SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): JULY 2, 1998
ABLE TELCOM HOLDING CORP.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
FLORIDA 0-21986 65-0013218
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
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1601 FORUM PLACE, SUITE 1110, WEST PALM BEACH, FLORIDA 33401
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (561) 688-0400
(Former Name or Former Address, if Changed Since Last Report)
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ABLE TELCOM HOLDING CORP.
FORM 8-K
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 2, 1998, Able Telcom Holding Corp. ("Registrant") acquired all of the
outstanding common stock of MFS Network Technologies, Inc. ("MFSNT") from MFS
Communications Company, Inc. ("MFSCC"), a subsidiary of WorldCom, Inc.
("WorldCom"). The transaction was structured as a merger of a newly-organized
wholly-owned subsidiary of Registrant with MFSNT, in which the subsidiary was
the surviving corporation. The subsidiary has changed its name to MFS Network
Technologies, Inc. Under the Agreement and Plan of Merger dated April 26, 1998,
as amended as of July 2, 1998 (the "Merger Agreement"), the purchase price is
equal to the shareholders' equity of MFSNT as of March 31, 1998, subject to
certain adjustments, including adding back the cumulative advances by MFSCC or
its affiliates to MFSNT, plus $10,000,000. The parties have not yet determined
the amount of the final purchase price. Under the Merger Agreement, Registrant
shall deliver to MFSCC Registrant's written calculations of the purchase price
within 30 days of July 2, 1998. MFSCC then has 30 days to object to the
calculation, in which case, a specified accounting firm is to make a final and
binding determination, subject to certain minimums and maximums.
Subject to such adjustments, the parties agreed that the estimated merger
consideration was deemed to be $101,405,217. Registrant has paid $15,000,000 of
the consideration in cash, and has temporarily financed the balance of
$86,405,217 by a note in that amount delivered to MFSCC (the "Note"), due August
31, 1998, except that a payment of $20,000,000 is due July 31, 1998, together
with interest at 12% per annum, and thereafter interest accrues at 18% per
annum, and except that an amount equal to 10% of MFSNT's collections under its
customer contracts shall be applied to principal or accrued interest under the
Note. As security for the Note and the Indemnity Agreement referred to below,
Registrant has pledged to WorldCom and MFSCC all of the shares of MFSNT.
The cash portion of the purchase price was obtained in part from Registrant's
line of credit with NationsBank, N.A. and CIBC Inc., and in part through the
private placement on June 30, 1998 of $20,000,000 of Registrant's Series B
Convertible Preferred Stock.
Pursuant to the Merger Agreement, Registrant agreed with WorldCom, MFSCC and its
affiliates (the "Indemnity Agreement") to assume (a) their obligations under a
certain Guaranty Agreement in favor of Credit Lyonnais' New York branch, as
Administrative Agent for lenders, under a Credit Agreement dated November 1,
1996 between the lenders and
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Kanas Telcom, Inc., a partially-owned affiliate of MFSNT, and (b) their
obligations under surety indemnity agreements relating to various surety bonds
issued in favor of MFSNT.
Pursuant to the Merger Agreement, MFSNT entered into a five-year Master Services
Agreement with WorldCom Network Services, Inc. ("WorldCom Network"), an
affiliate of WorldCom, to provide telecommunication infrastructure services to
WorldCom affiliates for a minimum of $40,000,000 per year, provided that the
aggregate sum payable to MFSNT shall be not less than $455,000,000, including a
fee of 12% of reimbursable costs under the agreement. MFSNT has agreed that
WorldCom Network will have met all of its obligations to MFSNT to the extent
that payments to MFSNT reach an aggregate of $500,000,000 at any time during the
five-year term. To achieve these established minimums, WorldCom Network has
agreed to award MFSNT at least 75% of all of WorldCom Network's outside plant
work related to its local network projects up to $500,000,000. MFSNT has agreed
to provide as much as $130,000,000 of infrastructure services to WorldCom
Network during each year of the five-year contract. WorldCom Network's
obligations under the Master Services Agreement are reduced in certain respects
if the Note is in default.
Under the Merger Agreement, Registrant is entitled to use the name "MFSNT"
during the 18-month transition period commencing July 2, 1998, and will not be
entitled to use it after such 18-month period.
Registrant, in the Merger Agreement, granted to MFSCC an option to purchase up
to 1,817,941 shares of Registrant's common stock ("Option Shares") during the
six months commencing July 2, 1998. The exercise price is $7.00 per share,
except that MFSCC may elect to exercise the option, in whole or in part, on a
"cashless" basis under which it shall receive shares of common stock with a
market value equal to the difference between the common stock's then market
price and $7.00 per share, up to the equivalent of 2,000,000 shares, so long as
the number of shares actually issued does not exceed 1,817,941 shares. If MFSCC
exercises the option, in whole or in part, it will be entitled to designate a
representative to serve on Registrant's Board of Directors for so long as MFSCC
retains Option Shares aggregating at least 5% of the then outstanding shares of
Registrant's common stock.
Registrant has agreed to file with the Securities and Exchange Commission a
registration statement covering the resale by MFSCC of any Option Shares
purchased by it until such shares may be sold on a unrestricted basis under Rule
144 under the Securities Act of 1933, as amended. If Registrant has failed to
file the registration statement by July 22, 1998, or fails to use reasonable
efforts to cause the registration statement to become effective, MFSCC has the
right to receive cash upon its exercise of some or all of the options in an
amount equal to the difference between the market price and the exercise price.
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MFSNT is a leading systems integrator for advanced telecommunications networks
and is engaged in the development, design, project management, construction,
operation and maintenance of communications systems throughout the United
States. MFSNT conducts its business through two divisions: MFS Network Systems,
a communications network systems integrator, and MFS Transportation Systems, a
leader in the electronic toll and traffic management segment of the intelligent
transportation systems industry.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) The financial statements of MFS Network Technologies, Inc. (See
Item 2.) and the pro forma financial information required by
this item shall be filed by amendment on or before 60 days from
July 17, 1998.
(c) Exhibits.
2.5 Agreement and Plan of Merger by and among MFS
Acquisition Corp., Able Telcom Holding Corp., MFS
Network Technologies, Inc. and MFS Communications
Company, Inc. dated as of April 22, 1998. (incorporated
by reference to Quarterly Report on Form 10-Q filed by
Registrant on June 15, 1998 with the Securities and
Exchange Commission).
2.5.1 Amendment to Agreement and Plan of Merger among MFS
Acquisition Corp., Registrant, MFS Network Technologies,
Inc. and MFS Communications Company, Inc. dated as of
July 2, 1998.
2.5.2 Promissory Note of Registrant dated July 2, 1998 to MFS
Communications Company, Inc.
2.5.3 Stock Pledge Agreement dated as of July 2, 1998 by
Registrant in favor of WorldCom, Inc.
2.5.4 Master Services Agreement between WorldCom Network
Services, Inc. and MFS Network Technologies, Inc. dated
as of July 2, 1998 (exhibits omitted).
2.5.5 Assumption and Indemnity Agreement dated as of July 2,
1998 among Registrant, WorldCom, Inc., MFS
Communications Company, Inc., MFS Intelenet, Inc., MFS
Datanet, Inc., MFS Telcom, Inc. and MFS Communications,
Ltd. (schedules omitted).
2.5.6 License Agreement between MFS Communications Company,
Inc. and Registrant dated as of July 2, 1998.
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SIGNATURES
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 hereunto duly authorized.
ABLE TELCOM HOLDING CORP.
Date: 7/16/98 By: /s/ GIDEON D. TAYLOR
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Gideon D. Taylor
Chairman
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.5.1 Amendment to Agreement and Plan of Merger among MFS Acquisition Corp.,
Registrant, MFS Network Technologies, Inc. and MFS Communications
Company, Inc. dated as of July 2, 1998.
2.5.2 Promissory Note of Registrant dated July 2, 1998 to MFS Communications
Company, Inc.
2.5.3 Stock Pledge Agreement dated as of July 2, 1998 by Registrant in favor
of WorldCom, Inc.
2.5.4 Master Services Agreement between WorldCom Network Services, Inc. and
MFS Network Technologies, Inc. dated as of July 2, 1998 (exhibits
omitted).
2.5.5 Assumption and Indemnity Agreement dated as of July 2, 1998 among
Registrant, WorldCom, Inc., MFS Communications Company, Inc., MFS
Intelenet, Inc., MFS Datanet, Inc., MFS Telcom, Inc. and MFS
Communications, Ltd. (schedules omitted).
2.5.6 License Agreement between MFS Communications Company, Inc. and
Registrant dated as of July 2, 1998.
EXHIBIT 2.5.1
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
AMENDMENT, dated as of July 2, 1998, to Agreement and Plan of
Merger, dated as of April 26, 1998 (the "Merger Agreement"), by and among MFS
Acquisition Corp., a Delaware corporation ("Buyer"), Able Telcom Holding Corp.,
a Florida corporation ("Parent"), MFS Network Technologies Inc., a Delaware
corporation ("Seller"), and MFS Communications Company, Inc., a Delaware
corporation ("MFS").
WITNESSETH:
WHEREAS, the parties hereto have entered into the Merger
Agreement; and
WHEREAS, in accordance with Section 18a of the Merger
Agreement the parties hereto wish to amend certain provisions of the Merger
Agreement as herein provided;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
1. AMENDMENTS TO SECTION 1.
(a) Section 1 of the Merger Agreement is hereby amended to
delete thereform the defined term "Master Services Agreement" and substitute in
lieu thereof the following:
""MASTER SERVICES AGREEMENT" is the Master Services Agreement
in form as attached to this Amendment as Exhibit 1a."
(b) Section 1 of the Merger Agreement is hereby further
amended to delete thereform the defined term "Stock Pledge Agreement" and
substitute in lieu thereof the following:
""STOCK PLEDGE AGREEMENT" is the Stock Pledge Agreement in
form as attached to this Amendment as Exhibit 1b."
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(c) Section 1 of the Merger Agreement is hereby further
amended to delete thereform all defined terms that are no longer used in the
Merger Agreement after giving effect to the other amendments to the Merger
Agreement provided for in this Amendment.
2. AMENDMENTS TO SECTION 3.
(a) The parties acknowledge that the "Estimated Merger
Consideration" for the purposes of the Closing shall be deemed to be
$101,405,217.
(b) The following shall be added as Section 3(l) of the Merger
Agreement:
"Without limiting the rights to the adjustments of the
Estimated Merger Consideration contemplated by Section 3 of
this Agreement, Parent hereby waives any rights of indemnity
under Section 14d resulting from or arising out of the alleged
breach of any representation or warranty made by MFS,
including without limitation Sections 6e and 6f of this
Agreement, with respect to the balance sheet of Seller as of
March 31, 1998 audited by Arthur Andersen and provided to
Parent in connection with the transactions contemplated by
this Agreement or in respect of any alleged default under the
Guaranty Agreement, dated November 1, 1996, by MFS in favor of
Credit Lyonnais, New York Branch ."
3. AMENDMENTS TO SECTION 4.
(a) Section 4(a) of the Merger Agreement is hereby amended in
its entirety to read as follows:
"The Closing shall be deemed to occur on July 2, 1998, subject
to Parent's compliance with the next two sentences. On July 2,
1998, Parent shall (a) direct the Escrow Agent to pay the
Deposit to MFS on July 3, 1998 and (b) give irrevocable
instructions to pay to MFS in United States Dollars, in
immediately available funds, $5,000,000 on July 3, 1998. On
July 3, 1998, Parent shall deliver to MFS a promissory note
(the "Promissory Note") in the form attached hereto as Exhibit
4a payable to MFS, or order, in the principal amount equal the
excess of the Estimated Merger Consideration over $15,000,000,
in
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addition, on July 6, 1998, but only following MFS'
acknowledgment of receipt of the $5,000,000 payment
contemplated by clause (b) of the preceding sentence, Parent
shall caused to be filed the certificate of merger necessary
to effect the Merger."
(b) Section 4(b) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"After the Closing, and within two business days after the
determination of the Adjusted Stockholder's Equity and the Net
Advance Adjustment pursuant to Section 3 which results in a
determination that the Merger Consideration is different from
the Estimated Merger Consideration, Parent shall execute and
deliver to MFS, in exchange for MFS' delivery to Parent of the
original Promissory Note, a replacement Promissory Note in the
form attached hereto as Exhibit 4a payable to MFS, or order,
in the principal amount equal to the excess of the Merger
Consideration over (a) $15,000,000 plus (b) any prepayments or
other principal payments made under the Note as of such date
(from and after such replacement, "Promissory Note" being
deemed to refer to such replacement Promissory Note) and as to
which Parent shall be deemed to have made a partial prepayment
as of the date of such exchange in an amount equal to the sum
of (x) the excess, if any, of $1,000,000 over 1% of the Merger
Consideration plus (y) an interest factor at the rate of 9%
simple interest per annum on the amount determined pursuant to
clause (x) from the Closing Date through but not including the
date of the exchange."
4. AMENDMENT TO SECTION 5. The following shall be added as
Section 5(g) of the Merger Agreement:
"Parent has no plan or intention to cause there to occur a
merger between Buyer and Parent and Parent agrees that no such
merger shall occur within the three year period following the
Closing Date."
5. AMENDMENT TO SECTION 13. Section 13a of the Merger
Agreement is hereby amended by the addition of the following clause at the end
of such sentence:
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", except that Buyer's certificate of incorporation shall be
amended to change Buyer's name to MFS Network Technologies,
Inc."
6. AMENDMENT TO SECTION 17.
(a) Section 17a of the Merger Agreement is hereby amended by
replacing the second sentence thereof with the following:
"The Option may be exercised by MFS in whole or in part and
from time to time by delivery of a notice to the Parent
complying with Section 18d during the period commencing with
the earlier to occur of the Merger or the termination of this
Agreement pursuant to Section 11 and continuing through 5:00
PM, Eastern time, on the date six months following the payment
in full of amounts owing under the Promissory Note."
(b) Section 17c of the Merger Agreement is hereby amended by
inserting the following sentence at the end thereof:
"If Parent has failed to file a registration statement with
the Securities and Exchange Commission on or before July 22,
1998 or at any time during the period commencing on September
30, 1998 and continuing through the Registration Term Parent
has failed to use its reasonable efforts to cause such
registration statement to be so effective and available for
resale by MFS (Parent not to be liable hereunder due to delays
caused by the Securities and Exchange Commission requesting
additional information or amendments), MFS shall have the
right to receive cash for some or all of the Option in the
amount equal to the aggregate "spread" for the shares as to
which the Option is being exercised, as determined pursuant to
Section 17b."
7. PROMISSORY NOTE AS AGREEMENT. For all purposes of the
Merger Agreement, the Promissory Note shall be treated as an agreement
contemplated by the Merger Agreement and the issuance of and performance under
the Promissory Note shall be treated as a transaction contemplated by the Merger
Agreement.
8. CONFIRMATION OF THE MERGER AGREEMENT. Except as set forth
in this Amendment, the Merger Agreement is in all respects hereby ratified and
confirmed and shall continue in full force and effect as amended hereby.
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9. MISCELLANEOUS. This Amendment may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument. This Amendment shall in all
respects be construed in accordance with and governed by the laws of the State
of Delaware and the United States of America, without regard to the principles
of conflicts of laws thereof, and may only be enforced in the courts of the
State of Delaware, or the United States District Court for the District of
Delaware, the jurisdiction of which courts each party hereto hereby irrevocably
subjects itself to.
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IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
duly executed and delivered as of the date first above written.
MFS Network Technologies, Inc. MFS Acquisition Corp.
By: /S/ JOHN SIDGMORE By: /S/ FRAZIER L. GAINES
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Name: JOHN SIDGMORE Name: FRAZIER L. GAINES
Title: Title: PRESIDENT AND CEO
MFS Communications Company, Inc. Able Telcom Holding Corp.
By: /S/ JOHN SIDGMORE By: /S/ FRAZIER L. GAINES
----------------------------- ------------------------
Name: JOHN SIDGMORE Name: FRAZIER L. GAINES
Title: Title: PRESIDENT AND CEO
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EXHIBIT 2.5.2
PROMISSORY NOTE
$86,405,217
July 2, 1998
LOAN
FOR VALUE RECEIVED, Able Telcom Holding Corp., a Florida corporation ("Able
Telcom"), pursuant to that certain Agreement and Plan of Merger, dated as of
April 26, 1998, as amended by an Amendment thereto, dated as of July 2, 1998 (as
so amended, the "Merger Agreement"), by and among MFS Acquisition Corp.
("MFSAC"), Able Telcom, MFS Network Technologies, Inc. and MFS Communications
Company, Inc. ("MFS"), promises to pay to MFS, or order, without set-off (except
as otherwise specified in the Master Services Agreement delivered pursuant to
the Merger Agreement) , counterclaim or any deduction of any nature by wire
transfer in immediately available funds to First Union National Bank of Florida,
Jacksonville, Florida, AWA #063000021; for the credit of WorldCom, Inc.
Concentration Account, Account Number: 2156320029820, or such other account as
may be specified in writing by MFS, the amounts in respect of principal and
interest on the Payment Dates indicated below. The principal amount of this Note
is $86,405,217.
INTEREST RATE
The "Interest Rate" shall be 12% per annum or, if this Note shall not have been
paid in full on or before July 31, 1998 or if a default shall have occurred
under this Note (whether or not such default is continuing), 18% per annum, in
each such case calculated on the basis of the actual days elapsed over a year of
365 days. Notwithstanding any other limitations con tained in this Note, MFS
does not intend to charge and Able Telcom shall not be required to pay any
interest or other fees or charges in excess of the maximum permitted by
applicable law.
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PAYMENT DUE AND PAYMENT DATES
On July 31, 1998, all accrued interest to that date and the lesser of (i)
$20,000,000 of the principal outstanding on that date (without regard for
payments made in respect of the Collections as defined below) or (ii) the
entirety of the remaining principal, shall be due and payable by Able Telcom.
Any remaining principal and interest on the Note shall be due and payable by
Able Telcom on August 31, 1998. Notwithstanding the foregoing, all accrued
interest and principal hereunder shall be payable on the earlier to occur: (i)
the date of signing by Able Telcom of any merger or similar agreement to which
Able Telcom would be a party, or (ii) the date on which a third party first
acquires beneficial ownership of at least a 40% equity interest in Able Telcom
(such earliest date, the "Payment Date"). Able Telcom agrees that it will not
enter into any agreement contemplated by clause (i) or issue equity interests as
contemplated by clause (ii) without contemporaneously repaying this Note in full
in accordance with its terms.
SECURITY
As security for this Note, MFS is entitled to the benefits of a certain Stock
Pledge Agree ment, dated as of July 2, 1998, by and between WorldCom, Inc.
("WorldCom") for itself and certain beneficiaries, including MFS, and Able
Telcom (the "Pledge Agreement"). Able Telcom agrees that, in the event that
WorldCom or MFS exercises its remedies under the Pledge Agreement and pursuant
thereto acquires the Pledged Stock or the substitute collateral thereunder (as
defined in the Pledge Agreement), (i) the "Deemed Value" to MFS of such
acquisition shall be (A) the original principal amount of this Note, (B) less
$10,000,000, (C) less the amount of any indebtedness incurred, or dividends
paid, by MFSAC in violation of Section 3 hereof, plus (D) the aggregate amount
of any prepayments of principal of this Note on or prior to the date of such
acquisition, including in respect of Collections (as defined below), provided
that the "Deemed Value" shall not exceed the unpaid principal amount and accrued
and unpaid interest on this Note at the time of such acquisition, (ii) the
principal amount of this Note shall be reduced by the Deemed Value and this Note
shall continue to be in default as to any remaining unpaid amount and accrued
interest, and (iii) Able Telcom shall remain obligated to repay the remaining
unpaid amount of this Note and accrued interest in full in accordance with its
terms.
SUBORDINATION
Able Telcom and MFS agree that, without prejudice to MFS' rights under the
preceding paragraph, MFS' right to receive payments on this Note shall be a
senior obligation of Able Telcom, except that MFS agrees that its right to
receive the "Subordinated Amount" in
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respect of this Note shall be a subordinated and junior in right of payment to
all obligations of Able Telcom pursuant to (a) those certain $10 million 12%
Senior Subordinated Notes, due January 6, 2005, issued by Able Telcom and now
held by John Hancock Mutual Life Insurance Company, John Hancock Variable Life
Insurance Company and Signature 1A (Cayman), Ltd. ("Senior Subordinated Notes")
and the Note Agreement, dated as of January 6, 1998, among Able Telcom and the
aforementioned holders of the Senior Subordinated Notes, as amended and after
giving effect to all consents given through and including the date hereof (the
"Senior Subordinated Note Agreement"; all obligations, indebtedness and
liabilities of Able Telcom now or hereafter existing, whether for principal,
interest, Prepay ment Compensation Amount, fees, expenses (including, without
limitation, attorneys' fees), indemnification or otherwise in respect of the
Senior Subordinated Notes and the Senior Subordinated Note Agreement being
herein referred to as the "Senior Subordinated Note Obligations") and (b) the
Notes issued, and other obligations arising, under that certain Credit Agreement
dated June 11, 1998, between Able Telcom and NationsBank, N.A. as Administrative
Agent and CIBC Inc. as Documentation Agent and the Lenders from time to time
parties thereto (as the same may be amended from time to time but without
increasing the "Commitments" thereunder, the "Revolving Credit Notes" and the
"Credit Agreement", respectively; the obligations of Able Telcom arising under
or in connection with the Revolving Credit Notes and the Credit Agreement being
herein referred to as the "Credit Agreement Obligations"). All Senior
Subordinated Note Obligations and all Credit Agreement Obligations shall first
be fully and indefeasibly paid in cash and in full and all commitments to lend
under the Credit Agreement shall have been permanently extinguished at least 91
days before any payment, whether in cash, securities or other property, may be
made, accepted or received on account of the Subordinated Amount. Any payment
paid to or collected, accepted, or received by any holder of this Note in
contravention of any of the terms of this paragraph shall be segregated, held in
trust and promptly delivered to the owners and holders of the Senior
Subordinated Note Obligations and Credit Agreement Obligations to the extent
necessary to pay such Senior Subordinated Note Obligations and Obligations in
full in accordance with their respective terms.
