from the date hereof, at
the rate or rates hereinafter specified, as follows:
1. Interest. This Note shall bear interest on the aggregate
unpaid principal amount thereof from the date hereof at the fixed rate of
interest equal to ten percent (10%) per annum.
2. Interest and Principal Payments; Maturity. This Note shall
be payable as follows:
(a) Interest shall be payable semi-annually in cash on each
_____ and commencing on _______________, 2000.;
(b) On ________________, 2003, the Maker shall pay to the
Payee a final installment of principal and interest in an amount equal to the
sum of the principal balance of this Note together with the remaining accrued
and unpaid interest thereon.
3. Calculation of Interest. The interest rate payable
hereunder shall be calculated on the basis of twelve (12) thirty (30) day months
over a year of 360 days.
4. Application of Payments. All installments paid hereunder
shall be in currently available funds.
5. Payments Due on Saturdays, Sundays or Legal Holidays. If
any payment of principal or interest due on this Note is payable on a day which
is a Saturday, Sunday or legal holiday in the state of Missouri, then such
payment shall be due on the next business day, the amount of such payment, in
such case, to include all interest accrued to the date of actual payment.
<PAGE>
6. Voluntary Prepayment. The indebtedness evidenced by this
Note may be prepaid, in whole or in part, at any time without premium. All
prepayments shall be applied first to accrued interest and the balance to the
reduction of the principal. No prepayment shall obligate Payee to re-advance any
sums prepaid.
7. Default Rate of Interest. After maturity, by acceleration
or otherwise, this Note shall bear interest at a rate equal to fifteen percent
(15%) per annum ("Default Rate"). Should Maker fail to make any payment hereon
on the date on which it shall fall due, or should any default be made in the
performance by Maker or any affiliated entity of Maker of any of the agreements,
conditions, covenants, provisions or stipulations contained in this Note or any
material agreements, conditions, covenants, provisions or stipulations contained
in any other documents securing or executed in connection with this Note, then
the holder of this Note, at its option and without notice or demand, may declare
immediately due and payable the entire unpaid balance of principal under this
Note, together with all accrued interest thereon and after the date of such
default this Note shall bear interest at the Default Rate. In such case the
holder of this Note may also recover all costs of suit and other expenses in
connection with efforts to collect any of the aforesaid amounts, together with
attorneys' fees (including attorneys' fees for representation in proceedings
under the Bankruptcy Code), regardless of whether litigation is commenced,
together with interest on any judgment obtained by the holder of this Note at
the Default Rate, including interest at the Default Rate from and after the date
of any foreclosure sale until actual payment is made to the holder of this Note
of the full amount due such holder.
8. Oral Agreements. Oral agreements or commitments to loan
money, extend credit or to forbear from enforcing repayment of a debt including
promises to extend or renew such debt are not enforceable. To protect you
(Maker) and us (Payee) from misunderstanding or disappointment, any agreements
we reach covering such matters are contained in this writing, which is the
complete and exclusive statement of the agreement between us, except as we may
later agree in writing to modify it.
9. Governing Law. This Agreement shall be construed according
to and governed by the laws of the State of Missouri.
IN WITNESS WHEREOF, Maker has executed and delivered this Note
the day and year first above written.
SAVVIS Communications Corporation
By:
---------------------------------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
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EXHIBIT J
FORM OF CALL ASSET TRANSFER AGREEMENT
This Transfer Agreement ("Agreement") made as of 12:01 A.M. on
this ___ day of _____________, 20____ (the "Effective Date"), by and between
Bridge _________________________________, a corporation organized under the laws
of __________________, having its principal place of business at
_________________ ("Seller"), and SAVVIS ____________________ [a ______________
company organized under the laws of_________________][_____________ branch, the
____________ branch of a ______________ company organized under the laws of
_______________] having its [registered][principal] office at
______________________________ ("SAVVIS") (Seller and SAVVIS each a "Party" and
collectively the "Parties").
WITNESSETH
WHEREAS, pursuant to that certain Master Establishment and
Transition Agreement dated ________ ___, 2000 by and between Bridge Information
Systems, Inc. and SAVVIS Communications Corporation (the "Master Establishment
and Transition Agreement") the direct or indirect parent entity of Seller,
Bridge Information Systems Inc. ("BISI"), has granted to SAVVIS Communications
Corporation ("SCC"), which is the direct or indirect parent of SAVVIS and the
subsidiaries or other operations of SCC worldwide, the right to purchase the
Call Assets and to assume the Assumed Liabilities in the Call Jurisdictions.
Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Master Establishment and Transition Agreement;
WHEREAS, pursuant to the Master Establishment and Transition
Agreement, transfers of Call Assets and the Assumed Liabilities, rights and
obligations associated therewith will be effected by subsidiaries of BISI and
SCC pursuant to individual transfer services agreements between such entities;
and
WHEREAS, SAVVIS and Seller desire to effect a transfer of the
certain Call Assets and the liabilities, rights and obligations associated
therewith on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein set forth and of other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties agree as
follows:
1. DEFINITIONS
1.1 In this Agreement and the Schedules the following expressions
shall have the following meanings namely:
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"Agreement" means the agreement between the Parties the terms of
which are set out herein;
"Assets" means the assets of the IP Network set forth in Clause 2.1
as amended pursuant to Clause 2.2;
"Closing" has the meaning set forth in Clause 5.1;
"Effective Date" has the meaning set forth in the first paragraph;
["Employees" means those employees of Seller listed on the attached
Schedule 4;]
"IP Network" means those assets that are used by Seller which
consists of telecommunications facilities utilizing Internet
protocols between Seller, suppliers and group companies of Seller and
Seller's customers;
"Liabilities" means all liabilities and obligations of Seller
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due)
fulfilling both of the following requirements:
(a) which are directly associated with (i) the Assets, (ii) the
Contracts, (iii) the use of the IP Network or (iv) those
matters set forth on Schedule [5] attached hereto; and
(b) which result from or arise out of the ownership or
operation of the IP Network prior to the Effective Date,
including liabilities which exist with respect to (i)
obligations under the Contracts, other than an obligation
to make payment, which are required to be fulfilled by
Seller wholly prior to Closing, or (ii) obligations to make
payment, to the extent such payment is for services
rendered under the Contracts prior to Closing.
"Software" means any and all software and software applications,
including operating software and embedded software, owned or used by
Seller in relation to the maintenance, ownership or operations of the
Assets listed in Clause 2.1.1.
1.2 In this Agreement words importing the singular include the plural
and vice versa and words importing gender include any other gender.
1.3 The headings of Clauses are for ease of reference and shall not
affect the construction of this Agreement.
1.4 References in this Agreement to Clauses or Schedules are
references to clauses of or schedules to this Agreement.
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1.5 Any undertaking hereunder not to do any act or thing shall be
deemed to include an undertaking not to permit or suffer the doing of
that act or thing.
1.6 The expression "person" used in this Agreement shall include
(without limitation) any individual, partnership, local authority,
company or unincorporated association.
2. SALE & PURCHASE
2.1 Seller shall sell and SAVVIS shall purchase with effect from the
Effective Date the Assets subject in all cases to the Liabilities,
which are the following:
2.1.1 the computer equipment listed in Schedule 1, including
but not limited to the Ascend Cascade Switch 9000s and the
Baynet Routers;
2.1.2 the full benefit of all agreements between Seller and
any other person, firm or corporation (other than SAVVIS) to
which Seller is entitled in connection with the operations
of the IP Network which are in force at the Effective Date
including, without limitation, the contracts listed in
Schedule 2 as well as any maintenance, support, supply or
licensing agreements, if any, relating to the Software;
2.1.3 the right of SAVVIS to represent itself as operating
the IP Network in succession to Seller;
2.1.4 all technical and contractual information relating to
the IP Network;
2.1.5 the Software.
2.2 SAVVIS and Seller shall take all reasonable efforts to jointly
prepare, within fifteen days after the Effective Date, or as soon as
practical thereafter, a revised list of the Assets as set forth in
Schedules 1 and 2. This revised list shall supersede the attached
Schedules 1 and 2 and shall include any assets purchased or acquired
by Seller after the as of date for the inventory taken to prepare
Schedules 1 and 2 but before the Effective Date which comprise part
of the IP Network. The parties shall negotiate in good faith to
finalize such revised Schedules and shall provide to each other any
information or records reasonably necessary to finalize such revised
Schedules.
3. CONSIDERATION
3.1 The purchase price for the Assets exclusive of any VAT, stamp
duty, and transfer taxes (the "Consideration") shall be the sum
specified in Schedule 3. To the extent the Assets are revised
pursuant to Clause 2.2, the Consideration set forth in Schedule 3
shall be adjusted based on the net book value on the Effective Date
(in the books of Seller) of the Assets which are added to or removed
from the revised list. The Parties shall take all reasonable efforts
to jointly prepare any such revisions to Schedule 3 within fifteen
days
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after the Effective Date, or as soon as practical thereafter. The
parties shall negotiate in good faith to finalize such revised
Schedule and shall provide to each other any information or records
reasonably necessary to finalize such Schedule.
3.2 The Consideration shall be due and payable as set forth in
Schedule 3.
3.3 The amount set forth in Schedule 3 is exclusive of VAT, and any
and all transfer or other taxes or duties applicable to the
transaction provided for in this Agreement, which SAVVIS hereby
agrees to pay.
4. REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants to the Buyer that the statements
contained in this Clause 4 are correct and complete as of the date of
this Agreement.
4.1 Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which Seller is
organized.
4.2 Seller has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and conditions.
4.3 Except as would not result in the imposition of any Impermissible
Security Interest upon any of the Assets and except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or a lien would
not impair the value of use of the Assets or have a material adverse
effect on ability of the parties to consummate the transactions
contemplated by this Agreement, neither the execution and the
delivery of this Agreement nor the consummation of the transactions
contemplated hereby by the Seller will:
(a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Seller is subject or any provision of the charter or bylaws of
the Seller,
(b) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which they are bound
or to which any of the Assets are subject; or
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(c) require Seller to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any third
party, government or governmental agency.
4.4 Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
4.5 The Seller has good title to, or a valid leasehold interest in
the Assets, free and clear of all Impermissible Security Interest,
and there exists no material restriction on the transfer of such
property.
4.6 Each of the Contracts with respect to the Assets is a valid and
binding obligation of the parties thereto, enforceable in accordance
with terms, in full force and effect. No party to any such contract
is in material breach or violation thereof or default thereunder.
Except for matters which would not, in the aggregate, have a material
adverse effect on the Assets, no event has occurred which, through
the passage of time or the giving of notice, or both, would
constitute, and neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby do or will
constitute or result in, a breach or violation of or default under
any contract, or would cause the acceleration of any obligation of
any party thereto or the creation of any Impermissible Security
Interest upon the Assets.
4.7 EXCEPT AS EXPRESSLY SET FORTH IN THIS CLAUSE 4, THE SELLER MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF ANY OF ITS ASSETS, LIABILITIES OR OPERATIONS,
INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER
HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY SET FORTH IN THIS CLAUSE 4, THE BUYER IS PURCHASING THE
ASSETS ON AN "AS-IS, WHERE-IS" BASIS. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, THE SELLER MAKES NO REPRESENTATION OR WARRANTY
REGARDING ANY ASSETS OTHER THAN THE ASSETS BEING PURCHASED HEREUNDER
OR ANY LIABILITIES OTHER THAN THE LIABILITIES ASSUMED HEREUNDER, AND
NONE SHALL BE IMPLIED AT LAW OR IN EQUITY.
5. CLOSING
5.1 Closing of the sale shall take place on the Effective Date when
Seller shall deliver to SAVVIS all physical Assets hereby agreed to
be sold, other than the Assets referred to in Clause 2.2 above. All
physical Assets referred to in Clause 2.2 above shall be delivered to
SAVVIS as soon as practicable following the finalization of any
adjustment to the Assets as set forth in Clause 2.2.
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5.2 Property in and title to the Assets referred to in Clause 2.1
shall pass to SAVVIS on the Effective Date. Property in and title to
the Assets referred to in Clause 2.2 shall pass to SAVVIS on the date
that the revised schedules are finalized in accordance with on Clause
2.2 but such transfer shall be effective as of the Effective Date.
5.3 Subject to Clause 7 below, Seller shall on or as soon as
practicable after the Effective Date deliver to SAVVIS all transfers,
assignments and novations relating to the Assets (including the
property) together with the documents of title thereto, necessary to
give effect to this Agreement; provided, however, that any such
transfers shall as between the Parties be deemed to be effective as
of the Effective Date.
6. THE LIABILITIES
Subject to the consent where necessary of other contracting parties
(which the Parties hereto shall use their reasonable best efforts to
obtain) SAVVIS shall as from the Effective Date assume, perform and
discharge all Liabilities. If it proves impossible to obtain any such
consent in relation to any of the Liabilities, SAVVIS will assume,
perform and discharge such Liability as agent for and on behalf of
Seller and will indemnify Seller accordingly. Seller will indemnify
SAVVIS for contractual liabilities for goods or services delivered
prior to the Effective Date.
7. THIRD PARTY CONSENTS
7.1 Seller and SAVVIS shall use their reasonable best efforts to
obtain any required consent of any other contracting parties to the
assignment or novation of any agreement referred to in Clause 2.1.2.
Unless and until such consent shall be forthcoming and the relevant
agreement shall have been assigned or novated, SAVVIS shall at its
own cost and expense assume Seller's obligations under such
agreements and Seller shall account to SAVVIS for all sums paid or
received therefrom.
7.2 Seller will at SAVVIS' request and expense give to SAVVIS all
assistance in the power of Seller to enable SAVVIS to enforce the
agreements referred to in Clause 2.1.2 against the other contracting
party or parties and, without prejudice to the generality of the
foregoing, will provide all such relevant books, documents and other
information as SAVVIS may require in relation thereto.
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[8. PERSONNEL
SAVVIS and Seller hereby agree and acknowledge that the Transfer of
Undertakings (Protection of Employment) Regulations applies to this
transaction and, therefore, that the contracts of employment of all
of the Employees of Seller, as set forth at Schedule 4 to this
Agreement, shall not be terminated at Closing but shall continue to
have effect as if originally made between such Employee and SAVVIS in
accordance such Regulations.]
[9. INDEMNIFICATION
Seller will indemnify, defend and hold SAVVIS and its shareholders,
directors, officers, successors, assigns, and agents of each of them,
harmless from and against any and all claims, losses, damages,
liabilities, expenses or costs, plus reasonable attorneys' fees and
expenses, incurred by SAVVIS to the extent resulting from or arising
out of any claim or suit by any Employee of Seller, or by any other
employee of Seller that is not being transferred to SAVVIS, asserting
rights under the Transfer of Undertakings (Protection of Employment)
Regulations 1981 or any other similar law or regulation.]
10. FURTHER ASSURANCE
From and after Closing, the Parties shall do such acts and execute
such documents and instruments as may be reasonably required to make
effective the transactions contemplated hereby. In the event that
consents, approvals, other authorizations or other acts contemplated
by this Agreement have not been fully effected as of Closing, the
parties will continue after Closing, without further consideration,
to use their reasonable best efforts to carry out such transactions;
provided, however, in the event that certain approvals, consents or
other necessary documentation cannot be secured, then the Party
having legal responsibility, ownership or control shall act on behalf
of the other Party, without further consideration, to effect the
essential intention of the Parties with respect to the transactions
contemplated by this Agreement.
11. SURVIVAL OF CERTAIN PROVISIONS
To the extent that any provision of this Agreement shall not have
been performed at Closing it shall survive and remain in full force
and effect notwithstanding Closing.
12. GOVERNING LAW AND CHOICE OF FORUM
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of [England][the state of Missouri, United
States of America] and the parties to this Agreement hereby agree
that all matters arising out of or in connection with this
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Agreement shall be subject to the exclusive jurisdiction of the
courts of [England][the state of Missouri].
[13. THIRD PARTY BENEFICIARIES
Except as expressly provided in this Agreement, nothing in this
Agreement will create or confer any rights or other benefits on or in
favor of any person who is not a party to this Agreement whether
pursuant to the Contracts (Rights of Third Parties) Act, 1999 or
otherwise.]
AS WITNESS the hands of duly authorized representatives of the parties the day
and year first above written
SIGNED by )
for and on behalf of )
- ------------------------ )
- ------------------------ )
SIGNED by )
for and on behalf of )
SAVVIS _____________ )
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SCHEDULE 3 TO CALL ASSET TRANSFER AGREEMENT
THE CONSIDERATION
[To be Completed at Call Right Exercise Closing]
ALLOCATION OF CONSIDERATION
Consideration to be allocated as set forth in Schedule 1.
PAYMENT OF CONSIDERATION
The consideration shall paid at Closing to the account of Seller as
follows:
[Details of account]
To the extent any adjustment is to be paid under Section 3 of this
Agreement, such amount shall be due and payable to the above
indicated account, no later than five days after receipt by SAVVIS of
a valid invoice, which may be submitted on or after the Effective
Date.
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EXHIBIT K
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease") is made as of the ____ day of
January, 2000 (the "Effective Date"), by and between BRIDGE INFORMATION SYSTEMS
AMERICA, INC., a Delaware corporation ("Sublessor") and SAVVIS COMMUNICATIONS
CORPORATION, a Missouri corporation ("Sublessee").
WHEREAS, Sublessor entered into a revised Master Lease Agreement, a
copy of which is attached hereto as EXHIBIT A (the "Master Lease"), with General
Electric Capital Corporation for itself and as Agent for certain Participants
(collectively, the "Lessor"); unless otherwise defined herein, capitalized terms
used as defined terms shall have the meaning assigned to such terms in the
Master Lease;
WHEREAS, in conjunction with the planned spin-off of Sublessee by
Sublessor, Sublessor has obtained the consent of Lessor, which consent is set
forth in the Master Lease attached hereto; and
WHEREAS, Sublessor and Sublessee desire to set forth in writing the
terms and conditions of the sublease;
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants, representations, warranties, conditions and agreements hereunder
expressed, Sublessor and Sublessee agree as follows:
I. SUBLEASING ARRANGEMENT:
Sublessor agrees to lease to Sublessee, and Sublessee agrees to lease
from Sublessor, the equipment (the "Equipment") described in the equipment
schedules attached hereto as EXHIBIT B (the "Equipment Schedules"), subject to
the terms set forth herein and in the Equipment Schedules.
II. TERM, RENT AND PAYMENT:
(a) The term of this Sublease (the "Term") with respect to any item of
the Equipment shall be the remaining term for such Equipment as set forth in the
Master Lease and the Equipment Schedules; provided, however, that the Term shall
begin effective from and after the Effective Date hereof.
(b) Rent shall be paid directly to Sublessor by wire transfer of
immediately available funds to: Bankers Trust New York, New York, New York
10006, Account No. 50-202-962, ABA No. 021-001-033, or to such other account as
Sublessor may direct in writing; and shall be effective upon receipt. Payments
of Rent shall be in the amount set forth in, and due in accordance with, the
provisions of the applicable Equipment Schedules and the other related
provisions contained in the schedules to the Master Lease (together with the
Equipment
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Schedules, individually and collectively, the "Schedules"). If Rent is not paid
within ten (10) days of its due date, Sublessee agrees to pay to Sublessor a
late charge of Five Cents ($0.05) per dollar on, and in addition to, the amount
of such Rent but not exceeding the lawful maximum, if any.
(c) Except as provided for in (d) below, Sublessee shall pay Rent, as
provided for herein without deduction or set-off. In the event of a non-payment
of Rent by Sublessee, Sublessor may continue to make payments to Lessor with
respect to the Equipment, with the right to set-off any such payments against
amounts due by the Sublessor or any of its affiliates to Sublessee or any of its
affiliates under any agreement.
(d) The parties agree that this Sublease is expressly subject and
subordinate to the Lessor's interest in and to the Equipment and to the Master
Lease and the rights of the Lessor under the Master Lease and that, upon the
declaration by the Lessor of a Default under the Master Lease and written notice
thereof to the parties by the Lessor, at the sole discretion of the Lessor, as
specified in such notice: (a) Sublessee shall make all payments then due or
thereafter becoming due under this Sublease directly to the Lessor and/or (b)
this Sublease shall be terminated and the Lessor shall have all rights and
remedies specified in the Master Lease.
III. TAXES:
Sublessee shall have no liability for taxes imposed by the United
States of America or any State or political subdivision thereof which are on or
measured by the net income of Lessor or Sublessor. Sublessee shall report (to
the extent that it is legally permissible) and pay promptly all other taxes,
fees and assessments due, imposed, assessed or levied against any Equipment (or
the purchase, ownership, delivery, leasing, possession, use or operation
thereof), this Agreement (or any rentals or receipts hereunder), any Schedule,
Lessor, Sublessor or Sublessee by any foreign, federal, state or local
government or taxing authority during or related to the term of this Agreement,
including, without limitation, all license and registration fees, and all sales,
use, personal property, excise, gross receipts, franchise, stamp or other taxes,
imposts, duties and charges, together with any penalties, fines or interest
thereon (all hereinafter called "Taxes"). Sublessee shall (i) reimburse Lessor
and/or Sublessor, as appropriate (on an after-tax basis), upon receipt of
written request for reimbursement for any Taxes charged to or assessed against
Lessor or Sublessor; (ii) on request of Lessor and/or Sublessor, submit to
Lessor and/or Sublessor, as appropriate, written evidence of Sublessee's payment
of Taxes, (iii) on all reports or returns show the ownership of the Equipment by
Lessor, and (iv) send a copy thereof to Lessor and Sublessor.
IV. REPORTS:
(a) Sublessee will notify Sublessor in writing, within ten (10) days
after any tax or other lien shall attach to any Equipment, of the full
particulars thereof and of the location of such Equipment on the date of such
notification.
(b) Sublessee will permit Lessor and Sublessor to inspect the Equipment
and all maintenance records with respect thereto during normal business hours
upon reasonable notice.
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(c) Subject to the following sentence, Sublessee will ensure that the
Equipment is located at the Equipment Location (specified in the applicable
Schedule) within the Continental United States. Sublessee may move the Equipment
from the Equipment Location to a new location within the Continental United
States provided that, within five (5) days after the end of each calendar
quarter: (i) Sublessee shall provide to Sublessor written notice identifying the
Equipment which has been relocated during the immediately preceding calendar
quarter, the old Equipment Location and the new Equipment Location; and (ii)
Sublessee shall deliver to Sublessor such documents and instruments as
reasonably may be required by Lessor or Sublessor in connection with such
relocation, including (without limitation) Uniform Commercial Code Financing
Statements and (if required by Lessor or Sublessor) Estoppel/Waiver Agreements,
to be filed at Sublessee's expense. Upon Lessor's or Sublessor's request,
Sublessee promptly will notify Lessor and/or Sublessor in writing of the
location of any Equipment as of the date of such notification.
(d) Sublessee will promptly and fully report to Sublessor in writing if
any Equipment is lost or damaged (where the estimated repair costs would exceed
ten percent (10%) of its then fair market value), or is otherwise involved in an
accident causing personal injury or property damage.
(e) Within thirty (30) days after any request by Lessor and Sublessor,
Sublessee will furnish to Sublessor a certificate of an authorized officer of
Sublessee stating that he has reviewed the activities of Sublessee and that, to
the best of his knowledge, there exists no Default (as hereinafter defined) or
event which, with the giving of notice or the lapse of time (or both), would
become a Default.
V. USE AND MAINTENANCE:
(a) Sublessee agrees that the Equipment will be used by Sublessee
solely in the conduct of its business and in a manner complying with all
applicable Federal, state and local laws and regulations and any applicable
insurance policies, and Sublessee shall not discontinue use of the Equipment.
(b) Sublessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor or Sublessor.
VI. SERVICE:
(a) Sublessee will, at its sole expense, maintain each unit of
Equipment in good operating order, repair, condition and appearance in
accordance with manufacturer's recommendations, normal wear and tear excepted
and Sublessee's standard practices (but in no event less than industry
practices). Sublessee's maintenance programs shall be subject to review and
approval by Lessor and Sublessor. Sublessee shall, if at any time reasonably
requested by Lessor or Sublessor, affix in a prominent position on each unit of
Equipment plates, tags or other identifying labels showing the interest therein
of Lessor and Sublessor.
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(b) Sublessee will not, without the prior consent of Sublessor, affix
or install any accessory, equipment or device on any Equipment if such addition
will impair the value, originally intended function or use of such Equipment.
All additions, repairs, parts, supplies, accessories, equipment, and devices
furnished, attached or affixed to any Equipment which are not readily removable
shall be made only in compliance with applicable law, including Internal Revenue
Service guidelines, shall be free and clear of all liens, encumbrances or rights
of others, and shall become the property of Lessor. Sublessee will not, without
the prior written consent of Sublessor and subject to such conditions as Lessor
or Sublessor may impose for its protection, affix or install any Equipment to or
in any other personal or real property.
(c) Any alterations or modifications to the Equipment that may, at any
time during the term of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made at the expense of Sublessee.
VII. STIPULATED LOSS VALUE:
Sublessee shall promptly and fully notify Sublessor in writing if any
unit of Equipment shall be or become worn out, lost, stolen, destroyed,
irreparably damaged in the reasonable determination of Sublessee, or permanently
rendered unfit for use from any cause whatsoever (such occurrence being
hereinafter called "Casualty Occurrences"). On the rental payment date next
succeeding a Casualty Occurrence (the "Payment Date"), Sublessee shall pay
Sublessor the sum of (x) the Stipulated Loss Value of such unit calculated in
accordance with Annex D to the Master Lease, which is incorporated herein by
reference as of the rental payment date next preceding such Casualty Occurrence
("Calculation Date"); and (y) all rental and other amounts which are due
hereunder as of the Payment Date. In addition to the amounts required to be paid
by Sublessee on any Rent Payment Date pursuant to the preceding clauses (x) and
(y), Sublessee shall also pay to Sublessor the amount of any swap breakage loss
incurred by Lessor and/or any Participant (as such term is hereinafter defined)
as a result of or in connection with such payment on such Rent Payment Date. As
used herein, "Swap Breakage Loss" shall include LIBOR and other funding breakage
costs, if any, and may be determined by Lessor and any Participant by reference
to the Standard International Swap Dealers Association calculation for "Loss."
Upon payment of all sums due hereunder, the term of this Sublease as to such
unit shall terminate and (except in the case of the loss, theft or complete
destruction of such unit) Lessor shall be entitled to recover possession of such
unit.
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VIII. LOSS OR DAMAGE:
Sublessee hereby assumes and shall bear the entire risk of any loss,
theft, damage to, or destruction of, any unit of Equipment from any cause
whatsoever from the time the Equipment is shipped to Sublessee.
IX INSURANCE.
Sublessee agrees, at its own expense, to keep all Equipment insured for
such amounts as specified in the Equipment Schedules and against such hazards as
Lessor or Sublessor may require, including, but not limited to, insurance for
damage to or loss of such Equipment and liability coverage for personal
injuries, death or property damage, with Lessor named as additional insured and
with a loss payable clause in favor of Lessor, as its interest may appear,
irrespective of any breach of warranty or other act or omission of Sublessee.
All such policies shall be with companies, and on terms, satisfactory to Lessor
and Sublessor. Sublessee agrees to deliver to Sublessor evidence of insurance
satisfactory to Lessor and Sublessor. No insurance shall be subject to any
co-insurance clause. Sublessee hereby appoints Lessor as Sublessee's
attorney-in-fact to make proof of loss and claim for insurance, and to make
adjustments with insurers and to receive payment of and execute or endorse all
documents, checks or drafts in connection with payments made as a result of such
insurance policies. Any expense of Lessor and Sublessor in adjusting or
collecting insurance shall be borne by Sublessee. Sublessee will not make
adjustments with insurers except (i) with respect to claims for damage to any
unit of Equipment where the repair costs do not exceed ten percent (10%) of such
unit's fair market value, or (ii) with Lessor's or Sublessor's written consent.
Said policies shall provide that the insurance may not be altered or canceled by
the insurer until after thirty (30) days' written notice to Lessor and
Sublessor. Sublessee may, at its option, apply proceeds of insurance, in whole
or in part, to (i) repair or replace Equipment or any portion thereof, or (ii)
satisfy any obligation of Sublessee to Lessor or Sublessor hereunder.
X. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any
Schedule, Sublessee shall promptly, at its own cost and expense: (i) perform any
testing and repairs required to place the affected units of Equipment in the
same condition and appearance as when received by Sublessee (reasonable wear and
tear excepted) and in good working order for their originally intended purpose;
(ii) if deinstallation, disassembly or crating is required, cause such units to
be deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is satisfactory to Lessor; and
(iii) return such units, free and clear of all liens and encumbrances, to a
location within the continental United States as Lessor shall direct.
(b) Until Sublessee fully has complied with the requirements of
Paragraph (a) above, Sublessee's Rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Sublessor may
terminate such continued leasehold interest upon ten (10) days' notice to
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Sublessee. In addition to these rents, Sublessor shall have all of its other
rights and remedies available as a result of this nonperformance.
XI. DEFAULT:
(a) Lessor or Sublessor may in writing declare this Agreement in
default ("Default") if: (1) Sublessee breaches its obligation to pay Rent or any
other sum when due and fails to cure the breach within ten (10) days; (2)
Sublessee breaches any of its insurance obligations under SECTION IX hereof, or
Sublessee fails to comply with the provisions of SECTION XXIII of the Master
Lease; (3) Sublessee breaches any of its other obligations hereunder and fails
to cure that breach within thirty (30) days after written notice thereof; (4)
any representation or warranty made by Sublessee in connection with this
Agreement shall be false or misleading in any material respect; (5) Sublessee
becomes insolvent or ceases to do business as a going concern; (6) any Equipment
is illegally used; (7) a petition is filed by or against Sublessee under any
bankruptcy or insolvency laws and, if such petition is filed against Sublessee,
such petition is not dismissed within ninety (90) days; (8) Sublessee shall have
terminated its corporate existence, consolidated with, merged into, or conveyed
or leased substantially all of its assets as an entirety to any person (such
actions being referred to as an "Event"), unless not less than sixty (60) days
prior to such Event: (x) such person is organized and existing under the laws of
the United States or any state, and executes and delivers to Lessor and
Sublessor an agreement containing an effective assumption by such person of the
due and punctual performance of this Sublease; and (y) Lessor and Sublessor are
reasonably satisfied as to the creditworthiness of such person; (9) effective
control of Sublessor's voting capital stock, issued and outstanding from time to
time, is not retained by the present stockholders (unless Sublessor shall have
provided sixty (60) days' prior written notice to Lessor of the proposed
disposition of stock and Lessor shall have consented thereto in writing). Any
provision of this Agreement to the contrary notwithstanding, Lessor and
Sublessor may exercise all rights and remedies hereunder independently with
respect to each Schedule.
(b) After Default, at the request of Lessor, Sublessee shall comply
with the provisions of SECTION X(a) hereof. Sublessee hereby authorizes Lessor
to enter, with or without legal process, any premises where any Equipment is
located and take possession thereof. Sublessee shall, without further demand,
forthwith pay to Lessor (i) as liquidated damages for loss of a bargain and not
as a penalty, the Stipulated Loss Value of the Equipment (calculated in
accordance with Annex D to the Master Lease as of the Rent Payment date next
preceding the declaration of default), and (ii) all Rent and other sums then due
hereunder. Lessor may, but shall not be required to, sell the Equipment at
private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale; or Lessor may, but
shall not be required to, lease, otherwise dispose of or keep idle all or part
of the Equipment; and Lessor may use Sublessee's premises for any or all of the
foregoing without liability for rent, costs, damages or otherwise. The proceeds
of sale, lease or other disposition, if any, shall be applied in the following
order of priorities: (1) to pay all of Lessor's costs, charges and expenses
incurred in taking, removing, holding, repairing and selling, leasing or
otherwise disposing of Equipment; then, (2) to the extent not previously paid by
Sublessee, to pay Lessor all sums due from Sublessee hereunder; then (3) to
reimburse to Sublessee any sums previously paid by Sublessee
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as liquidated damages; and (4) any surplus shall be remitted to Sublessee.
Sublessee shall pay any deficiency in clauses (1) and (2) forthwith.
(c) In addition to the foregoing rights, after Default, Lessor or
Sublessor may terminate the lease as to any or all of the Equipment.
(d) The foregoing remedies are cumulative, and any or all thereof may
be exercised in lieu of or in addition to each other or any remedies at law, in
equity, or under statute. Sublessee waives notice of sale or other disposition
(and the time and place thereof), and the manner and place of any advertising.
If permitted by law, Sublessee shall pay reasonable attorney's fees actually
incurred by Lessor and Sublessor in enforcing the provisions of this Sublease
and any ancillary documents. Waiver of any Default shall not be a waiver of any
other or subsequent default.
(e) Any default under the terms of any other material agreement between
Sublessor and Sublessee or any of their affiliates giving rise to the
termination of such other agreement may be declared by Sublessor a default under
this agreement.
XII. ASSIGNMENT:
(a) SUBLESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
EQUIPMENT OR THE INTEREST OF SUBLESSEE HEREUNDER WITHOUT THE PRIOR WRITTEN
CONSENT OF SUBLESSOR.
(b) Sublessor may not, without the consent of Sublessee, assign this
Agreement or any Schedule, or the right to enter into any Schedule, such consent
not to be unreasonably withheld. In the event of a permitted assignment,
Sublessee agrees that it will pay all Rent and other amounts payable under each
Schedule to the Sublessor named therein; provided, however, if Sublessee
receives written notice of an assignment from Sublessor, Sublessee will pay all
Rent and other amounts payable under any assigned Schedule to such assignee or
as instructed by Sublessor. Each Schedule, incorporating by reference the terms
and conditions of this Agreement, constitutes a separate instrument of lease,
and the Sublessor named therein or its assignee shall have all rights as
"Sublessor" thereunder separately exercisable by such named Sublessor or
assignee as the case may be, exclusively and independently of Sublessor or any
assignee with respect to other Schedules executed pursuant hereto. Sublessee
further agrees to confirm in writing receipt of a notice of assignment as
reasonably may be requested by assignee.
(c) Sublessee acknowledges that it has been advised that General
Electric Capital Corporation is acting under the Master Lease for itself and as
agent for certain third parties (each being herein referred to as a
"Participant" and, collectively, as the "Participants"); that the interest of
the Lessor in the Master Lease, the Equipment Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in part, and may
be used as security for financing obtained from, one or more third parties
without the consent of Sublessee (the "Syndication"). Sublessee agrees
reasonably to cooperate with Lessor and Sublessor in connection with the
Syndication, including the execution and delivery of such other documents,
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instruments, notices, opinions, certificates and acknowledgments as reasonably
may be required by Lessor, Sublessor or such Participant; provided, however in
no event shall Sublessee be required to consent to any change that would
adversely affect any of the economic terms of the transactions contemplated
herein.
(d) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the parties
hereto.
XIII. INDEMNIFICATION:
(a) Sublessee hereby agrees to indemnify, save and keep harmless,
Lessor and Sublessor, their agents, employees, successors and assigns, from and
against any and all losses, damages, penalties, injuries, claims, actions and
suits, including legal expenses, of whatsoever kind and nature, in contract or
tort, whether caused by the active or passive negligence of Lessor or otherwise,
and including, but not limited to, Lessor's strict liability in tort, arising
out of (i) the selection, manufacture, purchase, acceptance or rejection of
Equipment, the ownership of Equipment during the Term, and the delivery, lease,
possession, maintenance, uses, condition, return or operation of the Equipment
(including, without limitation, latent and other defects, whether or not
discoverable by Sublessor or Sublessee and any claim for patent, trademark or
copyright infringement or environmental damage), or (ii) the condition of
Equipment sold or disposed of after use by Sublessee, any sublessee or employees
of Sublessee. Sublessee shall, upon request, defend any actions based on, or
arising out of, any of the foregoing.
(b) All of Lessor's and Sublessor's rights, privileges and indemnities
contained in this Section shall survive the expiration or other termination of
this Sublease and the Master Lease and the rights, privileges and indemnities
contained herein are expressly made for the benefit of, and shall be enforceable
by Lessor, Sublessor and their successors and assigns.
XIV. DISCLAIMER:
SUBLESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY
ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. EXCEPT AS MAY BE PROVIDED IN
THE MASTER ESTABLISHMENT AND TRANSITION AGREEMENT, BETWEEN SUBLESSOR AND
SUBLESSEE DATED _____________, 2000 ("MEAT AGREEMENT"), SUBLESSOR DOES NOT MAKE,
HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY
OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR
OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All
such risks, as between Sublessor and Sublessee, or between Lessor and Sublessee,
are to be borne by Sublessee. Without limiting the foregoing, and except as may
be provided in the MEAT Agreement, Sublessor shall have no responsibility or
liability to Sublessee or any
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other person with respect to any of the following: (i) any liability, loss or
damage caused or alleged to be caused directly or indirectly by any Equipment,
any inadequacy thereof, any deficiency or defect (latent or otherwise) therein,
or any other circumstance in connection therewith; (ii) the use, operation or
performance of any Equipment or any risks relating thereto; (iii) any
interruption of service, loss of business or anticipated profits or
consequential damages; or (iv) the delivery, operation, servicing, maintenance,
repair, improvement or replacement of any Equipment. If, and so long as, no
default exists under this Sublease, Sublessee shall be, and hereby is,
authorized during the term of this Lease to assert and enforce, at Sublessee's
sole cost and expense, from time to time, in the name of and for the account of
Lessor, Sublessor and/or Sublessee, as their interests may appear, whatever
claims and rights Sublessor or Lessor may have against any Supplier of the
Equipment.
XV. REPRESENTATIONS AND WARRANTIES OF SUBLESSEE:
Sublessee represents and warrants to Sublessor that on the date hereof:
(a) Sublessee has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents (together, the
"Documents") and is duly qualified to do business wherever necessary to carry on
its present business and operations, including the jurisdiction(s) where the
Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and delivered by
Sublessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies therein provided may be limited under applicable bankruptcy and
insolvency laws.
(c) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into or
performance by Sublessee of the Documents except such as have already been
obtained.
(d) The entry into and performance by Sublessee of the Documents will
not: (i) violate any judgment, order, law or regulation applicable to Sublessee
or any provision of Sublessee's articles of incorporation, charter or by-laws;
or (ii) result in any breach of, constitute a default under or result in the
creation of any lien, charge, security interest or other encumbrance upon any
Equipment pursuant to any indenture, mortgage, deed of trust, bank loan or
credit agreement or other instrument (other than this Agreement) to which
Sublessee is a party.
(e) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Sublessee, which will have a material adverse effect on the ability of Sublessee
to fulfill its obligations under this Agreement.
(f) Sublessee is and will be at all times validly existing and in good
standing under the laws of the state of its incorporation (specified in the
first sentence of this Agreement) and is
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in good standing and qualified as a foreign corporation in (i) each jurisdiction
in which the Equipment is or will be located and (ii) in such jurisdictions
where Sublessee's ownership or lease of property or the conduct of its business
requires it to be so qualified.
XVI. COVENANTS OF SUBLESSEE:
Sublessee covenants and agrees as follows:
(a) Promptly upon any officer or director of Sublessee obtaining
knowledge of any condition or event which constitutes a default or a potential
default hereunder, Sublessee shall provide prompt written notice to Sublessor
specifying such condition and what action Sublessee is taking or proposes to
take with respect thereto.
(b) Sublessee will promptly execute and deliver to Sublessor such
further documents, instruments and assurances and take such further action as
Lessor or Sublessor from time to time may reasonably request in order to carry
out the intent and purpose of this Sublease and to establish and protect the
rights and remedies created or intended to be created in favor of Sublessor or
Lessor hereunder.
(c) Sublessee will comply with all affirmative and negative covenants
set forth in Exhibits M and N to the Master Lease, to the same extent as if set
forth herein.
(d) Sublessee will not attach or incorporate any item of Equipment to
or in any other item of equipment or personal property or to or in any real
property in a manner that gives rise to the assertion of any lien, claim or
encumbrance on such item of Equipment by reason of such attachment or the
assertion of a claim that such item of Equipment has become a fixture. Sublessee
hereby agrees that it will purchase any such item of Equipment which Lessor or
Sublessor notifies Sublessee in writing is subject to the assertion of any such
lien, claim or encumbrance within ten (10) days of such notice.
(e) The Equipment will at all times be used for commercial or business
purposes.
(f) Sublessee shall not take any action that would cause a default
under this Sublease or the Master Lease or omit to take any action necessary to
prevent a breach of this Sublease or the Master Lease.
XVII. REPRESENTATIONS AND WARRANTIES OF SUBLESSOR:
(a) Sublessor has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents (together, the
"Documents") and is duly qualified to do business wherever necessary to carry on
its present business and operations, including the jurisdiction(s) where the
Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and delivered by
Sublessor and constitute valid, legal and binding agreements, enforceable in
accordance with their terms,
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except to the extent that the enforcement of remedies therein provided may be
limited under applicable bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into or
performance by Sublessor of the Documents except such as have already been
obtained.
(d) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Sublessor, which will have a material adverse effect on the ability of Sublessor
to fulfill its obligations under this Agreement.
(e) Sublessor has not received a Notice of Default on the Master Lease
from Lessor and, to Sublessor's knowledge after the exercise of Sublessor's
commercially reasonable best efforts to investigate the same, no material
default has occurred on the Master Lease with respect to the Equipment which
could not be cured by the giving of notice or undertaking of other actions not
material to the market value of the Equipment taken as a whole.
XVIII. COVENANTS OF SUBLESSOR:
Sublessor covenants and agrees as follows:
(a) Sublessor shall at all time perform its obligations under the
Master Lease with respect to the Equipment, except such covenant shall not apply
to the extent such default is due to actions or failure to act by Sublessee.
(b) Sublessor shall notify Sublessee in writing of any notice of
default which it receives from the Lessor with respect to the Equipment: (1) if
with respect to a failure to pay rent or any other sum when due, such notice to
be delivered to Sublessee no later than 2 days after receipt of the notice of
default received by Sublessor, and (2) if with respect to any other notice of
default, such notice to be delivered to Sublessee no later than 10 days after
receipt of the notice of default received by Sublessor
XIX. OWNERSHIP FOR TAX PURPOSES, GRANT OF SECURITY INTEREST; USURY SAVINGS:
(a) For income tax purposes, Lessor and Sublessor will treat Sublessee
as the owner of the Equipment. Accordingly, Lessor and Sublessor will not claim
any tax benefits available to an owner of the Equipment.
(b) Sublessee hereby acknowledges that Lessor has a first security
interest in the Equipment, together with all additions, attachments, accessions,
accessories and accessions thereto whether or not furnished by the Supplier of
the Equipment and any and all substitutions,
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replacements or exchanges therefor, and any and all insurance and/or other
proceeds of the property in and against which a security interest is granted
hereunder.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Equipment Schedule is determined to
be subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Equipment Schedule or this Sublease, in no
event shall any Equipment Schedule require the payment or permit the collection
of interest in excess of the maximum amount permitted by applicable law. If any
such excess interest is contracted for, charged or received under any Equipment
Schedule or this Sublease, or in the event that all of the principal balance
shall be prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received under any Equipment Schedule or the Sublease
shall exceed the maximum amount of interest permitted by applicable law, then in
such event: (i) the provisions of this paragraph shall govern and control, (ii)
neither Sublessee nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (iii) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Sublessee, at the option of the Sublessor, and (iv) the effective rate of
interest shall be automatically reduced to the maximum lawful contract rate
allowed under applicable law as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received under any Equipment Schedule or the Sublease which are made for the
purpose of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the indebtedness evidenced hereby, all interest at any time
contracted for, charged or received from Sublessee or otherwise by Sublessor in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for Sublessor to receive a
greater interest per annum rate than is presently allowed, the Sublessee agrees
that, on the effective date of such amendment or preemption, as the case may be,
the lawful maximum hereunder shall be increased to the maximum interest per
annum rate allowed by the amended state law or the law of the United States of
America.
XX. END OF SUBLEASE PURCHASE OPTION:
So long as (i) no default exists under the Sublease or the Master Lease
and (ii) the Term of the Sublease and the Master Lease has not been earlier
terminated, Sublessee may at the expiration of the Term of the Sublease, upon
one hundred eighty (180) days' prior written notice to Sublessor, purchase all
(but not less than all) of the Equipment described in any Schedule on an AS IS,
WHERE IS BASIS without recourse to or warranty from Sublessor or lessor, express
or implied, for a purchase price of $1.00 payable to Sublessor (plus all
applicable sales taxes). The payment shall be due and payable on the expiration
of the Term of the Sublease and the Master Lease.
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XXI. MISCELLANEOUS:
(a) SUBLESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS SUBLEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
SUBLESSEE AND SUBLESSOR OR THE LESSOR RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED BETWEEN SUBLESSEE AND SUBLESSOR. The scope of this waiver is
intended to be all encompassing of any and all disputes that may be filed in any
court (including, without limitation, contract claims, tort claims, breach of
duty claims, and all other common law and statutory claims). THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS SUBLEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
(b) Any cancellation or termination by Sublessor, pursuant to the
provision of this Sublease, any Schedule, supplement or amendment hereto, or the
sublease of any Equipment hereunder, shall not release Sublessee from any then
outstanding obligations to Sublessor hereunder.
(c) All Equipment shall at all times remain personal property of Lessor
regardless of the degree of its annexation to any real property and shall not by
reason of any installation in, or affixation to, real or personal property
become a part thereof. Sublessee shall obtain and deliver to Sublessor (to be
recorded at Lessee's expense) from any person having an interest in the property
where the Equipment is to be located, waivers of any lien, encumbrance or
interest which such person might have or hereafter obtain or claim with respect
to the Equipment.
(d) Time is of the essence of this Agreement. Sublessor's failure at
any time to require strict performance by Sublessee of any of the provisions
hereof shall not waive or diminish Sublessor's right thereafter to demand strict
compliance therewith.
(e) Sublessee agrees, upon Sublessor's request, to execute any
instrument necessary or expedient for filing, recording or perfecting the
interest of Sublessor or Lessor.
(f) All notices required to be given hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by facsimile
transmission (with confirmation of receipt), or sent by certified mail, return
receipt requested, addressed to the other party at its respective address stated
above or, with respect to the Lessor, in the Master Lease or at such other
address as such party shall from time to time designate in writing to the other
party, and shall be effective from the date of receipt.
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(g) This Sublease and the Schedule, including the Equipment Schedules
and the schedules to the Master Lease, which are incorporated herein by
reference, constitute the entire agreement between the parties with respect to
the subject matter hereof and shall not be amended or altered in any manner
except by a document in writing executed by both parties. NO VARIATION OR
MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR
CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF THE PARTIES HERETO. Any provision of this Agreement which 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.
(h) The representations, warranties and covenants of Sublessee herein
shall be deemed to survive the closing hereunder. The obligations of Sublessee
which accrue during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive the
termination of this Agreement.
(i) In case of a failure of Sublessee to comply with any provision of
this Agreement, Sublessor shall have the right, but shall not be obligated, to
effect such compliance, in whole or in part; and all moneys spent and expenses
and obligations incurred or assumed by Sublessor in effecting such compliance
(together with interest thereon at the rate specified in Paragraph (j) of this
Section) shall constitute additional Rent due to Sublessor within five (5) days
after the date Sublessor sends notice to Sublessee requesting payment.
Sublessor's effecting such compliance shall not be a waiver of Sublessee's
default.
(j) Any Rent or other amount not paid to lessor when due hereunder
shall bear interest, both before and after any judgment or termination hereof,
at the lesser of eighteen percent (18%) per annum or the maximum rate allowed by
law.
(k) Any provisions in this Agreement and any Schedule which are in
conflict with any statute, law or applicable rule shall be deemed omitted,
modified or altered to conform thereto.
(l) So long as no Default shall have occurred and be continuing
hereunder, and conditioned upon Sublessee performing all of the covenants and
conditions hereof, as to claims of Sublessor or persons claiming under
Sublessor, Sublessee shall peaceably and quietly hold, possess and use the
Equipment during the Term of this Agreement subject to the terms and conditions
hereof.
(m) Whether or not any Equipment is leased hereunder, Sublessee shall
pay upon demand as additional Rent hereunder all reasonable and necessary
documented transaction expenses including, but not limited to, expenses of
counsel, due diligence, appraisals, lien searches, Uniform Commercial Code
and/or Estoppel/Waiver Agreement filing fees, and field audits.
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XXII. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT. The parties agree that
any action or proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern District of New
York.
XXIII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest therein may be created through the transfer
or possession of this Agreement in and of itself without the transfer or
possession of the original of a Schedule executed pursuant to this Agreement and
incorporating this Agreement by reference; and no security interest in this
Agreement and a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which shall be
identified as the document marked "Original" and all other counterparts shall be
marked "Duplicate."
IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease
Agreement to be executed by their duly authorized representatives as of the date
first written above.
SUBLESSOR SUBLESSEE
BRIDGE INFORMATION SYSTEMS SAVVIS COMMUNICATIONS
AMERICA, INC. CORPORATION
By: By:
----------------------------- -----------------------------
Its: Its:
----------------------------- -----------------------------
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EXHIBIT L
JAPANESE STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made this _____
day of February, 2000, by and between Bridge International Holdings, Inc., a
Delaware corporation having its principal place of business at 717 Office
Parkway, St. Louis, Missouri 63141 ("Seller"), and SAVVIS Communications
Corporation, a Delaware corporation having its principal place of business at
717 Office Parkway, St. Louis, Missouri 63141 ("SAVVIS") (Seller and SAVVIS each
a "Party" and collectively the "Parties").
WITNESSETH
WHEREAS, Bridge Information Systems Inc. ("BISI"), the
ultimate parent company of the Seller, desires to effectuate a restructuring of
its network operations by transferring certain assets, liabilities, rights, and
obligations relating to its IP Network, as well as stock, of certain
subsidiaries world-wide to its subsidiary, SAVVIS, and its subsidiaries pursuant
to an agreement to be executed between BISI and SAVVIS (the "Master
Establishment and Transition Agreement"); and
WHEREAS, pursuant to the Master Establishment and Transition
Agreement, the transfer of the IP Network in foreign jurisdictions will be
effected pursuant to other agreements to be executed between BISI and SAVVIS or
their respective subsidiaries;
WHEREAS, the Seller owns all the outstanding stock of Bridge
Information Systems (Japan) KK, a company organized under the laws of Japan (the
"Company");
WHEREAS, the Company currently owns all the assets and
interests relating to the IP Network in Japan;
WHEREAS, Seller desires to sell to SAVVIS, and SAVVIS desires
to purchase from Seller all the shares of common stock (the "Shares") of the
Company on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein set forth and of other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties agree as
follows:
1. DEFINITIONS
1.1 In this Agreement, the following expressions shall have the
following meanings namely:
"Agreement" means the agreement between the Parties the terms of
which are set out herein;
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"Closing" has the meaning set forth in Clause 4.1;
"Effective Date" means the date first written above;
"IP Network" means telecommunications facilities using internet
protocols;
1.2 In this Agreement words importing the singular include the plural
and vice versa and words importing gender include any other gender.
1.3 The headings of Clauses are for ease of reference and shall not
affect the construction of this Agreement.
1.4 References in this Agreement to Clauses are references to clauses
of this Agreement.
1.5 Any undertaking hereunder not to do any act or thing shall be
deemed to include an undertaking not to permit or suffer the doing of
that act or thing.
1.6 The expression "person" used in this Agreement shall include
(without limitation) any individual, partnership, local authority,
company or unincorporated association.
2. SALE & PURCHASE
Upon the terms and subject to the conditions set forth in this
Agreement, Seller shall sell and SAVVIS shall purchase the Shares
free and clear of all security interests, claims, and restrictions,
with effect from the Effective Date.
3. CONSIDERATION
3.1 The purchase price for the Shares (the "Consideration") shall be
US$ 1,014,319.65.
3.2 The Consideration shall be due and payable within thirty (30)
days after the Closing.
4. CLOSING
4.1 Closing of the sale shall take place on February __, 2000, when
Seller shall deliver to SAVVIS the share certificate representing the
Shares.
4.2 Title to the Shares shall pass to SAVVIS on the Effective Date.
5. REPRESENTATIONS AND WARRANTIES
5.1 Seller represents and warrants that it is now and will be at
Closing the sole holder of record and beneficial owner of all the
Shares, that it owns the Shares free and clear of all
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security interests, claims, and restrictions, and that the Shares
constitute all of the outstanding capital stock of the Company.
Seller will cause the transfer to SAVVIS of good and marketable title
to the Shares at Closing, free and clear of all security interests,
claims, and restrictions. Seller represents that it has the legal
capacity and authority to execute and deliver this Agreement, to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby.
5.2 The tangible and intangible property owned and leased by the
Company and listed or described on Schedule 5.2 hereto constitutes
all of the property and property rights owned and leased by the
Company and all of the property and property rights that in any way
relate to, are used in, or are necessary for the operation of the IP
Network of the Company in the manner and to the extent presently
conducted or planned. Further, the Company does not own or lease any
tangible or intangible property that is unrelated to the IP Network
and not mentioned in Schedule 5.2. Should the Company own or lease
property not related to the IP Network, the Parties shall endeavor to
cause such property to be returned to the Seller, and any charges
incurred or revenues generated in connection with such property shall
be allocated to the appropriate Party as if such property were owned
or leased by the Seller.
5.3 SAVVIS and Seller shall take all reasonable efforts to jointly
prepare, within fifteen days after the Effective Date, or as soon as
practical thereafter, a revised list of the property set forth on
Schedule 5.2. This revised list shall supersede the attached Schedule
5.2 and shall include any assets purchased or acquired by the Company
after October 31, 1999 but before the Effective Date and comprising
part of the IP Network. The parties shall negotiate in good faith to
finalize the revised Schedule 5.2 and shall provide to each other any
information or records reasonably necessary to finalize it.
6. FURTHER ASSURANCE
From and after Closing, the Parties shall do such acts and execute
such documents and instruments as may be reasonably required to make
effective the transactions contemplated hereby. In the event that
consents, approvals, other authorizations or other acts contemplated
by this Agreement have not been fully effected as of Closing, the
parties will continue after Closing, without further consideration,
to use their best efforts to carry out such transactions. However, in
the event that certain approvals, consents or other necessary
documentation cannot be secured, then the Party having legal
responsibility, ownership, or control shall act on behalf of the
other Party, without further consideration, to effect the essential
intention of the Parties with respect to the transactions
contemplated by this Agreement.
7. SURVIVAL OF CERTAIN PROVISIONS
To the extent that any provision of this Agreement shall not have
been performed at Closing it shall survive and remain in full force
and effect notwithstanding Closing.
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8. GOVERNING LAW AND CHOICE OF FORUM
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Missouri, and the parties to
this Agreement hereby agree that all matters arising out of or in
connection with this Agreement shall be subject to the exclusive
jurisdiction of the state and federal courts located in St. Louis,
Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement as of the date first above written.
SAVVIS COMMUNICATIONS CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BRIDGE INTERNATIONAL HOLDINGS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE 1.3
OTHER ASSUMED LIABILITIES
None.
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SCHEDULE 2.3
PAYMENT OF PURCHASE PRICE
Payment of cash portion of the Purchase Price will be by wire transfer of
immediately available funds to an account of Seller, the instructions for which
shall be provided to Buyer from Seller no less than three days prior to Closing.
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SCHEDULE 3.3
CONTRACTS REQUIRING CONSENT
The Parties acknowledge that Seller may be required to grant a security interest
in all of its rights, and those of the Seller Subsidiaries, under this
Agreement, the Global Operative Agreements and the Local Operative Agreements,
and further that no such liens or encumbrances shall be a breach of this
Agreement, including this Section 3.3. See also attached.
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SCHEDULE 3.5(a)
IP NETWORK EXCEPTIONS
The US Network Assets, as set forth on Schedule 1.16, are only those US Network
Assets as of October 31, 1999.
The International Network Assets, as set forth on Schedule 1.10, are only those
International Network Assets as of October 31, 1999; provided, however, that
those International Network Assets listed for Austria, Belgium, Denmark,
Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain,
Sweden, Switzerland, Turkey and the United Kingdom are as of December 31, 1999.
Seller and BT Contracts Rentals Ltd, with an address of Capital House, Bond
Street, Bristol BS1 3LA, have entered into a lease for 500 routers ("the
Lease"), certain of which have been installed as part of the IP Network. Seller
is not transferring its interest or obligations in the Lease or the leased
routers to Buyer, but has secured the consent of BT Contract Rentals Ltd. for
Buyer to use, for the remainder of the term of the Lease, such leased routers.
Such use by Buyer shall be without cost to Buyer. Seller shall remain liable for
all lease payments and related charges under the Lease. Buyer's use of the
leased routers shall be subject to and in accordance with the terms of the
Lease.
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SCHEDULE 3.7
EMPLOYEES
The Americas
- ------------
Acocks, Terry Gilfillan, Jeff Mueller, Don
Alexander, Larry Grant, Michael Mutrux, Alex
Allen, Courtney Grenier, Craig Nolan, Carrie
Amador, Alan Griffith, Ken Nottingham, Aaron
Ansley, Mike Gwaltney, Chris Ozanic, Candi
Arft, Chris Heinrich, Matt Patel, Reshma
Ballard, Tony Hensel, Mary Paule, Felisa
Bearfield, Lydia Hewitt, Ray Pearson, Dorothy
Bonoist, Chris Hezell, Larry Pezold, Jim
Berry, Paul Houston, Denise Regot, Alva
Bishop, Mike Hughes, Lynda Robinson, Don
Boaz, Constance Hunt, Tab Robles, Rick
Brissette, Dave Johnson, Cindy Rocha, Louis
Burdick, Linda Judge, Curtis Schwamle, Chris
Burnham, Robert Kahill, Narriman Scroggins, Jerry
Cattel, Mike Kanne, Fred Siedhoff, Jim
Champagne, Robert Klasinski, Gabe Stevens, Wayne
Cilino, Steve Kirby, Robert Taylor, Mike
Coffman, Jeff Kurtz, Dennis Walkenhorst, Jamie
Collins, Tanya Ladd, Connie Watkins, Terrence
Cornwell, Michael Laslie, Matt Weber, John
Cracker, Shelia Leatherman, Phillip West, Mark
Dailey, Sue Lee, Hing Whinery, Eric
Delard, Norma Linck, Carol Wilson, Michelle
Disano, Wanda Lokke, Chris Wolf, Michelle
Doerr, Mike Luciani, Jim Woltering, Ben
Engle, Scott Mallory, Kevin Zollner, Tim
Ennis, Erik Maragliano, Dave Zuccarello, Theresa
Freeman, James McCormick, Rob
Europe
- ------
Appleton, Allan Evans, Richard Scane, Jeffrey George
Bahra, Kushvinder Hill, Ian Spellman, Gary
Baker, Simon Korn, Yoav Symonds, Geoff
Burks, Andrew Lambert, David Taylor, Mark
Cann, Terry Alexander Morley, Julie Wilkinson, Charles
Choudhury, Jimpy Norwood, Jane Yiatanou, George
D'Cruz, Lincoln Saunders, Andrew
111
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Asia
- ----
Hicks, Rob Zu, Boon Tec
112
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SCHEDULE 5.2(b)
SATELLITE RIGHTS
Contracts:
Agreement for the Provision of DirecPC Professional Services Data Network and
Integrated Satellite Business Network Equipment Services in Europe and the
Middle East between HOT Telecommunications Limited and Bridge Information
Systems, Inc. commencing July 1, 1999.
Hughes Network Systems Customer Agreement with Bridge Information Systems, dated
October 10, 1998.
Countries:
Bulgaria
Croatia
Cyprus
Czech Republic
Egypt
Estonia
Jersey
Latvia
Lithuania
Macedonia
Portugal
Romania
Russia
Slovakia
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SCHEDULE 5.5
SHORT-TERM CALL ASSETS JURISDICTIONS
Greece
Hungary
Ireland
Poland
Taiwan
Mexico
Venezuela
114
Exhibit 10.12
NETWORK SERVICES AGREEMENT
This NETWORK SERVICES AGREEMENT (the "AGREEMENT") is effective as of
12:01 A.M. February 14, 2000 (the "EFFECTIVE DATE"), between SAVVIS
Communications Corporation, a Missouri corporation ("SAVVIS"), and Bridge
Information Systems, Inc., a Missouri corporation ("BRIDGE").
RECITALS
A. Bridge is engaged in the business of collecting and distributing
various financial, news and other data.
B. SAVVIS is engaged in the business of providing Internet Protocol
backbone and other data transport services.
C. SAVVIS and certain of its subsidiaries have acquired from Bridge and
certain of its subsidiaries certain assets relating to the provision of Internet
Protocol backbone and other data transport services, and may in the future
acquire additional such assets from Bridge and certain of its subsidiaries, all
pursuant to a Master Establishment and Transition Agreement between SAVVIS'
corporate parent, SAVVIS Communications Corporation, a Delaware corporation, and
Bridge, of even date herewith (the "MASTER ESTABLISHMENT AND TRANSITION
AGREEMENT").
D. It is an obligation of the parties under the Master Establishment
and Transition Agreement to cause this Network Services Agreement to be entered
into between SAVVIS and Bridge, pursuant to which SAVVIS shall provide Internet
Protocol backbone and other data transport services to Bridge.
E. Together with this Agreement, the parties hereto are entering into a
Technical Services Agreement of even date herewith (the "TECHNICAL SERVICES
AGREEMENT") and an Administrative Services Agreement of even date herewith (the
"ADMINISTRATIVE SERVICES AGREEMENT"), providing for the provision of certain
services to SAVVIS by Bridge. Certain SAVVIS Subsidiaries and certain Bridge
Subsidiaries are entering into, and may in the future enter into, Local Transfer
Agreements, Local Network Services Agreements substantially in the form of
Exhibit A hereto (the "LOCAL NETWORK SERVICES AGREEMENTS"), Equipment
Collocation Permits (the "EQUIPMENT COLLOCATION PERMITS"), and Local
Administrative Services Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
<PAGE>
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Network Services Agreement
by and between SAVVIS and Bridge, including all addenda to this
Agreement entered into in the manner set forth herein (each an
"ADDENDUM" and collectively the "ADDENDA"). This Agreement shall
be interpreted wherever possible to avoid conflicts between the
Sections hereof and the Addenda, provided that if such a conflict
shall arise, the Addenda shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an Addendum
to this Agreement, either party may initiate the process of
determining such matter by submitting a proposed outline or
contents of such Addendum to the other party. Each party shall
appoint a primary contact and a secondary contact for the
completion of such Addendum, who shall be the contact points for
every issue concerning such Addendum and who shall be informed of
the progress of the project. The names of the contacts will be
exchanged in writing by the parties. Using the contacts, the
parties shall work together in good faith with such diligence as
shall be commercially reasonable under the circumstances to
complete such Addendum, provided, however, that neither party
shall be obligated to enter into such an Addendum. Upon the
completion of such Addendum, it shall be set forth in a written
document and executed by the parties and shall become a part of
this Agreement and shall be deemed to be incorporated herein by
reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined terms
shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included" and
"including" shall not be construed as terms of limitation.
Additional definitions are provided in Schedule 3.1 of this
Agreement. Capitalized terms not otherwise defined have the
meanings assigned to such terms in the Master Establishment and
Transition Agreement.
"ADDITIONAL NETWORK FACILITIES" means any assets and contracts of
SAVVIS for the provision of Internet Protocol backbone and other
data transport services other than the Acquired Network
Facilities.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" means a period of 12 months beginning on the
Effective Date and each subsequent anniversary thereof.
"AMERICAS" means North America, Central America and South
America, including the Caribbean, but excluding the United
States.
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"ASIA" means Australia, China, Hong Kong, India, Indonesia,
Japan, Korea, Macau, Malaysia, New Zealand, Philippines,
Singapore, Taiwan, and Thailand.
