SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 17, 1996
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ACC Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-14567 16-1175232
- ---------------------------- ------------ --------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 West Avenue, Rochester, New York 14611
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 987-3000
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index Appears at Page 8
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<PAGE>
ITEM 5. OTHER EVENTS
- -----------------------
As used herein, unless the context otherwise requires, the
"Company" and "ACC" refer to ACC Corp. and its subsidiaries, including ACC
Long Distance Corp. ("ACC U.S."), ACC TelEnterprises Ltd., the Company's
Canadian subsidiary which is currently 70% owned by the Company ("ACC
Canada"), and ACC Long Distance UK Ltd. ("ACC U.K."). In this Form 8-K,
references to "dollar" and "$" are to United States dollars, references to
"Cdn. $" are to Canadian dollars, references to "pounds" are to English
pounds sterling, the terms "United States" and "U.S." mean the United
States of America and, unless the context otherwise requires, its states,
territories and possessions and all areas subject to its jurisdiction, and
the terms "United Kingdom" and "U.K." mean England, Scotland and Wales.
ACC CANADA CASH TENDER OFFER
The Company recently announced that it will make an all cash
tender offer (the "Tender Offer") for the repurchase of the minority shares
of ACC Canada. The common shares of ACC Canada are listed on the Toronto
Stock Exchange and the Montreal Exchange. As of August 1, 1996, the
Company owned approximately 69.8% of the issued and outstanding common
shares of ACC Canada and the remaining common shares were publicly held.
A newly formed Canadian subsidiary of the Company will offer to
purchase all of the shares publicly held by shareholders in Canada and in
the United States. The Company has proposed an aggregate price for the
Tender Offer of approximately Cdn. $49.4 million (the "Proposed Price").
The Proposed Price was negotiated by independent committees of the Boards
of Directors of ACC Corp. and ACC Canada after review of an independent
valuation. The Board of Directors of ACC Canada has (i) determined that
the Tender Offer, including the Proposed Price, is fair to and in the best
interests of shareholders of ACC Canada, and (ii) resolved to recommend
acceptance of the Tender Offer by ACC Canada's shareholders. This
recommendation of the Board of Directors of ACC Canada, however, may be
withdrawn, modified or amended, if required by the Board in the exercise of
its fiduciary duties.
The Tender Offer will be subject to certain conditions, any of
which may be waived by the Company. Such conditions may include a
requirement that holders of at least 90% of the publicly held shares (on a
fully diluted basis) accept the Tender Offer, and will include a
requirement that all necessary regulatory approvals be received. If holders
of at least 90% of the publicly held shares (on a fully diluted basis)
accept the Tender Offer, then ACC Canada would have a statutory right of
compulsory acquisition of all shares held by non-tendering shareholders.
If fewer than 90% of the publicly held shares (on a fully diluted basis)
are deposited under the Tender Offer or the compulsory acquisition
provisions are not available for any other reason, the Company intends to
consider other transactions that will result in ACC Canada becoming a
wholly-owned subsidiary of the Company. Such a transaction may take the
form of a merger or amalgamation between ACC Canada and the newly formed
subsidiary, which transaction must be approved by two-thirds of the votes
cast and by the holders of a simple or two-thirds majority (depending on
the nature of the transaction) of the shares of ACC Canada (other than
shares held by holders of common shares who are "related parties" of or
acting jointly or in concert with the Company or ACC Canada or affiliates
of any of the foregoing) subject to the Tender Offer. For purposes of such
votes, the Company expects to be permitted to vote the shares acquired in
the Tender Offer.
ACC Canada is the Company's largest operating subsidiary.
Management believes that, with adequate capital, ACC Canada is well
positioned for long term growth. Reacquiring the minority interest will
enable the Company to provide the additional capital needed by ACC Canada
without diluting the Company's interest. The proposed transaction is
expected to provide the following additional benefits to the Company: (1)
leveraging of ACC Canada's talented management team to assist the Company
in expanding other areas of its business; (2) an increase in the Company's
earnings per share in future periods as a result of the transaction; (3)
access to additional cash flow; (4) cost savings in 1997 of approximately
$500,000 (before taking into account amortization charges as a result of
the additional goodwill acquired by the Company) as a result of the
elimination of Canadian disclosure and reporting requirements and the
consolidation of certain operating and financial resources; (5) increased
flexibility for the Company to optimize its tax position with regard to
intercompany transactions; and (6) simplification of the Company's capital
structure. The foregoing forward-looking statements are based upon
expectations of actions that may be taken by third parties, including
Canadian regulatory authorities and employees, shareholders, customers and
competitors of ACC Canada, as well as expectations with respect to growth
of ACC Canada's customer base and revenues. If such expectations are not
realized, actual results may differ materially from the foregoing
discussion. There can be no assurance that the Tender Offer will be
consummated, or that the anticipated benefits of the transaction will
ultimately be realized if the transaction is completed. Revenues of ACC
Canada could be materially adversely affected if ACC Canada is no longer
perceived in the Canadian market as a Canadian company as a result of the
consummation of the transaction. Management believes, however, that any
such impact would dissipate over time in view of the Company's significant
continuing presence in Canada by virtue of the employees, facilities and
operations which are located in Canada.
DAVID K. LANIAK ELECTED CHAIRMAN
David K. Laniak has been elected Chairman of the Board of
Directors of the Company, effective October 8, 1996. He will succeed
Richard T. Aab who resigned as Chairman to pursue other entrepreneurial
interests. Mr. Aab will remain a director and employee of the Company.
Mr. Aab is entitled to terminate his employment at any time. If Mr. Aab's
employment with the Company were to terminate, he would be entitled to
receive from the Company a payment of $1 million, payable in three equal,
annual installments.
<PAGE>
NETWORK EXPANSION
The Company is proceeding with its planned international and
local exchange expansion of its network. In the United Kingdom, the
Company has added an additional long distance switch in Bristol, England.
In the United States, the Company is expanding its local telephone
operations to selected metropolitan areas in New York and Massachusetts.
The Company has ordered local exchange switches for each of the following
sites: New York, New York; White Plains, New York; Boston, Massachusetts;
and Springfield, Massachusetts. In addition, the Company has ordered
equipment to upgrade its local exchange switches in Buffalo and Albany, New
York.
NEW CREDIT FACILITY
The Company recently announced that it has signed a commitment
letter with First Union National Bank of North Carolina to provide a $100
million Credit Facility to the Company amending the Company's current $35
million Credit Facility. The Company expects to execute definitive credit
documents and close on the new Credit Facility this fall. The Company
anticipates that the new Credit Facility will be syndicated among several
banks, including Fleet Bank, an affiliate of certain principal shareholders
of the Company, and will provide additional working capital and generally
more flexible terms and conditions than the current Credit Facility. If
the new Credit Facility is closed in October 1996, the maximum aggregate
principal amount of the new Credit Facility would be required to be reduced
by $8 million per quarter commencing on December 31, 1998 until
September 30, 2000, and by $9 million per quarter commencing on
December 31, 2000 until maturity of the loan in October 2001.
INTERNET CANADA ACQUISITION
As of May 13, 1996, the Company, through ACC Canada, purchased
certain assets of Internet Canada Corp., a company based in Toronto,
Canada, which is engaged in the business of providing Internet access and
home page design and development (the "Internet Canada Acquisition"). The
purchase price was Cdn. $3.0 million plus additional amounts to be
calculated based on the number of customer subscribers at various dates,
with the total not to exceed Cdn. $7.0 million. As of July 31, 1996, Cdn.
$4.2 million has been paid.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Exhibit 99.1 contains the Report of Arthur Andersen & Co. with
respect to, and the Audited Consolidated Balance Sheets of ACC Canada as at
December 31, 1994 and 1995 and Audited Consolidated Statements of
Operations, Audited Consolidated Statements of Deficit and Audited
Consolidated Statements of Changes in Financial Position of ACC Canada for
the years ended December 31, 1994 and 1995 and notes thereto. Exhibit 99.2
sets forth the Unaudited Consolidated Balance Sheet of ACC Canada as at
June 30, 1996 and the Unaudited Consolidated Statements of Operations and
Unaudited Consolidated Statements of Changes in Financial Position of ACC
Canada for the Six Months Ended June 30, 1996 and 1995.
The historical and interim financial statements have been
prepared under Canadian generally accepted accounting principles. There
are no significant differences between Canada and the United States in the
form and content of financial statements.
While there are significant differences between codified
accounting principles in Canada versus the United States, management does
not deem such differences to have a significant impact specifically with
regard to the reported financial results of ACC Canada.
The financial amounts as of June 30, 1996, December 31, 1995
and December 31, 1994, and for the six months ended June 30, 1996 and June
30, 1995 and for the years ended December 31, 1995 and 1994, have been
presented in Canadian dollars. The exchange rate as of June 30, 1996,
December 31, 1995 and December 31, 1994 was .732 United States dollar to
one Canadian dollar, .732 United States dollar to one Canadian dollar and
.712 United States dollar to one Canadian dollar, respectively.
(b) PRO FORMA FINANCIAL INFORMATION
Exhibit 99.3 contains the Company's Unaudited Pro Forma Consolidated
Balance Sheet as of June 30, 1996, Unaudited Pro Forma Consolidated Statement
of Operations for the Six Months Ended June 30, 1996 and Unaudited Pro Forma
Consolidated Statement of Operations for the Year Ended December 31, 1995 and
Notes to Unaudited Pro Forma Consolidated Financial Statements (collectively,
the "Pro Forma Consolidated Financial Statements").
The unaudited pro forma consolidated statements of operations
provided for the year ended December 31, 1995 and six months ended June
30, 1996 have been prepared as if the Tender Offer had been consummated at the
Proposed Price and the Internet Canada Acquisition had been consummated
(collectively, the "Transactions") as of January 1, 1995. The unaudited pro
forma consolidated balance sheet data provided as of June 30, 1996 has been
prepared as if the Transactions (other than the Internet Canada
Acquisition) had occurred as of June 30, 1996. The Pro Forma Consolidated
Financial Statements do not purport to represent what the Company's results
of operations for the indicated periods would have been had the Transactions
in fact occurred on the aforementioned dates, or to project the Company's
results of operations for any future periods. Except for the Internet
Canada Acquisition, which was completed as of May 13, 1996, there can be no
assurance that the Transactions will be consummated. The pro forma
adjustments are based upon available information and upon certain
assumptions that management believes are reasonable under the
circumstances.
The Pro Forma Consolidated Financial Statements are not
necessarily indicative of the results of future operations and should be
read in conjunction with, and are qualified by, the consolidated financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for the applicable period,
which are contained in the Company's periodic reports filed with the
Securities and Exchange Commission.
(c) EXHIBITS
See Exhibit Index
<PAGE>
SIGNATURES
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Pursuant to the requirements 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.
ACC Corp.
Dated: September 17, 1996 By: /s/Michael R. Daley
------------------------
Michael R. Daley
Chief Financial Officer
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Title or Description
23.1 Consent of Arthur Andersen & Co.
99.1 Report of Arthur Andersen & Co. with respect to, and the
Audited Consolidated Balance Sheets of ACC TelEnterprises,
Ltd. as at December 31, 1994 and 1995 and Audited
Consolidated Statements of Operations, Audited Consolidated
Statements of Deficit and Audited Consolidated Statements of
Changes in Financial Position of ACC TelEnterprises, Ltd.
for the years ended December 31, 1994 and 1995 and Notes
thereto.
99.2 Unaudited Consolidated Balance Sheet of ACC TelEnterprises,
Ltd. as of June 30, 1996 and the Unaudited Consolidated
Statements of Operations and Unaudited Consolidated
Statements of Changes in Financial Position of ACC
TelEnterprises, Ltd. for the Six Months Ended June 30, 1995
and 1996.
99.3 Unaudited Pro Forma Consolidated Balance Sheet of ACC Corp.
as of June 30, 1996, Unaudited Pro Forma Consolidated
Statements of Operations of ACC Corp. for the Six Months
Ended June 30, 1996 and Unaudited Pro Forma Consolidated
Statements of Operations of ACC Corp. for the Year Ended
December 31, 1995 and Notes thereto.
99.4 Fee Letter, Commitment Letter and Amended and Restated Term
Sheet among First Union Capital Markets Corp., First Union
National Bank of North Carolina and ACC Corp., each dated
September 11, 1996.
99.5 By-laws of ACC Corp., as amended on May 21, 1996.
99.6 Net Settlement Arrangement dated September 9, 1996 between
Teletek, Inc. and ACC Long Distance Corp.
99.7 License Agreement between EDS of Canada Ltd. and ACC
TelEnterprises Ltd. dated June 24, 1996.
99.8 Amendment to Salary Continuation and Deferred Compensation
Agreement between ACC Corp. and Richard T. Aab, dated
September 13, 1996.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in
this Form 8-K of our report dated January 25, 1996. It should be noted that
we have not audited any financial statements of the Company subsequent to
December 31, 1995 or performed any audit procedures subsequent to the date of
our report.
/s/ Arthur Andersen & Co.
Mississauga, Canada
September 17, 1996
Exhibit 99.1
AUDITORS' REPORT
To ACC CORP.:
We have audited the consolidated balance sheets of ACC
TelEnterprises Ltd. as at December 31, 1995 and 1994 and the consolidated
statements of operations, deficit and changes in financial position for the
years then ended. 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance 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.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
December 31, 1995 and 1994 and the results of its operations and the changes
in its financial position for the years then ended in accordance with
generally accepted accounting principles.
Arthur Andersen & Co.
January 25, 1996
Mississauga, Canada<PAGE>
<PAGE>
ACC TELENTERPRISES, LTD.
CONSOLIDATED BALANCE SHEETS
(Amounts in 000s)
<TABLE>
<CAPTION>
As at December 31,
1995 1994
--------------------------------
CURRENT ASSETS:
<S> <C> <C>
Cash $709 $1,247
Accounts receivable, net 21,040 15,024
Prepaid and other assets 1,156 773
Due from affiliates 242 306
--------------------------------
TOTAL CURRENT ASSETS 23,147 17,350
--------------------------------
PROPERTY, PLANT, AND EQUIPMENT, net 16,017 13,604
--------------------------------
OTHER ASSETS:
Customer base and other assets, net 13,410 10,997
Goodwill, net 6,907 -
--------------------------------
20,317 10,997
--------------------------------
TOTAL ASSETS $59,481 $41,951
================================
CURRENT LIABILITIES:
Current maturities of long-term debt $854 $354
Accounts payable and accrued liabilities 20,612 15,350
Notes payable 2,583 -
Due to affiliates 5,723 893
--------------------------------
TOTAL CURRENT LIABILITIES 29,772 16,597
--------------------------------
LONG-TERM DEBT:
Due to affiliates 22,444 19,547
Capital leases and other 1,008 185
--------------------------------
TOTAL LONG-TERM DEBT 23,452 19,732
--------------------------------
SHAREHOLDERS' EQUITY:
Capital stock 22,994 22,990
Deficit (16,737) (17,368)
--------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,257 5,622
--------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $59,481 $41,951
================================
</TABLE>
The accompanying notes are an integral part of these statements.
The amounts above are stated in Canadian dollars.
The exchange rates to U.S. dollars at December 31, 1995 and 1994 were .732
and .712, respectively.
<PAGE>
<PAGE>
ACC TELENTERPRISES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000s except per share data)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1995 1994
-------------------------------
REVENUE:
<S> <C> <C>
Toll $108,816 $89,071
Local service lines 1,486 -
Leased line and other 9,700 6,440
-------------------------------
120,002 95,511
Network costs 76,130 65,482
-------------------------------
GROSS MARGIN 43,872 30,029
OPERATING EXPENSES:
Depreciation and amortization 6,364 6,353
Selling expense 12,420 9,596
General and administative expenses 21,447 17,589
Equal access costs - 3,191
-------------------------------
40,231 36,729
-------------------------------
Income (loss) from operations 3,641 (6,700)
OTHER INCOME (EXPENSE):
Interest income 123 20
Interest expense (3,080) (1,126)
Foreign exchange loss (53) (118)
-------------------------------
(3,010) (1,224)
-------------------------------
Income (loss) before income taxes 631 (7,924)
PROVISION FOR INCOME TAXES - 3,078
-------------------------------
NET INCOME (LOSS) $631 ($11,002)
===============================
EARNINGS (LOSS) PER SHARE $0.10 ($1.67)
===============================
</TABLE>
The accompanying notes are an integral part of these statements.
The amounts above are stated in Canadian dollars.
<PAGE>
<PAGE>
ACC TELENTERPRISES, LTD.
CONSOLIDATED STATEMENTS OF DEFICIT
(Amounts in 000s)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1995 1994
-----------------------
<S> <C> <C>
DEFICIT, beginning of year (17,368) (6,366)
Net income (loss) 631 (11,002)
-----------------------
DEFICIT, end of year (16,737) (17,368)
=======================
</TABLE>
The accompanying notes are an integral part of these statements.
The amounts above are stated in Canadian dollars.
<PAGE>
<PAGE>
ACC TELENTERPRISES, LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Amounts in 000s)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1995 1994
- ---------------------------------------------------------------------------------------
OPERATING:
<S> <C> <C>
Net income (loss) $631 ($11,002)
----------------------------
ADJUSTMENT FOR NON-CASH ITEMS:
Depreciation and amortization 6,364 6,353
Deferred income taxes - 2,040
(INCREASE) DECREASE IN ASSETS:
Accounts receivable, net (4,378) (2,106)
Prepaid and other assets 167 37
Income taxes recoverable - 942
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable and accrued liabilities (1,881) 5,676
----------------------------
Cash provided by operating activities 903 1,940
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INVESTING:
Additions to property, plant, and equipment (4,220) (6,150)
Purchase of Metrowide Communications, net of cash acquired (6,524) -
Customer base acquisition costs (629) (3,913)
Installation costs (706) (871)
Other assets (18) (46)
----------------------------
Cash used in investing activities (12,097) (10,980)
----------------------------
FINANCING:
Due to affiliates 7,792 10,322
Notes payable issued on purchase of Metrowide Communications 3,833 -
Repayment of notes payable (1,250) -
Stock options exercised 3 -
Repayments on line of credit (226) -
Capital leases and other 504 (897)
----------------------------
Cash provided by financing activities 10,656 9,425
----------------------------
NET INCREASE (DECREASE) IN CASH (538) 385
CASH, BEGINNING OF YEAR 1,247 862
----------------------------
CASH, END OF YEAR $709 $1,247
============================
</TABLE>
The accompanying notes are an integral part of these statements.
The amounts above are stated in Canadian dollars.
<PAGE>
<PAGE>
ACC TELENTERPRISES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Canadian dollars in 000s, except as otherwise indicated)
1. Summary Of Significant Accounting Policies
Consolidated Financial Statements and Basis of Financial Reporting:
The consolidated financial statements include all accounts of ACC
TelEnterprises Ltd. ("the company") and its principal operating subsidiaries
ACC Long Distance Inc. and Metrowide Communications Inc. (See note 4). All
significant intercompany accounts and transactions have been eliminated.
Company Background:
The company and certain of its subsidiaries provide local line services to
business customers in the provinces of Ontario and Quebec, and provide long
distance voice and data telecommunications services to business and
residential customers in the provinces of Ontario, Quebec, British Columbia,
Manitoba, Alberta, Nova Scotia, New Brunswick, and Prince Edward Island.
Related Companies:
Related parties include ACC Corp., the company's parent company, which owns
approximately 70% of the issued capital stock; ACC Corp.'s United States
subsidiary, ACC Long Distance Corp.; and its United Kingdom subsidiary, ACC
Long Distance UK Ltd. Intercompany transactions are in the normal course of
operations and are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.
Currency Forward Contracts:
The company enters into contracts to buy and sell Canadian dollars in the
future in order to protect the U.S. dollar value of certain currency positions
and future foreign currency transactions. The company does not engage in
speculation. The gains and losses on these contracts are included in income
in the period in which the exchange rates change. The discounts and premiums
of the forward contracts are amortized over the life of the contracts.
Revenue:
The company records as revenue the amount of communications services rendered,
as measured by the related minutes of toll traffic processed or flat-rate
services billed, after deducting an estimate of the traffic or services which
will neither be billed nor collected.
Property, Plant and Equipment:
Property, plant and equipment are recorded at original cost including
materials, direct labor, and overhead costs.
Depreciation and amortization of property, plant and equipment is computed
using the straight-line method over the following estimated useful lives:
- ----------------------------------------------------------------
Leasehold improvements Life of lease
Equipment, including assets
under capital leases 2 to 15 years
Computer software 5 to 10 years
Office furniture and equipment 3 to 10 years
- ----------------------------------------------------------------
Major additions and betterments are capitalized at cost, while maintenance and
repairs are expensed as incurred. The cost of property, plant and equipment
sold or otherwise disposed of and the related allowance for depreciation and
amortization are eliminated from the accounts at the time of disposal and
resulting gains or losses are included in the statements of income.
Goodwill and Customer Base:
The company's acquisition of the Metrowide group of companies has been
accounted for using the purchase method. The purchase price was allocated to
the assets and liabilities of the acquired companies based on their fair
values at the acquisition date. The excess of the purchase price over the net
assets acquired has been recorded as goodwill and is being amortized on a
straight-line basis over 20 years.
Customer base represents the cost of acquiring customer lists, billing
information, and service agreements. The company amortizes acquired customer
bases on a straight-line basis over 5 to 7 years.