Notwithstanding anything to the contrary contained in this Note or any agreement
delivered in connection herewith, but subject in all respects to the preceding
paragraph, for so long as any amount is outstanding under the Senior
Subordinated Note Obligations or the Credit Agreement Obligations, and for so
long as there is any commitment to lend existing under the Credit Agreement, no
holder of this Note may exercise any remedies in respect thereto or otherwise
than with respect to recourse against the Pledged Stock or the substituted
collat eral during any period (a "Standstill Period") commencing on the first
date the holder of the Subordinated Amount, but for the provisions of this
section, would have been entitled to enforce its claim and ending upon the
earlier of: (a) the date which is 120 days after the
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commencement of the Standstill Period, if an event of default in payment of the
Senior Subordinated Note Obligations or the Credit Agreement Obligations has
occurred and is continuing, and 150 days after the commencement of such
Standstill Period if no such event of default has occurred during that 120 day
period; and (b) the date that any owner or holder of the Senior Subordinated
Notes or the Credit Agreement Obligations commences the exercise of any remedies
in respect of such Senior Subordinated Notes or Obligations.
For purposes of this section, the "Subordinated Amount" shall be (x) in the
event that WorldCom or MFS exercises its remedies under the Pledge Agreement and
pursuant thereto acquires the Pledged Stock or the substitute collateral
thereunder, the outstanding principal amount of this Note plus accrued interest
minus the Deemed Value (the "Deficiency Amount") plus any amounts representing
costs, expenses and fees in paragraph 1(iv) of "Additional Terms And Conditions"
below, and any similar costs, expenses and fees under the Pledge Agreement, and
(y) until such time if ever as WorldCom or MFS exercises its remedies under the
Pledge Agreement and pursuant thereto acquires the Pledged Stock or the
substitute collateral thereunder, the unpaid principal amount of and accrued
interest on this Note plus any amounts representing costs, expenses and fees in
paragraph 1(iv) of "Additional Terms And Conditions" below, and any similar
costs, expenses and fees under the Pledge Agreement, it being agreed and
understood that the Subordinated Amount shall under no circumstances include,
and neither MFS nor WorldCom shall be under any obligation to repay to Able
Telcom or any holder or owner of the Senior Subordinated Notes or the Credit
Agreement Obligations, any purchase price, extension fee or other amounts
heretofore paid to MFS or WorldCom under the Merger Agreement (which amounts
are, in the aggregate, approximately $16,039,940), any amounts that are or may
be set off by MFS or WorldCom or paid to MFS as provided in paragraph 1(ii) of
"Additional Terms and Conditions" below, any "Collections" received under
paragraph 6 of "Additional Terms and Conditions" below and the $20 million
prepayment referred to in clause (i) of the "Payment Due and Payment Dates"
paragraph above. Notwithstanding anything to the contrary contained in this Note
or any agreement delivered in connection herewith, but only in the event that
WorldCom or MFS exercises its remedies under the Pledge Agreement and pursuant
thereto acquires the Pledged Stock or the substitute collateral thereunder, any
unpaid claim under the Note by WorldCom or MFS which does not constitute a
Subordi nated Amount will be satisfied solely from the proceeds of the Pledged
Stock or the substituted collateral.
Able Telcom and, by its acceptance hereof, MFS, acknowledges and agrees that
this Note is not "Senior Debt", as defined in the Senior Subordinated Note
Agreement.
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Able Telcom and, by its acceptance hereof, MFS, acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement to
and a consideration of each holder or owner of the Senior Subordinated Note
Obligations or Credit Agreement Obligations in consenting to the incurrence and
maintenance of the indebtedness represented by this Note, and such holder or
owner of Senior Subordinated Note Obligations or Credit Agreement Obligations
has conclusively relied on such subordination provisions. Each such holder of
Senior Subordinated Note Obligations or Credit Agreement Obligations is intended
to be, and is, a third party beneficiary of this Subordination provision. MFS
acknowledges and agrees that the provisions set forth in this Subordination
provision shall be enforceable against it by the holders of the Senior
Subordinated Note Obligations or Credit Agreement Obligations. Notwithstanding
anything contained in this Note or any other financing document to the contrary,
none of the provisions of this subordination provision may, directly or
indirectly, be amended, modified, supplemented or waived without the prior
written consent of all holders of the Senior Subordinated Notes and the holders
of a majority of the owners and holders of the Credit Agreement Obligations.
ADDITIONAL TERMS AND CONDITIONS
1. Able Telcom: (i) waives presentment, demand, notice of demand, protest,
notice of protest and notice of nonpayment and any other notice
required to be given under applicable law to Able Telcom, in connection
with the delivery, acceptance, performance, default or enforcement of
this Note, of any indorsement of this Note or of any document or
instrument evidencing any security for payment of this Note; (ii)
waives any and all setoff or similar rights that it may have to
withhold or reduce payments on this Note, including without limitation
arising in connection with any claims made under the Merger Agreement
or any of the other agreements entered into in connection therewith
(except as otherwise specified in the Master Services Agreement
delivered pursuant to the Merger Agreement); (iii) consents to any and
all delays, extensions or other modifications of this Note or waivers
of any term hereof or release or discharge by MFS of Able Telcom or
release, substitution or exchange of any security for the payment
hereof or the failure to act on the part of MFS or any indulgence shown
by MFS, from time to time and in one or more instances (without notice
to or further assent from Able Telcom), and agrees that no such action,
failure to act or failure to exercise any right or remedy, on the part
of MFS shall in any way affect or impair the obligations of Able Telcom
or be con strued as a waiver by MFS of, or otherwise affect, any of
MFS' rights under this Note, under any indorsement of this Note or
under any document or instrument evidencing any security for payment of
this Note; and (iv) agrees to pay, on demand, all costs and expenses
relating to the execution, recording or collection of
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this Note or of any indorsement and/or the enforcement of MFS' rights
with respect to, or the protection of, or realization upon, any
property securing payment hereof, including reasonable attorney's fees.
2. Able Telcom may, without premium or penalty, at any time and from time
to time, prepay all or a portion of the outstanding principal balance
due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to
the date of such prepayment (except as otherwise permitted by paragraph
6 below).
3. Beginning on the date of this Note and continuing for so long as the
Note shall not have been paid in full in accordance with its terms,
Able Telcom covenants and agrees with MFS that Able Telcom shall not
permit MFSAC (as the surviving corporation in the merger contemplated
by the Merger Agreement) to, (i) create, incur, assume, suffer to exist
or otherwise become or remain directly or indirectly liable with
respect to, any indebtedness, other than indebtedness that is
outstanding on the date of this Note or indebtedness the proceeds of
which are used entirely to repay this Note in accordance with its terms
or indebtedness to Able Telcom incurred for working capital purposes),
(ii) enter into any merger or consolidation, or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), discon tinue its
business or convey, lease, sell, transfer or otherwise dispose of, in
one transaction or series of transactions, all or any substantial part
of its business or property except with the express prior written
consent of MFS, or (iii) declare or pay any dividends, or return any
capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, any shares of any class of its capital stock
now or hereafter outstanding (or any options or warrants issued with
respect to its capital stock), or set aside any funds for any of the
foregoing purposes.
4. This Note is payable on a specific date. Accordingly, the occurrence of
any one or more of the following events shall constitute a default
under this Note: (i) the failure to pay or perform any obligations,
liabilities or indebtedness of Able Telcom to MFS, whether under this
Note or any other agreement, note or instru ment now or hereafter
existing, as and when due (whether at maturity or by acceleration and
no prior demand therefor by MFS being necessary); (ii) a proceed ing
being filed or commenced against Able Telcom for dissolution or
liquidation of Able Telcom (except where such proceeding is filed or
commenced
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involuntarily and is dismissed or discharged within sixty (60) days of
the date of notice thereof) or Able Telcom voluntarily or involuntarily
terminating or dissolving or being terminated or dissolved; (iii)
insolvency of, business failure of, the appointment of a custodian,
trustee, liquidator or receiver for or for any of the property of, or
an assignment for the benefit of creditors by or the filing of a
petition under bank ruptcy, insolvency, or debtor's relief law (except
where such appointment, assign ment, or filing is involuntary and is
dismissed or discharged within sixty (60) days of the date of notice
thereof), or for any readjustment of indebtedness, composition or
extension by or against Able Telcom; (iv) any attachments, liens or
additional security instruments being placed upon the property which is
security for this Note (except where such attachment or lien is created
by other than Able Telcom or its affiliates and is removed within sixty
(60) days of the date of notice thereof); (v) acquisition at any time
or from time to time of title to the whole of or any part of the
property which is security for this Note by any person, partnership or
corpora tion other than Able Telcom; (vi) any representation or
warranty, whether hereun der or pursuant to the Merger Agreement or the
Pledge Agreement, made by Able Telcom to MFS is, or was, untrue or
materially misleading at the time such representation or warranty was
made; (vii) any default as defined in the Pledge Agreement; or (viii)
breach of any the covenants contained in Section 3 hereof.
5. Whenever there is a default under this Note or any proceeding in
bankruptcy, receivership, or insolvency, including an assignment for
the benefit of creditors instituted by or against Able Telcom (except
where such bankruptcy or insolvency proceeding or assignment is filed
or instituted against Able Telcom and is dis missed or discharged
within sixty (60) days of the date of notice thereof) the entire
balance outstanding hereunder shall automatically become immediately
due and payable, without presentment, notice, protest or demand of any
kind (all of which are expressly waived by Able Telcom) for the payment
of the whole or any part hereof (subject to the subordination
provisions contained in the portion of this Note entitled "Limited
Subordination"). Failure at any time to exercise any of the aforesaid
options or any other rights of MFS hereunder shall not constitute a
waiver thereof, nor shall it be a bar to exercise of any of the
aforesaid options or rights at a later date.
6. Beginning on July 14, 1998 and on every second Tuesday thereafter for
so long as the Note shall not have been paid in full in accordance with
its terms, Able Telcom shall provide to MFS by fax to the attention of
Frederick W. Weidinger (i) a
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schedule of all payments (the "Collections") under the Contracts (as
defined in the Merger Agreement) received through the close of business
on the prior Friday, (ii) all the supporting documentation, if
requested, evidencing the Collections and their respective amounts
certified as correct by the senior financial officer of Able Telcom,
and (iii) a wire transfer in immediately available funds of the amount
equal to 10% percent of the total Collections for that period. Such
payments shall be first applied to the principal in excess of the
Deemed Value outstanding hereun der and then to accrued interest.
Information as to the Collections shall be subject to audit by MFS at
its expense, unless such audit uncovers an underpayment pursuant to
this paragraph of at least ten percent (10%), in which event such audit
shall be at Able Telcom's expense.
7. This Note is delivered in and shall be construed under the laws of the
State of Delaware and the United States of America, without giving
effect to the conflict of laws principles thereof, and in any
litigation in connection with, or enforcement of, this Note or any
indorsement of this Note or any security given for payment hereof, Able
Telcom waives trial by jury and consents to and confers personal
jurisdiction on courts of the State of Delaware or the United States
District Court for the District of Delaware, and expressly waives any
objections as to venue in any of such courts. As used in this Note, the
term MFS shall include successors, indorsees and assigns of MFS.
8. In the event any one or more of the provisions of this Note shall for
any reason be held to be invalid, illegal or unenforceable, in whole or
in part or in any respect, or in the event that any one or more of the
provisions of this Note operate or would prospectively operate to
invalidate this Note, then and in either of those events, such
provision or provisions only shall be deemed null and void and shall
not affect any other provision of this Note and the remaining
provisions of this Note shall remain operative and in full force and
effect and shall in no way be affected, prejudiced or disturbed
thereby.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by its
duly authorized officer as of the day and year first above written.
ABLE TELCOM HOLDING CORP.
1601 Forum Place, Suite 1110,
West Palm Beach, Florida 33401
By: /S/ GIDEON D. TAYLOR
-------------------------------------
Name: GIDEON D. TAYLOR
Title: CHAIRMAN
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ACKNOWLEDGEMENT
STATE OF VIRGINIA /section/
COUNTY OF PITTSYLVANIA /section/
Before me, the undersigned, a Notary Public, on this day
personally appeared Gideon Taylor, known to me or proved to me on the oath of
___________________ or through (description of identity card or other document)
to be the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same was the act of the said Able
Telcom Holding Corp., a Florida corporation, and that he has executed the same
as the act of such corporation for the purposes and consideration therein
expressed, and in the capacity therein stated.
Given under my hand and seal of office this 3rd day of July,
1998.
/S/ JOANN ATKINSON
----------------------------------
Notary Public, State of Virginia
JOANN ATKINSON
----------------------------------
Printed Name of Notary
(SEAL OR STAMP)
10
EXHIBIT 2.5.3
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of July 2, 1998, made by Able Telcom
Holding Corp., a Florida corporation ("Pledgor"), in favor of WorldCom, Inc.
("WorldCom") for itself and on behalf of the other Assumption Agreement
Beneficiaries (as defined in the Indemnity Agreement referred to below).
WITNESSETH:
WHEREAS, Pledgor is consummating and closing on the date hereof the
transactions contemplated by that certain Agreement and Plan of Merger ("Merger
Agreement"), dated as of April 26, 1998 as amended as of July 2, 1998, by and
among Pledgor, MFS Communications Company, Inc. ("MFSCC"), a wholly owned
subsidiary of WorldCom, and others;
WHEREAS, as contemplated by the Merger Agreement, Pledgor is executing
and delivering the Promissory Note as of the date hereof;
WHEREAS, Pledgor is executing and delivering to WorldCom and the other
Assumption Agreement Beneficiaries an Assumption and Indemnity Agreement, dated
as of the date hereof (as amended, supplemented or otherwise modified from time
to time, the "Indemnity Agreement"), in favor of WorldCom and the other
Assumption Agreement Beneficiaries under which Pledgor makes certain indemnity
covenants;
WHEREAS, Pledgor is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by the Issuer (as hereinafter
defined);
WHEREAS, it is a condition precedent to the obligation of MFSCC to
merge its subsidiary, MFS Network Technologies, Inc., with and into MFS
Acquisition Corp. with MFS Acquisition Corp. as the surviving corporation in the
merger (the "Issuer") pursuant to the Merger Agreement that Pledgor shall have
executed and delivered this Pledge Agreement to WorldCom for the benefit of
WorldCom and the other Assumption Agreement Beneficiaries; and
WHEREAS, in accordance with the terms of the Promissory Note, the
payment obligations of the Pledgor thereunder are to be secured by this Pledge
Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises and to induce WorldCom
to cause MFSCC to close and consummate the transactions contemplated by the
Merger Agreement, Pledgor hereby agrees with WorldCom, for the benefit of
WorldCom and the other Assumption Agreement Beneficiaries, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, the following terms shall
have the following meanings:
"AGREEMENT": this Pledge Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"BONDS": as defined in the Indemnity Agreement.
"CODE": the Uniform Commercial Code from time to time in effect in the
State of NewYork.
"COLLATERAL": the Pledged Stock and all Proceeds thereof.
"COLLATERAL ACCOUNT": any account established to hold money Proceeds,
maintained under the sole dominion and control of WorldCom, subject to
withdrawal by WorldCom for the account of WorldCom only as provided in paragraph
8a.
"EVENT OF DEFAULT": (a) as defined in the Indemnity Agreement with
respect to Pledgor's failure to perform its obligations thereunder, (b) as
defined in the Promissory Note with respect to Pledgor's failure to perform its
obligations thereunder, or (c) the failure of Pledgor to perform its covenants
under this Agreement.
"INDEMNITORS": as defined in the Indemnity Agreement.
"ISSUER": as defined in the recital clauses.
"OBLIGATIONS": the collective reference to the obligations and
liabilities of Pledgor under the Promissory Note and the Pledgor and the other
Indemnitors and the Indemnity Agreement.
"PLEDGED STOCK": the shares of capital stock listed on Schedule 1
hereto, together with all stock certificates, options or rights of any nature
whatsoever that may be issued or granted by Issuer to Pledgor while this
Agreement is in effect.
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"PROCEEDS": all "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends
(other than cash dividends as expressly permitted pursuant to the terms hereof)
or other income from the Pledged Stock, collections thereon or distributions
with respect thereto.
"SATISFACTORY RELEASE": as defined in the Indemnity Agreement.
"SECURITIES ACT": the Securities Act of 1933, as amended.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. PLEDGE; GRANT OF SECURITY INTEREST. Pledgor hereby delivers to
WorldCom, for the benefit of WorldCom and the other Assumption Agreement
Beneficiaries, all the Pledged Stock and hereby grants to WorldCom, for the
benefit of WorldCom and the other Assumption Agreement Beneficiaries, a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. STOCK POWERS. Concurrently with the delivery to WorldCom of each
certificate representing one or more shares of Pledged Stock, Pledgor shall
deliver an undated stock power covering such certificate, duly executed in blank
by Pledgor with, if WorldCom so requests, signature guaranteed.
4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants to
WorldCom and to each of the other Assumption Agreement Beneficiaries, as of the
date hereof and at all times until the Obligations are paid in full, that:
(a) The shares of Pledged Stock constitute all the issued and
outstanding shares of all classes of the capital stock of Issuer.
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(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all liens, encumbrances,
rights or options in favor of, or claims of, any other person or entity, except
the security interest created by this Agreement.
(d) Upon delivery to WorldCom of the stock certificates evidencing the
Pledged Stock, the security interest created by this Agreement will constitute a
valid, perfected first priority security interest in the Collateral, enforceable
in accordance with its terms against all creditors of Pledgor and any other
Indemnitors and any persons purporting to purchase any Collateral from Pledgor
and any other Indemnitors, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5. COVENANTS. Pledgor covenants and agrees with WorldCom and the other
Assumption Agreement Beneficiaries that, from and after the date of this
Agreement until the Obligations are paid in full:
(a) If Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
Pledgor shall accept the same as the agent of WorldCom and the other Assumption
Agreement Beneficiaries, hold the same in trust for WorldCom and the other
Assumption Agreement Beneficiaries and deliver the same forthwith to WorldCom in
the exact form received, duly indorsed by Pledgor to WorldCom, if required,
together with an undated stock power covering such certificate duly executed in
blank by Pledgor and with, if WorldCom so requests, signature guaranteed, to be
held by WorldCom, subject to the terms hereof, as additional collateral security
for the Obligations. Any sums paid upon or in respect of the Pledged Stock upon
the liquidation or dissolution of Issuer shall be paid over to WorldCom to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect
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of the Pledged Stock or any property shall be distributed upon or with respect
to the Pledged Stock pursuant to the recapitalization or reclassification of the
capital of Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to WorldCom to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be
received by Pledgor, Pledgor shall, until such money or property is paid or
delivered to WorldCom, hold such money or property in trust for WorldCom,
segregated from other funds of Pledgor, as additional collateral security for
the Obligations.
(b) Without the prior written consent of WorldCom, Pledgor will not (1)
vote to enable, or take any other action to permit, Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of Issuer, (2) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral, (3) create, incur or permit to exist any lien encumbrance, right or
option in favor of, or any claim of any person with respect to, any of the
Collateral, or any interest therein, except for the security interests created
by this Agreement or (4) enter into any agreement or undertaking restricting the
right to ability of Pledgor or WorldCom to sell, assign or transfer any of the
Collateral. WorldCom may grant or withhold any such consent in the exercise of
its reasonable discretion; provided, WorldCom will promptly consider and respond
to any request for consent delivered in writing by Pledgor to WorldCom.
(c) Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of WorldCom, and at the sole expense
of the Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as WorldCom may
reasonably request for the purposes of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to WorldCom, duly
endorsed in a manner satisfactory to WorldCom, to be held as Collateral pursuant
to this Agreement.
(d) Pledgor shall pay, and save WorldCom and WorldCom harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
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any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or WorldCom's
enforcement of its rights hereunder.