"BRIDGE" means Bridge Information Systems, Inc., a Missouri
corporation, and its successors and assigns.
"BRIDGE SUBSIDIARIES" has the meaning assigned to the term
"Seller Subsidiaries" in the Master Establishment and Transition
Agreement.
"CONFIDENTIAL INFORMATION" means all information concerning the
business of Bridge, SAVVIS or any third party doing business with
either of them that may be obtained from any source (i) by SAVVIS
by virtue of its performance under this Agreement or (ii) by
Bridge by virtue of its use of the Networks. Such information
shall also include the terms of this Agreement (and negotiations
and proposals from one party to the other related directly
thereto), network designs and design recommendations, tools and
programs, pricing, methods, processes, financial data, software,
research, development, strategic plans or related information.
All such information disclosed prior to the execution of this
Agreement shall also be considered Confidential Information for
purposes of this Agreement. Confidential Information shall not
include information that:
(a) is already rightfully known to the receiving party at
the time it is obtained by such party, free from any
obligation to keep such information confidential; or
(b) is or becomes publicly known through no wrongful act of
the receiving party; or
(c) is rightfully received by the receiving party from a
third party without restriction and without breach of
this Agreement.
"DISTRIBUTOR COUNTRY" means any country in which the products and
services of Bridge and Bridge Subsidiaries are provided through
third-party distributors.
"EFFECTIVE DATE" means the date set forth in the Preamble of this
Agreement.
"EUROPE" means Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Luxembourg,
Netherlands, Norway, Poland, Spain, Sweden, Switzerland, Turkey
and the United Kingdom.
"EVENT OF DEFAULT BY SAVVIS" has the meaning assigned to such
term in Section 7.1 of this Agreement.
"INITIAL TERM" means a period of ten consecutive Agreement Years
beginning on the Effective Date.
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"INSTALLATION SITE" means any facility of Bridge or a Bridge
Subsidiary or of vendors or customers of Bridge or a Bridge
Subsidiary at which one or more of the Networks is installed.
"MARKET HOURS" means, with respect to any Installation Site, the
period of time beginning two hours before the time at which
trading opens on the principal securities exchange or automated
quotation system designated by Bridge in writing from time to
time as being used by the purchasers and sellers of securities at
such Installation Site, and ending two hours after the time at
which such trading ceases to be conducted.
"MINIMUM ANNUAL COMMITMENT" has the meaning assigned to such term
in Schedule 3.1 of this Agreement.
"NETWORK" and "NETWORKS" have the meaning assigned to such terms
in Section 2.1 of this Agreement.
"REPLACED ROUTERS" has the meaning assigned to such term in
Section 2.7 of this Agreement.
"QUALITY OF SERVICE STANDARDS" means the standards for the
performance of the Networks contained in Schedule 2.2 hereto or
an Addendum to this Agreement.
"SAVVIS" means SAVVIS Communications Corporation, a Missouri
corporation, and its successors and assigns.
"SAVVIS BACKBONE" has the meaning set forth in Schedule 3.1
hereto.
"SAVVIS PARENT" means SAVVIS Communications Corporation, a
Delaware corporation.
"SAVVIS SUBSIDIARIES" has the meaning assigned to the term "Buyer
Subsidiaries" in the Master Establishment and Transition
Agreement.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"TELERATE" means Telerate Holdings, Inc., a Delaware corporation.
"TELERATE LOCAL NETWORK SERVICES AGREEMENTS" means the local
network services agreements between certain SAVVIS Subsidiaries
and certain Telerate Subsidiaries, substantially in the form of
Exhibit A to the Telerate Network Services Agreement.
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<PAGE>
"TELERATE NETWORK SERVICES AGREEMENT" means the network services
agreement pursuant to which SAVVIS shall provide Internet
Protocol backbone and other data transport services to Telerate,
substantially in the form of Exhibit B hereto.
"TELERATE SUBSIDIARIES" means the direct and indirect
subsidiaries of Telerate which will be involved in the operation
or ownership of the Acquired Network Facilities.
"TRANSITION PERIOD" has the meaning assigned to such term in
Section 6.3 of this Agreement.
2. THE NETWORKS AND QUALITY OF SERVICE STANDARDS
2.1. SAVVIS agrees to use the Acquired Network Facilities to provide
(or to cause the SAVVIS Subsidiaries to provide) to Bridge,
Affiliates of Bridge or any party making use of the Networks
through Bridge the following managed packet-data transport
networks, including the operation, management and maintenance
thereof:
(a) a global office-automation network, providing
connectivity between the offices of Bridge (the "OA
NETWORK"),
(b) a global data collection network (the "COLLECTION
NETWORK") and
(c) a global data distribution network (the "DISTRIBUTION
NETWORK"), such description being given without
limitation on Bridge's use of such network services as
are provided by SAVVIS, which shall be referred to in
this Agreement collectively as the "NETWORKS" and
individually as a "NETWORK."
2.2. Each Network shall be operated, managed and maintained by SAVVIS.
SAVVIS may, but shall not be obligated to, use facilities of
SAVVIS other than the Acquired Network Facilities to provide all
or any part of any Network. Beginning on the first anniversary of
the Effective Date and thereafter, each Network shall be
operated, managed and maintained by SAVVIS according to the
Quality of Service Standards set forth in Schedule 2.2 hereof,
and SAVVIS shall be responsible for monitoring the performance of
the Networks with respect to the Quality of Service Standards and
shall provide Bridge with monthly reports of such performance. If
the Quality of Service Standards are not met with respect to a
particular Installation Site in any month, Bridge shall be
entitled to receive, upon written request by Bridge within 30
days of its receipt of the performance report for such
Installation Site for such month, a credit in the amount set
forth on Schedule 2.2 attached hereto, which amount shall be
deemed to be one month's charges applicable to such Installation
Site under this Agreement with respect to such month; provided,
however, that Bridge shall not be entitled to such credit to the
extent that the failure to meet the Quality of Service Standards
with respect to such Installation Site is due to (i) an act or
omission of Bridge or a Bridge Subsidiary or a vendor or customer
of Bridge
5
<PAGE>
or a Bridge Subsidiary or (ii) equipment or software used by
Bridge and not provided by SAVVIS. Not more than one credit of
one month's charges shall be given for a particular Installation
Site for a particular month. The Quality of Service Standards
shall not apply to the provision of Local Access Facilities in
countries in which the products and services of Bridge and Bridge
Subsidiaries are provided through third-party distributors. For
all purposes of this Agreement, including without limitation the
determination of an Event of Default by SAVVIS, the Quality of
Service Standards applicable to a particular Installation Site in
any month shall be deemed to have been met unless Bridge, within
30 days of its receipt of the performance report for such
Installation Site for such month, requests in writing a credit as
set forth above with respect to such Installation Site for such
month.
2.3. SAVVIS agrees that, for the term of this Agreement, the network
operations centers for the Networks shall be managed by Bridge
under the Technical Services Agreement; provided, however, that
SAVVIS shall not be restricted from building, managing and
operating one or more network operations centers for such
portions of the SAVVIS Backbone or other operations of SAVVIS
that are not used to provide the Networks to Bridge.
2.4. [Intentionally omitted.]
2.5. Unless otherwise mutually agreed by the parties, each Addendum
providing for the provision of Additional Network Facilities
shall have a term of three years. Such Addendum may also include
provisions with respect to the level of redundancy to be provided
and the Quality of Service Standards to apply to such Additional
Network Facilities. In providing Additional Network Facilities,
SAVVIS agrees to use its best efforts to expedite the
provisioning of the circuits for such Additional Network
Facilities in those instances in which SAVVIS is responsible for
provisioning such circuits.
2.6. Throughout the term of this Agreement, SAVVIS shall use its
commercially reasonable best efforts to continue to meet the
requests of Bridge to enhance the total capacity, geographic
extension and performance quality of the Networks, and to
maintain its research and development effort at a level
appropriate to sustain the ability of Bridge to compete on the
basis of the quality of the Networks.
2.7. The parties acknowledge that SAVVIS intends to replace certain
existing routers among the Acquired Network Facilities (the
"REPLACED ROUTERS") with new equipment promptly after the
Effective Date. It is the intention of the parties that the
Replaced Routers will be re-deployed at Installation Sites at
which one or more 56 Kbps ports or 64 Kbps ports will be provided
by SAVVIS using Additional Network Facilities as set forth in
Section 3.1 hereof. SAVVIS agrees to manage the use of its
inventory of routers in order to re-deploy the maximum
6
<PAGE>
number of Replaced Routers as is commercially reasonable. So long
as Replaced Routers are available for re-deployment during the 18
months following the Effective Date, SAVVIS agrees not to make
any bulk purchases of additional routers without the prior
written consent of Bridge, which will not be unreasonably
withheld. Upon the expiration of 18 months following the
Effective Date, the parties shall determine the number of
Replaced Routers that the parties mutually agree are likely to be
so re-deployed within the succeeding 12 months. All Replaced
Routers that are not reasonably likely to be so re-deployed
within such 12-month period shall be purchased from SAVVIS by
Bridge at a price per Replaced Router equal to the average net
book value as of the Effective Date of all routers included in
the Acquired Network Facilities.
3. RATES AND CHARGES
3.1. Bridge shall pay SAVVIS for the Networks using the Acquired
Network Facilities and Additional Network Facilities according to
the rates and charges set forth in Schedule 3.1 hereof.
3.2. The parties recognize that certain savings might be obtained by
consolidating the multiple Local Access Facilities that are
provided at such building locations on the Effective Date. In the
event that SAVVIS consolidates the multiple Local Access
Facilities at one or more of such building locations and obtains
cost savings as a result thereof, the parties will mutually agree
within 30 days following such consolidation on the manner in
which such savings shall be shared between SAVVIS and Bridge. Any
reduction pursuant to this Section shall not affect the Minimum
Annual Commitment.
3.3. For any Installation Site to which SAVVIS is providing services
both under this Agreement and the Telerate Network Services
Agreement, the rates and charges applicable to such Installation
Site under this Agreement shall be one-half of the rates and
charges that would otherwise be applicable to such Installation
Site under this Agreement.
4. STRATEGIC ADVISORY COMMITTEE
4.1. Within 30 days after the Effective Date, SAVVIS and Bridge shall
each appoint three senior executives to the "STRATEGIC ADVISORY
COMMITTEE," and one outside consultant shall be jointly appointed
by both parties. Any fees and expenses of such outside consultant
incurred in connection with service on the Strategic Advisory
Committee shall be shared equally by SAVVIS and Bridge. Each
party shall have the right to change any or all of its
representatives on the Strategic Advisory Committee upon written
notice to the other party. A quorum of the Strategic Advisory
Committee shall consist of four members, provided that at least
two members appointed by each party are present. The Chair of the
Strategic Advisory Committee shall be designated by Bridge from
among the seven members of the Committee.
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<PAGE>
4.2. The mission of the Strategic Advisory Committee shall be to
review the performance of the Networks, to serve as forum for the
consideration and discussion of issues raised by either SAVVIS or
Bridge with respect to the Networks, and to discuss issues
related to the future development of the data transport and
Internet Protocol backbone operations of SAVVIS in the context of
the relationship of SAVVIS and Bridge.
4.3. The Strategic Advisory Committee shall meet with reasonable
frequency, at the call of the Chair.
4.4. The Strategic Advisory Committee shall have reasonable access to
the Chief Executive Officer and the Board of Directors of SAVVIS
to raise areas of concern to the Committee under this Agreement.
4.5. SAVVIS agrees to use its commercially reasonable best efforts to
comply with the recommendations of the Strategic Advisory
Committee regarding performance issues arising under this
Agreement.
5. INVOICES
5.1. The amounts due to SAVVIS from Bridge for the installation,
operation, management and maintenance of the Networks shall be
billed monthly in advance. All items on invoices not the subject
of a bona fide dispute shall be payable by Bridge in United
States currency within 30 days from the date of receipt of the
invoice. All amounts not in dispute are subject to interest
charges of 1-1/2 percent that will accrue daily on all amounts
not paid within 30 days of the date of receipt of the invoice.
5.2. At any time and from time to time, Bridge may, by written notice
to SAVVIS, have one or more Installation Sites removed from the
Networks. Each monthly invoice from SAVVIS to Bridge shall
reflect a reduction in the amount charged to Bridge for the
Networks resulting from any such removal of Installation Sites.
In the case of any Installation Site removed from the Acquired
Network Facilities, such reduction shall be the sum of:
(a) the actual cost of the Local Access Facilities
connecting the Acquired Network Facilities to such
Installation Site, effective as of such time as SAVVIS
is no longer required to pay such costs, and
(b) the amounts set forth on Schedule 5.2 attached hereto,
which are deemed to be one month's charges applicable
to such Installation Site under this Agreement with
respect to such month during the first Agreement Year,
according to connection speed at such Installation
Site, effective as of such time as such Installation
Site is disconnected from the Networks.
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<PAGE>
5.3. Bridge shall pay any sales, use, federal excise, utility, gross
receipts, state and local surcharges, value added and similar
taxes, charges or levies lawfully levied by a duly constituted
taxing authority against or upon the Networks. In the
alternative, Bridge shall provide SAVVIS with a certificate
evidencing Bridge's exemption from payment of or liability for
such taxes. All other taxes, charges or levies, including any ad
valorem, income, franchise, privilege or occupation taxes of
SAVVIS shall be paid by SAVVIS.
5.4. Bona fide disputes concerning invoices shall be referred to the
parties' respective representatives who are authorized to resolve
such matters. Any amount to which Bridge is entitled as a result
of the resolution of a billing dispute shall be credited promptly
to Bridge's account. Any amount to which SAVVIS is entitled as a
result of the resolution of a billing dispute shall be paid
promptly to SAVVIS.
5.5. Against the amounts owed by Bridge to SAVVIS under this
Agreement, Bridge shall have the right to offset any amounts owed
by SAVVIS to Bridge under this Agreement, the Technical Services
Agreement, or otherwise, including without limitation any amounts
paid by Bridge on behalf of SAVVIS under guarantees by Bridge of
obligations of SAVVIS.
6. TERM AND EXTENSIONS
6.1. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for the Initial Term unless
terminated or extended in accordance with the provisions hereof.
6.2. The term of this Agreement may be extended by Bridge for one
additional five-year period by giving SAVVIS written notice not
less than one year before the scheduled expiration of the Initial
Term.
6.3. Upon the termination of this Agreement in accordance with its
scheduled expiration or by Bridge pursuant to Section 7, SAVVIS
will continue to provide the Networks in accordance with the
terms and conditions herein (excluding the Minimum Annual
Commitment) for a period of up to five years after the effective
date of termination (the "TRANSITION PERIOD"). During the
Transition Period, Bridge shall pay SAVVIS for the use of the
Networks at the rates in effect for third party customers of
SAVVIS at the effective date of termination. If Bridge has not
completely transitioned from its use of the Networks after the
Transition Period, SAVVIS will provide the Networks at SAVVIS'
then current list rates. SAVVIS and its successor will cooperate
with Bridge until Bridge has completely migrated to another
provider.
7. TERMINATION BY BRIDGE
7.1. An "EVENT OF DEFAULT BY SAVVIS" shall be deemed to occur if:
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<PAGE>
(a) SAVVIS has failed to a material degree to perform or
comply with or has violated to a material degree any
material representation, warranty, term, condition or
obligation of SAVVIS under this Agreement, and SAVVIS
has failed to cure such failure or violation within 60
days after receiving notice thereof from Bridge; or
(b) SAVVIS becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(c) an Event of Default by SAVVIS occurs under the Telerate
Network Services Agreement.
7.2. Bridge shall have the right to terminate this Agreement, with no
liability to SAVVIS other than for charges (less any applicable
credits) for the Networks provided prior to such termination, if:
(a) Bridge provides written notice to SAVVIS, at any time
after the ninth anniversary of the Effective Date, of
Bridge's intent to terminate, such termination to be
effective not less than one year following the date of
such notice; or
(b) Bridge provides 10 days written notice of its intent to
terminate in the event that an Event of Default by
SAVVIS occurs.
7.3. For purposes of Section 7.1(a), if the Quality of Service
Standards are not met with respect to a particular Installation
Site in any month, SAVVIS shall be deemed to have cured such
failure within 60 days if the Quality of Service Standards are
met with respect to such Installation Site in the following
month. A failure of the Quality of Service Standards to be met
shall not constitute an Event of Default or give Bridge the right
to terminate this Agreement to the extent that such failure is
due to (i) an act or omission of Bridge or a Bridge Subsidiary or
a vendor or customer of Bridge or a Bridge Subsidiary or (ii)
equipment or software used by Bridge and not provided by SAVVIS.
The parties acknowledge and agree that the failure of the Quality
of Service Standards to be met with respect to one or more
Installation Sites in one or more months may, but does not
necessarily, constitute a failure by SAVVIS to a material degree
to perform or comply with, or a violation to a material degree
of, any material representation, warranty, term, condition or
obligation of SAVVIS under this Agreement.
7.4. As provided in Section 2.2, for all purposes of this Agreement,
including without limitation the determination of an Event of
Default by SAVVIS under this Section, the Quality of Service
Standards applicable to a particular Installation Site in any
month shall be deemed to have been met unless Bridge, within 30
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<PAGE>
days of its receipt of the performance report for such
Installation Site for such month, requests in writing a credit as
set forth in Section 2.2 with respect to such Installation Site
for such month.
8. TERMINATION BY SAVVIS
8.1. SAVVIS shall have the right to terminate this Agreement if:
(a) Bridge has failed to pay any invoice that is not the
subject of a bona fide dispute within 60 days of the
date on which such payment is due and SAVVIS has
provided Bridge with written notice thereof, provided
that Bridge shall have a further 30 days from the time
it receives such notice from SAVVIS of nonpayment to
cure any such default;
(b) SAVVIS provides 10 days written notice of its intent to
terminate in the event that Bridge has failed to
perform or comply with or has violated any material
representation, warranty, term, condition or obligation
of Bridge under this Agreement, and Bridge has failed
to cure such failure or violation within 60 days after
receiving notice thereof from SAVVIS;
(c) Bridge becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(d) SAVVIS becomes entitled to terminate the Telerate
Network Services Agreement pursuant to the terms
thereof.
8.2. Notwithstanding the provisions of Section 8.1(b) above, SAVVIS
shall not have the right to terminate this Agreement under
Section 8.1(b) solely for a failure by Bridge to perform or
comply with, a violation by Bridge of, the obligations of Bridge
under Section 15 (Confidentiality) of this Agreement, without
prejudice, however, to such rights as SAVVIS may have pursuant to
such Section and to such rights and remedies to which SAVVIS may
be entitled, at law or in equity, as the result of an actual or
threatened breach by Bridge of such Section.
9. ACCEPTANCE OF ADDITIONAL NETWORK FACILITIES
9.1. Upon the installation of Additional Network Facilities at any
Installation Site, SAVVIS shall conduct appropriate tests to
establish that such Additional Network Facilities perform in
accordance with mutually agreed upon acceptance criteria
("ACCEPTANCE CRITERIA") set forth in the applicable Addendum
entered into pursuant to Section 2.4, and shall promptly inform
Bridge of such test results. If test results show that the
Additional Network Facilities are performing in accordance with
the Acceptance Criteria, Bridge shall be deemed to accept the
Additional Network Facilities at the Installation Site
immediately.
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9.2. If SAVVIS' tests establish that newly installed Additional
Network Facilities at the Installation Site do not perform in
accordance with the mutually agreed upon Acceptance Criteria,
then SAVVIS shall immediately and diligently exert its best
efforts to bring the Additional Network Facilities at such
Installation Site into compliance. SAVVIS shall not bill Bridge
for the Additional Network Facilities at such Installation Site
until the test results show that the Additional Network
Facilities are performing in accordance with the Acceptance
Criteria.
9.3. Upon repair or restoration of any part of the Networks, SAVVIS
shall conduct appropriate tests to establish that the Networks
perform in accordance with mutually agreed upon Acceptance
Criteria and shall promptly inform Bridge of such test results.
10. RIGHTS AND OBLIGATIONS OF BRIDGE
10.1. SITE PREPARATION. For the installation of Additional Network
Facilities, Bridge shall, at its own expense, provide all
necessary preparations of each Installation Site in accordance
with the requirements to be mutually agreed upon by the
parties and set forth in an Addendum hereto, including inside
wiring, demarcation extension and rack mount accessories.
Bridge shall ensure that Bridge-provided equipment is on-site
by the scheduled installation date. If SAVVIS is required to
reschedule the installation of Bridge-provided equipment
because it is not on-site by the scheduled installation date,
Bridge shall pay SAVVIS to redispatch installation personnel.
10.2. PROPER USE OF NETWORKS.
10.2.1. Bridge shall use any equipment provided by SAVVIS in
connection with the Networks in accordance with its
documentation, which documentation shall be provided
by SAVVIS at no additional charge. Unless otherwise
provided herein, upon the termination of this
Agreement Bridge shall surrender to SAVVIS the
equipment provided by SAVVIS, in good working order,
ordinary wear and tear excepted.
10.2.2. Bridge shall be liable for damages to the Networks
caused by the negligence or willful acts or omissions
of Bridge's officers, employees, agents, contractors
or customers, for loss through theft or vandalism of
the Networks at the Installation Site, and for
damages to the Networks caused by the use of
equipment or supplies not provided hereunder or not
otherwise authorized by SAVVIS.
10.2.3. Bridge shall neither permit nor assist others to use
the Networks for any purpose other than that for
which they are intended, nor fail to maintain a
suitable environment specified by SAVVIS in the
applicable schedule, nor alter, tamper with, adjust
or repair the Networks. Any such alteration,
tampering, adjustment or repair by Bridge shall
relieve SAVVIS from any
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liability or obligation hereunder (including any
warranty or indemnity obligation) relating to the
affected Network, and Bridge shall be liable to
SAVVIS for any documented direct costs incurred by
SAVVIS as a result of such actions.
10.3. ABUSE OR FRAUDULENT USE OF NETWORKS. Bridge shall not abuse or
fraudulently use the Networks or use the Networks for any
unauthorized or illegal purposes, and shall neither permit nor
assist others to do so, including but not limited to:
(a) obtaining or attempting to obtain service by any
fraudulent means or device to avoid payment; or
(b) accessing, altering or destroying any information of
another party by any fraudulent means or device, or
attempting to do so; or
(c) using the Networks so as to interfere with the use of the
SAVVIS network by other SAVVIS customers or authorized
users or in violation of law or in support of any
unlawful act;
(d) using the Networks for voice communications over a
private network in jurisdictions where such use is not
allowed; or
(e) using the Networks in a manner contrary to or
inconsistent with such acceptable use policies as SAVVIS
may adopt and publish from time to time consistent with
industry standards.
Notwithstanding the provisions of Section 8, upon the breach
of this Section 10.3 by Bridge, SAVVIS shall have the right to
terminate this Agreement with respect to all or part of the
Networks immediately upon written notice to Bridge.
10.4. COVENANT NOT TO COMPETE.
10.4.1. As an inducement to SAVVIS to enter into this
Agreement, which Bridge acknowledges is of benefit to
it, and in consideration of the promises and
representations of SAVVIS under this Agreement,
Bridge covenants and agrees that during the term of
this Agreement and for a period of five years
thereafter, neither Bridge nor any of its successors
or assigns will, directly or indirectly, engage in,
or have any interest in any other person, firm,
corporation or other entity engaged in, any business
activities anywhere in the world competitive with or
similar or related to the packet-data transport
network services provided by SAVVIS under this
Agreement; provided, however, that (i) Bridge and the
Bridge Subsidiaries shall be free to continue to use
the Call Assets and the satellite networks currently
used by Bridge, until such Call Assets or satellite
networks have been acquired by SAVVIS or the SAVVIS
Subsidiaries pursuant to the Master Establishment and
Transition
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Agreement, and (ii) Bridge shall be free to make
passive investments in securities of companies that
provide network services in competition with SAVVIS
which, in the case of any such security, does not
constitute more than ten percent (10%) of the total
outstanding amount of such security.
10.4.2. If any court or tribunal of competent jurisdiction
shall refuse to enforce one or more of the covenants
in this Section 10.4 because the time limit
applicable thereto is deemed unreasonable, it is
expressly understood and agreed that such covenant or
covenants shall not be void but that for the purpose
of such proceedings such time limitation shall be
deemed to be reduced to the extent necessary to
permit the enforcement of such covenant or covenants.
10.4.3. If any court or tribunal of competent jurisdiction
shall refuse to enforce any or all of the covenants
in this Section 10.4 because, taken together, they
are more extensive (whether as to geographic area,
scope of business or otherwise) than is deemed to be
reasonable, it is expressly understood and agreed
between the parties hereto that such covenant or
covenants shall not be void but that for the purpose
of such proceedings the restrictions contained
therein (whether as to geographic area, scope of
business or otherwise) shall be deemed to be reduced
to the extent necessary to permit the enforcement of
such covenant or covenants.
10.4.4. Bridge specifically acknowledges and agrees that the
foregoing covenants are commercially reasonable and
reasonably necessary to protect the interests of
SAVVIS hereunder. Bridge hereby acknowledges that
SAVVIS and its successors and assigns will suffer
irreparable and continuing harm to the extent that
any of the foregoing covenants is breached and that
legal remedies would be inadequate in the event of
any such breach.
11. RIGHTS AND OBLIGATIONS OF SAVVIS
11.1. PROVISION OF THE NETWORKS. SAVVIS shall operate, maintain and
manage the Networks at the Installation Sites using the
Acquired Network Facilities in accordance with the Quality of
Service Standards and other terms of this Agreement, including
all Addenda hereto.
11.2. REPRESENTATIONS AND WARRANTIES.
11.2.1. [Intentionally omitted.]
11.2.2. SAVVIS hereby represents and warrants that the terms
hereof do not conflict in any respect whatsoever with
any SAVVIS tariff on file with the Federal
Communications Commission or other regulatory body.
If, during the term of this Agreement, SAVVIS shall
file a contract specific tariff
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governing the Networks or any portion thereof, such
tariff filing shall be consistent in all respects
with the terms of this Agreement, and SAVVIS shall
give Bridge 10 days advance written notice of making
such a tariff filing and of filing any subsequent
modifications thereto.
11.2.3. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.3. So long as Bridge is the beneficial owner of 20% of the
outstanding voting securities of SAVVIS Parent, SAVVIS Parent
shall not, without the prior written consent of Bridge, take
any action or otherwise enter into any agreement, arrangement
or understanding, including without limitation the creation or
issuance of any class of stock or other security, or any
agreement with any shareholder of SAVVIS Parent, the effect of
which would be to provide any shareholder of SAVVIS Parent
with any voting or registration rights superior to the voting
or registration rights of Bridge, other than as required by
law.
11.4. SAVVIS acknowledges that the occurrence of Event of Default by
SAVVIS, arising from either (i) a failure of the Networks to
meet Quality of Service Standards or (ii) a total loss to
Bridge of the use of the Networks, could cause irreparable
harm to Bridge, the amount of which may be difficult to
determine, thus potentially making any remedy at law or in
damages inadequate. SAVVIS, therefore, agrees that Bridge
shall have the right to apply to any court of competent
jurisdiction for injunctive relief upon the occurrence of an
Event of Default by SAVVIS or the occurrence of an event
which, with the passage of time or the giving of notice, could
become an Event of Default by SAVVIS and for any other
appropriate relief. This right shall be in addition to any
other remedy available to Bridge in law or equity. SAVVIS
further agrees that, upon the occurrence of an Event of
Default by SAVVIS, SAVVIS shall pay to Bridge, as liquidated
damages and not as a penalty, an amount equal to the lesser of
(a) the aggregate amounts paid by Bridge to SAVVIS under this
Agreement during the six months preceding such Event of
Default by SAVVIS or (b) $50,000,000; provided, however, that
Bridge may recover liquidated damages under this Section only
for an Event of Default by SAVVIS that occurs (i) prior to any
Event of Default by SAVVIS for which Bridge or Telerate or any
Bridge Subsidiary or any Telerate Subsidiary has claimed
liquidated damages under this Section or under the Telerate
Network Services Agreement or under any Local Network Services
Agreement or under any Telerate Local Network Services
Agreement, or (ii) more than 36 months following the most
recent Event of Default by SAVVIS for which Bridge or Telerate
or any Bridge Subsidiary or any Telerate Subsidiary has
claimed liquidated damages under this Section or under the
Telerate Network Services Agreement or under any Local Network
Services Agreement or under any Telerate Local Network
Services Agreement.
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12. LIMITATIONS OF LIABILITY
12.1. Subject to Section 11.4, neither party shall be liable to the
other for indirect, incidental, consequential, exemplary,
reliance or special damages, including damages for lost
profits, regardless of the form of action whether in contract,
indemnity, warranty, strict liability or tort, including
negligence of any kind with respect to the Networks or other
conduct under this Agreement.
12.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, including fraud, or (b) injury or death, or damage
to tangible real or tangible personal property or the
environment, when proximately caused by SAVVIS' or Bridge's
negligence or that of their respective agents, subcontractors
or employees. Nothing contained in this Section shall limit
SAVVIS' intellectual property indemnification obligations
under Section 16.1 or Bridge's indemnification obligations
with respect to a breach of Section 10.3.
13. EQUIPMENT AND SOFTWARE NOT PROVIDED BY SAVVIS
13.1. SAVVIS shall not be responsible for the installation,
operation or maintenance of equipment or software not provided
by it under this Agreement, nor shall SAVVIS be responsible
for the transmission or reception of information by equipment
or software not provided by SAVVIS hereunder. In the event
that Bridge uses equipment or software not provided by SAVVIS
hereunder in a manner that impairs Bridge's use of the
Networks, Bridge shall not be excused from payment for such
use and SAVVIS shall not be responsible for any failure of the
Networks to meet the Quality of Service Standards resulting
from the use of such equipment or software by Bridge. Upon
notice from SAVVIS that the equipment or software not provided
by SAVVIS under this Agreement is causing or is likely to
cause hazard, interference or service obstruction, Bridge
shall eliminate the likelihood of such hazard, interference or
service obstruction.
13.2. Notwithstanding the foregoing, SAVVIS shall, at no additional
charge, provide all interface specifications for the Networks
reasonably requested by Bridge. SAVVIS shall, upon the receipt
of appropriate specifications from Bridge, inform Bridge of
the compatibility with the Networks of any equipment or
software that Bridge proposes to use in connection therewith,
the effects, if any, of the use of such equipment or software
on the quality, operating characteristics and efficiency of
the Networks, and the effects, if any, of the Networks on the
operating characteristics and efficiency of any such equipment
or software.
14. PROPRIETARY RIGHTS; LICENSE
14.1. SAVVIS hereby grants to Bridge and the Bridge Subsidiaries a
non-exclusive and non-transferable license to use all
programming and software necessary for Bridge and the Bridge
Subsidiaries to use the Networks. Such license is granted
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for the term of this Agreement for the sole purpose of
enabling Bridge and the Bridge Subsidiaries to use the
Networks.
14.2. All title and property rights (including intellectual property
rights) to the Networks (including associated programming and
software) are and shall remain with SAVVIS or the third-party
providers thereof to SAVVIS. Bridge shall not (except as
permitted by applicable law) attempt to examine, copy, alter,
reverse engineer, decompile, disassemble, tamper with or
otherwise misuse the Networks, programming and software.
15. CONFIDENTIALITY
15.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination
(including all extensions thereof), each party agrees to
maintain in strict confidence all Confidential Information.
Neither party shall, without prior written consent of the
other party, use the other party's Confidential Information
for any purpose other than for the performance of its duties
and obligations, and the exercise of its rights, under this
Agreement. Each party shall use, and shall cause all
authorized recipients of the other party's Confidential
Information to use, the same degree of care to protect the
other party's Confidential Information as it uses to protect
its own Confidential Information, but in any event not less
than a reasonable degree of care.
15.2. Notwithstanding Section 15.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or
(c) other persons (including counsel, consultants, lessors or
managers of facilities or equipment used by such party) in
need of access to such information for purposes specifically
related to either party's responsibilities under this
Agreement, provided that any disclosure of Confidential
Information under clause (c) shall be made only upon prior
written approval of the other party and subject to the
appropriate assurances that the recipient of such information
shall hold it in strict confidence.
15.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
15.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a
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reasonable time and, if it determines, in its sole discretion,
to grant the requested waiver, it will do so in writing over
the signature of an employee authorized to grant such request.
15.5. Bridge and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of
which may be difficult to determine, thus potentially making
any remedy at law or in damages inadequate. Each party,
therefore, agrees that the other party shall have the right to
apply to any court of competent jurisdiction for an order
restraining any breach or threatened breach of this Section
and for any other appropriate relief. This right shall be in
addition to any other remedy available in law or equity.
15.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another
party's Confidential Information shall notify the other party
in advance of any such disclosure and, absent the other
party's consent to such disclosure, use its best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
15.7. The provisions of Section 15.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or competent
jurisdiction, or disclosures that may be reasonably necessary
in connection with the sale of securities or the performance
or enforcement of this Agreement or any of the obligations
hereof; provided, however, that if the receiving party would
otherwise be required to refer to or describe any aspect of
this Agreement in any of the preceding circumstances, the
receiving party shall use its reasonable efforts to take such
steps as are available under such circumstances (such as by
providing a summary or synopsis) to avoid disclosure of the
financial terms and conditions of this Agreement.
Notwithstanding any provisions of this Agreement to the
contrary, either party may disclose the terms and conditions
of this Agreement in the course of a due diligence review
performed in connection with prospective debt financing or
equity investment by, or a sale to, a third party, so long as
the persons conducting such due diligence review have agreed
to maintain the confidentiality of such disclosure and not to
use such disclosure for any purpose other such due diligence
review.
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16. INDEMNIFICATIONS
16.1. SAVVIS shall defend, settle, or otherwise manage at its own
cost and expense any claim or action against Bridge or any of
its directors, officers, employees or assigns for actual or
alleged infringement by the Networks of any patent, copyright,
trademark, trade secret or similar proprietary right of any
third party, except to the extent that such actual or alleged
infringement arises from (i) such actual or alleged
infringement by the Acquired Network Facilities on or prior to
the Effective Date or (ii) an act or omission of Bridge or a
Bridge Subsidiary or a vendor or customer of Bridge or a
Bridge Subsidiary or (iii) equipment or software used by
Bridge and not provided by SAVVIS or (iv) services or
equipment provided by or on behalf of Bridge under the
Technical Services Agreement. Bridge shall notify SAVVIS
promptly in writing of any such claim or suit and shall
cooperate with SAVVIS in a reasonable way to facilitate the
settlement or defense thereof. SAVVIS further agrees to
indemnify and hold Bridge harmless from and against any and
all liabilities and damages (whether incurred as the result of
a judicial decree or a settlement), and the costs and expenses
associated with any claim or action of the type identified in
this Section (including reasonable attorneys' fees).
16.2. If, as a consequence of a claim or action of the kind
described in Section 16.1, SAVVIS' or Bridge's use of all or
part of any Network is enjoined, SAVVIS shall, at its option
and expense, either: (a) procure for Bridge the right to
continue using the affected Network; (b) modify such Network
so that they are non-infringing, provided that such
modification does not affect the intended use of the Network
as contemplated hereunder. If SAVVIS does not take any of the
actions described in clauses (a) or (b), then Bridge may
terminate the affected portion of such Network, and SAVVIS
shall refund to Bridge any prepaid charges therefor.
16.3. Subject to Section 12, Bridge will defend, indemnify and hold
harmless SAVVIS or any of its directors, officers, employees
or assigns from and against all loss, liability, damage and
expense, including reasonable attorneys' fees, caused by:
(a) claims for libel, slander, invasion of privacy or
infringement of copyright, and invasion and/or
alteration of private records or data arising from any
information, data or messages transmitted over the
Networks by Bridge; and
(b) claims for infringement of patents arising from the use
by Bridge of equipment and software, apparatus and
systems not provided hereunder in connection with the
Networks; and
(c) the violation of any representations, warranties and
covenants made by Bridge in this Agreement.
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16.4. Subject to Section 12, SAVVIS will defend, indemnify and hold
harmless Bridge or any of its directors, officers, employees
or assigns from and against all loss, liability, damage and
expense, including reasonable attorneys' fees, caused by:
(a) claims for infringement of patents arising from the use
by SAVVIS of equipment and software, apparatus and
systems not provided by SAVVIS hereunder in connection
with the Networks (other than any Acquired Network
Facilities); and
(b) the violation of any representations, warranties and
covenants made by SAVVIS in this Agreement.
17. DISPUTES
17.1. Except as expressly provided in Schedule 4.1 of this
Agreement, the resolution of any and all disputes arising from
or in connection with this Agreement, whether based on
contract, tort, statute or otherwise, including disputes over
arbitrability and disputes in connection with claims by third
persons ("DISPUTES") shall be exclusively governed by and
settled in accordance with the provisions of this Section 17.
The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are
required to be resolved in determining whether to grant such
relief. Resolution of Disputes with respect to claims by third
persons shall be deferred until any judicial proceedings with
respect thereto are concluded.
17.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon
the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause
under applicable law. Either party may serve process or notice
on the other in any arbitration or litigation in accordance
with the notice provisions hereof. The parties agree not to
disclose any information regarding any Dispute or the conduct
of any arbitration hereunder, including the existence of such
Dispute or such arbitration, to any person or entity other
than such employees or representatives of such party as have a
need to know.
17.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the
"ARBITRATION DEMAND") to the other party not sooner than 60
calendar days after the date of delivery of the Dispute Notice
but at any time thereafter. The arbitration shall be conducted
in St. Louis, Missouri.
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17.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Bridge, one
by SAVVIS, and the third by agreement of the other two not
later than 10 days after appointment of the first two, or,
failing such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
17.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the
foregoing, each party shall have the right to inspect the
books and records of the other party that are reasonably
related to the Dispute, and each party shall provide to the
other, reasonably in advance of any hearing, copies of all
documents which such party intends to present in such hearing
and the names and addresses of all witnesses whose testimony
such party intends to present in such hearing.
17.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
17.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees
and expenses in connection with any and all proceedings under
this Section 17.
17.8. Either party may assert appropriate statutes of limitation as
a defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
17.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and SAVVIS shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Networks to
Bridge unless otherwise directed by Bridge. This Section shall
not apply where (a) Bridge is in default under this Agreement
or (b) the dispute or controversy between the parties relates
to harm to the Networks allegedly caused by Bridge and Bridge
does not immediately cease and desist from the activity giving
rise to the dispute or controversy.
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18. FORCE MAJEURE
18.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or
other causes to the extent that such failure and the
consequences thereof are reasonably beyond the control and
without the fault or negligence of the party claiming excuse.
Each party shall, with the cooperation of the other party, use
reasonable efforts to mitigate the extent of any failure to
perform and the adverse consequences thereof.
18.2. If SAVVIS cannot promptly provide a suitable temporary SAVVIS
alternative to all or part of a Network subject to an
interruption in connection with the existence of a force
majeure condition, Bridge may, at its option and at its own
cost, contract with one or more third parties for the affected
portion of the Network for the shortest commercially available
period likely to cover the reasonably expected duration of the
interruption, and may suspend SAVVIS' provision of such
affected portion for such period. SAVVIS shall not charge
Bridge for the affected portion thus suspended during the
period of suspension. SAVVIS shall resume provision of the
suspended portion of the Network upon the later of the
termination or expiration of Bridge's legally binding
commitments under contracts with third parties for alternative
services or the cessation or remedy of the force majeure
condition.
18.3. In the event that a force majeure condition shall continue for
more than 60 days, Bridge may cancel the affected portion of
the Network with no further liability to SAVVIS other than for
obligations incurred with respect to such affected portion
prior to the occurrence of the force majeure condition.
18.4. The consequences arising from existence and continuation of a
force majeure condition, including without limitation any
interruption of the Networks and the exercise by Bridge of its
rights under this Section 18, shall be deemed not to
constitute a breach by either party hereto of any
representations, warranties or covenants hereunder and shall
not be grounds for the exercise of any remedies under this
Agreement, including without limitation remedies under Section
2.2 or Section 7, other than those specified in this Section
18.
19. GENERAL PROVISIONS
19.1. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than
the parties and their respective successors and permitted
assigns.
19.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior
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understandings, agreements, or representations by or between
the parties, written or oral, to the extent they related in
any way to the subject matter hereof.
19.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other party, which consent shall not be
unreasonably withheld.
19.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
19.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
19.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Bridge: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General
Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other
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communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.
19.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri without giving effect to any choice or conflict of
law provision or rule (whether of the State of Missouri or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Missouri.
19.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Bridge. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent
such occurrence.
19.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
19.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
19.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
19.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Network
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
SAVVIS COMMUNICATIONS CORPORATION
By /s/ Steven M. Gallant
----------------------------------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
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BRIDGE INFORMATION SYSTEMS, INC.
By /s/ Daryl A. Rhodes
----------------------------------------
Name: Daryl A. Rhodes
Title: Executive Vice President
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SCHEDULE 2.2
QUALITY OF SERVICE STANDARDS
1. Starting one year from the Effective Date, the Acquired Network
Facilities and Additional Network Facilities that are connected to the
St. Louis hub where Bridge houses the data distributed over the
Distribution Network (the "ST. LOUIS HUB") by fully redundant paths
shall be covered by Quality of Service Standards outlined below. These
provisions shall be applicable to Installation Sites performing within
the bandwidth limitations set forth in Section 7.2 of Schedule 3.1 or,
with respect to the SAVVIS Backbone, to be agreed upon, and shall be
measured in performance relative to the St. Louis Hub.
2. For the SAVVIS Backbone supporting the Collection Network and
Distribution Network:
(a) There shall not be less than 99.99% availability to any SAVVIS POP
supporting Installation Sites during each one month period during
the Market Hours applicable to the POP connected to the St. Louis
Hub.
(b) The average round-trip terrestrial latency period to SAVVIS POP
locations supporting Installation Sites during each one-month
period shall not exceed:
(i) 75 milliseconds within the United States,
(ii) 250 milliseconds to Australia, Eastern Asia, Europe, and
North America,
(iii) 425 milliseconds to all other areas, including South
America, Middle East, Africa, New Zealand and India.
3. For Installation Sites, network availability shall be measured in terms
of server upstream connectivity during Market Hours for each one-month
period. Resultant availability to the Installation Sites shall be not
less than 99.99% based on the following criteria:
(a) All server disconnects will be considered as potential network
outages.
(b) Disconnects which are attributed to bandwidth limitations, process
failures, and server faults will be eliminated from the sample
population.
(c) Remaining disconnects that reflect total outage conditions on both
redundant pieces of the network shall be considered a network
outage to the Installation Site. The time duration of the network
outage shall be used to determine the availability percentage.
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3. SAVVIS will continue to monitor performance of the acquired Bridge OA
Network. Performance problems with specific OA sites will be resolved
jointly by Bridge and SAVVIS.
4. CREDIT AMOUNTS
Amounts to be credited if the Quality of Service Standards are not met
with respect to a particular Installation Site in any month shall be as
follows, plus (other than in Distributor Countries) the actual charges
for Installation Site Local Access Facilities, permanent virtual
circuits or other means for connecting such Installation Site to the
SAVVIS POP:
<TABLE>
<CAPTION>
CONNECTION MONTHLY MONTHLY MONTHLY MONTHLY CREDIT
SPEED CREDIT CREDIT CREDIT [DISTRIBUTOR
[UNITED STATES] [EUROPE] [ASIA] [COUNTRIES]
<S> <C> <C> <C> <C>
T1 [*] [*] [*] [*]
E1 [*] [*] [*] [*]
256 KBS [*] [*] [*] [*]
128 KBS [*] [*] [*] [*]
64 KBS [*] [*] [*] [*]
56 KBS [*] [*] [*] [*]
ISDN [*] [*] [*] [*]
</TABLE>
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
27
<PAGE>
SCHEDULE 3.1
PRICING
1. DEFINITIONS.
1.1. "BACKBONE LOCAL ACCESS FACILITIES" means the local access line or
other local communications circuit provided by a local exchange
carrier connecting long-haul circuits to a SAVVIS POP.
1.2. "INITIAL POP THRESHOLD REVENUE" with respect to any metropolitan
area means an amount equal to 2.5 times the sum of:
(a) (i) [*] if the POP is built by SAVVIS,
(ii) [*] if the POP is leased to SAVVIS, plus
(b) the actual cost to SAVVIS of extending two redundant circuits
of the SAVVIS long-haul circuits to a SAVVIS POP in such
metropolitan area, plus
(c) the actual cost to SAVVIS for Backbone Local Access
Facilities connecting the two redundant long-haul circuits to
such SAVVIS POP, plus
(d) the actual cost to SAVVIS of obtaining collocation and power
for such SAVVIS POP.
1.3. "INSTALLATION SITE" means any facility of Bridge or a Bridge
Subsidiary or of vendors or customers of Bridge or a Bridge
Subsidiary at which one or more of the Networks is installed.
1.4. "INSTALLATION SITE LOCAL ACCESS FACILITIES" means the local access
line or other local communications circuit provided by a local
exchange carrier connecting an Installation Site to a SAVVIS POP.
1.5. "LOCAL ACCESS FACILITIES" means the local access line or other
local communications circuit provided by a local exchange carrier.
1.6. "POP" means point-of-presence.
1.7. "SAVVIS BACKBONE" means the collection of long-haul circuits,
Backbone Local Access Facilities and POPS, including switching and
routing equipment, that are owned by, or leased to, SAVVIS
providing telecommunications utilizing the Internet Protocol,
excluding any Installation Site Local Access Facilities.
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1.8. "SUBSEQUENT POP THRESHOLD REVENUE" with respect to any
metropolitan area means an amount equal to 2.5 times the sum of:
(a) (i) [*] if the POP is built by SAVVIS, or
(ii) [*] if the POP is leased by SAVVIS, plus
(b) the actual cost to SAVVIS of connecting a second switch to
an existing switch in such metropolitan area by means of a
DS3 circuit, plus
(c) the actual cost to SAVVIS of obtaining collocation and power
for such second switch.
1.9. "POP SITE" means any Installation Site that accesses a SAVVIS POP
by means of Local Access Facilities.
1.10. "NON-POP SITE" means any Installation Site other than a POP Site.
2. FIRST-YEAR PRICE FOR NETWORKS USING ACQUIRED NETWORK FACILITIES
2.1. For the first Agreement Year in the Initial Term of this
Agreement, Bridge and the Bridge Subsidiaries shall pay SAVVIS and
the SAVVIS Subsidiaries for the Networks using the Acquired
Network Facilities plus the Short-Term Call Assets in the
aggregate amount determined as follows, but in any event not less
than [*] per month from the Effective Date, such amount to be
allocated between this Agreement and the Local Network Services
Agreements substantially in the form attached as Exhibit A hereto:
(a) The sum of:
(i) the actual cost to Bridge of operating the Networks as
of October 31, 1999, as set forth in Schedule 3.1-A
hereto; plus
(ii) the actual cost to Bridge of the employees transferred
from Bridge to SAVVIS for the operation of the
Networks, determined on the basis of the actual
salaries of such employees, as set forth in Schedule
3.1-A hereto, plus a benefits loading factor to be
mutually agreed upon;
(b) less the actual cost to Bridge of backbone circuits and
associated Backbone Local Access Facilities removed or
replaced subsequent to October 31, 1999, and prior to the
Effective Date;
(c) plus, (i) with respect to the Distribution Network, the
actual cost to SAVVIS as of the Effective Date of backbone
circuits and associated Backbone Local Access added or
substituted or used in part by any party other than Bridge,
subsequent to October 31, 1999, multiplied by the
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<PAGE>
proportionate megabit reserved usage of such circuits as
ordered by Bridge under this Agreement as of the Effective
Date, and further multiplied by [ * ]; or
(ii) with respect to the Collection Network and the OA
Network, the actual cost to SAVVIS as of the Effective Date
of backbone circuits and associated Backbone Local Access
Facilities added or substituted subsequent to October 31,
1999, and prior to the Effective Date, multiplied by [*];
(d) plus the actual cost to Bridge of the additional
Installation Site Local Access Facilities added subsequent
to October 31, 1999, and prior to the Effective Date.
The pricing under the Local Network Services Agreement shall be
as set forth in this Schedule 3.1, according to the geographic
territory applicable to such Local Network Services Agreement;
provided that the pricing for Installation Sites in Latin America
and Installation Sites connected to the Networks by satellite
shall be mutually agreed upon following an analysis to be
conducted by the parties of the costs pertaining to such
Installation Sites. Such pricing shall be determined in a manner
reasonably consistent with the pricing for other Installation
Sites. In the event that the parties are unable to reach
agreement on such pricing after exercising good faith efforts to
do so over a reasonable period of time, such pricing shall be
determined by binding arbitration as provided below. Charges
under each such Local Network Services Agreement shall be billed
locally, in local currency.
3. FIRST-YEAR PRICES AT ADDITIONAL POP SITES
3.1. For the first Agreement Year in the Initial Term of this
Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities in the United States, as follows:
(a) [*] per month for each T1 port, reflecting the cost of
equipment, hardware maintenance, the provision of a
diagnostic dial-up line, and the use of the SAVVIS Backbone,
plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
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<PAGE>
3.2. For the first Agreement Year in the Initial Term of this
Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities in Europe, as follows:
(a) an amount per month to be determined on an individual case
basis for each E1 port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
3.3. For the first Agreement Year in the Initial Term of this
Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities in Asia, as follows:
(a) an amount per month to be determined on an individual case
basis for each E1 port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
3.4. In the event that Bridge wishes to attach any additional servers
to a router having a single E1 port, or any fraction thereof, at
any POP Site, SAVVIS will provide such service at the rate of [*]
per month for each such additional server for the first Agreement
Year in the Initial Term of this Agreement.
3.5. Following the first Agreement Year in the Initial Term of this
Agreement, the rates and charges for the Networks using
Additional Network Facilities at any new POP Site shall be
mutually agreed upon by the parties from time to time and set
forth in an Addendum to this Agreement in the manner set forth in
Section 1.2 of this Agreement and Section 9.1 of this Schedule.
If the parties fail to reach agreement on any such Addendum prior
to the expiration of the Addendum then in effect, the rates and
charges shall be determined by binding arbitration as provided
below.
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<PAGE>
4. FIRST-YEAR PRICES FOR ADDITIONAL NON-POP SITES IN THE UNITED STATES
4.1. 56 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site in the
United States at which one or more 56 Kbps ports are provided, as
follows:
(a) [*] per month for each 56 Kbps port, reflecting the cost of
equipment, hardware maintenance, the provision of a
diagnostic dial-up line, and the use of the SAVVIS Backbone,
plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
4.2. 128 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more 128 Kbps ports are provided, as follows:
(a) [*] per month for each 128 Kbps port, reflecting the cost of
equipment, hardware maintenance, the provision of a
diagnostic dial-up line, and the use of the SAVVIS Backbone,
plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
4.3. 256 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more 256 Kbps ports are provided, as follows:
(a) [*] per month for each 256 Kbps port, reflecting the cost of
equipment, hardware maintenance, the provision of a
diagnostic dial-up line, and the use of the SAVVIS Backbone,
plus
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<PAGE>
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
4.4. ISDN BACK-UP LINE. In the event that Bridge wishes to use an ISDN
back-up line in lieu of full redundancy at any Non-POP Site at
which one or more 56 Kbps ports or 128 Kbps ports are provided as
Additional Network Facilities, SAVVIS will provide such service at
the following rate for the first Agreement Year in the Initial
Term of this Agreement:
(a) [*] per month for each ISDN line, reflecting the cost of
equipment and the use of the SAVVIS Backbone, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits, basic rate interface
or other means for connecting such Installation Site to the
SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
5. FIRST-YEAR PRICES FOR ADDITIONAL NON-POP SITES IN EUROPE
5.1. 64 KBPS SITES. For the first Agreement Year in the Initial Term of
this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site in Europe at
which one or more 64 Kbps ports are provided, as follows:
(a) [*] per month ([*] per month in a Distributor Country) for
each 64 Kbps port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
5.2. 128 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional
33
<PAGE>
Network Facilities at any new Non-POP Site at which one or
more 128 Kbps ports are provided, as follows:
(a) [*] per month ([*] per month in a Distributor Country) for
each 128 Kbps port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
5.3. 256 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more 256 Kbps ports are provided, as follows:
(a) an amount per month to be determined on an individual case
basis for each 256 Kbps port, reflecting the cost of
equipment, hardware maintenance and the provision of a
diagnostic dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
5.4. E1 SITES. For the first Agreement Year in the Initial Term of this
Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more E1 ports are provided, as follows:
(a) [*] per month ([*] per month in a Distributor Country) for
each E1 port, reflecting the cost of equipment, hardware
maintenance and the provision of a diagnostic dial-up line,
plus
34
<PAGE>
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
5.5. ISDN BACK-UP LINE. In the event that Bridge wishes to use an ISDN
back-up line in lieu of full redundancy at any Non-POP Site at
which one or more 64 Kbps ports or 128 Kbps ports are provided as
Additional Network Facilities, SAVVIS will provide such service at
the following rate for the first Agreement Year in the Initial
Term of this Agreement:
(a) [*] per month ([*] per month in a Distributor Country) for
each ISDN line, reflecting the cost of equipment, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits, basic rate interface
or other means for connecting such Installation Site to the
SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
6. FIRST-YEAR PRICES FOR ADDITIONAL NON-POP SITES IN ASIA
6.1. 64 KBPS SITES. For the first Agreement Year in the Initial Term of
this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site in the
United States at which one or more 64 Kbps ports are provided, as
follows:
(a) [*] per month ([*] per month in a Distributor Country) for
each 64 Kbps port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
6.2. 128 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more 128 Kbps ports are provided, as follows:
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<PAGE>
(a) [*] per month ([*] per month in a Distributor Country) for
each 128 Kbps port, reflecting the cost of equipment,
hardware maintenance and the provision of a diagnostic
dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
6.3. 256 KBPS SITES. For the first Agreement Year in the Initial Term
of this Agreement, Bridge shall pay SAVVIS for the Networks using
Additional Network Facilities at any new Non-POP Site at which one
or more 256 Kbps ports are provided, as follows:
(a) an amount per month to be determined on an individual case
basis for each 256 Kbps port, reflecting the cost of
equipment, hardware maintenance and the provision of a
diagnostic dial-up line, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
6.4. ISDN BACK-UP LINE. In the event that Bridge wishes to use an ISDN
back-up line in lieu of full redundancy at any Non-POP Site at
which one or more 56 Kbps ports or 128 Kbps ports are provided as
Additional Network Facilities, SAVVIS will provide such service at
the following rate for the first Agreement Year in the Initial
Term of this Agreement:
(a) [*] per month for each ISDN line, reflecting the cost of
equipment and the use of the SAVVIS Backbone, plus
(b) the actual charges for Installation Site Local Access
Facilities, permanent virtual circuits, basic rate interface
or other means for connecting such Installation Site to the
SAVVIS POP, plus
(c) the actual cost to SAVVIS of installing at such Installation
Site the equipment referred to in clause (a) and the
connection referred to in clause (b).
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<PAGE>
7. REDUNDANCY AND BANDWIDTH USAGE
7.1. The amount due to SAVVIS from Bridge for providing the Networks
using Additional Network Facilities at any new Installation Site
having full redundancy will be two times the amount due under
Sections 3.1, 3.2, 3.3, 4, 5 or 6 above with respect to a single
port.
7.2. Bandwidth usage of any port provided to Bridge by SAVVIS under
this Agreement, including both the Acquired Network Facilities and
any Additional Network Facilities, shall not exceed 128 Kbps. In
the event that Bridge wishes to obtain bandwidth usage in excess
of 128 Kbps on any such port, such usage shall be provided for in
an Addendum hereto mutually agreed upon by the parties in the
manner set forth in Section 1.2 of the Agreement.
8. CONVERSION TO POP SITES AND INSTALLATION OF SECOND SWITCH
8.1. In the event that the aggregate amount that would be paid by
Bridge to SAVVIS with respect to Non-POP Sites specified by Bridge
in a metropolitan area if such sites were converted to POP Sites
equals or exceeds the Initial POP Threshold Revenue per month
applicable to such metropolitan area, then, upon written request
from Bridge, SAVVIS shall (i) install a switch in a SAVVIS POP in
such metropolitan area capable of being accessed by means of a
connection using only Installation Site Local Access Facilities,
(ii) extend the SAVVIS Backbone to such SAVVIS POP with two
redundant circuits, and (iii) convert such Non-POP Sites to POP
Sites.
8.2. In the event that, following the installation by SAVVIS of a
switch and the conversion of Non-POP Sites to POP Sites pursuant
to Section 8.1 above, the aggregate amount that would be paid by
Bridge to SAVVIS with respect to additional Non-POP Sites in a
specified metropolitan area if such sites were converted to POP
Sites equals or exceeds the Subsequent POP Threshold Revenue per
month applicable to such metropolitan area, then, upon written
request from Bridge, SAVVIS shall (i) install a second switch in a
SAVVIS POP in such metropolitan area capable of being accessed by
means of a connection using only Installation Site Local Access
Facilities, (ii) connect the two switches by means of a circuit
having appropriate transmission capacity, and (iii) convert such
additional Non-POP Sites to POP Sites.
9. DETERMINATION OF RATES AND CHARGES AFTER FIRST AGREEMENT YEAR
9.1. For each Agreement Year following the first Agreement Year of this
Agreement, the rates and charges for the Networks and any
Additional Network Facilities shall be mutually agreed upon by the
parties from time to time in an Addendum to this Agreement in the
manner set forth in Section 1.2 of this Agreement; provided that,
in Europe or Asia where the Additional Network Facilities charge
does not include a Backbone component, the charge for any Backbone
circuit in
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<PAGE>
the Distribution Network that is not used exclusively for the
carriage of Bridge traffic under this Agreement shall be charged
to Bridge according to the actual cost to SAVVIS of such backbone
circuit multiplied by the proportionate megabit usage of such
circuits by Bridge under this Agreement as of the Effective Date,
and further multiplied by [*]. If the parties fail to reach
agreement on any such Addendum prior to the expiration of the
Addendum then in effect, the rates and charges shall be determined
by binding arbitration, as follows:
9.2. The arbitration shall be conducted by a single arbitrator jointly
selected by the parties, who shall be an attorney experienced and
knowledgeable in the tariffs and pricing of telecommunications
services (the "ARBITRATOR"). If the parties are unable to agree on
the selection of the Arbitrator within 30 days, either party may
apply to the United States District Court for the Eastern District
of Missouri or to the Circuit Court of St. Louis County for the
appointment of the Arbitrator.
(b) Within 10 days following the appointment of the Arbitrator,
each party shall submit to the Arbitrator such party's best
and final offer for the rates and charges to be set forth in
such Addendum.
(c) The Arbitrator must select the offer of one party or the
other as being closer to the Arbitrator's own assessment of
what an independent vendor would charge for services similar
in nature and volume to those to be covered by such Addendum
(the "INDEPENDENT VENDOR PRICE").
(d) The decision of the Arbitrator shall be final and binding on
the parties and shall be incorporated in this Agreement as
an Addendum hereto.
(e) Each party shall bear its own costs in conducting the
arbitration, and the non-prevailing party shall pay the fees
and expenses of the Arbitrator.
9.3. At the time any Addendum is entered into with respect to the rates
and charges for any POP Site, the amount charged to Bridge for the
T-1 ports at such Installation Site shall be not more than the
Independent Vendor Price for providing such ports at such
Installation Site, as mutually agreed by the parties or as
determined by the Arbitrator under Sections 9.1 and 9.2, reduced
by [*]of the excess, if any, of the Independent Vendor Price for
providing such ports over the actual cost to SAVVIS of providing
such ports at such Installation Site.
10. MINIMUM ANNUAL COMMITMENT
10.1.If the aggregate amounts paid by Bridge and the Bridge
Subsidiaries to SAVVIS and the SAVVIS Subsidiaries for the
Networks hereunder for any Agreement Year during the Initial Term
of this Agreement, using not only the Acquired Network Facilities
but also any Additional Network Facilities, is less than the
Minimum Annual Commitment (as defined below), then the amount of
such
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<PAGE>
deficiency shall be payable by Bridge to SAVVIS upon the receipt
by Bridge of an invoice therefor, in accordance with Section 5 of
the Agreement.
10.2. The "MINIMUM ANNUAL COMMITMENT" shall mean:
(a) With respect to the first Agreement Year during the Initial
Term, the amount set forth in Section 2.1 of this Schedule
3.1;
(b) With respect to the second Agreement Year during the Initial
Term, 110% of the amount set forth in Section 2.1 of this
Schedule 3.1;
(c) With respect to the third Agreement Year during the Initial
Term, 120% of the amount set forth in Section 2.1 of this
Schedule 3.1;
(d) With respect to the fourth, fifth and sixth Agreement Years
during the Initial Term, an amount equal to 80% of the total
amount paid by Bridge and all Bridge Subsidiaries during
such Agreement Year to SAVVIS, SAVVIS Subsidiaries and third
parties for Internet Protocol backbone and other data
transport services;
(e) With respect to the seventh, eighth, ninth and tenth
Agreement Years during the Initial Term, an amount equal to
60% of the total amount paid by Bridge and all Bridge
Subsidiaries during such Agreement Year to SAVVIS, SAVVIS
Subsidiaries and third parties for Internet Protocol
backbone and other data transport services.
10.3. With respect to the fourth Agreement Year and each Agreement Year
thereafter, SAVVIS shall have the right, at reasonable times and
on reasonable notice, but not more often than once during any
Agreement Year, to audit the books and records of Bridge and the
Bridge Subsidiaries in order to determine the total amount paid
by Bridge and the Bridge Subsidiaries during an Agreement Year to
SAVVIS, SAVVIS Subsidiaries and third parties for Internet
Protocol backbone and other data transport services. Such audits
may be conducted either by SAVVIS personnel or by outside
auditors retained by SAVVIS for such purpose, subject to the
consent of Bridge to such outside auditors, such consent not to
be unreasonably withheld or delayed. Such audits shall be
conducted at the expense of SAVVIS, including any additional cost
to Bridge in obtaining the cooperation of Bridge's outside
auditors that may be required; provided, that if the actual total
amount paid by Bridge and the Bridge Subsidiaries during an
Agreement Year to SAVVIS, SAVVIS Subsidiaries and third parties
for Internet Protocol backbone and other data transport services
is determined by such audit to be 105% or more of the amount
initially claimed by Bridge with respect to such Agreement Year,
then the cost of such audit shall be borne by Bridge.
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<PAGE>
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
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SCHEDULE 3.1-A
ACTUAL COST AMOUNTS
1. The parties agree that the actual cost to Bridge of operating the
Networks as of October 31, 1999, is $10,100,000.
2. The parties agree that the actual cost to Bridge of the employees
transferred from Bridge to SAVVIS for the operation of the
Networks, determined on the basis of the actual salaries of such
employees, is $562,614.
3. SAVVIS shall have the right, at reasonable times and on
reasonable notice, to audit the books and records of Bridge in
order to verify the amounts set forth in paragraphs 1 and 2
above. Such audits shall be conducted within 120 days after the
Effective Date, and may be conducted either by SAVVIS personnel
or by outside auditors retained by SAVVIS for such purpose,
subject to the consent of Bridge to such outside auditors, such
consent not to be unreasonably withheld or delayed. Such audits
shall be conducted at the expense of SAVVIS, including any
additional cost to Bridge in obtaining the cooperation of
Bridge's outside auditors that may be required.