The company continually evaluates its intangible assets in light of events and
circumstances that may indicate that the remaining estimated useful life may
warrant revision or that the remaining value may not be recoverable. When
factors indicate that intangible assets should be evaluated for possible
impairment, the company uses an estimate of the undiscounted cash flow over
the remaining life of the intangible asset in measuring whether that asset is
recoverable.
Deferred Installation Costs:
Costs incurred in the installation of local access lines are amortized over a
three-year period.
Income Taxes:
The company provides for deferred income taxes on all timing differences
between accounting income and taxable income using the deferral method.
Earnings Per Share:
Earnings per share have been calculated based upon the weighted average number
of common shares outstanding during the year. The potential exercise of stock
options has no current dilutive effect on earnings per share.
Comparative Figures:
Certain of the comparative figures have been reclassified to conform to
current presentation.
__________________________________________________________________________
2. Property, Plant, and Equipment
Accumulated 1995 Net 1994 Net
Cost Depreciation Book Value Book Value
------- ------------ ---------- ----------
Equipment $22,486 $10,088 $12,398 $11,628
Office furniture and equipment 1,379 315 1,064 910
Leasehold improvements 1,112 392 720 700
Computer software 637 140 497 366
Construction in progress 1,338 - 1,338 -
------- ------------ ---------- ----------
$26,952 $10,935 $16,017 $13,604
------- ------------ ---------- ----------
3. Other Assets
Accumulated 1995 Net 1994 Net
Cost Amortization Book Value Book Value
------- ------------ ---------- ----------
Customer base $16,693 $4,583 $12,110 $9,465
Installation costs 3,798 2,695 1,103 1,308
Other 315 118 197 224
------- ------------ ---------- ----------
20,806 7,396 13,410 10,997
Goodwill 7,054 147 6,907 -
------- ------------ ---------- ----------
$27,860 $7,543 $20,317 $10,997
------- ------------ ---------- ----------
4. Acquisitions
1995 1994
------------ -----------------
Metrowide(a) PCN(b) TCC(b)
------------ ------ ------
Net assets acquired (liabilities assumed):
Cash $131 $ - $ -
Working capital deficiency (5,181) - -
Fixed assets 1,270 - -
Customer base 4,200 800 1,535
Goodwill 7,054 - -
Capital leases and other (819) - -
------------ ------ ------
$6,655 $800 $1,535
------------ ------ ------
Financed by:
Cash $2,655 $800 $1,535
Promissory notes payable:
- due November 1, 1995 at
Royal Bank of Canada prime rate 1,250 - -
- due February 1, 1996 at
Royal Bank of Canada prime rate 1,250 - -
- due August 1, 1996 at
9% per annum 1,500 - -
------------ ------ ------
$6,655 $800 $1,535
------------ ------ ------
a) Metrowide Communications Inc. (Metrowide)
On August 1, 1995, the company acquired all of the issued and outstanding
shares of the Metrowide group of companies.
b) Personal Communications Network Inc. (PCN)
and 2759454 Canada Inc. (TCC)
During the first quarter of 1994, the company acquired all of the issued and
outstanding shares of PCN and TCC. The company entered into a long distance
sales representation agreement with Telesense Residential Inc., a company
controlled by a former shareholder of TCC, which provided for minimum annual
commission payments of $125 paid in equal monthly installments, subject to a
90-day written notice of termination clause. Telesense Residential Inc.
terminated this agreement during 1995.
c) Information Systems Management Corporation
During 1993, the company acquired a long distance customer base and related
autodialers. Payments of $1,993 during 1994 were added to the acquired
customer base.
5. Line of Credit
During December 1995, the company entered into a revolving demand loan with
the Royal Bank of Canada whereby it was provided with a credit facility of $1
million under which no amount had been drawn at December 31, 1995.
Amounts advanced under this credit facility bear interest at the Royal Bank of
Canada prime rate plus 1/2 of 1% per annum. Borrowings under this facility
are collateralized by an irrevocable standby letter of credit from a U.S.
Bank.
6. Long-Term Debt
Long-term debt comprises:
1995 1994
------- -------
Long-term debt due to parent $22,444 $19,547
Capital leases and other 1,862 539
------- -------
24,306 20,086
Less-current portion 854 354
------- -------
$23,452 $19,732
------- -------
The long-term debt due to parent is pursuant to a revolving line of credit,
which is payable on demand, for which the parent will not require repayment
prior to January 1, 1997. Interest on this debt is charged at U.S. prime plus
1%. The debt is denominated in U.S. dollars.
The company has entered into various capital leases for property, plant, and
equipment with implicit interest rates that range from 10% to 14%.
Schedule of minimum lease payments:
Year Amount
- ---- ------
1996 $1,004
1997 697
1998 397
------
2,098
Less - amount representing interest 236
------
1,862
Less - current portion 854
------
$1,008
------
7. Income Taxes
The company has losses available to offset future income for tax purposes of
approximately $12,694 which expire as follows: 2000 - $2,318; 2001 -
$10,376.
During the third quarter of 1994, the company wrote-off income taxes
recoverable in the amount of $3,078.
8. Related party Transactions
At December 31, 1995 the company was largely dependent on ACC Corp. to provide
its operating and long-term financing. At year-end the company had a
revolving line of credit from ACC Corp. in the amount of U.S. $29 million
(1994 - U.S. $20 million) of which Cdn. $22.4 million (1994 - Cdn. $19.5
million) had been drawn down upon.
Related party revenue is recognized when calls originating in the United
States or the United Kingdom, by customers of the company's affiliates,
terminate in Canada over the company's network.
Related party network costs are recognized when calls originating in Canada
terminate in the United States over the ACC Long Distance Corp. network or
terminate in the United Kingdom over the ACC Long Distance UK Ltd. network.
Due to affiliates represents network costs charged by the U.S. and U.K.
affiliate companies, amounts paid by ACC affiliates on behalf of the company
for capital expenditures, and corporate expenses. The corporate expenses
include amounts charged monthly by ACC Corp. for various management,
operations, and administrative services provided to the company.
Due from affiliates represents net unpaid tolls charged to ACC Long Distance
UK Ltd.
Decrease (increase) in payable to U.S. affiliates:
1995 1994
--------- --------
Network costs ($13,851) ($9,199)
Corporate expenses (5,058) (3,424)
Interest expense (1,719) (542)
Toll revenue 2,245 2,216
Purchases/cash transfers/payments 10,656 399
Converted to long-term debt 2,897 10,047
--------- --------
Increase in payable ($4,830) ($503)
--------- --------
Increase (decrease) in receivable from U.K. affiliate:
1995 1994
--------- --------
Network costs ($364) ($1,369)
Toll revenue 2,050 771
Purchases/cash transfers/payments (1,750) 826
--------- --------
Increase (decrease) in receivable ($64) $228
--------- --------
9. Commitments
The company leases office space, equipment, automobiles, and long distance
facilities under various agreements expiring through October 2003.
At December 31, 1995, the minimum aggregate payments under these agreements
are as follows:
Operating Long Distance
Year Leases Facilities
- ---- --------- -------------
1996 $1,616 $ 4,800
1997 1,598 4,800
1998 1,552 4,800
1999 1,506 4,800
2000 1,360 4,800
Thereafter 3,998 13,600
--------- -------------
$11,630 $37,600
--------- -------------
The agreement to lease long distance facilities is at a minimum commitment
level of $1 million per month for ten years and expires in October 2003.
10. Contingencies
The company is subject to litigation from time to time in the ordinary course
of business. Although the amount of any liability with respect to such
litigation cannot be determined, in the opinion of management, such liability
as of December 31, 1995 will not have a material adverse effect on the
company's financial condition or results of operations.
11. Capital Stock
The authorized capital stock consists of an unlimited number of common shares
and an unlimited number of Class A preferred shares, issuable in series. As
at December 31, 1995, 6,601,350 common shares (1994 - 6,600,000) were issued
and outstanding.
12. Stock Options
Common share stock options have been granted to various directors, officers,
and managers of the company and ACC Corp. The options have various vesting
requirements from issue date and are dependent on the length of service of the
individual.
The stock options are summarized as follows:
1995 1994
------- -------
Balance, beginning of year 362,000 385,000
Granted during the year 84,300 30,000
Surrendered during the year (28,150) (53,000)
Exercised during the year (1,350) -
------- -------
Balance, end of year 416,800 362,000
------- -------
Range of prices:
1995 1994
------------- ------------
Granted during the year $2.50 - 3.35 $8.875
Outstanding at end of year $2.50 - 11.00 $8.875-11.00
Exercised during the year $2.50 -
Subsequent to the year-end, the company granted 164,200 common share
management stock options with option prices ranging from $3.80 to $5.50 per
share, which vest from issue date to 1999.
Exhibit 99.2
ACC TELENTERPRISES LTD.
CONSOLIDATED BALANCE SHEET
(Amounts in 000's)
<TABLE>
<CAPTION>
(Unaudited)
June 30,
1996
------------------
CURRENT ASSETS:
<S> <C>
Cash $ -
Accounts receivable, net 24,933
Prepaid and other assets 1,022
Due from affiliates 173
------------------
TOTAL CURRENT ASSETS 26,128
------------------
PROPERTY, PLANT, AND EQUIPMENT, net 17,902
------------------
OTHER ASSETS:
Customer base and other assets, net 14,233
Goodwill, net 10,214
------------------
24,447
------------------
TOTAL ASSETS $68,477
==================
CURRENT LIABILITIES:
Bank indebtedness $272
Current maturities of long-term debt 687
Accounts payable and accrued liabilities 23,320
Notes payable 707
Due to affiliates 11,294
------------------
TOTAL CURRENT LIABILITIES 36,280
------------------
LONG-TERM DEBT:
Due to affiliates 22,238
Capital leases and other 871
------------------
TOTAL LONG-TERM DEBT 23,109
------------------
SHAREHOLDERS' EQUITY:
Capital stock (6,619,625 shares) 23,056
Deficit (13,968)
------------------
TOTAL SHAREHOLDERS' EQUITY 9,088
------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $68,477
==================
</TABLE>
The amounts above are stated in Canadian dollars.
The exchange rate to U.S. dollars at June 30, 1996 was .732.
<PAGE>
<PAGE>
ACC TELENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000's except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
----------------------------
REVENUE:
<S> <C> <C>
Toll $71,332 $53,793
Local service lines 2,425 -
Leased line and other 6,715 3,272
----------------------------
80,472 57,065
Network costs 51,175 38,066
----------------------------
GROSS MARGIN 29,297 18,999
OPERATING EXPENSES:
Depreciation and amortization 4,215 2,939
Selling expense 7,904 5,483
General and administrative expenses 13,219 9,708
----------------------------
25,338 18,130
----------------------------
Income from operations 3,959 869
OTHER INCOME (EXPENSE):
Interest income 44 63
Interest expense (1,282) (1,359)
Foreign exchange gain (loss) 48 (44)
----------------------------
(1,190) (1,340)
----------------------------
NET INCOME (LOSS) $2,769 ($471)
============================
INCOME (LOSS) PER SHARE $0.42 ($0.07)
============================
</TABLE>
The amounts above are stated in Canadian dollars.
<PAGE>
<PAGE>
ACC TELENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Amounts in 000's)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
----------------------------
OPERATING:
<S> <C> <C>
Net income (loss) $2,769 ($471)
----------------------------
ADJUSTMENT FOR NON-CASH ITEM:
Depreciation and amortization 4,215 2,939
(INCREASE) DECREASE IN ASSETS:
Accounts receivable, net (3,662) (2,452)
Prepaid and other assets 152 189
DECREASE IN LIABILITIES:
Accounts payable and accrued liabilities 2,195 (5,330)
----------------------------
Cash provided by (used in) operating activities 5,669 (5,125)
----------------------------
INVESTING:
Additions to property, plant and equipment (2,897) (1,729)
Customer base acquisition costs - (315)
Acquisition of Internet assets (5,625) -
Installation costs (929) (555)
Other assets (41) (7)
----------------------------
Cash used in investing activities (9,492) (2,606)
----------------------------
FINANCING:
Due to affiliates 5,095 6,369
Repayment of notes payable (1,050) -
Reduction of notes payable (826) -
Stock options exercised 62 -
Capital leases and other (439) 961
----------------------------
Cash provided by financing activities 2,842 7,330
----------------------------
NET DECREASE IN CASH (981) (401)
CASH, BEGINNING OF PERIOD 709 1,247
----------------------------
CASH (BANK INDEBTEDNESS), END OF PERIOD ($272) $846
============================
</TABLE>
The amounts above are stated in Canadian dollars.
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS
ACC TELENTERPRISES LTD. AND SUBSIDIARIES
1. Statement of Management
The condensed consolidated financial statements of ACC
TelEnterprises Ltd. and subsidiaries (the Company) as of, and for the six
months ended June 30, 1996, have been prepared by the Company, without audit.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's latest Annual Report.
The interim financial statements contained herein reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to a fair statement of the results of operations for
the interim periods presented.
2. Purchase
As of May 13, 1996, the Company purchased certain assets of
Internet Canada Corp., a company based in Toronto, Canada, which is engaged
in the business of providing Internet access and home page design and
development. The purchase price was Cdn. $3.0 million plus additional
amounts to be calculated based on customer numbers at various dates, with the
total not to exceed Cdn. $7.0 million. As of June 30, 1996, approximately
$3.0 million has been paid.
3. License Agreement
Prior to June 30, 1996, the Company entered into a contract with a
third party for a non-exclusive, non-transferable license for proprietary
software. The contract requires the Company to pay a one-time license fee of
approximately Cdn. $1.5 million and also provides for an annual maintenance
service fee to be paid by the Company.
Exhibit 99.3
ACC CORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(In thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Adjustments for
for Minority Internet Canada
Actual Interest purchase Acquisition Pro Forma
----------- ------------------ ----------------- --------------
CURRENT ASSETS:
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $30,380 ($30,380) (3) $ -
ACCTS RECEIVABLE, NET OF ALLOWANCE
FOR DOUBTFUL ACCTS 50,508 50,508
OTHER RECEIVABLES 2,529 2,529
PREPAID AND OTHER ASSETS 2,387 2,387
----------- ------------------ ----------------- --------------
TOTAL CURRENT ASSETS 85,804 (30,380) 55,424
----------- ------------------ ----------------- --------------
PROPERTY, PLANT, AND EQUIPMENT:
AT COST 93,191 93,191
ACCUMULATED DEPRECIATION AND AMORTIZATION (32,180) (32,180)
----------- ------------------ ----------------- --------------
61,011 61,011
----------- ------------------ ----------------- --------------
GOODWILL AND CUSTOMER BASE 16,732 33,816 (4) 50,548
DEFERRED INSTALLATION COSTS, NET 3,689 3,689
OTHER 4,115 4,115
----------- ------------------ ----------------- --------------
24,536 33,816 58,352
----------- ------------------ ----------------- --------------
TOTAL ASSETS $171,351 $3,436 $ $174,787
=========== ================== ================= ==============
CURRENT LIABILITIES
NOTES PAYABLE $517 $517
CURRENT MATURITIES OF
LONG-TERM DEBT 2,569 2,569
ACCOUNTS PAYABLE 6,151 6,151
ACCRUED NETWORK COSTS 29,652 29,652
OTHER ACCRUED EXPENSES 17,534 17,534
DIVIDENDS PAYABLE 0 -
----------- ------------------ ----------------- --------------
TOTAL CURRENT LIABILITIES 56,423 - - 56,423
----------- ------------------ ----------------- --------------
DEFERRED INCOME TAXES 2,471 2,471
----------- ------------------ ----------------- --------------
LONG-TERM DEBT 5,948 5,827 (11) 11,775
----------- ------------------ ----------------- --------------
REDEEMABLE PREFERRED STOCK 10,710 10,710
----------- ------------------ ----------------- --------------
MINORITY INTEREST 2,031 (2,031) (5) -
----------- ------------------ ----------------- --------------
SHAREHOLDERS' EQUITY
COMMON STOCK, $.015 PAR VALUE,
AUTHORIZED-50,000,000 SHARES 245 245
CAPITAL-IN-EXCESS OF PAR VALUE 97,872 97,872
CUMULATIVE TRANSLATION ADJUSTMENT (982) (360) (6) (1,342)
RETAINED EARNINGS (1,757) (1,757)
----------- ------------------ ----------------- --------------
95,378 (360) 95,018
TREASURY STOCK, AT COST (1,610) (1,610)
----------- ------------------ ----------------- --------------
93,768 (360) 93,408
----------- ------------------ ----------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $171,351 $3,436 $ $174,787
=========== ================== ================= ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE>
<PAGE>
ACC CORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Adjustments
for Minority for
Interest Internet Canada
Actual Repurchase Acquisition Pro Forma
------------- -------------- ----------------- ---------------
Revenue:
<S> <C> <C> <C> <C>
Toll revenue $136,137 $136,137
Leased lines and other 10,805 10,805
------------- -------------- ----------------- ---------------
Total revenue 146,942 - - 146,942
Network costs 94,988 94,988
------------- -------------- ----------------- ---------------
Gross profit 51,954 - - 51,954
Other operating expenses:
Depreciation and amortization 7,795 $423 (1) $177 (7) 8,395
Selling - -
General & Admin. 37,989 37,989
Management restructuring - -
------------- -------------- ----------------- ---------------
45,784 423 177 46,384
------------- -------------- ----------------- ---------------
Income (loss) from operations 6,170 (423) (177) 5,570
Other income (expense):
Interest income 457 (98)(10) 359
Interest expense (2,891) (233)(9) (3,124)
Equal access costs 0 -
Foreign exchange gain 26 26
------------- -------------- ----------------- ---------------
(2,408) (331) - (2,739)
------------- -------------- ----------------- ---------------
Income (loss) from continuing operations
before provision from taxes and
and minority interest 3,762 (754) (177) 2,831
Provision for (benefit from) income taxes 853 (112)(8) 741
Minority interest in income of
consolidated subsidiary (596) 596 (2) -
------------- -------------- ----------------- ---------------
Net income (loss) 2,313 (46) (177) 2,090
Less - Series A Preferred Stock dividend (638) (638)
Less - Series A Preferred Stock accretion (624) (624)
------------- -------------- ----------------- ---------------
Income (loss) applicable to common stock $1,051 ($46) ($177) $828
============= ============== ================= ===============
Net income (loss) per common and common
equivalent share $0.08 $0.06
============= ===============
Average number of common
and common equivalent shares 14,010,275 14,010,275
============= ===============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE>
<PAGE>
ACC CORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Adjustments
for Minority for
Interest Internet Canada
Actual Repurchase Acquisition Pro Forma
------------- -------------- ----------------- ---------------
Revenue:
<S> <C> <C> <C> <C>
Toll revenue $175,269 $175,269
Leased lines and other 13,597 13,597
------------- -------------- ----------------- ---------------
Total revenue 188,866 188,866
Network costs 114,841 114,841
------------- -------------- ----------------- ---------------
Gross profit 74,025 74,025
Other operating expenses:
Depreciation and amortization 11,614 $845 (1) $354 (7) 12,813
Selling 21,617 21,617
General & Admin. 39,248 39,248
Management restructuring 1,328 1,328
------------- -------------- ----------------- ---------------
73,807 845 354 75,006
------------- -------------- ----------------- ---------------
Income (loss) from operations 218 (845) (354) (981)
Other income (expense):
Interest income 198 198
Interest expense (5,131) (466)(9) (5,597)
Equal access costs -
Foreign exchange loss (110) (110)
------------- -------------- ----------------- ---------------
(5,043) (466) (5,509)
------------- -------------- ----------------- ---------------
Income (loss) from continuing operations
before provision from taxes and
and minority interest (4,825) (1,311) (354) (6,490)
Provision for (benefit from) income taxes 396 (158)(8) 238
Minority interest in income of
consolidated subsidiary (133) 133 (2)
------------- -------------- ----------------- ---------------
Net income (loss) ($5,354) ($1,020) ($354) ($6,728)
Less - Series A Preferred Stock dividend (401) (401)
Less - Series A Preferred Stock accretion (139) (139)
------------- -------------- ----------------- ---------------
Income (loss) applicable to common stock ($5,894) ($1,020) ($354) ($7,268)
============= ============== ================= ===============
Net income (loss) per common and common
equivalent share ($0.50) ($0.62)
============= ===============
Average number of common
and common equivalent shares 11,684,829 11,684,829
============= ===============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE>
<PAGE>
ACC CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(1) Amortization of goodwill associated with acquisition assuming the
amortization life of the goodwill associated with the buyback of the
minority interest is 40 years - see (4).
(2) Elimination of minority interest in earnings (loss) of subsidiary.
(3) Cash payment for repurchase of minority interest calculated as 2,017,400
shares purchased at a price of $15.70 ($21.50 CDN) per share plus
approximately $6.0 million (CDN) representing the Company s net cash
outlay for shares related to employee stock options which the Company
will purchase.
(4) Goodwill recorded in minority interest repurchase.
(5) Elimination of minority interest.
(6) Elimination of minority shareholders' portion of cumulative translation
adjustment.
(7) Amortization associated with customer base and goodwill acquired in
connection with the acquisition of Internet Canada assuming the
amortization life of the goodwill associated with the purchase is 20
years and that the amortization life of the customer base associated
with the purchase is 5 years.
(8) Tax effect of entries for current year.
(9) Interest expense associated with debt used to repurchase minority
interest assuming an 8% interest rate.