(e) Unless otherwise agreed to by WorldCom in advance in writing,
Pledgor shall cause Issuer to:
i. conduct Issuer's business only in the ordinary and usual
course, and, accordingly, Pledgor shall use its best efforts
to keep intact, and cause Issuer to keep intact, Issuer's
business organization and goodwill, to keep available the
services of qualified officers and employees, to maintain good
relationships with suppliers, lenders, creditors,
distributors, employees, customers and others having business
or financial relationships with Issuer; and
ii. not issue any Pledged Stock or any other series of stock or
other securities or rights in Issuer (including, without
limitation, options, warrants, stock appreciation rights, or
phantom stock), or redeem any Pledged Stock; and
iii. except in the ordinary course of business, not create, incur
or assume any material long-term or short-term indebtedness
for money borrowed, draw upon any existing lines of credit, or
undertake any acquisitions; and
iv. not adopt, or enter into any stock option, stock appreciation
rights, warrant, phantom stock, or other employee benefit
plan, agreement, trust fund, or arrangement for the benefit or
welfare of any officer, director or employee, or any other
person relating to securities of or ownership interest in
Issuer; and
v. not pay any dividends to Pledgor or any other person or
entity; provided, if no Event Default has occurred, Pledgor
may cause Issuer to pay Pledgor cash dividends no more
frequently than once per year and in an amount not to exceed
Issuer's net earnings for the prior fiscal year, calculated in
accordance with generally accepted accounting principles
consistently applied; and
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vi. not sell, lease, or otherwise dispose of any of Issuer's
assets or properties, except in the ordinary course of
business, consistent with past practice; not mortgage,
encumber, or otherwise grant any interest in any of Issuer's
assets or properties whatsoever; and
vii. not shift business, work, or customer relations from Issuer to
any other person, including Pledgor or any person or entity
with whom Pledgor is affiliated, or otherwise refrain from
bidding on a project in order to permit Pledgor or any
affiliate of Pledgor to so bid; and
viii. duly and properly perform its obligations under all of its
contracts and agreements and otherwise perform its
obligations; and
ix. not make capital expenditures, or commitments, for capital
expenditures, except in the ordinary course of Issuer's
business, but in no event to exceed $4million per Issuer's
fiscal year; and
x. not enter into any agreement, commitment, or understanding,
whether in writing or otherwise, with respect to any of the
matters referred to in subparagraphs (i) through (x) above.
WorldCom may grant or withhold consent to any of the matters set forth in
subparagraphs (i) through (x) above in the exercise of its reasonable
discretion; provided WorldCom will promptly consider and respond to any request
for consent delivered in writing by Pledgor to WorldCom.
6. VOTING RIGHTS. Unless an Event of Default shall have occurred and be
continuing and WorldCom shall have given notice to Pledgor of WorldCom's intent
to exercise its corresponding rights pursuant to paragraph 7 below, Pledgor
shall be permitted to exercise all voting and corporate rights with respect to
the Pledged Stock consistent with the terms and conditions of this Agreement;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which, in WorldCom's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Indemnity Agreement or this Agreement.
7. RIGHTS OF WORLDCOM AND SUBSIDIARIES. (a) All money Proceeds received
by WorldCom hereunder shall be held by WorldCom for the benefit of WorldCom and
Subsidiaries in a Collateral Account. All Proceeds while held by
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WorldCom in a Collateral Account (or by Pledgor in trust for WorldCom and
Subsidiaries) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in paragraph 8(a).
(b) If an Event of Default shall occur and be continuing and WorldCom
shall give notice of its intent to exercise such rights to Pledgor, then at any
time after 15 days after delivery of such notice and if such Event of Default is
continuing (1) WorldCom shall have the right to receive any and all cash
dividends paid in respect of the Pledged Stock and make application thereof to
the Obligations in such order as WorldCom may determine, and (2) all shares of
the Pledged Stock shall be registered in the name of WorldCom of its nominee and
Subsidiaries or their nominee may thereafter exercise (A) all voting, corporate
and other rights pertaining to such shares of the Pledged Stock at any meeting
of shareholders of Issuer or otherwise and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options pertaining to
such shares of the Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by Pledgor or WorldCom of any right, privilege or
option pertaining to such shares of the Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as WorldCom may determine), all without
liability except to account for property actually received by it, but WorldCom
shall have no duty to Pledgor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so or delay in so doing.
(c) Each of MFS and WorldCom agree (i) to the provisions under the
"Security" and "Subordination" sections of the Promissory Note, (ii) that the
Promissory Note may not be amended without the prior written consent of the
holders of a majority of then outstanding Senior Subordinated Notes and the
holders of a majority of the owners and holders of the Credit Agreement
Obligations (as each such term is defined in the Promissory Note) and (iii) that
the Collateral may not be substituted pursuant to Section 14 hereof without the
prior consent of the holders of a majority of then outstanding Senior
Subordinated Notes and the holders of a majority of the owners and holders of
the Credit Agreement Obligations (as each such term is defined in the Promissory
Note).
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8. REMEDIES. (a) If an Event of Default shall have occurred, and shall
be continuing for more than 15 days after delivery of written notice by WorldCom
to Pledgor, then at any time thereafter at WorldCom's election WorldCom may
apply all of any part of Proceeds held in any Collateral Account in payment of
the Obligations in such order as WorldCom may elect.
(b) If an Event of Default shall have occurred, and shall be continuing
for more than 15 days after delivery of written notice by World Com to Pledgor,
then WorldCom, on behalf of itself and Subsidiaries, may exercise, in addition
to all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, WorldCom, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon Pledgor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of WorldCom or any Subsidiary
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may reasonably deem best, for cash or on credit risk. WorldCom or
any Subsidiary shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in Pledgor, which right or equity is hereby waived or released.
WorldCom shall apply any Proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of
WorldCom and Subsidiaries hereunder, including, without limitation, reasonable
attorneys' fees and disbursements or in part of the Obligations, in such order
as WorldCom may elect, and only after such application amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need WorldCom account for the surplus, if any, to Pledgor. To the extent
permitted by applicable law, Pledgor waives all claims, damages and demands it
may acquire against WorldCom or any Subsidiary arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of
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Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. Pledgor
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the Obligations and the fees
and disbursements of any attorneys employed by WorldCom or any Subsidiary to
collect such deficiency.
(c) Pledgor has made available to WorldCom complete and correct copies
of resolutions duly adopted by the shareholders and the Board of Directors of
the Issuer authorizing the merger and represents and warrants herein that such
resolutions have not been amended or revoked and are in full force and effect as
on the date hereof; and such resolutions are the only resolutions adopted by the
shareholders and the Board of Directors of the Issuer with respect to the
matters set forth therein.
(d) Notwithstanding the foregoing, if the Event of Default is a failure
by Pledgor to pay money, Pledgor may cure such Event of Default by paying such
money at any time before WorldCom enforces its remedies hereunder.
9. PRIVATE SALES. (a) If WorldCom shall determine to exercise its right
to sell any or all of the Pledged Stock pursuant to Section 8 hereof, and if in
the opinion of WorldCom it is necessary or advisable to have the Pledged Stock,
or that portion thereof to be sold, registered under the provisions of the
Securities Act, Pledgor will cause the Issuer thereof to (1) execute and
deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be cone all such
other acts as may be, in the opinion of WorldCom, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (2) to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (3) to make all
amendments thereto and/or to the related prospectus which, in the opinion of
WorldCom, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Pledgor agrees to cause the such Issuer to comply
with the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions which WorldCom shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
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(b) Pledgor recognizes that WorldCom may be unable to effect a public
sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges and
agrees that any such private sale may result in process and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. WorldCom shall be under no obligation
to delay a sale of any of the Pledged Stock for the period of time necessary to
permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.
(c) Pledgor further agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section valid and binding
and in compliance with any and all other applicable requirements of law. Pledgor
further agrees that a breach of any of the covenants contained in this Section
will cause irreparable injury to WorldCom and Subsidiaries, that WorldCom and
Subsidiaries have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Indemnity Agreement.
10. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUER. Pledgor hereby
authorizes and instructs Issuer to comply with any instruction received by it
from WorldCom in writing that (a) states that an Event of Default has occurred
and (b) is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from Pledgor, and Pledgor agrees that Issuer shall
be fully protected in so complying.
11. WORLDCOM'S APPOINTMENT AS ATTORNEY-IN-FACT. (a) Pledgor hereby
irrevocably constitutes and appoints WorldCom and any officer or agent of
WorldCom, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Pledgor and in the name of Pledgor or in WorldCom's own name, from time
to time in WorldCom's
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discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the financing
statements, endorsements, assignments or other instruments of transfer.
(b) Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in paragraph
[11(a)]. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
12. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, Pledgor authorizes WorldCom to file financing statements with respect to
the Collateral without the signature of Pledgor in such form and in such filing
offices as WorldCom reasonably determines appropriate to perfect the security
interests of WorldCom under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
13. AUTHORITY OF WORLDCOM. Pledgor acknowledges that the rights and
responsibilities of WorldCom under this Agreement with respect to any action
taken by WorldCom or the exercise or non-exercise by WorldCom of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between WorldCom and
Subsidiaries, be governed by the Indemnity Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between WorldCom and Pledgor, WorldCom shall be conclusively presumed to be
acting as agent for Subsidiaries with full and valid authority so to act or
refrain from acting, and neither Pledgor nor Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
14. SUBSTITUTION OF COLLATERAL. Pledgor may, at its election, but only
upon the prior approval of the holders of a majority of then outstanding Senior
Subordinated Notes and the holders of a majority of the owners and holders of
the Credit Agreement Obligations (as each such term is defined in the Promissory
Note), substitute for the Collateral a letter of credit
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<PAGE>
(a) issued by a banking institution domiciled in the United States
which has not less than $500,000,000 in capital and has a rating on its long
term debt of at least "A" from Standard & Poor's Corporation,
(b) to and for the benefit of WorldCom,
(c) drawable by WorldCom upon sight,
(d) in an amount equal to the then outstanding amount of the Bonds
(including any other potential obligation of WorldCom or the other
Assumption Agreement Beneficiaries relating thereto, as reasonably
determined by WorldCom) as to which Satisfactory Releases have not been
obtained,
(e) with an expiration of no earlier than one year after the last day a
claim may be made against WorldCom or any of the other Assumption
Agreement Beneficiaries respecting any Bond, and
(f) otherwise in form and content acceptable to WorldCom
(herein called the "Substituted Letter of Credit"). Pledgor may exercise such
right of substitution by delivering to WorldCom the Substituted Letter of Credit
and a written notice of its election referring specifically to this paragraph of
this Agreement, whereupon WorldCom shall release and deliver the Pledged Stock
to Pledgor and the Substituted Letter of Credit shall be and become the
Collateral hereunder. WorldCom will also promptly consider and respond to any
other written request by Pledgor to substitute the Pledged Stock with other
collateral, securities, or undertakings; WorldCom may grant or deny its consent
to such substitution in the exercise of its reasonable discretion.
15. TERMINATION. This Agreement shall terminate and WorldCom shall
release and deliver the Pledged Stock to Pledgor upon demand by Pledgor after
the earlier to occur of (a) the Indemnity Agreement terminating in accordance
with its terms and (b) WorldCom having received Satisfactory Releases as to all
of the Bonds.
16. NOTICES. All notices, requests and demands to or upon WorldCom,
Subsidiaries or Pledgor to be effective shall be in writing and shall be deemed
to
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have been duly given or made to the persons and in the manner provided for in
the Indemnity Agreement.
17. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by Pledgor and
WorldCom, provided that any provision of this Agreement may be waived by
WorldCom and the other Assumption Agreement Beneficiaries in a letter or
agreement executed by WorldCom or by telex or facsimile transmission from
WorldCom.
(b) Neither WorldCom nor any of the other Assumption Agreement
Beneficiaries shall by any act (except by a written instrument pursuant to
paragraph 18(a) hereof), delay, indulgence, omission or otherwise be deemed
acquiesced in any default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of WorldCom or any of the other Assumption Agreement
Beneficiaries, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by WorldCom or any of the other
Assumption Agreement Beneficiaries of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which WorldCom
or any such Assumption Agreement Beneficiaries would otherwise have on any
future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
19. REASONABLENESS STANDARD. When any provision in this Agreement
contemplates WorldCom granting or withholding its consent subject to its
reasonable discretion, WorldCom shall not be deemed unreasonable if it withholds
consent to
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any matter which would, directly or indirectly, result in WorldCom having less
security for the Obligations than it does on the date of this Agreement.
20. SECTION HEADINGS. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of Pledgor and shall inure to the benefit of WorldCom and
the other Assumption Agreement Beneficiaries and their successors and assigns.
22. GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware and the United States of America, without regard to the principles of
conflict of laws thereof, and may only be enforced in the courts of the State of
Delaware, or the United States District Court for the District of Delaware, the
jurisdiction of which courts each Party hereby irrevocably subjects itself to.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
Able Telcom Holding Corp. ("Pledgor")
By: /S/ FRAZIER L. GAINES
----------------------------------
Title: PRESIDENT AND CEO
AGREED AND ACCEPTED FOR
PURPOSES OF SECTION 7(C):
MFS COMMUNICATIONS COMPANY, INC.
By: /S/ FREDERICK W. WEIDINGER
-----------------------------------
Name: FREDERICK W. WEIDINGER
Title: VICE PRESIDENT
WORLDCOM INC.
By:__________________________________
Name:
Title:
357127.1
16
EXHIBIT 2.5.4
================================================================================
MASTER SERVICES AGREEMENT
BY AND BETWEEN
WORLDCOM NETWORK SERVICES, INC.
AND
MFS NETWORK TECHNOLOGIES, INC.
CONTRACT NO. C-6734
================================================================================
CONFIDENTIAL
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. TERM.............................................................6
1.1 Term...............................................6
1.2 Termination........................................6
1.3 Contract Year......................................6
ARTICLE 2. CONTRACTOR SERVICES..............................................6
2.1 Work...............................................6
2.2 Work Orders........................................8
2.3 Other Work.........................................9
2.4 Refusal of Work...................................10
ARTICLE 3. PERFORMANCE OF WORK.............................................11
3.1 Contractor's Forces...............................11
3.2 Subcontractors....................................12
3.3 Contract Documents................................13
3.4 Materials.........................................14
3.5 Permits and Fees..................................16
3.6 Progress and Procedure............................17
3.7 Changes...........................................20
3.8 Commencement and Completion of Work...............21
3.9 As-Built Drawings.................................22
3.10 Specifications and Standards......................22
3.11 Lien Waivers......................................23
3.12 Timing/Delays.....................................23
3.13 Corrective Action Plan............................24
ARTICLE 4. PAYMENT AND COSTS...............................................24
4.1 Payment...........................................24
4.2 Cost Control......................................30
4.3 Most Favored Nation...............................30
4.4 Independent Contractor............................30
4.5 Accounting System.................................32
4.6 Progress Payment..................................33
4.7 Late Payment......................................35
4.8 Annual and Aggregate Project Sum..................35
4.9 Commitment Fulfilled..............................36
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4.10 Contractor's Fee Trueup...........................36
4.11 Able Telcom's Promissory Note.....................37
ARTICLE 5. OWNER'S RESPONSIBILITIES........................................38
5.1 Authorized Representative.........................38
5.2 Provision of Data.................................38
5.3 Owner's Own Forces................................39
5.4 Prompt Reply......................................39
5.5 Failure to Provide Information....................39
ARTICLE 6. OWNER'S AND CONTRACTOR'S REPRESENTATIONS........................39
6.1 Contractor Representations and Covenants..........39
6.2 Owner Representations and Covenants...............40
ARTICLE 7. INSURANCE AND BONDS ...........................................40
7.1 Worker's Compensation and Employer's Liability....41
7.2 Builder's Risk....................................43
7.3 Errors and Omissions..............................44
7.4 Railroad Protective...............................44
7.5 Insurance Required of Subcontractors..............44
7.6 Additional Insured................................45
7.7 Evidence of Coverage..............................45
7.8 Bonds.............................................46
ARTICLE 8. DEFAULT AND TERMINATION........................................47
8.1 Default...........................................47
8.2 Dispute Resolution / Arbitration..................50
ARTICLE 9. INDEMNIFICATION AND LIABILITY .................................52
9.1 Indemnification by Contractor.....................52
9.2 Indemnification by Owner..........................53
9.3 Notice of Claims..................................53
9.4 Limitation of Liability...........................54
ARTICLE 10. WARRANTY.......................................................54
10.1 Warranty..........................................54
10.2 Free from Defects.................................55
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10.3 No Other Warranties...............................55
ARTICLE 11. HAZARDOUS MATERIALS AND CONCEALED CONDITIONS...................55
11.1 Hazardous Materials...............................55
11.2 Concealed Conditions..............................56
ARTICLE 12. MISCELLANEOUS.................................................57
12.1 Title.............................................57
12.2 Assignment........................................57
12.3 Severability......................................57
12.4 Waiver............................................57
12.5 Notices...........................................58
12.6 Confidentiality...................................59
12.7 Counterparts......................................60
12.8 No Construction Against Drafter...................61
12.9 Course of Dealing.................................61
12.10 Survival..........................................61
12.11 Governing Law.....................................61
12.12 Entire Agreement..................................61
EXHIBITS (Omitted)
EXHIBIT A - Current Projects........................................A-1
EXHIBIT B - Work Orders.............................................B-1
EXHIBIT C - Agreements for Other Work...............................C-1
EXHIBIT D - Engineering Services Rate Schedule......................D-1
EXHIBIT E - Change Order Form.......................................E-1
EXHIBIT F - Certificate Of Completion...............................F-1
EXHIBIT G - Contractor's Labor Policies.............................G-1
EXHIBIT H - Subcontract Terms & Conditions..........................H-1
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EXHIBIT I - Professional Services Agreement........................I-1
EXHIBIT J - Invoice Form............................................J-2
- -----------------
The Company agrees to provide copies of any omitted exhibit(s) supplementally to
the Commission upon request.
CONFIDENTIAL
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<PAGE>
MASTER SERVICES AGREEMENT
CONTRACT NO. C-6734
THIS Master Services Agreement ("Agreement") is made as of this
__________ day of _________________, 1998 by and between WORLDCOM NETWORK
SERVICES, INC., a Delaware corporation with offices at 6929 N. Lakewood Avenue,
Tulsa, Oklahoma, 74117, including its affiliates and subsidiaries as appropriate
throughout (collectively referred to herein as "Owner") and MFS NETWORK
TECHNOLOGIES, INC., a Delaware corporation with offices at 1200 Landmark Center,
Suite 1300, Omaha, NE 68102, hereinafter called the "Contractor."
WITNESSETH:
WHEREAS, the Owner is engaged in the business of providing
telecommunications services and intends to obtain services for the design,
engineering, procurement, construction, operation, maintenance, relocation and
replacement of various telecommunications network projects within the United
States (each, a "Project", together, "Projects"); and
WHEREAS, Contractor is engaged in the business of providing design,
engineering, procurement, construction, maintenance, relocation and replacement
of telecommunications facilities and desires to design, engineer, procure,
construct, maintain, relocate and replace certain of the Owner's Projects; and
WHEREAS, Owner desires Contractor to perform such work as is deemed
necessary by Owner to design, engineer, procure, construct, maintain, relocate
and/or replace each Project as the same shall be agreed by and between Owner and
Contractor; and
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WHEREAS, Owner and Contractor desire to establish the general terms and
conditions under which each Project will be performed and to establish the
responsibilities of each party hereto for each Project; and
WHEREAS, Owner desires to engage Contractor for an agreed term and
commitment for Projects as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and other
considerations contained herein, the parties hereto agree as follows:
TERMCLE 1.
1.1 TERM. The term of this Agreement shall be for a period of five (5)
years effective on the date of execution hereof (hereinafter the "Term").
1.2 TERMINATION. This Agreement may be terminated at any time upon the
mutual written agreement of the parties. This Agreement may also be terminated
pursuant to Article 8.
1.3 CONTRACT YEAR. A "Contract Year" shall be any twelve month period
beginning on the date of execution of the Agreement as first written above or
any anniversary date thereof.
ARTICLE 2. CONTRACTOR SERVICES
2.1 WORK. The Contractor agrees to provide, as required by Owner, all
the labor, equipment, materials and expertise and to do all things necessary for
the proper performance and completion of each Project (the "Work"). The Work,
may, as required by Owner, include, but is not limited to, Local Network
Projects, Long Haul Projects, Engineering Services and Other Work all as
hereinafter defined.
2.1.1 LOCAL NETWORK PROJECTS. Local Network Projects may, as
required by Owner, include but are not limited to, design, engineering, project
management, material procurement, inspection, acceptance testing and
construction of local telecommunications network infrastructure
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which may consist of both inside and outside plant work, and initial building
laterals to provide intracity or intraexchange telecommunications services to
customers within a local loop (hereinafter referred to as "Local Network
Projects"). Local Network Projects do not include construction of isolated
laterals or points of presence ("POPs").
2.1.2 LONG HAUL PROJECTS, may, as required by Owner, include
but are not limited to, design, engineering, project management, material
procurement, inspection, acceptance testing and construction of long distance
telecommunications networks which may consist of both inside and outside plant
work, terminal and regen/amplifier facility construction or expansion to provide
intercity, interexchange or interLATA telecommunications services (hereinafter
referred to as "Long Haul Projects.").
2.1.3 ENGINEERING SERVICES. Engineering Services may, as
required by Owner, include but are not limited to, the design, engineering and
procurement of transmission facilities, spaces, nodes and central office
equipment related to Local Network Projects and other special engineering
projects or research. Central office equipment includes, but is not limited to,
optical-electric equipment, cross connect systems, voice and data switching
systems, DC power systems, cabling, racking and ancillary equipment ("Central
Office Equipment"). Due to the unique nature of such Engineering Services, Owner
and Contractor agree that such services shall be performed at the actual direct
salary, subject to adjustments as set forth in Article 4, plus the labor burden
factor set forth in Exhibit D attached hereto and incorporated herein which
shall include applicable overhead and benefits. The parties agree that
Contractor may, not more often than annually, update the labor burden factor for
Engineering Services based upon changes in Contractor's actual costs for
providing such services provided that Owner is given written notice and a
written justification of any change in such labor burden factor. The charges for
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Engineering Services set forth herein shall be considered Reimbursable Costs as
defined in Article 4 hereof.