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SCHEDULE 5.2
INSTALLATION SITE REMOVAL AMOUNTS
Amounts by which each monthly invoice from SAVVIS to Bridge shall be
reduced resulting from the removal of a particular Installation Site
shall be as follows during the first Agreement Year, according to the
connection speed at such Installation Site, plus (other than in
Distributor Countries) the actual charges for Installation Site Local
Access Facilities, permanent virtual circuits or other means for
connecting such Installation Site to the SAVVIS POP:
UNITED STATES:
INSTALLATION SITES INSTALLATION SITES
EXISTING AS OF ADDED AFTER
CONNECTION SPEED THE EFFECTIVE DATE THE EFFECTIVE DATE
T1 [*] [*]
256 KBS [*] [*]
128 KBS [*] [*]
56 KBS [*] [*]
ISDN [*] [*]
EUROPE:
<TABLE>
<CAPTION>
INSTALLATION SITES INSTALLATION SITES
AS OF ADDED AFTER DISTRIBUTOR
CONNECTION SPEED EFFECTIVE DATE EFFECTIVE DATE COUNTRY
<S> <C> <C> <C>
256 KBS [*] [*] [*]
128 KBS [*] [*] [*]
64 KBS [*] [*] [*]
ISDN [*] [*] [*]
E1 [*] [*] [*]
</TABLE>
42
<PAGE>
ASIA:
<TABLE>
<CAPTION>
INSTALLATION SITES INSTALLATION SITES
AS OF ADDED AFTER DISTRIBUTOR
CONNECTION SPEED EFFECTIVE DATE EFFECTIVE DATE COUNTRY
<S> <C> <C> <C>
256 KBS [*] [*] [*]
128 KBS [*] [*] [*]
64 KBS [*] [*] [*]
ISDN [*] [*] [*]
E1 [*] [*] [*]
</TABLE>
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
43
<PAGE>
EXHIBIT A
TO NETWORK SERVICES AGREEMENT
FORM OF LOCAL
NETWORK SERVICES AGREEMENT
This LOCAL NETWORK SERVICES AGREEMENT (the "Agreement") is effective as
of ___________, 2000 (the "Effective Date") between [local SAVVIS entity], a
[limited liability company] incorporated under the laws of [country ] ("SAVVIS")
and [local Bridge/Telerate entity], a [limited liability company] incorporated
under the laws of [country] ("Customer").
RECITALS
A. Customer is engaged in the business of collecting and distributing
various financial, news and other data in [country] (the "JURISDICTION").
B. SAVVIS is engaged in the business of providing Internet Protocol
backbone and other data transport services in the Jurisdiction.
C. SAVVIS Communications and [Bridge Parent]/[Telerate Parent] have
entered into the Network Services Agreement for the provision and receipt of
similar services on a world-wide basis at the parent level as are being provided
and received by the parties to this Agreement within the Jurisdiction.
D. Together with this Agreement, SAVVIS is entering into certain other
agreements with Customer, or Affiliates of the Customer, related to their
operations in the Jurisdiction, including Local Transfer Agreements, Equipment
Collocation Permits, and Local Administrative Services Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Local Network Services
Agreement by and between SAVVIS and Customer, including all
addenda to this Agreement entered into in the manner set forth
herein (each an "ADDENDUM" and collectively the "ADDENDA"). This
Agreement shall be interpreted wherever possible to avoid
conflicts between the Sections hereof and the Addenda, provided
that if such a conflict shall arise, the Addenda shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an Addendum
to this Agreement, either party
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may initiate the process of determining such matter by
submitting a proposed outline or contents of such Addendum to
the other party. Each party shall appoint a primary contact
and a secondary contact for the completion of such Addendum,
who shall be the contact points for every issue concerning
such Addendum and who shall be informed of the progress of the
project. The names of the contacts will be exchanged in
writing by the parties. Using the contacts, the parties shall
work together in good faith with such diligence as shall be
commercially reasonable under the circumstances to complete
such Addendum, provided, however, that neither party shall be
obligated to enter into such an Addendum. Upon the completion
of such Addendum, it shall be set forth in a written document
and executed by the parties and shall become a part of this
Agreement and shall be deemed to be incorporated herein by
reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined
terms shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included"
and "including" shall not be construed as terms of limitation.
Capitalized terms not otherwise defined herein have the
meanings assigned to such terms in the Network Services
Agreement.
"ACQUIRED NETWORK FACILITIES" means the assets and contracts
for the provision of Internet Protocol backbone and other data
transport services within the Jurisdiction to the extent
acquired by SAVVIS pursuant to the Local Transfer Agreement
between Customer, or Affiliates of the Customer, and SAVVIS.
"ADDITIONAL NETWORK FACILITIES" means any assets and contracts
of SAVVIS for the provision of Internet Protocol backbone and
other data transport services other than the Acquired Network
Facilities.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" means a period of 12 months beginning on the
Effective Date and each subsequent anniversary thereof.
["BRIDGE PARENT" means Bridge Information Systems, Inc., a
Missouri corporation, and its successors and assigns.]
"CONFIDENTIAL INFORMATION" means all information concerning
the business of Customer, SAVVIS or any third party doing
business with either of them that may be obtained from any
source (i) by SAVVIS by virtue of its performance under this
Agreement or (ii) by Customer by virtue of its use of the
Networks. Such information shall also include the terms of
this Agreement (and negotiations and proposals from one party
to the other related directly thereto), network designs and
design recommendations, tools and programs, pricing, methods,
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processes, financial data, software, research, development,
strategic plans or related information. All such information
disclosed prior to the execution of this Agreement shall also
be considered Confidential Information for purposes of this
Agreement. Confidential Information shall not include
information that:
(a) is already rightfully known to the receiving party
at the time it is obtained by such party, free
from any obligation to keep such information
confidential; or
(b) is or becomes publicly known through no wrongful
act of the receiving party; or
(c) is rightfully received by the receiving party from
a third party without restriction and without
breach of this Agreement.
"CUSTOMER" means [local Bridge/Telerate entity], a [limited
liability company] incorporated under the laws of [country],
and its successors and assigns.
"DISTRIBUTOR COUNTRY" means any country in which the products
and services of Bridge and Bridge Subsidiaries are provided
through third-party distributors.
"EFFECTIVE DATE" means the date set forth in the Preamble of
this Agreement.
"EVENT OF DEFAULT BY SAVVIS" has the meaning assigned to such
term in Section 7.1 of this Agreement.
"INITIAL TERM" means a period of ten consecutive Agreement
Years beginning on the Effective Date.
"INSTALLATION SITE" means any facility of Customer or of
vendors or customers of Customer at which one or more of the
Networks is installed.
"LOCAL EXCHANGE CARRIER" means the local telecommunications
provider(s) from which SAVVIS leases the lines it makes
available to Customer.
"LOCAL [TELERATE]/[BRIDGE] NETWORK SERVICES AGREEMENT" means a
local network services agreement pursuant to which SAVVIS
shall provide Internet Protocol backbone and other data
transport services to an Affiliate of [Telerate
Parent]/[Bridge Parent] operating in the Jurisdiction.
"MARKET HOURS" means, with respect to any Installation Site,
the period of time beginning two hours before the time at
which trading opens on the principal securities exchange or
automated quotation system designated by Customer in writing
from time to time as being used by the purchasers and sellers
of securities at such Installation Site, and ending two hours
after the time at which such trading ceases to be conducted.
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<PAGE>
"NETWORK" and "NETWORKS" have the meaning assigned to such
terms in Section 2.1 of this Agreement.
"NETWORK SERVICES AGREEMENT" means the Network Services
Agreement between SAVVIS Communications and [Bridge
Parent]/[Telerate Parent], effective as of February 14, 2000.
"POP" means point-of-presence.
"QUALITY OF SERVICE STANDARDS" means the standards for the
performance of the Networks contained in Schedule 2.2 hereto
or an Addendum to this Agreement.
"SAVVIS" means [local SAVVIS entity], a [limited liability
company] incorporated under the laws of [country ], and its
successors and assigns.
"SAVVIS COMMUNICATIONS" means SAVVIS Communications
Corporation, a Missouri corporation, its successors and
assigns.
"SECURITIES EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended.
"TAIL CIRCUIT" means the access line or other communications
circuit from the SAVVIS POP to an Installation Site.
["TELERATE PARENT" means Telerate Holdings, Inc., a Delaware
corporation, and its successors and assigns.]
"TRANSITION PERIOD" has the meaning assigned to such term in
Section 6.3 of this Agreement.
2. THE NETWORKS AND QUALITY OF SERVICE STANDARDS
2.1. SAVVIS agrees to use the Acquired Network Facilities to
provide to Customer the following managed packet-data
transport networks, including the operation, management and
maintenance thereof:
(a) that portion of a global office-automation network
located in the Jurisdiction, providing connectivity
between the offices of Customer, Bridge Parent and
Affiliates of Bridge Parent (the "OA NETWORK"),
(b) that portion of a global data collection network
located in the Jurisdiction (the "COLLECTION
NETWORK") and
(c) that portion of a global data distribution network
located in the Jurisdiction (the "DISTRIBUTION
NETWORK"),
4
<PAGE>
which shall be referred to in this Agreement
collectively as the "NETWORKS" and individually as a
"NETWORK."
2.2. Each Network shall be operated, managed and maintained by
SAVVIS. SAVVIS may, but shall not be obligated to, use
facilities of SAVVIS other than the Acquired Network
Facilities to provide all or any part of any Network.
Beginning on the first anniversary of the Effective Date and
thereafter, each Network shall be operated, managed and
maintained by SAVVIS according to the Quality of Service
Standards set forth in Schedule 2.2 hereof, and SAVVIS shall
be responsible for monitoring the performance of the Networks
with respect to the Quality of Service Standards and shall
provide Customer with monthly reports of such performance. If
the Quality of Service Standards are not met with respect to a
particular Installation Site in any month, Customer shall be
entitled to receive, upon written request by Customer within
30 days of its receipt of the performance report for such
Installation Site for such month, a credit in the amount set
forth on Schedule 2.2 attached hereto (or, in the case of a
Distributor Country, as set forth on Schedule 2.2 to the
Network Services Agreement), which amount shall be deemed to
be one month's charges applicable to such Installation Site
under this Agreement with respect to such month; provided,
however, that Customer shall not be entitled to such credit to
the extent that the failure to meet the Quality of Service
Standards with respect to such Installation Site is due to (i)
an act or omission of Customer or a vendor or customer of
Customer or (ii) equipment or software used by Customer and
not provided by SAVVIS. Not more than one credit of one
month's charges shall be given for a particular Installation
Site for a particular month. The Quality of Service Standards
shall not apply to the provision of Local Access Facilities in
countries in which the products and services of Bridge and
Bridge Subsidiaries are provided through third-party
distributors. For all purposes of this Agreement, including
without limitation the determination of an Event of Default by
SAVVIS, the Quality of Service Standards applicable to a
particular Installation Site in any month shall be deemed to
have been met unless Customer, within 30 days of its receipt
of the performance report for such Installation Site for such
month, requests in writing a credit as set forth above with
respect to such Installation Site for such month.
2.3. [Intentionally omitted.]
2.4. In providing Additional Network Facilities, SAVVIS agrees to
use its best efforts to expedite the provisioning of the
circuits for such Additional Network Facilities in those
instances in which SAVVIS is responsible for provisioning such
circuits, and to use its best efforts to avoid single points
of failure in the engineering design of such Additional
Network Facilities, consistent with the level of redundancy
specified in the applicable Addendum.
2.5. Throughout the term of this Agreement, SAVVIS shall use its
reasonable best efforts to continue to meet the requests of
Customer to enhance the total capacity,
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<PAGE>
geographic extension and performance quality of the Networks,
and to maintain its research and development effort at a level
appropriate to sustain the ability of Customer to compete on
the basis of the quality of the Networks.
3. RATES AND CHARGES
3.1. Customer shall pay SAVVIS for the Networks using the Acquired
Network Facilities and Additional Network Facilities according
to the rates and charges set forth in Schedule 3.1 of the
Network Services Agreement.
3.2. The parties recognize that certain savings might be obtained
by consolidating the multiple Local Access Facilities that are
provided at such building locations on the Effective Date. In
the event that SAVVIS consolidates the multiple Local Access
Facilities at one or more of such building locations and
obtains cost savings as a result thereof, the parties will
mutually agree within 30 days following such consolidation on
the manner in which such savings shall be shared as follows:
(a) between SAVVIS and Customer, if only Customer uses
those consolidated Local Access Facilities; or
(b) between SAVVIS, Customer and the Affiliate of
[Telerate Parent]/[Bridge Parent] that is a party to
the Local [Telerate]/[Bridge] Network Services
Agreement, if both Customer and such Affiliate use
those consolidated Local Access Facilities.
3.3. For any Installation Site to which SAVVIS is providing
services both under this Agreement and a Local
[Telerate]/[Bridge] Network Services Agreement, the rates and
charges applicable to such Installation Site under this
Agreement shall be one-half of the rates and charges that
would otherwise be applicable to such Installation Site under
this Agreement.
4. PROVISION OF TAIL CIRCUITS
4.1. SAVVIS shall use its reasonable efforts to provide a Tail
Circuit to Customer by contracting with the Local Exchange
Carrier for access to the Tail Circuit and causing the Tail
Circuit to be operated, managed, and maintained as necessary
to provide access thereto to Customer. SAVVIS does not
guarantee or warrant the performance of the Tail Circuit or
the performance by the Local Exchange Carrier of its
obligations under any contract between SAVVIS and the Local
Exchange Carrier, applicable laws and regulations, or
standards of the industry.
4.2. Customer shall not use the Tail Circuit in any way that might
cause SAVVIS to violate the terms and conditions under which
access to the Tail Circuit is provided by the Local Exchange
Carrier, whether such terms and conditions be contractual,
regulatory, or other.
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<PAGE>
4.3. Customer shall be responsible for only that portion of SAVVIS'
costs attributable to Customer's own access to and use of the
Tail Circuit. In the event that SAVVIS provides access to any
third party or parties, Customer and SAVVIS will follow the
procedure set forth in Section 1.2 above in order to establish
a mutually agreed upon method or formula for determining the
amount to be charged to Customer, generally based on a pro
rata allocation of SAVVIS' total costs among all its customers
and other relevant considerations and/or fair and reasonable
adjustments in light of the circumstances at that time.
5. INVOICES
5.1. The amounts due to SAVVIS from Customer for the installation,
operation, management and maintenance of the Networks shall be
billed monthly in advance. All items on invoices not the
subject of a bona fide dispute shall be payable by Customer in
legal currency of [jurisdiction] within 30 days from the date
of receipt of the invoice. All amounts not in dispute are
subject to interest charges of 1-1/2 percent that will accrue
daily on all amounts not paid within 30 days of the date of
receipt of the invoice.
5.2. At any time and from time to time, Customer may, by written
notice to SAVVIS, have one or more Installation Sites removed
from the Networks. Each monthly invoice from SAVVIS to
Customer shall reflect a reduction in the amount charged to
Customer for the Networks resulting from any such removal of
Installation Sites. In the case of any Installation Site
removed from the Acquired Network Facilities, such reduction
shall be the sum of:
(a) the actual cost of the Local Access Facilities
connecting the Acquired Network Facilities to such
Installation Site, effective as of such time as
SAVVIS is no longer required to pay such costs, and
(b) the amounts set forth on Schedule 5.2 of the Network
Services Agreement, which are deemed to be one
month's charges applicable to such Installation Site
under this Agreement with respect to such month
during the first Agreement Year, according to the
geographic location and connection speed at such
Installation Site, effective as of such time as such
Installation Site is disconnected from the Networks.
5.3. Customer shall pay any sales, use, federal excise, utility,
gross receipts, state and local surcharges, value added and
similar taxes, charges or levies lawfully levied by a duly
constituted taxing authority against or upon the Networks. In
the alternative, Customer shall provide SAVVIS with a
certificate evidencing Customer's exemption from payment of or
liability for such taxes. All other taxes, charges or levies,
including any ad valorem, income, franchise, privilege or
occupation taxes of SAVVIS shall be paid by SAVVIS.
7
<PAGE>
5.4. Bona fide disputes concerning invoices shall be referred to
the parties' respective representatives who are authorized to
resolve such matters. Any amount to which Customer is entitled
as a result of the resolution of a billing dispute shall be
credited promptly to Customer's account. Any amount to which
SAVVIS is entitled as a result of the resolution of a billing
dispute shall be paid promptly to SAVVIS.
5.5. Against the amounts owed by Customer to SAVVIS under this
Agreement, Customer shall have the right to offset any amounts
owed by SAVVIS to Customer under this Agreement, or otherwise,
including without limitation any amounts paid by Bridge Parent
on behalf of SAVVIS under guarantees by Bridge Parent of
obligations of SAVVIS.
6. TERM AND EXTENSIONS
6.1. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for the Initial Term unless
terminated or extended in accordance with the provisions
hereof.
6.2. The term of this Agreement may be extended by Customer for one
additional five-year period by giving SAVVIS written notice
not less than one year before the scheduled expiration of the
Initial Term.
6.3. Upon the termination of this Agreement in accordance with its
scheduled expiration or by Customer pursuant to Section 7,
SAVVIS will continue to provide the Networks in accordance
with the terms and conditions herein (excluding the Minimum
Annual Commitment) for a period of up to five years after the
effective date of termination (the "TRANSITION PERIOD").
During the Transition Period, Customer shall pay SAVVIS for
the use of the Networks at the rates in effect at the
effective date of termination. If Customer has not completely
transitioned from its use of the Networks after the Transition
Period, SAVVIS will provide the Networks at SAVVIS' then
current list rates. SAVVIS and its successor will cooperate
with Customer until Customer has completely migrated to
another provider.
6.4. The above provisions of this Section 6 notwithstanding, the
term of this Agreement, including the Initial Term and any
extension provided under Section 6.2, and the Transition
Period shall not extend beyond the term or the transition
period of the Network Services Agreement.
7. TERMINATION BY CUSTOMER
7.1. An "EVENT OF DEFAULT BY SAVVIS" shall be deemed to occur if:
(a) SAVVIS has failed to a material degree to perform or
comply with or has violated any material
representation, warranty, term, condition or
8
<PAGE>
obligation of SAVVIS under this Agreement, and SAVVIS
has failed to cure such failure or violation within
60 days after receiving notice thereof from Customer;
or
(b) SAVVIS becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(c) an Event of Default by SAVVIS occurs under the Local
[Telerate]/[Bridge] Network Services Agreement or
SAVVIS Communications defaults under the terms of the
Network Services Agreement.
7.2. Customer shall have the right to terminate this Agreement,
with no liability to SAVVIS other than for charges (less any
applicable credits) for the Networks provided prior to such
termination, if:
(a) Customer provides written notice to SAVVIS, at any
time after the ninth anniversary of the Effective
Date, of Customer's intent to terminate, such
termination to be effective not less than one year
following the date of such notice; or
(b) Customer provides 10 days written notice of its
intent to terminate in the event that an Event of
Default by SAVVIS occurs.
7.3. For purposes of Section 7.1(a), if the Quality of Service
Standards are not met with respect to a particular
Installation Site in any month, SAVVIS shall be deemed to have
cured such failure within 60 days if the Quality of Service
Standards are met with respect to such Installation Site in
the following month. The parties acknowledge and agree that
the failure of the Quality of Service Standards to be met with
respect to one or more Installation Sites in one or more
months may, but does not necessarily, constitute a failure by
SAVVIS to a material degree to perform or comply with or a
violation to a material degree of any material representation,
warranty, term, condition or obligation of SAVVIS under this
Agreement.
7.4. As provided in Section 2.2, for all purposes of this
Agreement, including without limitation the determination of
an Event of Default by SAVVIS under this Section, the Quality
of Service Standards applicable to a particular Installation
Site in any month shall be deemed to have been met unless
Customer, within 30 days of its receipt of the performance
report for such Installation Site for such month, requests in
writing a credit as set forth in Section 2.2 with respect to
such Installation Site for such month.
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8. TERMINATION BY SAVVIS
8.1. SAVVIS shall have the right to terminate this Agreement if:
(a) Customer has failed to pay any invoice that is not
the subject of a bona fide dispute within 60 days of
the date on which such payment is due and SAVVIS has
provided Customer with written notice thereof,
provided that Customer shall have a further 30 days
from the time it receives such notice from SAVVIS of
nonpayment to cure any such default;
(b) SAVVIS provides 10 days written notice of its intent
to terminate in the event that Customer has failed to
perform or comply with or has violated any material
representation, warranty, term, condition or
obligation of Customer under this Agreement, and
Customer has failed to cure such failure or violation
within 60 days after receiving notice thereof from
SAVVIS; or
(c) Customer becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(d) SAVVIS becomes entitled to terminate the Local
[Telerate]/[Bridge] Network Services Agreement or
SAVVIS Communications becomes entitled to terminate
the Network Services Agreement.
8.2. Notwithstanding the provisions of Section 8.1(b) above, SAVVIS
shall not have the right to terminate this Agreement under
Section 8.1(b) solely for a failure by Customer to perform or
comply with, a violation by Customer of, the obligations of
Customer under Section 15 (Confidentiality) of this Agreement,
without prejudice, however, to such rights as SAVVIS may have
pursuant to such Section and to such rights and remedies to
which SAVVIS may be entitled, at law or in equity, as the
result of an actual or threatened breach by Customer of such
Section.
9. ACCEPTANCE OF ADDITIONAL NETWORK FACILITIES
9.1. Upon the installation of Additional Network Facilities at any
Installation Site, SAVVIS shall conduct appropriate tests to
establish that such Additional Network Facilities perform in
accordance with mutually agreed upon acceptance criteria
("ACCEPTANCE CRITERIA") set forth in the applicable Addendum
entered into pursuant to Section 2.4, and shall promptly
inform Customer of such test results. If test results show
that the Additional Network Facilities are performing in
accordance with the Acceptance Criteria, Customer shall be
deemed to accept the Additional Network Facilities at the
Installation Site immediately.
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9.2. If SAVVIS' tests establish that newly installed Additional
Network Facilities at the Installation Site do not perform in
accordance with the mutually agreed upon Acceptance Criteria,
then SAVVIS shall immediately and diligently exert its best
efforts to bring the Additional Network Facilities at such
Installation Site into compliance. SAVVIS shall not bill
Customer for the Additional Network Facilities at such
Installation Site until the test results show that the
Additional Network Facilities are performing in accordance
with the Acceptance Criteria.
9.3. Upon repair or restoration of any part of the Networks, SAVVIS
shall conduct appropriate tests to establish that the Networks
perform in accordance with mutually agreed upon Acceptance
Criteria and shall promptly inform Customer of such test
results.
10. RIGHTS AND OBLIGATIONS OF CUSTOMER
10.1. SITE PREPARATION. For the installation of Additional Network
Facilities, Customer shall, at its own expense, provide all
necessary preparations of each Installation Site in accordance
with the requirements to be mutually agreed upon by the
parties and set forth in an Addendum hereto, including inside
wiring, demarcation extension and rack mount accessories.
Customer shall ensure that Customer-provided equipment is
on-site by the scheduled installation date. If SAVVIS is
required to reschedule the installation of Customer-provided
equipment because it is not on-site by the scheduled
installation date, Customer shall pay SAVVIS to redispatch
installation personnel.
10.2. PROPER USE OF NETWORKS.
10.2.1. Customer shall use any equipment provided by SAVVIS
in connection with the Networks in accordance with
its documentation, which documentation shall be
provided by SAVVIS at no additional charge. Unless
otherwise provided herein, upon the termination of
this Agreement Customer shall surrender to SAVVIS the
equipment provided by SAVVIS, in good working order,
ordinary wear and tear excepted.
10.2.2. Customer shall be liable for damages to the Networks
caused by the negligence or willful acts or omissions
of Customer's officers, employees, agents or
contractors, for loss through theft or vandalism of
the Networks at the Installation Site, and for
damages to the Networks caused by the use of
equipment or supplies not provided hereunder or not
otherwise authorized by SAVVIS.
10.2.3. Customer shall neither permit nor assist others to
use the Networks for any purpose other than that for
which they are intended, nor fail to maintain a
suitable environment specified by SAVVIS in the
applicable schedule, nor alter, tamper with, adjust
or repair the Networks. Any such alteration,
tampering, adjustment or repair by Customer shall
relieve
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SAVVIS from any liability or obligation hereunder
(including any warranty or indemnity obligation)
relating to the affected Network, and Customer shall
be liable to SAVVIS for any documented direct costs
incurred by SAVVIS as a result of such actions.
10.3. ABUSE OR FRAUDULENT USE OF NETWORKS. Customer shall neither
permit nor assist others to abuse or fraudulently use the
Networks, or to use the Networks for any unauthorized or
illegal purposes, including:
(a) obtaining or attempting to obtain service by any
fraudulent means or device to avoid payment; or
(b) accessing, altering or destroying any information of
another party by any fraudulent means or device, or
attempting to do so; or
(c) using the Networks so as to interfere with the use of
the SAVVIS network by other SAVVIS customers or
authorized users or in violation of law or in support
of any unlawful act; or
(d) using the Networks for voice communications over a
private network in jurisdictions where such use is
not allowed.
Notwithstanding the provisions of Section 8, upon the breach
of this Section 10.3 by Customer, SAVVIS shall have the right
to terminate this Agreement immediately upon written notice to
Customer.
10.4. COVENANT NOT TO COMPETE.
10.4.1. As an inducement to SAVVIS to enter into this
Agreement, which Customer acknowledges is of benefit
to it, and in consideration of the promises and
representations of SAVVIS under this Agreement,
Customer covenants and agrees that during the term of
this Agreement and for a period of five years
thereafter, neither Customer nor any of its
successors or assigns will, directly or indirectly,
engage in, or have any interest in any other person,
firm, corporation or other entity engaged in, any
business activities anywhere in the world competitive
with or similar or related to the packet-data
transport network services provided by SAVVIS under
this Agreement; provided, however, that (i) Customer
shall be free to continue to use the Call Assets and
the satellite networks currently used by Customer,
until such Call Assets or satellite networks have
been acquired by SAVVIS, SAVVIS Communications or
Affiliates of SAVVIS Communications, and (ii)
Customer shall be free to make passive investments in
securities of companies that provide network services
in competition with SAVVIS which, in the case of any
such security, does not constitute more than ten
percent (10%) of the total outstanding amount of such
security.
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10.4.2. If any court or tribunal of competent jurisdiction
shall refuse to enforce one or more of the covenants
in this Section 10.4 because the time limit
applicable thereto is deemed unreasonable, it is
expressly understood and agreed that such covenant or
covenants shall not be void but that for the purpose
of such proceedings such time limitation shall be
deemed to be reduced to the extent necessary to
permit the enforcement of such covenant or covenants.
10.4.3. If any court or tribunal of competent jurisdiction
shall refuse to enforce any or all of the covenants
in this Section 10.4 because, taken together, they
are more extensive (whether as to geographic area,
scope of business or otherwise) than is deemed to be
reasonable, it is expressly understood and agreed
between the parties hereto that such covenant or
covenants shall not be void but that for the purpose
of such proceedings the restrictions contained
therein (whether as to geographic area, scope of
business or otherwise) shall be deemed to be reduced
to the extent necessary to permit the enforcement of
such covenant or covenants.
10.4.4. Customer specifically acknowledges and agrees that
the foregoing covenants are commercially reasonable
and reasonably necessary to protect the interests of
SAVVIS hereunder. Customer hereby acknowledges that
SAVVIS and its successors and assigns will suffer
irreparable and continuing harm to the extent that
any of the foregoing covenants is breached and that
legal remedies would be inadequate in the event of
any such breach.
11. RIGHTS AND OBLIGATIONS OF SAVVIS
11.1. PROVISION OF THE NETWORKS. SAVVIS shall operate, maintain and
manage the Networks at the Installation Sites using the
Acquired Network Facilities in accordance with the Quality of
Service Standards and other terms of this Agreement, including
all Addenda hereto.
11.2. REPRESENTATIONS AND WARRANTIES.
11.2.1. [Intentionally omitted.]
11.2.2. SAVVIS hereby represents and warrants that the terms
hereof do not conflict in any respect whatsoever with
any SAVVIS tariff on file with the Federal
Communications Commission or other regulatory body.
If, during the term of this Agreement, SAVVIS shall
file a contract specific tariff governing the
Networks or any portion thereof, such tariff filing
shall be consistent in all respects with the terms of
this Agreement, and SAVVIS shall give Customer 10
days advance written notice of making such a tariff
filing and of filing any subsequent modifications
thereto.
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11.2.3. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.3. SAVVIS acknowledges that the occurrence of Event of Default by
SAVVIS, arising from either (i) a failure of the Networks to
meet Quality of Service Standards or (ii) a total loss to
Customer of the use of the Networks, could cause irreparable
harm to Customer, the amount of which may be difficult to
determine, thus potentially making any remedy at law or in
damages inadequate. SAVVIS, therefore, agrees that Customer
shall have the right to apply to any court of competent
jurisdiction for injunctive relief upon the occurrence of an
Event of Default by SAVVIS or the occurrence of an event
which, with the passage of time or the giving of notice, could
become an Event of Default by SAVVIS and for any other
appropriate relief. This right shall be in addition to any
other remedy available to Customer in law or equity. SAVVIS
further agrees that, upon the occurrence of an Event of
Default by SAVVIS, SAVVIS shall pay to Customer, as liquidated
damages and not as a penalty, an amount equal to the lesser of
(a) the aggregate amounts paid by Customer to SAVVIS under
this Agreement during the six months preceding such Event of
Default by SAVVIS or (b) $50,000,000; provided, however, that
Customer may recover liquidated damages under this Section
only for an Event of Default by SAVVIS that occurs (i) prior
to any Event of Default by SAVVIS for which Customer or
[Bridge Parent]/[Telerate Parent] or any customer of [Bridge
Parent]/[Telerate Parent] has claimed liquidated damages under
this Section or under a Network Services Agreement or any
Local [Telerate]/[Bridge] Network Services Agreement, or (ii)
more than 36 months following the most recent Event of Default
by SAVVIS for which Customer or [Bridge Parent]/[Telerate
Parent] or any customer of [Bridge Parent]/[Telerate Parent]
has claimed liquidated damages under this Section or under a
Network Services Agreement or any Local [Telerate]/[Bridge]
Network Services Agreement.
12. LIMITATIONS OF LIABILITY
12.1. Subject to Section 11.4, neither party shall be liable to the
other for indirect, incidental, consequential, exemplary,
reliance or special damages, including damages for lost
profits, regardless of the form of action whether in contract,
indemnity, warranty, strict liability or tort, including
negligence of any kind with respect to the Networks or other
conduct under this Agreement.
12.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, including fraud, or (b) injury or death, or damage
to tangible real or tangible personal property or the
environment, when proximately caused by SAVVIS' or Customer's
negligence or that of their respective agents, subcontractors
or employees. Nothing contained in this
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Section shall limit SAVVIS' intellectual property
indemnification obligations under Section 16.1 or Customer's
indemnification obligations with respect to a breach of
Section 10.3.
13. EQUIPMENT AND SOFTWARE NOT PROVIDED BY SAVVIS
13.1. SAVVIS shall not be responsible for the installation,
operation or maintenance of equipment or software not provided
by it under this Agreement, nor shall SAVVIS be responsible
for the transmission or reception of information by equipment
or software not provided by SAVVIS hereunder. In the event
that Customer uses equipment or software not provided by
SAVVIS hereunder in a manner that impairs Customer's use of
the Networks, Customer shall not be excused from payment for
such use and SAVVIS shall not be responsible for any failure
of the Networks to meet the Quality of Service Standards
resulting from the use of such equipment or software by
Customer. Upon notice from SAVVIS that the equipment or
software not provided by SAVVIS under this Agreement is
causing or is likely to cause hazard, interference or service
obstruction, Customer shall eliminate the likelihood of such
hazard, interference or service obstruction.
13.2. Notwithstanding the foregoing, SAVVIS shall, at no additional
charge, provide all interface specifications for the Networks
reasonably requested by Customer. SAVVIS shall, upon the
receipt of appropriate specifications from Customer, inform
Customer of the compatibility with the Networks of any
equipment or software that Customer proposes to use in
connection therewith, the effects, if any, of the use of such
equipment or software on the quality, operating
characteristics and efficiency of the Networks, and the
effects, if any, of the Networks on the operating
characteristics and efficiency of any such equipment or
software.
14. PROPRIETARY RIGHTS; LICENSE
14.1. SAVVIS hereby grants to Customer a non-exclusive and
non-transferable license to use all programming and software
necessary for Customer to use the Networks. Such license is
granted for the term of this Agreement for the sole purpose of
enabling Customer to use the Networks.
14.2. All title and property rights (including intellectual property
rights) to the Networks (including associated programming and
software) are and shall remain with SAVVIS or the third-party
providers thereof to SAVVIS. Customer shall not (except as
permitted by applicable law) attempt to examine, copy, alter,
reverse engineer, decompile, disassemble, tamper with or
otherwise misuse the Networks, programming and software.
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15. CONFIDENTIALITY
15.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination
(including all extensions thereof), each party agrees to
maintain in strict confidence all Confidential Information.
Neither party shall, without prior written consent of the
other party, use the other party's Confidential Information
for any purpose other than for the performance of its duties
and obligations, and the exercise of its rights, under this
Agreement. Each party shall use, and shall cause all
authorized recipients of the other party's Confidential
Information to use, the same degree of care to protect the
other party's Confidential Information as it uses to protect
its own Confidential Information, but in any event not less
than a reasonable degree of care.
15.2. Notwithstanding Section 15.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or
(c) other persons (including counsel, consultants, lessors or
managers of facilities or equipment used by such party) in
need of access to such information for purposes specifically
related to either party's responsibilities under this
Agreement, provided that any disclosure of Confidential
Information under clause (c) shall be made only upon prior
written approval of the other party and subject to the
appropriate assurances that the recipient of such information
shall hold it in strict confidence.
15.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
15.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines,
in its sole discretion, to grant the requested waiver, it will
do so in writing over the signature of an employee authorized
to grant such request.
15.5. Customer and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of
which may be difficult to determine, thus potentially making
any remedy at law or in damages inadequate. Each party,
therefore, agrees that the other party shall have the right to
apply to any court of competent jurisdiction
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<PAGE>
for an order restraining any breach or threatened breach of
this Section and for any other appropriate relief. This right
shall be in addition to any other remedy available in law or
equity.
15.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another
party's Confidential Information shall notify the other party
in advance of any such disclosure and, absent the other
party's consent to such disclosure, use its best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
15.7. The provisions of Section 15.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or competent
jurisdiction, or disclosures that may be reasonably necessary
in connection with the sale of securities or the performance
or enforcement of this Agreement or any of the obligations
hereof; provided, however, that if the receiving party would
otherwise be required to refer to or describe any aspect of
this Agreement in any of the preceding circumstances, the
receiving party shall use its reasonable efforts to take such
steps as are available under such circumstances (such as by
providing a summary or synopsis) to avoid disclosure of the
financial terms and conditions of this Agreement.
Notwithstanding any provisions of this Agreement to the
contrary, either party may disclose the terms and conditions
of this Agreement in the course of a due diligence review
performed in connection with prospective debt financing or
equity investment by, or a sale to, a third party, so long as
the persons conducting such due diligence review have agreed
to maintain the confidentiality of such disclosure and not to
use such disclosure for any purpose other such due diligence
review.
16. INDEMNIFICATIONS
16.1. SAVVIS shall defend, settle, or otherwise manage at its own
cost and expense any claim or action against Customer or any
of its directors, officers, employees or assigns for actual or
alleged infringement by the Networks of any patent, copyright,
trademark, trade secret or similar proprietary right of any
third party, except to the extent that such actual or alleged
infringement arises from (i) such actual or alleged
infringement by the Acquired Network Facilities on the
Effective Date or (ii) an act or omission of Customer or a
vendor or customer of Customer or (iii) equipment or software
used by Customer and not provided by SAVVIS. Customer shall
notify SAVVIS promptly in writing of any such claim or suit
and shall cooperate with SAVVIS in a reasonable way to
facilitate the
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<PAGE>
settlement or defense thereof. SAVVIS further agrees to
indemnify and hold Customer harmless from and against any and
all liabilities and damages (whether incurred as the result of
a judicial decree or a settlement), and the costs and expenses
associated with any claim or action of the type identified in
this Section (including reasonable attorneys' fees).
16.2. If, as a consequence of a claim or action of the kind
described in Section 16.1, SAVVIS' or Customer's use of all or
part of any Network is enjoined, SAVVIS shall, at its option
and expense, either: (a) procure for Customer the right to
continue using the affected Network; (b) modify such Network
so that they are non-infringing, provided that such
modification does not affect the intended use of the Network
as contemplated hereunder. If SAVVIS does not take any of the
actions described in clauses (a) or (b), then Customer may
terminate the affected portion of such Network, and SAVVIS
shall refund to Customer any prepaid charges therefor.
16.3. Subject to Section 12, Customer will defend, indemnify and
hold harmless SAVVIS or any of its directors, officers,
employees or assigns from and against all loss, liability,
damage and expense, including reasonable attorneys' fees,
caused by:
(a) claims for libel, slander, invasion of privacy or
infringement of copyright, and invasion and/or
alteration of private records or data arising from
any information, data or messages transmitted over
the Networks by Customer;
(b) claims for infringement of patents arising from the
use by Customer of equipment and software, apparatus
and systems not provided hereunder in connection with
the Networks; and
(c) the violation of any representations, warranties and
covenants made by Customer in this Agreement.
16.4. Subject to Section 12, SAVVIS will defend, indemnify and hold
harmless Customer or any of its directors, officers, employees
or assigns from and against all loss, liability, damage and
expense, including reasonable attorneys' fees, caused by:
(a) claims for infringement of patents arising from the
use by SAVVIS of equipment and software, apparatus
and systems not provided by SAVVIS hereunder in
connection with the Networks (other than any Acquired
Network Facilities); and
(b) the violation of any representations, warranties and
covenants made by SAVVIS in this Agreement.
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17. DISPUTES
17.1. Except as expressly provided in Schedule 4.1 of this
Agreement, the resolution of any and all disputes arising from
or in connection with this Agreement, whether based on
contract, tort, statute or otherwise, including disputes over
arbitrability and disputes in connection with claims by third
persons ("DISPUTES") shall be exclusively governed by and
settled in accordance with the provisions of this Section 17.
The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are
required to be resolved in determining whether to grant such
relief. Resolution of Disputes with respect to claims by third
persons shall be deferred until any judicial proceedings with
respect thereto are concluded.
17.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon
the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause
under applicable law. Either party may serve process or notice
on the other in any arbitration or litigation in accordance
with the notice provisions hereof. The parties agree not to
disclose any information regarding any Dispute or the conduct
of any arbitration hereunder, including the existence of such
Dispute or such arbitration, to any person or entity other
than such employees or representatives of such party as have a
need to know.
17.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the
"ARBITRATION DEMAND") to the other party not sooner than 60
calendar days after the date of delivery of the Dispute Notice
but at any time thereafter. The arbitration shall be conducted
in St. Louis, Missouri.
17.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Customer, one
by SAVVIS, and the third by agreement of the other two not
later than 10 days after appointment of the first two, or,
failing such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
17.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the
foregoing, each party shall have the right to inspect the
books and records of the other party that are reasonably
related to the Dispute, and each party shall provide to the
other, reasonably in advance of any hearing, copies of all
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documents which such party intends to present in such hearing
and the names and addresses of all witnesses whose testimony
such party intends to present in such hearing.
17.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
17.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees
and expenses in connection with any and all proceedings under
this Section 17.
17.8. Either party may assert appropriate statutes of limitation as
a defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
17.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and SAVVIS shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Networks to
Customer unless otherwise directed by Customer. This Section
shall not apply where (a) Customer is in default under this
Agreement or (b) the dispute or controversy between the
parties relates to harm to the Networks allegedly caused by
Customer and Customer does not immediately cease and desist
from the activity giving rise to the dispute or controversy.
18. FORCE MAJEURE
18.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or
other causes to the extent that such failure and the
consequences thereof are reasonably beyond the control and
without the fault or negligence of the party claiming excuse.
Each party shall, with the cooperation of the other party, use
reasonable efforts to mitigate the extent of any failure to
perform and the adverse consequences thereof.
18.2. If SAVVIS cannot promptly provide a suitable temporary SAVVIS
alternative to all or part of a Network subject to an
interruption in connection with the existence of a force
majeure condition, Customer may, at its option and at its own
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cost, contract with one or more third parties for the affected
portion of the Network for the shortest commercially available
period likely to cover the reasonably expected duration of the
interruption, and may suspend SAVVIS' provision of such
affected portion for such period. SAVVIS shall not charge
Customer for the affected portion thus suspended during the
period of suspension. SAVVIS shall resume provision of the
suspended portion of the Network upon the later of the
termination or expiration of Customer's legally binding
commitments under contracts with third parties for alternative
services or the cessation or remedy of the force majeure
condition.
18.3. In the event that a force majeure condition shall continue for
more than 60 days, Customer may cancel the affected portion of
the Network with no further liability to SAVVIS other than for
obligations incurred with respect to such affected portion
prior to the occurrence of the force majeure condition.
18.4. The consequences arising from existence and continuation of a
force majeure condition, including without limitation any
interruption of the Networks and the exercise by Customer of
its rights under this Section 18, shall be deemed not to
constitute a breach by either party hereto of any
representations, warranties or covenants hereunder and shall
not be grounds for the exercise of any remedies under this
Agreement, including without limitation remedies under Section
2.2 or Section 7, other than those specified in this Section
18.
19. GENERAL PROVISIONS
19.1. NO THIRD-PARTY BENEFICIARIES. [This Agreement shall not confer
any rights or remedies upon any person or entity other than
the parties and their respective successors and permitted
assigns.] [Except as expressly provided in this Agreement,
nothing in this Agreement will create or confer any rights or
other benefits on or in favor of any person who is not a party
to this Agreement whether pursuant to the Contracts (Rights of
Third Parties) Act, 1999 or otherwise.]
19.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior understandings,
agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
19.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other party, which consent shall not be
unreasonably withheld.
19.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
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19.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
19.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Customer: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and
General Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set
forth.
19.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri in the United States of America, without giving
effect to any choice or conflict of law provision or rule
(whether of the State of Missouri or any other jurisdiction)
that would cause the application of the laws of any
jurisdiction other than the State of Missouri.
19.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Customer. No waiver by any party of
any default, misrepresentation, or breach of
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warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
19.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
19.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
19.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
19.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Network
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
[local SAVVIS entity]
By
----------------------------------
Name: Steven M. Gallant
[local Bridge/Telerate entity].
By
----------------------------------
Name:
-------------------------------
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SCHEDULE 2.2
QUALITY OF SERVICE STANDARDS
1. Starting one year from the Effective Date, the Acquired Network
Facilities and Additional Network Facilities that are connected to the
St. Louis hub where [Bridge Parent]/[Telerate Parent] houses the data
distributed over the Distribution Network (the "ST. LOUIS HUB") by
fully redundant paths shall be covered by Quality of Service Standards
outlined below. These provisions shall be applicable to Installation
Sites performing within the bandwidth limitations set forth in Section
7.2 of Schedule 3.1 to the Network Services Agreement or, with respect
to the SAVVIS Backbone, to be agreed upon, and shall be measured in
performance relative to the St. Louis Hub.
2. For the SAVVIS Backbone supporting the Collection Network and
Distribution Network:
(a) There shall not be less than 99.99% availability to any SAVVIS
POP supporting Installation Sites during each one month period
during the Market Hours applicable to the POP connected to the
St. Louis Hub.
(b) The average round-trip terrestrial latency period to SAVVIS
POP locations supporting Installation Sites during each
one-month period shall not exceed:
(i) 75 milliseconds within the United States,
(ii) 250 milliseconds to Australia, Eastern Asia, Europe,
and North America,
(iii) 425 milliseconds to all other areas, including South
America, Middle East, Africa, New Zealand and India.
3. For Installation Sites, network availability shall be measured in terms
of server upstream connectivity during Market Hours for each one-month
period. Resultant availability to the Installation Sites shall be not
less than 99.99% based on the following criteria:
(a) All server disconnects will be considered as potential network
outages.
(b) Disconnects which are attributed to bandwidth limitations,
process failures, and server faults will be eliminated from
the sample population.
(c) Remaining disconnects that reflect total outage conditions on
both redundant pieces of the network shall be considered a
network outage to the Installation Site. The time duration of
the network outage shall be used to determine the availability
percentage.
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3. SAVVIS will continue to monitor performance of the acquired Customer OA
Network. Performance problems with specific OA sites will be resolved
jointly by Customer and SAVVIS.
4. CREDIT AMOUNTS
Amounts to be credited if the Quality of Service Standards are not met
with respect to a particular Installation Site in any month shall be as
follows during the first Agreement Year, according to the connection
speed at such Installation Site:
CONNECTION SPEED MONTHLY CREDIT MONTHLY CREDIT MONTHLY
[EUROPE] [ASIA] CREDIT
[AMERICAS]
T1 [*] [*] [*]
256 KBS [*] [*] [*]
128 KBS [*] [*] [*]
64 KBS [*] [*] [*]
56 KBS [*] [*] [*]
ISDN [*] [*] [*]
E1 [*] [*] [*]
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
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EXHIBIT B
TO NETWORK SERVICES AGREEMENT
TELERATE NETWORK SERVICES AGREEMENT
NETWORK SERVICES AGREEMENT
This NETWORK SERVICES AGREEMENT (the "AGREEMENT") is effective as of
___________________, 2000 (the "EFFECTIVE DATE"), between SAVVIS Communications
Corporation, a Missouri corporation ("SAVVIS"), and Telerate Holdings, Inc., a
Delaware corporation ("TELERATE").
RECITALS
A. Telerate is engaged in the business of collecting and distributing
various financial, news and other data. Bridge Information Systems, Inc., a
Missouri corporation ("BRIDGE") is the ultimate parent of Telerate, and is also
engaged in the business of collecting and distributing various financial, news
and other data.
B. SAVVIS is engaged in the business of providing Internet Protocol
backbone and other data transport services.
C. SAVVIS and certain of its subsidiaries have acquired from Bridge and
certain of its subsidiaries certain assets relating to the provision of Internet
Protocol backbone and other data transport services, and may in the future
acquire additional such assets from Bridge and certain of its subsidiaries, all
pursuant to a Master Establishment and Transition Agreement between SAVVIS'
corporate parent, SAVVIS Communications Corporation, a Delaware corporation, and
Bridge, of even date herewith (the "MASTER ESTABLISHMENT AND TRANSITION
AGREEMENT").
D. It is an obligation of Bridge and SAVVIS under the Master
Establishment and Transition Agreement to cause this Agreement to be entered
into between SAVVIS and Telerate, and the Bridge Network Services Agreement to
be entered into between SAVVIS and Bridge, pursuant to which SAVVIS shall
provide Internet Protocol backbone and other data transport services to Telerate
and Bridge.
E. In conjunction with this Agreement, SAVVIS and Bridge are entering
into a Technical Services Agreement of even date herewith (the "TECHNICAL
SERVICES AGREEMENT") and an Administrative Services Agreement of even date
herewith (the "ADMINISTRATIVE SERVICES AGREEMENT"), providing for the provision
of certain services to SAVVIS by Bridge. Certain SAVVIS Subsidiaries and certain
Bridge Subsidiaries are entering into, and may in the future enter into, Local
Transfer Agreements, Local Network Services Agreements substantially in the form
of Exhibit A hereto (the "LOCAL NETWORK SERVICES AGREEMENTS"), Equipment
Collocation
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Permits (the "EQUIPMENT COLLOCATION PERMITS"), and Local Administrative Services
Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Network Services
Agreement by and between SAVVIS and Telerate, including all
addenda to this Agreement entered into in the manner set forth
herein (each an "ADDENDUM" and collectively the "ADDENDA").
This Agreement shall be interpreted wherever possible to avoid
conflicts between the Sections hereof and the Addenda,
provided that if such a conflict shall arise, the Addenda
shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an
Addendum to this Agreement, either party may initiate the
process of determining such matter by submitting a proposed
outline or contents of such Addendum to the other party. Each
party shall appoint a primary contact and a secondary contact
for the completion of such Addendum, who shall be the contact
points for every issue concerning such Addendum and who shall
be informed of the progress of the project. The names of the
contacts will be exchanged in writing by the parties. Using
the contacts, the parties shall work together in good faith
with such diligence as shall be commercially reasonable under
the circumstances to complete such Addendum, provided,
however, that neither party shall be obligated to enter into
such an Addendum. Upon the completion of such Addendum, it
shall be set forth in a written document and executed by the
parties and shall become a part of this Agreement and shall be
deemed to be incorporated herein by reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined
terms shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included"
and "including" shall not be construed as terms of limitation.
Additional definitions are provided in Schedule 3.1 of this
Agreement. Capitalized terms not otherwise defined have the
meanings assigned to such terms in the Master Establishment
and Transition Agreement.
"ADDITIONAL NETWORK FACILITIES" means any assets and contracts
of SAVVIS for the provision of Internet Protocol backbone and
other data transport services other than the Acquired Network
Facilities.
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"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" means a period of 12 months beginning on the
Effective Date and each subsequent anniversary thereof.
"AMERICAS" means North America, Central America and South
America, including the Caribbean, but excluding the United
States.
"ASIA" means Australia, China, Hong Kong, India, Indonesia,
Japan, Korea, Macau, Malaysia, New Zealand, Philippines,
Singapore, Taiwan, and Thailand.
"BRIDGE" means Bridge Information Systems, Inc., a Missouri
corporation, and its successors and assigns.
"BRIDGE LOCAL NETWORK SERVICES AGREEMENTS" means the local
network services agreements between certain SAVVIS
Subsidiaries and certain Bridge Subsidiaries, as provided for
in the Bridge Network Services Agreement.
"BRIDGE NETWORK SERVICES AGREEMENT" means the network services
agreement pursuant to which SAVVIS shall provide Internet
Protocol backbone and other data transport services to Bridge.
"BRIDGE SUBSIDIARIES" has the meaning assigned to the term
"Seller Subsidiaries" in the Master Establishment and
Transition Agreement.
"CONFIDENTIAL INFORMATION" means all information concerning
the business of Telerate, SAVVIS or any third party doing
business with either of them that may be obtained from any
source (i) by SAVVIS by virtue of its performance under this
Agreement or (ii) by Telerate by virtue of its use of the
Networks. Such information shall also include the terms of
this Agreement (and negotiations and proposals from one party
to the other related directly thereto), network designs and
design recommendations, tools and programs, pricing, methods,
processes, financial data, software, research, development,
strategic plans or related information. All such information
disclosed prior to the execution of this Agreement shall also
be considered Confidential Information for purposes of this
Agreement. Confidential Information shall not include
information that:
(a) is already rightfully known to the receiving party
at the time it is obtained by such party, free
from any obligation to keep such information
confidential; or
(b) is or becomes publicly known through no wrongful
act of the receiving party; or
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(c) is rightfully received by the receiving party from
a third party without restriction and without
breach of this Agreement.
"DISTRIBUTOR COUNTRY" means any country in which the products
and services of Telerate and Telerate Subsidiaries are
provided through third-party distributors.
"EFFECTIVE DATE" means the date set forth in the Preamble of
this Agreement.
"EUROPE" means Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Luxembourg,
Netherlands, Norway, Poland, Spain, Sweden, Switzerland,
Turkey and the United Kingdom.
"EVENT OF DEFAULT BY SAVVIS" has the meaning assigned to such
term in Section 7.1 of this Agreement.
"INITIAL TERM" means a period of ten consecutive Agreement
Years beginning on the Effective Date.
"INSTALLATION SITE" means any facility of Telerate or a
Telerate Subsidiary or of vendors or customers of Telerate or
a Telerate Subsidiary at which one or more of the Networks is
installed.
"MARKET HOURS" means, with respect to any Installation Site,
the period of time beginning two hours before the time at
which trading opens on the principal securities exchange or
automated quotation system designated by Telerate in writing
from time to time as being used by the purchasers and sellers
of securities at such Installation Site, and ending two hours
after the time at which such trading ceases to be conducted.
"MINIMUM ANNUAL COMMITMENT" has the meaning assigned to such
term in Schedule 3.1 of this Agreement.
"NETWORK" and "NETWORKS" have the meaning assigned to such
terms in Section 2.1 of this Agreement.
"REPLACED ROUTERS" has the meaning assigned to such term in
Section 2.7 of this Agreement.
"QUALITY OF SERVICE STANDARDS" means the standards for the
performance of the Networks contained in Schedule 2.2 hereto
or an Addendum to this Agreement.
"SAVVIS" means SAVVIS Communications Corporation, a Missouri
corporation, and its successors and assigns.
"SAVVIS BACKBONE" means those facilities that are owned by, or
leased to, SAVVIS providing telecommunications utilizing the
Internet Protocol.
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"SAVVIS PARENT" means SAVVIS Communications Corporation, a
Delaware corporation.
"SAVVIS SUBSIDIARIES" has the meaning assigned to the term
"Buyer Subsidiaries" in the Master Establishment and
Transition Agreement.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"TELERATE" means Telerate Holdings, Inc., a Delaware
corporation.
"TELERATE SUBSIDIARIES" means the direct and indirect
subsidiaries of Telerate which will be involved in the
operation or ownership of the Acquired Network Facilities.
"TRANSITION PERIOD" has the meaning assigned to such term in
Section 6.3 of this Agreement.
2. THE NETWORKS AND QUALITY OF SERVICE STANDARDS
2.1. SAVVIS agrees to use the Acquired Network Facilities to
provide (or to cause the SAVVIS Subsidiaries to provide) to
Telerate, Affiliates of Telerate or any party making use of
the Networks through Telerate the following managed
packet-data transport networks, including the operation,
management and maintenance thereof:
(a) a global office-automation network, providing
connectivity between the offices of Telerate and Bridge
(the "OA NETWORK"),
(b) a global data collection network (the "COLLECTION
NETWORK") and
(c) a global data distribution network (the "DISTRIBUTION
NETWORK"),
such description being given without limitation on Telerate's
use of such network services as are provided by SAVVIS, which
shall be referred to in this Agreement collectively as the
"NETWORKS" and individually as a "NETWORK."
2.2. Each Network shall be operated, managed and maintained by
SAVVIS. SAVVIS may, but shall not be obligated to, use
facilities of SAVVIS other than the Acquired Network
Facilities to provide all or any part of any Network.
Beginning on the first anniversary of the Effective Date and
thereafter, each Network shall be operated, managed and
maintained by SAVVIS according to the Quality of Service
Standards set forth in Schedule 2.2 hereof, and SAVVIS shall
be responsible for monitoring the performance of the Networks
with respect to the Quality of Service Standards and shall
provide Telerate with monthly reports of such performance. If
the Quality of Service Standards are not met with respect to a
particular Installation Site in any month, Telerate shall be
entitled to receive, upon written request by Telerate within
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30 days of its receipt of the performance report for such
Installation Site for such month, a credit in the amount set
forth on Schedule 2.2 attached hereto, which amount shall be
deemed to be one month's charges applicable to such
Installation Site under this Agreement with respect to such
month; provided, however, that Telerate shall not be entitled
to such credit to the extent that the failure to meet the
Quality of Service Standards with respect to such Installation
Site is due to (i) an act or omission of Telerate or a
Telerate Subsidiary or a vendor or customer of Telerate or a
Telerate Subsidiary or (ii) equipment or software used by
Telerate and not provided by SAVVIS. Not more than one credit
of one month's charges shall be given for a particular
Installation Site for a particular month. The Quality of
Service Standards shall not apply to the provision of Local
Access Facilities in countries in which the products and
services of Telerate and Telerate Subsidiaries are provided
through third-party distributors. For all purposes of this
Agreement, including without limitation the determination of
an Event of Default by SAVVIS, the Quality of Service
Standards applicable to a particular Installation Site in any
month shall be deemed to have been met unless Bridge, within
30 days of its receipt of the performance report for such
Installation Site for such month, requests in writing a credit
as set forth above with respect to such Installation Site for
such month.
2.3. SAVVIS agrees that, for the term of this Agreement, the
network operations centers for the Networks shall be managed
by Bridge under the Technical Services Agreement; provided,
however, that SAVVIS shall not be restricted from building,
managing and operating one or more network operations centers
for such portions of the SAVVIS Backbone or other operations
of SAVVIS that are not used to provide the Networks to
Telerate.
2.4. [Intentionally omitted.]
2.5. Unless otherwise mutually agreed by the parties, each Addendum
providing for the provision of Additional Network Facilities
shall have a term of three years. Such Addendum may also
include provisions with respect to the level of redundancy to
be provided and the Quality of Service Standards to apply to
such Additional Network Facilities. In providing Additional
Network Facilities, SAVVIS agrees to use its best efforts to
expedite the provisioning of the circuits for such Additional
Network Facilities in those instances in which SAVVIS is
responsible for provisioning such circuits.
2.6. Throughout the term of this Agreement, SAVVIS shall use its
commercially reasonable best efforts to continue to meet the
requests of Telerate to enhance the total capacity, geographic
extension and performance quality of the Networks, and to
maintain its research and development effort at a level
appropriate to sustain the ability of Telerate to compete on
the basis of the quality of the Networks.
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2.7. The parties acknowledge that SAVVIS intends to replace certain
existing routers among the Acquired Network Facilities (the
"REPLACED ROUTERS") with new equipment promptly after the
Effective Date. It is the intention of the parties that the
Replaced Routers will be re-deployed at Installation Sites at
which one or more 56 Kbps ports or 64 Kbps ports will be
provided by SAVVIS using Additional Network Facilities as set
forth in Section 3.1 hereof. SAVVIS agrees to manage the use
of its inventory of routers in order to re-deploy the maximum
number of Replaced Routers as is commercially reasonable. So
long as Replaced Routers are available for re-deployment
during the 18 months following the Effective Date, SAVVIS
agrees not to make any bulk purchases of additional routers
without the prior written consent of Telerate, which will not
be unreasonably withheld. Upon the expiration of 18 months
following the Effective Date, the parties shall determine the
number of Replaced Routers that the parties mutually agree are
likely to be so re-deployed within the succeeding 12 months.
3. RATES AND CHARGES
3.1. Telerate shall pay SAVVIS for the Networks using the Acquired
Network Facilities and Additional Network Facilities according
to the rates and charges set forth in Schedule 3.1 hereof.
3.2. The parties recognize that certain savings might be obtained
by consolidating the multiple Local Access Facilities that are
provided at such building locations on the Effective Date. In
the event that SAVVIS consolidates the multiple Local Access
Facilities at one or more of such building locations and
obtains cost savings as a result thereof, the parties will
mutually agree within 30 days following such consolidation on
the manner in which such savings shall be shared between
SAVVIS and Telerate, if only Telerate or Telerate Subsidiaries
use those consolidated Local Access Facilities, or between
SAVVIS, Telerate and Bridge, if both Telerate or Telerate
Subsidiaries and Bridge or any subsidiaries of Bridge use
those consolidated Local Access Facilities. Any reduction
pursuant to this Section shall not affect the Minimum Annual
Commitment.
3.3. For any Installation Site to which SAVVIS is providing
services both under this Agreement and the Bridge Network
Services Agreement, the rates and charges applicable to such
Installation Site under this Agreement shall be one-half of
the rates and charges that would otherwise be applicable to
such Installation Site under this Agreement.
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4. STRATEGIC ADVISORY COMMITTEE
4.1. According to the Bridge Network Services Agreement, within 30
days after the Effective Date, SAVVIS and Bridge will each
appoint three senior executives to the "STRATEGIC ADVISORY
COMMITTEE," and one outside consultant will be jointly
appointed by both parties.
4.2. The mission of the Strategic Advisory Committee will be to
review the performance of the Networks, to serve as forum for
the consideration and discussion of issues raised by either
SAVVIS or Bridge with respect to the Networks, and to discuss
issues related to the future development of the data transport
and Internet Protocol backbone operations of SAVVIS in the
context of the relationship of SAVVIS, Telerate and Bridge.
5. INVOICES
5.1. The amounts due to SAVVIS from Telerate for the installation,
operation, management and maintenance of the Networks shall be
billed monthly in advance. All items on invoices not the
subject of a bona fide dispute shall be payable by Telerate in
United States currency within 30 days from the date of receipt
of the invoice. All amounts not in dispute are subject to
interest charges of 1-1/2 percent that will accrue daily on
all amounts not paid within 30 days of the date of receipt of
the invoice.
5.2. At any time and from time to time, Telerate may, by written
notice to SAVVIS, have one or more Installation Sites removed
from the Networks. Each monthly invoice from SAVVIS to
Telerate shall reflect a reduction in the amount charged to
Telerate for the Networks resulting from any such removal of
Installation Sites. In the case of any Installation Site
removed from the Acquired Network Facilities, such reduction
shall be the sum of:
(a) the actual cost of the Local Access Facilities
connecting the Acquired Network Facilities to such
Installation Site, effective as of such time as
SAVVIS is no longer required to pay such costs, and
(b) the amounts set forth on Schedule 5.2 attached
hereto, which are deemed to be one month's charges
applicable to such Installation Site under this
Agreement with respect to such month during the first
Agreement Year, according to connection speed at such
Installation Site, effective as of such time as such
Installation Site is disconnected from the Networks.
5.3. Telerate shall pay any sales, use, federal excise, utility,
gross receipts, state and local surcharges, value added and
similar taxes, charges or levies lawfully levied by a duly
constituted taxing authority against or upon the Networks. In
the alternative, Telerate shall provide SAVVIS with a
certificate evidencing Telerate's exemption from payment of or
liability for such taxes. All other taxes, charges or levies,
including any ad valorem, income, franchise, privilege or
occupation taxes of SAVVIS shall be paid by SAVVIS.
5.4. Bona fide disputes concerning invoices shall be referred to
the parties' respective representatives who are authorized to
resolve such matters. Any amount to which Telerate is entitled
as a result of the resolution of a billing dispute shall be
credited promptly to Telerate's account. Any amount to which
SAVVIS is
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entitled as a result of the resolution of a billing dispute
shall be paid promptly to SAVVIS.
5.5. Against the amounts owed by Telerate to SAVVIS under this
Agreement, Telerate shall have the right to offset any amounts
owed by SAVVIS to Telerate under this Agreement, and against
any amounts owed by SAVVIS to Bridge under the Bridge Network
Services Agreement, the Technical Services Agreement, or
otherwise, including without limitation any amounts paid by
Bridge on behalf of SAVVIS under guarantees by Bridge of
obligations of SAVVIS.
6. TERM AND EXTENSIONS
6.1. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for the Initial Term unless
terminated or extended in accordance with the provisions
hereof.
6.2. The term of this Agreement may be extended by Telerate for one
additional five-year period by giving SAVVIS written notice
not less than one year before the scheduled expiration of the
Initial Term.
6.3. Upon the termination of this Agreement in accordance with its
scheduled expiration or by Telerate pursuant to Section 7,
SAVVIS will continue to provide the Networks in accordance
with the terms and conditions herein (excluding the Minimum
Annual Commitment) for a period of up to five years after the
effective date of termination (the "TRANSITION PERIOD").
During the Transition Period, Telerate shall pay SAVVIS for
the use of the Networks at the rates in effect for third party
customers of SAVVIS at the effective date of termination. If
Telerate has not completely transitioned from its use of the
Networks after the Transition Period, SAVVIS will provide the
Networks at SAVVIS' then current list rates. SAVVIS and its
successor will cooperate with Telerate until Telerate has
completely migrated to another provider.
7. TERMINATION BY TELERATE
7.1. An "EVENT OF DEFAULT BY SAVVIS" shall be deemed to occur if:
(a) SAVVIS has failed to a material degree to perform or
comply with or has violated to a material degree any
material representation, warranty, term, condition or
obligation of SAVVIS under this Agreement, and SAVVIS
has failed to cure such failure or violation within
60 days after receiving notice thereof from Telerate;
or
(b) SAVVIS becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
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(c) an Event of Default by SAVVIS occurs under the Bridge
Network Services Agreement.