(10) Interest income earned during the six months ended June 30, 1996, which
would not have been earned if the assets were used to repurchase the
minority interest.
(11) Debt incurred to repurchase minority interest.
Exhibit 99.4
Confidential
[Letterhead of First Union]
September 11, 1996
Mr. Mike Daley
Chief Financial Officer
ACC Corp.
400 West Avenue
Rochester, New York 14611
Dear Mike:
This letter is the Fee Letter referred to in our commitment
letter, dated the date hereof (the "Commitment Letter"), pursuant to which
First Union National Bank of North Carolina ("First Union"), as a lender
and as Administrative Agent for itself and a group of other lenders, has
committed to provide a $100,000,000 credit facility (the "Facility") to ACC
Corp. ("ACC" or the "Company") and various subsidiaries and First Union
Capital Markets Corp. ("FUCMC") has agreed to act as Syndication Agent for
the Facility, subject to the terms and conditions set forth in the
Commitment Letter and attached Term Sheet. Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the
Commitment Letter and attached Term Sheet.
To induce First Union and FUCMC to execute and deliver the
Commitment Letter to the Company and to provide the Facility contemplated
therein, ACC agrees to pay to First Union the following fees:
Fees:
1. Structuring Fee - $250,000 payable upon the acceptance of
the Commitment Letter.
2. Underwriting Fee - $750,000 payable at closing of the
Facility.
2. Administrative Agency Fee - $60,000 per annum payable at
closing and each anniversary thereafter.
ACC Corp.
Page 2 Confidential
Each of the above fees shall be fully earned upon payment and
shall not be refundable or rebatable by reason of repayment of the
Facility, acceleration upon event of default under the Facility, or any
other circumstance, and shall survive any termination of the Facility.
First Union and FUCMC reserve the right to allocate, in whole or
in part, to FUCMC any fees payable to First Union in such a manner as First
Union and FUCMC agree.
If you are in agreement with the foregoing, please have both
copies of this letter signed and return an executed copy to First Union on
or prior to 5:00 p.m. on September 12, 1996.
Sincerely,
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ Jim Redman
---------------------------
Title: SVP
------------------------
FIRST UNION CAPITAL MARKETS
CORP.
By: /s/ Herbert Althouse
---------------------------
Title: Managing Director
------------------------
AGREED TO AND ACCEPTED THIS
12th DAY OF September, 1996.
ACC Corp., on behalf of itself and its Subsidiaries
By: /s/ Michael R. Daley
---------------------------
Title: EVP & CFO
------------------------
<PAGE>
Confidential
[Letterhead of First Union]
September 11, 1996
Mr. Mike Daley
Chief Financial Officer
ACC Corp.
400 West Avenue
Rochester, New York 14611
Dear Mike:
We are pleased to confirm that First Union National Bank of North Carolina
("First Union") has approved a $100,000,000 commitment to a $100,000,000
credit facility (the "Facility") to ACC Corp. and various of its
subsidiaries (the "Company"), subject to the terms and conditions set forth
below and in the summary of terms and conditions (the "Term Sheet") and the
fee letter dated the date hereof (the "Fee Letter"), each of which is
attached hereto. The Facility shall be evidenced by an amendment and
restatement of your existing Facility.
First Union's obligation to provide the Facility pursuant to this
Commitment is subject to (i) the acceptance of this Commitment on or prior
to September 12, 1996 as provided below, (ii) the completion of a
definitive credit agreement and related documentation in form and substance
satisfactory to First Union, (iii) compliance with all applicable laws and
regulations, and (iv) satisfactory completion by First Union of its legal
and business due diligence and all other conditions described herein, in
the Term Sheet and in the Fee Letter. This Commitment will terminate on
October 30, 1996, if the closing of the Facility has not occurred on or
prior to that date, or at any time prior to closing if any event occurs
that First Union believes has, or First Union is supplied with or discovers
information not previously disclosed to it that First Union believes has,
or may have, a material adverse effect on the business, financial condition
or prospects of the Company or any of its direct or indirect subsidiaries
taken as a whole.
It is agreed that First Union Capital Markets Corporation ("FUCMC") may
syndicate the Facility and First Union will act as the sole administrative
agent for any other lenders thereunder. First Union will also perform all
functions and exercise all authority (including without limitation
selecting counsel for the lenders and negotiating definitive credit
documentation) customarily performed and exercised by First Union in its
capacity as agent. It is also agreed that FUCMC will manage all aspects of
the syndication, including without limitation making decisions as to the
selection and number of institutions to be approached and when they will be
approached, when commitments will be accepted, which institutions will
participate, the allocations of commitments among syndicate lenders and the
amount and distribution of fees payable to syndicate lenders. As part of
this process, FUCMC will consult with the Company regarding the selection
and number of institutions to be approached.
The Company also agrees to actively assist FUCMC in promptly completing a
syndication that is satisfactory to FUCMC and the Company, and in
connection therewith will provide FUCMC upon reasonable request with all
information deemed appropriate by FUCMC. ACC agrees to make the appropriate
officers of the various companies available for bank meetings at such times
and places as FUCMC shall reasonably request. The Company's assistance
will also include using its diligent efforts to ensure that FUCMC's
syndication efforts benefit materially from the lending and other banking
relationships of the Company and its subsidiaries. This will be
accomplished by a variety of means, including direct contact during the
syndication between senior management of the Company and the proposed
syndicate lenders.
In connection with any such syndication, the Company acknowledges that
First Union may allocate a portion of the fees payable under the Fee Letter
to such other lenders. It is agreed, however, that no lender will receive
compensation outside the terms contained herein and in the Fee Letter in
order to obtain its commitment to participate in the Facility.
ACC represents and warrants that (a) all information which has been or is
hereafter made available to First Union or FUCMC by its authorized
representatives in connection with the transactions contemplated hereby is
and will be complete and correct in all material respects and does not and
will not contain, as of the time such information was or is available, any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were
or are made and (b) all financial projections that have been or are
hereafter prepared by you and made available to First Union or FUCMC or any
other participants in the Facility have been or will be prepared in good
faith based upon assumptions you believe or will believe to be reasonable.
You agree to supplement the information and projections referred to in
clauses (a) and (b) of this paragraph from time to time until completion of
the syndication so the representation and warranty in the preceding
sentence remains correct. In arranging and syndicating the Facility, FUCMC
will be using and relying on such information and projections without
independent verification thereof.
The Company agrees to reimburse First Union and FUCMC for all of their out-
of-pocket expenses (including reasonable attorneys' fees and expenses and
syndication expenses) incurred in connection with all of the transactions
described herein, whether or not the Facility is closed or any credit is
extended thereunder. The Company also agrees to indemnify and hold
harmless First Union and its affiliates (including FUCMC) and the Lenders
their respective directors, officers, employees and agents (collectively,
the "Indemnified Parties") from and against any and all actions, suits,
losses, claims, damages and liabilities of any kind or nature, joint or
several, to which such Indemnified Parties may become subject, related to
or arising out of any of the transactions contemplated herein, including
without limitation the execution of definitive credit documentation and the
closing of the Facility and any acquisition or other transaction in
connection with which the Company uses the proceeds of any of the Facility,
and will reimburse the Indemnified Parties for all out-of-pocket expenses
(including reasonable attorneys' fees and expenses) on demand as they are
incurred in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding
arising therefrom; provided, that no Indemnified Party shall have any right
to indemnification for any of the foregoing to the extent determined by a
final judgment to have resulted from its own gross negligence or willful
misconduct. This Commitment is addressed solely to the Company, and
neither First Union nor FUCMC, on the one hand, nor the Company, on the
other hand, shall be liable to the other or any other person for any
consequential damages that may be alleged as a result of this Commitment or
any of the transactions referred to herein. In the event that the closing
of the Facility fails to occur for any reason, the provisions of this
paragraph shall survive any termination of this Commitment.
The Company is not authorized to show or circulate this Commitment, the
Term Sheet or the Fee Letter to any other person or entity (other than its
directors, officers, independent accountants, and legal counsel in
connection with its evaluation thereof, provided that each of such persons
shall also be bound by the confidentiality provisions hereof, and except as
required by law or applicable judicial process) until such time as it has
accepted this Commitment in writing as provided below. Without in any way
limiting the foregoing, in the event that the Company shows or circulates
the terms of this Commitment, the Term Sheet or the Fee Letter prior to its
acceptance as provided below, the Company shall be deemed to have accepted
the Commitment and the attached Fee Letter.
First Union and FUCMC shall have the right to require that the Loan
Documents include, in addition to the provisions outlined in the Term
Sheet, provisions considered appropriate thereby for this type of lending
transaction, as well as provisions that such entities may deem appropriate
after they are afforded the opportunity to conduct and complete, to their
satisfaction, their business, tax and legal review of the Borrowers and the
proposed transaction as First Union and FUCMC may, in their sole and
individual discretion, deem appropriate.
<PAGE>
If the Company is in agreement with the foregoing, please sign both copies
of this Commitment and the Fee Letter attached hereto and return an
executed copy to First Union by no later than 5:00 p.m. on September 12,
1996.
Sincerely,
FIRST UNION CAPITAL FIRST UNION NATIONAL BANK OF
MARKETS CORP NORTH CAROLINA
By: /s/ Herbert Althouse By: /s/ Jim Redman
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Title: Managing Director Title: SVP
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AGREED TO AND ACCEPTED THIS
12th DAY OF September, 1996.
ACC Corp., on behalf of itself and its subsidiaries
By: /s/ Michael R. Daley
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Title: EVP & CFO
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<PAGE>
ACC CORP.
AMENDED AND RESTATED TERM SHEET
SEPTEMBER 11, 1996
BORROWERS: ACC Corp. ("ACC"), ACC Long Distance Corp. ("ACC
U.S."), ACC TelEnterprises Ltd. ("ACC Canada"), ACC
Long Distance UK Ltd. ("ACC U.K."), ACC National
Telecom Corp. ("ACC LEC"), and all present and
future Material direct or indirect subsidiaries of
ACC (collectively, the "Borrowers"). A Material
subsidiary is defined as a subsidiary with assets
in excess of $1.0 million.
FACILITY: $100,000,000 five-year and one day senior secured
reducing revolving credit facility with (i) up to
$8,000,000 sublimit for standby letters of credit
and (ii) a $3,000,000 Swing Line with the
Administrative Agent, each available to the
Borrowers and denominated in U.S. dollars,
collectively (the "Facility"). In no event shall
the Facility outstandings, including the Swing Line
and standby letters of credit outstandings, exceed
the available commitment. The Facility provides
for Canadian Dollar and United Kingdom Sterling
borrowings for ACC Canada and ACC UK respectively.
The Facility will include sublimits in the home
currency not to exceed the U.S. Dollar equivalent
for each Borrower and its subsidiaries as follows:
ACC or ACC U.S. $100,000,000
(less outstandings on foreign and LEC sublimits)
ACC Canada 30,000,000
ACC UK 20,000,000
ACC LEC 15,000,000
Each Borrower may borrow directly in its home
currency in an amount equivalent to the U.S. dollar
sublimits set above. Borrowings under the foreign
facilities will be marked to market no less
frequently than at each interest maturity date.
The sublimits were set based on current operations
and may be revised upon written request from the
Borrowers subject to written consent from the
Required Banks.
Intercompany loans and investments from ACC and/or
ACC U.S. in its foreign subsidiaries will be capped
at the levels described in the Negative Covenants
section of this term sheet.
MANAGING AGENTS: First Union National Bank of North Carolina ("First
Union") and Fleet Bank ("Fleet")
ADMINISTRATIVE AGENT: First Union
SYNDICATION AGENT: First Union Capital Markets Corporation ("FUCMC")
DOCUMENTATION AGENT: Fleet Bank ("Fleet")
LENDERS: The Adminstrative Agent and a group of financial
institutions (collectively, the "Lenders") arranged
by First Union, satisfactory to the Borrowers.
LETTER OF CREDIT
ISSUER: First Union
REQUIRED BANKS: Lenders holding 66 2/3% of the commitments.
PURPOSE: To pay closing costs related to this financing, to
finance acquisitions, capital expenditures and
permitted investments, to provide working capital
and for general corporate purposes.
FINAL MATURITY: Five years and one day subsequent to closing.
AMORTIZATION: The Facility availability will be reduced in
quarterly increments, commencing nine quarters
after closing (the "Termination Date") according to
the following schedule:
Per Quarter
Quarters 1-8 0.00%
Quarters 9-16 8.00%
Quarters 17-20 9.00%
Reductions will be made each December 31, March 31,
June 30 and September 30. Each sublimit will be
reduced prorata on reduction dates.
SECURITY: The Borrowers' obligations under the Facility shall
be secured by a first priority security interest in
a) all tangible and intangible assets of the
Borrowers and their present and future subsidiaries
as reasonably determined by the Adminstrative
Agent, b) the stock pledges described below; and c)
other reasonable security requirements deemed
appropriate by the Administrative Agent and its
counsel. Security interests in assets of ACC
Canada, ACC U.K. and other foreign subsidiaries
will not be available in connection with payment
defaults by U.S. borrowers. The Facility shall also
contain a limitation on additional indebtedness and
a negative pledge on the assets of the Borrowers
except as agreed to in writing by the Required
Banks and as excepted in the Other Indebtedness and
Guarantee provisions below. The Facility shall
also contain a restriction on other negative
pledges.
GUARANTEES
AND PLEDGE: ACC will unconditionally guarantee the Loans and
all other obligations of the other Borrowers under
the Facility. The Facility will also be secured
with a pledge of a first priority security interest
in a) 100% of the voting stock of ACC U.S.; b)
66.6% of the voting stock of ACC Canada; c) 66.6%
of the voting stock of ACC U.K.; d) a negative
pledge against the remaining voting stock of ACC
U.K. and ACC Canada except as described in the
Joint Ventures provisions; and e) 100% of the
voting stock of ACC LEC and all other U.S. Material
subsidiaries and 66.6% (other than with respect to
Redemption Newco) of any foreign Material direct
subsidiaries (subject to the same negative pledge
described above).
ACC CANADA
SHARE REPURCHASE: ACC Canada (or a wholly-owned Subsidiary of ACC)
intends to make a tender offer for and redeem in
accordance with applicable law 100% (or such lesser
amount as may be tendered by the applicable
holders) of the publicly issued shares of common
stock of ACC Telenterprises (such transaction, the
"Redemption"). Such Redemption shall be
permitted; provided that (a) the aggregate purchase
price of such shares which are so redeemed shall
not exceed $40,000,000 (or the Canadian dollar
equivalent thereof), (b) such Redemption shall be
completed by March 31, 1997, (c) to the extent that
the Redemption is accomplished through a wholly-
owned Subsidiary of ACC ("Redemption Newco") , (i)
such Subsidiary shall become a Borrower and 100% of
its assets shall be pledged to the Lenders to
secure the Canadian dollar tranche of the Facility,
(ii) if such Subsidiary is a Canadian entity, 100%
of the stock of the entity shall be pledged to the
Lenders to secure the Canadian dollar tranche of
the Facility and (iii) if such entity is a U.S.
entity, 100% of the stock of the entity shall be
pledged to the Lenders to secure the U.S. dollar
tranche of the Facility. Redemption Newco shall be
a single purpose entity incorporated solely to
complete the Redemption and shall not be permitted
to conduct any other business or incur any other
debt without prior written Required Banks approval.
COMMITMENT
FEE: 0.500% per annum on the unused portion of the
Facility, payable quarterly in arrears. The unused
commitment fee declines to 0.375% if Debt/EBITDA is
less than or equal to 2.50:1 for the prior quarter.
The unused commitment fee declines to 0.250% if
Debt/EBITDA is less than or equal to 2.00:1 for the
prior quarter.
INTEREST RATES: Base and LIBOR rates as determined by the
Administrative Agent. Interest margin will be
based on the Leverage Ratio calculated as follows:
Total Debt/ LIBOR Base
EDITDA Margin Margin
> 3.0:1 2.000% 0.500%
> 2.5:1 and <= 3.0:1 1.625% 0.125%
> 2.0:1 and <= 2.5:1 1.375% 0.000%
< 2.0:1 1.000% 0.000%
EBITDA means Operating Cash Flow as defined below.
The Base Rate shall mean the greater of the Prime
Rate announced by the Administrative Agent or the
overnight Federal Funds rate plus 0.50%. The Base
Rate will only be available on advances denominated
in U.S. dollars. LIBOR means the Administrative
Agent's reserve adjusted London Interbank Offered
Rates for the applicable currency.
LIBOR interest is to be calculated on a 360-day
basis, while Base Rate interest and Commitment Fees
shall be calculated on a 365-day basis. Base Rate
interest and Commitment Fees shall be payable
quarterly in arrears beginning September 30, 1996.
LIBOR interest shall be payable every three months
and at maturity. LIBOR will be available for one,
two, three and six month periods.
Borrower may draw under the Facility with three
business days notice for LIBOR loans and with one
day notice for Base Rate loans. Advances shall be
in minimum amounts of $3,000,000 and $1,500,000 for
LIBOR and Base Rate loans, respectively. The Swing
Line will have daily availability in $100,000
increments.
All borrowings in Canadian and U.K. currencies
require three business days notice.
The applicable margin will increase by 2.0% upon
the occurrence and during the continuation of an
Event of Default.
The agreement will include standard protective
provisions for such matters as increased costs,
capital adequacy, LIBOR rate indemnification (i.e.
prepayment or non-borrowing), illegality/un-
availability of LIBOR rates, currency fluctuations,
withholding taxes, and judgement currency.
MANDATORY
PREPAYMENTS: The Facility shall be permanently reduced by a)
100% of the net proceeds from any sale or
disposition of assets (other than in the ordinary
course of business or as permitted in the Negative
Covenant provisions) or sale of an ownership
interest of any other Material subsidiary and b)
100% of any proceeds of insurance in excess of
$250,000 not reinvested within 180 days of receipt.
100% of the proceeds of any debt or equity
issuances must be used to repay the Facility, but
will not be deemed permanent reductions in the
Facility. However to the extent the Leverage Ratio
exceeds 3.0x, the portion of the proceeds
necessary to reduce the Leverage Ratio to 3.0x will
be deemed a permanent facility reduction.
Mandatory repayments will be required in connection
with foreign currency fluctuations which cause the
borrowings of the foreign subsidiaries to exceed
their sublimits which are measured in U.S. dollars
and marked to market no less frequently than at
each interest maturity date.
All mandatory prepayments are applied to Facility
availability in the inverse order of maturity and
reduce all sublimits ratably rounded to the nearest
$1,000,000 (unless otherwise agreed upon in
writing).
OPTIONAL
PREPAYMENTS: The Borrowers may voluntarily prepay the
outstandings under the Facility at any time without
penalty; provided, that any LIBOR breakage costs
will be paid by the Borrowers. In addition, the
Borrowers agree to pay the Lenders' costs incurred
with respect to any foreign exchange breakage costs
incurred as a result of optional prepayments. All
optional prepayments are applied in the inverse
order of maturity.
CONDITIONS PRECEDENT
TO CLOSING: The closing of the Facility will be subject to
conditions precedent reasonably deemed appropriate
by the Administrative Agent, including but not
limited to:
1. No material adverse change shall have occurred
in the condition (financial or otherwise),
operations, properties, business, or prospects
of the Borrowers and their subsidiaries taken
as a whole.
2. Proforma compliance with covenants.
3. Absence of material litigation.
4. Receipt of corporate and regulatory
authorizations.
5. Completion of loan documentation on terms
acceptable to the Administrative Agent, its
counsel, the Lenders, and the Borrowers. The
applicable loan documents executed in
connection with the July 21, 1995 credit
facility (the "Existing Facility") shall be
amended and restated pursuant to the terms
hereof.
6. Legal opinions satisfactory to the
Adminstrative Agent including with respect to
all security, both domestic and foreign
regulatory opinions.
7. Satisfactory resolution of contingent interest
under existing facility
8. Satisfactory completion of remaining due
diligence items
REPRESENTATIONS &
WARRANTIES: Those customarily found in the Administrative
Agent's credit agreements for similar financings
and any additional representations and warranties
reasonably deemed appropriate by the Administrative
Agent and the Lenders in the context of the
proposed transaction.
FINANCIAL NOTICES &
REPORTS: ACC Corp. and its subsidiaries will furnish, or
cause to be furnished, to each Lender and the
Adminstrative Agent: (i) quarterly, unaudited,
consolidated and consolidating financial
statements of ACC within 45 days of the end of each
fiscal quarter, (ii) annual, audited consolidated
and unaudited consolidating statements of ACC
within 120 days of the end of each fiscal year,
with consolidated results prepared in accordance
with Generally Accepted Accounting Principles in
the United States, (iii) certificates of compliance
with financial covenants (with appropriate
calculations and computations), as well as
certificates of no default, accompanying each
quarterly financial statement and certified by an
Authorized Signatory (CFO or VP Finance will be
included as authorized signatories), and (iv) an
annual business plan of each of the Borrowers no
later than 30 days prior to the beginning of each
fiscal year, including balance sheets, income
statements and cash flow statements, all presented
on a quarterly basis.