2.1.4 CURRENT PROJECTS. Owner and Contractor agree that all
work or projects being performed under a contract between Contractor and Owner
as of the date of this Agreement which work has been performed after the
execution date of this Agreement, including but not limited to those Projects
set forth in Exhibit A, shall be treated in accordance with the terms and
conditions of this Agreement. The parties agree that any commitments concerning
volume of work or annual payments in any such contracts shall immediately become
void and of no effect due to the Annual Project Sum and Aggregate Project Sum
commitments contained in Article 4 hereof.
2.2 WORK ORDERS. The Work shall be set forth in a detailed Work Order
(each, "Work Order" or, together "Work Orders"), for each individual Local
Network Project, Long Haul Project, or Engineering Services Project executed by
Owner (or Owner's affiliate or subsidiary as appropriate) and Contractor. Where
appropriate, Owner and Contractor will enter into a Work Order to develop a
description of Work to be performed, Project Staffing Plan, Project Budget and
Project Schedule for Project development. No Work Order shall be effective nor
shall Owner or Contractor incur any liability hereunder unless the Work Order is
executed by duly authorized representatives of each party hereto.
2.2.1 Each Work Order shall be substantially in the form of
and shall contain the information contained in the Sample Work Order attached
hereto as Exhibit B. At a minimum, each Work Order shall contain the Project
name, description of the Work to be performed, Project Staffing Plan (as
hereafter defined), Project budget, Project schedules and a list of work to be
subcontracted. Upon execution of a Work Order it shall become a part of and
shall be governed by this Agreement.
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Each Work Order shall be labeled so that, for example, the first executed Work
Order may be Work Order No. C-6734.001, the second Work Order shall be Work
Order No. C-6734.002 and so on.
2.3 OTHER WORK. In addition to Local Network Projects, Long Haul
Projects and Engineering Services, Owner may enter into agreements with
Contractor to provide, among other things, all the labor, equipment, materials
and expertise and to do all things necessary for the proper performance and
completion of other Projects. Such other Projects may include but are not
limited to the engineering, procurement or construction of telecommunications
networks or facilities or services required for the maintenance, expansion or
operation of either Local Network Projects or Long Haul Projects or other
Projects not specifically defined in this Agreement, hereinafter collectively
referred to as "Other Work." The Contractor may from time to time bring projects
to the attention of Owner whereby Contractor acting on behalf of a third party
right-of-way or facility owner is offering for sale or lease telecommunications
facilities. Should Owner elect to enter into an agreement with Contractor for
such facilities such agreement shall not be subject to this agreement.
2.3.1 The details for all Other Work shall be set forth in an
agreement which shall be executed by Owner (or Owner's affiliate or subsidiary
as appropriate) and Contractor. No agreement for Other Work shall be effective
nor shall Owner or Contractor incur any liability hereunder unless the agreement
is executed by duly authorized representatives of each party hereto.
2.3.2 Each agreement for Other Work shall become a part of and
shall be governed by this Agreement unless expressly stated in such agreement
for Other Work. In the event of a conflict between this Agreement and an
agreement for Other Work, the agreement for Other Work shall prevail.
Notwithstanding the foregoing, all payments made or due by Owner to Contractor
pursuant to an agreement for Other Work without regard to the terms of such
agreement for Other Work, shall become
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part of the Aggregate Project Sum as defined in Article 4. Each agreement for
Other Work shall be labeled in the same manner as Work Orders.
2.3.3 Owner agrees that Contractor shall have the opportunity
to bid on all Local or Long Haul Projects not assigned to Contractor via a Work
Order and offered by Owner for bidding during the Term.
2.4 REFUSAL OF WORK
2.4.1 During each Contract Year, Contractor shall accept and
execute all Work Orders offered to Contractor by Owner hereunder without regard
to quantity, schedule or cost throughout the Term until such time as the Annual
Project Sum reaches One-hundred Thirty Million Dollars ($130,000,000.00). If
Contractor refuses or fails to accept any Work Order prior to such time, the
value of the Work Order (including the applicable Contractor's Fee) shall be
added as a credit to the Aggregate Project Sum as if such Work Order had been
accepted and performed by Contractor pursuant to the terms of this Agreement.
For the purpose of determining whether such a credit is due, the Annual Project
Sum shall be as calculated at the time Contractor declines such Work Order.
2.4.2 The Owner agrees to award Contractor a minimum volume of
seventy-five percent (75 %) of all outside plant work related to Owner's Local
Network Projects.
2.4.3 In the event the Annual Project Sum for all Work Orders
and agreements for Other Work reaches One Hundred Thirty Million Dollars
($130,000,000.00) in any year of the Term and Owner offers a Long Haul Project,
Engineering Services or Other Work to Contractor, Contractor may decline to
accept such additional Work, without penalty.
ARTICLE 3. PERFORMANCE OF WORK
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3.1 CONTRACTOR'S FORCES. The Contractor shall perform project
management, supervisory functions, contract and document preparation, drafting,
material procurement, and all portions of the Work which are similar to those
stated herein with its own employees except as mutually agreed by Owner and
Contractor.
3.1.1 Owner and Contractor acknowledge that as part of the
consideration given by Owner to Contractor hereunder, Owner is relying on and
expects to continue to rely upon the high level of experience, skill and
expertise existing in the personnel currently in Contractor's employ. Contractor
shall staff Key Positions only with qualified persons with prior experience in
the position to be filled. For purposes of this Agreement, "Key Positions" are
defined as Project Manager, Construction Manager, Business Manager and Contract
Manager. However, Contractor may propose and Owner may reasonably approve the
use of individuals having no prior experience in a Key Position.
3.1.2 Contractor agrees to provide Owner with a detailed plan
for the staffing of each Project (hereinafter the "Project Staffing Plan") as
part of each Work Order. Each Project Staffing Plan shall identify the
individuals who will fill Key Positions and other positions which will be
required for the Project. Contractor shall provide Owner with relevant employee
information upon request. Contractor shall follow Owner's reasonable
recommendations concerning the Project Staffing Plan for each Work Order. All
unscheduled or voluntary changes by Contractor in the staffing of Key Positions
or other Contractor employees on a Project shall be subject to the prior written
approval of Owner, which shall not be unreasonably withheld.
3.1.3 Owner shall have the right to request in writing that
Contractor remove any of its employees from any Project at any time provided
such request is reasonable, lawful and nondiscriminatory.
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Contractor shall comply with such request immediately upon receipt of the
written request from Owner.
3.2 SUBCONTRACTORS. Unless specifically permitted in a Work Order or
agreement for Other Work, Owner and Contractor agree that Contractor shall
perform all actual construction for all Projects and Work performed hereunder
with unaffiliated third party contractors hereinafter referred to as
"Subcontractors".
3.2.1 As part of the Work performed under a Work Order or
agreement for Other Work, the Contractor shall develop, a list of qualified
bidders for each Project and establish bidding schedules. The Owner shall, upon
written notice to Contractor, have the right, in its sole discretion, to review,
approve, disapprove, add to or delete from the list of bidders. Unless otherwise
stated in a Work Order or agreement for Other Work, the Contractor shall obtain
competitive bids from a minimum of three (3) bidders for each phase or portion
of work for a Project or obtain a written waiver of this requirement before
proceeding with less than three bids.
3.2.2 Upon the prior written request of Owner, Owner shall
have the option to pre-approve all bidding documents, addenda and other
documents related to the bidding process at any time prior to Contractor's award
of a subcontract.
3.2.3 The Contractor shall prepare a bid evaluation analyzing
all bids received for a Project and shall notify Owner regarding selection of
the successful bidder. The Contractor shall award the work to be subcontracted
to the lowest priced, qualified, responsive bidder unless written approval is
obtained from Owner approving an award on some other basis. The Owner shall have
the right, upon prior written notice to Contractor, to determine the successful
bidder for any Work subcontracted
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hereunder. In no event shall Contractor award a contract to a bidder which
exceed the limits set forth in Section 3.7.1 unless approved in writing by
Owner.
3.3 CONTRACT DOCUMENTS. The Contractor shall prepare all Subcontractor
related contracts for the Work (the "Contract Documents"). All Contract
Documents shall conform to all laws and requirements of any right-of-way
providers, permitting authorities and other requirements of the Work Order or
agreement for Other Work.
3.3.1 All Contract Documents shall include terms and
conditions attached hereto as Exhibit I (for Subcontractors) and Exhibit J (for
professional services). The content of such Contract Documents shall comply with
generally accepted industry standards. In no event shall any Contract Document
including but not limited to agreements with Subcontractors, expose Owner to any
premium payment for early completion of a Project by Subcontractor, costs for
Subcontractor errors, liquidated damages or other penalty payments of any kinds
without the prior written consent of Owner which may be withheld by Owner in its
sole discretion.
3.3.2 The Contractor shall report to Owner any error,
inconsistency or omission in the Contract Documents which may have a material
impact on any Project immediately upon discovery thereof.
3.3.3 Upon written notice to Contractor by Owner prior to
execution of the Contract Documents, Owner shall have the right to approve any
and all Contract Documents. Contractor shall provide Owner with copies of the
documents upon such request and, Owner shall have five (5) business days from
receipt thereof to approve or disapprove said documents. Unless Owner gives
Contractor written notice to the contrary, failure of Owner to approve or
disapprove the Contract Documents within such five day period shall be deemed
approval. Owner shall not be responsible for the completeness, accuracy or
context of the Contract Documents except where such completeness,
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accuracy or context is affected by changes to Contract Documents directed,
dictated or otherwise made by Owner. Contractor shall use commercially
reasonable efforts to ensure that all disputes concerning errors,
inconsistencies or omissions in the Contract Documents shall be resolved in
favor of Owner.
3.3.4 The Contractor shall maintain copies of all Contract
Documents at the site of each Project in good order and marked reasonably
current to record all changes made during the Work.
3.4 MATERIALS. The Contractor will buy on a competitive-bid basis from
the lowest priced, qualified, responsible provider, in accordance with the same
bidding procedure outlined in Section 3.2 hereof, all major items of
construction materials necessary for the Work. All anticipated purchases,
rentals or other contracts for material shall be described in the applicable
Work Order or agreement for Other Work and included in the appropriate budget
for each. Contractor its Subcontractors will only purchase and install materials
which conform to Owner's specifications which will be included in the Work
Order. For purposes of economy, Contractor may enter into volume purchase
agreements to purchase major material items, such as fiber optic cable, conduit,
manholes, handholes, duct and innerduct, to be used in multiple projects
provided that such volume purchase agreements are competitively bid at
reasonable intervals during the Term but in no event less than every 18 months.
Any material deviation from Owner's specifications included in the Work Order
must be approved in writing by Owner.
3.4.1 Notwithstanding anything herein to the contrary,
including but not limited to Article 4 hereof, Contractor shall order major
material items limited to fiber optic cable, manholes, duct, innerduct,
handholes, and conduit only as described in and budgeted for in an applicable
Work Order or agreement for Other Work. Contractor shall count all quantities
toward its own volume purchasing
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agreements with suppliers as appropriate. Contractor shall reimburse to Owner as
a credit, any such volume discounts received by Contractor after billing. Owner
shall receive all supplier warranties and guarantees.
3.4.2 Owner hereby reserves the right to purchase or provide
any and all materials necessary for the Work if deemed necessary by Owner due to
its tax status, availability of surplus material already owned, ordered, or
purchased by Owner or the Contractor's inability to secure the materials by the
stated due date.
3.4.3 All materials purchases made hereunder, including
payments of Contractor's Fees shall be credited to the Aggregate Project Sum as
defined in Article 4. Notwithstanding the foregoing, the Contractor's fee shall
be reduced from 12% to 6% only for circumstances where the Owner reserves the
right to purchase material pursuant Subsection 3.4.2 above. This reduction in
Contractor's fee shall not apply anywhere else in this Agreement. Further,
materials moved from one Project to another Project will not be subject to a
second Contractor's Fee.
3.4.4 Contractor shall properly inspect, receive and handle
any materials ordered pursuant to this Article. For Engineering Services Central
Office Equipment projects, Contractor will be responsible for all material
handling and inventory control, will use off-site facilities for warehousing
services prior to the installation start date as designated by Owner; and will
minimize the amount of materials stored on site during the implementation of the
Project.
3.5 PERMITS AND FEES. As required by Owner and specified in the Work
Order, the Contractor shall secure on Owner's behalf and the Owner shall pay
for, as Reimbursable Costs, all permits and governmental fees, licenses and
inspections necessary for the proper execution and completion of the Work which
are customarily secured after execution of the Work Order and which are legally
required.
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3.5.1 Where the local law at the site of the building requires
a Certificate or Statement of Occupancy the Contractor shall obtain and pay for
this Certificate and deliver it to the Owner. Any costs for this Certificate
shall be treated as a Reimbursable Cost pursuant to Article 4 hereof.
3.5.2 Contractor shall not enter into or accept any license
agreement, joint-use agreement, ordinance, resolution, franchise, or other
agreement for the use of public or private right-of-way with any federal, state,
local, public or private entity for any Project without the written approval of
Owner it being agreed that Owner or its duly authorized representation shall
execute any such agreements. Contractor shall immediately notify Owner if, or
when, it discovers any such agreement is required.
3.6 PROGESS AND PROCEDURE. The Contractor shall, unless otherwise
stated in a Work Order or agreement for Other Work, follow these procedures;
3.6.1 The Contractor will maintain current estimates of costs
and progress schedules. The Contractor shall furnish information regarding
availability of materials, when requested by the Owner, and furnish any
information to the Owner to assist in arriving at the most economical
construction.
3.6.2 The Contractor shall provide administrative, management,
and related services to coordinate scheduled activities and responsibilities of
the Subcontractors with each other and with those of the Contractor, Owner, or
others involved in the Project to use commercially reasonable efforts to manage
each Project in accordance with the approved estimate for costs, the Project
schedule and the Contract Documents.
3.6.3 Utilizing the Project Schedule, the Contractor shall
update all schedules incorporating the activities of the Subcontractors and
others on the Project including activity sequences
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and durations, allocation of labor and materials, processing of shop drawings,
product data and samples, and delivery of materials or equipment requiring long
lead time and procurement. The Project Schedule shall include the Owner's
requirements and responsibilities showing portions of the Project having
priority. The Contractor shall update and reissue each Project Schedule as
required by Owner to show current conditions and percentages of completion. The
Contractor shall keep a daily log containing a record of weather, each
Subcontractor on the site, number of workers, identification of equipment, Work
accomplished, problems encountered, and other similar relevant data as the Owner
may require. If an update indicates that the previously approved Project
Schedule may not be met, the Contractor shall immediately notify Owner and
recommend corrective action. The Contractor shall schedule and conduct meetings
to discuss such matters as progress and scheduling with Owner as set forth in
the Work Order or as requested by Owner.
3.6.4 Consistent with the various bidding documents, Contract
Documents and utilizing information from the Subcontractors, the Contractor
shall coordinate the sequence of construction and assignment of space in areas
where the Subcontractors are performing work.
3.6.4.1 The Contractor shall at all times enforce
strict discipline and good order among its employees and shall not employ on any
Project any person not skilled in the task assigned to him or her. The
Contractor shall be responsible to maintain and observe and to require its
Subcontractors to maintain and observe, sound labor and safety practices and
shall require each Subcontractor to take all steps reasonably necessary to avoid
labor disputes or work stoppages. For Engineering Services Central Office
Equipment projects, Contractor agrees to use personnel and Subcontractors who
have been certified in certain high skill procedures under Owner's mandatory
training program. The expense of obtaining such certification is to be paid by
the Subcontractor for Subcontractor's forces and as a
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Reimbursable Cost for Contractor's personnel. Owner shall make such training
available at a nominal cost.
3.6.4.2 The Contractor shall coordinate and supervise
the work performed by Subcontractors to the end that the work is carried out
without conflict between trades or jurisdictional disputes and so that no
Subcontractor, at any time, causes delay to the general progress of a Project.
The Contractor and all Subcontractors shall at all times afford each other
Subcontractor, any separate (Sub)contractor, and the Owner, every reasonable
opportunity for the installation of work and the storage of materials, and shall
provide access to and the use of necessary loading dock and hoist facilities,
adequate storage room and necessary utilities and other services. Wherever the
work of a Subcontractor is dependent upon the work of other Subcontractors, the
Contractor shall require the Subcontractor to:
(a) coordinate his work with the dependent work;
(b) provide necessary dependent data and
requirements;
(c) supply and/or install items to be built into
dependent work of others;
(d) make provisions for dependent work of
others;
(e) examine dependent drawings and
specifications;
(f) examine previously placed dependent work;
(g) check and verify dependent dimensions of
previously placed work;
(h) notify Contractor of previously placed
dependent work or dependent dimensions which
are unsatisfactory or will prevent a
satisfactory installation of this Work; and
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(i) not proceed with this Work until the
unsatisfactory dependent condition has been
corrected.
3.6.4.3 The Contractor shall develop and implement
procedures for the review and processing of applications by Subcontractor for
progress and final payments.
3.6.4.4 Based on the Contractor's observations and
evaluations of each Subcontractor's application for payment, the Contractor
shall review, certify and pay the amounts due the respective Subcontractor.
3.6.5 The Contractor shall manage the performance of each of
the Subcontractors with all due diligence to ensure that the requirements of the
Contract Documents are met. The Contractor shall take appropriate action against
Subcontractor(s) when requirements of a Contract Document are not being
fulfilled and shall take commercially reasonable steps to assure compliance with
the Contract Documents.
3.7 CHANGES. The Owner may, at any time, by written change order
("Change Order"), make changes in the drawings, specifications, schedule or
other aspects of a Project. The Contractor may also, through the course of
performance of Work, recommend changes to the design, schedule or budget for any
Project for approval by Owner. Contractor will utilize commercially reasonable
efforts to minimize the effect on costs and schedules in accommodating such
change. The purpose of a Change Order is to provide control in changes in Work,
Project configuration, budget and/or schedules on a formal basis. No changes
shall be made to any Project without an appropriate Change Order. All Change
Orders shall be in the form attached hereto as Exhibit E and executed by both
parties. The time and schedule for completion of the Project affected shall be
extended as reasonably required to complete the Work so changed. If the changes
desired change the Work contemplated including, but not limited to: (a)
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changes in, substitutions for, additions to or deletions of any Work; (b)
changes in the specifications or drawings, (c) changes in the schedule or
acceleration, deceleration or suspension of performance of any Work; and (d)
substantial changes in the location, alignment, dimensions or design of items in
the Work and/or if the Owner requests the Contractor to perform added Work
outside the scope of such Project, then, prior to the performance of such
additional Work an equitable adjustment in the Project Schedule, Project Budget
and Project Staffing Plan will be negotiated by the parties for such Work and
included in the applicable Change Order.
3.7.1 In the event the estimated costs of a Work Order or
agreement for Other Work exceed or are likely to exceed the total budget for the
Project or One Hundred Ten percent (110%) of the budget for any individual
budget line item, the Contractor will promptly notify Owner of such condition so
the appropriate action can be taken by Owner in response to the variance.
3.8 COMMENCEMENT AND COMPLETION OF WORK. The Contractor shall commence
Work on the commencement date reasonably set by Owner in the Work Order and
shall complete the Work and turn the Project over to the Owner (after final
inspection and testing) ready for acceptance by Owner no later than the date
specified for completion in the applicable Work Order, except as this date may
be changed pursuant to a Change Order or to delays beyond the reasonable control
of Contractor.
3.8.1 FINAL INSPECTION, TESTING AND ACCEPTANCE:
3.8.1.1 FINAL INSPECTION AND TESTING. Upon completion
of construction of any Project hereunder, Contractor shall conduct acceptance
testing, in accordance with the requirements of the Work Order, to demonstrate
that the Work has been performed in accordance with the specification of the
Work Order, including a review of all Contract Documents, drawings,
specifications and other related documents. Owner reserves the right to attend
and observe all final inspections and testing. After
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completion of acceptance testing, Contractor shall forward to Owner one copy of
all test results for approval.
3.8.1.2 Upon completion of all Project requirements,
Contractor shall provide Owner with a Certificate of Completion that signifies
the Project is completed and shall assist the Owner with the final inspection of
the Project. Once the Owner has completed the final inspection and accepted the
test results and as-builts, Owner shall signify its final acceptance of the
Project by approving a Certificate of Completion in the form attached hereto as
Exhibit F.
3.8.1.3 The Certificate of Completion shall identify
all currently known and outstanding liabilities, charges, claims made by
Subcontractors and potential financial obligations that have not been resolved
at the time of final completion.
3.8.1.4 Notwithstanding anything to the contrary in
this Agreement, acceptance of any Work performed by Contractor for Owner
hereunder shall not affect the warranties set forth in Section 10 hereof.
3.9 AS-BUILT DRAWINGS. Drawings showing all facilities and elements as
built by Contractor for Owner for a Project ("As-Builts") shall meet Owner
specifications as set forth in the Work Order and shall be prepared in a
computerized format acceptable to Owner. Contractor shall turn over within 30
calendar days after completion of testing, two (2) hard copies and one (1) soft
electronic copy of the entire set of As-Builts for each Project. For a period of
three (3) years after Notice of Acceptance, Contractor will also maintain a full
set of As-Builts in both hard copy and soft electronic copy in its files for
each Project. Final acceptance of any Project shall be subject to Owner's
acceptance of As-Builts from Contractor.