7.2. Telerate shall have the right to terminate this Agreement,
with no liability to SAVVIS other than for charges (less any
applicable credits) for the Networks provided prior to such
termination, if:
(a) Telerate provides written notice to SAVVIS, at any
time after the ninth anniversary of the Effective
Date, of Telerate's intent to terminate, such
termination to be effective not less than one year
following the date of such notice; or
(b) Telerate provides 10 days written notice of its
intent to terminate in the event that an Event of
Default by SAVVIS occurs.
7.3. For purposes of Section 7.1(a), if the Quality of Service
Standards are not met with respect to a particular
Installation Site in any month, SAVVIS shall be deemed to have
cured such failure within 60 days if the Quality of Service
Standards are met with respect to such Installation Site in
the following month. A failure of the Quality of Service
Standards to be met shall not constitute an Event of Default
or give Telerate the right to terminate this Agreement to the
extent that such failure is due to (i) an act or omission of
Telerate or a Telerate Subsidiary or a vendor or customer of
Telerate or a Telerate Subsidiary or (ii) equipment or
software used by Telerate and not provided by SAVVIS. The
parties acknowledge and agree that the failure of the Quality
of Service Standards to be met with respect to one or more
Installation Sites in one or more months may, but does not
necessarily, constitute a failure by SAVVIS to a material
degree to perform or comply with, or a violation to a material
degree of, any material representation, warranty, term,
condition or obligation of SAVVIS under this Agreement.
7.4. As provided in Section 2.2, for all purposes of this
Agreement, including without limitation the determination of
an Event of Default by SAVVIS under this Section, the Quality
of Service Standards applicable to a particular Installation
Site in any month shall be deemed to have been met unless
Telerate, within 30 days of its receipt of the performance
report of such Installation Site for such month, requests in
writing a credit as set forth in Section 2.2 with respect to
such Installation Site for such month.
8. TERMINATION BY SAVVIS
8.1. SAVVIS shall have the right to terminate this Agreement if:
(a) Telerate has failed to pay any invoice that is not
the subject of a bona fide dispute within 60 days of
the date on which such payment is due and SAVVIS has
provided Telerate with written notice thereof,
provided that
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Telerate shall have a further 30 days from the time
it receives such notice from SAVVIS of nonpayment to
cure any such default;
(b) SAVVIS provides 10 days written notice of its intent
to terminate in the event that Telerate has failed to
perform or comply with or has violated any material
representation, warranty, term, condition or
obligation of Telerate under this Agreement, and
Telerate has failed to cure such failure or violation
within 60 days after receiving notice thereof from
SAVVIS;
(c) Telerate becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(d) SAVVIS becomes entitled to terminate the Bridge
Network Services Agreement pursuant to the terms
thereof.
8.2. Notwithstanding the provisions of Section 8.1(b) above, SAVVIS
shall not have the right to terminate this Agreement under
Section 8.1(b) solely for a failure by Telerate to perform or
comply with, a violation by Telerate of, the obligations of
Telerate under Section 15 (Confidentiality) of this Agreement,
without prejudice, however, to such rights as SAVVIS may have
pursuant to such Section and to such rights and remedies to
which SAVVIS may be entitled, at law or in equity, as the
result of an actual or threatened breach by Telerate of such
Section.
9. ACCEPTANCE OF ADDITIONAL NETWORK FACILITIES
9.1. Upon the installation of Additional Network Facilities at any
Installation Site, SAVVIS shall conduct appropriate tests to
establish that such Additional Network Facilities perform in
accordance with mutually agreed upon acceptance criteria
("ACCEPTANCE CRITERIA") set forth in the applicable Addendum
entered into pursuant to Section 2.5, and shall promptly
inform Telerate of such test results. If test results show
that the Additional Network Facilities are performing in
accordance with the Acceptance Criteria, Telerate shall be
deemed to accept the Additional Network Facilities at the
Installation Site immediately.
9.2. If SAVVIS' tests establish that newly installed Additional
Network Facilities at the Installation Site do not perform in
accordance with the mutually agreed upon Acceptance Criteria,
then SAVVIS shall immediately and diligently exert its best
efforts to bring the Additional Network Facilities at such
Installation Site into compliance. SAVVIS shall not bill
Telerate for the Additional Network Facilities at such
Installation Site until the test results show that the
Additional Network Facilities are performing in accordance
with the Acceptance Criteria.
9.3. Upon repair or restoration of any part of the Networks, SAVVIS
shall conduct appropriate tests to establish that the Networks
perform in accordance with
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mutually agreed upon Acceptance Criteria and shall promptly
inform Telerate of such test results.
10. RIGHTS AND OBLIGATIONS OF TELERATE
10.1. SITE PREPARATION. For the installation of Additional Network
Facilities, Telerate shall, at its own expense, provide all
necessary preparations of each Installation Site in accordance
with the requirements to be mutually agreed upon by the
parties and set forth in an Addendum hereto, including inside
wiring, demarcation extension and rack mount accessories.
Telerate shall ensure that Telerate-provided equipment is
on-site by the scheduled installation date. If SAVVIS is
required to reschedule the installation of Telerate-provided
equipment because it is not on-site by the scheduled
installation date, Telerate shall pay SAVVIS to redispatch
installation personnel.
10.2. PROPER USE OF NETWORKS.
10.2.1. Telerate shall use any equipment provided by SAVVIS
in connection with the Networks in accordance with
its documentation, which documentation shall be
provided by SAVVIS at no additional charge. Unless
otherwise provided herein, upon the termination of
this Agreement Telerate shall surrender to SAVVIS the
equipment provided by SAVVIS, in good working order,
ordinary wear and tear excepted.
10.2.2. Telerate shall be liable for damages to the Networks
caused by the negligence or willful acts or omissions
of Telerate's officers, employees, agents or
customers, for loss through theft or vandalism of the
Networks at the Installation Site, and for damages to
the Networks caused by the use of equipment or
supplies not provided hereunder or not otherwise
authorized by SAVVIS.
10.2.3. Telerate shall neither permit nor assist others to
use the Networks for any purpose other than that for
which they are intended, nor fail to maintain a
suitable environment specified by SAVVIS in the
applicable schedule, nor alter, tamper with, adjust
or repair the Networks. Any such alteration,
tampering, adjustment or repair by Telerate shall
relieve SAVVIS from any liability or obligation
hereunder (including any warranty or indemnity
obligation) relating to the affected Network, and
Telerate shall be liable to SAVVIS for any documented
direct costs incurred by SAVVIS as a result of such
actions.
10.3. ABUSE OR FRAUDULENT USE OF NETWORKS. Telerate shall not abuse
or fraudulently use the Networks, or use the Networks for any
unauthorized or illegal purposes, and shall neither permit nor
assist others to do so, including but not limited to:
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(a) obtaining or attempting to obtain service by any
fraudulent means or device to avoid payment; or
(b) accessing, altering or destroying any information of
another party by any fraudulent means or device, or
attempting to do so; or
(c) using the Networks so as to interfere with the use of
the SAVVIS network by other SAVVIS customers or
authorized users or in violation of law or in support
of any unlawful act; or
(d) using the Networks for voice communications over a
private network in jurisdictions where such use is
not allowed; or
(e) using the Networks in a manner contrary to or
inconsistent with such acceptable use policies as
SAVVIS may adopt and publish from time to time
consistent with industry standards.
Notwithstanding the provisions of Section 8, upon the breach
of this Section 10.3 by Telerate, SAVVIS shall have the right
to terminate this Agreement with respect to all or part of the
Networks immediately upon written notice to Telerate.
10.4. COVENANT NOT TO COMPETE.
10.4.1. As an inducement to SAVVIS to enter into this
Agreement, which Telerate acknowledges is of benefit
to it, and in consideration of the promises and
representations of SAVVIS under this Agreement,
Telerate covenants and agrees that during the term of
this Agreement and for a period of five years
thereafter, neither Telerate nor any of its
successors or assigns will, directly or indirectly,
engage in, or have any interest in any other person,
firm, corporation or other entity engaged in, any
business activities anywhere in the world competitive
with or similar or related to the packet-data
transport network services provided by SAVVIS under
this Agreement; provided, however, that (i) Telerate
and the Telerate Subsidiaries shall be free to
continue to use the Call Assets and the satellite
networks currently used by Telerate, until such Call
Assets or satellite networks have been acquired by
SAVVIS or the SAVVIS Subsidiaries pursuant to the
Master Establishment and Transition Agreement, and
(ii) Telerate shall be free to make passive
investments in securities of companies that provide
network services in competition with SAVVIS which, in
the case of any such security, does not constitute
more than ten percent (10%) of the total outstanding
amount of such security.
10.4.2. If any court or tribunal of competent jurisdiction
shall refuse to enforce one or more of the covenants
in this Section 10.4 because the time limit
applicable thereto is deemed unreasonable, it is
expressly understood and agreed that such covenant or
covenants shall not be void but that for the
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purpose of such proceedings such time limitation
shall be deemed to be reduced to the extent necessary
to permit the enforcement of such covenant or
covenants.
10.4.3. If any court or tribunal of competent jurisdiction
shall refuse to enforce any or all of the covenants
in this Section 10.4 because, taken together, they
are more extensive (whether as to geographic area,
scope of business or otherwise) than is deemed to be
reasonable, it is expressly understood and agreed
between the parties hereto that such covenant or
covenants shall not be void but that for the purpose
of such proceedings the restrictions contained
therein (whether as to geographic area, scope of
business or otherwise) shall be deemed to be reduced
to the extent necessary to permit the enforcement of
such covenant or covenants.
10.4.4. Telerate specifically acknowledges and agrees that
the foregoing covenants are commercially reasonable
and reasonably necessary to protect the interests of
SAVVIS hereunder. Telerate hereby acknowledges that
SAVVIS and its successors and assigns will suffer
irreparable and continuing harm to the extent that
any of the foregoing covenants is breached and that
legal remedies would be inadequate in the event of
any such breach.
11. RIGHTS AND OBLIGATIONS OF SAVVIS
11.1. PROVISION OF THE NETWORKS. SAVVIS shall operate, maintain and
manage the Networks at the Installation Sites using the
Acquired Network Facilities in accordance with the Quality of
Service Standards and other terms of this Agreement, including
all Addenda hereto.
11.2. REPRESENTATIONS AND WARRANTIES.
11.2.1. [Intentionally omitted.]
11.2.2. SAVVIS hereby represents and warrants that the terms
hereof do not conflict in any respect whatsoever with
any SAVVIS tariff on file with the Federal
Communications Commission or other regulatory body.
If, during the term of this Agreement, SAVVIS shall
file a contract specific tariff governing the
Networks or any portion thereof, such tariff filing
shall be consistent in all respects with the terms of
this Agreement, and SAVVIS shall give Telerate 10
days advance written notice of making such a tariff
filing and of filing any subsequent modifications
thereto.
11.2.3. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
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11.3. So long as Bridge is the beneficial owner of 20% of the
outstanding voting securities of SAVVIS Parent, SAVVIS Parent
shall not, without the prior written consent of Bridge, take
any action or otherwise enter into any agreement, arrangement
or understanding, including without limitation the creation or
issuance of any class of stock or other security, or any
agreement with any shareholder of SAVVIS Parent, the effect of
which would be to provide any shareholder of SAVVIS Parent
with any voting or registration rights superior to the voting
or registration rights of Bridge, other than as required by
law.
11.4. SAVVIS acknowledges that the occurrence of Event of Default by
SAVVIS, arising from either (i) a failure of the Networks to
meet Quality of Service Standards or (ii) a total loss to
Telerate of the use of the Networks, could cause irreparable
harm to Telerate, the amount of which may be difficult to
determine, thus potentially making any remedy at law or in
damages inadequate. SAVVIS, therefore, agrees that Telerate
shall have the right to apply to any court of competent
jurisdiction for injunctive relief upon the occurrence of an
Event of Default by SAVVIS or the occurrence of an event
which, with the passage of time or the giving of notice, could
become an Event of Default by SAVVIS and for any other
appropriate relief. This right shall be in addition to any
other remedy available to Telerate in law or equity. SAVVIS
further agrees that, upon the occurrence of an Event of
Default by SAVVIS, SAVVIS shall pay to Telerate, as liquidated
damages and not as a penalty, an amount equal to the lesser of
(a) the aggregate amounts paid by Telerate to SAVVIS under
this Agreement during the six months preceding such Event of
Default by SAVVIS or (b) $50,000,000; provided, however, that
Telerate may recover liquidated damages under this Section
only for an Event of Default by SAVVIS that occurs (i) prior
to any Event of Default by SAVVIS for which Telerate or Bridge
or any Telerate Subsidiary or any Bridge Subsidiary has
claimed liquidated damages under this Section or under the
Bridge Network Services Agreement or under any Local Network
Services Agreement or under any Bridge Local Network Services
Agreement, or (ii) more than 36 months following the most
recent Event of Default by SAVVIS for which Telerate or Bridge
or any Telerate Subsidiary or any Bridge Subsidiary has
claimed liquidated damages under this Section or under the
Bridge Network Services Agreement or under any Local Network
Services Agreement or under any Telerate Local Network
Services Agreement.
12. LIMITATIONS OF LIABILITY
12.1. Subject to Section 11.4, neither party shall be liable to the
other for indirect, incidental, consequential, exemplary,
reliance or special damages, including damages for lost
profits, regardless of the form of action whether in contract,
indemnity, warranty, strict liability or tort, including
negligence of any kind with respect to the Networks or other
conduct under this Agreement.
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12.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, including fraud, or (b) injury or death, or damage
to tangible real or tangible personal property or the
environment, when proximately caused by SAVVIS' or Telerate's
negligence or that of their respective agents, subcontractors
or employees. Nothing contained in this Section shall limit
SAVVIS' intellectual property indemnification obligations
under Section 16.1 or Telerate's indemnification obligations
with respect to a breach of Section 10.3.
13. EQUIPMENT AND SOFTWARE NOT PROVIDED BY SAVVIS
13.1. SAVVIS shall not be responsible for the installation,
operation or maintenance of equipment or software not provided
by it under this Agreement, nor shall SAVVIS be responsible
for the transmission or reception of information by equipment
or software not provided by SAVVIS hereunder. In the event
that Telerate uses equipment or software not provided by
SAVVIS hereunder in a manner that impairs Telerate's use of
the Networks, Telerate shall not be excused from payment for
such use and SAVVIS shall not be responsible for any failure
of the Networks to meet the Quality of Service Standards
resulting from the use of such equipment or software by
Telerate. Upon notice from SAVVIS that the equipment or
software not provided by SAVVIS under this Agreement is
causing or is likely to cause hazard, interference or service
obstruction, Telerate shall eliminate the likelihood of such
hazard, interference or service obstruction.
13.2. Notwithstanding the foregoing, SAVVIS shall, at no additional
charge, provide all interface specifications for the Networks
reasonably requested by Telerate. SAVVIS shall, upon the
receipt of appropriate specifications from Telerate, inform
Telerate of the compatibility with the Networks of any
equipment or software that Telerate proposes to use in
connection therewith, the effects, if any, of the use of such
equipment or software on the quality, operating
characteristics and efficiency of the Networks, and the
effects, if any, of the Networks on the operating
characteristics and efficiency of any such equipment or
software.
14. PROPRIETARY RIGHTS; LICENSE
14.1. SAVVIS hereby grants to Telerate and the Telerate Subsidiaries
a non-exclusive and non-transferable license to use all
programming and software necessary for Telerate and the
Telerate Subsidiaries to use the Networks. Such license is
granted for the term of this Agreement for the sole purpose of
enabling Telerate and the Telerate Subsidiaries to use the
Networks.
14.2. All title and property rights (including intellectual property
rights) to the Networks (including associated programming and
software) are and shall remain with SAVVIS or the third-party
providers thereof to SAVVIS. Telerate shall not (except as
permitted by applicable law) attempt to examine, copy, alter,
reverse
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engineer, decompile, disassemble, tamper with or otherwise
misuse the Networks, programming and software.
15. CONFIDENTIALITY
15.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination
(including all extensions thereof), each party agrees to
maintain in strict confidence all Confidential Information.
Neither party shall, without prior written consent of the
other party, use the other party's Confidential Information
for any purpose other than for the performance of its duties
and obligations, and the exercise of its rights, under this
Agreement. Each party shall use, and shall cause all
authorized recipients of the other party's Confidential
Information to use, the same degree of care to protect the
other party's Confidential Information as it uses to protect
its own Confidential Information, but in any event not less
than a reasonable degree of care.
15.2. Notwithstanding Section 15.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or
(c) other persons (including counsel, consultants, lessors or
managers of facilities or equipment used by such party) in
need of access to such information for purposes specifically
related to either party's responsibilities under this
Agreement, provided that any disclosure of Confidential
Information under clause (c) shall be made only upon prior
written approval of the other party and subject to the
appropriate assurances that the recipient of such information
shall hold it in strict confidence.
15.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
15.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines,
in its sole discretion, to grant the requested waiver, it will
do so in writing over the signature of an employee authorized
to grant such request.
15.5. Telerate and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of
which may be difficult to determine, thus potentially making
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any remedy at law or in damages inadequate. Each party,
therefore, agrees that the other party shall have the right to
apply to any court of competent jurisdiction for an order
restraining any breach or threatened breach of this Section
and for any other appropriate relief. This right shall be in
addition to any other remedy available in law or equity.
15.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another
party's Confidential Information shall notify the other party
in advance of any such disclosure and, absent the other
party's consent to such disclosure, use its best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
15.7. The provisions of Section 15.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or competent
jurisdiction, or disclosures that may be reasonably necessary
in connection with the sale of securities or the performance
or enforcement of this Agreement or any of the obligations
hereof; provided, however, that if the receiving party would
otherwise be required to refer to or describe any aspect of
this Agreement in any of the preceding circumstances, the
receiving party shall use its reasonable efforts to take such
steps as are available under such circumstances (such as by
providing a summary or synopsis) to avoid disclosure of the
financial terms and conditions of this Agreement.
Notwithstanding any provisions of this Agreement to the
contrary, either party may disclose the terms and conditions
of this Agreement in the course of a due diligence review
performed in connection with prospective debt financing or
equity investment by, or a sale to, a third party, so long as
the persons conducting such due diligence review have agreed
to maintain the confidentiality of such disclosure and not to
use such disclosure for any purpose other such due diligence
review.
16. INDEMNIFICATIONS
16.1. SAVVIS shall defend, settle, or otherwise manage at its own
cost and expense any claim or action against Telerate or any
of its directors, officers, employees or assigns for actual or
alleged infringement by the Networks of any patent, copyright,
trademark, trade secret or similar proprietary right of any
third party, except to the extent that such actual or alleged
infringement arises from (i) such actual or alleged
infringement by the Acquired Network Facilities on the
Effective Date or (ii) an act or omission of Telerate or a
Telerate Subsidiary or a vendor or customer of Telerate or a
Telerate Subsidiary or (iii) equipment or
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software used by Telerate and not provided by SAVVIS or (iv)
services or equipment provided by or on behalf of Bridge under
the Technical Services Agreement. Telerate shall notify SAVVIS
promptly in writing of any such claim or suit and shall
cooperate with SAVVIS in a reasonable way to facilitate the
settlement or defense thereof. SAVVIS further agrees to
indemnify and hold Telerate harmless from and against any and
all liabilities and damages (whether incurred as the result of
a judicial decree or a settlement), and the costs and expenses
associated with any claim or action of the type identified in
this Section (including reasonable attorneys' fees).
16.2. If, as a consequence of a claim or action of the kind
described in Section 16.1, SAVVIS' or Telerate's use of all or
part of any Network is enjoined, SAVVIS shall, at its option
and expense, either: (a) procure for Telerate the right to
continue using the affected Network; (b) modify such Network
so that they are non-infringing, provided that such
modification does not affect the intended use of the Network
as contemplated hereunder. If SAVVIS does not take any of the
actions described in clauses (a) or (b), then Telerate may
terminate the affected portion of such Network, and SAVVIS
shall refund to Telerate any prepaid charges therefor.
16.3. Subject to Section 12, Telerate will defend, indemnify and
hold harmless SAVVIS or any of its directors, officers,
employees or assigns from and against all loss, liability,
damage and expense, including reasonable attorneys' fees,
caused by:
(a) claims for libel, slander, invasion of privacy or
infringement of copyright, and invasion and/or
alteration of private records or data arising from
any information, data or messages transmitted over
the Networks by Telerate; and
(b) claims for infringement of patents arising from the
use by Telerate of equipment and software, apparatus
and systems not provided hereunder in connection with
the Networks; and
(c) the violation of any representations, warranties and
covenants made by Bridge in this Agreement.
16.4. Subject to Section 12, SAVVIS will defend, indemnify and hold
harmless Telerate or any of its directors, officers, employees
or assigns from and against all loss, liability, damage and
expense, including reasonable attorneys' fees, caused by:
(a) claims for infringement of patents arising from the
use by SAVVIS of equipment and software, apparatus
and systems not provided by SAVVIS hereunder in
connection with the Networks (other than any Acquired
Network Facilities); and
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(b) the violation of any representations, warranties and
covenants made by SAVVIS in this Agreement.
17. DISPUTES
17.1. Except as expressly provided in Schedule 4.1 of this
Agreement, the resolution of any and all disputes arising from
or in connection with this Agreement, whether based on
contract, tort, statute or otherwise, including disputes over
arbitrability and disputes in connection with claims by third
persons ("DISPUTES") shall be exclusively governed by and
settled in accordance with the provisions of this Section 17.
The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are
required to be resolved in determining whether to grant such
relief. Resolution of Disputes with respect to claims by third
persons shall be deferred until any judicial proceedings with
respect thereto are concluded.
17.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon
the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause
under applicable law. Either party may serve process or notice
on the other in any arbitration or litigation in accordance
with the notice provisions hereof. The parties agree not to
disclose any information regarding any Dispute or the conduct
of any arbitration hereunder, including the existence of such
Dispute or such arbitration, to any person or entity other
than such employees or representatives of such party as have a
need to know.
17.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the
"ARBITRATION DEMAND") to the other party not sooner than 60
calendar days after the date of delivery of the Dispute Notice
but at any time thereafter. The arbitration shall be conducted
in St. Louis, Missouri.
17.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Telerate, one
by SAVVIS, and the third by agreement of the other two not
later than 10 days after appointment of the first two, or,
failing such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
17.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules.
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Notwithstanding the foregoing, each party shall have the right
to inspect the books and records of the other party that are
reasonably related to the Dispute, and each party shall
provide to the other, reasonably in advance of any hearing,
copies of all documents which such party intends to present in
such hearing and the names and addresses of all witnesses
whose testimony such party intends to present in such hearing.
17.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
17.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees
and expenses in connection with any and all proceedings under
this Section 17.
17.8. Either party may assert appropriate statutes of limitation as
a defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
17.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and SAVVIS shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Networks to
Telerate unless otherwise directed by Bridge. This Section
shall not apply where (a) Telerate is in default under this
Agreement or (b) the dispute or controversy between the
parties relates to harm to the Networks allegedly caused by
Telerate and Telerate does not immediately cease and desist
from the activity giving rise to the dispute or controversy.
18. FORCE MAJEURE
18.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or
other causes to the extent that such failure and the
consequences thereof are reasonably beyond the control and
without the fault or negligence of the party claiming excuse.
Each party shall, with the cooperation of the other party, use
reasonable efforts to mitigate the extent of any failure to
perform and the adverse consequences thereof.
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18.2. If SAVVIS cannot promptly provide a suitable temporary SAVVIS
alternative to all or part of a Network subject to an
interruption in connection with the existence of a force
majeure condition, Telerate may, at its option and at its own
cost, contract with one or more third parties for the affected
portion of the Network for the shortest commercially available
period likely to cover the reasonably expected duration of the
interruption, and may suspend SAVVIS' provision of such
affected portion for such period. SAVVIS shall not charge
Telerate for the affected portion thus suspended during the
period of suspension. SAVVIS shall resume provision of the
suspended portion of the Network upon the later of the
termination or expiration of Telerate's legally binding
commitments under contracts with third parties for alternative
services or the cessation or remedy of the force majeure
condition.
18.3. In the event that a force majeure condition shall continue for
more than 60 days, Telerate may cancel the affected portion of
the Network with no further liability to SAVVIS other than for
obligations incurred with respect to such affected portion
prior to the occurrence of the force majeure condition.
18.4. The consequences arising from existence and continuation of a
force majeure condition, including without limitation any
interruption of the Networks and the exercise by Telerate of
its rights under this Section 18, shall be deemed not to
constitute a breach by either party hereto of any
representations, warranties or covenants hereunder and shall
not be grounds for the exercise of any remedies under this
Agreement, including without limitation remedies under Section
2.2 or Section 7, other than those specified in this Section
18.
19. GENERAL PROVISIONS
19.1. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than
the parties and their respective successors and permitted
assigns.
19.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior understandings,
agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
19.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other party, which consent shall not be
unreasonably withheld.
19.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
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19.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
19.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Telerate: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and
General Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General
Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set
forth.
19.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri without giving effect to any choice or conflict of
law provision or rule (whether of the State of Missouri or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Missouri.
19.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Telerate. No waiver by any party of
any default, misrepresentation, or breach of
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warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
19.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
19.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
19.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
19.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Network
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
SAVVIS COMMUNICATIONS CORPORATION
By
-------------------------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
TELERATE HOLDINGS, INC.
By
-------------------------------
Name: Richard R. Snape
Title: Chief Operating Officer
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EXHIBIT A TO THE TELERATE NETWORK SERVICES AGREEMENT
FORM OF LOCAL
NETWORK SERVICES AGREEMENT
This LOCAL NETWORK SERVICES AGREEMENT (the "Agreement") is effective as
of ___________, 2000 (the "Effective Date") between [local SAVVIS entity], a
[limited liability company] incorporated under the laws of [country ] ("SAVVIS")
and [local Bridge/Telerate entity], a [limited liability company] incorporated
under the laws of [country] ("Customer").
RECITALS
A. Customer is engaged in the business of collecting and distributing
various financial, news and other data in [country] (the "JURISDICTION").
B. SAVVIS is engaged in the business of providing Internet Protocol
backbone and other data transport services in the Jurisdiction.
C. SAVVIS Communications and [Bridge Parent]/[Telerate Parent] have
entered into the Network Services Agreement for the provision and receipt of
similar services on a world-wide basis at the parent level as are being provided
and received by the parties to this Agreement within the Jurisdiction.
D. Together with this Agreement, the SAVVIS is entering into certain
other agreements with Customer, or Affiliates of the Customer, related to their
operations in the Jurisdiction, including Local Transfer Agreements, Equipment
Collocation Permits, and Local Administrative Services Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1 This Agreement shall consist of this Local Network Services
Agreement by and between SAVVIS and Customer, including all
addenda to this Agreement entered into in the manner set forth
herein (each an "ADDENDUM" and collectively the "ADDENDA").
This Agreement shall be interpreted wherever possible to avoid
conflicts between the Sections hereof and the Addenda,
provided that if such a conflict shall arise, the Addenda
shall control.
1.2 Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an
Addendum to this Agreement, either party may initiate the
process of determining such matter by submitting a proposed
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outline or contents of such Addendum to the other party. Each
party shall appoint a primary contact and a secondary contact
for the completion of such Addendum, who shall be the contact
points for every issue concerning such Addendum and who shall
be informed of the progress of the project. The names of the
contacts will be exchanged in writing by the parties. Using
the contacts, the parties shall work together in good faith
with such diligence as shall be commercially reasonable under
the circumstances to complete such Addendum, provided,
however, that neither party shall be obligated to enter into
such an Addendum. Upon the completion of such Addendum, it
shall be set forth in a written document and executed by the
parties and shall become a part of this Agreement and shall be
deemed to be incorporated herein by reference.
1.3 Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined
terms shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included"
and "including" shall not be construed as terms of limitation.
Capitalized terms not otherwise defined herein have the
meanings assigned to such terms in the Network Services
Agreement.
"ACQUIRED NETWORK FACILITIES" means the assets and contracts
for the provision of Internet Protocol backbone and other data
transport services within the Jurisdiction to the extent
acquired by SAVVIS pursuant to the Local Transfer Agreement
between Customer, or Affiliates of the Customer, and SAVVIS.
"ADDITIONAL NETWORK FACILITIES" means any assets and contracts
of SAVVIS for the provision of Internet Protocol backbone and
other data transport services other than the Acquired Network
Facilities.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" means a period of 12 months beginning on the
Effective Date and each subsequent anniversary thereof.
["BRIDGE PARENT" means Bridge Information Systems, Inc., a
Missouri corporation, and its successors and assigns.]
"CONFIDENTIAL INFORMATION" means all information concerning
the business of Customer, SAVVIS or any third party doing
business with either of them that may be obtained from any
source (i) by SAVVIS by virtue of its performance under this
Agreement or (ii) by Customer by virtue of its use of the
Networks. Such information shall also include the terms of
this Agreement (and negotiations and proposals from one party
to the other related directly thereto), network designs and
design recommendations, tools and programs, pricing, methods,
processes, financial data, software, research, development,
strategic plans or
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related information. All such information disclosed prior to
the execution of this Agreement shall also be considered
Confidential Information for purposes of this Agreement.
Confidential Information shall not include information that:
(a) is already rightfully known to the receiving party
at the time it is obtained by such party, free
from any obligation to keep such information
confidential; or
(b) is or becomes publicly known through no wrongful
act of the receiving party; or
(c) is rightfully received by the receiving party from
a third party without restriction and without
breach of this Agreement.
"CUSTOMER" means [local Bridge/Telerate entity], a [limited
liability company] incorporated under the laws of [country],
and its successors and assigns.
"DISTRIBUTOR COUNTRY" means any country in which the products
and services of Bridge and Bridge Subsidiaries are provided
through third-party distributors.
"EFFECTIVE DATE" means the date set forth in the Preamble of
this Agreement.
"EVENT OF DEFAULT BY SAVVIS" has the meaning assigned to such
term in Section 7.1 of this Agreement.
"INITIAL TERM" means a period of ten consecutive Agreement
Years beginning on the Effective Date.
"INSTALLATION SITE" means any facility of Customer or of
vendors or customers of Customer at which one or more of the
Networks is installed.
"LOCAL EXCHANGE CARRIER" means the local telecommunications
provider(s) from which SAVVIS leases the lines it makes
available to Customer.
"LOCAL [TELERATE]/[BRIDGE] NETWORK SERVICES AGREEMENT" means a
local network services agreement pursuant to which SAVVIS
shall provide Internet Protocol backbone and other data
transport services to an Affiliate of [Telerate
Parent]/[Bridge Parent] operating in the Jurisdiction.
"MARKET HOURS" means, with respect to any Installation Site,
the period of time beginning two hours before the time at
which trading opens on the principal securities exchange or
automated quotation system designated by Customer in writing
from time to time as being used by the purchasers and sellers
of securities at such Installation Site, and ending two hours
after the time at which such trading ceases to be conducted.
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"NETWORK" and "NETWORKS" have the meaning assigned to such
terms in Section 2.1 of this Agreement.
"NETWORK SERVICES AGREEMENT" means the Network Services
Agreement between SAVVIS Communications and [Bridge
Parent]/[Telerate Parent], effective as of February 14, 2000.
"POP" means point-of-presence.
"QUALITY OF SERVICE STANDARDS" means the standards for the
performance of the Networks contained in Schedule 2.2 hereto
or an Addendum to this Agreement.
"SAVVIS" means [local SAVVIS entity], a [limited liability
company] incorporated under the laws of [country ], and its
successors and assigns.
"SAVVIS COMMUNICATIONS" means SAVVIS Communications
Corporation, a Missouri corporation, its successors and
assigns.
"SECURITIES EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended.
"TAIL CIRCUIT" means the access line or other communications
circuit from the SAVVIS POP to an Installation Site.
["TELERATE PARENT" means Telerate Holdings, Inc., a Delaware
corporation, and its successors and assigns.]
"TRANSITION PERIOD" has the meaning assigned to such term in
Section 6.3 of this Agreement.
2. THE NETWORKS AND QUALITY OF SERVICE STANDARDS
2.1 SAVVIS agrees to use the Acquired Network Facilities to
provide to Customer the following managed packet-data
transport networks, including the operation, management and
maintenance thereof:
(a) that portion of a global office-automation network
located in the Jurisdiction, providing connectivity
between the offices of Customer, Bridge Parent and
Affiliates of Bridge Parent (the "OA NETWORK"),
(b) that portion of a global data collection network
located in the Jurisdiction (the "COLLECTION
NETWORK") and
(c) that portion of a global data distribution network
located in the Jurisdiction (the "DISTRIBUTION
NETWORK"),
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which shall be referred to in this Agreement collectively as
the "NETWORKS" and individually as a "NETWORK."
2.2 Each Network shall be operated, managed and maintained by
SAVVIS. SAVVIS may, but shall not be obligated to, use
facilities of SAVVIS other than the Acquired Network
Facilities to provide all or any part of any Network.
Beginning on the first anniversary of the Effective Date and
thereafter, each Network shall be operated, managed and
maintained by SAVVIS according to the Quality of Service
Standards set forth in Schedule 2.2 hereof, and SAVVIS shall
be responsible for monitoring the performance of the Networks
with respect to the Quality of Service Standards and shall
provide Customer with monthly reports of such performance. If
the Quality of Service Standards are not met with respect to a
particular Installation Site in any month, Customer shall be
entitled to receive, upon written request by Customer within
30 days of its receipt of the performance report for such
Installation Site for such month, a credit in the amount set
forth on Schedule 2.2 attached hereto (or, in the case of a
Distributor Country, as set forth on Schedule 2.2 to the
Network Services Agreement), which amount shall be deemed to
be one month's charges applicable to such Installation Site
under this Agreement with respect to such month; provided,
however, that Customer shall not be entitled to such credit to
the extent that the failure to meet the Quality of Service
Standards with respect to such Installation Site is due to (i)
an act or omission of Customer or a vendor or customer of
Customer or (ii) equipment or software used by Customer and
not provided by SAVVIS. Not more than one credit of one
month's charges shall be given for a particular Installation
Site for a particular month. The Quality of Service Standards
shall not apply to the provision of Local Access Facilities in
countries in which the products and services of Telerate and
Telerate Subsidiaries are provided through third-party
distributors. For all purposes of this Agreement, including
without limitation the determination of an Event of Default by
SAVVIS, the Quality of Service Standards applicable to a
particular Installation Site in any month shall be deemed to
have been met unless Customer, within 30 days of its receipt
of the performance report for such Installation Site for such
month, requests in writing a credit as set forth above with
respect to such Installation Site for such month.
2.3 [Intentionally omitted.]
2.4 In providing Additional Network Facilities, SAVVIS agrees to
use its best efforts to expedite the provisioning of the
circuits for such Additional Network Facilities in those
instances in which SAVVIS is responsible for provisioning such
circuits, and to use its best efforts to avoid single points
of failure in the engineering design of such Additional
Network Facilities, consistent with the level of redundancy
specified in the applicable Addendum.
2.5 Throughout the term of this Agreement, SAVVIS shall use its
reasonable best efforts to continue to meet the requests of
Customer to enhance the total capacity,
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geographic extension and performance quality of the Networks,
and to maintain its research and development effort at a level
appropriate to sustain the ability of Customer to compete on
the basis of the quality of the Networks.
3. RATES AND CHARGES
3.1 Customer shall pay SAVVIS for the Networks using the Acquired
Network Facilities and Additional Network Facilities according
to the rates and charges set forth in Schedule 3.1 of the
Network Services Agreement.
3.2 The parties recognize that certain savings might be obtained
by consolidating the multiple Local Access Facilities that are
provided at such building locations on the Effective Date. In
the event that SAVVIS consolidates the multiple Local Access
Facilities at one or more of such building locations and
obtains cost savings as a result thereof, the parties will
mutually agree within 30 days following such consolidation on
the manner in which such savings shall be shared as follows:
(a) between SAVVIS and Customer, if only
Customer uses those consolidated Local
Access Facilities; or
(b) between SAVVIS, Customer and the Affiliate
of [Telerate Parent]/[Bridge Parent] that is
a party to the Local [Telerate]/[Bridge]
Network Services Agreement, if both Customer
and such Affiliate use those consolidated
Local Access Facilities.
3.3 For any Installation Site to which SAVVIS is providing
services both under this Agreement and a Local
[Telerate]/[Bridge] Network Services Agreement, the rates and
charges applicable to such Installation Site under this
Agreement shall be one-half of the rates and charges that
would otherwise be applicable to such Installation Site under
this Agreement.
4. PROVISION OF TAIL CIRCUITS
4.1 SAVVIS shall use its reasonable efforts to provide a Tail
Circuit to Customer by contracting with the Local Exchange
Carrier for access to the Tail Circuit and causing the Tail
Circuit to be operated, managed, and maintained as necessary
to provide access thereto to Customer. SAVVIS does not
guarantee or warrant the performance of the Tail Circuit or
the performance by the Local Exchange Carrier of its
obligations under any contract between SAVVIS and the Local
Exchange Carrier, applicable laws and regulations, or
standards of the industry.
4.2 Customer shall not use the Tail Circuit in any way that might
cause SAVVIS to violate the terms and conditions under which
access to the Tail Circuit is provided by the Local Exchange
Carrier, whether such terms and conditions be contractual,
regulatory, or other.
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4.3 Customer shall be responsible for only that portion of SAVVIS'
costs attributable to Customer's own access to and use of the
Tail Circuit. In the event that SAVVIS provides access to any
third party or parties, Customer and SAVVIS will follow the
procedure set forth in Section 1.2 above in order to establish
a mutually agreed upon method or formula for determining the
amount to be charged to Customer, generally based on a pro
rata allocation of SAVVIS' total costs among all its customers
and other relevant considerations and/or fair and reasonable
adjustments in light of the circumstances at that time.
5. INVOICES
5.1 The amounts due to SAVVIS from Customer for the installation,
operation, management and maintenance of the Networks shall be
billed monthly in advance. All items on invoices not the
subject of a bona fide dispute shall be payable by Customer in
legal currency of [jurisdiction] within 30 days from the date
of receipt of the invoice. All amounts not in dispute are
subject to interest charges of 1-1/2 percent that will accrue
daily on all amounts not paid within 30 days of the date of
receipt of the invoice.
5.2 At any time and from time to time, Customer may, by written
notice to SAVVIS, have one or more Installation Sites removed
from the Networks. Each monthly invoice from SAVVIS to
Customer shall reflect a reduction in the amount charged to
Customer for the Networks resulting from any such removal of
Installation Sites. In the case of any Installation Site
removed from the Acquired Network Facilities, such reduction
shall be the sum of:
(a) the actual cost of the Local Access Facilities
connecting the Acquired Network Facilities to such
Installation Site, effective as of such time as
SAVVIS is no longer required to pay such costs, and
(b) the amounts set forth on Schedule 5.2 of the Network
Services Agreement, which are deemed to be one
month's charges applicable to such Installation Site
under this Agreement with respect to such month
during the first Agreement Year, according to the
geographic location and connection speed at such
Installation Site, effective as of such time as such
Installation Site is disconnected from the Networks.
5.3 Customer shall pay any sales, use, federal excise, utility,
gross receipts, state and local surcharges, value added and
similar taxes, charges or levies lawfully levied by a duly
constituted taxing authority against or upon the Networks. In
the alternative, Customer shall provide SAVVIS with a
certificate evidencing Customer's exemption from payment of or
liability for such taxes. All other taxes, charges or levies,
including any ad valorem, income, franchise, privilege or
occupation taxes of SAVVIS shall be paid by SAVVIS.
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5.4 Bona fide disputes concerning invoices shall be referred to
the parties' respective representatives who are authorized to
resolve such matters. Any amount to which Customer is entitled
as a result of the resolution of a billing dispute shall be
credited promptly to Customer's account. Any amount to which
SAVVIS is entitled as a result of the resolution of a billing
dispute shall be paid promptly to SAVVIS.
5.5 Against the amounts owed by Customer to SAVVIS under this
Agreement, Customer shall have the right to offset any amounts
owed by SAVVIS to Customer under this Agreement, or otherwise,
including without limitation any amounts paid by Bridge Parent
on behalf of SAVVIS under guarantees by Bridge Parent of
obligations of SAVVIS.
6. TERM AND EXTENSIONS
6.1 This Agreement shall commence on the Effective Date and shall
continue in full force and effect for the Initial Term unless
terminated or extended in accordance with the provisions
hereof.
6.2 The term of this Agreement may be extended by Customer for one
additional five-year period by giving SAVVIS written notice
not less than one year before the scheduled expiration of the
Initial Term.
6.3 Upon the termination of this Agreement in accordance with its
scheduled expiration or by Customer pursuant to Section 7,
SAVVIS will continue to provide the Networks in accordance
with the terms and conditions herein (excluding the Minimum
Annual Commitment) for a period of up to five years after the
effective date of termination (the "TRANSITION PERIOD").
During the Transition Period, Customer shall pay SAVVIS for
the use of the Networks at the rates in effect at the
effective date of termination. If Customer has not completely
transitioned from its use of the Networks after the Transition
Period, SAVVIS will provide the Networks at SAVVIS' then
current list rates. SAVVIS and its successor will cooperate
with Customer until Customer has completely migrated to
another provider.
6.4 The above provisions of this Section 6 notwithstanding, the
term of this Agreement, including the Initial Term and any
extension provided under Section 6.2, and the Transition
Period shall not extend beyond the term or the transition
period of the Network Services Agreement.
7. TERMINATION BY CUSTOMER
7.1 An "EVENT OF DEFAULT BY SAVVIS" shall be deemed to occur if:
(a) SAVVIS has failed to a material degree to perform or
comply with or has violated any material
representation, warranty, term, condition or
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obligation of SAVVIS under this Agreement, and SAVVIS
has failed to cure such failure or violation within
60 days after receiving notice thereof from Customer;
or
(b) SAVVIS becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(c) an Event of Default by SAVVIS occurs under the Local
[Telerate]/[Bridge] Network Services Agreement or
SAVVIS Communications defaults under the terms of the
Network Services Agreement.
7.2 Customer shall have the right to terminate this Agreement,
with no liability to SAVVIS other than for charges (less any
applicable credits) for the Networks provided prior to such
termination, if:
(a) Customer provides written notice to SAVVIS, at any
time after the ninth anniversary of the Effective
Date, of Customer's intent to terminate, such
termination to be effective not less than one year
following the date of such notice; or
(b) Customer provides 10 days written notice of its
intent to terminate in the event that an Event of
Default by SAVVIS occurs.
7.3 For purposes of Section 7.1(a), if the Quality of Service
Standards are not met with respect to a particular
Installation Site in any month, SAVVIS shall be deemed to have
cured such failure within 60 days if the Quality of Service
Standards are met with respect to such Installation Site in
the following month. The parties acknowledge and agree that
the failure of the Quality of Service Standards to be met with
respect to one or more Installation Sites in one or more
months may, but does not necessarily, constitute a failure by
SAVVIS to a material degree to perform or comply with or a
violation to a material degree of any material representation,
warranty, term, condition or obligation of SAVVIS under this
Agreement.
7.4 As provided in Section 2.2, for all purposes of this
Agreement, including without limitation the determination of
an Event of Default by SAVVIS under this Section, the Quality
of Service Standards applicable to a particular Installation
Site in any month shall be deemed to have been met unless
Customer, within 30 days of its receipt of the performance
report for such Installation Site for such month, requests in
writing a credit as set forth in Section 2.2 with respect to
such Installation Site for such month.
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8. TERMINATION BY SAVVIS
8.1 SAVVIS shall have the right to terminate this Agreement if:
(a) Customer has failed to pay any invoice that is not
the subject of a bona fide dispute within 60 days of
the date on which such payment is due and SAVVIS has
provided Customer with written notice thereof,
provided that Customer shall have a further 30 days
from the time it receives such notice from SAVVIS of
nonpayment to cure any such default;
(b) SAVVIS provides 10 days written notice of its intent
to terminate in the event that Customer has failed to
perform or comply with or has violated any material
representation, warranty, term, condition or
obligation of Customer under this Agreement, and
Customer has failed to cure such failure or violation
within 60 days after receiving notice thereof from
SAVVIS; or
(c) Customer becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay debts when due; or
(d) SAVVIS becomes entitled to terminate the Local
[Telerate]/[Bridge] Network Services Agreement or
SAVVIS Communications becomes entitled to terminate
the Network Services Agreement.
8.2 Notwithstanding the provisions of Section 8.1(b) above, SAVVIS
shall not have the right to terminate this Agreement under
Section 8.1(b) solely for a failure by Customer to perform or
comply with, a violation by Customer of, the obligations of
Customer under Section 15 (Confidentiality) of this Agreement,
without prejudice, however, to such rights as SAVVIS may have
pursuant to such Section and to such rights and remedies to
which SAVVIS may be entitled, at law or in equity, as the
result of an actual or threatened breach by Customer of such
Section.
9. ACCEPTANCE OF ADDITIONAL NETWORK FACILITIES
9.1. Upon the installation of Additional Network Facilities at any
Installation Site, SAVVIS shall conduct appropriate tests to
establish that such Additional Network Facilities perform in
accordance with mutually agreed upon acceptance criteria
("ACCEPTANCE CRITERIA") set forth in the applicable Addendum
entered into pursuant to Section 2.4, and shall promptly
inform Customer of such test results. If test results show
that the Additional Network Facilities are performing in
accordance with the Acceptance Criteria, Customer shall be
deemed to accept the Additional Network Facilities at the
Installation Site immediately.
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9.2 If SAVVIS' tests establish that newly installed Additional
Network Facilities at the Installation Site do not perform in
accordance with the mutually agreed upon Acceptance Criteria,
then SAVVIS shall immediately and diligently exert its best
efforts to bring the Additional Network Facilities at such
Installation Site into compliance. SAVVIS shall not bill
Customer for the Additional Network Facilities at such
Installation Site until the test results show that the
Additional Network Facilities are performing in accordance
with the Acceptance Criteria.
9.3 Upon repair or restoration of any part of the Networks, SAVVIS
shall conduct appropriate tests to establish that the Networks
perform in accordance with mutually agreed upon Acceptance
Criteria and shall promptly inform Customer of such test
results.
10. RIGHTS AND OBLIGATIONS OF CUSTOMER
10.1 SITE PREPARATION. For the installation of Additional Network
Facilities, Customer shall, at its own expense, provide all
necessary preparations of each Installation Site in accordance
with the requirements to be mutually agreed upon by the
parties and set forth in an Addendum hereto, including inside
wiring, demarcation extension and rack mount accessories.
Customer shall ensure that Customer-provided equipment is
on-site by the scheduled installation date. If SAVVIS is
required to reschedule the installation of Customer-provided
equipment because it is not on-site by the scheduled
installation date, Customer shall pay SAVVIS to redispatch
installation personnel.
10.2. PROPER USE OF NETWORKS.
10.2.1. Customer shall use any equipment provided by SAVVIS
in connection with the Networks in accordance with
its documentation, which documentation shall be
provided by SAVVIS at no additional charge. Unless
otherwise provided herein, upon the termination of
this Agreement Customer shall surrender to SAVVIS the
equipment provided by SAVVIS, in good working order,
ordinary wear and tear excepted.
10.2.2. Customer shall be liable for damages to the Networks
caused by the negligence or willful acts or omissions
of Customer's officers, employees, agents or
contractors, for loss through theft or vandalism of
the Networks at the Installation Site, and for
damages to the Networks caused by the use of
equipment or supplies not provided hereunder or not
otherwise authorized by SAVVIS.
10.2.3. Customer shall neither permit nor assist others to
use the Networks for any purpose other than that for
which they are intended, nor fail to maintain a
suitable environment specified by SAVVIS in the
applicable schedule, nor alter, tamper with, adjust
or repair the Networks. Any such alteration,
tampering, adjustment or repair by Customer shall
relieve
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SAVVIS from any liability or obligation hereunder (including
any warranty or indemnity obligation) relating to the affected
Network, and Customer shall be liable to SAVVIS for any
documented direct costs incurred by SAVVIS as a result of such
actions.
10.3. ABUSE OR FRAUDULENT USE OF NETWORKS. Customer shall neither
permit nor assist others to abuse or fraudulently use the
Networks, or to use the Networks for any unauthorized or
illegal purposes, including:
(a) obtaining or attempting to obtain service by any
fraudulent means or device to avoid payment; or
(b) accessing, altering or destroying any information of
another party by any fraudulent means or device, or
attempting to do so; or
(c) using the Networks so as to interfere with the use of
the SAVVIS network by other SAVVIS customers or
authorized users or in violation of law or in support
of any unlawful act; or
(d) using the Networks for voice communications over a
private network in jurisdictions where such use is
not allowed.
Notwithstanding the provisions of Section 8, upon the breach
of this Section 10.3 by Customer, SAVVIS shall have the right
to terminate this Agreement immediately upon written notice to
Customer.
10.4. COVENANT NOT TO COMPETE.
10.4.1. As an inducement to SAVVIS to enter into this
Agreement, which Customer acknowledges is of benefit
to it, and in consideration of the promises and
representations of SAVVIS under this Agreement,
Customer covenants and agrees that during the term of
this Agreement and for a period of five years
thereafter, neither Customer nor any of its
successors or assigns will, directly or indirectly,
engage in, or have any interest in any other person,
firm, corporation or other entity engaged in, any
business activities anywhere in the world competitive
with or similar or related to the packet-data
transport network services provided by SAVVIS under
this Agreement; provided, however, that (i) Customer
shall be free to continue to use the Call Assets and
the satellite networks currently used by Customer,
until such Call Assets or satellite networks have
been acquired by SAVVIS, SAVVIS Communications or
Affiliates of SAVVIS Communications, and (ii)
Customer shall be free to make passive investments in
securities of companies that provide network services
in competition with SAVVIS which, in the case of any
such security, does not constitute more than ten
percent (10%) of the total outstanding amount of such
security.
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10.4.2. If any court or tribunal of competent jurisdiction
shall refuse to enforce one or more of the covenants
in this Section 10.4 because the time limit
applicable thereto is deemed unreasonable, it is
expressly understood and agreed that such covenant or
covenants shall not be void but that for the purpose
of such proceedings such time limitation shall be
deemed to be reduced to the extent necessary to
permit the enforcement of such covenant or covenants.
10.4.3. If any court or tribunal of competent jurisdiction
shall refuse to enforce any or all of the covenants
in this Section 10.4 because, taken together, they
are more extensive (whether as to geographic area,
scope of business or otherwise) than is deemed to be
reasonable, it is expressly understood and agreed
between the parties hereto that such covenant or
covenants shall not be void but that for the purpose
of such proceedings the restrictions contained
therein (whether as to geographic area, scope of
business or otherwise) shall be deemed to be reduced
to the extent necessary to permit the enforcement of
such covenant or covenants.
10.4.4. Customer specifically acknowledges and agrees that
the foregoing covenants are commercially reasonable
and reasonably necessary to protect the interests of
SAVVIS hereunder. Customer hereby acknowledges that
SAVVIS and its successors and assigns will suffer
irreparable and continuing harm to the extent that
any of the foregoing covenants is breached and that
legal remedies would be inadequate in the event of
any such breach.
11. RIGHTS AND OBLIGATIONS OF SAVVIS
11.1. PROVISION OF THE NETWORKS. SAVVIS shall operate, maintain and
manage the Networks at the Installation Sites using the
Acquired Network Facilities in accordance with the Quality of
Service Standards and other terms of this Agreement, including
all Addenda hereto.
11.2. REPRESENTATIONS AND WARRANTIES.
11.2.1. [Intentionally omitted.]
11.2.2. SAVVIS hereby represents and warrants that the terms
hereof do not conflict in any respect whatsoever with
any SAVVIS tariff on file with the Federal
Communications Commission or other regulatory body.
If, during the term of this Agreement, SAVVIS shall
file a contract specific tariff governing the
Networks or any portion thereof, such tariff filing
shall be consistent in all respects with the terms of
this Agreement, and SAVVIS shall give Customer 10
days advance written notice of making such a tariff
filing and of filing any subsequent modifications
thereto.
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11.2.3. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
11.3. SAVVIS acknowledges that the occurrence of Event of Default by
SAVVIS, arising from either (i) a failure of the Networks to
meet Quality of Service Standards or (ii) a total loss to
Customer of the use of the Networks, could cause irreparable
harm to Customer, the amount of which may be difficult to
determine, thus potentially making any remedy at law or in
damages inadequate. SAVVIS, therefore, agrees that Customer
shall have the right to apply to any court of competent
jurisdiction for injunctive relief upon the occurrence of an
Event of Default by SAVVIS or the occurrence of an event
which, with the passage of time or the giving of notice, could
become an Event of Default by SAVVIS and for any other
appropriate relief. This right shall be in addition to any
other remedy available to Customer in law or equity. SAVVIS
further agrees that, upon the occurrence of an Event of
Default by SAVVIS, SAVVIS shall pay to Customer, as liquidated
damages and not as a penalty, an amount equal to the lesser of
(a) the aggregate amounts paid by Customer to SAVVIS under
this Agreement during the six months preceding such Event of
Default by SAVVIS or (b) $50,000,000; provided, however, that
Customer may recover liquidated damages under this Section
only for an Event of Default by SAVVIS that occurs (i) prior
to any Event of Default by SAVVIS for which Customer or
[Bridge Parent]/[Telerate Parent] or any customer of [Bridge
Parent]/[Telerate Parent] has claimed liquidated damages under
this Section or under a Network Services Agreement or any
Local [Telerate]/[Bridge] Network Services Agreement, or (ii)
more than 36 months following the most recent Event of Default
by SAVVIS for which Customer or [Bridge Parent]/[Telerate
Parent] or any customer of [Bridge Parent]/[Telerate Parent]
has claimed liquidated damages under this Section or under a
Network Services Agreement or any Local [Telerate]/[Bridge]
Network Services Agreement.
12. LIMITATIONS OF LIABILITY
12.1. Subject to Section 11.4, neither party shall be liable to the
other for indirect, incidental, consequential, exemplary,
reliance or special damages, including damages for lost
profits, regardless of the form of action whether in contract,
indemnity, warranty, strict liability or tort, including
negligence of any kind with respect to the Networks or other
conduct under this Agreement.
12.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, including fraud, or (b) injury or death, or damage
to tangible real or tangible personal property or the
environment, when proximately caused by SAVVIS' or Customer's
negligence or that of their respective agents, subcontractors
or employees. Nothing contained in this
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Section shall limit SAVVIS' intellectual property
indemnification obligations under Section 16.1 or Customer's
indemnification obligations with respect to a breach of
Section 10.3.
13. EQUIPMENT AND SOFTWARE NOT PROVIDED BY SAVVIS
13.1. SAVVIS shall not be responsible for the installation,
operation or maintenance of equipment or software not provided
by it under this Agreement, nor shall SAVVIS be responsible
for the transmission or reception of information by equipment
or software not provided by SAVVIS hereunder. In the event
that Customer uses equipment or software not provided by
SAVVIS hereunder in a manner that impairs Customer's use of
the Networks, Customer shall not be excused from payment for
such use and SAVVIS shall not be responsible for any failure
of the Networks to meet the Quality of Service Standards
resulting from the use of such equipment or software by
Customer. Upon notice from SAVVIS that the equipment or
software not provided by SAVVIS under this Agreement is
causing or is likely to cause hazard, interference or service
obstruction, Customer shall eliminate the likelihood of such
hazard, interference or service obstruction.
13.2. Notwithstanding the foregoing, SAVVIS shall, at no additional
charge, provide all interface specifications for the Networks
reasonably requested by Customer. SAVVIS shall, upon the
receipt of appropriate specifications from Customer, inform
Customer of the compatibility with the Networks of any
equipment or software that Customer proposes to use in
connection therewith, the effects, if any, of the use of such
equipment or software on the quality, operating
characteristics and efficiency of the Networks, and the
effects, if any, of the Networks on the operating
characteristics and efficiency of any such equipment or
software.
14. PROPRIETARY RIGHTS; LICENSE
14.1. SAVVIS hereby grants to Customer a non-exclusive and
non-transferable license to use all programming and software
necessary for Customer to use the Networks. Such license is
granted for the term of this Agreement for the sole purpose of
enabling Customer to use the Networks.
14.2. All title and property rights (including intellectual property
rights) to the Networks (including associated programming and
software) are and shall remain with SAVVIS or the third-party
providers thereof to SAVVIS. Customer shall not (except as
permitted by applicable law) attempt to examine, copy, alter,
reverse engineer, decompile, disassemble, tamper with or
otherwise misuse the Networks, programming and software.
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15. CONFIDENTIALITY
15.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination
(including all extensions thereof), each party agrees to
maintain in strict confidence all Confidential Information.
Neither party shall, without prior written consent of the
other party, use the other party's Confidential Information
for any purpose other than for the performance of its duties
and obligations, and the exercise of its rights, under this
Agreement. Each party shall use, and shall cause all
authorized recipients of the other party's Confidential
Information to use, the same degree of care to protect the
other party's Confidential Information as it uses to protect
its own Confidential Information, but in any event not less
than a reasonable degree of care.
15.2. Notwithstanding Section 15.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or
(c) other persons (including counsel, consultants, lessors or
managers of facilities or equipment used by such party) in
need of access to such information for purposes specifically
related to either party's responsibilities under this
Agreement, provided that any disclosure of Confidential
Information under clause (c) shall be made only upon prior
written approval of the other party and subject to the
appropriate assurances that the recipient of such information
shall hold it in strict confidence.
15.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
15.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines,
in its sole discretion, to grant the requested waiver, it will
do so in writing over the signature of an employee authorized
to grant such request.
15.5. Customer and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of
which may be difficult to determine, thus potentially making
any remedy at law or in damages inadequate. Each party,
therefore, agrees that the other party shall have the right to
apply to any court of competent jurisdiction
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for an order restraining any breach or threatened breach of
this Section and for any other appropriate relief. This right
shall be in addition to any other remedy available in law or
equity.
15.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another
party's Confidential Information shall notify the other party
in advance of any such disclosure and, absent the other
party's consent to such disclosure, use its best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
15.7. The provisions of Section 15.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or competent
jurisdiction, or disclosures that may be reasonably necessary
in connection with the sale of securities or the performance
or enforcement of this Agreement or any of the obligations
hereof; provided, however, that if the receiving party would
otherwise be required to refer to or describe any aspect of
this Agreement in any of the preceding circumstances, the
receiving party shall use its reasonable efforts to take such
steps as are available under such circumstances (such as by
providing a summary or synopsis) to avoid disclosure of the
financial terms and conditions of this Agreement.
Notwithstanding any provisions of this Agreement to the
contrary, either party may disclose the terms and conditions
of this Agreement in the course of a due diligence review
performed in connection with prospective debt financing or
equity investment by, or a sale to, a third party, so long as
the persons conducting such due diligence review have agreed
to maintain the confidentiality of such disclosure and not to
use such disclosure for any purpose other such due diligence
review.
16. INDEMNIFICATIONS
16.1. SAVVIS shall defend, settle, or otherwise manage at its own
cost and expense any claim or action against Customer or any
of its directors, officers, employees or assigns for actual or
alleged infringement by the Networks of any patent, copyright,
trademark, trade secret or similar proprietary right of any
third party, except to the extent that such actual or alleged
infringement arises from (i) such actual or alleged
infringement by the Acquired Network Facilities on the
Effective Date or (ii) an act or omission of Customer or a
vendor or customer of Customer or (iii) equipment or software
used by Customer and not provided by SAVVIS. Customer shall
notify SAVVIS promptly in writing of any such claim or suit
and shall cooperate with SAVVIS in a reasonable way to
facilitate the
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settlement or defense thereof. SAVVIS further agrees to
indemnify and hold Customer harmless from and against any and
all liabilities and damages (whether incurred as the result of
a judicial decree or a settlement), and the costs and expenses
associated with any claim or action of the type identified in
this Section (including reasonable attorneys' fees).
16.2. If, as a consequence of a claim or action of the kind
described in Section 16.1, SAVVIS' or Customer's use of all or
part of any Network is enjoined, SAVVIS shall, at its option
and expense, either: (a) procure for Customer the right to
continue using the affected Network; (b) modify such Network
so that they are non-infringing, provided that such
modification does not affect the intended use of the Network
as contemplated hereunder. If SAVVIS does not take any of the
actions described in clauses (a) or (b), then Customer may
terminate the affected portion of such Network, and SAVVIS
shall refund to Customer any prepaid charges therefor.
16.3. Subject to Section 12, Customer will defend, indemnify and
hold harmless SAVVIS or any of its directors, officers,
employees or assigns from and against all loss, liability,
damage and expense, including reasonable attorneys' fees,
caused by:
(a) claims for libel, slander, invasion of privacy or
infringement of copyright, and invasion and/or
alteration of private records or data arising from
any information, data or messages transmitted over
the Networks by Customer;
(b) claims for infringement of patents arising from the
use by Customer of equipment and software, apparatus
and systems not provided hereunder in connection with
the Networks; and
(c) the violation of any representations, warranties and
covenants made by Customer in this Agreement.
16.4. Subject to Section 12, SAVVIS will defend, indemnify and hold
harmless Customer or any of its directors, officers, employees
or assigns from and against all loss, liability, damage and
expense, including reasonable attorneys' fees, caused by:
(a) claims for infringement of patents arising from the
use by SAVVIS of equipment and software, apparatus
and systems not provided by SAVVIS hereunder in
connection with the Networks (other than any Acquired
Network Facilities); and
(b) the violation of any representations, warranties and
covenants made by SAVVIS in this Agreement.
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17. DISPUTES
17.1. Except as expressly provided in Schedule 4.1 of this
Agreement, the resolution of any and all disputes arising from
or in connection with this Agreement, whether based on
contract, tort, statute or otherwise, including disputes over
arbitrability and disputes in connection with claims by third
persons ("DISPUTES") shall be exclusively governed by and
settled in accordance with the provisions of this Section 17.
The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are
required to be resolved in determining whether to grant such
relief. Resolution of Disputes with respect to claims by third
persons shall be deferred until any judicial proceedings with
respect thereto are concluded.
17.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon
the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause
under applicable law. Either party may serve process or notice
on the other in any arbitration or litigation in accordance
with the notice provisions hereof. The parties agree not to
disclose any information regarding any Dispute or the conduct
of any arbitration hereunder, including the existence of such
Dispute or such arbitration, to any person or entity other
than such employees or representatives of such party as have a
need to know.
17.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the
"ARBITRATION DEMAND") to the other party not sooner than 60
calendar days after the date of delivery of the Dispute Notice
but at any time thereafter. The arbitration shall be conducted
in St. Louis, Missouri.
17.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Customer, one
by SAVVIS, and the third by agreement of the other two not
later than 10 days after appointment of the first two, or,
failing such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
17.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the
foregoing, each party shall have the right to inspect the
books and records of the other party that are reasonably
related to the Dispute, and each party shall provide to the
other, reasonably in advance of any hearing, copies of all
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documents which such party intends to present in such hearing
and the names and addresses of all witnesses whose testimony
such party intends to present in such hearing.
17.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
17.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees
and expenses in connection with any and all proceedings under
this Section 17.
17.8. Either party may assert appropriate statutes of limitation as
a defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
17.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and SAVVIS shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Networks to
Customer unless otherwise directed by Customer. This Section
shall not apply where (a) Customer is in default under this
Agreement or (b) the dispute or controversy between the
parties relates to harm to the Networks allegedly caused by
Customer and Customer does not immediately cease and desist
from the activity giving rise to the dispute or controversy.
18. FORCE MAJEURE
18.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or
other causes to the extent that such failure and the
consequences thereof are reasonably beyond the control and
without the fault or negligence of the party claiming excuse.
Each party shall, with the cooperation of the other party, use
reasonable efforts to mitigate the extent of any failure to
perform and the adverse consequences thereof.