FINANCIAL COVENANTS: The credit agreement shall include, without
limitation, the following covenants:
1. Leverage Ratio - At all times, the ratio of
Total Debt to Operating Cash Flow will be
equal to or less than:
For the Period Maximum Ratio
Closing - 03/31/97 3.50:1
04/01/97- 09/30/97 3.00:1
10/01/97 -03/31/98 2.50:1
04/01/98 - thereafter 2.00:1
"Total Debt" is defined as all indebtedness
for borrowed money, including capitalized
leases, net exposure payable under hedging
agreements, deferred purchase price of
property or services, guarantees of
indebtedness and letters of credit. Debt or
capital leases recorded on the books of an ACC
subsidiary and also guaranteed by ACC in the
calculation will be included only one time.
As described elsewhere in the term sheet,
capital leases, guarantees, certain tax free
borrowings (related to non-profit
institutions), and other indebtedness are
limited to $25.0 million in aggregate.
"Operating Cash Flow" is defined as
consolidated pretax income plus interest
expense, depreciation, amortization, and other
non-cash charges minus interest income,
capitalized software costs and any
extraordinary gains. The Operating Cash Flow
definition will include or exclude as
appropriate, acquisitions and subsidiary
divestitures as if such acquisition or
divestiture occurred on the first day of such
applicable period. Operating Cash Flow will
be calculated using the trailing two fiscal
quarters multiplied by two until 9/30/97.
Operating cash flow will be calculated on a
trailing four fiscal quarters basis beginning
10/01/97.
2. Minimum Fixed Charge Coverage Ratio - At all
times subsequent to 12/31/96, the Fixed Charge
Coverage Ratio will not be less than 1.15:1.
For 1996, consolidated capital expenditures
will be limited to $26,400,000. Up to
$40,000,000 related to the Redemption will not
be included for purposes of this calculation.
"Fixed Charge Coverage Ratio" is defined as
the ratio of Operating Cash Flow divided by
Fixed Charges.
"Fixed Charges" means scheduled principal and
interest payments plus capital expenditures,
cash taxes and cash dividends for the trailing
two quarters multiplied by two until 9/30/97.
Fixed charges will be calculated on a trailing
four quarters basis beginning 10/1/97.
Acquisitions allowed under the Facility are
excluded from capital expenditures.
3. Minimum Debt Service Coverage Ratio -At all
times, the Debt Service Coverage Ratio will
not be less than 2.5:1
"Debt Service Coverage Ratio" is defined as
Operating Cash Flow divided by pro forma
principal and interest payments for the
succeeding four fiscal quarters.
4. Net Worth Minimum - At all times Net Worth
will not be less than $85 million, plus net
proceeds from any equity offering plus 50% of
Net Income, minus treasury stock impact if any
of the Redemption. The amount will be
adjusted upward by the amount transferred from
Redeemable Preferred Stock to Common Stock in
conjunction with the Fleet Redeemable
Preferred conversion process. Net Worth means
common stock, plus additional paid in capital,
plus retained earnings, plus cumulative
translation adjustment, less treasury stock.
INTEREST RATE
PROTECTION: Within three months of closing, with respect to 50%
of the Facility outstandings, the Borrowers will
purchase or enter into interest rate protection
arrangements customary for lending transactions of
this type and mutually satisfactory to the
Administrative Agent and the Borrowers. The
Administrative Agent expects that the minimum tenor
would be for two years and the maximum rate
selected will be approximately two percentage
points above current market rates. No interest
rate protection is required as long as Facility
outstandings are less than $30,000,000.
CURRENCY RATE
PROTECTION: The Borrowers will maintain at all times currency
hedging arrangements reasonably satisfactory to the
Administrative Agent.
AFFIRMATIVE COVENANTS:Standard covenants for a facility of this size,
type, and purpose including, but not limited to,
maintenance of corporate existence, payment of
taxes, maintenance of insurance, payment of
obligations as they come due, maintenance of
property; observance of legal requirements,
maintenance of material licenses and
authorizations, compliance with environmental
laws, and reasonable inspection of books and
records.
NEGATIVE COVENANTS: Standard covenants for a facility of this size,
type, and purpose including, but not limited to,
the following:
1. Liens: Prohibited except for statutory liens
and specified existing liens and agreed upon
purchase money security interests;
2. Other Indebtedness: Standard language to
permit loans under the Facility, subordinated
indebtedness utilized to repay the Facility on
terms and conditions acceptable to the
Required Banks and consistent with the
Mandatory prepayments requirements;
capitalized leases, guarantees, certain tax
free borrowings (related to non-profit
institutions) and other indebtedness not to
exceed $25.0 million in aggregate.
3. Guarantees: Prohibited except for (i)
contingent obligations in an aggregate amount
to be determined to secure customer service
contracts in the ordinary course of business,
(ii) contingent obligations in respect of
network agreements and network facilities
incurred in the ordinary course of business;
(iii) guarantees executed in favor of the
Administrative Agent for the benefit of the
Lenders; (iv) other guarantees, all together
with capital leases and other indebtedness not
to exceed $25.0 million in aggregate as
described above.
4. Mergers: Limited to mergers of wholly owned
subsidiaries and mergers of permitted acquired
companies.
5. Joint Ventures: ACC U.K. may enter into joint
ventures with other parties to the extent that
ACC Corp.'s ownership interest in ACC U.K.
does not decline below 80% without written
approval from the Required Banks. ACC may
enter into other new joint ventures it does
not have a controlling interest in as long as
its investment in these ventures does not
exceed $5.0 million in any individual entity
or $15.0 million in aggregate over the life of
the Facility without prior Required Bank
approval. If ACC has a controlling interest in
the joint venture, meaning greater than a
66.6% ownership interest ("Controlled
Ventures"), then Controlled Venture
investments are subject to the limitations
described under Acquisitions below.
6. Subsidiaries: ACC will not permit its
subsidiaries to permit to exist or enter into
agreements which would impair or limit their
ability to pay dividends to ACC unless
approved in writing by the Required Banks.
7. Licenses: No termination by ACC or its
subsidiaries of FCC, foreign, and other
licenses, franchise agreements and other
material contracts if, in the reasonable
opinion of Required Banks, such termination
would have a material adverse effect.
8. Acquisitions: Investments in the form of
acquisitions of all or substantially all of
the business or line of business of any other
person or investments will be permitted if
each such acquisition or investment meets all
of the following requirements: (i) the Person
to be acquired or invested in shall be a
provider of long distance telephone service or
other business reasonably related to the
provision of long distance telephone or
telecommunications business, (ii) ACC, the
Borrowers, or a wholly owned subsidiary shall
be the surviving entity and no change of
control shall be effected thereby, (iii) the
Borrowers shall have demonstrated pro forma
compliance with each affirmative, negative and
financial covenant prior to the consummation
of the acquisition or investment and no
default shall exist or be created thereby,
(iv) a description of the acquisition or
investment and a copy of the related purchase
agreement or investment agreement shall have
been delivered to the Managing Agents at least
15 business days prior to the consummation of
the acquisition or investment, (v) if such
acquisition or investment causes the aggregate
fair market value of the consideration in
connection with all such acquisitions or
investments during the immediately preceding
four fiscal quarters to exceed $25,000,000,
the Required Lenders shall have consented to
such acquisition or investment, and (vi) the
person acquired or invested in (if a
subsidiary) shall have become a Borrower of
the Facility concurrent with the consummation
of the acquisition or investment.
9. Investments: Financial investments in or
loans/advances to other entities (including,
but not limited to corporations, partnerships,
or joint ventures) will be limited to (i)
investments in the form of acquisitions
permitted above, (ii) investments in Joint
Ventures permitted in paragraph 5 above, (iii)
investments in cash and cash equivalents, (iv)
investments and advances existing as of the
closing date, and (v) advances in the ordinary
course of business to other wholly owned
subsidiaries or Controlled Ventures not to
exceed $500,000. Intercompany loans from ACC
shall not exceed the following levels:
Intercompany
Borrowing Entity Amount
ACC Canada $30,000,000
ACC U.K. $25,000,000
ACC LEC $15,000,000
ACC Canada, ACC U.K. and ACC LEC will be
allowed to maintain the above levels of
intercompany borrowings and borrow the
incremental facilities ($30.0 million, $20.0
and $15.0 million respectively) as described
elsewhere in this term sheet. The
intercompany loans will be evidenced by
promissory notes in form and substance
acceptable to the Lenders, which notes shall
be pledged to the Lenders and subordinated to
the Facility. An intercompany loan will be
permitted from ACC Corp to Redemption Newco to
complete the Redemption in an amount not to
exceed $40,000,000.
10. Dividends/Stock Repurchase: The Borrowers may
not repurchase shares, pay dividends (except
to ACC Corp and the existing preferred stock
dividends) or make distributions, without
prior written bank approval by the Required
Banks, except for the Redemption described
above. In addition, up to $2,000,000 in
officer and employee owned ACC Corp stock may
be repurchased in any calendar year as long as
the Borrowers can demonstrate proforma
compliance with all covenants before and after
the share repurchase.
11. Asset Sales: Limited to sale of assets that
generate less than 10% of the Operating Cash
Flow for the trailing four quarters so long as
no default is existing or would be created
thereby. Asset Sales representing more than
10% of Operating Cash Flow shall require
Required Banks Approval.
EVENTS OF DEFAULT: Usual and customary for similar financings,
including but not limited to (i) failure to pay
principal (no grace period) or interest and fees
(within 5 business days) when due, (ii) default in
the observance of any affirmative or negative
covenant not cured within specified periods, (iii)
inaccurate or false representations and warranties,
and (iv) other usual defaults (as determined by
the Administrative Agent) with respect to ACC and
its subsidiaries, including cross defaults,
insolvency, bankruptcy, change of control, ERISA
termination, loss of material licenses or
franchises, and judgement defaults in excess of
$1,000,000.
ASSIGNMENTS AND
PARTICIPATIONS: The Lenders are permitted to assign their
commitments in minimum amounts of at least
$10,000,000. Participations are permitted with
voting rights limited to change in the size of the
Facility, amortization, interest rates, release of
a material portion of collateral and maturity.
Assignments will be subject to the Borrowers' and
the Administrative Agents' consent, which shall not
be unreasonably withheld. Assignments will be
subject to a $2,500 fee payable by the Lender to
the Administrative Agent.
ADDITIONAL PROVISIONS:Such warranties, additional covenants, events of
default, and other terms and conditions as the
Administrative Agent customarily requires in
similar transactions.
GOVERNING LAW: North Carolina
.
EXPENSES: The Administrative and Documentation Agents
reasonable attorney's fees, including overseas
counsel, and syndication expenses incurred will be
reimbursed by ACC, whether or not the transaction
contemplated is completed. The due diligence costs
incurred subsequent to the signing of this term
sheet will also be reimbursed by ACC.
As amended by action of the Board of
Directors of this Corporation on May 21,
1996
/s/ Thomas P. Young
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Thomas P. Young, Acting Secretary
BYLAWS
OF
ACC CORP.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
Section 1.01 Annual Meeting. The Annual Meeting of the stockholders of
this Corporation, for the purpose of electing Directors and transacting such
other business as may come before the meeting, shall be held on such date, at
such time and at such place as may be designated by the Board of Directors.
Section 1.02 Special Meetings. Special Meetings of the stockholders
may be called at any time by the Chairman of the Board, or by the Chief
Executive Officer, or by the President and Chief Operating Officer, or by a
majority of the entire Board of Directors acting with or without a meeting.
Special Meetings may be called for any purpose(s); however, the business
transacted at any such Special Meeting shall be confined to the purposes set
forth in the notice thereof.
Section 1.03 Place of Meetings. Meetings of stockholders shall be held
at such place as the person or persons calling the meetings shall decide,
unless the Board of Directors decides that a meeting shall be held at some
other place and causes the notice thereof to so state.
Section 1.04 Notices of Meetings. Unless waived, a written, printed,
or typewritten notice of each Annual or Special meeting, stating the date,
hour and place and the purpose or purposes thereof shall be delivered or
mailed to each stockholder of record entitled to vote or entitled to notice,
not more than 60 days nor less than 10 days before any such meeting. If
mailed, such notice shall be directed to a stockholder at his or her address
as the same appears on the records of the Corporation. Notice shall not be
required to be given to any stockholder who submits a signed waiver of
notice, in person or by proxy, whether before or after such meeting. The
attendance of any stockholder at a meeting without protesting, prior to the
conclusion of the meeting, the lack of notice of such meeting, shall
constitute a waiver of notice by him or her. If a meeting is adjourned to
another time or place and such adjournment is for 30 days or less and no new
record date is fixed for the adjourned meeting, no further notice as to such
adjourned meeting need be given if the time and place to which it is
adjourned are fixed and announced at such meeting. If, however, such
adjournment exceeds 30 days or if, after the adjournment, a new record date
is fixed for the adjourned meeting, a notice of such adjourned meeting must
be given to each stockholder of record entitled to vote at such meeting. In
the event of a transfer of shares after notice has been given and prior to
the holding of the meeting, it shall not be necessary to serve notice on the
transferee. Such notice shall specify the place where the stockholders list
will be open for examination prior to the meeting if required by Section 1.08
hereof.
Section 1.05 Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any other change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than 60 nor less than 10 days before the date
of such meeting, nor more than 60 days prior to any other action. If the
Board shall not fix such a record date, (i) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be the close of business on the date next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held, and (ii) in any case
involving the determination of stockholders for any purpose other than notice
of or voting at a meeting of stockholders, the record date for determining
stockholders for such purpose shall be the close of business on the day on
which the Board of Directors shall adopt the resolution relating thereto.
Determination of stockholders entitled to notice of or to vote at a meeting
of stockholders shall apply to any adjournment of such meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 1.06 Organization. At each meeting of the stockholders, the
Chairman of the Board, or in the absence of the Chairman of the Board, the
Chief Executive Officer, or in the absence of both the Chairman of the Board
and the Chief Executive Officer, the President and Chief Operating Officer,
or, in the absence of all such officers, a Chairman chosen by a majority in
interest of the stockholders present in person or by proxy and entitled to
vote, shall act as Chairman, and the Secretary of the Corporation, or, if the
Secretary of the Corporation not be present, the Assistant Secretary, or, in
the absence of both such officers, any person whom the Chairman of the
Meeting shall appoint, shall act as Secretary of the Meeting.
Section 1.07 Quorum. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. Except
as otherwise expressly provided by law, the Certificate of Incorporation or
these Bylaws, the presence in person or by proxy of holders of record of
shares of stock of the Corporation entitling them to exercise at least a
majority of the voting power of the Corporation shall constitute a quorum for
such meeting. The stockholders present at a duly organized meeting can
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum. If a meeting cannot be
organized because a quorum has not attended, a majority in voting interest of
the stockholders present may adjourn, or, in the absence of a decision by the
majority, any officer entitled to preside at such meeting may adjourn the
meeting from time to time to such time (not more than 30 days after the
previously adjourned meeting) and place as they (or he/she) may determine,
without notice other than by announcement at the meeting of the time and
place of the adjourned meeting. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
Section 1.08 List of Stockholders. The Secretary of the Corporation
shall prepare and make a complete list of the stockholders of record as of
the applicable record date entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the
number and class or series of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. This list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present. The Corporation shall be entitled for all
purposes to rely on the address for any stockholder appearing on the records
of its duly appointed transfer agent(s), unless a stockholder shall
specifically file with the Secretary of the Corporation a written request
that notices intended for such stockholder be mailed to a different address,
in which case all notices shall be mailed to the address specified in such
request.
Section 1.09 Order of Business and Procedure. The order of business at
all meetings of the stockholders and all matters relating to the manner of
conducting the meeting shall be determined by the Chairman of the Meeting,
whose decisions may be overruled only by majority vote of the stockholders
present and entitled to vote at the meeting in person or by proxy. Meetings
shall be conducted in a manner designed to accomplish the business of the
meeting in a prompt and orderly fashion and to be fair and equitable to all
stockholders, but it shall not be necessary to follow any manual of
parliamentary procedure.
Section 1.10 Voting.
(a) Each stockholder of any class or series of the capital stock of the
Corporation shall, at each meeting of the stockholders, be entitled to such
number of votes for each such share of capital stock as provided by the
Certificate of Incorporation with respect to each such class or series of
capital stock as shall have been held by and registered in the name of such
stockholder on the books of the Corporation on the date fixed pursuant to
these Bylaws as the record date for the determination of stockholders
entitled to notice of and to vote at such meeting, except as may otherwise be
provided by statute or the Certificate of Incorporation.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by such stockholder's proxy appointed by an instrument
in writing, subscribed by such stockholder or by his attorney thereunto
authorized and delivered to the Secretary of the Meeting in sufficient time
to permit the necessary examination and tabulation thereof before the vote is
taken; provided, however, that no proxy shall be valid after the expiration
of three years after the date of its execution, unless the stockholder
executing it shall have specified therein the length of time it is to
continue in force. At any meeting of the stockholders at which a quorum is
present, all matters, except as otherwise expressly required by law, the
Certificate of Incorporation or these Bylaws, shall be decided by the vote of
a majority of the shares present in person or by proxy and entitled to vote
thereat and thereon. The vote at any meeting of the stockholders on any
questions need not be by ballot, unless so directed by the Chairman of the
Meeting or required by the Certificate of Incorporation; provided, however,
that with respect to the election of Directors, any stockholder shall have
the right to demand that such vote be taken by written ballot. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by such
stockholder's proxy, as the case may be, and it shall state the number of
shares voted. Each proxy shall be revocable at the pleasure of the person
executing it, or of such person's personal representative(s) or assign(s),
except as otherwise provided by statute. The authority of the holder of a
proxy to act shall not be revoked by the incompetence or death of the
stockholder who executed the proxy unless, before the authority is exercised,
valid and sufficient written notice of an adjudication of such incompetence
or of such death is received by the Secretary of the Corporation.
Section 1.11 Inspectors. The Board of Directors, in advance of any
meeting of the stockholders, may appoint one or more inspectors to act at the
meeting. If inspectors are not so appointed, the person presiding at the
meeting may appoint one or more inspectors. If any person so appointed fails
to appear or act, the vacancy may be filled by appointment made by the Board
of Directors in advance of the meeting or at the meeting by the person
presiding thereat. The inspectors so appointed shall determine the number of
shares outstanding, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies and shall receive
votes, ballots, waivers, releases, or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots, waivers, releases, or consents, determine
and announce the results and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspectors shall make a report in writing of
any challenge, question or matter determined by them and execute a
certificate of any fact found by them. Any report or certificate made by
them shall be prima facie evidence of the facts stated and of the vote as
certified by them.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01 General Powers of Board. The powers of the Corporation
shall be exercised, its business and affairs conducted, and its property
controlled by the Board of Directors, except as otherwise provided by the law
of Delaware or in the Certificate of Incorporation. Each Director shall be
at least 21 years of age.
Section 2.02 Number of Directors. The number of Directors of the
Corporation shall not be less than three, with the exact number of Directors
to be such number as may be set from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors; provided,
however, that no decrease in the size of the Board shall serve to reduce the
term of any Director then in office. As used in these Bylaws, the term
"entire Board" means the total number of Directors which the Corporation
would have if there were no vacancies. The initial number of Directors and
the persons appointed as the initial Directors shall be as selected by the
incorporator.
Section 2.03 Election of Directors. At each Annual Meeting of the
stockholders, and except as may otherwise be provided by the Certificate of
Incorporation, Directors shall be elected by a plurality of the votes cast by
the holders of shares of the Corporation's capital stock entitled to vote
thereon for a term of one year, and shall hold office until the election and
qualification of their successors, or until their earlier resignation or
removal.
Section 2.04 Nominations. Nominations for the election of Directors
may be made by the Board of Directors or a committee thereof or by any
stockholder entitled to vote for the election of Directors.
Section 2.05 Resignations. Any Director of the Corporation may resign
at any time by giving written notice to the Chairman of the Board, the Chief
Executive Officer, the President and Chief Operating Officer or the Secretary
of the Corporation. Such resignation shall take effect at the time specified
therein, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.06 Vacancies. In the event that any vacancy shall occur in
the Board of Directors, whether because of death, resignation, removal, newly
created directorships resulting from any increase in the authorized number of
Directors, the failure of the stockholders to elect the whole authorized
number of Directors, or for any other reason, such vacancy shall be filled by
the vote of a majority of the Directors then in office, although less than a
quorum. A Director elected to fill a vacancy shall hold office until the
next Annual Meeting of stockholders for the election of Directors, and until
the election and qualification of his or her successor.
Section 2.07 Removal of Directors. Any or all of the Directors may be
removed for cause or without cause only by a majority vote of all outstanding
shares of stock.
Section 2.08 Place of Meeting, etc. The Board of Directors may hold
any of its meetings at the principal office of the Corporation or at such
other place or places as the Board of Directors may from time to time
designate. Directors may participate in any regular or special meeting of
the Board of Directors or of any committee thereof by means of conference
telephone or similar communications equipment pursuant to which all persons
participating in any such meeting can hear each other and such participation
shall constitute presence in person at any such meeting.
Section 2.09 Regular Meetings. A Regular Meeting of the Board of
Directors shall be held following each Annual Meeting of Stockholders for the
purpose of organizing the Corporation's affairs and the transaction of such
other business as may properly come before such meeting. Other Regular
Meetings of the Board of Directors may be held at such intervals and at such
time as shall from time to time be determined by the Board of Directors.
Once such determination has been made and notice thereof has been once given
to each person then a member of the Board of Directors, such Regular Meetings
may be held at such intervals and at the time(s) and place(s) so designated
without further notice being given.