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3.10 SPECIFICATIONS AND STANDARDS. All Work for any Work Order or
agreement for Other Work performed hereunder shall be performed in addition to
all requirements and specifications set forth in the Work Order or agreement for
Other Work, in accordance with the requirements and specifications of the
National Electric Code, the National Electric Safety Code (both as they
currently exist or are amended) and any other requirements imposed by any
governmental authority or agency having jurisdiction.
3.11 LIEN WAVERS. Unless otherwise prohibited by Law, Contractor will
waive all rights to place any lien and will require all Subcontractors to waive
all rights to place any lien against the equipment, materials, or other property
used in a Project and shall provide a written statement in the Contract
Documents evidencing such waivers to Owner prior to the commencement of any Work
hereunder. Any failure by Contractor to secure such waivers which are not
otherwise prohibited by law, without the written consent of Owner shall be
promptly corrected at Contractor's expense. Contractor may, at its option,
correct by bonding over its failure to receive such waivers.
3.12 TIMING/DELAYS.
3.12.1 Time shall be of the essence for Owner and Contractor
in the performance of Agreement.
3.12.2 It is specifically agreed that neither Contractor nor
Owner shall be held responsible or liable for any loss, damage, detention or
delay ("Loss"), arising from causes beyond the control and without the fault or
negligence of the Contractor or Owner, including but not limited to acts of God,
acts of the public enemy, acts of another contractor in the performance of a
contract with the Owner which is not performed pursuant to a Work Order
hereunder, fires, floods, epidemics, quarantine restrictions, strikes, freight
embargoes, or unusually severe weather or delays of Subcontractors or suppliers.
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Contractor shall not be held responsible or liable for any Loss resulting from
suspension of Work by or acts or neglect of Owner. In the event of such Loss,
Contractor or Owner shall promptly give written notice to the other party and
the time and/or cost for performance of each affected Project, shall be adjusted
by Change Order pursuant to Article 3, subsection 3.7 hereof.
3.13 CORRECTIVE ACTION PLAN. If Contractor consistently fails to comply
with any non-material provision of the Agreement, any Work Order or any
agreement for Other Work Owner may, at its sole discretion and with sufficient
written description of the failure, direct that Contractor produce a corrective
action plan to remedy such failure within ten (10) days of receipt of such
request. In the event that such corrective action plan performed by Contractor
does not remedy such failure, Owner may escalate the issue in accordance with
the provisions of Article 8, Subsection 8.2 of this Agreement.
ARTICLE 4. PAYMENT AND COSTS
4.1 PAYMENT. The parties intend for this Agreement to be a "Cost Plus"
Agreement and that, except as otherwise provided herein, Contractor shall not be
obligated to incur any costs which will not be reimbursed by Owner as set forth
herein nor shall Contractor charge Owner any costs not directly related to a
Work Order. For each Work Order, the Owner shall pay the Contractor the Project
Sum, which shall be comprised of the reimbursable costs ("Reimbursable Costs")
as defined below, and a fee ("Contractor's Fee"), which shall be 12% of the
total of the Reimbursable Costs for such Project,
4.1.1 REIMBURSABLE COSTS. The Reimbursable Costs shall be all
actual direct costs necessarily incurred and paid by the Contractor for Owner in
the proper performance of the Work for a Work Order. Such Reimbursable Costs
allowable under this Agreement shall be the costs and expenses which are
actually incurred by the Contractor in the performance of a Project pursuant to
a Work Order hereunder. Reimbursable Costs shall include but shall not be
limited to all actual direct costs incurred
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by the Project office, Project staff, and other items directly related to a
specific Project performed hereunder, including prorated costs for general
liability, worker's compensation and other insurance coverage required for
Owner's Work which insurance is carried at a corporate level by Contractor.
Failure to mention any item of Reimbursable Costs herein shall not bear upon a
determination of its allowability. All Reimbursable Costs must be documented and
copies of invoices including a detailed summary of charges shall be sent to
Owner prior to the making of any payment by Owner therefor.
4.1.1.1 LABOR AND LABOR-RELATED ITEMS.
(a) LABOR COST. Labor cost shall be the actual direct
cost of Project staff, including salary or wages, benefits,
payroll insurance and payroll taxes. The positions included as
Reimbursable Cost are limited to those positions listed in the
Project Staffing Plan. Other positions such as any corporate
office support staff and other corporate level supervisory
personnel are considered to be overhead to the Project and
are, therefore, explicitly not Reimbursable Cost. Vacation,
personal day pay, holiday pay, sick leave pay, bonus and rest
and relaxation (R&R) pay shall be charged as incurred. Owner
shall have the right on an annual basis and at Owner's expense
to an independent audit of Project timesheets and payroll
records to determine whether a materially disproportionate
amount of vacation pay, personal day pay, holiday pay, sick
leave pay, bonus and R&R pay is being charged to Owner's
Projects. In the event such an audit discloses such a
disproportionate charge, Owner shall be entitled to an
equitable adjustment to charges for labor costs and associated
Contractor's Fees. If the disproportionate charge is three
percent (3%) or more than what should be charged to Owner's
projects hereunder then Contractor shall reimburse Owner for
the actual direct cost of such audit. Contractor agrees that
during its normally scheduled annual review process it shall
determine the
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average annual salary paid in the previous year for its field employees.
Contractor further agrees that the change in salary or wages over a Contract
year shall not increase on a percentage basis more than the percentage increase
in the Consumer's Price Index for all urban consumers (CPIU). In the event the
Contractor desires to change salary or wages of its Project Staff in excess of
the CPIU percentage increase for any Contract Year, then Contractor shall
provide notice and justification for such increase to Owner. Owner shall
promptly review such information and shall not unreasonably withhold consent to
such request. Bonus amounts paid to Contractor employees assigned to Owner's
Projects will be consistent with Bonus amounts paid to all of Contractor's
employees in comparable positions.
(b) Cost of Living Adjustment ("COLA") applied to
labor costs where applicable will be consistent with Contractor's policy set
forth in Exhibit G.
(c) The cost of moving supervisory and administrative
employees who are assigned to the Work for a specific Project from their last
place of employment in accordance with the Contractor's current moving policy
which is attached hereto and incorporated herein as part of Exhibit G shall be a
Reimbursable Cost. Owner shall not pay relocation costs for the movement of any
Contractor employee from Owner's Project Site. However, Owner shall pay the
costs of demobilization for a Project if the project is canceled or
substantially reduced in scope prior to completion.
(d) Travel Expenses in connection with the following:
(i) Trips included in Contractor's current
R&R policy attached hereto and incorporated herein as part of Exhibit G;
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(ii) Trips to various fabricating plants,
Subcontractor or material supplier locations to inspect their facilities and/or
financial condition in regard to the Work on a Project which Work is approved by
Owner via a Work Order and trips to various fabricating plants, Subcontractor or
material supplier locations to inspect the progress of the Work being prepared
for a Project and to consult on methods of fabrication, shipment, etc.;
(iii) Trips for Project Management Staff for
training purposes including training courses, Project Management Meetings to be
held not more often than once per calendar quarter not to exceed One Hundred
Fifty Thousand Dollars ($150,000.00) per Contract Year provided such training is
directly related to the improvement of the Project Management Staff's skills in
the performance of Work for Owner's Projects; and/or
(iv) Trips conducted as part of the
relocation provisions of Article 4.1.1.1(b) above.
(e) In order to reduce the number of personnel
assigned to the job site or to expedite the performance of the Work hereunder,
Contractor may, as agreed to and stated in the applicable Work Order, perform
off-job site engineering, drafting clerical and/or accounting work, in which
case the costs of such Work shall be charged to the Project based on actual
labor costs marked up by the percentages in Exhibit D, supported by time cards,
expense reports, and expense vouchers. These charges shall be considered
Reimbursable Costs as defined in Article 4.
4.1.1.2 MATERIALS AND MATERIAL-RELATED ITEMS
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(f) The cost of all permanent materials, equipment
and supplies directly related to a Work Order. Credit shall be given the Owner
for all trade or quantity discounts obtained from vendors by Contractor for the
purchase of materials, equipment or supplies.
(g) The actual cost of all temporary and other
expendable services, materials and supplies, including, fuel, oil and grease,
which are normally consumed in performance of the Work. Any such expendable
materials and supplies for which the Contractor has been reimbursed by the Owner
and which remain after completion of the Work will be disposed of as directed by
the Owner.
(h) The cost of all necessary inspections, tests,
loading, handling, permits, transportation and insurance of whatever character
or description paid by the Contractor for materials and supplies used in the
construction of a Project.
(i) All materials, equipment and supplies shall be
delivered, handled, stored, installed protected and disposed of in such a manner
to prevent damage in accordance with current practice in the industry, in
accordance with manufacturer's specifications and recommendations, in accordance
with the Work Order requirements and in accordance with all laws. The Contractor
will haul and store packaged materials and equipment in their original and
sealed containers, marked with the brand and manufacturer's name, until ready
for use, and haul and deliver such materials and equipment in ample time to
facilitate inspections and tests prior to installation. The "delivery" in
reference to any item specified or indicated means the unloading and storing
with proper protection at the Project site. Damaged materials or equipment will
be rejected and removed from the site by the Contractor.
4.1.1.3 EQUIPMENT AND EQUIPMENT RELATED ITEMS
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(j) The cost of rental of all equipment including but
not limited to vehicles required for the Work. The cost of rental of equipment
charged to Owner for equipment owned by the Contractor for a Project shall be
consistent with the current market rate for renting or leasing similar items
from nationally recognized third party rental companies. The cost of rental of
equipment charged to Owner for use by Contractor from third parties shall be the
actual rental rate charged. The actual rental rate for the equipment shall be
consistent with the current market rates for renting or leasing similar items
from a nationally recognized third party rental company. As part of any Work
Order or agreement for Other Work, the Contractor shall prepare a utilization
chart listing all equipment to be used on the Project, together with the
corresponding fully maintained (excluding consumable items such as oil, grease
and fuel) rental rates for such equipment, and submit same to the Owner for its
approval.
4.1.1.4 MISCELLANEOUS
(k) For any Contractor Project office supporting more
than one Project or in conjunction with a third party's project, direct actual
costs for such Project office shall be prorated to each Project or project based
on a methodology specified in the Work Order.
(l) The budgeted fees of any consultants engaged in a
professional capacity pursuant to a Work Order.
(m) Losses and expenses, not compensated by insurance
or otherwise and actual, direct costs associated with the recovery or collection
of such Losses and expenses, including but not limited to the deductible amount
of any insurance required by Article 7 sustained by the Contractor in connection
with the Work provided they have resulted from causes other than the fault or
negligence of the Contractor, its Subcontractors, agents or employees.
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(n) All federal, state and local sales taxes, use
taxes, excise taxes, personal property taxes or special assessments, except
taxes on Contractor's income, in connection with the Work or materials to be
performed pursuant to a Work Order or agreement for Other Work.
(o) Such other items properly chargeable to the cost
of the Project to which Owner and Contractor have previously agreed to as part
of an executed Work Order.
4.2 COST CONTROL. The Contractor recognizes the relationship of trust
and confidence established between it and the Owner by this Agreement and agrees
to furnish its best skill and judgment and to cooperate with the Owner.
Contractor agrees to furnish efficient business administration and
superintendence, and to use commercially reasonable efforts to minimize expense
to the Owner, to keep upon the location for each Project at all times an
adequate supply of qualified workers as specified in the Project Staffing Plan,
tools, equipment and materials and to promote the progress of the work in the
most expeditious and economical manner consistent with the interests of the
Owner.
4.3 MOST FAVORED NATION. The cost basis for labor and associated cost
items and equipment rental rates charged to Owner under this Agreement or any
Work Order or agreement for Other Work (except for charges by Subcontractors or
other third parties not employees of Contractor) shall be no greater than the
lowest cost basis charged to other customers (including Contractor's
subsidiaries and affiliates) of Contractor.
4.4 INDEPENDENT CONTRACTOR. It is the intention of this Agreement that
the Contractor shall be and remain an independent contractor and nothing herein
is intended to be construed as inconsistent with that status. Contractor and
Owner, expressly intending that no employment, partnership, or joint venture
relationship is created by this Agreement, hereby agree as follows:
(a) Contractor shall act at all times as an
independent contractor hereunder;
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(b) Neither Contractor nor anyone employed by or
acting for or on behalf of Contractor shall ever be construed as an employee of
Owner and Owner shall not be liable for employment or withholding taxes
respecting Contractor or any employee of Contractor;
(c) Except as otherwise provided herein, Contractor
shall determine when, where and how Contractor shall perform the Work;
(d) Contractor shall take all steps to ensure that
Contractor and Contractor's employees are treated as independent contractors of
Owner;
(e) Owner shall have the right to conduct inspections
and reviews of, and determine satisfactory performance of, the Contractor's
services;
(f) Contractor shall provide Contractor's own
materials, tools and equipment in performing the services;
(g) Contractor shall, as an allocated cost, maintain
workers compensation insurance for Contractor and for all others employed by or
acting for or on behalf of Contractor only to the extent and in the amounts
required by law;
(h) Contractor shall be free to contract with, and
provide Contractor's services to, parties other than Owner during the term of
this Agreement, subject to the confidentiality restrictions delineated herein;
(i) Contractor shall not make any commitment or incur
any charge or expense in the name of Owner without the prior written approval of
Owner; and
(j) Contractor, for Contractor and for anyone
claiming through Contractor, waives any and all rights to any consideration,
compensation or benefits, except as provided for herein.
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4.5 ACCOUNTING SYSTEM. The Contractor shall keep accurate and detailed
books of account for all Work performed for each Project open to the inspection
of the Owner at reasonable times and frequency during Contractors regular
business hours to verify all Reimbursable Costs, and Contractor's Fees due to
Contractor hereunder. Contractor shall make its books and records available at
Owner's election, to an independent certified public accountant reasonably
acceptable to Contractor for the purpose of auditing the Reimbursable Cost
including the labor burden factors as shown on Exhibit D, and Contractor's Fees.
Contractor shall keep such full and detailed accounts and Project costs as may
be necessary for proper financial management by the Contractor under this
Agreement in a manner and pursuant to methods which are reasonably satisfactory
to the Owner. Owner shall have the right to request other reports as are deemed
necessary by Owner and Contractor shall comply with such request. Owner shall be
responsible for and shall reimburse Contractor for any direct costs associated
with such requested reports. The Contractor shall also monitor the approved cost
estimate for each Project and shall show actual costs for activities in progress
and estimates for uncompleted tasks by way of comparison with such approved
estimate. In the event the results of any audit show Contractor's costs to be in
error to the material detriment of Owner, Contractor shall credit to Owner any
such differentials and Contractor shall also reimburse Owner for the costs of
the audit.
Contractor shall at all times act in good faith and to the best
advantage of the Owner in the purchase of materials, in the employment of labor,
and in all its conduct and activities relative to any work on Projects performed
pursuant to this Agreement.
4.6 PROGRESS PAYMENT. As soon as is possible after the first of each
month, the Contractor shall submit to the designated office of the Owner an
application for payment for the Work performed for each Project in the preceding
month less any retainage held for Contractor's Subcontractors.
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Contractor may, subject to approval of Owner, submit an aggregate progress
payment application for Projects or a separate application for each Project, but
in any event, costs for each Project shall be separately stated.
4.6.1 Monthly payments to the Contractor for the Work
performed to such date will be made within thirty (30) days after receipt of
each invoice by the Owner. Such applications for payment shall be submitted, in
a form satisfactory to the Owner which form is attached hereto as Exhibit J and
shall be accompanied by documentation of all Reimbursable Costs including but
not limited to weekly payrolls and time sheets, showing the amounts paid to each
worker or employee, and allocation of each employee's time to the Project and
bills for materials delivered to each Project site and payments made or due to
Subcontractors. Contractor and Owner shall use commercially reasonable efforts
to resolve any disputed items within five (5) business days after the payment
due date. Any disputes not resolved within this time frame shall be handled in
accordance with Article 8, Subsection 8.2 hereof. Owner may withhold payment for
any disputed items until all such issues relating thereto are resolved, but
shall pay all undisputed amounts promptly in accordance with the provisions of
this Agreement. Owner shall act in good faith and not in an arbitrary or
capricious manner in disputing any amount. The basis for disputed amounts shall
be documented to Contractor. As used in this Article 4, Subsection 4.6.1,
"amount" shall be defined as a specific line item or items in a relevant
invoice, not the total amount of the invoice, unless all line items in the
invoice are reasonably disputed. Monthly payments to the Contractor shall, in
addition to payment for Reimbursable Costs for Work Performed, include the
Contractor's Fee to be paid to the Contractor for such Work performed in the
applicable month.
4.6.2 The Contractor's application for payment shall
constitute a representation to the Owner, based on its determinations at the
Project site, that to the best of the Contractor's knowledge,
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information and belief, the Work has progressed to the point indicated and the
quality of the Work is in accordance with the Work Order. The foregoing
representations are subject to an evaluation of the Work for conformance with
the Work Order upon substantial completion, the results of subsequent tests and
inspections, to minor deviations from the Work Order correctable prior to
acceptance.
4.7 LATE PAYMENT. Any payment not made by Owner to Contractor within
forty-five (45) days after the date of invoice shall bear interest on a monthly
basis from the date due until the date paid at the rate of the sum of the prime
rate then current as published in the Wall Street Journal plus four percent (4%)
divided by twelve (12). Any payment not made by Owner to Contractor with ninety
(90) days after the date of the invoice shall bear interest on a monthly basis
beginning on the 90th day at rate of the sum of the prime rate then current as
published in the Wall Street Journal plus eight percent (8%) divided by twelve
(12) but in no event shall this amount be greater than the maximum interest
amount allowed by applicable laws. Payment shall be deemed made on the date
received by Contractor. Owner shall also pay Contractor's actual costs incurred
for collection of any late payment or fees due hereunder, including reasonable
attorneys fees. Interest or collection costs paid hereunder shall not be applied
to the Aggregate Project Sum. Any failure by Owner to make payments when due
within ninety (90) days of the date of invoice three (3) or more times during
each Contract Year may be an event of default pursuant Article 8 hereof.
4.8 ANNUAL AND AGGREGATE PROJECT SUM. Owner hereby agrees to execute
sufficient Work Orders and agreements for Other Work with Contractor under this
Agreement so that the Annual Project Sum shall total no less than Forty Million
Dollars ($40,000,000.00) per Contract Year and the Aggregate Project Sum shall
total no less than Four Hundred Fifty Five Million Dollars ($455,000,000.00)
during the Term. The Annual Project Sum shall be defined as the sum of all
payments due by Owner to
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Contractor for Work actually performed by Contractor during a Contract Year
including Reimbursable Costs and Contractor's Fees for each Project (hereinafter
"Annual Project Sum"). The Aggregate Project Sum shall be defined as the sum of
all payments paid or due by Owner to Contractor for Work actually performed by
Contractor hereunder including Reimbursable Costs and Contractor's Fee for each
Project (hereinafter "Aggregate Project Sum") for all Work Orders and agreements
for Other Work executed during the Term. Both the Annual Project Sum and the
Aggregate Project Sum shall include any Contractor's Fee Trueup amounts as set
forth in Subsection 4.10.
4.9 COMMITMENT FULFILLED. Owner and Contractor agree that Owner shall
have met the Annual Project Sum commitment when the total Annual Project Sum is
Forty Million Dollars ($40,000,000). Owner and Contractor agree that Owner shall
have met the Aggregate Project Sum Commitment when the total Aggregate Project
Sum is Four Hundred Fifty Five Million Dollars ($455,000,000.00) at the end of
the Term. Further, the parties agree that Owner shall have met all commitments
hereunder when the total Aggregate Project Sum reaches Five Hundred Million
Dollars ($500,000,000.00) which may occur at any time during the Term. Owner
shall have the right to unilaterally terminate this Agreement upon its payment
of the Aggregate Project Sum to Contractor. Upon such termination Owner shall
have no further obligations to Contractor hereunder except as otherwise provided
herein. The parties agree that the Aggregate Project Sum and the Annual Project
Sum for the first Contract Year shall include but are not limited to the amounts
for Work performed by Contractor subsequent to the date of this Agreement for
Projects listed on Exhibit A, attached hereto and incorporated herein.
4.10 CONTRACTOR'S FEE TRUEUP. In the event Owner fails to execute Work
Orders or commitments for Other Work sufficient to reach the Annual Project Sum
or the Aggregate Project Sum,
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upon expiration of the Contract Year or Term, as appropriate, Owner shall pay
Contractor, in addition to all other sums due by Owner to Contractor hereunder
the "Contractor's Fee Trueup"," which shall be computed as follows:
4.10.1 Revenue Shortfall =
(a) Annual Project Sum commitment minus all amounts
paid, invoiced or otherwise due by Owner to Contractor for completed
portions of Work Orders and/or agreements for Other Work during a
Contract Year; and /or
(b) Aggregate Project Sum commitment minus all
amounts paid, invoiced or otherwise due by Owner to Contractor during
the Term minus any amounts for Work in progress at the end of the Term
which Work is performed and payment is made or due within twelve (12)
months after the end of the Term.