18.2. If SAVVIS cannot promptly provide a suitable temporary SAVVIS
alternative to all or part of a Network subject to an
interruption in connection with the existence of a force
majeure condition, Customer may, at its option and at its own
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cost, contract with one or more third parties for the affected
portion of the Network for the shortest commercially available
period likely to cover the reasonably expected duration of the
interruption, and may suspend SAVVIS' provision of such
affected portion for such period. SAVVIS shall not charge
Customer for the affected portion thus suspended during the
period of suspension. SAVVIS shall resume provision of the
suspended portion of the Network upon the later of the
termination or expiration of Customer's legally binding
commitments under contracts with third parties for alternative
services or the cessation or remedy of the force majeure
condition.
18.3. In the event that a force majeure condition shall continue for
more than 60 days, Customer may cancel the affected portion of
the Network with no further liability to SAVVIS other than for
obligations incurred with respect to such affected portion
prior to the occurrence of the force majeure condition.
18.4. The consequences arising from existence and continuation of a
force majeure condition, including without limitation any
interruption of the Networks and the exercise by Customer of
its rights under this Section 18, shall be deemed not to
constitute a breach by either party hereto of any
representations, warranties or covenants hereunder and shall
not be grounds for the exercise of any remedies under this
Agreement, including without limitation remedies under Section
2.2 or Section 7, other than those specified in this Section
18.
19. GENERAL PROVISIONS
19.1. NO THIRD-PARTY BENEFICIARIES. [This Agreement shall not confer
any rights or remedies upon any person or entity other than
the parties and their respective successors and permitted
assigns.] [Except as expressly provided in this Agreement,
nothing in this Agreement will create or confer any rights or
other benefits on or in favor of any person who is not a party
to this Agreement whether pursuant to the Contracts (Rights of
Third Parties) Act, 1999 or otherwise.]
19.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior understandings,
agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
19.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other party, which consent shall not be
unreasonably withheld.
19.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
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19.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
19.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Customer: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President
and General Counsel
If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General
Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set
forth.
19.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri in the United States of America, without giving
effect to any choice or conflict of law provision or rule
(whether of the State of Missouri or any other jurisdiction)
that would cause the application of the laws of any
jurisdiction other than the State of Missouri.
19.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Customer. No waiver by any party of
any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation, or breach of
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warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
19.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
19.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
19.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
19.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Network
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
[local SAVVIS entity]
By
--------------------------------
Name: Steven M. Gallant
[local Bridge/Telerate entity].
By
-------------------------------
Name:
-----------------------------
Title:
----------------------------
47
Exhibit 10.13
TECHNICAL SERVICES AGREEMENT
This TECHNICAL SERVICES AGREEMENT (the "AGREEMENT") is effective as of
12:01 A.M. February 14, 2000 (the "EFFECTIVE DATE"), between SAVVIS
Communications Corporation, a Missouri corporation ("SAVVIS"), and Bridge
Information Systems, Inc., a Missouri corporation ("BRIDGE").
RECITALS
A. Bridge is engaged in the business of collecting and distributing
various financial, news and other data.
B. SAVVIS is engaged in the business of providing Internet Protocol
backbone and other data transport services.
C. SAVVIS and certain of its subsidiaries have acquired from Bridge and
certain of its subsidiaries certain assets relating to the provision of Internet
Protocol backbone and other data transport services, and may in the future
acquire additional such assets from Bridge and certain of its subsidiaries, all
pursuant to a Master Establishment and Transition Agreement between SAVVIS'
corporate parent, SAVVIS Communications Corporation, a Delaware corporation, and
Bridge, of even date herewith (the "MASTER ESTABLISHMENT AND TRANSITION
AGREEMENT").
D. It is an obligation of the parties under the Master Establishment
and Transition Agreement to cause this Technical Services Agreement to be
entered into between SAVVIS and Bridge, pursuant to which Bridge shall provide
technical services to SAVVIS relating to the assets acquired by SAVVIS pursuant
to the Master Establishment and Transition Agreement.
E. Together with this Agreement, the parties hereto are entering into a
Network Services Agreement of even date herewith (the "NETWORK SERVICES
AGREEMENT") providing for the provision of certain services to Bridge by SAVVIS
and an Administrative Services Agreement of even date herewith (the
"ADMINISTRATIVE SERVICES AGREEMENT"), providing for the provision of certain
services to SAVVIS by Bridge. Certain SAVVIS Subsidiaries and certain Bridge
Subsidiaries are entering into, and may in the future enter into, Local Transfer
Agreements, Local Network Services Agreements (the "LOCAL NETWORK SERVICES
AGREEMENTS"), Equipment Collocation Permits, and Local Administrative Services
Agreements.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants contained herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
<PAGE>
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1. This Agreement shall consist of this Technical Services
Agreement by and between SAVVIS and Bridge, including all
addenda to this Agreement entered into in the manner set forth
herein (each an "ADDENDUM" and collectively the "ADDENDA").
This Agreement shall be interpreted wherever possible to avoid
conflicts between the Sections hereof and the Addenda,
provided that if such a conflict shall arise, the Addenda
shall control.
1.2. Whenever it is provided in this Agreement for a matter to be
mutually agreed upon by the parties and set forth in an
Addendum to this Agreement, either party may initiate the
process of determining such matter by submitting a proposed
outline or contents of such Addendum to the other party. Each
party shall appoint a primary contact and a secondary contact
for the completion of such Addendum, who shall be the contact
points for every issue concerning such Addendum and who shall
be informed of the progress of the project. The names of the
contacts will be exchanged in writing by the parties. Using
the contacts, the parties shall work together in good faith
with such diligence as shall be commercially reasonable under
the circumstances to complete such Addendum, provided,
however, that neither party shall be obligated to enter into
such an Addendum. Upon the completion of such Addendum, it
shall be set forth in a written document and executed by the
parties and shall become a part of this Agreement and shall be
deemed to be incorporated herein by reference.
1.3. Whenever used in this Agreement, the words and phrases listed
below shall have the meanings given below, and all defined
terms shall include the plural as well as the singular. Unless
otherwise stated, the words "herein", "hereunder" and other
similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision. The words "included"
and "including" shall not be construed as terms of limitation.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Master Establishment
and Transition Agreement.
"ADDITIONAL NETWORK FACILITIES" means any assets and contracts
of SAVVIS for the provision of Internet Protocol backbone and
other data transport services other than the Acquired Network
Facilities.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"AGREEMENT YEAR" shall mean a period of 12 months beginning on
the Effective Date and each subsequent anniversary thereof.
"AMERICAS" means North America, Central America and South
America, including the Caribbean, but excluding the United
States.
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"ASIA" means Australia, China, Hong Kong, India, Indonesia,
Japan, Korea, Macau, Malaysia, New Zealand, Philippines,
Singapore, Taiwan, and Thailand.
"BRIDGE" means Bridge Information Systems, Inc., a Missouri
corporation.
"BRIDGE SUBSIDIARIES" has the meaning assigned to the term
"Seller Subsidiaries" in the Master Establishment and
Transition Agreement.
"CONFIDENTIAL INFORMATION" means all information concerning
the business of Bridge, SAVVIS or any third party doing
business with either of them that may be obtained from any
source (i) by Bridge by virtue of its performance under this
Agreement or (ii) by SAVVIS by virtue of its use of the
Services. Such information shall also include the terms of
this Agreement (and negotiations and proposals from one party
to the other related directly thereto), network designs and
design recommendations, tools and programs, pricing, methods,
processes, financial data, software, research, development,
strategic plans or related information. All such information
disclosed prior to the execution of this Agreement shall also
be considered Confidential Information for purposes of this
Agreement. Confidential Information shall not include
information that:
(a) is already rightfully known to the receiving party
at the time it is obtained by such party, free from
any obligation to keep such information
confidential; or
(b) is or becomes publicly known through no wrongful
act of the receiving party; or
(c) is rightfully received by the receiving party from
a third party without restriction and without
breach of this Agreement.
"EFFECTIVE DATE" means the date set forth in the Preamble of
this Agreement.
"EUROPE" means Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Luxembourg,
Netherlands, Norway, Poland, Spain, Sweden, Switzerland,
Turkey and the United Kingdom.
"INITIAL TERM" shall mean a period of ten consecutive
Agreement Years beginning on the Effective Date.
"LOCAL ACCESS FACILITIES" means the local access line or other
local communications circuit provided by a local exchange
carrier connecting the Acquired Network Facilities or the
Additional Network Facilities to an Installation Site.
"NOC" means each Network Operations Center that is part of the
SAVVIS Network, including the NOCs currently in St. Louis,
London and Singapore.
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"QUALITY OF SERVICE STANDARDS" means the standards for the
performance of the Services contained in a Schedule or an
Addendum to this Agreement.
"SAVVIS" means SAVVIS Communications Corporation, a Missouri
corporation.
"SAVVIS EQUIPMENT" means all items of equipment owned by
SAVVIS or provided to SAVVIS by others related to the SAVVIS
Network.
"SAVVIS NETWORK" means the managed packet-data transport
networks operated by SAVVIS, whether using the Acquired
Network Facilities or using Additional Network Facilities.
"SAVVIS PARENT" means SAVVIS Communications Corporation, a
Delaware corporation.
"SAVVIS SUBSIDIARIES" has the meaning assigned to the term
"Buyer Subsidiaries" in the Master Establishment and
Transition Agreement.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"SERVICES" means the and services provided by Bridge to SAVVIS
hereunder.
"SERVICE SITE" means any location at which Bridge provides
Services to SAVVIS. The Service Sites may be changed by mutual
agreement of the parties as set forth from time to time in
Addenda to this Agreement.
2. THE SERVICES
2.1. Bridge agrees to provide to SAVVIS the following services:
(a) help desk support for the operation of the SAVVIS Network, as
described in Schedule 2.1(a) hereto;
(b) installation, maintenance and repair of facilities and
equipment used in the SAVVIS Network (other than the NOC), as
described in Schedule 2.1(b) hereto;
(c) other services related to the SAVVIS Network with respect to
the customers of both SAVVIS and Bridge, including, without
limitation, processing orders for service and provisioning
interconnection to the SAVVIS Network, as described in
Schedule 2.1(c) hereto; and
(d) collocation of third-party equipment in SAVVIS facilities,
including, without limitation, management of the facilities
in which such equipment is collocated, installation and
maintenance of hardware, and the provision
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and management of computer operations staff, as described in
Schedule 2.1(d) hereto; and
(e) management of the NOCs for the SAVVIS Network, as described
in Schedule 2.1(e) hereto;
which shall be referred to in this Agreement collectively as
the "Services" and individually as a "SERVICE." Each Service
shall be provided according to such Quality of Service
Standards set forth in the applicable Schedule. Bridge shall
be responsible for monitoring the compliance of the Services
with the Quality of Service Standards and shall provide
SAVVIS with monthly reports of such compliance substantially
in the form of the "SummEx Client Services Executive Summary"
regularly prepared by Bridge prior to the Effective Date.
2.2. Any changes to the Services or in the Quality of Service
Standards applicable thereto shall be provided for in an
Addendum hereto mutually agreed upon by the parties in the
manner set forth in Section 1.2 hereof. Unless otherwise
mutually agreed by the parties, each such Addendum shall have
a term of three years.
2.3. SAVVIS agrees that it will request Bridge to provide such
Services for which Bridge has prepaid under the contract
between Bridge Information Systems (UK) Limited and British
Telecommunications PLC, executed by the parties thereto on 16
December 1998 and 31 December 1998, respectively.
3. RATES AND CHARGES
3.1. For the first Agreement Year in the Initial Term of this
Agreement, SAVVIS shall pay Bridge for the Services according
to the rates and charges set forth in the applicable Schedule.
3.2. For all cases not covered by Section 3.1, Bridge shall charge
SAVVIS the rates and charges for the Services as shall be
provided for in an Addendum hereto mutually agreed upon by the
parties in the manner set forth in Section 1.2 hereof. If the
parties fail to reach agreement on any such Addendum prior to
the expiration of the Addendum then in effect, the rates and
charges shall be determined by binding arbitration, as
follows:
3.3. The arbitration shall be conducted by a single arbitrator
jointly selected by the parties, who shall be an attorney
experienced and knowledgeable in the tariffs and pricing of
telecommunications services (the "ARBITRATOR"). If the parties
are unable to agree on the selection of the Arbitrator within
30 days, either party may apply to the United States District
Court for the Eastern District of Missouri or to the Circuit
Court of St. Louis County for the appointment of the
Arbitrator.
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(b) Within 10 days following the appointment of the
Arbitrator, each party shall submit to the Arbitrator
such party's best and final offer for the rates and
charges to be set forth in such Addendum.
(c) The Arbitrator must select the offer of one party or
the other as being closer to the Arbitrator's own
assessment of what an independent vendor would charge
for services similar in nature and volume to those to
be covered by such Addendum (the "INDEPENDENT VENDOR
PRICE").
(d) The decision of the Arbitrator shall be final and
binding on the parties and shall be incorporated in
this Agreement as an Addendum hereto.
(e) Each party shall bear its own costs in conducting the
arbitration, and the non-prevailing party shall pay
the fees and expenses of the Arbitrator.
4. INVOICES
4.1. The amounts due to Bridge from SAVVIS for the Services shall
be billed monthly in arrears. All items on invoices not the
subject of a bona fide dispute shall be payable by SAVVIS in
United States currency within 30 days from the date of receipt
of the invoice. All amounts not in dispute are subject to
interest charges of 1-1/2 percent that will accrue daily on
all amounts not paid within 30 days of the date of receipt of
the invoice.
4.2. SAVVIS shall pay any sales, use, federal excise, utility,
gross receipts, state and local surcharges, and similar taxes,
charges or levies lawfully levied by a duly constituted taxing
authority against or upon the Services. In the alternative,
SAVVIS shall provide Bridge with a certificate evidencing
SAVVIS' exemption from payment of or liability for such taxes.
All other taxes, charges or levies, including any ad valorem,
income, franchise, privilege, value added or occupation taxes
of Bridge shall be paid by Bridge.
4.3. Bona fide disputes concerning invoices shall be referred to
the parties' respective Contract Managers for resolution. Any
amount to which SAVVIS is entitled as a result of the
resolution of a billing dispute shall be credited promptly to
SAVVIS' account. Any amount to which Bridge is entitled as a
result of the resolution of a billing dispute shall be paid
promptly to Bridge.
4.4. Against the amounts owed by SAVVIS to Bridge under this
Agreement, SAVVIS shall have the right to offset any amounts
owed by Bridge to SAVVIS under this Agreement, the Network
Services Agreement, or otherwise.
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5. TERM AND EXTENSIONS
5.1. This Agreement shall commence on the Effective Date, and shall
continue in full force and effect for the Initial Term unless
terminated or extended in accordance with the provisions
hereof.
5.2. The term of this Agreement shall automatically terminate upon
the termination of the Network Services Agreement for any
reason, and shall automatically be extended for such period as
the term of the Network Services Agreement may be extended,
including any Transition Period, as defined in the Network
Services Agreement.
6. TERMINATION BY SAVVIS
6.1. SAVVIS shall have the right to terminate this Agreement, with
no liability to Bridge other than for charges (less any
applicable credits) for Services provided prior to such
termination, if:
(a) SAVVIS provides 10 days written notice of its intent
to terminate in the event that Bridge has failed to
perform or comply with or has violated any material
representation, warranty, term, condition or
obligation of Bridge under this Agreement, and Bridge
has failed to cure such failure or violation within
60 days after receiving notice thereof from SAVVIS;
or
(b) Bridge becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, admits in writing its inability
to pay debts when due.
6.2. In the event that SAVVIS exercises this option, Bridge will
continue to provide the Services in accordance with the terms,
conditions and rates herein for a period of up to 12 months
after the effective date of termination. If the Services have
not completely transitioned from Bridge after 12 months,
Bridge will provide the Services at Bridge's then current list
rates. Bridge and its successor will cooperate with SAVVIS
until the Services are completely migrated to another
provider.
7. TERMINATION BY BRIDGE
Bridge shall have the right to terminate this Agreement if:
(a) SAVVIS has failed to pay any invoice that is not the
subject of a bona fide dispute within 60 days of the
date on which such payment is due and Bridge has
provided SAVVIS with written notice thereof, provided
that SAVVIS shall have 30 days from the time it
receives such notice from Bridge of nonpayment to
cure any such default; or
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(b) SAVVIS becomes the subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or
liquidation proceeding, makes an assignment for the
benefit of creditors, admits in writing its inability
to pay debts when due.
8. CONTRACT MANAGERS
8.1. CONTRACT MANAGER. SAVVIS shall assign a representative to
serve as Bridge's point-of-contact for all matters concerning
its performance under this Agreement.
8.2. CONTRACT MANAGER. Bridge shall assign a representative to
serve as SAVVIS' point-of-contact for all matters concerning
its performance under this Agreement.
9. RIGHTS AND OBLIGATIONS OF BRIDGE
9.1. PROVISION OF THE SERVICES. Bridge shall provide the Services
at the Service Sites designated by SAVVIS in accordance with
the Quality of Service Standards and other terms of this
Agreement.
9.2. ACCESS AND SECURITY. Bridge personnel shall have such access
to SAVVIS' premises as is reasonably necessary to provide the
Services in accordance with this Agreement, provided that
Bridge personnel shall comply at all times with SAVVIS'
reasonable security requirements. SAVVIS shall have the right
immediately to terminate the right of access of any Bridge
personnel to any or all Service Sites should SAVVIS determine
in its sole discretion that such termination is in SAVVIS'
best interest, provided that SAVVIS shall not exercise this
right on grounds unrelated to job performance or in a manner
that obliges Bridge to commit an unlawful act. Unless Bridge
knew or should reasonably have known that particular Bridge
personnel would be barred from a Service Site, the time
allowed for any installation, repair, maintenance or similar
action that such personnel were to perform shall be extended
for the period reasonably required by Bridge to deploy
substitute personnel, provided that Bridge shall use its best
efforts to deploy such substitute personnel as quickly as
possible. For purposes of this Section, any subcontractor or
other agent of Bridge shall be treated as Bridge personnel.
9.3. PROPER USE OF SAVVIS EQUIPMENT.
9.3.1. Bridge shall use any SAVVIS Equipment in connection with the
Services in accordance with its documentation, which
documentation shall be provided by SAVVIS at no additional
charge.
9.3.2. Bridge shall be liable for damages to the SAVVIS Equipment
caused by the negligence or willful acts or omissions of
Bridge's officers, employees, agents or contractors, and for
damages to SAVVIS Equipment caused by the use of equipment or
supplies not authorized by SAVVIS.
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9.3.3. Bridge shall neither permit nor assist others to
use the SAVVIS Equipment for any purpose other than
that for which they are intended, and Bridge shall
be liable to SAVVIS for any direct costs incurred
by SAVVIS as a result of such use.
9.4. INSURANCE.
9.4.1. At all times during the term of this Agreement,
Bridge shall maintain for itself, its officers,
employees, agents and representatives insurance as
shall be provided for in an Addendum mutually
agreed upon by the parties in the manner set forth
in Section 1.2 hereof.
9.4.2. Bridge shall furnish to SAVVIS, upon written
request, certificates of insurance or other
appropriate documentation (including evidence of
renewal of insurance) evidencing the insurance
coverage referenced above, naming SAVVIS as an
additional insured. Such certificates or other
documentation shall include a proviso whereby 15
days prior written notice shall be provided to
SAVVIS prior to coverage cancellation or other
material alteration by either Bridge or the
applicable insurer. Such cancellation or material
alteration shall not relieve Bridge of its
continuing obligation to maintain insurance
coverage in accordance with this Section.
9.4.3. In lieu of all or part of the insurance coverage
specified in this Section, Bridge may self-insure
with respect to any insurance coverage, except
where expressly prohibited by law.
9.5. REPRESENTATIONS AND WARRANTIES.
9.5.1. Bridge hereby warrants that the Services will be
provided in accordance with the Quality of Service
Standards throughout the term of this Agreement. In
the event that Bridge fails to provide any of the
Services in accordance with the Quality of Service
Standards, SAVVIS shall be entitled to recover from
Bridge (i) a refund of all amounts paid by SAVVIS
to Bridge, if any, for the performance of the
specific Service that fails to meet the applicable
Quality of Service Standards, plus (ii) the costs
actually incurred by SAVVIS in order to have such
service provided by a third party, to the extent
such costs are in excess of the amounts that SAVVIS
actually paid, or would have paid, to Bridge for
the performance of the specific Service that fails
to meet the applicable Quality of Service
Standards.
9.5.2. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
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10. LIMITATIONS OF LIABILITY
10.1. Neither party shall be liable to the other for indirect,
incidental, consequential, exemplary, reliance or special
damages, including damages for lost profits, regardless of the
form of action whether in contract, indemnity, warranty,
strict liability or tort, including negligence of any kind
with respect to the Services or other conduct under this
Agreement.
10.2. Nothing contained in this Section shall limit either party's
liability to the other for (a) willful or intentional
misconduct, or (b) injury or death, or damage to tangible real
or tangible personal property or the environment, when
proximately caused by SAVVIS' or Bridge's negligence or that
of their respective agents, subcontractors or employees.
Nothing contained in this Section shall limit Bridge's
intellectual property indemnification obligations under
Section 13.
11. PROPRIETARY RIGHTS; LICENSE
11.1. Bridge hereby grants to SAVVIS a non-exclusive and
non-transferable license to use all hardware, equipment,
programming and software necessary for SAVVIS to use the
Services. Such license is granted for the term of this
Agreement for the sole purpose of enabling SAVVIS to use the
Services.
11.2. All title and property rights (including intellectual property
rights) to Services (including associated programming and
software) are and shall remain with Bridge. SAVVIS shall not
attempt to examine, copy, alter, reverse engineer, decompile,
disassemble, tamper with or otherwise misuse such Services,
programming and software.
12. CONFIDENTIALITY
12.1. During the term of this Agreement and for a period of five
years from the date of its expiration or termination
(including all extensions thereof), each party agrees to
maintain in strict confidence all Confidential Information.
Neither party shall, without prior written consent of the
other party, use the other party's Confidential Information
for any purpose other than for the performance of its duties
and obligations, and the exercise of its rights, under this
Agreement. Each party shall use, and shall cause all
authorized recipients of the other party's Confidential
Information to use, the same degree of care to protect the
other party's Confidential Information as it uses to protect
its own Confidential Information, but in any event not less
than a reasonable degree of care.
12.2. Notwithstanding Section 12.1, either party may disclose the
Confidential Information of the other party to: (a) its
employees and the employees, directors and officers of its
Affiliates as necessary to implement this Agreement; (b)
employees, agents or representatives of the other party; or
(c) other persons (including counsel, consultants, lessors or
managers of facilities or equipment
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used by such party) in need of access to such information for
purposes specifically related to either party's
responsibilities under this Agreement, provided that any
disclosure of Confidential Information under clause (c) shall
be made only upon prior written approval of the other party
and subject to the appropriate assurances that the recipient
of such information shall hold it in strict confidence.
12.3. Upon the request of the party having proprietary rights to
Confidential Information, the party in possession of such
information shall promptly return it (including any copies,
extracts and summaries thereof, in whatever form and medium
recorded) to the requesting party or, with the other party's
written consent, shall promptly destroy it and provide the
other party with written certification of such destruction.
12.4. Either party may request in writing that the other party waive
all or any portion of the requesting party's responsibilities
relative to the other party's Confidential Information. Such
waiver request shall identify the affected information and the
nature of the proposed waiver. The recipient of the request
shall respond within a reasonable time and, if it determines,
in its sole discretion, to grant the requested waiver, it will
do so in writing over the signature of an employee authorized
to grant such request.
12.5. Bridge and SAVVIS acknowledge that any disclosure or
misappropriation of Confidential Information in violation of
this Agreement could cause irreparable harm, the amount of
which may be difficult to determine, thus potentially making
any remedy at law or in damages inadequate. Each party,
therefore, agrees that the other party shall have the right to
apply to any court of competent jurisdiction for an order
restraining any breach or threatened breach of this Section
and for any other appropriate relief. This right shall be in
addition to any other remedy available in law or equity.
12.6. A party requested or ordered by a court or other governmental
authority of competent jurisdiction to disclose another
party's Confidential Information shall notify the other party
in advance of any such disclosure and, absent the other
party's consent to such disclosure, use its best efforts to
resist, and to assist the other party in resisting, such
disclosure. A party providing another party's Confidential
Information to a court or other governmental authority shall
use its best efforts to obtain a protective order or
comparable assurance that the Confidential Information so
provided will be held in confidence and not further disclosed
to any other person, absent the owner's prior consent.
12.7. The provisions of Section 12.1 above shall not apply to
reasonably necessary disclosures in or in connection with
filings under any securities laws, regulatory filings or
proceedings, financial disclosures which in the good faith
judgment of the disclosing party are required by law,
disclosures required by court or tribunal or
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competent jurisdiction, or disclosures that may be reasonably
necessary in connection with the performance or enforcement of
this Agreement or any of the obligations hereof; provided,
however, that if the receiving party would otherwise be
required to refer to or describe any aspect of this Agreement
in any of the preceding circumstances, the receiving party
shall use its reasonable efforts to take such steps as are
available under such circumstances (such as by providing a
summary or synopsis) to avoid disclosure of the financial
terms and conditions of this Agreement. Notwithstanding any
provisions of this Agreement to the contrary, either party may
disclose the terms and conditions of this Agreement in the
course of a due diligence review performed in connection with
prospective debt financing or equity investment by, or a sale
to, a third party, so long as the persons conducting such due
diligence review have agreed to maintain the confidentiality
of such disclosure and not to use such disclosure for any
purpose other than such due diligence review.
13. INDEMNIFICATIONS
13.1. Bridge shall defend, settle, or otherwise manage at its own
cost and expense any claim or action against SAVVIS or any of
its directors, officers, employees or assigns for actual or
alleged infringement of any patent, copyright, trademark,
trade secret or similar proprietary right to the extent that
such claim or action arises from Bridge's provision of the
Services. SAVVIS shall notify Bridge promptly in writing of
any such claim or suit and shall cooperate with Bridge in a
reasonable way to facilitate the settlement or defense
thereof. Bridge further agrees to indemnify and hold SAVVIS
harmless from and against any and all liabilities and damages
(whether incurred as the result of a judicial decree or a
settlement), and the costs and expenses associated with any
claim or action of the type identified in this Section
(including reasonable attorneys' fees).
13.2. If, as a consequence of a claim or action of the kind
described in Section 13.1, SAVVIS' or Bridge's use of any
Service or related documentation is enjoined, Bridge shall, at
its option and expense, either: (a) procure for SAVVIS the
right to continue using the affected Services or
documentation; (b) modify such Service or documentation so
that it is non-infringing, provided that such modification
does not affect the intended use of the Service or
documentation as contemplated hereunder; or (c) upon written
notice to SAVVIS, substitute for such Service or documentation
a comparable, non-infringing product or service or
documentation. If Bridge does not take any of the actions
described in clauses (a), (b) and (c), then SAVVIS may
terminate any affected Service pursuant to Section 5, and
Bridge shall refund to SAVVIS any prepaid charges therefor.
14. DISPUTES
14.1. Resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract,
tort, statute or otherwise, including disputes
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over arbitrability and disputes in connection with claims by
third persons ("DISPUTES") shall be exclusively governed by
and settled in accordance with the provisions of this Section
14. The foregoing shall not preclude recourse to judicial
proceedings to obtain injunctive, emergency or other equitable
relief to enforce the provisions of this Agreement, including
specific performance, and to decide such issues as are
required to be resolved in determining whether to grant such
relief. Resolution of Disputes with respect to claims by third
persons shall be deferred until any judicial proceedings with
respect thereto are concluded.
14.2. The parties hereby agree to submit all Disputes to rules of
arbitration of the American Arbitration Association and the
Missouri Uniform Arbitration Act (the "RULES") under the
following provisions, which shall be final and binding upon
the parties, their successors and assigns, and that the
following provisions constitute a binding arbitration clause
under applicable law. Either party may serve process or notice
on the other in any arbitration or litigation in accordance
with the notice provisions hereof. The parties agree not to
disclose any information regarding any Dispute or the conduct
of any arbitration hereunder, including the existence of such
Dispute or such arbitration, to any person or entity other
than such employees or representatives of such party as have a
need to know.
14.3. Either party may commence proceedings hereunder by delivery of
written notice providing a reasonable description of the
Dispute to the other, including a reference to this provision
(the "DISPUTE NOTICE"). Either party may initiate arbitration
of a Dispute by delivery of a demand therefor (the
"ARBITRATION DEMAND") to the other party not sooner than 60
calendar days after the date of delivery of the Dispute Notice
but at any time thereafter. The arbitration shall be conducted
in St. Louis, Missouri.
14.4. The arbitration shall be conducted by three arbitrators (the
"ARBITRATORS"), one of whom shall be selected by Bridge, one
by SAVVIS, and the third by agreement of the other two not
later than 10 days after appointment of the first two, or,
failing such agreement, appointed pursuant to the Rules. If an
Arbitrator becomes unable to serve, a successor shall be
selected or appointed in the same manner in which the
predecessor Arbitrator was appointed.
14.5. The arbitration shall be conducted pursuant to such procedures
as the parties may agree or, in the absence of or failing such
agreement, pursuant to the Rules. Notwithstanding the
foregoing, each party shall have the right to inspect the
books and records of the other party that are reasonably
related to the Dispute, and each party shall provide to the
other, reasonably in advance of any hearing, copies of all
documents which such party intends to present in such hearing
and the names and addresses of all witnesses whose testimony
such party intends to present in such hearing.
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14.6. All hearings shall be conducted on an expedited schedule, and
all proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof.
14.7. The Arbitrators shall complete all hearings not later than 90
calendar days after the Arbitrators' selection or appointment,
and shall make a final award not later than 30 calendar days
thereafter. The Arbitrators shall apportion all costs and
expenses of the Arbitration, including the Arbitrators' fees
and expenses of experts ("ARBITRATION COSTS") between the
prevailing and non-prevailing parties as the Arbitrators deem
fair and reasonable. In circumstances where a Dispute has been
asserted or defended against on grounds that the Arbitrators
deem manifestly unreasonable, the Arbitrators may assess all
Arbitration Costs against the non-prevailing party and may
include in the award the prevailing party's attorneys' fees
and expenses in connection with any and all proceedings under
this Section 14.
14.8. Either party may assert appropriate statutes of limitation as
a defense in arbitration; provided, that upon delivery of a
Dispute Notice any such statute shall be tolled pending
resolution hereunder.
14.9. Pending the resolution of any dispute or controversy arising
under this Agreement, the parties shall continue to perform
their respective obligations hereunder, and Bridge shall not
discontinue, disconnect or in any other fashion cease to
provide all or any substantial portion of the Services to
SAVVIS unless otherwise directed by SAVVIS. This Section shall
not apply where SAVVIS is in default under this Agreement.
15. FORCE MAJEURE
15.1. In no event shall either party be liable to the other for any
failure to perform hereunder that is due to war, riots,
embargoes, strikes or other concerted acts of workers (whether
of a party hereto or of others), casualties, accidents or
other causes to the extent that such failure and the
consequences thereof are reasonably beyond the control and
without the fault or negligence of the party claiming excuse.
Each party shall, with the cooperation of the other party, use
reasonable efforts to mitigate the extent of any failure to
perform and the adverse consequences thereof.
15.2. If Bridge cannot promptly provide a suitable temporary Bridge
alternative to a Service subject to an Interruption in
connection with the existence or a force majeure condition,
SAVVIS may, at its option and at its own cost, contract with
one or more third parties for (or provide for itself) any or
all affected Services for the shortest commercially available
period likely to cover the reasonably expected duration of the
Interruption, and may suspend Bridge's provision of such
Services for such period. Bridge shall not charge SAVVIS for
any Services thus suspended during the period of suspension.
Bridge shall resume provision of the suspended Services upon
the later of the termination or expiration of SAVVIS'
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legally binding commitments under contracts with third parties
for alternative services or the cessation or remedy of the
force majeure condition.
15.3. In the event that a force majeure condition shall continue for
more than 60 days, SAVVIS may cancel the affected Services
with no further liability to Bridge other than for Services
received by SAVVIS prior to the occurrence of the force
majeure condition.
16. GENERAL PROVISIONS
16.1. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than
the parties and their respective successors and permitted
assigns.
16.2. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the parties and supersedes any prior understandings,
agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
16.3. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other party, which consent shall not be
unreasonably withheld.
16.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
16.5. HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
16.6. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
<TABLE>
<CAPTION>
<S> <C>
If to Bridge: Bridge Information Systems, Inc.
Three World Financial Center
New York, New York 10285
(212) 372-7195 (fax)
Attention: Zachary Snow,
Executive Vice President and General Counsel
</TABLE>
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If to SAVVIS: SAVVIS Communications Corporation
717 Office Parkway
St. Louis, Missouri 63141
(314) 468-7550 (fax)
Attention: Steven M. Gallant,
Vice President and General Counsel
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set
forth.
16.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Missouri without giving effect to any choice or conflict of
law provision or rule (whether of the State of Missouri or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Missouri.
16.8. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by SAVVIS and Bridge. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent
such occurrence.
16.9. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
16.10. EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
16.11. CONSTRUCTION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation.
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16.12. ADDENDA AND SCHEDULES. The Addenda and Schedules identified in
this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Technical
Services Agreement to be executed as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
SAVVIS COMMUNICATIONS CORPORATION
By /s/ Steven M. Gallant
-----------------------------------------------
Name: Steven M. Gallant
Title: President
BRIDGE INFORMATION SYSTEMS, INC.
By /s/ Daryl A. Rhodes
-----------------------------------------------
Name: Daryl A. Rhodes
Title: Executive Vice President
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SCHEDULE 2.1(a)
HELP DESK SERVICES
1. Bridge will provide help desk support for 24 hours a day, seven days a
week, to SAVVIS customers using the SAVVIS Network, including customers
using the SAVVIS Dial Service. Help desk support shall include, without
limitation, assistance with establishing network connections and
response to inquiries regarding network performance.
2. The number of phone lines and staff personnel will be such that the
mean wait time per call, determined daily, will not exceed two minutes.
3. Help desk inquiries will be escalated as follows:
<TABLE>
<CAPTION>
ESCALATION TO NEXT LEVEL IN HOW MANY HOURS
-----------------------------------------------------------------------
OUTAGE MTTR LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6
SEVERITY EXAMPLES (HOURS) TAM MANAGER DIRECTOR VP VP
<S> <C> <C> <C> <C> <C> <C> <C>
Single site or
I user impaired 8 2 8 12 24 48
Multiple sites
or users
II impaired 6 1 2 4 8 16
Site(s) down
or unable to 30
III coommunicate 3 minutes 1 2 4 8
</TABLE>
4. Bridge will ensure that help desk staff are trained to be knowledgeable
in all aspects of the operations of the SAVVIS Network.
5. Unless otherwise agreed by Bridge and SAVVIS, Bridge will provide the
following help desk software, and will maintain the most current
version thereof: Summex, Vantive and OP Center.
6. Unless otherwise agreed by Bridge and SAVVIS, Bridge will provide the
following telecommunications equipment and computer hardware for the
help desk: Lucent Difinity G4.
7. Bridge will provide toll-free calling access to the help desk from the
following locations: the Americas, Europe, and Asia.
8. In the event that SAVVIS believes that the performance of a specific
member of Bridge's help desk staff is not satisfactory with respect to
assisting SAVVIS customers, SAVVIS may raise the matter with Bridge,
and Bridge and SAVVIS will work together to resolve the matter,
including the possible removal of such person from providing help desk
services to SAVVIS customers under this Agreement.
18
<PAGE>
9. SAVVIS will compensate Bridge for help desk support at the following
rates:
(a) For calls relating to the SAVVIS dial-in service, [*] per call;
(b) For calls relating to the SAVVIS DSL service, [*] per call; and
(c) For calls relating to SAVVIS Internet managed data virtual
private networks, [*] per call.
Call records relating to the products or services provided by Bridge,
whether or not also relating to the performance of the SAVVIS Network
or Dial Service, shall not be billed to SAVVIS by Bridge.
10. The parties will review the response times specified in this Schedule
on an annual basis and revise them as may be required to ensure that
they are consistent with the then current standards in the
telecommunications industry.
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
19
<PAGE>
SCHEDULE 2.1(b)
FIELD INSTALLATION AND SUPPORT SERVICES
1. Bridge will, if requested by SAVVIS, provide the installation of
equipment for the operation of the SAVVIS Network and the connection of
customers of Bridge and SAVVIS to the SAVVIS Network.
2. Bridge will, if requested by SAVVIS, provide the installation of
equipment in response to an order for new service from a customer of
Bridge or SAVVIS.
3. Bridge will, if requested by SAVVIS, provide the installation of
equipment relating to the expansion or modification of the backbone of
the SAVVIS Network.
4. Orders for new service from customers of Bridge or SAVVIS will be
received and processed by Bridge in accordance with Addendum 2.1(c).
5. The equipment to be installed that will constitute part of the SAVVIS
Network will be specified by SAVVIS.
6. Bridge will be responsible for configuring and installing certain
network equipment at the Installation Site.
7. Bridge will, if requested by SAVVIS, dispatch field personnel to
install the equipment. Such personnel shall be employees or contractors
of Bridge.
8. In the event that SAVVIS believes that the performance of a specific
member of Bridge's field installation and support staff is not
satisfactory with respect to assisting SAVVIS customers, SAVVIS may
raise the matter with Bridge, and Bridge and SAVVIS will work together
to resolve the matter, including the possible removal of such person
from providing such services to SAVVIS customers under this Agreement.
9. Bridge will, if requested by SAVVIS, provide repair services for the
installed equipment of the SAVVIS Network, including equipment that is
part of the SAVVIS backbone.
10. Bridge will ensure that, on a global basis, mean response time for the
configuration and installation of new equipment, determined monthly,
will not exceed three days (five days, for customer sites outside the
United States) after Bridge has been notified that the customer's site
is ready for such installation.
11. Bridge will provide telephone support 24 hours a day, seven days a
week, for the installation of the SAVVIS network at the customer's
site.
12. Bridge will ensure that, on a global basis, mean response time for the
repair or replacement of equipment on the SAVVIS Network, determined
monthly, will not exceed
20
<PAGE>
12 hours (24 hours, for locations outside the United States) after
Bridge has received a trouble report.
13. Bridge will be compensated by SAVVIS for providing field engineer
support, according to the following hourly rate on a global basis:
Field engineer support [*] per hour (two hours minimum),
with no charge for travel time to
the site
14. Bridge will be compensated by SAVVIS for the installation and repair of
equipment on a time and materials basis, and according to the following
hourly rate on a global basis:
(a) Field engineer [*] per hour (two hours minimum),
with no charge for travel time to
the site
(b) Materials Cost plus ten percent ([*])
15. In addition, Bridge will provide system support and programming
services when requested by SAVVIS, at the following rates:
(a) Base fee to maintain the system as of the Effective Date to be
mutually agreed between the parties.
(b) Software development on a per-project, time and materials basis.
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE
OMISSIONS.
21
<PAGE>
SCHEDULE 2.1(c)
CUSTOMER ORDER PROCESSING SERVICES
1. Bridge will provide the necessary services to receive and process
orders from prospective customers for the products and services offered
by Bridge or by SAVVIS on the SAVVIS Network, but excluding orders from
Bridge for network services under the Network Services Agreement.
2. Bridge will be responsible for managing all steps required for the
fulfillment of such order, including without limitation:
(a) the configuration and installation of necessary equipment;
(b) scheduling installation and service initiation with the customer;
(c) provisioning of interconnection to the SAVVIS Network; and
(d) additional services that may be provided under the
Administrative Services Agreement, such as credit
authorization, billing information and the like.
3. SAVVIS will compensate Bridge for customer order processing at the rate
of [*] per Vantive work order.
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
22
<PAGE>
SCHEDULE 2.1(d)
COLLOCATION SERVICES
1. Collocation services provided by Bridge at SAVVIS facilities shall
include, without limitation, facilities management (e.g., power,
heating, air conditioning, lighting and other utilities), project
management for the installation and connection of such equipment,
installation and maintenance of the equipment, and full monitoring and
management of such equipment with Bridge employees.
2. SAVVIS will market such space to its customers at rates to be
determined by SAVVIS.
3. For providing such space, Bridge shall be compensated at the following
rates per square foot to be mutually agreed upon following an analysis
to be conducted by the parties of the costs pertaining to such space,
plus the actual cost of providing electrical power to such spaces:
UNITED STATES
AND CANADA EUROPE ASIA
POP COLLOCATIONS [*] [*] [*]
REGIONAL CUSTOMER [*]
COLLOCATION [*] [*] [*]
ST. LOUIS NOC
COLLOCATION [*] N/A N/A
4. For providing facilities management services, Bridge shall be
compensated at the following rates to be mutually agreed upon following
an analysis to be conducted by the parties of the costs pertaining to
such services:
UNITED STATES
AND CANADA EUROPE ASIA
POP COLLOCATIONS
REGIONAL CUSTOMER
COLLOCATION
ST. LOUIS NOC
COLLOCATION
23
<PAGE>
5. If requested by SAVVIS or by a customer of SAVVIS, Bridge will install
the customer's equipment in the space provided, including racking,
cabling and powering. Bridge will be compensated by SAVVIS for such
work at the rate of [*] per rack.
6. If requested by SAVVIS or by a customer of SAVVIS, Bridge will perform
scheduled and other required maintenance of such equipment, will
provide monitoring of such equipment 24 hours a day, seven days a week,
and will provide reports and statistics on the operation of such
equipment. Bridge will be compensated by SAVVIS for such work annually
at a rate equal to [*] of the vendor's list price for such equipment.
7. If requested by SAVVIS or by a customer of SAVVIS to perform additional
project management responsibilities, such as loading software or
configuring equipment, Bridge will perform and be compensated for such
work on an individual case basis.
8. If requested by SAVVIS or by a customer of SAVVIS, Bridge will arrange
for the replacement of existing collocated equipment and will be
compensated in an amount equal to the actual cost charged to Bridge by
the hardware vendor for such work.
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
24
<PAGE>
SCHEDULE 2.1(e)
NOC MANAGEMENT SERVICES
1. Bridge will provide management of the operations of each of the
following SAVVIS Network Operations Centers ("NOCs"):
St. Louis: 24 hours a day, seven days a week
London: seven days a week, from 7:00 a.m. to 7:00 p.m. local time
Singapore: seven days a week, from 7:00 a.m. to 7:00 p.m. local time
2. The operations personnel staffing each NOC will be employees of SAVVIS
and the supervisory personnel will be employees of Bridge.
3. SAVVIS will compensate Bridge for management of the NOCs at the rate of
[*] per year.
4. In the event that the performance of a specific member of Bridge's NOC
management is not satisfactory to SAVVIS, SAVVIS may raise the matter
with Bridge, and Bridge and SAVVIS will work together to resolve the
matter, including the possible removal of such person from providing
such services to SAVVIS under this Agreement.
CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS SCHEDULE
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
25
<PAGE>
Exhibit 10.27
OFFICE LEASE
BETWEEN
WGP ASSOCIATES, LLC,
A VIRGINIA LIMITED LIABILITY COMPANY
(AS LANDLORD)
AND
SAVVIS COMMUNICATIONS CORPORATION, A MISSOURI CORPORATION
(AS TENANT)
Section Page
1. PRINCIPAL TERMS 1
2. GENERAL COVENANTS 2
3. TERM 3
4. RENT 3
5. COMPLETION OR REMODELING OF THE PREMISES 3
6. OPERATING EXPENSES 3
7. SERVICES 3
8. QUIET ENJOYMENT 6
9. DEPOSIT 6
10. CHARACTER OF OCCUPANCY 7
11. MAINTENANCE, ALTERATIONS AND REENTRY BY LANDLORD8
12. ALTERATIONS AND REPAIRS BY TENANT 9
13. CONSTRUCTION LIENS 9
14. SUBLETTING AND ASSIGNMENT 10
15. DAMAGE TO PROPERTY 12
16. INDEMNITY TO LANDLORD 12
17. SURRENDER AND NOTICE 12
18. INSURANCE, CASUALTY, AND RESTORATION OF PREMISES 12
19. CONDEMNATION 13
20. DEFAULT BY TENANT 14
21. DEFAULT BY LANDLORD 16
22. SUBORDINATION AND ATTORNMENT 17
23. REMOVAL OF TENANT'S PROPERTY 18
24. HOLDING OVER: TENANCY MONTH-TO-MONTH 18
25. PAYMENTS AFTER TERMINATION 18
26. STATEMENT OF PERFORMANCE 19
27. MISCELLANEOUS 19
28. AUTHORITIES FOR ACTION AND NOTICE 21
29. PARKING 21
30. SUBSTITUTE PREMISES 22
31. BROKERAGE 22
32. COUNTERPARTS 22
33. ADDENDUM/EXHIBITS 22
1
<PAGE>
LEASE AGREEMENT
THIS LEASE, dated as of January 24, 2000, is by and between WGP ASSOCIATES, LLC,
a Virginia limited liability company ("Landlord") and SAVVIS COMMUNICATIONS
CORPORATION, a Missouri corporation ("Tenant").
W I T N E S S E T H :
1. PRINCIPAL TERMS. Capitalized terms, first appearing in quotations in
this Section, elsewhere in the Lease or any Exhibits, are definitions of such
terms as used in the Lease and Exhibits and shall have the defined meaning
whenever used.
1.1 "BUILDING": Worldgate Plaza II, 12851 Worldgate
Drive, Herndon, Virginia
1.2 "PREMISES": approximately 80,582 rentable
square feet located on the 5th,
6th, 7th, and 8th floors, which
comprise the entirety of the
Building
1.3 "INITIAL TERM": 10 years, 3 months
"Commencement Date": March 1, 2000
"Expiration Date": May 31, 2010
<TABLE>
<CAPTION>
1.4 "BASE RENT": Annual Per Rentable
Period Square Foot Rate Monthly
------ ------------------- -------
<S> <C> <C> <C>
Months 1-12: $25.85 $173,587.06 [See
Section 4]
Months 13-24: $26.68 $179,160.65
Months 25-36: $27.53 $184,868.54
Months 37-48: $28.41 $190,777.89
Months 49-60: $29.32 $196,821.54
Months 61-72: $31.24 $209,781.81
Months 73-84: $32.18 $216,094.06
Months 85-96: $33.15 $222,607.78
Months 97-108: $34.14 $229,255.79
Months 109-120: $35.16 $236,105.26
Months 121-122: $36.21 $243,156.19
</TABLE>
1.5 OPERATING EXPENSES: Base Year: 2000
Pro Rata Share: 100%
1.6 DEPOSIT": $738,668.32 See Section 9
1.7 "PERMITTED USE": Primarily as general offices with
ancillary use for related uses in
accordance with Section 10
1.8 "GUARANTOR": Bridge Information Systems, Inc., a
Missouri corporation
1.9 PARKING: 322 spaces in the Parking Garage or
surface parking for the Building in
accordance with Section 29
1.10 LANDLORD'S NOTICE ADDRESS: WGP ASSOCIATES, LLC, c/o Miller
Global Properties, LLC, 4643 S.
Ulster Street, Suite 1500, Denver,
CO 80237, Attn: Donald E.
Spiegleman, Esq. or Mr. Paul Hogan
Facsimile: 303 694-0082 Telephone:
303 773-0369
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
with a copy to Building Manager: [name, address and phone numbers to be provided by Landlord]
Facsimile: _____________________
Telephone: ____________________
</TABLE>
1.11 RENT PAYMENT ADDRESS: WGP ASSOCIATES, LLC, c/o Miller
Global Properties, LLC, 4643 S.
Ulster Street, Suite 1500, Denver,
CO 80237
1.12 LANDLORD'S TAX I.D.: 84-1474051
1.13 TENANT'S NOTICE ADDRESS: Steven Gallant, Esq.
Vice President and General Counsel
Savvis Communications Corporation
717 Office Parkway
St. Louis, Mo. 63141
Facsimile: 314 468-7550
Telephone: 314 468 7517
with a copy to: Richard A. Cohn
Bryan Cave LLP
700 Thirteenth Street, N.W.
Washington, DC 20005-3960
Facsimile: 202 508-6200
Telephone: 202 508-6019
1.14 TENANT'S TAX I.D.: 43-1727675
1.15 LANDLORD'S BROKER: Charles E. Smith Real Estate
Services, L.P.
1.16 COOPERATING BROKER: Fred Ezra Company
1.17 ATTACHMENTS: [check if applicable]
x Addendum
x Work Letter
x Exhibit A - The Premises
x Exhibit A-1 - Building and
Plaza I
x Exhibit B - Real Property
x Exhibit C - Operating
Expenses
Exhibit D - [Intentionally
Deleted]
x Exhibit E - Rules and
Regulations
x Exhibit F - Janitorial
Specification
x Exhibit G - HVAC Rates
x Exhibit H - Parking
x Exhibit I - Generator,
Generator Fuel Tank and UPS
Locations
x Exhibit J - Subordination,
Non-Disturbance and
Attornment Agreement
2. GENERAL COVENANTS. Tenant covenants and agrees to pay Rent and perform
the obligations hereafter set forth and in consideration therefor Landlord
leases to Tenant the Premises as depicted on the plat attached as
2
<PAGE>
EXHIBIT A, together with a non-exclusive right, subject to the provisions
hereof, to use exterior plazas, common areas, or other areas on the real
property legally described on EXHIBIT B and all other common areas of the
Building and the Building Complex (including, without limitation, parking areas,
sidewalks, lobby and corridors), (the "Real Property") and such other areas
designated by Landlord for the exclusive or non-exclusive use of the tenants of
the Building and Plaza I (as hereinafter defined), including the Parking Garage
("Common Areas"). The "Building" includes the building depicted and labeled as
Worldgate Plaza Tower II on the attached EXHIBIT A-1, inclusive of the 5th, 6th,
7th and 8th floors, the elevators and stairs serving such floors, and the
elevator lobby on the first floor, exclusive of the parking garage portion lying
within the footprint of the Building depicted on EXHIBIT A-1. The Building and
the adjacent building to be constructed as depicted and labeled on EXHIBIT A-1
as Worldgate Plaza Tower I ("Plaza I"), Real Property, Common Areas, and
appurtenances are hereinafter collectively sometimes called the "Building
Complex." The mechanical rooms constituting Common Areas on floors 5,6,7 and 8
of the Building shall be reserved to Landlord's use for Building operations and
for Tenant's use, not the use of third parties, and use of the roof is subject
to the provisions of the Addendum. The mechanical rooms constituting Common
Areas elsewhere in the Building shall be reserved for Landlord's use for
Building Complex operations (including permitting the use by Tenant and tenants
of Plaza I, subject to Landlord's control of access and use).
3. TERM. The Initial Term of the Lease commences at 12:01 a.m. on the
Commencement Date and terminates at 12:00 midnight on the Expiration Date (the
Initial Term together with any extensions thereof is herein referred to as the
"Term.").
4. RENT. Subject to the provisions below, commencing on the Commencement
Date and on the first day of each month thereafter, Tenant shall pay Base Rent
in the amount stated in Section 1.4, in advance without notice (all amounts,
including Base Rent, to be paid by Tenant pursuant to this Lease as the context
requires are sometimes referred to collectively as "Rent(s)"). Rents shall be
paid without set off, abatement, or diminution, at the address set forth in
Section 1.11 above, or at such other place as Landlord from time to time
designates in writing. Notwithstanding anything to the contrary set forth in
Section 1.4 above, Tenant's obligation to pay Base Rent for the Premises shall
be phased in on a floor by floor basis for the Premises in accordance with the
following: Tenant's obligation to pay Base Rent for the 5th, 7th and 8th floors
(calculated on the basis of $25.85 annually per rentable square foot) shall
commence on March 1, 2000; Tenant's obligation to pay Base Rent for the 6th
floor (calculated on the basis of $25.85 annually per rentable square foot)
shall commence on June 1, 2000 and thereafter Tenant shall pay Rent in
accordance with Section 1.4.
5. COMPLETION OR REMODELING OF THE PREMISES. Provisions regarding
Landlord's obligation to complete the Building and the Premises and regarding
the completion of tenant finish work in the Premises are set forth in a work
letter attached to this Lease (the "Work Letter"). "Initial Tenant Finish" means
the Premises in its as-is condition as modified by all work, if any, performed
by Landlord at its expense prior to the respective Delivery Dates in accordance
with the Work Letter. Except as provided in and subject to the Work Letter,
Landlord has no obligation for the completion or remodeling of the Premises.
Tenant will accept the Premises in its "as is" condition on the Delivery Date.
6. OPERATING EXPENSES. Tenant shall pay additional Rent in accordance with
EXHIBIT C attached hereto.
7. SERVICES.
7.1 Subject to the provisions below, Landlord agrees, without charge, in
accordance with standards reasonably determined by Landlord from time to time
for the Building consistent with the standards observed by operators of first
class office buildings in the northern Virginia market: (1) at all hours to
furnish running water at those points of supply for general use of tenants of
the Building; (2) during Ordinary Business Hours and such other times as may be
required by Tenant to furnish to interior Common Areas heated or cooled air (as
applicable), electrical current, janitorial services, and maintenance;
(3) during Ordinary Business Hours and such other times as may be required by
Tenant to furnish heated or cooled air to the Premises consistent with the
design capacity of the Building HVAC; (4) to furnish, subject to capacity of
building systems, unfiltered treated chilled water for use in Tenant's packaged
HVAC systems
3
<PAGE>
provided that such systems are approved by Landlord, including strainers,
pumping systems and controls; (5) to provide, during Ordinary Business Hours,
the general use of passenger elevators for ingress and egress to and from the
Premises (at least one such elevator shall be available at all times except in
the case of emergencies or repair); (6) to provide janitorial services for the
Premises in accordance with the attached EXHIBIT F (including window washing of
the outside of exterior windows and relamping and replacement of ballasts in
flourescent ceiling light fixtures in the Premises); and (7) to cause electric
current to be supplied to the Premises for Tenant's Standard Electrical Usage
(items (1) through (7) are collectively called "Services"). "Tenant's Standard
Electrical Usage" means electricity for normal office purposes including
fluorescent and incandescent lighting (including task and task ambient lighting
systems) and for normal office equipment, including duplicating (reproduction)
machines and personal computers (provided they do not require any additional
voltage, special electrical or HVAC requirements beyond the systems existing in
the Premises), and internal communications systems. "Ordinary Business Hours"
means 8:00 a.m. to 6:00 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. on
Saturdays, Legal Holidays excepted. "Legal Holidays" mean New Year's Day, Martin
Luther King Day, Inauguration Day, Presidents' Day, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day, and
such other national holidays hereafter established by the United States
Government. The security system shall be operative at all times except as
required for repair or maintenance and shall restrict access (in accordance with
the security system specifications) to the main Building lobby and access to
individual floors from the elevator on such days and at such hours as Tenant may
request by notice to Landlord; Tenant shall have access to the Building 24 hours
a day, 7 days a week (subject to the provisions of this Lease). Any security
system or other security measures (collectively "security") that Landlord may
undertake are for protection of the physical structures only and shall not be
relied upon by Tenant, its agents, employees or invitees to protect their
person, or property, including Tenant's Property. Tenant shall not do anything
to circumvent or allow others to circumvent security. Tenant shall have a right
to install its own security system in the Building provided that such system is
installed in such a manner as to permit the continued operation of Landlord's
security and life safety systems or is a substitute security system (for the
Building and Premises and Tenant's allocated portion of parking level four of
the parking garage, as referred to in Section 29, but excluding the security
system for the main access controls for the parking garage), reasonably approved
by Landlord, that interfaces with Landlord's life safety systems to permit their
continued operation. Tenant shall provide Landlord with keys, access cards or
access numbers for any security system installed by Tenant to permit Landlord to
have access to the Building and Premises. If a substitute security system is
used, Tenant shall deliver to Landlord, at the expiration or earlier termination
of the Lease, all manuals and other equipment required for operation of the
system and leave in place all cabling and related equipment installed in the
Building. Landlord shall not be liable for any failure of any security to
operate or for any breach or circumvention of the security by others, and
Landlord makes no representations or warranties concerning the installation,
performance and monitoring of the security or that it will detect or avert
occurrences which any such security is intended or expected to detect or avert.
Landlord shall maintain the security which it elects to install in good repair.
7.2 Electricity for the Building, including the entirety of the Premises
shall be separately metered and paid by Tenant upon billing by service provider
of Landlord (based on the actual costs incurred to the provider, without markup
or profit to Landlord) and electricity shall not be included in amounts required
to be paid by Tenant as Operating Expenses under EXHIBIT C. In addition, Tenant
shall be responsible for and shall pay promptly, directly to the appropriate
supplier, all charges for telephone, interior landscape maintenance, and other
materials and services furnished directly to Tenant or the Premises, or used by
Tenant in or about the Premises during the Term, together with any taxes
thereon. Tenant shall have the right to contract for fiber optic cable to be
installed, at Tenant's expense, from the street right-of-way to the Premises
using existing conduits installed by Landlord for use of this Building or by
installation of additional conduits, subject to Landlord's reasonable approval
based on the capacity, design and location of such conduits. "Excess Usage"
means any usage of electricity (1) during other than Ordinary Business Hours;
(2) in an amount in excess of Tenant's Standard Electrical Usage; or (3) for
Special Equipment or for standard HVAC services during other than Ordinary
Business Hours. "Special Equipment" means (a) any equipment consuming more than
0.5 kilowatts at rated capacity, (b) any equipment requiring a voltage other
than 120 volts, single phase, or (c) equipment that requires the use of
self-contained HVAC units. If Tenant desires Excess Usage, Landlord will use
reasonable efforts to supply the same. Tenant shall reimburse Landlord for all
Landlord's costs of providing services for Excess Usage, including costs for
materials, additional wear and tear on equipment, utilities, and labor
(including fringe and overhead costs). Computation of such costs will be made by
Landlord's engineer, based on his engineering survey of Tenant's Excess Usage.
4
<PAGE>
Tenant shall reimburse Landlord for all additional costs, if any, incurred by
Landlord as a result of Tenant's installation or use of Special Equipment, other
than electrical costs (which shall be included in the metered electricity), as
reasonably determined by Landlord's engineer, including all costs of
supplementing the Building HVAC Systems and/or extending or supplementing any
electrical service, as Landlord determines is necessary, as a result of such
Special Equipment. "Special Equipment" means (a) any equipment requiring
modification or supplementation of the Building HVAC or electrical systems, (b)
any equipment requiring a voltage other than 120 volts, single phase, or (c)
equipment that requires the use of self-contained HVAC units. If Tenant desires
use of Building services after Ordinary Business Hours, Tenant shall give
Landlord such prior notice as is reasonably required to arrange for such
after-hours services; provided, however, that only 2 hours prior notice shall be
required if such notice is given during Ordinary Business Hours during Monday
through Friday (or such lesser notice as is required so long as after hours HVAC
is under the control of the Charles E. Smith Environmental Control Center,
pursuant to the applicable Building engineering services agreement). Charges for
Building HVAC use after Ordinary Business Hours, to be used in determining the
charges referred to above, are set forth on the attached EXHIBIT G. Tenant shall
also reimburse Landlord for all costs of supplementing the Building HVAC System
and/or extending or supplementing any electrical service, as Landlord determines
is necessary, as a result of Tenant's Excess Usage. Prior to installation or use
of Special Equipment or operation of the Premises for extended hours on an
ongoing basis, Tenant shall notify Landlord of such intended installation or use
and obtain Landlord's consent. Tenant may request that Landlord install at
Tenant's cost a check meter and/or flow meter to determine the cost of Tenant's
Excess Usage. Tenant shall also pay the cost of replacing light bulbs and/or
tubes and ballast used in all lighting in the Premises other than that provided
by Landlord to all tenants of the Building.
7.3 If Tenant requires janitorial services other than those included as
standard Services, Tenant shall separately pay for such services monthly upon
billings by Landlord, or Tenant shall, at Landlord's option, separately contract
for such services with the same company used by Landlord to furnish janitorial
services to the Building.
7.4 Landlord may discontinue, reduce, or curtail Services (either
temporarily or permanently) when necessary due to accident beyond the reasonable
control of Landlord, repairs, strikes, lockouts, Applicable Laws, or any other
happening beyond Landlord's reasonable control. Landlord is not liable for
damages to Tenant or any other party as a result of any interruption, reduction,
or discontinuance of Services (either temporary or permanent) nor shall the
occurrence of any such event be construed as an eviction of Tenant, cause or
permit an abatement, reduction or setoff of Rent, or operate to release Tenant
from Tenant's obligations; provided, however, that notwithstanding the
foregoing, if the Premises should become unsuitable for Tenant's use as a
consequence of a cessation of Services (other than an interruption resulting
from a fire or other casualty, which shall be governed by the provisions of
Section 18) (excluding, however, acts or omissions of Tenant or Tenant's Agents,
as defined below) and persists for more than three (3) consecutive business days
(an "Interfering Event"), then Tenant shall be entitled to an equitable
abatement of Rent to the extent of the interference with Tenant's use of the
Premises occasioned thereby from the date of the Interfering Event until the
date the Services are restored to the Premises. If Tenant continues to use any
part of the Premises to conduct its business, the Rent will only abate for the
untenantable part not used. Should any
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malfunction of the Building improvements or facilities required to be maintained
by Landlord occur that affect such Services, Landlord shall repair such
malfunction as soon as reasonably practicable with reasonable diligence and in
the event of the discontinuance, reduction or curtailment of Services for any
reason, Landlord shall use commercially reasonable efforts to have such services
restored as soon as reasonably practicable.
7.5 Tenant shall promptly notify Landlord of any accidents or defects in
the Building of which Tenant has actual knowledge, including defects in pipes,
electric wiring, and HVAC equipment, and of any condition which is likely to
cause injury or damage to the Building or any person or property therein.
8. QUIET ENJOYMENT. So long as an Event of Default has not occurred and
which is continuing, Tenant is entitled to the quiet enjoyment and peaceful
possession of the Premises subject to the provisions of this Lease. Landlord
shall under no circumstances be held responsible for restriction or disruption
of access to the Building from public streets caused by construction work or
other actions taken by or on behalf of governmental authorities, or for actions
taken by other tenants (their employees, agents, visitors, contractors or
invitees), or any other cause not entirely within Landlord's direct control, and
same shall not constitute a constructive eviction of Tenant nor give rise to any
right or remedy of Tenant against Landlord of any nature or kind. This covenant
of quiet enjoyment is in lieu of any covenant of quite enjoyment provided or
implied by law, and Tenant expressly waives any such other covenant of quiet
enjoyment to the extent broader than the covenant contained in this Section.
9. DEPOSIT.
9.1 By not later than 10 days following the delivery by Landlord of the
fully executed Lease to Tenant, Tenant shall deposit, and will keep on deposit
at all times during the Initial Term, with Landlord the Deposit as security for
the payment and performance of Tenant's obligations under this Lease. If, at any
time, after an Event of Default by Tenant, Landlord has the right to use the
Deposit, or so much thereof as necessary, in payment of Rent, in reimbursement
of any expense incurred by Landlord, and in payment of any damages incurred by
Landlord by reason of such Event of Default. In such event, Tenant shall on
demand of Landlord forthwith remit to Landlord a sufficient amount in cash to
restore the Deposit to the original amount. If the entire Deposit has not been
utilized, the remaining amount will be refunded to Tenant or to whoever is then
the holder of Tenant's interest in this Lease, without interest, within 60 days
after expiration of the Initial Term. Landlord may deliver the Deposit (or
rights to the Deposit account, as referred to above) to any purchaser of
Landlord's interest in the Premises and Landlord shall be discharged from
further liability therefor following actual delivery of such Deposit and
assumption by the transferee of Landlord's obligations with respect thereto.
Tenant agrees that if a Mortgagee succeeds to Landlord's interest in the
Premises by reason of foreclosure or deed in lieu of foreclosure, Tenant has no
claim against the Mortgagee for the Deposit or any portion thereof unless such
Mortgagee has actually received the same from Landlord. If claims of Landlord
exceed the Deposit, Tenant shall remain liable for the balance.