Section 2.10 Chairman of the Board. At the regular meeting of the
Board of Directors held following each Annual Meeting of the stockholders,
the Board shall elect one of its members as Chairman of the Board, to serve
at the pleasure of the Board. The Chairman of the Board shall preside at all
meetings of the stockholders and of the Board of Directors. The Chairman of
the Board shall also perform such duties and may exercise such other powers
as from time to time may be assigned by these Bylaws or by the Board of
Directors.
Section 2.11 Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, by the
Chief Executive Officer, by the President and Chief Operating Officer, or by
a majority of Directors then in office, to be held on such day and at such
time as shall be specified by the person or persons calling the meeting.
Section 2.12 Notice of Meetings. Notice of each Special Meeting or,
where required, each Regular Meeting of the Board of Directors shall be
deemed properly given to each Director either: (a) when mailed by first
class mail, postage prepaid, to each Director, addressed to him or her at his
or her residence or usual place of business, at least two days before the day
on which such meeting is to be held; or (b) when sent to him or her at such
address by telegraph, cable, telex, telecopier, facsimile or other similar
means, or when delivered to him or her personally, or when given to him or
her by telephone or other similar means, in any event at least 24 hours
before the time at which such meeting is to be held. Such notice shall
specify the place, date and time of the meeting; however, except as otherwise
specifically required by these Bylaws, notice of any Regular or Special
Meeting of the Board of Directors need not state the purpose or purposes of
such meeting and, at any such meeting duly held, any business may be
transacted. At any meeting of the Board of Directors at which every Director
shall be present, even though without such notice, any business may be
transacted. Any acts or proceedings taken at a meeting of the Board of
Directors not validly called or convened may be made valid and fully
effective by ratification at a subsequent meeting that has been validly
called or convened. A written waiver of notice of a Special or Regular
Meeting, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed the equivalent of
such notice, and attendance of a Director at any meeting shall constitute a
waiver of notice of such meeting except when the Director attends the meeting
and prior to or at the commencement thereof protests the lack of proper
notice to him or her, or that the meeting is not lawfully called or convened.
Section 2.13 Quorum and Voting. At all meetings of the Board of
Directors, the presence of a majority of the Directors then in office shall
constitute a quorum for the transaction of business; provided, however, that
such number may not be less than one-third of the entire Board. Except as
otherwise required by law, the Certificate of Incorporation, or these Bylaws,
the vote of a majority of the Directors present at any meeting at which a
quorum is present shall be the act of the Board of Directors. At all
meetings of the Board of Directors, each Director shall have one vote.
Section 2.14 Committees. The Board of Directors may appoint an
Executive Committee, an Audit Committee, an Executive Compensation Committee,
a Nominating and Organizational Development Committee, a Strategic Planning
Committee and any other committee of the Board of Directors, each to consist
of three or more Directors of the Corporation. Each such committee shall have
and may exercise all of the powers and authority of the Board of Directors
necessary and appropriate to the carrying out of its functions, except that
no such committee shall have the power or authority:
(a) To amend the Certificate of Incorporation or these Bylaws;
(b) To adopt an agreement of merger or consolidation;
(c) To recommend to the stockholders the sale, lease or exchange of all
or substantially all the Corporation's property and assets;
(d) To recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution; nor
(e) To declare a dividend or to authorize the issuance of stock unless
the resolution creating such committee expressly so provides.
The Executive Committee of the Board shall have the power and authority
to act in lieu of the full Board of Directors as may be necessary in the
intervals between Board meetings and as otherwise requested by the full
Board, except as otherwise specifically circumscribed by the Delaware General
Corporation Law, the Corporation's Certificate of Incorporation or these
Bylaws.
The Audit Committee of the Board shall periodically review the
Corporation's auditing practices and procedures, make recommendations to
management or to the Board of Directors as to any changes to such practices
and procedures deemed necessary from time to time to comply with applicable
auditing rules, regulations and practices, and recommend independent auditors
for the Corporation to be elected by the stockholders. This Committee shall
at all times consist solely of Directors who are not also employees or
officers of the Corporation.
The Executive Compensation Committee of the Board shall meet from time
to time to set and review the compensation and benefits payable to the
Corporation's officers and other senior executives, and, acting under the
terms of the Corporation's Employee Long Term Incentive Plan and the
Corporation's Employee Stock Purchase Plan, shall have exclusive authority to
administer said Plans in all respects in accordance with their terms. This
Committee shall at all times consist solely of Directors who are not also
employees or officers of the Corporation.
The Nominating and Organizational Development Committee of the Board
shall meet from time to time to review the qualifications of and recommend to
the Board the names of candidates both (1) to stand for election as Directors
of the Corporation and (2) to fill vacancies that occur on the Board of
Directors, as well as to develop long range management succession plans for
the Corporation and to review the qualifications of and make recommendations
to the Board of the names of candidates for Chief Executive Officer of the
Corporation. The Chief Executive Officer shall be an ex officio member of
this Committee.
The Strategic Planning Committee of the Board shall meet from time to
time to develop and review the Corporation's long range strategic business
plans and goals and to recommend the same to the Board as necessary for
approval and implementation. The Chairman of the Board shall be the Chairman
of this Committee.
Each such committee shall serve at the pleasure of the Board of
Directors and shall be subject to the control and direction of the Board of
Directors. In the absence of any member of any such committee, the members
thereof present at any meeting may appoint a member of the Board of Directors
previously designated by the Board of Directors as a committee alternate to
act in the place of such absent member. Any such committee shall keep
written minutes of its meetings and report the same to the Board of Directors
at the next Regular Meeting of the Board of Directors.
Section 2.15 Compensation. The Board of Directors may, by resolution
passed by a majority of those in office, fix the compensation of Directors
for service in any capacity and may fix fees for attendance at meetings and
may authorize the Corporation to pay the traveling and other expenses of
Directors incident to their attendance at meetings, or may delegate such
authority to a committee of the Board of Directors. The Board of Directors
shall fix the compensation of all officers of the Corporation who are
appointed by the Board of Directors. The Board of Directors may authorize
the Chief Executive Officer or the President and Chief Operating Officer to
fix the compensation of such assistant and subordinate officers and agents as
either of them is authorized to appoint and remove.
Section 2.16 Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the
Board of Directors or such committee.
Section 2.17 Director Emeritus. From time to time, the Board may in
its discretion designate a Director who elects to retire from the Board, on
or after reaching age 70, as a Director Emeritus. A Director Emeritus shall
be invited to attend all Board meetings as an ex officio member of the Board
without a vote and shall be entitled to receive the annual retainer fees then
paid to the Directors of this Corporation, until reaching age 75.
ARTICLE III
OFFICERS
Section 3.01 General Provisions. The officers of the Corporation shall
be the Chief Executive Officer, the President and Chief Operating Officer,
such number of Vice Presidents as the Board of Directors may from time to
time determine, a Secretary and a Treasurer. Any person may hold any two or
more offices and perform all the duties thereof. The Board of Directors may
also elect a Chief Financial Officer, a Controller and such other officers as
it may determine.
Section 3.02 Election, Terms of Office, and Qualification. The
officers of the Corporation named in Section 3.01 of this Article III shall
be elected by the Board of Directors for an indeterminate term and shall hold
office at the pleasure of the Board of Directors.
Section 3.03 Additional Officers, Agents, etc. In addition to the
officers mentioned in Section 3.01 of this Article III, the Corporation may
have such other officers or agents as the Board of Directors may deem
necessary and may appoint, each of whom shall hold office for such period,
have such authority and perform such duties as may be provided in these
Bylaws as the Board of Directors may from time to time determine. The Board
of Directors may from time to time delegate to the Chief Executive Officer or
the President and Chief Operating Officer the power to appoint any
subordinate officers or agents and prescribe the powers and duties thereof.
In the absence of any officer of the Corporation, or for any other reason the
Board of Directors may deem sufficient, the Board of Directors may delegate
the powers and duties of such officer, in whole or in part, to any other
officer, or to any Director.
Section 3.04 Removal. Any officer of the Corporation may be removed,
either with or without cause, at any time, by resolution adopted by the Board
of Directors at any meeting. Any officer appointed not by the Board of
Directors but by an officer or committee to which the Board of Directors
shall have delegated the power of appointment may be removed, with or without
cause, by the Board of Directors, by the committee that or superior officer
(including successors) who made the appointment, or by any committee or
officer upon whom such power of removal may be conferred by the Board of
Directors.
Section 3.05 Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors, or to the Chairman of the
Board, the Chief Executive Officer, the President and Chief Operating
Officer, or the Secretary of the Corporation. Any such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 3.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, shall be filled in the
manner prescribed in these Bylaws for regular appointments or elections to
such office.
ARTICLE IV
DUTIES OF THE OFFICERS
Section 4.01 Chief Executive Officer. The Chief Executive Officer
shall have general charge of and be primarily responsible for the conduct of
the business of the Corporation, including long-range planning and strategic
analyses of the Corporation's future growth and direction, and subject to the
Board's approval, establishing the general business policies and goals of the
Corporation. During the absence or disability of the Chairman of the Board,
the Chief Executive Officer shall preside at all meetings of the stockholders
and of the Board of Directors. Except where by law the signature of the
President and Chief Operating Officer is required, the Chief Executive
Officer shall possess the same power as the President and Chief Operating
Officer to sign all contracts, certificates and other instruments of the
Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President and Chief Operating Officer, the Chief
Executive Officer shall exercise all the powers and discharge all the duties
of the President and Chief Operating Officer. The Chief Executive Officer
shall also perform such duties and may exercise such other powers as from
time to time may be assigned by these Bylaws or by the Board of Directors.
Section 4.02 President and Chief Operating Officer. The President and
Chief Operating Officer shall, subject to the control of the Board and the
Chief Executive Officer, have general supervision of the day-to-day operation
and administration of the business of the Corporation, together with such
other duties and such other powers as from time to time may be assigned by
the Board of Directors or the Chief Executive Officer. He shall execute all
bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except that the
other officers of the Corporation may sign and execute documents when so
authorized by these Bylaws, the Board of Directors, or the Chief Executive
Officer. In the absence or disability of both the Chairman of the Board and
of the Chief Executive Officer, the President and Chief Operating Officer
shall preside at all meetings of the shareholders and the Board of Directors.
Section 4.03 Vice Presidents. The Vice Presidents shall perform such
duties as are conferred upon them by these Bylaws or as may from time to time
be assigned to them by the Board of Directors, the Chief Executive Officer or
the President and Chief Operating Officer. Any one or more of the Vice
Presidents may be designated by the Board of Directors as an Executive Vice
President, and the Board may also from time to time designate one or more of
the Vice Presidents as Senior Vice Presidents in the exercise of its sole
discretion. At the request of the Chief Executive Officer, in the absence or
disability of the President and Chief Operating Officer, the Executive Vice
President designated by the Chief Executive Officer shall perform all the
duties and have all the powers of the President and Chief Operating Officer.
If there be no Executive Vice President, the Vice President designated by the
Board of Directors shall perform such duties and exercise such functions.
Each Vice President shall have such other powers and duties as may from time
to time be properly prescribed by the Board of Directors, the Chief Executive
Officer, or the President and Chief Operating Officer.
Section 4.04 Treasurer. The Treasurer shall keep correct and complete
books and records of account for the Corporation. Subject to the control and
supervision of the Board of Directors and the Chief Executive Officer, or
such other officer as any of them may designate, the Treasurer shall
establish programs for the provision of the capital required by the
Corporation, including negotiating the procurement of capital and maintaining
adequate sources for the Corporation's current borrowings from lending
institutions. He shall maintain banking arrangements to receive, have
custody of and disburse the funds and securities of the Corporation. He
shall invest the funds of the Corporation as required, and establish and
coordinate policies for investment in pension and other similar accounts due
the Corporation. The Treasurer shall have such other powers and duties as
may from time to time be properly prescribed by the Board of Directors, the
Chief Executive Officer, the President and Chief Operating Officer, or the
Chief Financial Officer.
Section 4.05 Secretary. The Secretary shall attend all meetings of the
Board of Directors and of the stockholders, and shall record all votes in the
Minutes of all such proceedings in a book to be maintained for such purpose.
The Secretary shall give or cause to be given a notice of all meetings of
stockholders and of the Board of Directors. The Secretary shall be the
custodian of the seal of the Corporation and shall affix the seal to any
instrument when authorized by the Board of Directors. The Secretary shall
keep all the documents and records of the Corporation, as required by law or
otherwise, in a proper and safe manner. The Secretary shall have such other
powers and duties as may from time to time be properly prescribed by the
Board of Directors, the Chief Executive Officer or the President and Chief
Operating Officer.
Section 4.06 Chief Financial Officer. The Board of Directors may
appoint a Chief Financial Officer. Subject to the control and supervision of
the Board of Directors and the Chief Executive Officer, the Chief Financial
Officer shall have general charge of establishing and overseeing all
financial and accounting policies and matters of the Corporation. The Chief
Financial Officer shall also have such other powers and duties as may from
time to time be properly prescribed by the Board of Directors or the Chief
Executive Officer.
Section 4.07 Controller. The Board of Directors may appoint a
Controller. Subject to the control and supervision of the Board of
Directors, the Chief Executive Officer, or such officer as either of them may
designate, the Controller shall establish, coordinate and administer an
adequate plan for the financial control of operations, including profit
planning, programs for capital investing and for financing, sales forecasts,
expense budgets and cost standards, together with the necessary procedures to
effectuate such plans. The Controller shall compare performance with
operating plans and standards and shall report and interpret the results of
operations to all levels of management.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 5.01 Mandatory Indemnification. The Corporation shall
indemnify any officer or Director of the Corporation who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceedings, whether civil, criminal, administrative or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the Corporation), by reason of the fact that
he is or was a Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a Director, trustee,
officer, employee or agent of another corporation (domestic or foreign,
nonprofit or for profit), partnership, joint venture, trust or other
enterprise, against expenses (including, without limitation, attorneys' fees,
filing fees, court reporters' fees and transcript costs), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, he had no reasonable cause to believe his conduct was unlawful.
A person claiming indemnification under this Section 5.01 shall be presumed,
in respect of any act or omission giving rise to such claim for
indemnification, to have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
and with respect to any criminal matter, to have had no reasonable cause to
believe his conduct was unlawful, and the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, rebut such
presumption.
Section 5.02 Court-Approved Indemnification. Anything contained in
these Bylaws or elsewhere to the contrary notwithstanding:
(a) The Corporation shall not indemnify any officer or Director of the
Corporation who was a party to any completed action or suit instituted by or
in the right of the Corporation to procure a judgment in its favor by reason
of the fact that he is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, trustee, officer, employee or agent of another Corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, in respect of any claim, issue or matter asserted
in such action or suit as to which he shall have been adjudged to be liable
for gross negligence or intentional misconduct in the performance of his duty
to the Corporation unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite such adjudication of
liability, and in view of all the circumstances of the case, he is fairly and
reasonably entitled to such indemnity as such Court of Chancery or such other
court shall deem proper; and
(b) The Corporation shall promptly make any such unpaid indemnification
as is determined by a court to be proper as contemplated by this Section
5.02.
Section 5.03 Indemnification for Expenses. Anything contained in these
Bylaws or elsewhere to the contrary notwithstanding, to the extent that an
officer or Director of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be
promptly indemnified by the Corporation against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) actually and reasonably incurred by him in connection
therewith.
Section 5.04 Determination Required. Any indemnification required
under Section 5.01 and not precluded under Section 5.02 shall be made by the
Corporation only upon a determination that such indemnification of the
officer or Director is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 5.01. Such determination
may be made only (a) by a majority vote of a quorum consisting of Directors
of the Corporation who were not and are not parties to any such action, suit
or proceedings, or (b) if such a quorum is not obtainable or if a majority of
a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (c) by the stockholders, or (d) by the Court of
Chancery of the State of Delaware or (if the Corporation is a party thereto)
the court in which such action, suit or proceeding was brought, if any. Any
such determination may be made by a court under division (d) of this Section
5.04 at any time (including, without limitation, any time before, during or
after the time when any such determination may be requested of, be under
consideration by or have been denied or disregarded by the disinterested
Directors under division (a) or by independent legal counsel under division
(b) or by the stockholders under division (c) of this Section 5.04); and no
failure for any reason to make any such determination, and no decision for
any reason to deny any such determination, by the disinterested Directors
under division (a) or by independent legal counsel under division (b) or by
stockholders under division (c) of this Section 5.04 shall be evidence in
rebuttal of the presumption recited in Section 5.01. Any determination made
by the disinterested Directors under division (a) or by independent legal
counsel under division (b) of this Section 5.04 to make indemnification in
respect of any claim, issue or matter asserted in an action or suit
threatened or brought by or in the right of the Corporation shall be promptly
communicated to the person who threatened or brought such action or suit, and
within twenty days after receipt of such notification such person shall have
the right to petition the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought, if any, to review the reason-
ableness of such determination.
Section 5.05 Advances for Expenses. Expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding
referred to in Section 5.01 shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding to or on behalf of
the officer or Director promptly as such expenses are incurred by him, but
only if such officer or Director shall first agree, in writing, to repay all
amounts so paid in respect of any claim, issue or other matter asserted in
such action, suit or proceeding in defense of which he shall not have been
successful on the merits or otherwise:
(a) If it shall ultimately be determined as provided in Section 5.04
that he is not entitled to be indemnified by the Corporation as provided
under Section 5.01; or
(b) If, in respect of any claim, issue or other matter asserted by or
in the right of the Corporation in such action or suit, he shall have been
adjudged to be liable for gross negligence or intentional misconduct in the
performance of his duty to the Corporation, unless and only to the extent
that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the circumstances,
he is fairly and reasonably entitled to all or part of such indemnification.
Section 5.06 Article V Not Exclusive. The indemnification provided by
this Article V shall not be deemed exclusive of any other rights to which any
person seeking indemnification may be entitled under the Certificate of
Incorporation or any Bylaw, agreement, vote of stockholders or disinterested
Directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be an officer or Director of the Corporation
and shall inure to the benefit of the heirs, executors, and administrators of
such a person.
Section 5.07 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a Directors, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the obligation or
the power to indemnify him against such liability under the provisions of
this Article V.
Section 5.08 Certain Definitions. For purposes of this Article V, and
as examples and not by way of limitation:
(a) A person claiming indemnification under this Article V shall be
deemed to have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 5.01, or in defense of any
claim, issue or the matter therein, if such action, suit or proceeding shall
be terminated as to such person, with or without prejudice, without the entry
of a judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to pay any
amount in settlement thereof (whether or not any such termination is based
upon a judicial or other determination of the lack of merit of the claims
made against him or otherwise results in his vindication); and
(b) References to an "other enterprise" shall include employee benefit
plans; references to a "fine" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the Corporation" shall include any service as a Director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such Director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" within the meaning of that term as used in this
Article V.
Section 5.09 Venue. Any action, suit or proceeding to determine a
claim for indemnification under this Article V may be maintained by the
person claiming such indemnification, or by the Corporation, in the Court of
Chancery of the State of Delaware. The Corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction
over its or his person by the Court of Chancery of the State of Delaware in
any such action, suit or proceeding.
Section 5.10 Contractual Nature. The foregoing provisions of this
Article V shall be deemed to be a contract between the Corporation and each
Director and officer who serves in such capacity at any time while this
Section 5.10 is in effect, and any repeal or modification thereof shall not
affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding there-
tofore or thereafter brought based in whole or in part upon any such state of
facts.
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01 Certificate for Shares. Every owner of one or more shares
in this Corporation shall be entitled to a certificate, which shall be in
such form as the Board of Directors shall prescribe, certifying the number
and class of shares in the Corporation owned by such person. When such
certificate is countersigned by an incorporated transfer agent or registrar,
the signature of any of said officers may be facsimile, engraved, stamped or
printed. The certificates for the respective classes of such shares shall be
numbered in the order in which they shall be issued and shall be signed in
the name of the Corporation by the Chairman of the Board, the Chief Executive
Officer, the President and Chief Operating Officer, or a Vice President and
by the Secretary or the Treasurer. A record shall be kept of the name of the
person, firm, or corporation owning the shares represented by each such
certificate and the number of shares represented thereby, the date thereof
and in case of cancellation, the date of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled and
no new certificate or certificates shall be issued in exchange for any
existing certificates until such certificates shall have been so canceled.
In case any officer who has signed, or whose facsimile signature has been
placed upon a certificate, shall have ceased to be such officer before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if such person were such officer at the date of issue.
Section 6.02 Lost, Destroyed or Mutilated Certificates. If any
certificates for shares in this Corporation become worn, defaced, or
mutilated but are still substantially intact and recognizable, the Directors,
upon production and surrender thereof, shall order the same canceled and
shall issue a new certificate in lieu of same. The holder of any shares in
the Corporation shall immediately notify the Corporation if a certificate
therefor shall be lost, destroyed, or mutilated beyond recognition, and the
Corporation may issue a new certificate in the place of any certificate
theretofore issued by it which is alleged to have been lost or destroyed or
mutilated beyond recognition. Unless otherwise provided by the Board of
Directors or an officer of the Corporation, the owner of the certificate
which has been lost, destroyed, or mutilated beyond recognition, or his legal
representative, shall give the Corporation a bond in such sum and with such
surety or sureties as may be required to adequately indemnify the Corporation
against any claim that may be made against it on account of the alleged loss,
destruction, or mutilation of any such certificate. The Board of Directors
may, however, in its discretion, refuse to issue any such new certificate
pending the resolution of any legal proceedings involving such certificate or
the loss, destruction or mutilation thereof.