4.10.2 Revenue Shortfall = X
Contractor's Fee Trueup = .12X
4.10.3 The Contractor's Fee Trueup due for each Contract Year,
if any, shall be due within forty-five (45) days after the date of invoice and
late payments shall be treated in accordance with subsection 4.7 hereof. An
estimated final Contractor's Fee Trueup, if any, shall be due at the end of the
Term within forty-five (45) days after the date of invoice and late payments
shall be treated in accordance with subsection 4.7 hereof. The final
Contractor's Fee Trueup, if any, shall be invoiced twelve (12) months after the
completion of the Term and shall also be treated in accordance with subsection
4.7 hereof.
4.11 ABLE TELCOM'S PROMISSORY NOTE. Notwithstanding any provision of
this Agreement to the contrary, (1) if a default shall have occurred under the
Promissory Note, dated June 30, 1998 (the
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"Promissory Note"), of Able Telcom
Holding Corp. ("Able") in favor of MFS Communications Company, Inc., Owner shall
apply twelve (12) percent of sums due from Owner to Contractor at the times such
sums would otherwise have been required to be paid to Contractor as provided in
subsection 4.10.3 hereof toward partial prepayment of the principal first and
then to all other amounts owing under the Promissory Note until such time as the
Promissory Note is paid in full, (2) if the Promissory Note is not paid in full
by August 31, 1998, Owner shall not be obligated to execute Work Orders and
agreements for Other Work with Contractor during the period the Promissory Note
remains not paid in full, and (3) if the Promissory Note is not paid in full by
August 31, 1998, during the period the Promissory Note remains not paid in full,
the Annual Project Sum shall be reduced by the amount determined by multiplying
the actual number of days after August 31, 1998 in which any balance under the
Promissory Note remains unpaid in full times $40,000,000/365 and the Aggregate
Project Sum shall be reduced by the amount determined by multiplying the actual
number of days after August 31, 1998 in which any balance under the Promissory
Note remains unpaid in full times $325,000,000/1825.
ARTICLE 5. OWNER'S RESPONSIBILITIES
5.1 AUTHORIZED REPRESENTATIVE. The Owner shall designate a
representative authorized to act on the Owner's behalf with respect to each
Project. The Owner, or such authorized representative, shall render decisions in
a timely manner pertaining to documents submitted by the Contractor in order to
avoid unreasonable delay in the orderly and sequential progress of the Work.
5.2 PROVISION OF DATA. Owner shall provide any and all relevant plans,
specifications, facts and other data to the Contractor as agreed to in the Work
Order promptly upon request of Contractor to enable the Contractor to complete
the work by the completion date specified in the Work Order.
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5.3 OWNER'S OWN FORCES. The Owner reserves the right to perform
construction and operations related to a Project with Owner's own forces, and to
award Contracts in connection with the Project which are not part of the
Contractor's responsibilities pursuant to a Work Order. Owner will notify
Contractor in writing of such election. The Contractor shall notify the Owner if
any such independent action will interfere with the Contractor's
responsibilities under this Agreement and Owner agrees to cooperate with
Contractor and all Subcontractors.
5.4 PROMPT REPLY. Information or services under the Owner's control
shall be furnished by the Owner with reasonable promptness to avoid delay in the
orderly progress of the Contractor's services and the progress of the Work.
5.5 FAILURE TO PROVIDE INFORMATION. If Owner fails to provide in a
timely manner any information or services necessary to the progress of a Project
or makes an election under Article 5.3, Contractor shall be entitled to an
equitable adjustment, by way of a Change Order, in the budget and schedule for
such project.
ARTICLE 6. OWNER'S AND CONTRACTOR'S REPRESENTATIONS
6.1 CONTRACTOR REPRESENTATIONS AND COVENANTS. Contractor represents to
and covenants with Owner as follows:
(a) Contractor is duly organized and validly existing
and Contractor has the authority to execute this Agreement and has
access to sufficient personnel and expertise to perform its obligations
hereunder; and
(b) Contractor will use its commercially reasonable
efforts, in good faith, to keep all required authorities in full force
and effect during the Term and to obtain any
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additional authorities, permissions or certifications which may be
required in connection with this Agreement.
(c) There are no pending, or to Contractor's
knowledge threatened, claims, actions, suits, audits, investigations or
proceedings by or against Contractor which would have a material
adverse effect on Contractor's performance under or ability to comply
with this agreement.
6.2 OWNER REPRESENTATIONS AND COVENANTS. Owner represents to and
covenants with Owner as follows:
(a) Owner is duly organized and validly existing and
Owner has the authority to execute this Agreement and perform its
obligations hereunder;
(b) Owner will use its commercially reasonable
efforts, in good faith, to keep all required authorities in full force
and effect during the Term and to obtain any additional authorities,
permissions or certifications which may be required in connection with
this Agreement; and
(c) There are no pending, or to Owner's knowledge,
threatened, claims, actions, suits, audits, investigations or
proceedings by or against Owner which would have a material adverse
effect on Owner's performance under or ability to comply with this
Agreement.
ARTICLE 7. INSURANCE AND BONDS
Prior to commencement of any Work for any Project hereunder, Contractor
shall procure and maintain, with insurers reasonably acceptable to the Owner,
the following insurance protecting the Owner, Contractor and all other parties
required by the Owner against liability from damages because
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of injuries, including death, to persons, and liability for damages to property
arising from Contractor's operations, including its employees, agents,
Subcontractors and suppliers operations, in connection with the performance of
this Agreement. This insurance shall be kept in good standing during the term of
this Agreement. Owner reserves the right to have an Owner controlled Insurance
Program for all Work performed by Contractor and Contractor agrees to cooperate
reasonably with such efforts. Additional insurance requirements, if any,
required by third parties shall be set forth in the applicable Work Order or
Agreement for Other Work. The cost of insurance (including co-insurance and
deductibles paid) shall be a Reimbursable Cost hereunder and coverage for the
Projects shall be provided as follows:
7.1 WORKER'S COMPENSATION AND EMPLOYER'S LIABILITY. Worker's
Compensation insurance complying with the laws of the state or states of
operation, whether or not such coverage is required by law, and Employer's
Liability insurance with limits of $1,000,000 each accident, including
occupational disease coverage with a limit of $1,000,000 each employee and
$1,000,000 disease policy limit. If work is to be performed in Nevada, North
Dakota, Ohio, Wyoming, Washington or West Virginia, Contractor will purchase
Worker's Compensation in the State Fund established in the respective States.
Stop Gap Coverage or Employers Overhead coverage will be purchase.
When any Work Order calls for water operations, Longshoreman's and
Harbor Worker's Compensation insurance, Jones Act, and Maritime Coverage
providing for transportation, wages, maintenance and cure, with the limits of
$500,000 each employee, $500,000 more than one employee, shall be included. An
endorsement shall be attached evidencing that a claim "in rem" shall be treated
as a claim against the employer.
7.1.1 Commercial General Liability insurance with a combined
single limit for bodily injury and property damage of $2,000,000 each occurrence
and $4,000,000 annual aggregate. Annual
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aggregate shall apply on a per project basis. Such policy shall include coverage
for all operations of Contractor, including products and completed operations
coverage, blanket contractual liability and independent contractor coverage, and
will be endorsed to delete exclusion for work, construction or demolition within
50 feet of railroad trackage. This policy shall include no modifications that
reduce the standard coverages provided under a Commercial Guaranty Liability
policy form.
7.1.2 Business Automobile Liability insurance with a combined
single bodily injury and property damage single limit of $2,000,000 each
occurrence. This policy shall include coverage for owned, non-owned, and hired
vehicles.
7.1.3 When vessel(s) or barge(s) are used by the Contractor
for the performance of Work, protection and indemnity, collision and towers
liability insurance if applicable, on such vessel(s) or barge(s) both owned and
non-owned, in a single limit of not less than $5,000,000 or the value of the
vessel(s) or barge(s), which ever is greater, shall be provided.
When vessel or barges are used, the Contractor will provide
hull insurance in amounts to the full value of the vessel(s) or barge(s) owned
and/or operated by or for the Contractor.
7.1.4 In the event Contractor conducts diving operations, with
the divers who are employees, agents or servants of Contractor, from Owner's
vessels, Contractor's vessels or any other marine equipment, they shall only do
so at the express written request of the Owner Representative. Contractor agrees
to indemnify and save Owner harmless from any liability, loss, cost or damage,
including cost of defense, arising from or connected with such diving
operations.
Seaworthiness of Owner's vessel(s) used herein for such diving
operations is acknowledged and agreed to by Contractor, and neither Contractor
nor its insurance carrier shall contest this.
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7.1.5 When aircraft is used by the Contractor for performance
of the Work, the contractor will provide Aircraft Liability insurance on both
owned and non-owned aircraft, including helicopters, with combined single limit
of $1,000,000 per seat for bodily injury and property damage, including
passenger legal liability.
When any aircraft is used by the Contractor for the
performance of the Work, Aircraft Hull insurance in amounts to the full value of
each aircraft will be maintained by the Contractor on such aircraft owned and/or
operated by or for the Contractor.
7.1.6 Umbrella or Excess Liability Insurance applying in
excess of 7.1.1 through 7.1.5 above subject to a limit of $5,000,000.
7.1.7 The maintenance of insurance by the Contractor and the
limits of coverage required shall in no way limit or affect the extent of the
Contractor's liability.
7.1.8 Limits required above may be obtained through various
primary and umbrella structures.
7.2 BUILDERS RISK. As requested by Owner, Contractor shall procure and
maintain during the term of a Work Order or an agreement for Other Work, an all
risk builders' risk insurance policy protecting the Owner, Contractor and all
Subcontractors, as their interests may appear, from loss due to damage to the
Work or to any equipment supplies or material including any such items directly
provided by Owner pursuant to Article 4 hereof going into the Work, while at the
Project site, or while in transit to or from the Project site. The limit of
liability of this insurance shall be no less than the greater of the value of
the Project after the Work has been performed or the approved Project Budget
estimate in the applicable Work Order per occurrence and shall contain a
deductible of no more than $500,000 per
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occurrence. If coverage is requested by Owner, cost for builder's risk insurance
shall be a Reimbursable Cost.
7.3 ERRORS AND OMISSIONS. If requested in writing by Owner, Contractor
shall procure and maintain during the term of a Work Order or agreement for
Other Work insurance against the errors or omissions of Contractor or any of
Contractor's employees, agents or subcontractors performing Work hereunder with
limits satisfactory to Owner. If coverage is requested by Owner, cost for Errors
and Omissions insurance shall be a Reimbursable Cost. If coverage is written on
a "claims made" basis, all renewals during the life of this Agreement will
include "prior acts coverage".
7.4 RAILROAD PROTECTIVE. If requested in writing by Owner, Contractor
shall procure and maintain during the term of a Work Order or agreement for
Other Work, Railroad Protective Insurance protecting Owner, Contractor and
Subcontractor and in such limits as specified in the applicable Work Order.
7.5 INSURANCE REQUIRED OF SUBCONTRACTORS. Except as may be waived or
modified by Owner in writing, the Contractor shall require all Subcontractors to
provide and maintain the insurance required above subject to all requirements
set forth in this Article 7, provided however, that Builder's Risk, Errors and
Omissions, Railroad Protective, Owners Contractors Protective Liability and
Contractors Pollution Liability insurance shall only be required of
Subcontractors if requested by Owner as part of the Work Order agreement for
Other Work or if required pursuant to Article 3, Subsection 3.5 hereof.
Contractor and Owner shall be listed as additional insureds on Subcontractor's
policies. Owner's approval of any Subcontractor shall be conditioned upon a
Subcontractor having the required insurance coverage. Except as may be waived or
modified by Owner in writing, each Subcontractor shall also require its
Subcontractors, if any, to provide and maintain insurance as required above.
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7.6 ADDITIONAL INSURED. Owner shall be listed as an additional insured
on Contractor's and Subcontractor's policies. Contractor hereby waives its
right, and agrees to require its underwriter any and all Subcontractors to waive
all such rights, of subrogation against Owner, its officers, directors, agents,
and employees thereof, and corporate shareholders and officers, directors,
agents and employees thereof. Such waiver shall also extend to companies and
other legal entities that control, are controlled by, are subsidiaries of or are
affiliated with Company, and the respective officers, directors, agents,
employees and shareholders of such companies or entities. Contractor's insurance
is understood to be primary as respects the interest of additional insureds.
7.6.1 Owner or its Affiliates shall not insure nor be
responsible for any loss or damage to property of any kind owned or leased by
Contractor or its employees, servants, and agents. Any policy of insurance
covering the Property owned or leased by Contractor against loss by physical
damage shall provide that the underwriters have given their permission to waive
their rights of subrogation against Owner, its Affiliates and their Directors,
officers, and employees, as well as their subsidiaries and affiliates, including
directors, officers, and employees thereof.
7.7 EVIDENCE OF COVERAGE. Certificates of insurance or certified copies
of the insurance policies will be provided to the Owner prior to Contractor
beginning any Work under this Agreement. Such certificate shall contain a
provision that the insurer will give the Owner at least thirty (30) days prior
written notice of any material changes, reductions, non-renewal or cancellation
of the coverage. Contractor shall obtain certificates from its Subcontractor(s)
and deliver them to Owner, if requested to do so. In the event of any failure by
Contractor to comply with the provisions of this paragraph, Owner may, at its
option on notice to Contractor, suspend the affected Work Orders or agreement
for other work until there is full compliance with this paragraph or contract
for such insurance at Contractor's expense.
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7.8 BONDS. A payment bond from the Contractor shall be required for
each Work Order executed hereunder. The cost shall be a Reimbursable Cost of the
Project, and such bond shall be delivered to the Owner prior to the performance
of any Work. The amount of each bond shall be set by Owner but in no event shall
such amount exceed the amount of the Work Order. The Owner may waive this bond
requirement or, if a bond cannot be obtained for a Work Order, require a letter
of credit or other form of security as an alternative in its sole discretion for
any Work Order performed hereunder. In lieu of individual bonds for each
Project, Contractor and Owner may mutually agree to elect to provide Owner a
blanket payment bond in a face amount to be determined.
7.8.1 Unless and only if Owner waives in writing the
requirement of Article 7.9 for a bond, the Contractor will require payment bonds
of all Subcontractors. Upon Owner's request, copies of all such bonds shall be
provided to Owner for review. The costs of such bonds shall be included in the
Subcontractor's bid price and as such are a Reimbursable Cost. In the event that
Owner waives this requirement for a bond from a Subcontractor, Owner shall be
responsible for any payment default of such unbonded Subcontractor which is not
otherwise cured by legal or equitable remedies.
ARTICLE 8. DEFAULT AND TERMINATION
8.1 DEFAULT. The following events shall constitute an Event of Default
hereunder.
8.1.1 CONTRACTOR DEFAULT. The Contractor shall be in default
of the Agreement if:
8.1.1.1 Contractor becomes insolvent, is adjudged a
bankrupt, or makes a general assignment for the benefit of its creditors, or
becomes a subject of any proceeding (voluntary or involuntary) commenced under
any statute or law for the relief of debtors, or a receiver, trustee or
liquidator of any of the property or income of Contractor shall be appointed
which judgment, assignment,
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proceeding or receivership is not dismissed or discharged within ninety (90)
days of the date of notice thereof.
8.1.1.2 Contractor refuses or fails to prosecute the Work in
accordance with the Work Order or agreement for Other Work, or this Agreement in
any material respect; or
8.1.1.3 Contractor fails in any material respect to observe
any other terms, provisions, conditions, covenants, representations, warranties
or agreements in this Agreement, any Work Order or any agreement for Other Work
to be observed and performed on the part of the Contractor ("Material Default").
A Material Default under subsections 8.1.1.2 and 8.1.1.3 may include but is not
limited to the following:
(a) Failure by Contractor to make proper payment to
Subcontractors or others for undisputed amounts due for services,
materials or labor (provided Owner shall have paid to Contractor any
payments for such Work for which payment is demanded by Subcontractor)
; or
(b) Failure by Contractor to comply with laws,
ordinances, rules and regulations or orders of any public authority
having jurisdiction of which Contractor has or should have knowledge
after making reasonably diligent inquiries and except as directed by
Owner and which failure has a material adverse effect on a Project; or
(c) Failure to use commercially reasonable efforts to
prosecute the work in compliance with the budget or scheduling
requirements, set forth in a Work Order or agreement for Other Work
subject to any equitable adjustments in budget or schedule as provided
herein; or
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(d) Failure to correct any incomplete or unacceptable
items during any final inspection and testing which failure has a
materially adverse effect on the Project.
8.1.2 OWNER'S REMEDIES. In the event of a default by
Contractor hereunder, if the failure is not corrected or good faith efforts are
not being made to correct within ten (10) calendar days after receipt of written
notice from Owner to Contractor, Owner may without prejudice to any other right
or remedy:
8.1.2.1 With or without terminating Work Order or
agreement for Other Work, take over and/or subcontract such Work or any portion
thereof and furnish such materials and/or employ such workers as may be
necessary to remedy the noncompliance. Notwithstanding the foregoing, all costs
expended by Owner hereunder, including the value of the Contractor's Fee
applicable thereto, shall be applied to the Annual Project Sum and Aggregate
Project Sum.
8.1.2.2 Terminate the Work Order for the Project in
default, agreement for Other Work in default or this Agreement and all Projects
hereunder and have only the obligation to pay Contractor payments due for
portions of Work completed pursuant to the requirements set forth in the
applicable Work Order or agreements for Other Work up to the date of
termination. In the event of a termination of this Agreement, Contractor shall
not be entitled to any Contractor's Fee Trueup as set forth in Article 4.10
hereof; and/or
8.1.2.3 Make a claim against Contractor's or
Subcontractor's bond or other security.
8.1.3 OWNER DEFAULT. The Owner shall be in default of the
Agreement if:
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8.1.3.1 Owner fails to make any payment due to
Contractor hereunder three (3) or more times during a Contract Year within
ninety (90) days after the date of invoice, unless such nonpayment is the
subject of a good faith dispute; or
8.1.3.2 Owner becomes insolvent, is adjudged a
bankrupt, or makes a general assignment for the benefit of creditors, or becomes
the subject of any proceeding (voluntary or involuntary) commenced under any
statute or law for the relief of debtors, or a receiver, trustee or liquidator
of any of the property or income of Contractor shall be appointed, which
judgment, assignment, proceeding or receivership is not dismissed or discharged
within ninety (90) days of the date of notice thereof.
8.1.4 CONTRACTOR REMEDIES. In the event of a default by Owner
hereunder if failure is not corrected or good faith efforts are not being made
to correct within ten (10) calendar days after receipt of written notice from
Contractor to Owner, Contractor may without prejudice to any other right or
remedy:
8.1.4.1 Terminate the applicable Work Order or
agreement for Other Work for default without terminating this Agreement in which
case the Owner shall be responsible for all payments due to Contractor as of the
date of termination of the affected Work Order or agreement for Other Work; or
8.1.4.2 Terminate this Agreement for default.
8.1.5 In the event of a termination of any Work Order,
agreement for Other Work or this Agreement for default, Contractor shall be
entitled to receive reimbursement of all costs including the entire minimum
Contractor's Fee Trueup expected to be paid pursuant to Article 4 hereof during
the Term.
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8.1.6 In no event shall Contractor suspend its performance for
any Work under any Work Order or agreement for Other Work prior to termination
of the applicable Work Order agreement for Other Work, or this Agreement as
applicable.
8.2 DISPUTE RESOLUTION / ARBITRATION
8.2.1 MANAGEMENT MEETINGS. Except with respect to payments of
undisputed amounts to Contractor by Owner, in the event of a dispute, claim or
other matter arising out of or relating to this Agreement or breach thereof, the
parties agree that in addition to the remedies available to each party as
outlined above, the parties may contemporaneously provide the other party with a
written notice outlining the nature of the dispute. Within five (5) business
days of the receipt of such notice the Contractor's Project Manager and Owner's
designee shall meet in a good faith effort to resolve the dispute. If the
dispute cannot be resolved at such meeting, the parties agree that within twenty
(20) business days of the initial meeting, a second meeting shall take place
with a Vice President or person with similar decision making authority
representing each of the Contractor and Owner. If the dispute remains unresolved
after such second meeting and the parties have used good faith efforts to
otherwise resolve the dispute then the parties shall participate in Arbitration
as set forth below.
8.2.2 ARBITRATION. All claims, disputes and other matters in
question arising out of, or relating to, this Agreement or the breach thereof
which are not resolved pursuant to 8.2.1 above, shall be decided by arbitration
in accordance with the Construction Industry Arbitration Rules of the American
Arbitration Association then in effect unless the parties mutually agree in
writing otherwise. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. The award rendered by the arbiters shall
be final, and judgment may be entered upon it in accordance with applicable law
in any court having jurisdiction thereof.
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8.2.2.1 Notice of demand for Arbitration shall be
filed in writing with the other party to the Agreement and with the American
Arbitration Association. The demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter in question has arisen,
and in no event shall it be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in questions
would be barred by the applicable statute of limitations. The Contractor shall
carry on the Work and maintain the progress schedule during any arbitration
proceedings, (provided Owner is not otherwise in breach of this Agreement) and
Owner shall continue to pay any undisputed sums to Contractor.