9.2 Subject to the provisions of Section 9.4, if there is no Event of
Default by Tenant as of the end of the end of the 36th month following the
Commencement Date or circumstances which with the mere passage of time or giving
of notice would constitute an Event of Default following such date, the Deposit
shall be reduced by $184,667.08; if there is Event of Default by Tenant as of
the end of the end of the 36th month following the Commencement Date or
circumstances which with the mere passage of time or giving of notice would
constitute an Event of Default, such reduction shall occur thereafter only upon
the curing of such Event of Default or circumstances, as applicable. The
remaining Deposit shall then be held for the balance of the Initial Term until
the Expiration Date (as provided in Section 1.3), subject to application in
accordance with this Section.
9.3 The Deposit shall be in the form of immediately available funds
deposited in a separate interest-bearing account in Landlord's name, which
interest shall be considered additional Deposit or, alternatively Tenant shall
have the right to request Landlord's consent to the substitution of an
irrevocable transferable letter of credit for the Deposit and Landlord shall not
withhold consent to such substitution subject to such letter of credit being
issued by a lending institution approved by Landlord and the letter of credit
being in a form approved by Landlord ("Letter of
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Credit"), such approval not to be unreasonably withheld, conditioned or delayed,
in the amount of the Deposit, subject to reduction as provided above. If the
Letter of Credit would otherwise expire prior to the Expiration Date, Tenant
shall present Landlord with an extension or renewal of the initial Letter of
Credit, or a substitute Letter of Credit in the same form, not later than 60
days prior to the expiration date of such initial Letter of Credit, from a
lending institution subject to Landlord's reasonable approval; such extension,
renewal or substitute Letter of Credit shall be effective no later than the day
prior to the expiration of the initial Letter of Credit and shall continue in
effect for not less than the period ending with the Expiration Date and shall be
in the amount provided above. Tenant agrees that in an Event of Default by
Tenant (as defined in Section 20), Landlord shall have a right to present the
Letter of Credit (or the renewal, extension or substitute) for payment, with
amounts received to be held and applied in accordance with this Section. Any
failure of Tenant to provide Landlord with an extension, renewal or substitute
Letter of Credit, as required hereunder, shall be deemed an Event of Default
under the Lease and Landlord shall have a right to present the Letter of Credit
in accordance with the foregoing provision. If the Letter of Credit has not been
presented for payment in accordance with this Section on or before the
Expiration Date, Landlord shall return the Letter of Credit to Tenant within
thirty (30) days after the Expiration Date. Tenant agrees that in the event of
any assignment or this Lease or mortgage, Landlord shall have the right to
transfer the Letter of Credit or substitute to the assignee or mortgagee (and
Tenant shall pay any costs or fees charged by the issuer to permit such
transfer), and if the Letter of Credit has been transferred as provided above,
Tenant shall look solely to such transferee for the return of the Letter of
Credit (or substitute), provided that Landlord shall give written notice to
Tenant of transfer of Landlord's interest resulting in transfer of the Letter of
Credit and the transferee shall assume the obligation to return the same to
Tenant in accordance with this Lease. Landlord shall deliver the then-current
effective Letter of Credit to Tenant upon receipt of any conforming renewal or
substitute Letter of Credit provided in accordance with this Paragraph and
cooperate with the issuing bank to effect the release of such then-current
effective Letter of Credit.
9.4 In accordance with Paragraph 6 of the Addendum, the obligations of
Tenant are guaranteed by the Guarantor, Bridge Information Systems, Inc., a
Missouri corporation, pursuant to the terms of the Guaranty. The Guaranty
provides for the ability to substitute Tenant's parent corporation, Savvis
Communications Corporation, a Delaware corporation, as Guarantor, subject to
increasing the amount of the Deposit to a total of $3,196,419.30 in the form of
the Letter of Credit referred to above; the effective date of such substitution
is referred to as the Substitution Date. In such event, the following provision
shall be applicable, in substitution for the provisions of Section 9.2 above:
(i) if there is no Event of Default (or circumstances which with the mere
passage of time or giving of notice would constitute an Event of Default) by
Tenant as of the end of the 12th month following the Substitution Date or
circumstances which with the mere passage of time or giving of notice would
constitute an Event of Default following such date, the Deposit shall be reduced
by $351,107.29; (ii) likewise, on each anniversary thereafter of the
Substitution Date through and including the 7th anniversary, if there is no
Event of Default (or circumstances which with the mere passage of time or giving
of notice would constitute an Event of Default) as of such date, the Deposit
shall be additionally reduced by $351,107.29 (however, in no event shall such
reductions result in reduction below $738,668.32); (iii) if there are
circumstances which with the mere passage of time or giving of notice would
constitute an Event of Default as of the respective anniversary of the
Substitution Date, the respective reduction shall occur thereafter only upon the
curing of such Event of Default or circumstances, as applicable; (iv) the
remaining Deposit as of the 7th anniversary of $738,668.32 shall then be held
until the Expiration Date of the Initial Term, subject to application in
accordance with this Section. The reduction of the amount of the Deposit shall
be effected by amendment of the then-effective Letter of Credit (by amendment
executed by the issuer and Landlord) or by Tenant's substitution of a substitute
Letter of Credit in the respective reduced amount (in which event Landlord shall
surrender the Letter of Credit being held as of the substitution upon receipt of
the substitute).
10. CHARACTER OF OCCUPANCY. Tenant shall occupy the Premises for the
Permitted Use and for no other purpose, and use it in a careful, safe, and
proper manner and pay on demand for any damage to the Premises caused by misuse
or abuse by Tenant, Tenant's agents or employees, or any other person entering
upon the Premises under express or implied invitation of Tenant (collectively,
"Tenant's Agents"). The term "Permitted Use" shall mean: general office use for
administrative, clerical, and professional office purposes and the operation of
internet and telecommunications services and Collocation Services (as defined in
Section 14.7) (collectively, the "Primary Use") and for activities ancillary
thereto (the "Ancillary Uses") provided that Ancillary Uses shall not be the
primary use of
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the Premises, are permitted by Applicable Laws (as hereinafter defined), and are
expressly approved by Landlord, which approval shall not be unreasonably
withheld if such uses are consistent with first class suburban general office
building uses and so long as in keeping with Building's first-class quality and
allowed under PDC zoning applicable to the Building. Tenant shall be responsible
for obtaining any approvals or permits required for the Ancillary Uses under
Applicable Laws and the Declaration. Tenant, at Tenant's expense, shall comply
with all applicable federal, state, city, quasi-governmental and utility
provider laws, codes, rules, and regulations now or hereafter in effect
("Applicable Laws") which impose any duty upon Landlord or Tenant with respect
to the occupation or alteration of the Premises. Tenant shall not commit or
permit waste or any nuisance on or in the Premises. Tenant agrees not to store,
keep, use, sell, dispose of or offer for sale in, upon or from the Premises any
article or substance prohibited by any insurance policy covering the Building
Complex nor shall Tenant keep, store, produce or dispose of on, in or from the
Premises or the Building Complex any substance which may be deemed an infectious
waste or hazardous substance under any Applicable Laws, except customary office
and cleaning supplies or supplies customarily associated with the Primary Use of
the Premises that are disclosed to Landlord and are stored and used in
accordance with Applicable Laws and applicable industry standards. Landlord is
responsible for complying with Applicable Laws relating to the Building
(excluding the Premises) and its Common Areas, including Title III of the
Americans with Disabilities Act of 1990 (the "ADA") and the costs of such
compliance with existing Applicable Laws as of the date hereof will be paid by
Landlord and will not be charged back to Tenant. The method and timing of
compliance will be within Landlord's discretion. Tenant is responsible for
compliance with all existing and any new Applicable Laws, including ADA, within
the Premises. Landlord will include Landlord's future compliance costs due to
changes in or new Applicable Laws as an Operating Expense in accordance with
Exhibit C. To the extent that Tenant is responsible for compliance with
Applicable Laws, Tenant shall have the right to contest by appropriate
proceedings diligently conducted in good faith, in the name of Tenant or, with
the prior written consent of Landlord, in the name of Landlord, or both, the
validity or application of any Applicable Laws of any nature affecting Tenant or
its use of the Premises. If compliance with any of such Applicable Laws legally
may be delayed pending the prosecution of any proceeding, without incurring any
lien, charge or liability of any kind against the Building and/or the Premises,
or against Landlord's interest in the Building and/or the Premises or sale of
the Building and/or the Premises, and without subjecting Tenant or Landlord to
any liability, civil or criminal, interest or penalty for failure to comply,
Tenant may delay compliance until the final determination of the proceeding.
11. MAINTENANCE, ALTERATIONS AND REENTRY BY LANDLORD.
11.1 Landlord will (i) make repairs and replacements to HVAC, mechanical,
life safety and electrical systems in the Premises (to the extent such systems
are Building standard) deemed necessary by Landlord for normal operations of the
Building Complex; and (ii) provide upkeep, maintenance, and repairs to all
Common Areas of the Building Complex, including without limitation the Parking
Facilities, and all structural elements of the Building, including without
limitation the roof, exterior walls (including windows and glass), interior
bearing walls, foundations, footings, and all exterior surfaces of the Building.
Landlord shall perform its obligations under this Section 11.1 in a manner
consistent with other first class office buildings in the northern Virginia area
and in accordance with Applicable Laws. Except as provided in this Section or
otherwise expressly required in this Lease, Landlord is not required to make
improvements or repairs to the Premises during the Term.
11.2 Landlord or Landlord's agents may at any time enter the Premises
without notice in case of emergency and for performance of janitorial services
and in all other instances after reasonable prior oral or written notice to
Tenant and subject to compliance with Tenant's reasonable security measures
(which may include an escort) for examination and inspection, or to perform, if
Landlord elects, any obligations of Tenant which Tenant fails to perform or such
cleaning, maintenance, janitorial services, repairs, replacements, additions, or
alterations as Landlord deems necessary for the safety, improvement, or
preservation of the Premises or other portions of the Building Complex or as
required by Applicable Laws. Landlord or Landlord's agents may also show the
Premises to prospective purchasers, Mortgagees and during the last 12 months of
the Term, to prospective tenants, upon not less than 48 hours prior notice. Any
such reentry does not constitute an eviction or entitle Tenant to abatement of
Rent. Landlord may make such alterations or changes in other portions of the
Building Complex as Landlord desires so long as such alterations and
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changes do not unreasonably interfere with Tenant's occupancy of the Premises or
use of the Common Areas or conflict with the other provisions of this Lease.
Landlord may use the Common Areas and one or more street entrances to the
Building Complex as may be necessary in Landlord's judgment to complete such
work.
12. ALTERATIONS AND REPAIRS BY TENANT.
12.1 Tenant shall not make any alterations to the Premises during the Term,
including installation of equipment or machinery which requires modifications to
existing electrical outlets or increases Tenant's usage of electricity beyond
Tenant's Standard Electrical Usage (collectively "Alterations") without in each
instance first obtaining the written consent of Landlord, which consent shall
not be unreasonable withheld, conditioned or delayed. Landlord's consent or
approval of the plans, specifications and working drawings for any Alterations
shall not constitute any warranty or representation by Landlord (and shall not
impose any liability on Landlord) as to their completeness, design sufficiency,
or compliance with Applicable Laws; provided, however, Tenant may, without
Landlord's consent, perform interior non-structural Alterations not involving
modifications to the Base Building plumbing, electrical, mechanical or life
safety systems (as distinguished from the portions of such systems located
within the Premises that are installed by Tenant as Initial Tenant Finish)
provided the cost of any particular Alterations (taking into account together
all Alterations being made as part of a common or phased plan) does not exceed
Seventy Five Thousand Dollars ($75,000)(such cost limit shall not, however, be
applicable to Alterations on the 6th floor). Tenant shall at its cost: pay all
engineering and design costs incurred by Landlord as to all Alterations, obtain
all governmental permits and approvals required, and cause all Alterations to be
completed in compliance with Applicable Laws and requirements of Landlord's
insurance. All such work relating to Alterations shall be performed in a good
and workmanlike manner, using new materials and equipment at least equal in
quality to the Initial Tenant Finish. All Alterations, repair and maintenance
work performed by Tenant shall be done at Tenant's expense by Landlord's
employees or, with Landlord's prior consent, which shall not be unreasonably
withheld, conditioned or delayed, by other persons requested by Tenant; however,
if such work is not performed by Landlord's employees, Tenant shall pay Landlord
a supervisory fee upon receipt of an invoice. If Landlord authorizes such
persons to perform work, Tenant shall deliver to Landlord prior to commencement
certificates issued by insurance companies qualified to do business in the state
in which the Premises are located, evidencing that worker's compensation, public
liability insurance, and property damage insurance (in amounts, with companies
and on forms satisfactory to Landlord) are in force and maintained by all
contractors and subcontractors engaged to perform such work. All liability
policies shall name Landlord, Building Manager, and Mortgagee as additional
insureds. Each certificate shall provide that the insurance may not be canceled
or modified without 10 days' prior written notice to Landlord and Mortgagee.
Landlord also has the right to post notices in the Premises in locations
designated by Landlord stating that Landlord is not responsible for payment for
such work and containing such other information as Landlord deems necessary. All
such work shall be performed in a manner which does not unreasonably interfere
with the performance of Landlord's rights and obligations under this Lease, or
impose additional expense upon Landlord in the operation of the Building
Complex.
12.2 Tenant shall keep the Premises in as good order, condition, and repair
and in an orderly state, as on the Commencement Date, loss by fire or other
casualty or ordinary wear excepted.
12.3 All Alterations, including partitions, paneling, carpeting, drapes or
other window coverings, and light fixtures (but not including movable office
furniture, equipment and other property not permanently attached to the
Building), are deemed a part of the real estate and the property of Landlord and
remain upon and be surrendered with the Premises at the end of the Term, whether
by lapse of time or otherwise, unless Landlord notifies Tenant no later than 15
days prior to the end of the Term that it elects to have Tenant remove all or
part of such Alterations, and in such event, Tenant shall at Tenant's expense
promptly remove the Alterations specified and restore the Premises to its prior
condition, reasonable wear and tear excepted.
13. CONSTRUCTION LIENS. Tenant shall pay for all work done on the
Premises by Tenant or at its request (other than the Initial Tenant Finish) of a
character which may result in liens on Landlord's or Tenant's interest and
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Tenant will keep the Premises free of all construction liens, and other liens on
account of such work. Tenant indemnifies, defends, and saves Landlord and all
Mortgagees harmless from all liability, loss, damage, or expenses, including
attorneys' fees, on account of any claims of laborers, materialmen or others for
work performed or for materials or supplies furnished to Tenant or persons
claiming under Tenant. If any lien is recorded against the Premises or Building
or any suit affecting title thereto is commenced as a result of such work, or
supplying of materials, Tenant shall cause such lien to be removed of record
within 10 days after notice from Landlord. If Tenant desires to contest any
claim, Tenant must either arrange for release of such lien and substitution of a
bond or other collateral (in accordance with Applicable Laws) or furnish
Landlord adequate security of at least 150% of the amount of the claim, plus
estimated costs and interest and, if a final judgment establishing the validity
of any lien is entered, Tenant shall immediately pay and satisfy the same. If
Tenant fails to proceed as aforesaid, Landlord may pay such amount and any
costs, and the amount paid, together with reasonable attorneys' fees incurred,
shall be immediately due Landlord upon notice.
14. SUBLETTING AND ASSIGNMENT.
14.1 Except as provided in Section 14.7, Tenant shall not sublet any part
of the Premises nor assign or otherwise transfer this Lease or any interest
herein (sometimes referred to as "Transfer," and the subtenant or assignee may
be referred to as "Transferee") without the consent of Landlord first being
obtained, which consent will not be unreasonably withheld, conditioned or
delayed provided that: (1) Tenant complies with the provisions of Section 14.4;
(2) Landlord declines to exercise its rights under Section 14.3; (3) the
Transferee is engaged in a business and the portion of the Premises will be used
for the Permitted Use in a manner which is in keeping with the then standards of
the Building and does not conflict with any exclusive use rights granted to any
other tenant of the Building Complex; (4) the Transferee has reasonable
financial worth in light of the responsibilities involved; (5) Tenant is not in
default at the time it makes its request; (6) the Transferee is not a
governmental or quasi-governmental agency; and (7) the Transferee is not a
tenant or currently negotiating a lease with Landlord in any building owned by
Landlord in the metropolitan area of the Building Complex (including the
Building Complex). Transfer includes a sale by Tenant of substantially all of
its assets or stock if Tenant is a publicly traded corporation, a merger of
Tenant with another corporation, the transfer of 49% or more of the stock in a
corporate tenant whose stock is not publicly traded, or transfer of 49% or more
of the beneficial ownership interests in a partnership or limited liability
company tenant. If any Alterations to the Premises or the Common Areas are
required by Applicable Laws in connection with such Transfer or the particular
business of such Transferee, such Alterations shall be subject to the prior
approval of Landlord (which approval shall not be unreasonably withheld) and
Tenant shall bear the cost of such Alterations.
14.2 Following any Transfer in accordance with this Section 14, Landlord
may, during the continuance of an Event of Default by Tenant, collect rent from
the Transferee or occupant and apply the net amount collected to the Rent, but
no Transfer or collection will be deemed an acceptance of the Transferee or
occupant as Tenant or release Tenant from its obligations. Consent to a Transfer
shall not relieve Tenant from obtaining Landlord's consent to any other
Transfer. Notwithstanding Landlord's consent to a Transfer, Tenant shall
continue to be primarily liable for its obligations. If Tenant collects any rent
or other amounts from a Transferee in excess of the Rent (after deduction of the
reasonable costs of such Transfer) for any monthly period, Tenant shall pay
Landlord fifty percent (50%) of the excess monthly, as and when received.
14.3 Notwithstanding the above (and except for a Transfer permitted under
Section 14.7), if Tenant requests Landlord's consent to sublet 49% or more of
the Premises for all or substantially all of the remainder of the then-current
Term of the Lease or assign Tenant's interest in the Lease, Landlord may refuse
to grant such consent in its sole discretion and terminate this Lease as to the
portion of the Premises with respect to which such consent was requested;
provided, however, if Landlord does not consent and elects to terminate the
Lease as to such portion, Tenant may within 15 days after notice from Landlord
to this effect withdraw Tenant's request for consent. If such termination
occurs, it shall be effective on the date designated in a notice from Landlord
and shall not be more than 30 days following such notice.
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14.4 Tenant must notify Landlord at least 30 days prior to the desired date
of the Transfer ("Tenant's Notice"), excluding a Transfer permitted under
Section 14.7. Tenant's Notice shall describe the portion of the Premises to be
transferred and the terms and conditions. Landlord has, without obligation, 15
days following receipt of Tenant's Notice to (i) propose a subtenant for such
space (which subtenant shall be subject to reasonable approval of Tenant) or
(ii) exercise its rights pursuant to Section 14.3 if Tenant's Notice discloses
that 49% or more of the Premises is involved; provided, however, that Landlord's
option in clause (i) shall not be applicable until 24 months following the
Commencement Date so long as the Transfers are subleases for a period not to
exceed 36 months which which do not involve more than 33% of the Premises in the
aggregate. If the space covered by Tenant's Notice is subleased to a sublessee
proposed by Landlord, rent and other sums due from the subtenant will be paid to
Tenant directly and Landlord has no responsibility for the performance by such
subtenant of its obligations under its sublease with Tenant. If Landlord does
not exercise its rights under clause (i) or clause (ii) within 15 days after
receipt of Tenant's Notice, Landlord shall be deemed to have waived its rights
under those clauses with respect to the proposed transaction and Tenant shall be
free to sublet the specified portion of the Premises to any third party on terms
substantially identical to those described in Tenant's Notice, subject to
Landlord's consent as set forth above. If Tenant does not sublet such portion of
the Premises within 180 days following Landlord's notice to Tenant, Tenant must
reoffer the Premises to Landlord in accordance with the provisions hereof prior
to subleasing to a third party.
14.5 All documents utilized by Tenant to evidence a Transfer are subject to
approval by Landlord. Tenant shall pay Landlord's reasonable expenses, including
reasonable attorneys' fees, of determining whether to consent and in reviewing
and approving the documents. Tenant shall provide Landlord with such information
as Landlord reasonably requests regarding a proposed Transferee, including
financial information.
14.6 If a trustee or debtor in possession in bankruptcy is entitled to
assume control over Tenant's rights under this Lease and assigns such rights to
any third party notwithstanding the provisions hereof, the rent to be paid by
such party shall be increased to the current Base Rent (if greater than that
being paid for the Premises) which Landlord charges for comparable space in the
Building as of the date of such third party's occupancy. If Landlord is entitled
under the Bankruptcy Code to "Adequate Assurance" of future performance of this
Lease, the parties agree that such term includes the following:
(1) Any assignee must demonstrate to Landlord's reasonable satisfaction a
net worth (as defined in accordance with generally accepted accounting
principles consistently applied) at least as large as the net worth of Tenant on
the Commencement Date [increased by 4%, annually, for each year thereafter
through the date of the proposed assignment] or other equivalent financial
capacity. Tenant's financial condition was a material inducement to Landlord in
executing this Lease.
(2) The assignee must assume and agree to be bound by the provisions of
this Lease.
14.7 Notwithstanding anything to the contrary contained hereinabove but
subject to Section 14.2 and provided that the conditions of clauses (3) and (5)
of Section 14.1 are met, Tenant may, without obtaining Landlord's prior written
consent, assign or sublease all or any portion of the Premises to the following
parties on the following conditions: (1) any subsidiary or affiliate in which
Tenant has, directly or indirectly, an ownership interest of more than 50%; (ii)
any direct or ultimate parent of Tenant; (iii) any subsidiary or affiliate in
which Tenant's parent owns, directly or indirectly, by means of an ownership
interest of more than 50%; or (iv) any corporation into which Tenant may be
merged or consolidated or which purchases all or substantially all of the assets
or stock of Tenant provided that the resulting corporation has a net worth at
least equal to Tenant's net worth as of the date hereof. A sale or transfer of
stock in Tenant pursuant to a public offering, including publicly traded stock
or Tenant, shall be permitted without obtaining Landlord's prior written
consent. As soon as practicable prior to the effective date of a transaction
permitted under this Section 14.7, Tenant will provide Landlord with
documentation evidencing such transaction and such other evidence as Landlord
may reasonably require to establish that such transaction falls within the terms
and provisions of this Section. Furthermore, Tenant may allow employees of
companies to whom Tenant is providing products or services (including the
maintenance
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and operation of computer servers for such companies) or with which Tenant is
collaborating in the development or provision of products or services
(collectively referred to as "Collocation Services") to work in the Premises
without Landlord's consent and without being deemed to have sublet any portion
of the Premises, so long as such employees do not occupy space which is
separated from that occupied by Tenant by demising walls and the number of such
employees whose primary place of employment is the Premises does not exceed ten
percent (10%) of the total number of persons regularly occupying the Premises.
15. DAMAGE TO PROPERTY. Tenant agrees Landlord is not liable for any injury
or damage, either proximate or remote, occurring through or caused by fire,
water, steam, or any repairs, alterations, injury, accident, or any other cause
to the Premises, to any furniture, fixtures, Tenant improvements, or other
personal property of Tenant kept or stored in the Premises, or in other parts of
the Building Complex, whether by reason of the negligence or default of
Landlord, other occupants, any other person, or otherwise; and the keeping or
storing of all property of Tenant in the Premises and Building Complex is at the
sole risk of Tenant.
16. INDEMNITY TO LANDLORD.
16.1 Tenant agrees to indemnify, defend, and hold Landlord and Building
Manager harmless from all liability, costs, or expenses, including attorneys'
fees, on account of damage to the person or property of any third party,
including any other tenant in the Building Complex, to the extent caused by the
negligence or breach of this Lease by the Tenant or Tenant's Agents.
16.2 Tenant shall maintain throughout the Term a commercial general
liability policy, including protection against death, personal injury and
property damage, issued by an insurance company qualified to do business in the
state in which the Premises are located, with a single limit of not less than
$1,000,000.00. Such policy shall name Landlord, Building Manager, and Mortgagee
as additional insureds, be primary to any other similar insurance of such
additional insureds, and provide that it may not be cancelled or modified
without at least 20 days' prior notice to Landlord and Mortgagee. The minimum
limits of such insurance do not limit the liability of Tenant hereunder. Prior
to occupancy of the Premises, and prior to expiration of the then-current
policy, Tenant shall deliver certificates evidencing that insurance required
under this Lease is in effect.
16.3 Landlord agrees to indemnify, defend, and hold Tenant harmless from
all liability, costs, or expenses, including attorneys' fees, on account of
damage to the person or property of any third party (excluding Tenant's Agents)
including any other tenant in the Building Complex, to the extent caused by the
negligence or breach of this Lease by Landlord, subject to the provisions of
Section 18.6
17. SURRENDER AND NOTICE. Upon the expiration or other termination of this
Lease, Tenant shall immediately quit and surrender to Landlord the Premises
broom clean, in good order and condition, ordinary wear and tear and loss by
fire or other casualty excepted, and Tenant shall remove all of its movable
furniture and other effects, all telephone cable and related equipment in the
Building installed for Tenant, and such Alterations, as Landlord requires. If
Tenant fails to timely vacate the Premises as required, Tenant is responsible to
Landlord for all resulting costs and damages of Landlord, including any amounts
paid to third parties who are delayed in occupying the Premises.
18. INSURANCE, CASUALTY, AND RESTORATION OF PREMISES.
18.1 Landlord shall maintain property insurance for the Building Complex,
the shell and core of the Building and the Premises in such amounts, from such
companies, and on such terms and conditions, sufficient to prevent Landlord from
being a coinsurer under its policy of insurance, for property loss equal to the
full replacement value of the Building Complex and public liability insurance in
an amount customary for first class office properties in the Northern Virginia
area.
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18.2 Tenant shall maintain throughout the Term insurance coverage at least
as broad as ISO Special Form Coverage against risks of direct physical loss or
damage (commonly known as "all risk") for the full replacement cost of Tenant's
property and betterments in the Premises, including tenant finish in excess of
the Initial Tenant Finish.
18.3 If the Building is damaged by fire or other casualty which renders the
Premises wholly untenantable and the damage is so extensive that an architect
selected by Landlord certifies in writing to Landlord and Tenant within 30 days
of said casualty (or such longer period, not to exceed a total of 45 days, if
Landlord is unable to obtain such certification within the 30 day period for
causes beyond Landlord's reasonable control) that the Premises cannot, with the
exercise of reasonable diligence, be made fit for occupancy within 180 working
days from the happening thereof, then, at the option of Landlord or Tenant
exercised in writing to the other within 30 days of such determination, this
Lease shall terminate as of the occurrence of such damage. In the event of
termination, Tenant shall pay Rent duly apportioned up to the time of such
casualty and forthwith surrender the Premises and all interest. If Tenant fails
to do so, Landlord may reenter and take possession of the Premises and remove
Tenant. If, however, the damage is such that the architect certifies that the
Premises can be made tenantable within such 180-day period or neither Landlord
or Tenant elects to terminate the Lease despite the extent of damage, then the
provisions below apply.
18.4 If the Premises are damaged by fire or other casualty that does not
render it wholly untenantable and require a repair period in excess of 180 days,
Landlord shall with reasonable promptness except as hereafter provided repair
the Premises up to the level of the Initial Tenant Finish.
18.5 If the Parking Garage or portions of the Building Complex required for
support or operation of the Building is damaged (though the Premises may not be
affected, or if affected, can be repaired within 180 days) and within 30 days of
said casualty (or such longer period, not to exceed a total of 45 days, if
Landlord is unable to obtain such certification within the 30 day period for
causes beyond Landlord's reasonable control) Landlord decides not to reconstruct
or rebuild the Building, then, notwithstanding anything contained herein, upon
notice to that effect from Landlord within said period, Tenant shall pay the
Rent apportioned to the later of such casualty or the date that Tenant ceases to
use the Premises, this Lease shall terminate from the date of such notice, and
both parties discharged from further obligations except as otherwise expressly
provided.
18.6 Landlord and Tenant waive all rights of recovery against the other and
its respective officers, partners, members, agents, representatives, and
employees for loss or damage to its real and personal property kept in the
Building Complex which is capable of being insured against under ISO Special
Form Coverage, or for loss of business revenue or extra expense arising out of
or related to the use and occupancy of the Premises. Tenant also waives all such
rights of recovery against Building Manager and Building Manager waives all
rights to recovery against Tenant. Each party shall, upon obtaining the property
damage insurance required by this Lease, notify the insurance carrier that the
foregoing waiver is contained in this Lease and use reasonable efforts to obtain
an appropriate waiver of subrogation provision in the policies.
18.7 Rent shall abate from the later of the date of such casualty or the
date that Tenant ceases to use the Premises and continuing until substantial
completion during any period of repair and restoration up to the level of the
Initial Tenant Finish permitting occupancy by Tenant, any recovery by Landlord
under its loss of rent insurance related to the Premises in the same proportion
that the part of the Premises rendered untenantable bears to the whole;
provided, however, if the casualty is the fault of Tenant or Tenant's agents,
then the Rent will abate during any such period of repair and restoration but
only to the extent of any recovery by Landlord under its rental insurance
related to the Premises.
19. CONDEMNATION. If the Premises or substantially all of it or any portion
of the Building Complex which renders the Premises untenantable is taken by
right of eminent domain, or by condemnation (which includes a conveyance in lieu
of a taking), this Lease, at the option of either Landlord or Tenant exercised
by notice to the other within 30 days after the taking, shall terminate and Rent
shall be apportioned as of the date of the taking. Tenant shall forthwith
surrender the Premises and all interest in this Lease, and, if Tenant fails to
do so, Landlord may reenter and take
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possession of the Premises. If less than all the Premises is taken, Landlord
shall promptly repair the Premises as nearly as possible to its condition
immediately prior to the taking, unless Landlord elects not to rebuild under
Section 18.5. Landlord shall receive the entire award or consideration for the
taking, except with respect to the value of Tenant's improvements and fixtures
and for any separate award made to Tenant for its relocation expenses pursuant
to a separate independent action taken by Tenant against the condemning
authority.
20. DEFAULT BY TENANT.
20.1 Each of the following events is an "Event of Default":
(1) Any failure by Tenant to pay Rent on the due date unless such failure
is cured within 5 business days after notice by Landlord; however, Tenant is not
entitled to more than 2 notices of delinquent payments during any calendar year
and, if thereafter during such calendar year any Rent is not paid when due, an
Event of Default shall automatically occur;
(2) Tenant vacates (other than temporary vacation during which period
Tenant is engaged in trying to relet the Premises) or abandons the Premises (as
evidenced by vacating the Premises with the intent by Tenant not to be bound by
the terms of the Lease, as evidenced by a breach of any of its other obligations
under the Lease, including the payment of Rent);
(3) This Lease or Tenant's interest is transferred whether voluntarily or
by operation of law except as permitted in Section 14;
(4) This Lease or any part of the Premises is taken by process of law
against Tenant and is not released within 15 days after a levy;
(5) Commencement by Tenant of a proceeding under any provision of federal
or state law relating to insolvency, bankruptcy, or reorganization ("Bankruptcy
Proceeding");
(6) Commencement of a Bankruptcy Proceeding against Tenant, unless
dismissed within 60 days after commencement;
(7) The insolvency of Tenant or execution by Tenant of an assignment for
the benefit of creditors; or the failure of Tenant generally to pay its debts as
they mature, or the occurrence of any of the foregoing with respect to any
Guarantor, if any, of Tenant's obligations;
(8) The admission in writing by Tenant (or any general partner of Tenant if
Tenant is a partnership), that it is unable to pay its debts as they mature or
it is generally not paying its debts as they mature;
(9) Tenant fails to take possession of the Premises by the 90th day
following the Commencement Date (which deadline may be extended by delays beyond
the reasonable control of Tenant, provided that Tenant is proceeding with due
diligence to complete the Finish Work and move into the Premises);
(10) Tenant fails to perform any of its other obligations and
non-performance continues for 30 days after notice by Landlord or, if such
performance cannot be reasonably had within such 30 day period, Tenant does not
in good faith commence performance within such 30 day period and diligently
proceed to completion; provided, however, that if Tenant's failure would
constitute a violation of Applicable Law and Landlord would be subject to fines
or penalties or use of the Building Complex by another tenant would be adversely
affected, Tenant's right to cure shall not exceed the period provided by
Applicable Law;
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(11) Any event which is expressly defined as or deemed an Event of Default
under Sections 9 and 27.22 of this Lease.
20.2 Remedies of Landlord. If an Event of Default occurs, Landlord may then
or at any time thereafter, either:
(1) (a) Without further notice except as required by Applicable Laws,
reenter and repossess the Premises or any part and expel Tenant and those
claiming through or under Tenant and remove the effects of both without being
deemed guilty of any manner of trespass and without prejudice to any remedies
for arrears of Rent or preceding breach of this Lease. Should Landlord reenter
or take possession pursuant to legal proceedings or any notice provided for by
Applicable Law, Landlord may, from time to time, without terminating this Lease,
relet the Premises or any part, either alone or in conjunction with other
portions of the Building Complex, in Landlord's or Tenant's name but for the
account of Tenant, for such periods (which may be greater or less than the
period which would otherwise have constituted the balance of the Term) and on
such conditions and upon such other terms (which may include concessions of free
rent and alteration and repair of the Premises) as Landlord, in its reasonable
discretion, determines and Landlord may collect the rents therefor. Landlord is
not in any way responsible or liable for failure to relet the Premises, or any
part thereof, or for any failure to collect any rent due upon such reletting,
but Landlord shall use commercially reasonable efforts to mitigate its damages.
If there is other unleased space in the Worldgate complex (consisting of the
Building, Plaza I and building that may be built on the property known as
Worldgate Parcel 12; collectively, the "Worldgate Complex"), Landlord may lease
such other space without prejudice to its remedies against Tenant. No such
reentry or repossession or notice from Landlord shall be construed as an
election by Landlord to terminate this Lease unless specific notice of such
intention is given Tenant. Acts of maintenance or preservation or efforts to
relet the Premises or the appointment of a receiver upon initiative of Landlord
to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's contractual liability under this Lease unless written
release of liability is given by Landlord to Tenant. Landlord reserves the right
following any reentry and/or reletting to exercise its right to terminate this
Lease by giving Tenant notice, in which event this Lease will terminate as
specified in the notice.
(b) If Landlord takes possession of the Premises without terminating this
Lease, Tenant shall pay Landlord (i) the Rent which would be payable if
repossession had not occurred, less (ii) the net proceeds, if any, of any
reletting of the Premises after deducting all of Landlord's expenses incurred in
connection with such reletting, including all reasonable repossession costs,
brokerage commissions, attorneys' fees, expenses of employees, alteration, and
repair costs (collectively "Reletting Expenses"). If, in connection with any
reletting, the new lease term extends beyond the Term or the premises covered
thereby include other premises not part of the Premises, a fair apportionment of
the rent received from such reletting and the Reletting Expenses, will be made
in determining the net proceeds received from the reletting. In determining such
net proceeds, rent concessions will also be apportioned over the term of the new
lease. Tenant shall pay such amounts to Landlord monthly on the days on which
the Rent would have been payable if possession had not been retaken, and
Landlord is entitled to receive the same from Tenant on each such day; or
(2) Give Tenant notice of termination of this Lease on the date specified
and, on such date, Tenant's right to possession of the Premises shall cease and
the Lease will terminate except as to Tenant's liability as hereafter provided
as if the expiration of the term fixed in such notice were the end of the Term.
If this Lease terminates pursuant to this Section, Tenant remains liable to
Landlord for damages in an amount equal to the Rent which would have been owing
by Tenant for the balance of the Term had this Lease not terminated, less the
net proceeds, if any, of reletting of the Premises by Landlord subsequent to
termination after deducting Reletting Expenses. Landlord may collect such
damages from Tenant monthly on the days on which the Rent would have been
payable if this Lease had not terminated and Landlord shall be entitled to
receive the same from Tenant on each such day. Alternatively, if this Lease is
terminated, Landlord at its option may recover forthwith against Tenant as
damages for loss of the bargain and not as a penalty an amount equal to the
worth at the time of termination of the excess, if any, of the Rent reserved in
this Lease for the balance of the Term over the then Reasonable Rental Value of
the Premises for the same period plus all Reletting Expenses. "Reasonable Rental
Value" is the amount of rent Landlord can obtain for the remaining balance of
the Term.
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20.3 Cumulative Remedies. Suits to recover Rent and damages may be brought
by Landlord, from time to time, and nothing herein requires Landlord to await
the date the Term would expire had there been no Event of Default or
termination, as the case may be. Each right and remedy provided for in this
Lease is cumulative and non-exclusive and in addition to every other right or
remedy now or hereafter existing at law or equity, including suits for
injunctive relief and specific performance. The exercise or beginning of the
exercise by Landlord of one or more rights or remedies shall not preclude the
simultaneous or later exercise by Landlord of other rights or remedies. All
costs incurred by Landlord to collect any Rent and damages or to enforce this
Lease are also recoverable from Tenant. If any suit is brought because of an
alleged breach of this Lease, the prevailing party is also entitled to recover
from the other party all reasonable attorneys' fees and costs incurred in
connection therewith.
20.4 No Waiver. No failure by Landlord to insist upon strict performance of
any provision or to exercise any right or remedy upon a breach thereof, and no
acceptance of full or partial Rent during the continuance of any breach
constitutes a waiver of any such breach or such provision, except by written
instrument executed by Landlord. No waiver shall affect or alter this Lease but
each provision hereof continues in effect with respect to any other then
existing or subsequent breach thereof.
20.5 Bankruptcy. Nothing contained in this Lease limits Landlord's right to
obtain as liquidated damages in any bankruptcy or similar proceeding the maximum
amount allowed by law at the time such damages are to be proven, whether such
amount is greater, equal to, or less than the amounts recoverable, either as
damages or Rent, referred to in any of the preceding provisions of this Section.
Notwithstanding anything in this Section to the contrary, any proceeding
described in Section 20.1(5),(6),(7) and (8) is an Event of Default only when
such proceeding is brought by or against the then holder of the leasehold estate
under this Lease.
20.6 Late Payment Charge. Any Rent not paid within 5 business days after
the due date shall thereafter bear interest at 5 percentage points above the
Prime Rate or the highest rate permitted by law, whichever is lower, until paid.
Further, if such Rent is not paid within 5 business days after notice, Tenant
agrees Landlord will incur additional administrative expenses, the amount of
which will be difficult to determine; Tenant therefore shall also pay Landlord a
late charge for each late payment of 5% of such payment. Any amounts paid by
Landlord to cure a default of Tenant which Landlord has the right but not the
obligation to do, shall, if not repaid by Tenant within 5 days of demand by
Landlord, thereafter bear interest at 5 percentage points above the Prime Rate
until paid. "Prime Rate" means that rate announced by Wells Fargo Bank, N.A. as
its prime rate on the date closest to the date interest commences.
20.7 Waiver of Jury Trial. Tenant and Landlord waive any right to a trial
by jury in suits arising out of or concerning the provisions of this Lease.
20.8 Self-Help. Notwithstanding anything in the Lease to the contrary, the
use of force by Landlord or its agents shall not be included among the remedies
available to Landlord. Landlord reserves the right to use other self-help
remedies provided that they do not disturb the peace.
21. DEFAULT BY LANDLORD. In the event of any alleged default on the part of
Landlord, Tenant shall give notice to Landlord and afford Landlord a reasonable
opportunity to cure such default, provided Landlord commences such cure on or
before the Fifth (5th) day following Tenant's notice and diligently pursues such
cure to completion using commercially reasonable efforts. Such notice shall be
ineffective unless a copy is simultaneously also delivered in the manner
required in this Lease to any holder of a mortgage and/or deed of trust
affecting all or any portion of the Building Complex (collectively,
"Mortgagee"), provided that prior to such notice Tenant has been given written
notice in accordance with the notice provisions of this Lease of the identity
and the address of such Mortgagee. Within such Five (5) day period, Landlord
shall provide written notice to Tenant of Landlord's intended actions and
schedule for completion of such cure and regular progress reports regarding the
same. If Landlord fails to cure such default in accordance with the requirements
set forth above or within 30 days following the notice to Landlord, whichever is
earlier,
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then Mortgagee shall have an additional 30 days following a second notice from
Tenant or, if such default cannot be cured within that time, such additional
time as may be necessary to effect a cure, provided Mortgagee commences such
cure on or before the Fifth (5th) day following such second notice and
diligently pursues such cure to completion using commercially reasonable efforts
(which pursuit shall include, without limitation, commencing foreclosure
proceedings and seeking relief in any applicable bankruptcy or insolvency
proceedings, if necessary to effect such cure). If Landlord fails to cure within
Landlord's cure period, Tenant shall be entitled to relief against Landlord for
such default (other than termination of the Lease) for so long as the
Mortgagee's cure period remains in effect. If such default involves Landlord's
failure to make repairs, provide essential services, pay utility bills as are
required under this Lease or any other circumstance that would materially impair
Tenant's ability to continue operating its business on and from the Premises,
then, if such default or failure is not cured within Five (5) days following the
date of such notice to Landlord, Tenant also shall have the right (but shall not
be obligated to) to undertake such repairs (in such manner as to not to void
applicable warranties), provide services or pay such bills or take such other
actions as are reasonably required to enable Tenant to avoid such material
impairment and to continue operating its business activities on and from the
Premises (consistent with the Permitted Uses under this Lease), provided that
such undertakings by Tenant do not materially interfere with such actions by
Landlord to effect a cure as are (1) actually being undertaken by Landlord at
such time and (2) as are equally likely and expeditious in effecting a complete
cure as those which could be taken or are proposed to be taken by Tenant and,
further provided, that Tenant's undertakings to effect a cure do not result in
any permanent material damage to the Building or Building Complex. As to all
such undertakings by Tenant, Landlord shall reimburse Tenant within 30 days of
receipt of Tenant's invoice the full amount of such reasonable out-of-pocket
costs and expenses incurred by Tenant; provided, however, that if Landlord
disputes that such default exists or disputes the reasonableness of all or a
portion of the amount to be paid, by notice to Tenant prior to the expiration of
the 30 day period, then Landlord shall have no obligation to pay the amount
disputed until such dispute is determined by final decision of a court or
agreement of the parties. If any such repairs will affect the HVAC, plumbing,
electrical or mechanical systems of the Building (the "Building Systems "), the
structural integrity of the Building, or the exterior appearance of the
Building, Tenant shall use only those contractors used by Landlord in the
Building for work on the Building Systems, or its structure, provided that
Landlord provides Tenant (upon Tenant's request) with notice identifying such
contractors and any changes to the list of such contractors, unless such
contractors are unwilling or unable to perform such work or the cost of such
work is not competitive, in which event Tenant may utilize the services of any
other qualified contractors which normally and regularly performs similar work
on comparable buildings. To the extent any sum thus reimbursed to Tenant by
Landlord represents an amount that would have been included in the Operating
Expenses of the Building if paid by Landlord to perform the obligation in
question, Landlord shall be entitled to include in Operating Expenses the sum
reimbursed to Tenant. Tenant's sole additional remedy will be equitable relief
or actual damages but in no event is Landlord or any Mortgagee responsible for
consequential damages or lost profit incurred by Tenant as a result of any
default by Landlord. If a Mortgagee, or transferee under such Mortgage
(hereafter defined), succeeds to Landlord's interest as a result of foreclosure
or otherwise, such party shall not be: (i) liable for any default, nor subject
to any setoff or defenses that Tenant may have against Landlord except for a
reimbursement obligation arising under this Section as to which such Mortgagee
has been given notice and the opportunity to dispute as provided herein or
except for obligations arising or continuing after the date such Mortgagee or
transferee succeeds to Landlord's interest; (ii) bound by any amendment
(including an agreement for early termination) without its consent made at any
time after notice to Tenant that such Mortgage requires such consent; and (iii)
bound by payment of Rent in advance for more than 30 days. Tenant agrees to pay
Rent (and will receive credit under this Lease) as directed in any Mortgagee's
notice of Landlord's default under the Mortgage reciting that Mortgagee is
entitled to collect Rent. The terms of Section 7 of this Lease shall be subject
to the terms of this Section.
22. SUBORDINATION AND ATTORNMENT.
22.1 This Lease at Landlord's option will be subordinate to any mortgage,
deed of trust and related documents now or hereafter placed upon the Building
Complex (including all advances made thereunder), and to all amendments,
renewals, replacements, or restatements thereof (collectively, "Mortgage").
Tenant agrees that no documentation other than this Lease is required to
evidence such subordination, provided, however, that the subordination by Tenant
to any such future mortgage, deed of trust or related documents shall be subject
to Tenant obtaining a non-
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disturbance agreement, on such lender's standard form agreement, with changes
are Tenant may reasonably require (to the extent such changes are consistent
with provisions in forms customarily executed by credit-worthy full-floor
tenants) whereby such lender agrees, provided Tenant is not then in default
under this Lease, that Tenant's occupancy of the Premises and rights and
privileges under this Lease shall not be disturbed or impaired in connection
with any proceeding to enforce or foreclose any such mortgage, trust indenture
or other lien and if such party succeeds to the interests of Landlord by reason
of such proceedings or conveyance in lieu thereof, Tenant shall attorn hereunder
directly to such party; provided, however, such party shall not be (i) liable
for any act or omission of any prior landlord or (ii) subject to any offsets or
defenses which Tenant might have against any prior landlord, including Landlord
(but such limitation shall not relieve such party from the responsibility to
perform the obligations as successor to Landlord applicable during its period of
ownership); or (iii) bound by any rental which Tenant might have paid for more
than one (1) month in advance to any prior landlord; or (iv) bound by any
amendment or modification of the Lease made without its consent.
22.2 If any Mortgagee elects to have this Lease superior to the lien of its
Mortgage and gives notice to Tenant, this Lease will be deemed prior to such
Mortgage whether this Lease is dated prior or subsequent to the date of such
Mortgage or the date of recording thereof.
22.3 In confirmation of subordination or superior position, as the case may
be, Tenant will execute such documents as may be required by Mortgagee and if it
fails to do so within 10 days after demand, Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact and in Tenant's name, place, and stead, to
do so.
22.4 Tenant hereby attorns to all successor owners of the Building, whether
such ownership is acquired by sale, foreclosure of a Mortgage, or otherwise.
22.5 Upon the execution hereof, Tenant and Landlord's Mortgagee shall
execute the form of nondisturbance agreement in the form attached hereto as
EXHIBIT J and thereafter Landlord promptly shall provide Tenant such document as
executed by Landlord's Mortgagee.
23. REMOVAL OF TENANT'S PROPERTY.
23.1 All movable personal property of Tenant not removed from the Premises
upon vacation, abandonment, or termination of this Lease shall be conclusively
deemed abandoned and may be sold, or otherwise disposed of by Landlord without
notice to Tenant and without obligation to account; Tenant shall pay Landlord's
expenses in connection with such disposition.
23.2 Tenant shall have the right to collaterally assign Tenant's interest
in its furniture, fixtures, and equipment that are not considered part of the
Premises; Landlord agrees to execute documents, subject to Landlord's reasonable
approval, evidencing that Landlord does not have a pre-existing lien on such
personal property.
24. HOLDING OVER: TENANCY MONTH-TO-MONTH. If, after the expiration or
termination of this Lease, Tenant remains in possession of the Premises without
a written agreement as to such holding over and continues to pay rent and
Landlord accepts such rent, such possession is a tenancy from month-to-month,
subject to all provisions hereof but at a monthly rent equivalent to 150% of the
monthly Rent paid by Tenant immediately prior to such expiration or termination.
Rent shall continue to be payable in advance on the first day of each calendar
month. Such tenancy may be terminated by either party upon 10 days' notice prior
to the end of any monthly period. Nothing contained herein obligates Landlord to
accept rent tendered after the expiration of the Term or relieves Tenant of its
liability under Section 17.
25. PAYMENTS AFTER TERMINATION. No payments by Tenant after expiration or
termination of this Lease or after any notice (other than a demand for payment
of money) by Landlord to Tenant reinstates, continues, extends the Term, or
affects any notice given to Tenant prior to such payments. After notice,
commencement of a suit, or
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final judgment granting Landlord possession of the Premises, Landlord may
collect any amounts due or otherwise exercise Landlord's remedies without
waiving any notice or affecting any suit or judgment.
26. STATEMENT OF PERFORMANCE. Tenant and Landlord agree at any time upon
not less than 10 business days' written notice to execute and deliver to the
requesting party a written statement certifying that this Lease is unmodified
and in full force and effect (or, if there have been modifications, that the
same is in full force and effect as modified stating the modifications); that
there have been no defaults by Landlord or Tenant and no event which with the
giving of notice or passage of time, or both, would constitute such a default
(or, if there have been defaults, setting forth the nature thereof); the date to
which Rent has been paid in advance and such other information relating to the
Lease as the requesting party requests. Such statement from Tenant may be relied
upon by a prospective purchaser of Landlord's interest or Mortgagee. The failure
of either party when requested to timely deliver such statement is conclusive
upon the failing party that: (i) this Lease is in full force and effect without
modification except as may be represented by the requesting party; (ii) there
are no uncured defaults in the requesting party's performance; and (iii) not
more than 1 month's Rent has been paid in advance. Upon request, the certifying
party will furnish Landlord an appropriate certificate confirming that the party
signing the statement is authorized to do so.
27. MISCELLANEOUS.
27.1 Transfer by Landlord. The term "Landlord" means so far as obligations
of Landlord are concerned, only the owner of the Building at the time in
question and, if any transfer of the title occurs, Landlord herein named (and in
the case of any subsequent transfers, the then grantor) is automatically
released from and after the date of such transfer of all liability as respects
performance of any obligations of Landlord thereafter to be performed. Any funds
in Landlord's possession at the time of transfer in which Tenant has an interest
will be turned over to the grantee and any amount then due Tenant under this
Lease will be paid to Tenant.
27.2 No Merger. The termination or mutual cancellation of this Lease will
not work a merger, and such termination or cancellation will at the option of
Landlord either terminate all subleases or operate as an automatic assignment to
Landlord of such subleases.
27.3 Common Area Use. Landlord may use any of the Common Areas for the
purposes of completing or making repairs or alterations in any portion of the
Building Complex, subject to the provisions of Section 11.
27.4 Independent Covenants. This Lease is to be construed as though the
covenants between Landlord and Tenant are independent and not dependent and
Tenant is not entitled to any setoff of the Rent against Landlord if Landlord
fails to perform its obligations; provided, however, the foregoing does not
impair Tenant's right to commence a separate suit against Landlord for any
default by Landlord so long as Tenant complies with Section 21.
27.5 Validity of Provisions. If any provision is invalid under present or
future laws, then it is agreed that the remainder of this Lease is not affected
and that in lieu of each provision that is invalid, there will be added as part
of this Lease a provision as similar to such invalid provision as may be
possible and is valid and enforceable.
27.6 Captions. The caption of each Section is added for convenience only
and has no effect in the construction of any provision of this Lease.
27.7 Construction. The parties waive any rule of construction that
ambiguities are to be resolved against the drafting party. Any words following
the words "include," "including," "such as," "for example," or similar words or
phrases shall be illustrative only and are not intended to be exclusive, whether
or not language of non-limitation is used.
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27.8 Applicability. Except as otherwise provided, the provisions of this
Lease are applicable to and binding upon Landlord's and Tenant's respective
heirs, successors and assigns. Such provisions are also considered to be
covenants running with the land to the fullest extent permitted by law.
27.9 Authority. Tenant and the party executing this Lease on behalf of
Tenant represent to Landlord that such party is authorized to do so by requisite
action of Tenant and agree, upon request, to deliver Landlord a resolution,
similar document, or opinion of counsel to that effect.
27.10 Severability. If there is more than one party which is the Tenant,
the obligations imposed upon Tenant are joint and several.
27.11 Acceptance of Keys, Rent or Surrender. No act of Landlord or its
representatives during the Term, including any agreement to accept a surrender
of the Premises or amend this Lease, is binding on Landlord unless such act is
by a partner, member or officer of Landlord, as the case may be, or other party
designated in writing by Landlord as authorized to act. The delivery of keys to
Landlord or its representatives will not operate as a termination of this Lease
or a surrender of the Premises. No payment by Tenant of a lesser amount than the
entire Rent owing is other than on account of such Rent nor is any endorsement
or statement on any check or letter accompanying payment an accord and
satisfaction. Landlord may accept payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy available to Landlord.
27.12 Building Name and Size. Landlord may change the name of the Building
and as it relates to the Building Complex other than the Building: change the
name, increase the size by adding additional real property, construct other
buildings or improvements, change the location and/or character, or make
alterations or additions subject to the provisions of Section 11.1. If
additional buildings are constructed or the size is increased, Landlord and
Tenant shall execute an amendment that incorporates any necessary modifications
to Tenant's Pro Rata Share. Tenant may not use the Building's name for any
purpose other than as part of its business address.
27.13 Diminution of View. Tenant agrees that no diminution of light, air,
or view from the Building entitles Tenant to any reduction of Rent under this
Lease, results in any liability of Landlord, or in any way affects Tenant's
obligations.
27.14 Limitation of Liability. Notwithstanding anything to the contrary
contained in this Lease, Landlord's liability is limited to Landlord's interest
in the Building and Landlord shall never be personally liable for recovery of
any judgment.
27.15 Non-Reliance. Tenant confirms it has not relied on any statements,
representations, or warranties by Landlord or its representatives except as set
forth herein.
27.16 Written Modification. No amendment or modification of this Lease is
valid or binding unless in writing and executed by the parties.
27.17 Lender's Requirements. Tenant will make such modifications to this
Lease as may hereafter be required to conform to any lender's reasonable
requirements, so long as such modifications do not increase Tenant's obligations
or materially alter its rights, as reasonably determined by Tenant.
27.18 Effectiveness. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option to lease and
it is not effective unless and until execution and delivery by both Landlord and
Tenant.
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27.19 Survival. This Lease, notwithstanding expiration or termination,
continues in effect as to any provisions requiring observance or performance
subsequent to termination or expiration.
27.20 Time of Essence. Time is of the essence herein.
27.21 Rules and Regulations. If rules and regulations are attached hereto,
they are a part of this Lease and Tenant agrees that Tenant and Tenant's Agents
shall at all times abide by such rules and regulations.
27.22 Recording. Tenant will not record this Lease. Recording of the Lease
by or on behalf of Tenant is an Event of Default.
27.23 Consent. Where either party's consent is required under the Lease,
such consent shall not be unreasonably withheld, delayed or conditioned, except
as expressly provided.
28. AUTHORITIES FOR ACTION AND NOTICE.
28.1 Unless otherwise provided, Landlord may act through Landlord's
Building Manager or other designated representatives from time to time.
28.2 All notices or other communications required or desired to be given to
Landlord must be in writing, addressed as set forth in Section 1.10 and shall be
deemed received when: (i) delivered personally to any officer, partner, or
member of Landlord (depending upon the nature of Landlord) or the manager of the
Building (the "Building Manager") whose office is in the Building, or (ii) if
deposited in the United States mail, postage prepaid, certified or registered,
return receipt requested, when such notice is received or receipt is refused, or
(iii) if deposited with a nationally recognized courier service providing
confirmation of receipt, when such notice is received or receipt is refused, or
(iv) if sent by facsimile transmission, when received and oral confirmation by
telephone of such receipt has been given by the recipient. All notices or
communications required or desired to be given to Tenant must be in writing,
addressed as set forth in Section 1.13 and shall be deemed received when:
(i) delivered personally to any officer, partner, or member of Landlord
(depending upon the nature of Landlord) or the manager of the Building (the
"Building Manager") whose office is in the Building, or (ii) if deposited in the
United States mail, postage prepaid, certified or registered, return receipt
requested, when such notice is received or receipt is refused, or (iii) if
deposited with a nationally recognized courier service providing confirmation of
receipt, when such notice is received or receipt is refused, or (iv) if sent by
facsimile transmission, when received and oral confirmation by telephone of such
receipt has been given by the recipient. Either party may designate in writing
served as above provided a different address to which notice is to be mailed.
The foregoing does not prohibit notice from being given as provided in the rules
of civil procedure, as amended from time to time, for the state in which the
Real Property is located.
29. PARKING. Landlord shall control parking in the Parking Garage by
Tenant's employees and employees of tenants in Plaza II by issuance of parking
passes; Landlord will make available the number of parking spaces set forth in
Section 1.9 without charge for parking by Tenant's employees by issuing passes
to employees designated by Tenant for the applicable number of spaces. Landlord
shall have the right to control or limit parking by visitors to the Building in
a manner consistent with policies at similar first-class buildings in the
suburban northern Virginia area; the visitor spaces for Tenant shall be in the
surface spaces adjacent to the entry to the Building, as shown on the site plan
attached as EXHIBIT H (which spaces shall be a portion of the 322 spaces
allocated to Tenant in accordance with Section 1.9) designated by signage as
visitor parking spaces for Tenant's visitors only (but Landlord shall have no
obligation to police the use of such visitor spaces); the remaining parking
spaces shall be in the parking garage located in the lower level and the 1st
through 4th floors of the Building and of the Plaza I Building (the "Parking
Garage") and in surface parking spaces in the Building Complex as depicted on
the attached EXHIBIT H. All Tenant's parking spaces shall be in and out,
non-assigned, however, at Tenant's request, Landlord shall label by signage all
spaces allocated to Tenant (other than handicapped spaces) as depicted on the
attached EXHIBIT H and Tenant shall have the right to install control gates
limiting
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access to Tenant's parking spaces on parking level four (subject to Landlord's
reasonable approval of such system and subject to the provisions of Section
7.1); the costs of such signage and control gates shall be paid by Tenant.
Notwithstanding the above, Landlord's inability to make such spaces available at
any time for reasons beyond Landlord's reasonable control is not a material
breach by Landlord of its obligations hereunder and Tenant has no rights to use
the parking garage except as provided in this Section. If Landlord is unable to
make all such spaces available for reasons beyond Landlord's reasonable control,
Landlord shall take reasonable steps to make all such spaces available as
provided herein. All vehicles parked in the parking facilities and the personal
property therein shall be at the sole risk of Tenant, Tenant's Agents and the
users of such spaces and Landlord shall have no liability for loss or damage
thereto for whatever cause.
30. SUBSTITUTE PREMISES. INTENTIONALLY OMITTED.
31. BROKERAGE. Tenant represents it has not employed any broker with
respect to this Lease and has no knowledge of any broker's involvement in this
transaction except those listed in Sections 1.15 and 1.16 (collectively, the
"Brokers"). Tenant shall indemnify Landlord against any expense incurred by
Landlord as a result of any claim for commissions or fees by any other broker,
finder, or agent, whether or not meritorious, employed by Tenant or claiming by,
through, or under Tenant, other than the Brokers. Tenant acknowledges Landlord
is not liable for any representations by the Brokers regarding the Premises,
Building, Building Complex, or this Lease. Landlord represents that it has not
employed any broker with respect to this Lease and has no knowledge of any
broker's involvement in this transaction except those listed in Section 1.15 and
1.16 (collectively, the "Brokers"). Landlord shall indemnify Tenant against any
expense incurred by Tenant as a result of any claim for commissions or fees by
any other broker, finder, or agent, whether or not meritorious, employed by
Landlord or claiming by, through, or under Landlord, other than the Brokers.
Landlord shall pay commissions due Brokers in connection with this Lease
pursuant to separate written agreement
32. COUNTERPARTS. This Lease may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Any one or more counterpart signature
pages may be removed from one counterpart of the Lease and annexed to another
counterpart of the Lease to form a completely executed original instrument
without impairing the legal effect of the signature thereon.
33. ADDENDUM/EXHIBITS. Any Addenda and/or Exhibits referred to herein and
attached hereto are incorporated herein by reference.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and
year first above written and it is effective upon delivery of a fully-executed
copy to Tenant.
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SAVVIS COMMUNICATIONS CORPORATION, WGP ASSOCIATES, LLC, a Virginia
a Missouri corporation limited liability company
By:/s/ Greg Pohle
-----------------
By:/s/ David J. Frear Authorized Signatory
----------------------- "Landlord"
Print Name: David J. Frear
---------------
Print Title: Executive Vice President
-------------------------
Chief Financial Officer
ATTEST:
By:/s/ Steven M. Gallant
---------------------
Print Name: Steven M. Gallant
-----------------
Print Title: Vice President
-----------------
"Tenant"
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ADDENDUM
THIS ADDENDUM is to that certain lease agreement (the "Lease") by and
between WGP ASSOCIATES, LLC, a Virginia limited liability company ("Landlord"),
and SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation ("Tenant"), with
respect to approximately 80,580 rentable square feet of space (the "Premises")
in the Building. In the event of any conflict between the terms and provisions
of the Lease and the terms and provisions of this Addendum, the terms and
provisions of this Addendum shall control.
1. Landlord grants Tenant an option (the "Option") to extend the term of
the Lease for one (1) additional term of five (5) years (the "Option Term"). The
Option applies only to the Premises and is on the following conditions:
A. Notice of Tenant's interest in exercising the Option must be given to
Landlord no earlier than 12 months and no later than 9 months prior to the
Expiration Date ("Tenant's Notice"). Not later than thirty (30) days after
receiving Tenant's Notice, Landlord will notify Tenant of the Base Rent
applicable during the Option Term in accordance with subparagraph E below
("Landlord's Notice").
B. Tenant shall have 15 days following Tenant's receipt of Landlord's
Notice within which to exercise the Option for the Option Term by delivering
written notice of such exercise to Landlord at the Base Rent, allowances and
concessions, if any, set forth in Landlord's Notice or delivering notice of such
exercise but reserving the right to final determination of the Base Rent to be
paid in accordance with subparagraphs E below ("Tenant's Dispute Notice"). If
Tenant timely exercises the Option for the respective Option Term, the Lease
shall be deemed extended and thereafter the parties shall execute an amendment
to the Lease setting forth the extension for the Option Term and the rental rate
applicable upon determination of the Base Rent applicable in accordance with
subparagraph E below.
C. Unless Landlord is timely notified by Tenant in accordance with
subparagraphs A and B above, it will be conclusively deemed that Tenant has not
exercised the Option and the Lease will expire in accordance with its terms on
the Expiration Date.
D. Tenant's rights pursuant to this Paragraph are personal to Tenant and
may not be assigned. Tenant's right to exercise the Option is conditioned on:
(i) Tenant not being in default at the time of exercise or at the time of
commencement of the Option Term; (ii) Tenant not having subleased or vacated
more than 33% of the Premises or assigned its interest under the Lease as of the
commencement of the Option Term; and (iii) Tenant having the financial ability
to perform its obligations under the Option Term. Upon an assignment of the
Lease, this Paragraph is null and void.
E. Following delivery of Tenant's Dispute Notice, Landlord and Tenant shall
promptly initiate negotiations to determine a mutually acceptable Base Rent. If
the parties mutually agree upon a Base Rent rate, such agreed rate shall be the
Base Rent rate applicable during the Option Term. If the parties have not agreed
upon the terms as of the 20th day after the date of Tenant's Dispute Notice,
then Landlord and Tenant shall, within thirty (30) days after Tenant's delivery
of Tenant's Dispute Notice, agree upon a qualified commercial real estate broker
of good reputation, having at least five (5) years' experience in the northern
Virginia real estate market; if Landlord and Tenant cannot agree upon the
broker, then they shall each select, within the foregoing thirty-day period, a
real estate broker who meets the above qualifications and together such brokers
will then select as the arbitrator a real estate broker who meets the above
qualifications (the broker selected shall be deemed the "Arbitrator" hereunder).