Section 6.03 Transfers of Shares. Transfers of shares in the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof, his or its legal guardian, executor, or
administrator, or by his or its attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation or
with a transfer agent appointed by the Board of Directors, and on surrender
of the certificate or certificates for such shares properly endorsed or
accompanied by properly executed stock powers (and any requested signature
guarantees) and evidence of the payment of all taxes imposed upon such
transfer. The person in whose name shares stand on the books of the
Corporation shall, to the full extent permitted by law, be deemed the owner
thereof for all purposes as regards the Corporation, and the Corporation
shall not be bound to recognize any equitable or other claim or interest in
such shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as expressly provided by statute.
Section 6.04 Stock Ledgers. The stock ledgers of the Corporation
containing the names and addresses of the stockholders and the number of
shares held by them respectively shall be maintained at the principal offices
of the Corporation, or, if there be a transfer agent, at the office of such
transfer agent as the Board of Directors shall determine.
Section 6.05 Regulations. The Board of Directors may make such rules
and regulations as it may deem expedient and not inconsistent with these
Bylaws concerning the issue, transfer, and registration of certificates for
shares in the Corporation. It may appoint one or more transfer agents or one
or more registrars, or both, and may require all certificates for shares to
bear the signature of either or both.
ARTICLE VII
FINANCES
Section 7.01 Dividends. Subject to any statutory provisions, dividends
upon the capital stock of the Corporation may be declared by the Board of
Directors, payable on such dates as the Board of Directors may designate.
Section 7.02 Reserves. Before the payment of any dividend, there may
be set aside out of the funds of the Corporation available for dividends,
such sum or sums as the Board of Directors may from time to time in its
absolute discretion deem proper as a reserve to meet contingencies or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board shall deem conducive to
the interests of the Corporation. The Board of Directors may modify or
abolish any such reserve in the manner in which it was created.
Section 7.03 Bills, Notes, etc. All checks or demands for money and
notes or other instruments evidencing indebtedness or obligations of the
Corporation shall be made in the name of the Corporation and shall be signed
by such officer or officers or such other person or persons as the Board of
Directors may from time to time designate.
ARTICLE VIII
DIVISIONS
Section 8.01 Creation of Divisions. The Board of Directors may from
time to time create Divisions of the Corporation as operational units of the
Corporation, and may set apart to such Divisions such aspects or portions of
the business, affairs and properties of the Corporation as the Board of
Directors may from time to time determine.
Section 8.02 Division Officers. The Board of Directors of the
Corporation may appoint as officers of a Division a President, one or more
Vice Presidents, a Secretary, a Treasurer and any other officers, all of whom
shall serve at the pleasure of the Board of Directors. The same person may
hold two or more offices of a Division, and any person holding an office of a
Division may also be elected an officer of the Corporation. The officers and
all other persons who shall serve a Division in the capacities set forth in
this Article are hereby appointed agents of the Corporation with the powers
and duties herein set forth; provided, however, that the authority of said
agents shall be limited to matters related to the properties, business and
affairs of the Division and shall not extend to any other portion of the
properties, business and affairs of the Corporation. The Board of Directors
may from time to time authorize the Chief Executive Officer or the President
and Chief Operating Officer of the Corporation to appoint and remove all such
Divisional officers and agents and to prescribe their respective powers and
duties.
Section 8.03 Division President. The President of a Division shall be
the Chief Executive Officer of the Division and shall have the responsibility
for the general management of the affairs of the Division, subject to the
direction of the Board of Directors and the President and Chief Operating
Officer of the Corporation. He shall see that all orders, instructions,
policies and resolutions of the Board of Directors, the Chief Executive
Officer and the President and Chief Operating Officer of the Corporation
relating to the business and affairs of the Division are carried into effect.
Section 8.04 Division Secretary. The Division Secretary shall have the
custody of such books and papers, shall maintain such records and shall have
such other powers and duties as may from time to time be properly prescribed
by the Board of Directors, the Chief Executive Officer and the President and
Chief Operating Officer of the Corporation and by the Division President.
Section 8.05 Division Treasurer. Subject to the direction of the
Treasurer of the Corporation and the Division President, the Division
Treasurer shall have custody of the funds and securities of the Division,
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Division, shall deposit all monies and other valuable
effects in the name and to the credit of the Division in such depositories as
may be designated by the Board of Directors and shall have such other powers
and duties as may from time to time be properly prescribed by the Board of
Directors, the Chief Executive Officer, the President and Chief Operating
Officer of the Corporation and by the Division President.
ARTICLE IX
SEAL
Section 9.01 Seal. The Board of Directors may provide a corporate
seal, which shall be circular and contain the name of the Corporation
engraved around the margin and the words "corporate seal," the year of its
organization, and the word "Delaware."
ARTICLE X
AMENDMENTS
Section 10.01 Power to Amend. These Bylaws may be adopted, altered,
amended or repealed by the affirmative vote of the holders of at least 80% of
the issued and outstanding shares of this Corporation's Common Stock. The
Board of Directors shall also have the power to adopt, alter, amend or repeal
these Bylaws by a majority vote of the entire Board of Directors at any meet-
ing thereof, subject to the right of the holders of this Corporation's Class
A Common Stock to adopt, alter, amend or repeal these Bylaws as aforesaid.
Exhibit 99.6
[ACC Corp. Letterhead]
September 9, 1996
Teletek, Inc.
1771 East Flamingo Road
Suite 111A
Las Vegas, Nevada 89119
Attn: Mr. Wayne Godbout
RE: Net Settlement Arrangement
Dear Wayne:
By signing below, Teletek, Inc. ("Teletek") hereby acknowledges
that ACC Long Distance Corp. ("ACC") is owed the sum of
$6,675,498.85 as of September 7, 1996 arising from long distance
telecommunications services furnished by ACC to Teletek's wholly-
owned subsidiary, Hi-Rim Communications, Inc. on or before such
date (the "Hi-Rim Obligation").
Until such time as the Hi-Rim Obligation has been paid in full,
the parties mutually agree that payment for long distance
telecommunications services shall continue to be settled in
accordance with the following procedures.
1. ACC shall be permitted to terminate a minimum of 750,000
minutes of traffic per week on transmission lines owned or leased
by Hi-Rim;
2. ACC may, but shall have no obligation to, furnish additional
long distance telecommunications services to Hi-Rim;
3. On a continuing weekly basis, the amount owed by ACC to
Hi-Rim for long distance telecommunications services furnished by
Hi-Rim during the billing period, reduced by the additional
amount (if any) owed by Hi-Rim to ACC for long distance
telecommunications services furnished by ACC during the billing
period, shall be offset against and shall reduce the outstanding
Hi-Rim Obligation.
The foregoing shall in no event limit or alter any obligation of
Hi-Rim, Teletek, or any of their affiliates to pay, or any right
of ACC to demand and collect payment of, the outstanding Hi-Rim
Obligation or any other amounts owing to ACC.
Very truly yours,
ACC LONG DISTANCE CORP.
By: /s/Mae Squier-Dow
--------------------------
Mae Squier-Dow
President
MSD/mir
ACCEPTED AND APPROVED:
TELETEK, INC.
By: /s/ Wayne Godbout
--------------------------
Title: V.P. - Director
-----------------------
Date: September 9, 1996
------------------------
Exhibit 99.7
LICENSE AGREEMENT
between
E.D.S. OF CANADA, LTD.
and
ACC TELENTERPRISES LTD.
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement"), dated as of June 24, 1996 (the
"Effective Date"), is between E.D.S. OF CANADA, LTD., an Ontario corporation
("EDS"), and ACC TELENTERPRISES LTD., a Canadian corporation ("Licensee").
WHEREAS, Licensee desires for EDS to grant to it a license or
sublicense, as the case may be, to use software proprietary to EDS or its
third party vendor; and
WHEREAS, EDS is willing to license or sublicense such software to
Licensee upon the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the terms and
conditions in this Agreement, EDS and Licensee hereby agree as follows:
ARTICLE I - GRANT
1.1 License Grant. EDS hereby grants to Licensee a non-exclusive, non-
transferable license (the "License"):
(a) to use (as provided in this Article I) on the equipment
designated by type, model and serial number on Schedule 1.1 (the
"Designated Equipment") and at the location designated on
Schedule 1.1 (the "Designated Location") one copy each, in object
code form, of the computer software programs more specifically
described on Schedule 1.1 (such programs, including all new
releases, updates and modifications made thereto which are
provided to Licensee pursuant to this Agreement or the Services
Agreement, are referred to as the "Licensed Programs"); and
(b) to use (as provided in this Article I) the documentation relating
to the Licensed Programs, including user manuals, narrative
descriptions, output reports, training materials and technical
manuals setting forth specifications for the Licensed Programs
provided to Licensee by EDS (the "Documentation").
The license granted by EDS under this Agreement relates only to the
Licensed Programs and does not relate or grant rights to any other
computer software programs (including system software or operating
systems for the Designated Equipment) required for Licensee to operate
or use the Licensed Programs.
1.2 Ownership. EDS or its third party vendor, as applicable, will be
considered the owner of the Licensed Programs and Documentation, and
any copies thereof, and of all copyright, trade secret, patent and
other intellectual or industrial property rights contained or evidenced
therein, whether for purposes of the Copyright Act (Canada) or
otherwise. Physical copies of the Licensed Programs (in diskette, tape
or other form provided by EDS) and Documentation will remain the
property of EDS, or its third party vendor, as applicable, and such
copies will be deemed to be on loan to Licensee during the License
Term.
1.3 Restrictions on Use.
(a) Use by Licensee. The Licensed Programs and Documentation will be
utilized only to process: (i) the data of Licensee; or (ii) the
data of persons who are reselling Licensee's network or
telecommunications services if such data is related to the
network or telecommunications services of Licensee that are
resold. Licensee will not otherwise use the Licensed Programs
and Documentation to process data of any third person. The
Licensed Programs will be operated only by Licensees employees or
by EDS on behalf of Licensee.
(b) Use on Designated Equipment. The Licensed Programs will be
operated only on the Designated Equipment and at the Designated
Location unless Licensee obtains EDS' prior written approval of a
change in the Designated Equipment (including a change in any one
or more of the following: the manufacturer, description, model
number or serial number of the Designated Equipment) or the
Designated Location, which approval will not be unreasonably
withheld. Any EDS-approved change in the Designated Equipment or
the Designated Location will be documented by amending Schedule
1.1 to reflect such change. Licensee will have the limited
right, without obtaining EDS' prior written approval, in the
event that the Designated Equipment is inoperative due to:
(i) malfunction; or (ii) engineering changes or similar
occurrences; to temporarily use the Licensed Programs on backup
equipment until the Designated Equipment is restored to operative
status. In such case, the backup equipment will, for all
purposes hereunder, be deemed to be the Designated Equipment.
Licensee is not entitled to use the Licensed Programs on backup
equipment for a period exceeding 30 days except in the
circumstances contemplated in Section 10.6 (Force Majeure) unless
Licensee obtains EDS' prior written approval, which approval will
not be unreasonably withheld.
1.4 Confidentiality.
(a) Non-disclosure. The Licensed Programs and Documentation will be
disclosed by EDS to Licensee in confidence. Licensee will not
cause or permit disclosure, display, loan, publication, transfer
of possession (whether by sale, exchange, gift, operation of law
or otherwise), sublicensing or other dissemination of the
Licensed Programs or Documentation, in whole or in part, to any
third party without the prior written consent of EDS. Licensee
will limit use of and access to the Licensed Programs to:
(i) Licensee's employees; or (ii) with the prior written consent
of EDS (such consent not to be unreasonably withheld), Licensee's
subcontractors; who are, in each case, directly involved in the
utilization of the Licensed Programs and are bound to comply with
the confidentiality obligations set forth in this Agreement.
Licensee will limit use of and access to the Documentation to:
(i) Licensee's employees; or (ii) with the prior written consent
of EDS (such consent not to be unreasonably withheld), Licensee's
subcontractors; who are, in each case, directly involved in the
utilization of the Licensed Programs or the output therefrom and
are bound to comply with the confidentiality obligations set
forth in this Agreement.
(b) Copying or Modifying - Licensed Programs. Licensee will not
reverse assemble, reverse compile, otherwise recreate or modify
the Licensed Programs prior to the time at which Licensee
acquires a Source Code License for the Licensed Programs under
Section 6.2 (Source Code License). Licensee will not recreate or
modify the Licensed Programs after Licensee acquires a Source
Code License except as provided in Section 6.2 (Source Code
License). Licensee may make one copy of the Licensed Programs
for backup purposes and one copy for archival purposes. Licensee
will not copy or reproduce the Licensed Programs at any time
except as expressly provided for in this Agreement.
(c) Copying or Modifying - Documentation. Licensee may copy or
reproduce the Documentation for distribution to: (i) employees of
Licensee; or (ii) with the prior written consent of EDS (such
consent not to be unreasonably withheld) Licensee's
subcontractors; who are, in each case, directly involved in the
use of the Licensed Programs or the output therefrom and are
bound to comply with the confidentiality obligations set forth in
this Agreement. Licensee will not otherwise copy or reproduce
the Documentation.
(d) Safeguards. Licensee will exercise reasonable precautions, no
less vigorous than those Licensee uses to protect its own
confidential information, to safeguard the Licensed Programs and
Documentation and to ensure that no unauthorized persons have
access to the Licensed Programs and Documentation, and to ensure
that no persons authorized to have such access will take any
action which would be in violation of Section 1.3 (Restrictions
on Use) or Section 1.4 (Confidentiality) of this Agreement if
taken by Licensee. Licensee will promptly report to EDS any
actual or suspected violation of Sections 1.3 or 1.4 and Licensee
will, at its expense, take such further steps as may reasonably
be requested by EDS to prevent or remedy any such violation and
will reimburse EDS for all reasonable expenses EDS incurs related
to the remedy of such violation.
(e) Acknowledgement. EDS acknowledges that Licensee may from time to
time provide EDS with a list of subcontracting companies whom
Licensee proposes, and the circumstances and time frames in which
such subcontracting companies, will use and access the Licensed
Programs or Documentation in accordance with this Section with a
view to obtaining EDS' consent to such subcontracting companies
and such use and access.
1.5 Notices. Licensee will not alter or remove any copyright, trade
secret, patent, proprietary and/or other legal notices contained on or
in copies of the Licensed Programs and Documentation. Licensee will
include on all copies of the Licensed Programs or the Documentation
which it may have in its possession, or create, whatever type of
designation EDS may reasonably require to indicate that such material
is the proprietary property of EDS or another party.
1.6 Verification. At least twice each year during the License Term,
Licensee will permit access to EDS on reasonable notice to Licensee's
premises, computer systems and records related to this Agreement and
the use of the Licensed Programs and Documentation so that EDS may
conduct, at EDS' expense, an investigation to determine Licensee's
compliance with the terms of this Agreement.
1.7 Injunctive Relief. Licensee acknowledges and agrees that the Licensed
Programs and the Documentation are the valuable property and trade
secrets of EDS or other parties, that any willful violation by Licensee
of the provisions of Article I (Grant) would cause EDS or such other
parties irreparable injury for which they would have no adequate remedy
at law, and that, in addition to any other remedies which EDS may have,
it will be entitled to preliminary and other injunctive relief against
any such violation.
1.8 Survival. Notwithstanding anything to the contrary herein, the
restrictions set forth in this Article I (Grant) will survive the
expiration or termination of this Agreement until the provisions of
Section 8.4 (Rights on Termination) of this Agreement have been fully
complied with or have been waived in writing by EDS.
ARTICLE II - DELIVERY AND TERM
2.1 Delivery. EDS will deliver the Licensed Programs and Documentation to
Licensee at the Designated Location or make them available for
Licensee's use at the Designated Location on such date (the "Delivery
Date") as is agreed to by EDS and Licensee pursuant to the operations
and support services agreement (the "Services Agreement") between EDS
and Licensee dated as of June 24, 1996. The Licensed Programs shall be
deemed to be installed on the Start of Processing Date (as such term is
defined in the Services Agreement).
2.2 Term of License. The term of the License (the "License Term") will
commence on the Delivery Date and will continue in perpetuity unless
terminated pursuant to Article VIII (Termination) of this Agreement.
2.3 Maintenance Service Term. The term during which the maintenance
services described in Section 3.2 (Maintenance) of this Agreement will
be provided (the "Maintenance Service Term") will commence on the Start
of Processing Date and, unless earlier terminated pursuant to
Article VIII (Termination) of this Agreement, will expire on the first
anniversary of the Start of Processing Date. The Maintenance Service
Term will automatically extend for additional one year periods after
the first anniversary of the Start of Processing Date unless either of
the parties notifies the other party in writing at least three months
prior to the first anniversary of the Start of Processing Date or the
end of any renewal term as the case may be, that the Maintenance
Service Term will not be so extended.
ARTICLE III - IMPLEMENTATION AND MAINTENANCE
3.1 Implementation Assistance. EDS will provide the Licensee with the
implementation assistance for the Licensed Programs that is specified
in the Services Agreement.
3.2 Maintenance.
(a) Maintenance Service.
(i) During the Maintenance Service Term, EDS will use all
reasonable efforts to repair or replace the then current
release of the Licensed Programs if it is not performing
in all material respects in accordance with the
Documentation, upon receiving written notice of the
nonperformance from Licensee as described in
Section 3.2(b) (Notice) below. The methods and techniques
for resolving nonperformance will be at the sole
discretion of EDS. If the Designated Equipment can be
accessed remotely through dial-up capability or otherwise,
Licensee will make such remote access capability available
to EDS for use in performing maintenance services. (EDS
acknowledges that, if functions that were operating in
accordance with the Documentation in the previous release
of the Licensed Programs do not operate in accordance with
the Documentation in the current Release of the Licensed
Programs, then, for the purposes of this Section, the
current release of the Licensed Programs will not be
deemed to be performing in all material respects in
accordance with the Documentation.)
(ii) If after reasonable efforts to repair or replace the then
current release of the Licensed Programs which is not
performing in accordance with the Documentation in all
material respects, EDS is unable to make such repairs or
replacement, then:
(x) the Licensee's sole remedy will be the refund of an
amount not to exceed the greater of: (a) the
Maintenance Service Fees paid by Licensee to EDS
during the twelve month period preceding the date on
which EDS notifies Licensee that EDS is unable to
make the repair or replacement; and (b) the
unamortized portion of the License Fee where the
License Fee is depreciated on a straight line basis
over a period of five years commencing on the Start
of Processing Date; and
(y) the License Term and the Maintenance Service Term
shall terminate.
(iii) EDS will have no obligation to repair or replace the
Licensed Programs if the nonperformance is found by EDS to
have been caused or contributed to by computer equipment
malfunction, Licensee's negligence or fault, Licensee's
failure to follow instructions as set forth in the
Documentation, improper or unauthorized use of the
Licensed Programs, changes to the Licensed Programs made
by Licensee, changes in any software not provided by EDS,
hardware changes or any other cause beyond the control of
EDS; provided, however, EDS and Licensee may agree that
EDS will provide Licensee with assistance in resolving any
nonperformance resulting from such causes as an Additional
Service pursuant to Section 3.3 (Additional Services).
(b) Notice. To obtain the maintenance services described in
Section 3.2(a) (Maintenance Service), Licensee must provide EDS
with the following during the Maintenance Service Term:
(i) written notice of the operating problem; (ii) a detailed
description of the failure to perform substantially in accordance
with the Documentation; (iii) a detailed description of the
operating conditions, including the specific hardware/software
configuration, under which such failure to perform occurred; and
(iv) a representative sample of inputs and outputs for
replicating and analyzing such failure to perform; provided that,
in emergency situations, the parties will cooperate to respond to
the operating problem with the available information.
(c) New Releases. From time to time, EDS may, in its sole
discretion, make updates, improvements or changes to the Licensed
Programs in separate releases to the Licensed Programs
("Releases") which are designed to enhance operating performance
without changing the basic functions of the Licensed Programs.
EDS has no obligation to make any updates, improvements or
changes to the Licensed Programs. During the Maintenance Service
Term, EDS will make all new Releases available to Licensee which
are generally made available to EDS' other licensees of the
Licensed Programs and will provide revisions to the Documentation
necessary to reflect the updates, improvements or changes
included in such new Releases. EDS confirms that, during the
Maintenance Service Term, all new Releases made available to take
account of new releases of the operating systems for the
Designated Equipment will be provided at no additional charge
(other than the Maintenance Service Fee). EDS may discontinue
maintenance services as described in Section 3.2(a) (Maintenance
Service) for a prior Release of the Licensed Programs replaced by
a new Release 180 days after the date such new Release is first
made available. EDS will provide to Licensee maintenance
services as described in Section 3.2(a)(Maintenance Service) for
prior Releases of the Licensed Programs which Licensee elects to
continue to use as an Additional Service pursuant to Section 3.3
(Additional Services) on an as needed basis, so long as Licensee
continues to pay for and receive maintenance services for the
most current Release of the Licensed Programs in anticipation of
eventually using the most current Release. There will be no
charge under Section 3.3 (Additional Services) for any
maintenance services provided to Licensee for prior Releases of
the Licensed Programs until the earlier of: (i) the expiry of
six months after conversion and loading of Licensee's engineering
and End User data under the Services Agreement; and (ii) eighteen
months following the Start of Processing Date.