8.2.2.2 The foregoing notwithstanding, either party
may seek injunctive relief from a court of competent jurisdiction which may be
necessary to protect its rights under this Agreement without being required to
show any actual damages or to post an injunction bond.
ARTICLE 9. INDEMNIFICATION AND LIABILITY
9.1 INDEMNIFICATION BY CONTRACTOR. Contractor shall be liable for and
shall defend, indemnify and hold harmless the Owner and its officers, directors,
agents and employees from and against any and all claims, demands, causes of
action, losses, damages, costs and expenses (including reasonable attorney's
fees) of every kind and character arising in favor or any person including
Contractor, Owner's employees, Contractor's employees, Subcontractors or other
persons on account of personal injuries or death or damage to any property
(hereinafter "Claims") in any way incident to, arising out of, or claimed to
have arisen out of, occurring in, in connection with, or relating to the
Services performed by Contractor hereunder (including Claims in any way incident
to, arising out of, or claimed to have arisen out of, occurring in, in
connection with, or relating to the Services performed by any and all
Subcontractors), except if directly or indirectly due to Owner's or Owner's
employees' negligence.
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<PAGE>
Owner shall have a direct right of action against Contractor in the event
Contractor fails to perform under this Article 9.1. and Owner may recover all of
the reasonable costs of such action, including reasonable attorney's fees.
Contractor shall obtain a written agreement from anyone (including
Subcontractors) retained or employed by Contractor which shall include this
indemnification in favor of Owner.
9.1.1 Contractor further agrees to indemnify and hold Owner
harmless against the payment of any and all penalties, interest, liens or
indebtedness or claims against Owner's property, or for work performed, or
materials furnished, or measured by the work performed, growing out of or
incident to Contractor's operations hereunder. Contractor agrees to reimburse
Owner and Owner's employees for each and every reasonable cost or charge,
including court costs, all expenses of litigation and reasonable attorney's
fees, if any, which Owner, its successors, assigns or employees, may incur in
defending against or prosecuting any such claims, demands, causes of action or
suits brought pursuant to Services performed under this Agreement.
9.1.2 Contractor shall release, indemnify, and hold the Owner
harmless from and against any and all claims arising from or relating to any
loss or damage to property of any kind owned or leased by Contractor or its
employees, servants, agents and Subcontractors unless directly or indirectly due
to Owner's or Owner's employee's negligence.
9.1.3 All obligations to assume, protect, defend, indemnify,
and save the Owner harmless shall extend to the Owner's officers, directors,
employees, agents, shareholders, and to companies and other legal entities that
control, are controlled by, are subsidiaries of, or are affiliated with Owner
and the respective officers, directors, agents, and employees of such companies
or entities and shall continue for so long as any of the named indemnities may
be subjected to claims or suits calling for such obligations, notwithstanding
the completion, acceptance or payment for the Work.
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<PAGE>
9.2 INDEMNIFICATION BY OWNER. Owner shall be liable for and shall
defend, indemnify and hold harmless the Contractor and its officers, directors,
agents and employees from and against any Claims to the extent they arise from
the negligence and/or willful misconduct of the Owner, its employees or agents.
9.3 NOTICE OF CLAIMS. Each party shall notify other promptly of written
Claims or demands of which the other party is responsible hereunder. The
indemnifying party shall have the right to defend the Claim with counsel of its
own choosing but no settlement or compromise of any Claims hereunder shall be
completed without the consent of the indemnified party.
9.4 LIMITATION OF LIABILITY. In no event shall either party hereto be
liable for any consequential, incidental, special, indirect or remote damages
including, but not limited to, loss of use, lost revenues or profits (except for
Contractor's Fee Trueup payable under Article 4.10 hereof) or interest on
borrowed funds, arising out of or in connection with its performance of this
Agreement whether arising in contract, warranty, tort (including negligence) or
strict liability.
ARTICLE 10. WARRANTY
10.1 WARRANTY. Any equipment, materials, and services supplied by
Contractor, its agents, employers, suppliers, or Subcontractors, are warranted
by Contractor or its suppliers or Subcontractors as appropriate, to be of good
quality and workmanship and will be properly installed by Contractor or its
Subcontractors as appropriate. To the extent possible, Contractor shall also
assign to Owner all manufacturers, suppliers or Subcontractor's warranties for
any services, equipment and materials. All warranties made hereunder shall be
for a minimum period of one (1) year following Owner's acceptance of the Work
for such Project unless otherwise specified in a Work Order, provided however,
that any warranty for materials or services not provided directly by Contractor
shall be the warranty of the
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Subcontractor or supplier which Contractor shall pass through to Owner. Where a
Certificate of Occupancy is issued by Contractor to Owner, the warranty period
shall commence upon the date the Certificate of Occupancy is issued for
equipment, materials, or services which are directly related to such Certificate
of Occupancy. Contractor shall not be obligated to continue these warranty
obligations for any equipment (including software), materials and/or services
which have been improperly repaired or altered, abused, misused or improperly
handled by Owner unless such repair or alteration was necessitated by an act or
omission of Contractor, Subcontractor or their respective employees or agents.
Notwithstanding the foregoing, all fiber optic cable purchased by Contractor for
Owner hereunder shall have a minimum three (3) year warranty assignable to Owner
unless otherwise agreed to in a Work Order.
10.2 FREE FROM DEFECTS. The Contractor warrants to the Owner that all
materials and equipment furnished under this Agreement will be new unless
otherwise specified in a Work Order or agreement for Other Work, free from
faults and defects and in conformance with the Work Order, agreement for Other
Work and/or this Agreement. All work not conforming to these requirements,
including substitutions not properly approved and authorized, may be considered
defective and must be cured by Contractor at Contractor's expense. If required
by the Owner, Contractor shall furnish satisfactory evidence as to the kind and
quality of materials and equipment furnished hereunder.
10.3 NO OTHER WARRANTIES. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
FOREGOING WARRANTIES AND THOSE CONTAINED IN ANY WORK ORDER OR AGREEMENT FOR
OTHER WORK CONSTITUTE THE ONLY WARRANTIES WITH RESPECT TO THE WORK PERFORMED
HEREUNDER, OR ANY STATEMENT OF WORK, THERE BEING
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<PAGE>
NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 11. HAZARDOUS MATERIALS AND CONCEALED CONDITIONS
11.1 HAZARDOUS MATERIALS. In the event Contractor encounters toxic or
hazardous materials in performance of any Project, any resulting delays and
costs shall be considered to be beyond its control, without its fault and
outside the scope of such Project unless such encounter is due to the gross
negligence or willful misconduct of Contractor, its employees, officers or
directors or Subcontractors. Such toxic or hazardous materials shall be removed
or otherwise dealt with by Owner or by the appropriate government agency,
organization or third party. Contractor shall have no obligation, responsibility
or liability with respect to such materials. Notwithstanding the foregoing,
Contractor agrees that it will be responsible for the cleanup or any other cost,
damage or liability arising from any toxic or hazardous materials generated or
used by Contractor, its employees or Subcontractors in the course of its
performance of any Work under this Agreement. Contractor agrees in any event to
cooperate fully with Owner and to perform reasonable and customary
investigations as to the existence of hazardous materials prior to the
performance of any Work hereunder.
11.2 CONCEALED CONDITIONS. The Contractor shall promptly, upon
discovery, and before any such conditions are disturbed, notify the Owner in
writing of: (1) subsurface or latent physical conditions at the site of Work
differing materially from those indicated in the Contract Documents, or (2)
unknown physical conditions at such site, of an unusual nature, differing
materially from those ordinarily encountered and generally recognized as
inherent in work of the character provided for in this Agreement. The Contractor
shall, at Owner's direction, promptly investigate the conditions, and if it
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finds that such conditions do materially so differ and cause an increase or
decrease in the Contractor's cost of, or the time for, performance of any part
of the Work under the applicable Work Order an equitable adjustment of time
shall be made and the Work Order modified accordingly. Owner and Contractor
acknowledge that all costs incurred in investigating the conditions and
performing such Work are Reimbursable Costs.
ARTICLE 12. MISCELLANEOUS
12.1 TITLE. Title to all Work completed pursuant to a Work Order or
agreement for Other Work hereunder and to all materials and supplies on account
of which payment in full has been made by Owner shall be and vest in the name of
Owner.
12.2 ASSIGNMENT. Owner may not transfer, assign or otherwise delegate
its obligations under this Agreement without the express written consent of the
Contractor which consent shall not be unreasonably withheld; provided, however,
that Owner may assign its rights, including the obligation of payment to
Contractor and Owner's rights under any Work Order or agreement for Other Work,
under this Agreement to its subsidiaries, affiliates or successors in interest
without prior written consent of Contractor. Contractor may not transfer, assign
or otherwise delegate its obligations under this Agreement without the express
written consent of Owner which may be withheld by Owner in its sole discretion.
Any assignment by any party hereunder shall not release the assigning party from
its obligations under this Agreement.
12.3 SEVERABILITY. If any provision of this Agreement is adjudicated to
be invalid or unenforceable, the remainder shall be valid and enforceable, and
the parties shall negotiate in good faith to recreate such provision in a valid
and enforceable form to provide for the intent of such provision.
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<PAGE>
12.4 WAIVER. Failure of Owner or Contractor at any time to require
strict performance of any provision of this Agreement shall not constitute a
waiver of that provision nor in any way limit enforcement of that provision.
12.5 NOTICES. Except as otherwise set forth herein, when any notice or
other communication is required or authorized to be given hereunder, such notice
shall, for all purposes, be in writing and either delivered personally to the
addressee, by telex or facsimile transmission followed by mailing, or mailed
registered or certified mail return receipt requested, or by express mail,
postage prepaid and shall be deemed given when so delivered personally, when
such telex or facsimile transmission is received or, if mailed, five (5) days
after the date of mailing to the address of the respective parties at the
following addresses:
(i) If sent by Owner to Contractor, addressed as follows:
MFS Network Technologies, Inc.
1200 Landmark Center
Suite 1300
Omaha, NE 68102
Attn: Vice President, Operations
With a copy to:
MFS Network Technologies, Inc.
1200 Landmark Center
Suite 1300
Omaha, NE 68102
Attn: Vice President, Corporate and Legal Affairs
and
Able Telcom Holding Corp.
1601 Forum Place
Suite 1110
West Palm Beach, FL 33401
Attn: President
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<PAGE>
(ii) If sent by Contractor to Owner, addressed as follows:
WorldCom Network Services, Inc.
Purchasing & Contracts, MD 1.1-131F
6929 N. Lakewood Avenue
Tulsa, OK 74117
Attn: Contract Administrator
With a copy to:
WorldCom Network Services, Inc.
6929 N. Lakewood Avenue
Tulsa, OK
Attn: Vice President, Construction and Facilities
and
WorldCom, Inc.
One Tower Lane, Suite 1600
Oakbrook Terrace, IL 60181
Attn: Counsel for Development
12.6 CONFIDENTIALITY
12.6.1 Owner and Contractor agree to hold and will use their
commercially reasonable efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning this Agreement and any Work or Project performed hereunder, except to
the extent that such information can be shown to have been (i) in the public
domain through no fault of the received party, or (ii) later lawfully acquired
by the receiving party from third parties without an obligation of
confidentiality. The obligation of Owner and Contractor to hold any such
information in confidence shall be satisfied if it exercises the
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same care with respect to such information as it would take to preserve the
confidentiality of its own similar information.
12.6.2 The drawings, specifications and other documents are
instruments of service through which the Work to be performed by the Contractor
is described. The Contractor may retain one record set. The Contractor shall not
own or claim a copyright or any other right in the drawings, specifications and
other documents. All copies of them, except the record set, shall be returned to
Owner on request upon completion of the Project. The drawings, specifications
and other documents and copies thereof furnished to the Contractor, are for use
solely with respect to a Project. They are not to be used by the Contractor on
other projects without the specific written consent of the Owner. The Contractor
is granted a limited license to use and reproduce applicable portions of the
drawings, specifications and other documents prepared for a Project appropriate
to and for use in the performance of the Contractor's services under this
Agreement. All drawings, specifications and other documents relating to the
Project are owned by the Owner, including drawings, specifications and other
documents generated by Contractor for Owner or used to perform work for Owner
prior to the date of this Agreement.
12.6.3 Subject to the confidentiality requirements stated
herein, neither party shall reference or use any part of this Agreement or the
names of the parties hereto in any press release, marketing, advertising or
other sales or promotional materials without the express written consent of the
other party which will not be unreasonably withheld or delayed.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8 NO CONSTRUCTION AGAINST DRAFTER. The parties acknowledge that this
Agreement and all the terms and conditions contained herein have been fully
reviewed and negotiated by the parties and
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that each party has been represented by Counsel. Having acknowledged the
foregoing, the parties agree that any principle of construction or rule of law
that provides that, in the event of any inconsistency or ambiguity, an agreement
shall be construed against the drafter of the agreement shall have no
application to the terms and conditions of this Agreement.
12.9 COURSE OF DEALING. The parties acknowledge that due to the
previous relationship between Contractor and Owner, the sequence of previous
acts and conduct between Contractor and Owner related to the Work to be
performed pursuant to this Agreement and any Work Orders or agreements for Other
Work executed hereunder, is fairly to be regarded as establishing a common basis
of understanding for interpreting each party's expressions and other conduct as
further described in the Uniform Commercial Code.
12.10 SURVIVAL. The provisions of Articles 9, 10, 11 and 12 shall
survive the expiration or termination of the Agreement and Owner and Contractor
each agree to be bound thereto as appropriate.
12.11 GOVERNING LAW. The Agreement, and all the rights and duties of
the parties arising from or relating in any way to the subject matter of this
Agreement or the transaction(s) contemplated by it, shall be governed by,
construed, and enforced in accordance with the laws of the State of Delaware
(excluding any conflict of laws provisions).
12.12 ENTIRE AGREEMENT. This Agreement and all Exhibits and Schedules
attached hereto constitute the entire agreement between parties with respect to
the subject matter hereof. This Agreement shall be binding upon the parties
hereto and their permitted successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument,
through their authorized officers, effective the date first above written.
OWNER
WORLDCOM NETWORK SERVICES, INC.
By:________________________________________________
John Sidgmore
Title:_____________________________________________
CONTRACTOR
MFS NETWORK TECHNOLOGIES, INC
By:________________________________________________
Title:_____________________________________________
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EXHIBIT 2.5.5
ASSUMPTION AND INDEMNITY AGREEMENT
ASSUMPTION AND INDEMNITY AGREEMENT, dated as of July 2, 1998, by and
among ABLE TELCOM HOLDING CORP. ("Able") and its permitted successors and
assigns (collectively with Able, "INDEMNITORS"), and WORLDCOM, INC., MFS
COMMUNICATIONS COMPANY, INC., MFS INTELENET, INC., MFS DATANET, INC., MFS
TELECOM, INC., and MFS COMMUNICATIONS, LIMITED and their successors and assigns
(collectively, "ASSUMPTION AGREEMENT BENEFICIARIES").
Indemnitors and the Assumption Agreement Beneficiaries hereby agree as
follows:
1. CERTAIN DEFINITIONS. The parties to this Assumption and Indemnity
Agreement hereby agree that, in addition to other terms defined in this
Assumption and Indemnity Agreement, the terms set forth below in this paragraph
1 shall have the following meanings ascribed to them, and that variants and
derivatives of such terms shall have correlative meanings:
a. "AETNA" is Aetna Casualty and Surety Company.
b. "AETNA BONDS" are those Bonds with respect to which Aetna is
listed as the bonding company under the column headed "Bonding
Company" on the list of Bonds attached hereto as Exhibit A and
all other Bonds, or
<PAGE>
renewals or continuations thereof, which may be already or
hereafter issued or executed pursuant to the Aetna Indemnity
Agreement.
c. "AETNA INDEMNITORS" are, collectively and individually, MFS
Communications Company, Inc., MFS Intelenet, Inc., MFS
Datanet, Inc., MFS Telecom, Inc., and MFS Communications,
Limited, and MFS Network Technologies, Inc. and any other
person or entity included within the definition of
"Indemnitors" in the Aetna Indemnity Agreement.
d. "AETNA INDEMNITY AGREEMENT" is that certain agreement between
the Aetna Indemnitors and Aetna, dated December 21, 1994, a
copy of which is attached hereto as Exhibit B.
e. "ASSUMPTION AGREEMENT" is that agreement set forth herein
under the terms of which Indemnitors agree to assume
Assumption Agreement Obligations.
f. "ASSUMPTION AGREEMENT OBLIGATIONS" is that obligation
undertaken by Indemnitors
i. to pay and fully discharge at the Indemnitors'
expense all of the liabilities and obligations of the
Assumption Agreement Beneficiaries under the Credit
Lyonnais Guaranty Agreement; and
ii. to pay and fully discharge at the Indemnitors'
expense all of the liabilities and obligations of the
Assumption Agreement Beneficiaries under any Surety
Indemnity Agreement, Bond, or Contract; and 1.
2
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iii. at Indemnitors' expense to settle or defend, with
counsel approved by Assumption Agreement
Beneficiaries (which approval shall not be
unreasonably withheld), any actions or proceedings
brought against MFS Network Technologies, Inc., or
any other Principal, any Surety, and Assumption
Agreement Beneficiaries arising out of any Contract,
Bond, Surety Indemnity Agreement or the Credit
Lyonnais Guaranty Agreement ("Proceedings"), and to
pay any judgment entered in any such Proceeding.
g. "ASSUMPTION AND INDEMNITY AGREEMENT" is this agreement
including all attached Exhibits.
h. "BONDS" are those certain bid, payment, performance, permit
and/or other bonds listed on Exhibit A and all other bonds
which heretofore have been or hereafter are executed and
issued under any of the Surety Indemnity Agreements, or any
renewal or continuation thereof.
i. "CONTRACTS" are the various contracts, including any
amendments and change orders, for the work for the various
projects listed under the columns headed project number and
project name on Exhibit A attached hereto and any other
contract with respect to which a Bond has been executed and
issued.
j. "CREDIT LYONNAIS" is Credit Lyonnais, New York Branch, one of
the lenders under that certain Credit Agreement, dated
November 1, 1996,
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among Kanas Telecom, Inc., Administrative Agent and Lenders
with respect to which the Credit Lyonnais Guaranty Agreement
relates.
k. "CREDIT LYONNAIS GUARANTY AGREEMENT" is that certain guaranty
agreement (a copy of which is attached as Exhibit F) by MFS
Communications Company, Inc. in favor of Credit Lyonnais, New
York Branch as Administrative Agent for Lenders under that
certain Credit Agreement, dated November 1, 1996, among Kansas
Telecom, Inc., Administrative Agent for Lenders, and the
Lenders dated the 1st day of November, 1996.
l. "EVENT OF DEFAULT" is the failure of Indemnitors to perform
any Assumption Agreement Obligations.
m. "GUARANTY OBLIGATIONS" are those obligations assumed by MFS
Communications Company, Inc., under the Credit Lyonnais
Guaranty Agreement.
n. "GUARANTOR" is MFS Communications Company, Inc., in its
capacity as guarantor under the Credit Lyonnais Guaranty
Agreement.
o. "LOSS" is all reasonable out-of-pocket damages, expenses,
costs, the full amount of professional and consulting fees,
attorney fees (however incurred, including on appeal),
calculated after taking into account any proceeds of insurance
received in respect thereto, incurred or paid by Assumption
Agreement Beneficiaries, court costs and fees, and interest
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<PAGE>
at the rate of 8% on all sums due from the date of Assumption
Agreement Beneficiaries' disbursement of said sums, whether or
not interest has been awarded by a court, which Assumption
Agreement Beneficiaries may sustain, pay, or incur.
p. "NORTHERN" is Northern Indemnity, Inc.
q. "NORTHERN BONDS" are those Bonds with respect to which
Northern is listed as the bonding company under the column
headed "Bonding Company" on Exhibit A and all other bonds
which may be already or hereafter executed pursuant to the
Northern Indemnity Agreement, or any renewal or continuation
thereof.
r. "NORTHERN INDEMNITORS" are WorldCom, Inc., MFS Communications
Company, Inc., MFS Transportation Systems, Inc., MFS
TransTech, Inc., MFS Network Technologies, Inc., SIRIT
Technologies, Inc. and SIRIT Corp. and any other person or
entity included within the definition of "Indemnitors" in the
Northern Indemnity Agreement.
s. "NORTHERN INDEMNITY AGREEMENT" is that certain agreement
between Northern Indemnitors and Northern, a copy of which is
attached hereto as Exhibit C.
t. "NORTHERN PRINCIPALS" are SIRIT Technologies, Inc. and SIRIT
Corp.
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u. "OBLIGEE" is that entity (or its assignee) for whose benefit a
Bond was issued.
v. "PLEDGE AGREEMENT" is the Stock Pledge Agreement, dated as of
July 2, 1998, between Able and MFS Communications Company,
Inc.
w. "PRINCIPAL" is the Surety Indemnitor identified on a Bond as
the principal or contractor.
x. "RELIANCE" collectively is Reliance Insurance Company, United
Pacific Insurance Company, Reliance National Indemnity Company
and Reliance Surety Company.
y. "RELIANCE BONDS" are those Bonds with respect to which
Reliance or "United Pac" is listed as the bonding company
under the column headed "Bonding Company" on Exhibit A and all
other bonds which may be already or hereafter are executed or
issued pursuant to the Reliance Indemnity Agreement, or any
renewal or continuation thereof.
z. "RELIANCE INDEMNITORS" are WorldCom, Inc., MFS Communications
Company, Inc., MFS Transportation Systems, Inc., MFS
TransTech, Inc., and MFS Network Technologies, Inc. and any
other person or entity included within the definition of
"Contractors" in the Reliance Indemnity Agreement.