Within ten (10)) days of selection of the Arbitrator, Landlord and Tenant each
shall state, in writing, their determination of the Prevailing Market Rental
Rate supported by the reasons therefor and shall make counterpart copies for
each other and the Arbitrator, under an arrangement for simultaneous exchange of
the determinations. The Arbitrator will review each party's declaration of the
Prevailing Market Rental Rate and select the one which he determines most
accurately reflects such Arbitrator's determination of the Prevailing Market
Rental Rate. The Arbitrator shall have no right to propose a middle ground or
any
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modifications of either of the two proposed resolutions. The Base Rent to paid
during the Option Term shall be the Prevailing Market Rental Rate so determined
and Tenant shall have the right to receive the allowance and concessions, if
any, set forth in Landlord's Notice. The costs incurred in connection with
engaging the Arbitrator shall be shared equally by Landlord and Tenant, and
shall be determined at the time the Arbitrator is selected. For purposes of this
Paragraph, Prevailing Market Rental Rate shall mean the annual amount per square
foot (including the then-current Operating Expenses) that a willing tenant would
pay and a willing landlord would accept following arms-length negotiations with
respect to an "Assumed Lease" (as defined below) under the circumstances then
obtaining. "Assumed Lease" means (i) a lease or renewal having a commencement
date within 6 months of Tenant's Notice for space of approximately the same size
as the Premises of the Building or a "Comparable Building," as hereinafter
defined, located in a portion of the Building or such Comparable Building, and
with a view and floor height similar to the portion of the Premises for which
Prevailing Market Rental Rate is being determined, for a term equal in length to
the Option Term; (ii) assuming that a real estate commission is payable with
respect to such lease to the extent a third-party commission with respect to
extension is agreed or obligated to be paid by Landlord; and (iii) taking into
consideration and making adjustment to reflect allowances and concessions
provided in Landlord's Notice, if any, and the use of the Base Operating
Expenses provided in Section 1.5 during the Option Term. "Comparable Building"
shall mean any existing building or building hereafter constructed in the Dulles
corridor of northern Virginia which is of a size, location, quality and prestige
comparable to, and with a size and efficiency of floor plate, amenities, and
with tenants of a stature reasonably comparable with the Building, provided that
appropriate adjustments shall be made to adjust for differences in the size,
location, age, efficiency of floorplate, and quality between such other
buildings and the Building.
F. After exercise, or failure to exercise the Option, Tenant shall have no
further rights to extend the Term.
2. In accordance with the Work Letter, as part of the Finish Work, Tenant
shall have the right to have signage installed on a monument to be constructed
by Landlord, which monument shall be constructed at Landlord's cost; such
signage shall be subject to approval by Landlord of the exact location and
details, which approval shall not be unreasonably withheld, conditioned or
delayed. Further, the monument and Tenant's signage on the monument is subject
to approval under Applicable Law and under the declaration of protective
covenants applicable to the Real Property (the "Declaration"), all of which
approvals shall be diligently pursued by Landlord. The monument, which shall be
designed and constructed by Landlord at Landlord's cost, is intended for a
building name/address identifier for the entire 4 tower Worldgate Plaza I, II,
III, and IV complex and for tenants of the complex, and notwithstanding the
above, is not exclusively for Tenant's signage; however, Tenant shall have the
right to use 25% of such monument signage area; the monument shall not be used
for Tenant's signage if only the Building name/address identifier is permitted
on such monument under the Declaration and Applicable Law. The costs for the
design, fabrication and installation of such Tenant's signage shall be borne by
Tenant (subject to the allowance provisions of the Work Letter). Tenant will
bear the costs of removal of any signage at the termination or expiration of the
Lease, including restoring or repairing damages to the monument caused by such
removal to the condition at the time of installation. In addition, if Landlord
is required at any time to remove any signage, including any approved signage,
due to any Applicable Law or if Tenant elects to remove or change the signage at
any time, Tenant shall bear the costs of such change or removal. Tenant will be
responsible at its cost to maintain its signage in reasonably good condition
acceptable to Landlord at Landlord's reasonable discretion; Landlord shall
maintain the monument as part of the Common Areas and shall require other
tenants to maintain their respective signage. In addition to the monument
signage, Tenant shall have the right to install a corporate identification sign
on the exterior of the Building facing the Dulles Toll/Access Roads out of the
Allowance or, if there is no balance of the Allowance available, at Tenant's
expense. Such Building signage shall be subject to approval (including with
respect to location, style, size, material, and method of application) by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed, and under Applicable Laws and under the Declaration (which approvals
shall be diligently pursued by Landlord). Tenant shall not otherwise affix
signage to the outside of the Building and no signage shall be affixed to the
inside of the Building that is visible outside the Building without the approval
of Landlord, which approval shall not be unreasonably withheld or delayed. The
rights granted to Tenant pursuant to this Paragraph are personal to Tenant and
any assignees (except an assignee permitted under Section 14.7 of the Lease) or
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subtenants of Tenant have no rights under this Section. Tenant shall have the
right to erect temporary construction identification signage, at Tenant's sole
cost and expense, during the period prior to the Commencement Date identifying
the Building as Tenant's future location, subject to approval (including with
respect to location, style, size, material, and method of application) by
Landlord which approval shall not be unreasonably withheld, conditioned or
delayed, and approval under Applicable Laws and under the Declaration (which
approvals shall be diligently pursued by Landlord).
3. During the Term, Tenant shall have a right to use the roof of the
Building for the purpose of installing, maintaining and operating the following
described equipment on a portion of the roof of the Building ("Roof")
anticipated to be within the area labeled "(1)" on the roof plan attached as
part of EXHIBIT I, with the actual location to be designated by Landlord, in
Landlord's reasonable discretion ("Roof Space"): (1) chillers, as referred to on
EXHIBIT 5 to the Work Letter, to service equipment in the Premises ("Chillers")
and (2) non-penetrating (or alternative attachment methods approved by Landlord)
microwave/satellite dishes, not to exceed approximately one meter in diameter
(or such larger dimensions as shall be subject to Landlord's prior written
consent, not to be unreasonably withheld, conditioned or delayed) (the "Dishes")
and antennae not to exceed approximately one meter in height (the
"Antennae")(the foregoing height and size limitations shall be exclusive of
dimensions of any customary pedestals, platforms, supports or other mounting
devices associated with such equipment), and (3) screening, equipment, conduits,
cables and materials to be located on the Roof Space or in other parts of the
Building serving the items listed in clauses (1) and (2) (collectively, the
"Related Equipment") in accordance with the terms of this Section. Tenant shall
have the right to locate on the Roof additional equipment associated with
Tenant's use of the Premises for the Permitted Uses, provided that Tenant
obtains Landlord's prior consent (which consent shall not be unreasonably
withheld); if approved, such additional equipment shall be subject to the
provisions of this Paragraph and deemed Related Equipment hereunder. In
designating the actual location of the Chillers, Dishes, Antennae and Related
Equipment, Landlord shall use reasonable efforts to accommodate line of site,
avoidance of interference and other technical requirements to be satisfied for
the full functionality of such Chillers, Dishes, Antennae and Related Equipment.
In the event that the Roof Space is unsuitable for any such Dishes, Antennae and
Related Equipment or cannot perform according to Tenant's requirements on the
Roof Space, Landlord shall reasonably consent to the use by Tenant of roof space
on another building within the Building Complex, provided that space is
available on such roof and the use, location and equipment is approved in
accordance with Applicable Laws and is otherwise permitted in accordance with
the Declaration and agreements Landlord may have entered into with third parties
as of such time, and Tenant agrees to be bound by the requirements to which
third party tenants are required to be bound under subsection D, below in
respect of their use of the Roof Space. All costs and expenses related to
installation (including costs of acquiring any required permits therefor or
approvals under the Declaration), maintenance, operation and removal of the
Chillers, Dishes, Antennae and Related Equipment shall be borne by Tenant but
Tenant shall not pay any additional fee or Rent for use of the Chillers, Dishes
Antennae and the Related Equipment under this Lease.
A. Tenant will not use the Roof for any purpose other than installing,
maintaining and operating the Chillers, Dishes, Antennae and Related Equipment
for Tenant's business operations, but shall not have any right to license or
otherwise provide use of the Chillers, Dishes, Antennae and Related Equipment
other than in connection with Collocation Services. Tenant's Agents agree to be
accompanied at all times by Landlord's designated representative when access to
the Roof Space or Related Equipment areas is necessary for installation, repair
and maintenance; Landlord will make such representative available upon
reasonable prior notice. Tenant will make every reasonable effort to minimize
the number of service calls made to the Roof Space or Related Equipment areas
and will enter such only for required maintenance or in case of an emergency.
Tenant must secure and maintain at all times all required approvals and permits
of the Federal Communications Commission and all other governmental bodies
having jurisdiction over its business, including its communications, operations
and facilities. Landlord may require Tenant to cease operation of or relocate
(at Tenant's cost and expense) the Chillers, Dishes, Antennae and Related
Equipment upon notice to Tenant if Landlord reasonably determines that such
installation or use materially interferes with the operation of machinery and
apparatus of the Building, such as the elevators, and Tenant fails to remedy
such condition as soon as reasonably practicable and not later than 3 business
days. In no event shall Landlord be responsible for any interruption of services
or use of the Building caused by the Chillers, Dishes, Antennae and Related
Equipment. If the machinery or apparatus of the Building is equipment that was
installed following completion of the Base Building Work, the costs of any such
relocation shall be
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borne by Landlord and the relocation is scheduled and performed in a manner that
minimizes any disruption to Tenant and its use of the Chillers, Dishes, Antennae
and Related Equipment. Landlord may suspend or terminate Tenant's right to use
the Roof under this Section as required upon notice to Tenant, to the extent
that it is found by a public authority having jurisdiction over the Building
that the installation and use of the Chillers, Dishes, Antennae and Related
Equipment constitute a nuisance or hazard to the public or to the occupants of
the Building or if this Lease expires or is terminated in accordance with its
terms. If Tenant fails to suspend or terminate operations as so required at the
request of Landlord, Landlord will be entitled to injunctive relief and the cost
of obtaining such relief will be paid by the prevailing party.
B. Upon expiration or earlier termination, Tenant will, at its sole cost
and expense, remove the Chillers, Dishes, Antennae and Related Equipment and
repair any damage caused to the Roof Space and restore the Roof Space to the
condition existing prior to such installation to the extent reasonably
practicable. Tenant will keep and maintain the Chiller, Dishes, Antennae and the
Related Equipment in good condition and repair, at its sole expense, in a manner
that does not conflict or interfere with the use of other Building equipment
installed in the Building or on the Roof as of the Delivery Date. Further,
Tenant will not damage or permit damage to the Roof or the Building in
conjunction with the Chillers, Dishes, Antennae and Related Equipment.
C. All transmitters must be equipped with any transmitter isolator device
as may be required by law or as industry standard for such equipment to minimize
spurious radiation. Tenant shall indemnify Landlord for all claims of third
parties with respect to interference from operation of the Chillers, Dishes,
Antennae and Related Equipment. Landlord makes no warranty that the Roof Space
is suitable for the Chillers, Dishes, Antennae and Related Equipment or that it
will perform according to Tenant's requirements.
D. Landlord and its agents, employees, contractors or anyone else permitted
by Landlord to be on the Roof may from time to time repair, replace, maintain,
or install additional improvements or fixtures on the Roof, provided that the
same do not cause interference with the Chillers or to Tenant's Dishes, Antennae
and Related Equipment, and provided further, however, that anyone other than an
employee of Landlord or the Building manager shall be required to be accompanied
by a representative of Landlord or the Building manager at all times. Landlord
shall not license the use of roof space to any third parties except to other
tenants in the Worldgate Complex and only to such tenants if the roof of the
building in which they are located is unsuitable for operation of the equipment
proposed to be used. Tenant will cooperate in any repair, replacement,
maintenance and installation as reasonably required by Landlord from time to
time consistent with the foregoing. Landlord's right to permit such other
licensees to install other rooftop equipment, shall be subject to Landlord's
undertaking to use reasonable efforts to coordinate such installation with
Tenant and to subject all such permissions, licenses, easements and the like to
the condition that such other equipment shall not interfere with the Chillers or
Tenant's Dishes, Antennae and Related Equipment and operations. If any
interference is caused by Landlord or any such other tenant, including, without
limitation, as a result of any subsequent change or addition of equipment or
improvements by Landlord, Landlord agrees to use reasonable efforts to correct
and eliminate such interference at Landlord's cost in a prompt and timely
manner, not to exceed a period of 3 business days after notice thereof. Such
efforts may include modification of the third party tenant equipment or
relocation to another area mutually approved by Landlord and Tenant.
E. Tenant will, at Tenant's sole cost and expense, comply with all
Applicable Laws, or the requirements of Landlord's insurance underwriters
relating to the installation, maintenance, height, location, use, operation, and
removal of said Dishes and Related Equipment and indemnify Landlord against any
loss, cost, or expense incurred resulting from the installation, maintenance,
operation, or removal of said Dishes and Related Equipment. Landlord makes no
representation that Applicable Laws permit the installation or operation of the
Dishes or Related Equipment.
F. The insurance required to be carried by Tenant under Section 16.2 shall
provide coverage with respect to the ownership, operation and use of the Dishes
and the Related Equipment. Landlord has no responsibility or liability for
damage to the Dishes or the Related Equipment.
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4. Landlord is the owner of an adjacent parcel of land known generally as
Worldgate Parcel 12 on which Landlord is constructing an additional office
building ("Plaza III"). Landlord agrees to offer to lease space to Tenant in
Plaza III in accordance with the following provisions:
A. Prior to initial leasing of the 7th and 8th floors in Plaza III,
Landlord shall give notice to Tenant (the "Offer Notice") of Landlord's desire
to lease such floors to Tenant (the "RFO Space"), provided that, if Landlord
desires at such time to offer a portion or all of the 7th and 8th floors to
another proposed tenant in conjunction with leasing other space in Plaza III,
Landlord shall have a right to identify all of the space being proposed to be
leased as well (the space being proposed outside of the RFO Space 7th and 8th
floors is referred to collectively as the "Additional Space"); however, Landlord
shall not include Additional Space unless the square footage available on the
7th and 8th floors is not adequate to accommodate the proposed leasing. Tenant
has 10 calendar days after receipt of Landlord's Offer Notice within which to
notify Landlord if it elects to exercise its Right of Offer as to (i) the
entirety of the RFO Space floors included in such proposal (if there is no
Additional Space identified in the Offer Notice) or (ii) the RFO Space floors
included in such proposal and the Additional Space (if there is Additional Space
identified in the Offer Notice). If there is Additional Space set forth in the
Offer Notice and Tenant elects to lease the Additional Space, Tenant shall have
a right to also take the balance of the 7th and 8th floors then available which
is not included in Offer Notice. For example, if Landlord identifies the
Additional Space as both the 5th and 6th floors and the RFO Space as 1/2 of the
7th floor, Tenant shall have the right to elect to exercise as to (1) the 5th
and 6th floors and all of the 7th, or (2) the 5th and 6th floors and all of the
7th and all of the 8th floor (assuming the 8th floor is then available). To the
extent that the Additional Space includes portions or all of the 5th and 6th
floors in Plaza III, Tenant's right under this Paragraph shall be subject to the
pre-existing rights of Onepoint Communications Corp. as tenant under its lease
for space in Plaza I. The space Tenant elects to lease, in accordance with the
foregoing provisions, as set forth in Tenant's responsive notice ("Tenant's
Election Notice") shall be deemed the "Offer Space."
B. If Tenant does not timely notify Landlord, it will be conclusively
presumed that Tenant has waived its Right of Offer as to the floors of the RFO
Space included in the Offer Notice, Landlord shall be free to lease the
described RFO Space to anyone whom it desires and Tenant will have no further
rights to the respective floors of RFO Space included in the Offer Notice,
provided, however, that if after Tenant waives its right as to any such space
Landlord desires to lease the space to a prospective tenant on materially more
beneficial terms than provided in Landlord's Offer Notice, Landlord shall
re-offer such space on such changed terms to Tenant before leasing to a third
party. If the Offer Notice did not include both floors of the RFO Space,
Tenant's rights as to the excluded floor shall continue in accordance with the
terms of this Paragraph 4. For purposes of this Addendum: "more beneficial
terms" means an effective per square foot rental rate (taking into account
amortization of allowances and rent credits on a straight line basis over the
applicable term) which is less than the rate set forth in Landlord's Offer
Notice; "materially more beneficial terms" means an effective rental rate
(taking into account amortization of allowances and rent credits on a straight
line basis over the applicable term) which is 90% or less than the rate set
forth in Landlord's Offer Notice.
C. The Offer Notice shall include the lease term, the per square foot
rental rate, per square foot finish allowance, terms and conditions that
Landlord desires offer to lease the respective space to third parties (including
finish allowance and lease provisions), but in no event shall the rental rate be
less than the per square foot rental rate that Tenant is paying for the
Premises. Except as set forth in Landlord's Offer Notice, the provisions of this
Lease shall be applicable to such space and, at Landlord's option, evidenced
either in a separate lease or, if mutually agreed by Landlord and Tenant,
amendment to this Lease; however, the provisions of this Addendum shall not be
applicable to such space and provisions regarding services, calculation of
Operating Expenses (except exclusions of Operating Expenses not otherwise
logically inapplicable) and other provisions applicable to such separate
building shall be subject to separate determination and calculation consistent
with other leases of space in Plaza III. Except any finish allowance and work
letter provisions referred to in the Offer Notice, all costs of preparing the
space for Tenant's occupancy, including costs of compliance with Applicable Laws
(except for compliance that is the obligation of Landlord under such work
letter), will be paid by Tenant.
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D. Tenant's rights under this Paragraph 2 are conditioned on: (i) Tenant
not being in default under the Lease at the time it delivers Tenant's Election
Notice or on the date that Tenant's occupancy of the Offered Space is scheduled
to commence; (ii) Tenant not having vacated or subleased more than 25% of the
Premises or assigned its interest in the Lease (except as permitted under
Section 14.7 of the Lease) at the time it exercises the Right of Offer or on the
date that Tenant's occupancy of the Offered Space is scheduled to commence; and
(iii) there being at least 2 years remaining in the Term. Notwithstanding the
foregoing, if there are less than two years remaining in the Term but Tenant's
rights under this paragraph would otherwise be available to Tenant and an option
to extend the Term is available to Tenant hereunder, Tenant may exercise its
rights under this Paragraph provided that Tenant simultaneously exercises its
option to extend the term of the Lease. Tenant's rights under this paragraph are
personal to Tenant and may not be assigned (except as permitted under Section
14.7 of the Lease) and upon an assignment of the Lease (except as permitted
under Section 14.7), this Paragraph is null and void.
5. Tenant, at Tenant's sole cost and expense, shall have the right to
install an emergency generator ("Generator"), generator fuel tank ("Generat or
Fuel Tank") and uninterrupted battery power source (the "UPS"), as generally
described on EXHIBIT 5 to the Work Letter, ("collectively the Generator,
Generator Fuel Tank and UPS are referred to as the "Backup System") and related
equipment connecting such Backup System to the Premises, including the equipment
referred to under the heading "Riser Backup Power" on EXHIBIT 5 to the Work
Letter (the "Backup Related Equipment"). The Generator, Generator Fuel Tank and
the UPS shall be located in the areas of the Building Complex labeled "(3)" for
the Generator and Generator Fuel Tank and "(2)" for the UPS on the parking level
one plan attached as part of EXHIBIT I, with the exact location and space used
being designated by Landlord, as reasonably approved by Tenant. The Backup
System and Backup Related Equipment shall be subject to the following
provisions:
A. The specifications and types of Generator, Generator Fuel Tank and UPS
and Backup Related Equipment, and any alterations thereto, shall be subject to
the prior approval of Landlord, which approval shall not be unreasonably
withheld.
B. Upon expiration or earlier termination, Tenant will, at its sole cost
and expense, remove and retain the Backup System and the Backup Related
Equipment and return the Building to the condition existing prior to such
installation. Tenant will keep and maintain the Backup System and the Backup
Related Equipment in good condition and repair, at its sole expense, in a manner
that does not conflict or interfere with the use of other facilities installed
in the Building. Further, Tenant will not damage or permit damage to the
Building in conjunction with the Backup System and the Backup Related Equipment.
The Backup System and Backup Related Equipment will be of types that do not
cause interference with other equipment or operations in the Building or
surrounding areas to the extent such interference is unacceptable to Landlord,
in Landlord's reasonable determination.
C. Tenant will, at Tenant's sole cost and expense, comply with all
applicable laws, rules, regulations, statutes, ordinances or other requirements
of any kind or nature of any municipal, state and federal governmental or
quasi-governmental authority or the requirements of Landlord's insurance
underwriters relating to the installation, maintenance, height, location, use,
operation, and removal of the Backup System and Backup Related Equipment and
indemnify Landlord against any loss, cost, or expense incurred resulting from
the installation, maintenance, operation, or removal of the Backup System and
Backup Related Equipment. Landlord makes no representation that applicable laws,
ordinances or regulations permit the installation or operation of the Backup
System or Backup Related Equipment. The insurance required to be carried by
Tenant under Section 16.2 shall provide coverage with respect to the ownership,
operation and use of the Backup System and the Backup Related Equipment.
Landlord has no responsibility or liability for damage to the Backup System or
the Backup Related Equipment.
6. This Lease is conditioned, at Landlord's option, on Landlord obtaining a
guaranty of the performance of Tenant's obligations and covenants hereunder from
Guarantor, Bridge Information Systems, Inc., a Missouri corporation, in form
acceptable to Landlord (the "Guaranty"), which is subject to substitution in
accordance with Section 9.
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IN WITNESS WHEREOF, the parties hereto execute this Addendum.
SAVVIS COMMUNICATIONS CORPORATION, WGP ASSOCIATES, LLC, a Virginia
a Missouri corporation limited liability company
By:/s/ Greg Pohle
-----------------
By:/s/ David J. Frear Authorized Signatory
----------------------- "Landlord"
Print Name: David J. Frear
---------------
Print Title: Executive Vice President
-------------------------
Chief Financial Officer
ATTEST:
By:/s/ Steven M. Gallant
---------------------
Print Name: Steven M. Gallant
-----------------
Print Title: Vice President
-----------------
"Tenant"
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EXHIBIT A TO LEASE
THE PREMISES
<PAGE>
EXHIBIT A-1 TO LEASE
BUILDING AND PLAZA I
<PAGE>
EXHIBIT B TO LEASE
REAL PROPERTY
Parcel 28-A as shown on the plat entitled "Plat of Subdivision and Dedication of
Various Easements through the property of Worldgate Associates Limited
Partnership" attached to that certain Deed of Subdivision and Easement, by and
between Worldgate Associates Limited Partnership and The Town of Herndon, dated
August 27, 1998 and recorded September 29, 1998 in Deed Book 10587, page 129,
among the Land Records of Fairfax County, Virginia.
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EXHIBIT C TO LEASE
OPERATING EXPENSES
6.1 Definitions. The additional terms below have the following meanings in
this Lease:
(1) "Base Operating Expenses" means an amount equal to the Operating
Expenses for the calendar year identified as the Base Year in Section 1.5, as
determined by Landlord in accordance with this Exhibit C. Tenant acknowledges
Landlord has not made any representations or warranties that the Base Operating
Expenses will equal any specified amounts (any estimates provided by Landlord
are non-binding estimates only).
(2) "Landlord's Accountants" means that individual or firm employed by
Landlord from time to time to keep the books and records for the Building
Complex, and/or to prepare the federal and state income tax returns for Landlord
with respect to the Building Complex, which books and records shall be certified
to by a representative of Landlord. All determinations made hereunder shall be
made by Landlord's Accountants unless otherwise stated.
(3) "Rentable Area" means 80,582 rentable square feet of space. If there is
a significant change in the aggregate Rentable Area as a result of an addition,
partial destruction, modification to building design, or similar cause which
causes a reduction or increase in the Rentable Area on a permanent basis or, if
Landlord remeasures the Building and a change in Rentable Area occurs,
Landlord's Accountants shall make such adjustments in the computations as are
necessary to provide for such change.
(4) "Tenant's Pro Rata Share" means the percentage set forth in Section
1.5. If Tenant, at any time during the Term, leases additional space in the
Building or if the Rentable Area is adjusted, Tenant's Pro Rata Share shall be
recomputed by dividing the total rentable square footage of space then leased by
Tenant (including any additional space) by the Rentable Area and the resulting
figure shall become Tenant's Pro Rata Share.
(5) "Operating Expense Year" means each calendar year during the Term,
except that the first Operating Expense Year begins on the Commencement Date and
ends on December 31 of such year and the last Operating Expense Year begins on
January 1 of the calendar year in which this Lease expires or is terminated and
ends on the date of such expiration or termination. If an Operating Expense Year
is less than twelve (12) months, Operating Expenses for such year shall be
prorated.
(6) "Operating Expenses" means all operating expenses of any kind or nature
which are in Landlord's reasonable judgment necessary, appropriate, or
customarily incurred in connection with the operation and maintenance of the
Building Complex. Operating Expenses include:
(a) All real property taxes and assessments levied against the Building and
a proportionate share of amounts levied against the rest of the Building Complex
by any governmental or quasi-governmental authority or under any covenants,
declarations, easements or restrictions, including taxes, assessments,
surcharges, or service or other fees of a nature not presently in effect which
are hereafter levied on the Building Complex as a result of the use, ownership
or operation of the Building Complex or for any other reason, whether in lieu of
or in addition to, any current real estate taxes and assessments. However, any
taxes which are levied on the rent of the Building Complex will be determined as
if the Building Complex were Landlord's only real property. In no event do taxes
and assessments include any federal or state income taxes levied or assessed on
Landlord. Expenses for tax consultants to contest taxes or assessments are also
included as Operating Expenses (all of the foregoing are collectively referred
to herein as "Taxes"). Taxes also include special assessments, license taxes,
business license fees, business license taxes, commercial rental taxes, levies,
charges, penalties or taxes, imposed by any authority against the Premises,
Building Complex or any legal or equitable interest of Landlord. Special
assessments are deemed payable in such number of installments permitted by law,
whether or not actually so paid, and include any applicable interest, but not
penalties or penalty interest on such installments. Taxes
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(other than special assessments) are computed on an accrual basis based on the
year in which they are levied, even though not paid until the following
Operating Expense Year. Notwithstanding the foregoing or anything else to the
contrary, The terms "taxes", "assessments", "special assessments," "Real Estate
Taxes" "real property taxes" or "Taxes" shall exclude (and under no
circumstances shall Real Estate Taxes or Taxes include) profit taxes, franchise
taxes, inheritance taxes, gift taxes, transfer taxes, excise taxes, capital
levies or similar taxes on Landlord's business or any assessments to the extent
no substantial benefit accrues to Tenant. In addition, if the Building, the
parking facilities or the Property are subject to any provision for tax
abatement during the Base Year as a result of the incomplete status of the
Building Complex, the Base Operating Expenses for determining increases in Real
Estate Taxes shall be adjusted to reflect the estimated taxes that would have
been applicable for a fully completed Building Complex. If substantial
additional improvements are added to the Plaza I Building or if there occurs a
rehabilitation of or improvement to the Plaza I Building, Tenant shall not be
responsible for increases in Real Estate Taxes attributable to such additional
improvements or rehabilitation. In the event any tax contest is pending, in
progress or contemplated in respect of the Real Estate Taxes, the base Real
Estate Taxes for determining Tenant's share shall not be reduced as a
consequence of such contest until a final determination. In the event any tax
contest subsequent to the year on which base Real Estate Taxes are determined
shall result in a reduction of Real Estate Taxes, Operating Expenses and
Tenant's Pro Rata Share of Operating Expenses for the applicable Lease Year
shall be readjusted upon a final determination. Landlord shall be entitled to
deduct from the amount of the readjustment the actual out of pocket bona fide
expenses incurred by Landlord in securing such reduction so long as such
expenses are appropriately allocated to the respective years as to which the
reduction applies;
(b) Costs of supplies, including costs of relamping and replacing ballasts
in all Building standard tenant lighting;
(c) Costs of energy for the Building Complex, including costs of propane,
butane, natural gas, steam, electricity, solar energy and fuel oils, coal or any
other energy sources;
(d) Costs of water and sanitary and storm drainage services;
(e) Costs of janitorial and security services;
(f) Costs of general maintenance, repairs, and replacements including costs
under HVAC and other mechanical maintenance contracts; and repairs and
replacements of equipment used in maintenance and repair work;
(g) Costs of maintenance, repair and replacement of landscaping;
(h) Insurance premiums for the Building Complex, including all-risk or
multi-peril coverage, together with loss of rent endorsement; the part of any
claim paid under the deductible portion of any insurance policy carried by
Landlord; public liability insurance; and any other insurance carried by
Landlord on any component parts of the Building Complex;
(i) All labor costs, including wages, costs of worker's compensation
insurance, payroll taxes, fringe benefits, including pension, profit-sharing and
health, and legal fees and other costs incurred in resolving any labor dispute;
(j) Professional building management fees, costs and expenses, including
costs of office space and storage space required by management for performance
of its services;
(k) Legal, accounting, inspection, and other consulting fees (including
fees for consultants for services designed to produce a reduction in Operating
Expenses or improve the operation, maintenance or state of repair of the
Building Complex);
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(l) Costs of capital improvements and structural repairs and replacements
to the Building Complex to conform to changes subsequent to the date of issuance
of the shell and core certificate of occupancy for the Building in any
Applicable Laws (herein "Required Capital Improvements"); and the costs of any
capital improvements and structural repairs and replacements designed primarily
to reduce Operating Expenses (herein "Cost Savings Improvements"). Expenditures
for Required Capital Improvements and Cost Savings Improvements will be
amortized at a market rate of interest over the useful life of such capital
improvement (as determined by Landlord's Accountants); however, the amortized
amount of any Cost Savings Improvement in any year will be equal to the
estimated resulting reduction in Operating Expenses; and
(m) Costs incurred for Landlord's Accountants including costs of any
experts and consultants engaged to assist in making the computations;
"Operating Expenses" do not include:
(i) Costs of work, including painting and decorating, which Landlord
performs for any tenant other than work of a kind and scope which Landlord is
obligated to furnish to all tenants whose leases contain a rental adjustment
provision similar to this one;
(ii) Costs of repairs, renovation or rebuilding necessitated by
condemnation or the exercise of eminent domain or other work occasioned by fire,
windstorm or other insured casualty to the extent of insurance proceeds
received;
(iii) Any and all of Landlord's costs to lease space in the Building to all
prior, existing, and prospective tenants, including, without limitation:
consulting and marketing fees, leasing commissions, advertising expenses,
brokerage commissions, legal fees, vacancy costs, rent or other rent
concessions, and/or refurbishment or improvement expenses; and costs of
preparing, improving or altering any space in preparation for occupancy of any
new or renewal tenant; rent for management or leasing offices;
(iv) Costs for any structural maintenance constituting Capital Improvements
or replacement or redesign of the structure (except for Permitted Capital
Improvements), including, without limitation, any financing related fees, costs
and expenses, depreciation or amortization of costs required to be capitalized
in accordance with generally accepted accounting principles ("Capital
Improvements") (other than Permitted Capital Improvements), and professional
fees and disbursements incurred in connection therewith; rentals and other
expenses incurred in leasing systems, elevators, or other equipment ordinarily
considered to be of a capital nature, and costs incurred to achieve compliance
with any governmental laws, ordinances, rules, regulations or orders (other than
Permitted Capital Improvements);
(v) Any and all of Landlord's payment of principal or interest due under
any mortgage or deed of trust, payments pursuant to ground leases, declarations,
easements, license agreements, and payments pursuant to any other agreements
that do not constitute operating expenses under generally accepted accounting
principles, or for any costs or expenses relating to Landlord's obligations
under any work letter to construct Tenant improvements;
(vi) Any and all of Landlord's costs to compel full performance under
leases with all prior, existing and prospective tenants at the Building,
including, without limitation, all legal fees, costs, and expenses to collect
rent arrears and recover possession;
(vii) Compensation (exclusive of the professional building management fee)
paid to officers of Landlord or officers of the management agent or anyone else
above the level of Building manager, and salaries of Landlord's employees who
are not engaged in the day-to-day management and maintenance of the Premises
including, without limitation, any compensation paid to clerks, attendants or
other persons in commercial concessions operated for profit by Landlord, or
wages, salaries or other compensation or benefits of other offsite employees
applicable to the time
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<PAGE>
spend working at other buildings, other than the Building manager (provided that
with respect to each employee that services the Building and other buildings, a
pro rata share of such employee's salary shall be included in Operating
Expenses, as applicable);
(viii) Any costs incurred to Landlord or an affiliate of Landlord for the
provision of any goods or services, in excess of the cost then prevailing in
similar transactions between unrelated parties.
(ix) Depreciation on the Building Complex, except as specifically set forth
above;
(x) Expenses for the correction of defects in Landlord's initial
construction of the Building, Project, or any part thereof, except that
conditions (not occasioned by construction defects) resulting from ordinary wear
and tear will not be deemed defects for the purpose of this category; the cost
of repair or replacement of any item covered by warranty;
(xi) The cost of tools, equipment and material used in, and all other costs
associated with, the initial construction of the Building, the Project, and
related facilities; the cost of any "tap fees" or one time lump sum sewer or
water connection fees for the Property;
(xii) Any documentary and transfer taxes imposed in connection with the
Lease or any other lease;
(xiii) Costs arising from the presence of hazardous materials, substances,
wastes, or asbestos-containing materials in or about or below the Building, the
Land, or the Project, including without limitation, hazardous substances in the
groundwater or soil (other than ordinary maintenance costs, including changing
filters, etc.), unless the materials, substances, wastes or asbestos-containing
materials were in or on the Property due to Tenant's negligence or intentional
acts;
(xiv) Property management fees in excess of Five Percent (5%) of gross
rentals generated by the Property; and
(xv) Interest on borrowed money or debt amortization, except as
specifically set forth above.
To the extent that employees, utilities or other services or costs are
attributable to the Building and other buildings on a common basis or are
provided for Common Areas, such Operating Expenses shall be reasonably prorated
by Landlord to reflect costs to be allocated hereunder to the Building. If any
lease entered into by Landlord with any tenant in the Building is on a so-called
"net" basis, or provides for a separate basis of computation for any Operating
Expenses with respect to its leased premises, Landlord's Accountants may modify
the computation of Base Operating Expenses, Rentable Area, and Operating
Expenses for a particular Operating Expense Year to eliminate or modify any
expenses which are paid for in whole or in part by such tenant. If the Rentable
Area is not fully occupied during any particular Operating Expense Year,
Landlord's Accountants may adjust those Operating Expenses which are affected by
occupancy for the particular Operating Expense Year to reflect 100% occupancy.
Furthermore, in making any computations contemplated hereby, Landlord's
Accountants may make such other modifications to the computations as are
required in their judgment to achieve the intention of the parties hereto.
6.2 Additional Payment. If any increase occurs in Operating Expenses for
any Operating Expense Year during the Term in excess of the Base Operating
Expenses, Tenant shall pay Landlord Tenant's Pro Rata Share of the amount of
such increase (less Estimated Payments, if any, previously made by Tenant for
such year).
6.3 Estimated Payments. During each Operating Expense Year beginning with
the first month of the second Operating Expense Year and continuing each month
thereafter throughout the Term, Tenant shall pay Landlord, at the same time as
Base Rent is paid, an amount equal to 1/12 of Landlord's estimate of Tenant's
Pro Rata Share of any projected increases in Operating Expenses for the
particular Operating Expense Year in excess of Base Operating Expenses
("Estimated Payment").
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6.4 Annual Adjustments.
(1) Following the end of each Operating Expense Year, including the first
Operating Expense Year, Landlord shall submit to Tenant a statement setting
forth the exact amount of Tenant's Pro Rata Share of the increase, if any, of
the Operating Expenses for the Operating Expense Year just completed over the
Base Operating Expenses. Beginning with the statement for the second Operating
Expense Year, each statement shall set forth the difference, if any, between
Tenant's actual Pro Rata Share of the increase in Operating Expenses for the
Operating Expense Year just completed and the estimated amount for such
Operating Expense Year. Each statement shall also set forth the projected
increase, if any, in Operating Expenses for the new Operating Expense Year over
Base Operating Expenses and the corresponding increase or decrease in Tenant's
monthly Rent for such new Operating Expense Year above or below the Rent paid by
Tenant for the immediately preceding Operating Expense Year. All statements
related to Operating Expenses shall be broken down on a reasonably itemized
basis. All books and records pertaining to Operating Expenses and all statements
relating thereto shall conform to generally accepted accounting principles
consistently applied.
(2) To the extent that Tenant's Pro Rata Share of the increase in Operating
Expenses for the period covered by a statement is different from the Estimated
Payment during the Operating Expense Year just completed, Tenant shall pay
Landlord the difference within 30 days following receipt by Tenant of the
statement or receive a credit against the next due Rent, as the case may be.
Until Tenant receives a statement, Tenant's Estimated Payment for the new
Operating Expense Year shall continue to be paid at the prior Estimated Payment,
but Tenant shall commence payment of Rent based on the new Estimated Payment
beginning on the first day of the month following the month in which Tenant
receives the statement. Tenant shall also pay Landlord or deduct from the Rent,
as the case may be, on the date required for the first payment, as adjusted, the
difference, if any, between the Estimated Payment for the new Operating Expense
Year set forth in the statement and the Estimated Payment actually paid during
the new Operating Expense Year. If, during any Operating Expense Year, there is
a change in the information on which Tenant is then making its Estimated
Payments so that the prior estimate is no longer accurate, Landlord may revise
the estimate and there shall be such adjustments made in the monthly Rent on the
first day of the month following notice to Tenant as shall be necessary by
either increasing or decreasing, as the case may be, the amount of monthly Rent
then being paid by Tenant for the balance of the Operating Expense Year.
6.5 Miscellaneous. In no event will any decrease in Rent pursuant to any
provision hereof result in a reduction of Rent below the Base Rent. Delay by
Landlord in submitting any statement for any Operating Expense Year does not
affect the provisions of this Section or constitute a waiver of Landlord's
rights for such Operating Expense Year or any subsequent Operating Expense
Years.
6.6 Dispute. If Tenant disputes an adjustment submitted by Landlord or a
proposed increase or decrease in the Estimated Payment, Tenant shall give
Landlord notice of such dispute within 180 days after Tenant's receipt of the
adjustment. If Tenant does not give Landlord timely notice, Tenant waives its
right to dispute the particular adjustment. If Tenant timely objects, Tenant may
engage its own certified public accountants ("Tenant's Accountants") to verify
the accuracy of the statement complained of or the reasonableness of the
estimated increase or decrease. The person conducting the examination on behalf
of Tenant shall enter into a confidentiality agreement satisfactory to Landlord.
If Tenant's Accountants determine that an error has been made, Landlord's
Accountants and Tenant's Accountants shall endeavor to agree upon the matter,
failing which such matter shall be submitted to an independent certified public
accountant selected by Landlord, with Tenant's reasonable approval, for a
determination which will be conclusive and binding upon Landlord and Tenant. All
costs incurred by Tenant for Tenant's Accountants shall be paid for by Tenant
unless Tenant's Accountants disclose an error, acknowledged by Landlord's
Accountants (or found to have occurred through the above independent
determination), of more than 5% in the computation of the total amount of
Operating Expenses, in which event Landlord shall pay the reasonable costs
incurred by Tenant to obtain such audit. Notwith-
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standing the pendency of any dispute, Tenant shall continue to pay Landlord the
amount of the Estimated Payment or adjustment determined by Landlord's
Accountants until the adjustment has been determined to be incorrect. If it is
determined that any portion of the Operating Expenses were not properly
chargeable to Tenant, then Landlord shall promptly credit or refund the
appropriate sum to Tenant.
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EXHIBIT D TO LEASE
[Intentionally deleted]
1
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EXHIBIT E TO LEASE
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
installed or displayed on any part of the outside or inside of the Building
without the prior written consent of the Landlord. Landlord shall have the right
to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by a person or vendor approved by Landlord. In addition, Landlord
reserves the right to change from time to time the format of the signs or
lettering and to require previously approved signs or lettering to be
appropriately altered.
2. The coverings for all windows in each tenant's premises shall be lowered
and closed as reasonably required because of the position of the sun, during the
operation of the Building's air-conditioning system to heat, cool or ventilate
such Premises. All tenants with premises visible from one of the lobbies, or any
other public portion of the Building, shall furnish and maintain its premises in
a first-class manner, utilizing furnishings and other decorations commensurate
in quality and style with the furnishings and decor in the public portions of
the Building. If Landlord objects in writing to any curtains, blinds, shades or
screens attached to or hung in or used in connection with any window or door of
the Premises, Tenant shall immediately discontinue such use. No awning shall be
permitted on any part of the Premises. Tenant shall not place anything or allow
anything to be placed against or near any glass partitions or doors or windows
which may appear unsightly, in the opinion of Landlord, from outside the
Premises.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits,
entrances, elevators, escalators or stairways of the Building. The halls,
passages, exits, entrances, shopping malls, elevators, escalators and stairways
are not for the general public.
4. The directory of the Building will be provided exclusively for the
display or the name and location of tenants only and Landlord reserves the right
to exclude any other names therefrom.
5. Unless otherwise approved by Landlord, all cleaning and janitorial
services for the Building and the Premises shall be provided exclusively through
Landlord. Tenant shall not cause any unnecessary labor by carelessness or
indifference to the good order and cleanliness of the Premises. Landlord shall
not in any way be responsible to any Tenant for any loss to property on the
Premises, however occurring, or for any damage to any Tenant's property by the
janitor or any other employee or any other person.
6. No equipment, materials, furniture, packages, supplies, merchandise or
other property will be received in the Building or carried in the elevators
except during Ordinary Business Hours or other hours reasonably designated by
Landlord and in such elevators as may be reasonably designated by Landlord. The
persons employed to move furnishings, fixtures and equipment in and out of the
Building shall be subject to Landlord's approval and, if required by law,
properly licensed. Landlord shall have the right to condition approval upon
payment of an additional security deposit as a condition of approving a
particular moving company. Tenant must make arrangements in advance with
Landlord for moving large quantities of furniture and equipment into or out of
the Building.
7. Tenant shall not place a load upon any floor which exceeds the load per
square foot which such floor was designed to carry and which is allowed by law.
Landlord shall have the right to prescribe the weight, size and position to all
equipment, materials, furniture or other property brought into the Building.
Heavy objects shall stand on such platforms as determined by Landlord to be
necessary to properly distribute such weight. Business machines and mechanical
equipment belonging to Tenant which cause noise or vibration which may be
transmitted to the structure of the Building or to any space in the Building to
such a degree as to be objectionable to Landlord or to any tenants shall be
placed and maintained by Tenant, at Tenant's expense, on vibration eliminators
or other devices sufficient to eliminate noise or vibration. The
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persons employed to remove such equipment in or about the Building must be
acceptable to Landlord. Landlord will not be responsible for loss of or damage
to, any such equipment or other property from any cause, and all damage done to
the Building by maintaining or moving such equipment or other property shall be
repaired at the expense of Tenant.
8. Landlord reserves the right to exclude from the Building outside
Ordinary Business Hours any person unless that person is known to the person or
employee in charge of the Building and has an access device such as a key, entry
card, combination code, pass or is properly identified. Tenant shall be
responsible for all persons for whom it requests passes and shall be liable to
Landlord for all acts of such persons. Any person whose presence in the Building
at any time shall, in the judgment of the Landlord, be prejudicial to the
safety, character, reputation and interests of the Building or its Tenants may
be denied access to the Building or may be ejected therefrom, including any
person who in the judgment of Landlord is intoxicated or under the influence of
liquor or drugs or who shall in any manner do any act in violation of these
Rules and Regulations. In case of public excitement or other commotion, the
Landlord may prevent all access to the Building during the continuance of the
same, by closing the doors or otherwise, for the safety and protection of
tenants, the Building, and property in the Building. The Landlord may require
any person leaving the Building with a package or other object to exhibit
authorization from the Tenant of the premises from which the package or object
is removed, but the establishment and enforcement of such requirement shall not
impose any responsibility on the Landlord to protect any Tenant against the
removal of property from its premises. The Landlord shall in no way be liable to
any Tenant for damages or loss arising from the admission, exclusion or ejection
of any person to or from Tenant's Premises or the Building under the provisions
of this rule.
9. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, no
foreign substance or any kind whatsoever shall be thrown into any of them, and
the expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees,
shall have caused it.
10. Tenant shall store all its trash and garbage within its Premises.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
11. Smoking is prohibited at all times in all areas of the Building,
including offices, restrooms, corridors, stairwells, lobbies and elevators. and
may be prohibited in all outside Common Areas of the Building Complex or
restricted by Landlord to specific locations designated by Landlord as smoking
areas. Tenant shall not cause or permit any noise (including playing of musical
instruments, radio ortelevision) or unusual or objectionable odors to emanate
from the Premises which would annoy other tenants or create a public or private
nuisance and no cooking shall be done or permitted by any Tenant on the
Premises, except by the Tenant of Underwriters' Laboratory approved microwave
oven or equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted provided that such equipment and use is in accordance with
all applicable federal, state and city laws, codes, ordinances, rules and
regulations. Tenants shall not conduct directly or indirectly any auction upon
their premises, or permit any other person to conduct an auction upon the
premises.
12. No animals, birds, or pets of any kind, excluding seeing eye dogs,
shall be allowed in a tenant's premises or the Building.
13. Tenant shall not use in any space or in the public halls of the
Building any hand trucks except those equipped with the rubber tires and side
guards or such other material-handling equipment as Landlord may approve. Tenant
shall not bring any other vehicles of any kind into the Building and bicycles
shall be used or stored only in areas designated by Landlord.
14. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.
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15. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instruction from Landlord, and no employee of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord. All contractors hired by Tenant to complete
alterations to the Premises shall adhere to the provisions of the Lease and
these Rules and Regulations, as well as such separate rules and regulations as
Landlord may adopt as requirements for contractors.
16. Tenant shall cooperate fully with the life safety plans of the Building
established and administered by Landlord. This includes participation by Tenant
and its employees in exit drills, fire inspections, life safety orientations and
other programs relating to fire safety that may be promulgated by the Landlord.
17. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
25. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
In the event of a conflict between the terms of the Lease and these rules and
regulations, the Lease shall control.
26. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
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EXHIBIT F TO LEASE
JANITORIAL SPECIFICATIONS
A. DAILY - Monday through Friday, except legal holidays.
1. Empty waste baskets, clean ashtrays.
2. Dust accessible areas of desk tops.
3. Vacuum carpet in elevator lobbies, reception areas and other
high-traffic areas.
B. WEEKLY
1. Dust accessible areas of furniture, convectors and other furnishings.
2. Vacuum office area carpeting.
C. MONTHLY
1. Mop and buff tile floors.
2. Dust Venetian blinds, window frames and exterior of lighting fixtures.
3. Spot clean walls.
4. Clean telephones.
D. QUARTERLY
1. Clean and refinish tile floors where necessary.
2. Clean baseboards.
E. SEMI-ANNUALLY
1. Wash windows.
F. ANNUALLY
1. Wash light fixtures and lenses.
2. Clean Venetian blinds.
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NOTE: Cleaners will not remove papers or other materials from surfaces to be
cleaned, dusted or vacuumed. Trash not in wastebaskets should be clearly
marked "TRASH." Cleaning of private kitchens and baths is the
responsibility of the Tenant.
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EXHIBIT G TO LEASE
HVAC RATES
The following charges shall be the only charges applicable to use of the
Building heating, ventilation, air-conditioning system (HVAC) after Ordinary
Business Hours (other than electricity which is included in electricity charges
that are separately metered to Tenant):
After-hours operation of fans only (excluding chiller/air-conditioning
use): $23.50 per hour
After-hours operation of chiller/air-conditioning: $37.50 per hour
The foregoing charges are for use of all or any portion of the Building,
calculated on an hourly basis (without proration for partial hours).
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EXHIBIT H TO LEASE
PARKING
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EXHIBIT I TO LEASE
Generator, Generator Fuel Tank and UPS Locations
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EXHIBIT J TO LEASE
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is made as of the 24th day of January, 2000 among U.S. BANK
NATIONAL ASSOCIATION, a national banking association ("Lender"), WGP ASSOCIATES,
LLC, a Virginia limited liability company ("Landlord"), and Savvis
Communications Corporation, a Missouri corporation ("Tenant").
RECITALS
A. Lender has made a loan to Landlord (the "Loan"), upon certain terms and
conditions.
B. The Loan is secured by, among other things, a Deed of Trust, Security
Agreement, Financing Statement and Assignment of Leases and Rents (the "Deed of
Trust") executed by Landlord for the benefit of Lender and recorded in the real
estate records of Fairfax County, Virginia on April 16, 1999 in Deed Book 10865
at Page 932. The Deed of Trust created a first lien upon that certain tract of
real property described on Exhibit A attached hereto, together with the
improvements constructed or to be constructed thereon (the "Property"). The Loan
is also secured by other security agreements, financing statements and
assignments (the Deed of Trust and all such other security instruments are
hereinafter collectively referred to as the "Collateral Documents").
C. Tenant is the lessee of part of the Property (the "Demised Premises"),
under and by virtue of a lease (the "Lease") between Landlord and Tenant dated
January 24, 2000.
D. It is a condition to the Lease that Lender confirm certain matters
relating to the Loan and Lender is willing to do so provided that Tenant
subordinates the Lease and all of Tenant's rights thereunder to the Collateral
Documents and the liens and security interests created thereby.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender, Landlord and Tenant hereby
agree as follows:
1. SUBORDINATION. The Lease and all of Tenant's rights thereunder are, and
shall at all times continue to be, subordinate to the Collateral Documents and
the liens and security interests created thereby, regardless of how often or in
what manner the Loan, together with the liens securing the same, and any of the
Collateral Documents, may be increased, renewed, extended or modified.
2. NON-DISTURBANCE. So long as Tenant is not in default in the performance
of any of the terms, covenants or conditions of the Lease on Tenant's part to be
performed, after the expiration of any grace periods set forth in the Lease,
Tenant's possession and occupancy of the Demised Premises and the Tenant's
rights and privileges under the Lease shall not be diminished or interfered with
by Lender in the exercise of any of Lender's rights under the Deed of Trust.
3. ATTORNMENT. In the event of the foreclosure of the lien of the Deed of
Trust or if the Demised Premises are conveyed to Lender by deed in lieu of
foreclosure, Tenant shall attorn to Lender or the purchaser upon any such
conveyance or foreclosure sale and shall recognize Lender or such purchaser as
the lessor under the Lease and Lender or such purchaser shall have the same
rights and remedies under the Lease as Landlord. Such attornment shall be
effective and self-operative without the execution of any further instrument on
the part of any of the parties hereto. From and after any such attornment,
Lender or such purchaser shall be bound to Tenant under all of the terms,
covenants and conditions of the Lease; provided, however, that Lender or such
purchaser shall not be:
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(a) liable for any action or omission of any prior lessor (including
Landlord) except for the right of the Tenant to recoup its damages for a prior
lessor's default which have been reduced to a final judgment against the Rent
owed under the Lease;
(b) bound by any rent which Tenant might have paid for more than the
current month to any prior lessor (including Landlord);
(c) liable for the return or application of any security deposits unless
Landlord delivers such deposits to Lender or such purchaser;
(d) bound by any amendment or modification of the Lease made without
Lender's written consent, which consent shall not be unreasonably withheld; or
(e) subject to any offsets or deficiencies which Tenant might be entitled
to assert against any prior lessor (including Landlord) except for the right to
recoup its damages for a prior Lessor default which have been reduced to a final
judgment against the Rent owed under the Lease.
4. NO DIMINUTION OF LANDLORD'S RIGHTS. Nothing contained herein is
intended, nor shall it be construed, to abridge or adversely affect any right or
remedy of Landlord under the Lease in the event of default by Tenant in the
performance of any of the terms, covenants or conditions of the lease on
Tenant's part to be performed.
5. NOTICES. If Tenant gives Landlord notice requesting arbitration of any
alleged Landlord default, it shall simultaneously serve a duplicate of the
notice on Lender, and Lender shall have the right to participate in such
arbitration. Any notice required or permitted to be given hereunder shall be in
writing and will be deemed given (a) upon personal delivery or upon transmission
by telecopier or similar facsimile transrnission device, (b) on the first
business day after receipted delivery to a courier service which guarantees
next-business-day delivery, or (c) on the third business day after mailing, by
registered or certified United States mail, postage prepaid, in any case to the
appropriate party at its address set forth below:
IF TO LENDER:
U.S. Bank National Association
918 Seventeenth Street, 5th Floor
Denver, Colorado 80202
Attention: Craig A. Poulter
Telecopy No.: (303) 585-4198
WITH A COPY TO:
Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
950 Seventeenth Street, Suite 1600
Denver, Colorado 80202
Attention: Michael Westover, Esq.
Telecopy No.: (303)825-6525
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IF TO LANDLORD:
WGP ASSOCIATES, LLC
4643 South Ulster Street, Suite 1500
Denver, Colorado 80237
Attention: Donald E. Spiegleman
Telecopy No.: (303)694-0082
WITH A COPY TO:
Isaacson, Rosenbaum, Levy & Woods, P.C.
633 Seventeenth Street Suite 2200
Denver, Colorado 80202
Attention: Lawrence J. Donovan, Jr., Esq.
Telecopy No.: (303) 292-3152
IF TO TENANT:
Steven Gallant, Esq.
Vice President and General Counsel
Savvis Communications Corporation
717 Office Parkway
St. Louis, Mo. 63141
Telecopy No.: 314 468-7550
WITH A COPY TO:
Richard A. Cohn, Esq.
Bryan Cave LLP
700 Thirteenth Street, N.W.
Washington, DC 20005-3960
Telecopy No.: 202 508-6200
Any party may change such party's address for notices or copies of notices
by giving notice to the other parties in accordance with this Section.
6. CHOICE OF LAW. The validity and construction of this Agreement shall be
governed by the laws of the State of Virginia.
7. ADDITIONAL PROVISIONS.
(a) Tenant shall not be named or joined as a party or otherwise in any
suit, action or proceeding for the foreclosure of the Mortgage or to enforce any
rights under the Mortgage or the obligation secured thereby. Notwithstanding the
foregoing provisions of this paragraph, if Tenant is an indispensable party in a
foreclosure proceeding with respect to the Mortgage, Mortgagee may so name or
join Tenant if such naming or joinder may be accomplished without in any way
diminishing or otherwise affecting the rights and privileges granted to, or
inuring to the benefit of, Tenant under this Agreement or under the Lease;
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(b) The possession by Tenant of the Demised Premises and Tenant's right
thereto shall not be disturbed, affected or impaired by, nor will the Lease or
the term thereof be terminated or otherwise affected by (i) any suit, action or
proceeding upon the Mortgage or the obligation secured thereby, or for the
foreclosure of the Mortgage or any other documents held by the holder of the
Mortgage, or by any judicial sale or execution or other sale of the Demised
Premises, or any deed given in lieu of foreclosure, or by the exercise of any
other rights given to any holder of the Mortgage or other documents as a matter
of law, or (ii) any default under the Mortgage or the obligation secured
thereby; and
(c) Neither the Mortgage nor any other security instrument executed in
connection therewith shall cover or be construed as subjecting in any manner to
the lien thereof, any trade fixtures, signs or other personal property, at any
time furnished or installed by or at the expense of Tenant or its subtenants or
licensees on the Demised Premises regardless of the manner or mode of attachment
thereof.
8. MODIFICATIONS. This Agreement may not be modified orally or in any
manner other than by an agreement in writing signed by the parties hereto or
their respective successors in interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors and assigns,
and any purchaser or purchasers at foreclosure of the Demised Premises, and
their respective heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LENDER:
U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By:_______________________________
Name:_____________________________
Title:____________________________
LANDLORD:
WGP ASSOCIATES, LLC, a Virginia limited liability company
By:_______________________________
Authorized Signatory
TENANT:
Savvis Communications Corporation, a Missouri corporation
By:_______________________________
Name:_____________________________
Title:____________________________
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STATE OF COLORADO )
CITY AND )
COUNTY OF DENVER )
On _______________, ____, before me ______________________________, a
Notary Public, personally appeared ________________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
My commission expires: __________________________
___________________________
Notary Public
STATE OF __________________ )
)
COUNTY OF ________________ )
On _______________, ____, before me ______________________________, a
Notary Public, personally appeared ________________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
My commission expires: __________________________
___________________________
Notary Public
STATE OF __________________ )
)
COUNTY OF ________________ )
On _______________, ____, before me ______________________________, a
Notary Public, personally appeared ________________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
My commission expires: __________________________
___________________________
Notary Public
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EXHIBIT A
TO
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
(LEGAL DESCRIPTION)
Parcel 28-A as shown on the plat entitled "Plat of Subdivision and Dedication of
Various Easements through the property of Worldgate Associates Limited
Partnership" attached to that certain Deed of Subdivision and Easement, by and
between Worldgate Associates Limited Partnership and The Town of Herndon, dated
August 27, 1998 and recorded September 29, 1998 in Deed Book 10587, page 129,
among the Land Records of Fairfax County, Virginia
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WORK LETTER
Tenant Performs Work
January 24, 2000
SAVVIS COMMUNICATIONS CORPORATION
RE: Lease dated as of the 24th of January, 2000 (the "Lease"), by and between
WGP ASSOCIATES, LLC, a Virginia limited liability company, as Landlord,
and SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation, as Tenant
Re: Tenant: SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation,
Premises: Approximately 80,582 rentable square feet of space on the 5th,
6th, 7th and 8th floors (the "Premises")
Address: 12851 Worldgate Drive, Herndon, Virginia
Gentlemen:
Concurrently herewith, you ("Tenant") and the undersigned ("Landlord") have
executed a Lease (the "Lease") covering the Premises (initially capitalized
words not defined have the same meaning set forth in the Lease). This Work
Letter sets forth how certain base building construction (as defined more fully
below, "Base Building Work") and certain interior finish construction of the
Premises to be leased by Tenant pursuant to the Lease (as defined more fully
below, "Tenant's Finish Work") are to be constructed, who will be responsible
for the construction of the base building improvements and tenant improvements,
who will pay for such construction, and the time schedule and coordination of
activities for the completion of such construction. All provisions of the Lease
shall apply to this Agreement except to the extent clearly inconsistent with
this Agreement or otherwise inapplicable. This Agreement is a part of the Lease.
In consideration of the execution of the Lease, Landlord and Tenant mutually
agree as follows:
1. Base Building Work; Space Planning and Engineering
1.1 Landlord has provided to Tenant the architectural and engineering drawings
for the base building improvements for the Building and the Building Complex to
be completed by Landlord ("Base Building Drawings")(as further described on
EXHIBIT 4 to this Work Letter), as prepared by Davis, Carter & Scott Architects
(such architectural firm or its replacement, if replaced by Landlord prior to
completion of construction, is referred to as the "Landlord's Architect"). The
work to be completed by Landlord in accordance with the Base Building Drawings
as modified is hereinafter referred to as the "Base Building Work." Landlord is
responsible for having completed the Base Building Work in a good and
workmanlike manner in accordance with Applicable Laws and the Declaration, as
further provided in Section 2.4.
1.2 Tenant has retained Davis Carter Scott as Tenant's architect ("Tenant's
Architect") and Burr Computer Environments, Inc. as Tenant's engineer on the 6th
floor and Tolk Engineering Inc. or Shapiro-O'Brien Associates as Tenant's
overall engineer ( collectively, "Tenant's Engineers"); Landlord reserves the
right to elect to retain separate engineers ("Landlord's Engineers") to provide
a separate review on behalf of Landlord of plans prepared by Tenant's Architect
and Tenant's Engineers (which review shall be at Landlord's cost and expense and
not as a deduction from the Allowance except that cost of a review, if any,
required in connection with any request of Tenant to modify the Base Building
Drawings or Base Building Work). Tenant has provided to Landlord the
Tenant-approved space plans for the Premises (collectively referred to herein as
"Space Plans") prepared by Tenant's Architect, which plans are dated January 17,
2000; Tenant shall also have Tenant's Engineers review the Space Plans on
Tenant's behalf for conformity to the Base Building Drawing. The
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Space Plans shall contain information specified in EXHIBIT 1 and shall be
sufficiently complete to permit Landlord and Landlord's Engineers to review such
drawings for the purpose of conforming the Space Plans with the Base Building
Drawings and for the purposes described in Section 1.3 below. The Space Plans
shall be prepared by Tenant's Architect at Tenant's sole cost and expense,
subject to Landlord's payment of the Allowance as hereinafter provided.
1.3 Within 5 business days after the Delivery Date, Landlord shall review the
Space Plans and confer with Tenant concerning such review. Tenant's Engineers,
and Landlord's Engineers, if applicable, shall advise Landlord and Tenant
whether the Base Building Work will have to be supplemented or modified in order
to allow installation of work shown on the Space Plans. If Landlord or such
engineers reasonably determine that the Space Plans (i) are inconsistent with
the Base Building Drawings; (ii) do not contain all of the information specified
in EXHIBIT 1 or are not sufficiently complete to permit Landlord to review them
for the purposes set forth therein; or (iii) indicate space usages inconsistent
with the Permitted Use set forth in the Lease, Landlord shall notify Tenant
within such 5 business day period of Landlord's determination setting forth the
specific reasons therefor, in reasonable detail. Thereafter, Tenant shall revise
the Space Plans accordingly and resubmit them to Landlord and the review
procedure and time frames set forth above shall be repeated. Any delay by
Landlord in responding within the applicable periods or delays arising from
errors by Landlord or its engineers in such review process shall be deemed
"Landlord Delay" to the extent that such delay results in delaying approval of
the Approved Space Plans beyond the 15th day following receipt by Landlord of
the initial Space Plans; except for such delay, approval of Approved Space Plans
shall not delay the Commencement Date under Section 2.4 below. When approved by
Landlord and Tenant, the Space Plans shall be acknowledged as such by Landlord
and Tenant signing each sheet therefor and such approved drawings shall be
deemed the "Approved Space Plans."
1.4 Tenant has provided Landlord with architectural working drawings prepared by
Tenant's Architect (the "Architectural Working Drawings") and structural,
plumbing, fire protection, mechanical controls, electrical and life safety
engineering drawings prepared by Tenant's Engineers ("Engineering Working
Drawings") for the Premises approved by Tenant for review by Landlord, which are
to be substantially in the form provided in EXHIBIT 1. The Architectural Working
Drawings shall be coordinated by Tenant's Architect with the Engineering Working
Drawings prepared by Tenant's Engineers pursuant to Paragraph 1.3 above. The
Architectural Working Drawings and the Engineering Working Drawings shall be a
logical extension of the Approved Space Plans. Landlord shall have the right to
have a representative of Landlord attend Tenant's weekly construction meetings.
Tenant shall have responsibility for any problems caused by any inconsistency of
the Architectural Working Drawings and the Engineering Working Drawings with one
another or with the Base Building Drawings, conflicts with building codes, and
any conflicts between such drawings and field conditions disclosed to Tenant.
Landlord, Landlord's Architect and Landlord's Engineers, as applicable, shall
review the Architectural Working Drawings and the Engineering Working Drawings
within 7 business days after the Delivery Date and give notice if they discover
any conflicts with the Base Building Drawings or field conditions or
noncompliance with building codes within such period. If Landlord does not reply
within such period, it shall be presumed that Landlord has no objection thereto,
however, such approval shall not limit Landlord's right to request changes in
the future in the event design errors are discovered later (which request shall
be made as soon as practicable following such discovery); however, Tenant shall
be obligated only to make changes with regard to design errors identified by
Landlord after such 7 business day period that affect the safety of the Finish
Work or that are required by Applicable Laws. If Landlord notifies Tenant of
such errors (within the time period, if applicable), Tenant shall revise the
Architectural Working Drawings and the Engineering Working Drawings accordingly
and resubmit them to Landlord and the review procedure set forth above shall be
repeated. Delay caused by such revisions shall be deemed Tenant Delay. When
approved (or deemed approved) by Landlord and Tenant, such drawings shall be
deemed the "Final Working Drawings."