(d) Requested Changes. Any changes to the Licensed Programs or
Documentation (other than those specified in Section 3.2(c) (New
Releases)) requested by Licensee which EDS, in its sole
discretion, has not or does not intend to make part of a new
Release will be provided as an Additional Service pursuant to
Section 3.3 (Additional Services).
3.3 Additional Services.
(a) Services. Licensee may from time to time request that EDS
provide support or services which are beyond the scope or amount
of the support or services provided pursuant to this Agreement
("Additional Services"). Any requested Additional Services will
be provided by EDS to Licensee on such terms as are mutually
agreed upon by Licensee and EDS and documented in writing,
including but not limited to the description of the Additional
Services to be provided, the price to be paid and any other
appropriate terms and conditions.
(b) Enhancements Funded by Licensee. This Section 3.3(b) applies to
major enhancements or developments that are paid for by Licensee
as an Additional Service under Section 3.3(a) (Services).
Licensee and EDS may, in finalizing the terms on which such
Additional Services will be provided by EDS, negotiate credits or
refunds to be provided to Licensee if the code for such
enhancement or development is later included by EDS as part of
the core IXplus System and INM System that EDS makes available to
its other customers. Any agreement concerning credits or refunds
shall be finalized and documented in writing prior to the time at
which EDS commences to provide the Additional Services for such
major enhancement or development.
ARTICLE IV - WARRANTY
4.1 Rights in Licensed Programs. EDS hereby represents and warrants that,
subject to Section 9.1(b) (Patents), it has all rights, title,
ownership interest and/or marketing rights necessary to grant the
rights and the License to Licensee set forth herein.
4.2 Nonperformance of Licensed Programs.
(a) Warranty. EDS further warrants that on the Start of Processing
Date, and for a period of one year thereafter, the Licensed
Programs will be capable of performing in all material respects
in accordance with the Documentation. EDS will resolve any
failure of the Licensed Programs to perform in all material
respects in accordance with the Documentation pursuant to the
terms and conditions of Section 3.2 (Maintenance) of this
Agreement.
(b) Documentation. EDS acknowledges that, as at the Start of
Processing Date, the "Documentation" will include Section IV,
Functional Capabilities, of EDS' proposal to Licensee dated
March, 1996, A Proposal to ACC TelEnterprises Ltd. for Billing
Services and Support. Licensee acknowledges that the
Documentation will be revised in accordance with Section 3.2(c)
(New Releases) to take account of new Releases of the Licensed
Programs.
4.3 Remedies. EDS does not warrant that the functions contained in the
Licensed Programs will meet Licensee's requirements or that the
operation of the Licensed Programs will be uninterrupted or error free.
EDS will have no responsibility with respect to Licensee's data files
except such responsibilities as are assumed by EDS under the Services
Agreement. EDS' liability for all matters relating to the warranty set
forth in Section 4.2 (Nonperformance of Licensed Programs) will be
limited as provided in Section 3.2(a) (Maintenance Service).
4.4 No Other Warranties. THE WARRANTIES CONTAINED IN THIS ARTICLE IV ARE
LIMITED WARRANTIES AND ARE THE ONLY REPRESENTATIONS, WARRANTIES OR
CONDITIONS MADE BY EDS. EDS MAKES AND THERE ARE, AND LICENSEE
RECEIVES, NO OTHER REPRESENTATIONS, WARRANTIES OR CONDITIONS, EXPRESS
OR IMPLIED, STATUTORY OR OTHERWISE INCLUDING BUT NOT LIMITED TO, NO
REPRESENTATIONS, WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTIES ARE IN
LIEU OF ALL LIABILITIES OR OBLIGATIONS OF EDS FOR DAMAGES ARISING OUT
OF OR IN CONNECTION WITH THE DELIVERY, USE OR PERFORMANCE OF THE
LICENSED PROGRAMS.
ARTICLE V - PAYMENTS TO EDS
5.1 License Fee. Licensee will pay to EDS for the grant of the License a
one-time license fee of $1,450,000 (CDN.) (the "License Fee") in
accordance with Part I of Schedule 5.1 (Payment and Billing).
5.2 Annual Maintenance Service Fee. For the maintenance services provided
pursuant to Section 3.2 (Maintenance) of this Agreement during the
Maintenance Service Term, Licensee will pay to EDS, for each twelve
month period commencing on the Start of Processing Date or an adversary
of the Start of Processing Date, the amount (the "Maintenance Service
Fee") set out in Part II of Schedule 5.1 (Payment and Billing). Not
less than thirty days prior to the end of each twelve-month period, EDS
will send Licensee an invoice for the Maintenance Service Fee for the
next twelve-month period, prorated as appropriate for any partial
twelve-month period.
5.3 Out-of-Pocket Expenses. Licensee will pay, or reimburse EDS for, all
reasonable actual out-of-pocket costs and expenses incurred by EDS with
the prior written approval of Licensee in connection with the
performance of this Agreement including but not limited to, the travel
and travel-related expenses incurred by EDS personnel providing
installation assistance, training, maintenance service and any
Additional Services described in this Agreement. EDS will provide
relevant vouchers, invoices or receipts to support all such out-of-
pocket costs and expenses.
5.4 Time of Payment. Any amount due to EDS pursuant to this Agreement for
which a time for payment is not otherwise specified will be due and
payable thirty days after Licensee's receipt of an invoice from EDS
conforming to this Agreement. Any amount owing to EDS pursuant to this
Agreement that is not paid when due and payable will thereafter bear
interest until paid at a rate of interest equal to 1% per annum more
than the prime rate established from time to time by the Toronto-
Dominion Bank, calculated and payable monthly. The foregoing does not
apply to any amount that is reasonably the subject of a dispute
provided that all amounts due and payable which are not in dispute have
been paid to EDS in accordance with this Agreement and any amount that
is in dispute has been paid into an escrow account in accordance with
Section 7.5(a) (Disputed Amounts) of this Agreement.
5.5 Taxes. There will be added to any charges hereunder, and Licensee will
pay to EDS, all taxes, assessments, duties, permits and fees, however
designated or levied, which are based upon any charges under this
Agreement, or upon this Agreement or the Licensed Programs, services or
materials provided hereunder, or their use, including but not limited
to the Goods and Services Tax and any sales and use taxes, and any
taxes or amounts in lieu thereof paid or payable by EDS in respect of
the foregoing, but excluding franchise taxes and taxes based on the net
income of EDS.
ARTICLE VI - OTHER AGREEMENTS
6.1 Services Agreement.
(a) Operation of Licensed Programs by EDS. Under the Services
Agreement the Licensed Programs will be operated by EDS on behalf
of the Licensee on the Designated Equipment at the Designated
Location to process: (i) the data of the Licensee; or (ii) the
data of persons who are reselling Licensee's network or
telecommunications services, which data is related to the network
or telecommunications services of Licensee that are resold.
Operation of the Licensed Programs by EDS on behalf of the
Licensee will be deemed to be in compliance with the terms of
this Agreement but such operation by EDS does not authorize
Licensee to use the Licensed Programs or to take any action
relating to the Licensed Programs that is not in compliance with
Article I (Grant).
(b) Change in Equipment or Location. EDS shall be entitled to change
the Designated Location at which EDS is operating the Licensed
Programs on behalf of Licensee under the Services Agreement in
accordance with Section 4.4 (Change in Facilities) of the
Services Agreement.
(c) Maintenance Services. EDS and Licensee agree that the
Maintenance Service Term will not be terminated pursuant to
Section 2.3 (Maintenance Service Term) prior to the expiry of the
term of the Services Agreement. During the term of and subject
to the provisions of the Services Agreement, while EDS is
operating the Licensed Programs on behalf of the Licensee:
(i) EDS will provide maintenance services for the Licensed
Programs in accordance with this Agreement;
(ii) EDS will repair or replace the Licensed Programs if the
nonperformance is found by EDS to have been caused or
contributed to by the malfunction of equipment or software
operated by EDS or changes to such equipment or software.
This paragraph (ii) will apply notwithstanding
paragraph 3.2(a)(iii) of this Agreement; and
(iii) Licensee will pay the Maintenance Service Fees set out in
and in accordance with this Agreement.
Maintenance services for those software programs forming part of
the Licensed Programs that are developed by EDS specifically for
the Licensee (including integration of such software programs
into new Releases of the Licensed Programs) will be provided as
part of the SE Services under the Services Agreement.
(d) Conversion to Inhouse Processing. Licensee may operate the
Licensed Programs during the License Term following termination
of the term of the Services Agreement in accordance with this
Agreement. In such event:
(i) in connection with the Transition Services provided
pursuant to Section 8.7 (Transition Services) of the
Services Agreement, Licensee shall identify the equipment
on which and the location at which Licensee wishes to
operate the Licensed Programs. Section 1.3(b) (Use on
Designated Equipment) shall apply to the identification by
License of the equipment and location on which the
Licensed Programs are to be operated as if Licensee were
requesting EDS' approval to a change in the Designated
Equipment and the Designated Location under
Section 1.3(b); and
(ii) Licensee shall be solely responsible for acquisition and
compliance with the term of licenses for the QTEL-9000
software, installation of such software on the Designated
Equipment and maintenance and support for such software in
connection with Licensee's use of the Licensed Programs
after the termination of the term of the Services
Agreement.
6.2 Source Code License. During the License Term, Licensee may acquire a
license (the "Source Code License") to use the source code of the
Licensed Programs (the "Source Code") subject to the following:
(a) Subject to paragraph 6.2(b), Licensee shall pay to EDS a license
fee (the "Source Code License Fee") in the amount of (i) twenty-
five percent of the License Fee if Licensee acquires the Source
Code License prior to the third anniversary of the Start of
Processing Date; or (ii) otherwise, twenty-five percent of EDS'
then current license fee for the object code version of the
Licensed Programs;
(b) if, at the time Licensee acquires a Source Code License, EDS is
not authorized to provide Licensee with the source code for the
Facilities and Engineering software and the Trouble Ticketing
software forming part of the Licensed Programs, then: (i) EDS
shall have no obligation to provide the source code for the
Facilities and Engineering software and the Trouble Ticketing
software to Licensee; (ii) such source code shall be deemed not
to be a part of the Source Code; and (iii) EDS and Licensee will
negotiate in good faith an appropriate adjustment to the Source
Code License Fee to recognize EDS' inability to provide the
source code for the Facilities and Engineering software and the
Trouble Ticketing software to Licensee;
(c) Licensee shall give EDS written notice of Licensee's intention to
acquire a Source Code License. Licensee shall pay the Source
Code License Fee to EDS when Licensee delivers such notice to
EDS. EDS will deliver the Source Code to Licensee within thirty
days of EDS' receipt of such notice and the Source Code License
Fee;
(d) The provisions of Article I (Grant) will apply to the Source Code
of the Licensed Programs. Without limiting the generality of the
foregoing, Licensee will maintain the Source Code of the Licensed
Programs in confidence in accordance with Section 1.4
(Confidentiality). Licensee shall be authorized to use the
Source Code: (i) in support of Licensee's operations of the
Licensed Programs in accordance with Article I (Grant); and
(ii) to make such changes ("Changes") to the Licensed Programs as
Licensee deems appropriate. Licensee shall be the owner of all
rights (including copyright, trade secret, patent or other
intellectual property rights) in any Changes made by Licensee.
The ownership by Licensee of all rights in any Changes: (i) does
not give Licensee any right, title or interest in the Licensed
Programs or the copyright, trade secret, patent or other
intellectual property rights in the Licensed Programs; or
(ii) entitle Licensee to take any action with respect to any
Change that includes all or part of the Licensed Programs that
Licensee is not authorized to take under this Agreement with
respect to the Licensed Programs or such part as is included in
the Change.
ARTICLE VII - DISPUTE RESOLUTION
7.1 Disputes. In the event of any dispute, controversy or claim arising
under or in connection with this Agreement, or the breach, termination,
validity or enforceability of any provision of this Agreement
("Disputes"), then upon the written request of either party, each of
the parties will appoint a designated officer whose task it will be to
meet for the purpose of endeavouring to resolve the Dispute or to
negotiate for an adjustment to the provisions of this Agreement. The
designated officers will meet as often as the parties reasonably deem
necessary in order to gather and furnish to the other all information
with respect to the matter in issue which the parties believe to be
appropriate and germane in connection with its resolution. Such
officers will discuss the Dispute and negotiate in good faith in an
effort to resolve the Dispute or renegotiate the applicable section or
provision without the necessity of any formal proceeding relating
thereto. The specific format for such discussions will be left to the
discretion of the designated officers but may include the preparation
of agreed upon statements of fact or written statements of position
furnished to the other party. No formal proceedings for the judicial
resolution of such dispute or controversy may be commenced until:
(i) the designated officers conclude in good faith that amicable
resolution through continued negotiation of the matter in issue is not
likely to occur; or (ii) thirty days after the circumstances giving
rise to the Dispute originated or occurred; which ever is later.
7.2 Arbitration. Subject to Section 7.3 (Exception), any Dispute that is
not resolved in accordance with Section 7.1 (Disputes) will be settled
by final and binding arbitration conducted by a Board in accordance
with Schedule 7.2 (Arbitration). Judgment upon the award rendered in
any such arbitration may be entered in any court having jurisdiction
thereof, or application may be made to such court for a judicial
acceptance of the award and an enforcement, as the law of such
jurisdiction may require or allow.
7.3 Exception. The parties acknowledge and agree that, with respect to any
Dispute arising under Section 1.4 (Confidentiality), Section 9.1
(Infringement Indemnity) or Section 10.1 (Other Confidential
Information) or in respect of a claim for injunctive relief, a party
may refer such matter to arbitration in accordance with Section 7.2
(Arbitration) or apply to the appropriate court for such relief.
7.4 Exclusive Remedy. Other than any action necessary to enforce the award
of the Board, and subject to Section 7.3 (Exception), the parties agree
that the provisions of this Article VII are a complete defense to any
suit, action or other proceeding instituted in any court or before any
administrative tribunal with respect to any Dispute arising under or in
connection with this Agreement. Nothing in this Article VI prevents
the parties from exercising their rights to terminate this Agreement in
accordance with this Agreement.
7.5 Continued Performance.
(a) Disputed Amounts. In the event of a Dispute between EDS and
Licensee with respect to any amounts that EDS claims are owing to
it under this Agreement, then Licensee will pay: (i) to EDS all
amounts the payment of which is not in Dispute; and (ii) all
amounts that are the subject of the dispute into an escrow
account structured by agreement of the parties or as ordered by
the Board if agreement cannot be reached, for distribution in
accordance with the award of the Board.
(b) Continued Performance. EDS shall continue to provide the
services, if applicable, pursuant to the Agreement during
arbitration proceedings pursuant to this Article VII
(Arbitration) except where: (i) this Agreement has been
terminated in accordance with Article VIII (Termination); or
(ii) the Dispute relates (in whole or in part) to amounts that
EDS claims are owing to it pursuant to the Agreement and Licensee
does not pay the disputed amounts into an escrow account and the
amounts not in dispute to EDS in accordance with Section 7.5(a)
(Disputed Amounts).
ARTICLE VIII - TERMINATION
8.1 Termination for Cause. If either party materially or repeatedly
defaults in the performance of any of its duties or obligations under
this Agreement and, within thirty days after written notice is given to
the defaulting party specifying the default: (i) such default is not
substantially cured and any part of the default that is not so cured is
immaterial to the party not in default; or (ii) the defaulting party
does not obtain the approval of the other party to a plan to remedy the
default and thereafter implements such plan to its conclusion; then the
party not in default may terminate the License Term and/or the
Maintenance Service Term by giving written notice to the defaulting
party.
8.2 Termination for Adverse Change in Business. If Licensee ceases to
carry on its business, EDS may, by giving Licensee written notice
thereof terminate the License Term and/or the Maintenance Service Term
as of a date specified in such notice of termination. If: (i) a
receiver or similar officer is appointed for Licensee; (ii) Licensee
makes an assignment for the benefit of all or substantially all of its
creditors or enters into an agreement for composition, extension or
readjustment of all or substantially all of its obligations; or
(iii) proceedings under any bankruptcy or insolvency law are commenced
by or against Licensee; then in such event but subject to applicable
law, EDS may, by giving Licensee written notice thereof, terminate the
License Term and/or the Maintenance Service Term as of a date specified
in such notice of termination if Licensee defaults in the performance
of any of its duties or obligations under this Agreement.
8.3 Termination of Services Agreement. If: (i) either party terminates
the term of the Services Agreement pursuant to Section 8.1 (Termination
for Cause) of the Services Agreement as a result of the uncured default
of the other party under such Agreement; or (ii) EDS terminates the
term of the Services Agreement pursuant to Section 8.2 (Termination for
Insolvency) of the Services Agreement as a result of Licensee's
default; then such party may, by giving written notice to the other
party, terminate the License Term and/or the Maintenance Service Term
as of a date specified in such notice of termination.
8.4 Rights Upon Termination. Upon termination of the License Term for any
reason, then, in addition to any other rights which either party may
have, Licensee will promptly return to EDS all copies of the Licensed
Programs and the Documentation in Licensee's possession and completely
erase the Licensed Programs and all elements thereof from the
Designated Equipment and any other Licensee computer system. Upon EDS'
request, Licensee will execute and deliver to EDS a written
certification that Licensee has complied with the provisions of his
Section 8.4 and no longer retains any material relating to the Licensed
Programs or the Documentation except as contemplated in the preceding
sentence.
ARTICLE IX - INDEMNIFICATION, REMEDIES AND LIABILITY
9.1 Intellectual Property Indemnity.
(a) Defense of Claim. Subject to Section 9.l(b) (Exception), EDS
will defend Licensee and hold it harmless from and against any
and all claims, actions, damages, liabilities, costs and expenses
(including reasonable legal fees and expenses) (collectively,
"Claims"): (i) based on a claim that the Licensed Programs, the
Source Code or the Documentation used within the scope of the
licenses granted herein, in whole or in part: (x) infringes a
patent, copyright, trade mark or similar proprietary right
granted under U.S. or Canadian law; or (y) constitutes an
unlawful disclosure, use or misappropriation of another party's
trade secret; or (ii) for breach of the representation and
warranty set out in Section 4.1 (Rights in Licensed Programs) of
this Agreement. EDS will bear the expense of such defense and
pay any costs and damages which are finally awarded as a result
of such claim, provided that Licensee notifies EDS promptly in
writing of the claim and that Licensee allows EDS to fully direct
the defense or settlement of such claim. EDS will not be
responsible for any settlement or compromise made without its
consent.
(b) Patents. To the extent that Section 4.1 (Right in Licensed
Programs) or Section 9.1(a) (Defense of Claim) applies to
patents, EDS shall be liable for alleged or adjudged infringement
of patents only to the extent of its knowledge at the time EDS
agreed to supply the Systems or perform the work giving rise to
the infringement.
(c) Continued Right to Use. Should the Licensed Programs, the Source
Code or the Documentation become, or in EDS' opinion be likely to
become, the subject of a Claim specified in Section 9.1(a)
(Defense of Claim), EDS will attempt to procure for Licensee the
right to continue to exercise all rights granted to Licensee
under this Agreement, or replace or modify the Licensed Programs,
Source Code or Documentation to make its use hereunder non-
infringing. If, with respect to the Licensed Programs or Source
Code, neither option is reasonably available in EDS' judgment:
(i) Licensee will return the Licensed Programs, Source Code
and the Documentation to EDS;
(ii) the License Term and the Maintenance Service Term and all
of the rights granted hereunder will terminate; and
(iii) EDS will pay to Licensee the unamortized part of the
License Fee, where such License Fee is amortized over a
five year period on a straight line basis commencing on
the Start of Processing Date. If Licensee has acquired
the Source Code License by payment of the Source Code
License Fee, EDS will also pay to Licensee the unamortized
part of the Source Code License Fee where such Source Code
License Fee is amortized on a straight line basis over a
five year period commencing on the date Licensee acquires
the Source Code License.
(d) Infringement Caused by Licensee. EDS will have no liability to
Licensee under this Section 9.1 or under any other provision of
this Agreement if any Claim specified in Section 9.l(a)(Defense
of Claim) is based upon:
(i) the use of the Licensed Programs, Source Code or
Documentation delivered hereunder in combination with
equipment, devices or software not supplied or approved by
EDS;
(ii) the use of the Licensed Programs or Source Code in an
application or environment for which it was not designed
or was not contemplated under this Agreement; or
(ii) the modification of the Licensed Programs, Source Code or
Documentation by anyone other than EDS or its employees or
agents;
if no infringement would have occurred but for such use or
modification. Further, Licensee will indemnify and hold EDS
harmless from any liability, loss, claim or damage to persons or
property arising out of Licensee's possession, operation or use
of the Licensed Programs, the Source Code or the Documentation or
arising out of the fault or negligence of Licensee or its
employees and will indemnity EDS from any expense or cost
incurred if any such claims are made.
(e) Entire Obligation. This Section 9.1 states EDS' entire
obligation to Licensee regarding infringement.
9.2 Third Party Claims. Licensee will indemnify and defend EDS and hold it
harmless from and against any and all Claims of any persons whose data
is processed by Licensee using Licensed Programs in accordance with
this Agreement.