6
<PAGE>
aa. "RELIANCE INDEMNITY AGREEMENT" is that certain agreement
between Reliance Indemnitors and Reliance, dated September 22,
1997, a copy of which is attached hereto as Exhibit D.
bb. "SATISFACTORY RELEASE" as to any Bond and any obligations or
liabilities of WorldCom and the Subsidiaries respecting such
Bond, is the receipt by WorldCom of (i) written releases, in
form and content reasonably satisfactory to WorldCom, whereby
all of the parties to whom WorldCom and the Subsidiaries are
obligated or otherwise liable respecting such Bond
unconditionally, irrevocably, and fully release WorldCom and
the Subsidiaries from any obligation or liabilities respecting
such Bond, or (ii) other evidence reasonably satisfactory to
WorldCom that such Bond and any obligations or liabilities of
WorldCom and the Subsidiaries respecting the Bonds have
expired in accordance with their terms.
cc. "SUBSTITUTED CONTRACT PERFORMANCE" is as defined in paragraph
8.
dd. "SURETY" is, as appropriate, Aetna, Northern, Reliance, or
USF&G and is the party who acts a co-obligor with the
Principal on a Bond.
ee. "SURETY INDEMNITORS" are Aetna Indemnitors, Reliance
Indemnitors, Northern Indemnitors and USF&G Indemnitors.
ff. "SURETY INDEMNITY AGREEMENTS" are those certain indemnity
agreements identified as Aetna Indemnity Agreement, Reliance
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<PAGE>
Indemnity Agreement, Northern Indemnity Agreement and USF&G
Indemnity Agreement.
gg. "USF&G" is United State Fidelity & Guarantee Company, Fidelity
& Guarantee Insurance Company, and Fidelity & Guarantee
Insurance Underwriters, Inc.
hh. "USF&G BONDS" are those Bonds with respect to which USF&G is
listed as the bonding company under the column headed "Bonding
Company" on Exhibit A and all other bonds which may be already
or hereafter are executed pursuant to the USF&G Indemnity
Agreement, or any renewal or continuation thereof.
ii. "USF&G INDEMNITORS" are WorldCom, Inc., MFS Network
Technologies, Inc., MFS Transportation Systems, Inc., and MFS
TransTech, Inc., and any other person or entity included
within the definition of "Undersigned" in the USF&G Indemnity
Agreement.
jj. "USF&G INDEMNITY AGREEMENT" is that agreement between USF&G
and USF&G Indemnitors, dated August 18, 1997, a copy of which
is attached hereto as Exhibit E.
2. CONSIDERATION. Contemporaneously herewith Able is purchasing from
MFS Communications Company, Inc. all of the assets and assuming substantially
all of the liabilities of MFS Network Technologies, Inc. pursuant to a Agreement
and Plan of Merger, dated as of April 26, 1998, as amended by an Amendment
thereto, dated as of
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July 2, 1998 (the "Merger Agreement"). The execution and delivery of this
Assumption and Indemnity Agreement is an express condition to the closing and
consummation of the transactions contemplated by the Merger Agreement.
Indemnitor hereby acknowledges the receipt and sufficiency of adequate
consideration for Indemnitors' execution, delivery and performance of this
Assumption and Indemnity Agreement including, without limitation, the closing
and consummation of the transactions contemplated by the Merger Agreement and
the covenants and agreements made therein by the parties thereto.
3. ASSUMPTION AGREEMENT. In consideration of the foregoing and in
consideration of MFS Communications Company, Inc.'s agreement to cause MFS
Network Technologies, Inc. to sell all of the assets of the NT Business (as
defined in the Merger Agreement) under the Merger Agreement, Indemnitors hereby
jointly and severally agree to, and hereby do, assume and agree to pay and fully
discharge at their expense the Assumption Agreement Obligations.
4. PAYMENT. Payments of amounts due Assumption Agreement Beneficiaries
as a result of an Event of Default shall be made by Indemnitors to Assumption
Agreement Beneficiaries upon demand made by any Assumption Agreement
Beneficiary.
5. DUTY TO NOTIFY. The Assumption Agreement Beneficiaries agree to
forthwith provide written notice to Indemnitors if any of them has knowledge of
the occurrence of an Event of Default or of circumstances which with the passage
of time will constitute an Event of Default. Notwithstanding anything herein to
the contrary, the failure by Assumption Agreement Beneficiaries to provide the
notice provided for
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<PAGE>
herein shall not affect the determination of whether an Event of Default has
occurred hereunder nor shall the failure to provide the notice provided for
hereunder relieve Indemnitors of their obligations under this Assumption and
Indemnity Agreement.
6. ASSUMPTION AGREEMENT BENEFICIARIES RIGHT TO SETTLE, DEFEND. If there
has been an Event of Default, Assumption Agreement Beneficiaries shall have the
exclusive right, in their sole and absolute discretion, to determine whether any
claim, demand, suit or judgment on the Credit Lyonnais Guaranty Agreement or any
Surety Indemnity Agreement shall be paid, settled, defended, prosecuted,
compromised or appealed and to investigate, pay, settle, defend, prosecute,
compromise, or appeal any such claim, demand, suit or judgment. Assumption
Agreement Beneficiaries shall be entitled to reimbursement for any Loss incurred
as a result of having investigated, paid, settled, defended, prosecuted,
compromised or appealed any such claim, demand, suit, or judgment under a good
faith belief that: (a) Assumption Agreement Beneficiaries were or might be
liable therefor; or (b) such payments were necessary or expedient to protect any
of Assumption Agreement Beneficiaries' rights or to avoid or lessen Assumption
Agreement Beneficiaries' liability or alleged liability, whether or not such
liability, necessity or expediency existed and whether or not such payments were
negligent. An itemized statement of Loss sworn to by any officer or authorized
representative of Assumption Agreement Beneficiaries, or voucher or other
evidence of such Loss shall be final, conclusive and binding upon Indemnitors in
any claim or suit and all matters arising between Indemnitors and Assumption
Agreement Beneficiaries. Without in any way limiting the foregoing, Assumption
Agreement Beneficiaries shall make reasonable efforts to provide information to
Indemnitors as to the status of any such claim, demand, suit or judgment.
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7. CONTRIBUTION. Indemnitors and Surety Indemnitors who are not also
Assumption Agreement Beneficiaries shall have no rights of contribution, rights
of offset, rights of recoupment, or similar rights by virtue of having performed
any Assumption Agreement Obligation, or any obligation under any Bond, Contract,
or Surety Indemnity Agreement as respects Assumption Agreement Beneficiaries, or
as respects any Contract liability, or Contract funds, or any other obligation
or liability under any agreement between Assumption Agreement Beneficiaries and
Indemnitors or Surety Indemnitors who are not also Assumption Agreement
Beneficiaries.
8. SUBSTITUTED CONTRACT PERFORMANCE. In the event a Principal
materially fails, refuses, or is unable to observe or perform any of its
material obligations under a Contract, and Indemnitors fail, refuse or, in the
judgment of Assumption Agreement Beneficiaries, are unable to perform Assumption
Agreement Obligations, Assumption Agreement Beneficiaries may, in the exercise
of their reasonable discretion and, upon five days' prior written notice to
Indemnitors, referring specifically to this paragraph 8, take any, some, or all
actions which Assumption Agreement Beneficiaries believe appropriate to attempt
to minimize the Loss which they may have otherwise sustained, including, without
limitation, performing the Contract on behalf of the Principal (herein called
"Substituted Contract Performance") if and to the extent permitted by the
Contract. Any election by Assumption Agreement Beneficiaries to undertake
Substituted Contract Performance, and any undertaking thereof, shall not
release, amend, modify, limit, restrict, or otherwise affect (a) Principals'
obligations under the Contract, or (b) Indemnitors' Assumption Agreement
Obligations, even if the amount of the Loss is increased by any such
undertaking. In the event Assumption Agreement Beneficiaries elect to undertake
Substituted Contract Performance, the affected Principal and Indemnitors shall
fully cooperate with Assumption Agreement Beneficiaries, shall
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provide Assumption Agreement Beneficiaries with access to the Principal's books,
records, tools, employees, agents, professionals, suppliers, and subcontractors,
and shall assign to Assumption Agreement Beneficiaries the Contract or other
agreements as Assumption Agreement Beneficiaries reasonably request to
facilitate Assumption Agreement Beneficiaries' efforts to undertake such
Substituted Contract Performance if and to the extent permitted by the Contract.
Assumption Agreement Beneficiaries shall hold confidential information received
by them in the course of such access. Assumption Agreement Beneficiaries shall
be entitled to reimbursement of any Loss incurred by it as a result of
undertaking Substituted Contract Performance and an itemized statement of Loss
sworn to by any officer or authorized representative of Assumption Agreement
Beneficiaries, or voucher or other evidence of such Loss shall be final,
conclusive and binding upon Indemnitors in any claim or suit and all matters
arising between Indemnitors and Assumption Agreement Beneficiaries. Nothing
contained in this Assumption and Indemnity Agreement shall require Assumption
Agreement Beneficiaries to undertake any Substituted Contract Performance.
9. SECURITY. As collateral security for Indemnitors' undertakings
hereunder, Able hereby agrees to deliver to Assumption Agreement Beneficiaries
the Pledge Agreement.
10. TERM/NO RELEASE. The term of this Assumption and Indemnity
Agreement shall extend until Satisfactory Releases shall have been obtained for
all of the Bonds. Notwithstanding the generality of the foregoing, the
termination of this Assumption and Indemnity Agreement shall not release, amend,
modify, limit, restrict, or otherwise affect Indemnitors' indemnity obligations,
covenants, or agreements hereunder, which obligations, covenants, and agreements
shall survive forever.
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11. NO WAIVER. No failure on the part of Assumption Agreement
Beneficiaries to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or remedy by Assumption Agreement
Beneficiaries preclude any other or further exercise thereof or the exercise of
any other right, power, or remedy.
12. NOTICES. All notices or other communications which are required or
permitted herein shall be in writing and sufficient if delivered personally, or
sent by overnight air courier, or sent by facsimile followed by overnight air
courier, addressed as follows:
If to Assumption Agreement
Beneficiaries: WorldCom, Inc.
515 East Amite Street
Jackson, Mississippi 39201
Attention: David Roberts
with copies to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022 and
Attention: Randall Doud, Esq., and
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Fraser, Stryker, Vaughn, Meusey, Olson,
Boyer & Bloch, P.C.
500 Energy Plaza
409 South 17th Street
Omaha, Nebraska 68102
Attention: Robert M. Yates
If to Indemnitors: Able Telcom Holding Corp.
1601 Forum Place, Suite 1110
West Palm Beach, Florida 33401
Attention: Gideon Taylor
with a copy to: Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
Phillips Point
777 Flagler Dr., Suite 500 East
West Palm Beach, Florida. 33401-6194
Attention: Michael V. Mitrione
or at such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if delivered
personally or sent by facsimile, or on the first business day after dispatch if
sent by overnight air courier.
13. FURTHER ASSURANCES. Indemnitors agree to execute and deliver such
additional conveyances, assignments, agreements and instruments, as Assumption
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Agreement Beneficiaries may at any time reasonably request in connection with
the administration or enforcement of this Assumption and Indemnity Agreement or
any part thereof or in order better to assure and confirm unto Assumption
Agreement Beneficiaries their rights, powers, and remedies hereunder as
determined by legal counsel for Assumption Agreement Beneficiaries.
14. ASSIGNMENT; BINDING AGREEMENT. None of the parties to this
Assumption Agreement may assign or delegate this Assumption and Indemnity
Agreement or its obligations, covenants or agreements hereunder to any person or
entity without the prior written approval of the parties. This Assumption and
Indemnity Agreement, and the terms, covenants and conditions hereof, shall be
binding upon and inure to the benefit of the parties hereto and permitted
successors and assigns.
15. AMENDMENTS. Neither this Assumption and Indemnity Agreement nor any
provisions hereof may be amended, modified, waived, discharged or terminated
orally, but, rather, only by an instrument in writing duly signed by or on
behalf of Assumption Agreement Beneficiaries.
16. SEVERABILITY. If any term or provision of this Assumption and
Indemnity Agreement or the application thereof to any person or circumstances
shall to any extent be invalid or unenforceable, the remainder of this
Assumption and Indemnity Agreement or the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be effected hereby, and each term and provision of this
Assumption and Indemnity Agreement shall be valid and enforced to the fullest
extent permitted by law.
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17. COUNTERPARTS. This Assumption and Indemnity Agreement may be
executed in one or more counterparts, each of which shall be an original but all
of which, taken together, shall constitute a single agreement.
18. GOVERNING LAW. This Assumption and Indemnity Agreement shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Delaware and the United States of America, without regard
to the principles of conflict of laws thereof, and may only be enforced in the
courts of the State of Delaware, or the United States District Court for the
District of Delaware, the jurisdiction of which courts each Party hereby
irrevocably subjects itself to.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
ABLE TELCOM HOLDING CORP.
By: /S/ FRAZIER L. GAINES
--------------------------------------
Frazier L. Gaines, President and CEO
WORLDCOM, INC.
By: /S/ JOHN SIDGMORE
--------------------------------------
MFS COMMUNICATIONS
COMPANY, INC.
By: /S/ JOHN SIDGMORE
--------------------------------------
MFS INTELENET, INC.
By: /S/ JOHN SIDGMORE
--------------------------------------
MFS DATANET, INC.
By: /S/ JOHN SIDGMORE
--------------------------------------
MFS TELECOM, INC.
By: /S/ JOHN SIDGMORE
--------------------------------------
MFS COMMUNICATIONS,
LIMITED
By: /S/ JOHN SIDGMORE
--------------------------------------
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EXHIBITS (Omitted)
Exhibit A - List of Bonds
Exhibit B - Aetna Indemnity Agreement
Exhibit C - Northern Indemnity Agreement
Exhibit D - Reliance Indemnity Agreement
Exhibit E - USF&G Indemnity Agreement
Exhibit F - Credit Lyonnais Guaranty Agreement
- -------------------
The Company agrees to provide copies of any omitted exhibit(s) supplementally to
the Commission upon request.
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EXHIBIT 2.5.6
LICENSE AGREEMENT
This License Agreement is entered into and is effective as of the
second day of July 1998, between MFS Communications Company Inc., a Delaware
corporation ("Licensor"), and Able Telcom Holding Corp., a Florida corporation
("Licensee").
WHEREAS, Licensor is the owner of the trademarks listed on Schedule A
hereto (the "Licensed Trademarks");
WHEREAS, Licensor and Licensee have entered into an Agreement and Plan
of Merger, dated as of April 26, 1998, amended by an Amendment thereto, dated as
of July 2, 1998 (the "Merger Agreement"), whereby Licensee is acquiring the NT
Business, as that term is defined in the Merger Agreement;
WHEREAS, Licensee is desirous of using the Licensed Trademarks in
connection with its conduct of the NT Business; and
WHEREAS, Licensor is willing to grant to Licensee a limited license to
use the Licensed Trademarks for such purpose.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties agree as follows:
1. Capitalized terms not defined herein shall have the meaning set
forth in the Merger Agreement.
2. Licensor hereby grants Licensee a limited, non-transferrable,
royalty-free, exclusive license during the Term, as defined below, to use the
Licensed Trademarks in the United States in connection with the conduct of the
NT Business.
3. Notwithstanding the provisions of section 2 hereof, during the Term,
Licensor and all of its affiliates and subsidiaries may freely use the Licensed
Trademarks and the MFS name in their businesses, provided that the Licensed
Trademarks may not be used in businesses that compete directly with the NT
Business in the United States.
<PAGE>
4. All use of the Licensed Trademarks shall be followed by the language
"A subsidiary of Able Telcom."
5. In addition to the requirements of section 4 hereof, Licensee shall
use the Licensed Trademarks according to the specifications, formulas and
instructions of Licensor, which shall be in substantially the same form and
manner in which Licensor used the Licensed Trademarks as of the Closing Date.
Licensee undertakes to comply with all laws, rules and regulations pertaining to
the use of the Licensed Trademarks, and agrees to apply appropriate statutory
notice of registration where applicable. In the event Licensee desires to use
the Licensed Trademarks in a substantially different form or manner than the
Licensed Trademarks are currently used in connection with the NT Business,
Licensee shall request Licensor's consent to such use, which consent shall not
be unreasonably withheld or delayed.
6. The trademark license and rights granted herein shall commence on
the date first written above and terminate eighteen (18) months thereafter (the
"Term").
7. Licensee shall permit Licensor's representatives, upon reasonable
notice during regular business hours, to inspect all premises whereon materials
bearing the Licensed Trademarks are stored by Licensee, and shall do all such
other things as may be reasonably necessary, to satisfy Licensor that said
materials conform to the terms of this Agreement. Licensee shall, on Licensor's
request, supply Licensor or its authorized representatives with samples of all
materials bearing the Licensed Trademarks.
8. Licensee agrees to submit to Licensor for approval the original and
all subsequent new formats of labels, packages, package inserts incorporating
the Licensed Trademarks not used by Licensor prior to the Closing Date, and
shall not use the same without the prior approval of Licensor, such approval not
to be unreasonably withheld. Further, at the request of Licensor, Licensee shall
submit to Licensor for approval, such approval not to be unreasonably withheld,
specimens of the sales promotional material and other printed matter
incorporating the Licensed Trademarks and shall comply with all requirements of
Licensor relating to the same. Licensor shall review all materials submitted for
approval pursuant to this section within fifteen (15) business days of receipt
of such materials by the individual designated by Licensor as responsible for
granting such approval.
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9. Licensee acknowledges that Licensor is the owner of the Licensed
Trademarks, and that all use of the Licensed Trademarks by Licensee (i) for
purposes of trademark ownership and enforcement shall inure to the benefit of
Licensor; and (ii) shall not create in Licensee's favor any ownership interest
in the Licensed Trademarks.
10. Licensee shall inform Licensor of any infringement or suspected
infringement of the Licensed Trademarks of which it becomes aware during the
term of this Agreement.
11. On termination of this license and the rights granted herein,
Licensee shall take all necessary actions and steps to cease immediately all use
of the Licensed Trademarks, including but not limited to changing its trade name
or d/b/a to a name that does not include the Licensed Trademarks, and shall
thereafter not adopt or use any confusingly similar trademarks, service marks,
or trade names.
12. Licensor agrees to defend, indemnify and hold Licensee, its
officers, directors, affiliates, employees, representatives and agents harmless
from any claims, liabilities and damages, including attorneys fees and
disbursements, resulting from claims that the Licensed Trademarks infringe the
intellectual property rights of a third party.
13. Except for liabilities and damages resulting from claims that the
Licensed Trademarks infringe the intellectual property rights of a third party,
Licensee agrees to defend, indemnify and hold Licensor its officers, directors,
affiliates, employees, representatives and agents harmless from any claims,
liabilities and damages, including attorneys fees and disbursements, resulting
from the use by Licensee of the Licensed Trademarks.
14. In the event of an alleged breach of any of the terms and
conditions hereof, Licensor shall provide to Licensee notice, to the address set
forth in the Merger Agreement, of such alleged breach and a reasonable
opportunity to cure. In the event Licensee does not cure the breach within
fifteen (15) days of notice from Licensor, Licensor may terminate the Agreement
immediately upon notice to Licensee.
15. This Agreement, the Merger Agreement, and other documents referred
to herein which form a part hereof contain the entire understanding of the
parties hereto with respect to the subject matter hereof. This Agreement
supersedes
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all prior agreements and understandings, oral and written, with respect to its
subject matter.
16. Should any provision of this Agreement for any reason be declared
invalid or unenforceable, such declaration shall not affect the validity or
enforceability of any other provision of this Agreement, all of which other
provisions shall remain in full force and effect, and the application of such
invalid or unenforceable provision to persons or circumstances other than those
as to which it is held invalid or unenforceable shall be valid and be enforced
to the fullest extent permitted by law.
17. This Agreement may not be assigned directly or indirectly by
Licensee, except to a subsidiary or an affiliate of Licensee.
18. This Agreement may be amended, modified or supplemented at any time
by written agreement of the parties hereto. Any failure by either party to
comply with any term or provision of this Agreement may be waived by the other
party at any time by an instrument in writing signed by or on behalf of both
parties, but such waiver or other failure to insist upon strict compliance with
such term or provision shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply.
19. This Agreement is not intended, and shall not be deemed, to confer
upon or give any person except the parties hereto and their respective
successors and permitted assigns, any remedy, claim, liability, reimbursement,
cause of action or other right under or by reason of this Agreement.
20. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
21. This Agreement shall be governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law thereof.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
MFS COMMUNICATIONS ABLE TELCOM HOLDING
COMPANY, INC. CORP.
By: /S/ JOHN SIDGMORE By: FRAZIER L. GAINES
------------------------ ------------------------
Title______________________ Title: PRESIDENT AND CEO
Date_______________________ Date: JULY , 1998
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SCHEDULE A
Licensed Trademarks
1. MFS Transtech
2. MFS Network Technologies
3. MFS Network Technologies & design
4. MFS NT
5. MFS TT
6