1.5 Changes to the Final Working Drawings, except for minor changes not
affecting the Building mechanical, electrical or life safety systems or the
structure of the Building, may be made only upon prior written approval of
Landlord. Landlord shall respond (in writing or by oral communication thereafter
confirmed in writing) to all written requests for changes within 7 business days
of Landlord's receipt of the same. If Landlord does not respond within such
period, Landlord shall be deemed to have consented to the requested changes.
Tenant shall provide Landlord with revised Final Working Drawings reflecting any
such changes as soon as reasonably practicable. Any delay in completion of the
Finish Work or
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the Base Building Work which results from any such changes or the process of
approval or disapproval (other than caused by Landlord Delay) shall be deemed
Tenant Delay. Landlord's review of the Space Plans, Architectural Working
Drawings, Engineering Working Drawings or Final Working Drawings shall not imply
approval by Landlord for their completeness, design sufficiency, or as to
compliance with the requirements of applicable codes, rules, or regulations of
any governmental agencies having jurisdiction thereof now in effect or which may
hereafter be in effect.
II. Finish Work and Finish Allowance
2.1 Tenant agrees to execute contracts for design and construction services to
complete the Finish Work (the "Contract") with contractors and subcontractors
reasonably satisfactory to Landlord (collectively, "Tenant's Contractors").
Tenant and Tenant's Contractors will be required to adhere to the requirements
set forth on EXHIBIT 2 (collectively, "Requirements"). The Contract will
incorporate the provisions of the Requirements or otherwise be consistent with
the Requirements, subject to changes as may be approved by Landlord. Prior to
execution of the Contract, Tenant will provide a copy to Landlord. Landlord will
review the Contract for compliance with the Requirements and advise Tenant of
Landlord's approval or required changes within 10 business days of receipt; if
Landlord fails to respond within such period, Landlord shall be deemed to
approved such contract(s). Following such approval and the Delivery Date, Tenant
will promptly commence and proceed diligently to complete the Finish Work.
2.2 Tenant's Contractors and contractors employed by Landlord who are completing
work in the Building Complex ("Landlord's Contractors") shall be obligated to
mutually cooperate and such Contractors will each conduct its respective work in
an orderly fashion and manner so as not to unreasonably interfere with the
other. Tenant's subcontractors with respect to all mechanical, electrical, and
fire protection work in the Premises will be the subcontractors used by Landlord
for such work in the Building, provided, however, if Tenant bids such
subcontracts and the bids of Landlord's subcontractors are in excess of 5%
higher than the next highest bid, Landlord shall either not unreasonably
withhold approval of such other subcontractor(s) or require Tenant to use
Landlord's subcontractor(s) but pay to Tenant (as additional Allowance) the
difference between such bids. If requested by Tenant, Landlord shall supervise
construction by Tenant's Contractors, in which case Tenant shall pay from the
Allowance to Landlord a construction supervision and management fee equal to 5%
of the total costs of construction of the Finish Work; otherwise, Tenant shall
be responsible for supervising Tenant's Contractors, but Tenant shall also pay
from the Allowance to Landlord a construction coordination fee equal to 1% of
the total costs of construction of the Finish Work.
2.3 Tenant assumes full responsibility for Tenant's Contractor's performance of
all work including compliance with Applicable Laws, and for all Tenant's
Contractors' property, equipment, materials, tools or machinery placed or stored
in the Premises during the completion thereof (subject to the provisions
regarding Builder's Risk insurance). All such work is to be performed in a good
and workmanlike manner consistent with first class standards.
2.4 Landlord has notified Tenant that Landlord has determined that the Base
Building Work has been Substantially Completed. "Substantially Completed" means
that all of the following have occurred: (i) Landlord has performed or completed
substantially all of the Base Building Work which is the responsibility of
Landlord to complete in accordance with the Base Building Drawings and this Work
Letter, except only punch list items which: (1) do not substantially interfere
with Tenant's ability to perform and complete Tenant's Finish Work, otherwise to
complete improvements to the Premises to be made by Tenant or occupy or use the
Premises, and (2) which are reasonably projected to be completed prior to the
Rent commencement dates provided in Section 4 of the Lease for the affected
areas; and (ii) all approvals, certificates of occupancy and permits (other than
Tenant's business licenses and certificates of occupancy pertaining to the
completion of Tenant's Finish Work), and those permits and approvals from the
appropriate governmental authorities pertaining to the Base Building Work or
other improvements to be constructed by Landlord required for the legal and
practical occupancy of the Premises (except for such permits which by their
terms cannot be issued until Tenant's Finish Work is completed); and (iii) the
Landlord's Architect certifies in writing to Tenant that the portions of the
Premises constituting Base Building Work and other improvements to be
constructed by Landlord are substantially complete; and (iv) the construction of
Common Areas, including, without limitation, lobbies, corridors, loading and
parking facilities and the Base Building Systems serving the Building shall have
been substantially completed and so certified by
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Landlord's Architect and approved by the appropriate governmental authorities
(to the extent required); and (v) Landlord has effected removal of rubbish and
debris and Landlord's (and its contractors') construction materials and
equipment to the extent necessary to permit Tenant access and use of the
Building and Premises for commencing its Tenant Finish Work in the Premises.
Following the Delivery Date and prior to Tenant's Contractors commencing the
Finish Work, the representatives of Landlord and Tenant shall jointly inspect
the Premises with Landlord's Architect and develop a list of items of Base
Building Work that have not been completed (the items set forth on such list are
referred to herein as "Punch List Items"). In the event of a dispute, Landlord's
Architect and Tenant's Architect shall mutually resolve such dispute and if the
Architects cannot agree upon a resolution, the Architects shall jointly appoint
an independent architect whose determination shall be binding on the parties.
The date on which Landlord delivers a fully executed original of this Lease to
Tenant is referred to as the "Delivery Date." Following the Delivery Date,
Landlord shall complete the Punch List Items with reasonable diligence and in a
manner so as to minimize delay or interference with the completion of the Finish
Work by Tenant and Tenant shall commence completion of the Tenant Finish Work,
while being responsible for repair of damage caused by Tenant's Contractors in
the Building or Premises. Following the Delivery Date, Tenant is responsible for
the diligent completion of all finish work substantially in accordance with the
Working Drawings (the "Finish Work"), at its sole cost and expense, subject to
Landlord's payment of the Allowance. Tenant's use and occupancy of the Premises
following the Delivery Date, as well as related use of the Building Complex in
conjunction with such use, is subject to all of the terms and provisions of the
Lease (except for Tenant's obligation to pay Base Rent and utilities, which
shall be governed by the provisions of Section 4 and 7 of the Lease; it being
understood that no Base Rent or utilities obligations shall commence until the
Rent commencement dates provided in Section 4 of the Lease). Following the
Delivery Date, to minimize interference or delay in the completion of the Finish
Work and Punch List Items, Tenant will cause Tenant's Contractors to: (i)
conduct work so as not to unreasonably interfere with any other construction
occurring in the Building Complex (including Punch List Items or occurring with
respect to the adjacent building known as Worldgate Plaza I; (ii) comply with
the Requirements; and (iii) reach reasonable agreement with Landlord's
Contractors as to the terms and conditions for hoisting, systems interfacing,
and use of temporary utilities. Landlord shall likewise cause Landlord's
Contractors to : (i) conduct work so as not to unreasonably interfere with
Tenant's Contractors completion of Finish Work; (ii) cooperate with Tenant's
Contractor's to permit their compliance with the Requirements; and (iii) reach
reasonable agreement with Tenant's Contractors as to the terms and conditions
for hoisting, systems interfacing, and use of temporary utilities. There shall
be no charge for Tenant's and Tenant's Contractors access to the Building or for
use of elevators or hoists and Landlord shall permit Tenant to operate a
temporary construction office on a floor of the Premises following the Delivery
Date or in a location designated by Landlord elsewhere in the Building Complex,
to the extent space is available for such purpose and operation is permitted
under applicable codes and will not limit Landlord's ability to obtain
inspection approvals under applicable codes.
2.5 Landlord will pay the cost of the Finish Work as substantially completed in
accordance with the Final Drawings (including the cost of preparation of the
Space Plan and Final Drawings and Landlord's review thereof) in the amount of
$2,457,751.00 (the "Allowance"). Landlord shall make progress payments on a
monthly basis as portions of the Finish Work is completed following request of
Tenant in accordance with Section 2.6. Finish Work Costs in excess of the Finish
Allowance ("Excess Costs") will be at Tenant's sole cost and expense and will be
paid promptly by Tenant, subject to the provisions of this Work Letter. Upon the
execution hereof, Landlord shall pay to Tenant $8,058.20 as reimbursement for a
portion of the costs incurred by Tenant for Tenant's Architect's programming and
test fit design work, which amount shall be in addition to the Allowance (the
"Design Allowance").
2.6 The Allowance is to be expended solely for the benefit of Landlord; that is,
the Allowance will be expended only to pay for design, engineering,
installation, and construction of the Finish Work which under the Lease becomes
the property of Landlord upon installation and for cabling and wiring, but not
for movable furniture, equipment, and trade fixtures not physically attached to
the Premises. Not more than $250,000.00 of the Allowance shall be paid to
Tenant's Architect and Tenant's Engineer for planning, architectural and
engineering costs (in addition to the Design Allowance). Any of Landlord's costs
and expenses payable to Landlord, required to be paid by Tenant under this Work
Letter will also be paid out of the Allowance. Prior to Tenant commencing
construction of the Finish Work, Tenant shall provide Landlord with notice of
the total estimated cost of all Finish Work. As design, engineering, and
construction work is completed and
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Tenant receives invoices therefor, Tenant will submit requests for payment to
Landlord not more frequently than monthly, along with appropriate lien waivers
(substantially in the forms attached hereto as EXHIBIT 3) and such other related
documentation as Landlord reasonably requires. On a monthly basis following
receipt of such documentation (with such payment being made by the 30th of the
month if all required documentation is received by Landlord by the 5th of such
month), Landlord will pay the amounts requested by delivery to Tenant of
Landlord's check(s) payable to Tenant or, at Landlord's option, payable to
Tenant and Tenant's Contractors jointly; provided, however, that if the
estimated costs of completing the Finish Work exceeds the Allowance, Landlord
shall have the right to disburse the Allowance on a percentage basis, equal to
that percentage of the invoiced work that equals the percentage that the
Allowance constitutes of the total estimated costs of the Finish Work. Unless
otherwise agreed by Landlord and Tenant in writing and subject to delays beyond
Tenant's reasonable control, if any portion of the costs to be reimbursed by the
Allowance has not been requested by Tenant or will be requested for Finish Work
that is ongoing as of December 31, 2000 (which deadline shall be extended for
Finish Work ongoing at the time of such deadline) such amounts shall be
forfeited by Tenant.
2.7 Landlord will, during completion of the Finish Work and immediately
thereafter, reasonably cooperate in the balancing of the Building HVAC system
serving the Premises. Landlord shall pay for costs of balancing the Base
Building Work portions of the HVAC system (including the central fans discharge
and the perimeter heating/cooling zone) and Tenant shall pay for balancing the
portions of the system within the Premises.
2.8 Subject to the mutual waiver in Section 18.6 of the Lease, Tenant will
indemnify, defend and hold harmless Landlord, Building Manager, and Landlord's
Contractors from and against liability, costs or expenses, including attorney's
fees on account of damage to the person or property of any third party arising
out of, or resulting from the performance of the Finish Work, including, but not
limited to, mechanics' or other liens or claims (and all costs associated
therewith), subject to Landlord's obligation to disburse the Allowance in
accordance with the foregoing provisions. Tenant will also repair or cause to be
repaired at its expense all damage caused to the Premises or the Building by
Tenant's Contractors or its subcontractor, subject to the mutual waiver in
Section 18.6 of the Lease and the provisions for Builder's Risk insurance
provided in this Work Letter and Exhibits. Further, Landlord will have the right
as described in Section 12.1 of the Lease to post and maintain notices of
non-liability. Subject to the mutual waiver in Section 18.6 of the Lease,
Landlord will indemnify, defend and hold harmless Tenant and Tenant's
Contractors from and against liability, costs or expenses, including attorney's
fees on account of damage to the person or property of any third party arising
out of, or resulting from the performance of the Base Building Work and other
improvements and work performed by Landlord and Landlord's Contractors on
Landlord's behalf, including, but not limited to, mechanics' or other liens or
claims (and all costs associated therewith). Landlord will also repair or cause
to be repaired at its expense all damage caused to the Premises or the Building
by Landlord 's Contractors or its subcontractors, subject to the mutual waiver
in Section 18.6 of the Lease and the provisions for Builder's Risk insurance
provided in this Work Letter and Exhibits.
2.9 Tenant agrees to submit to Landlord within 60 days following completion of
all work one reverse mylar sepia and two blueprint copies of the as built
drawings (the Final Drawings showing all changes thereon as marked by Tenant's
Contractors in the field to show field modifications).
2.10 Notwithstanding any provision herein or in the Lease to the contrary,
Tenant's Rent obligations and other obligations will not be delayed or extended
by any delay in completion of the Finish Work; provided, however, that Tenant
shall be entitled to an abatement of Base Rent for any portion of the Premises
as to which Tenant's completion of Finish Work for such portion of the Premises
is delayed by Landlord Delay or by a casualty occurring after the Delivery Date
that is covered by the Builder's Risk insurance carried by Landlord. The term
"Landlord Delay" means any delay designated as such in this Work Letter or delay
in the preparation, finalization or approval of the Space Plans, Working
Drawings or completion of the Finish Work caused by Landlord's or Landlord's
Contractors' failure to perform its or their obligations under this Work Letter
within the time limits set forth herein that cause a delay in the completion of
the Finish Work, including, without limitation, as a result of interference
caused by Landlord or Landlord's Contractors (to the extent not permitted
herein); Tenant shall provide notice to Landlord as soon as Tenant determines
that Landlord Delay has occurred. All delays other than Landlord Delay are
deemed "Tenant Delay."
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2.11 Tenant designates and authorizes Dave Simmons, of the Orr Company, to act
for Tenant in this Work Letter. Tenant has the right by written notice to
Landlord to change its designated representative.
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2.12 Landlord designates and authorizes George Chelwick to act for Landlord in
this Work Letter. Landlord has the right by written notice to Tenant to change
its designated representative.
2.13 All notices required hereunder will be in writing in accordance with
Section 28 of the Lease. Whenever Tenant's or Landlord's approval or consent is
required under the express terms of this Work Letter, such approval or consent
shall not be unreasonably withheld, conditioned or delayed.
2.14 Landlord shall obtain Builder's Risk insurance on the Base Building Work
and, if available in a form reasonably acceptable to Landlord and requested by
Tenant, on the Finish Work on a Builder's Risk Completed Value Form or other
comparable coverage; if such coverage on the Finish Work is obtained by
Landlord, Tenant shall pay (by deduction from the Allowance) the costs
attributable to coverage for the Finish Work. Upon request of Tenant, Landlord
shall confirm whether such coverage of the Finish Work is applicable prior to
Tenant commencing construction of any portion of the Finish Work. Builder's Risk
insurance if applicable to the Finish Work shall include naming the interest of
Landlord, Landlord's Contractor and subcontractors, Tenant, Tenant's contractor
and subcontractors, and Landlord's mortgage, as their respective interest may
appear on a Builder's Risk Completed Value Form or other comparable coverage.
Such Builder's Risk coverage shall be in addition to, and not substitution for,
the insurance (other than Builder's Risk) required under Exhibit 2 to be carried
by Tenant, Tenant's Architect, Engineers and contractors with respect to the
Finish Work.
Very truly yours,
WGP ASSOCIATES, LLC, a Virginia limited liability company
By:_________________________________
Authorized Signatory
"Landlord"
ACCEPTED AND APPROVED this ____ day
of ______________, 2000.
SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation
By:_______________________________
Print Name:_______________________
Print Title:______________________
ATTEST:
By:_______________________________
Print Name:_______________________
Print Title:______________________
"Tenant"
<PAGE>
LIST OF EXHIBITS
Exhibit 1 Space Plan and Drawings
Requirements
Exhibit 2 Landlord's Requirements of Tenant
the Contractors
Exhibit 3 Form of Lien Waivers
Exhibit 4 Base Building Drawings
<PAGE>
EXHIBIT 1 TO WORK LETTER
SPACE PLANS AND ARCHITECTURAL DRAWINGS REQUIREMENTS
I. Space Plans
Tenant's Space Plans will comply with the following requirements which are
intended to assist Tenant and Tenant's Architect in defining all
information required for Landlord's review of the space usages and
evaluation of the improvements contemplated thereby.
1. All Space Plans will be drawn to 1/8" scale and may be produced on CAD
equipment.
2. Tenant will submit one reverse mylar sepia and two blue prints of all
Space Plans with notes describing the general intent of the usage and the
improvement requirements.
3. The Space Plans and notes will include: (a) partition layout and door
locations; (b) depiction of electrical and communication equipment
requirements other than for normal office equipment, including
modifications required to floor or main telephone or electric closets; (c)
reflected ceiling plan showing non-standard lighting and ceiling
construction or constraints which will affect mechanical, electrical, fire
protection or life safety systems; (d) Tenant's special mechanical and
plumbing requirements; (e) Tenant's special floor loading requirements; (f)
Tenant's requirements for floor penetrations, including but not limited to
special stairs, dumbwaiters, conveyors, pneumatic systems, elevators or
architectural features; and (g) approximate information regarding
anticipated structural and mechanical, electrical, fire protection,
controls and life safety system design requirements.
II. Architectural and Engineering Working Drawings
Tenant's submission of Architectural Working Drawings and Engineering
Working Drawings (collectively the "Working Drawings") shall include one
reverse mylar and two blueprints of Architectural Drawings and
Specifications to Landlord and comply with the following requirements which
are intended to assist Tenant, Tenant's Architect and Tenant's Engineer in
defining all information required by Landlord to complete Landlord's review
of space usages and the quality and extent of the proposed construction and
its effect upon the Base Building Work.
The Working Drawings will depict the quality of Finish Work to be performed
and must provide for a quality level equal to (as reasonably determined by
Landlord) or exceeding the requirements of the Base Building Work.
The Architectural Working Drawings and Engineering Working Drawings
colectively will include but not be limited to: (a) partition layout and
door locations; (b) electrical outlets, including the location and usage;
(c) telephone outlets, including description of system, size of conduit
servicing each outlet, power and mechanical requirements for system and any
requirements affecting base building construction, including modifications
required to floor or main telephone rooms; (d) reflected ceiling plan
showing standard and non-standard lighting, switching requirements and
ceiling construction or constraints which will affect mechanical,
electrical, fire protection or life safety systems, and will include all
necessary specifications and details of items or construction; (e) Tenant's
occupancy capacity, usage equipment loads for all spaces, particularly
special usage rooms, including but not limited to conference rooms,
lounges, coffee rooms, copy rooms, computer terminal or keypunch rooms,
audio-visual rooms and reproduction
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or print rooms which require special heating, ventilating, air conditioning
or fire protection (all specifications on usage or equipment therein,
including BTU per hour output of all equipment and parameters as to extent
of special work required); (f) Tenant's floor loading for all spaces (all
specifications, weight, vibration and vibration isolation for each item
sufficiently complete for structural engineering design), particularly
special usage rooms, including, but not limited to file rooms, storage
rooms, computer rooms and reproduction or print rooms; (g) floor
penetrations, including but not limited to special stairs, dumbwaiters,
conveyors, pneumatic systems, elevators or architectural features; and (h)
all structural, mechanical, electrical, fire protection, controls and life
safety systems requirements.
The Working Drawings will include the following as well: (1) all millwork
and equipment which will be part of the Finish Work and become part of the
Premises; (2) a complete finish schedule for all floors, walls, ceilings,
including millwork, door frames, etc.; (3) keying schedules; (4) special
blocking requirements as may be required to support wall or ceiling hung
furniture or equipment; and (5) all other information necessary to complete
construction of the Premises, including the architect's and engineer's
stamps if required by the Building Department.
<PAGE>
EXHIBIT 2 TO WORK LETTER
LANDLORD REQUIREMENTS OF THE CONTRACT
The Contract will be subject to review and approval of Landlord in accordance
with the Work Letter and will fully incorporate the following provisions. In the
event of any conflict between any provisions of the Contract and the provisions
below, the provisions below will control.
1. The Contract will be in writing and will cover all aspects of the Finish
Work. No Finish Work will be performed except pursuant to the Contract. Fully
executed copies of the Contract will be delivered to Landlord. If Landlord
determines that the Contract does not comply with the provisions hereof, it will
immediately be corrected and no work will be commenced in the Premises until the
deficiencies have been corrected. Any delays in completion resulting from
modifications (except as required by Landlord Delay) will be Tenant Delays.
Following delivery of a copy of the Contract to Landlord and its approval (or
deemed approval), no material modification will be effective unless and until a
copy thereof has been delivered to Landlord for its review.
2. Changes in the Final Drawings will be made only upon prior written approval
(or deemed approval) of Landlord (to the extent required under and in accordance
with Section 1.5 of the Work Letter).
3. Scheduling of Finish Work: The Contract will obligate Tenant's Contractor to
perform Finish Work in accordance with time schedules acceptable to Tenant,
Tenant's Contractor and Landlord (which approval shall be based on consistency
with Landlord's schedule for completion of the Base Building Work). Any schedule
proposed by Tenant's Contractor will be based upon Tenant's Contractor applying
its best efforts to the Finish Work.
4. Tenant's Contractor will not knowingly perform Finish Work inconsistent with
the Final Working Drawings which will result in a lesser quality installation or
provide inferior performance than that established by the base shell and core
drawings and specifications covering similar work items. Landlord will have the
right at any time during the performance of Finish Work or thereafter to require
replacement and reconstruction at Tenant's Expense of Finish Work not conforming
to the standards and specifications in the Final Drawings.
5. Tenant and Tenant's Contractor will give all notices and comply with all
laws, ordinances, rules, regulations and orders of any public authority relating
to the performance of the Finish Work. If either party observes that any Finish
Work is at variance with any applicable codes, ordinances, laws, rules and
regulations (collectively, "Applicable Laws"), it will promptly notify the other
party and Landlord in writing, and necessary changes will be made by Tenant. If
Tenant's Contractor performs any Finish Work that it knows is contrary to
Applicable Laws, and fails to deliver prior notice to Tenant and Landlord,
Tenant's Contractor will assume full responsibility therefor and will bear all
costs attributable to repair, replacement or correction. Tenant, Tenant's
Contractor and its subcontractors will comply with Federal, State and local tax
laws, social security acts, unemployment compensation acts and such other acts
and laws as are applicable to the performance of Finish Work.
6. All risk of loss to all property of Tenant, Tenant's Contractor and its
subcontractors will be the sole responsibility of Tenant, Tenant's Contractor
and its subcontractors, and Landlord will have no responsibility therefor,
subject to Builder's Risk insurance on the Finish Work to the extent carried by
Landlord in accordance with Section 2.14 of the Work Letter.
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7. The following insurance requirements will be complied with:
a. Minimum Coverage - Prior to any Finish Work being commenced by Tenant's
Contractor, it will obtain and maintain insurance with minimum coverage and
limits to protect Tenant and Landlord from the claims hereafter set forth
which may arise or result from Tenant's Contractor's performance of any
Finish Work, whether such work is performed by Tenant's Contractor, its
subcontractors, or by anyone for whose acts such parties may be liable as
follows (subject to the provisions below, such limits may be provided by an
appropriate "umbrella" policy):
(1) Workmen's Compensation and occupational disease insurance at the
statutory limits provided for by the State of Virginia;
(2) Employer's liability insurance in an amount not less than $100,000
for all damages arising from each accident or occupational disease;
(3) Commercial general liability insurance covering:
(i) Operations premises liability;
(ii)Owner's and Contractor's protective liability;
(iii) Completed operations;
(iv)Product liability;
(v) Contractual liability;
(vi) Broad form property damage endorsement and property damage
caused by conditions otherwise subject to exclusion for explosion,
collapse or underground damage;
(vii) Architect's and engineer's professional liability insurance
(for Tenant's Architect and Tenant's Engineer)
(4) Insurance limits:
Bodily Injury:
$1,000,000 each occurrence; $1,000,000 aggregate completed
operations products
Property Damage
$500,000 each occurrence; $500,000 aggregate operations; $500,000
aggregate protective; $500,000 aggregate completed operations
products
(5) Comprehensive automobile liability insurance covering all owned,
hired or non-owned vehicles including the loading and unloading
thereof with limits of no less than:
Automobile Bodily Injury:
$500,000 each person; $1,000,000 each occurrence;
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Automobile Property Damage:
$500,000 each person
b. Unless Landlord retains Builder's Risk insurance on the Finish Work in
accordance with Section 2.14 of the Work Letter, Tenant or Tenant's general
contractor shall carry Builder's Risk insurance covering the completed
value of the Finish Work which will afford coverage against "all risks" for
physical loss or damage.
c. Cancellation - All such insurance will be carried with a company
reasonably satisfactory to Landlord and Tenant and the liability policy
will name Landlord and Tenant and their employees and agents as additional
insured parties. Each policy will provide that it will not be canceled or
altered except after 15 days prior written notice to Tenant and Landlord,
and the certificate of insurance will so state.
d. Policy Termination - Tenant's Contractor and each subcontractor will
maintain all insurance required hereunder during the term of the Contract
and for a period ending one year after the date of completion of all Finish
Work done pursuant to the Contract to the extent such insurance is written
in a "claims made basis."
e. Policies - Prior to commencement of work by Tenant's Contractor, it will
deliver one copy of the policies or certificates evidencing such insurance
to Tenant and Landlord. Such policies must be approved by Tenant and
Landlord prior to commencement of work. Notwithstanding the above, Landlord
may require greater coverage or larger limits by serving notice upon
Tenant. Without the written consent of Landlord, Tenant's Contractor agrees
that it will not allow any subcontractor to commence work within the
building until such subcontractor has obtained the required insurance.
f. Umbrella Liability Insurance - Umbrella liability insurance with limits
of liability for claims of bodily injury, personal injury and property
damage liability not less than $10,000,000 each occurrence and $10,000,000
aggregate.
g. Waiver of Subrogation - Landlord, Tenant and Tenant's Contractor will
waive all rights against each other, and their respective contractors,
subcontractors and sub-subcontractors, agents and employees, for damages
caused by fire or other perils covered under the Builder's Risk insurance
policy on the Finish Work.
9. Tenant's Contractor will indemnify, defend, and hold harmless Tenant and
Landlord and their respective representatives, agents and employees from and
against all claims, damages, losses and expenses, including, but not limited to
reasonable attorney's fees, arising out of or resulting from the performance of
Finish Work or Tenant's Contractor's failure to perform in accordance with the
Contract (but specifically excluding the Finish Work itself and the Building)
which are: a) caused in whole or in part by any negligent act or omission of
Tenant's Contractor, any subcontractor, anyone directly or indirectly employed
by any of them or anyone for whose acts any of them may be liable, regardless of
whether or not such claim, loss, damage or expense is caused in part by a party
indemnified hereunder, and b) attributable to bodily injury, sickness, disease
or death, or destruction of or damage to tangible property including loss of use
resulting from any of the foregoing acts.
<PAGE>
Tenant's indemnification obligation under this Paragraph 9 will not be limited
by any limitation on the amount or type of damages, compensation or benefits
payable by or for the Contractor or any subcontractor under workmen's
compensation acts, disability benefit acts or other employee benefit acts.
10. Tenant's Contractor and Tenant will agree that while Landlord may make
available to Tenant's Contractor for incorporation into the Finish Work
materials previously purchased by Landlord, Landlord is not the manufacturer of
such materials nor is it the commercial supplier of such materials. Accordingly,
Tenant and Tenant's Contractor will agree that if either one or both of them
have any claim with respect to any of such materials supplied by Landlord for
incorporation into the Finish Work, whether such claims relate to any alleged
breach of an express warranty or an implied warranty or otherwise, any claims
against Landlord whether directly or by way of defense, counterclaim, cross
claim or offset are waived and released and such claims will be brought
exclusively against the person or entity from whom Landlord purchased such
materials or against the manufacturer. Landlord will execute such documents as
may be reasonably necessary to assign any rights Landlord would otherwise have
against a supplier or manufacturer.
11. Landlord or Tenant may require Tenant's Contractor to provide payment and
performance bonds for any or all Finish Work, such bonds to be provided at
Tenant's expense (subject to reimbursement under the Allowance). Any bond will
be requested and provided prior to commencement of Finish Work.
12. If Tenant's Contractor is adjudicated a bankrupt, or makes a general
assignment for the benefit of its creditors, or if a receiver is appointed on
account of Tenant's Contractor's insolvency, or if Tenant's Contractor
persistently or repeatedly refuses or fails, except in cases where delay is
justified, to supply enough properly skilled workmen or proper materials or if
Tenant's Contractor persistently disregards Applicable Laws, or otherwise is
guilty of a substantial violation of a provision of the Contract, Tenant may,
without prejudice to any right or remedy and after giving Tenant's Contractor
and its surety, if any, 7 business days' written notice, terminate the Contract
and take possession of all materials, equipment, tools, construction equipment
and machinery owned by Tenant's Contractor and will thereafter complete the
Finish Work by whatever method it may deem expedient. In such case, Tenant's
Contractor will not be entitled to receive any further payments until completion
of all Finish Work; provided, however, that Tenant's actions will not release
Tenant's Contractor from any obligations to Tenant arising from its performance
or nonperformance prior to the date of such termination. Following completion,
Tenant will pay Tenant's Contractor an amount equal to the aggregate of the
amounts actually due under the Contract at the time of the termination, less the
cost to Tenant of completing the Finish Work.
13. Prior to commencement of any Finish Work in the Premises, Tenant's
Contractor will give written notice to Landlord and Tenant of the date work will
commence. If a subcontractor or materialman files a mechanics' lien as a result
of performing Finish Work pursuant to the Contract, then, provided Tenant's
Contractor has been paid for such work, Tenant's Contractor will indemnify and
defend Tenant and Landlord from said lien and will, when requested by Tenant or
Landlord, furnish (as Landlord or Tenant may specify) either a bond sufficient
to discharge the lien, deposit in an escrow approved by Landlord and Tenant a
sum equal to 150% of the amount of such lien or obtain for Landlord an
endorsement through Landlord's title policy insuring against loss or damage
resulting from such lien. Subject to any restrictions of Landlord's Mortgagee on
the Building, Tenant's Contractor may, in cooperation with Landlord and Tenant,
contest the validity of a mechanics' lien, including the right to prosecute any
appeals so long as during the pendency of any contest, Tenant's Contractor will
effectively stay any official or judicial sale of the Building, upon execution
or otherwise, and so long as Tenant's Contractor immediately pays any final
judgment entered and procures record satisfaction thereof. If Tenant or Landlord
is a party to any such contest, or any other action resulting from or arising
out of the performance of the Finish Work, Tenant's Contractor will pay all
legal fees and other costs and expenses
<PAGE>
incurred by Landlord and Tenant in such action. If Tenant's Contractor fails to
provide a bond, cash escrow or title endorsement, or otherwise fails to fully
satisfy and obtain the release of a lien in accordance with the provisions
hereof, Tenant's Contractor will be obligated to refund Tenant or Landlord, as
the case may be, all monies that the latter may pay in discharging any such lien
including costs and reasonable attorneys' fees incurred in settling, defending
against, appealing or in any other manner dealing with any such lien.
14. Tenant's Contractor will warrant and agree at its expense to correct or
cause to be corrected any defects in the Finish Work (including, but not limited
to, defects due to defective workmanship or materials whether supplied,
installed or performed by Tenant's Contractor or any subcontractor or supplier)
which occur within one year after Tenant's Contractor has substantially
completed the Finish Work, including completion of all punchlist items, or for
such longer period as may be set forth in the Final Drawings. Tenant's
Contractor will require a similar warranty in all subcontracts, and will deliver
to Landlord and Tenant, together with appropriate assignments, if required, all
warranties of subcontractors and suppliers. All warranties will extend to both
Landlord and Tenant, as their respective interests in such Finish Work exist
pursuant to the Lease.
15. Tenant's Contractor will: (a) comply with all reasonable rules relating to
construction activities in the Building promulgated by Landlord or Landlord's
Contractor; (b) be responsible for reaching agreement with Landlord as to the
reasonable conditions for use of the elevators, systems interfacing, use of
temporary utilities, access to the Premises and use of truck docks and storage
areas (without charge).
16. Landlord shall make available hoisting, systems interfacing, and use of
temporary utilities as is customary in construction of similar buildings in the
suburban Washington, D.C. area, subject to Landlord's schedule for completion of
the Base Building Work.
17. Landlord and Landlord's Contractor may, from time to time, inspect or
perform work within the Premises. Such inspections or work will not unreasonably
conflict with Tenant's Contractor's work. Landlord may suspend Tenant's
Contractor's work in the Premises if such work, in the reasonable opinion of
Landlord or of Landlord's Contractor, presents a danger to life, safety, or
property, or in an emergency situation.
18. Tenant will give Landlord reasonable prior notice of all inspections,
punchouts and other reviews during the course of construction so that Landlord
may observe such events. Landlord will be likewise informed of all Building
Department inspections and requirements for issuance of the Certificate of
Occupancy for the Premises. Landlord's observation of any such events will, in
no event be construed or interpreted as a review or approval by Landlord of any
such work nor will it prevent Landlord, if it thereafter discovers any
deficiency in such Work, from requiring correction. Tenant's Contractor will be
solely responsible for obtaining a certificate of occupancy (or its equivalent)
for the Premises (as distinguished from a similar certificate to the extent
required for the Base Building Work) and will submit to Landlord the original
prior to Tenant's occupancy of the Premises for the purpose of conducting
business.
19. Landlord's Engineer or other agent will have the option of reviewing all
equipment and materials to be used in the construction of the Finish Work for
consistency with Final Working Drawings and all work prior to Tenant move-in.
Such review will in no event constitute approval by Landlord and Landlord shall
use reasonable efforts to minimize any delay arising from such reviews.
20. Tenant will promptly furnish Landlord a copy of the building permit issued
to Tenant's Contractor after issuance.
<PAGE>
21. Tenant's Contractor will not store materials or supplies in or outside the
Building (other than within the Premises) without the prior approval of Landlord
or Landlord's Contractor.
22. All deliveries except hand-held items must be taken to the floors via
elevator(s) designated by Landlord for such purpose.
23. Tenant's Contractor will provide at all times direct supervision of all work
being performed for Tenant.
24. Tenant's Contractor will cooperate with Landlord in disposing refuse
resulting from the Finish Work. This may include the use of Landlord's dumpster
and a proration of charges associated with such use or at Landlord's option at
Tenant's expense the placement of Tenant Contractor's dumpster at a location
reasonably specified by Landlord.
25. Tenant's Contractor will acknowledge that the work to be performed by it for
Tenant is also for the direct benefit of Landlord. Landlord will have the right
to pursue in its own name directly against Tenant's Contractor any rights or
remedies including, without limitation, claims for damages granted to Tenant.
If any legal action or arbitration proceeding is commenced to enforce the
provisions of the Contract or to recover damages as a result of the alleged
breach of the provisions thereof, the prevailing party will be entitled to
recover all reasonable costs incurred in connection therewith, including
attorneys' fees.
The Contract will be construed in accordance with the laws of the State of
Virginia Subject to Paragraph 26, any litigation or other proceeding will be
decided by the applicable court in the State of Virginia.
26. All claims, disputes and other matters in question between Tenant and
Tenant's Contractor arising out of, or relating to, the Contract, will be
decided by arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association then obtaining unless the parties
mutually agree otherwise. No such arbitration will include Landlord, its
employees or consultants, except by written consent of Landlord and any other
party sought to be joined.
<PAGE>
EXHIBIT 3 TO WORK LETTER
FORM OF LIEN WAIVERS
Appropriate lien waivers substantially in the forms attached hereto (with blanks
completed and notary revised as appropriate) as Exhibits 3-1, 3-2, 3-3, and 3-4,
as the case may be, will accompany all requests for payment by Tenant.
1
<PAGE>
EXHIBIT 3-1 TO WORK LETTER
STATE OF VIRGINIA ) INTERIM CONTRACTOR'S AFFIDAVIT
) ss. RELEASE AND LIEN WAIVER
COUNTY OF _____________ )
TO WHOM IT MAY CONCERN:
The undersigned, being first duly sworn, deposes and says that:
1. He is _______________ of the ________________________, who is the
general Contractor for the project hereinafter identified (the "Contractor"),
and that the undersigned is authorized to execute and deliver this document on
behalf of the Contractor.
2. The Contractor is the contractor for the performance of certain work
and/or the furnishing of certain materials or supplies (the "Work") pursuant to
a Contract between Contractor and _______________________________, as Owner, for
the improvements and project commonly known as
__________________________________________ (the "Project") upon property legally
described as: ____________________________________________, County of
_______________, State of _______________, hereinafter referred to as the
"Property."
3. This instrument is executed and delivered in consideration of and for
the purpose of inducing _________________________ ("Construction Lender") and
the Owner to make an interim payment of $__________ under the Contract, subject
to collection of any check given as payment. The total amount of the Contract
including change orders is $__________, and the undersigned acknowledges that
upon receipt of this interim payment, the Contractor has received interim
payments totaling $__________ under the Contract.
4. The undersigned for the Contractor, subject to the receipt and
collection of the interim payment herein requested, warrants and represents
that: (i) all materials delivered to said project by or for the Contractor are
for use therein only; (ii) title to all work, materials and equipment covered by
said payment, whether or not incorporated in the improvement on the Property,
has passed to the Owner, free and clear of all liens, claims, security or
encumbrances (hereinafter all referred to as "liens"); (iii) all taxes
applicable to the materials furnished for use in or on the Property and all
taxes for the Work performed under the Contract have been fully paid; and (iv)
all laborers, mechanics, subcontractors, materialmen and suppliers for all work
done and for all materials, machinery, equipment, fixtures, tools, scaffolding
and appliances furnished for the performance of the Contract and for any other
indebtedness connected therewith for which the Owner of the Property might be
responsible have been paid in full to the date hereof. Contractor, to the extent
of the total of interim payments received, for itself, its successors, and on
behalf of all persons able to claim through or under the Contractor: (a) waives,
relinquishes and releases all liens and rights of claims to liens for labor or
materials furnished in the construction, improvement, alteration or repair
involved in performance under the Contract; (b) agrees (1) to save Owner and
Construction Lender harmless from all liability, costs and expenses, including
reasonable attorneys' fees, resulting from mechanic's and/or materialmen's liens
for the performance of work or the furnishing of materials or supplies pursuant
to the Contract, (2) to discharge (by bond or otherwise) or to defend suit to
enforce any mechanic's or materialmen's lien, claim to or right of action for
any such lien which may be filed, and (3) to satisfy any claims or demands which
arise out of, which are due to or which may be made for, any work performed or
supplies furnished under the Contract or in furtherance of the construction or
completion of the Contract, whether directly or indirectly attributable to the
Contract; and (c) hereby releases the present and any future Owner of the
Property, the Property, the Construction
1
<PAGE>
Lender and any lender who may now or hereafter have a security interest in the
Property, from all claims, rights of action, liabilities and liens which may be
filed or asserted in connection with the Contract.
Dated this _____ day of _______________, 2000.
_______________________________________
Authorized representative of Contractor
SUBSCRIBED AND SWORN TO before me this _____ day of __________________,
2000.
My commission expires ________________________.
_______________________________________
Notary Public
2
<PAGE>
EXHIBIT 3-2 TO WORK LETTER
STATE OF VIRGINIA )
) FINAL CONTRACTOR'S AFFIDAVIT,
COUNTY OF _____________ ) RELEASE AND LIEN WAIVER
TO WHOM IT MAY CONCERN:
The undersigned, being first duly sworn, deposes and says that:
1. He is __________________ of the _____________________, who is the
general Contractor for the project hereinafter identified (the "Contractor"),
and that the undersigned is authorized to execute and deliver this document on
behalf of the Contractor.
2. The Contractor is the contractor for the performance of certain work
and/or the furnishing of certain materials or supplies (the "Work") pursuant to
a Contract between Contractor and ____________________, as Owner, for the
improvements and project commonly known as __________________________
________________________ (the "Project") upon property legally described as:
_________________________________, County of __________, State of __________,
hereinafter referred to as the "Property."
3. This instrument is executed and delivered in consideration of and for
the purpose of inducing _________________________ ("Construction Lender") and
the Owner to make final payment of $__________ under the Contract, subject to
collection of any check given as payment. The total amount of the Contract
including change orders is $__________, and the undersigned acknowledges that
upon receipt of this final payment, the Contractor has been paid in full the
total contract price under the Contract.
4. The undersigned for the Contractor, subject to the receipt and
collection of the final payment herein requested, warrants and represents that:
(i) all materials delivered to said project by or for the Contractor are for use
therein only; (ii) title to all work, materials and equipment covered by said
payment, whether or not incorporated in the improvement on the Property, has
passed to the Owner, free and clear of all liens, claims, security or
encumbrances (hereinafter all referred to as "liens"); (iii) all taxes
applicable to the materials furnished for use in or on the Property and all
taxes for the Work performed under the Contract have been fully paid; and (iv)
all laborers, mechanics, subcontractors, materialmen and suppliers for all work
done and for all materials, machinery, equipment, fixtures, tools, scaffolding
and appliances furnished for the performance of the Contract and for any other
indebtedness connected therewith for which the Owner of the Property might be
responsible have been paid in full. Contractor for itself, its successors, and
on behalf of all persons able to claim through or under the Contractor: (a)
waives, relinquishes and releases all liens and rights of claims to liens for
labor or materials furnished in the construction, improvement, alteration or
repair involved in performance under the Contract; (b) agrees (1) to save Owner
and Construction Lender harmless from all liability, costs and expenses,
including reasonable attorneys' fees, resulting from mechanic's and/or
materialmen's liens for the performance of work or the furnishing of materials
or supplies pursuant to the Contract, (2) to discharge (by bond or otherwise) or
to defend suit to enforce any mechanic's or materialmen's lien, claim to or
right of action for any such lien which may be filed, and (3) to satisfy any
claims or demands which arise out of, which are due to or which may be made for,
any work performed or supplies furnished under the Contract or in furtherance of
the construction or completion of the Contract, whether directly or indirectly
attributable to the Contract; and (c) hereby releases the present and any future
Owner of the Property, the Property, the Construction Lender and any lender who
may now or hereafter have a security interest in the Property,
1
<PAGE>
from all claims, rights of action, liabilities and liens which may be filed or
asserted in connection with the Contract.
Dated this _____ day of _______________, 2000.
_______________________________________
Authorized representative of Contractor
SUBSCRIBED AND SWORN TO before me this _____ day of __________________,
2000.
My commission expires _______________________.
_______________________________________
Notary Public
3
<PAGE>
EXHIBIT 3-3 TO WORK LETTER
INTERIM
Project SUBCONTRACTOR'S OR
MATERIAL SUPPLIER'S
Job Address AFFIDAVIT,
RELEASE AND LIEN
Job Number WAIVER
STATE OF _____________ )
) ss.
COUNTY OF _____________ )
The undersigned subcontractor or material supplier (herein referred to as
"Subcontractor"), being first duly sworn, deposes and says that: He is over the
age of 21 years and resides at:
_________________________________________________________________.
(IF SUBCONTRACTOR IS AN INDIVIDUAL:)
1. He is the Subcontractor referred to herein.
(IF SUBCONTRACTOR IS A PARTNERSHIP:)
1. He is a general partner in _____________________________________, a
co-partnership composed of the undersigned and carrying on business at
_______________________________, City of ___________. Said co-partnership is the
Subcontractor referred to herein.
(IF SUBCONTRACTOR IS A CORPORATION:)
1. He holds the title of _______________, in _______________________, a
corporation organized under the laws of the State of ____________, carrying on
business at ________________________________________, City of ____________,
State of _________________, which corporation is the Subcontractor referred to
herein. The undersigned is authorized to execute this instrument on its behalf.
2. Subcontractor is a subcontractor or material supplier for the
performance of certain work and/or the furnishing of certain materials or
supplies pursuant to an agreement or purchase order, as the case may be
(hereinafter called the "Subcontract," which term will refer to the agreement or
purchase order, as the case may be), under a general contract between
_________________________________ (hereinafter called "Contractor"), and
________________________________ (hereinafter called the Owner"), for the
improvements or project known as ______________________________, at
_________________________, City of ____________, County of ____________, State
of ____________ (hereinafter called the "Property").
3. This instrument is delivered in consideration of and for the purpose of
inducing Contractor to make interim payment of $__________ under the
Subcontract, subject to collection of any check given as payment. Subcontractor
acknowledges that upon receipt of this interim payment, Subcontractor has
received from Contractor interim payments totaling $__________ under the
Subcontract.
1
<PAGE>
4. Subcontractor warrants and represents that: (i) all materials delivered
to said project by or for Subcontractor are for use therein only; (ii) title to
all work, material and equipment covered by said payment, whether or not
incorporated in the Property, has passed to the Owner, free and clear of all
liens, claims, security interests or encumbrances (hereinafter all referred to
as "liens"); (iii) all taxes applicable to the materials furnished and the work
performed under the Subcontract have been fully paid; and (iv) all laborers,
mechanics, sub-subcontractors, materialmen and suppliers for all work done and
for all materials, machinery, equipment, fixtures, tools, scaffolding and
appliances furnished for the performance of the Subcontract and for any other
indebtedness connected therewith for which the Owner of the Property might be
responsible have been paid in full to the date hereof. Subcontractor, to the
extent of the total of interim payments received, for itself, its successors,
and on behalf of all persons able to claim through or under Subcontractor: (a)
waives, relinquishes and releases all liens and right or claim to a lien for
labor or materials furnished in the construction improvement, alteration or
repair involved in performance under the Subcontract; (b) agrees to save
Contractor harmless from all liability, costs and expenses, including reasonable
attorneys' fees, to: (1) discharge (by bond or otherwise) or to defend suit to
enforce, any mechanics' or materialmen's lien, claim to or right of action for
such lien, which may be filed and (2) satisfy any claims or demands arising out
of, due or which may be made, directly or indirectly attributable to the
Subcontract, any work performed or supplies furnished thereunder, or in
furtherance of the construction or completion of the subcontract work; and (c)
hereby releases Contractor, any money earned by Contractor, Contractor's
sureties, the present and any future Owner, the Property and any lender who may
now or hereafter have a security interest therein, from all claim, right of
action, liability and lien which may be filed or asserted in connection with the
Subcontract.
Dated this _____ day of _______________, 2000.
_______________________________________
As Subcontractor, General Partner of
Subcontractor, or Authorized Officer of
Subcontractor, above described
STATE OF _______________ )
) ss.
COUNTY OF _____________ )
Subscribed and sworn to before me this _____ day of _____________, 2000, by
________________________, known to me to be the above-named signatory, who
personally appeared before me and acknowledged that the foregoing instrument was
freely and voluntarily executed for the uses and purposes and on behalf of the
Subcontractor therein mentioned.
My commission expires ___________________________.
_______________________________________
Notary Public in and for
said County and State
2
<PAGE>
EXHIBIT 3-4 TO WORK LETTER
Project
Job Address
Job Number
FINAL SUBCONTRACTOR'S OR
MATERIAL SUPPLIER'S AFFIDAVIT,
RELEASE AND LIEN WAIVER
STATE OF __________ )
) ss.
COUNTY OF _____________ )
The undersigned subcontractor or material supplier (herein referred to as
"Subcontractor"), being first duly sworn, deposes and says that: He is over the
age of 21 years and resides at:
_______________________________________________________________.
(IF SUBCONTRACTOR IS AN INDIVIDUAL:)
1. He is the Subcontractor referred to herein.
(IF SUBCONTRACTOR IS A PARTNERSHIP:)
1. He is a general partner in _____________________________, a
co-partnership composed of the undersigned and carrying on business at
____________________________________________, City of ____________. Said
co-partnership is the Subcontractor referred to herein.
(IF SUBCONTRACTOR IS A CORPORATION:)
1. He holds the title of _______________, in ______________________
____________________, a corporation organized under the laws of the State of
____________, carrying on business at _________________________________, City of
____________, State of ____________, which corporation is the Subcontractor
referred to herein. The undersigned is authorized to execute this instrument on
its behalf.
2. Subcontractor is a subcontractor or material supplier for the
performance of certain work and/or the furnishing of certain materials or
supplies pursuant to an agreement or purchase order, as the case may be
(hereinafter called the "Subcontract," which term will refer to the agreement or
purchase order, as the case may be), under a general contract between
________________________________ (hereinafter called "Contractor"), and
_______________________________________ (hereinafter called the "Owner"), for
the improvements or project known as ________________________ at
_____________________________, City of ____________, County of __________, State
of _____________(hereinafter called the "Property").
1
<PAGE>
3. This instrument is delivered in consideration of and for the purpose of
inducing Contractor to make final payment of $__________, subject to collection
of any check given as payment. Subcontractor acknowledges that upon receipt of
this final payment, Subcontractor has been paid in full the total subcontract
price of $__________, for all of the work performed under the Subcontract,
including retainage, if any.
4. Subcontractor warrants and represents that: (i) all materials delivered
to said project by or for Subcontractor are for use therein only; (ii) title to
all work, material and equipment covered by said payment, whether or not
incorporated in the Property, has passed to the Owner, free and clear of all
liens, claims, security interests or encumbrances (hereinafter all referred to
as "liens"); (iii) all taxes applicable to the materials furnished and the work
performed under the Subcontract have been fully paid; and (iv) all laborers,
mechanics, sub-subcontractors, materialmen and suppliers for all work done and
for all materials, machinery, equipment, fixtures, tools, scaffolding and
appliances furnished for the performance of the Subcontract and for any other
indebtedness connected therewith for which the Owner of the Property might be
responsible have been paid in full. Subcontractor for itself, its successors,
and on behalf of all persons able to claim through or under Subcontractor: (a)
waives, relinquishes and releases all liens and right or claim to a lien for
labor or materials furnished in the construction improvement, alteration or
repair involved in performance under the Subcontract; (b) agrees to save
Contractor harmless from all liability, costs and expenses, including reasonable
attorneys' fees, to: (1) discharge (by bond or otherwise) or to defend suit to
enforce, any mechanics' or materialmen's lien, claim to or right of action for
such lien, which may be filed and (2) satisfy any claims or demands arising out
of, due or which may be made, directly or indirectly attributable to the
Subcontract, any work performed or supplies furnished thereunder, or in
furtherance of the construction or completion of the subcontract work; and (c)
hereby releases Contractor, any money earned by Contractor, Contractor's
sureties, the present and any future Owner, the Property and any lender who may
now or hereafter have a security interest therein, from all claim, right of
action, liability and lien which may be filed or asserted in connection with the
Subcontract.
Dated this _____ day of _________________, 2000.
_______________________________________
As Subcontractor, General Partner of
Subcontractor, or Authorized Officer of
Subcontractor, above described
STATE OF _______________ )
) ss.
COUNTY OF _____________ )
Subscribed and sworn to before me this _____ day of _____________, 2000, by
__________________________, known to me to be the above-named signatory, who
personally appeared before me and acknowledged that the foregoing instrument was
freely and voluntarily executed for the uses and purposes and on behalf of the
Subcontractor therein mentioned.
2
<PAGE>
My commission expires _______________________.
_______________________________________
Notary Public in and for said
County and State
<PAGE>
EXHIBIT 4 TO WORK LETTER
Savvis Project
Base Building Drawings
<TABLE>
<CAPTION>
SHEET NAME SHEET NUMBER LATEST REVISION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cover Sheet 1 of 11 05/24
Overview Sheet 2 of 11 05/24
Overview Sheet 3 of 11 05/24
Landscape Plan 4 of 11 05/24
Landscape Plan 5 of 11 05/24
Landscape Plan 6 of 11 05/24
Landscape Plan 7 of 11 05/24
Landscape Plan 8 of 11 05/24
Landscape Plan 9 of 11 05/24
Landscape Plan 10 of 11 05/24
Landscape Details 11 of 11 05/24
County Number 6795-SP-17 1 of 40 03/24
Existing Conditions & Demolition Plan 2 of 40 03/24
Site Plan 3 of 40 09/03
Sediment & Erosion Control Plan- Phase I 4 of 40 07/31
Sediment & Erosion Control Plan- Phase II 5 of 40 07/31
Sediment & Erosion Control- Notes & Details 6 of 40 07/31
Sanitary Plan & Profile 7 of 40 07/31
Profiles 8 of 40 07/31
Profiles 8A of 40 03/24
Storm Drain Computations 9 of 40 07/31
Landscape Plan 10 of 40 09/03
Landscape Details & Notes 11 of 40 09/03
Fire Lane & Marking Plan 12 of 43 09/03
Site Notes & Details 13 of 40 03/24
Site Notes & Details 14 of 40 07/31
Garage Parking Plan 15 of 40 07/31
Geotechnical Requirements 16 of 40 03/24
Illustrative Design Drawing 11 of 13 06/30
Illustrative Rendering 12 06/30
Illustrative Rendering 13 06/30
Profiles/Letters 27 No Date
Proffers 28 No Date
Proffers 29 No Date
Proffers Per PCA-D-093-11 30 11/14
Proffers 36 of 40 07/31
Drainage Study- Exisiting Conditions 31 No Date
Post Developed Conditions 32 04/15
TR-20 Flow Summary 33 No Date
BMP & Phosphorous Removal Calculations 34 08/16
Plan & Profile- Worldgate Drive 40A of 40 Jul-87
Plan & Profile- Worldgate Drive 40B of 40 Jul-87
Project Data & Drawing Index A-001 06/04
Door & Partition Types & Door Details A-002 06/04
Door Schedule A-003 06/04
Hardware Schedule A-004 06/04
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Finish Schedule A-005 06/04
Architechual Site Plan A-101 02/02
Parking- Level 1 A-201 06/04
Parking- Level 2 A-202 06/04
Parking- Level 3 A-203 02/99
Parking- Level 4 A-204 02/02
Typical Floor Plan- 1-4 A-205 02/02
Typical Floor Plan- 1-4 West-East A-206 02/02
Penthouse & Roof Plan A-207 02/02
Lobby Plans A-208 06/04
Interior Elevations A-209 09/28
Interior Details A-210 06/04
Typical Core & Stair Plans A-211 06/04
Toilet Plans - Elevations & Details A-212 02/02
Parking Level 4- Ceiling Plan West-East A-213 06/04
Exterior Elevations A-301 02/02
Exterior Elevations A-302 02/99
Exterior Elevations A-303 02/02
Exterior Elevation/Section A-304 02/02
Exterior Elevation/Section A-305 02/02
Building Section A-306 02/02
Wall Sections A-401 02/02
Wall Sections & Details A-402 02/02
Exterior Section Details A-403 06/04
Plan Details A-404 06/04
Plan Details A-405 06/04
Partial Building- Section & Details A-501 06/04
Stair Section & Details A-502 02/02
Garage Level P1 - Foundation Plan West S-1 02/02
Garage Level P1 - Foundation Plan East S-2 02/02
Garage Level P2 - Framing Plan West S-3 02/02
Garage Level P2 - Framing Plan East S-4 02/02
Garage Level P3 - Framing Plan West S-5 02/02
Garage Level P3 - Framing Plan East S-6 02/02
Garage Level P4 - Framing Plan West S-7 02/02
Garage Level P4 - Framing Plan East S-8 02/02
Typical Floor Framing Plan West S-9 02/02
Typical Floor Framing Plan East S-10 02/02
Main Roof & Penthouse Framing Plan West S-11 02/02
Main Roof & Penthouse Framing Plan East S-12 02/02
Penthouse Roof Framing Plan S-13 02/02
Column Schedule West S-14 02/02
Column Schedule East S-15 02/02
Beam Schedules S-16 02/02
Structural Notes S-17 02/02
Typical Details S-18 02/02
Typical Details S-19 02/02
Sections S-20 02/02
Sections S-21 02/02
Cover Sheet Equip. Sch. & Symbols M-1 02/02
Parking- Level 1 M-2 02/02
Part Plan Parking- Levels 2 & 3 M-3 02/02
Parking- Level 4 M-4 02/02
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Typical Floor Plan- 1-3 West M-5 02/02
Typical Floor Plan- 1-3 East M-6 02/02
4th Floor Plan West M-7 02/02
4th Floor Plan East M-8 02/02
Penthouse Duckwork & Piping Plan M-9 02/02
Typical Floor Core Plan M-10 02/02
4th Floor Core Plan M-11 02/02
Riser & Flow Diagrams- Mechanical M-12 02/02
Details- Mechanical M-13 02/02
Details- Mechanical M-14 02/02
Schedules, Symbols, & Notes- Plumbing P-1 02/02
Parking Level 1- West Underground Plumbing P-2 02/02
Parking Level 1- East Underground Plumbing P-3 02/02
Parking Level 1- West Above Ground Plumbing P-4 02/02
Parking Level 1- East Above Ground Plumbing P-5 02/02
Parking Level 2 Plan West Plumbing P-6 02/02
Parking Level 2 Plan East Plumbing P-7 02/02
Parking Level 3 Plan West Plumbing P-8 02/02
Parking Level 3 Plan East Plumbing P-9 02/02
Parking Level 4 Plan West Plumbing P-10 02/02
Parking Level 4 Plan East Plumbing P-11 02/02
Typical Floor (1-3) Plan West Plumbing P-12 02/02
Typical Floor (1-3) Plan East Plumbing P-13 02/02
4th Floor Plan- West Plumbing P-14 02/02
4th Floor Plan- East Plumbing P-15 02/02
Penthouse & Roof Plan- West Plumbing P-16 02/02
Penthouse & Roof Plan- East Plumbing P-17 02/02
Typical Core (1-3) Plan- West Plumbing P-18 02/02
Typical Core (1-3) Plan- East Plumbing P-19 02/02
Water Riser Diagram P-20 02/02
Sanitary Riser Diagram P-21 02/02
Storm Riser Diagram P-22 02/02
Fire Protection Riser Diagram P-23 02/02
Details Plumbing P-24 02/02
Symbols, Notes, Schedules, & Details Electrical E-1 02/02
Site Plan- Electrical E-2 02/02
P1 Garage Level West Electrical E-3 07/12
P1 Garage Level East Electrical E-4 07/12
P2 Garage Level West Electrical E-5 02/02
P2 Garage Level East Electrical E-6 07/12
P3 Garage Level West Electrical E-7 07/12
P3 Garage Level East Electrical E-8 07/12
P4 Garage Level West Electrical E-9 07/12
P4 Garage Level East Electrical E-10 07/12
Typical Floor (1-3) West Electrical E-11 02/02
Typical Floor (1-3) East Electrical E-12 02/02
4th Floor Plan West Electrical E-13 02/02
4th Floor Plan East Electrical E-14 02/02
Penthouse Plan West/East Electrical E-15 02/02
Typical Core Plan West/East Electrical E-16 02/02
Main Lobby Lighting West/East Electrical E-17 02/02
Power Riser Diagram Electrical E-18 02/02
Switchboard Schedules- Electrical E-19 02/02
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fire Alarm Riser Diagram- Elecrical E-20 02/02
Fire Alarm Riser Diagram- Elecrical E-21 02/02
Panelboard Schedules- Electrical E-22 02/02
Panelboard Schedules- Electrical E-23 02/02
</TABLE>
4
<PAGE>
EXHIBIT 5 TO WORK LETTER
Leasehold Improvements:
Tenant shall have the right to install, at its sole cost and expenses, a "7x24
Environmental Infrastructure" plant to support a Data Processing facility within
the space under lease by Tenant in the Building. Such plant shall include an
emergency generator, emergency generator fuel supply, supplemental HVAC
equipment, UPS, and associated risers, in accordance with the terms of
Paragraphs 3 and 5 of the Work Letter. Such plant design and equipment shall be
identified on Tenant's Space Plans and reflected in the Architectural Working
Drawings and Engineering Working Drawings, as referred to in the Work Letter.
Emergency Generator:
Landlord shall provide space for the Tenant's 1500 kW to 2000 kW emergency
generator, in accordance with Paragraph 5 of the Addendum. Expenses associated
with the installation, operation, and maintenance, including modifications of
the Base Building Work, shall be borne by the Tenant.
Emergency Generator Fuel Supply:
Landlord shall provide space for the Tenant's emergency generator fuel supply
tank, in accordance with Paragraph 5 of the Addendum. The space shall be used
for installation of a 4,000 gallon diesel fuel tank use to supply the Tenant's
generator with fuel. Expenses associated with the installation, operation, and
maintenance of the equipment, including modifications of the Base Building Work,
shall be borne by the Tenant.
Supplemental HVAC Equipment:
Tenant shall be permitted to install two chillers, pumps, controls, and
electrical distribution equipment as required to supply the Tenant space with
24x7 redundant chilled water. The chiller shall be located on the roof of the
Building in accordance with Paragraph 3 of the Addendum and the related
equipment shall be located in areas approved by Landlord and Tenant in
accordance with the Tenant's Space Plans and reflected in the Architectural
Working Drawings and Engineering Working Drawings, as referred to in the Work
Letter. Expenses associated with the installation, operation, and maintenance of
the equipment, including any necessary screening and modifications to the Base
Building Work, shall be borne by the Tenant.
Riser Backup Power:
Landlord shall provide riser space from the Tenant's emergency generator to a
central distribution location in the lease space in accordance with the Base
Building Drawings. The riser space shall be used for installation of conduit
containing control wiring and electrical distribution cable used to supply the
Tenant space with emergency power as reflected in the Architectural Working
Drawings and Engineering Working Drawings, as referred to in the Work Letter.
Expenses associated with the installation, operation, and maintenance of the
conduit, including modifications of the Base Building Work, shall be borne by
the Tenant.
Riser chilled Water:
Landlord shall provide riser space in accordance with the Base Building Drawings
from the Tenant's chillers and Related Equipment to Tenant's HVAC equipment
located in the lease space. The riser space shall be used for installation of
piping used to transport chilled water and requisite control wiring used to
1
<PAGE>
supply the Tenant space with such supplemental cooling. Expenses associated with
the installation, operation, and maintenance, including modifications of the
Base Building Work, shall be borne by the Tenant.
There will be no additional rent for the space utilized by Tenant's
Environmental Infrastructure plant as described herein to the extent such is
located in areas approved by Landlord within the Premises, the Building's
central plant, garage, the Building roof, parking lots, Building property, or
other mechanical/electrical service areas.
2
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<ARTICLE> 5
<CIK> 0001058444
<NAME> SAVVIS
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<EXCHANGE-RATE> 1.000 1.000
<CASH> 2,867 2,521
<SECURITIES> 0 0
<RECEIVABLES> 2,646 2,798
<ALLOWANCES> (375) (149)
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,729 5,311
<PP&E> 7,758 6,943
<DEPRECIATION> (2,198) (2,190)
<TOTAL-ASSETS> 39,296 11,663
<CURRENT-LIABILITIES> 38,631 7,025
<BONDS> 0 0
0 36,186
0 0
<COMMON> 772 693
<OTHER-SE> (3,538) (33,890)
<TOTAL-LIABILITY-AND-EQUITY> 39,296 11,663
<SALES> 23,989 13,674
<TOTAL-REVENUES> 23,989 13,674
<CGS> 27,782 20,889
<TOTAL-COSTS> 27,782 20,889
<OTHER-EXPENSES> 41,462 14,453
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,508 483
<INCOME-PRETAX> (46,692) (21,848)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (46,692) (21,848)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 1,954
<CHANGES> 0 0
<NET-INCOME> (46,692) (19,548)
<EPS-BASIC> (0.53) (0.38)
<EPS-DILUTED> (0.53) (0.38)
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