9.3 Remedies and Limit of Liability.
(a) Limit. In the event EDS is liable to the Licensee on account of
EDS' performance or nonperformance of its obligations under this
Agreement or the Services Agreement, whether arising by
negligence, willful misconduct, or otherwise, and subject to
Section 9.3(b) (Remedies re Nonperformance of Licensed Programs):
(i) the amount of damages recoverable against EDS for all events,
acts or omissions will not exceed in the aggregate an amount
equal to the Effective Limit of Liability; and (ii) the measure
of damages will not include any amounts for indirect,
consequential, incidental or punitive damages of any party,
including third parries, or for damages which could have been
avoided had the data furnished by EDS been verified before
utilization thereof or for lost profits. Further, no cause of
action which accrued more than two years prior to the filing of a
suit alleging such cause of action may be asserted under this
Agreement or the Services Agreement against EDS. In connection
with the conduct of any litigation with third parties relating to
any liability of EDS to the Licensee or to such third parties,
EDS will have all rights (including the right to accept or reject
settlement offers and to participate in such litigation) which
are appropriate to its potential responsibilities or liabilities.
Notwithstanding any provision in this Agreement or the Services
Agreement, EDS will have no liability for any loss or destruction
of the data of the Licensee beyond any obligations of EDS under
this Agreement or the Services Agreement respecting the
safeguarding of such data.
(b) Remedies re Nonperformance of Licensed Programs. For all Claims
relating to a breach of the warranty contained in Section 4.2
(Nonperformance of Licensed Programs), Licensee's sole and
exclusive remedy will be the correction of such breach at no
charge to Licensee as described in Section 4.3 (Remedies) of this
Agreement.
(c) Exception. Section 9.3(a)(i) shall not apply in the case of the
willful misconduct of EDS that is intentionally wrong.
(d) Definitions. In this Section, "Effective Limit of Liability" has
the meaning attached to such term in the Services Agreement.
9.4 Acknowledgement. The parries acknowledge that each of the provisions
of this Agreement including the fees for the license and services, were
based in part on the limitations contained in Section 9.3 (Remedies and
Limit of Liability) above and that each party fully understands and
accepts the obligations and limitations described in this Agreement.
ARTICLE X - MISCELLANEOUS
10.1 Other Confidential Information. In addition to the provisions of
Section 1.4 (Confidentiality) of this Agreement, each party will use
the same means as it uses to protect its own confidential information,
but in any event not less than reasonable means, to prevent the
disclosure and to protect the confidentiality of both (a) written
information received from the other party which is marked or identified
as confidential and (b) oral or visual information identified as
confidential at the time of disclosure. The information described in
the preceding sentence at (a) and (b) will be referred to in this
Agreement as "Confidential Information". Each party will use
Confidential Information received from the other party only in
connection with the purposes of this Agreement. The foregoing will not
prevent either party from disclosing Confidential Information which
belongs to such party or is: (i) already known by the recipient party
without an obligation of confidentiality; (ii) publicly known or
becomes publicly known through no unauthorized act of the recipient
party; (iii) rightfully received from a third party; (iv) independently
developed by the recipient party without use of the other party's
Confidential Information; (v) disclosed without similar restrictions to
a third party by the party owning the Confidential Information; or
(vi) approved by the other party for disclosure. If Confidential
Information is required to be disclosed pursuant to a requirement of a
governmental authority, the Confidential Information may be disclosed
pursuant to such requirement so long as the party required to disclose
the Confidential Information provides the other party with timely prior
notice of such requirement and coordinates with such other party in an
effort to limit the nature and scope of such required disclosure.
10.2 Assignment. This Agreement will be binding on the parties hereto and
their successors and permitted assigns. Neither party may assign this
Agreement, in whole or in part, without the prior written consent of
the other party.
10.3 Notices. Notice under this Agreement shall be deemed given when
delivered in hand, when transmitted if sent by electronic mail or
facsimile, or five days after mailing if sent by registered mail,
return receipt requested, postage prepaid, and addressed as follows:
In the case of EDS:
E.D.S. of Canada, Ltd.
33 Yonge Street
Suite 810
Toronto, Ontario M5E 1G4
Attention: President
Telephone: (416) 814-4500
Telecopier: (416) 814-4600
In the case of Licensee:
ACC TelEnterprises Ltd.
90 Galaxy Boulevard
Etobicoke, Ontario
M9W 4Y6
Attention: Executive Vice-President Operations, Engineering and
Service
Telephone: (416) 213-2000
Telecopier: (416) 798-7872
If a party changes its address for notification purposes, then it shall
give the other party prior written notice of the new address and the
date on which it shall become effective.
10.4 Headings. The article and section headings and the table of contents
used herein are for reference and convenience only and will not enter
into the interpretation hereof.
10.5 Relationship of Parties. EDS, in furnishing services to Licensee, is
providing services only as an independent contractor. EDS does not
undertake by this Agreement or otherwise to perform any obligation of
Licensee, whether regulatory or contractual.
10.6 Force Majeure. Each party hereto will be excused from performance
hereunder (other than the performance of payment obligations) for any
period and to the extent that it is prevented from performing pursuant
hereto, in whole or in part, as a result of delays caused by the other
party or an act of God, war, civil disturbance, court order, labour
dispute, third party nonperformance or other cause beyond its
reasonable control, including failures, fluctuations or non-
availability of electrical power, heat, light, air conditioning or
telecommunications equipment and such nonperformance will not be a
default hereunder nor a ground for termination of the License Term or
the Maintenance Service Term.
10.7 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void (other than a provision relating
to a payment obligation), then both parties will be relieved of all
obligations arising under such provision, but if the remainder of this
Agreement will not be affected by such declaration or finding, then
each provision not so affected will be enforced to the extent permitted
by law.
10.8 Legal Fees. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the prevailing party will be entitled to
recover reasonable legal fees and other costs incurred in that action
or proceeding, in addition to any other relief to which it may be
entitled.
10.9 Media Releases. All media releases, public announcements and public
disclosures by either party or its employees relating to this Agreement
or its subject matter, including but not limited to promotional or
marketing material (but not including any announcement intended solely
for internal distribution or any disclosure required by legal,
accounting or regulatory requirements beyond the reasonable control of
a party), will be coordinated with and approved by the other party in
writing prior to the release thereof.
10.10 No Third Party Beneficiary. Nothing in this Agreement may be relied
upon or will benefit any party other than the parties hereto.
10.11 Waiver. No delay or omission by either party hereto to exercise any
right or power accruing upon any noncompliance or default by the other
party with respect to any of the terms of this Agreement will impair
any such right or power or be construed to be a waiver thereof. A
waiver by either of the parties hereto of any of the covenants,
conditions or agreements to be performed by the other will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant, condition or agreement herein contained.
10.12 Schedules. The following schedules are incorporated into and form part
of this Agreement:
Schedule 1.1 Designated Equipment, Designated Location,
Description of Licensed Programs
Schedule 5.1 Payment and Billing
Schedule 7.2 Arbitration
Schedule A Index of Definitions
10.13 Entire Agreement. This Agreement (including the Schedules hereto and
all other documents referred to herein) and the Services Agreement
constitute the entire agreement between the parties with respect to the
subject matter of this Agreement and supersede all prior and
contemporaneous agreements and understandings, whether written or oral,
between the parties with respect to the subject matter of this
Agreement including the letter agreement between EDS and Licensee dated
June 19, 1996. There are no representations, warranties, conditions,
understandings or agreements, express or implied, statutory or
otherwise, relating to this Agreement that are not fully expressed in
this Agreement or the Services Agreement.
10.14 Survival. Section 1.8 (Survival), Section 4.4 (No Other Warranties),
Article V (Payments to EDS) (with respect to amounts owing at
termination), Article VII (Arbitration), Section 8.4 (Rights Upon
Termination), Article IX (Indemnification, Remedies and Liability),
Section 10.1 (Other Confidential Information), Section 10.2
(Assignment), Section 10.9 (Media Releases) and this Section 10.14
(Survival) will survive any termination of this Agreement.
10.15 Governing Law. This Agreement will be governed by and construed in
accordance with the laws, other than choice of law rules, of the
Province of Ontario.
IN WITNESS WHEREOF, EDS and Licensee have caused this Agreement to be
signed by their duly authorized representatives as of the Effective Date.
E.D.S. OF CANADA, LTD. ACC TELENTERPRISES LTD.
By: /s/ Sheel Agm Whittaker By: /s/ Steve M. Dubnik
---------------------------- -----------------------------
Print Name: Sheel Agm Whittaker Print Name: Steve M. Dubnik
-------------------- ---------------------
Title: President Title: Chairman, President + CEO
------------------------- --------------------------
By: /s/ Jacques Quimet By: /s/ Margaret A. Barrett
---------------------------- -----------------------------
Name: Jacques Quimet Name: Margaret A. Barrett
-------------------------- ---------------------------
Title: Vice President Title: EVP
Communiciations Division --------------------------
-------------------------
<PAGE>
<PAGE>
SCHEDULE 1.1
Designated Equipment, Designated Location,
Description of Licensed Programs
Designated Equipment:
Serial
Manufacturer Description Model Number Number
IBM AS 400 320 Dual Processor
IBM AS 400 50-S
Designated Location: EDS Markham IPC
DESCRIPTION OF LICENSED PROGRAMS:
The Licensed Programs consist of all current modules of the IXplus Software
and the modules of the IXplus Software identified below.
A. IXplus Software
Menu System
Menus may be modified to meet business requirements. Selections can be
tailored for specific users or departments and passwords may be
assigned for security.
Call Rating
The IXplus Software can process and account for all of the data
received from the network switching equipment. The information from
the switch is converted into a format compatible with the IXplus
Software and accounting totals are accumulated. Unbillable calls are
reported and routed back through the IXplus Software for corrective
procedures. These calls are maintained by the IXplus Software until
they are corrected or deleted.
The Call Rating subsystem allows for virtually unlimited rate
structures. Call Rating variables include:
V/H Coordinates
Flat Rate
Mileage Band
Area Code
Rate Step
Day/Evening/Night - Weekend/Holiday
Up to 5 additional rate/time classes
Call Billing
The Call Billing subsystem creates the customer bill format, offering
selectable features such as customized messages, call detail reporting
and discounts.
The Project Billing subsystem provides a commercial customer with call
detail plus the total levels required for charge-back of
telecommunications expenses. This subsystem also allows for variable
volume discounts and unlimited rate steps.
The Cycle Billing subsystem assists cash flow tracking and provides a
method for distributing the work load more evenly for a large customer
base. The Cycle-end reporting subsystem provides the necessary
checkpoints and controls to properly manage a billing cycle.
A copy of the printed customer bills may be maintained on-line for
inquiries, reprints, and archival purposes. The statement images may
be transferred to magnetic tape for long-term storage.
Customer Service (including Calling Card Capability)
The IXplus Software allows Customer inquiries to be made by name or
partial name, authorization code, account code, and telephone number.
Customer calls concerning new business, service changes and complaints
may be recorded in an on-line database. Customer service personnel may
then record the responses to customer calls in the same manner. A
follow-up screen may be used by management to insure that the customer
is being handled in a timely manner.
Accounts Receivable
An integral part of the billing system is a complete open item accounts
receivable system which will assist in cash flow management.
The Accounts Receivable subsystem provides detailed reports of cash
receipts, adjustments, customer charges, deposits, account balances,
and aged receivables. Numerous inquiry screens display current and
Historical customer transactions and information regarding collection
contacts.
A delinquent processing function provides the ability to customize and
print past due notices and final notices.
Traffic Analysis
The Traffic Analysis subsystem produces a series of reports that
provides the ability to analyze traffic patterns, time patterns, fine
usage, and line utilization. Some of the reports which May be
generated are:
Traffic by City
Traffic by Top 100 Cities
Traffic Analysis by Product
Busy Hours by Output Facility and Line
Traffic Analysis by Output Facility and Line
Traffic Analysis by Input Facility and Line
Billing Analysis by Output Facility
Revenue by Volume and Customer
BRS - Bill Retrieval System
The Bill Retrieval System, BRS, is a Windows-based tool for viewing
microfiche information from IXplus. The application is designed to be
an alterative to conventional microfiche technology by accessing the
microfiche from CD-ROM disks or hard disk drives.
Multi-bill
Multi-bill provides the ability to view and analyze long distance
telephone call records and telephone bills on a personal computer
utilizing the Microsoft Windows environment.
800 Portability
Allows an organization that is defined as a RESP ORG (Responsible
Organization) to reserve and maintain 800 numbers directly through a
batch or mechanized interface to the Bell core SMS (Service Management
System) 800 Database.
Credit and Collections
Provides an organized means to solicit payments from customers that
have delinquent balances. Generates automatic collection letters as
well as a work list of delinquent accounts that collectors can use in
the collection process.
Private Line Billing
Provides point-to-point and multi-point circuit billing and charges.
The charges and bill presentation are included on a single bill with
all other products and services.
B. INM SYSTEM
Traffic Analysis Software
The Traffic Analysis Software provides line cost automation, routing,
verification, traffic engineering and on-line LERG access.
Call Detail Collection Software
Call Detail Collection Software communicates with switching equipment,
billing, traffic and security systems to deliver call detail
information in real time. The Call Detail Collection Software and the
CDR Split Software also converts the call detail information into the
IXplus CDR format.
Fraud Detection Software
The Fraud Detection Software analyzes records and calling patterns from
the network, alerting via self-adjusting threshold levels of potential
fraud and its source.
CDR Search Software
The CDR Search Software provides a fast record search to display
selected call records instantly and provide a network wide view across
all switches on the network. It also provides multiple search criteria
and the ability to capture call search records to a file.
CDR Split Software
Integrated with the Call Detail Collection Software, the CDR Split
Software provides a control tool for CDR processing before the billing
process. The CDR Split Software forwards CDRs to the proper billing
center in various regions of the country. Dropped and rejected records
are automatically recycled for corrective action and re-entry into the
billing stream.
Switch Access
Switch Access System, which sends updates to the switch as changes to
the databases occur, provides the following features:
Prompt and Validate Northern Telecom, DEX or Harris commands on
the AS/400(20)
Help for commands (20)
Pass-through (free format) mode for commands not implemented
Prioritize and Schedule Command Delivery
Immediate Execution Mode
Transmit Commands to Client Server PCs
Security per Switch Command and User ID
Communicate commands to Northern Telecom DMS-250, DEX 400/600 or
Harris 20/20 switching equipment
Transaction and error logging
Per customer, per product, per switch default values (for batch
upload). Default profiles will be established to allow batch
uploads of customer data
Batch Upload interface to Switch Access System for ANIs, Auths.
Facilities and Engineering Software
This software provides the capability to quickly and easily turn a
service order into a customized workload reporting for all departments,
event tracking and management for local exchange carrier/inter-exchange
carrier interconnections and circuit designs with capacity management
for the network. This tool set enables telephone companies to build,
maintain and optimize local exchange carrier and inter-exchange carrier
transmission networks.
Trouble Ticketing Software
Trouble ticketing provides the tools to enter, track and analyze
problem reports. Information is provided to service representatives
and repair technicians to aid in effectively managing customer contact.
NOTE: The Facilities and Engineering software and the Trouble Ticketing
software is proprietary third party software. Licensee shall
enter into an agreement with third party licensor relating to the
use of such third parry software if required by the third party
licensor. Such third party agreement shall be consistent with
the terms of this Agreement but at no additional cost to
Licensee.
<PAGE>
<PAGE>
SCHEDULE 5.1
PAYMENT AND BILLING
I. LICENSE FEE
The License Fee for the Licensed Programs will be payable as
follows:
Milestone Amount
A. Implementation in Production
(Start of Processing Date) $725,000
B. January 1, 1997 $725,000
II. MAINTENANCE SERVICE FEE
Period Maintenance Service Fee
For the initial twelve month period $0
commencing on the Start of
Processing Date
For each subsequent twelve month $240,000
period that commences prior to the
fifth anniversary of the termination
of the term of the Services Agreement
on an anniversary of the Start of
Processing Date
For each subsequent twelve month 15% of then
period that commences on or after current License
the fifth anniversary of termination Fee for the
of the term of Services Agreement Licensed Programs
on an anniversary of the start of
Processing Date
III. NOTES
1. Applicable taxes extra.
2. All dollar amounts are in Canadian dollars.
3. Maintenance Service Fees are payable in advance.
<PAGE>
<PAGE>
SCHEDULE 7.2
ARBITRATION
1. Arbitration Procedure. All Disputes will be referred to a board of
arbitration (the "Board") to be settled in accordance with the
provisions of the Arbitration Act, 1991 (Ontario) and any
amendments thereto, based upon the following procedure:
(i) Subject to paragraph (ii) of this Section 1, the Board will be
composed of one person appointed by the party requesting a Board
(the "Applicant"), one person appointed by the other party (the
"Respondent") and a third person to act as chairman, chosen by the
other two members of the Board, or, if both parties agree, the
Board will consist of a sole arbitrator.
(ii) The Applicant shall deliver to the Respondent written notice of its
intent to refer the Dispute to the Board within twenty (20)
business days following the Resolution Date and shall at the same
time name its appointee to the Board. The Respondent shall within
fifteen (15) business days of receipt of such notice advise the
Applicant, in writing, of the name of its appointee to the Board.
If the Respondent fails to notify the Applicant of its appointee,
the Respondent shall be deemed to have concurred in the appointment
of the arbitrator appointed by the Applicant, and such arbitrator
shall constitute the Board.
(iii) If the Respondent appoints an arbitrator pursuant to
paragraph 1(ii) above, then, within five (5) business days of the
appointment of such additional arbitrator, the two appointed
arbitrators shall agree on the appointment of an additional
arbitrator to act as chairperson (the "Chairperson"). If the
appointed arbitrators cannot agree on the additional arbitrator,
the Applicant or Respondent may apply to the Ontario Court to
appoint an impartial third member to act as Chairperson or promptly
take such other action to appoint a Chairperson as the parties may
agree.
(iv) No person may be appointed as an arbitrator unless he or she is
independent of the Applicant and Respondent, is skilled in the
subject matter of the Dispute and is not directly or indirectly
carrying on or involved in a business being carried on in
competition with the business of the parties.
(v) The decision of the Board shall be made by a majority vote or by
the sole arbitrator, as the case may be. In the event of the
failure of the Board to reach a majority decision, the decision of
the Chairperson shall constitute the decision of the Board.
(vi) The decision of the Board with respect to the Dispute shall be made
in writing within the sixty (60) days period following the
appointment of the last member to the Board, shall be final and
binding on the parties, not subject to any appeal, and shall deal
with the question of costs of arbitration and all related matters.
(vii) The arbitration shall take place in Toronto, Ontario.
(viii) The time limits referred to in this Schedule may be extended by
mutual agreement of the parties.
<PAGE>
SCHEDULE A
INDEX OF DEFINITIONS
"Additional Services" has the meaning set out in Section 3.3.
"Agreement" has the meaning set out in the first paragraph.
"Board" has the meaning set out in Schedule 7.2.
"Changes" has the meaning set out in Section 6.2.(d).
"Claims" has the meaning set out in Section 9.1.
"Confidential Information" has the meaning set out in Section 10.1.
"Delivery Date" has the meaning set out in Section 2.1.
"Designated Equipment" has the meaning set out in Section 1.1(a).
"Designated Location" has the meaning set out in Section 1.1(a).
"Disputes" has the meaning set out in Section 7.1.
"Documentation" has the meaning set out in Section 1.1(b).
"EDS" has the meaning set out in the first paragraph of this Agreement.
"Effective Date" has the meaning set out in the first paragraph of this
Agreement.
"Effective Limit of Liability" has the meaning set out in the Services
Agreement.
"License" has the meaning set out in Section 1.1.
"License Fee" has the meaning set out in Section 5.1.
"License Term" has the meaning set out in Section 2.2.
"Licensed Programs" has the meaning set out in Section 1.1(a).
"Licensee" has the meaning set out in the first paragraph of this Agreement.
"Maintenance Service Fee" has the meaning set out in Section 5.2.
"Maintenance Service Team" has the meaning set out in Section 2.3.
"Releases" has the meaning set out in Section 3.2(c).
"SE Services" has the meaning set out in the Services Agreement.
"Services Agreement" has the meaning set out in Section 2.1.
"Start of Processing Date" has the meaning set out in the Services Agreement.
"Source Code" has the meaning set out in Section 6.2.
"Source Code License" has the meaning set out in Section 6.2.
"Source Code License Fee" has the meaning set out in Section 6.2.
"Systems" has the meaning set out in the Services Agreement.
Exhibit 99.8
September 13, 1996
Mr. David K. Laniak
Chief Executive Officer
ACC Corp.
400 West Avenue
Rochester, New York 14611
Dear David:
You and I have agreed to an addendum modification of my Salary Continuation
and Deferred Compensation Agreement with ACC Corp. and have received
Executive Committee/Compensation Committee and/or Board of Director
approval Friday, September 13, 1996.
The modifications include the following:
* We agreed that the addendum will continue my status as an
employee, continuing my existing salary and benefits until
such time as my employment status ceases for whatever
reason;
* We agreed that my resignation as Chairman of the Board would
be effective on October 8, 1996 to coincide with the board
meeting scheduled for that date;
* My salary severance benefits would be deferred until such
time as my employment status with the Company ceases for
whatever reason.
If this is your understanding of the positions taken by the Committees, I
would appreciate your indicating such by signing this letter with me.
Very truly yours,
/s/Richard T. Aab /s/David K. Laniak
- ------------------- ---------------------
ACC CORP.
Chief Executive Officer
